<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
AMENDMENT NO. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF THE
SECURITIES EXCHANGE ACT OF 1934
MACKENZIE INVESTMENT MANAGEMENT INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 59-2522153
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 393-8900
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
- ------------------------------------- ----------------------------------
NONE N/A
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(TITLE OF CLASS)
1
<PAGE> 2
ITEM 1. DESCRIPTION OF BUSINESS
General Development of Business
Mackenzie Investment Management Inc. ("MIMI") was incorporated under
the laws of the State of Delaware by certificate of incorporation dated April
17, 1985. MIMI is a majority owned subsidiary of Mackenzie Financial
Corporation ("MFC"), a Toronto-based investment counsel and mutual fund
management company.
MIMI provides, through various subsidiaries, investment management,
marketing, distribution, transfer agency and other administrative services to
the Ivy Fund Trust ("Ivy Fund") and beginning in July 1999, to the Mackenzie
Solutions Trust ("Mackenzie Solutions"), both of which are U.S. open-end
investment companies, registered under the Investment Company Act of 1940, as
amended (the "40 Act"), consisting of nineteen and five separate portfolios,
respectively, as of September 1999. Since its inception, MIMI has also provided
portfolio management and related services to various separate portfolios of
Mackenzie Series Trust (September 1985 through September 1997), and The
Mackenzie Funds Inc. (November 1987 through April 1995), each an open-end
investment company.
Ivy Management, Inc. ("IMI"), a Securities and Exchange Commission
("SEC") registered investment advisor and a wholly owned subsidiary of MIMI,
provides investment advisory services to Ivy Fund and Mackenzie Solutions and
provides sub-advisory services to nine Universal mutual funds sold only in
Canada and managed by MFC (the "Canadian Funds"). In addition, IMI separately
manages accounts which consist of international equity accounts for an
investment partnership and a private foundation formed under Internal Revenue
Code Section 501(c).
The following table provides a summary of assets under management and
associated revenues. The U.S. mutual funds consist of international equity
funds, domestic equity funds, taxable fixed income funds and the Ivy Money
Market Fund. The Canadian Funds consist of the Universal Funds sold only in
Canada. As of September 30, 1999, assets under management, including U.S.
mutual funds and Canadian funds, totaled $5,217,830,303.
<TABLE>
<CAPTION>
For the year ended March 31,
Assets under management 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Assets under management
U.S. mutual funds(1) $3,330,892 $3,917,952 $2,844,544 $1,576,687 $1,125,631
Canadian Funds 1,437,379 1,328,136 962,269 599,920 296,978
---------- ---------- ---------- ---------- ----------
Total assets under management $4,768,271 $5,246,088 $3,806,813 $2,176,607 $1,422,609
---------- ---------- ---------- ---------- ----------
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
For the year ended March 31,
Revenues 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
(in thousands)
Management fees $ 33,813 $ 33,223 $ 18,326 $ 11,125 $ 8,643
Sub-advisory fees from Canadian 5,994 5,556 3,954 2,114 1,077
Funds
12b-1 Service and Distribution fees 14,676 14,650 7,096 2,791 2,185
Transfer Agent fees 3,019 3,013 3,021 2,446 1,914
Administrative and Other Fee Income 7,318 6,583 4,000 2,665 2,331
Other income 1,436 2,071 746 696 97
---------- ---------- ---------- ---------- ----------
Total revenues $ 66,256 $ 65,096 $ 37,143 $21,837 $16,247
---------- ---------- ---------- ---------- ----------
</TABLE>
(1) Includes separately managed accounts which represented less than 1% of
assets under management.
In December 1996, MIMI completed an underwritten public offering of
1,000,000 shares of its common stock, on the Toronto Stock Exchange ("TSE"), at
a public offering price of $6.25 ($Cdn. 8.50) per share, pre-stock split, as
described below (the "Offering"). The net proceeds from the offering of
approximately $5.3 million were used to finance MIMI's growth, which included
the funding of deferred selling commissions paid to broker-dealers on the sale
of Class B and Class C shares of the Ivy Funds. See "Introduction of
Multi-Class Share Structure" under "Narrative Description of Business."
In July 1997, the Board of Directors of MIMI approved a 2-for-1 stock
split of the common shares of MIMI. This stock split was effected by declaring
a stock dividend of one additional common share for each common share of MIMI
issued and outstanding on the dividend record date of August 25, 1997. All
references in this document referring to shares and per share amounts have been
adjusted retroactively to reflect the 2-for-1 stock split.
In June 1998, MIMI entered into a normal course issuer bid, which was
approved by the TSE, to purchase up to 945,000 shares of its common stock. The
bid commenced on June 10, 1998 and terminated on June 9, 1999. During this
period, MIMI purchased 400,800 shares of its common stock at the prevailing
market price at the time of acquisition. MIMI has filed notice of intention to
make a normal course issuer bid with the TSE for another year, whereby it will
be permitted to purchase up to 941,610 shares of its common stock through July
2000. MIMI believes that its common stock is undervalued at current market
prices based on its earnings and that the repurchase of the common stock is an
appropriate use of corporate funds and should benefit shareholders.
In September 1998, the shareholders of MIMI approved, at its annual
meeting, an amendment to its Certificate of Incorporation to increase the
number of authorized common shares from 30 million to 100 million. The
additional authorized common shares will benefit MIMI by providing the Board of
Directors the flexibility to respond to business needs and opportunities as
they arise, and for other corporate purposes.
In the last five years, MIMI has positioned itself as a niche company
offering mutual funds with an emphasis on international and emerging growth
investing. MIMI intends to concentrate its marketing efforts on the sale of
mutual funds which specialize in the international and emerging growth areas.
When used in this document, the following terms generally apply unless
otherwise noted:
3
<PAGE> 4
the "Canadian Funds" the Canadian Funds sold only in Canada and
sub-advised by IMI.
the "Company" MIMI and its consolidated subsidiaries
the "Funds" the separate portfolios of Ivy Fund and the
separate portfolios of
the "Ivy Funds" the separate portfolios of Ivy Fund,
collectively
the "Solutions Funds" the five separate portfolios of Mackenzie
Solutions that participate in the
International Solutions asset allocation
program, collectively
MIMI is an SEC-registered investment advisor and conducts business through
three Boca Raton, Florida based, wholly-owned subsidiaries as follows:
Ivy Management, Inc. was incorporated under the laws of the
Commonwealth of Massachusetts and is registered with the SEC
under the Investment Advisers Act of 1940. IMI has exclusive
management agreements pursuant to which it manages Ivy Fund
and Mackenzie Solutions.
Ivy Mackenzie Distributors, Inc. ("IMDI") was incorporated
under the laws of the State of Florida and is registered as a
broker-dealer under the Securities Exchange Act of 1934 (the
"34 Act"). IMDI is a member of the National Association of
Securities Dealers ("NASD"). Under terms of exclusive
underwriting agreements with Ivy Fund and Mackenzie
Solutions, IMDI is entitled to sell the shares of the Funds.
In this capacity, IMDI distributes shares of the Funds
through broker-dealers, financial planners and registered
investment advisers, and to institutional investors, such as
retirement plans.
Ivy Mackenzie Services Corporation ("IMSC") was incorporated
under the laws of the State of Florida and is registered as a
transfer agent with the SEC under the 34 Act. IMSC, under
transfer agency and shareholder services agreements with Ivy
Fund and Mackenzie Solutions, serves as transfer agent and
dividend paying agent for the Funds and provides certain
shareholder and shareholder-related services as requested by
the Funds.
The Company's revenues are generated principally from on-going
management fees and sub-advisory fees calculated as a percentage of average
daily net assets under management, and from fees related to services performed
for Ivy Fund and Mackenzie Solutions under various contracts for
administrative, transfer agent, investment advisory, distribution and fund
accounting services. The level of assets under management is affected by gross
sales, redemptions and changes in the market value of the Funds' portfolios of
investments. Gross sales and redemptions are a function of a number of factors
including relative performance and prevailing market conditions. As the level
of assets under management fluctuates so does management fee revenue. Mutual
fund managers generally experience higher levels of sales during and after a
period of above-average fund and market performance and higher levels of
redemptions during and after a period of below-average fund and market
performance. While an increase in assets under management will most likely
increase transfer agent fees, these fees are more directly related to the
number of shareholder accounts in the Funds.
IMI seeks to achieve a variety of investment objectives on behalf of
the Funds, including capital appreciation, income, and growth and income. In
seeking to achieve such objectives, each Fund's portfolio reflects different
investment strategies. Funds that seek capital appreciation invest primarily in
equity securities in a wide variety of international and U.S. markets; some
seek broad national market exposure, while others focus on narrower sectors
such as precious metals, emerging and technologies. Funds seeking income focus
on taxable money market instruments, fixed-income debt securities of
corporations and of the U.S. government and its agencies and instrumentalities
such as the Government National Mortgage Association, the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation. Still
others focus on investments in particular countries and regions. A majority of
the assets managed are equity-oriented.
4
<PAGE> 5
IMI's investment style generally favors minimizing risk rather than
attempting to achieve a top performance ranking over a given period. Management
believes that, over the long term, consistent performance that is average to
above average best serves Fund shareholders and is most conducive to developing
loyal investors and repeat business from Fund distributors. The chart below
shows assets under management and revenues by broad investment objective.
<TABLE>
<CAPTION>
As of March 31,
Assets under management
(in thousands) 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Fixed Income $ 612,655 $ 528,710 $ 385,545 $ 248,814 $ 139,441
International Equity 3,416,113 3,863,332 2,592,820 1,080,365 549,244
Money Market 28,435 23,529 22,345 19,396 26,373
Tax Exempt Municipal 0 0 144,860 186,468 250,143
U.S. Equity 711,068 830,517 661,243 641,564 457,408
---------- ---------- ---------- ---------- ----------
Total assets under
management $4,768,271 $5,246,088 $3,806,813 $2,176,607 $1,422,609
---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
For the year ended March 31,
As of March 31,
Revenues (in thousands) 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Fixed Income $ 4,377 $ 3,332 $ 2,556 $ 2,014 $ 1,125
International Equity 51,444 49,816 23,775 9,863 5,542
Money Market 243 197 201 248 917
Tax Exempt Municipal 0 600 1,774 2,396 2,931
U.S. Equity 8,757 9,080 8,091 6,620 5,635
Other 1,435 2,071 746 696 97
---------- ---------- ---------- ---------- ----------
Total revenues $66,256 $65,096 $37,143 $21,837 $16,247
---------- ---------- ---------- ---------- ----------
</TABLE>
Shares of the Funds are generally sold at their respective net asset
value per share plus a sales charge, which varies depending on the type of Fund
and the amount purchased. Exceptions from sales charges are made for purchases
of the Ivy Money Market Fund. The Company has implemented a multi-class
structure in response to increasing competition from mutual fund managers
offering funds without a front-end sales charge. All Funds offer Class A, Class
B and Class C shares and all Funds other than Ivy Money Market Fund and Ivy
International Fund offer Advisor Class shares. Eight of the nineteen Ivy Funds
and all of the Solutions Funds also offer Class I shares. Some classes are
specifically designed for institutional investors. See "Introduction of
Multi-Class Share Structure" under "Narrative Description of Business." In
accordance with certain terms and conditions described in the Prospectus for
such Funds, certain investors are allowed to purchase shares at net asset value
or at a reduced sales charge. Investors may generally exchange their shares of
a Fund at net asset value for shares within the same class of another Fund
within the same trust without the payment of additional sales charges.
5
<PAGE> 6
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
All of the operations of the Company are carried on within a single operating
segment.
NARRATIVE DESCRIPTION OF BUSINESS
INVESTMENT MANAGEMENT AND ADVISORY SERVICES
The Company, through its various subsidiaries described above,
provides investment management, marketing, distribution, transfer agency,
accounting and other administrative services to Ivy Fund and Mackenzie
Solutions, as well as sub-advisory services to the Canadian Funds. Such
services are provided pursuant to various written agreements.
The investment management agreements for the Funds continue in effect,
after an initial two year period, for successive annual periods, providing the
continuance is specifically approved at least annually by a majority of votes
cast in person at a meeting of such Funds' Boards of Trustees called for that
purpose, or by a vote of the holders of a majority of the Funds' outstanding
voting securities. In either event, the continuance must be approved by a
majority of the Funds' trustees who are not parties to the agreement or
interested persons of the Funds or the Company, within the meaning of the 40
Act. The investment management agreements may be terminated upon 60 days'
written notice by a vote of the majority of the outstanding voting securities
of the affected Fund, by a vote of a majority of the Board of Trustees, or by
IMI. If there were to be a termination of a significant number of the
investment management agreements between Ivy Fund and/or Mackenzie Solutions
and IMI, such termination would have a material adverse impact upon the
Company. To date, no agreements of the Company with the Funds have been
involuntarily terminated.
As the manager of the Funds, IMI is responsible for monitoring the
services provided by third parties, supplying the Funds with office space and
administrative and clerical personnel, supervising the maintenance of books and
records, assisting in the preparation of tax and other governmental returns and
reports and responding to appropriate inquiries from persons such as transfer
agents and fund accounting personnel. The Company pays the salaries of
personnel who serve as officers of the Company, including the President and
such other administrative personnel as are necessary to conduct the Funds'
day-to-day business operations. The Funds generally pay their own expenses,
such as legal and auditing fees, shareholder reporting and board and
shareholder meeting costs, SEC and state registration fees and similar
expenses. Generally, the Ffunds pay IMI a management fee based upon a Fund's
average daily net assets.
IMI acts as advisor to all Funds other than Ivy Global Natural
Resources Fund and also acts as sub-advisor to the nine Canadian Funds. IMI has
retained Northern Cross Investments Limited (Northern Cross) to act as
sub-advisor to Ivy International Fund ("IIF") and Henderson Investment
Management Limited ("Henderson") to act as sub-advisor to 50% of the portfolio
of Ivy International Small Companies Fund. IMI has also retained Henderson to
act as sub-advisor to Ivy European Opportunities Fund. MFC acts as sub-advisor
to Ivy Global Natural Resources Fund.
IMI (i) determines, with respect to the Funds it advises, which
investments the Funds will make and which investments will be sold; (ii)
prepares investment performance reports for the appropriate Trustees of the
Funds; and (iii) complies with information requirements from the Trustees of
the Funds with regard to such matters and filings made with the SEC and state
securities commissions. In its capacity as investment advisor, IMI performs
fundamental research and valuation analysis, industry and company research, and
company visits and inspections, and utilizes such sources as company public
records and activities, management interviews, company prepared information,
and other publicly available information, as well as analyses of suppliers,
customers and competitors. Fixed-income research includes economic analysis,
credit analysis and value analysis. The economic analysis includes an
evaluation of certain macro economic variables such as inflation, employment
levels, and industrial production and capacity utilization. Credit analysis
researches the creditworthiness of debt issuers and their individual short-term
and long-term debt issues. Yield spread differential analysis reviews the
relative value of market sectors that represent buying and selling
opportunities.
6
<PAGE> 7
The Funds pay management fees to IMI ranging from 0.25% to 1.00% per
annum of a Fund's average daily net assets. IMI receives a sub-advisory fee
from MFC equal to 0.50% per annum of the first $50 million of the average daily
net assets of each of the Canadian Funds, calculated daily on each day the TSE
is open for trading, except for the Universal World Science and Technology Fund
and Universal Select Managers Fund, with respect to which IMI receives a
sub-advisory fee of 0.50% per annum of 40% of each respective fund's average
daily net assets. Assets of the Canadian Funds in excess of $50 million per
fund are added to a pool of funds with the following rates: 0.50% of the first
$1.3 billion of consolidated assets in excess of the 0.50% paid on the first
$50 million in each fund; 0.35% on the excess of the consolidated assets of
$1.3 billion up to $3.0 billion; 0.25% on the excess of the consolidated assets
from $3.0 billion up to $5.0 billion; 0.20% on the excess of the consolidated
assets from $5.0 billion up to $10.0 billion; and 0.15% on consolidated assets
above $10.0 billion.
Under the Funds' management agreements, IMI pays all expenses incurred
by it in rendering management and advisory services to the Funds. See the table
of funds and investment objectives, which contains information on management
and sub-advisory fees paid to IMI in "The Products."
The Funds bear their own operating expenses. However, IMI limits
certain Ivy Funds' total operating expenses (excluding 12b-1 Service and
Distribution Fees and taxes) to annual rates ranging from 0.85% to 1.95% of
each such Ivy Fund's average daily net assets, depending upon the size of the
Ivy Fund. These contractual expense limitations are determined annually and are
disclosed in the affected Funds' Prospectuses.
The five separate portfolios of Mackenzie Solutions participate in an
asset allocation program known as "International Solutions". The Solutions
Funds enable investors to tailor their exposure to different investment
techniques in the international securities markets and related risk by
investing primarily in the shares of other mutual funds that in turn invest in
a broad range of foreign securities. Each Solutions Fund invests in eight to
fifteen underlying funds whose combined investment strategies and techniques
are consistent with the Solutions Fund's investment objective. These underlying
funds are Ivy Funds and other non-affiliated funds. Each underlying fund in
turn invests in a wide range of foreign securities. As a result, an investment
in a Solutions Fund is effectively diversified over a large number of different
foreign issuers.
MIMI has retained Garmaise Investment Technologies ("GIT") to provide
asset allocation consulting services to the Solutions Funds. GIT uses a
proprietary computer-based method of portfolio selection known as
"Optimization." GIT's responsibilities include selecting the underlying funds
that comprise each Solutions Fund portfolio and determining when changing the
relative mix of underlying funds within a Solutions Fund portfolio may be
appropriate in light of prevailing market conditions. The underlying fund
selection process includes evaluation of a long-term return forecasts; a risk
estimation; a measure of the relative diversification potential; and a
cross-checking analysis to ensure all resulting portfolios conform to
professional standards of asset class and geographic diversification. For these
services, MIMI pays GIT an annual fee of $50,000.
Each manager of an underlying fund, other than the Ivy Funds,
participating in the International Solutions asset allocation program pays IMI
a fee of up to 0.25% of the average daily value of the shares of the underlying
fund held by a Solutions Fund. Such payments are used by IMI on behalf of and
at the direction of the underlying funds to reduce the expenses of the
Solutions Funds. In addition, IMI voluntarily limits the Solutions Funds' total
operating expenses (excluding 12b-1 Service and Distribution Fees and taxes) to
annual rates ranging from 0.08% to 0.39% of each Solutions Fund's average daily
net assets. The voluntary expense limitations are designed to limit the
combined operating expenses of the underlying funds and Solutions Funds
collectively to an overall expense ratio of 1.99% for Class A shares. These
voluntary expense limitations may be terminated at any time.
7
<PAGE> 8
THE PRODUCTS
The Company's groups of Funds currently consist of nineteen separate
portfolios of Ivy Fund and five separate portfolios of Mackenzie Solutions. The
business affairs of Ivy Fund and Mackenzie Solutions are managed by separate
Boards of Trustees, and the day to day administration of each is carried out by
the Company. Management of a Fund's portfolio is the responsibility of its
portfolio manager. Some Funds may be managed under a team approach. The table
below outlines information related to each fund's portfolio management, net
asset value and management fees.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets
as of Management Fee
Name of Fund Investment Objective March 31, 1999 (% of Fund Year
(Portfolio Manager) (In Millions of Average Daily Introduced
Dollars) Net Assets)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTERNATIONAL EQUITY FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
Long-term capital growth by
Ivy European Opportunities Fund investing in the securities * 1.00(1) 1999
(Henderson) markets of Europe.
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Global Fund
(IMI's International Equity Long-term capital growth. 1.00 1991
Team) 20.5
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Global Natural
Resources Fund Long-term growth. 3.1(2) 1.00(3) 1997
(Frederick Sturm, MFC)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Global Science & Technology
Fund Long-term capital growth. 37.1 1.00 1996
(IMI's Global Technology Team)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy International Fund
(Northern Cross - Long-term capital growth. 2,377.3 1.00(4) 1986
Hakan Castegren)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy International Fund II Long-term capital growth. 141.3 1.00 1997
(Barbara Trebbi)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy International Small
Companies Fund
(Co-managed by Henderson and Long-term growth. 2.7 1.00(5) 1997
IMI's International Equity Team)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Pan Europe Fund
(IMI's International Equity Long-term capital growth. 6.0 1.00 1997
Team)
- ---------------------------------------------------------------------------------------------------------------------------
U.S. EQUITY FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Growth Fund
(Co-managed by James W.
Broadfoot, Barbara Trebbi, and Long-term growth. 309.6 0.85(6) 1960
Paul P. Baran)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets
as of Management Fee
Name of Fund Investment Objective March 31, 1999 (% of Fund Year
(Portfolio Manager) (In Millions of Average Daily Introduced
Dollars) Net Assets)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ivy Growth with
Income Fund Long-term growth. 88.8 0.75 1984
(Paul P. Baran)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy US Blue Chip Fund Long-term growth. 7.6 0.75 1998
(Paul P. Baran)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy US Emerging
Growth Fund(7) Long-term growth. 110.7 0.85 1993
(James W. Broadfoot)
- ---------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Asia Pacific Fund
(IMI's International Equity Long-term growth. 5.5 1.00 1997
Team)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy China Region Fund
(IMI's International Equity Long-term capital growth. 16.7 1.00 1993
Team)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Developing
Nations Fund(8)
(IMI's International Equity Long-term growth. 12.8 1.00 1994
Team)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy South America Fund(9)
(IMI's International Equity Long-term growth. 2.5 1.00 1994
Team)
- ---------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
Ivy Bond Fund High level of current income. 148.5 0.75(10) 1985
(IMI's Fixed Income Team)
- ---------------------------------------------------------------------------------------------------------------------------
Ivy International Total return, and
Strategic Bond Fund consistent with that objective, to * 0.75 1999
(Richard A. Gluck) maximize current income.
- ---------------------------------------------------------------------------------------------------------------------------
To obtain as high a level of current
Ivy Money Market Fund income as is consistent with the 28.4 0.40 1987
(IMI's Fixed Income Team) preservation of capital and
liquidity.
- ---------------------------------------------------------------------------------------------------------------------------
CANADIAN FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
IMI acts as sub-adviser to the following Canadian Funds which are offered for sale only in Canada.
- ---------------------------------------------------------------------------------------------------------------------------
Universal World Balanced RRSP Long-term capital growth by
Fund pursuing both current income and
(Co-managed by Richard A. capital gains, generally through 280.6 0.50(11) 1994
Gluck and Barbara international fixed income and
) equity derivative securities.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets
as of Management Fee
Name of Fund Investment Objective March 31, 1999 (% of Fund Year
(Portfolio Manager) (In Millions of Average Daily Introduced
Dollars) Net Assets)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Universal World Income RRSP
Fund Long-term capital growth. 461.4 0.50(11) 1975
(Richard Gluck)
- ---------------------------------------------------------------------------------------------------------------------------
Universal World Growth RRSP
Fund Long-term capital growth. 303.4 0.50(11) 1994
(Barbara Trebbi)
- ---------------------------------------------------------------------------------------------------------------------------
Universal Americas Fund
(Co-managed by James W.
Broadfoot, Michael Borowsky Long-term capital growth. 52.7 0.50(11) 1978
and Barbara Trebbi)
- ---------------------------------------------------------------------------------------------------------------------------
Universal U.S. Emerging Growth
Fund Long-term capital growth. 194.4 0.50(11) 1991
(James W. Broadfoot)
- ---------------------------------------------------------------------------------------------------------------------------
Universal World Science and
Technology Fund
(Co-managed by three portfolio Capital growth. 100.8 0.50(11) 1996
managers from MFC,
MIMI and Henderson)
- ---------------------------------------------------------------------------------------------------------------------------
Universal World High Yield
Fund Above-average income with the
(Michael Borowsky) potential for capital growth 2.7 0.50(11) 1997
- ---------------------------------------------------------------------------------------------------------------------------
Universal Select Managers Fund
(Co-managed by five portfolio
managers from MFC, MIMI, Long-term growth. 34.1 0.50(11) 1998
Henderson and Cundill)
- ---------------------------------------------------------------------------------------------------------------------------
Universal World Value Fund Long-term capital appreciation. 7.4 0.50(11) 1997
(Barbara Trebbi)
- ---------------------------------------------------------------------------------------------------------------------------
SOLUTIONS FUNDS
The following funds participate in the asset allocation program known as International Solutions.
- ---------------------------------------------------------------------------------------------------------------------------
International Solutions I: Capital preservation with moderate
Conservative Growth current income and secondarily, ** 0.25 1999
(IMI) capital appreciation.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets
as of Management Fee
Name of Fund Investment Objective March 31, 1999 (% of Fund Year
(Portfolio Manager) (In Millions of Average Daily Introduced
Dollars) Net Assets)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Solutions II: A balance of capital appreciation
Balanced Growth and capital preservation, with ** 0.25 1999
(IMI) moderate current income.
- ---------------------------------------------------------------------------------------------------------------------------
International Solutions III: Capital appreciation and
Moderate Growth secondarily, preservation of ** 0.25 1999
(IMI) capital.
- ---------------------------------------------------------------------------------------------------------------------------
International Solutions IV:
Long-term Growth Capital appreciation without ** 0.25 1999
(IMI) regard to current income.
- ---------------------------------------------------------------------------------------------------------------------------
International Solutions V:
Aggressive Growth Aggressive capital appreciation ** 0.25 1999
(IMI) without regard to current income.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Ivy European Opportunities Fund and Ivy International Strategic Bond Fund
began sales on May 3, 1999. Effective June 21, 1999, new orders for
purchases of Ivy European Opportunities Fund are no longer accepted.
** The Solutions Funds began sales on July 2, 1999.
(1) IMI retains 0.50%,
Henderson, as sub-adviser, is paid 0.50%.
(2) The net assets of Ivy Canada Fund were acquired by Ivy Global Natural
Resources Fund on April 7, 1999.
(3) IMI is paid 0.50%, MFC is paid 0.50%.
(4) Reduced to 0.90% for average daily net assets over $2.5 billion. For
assets up to $2.5 billion (with respect to which the 1.00% fee applies),
Northern Cross, as sub-adviser, is paid 0.60% of the first $1.5 billion in
average daily net assets, reduced to 0.55% of the next $1 billion in
average daily net assets. For assets over $2.5 billion (with respect to
which the 0.90% fee applies), Northern Cross is paid an amount equal to
0.50% of the Fund's average daily net assets.
(5) IMI retains 0.75%; Henderson, as sub-adviser, is paid 0.25%. Each fee is
based on 50% of the average daily net assets of the Fund.
(6) Reduced to 0.75% for average daily net assets over $350 million.
(7) Effective January 20, 1998, the Fund changed its name from Ivy Emerging
Growth Fund.
(8) Effective January 20, 1998, the Fund changed its name from Ivy New Century
Fund.
(9) Effective January 20, 1998, the Fund changed its name from Ivy Latin
America Strategy Fund.
(10) Reduced to 0.50% for average daily net assets over $100 million.
(11) These fees are paid according to a graduated scale. For details see the
"Investment Management and Advisory Services" section under "Narrative
Description of Business."
CLOSING OF IVY INTERNATIONAL FUND
In April 1997, Ivy International Fund ("IIF") exceeded $2 billion in
assets. The sub-adviser, Northern Cross, believed strongly in preserving the
integrity of IIF and that the ability to manage the Fund effectively would be
impeded if it continued to grow at its historical pace. Effective April 18,
1997, IIF closed to new shareholders; existing shareholders may continue to
invest in IIF.
SALE OF THE TAX-EXEMPT MUNICIPAL BOND FUNDS
On September 5, 1997, MIMI entered into a plan of reorganization with
an unrelated third party, providing for the transfer of certain assets relating
to the four municipal funds which had been distributed under the Mackenzie
Series Trust name. This transaction resulted in gross proceeds of approximately
$1.755 million, which after recording related expenses resulted in a gain of
approximately $1.049 million. The transfer of the assets of these municipals
funds did not have a material effect on MIMI's financial results.
11
<PAGE> 12
FUND MERGERS AND INTRODUCTIONS
In April 1999, Ivy Canada Fund merged into Ivy Global Natural
Resources Fund. In May 1999, Ivy European Opportunities Fund and Ivy Strategic
Bond Fund commenced operations. In July 1999, sales commenced for the five
Solutions Funds: International Solutions I - Conservative Growth; International
Solutions II - Balanced Growth; International Solutions III - Moderate Growth;
International Solutions IV - Long-term Growth; and International Solutions V -
Aggressive Growth. These five Funds each have their own investment objectives,
strategies and risks and invest in shares of other mutual funds (referred to as
"underlying funds"). The underlying funds are both affiliated Ivy Funds and
funds from non-affiliated mutual funds companies.
INTRODUCTION OF A MULTI-CLASS SHARE STRUCTURE
In October 1993, the Ivy Funds began offering a multi-class structure
which allows investors to choose appropriate purchase option based on the
amount purchased and the anticipated duration of the investments. MIMI
implemented this multi-class structure in response to increasing competition
from mutual fund managers offering funds without a front-end sales charge. The
multi-class share structure allows investors to choose between paying a
front-end sales charge at the time of purchase, or not paying a front-end sales
charge at the time of purchase but instead paying a Contingent Deferred Sales
Charge ("CDSC") on redemption. Prior to October 1993, the Ivy Funds offered
Class A shares only, which normally bear a front-end sales charge payable by
the investor at the time of purchase and are subject to a 12b-1 Service Fee at
an annual rate of up to 0.25% of a Fund's average daily net assets attributable
to its Class A shares.
A "12b-1" Fee is a fee permitted by Rule 12b-1 under the 40 Act, which
a mutual fund may pay in connection with the distribution of its shares, for
costs such as advertising and commissions paid to broker-dealers. The portion
of the 12b-1 Fee payable to a broker-dealer as a distribution fee in connection
with the distribution of a mutual fund's shares is referred to as a 12b-1
Distribution Fee. This fee is limited annually to 0.75% of the mutual fund's
average daily net assets. An additional portion of the 12b-1 Fee, referred to
as a 12b-1 Service Fee, is limited to 0.25% of the mutual fund's average daily
net assets. It is paid to broker-dealers and other sales professionals for
their services in providing ongoing information and assistance to investors.
Class B shares of the Ivy Funds became available for sale starting in
October 1993. No front-end sales charge on such shares is payable by the
investor at the date of purchase, but there is a deferred selling commission of
4% of the sale price paid by MIMI to the selling broker-dealer when the shares
are purchased and a declining CDSC payable by the investor if the shares are
redeemed within six years from the date of purchase. In addition, Class B
shares are subject to 12b-1 Service and Distribution Fees at a combined annual
rate of up to 1.00% of a Fund's average daily net assets attributable to its
Class B shares.
In March 1999, MIMI sold the Class B deferred selling commission
asset. See the sub-section titled "Distribution Services" below for more
information.
Class C shares became available for sale starting in May 1996. There
is no front-end sales charge payable by the investor at the date of purchase,
but there is a deferred selling commission of 1% of the sale price paid by MIMI
to the selling broker-dealer when the shares are purchased. A CDSC of 1% is
payable by the investor if the shares are redeemed within one year from the
date of purchase. Class C shares are subject to 12b-1 Service and Distribution
Fees at a combined annual rate of up to 1.00% of the mutual fund's average
daily net assets attributable to its Class C shares. The 12b-1 Service and
Distribution Fees are retained by IMDI in year one; for all subsequent years
the fees are paid to the selling broker-dealer.
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<PAGE> 13
Advisor Class shares became available for sale starting in January
1998. The shares are offered at net asset value without the imposition of a
front-end sales charge or CDSC. In addition, Advisor Class shares are not
subject to Rule 12b-1 Fees. Advisor Class shares are offered only to certain
investors, such as those with an account over which a financial planner, trust
company or registered investment adviser has investment discretion, and where
the investor pays such person as compensation for its advice and other services
an annual fee on the assets in the account. Currently, Advisor Class shares are
sold by all the Funds other than Ivy Money Market Fund and Ivy International
Fund.
Class I shares became available for sale starting in October 1994.
Class I shares are offered only to institutions and are not subject to an
initial sales charge or CDSC, nor to ongoing 12b-1 Sservice or Distribution
Fees. Class I shares also bear lower fees than Class A, Class B and Class C
shares. Currently, Class I shares are sold by eight of the Ivy Funds and the
Solutions Funds.
ADMINISTRATIVE, TRANSFER AGENT AND FUND ACCOUNTING SERVICES
Under administrative services agreements, MIMI provides administrative
services to the Funds including, but not limited to, maintenance of
registration and qualification of Fund shares under state Blue Sky laws,
preparation of federal, state and local income tax returns and preparation of
financial and other information for prospectuses, securities regulatory
documents and returns and periodic reports to shareholders. The administrative
service agreements for the Funds continue in effect, after an initial two year
period, for successive annual periods, providing such continuance is
specifically approved at least annually by a majority of votes cast in person
at a meeting the Funds' Boards of Trustees called for that purpose, or by a
vote of the holders of a majority of the Funds' outstanding voting securities.
In either event, the continuance must be approved by a majority of the Funds'
trustees who are not parties to the agreement or interested persons, within the
meaning of the 40 Act, of the Funds or the Company . The administrative service
agreements may be terminated upon 60 days' written notice by a vote or written
consent of a majority of the Funds' Board of Trustees, or by MIMI. To date, no
administrative service agreements of the Company with the Funds have been
terminated.
Under fund accounting services agreements, MIMI also provides certain
accounting and pricing services to the Funds. The fund accounting services
agreements for the Funds continue in effect for successive annual periods,
providing such continuance is specifically approved at least annually by a
majority of votes cast in person at a meeting the Funds' Boards of Trustees
called for that purpose, or by a vote of the holders of a majority of the
Funds' outstanding voting securities. In either event, the continuance must be
approved by a majority of the Funds' trustees who are not parties to such
agreement or interested persons, within the meaning of the 40 Act, of the Funds
or the Company. The fund accounting services agreements may be terminated upon
90 days' written notice by a vote or written consent of a majority of the Board
of Trustees, or by MIMI. To date, no fund accounting services agreements of the
Company with the Funds have been terminated.
For the administrative services provided to the Funds as described
above, all Ivy Funds pay a monthly fee at an annual rate of 0.10% of the
average daily net assets of the applicable Fund (except with respect to Class I
shares). All Ivy Funds pay a monthly fee at an annual rate of .01% of the
average daily net assets for Class I shares. MIMI does not receive any
compensation for administrative services provided to the Solutions Funds. For
accounting and pricing services, MIMI receives a fee ranging from $1,000 to
$6,500 per month based on the net asset value of each of the Ivy Funds and each
of the Mackenzie Solutions Funds at the preceding month end. MIMI is also
reimbursed by the Funds for certain out-of-pocket expenses.
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<PAGE> 14
IMSC serves as transfer agent and dividend paying agent for the Funds
and provides certain shareholder and shareholder-related services as required
by the Funds. For transfer agent services, IMSC receives a per shareholder
account fee ranging from $20 to $22 per year. The shareholder account fee
received by IMSC for Class I shares is $10.25. In addition, the Funds pay IMSC
a monthly fee at an annual rate of $4.58 per account that is closed. IMSC is
also reimbursed by the Funds for certain out-of-pocket expenses.
DISTRIBUTION SERVICES
IMDI serves as principal underwriter and exclusive distributor of the
Funds and distributes their on a continuous basis in every state in the U.S.
IMDI is not required to sell any specific amount of Fund shares. The Funds'
shares are sold primarily through a large network of independent participating
securities dealers. The Funds' shares are offered to individual investors,
qualified groups, trustees, IRA and profit sharing or money purchase plans,
employee benefit plans, trust companies, bank trust departments and
institutional investors.
IMDI is assisted in its distribution efforts by a national team of
eighteen regional representatives who market the Funds to the broker-dealer,
financial planner and registered investment adviser sales channels, supported
by a national sales manager and a team of internal sales personnel, all of whom
are employed by the Company. The broker-dealer and financial planner sales
channels are the traditional channels through which load mutual funds are sold
to investors. IMDI has dealer agreements with over 275 U.S. broker-dealer
firms, such as Merrill Lynch & Co., Inc., Prudential, and PaineWebber Inc., who
distribute the Funds' shares through their regional offices. Merrill Lynch &
Co., Inc. was responsible for approximately 53% of the Company's mutual fund
sales for the year ended March 31, 1999. Merrill Lynch & Co., Inc. is not under
any obligation to sell a specific amount of shares of the Ivy Funds or the
Solutions Funds and also sells shares of mutual funds that it sponsors and
which are sponsored by unaffiliated organizations.
Upon receipt of a purchase order from a broker-dealer, IMDI purchases
shares from the Funds at net asset value per share and re-sells them to the
broker-dealer who in turn sells them to the investor at the public offering
price. As an underwriting fee, IMDI receives a portion of the difference
between the purchase price it paid to the Funds and the public offering price
paid by the investor. The underwriting fee retained by IMDI is typically 15 -
20% of the front-end sales charge paid by the investor, with the remaining
portion being retained by the selling broker-dealer.
Over the years, MIMI has gained access to the mutual fund sales
network created by the emergence of registered investment advisers and
financial planners. This network consists of independent registered investment
advisers and financial planners who work with the traditional broker-dealer
distribution network in selling funds to their clients. Firms such as Charles
Schwab & Co., Inc. and Fidelity Investment Advisor Group act as clearing houses
for thousands of U.S. mutual funds enabling smaller, independent registered
investment advisers and financial planners to have access to mutual fund groups
previously sold only by broker-dealers. Management of MIMI believes that MIMI
was one of the first U.S. mutual fund managers whose funds impose fFront-eEnd
sales charges or CDSCs to actively participate in this expanding network and
has established selling arrangements with many U.S. registered investment
advisers and financial planner groups.
For the year ended March 31, 1999, the percentages of Fund sales from
the various distribution channels used by the Company were as follows:
Distribution Channel Percent of Total Fund Sales
-------------------- ---------------------------
Broker-dealers 56%
Financial Planners 10%
House Accounts / Insurers / Other 9%
Regional Representatives 3%
Registered Investment Advisers 22%
---
100%
===
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<PAGE> 15
Under the terms of the distribution plans between IMDI and the Funds,
IMDI is entitled to receive 12b-1 Distribution Fees from the Funds for
distribution services in respect of certain of the classes of shares offered by
the Funds. The plans are established for an initial term of one year and
thereafter, must be approved annually by the Funds' Board of Trustees and by a
majority of disinterested directors. All such plans are subject to termination
at any time by a majority vote of the disinterested directors or by the Funds'
shareholders. The plans permit the Funds to bear certain expenses relating to
the distribution of their shares.
IMDI is entitled to be reimbursed by the Funds for 12b-1 Service Fees
paid by it to broker-dealers up to an amount equal to 0.25% of the average
daily net assets of each Fund's Class A shares. This fee is accrued daily and
IMDI is reimbursed monthly.
The Funds pay IMDI a 12b-1 Fee at an annual rate of 1.00% of the
average daily net assets of the Class B and Class C shares of the Funds, which
is comprised of a 12b-1 Distribution Fee of 0.75% of the average daily net
assets paid to IMDI as reimbursement for various promotional and sales-related
expenses incurred, and a 12b-1 Service Fee of 0.25% of the average daily net
assets which IMDI pays to the broker-dealer for account maintenance and
shareholder services. This fee is accrued daily and IMDI is paid monthly.
IMDI is entitled to receive a CDSC on the redemption of Class B and
Class C shares depending on when are redeemed. For Class B shares, the fee
ranges from 5% of the value of shares subject to charge in the first year of
purchase, to 1% in the sixth year after purchase. For Class C shares, there is
a 1% fee for redemptions during the first year after purchase.
MIMI pays the up-front selling commission to broker-dealers on sales
of Class B and Class C shares. The up-front selling commission is 4% and 1% for
Class B and Class C shares, respectively. MIMI funds these up-front selling
commissions from its cash flows from operations, including CDSC and 12b-1
Distribution Fees.
In March 1999, the Company sold a portion of the deferred selling
commissions related to Class B shares to an unrelated third party (the
"Purchaser"). The sale resulted in the Company receiving cash proceeds of
$21,115,000 and recording a net gain of approximately $41,000 after recording
expenses incurred in connection with the transaction. The Purchaser will
receive 12b-1 Distribution Fees and any CDSC upon redemption of the asset sold.
The sale of the deferred selling commissions provided cash to the Company for
general corporate purposes.
As of March 31, 1999, there were approximately 111,000 shareholder accounts in
the Funds.
CUSTODY AND BROKERAGE
Custody of individual securities is maintained by banks, trust
companies, brokerage firms or other custodians as appointed by the Company. The
Company generally has the discretion to select brokers or dealers to be
utilized to execute transactions for the Funds' accounts.
RISK FACTORS AND CAUTIONARY STATEMENTS
COMPETITION
The financial services industry is highly competitive and has
increasingly become a global industry. There are over 7,000 open-end investment
companies of varying sizes, investment policies and objectives whose shares are
being offered to the public in the U.S. Given the large number of competitors
in the U.S., the Company has focused its efforts on becoming a niche market
mutual fund manager. With this focus, the Company considers that it has
narrowed the competitive field to a certain extent as it competes primarily
with mutual fund managers that provide specialty mutual funds, such as
international and emerging market funds, to investors. As of March 31, 1999,
the Company's market share of monthly average assets under management was .03%.
However, the Company's market share of international and emerging market fund
monthly average assets under management was 1.66%.
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<PAGE> 16
The Company is in competition with the financial services and other
investment alternatives offered by stock brokerage and investment banking
firms, insurance companies, banks, savings and loan associations and other
financial institutions. Many of the Company's competitors have substantially
greater resources than the Company. In addition, there has been a trend of
consolidation in the mutual fund industry which has resulted in stronger
competitors. Such competition could negatively impact the Company's market
share, revenues and net income.
DISTRIBUTION
Securities dealers, whose large retail distribution systems play an
important role in the sale of shares of the Funds, also sponsor competing
proprietary mutual funds. To the extent that these firms limit or restrict the
sale of Ivy Funds or Mackenzie Solutions Funds through their brokerage systems
in favor of their proprietary mutual funds, future sales may be negatively
impacted and the Company's revenues might be adversely affected. In addition,
as the number of competitors in the investment management industry increases,
greater demands are placed on existing distribution channels, which has caused
distribution costs to increase.
As investor interest in the mutual fund industry has increased,
competitive pressures have increased on sales charges of broker-dealer
distributed funds. The Company believes that, although this trend will
continue, a significant portion of the investing public still relies on the
services of the broker-dealer community, particularly during weaker market
conditions. However, in response to competitive pressures or for other similar
reasons, the Company might be forced to lower or further adjust sales charges,
substantially all of which are paid by the Company to broker-dealers and other
financial intermediaries. The reduction in such sales charges paid to
broker-dealers could make the sale of shares of the Funds somewhat less
attractive to the broker-dealer community, which could in turn have a material
adverse effect on the Company's revenues.
ASSET MIX
As discussed above, the Company's revenues are derived primarily from
investment management activities. Broadly speaking, the direction and amount of
change in the net assets of the Funds depend upon two factors: (1) the level of
sales of shares of the Funds as compared to redemptions of the shares of the
Funds; and (2) the increase or decrease in the market value of the securities
owned by the Funds. The Company is subject to an increased risk of volatility
from changes in the global equity markets. Despite this volatility, management
believes that in the long run the Company is more competitive as a result of
greater diversity of global investments available to its customers.
Market values are affected by many things, including the general
condition of national and world economics and the direction and volume of
changes in interest rates and/or inflation rates. Fluctuations in interest
rates and in the yield curve will have an effect on fixed-income assets under
management as well as on the flow of monies to and from fixed-income funds and,
as a result, will effect the Company's revenues from such funds. The effects of
the foregoing factors on equity funds and fixed-income funds often operate
inversely and it is, therefore, difficult to predict the net effect of any
particular set of conditions on the level of assets under management.
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<PAGE> 17
Certain portions of the Company's managed portfolios are invested in
various securities of corporations located or doing business in developing
regions of the world, commonly known as emerging markets. These portfolios and
the Company's revenues derived from the management of such portfolios are
subject to significant risks of loss from unfavorable political and diplomatic
developments, currency fluctuations, social instability, changes in
governmental policies, expropriation, nationalization, confiscation of assets
and changes in legislation relating to foreign ownership. Foreign trading
markets, particularly in some emerging market countries, are often smaller,
less liquid, less regulated and significantly more volatile.
INVESTOR SENTIMENT FOR INTERNATIONAL INVESTING
Given the risk associated with investing in foreign and emerging
markets, investors may from time to time be less supportive of investing in
international funds than in U.S. equity or fixed income funds and sales of
those Funds which invest in these areas may decrease.
IVY INTERNATIONAL FUND
As of March 31, 1999, 50% of the assets under the Company's management
was represented by IIF. In April 1997, this fund was closed to new
shareholders. A decline in the performance of IIF could have an effect on
further redemptions of its shares. In addition, any change in the sub-advisory
arrangements between IMI and Northern Cross may have an adverse effect on IIF's
net redemptions. Net redemptions in IIF for the Company's fiscal year ended
March 31, 1999 were $448 million, compared to average net sales of $499 million
over the past four years.
Sales for fiscal year 1999 in IIF were $325 million as compared to
$893 million in fiscal year 1998, a 64% decrease, and assets under management
in IIF at March 31, 1999 were $2,377 million as compared to $2,881 million at
March 31, 1998.
ABSENCE OF PUBLIC TRADING MARKET
MFC owns 85% of the issued and outstanding common shares of
MIMI as of July 1999. The shares have been thinly traded. There is no assurance
that an active market will develop or be sustained after this filing. Further,
the number of common shares of MIMI held by persons other than MFC will be very
small by market standards and this may have an adverse impact on liquidity and
trading of the common shares.
RELATIONSHIP WITH MFC
For the year ended March 31, 1999, 9% of MIMI's consolidated revenues
were derived from fees received from MFC for sub-advisory services provided to
the Canadian Funds. Any change in these sub-advisory arrangements between MFC
and MIMI could have an adverse effect on MIMI's revenues. Management of MIMI
understands that MFC intends to continue MIMI's role as a sub-adviser, subject
to MIMI's level of performance and MFC's obligations as manager of the Canadian
Funds.
SALES TRENDS OF CERTAIN MIMI FUNDS
Sales of Ivy Funds were $518 million for the Company's fiscal year
ended March 31, 1999, as compared to $1,202 million for the same period last
year. The closing of IIF to new shareholders in April 1997 and the global
economic turbulence, in general, has significantly impacted the Company's sales
and the growth of its assets under management. MIMI's future growth, given the
closing of IIF, is dependent upon broadening the sales base to its other
specialty funds and maintaining existing contracts to provide sub-advisory
services to mutual funds managed by MFC.
17
<PAGE> 18
RELIANCE ON KEY EMPLOYEES
Although MIMI takes a team approach to the management of several of
the Funds' portfolios whereby all members work together in developing and
carrying out investment strategies, it is possible that levels of investment in
aFund may not grow at the same rate should the principal portfolio manager
cease managing that Fund.
NUMBER OF EMPLOYEES
As of March 31, 1999, the Company had 123 employees, including
thirteen investment professionals, of whom seven are portfolio managers, four
are research analysts and two are traders. The average period of employment of
these professionals with the Company is approximately five years and their
average investment experience is approximately nineteen years. The Company
considers its employee relations to be good.
REGULATORY ENVIRONMENT
Virtually all aspects of the Company's business are subject to various
federal and state laws and regulations. As discussed above, the Company and its
subsidiaries are registered with federal and state governmental agencies. These
supervisory agencies have broad administrative powers, including the power to
limit or restrict the Company from carrying on its business if it fails to
comply with applicable laws and regulations. In the event of non-compliance,
the possible sanctions which may be imposed include suspending individual
employees, limiting the Company's ability to engage in business for specified
periods of time, revoking the investment advisor or broker-dealer registrations
and censures and fines.
The Company's officers, directors and employees may from time to time
own securities which are also held by the Funds. The Company's internal
policies with respect to individual investments by certain employees, including
officers and directors who are employed by the Company, require prior clearance
and reporting of some transactions and restrict certain transactions so as to
reduce the possibility of conflicts of interest. The Company's compliance
procedures meet the standards outlined in the most recent Investment Company
Institute's guidelines related to securities transactions by employees,
officers and directors of investment companies.
To the extent that existing or future regulations cause a reduction in
sales of Ffund shares or investment products or impair the investment
performance of the Funds or such other investment products, the Company's
aggregate assets under management and its revenues might be adversely affected.
Changes in regulations affecting free movement of international currencies
might also adversely affect the Company.
The Company is subject to increased scrutiny and a
substantially-increased volume of compliance reporting related to its plan,
activities and the associated costs related to the year 2000, as discussed in
more detail in "Item 2. FINANCIAL INFORMATION" under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Since 1993, the NASD Conduct Rules have limited the amount of
aggregate sales charges which may be paid in connection with the purchase and
holding of investment company shares sold through brokers. The effect of the
rule might be to limit the amount of fees that could be paid pursuant to a
Fund's 12b-1 Plan to IMDI. Such limitations would apply in a situation where a
Fund has no, or limited, new sales for a prolonged period of time.
Under the 40 Act, each of the Funds must file annually a current
Prospectus and Statement of Additional Information with, and pay registration
fees to, the SEC. The public may read and copy any material filed with the SEC
at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. Additionally, each of the Funds
must pay registration fees in some or all of the states.
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<PAGE> 19
Under the 40 Act and rules thereunder, each of the Funds is required
to obtain shareholder approval for certain changes in its operations including
changes to its investment advisory contracts, a change in control of its
adviser or IMDI, its principal underwriter, or a change in its fundamental
investment objective or other fundamental policies. The 40 Act also requires
that each of the Funds' investment advisory contracts be annually approved by
the Funds' Board of Trustees.
As a registered broker-dealer, IMDI is subject to net worth and
capital requirements, bonding requirements and detailed rules of practice as
well as general anti-fraud provisions.
REPORTS TO SECURITIES HOLDERS
Security holders will receive an annual report containing financial
statements on which there will be an opinion expressed by an independent public
accountant. Security holders will also receive unaudited quarterly condensed
financial statements.
ITEM 2. FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL DATA
The tables below indicate selected consolidated financial information
for MIMI as of and for each of the five years in the period ended
March 31, 1999. The selected consolidated financial data have been
derived from the Company's consolidated financial statements, which
have been audited by PricewaterhouseCoopers LLP, independent certified
public accountants. The following data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's Consolidated Financial
Statements and notes thereto included elsewhere in this document.
(Note: all figures are in US dollars except where otherwise stated).
<TABLE>
<CAPTION>
For the year ended March 31,
1999 1998 1997 1996 1995
-------------- ------------ -------------- ------------ -------------
(in thousands of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
Revenues $ 66,256 $ 65,096 $ 37,143 $ 21,837 $ 16,247
Net Income 8,549 9,526 7,291 2,053 12
Per common share:
Net income - basic 0.45 0.51 0.44 0.13 0.00
Net income - diluted 0.44 0.49 0.43 0.13 0.00
</TABLE>
<TABLE>
<CAPTION>
As of March 31,
1999 1998 1997 1996 1995
-------------- ------------ -------------- ------------ ---------------
(In thousands of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
Total Assets Under
Management $4,768,271 $5,246,088 $3,806,813 $2,176,607 $1,422,609
Total Assets 68,169 61,925 64,405 25,951 22,350
Total Liabilities 15,865 18,475 32,836 6,976 5,428
Stockholders' equity 52,304 43,450 31,569 18,975 16,922
</TABLE>
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<PAGE> 20
FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10 under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations", and
elsewhere in this report constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause the actual results, performance or achievements
of the Company to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions; the loss of, or the failure to replace, any significant
sub-advisory relationship; changes in the relative investment performance;
investor sentiment for international investing; the Year 2000 issue. These
forward-looking statements speak only as of the date of this Form 10. The
Company expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1998
Net assets under management, exclusive of assets of the Canadian
Funds, for which MIMI provided sub-advisory services to MFC, decreased 13% to
$3,338 million at June 30, 1999 from $3,815 million at June 30, 1998. Of the
$477 million decrease, a $673 million decrease was attributable to net
redemptions (sales less redemptions) which was offset by a $196 million
increase which was attributable to market appreciation.
Net sales for the quarter ended June 30, 1999 decreased by $150
million compared to the quarter ended June 30, 1998 due to (i) a $108 million
increase in redemptions over the prior quarter and (ii) a $42 million decrease
in sales. The increase in redemptions and the decrease in sales are primarily
caused by (i) the closing of IIF to new shareholders and (ii) in management's
opinion, investors' apprehension of the world financial markets.
REVENUES
Total revenues decreased 17% to $14.9 million for the quarter ended
June 30, 1999 from $17.9 million for the comparable period last year. The
decrease is primarily due to the decrease in assets under management, as
discussed above. The following is an explanation of the increase or decrease in
each major category.
Management fees decreased 14%, to $8,058,000 for the quarter ended
June 30, 1999 from $9,340,000 for the comparable period last year, resulting
from a decrease in assets under management.
Sub-advisory fees from the Canadian Funds increased 17%, or $266,000
to $1,807,000 for the quarter ended June 30, 1999 from $1,541,000 for the
comparable period last year. This increase is attributable to a 31% increase in
the Canadian Funds' assets to $1,716 million at June 30, 1999, from $1,309
million at June 30, 1998.
20
<PAGE> 21
12b-1 Service and Distribution fees received from the Funds decreased
by $2,056,000, to $2,136,000 for the quarter ended June 30, 1999, from
$4,192,000 for the comparable period last year, primarily due to a decrease in
assets under management and the sale of the Class B deferred selling commission
asset. As a result of the sale, the purchaser is entitled to receive 12b-1
Distribution Fees on the mutual fund shares represented by the deferred selling
commission asset sold. Consequently, there has been a decrease in the asset
base on which the Company collects 12b-1 Distribution related Fees (See
Liquidity and Capital Resources).
Transfer agent, administrative services and fund accounting fees
decreased 9%, to $1,702,000 for the quarter ended June 30, 1999 from $1,877,000
for the comparable period last year. This decrease is primarily due to a
decrease in assets under management.
Underwriting fees decreased 35% to $36,000 for the quarter ended June
30, 1999 from $55,000 for the comparable period last year, due to the overall
decrease in sales volume.
Redemption fees decreased 92% to $50,000 for the quarter ended June
30, 1999 from $633,000 for the comparable period last year. This decrease is
due to the sale of the Class B deferred selling commission asset. As a result
of the sale, the purchaser is entitled to receive redemption fees on the mutual
fund shares represented by the deferred selling commission asset sold. (See
Liquidity and Capital Resources).
Interest, dividends and other income increased 375% to $1,084,000 for
the quarter ended June 30, 1999 from $228,000 for the comparable period last
year. This increase is due to (i) an increase in average cash balances
primarily due to cash received from the sale of the Class B deferred selling
commission asset and (ii) the appreciation in the market value of our
investments.
EXPENSES
Total operating expenses decreased by 9% to $12.7 million for the
quarter ended June 30, 1999 from $14.0 million for the comparable period last
year. The decrease is primarily due to (i) the amortization of deferred selling
commissions as a result of the sale of Class B deferred selling commission
asset (See Liquidity and Capital Resources); (ii) sub-advisory fees expense due
to a decrease in the net assets of IIF, for which a third party provides
investment advisory services; and (iii) 12b-1 Service fees resulting from a
decrease in average assets under management.
Sales literature, advertising and promotion increased 67%, or
$503,000, to $1,250,000 for the quarter ended June 30, 1999 from $747,000 for
the comparable period last year. This increase is related to an increase in the
sales force and related marketing expenditures for the promotion of new and
existing products.
12b-1 Services fees paid to broker/dealers decreased $295,000, or 12%
to $2,163,000 for the quarter ended June 30, 1999, from $2,458,000 for the
comparable period last year, due to the decrease in assets under management.
Employee compensation and benefits increased 5%, or $155,000, to
$2,981,000 for the quarter ended June 30, 1999 from $2,826,000 for the
comparable period last year. This increase is due to higher staffing levels at
June 30, 1999 as compared to June 30, 1998.
Sub-advisory fees paid to the sub-advisor of IIF, decreased $603,000,
or 15% to $3,484,000 for the quarter ended June 30, 1999, from $4,087,000 for
the comparable period last year, due to the decrease in net assets of IIF.
Amortization of deferred selling commissions was $223,000 for the
quarter ended June 30, 1999, as compared to $1,698,000 for the comparable
period last year. This decrease was attributable to the sale of the deferred
selling commission asset. (See Liquidity and Capital Resources).
21
<PAGE> 22
General and administrative expenses increased $395,000, or 37%, to
$1,464,000 for quarter ended June 30, 1999, from $1,069,000 for the comparable
period last year. This increase is primarily related to the expensing of
certain fund organization costs resulting from the adoption of Statement of
Position No. 98-5, Reporting on the Cost of Start-Up Activities.
There was no interest expense for the quarter ended June 30, 1999 as
compared with $123,000 for the comparable period last year. The line of credit
with BankBoston, N.A. was repaid when the deferred selling commission asset was
sold in fiscal year 1999. (See Liquidity and Capital Resources).
IMI voluntarily limits total fund expenses for certain Ivy Funds and
bears expenses in excess of such limits. The increase of $68,000, to $451,000
for the quarter ended June 30, 1999 in the reimbursement to the Funds for
expenses is primarily attributable to the decline in the net assets of many of
the Funds that IMI reimburses.
YEAR ENDED MARCH 31, 1999 COMPARED WITH YEAR ENDED MARCH 31, 1998
Net assets under management, exclusive of assets of the Canadian Funds
for which MIMI provided sub-advisory services to MFC, decreased 15% to $3,331
million at March 31, 1999 from $3,918 million at March 31, 1998. Of the $587
million decrease, $523 million was attributable to net redemptions (sales less
redemptions) and the balance of $64 million was attributable to market
depreciation and cash distributions. Net sales decreased by $1,133 million
compared to the year ended March 31, 1998 due to (i) a $449 million increase in
redemptions over the prior year which the Company believes was primarily
resulting from investors' apprehension of the world financial markets and (ii)
a $684 million decrease in sales primarily due to the closing of IIF to new
shareholders in April 1997.
At the end of fiscal year 1999, the net assets of the Canadian Funds
for which MIMI provides sub-advisory services to MFC totaled approximately
$1,437 million as compared to $1,328 million at the previous fiscal year-end,
representing an 8% increase.
REVENUES
Total revenues increased 2% to $66.3 million for the fiscal year 1999
from $65.1 million for the fiscal year 1998. The increase is primarily due to
the increase in average assets under management and the fees derived therefrom.
The following is an explanation of the increase or decrease in each major
category.
Management fees increased 2%, or $590,000, to $33.8 million for the
year ended March 31, 1999 from $33.2 million for the year ended March 31, 1998,
solely attributable to the increase in average assets under management.
Sub-advisory fees from the Canadian Funds increased 8%, or $438,000 to
$6.0 million in fiscal year 1999 from $5.6 million in fiscal year 1998. This
increase can be attributed to (i) the growth in assets of the Canadian Funds as
discussed above and (ii) the addition of one fund for which sub-advisory
services were rendered in fiscal year 1999 as compared to fiscal year 1998.
12b-1 Service and Distribution Fees received from the Funds increased
1% to $14.7 million for the year ended March 31, 1999 from $14.6 million for
the year ended March 31, 1998, as average assets for the year ended March 31,
1999 were above the year ended March 31, 1998. As a result of the sale of the
Class B deferred selling commission asset, MIMI estimates that 12b-1
Distribution Fees will decrease by approximately $5.8 million in fiscal year
2000. (See Liquidity and Capital Resources).
Administrative, fund accounting and transfer agent fees during fiscal
year 1999 of $7.1 million were comparable with fiscal year 1998 amounts.
22
<PAGE> 23
Underwriting fees decreased 73% to $141,000 for the fiscal year 1999
from $516,000 for the fiscal year 1998, due to the overall decrease in sales
volume.
Redemption fees in the form of CDSCs, increased $1.2 million to $3.1
million for fiscal year 1999 from $1.9 for fiscal year 1998. This increase can
be attributed to the $125 million increase in Class B and C share redemptions
over the last fiscal year. Redemption fees in the form of CDSCs, in fiscal year
2000 are expected to decrease as a result of the sale of the Class B deferred
selling commission asset. It is difficult to quantify the decrease since MIMI
cannot control the redemption rates in the Funds but management estimates that
redemption fees will decrease by approximately $2.2 million. (See Liquidity and
Capital Resources).
Interest, dividends, and other revenue decreased 31% to $1,435,000 in
the fiscal year 1999 from $2,070,000 in the fiscal year 1998. Other revenue
during fiscal year 1998 included a gain of $1 million from MIMI's transfer of
its four municipal funds comprising the Mackenzie Series Trust. Interest and
dividend income for fiscal year 1999 increased $559,000 over fiscal year 1998
primarily due to MIMI's higher cash balances. MIMI's cash and cash equivalents
increased to $51.0 million at March 31, 1999 from $20.9 million at March 31,
1998.
EXPENSES
Total operating expenses increased by 6% to $52.6 million for fiscal
year 1999 from $49.6 million for fiscal year 1998 due to (i) 12b-1 Service Fees
paid to broker/dealers and sub-advisory fees paid to an unrelated third party
resulting from a higher level of average assets under management as discussed
above; (ii) an increase in staffing levels and office space; and (iii) an
increase in reimbursement to the Funds for expenses due to a decrease in assets
under management in certain of the Funds.
Sales literature, advertising and promotion expenses decreased 37%, or
$1.5 million due to a more tightly focused advertising and marketing program.
12b-1 Service Fees paid to broker/dealers increased $1,954,000, or 28%, due to
the increase in average assets under management.
Employee compensation and benefits increased by $732,000, or 8%, due
to (i) an increase in the number of employees to 123 at March 31, 1999 from 117
at March 31, 1998; (ii) salary and cost-of-living adjustments; and (iii) an
increase in 401(k) company contributions due to an increase in the Company's
matching contributions.
Sub-advisory fees paid to Northern Cross, the sub-advisor to IIF,
increased $153,000, or 1%, due to an increase in average assets under
management in the fund.
Amortization of deferred selling commissions was $6,202,000 for fiscal
year 1999 as compared to $7,065,000 for fiscal year 1998, or a decrease of 12%.
This decrease was attributable to (i) the decline in Class B and C share sales;
and (ii) the sale of the Class B deferred selling commission. As a result of
the sale of the Class B deferred selling commission asset, MIMI estimates that
the amortization of Class B deferred selling commissions will decrease by
approximately $5.3 million in fiscal year 2000. (See Liquidity and Capital
Resources).
General and administrative expenses increased $1,325,000, or 36%,
primarily due to increases in (i) expensing of Fund organization costs
resulting from the adoption of Statement of Position No. 98-5, Reporting on the
Costs of Start-up Activities; (ii) the outsourcing of certain
technology-related services; (iii) travel costs related to new product
development; and (iv) costs, including office and computer supplies and other
general operating expenses.
Interest expense decreased $10,000, or 2%, due to lower interest rates
during fiscal year 1999 as compared to fiscal year 1998.
Occupancy and equipment rental increased $195,000, or 25%, due to the
expansion of office space to accommodate the increased staff.
23
<PAGE> 24
IMI voluntarily limits total fund expenses for certain Ivy Funds and
bears expenses in excess of such limits. The increase of $716,000, to
$1,667,000, in the reimbursement to the Funds for expenses is primarily
attributable to the decline in the net asset values of many of the Funds that
IMI reimburses.
YEAR ENDED MARCH 31, 1998 COMPARED TO YEAR ENDED MARCH 31, 1997
Net assets under management, exclusive of assets of the Canadian
Funds, for which MIMI provided sub- advisory services to MFC, increased 38% to
$3,918 million at March 31, 1998 from $2,845 million at March 31, 1997. Of the
$1,073 million increase, $611 million was attributable to net sales (gross
sales less redemptions) and the balance of $462 million was attributable to
market appreciation and dividend reinvestments. Net sales decreased by $451
million compared to the year ended March 31, 1997 due to (i) a $251 million
increase in redemptions over the prior year primarily resulting from investors'
apprehension of the world financial markets, particularly during the last two
quarters of the fiscal year, and (ii) a $200 million decrease in sales
primarily due to the closing of IIF to new shareholders in April 1997. At the
end of fiscal year 1998, the net assets of the Canadian Funds for which MIMI
provides sub-advisory services to MFC totaled approximately $1,328 million as
compared to $962 million at the previous fiscal year-end, representing a 38%
increase.
REVENUES
Total revenues increased 75% to $65.1 million for the fiscal year 1998
from $37.1 million for the fiscal year 1997. The increase is primarily due to
the increase in assets under management and the fees derived therefrom. The
following is an explanation of the increase or decrease in each major category.
Management fees increased $14.9 million to $33.2 million for the year
ended March 31, 1998 from $18.3 million for the year ended March 31, 1997
solely attributable to the increase in assets under management. As discussed
above, U.S. assets under management increased 38% to $3,918 million at March
31, 1998 from $2,845 million at March 31, 1997. While IIF is closed to new
investors, the Company benefited from the large increase in assets under
management in that fund. IIF contributed $13.7 million of the $14.9 million
increase in management fees as purchases by existing shareholders, including
401(k) plans, continued and the net assets of the fund increased.
Sub-advisory fees from the Canadian Funds increased $1.6 million to
$5.6 million in fiscal year 1998 from $4.0 million in fiscal year 1997. This
increase can be attributed to (i) the growth in assets of the Canadian Funds as
discussed above and (ii) the addition of two funds for which sub-advisory
services were rendered in fiscal year 1998 as compared to fiscal year 1997.
12b-1 Service and Distribution Fees received from the Funds increased
106% to $14.6 million for the year ended March 31, 1998 from $7.1 million for
the year ended March 31, 1997. This increase is attributable, in part, to an
increase in assets under management and to the increase in net sales of Class B
and C shares. These shares bear a 12b-1 Distribution Fee of 0.75% of the Funds'
average daily net assets. Net sales for Class B and C shares for the year ended
March 31, 1998 were $267.9 million as compared to $219.5 million for the year
ended March 31, 1997, representing a 22% increase.
Administrative, fund accounting and transfer agent fees totaled $7.1
million and $5.7 million during fiscal years 1998 and 1997, respectively. This
25% increase resulted from an increase in assets under management, which caused
administrative and fund accounting fees to increase.
Underwriting fees decreased 39% to $516,000 for the fiscal year 1998
from $843,000 for the fiscal year 1997, as sales of shares that do not bear a
front-end sales charge replaced sales of Class A shares.
Redemption fees in the form of CDSCs increased $1,423,000 to
$1,946,000 for fiscal year 1998 from $523,000 for fiscal year 1997. This
increase can be attributed to (i) a broader Class B and C shareholder base and
increases in Class B and C sales and assets; and (ii) the $60 million increase
in Class B and C share redemptions over the previous fiscal year.
24
<PAGE> 25
Interest, dividends, and other revenue increased 177% to $2,070,000 in
the fiscal year 1998 from $746,000 in the fiscal year 1997, due to (i) a net
gain of $1 million resulting from the transfer of MIMI's four municipal funds
comprising the Mackenzie Series Trust; and (ii) the overnight investing of
MIMI's higher cash balances. MIMI's cash and cash equivalents increased to
$20.9 million at March 31, 1998 from $6.8 million at March 31, 1997.
EXPENSES
Total operating expenses increased 66% from fiscal year 1997 to fiscal
year 1998. The increase was related to four factors: (i) the growth in assets
under management, which increased 38% to $3,918 million as of March 31, 1998
from $2,845 million as of March 31, 1997, resulting in increased payments of
sub-advisory fees and 12b-1 Service Fees; (ii) an increase in the amortization
of deferred selling commissions resulting from a higher Class B and C share
asset base; (iii) increased marketing and public relations efforts; and (iv) an
increase in staff to support the growth in the business.
Sales literature, advertising and promotion expenses increased 65%, or
$1,530,000, due to the increase in literature and advertising of our niche
product funds and funds launched in fiscal year 1998 and the increased demand
for information by prospective investors. 12b-1 Service Fees paid to
broker/dealers increased $3,435,000, or 94%, due to the increase in assets
under management.
Employee compensation and benefits increased by $2,272,000, or 31%,
due to (i) an increase in the number of employees to 117 at March 31, 1998 from
93 at March 31, 1997; (ii) salary and cost-of-living adjustments; and (iii) an
increase in bonuses earned by all employees due to the achievement of certain
performance, profitability and sales targets.
Sub-advisory fees paid to Northern Cross, the sub-advisor to IIF,
increased $7.7 million, or 111%, due to an increase in assets under management
in the fund. IIF's net assets were $2,881 million at March 31, 1998 as compared
to $1,969 million at March 31, 1997.
Amortization of deferred selling commissions increased 155% to
$7,065,000 for fiscal year 1998 from $2,772,000 for fiscal year 1997. This
increase was attributable to the continued popularity of Class B and C shares,
as deferred selling commissions paid to broker/dealers totaled $11 million
during fiscal year 1998.
General and administrative expenses increased $228,000, or 7%,
primarily due to (i) the outsourcing of certain technology-related services;
(ii) an increase in certain expenses due to being a publicly held company; and
(iii) general increases in costs, including office and computer supplies due to
the growth in the business.
Interest expense increased $249,000, or 107%, due to a higher average
balance of principal outstanding on MIMI's credit facility with BankBoston,
N.A. during fiscal year 1998. This credit facility is used to fund the payment
of deferred selling commissions paid on sales of Class B and C shares. At March
31, 1998, the principal outstanding balance was $6.8 million as compared to $5
million at March 31, 1997.
Occupancy and equipment rental increased $135,000, or 21%, due to the
expansion of office space to accommodate the increased staffing levels, as
discussed previously.
IMI voluntarily limits total fund expenses for certain Ivy Funds and
bears expenses in excess of such limits. The decrease of $164,000, to $951,000,
in the reimbursement to the Funds for expenses is primarily attributable to the
sale of the municipal funds that comprised the Mackenzie Series Trust, which
received reimbursement for expenses.
25
<PAGE> 26
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and capital resources are primarily derived from the
operating cash flows received by MIMI from managing and providing investment
advisory services to mutual funds offered in the U.S. and from providing
sub-advisory services to the Canadian Funds. MIMI manages it resources to
ensure the availability of sufficient cash flows to meet all of its financial
commitments.
In March 1999, the Class B deferred selling commission asset was sold
to an unrelated third party. The sale resulted in proceeds of approximately $21
million. The cash received will be used for general corporate purposes. As a
result of the sale of the Class B deferred selling commission asset, the
purchaser will receive 12b-1 Distribution Fees and any contingent deferred
sales charges upon redemption of the asset sold. MIMI estimates that cash flows
in fiscal year 2000 will decrease by approximately $8 million due to the
estimated decrease in 12b-1 Distribution Fees and redemption fees resulting
from the transaction. In March 1999, MIMI repaid BankBoston, N.A. all amounts
outstanding under its credit facility, which was used to fund the commissions
paid to brokers.
MIMI is currently negotiating a $10 million line of credit with a
local lending institution. The purpose of the line is for general working
capital and short-term capital expenditures.
At March 31, 1999, MIMI increased its position in cash and cash
equivalents to $51.0 million from $20.9 million at March 31, 1998. This $30.1
million increase resulted from (i) cash flows from operating activities of
$16.5 million; (ii) net proceeds of $20.1 million from the sale of the Class B
deferred selling commission asset, which are included in cash flows from
investing activities; (iii) repayment of $6.8 million under its credit
facility; and (iv) a net of $305,000 from the exercise of stock options and the
purchase and retirement of MIMI's common stock. Included in cash equivalents at
March 31, 1999 and June 30, 1999 are $29.4 million and $29.7 million,
respectively, of short-term investments that can be readily converted to cash.
At June 30, 1999, MIMI decreased its cash position in cash and cash
equivalents to $39.5 million from $51.0 million at March 31, 1999. This $11.5
million decrease resulted from (i) cash flows used in operating activities of
$9.7 million, primarily related to federal and state income taxes paid; (ii)
purchases of property and equipment of $196,000; and (iii) purchase and
retirement of MIMI's common stock for $1,593,000.
The payment of deferred selling commissions to broker/dealers
decreased to $3.9 million for fiscal year 1999 from $11.5 million for fiscal
year 1998. For the quarter ended June 30, 1999, the payments of deferred
selling commissions to broker/dealers decreased to $689,000 from $1,642,000 for
the quarter ended June 30, 1998. The decreases in deferred selling commissions
is believed to be attributable primarily to the closing of IIF to new investors
and, in the opinion of management, investor apprehension towards international
investing. Commission payments made during the fiscal year 1999 and the quarter
ended June 30, 1999 were funded internally from operations.
Expenditures for capital assets were $696,000 and $837,000 for the
fiscal years ended March 31, 1999 and 1998, respectively. Expenditures for
capital assets were $196,000 and $232,000 for the quarters ended June 30, 1999
and June 30, 1998, respectively. These expenditures were primarily for computer
equipment and software enhancements, and were internally funded. MIMI
anticipates investing approximately an additional $500,000 during fiscal year
2000 in equipment and technology.
YEAR 2000 PROJECT
In 1996, MIMI began the process of identifying, evaluating and
implementing changes to its critical computer programs and equipment to address
the year 2000 issue. MIMI's year 2000 project plan includes discovery,
assessment, remediation, system testing, contingency planning and internal
certification. MIMI's business areas are in various stages of completion of
this project plan. MIMI has completed 100% of the assessment, remediation and
system testing for internal mission critical information technology and
non-information technology systems. Internal systems have been certified as
being year 2000 compliant. MIMI continues integration testing among internal
systems. MIMI continues testing with third-party vendors of mission-critical
information technology systems as well. The testing is precautionary and will
continue through the end of calendar year 1999.
26
<PAGE> 27
To date, MIMI has incurred expenses of approximately $18,000 during
fiscal years 1997 and 1998 and $47,000 during fiscal year 1999 related to
discovery, assessment, strategy, remediation, system testing and internal
certification. MIMI expects to incur another $20,000 of such expenses during
fiscal year 2000. Existing staff has been redeployed to address the year 2000
project. MIMI does not believe that the redeployment of existing staff has had
or will have a material adverse effect on its business, results of operations
or financial position.
The impact of year 2000 issues on MIMI will depend not only on the
corrective actions that it takes, but also on the way in which year 2000 issues
are addressed by businesses and other third parties that provide services or
data to, or receive services or data from, MIMI. To reduce this exposure, MIMI
has an on-going process of contacting mission critical third-party vendors to
determine their year 2000 plans and target dates. As of July 15, 1999, MIMI has
not been advised by any such third-party vendors that they will not be year
2000 compliant. However, in many cases, MIMI is not in a position to verify the
accuracy or completeness of the information it receives from third parties and
as a result is dependent on their willingness and ability to disclose, and to
address, their Year 2000 problems. While MIMI has received assurances from some
of its critical vendors regarding Year 2000 compliance, such assurances have
been qualified and it is not clear whether or not such assurances are legally
enforceable. Thus, notwithstanding MIMI's efforts, there can be no assurance
that mission critical third-party vendors will adequately address their year
2000 issues.
MIMI has developed contingency plans to address risks associated with
year 2000 issues. These activities include retaining and testing off-site
recovery procedures with a third party service to ensure that computer and
communications hardware will function. In addition, MIMI is developing and
testing manual procedures as alternatives to mission critical processes.
Until the year 2000 event actually occurs and for a period of time
thereafter, there can be no assurance that there will be no problems related to
year 2000. The year 2000 technology challenge is an unprecedented event. If
year 2000 issues are not adequately addressed by MIMI and third parties, MIMI
could face, among other things, business disruptions, operational problems,
financial losses, legal liability and similar risks, and MIMI's business,
results of operations and financial position could be materially adversely
affected.
ITEM 3. PROPERTIES
The Company's corporate, research and administrative offices are located in
leased premises, which consist of the following:
o Approximately 27,000 square feet located at Via Mizner Financial Plaza,
700 South Federal Highway, Boca Raton, Florida 33432 for an average rent
per year of approximately $680,000. The lease expires year 2001.
o Approximately 5,300 square feet located at 1239-1287 East Newport Center
Drive, Suite 106 & 205, Deerfield Beach, Florida 33442 for an average rent
per year of $70,000. The lease expires year 2001.
27
<PAGE> 28
o Approximately 1,800 square feet located at 200 East Broward Boulevard,
Suite 1100, Fort-Lauderdale, Florida 33301 for an average rent per year of
$51,000. The lease expires year 2000.
The Company's headquarters are located in the Boca Raton facility.
All premises are leased from unaffiliated entities, and the Company believes
that the facilities currently occupied by it are satisfactory for its present
needs.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1999, certain information as to
holdings of the Company's common stock by the shareholders of the Company at
that date.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Title of Class Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
> 5% Ownership Common Stock, Mackenzie Financial 15,987,910 (1) 83.20%
$.01 par value per share Corporation, ATTN:
Mr. James T. Dryburgh
C.A., Vice President
Finance
150 Bloor Street West,
Suite 400
Toronto, Ontario
M5S 2X9 Canada
- ------------------------------------------------------------------------------
> 5% Ownership Canadian Depository 2,091,180 (2) 10.89%
Common Stock, $.01 par value For Securities Ltd.
per share 25 The Esplanade
Box 1038 Station A
Toronto, Ontario
M5E IW5 Canada
- ------------------------------------------------------------------------------
</TABLE>
(1) All shares are owned of record and beneficially.
(2) The entity set forth above is the shareholder of record (for the benefit
of its customers) and may be deemed to be the beneficial owner of certain
of the shares listed for certain purposes under the securities laws,
although it generally does not have an economic interest in these shares
and would ordinarily disclaim any beneficial ownership therein.
The following table sets forth, as of March 31, 1999, certain information as to
the holdings of the Company by the Company's officers and directors.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Amount and Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class
Common Stock/Options
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock/Stock Options James W. Broadfoot III 44,000/141,000 *
Common Stock/Stock Options Keith J. Carlson** 0/127,500 *
Common Stock/Stock Options C. William Ferris 20,000/123,500 *
Common Stock/Stock Options Michael G. Landry*** 0/190,000 *
Common Stock/Stock Options Barbara J. Trebbi 0/79,000 *
Common Stock/Stock Options All Directors & Officers 82,200/671,000 *
as a group (12 persons)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 29
* Represent less than 1%
** Keith J. Carlson served as President and Chief Executive Office from July
1999 to present. Prior thereto, he served as Executive Vice President and
Chief Operating Officer since October 1997.
*** Michael G. Landry served as President and Chief Executive Officer from
August 1987 to July 1999.
There are no arrangements known to the Company, including any pledge by any
person of the securities of the Company or MFC, the operation of which may at a
subsequent date result in a change in control of the Company.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names, municipalities of residence, the
position held with MIMI and the principal occupation during the past five years
of the directors and senior officers of MIMI. All directors have been elected
to hold office until the next annual meeting of shareholders of MIMI.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
<S> <C> <C>
James W. Broadfoot III Age Senior Vice President, Director and Portfolio Manager since
Boca Raton, Florida 56 June 1995. Senior Vice President and Portfolio Manager
since August 1990. President, IMI since
October 1997. President and Interested Trustee of Ivy Fund
since July 1999. Prior thereto, Vice President of Ivy Fund
since June 1996.
Keith J. Carlson Age President, Chief Executive Officer, and Director since July
Coral Springs, Florida 43 1999. Prior thereto, Executive Vice President and Chief
Operating Officer from December 1997 to July 1999. Senior
Vice President August 1989 to December 1997. Director from
April 1985 to October 1996. Director of IMDI since June
1993. President and Chief Executive Officer of IMDI since
December 1994. Director of IMI since November 1992. Senior
Vice President IMI since August 1994. President of IMSC from
June 1993 to February 1996. Director of IMSC since June
1993. Chairman and Trustee of Ivy Fund since July 1999.
Prior thereto, President of Ivy Fund since December 1996.
President and Trustee of Mackenzie Solutions since November
1998.
Alan J. Dilworth Age Director of MIMI since December 1996. President, Alan J.
Toronto, Canada 68 Dilworth Consulting, Inc. , from September 1995 to present.
Prior thereto, Partner and Senior Counsel, Deloitte &
Touche, Chartered Accountants, from 1993 to 1995. Director
of MFC since January 1999. Director and Chairman of St.
Michael's Hospital (Toronto) Research Institute since 1994.
Director and Chairman of St. Michael's Hospital Crown
Foundation since December 1996. Director and Secretary of
Mary Centre of the Archdiocese of Toronto since June 1996.
Director of Toronto Lawn Tennis Club since April 1997.
C. William Ferris Age Senior Vice President, Chief Financial Officer and
Palm Beach Gardens, Florida 54 Secretary/Treasurer since June 1995. Director, IMSC since
December 1994. President, IMSC since February 1996. Director
and Senior Vice President of IMDI since December 1994.
Senior Vice President, IMI since December 1994. Secretary
and Treasurer of Ivy Fund since February 1994. Vice
President, Secretary and Treasurer of Mackenzie Solutions
since November 1998.
</TABLE>
29
<PAGE> 30
<TABLE>
<CAPTION>
<S> <C> <C>
James L. Hunter Age Director since September 1994. Chairman from 1995
Etobicoke, Ontario 47 to March 1997. Director, President and Chief Executive
Officer, MFC, since 1997. Executive Vice President
and Chief Executive Officer from September 1992 to
January 1997. Prior thereto, Chief Financial Officer and
Senior Vice President from September 1992 to May 1995.
Director and Chairman of Cundill Funds Inc. since September
1998. Director and Chairman of Execuhold Investment Ltd.,
since March 1992. Director of IMI since August 1994.
Director and Chairman of Mackenzie Financial Services since
October 1994. Director and Chairman of Mackenzie M.E.F.
Management Inc. since August 1994. Director and Chairman
M.R.S. Securities Services Inc. since June 1996. Director and
Chairman of M.R.S. Trust Co. since September 1993. Director
and Chairman of Multiple Retirement Services Inc. from March
1993.
Neil Lovatt Age Chairman and Director since September 1994.
Unionville, Ontario 58 Vice-Chairman of MFC since October 1994. Prior thereto,
Senior Vice President, MFC, from April 1992 to October 1994.
Prior thereto, Vice President, MFC, from April 1989 to April
1992. Director of Mackenzie Financial Services Inc. since
October 1994. Director of IMI since August 1994. Director
of M.R.S. Trust Company since June 1999. Governor of
Cundill Funds (Board of Governors) since September 1998.
Alasdair J. McKichan Age Director since November 1994. Associate of KPMG
Cambellville, Ontario 68 since February 1995. CEO of McKichan Associates since
December 1994. Prior thereto, President, Retail Council of Canada
from 1975 to 1994. Director of MFC since 1994.
Allan S. Mostoff, Esq. Age Director since December 1998. Senior Partner of
Falls Church, Virginia 66 Dechert Price & Rhoads since March 1976.
Michael R. Peers Age Director since October 1996. Director, Ivy Fund,
Hamilton, Bermuda 69 from 1972 to 1996. Chairman, Ivy Fund, from 1974 to
December 2, 1996. Chairman and Principal, Ivy Management,
Inc. from 1980 to 1992.
Dolph W. von Arx Age Director of MIMI. Chairman, NCH Healthcare System, since
Naples, Florida 64 June 1998. Prior thereto, Chairman, Morrison Restaurants
Inc. from February 1966 to June 1998. Chairman, President
and Chief Executive Officer of Planters Lifesavers Company,
an affiliate of R.J.R. Nabisco, Inc. from 1988 to 1992.
Director of Ruby Tuesdays, Inc. since 1993. Director of
Cree Research Inc. since 1992. Director of International
Multifoods Corp. since 1997. Director of Northern Trust of
Florida Corp. since 1999. Director of BMC Fund Inc. since
1996.
</TABLE>
30
<PAGE> 31
<TABLE>
<CAPTION>
<S> <C> <C>
Vice President
Thomas H. Bivin, Jr. Age 60 Vice President and National Sales Manager since September
1999. Executive Vice President and National Sales Manager
for Ivy Mackenzie Distributors, Inc. since August 1999.
Prior thereto, wholesaler for Fidelity Investments and
Eaton Vance.
Barbara J. Trebbi Age 33 Vice President and Portfolio Manager since September 1994.
Fort-Lauderdale, Florida Prior thereto, Assistant Vice President from August
1991 to September 1994. Senior Vice President, IMI since
February 1996
</TABLE>
The members of Audit, Finance and Risk Committee are Alan J. Dilworth,
Chairman, James L. Hunter and Michael R. Peers. The members of the Human
Resources and Corporate Governance Committee are Michael R. Peers, Chairman,
Alasdair J. McKichan, Allan S. Mostoff, Esq. and Dolph W. von Arx.
ITEM 6. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NAME AND FISCAL SALARY BONUS OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) COMPENSATION ($) (#) COMPENSATION ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999 375,000 275,000 190,000
Michael G. Landry * 1998 375,000 484,375 0 100,000 0
1997 350,000 422,860 640,000
- --------------------------------------------------------------------------------------------------------------------------
1999 250,000 245,406 141,000
James W. Broadfoot 1998 250,000 343,125 0 90,000 0
Senior Vice-President 1997 225,000 335,608 144,000
- --------------------------------------------------------------------------------------------------------------------------
1999 250,000 188,000 127,500
Keith J. Carlson** 1998 250,000 300,000 0 156,000 0
1997 185,000 237,110 144,000
- --------------------------------------------------------------------------------------------------------------------------
C. WIlliam Ferris
Senior Vice- 1999 165,000 130,000 123,500
President, Chief 1998 165,000 233,154 0 130,000 0
Financial Officer and 1997 150,000 184,195 90,000
Secretary/Treasurer
- --------------------------------------------------------------------------------------------------------------------------
1999 175,000 135,253 79,000
Barbara J. Trebbi 1998 146,000 118,700 0 76,000 0
Vice-President 1997 120,000 76,160 76,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
o Long Term Compensation Awards reflect the aggregate amounts outstanding
at the end of each fiscal year.
31
<PAGE> 32
o As permitted by applicable securities regulation, perquisites and other
personal benefits which do not exceed the lesser of $50,000 and 10% of
the total of the annual salary and bonus for any of the named executive
officers have not been disclosed.
* Michael G. Landry served as President and Chief Executive Officer from
August 1987 to July 1999.
** Keith J. Carlson served as President and Chief Executive Office from July
1999 to present. Prior thereto, he served as Executive Vice President and
Chief Operating Officer since October 1997.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
FROM 4/1/1998 TO 3/31/1999
<TABLE>
<CAPTION>
- ----------------- ---------- ---------- ---------- --------------- ------------ ----------- ------------- -----------
NAME OPTIONS PERCENT OPTION MARKET PRICE EXPIRATION POTENTIAL REALIZABLE VALUE
GRANTED OF TOTAL PRICE ON GRANT DATE DATE 0% 5% 10%
GRANTED U.S. $ U.S. $
- ----------------- ---------- ---------- ---------- --------------- ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James W. 21,000 3.12% 4.3000 4.3000 3/26/2004 $0 $24,948 $55,129
Broadfoot SSN 17,000 2.52% 5.7800 5.7800 9/10/2003 $0 $27,147 $59,989
###-##-#### 13,000 1.93% 9.6200 9.6200 5/29/2003 $0 $34,552 $76,350
- ----------------- ---------- ---------- ---------- --------------- ------------ ----------- ------------- -----------
Keith J. 27,500 4.08% 4.3000 4.3000 3/26/2004 $0 $32,670 $72,193
Carlson SSN 22,600 3.35% 5.7800 5.7800 9/10/2003 $0 $36,090 $79,750
###-##-#### 17,400 2.58% 9.6200 9.6200 5/29/2003 $0 $46,246 $102,192
- ----------------- ---------- ---------- ---------- --------------- ------------ ----------- ------------- -----------
C. William 21,000 3.12% 4.3000 4.3000 3/26/2004 $0 $24,948 $55,129
Ferris SSN 12,500 1.85% 5.7800 5.7800 9/10/2003 $0 $19,961 $44,109
###-##-#### 10,000 1.48% 9.6200 9.6200 5/29/2003 $0 $26,578 $58,731
- ----------------- ---------- ---------- ---------- --------------- ------------ ----------- ------------- -----------
Michael G. 40,000 5.93% 4.3000 4.3000 3/26/2004 $0 $47,520 $105,008
Landry SSN 28,500 4.23% 5.7800 5.7800 9/10/2003 $0 $45,512 $100,569
###-##-#### 21,500 3.19% 9.6200 9.6200 5/29/2003 $0 $57,143 $126,272
- ----------------- ---------- ---------- ---------- --------------- ------------ ----------- ------------- -----------
Barbara J. 16,000 2.37% 4.3000 4.3000 3/26/2004 $0 $19,008 $42,003
Trebbi SSN 13,000 1.93% 5.7800 5.7800 9/10/2003 $0 $20,760 $45,874
###-##-#### 10,000 1.48% 9.6200 9.6200 5/29/2003 $0 $26,578 $58,731
- ----------------- ---------- ---------- ---------- --------------- ------------ ----------- ------------- -----------
</TABLE>
During the fiscal year ended March 31, 1999, grants of options to
purchase 291,000 common shares of the Company were issued to the named
executive officers. The options were granted on May 29, 1998,
September 10, 1998 and March 26, 1999 at an exercise price of $14.00
(Canadian), $8.80 (Canadian) and $6.50 (Canadian), respectively per
share, being the share price at the closing of trading on May 28,
1998, September 9, 1998, and March 25, 1999, respectively.
EXERCISE OF STOCK OPTIONS
The following table contains details of the shares acquired on: (i)
the exercise of options by the named executive officers during the
most recent fiscal year; (ii) the value realized from the exercise of
those options; (iii) the unexercised options at March 31, 1999; and
(iv) the financial year-end value of options previously granted to the
named executive officers, but which have not yet been exercised:
Aggregated Options Exercised during the Most Recently Completed Financial Year
and Financial Year -End Option Values
<TABLE>
<CAPTION>
- --------------------- --------------------- ---------------------- ------------------------- -------------------------
Value of Unexercised
Number of Unexercised In-the-Money Options at
Name Shares Acquired on Value Realized Options at Fiscal Fiscal Year-end (U.S.$)
Exercise (#) ($) Year-end Exercisable/ Exercisable/
Unexercisable Unexercisable
- --------------------- --------------------- ---------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
James W. Broadfoot 0 0 90,000/51,000 0/$6,930
- --------------------- --------------------- ---------------------- ------------------------- -------------------------
Keith J. Carlson 96,000 728,160 60,000/67,500 0/$9,075
- --------------------- --------------------- ---------------------- ------------------------- -------------------------
C. William Ferris 50,000 376,000 80,000/43,500 $101,400/$6,930
- --------------------- --------------------- ---------------------- ------------------------- -------------------------
Michael G. Landry 0 0 100,000/90,000 0/$13,200
- --------------------- --------------------- ---------------------- ------------------------- -------------------------
Barbara J. Trebbi 36,000 273,960 40,000/39,000 0/$5,280
- --------------------- --------------------- ---------------------- ------------------------- -------------------------
</TABLE>
32
<PAGE> 33
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not Applicable
ITEM 8. LEGAL PROCEEDINGS
There are currently no legal proceedings pending to which the Company
is a party or of which any of its property is the subject. Further, there are
no material legal proceedings to which any director, officer, or affiliate of
the Company or any associate thereof is a party adverse to the Company. There
are no material administrative or judicial proceedings pending or known to be
contemplated by any governmental authorities.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common shares are traded on the TSE under the ticker
symbol MCI. The current bylaws of the TSE require every TSE listed company
incorporated under the laws of Canada or any province to disclose to
shareholders, on an annual basis, its corporate governance practices. That
statement of corporate governance practices must indicate whether the Company
complies with the guidelines for effective corporate governance contained in
the TSE Guidelines and, if not, the reasons for the differing practices. As the
Company is a foreign issuer in Canada, it is not technically required to comply
with the TSE Guidelines. However, the Company has adopted the same approach to
corporate governance as its majority shareholder, MFC, which follows the TSE
Guidelines.
The following table sets forth the high and low sales prices for the
Company's common stock in U.S. dollars. The prices were obtained from the TSE
in Canadian dollars and translated at each respective day's spot rate to U.S
dollars.
<TABLE>
<CAPTION>
1999 Fiscal Year 1998 Fiscal Year
Quarter High Low High Low
----------------------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C>
April-June $13.31 $8.20 $7.32 $5.87
July-September 10.48 4.79 24.55 6.70
October-December 7.15 3.90 25.16 15.99
January-March 5.90 3.77 17.02 12.97
</TABLE>
MIMI's stock option plan was adopted by the Board of Directors on
August 31, 1994 (the "1994 Plan"). In accordance with the rules of the TSE,
effective September 10, 1998, MIMI amended the 1994 Plan to fix the maximum
number of shares issuable under the 1994 Plan at 3,051,800 common shares,
representing 10% of the issued and outstanding common shares of MIMI's then
outstanding shares less the common shares issued on the exercise of options
within the preceding year. On March 31, 1999, there were 1,372,500 options
outstanding.
At the shareholder meeting held on September 9, 1999, management
proposed thaand the shareholders approved an amendment to the 1994 Plan so that
the new maximum limit of common shares to be reserved for issuance under the
1994 Plan was increased from 3,051,800 shares to 3,114,220 shares.
33
<PAGE> 34
There are currently over 160 registered shareholders of the Company.
As of March 31, 1999, MFC was the primarily shareholder holding 15,987,910
shares, or 83.2% of the Company.
Although MIMI is permitted to pay dividends of up to 15% of its
consolidated net income under the terms of its credit facility with BankBoston,
N.A., MIMI expects that its earnings will be retained for use in the operation
and expansion of its business and therefore does not intend to pay any cash
dividends on Common Shares in the foreseeable future. Any future determination
as to the payment of cash dividends would depend on the earnings and financial
position of MIMI at such time, as well as applicable legal restrictions and
such other factors as the Board of Directors of MIMI may deem appropriate.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
In December 1996, MIMI completed an underwritten public offering of
1,000,000 shares of its common stock, on the TSE, at a public offering price of
$US 6.25 ($Cdn. 8.50) per share, pre-split, (the "Offering"). The net proceeds
from the Offering of approximately $US 5.3 million were used to finance MIMI's
growth, which included the funding of deferred selling commissions paid to
broker-dealers on the sale of Class B and Class C shares of the Funds.
The three underwriters for the transactions were:
o Nesbitt Burns Inc. (a majority-owned subsidiary of a Canadian chartered
bank)
o Midland Walwyn Capital Inc. (a wholly-owned subsidiary of Midland Walwyn
Inc.)
o RBC Dominion Securities Inc. (a majority-owned subsidiary of a Canadian
chartered bank)
The total underwriters fees were $0.55 per share (Canadian dollar).
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company is authorized to issue 100,000,000 shares of common
stock, par value $.01 per share. Each share of common stock is entitled to
participate pro rata in dividends and distributions, if any, with respect to
the common stock when, as and if declared by the Board of Directors from funds
legally available therefor.
Upon liquidation of the Company's assets then legally available for
distribution to the holders of the Company's common stock, such assets are to
be distributed ratably among such holders in proportion to their share
holdings.
Shares of common stock are not redeemable, do not have preemptive
rights or conversion rights and are not subject to call. The shares of common
stock presently outstanding are fully paid and non-assessable.
Each shareholder of record is entitled to one vote for each share of
common stock held on every matter properly submitted to the shareholders for
their vote. Cumulative voting is not permitted on any matters submitted to
shareholders for a vote.
34
<PAGE> 35
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware law authorizes a Delaware corporation to eliminate or limit
the personal liability of a director to the corporation and its shareholders
for monetary damages for breach of certain fiduciary duties as a director. The
Company believes that such a provision is beneficial in attracting and
retaining qualified directors and, accordingly, the Company's Bylaws include a
provision eliminating liability for monetary damages for any breach of
fiduciary duty as a director, except: (1) for any breach of the duty of loyalty
to the Company or its shareholders; (2) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (3) for
any transaction for which the director derived an improper personal benefit;
(4) for certain other actions. Thus, pursuant to Delaware law, directors of the
Company are not insulated from liability for breach of their duty of loyalty
(requiring that, in making a business decision, directors act in good faith and
in the honest belief that the action was taken in the best interest of the
corporation), or for claims arising under the federal securities laws. The
foregoing provisions of the Bylaws may reduce the likelihood of derivative
litigation against directors and may discourage or deter shareholders or
management from bringing a lawsuit against directors for breaches of their
fiduciary duties, even though such an action, if successful, might otherwise
have benefited the Company and its shareholders.
Article 4 of the Company's Bylaws provides as follows:
RIGHT TO INDEMNIFICATION
The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that such person is or was a director or
officer of the Company or a constituent corporation absorbed in a consolidation
or merger, or is or was serving at the request of the Company or a constituent
corporation absorbed in a consolidation or merger, as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise, or
is or was a director or officer of the Company serving at its request as an
administrator, trustee or other fiduciary of one or more of the employee
benefit plans of the Company or other enterprise, against expenses (including
attorney's fees), liability and loss actually and reasonably incurred or
suffered by such person in connection with such proceeding, whether or not the
indemnified liability arises or arose from any threatened, pending or completed
proceedings by or in the right of the Company, except to the extent that such
indemnification is prohibited by applicable law.
ADVANCE OF EXPENSES
Expenses incurred by a director or officer of the Company in defending
a proceeding shall be paid by the Company in advance of the final disposition
of such proceedings subject to the provisions of any applicable statute.
PROCEDURE FOR DETERMINING PERMISSIBILITY
To determine whether any indemnification or advance of expenses under
this Article 4 is permissible, the board of directors by a majority vote of a
quorum consisting of directors not parties to such proceedings may, and on
request of any person seeking indemnification or advance of expenses shall be
required to, determine in each case whether the applicable standards in any
applicable statue have been met, or such determination shall be made by
independent legal counsel if such quorum is not obtainable, or, even if
obtainable, a majority vote of a quorum of disinterested directors so directs,
provided that, if there has been a change in control of the Company between the
time of the action or failure to act giving rise to the claim for
indemnification or advance of expenses and the time such claim is made, at the
option of the person seeking indemnification or advance of expenses, the
permissibility of indemnification or advance of expenses shall be determined by
independent legal counsel. The reasonable expenses of any director or officer
in prosecuting a successful claim for indemnification, and the fees and
expenses of any special legal counsel engaged to determine permissibility of
indemnification or advance of expenses, shall be borne by the Company.
CONTRACTUAL OBLIGATION
The obligations of the Company to indemnify a director or officer
under this Article 4, including the duty to advance expenses, shall be
considered a contract between the Company and such director or officer, and no
modification or repeal of any provision of this Article 4 shall affect, to the
detriment of the director or officer, such obligations of the Company in
connection with a claim based on any act or failure to act occurring before
such modification or repeal.
35
<PAGE> 36
INDEMNIFICATION NOT EXCLUSIVE; INURING OF BENEFITS
The indemnification and advance of expenses provided by this Article 4
shall not be deemed exclusive of any other right to which one indemnified may
be entitled under any statue, provision of the Certificate of Incorporation,
these bylaws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office, and shall inure to the
benefit of the heirs, executors and administrators of any such person.
INSURANCE AND OTHER INDEMNIFICATION
The board of directors shall have the power to (i) authorize the
Company to purchase and maintain, at the Company's expense, insurance on behalf
of the Company and on behalf of others to the extent that power to do so has
not been prohibited by statue, (ii) create any fund of any nature, whether or
not under the control of a trustee, or otherwise secure any of its
indemnification obligations, and (iii) give other indemnification to the extent
permitted by statue.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - FINANCIAL STATEMENTS
REQUIRED BY REG. S-X
The consolidated financial statements and the report thereon of
PricewaterhouseCoopers LLP, independent certified public accountants, dated
April 23, 1999 are filed as part of this Registration Statement. See Item 15.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants, page F-1
Consolidated Statements of Financial Condition as of March 31, 1999 and 1998,
page F-2
Consolidated Statements of Operations for the years ended March 31, 1999, 1998
and 1997, page F-3
Consolidated Statements of Cash Flows for the years ended March 31, 1999, 1998
and 1997, page F-4
Consolidated Statements of Changes in Stockholders' Equity for the years ended
March 31, 1999, 1998 and 1997, page F-5
Notes to Consolidated Financial Statements, pages F-6 to F-18
Condensed Consolidated Statement of Financial Condition as of June 30, 1999
(unaudited) and March 31, 1999, page F-19
Condensed Consolidated Statement of Operations for the three months ended June
30, 1999 and 1998 (unaudited), page F-20
Condensed Consolidated Statement of Cash Flows for the three months ended June
30, 1999 and 1998 (unaudited), page F-21
Notes to Condensed Consolidated Financial Statements, page F-22
36
<PAGE> 37
MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1999 AND 1998
AND FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<PAGE> 38
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Pages
<S> <C>
Report of Independent Certified Public Accountants F-1
Financial Statements:
Consolidated Statements of Financial Condition as of
March 31, 1999 and 1998 F-2
Consolidated Statements of Operations for the years ended
March 31, 1999, 1998 and 1997 F-3
Consolidated Statements of Cash Flows for the years ended
March 31, 1999, 1998 and 1997 F-4
Consolidated Statements of Changes in Stockholders' Equity for the
years ended March 31, 1999, 1998 and 1997 F-5
Notes to Consolidated Financial Statements F-6 to F-18
</TABLE>
<PAGE> 39
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Mackenzie Investment Management Inc.
In our opinion, the accompanying consolidated statements of financial condition
and the related consolidated statements of operations, of cash flows and of
changes in stockholders' equity present fairly, in all material respects, the
financial position of Mackenzie Investment Management Inc. and its subsidiaries
as of March 31, 1999 and 1998, and the results of their operations and their
cash flows for the three years in the period ended March 31, 1999, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Fort Lauderdale, Florida, U. S. A.
April 23, 1999
F-1
<PAGE> 40
MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31,
----------------------------
ASSETS 1999 1998
<S> <C> <C>
Cash and cash equivalents $51,032,223 $20,959,781
Receivables:
Funds for fees and expense advances 5,372,633 6,053,690
Other 854,343 691,730
Property and equipment, net of accumulated depreciation 1,306,696 1,160,216
Management contracts, net of accumulated amortization of
$6,831,667 in 1999 and $5,749,772 in 1998 5,643,284 6,725,179
Deferred selling commissions 1,761,002 24,903,294
Other assets 2,199,076 1,430,709
----------- -----------
Total assets $68,169,257 $61,924,599
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Payable to Funds for purchases of Funds' shares and
expense reimbursements $ 158,365 $ 92,678
Sub-advisory fees payable 3,447,159 3,763,947
Accounts payable 876,578 830,514
Accrued expenses and other liabilities 2,138,424 2,398,945
Note payable -- 6,800,000
Income taxes payable 9,241,917 --
Deferred tax liability 2,976 4,588,696
----------- -----------
Total liabilities 15,865,419 18,474,780
----------- -----------
Commitments
Stockholders' equity:
Capital stock, $.01 par value, 100,000,000 and 30,000,000
shares authorized as of March 31, 1999 and 1998, respectively;
19,210,200 and 18,917,000 shares issued and outstanding as
of March 31, 1999 and 1998, respectively 192,102 189,170
Additional paid-in capital 40,403,488 40,101,057
Retained earnings 11,708,248 3,159,592
----------- -----------
Total stockholders' equity 52,303,838 43,449,819
----------- -----------
Total liabilities and stockholders' equity $68,169,257 $61,924,599
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-2
<PAGE> 41
MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended March 31,
--------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
Revenues:
Management fees $33,812,998 $33,223,349 $18,325,665
Sub-advisory fees from Canadian Funds 5,994,295 5,556,333 3,953,623
12b-1 Service and Distribution fees 14,675,809 14,649,757 7,095,643
Transfer agent fees 3,018,847 3,012,911 3,021,754
Administrative services fees 3,415,947 3,396,325 1,999,076
Fund accounting fees 707,358 724,670 634,312
Underwriting fees 140,940 515,823 843,263
Redemption fees 3,054,426 1,946,276 523,266
Interest, dividends and other 1,435,261 2,070,447 746,364
----------- ----------- -----------
66,255,881 65,095,891 37,142,966
----------- ----------- -----------
Expenses:
Sales literature, advertising and promotion 2,429,708 3,881,964 2,351,834
12b-1 Service fees 9,036,835 7,082,591 3,647,173
Employee compensation and benefits 10,335,240 9,603,448 7,331,197
Sub-advisory fees 14,826,319 14,672,847 6,948,083
Amortization of management contracts 1,081,895 1,095,782 1,115,223
Amortization of deferred selling commissions 6,202,132 7,065,446 2,772,084
Depreciation 549,930 336,549 267,959
General and administrative 4,990,050 3,664,911 3,436,651
Interest 473,842 483,645 234,158
Occupancy and equipment rental 962,903 767,535 632,514
Reimbursement to Funds for expenses 1,667,174 950,898 1,114,785
----------- ----------- -----------
52,556,028 49,605,616 29,851,661
----------- ----------- -----------
Income before income taxes 13,699,853 15,490,275 7,291,305
Provision for income taxes 5,151,197 5,964,056 --
----------- ----------- -----------
Net income $ 8,548,656 $ 9,526,219 $ 7,291,305
=========== =========== ===========
Basic earnings per share: 0.45 0.51 0.44
=========== =========== ===========
Weighted average number of common
shares outstanding used in basic
calculation 19,137,480 18,644,026 16,597,826
=========== =========== ===========
Diluted earnings per share: 0.44 0.49 0.43
=========== =========== ===========
Weighted average number of common and
common equivalent shares outstanding
used in diluted calculation 19,267,093 19,306,659 17,026,839
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-3
<PAGE> 42
MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended March 31,
--------------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 8,548,656 $ 9,526,219 $ 7,291,305
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 549,930 336,549 267,959
Amortization of management contracts 1,081,895 1,095,782 1,115,223
Amortization of deferred selling commissions 6,202,132 7,065,446 2,772,084
Deferred tax expense 4,656,197 5,806,756 --
Payment of deferred selling commissions (3,876,736) (11,489,731) (17,063,321)
Change in assets and liabilities:
Receivables 518,444 20,736,957 (22,087,632)
Management contracts -- 232,449 --
Other assets (768,367) (519,915) (360,931)
Payable to Funds for purchases of Fund shares 1,527 (22,654,680) 19,850,132
Payable to Funds for expense reimbursements 64,160 2,720 7,459
Sub-advisory fees payable (316,788) 1,307,027 1,473,328
Accounts payable, accrued expenses and other liabilities (214,457) 594,926 1,229,372
------------ ------------ ------------
Net cash provided by (used in) operating activities 16,446,593 12,040,505 (5,505,022)
------------ ------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (696,410) (836,785) (408,242)
Proceeds from the sale of deferred selling commissions, net 20,816,896 -- --
------------ ------------ ------------
Net cash provided by (used in) investing activities 20,120,486 (836,785) (408,242)
------------ ------------ ------------
Cash flows from financing activities:
Note payable borrowings -- 1,800,000 3,300,000
Note payable repayments (6,800,000) -- --
Proceeds from the issuance of common stock -- -- 6,250,000
Costs associated with the issuance of common stock -- (135,231) (946,906)
Purchase and retirement of common stock (108,537) -- --
Proceeds from the exercise of stock options 413,900 1,271,350 --
------------ ------------ ------------
Net cash (used in) provided by financing activities (6,494,637) 2,936,119 8,603,094
------------ ------------ ------------
Net increase in cash and cash equivalents 30,072,442 14,139,839 2,689,830
Cash and cash equivalents, beginning of year 20,959,781 6,819,942 4,130,112
------------ ------------ ------------
Cash and cash equivalents, end of year $ 51,032,223 $ 20,959,781 $ 6,819,942
============ ============ ============
Supplemental disclosures:
Interest paid $ 490,783 $ 461,268 $ 216,399
============ ============ ============
Income taxes paid $ 495,000 $ 157,300 $ --
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-4
<PAGE> 43
MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the years ended March 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
(Accumulated
Common Stock Additional Deficit)/ Total
----------------------- Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
----------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1996 8,000,000 $ 80,000 $ 32,552,954 $(13,657,932) $ 18,975,022
Issuance of common stock in
connection with public offering, net of
issuance costs of $946,906 1,000,000 10,000 5,293,094 -- 5,303,094
Net income for the year -- -- -- 7,291,305 7,291,305
----------- --------- ------------ ------------ ------------
Balance, March 31, 1997 9,000,000 90,000 37,846,048 (6,366,627) 31,569,421
Two-for-one stock split (Note 9) 9,000,000 90,000 (90,000) -- --
Issuance of common stock issued under
stock option plan 917,000 9,170 1,262,180 -- 1,271,350
Tax benefit related to the exercise of
employee stock options -- -- 1,218,060 -- 1,218,060
Costs associated with the issuance of
common stock -- -- (135,231) -- (135,231)
Net income for the year -- -- -- 9,526,219 9,526,219
----------- --------- ------------ ------------ ------------
Balance, March 31, 1998 18,917,000 189,170 40,101,057 3,159,592 43,449,819
Issuance of common stock under
stock option plan 316,000 3,160 410,740 -- 413,900
Purchase and retirement of common stock (22,800) (228) (108,309) -- (108,537)
Net income for the year -- -- -- 8,548,656 8,548,656
----------- --------- ------------ ------------ ------------
Balance, March 31, 1999 19,210,200 $ 192,102 $ 40,403,488 $ 11,708,248 $ 52,303,838
=========== ========= ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-5
<PAGE> 44
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Mackenzie Investment Management Inc. ("MIMI") is a majority-owned
subsidiary of Mackenzie Financial Corporation of Toronto, Ontario
("MFC"). MIMI is an investment adviser and has three wholly-owned
subsidiaries as follows: Ivy Management, Inc. ("IMI"), an investment
adviser; Ivy Mackenzie Distributors, Inc. ("IMDI"), a broker/dealer;
and Ivy Mackenzie Services Corp. ("IMSC"), a transfer agent. MIMI and
IMI (the "Advisers") are registered with the Securities and Exchange
Commission ("SEC") as investment advisers. IMDI is registered with the
SEC as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. IMSC is registered with the SEC as a transfer
agent.
The Advisers are engaged in the management of Ivy Fund, a registered
investment company consisting of eighteen funds (collectively the
"Funds") at March 31, 1999. The Advisers have exclusive management
agreements entitling them to manage the Funds. The Advisers also provide
sub-advisory services to nine Universal mutual funds sold only in Canada
and managed by MFC (the "Canadian Funds").
IMDI, as the broker-dealer, has underwriting agreements with the Funds
entitling IMDI to the exclusive right to sell redeemable shares of the
Funds. In addition, IMDI also receives distribution fees from certain of
the Funds for purposes of advertising and marketing the shares of such
Funds.
IMSC serves as transfer agent and dividend paying agent for the Funds and
provides certain shareholder and shareholder related services as are
required by the Funds.
MIMI also provides certain additional services for the Funds, such as
fund accounting and administrative services.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of MIMI, IMI,
IMDI and IMSC (the "Company"). All intercompany accounts and transactions
have been eliminated in consolidation.
The financial statements of the Company have been prepared in accordance
with accounting principles generally accepted in the United States and
are denominated in U. S. currency. The following is a summary of
significant accounting policies consistently followed by the Company in
the preparation of its consolidated financial statements.
CASH EQUIVALENTS
The Company includes as cash equivalents: demand deposits in interest
bearing bank accounts, short-term investments, repurchase agreements, and
investments in U.S. Government Securities with original maturities of
three months or less when purchased.
F-6
<PAGE> 45
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
CONTINUED:
PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment, which are stated at cost, are depreciated on a
straight-line basis over the estimated useful life of the related assets,
which range from three to five years except for leasehold improvements.
Leasehold improvements are amortized over the lesser of the initial term
of the building lease, which is eleven years, or the remaining term of
the lease.
Additions and improvements that significantly extend the useful life of
an asset are capitalized. Other expenditures for repairs and maintenance
are charged to operations in the period incurred. The cost and
accumulated depreciation of assets sold or retired are removed from the
accounts and any related gains or losses are included in operations for
the period.
MANAGEMENT CONTRACTS
Management contracts, consisting principally of the cost of investment
advisory and service contracts, are being amortized over periods not
exceeding ten years from their date of inception. Management periodically
assesses the value of its management contracts by considering the future
economic benefit associated with the revenue capacity of the contracts.
REIMBURSEMENT TO FUNDS FOR EXPENSES
The Company reimburses certain of the Funds' expenses on a voluntary
basis. The Company records this commitment on an accrual basis. The
voluntary expense limitation may be terminated or revised at any time.
REVENUE RECOGNITION
Revenues for services rendered are recognized on an accrual basis when
the services are performed. Such revenues from services rendered include
management, underwriting, distribution, fund accounting, administrative
services and transfer agent fees.
INCOME TAXES
Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax basis of assets and liabilities and
their financial reporting amounts. Deferred tax assets are also
established for the future tax benefits of loss and credit carryforwards.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that all or some
portion of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
F-7
<PAGE> 46
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
CONTINUED:
EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available to
common stockholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised and resulted in the issuance of common
stock.
DEFERRED SELLING COMMISSIONS
In conjunction with the sale of Class A shares sold at net asset value
and Class B and C shares, MIMI pays dealers a deferred selling
commission. MIMI then amortizes these amounts over periods ranging from
five to six years for commissions paid on Class A and B shares and one
year for commissions paid on Class C shares.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make some estimates
and assumptions that may affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from
those estimates.
ADVERTISING
The Company expenses the cost of advertising as incurred. The cost of
marketing literature, whose primary purpose is to elicit sales, is
capitalized and amortized over its estimated future period of economic
benefit, ranging from two to twelve months.
STOCK OPTIONS
The Company has elected to disclose pro forma net income and earnings per
share based on fair value accounting rules and not to apply those rules
in the consolidated statement of operations. No amounts have been
reflected in the consolidated statement of operations as a result of the
grant of stock options as the exercise price of the stock options equals
or exceeds the market value of the Company's stock on the date the
options are granted. The Company records amounts received upon the
exercise of options by crediting common stock and additional paid-in
capital. To the extent that the Company realizes an income tax benefit
from the exercise or early disposition of certain stock options, this
benefit results in a decrease in the tax liability and an increase in
additional paid-in capital.
F-8
<PAGE> 47
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
CONTINUED:
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, receivables, accounts
payable, accrued expenses and the payables to Funds for purchases of Fund
shares approximate fair value due to the short term maturities of these
items. The carrying amount of the note payable approximates fair value
because the interest rates on this instrument change with market interest
rates.
SEGMENT REPORTING
The Company adopted Financial Accounting Standards Board ("FASB")
Statement No. 131, "Disclosure about Segments of an Enterprise and
Related Information" for the year ended March 31, 1999. The Company has
considered its operations and has determined that it operates in a single
operating segment for purposes of presenting financial information and
evaluating performance. As such, the accompanying consolidated financial
statements present financial information in a format that is consistent
with the financial information used by management for internal use.
NEW ACCOUNTING PRONOUNCEMENTS
In April 1998, the AICPA issued Statement of Position 98-5 ("SOP No.
98-5"), Reporting on the Costs of Start-up Activities. SOP No. 98-5
requires that the costs of start-up activities be expensed as incurred.
SOP No. 98-5 was adopted by the Company in fiscal year 1999 and did not
have a material effect on the Company's operations or cash flows.
In June 1998, the FASB issued FASB Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The statement establishes
accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or
liability measured at its fair value. The statement requires that changes
in the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. The Company will be required
to adopt the standard in fiscal year 2001. The implementation of this
standard is not expected to have a material effect on the Company's
operations or cash flows.
RECLASSIFICATIONS
Certain amounts in the 1997 and 1998 consolidated financial statements
have been reclassified to conform with the 1999 presentation.
F-9
<PAGE> 48
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. PROPERTY AND EQUIPMENT:
Property and equipment owned consist of the following:
<TABLE>
<CAPTION>
March 31,
--------------------------
1999 1998
<S> <C> <C>
Furniture and equipment $ 980,926 $ 821,348
Computer hardware 1,553,419 1,211,277
Computer software 543,828 373,950
Leasehold improvements 490,909 466,954
----------- -----------
Total cost 3,569,082 2,873,529
Less accumulated depreciation (2,262,386) (1,713,313)
----------- -----------
$ 1,306,696 $ 1,160,216
=========== ===========
</TABLE>
3. INCOME TAXES:
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------------------
1999 1998 1997
<S> <C> <C> <C>
Current income taxes:
Federal $ 8,360,277 $ -- $ --
State 1,447,117 157,300 --
----------- ---------- ----
9,807,394 157,300 --
----------- ---------- ----
Deferred income taxes:
Federal (3,985,948) 5,115,340 --
State (670,249) 691,416 --
----------- ---------- ----
(4,656,197) 5,806,756 --
----------- ---------- ----
$ 5,151,197 $5,964,056 $ --
=========== ========== ====
</TABLE>
F-10
<PAGE> 49
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
3. INCOME TAXES, CONTINUED:
A reconciliation of the statutory federal income tax rate to the
effective rate is as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
-----------------------------------
1999 1998 1997
<S> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% 34.0%
State taxes, net of federal benefit 3.3 3.9 4.2
Goodwill 2.3 2.0 4.3
Change in valuation allowance -- (1.9) (43.2)
Other (2.0) 0.5 0.7
------ ------ ------
37.6% 38.5% -%
====== ====== ======
</TABLE>
At March 31, 1999 and 1998, deferred income taxes consist of the
following:
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
Deferred Taxes Deferred Taxes
---------------------------- ---------------------------
Assets Liabilities Assets Liabilities
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Accrued payables not yet deducted for
tax purposes $ 78,000 $ -- $ 83,696 $ --
Prepaid Class B and C share commissions -- 210,000 -- 8,996,529
Net operating loss carryforwards -- -- 4,010,823 --
Alternative minimum tax credit carryforward -- -- 159,322 --
Other 132,000 2,976 167,560 13,568
-------- ---------- ---------- ----------
$210,000 $ 212,976 $4,421,401 $9,010,097
======== ========== ========== ==========
Net deferred tax $ 2,976 $4,588,696
========== ==========
</TABLE>
During the years ended March 31, 1998 and 1997, the Company reduced its
valuation allowance for deferred tax assets by $300,000 and $3,147,000,
respectively. The Company was able to eliminate the valuation allowance due to
changes in the expected reversal of deferred tax amounts.
F-11
<PAGE> 50
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. MANAGEMENT, UNDERWRITING, ADMINISTRATIVE SERVICES, FUND ACCOUNTING AND
TRANSFER AGENT AGREEMENTS:
The Company is the manager of the Funds and, as such, furnishes the Funds
with accounting and various other services and office facilities in Boca
Raton, Florida and Fort Lauderdale, Florida. In addition, the Advisers
act as investment adviser for certain of the Funds. For these services
and facilities, the Funds pay the Advisers monthly management fees at
annual rates ranging from .40% to 1.00% of the Funds' average daily net
assets. The Management Agreements may be terminated upon 60 days written
notice by a vote of the majority of the outstanding voting securities of
the Funds, by vote of a majority of the Fund's entire Board of Trustees,
or by the Advisers.
Sub-advisory fees from the Canadian Funds represent fees earned for
certain management services rendered to mutual funds managed by MFC.
IMDI is the principal underwriter and national distributor of the Funds'
shares and, as such, purchases shares from the Funds at net asset value
to fill orders received from investment dealers. IMDI is permitted to
resell such shares at the public offering price, allowing for discounts
to dealers, if any. The differences in the purchase price and the resale
price constitutes underwriting fee income to IMDI.
MIMI has entered into Administrative Services Agreements with the Funds
wherein MIMI provides various services, including maintenance of
registration or qualification of Fund shares under state "Blue Sky" laws,
assisting in the preparation of U.S. Federal, state and local income tax
returns and preparing financial and other information for prospectuses,
statements of additional information, and periodic reports to
shareholders. For these services, the Funds pay MIMI monthly fees at an
annual rate of .10% of the Funds' average daily net assets. The
Administrative Services Agreement may be terminated by MIMI upon 60 days
written notice, or by the Funds upon 60 days written notice and
authorization by the Fund's Board of Trustees.
MIMI has entered into Fund Accounting Services Agreements with the Funds
wherein MIMI provides certain accounting and pricing services for the
Funds. As compensation for those services, each Fund pays MIMI a monthly
fee plus certain out-of-pocket costs. The monthly fee is based upon the
net assets of each Fund at the preceding month end at rates ranging from
$1,000 to $6,500. The Fund Accounting Services Agreements may be
terminated by MIMI upon 90 days written notice, or by the Funds upon 60
days written notice and authorization by the Fund's Board of Trustees.
F-12
<PAGE> 51
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. MANAGEMENT, UNDERWRITING, ADMINISTRATIVE SERVICES, FUND ACCOUNTING AND
TRANSFER AGENT AGREEMENTS, CONTINUED:
IMSC provides services to the Funds under Transfer Agency and Shareholder
Services Agreements. The agreements provide compensation on a per account
basis plus reimbursement for out-of-pocket costs. The compensation range
on a per account basis per year is $20 to $22. The Transfer Agency and
Shareholder Services Agreements may be terminated by IMSC upon 90 days
written notice, or by the Funds upon 60 days written notice and
authorization by the Fund's Board of Trustees.
5. DISTRIBUTION FEES:
Pursuant to distribution plans adopted by certain of the Funds, IMDI
receives distribution fees at annual rates ranging from .25% to 1.00% of
certain of the Funds' average daily net assets attributable to the
respective classes of shares, subject to the respective distribution
plan, for the advertising and marketing of such Funds. The plans may be
terminated at any time. If such termination occurs, the Funds will owe no
payments to IMDI, other than any portion of the distribution fees accrued
through the effective date of termination, but unpaid as of such date.
6. ACCRUED EXPENSES AND OTHER LIABILITIES:
Accrued expenses and other liabilities consist of the following:
<TABLE>
<CAPTION>
March 31,
--------------------------
1999 1998
<S> <C> <C>
Accrued compensation and benefits $ 867,313 $1,797,038
Due to Purchaser (Note 13) 701,178 --
Other 569,933 601,907
---------- ----------
$2,138,424 $2,398,945
========== ==========
</TABLE>
F-13
<PAGE> 52
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
7. NOTE PAYABLE:
The Company entered into a $10,000,000 revolving credit and term loan
agreement (the "Agreement") in order to fund the payment of sales
commissions paid to dealers for the sale of Class B and C shares of the
Funds. The Agreement provides for interest only payments on advances
outstanding until the revolving credit line converts to a term loan. The
advances bear interest at a fluctuating rate based on either the prime
rate or the lender's funding rate plus a margin of 1.50%. After June 30,
1999, the conversion date to a term loan, the Company may convert the
advances to a term loan, which stipulates principal payments in 20 equal
quarterly installments. The term loan bears interest at either the prime
rate plus a margin of .25% or the lender's funding rate plus a margin of
1.75%. Pursuant to the terms of the Agreement and the continued sales of
Class B and C shares, the conversion date may be extended. The Agreement
requires the Company to comply with consolidated cash flows, consolidated
fixed charges, consolidated net worth, consolidated net income and
leverage requirements and permits the Company to pay dividends of up to
15% of its consolidated net income. As of March 31, 1998, the Company had
$6,800,000 outstanding under the Agreement. As of March 31, 1999, the
Company had no amounts outstanding under the Agreement.
8. COMMITMENTS:
Under operating leases with remaining non-cancelable terms in excess of
one year at March 31, 1999, aggregate annual rental payments for office
space and equipment are as follows:
<TABLE>
<CAPTION>
YEARS ENDING MARCH 31,
<S> <C>
2000 $ 845,000
2001 843,000
2002 438,000
2003 85,000
2004 39,000
----------
$2,250,000
==========
</TABLE>
Rent expense for the years ended March 31, 1999, 1998 and 1997 was
approximately $899,000, $762,000 and $595,000, respectively. In addition,
the Company is responsible for payment of common area operating expenses
in connection with its office leases. Total expenses pursuant to these
clauses were approximately $136,000, $141,000 and $108,000 for the years
ended March 31, 1999, 1998 and 1997, respectively.
F-14
<PAGE> 53
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. STOCK OPTION PLANS:
The Company has a stock option plan (the "Option Plan") which provides
for the granting of non-incentive and incentive stock options. The
maximum number of shares reserved for issue under the Option Plan is
3,051,800 common shares. Options are granted to key employees of the
Company. The Option Plan is administered by the Human Resource and
Corporate Governance Committee (the "Committee"), which reports its
recommendations to the Board of Directors for specific option grants.
Option vesting periods are subject to the discretion of the Committee and
generally range from one to four years. The exercise price of the options
shall not be less than the market price per common share on the Toronto
Stock Exchange on the business day prior to the date of the grant.
Non-incentive options granted under the Option Plan shall expire five
years after the date of grant and incentive options shall expire not
later than ten years after the date of grant. Information regarding the
above options for fiscal years ended March 31, 1999, 1998 and 1997 is as
follows:
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------------------------
March 31, 1999 March 31, 1998 March 31, 1997
-------------------------- -------------------------- -----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
---------- ------ ---------- ------ --------- -----
<S> <C> <C> <C> <C> <C> <C>
Options outstanding, beginning
of year 1,119,500 $ 7.54 1,284,000 $ 1.36 1,284,000 $1.36
Options granted 674,000 5.81 752,500 10.58 -- 0.00
Options exercised (316,000) 1.31 (917,000) 1.39 -- 0.00
Options expired (105,000) 8.61 -- 0.00 -- 0.00
--------- --------- ---------
Options outstanding, end of year 1,372,500 8.04 1,119,500 7.54 1,284,000 1.36
========= ========= =========
Options exercisable, end of year 709,500 10.19 337,000 1.30 1,231,500 1.36
========= ========= =========
</TABLE>
Significant option groups outstanding as of March 31, 1999 and related
price and life information follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------- ----------------------------
Weighted
Weighted Average Weighted
Average Remaining Average
Exercise Contractual Exercise
Range of Exercise Prices Outstanding Price Life Exercisable Price
- -------------------------- -------------- ---------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C>
$1.25-$4.91 401,000 $ 3.98 $4.60 39,000 $ 1.28
$5.78-$9.62 554,200 7.28 3.80 260,700 7.13
$10.92-$12.35 288,800 12.31 3.50 281,300 12.35
$14.02-$18.63 128,500 14.40 4.00 128,500 14.40
--------- ------ ----- ------- ------
1,372,500 8.04 4.00 709,500 10.19
========= ====== ===== ======= ======
</TABLE>
F-15
<PAGE> 54
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. STOCK OPTION PLANS, CONTINUED:
The Company utilizes the "intrinsic value based method" of accounting for
stock options issued to employees. Had compensation costs been determined
based on the "fair value based method" at the grant date for stock
options it would have resulted in pro forma net income of $6,882,066 and
$7,999,752, basic earnings per share of $.36 and $.43, and diluted
earnings per share of $.36 and $.41 for the years ended March 31, 1999
and 1998, respectively. Had compensation costs been determined based on
the "fair value based method", the Company's net income and basic and
diluted earnings per share for the year ended March 31, 1997 would have
been unchanged, as options were determined to have exercisable prices in
excess of fair value.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions:
<TABLE>
<CAPTION>
March 31,
----------------------
1999 1998
<S> <C> <C>
Dividend yield 0% 0%
Expected volatility 69% 66%
Risk free interest rates 5.50% 6.21%
Expected lives in years 5 5
</TABLE>
10. CAPITAL TRANSACTIONS:
On July 23, 1997, the Company's Board of Directors approved a two-for-one
stock split of the Company's common shares. This stock split was effected
by declaring a stock dividend of one additional common share for each
common share of the Company issued and outstanding on the dividend record
date of August 25, 1997. As a result, the Company transferred
approximately $90,000 from additional paid-in capital to common stock.
All historical share and per share amounts have been adjusted
retroactively to reflect the two-for-one split.
In December 1996, the Company completed a public offering of 1,000,000
shares of its common stock (the "Offering"), on the Toronto Stock
Exchange, at a public offering price of $U.S. 6.25 ($Cdn. 8.50) per
share. The public offering price disclosed is prior to the two-for-one
stock split discussed in the preceding paragraph. The net proceeds from
the Offering of approximately $5,300,000 were used to finance the
Company's growth, which includes the funding of deferred selling
commissions paid to brokers/dealers on the sale of Class B and Class C
shares of the Funds.
F-16
<PAGE> 55
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
10. CAPITAL TRANSACTIONS, CONTINUED:
In June 1998, the Company entered into a normal course issuer bid, which
was approved by the Toronto Stock Exchange, to repurchase up to 5% of the
outstanding shares of the Company's common stock. As of March 31, 1999,
the Company has purchased 22,800 of its common shares at a total cost of
$108,537. The shares were acquired at market price at the time of the
acquisition and were immediately retired.
11. EARNINGS PER SHARE:
The following table reconciles the weighted average shares outstanding
used to calculate basic and diluted earnings per share for the years
ended March 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Weighted average number of common shares
outstanding used in basic calculation 19,137,480 18,644,026 16,597,826
Effect of dilutive stock options 129,613 662,633 429,013
---------- ---------- ----------
Weighted average number of common and
common equivalent shares outstanding used
in the diluted calculation 19,267,093 19,306,659 17,026,839
========== ========== ==========
</TABLE>
12. PLAN OF REORGANIZATION OF MUNICIPAL FUNDS:
During the year ended March 31, 1998, the Company entered into a plan of
reorganization providing for the transfer of all of the assets comprising
the Mackenzie Series Trust, which it previously managed, to an unrelated
third party. This transaction resulted in gross proceeds of $1,755,137
and a net gain of $1,048,519 after recording related expenses which was
recorded as interest, dividends, and other in the consolidated statement
of operations for the year ended March 31, 1998.
13. SALE OF DEFERRED SELLING COMMISSIONS:
On March 23, 1999, the Company sold the portion of the deferred selling
commissions related to Class B shares to an unrelated third party
("Purchaser"). The sale resulted in the Company receiving cash proceeds
of $21,115,000 and recording a net gain of approximately $41,000 after
recording expenses incurred in connection with the transaction. The sale
of the deferred selling commissions provides cash to the Company for
general corporate purposes.
F-17
<PAGE> 56
MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
13. SALE OF DEFERRED SELLING COMMISSIONS, CONTINUED:
As a result of this sale, the Purchaser is entitled to receive 12b-1
Distribution fees of .75% on average daily assets of the mutual funds
shares represented by the deferred selling commissions sold ("Eligible
Shares"). In addition, the Purchaser will receive any contingent
deferred sales charges upon redemption of the Eligible Shares.
14. PROFIT SHARING PLAN:
MIMI maintains a 401(k) profit sharing plan (the "401(k) Plan") in
which all eligible, full-time employees may participate. From April 1,
1996 through March 31, 1998, MIMI was contributing to a trust amounts
ranging from 50% to 75% of the first 6% of pay that each employee
contributed to the 401(k) Plan. Effective April 1, 1998, MIMI's
contribution increased to 100% of the first 6% of pay that each
employee contributes. Participants are, at all times, fully vested in
their contributions, and Company contributions become fully vested to
the participants after six years of continued employment. Additionally,
on an annual basis, the Board of Directors may vote to make an
additional contribution to the 401(k) Plan. MIMI's total contributions
for the years ended March 31, 1999, 1998 and 1997 were approximately
$369,000, $183,000 and $103,000, respectively.
15. CONCENTRATION OF RISK:
As of March 31, 1999 and 1998, the Company had approximately
$21,916,504 and $13,337,091, respectively, in cash and cash equivalents
in excess of Federal deposit insurance limits. The Company's policy is
to only have funds on deposit with reputable financial institutions.
A significant percentage of the Company's assets under management are
represented by one fund, Ivy International Fund. A decline in the
performance of the Ivy International Fund or the securities markets in
general could have an adverse affect on the Company's revenues.
16. DIFFERENCES FROM CANADIAN ACCOUNTING PRINCIPLES:
The Company has reviewed its consolidated financial statements for the
periods presented for compliance with accounting principles generally
accepted in Canada and has determined that there are no material
differences between the amounts reported in these consolidated
financial statements and the amounts which would be reported in
accordance with accounting principles generally accepted in Canada.
F-18
<PAGE> 57
MACKENZIE INVESTMENT MANAGEMENT INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(U.S. Dollars)
<TABLE>
<CAPTION>
ASSETS
UNAUDITED
June 30, March 31,
1999 1999
----------- ------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $39,517,641 $51,032,223
Receivables:
Funds for fees and expense advances 5,439,871 5,372,633
Other 942,599 854,343
Property and equipment, net of accumulated
depreciation of $2,426,273 as of June 1999 and $2,262,386 as of
March 1999 1,338,798 1,306,696
Management contracts, net of accumulated
amortization of $7,102,141 as of June 1999 and $6,831,667 as of
March 1999 5,372,810 5,643,284
Deferred selling commissions 2,226,610 1,761,002
Other assets 4,800,335 2,199,076
----------- -----------
TOTAL ASSETS $59,638,664 $68,169,257
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Payable to the Funds for purchases of Funds' shares and
expense reimbursements $ 170,824 $ 158,365
Sub-advisory fees payable 3,486,325 3,447,159
Accounts payable, accrued expenses and other liabilities 3,117,696 3,015,002
Income taxes payable 610,592 9,241,917
Deferred tax liability 347,976 2,976
----------- -----------
TOTAL LIABILITIES 7,733,413 15,865,419
----------- -----------
STOCKHOLDERS' EQUITY:
Capital stock, $.01 par value, 100,000,000 shares authorized;
18,832,200 and 19,210,200 shares issued and outstanding as of
June 30, 1999 and March 31, 1999, respectively 188,322 192,102
Additional paid-in capital 38,813,880 40,403,488
Retained earnings 12,903,049 11,708,248
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 51,905,251 52,303,838
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $59,638,664 $68,169,257
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
F-19
<PAGE> 58
MACKENZIE INVESTMENT MANAGEMENT INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (UNAUDITED)
(U.S. Dollars)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
JUNE 30,
1999 1998
----------- -----------
<S> <C> <C>
REVENUES:
Management fees $ 8,057,538 $ 9,339,513
Sub-advisory fees from Canadian Funds 1,807,393 1,540,567
12b-1 Service and Distribution fees 2,136,159 4,192,357
Transfer agent fees 722,915 749,541
Administrative services fees 801,248 948,340
Fund accounting fees 177,746 178,740
Underwriting fees 35,606 55,334
Redemption fees 50,320 633,377
Interest, dividends and other 1,083,811 227,921
----------- -----------
14,872,736 17,865,690
----------- -----------
EXPENSES:
Sales literature, advertising and promotion 1,249,629 746,870
12b-1 Service fees 2,163,132 2,458,186
Employee compensation and benefits 2,981,062 2,825,584
Sub-advisory fees 3,484,368 4,087,460
Amortization of management contracts 270,474 270,474
Amortization of deferred selling commissions 223,057 1,698,033
Depreciation 163,888 118,678
General and administrative 1,464,245 1,068,951
Interest -- 123,442
Occupancy and rental expense 263,942 232,783
Reimbursement to Funds for expenses 450,672 382,188
----------- -----------
12,714,469 14,012,649
----------- -----------
Income before income taxes 2,158,267 3,853,041
Provision for income taxes 963,466 1,552,539
----------- -----------
NET INCOME 1,194,801 2,300,502
RETAINED EARNINGS, BEGINNING OF PERIOD 11,708,248 3,159,592
----------- -----------
RETAINED EARNINGS, END OF PERIOD $12,903,049 $ 5,460,094
=========== ===========
BASIC EARNINGS PER SHARE $ 0.06 $ 0.12
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTAINDING USED IN BASIC CALCULATION 18,981,738 18,917,253
=========== ===========
DILUTED EARNINGS PER SHARE $ 0.06 $ 0.12
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTAINDING
USED IN DILUTED CALCULATION 19,023,867 19,314,879
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
F-20
<PAGE> 59
MACKENZIE INVESTMENT MANAGEMENT INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(U.S. Dollars)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
JUNE 30,
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,194,801 $ 2,300,502
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation 163,888 118,678
Amortization of management contracts 270,474 270,474
Amortization of deferred selling commissions 223,057 1,698,033
Provision for deferred income taxes 345,000 1,457,539
Payment of deferred selling commissions (688,665) (1,642,081)
Change in assets and liabilities:
Receivables (155,495) (1,275,002)
Other assets (2,601,259) (277,838)
Payable to Funds for purchases of Funds' shares and
expense reimbursements 12,459 76,128
Sub-advisory fees payable 39,166 327,612
Accounts payable, accrued expenses and other liabilities 102,694 (606,815)
Income taxes payable (8,631,325) --
------------ ------------
Net cash (used in) provided by operating activities (9,725,205) 2,447,230
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (195,989) (231,888)
------------ ------------
Net cash used in investing activities (195,989) (231,888)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase and retirement of common stock (1,593,388) --
Proceeds from the exercise of stock options -- 1,400
------------ ------------
Net cash (used in) provided by financing activities (1,593,388) 1,400
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (11,514,582) 2,216,742
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 51,032,223 20,959,781
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 39,517,641 $ 23,176,523
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
F-21
<PAGE> 60
MACKENZIE INVESTMENT MANAGEMENT INC.
Notes to Condensed Consolidated Financial Statements
June 30, 1999
(Unaudited)
1. Basis of Presentation
The unaudited interim financial statements of Mackenzie Investment
Management Inc. and its consolidated subsidiaries (the "Company")
included herein do not include all footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles. In the opinion of management, these
financial statements include all appropriate adjustments, consisting
of normal recurring adjustments, necessary to a fair presentation of
the results of operations for the periods shown. Certain prior year
amounts have been reclassified to conform to current year
presentation. The results of operations for the three months ended
June 30, 1999, are not necessarily indicative of the results of
operations to be expected for the year ended March 31, 2000. These
interim financial statements should be read in conjunction with the
Company's audited financial statements for the fiscal year ended March
31, 1999.
2. Normal Course Issuer Bid
In June 1998, the Company entered into a normal course issuer bid,
which was approved by the Toronto Stock Exchange ("TSE"), to purchase
up to 945,000 of its common shares. The bid commenced on June 10, 1998
and terminated on June 9, 1999. During this bid period, the Company
purchased 400,800 of its common shares at a total cost of $1,701,923.
These shares were acquired at market price at the time of acquisition.
The Company has filed another notice with the TSE to commence a normal
course issuer bid to purchase, through the facilities of the TSE, up
to an additional 941,610 common shares of its stock, representing 5%
of the issued and outstanding common shares at the date of the notice.
The bid was approved by the TSE effective on July 16, 1999 and will
terminate on the earlier of the date on which the maximum number of
common shares have been purchased, the date the Company provides
notice of termination, or July 15, 2000. The Company believes that its
common shares are undervalued at current market prices based on its
current earnings and that the repurchase of common shares is an
appropriate use of corporate funds and will benefit shareholders.
3. Subsequent Event
On September 29, 1999, the Company acquired the assets of Hudson
Capital Appreciation Fund (the "Hudson Fund"). The assets of the
Hudson Fund, which were approximately $20,056,000, were merged into
the Ivy U.S. Emerging Growth Fund. The purchase price consists of
three payments: 3.25% of the Hudson Fund's net assets at the time of
closing, or approximately $652,000, and two additional payments each
of 0.375% of the net assets represented by the acquisition at six
months and twelve months after closing.
F-22
<PAGE> 61
EXHIBITS DESCRIPTION
3.1.1 Certificate of Incorporation - Mackenzie Investment Management Inc
3.1.2 Articles of Organization - Ivy Management Inc
3.1.3 Articles of Incorporation - Ivy Mackenzie Distributors Inc
3.1.4 Articles of Incorporation - Ivy Mackenzie Services Corp.
3.2.1 By - Laws -Mackenzie Investment Management Inc.
3.2.2 By - Laws - Ivy Management Inc.
3.2.3 By - Laws - Ivy Mackenzie Distributors Inc.
3.2.4 By - Laws - Ivy Mackenzie Services Corp.
4.1 Stock Certificate - Mackenzie Investment Management Inc.
10.1 Revolving Credit and Term Loan Agreement dated February 11, 1994
between Mackenzie Investment Management Inc. and The First National
Bank of Boston, as amended
10.2 Mackenzie Program Master Agreement Dated as of March 16, 1999 among
Mackenzie Investment Management Inc, as Parent, Ivy Management, Inc.
and Mackenzie Investment Management, Inc as Advisor, Ivy Mackenzie
Distributors Inc as Distributor, Ivy Mackenzie Services Corp., as
Program Service Agent, Putnam Lovell Finance L.P. as Purchaser,
Putnam, Lovell, De Guardiola & Thornton Inc. as Program Administrator
and Bankers Trust Company, not in its individual capacity but solely
as Collection Agent, except as otherwise expressly provided.
10.3 Lease Agreement between Via Mizner Associates(Landlord) and Mackenzie
Investment Management Inc. (Tenant)
10.4 Sublease Agreement between Buenos Aires embotelladora S.A. as Lessor
and Mackenzie Investment Management, Inc. as Lessee.
10.5 First Amendment to Sublease Between Buenos Aires Embotelladora
S.A.(Lessor) and Mackenzie Investment Management, Inc., (Lessee)
10.6 Lease Agreement Between Via Mizner Associates and Ivy Management, Inc.
10.7 First Amendment to Lease Agreement Between Via Mizner Associates and
Ivy Management, Inc.
10.8 Mackenzie Investment Management, Inc. 1994 Stock Option Plan
10.9 Mackenzie Investment Management Inc. Profit Sharing Plan, as amended
10.10 Master Administrative Services Agreement - Ivy Fund
10.11 Master Business Management and Investment Advisory Agreement - Ivy
Fund
10.12 Master Fund Accounting Services Agreement - Ivy Fund
10.13 Master Business Management and Investment Advisory Agreement -
Mackenzie Solutions
10.14 Master Fund Accounting Services Agreement - Mackenzie Solutions
10.15 Subadvisory Agreement dated July 1, 1999, between Ivy Management Inc
and Garmaise Investment Technologies (US) Inc.
21.1 Subsidiaries
24.1 Power of Attorney
27.1 Financial Data Schedule (for the fiscal year 1998).
27.2 Financial Data Schedule (for the three months ended June 30, 1999).
37
<PAGE> 62
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Company has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly
authorized.
<TABLE>
<CAPTION>
Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ KEITH J. CARLSON
- ----------------------
Keith J. Carlson President and Chief Executive Officer October 13, 1999
/s/ C. WILLIAM FERRIS
- ----------------------
C. William Ferris Senior Vice President, Chief Financial October 13, 1999
Officer and Secretary/Treasurer
*
- ----------------------
Neil Lovatt Chairman and Director October 13, 1999
*
- ----------------------
James W. Broadfoot III Senior Vice President and Director October 13, 1999
*
- ----------------------
Alan J. Dilworth Director October 13, 1999
*
- ----------------------
Allan S. Mostoff, Esq. Director October 13, 1999
*
- ----------------------
James L. Hunter Director October 13, 1999
*
- ----------------------
Alasdair J. McKichan Director October 13, 1999
*
- ----------------------
Michael R. Peers Director October 13, 1999
*
- ----------------------
Dolph W. von Arx Director October 13, 1999
</TABLE>
* Executed pursuant to the Power of Attorney filed herewith as Exhibit
24.1.
<PAGE> 1
EXHIBIT 3.1.1
CERTIFICATE OF INCORPORATION
OF
MACKENZIE INVESTMENT MANAGEMENT INC.
1. The name of the corporation is Mackenzie Investment
Management Inc.
2. The address of its registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington. County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted
or promoted is:
To engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
4. The aggregate number of shares which the corporation
shall have authority to issue is One Thousand (1,000) and the par value of
each of such shares is One Dollar ($1.00), amounting in the aggregate to One
Thousand Dollars ($1,000.00).
5. The name and mailing address of the incorporator are
as follows:
Name Mailing Address
---- ---------------
Andrew J. Rudolph 3400 Centre Square West
1500 Market Street
Philadelphia, PA 19102
6. The corporation is to have perpetual existence.
7. The board of directors of the corporation shall have
the authority to make, alter, amend or repeal the bylaws of the corporation.
I, THE UNDERSIGNED, being the Incorporator hereinbefore
named, for the purpose of forming a corporation
<PAGE> 2
pursuant to the General Corporation Law of the State of Delaware,
do make this certificate. hereby declaring and certifying that
this is my act and deed and the facts stated herein are true, and
accordingly have hereunto set my hand this 17th day of April, 1985.
/s/ ANDREW J. RUDOLPH
-------------------------------
Andrew J. Rudolph, Incorporator
-2-
<PAGE> 3
CERTIFICATE OF AMENDMENT
OF
MACKENZIE INVESTMENT MANAGEMENT INC.
WHEREAS, Mackenzie Investment Management Inc. ("Corporation") is a
Delaware corporation whose Certificate of Incorporation was originally filed
with the Secretary of State of the State of Delaware on April 18, 1985:
WHEREAS, the Board of Directors and the sole shareholder of the
Corporation, by a Joint Unanimous Written Consent dated March 27, 1989, (i)
resolved that the authorized number of shares of Common Stock of the Corporation
be increased to Eighty Million (80,000,000) and the par va1ue per share be
decreased to One Cent ($.0l) and (ii) duly adopted this Certificate of Amendment
pursuant to Section 242 of the Delaware General Corporation Law and
WHEREAS, pursuant to the Joint Unanimous Written Consent the
appropriate officers of the Corporation were authorized, empowered and directed
to file this Certificate of Amendment with the Secretary of State of Delaware to
amend the Certificate of Incorporation of the Corporation;
RESOLVED, paragraph numbered four (4) of the Certificate of
Incorporation is hereby amended to read as follows:
4. The Corporation shall have authority to issue an aggregate
of Eighty Million (80,000,000) shares of common stock at 1 par
value of One Cent ($.0l) per share.
THE UNDERSIGNED, the President of the Corporation, hereby acknowledges and
executes this Certificate of Amendment of the Certificate of Incorporation of
the Corporation as required by Section 103 of the Delaware General Corporation
Law.
DATED: 4-14-89
------------------------ -----------------------------------------
MICHAEL G. LANDRY, PRESIDENT
MACKENZIE INVESTMENT MANAGEMENT INC.
THE UNDERSIGNED, the Secretary of the Corporation, hereby attests that the
signature appearing above is that of Michael G. Landry, the President of the
Corporation.
DATED: 4-14-89
------------------------ -----------------------------------------
MARK SPINELLO, SECRETARY
MACKENZIE INVESTMENT MANAGEMENT INC.
<PAGE> 4
CERTIFICATE OF AMENDMENT
OF ARTICLES OF INCORPORATION OF
MACKENZIE INVESTMENT MANAGEMENT INC.
WHEREAS, Mackenzie Investment Management Inc. (hereinafter, the
"Corporation") is a Delaware corporation whose Certificate of Incorporation was
originally filed with the Secretary of State of the State of Delaware on April
18, 1985; and
WHEREAS, the Board of Directors of the Corporation, by a Unanimous
Written Consent dated September 15, 1995, (i) resolved that the authorized
number of shares of Common Stock of the Corporation be decreased from Eighty
Million (80,000,000) to Ten Million (10,000,000)(the "Proposed Resolution"),
(ii) duly adopted this Certificate of Amendment in accordance with Section 242
of the Delaware General Corporation Law, and (iii) authorized, empowered and
directed the appropriate officers of the Corporation to file this Certificate of
Amendment with the Secretary of State of Delaware to amend the Certificate of
Incorporation of the Corporation; and
WHEREAS, in accordance with Section 228 of the Delaware General
Corporation Law, (i) the holder of a majority of the outstanding stock of the
Corporation, by a Written Consent dated September 15, 1995, duly approved the
Proposed Resolution, and (ii) prompt notice of the action to be taken under the
Proposed Amendment was given to the Corporation's remaining stockholders;
NOW, THEREFORE, IT IS HEREBY RESOLVED, that paragraph numbered four (4)
of the Certificate of Incorporation is amended to read as follows:
4. The Corporation shall have authority to issue an aggregate
of Ten Million (10,000,000) shares of common stock at a par
value of One Cent ($.01) per share.
THE UNDERSIGNED, the President, hereby certifies that the preceding
amendment has been duly adopted in accordance with Section 242 of the Delaware
General Corporation Law, and, as required by Section 103 of the Delaware General
Corporation Law, hereby executes this Certificate of Amendment to the Articles
of Incorporation of the Corporation.
DATED: SEPTEMBER 15, 1995 /s/ MICHAEL G. LANDRY
------------------------ -----------------------------------------
Michael G. Landry, President
MACKENZIE INVESTMENT MANAGEMENT INC.
THE UNDERSIGNED, the Secretary /Treasurer of the Corporation, hereby
attests that the signature appearing above is that of Michael G. Landry, the
President of the Corporation.
DATED: SEPTEMBER 15, 1995 /s/ C. WILLIAM FERRIS
------------------------ -----------------------------------------
C. William Ferris, Secretary /Treasurer
MACKENZIE INVESTMENT MANAGEMENT INC.
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Mackenzie Investment Management Inc. a Delaware Corporation (the
"Corporation") DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Corporation
held on October 17, 1996, resolutions were duly adopted setting forth proposed
amendments of the Certificate of Incorporation of said corporation, declaring
said amendments to be advisable and calling for such amendments to be submitted
to the stockholders of said corporation for their consideration thereof. The
resolutions setting forth the proposed amendments are as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the paragraph thereof numbered "4" so that, as
amended that paragraph shall be and read as follows:
"The Corporation shall have authority to issue an aggregate of
Thirty Million (30,000,000) shares of common stock at a par
value of One Cent ($.01) per share."
RESOLVED FURTHER, that the Certificate of Incorporation of this
Corporation be amended by adding a new provision number "8" to read as
follows:
"The directors of the Corporation shall be entitled to the
benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the
General Corporation Law of Delaware. Without limiting the
generally of the foregoing, no director of the Corporation
shall be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an
improper personal benefit. Any repeal or modification of this
paragraph B shall be prospective only, and shall not affect,
to the detriment of any director, any limitation on the
personal liability of a director of the Corporation existing
at the time of such repeal or modification."
SECOND: That thereafter, pursuant to resolutions of its Board of
Directors, in accordance with Section 228 of the General Corporation Law of the
State of Delaware,
<PAGE> 6
the written consent in favor of such amendments of the necessary number of
shares as required by statute was taken arid prompt notice of this taking of
such Corporation was given to the stockholders who did not consent in writing.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Mackenzie Investment Management Inc. has
caused this certificate to be signed by Michael G. Landry, its President, and C.
William Ferris, its Secretary, this 17th day of October, 1996.
By: /s/ (ILLEGIBLE)
----------------------------
President
ATTEST: /s/ (ILLEGIBLE)
------------------------
Secretary
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Mackenzie Investment Management Inc, a Delaware Corporation (the
"Corporation") DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Corporation
held on October 17, 1996, resolutions were duly adopted setting forth proposed
amendments of the Certificate of Incorporation of said corporation, declaring
said amendments to be advisable and calling for such amendments to be submitted
to the stockholders of said corporation for their consideration thereof. The
resolutions setting forth the proposed amendments are as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the paragraph thereof numbered "4" so that, as
amended that paragraph shall be and read as follows:
"The Corporation shall have authority to issue an aggregate of
Thirty Million (30,000,000) shares of common stock at a par
value of One Cent ($.01) per share."
RESOLVED FURTHER, that the Certificate of Incorporation of this
Corporation be amended by adding a new provision number "8" to read as
follows:
"The directors of the Corporation shall be entitled to the
benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the
General Corporation Law of Delaware. Without limiting the
generality of the foregoing, no director of the Corporation
shall be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an
improper personal benefit. Any repeal or modification of this
Paragraph B shall be prospective only, and shall not affect,
to the detriment of any director, any limitation on the
personal liability of a director of the Corporation existing
at the time of such repeal or modification."
SECOND: That thereafter, pursuant to resolutions of its Board of
Directors, in accordance with Section 228 of the General Corporation Law of the
State of Delaware,
<PAGE> 8
the written consent in favor of such amendments of the necessary number of
shares as required by statute was taken and prompt notice of this taking of such
Corporation was given to the stockholders who did not consent in writing.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Mackenzie Investment Management Inc has caused
this certificate to be signed by Michael G. Landry, its President, and C.
William Ferris, its Secretary, this 17th day of October, 1996.
By: /s/ (ILLEGIBLE)
----------------------------
President
ATTEST: /s/ (ILLEGIBLE)
------------------------
Secretary
<PAGE> 1
EXHIBIT 3.1.2
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, SECRETARY
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
ARTICLES OF ORGANIZATION
(UNDER G.L CH. 156B)
INCORPORATORS
NAME POST OFFICE ADDRESS
Include given name in full in case of natural persons: in case of a corporation,
give state of incorporation.
David L. Engel Bernman Engel P.C.
One Boston Place
Boston, Massachusetts 02108
The above-named incorporator(s) do hereby associate
(themselves) with the intention of forming a corporation under the provisions of
General Laws. Chapter 156B and hereby state(s):
1. The name by which the corporation shall be known is: Hingham Management Inc.
2. The purpose for which the corporation is formed is as follows:
To, engage in the business of investment management
and related administrative activities in connection therewith.
To engage in, carry on and conduct any lawful act or
activity for which corporations may be organized under the Business
Corporation law of The Common wealth of Massachusetts.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on separate 8 1/2 X 11 sheets of
paper leaving a left hand margin of at least 1 inch for binding. Additions to
more than one article may be continued on a single sheet so long as each
article requiring each such addition is clearly indicated.
<PAGE> 2
3. The total number of shares and the par value, if any, of each class of
stock within the corporation is authorized as follows.
- ----------------- --------------------------------------------------------------
WITHOUT PAR VALUE WITH PAR VALUE
CLASS OF STOCK ------------------ -------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES PAR AMOUNT
VALUE
- ----------------- ------------------ ---------------- ---------- ---------------
PREFERRED $
- ----------------- ------------------ ---------------- ---------- ---------------
- ----------------- ------------------ ---------------- ---------- ---------------
COMMON 300,000 .01 $3,000.00
- --------------------------------------------------------------------------------
*4. If more than one class is authorized. a description of each of the
different classes of stock with, if any, the preferences, voting powers,
qualifications, special or relative rights or privileges as to each class
thereof and any series now established:
*5. The restrictions, if any, imposed by the Articles of Organization upon
the transfer of shares of stock of any class are as follows:
*6. Other lawful provisions, if any, for the conduct and regulation of
business and affairs of the corporation, for its voluntary dissolution or
for limiting, defining, or regulating the powers of the corporation. or
of its directors or stockholders, or of any class of stockholders:
See additional Articles 6A, 6B, 6C, 6D and 6E.
*If there are no provisions state "None"
<PAGE> 3
ARTICLE 6A. INDEMNIFICATION
1. Except as limited by law or as provided in Paragraphs 2 and 3) each
Officer or this Corporation (and his heirs and personal representatives) shall
be indemnified by this Corporation against all expense incurred by him in
connection with each Proceeding in which he is involved as a result or his
serving or having served as an Officer of this Corporation or, at the request of
this Corporation as a director, officer, employee or other agent or any other
organization.
2. No indemnification shall be provided to an Officer with respect to a
matter as to which it shall have been adjudicated in any proceeding that he did
not act in good faith in the reasonable belief that his action was in the best
interests or this Corporation.
3. In the event that a Proceeding is compromised or settled so as to
impose any liability or obligation upon an Officer or upon this Corporation, no
indemnification shall be provided to said Officer with respect to a matter if
this Corporation has obtained an opinion or counsel that with respect to said
matter said Officer did not act in good faith in the reasonable belief that his
action was in the best interests of this Corporation.
4. To the extent authorized by the Board or Directors or the
stockholders, this Corporation may pay indemnification in advance of final
disposition or a Proceeding, upon receipt of an undertaking by the person
indemnified to reply such indemnification if it shall be established that he is
not entitled to indemnification by an adjudication under Paragraph 2 or by an
opinion or counsel under Paragraph 3 hereof.
5. For the purposes of this Article,
(a) "Officer" means any person who serves or has served as a
director or in any other office filled by election or appointment by
the stockholders or the Board of Directors.
(b) "Proceeding" means any action, suit or proceeding, civil
or criminal, brought or threatened in or before any court, tribunal,
administrative or legislative body or agency, and
(c) "Expense" means any liability fixed by a judgement, order,
decree, or award in a Proceeding, any amount reasonably paid in
settlement of a Proceeding and any professional fees and other
disbursements reasonably incurred in a Proceeding.
6. Nothing in this Article shall limit any lawful rights to
indemnification existing independently of this Article.
-2A-
<PAGE> 4
ARTICLE 6B. TRANSACTIONS WITH INTERESTED PERSONS
1. Unless entered into in bad faith, no contract or transaction by this
Corporation shall be void, voidable or in any way affected by reason of the fact
that it is with an Interested Person.
2. For the purposes of this Article, "Interested Person" means any
person or organization in any way interested in this Corporation whether as an
officer, director, stockholder, employee or otherwise, and any other entity in
which any such person or organization or this Corporation is in any way
interested.
3. Unless such contract or transaction was entered into in bad faith,
no Interested Person) because of such interest, shall be liable to this
Corporation or to any other person or organization for any loss or expense
incurred by reason of such contract or transaction or shall be accountable for
any gain or profit realized from such contract or transaction.
4. The provisions of this Article shall be operative notwithstanding
the fact that the presence or an Interested Person was necessary to constitute a
quorum at a meeting of directors or stockholders of this Corporation at which
such contract or transaction was authorized or that the vote or an Interested
Person was necessary for the authorization of such contract or transaction.
ARTICLE 6C. STOCKHOLDERS' MEETINGS
Meetings of stock holders or this Corporation may be held anywhere in
the United States.
ARTICLE 6D. AMENDMENT OF BY-LAWS
The By-Laws may provide that the Board or Directors as well as the
stockholders may make, amend or repeal the By-Laws of this Corporation, except
with respect to any provision thereof which by law, by these Articles or by the
By-Laws requires action by the Stockholders.
ARTICLE 6E. ACTING AS A PARTNER
This Corporation may be a partner in any business enterprise which it
would have power to conduct by itself.
-2B-
<PAGE> 5
7. By-laws of the corporation have been duly adopted and the initial directors,
president, treasurer and clerk, whose names are set out below, have been
duly elected.
8. The effective date of organization of the corporation shall be the date of
filing with the Secretary of the Commonwealth.
9. The following information shall not for any purpose be treated as a
permanent part of the Articles of Organization of the corporation.
a. THE POST OFFICE ADDRESS of the INITIAL PRINCIPAL OFFICE of the
corporation of Massachusetts is:
40 Industrial Park Road, South Shore Park, Hingham, Massachusetts 02043
b. The name, residence, and post office address of each of the initial
directors and following officers of the corporation are as follows:
NAME RESIDENCE POST OFFICE ADDRESS
President: Michael R. Peers 2 Arlington Street 2 Arlington Street
Boston, MA 02117 Boston, MA 02117
Treasurer: William M. Watson 48 Parker Street 48 Parker Street
Norwell, MA 02061 Norwell, MA 02061
Clerk: William M. Watson " " " "
Directors: William M. Watson " " " "
Michael R. Peers 2 Arlington Street 2 Arlington Street
Boston, MA 02117 Boston, MA 02117
c. The date initially adopted on which the corporation's fiscal year ends
is:
December 31st
d. The date initially fixed in the by-laws for the annual meeting of
stockholders of the corporation is:
Fourth Tuesday in April
e. The name and business address of the resident agent, if any, of the
corporation is: N/A
IN WITNESS WHEREOF and under the penalties of perjury the INCORPORATOR(S)
sign(s) these Articles of Organization this 14th day of September, 1983.
(ILLEGIBLE)
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
The signature of each incorporator which is not a natural person must be an
individual who shall show the capacity in which he acts and by signing shall
represent under the penalties of perjury that he is duly authorized on its
behalf to sign these Articles of Organization.
<PAGE> 6
APPLICATION BY FOREIGN CORPORATION FOR
AUTHORIZATION TO TRANSACT BUSINESS IN FLORIDA
1. IVY MANAGEMENT, INC.
- --------------------------------------------------------------------------------
(NAME OF CORPORATION ADDING THE WORD "INCORPORATED" OR "CORPORATION" NOT SO
CONTAINED IN THE NAME AT PRESENT).
2. MASSACHUSETTS 3. 04-2813653
- ------------------------------------ ----------------------------------------
(INCORPORATED UNDER THE LAWS OF) (FEDERAL EMPLOYER IDENTIFICATION NUMBER)
4. SEPTEMBER 14, 1983 5. JUNE 29, 1992
---------------------- ----------------------------------------
(DATE OF INCORPORATION) *(DATE FIRST TRANSACTED BUSINESS IN
FLORIDA) SEE SECTION 607.354 AND
817.155 F.S.
6. 700 S. FEDERAL HIGHWAY, SUITE 300, BOCA RATON, FL 33432
---------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL OFFICER)
6. JOHN N. BREAZEALE
---------------------------------------------------------------------------
(NAME OF FLORIDA REGISTERED AGENT REQUIRED PURSUANT TO
SECTION 607.325 F.S.)
700 S. FEDERAL HIGHWAY, SUITE 300
---------------------------------------------------------------------------
(STREET ADDRESS IN FLORIDA OF REGISTERED AGENT)
BOCA RATON, FL 33432
---------------------------------------------------------------------------
(CITY) (STATE FLORIDA) (ZIP CODE)
8. TRANSFER AGENT AND INVESTMENT ADVISOR FOR REGISTERED INVESTMENT:
---------------------------------------------------------------------------
(Nature of Business to be Transacted in Florida)
9. NAME OF OFFICERS SPECIFIC ADDRESSES
---------------- ------------------
SEE ATTACHED (P)
----------------------------- --------------------------------
(V)
----------------------------- --------------------------------
(S)
----------------------------- --------------------------------
(T)
----------------------------- --------------------------------
NAME OF DIRECTORS SPECIFIC ADDRESSES
----------------- ------------------
SEE ATTACHED (D)
----------------------------- --------------------------------
(D)
----------------------------- --------------------------------
(D)
----------------------------- --------------------------------
(D)
----------------------------- --------------------------------
10. I AM FAMILIAR WITH AND ACCEPT THE OBLIGATIONS PROVIDED FOR IN s. 607.325.
ACCEPTANCE BY THE REGISTERED AGENT: /s/ JOHN N. BREAZEALE
-------------------------------
AGENT MUST SIGN ON THIS LINE
John N. Breazeale
<PAGE> 7
10. 300,000 COMMON SHARES, $.01 PER SHARE
----------------------------------------------------------------------------
(Total Authorized Shares (itemized by Class), Par Value of Shares, & without
Par Value)
Two officers indicated below must sign this application pursuant to Section
607.317(2)F.S.
/s/ JOHN N. BREAZEALE /s/ MICHAEL G. LANDRY
- ------------------------- --------------------------
Secretary President
JOHN N. BREAZEALE MICHAEL G. LANDRY
State of FLORIDA COUNTY OF PALM BEACH
------------------------------------ ---------------------------
The foreign instrument WAS ACKNOWLEDGED BEFORE ME THIS 13TH
--------------------------
JOHN N. BREAZEALE
of APRIL , 1992, By MICHAEL G. LANDRY
--------- -- ---------------------------------------------------------
(NAME OF OFFICE)
SECRETARY
PRESIDENT OF IVY MANAGEMENT INC.
- ----------------------------- ------------------------------------------------
(Title of Officer) (Name of Corporation)
A (An) Massachusetts Corporation on behalf of the Corporation
--------------------------
(State or Country)
(Seal) /s/ PATRICIA A. HILL
-------------------------------------------
Patricia A. Hill
NOTARY PUBLIC
Commission expires: 2/6/93
<PAGE> 8
9. NAME OF OFFICERS SPECIFIC ADDRESS
---------------- ----------------
Michael G. Landry 700 S. Federal Highway
President and Chairman Suite 300
of the Board Boca Raton, FL 33432
Keith J. Carlson 700 S. Federal Highway
Sr. Vice President Suite 300
Boca Raton, FL 33432
John N. Breazeale 700 S. Federal Highway
Sr. Vice President, Clerk Suite 300
and Secretary Boca Raton, FL 33432
Jerry Adler 700 S. Federal Highway
Sr. Vice President Suite 300
Boca Raton, FL 33432
James W. Broadfoot 700 S. Federal Highway
Sr. Vice President Suite 300
Boca Raton, FL 33432
C. William Ferris 700 S. Federal Highway
Vice President Finance Suite 300
and Administration Boca Raton, FL 33432
Leslie A. Ferris 700 S. Federal Highway
Vice President Suite 300
Boca Raton, FL 33432
9. NAME OF DIRECTORS SPECIFIC ADDRESS
----------------- ----------------
Alexander Christ Mackenzie Financial Corp.
150 Bloor Street West
Toronto, Ontario, Canada M5S 3B5
James F. O'Donnell Mackenzie Financial Corp.
150 Bloor Street West
Toronto, Ontario, Canada M5S 3B5
William G. Crerar Mackenzie Financial Corp.
150 Bloor Street West
Toronto, Ontario, Canada 5MS 3B5
Michael G. Landry 700 5. Federal Highway
Suite 300
Boca Raton, FL 33432
<PAGE> 1
EXHIBIT 3.1.3
ARTICLES OF INCORPORATION
OF
MACKENZIE GROUP OF FUNDS, INC.
ARTICLE I
The name of the Corporation is Mackenzie Group of Funds, Inc.
ARTICLE II
The Corporation is organized for the purpose of transacting any and all business
for which corporations may be formed under Chapter 607 of the Florida Statutes,
as amended from time to time.
ARTICLE III
The Corporation is authorized to issue 1,000 shares of common stock, par value
$.001 per share.
ARTICLE IV
The address of the initial registered office of the Corporation is 700 S.
Federal Highway, Suite #300, Boca Baton, FL 33432 and the name of the initial
registered agent of the Corporation at such address is C. William Ferris.
ARTICLE V
The initial mailing address for the Corporation is 700 S. Federal Highway, Suite
#700, Boca Raton, FL 33432.
ARTICLE VI
The Corporation shall have 3 director(s) initially and the number of directors
may be increased or decreased from time to time as provided by the By-laws but
shall never be less than one (1). The name(s) and address(es) of the initial
Director(s) is/are as follows:
C. William Ferris
700 S. Federal Highway
Suite #300
Boca Baton, FL 33432
1
<PAGE> 2
Michael G. Landry
700 S. Federal Highway
Suite #300
Boca Raton, FL 33432
Keith J. Carlson
7005. Federal Highway
Suite #300
Boca Baton, FL 33432
ARTICLE VII
To the fullest extent permitted by the Florida Business Corporation Act, the
Corporation shall indemnify, or advance expenses to, any person made, or
threatened to be made, a party to any action, suit or proceeding by reason of
the fact that such person (i) is or was a director of the Corporation; (ii) is
or was serving at the request of the Corporation as a director of another
corporation, provided that such person is or was at the time a director of the
Corporation; or (iv) is or was serving at the request of the Corporation as an
officer of another corporation, provided that such person is or was at the time
a director of the Corporation or a director of such other corporation, serving
at the request of the Corporation. Unless otherwise expressly prohibited by the
Florida Business Corporation Act, and except as otherwise provided in the
previous sentence, the Board of Directors of the Corporation shall have the sole
and exclusive discretion, on such terms and conditions as it shall determine, to
indemnify, or advance expenses to, any person made; or threatened to be made, a
party to any action, suit, or proceeding by reason of the fact that such person
is or was an officer, employee or agent of the Corporation as an officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise. No person falling within the purview of this paragraph may
apply for indemnification or advancement of expenses to any court of competent
jurisdiction.
ARTICLE VII
The Corporation elects not to be governed by Florida Statute Section 607.0902,
as amended from time to time, relating to control share acquisitions.
ARTICLE IX
The Corporation elects not to be governed by Florida Statute Section 607.0901,
as amended from time to time, concerning affiliated transactions.
2
<PAGE> 3
ARTICLE X
The name(s) and address(es) of the incorporator(s) of this Corporation is/are C.
William Ferris, 700 S. Federal Highway, Suite #700, Boca Baton, FL 33432.
ARTICLE XI
The Board of Directors and Shareholders may amend, repeal or adopt any By-law of
and for the Corporation, but the Shareholders may prescribe that any By-law so
amended, repealed or adopted by the Shareholders shall not be amended, repealed
or adopted by the Board of Directors.
ARTICLE XII
The duration of the Corporation is perpetual.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Incorporation
this 28th day of May, 1993.
/s/ C. WILLIAM FERRIS
-------------------------------------
C. William Ferris
3
<PAGE> 4
ARTICLES OF AMENDMENTS OF
ARTICLES OF INCORPORATION OF
MACKENZIE GROUP OF FUNDS, INC.
RECITALS:
---------
1. Mackenzie Group of Funds, Inc. is a Florida corporation ("Corporation") whose
Articles of Incorporation were originally filed with the Department of State of
the State of Florida on June 2, 1993;
2. the Board of Directors and the Shareholders of the Corporation, by Joint
Unanimous Written Consent dated September 10, 1993 pursuant to Florida Statutes
Section 607.1003 resolved, among other things, that the Articles of
Incorporation of the Corporation be amended as set forth below; and
3. pursuant to the Joint Unanimous Written Consent, the President of the
Corporation was authorized, empowered and directed to sign and file these
Articles of Amendment with the Department of State of the State of Florida to
amend the Articles of Incorporation of the Corporation;
RESOLVED:
---------
1. Article I of the Articles of Incorporation of the Corporation is hereby
deleted in its entirety and the following is substituted:
The name of the corporation will be Mackenzie Funds
Distribution, Inc.
The undersigned, the President of the Corporation, hereby executes these
Articles of Amendment of the Articles of Incorporation of the above Corporation
on behalf of the Corporation.
Mackenzie Group of Funds, Inc.
By: /s/ MICHAEL G. LANDRY
---------------------------------
Michael G. Landry, President
<PAGE> 5
ARTICLES OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
MACKENZIE FUNDS DISTRIBUTION, INC.
R E C I T A L S:
----------------
1. Mackenzie Funds Distribution, Inc. is a Florida corporation ("Corporation")
whose Articles of Incorporation were originally filed with the Department of
State of the State of Florida on June 2, 1993;
2. the Board of Directors and Shareholders of the Corporation, by Joint
Unanimous Written Consent dated June 20, 1994, pursuant to Florida Statutes
Section 607.1003 resolved, among other things, that the amendments were adopted
on June 20, 1994, and the Articles of Incorporation of the Corporation be
amended as set forth below; and
3. pursuant to the Joint Unanimous Written Consent, the president of the
Corporation was authorized, empowered and directed to sign and file these
Articles of Amendment with the Department of State of Florida to amend the
Articles of Incorporation of the Corporation as follows:
R E S O L V E D:
----------------
1. Article 1 of the Articles of Incorporation of the Corporation is hereby
deleted in its entirety and the following is substituted:
ARTICLE I
The name of the Corporation shall be Mackenzie Ivy Funds Distribution, Inc.
The undersigned, of the President of the corporation, hereby executes these
Articles of Amendment of the Articles of Incorporation of the above Corporation
on behalf of the Corporation.
MACKENZIE FUNDS DISTRIBUTION, INC.
By: /s/ MICHAEL G. LANDRY
----------------------------------
Michael G. Landry, President
<PAGE> 6
ARTICLES OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
MACKENZIE IVY FUNDS DISTRIBUTION, INC.
R E C I T A L S:
----------------
1 Mackenzie Ivy Funds Distribution, Inc., is a Florida corporation
("Corporation") whose Articles of Incorporation were originally filed with the
Department of State of the State of Florida on June 2, 1993;
2. the Board of Directors and Shareholder of the Corporation, by Joint Unanimous
Written Consent dated May 1, 1996, pursuant to Florida Statutes Section 607.1003
resolved, among other things, that the Articles of Incorporation of the
Corporation be amended as set forth below (the amendment(s) were adopted May 1,
1996); and
3. pursuant to the Joint Unanimous Written Consent, the President of the
Corporation was authorized, empowered and directed to sign and file these
Articles of Amendment with the Department of State of Florida to amend the
Articles of Incorporation of the Corporation as follows:
R E S O L V E D:
----------------
1. Article 1 of the Articles of Incorporation of the Corporation is hereby
deleted in its entirety and the following is substituted:
ARTICLE I
The name of the Corporation shall be Ivy Mackenzie Distributors, Inc.
The undersigned, the President of the Corporation, hereby executes these
Articles of Amendment of the Articles of Incorporation of the above Corporation
on behalf of the Corporation.
Mackenzie Ivy Funds Distribution, Inc.
By: /s/ KEITH J. CARLSON
-------------------------------------
Keith J. Carlson, President
<PAGE> 7
ACCEPTANCE OF APPOINTMENT
OF
REGISTERED AGENT
I hereby accept the appointment as registered. agent contained in the foregoing
Articles of Incorporation and state that I am familiar with and accept the
obligations of Section 607.0505 of the Florida Statutes, as amended.
/s/ C. WILLIAM FERRIS
------------------------------------
C. William Ferris
4
<PAGE> 1
EXHIBIT 3.1.4
ARTICLES OF INCORPORATION
OF
MACKENZIE/IVY INVESTOR SERVICES CORP.
ARTICLE I
The name of the Corporation is Mackenzie/Ivy Investor Services Corp.
ARTICLE II
The Corporation is organized for the purpose of transacting any and all business
for which corporations may be formed under Chapter 607 of the Florida Statutes,
as amended from time to time.
ARTICLE III
The Corporation is authorized to issue 1,000 shares of common stock, par value
$.001 per share.
ARTICLE IV
The address of the initial registered office of the Corporation is 798 S.
Federal Highway, Suite #201, Boca Raton, FL 33432 and the name of the initial
registered agent of the Corporation at such address is C. William Ferris.
ARTICLE V
The initial mailing address for the Corporation is 700 S. Federal Highway, Suite
#700, Boca Raton, FL 33432.
ARTICLE VI
The Corporation shall have 3 director(s) initially and the number of directors
may be increased or decreased from time to time as provided by the By-laws but
shall never be less than one (1). The name(s) and address(es) of the initial
Director(s) is/are as follows:
C. William Ferris
700 S. Federal Highway
Suite #300
Boca Raton, FL 33432
1
<PAGE> 2
Michael G. Landry
700 S. Federal Highway
Suite #300
Boca Raton, FL 33432
Keith J. Carlson
700 S. Federal Highway
Suite #300
Boca Raton, FL 33432
ARTICLE VII
To the fullest extent permitted by the Florida Business Corporation Act, the
Corporation shall indemnify, or advance expenses to, any person made, or
threatened to be made, a party to any action, suit or proceeding by reason of
the fact that such person (i) is or was a director of the Corporation; (ii) is
or was serving at the request of the Corporation as a director of another
corporation, provided that such person is or was at the time a director of the
Corporation; or (iv) is or was serving at the request of the Corporation as an
officer of another corporation, provided that such person is or was at the time
a director of the Corporation or a director of such other corporation, serving
at the request of the Corporation. Unless otherwise expressly prohibited by the
Florida Business Corporation Act, and except as otherwise provided in the
previous sentence, the Board of Directors of the Corporation shall have the sole
and exclusive discretion, on such terms and conditions as it shall determine, to
indemnify, or advance expenses to, any person made, or threatened to be made, a
party to any action, suit, or proceeding by reason of the fact that such person
is or was an officer, employee or agent of the Corporation as an officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise. No person falling within the purview of this paragraph may
apply for indemnification or advancement of expenses to any court of competent
jurisdiction.
ARTICLE VIII
The Corporation elects not to be governed by Florida Statute Section 607.0902,
as amended from time to time, relating to control share acquisitions.
ARTICLE IX
The Corporation elects not to be governed by Florida Statute Section 607.0901,
as amended from time to time, concerning affiliated transactions.
2
<PAGE> 3
ARTICLE X
The name(s) and address(es) of the incorporator(s) of this Corporation is/are C.
William Ferris, 700 S. Federal Highway, Suite #700, Boca Raton, FL 33432.
ARTICLE XI
The Board of Directors and Shareholders may amend, repeal or adopt any By-law of
and for the Corporation, but the Shareholders may prescribe that any By-law so
amended, repealed or adopted by the Shareholders shall not be amended, repealed
or adopted by the Board of Directors.
ARTICLE XII
The duration of the Corporation is perpetual.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Incorporation
this 28th day of May, 1993.
/s/ C. WILLIAM FERRIS
--------------------------------
C. William Ferris
3
<PAGE> 4
ARTICLES OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
MACKENZIE/IVY INVESTOR SERVICES CORP.
R E C I T A L S:
----------------
1. Mackenzie/Ivy Investor Services Corp., Inc. is a Florida corporation
("Corporation") whose Articles of Incorporation were originally filed with the
Department of State of the State of Florida on June 2, 1993;
2. the Board of Directors and Shareholder of the Corporation, by Joint Unanimous
Written Consent dated May 1, 1996, pursuant to Florida Statutes Section 607.1003
resolved, among other things, that the Articles of Incorporation of the
Corporation be amended as set forth below (the amendment(s) were adopted May
1,1996); and
3. pursuant to the Joint Unanimous Written Consent, the President of the
Corporation was authorized, empowered and directed to sign and file these
Articles of Amendment with the Department of State of Florida to amend the
Articles of Incorporation of the Corporation as follows:
R E S 0 L V E D:
----------------
1. Article 1 of the Articles of Incorporation of the Corporation is hereby
deleted in its entirety and the following is substituted:
ARTICLE I
The name of the Corporation shall be Ivy Mackenzie Services Corp.
The undersigned, the President of the Corporation, hereby executes these
Articles of Amendment of the Articles of Incorporation of the above Corporation
on behalf of the Corporation.
Mackenzie/Ivy Investor Services Corp.
By: /s/ C. WILLIAM FERRIS
-----------------------------------
C. William Ferris, President
<PAGE> 5
ARTICLES OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
MACKENZIE/IVY INVESTOR SERVICES CORP.
R E C I T A L S:
----------------
1. Mackenzie/Ivy Investor Services Corp., Inc. is a Florida corporation
("Corporation") whose Articles of Incorporation were originally filed with the
Department of State of the State of Florida on June 2, 1993;
2. the Board of Directors and Shareholder of the Corporation, by Joint Unanimous
Written Consent dated May 1, 1996, pursuant to Florida Statutes Section 607.1003
resolved, among other things, that the Articles of Incorporation of the
Corporation be amended as set forth below (the amendment(s) were adopted May 1,
1996); and
3. pursuant to the Joint Unanimous Written Consent, the President of the
Corporation was authorized, empowered and directed to sign and file these
Articles of Amendment with the Department of State of Florida to amend the
Articles of Incorporation of the Corporation as follows:
R E S 0 L V E D:
----------------
1. Article 1 of the Articles of Incorporation of the Corporation is hereby
deleted in its entirety and the following is substituted:
ARTICLE I
The name of the Corporation shall be Ivy Mackenzie Services Corp.
The undersigned, the President of the Corporation, hereby executes these
Articles of Amendment of the Articles of Incorporation of the above Corporation
on behalf of the Corporation.
Mackenzie/Ivy Investor Services Corp.
By: /s/ C. WILLIAM FERRIS
--------------------------------
C. William Ferris, President
<PAGE> 6
ARTICLES OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
MACKENZIE/IVY INVESTOR SERVICES CORP.
R E C I T A L S:
----------------
1. Mackenzie/Ivy Investor Services Corp. is a Florida corporation
("Corporation") whose Articles of Incorporation were originally filed with the
Department of State of the State of Florida on June 2, 1993;
2. the Board of Directors and Shareholders of the Corporation, by Joint
Unanimous Written Consent dated June 2, 1993, pursuant to Florida Statutes
Section 607.1003 resolved, among other things, that the Articles of
Incorporation of the Corporation be amended as set forth below; and
3. pursuant to the Joint Unanimous Written Consent, the President of the
Corporation was authorized, empowered and directed to sign and file these
Articles of Amendment with the Department of State of Florida to amend the
Articles of Incorporation of the Corporation as follows:
R E S 0 L V E D:
----------------
1 Article I of the Articles of Incorporation of the Corporation is hereby
deleted in its entirety and the following is substituted:
ARTICLE I
The name of the Corporation shall be Mackenzie Ivy Investor Services Corp.
The undersigned, the President of the Corporation, hereby executes these
Articles of Amendment of the Articles of Incorporation of the above Corporation
on behalf of the Corporation.
Mackenzie Ivy Investor Services Corp.
By: /s/ Keith J. Carlson
-------------------------------
Keith J. Carlson, President
<PAGE> 7
ACCEPTANCE OF APPOINTMENT
OF
REGISTERED AGENT
I hereby accept the appointment as registered agent contained in the foregoing
Articles of Incorporation and state that I am familiar with and accept the
obligations of Section 607.0505 of the Florida Statutes, as amended.
/s/ C. WILLIAM FERRIS
----------------------------
C. William Ferris
4
<PAGE> 1
EXHIBIT 3.2.1
BYLAWS OF
MACKENZIE INVESTMENT MANAGEMENT INC.
ARTICLE 1
SHAREHOLDERS
1.1 MEETINGS.
1.1.1 PLACE OF MEETINGS. Meetings of the shareholders shall be
held at such place as may be designated by the board of directors.
1.1.2 ANNUAL MEETING. An annual meeting of the shareholders
for the election of directors and for other business shall be held at such place
and time as may be fixed by the board of directors.
1.1.3 SPECIAL MEETINGS. Special meetings of the shareholders
may be called at any time by the president or any two members of the board of
directors.
1.1.4 QUORUM. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of stock of the Company entitled
to vote on a particular matter shall constitute a quorum for the purpose of
considering such matter.
1.2 VOTING RIGHTS. Except as otherwise provided herein, in the articles
of incorporation or by law, every shareholder shall have the right at every
shareholders meeting to one vote for every share standing in his name on the
books of the Company which is entitled to vote at such meeting. Every
shareholder may vote either in person or by proxy.
ARTICLE 2
DIRECTORS
2.1 NUMBER AND TERM. The board of directors shall have authority by
resolution adopted by a majority of the board to (i) determine the number of
directors to constitute the board and (ii) fix the compensation of the
directors. Each director elected to the board shall hold office until the next
annual meeting of the shareholders or until his earlier resignation, removal
from office or death.
2.2 POWERS. All corporate powers shall be exercised by or under
authority of, and the business and affairs of the Company shall be managed under
the direction of, the board of directors.
<PAGE> 2
2.3 MEETINGS.
2.3.1 PLACE. Meetings of the board of directors shall be held
at such place as may be designated by the board or in the notice of the meeting.
2.3.2 REGULAR MEETINGS. Regular meetings of the board of
directors shall be held at such times as the board may designate. Notice of
regular meetings need not be given
2.3.3 SPECIAL MEETINGS. Special meetings of the board may be
called by direction of the chairman of the board, the president or any two
members of the board on three days' notice to each director, either personally
or by mail or by telegram.
2.3.4 QUORUM. A majority of all the directors in office shall
constitute a quorum for the transaction of business at any meeting.
2.4 COMMITTEES. The board of directors may by resolution adopted by a
majority of the whole board designate one or more committees, each committee to
consist of one or more directors and such alternate members (also directors) as
may be designated by the board. Unless otherwise provided herein, in the absence
or disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another director to act at the
meeting in the place of any such absent or disqualified member.
ARTICLE 3
OFFICERS
3.1 ELECTION. At its first meeting after each annual meeting of the
shareholders, the board of directors shall elect a president, treasurer,
secretary and such vice-presidents, other officers and assistant officers as it
deems advisable. All officers shall serve at the pleasure of the board, and any
number of offices may be held by the same person.
3.2 AUTHORITY DUTIES AND COMPENSATION. The officers shall have such
authority, perform such duties and serve for such compensation as may be
determined by resolution of the board of directors. Except as otherwise provided
by board resolution, (i) the chairman of the board shall preside at all meetings
of the board and shareholders, (ii) the president shall be the chief executive
officer of the Company, shall have general supervision over the business and
operations of the Company, and may perform any act and execute any instrument
for the conduct of such business and operations and (iii) the other officers
shall have the duties usually related to their offices.
-2-
<PAGE> 3
ARTICLE 4
INDEMNIFICATION
4.1 RIGHT TO INDEMNIFICATION. The Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact that
such person is or was a director or officer of the Company or a constituent
corporation absorbed in a consolidation or merger, or is or was serving at the
request of the Company or a constituent corporation absorbed in a consolidation
or merger, as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or is or was a director or officer of the
Company serving at its request as an administrator trustee or other fiduciary of
one or more of the employee benefit plans of the Company or other enterprise,
against expenses (including attorneys' fees), liability and loss actually and
reasonably incurred or suffered by such person in connection with such
proceeding, whether or not the indemnified liability arises or arose from any
threatened, pending or completed proceeding by or in the right of the Company,
except to the extent that such indemnification is prohibited by applicable law.
4.2 ADVANCE OF EXPENSES. Expenses incurred by a director or officer of
the Company in defending a proceeding shall be paid by the Company in advance of
the final disposition of such proceeding subject to the provisions of any
applicable statute.
4.3 PROCEDURE FOR DETERMINING PERMISSIBILITY. To determine whether any
indemnification or advance of expenses under this Article 4 is permissible, the
board of directors by a majority vote of a quorum consisting of directors not
parties to such proceeding may, and on request of any person seeking
indemnification or advance of expenses shall be required to, determine in each
case whether the applicable standards in any applicable statute have been met,
or such determination shall be made by independent legal counsel if such quorum
is not obtainable, or, even if obtainable, a majority vote of a quorum of
disinterested directors so directs, provided that, if there has been a change in
control of the Company between the time of the action or failure to act giving
rise to the claim for indemnification or advance of expenses and the time such
claim is made, at the option of the person seeking indemnification or advance of
expenses, the permissibility of indemnification or advance of expenses shall be
determined by independent legal counsel. The reasonable expenses of any director
or officer in prosecuting a successful claim for indemnification, and the fees
and expenses of any special legal counsel engaged to determine permissibility of
indemnification or advance of expenses, shall be borne by the Company.
-3-
<PAGE> 4
4.4 CONTRACTUAL OBLIGATION. The obligations of the Company to indemnify
a director or officer under this Article 4, including the duty to advance
expenses, shall be considered a contract between the Company and such director
or officer, and no modification or repeal of any provision of this Article 4
shall affect, to the detriment of the director or officer, such obligations of
the Company in connection with a claim based on any act or failure to act
occurring before such modification or repeal.
4.5 INDEMNIFICATION NOT EXCLUSIVE; INURING OF BENEFIT. The
indemnification and advance of expenses provided by this Article 4 shall not be
deemed exclusive of any other right to which one indemnified may be entitled
under any statute, provision of the Certificate of Incorporation, these bylaws,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in such person's official capacity and as to action in another
capacity while holding such office, and shall inure to the benefit of the heirs,
executors and administrators of any such person.
4.6 INSURANCE AND OTHER INDEMNIFICATION. The board of directors shall
have the power to (i) authorize the Company to purchase and maintain, at the
Company's expense, insurance on behalf of the Company and on behalf of others to
the extent that power to do so has not been prohibited by statute, (ii) create
any fund of any nature, whether or not under the control of a trustee, or
otherwise secure any of its indemnification obligations, and (iii) give other
indemnification to the extent permitted by statute.
ARTICLE 5
STOCK CERTIFICATES AND TRANSFERS
5.1 STOCK CERTIFICATES. Every shareholder of record shall be entitled
to a stock certificate representing the stock held by him or her. Every stock
certificate shall bear the corporate seal (which may be a facsimile) and the
signature of the president or a vice-president and the secretary or an assistant
secretary of the Company. Where a certificate is signed by a transfer agent or
registrar the signature of any corporate officer may be a facsimile.
5.2 TRANSFERS. Transfers of stock certificates and the stock
represented thereby shall be made on the books of the Company only by the
registered holder or by duly authorized attorney. Transfers shall be made only
on surrender of the stock certificate or certificates. All transfers of stock
shall be made in accordance with the provisions of applicable law, including the
provisions of Regulation S under the Securities Act of 1933, as amended.
-4-
<PAGE> 5
ARTICLE 6
AMENDMENTS
These bylaws may be altered, amended or repealed at any regular or
special meeting of the board of directors by the vote of a majority of all the
directors in office.
-5-
<PAGE> 6
MACKENZIE INVESTMENT MANAGEMENT INC.
INFORMAL ACTION BY INCORPORATOR
The undersigned, being the incorporator of Mackenzie
Investment Management Inc. (the "Company"), a Delaware corporation, hereby
adopts the following resolutions in accordance with Section 108(c) of the
General Corporation Law of the State of Delaware:
RESOLVED that the bylaws attached hereto are hereby adopted as
the bylaws of the Company.
RESOLVED that the number of directors to constitute the board
of directors of the Company shall be six and that the
following persons are hereby elected directors, to hold office
until the first annual meeting of the shareholders of the
Company or until their successors have been elected and
qualified:
Keith J. Carlson
Alexander Christ
William Grant Crerar
Wesley E. Horton
James Francis O'Donnell
Mark J. Spinello
IN WITNESS WHEREOF, the undersigned has executed this Informal
Action this 26th day of April, 1985.
/s/ ANDREW J. RUDOLF
-----------------------------------
Andrew J. Rudolf,
Incorporator
<PAGE> 7
BYLAWS OF
MACKENZIE INVESTMENT MANAGEMENT INC.
ARTICLE I
SHAREHOLDERS
1.1 MEETINGS.
1.1.1 PLACE OF MEETINGS. Meetings of the shareholders
shall be held at such place as may be designated by the board of directors.
1.1.2 ANNUAL MEETING. An annual meeting of the
shareholders for the election of directors and for other business shall be held
at such place and time as may be fixed by the board of directors.
1.1.3 SPECIAL MEETINGS. Special meetings of the
shareholders may be called at any time by the president or any two members the
board of directors.
1.1.4 QUORUM. The presence, in person or by proxy, of
the holders of a majority of the outstanding shares of stock of the Company
entitled to vote on a particular matter shall constitute a quorum for the
purpose of considering such matter.
1.2 VOTING RIGHTS. Except as otherwise provided herein, in the
articles of incorporation or by law, every shareholder shall have the right at
every shareholders' meeting to one vote for every share standing in his name on
the books of the Company which is entitled to vote at such meeting. Every
shareholder may vote either in person or by proxy.
ARTICLE II
DIRECTORS
2.1 NUMBER AND TERM. The board of directors shall have
authority by resolution adopted by a majority of the board to (i) determine the
number of directors to constitute the board and (ii) fix the compensation of the
directors. Each director elected to the board shall hold office until
<PAGE> 8
the next annual meeting of the shareholders or until his earlier resignation,
removal from office or death.
2.2 POWERS. All corporate powers shall be exercised by or
under authority of, and the business and affairs of the Company shall be managed
under the direction of, the board of directors.
2.3 MEETINGS.
2.3.1 PLACE. Meetings of the board of directors shall
be held at such place as may be designated by the board or in the notice of the
meeting.
2.3.2 REGULAR MEETINGS. Regular meetings of the board
of directors shall be held at such times as the board may designate. Notice of
regular meetings need not be given.
2.3.3 SPECIAL MEETINGS. Special meetings of the board
may be called by direction of the chairman of the board, the president or any
two members of the board on three days' notice to each director, either
personally or by mail or by telegram.
2.3.4 QUORUM. A majority of all the directors in
office shall constitute a quorum for the transaction of business at any meeting.
2.4 COMMITTEES. The board of directors may by resolution
adopted by a majority of the whole board designate one or more committees, each
committee to consist of one or more directors and such alternate members (also
directors) as may be designated by the board. Unless otherwise provided herein,
in the absence or disqualification of any member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another director
to act at the meeting in the place of any such absent or disqualified member.
ARTICLE III
OFFICERS
3.1 ELECTION. At its first meeting after each annual meeting
of the shareholders, the board of directors shall elect a president, treasurer,
secretary and such
-2-
<PAGE> 9
vice-presidents, other officers and assistant officers as it deems advisable.
All officers shall serve at the pleasure of the board, and any number of offices
may be held by the same person.
3.2 AUTHORITY, DUTIES AND COMPENSATION. The officers shall
have such authority, perform such duties and serve for such compensation as may
be determined by resolution of the board of directors. Except as otherwise
provided by board resolution, (i) the chairman of the board shall preside at all
meetings of the board and shareholders, (ii) the president shall be the chief
executive officer of the Company, shall have general supervision over the
business and operations of the Company, and may perform any act and execute any
instrument for the conduct of such business and operations and (iii) the other
officers shall have the duties usually related to their offices.
ARTICLE IV
INDEMNIFICATION
4.1 RIGHT TO INDEMNIFICATION.
4.1.1 The Company shall indemnify any person who was
or is a party or threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, either civil, criminal, administrative or
investigative by reason of the fact that he or she is or was a director, officer
or employee of the Company or is or was serving at the request of the Company as
a director, officer or employee of another enterprise, or is or was a director,
officer or employee of the Company serving at its request as an administrator,
trustee or other fiduciary of one or more of the employee benefit plans of the
Company or other enterprise, against expenses (including attorneys' fees),
judgments, fines, excise taxes and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the Company, and,
with respect to any criminal action or proceeding had no reasonable cause to
believe his or her conduct was unlawful, to the extent that (i) such person is
not otherwise indemnified and (ii) the power to do so has been or may be granted
by statute. For this purpose the board of directors may, and on request of any
such person shall be required to, determine in each case whether or not the
applicable
-3-
<PAGE> 10
standards in any such statute have been met, or such determination shall be made
by independent legal counsel if the board so directs or if the board is not
empowered by statute to make such determination. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action or proceeding had no reasonable
cause to believe that his or her conduct was unlawful.
4.1.2 The Company shall indemnify any person who was
or is a party or is proposed to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company to procure a judgment
in its favor by reason of the fact that he or she is or was a director, officer,
employee or agent of the Company against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit, if he or she acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Company.
4.2 INDEMNIFICATION NOT EXCLUSIVE. The foregoing
indemnification shall not be deemed exclusive of any other right to which one
indemnified may be entitled, both as to action in his or her official capacity
and as to action in another capacity while holding such office, and shall inure
to the benefit of the heirs, executors and administrators of any such person.
4.3 INSURANCE AND OTHER INDEMNIFICATION. The board of
directors shall have the power to (i) purchase and maintain, at the Company's
expense, insurance on behalf of the Company and on behalf of others to the
extent that power to do so has been or may be granted by statute, and (ii) give
other indemnification to the extent permitted by law.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
5.1 STOCK CERTIFICATES. Every shareholder of record shall be
entitled to a stock certificate representing the stock held by him or her. Every
stock certificate shall bear the corporate seal (which may be a facsimile) and
the
-4-
<PAGE> 11
signature of the president or a vice-president and the secretary or an assistant
secretary of the Company. Where a certificate is signed by a transfer agent or
registrar the signature of any corporate officer may be a facsimile.
5.2 TRANSFERS. Transfers of stock certificates and the stock
represented thereby shall be made on the books of the Company only by the
registered holder or by duly authorized attorney. Transfers shall be made only
on surrender of the stock certificate or certificates.
ARTICLE VI
AMENDMENTS
These bylaws may be altered, amended or repealed at any
regular or special meeting of the board of directors by the vote of a majority
of all the directors in office.
-5-
<PAGE> 1
EXHIBIT 3.2.2
BY-LAWS
OF
HINGHAM MANAGEMENT INC.
ARTICLE I
STOCKHOLDERS
1. ANNUAL MEETING. The annual meeting of stockholders shall be held on
the fourth Tuesday in April in each year after 1904 (or if that be a legal
holiday in the place where the meeting is to be held on the next succeeding full
business day), at the principal office of the corporation in Massachusetts at
10:00 o'clock A.M. unless a different hour or place within the United States is
fixed by the Board of Directors or the President. The purposes for which the
annual meeting is to be held, in addition to those prescribed by law, by the
Articles of Organization or by these By-laws, may be specified by the Board of
Directors or the President. If no annual meeting has been held on the date
fixed above, a special meeting in lieu thereof may be held with all the force
and effect of an annual meeting.
2. SPECIAL MEETINGS. Special meetings of stockholders may be called by
the President or by the Board of Directors. Special meetings shall be called by
the Clerk, or in case of the death, absence, incapacity or refusal of the Clerk,
by any other officer, upon written application of one or more stockholders who
hold at least one tenth part in interest of the capital stock entitled to vote
at such meeting. The call for the meeting may be oral or written and shall state
the place, date, hour and purposes of the meeting.
3. NOTICE OF MEETINGS. A written notice of the place, date and hour of
all meetings of stockholders stating the purposes of the meeting shall be given
by the Clerk or an Assistant Clerk (or other person authorized by these By-laws
or by law) at least seven days before the meeting to each stockholder entitled
to vote thereat and to each stockholder who, under the Articles of Organization
or under these By-laws, is entitled to such notice, by leaving such notice with
him or at his residence or usual place of business, or by mailing it, postage
prepaid, and addressed to such stockholder at his address as it appears in the
records of the corporation. Notice need not be given to a stockholder if a
written waiver of notice, executed before or after the meeting by such
stockholder or his attorney thereunto authorized, is filed with the records of
the meeting.
4. QUORUM. The holders of a majority in interest of all stock issued,
outstanding and entitled to vote at a meeting shall constitute a quorum, but if
a quorum is not present, a lesser
<PAGE> 2
number may adjourn the meeting from time to time and the meeting may be held as
adjourned without further notice.
5. VOTING AND PROXIES. Stockholders shall have one vote for each share
of stock entitled to vote owned by them of record according to the books of the
corporation and a proportionate vote for a fractional share, unless otherwise
provided by law or by the Articles of Organization. Stockholders may vote either
in person or by written proxy dated not more than six months before the meeting
named therein. Proxies shall be filed with the Clerk of the meeting, or of any
adjournment thereof, before being voted. Except as otherwise limited therein,
proxies shall entitle the persons authorized thereby to vote at any adjournment
of such meeting but shall not be valid after final adjournment of such meeting.
A proxy with respect to stock held in the name of two or more persons shall be
valid if executed by one of them unless at or prior to exercise of the proxy the
corporation receives a specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a stockholder shall
be deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger.
6. ACTION AT MEETING. When a quorum is present, any matter before the
meeting shall be decided by vote of the holders of a majority of the shares of
stock voting on such matter, except where a larger vote is required by law, by
the Articles of Organization or by these by-laws. Any election by stockholders
shall be determined by a plurality of the votes. cast, except where a larger
vote is required by law, by the Articles of Organization or by these By-laws. No
ballot shall be required for any election unless requested by a stockholder
entitled to vote in the election. The corporation shall not directly or
indirectly vote any share of its own stock.
7. ACTION WITHOUT MEETING. Any action to be taken by stockholders may
be taken without a meeting if all stockholders entitled to vote on the matter
consent to the action by a writing filed with the records of the meetings of
stockholders. Such consent shall be treated for all purposes as a vote at a
meeting.
ARTICLE II
DIRECTORS
1. POWERS. The business of the corporation shall be managed by a Board
of Directors, who may exercise all the powers of the corporation except as
otherwise provided by law by the Articles of Organization, or by these By-laws.
In the event of a vacancy in the Board of Directors, the remaining Directors,
except as otherwise provided by law, may exercise the powers of the full Board
until the vacancy is filled.
-2-
<PAGE> 3
2. NUMBER, ELECTION, AND TERM OF OFFICE. The stockholders at each
annual meeting shall fix the number of Directors (which shall be not less than
three or less than the number of stockholders if less than three) and elect the
number of Directors so fixed. Each Director shall serve until the next annual
meeting of stockholders and until his successor shall have been elected and
qualified or until his death, resignation, or removal from office. The Board of
Directors may be enlarged by the stockholders at any meeting.
3. QUALIFICATION. No Director need be a stockholder.
4. VACANCIES; REDUCTION OF BOARD. Any vacancy in the Board of
Directors, however occurring, including a vacancy resulting from the enlargement
of the Board of Directors, may be filled by the stockholders. In lieu of filling
any such vacancy, the stockholders may reduce the number of Directors, but not
to a number less than three or less than the number of stockholders, if less
than three.
5. RESIGNATION. Any Director may resign by delivering his written
resignation to the corporation at its principal office or to the President,
Clerk or Secretary. Such resignation shall be effective upon receipt unless it
is specified to be effective at some other time or upon the happening of some
other event.
6 REMOVAL. Any Director may be removed with or without cause at any
time by the vote of the holders of a majority of the outstanding stock entitled
to vote, at an annual meeting or a special meeting of the stockholders called
for the purpose. A Director may be removed for cause only after reasonable
notice and opportunity to be heard.
7. MEETINGS. Regular meetings of the Board of Directors may be held
without notice at such time, date and place as the Board of Directors may from
time to time determine. A regular meeting of the Board of Directors may be held
without notice at the same place as the annual meeting of stockholders, or the
special meeting held in lieu thereof, following such meeting of stockholders.
Special meetings of the Board of Directors may be called, orally or in
writing, by the President, Treasurer or two or more Directors, designating the
time, date and place thereof.
8. NOTICE OF MEETINGS. Notice of the time, date and place of all
special meetings of the Board of Directors shall be given to each Director by
the Secretary, or if there be no Secretary, by the Clerk or Assistant Clerk, or
in case of the death, absence, incapacity or refusal of such persons, by the
officer or one of the Directors calling the meeting. Notice shall be given to
each Director in person or by telephone or by telegram sent to his business or
home address at least twenty-four hours in advance of the meeting, or by written
notice mailed to his business or home address at least forty-eight hours in
advance of the meeting. Notice need not be given to any Director if a written
waiver of
-3-
<PAGE> 4
notice executed by him before or after the meeting, is filed with the records of
the meeting, or to any Director who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him. A notice or waiver of
notice of a meeting of the Board of Directors need not specify the purposes of
the meeting.
9. QUORUM. At any meeting of the Board of Directors, a majority of the
total number of Directors then in office shall constitute a quorum. Less than a
quorum may adjourn any meeting from time to time and the meeting may be held as
adjourned without further notice.
10. ACTION AT MEETING. At any meeting of the Board of Directors at
which a quorum is present, a majority of the Directors present may take any
action on behalf of the Board of Directors, unless a larger number is required
by law, by the Articles of Organization or by these By-laws.
11. ACTION BY CONSENT. Any action by the Board of Directors may be
taken without a meeting if a written consent thereto is signed by all the
Directors and filed with the records of the Meetings of the Board of Directors.
Such consent shall be treated as a vote of the Board of Directors for all
purposes.
12. COMMITTEES. The Board of Directors, by vote of a majority of the
total number of Directors then in office, may elect from its number an
Executive Committee or other committees and may delegate thereto some or all of
its powers except those which by law, by the Articles of Organization or by
these By-laws may not be delegated. Except as the Board of Directors may
otherwise determine, any such committee may make rules for the conduct of its
business, but unless otherwise provided by the Board of Directors or in such
rules, its business shall be conducted so far as possible in the same manner as
is provided by these By-laws for the Board of Directors. All members of such
committees shall hold such offices at the pleasure of the Board of Directors.
The Board of Directors may abolish any such committee at any time. Any committee
to which the Board of Directors delegates any of its powers or duties shall keep
records of its meetings and shall report its action to the Board of Directors.
The Board of Directors shall have power to rescind any action of any committee,
but no such rescission shall have retroactive effect.
ARTICLE III
OFFICERS
1. ENUMERATION. The officers of the corporation shall consist of a
President, a Treasurer, a Clerk, and such other officers, including one or more
Vice Presidents, Assistant Treasurers, Assistant Clerks or a Secretary, as the
Board of Directors may determine.
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<PAGE> 5
2. ELECTION. The President, Treasurer and Clerk shall be elected
annually the Board of Directors at their first meeting following the annual
meeting of stockholders. Other officers may be chosen by the Board of Directors
at such meeting or at any other meeting.
3. QUALIFICATION. No officer need be a stockholder or Director. Any two
or more offices may be held by any person provided that the President and Clerk
shall not be the same person. The Clerk shall be a resident of Massachusetts
unless the corporation has a resident agent appointed for the purpose of service
of process. Any officer may be required by the Board of Directors to give bond
for the faithful performance of his duties in such amount and with such sureties
as the Board of Directors may determine.
4. TENURE. Except as otherwise provided by law, by the Articles of
Organization or by these By-laws, the President, Treasurer and Clerk shall hold
office until the next annual meeting of stockholders and until their respective
successors are chosen and qualified, and all other officers shall hold office
until the next annual meeting of stockholders and until their successors are
chosen and qualified, or for such shorter term as the Board of Directors may fix
at the time such officers are chosen. Any officer may resign by delivering his
written resignation to the corporation at its principal office or to the
President, Clerk or Secretary, and such resignation shall be effective upon
receipt unless it is specified to be effective at some other time or upon the
happening of some other event.
5. REMOVAL. The Board of Directors may remove any officer with or
without cause by a vote of a majority of the entire number of Directors then in
office; provided, that an officer may be removed for cause only after reasonable
notice and opportunity to be heard by the Board of Directors.
6. VACANCIES. Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
7. PRESIDENT AND VICE PRESIDENTS. The President shall be the chief
executive officer of the corporation and shall, subject to the direction of the
Board of Directors, have general supervision and control of its business.
Unless otherwise provided by the Board of Directors he shall preside, when
present, at all meetings of stockholders and of the Board of Directors.
Any Vice President shall have such powers and shall perform such
duties as the Board or Directors may from time to time designate.
8. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall, subject
to the direction of the Board of Directors, have general charge of the financial
affairs of the corporation and shall cause to be kept accurate books of account.
He shall have
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<PAGE> 6
custody of all funds, securities, and valuable documents of the corporation,
except as the Board of Directors may otherwise provide.
Any Assistant Treasurer shall hive such power and perform such
duties as the Board of Directors may from time to time designate.
9. CLERK AND ASSISTANT CLERKS. The Clerk shall keep a record of the
meetings of stockholders. In case a Secretary is not elected or is absent, the
Clerk or an Assistant Clerk shall keep a record of the meetings of the Board of
Directors. In the absence of the Clerk from any meeting of stockholders, an
Assistant Clerk if one be elected, otherwise a Temporary Clerk designated by the
person presiding at the meeting, shall perform the duties of the Clerk.
10. SECRETARY. The Secretary, if one be elected, shall keep a record
of the meetings of the Board of Directors. In the absence of the Secretary, the
Clerk and any Assistant Clerk, a Temporary Secretary shall be designated by the
person presiding at such meeting to perform the duties of the Secretary.
11. OTHER POWERS AND DUTIES. Subject to these By-laws, each officer
of the corporation shall have in addition to the duties and powers specifically
set forth in these By-laws, such duties and powers as are customarily incident
to his office, and such duties and powers as may be designated from time to time
by the Board of Directors.
ARTICLE V
CAPITAL STOCK
1. CERTIFICATES OF STOCK. Each stockholder shall be entitled to a
certificate of the capital stock of the corporation in such form as may from
time to time be prescribed by the Board of Directors. Such certificate shall be
signed by the President or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate is signed by a
transfer agent, or by a registrar, other than a Director, officer or employee of
the corporation. In case any officer who has signed or whose facsimile signature
has been placed on such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the time of its issue. Every certificate
for shares of stock which are subject to any restriction on transfer and every
certificate issued when the corporation is authorized to issue more than one
class or series of stock shall contain such legend with respect thereto as is
required by law.
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<PAGE> 7
2. TRANSFERS. Subject to the restrictions, if any, noted on the stock
certificates, shares of stock may be transferred on the books of the corporation
by the surrender to the corporation or its transfer agent of the certificate
therefor properly endorsed or accompanied by a written assignment and power of
attorney properly executed, with transfer stamps (if necessary) affixed, and
with such proof of the authenticity of signature as the corporation or its
transfer agent may reasonably require.
3. RECORD HOLDERS. Except as may be otherwise required by law, by the
Articles of Organization or by these By-laws, the corporation shall be entitled
to treat the record holder of stock as shown on its books as the owner of
such stock for all purposes, including the payment of dividends and the right to
vote with respect thereto, regardless of any transfer, pledge or other
disposition of such stock, until the shares have been transferred on the books
of the corporation in accordance with the requirements of these By-laws.
It shall be the duty of each stockholder to notify the
corporation of his post office address.
4. RECORD DATE. The Board of Directors may fix in advance a time of not
more than sixty days preceding the date of any meeting of stockholders, or the
date for the payment of any dividend or the making of any distribution to
stockholders, or the last day on which the consent or dissent of stockholders
may be effectively expressed for any purpose, as the record date for
determining the stockholders having the right to notice of and to vote at such
meeting, and any adjournment thereof, or the right to receive such dividend or
distribution or the right to give such consent or dissent. In such case only
stockholders of record on such record date shall have such right,
notwithstanding any transfer of stock on the books of the corporation after the
record date. Without fixing such record date the Board of Directors may for any
of such purposes close the transfer books for all or any part of such period.
5. REPLACEMENT OF CERTIFICATES. In case of the alleged loss,
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms as the Board of Directors may
prescribe.
ARTICLE V
MISCELLANEOUS PROVISIONS
1. FISCAL YEAR. Except as otherwise determined by the Board of
Directors, the fiscal year of the corporation shall be the twelve months ending
December 31.
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<PAGE> 8
2. SEAL. The Board of Directors shall have power to adopt and alter the
seal of the corporation.
3. EXECUTION OF INSTRUMENTS. All deeds, leases, transfers, contracts,
bonds, notes and other obligations authorized to be executed by an officer of
the corporation in its behalf shall be signed by the President or the Treasurer
except as the Board of Directors may generally or in particular cases otherwise
determine.
4. VOTING OF SECURITIES. Unless otherwise provided by the Board of
Directors, the President or Treasurer may waive notice of and act on behalf of
this Corporation, or appoint another person or persons to act as proxy or
attorney in fact for this corporation with or without discretionary power and/or
power of substitution, at any meeting of stockholders or shareholders of any
other corporation or organization, any of whose securities are held by this
corporation.
5. RESIDENT AGENT. The Board of Directors may appoint a resident agent
upon legal process may be served in any action or proceeding against the
corporation. Said resident agent shall be either an individual who is a resident
of and has a business address in Massachusetts, a corporation organized under
the laws of Massachusetts, or a corporation organized under the laws of any
other state of the United States, which has qualified to do business in, and has
an office in, Massachusetts.
6. CORPORATE RECORDS. The original, or attested copies, of the Articles
of Organization, By-laws and records of all meetings of the incorporators and
stockholders, and the stock and transfer records, which shall contain the names
of all stockholders and the record address and the amount of stock held by each,
shall be kept in Massachusetts at the principal office of the corporation, or at
an office of its transfer agent, Clerk, Assistant Clerk or resident agent, and
shall be open at all reasonable times to the inspection of any stockholder for
any proper purpose, but not to secure a list of stockholders for the purpose of
selling said list or copies thereof or of using the same for a purpose other
than in the interest of the applicant, as a stockholder, relative to the affairs
of the corporation.
7. ARTICLES OF ORGANIZATION. All references in these By-laws to the
Articles of Organization shall be deemed to refer to the Articles of
Organization of the corporation, as amended and in effect from time to time.
8. AMENDMENTS. Any of these By-laws may be amended or repealed in whole
or in part and new By-laws made only by vote of the stockholders at any annual
or special meeting.
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<PAGE> 9
EXHIBIT A
---------
HINGHAM MANAGEMENT INC.
-----------------------
First Amendment
Dated as of May 1, 1985
to By-laws
Adopted September 14. 1983
--------------------------
FIRST AMENDMENT, dated as of May 1, 1985, to the By-laws adopted
September 14, 1983 of HINGHAM MANAGEMENT INC.
SECTION 1. ARTICLE III. Article III of the By-laws is hereby amended, as
of the date hereof, as set forth below:
(a) Section 1 of Article III of the By-laws is hereby amended
by deleting said section in its entirety and substituting in lieu
thereof the following:
"SECTION 1. ENUMERATION. The officers of the corporation shall
consist of a Chairman of the Board of Directors, a President, a
Treasurer, a Clerk and such other officers, including one or more Vice
Presidents, Assistant Treasurers, Assistant Clerks or a Secretary, as
the Board of Directors may determine."
(b) Section 2. of Article III of the By-laws is hereby amended
by deleting said section in its entirety and substituting in lieu
thereof the following:
"SECTION 2. ELECTION. The Chairman of the Board, President,
Treasurer and Clerk shall be elected annually by the Board of Directors
at their first meeting following the annual meeting of stockholders.
Other officers may be chosen by the Board of Directors at such meeting
or at any other meeting."
(c) Section 4 of Article III of the By-laws is hereby amended
by deleting said section in its entirety and substituting in lieu
thereof the following:
"SECTION 4. TENURE. Except as otherwise provided by law, by
the Articles of Organization or by these By-laws, the Chairman of the
Board, President, Treasurer and Clerk shall hold office until the next
annual meeting of stockholders and until their respective successors
are chosen and qualified; and all other officers shall hold
<PAGE> 10
EXHIBIT 3.2.2
EXHIBIT A
HINGHAM MANAGEMENT INC.
-----------------------
First Amendment
Dated as of May 1, 1985
to By-laws
Adopted September 14, 1983
--------------------------
FIRST AMENDMENT, dated as of May 1, 1985, to the By-laws adopted
September 14, 1983 of HINGHAM MANAGEMENT INC.
Section 1. ARTICLE III. Article III of the By-laws is hereby amended,
as of the date hereof, as set forth below:
(a) Section 1 of Article III of the By-laws is hereby amended
by deleting said section in its entirety and substituting in lieu thereof the
following:
"Section 1. ENUMERATION. The officers of the corporation shall
Consist of a Chairman of the Board of Directors, a President, a Treasurer, a
Clerk and such other officers, including one or more Vice Presidents, Assistant
Treasurers, Assistant Clerks or a Secretary, as the Board of Directors may
determine."
(b) Section 2 of Article III of the By-laws is hereby amended
by deleting said section in its entirety and Substituting in lieu thereof the
following:
"Section 2. ELECTION. The Chairman of the Board, President,
Treasurer and Clerk shall be elected annually by the Board of Directors at their
first meeting following the annual meeting of Stockholders. Other officers may
be chosen by the Board of Directors at, such meeting or at any other meeting."
(c) Section 4 of Article III of the By-laws is hereby amended
by deleting said section in its entirety and substituting in lieu thereof the
following:
"Section 4. TENURE. Except as otherwise provided by law, by
the Articles of Organization or by these By-laws, the Chairmen of the Board,
President, Treasurer and Clerk shall hold office until the next - annual meeting
of Stockholders and until their respective successors are chosen and qualified;
and all other officers shall hold
<PAGE> 11
-2-
office until the next annual meeting of stockholders and until their successors
are chosen and qualified, or for such shorter term as the Board of Directors may
fix at the time such officers are chosen. Any officer may resign by delivering
his written resignation to the Corporation at its principal office or to the
Chairman of the board, President, Clerk or Secretary, and such resignation shall
be effective upon receipt unless it is specified to be effective at some other
time or upon the happening of some other event."
(d) Section 7 of Article III of the By-Laws is hereby amended
by deleting said section in its entirety and substituting in lieu thereof the
following:
"Section 7. PRESIDENT AND VICE PRESIDENTS. The President shall
be the executive officer next in authority to the Chairman of the Board of
Directors, and shall perform such duties at the Board of Directors or the
Chairman of the Board may from time to time designate. He shall have the power
and authority to bind the corporation to any contract or in any other manner
that would be customary for the President of a Massachusetts corporation.
Any Vice President shall have such powers and shall perform such duties as the
Board of Directors may from time to time designate."
(2) Sections 7, 8, 9, 10 and 11 of Article III of the By-Laws
are hereby renumbered to become ) Sections 8, 9, 10, 11 and 12, respectively;
and, the following new Section 7 is hereby inserted:
"Section 7. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman
of the Board of Directors shall be the senior corporate officer of the
corporation, and shall preside, when present, at all meetings of stockholders
and of the Board of Directors. The Chairman of the Board shall have the general
control and management of the corporation's business and affairs, subject,
however, to the right of the Board of Directors to confer any specific power
upon any other officer of the corporation. The Chairman of the Board shall do
and perform all acts and things incident
<PAGE> 12
-3-
to the office of Chairman of the Board and such other duties as may be assigned
to him from time to time by the Board of Directors."
Section 2. ARTICLES I AND II. Each reference to the "President" in
Article I, Section 1, and Article I, Section 2, and Article II, Section 7, of
the By-Laws is hereby replaced by a reference to the "Chairman of the Board".
Section 3. MISCELLANEOUS. Except to the extent specifically amended
hereby, the provisions of the By-Laws shall remain unmodified, and the By-Laws,
as amended hereby, are hereby confirmed as being in full force and effect.
<PAGE> 1
EXHIBIT 3.2.3
BY-LAWS
OF
MACKENZIE IVY FUNDS DISTRIBUTION, INC.
ARTICLE 1
OFFICES
Section 1. OFFICES. The principal office of the corporation shall be
located within the State of Florida, and the corporation may have such other
offices, either within or without the State of Florida, as the board of
directors may designate from time to time, or as the business of the corporation
may require from time to time.
Section 2. REGISTERED OFFICE. The location of the registered office of
the corporation in the State of Florida, as required by the Florida General
Corporation Act, as amended, may be changed from time to time by the board of
directors.
ARTICLE II
SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held at such date and time as shall be fixed by the board of directors or
shareholders, for the purpose of electing directors and for the transaction of
such other business as may properly come before the meeting.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, unless
<PAGE> 2
otherwise prescribed by statute, may be called by the president, chairman of the
board of directors or by the board of directors, and shall be called by the
president or the chairman of the board at the request of the holders of at least
ten (10%) percent of all outstanding shares of the corporation entitled to vote
at the meeting.
Section 3. PLACE OF MEETING. The board of directors may designate any
place, either within or without the State of Florida, as the place of meeting
for any annual or special meeting of the shareholders. A waiver of notice signed
by all shareholders entitled to vote at a meeting may designate any place,
either within or without the State of Florida, as the place for the holding of
such meeting. If no designation is made, the place of meeting shall be the
principal office of the corporation in the State of Florida.
Section 4. NOTICE OF MEETING. Notice stating the place, day and hour of
the meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called shall, unless otherwise prescribed by law, be delivered
not less than ten (10) and not more than sixty (60) days before the date of the
meeting, either personally or by first class mail, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, postage paid, addressed to
the shareholder at
2
<PAGE> 3
his or her address as it appears on the records of the corporation.
Section 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of (i) determining shareholders entitled to notice of, or to vote at,
any meeting of shareholders, or any adjournment or postponement thereof, (ii)
shareholders entitled to receive any dividend, (iii) in order to make a similar
determination concerning the shareholders for any other appropriate purpose, the
board of directors may provide that the stock transfer books shall be closed for
a stated period, not to exceed, in any case sixty (60) days. If the stock
transfer books shall be closed, such books shall be closed for at least ten (10)
days immediately preceding such shareholders meeting or the effective date of
such other action in case of any dividend or other determination. In lieu of
closing the stock transfer books, the board of directors may fix in advance a
date as the record date for any determination of shareholders, such date in any
case to be not more than sixty (60) days and not less than ten (10) days prior
to the shareholders meeting, or the effective date of the particular action
requiring such determination regarding the shareholders. If the stock transfer
books are not closed and no record date is fixed for any such determination, the
earlier of the date on which notice of a shareholders meeting is mailed or the
date on which the resolution of the
3
<PAGE> 4
board of directors concerning any matter is adopted, as the case maybe, shall be
the record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, except as otherwise determined by the board of
directors, such determination shall also apply to any adjournment or
postponement thereof.
Section 6. VOTING RECORD. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten
(10) days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment or postponement
thereof, arranged in alphabetical order, with the address of and the number of
shares, including classes and series, held by each. For a period of ten (10)
days prior to such meeting, such list shall be kept on file at the registered
office of the corporation, at the principal place of business of the
corporation, or at the office of the transfer agent or registrar of the
corporation and shall be subject to inspection by any shareholder at any time
during normal business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting for the purposes thereof.
Notwithstanding the above, this Section 6 of Article II shall not apply at any
4
<PAGE> 5
such time that the corporation has less than six (6) shareholders.
Section 7. QUORUM. A majority of the issued and outstanding shares of
the corporation entitled to vote, represented in person or proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present and represented any
business may be transacted which might have been transacted at the meeting as
originally noticed. After a quorum has been established at a shareholder's
meeting, the subsequent withdrawal of shareholders from said meeting, so as to
reduce the number of shareholders entitled to vote at the meeting below the
number required for a quorum, shall not affect the validity of any action taken
at the meeting or any adjournment or postponement thereof. If a new record date
is fixed for any adjourned or postponed meeting, notice to all of the
shareholders of the adjourned or postponed meeting shall be given.
Section 8. PROXIES. At all meetings of shareholders, a shareholder may
vote in person or by proxy, executed in writing by the shareholder or by his
duly authorized attorney-in-fact. Such proxy shall be filed with the secretary
of the corporation before or at the time of
5
<PAGE> 6
the meeting. No proxy shall be valid after the expiration of eleven (11) months
from the date of its execution, unless otherwise provided in the proxy.
Section 9. VOTING OF SHARES. Each outstanding share held by a
shareholder entitled to vote shall be entitled to one (1) vote upon each matter
submitted to a vote at a meeting of shareholders.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
By-laws of such other corporation may prescribe, or, in the absence of such
provision, as the board of directors of such other corporation may determine
(proof of such designation may be made by a presentation of a certified copy of
the By-laws or other instrument of the corporate stockholder); provided,
however, it may be presumed that the president or chief executive officer of
such other corporation has the right to vote such shares, unless this
corporation is otherwise put on notice, in writing prior to the vote.
Shares held by a trustee, administrator, executor, guardian or
conservator may be voted by him or her, either in person or by proxy, without a
transfer of such shares into his or her name on the stock transfer books of the
corporation.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver, without
6
<PAGE> 7
the transfer thereof into his or her name on the stock transfer books of the
corporation, if authority to do so is contained in the appropriate order of the
court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Treasury shares and shares of its own stock owned by another
corporation (the majority of the voting stock of which is owned or controlled by
this corporation), and shares of its own stock held by another corporation in a
fiduciary capacity, shall not be voted at any meeting or counted in determining
the total number of outstanding shares at any given time for purposes of any
meeting.
Section 11. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Within ten (10) days after obtaining such authorization by written consent,
notice shall be given to those shareholders, who
7
<PAGE> 8
have not so consented, in writing. The notice shall fairly summarize the
material features of the authorized action, and if the action be a merger,
consolidation or a sale or exchange of assets for which dissenters' rights are
provided under the Florida law, the notice shall contain a clear statement of
the rights of shareholders dissenting therefrom, if any, to be paid the fair
value of their shares as provided under Florida law.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed under the direction of the board of directors. The board may
exercise all powers of the corporation, except as otherwise provided by the
Articles of Incorporation, these By-laws or Florida law.
Section 2. NUMBER, ELECTION AND QUALIFICATIONS. The corporation shall
have at least one (1) director and no more than ten (10). In the absence of an
express determination by the board, the number of directors shall be equal to
the number of directors elected at the most recent annual meeting of the
shareholders. Each director shall hold office until the next annual meeting of
shareholders and until his successor shall have been duly elected and qualified,
or until his earlier resignation, removal or death. Directors need not be
residents of the State of Florida, or shareholders or officers of the
8
<PAGE> 9
corporation, or citizens of the United States.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the board
of directors shall be held, without other notice than this By-law, immediately
after, and at the same place as, the annual meeting of shareholders for the
purpose of electing officers to the corporation and to transact such other
lawful business as may properly come before such meeting. The board of directors
may provide, by resolution, the time and place, either within or without the
State of Florida, for the regular holding of meetings of the board (without
other notice than such resolution in the case of such regular meetings).
Section 4. SPECIAL MEETINGS. Special meetings of the board of directors
shall be called by the president or the chairman of the board or at the request
of any two (2) directors. The person or persons authorized to call special
meetings of the board of directors may fix any place, either within or without
the State of Florida, as the place for holding any special meeting of the board
of directors so called.
Section 5. NOTICE. Notice of any special meeting of the board shall be
given at least two (2) days previously thereto by notice delivered personally or
mailed to each director at his address appearing upon the books and records of
the corporation, or by telegram or cablegram. If mailed,
9
<PAGE> 10
such notice shall be deemed delivered when deposited in the United States mail,
postage paid, so addressed. If notice is given by telegram or cablegram, such
notice shall be deemed delivered when delivered to the appropriate company for
transmission. Any director may waive notice of any meeting in writing. The
attendance of a director at a meeting shall also constitute a waiver of notice
of such meeting, except where a director attends a meeting for the express
purpose, announced at the meeting, of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the board of
directors need to be specified in the notice of waiver of notice of such
meeting.
Members of the board of directors may participate in any meeting of the
board of directors by means of a conference by telephone, or similar
communications equipment by means of which all directors participating in the
meeting can hear each other at the same time. Participation by such means shall
constitute presence in person at the meeting.
Section 6. QUORUM. A majority of the number of the elected directors
shall constitute a quorum for the transaction of business at any meeting of the
board of directors, or any committees of the board, but if less than such
majority is present at the meeting, a majority of the directors present may
adjourn or postpone the meeting from
10
<PAGE> 11
time to time without further notice. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, or such committee.
Section 7. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the board of directors at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors. Such consent shall be filed in the corporation's
corporate minutes book and shall have the same effect as a unanimous vote.
Section 8. REMOVAL OF DIRECTORS. Unless the Articles of Incorporation
otherwise provide, any director or the entire board of directors may be removed,
with or without cause, by the holder of a majority of shares entitled to vote at
an election of directors.
Section 9. VACANCIES AND RESIGNATIONS. Any vacancy occurring in the
board of directors, including any vacancy created by reason of an increase in
the number of directors, may be filled by the affirmative vote of a majority of
the remaining directors, though less than a quorum of the board of directors, or
by the shareholders. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office. Any directorship to be filled
by reason of an increase in the number of directors may be filled for a term of
office continuing only until the next election of directors by the
11
<PAGE> 12
shareholders. A director may resign by written notice to the corporation, with
such resignation to be effective upon its receipt by the corporation or at such
time as set forth in the notice, except and unless the board of directors
determines otherwise.
Section 10. COMPENSATION. Directors may set their own compensation for
service as officers, if applicable, as well as for service as directors.
Section 11. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken, unless
he votes against such action or abstains from voting in respect thereto.
Section 12. COMMITTEES. The majority of the directors on the board of
directors may designate one (1) or more committees, each committee to consist of
one (1) or more of the directors of the corporation. Any such committee, to the
extent provided in the related resolution(s) of the board concerning such
committee, shall have and may exercise the powers of the board of directors of
the corporation, except as otherwise prescribed by Florida law. Any such
committee, and each member thereof with respect to the committee, shall serve at
the pleasure of the board. Each committee shall keep regular minutes of its
meetings, and make reports of such minutes to the
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board of directors from time to time, and be subject to the By-laws which apply
to the board in respect of the calling, holding and transaction of any meetings.
ARTICLE IV
OFFICERS
Section 1. NUMBER. The corporation shall have a president, a secretary,
and a treasurer, each of whom shall be elected by the board of directors. Such
other officers and assistant officers as may be deemed necessary may be elected
by the board of directors. Any two (2) or more offices may be held by the same
person. Officers need not be residents of the State of Florida or United States
citizens. The failure to elect a president, secretary or treasurer shall not
affect the existence of this corporation.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at the annual meeting of the
board of directors. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be
scheduled. Each officer shall hold office until his successor shall have been
duly elected and qualified, or until his earlier death, resignation or removal.
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Section 3. REMOVAL. Any officer may be removed, with or without cause,
by the board of directors, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election of an officer shall
not itself create any contract rights.
Section 4. VACANCIES. A vacancy in any office because of the death,
resignation, removal, or otherwise, may be filled by the board of directors for
the unexpired portion of the term of such office.
Section 5. PRESIDENT. The president shall be the principal executive
officer of the corporation and, subject to the board of directors, shall
supervise and control the business and affairs of the corporation. He or she
shall, when present, preside at all meetings of the shareholders and of the
board of directors, except if a chairman of the board has been appointed by the
board and is present at the meeting. He or she may sign, with the secretary or
any other proper officer of the corporation thereunto authorized by the board of
directors, certificates for shares of the corporation, deeds, mortgages, bonds,
contracts, or other instruments which the board of directors has authorized to
be executed, except in cases where the signing and execution thereof shall be
expressly delegated by the board of directors or by these By-laws to some other
officer or agent of the corporation, or shall be required by law to be otherwise
signed or executed; and, in general, shall perform all duties incident to the
office of president and
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such other duties as may be assigned by the board of directors from time to
time.
Section 6. VICE-PRESIDENTS. In the event that a vice-president is
elected, the following provisions shall apply: in the absence of the president
or in the event of his death, inability or refusal to act, the vice-president
(or in the event there are more than one vice-president, the vice-presidents in
the order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall have all the powers of,
and be subject to all the restrictions upon, the president. Any vice-president
may sign, with the secretary or an assistant secretary, certificates for shares
of the corporation; and shall perform such other duties as from time to time may
be assigned to him by the president or by the board of directors.
Section 7. SECRETARY. The secretary shall: (i) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (ii) see that all notices are duly given in
accordance with the provisions of these By-laws or as required by law; (iii) be
custodian of the corporate records and of the seal of the corporation; (iv) keep
a register of the post office address of each shareholder; (v) sign with the
president, or a vice-president, certificates for shares of the
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corporation; (vi) have general charge of the stock transfer books of the
corporation; and (vii) perform all duties incident to the office of secretary
and such other duties as from time to time may be assigned to him or her by the
president or by the board of directors.
Section 8. TREASURER. The treasurer shall:(i) have charge and custody
of and be responsible for all funds of the corporation; (ii) receive and give
receipts for monies due and payable to the corporation, from any source
whatsoever, and deposit all such monies in the name of the corporation in such
banks, trusts companies or other depositories as shall be selected in accordance
with these By-laws; and (iii) in general perform all of the duties as from time
to time may be assigned to him by the president or by the board of directors. If
required by the board of directors, the treasurer shall give a bond for the
faithful discharge of his or her duties in such sum and with such surety or
sureties as the board of directors shall determine.
Section 9. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. In the event
that an assistant secretary or assistant treasurer is elected, the following
provisions shall apply: the assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the
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secretary or in the event of his or her inability or refusal to act, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
The assistant treasurer, or if there be more than one, the assistant
treasurers in the order determined by the board of directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the treasurer or in the event of his or her inability or refusal to act,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
Section 10. CHAIRMAN OF THE BOARD. The board of directors may also
create and fill the office of chairman of the board and may appoint one (1)
director to serve in such capacity. The chairman of the board, if any, will
preside over all meetings of the board of directors and shareholders of the
corporation when present and shall have such other duties and obligations as are
customary with respect to such office, except and to the extent otherwise
prescribed by the board of directors.
Section 11. SALARIES. The salaries of the officers shall be fixed from
time to time by the board of directors and no officer shall be prevented from
receiving any salary
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by reason of the fact that he or she is also a director of the corporation.
Section 12. POWERS AND DUTIES. Whenever the board of directors may deem
it desirable, the board of directors may delegate the powers and duties of any
officer or officers to any director or directors and/or officer or officers. All
powers and duties of the officers of the corporation are subject to the
discretion of the board of directors.
ARTICLE V
CONTRACTS, CHECKS, DEPOSITS BOOKS AND RECORDS, ETC.
Section 1. CONTRACTS. The board of directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed in such manner as shall from time to
time be determined by resolution of the board of directors.
Section 3. DEPOSITS. All funds of the corporation, not otherwise
employed, shall be deposited from time to time to the credit of the corporation
in such banks,
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trust companies or other depositories as the appropriate officer(s) of the
corporation may select.
Section 4. BOOKS, RECORDS AND FINANCIAL STATEMENTS. This corporation
shall keep correct and complete books and records of account and shall keep
minutes of the proceedings of its shareholders, board of directors and
committees of directors, if any. Any books, records and minutes may be in
written form or in any other form capable of being converted into written form
within a reasonable time. The corporation shall have prepared, after the close
of each fiscal year, a balance sheet and a profit and loss statement showing in
reasonable detail the results of operations and financial condition of the
corporation for such fiscal year then ended.
The board of directors shall determine from time to time whether and to
what except and at what times and places and under what conditions any accounts,
records and books of the corporation are to be open to the inspection of any
shareholder, or other person, subject to Florida law.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be in such form as shall be approved by the board of
directors. Such certificates shall be signed by the president or a vice-
president and by the secretary or an assistant secretary and
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<PAGE> 20
sealed with the corporate seal or a facsimile thereof. The signatures of such
officers upon a certificate may be by facsimiles if such certificate is prepared
on behalf of the corporation by a duly authorized transfer agent and/or
registrar. Each certificate for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity as the board of directors may prescribe.
In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certificate has ceased to be such
officer, transfer agent or registrar before the certificate has been issued,
such certificate may, nevertheless, be issued and delivered by the corporation
with the same effect as if such person still was such officer, transfer agent or
registrar at the date of issue.
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Section 2. TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the corporation,
and on surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the books of the corporation shall be conclusively
deemed by the corporation to be the owner thereof for all purposes.
ARTICLE VII
DIVIDENDS
The board of directors may, from time to time, declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
ARTICLE VIII
CORPORATE SEAL
The board of directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation,
the year and the state of incorporation and the words "Corporate Seal."
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ARTICLE IX
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or
director of the corporation under these By-laws, the Articles of Incorporation
or Florida law, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether executed before or after the time stated
therein, shall be deemed equivalent to the giving of such notice to such person
or persons. Any stockholder or director present at a meeting, either in person
or by proxy, shall be deemed to have received proper notice, unless such person
objects to any insufficiency of notice at such meeting.
ARTICLE X
MISCELLANEOUS
Section 1. EXCLUSIVE OWNERSHIP OF STOCK. The corporation shall be
entitled to recognize the exclusive right of a person registered upon its stock
transfer books as the owner of the shares of the corporation for all purposes
including voting and dividends, and shall not be bound to recognize any
equitable or other claims of interest in such share or shares on the part of any
other person, whether or not the corporation shall have received notice thereof,
except as otherwise provided by law and except as agreed to in writing by the
corporation.
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Section 2. POWERS OF ATTORNEY. The board of directors may authorize one
or more of the officers of the corporation to execute powers of attorney
delegating the named representatives or agents the power to represent or act on
behalf of the corporation, with or without power of substitution.
Section 3. FISCAL YEAR. The fiscal year end of the corporation shall be
fixed by the president of the corporation, except and subject to determination
otherwise by the board of directors.
ARTICLE XI
BY-LAWS
Section 1. AMENDMENT BY DIRECTORS. These By-laws may be amended,
repealed or added to by the board of directors.
Section 2. AMENDMENT BY STOCKHOLDERS. These By-laws may be amended,
repealed or added to by the shareholders, and the shareholders may prescribe
that any By-law so amended, repealed or added to shall not be amended, repealed
or added to by the board of directors.
Section 3. CONTROL. Notwithstanding anything to the contrary, the
Articles of Incorporation of the corporation shall control any conflicts between
the By-laws and the Articles of Incorporation, and the By-laws and Articles of
Incorporation shall both be subject to compliance with the provisions of Florida
law. Therefore, any powers, duties
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and obligations, in addition to those set forth herein, not otherwise limited,
restricted, modified or prohibited herein as permitted by Florida law, shall
remain unaffected by the failure of the By-laws to address such powers, duties
or obligations.
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EXHIBIT 3.2.4
BY-LAWS
OF
MACKENZIE/IVY INVESTOR SERVICES CORP.
ARTICLE I
OFFICES
Section 1. OFFICES. The principal office of the corporation shall be
located within the State of Florida, and the corporation may have such other
offices, either within or without the State of Florida, as the board of
directors may designate from time to time, or as the business of the corporation
may require from time to time.
Section 2. REGISTERED OFFICE. The location of the registered office of
the corporation in the State of Florida, as required by the Florida General
Corporation Act, as amended, may be changed from time to time by the board of
directors.
ARTICLE II
SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held at such date and time as shall be fixed by the board of directors or
shareholders, for the purpose of electing directors and for the transaction of
such other business as may properly come before the meeting.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, unless
<PAGE> 2
otherwise prescribed by statute, may be called by the president, chairman of the
board of directors or by the board of directors, and shall be called by the
president or the chairman of the board at the request of the holders of at least
ten (10%) percent of all outstanding shares of the corporation entitled to vote
at the meeting.
Section 3. PLACE OF MEETING. The board of directors may designate any
place, either within or without the State of Florida, as the place of meeting
for any annual or special meeting of the shareholders. A waiver of notice signed
by all shareholders entitled to vote at a meeting may designate any place,
either within or without the State of Florida, as the place for the holding of
such meeting. If no designation is made, the place of meeting shall be the
principal office of the corporation in the State of Florida.
Section 4. NOTICE OF MEETING. Notice stating the place, day and hour of
the meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called shall, unless otherwise prescribed by law, be delivered
not less than ten (10) and not more than sixty (60) days before the date of the
meeting, either personally or by first class mail, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, postage paid, addressed to
the shareholder at
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<PAGE> 3
his or her address as it appears on the records of the corporation.
Section 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of (i) determining shareholders entitled to notice of, or to vote at,
any meeting of shareholders, or any adjournment or postponement thereof, (ii)
shareholders entitled to receive any dividend, (iii) in order to make a similar
determination concerning the shareholders for any other appropriate purpose, the
board of directors may provide that the stock transfer books shall be closed for
a stated period, not to exceed, in any case sixty (60) days. If the stock
transfer books shall be closed, such books shall be closed for at least ten (10)
days immediately preceding such shareholders meeting or the effective date of
such other action in case of any dividend or other determination. In lieu of
closing the stock transfer books, the board of directors may fix in advance a
date as the record date for any determination of shareholders, such date in any
case to be not more than sixty (60) days and not less than ten (10) days prior
to the shareholders meeting, or the effective date of the particular action
requiring such determination regarding the shareholders. If the stock transfer
books are not closed and no record date is fixed for any such determination, the
earlier of the date on which notice of a shareholders meeting is mailed or the
date on which the resolution of the
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<PAGE> 4
board of directors concerning any matter is adopted, as the case may be, shall
be the record date for such determination of shareholders. When a determination
of shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, except as otherwise determined by the board of
directors, such determination shall also apply to any adjournment or
postponement thereof.
Section 6. VOTING RECORD. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten (10)
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment or postponement thereof,
arranged in alphabetical order, with the address of and the number of shares,
including classes and series, held by each. For a period of ten (10) days prior
to such meeting, such list shall be kept on file at the registered office of the
corporation, at the principal place of business of the corporation, or at the
office of the transfer agent or registrar of the corporation and shall be
subject to inspection by any shareholder at any time during normal business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes thereof. Notwithstanding the above,
this Section 6 of
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Article II shall not apply at any such time that the corporation has less than
six (6) shareholders.
Section 7. QUORUM. A majority of the issued and outstanding shares of
the corporation entitled to vote, represented in person or proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present and represented any
business may be transacted which might have been transacted at the meeting as
originally noticed. After a quorum has been established at a shareholder's
meeting, the subsequent withdrawal of shareholders from said meeting, so as to
reduce the number of shareholders entitled to vote at the meeting below the
number required for a quorum, shall not affect the validity of any action taken
at the meeting or any adjournment or postponement thereof. If a new record date
is fixed for any adjourned or postponed meeting, notice to all of the
shareholders of the adjourned or postponed meeting shall be given.
Section 8. PROXIES. At all meetings of shareholders, a shareholder may
vote in person or by proxy, executed in writing by the shareholder or by his
duly authorized attorney-in-fact. Such proxy shall be filed with the secretary
of the corporation before or at the time of
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the meeting. No proxy shall be valid after the expiration of eleven (11) months
from the date of its execution, unless otherwise provided in the proxy.
Section 9. VOTING OF SHARES. Each outstanding share held by a
shareholder entitled to vote shall be entitled to one (1) vote upon each matter
submitted to a vote at a meeting of shareholders.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
By-laws of such other corporation may prescribe, or, in the absence of such
provision, as the board of directors of such other corporation may determine
(proof of such designation may be made by a presentation of a certified copy of
the By-laws or other instrument of the corporate stockholder); provided,
however, it may be presumed that the president or chief executive officer of
such other corporation has the right to vote such shares, unless this
corporation is otherwise put on notice, in writing prior to the vote.
Shares held by a trustee, administrator, executor, guardian or
conservator may be voted by him or her, either in person or by proxy, without a
transfer of such shares into his or her name on the stock transfer books of the
corporation.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control
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of a receiver may be voted by such receiver, without the transfer thereof into
his or her name on the stock transfer books of the corporation, if authority to
do so is contained in the appropriate order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
Treasury shares and shares of its own stock owned by another corporation (the
majority of the voting stock of which is owned or controlled by this
corporation), and shares of its own stock held by another corporation in a
fiduciary capacity, shall not be voted at any meeting or counted in determining
the total number of outstanding shares at any given time for purposes of any
meeting.
Section 11. INFORMAL ACTION BY SHAREHOLDERS. Any action required
or permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Within ten (10) days after obtaining such authorization by written consent,
notice shall be given to those shareholders, who
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have not so consented, in writing. The notice shall fairly summarize the
material features of the authorized action, and if the action be a merger,
consolidation or a sale or exchange of assets for which dissenters' rights are
provided under the Florida law, the notice shall contain a clear statement of
the rights of shareholders dissenting therefrom, if any, to be paid the fair
value of their shares as provided under Florida law.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed under the direction of the board of directors. The board may
exercise all powers of the corporation, except as otherwise provided by the
Articles of Incorporation, these By-laws or Florida law.
Section 2. NUMBER, ELECTION AND QUALIFICATIONS. The corporation shall
have at least one (1) director and no more than ten (10). In the absence of an
express determination by the board, the number of directors shall be equal to
the number of directors elected at the most recent annual meeting of the
shareholders. Each director shall hold office until the next annual meeting of
shareholders and until his successor shall have been duly elected and qualified,
or until his earlier resignation, removal or death. Directors need not be
residents of the
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State of Florida, or shareholders or officers of the corporation, or citizens of
the United States.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the board
of directors shall be held, without other notice than this By-law, immediately
after, and at the same place as, the annual meeting of shareholders for the
purpose of electing officers to the corporation and to transact such other
lawful business as may properly come before such meeting. The board of directors
may provide, by resolution, the time and place, either within or without the
State of Florida, for the regular holding of meetings of the board (without
other notice than such resolution in the case of such regular meetings).
Section 4. SPECIAL MEETINGS. Special meetings of the board of directors
shall be called by the president or the chairman of the board or at the request
of any two (2) directors. The person or persons authorized to call special
meetings of the board of directors may fix any place, either within or without
the State of Florida, as the place for holding any special meeting of the board
of directors so called.
Section 5. NOTICE. Notice of any special meeting of the board shall be
given at least two (2) days previously thereto by notice delivered personally or
mailed to each director at his address appearing upon the books and records of
the corporation, or by telegram or cablegram. If mailed,
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<PAGE> 10
such notice shall be deemed delivered when deposited in the United States mail,
postage paid, so addressed. If notice is given by telegram or cablegram, such
notice shall be deemed delivered when delivered to the appropriate company for
transmission. Any director may waive notice of any meeting in writing. The
attendance of a director at a meeting shall also constitute a waiver of notice
of such meeting, except where a director attends a meeting for the express
purpose, announced at the meeting, of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the board of
directors need to specified in the notice of waiver of notice of such meeting.
Members of the board of directors may participate in any meeting of
the board of directors by means of a conference by telephone, or similar
communications equipment by means of which all directors participating in the
meeting can hear each other at the same time. Participation by such means shall
constitute presence in person at the meeting.
Section 6. QUORUM. A majority of the number of the elected
directors shall constitute a quorum for the transaction of business at any
meeting of the board of directors, or any committee of the board, but if less
than such majority is present at the meeting, a majority of the directors
present may adjourn or postpone the meeting from
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<PAGE> 11
time to time without further notice. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, or such committee.
Section 7. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the board of directors at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors. Such consent shall be filed in the corporation's
corporate minutes book and shall have the same effect as a unanimous vote.
Section 8. REMOVAL OF DIRECTORS. Unless the Articles of Incorporation
otherwise provide, any director or the entire board of directors may be removed,
with or without cause, by the holder of a majority of shares entitled to vote at
an election of directors.
Section 9. VACANCIES AND RESIGNATIONS. Any vacancy occurring in the
board of directors, including any vacancy created by reason of an increase in
the number of directors, may be filled by the affirmative vote of a majority of
the remaining directors, though less than a quorum of the board of directors, or
by the shareholders. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office. Any directorship to be filled
by reason of an increase in the number of directors may be filled for a term of
office
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continuing only until the next election of directors by the shareholders. A
director may resign by written notice to the corporation, with such resignation
to be effective upon its receipt by the corporation or at such time as set forth
in the notice, except and unless the board of directors determines otherwise.
Section 10. COMPENSATION. Directors may set their own compensation for
service as officers, if applicable, as well as for service as directors.
Section 11. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken, unless
he votes against such action or abstains from voting in respect thereto.
Section 12. COMMITTEES. The majority of the directors on the board of
directors may designate one (1) or more committees, each committee to consist of
one (1) or more of the directors of the corporation. Any such committee, to the
extent provided in the related resolution(s) of the board concerning such
committee, shall have and may exercise the powers of the board of directors of
the corporation, except as otherwise prescribed by Florida law. Any such
committee, and each member thereof with respect to the committee, shall serve at
the pleasure of the board. Each committee shall keep regular minutes of
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<PAGE> 13
its meetings, and make reports of such minutes to the board of directors from
time to time, and be subject to the By-laws which apply to the board in respect
of the calling, holding and transaction of any meetings.
ARTICLE IV
OFFICERS
Section 1. NUMBER. The corporation shall have a president, a secretary,
and a treasurer, each of whom shall be elected by the board of directors. Such
other officers and assistant officers as may be deemed necessary may be elected
by the board of directors. Any two (2) or more offices may be held by the same
person. Officers need not be residents of the State of Florida or United States
citizens. The failure to elect a president, secretary or treasurer shall not
affect the existence of this corporation.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at the annual meeting of the
board of directors. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be
scheduled. Each officer shall hold office until his successor shall have been
duly elected and qualified, or until his earlier death, resignation or removal.
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Section 3. REMOVAL. Any officer may be removed, with or without cause,
by the board of directors, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election of an officer shall
not itself create any contract rights.
Section 4. VACANCIES. A vacancy in any office because of the death,
resignation, removal, or otherwise, may be filled by the board of directors for
the unexpired portion of the term of such office.
Section 5. PRESIDENT. The president shall be the principal executive
officer of the corporation and, subject to the board of directors, shall
supervise and control the business and affairs of the corporation. He or she
shall, when present, preside at all meetings of the shareholders and of the
board of directors, except if a chairman of the board has been appointed by the
board and is present at the meeting. He or she may sign, with the secretary or
any other proper officer of the corporation thereunto authorized by the board of
directors, certificates for shares of the corporation, deeds, mortgages, bonds,
contracts, or other instruments which the board of directors has authorized to
be executed, except in cases where the signing and execution thereof shall be
expressly delegated by the board of directors or by these By-laws to some other
officer or agent of the corporation, or shall be required by law to be otherwise
signed or executed; and, in general, shall perform
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all duties incident to the office of president and such other duties as may be
assigned by the board of directors from time to time.
Section 6. VICE-PRESIDENTS. In the event that a vice-president is
elected, the following provisions shall apply: in the absence of the president
or in the event of his death, inability or refusal to act, the vice-president
(or in the event there are more than one vice-president, the vice-presidents in
the order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall have all the powers of,
and be subject to all the restrictions upon, the president. Any vice-president
may sign, with the secretary or an assistant secretary, certificates for shares
of the corporation; and shall perform such other duties as from time to time may
be assigned to him by the president or by the board of directors.
Section 7. SECRETARY. The secretary shall: (i) keep the minutes of
the proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (ii) see that all notices are duly given in
accordance with the provisions of these By-laws or as required by law; (iii) be
custodian of the corporate records and of the seal of the corporation; (iv) keep
a register of the post office address of each shareholder; (v) sign with the
president, or a vice-president, certificates for shares
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of the corporation; (vi) have general charge of the stock transfer books of the
corporation; and (vii) perform all duties incident to the office of secretary
and such other duties as from time to time may be assigned to him or her by the
president or by the board of directors.
Section 6. TREASURER. The treasurer shall: (i) have charge and custody
of and be responsible for all funds of the corporation; (ii) receive and give
receipts for monies due and payable to the corporation, from any source
whatsoever, and deposit all such monies in the name of the corporation in such
banks, trusts companies or other depositories as shall be selected in accordance
with these By-laws; and (iii) in general perform all of the duties as from time
to time may be assigned to him by the president or by the board of directors. If
required by the board of directors, the treasurer shall give a bond for the
faithful discharge of his or her duties in such sum and with such surety or
sureties as the board of directors shall determine.
Section 9. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. In the event
that an assistant secretary or assistant treasurer is elected, the following
provisions shall apply: the assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
16
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in the absence of the secretary or in the event of his or her inability or
refusal to act, perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
The assistant treasurer, or if there be more than one, the assistant
treasurers in the order determined by the board of directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the treasurer or in the event of his or her inability or refusal to act,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
Section 10. CHAIRMAN OF THE BOARD. The board of directors may also
create and fill the office of chairman of the board and may appoint one (1)
director to serve in such capacity. The chairman of the board, if any, will
preside over all meetings of the board of directors and shareholders of the
corporation when present and shall have such other duties and obligations as are
customary with respect to such office, except and to the extent otherwise
prescribed by the board of directors.
Section 11. SALARIES. The salaries of the officers shall be fixed from
time to time by the board of directors and no officer shall be prevented from
receiving any salary
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by reason of the fact that he or she is also a director of the corporation.
Section 12. POWERS AND DUTIES. Whenever the board of directors may deem
it desirable, the board of directors may delegate the powers and duties of any
officer or officers to any director or directors and/or officer or officers. All
powers and duties of the officers of the corporation are subject to the
discretion of the board of directors.
ARTICLE V
CONTRACTS, CHECKS, DEPOSITS, BOOKS AND RECORDS, ETC.
Section 1. CONTRACTS. The board of directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed in such manner as shall from time to
time be determined by resolution of the board of directors.
Section 3. DEPOSITS. All funds of the corporation, not otherwise
employed, shall be deposited from time to time to the credit of the corporation
in such banks,
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trust companies or other depositories as the appropriate officer(s) of the
corporation may select.
Section 4. BOOKS, RECORDS AND FINANCIAL STATEMENTS. This corporation
shall keep correct and complete books and records of account and shall keep
minutes of the proceedings of its shareholders, board of directors and
committees of directors, if any. Any books, records and minutes may be in
written form or in any other form capable of being converted into written form
within a reasonable time. The corporation shall have prepared, after the close
of each fiscal year, a balance sheet and a profit and loss statement showing in
reasonable detail the results of operations and financial condition of the
corporation for such fiscal year then ended.
The board of directors shall determine from time to time whether and to
what except and at what times and places and under what conditions any accounts,
records and books of the corporation are to be open to the inspection of any
shareholder, or other person, subject to Florida law.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be in such form as shall be approved by the board of
directors. Such certificates shall be signed by the president or a vice
president and by the secretary or an assistant secretary and
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sealed with the corporate seal or a facsimile thereof. The signatures of such
officers upon a certificate may be by facsimiles if such certificate is prepared
on behalf of the corporation by a duly authorized transfer agent and/or
registrar. Each certificate for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity as the board of directors may prescribe.
In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certificate has ceased to be such
officer, transfer agent or registrar before the certificate has been issued,
such certificate may, nevertheless, be issued and delivered by the corporation
with the same effect as if such person still was such officer, transfer agent or
registrar at the date of issue.
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Section 2. TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the corporation,
and on surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the books of the corporation shall be conclusively
deemed by the corporation to be the owner thereof for all purposes.
ARTICLE VII
DIVIDENDS
The board of directors may, from time to time, declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
ARTICLE VIII
CORPORATE SEAL
The board of directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation,
the year and the state of incorporation and the words "Corporate Seal."
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ARTICLE IX
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or
director of the corporation under these By-laws, the Articles of Incorporation
or Florida law, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether executed before or after the time stated
therein, shall be deemed equivalent to the giving of such notice to such person
or persons. Any stockholder or director present at a meeting, either in person
or by proxy, shall be deemed to have received proper notice, unless such person
objects to any insufficiency of notice at such meeting.
ARTICLE X
MISCELLANEOUS
Section 1. EXCLUSIVE OWNERSHIP OF STOCK. The corporation shall be
entitled to recognize the exclusive right of a person registered upon its stock
transfer books as the owner of the shares of the corporation for all purposes
including voting and dividends, and shall not be bound to recognize any
equitable or other claims of interest in such share or shares on the part of any
other person, whether or not the corporation shall have received notice thereof,
except as otherwise provided by law and except as agreed to in writing by the
corporation.
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Section 2. POWERS OF ATTORNEY. The board of directors may authorize one
or more of the officers of the corporation to execute powers of attorney
delegating the named representatives or agents the power to represent or act on
behalf of the corporation, with or without power of substitution.
Section 3. FISCAL YEAR. The fiscal year end of the corporation shall be
fixed by the president of the corporation, except and subject to determination
otherwise by the board of directors.
ARTICLE XI
BY-LAWS
Section 1. AMENDMENT BY DIRECTORS. These By-laws may be amended,
repealed or added to by the board of directors.
Section 2. AMENDMENT BY STOCKHOLDERS. These By-laws may be amended,
repealed or added to by the shareholders, and the shareholders may prescribe
that any By-law so amended, repealed or added to shall not be amended, repealed
or added to by the board of directors.
Section 3. CONTROL. Notwithstanding anything to the contrary, the
Articles of Incorporation of the corporation shall control any conflicts between
the By-laws and the Articles of Incorporation, and the By-laws and Articles of
Incorporation shall both be subject to compliance with the provisions of Florida
law. Therefore, any powers, duties
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and obligations, in addition to those set forth herein, not otherwise limited,
restricted, modified or prohibited herein as permitted by Florida law, shall
remain unaffected by the failure of the By-laws to address such powers, duties
or obligations.
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<PAGE> 1
Exhibit 4.1
Description: Specimen copy of Mackenzie Investment Management Inc.
Stock Certificate
<PAGE> 1
EXHIBIT 10.1
THE FIRST NATIONAL BANK OF BOSTON
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
Dated as of February 11, 1994
Between
MACKENZIE INVESTMENT MANAGEMENT, INC.
And
THE FIRST NATIONAL BANK OF BOSTON
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. - DEFINITIONS......................................... 1
SECTION 2. - THE REVOLVING CREDIT ADVANCES....................... 10
2.1 Commitment to Lend ............................... 10
2.2 Requests for Advances; Funding ................... 10
2.3 Reduction of Commitment .......................... 11
2.4 Maturity Date .................................... 11
2.5 Change in Borrowing Base ......................... 11
SECTION 3. - THE TERM LOANS...................................... 12
3.1 Term Conversion Date; Term Loans ................. 12
3.2 Repayment of Term Loans .......................... 12
SECTION 4. - RATE CONVERSION, INTEREST, PAYMENT AND COSTS........ 12
4.1 The Note ......................................... 12
4.2 Rate Conversion and Rate Extension ............... 13
4.3 Interest ......................................... 14
4.4 Default Interest ................................. 14
4.5 Facility Fee ..................................... 15
4.6 Optional Prepayment .............................. 15
4.7 Funds for Payments ............................... 15
4.8 Computations ..................................... 15
4.9 Fixed Rate Indemnification ....................... 16
4.10 Additional Costs, Etc ............................ 16
4.11 Capital Adequacy ................................. 18
SECTION 5. - REPRESENTATIONS AND WARRANTIES...................... 19
5.1 Corporate Authority .............................. 19
5.2 Governmental Approvals ........................... 20
5.3 Title to Properties; Leases ...................... 20
5.4 Financial Statements ............................. 20
5.5 No Material Changes, Etc ......................... 21
5.6 Franchises, Patents, Copyrights, Etc ............. 21
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
5.7 Litigation ....................................... 21
5.8 No Materially Adverse Contracts, Etc ............. 21
5.9 Compliance With Other Instruments Laws, Etc ...... 22
5.10 Tax Status ....................................... 22
5.11 No Event of Default .............................. 22
5.12 Holding Company and Investment Company Acts ...... 22
5.13 Absence of Financing Statements, Etc ............. 23
5.14 Certain Transactions ............................. 23
5.15 ERISA Compliance ................................. 23
5.16 Regulations U and X .............................. 23
5.17 Registrations, Permits, Etc ...................... 23
5.18 Subsidiaries ..................................... 24
5.19 Advisory Agreements .............................. 24
5.20 12b-1 Plans ...................................... 25
5.21 The Parent ....................................... 25
SECTION 6. - AFFIRMATIVE COVENANTS OF THE COMPANY................ 28
6.1 Proceeds ......................................... 28
6.2 Punctual Payment ................................. 29
6.3 Maintenance of Office ............................ 29
6.4 Records and Accounts ............................. 29
6.5 Financial Statements, Certificates and Information 29
6.6 Corporate Existence; Maintenance of Properties ... 31
6.7 Insurance ........................................ 32
6.8 Taxes ............................................ 32
6.9 Inspection of Properties and Books ............... 32
6.10 Compliance with Laws, Contracts, Licenses, Permits 33
6.11 Pension Plans .................................... 33
6.12 Status Under Securities Laws ..................... 34
6.13 Sales Under 12b-1 Plans .......................... 34
6.14 Notices .......................................... 34
6.15 Further Assurances ............................... 34
SECTION 7. - CERTAIN NEGATIVE COVENANTS OF THE COMPANY........... 35
7.1 Restrictions on Indebtedness ..................... 35
7.2 Restrictions on Liens ............................ 36
7.3 Restrictions on Investments ...................... 37
7.4 Merger and Consolidation ......................... 38
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
7.5 Distributions .................................... 38
7.6 Sales and Leaseback .............................. 39
7.7 Liens of Business ................................ 39
7.8 Consolidated Cash Flow Ratio ..................... 39
7.9 Consolidated Fixed Charge Ratio .................. 39
7.10 Consolidated Tangible Net Worth .................. 39
7.11 Consolidated Net Income .......................... 39
7.12 Leverage Ratio ................................... 39
SECTION 8. - CONDITIONS PRECEDENT............................... 39
8.1 Closing Conditions ............................... 40
8.2 All Borrowings ................................... 40
SECTION 9. - EVENTS OF DEFAULT; ACCELERATION.................... 41
SECTION 10. - SETOFF............................................. 45
SECTION 11. - EXPENSES........................................... 45
SECTION 12. - INDEMNIFICATION.................................... 46
SECTION 13. - SURVIVAL OF COVENANTS, ETC......................... 46
SECTION 14. - PARTIES IN INTEREST................................ 46
SECTION 15. - NOTICES, ETC....................................... 46
SECTION 16. - MISCELLANEOUS ..................................... 47
SECTION 17. - ENTIRE AGREEMENT, ETC.............................. 48
SECTION 18. - CONSENTS, AMENDMENTS, WAIVERS, ETC................. 48
</TABLE>
Exhibits:
Exhibit A - Form of Note
Exhibit B - Form of Borrowing Base Report
Exhibit C - Form of Advance Request
Exhibit D - Form of Compliance Certificate
-iii-
<PAGE> 5
Schedules:
Schedule 1 - 12b-1 Funds
Schedule 5.3 - Title to properties
Schedule 5.18 - Subsidiaries
Schedule 5.19 - Advisory Agreements
Schedule 5.20 - 12b-1 Plan Distribution Agreements
-iv-
<PAGE> 6
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as of February
11, 1994, by and between MACKENZIE INVESTMENT MANAGEMENT, INC. (The "Company"),
a Delaware corporation having its principal place of business at 700 South
Federal Highway, Boca Raton, FL 33432, and THE FIRST NATIONAL BANK OF BOSTON
(the "Bank"), a national banking association having its principal place of
business at 100 Federal Street, Boston, MA 02110.
Section 1. DEFINITIONS. (a) The following terms shall have the meanings
set forth in this 1 or elsewhere in the provisions of this Agreement referred to
below:
Advance Request. See section 2.2.
Advances. Revolving credit advances made by the Bank to the Company
pursuant to requests of the Company under this Agreement, whether a Base Rate
Advance or a Fixed Rate advances (each of which shall be a "Type" of Advance).
Agreement. This Revolving Credit and Term Loan Agreement, including the
Exhibits and Schedules hereto, as originally executed, or if this Agreement is
amended, varied or supplemented from time to time, as so amended, varied or
supplemented.
Balance Sheet Date. March 31, 1993.
Bank. See preamble.
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by the Bank at its head office in Boston, Massachusetts, as its
"base rate" and (b) one-half of one percent (l/2%) above the Federal Funds
Effective Rate. For the purposes of this definition, "Federal Funds Effective
Rate" shall mean, for any day, the rate per annum equal to 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 for such day (or
if such day is not a Business Day, for the next preceding 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 such day on such
transactions received by the Bank from three funds brokers of recognized
standing selected by the Bank.
<PAGE> 7
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Base Rate Advance. An Advance which bears interest with reference to
the Base Rate plus any additional margin required pursuant to sec. 4.3.
Base Rate Amounts. Base Rate Advances and Base Rate Term Loans.
Base Rate Term Loan. A Term Loan which bears interest with reference to
the Base Rate plus any additional margin pursuant to sec. 4.3.
Borrowing Base. On any date during the term of this Agreement, an
amount equal to the lesser of (a) the Unreimbursed Sales Commission Amount and
(b) the Contingent Redemption Amount, in each case as determined by the Bank by
reference to the most recent Borrowing Base Report delivered to the Bank
Borrowing Base Report. A report with respect to the Borrowing Base in
the form attached hereto as Exhibit B.
Business Day. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business.
Class B Shares. Any shares (or class of shares) of beneficial interest
or capital stock of any 12b-l Fund upon the redemption of which a contingent
deferred sales charge or other redemption fee or amount is payable.
Commitment. The Bank's obligation to make Advances to the Company under
this Agreement up to the Commitment Amount.
Commitment Amount. $5,000,000, minus the amount of any reductions
pursuant to sec. 2.3 hereof; or if such commitment is terminated pursuant to the
provisions hereof, zero.
Company. See preamble.
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Company and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Cash Flow. For any period, an amount equal to the sum of
(a) Consolidated Net Income for such period, plus (b) the aggregate amount
deducted in the computation thereof in respect of depreciation, amortization,
federal and state income taxes paid in cash
<PAGE> 8
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during such period, Consolidated Interest Charges and Consolidated Rental
Expense.
Consolidated Fixed Charges. For any period, an amount equal to the sum
of (a) all payments of principal on Indebtedness which are due and payable at
any time during such period pursuant to any agreement or instrument to which the
Company or any of its Subsidiaries is a party relating to the borrowing of money
or the obtaining of credit, including the principal component of payments in
respect of capitalized leases, plus (b) Consolidated Interest Charges for such
period, plus (c) capital expenditures for such period, plus (d) Consolidated
Rental Expense for such period, plus (e) the aggregate amount of federal and
state income taxes actually paid in cash by the Company and its Subsidiaries
during such period, all as determined in accordance with generally accepted
accounting principles. Demand obligations shall be deemed to be due and payable
during any and all fiscal periods during which said obligations are outstanding.
Consolidated Interest Charges. For any period, the expenses of the
Company and its Subsidiaries for such period for interest on Indebtedness
(including the current portion thereof and including payments consisting of
interest in respect of capitalized leases) and for commitment fees, facility
fees, balance deficiency fees, and similar expenses in connection with the
borrowing of money.
Consolidated Net Income. For any period, the consolidated net income
(of deficit) of the Company and its Subsidiaries during such period, after
deduction of all expenses, taxes, and other proper charges, determined in
accordance with generally accepted accounting principles, after eliminating
therefrom all. Extraordinary nonrecurring items of income.
Consolidated Rental Expense. For any period, the aggregate amount of
consolidated rental expense of the Company and its Subsidiaries during such
period for the lease of real or personal property under lease arrangements that
do not constitute capitalized leases, as determined in accordance with generally
accepted accounting principles.
Consolidated Tangible Net Worth. The excess of the consolidated total
assets of the Company and its Subsidiaries (excluding amounts which would or
should be reflected on the Company's consolidated balance sheet as receivables
from brokers for sales of mutual fund shares)
<PAGE> 9
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determined in accordance with generally accepted accounting principles, over
Consolidated Total Liabilities, and less the sum of:
(a) the total book value of all assets of the Company and its
Subsidiaries properly classified as intangible assets under generally
accepted accounting principles, including, without limitation, such
items as good will, the purchase price of acquired assets in excess of
the fair market value thereof, trademarks, trade names, service marks,
brand names, copyrights, patents and licenses, and rights with respect
to the foregoing; and
(b) all amounts representing any write-up in the book value of
any assets of the Company and its Subsidiaries resulting from a
revaluation thereof subsequent to the Balance Sheet Date, excluding
adjustments to translate foreign assets and liabilities for changes in
foreign exchange rates made in accordance with Financial Accounting
Standards Board Statement No. 52.
Consolidated Total Liabilities. All consolidated liabilities of the
Company and its Subsidiaries (excluding amounts which would or should be
reflected on the Company's consolidated balance sheet as payable to funds for
sales of mutual fund shares) determined in accordance with generally accepted
accounting principles and all other Indebtedness of the Company and its
Subsidiaries, whether or not so classified.
Contingent Redemption Amount. On any date the aggregate redemption
proceeds that would be payable by shareholders of Class B Shares of the 12b-l
Funds for contingent deferred sales charges or redemption fees, assuming a total
redemption on such date of all Class B Shares in the 12b-l Funds.
Default. Any event which with notice or lapse of time would become an
Event of Default.
Distributions. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock or other equity interest of
any Person (or any options, warrants, or rights to purchase or subscribe for the
same), other than dividends payable solely in shares of common stock of such
Person; the purchase, redemption, or other retirement of any shares of any class
of capital stock
<PAGE> 10
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or other equity interest of any Person (or any options, warrants, or rights to
purchase or subscribe for the same), directly or indirectly through a Subsidiary
or otherwise; the return of capital by any Person to its shareholders as such;
or any other distribution on or in respect of any shares of any class of capital
stock or other equity interest of any Person.
Drawdown Date. The date on which any Advance is made or is to be made.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with
the Company under sec. 414 of the Internal Revenue Code of 1986, as amended.
Event of Default. See sec. 9.
Facility Fee. See sec. 4.5.
Fixed Rate Advance. An Advance which bears interest with reference to
the Funding Rate plus any additional margin required pursuant to sec. 4.3.
Fixed Rate Amounts. Fixed Rate Advances and Fixed Rate Term Loans.
Fixed Rate Term Loan. A Term Loan which bears interest with reference
to the Funding Rate plus any additional margin required pursuant to sec. 4.3.
Funding Rate. With respect to any Interest Period, the rate per annum
determined by the Bank in its sole discretion at the commencement of such
Interest Period to be equal to its cost of funds for such Interest Period.
Generally accepted accounting principles. (i) When used in general,
means accounting principles which are (1) consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors (or successor organizations), and (2) such that a certified public
accountant would, insofar as the use of accounting principles is pertinent, be
in a position to deliver an unqualified opinion as to financial statements in
which such principles have been properly applied; and (ii) when used with
reference to the Borrowing Base and the covenants set forth in sec. sec.
7.8-7.12 hereof, generally accepted accounting
<PAGE> 11
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principles shall mean (to the extent consistent with such principles) the
accounting practice of the Company reflected in its financial statements for the
year ended on the Balance Sheet Date consistently applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of sec. 3(2) of ERISA maintained by the Company, or any ERISA Affiliate,
or to which the Company or any ERISA Affiliate contributes, which is required to
pay plan termination insurance premiums to the Pension Benefit Guaranty
Corporation.
Indebtedness. All obligations, contingent and otherwise, which in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made by footnotes thereto, including, without limitation, in any event and
whether or not so classified: (i) all debt and similar monetary obligations,
whether direct or indirect; (ii) all liabilities secured by any mortgage,
pledge, security interest, lien, charge, or other encumbrance existing on
property owned or acquired subject thereto, whether or not the liability secured
thereby shall have been assumed; and (iii) all guarantees, endorsements and
other contingent obligations whether direct or indirect in respect of
Indebtedness of others, including any obligation to supply funds to or in any
manner to invest in, directly or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the Indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer in respect of any letters of credit.
Installment Payment Date. See sec. 3.2.
Interest Period. With respect to each Fixed Rate Amount (i) initially,
the period commencing on the Drawdown Date or Term Conversion Date or on the
date of any conversion from a Base Rate Amount to a Fixed Rate Amount, and
ending 7, 14, 30, 60 or 90 days thereafter, as the Company may elect pursuant to
sec. 2.2, sec. 3.1 or sec. 4.2, and (ii) with respect to each Rate Extension
thereafter, the period commencing on the last day of the preceding Interest
Period for such Fixed Rate Amount and ending 7, 14, 30, 60 or 90 days
thereafter, as the Company may elect pursuant to sec. 4.2.
<PAGE> 12
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Investment Advisers Act. The Investment Advisers Act of 1940, as
amended.
Investment Company Act. The Investment Company Act of 1940, as amended.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any person. In determining the aggregate
amount of Investments outstanding at any particular time, (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding;(ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid,
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause, (iii) may be
deducted when paid; and (v) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
Loan Documents. This Agreement, the Note, the Security Documents and
any other agreement or instrument designated as a Loan Document by the Company
and the Bank.
Loans. Collectively, the Advances and the Term Loans.
Mackenzie Funds Distribution. Mackenzie Funds Distribution, Inc., a
Florida corporation
Note. See sec. 4.1.
Obligations. All indebtedness, obligations and liabilities of the
Company to the Bank, existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
or incurred (whether by contract, operation of law or otherwise) under this
Agreement or any of the other Loan
<PAGE> 13
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Documents or in respect of Advances or Term Loans or the Note or other
instruments at any time evidencing any of such indebtedness, obligations and
liabilities.
Outstanding. With respect to the Loans, the unpaid principal thereof as
of any date of determination.
Parent. Mackenzie Financial Corporation, a corporation organized under
the laws of Ontario, Canada, having its principal place of business at 150 Bloor
Street West, Toronto, Ontario M5S3B5, Canada.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Rate Conversion. (i) Conversion of Base Rate Advances to fixed Rate
Advances or of Fixed Rate Advances to Base Rate Advances and (ii) conversion of
Base Rate Term Loans to Fixed Rate Term Loans or of Fixed Rate Term Loans to
Base Rate Term Loans.
Rate Extension. With respect to any Fixed Rate Amount, the election by
the Company in accordance with the terms hereof for such Fixed Rate Amount to
bear interest at a rate per annum referencing the Funding Rate for a successive
Interest Period.
Security Documents. The Guaranty dated as of the date hereof from the
Parent to the Bank, and all related instruments and documents.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
Term Conversion Date. February 10, 1995.
Term Conversion Notice. See sec. 3.1.
Termination Date. December 31, 1999 or the earlier date of termination
of this Agreement pursuant to sec. 2.4, sec. 4.6 or sec. 9.
<PAGE> 14
-9-
Term Loans. Base Rate Term Loans and Fixed Rate Term 1 Loans made by
the Bank pursuant to sec. 3.1 and 4.2 (each of which shall be a "Type" of
Term Loan).
12b-l Funds. Any investment companies registered under the Investment
Company Act of which the Company is the investment adviser and Mackenzie Funds
Distribution is the distributor and which have adopted and have in effect a
12b-l Plan and which are listed on Schedule 1 hereto, which schedule the Company
may add to from time to time.
12b-l Plan. A plan of distribution relating to any of the 12b-l Funds
adopted pursuant to Rule 12b-1 under the Investment Company Act.
Unreimbursed Sales Commission Amount. For any period, an amount equal
to (a) the Unreimbursed Sales Commission Amount as of the last day of the prior
period, plus (b) the aggregate amount of commissions paid or payable by
Mackenzie Funds Distribution during such period to brokers in respect of Class B
Shares of 12b-1 Funds, minus (c) the aggregate amount of distribution fees and
redemption fees received by Mackenzie Funds Distribution during such period from
the 12b-l Funds and the holders of Class B Shares, respectively, in respect of
Class B Shares of 12b-l Funds. Notwithstanding the foregoing, the initial
Unreimbursed Sales Commission Amount hereunder shall be the aggregate amount of
commissions paid to brokers by Mackenzie Funds Distribution during the period
from October 23, 1993 through January 31, 1994 in respect of Class B Shares of
12b-1 Funds, minus the aggregate amount of distribution fees and redemption
fees received by Mackenzie Funds Distribution from the 12b-1 Funds and the
holders of Class B Shares during the same period in respect of Class B Shares of
12b-l Funds.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
(b) All terms of an accounting character not specifically defined
herein shall have the meanings assigned thereto by generally accepted accounting
principles. All terms not specifically defined herein which are defined in the
Uniform Commercial Code as in effect in the Commonwealth
<PAGE> 15
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of Massachusetts shall have the same meanings herein as therein. Each reference
herein to a particular Person (including, without limitation, the Bank) shall
include a reference to such Person's successors and permitted assigns. A
reference to any document or agreement shall include such document or agreement
as amended, modified or supplemented from time to time in accordance with its
terms and the terms of this Agreement. The singular includes the plural and the
plural includes the singular. A reference to any law includes any amendment or
modification to such law. The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any particular
Section or subdivision of this Agreement.
Sec. 2. THE REVOLVING CREDIT ADVANCES.
Sec. 2.1. Commitment to Lend. Subject to the terms and conditions set
forth in this Agreement, the Bank agrees to lend to the Company and the Company
may borrow, repay, and reborrow from time to time between the date of this
Agreement and the Term Conversion Date upon notice by the Company to the Bank
given in accordance with sec. 2.2 hereof, such sums as may be requested by the
Company up to a maximum aggregate principal amount outstanding (after giving
effect to all amounts requested) at any one time equal to the lesser of the
Commitment Amount or the Borrowing Base. If at any time the aggregate principal
amount of all Advances outstanding shall exceed the Commitment Amount or the
Borrowing Base then in effect, the Company shall immediately pay to the Bank the
amount of such excess.
Sec. 2.2. Requests for Advances; Funding. The Company shall give to the
Bank by telecopy, telex, cable or telephone, in each case confirmed immediately
in writing by the Company by a notice in the form of Exhibit C hereto, notice of
each Advance requested hereunder (an "Advance Request") no later than the
applicable time specified below and specifying (i) the proposed Drawdown Date,
(ii) the Types of Advances to comprise such borrowing, (iii) in the case of
Fixed Rate Advances, the initial Interest period for such Advances, (iv) the
amount of each Advance, and (v) the Borrowing Base then in effect. Each Advance
Request shall be in a minimum aggregate amount of $100,000 or an integral
multiple thereof. In the event that the Company wishes to request a Base Rate
Advance, the Company shall give the Bank such Advance Request not later than
11:00 a.m. (Boston time) on the proposed Drawdown Date. In the event that the
Company wishes to request a Fixed Rate Advance, the Company shall request the
Bank to quote the Company the Funding Rate
<PAGE> 16
-11-
applicable to the proposed Interest Period not later than 11:00 a.m. (Boston
time) on the proposed Drawdown Date, specifying all of the information that
would be required in an Advance Request. Upon such request, the Bank will as
promptly as practicable notify the Company by telephone on such date, of the
Funding Rate applicable to the proposed Interest period, specifying how long
such rate quotation is available to the Company. If the Company wishes to
request a Fixed Rate Advance upon the terms described in the Company's request
and at the Funding Rate quoted by the Bank for the proposed Interest Period, the
Company will give the Bank an Advance Request as provided in this sec. 2.2, not
later than the time such rate quotation is to expire in accordance with its
terms. Each request for Advances hereunder shall constitute a representation by
the Company that the conditions set forth in sec. 8 hereof have been satisfied
on the date of such request. Upon satisfaction of all conditions to the Bank's
obligations to make any Advance requested by the Company in any Advance Request
hereunder, the Bank will make the amount of such Advance available to the
Company on the proposed Drawdown Date of such Advance. Each Advance Request for
a Fixed Rate Loan shall obligate the Company to accept the Advance requested
from the Bank on the proposed Drawdown Date and shall be irrevocable and binding
on the Company.
Sec. 2.3. Reduction of Commitment. The Company shall have the right at
any time and from time to time upon five Business Days' prior written notice to
the Bank to reduce by $500,000 or an integral multiple thereof or terminate
entirely the unborrowed portion of the Commitment Amount, whereupon the
Commitment Amount shall be reduced by the amount specified in such notice or, as
the case may be, terminated. Upon the effective date of any reduction of the
Commitment Amount in part or termination of the Commitment Amount in full, the
Company shall pay to the Bank the full amount of any Facility Fee then accrued
on the amount of the reduction. No reduction of he Commitment Amount may be
reinstated.
Sec. 2.4. Maturity Date. Subject to the terms and conditions of this
Agreement, the Commitment shall terminate on the Term Conversion Date and,
except for Advances converted into Term Loans pursuant to sec. 3.1 hereof, all
Advances shall become due and payable on the Term Conversion Date.
Sec. 2.5. Change in Borrowing Base. The Borrowing Base shall be
determined by the Bank monthly as of the last day
<PAGE> 17
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of the most recently ended month (unless the Bank shall specify another
interval) by reference to the Borrowing Base Report delivered pursuant to
sec. 6.5(e) hereof.
Sec. 3. THE TERM LOANS
Sec. 3.1. Term Conversion Date; Term Loans. (a) Subject to the terms
and conditions of this Agreement, the Company may on the Term Conversion Date
convert the Advances into Term Loans in an aggregate amount equal to the
aggregate amount of the outstanding Advances. All Advances not so converted to
Term Loans shall be due and payable on the Term Conversion Date. The Company
shall give the Bank irrevocable notice, by telecopy, telex or cable, in each
case confirmed immediately in writing by the Company (the "Term Conversion
Notice") no later than 11:00 a.m. (Boston time) five Business Days prior to the
Term Conversion Date, requesting the Bank to make the Term Loans on the Term
Conversion Date. The Term Conversion Notice shall specify (i) the amount of the
outstanding Advances being requested to be converted into Term Loans, (ii) the
requested Types of Term Loans and the amounts thereof, and (iii) the length of
the initial Interest Periods in the case of Fixed Rate Term Loans.
(b) On the Term Conversion Date, the Company shall pay to the Bank all
interest accrued to such date on the Advances.
Sec. 3.2. Repayment of Term Loans. Subject to sec. 4.6 and sec. 9
hereof, the Term Loans shall be payable in installments over a term of five
years as hereinafter set forth. The Company hereby absolutely and
unconditionally promises to pay to the Bank the principal amount of the Term
Loans Outstanding on the Term Conversion Date in twenty consecutive, equal
quarterly installments each in an amount equal to 1/20 of the Term Loans
Outstanding on the Term Conversion Date, such installments to be due and payable
on the last day of each March, June, September and December of each year,
commencing on March 31, 1995, with a final payment on the Termination Date
(each, an "Installment Payment Date"); provided that the last such installment
shall be in the amount necessary to repay in full the aggregate principal amount
outstanding of the Loans.
Sec. 4. RATE CONVERSION, INTEREST, PAYMENT AND COSTS.
Sec. 4.1. The Note. The Loans shall be evidenced by a Note of the
Company in substantially the form of Exhibit A hereto (the "Note"), dated the
date of this Agreement
<PAGE> 18
-13-
representing the obligation of the Company to pay the Bank the Commitment Amount
or, if less, the aggregate unpaid principal amount of all Loans made by the Bank
hereunder, plus interest accrued thereon, as set forth below. All Advances made
to the Company by the Bank shall be recorded by the Bank, and all payments made
on account of the Loans shall be similarly recorded. Any failure of the Bank to
record a transaction in a timely fashion, or any error in so recording, shall
not affect or impair the validity of any obligation.
Sec. 4.2. Rate Conversion and Rate Extension. (a) The Company may
effect a Rate Conversion or Rate Extension upon notice given to the Bank, not
later than the applicable time specified below, by telecopy, telex, cable or
telephone, in each case confirmed immediately in writing by the Company and
specifying (i) the date of the Rate Conversion or Rate Extension, (ii) the
Advances or Term Loans to be converted or extended, and (iii) with respect to
Rate Conversions of Base Rate Amounts into Fixed Rate Amounts and Rate
Extensions, the duration of the Interest Period for such Advances or Term Loans.
In the event that the Company wishes to effect a conversion from a Fixed Rate
Amount to a Base Rate Amount, the Company shall give the Bank such notice not
later than 11:00 a.m. (Boston time) on the date of such Rate Conversion. In the
event that the Company wishes to effect a Rate Conversion from a Base Rate
Amount to a Fixed Rate Amount or a Rate Extension, the Company shall request the
Bank to quote the Company the Funding Rate applicable to the proposed Interest
Period not later than 11:00 a.m. (Boston time) on the date of such proposed Rate
Conversion or Rate Extension, specifying all of the information that would be
required in a notice of Rate Conversion or Rate Extension, as the case may be.
Upon such request, the Bank will as promptly as practicable notify the Company
by telephone on such date, of the Funding Rate applicable to the proposed
Interest Period, specifying how long such rate quotation is available to the
Company. If the Company wishes to effect a Rate Conversion from a Base Rate
Amount to a Fixed Rate Amount or a Rate Extension upon the terms described in
the Company's request and at the Funding Rate quoted by the Bank for the
proposed Interest Period, the Company will give the Bank notice as provided in
this sec. 4.2, not later than the time such rate quotation is to expire in
accordance with its terms. Notwithstanding anything to the contrary herein, if
the Company shall at any time fail to give the Bank a notice of Rate Conversion
or Rate Extension with respect to Fixed Rate Amounts in accordance with this
sec. 4.2(a), then the Company shall be
<PAGE> 19
-14-
deemed to have given a timely notice of a Rate Conversion into a Base Rate
Advance or Base Rate Term Loan, as appropriate.
(b) Notwithstanding anything to the contrary herein, any Rate
Conversion of a Fixed Rate Amount to a Base Rate Amount and any Rate Extension
may be made only on the last day of the Interest Period applicable to such Fixed
Rate Amount. No Rate Conversion of a Base Rate Amount to a Fixed Rate Amount,
and no Rate Extension, shall be made during the continuance of a Default or an
Event of Default.
Sec. 4.3. Interest. (a) Except as otherwise provided in sec. 4.4, the
Company shall pay interest on the unpaid principal amount of each Advance from
the Drawdown Date thereof until such principal amount is paid in full or
converted to a Term Loan and on the unpaid principal amount of each Term Loan
from the Term Conversion Date until such principal amount is paid in full, in
each case at an annual rate equal to, (a) with respect to Base Rate Advances,
the Base Rate, (b) with respect to Fixed Rate Advances, the sum of the Funding
Rate plus 1.50% per annum, (c) with respect to Base Rate Term Loans, the sum of
the Base Rate plus .25% per annum, and (d) with respect to Fixed Rate Term
Loans, the sum of the Funding Rate plus 1.75% per annum.
(b) Notwithstanding anything to the contrary in this Agreement, the
Company shall select the Interest Periods with respect to all Fixed Rate Term
Loans so that on each Installment Payment Date an amount of Term Loans at least
equal to the aggregate amount of the installment of principal then due on the
Term Loans shall not consist of Fixed Rate Term Loans subject to an Interest
Period that ends after such Installment Payment Date. In no event shall any
Interest Period end after the Termination Date.
(c) Interest on each Base Rate Amount shall be payable monthly in
arrears on the last day of each calendar month and on the date such Base Rate
Amount is paid in full, and, with respect to Base Rate Advances, on the Term
Conversion Date. Interest on each Fixed Rate Amount shall be payable on the last
day of each Interest Period relating thereto and, in addition, if the Interest
Period is more than 30 days, each date that is 30 or 60 days from the first day
of such Interest Period.
Sec. 4.4. Default Interest. Overdue principal and (to the extent
permitted by applicable law) interest on the Loans and all other overdue amounts
payable hereunder or under any
<PAGE> 20
-15-
of the other Loan Documents shall bear interest compounded monthly and payable
on demand at a rate per annum equal to two percent (2%) above the Base Rate
until such amount shall be paid in full (after as well as before judgment).
During the continuance of an Event of Default the principal of the Loans not
overdue shall, until such Event of Default has been cured or remedied or waived
by the Bank, bear interest at a rate per annum equal to the greater of (a) two
percent (2%) above the rate of interest otherwise applicable to such Loans
pursuant to sec. 4.3 and (b) the rate of interest applicable to overdue
principal pursuant to the first sentence of this sec. 4.4.
Sec. 4.5. Facility Fee. The Company agrees to pay to the Bank a
facility fee (the "Facility Fee") at the rate of one-half of one percent (1/2%)
per annum on the average daily Commitment Amount during each three-month period
(or portion thereof) ending on the payment dates referred to below from the date
hereof to the Term Conversion Date. The Facility Fee shall be payable quarterly
in arrears on the last day of each March, June, September and December of each
year, commencing on March 31, 1994, with a final payment on the Term Conversion
Date.
Sec. 4.6. Optional Prepayment. The Company shall have the right at any
time to prepay the Note, as a whole, or in part, without premium or penalty, but
subject to the provisions of sec. 4.9 hereof, upon not less than two Business
Days' prior written, telegraphic or telephonic notice to the Bank; provided that
each partial prepayment shall be in the aggregate principal amount of $100,000
or an integral multiple thereof. Each prepayment of principal shall include all
interest accrued to the date of prepayment. Each partial prepayment of the Term
Loans shall be applied to the then last maturing installment or installments of
principal of the Term Loans in the inverse order of maturity. No amount repaid
with respect to the Term Loans may be reborrowed.
Sec. 4.7. Funds for Payments. All payments of principal, interest,and
facility fees and any other amounts due hereunder shall be made by the Company
to the Bank at the Bank's head office in Boston, Massachusetts or at such other
location that the Bank may designate from time to time in immediately available
funds in United States dollars, without setoff or counterclaim.
Sec. 4.8. Computations. All computations of interest on the Loans and
of the Facility Fee shall be based on a 360-day year and paid for the actual
number of days
<PAGE> 21
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elapsed. Whenever a payment here under or under the Note becomes due on a day
which is not a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and interest shall accrue during such
extension. The Outstanding amount of the Loans as reflected on the Bank's
records from time to time shall be considered correct and binding on the Company
unless within ten Business Days after receipt of any notice from the Bank of
such Outstanding amount, the Company shall notify the Bank to the contrary. Any
change in the rate of interest payable on any Advance or Term Loan resulting
from a change in the Base Rate shall become effective as of the opening of
business on the day on which such change in the Base Rate becomes effective.
Sec. 4.9. Fixed Rate Indemnification. With respect to any Fixed Rate
Advance or Rate Conversion to a Fixed Rate Amount, if such Advance or Term Loan
or Rate Conversion is not made on the proposed date therefor, the Company shall
indemnify the Bank against any loss or expense incurred by the Bank as a result
of such failure, including without limitation, any loss or expense incurred by
reason of liquidation or reemployment of deposits or other funds acquired by the
Bank to fund or maintain a Fixed Rate Amount maintained by the Bank. If for any
reason, including pre-payment, conversion to Term Loans or acceleration of the
Loans pursuant to sec. 9, the Bank receives payment of the principal of a Fixed
Rate Amount or a Fixed Rate Amount is converted to a Base Rate Amount on a date
other than the last day of the Interest Period relating thereto, the Company
shall pay the Bank, upon demand, any amounts required to compensate the Bank for
any additional losses, costs or expenses which it may reasonably incur as a
result of such payment or Rate Conversion, including, without limitation, any
loss, costs or expenses incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by the Bank to fund or maintain such Advances
and/or Term Loans. Any demand by the Bank for payment pursuant to this sec. 4.9
shall be accompanied by a schedule in reasonable detail setting forth its
computation of any such loss, cost or expense, such schedule to be conclusive
and binding on the Company, absent manifest error.
Sec. 4.10. Additional Costs. Etc. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and
<PAGE> 22
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requests, directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to the Bank by any central bank or other
fiscal, monetary or other authority (whether or not having the force of law),
shall:
(a) subject the Bank to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, the Bank's Commitment or the Loans
(other than taxes based upon or measured by the income or profits of
the Bank), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to the Bank of the
principal of or the interest on any Loans or any other amounts payable
to the Bank under this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or commitments of an office of the Bank, or
(d) impose on the Bank any other conditions or requirements
with respect to this Agreement, the other Loan Documents, the Loans,
the Bank's Commitment, or any class of loans or commitments of which
any of the Loans or the Bank's Commitment forms a part,
and the result of any of the foregoing is
(i) to increase the cost to the Bank of making,
funding, issuing, renewing, extending or maintaining any of
the Loans or the Bank's Commitment, or
(ii) to reduce the amount of principal, interest or
other amount payable to the Bank hereunder on account of the
Bank's Commitment or any of the Loans, or
(iii) to require the Bank to make any payment or to
forego any interest or other sum payable hereunder, the amount
of which payment or foregone interest or other sum is
calculated by reference
<PAGE> 23
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to the gross amount of any sum receivable or deemed received
by the Bank from the Company hereunder,
then, and in each such case, the Company will, upon demand made by the Bank at
any time and from time to time and as often as the occasion therefor may arise,
pay to the Bank such additional amounts as will be sufficient to compensate the
Bank for such additional cost, reduction, payment or foregone interest or other
sum.
Sec. 4.11. Capital Adequacy. If the Bank shall have determined that any
present or future applicable law, rule, regulation, guideline, directive or
request (whether or not having force of law) regarding capital requirements for
banks or bank holding companies, or any change therein or in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank with any of the foregoing, imposes or increases a
requirement by the Bank to allocate capital resources to the Bank's commitment
to make or issue, or to the Bank's maintenance of, loans hereunder, which has or
would have the effect of reducing the return on the Bank's capital to a level
below that which the Bank could have achieved (taking into consideration the
Bank's then existing policies with respect to capital adequacy and assuming full
utilization of the Bank's capital) but for such applicability, change,
interpretation, administration or compliance, by any amount deemed by the Bank
to be material, the Bank shall promptly after its determination of such
occurrence give notice thereof to the Company, which notice shall be accompanied
by a schedule in reasonable detail setting forth the bases for the Bank's
determination. The Company and the Bank shall thereafter attempt to negotiate in
good faith an adjustment to the compensation payable hereunder which will
adequately compensate the Bank for such reduction. If the Company and the Bank
are unable to agree to such adjustment within thirty days of the day on which
the Company receives such notice, then commencing on the date of such notice
(but not earlier than the effective date of any such applicability, change,
interpretation, administration or compliance), the fees payable hereunder shall
increase by an amount which will, in the Bank's reasonable determination,
compensate the Bank for such reduction, the Bank's determination of such amount
to be conclusive and binding on the Company, absent manifest error. In
determining such amount, the Bank may use any reasonable methods of averaging,
allocating or attributing such reduction among its customers.
<PAGE> 24
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Sec. 5. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Bank:
Sec. 5.1. Corporate Authority.
(a) Incorporation; Good Standing. Each of the Company and its
Subsidiaries (i) is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation, (ii) has
all requisite corporate power to own its property and conduct its
business as now conducted and as presently contemplated, and (iii) is
in good standing as a foreign corporation and is duly authorized to do
business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a material
adverse effect on the business, assets or financial condition of the
Company or its Subsidiaries.
(b) Authorization. The execution, delivery and performance by
the Company of this Agreement and the Note and the transactions
contemplated hereby and thereby (i) are within the corporate authority
of the Company, (ii) have been duly authorized by all necessary
corporate proceedings, (iii) do not conflict with or result in any
breach or contravention of any provision of law, statute, rule or
regulation to which the Company or any of its Subsidiaries is subject
or any judgment, order, writ, injunction, license or permit applicable
to the Company or any of its Subsidiaries and (iv) do not conflict with
any provision of the corporate charter or bylaws of, or any agreement
or other instrument binding upon, the Company or any of its
Subsidiaries.
(c) Enforceability. The execution and delivery by the Company
of this Agreement and the Note will result in valid and legally binding
obligations of the Company, enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any proceeding
therefor may be brought.
<PAGE> 25
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Sec. 5.2. Governmental Approvals. The execution, delivery and
performance by the Company of this Agreement and the Note and the transactions
contemplated hereby and thereby do require the approval or consent of, or filing
with, any governmental agency or authority other than those already obtained.
Sec. 5.3. Title to Properties; Leases. Except as indicated on Schedule
5.3 hereto, the Company and its Subsidiaries own all of the assets reflected in
the consolidated balance sheet of the Company and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including, without limitation, any mortgages,
leases, conditional sales agreements, title retention agreements, liens or other
encumbrances, except those permitted by sec. 7.2 hereof.
Sec. 5.4. Financial Statements. There have been furnished to the Bank
complete and correct copies of the following:
(a) the consolidated balance sheet of the Company and its
Subsidiaries as at the Balance Sheet Date, and the related consolidated
statements of income and retained earnings and statement of cash flow
for the fiscal year then ended; and
(b) the unaudited consolidated balance sheets of the Company
and its Subsidiaries as at June 30, 1993 and September 30, 1993 and the
related consolidated statement of income and retained earnings for the
3- and 6-month periods then ended.
Each of the financial statements delivered under sec. 5.4(a) was prepared in
accordance with generally accepted accounting principles, and fairly presents in
all material aspects the financial condition of the Company and its Subsidiaries
as at the close of business on the date thereof and the results of operations
for the fiscal year then ended. Each of the financial statements delivered under
sec. 5.4(b) has been prepared in accordance with generally accepted accounting
principles, subject to year-end audit adjustments and exclusive of any footnotes
which might be required by such accounting principles, and fairly presents in
all material aspects the financial condition of the Company and its Subsidiaries
as at the close of business on the date thereof
<PAGE> 26
-21-
and the results of operations for the period then ended. There are no
contingent liabilities of the Company or any of its Subsidiaries as of such date
involving material amounts known to the officers of the Company not disclosed in
said balance sheets and the related notes thereto.
Sec. 5.5. No Material Changes, Etc. Since the Balance Sheet Date there
has occurred no material adverse change in the financial condition or business
of the Company and its Subsidiaries as shown on or reflected in the consolidated
balance sheet of the Company and its Subsidiaries as at the balance Sheet Date,
or the consolidated statement of income for the fiscal year then ended, other
than changes in the ordinary course of business which have not had any material
adverse effect either individually or in the aggregate on the business or
financial condition of the Company and its Subsidiaries, considered as a whole.
Since the Balance Sheet Date the Company has not made any Distribution.
Sec. 5.6. Franchises, Patents, Copyrights, Etc. Each of the Company and
its Subsidiaries possesses all franchises, patents, copyrights, trademarks,
trade names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of its business substantially as now conducted without
known conflict with any rights of others.
Sec. 5.7. Litigation. There are no actions, suits, proceedings or
investigations of any kind pending or threatened against the Company or any of
its Subsidiaries before any court, tribunal or administrative agency or board
(a) which, if adversely determined, either in any case or in the aggregate, are
reasonably likely to materially adversely affect the properties, assets,
financial condition or business of the Company and its Subsidiaries or
materially impair the right of the Company and its Subsidiaries, considered as a
whole, to carry on business substantially as now conducted, or result in any
substantial liability not adequately covered by insurance, or (b) for which
adequate reserves are not maintained on the consolidated balance sheet of the
Company, or (c) which question the validity or enforceability of this Agreement
or the Note or any action taken or to be taken pursuant hereto or thereto or (d)
which challenge or seek to set aside or amend in any way the rate or amount of
payments previously paid or payable in the future under any 12b-l Plan or with
respect to any Class B Shares of any 12b-l Fund.
Sec. 5.8. No Materially Adverse Contracts, Etc. Neither the Company nor
any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any
<PAGE> 27
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judgment, decree, order, rule or regulation which has or is expected in the
future to have a materially adverse effect on the business, assets or financial
condition of the Company or any of its Subsidiaries. Neither the Company nor any
of its Subsidiaries is a party to any contract or agreement which has or is
expected, in the judgment of the Company's officers, to have any materially
adverse effect on the business of the Company or any of its Subsidiaries.
Sec. 5.9. Compliance With Other Instruments, Laws, Etc. Neither the
Company nor any of its Subsidiaries is in violation of any provision of its
charter documents, bylaws, or any agreement or instrument to which it may be
subject or by which it or any of its properties may be bound or any decree,
order, judgment, or any statute, license, rule or regulation, in any of the
foregoing cases, in a manner which could result in the imposition of substantial
penalties or materially and adversely affect the financial condition, properties
or business of the Company or any of its Subsidiaries.
Sec. 5.10. Tax Status. The Company and its Subsidiaries have made or
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which any of them are subject and
have paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith, and have set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.
Sec. 5.11. No Event of Default. No Default or Event of Default has
occurred and is continuing.
Sec. 5.12. Holding Company and Investment Company Acts. Neither the
Company nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor is
the Company or any of its Subsidiaries an "investment company", as such term is
defined in the Investment Company Act.
<PAGE> 28
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Sec. 5.13. Absence of Financial Statements, Etc. Except as contemplated
by sec. 7.2 of this Agreement, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, which
purports to cover, affect or give notice of any present or possible future lien
on, or security interest in, any assets or property of the Company or any of its
Subsidiaries or rights thereunder.
Sec. 5.14. Certain Transactions. None of the officers, directors, or
employees of the Company or any of its Subsidiaries is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for services
as employees, officers and directors), including, without limitation, any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
Sec. 5.15. ERISA Compliance. The Company and its ERISA Affiliates have
complied in all material respects with ERISA, including without limitation, the
provisions thereof respecting funding requirements for, and the termination of,
plans and respecting prohibited transactions thereunder, and the funding of any
Guaranteed Pension Plan of the Company or any of its ERISA Affiliates complies
with the minimum funding standards of Section 412 of the Internal Revenue Code
for 1954, as amended. The current value of all accrued benefits under each of
such plans did not, as of the latest valuation date, exceed the then current
value of the assets of such plans allocable to such accrued benefits based upon
the actuarial methods and assumptions used for such plans.
Sec. 5.16. Regulations U and X. No portion of the Loan is to be used
for the purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
Sec. 5.17. Registrations, Permits, Etc. Each of the Company and its
Subsidiaries has obtained and maintains all such rights, franchises, exemptions,
registrations, approvals, consents, orders, acknowledgments,
<PAGE> 29
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authorizations, permits and licenses from and has given all such notices to, and
has taken all such other actions with respect to, any governmental or regulatory
agency or authority as may be required in connection with the conduct of the
business of the Company or such Subsidiary as currently conducted or as proposed
to be conducted. Without limiting the foregoing, the Company is duly registered
as an "investment adviser" under the Investment Advisers Act and under the
applicable laws of each state in which such registration is required in
connection with the investment advisory business of the Company; Mackenzie Funds
Distribution is duly registered as a "broker/dealer" under the Securities
Exchange Act of 1934, as amended, and under the securities or blue sky laws of
each state in which such registration is so required in connection with the
business conducted by Mackenzie Funds Distribution, and is a member in good
standing of the National Association of Securities Dealers, Inc.; no action,
proceeding, suit or investigation is pending or threatened with respect to the
suspension, revocation or termination of any such registration or membership;
and the termination or withdrawal of any such registration or membership is not
contemplated by the Company or Mackenzie Funds Distribution.
Sec. 5.18. Subsidiaries. The only Subsidiaries of the Company are those
listed on Schedule 5.18, which schedule accurately sets forth the name of each
such Subsidiary and its jurisdiction and form of organization. Except as shown
on Schedule 5.18, the Company owns 100% of the outstanding capital stock or
other equity securities of each such Subsidiary. The Company owns, of record and
beneficially, all of the issued and outstanding shares of capital stock of
Mackenzie Funds Distribution, all of which shares are duly authorized, fully
paid and non-assessable. The Company may add Subsidiaries to such Schedule from
time to time to the extent permitted by sec. 7.3 by delivering written copies of
such Schedule, with the additions thereto clearly marked, to the Bank.
Sec. 5.19. Advisory Agreements. Schedule 5.19 hereto contains a
complete list of all advisory agreements between the Company and registered
investment companies (as defined in the Investment Company Act) and a brief
description of the rate and frequency at which payments are calculated and paid
to the Company thereunder. Each of such agreements is in full force and effect
in the form previously delivered to the Bank and none of the parties thereto is
in default thereunder. The Company may add to such Schedule from time to time by
delivering written copies of such Schedule, with
<PAGE> 30
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the additions thereto clearly marked, to the Bank, along with copies of the
additional advisory agreements reflected therein.
Sec. 5.20. 12b-1 Plans. Schedule 5.20 hereto contains a complete list
of all 12b-l Plan distribution agreements between Mackenzie Funds Distribution
and registered investment companies (as defined in the Investment Company Act)
and a brief description of the rate and frequency at which payments are
calculated and paid to Mackenzie Funds Distribution thereunder. Each of such
agreements is in full force and effect in the form previously delivered to the
Bank and none of the parties thereto is in default thereunder. The Company may
add to such Schedule from time to time by delivering written copies of such
Schedule, with the additions thereto clearly marked, to the Bank, along with
copies of the additional distribution agreements reflected therein.
Sec. 5.21. The Parent.
(a) The Parent is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, (ii) has all requisite corporate power to own its
property and conduct its business as now conducted and as presently
contemplated, and (iii) is in good standing as a foreign corporation
and is duly authorized to do business in each jurisdiction where such
qualification is necessary except where a failure to be so qualified
would not have a material adverse effect on its business, assets or
financial condition.
(b) The execution, delivery and performance by the Parent of
the Security Documents and the transactions contemplated thereby (i)
are within the corporate authority of the Parent, (ii) have been duly
authorized by all necessary corporate proceedings, (iii) do not
conflict with or result in any breach or contravention of any provision
of law, statute, rule or regulation to which the Parent is subject or
any judgment, order, writ, injunction, license or permit applicable to
the Parent and (iv) do not conflict with any provision of the corporate
charter or bylaws of, or any agreement or other instrument binding
upon, the Parent.
(c) The execution and delivery by the Parent of the Security
Documents will result in valid and legally binding obligations of the
Parent, enforceable against
<PAGE> 31
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it in accordance with the respective terms and provisions thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent
that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) The execution, delivery and performance by the Parent of
the Security Documents and the transactions contemplated thereby do not
require the approval or consent of, or filing with, any governmental
agency or authority other than those already obtained.
(e) There have been furnished to complete and correct copies
of the following:
(i) the consolidated balance sheet of the Parent and
its Subsidiaries as at the Balance Sheet Date, and the related
consolidated statements of income and retained earnings and
statement of cash flow for the fiscal year then ended, and
(ii) the unaudited consolidated balance sheets of the
Parent and its Subsidiaries as at June 30, 1993 and September
30, 1993 and the related consolidated statement of income and
retained earnings for the 3- and 6-month periods then ended.
Each of the financial statements delivered under (i) above was prepared
in accordance with generally accepted accounting principles as in
effect in Canada on the Balance Sheet Date, and fairly presents in all
material respects the financial condition of the Parent and its
Subsidiaries as at the close of business on the date thereof and the
results of operations for the fiscal year then ended. Each of the
financial statements delivered under (ii) above has been prepared in
accordance with generally accepted accounting principles as in effect
in Canada on the Balance Sheet Date, subject to year-end audit
adjustments and exclusive of any footnotes which might be required by
such accounting principles, and fairly presents in all material
respects the financial condition of the Parent
<PAGE> 32
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and its Subsidiaries as at the close of business on the date thereof
and the results of operations for the period then ended. There are no
contingent liabilities of the Parent or any of its Subsidiaries as of
such date involving material amounts known to the officers of the
Parent not disclosed in said balance sheets and the related notes
thereto.
(f) Since the Balance Sheet Date there has occurred no
material adverse change in the financial condition or business of the
Parent as shown on or reflected in the consolidated balance sheet of
the Parent as at the Balance Sheet Date, or the consolidated statement
of income for the fiscal year then ended, other than changes in the
ordinary course of business which have not had any material adverse
effect either individually or in the aggregate on the business or
financial condition of the Parent.
(g) There are no actions, suits, proceedings or investigations
of any kind pending or threatened against the Parent before any court,
tribunal or administrative agency or board (a) which, if adversely
determined, either in any case or in the aggregate, are reasonably
likely to materially adversely affect the properties, assets, financial
condition or business of the Parent or materially impair the right of
the Parent to carry on business substantially as now conducted, or
result in any substantial liability not adequately covered by
insurance, or (b) for which adequate reserves are not maintained on the
consolidated balance sheet of the Parent, or (c) which question the
validity or enforceability of the Security Documents or any action
taken or to be taken pursuant thereto.
(h) The Parent has made or filed all federal and state income
and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and has paid all taxes and other
governmental assessments and charges shown or determined to be due on
such returns, reports and declarations, except those being contested in
good faith, and has set aside on its books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Parent know of
no basis for any such claim.
<PAGE> 33
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(i) The Parent possesses all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in respect of
the foregoing, adequate for the conduct of its business substantially
as now conducted without known conflict with any rights of others.
(j) The Parent is not in violation of any provision of its
charter documents, bylaws, or any agreement or instrument to which it
may be subject or by which it or any of its properties may be bound or
any decree, order, judgment, or any statute, license, rule or
regulation, in any of the foregoing cases, in a manner which could
result in the imposition of substantial penalties or materially and
adversely affect the financial condition, properties or business of the
Parent or any of its Subsidiaries.
(k) No default under the Guaranty has occurred and is
continuing.
(l) The Parent has obtained and maintains all such rights,
franchises, exemptions, registrations, approvals, consents, orders,
acknowledgments, authorizations, permits and licenses from and has
given all such notices to, and has taken all such other actions with
respect to, any governmental or regulatory agency or authority as may
be required in connection with the conduct of its business as currently
conducted or as proposed to be conducted.
Sec. 6. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company covenants and
agrees that, so long as any Loan or the Note is outstanding or the Bank has any
obligation to make any Advances hereunder:
Sec. 6.1. Proceeds. The Company will apply the proceeds of the Loans to
fund the payment by Mackenzie Funds Distribution of sales commissions to dealers
of Class B Shares of the 12b-l Funds. The Company will cause Mackenzie Funds
Distribution, as distributor under 12b-1 Plans, to apply all 12b-l payments
under the 12b-l Plans received with respect to Class B Shares, and all
contingent deferred sales charges and redemption fees, after deduction of all
expenses, taxes and other distribution related charges, to repay loans from the
Company or to pay dividends to the Company, and the Company shall apply such
funds first to the payment of interest and next to the repayment of principal
due under the Loans.
<PAGE> 34
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Sec. 6.2. Punctual Payment. The Company will duly and punctually pay or
cause to be paid the principal and interest on the Loans and the Facility Fee
provided for in this Agreement, all in accordance with the terms of this
Agreement and the Note. If at any time the aggregate principal amount of all
Advances Outstanding shall exceed the lesser of the Commitment Amount or the
Borrowing Base then in effect, the Company shall immediately pay to the Bank the
amount of such excess.
Sec. 6.3. Maintenance of Office. The Company will maintain its chief
executive office in Boca Raton, Florida, or at such other place in the United
States of America as the Company shall designate upon written notice to the
Bank, where notices, presentations and demands to or upon the Company in respect
of the Loan Documents may be given or made.
Sec. 6.4. Records and Accounts. The Company will keep, and cause each
of its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles and maintain adequate accounts and reserves for
all taxes (including income taxes), all depreciation, depletion, obsolescence
and amortization of its properties, and the properties of its Subsidiaries, all
contingencies, and all other reserves.
Sec. 6.5. Financial Statements, Certificates and Information. The
Company will deliver to the Bank:
(a) as soon as practicable, but in any event not later than 90
days after the end of each fiscal year of the Company, the consolidated
balance sheet of the Company and its Subsidiaries as at the end of such
year, and the related consolidated statement of income and retained
earnings and of cash flow for such year, each setting forth in
comparative form the figures for the previous fiscal year, all such
consolidated statements to be in reasonable detail, prepared in
accordance with generally accepted accounting principles, and all such
consolidated statements to be certified without qualification by
Coopers & Lybrand or by other independent certified public accountants
satisfactory to the Bank, together with a written statement from such
accountants to the effect that they have read a copy of this Agreement,
and that, in making the examination necessary to said certification,
they have obtained no knowledge of any Default or Event of Default, or,
if such accountants shall have obtained
<PAGE> 35
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knowledge of any then existing Default or Event of Default they shall
disclose in such statement any such Default or Event of Default;
provided that such accountants shall not be liable to the Bank for
failure to obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than 45
days after the end of each of the first three fiscal quarters of each
fiscal year of the Company and its Subsidiaries, copies of the
unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and the related
consolidated statement of income and retained earnings and of cash flow
for the portion of the Company's fiscal year then elapsed, all in
reasonable detail and prepared in accordance with generally accepted
accounting principles, together with a certification by the principal
financial or accounting officer of the Company that the information
contained in such financial statements is true and accurate, subject
only to normal year-end adjustments;
(c) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement
certified by the principal financial or accounting officer of the
Company in substantially the form of Exhibit D hereto and setting forth
in reasonable detail computations evidencing compliance with the
covenants contained in Sec. 7.8-7.12 and (if applicable)
reconciliations to reflect changes in generally accepted accounting
principles since the Balance Sheet Date;
(d) contemporaneously with the filing or mailing thereof,
copies of all material of a financial nature filed with the Securities
and Exchange Commission by the Company or any of its Subsidiaries or
sent to the stockholders of the Company or any of its Subsidiaries;
(e) within 15 days after the end of each calendar month, (i) a
statement certified by the principal financial or accounting officer of
the Company which shall set forth with respect to such month, both in
the aggregate for all of the 12b-l Funds and separately with respect to
each of the 12b-l Funds, (1) all brokerage commissions incurred by
Mackenzie Funds Distribution in connection with sales of Class B Shares
in the 12b-l Funds, (2) service fees estimated to have been incurred by
Mackenzie Funds Distribution in connection with sales of Class B Shares
in the 12b-l
<PAGE> 36
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Funds, (3) the distribution fees paid by the 12b-1 Funds to Mackenzie
Funds Distribution pursuant to the 12b-l Plans or such Funds'
distribution agreements with Mackenzie Funds Distribution and aggregate
contingent deferred sales charges and other fees imposed upon the
redemption of Class B Shares of the 12b-l Funds received by Mackenzie
Funds Distribution, and (4) the advisory fees with respect to such
month received by the Company pursuant to investment advisory
agreements with the 12b-1 Funds; (ii) a report which shall set forth
with respect to the last day of such month the potential maximum
redemption proceeds from shareholders of Class B Shares of each of the
12b-l Funds from contingent deferred sales charges and redemption fees;
(iii) a statement certified by the principal financial or accounting
officer of the Company and setting forth the amount of all dividends
and distributions and intercompany payments made by Mackenzie Funds
Distribution to the Company with respect to such month; (iv) a
Borrowing Base Report; and (v) a statement certified by the principal
financial or accounting officer of the Company that the Company is in
compliance with the covenants contained in sec. 6.1 hereof as of the
end of the applicable period and setting forth in reasonable detail
computations evidencing such compliance (except that from and after the
Term Conversion Date, items (i) (1) and (iv) need not be delivered);
and
(f) from time to time such other financial data and
information (including accountants' management letters, interim
financial reports with respect to the matters described in clause (e)
above, and Borrowing Base Reports) as the Bank may reasonably request.
Sec. 6.6. Corporate Existence; Maintenance of Properties. The Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises and those of its
Subsidiaries. It will cause all of its properties and those of its Subsidiaries
used or useful in the conduct of its business or the business of its
Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times and will and will cause each of its Subsidiaries to continue to
engage
<PAGE> 37
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primarily in the business now conducted by them and in related businesses.
Sec. 6.7. Insurance. The Company will maintain, and cause its
Subsidiaries to maintain, with financially sound and reputable insurance
companies, funds or underwriters insurance of the kinds, covering the risks and
in the relative proportionate amounts usually carried by reasonable and prudent
companies conducting businesses similar to that of the Company and its
Subsidiaries.
Sec. 6.8. Taxes. The Company will and will cause each of its
Subsidiaries to duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
governmental charges imposed upon it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies, which if unpaid might by
law become a lien or charge upon any of its property; provided, however, that
any such tax, assessment, charge, levy or claim need not be paid if the validity
or amount thereof shall currently be contested in good faith by appropriate
proceedings and if the Company or such Subsidiary shall have set aside on its
books adequate reserves with respect thereto; and provided, further, that the
Company and each Subsidiary will pay all such taxes, assessments, charges,
levies or claims forthwith upon the commencement of proceedings to foreclose any
lien which may have attached as security therefor.
Sec. 6.9. Inspection of Properties and Books. The Company shall permit
the Bank or any of its designated representatives to visit and inspect any of
the properties of the Company or any of its Subsidiaries, to examine the books
of account of the Company or any of its Subsidiaries (and to make copies thereof
and extracts therefrom), and to discuss the affairs, finances and accounts of
the Company or any of its Subsidiaries with, and to be advised as to the same
by, its and their officers, all at such reasonable times during normal business
hours and intervals as the Bank may reasonably request. The Bank may, with the
prior written consent of the Company, which consent shall not be unreasonably
withheld, communicate directly with the Company's independent certified public
accountants and, subject to such consent, the Company authorizes such
accountants to disclose to the Bank any and all financial statements and other
supporting financial documents and schedules including copies of any management
letter with respect to the business, financial condition and other
<PAGE> 38
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affairs of the Company or any of its Subsidiaries. Subject to the preceding
sentence, at the request of the Bank, the Company shall deliver a letter
addressed to such accountants instructing them to comply with the provisions of
this sec. 6.9.
Sec. 6.10. Compliance with Laws, Contracts, Licenses, and Permits. The
Company will and will cause each of its Subsidiaries to comply with (i) the
applicable laws and regulations wherever its business is conducted, including,
without limitation, all environmental laws, rules and regulations, the
Investment Company Act and the Investment Advisers Act, except to the extent
that any failure to comply with any of the foregoing would not have a material
adverse effect on the business of the Company or any of its Subsidiaries, (ii)
the provisions of its charter documents and by-laws, (iii) all agreements and
instruments by which it or any of its properties may be bound, except to the
extent that any failure to comply with any of the foregoing would not have a
material adverse effect on the business of the Company or any of its
Subsidiaries, and (iv) all applicable decrees, orders, and judgments. If at any
time while any Loan or Note is outstanding or the Bank has any obligation to
make Advances hereunder, any authorization, consent, approval, permit or license
from any officer, agency or instrumentality of any government shall become
necessary or required in order that the Company or any of its Subsidiaries may
fulfill any of its obligations hereunder, the Company will immediately take or
cause to be taken all reasonable steps within the power of the Company to obtain
such authorization, consent, approval, permit or license and furnish the Bank
with evidence thereof.
Sec. 6.11. Pension Plans. The Company and each of its Subsidiaries
shall:
(a) fund each pension plan as required by Section 412 of the
Internal Revenue Code of 1986, as amended (the "Code");
(b) furnish to the Bank a copy of any actuarial statement
related to any pension plan required to be submitted under sec. 103(d)
of ERISA, no later than the date on which such statement is submitted
to the Department of Labor or the Internal Revenue Service;
(c) furnish to the Bank forthwith, a copy of (i) any notice of
a pension plan termination sent to the Pension Benefit Guaranty
Corporation under sec. 4041(a) of ERISA or (ii) any notice, report or
demand sent or received by a pension plan under sec. 4041, 4042, 4043,
4063, 4065, 4066 and 4068 of ERISA; and
<PAGE> 39
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(d) furnish to the Bank a copy of any request for waiver from
the funding standards or extension of the amortization periods required
by Sec. 412 of the Code no later than the date on which the request is
submitted to the Department of Labor or the Internal Revenue Service,
as the case may be.
Sec. 6.12. Status Under Securities Laws. The Company will maintain its
status as a registered "investment adviser" under the Investment Advisers Act
and under the laws of each state in which such registration is required in
connection with the business of the Company, and also will cause Mackenzie Funds
Distribution to maintain its status as a registered "broker/dealer" under the
Securities Exchange Act of 1934, as amended, and under the laws of each state in
which such registration is required in connection with its business and its
membership in the National Association of Securities Dealers, Inc., and will
maintain or cause to be maintained all other registrations, qualifications,
licenses, approvals, authorizations, permits and memberships as may be required
in connection with the business of the Company or any Subsidiary of the Company
as now conducted or at any time may be conducted.
Sec. 6.13. Sales Under 12b-1 Plans. The Company shall promptly notify
the Bank when aggregate sales commissions payable and anticipated to be payable
by Mackenzie Funds Distribution to dealers of Class B Shares of the 12b-1 Funds
exceed or are anticipated to exceed the unborrowed portion of the Commitment
Amount.
Sec. 6.14. Notices. The Company will promptly notify the Bank in
writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice or take any other action in respect of a claimed default
(whether or not constituting an Event of Default) under this Agreement or any
other note, evidence of indebtedness, indenture or other obligation to which or
with respect to which the Company or any of its Subsidiaries is a party or
obligor, whether as principal or surety, the Company shall forthwith give
written notice thereof to the Bank, describing the notice or action and the
nature of the claimed default. The Company will also promptly notify the Bank of
the adoption of any 12b-l Plan by any other investment company registered under
the Investment Company Act of which the Company is the investment adviser and
Mackenzie Funds Distribution is the distributor.
Sec. 6.15. Further Assurances. The Company will cooperate with the Bank
and execute such further instruments and
<PAGE> 40
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documents as the Bank shall reasonably request to carry out to satisfaction the
transactions contemplated by this Agreement.
Sec. 7. CERTAIN NEGATIVE COVENANTS OF THE COMPANY. The Company agrees
that, so long as any Loan or the Note is outstanding or the Bank has any
obligation to make any Advances hereunder:
Sec. 7.1. Restrictions on Indebtedness. The Company will not, and will
not permit any Subsidiary to, create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Indebtedness other than:
(a) Indebtedness of the Company to the Bank with respect to
the Loans;
(b) Current liabilities incurred in the ordinary course of
business not incurred through (i) the borrowing of money, or (ii) the
obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal
purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of sec. 6.8;
(d) Indebtedness in respect of judgments or awards which have
been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which
the Company shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;
(e) Endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Obligations of the Company or any Subsidiary under leases
required to be capitalized on the books of the Company in accordance
with generally accepted accounting principles not exceeding $500,000 in
aggregate amount at any time outstanding;
<PAGE> 41
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(g) Indebtedness incurred in connection with the acquisition
after the date hereof of any real or personal property by the Company
or any Subsidiary, provided that the principal amount of such
Indebtedness shall not exceed in any case 80% of the cost, to the
Company or such Subsidiary, of the real or personal property so
acquired; and
(h) Indebtedness of the Company's Subsidiaries to the Company
solely in an amount equal to the amount advanced by the Company to such
Subsidiaries to pay the ordinary operating expenses of such
Subsidiaries.
Sec. 7.2. Restrictions on Liens. The Company will not, and will not
permit any Subsidiary to: create or incur or suffer to be created or incurred or
to exist any lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom, including, without limitation, any agreement preventing the Company
or any Subsidiary from granting a security interest in its property or assets to
the Bank; or transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; or acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; or suffer to exist for a period of more than
30 days after the same shall have been incurred any Indebtedness or claim or
demand against it which if unpaid might by law or upon bankruptcy or insolvency,
or otherwise, be given any priority whatsoever over its general creditors; or
sell, assign, pledge or otherwise transfer any accounts, contract rights,
general intangibles or chattel paper, with or without recourse; provided,
however, that the Company and its Subsidiaries may create or incur or suffer to
be created or incurred or to exist:
(a) Liens to secure taxes, assessments and other government
charges or claims for labor, material or supplies in respect of
obligations not overdue;
(b) Deposits or pledges made in connection with, or to secure
payment of, worker's compensation, unemployment insurance, old age
pensions or other social security obligations;
<PAGE> 42
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(c) Liens in respect of judgments or awards, the Indebtedness
with respect to which is permitted by Sec. 7.1(d);
(d) Liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than 120 days from
the date of creation thereof in respect of obligations not overdue;
(e) Encumbrances consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which the Company is a party, and other minor
liens or encumbrances none of which in the reasonable opinion of the
Company interferes materially with the use of the property affected in
the ordinary conduct of the business of the Company, which defects do
not individually or in the aggregate have a material adverse effect on
the business of the Company individually or of the Company and its
Subsidiaries as a whole; and
(f) Purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof
to secure purchase money Indebtedness of the type and amount permitted
by sec. 7.1(g), incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired.
Sec. 7.3. Restrictions on Investments. The Company will not, and will
not permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) Marketable direct or guaranteed obligations of the United
States of America which mature within one year from the date of
purchase by the Company;
(b) Demand deposits, certificates of deposit, bankers'
acceptances and time deposits of United States banks having total
assets in excess of $1,000,000,000 United States Dollars;
(c) Securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof which at the time of purchase
have been rated and the ratings for which are not less than "P-1"
<PAGE> 43
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if rated by Moody's Investors Service, Inc., and not less than "A-1" if
rated by Standard and Poor's Corporation;
(d) Presently existing Investments in any Person which is a
Subsidiary of the Company on the date hereof to the extent of the
respective amounts of such Investments, and future Investments by the
Company in such Subsidiaries provided that the amount of such future
Investments shall be solely that amount needed to pay the ordinary
operating expenses of such Subsidiaries;
(e) Investments by the Company consisting of loans to or
contributions to capital of Mackenzie Funds Distribution solely in an
amount equal to the amount of sales commissions paid by Mackenzie Funds
Distribution to dealers of Class B Shares of the 12b-1 Funds;
(f) "Seed Money" Investments, in an individual amount not to
exceed $100,000 (when made) and in an aggregate amount not to exceed
$300,000 (when made) in investment companies which are or will be
registered under the Investment Company Act of which the Company or
Mackenzie Funds Distribution is or may become the investment adviser
and distributor, respectively; and
(g) Any other Investments aggregating not more than $500,000
at any time.
Sec. 7.4. Merger and Consolidation. The Company will not, and will not
permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition, stock acquisition or
disposition of assets (other than the acquisition and disposition of assets in
the ordinary course of business) except the merger or consolidation of one or
more of the Subsidiaries of the Company with and into the Company, or the merger
or consolidation of two or more Subsidiaries of the Company or the asset
acquisition or stock acquisition by the Company or the merger or consolidation
of the Company with any other entity, provided that the Company is the surviving
entity.
Sec. 7.5. Distributions. The Company will not, and will not permit any
Subsidiary to, make or declare any Distribution, except that any Subsidiary of
the Company which is wholly-owned by the Company, whether directly or indirectly
(through a wholly-owned Subsidiary or Subsidiaries) may make Distributions to
the Company. The Company will not permit any of its wholly-owned Subsidiaries
<PAGE> 44
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to enter into any contractual restrictions on such Subsidiaries' ability to make
Distributions to the Company.
Sec. 7.6. Sale and Leaseback. The Company will not, and will not permit
any of its Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Company or of its Subsidiaries shall sell or transfer any property
owned by it in order then or thereafter to lease such property or lease other
property which the Company or such Subsidiary intends to use for substantially
the same purpose as the property being sold or transferred.
Sec. 7.7. Lines of Business. The Company will not engage in any
business other than the business of a registered investment adviser or any
business directly related thereto.
Sec. 7.8. Consolidated Cash Flow Ratio. The Company will not permit the
ratio of Consolidated Cash Flow for any fiscal quarter of the Company to
Consolidated Interest Charges for the same period to be less than 6.00 to 1.00.
Sec. 7.9. Consolidated Fixed Charge Ratio. The Company will not permit
the ratio of Consolidated Cash Flow for any fiscal quarter of the Company to
Consolidated Fixed Charges for the same period to be less than 1.25 to 1.00.
Sec. 7.10. Consolidated Tangible Net Worth. The Company will not at any
time permit Consolidated Tangible Net Worth to be less than $4,900,000 plus, on
a cumulative basis, 60% of positive Consolidated Net Income for each fiscal
quarter of the Company beginning with the fiscal quarter ended March 31, 1994,
with no deductions for losses.
Sec. 7.11. Consolidated Net Income. The Company will not permit
Consolidated Net Income for any period consisting of four consecutive fiscal
quarters of the Company, connecting with the four-quarter period ended March 31,
1994, to be less than $1.00.
Sec. 7.12. Leverage Ratio. The Company will not at any time permit the
ratio of Consolidated Total Liabilities to Consolidated Tangible Net Worth to
exceed 2.00 to 1.00.
Sec. 8. CONDITIONS PRECEDENT. The obligation of the Bank to make
Advances hereunder and to convert Advances into Term Loans on the Term
Conversion Date is subject to the following conditions precedent:
<PAGE> 45
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Sec. 8.1. Closing Conditions. In the case of the first Advance:
(a) Corporate Action. All corporate action necessary for the
valid execution, delivery and performance by the Company of this
Agreement and the Note shall have been duly and effectively taken, and
evidence thereof satisfactory to the Bank shall have been provided to
the Bank.
(b) Opinion of Company Counsel. The Bank shall have received
from each of Dechert Price & Rhoads, counsel to the Company, and Harold
Hands, counsel to the Parent, a favorable opinion addressed to the
Bank, dated the date of the closing, in scope, form and substance
satisfactory to the Bank.
(c) No Material Adverse Change. There shall have been no
material adverse change in the business, assets or financial condition
of the Company since the date of the financial information delivered
pursuant to sec. 5.4(a) hereof.
Sec. 8.2. All Borrowings. In the case of each Advance, including the
first Advance, and in the case of the conversion of Advances into Term Loans on
the Term Conversion Date:
(a) Representations True; No Event of Default. Each of the
representations and warranties of the Company contained in this
Agreement or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of which
they were made and shall also be true at and as of the time of the
making of the Advance or Term Loan, with the same effect as if made at
and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Agreement and changes
occurring in the ordinary course of business which singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date) and
no Default or Event of Default shall have occurred and be continuing;
and the Bank shall have received a certificate of the Company signed by
an authorized officer of the Company to such effect.
(b) No Legal Impediment. No change shall have occurred in any
law or regulations thereunder or interpretations thereof which in the
reasonable opinion
<PAGE> 46
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of the Bank would make it illegal for the Bank to make Advances or the
Term Loans hereunder.
(c) Governmental Regulation. The Bank shall have received such
statements from the Company in substance and form reasonably
satisfactory to the Bank as the Bank shall require for the purpose of
the compliance with any applicable regulations of the Comptroller of
the Currency or the Board of Governors of the Federal Reserve System.
(d) Proceedings and Documents. All proceedings in connection
with the transactions contemplated by this Agreement and all documents
incident thereto shall be satisfactory in substance and in form to the
Bank's counsel, and the Bank and such counsel shall have received all
information and such counterpart originals or certified or other copies
of such documents as the Bank may reasonably request.
Sec. 9. EVENTS OF DEFAULT; ACCELERATION. If any of the following events
("Events of Default") shall occur:
(a) if the Company shall fail to pay any principal of the
Loans when the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any other
date fixed for payment;
(b) if the Company shall fail to pay any interest on the
Loans, Facility Fee, or other sums due hereunder or under any of the
Loan Documents, when the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or at
any other date fixed for payment, and such failure shall remain uncured
for three (3) Business Days;
(c) if the Company shall fail to comply with its covenants
contained in sec. 6 or 7 hereof;
(d) if the Company shall fail to perform any term, covenant or
agreement herein contained (other than those specified in subsections
(a), (b) and (c) above) for 15 days after written notice of such
failure has been given to the Company by the Bank;
(e) if any representation or warranty of the Company or the
Parent in this Agreement or any other Loan Document or in any document
or instrument delivered pursuant to or in connection with this
<PAGE> 47
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Agreement or any other Loan Document shall prove to have been false in
any material respect upon the date when made;
(f) if the Company or any of its Subsidiaries or the Parent
shall fail to pay at maturity, or within any applicable period of
grace, any obligation for borrowed money or credit received or in
respect of capitalized leases in excess of $100,000 in aggregate
principal amount, or fail to observe or perform any term, covenant or
agreement contained in any agreement by which it is bound, evidencing
or securing such borrowed money or credit received or in respect of any
capitalized leases for such period of time as would permit (assuming
the giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the
maturity thereof;
(g) if the Company or any of its Subsidiaries or the Parent
makes an assignment for the benefit of creditors, or admits in writing
its inability to pay or fails to pay its debts as they mature or become
due, or petitions or applies for the appointment of a trustee or other
custodian, liquidator or receiver of the Company or any of its
Subsidiaries or the Parent or of any substantial part of the assets of
the Company or any of its Subsidiaries or the Parent under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction,
now or hereafter in effect, or takes any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application is filed or any such case or other proceeding is commenced
against the Company or any of its Subsidiaries or the Parent and the
Company or any of its Subsidiaries or the Parent indicates its approval
thereof, consent thereto or acquiescence therein;
(h) if a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the Company
or any of its Subsidiaries or the Parent bankrupt or insolvent, or
approving a petition in any such case or other proceeding, or a decree
or order for relief is entered in respect of the Company or any
Subsidiary or the Parent in an involuntary case under Federal (or
equivalent Canadian) bankruptcy laws as now or hereafter constituted;
<PAGE> 48
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(i) if there shall remain in force, unsatisfied and unstayed,
for more than thirty days, whether or not consecutive, any final
judgment against the Company or any of its Subsidiaries which, with
other outstanding final judgments, undischarged, against such Person(s)
exceeds in the aggregate $50,000;
(j) if the Company shall cease to be duly registered as an
"investment adviser" under the Investment Advisers Act or under the
applicable laws of any state in which such registration is required in
connection with the investment advisory business of the Company or the
Company shall be enjoined, barred or prohibited from acting as an
investment adviser to any investment company registered under the
Investment Company Act or to any other client; or Mackenzie Funds
Distribution shall cease to be duly registered as a broker/dealer under
the Securities Exchange Act of 1934 or under the blue sky or securities
laws of any state or other jurisdiction or Mackenzie Funds Distribution
shall be enjoined, barred or prohibited from acting as a broker/dealer
or as an underwriter or distributor of any securities or class of
securities; or any other registration, qualification, license, permit,
approval or authorization of the Company or any of its Subsidiaries
shall cease to be in effect or shall be withdrawn, revoked or
suspended, if, in any such instance, singly or in the aggregate, the
same would have a material adverse effect upon the financial condition,
business, operations or prospects of the Company and its Subsidiaries;
(k) if the Parent shall own, either directly or through one or
more Subsidiaries, less than 51% of the outstanding voting stock of the
Company on a fully diluted basis or if the Company shall own less than
100% of the outstanding capital stock of Mackenzie Funds Distribution
on a fully diluted basis; or
(l) if any 12b-l Plan or 12b-l Plan distribution agreement
between Mackenzie Funds Distribution and any 12b-l Fund is terminated
or amended in any way which reduces the rate or amount of payments
payable to Mackenzie Funds Distribution thereunder or if any advisory
agreement between the Company and any registered investment company (as
defined in the Investment Company Act) is terminated or amended in any
way which reduces the rate or amount of payments payable to the Company
thereunder;
<PAGE> 49
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(m) any of the 12b-l Funds shall fail to comply in any
material respect with any investment policy or restriction contained in
(i) its most recent prospectus, (ii) its most recent statement of
additional information, if any, or (iii) applicable federal or state
securities laws and regulations;
(n) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded otherwise than in accordance with the
terms thereof or with the express prior written agreement consent or
approval of the Bank, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the loan documents
shall be commenced by or on behalf of the Company or the Parent party
thereto or any of their respective stockholders, or any court or any
other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment
order, decree or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the
terms thereof;
(o) if the parent shall fail to comply with its covenants
contained in the Security Documents, or if there shall occur any other
default under any Security Document;
then, and in any such event, so long as the same may be continuing, the Bank
may, by notice in writing to the Company declare all amounts owing with respect
to this Agreement and the Note to be, and they shall thereupon forthwith become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Company; provided
that in the event of any Event of Default specified in sec. 9(g) or 9(h)
hereof, all such amounts shall become immediately due and payable automatically
and without any requirement of notice from the Bank. In case any one or more of
the Events of Default shall have occurred and be continuing, and whether or not
the Bank shall have accelerated the maturity of the Loans pursuant to the
foregoing, the Bank, if owed any amount with respect to the Loans may proceed to
protect and enforce its rights by suit in equity, action at law and/or other
appropriate proceeding, whether for the specific performance of any instrument
pursuant to which the Obligations of the Company to the Bank hereunder are
evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have become due, by
<PAGE> 50
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declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of the Bank. No remedy herein conferred upon the Bank
or holder of the Note is intended to be exclusive of any other remedy and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or thereafter existing at law or in equity or by
statute or any other provision of law.
If any one or more of the Events of Default specified above shall
occur, any unused portion of the credit hereunder shall forthwith terminate and
the Bank shall be relieved of all obligations to make Advances to the Company;
or if on any Drawdown Date the conditions precedent to the making of the
Advances to be made on such Drawdown Date are not satisfied, the Bank may, by
notice to the Company, terminate the unused portion of the credit hereunder, and
upon such notice being given such unused portion of the credit hereunder shall
terminate immediately and the Bank shall be relieved of all further obligations
to make Advances to the Company hereunder. No termination of the credit
hereunder shall relieve the Company of any of its existing Obligations to the
Bank hereunder or elsewhere.
Sec. 10. SETOFF. Regardless of the adequacy of any collateral, during
the continuance of an Event of Default, any deposits or other sums credited by
or due from the Bank to the Company and any securities or other property of the
Company in the possession of the Bank may be applied to or set off against the
payment of obligations of the Company hereunder and under the Note and any and
all other liabilities, direct, or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, of the Company to the Bank.
Sec. 11. EXPENSES. The Company will reimburse the Bank for all
reasonable out-of-pocket expenses, including but not limited to the reasonable
attorney's fees and disbursements of Bingham, Dana & Gould, the Bank's special
counsel, and other reasonable attorneys' fees and disbursements, incurred or
expended in connection with the preparation, interpretation or administration of
this Agreement, the Note or any amendment hereof or thereof, or with the
enforcement of any obligations or the satisfaction of any indebtedness of the
Company hereunder or thereunder, or in connection with any litigation,
proceeding or dispute hereunder in any way related to the credit hereunder. The
Company will pay any taxes (including any interest and penalties in respect
thereof), payable on or with respect to the transactions contemplated by this
Agreement (the Company hereby agreeing to indemnify the Bank with respect
thereto).
<PAGE> 51
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Sec. 12. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the Bank from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Agreement
or the transactions evidenced hereby.
Sec. 13. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the Note or in any documents or
other papers delivered by or on behalf of the Company or the Parent pursuant
hereto shall be deemed to have been relied upon by the Bank, notwithstanding any
investigation heretofore or hereafter made by it, and shall survive the making
by the Bank of the Loans, as herein contemplated, and shall continue in full
force and effect so long as any amount due under this Agreement or the Note
remains outstanding and unpaid or the Bank has any obligation to make any
Advances hereunder. All statements contained in any certificate or other paper
delivered to the Bank at any time by or on behalf of the Company pursuant hereto
or in connection with the transactions contemplated hereby shall constitute
representations and warranties by the Company hereunder.
Sec. 14. PARTIES IN INTEREST. All the terms of this Agreement and the
Note shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto and thereto; provided,
that the Company may not assign or transfer its rights hereunder without the
prior written consent of the Bank. The Bank may without the consent of the
Company sell participations to one or more banks or financial institutions in
all or a portion of the Bank's rights and obligations under this Agreement
(including without limitation, all or a portion of its Commitment hereunder and
the Loans owing to it and the Note held by it); provided that no grant of a
participation herein to any Person shall relieve the Bank of its obligations
hereunder.
Sec. 15. NOTICES, ETC. Except as otherwise expressly provided in this
Agreement, all notices and other communications made or required to be given
pursuant to this Agreement or the Note shall be in writing and shall be
delivered in hand, mailed by United States first-class mail, postage prepaid,
sent by overnight courier, or sent by telegraph, telex or telefax and confirmed
by letter, addressed as follows:
<PAGE> 52
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(a) if to the Company, at 700 South Federal Highway, Boca Raton,
FL 33432, Attention: C. William Ferris, Senior Vice President or at
such other address for notice as the Company shall last have furnished
in writing to the Person giving the notice;
(b) if to the Bank, at 100 Federal Street, Boston, Massachusetts
02110, Attention: Karen Andon, Vice President or such other address for
notice as the Bank shall last have furnished in writing to the Person
giving the notice;
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer, and (b) if sent by registered or
certified first-class mail, postage prepaid, when mailed.
Sec. 16. MISCELLANEOUS. THIS AGREEMENT AND EACH OF THE OTHER LOAN
DOCUMENTS, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS
UNDER SEAL UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID
COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE
COMPANY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THE AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE COMPANY BY MAIL AT THE ADDRESS SPECIFIED IN SEC. 15.
THE COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN ANY
INCONVENIENT COURT. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof. This
Agreement and any amendment hereof may be executed in several counterparts and
by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall constitute one
instrument. In proving this Agreement it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom
enforcement is sought. As an inducement to the Bank to enter into this
Agreement, the Company hereby waives its right to a jury trial with respect to
any action or claim arising out of any dispute in connection with this Agreement
or any of the other Loan Documents.
<PAGE> 53
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Sec. 17. ENTIRE AGREEMENT,ETC. This Agreement, together with the Note
and any other documents executed in connection herewith or therewith, express
the entire understanding of the parties with respect to the transactions
contemplated hereby. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated, except as provided in sec. 18.
Sec. 18. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise
expressly provided in this Agreement, any consent or approval required or
permitted by this Agreement to be given by the Bank may be given, and any term
of this Agreement or of any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the Company of any terms of
this Agreement or such other instrument or the continuance of any Default or
Event of Default may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written consent
of the Company and the written consent of the Bank. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Bank in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon the Company shall entitle the
Company to other or further notice or demand in similar or other circumstances.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
under seal as of the date first set forth above.
MACKENZIE INVESTMENT
MANAGEMENT, INC.
By: /s/ C. William Ferris
---------------------------------------
Title: Sr. Vice President
THE FIRST NATIONAL BANK
OF BOSTON
By:
---------------------------------------
Title:
<PAGE> 54
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The undersigned, Mackenzie Financial Corporation, hereby joins in this
Agreement for purposes of sec. 5.21 hereof, and represents and warrants to the
Bank that the matters set forth therein are true and correct on the date of this
Agreement.
MACKENZIE INVESTMENT
MANAGEMENT, INC.
By:
----------------------------------------
Title: Senior Vice-President & Secretary
<PAGE> 55
EXHIBIT A
FORM OF NOTE
$5,000,000 February 11, 1994
FOR VALUE RECEIVED, the undersigned MACKENZIE INVESTMENT MANAGEMENT,
INC., a Delaware corporation (the "Company"), hereby promises to pay to the
order of THE FIRST NATIONAL BANK OF BOSTON (the "Bank") at the Bank's head
office at 100 Federal Street, Boston, Massachusetts 02110:
(a) the principal amount of FIVE MILLION DOLLARS ($5,000,000)
or, if less, the aggregate unpaid principal amount of Advances by the
Bank to the Company pursuant to the Revolving Credit and Term Loan
Agreement dated as of the date hereof, as amended from time to time
(the "Agreement"), between the Company and the Bank, payable on the
Term Conversion Date (as defined in the Agreement), or, provided that
the Company converts such Advances to Term Loans as provided in the
Agreement, payable in twenty consecutive equal quarterly installments
payable on the last day of each March, June, September and December of
each year commencing on the first such date after the Term Conversion
Date and with a final payment of all principal then outstanding on the
Termination Date (as defined in the Agreement), all as provided in the
Agreement; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on
which such principal amount is paid in full, at the times and at the
rates provided in the Agreement.
This Note evidences borrowings under and has been issued by the Company
in accordance with the terms of the Agreement. The Bank or any holder hereof is
entitled to the benefits of the Agreement and may enforce the agreements of the
Company contained therein, and any holder may exercise the remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
terms thereof. All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Agreement.
The Bank shall, and is hereby irrevocably authorized by the Company to,
endorse on the schedule attached to this Note or a continuation of such schedule
attached hereto and made a part hereof, an appropriate notation evidencing
<PAGE> 56
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advances and repayments of principal of this Note, provided that failure by the
Bank to make any such notations shall not affect any of the Company's
obligations in respect of this Note.
The Company has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Agreement.
The Company and every endorser and guarantor of this Note or the
obligation represented hereby waive presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, assent to any extension or
postponement of the time of payment or any other indulgence, and to any
substitution, exchange or release of any other party or person primarily or
secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT UNDER
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, Mackenzie Investment Management, Inc. has caused
this Note to be signed in its corporate name by its duly authorized officer as
of the day and year first above written.
MACKENZIE INVESTMENT
MANAGEMENT, INC.
Attest:
By:
- ---------------------------------- ----------------------------------------
Title:
<PAGE> 57
-3-
<TABLE>
<CAPTION>
Type of Amount of
Advance Principal Balance of
Amount [Fixed Rate Paid or Principal Notation
Date of Loan or Base] Prepaid Unpaid Made By
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
<PAGE> 58
EXHIBIT B
FORM OF
BORROWING BASE REPORT
(Date)
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attn: Carol A. Clark, Managing Director
Ladies and Gentlemen:
Reference is made to the Revolving Credit and Term Loan Agreement,
dated as of February 11, 1994, as amended and in effect from time to time (such
agreement, as so amended, the "Credit Agreement"), between Mackenzie Investment
Management, Inc. (the "Company") and The First National Bank of Boston (the
"Bank"). Capitalized terms which are used herein without definition and which
are defined in the Credit Agreement shall have the same meanings herein as in
the Credit Agreement.
The Company hereby certifies as follows: (a) the information furnished
in the materials attached hereto was true, correct and complete as at the last
day of the month immediately preceding the date of this certificate; (b) as the
date hereof, there exists no Default or Event of Default; and (c) the
representations and warranties contained in sec. 5 of the Credit Agreement were
correct when made and are correct at and as of the date hereof, except to the
extent that the facts upon which such representations and warranties are based
may have changed in the ordinary course as a result of transactions permitted or
contemplated by the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Borrowing Base
Report as of the date first written above.
MACKENZIE INVESTMENT MANAGEMENT, INC.
By:
----------------------------------
Title:
<PAGE> 59
-2-
Borrowing Base Worksheet
[DATE)
Calculation of Borrowing Base for the month ending :
----------------------------
<TABLE>
<CAPTION>
Date Range Amount
<S> <C> <C>
(1) Unreimbursed sales
commissions as of the last
day of the prior period __________ _________
(2) Broker commission fronted
during period __________ _________
(3) Distribution fees received
during period __________ _________
(4) CDSC fees received during period __________ _________
(5) Unreimbursed Sales Commission Amount
at end of period (Line 1 plus Line 2
less Lines 3 and 4) __________ _________
(6) Contingent Redemption Amount __________ _________
(6) Borrowing Base (the lesser of Line 5
and Line 6) __________ _________
Loan Balance at End of Month __________ _________
Additional Borrowing Amount __________ _________
Loan Balance After Additional Borrowing __________ _________
</TABLE>
<PAGE> 60
EXHIBIT C
FORM OF ADVANCE REQUEST
[Date]
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attn: Carol A. Clark, Managing Director
Ladies and Gentlemen:
Reference is made to the Revolving Credit and Term Loan Agreement,
dated as of February 11, 1994, as amended and in effect from time to time (such
agreement, as so amended, the ("Credit Agreement"), between Mackenzie Investment
Management, Inc. (the "Company") and The First National Bank of Boston (the
"Bank"). Capitalized terms which are used herein without definition and which
are defined in the Credit Agreement shall have the same meanings herein as in
the Credit Agreement.
The undersigned authorized officer of the Company hereby [gives
you notice) (confirms the telephonic notice previously given) pursuant to sec.
2.2 of the Credit Agreement that the Company hereby requests an Advance under
the Credit Agreement, and in that connection sets forth below the information
relating to such Advance as required by sec. 2.2 of the Credit Agreement:
(i) The requested Business Day of the Advance is
___________________, 19__;
(ii) The requested Type of Advance is [Base Rate Advances]
[Fixed Rate Advances];
(iii) [In the case of Fixed Rate Advances] such Fixed Rate
Advances shall have a [7-/14-/30-/60- or 90-day] initial
Interest period therefor;
<PAGE> 61
-2-
(iv) The aggregate amount of the Advance is _________________;
and
(v) The Borrowing Base in effect as of the date hereof is
_______________.
The undersigned authorized officer of the Company hereby certifies
to the Bank on behalf of the Company that:
(i) no Default or Event of Default under the Credit Agreement
exists on the date of this Request, or shall occur as a
result of the Advance to which this Request relates;
(ii) the representations and warranties contained in the Credit
Agreement were true and correct as of the date on which made
and are true and correct as of the date hereof with the same
effect as if made at and as of such time, except to the
extent that the facts upon which such representations and
warranties are based may have changed in the ordinary course
as a result of transactions permitted or contemplated by the
Credit Agreement;
(iii) the Company has performed all obligations and complied with
all covenants and conditions required by the Credit
Agreement to be performed or complied with by it on or prior
to the date hereof; and
(iv) the matters certified herein shall remain true from and
after the date hereof through the date of the Advance unless
the Company shall deliver to the Bank a certificate as to
any change in any such matters, which the Company hereby
agrees to give promptly after obtaining knowledge thereof.
IN WITNESS WHEREOF, the undersigned has executed this Advance
Request as of the date first written above.
MACKENZIE INVESTMENT MANAGEMENT, INC.
By:
----------------------------------
Title:
<PAGE> 62
EXHIBIT D
FORM OF
COMPLIANCE CERTIFICATE
[Date]
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attn: Carol A. Clark, Managing Director
Ladies and Gentlemen:
Reference is made to the Revolving Credit and Term Loan Agreement, dated as
of February 11, 1994, as the same is amended and in effect from time to time
(such agreement, as amended and in effect from time to time, the "Credit
Agreement"), between Mackenzie Investment Management, Inc. (the "Company") and
The First National Bank of Boston (the "Bank"). Capitalized terms which are used
herein without definition and which are defined in the Credit Agreement shall
have the same meanings herein as in the Credit Agreement.
The Company hereby certifies to you as follows: (a) the information
furnished in the calculations attached hereto was true and correct as of the
last day of the fiscal [year/quarter] next preceding the date of this
certificate; (b) as of the date hereof, there exists no Default or Event of
Default; and (c) the financial statements delivered herewith were prepared in
accordance with generally accepted accounting principles as defined in the
Credit Agreement (except, in the case of quarterly statements, for provisions
for footnotes and subject to year-end adjustments).
IN WITNESS WHEREOF, the undersigned has executed this Compliance
Certificate as of the date first written above.
MACKENZIE INVESTMENT
MANAGEMENT, INC.
By:
-----------------------------
Title:
<PAGE> 63
-2-
Covenant Compliance Worksheet
As at ________________
1. Sec. 7.1 Indebtedness
(1) Consolidated obligations under capitalized
leases (sec. 7.1(f))
------------
(2) Maximum permitted $500.000
------------
(3) Additional available (Line 2 minus Line 1)
------------
(4) Purchase Money Debt (per acquisition) (sec. 7.1(g))
------------
(5) 80% of cost of property acquired
(per acquisition)
------------
(6) Line 5 minus line 4 (per acquisition)
------------
2. Sec. 7.3 Investments
(7) Aggregate investments (sec. 7.3(g))
------------
(8) Maximum permitted $500.000
------------
(9) Additional available (Line 8 minus Line 7)
------------
3. Sec. 7.8 Consolidated Cash Flow Ratio
For the fiscal quarter commencing on ________ and ending
on __________________:
(10) Consolidated net income (of deficit)
------------
(11) Taxes, expenses and other proper charges
------------
<PAGE> 64
-3-
(12) Extraordinary items of income
------------
(13) Consolidated Net Income (Line 10 minus
Lines 11 and 12)
------------
(14) Depreciation and amortization
------------
(15) Cash taxes paid
------------
(16) Consolidated Interest Charges
------------
(17) Consolidated Rental Expense
------------
(18) Consolidated Cash Flow (Line 13 plus
Lines 14 through 17)
------------
(19) Consolidated Cash Flow Ratio (Line 18
divided by Line 16)
------------
(20) Minimum Ratio Permitted 6.00:1.00
------------
4. Sec. 7.9 Consolidated Fixed Charge Ratio
For the fiscal quarter commencing on ___________ and ending on
___________________:
(21) Consolidated Cash Flow (Line 18)
------------
(22) Payments of principal on debt,
including capital leases
------------
(23) Consolidated Interest Charges
------------
(24) Capital expenditures
------------
(25) Consolidated Rental Expense
------------
(26) Cash taxes paid
------------
(27) Consolidated Fixed Charges (Sum of Lines 22
through 26)
------------
(28) Consolidated Fixed Charge Ratio (Line 26
divided by Line 28)
------------
(29) Minimum Ratio Permitted 1.25:1.00
------------
<PAGE> 65
-4-
5. Sec. 7.10 Consolidated Tangible Net Worth
(30) Consolidated Total Assets
------------
(31) Consolidated Total Liabilities
------------
(32) Intangibles
------------
(33) Write-up in book value of assets
------------
(34) Consolidated Tangible Net Worth
(Line 30 plus Line 31 less Line 32
less Line 33)
------------
(35) Starting Point Net Worth $4,900,000
------------
(36) Sum of Consolidated Net Income
of each fiscal quarter in which
income was earned beginning with
the fiscal quarter ended 3/31/94
------------
(37) 60% of Line 36
------------
(38) Minimum Worth Required
(Line 35 plus Line 37)
------------
6. Sec. 7.11 Consolidated Net Income
For the four consecutive fiscal quarters commencing on _______
and ending on _________________:
(39) Consolidated Net Income (Line 13)
------------
(40) Minimum Consolidated Net Income $1.00
------------
7. Sec. 7.12 Leverage Ratio
(41) Consolidated Total Liabilities
------------
(42) Consolidated Tangible Net Worth (Line 34)
------------
(43) Leverage Ratio (Line 42 divided by Line 43)
------------
(44) Maximum Ratio Permitted 2:00:1:00
------------
<PAGE> 66
SCHEDULE 1
LIST OF 12b-1 FUNDS
12b-1 FUNDS
Ivy Growth Fund
Ivy Growth with Income Fund
Ivy International Fund
Ivy Emerging Growth Fund
Ivy China Region Fund
<PAGE> 67
SCHEDULE 5.3
TITLE TO PROPERTIES
None.
<PAGE> 68
SCHEDULE 5.18
SUBSIDIARIES
WHOLLY-OWNED SUBSIDIARIES OF MACKENZIE INVESTMENT MANAGEMENT INC. (a Delaware
corporation)
Ivy Management, Inc. (a Massachusetts corporation)
Mackenzie Funds Distribution, Inc. (a Florida corporation)
Mackenzie/Ivy Investor Services Corp. (a Florida corporation)
<PAGE> 69
SCHEDULE 5.19
ADVISORY AGREEMENTS
The Ivy funds pay Ivy Management, Inc. and the Mackenzie funds pay Mackenzie
Investment Management Inc. a management fee monthly based on an annual rate of
each funds' average daily net assets, as follows:
IVY GROWTH FUND: annual rate of .85% of average daily net assets
IVY GROWTH WITH INCOME FUND: annual rate of .85% of average daily net assets
IVY EMERGING GROWTH FUND: annual rate of .85% of average daily net assets
IVY INTERNATIONAL FUND: annual rate of 1.00% of average daily net assets
IVY CHINA REGION FUND: annual rate of 1.00% of average daily net assets
MACKENZIE AMERICAN FUND:
annual rate of 1.00% of first $500 million of average daily net assets
annual rate of 0.75% of first $500 million of average daily net assets
annual rate of 0.50% over $1 billion of average daily net assets
MACKENZIE NORTH AMERICAN FUND:
annual rate of 0.75% of first $500 million of average daily net assets
annual rate of 0.60% of next $500 million of average daily net assets
annual rate of 0.40% over $1 billion of average daily net assets
MACKENZIE GLOBAL FUND:
annual rate of 1.00% of first $500 million of average daily net assets
annual rate of 0.75% over $500 million of average daily net assets
MACKENZIE CANADA FUND:
annual rate of 0.50% of average daily net assets
MACKENZIE LIMITED TERM MUNICIPAL FUND, MACKENZIE NATIONAL MUNICIPAL
FUND, MACKENZIE NEW YORK MUNICIPAL FUND AND MACKENZIE CALIFORNIA MUNICIPAL FUND
annual rate of 0.55% of each funds' respective average daily net assets
MACKENZIE ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST
annual rate of 0.60% of average daily net assets
<PAGE> 70
MACKENZIE FIXED INCOME TRUST
annual rate of 0.75% of first $500 million of average daily net assets
annual rate of 0.60% of next $500 million of average daily net assets
annual rate of 0.40% over $1 billion of average daily net assets
SUBADVISORY AGREEMENTS
Northern Cross Investments Limited serves as subadvisor for Ivy International.
Mackenzie Investment Management Inc. pays Northern Cross a fee at the rate of
0.60% of the average annualized net assets of Ivy International Fund.
Mackenzie Financial Corporation (MFC) serves as investment advisor to Mackenzie
American Fund and Mackenzie Canada Fund. MFC receives a monthly fee from
Mackenzie Investment Management Inc. at the annual rate of 0.25% of the average
daily net assets. In addition, Mackenzie Canada Fund pays MFC a monthly fee at
the annual rate of 0.35% of its average daily net assets.
<PAGE> 71
SCHEDULE 5.20
12b-1 DISTRIBUTION PLANS
CLASS A
Summary of Distribution Plans: Distributor (Mackenzie Funds Distribution,
Inc., a wholly-owned subsidiary of Mackenzie Investment Management, Inc.)
shall be reimbursed for service fee payments made to brokers for account
maintenance and personal services to shareholders in connection with the sale
of shares of each of the following funds, up to an amount equal on an annual
basis to 0.25% of the average daily net asset value of each of the following
funds' shares that are registered in the name of a broker as nominee or held
in a shareholder account that designates a broker as broker of record. The
funds accrue the fee daily and reimburse the Distributor monthly. The brokers
are paid quarterly.
Ivy China Region Fund - Class A
Ivy Emerging Growth Fund - Class A
Ivy Growth Fund - Class A (1)
Ivy Growth with Income Fund - Class A (1)
Ivy International Fund - Class A (1)
Mackenzie Limited Term Municipal Fund (2)
Mackenzie National Municipal Fund (2)
Mackenzie New York Municipal Fund (2)
Mackenzie California Municipal Fund (2)
Mackenzie American Fund (2)(3)
Mackenzie Global Fund (2)
Mackenzie Adjustable U.S. Government Securities Trust
Mackenzie North American Municipal Fund (2)(4)
Mackenzie Fixed Income Trust (2)
Mackenzie Canada Fund: The above summary applies; but in addition, the
Distributor is compensated for its services as distributor of the shares of
the Canada fund at the annual rate of 0.15% of the Canada Fund's average
daily net assets.
(1) Fee applies only to Class A shares issued after December 31, 1991.
(2) Mackenzie funds offer only Class A shares at this time.
(3) Fee applies only to shares issued after December 31, 1990.
(4) Fee applies only to shares issued after March 31, 1990.
<PAGE> 72
SCHEDULE 5.20
12b-1 DISTRIBUTION PLAN
CLASS B
Summary of Distribution Plan: Ivy Fund shall pay the Distributor Mackenzie Funds
Distribution, Inc., a wholly owned subsidiary of Mackenzie Investment Management
Inc.) a fee at the annual rate of 1.00% of the average daily net assets of Class
B shares of each of the funds itemized below. The fee is broken down into two
components: a 0.75% asset based sales charge and a 0.25% service fee. The
purpose of the asset based service charge is to reimburse the Distributor for
services rendered in connection with any activities or expenses primarily
intended to result in the sale of Class B shares. The purpose of the 0.25%
service fee is to reimburse the distributor for payments made to brokers, which
are unaffiliated with the distributor, for account maintenance and personal
services to shareholders. The 12b-1 Funds accrue the fee daily and reimburse the
Distributor monthly. The 0.25% service fee is paid to the brokers quarterly. The
Ivy Fund Class B Distribution Plan applies to the following funds:
Ivy China Region Fund - Class B
Ivy Emerging Growth Fund - Class B
Ivy Growth Fund - Class B
Ivy Growth with Income Fund - Class B
Ivy International Fund - Class B
<PAGE> 73
NOTE
$5,000,000 February 11, 1994
FOR VALUE RECEIVED, the undersigned MACKENZIE INVESTMENT MANAGEMENT, INC.,
a Delaware corporation (the "Company"), hereby promises to pay to the order of
THE FIRST NATIONAL BANK OF BOSTON (the "Bank") at the Bank's head office at 100
Federal Street, Boston, Massachusetts 02110:
(a) the principal amount of FIVE MILLION DOLLARS ($5,000,000) or, if
less, the aggregate unpaid principal amount of Advances by the Bank to the
Company pursuant to the Revolving Credit and Term Loan Agreement dated as
of the date hereof, as amended from time to time (the "Agreement"), between
the Company and the Bank, payable on the Term Conversion Date (as defined
in the Agreement), or, provided that the Company converts such Advances to
Term Loans as provided in the Agreement, payable in twenty consecutive
equal quarterly installments payable on the last day of each March, June,
September and December of each year commencing on the first such date after
the Term Conversion Date and with a final payment of all principal then
outstanding on the Termination Date (as defined in the Agreement), all as
provided in the Agreement; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which
such principal amount is paid in full, at the times and at the rates
provided in the Agreement.
This Note evidences borrowings under and has been issued by the Company in
accordance with the terms of the Agreement. The Bank or any holder hereof is
entitled to the benefits of the Agreement and may enforce the agreements of the
Company contained therein, and any holder may exercise the remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
terms thereof. All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Agreement.
<PAGE> 74
-2-
The Bank shall, and is hereby irrevocably authorized by the Company to,
endorse on the schedule attached to this Note or a continuation of such schedule
attached hereto and a part hereof, an appropriate notation evidencing advances
and repayments of principal of this Note, provided that failure by the Bank to
make any such notations shall affect any of the Company's obligations in respect
of this Note.
The Company has the right in certain circumstances and the obligation under
certain other circumstances to prepay the whole or part of the principal of this
Note on the terms and conditions specified in the Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Agreement.
The Company and every endorser and guarantor of this Note or the obligation
represented hereby waive presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension or postponement of
the time of payment or any other indulgence, and to any substitution, exchange
or release of any other party or person primarily or secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED :INSTRUMENT UNDER THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, Mackenzie Investment Management, Inc. has caused this
Note to be signed in its corporate name by its duly authorized officer as of the
day and year first above written.
MACKENZIE INVESTMENT
MANAGEMENT, INC.
Attest:
By:
- ------------------------------ --------------------------------
Title: Sr. Vice President
<PAGE> 75
-3-
<TABLE>
<CAPTION>
Type of Amount of
Advance Principal Balance of
Amount [Fixed Rate Paid or Principal Notation
Date of Loan or Base] Prepaid Unpaid Made By
- ---- ------- ----------- ------- ------ --------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 76
[LOGO] BANK OF BOSTON
THE FIRST NATIONAL BANK OF BOSTON
100 Federal Street
Boston, Massachusetts 02110
February 10, 1995
C. William Ferris, Senior Vice President
Mackenzie Investment Management, Inc.
700 South Federal Highway
Boca Raton, Florida 33432
Re: First Amendment
Dear Mr. Ferris:
We refer to the Revolving Credit and Term loan Agreement, dated as of
February 11, 1994, between Mackenzie Investment Management, Inc. and The First
National Bank of Boston, (the "Agreement"), with capitalized terms being used
herein with the same meanings assigned thereto in the Agreement.
The Company has requested that the Bank extend the time period during which
the Company may borrow Advances pursuant to the Loan Documents. In response to
that request and in reliance on the Company's representations and warranties
herein, the Bank agrees as follows:
1. Amendment. The definition of "Term Conversion Date" in section 1(a) of
the Agreement is hereby amended to refer to May 10, 1995.
2. No Other Changes. Except as expressly provided herein, all of the
provisions of the Loan Documents remain unchanged and in full force and effect,
and the Company hereby affirms its obligations thereunder.
In order to induce us to enter into this letter agreement, the Company
represents and warrants that no Default or Event of Default exists or will exist
after giving effect hereto.
BOS-BUS:133368.1
THE FIRST NATIONAL BANK OF BOSTON, BOSTON, MASSACHUSETTS 02106
<PAGE> 77
[LOGO] -2-
Please sign below to evidence your agreement hereto, whereupon this letter
agreement shall become a binding agreement under seal to be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
Very truly yours,
THE FIRST NATIONAL BANK OF BOSTON
By:
-------------------------------
Title:
Agreed:
MACKENZIE INVESTMENT MANAGEMENT, INC.
By: /s/ C. William Ferris
----------------------------------
Title: Sr. Vice President
<PAGE> 78
[LOGO] BANK OF BOSTON
May 30, 1995
C. William Ferris, Senior Vice President
Mackenzie Investment Management, Inc.
700 South Federal Highway
Boca Raton, Florida 33432
Re: Second Amendment
Dear Mr. Ferris:
We refer to the Revolving Credit and Term Loan Agreement, dated as of
February 11, 1994, between Mackenzie Investment Management, Inc. and The First
National Bank of Boston, (the "Agreement"), with capitalized terms being used
herein with the same meanings assigned thereto in the Agreement.
The Company has requested that the Bank extend the time period during which
the Company may borrow Advances pursuant to the Loan Documents. In response to
that request and in reliance on the Company's representations and warranties
herein, the Bank agrees as follows:
1. Amendment. The definition of "Term Conversion Date" in section 1(a)
of the Agreement is hereby amended to refer to May 29, 1996.
2. No Other Changes. Except as expressly provided herein, all of the
provisions of the Loan Documents remain unchanged and in full force and
effect, and the Company hereby affirms its obligations thereunder.
In order to induce us to enter into this letter agreement, the Company
represents and warrants that no Default or Event of Default exists or will exist
after giving effect hereto.
THE FIRST NATIONAL BANK OF BOSTON, BOSTON, MASSACHUSETTS 02106
<PAGE> 79
Please sign below to evidence your agreement hereto, whereupon this letter
agreement shall become a binding agreement under seal to be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
Very truly yours,
THE FIRST NATIONAL BANK OF BOSTON
By:
----------------------------------
Title: Vice President
Agreed:
MACKENZIE INVESTMENT MANAGEMENT, INC.
BY: /s/ C. William Ferris
---------------------------------
Title: Sr. Vice President
2
<PAGE> 80
THE FIRST NATIONAL BANK OF BOSTON
100 Federal Street
Boston, Massachusetts 02110
October 17, 1996
C. William Ferris, Senior Vice President
Mackenzie Investment Management, Inc.
700 South Federal Highway
Boca Raton, Florida 33432
Re: Third Amendment
Dear Mr. Ferris:
We refer to the Revolving Credit and Term Loan Agreement, dated as of
February 11, 1994, as amended, between Mackenzie Investment Management, Inc. and
The First National Bank of Boston, (the "Agreement"), with capitalized terms
being used herein with the same meanings assigned thereto in the Agreement.
The Company has requested that the Bank extend the time period during which
the Company may borrow Advances pursuant to the Loan Documents and make certain
other changes to the Loan Documents, and that the Bank release the Parent's
Guaranty of the Obligations which is presently in effect. In response to those
requests and in reliance on the Company's representations and warranties herein,
the Bank agrees as follows:
1. Amendment. Subject to sec. 3 hereof, the Agreement is amended as
follows:
(a) all references to Mackenzie Funds Distribution are hereby deemed
to be references to Ivy Mackenzie Distributors, Inc. (formerly known as
Mackenzie Funds Distribution, Inc.), a Florida corporation;
<PAGE> 81
-2-
(b) the term "Security Documents" in section 1(a) is deleted in its
entirety, and the reference to the Security Documents is deleted from the
definition of "Loan Documents" in section 1(a);
(c) the definition of "Term Conversion Date" in section 1(a) is hereby
amended to refer to May 28, 1997;
(d) the definition of "Termination Date" in section 1(a) is hereby amended
to refer to March 31, 2002 or the earlier date of termination of the Agreement
pursuant to sec. 2.4, sec. 4.6 or sec. 9 thereof;
(e) the date "March 31, 1995" in the eleventh line of sec. 3.2 is hereby
replaced with the date "June 30, 1997";
(f) the last sentence of sec. 5.5 is hereby amended in its entirety to read
as follows: "Since the Balance Sheet Date, the Company has not made any
Distribution in violation of sec. 7.5 hereof.";
(g) all references to the Security Documents are hereby deleted from sec.
5.21, and sec. 5.21(k) and 9(o) are deleted in their entirety;
(h) Section 7.5 is hereby amended in its entirety to read as follows:
Sec. 7.5. Distributions. The Company will not, and will not permit any
Subsidiary to, make or declare any Distribution, except that (i) so long as
no Default or Event of Default exists or would exist after giving effect
thereto, the Company may declare and pay cash dividends to its stockholders
in an amount not to exceed 15% of positive Consolidated Net Income for each
fiscal year of the Company commencing with the fiscal year ending March 31,
1997, and (ii) any Subsidiary of the Company may make Distributions to the
Company. The Company will not permit any of its wholly-owned Subsidiaries
to enter into any contractual restrictions on such Subsidiaries' ability to
make Distributions to the Company;
(i) Schedules 1, 5.3, 5.18, 5.19 and 5.20 are replaced with the schedules
attached hereto.
2. Representations. In order to induce the Bank to enter into this
Amendment, the Company represents and warrants as follows:
<PAGE> 82
-3-
(a) each of the representations and warranties, as supplemented by the
schedules delivered herewith, of the Company in the Agreement are true and
correct on the date of this Amendment;
(b) no Default or Event of Default has occurred and is continuing;
(c) the execution, delivery and performance by the Company of this
Amendment and the Agreement as amended hereby are within the Company's corporate
powers, have been duly authorized by all necessary corporate action, require no
authorization or action by or in respect of, or filing with, any governmental
body, agency or official or any shareholder or creditor of the Company and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the corporate charter or by-laws of the Company or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Company or result in the creation or imposition of any lien on any asset of
the Company; and
(d) this Amendment has been duly executed and delivered by the Company,
and this Amendment and the Agreement as amended hereby constitute valid and
binding agreements of the Company enforceable in accordance with their terms.
3. Conditions. The provisions of sec. 1 of this Amendment shall become
effective when each of the following conditions has been satisfied:
(a) the Bank shall have received copies of this Amendment signed by the
Company;
(b) the Bank shall have received an opinion of counsel from the
Company's counsel which is satisfactory to the Agent in all respects;
(c) the Bank shall have received a manually signed certificate from the
Secretary of the Company in form and substance satisfactory to the Bank and
dated a recent date as to any changes in the incumbency of the officers of the
Company who are authorized to execute and take actions under the Loan Documents
and in the Company's charter and by-laws, and certifying and attaching votes of
the Company's board of directors authorizing the transactions contemplated
hereby;
(d) the Bank shall have received a long-form legal existence and good
standing certificate for the Company from the Secretary of State of the State of
Delaware and a foreign qualification certificate for the Company from
<PAGE> 83
-4-
the Secretary of State of the State of Florida, each dated no more than ten days
prior to the date hereof; and
(e) the Bank shall have received evidence satisfactory to it of the
change of name of Mackenzie Funds Distribution, Inc. to Ivy Mackenzie
Distributors, Inc.
Upon the effectiveness of this Amendment the Bank shall mark "cancelled"
and return to the Company the Parent's Guaranty of the Obligations.
4. Miscellaneous. Except as expressly provided above, the Agreement is
unchanged and remains in full force and effect, and this Amendment and the
Agreement shall be read and construed as one agreement. This Amendment is
intended to take effect as an instrument under seal, is governed by the laws of
the Commonwealth of Massachusetts, and may be executed in counterparts. In
making proof of this Amendment it shall not be necessary to produce or account
for more than one counterpart signed by each party hereto against which
enforcement hereof is sought.
Please sign below to evidence your agreement hereto, whereupon this
Amendment shall become a binding agreement between us.
Very truly yours,
THE FIRST NATIONAL BANK OF BOSTON
By:
----------------------------------
Title: Division Executive
Agreed:
MACKENZIE INVESTMENT MANAGEMENT, INC.
BY: /s/ C. William Ferris
---------------------------------
Title: Sr. Vice President
<PAGE> 84
THE FIRST NATIONAL BANK OF BOSTON
100 Federal Street
Boston, Massachusetts 02110
March 26, 1997
C. William Ferris, Senior Vice President
Mackenzie Investment Management, Inc.
700 South Federal Highway
Boca Raton, Florida 33432
Re: Fourth Amendment
Dear Mr. Ferris:
We refer to the Revolving Credit and Term Loan Agreement, dated as of
February 11, 1994, as amended, between Mackenzie Investment Management Inc. and
The First National Bank of Boston, (the "Agreement"), with capitalized terms
being used herein with the same meanings assigned thereto in the Agreement.
The Company has requested that the Bank increase the aggregate principal
amount of Advances that the Company may borrow under the Loan Documents, extend
the time period during which the Company may borrow Advances pursuant to the
Agreement and make certain other changes to the Agreement. In response to those
requests and in reliance on the Company's representations and warranties herein,
the Bank agrees as follows:
1. Amendment. Subject to sec. 4 hereof, the Agreement is amended as
follows:
(a) the definition of the term "Class B Shares" in section 1(a) is
deleted in its entirety, and replaced with the following:
"Class B Shares. Any shares (or class of shares) of beneficial interest or
capital stock of any 12b-1 Fund which are designated
<PAGE> 85
-2-
by such 12b-1 Fund as Class B shares of such fund and upon the redemption
of which a contingent deferred sales charge or other redemption fee or
amount is payable.";
(b) the following new term is added to section 1(a) after the term
"Class B Shares":
"Class C Shares. Any shares (or class of shares) of beneficial interest or
capital stock of any 12b-1 Fund which are designated by such 12b-1 Fund as
Class C shares of such fund and upon the redemption of which a contingent
deferred sales charge or other redemption fee or amount is payable.";
(c) the amount "$5,000,000" in line one of the definition of "Commitment
Amount" in section 1(a) is hereby replaced with the amount "$10,000,000";
(d) the definition of the term "Contingent Redemption Amount" in
section 1(a) is deleted in its entirety, and replaced with the following:
"Contingent Redemption Amount. On any date the aggregate redemption
proceeds that would be payable by shareholders of Class B Shares and Class
C Shares of the 12b-1 Funds for contingent deferred sales charges or
redemption fees, assuming a total redemption on such date of all Class B
Shares and all Class C Shares in the 12b-1 Funds.";
(e) the definition of "Term Conversion Date" in section 1(a) is hereby
amended to refer to June 30, 1998;
(f) the definition of "Termination Date" in section 1(a) is hereby
amended to refer to June 30, 2003 or the earlier date of termination of the
Agreement pursuant to sec. 2.4, sec. 4.6 or sec. 9 thereof;
(g) the definition of the term "Unreimbursed Sales Commission Amount"
in section 1(a) is deleted in its entirety, and replaced with the following:
"Unreimbursed Sales Commission Amount. For any period, an amount equal to
(a) the Unreimbursed Sales Commission Amount as of the last day of the
prior period, plus (b) the aggregate amount of commissions paid or payable
by Ivy
<PAGE> 86
-3-
Mackenzie Distributors, Inc. during such period to brokers in respect of
Class B Shares and Class C Shares of 12b-1 Funds, minus (c) the aggregate
amount of distribution fees and redemption fees received by Ivy Mackenzie
Distributors, Inc. during such period from 12b-1 Funds and the holders of
Class B Shares and Class C Shares, respectively, in respect of Class B
Shares and Class C Shares of 12b-1 Funds. Notwithstanding the foregoing, as
of February 28, 1997, the Unreimbursed Sales Commission Amount hereunder
shall be $16,718,266.25.";
(h) the date "June 30, 1997" in the eleventh line of section 3.2 is
hereby replaced with the date "September 30, 1998";
(i) the words"or Class C Shares" are hereby added to clause (d) of
section 5.7 after the words "Class B Shares" in the last line thereof;
(j) section 6.1 is hereby amended by adding the words "and Class C
Shares" after the words "Class B Shares" where such words appear in lines four
and seven of such section;
(k) section 6.5(e) is hereby amended by adding the words "and Class C
Shares" after the words "Class B Shares" where such words appear in lines eight,
eleven, seventeen and twenty-four of such section;
(l) section 6.13 is hereby amended by adding the words "and Class C
Shares" after the words "Class B Shares" where such words appear in line
four of such section;
(m) section 7.1(a) is deleted in its entirety, and replaced with the
following:
"(a) Indebtedness of the Company to the Bank;";
(n) section 7.3(e) is hereby amended by adding the words "and Class C
Shares" after the words "Class B Shares" where such words appear in the last
line of such section;
(o) Exhibit A is replaced with Exhibit A attached hereto; and
(p) Schedules 1, 5.3, 5.18, 5.19 and 5.20 are replaced with the
schedules attached hereto.
<PAGE> 87
-4-
2. Restated Note. The Company will deliver with this Amendment a restated
revolving credit note in the form of Exhibit A attached hereto in the aggregate
principal amount of $10,000,000 (the "Restated Note"). From and after the
effectiveness of this Amendment, all references in the Agreement and the Loan
Documents to the Note shall be deemed to be references to the Restated Note.
3. Representations. In order to induce the Bank to enter into this
Amendment, the Company represents and warrants as follows:
(a) each of the representations and warranties, as supplemented by the
schedules delivered herewith, of the Company in the Agreement is true and
correct on the date of this Amendment;
(b) no Default or Event of Default has occurred and is continuing;
(c) the execution, delivery and performance by the Company of this
Amendment, the Restated Note and the Agreement as amended hereby are within the
Company's corporate powers, have been duly authorized by all necessary corporate
action, require no authorization or action by or in respect of, or filing with,
any governmental body, agency or official or any shareholder or creditor of the
Company and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the corporate charter or bylaws of the
Company or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Company or result in the creation or imposition of
any lien on any asset of the Company; and
(d) this Amendment and the Restated Note have been duly executed and
delivered by the Company, and this Amendment and the Agreement as amended hereby
constitute valid and binding agreements of the Company, and the Restated Note
constitutes the valid and binding obligation of the Company, in each case
enforceable against the Company in accordance with their terms.
4. Conditions. The provisions of sec. 1 of this Amendment shall become
effective when each of the following conditions has been satisfied:
(a) the Bank shall have received counterparts of this Amendment and
the Restated Note, in each case manually signed by the Company;
<PAGE> 88
-5-
(b) the Bank shall have received an opinion of counsel from the
Company's counsel which is satisfactory to the Bank in all respects;
(c) the Bank shall have received a manually signed certificate from the
Secretary of the Company in form and substance satisfactory to the Bank and
dated a recent date as to any changes in the incumbency of the officers of the
Company who are authorized to execute and take actions under the Loan Documents
and in the Company's charter and by-laws, and certifying and attaching votes of
the Company's board of directors authorizing the transactions contemplated
hereby and by the Restated Note;
(d) the Bank shall have received a long-form legal existence and good
standing certificate for the Company from the Secretary of State of the State of
Delaware and a foreign qualification certificate for the Company from the
Secretary of State of the State of Florida, each dated no more than ten days
prior to the date hereof; and
(e) the Bank shall have received a manually signed lien search
certificate from the Secretary of the Company in form and substance satisfactory
to the Bank and dated a recent date, and certifying and attaching lien searches
showing no liens other than those expressly permitted by section 7.2 of the
Agreement and which are otherwise satisfactory in form and substance to the
Bank.
5. Miscellaneous. Except as expressly provided above, the Agreement is
unchanged and remains in full force and effect, and this Amendment and the
Agreement shall be read and construed as one agreement. This Amendment is
intended to take effect as an instrument under seal, is governed by the laws of
the Commonwealth of Massachusetts, and may be executed in counterparts. In
making proof of this Amendment it shall not be necessary to produce or account
for more than one counterpart signed by each party hereto against which
enforcement hereof is sought.
<PAGE> 89
-6-
Please sign below to evidence your agreement hereto, whereupon this Amendment
shall become a binding agreement between us.
Very truly yours,
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Carol A. Clark
-----------------------------
Title: Managing Director
Agreed:
MACKENZIE INVESTMENT MANAGEMENT INC.
BY: /s/ C. William Ferris
---------------------------------
Title: Sr. Vice President
<PAGE> 90
Exhibit A
NOTE
$10,000,000 Dated: February 11, 1994
Restated: March 26, 1997
FOR VALUE RECEIVED, the undersigned MACKENZIE INVESTMENT MANAGEMENT INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order of THE
FIRST NATIONAL BANK OF BOSTON (the "Bank") at the Bank's head office at 100
Federal Street, Boston, Massachusetts 02110:
(a) the principal amount of TEN MILLION DOLLARS ($10,000,000) or, if
less, the aggregate unpaid principal amount of Advances by the Bank to the
Company pursuant to the Revolving Credit and Term Loan Agreement dated as
of February 11, 1994, as amended from time to time (the "Agreement"),
between the Company and the Bank, payable on the Term Conversion Date (as
defined in the Agreement), or provided that the Company converts such
Advances to Term Loans as provided in the Agreement, payable in twenty
consecutive equal quarterly installments payable on the last day of each
March, June, September and December of each year commencing on the first
such date after the Term Conversion Date and with a final payment of all
principal then outstanding on the Termination Date (as defined in the
Agreement), all as provided in the Agreement; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which
such principal amount is paid in full, at the times and at the rates
provided in the Agreement.
This Note evidences borrowings under and has been issued by the Company in
accordance with the terms of the Agreement. The Bank or any holder hereof is
entitled to the benefits of the Agreement may enforce the agreements of the
Company contained therein, and any holder hereof may exercise the remedies
provided for thereby or otherwise available in respect thereof, all in
accordance with the terms thereof. All capitalized terms used in this Note and
not otherwise defined herein shall have the same meanings herein as in the
Agreement.
This Note has been issued as a replacement and in exchange for (but does
not evidence payment or satisfaction of) the Note issued by the Company to the
Bank dated February 11, 1994 in the original principal amount of $5,000,000.
The Bank shall, and is hereby irrevocably authorized by the Company to,
endorse on the schedule attached to this Note or a continuation of such schedule
<PAGE> 91
-2-
attached hereto and made a part hereof, an appropriate notation evidencing
advances and repayments of principal of this Note, provided that failure by the
Bank to make any such notations shall not affect any of the Company's
obligations in respect of this Note.
The Company has the right in certain circumstances and the obligation under
certain other circumstances to prepay the whole or part of the principal of this
Note on the terms and conditions specified in the Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Agreement.
The Company and every endorser and guarantor of this Note or the obligation
represented hereby waive presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension or postponement of
the time of payment or any other indulgence, and to any substitution, exchange
or release of any other party or person primarily or secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT UNDER THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed in
its corporate name and its corporate seal to be impressed thereon by its duly
authorized officer as of the day and year first above written.
MACKENZIE INVESTMENT MANAGEMENT INC.
Attest:
___________________________ By:______________________________
Title:
<PAGE> 92
<TABLE>
<CAPTION>
Type of Amount of
Advance Principal Balance of
Amount [Fixed Rate Paid or Principal Notation
Date of Loan or Base] Prepaid Unpaid Made By:
- ---- ------- ----------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 93
SCHEDULE 1
LIST OF 12b-1 FUNDS
12b-1 FUNDS
Ivy Growth Fund
Ivy Growth with Income Fund
Ivy International Fund
Ivy Emerging Growth Fund
Ivy China Region Fund
Ivy Latin America Strategy Fund
Ivy New Century Fund
Ivy Global Science & Technology Fund
Ivy Canada Fund
Ivy Global Fund
Ivy International Small Companies Fund
Ivy Asia Pacific Fund
Ivy Global Natural Resources Fund
Ivy Pan-Europe Fund (to be effective on, or about, April 7, 1997)
Ivy International Fund II (to be effective on, or about, May 13, 1997)
Ivy Bond Fund
Mackenzie National Municipal Fund (Class B only)
Mackenzie California Municipal Fund (Class B only)
Mackenzie New York Municipal Fund (Class B only)
Mackenzie Limited Term Municipal Fund (Class B only)
March 1997
<PAGE> 94
SCHEDULE 5.3
TITLE TO PROPERTIES
None.
March 1997
<PAGE> 95
SCHEDULE 5.18
SUBSIDIARIES
WHOLLY-OWNED SUBSIDIARIES OF MACKENZIE INVESTMENT MANAGEMENT INC.
(a Delaware corporation)
Ivy Management, Inc. (a Massachusetts corporation)
Ivy Mackenzie Distributors, Inc. (a Florida corporation)
Ivy Mackenzie Services Corp. (a Florida corporation)
March 1997
<PAGE> 96
SCHEDULE 5.19
ADVISORY AGREEMENTS
The Ivy funds pay Ivy Management, Inc. and the Mackenzie funds pay Mackenzie
Investment Management Inc. a management fee monthly based on an annual rate of
each funds' average daily net assets, as follows:
IVY GROWTH FUND: annual rate of .85 % of average daily net assets
IVY GROWTH WITH INCOME FUND: annual rate of .75% of average daily net assets
IVY EMERGING GROWTH FUND: annual rate of .85 % of average daily net assets
IVY INTERNATIONAL FUND: annual rate of 1.00% of average daily net assets
IVY CHINA REGION FUND: annual rate of 1.00% of average daily net assets
IVY LATIN AMERICA STRATEGY FUND: annual rate of 1.00% of average daily net
assets
IVY NEW CENTURY FUND: annual rate of 1.00% of average daily net assets
IVY GLOBAL SCIENCE & TECHNOLOGY FUND: annual rate of 1.00% of average daily net
assets
IVY CANADA FUND: annual rate of .50% of average daily net assets
IVY GLOBAL FUND:
annual rate of 1.00% of first $500 million of average daily net assets
annual rate of 0.75% over $500 million of average daily net assets
IVY INTERNATIONAL SMALL COMPANIES FUND: annual rate of 1.00% of average daily
net assets
IVY ASIA PACIFIC FUND: annual rate of 1.00% of average daily net assets
IVY GLOBAL NATURAL RESOURCES FUND: annual rate of 1.00% of average daily net
assets
IVY PAN-EUROPE: annual rate of 1.00% of average daily net assets
IVY INTERNATIONAL FUND II: annual rate of 1.00% of average daily net assets
<PAGE> 97
IVY BOND FUND:
annual rate of 0.75% of first $100 million of average daily net assets
annual rate of 0.50% over $100 million of average daily net assets
MACKENZIE LIMITED TERM MUNICIPAL FUND, MACKENZIE NATIONAL MUNICIPAL FUND,
MACKENZIE NEW YORK MUNICIPAL FUND AND MACKENZIE CALIFORNIA MUNICIPAL FUND
annual rate of 0.55% of each funds' respective average daily net assets
SUBADVISORY AGREEMENTS
Northern Cross Investments Limited serves as subadviser for Ivy International
Fund. Ivy Management. Inc. pays Northern Cross a fee at the rate, on an annual
basis, equal to 0.60% of the average net assets up to $1.5 billion and 0.55% of
the average net assets in excess of $1.5 billion of Ivy International Fund.
Mackenzie Financial Corporation (MFC) serves as investment adviser for the Ivy
Canada Fund and the Ivy Global Natural Resources Fund. Ivy Canada Fund and Ivy
Global Natural Resources Fund pay MFC a monthly fee at the annual rate of 0.35%
and 0.50% of their respective average daily net assets.
March 1997
<PAGE> 98
Schedule 5.20
12b-1 DISTRIBUTION PLANS
CLASS A
Summary of Distribution Plans: Distributor (Ivy Mackenzie Distributors, Inc., a
wholly-owned subsidiary of Mackenzie Investment Management Inc.) shall be
reimbursed for service fee payments made to brokers for account maintenance and
personal services to shareholders in connection with the sale of shares of each
of the following funds, up to an amount equal, on an annual basis, to 0.25% of
the average daily net asset value of each of the following funds' shares that
are registered in the name of a broker as nominee or held in a shareholder
account that designates a broker as broker of record. The funds accrue the fee
daily and reimburse the Distributor monthly. The brokers are paid quarterly.
Ivy China Region Fund
Ivy Emerging Growth Fund
Ivy Growth Fund (1)
Ivy Growth with Income Fund (1)
Ivy International Fund (1)
Ivy Latin America Strategy Fund
Ivy New Century Fund
Ivy Global Science & Technology Fund
Ivy Canada Fund
Ivy Global Fund
Ivy International Small Companies Fund
Ivy Asia Pacific Fund
Ivy Global Natural Resources Fund
Ivy Pan-Europe Fund
Ivy International Fund II
Ivy Bond Fund
Mackenzie Limited Term Municipal Fund
Mackenzie National Municipal Fund
Mackenzie New York Municipal Fund
Mackenzie California Municipal Fund
Ivy Canada Fund: The above summary applies: but in addition, the Distributor is
compensated for its services as distributor of the shares of the Ivy Canada Fund
at the annual rate of 0.15% of the Ivy Canada Fund's average daily net assets.
(1) Fee applies only to Class A shares issued after December 31, 1991.
March 1997
<PAGE> 99
SCHEDULE 5.20
12b-1 DISTRIBUTION PLAN
CLASS B
Summary of Distribution Plan: Ivy Fund or the Mackenzie Series Trust shall pay
the Distributor (Ivy Mackenzie Distributors. Inc., a wholly owned subsidiary of
Mackenzie Investment Management Inc.) a fee at the annual rate of 1.00% of the
average daily net assets of Class B shares of each of the funds itemized below.
The fee is broken down into two components: a 0.75% asset based sales charge and
a 0.25% service fee. The purpose of the asset based service charge is to
reimburse the Distributor for services rendered in connection with any
activities or expenses primarily intended to result in the sale of Class B
shares. The purpose of the 0.25% service fee is to reimburse the distributor for
payments made to brokers, which are unaffiliated with the distributor, for
account maintenance and personal services to shareholders. The 12b-1 Funds
accrue the fee daily and reimburse the Distributor monthly. The 0.25% service
fee is paid to the brokers quarterly.
The Ivy Fund Class B Distribution Plan applies to the following funds:
Ivy China Region Fund
Ivy Emerging Growth Fund
Ivy Growth Fund
Ivy Growth with Income Fund
Ivy International Fund
Ivy Latin America Strategy Fund
Ivy New Century Fund
Ivy Global Science & Technology Fund
Ivy Canada Fund
Ivy Global Fund
Ivy International Small Companies Fund
Ivy Asia Pacific Fund
Ivy Global Natural Resources Fund
Ivy Pan-Europe Fund
Ivy International Fund II
Ivy Bond Fund
The Mackenzie Series Trust Class B Distribution Plan applies to the following
funds:
Mackenzie National Municipal Fund
Mackenzie California Municipal Fund
Mackenzie New York Municipal Fund
Mackenzie Limited Term Municipal Fund
March 1997
<PAGE> 100
SCHEDULE 5.20
12b-1 DISTRIBUTION PLAN
CLASS C
Summary of Distribution Plan: Ivy Fund shall pay the Distributor (Ivy Mackenzie
Distributors, Inc., a wholly owned subsidiary of Mackenzie Investment Management
Inc.) a fee at the annual rate of 1.00% of the average daily net assets of Class
C shares of each of the funds itemized below. The fee is broken down into two
components: a 0.75% asset based sales charge and a 0.25% service fee. The
purpose of the asset based service charge is to reimburse the Distributor for
services rendered in connection with any activities or expenses primarily
intended to result in the sale of Class C shares. The purpose of the 0.25%
service fee is to reimburse the distributor for payments made to brokers. which
are unaffiliated with the distributor, for account maintenance and personal
services to shareholders. The 12b-1 Funds accrue the fee daily and reimburse the
Distributor monthly. During the first year of the investment, the Distributor
retains the entire service/distribution fee. Thereafter, the Distributor pays
the entire service/distribution fee to the dealer of the qualified investment.
The Ivy Fund Class C Distribution Plan applies to the following funds:
Ivy China Region Fund
Ivy Emerging Growth Fund
Ivy Growth Fund
Ivy Growth with Income Fund
Ivy International Fund
Ivy Latin America Strategy Fund
Ivy New Century Fund
Ivy Global Science & Technology Fund
Ivy Canada Fund
Ivy Global Fund
Ivy International Small Companies Fund
Ivy Asia Pacific Fund
Ivy Global Natural Resources Fund
Ivy Pan-Europe Fund
Ivy International Fund II
Ivy Bond Fund
March 1997
<PAGE> 101
<TABLE>
<CAPTION>
Type of Amount of
Advance Principal Balance of
Amount [Fixed Rate Paid or Principal Notation
Date of Loan or Base] Prepaid Unpaid Made By:
- ---- ------- ----------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 102
BANKBOSTON, N.A.
100 Federal Street
Boston, Massachusetts 02110
September 15, 1997
C. William Ferris, Senior Vice President
Mackenzie Investment Management Inc.
700 South Federal Highway
Boca Raton, Florida 33432
Re: Fifth Amendment and Waiver
Dear Mr. Ferris:
We refer to the Revolving Credit and Term Loan Agreement, dated as of
February 11, 1994, as amended, between Mackenzie Investment Management Inc. and
The First National Bank of Boston (now known as Bank Boston, N.A.) (the
"Agreement"), with capitalized terms being used herein with the same meanings
assigned thereto in the Agreement.
The Company has informed the Bank that it has entered into the agreement
attached hereto as Exhibit A (the "Thornburg Agreement") concerning a
transaction (the "Reorganization") pursuant to which the assets of certain of
the registered investment companies for which the Company serves as investment
adviser will be acquired by certain registered investment companies for which
Thornburg Management Company, Inc. serves as investment adviser in exchange for
voting shares of the acquiring investment companies. After the Reorganization,
the business of each acquired investment company will be wound up and the
investment companies deregistered. The Company has asked that the Bank agree to
certain amendments to, and waivers of provisions of, the Agreement in connection
with the Thornburg Agreement and the Reorganization.
1. Amendment. Effective the date hereof, the Agreement is hereby
amended by deleting Schedules 5.19 and 5.20 attached thereto and attaching the
Schedules 5.19 and 5.20 attached hereto.
2. Waivers. In response to the Company's request and in reliance on the
Company's representations and warranties herein, the Bank hereby waives (a) the
provisions of Sections 7.1 and 7.3 of the Agreement to the extent necessary to
permit the Company to comply with its obligations in
<PAGE> 103
-2-
Sections 5(c) and (d) of the Thornburg Agreement, provided that (i) the
aggregate fees waived, expenses and other amounts paid and liabilities assumed
pursuant to such Sections does not exceed $500,000, (ii) the Company receives
net cash proceeds of at least, $1,200,000 upon consummation of the
Reorganization, and (iii) the Reorganization is consummated, and such net cash
proceeds are received, no later than September 30, 1997; and (b) the provisions
of Section 9(e) of the Agreement to the extent necessary to permit the
Reorganization, as described in the Thornburg Agreement.
In order to induce the Bank to enter into this Amendment, the Company
represents and warrants to the Bank that (i) each of the representations and
warranties of the Company in the Agreement is true and correct, (ii) no Default
or Event of Default has occurred and is continuing or will exist at the closing
of the Reorganization, and (iii) each of the representations and warranties of
the Company in the Thornburg Agreement was true and correct when made and will
be true and correct at the closing of the Reorganization.
Please sign below to evidence your agreement hereto, whereupon this
Amendment shall become a binding agreement between us.
Very truly yours,
BANKBOSTON, N.A.
(formerly known as
The First National Bank of Boston)
By: /s/ Carol A. Clark
-------------------------------
Title: Managing Director
Agreed:
MACKENZIE INVESTMENT MANAGEMENT INC.
BY: /s/ C. William Ferris
---------------------------------
Title: Sr. Vice President
<PAGE> 104
EXHIBIT A
AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 13th day of June,
1997, by and between THORNBURG MANAGEMENT COMPANY, INC., a Delaware corporation
having its principal office at 119 East Marcy Street, Santa Fe, New Mexico 87501
("Thornburg") and MACKENZIE INVESTMENT MANAGEMENT INC., a Delaware corporation
having its principal office at Via Mizner Financial Plaza, Suite 300, 700 South
Federal Highway, Boca Raton, Florida 33432 ("MIMI").
RECITALS
A. This Agreement describes agreements between Thornburg, investment
adviser to the Acquiring Funds (as defied below) and MIMI, investment adviser to
the Acquired Funds (as defined below) associated with the proposed acquisition
of the Assets (as defined below) of the four series of Mackenzie Series Trust
named below (the "Acquired Funds"), a Massachusetts business trust ("Mackenzie
Trust") by certain series of Thornburg Investment Trust, a Massachusetts
business trust ("Thornburg Trust") and certain series of Thornburg Limited Term
Municipal Fund, Inc., a Maryland corporation ("Thornburg LTMF") (collectively
the "Acquiring Funds") as follows:
<TABLE>
<CAPTION>
ACQUIRING FUNDS ACQUIRED FUNDS
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<S> <C>
Thornburg Investment Trust Mackenzie Series Trust
Thornburg Intermediate Municipal................. Mackenzie National Municipal Fund
Fund ("Thornburg Fund") ("Mackenzie Fund")
Thornburg New York Intermediate.................. Mackenzie New York Municipal
Municipal Fund Fund ("Mackenzie New York Fund")
("Thornburg New York Fund")
Thornburg Limited Tern Municipal Fund, Inc.
Thornburg Limited Term Municipal................. Mackenzie Limited Term Municipal
Fund National Portfolio ("Thornburg Fund ("Mackenzie Limited Term
Limited Term Fund") Fund")
Thornburg Limited Term Municipal ................ Mackenzie California Municipal
Fund California Portfolio ("Thornburg Fund ("Mackenzie California Fund")
California Fund")
</TABLE>
B. Thornburg and MIMI understand that Thornburg Trust and Thornburg LTMF
will each enter into an agreement and plan of reorganization with Mackenzie
Trust (the "Acquisition Agreement") under which each of the above-named
Acquiring Funds will acquire the cash portfolio securities and due bills for
dividends, interest or other receivables or rights to receive any of the
foregoing, receivables for shares sold, and any claims or rights to receive any
of the forgoing, receivables for shares sold, and any claims or rights with
respect to portfolio securities, whether or not arising from contract (the
"Assets") of the Acquired Fund set forth opposite its name above, in exchange
solely for shares of the Acquiring Fund having an aggregate net asset value
equal to the value represented by the Assets of the Acquired Fund on the date
which all conditions to the closing of the acquisition (the
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"Acquisition") have been satisfied or waived and the Acquisition is consummated
(the "Closing Date").
C. Thornburg and MIMI further understand that the Acquiring Funds will not
assume any liabilities of the respective Acquired Funds in the Acquisition,
except that each Acquiring Fund will assume the obligation to pay for any
portfolio securities purchased by its respective Acquired Fund before the
Closing Date in the ordinary course of its business and the purchase of which
was disclosed to the Acquiring Fund by the Acquired Fund when the commitment to
purchase arose.
D. The value of the investment portfolio securities and portfolio assets of
each Acquired Fund shall be computed by Kenny Information Systems subject to
adjustment by the amount, if any, agreed to by the Acquiring Fund and its
corresponding Acquired Fund. In determining the value of the portfolio
securities and other portfolio assets transferred by each Acquired Fund to its
corresponding Acquiring Fund, each portfolio security and other portfolio asset
shall be priced by Kenny Information Systems in accordance with the policies and
procedures of the Acquiring Fund (subjects to the third sentence hereafter) as
set forth in the then current prospectus and statement of additional information
applicable to Class A shares of the Acquiring Fund and the Acquired Fund. At the
Acquired Fund's option and expense, each Acquiring Fund will cause Kenny
Information Systems to perform a trial valuation of all or a portion of the
corresponding Acquired Fund's portfolio securities five to seven days before the
Closing Date, and will furnish the trial valuations to the Acquired Fund upon
its receipt of the information from Kenny Information Systems. All computations
shall be made by Kenny Information Systems. In the event of a dispute with
respect to the valuation of any portfolio security or other portfolio asset of
an Acquired Fund, the Acquired Fund its corresponding shall, by mutual consent,
select an independent third party to resolve the matter, and the determination
of the independent party will bind the Acquired Fund and the Acquiring Fund.
THEREFORE, in consideration of the premises, and the covenants and
agreements hereafter described, the parties agree as follows:
1. Closing and Closing Date. The Closing Date will be the earliest
practicable following receipt of each of the required approvals; however, in no
event will the Closing Date be later than 30 days after approval by the
shareholders of each of the Acquired Funds has been obtained. The closing shall
be held at 119 East Marcy Street, Suite 202 Santa Fe, New Mexico 87501, in the
offices of Thornburg or at such other place as the parties may agree. The
parties contemplate that the Closing Date will occur around August 29, 1997, and
in no event after October 31, 1997. If the Closing Date has not occurred by
October 31, 1997 this Agreement will terminate.
2. Representations and Warranties of Thornburg. Thornburg represents and
warrants to MIMI as follows, understanding and agreeing that each representation
or warranty is a material inducement to MIMI to enter into and perform its
obligations under this Agreement, and that each warranty and representation will
be true and correct on the date of this Agreement and at Closing.
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(a) Thornburg is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has power to own, lease and
operate all of its properties and assets and to carry on business as currently
conducted. Thornburg is duly qualified or licensed to do business as a foreign
corporation and is in good standing in every jurisdiction where the failure to
be so qualified or licensed would have a material adverse effect on its
business.
(b) Thornburg is a duly registered investment adviser and its registration
with the Securities and Exchange Commission ("SEC") under the Investment
Advisers Act of 1940 (the "Advisers Act") is in full force and effect.
(c) Thornburg is not, and the execution, delivery and performance of this
Agreement and the Transactions contemplated hereby will not insult, in violation
of any provisions of Thornburg's Articles of Incorporation or By-Laws or of any
agreement, indenture, instrument, contract, lease, order, writ, injunction,
decree, law, rule, regulation or undertaking to which Thornburg is a party or by
which it is bound.
(d) No litigation or administrative proceeding or investigation of or
before any court or governmental body or authority (for purposes of this
Agreement, the term "governmental body or authority" includes self-regulatory
organizations) is presently pending or threatened against Thornburg or any of
the Acquiring Fund, or any of their respective properties, assets or business,
which materially and adversely affects its business its ability to consummate
the transactions herein contemplated. Thornburg knows of no fact which might
form the basis for the institution of such proceedings and neither Thornburg nor
any of the Acquiring Funds is a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body or authority which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated.
(e) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
prior to the Closing Date by all necessary action on the part of Thornburg's
board of directors, and no corporate action or proceeding on the part of
Thornburg is necessary to authorize the Agreement and the consummation of those
transactions. Assuming due authorization, execution and delivery of this
Agreement by MIMI, this Agreement constitutes me valid and binding obligation of
Thornburg enforceable in accordance with its terms, except as may be limited by
or subject to any bankruptcy, insolvency, reorganization, moratorium or other
similar law affecting the enforcement of creditors' rights generally, and
subject to generally, and subject to general principles of equity. Further, the
trustees of Thornburg Trust and the directors of Thornburg LTMF have been
informed of the transactions contemplated by this agreement, and have generally
approved and authorized those transactions.
(f) The information furnished or to be furnished by Thornburg for use in
registration statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with federal securities and other applicable laws and regulations.
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(g) No notice, report, consent, approval, authorization or order of, or
any other filing with, any court or governmental body or authority is required
for the execution, delivery or performance of this Agreement by Thornburg or the
consummation of the transactions contemplated herein, except as required of the
Acquiring Funds under the Securities Act of 1933, as amended (the "1933 Act"),
the Investment Company Act of 1940 as amended (the "1940 Act"), and applicable
state laws.
(h) In connection with the transactions contemplated by this Agreement,
neither Thornburg nor any "interested person" (as that term is defined in the
1940 Act) of Thornburg has imposed and Thornburg does not intend to impose, an
unfair burden on the Acquiring Funds as a result of such transactions, or as a
result of any express or implied terms, conditions, or understandings applicable
to such transactions within the meaning of Section 15(f) off the 1940 Act.
(i) Each item of information reflected in the annual reports, semiannual
reports, federal and state income tax returns and Forms N-SAR for each of the
Acquiring Funds is true and correct in all material respects, and there is no
material claim or liability against any of the Acquiring Funds or its not
described in one or more of those documents.
3. Representatives and Warranties of MIMI. MIMI represents and warrants to
Thornburg as follows, understanding and agreeing that each representation or
warranty is a material inducement to Thornburg to enter into and perform its
obligations under this Agreement, that these representations and warranty
supersede the provisions and limitations stated in that certain confidentiality
letter between MIMI and Thornburg dated March 26, 1997, and that each warranty
and representation will be true and correct on the date of this Agreement and at
Closing.
(a) MIMI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has power to own, lease and
operate all of its properties and assets and to carry on its business as
currently conducted. MIMI is duly qualified or licensed to do business as a
foreign corporation and is in good standing in every jurisdiction where the
failure to be so qualified or licensed would have a material adverse effect on
its business.
(b) MIMI is a duly registered investment adviser and its registration
with the SEC under the Advisers Act is in full force and effect.
(c) MIMI is not, and the execution, delivery and performance of this
Agreement and the transactions contemplated hereby will not result, in violation
of any provision of MIMI's Articles of Incorporation or By-laws or of any
agreement, indenture, instrument, contract, lease, order, writ, injunction,
decree, law, rule, regulation or undertaking to which MIMI is a party or by
which it is bound.
(d) No litigation or administrative proceeding or investigation of or
before any court or governmental body or authority is presently pending or
threatened as to MIMI or any
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of the Acquired Funds or any of their respective properties assets or business,
which materially and adversely affects its ability to consummate the
transactions hereby contemplated. MIMI knows of no facts which might form the
basis of the institution of such proceedings and neither MIMI nor any of the
Acquired Fund is a parry to or subject to the provisions of any order. decree or
judgment of any court or governmental body or authority which materially and
adversely affects it ability to consummate the transactions herein contemplated.
(e) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
prior to the Closing Date by all necessary actions on the part of MIMI's board
of directors and no further corporate action on the part of MIMI is necessary to
authorize this Agreement and consummation of those transactions. Assuming due
authorization execution arid delivery of this Agreement by Thornburg, this
Agreement constitutes a valid and binding obligation of MIMI enforceable in
accordance with its terms, except as may be limited or subject to any
bankruptcy, insolvency, reorganization, moratorium or other similar jaw
affecting the enforcement or creditors' rights generally, and subject to general
principal of equity Further, the trustees or Mackenzie Trust have been informed
of the transactions contemplated by this Agreement and have generally approved
arid authorized those transactions.
(f) The information furnished or to be furnished by for use in
registration statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects. with federal securities and other applicable laws and regulations.
(g) No consent, notice, report, approval, authorization or order of, or
any other filing with, any court or governmental body or authority is required
for the execution, delivery or performance of this Agreement by MIMI or the
consummation of the transactions contemplated herein. except as required of the
Acquired Funds under the 1933 Act, the 1934 Act, the 1940 Act, and applicable
state laws.
(h) Each Acquired Fund's annual expense ratio (excluding taxes, Rule
12b-1 fees, brokerage commissions, interest litigation and indemnification
expenses and other extraordinary expenses) is and will be no greater than .85%
in the case of Mackenzie Limited Term Municipal Fund and .64% in the case of
each of the other Acquired Funds from the beginning of each Acquired Fund's
current fiscal year to and including the Closing Date.
(i) Each item of information reflected in the annual reports, semiannual
reports, federal and state income tax returns and Forms N-SAR for each of the
Acquired Funds is true and correct in all material respects, and there is no
material claim or liability against any of the Acquired Funds or its assets
which is not described in one or more of those documents.
4. Covenants of Thornburg.
(a) Thornburg will use its best efforts to comply with and obtain the
approvals and authorizations required by the 1933 Act, the 1934 Act, the 1940
Act, and those state
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securities and general laws which are necessary to consummate the transactions
contemplated in this Agreements.
(b) Thornburg will cause to be prepared and filed at its expense. for
Thornburg Trust and Thornburg LTMF, registration statements on Form N-14 and
necessary pre- and post-effective amendments to register under the 1933 Act the
Class A shares to be issued by the Acquiring Funds to the Acquired Funds to
Consummate the Acquisition. Further, Thornburg will file notices with and pay
fees to such state securities administrators are required by applicable state
law in connection with the issued of the described Class A shares. Thornburg
also will cause to be prepared at its expense an agreement and plan of
reorganization for each of the contemplated exchanges.
(c) Thornburg will at its sole expense print and mail to the
shareholders of each of the Acquired Funds the combined prospectus and proxy
statement soliciting these shareholders: approval of the Acquired Funds and will
otherwise conduct at its expense supplemental solicitation by the mailing of
supplemental materials, telephone solicitation or other means including a proxy
solicitation agent which it considers reasonable under the circumstances.
(d) Thornburg will pay in cash to MIMI, by wire transfer of immediately
available funds, at the Closing, one percent of the aggregate net asset value of
the assets acquired by the Acquiring Funds from the Acquired Funds at Closing.
Of this amount, 5% is partial consideration for MIMI'S performance under the
Noncompetition Agreement described in paragraph (f) below, and 30% is partial
consideration for MIMI's performance under the Transition and Related Services
Agreement described in paragraph (g) below.
(e) Thornberg will pay in cash to MIMI, by wire transfer of immediately
available funds as soon as practicable after the six-month anniversary date of
the Closing, and in no event more than 30 days after the six-month anniversary
date of Closing, 1/2 of one percent of the net asset value of the shares of the
Acquiring Funds issued to shareholders of the Acquired Funds in the Acquisition
and remaining outstanding on the anniversary date ("outstanding Shares"). Of
this amount, 5% is partial consideration for MIMI's performance under the
Noncompetition Agreement described in paragraph (f) below, and 30% is partial
consideration for MIMI's performance under the Transition and Related Services
Agreement described in paragraph (g) below. For purposes of this calculation,
the Outstanding Shares will also include (i) Acquiring Fund shares purchased
through reinvestment of dividend and capital gains distributions on Outstanding
and Acquiring Fund shares exchanged from one Acquiring Fund to another Acquiring
Fund or to any other fund for which Thornburg serves as investment adviser or
for which an affiliate of Thornburg serves as principal underwriter and which
such exchanged shares were derived from Outstanding Shares; and (ii) Outstanding
Shares transferred by an Acquiring Fund in a reorganization transaction with an
opened investment company other than a reorganization transaction including two
or more of the Acquiring Funds.
(f) Thornburg will execute and deliver to MIMI at Closing the
Noncompetition Agreement attached to this agreement as Exhibit A.
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(g) Thomburg will execute and deliver to MIMI at Closing the Transition
and Related Service Agreement attached to this Agreement as Exhibit B.
(h) Thornburg will cooperate with MIMI and the Acquired Funds in all
reasonable respects to consummate the transactions contemplated in this
Agreement. including the timely delivery of copies of all documents and other
information reasonably required in connection with MIMI's due diligence
investigations and other obligations under this agreement.
(i) With respect to each Acquired Fund, Thomburg to provide as promptly
as practicable to the trustee of Mackenzie Trust all such information as is
reasonably requested by the trustees, in accordance with their responsibilities
under the 1940 Act, to evaluate the terms of the agreement and plan of
reorganization relating to each Acquired Fund. With respect to each Acquired
Fund, Thomburg also agrees to provide to the trustees of Mackenzie Trust all
information reasonably requested by that Acquired Fund or the trustees of
Mackenzie Trust in connection with the preparation of proxy material, to be sent
to shareholders of that Acquired Fund.
(j) Thornburg agrees to use its best efforts not to permit the issuance
of any press release or other public statement with respect to the transactions
contemplated hereby without the consent of MIMI, except as may be required by
law, in which event such press release or public statement shall be made only
after a reasonable effort to consult with and obtain the consent of MIMI has
been made.
(k) Thornburg shall comply, and shall use its reasonable best efforts
to cause the trustees of Thornburg Trust and the directors of Thornburg LTMF to
comply, until the third anniversary of the Closing Date, with Section 15(f) of
the 1940 Act. Compliance with Section 15(f) of the 1940 Act shall include,
without limitation, the following requirements for the minimum time periods
specified in Section 15(f) of the 1940 Act: (i) at least 75% of the trustees of
Thornburg Trust and of the board of directors of Thornburg LTMF shall not be
"interested persons" (as that term is defined in the 1940 Act) of Thornburg or
MIMI, or any interested person" (as that term is defined in the 1940 Act)
therefore: (ii) no "unfair burden" (as that term is defined in Section
(f)(2)(B) of the 1940 Act) shall be imposed; and (iii) all vacancies among the
trustees of Thornburg Trust and the board of directors of Thornburg LTMF which
must be files by a person who is not an interested person of Thornburg or MIMI
so as to comply with Section 15(f) of the 1940 Act shall be filled by a person
who is not an interested person of Thornburg or MIMI who has been selected and
proposed for election by a majority of the trustees or directors, respectively,
who are not such interested persons. Thornburg may elect, in lieu of the
described compliance with Section 15(f) of the 1940 Act, to apply for and obtain
an example order under Section 6(a) of die 1940 Act from the provisions of
Sections 15(f)(l)(A) of the 1940 Act, in form and substance reasonably
acceptance to MIMI.
(l) Thornburg shall not acquired hereby any rights to the name
"Mackenzie," or ally variation therefore.
(m) Thornburg agrees to advise MIMI promptly, both orally and in
writing, of any change in the final condition, operations, properties or
business of Thornburg which,
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taken as a whole, would material affect its ability to perform investment
advisory services for the Acquiring Funds on the Closing Date or its ability to
carry out its obligations under this Agreement.
5. Covenants of MIMI
(a) Upon tile execution of this Agreement MIMI agrees that it will not
initiate or participate in any discussions or agreements having the purpose or
effect of (I) merging or effecting any transaction having the effect of a
reorganization or disposition of any Acquired Fund or substantially all of its
assets. The provisions of this paragraph shall become void and have no further
force and effect in the event the Acquisition is not consummated by October 31,
1997.
(b) MIMI will use its best efforts to comply with and obtain the
approvals and authorizations required by the 1933 Act, the 1934 Act, 1940 Act
and those state securities and general laws which are necessary to consummate
the transactions contemplated in this Agreement.
(c) Commencing on the date of this Agreement, MIMI will take such
actions including the reduction of fees, and the assumption of reimbursement of
expenses, necessary to maintain each Acquired Fund's expense ratio (excluding
taxes, Rule 12b-1 fees, brokerage commissions, interest litigation and
indemnification expenses and other extraordinary expenses ) for the fiscal year
ending June 30, 1997 and, if applicable, the fiscal period beginning July 1,
1997 and ending on the Closing Date at an annual for no more than .64% in case
of Mackenzie Limited Term Municipal Fund and .85% in the case of each of the
other Acquired Funds. MIMI agrees to waive, reimburse or otherwise limit each
Acquired Fund's expenses incurred in excess of that ratio for each period,
except that. any payment made in furtherance of this requirement after the
Closing Date that, if prior to the Closing Date would have been made to the
Acquired Fund, will instead be made to the Acquired Fund.
(d) MIMI will pay or discharge any liabilities of each Acquired Funds
which remain unpaid on the Closing Date, except as otherwise indicated in the
applicable Agreement and Plan of Reorganization for such Acquired Fund. Before
or on the Closing Date, MIMI will contribute to each Acquired Fund cash in an
amount of the Acquired Fund's unamortized deferred organizational expenses, and
MIMI will write down the value of any prepaid expenses of the Acquired Fund.
MIMI will pay or discharge substantially all expenses incurred by each within
the limitations described in the proceeding paragraph; provided that any such
expenses So incurred by MIMI will be solely and directly related to the
Acquisition within the meaning of Revenue Ruling 73-84, 1973-1 Cum. Bull. 187.
Nothing in this will be interpreted to relieve MIMI of its obligation under the
preceding paragraph to maintain each Fund's expense ratio at the specified
annual rate far the stated
(e) MIMI will at its expense obtain from the Acquired Funds' counsel an
opinion in the usual form that, based upon certain facts, assumptions and
representations, the
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Acquisition will be a reorganization described in Section 368(a)(l) of the
Internal Revenue Code of 1986 and no again or loss will be recognized in the
Acquisition by the Funds of the shareholders of the Acquired Funds.
(f) MIMI will at its expense wind up the business of each Acquired Fund
after Closing, deregister Mackenzie Series Trust, and distribute to the former
shareholders of each Acquired Fund final statements and tax reporting forms as
may be required by applicable law.
(g) MIMI will execute and deliver to Thornburg at Closing the
Noncompetition Agreement attached to this Agreement as Exhibit B.
(h) MIMI will execute and deliver to Thomburg at Closing the Transition
and Related Services Agreement attached to this Agreement as Exhibit B.
(i) MIMI will cooperate with Thornburg and the Acquiring Funds in all
reasonable respects to consummate the transactions contemplated in this
Agreement, including the timely delivery of copies of all documents and other
information reasonably required in connection with Thornburg's due diligence
investigations, preparation and filing of registration statements and other
documents (including but not limited to pro forma financial statements for
inclusion in the registration statements Thornburg will cause to be prepaid),
and assistance in proxy solicitation efforts directed at the shareholders of the
Acquired Funds.
(j) MIMI agrees to use its best efforts not to permit the issuance of
any press release or other public statement with respect to the transactions
contemplated hereby without the consent of Thornburg, except as may be required
by law, in which event such press release or public statement shall be made only
after a reasonable effort to consult with and obtain consent of Thornburg has
been made.
6. Allocation of the Purchase Price. The parties will follow and use the
allocation of those amounts paid to MIMI by Thornburg pursuant to Sections 4(d)
and (e) (the "Purchase Price"), as set forth in Schedule 1, in all tax returns,
tax filings and other tax reports made by them to any governmental agencies.
7. Confidentiality.
(a) Thornburg and MIMI each covenant and agree that it will use its
reasonable best efforts to keep information Acquired during the course of the
transactions contemplated hereby and relating to any business of the other
condition.
(b) In order to keep this Agreement confidential, neither Thornburg and
its Affiliates, on the one hand, nor MIMI and its Affiliates, on the other hand
will, release or supply a copy of the agreement, or the terms of the
transactions contemplated by the Agreement or any of the schedules, exhibits or
related agreements to this Agreement to any person other than to their
respective Representatives are informed of the nature of the terms, document or
documents and informed that such Representatives shall keep the terms, document
or documents confidential.
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(c) None of the aforesaid covenants in this Section 7 will be deemed to
be breached in any of the following instances:
(i) The other party to this Agreement ("Party") consents to the
action being taken.
(ii) The information disclosed is generally available or known to
die public other than as a result of a disclosure in violation of the
covenants contained in this Section 7.
(iii) A Party determines in good faith that me disclosure at
information, including the filing of this Agreement, is required by any
governmental body or authority, stock exchange or judicial authority or
required by law or a regulation , including, but not limited to, any
Party's reporting obligation under the 1933 Act or the 1934 Act.
(iv) The disclosure is required or appropriate under principles of
fiduciary law.
(d) For purposes of this Section 7, the Term "Representatives" shall
mean any officer, employee, director ten percent shareholder, accountant,
attorney, financial adviser or banker of Thornburg or MIMI or their Affiliates,
or of a member of the board of trustees or directors of any investment company
advised by Thornburg or MIMI or their Affiliates, or of any person performing
custody or transfer agent functions for Mackenzie trust Thornburg Trust or
Thomburg LTMF, and the term "Affiliate" shall mean a person or entity that
directly or indirectly controls, is controlled by or is under common control
with a specified person or entity.
8. Conditions Precedent to Obligations of Thornburg. The obligations of
Thornburg provided for herein shall be subject, at its election, to the
performance by MIMI of all the obligations to be performed by it hereunder or on
before the Closing Date and, in addition thereto, die following conditions:
(a) All representations and warranties of MIMI contained in this
Agreement shall be true and correct in all material respects on the date hereof
and as of the Closing Date.
(b) MIMI shall have delivered to Thornburg at the Closing Date a
certificate executed in its name by its President or Vice President, in form and
substance satisfactory to counsel for Thornburg and dated as of the Closing
Date, certifying that the representatives and warranties of MIMI made in this
Agreement are true and correct at and as of the Closing Date, that the
conditions set forth in this Section have been met and as such other matters as
Thornburg or its counsel shall reasonably request
(c) The Acquisition and the transactions contemplated therein shall have
been approved by the requisite vote of the holders of the outstanding shares of
each Acquired Fund,
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the board of directors of Thornburg LTMF, and the trustees of Mackenzie Trust
and the Thornburg Trust, in accordance with applicable law.
(d) All consents Of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including
"no-action" positions of such federal or state authorities) deemed necessary by
the parties hereto to permit consummation, in all material respects of the
transactions contemplated under the 1933 Act.
(e) The registration statements on Form N-14 of Thornburg LTMF and
Thornburg Trust respecting the Acquisition shall have become effective under the
1933 and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
9. Conditions precedent to Obligations of MIMI. The obligations of MIMI
provided herein shall be subject, at its election, to the performance by
Thornberg of all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following conditions:
(a) All representatives and warranties contained in this Agreement shall
be true and correct in all material respects on the date hereof and as of the
Closing Date.
(b) Thornburg shall have delivered to MIMI a certificate executed in its
name by its President or Vice President, in form and substance satisfactory to
counsel for MIMI and dated as of the Closing Date, certifying that the
representations and warranties of Thornburg made in this Agreement are true and
correct at and as of tile Closing Date, that the conditions set forth in this
Section have been met. and as to such other matters as MIMI or its counsel shall
reasonably request.
(c) The Acquisition and the transactions contemplated therein shall have
been approved by the requisite vote of the holders of the outstanding shares of
each Acquired Fund, the board of directors of Thornburg LTMF, and the trustees
of Mackenzie Trust and the Thornburg Trust, in accordance with applicable law.
(d) The registration statements on Form N-14 of Thornburg LTMF and
Thornburg Trust respecting the Acquisition shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
(e) All consents of other parties and all other consents, order and
permits of federal, state and local regulation authorities (including those of
the Securities and Exchange Commission and of state security authorities,
including "no-action" positions of such federal
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or state authorities ) deemed necessary by the parties hereto to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained.
10. Further Condition Precedent to Obligations of Thornburg The obligations
of MIMI hereunder are, at the Option of Thornburg, and the obligations of
Thornburg hereunder are, at the Option of MIMI, each subject to the further
condition that on or before the Closing Date no action, suit or other proceeding
shall be pending before any court or in any governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in connection
with, the Acquisition or the transitions contemplated therein.
11. Responsibility for Fees and Expenses.
(a) Thornburg and MIMI each agrees that it will pay to Roberto de
Guardiola Company, L.L.C. one half of the firm's fee for assisting in
consummation of the transactions contemplated in the Agreement. This fee is four
percent of the consideration paid by Thornburg to MIMI under the Noncompetition
Agreement and the Consulting and Services Agreement attached to this Agreement
as Exhibit A and B, respectively, under paragraphs 4(d) and 4(e) of this
Agreement, payable at the times Thornburg pays the consideration to MIMI. Each
party hereby represents and warrants to the other that is no other that there is
no other person entitled to a commission, broker fee or similar consideration in
connection with the transactions contemplated in this Agreement.
(b) Except as otherwise specified provided in this Agreement, Thornburg
and MIMI each will pay its expenses incurred in connection with entering into
carrying out provisions of this Agreement, including the expense of its own
counsel to review and revise documents prepared by the other party, whether or
not the Acquisition consummated.
12. Indemnification.
(a) Indemnification by MIMI of Thornburg. Subject to the following
sentence, MIMI shall indemnify defend and hold harmless Thornburg, each of its
Affiliates (as that term is defined in Section 7), and each Acquiring Fund, and
each of their respective officers, trustees, directors, employees and agents,
and the successors of any of them (hereinafter collectively, the "Thornburg
Group") against any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies, including but
not limited to interest, penalties and reasonable attorney's fees and
disbursements (including any such fees and disbursements which are incident to
any appeal) ("Thornburg Losses") that any member of the Thornburg Group shall
incur or suffer, which arise out of, result from, or relate to: (i) any breach
of the representations or warranties made by MIMI in this Agreement: (ii) any
failure to comply with any of the covenants or agreements of MIMI made in this
Agreement; and (iii) any claim asserted against Thornburg or an Acquiring Fund
relating to the operations of MIMI any Acquired Fund before the Closing Date
(but not including any claim or portion of a claim which relates to operations
of Thomburg or an Acquiring Fund after the Closing Date). Notwithstanding any
other provision of this Agreement to the contrary, MIMI shall not be charged
with any obligation to Thornburg or a Thornburg Fund under the forgoing
indemnity or otherwise under this Agreement or with respect to any breach of
this Agreement or any
-12-
<PAGE> 116
agreement or instrument delivered hereunder (a) unless and only to the extent
that the aggregate amount of Thornburg Losses exceeds $50,000,000; and (b) for
any amount in excess of the Purchase Price.
(b) Indemnification by Thornburg of MIMI. Subject to the following
sentence, Thornburg shall indemnify, defend and hold harmless MIMI, each of its
Affiliates, and each Acquired Fund, and each of their representative officers,
trustees, directors, employees and agents and the successors of any of them
(hereinafter collectively, the "MIMI Group") against any and all claims,
demands, losses, costs, expenses, obligation, liabilities, damages, recoveries
and deficiencies, including but not limited to interest, penalties and
reasonable attorneys' fees and disbursements (including any such fees and
disbursements which are incident to any appeal) ("MIMI Losses") that any member
of the MIMI group shall incur or suffer which arise out of, result from. or
relate to: (i) any breach of the covenants or warranties made by Thornburg in
this Agreement; (ii) any failure to comply with any of the covenants or
agreements at Thornburg made in this Agreement; and (iii) any claim asserted
against MIMI or an Acquired Fund relating to the operations of Thornburg or the
Acquiring Funds subsequent to the Closing Date, (but not including any claim or
portion of a claim which relates to operations of MIMI or an Acquired Fund
before the Closing Date). Notwithstanding any other provision of This Agreement
to the contrary, Thornburg shall not be charged with any obligation to MIMI or
an Acquired Fund under the foregoing indemnity or otherwise under this Agreement
or with respect to any breach of this Agreement or any agreement or instrument
delivered hereunder (a) unless and only to the extent that the aggregate amount
of MIMI Losses exceeds $50,000; and (b) for any amount in excess of the Purchase
Price; provided, however, that the limitations set forth in subparagraphs (a)
and (b) of this Section 12(b) shall not apply with respect to MIMI Losses
relating to Section 15(f) of the 1940 Act.
(c) Indemnification Procedures.
(i) Promptly after receipt by the person seeking indemnification
under this Agreement (the "Indemnitee") of notice of the commencement
of any action or the assertion any claim, liability or obligation
(whether by legal process or otherwise), against which claim,
liability or obligation a Party to this Agreement (the "Indemnitor")
is, or may be, required under this Agreement to indemnify the
Indemnitee, the Indemnitee shall if a claim under this Agreement is to
be or may be made against the Indemnitor, notify the Indemnitor in
writing of the commencement or assertion of the claim, provide the
Indemnitor with a copy of the claim, process and all legal pleadings
and permit the Indemnitor to assume and have sole control over the
defense of the claim or any litigation resulting from the claim.
Failure by the Indemnitor to notify the Indemnitor of its election to
defend any such action within 30 days after notice of the action has
been given to the Indemnitor shall be deemed a waiver by the
Indemnitor of its right to defend the action.
(ii) If the Indemnitor assumes the defense of any claim or any
litigation resulting from the claim, the obligations of the Indemnitor
as to the claim shall be limited to taking all steps necessary in the
defense or settlement of the claim
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<PAGE> 117
or litigation resulting from the claim and to holding the Indemnitee
harmless from and against any and all losses, damages and liabilities
caused by or arising out of any settlement approved by the Indemnitor
or any judgment in connection with the claim or litigation resulting
from the claim. The Indemnitee shall fully cooperate with the
Indemnitor in defending any claim. The Indemnitee may participate in
the defense of the claim or litigation. The Indemnitee may employ
separate counsel to participate in the defense of the claim or
litigation and the fees and expenses of such counsel shall be at the
expense of the Indemnitee but only if the employment thereof (a) has
been specifically authorized in writing by the Indemnitor, which
authorization shall not be unreasonably withheld, (b) relates to the
defense of any claim to the extent. the claim seeks injunctive,
specific performance or other non-monetary relief involving or
affecting the business, operations or assets of the Indemnitee (or an
Affiliate of the Indemnitee), and (c) does not present counsel chosen
by the Indemnitor a conflict of interest. The Indemnitor shall not, in
the defense of the claim or any litigation resulting from the claim,
consent to the entry of any judgement without written consent of the
Indemnitee or enter into any settlement without the written consent of
the Indemnitee, unless the judgment or settlement (1) includes as an
unconditional term the giving by the claimant or tile plaintiff to the
Indemnitee of a release from all liability with respect to the claim
or litigation (2) does not impose any injunctive or other non-monetary
relief on the indemnitee (3) does not require any action other than
the payment of money for which the Indemnitor will be liable.
(iii) If the Indemnitor does not assume the defense of the claim
or litigation resulting from the claim, the Indemnitee may defend
against the claim or litigation. The Indemnitor shall pay all
reasonable expenses, Legal or otherwise, incurred by the Indemnitee in
the defense of the claim or litigation. The Indemnitee shall conduct
such defense in good faith and shall have the right to settle the
claim or litigation with the prior written counsel of the Indemnitor
which shall not be unreasonably withheld.
(iv) Nothing in this Section shall be construed to provide for
Indemnification in violation of Section 17(i) of the 1940 Act or any
other applicable federal securities laws. In the event that any court
determines that, notwithstanding the foregoing, any particular
indemnification sought hereunder violates the aforesaid Section 17(i)
(or other applicable provisions of the federal securities laws), it is
the intent of the Parties that any court shall have the power to
reform or construe such provisions in such manner as to render the
same enforceable, or, alternatively, substitute other provisions
(including, without limitation. provisions regarding contribution or
other sharing of liability by indemnified and indemnifying Parties) so
as to give the Parties hereto, to the maximum extent permitted by law,
the intended benefits of this Section 12.
(v) If the loss, damage, cost, expense or liability of an
Indemnitee results in a tax deduction or credit that reduces the
amount of any taxes actually
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<PAGE> 118
paid by such Indemnitee, then the amount of such claim for
indemnification shall, unless and to extent that such claim amount is
itself subject to taxes in the hands of the Indemnitee, be reduced by
the amount of such reduction in tax.
13. Entire Agreement; Survival Warranties.
(a) Thornburg and MIMI agree that neither party has made any
representation, warranty, or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties This Agreement
supersedes that certain confidentiality letter between the parties dated March
26, 1997.
(b) The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive die consummation of the transactions contemplated hereunder for a
period of three years after the Closing Date.
14. Termination.
(a) In addition to the automatic termination provided for in Section 1
hereof, this Agreement may be terminated by the mutual agreement of Thornburg
and MIMI. In addition, either Thornburg or MIMI may at its option terminate this
Agreement at the prior to the Closing Date because:
(i) of a breach by the other of any representation, warranty or
agreement contained herein to be performed at or prior to the Closing
Date if such breach is material to the transactions contemplated
herein; or
(ii) a condition herein expressed to be precedent to the
obligations of the terminating party (Other than the conditions
identified in paragraphs 8(a) and 9(a) above) has not been met and it
reasonably appears that it will not or cannot be met
(b) In the event of any such termination, there shall be no liability
for damages on the part of either Thornburg or MIMI. or their respective
Affiliates (as that term is defined in Section 7), shareholders, directors,
trustees, officers, employees, agents, consultants or representatives or any
affiliate thereof, or on the part of any Acquiring Fund or any of its officers,
directors or trustees; but each party shall bear, except as otherwise expressly
provided herein, the expenses incurred by them incidental to the preparation and
carrying out of this Agreement, provided that, if the termination shall result
from the breach by a party of any covenant or agreement of such party contained
in this Agreement, such party responsible for the breach shall be fully liable
for any and all reasonable costs and expenses (including reasonable counsel fees
and disbursements) sustained or incurred by the non-breaching party; and further
provided that the terms of the confidentiality obligations of die parties to
this Agreement set forth in this Agreement shall survive any termination of this
Agreement.
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<PAGE> 119
15. Amendments. This Agreement may be amended, modified or supplemented
only in a writing executed by authorized officers of MIMI and Thornburg.
16. Notices. Any notice, report, statement or demand required or permitted
by any provisions of this Agreement shall be in writing and shall be given by
certified U.S. mail, facsimile or courier service addressed to: Thornburg, 119
East Marcy Street, Suite 202, Santa Fe, New Mexico 87501. Attention - Brian J.
McMahon; and MIMI, Via Mizner Financial Plaza, Suite 300, 700 South Federal
Highway, Boca Raton, Florida 33432, Attention - C. William Ferris, or to such
other addresses as a party may designate by notice complying with this Section.
17. Further Assurances. The parties hereby agree from time to time to
execute and deliver such further and other transfers, assignments and documents
arid to do all matters arid things which may be convenient or necessary to more
effectively and completely carry out the provisions and purposes of this
Agreement and the transactions contemplated herein.
18. Severability. If any part of this Agreement or any other agreement
entered into pursuant hereto is contrary to, prohibited by or deemed invalid
under applicable law or regulation, such provisions shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible.
19. Waivers. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if known,
shall not affect the right of such party to require performance of that
provision or to exercise any right, power or remedy hereunder, and any waiver by
any party of any breach of any provision of this Agreement will not be construed
as a waiver of any continuing or succeeding breach of such provision a of the
provision itself, or a waiver of any right, power or remedy under this.
Agreement except in respect of such breach. No notice to or demand on any party
in any case shall, of itself, entitle such party to any other or further notice
or demand in similar or other circumstances.
20. Headings; Counterparts; Governing Law; Assignment
(a) The Section and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(b) This Agreement may be execute in any number of counterparts, each
of which shall be deemed an original.
(c) This Agreement shall be governed by and construed in accordance
with the substantive laws of the State of Delaware, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act or the Advisers
Act (as the same Acts shall have been or will be amended) or rules, orders or
regulations of such governmental bodies or authorities having authority with
respect to such Acts.
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<PAGE> 120
(d) This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
administrators, executors, legal representatives, heirs, successors and
permitted assigns any rights or remedies under or by reason or Agreement.
(e) In the event of any litigation respecting this Agreement or its
subject matter, the prevailing party will be entitled to reimbursement from the
Losing party for the prevailing party's costs of suit, including reasonable
attorney's fees.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Vice President.
THORNBURG MANAGEMENT COMPANY, INC.
By: /s/
-------------------------------------
Managing Director
MACKENZIE INVESTMENT MANAGEMENT, INC.
By: /s/ C. William Ferris
-------------------------------------
Sr. Vice President
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<PAGE> 121
SCHEDULE 1
<TABLE>
<CAPTION>
PERCENTAGE OF
ASSETS PURCHASE PRICE
- ------ --------------
<S> <C>
Various investment advisory/distribution
materials and prospectuses, annual reports
and certain records relating to the Acquired Funds .75%
The intangible relationship with the Acquired
Funds and the beneficial owners as evidenced
by each Acquired Fund's customers' list, subject
to uses thereof which are lawful 64.00%
Copies of all sales literature, promotional
literature, catalogs and similar materials
relating to the to the Acquired Funds for the two
most recent years .25%
Services to be Performed Pursuant to the
Transition and Related Services Agreement 30.00%
Covenant not to compete pursuant to
the Noncompetition Agreement 5.00%
-------
TOTAL 100.00%
</TABLE>
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<PAGE> 122
EXHIBIT A
NONCOMPETITION AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the ___ day of_______ 1997,
by and between THORNBURG MANAGEMENT COMPANY, INC. a Delaware corporation having
its principal office at 119 East Marcy Street, Santa Fe, New Mexico 87501
("Thornburg") and MACKENZIE INVESTMENT MANAGEMENT, INC., a Delaware corporation
having its principal office at Via Mizner Financial Plaza, Suite 300, 700 South
Federal Highway, Boca Raton, Florida 33432 ("MIMI").
Recital
Thornburg and MIMI entered into a certain Agreement dated June 5, 1997 (the
"Purchase Agreement") relating to the acquisition (the "Acquisition") of
specified assets of four series of Thornburg Investment Trust ("Mackenzie
Trust") by certain series of Thornburg Investment Trust ("Thornburg Trust") and
certain series of Thornburg Limited Term Municipal Fund, Inc. ("Thornburg
LTMF"), which provided, in part, that upon closing of the Acquisition. Thornburg
and MIMI would execute and deliver this Agreement.
THEREFORE, in consideration of the premises, and the covenants and
agreements hereafter described, the parties agree as follows.
1. Noncompetition. MIMI hereby agrees that for a period of one year from
the date of this Agreement, it will not engage directly or indirectly in the
performance of management or investment advisory services for, or the promotion
or sponsorship of, any investment company registered under the Investment
Company Act of 1940, as amended that, as a fundamental policy, invests at least
80% of its total assets in municipal obligations. For purposes of this
Agreement, "promotion" includes, but is not limited to, providing advice,
consulting or marketing services to any other person in connection with the
management, administration or sponsorship of an investment company or the
distribution of its securities. Notwithstanding the preceding two sentences,
MIMI shall not be precluded from the performance of management or advisory
services for, or the promotion sponsorship of, any one or more registered
investment companies investing primarily in municipal bonds were MIMI commences
these activities in connection with a transaction involving (i) an assignment of
investment advisory agreements to MIMI under which MIMI is to commence providing
services for a group of registered investment companies of which the companies
investing at least 80% of total assets in municipal bonds represent less than
30% of the companies' total assets, or (ii) an acquisition of assets by
registered investment companies managed by MIMI in which the assets of the
acquired companies which invest primarily in municipal bonds represent less than
30% of all the acquired companies' total assets, or (iii) a combination of (i)
and (ii).
2. Current Relationships Protected. The proceeding section will not
preclude or limit MIMI or any successor from managing, advising, promoting, or
sponsoring any of currently sponsored existing investment companies, or any
other investment companies not having the investment policy described in the
proceeding section, or any private accounts and common trust funds which may
invest in whole or in part in municipal obligations so long as those accounts
and funds are not investment companies defined in the Investment Company Act of
1940, as
<PAGE> 123
amended. The preceding section will not preclude MIMI from owning shares in any
Investment company.
3. No Use of Information
(a) MIMI hereby further agrees that it will not use in the conduct of
any business activity, or disclose to any other person whether or not in
connection with any business activity, any information of any kind acquired from
Thornburg in the course of negotiating and consummating the Acquisition. This
provision does not apply to any portion of the information which is of public
record or otherwise generally available, and will not prohibit MIMI from
disclosing portions of that information in compliance with an order or similar
directive of any court or governmental agency having jurisdiction and the power
to compel that disclosure.
(b) Thornburg hereby further agrees that it will not use in the conduct
of any business activity. or disclose to any other person whether or not in
connection with any business activity, any information of any kind acquired from
MIMI in the course of negotiating and consummating the Acquisition. This
provision does not apply to any portion of the information which is of public
record or otherwise generally available and win not prohibit Thornburg from
disclosing portions of that information in compliance with an order or similar
directive of any court or governmental agency having jurisdiction and the power
to compel that disclosure.
4. Consideration for Agreements. In consideration of MIMI's agreements
hereunder, Thornburg has paid to MIMI upon the execution of this Agreement a
cash consideration equal to a percentage of the aggregate net asset value of the
assets acquired by Thornburg Trust and Thornburg LTMF from Mackenzie Trust on
the closing of tile Acquisition, as more specifically described in tile Purchase
Agreement. In further consideration of MIMI's agreement hereunder, Thornburg
will pay in cash to MIMI, by wire transfer of immediately available funds, as
soon as practicable after the six-month anniversary date of the Closing
described in the Purchase Agreement, and in no event more than 30 days after the
six-month anniversary date of that Closing the further payment more specifically
described in the Purchase Agreement.
5. Injunction. The parties understand and agree monetary damages alone may
not be an adequate remedy to Thornburg in the event of MIMI's breach of its
agreements hereunder, and that any breach by Mackenzie of its covenants herein
would cause irreparable harm to Thornburg. In addition to any other remedies
available to Thornburg under applicable law, Thornburg is entitled to obtain one
or more injunctions restraining MIMI from any breach or threatened or
anticipatory breach, of this Agreement.
6. Headings; Counterparts; Governing Law; Assignment
(a) The section and paragraph headings contained in this Agreement are
for reference purpose only and shall not affect in any way the meaning or
interpretation of this Agreement.
(b) This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
-2-
<PAGE> 124
(c) This Agreement shall be governed by and construed in accordance with
the substantive laws of the State of Delaware, provided that nothing herein
shall be construed in a manner inconsistent with the Investment Company Act of
1940, as amended, or rules, orders or regulations of governmental authorities or
self regulatory organizations having authority under those statutes.
(d) This Agreement shall bind and inure to the benefit of the parties
hereto and their successors and assigns, but no assignment or transfer hereof or
of any rights or obligations hereunder shall be made by any party without the
written consent of the other party. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective administrators,
executors, legal representatives, heirs, permitted successors and assigns, any
rights or remedies under or by reason of this Agreement.
(e) In the event of any litigation between the parties hereto respecting
this Agreement or its subject matter, the prevailing party will be entitled to
reimbursement from the losing party for the prevailing party's cost of suit,
including reasonable attorneys' fees.
(f) No delay or failure by a party to exercise any right under this
Agreement, and no partial or single exercise of a right, shall constitute a
waiver of that right or any other right.
(g) If any portion of this Agreement is void or unenforceable, that
voidness or unenforceability, will not affect the validity or enforceability of
any other portion of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Vice President.
THORNBURG MANAGEMENT COMPANY, INC.
By:_____________________________________
MACKENZIE INVESTMENT MANAGEMENT,INC.
By:_____________________________________
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<PAGE> 125
EXHIBIT B
TRANSITION AND RELATED SERVICE AGENTS
This AGREEMENT (the "Agreement") is made as of this ___ day or _________ ,
1997, by and between THORNBURG MANAGEMENT COMPANY, INC., a Delaware corporation
having its principal office at 119 East Marcy Street, Santa Fe, New Mexico 87501
("Thornburg") and MACKENZIE INVESTMENT MANAGEMENT, INC., a Delaware corporation
having its principal office at Via Mizner Financial Plaza, Suite 300, 700 South
Federal Highway, Boca Raton, Florida 33432 ("MIMI").
Recital
Thornburg and MIMI entered into a certain Agreement dated June 5, 1997 (the
"Purchase Agreement") relating to the acquisition (the "Acquisition") of
specified assets of four series of Thornburg Series Trust ("Mackenzie Trust") by
certain series of Thornburg Investment must ("Thornburg Trust") and certain
series of Thornburg Investment Trust Municipal Fund, Inc. ("Thornburg LTMF"),
which provided, in part, that upon closing of the Acquisition. Thornburg and
MIMI would execute and deliver this Agreement.
THEREFORE, in consideration of the premises, and the covenants and
agreements hereafter described, the parties agree as follows.
1. Dealer Relations. MIMI will not impede or discourage persons who were
previously parties to dealer agreements with Mackenzie Trust's principal
underwriter from executing dealer agreements with Thornburg Securities
Corporation, principal underwriter for Thornburg Trust and Thornburg LTMF.
2. Shareholder and Accounting Information. MIMI will furnish to Thornburg
information (including copies of documents) reasonably requested by Thornburg
respecting Mackenzie Trust readily available income and expense accounting and
recordkeeping, share insurance and redemptions, dividends and other shareholder
distributions accounting, compliance and tax reporting matters, dealers and
other persons who sold shares of Mackenzie Trust shareholder servicing,
transactions and identification, custodial and transfer agency information and
other information respecting the management and administration of the Mackenzie
Trust before the closing of the Acquisition. MIMI will furnish to shareholders
of the Acquiring Funds final accountant statements and inquired tax reporting
statements pertaining to their accounts in the Acquired.
3. Consideration for Agreements. In partial consideration of MIMI's
agreements hereunder, Thornburg has paid to MIMI upon the execution of this
Agreement a cash consideration equal to a percentage of the aggregate net value
of the assets acquired by Thornburg Trust and Thornburg LTMF from Mackenzie
Trust on the closing of the Acquisition as more specifically described in the
Purchase Agreement. In further consideration of MIMI's agreements hereunder,
Thornburg will pay in cash to MIMI, by wire transfer of immediately available
funds as soon as practicable after the six-month anniversary date of the Closing
described in the Purchase Agreement, and in no event more than 30 days after the
six-month
<PAGE> 126
anniversary date of that Closing the further payment more specially described in
the Purchase Agreement.
4. Thornburg's Delivery of Information. Thornburg will furnish to MIMI
shareholder address changes, similar information not possessed or otherwise
available to MIMI and necessary to permit MIMI to wind up the business of
Mackenzie Trust and distribute final statements and tax reporting statements to
Mackenzie Trust's former shareholders and such other information as MIMI may
reasonably require to effect the deregistration of Mackenzie Trust with the
Securities and Exchange Commission and termination of Mackenzie Trust.
5. Headings; Counterparts; Governing Law; Assignment.
(a) The section and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(b) This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
(c) This Agreement shall be governed by and construed in accordance with
the substantive laws of the State of Delaware, provided that nothing herein
shall be construed in a major inconsistent with the Investment Company Act of
1940, as amended, or Investment Advisers Act of 1940, as amended, or rules,
orders or regulations of governmental authorities or self regulatory
organizations having authority under those statutes.
(d) This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be made by any party without the written confer
of upon or give any person, firm or corporation, other than the parties hereto
and their representatives, heirs, permitted successors and assigns, any rights
or remedies under or by reason of this Agreement.
(e) In the event of any litigation between the parties hereto respecting
this Agreement or its subject matter, the prevailing party will be entitled to
reimbursement from the losing party for the prevailing party's cost of suit,
including reasonable attorneys' fees.
(f) No delay or failure by a party to exercise any right under this
Agreement, and no partial or single exercise of a right, shall constitute a
waiver of that right or any other right.
(g) If any portion of this Agreement is void or unenforceable, that
voidness or unenforceability will not affect the validity or enforceability of
ally other portion of this Agreement.
-2-
<PAGE> 127
6. Term. This Agreement shall commence on the date hereof and terminate
nine months after its commencement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Vice President.
THORNBURG MANAGEMENT COMPANY, INC.
By:______________________________________
THORNBURG MANAGEMENT COMPANY, INC.
By:______________________________________
-3-
<PAGE> 128
SCHEDULE 5.19
ADVISORY AGREEMENTS
The Ivy funds pay Ivy Management, Inc. and the Mackenzie funds pay Mackenzie
Investment Management Inc. a management fee monthly based on an annual rate of
each funds' average daily net assets, as follows:
IVY GROWTH FUND: annual rate of .85% of average daily net assets
IVY GROWTH WITH INCOME FUND: annual rate of .75% of average daily net assets
IVY EMERGING GROWTH FUND: annual rate of .85% of average daily net assets
IVY INTERNATIONAL FUND: annual rate of 1.00% of average daily net assets
IVY CHINA REGION FUND: annual rate of 1.00% of average daily net assets
IVY LATIN AMERICA STRATEGY FUND: annual rate of 1.00% of average daily net
assets
IVY NEW CENTURY FUND: annual rate of 1.00% of average daily net assets
IVY GLOBAL SCIENCE & TECHNOLOGY FUND: annual rate of 1.00% of average daily net
assets
IVY CANADA FUND: annual rate of .50% of average daily net assets
IVY GLOBAL FUND:
annual rate of 1.00% of first $500 million of average daily net assets
annual rate of 0.75% over $500 million of average daily net assets
IVY INTERNATIONAL SMALL COMPANIES FUND: annual rate of 1.00% of average daily
net assets
IVY ASIA PACIFIC FUND: annual rate of 1.00% of average daily net assets
IVY GLOBAL NATURAL RESOURCES FUND: annual rate of 1.00% of average daily net
assets
IVY PAN-EUROPE: annual rate of 1.00% of average daily net assets
IVY INTERNATIONAL FUND II: annual rate of 1.00% of average daily net assets
<PAGE> 129
IVY BOND FUND:
annual rate of 0.75% of first $100 million of average daily net assets
annual rate of 0.50% over $100 million of average daily net assets
SUBADVISORY AGREEMENTS
Northern Cross Investments Limited serves as subadviser for Ivy International
Fund. Ivy Management, Inc. pays Northern Cross a fee at the rate, on an annual
basis, equal to 0.60% of the average net assets up to $1.5 billion and 0.55% of
the average net assets in excess of $1.5 billion of Ivy International Fund.
Mackenzie Financial Corporation (MFC) serves as investment adviser for the Ivy
Canada Fund and the Ivy Global Natural Resources Fund. Ivy Canada Fund and Ivy
Global Natural Resources Fund pay MFC a monthly fee at the annual rate of 0.35%
and 0.50% of their respective average daily net assets.
September 16, 1997
<PAGE> 130
SCHEDULE 5.20
12b-1 DISTRIBUTION PLANS
CLASS A
Summary of Distribution Plans: Distributor (Ivy Mackenzie Distributors, Inc.,
a wholly-owned subsidiary of Mackenzie Investment Management Inc.) shall be
reimbursed for service fee payments made to brokers for account maintenance and
personal services to shareholders in connection with the sale of shares of each
of the following funds, up to an amount equal, on an annual basis, to 0.25% of
the average daily net asset value of each of the following funds' shares that
are registered in the name of a broker as nominee or held in a shareholder
account that designates a broker as broker of record. The funds accrue the fee
daily and reimburse the Distributor monthly. The brokers are paid quarterly.
Ivy China Region Fund
Ivy Emerging Growth Fund
Ivy Growth Fund (1)
Ivy Growth with Income Fund (1)
Ivy International Fund (1)
Ivy Latin America Strategy Fund
Ivy New Century Fund
Ivy Global Science & Technology Fund
Ivy Canada Fund
Ivy GlobalFund
Ivy International Small Companies Fund
Ivy Asia Pacific Fund
Ivy Global Natural Resources Fund
Ivy Pan-Europe Fund
Ivy International Fund II
Ivy Bond Fund
Ivy Canada Fund: The above summary applies; but in addition, the Distributor is
compensated for its services as distributor of the shares of the Ivy Canada Fund
at the annual rate of 0.15% of the Ivy Canada Fund's average daily net assets.
(1) Fee applies only to Class A shares issued after December 31, 1991.
September 16, 1997
<PAGE> 131
SCHEDULE 5.20
12b-1 DISTRIBUTION PLAN
CLASS B
Summary of Distribution Plan: Ivy Fund or the Mackenzie Series Trust shall pay
the Distributor (Ivy Mackenzie Distributors, Inc., a wholly owned subsidiary of
Mackenzie Investment Management Inc.) a fee at the annual rate of 1.00% of the
average daily net assets of Class B shares of each of the funds itemized below.
The fee is broken down into two components: a 0.75% asset based sales charge and
a 0.25% service fee. The purpose of the asset based service charge is to
reimburse the Distributor for services rendered in connection with any
activities or expenses primarily intended to result in the sale of Class B
shares. The purpose of the 0.25% service fee is to reimburse the distributor for
payments made to brokers, which are unaffiliated with the distributor, for
account maintenance and personal services to shareholders. The 12b-1 Funds
accrue the fee daily and reimburse the Distributor monthly. The 0.25% service
fee is paid to the brokers quarterly.
The Ivy Fund Class B Distribution Plan applies to the following funds:
Ivy China Region Fund
Ivy Emerging Growth Fund
Ivy Growth Fund
Ivy Growth with Income Fund
Ivy International Fund
Ivy Latin America Strategy Fund
Ivy New Century Fund
Ivy Global Science & Technology Fund
Ivy Canada Fund
Ivy Global Fund
Ivy International Small Companies Fund
Ivy Asia Pacific Fund
Ivy Global Natural Resources Fund
Ivy Pan-Europe Fund
Ivy International Fund II
Ivy Bond Fund
September 16, 1997
<PAGE> 132
SCHEDULE 5.20
12b-1 DISTRIBUTION PLAN
CLASS C
Summary of Distribution Plan: Ivy Fund shall pay the Distributor (Ivy Mackenzie
Distributors, Inc., a wholly owned subsidiary of Mackenzie Investment Management
Inc.) a fee at the annual rate of 1.00% of the average daily net assets of Class
C shares of each of the funds itemized below. The fee is broken down into two
components: a 0.75% asset based sales charge and a 0.25% service fee. The
purpose of the asset based service charge is to reimburse the Distributor for
services rendered in connection with any activities or expenses primarily
intended to result in the sale of Class C shares. The purpose of the 0.25%
service fee is to reimburse the distributor for payments made to brokers, which
are unaffiliated with the distributor, for account maintenance and personal
services to shareholders. The 12b-1 Funds accrue the fee daily and reimburse the
Distributor monthly. During the first year of the investment, the Distributor
retains the entire service/distribution fee. Thereafter, the Distributor pays
the entire service/distribution fee to the dealer of the qualified investment.
The Ivy Fund Class C Distribution Plan applies to the following funds:
Ivy China Region Fund
Ivy Emerging Growth Fund
Ivy Growth Fund
Ivy Growth with Income Fund
Ivy International Fund
Ivy Latin America Strategy Fund
Ivy New Century Fund
Ivy Global Science & Technology Fund
Ivy Canada Fund
Ivy Global Fund
Ivy International Small Companies Fund
Ivy Asia Pacific Fund
Ivy Global Natural Resources Fund
Ivy Pan-Europe Fund
Ivy International Fund II
Ivy Bond Fund
September 16, 1997
<PAGE> 133
BANKBOSTON, N. A.
100 Federal Street
Boston, Massachusetts 02110
May 27, 1998
C. William Ferris, Senior Vice President
Mackenzie Investment Management Inc.
700 South Federal Highway
Boca Raton, FL 33432
Re: Sixth Amendment
Dear Mr. Ferris:
We refer to the Revolving Credit and Term Loan Agreement, dated as of
February 11, 1994, as amended, between Mackenzie Investment Management Inc. and
The First National Bank of Boston (now known as Bank Boston, N.A.) (the
"Agreement"), with capitalized terms being used herein with the same meanings
assigned thereto in the Agreement.
The Company has requested that the Bank extend the time period during which
the Company may borrow Advances pursuant to the Loan Documents. In response to
that request and in reliance on the Company's representations and warranties
herein, the Bank agrees as follows:
1. Amendment. Subject to sec. 3 hereof, the Agreement is amended as
follows:
(a) the definition of "Term Conversion Date" in section 1(a) is hereby
amended to refer to June 30, 1999.
(b) the definition of "Termination Date" in section 1(a) is hereby
amended to refer to June 30, 2004 or the earlier date of termination of the
Agreement pursuant to sec. 2.4, sec. 4.6 or sec. 9 thereof; and
(c) the date "September 30, 1998" in the eleventh line of sec. 3.2 is
hereby replaced with the date "September 30, 1999."
<PAGE> 134
-2-
2. Representations. In order to induce the Bank to enter into this
Amendment, the Company represents and warrants as follows:
(a) each of the representations and warranties of the Company in the
Agreement are true and correct on the date of this Amendment;
(b) no Default or Event of Default has occurred and is continuing;
(c) the execution, delivery and performance by the Company of this
Amendment and the Agreement as amended hereby are within the Company's
corporate powers, have been duly authorized by all necessary corporate
action, require no authorization or action by or in respect of, or filing
with, any governmental body, agency or official or any shareholder or
creditor of the Company and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the corporate
charter or by-laws of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or
result in the creation or imposition any lien on any asset of the Company;
and
(d) this Amendment has been duly executed and delivered by the
Company, and this Amendment and the Agreement as amended hereby constitute
valid and binding agreements of the Company enforceable in accordance with
their terms.
3. Conditions. The provisions of sec. 1 of this Amendment shall become
effective when each of the following conditions has been satisfied:
(a) the Bank shall have received copies of this Amendment signed by
the Company;
(b) the Bank shall have received an opinion of counsel from the
Company's counsel which is satisfactory to the Bank in all respects;
(c) the Bank shall have received a manually signed certificate from
the Secretary of the Company in form and substance satisfactory to the Bank
and dated a recent date as to any changes in the incumbency of the officers
of the Company who are authorized to execute and take actions under the
Loan Documents and in the Company's charter and by-laws, and certifying and
<PAGE> 135
-3-
attaching votes of the Company's board of directors authorizing the
transactions contemplated hereby; and
(d) the Bank shall have received a long-form legal existence and good
standing certificate for the Company from the Secretary of State of the
State of Delaware and a foreign qualification certificate for the Company
from the Secretary of State of the State of Florida, each dated no more
than ten days prior to the date hereof.
4. Miscellaneous. Except as expressly provided above, the Agreement is
unchanged and remains in full force and effect, and this Amendment and the
Agreement shall be read and construed as one agreement. This Amendment is
intended to take effect as an instrument under seal, is governed by the laws of
the Commonwealth of Massachusetts, and may be executed in counterparts. In
making proof of this Amendment it shall not be necessary to produce or account
for more than one counterpart signed by each party hereto against which
enforcement hereof is sought.
Please sign below to evidence your agreement hereto, whereupon this
Amendment shall become a binding agreement between us.
Very truly yours,
BANKBOSTON, N. A. (formerly known as
The First National Bank of Boston, N.A.)
By: /s/
----------------------------------
Title: Managing Director
Agreed:
MACKENZIE INVESTMENT MANAGEMENT, INC.
BY: /s/ C. William Ferris
---------------------------------
Title: Sr. Vice President
<PAGE> 1
EXHIBIT 10.2
- --------------------------------------------------------------------------------
MACKENZIE PROGRAM
MASTER AGREEMENT
Dated as of March 16, 1999
among
MACKENZIE INVESTMENT MANAGEMENT INC.,
as Parent,
IVY MANAGEMENT, INC.
and
MACKENZIE INVESTMENT MANAGEMENT INC.,
as Advisor,
IVY MACKENZIE DISTRIBUTORS, INC.,
as Distributor,
IVY MACKENZIE SERVICES CORP.,
as Program Servicer Agent,
PUTNAM LOVELL FINANCE L.P.,
as Purchaser,
PUTNAM, LOVELL, DE GUARDIOLA & THORNTON INC.,
as Program Administrator and
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Collection Agent,
except as otherwise expressly provided
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 RULES OF CONSTRUCTION; DEFINITIONS
1.01 Rules of Construction........................................ 2
1.02. Definitions.................................................. 2
ARTICLE II EXECUTION AND DELIVERY OF PROGRAM DOCUMENTS
2.01. Program Documents; Purchase Date............................. 2
2.02. Execution and Delivery of Purchase Agreement................. 2
2.03. Execution and Delivery of Program Funding and
Collection Agency Agreement.................................. 2
2.04. Execution and Delivery of Program Servicer
Agent Agreement.............................................. 2
ARTICLE III CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES
PURSUANT TO THE PROGRAM DOCUMENTS
3.01. Conditions to Obligations of the Parties Under the
Program Documents............................................ 3
3.02. Conditions Precedent on the Closing Date..................... 3
3.03. Conditions Precedent on The Purchase Date.................... 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Advisor, the Parent,
the Distributor and the Program Servicer Agent............... 8
4.02. Additional Representations and Warranties of the Parent...... 12
4.03. Additional Representations and Warranties of the
Distributor.................................................. 13
4.04. Additional Representations and Warranties of the Advisor..... 14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
4.05. Additional Representations and Warranties of the
Program Servicer Agent....................................... 15
4.06. Representations and Warranties of the Purchaser.............. 15
ARTICLE V COVENANTS
5.01. Covenants of the Advisor, the Parent, the Distributor
and the Program Servicer Agent............................... 16
5.02. Additional Covenants of the Parent........................... 20
5.03. Additional Covenants of the Distributor...................... 23
5.04. Additional Covenants of the Advisor.......................... 25
5.05 Term of Covenants............................................ 27
5.06. Additional Covenants of the Program Servicer Agent........... 27
ARTICLE VI THE PROGRAM ADMINISTRATOR
6.01. Authorization and Action..................................... 28
6.02. Program Administrator Reliance, Etc.......................... 28
6.03. Rights of the Program Administrator.......................... 28
ARTICLE VII PARENT UNDERTAKINGS
7.01. Undertakings; Payment of Damages............................. 29
7.02. Agreement Not Affected....................................... 29
7.03. Waiver of Notice; No Offset; No Subrogation.................. 29
ARTICLE VIII MISCELLANEOUS
8.01. No Waiver; Modifications in Writing.......................... 30
8.02. Payment...................................................... 30
8.03. Notices, Etc................................................. 30
8.04. Costs and Expenses; Indemnification.......................... 32
8.05. Taxes........................................................ 35
8.06. Execution in Counterparts.................................... 37
8.07. Binding Effect; Assignment................................... 37
8.08. Governing Law; Submission to Jurisdiction.................... 37
8.09. Severability of Provisions................................... 38
8.10. Confidentiality.............................................. 38
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
8.11. Intent of Agreement.......................................... 38
8.12. Continuing Obligations....................................... 39
8.13. Merger....................................................... 39
8.14. Further Acts................................................. 39
8.15. Specific Performance; Other Rights and Remedies.............. 39
8.16. No Proceedings............................................... 40
8.17. Additional Companies and Funds............................... 40
</TABLE>
SCHEDULES
SCHEDULE 1 COMPANIES, FUNDS, SHARES AND RELATED MATTERS
SCHEDULE II PROGRAM ALLOCATION PROCEDURES
SCHEDULE III BANKRUPTCY REMOTE COVENANTS
SCHEDULE IV CONTINGENT DEFERRED SALES CHARGE SCHEDULE
SCHEDULE X RULES OF CONSTRUCTION; DEFINITIONS
EXHIBITS
EXHIBIT A FORM OF PURCHASE AGREEMENT
EXHIBIT B FORM OF PROGRAM SERVICER AGENT AGREEMENT
EXHIBIT C FORM OF PROGRAM COLLECTION AGENCY AGREEMENT
EXHIBIT D FORM OF DISTRIBUTION PLAN
EXHIBIT E FORM OF DISTRIBUTOR'S CONTRACT
EXHIBIT F FORM OF IRREVOCABLE PAYMENT INSTRUCTION
EXHIBIT G FORMS OF OPINIONS
EXHIBIT H FORM OF INVESTOR REPORT
EXHIBIT 1 FORM OF ADDITIONAL ELIGIBLE FUND ADDENDUM
iii
<PAGE> 5
MACKENZIE PROGRAM
MASTER AGREEMENT
THIS MACKENZIE PROGRAM MASTER AGREEMENT (this "Agreement"), dated as
of March 16, 1999, among MACKENZIE INVESTMENT MANAGEMENT INC., a Delaware
corporation (the "Parent"), IVY MANAGEMENT, INC., a Massachusetts
corporation and MACKENZIE INVESTMENT MANAGEMENT INC. (collectively, the
"Advisor"), IVY MACKENZIE DISTRIBUTORS, INC., a Florida corporation (the
"Distributor"), IVY MACKENZIE SERVICES CORP., a Florida corporation (the
"Program Servicer Agent"), PUTNAM LOVELL FINANCE L.P. (the "Purchaser"),
PUTNAM, LOVELL, DE GUARDIOLA & THORNTON INC., a Delaware corporation (the
"Program Administrator") and BANKERS TRUST COMPANY, not in its individual
capacity but solely as Collection Agent except as otherwise expressly
provided (the "Collection Agent").
WITNESSETH:
WHEREAS, the Parent owns directly or indirectly one hundred percent
(100%) of the capital stock of the Distributor, the Advisor and the Program
Servicer Agent;
WHEREAS, the Distributor is the originator of certain "Portfolio
Assets" (as hereinafter defined);
WHEREAS, the Parent, the Distributor, the Advisor, the Program
Servicer Agent and the Purchaser wish to establish a program pursuant to which
the Purchaser will acquire certain of the Portfolio Assets in accordance with
the terms and conditions set forth herein and in the other "Program Documents"
(as hereinafter defined);
WHEREAS, the Purchaser has appointed the Program Administrator to
administer the Program;
WHEREAS, the Purchaser and the Program Administrator have appointed
the Collection Agent to serve as Collection Agent; and
WHEREAS, the Purchaser and the Program Administrator wish to appoint
the Ivy Mackenzie Services Corp. as Program Servicer Agent and the Program
Servicer Agent wishes to serve in that capacity, in each case in accordance with
the terms and conditions set forth herein and in the other Program Documents;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereto hereby agree as follows:
<PAGE> 6
ARTICLE 1
RULES OF CONSTRUCTION;
DEFINITIONS
Section 1.01. Rules of Construction. The rules of construction set
forth in Schedule X hereto shall be applied to this Agreement.
Section 1.02. Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed thereto in Schedule X
attached hereto and by this reference made a part hereof.
ARTICLE II
EXECUTION AND DELIVERY OF PROGRAM DOCUMENTS
Section 2.01. Program Documents: Purchase Date. Subject to the terms
and conditions of this Agreement and the other Program Documents, on or before
the Closing Date, each of the Parties severally agrees to execute and deliver
the other Program Documents to which it is to be a Party. The Parties also agree
that the events which are to occur on the Purchase Date shall be deemed to occur
simultaneously.
Section 2.02. Execution and Delivery of Purchase Agreement. On the
date hereof, the Distributor and the Purchaser shall have executed and delivered
the Purchase Agreement.
Section 2.03. Execution and Delivery of Program Collection Agency
Agreement. On the date hereof, the Purchaser, the Program Administrator, the
Distributor and the Collection Agent shall have executed and delivered the
Program Collection Agency Agreement pursuant to which, among other things, the
Collection Agent shall receive Program Collections and Related Collections on
the Portfolio Assets and make distributions in respect thereof.
Section 2.04. Execution and Delivery of Program Servicer Agent
Agreement. On the date hereof, the Program Servicer Agent, Distributor, the
Purchaser and the Program Administrator shall have executed and delivered the
Program Servicer Agent Agreement, pursuant to which Ivy Mackenzie Services Corp.
is appointed Program Servicer Agent.
2
<PAGE> 7
ARTICLE III
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE PARTIES PURSUANT TO THE PROGRAM DOCUMENTS
Section 3.01. Conditions to Obligations of the Parties Under the
Program Documents. The obligation of each Party to take the actions to be taken
by it under the Program Documents on the Purchase Date shall be subject to the
fulfillment or waiver (i) on the Closing Date of the following specified
conditions precedent set forth in Section 3.02 and (ii) on such Purchase Date of
the following specified conditions precedent set forth in Section 3.03 (except
that the obligation of any Party shall not be subject to such Party's own
performance or compliance):
(a) in the case of each of the Parent, the Distributor, the Program
Servicer Agent and the Advisor, the fulfillment to its satisfaction, or
waiver by it, of the conditions precedent set forth in clauses (a), (b),
(d), (e), (j), (k) and (o) of Section 3.02;
(b) in the case of each of the Program Administrator and the
Purchaser, the fulfillment to its satisfaction, or waiver by it, of the
conditions precedent set forth in all clauses of Section 3.02 and in
Section 3.03; and
(c) in the case of the Collection Agent, the fulfillment to its
satisfaction or waiver by it, of the conditions precedent set forth in
clauses (a) through (g), (j) and (k) of Section 3.02 and in Section 3.03.
Section 3.02. Conditions Precedent on the Closing Date. The
conditions precedent for each Party as specified in Section 3.01 hereof for the
Closing Date are as follows:
(a) Program Documents. The Program Documents shall have been duly
authorized, executed and delivered by the other Parties thereto, and shall
be in full force and effect on such date.
(b) Representations and Warranties. All representations and
warranties of each Party contained in this Agreement and the other Program
Documents shall be true and accurate in all material respects on and as of
such date as though made on and as of such date, except to the extent that
such representations and warranties relate solely to an earlier date (in
which case such representations and warranties shall be true and accurate
in all material respects on and as of such earlier date).
(c) Security Documents. Copies of UCC financing statements and UCC
search reports, in form and substance acceptable to the Purchaser and the
Program Administrator, covering the interests in the Portfolio Assets to be
conveyed by the Distributor to the Purchaser pursuant to the Purchase
Agreement, shall have been delivered by the Distributor to the Purchaser
and shall evidence to the satisfaction of the Program Administrator and the
Purchaser the conveyance to the Purchaser of an ownership interest therein
free and clear of Adverse Claims. Such financing statements
3
<PAGE> 8
shall have been duly filed in all places where, and all other actions shall
have been taken which are, in the reasonable opinion of counsel for the
Program Administrator, necessary or advisable to perfect the interests
reflected thereon.
(d) Approvals. All Governmental Authorizations, Private
Authorizations and Governmental Filings, if any, on the part of the Parent,
the Distributor, the Advisor, the Program Servicer Agent, the Collection
Agent, the Companies, the Funds, the Program Administrator and the
Purchaser that are required to be obtained or done in order to permit the
execution, delivery and performance by the Parent, the Distributor, the
Advisor, the Program Servicer Agent, the Collection Agent, the Program
Administrator or the Purchaser, as the case may be, of the Program
Documents to which it is a party shall have been duly obtained or
delivered.
(e) Purchaser Documents. The other Parties shall have received
certified copies of (i) evidence that the execution, delivery and
performance by the Purchaser of this Agreement and the other Program
Documents to which it is a party and any other documents to be executed by
or on behalf of the Purchaser in connection with the transactions
contemplated hereby or thereby have been duly authorized, and (ii) an
incumbency certificate of the Purchaser as to the person or persons
authorized to execute and deliver all Program Documents to which the
Purchaser is a party with specimen signatures of such persons acting on
behalf of the Purchaser.
(f) Corporate Documents. The other Parties shall have received (i) a
copy of the certificate of incorporation or similar organizational document
of each of the Advisor, the Parent, the Program Servicer Agent, and the
Distributor certified by the Secretary of State of the state of
organization of such Sponsor Entity, (ii) the by-laws or similar
organizational document of each of the Advisor, the Parent, the Program
Servicer Agent, and the Distributor and the resolutions of the Board of
Directors or governing body of each such Sponsor Entity duly authorizing
the execution, delivery and performance by such Sponsor Entity of the
Program Documents to which it is a party, each certified by a Responsible
Officer, (iii) an incumbency certificate of each as to the person or
persons authorized to execute and deliver all Program Documents to which
each such Sponsor Entity is a party with specimen signatures of such
persons acting on behalf thereof, and (iv) a certificate of good standing
of each of the Advisor, the Parent, the Program Servicer Agent, and the
Distributor issued by the Secretary of State of the state of organization
of each such Sponsor Entity.
(g) Closing Certificates. On such date, the following statements
shall be true and each of the Purchaser and the Program Administrator shall
have received a certificate of each of the Advisor, the Parent, the Program
Servicer Agent, and the Distributor certifying as to the accuracy of the
following statements as to itself:
(i) the representations and warranties by it contained in
this Agreement and the other Program Documents to which it
is a party are true and accurate in all material respects on
and as of such date as though made on and as of the date,
except to the extent that such
4
<PAGE> 9
representations and warranties relate solely to an earlier
date (in which case such representations and warranties
shall be true and accurate in all material respects on and
as of such earlier date);
(ii) it has in all material respects satisfied all conditions on
its part to be performed or satisfied on or prior to such
date; and
(iii) no event has occurred and is continuing, or will result
from the closing of the transactions on such date that
constitutes an Event of Termination or an event which, with
the passage of time or notice or both would constitute an
Event of Termination.
(h) Distribution Plans and Distributor's Contracts. The Program
Administrator and the Purchaser shall have received a copy of a certificate
of the President or any Vice President of the Parent certifying that a true
and complete copy of each of the following documents is attached thereto
and has been duly authorized, executed and delivered by each of the parties
thereto, and in the case of each Fund, has been approved in the manner
required by the Investment Company Act and the rules and regulations
adopted thereunder:
(i) the Distribution Plan of each Fund relating to the
Purchased Portfolio Assets, which shall be substantially in
the form of Exhibit D hereto; and
(ii) the Distributor's Contracts relating to the Portfolio
Assets, which shall be substantially in the form of Exhibit
E hereto.
(i) Prospectus. The Program Administrator and the Purchaser shall
have received a copy of a certificate of the President or any Vice
President of the Parent certifying that a true and complete copy of the
current Prospectus for each Fund is attached and that no change therein has
been proposed which if in effect on such date would cause the
representation of the Parent set forth in Section 4.02(a) to be incorrect.
(j) Illegality. No change shall have occurred after the date of
execution and delivery of this Agreement in Applicable Law or regulations
thereunder or interpretations thereof by appropriate regulatory authorities
or any court that would make it illegal for any Party to execute, deliver
and perform the Program Documents to which it is a Party and no action or
proceeding shall have been instituted nor shall any action or proceeding be
threatened before any court or governmental agency, nor shall any order,
judgment or decree have been issued by any court or governmental agency
prior to such date, to set aside, restrain, enjoin or prevent the
completion and consummation of this Agreement or any other Program Document
or the transactions contemplated hereby or thereby.
(k) Obligations. Each obligation to be performed in favor of such
Party by any other Party on or before such date pursuant to any Program
Document shall have been performed.
5
<PAGE> 10
(l) Opinions of Counsel. Each of the Purchaser and the Program
Administrator shall have received each of the opinions described in
subclauses (i), (ii), (iii) and (iv) below addressed to it (on which the
Purchaser, each Placement Trust, the investors in each thereof, and the
rating agencies rating securities issued by the Placement Trusts are
entitled to rely) and dated the Closing Date, and each of the Parent, the
Advisor, and the Distributor shall have received the opinion described in
subclause (v) below addressed to it and dated the Closing Date, and each of
the parties hereto shall have received the opinion described in subclause
(vi) below addressed to it and dated the Closing Date (and on which the
Investors are entitled to rely):
(i) Dechert Price & Rhoads, special counsel to the Parent, the
Distributor, the Program Servicer Agent and the Advisor,
substantially in the form of Exhibit G- 1;
(ii) Dechert Price & Rhoads, special counsel to each Company,
substantially in the form of Exhibit G-2.
(iii) McCaffrey & Raimi, P.A., special counsel to the Parent,
the Distributor, the Program Servicer Agent and the
Advisor, substantially in the form of Exhibit G-3;
(iv) Dechert Price & Rhoads, special counsel to the Parent, the
Distributor, the Program Servicer Agent, and the Advisor
on certain issues under the Bankruptcy Code, substantially
in the form of Exhibit GA;
(v) Seward & Kissel LLP, special counsel to the Collection
Agent, substantially in the form of Exhibit G-5; and
(vi) Seward & Kissel LLP, special counsel to the Purchaser and
Program Administrator, substantially in the form of
Exhibit G-6.
(m) Certain Fees and Expenses. The Parent, the Advisor, the Program
Servicer Agent, or the Distributor shall have paid all reasonable fees and
expenses of the Purchaser, the Program Administrator and the Collection
Agent (including the reasonable accrued fees and expenses of counsel to the
Purchaser, the Program Administrator and the Collection Agent) then due and
payable in accordance herewith.
(n) Investor Reports. The Program Servicer Agent shall have delivered
to the Purchaser and the Program Administrator final forms of periodic
reports proposed to be delivered by the Transfer Agent furnishing
information needed to complete any Investor Reports due on or prior to such
date, which shall be substantially in the form of Exhibit H hereto and
otherwise in form and substance reasonably satisfactory to the Purchaser
and the Program Administrator.
6
<PAGE> 11
(o) Program Collections. No Company shall be prevented by any
Authority or by any Applicable Law from paying Program Collections and
Related Collections to the Program Collection Account in accordance with
the applicable Irrevocable Payment Instruction and no Company shall have so
asserted in writing.
(p) Other Documents. The Purchaser and the Program Administrator
shall have received such other instruments, documents, certificates and
opinions as the Purchaser and the Program Administrator may have reasonably
requested in order to establish the taking of all appropriate corporate or
partnership and other proceedings in connection herewith, the consummation
of the transactions contemplated hereby, and compliance with the conditions
herein set forth, in connection with the Portfolio Assets relating to any
Fund and the Purchase Price payable, each such instrument, document,
certificate and opinion to be in form and substance reasonably satisfactory
to such Party.
Section 3.03. Conditions Precedent on the Purchase Date. The
conditions precedent for each Party as specified in Section 3.01 hereof for the
Purchase Date shall be as follows:
(a) Program Documents. Each of the Program Documents shall be in full
force and effect on such date.
(b) Representations and Warranties. Each of the representations and
warranties of each Party contained in the Program Documents shall be true
and accurate on and as of such date as though made on and as of such
Purchase Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such
representations and warranties shall be true and accurate on and as of such
earlier date), and except insofar as the failure of such representations
and warranties to be true or accurate could not reasonably be expected to
give rise to an Adverse Effect.
(c) Investor Reports. The Program Servicer Agent shall have delivered
to the Program Administrator any Investor Reports due on or prior to such
Purchase Date, which shall be substantially in the form of Exhibit H hereto
and otherwise in form and substance reasonably satisfactory to the
Purchaser and the Program Administrator.
(d) Program Collections. No Company shall be prevented by any
Authority or by any Applicable Law from paying Program Collections and
Related Collections to the Program Collection Account in accordance with
the applicable Irrevocable Payment Instruction and no Company shall have so
asserted in writing.
(e) No Event of Termination. No Event of Termination or event which,
with the passage of time, or notice or both, would constitute an Event of
Termination shall have occurred and be continuing as of such date, unless
the Program Administrator shall have waived such Event of Termination or
other event in writing.
(f) Purchase Limit. Immediately after giving effect to all such
Purchases on such date, the Purchase Limit shall be equal to or greater
than zero.
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(g) Purchaser Funding. The Purchaser has sufficient resources to meet
its obligations pursuant to the Program Documents.
(h) No Asserted Defenses. There shall not have occurred, and no
Person (including any trustee in bankruptcy of any Person) shall have
asserted, any dispute, offset, counterclaim, defense or Adverse Claim
whatsoever in respect of all or any portion of the Purchased Portfolio
Assets to be acquired by the Purchaser on such date.
(i) Cessation of Share Issuance. No Portfolio Asset to be purchased
by Purchaser on such date arises (i) in respect of Shares of a Fund which
shall be required by any Authority or any Applicable Law to cease or
suspend the sale of Shares or (ii) in respect of Shares of a Fund which
shall have voluntarily ceased or suspended the sale of Shares; provided,
however, that the voluntary cessation or suspension of the issuance of
Shares by a successful Fund solely as a result of rapid growth or excessive
size does not cause this condition precedent to not be met.
(j) No Liquidation or Merger of Funds. No Portfolio Asset to be
purchased by the Purchaser on such date arises in respect of Shares of a
Fund which shall have proposed or effected a merger or other combination
with another Person (other than a Permitted Merger) or Liquidation Plan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Advisor. the
Parent. the Distributor and the Program Servicer Agent. Each of the Advisor, the
Parent, the Distributor and the Program Servicer Agent represents and warrants
on and as of the Closing Date and the Purchase Date and, as to clause (k)
hereof, on the date such information is provided, as to itself and, in the case
of the Parent, as to each Sponsor Entity, as follows:
(a) it is duly organized and is validly existing and in good standing
under the laws of the jurisdiction of its organization, with full power and
authority to own and operate its property, conduct the business in which it
is now engaged and to execute, deliver and perform its obligations under
this Agreement and the other Program Documents to which it is a party, and
it is in compliance with all Applicable Law and duly qualified to do
business as a foreign corporation or business trust and is in good standing
in each jurisdiction in which the nature of its business or the performance
of its obligations under this Agreement and the other Program Documents to
which it is a party requires such qualification, where the failure to so
comply or to be so qualified could reasonably be expected to give rise to
an Adverse Effect;
(b) the execution, delivery and performance by it of this Agreement,
the other Program Documents to which it is a party and the other
instruments and agreements
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contemplated hereby or thereby have been duly authorized by all requisite
corporate action by it and have been duly executed and delivered by it and
constitute its legal, valid and binding obligations, enforceable against it
in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy laws and any other similar laws
affecting the rights and remedies of creditors generally and by general
principles of equity;
(c) neither the execution and delivery of this Agreement, the other
Program Documents to which it is a party, or any instrument or agreement
referred to herein or therein, or contemplated hereby or thereby, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms, conditions and provisions hereof or thereof by
it (i) will conflict with, or result in a breach or violation of, or
constitute a default under, the certificate of its incorporation, by-laws
or other organizational documents, (ii) will conflict with, or result in a
breach or violation of, or constitute a default under, or permit the
acceleration of any obligation or liability in, or but for any requirement
of the giving of notice or the passage of time (or both) would constitute
such a conflict with, breach or violation of, or default under, or permit
any such acceleration in, any contractual obligation or any agreement or
document to which it is a party or by which it or any of its properties is
bound (or to which any such obligation, agreement or document relates,
including any Distributor's Contract and any Distribution Plan) where such
conflict, breach or violation could reasonably be expected to give rise to
an Adverse Effect, (iii) will violate any Applicable Law, the violation of
which could reasonably be expected to give rise to an Adverse Effect, (iv)
could reasonably be expected to give rise to or permit the creation or
imposition of any Adverse Claim upon Related Collections relating to any
Fund, or (v) could reasonably be expected to give rise to the termination
of any Distributor's Contract or any Distribution Plan;
(d) it has obtained all Governmental Authorizations and Private
Authorizations, and made all Governmental Filings, necessary for the
execution, delivery and performance by it of this Agreement, the other
Program Documents to which it is a party and the agreements and instruments
contemplated hereby or thereby and no consents which have not been obtained
or waivers under any instruments to which it is a party or by which it or
any of its properties is bound are required by it to be obtained in
connection with the execution, delivery or performance of this Agreement
and the other Program Documents, except to the extent the failure to so
obtain or make the same could not reasonably be expected to give rise to an
Adverse Effect;
(e) the principal place of business and chief executive office of the
Distributor, and the place where any and all records concerning the
Purchased Portfolio Assets are kept, is at their address specified in
Section 8.03 (except as otherwise permitted by Section 5.01(o));
(f) each of the applicable conditions precedent set forth in Article
Ill has been satisfied or waived in writing;
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<PAGE> 14
(g) it is not in default in any of its obligations under this
Agreement or any other Program Document to which it is a party which
default could reasonably be expected to give rise to an Adverse Effect;
(h) there are no proceedings or investigations pending, or, to the
best of its knowledge, threatened, against it before any Authority (i)
asserting the invalidity of this Agreement, any other Program Document to
which it is a party or any certificate, document or agreement executed by
it in connection herewith or therewith, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
any other Program Document, or (iii) seeking any determination or ruling
which, if granted, could reasonably be expected to adversely affect the
performance by it of its obligations under, or the validity or
enforceability of, this Agreement, any other Program Document to which it
is a party or any agreement, certificate or document executed by it in
connection herewith or therewith, which in each case, if adversely
determined, could reasonably be expected to give rise to an Adverse Effect;
(i) it is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act;
(j) it is not engaged principally or as one of its important
activities in the business of extending, or arranging for the extension of,
credit for the purpose of purchasing or carrying any margin stock within
the meaning of Regulation U of the Board of Governors of the Federal
Reserve System and no part of the proceeds of the Purchase Price paid to
it, if any, under the Purchase Agreement will be used to purchase or carry
any margin stock within the meaning of said regulation (except investments
in funds managed by an Affiliate of the Parent in accordance with ordinary
business operations) or to extend credit to others for such purpose in a
manner which is inconsistent with or a violation of the provisions of said
regulation, and it will not hold margin stock (including shares in such
funds) such that the aggregate current market value (as defined in said
regulation) of all thereof shall exceed 25% of the value (as determined by
any reasonable method) of its consolidated assets;
(k) all written information provided by it or by the Data Processing
Service Provider at its request to the Purchaser or the Program
Administrator in writing for purposes of or in connection with this
Agreement, the other Program Documents to which it is a party or the
transactions contemplated hereby or thereby is, and all such information
hereafter provided by any such Person to the Purchaser, the Program
Administrator or any other Person in writing will be, true, correct and
complete in all material respects and not misleading in any material
respect;
(l) neither it nor any ERISA Affiliate has engaged in a "prohibited
transaction," as such term is defined in Section 4975 of the Code or in a
transaction subject to the prohibitions of Section 406 of ERISA, which
would subject it or any ERISA Affiliate (after giving effect to any
exemption) to the tax or penalty on prohibited transactions imposed by
Section 4975 of the Code, Section 502 of ERISA or any other liability under
ERISA which tax, penalty or other liability could reasonably be expected
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<PAGE> 15
to have an Adverse Effect; neither the transactions contemplated hereby nor
the exercise of any of the Purchaser's or the Program Administrator's
rights and remedies under any of the Program Documents constitutes a
prohibited transaction under ERISA or the Code or otherwise results or will
result in the Purchaser or the Program Administrator being a fiduciary or
party in interest under ERISA with respect to an ERISA plan or its assets
or the Purchased Portfolio Assets or being deemed in violation of Section
404 or Section 406 of ERISA;
(m) it has filed or caused to be filed all federal, state and local
tax returns which are required to be filed (except where such nonfiling
could not reasonably be expected to have an Adverse Effect), and paid or
caused to be paid all taxes as shown on said returns or any other taxes or
assessments payable by it to the extent that such taxes have become due
unless the same are being contested in good faith by appropriate
proceedings, and in respect of which appropriate reserves have been
established and the nonpayment of which could not reasonably be expected to
have an Adverse Effect;
(n) it is not contemplating the filing of a petition by it under any
state or federal bankruptcy or insolvency laws, and it has no Actual
Knowledge of any Person contemplating the filing of any such petition
against it;
(o) all financial statements of it and its consolidated subsidiaries
delivered to the other Parties fairly present in all material respects its
assets, liabilities and financial condition and income as of the dates
thereof and have been prepared in accordance with GAAP consistently
applied; as of the date hereof, there exists no equity or long-term
investments in, or outstanding advances to, or guarantees of, any Person
except such equity, investments, advances, or guaranties reflected in the
financial statements or in the footnotes thereto;
(p) all action necessary or advisable to protect, preserve and
perfect the Purchaser's first priority ownership interest in the Purchased
Portfolio Assets free and clear of all Adverse Claims has been duly and
effectively taken and no security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering
all or any part of such Purchased Portfolio Assets is required to be on
file or on record in any jurisdiction, except such as may have been filed,
recorded or made as contemplated by this Agreement and the other Program
Documents;
(q) the factual assumptions set forth in the opinion of Dechert Price
& Rhoads dated as of the Closing Date on certain bankruptcy matters
including "true sale" issues are true and correct in all respects material
to the opinions given as of such date; and
(r) it has taken all reasonable steps to eliminate the Year 2000
Problem in its computer applications to the extent the same could
reasonably be expected to have an Adverse Effect; and it is not expected
that the Year 2000 Problem will adversely affect its ability to perform its
obligations under this Agreement or the other Program Documents or the
collectibility of the Portfolio Assets generally or any material portion of
the Portfolio Assets.
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Section 4.02. Additional Representations and Warranties of the
Parent. The Parent represents and warrants on and as of the Closing Date and the
Purchase Date, as follows:
(a) the Parent has delivered to the Purchaser and the Program
Administrator a true, correct and complete copy of each Distribution Plan,
Distributor's Contract, Advisory Agreement and each Prospectus in effect
and the date of this Agreement each of which is in full force and effect
and has not been amended in any manner from the form delivered except: (i)
in respects which could not reasonably be expected to give rise to an
Adverse Effect or (ii) with the prior written consent of the Program
Administrator; and the Fundamental Investment Objectives and Policies
relating to each Fund have not been changed in any respect from those set
forth in the Prospectus so delivered, except as approved by (1) the board
of directors or trustees of such Fund and (2) the shareholders of such
Fund;
(b) each of the Funds is in compliance with the Fundamental
Investment Objectives and Policies relating to such Fund except insofar as
noncompliance could not reasonably be expected to give rise to an Adverse
Effect and each of the Funds has taken all reasonable steps to eliminate
the Year 2000 Problem in its computer applications to the extent the same
could reasonably be expected to have an Adverse Effect.;
(c) each of the Distributor, the Program Servicer Agent, the Advisor,
each Company, the Advisory Agreements, the Distribution Plans, the
Distributor's Contracts, the Prospectus of each Fund and the Contingent
Deferred Sales Charge arrangements, in each case relating to each Fund, is
in compliance in all material respects with Applicable Law, including Rule
12b-l of the Investment Company Act and the Conduct Rules;
(d) the Asset Based Sales Charge and Contingent Deferred Sales Charge
arrangements relating to the Shares of each Fund and the payments provided
for in, and actually being made pursuant to, the Distribution Plan and the
Prospectus for each such Fund are fairly and accurately described in the
Distribution Plan and Prospectus relating to such Fund;
(e) the Parent owns directly or indirectly one hundred percent (100%)
of the capital stock of the Advisor, the Program Servicer Agent, and the
Distributor;
(f) the Distributor is a registered broker-dealer under the Exchange
Act, and is a member of the NASD;
(g) each Company is registered as an investment company under the
Investment Company Act;
(h) neither the Advisor, the Distributor, the Program Servicer Agent,
any Company nor any Transfer Agent which is a Sponsor Entity is prevented
by any
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<PAGE> 17
Applicable Law from paying the Program Collections directly to the Program
Collection Account in accordance with the applicable Irrevocable Payment
Instruction; and
(i) the Purchased Portfolio Assets relating to each Fund constitute
Eligible Portfolio Assets.
Section 4.03. Additional Representations and Warranties of the
Distributor. The Distributor represents and warrants, on and as of the Closing
Date and the Purchase Date, as follows:
(a) The Distributor has the requisite corporate power and authority
and legal right to sell Portfolio Assets relating to each Fund, and the
Program Collections and the Ancillary Rights with respect thereto, to the
Purchaser in accordance with the terms of this Agreement and the Purchase
Agreement and the Distributor has duly authorized each such sale to the
Purchaser by all necessary action;
(b) the transfer of Purchased Portfolio Assets to the Purchaser under
the Purchase Agreement on such date constitutes a valid and complete True
Sale to the Purchaser of all right, title and interest in and to such
Purchased Portfolio Assets free and clear of any Adverse Claim; such
transfer has not been made with an intent to hinder, delay or defraud any
present or future creditor; the Purchase Price for such Portfolio Assets is
fair consideration and of reasonably equivalent value to the Purchased
Portfolio Assets so transferred; and immediately after the purchase
pursuant to the Purchase Agreement the Distributor will remain solvent and
will have adequate capital for the conduct of its business;
(c) immediately after the purchase of Purchased Portfolio Assets by
the Purchaser under the Purchase Agreement on such date, (i) no Person
(other than the Purchaser and other Persons claiming through the Purchaser)
claiming through the Distributor has any right, title or interest in such
Portfolio Assets or the Ancillary Rights or Program Collections with
respect thereto, (ii) the Purchaser owns such Portfolio Assets and the
Ancillary Rights and Program Collections with respect thereto free and
clear of all Adverse Claims or other such restrictions on transfer created
by or arising out of the acts or omissions of the Distributor; and (iii)
such Purchased Portfolio Assets and the Ancillary Rights and the right to
Program Collections with respect thereto have not been sold, transferred or
assigned by the Distributor to any other Person;
(d) neither the Distributor nor any Company nor any Transfer Agent
which is a Sponsor Entity is prevented by any Applicable Law from paying
the Program Collections directly to the Program Collection Account in
accordance with the applicable Irrevocable Payment Instruction;
(e) the Distributor is a registered broker-dealer under the Exchange
Act, and is a member of the NASD;
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(f) the Distributor has clearly and unambiguously marked, or caused
to be marked, its books, records , computer files and master data
processing records relating to the Portfolio Assets to indicate the
interests of the Purchaser in the Portfolio Assets;
(g) giving effect to the transactions contemplated by the Program
Documents, the sum of the Distributor's assets exceeds and will,
immediately following the transactions contemplated hereby, exceed the
Distributor's total liabilities (including subordinated, unliquidated,
disputed and contingent liabilities). The Distributor's assets do not and,
immediately following the transactions contemplated hereby will not,
constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. The Distributor does not intend
to, and does not believe that it will, incur debts and liabilities
(including contingent liabilities and other commitments) beyond its ability
to pay such debts as they mature (taking into account the timing and
amounts to be payable on or in respect of obligations of the Distributor);
(h) the Distributor has not used any trade names or assumed names
other than Ivy Mackenzie Distributors, Inc., Mackenzie Ivy Funds
Distribution, Inc., and Mackenzie Funds Distribution, Inc.;
(i) this Agreement and the Purchase Agreement and the actions of the
Distributor required to be taken pursuant to the terms hereof and thereof
are and at all times shall be effective to transfer to the Purchaser all of
the Distributor's right, title and interest in, to and under the Purchased
Portfolio Assets free and clear of any Adverse Claim; and
(j) the Purchased Portfolio Assets relating to each Fund constitute
Eligible Portfolio Assets.
Section 4.04. Additional Representations and Warranties of the
Advisor. The Advisor represents and warrants, on and as of the Closing Date and
the Purchase Date, as follows:
(a) the Advisor and each of the Companies is in compliance with the
Fundamental Investment Objectives and Policies relating to each Fund as set
forth in the prospectuses which have been delivered to the Purchaser and
the Program Administrator, except insofar as noncompliance could not
reasonably be expected to give rise to an Adverse Effect; and
(b) the Advisor is a registered investment adviser under the
Investment Advisers Act.
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Section 4.05. Additional Representations and Warranties of the
Program Servicer Agent. The Program Servicer Agent represents and warrants, on
and as of the Closing Date and the Purchase Date as follows:
(a) the Program Servicer Agent has clearly and unambiguously marked
its books, records and electronic, computer files and master data
processing records relating to the Portfolio Assets to indicate the
interests of the Purchaser in the Portfolio Assets; and
(b) the Program Servicer Agent's tracking capabilities and the
tracking capabilities of any Transfer Agent which is a Sponsor Entity are
sufficient at all times to: (i) track the Portfolio Assets as required by
the Program Allocation Procedures, (ii) provide the information specified
to be in the Investor Reports and (iii) identify and arrange for the
remittance of Program Collections and Related Collections to the Collection
Agent.
Section 4.06. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants on and as of the Closing Date and the Purchase
Date as follows:
(a) it is duly organized and is validly existing and in good standing
under the laws of the jurisdiction of its organization, with full power and
authority to execute, deliver and perform its obligations under this
Agreement and the other Program Documents to which it is a party, and it is
in compliance with all Applicable Law and duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which
the performance of its obligations under this Agreement and the other
Program Documents to which it is a party requires such qualification, where
the failure to so comply or to be so qualified could reasonably be expected
to have a material adverse effect on its ability to perform its obligations
under the Program Documents;
(b) the execution, delivery and performance by it of this Agreement,
the other Program Documents to which it is a party and the other
instruments and agreements contemplated hereby or thereby have been duly
authorized by all requisite corporate action by it and have been duly
executed and delivered by it and constitute its legal, valid and binding
obligations, enforceable against it in accordance with their respective
terms, except as such enforceability may be limited by applicable
bankruptcy laws and any other similar laws affecting the rights and
remedies of creditors generally and by general principles of equity;
(c) neither the execution and delivery of this Agreement, the other
Program Documents to which it is a party, or any instrument or agreement
referred to herein or therein, or contemplated hereby or thereby, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms, conditions and provisions hereof or thereof by
it (i) will conflict with, or result in a breach or violation of, or
constitute a default under, its certificate of incorporation or any
material agreement or document to which it is a party or by which it or any
material portion of its assets is bound, as the case may be, or (ii) will
violate any Applicable Law, in each case
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<PAGE> 20
except to the extent the same results from a breach of representation,
warranty or covenant of the Distributor, the Program Servicer Agent, the
Advisor, or the Parent and except to the extent the same could not
reasonably be expected to have a material adverse effect on its ability to
perform its obligations under the Program Documents; and
(d) it has sufficient resources, including its rights under certain
funding arrangements and its ability to access the capital markets, to meet
its obligations under the Program Documents.
ARTICLE V
COVENANTS
Section 5.01. Covenants of the Advisor, the Parent. the Distributor
and the Program Servicer Agent. Each of the Advisor, the Parent, the Distributor
and the Program Servicer Agent covenants and agrees that it shall and, in the
case of the Parent, that it shall cause each Sponsor Entity to:
(a) (i) preserve and maintain its legal existence and all of its
material rights, privileges and franchises, and duly observe and conform to
all requirements of Applicable Law relative to it, the conduct of its
business or to its properties or assets, (ii) preserve and keep in full
force and effect its corporate existence, rights, privileges and
franchises, and maintain records of its resolutions or similar actions
regarding the transactions contemplated by the Program Documents, and (iii)
obtain, maintain and keep in full force and effect all Governmental
Authorizations and Private Authorizations which are necessary or
appropriate to properly carry out the transactions contemplated to be
performed by it under this Agreement and the other Program Documents,
except in such case where the failure to so observe, conform to, preserve,
obtain, maintain or keep in full force and effect could not reasonably be
expected to give rise to an Adverse Effect;
(b) duly fulfill all obligations on its part to be performed under or
in connection with the other Program Documents and the agreements and
instruments entered into in connection herewith or therewith;
(c) keep proper books of record and account in accordance with its
normal business practice in which full and appropriate entries shall be
made of all dealings or transactions in relation to its business and
activities and shall (in the case of the Distributor and the Program
Servicer Agent) mark its data processing or other records, if any, so as to
clearly indicate that the Purchased Portfolio Assets have been sold by the
Distributor to the Purchaser;
(d) (i) promptly give written notice to the Program Administrator of
the occurrence of any Event of Termination (or event which, with the
passage of time or notice, or both, would constitute an Event of
Termination), the failure of any conditions precedent set forth in Section
3.02 or Section 3.03 to be fully satisfied on or immediately
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<PAGE> 21
prior to the Closing Date or the Purchase Date, as the case may be, or any
breach of any term or condition of any Program Document, which in each case
relates to or is caused by it or any of its Affiliates or the performance
of any such Persons under any Program Document, (ii) give written notice to
the Program Administrator, promptly after it becomes aware thereof, of any
other Event of Termination (or event which with the passage of time, notice
or both would constitute such an Event of Termination), or the failure of
any other conditions precedent set forth in Section 3.02 or Section 3.03 or
any other breach of any terms or conditions of any Program Documents, and
(iii) promptly give written notice to the Program Administrator of any
litigation or proceedings with respect to it or any of its Affiliates or
affecting it, any of its Affiliates or any of their respective assets or
properties, which if adversely determined, could reasonably be expected to
give rise to an Adverse Effect;
(e) cause to be paid and discharged all taxes, assessments and other
charges or levies of any Authority imposed upon it, or upon any of its
income or assets, unless and to the extent that the same shall be contested
in good faith by appropriate proceedings which could not reasonably be
expected to give rise to an Adverse Effect;
(f) to the extent obtained or received by it, furnish or cause to be
furnished to the Program Administrator a copy of all Private Authorizations
and all Governmental Authorizations obtained or required to be obtained by
it in connection with the transactions contemplated by this Agreement, the
Purchase Agreements and any other Program Documents to which it is a party
to the extent that such documents relate to the transactions contemplated
hereby;
(g) annually, or more frequently as the Program Administrator may
reasonably request upon the occurrence and during the continuance of an
Event of Termination (or an event which upon the passage of time or notice,
or both, would constitute an Event of Termination), (i) cause an
independent nationally recognized accounting firm selected by it and
reasonably satisfactory to the Program Administrator and the Parent to
enter its premises (and each other Person to whom it delegates any of its
duties under the Program Documents) and examine and audit the books,
records and accounts relating to the Portfolio Assets, the Program
Collections with respect thereto and its or such other Person's performance
under the Program Documents, (ii) permit such accounting firm to discuss
its or such other Person's affairs, finances, accounts and performance
under the Program Documents with the officers, partners, employees and
accountants of it or such other Person, (iii) cause such accounting firm to
provide the Purchaser and the Program Administrator with a report in
respect of the foregoing, which shall be in form and scope reasonably
satisfactory to the Program Administrator and the Purchaser, and (iv)
authorize such accounting firm to discuss such affairs, finances, records
and accounts with representatives of the Program Administrator or the
Purchaser or any Permitted Designee;
(h) permit and cause each Person to which it delegates any of its
duties under the Program Documents to permit the Purchaser, the Program
Administrator or any Permitted Designee to, upon reasonable advance notice
and during normal business
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<PAGE> 22
hours, visit and inspect its and such Person's books, records and accounts
relating to the Purchased Portfolio Assets, the Program Collections with
respect thereto and its performance under the Program Documents and to
discuss the foregoing with the officers, partners, employees and
accountants of it and such Person, all as often as the Purchaser, the
Program Administrator or any such Permitted Designee may reasonably
request, all at the cost and expense of the requesting party;
(i) promptly, at its expense, execute and deliver to the Program
Administrator and the Purchaser such further instruments and documents, and
take such further action as the Program Administrator or the Purchaser may
from time to time reasonably request in order to further carry out the
intent and purpose of this Agreement and the other Program Documents and to
establish and protect the rights, interests and remedies created, or
intended to be created, hereby and thereby, and the protection and
perfection of the Purchaser's first priority ownership interest in the
Purchased Portfolio Assets free and clear of all Adverse Claims, including,
without limitation, the execution, delivery, recordation and filing of
financing statements and continuation statements under the UCC of any
applicable jurisdiction;
(j) promptly deliver to the Program Administrator copies of all
notices, requests, agreements, amendments, supplements, waivers and other
documents received or delivered by it under or with respect to any of the
Program Documents, provided, that it shall not be necessary to deliver to
the Program Administrator copies of waivers of Contingent Deferred Sales
Charges which are made in conformance with the mandatory waiver provisions
set forth in the Prospectus of the applicable Fund as in effect on the date
hereof;
(k) in the event that, notwithstanding the Irrevocable Payment
Instructions, it shall receive any Program Collections or Related
Collections from any Company or Transfer Agent or other Person (other than
the Collection Agent in accordance with the Program Collection Agency
Agreement), promptly upon its receipt of any such Program Collections or
Related Collections, remit the same to the Collection Agent for deposit
into the Program Collection Account and, until such funds are so deposited
into the Program Collection Account, use its best efforts to ensure that
such amounts are not commingled with any other funds;
(l) promptly notify the Program Administrator and the Purchaser of
any material adverse change with respect to the business, properties (in
respect of properties, other than in the ordinary course of its and each
Fund's business, as conducted on the date hereof), financial condition or
results of operations of it, or, to its knowledge, any Company or Fund
since March 31, 1998;
(m) not permit to exist any Adverse Claims on, or otherwise attempt
to transfer any interest in, any Portfolio Assets, any Ancillary Rights
with respect thereto, the Program Collections or any interest in any of the
foregoing except those transferred pursuant to the Purchase Agreement;
provided, however, that in the event that the Purchaser does not purchase
certain Portfolio Assets relating to Shares of any Fund, the
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<PAGE> 23
Distributor may transfer all or a portion of its interest in such Portfolio
Assets and the Ancillary Rights with respect thereto to another Person
provided each of the following conditions are met: (1) that such Person and
the Program Administrator, the Collection Agent and the Purchaser shall
have entered into a mutually satisfactory agreement and amendment to the
Program Collection Agency Agreement as contemplated by Section 7.06
thereof, specifying their respective rights with respect to the Portfolio
Assets, and (2) the Program Administrator, the Collection Agent and the
Purchaser shall have received such certificates and opinions as they may
reasonably request in connection therewith all in form, scope and substance
reasonably satisfactory to them;
(n) not (in the case of the Distributor) move its chief executive
office or the place where it keeps its records concerning the Purchased
Portfolio Assets from the offices specified in Section 4.01(e), unless (a)
it shall have given to the Program Administrator not less than twenty (20)
days prior written notice of its intention to do so, clearly describing the
new location and (b) it shall have taken such action as is satisfactory to
the Program Administrator and the Purchaser to maintain the title or
ownership of the Purchaser in the Purchased Portfolio Assets at all times
fully perfected and in full force and effect;
(o) not amend, waive, terminate or otherwise modify the terms of any
Irrevocable Payment Instruction or take any action inconsistent with any
Irrevocable Payment Instruction;
(p) without the prior written consent of the Program Administrator
which will not be unreasonably withheld, not act affirmatively in any
manner not specifically authorized by this Agreement to change its
operations in any material manner if, at the time of such action, based
upon all of the facts and circumstances, such change could reasonably be
expected to give rise to an Adverse Effect;
(q) not reflect the Purchased Portfolio Assets as being owned by the
Distributor or any Affiliate of the Distributor (except to the extent such
treatment is required by a change in GAAP after the date hereof and all
appropriate financial statements are footnoted to reflect the sale thereof
to the Purchaser);
(r) not take any action to cancel, terminate, amend, supplement,
modify or waive any of the provisions of the Distributor's Contract, the
Distribution Plan, the Conversion Features or the Contingent Deferred Sales
Charge arrangements applicable to the holders of any Shares of any Fund
affecting its rights thereunder (including by way of allowing Free
Redemptions in respect of Shares of any Fund under circumstances not
required by the Prospectus of such Fund in effect on the date of this
Agreement or by allowing Free Redemptions which are not Permitted Free
Exchanges), or request, consent or agree to any such cancellation,
termination, amendment, supplement, modification or waiver, except (i) with
the prior written consent of the Program Administrator, (ii) that it may
from time to time waive a Contingent Deferred Sales Charge that becomes
payable provided it pays in accordance with the Program Servicing
Procedures an amount to the Purchaser equal to the Contingent Deferred
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<PAGE> 24
Sales Charge to which the Purchaser would have been entitled, and (iii) to
the extent such action could not reasonably be expected to give rise to an
Adverse Effect and written notice of such action is given to the Program
Administrator at least five (5) Business Days prior to the taking of such
action;
(s) cause or ensure that all information provided by or on behalf of
a Sponsor Entity to the Purchaser or the Program Administrator for purposes
of or in connection with this Agreement or any other Program Document or
the transactions contemplated hereby or thereby by or on behalf of it at
the request of any of the foregoing is, and all such information hereafter
provided by or on behalf of it to the Purchaser or the Program
Administrator will be, true, correct, complete in all material respects and
not misleading in any material respect on the date such information is
stated or certified;
(t) cause and ensure that all actions, which the opinion of Dechert
Price & Rhoads dated as of the Closing Date on certain bankruptcy matters
including "true sale" assumes will be taken or omitted by it, will be taken
or omitted as so assumed; and
(u) take all reasonable steps to eliminate the Year 2000 Problem in
its computer applications, to the extent the same could reasonably be
expected to have an Adverse Effect.
Section 5.02. Additional Covenants of the Parent. The Parent
covenants and agrees that it shall:
(a) except to the extent as could not reasonably be expected to give
rise to an Adverse Effect, cause the Advisor to manage each applicable Fund
in accordance with the Fundamental Investment Objectives and Policies in
respect of such Fund as in effect from time to time;
(b) consistent with its fiduciary obligations, if any, to the Funds,
use its best efforts, which are commercially reasonable in relation to the
consequence to the Purchaser if they are not successful, to maintain the
Fundamental Investment Objectives and Policies in respect of any Fund as
reflected in the Prospectus of such Fund as in effect on the date hereof,
except for changes approved by: (i) the board of directors or trustees of
such Fund and (ii) shareholders of such Fund; and, in the event that as a
consequence of its fiduciary obligations to any Fund it cannot resist a
proposed change in the Fundamental Investment Objectives and Policies in
respect of such Fund, or in the event that despite its best efforts such
change will be made, it shall, prior to taking any action inconsistent with
the maintenance of such Fundamental Investment Objectives and Policies, or
failing to take the action it could otherwise take, or to the effectiveness
of such change, as the case may be: (i) notify the Purchaser and the
Program Administrator in writing of the nature of such change, and (ii) if
applicable, provide certification by a Responsible Officer that such change
is necessary in order to comply with such fiduciary obligations;
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<PAGE> 25
(c) consistent with its fiduciary obligations, if any, to the Funds,
use its best efforts, which are commercially reasonable in relation to the
consequences to the Purchaser if they are not successful, to obtain the
approval of the board of trustees of each Company in respect of each Fund
to: (a) annually re-approve the Distribution Plan and the Distributor's
Contract relating to each Fund without modifications which could reasonably
be expected to give rise to an Adverse Effect, (b) keep in effect the
Conversion Features and Contingent Deferred Sales Charge arrangements
relating to the Shares of each Fund without modifications which could
reasonably be expected to give rise to an Adverse Effect and (c) in the
event any Distribution Plan or Distributor's Contract shall be terminated
with respect to any Fund, to approve a new distribution plan and
distributor's contract, in respect of such Fund so as to permit the
continued payments in respect of the Purchased Portfolio Assets relating to
such Fund as though no such termination had occurred. In the event that as
a consequence of its fiduciary obligations to the Funds, it cannot endeavor
to obtain the approval of the board of directors or trustees of a Company
in respect of a Fund to take the actions described in clauses (a) through
(c) above, or in the event that despite its efforts such action will not be
taken, it shall, prior to taking any action inconsistent with the actions
described in clauses (a) through (c) above, or failing to take any action
it could otherwise take, or to any termination referred to in clause (c)
above: (i) notify the Purchaser and the Program Administrator in writing of
the nature of such failure or inability or termination and (ii) if
applicable, provide certification by a Responsible Officer that such
failure or inability is required in order to comply with such fiduciary
obligations;
(d) provide prompt written notice to the Purchaser and the Program
Administrator of any action by its board of directors, the board of
directors of the Advisor or the board of directors or trustees of any
Company in respect of any Fund to make any modification, amendment or
supplement to, or any waiver of any provisions of, or any termination, of
any Distribution Plan, any Distributor's Contract, any Advisory Agreement,
any Conversion Feature, any Contingent Deferred Sales Charge arrangement,
any Fundamental In vestment Objectives and Policies of any Company in
respect of any Fund, or any modification, amendment, supplement or waiver
in the amounts payable or actually being paid thereunder, each as in effect
on the date of that agreement, to the extent that any such modification,
amendment, supplement or waiver could reasonably be expected to give rise
to an Adverse Effect;
(e) cause each of the Advisor, the Program Servicer Agent and the
Distributor to comply in all respects with its covenants under the Program
Documents at all times;
(f) furnish to the Program Administrator:
(A) annually within 120 days after the end of each fiscal year,
audited consolidated financial statements of the Parent and its
consolidated subsidiaries prepared in accordance with GAAP for
such fiscal year;
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(B) quarterly within 45 days after the end of the first three fiscal
quarters of any fiscal year, unaudited consolidated financial
statements of the Parent and its consolidated subsidiaries for
such fiscal quarter, which statements shall include all quarterly
financial information made publicly available to the Parent's
shareholders; and
(C) such other information as the Program Administrator or the
Purchaser may reasonably request and which is reasonably
available;
(g) consistent with its fiduciary obligations, if any, to the Funds,
not initiate or propose the adoption by any Fund of a plan of liquidation,
a plan to dispose of a substantial portion of its assets out of the
ordinary course of business (except in connection with a Permitted Merger)
or any other plan of action with similar effect (a "Liquidation Plan") or
in the event its fiduciary obligations require such initiation or proposal,
use its best efforts, consistent with its fiduciary duties, to assure that
any such Liquidation Plan is carried out in a manner which does not have an
Adverse Effect, and use its best efforts to cause the board of directors or
trustees and shareholders of each Fund to avoid adopting any Liquidation
Plan or in the event its fiduciary obligations require such initiation or
proposal, use its best efforts, consistent with its fiduciary duties, to
assure that any such Liquidation Plan is carried out in a manner which does
not have an Adverse Effect, and in any event the Parent shall promptly
notify the Program Administrator of any proposed Liquidation Plan by any
Fund;
(h) not permit any change in Control of the Parent, the Distributor,
the Program Servicer Agent or the Advisor unless either:
(1) in connection with such change in Control:
(i) either (A) the Distributor, Advisor or Program Servicer Agent
shall remain distributor, advisor or servicer, as the case may be,
for the Funds and the Parent shall remain the parent of each of the
foregoing or (B) if another Person shall be retained to replace any
of the foregoing to act as distributor, investment advisor or
servicer, as the case may be, for the Funds, or as parent, such
Person shall (x) meet the requirements of clause (iii) of this
Section 5.03(h)(l) below with reference to the expertise, experience
and capacity applicable to the function it undertakes to perform and
(y) have agreed in writing, in respect of periods from and after its
retention, to be bound by the undertakings of the Distributor, the
Advisor, the Program Servicer Agent or the Parent, as the case may
be, under the Program Documents and shall have confirmed as of a
current date the representations and warranties of the Distributor,
the Advisor, the Program Servicer Agent or the Parent, as the case
may be, except such representations and warranties as expressly
relate solely to an earlier date
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<PAGE> 27
(in which case such representations and warranties shall have been
true and correct as of such earlier date);
(ii) in the case where another Person is retained to replace
the Distributor, the Advisor or the Program Servicer Agent to act as
distributor, investment advisor or servicer, as the case may be, for
the Funds, ownership of at least 51% of the voting securities of each
of the Persons serving as the distributor, or investment advisor to
the Funds is retained by, or transferred to, a single Person (the
"Immediate Parent");
(iii) in the case where another Person is retained to replace
the Distributor, Advisor, the Program Servicer Agent or the Parent to
act as distributor, investment advisor or servicer for the Funds or
as parent, as the case may be, in the reasonable opinion of the
Parent, the Immediate Parent, together with its affiliated
subsidiaries (including the Immediate Parent and the Persons then
serving as distributor, investment advisor and servicer to the Funds)
in the aggregate, have financial resources and mutual fund
management, distribution and investment advisory expertise,
experience and capacity immediately after the change in Control
sufficient to satisfy the obligations of their counterparts under the
Program Documents; and
(iv) in the case where another Person is retained to replace
the Distributor, the Advisor or the Program Servicer Agent to act as
distributor, investment advisor or servicer, as the case may be, for
the Funds, a majority of the board of directors or trustees of the
Funds, including a majority who are not "Interested Persons" (as
defined by Section 2(a)(19) of the Investment Company Act), shall
have either (i) reapproved the Distributor's Contracts, any advisory
contracts and any servicing contracts, or (ii) approved substitute
agreements substantially identical thereto; or
(2) the Program Administrator shall have consented to such change in
Control, such consent not to be unreasonably withheld; and
(i) ensure that each Transfer Agent's tracking capabilities and/or
the Distributor's tracking capabilities for each Fund is sufficient to: (i)
track the Portfolio Assets and provide the information specified to be in
the Investor Reports or used in the Program Allocation Procedures and (ii)
identify and remit Program Collections and Related Collections to the
Collection Agent, and the Parent shall use its best efforts to replace any
Transfer Agent which does not maintain such capabilities or in respect of
which an event similar to those described in clause (e) of the definition
of Event of Termination occurs within 60 days after becoming aware of such
event.
Section 5.03. Additional Covenants of the Distributor. The
Distributor covenants and agrees that it shall:
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<PAGE> 28
(a) not reflect the Purchased Portfolio Assets as being owned by the
Distributor or any Affiliate of the Distributor (except to the extent such
treatment is required by a change in GAAP after the date hereof and all
appropriate financial statements are footnoted to reflect the sale thereof
to the Purchaser);
(b) promptly upon preparation, deliver to the Program Administrator,
copies of the semi-annual unaudited reports and annual audited reports of
each Company;
(c) consistent with its fiduciary obligations, if any, to the Funds,
use its best efforts, which are commercially reasonable in relation to the
consequences to the Purchaser if they are not successful, to obtain the
approval of the board of directors or trustees of each Company in respect
of each Fund to: (a) annually re-approve the Distribution Plan and the
Distributor's Contract relating to each Fund, if necessary in order to
continue payments in respect of the Purchased Portfolio Assets relating to
such Fund without modifications which could reasonably be expected to give
rise to an Adverse Effect, (b) keep in effect the Conversion Features and
Contingent Deferred Sales Charge arrangements relating to the Shares of
each Fund without modifications which could reasonably be expected to give
rise to an Adverse Effect and (c) in the event any Distribution Plan or
Distributor's Contract shall be terminated with respect to any Fund, to
approve a new distribution plan and distributor's contract, in respect of
such Fund so as to permit the continued payments in respect of the
Purchased Portfolio Assets relating to such Fund as though no such
termination had occurred. In the event that as a consequence of fiduciary
obligations to the Funds it cannot endeavor to obtain the approval of the
board of directors or trustees of a Fund to take the actions described in
clauses (a) through (c) above, or in the event that despite its efforts
such action will not be taken, it shall, prior to taking any action
inconsistent with the actions described in clauses (a) through (c) above,
or failing to take any action it could otherwise take, or to any
termination referred to in clause (c) above: (i) notify the Purchaser and
the Program Administrator in writing of the nature of such failure or
inability or termination and (ii) if applicable, provide certification by a
Responsible Officer that such failure or inability is required in order to
comply with such fiduciary obligations;
(d) provide prompt written notice to the Program Administrator of any
action by its board of directors or, to the extent the same becomes known
to it, the board of directors or trustees of any Company in respect of any
Fund to make any modification, amendment or supplement to, or any waiver of
any provisions of, or any termination, of any Distribution Plan, any
Distributor's Contract any Advisory Agreement, any Conversion Feature, any
Contingent Deferred Sales Charge arrangement, or any Fundamental Investment
Objectives and Policies of any Company in respect of any Fund, or any
modification, amendment, supplement or waiver in the amounts payable or
actually being paid thereunder, each as in effect on the date of that
agreement, to the extent that any such modification, amendment, supplement
or waiver could reasonably be expected to give rise to an Adverse Effect;
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<PAGE> 29
(e) not use any trade names or assumed names other than Ivy Mackenzie
Distributor's, Inc., unless and until it has notified the Program
Administrator and the Purchaser, has amended all filings made under the UCC
in all applicable jurisdictions in connection with the transactions
contemplated hereby to reflect such change and has taken such other action
as the Program Administrator may reasonably request in connection therewith
to avoid any Adverse Effect;
(f) keep each Irrevocable Payment Instruction in full force and
effect and not amend, waive, terminate or otherwise modify the terms of the
Irrevocable Payment Instruction or take any action inconsistent with the
Irrevocable Payment Instruction; and
(g) provide to the Program Servicer Agent, in time to permit
inclusion thereof in each timely provided Investor Report, all information
in its possession necessary to enable the Program Servicer Agent to
complete such Investor Report.
Section 5.04. Additional Covenants of the Advisor. The Advisor
covenants and agrees that it shall:
(a) except for such noncompliance as could not reasonably be expected
to give rise to an Adverse Effect, manage each Fund in accordance with the
Fundamental Investment Objectives and Policies in respect of such Fund as
in effect from time to time;
(b) consistent with its fiduciary obligations, if any, to the Funds,
use its best efforts, which are commercially reasonable in relation to the
consequence to the Purchaser if they are not successful, to maintain the
Fundamental Investment Objectives and Policies in respect of any Fund as
reflected in the Prospectus of such Fund, except for changes approved by:
(i) the board of directors or trustees and (ii) shareholders of each Fund;
and, in the event that as a consequence of its fiduciary obligations to the
Funds it cannot resist a proposed change in the Fundamental Investment
Objectives and Policies in respect of the Fund, or in the event that
despite its best efforts such change will be made, it shall, prior to
taking any action inconsistent with the maintenance of such Fundamental
Investment Objectives and Policies, or failing to take the action it could
otherwise take, or to the effectiveness of such change, as the case may be:
(i) notify the Purchaser and the Program Administrator in writing of the
nature of such change, and (ii) if applicable, provide certification by a
responsible officer that such change is necessary in order to comply with
such fiduciary obligations;
(c) use its best efforts to cause each Company to comply with all
Applicable Law, except for such noncompliance as could not reasonably be
expected to give rise to an Adverse Effect;
(d) consistent with its fiduciary obligations, if any, to the Funds,
use its best efforts, which are commercially reasonable in relation to the
consequences to the Purchaser if they are not successful, to obtain the
approval of the board of
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<PAGE> 30
trustees of each Company in respect of each Fund to: (a) annually
re-approve the Distribution Plan and the Distributor's Contract relating to
each Fund without modifications which could reasonably be expected to give
rise to an Adverse Effect, (b) keep in effect the Conversion Features and
the Contingent Deferred Sales Charge arrangements relating to the Shares of
each Fund without modifications which could reasonably be expected to give
rise to an Adverse Effect and (c) in the event any Distribution Plan or
Distribution Contract shall be terminated with respect to any Fund, to
approve a new distribution plan and distributor's contract, in respect of
such Fund so as to permit the continued payments in respect of the
Purchased Portfolio Assets relating to such Fund as though no such
termination had occurred. In the event that as a consequence of its
fiduciary obligations to the Funds, it cannot endeavor to obtain the
approval of the board of directors or trustees of a Company in respect of a
Fund to take the actions described in clauses (a) through (c) above, or in
the event that despite its efforts such action will not be taken, it shall,
prior to taking any action inconsistent with the actions described in
clauses (a) through (c) above, or failing to take any action it could
otherwise take, or to any termination referred to in clause (c) above: (i)
notify the Purchaser and the Program Administrator in writing of the nature
of such failure or inability or termination, and (ii) if applicable,
provide certification by a Responsible Officer that such failure or
inability is required in order to comply with such fiduciary obligations;
(e) provide prompt written notice to the Program Administrator of any
action by its board of directors or the board of directors or trustees of
any Company in respect of any Fund to make any modification, amendment or
supplement to, or any waiver of any provisions of, or any termination, of
any Distribution Plan, any Distributor's Contract, any Advisory Agreement,
any Conversion Feature, any Contingent Deferred Sales Charge arrangement,
or any Fundamental Investment Objectives and Policies of any Company in
respect of any Fund, or any modification, amendment, supplement or waiver
in the amounts payable or actually being paid thereunder, each as in effect
on the date of that agreement, to the extent that any such modification,
amendment, supplement or waiver could reasonably be expected to give rise
to an Adverse Effect;
(f) consistent with its fiduciary obligations, if any, to the Funds,
not initiate or propose the adoption by any Fund of a Liquidation Plan or
in the event its fiduciary obligations require such initiation or proposal,
use its best efforts, consistent with its fiduciary duties, to assure that
any such Liquidation Plan is carried out in a manner which does not have an
Adverse Effect, and use its best efforts to cause the board of directors or
trustees and shareholders of each Fund to avoid adopting any Liquidation
Plan or in the event its fiduciary obligations require such initiation or
proposal, use its best efforts, consistent with its fiduciary duties, to
assure that any such Liquidation Plan is carried out in a manner which does
not have an Adverse Effect, and in any event the Advisor shall promptly
notify the Program Administrator of any proposed Liquidation Plan by any
Fund; and
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(g) deliver to the Program Administrator, promptly after the filing
thereof with the SEC, any report on Form N-SAR (or successor form), any
Prospectus (including any Form N-1A (or successor form) and any statement
of additional information) or any amendment or supplement to any of the
foregoing, any proxy statements and all other notices (out of the ordinary
course) to shareholders of each Fund, annual reports of each Company and
any other filings (out of the ordinary course), made by any Company in
respect of each Fund.
Section 5.05. Term of Covenants. The obligations of the Parties under
this Article V shall continue until all amounts payable in respect of the
Purchased Portfolio Assets have been paid in full and the Sponsor Entities have
paid all amounts payable by them to the other Parties under the Program
Documents.
Section 5.06. Additional Covenants of the Program Servicer Agent. The
Program Servicer Agent covenants and agrees that it shall:
(a) comply with its obligations under the Program Servicer Agent
Agreement in a timely manner;
(b) ensure that the Program Servicer Agent's tracking capabilities
and the Transfer Agent's tracking capabilities are sufficient at all times
to: (i) track the Portfolio Assets as required by the Program Allocation
Procedures and provide the information specified to be in the Investor
Reports and (ii) identify and remit Program Collections and Related
Collections to the Collection Agent, and use its best efforts to promptly
replace any Transfer Agent which does not maintain such capabilities or in
respect of which an event similar to those described in clause (v) of the
definition of Event of Termination occurs within 60 days after becoming
aware of such event;
(c) promptly upon preparation, deliver to the Program Administrator,
copies of the semi-annual unaudited reports and annual audited reports of
each Fund; and
(d) provide prompt written notice to the Program Administrator of any
action to the extent the same becomes known to it, by the board of
directors or trustees of any Fund to make any modification, amendment or
supplement to, or any waiver of any provisions of or any termination, of
any Fundamental Investment Objectives and Policies of such Fund as in
effect on the date of this Agreement, to the extent that any such
modification, amendment, supplement or waiver could reasonably be expected
to give rise to an Adverse Effect.
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ARTICLE VI
THE PROGRAM ADMINISTRATOR
Section 6.01. Authorization and Action. The Purchaser hereby
irrevocably appoints and authorizes the Program Administrator to take such
action as agent on its behalf and to exercise such powers under this Agreement,
and the other Program Documents as are delegated to the Program Administrator by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement or the other Program Documents, the Program Administrator shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Purchaser; provided,
however, that the Program Administrator shall not be required to take any action
which exposes the Program Administrator to personal liability or which is
contrary to this Agreement, the other Program Documents or Applicable Law.
Section 6.02. Program Administrator Reliance, Etc. Neither the
Program Administrator nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or any of the other Program Documents,
except in the case of the Program Administrator for its gross negligence,
willful misconduct or breach of its obligations under the Program Documents.
Without limiting the generality of the foregoing, the Program Administrator: (i)
may consult with legal counsel (including counsel for the Parent, the
Distributor, the Program Servicer Agent, the Advisor or any Transfer Agent),
independent public accountants and experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii) makes
no warranty or representation to any of the other parties to this Agreement and
shall not be responsible to any of the other parties to this Agreement for any
statements, warranties or representations (whether written or oral) made by any
of the other parties to this Agreement (including the Purchaser) in or in
connection with this Agreement or the other Program Documents; (iii) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or the other Program
Documents on the part of any of the other parties to this Agreement or to
inspect the property (including the books and records) of any of the other
parties to this Agreement; (iv) shall not be responsible for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, the other Program Documents or any other instrument or document
furnished pursuant hereto or thereto in respect of any Person other than the
Program Administrator; and (v) shall incur no liability under or in respect of
this Agreement or any other Program Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
Section 6.03. Rights of the Program Administrator. Each Sponsor
Entity hereby agrees that the Program Administrator is hereby authorized upon
the occurrence of any Event of Termination (or event which with the passage of
time or notice, or both, would constitute an Event of Termination) which relates
to the Parent, the Distributor, the Program Servicer Agent, the Advisor or any
other Sponsor Entity, to deliver an Allocation Notice to the Collection Agent.
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ARTICLE VII
PARENT UNDERTAKINGS
Section 7.01. Undertakings: Payment of Damages. The Parent hereby
irrevocably and unconditionally agrees and guarantees for the benefit of the
Purchaser, the Program Administrator, and each Indemnified Party to cause the
Advisor, the Distributor, the Program Servicer Agent and each other Sponsor
Entity to perform and punctually and completely carry out each and every
agreement, covenant or undertaking of the Advisor, the Distributor, the Program
Servicer Agent and each other Sponsor Entity under this Agreement and each other
Program Document in accordance with the terms thereof, notwithstanding that the
Advisor, the Distributor, the Program Servicer Agent, or other Sponsor Entity
fails to fully perform any such agreements, covenants and undertakings for any
reason, including liquidation, insolvency, dissolution, receivership,
bankruptcy, assignment for the benefit of creditors, reorganization,
composition, adjustment, legal limitations, court order, disability, incapacity,
invalidity, unenforceability, defense, offset or counterclaim. Each of the
Parent, the Distributor, the Program Servicer Agent and the Advisor further
covenants and agrees that it shall maintain adequate capital in light of its
contemplated business operation.
Section 7.02. Agreement Not Affected. The Purchaser and the Program
Administrator may proceed to exercise any right or remedy which it might have
pursuant to this Article VII or Applicable Law without regard to any actions or
omissions of the Purchaser, the Program Administrator or any other Person. The
validity of this Article VII shall not be affected by any action or inaction
which may be taken under or in respect of any Program Document. Each of the
Purchaser and the Program Administrator at its option may proceed in the first
instance against the Parent to obtain a remedy under any Program Document in the
amount and in the manner set forth in such Program Document, without being
obliged to resort first to any claim or action against the Advisor, the
Distributor, the Program Servicer Agent or any other Sponsor Entity.
Section 7.03. Waiver of Notice: No Offset: No Subrogation. The Parent
hereby waives any and all notices or demands to which any other Sponsor Entity
may otherwise be entitled in connection with the pursuit of any remedy
hereunder, or under any other Program Document or, to the extent permitted,
under Applicable Law; provided, that this sentence shall not constitute a waiver
on behalf of the Advisor, the Distributor, the Program Servicer Agent or any
other Sponsor Entity of any notice or demand to which the Advisor, the
Distributor, the Program Servicer Agent or any other Sponsor Entity is entitled
under the Program Documents. The obligations of the Parent under this Article
VII shall not be subject to any defense, counterclaim or offset which the
Parent, the Advisor, the Distributor, the Program Servicer Agent or any other
Person has or may have against the Purchaser, the Program Administrator, any
Indemnified Party or any other Person, except such defense, counterclaim or
offset which is expressly allowed under this Agreement and the other Program
Documents to such Party and shall not have been previously adjudicated in any
prior action against such Party, but nothing herein shall limit the right of the
Parent to pursue any claim in a separate action. The Parent
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<PAGE> 34
waives all rights of subrogation which it may acquire due to any payment or
payments made under this Article VII until all of the obligations of each of the
Sponsor Entities to any other Party to this Agreement and the other Program
Documents shall have been paid and performed in full.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. No Waiver: Modifications in Writing. No failure or
delay on the part of the Program Administrator or any Purchaser or any
Indemnified Party exercising any right, power or remedy hereunder or under any
other Program Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Program Administrator and the Purchaser,
at law or in equity. No amendment, modification, supplement, termination or
waiver of this Agreement or any other Program Document shall be effective unless
the same shall be in writing and signed by the parties thereto. Any waiver of
any provision of this Agreement, and any consent to any departure by any party
to this Agreement or any other Program Document from the terms of any provision
of this Agreement or any other Program Document, shall be effective only in the
specific instance and for the specific purpose for which given. No notice to or
demand on any party to this Agreement or any other Program Document in any case
shall entitle a Sponsor Entity to any other or further notice or demand in
similar or other circumstances.
Section 8.02. Payment. Unless otherwise provided herein, whenever any
payment to be made hereunder or under any other Program Document shall be due on
a non-Business Day, such payment shall be made on the next succeeding Business
Day. All amounts owing and payable to the Purchaser, the Program Administrator
or any Indemnified Party under this Agreement or under any other Program
Document shall be paid in immediately available funds without counterclaim,
setoff, deduction, defense, abatement, suspension or deferment, but nothing
herein shall limit the right of the Parent, the Advisor, the Program Servicer
Agent or the Distributor to pursue any claim in a separate action. Each of the
Parent, the Program Servicer Agent and the Distributor hereby agrees to pay
interest on any amounts payable by it under this Agreement or under any other
Program Document, which shall not be paid in full when due, for the period
commencing on the due date thereof until, but not including, the date the same
is paid in full at the Post-Default Rate. For purposes of calculating the
Post-Default Rate interest, any amount received by or on behalf of the
Purchaser, the Program Administrator or any Indemnified Party after the close of
the Fedwire shall be deemed to have been received on the next succeeding
Business Day.
Section 8.03. Notices, Etc. (a) All notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto or to any other Program Document shall be in writing and shall be
personally delivered or sent by first-class, registered, certified or express
mail, postage prepaid, or by prepaid telegram (with
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messenger delivery specified in the case of a telegram), or by telecopier, or by
prepaid courier service. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 8.03,
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto or to the other Program
Documents at their respective addresses (or to their respective telecopier
numbers) indicated below:
If to the Purchaser:
Putnam Lovell Finance L.P.
65 East 55th Street
New York, New York 10022
Attention: Vice President
Facsimile No.: (212) 644-2271
If to the Program Administrator:
Putnam, Lovell, de Guardiola & Thornton Inc.
65 East 55th Street
New York, New York 10022
Attention: Vice President
Facsimile No.: (212) 644-2271
If to the Parent, the Advisor, the Distributor or the Program Servicer
Agent:
Mackenzie Investment Management Inc.
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
Attention: C.W. Ferris
Facsimile No.: (561) 368-3576
with a copy to
Mackenzie Investment Management Inc.
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
Attention: Bev Yanowitch
Facsimile Number: (561) 391-4955
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If to the Collection Agent:
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attention: Corporate Trust and
Agency Group-Structured Finance
Facsimile No.: 212-250-6439
(b) All notices, demands, consents, requests and other communications
to be sent or delivered hereunder or under any other Program Document shall be
deemed to be given or become effective for all purposes of this Agreement or of
such Program Document as follows: (i) when delivered in person, when given; (ii)
when sent by mail, when received by the Person to whom it is given, unless it is
mailed by registered, certified or express mail, in which case it shall be
deemed given or effective on the earlier of the date of receipt or refusal; and
(iii) when sent by telegram, telecopy or other form of rapid transmission shall
be deemed to be given or effective when receipt of such transmission is
acknowledged, electronically or otherwise.
Section 8.04. Costs and Expenses: Indemnification. (a) Regardless of
whether or not any of the transactions contemplated hereby are actually
consummated, the Parent agrees to pay promptly on demand to the other Parties
hereto (other than any other Sponsor Entity) (i) all reasonable out-of-pocket
costs and expenses in connection with the preparation, review, negotiation,
reproduction, execution, delivery, administration and any modification,
amendment and waiver of this Agreement and the other Program Documents, (ii) all
out-of-pocket costs and expenses incurred in connection with the enforcement of,
or preservation of, any rights under this Agreement and the other Program
Documents, (iii) all actuarial fees, UCC filing fees and periodic auditing
expenses in connection with the transactions contemplated by this Agreement and
the other Program Documents, and (iv) all reasonable fees and disbursements of
counsel in connection with the foregoing.
(b) Indemnification. The Parent agrees to indemnify and hold harmless
the Purchaser (and, without duplication, its respective Investors), each
Placement Trust (and, without duplication, its respective Investors), the
Program Administrator, the Collection Agent, the Placement Agent, and each of
their respective Affiliates and the respective officers, directors, employees,
trustees, agents and advisors of, and any Person controlling, any of the
foregoing (each, an "Indemnified Party") from and against any and all damages,
losses, liabilities, expenses, obligations, penalties, actions, suits, judgments
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel) (collectively the "Liabilities") that are
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (and regardless of whether
or not any such transactions are consummated) any of the transactions
contemplated by the Program Documents, including without limitation, any one or
more of following:
(i) any failure or alleged (by Persons other than an Indemnified
Party) failure by any Sponsor Entity to perform any of its
obligations, covenants,
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or agreement contained in any Program Document to which it is a party
promptly and fully;
(ii) any representation or warranty made or deemed made by any
Sponsor Entity contained in any Program Document or in any
certificate, written statement or report delivered by or on behalf of
any such Person in connection herewith or therewith is, or is alleged
(by Persons other than an Indemnified Party) to have been false or
misleading in any respect when made;
(iii) any failure by any Sponsor Entity to comply promptly and fully
with any Applicable Law or any contractual obligation binding upon
it;
(iv) any proceeding by or against any Sponsor Entity seeking to
adjudicate such Person bankrupt or insolvent, or seeking liquidation,
winding up, administration, reorganization, arrangement, adjustment,
protection, relief, or composition of such Person or the debts of
such Person under any law relating to bankruptcy, insolvency,
liquidation, administrative, reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian, administrator, liquidator, or other
similar official for such Person or for a substantial part of such
Person's property;
(v) any change in Control of the Parent, the Distributor, the
Program Servicer Agent or the Advisor which does not meet the
requirements set forth in Section 5.02(h)(l) or (2);
(vi) any Year 2000 Problem effecting the computer applications
of any Sponsor Entity;
(vii) any commingling of Program Collections or Related
Collections with other funds of any Sponsor Entity;
(viii) any action which would have been a violation of its
covenants hereunder if clause (v) of the definition of Adverse Effect
included any adverse effect (as opposed to "any material adverse
effect") on the status of the Purchased Portfolio Assets as Eligible
Portfolio Assets or on the status of any Funds as an Eligible Fund;
(ix) any action which would have been a violation of its
covenants hereunder if clause (vi) of the definition of Adverse
Effect included any adverse effect (as opposed to "any material
adverse effect") on the amount or timely receipt by the Collection
Agent of any Program Collections in accordance with the terms of any
Irrevocable Payment Instruction or any other Program Document; and
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(x) preparation for a defense of, any investigation, litigation
or proceeding arising out of any of the transactions, events or
circumstances described above;
provided, however, that the Parent shall not be required to indemnify any
Indemnified Party in respect of any Liability to the extent such Liability (A)
resulted directly and primarily from such Indemnified Party's gross negligence
or willful misconduct, or (B) arises out of the Purchased Portfolio Assets
proving to be uncollectible, except to the extent that such uncollectibility is
attributable to, or would not have occurred but for, one or more of the events
or circumstances described in clauses (i) through (ix) above, or (C) arises out
of a subsequent sale or assignment of the Purchased Portfolio Assets by the
Purchaser except to the extent that the same is attributable to, or would not
have accrued but for, one or more of the events or circumstances described in
clauses (i) through (ix) above, or (D) arises prior to May 1, 1999 and out of
the Portfolio Assets failing to be Eligible Portfolio Assets solely because of a
failure to comply with clause (f)(i)(2) of the definition of Eligible Portfolio
Assets, except to the extent that the same is attributable to, or would not have
accrued but for, one or more of the events or circumstances described in clauses
(i) through (ix) above.
(c) Unless the Parent shall have assumed responsibility for
contesting a Liability as provided in the next sentence, the Indemnified Party
may, but shall have no obligation to, contest, settle or compromise such
Liability. The Parent may pursue, at its sole cost and expense, such lawful
rights as are available at law to contest any Liability asserted against any
Indemnified Party provided: (i) the Parent has assumed responsibility for such
contest and conceded in writing its responsibility to indemnify the Indemnified
Party, in accordance with this Section, for the full amount of such Liability;
(ii) such contest is conducted in a manner which does not result in a Lien on
the Portfolio Assets unless the Parent shall have indemnified the Indemnified
Parties in respect thereof to their reasonable satisfaction and, if the manner
of contest does not defer the obligation to pay the Liability, the Parent shall
pay such Liability when due, subject to the right to recover such Liability if
the contest is successful, (iii) the Parent shall have provided to the
Indemnified Party such undertakings as the Indemnified Party shall reasonably
request, in form and substance satisfactory to the Indemnified Party, whereby
the Parent agrees to hold the Indemnified Party harmless from any and all
liabilities, costs and expenses which may arise as a consequence of such
contest; (iv) the Parent shall have furnished the Indemnified Party with
information demonstrating to the reasonable satisfaction of the Indemnified
Party that there is a meritorious basis for such contest; (v) the contest of
such Liability may be conducted in a manner which does not affect the liability
of the Indemnified Party for any liability not indemnified by the Parent; (vi)
the contest of such Liability can be separated from any contest of any other
liability in respect of which the Parent has not indemnified the Indemnified
Party without prejudicing the Indemnified Party's ability to deal with or
otherwise contest such other liability; and (vii) the Indemnified Party has not
waived its right to indemnification by the Parent in respect of such Liability.
The Parent shall keep the Indemnified Party fully advised on a current basis
concerning any such contest. Without limiting the foregoing, if such contest
involves or could involve a claim or counterclaim for relief by either party
other than for money damages: (A) the Parent shall give the Indemnified Party
reasonable notice of and a reasonable opportunity to be present in person or by
counsel at any proceeding in connection therewith; (B) the Parent shall give the
Indemnified Party notice of any
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proposed filings or papers to be served or filed by the Parent in connection
with any such proceedings and a reasonable opportunity to comment upon them; and
(C) the Parent shall promptly supply the Indemnified Party with copies of any
filings or papers served upon the Parent in connection with such proceedings; it
being understood that the Indemnified Party shall bear its own costs incurred in
connection with any participation by the Indemnified Party or its counsel in the
contest as contemplated by this sentence.
(d )Without prejudice to the survival of any other agreement of the
Parent, hereunder, the agreements and obligations of the Parent contained in
this Section 8.04 and of the Parent in Article VII shall survive the termination
of this Agreement.
Section 8.05. Taxes. (a) Any and all payments by any Sponsor Entity,
any Transfer Agent, any Company or any Fund under this Agreement, any
Irrevocable Payment Instrument or any other Program Document shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, taxes imposed on the recipient's income, and
franchise taxes imposed on the recipient, by (i) the United States federal
government, (ii) the jurisdiction under the laws of which the recipient is
organized or any political subdivision thereof, (iii) the jurisdiction in which
is located the principal executive office of the recipient or any political
subdivision thereof or (iv) any other jurisdiction which asserts the authority
to impose such tax on the basis of contacts the recipient maintains with such
jurisdiction other than the contacts arising out of the transactions
contemplated hereby (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If any Sponsor Entity, any Transfer Agent, any Company or any Fund shall be
required by Applicable Law to deduct any Taxes from or in respect of any sum
payable hereunder or under any other Program Document, (i) the sum payable
hereunder or thereunder shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 8.05) the recipient receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Sponsor Entity, Transfer Agent, Company or Fund shall make such deductions and
(iii) such Sponsor Entity, Transfer Agent, Company or Fund shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with Applicable Law.
(b) In addition, the Parent agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any transfer of Portfolio Assets in connection herewith
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any other Program Document (hereinafter referred to as
"Other Taxes").
(c) The Parent will indemnify the Program Administrator and the
Purchaser for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
8.05) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted, so long as there is a reasonable basis for the
assertion of such Taxes or Other Taxes. This indemnification shall be made
within 30 days
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from the date the Program Administrator or the Purchaser makes written demand
therefor to the Parent. The Purchaser and the Program Administrator shall
endeavor to avoid or reduce any Taxes or Other Taxes subject to the foregoing
indemnity; provided that they shall not be required to take any action which, in
their sole judgment, may subject them to any adverse effect.
(d) Within thirty (30) days after the date of any payment of Taxes,
the Parent will furnish to the Purchaser and the Program Administrator the
original or a certified copy of a receipt evidencing payment thereof.
(e) In the event the Parent shall pay a Tax or Other Tax pursuant to
this Section 8.05 and all or a portion of such Tax or Other Tax previously paid
by the Parent is later refunded by the applicable taxing Authority, the
recipient of such refund shall pay to the Parent, the portion of such refund
which relates to the amount previously paid by the Parent.
(f) Unless the Parent shall have assumed responsibility for
contesting a Tax or Other Tax described in paragraph (c) of this Section 8.05 as
provided in the next sentence, the Program Administrator and the Purchaser may,
but shall have no obligation to, contest, settle or compromise such Tax or Other
Tax. The Parent may pursue, at its sole cost and expense, such lawful rights as
are available at law to contest any Tax or Other Tax asserted against the
Purchaser or the Program Administrator provided: (i) the Parent has assumed
responsibility for such contest and conceded in writing its responsibility to
indemnify the Purchaser or the Program Administrator, as the case may be, in
accordance with this Section, for the full amount of such Tax or Other Tax; (ii)
such contest is conducted in a manner which does not result in a Lien on the
Portfolio Assets unless the Parent shall have indemnified the Purchaser with
respect thereof in a manner reasonably satisfactory to the Purchaser and, if the
manner of contest does not defer the obligation to pay the Tax or Other Tax, the
Parent shall pay such Tax or Other Tax when due, subject to the right to recover
such Tax or Other Tax if the contest is successful, (iii) to the extent not
covered by Section 8.04(b), the Parent shall have provided to the Purchaser or
the Program Administrator, as the case may be, such undertakings as the
Purchaser or the Program Administrator, as the case may be, shall reasonably
request, in form and substance satisfactory to the Purchaser or the Program
Administrator, as the case may be, whereby the Parent agrees to hold the
Purchaser or the Program Administrator, as the case may be, harmless from any
and all liabilities, costs and expenses which may arise as a consequence of such
contest; (iv) the Parent shall have furnished the Purchaser or the Program
Administrator, as the case may be, with information demonstrating to the
reasonable satisfaction of the Purchaser or the Program Administrator, as the
case may be, that there is a meritorious basis for such contest; (v) the contest
of such Tax or Other Tax may be conducted in a manner which does not affect the
liability of the Purchaser or the Program Administrator, as the case may be, for
any tax not indemnified by the Parent; (vi) the contest of such Tax or Other Tax
can be separated from any contest of any other tax in respect of which the
Parent has not indemnified the Purchaser or the Program Administrator, as the
case may be, without prejudicing the Purchaser's or the Program Administrator's,
as the case may be, ability to deal with or otherwise contest such other
liability; and (vii) such Purchaser or the Program Administrator, as the case
may be, has not waived its right to indemnification by the Parent in respect of
such Tax or Other Tax. The Parent shall keep the Purchaser or the Program
Administrator, as the case may be, fully advised on a current basis concerning
any such contest. Without limiting the foregoing, if such contest involves or
could
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involve a claim or counterclaim for relief by either party other than for money
damages: (A) the Parent shall give the Purchaser or the Program Administrator,
as the case may be, reasonable notice of and a reasonable opportunity to be
present in person or by counsel at any proceeding in connection therewith; (B)
the Parent shall give the Purchaser or the Program Administrator, as the case
may be, notice of any proposed filings or papers to be served or filed by the
Parent in connection with any such proceedings and a reasonable opportunity to
comment upon them; and (C) the Parent shall promptly supply the Purchaser or the
Program Administrator, as the case may be, with copies of any filings or papers
served upon the Parent in connection with such proceedings; it being understood
that the Purchaser or the Program Administrator, as the case may be, shall bear
its own costs incurred in connection with any participation by the Purchaser or
the Program Administrator, as the case may be, or its counsel in the contest as
contemplated by this sentence.
(g) Without prejudice to the survival of any other agreement of the
Parent, hereunder, the agreements and obligations of the Parent contained in
this Section 8.05 shall survive the termination of this Agreement.
Section 8.06. Execution in Counterparts. This Agreement and each
other Program Document may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
agreement.
Section 8.07. Binding Effect: Assignment. This Agreement and the
various representations and covenants set forth herein shall be binding upon the
parties hereto, the Indemnified Parties and their respective permitted
successors and assigns, and inure to the benefit of the parties hereto, the
Indemnified Parties and their respective permitted successors and assigns. No
Sponsor Entity shall assign its rights or obligations hereunder or under any
other Program Document or in connection herewith or therewith or any interest
herein or therein (voluntarily, or by operation of law or otherwise) without the
Program Administrator's and the Purchaser's prior written consent, except as
otherwise expressly permitted hereunder and thereunder. This Agreement and the
Program Administrator's and the Purchaser's rights herein, and in the Purchased
Portfolio Assets, the Program Collections and the Ancillary Rights with respect
thereto shall be assignable, in whole or in part, by the Purchaser and the
Program Administrator and their respective successors and assigns.
Section 8.08. Governing Law: Submission to Jurisdiction. (a) THIS
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
NEW YORK AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SAID STATE WITHOUT REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.
(b) Each of the Advisor, the Parent, the Program Servicer Agent and
the Distributor hereby irrevocably submits itself to the non-exclusive
jurisdiction of the courts of the State of New York and to the non-exclusive
jurisdiction of any Federal Court of the United States located in the Southern
District of New York, for the purposes of any suit, action or other
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proceeding arising out of this Agreement or any other Program Document or any of
the transactions contemplated hereby or thereby.
Section 8.09. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Confidentiality. Unless otherwise required by
Applicable Law, the parties hereto agree to maintain the confidentiality of the
Program Documents (and all drafts hereof and thereof) other than the
Distributor's Contracts, the Distribution Plans and the Prospectuses and the
transactions contemplated thereby, and all information disclosed to such party
by another party and identified by such party as non-public information pursuant
to or in connection with the Program Documents (all of the foregoing, the
"Confidential Information"), in communications with third parties and otherwise;
provided, that Confidential Information may be disclosed (i) to assignees,
participants and potential assignees and participants of the Purchaser and the
Program Administrator provided that confidentiality arrangements with such third
parties are put in place by the Purchaser or the Program Administrator, (ii) to
third parties to the extent such disclosure is consented to in writing by all
parties to this Agreement, in the case of the Program Documents, or the party to
which the Confidential Information relates, in the case of other Confidential
Information (which consent shall not be unreasonably withheld) and such
disclosure is made pursuant to a written confidentiality agreement in form and
substance substantially identical to this Section 8.10, (iii) the officers,
partners, directors and employees, legal counsel and internal and external
auditors of the parties hereto, (iv) as the Program Administrator or the
Purchaser may deem necessary or appropriate in connection with any Placement or
its warehouse financing arrangements, provided, that prior to disclosing such
Confidential Information (other than the performance of the Portfolio Assets)
concerning any Sponsor Entity in any offering memorandum in connection with any
Placement, the Program Administrator will give the Sponsor Entity a reasonable
opportunity to comment on such proposed disclosure, (v) in connection with any
litigation or the protection or enforcement of a party's rights and remedies
under or relating to the Program Documents and (vi) in response to a lawful
requirement of any Authority exercising supervisory jurisdiction over the
disclosing Party or its Affiliates.
Section 8.11. Intent of Agreement. It is the intention of this
Agreement and the Purchase Agreement that each purchase of Purchased Portfolio
Assets hereunder shall convey to the Purchaser an undivided 100% ownership
interest in such Purchased Portfolio Assets on the Purchase Date therefor and
that such transactions shall constitute a True Sale and not a secured loan. If,
notwithstanding such intention, any conveyance of Purchased Portfolio Assets
from the Distributor to the Purchaser shall ever be recharacterized as a secured
loan and not a sale, it is the intention of this Agreement and the Purchase
Agreement that such agreements shall constitute collectively a security
agreement under Applicable Law, and that the Distributor shall be deemed to have
granted to the Purchaser, and hereby does so grant, a duly perfected first
priority security interest in all of the Distributor's right, title and interest
in, to and under such Purchased Portfolio Assets free and clear of any Adverse
Claim.
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Section 8.12. Continuing Obligations. Notwithstanding any other
provision of this Agreement or the other Program Documents, to the extent that
any obligation of the Sponsor Entities under, pursuant to and in connection with
the Purchased Portfolio Assets remains unperformed or executory, the Sponsor
Entities shall be obligated to perform such obligation to the same extent as if
the purchase and sale contemplated hereby had not taken place, and the Purchaser
and the Program Administrator shall not be required or obligated in any manner
to perform or fulfill any of the obligations of the Sponsor Entities under,
pursuant to or in connection with any Purchased Portfolio Assets.
Section 8.13. Merger. The Program Documents taken as a whole
incorporate the entire agreement between the parties thereto concerning the
subject matter thereof. The Program Documents supersede any prior agreements
among the parties relating to the subject matter thereof.
Section 8.14. Further Acts. Each party agrees that at any time,
and from time to time, it will do all such things and execute and deliver all
such instruments, assignments, other documents and assurances, as such other
party or its counsel reasonably deems necessary or desirable in order to carry
out the express intent, purpose and conditions of this Agreement and the other
Program Documents and the transactions contemplated hereby and thereby, and
without limiting the generality of the foregoing, to the extent permitted by
Applicable Law, upon the Program Administrator's written request from time to
time, the Parent, the Distributor, the Advisor and the Program Servicer Agent
shall make, execute, acknowledge and deliver and file and record in the proper
filing and recording places all such instruments, and take all such actions, as
the Program Administrator may reasonably deem necessary or advisable for
assuring or confirming to the Purchaser its rights and interest in and to, and
remedies in respect of, the Purchased Portfolio Assets. In addition, the
Advisor, the Distributor, the Program Servicer Agent and the Parent, agree to do
all things and execute and deliver all instruments, assignments, other documents
and assurances, as the Program Administrator or its counsel reasonably deems
necessary to permit the Purchaser to convey any portion of its right, title and
interest in the Purchased Portfolio Assets and the Program Documents in
connection with any assignment by such Purchaser permitted by this Agreement and
the other Program Documents.
Section 8.15. Specific Performance: Other Rights and Remedies. The
parties hereto recognize that certain of their rights under this Agreement and
the other Program Documents are unique and, accordingly, the parties hereto
shall, in addition to such other remedies as may be available to any of them at
law or in equity or under this Agreement and the other Program Documents, have
the right to enforce their rights hereunder and thereunder by actions for
injunctive permitted relief and specific performance to the extent permitted by
Applicable Law. The rights and remedies of the Program Administrator and the
Purchaser under this Agreement and the other Program Documents are cumulative
and are not in lieu of, but are in addition to, any other rights and remedies
which the Program Administrator and the Purchaser may have under or by virtue of
any Applicable Law, or in equity, or any other agreement or obligations to which
the Program Administrator and the Purchaser are parties. The rights and remedies
of the Program Administrator and the Purchaser under this Agreement and the
other Program Documents may be exercised from time to time and as often as such
exercise is deemed expedient. Without limiting the generality of the foregoing,
the Distributor acknowledges and
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agrees that it will be impossible to measure in money the damage to the Program
Administrator or the Purchaser in the event of a breach of any of the terms and
provisions of this Agreement or any other Program Document, and that, in the
event of any such breach, the Program Administrator and the Purchaser may not
have an adequate remedy at law, although the foregoing shall not constitute a
waiver of any of the Program Administrator's or the Purchaser's rights, powers,
privileges and remedies against or in respect of a breaching party, any
collateral or any other Person or thing under this Agreement, any other Program
Document or Applicable Law. It is therefore agreed that each of the Program
Administrator and the Purchaser, in addition to all other such rights, powers,
privileges and remedies that it may have, shall be entitled to injunctive
relief, specific performance or such other equitable relief as it may request to
exercise or otherwise enforce any of the terms of those provisions and to enjoin
or otherwise restrain any act prohibited thereby, and the Distributor shall not
argue and hereby waives any defense that there is an adequate remedy available
at law.
Section 8.16. No Proceedings. Each Party agrees that it will not
institute against the Purchaser, or join any other Person in instituting against
Purchaser, any insolvency proceeding (including any proceeding of the type
described in clause (e) of the definition of Event of Termination). The
foregoing shall not limit the right of any Party to file any claim in or
otherwise take any action in any insolvency proceeding that was instituted
against the Purchaser by any other Person.
Section 8.17. Additional Companies and Funds. Unless an Event of
Termination (or an event which, with the passage of time or notice, or both,
would constitute an Event of Termination) shall have occurred and be continuing,
the Distributor may request that an Additional Eligible Fund become a "Fund"
(and in connection therewith any investment company, which is registered with
the SEC under the Investment Company Act, of which such Eligible Fund is a
series, to become a Company) under this Agreement on the Addition Effective Date
in respect of such additional Eligible Fund. On and as of such Addition
Effective Date in respect of any additional Eligible Fund, (i) such additional
Eligible Fund shall become a Fund hereunder and any investment company, which is
registered with the SEC under the Investment Company Act, of which such Fund is
a series, shall become a Company hereunder, (ii) the Program Documents
(including Schedule 1 to the Master Agreement and Schedule 1 to the Purchase
Agreement) shall be deemed to be supplemented to reflect such addition, and
(iii) any reference in this Agreement to any change or modification since the
date of this Agreement or the Closing Date to the Distributor's Contract,
Distribution Plan, advisory agreement, Prospectus, Conversion Features,
Redemption Features or Contingent Deferred Sales Charge arrangement in respect
of such additional Eligible Fund shall be deemed to refer to any change or
modification thereof since such Addition Effective Date.
The term "Addition Effective Date" shall mean with respect to any
additional Eligible Fund, the first date on which all of the following
conditions shall have been satisfied:
(i) the Program Administrator shall have received a fully executed
Additional Eligible Fund Addendum, together with such signed opinions of
counsel to the applicable Company, the Distributor, the Program Servicer
Agent, the Advisor, and the Parent, each dated a date reasonably near the
Addition
40
<PAGE> 45
Effective Date, as the Program Administrator shall have reasonably
requested, all in form, scope and substance satisfactory to the Program
Administrator;
(ii) the Program Administrator shall have received such instruments,
certificates and documents regarding the addition of such additional
Eligible Fund from the Distributor, the Program Servicer Agent, the
Advisor, the Parent, and the applicable Company as the Program
Administrator shall reasonably request; and
(iii) the Program Administrator shall have received evidence
satisfactory to it that (a) the conditions in respect of such additional
Eligible Fund set forth in Section 3.02 immediately after the Addition
Effective Date shall be satisfied, and (b) that on such Addition Effective
Date the Portfolio Assets relating to such additional Eligible Fund shall
constitute Eligible Portfolio Assets.
[Remainder of This Page Intentionally Left Blank]
41
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
MACKENZIE INVESTMENT MANAGEMENT INC.,
as Parent
By: /s/ Michael G. Landry
-----------------------------------------------
Michael G. Landry
President
IVY MANAGEMENT, INC.,
as Advisor
By: /s/ James Broadfoot, III
-----------------------------------------------
James Broadfoot, III
President
IVY MACKENZIE DISTRIBUTORS, INC.,
as Distributor
By: /s/ Keith K. Carlson
-----------------------------------------------
Keith J. Carlson
President
IVY MACKENZIE SERVICES CORP.,
as Program Service Agent
By: /s/ C. William Ferris
-----------------------------------------------
C. William Ferris
President
42
<PAGE> 47
PUTNAM LOVELL FINANCE L.P.,
as Purchaser
By: Putnam Lovell Finance Inc.,
General Partner
By:
-----------------------------------------------
Name:
Title:
PUTNAM, LOVELL, DE GUARDIOLA & THORNTON INC.,
as Program Administrator
By: /s/ Robert T. Fleisher
-----------------------------------------------
Name: Robert T. Fleisher
Title: Vice President
43
<PAGE> 48
BANKERS TRUST COMPANY,
not in its individual capacity but solely as
Collection Agent
By: /s/ Louis Bodi
-----------------------------------------------
Name: Louis Bodi
Title: Vice President
44
<PAGE> 49
Schedule I to
Mackenzie Program
Master Agreement
COMPANIES, FUNDS, SHARES AND RELATED MATTERS
<TABLE>
<CAPTION>
COMPANIES AND FUNDS: SHARES
- -------------------- ------
Company:
- --------
Ivy Fund
Funds:
- ------
<S> <C>
Ivy Bond Fund Class B
Ivy Growth Fund Class B
Ivy Growth With Income Fund Class B
Ivy U.S. Emerging Growth Fund Class B
Ivy Asia pacific Fund Class B
Ivy Canada Fund Class B
Ivy China Region Fund Class B
Ivy Developing Nations Fund Class B
Ivy Global Fund Class B
Ivy Global Natural Resources Fund Class B
Ivy Global Science & Technology Fund Class B
Ivy International Fund II Class B
Ivy International Fund Class B
Ivy International Small companies Fund Class B
Ivy Pan-Europe Fund Class B
Ivy South America Fund Class B
Ivy U.S. Blue Chip Fund Class B
</TABLE>
<PAGE> 50
Schedule II to
Mackenzie Program
Master Agreement
PROGRAM ALLOCATION PROCEDURES
Program Collections in respect of Portfolio Assets which constitute
Contingent Deferred Sales Charges, and Asset Based Sales Charges related to
Shares of each Fund shall be allocated by the Program Administrator among the
Purchaser and the Distributor in accordance with this Schedule II.
Defined terms used in this Schedule II and not otherwise defined herein
shall have the meaning assigned to them in Schedule X to the Master Agreement.
As used herein the following terms shall have the meanings indicated:
"Commission Share" means in respect of any Fund, each Share of such
Fund, which is issued under circumstances which would normally give rise to an
obligation of the holder of such Share to pay a Contingent Deferred Sales Charge
upon redemption of such Share (including, without limitation, any Share of such
Fund issued in connection with a Permitted Free Exchange) and any such Share
shall continue to be a Commission Share of such Fund prior to the redemption
(including a redemption in connection with a Permitted Free Exchange) or
conversion of such Share, even though the obligation to pay the Contingent
Deferred Sales Charge may have expired or conditions for waivers thereof may
exist.
"Date of Original Issuance" means in respect of any Commission Share,
the date with reference to which the amount of the Contingent Deferred Sales
Charge payable on redemption thereof, if any, is computed.
"Free Share" means, in respect of any Fund, each Share of such Fund,
other than a Commission Share or Omnibus Share (including, without limitation,
any Share issued in connection with the reinvestment of dividends or capital
gains).
"Inception Date" means in respect of any Fund, the first date on which
such Fund issued Shares.
"Net Asset Value" means, (i) with respect to any Fund, as of the date
any determination thereof is made, the net asset value of such Fund computed in
the manner such value is required to be computed by such Fund in its reports to
its shareholders, and (ii) with respect to any Share of such Fund as of any
date, the quotient obtained by dividing: (A) the net asset value of such Fund
(as computed in accordance with clause (i) above) allocated to Shares of such
Fund (in accordance with the constituent documents for such Fund) as of such
date, by (B) the number of Shares of such Fund outstanding on such date.
"Omnibus Share" means, in respect of any Fund, a commission share sold
by one of the Selling Agents listed on Exhibit A or related free share issued in
connection with the reinvestment of dividends or capital gains for such share.
If, subsequent to closing of the Program, the Program Administrator reasonably
determines that the Program Servicer Agent is able to provide information to
track all commission shares sold by any of the Selling Agents listed on Exhibit
A (and related free
<PAGE> 51
shares) in the same manner as Commission Shares and Free Shares are currently
tracked in respect of Selling Agents not listed on Exhibit A (taking into
account all information provided to the Program Servicer Agent by such Selling
Agent sufficient to enable the Program Servicer Agent to complete the Investor
Reports in a timely manner), then Exhibit A shall be amended to delete such
Selling Agent from Exhibit A so that commission shares sold by such Selling
Agent (and related free shares) will thereafter be treated as Commission Shares
and Free Shares.
PART 1: ATTRIBUTION OF SHARES
Shares of each Fund, which are outstanding from time to time, shall be
attributed to the Purchaser and the Distributor in accordance with the following
rules;
(1) Commission Shares:
(a) Commission Shares which are not Omnibus Shares attributed to the
Purchaser shall be Commission Shares the Date of Original Issuance of which
occurred on or after the Inception Date of such Fund and on or prior to the last
Purchase Cut-Off Date occurring prior to the date of such determination.
(b) Commission Shares which are not Omnibus Shares attributable to the
Distributor shall be Commission Shares which are not Omnibus Shares, the Date of
Original Issuance of which occurs after the last Purchase Cut-Off Date occurring
prior to the date of such determination.
(c) A Commission Share which is not an Omnibus Share of a particular
Fund (the "Issuing Fund") issued in consideration of the investment of proceeds
of the redemption of a Commission Share which is not an Omnibus Share of another
Fund (the "Redeeming Fund") in connection with a Permitted Free Exchange, is
deemed to have a Date of Original Issuance identical to the Date of Original
Issuance of the Commission Share of the Redeeming Fund and any such Commission
Share will be attributed to the Purchaser or the Distributor based upon such
Date of Original Issuance in accordance with rules (a) and (b) above.
(d) A Commission Share which is not an Omnibus Share redeemed (other
than in connection with a Permitted Free Exchange) or converted to a Class A
share is attributable to the Purchaser or Distributor based upon the Date of
Original Issuance in accordance with rule (a), (b) and (c) above.
(2) Free Shares:
Free Shares which are not Omnibus Shares of a Fund outstanding on any
date shall be attributed to the Purchaser or Distributor, as the case may be, in
the same proportion that the Commission Shares which are not Omnibus Shares of
such Fund outstanding on such date are attributed to it on such date; provided
that if the Program Administrator reasonably determines that the Transfer Agent
is able to produce monthly reports which track the Date of
2
<PAGE> 52
Original Issuance for the Free Shares, then the Free Shares shall be allocated
pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed
to the Purchaser or Distributor, as the case may be, in the same proportion that
the Commission Shares which are not Omnibus Shares of such Fund outstanding on
such date are attributed to it on such date; provided that if the Program
Administrator reasonably determines that the Transfer Agent is able to produce
monthly reports which track the Date of Original Issuance for the Omnibus
Shares, then the Omnibus Shares shall be allocated pursuant to clause 1(a), (1,)
and (c) above.
PART II: ALLOCATION OF CONTINGENT DEFERRED SALES CHARGES ("CDSCs")
(1) CDSCs Related to the Redemption of Commission Shares which are
not Omnibus Shares:
CDSCs accruing prior to March 1, 1999 in respect of the redemption of
Commission Shares which are not Omnibus Shares shall be allocated to the
Distributor. CDSCs accruing on or after March 1, 1999 in respect of the
redemption of Commission Shares which are not Omnibus Shares shall be allocated
to the Purchaser or Distributor depending upon whether the related redeemed
Commission Share is attributable to the Purchaser or Distributor, as the case
may be, in accordance with Part 1 above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs accruing prior to March 1, 1999 in respect of the redemption of
Omnibus Shares shall be allocated to the Distributor. CDSCs accruing on or after
March 1, 1999 in respect of the redemption of Omnibus Shares shall be allocated
to the Purchaser or Distributor, as the case may be, in the same proportion that
the CDSCs Related to the Redemption of Commission Shares are attributed to it on
such date; provided that if the Program Administrator reasonably determines that
the Transfer Agent is able to produce monthly reports which track the Date of
Original Issuance for the redeemed Omnibus Shares, then the CDSCs Related to the
Redemption of Omnibus Shares shall be allocated pursuant to clause 1 above.
3
<PAGE> 53
PART III: ALLOCATION ASSET BASED SALES CHARGES
Assuming that the Asset Based Sales Charge remains constant over time
and among Funds so that Part V hereof does not become operative:
(1) Asset Based Sales Charges accruing prior to March 9, 1999 in
respect of all Shares of all Funds shall be allocated to the Distributor. The
portion of the aggregate Asset Based Sales Charges accrued in respect of all
Shares of all Funds on or after March 9, 1999 and during any calendar month
allocable to the Purchaser or Distributor is determined by multiplying the total
of such Asset Based Sales Charges by the following fraction:
(A + C)/2
---------
(B + D)/2
where:
A= The aggregate Net Asset Value of all Shares of all Funds attributed
to the Purchaser or the Distributor, as the case may be, and
outstanding at the beginning of such calendar month (or March 9,
1999 if later)
B= The aggregate Net Asset Value of all Shares of all Funds at the
beginning of such calendar month (or March 9, 1999 if later)
C= The aggregate Net Asset Value of all Shares of all Funds attributed
to the Purchaser or the Distributor, as the case may be, and
outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Shares of all Funds at the end
of such calendar month
(2) If the Program Administrator reasonably determines that the
Transfer Agent is able to produce automated monthly reports which allocate the
average Net Asset Value of the Commission Shares (or all Shares if available) of
all Funds among the Purchaser and Distributor in a manner consistent with the
methodology detailed in Part 1 and Part 111(1) above, the portion of the Asset
Based Sales Charges accrued in respect of all such Shares of all Funds during a
particular calendar month will be allocated to the Purchaser or the Distributor
by multiplying the total of such Asset Based Sales Charges by the following
fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Shares of all Funds for such
calendar month attributed to the Purchaser or the Distributor, as the
case may be
B= Total average Net Asset Value of all such Shares of all Funds for
such calendar month
4
<PAGE> 54
PART IV: ALLOCATION OF OTHER AMOUNTS (IF ANY)
The allocation of amounts such as expense and indemnity payments
shall be accomplished in the following manner:
1. The Program Administrator will determine whether any such amounts
are intended to (i) be distributed in a manner similar to Program Collections
("Receivable Reimbursement Payment"), or (ii) reimburse a particular Person for
specific losses, cost, damages or other expenses other than losses for which a
Receivable Reimbursement Payment is being made ("Expense Payments").
2. Receivable Reimbursement Payments shall be allocated as nearly as
possible in the same manner as the Collections in respect of the Shares to which
they related would be allocated as provided in Parts 1 through III of this
Schedule II; provided, that if any such payment by a particular payor is not
sufficient to replace the full amount required to be replaced by such payment,
such payment shall be allocated to each person to which the amount replaced
would have been allocated as nearly as practicable in the proportion that the
full amount of indemnification required to be made to such indemnitee from such
payor bears to the total amount of indemnification required to be made to all
such indemnitees from such payor.
PART V: ADJUSTMENT OF THE PURCHASER'S PORTION AND THE DISTRIBUTOR'S PORTION
The Parties to the Program Documents recognize that, if the terms of
any Distributor's Contract, any Distribution Plan, any Prospectus, the Conduct
Rules or any other Applicable Law change, which change disproportionately
reduces, in a manner inconsistent with the intent of the Program Documents, the
amount of the Purchaser's Portion or the Distributor's Portion that would have
been payable on any Monthly Settlement Date had no such change occurred, the
definitions of the Purchaser's Portion and/or the Distributor's Portion in
respect of the Shares relating to such Fund shall be adjusted by agreement among
the Purchaser, the Distributor, the Program Administrator and the Funding and
Collection Agent; provided, however, if the Purchaser, the Distributor, the
Program Administrator and the Funding and Collection Agent cannot agree within
thirty (30) days after the date of any such change in Applicable Laws or in any
Distributor's Contract, Distribution Plan, Prospectus or the Conduct Rules, the
Parties shall submit the question to arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association and the
decision reached by the arbitrator shall be final and binding on the Parties
hereto. The Funding and Collection Agent shall be notified promptly in writing
by the Program Administrator of any adjustment in the Purchaser's Portion or the
Distributor's Portion or of any arbitration award pursuant to this Part V.
5
<PAGE> 55
Exhibit A to
Schedule II
to the
Mackenzie Program
Master Agreement
Selling Agents
Merrill Lynch
<PAGE> 56
Schedule III to
Mackenzie Program
Master Agreement
CONTINGENT DEFERRED SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
Years from
Fund Share Purchase CDSC Rate
- ------------------- ---------
<S> <C>
0-1 5%
1-2 4%
2-3 3%
3-4 3%
4-5 2%
5-6 1%
6+ 0%
</TABLE>
<PAGE> 57
RULES OF CONSTRUCTION; DEFINITIONS
[See Tab 5]
<PAGE> 58
Exhibit A to
Mackenzie Program
Master Agreement
FORM OF PURCHASE AGREEMENT
[See Tab 2]
<PAGE> 59
Exhibit B to
Mackenzie Program
Master Agreement
FORM OF PROGRAM SERVICER AGENT AGREEMENT
[See Tab 3]
<PAGE> 60
Exhibit C to
Mackenzie Program
Master Agreement
FORM OF PROGRAM COLLECTION AGENCY AGREEMENT
[See Tab 4]
<PAGE> 61
Exhibit D to
Mackenzie Program
Master Agreement
FORM OF DISTRIBUTION PLAN
[See Tab 12]
<PAGE> 62
Exhibit E to
Mackenzie Program
Master Agreement
FORM OF DISTRIBUTOR'S CONTRACT
[See Tab 12]
<PAGE> 63
Exhibit H to
Mackenzie Program
Master Agreement
FORM OF INVESTOR REPORT
[TO COME]
<PAGE> 64
Exhibit I to
Mackenzie Program
Master Agreement
FORM OF ADDITIONAL ELIGIBLE FUND ADDENDUM
Reference is hereby made to that certain Mackenzie Program Master
Agreement, dated as of March __, 1999 (as from time to time amended,
supplemented, waived or modified, the "Master Agreement"), among Mackenzie
Investment Management Inc., Ivy Management, Inc., Ivy Mackenzie Distributors,
Inc., Ivy Mackenzie Services Corp., Putnam Lovell Finance L.P., Putnam, Lovell,
de Guardiola & Thornton Inc. and Bankers Trust Company, as Collection Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings assigned to such terms in the Master Agreement.
Pursuant to the terms of Section 8.17 of the Master Agreement, the
Distributor hereby requests that [INSERT NAME OF FUND] a series of [INSERT NAME
OF COMPANY], an additional Eligible Fund, become a "Fund" under the Master
Agreement on the Addition Effective Date.
On and as of the Addition Effective Date, (i) such additional
Eligible Fund shall become a Fund ['and such Company shall become a Company,]
under and for all purposes of the Master Agreement and the other Program
Documents, (ii) the Program Documents shall be deemed to be supplemented to
reflect the addition of such additional Eligible Fund [and Company], (iii) Annex
A to this Additional Eligible Fund Addendum shall be deemed to be made a part of
Schedule 1 to the Master Agreement, and (iv) any reference in the Master
Agreement to the effectiveness on the date of the Master Agreement of, or any
change or modification since the date of the Master Agreement to, the
Distributor's Contract, the Distribution Plan, the Prospectus, the Conversion
Features, the Redemption Features, the Contingent Deferred Sales Charge
arrangement or Fundamental Investment Objectives and Policies in respect of such
additional Eligible Fund shall be amended to refer to the effectiveness thereof
on, and any change or modification thereof since, the Addition Effective Date.
In addition on the Addition Effective Date the [SPECIFY PROGRAM
DOCUMENT] shall be amended as follows: [SPECIFY NECESSARY AMENDMENTS, IF ANY, TO
WHICH THE PROGRAM ADMINISTRATOR HAS CONSENTED].
In addition, on and as of the Addition Effective Date, Schedule 1 to
the Purchase Agreement is hereby supplemented to add the following information
under each heading:
<TABLE>
<CAPTION>
PURCHASE PRICE
FUNDS SHARES PERCENTAGE
----- ------ ----------
<S> <C> <C>
[INSERT NAME OF Class B
ADDITIONAL
ELIGIBLE FUND]
</TABLE>
The Parent, the Distributor, the Advisor, the Program Servicer Agent
represent and warrant to the Program Administrator and the Purchaser that, on
and immediately after the
I-1
<PAGE> 65
Addition Effective Date, (i) their representations and warranties contained in
Article IV of the Master Agreement are true and correct in all respects (ii) no
Event of Termination (or event which with the passage of time or notice, or
both, would constitute an Event of Termination) has occurred, and (iii) the
conditions precedent set forth in Article III to he Master Agreement are
satisfied.
The Addition Effective Date shall occur when (a) a counterpart
hereof, signed by the Parent, the Distributor, the Advisor, the Program Servicer
Agent, the Purchaser and the Program Administrator has been received by the
Program Administrator, and (b) the other requirements described in Section 8.17
of the Master Agreement have been fully satisfied.
MACKENZIE INVESTMENT MANAGEMENT INC.,
as Parent
By:
------------------------------------
Name:
Title:
IVY MACKENZIE DISTRIBUTORS, INC.,
as Distributor
By:
------------------------------------
Name:
Title:
IVY MACKENZIE MANAGEMENT, INC.,
as Advisor
By:
------------------------------------
Name:
Title:
IVY MACKENZIE SERVICES CORP.,
as Program Servicer Agent
By:
------------------------------------
Name:
Title:
I-2
<PAGE> 66
PUTNAM LOVELL FINANCE L.P.,
as Purchaser
By: Putnam Lovell Finance Inc.,
its General Partner
By:
------------------------------------
Name:
Title:
PUTNAM, LOVELL, DE GUARDIOLA & THORNTON INC.,
as Program Administrator
By:
------------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Collection Agent
By:
------------------------------------
Name:
Title:
- ---------------------------------------
1. Required if Program Collection Agency Agreement is to be amended.
I-3
<PAGE> 67
- --------------------------------------------------------------------------------
MACKENZIE PROGRAM
PURCHASE AGREEMENT
Dated as of March 16, 1999
between
IVY MACKENZIE DISTRIBUTORS, INC.,
as Distributor
and
PUTNAM LOVELL FINANCE L.P.,
as Purchaser
- --------------------------------------------------------------------------------
<PAGE> 68
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 RULES OF CONSTRUCTION; DEFINITIONS
1.01. Rules of Construction........................................... 1
1.02. Definitions..................................................... 1
ARTICLE II PURCHASES; GENERAL
2.01. Purchase........................................................ 1
2.02. Sales and Purchases............................................. 2
2.03. Recording of Sales and Transfers................................ 2
2.04. Purchaser's Collection Rights................................... 2
2.05. Continuing Obligations.......................................... 2
2.06. Further Assurances.............................................. 3
ARTICLE III SECURITY INTEREST
ARTICLE IV MISCELLANEOUS
4.01. Modifications in Writing........................................ 3
4.02. Notices......................................................... 3
4.03. Binding Effect; Assignment...................................... 3
4.04. Governing Law................................................... 3
4.05. Severability of Provisions...................................... 4
</TABLE>
<PAGE> 69
MACKENZIE PROGRAM
PURCHASE AGREEMENT
MACKENZIE PROGRAM PURCHASE AGREEMENT, dated as of March 16, 1999 (this
"Agreement"), between IVY MACKENZIE DISTRIBUTORS, INC. (the "Distributor") and
PUTNAM LOVELL FINANCE L.P. (the "Purchaser").
WITNESSETH:
WHEREAS, the Distributor and the Purchaser are parties to that
certain Mackenzie Program Master Agreement dated as of the date hereof with the
"Parent," "Program Servicer Agent," "Advisor," "Collection Agent" and "Program
Administrator," each as defined therein (the "Master Agreement"); and
WHEREAS, the Distributor desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Distributor, from time to time, on the
terms and subject to the conditions specified in this Agreement and the Master
Agreement, the Purchased Portfolio Assets (defined as hereinafter provided);
NOW, THEREFORE, in consideration of the foregoing premises, and
the mutual covenants and agreements herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
RULES OF CONSTRUCTION; DEFINITIONS
Section 1.01. Rules of Construction. The rules of construction set
forth in Schedule X to the Master Agreement shall be applied to this Agreement.
Section 1.02. Definitions. Capitalized terms not expressly defined
herein, which are defined in Schedule X to the Master Agreement, shall have the
same meanings herein as in said Schedule.
ARTICLE II
PURCHASES; GENERAL
Section 2.01. Purchase. On the Purchase Date, the Distributor hereby
agrees to sell, transfer, convey and assign to the Purchaser, and the Purchaser
hereby agrees to purchase, in each case on the terms and subject to the
conditions set forth in this Agreement and in the Master Agreement, all of the
Distributor's right, title and interest in, to and under all Purchased Portfolio
<PAGE> 70
Assets, arising directly and indirectly out of Commission Shares of each Fund
the Date of Original Issuance of which occurs on or prior to the Purchase
Cut-Off Date, and the Purchaser shall pay to the Distributor a purchase price in
the amount of $21,115,000 the ("Purchase Price") therefore.
Section 2.02. Sales and Purchases. (a) The parties to this Agreement
intend that the transaction contemplated by Section 2.01 shall be, and shall be
treated as, a purchase by the Purchaser and a sale by the Distributor of the
Purchased Portfolio Assets relating thereto, constituting a True Sale, and shall
not be treated as a lending transaction. The sale of Purchased Portfolio Assets
by the Distributor hereunder shall be without recourse to, or representation or
warranty of any kind (express or implied) by, the Distributor, except as set
forth in the Master Agreement.
(b) The parties agree, to the fullest extent they may lawfully do so,
that the Purchase Price for the purchase and sale of the Purchased Portfolio
Assets relating thereto pursuant to this Agreement represents reasonably
equivalent value for the transfer of the same by the Distributor to the
Purchaser pursuant to this Agreement.
Section 2.03. Recording of Sales and Transfers. In connection with
the sale and conveyance of Purchased Portfolio Assets pursuant to this
Agreement, the Distributor shall indicate on its books and records that all such
Purchased Portfolio Assets have been sold or conveyed to the Purchaser. In
addition, the Distributor shall not carry any Purchased Portfolio Assets sold to
the Purchaser on its accounting records, and the Distributor agrees that all
such Purchased Portfolio Assets have been and will be, as contemplated by the
terms of this Agreement, transferred and sold to the Purchaser and carried on
the Purchaser's accounting records.
Section 2.04. Purchaser's Collection Rights. The Purchaser has
appointed the Program Servicer Agent to, on the Purchaser's behalf, and pursuant
to the Program Servicer Agent Agreement, the Program Servicer Agent has agreed
to take all actions it considers reasonable and in accordance with the Program
Servicer Agent Agreement to collect from the respective Companies and Funds all
payments in respect of the Purchased Portfolio Assets as and when the same shall
become due. The Distributor hereby irrevocably authorizes and empowers the
Purchaser and the Program Servicer Agent, on behalf of the Purchaser, to demand,
sue for, collect and receive payment of any funds due with respect to the
Purchased Portfolio Assets in the name of the Distributor, if required in the
judgment of the Purchaser or the Program Servicer Agent.
Section 2.05. Continuing Obligations. Notwithstanding any other
provision of this Agreement, to the extent that any obligation of the
Distributor or the Distributor under, pursuant to and in connection with the
Purchased Portfolio Assets remains unperformed or executory, the Distributor
hereby appoints the Program Servicer Agent, on its behalf but for the benefit of
the Purchaser, to perform such obligation to the same extent as if the purchase
and sale contemplated hereby had not taken place, and the Purchaser shall not be
required or obligated in any manner to perform or fulfill any of the obligations
of Distributor under, pursuant to or in connection with any Purchased Portfolio
Assets.
2
<PAGE> 71
Section 2.06. Further Assurances. The Distributor agrees to do such
further acts and things, and to execute and deliver to the Purchaser such
additional assignments, agreements, powers and instruments, as are reasonably
required by the Purchaser to carry into effect the purposes of this Agreement or
to better assure and confirm unto the Purchaser its rights, power and remedies
hereunder.
ARTICLE III
SECURITY INTEREST
For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to induce the Purchaser to purchase the Purchased
Portfolio Assets hereunder, the Distributor hereby grants to the Purchaser, in
order to secure the Purchaser's rights under this Agreement in the event the
purchase of any Purchased Portfolio Assets by the Purchaser is recharacterized
as a loan from the Purchaser to the Distributor, a security interest in any
right, title and interest in and to such Purchased Portfolio Assets, whether now
owned or hereafter acquired, that remain property of the Distributor's estate
notwithstanding this Agreement.
ARTICLE IV
MISCELLANEOUS
Section 4.01. Modifications in Writing. This Agreement and any term
or provision hereof may only be amended, modified or waived by a written
instrument executed by the parties hereto and by any additional Persons whose
execution is required pursuant to Section 8.01 of the Master Agreement.
Section 4.02. Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be given or made in accordance with Section 8.03 of the Master
Agreement.
Section 4.03. Binding Effect: Assignment. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective permitted successors and assigns. No party shall assign any of its
rights or obligations hereunder without the prior written consent of the other
parties hereto and of any additional Persons whose consent is required pursuant
to Section 8.07 of the Master Agreement; provided that the Purchaser's right,
title and interest in, to and under this Agreement, including all of the
Purchaser's right, title and interest in and to Purchased Portfolio Assets may
be assigned as contemplated by the Program Documents without the consent of the
Distributor.
Section 4.04. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK
3
<PAGE> 72
AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
Section 4.05. Severability of Provisions. Any provisions of this
Agreement which are prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
4
<PAGE> 73
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
IVY MACKENZIE DISTRIBUTORS, INC.,
as Distributor
By: /s/ Keith J. Carlson
------------------------------------------
Keith J. Carlson
President
5
<PAGE> 74
PUTNAM LOVELL FINANCE L.P.
By: PUTNAM LOVELL FINANCE INC.,
as General Partner
By: /s/ Michael R. Llodra
--------------------------------------
Name: Michael R. Llodra
Title: Vice President
6
<PAGE> 75
- --------------------------------------------------------------------------------
MACKENZIE PROGRAM
SERVICER AGENT AGREEMENT
Dated as of March 16, 1999
among
PUTNAM LOVELL FINANCE L.P.,
as Purchaser,
PUTNAM, LOVELL, DE GUARDIOLA & THORNTON INC.,
as Program Administrator,
IVY MACKENZIE DISTRIBUTORS, INC.,
as Distributor
and
IVY MACKENZIE SERVICES CORP.,
as Program Servicer Agent
- --------------------------------------------------------------------------------
<PAGE> 76
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 RULES OF CONSTRUCTION; DEFINITIONS
1.01. Rules of Construction...................................... 1
1.02. Definitions................................................ 1
ARTICLE II ADMINISTRATION AND SERVICING OF PORTFOLIO ASSETS
2.01. Duties of the Program Servicer Agent....................... 1
2.02. Appointment of the Program Servicer Agent as
Agent for the Purchaser.................................. 2
2.03. Continuing Covenants of the Program Servicer Agent......... 2
2.04. No Offset.................................................. 3
2.05. Consent of Distributor..................................... 3
2.06. Term....................................................... 3
ARTICLE III INVESTOR REPORTS; RECORDKEEPING; COMPENSATION
3.01. Investor Reports........................................... 4
3.02. Recordkeeping.............................................. 4
3.03. Servicing Expenses and Compensation........................ 4
3.04. Delivery of Officer's Certificates......................... 4
ARTICLE IV THE PROGRAM SERVICER AGENT
4.01. Program Servicer Agent Not to Resign....................... 5
4.02. No Assignment.............................................. 5
4.03. Delegation of Duties....................................... 5
</TABLE>
<PAGE> 77
<TABLE>
<S> <C>
ARTICLE V REMOVAL FOR CAUSE; SUCCESSOR PROGRAM SERVICER AGENT
5.01. Removal for Cause........................................... 5
5.02. Appointment of Successor Program Servicer
Agent..................................................... 6
5.03. No Effect on Other Parties.................................. 6
5.04. Rights Cumulative........................................... 6
ARTICLE VI TERMINATION; REMOVAL AND RESIGNATION; TRANSFER OF
SERVICING FUNCTION
6.01. Removal and Resignation..................................... 7
6.02. Transfer of Servicing Function.............................. 7
ARTICLE VII MISCELLANEOUS PROVISIONS
7.01. Modifications in Writing.................................... 7
7.02. Notices..................................................... 7
7.03. Binding Effect; Assignment.................................. 7
7.04. Governing Law............................................... 7
7.05. Severability................................................ 8
7.06. Survival.................................................... 8
EXHIBITS
Exhibit A Program Servicing Procedures
</TABLE>
ii
<PAGE> 78
MACKENZIE PROGRAM
SERVICER AGENT AGREEMENT
MACKENZIE PROGRAM SERVICER AGENT AGREEMENT, dated as of March 16, 1999,
among PUTNAM LOVELL FINANCE L.P. (the "Purchaser"), PUTNAM, LOVELL, DE GUARDIOLA
& THORNTON INC., as program administrator (the "Program Administrator"), IVY
MACKENZIE DISTRIBUTORS, INC. (the "Distributor"), and IVY MACKENZIE SERVICES
CORP. (the "Program Servicer Agent").
WITNESSETH:
WHEREAS, the Program Servicer Agent, the Distributor, the Purchaser
and the Program Administrator are parties to that certain Mackenzie Program
Master Agreement dated as of the date hereof with the "Parent," "Advisor," and
Collection Agent" as defined therein (the "Master Agreement") pursuant to which
the Purchaser shall purchase the Purchased Portfolio Assets (defined as
hereinafter provided) upon the terms and subject to the conditions described
therein; and
WHEREAS, it is a condition precedent in the Master Agreement that the
parties hereto enter into this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
RULES OF CONSTRUCTION; DEFINITIONS
Section 1.01. Rules of Construction. The rules of construction set
forth in Schedule X to the Master Agreement shall be applied to this Agreement.
Section 1.02. Definitions. Capitalized terms not expressly defined
herein which are defined in Schedule X to the Master Agreement, shall have the
same meanings herein as in said Schedule.
ARTICLE II
ADMINISTRATION AND SERVICING OF PORTFOLIO ASSETS
Section 2.01. Duties of the Program Servicer Agent. The Program
Servicer Agent's duties shall be: (i) to take all such action as the Program
Administrator shall request to exercise all of the Purchaser's rights
(including, to the extent acquired by the Purchaser, all of the
<PAGE> 79
Distributor's rights) under the Distributor's Contracts, the Distribution Plans,
the Prospectuses, each Irrevocable Payment Instruction and at law or equity to
cause each Fund (or in respect of any Fund which constitutes a portfolio, to
cause the related Company in respect of such Fund) to pay to the Program
Collection Account when due all Program Collections and Related Collections due
from such Fund or its shareholders in respect of outstanding shares of the Fund;
(ii) the recording of all Portfolio Assets due under or in connection with each
Fund; (iii) investigating delinquencies; (iv) responding to inquiries of the
Purchaser and the Program Administrator; (v) enforcing the Purchaser's rights
with respect to the Purchased Portfolio Assets relating to each Fund; (vi)
accounting for Program Collections in respect of the Purchased Portfolio Assets
relating to each Fund; (vii) furnishing the Investor Report and other monthly
statements and reports relating to Portfolio Assets as required by this
Agreement, the Master Agreement and the other Program Documents; (viii)
performing any and all obligations of the Distributor under, pursuant to and in
connection with the Purchased Portfolio Assets in accordance with Section 2.05
of the Purchase Agreement; and (ix) consistent with the terms herein, to follow
the Program Servicing Procedures. Subject to the limitations contained herein,
the Program Servicer Agent shall have full power and authority, acting alone, to
do any and all things in connection with such management, servicing,
administration, performance and collection which it deems necessary or
appropriate but in no case shall the Program Servicer Agent take any action
under this Section 2.01 inconsistent with the provisions of the Program
Documents or which gives rise to the reasonable possibility of an Adverse
Effect. The Program Servicer Agent has no right to receive payments on account
of Purchased Portfolio Assets for its own account. The Program Servicer Agent is
required to take such actions as may be necessary or advisable to collect
Purchased Portfolio Assets, but is not authorized to extend, modify or amend any
Purchased Portfolio Assets without the prior consent of the Program
Administrator and the Purchaser.
Section 2.02. Appointment of the Program Servicer Agent as Agent for
the Purchaser. The Purchaser hereby appoints IVY MACKENZIE SERVICES CORP. as
Program Servicer Agent under this Agreement. The Purchaser shall furnish the
Program Servicer Agent, upon the Program Servicer Agent's written request, with
such powers of attorney and other documents reasonably necessary or appropriate
to enable the Program Servicer Agent to carry out its servicing and
administrative duties hereunder.
Section 2.03. Continuing Covenants of the Program Servicer Agent.
The Program Servicer Agent hereby covenants and agrees that it shall at all
times:
(a) punctually perform and observe all of its obligations and
agreements contained herein;
(b) carry out its obligations hereunder in accordance with all
Applicable Laws (except where the failure to comply with Applicable Laws could
not reasonably be expected to give rise to an Adverse Effect) and with due care,
using at least the degree of skill, care and attention followed by responsible
institutions servicing comparable mutual fund distribution plans and
distribution agreements and in accordance with the terms of this Agreement and
the Program Servicing Procedures in effect from time to time and with
instructions received from the Purchaser;
2
<PAGE> 80
(c) do nothing (in its capacity as Program Servicer Agent) which
could reasonably be expected to (i) impair or otherwise adversely affect the
rights of the Purchaser in any Purchased Portfolio Assets or under any Program
Document or the collectibility of the Purchased Portfolio Assets relating to any
Fund, or (ii) otherwise give rise to an Adverse Effect;
(d) provide such information to the Program Administrator as it may
reasonably request from time to time with respect to the Portfolio Assets or
which is otherwise reasonably necessary or desirable, in the reasonable judgment
of the Program Administrator, to make any determination in connection with any
consent, waiver or other action which may be given or taken under or in
connection with this Agreement or the other Program Documents; and
(e) keep in full force and effect its existence and good standing
under the laws of the jurisdiction of its incorporation and obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which the nature of its business or the performance of its obligations under
this Agreement requires such qualification, except to the extent that the
failure to so qualify could not reasonably be expected to have an Adverse
Effect.
Section 2.04. No Offset. The obligations of the Program Servicer
Agent under this Agreement shall not be subject to any defense, counterclaim or
right of offset which the Program Servicer Agent has or may have against the
Purchaser, the Distributor, the Program Administrator or any other Person,
whether in respect of this Agreement, any other Program Document, the Portfolio
Assets relating to any Fund or otherwise.
Section 2.05. Consent of Distributor. The Distributor hereby consents
to the appointment of Ivy Mackenzie Services Corp. as Program Servicer Agent
under this Agreement. In addition, the Distributor grants to Ivy Mackenzie
Services Corp. all rights, powers and authority necessary or advisable to enable
the Program Servicer Agent to perform its obligations hereunder including the
rights and remedies of the Distributor (a) under the Distributor's Contracts,
the Distribution Plans, the Prospectuses, each Irrevocable Payment Instruction
and at law or equity to cause each Fund (or in respect of a Fund which
constitutes a portfolio, to cause the related Company in respect of such Fund)
to pay to the Program Collection Account when due all amounts due from such Fund
or its shareholders in respect of outstanding shares of the Fund which relate to
Purchased Portfolio Assets relating to each Fund, and (b) under, pursuant to and
in connection with the Purchased Portfolio Assets in accordance with Section
2.07 of the Purchase Agreement; it being understood that the Distributor is not
assigning, and shall remain fully responsible to perform, all of its obligations
under the Program Documents.
Section 2.06. Term. The term of this Agreement shall end on the date
that all amounts payable pursuant to the Purchased Portfolio Assets have been
paid in full.
3
<PAGE> 81
ARTICLE III
INVESTOR REPORTS; RECORDKEEPING;
COMPENSATION
Section 3.01. Investor Reports. Monthly on or prior to the 10th
Business Day of each calendar month, the Program Servicer Agent shall provide
the Program Administrator with an Investor Report. All monthly activity reports
and electronic files related to each Investor Report will be transmitted to the
Program Administrator on or prior to the 5th Business Day of each calendar month
in accordance with the Program Servicing Procedures.
Section 3.02. Recordkeeping. The Program Servicer Agent shall
maintain accurate records with respect to the Portfolio Assets relating to each
Fund and shall retain all information relating directly to, or maintained in
connection with, the servicing of such Portfolio Assets, at the offices of the
Program Servicer Agent, and shall give the Purchaser, the Program Administrator,
any Permitted Designees or any of their agents or representatives access to all
such information at all reasonable times, on reasonable notice during business
hours. The Program Servicer Agent shall, at the reasonable request of the
Purchaser or the Program Administrator, deliver to them all such information
which is necessary or desirable for evaluating the servicing of the Portfolio
Assets relating to each Fund.
Section 3.03. Servicing Expenses and Compensation. The Program
Servicer Agent shall pay all expenses and charges it shall incur in the
performance of its duties hereunder and will not be entitled to reimbursement
for any such expenses or any compensation for its services hereunder, except for
a fee (the "Program Servicer Agent Fee") for its services hereunder payable in
accordance with Section 3.03 of the Program Collection Agency Agreement during
the term of this Agreement at the rate of $1,000 per month.
Section 3.04. Delivery of Officer's Certificates. On or before one
hundred twenty (120) days after the end of each fiscal year of the Program
Servicer Agent, the Program Servicer Agent shall deliver to the Purchaser and
the Program Administrator, an officer's certificate to the effect that a review
of the activities of the Program Servicer Agent during the period from the last
accounting under this Section 3.04 (or the Purchase Date in the case of the
first such certificate) has been made under the supervision of the officer
executing such certificate with a view to determining whether during that period
the Program Servicer Agent had performed and observed all of its obligations
hereunder, and either (i) stating that no default hereunder by the Program
Servicer Agent has occurred and is continuing, or (ii) if such a default has
occurred and is continuing, specifying in reasonable detail the default, its
nature and status and the measures the Program Servicer Agent is taking to cure
such default.
4
<PAGE> 82
ARTICLE IV
THE PROGRAM SERVICER AGENT
Section 4.01. Program Servicer Agreement Not to Resign. The Program
Servicer Agent shall not resign from the duties and obligations hereby imposed
upon it except with the prior written consent of the Program Administrator or
upon a determination that by reason of a change in Applicable Law (i) the
continued performance by the Program Servicer Agent of its duties hereunder
would cause it to be in violation of such Applicable Law, and (ii) there is no
reasonable action which the Program Servicer Agent could take to comply with
Applicable Law. Such a determination to that effect shall be evidenced by a
certificate of an executive officer of the Program Servicer Agent accompanied by
an opinion of outside counsel to the Program Servicer Agent reasonably
satisfactory to the Purchaser and the Program Administrator with respect to the
matters described in clause (i) of the preceding sentence.
Section 4.02. No Assignment. The Program Servicer Agent may not
assign this Agreement or any of its rights, powers, duties or obligations
hereunder.
Section 4.03. Delegation of Duties. The Program Servicer Agent may
execute any of its duties under this Agreement by or through an agent with the
prior written consent of the Program Administrator which consent shall not be
unreasonably withheld or delayed; provided, however, that the Program Servicer
Agent's exercise of any such duties through any such agent shall not in any way
affect or limit its liabilities under this Agreement.
ARTICLE V
REMOVAL FOR CAUSE; SUCCESSOR PROGRAM SERVICER AGENT
Section 5.01. Removal for Cause. The Purchaser or the Program
Administrator for Cause may remove IVY MACKENZIE SERVICES CORP. as Program
Servicer Agent under this Agreement and all of the rights and powers of the
Program Servicer Agent hereunder shall terminate on five (5) Business Days'
prior written notice to the Program Servicer Agent, it being understood that
such removal and termination shall not operate to terminate any of the Program
Servicer Agent's obligations under this Agreement other than its obligation to
perform the duties set forth in Articles II and III hereof after the date of
such termination. Upon such termination of the Program Servicer Agent's rights
and powers, all rights and powers of the Program Servicer Agent hereunder with
respect to the Portfolio Assets relating to each Fund will immediately vest in
the Program Administrator or such other Permitted Entity (as defined in Section
5.02) as the Program Administrator shall designate, and the Program
Administrator or such Permitted Entity shall be authorized and empowered to
execute and deliver, on behalf of the Program Servicer Agent, as
attorney-in-fact or otherwise, all documents and other instruments and to do all
other things which the Purchaser or the Program Administrator believes to be
necessary or appropriate to effect such vesting, subject, however, to the
provisions of applicable law. The term "Cause" as used herein shall mean: (i)
the failure, in any material respect, of the Program Servicer Agent to perform
obligations under this Agreement, fully and in a timely manner, after being
notified of
5
<PAGE> 83
such failure by the Program Administrator; or (ii) the occurrence of an event of
the type specified in clauses (e), (f), (h), (i) or (k) of the definition of
Event of Termination with respect to the Program Servicer Agent.
Section 5.02. Appointment of Successor Program Servicer Agent. (a)
Within thirty (30) days after the time the Program Servicer Agent delivers a
notice of resignation pursuant to Section 4.01 or is removed pursuant to Section
5.01, the Program Administrator shall, with the consent of the Distributor,
which shall not be unreasonably withheld, appoint a successor servicer (the
"Successor"), which may be the Program Administrator, any Affiliate of the
Purchaser or the Program Administrator or such other Person reasonably
satisfactory to the Program Administrator (each a "Permitted Entity").
(b) Any such Successor shall have the following additional rights:
(i) to have its agents, employees and representatives enter upon the premises of
the Program Servicer Agent and the other Sponsor Entities during normal business
hours upon reasonable notice, and (ii) to perform at such premises all of the
functions necessary to be performed in accordance with the terms hereof for
fulfillment of its obligations hereunder including, but not limited to,
performance of all necessary accounting functions, bookkeeping functions,
notification and reporting functions and to deal in all other respects with the
Portfolio Assets relating to each Fund to the extent required to be performed by
the Program Servicer Agent hereunder. The Purchaser and the Program
Administrator (or their respective designees) shall be authorized and empowered
through their respective officers, directors, agents and employees to execute on
behalf of the Program Servicer Agent all checks, bills, drafts, deposits and
other bank documents or other instruments as may be necessary or appropriate to
effect the foregoing.
Section 5.03. No Effect on Other Parties. Upon any termination of the
rights and powers of the Program Servicer Agent pursuant to Section 4.01 or
Section 5.01 hereof, or upon any appointment of a Successor, all the rights and
powers of the Purchaser and the Program Administrator hereunder will remain
unaffected by the termination or appointment and will remain in full force and
effect.
Section 5.04. Rights Cumulative. The rights and remedies conferred
upon or reserved to the Purchaser and the Program Administrator in this
Agreement, the Master Agreement, and the other Program Documents are cumulative,
and none is intended to be exclusive of another. No delay or omission in
insisting upon the strict observance or performance of any provision hereof or
of the Master Agreement, or any other Program Document, or in exercising any
right or remedy hereunder or thereunder, will be construed as a waiver or
relinquishment of that provision or will impair such right or remedy. Every
right and remedy may be exercised from time to time and as often as deemed
expedient.
6
<PAGE> 84
ARTICLE VI
TERMINATION; REMOVAL AND RESIGNATION;
TRANSFER OF SERVICING FUNCTION
Section 6.01. Removal and Resignation. If the rights and obligations
of the Program Servicer Agent are terminated pursuant to Section 4.01 or Section
5.01, the Program Servicer Agent shall promptly remit to the Program Collection
Account all other moneys with respect to the Purchased Portfolio Assets relating
to each Fund held by the Program Servicer Agent, or for the account of the
Purchaser, if any.
Section 6.02. Transfer of Servicing Function. If the rights and
obligations of the Program Servicer Agent are terminated in accordance with
Section 4.01 or Section 5.01 hereof, the Program Servicer Agent shall deliver to
the Program Administrator (or such Person designated by the Program
Administrator) all information, records and documents in the Program Servicer
Agent's possession which are necessary or appropriate for the servicing of the
Portfolio Assets relating to each Fund. The Program Servicer Agent shall execute
all documents reasonably requested by the Purchaser and the Program
Administrator to effectively transfer the servicing obligations to the
Successor.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Modifications in Writing. This Agreement and any term
or provision hereof may only be amended, modified or waived by a written
instrument executed by the parties hereto and by any additional Persons whose
execution is required pursuant to Section 8.01 of the Master Agreement.
Section 7.02. Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be given or made in accordance with Section 8.03 of the Master
Agreement.
Section 7.03. Binding Effect: Assignment. This Agreement shall be
binding upon and inure to the benefit of, the parties hereto and their
respective permitted successors and assigns. The Servicer Agent shall not assign
any of its rights or obligations hereunder (voluntarily or by operation of Law)
without the prior written consent of the other parties hereto. The Purchaser may
assign all or any portion of its rights hereunder in connection with any
assignment of Purchased Portfolio Assets permitted pursuant to Section 8.07 of
the Master Agreement.
Section 7.04. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL
BE GOVERNED BY AND CONSTRUED IN
7
<PAGE> 85
ACCORDANCE WITH THE LAWS OF SMD STATE WITHOUT REGARD TO ITS CONFLICTS OF LAWS
PROVISIONS THEREOF.
Section 7.05. Severability. Any provision of this Agreement which is
prohibited or unenforceable, in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 7.06. Survival. The obligations of the Program Servicer Agent
in respect of the breach of any provision or covenant set forth herein shall
continue to be the obligation of the Person who was the Program Servicer Agent
at the time of such breach regardless of any subsequent assignment or transfer
of such Program Servicer Agent's obligations hereunder or to another Person.
[Remainder of This Page Intentionally Left Blank]
8
<PAGE> 86
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
IVY MACKENZIE SERVICES CORP.,
as Program Servicer Agent
By: /s/ C. William Ferris
-------------------------------------------
C. William Ferris
President
IVY MACKENZIE DISTRIBUTORS, INC.,
as Distributor
By: /s/ Keith J. Carlson
-------------------------------------------
Keith J. Carlson
President
9
<PAGE> 87
PUTNAM LOVELL FINANCE L.P.,
as Purchaser
By: Putnam Lovell Finance Inc.,
General Partner
By: /s/ Michael R. Llodra
---------------------------------------
Name: Michael R. Llodra
Title: Vice president
PUTNAM, LOVELL, DE GUARDIOLA &
THORNTON INC.,
as Program Administrator
By: /s/ Robert T. Fleisher
---------------------------------------
Name: Robert T. Fleisher
Title: Vice President
10
<PAGE> 88
EXHIBIT A
To the Program
Servicer Agent
Agreement
Program Servicing Procedures
1. All Contingent Deferred Sales Charges withheld by the Fund's Transfer Agent
or Selling Agents (other than Selling Agents then listed on Exhibit 1 to
the Program Allocation Procedures (the "Omnibus Selling Agents")) will be
wired directly to the Program Collection Account in accordance with the
Irrevocable Payment Instructions no later than the third Business Day
following the end of the calendar week in which the same are withheld, it
being understood that all CDSC's accrued beginning March 1, 1999 will be
deposited to the Program Collection Account on the Closing Date.
2. All Contingent Deferred Sales Charges withheld by each Omnibus Selling
Agent will be wired directly to the Program Collection Account in
accordance with the Irrevocable Payment Instruction on or prior to the
fifth Business Day of the calendar month immediately following the calendar
month to which they relate. In the event that Omnibus Selling Agents
forward amounts to the Program Collection Account other than Contingent
Deferred Sales Charges related to the Portfolio Assets and the Distributor
notifies the Program Administrator of such occurrence, the Program
Administrator will promptly forward such amounts to the Distributor, it
being understood that all CDSC's accrued beginning March 1, 1999 will be
deposited to the Program Collection Account on or prior to the fifth
Business Day of April 1999.
3. All Asset Based Sales Charges accruing after the eighth calendar day of any
calendar month through the eighth calendar day of the next succeeding
calendar month will be wired directly to the Program Collection Account in
accordance with the Irrevocable Payment Instruction on or prior to the
twelfth calendar day of the calendar month, it being understood that all
Asset Based Sales Charges accrued beginning on March 9, 1999 through April
8, 1999 will be deposited in the Program Collection Account on or prior to
the April 12, 1999.
4. The Program Servicer Agent will cause all Persons (including Funds,
Transfer Agents and Selling Agents) making deposits to the Program
Collection Account to identify, in the wire instructions for such deposit,
the nature of the amounts deposited (e.g. Asset Based Sales Charges,
Contingent Deferred Sales Charges, etc.), the calendar month to which each
such identified amount relates and to the extent any such amount relates to
two calendar months (other than Asset Based Sales Charges), such wire
instructions will separate the portions of such amount related to each such
calendar month.
5. The Program Servicer Agent will promptly notify the Program Administrator
of any persons (including additional Omnibus Selling Agents) that will be
withholding Contingent Deferred Sales Charges for deposit directly to the
Program Collection Account. Upon such notifications, Exhibit 1 to the
Program Allocation Procedures will be updated by the Program Administrator.
<PAGE> 89
6. As soon as possible following the end of each calendar month and on or
prior to the fifth Business Day of the calendar month, the Program Servicer
Agent will cause the following reports (or other reports designated by the
Program Administrator in the future) to be forwarded to the Program
Administrator in an acceptable format:
- Excel Spreadsheet Containing Monthly Share Lot Report (three section
for each fund: 1) total balances including Merrill Lynch, by fund, by
aging bucket, 2) Merrill Lynch only, by fund, by aging bucket and 3)
the total balances after subtracting out Merrill Lynch only, by fund,
by aging bucket). Hard copy backup of report from FDC will be
included, provided that if programming changes can be made that
segregate section 2 above as part of section 1, section 3 will not be
required.
- Monthly Waived Deferred Sales Charge Report from FDC (including
Merrill Lynch, by fund, by aging bucket)
- Monthly Deferred Sales Charge Report from FDC
- Monthly Reports B.1 and C.2 from Merrill Lynch (divided by Lender
with all CDSCs and Assets related to pre-1999 shares categorized as
Lender 1)
- Monthly Distributor Liability Reports MFA595R2 and MFA595R4 from
Merrill Lynch
Each report shall contain any summary sections that are available as an
option for such report. The Program Servicer Agent will cause all parties
submitting reports to run such reports as of the last day of each calendar
month on a settlement date basis. If the Program Servicer Agent cannot
arrange for the reports listed above to be transmitted electronically to
the Purchaser, only hardcopy reports will be required to be submitted to
the Purchaser. Notwithstanding the previous sentence, the Program Servicer
Agent will use its best efforts to arrange for the transmittal of
electronic files containing the reports listed above on or prior to the
fifth Business Day of each calendar month. All reports related to activity
for February 1999 along with the Investor Report for February 1999 will be
submitted to the Program Administrator on or prior to March 19, 1999.
7. An explanation of all unusual activity will be footnoted on each Investor
Report. Such unusual activity will include, but not be limited to:
a) negative adjustments to any amount including Contingent Deferred Sales
Charges
b) Free Redemptions of Shares for a single shareholder where the
aggregate redemption date Net Asset Value of all Shares of all Funds
redeemed by such shareholder during the calendar month to which the
Investor Report relates equals or exceeds $200,000.
<PAGE> 90
- --------------------------------------------------------------------------------
MACKENZIE PROGRAM
COLLECTION AGENCY AGREEMENT
Dated as of March 16,1999
among
BANKERS TRUST COMPANY,
as Collection Agent,
PUTNAM LOVELL FINANCE L.P.,
as Purchaser,
PUTNAM, LOVELL, DE GUARDIOLA & THORNTON INC.,
as Program Administrator,
and
IVY MACKENZIE DISTRIBUTORS, INC.,
as Distributor
- --------------------------------------------------------------------------------
<PAGE> 91
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 RULES OF CONSTRUCTION; DEFINED TERMS
1.01. Rules of Construction...................................... 1
1.02. Defined Terms.............................................. 1
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS
2.01. Representations and Warranties............................. 1
2.02. Covenants.................................................. 2
ARTICLE III PROGRAM COLLECTION ACCOUNT
3.01. Establishment and Maintenance.............................. 2
3.02. Required Deposits.......................................... 2
3.03. Application of Funds in the Program Collection
Account.................................................. 3
3.04. Investment of Funds Deposited in Program Collection
Account.................................................. 6
3.05. Program Collection Account CDSC Sub-Accounts............... 7
ARTICLE IV COLLECTION AGENT
4.01. Appointment................................................ 8
4.02. Scope of Duties............................................ 8
4.03. Delegation of Duties....................................... 8
4.04. Reliance by Collection Agent............................... 8
4.05. Collection Agent in its Individual Capacity................ 9
4.06. Limitation on Liability, Etc............................... 9
ARTICLE V SUCCESSOR COLLECTION AGENT; QUALIFICATIONS OF COLLECTION
AGENT
5.01. Successor Collection Agent................................. 9
5.02. Qualifications of Collection Agent......................... 10
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VI FEES AND EXPENSES
6.01. Payment of Expenses and Taxes.............................. 11
6.02. Fees....................................................... 11
ARTICLE VII MISCELLANEOUS
7.01. Amendment and Waivers...................................... 12
7.02. Notices.................................................... 12
7.03. Severability............................................... 12
7.04. No Waiver; Cumulative Remedies............................. 12
7.05. Termination................................................ 12
7.06. Successors and Assigns..................................... 12
7.07. Governing Law.............................................. 13
7.08. Security Interests......................................... 13
7.09. Counterparts............................................... 13
</TABLE>
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MACKENZIE PROGRAM
COLLECTION AGENCY AGREEMENT
MACKENZIE PROGRAM COLLECTION AGENCY AGREEMENT, dated as of March 16,
1999, among BANKERS TRUST COMPANY, as collection agent (in such capacity, the
"Collection Agent"), PUTNAM LOVELL FINANCE L.P. (the "Purchaser"), PUTNAM,
LOVELL, DE GUARDIOLA & THORNTON INC., as program administrator (the "Program
Administrator") and IVY MACKENZIE DISTRIBUTORS, INC. (the "Distributor").
WITNESSETH:
WHEREAS, the Purchaser, the Distributor, the Program Administrator
and the Collection Agent are parties to that certain Mackenzie Program Master
Agreement dated as of the date hereof with the "Advisor", the "Program Servicer
Agent", and the "Parent" as defined therein (the "Master Agreement") pursuant to
which the Purchaser has agreed, on the terms and conditions set forth therein,
to purchase from the Distributor certain "Purchased Portfolio Assets" as defined
therein; and
WHEREAS, it is a condition precedent in the Master Agreement that the
parties hereto enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the parties
hereto agree as follows:
ARTICLE 1
RULES OF CONSTRUCTION; DEFINED TERMS
Section 1.01. Rules of Construction. The rules of construction set
forth in Schedule X to the Master Agreement shall be applied to this Agreement.
Section 1.02. Defined terms. Capitalized terms not otherwise defined
herein shall have the meanings assigned to such terms in Schedule X to the
Master Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties. Each of the parties to
this Agreement represents and warrants to the other parties to this Agreement as
follows:
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(a) it is duly organized and existing under the laws of the
jurisdiction of its organization with full power and authority to execute and
deliver this Agreement and to perform all of the duties and obligations to be
performed by it under this Agreement; and
(b) this Agreement has been duly authorized, executed and delivered
by it, and constitutes its valid, legal and binding obligation enforceable
against it in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency or other similar laws of general application relating
to or affecting the enforcement of creditors' rights in general or by general
principles of equity whether considered in a proceeding at law or equity.
Section 2.02. Covenants. Each of the Purchaser, the Program
Administrator and the Distributor covenants and agrees that all authorizations
in this Agreement for the Collection Agent to endorse checks, instruments and
securities and to execute, deliver and file other instruments with respect to
the Program Collection Account are powers coupled with an interest and are
irrevocable.
ARTICLE III
PROGRAM COLLECTION ACCOUNT
Section 3.01. Establishment and Maintenance. Concurrently with the
execution and delivery of this Agreement, the Collection Agent shall establish
an account entitled "Putnam Lovell Finance L.P.-Mackenzie Program Collection
Account", at Four Albany Street, New York, New York 10006, ABA No.: 021001033,
Account No.00382838, for further credit to Account No.26994, Ref. "Putnam Lovell
Finance L.P.-Mackenzie Program Collection Account" (the "Program Collection
Account"), the operation of which shall be governed by this Article III. The
Purchaser hereby appoints the Collection Agent as its agent to hold the Program
Collection Account and all moneys on deposit therein, with the sole and
exclusive right to withdraw or order a transfer of Deposited Collection Funds
from the Program Collection Account with full power of substitution, for the
purpose of making any such withdrawal or ordering any such transfer of Deposited
Collection Funds from the Program Collection Account, which appointment is
coupled with an interest and is irrevocable, all in accordance with the terms of
this Agreement. The Distributor hereby consents to such appointment. Neither the
Purchaser, the Program Administrator nor the Distributor shall have any right of
withdrawal from the Program Collection Account, but may require application of
amounts on deposit therein be made strictly in accordance with the terms of this
Article III.
Section 3.02. Required Deposits.
(a) Pursuant to the Irrevocable Payment Instructions given by the
Distributor to the Transfer Agent, Custodian and each Company in respect of each
Fund, the Transfer Agent, Custodian, each Company and in certain cases Selling
Agents shall in respect of each Fund remit all Program Collections and Related
Collections payable by each Company and its shareholders in respect of each Fund
directly to the Program Collection Account in accordance with the terms of the
Irrevocable Payment Instruction.
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(b) If any check, instrument or security shall not be endorsed, the
Program Administrator, the Purchaser and the Distributor hereby irrevocably
authorize and empower the Collection Agent to endorse the same as
attorney-in-fact.
Section 3.03. Application of Funds in the Program Collection Account.
(a) On each Monthly Settlement Date until this Agreement terminates
in accordance with Section 7.05, the Collection Agent shall allocate the
following amounts from the Program Collection Account and distribute such
amounts in the following priority:
(i) an amount equal to the accrued and unpaid Collection Agent
Fee then due and payable shall be distributed to the Collection Agent;
(ii) an amount equal to the accrued and unpaid Program Servicer
Agent Fee then due and payable shall be distributed to the Program Servicer
Agent Remittance Account;
(iii) an amount equal to any other accrued Program Costs shall be
distributed to the Program Administrator for payment to the appropriate party or
at its direction;
(iv) an amount equal to the result of:
(A) the sum of the Purchaser's Asset Based Sales Charge Portion,
plus, the Purchaser's CDSC Portion, plus the Purchaser's Investment
Earnings, less
(B) the sum of the Purchaser's allocable portion of the amount
distributed pursuant to clauses (i), (ii) and (iii) above, as
determined in accordance with Section 3.03(b),
shall be transferred to the Purchaser's Remittance Account; and
(iv) an amount equal to the result of:
(A) the sum of the Distributor's Asset Based Sales Charge
Portion, plus, the Distributor's CDSC Portion, plus the Distributor's
Investment Earnings, less
(B) the Distributor's allocable portion of the amount distributed
pursuant to clauses (i), (ii) and (iii) above, as determined in
accordance with Section 3.03(b),
shall be transferred to the Distributor's Remittance Account.
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(b) (i) The amount of funds applied by the Collection Agent in
accordance with Section 3.03(a)(i) or (ii) on any Monthly Settlement Date shall
be allocated among the Purchaser and the Distributor in the proportion that
Program Collections and Related Collections deposited in the Program Collection
Account since the immediately preceding Monthly Settlement Date are allocated
among each thereof on the Monthly Settlement Date in question; and
(ii) The amount of funds applied by the Collection Agent in
accordance with Section 3.03 (a) (iii) on any Monthly Settlement Date shall be
allocated among the Purchaser and the Distributor in the proportion that Program
Collections and Related Collections deposited in the Program Collection Account
since the immediately preceding Monthly Settlement Date are allocated to each on
the Monthly Settlement Date in question; provided, however, that special
allocations of Program Costs will be made by the Program Administrator if such
costs are related solely to Portfolio Assets owned by the Purchaser or the
Distributor.
(c) (i) As used in this Agreement the term "Purchaser's Investment
Earnings" shall mean on any Monthly Settlement Date, an amount equal to the
product of (A) the result of (x) the Investment Earnings, if any, minus (y) the
Investment Losses, if any, and (B) a fraction, expressed as a percentage, the
numerator of which is the Purchaser's Portion (determined without regard to
clause (iii) of the definition thereof) of the Program Collections and Related
Collections which were deposited in the Program Collection Account since the
immediately preceding Monthly Settlement Date and the denominator of which is
the total amount of Program Collections and Related Collections which were
deposited in the Program Collection Account since the immediately preceding
Monthly Settlement Date.
(ii) As used in this Agreement the term "Distributor's Investment
Earnings" shall mean on any Monthly Settlement Date, an amount equal to the
product of (a) the result of (x) the Investment Earnings, if any, minus (y) the
Investment Losses, if any, and (1,) a fraction, expressed as a percentage, the
numerator of which is the Distributor's Portion (determined without regard to
clause (iii) of the definition thereof) of Program Collections and Related
Collections which were deposited in the Program Collection Account since the
immediately preceding Monthly Settlement Date and the denominator of which is
the total amount of Program Collections and Related Collections which were
deposited in the Program Collection Account since the immediately preceding
Monthly Settlement Date.
(d) For purposes of determining the amounts to be distributed
pursuant to Section 3.03(a), the Purchaser hereby authorizes the Collection
Agent to conclusively rely upon the written statements of the Authorized
Representative of the Program Administrator setting forth the calculations of
such amounts, and the Distributor hereby consent thereto (which notice or
statements shall set forth in reasonable detail the computation of such
amounts). Unless such written statement is received by the Collection Agent on
or prior to 12:00 noon (New York City time) on the Business Day funds are to be
distributed under Section 3.03(a), the Collection Agent shall use its reasonable
efforts to, but shall not be obligated to, distribute such amounts on such day;
provided, however, that if such certificate or statement is received by the
Collection Agent after 12:00 noon New York City time) on any day on or after the
date that such funds were to be distributed under Section 3.03 (a), it shall in
any event distribute such funds not later than the next succeeding Business Day
after receipt of such certificate or statement; provided, further,
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that if such certificate or statement is received by the Collection Agent prior
to the close of business (New York City time) on the day prior to the day on
which funds were to be distributed under Section 3.03(a) (each such day on which
funds are to be distributed, the "Distribution Date"), it shall in any event
distribute such funds not later than 12:00 noon New York City time) on the
Distribution Date. Assuming the Program Administrator has received in a timely
manner the Investor Report and the Distributor's Portion is not equal to zero,
in respect of the calendar month to which the related Monthly Collection
Determination Date relates, it will provide the required statement to the
Collection Agent and the Distributor prior to the close of business (New York
City time) on such Monthly Collection Determination Date.
Notwithstanding the foregoing, if an Authorized Representative of the
Distributor or the Purchaser shall have certified in writing that the
computation of any amount in respect of the Distributor's Portion or the
Purchaser's Portion under Section 3.03 (a) is not in conformity with the
mechanics for calculating any such amount set forth in this Agreement or any
other Program Document (which certification shall set forth in reasonable detail
the Distributor's or the Purchaser's, as the case may be, calculation of such
amount, the nature of the alleged error made and the amount of such
discrepancy), the Collection Agent shall not distribute the amount of the
discrepancy stipulated in such certificate until, the Distributor and the
Purchaser shall have agreed upon how such amount should be properly distributed
or a court shall have made a determination concerning the amounts properly
distributable in respect thereto.
Each of; the Distributor and the Purchaser agrees that it shall not
send the certificate specified in the immediately preceding sentence unless it
reasonably believes that the computation of the Distributor's Portion or the
Purchaser's Portion, as the case may be, was not in conformity with the
provisions of the Program Documents. The Collection Agent shall not be liable
for any application of the moneys and other cash proceeds pursuant to Section
3.03(a) made in accordance with any certificate or written direction delivered
pursuant to this Section 3.03(d) or otherwise made in accordance with the second
preceding sentence; provided, however, that no application of the moneys and
other cash proceeds by the Collection Agent in accordance with any certificate
or other written direction delivered or made pursuant to this Section 3.03(d)
shall be deemed to restrict or limit the right of any party to contest with the
purported obligee the amount set forth in such certificate or other written
direction. In no event shall the Collection Agent be obligated to make any
application or distribution of funds in the Program Collection Account in the
absence of such certificate or written direction. For purposes of this
Agreement, the term "Authorized Representative" shall mean any individual at the
time designated to act on behalf of the Distributor, the Purchaser or the
Program Administrator, as the case may be, such designation to be evidenced by a
written certificate (an "Authorized Representative Certificate") (i) furnished
on the date hereof and from time to time hereafter by the Distributor, the
Purchaser or the Program Administrator, as the case may be, to the Collection
Agent containing the name, title and specimen signature of each such individual,
and (ii) executed on behalf of the Distributor, the Purchaser or the Program
Administrator, as the case may be, by the President, any Vice President, any
Secretary or any Assistant Secretary of the Distributor, the Purchaser or the
Program Administrator, as the case may be. Until the Collection Agent has
received a subsequent Authorized Representative Certificate, the Collection
Agent shall be entitled to rely conclusively on the last such Authorized
Representative Certificate delivered to it hereunder for the purpose of
determining the Authorized
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Representatives of the Distributor, the Purchaser or the Program Administrator,
as the case may be.
(e) The Collection Agent shall (subject to Section 3.03(d)) upon its
receipt of an Allocation Notice (with a copy to the other parties hereto) remit
Deposited Collection Funds to the Purchaser's Remittance Account and the
Distributor's Remittance Account as contemplated by Section 3.03(a) on a more
frequent basis as specified in such Allocation Notice.
Section 3.04. Investment of Funds Deposited in Program Collection
Account. (a) To the extent that any Deposited Collection Funds are not required
to be promptly distributed from the Program Collection Account and such funds
remain in such Program Collection Account unused after being set aside for the
purposes specified in Section 3.03 above, the Collection Agent shall invest and
reinvest at the written direction of the Program Administrator, in its own name
or in the name of its nominee, such Deposited Collection Funds in investments,
having maturities which shall not extend beyond the next following Monthly
Settlement Date (each such investment, a "Cash Equivalent") and which
constitute:
(i) marketable direct obligations issued or unconditionally and fully
guaranteed by the United States of America or issued by any agency thereof;
(ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof and having as at any date of determination the highest
rating obtainable from Standard & Poor's;
(iii) commercial paper issued by any corporation (other than an
Affiliate of the Distributor) organized and existing under the United States of
America and having as at any date of determination the highest rating obtainable
from Standard & Poor's;
(iv) certificates of deposit issued by commercial banking
institutions that are members of the Federal Reserve System, each having as at
any date of determination combined capital and surplus of not less than
$500,000,000, and the commercial paper of other short-term unsecured debt
obligations of which, as at any date of determination, have the highest rating
obtainable from Standard & Poor's ("Permitted Banks"); and
(v) investments in money market funds having a rating of "AAAm" or
"AAAm-g" from Standard & Poor's (including funds for which the Parent or the
Collection Agent or any of their respective Affiliates is investment manager or
advisor).
In the absence of specific written instructions by an Authorized Representative
of the Program Administrator, the Collection Agent shall, in accordance with
this Section 3.04, invest the Deposited Collection Funds in such Cash
Equivalents described in clause (v) above. All such Cash Equivalents and the
interest and income received thereon and the net proceeds realized on
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the sale or redemption thereof shall be deemed to be to the credit of the
Program Collection Account.
(b) The Collection Agent may, without requirement of instructions
from the Program Administrator, take such actions as are reasonably necessary to
realize the proceeds of any such Cash Equivalent that are held to the stated
maturity thereof. The Collection Agent may, at the written direction of the
Program Administrator, liquidate Cash Equivalents from time to time to the
extent necessary to make payments pursuant to Section 3.03 hereof. None of the
Collection Agent, the Purchaser, the Distributor or the Program Administrator
shall have recourse to any other party hereto for any loss resulting from the
investment performance of any investment or reinvestment of moneys made in
accordance with the provisions of this Section or from the sale or liquidation
of such Cash Equivalents.
Section 3.05. Program Collection Account CDSC Sub-accounts.
(a) The Collection Agent shall establish and maintain for each of the
Purchaser, and the Distributor a separate account as a sub-account of the
Program Collection Account referred to as: (i) the "Purchaser CDSC Sub-account,"
in the case of the Purchaser; and (ii) the "Distributor CDSC Sub-account," in
the case of the Distributor; such accounts are collectively referred to as the
"CDSC Sub-accounts." References in this Agreement to the Program Collection
Account shall be deemed to refer to the Program Collection Account and all CDSC
Sub-accounts.
(b) Upon receipt of each deposit of Contingent Deferred Sales Charges
into the Program Collection Account, the Collection Agent shall deposit a
portion of such deposit in the CDSC Sub-account for each of the Purchaser and
the Distributor equal to a percentage of the total amount of such deposit equal
to the Purchaser's CDSC Portion or Distributor's CDSC Portion, as the case may
be, for the Monthly Settlement Date immediately preceding such deposit, all in
accordance with the written direction of an Authorized Representative of the
Program Administrator.
(c) If as of any Monthly Settlement Date the Program Administrator
determines that the amount on deposit in any CDSC Sub-account includes a portion
of the CDSC Portion for such Monthly Settlement Date of a party other than the
party for whom such CDSC Sub-account was established, the Collection Agent
shall, at the written direction of the Program Administrator, transfer such
amount to the proper CDSC Sub-account.
(d) On each Monthly Settlement Date, the amounts on deposit in the
CDSC Sub-accounts which are required to be distributed to the Purchaser or the
Distributor shall be paid to such party directly from the CDSC Sub-account
established for such party in accordance with the provisions of Section 3.03.
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ARTICLE IV
COLLECTION AGENT
Section 4.01. Appointment. Each of the Purchaser and the Program
Administrator hereby appoints Bankers Trust Company, as Collection Agent under
this Agreement with full power and authority to apply the Deposited Collection
Funds in accordance with the terms and conditions of this Agreement and to
otherwise perform the duties of the Collection Agent hereunder and the
Distributor hereby consent and agree to such appointment. Bankers Trust Company
hereby accepts the appointment as Collection Agent hereunder and agrees to
receive and safe keep all funds transferred or delivered to the Collection Agent
for deposit in the Program Collection Account and apply and distribute the
Deposited Collection Funds solely in accordance with the terms of this Agreement
and to otherwise perform its duties as hereinafter provided. Each of the parties
acknowledges that pursuant to that certain Pledge and Collateral Agency
Agreement dated as of July 29, 1997, among the Purchaser, the Program
Administrator, certain Residual Interest Holders parties thereto, certain
Qualified Enhancement Provider Security Holders parties thereto, Bankers Trust
Company, as Collateral Agent and Master Collection Agent (the "Collateral
Agent"), certain Secured Parties parties thereto and the Placement Trust parties
thereto (the "Purchaser Warehouse Pledge Agreement"), the Collateral Agent has
appointed the Collection Agent as the Collateral Agent's agent for purposes of
perfecting the Collateral Agent's security interest created by the Purchaser
Warehouse Pledge Agreement in the interest of the Purchaser in the Program
Collection Account and in the Deposited Funds deposited therein. Each of the
Parties acknowledges that pursuant to those certain indentures to be entered
into between certain Placement Trusts, which have become a party to the
Purchaser Warehouse Pledge Agreement, and certain indenture trustees, such
indenture trustees have appointed the Collection Agent as the indenture
trustee's agent for purposes of perfecting the indenture trustee's security
interest created by the relevant indenture in the interest of the Purchaser in
the Program Collection Account and in the Deposited Funds deposited therein. The
Collection Agent accepts such appointments, and the other parties hereto consent
to such appointments.
Section 4.02. Scope of Duties. The Collection Agent undertakes to
perform only those duties in such capacity as are expressly required by this
Agreement.
Section 4.03. Delegation of Duties. Subject to Article V hereof, the
Collection Agent may not assign its rights or obligations under this Agreement.
The Collection Agent may, however, execute any of its duties under this
Agreement by or through officers, directors, employees, attorneys, custodians,
nominees or agents; provided, however, that no such delegation of duties shall
limit or otherwise affect the liability of the Collection Agent for its
performance of its duties hereunder. The Collection Agent shall be entitled to
(and shall be protected in relying upon) advice of counsel concerning all
matters pertaining to its duties under this Agreement.
Section 4.04. Reliance by Collection Agent. The Collection Agent and
its officers, directors, employees, attorneys, nominees and agents shall be
entitled to conclusively rely and shall be fully protected in relying on any
writing, resolution, notice, consent, certificate,
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affidavit, letter, cablegram, telegram, telex or teletype message, statement,
order, or other document reasonably believed by it or them to be genuine and
correct and to have been signed or made by the proper Person and, with respect
to legal matters, upon opinions of counsel selected by the Collection Agent.
Section 4.05. Collection Agent in its Individual Capacity. The
Collection Agent may accept deposits from, act as trustee under indentures of,
and generally engage in any kind of business with, the Purchaser, the Program
Administrator, the Distributor, any other party to any Program Document, any of
their respective Affiliates and any other Person who may do business with or own
securities of any of the foregoing, all as if the Collection Agent were not the
Collection Agent hereunder and without any duty to account therefor to the
Purchaser, the Program Administrator or the Distributor.
Section 4.06. Limitation on Liability. Etc. Neither the Collection
Agent, nor any of its directors, officers, employees, custodians, nominees or
agents, shall be liable for any action taken or omitted to be taken by it or
them hereunder or in connection herewith, except for its or their gross
negligence or willful misconduct; nor shall the Collection Agent be responsible
for the validity, effectiveness, value, sufficiency or enforceability against
the Purchaser, the Program Administrator or the Distributor of this Agreement or
any other Program Document furnished pursuant hereto or in connection herewith.
Without limiting the generality of the foregoing, the Collection Agent: (i)
except as expressly provided in this Agreement or any other Program Document,
makes no warranty or representation, and shall not be responsible to the
Purchaser, the Program Administrator or the Distributor for any statements,
warranties or representations made in or in connection with this Agreement or
any such Program Document by any such Person; and (ii) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or any other Program Document
on the part of the Purchaser, the Program Administrator or the Distributor. No
implied covenant or obligation shall be read into this Agreement against the
Collection Agent. The Collection Agent shall not be compelled to do any act not
expressly set forth in this Agreement or to take any action towards the
enforcement of the powers hereby created or to prosecute or defend any suit in
respect hereof unless indemnified to its reasonable satisfaction against loss,
cost, liability and expense. The Collection Agent shall not have or be deemed to
have any trust relationship with the Purchaser, the Program Administrator or the
Distributor as a result of this Agreement or any of its actions in connection
herewith.
ARTICLE V
SUCCESSOR COLLECTION AGENT;
QUALIFICATIONS OF COLLECTION AGENT
Section 5.01. Successor Collection Agent. The Collection Agent acting
hereunder may resign at any time upon thirty (30) days prior written notice to
the Purchaser, the Program Administrator and the Distributor, and may be removed
at any time with or without cause by an instrument in writing duly executed by
the Purchaser and the Program Administrator. Subject to the provisions of
Section 5.02, the Program Administrator shall have
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the right to appoint a successor to the Collection Agent which shall be such
other bank or financial institution selected by the Program Administrator and
reasonably satisfactory to the Purchaser and the Distributor upon any such
resignation or removal, by an instrument of substitution complying with the
requirements of Applicable Law, or, in the absence of any such requirements,
without other formality than appointment and designation in writing. Upon the
making and acceptance of such appointment, the execution and delivery by such
successor Collection Agent of a ratifying instrument pursuant to which such
successor Collection Agent agrees to assume the duties and obligations imposed
on the Collection Agent by the terms of this Agreement, and the delivery to such
successor Collection Agent of the Deposited Collection Funds and documents and
instruments then held by the retiring Collection Agent, such successor
Collection Agent shall thereupon succeed to and become vested with all the
estate, rights, powers, remedies, privileges, immunities, indemnities, duties
and obligations hereby granted to or conferred or imposed upon the Collection
Agent named herein, and one such appointment and designation shall not exhaust
the right to appoint and designate further successor Collection Agents
hereunder. No Collection Agent shall be discharged from its duties or
obligations hereunder until the Collection Deposited Funds and documents and
instruments then held by such Collection Agent shall have been transferred or
delivered to the successor Collection Agent for deposit in the new Program
Collection Account, and until such retiring Collection Agent shall have executed
and delivered to the successor Collection Agent appropriate instruments
substituting such successor Collection Agent as attorney-in-fact of the
Purchaser, the Program Administrator and the Distributor for purposes of this
Agreement as contemplated by Section 2.02. If no successor Collection Agent
shall be appointed, as aforesaid, or, if appointed, shall not have accepted its
appointment, within thirty (30) days after resignation or removal of the
retiring Collection Agent then, subject to the provisions of this Section 5.01,
the Collection Agent may appoint a successor Collection Agent reasonably
satisfactory to the Purchaser, the Program Administrator, the Distributor. Each
such successor Collection Agent shall provide the Purchaser, the Program
Administrator and the Distributor with its address, telephone and facsimile
numbers, to be used for purposes of Section 7.02 hereof; in a notice complying
with the terms of said Section. Notwithstanding the resignation or removal of
any Collection Agent hereunder, the provisions of this Agreement shall continue
to inure to the benefit of such Collection Agent in respect of any action taken
or omitted to be taken by such Collection Agent in its capacity as such while it
was Collection Agent under this Agreement. No Collection Agent shall be liable
by reason of any act or omission of any successor Collection Agent.
Section 5.02. Qualifications of Collection Agent. Any Collection
Agent at any time acting hereunder must at all times be an "Eligible
Institution," as hereinafter defined. For purposes of this Section 5.02, the
term "Eligible Institution" shall mean any branch of a depository institution or
trust company organized under the laws of the United States, any state thereof
or the District of Columbia (or any branch of a foreign bank), which (i) has
either (A) a long-term unsecured debt rating of "AA" (or the equivalent) or
better by Standard & Poor's or (B) a certificate of deposit rating of "A-1" by
Standard & Poor's, or is otherwise acceptable to Standard & Poor's and (ii) has
total capital and surplus of at least $100,000,000.
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ARTICLE VI
FEES AND EXPENSES
Section 6.01. Payment of Expenses and Taxes. The Distributor shall
(a) to the extent not otherwise paid pursuant to the Program Documents, pay or
reimburse the Collection Agent for (i) all the reasonable out-of-pocket costs
and expenses (including the fees and disbursements of counsel) incurred by the
Collection Agent in connection with the preparation and execution of this
Agreement; (ii) all reasonable out-of-pocket costs and expenses (other than fees
and disbursements of counsel) incurred by the Collection Agent in connection
with any amendment, supplement or modification to this Agreement and any other
documents prepared in connection herewith or therewith, and the consummation of
the transactions contemplated hereby and thereby; and (iii) the reasonable fees
and disbursements of counsel to the Collection Agent in connection with clause
(ii); (b) to the extent not otherwise paid pursuant to the Program Documents,
pay or reimburse Collection Agent for all its reasonable costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, and any such other documents, including, without limitation,
reasonable fees and disbursements of counsel to the Collection Agent, (c) to the
extent not otherwise paid pursuant to the Program Documents, pay, indemnify, and
hold the Collection Agent, and its respective directors, officers, employees,
custodians, nominees, agents and representatives, harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp and other taxes, if any, which may be
payable or determined to be payable by the Collection Agent in connection with
the execution and delivery of; or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of; or any waiver
or consent under or in respect of; this Agreement, and any such other documents,
and (d) pay, indemnify, and hold the Collection Agent, and its directors,
officers, employees, custodians, nominees, agents and representatives, harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursement of any
kind or nature whatsoever with respect to the enforcement, performance and
administration of this Agreement, the other Program Documents and any such other
documents contemplated hereby or thereby (all the foregoing, collectively, the
"Indemnified Liabilities"); Provided, however, that neither the Distributor, the
Purchaser or the Program Administrator shall have any obligation hereunder with
respect to Collection Agent's ordinary administrative costs, or any Indemnified
Liabilities arising from (i) the breach by the Collection Agent of any
representation, warranty or covenant expressly set forth in this Agreement, (ii)
the gross negligence or willful misconduct of the Collection Agent.
Section 6.02. Fees. The Collection Agent shall be paid a fee at the
rate of $6,000 per annum payable in equal installments in arrears monthly on
each Monthly Settlement Date during the term of this Agreement from Deposited
Collection Funds in the Program Collection Account in accordance with Section
3.03; provided, that if there are insufficient funds in the Program Collection
Account to satisfy the amounts payable on any Monthly Settlement Date, the
Distributor shall pay the Collection Agent any shortfall on such Monthly
Settlement Date.
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ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendment and Waivers. No amendment, modification,
supplement, termination or waiver of this Agreement shall be effective unless
the same shall be in writing and signed by the Purchaser, the Program
Administrator, the Collection Agent and the Distributor. Any waiver of any
provision of this Agreement, and any consent to any departure by any party to
this Agreement from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on any party to this Agreement in any case shall
entitle such party to any other or further notice or demand in similar or other
circumstances.
Section 7.02. Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be given or made in accordance with Section 8.03 of the Master
Agreement.
Section 7.03. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 7.04. No Waiver: Cumulative Remedies. No failure or delay on
the part of any party to this Agreement in exercising any right, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or future exercise thereof or the exercise of any other right, power or
privilege. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to the Purchaser or the Program
Administrator at law or in equity.
Section 7.05. Termination. This Agreement shall terminate upon the date
that the Collection Agent receives written notification from the Program
Administrator that the Unamortized Gross Purchase Amount in respect of the
Purchased Portfolio Assets of each Fund has been reduced to zero; provided that
in any event this Agreement will terminate upon the date that the Collection
Agent receives written notification from the Program Administrator that all
Shares relating to the Purchased Portfolio Assets have either been redeemed or
converted to "A" shares pursuant to Permitted Conversion Features and that all
Program Collections payable in respect of such Purchased Portfolio Assets have
been paid; and provided, further, that the obligations under Section 6.01 shall
survive the termination of this Agreement or the earlier resignation or removal
of the Collection Agent.
Section 7.06. Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of; each of the parties hereto and their
respective permitted successors and permitted assigns. The Distributor shall not
assign its rights or obligations hereunder or in connection herewith or any
interest herein, (voluntarily or by operation of law) without the prior written
consent of the other parties hereto except as otherwise expressly permitted
hereunder or by the Master Agreement) provided, however, that in the event the
Purchaser does not purchase
12
<PAGE> 105
Eligible Portfolio Assets relating to Shares of any Fund, the Distributor may
assign its rights to a portion of the amounts actually distributable to the
Distributor pursuant to Section 3.03 (the "Assigned Portion") to an assignee
unrelated to the Distributor in accordance with the Program Documents, and in
the event that the Distributor shall secure a commitment from an assignee to
purchase such Assigned Portion, the parties hereto agree to negotiate in good
faith with a view to: (A) amending this Agreement to: (1) permit such assignee
to become a party to this Agreement; (2) remove such Assigned Portion from the
amounts distributable to the Distributor pursuant to Section 3.03 and providing
for such assignee to be entitled to distributions pursuant to Section 3.03 in
respect of the Assigned Portion, and (B) executing and delivering a mutually
satisfactory agreement among the Program Administrator, the Purchaser, the
Collection Agent and such assignee, specifying their respective rights with
respect to the Portfolio Assets. Program Administrator's and Purchaser's rights
hereunder shall be assignable, in whole or in part, by the Purchaser and Program
Administrator without the consent of the other parties hereto.
Section 7.07. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL
BE GOVERNED BY AND BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SMD STATE WITHOUT
REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.
Section 7.08. Security Interests. The Distributor, the Collection
Agent, the Program Administrator, the Purchaser hereby acknowledge that: (a) the
Purchaser has assigned and will assign all of its rights under this Agreement to
secure certain borrowings; and (b) the Purchaser intends to assign a portion of
its interests hereunder to Placement Trusts pursuant to Placements.
Section 7.09. Counterparts. This Agreement may be executed in several
counterparts and by different parties on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same agreement.
[Remainder of This Page Intentionally Left Blank]
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<PAGE> 106
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first set forth above.
BANKERS TRUST COMPANY,
as Collection Agent
By: /s/ Louis Bodi
------------------------------------------
Name: Louis Bodi
Title: Vice President
14
<PAGE> 107
PUTNAM LOVELL FINANCE
as Purchaser
By: PUTNAM LOVELL FINANCE INC.,
General Partner
By: /s/ Michael R. Llodra
-------------------------------------------
Name: Michael R. Llodra
Title: Vice President
PUTNAM, LOVELL, DE GUARDIOLA & THORNTON INC.,
as Program Administrator
By: /s/ Robert T. Fleisher
-------------------------------------------
Name: Robert T. Fleisher
Title: Vice President
15
<PAGE> 108
IVY MACKENZIE DISTRIBUTORS, INC.,
as Distributor
By: /s/ Keith J. Carlson
------------------------------------------
Keith J. Carlson
President
16
<PAGE> 109
SCHEDULE X
MACKENZIE PROGRAM
RULES OF CONSTRUCTION; DEFINITIONS
Section 1.01 Rules of Construction. For all purposes of the Program
Documents, except as otherwise expressly provided or unless the context
otherwise requires:
Singular words shall connote the plural as well as the singular, and
vice versa (except as indicated), as may be appropriate.
Unless otherwise indicated, references within any document to
appendices, articles, schedules, sections, paragraphs, clauses, schedules,
annexes or exhibits are references to appendices, articles, schedules, sections,
paragraphs, clauses, schedules, annexes or exhibits in or to such document.
The words "herein," "hereof " and "hereunder" and other words of
similar import used in any document refer to such document as a whole and not to
any particular appendix, article, schedule, section, paragraph, clause, exhibit
or other subdivision.
The headings, subheadings and table of contents are solely for
convenience of reference and shall not constitute a part of any such document
nor shall they affect the meaning, construction or effect of any provision
thereof.
References to any Person shall include such Person, its permitted
successors and assigns.
Except as otherwise expressly provided, reference to any agreement
means such agreement, together with all schedules, exhibits, annexes or other
appendices thereto, as amended, modified or supplemented from time to time in
accordance with the applicable provisions thereof and other Program Documents.
Except as otherwise expressly provided, any reference to any statute,
law or regulation shall be deemed to be a reference to such statute, law rule or
regulation as from time to time in effect, and any successor statutory or
regulatory provision.
References to "including" shall mean including without limiting the
generality of any description preceding such term, and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.
Each of the parties to the Program Documents and its counsel have
reviewed and revised, or requested revisions to, the Program Documents, and the
usual rule of construction
<PAGE> 110
that any ambiguities are to be resolved against the drafting party shall be
inapplicable in the construction and interpretation of the Program Documents.
Section 1.02 Definitions. The following terms shall have the following
meanings:
"Actual Knowledge" means, (i) as it applies to any natural Person,
actual knowledge of such Person, (ii) as it applies to any Person which is a
corporate entity or business trust, actual knowledge of a Responsible Officer of
such Person, and (iii) as it applies to any Person which is a trust entity,
actual knowledge of such trustee determined with reference to all applicable
provisions of this definition.
"Addition Effective Date" shall have the meaning assigned to such term
in Section 8.17 of the Master Agreement.
"Additional Eligible Fund Addendum" means the addendum substantially in
the form of Exhibit 1 to the Master Agreement executed by the Distributor, the
Advisor, the Parent, the Program Servicer Agent, the Purchaser and the Program
Administrator.
"Adverse Claim" means any Lien of any Person (other than (i) any such
right or claim of the Purchaser or the Program Administrator created by or
pursuant to this Agreement or any other Program Document, and (ii) any Lien
created by the Purchaser).
"Adverse Effect" means (i) any occurrence of, or any increase in, any
Adverse Claim on the Purchased Portfolio Assets, (ii) any occurrence of, or any
increase in, any material claims, damages, losses, liabilities, expenses,
obligations, penalties or disbursements of any kind or nature of the Purchaser
or the Program Administrator arising out of the transactions contemplated by the
Program Documents, (iii) any adverse effect upon the status of any transfer of
any Purchased Portfolio Assets by the Distributor under the Program Documents as
a True Sale, (iv) any material adverse effect upon the Parent's, the
Distributor's, the Program Servicer Agent's, the Advisor's, any Transfer Agent's
or any Company's ability to pay or perform its respective obligations under any
Program Document in a timely manner, (v) any material adverse effect on the
status of the Purchased Portfolio Assets as Eligible Portfolio Assets or on the
status of any Fund as an Eligible Fund, (vi) any material adverse effect on the
amount or timely receipt by the Collection Agent of any Program Collections in
accordance with the terms of any Irrevocable Payment Instruction or any other
Program Document, (vii) any adverse effect on the Purchaser's right, title or
interest in the Purchased Portfolio Assets, the Program Collections in respect
thereof, the Program Collection Account or the Ancillary Rights in respect of
the Purchased Portfolio Assets, (viii) any material adverse effect on any of the
other rights of the Purchaser or the Program Administrator under the Program
Documents, or (ix) any material adverse effect on the remedies of the Purchaser
or the Program Administrator under any Program Document.
"Advisor" shall have the meaning assigned to such term in the preamble
to the Master Agreement.
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"Advisory Agreement" means with respect to any Fund, the agreement
between the Advisor and the related Company in respect of such Fund and any
replacement agreement as may be adopted in the future, pursuant to which the
Advisor provides investment advisory services to such Fund.
"Affiliate" of a referenced Person means (a) another Person
controlling, controlled by or under common control with such referenced Person,
or (b) any other Person beneficially owning or controlling ten percent (10%)
or more of the outstanding voting securities or rights of or the interest in the
capital, distributions or profits of the referenced Person, provided, however,
that the term "Affiliate" shall not include any Fund, any Company, or any
similar investment company for which the Parent and/or its Affiliates provide
the type of services contemplated by the Distributor's Contracts and the
Advisory Agreements or the Canadian parents of the Parent. The terms "control,"
"controlling," "controlled" and the like shall mean the direct or indirect
possession of the power to direct or cause the direction of the management or
policies of a Person or the disposition of its assets or properties, whether
through ownership, by contract, arrangement or understanding, or otherwise.
"Allocation Notice" means a written notice from the Program
Administrator to the Collection Agent (with a copy to each of the other parties
to the Program Collection Agency Agreement) stating funds are to be allocated in
accordance with the Allocation Procedures and disbursed in accordance with
Section 3.03(a) of the Program Collection Agency Agreement on a more frequent
basis, which notice shall specify the frequency of such allocation.
"Allocation Procedures" means the program allocation procedures set
forth in Schedule II to the Master Agreement.
"Amortized Maximum Aggregate Sales Charge Allowable" means with respect
to the Portfolio Assets relating to any Fund as of any date of determination,
(i) an amount equal to the Maximum Aggregate Sales Charge Allowable payable in
respect of such Portfolio Assets, minus (ii) the aggregate amounts paid by the
applicable Company and the holders of its Shares relating thereto.
"Ancillary Rights" means all of the Distributor's rights, remedies,
title and interests in, to and under (i) the Program Documents (to the extent of
representations, warranties, covenants, indemnities, security interests and
other rights and remedies thereunder), including the right to receive payments
pursuant thereto, (ii) all UCC financing statements covering any of the
foregoing, (iii) all proceeds thereof, and (iv) all other rights Distributor may
have in respect of the foregoing under Applicable Law, in each case as they
relate to the Purchased Portfolio Assets.
"Applicable Law" means all applicable laws and treaties, judgments,
decrees, injunctions, writs and orders of any court, tribunal, arbitrator or
governmental agency or authority or regulatory body and rules, regulations,
orders, licenses and permits of any governmental body, instrumentality, agency
or authority or regulatory body.
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"Asset Based Sales Charges" means fees payable by a Fund, or a Company
with respect to a Fund, pursuant to the Distribution Plan and Distributor's
Contract in consideration of the distribution of its Shares, excluding the
Shareholder Servicing Fee.
"Assigned Portion" shall have the meaning assigned to such term in
Section 7.06 of the Program Collection Agency Agreement.
"Authority" means any governmental or self-regulatory authority
(including the NASD, the stock exchanges and the SEC), whether executive,
legislative, judicial, regulatory, administrative or other, or any combination
thereof, including any federal, state, territorial, county, municipal or other
government or governmental or self-regulatory agency, arbitrator, board, body,
branch, bureau, commission, corporation, court, department, instrumentality,
master, mediator, panel, referee, system or other political unit or subdivision
or other entity of any of the foregoing, whether domestic or foreign.
"Authorized Representative" shall have the meaning assigned to such
term in Section 3.03(d) of the Program Collection Agency Agreement.
"Authorized Representative Certificate" shall have the meaning assigned
to such term in Section 3.03(d) of the Program Collection Agency Agreement.
"Bankruptcy Code" means Title 11 of the United States Code, Sections
101 et seq., and the rules and regulations promulgated thereunder, as amended
from time to time.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time which rate per annum shall at all
times be equal to the higher of:
(a) the Prime Rate; and
(b) 1/2 of one percent (0.50%) per annum above the Federal Funds Rate.
"Business Day" means any day on which banks are not authorized or
required to close in New York City or Boca Raton, Florida.
"Calculation Date" means the last day of each calendar month.
"Cash Equivalents" shall have the meaning assigned to such term in
Section 3.04 of the Program Collection Agency Agreement.
"Cause" shall have the meaning assigned to such term in Section 5.01 of
Program Servicer Agent Agreement.
"CDSC Sub-accounts" shall have the meaning assigned to such term in
Section 3.05(a) of the Program Collection Agency Agreement.
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<PAGE> 113
"Closing Date" means the date on which the parties hereto or the
representatives meet and confirm that all of the conditions precedent set forth
in Section 3.02 of the Master Agreement have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"Collateral Agent" shall have the meaning assigned to such term in
Section 4.01 of the Program Collection Agency Agreement.
"Collection Agent" means Bankers Trust Company, as collection agent
under the Program Collection Agency Agreement.
"Collection Agent Fee" means the fee payable to the Collection Agent
pursuant to Section 6.02 of the Program Collection Agency Agreement.
"Commission Share" means, in respect of any Fund, each Share of such
Fund which is issued under circumstances which would normally give rise to an
obligation of the holder of such Share to pay a Contingent Deferred Sales Charge
upon redemption of such Share, including any Share of such Fund issued in
connection with a Permitted Free Exchange, and any such Share shall not cease to
be a Commission Share prior to the redemption (including a redemption in
connection with a Permitted Free Exchange) or conversion even though the
obligation to pay the Contingent Deferred Sales Charge shall have expired or
conditions for waivers thereof shall exist.
"Company" means each investment company registered with the SEC under
the Investment Company Act specified on Schedule 1 to the Master Agreement, as
the same may be supplemented pursuant to Section 3.17.
"Complete Termination" shall (i) in respect of the Distribution Plan in
respect of any Fund have the meaning assigned to such term in such Distribution
Plan in effect on the date of the Master Agreement, and (ii) in respect of the
Distributor's Contract in respect of any Fund have the meaning assigned to such
term in such Distributor's Contract.
"Conduct Rules" means the Conduct Rules of the NASD, and the rules,
regulations and interpretations (including examples and explanations) of the
NASD in respect thereto, as the same may from time to time be amended,
supplemented or modified.
"Confidential Information" shall have the meaning assigned to such term
in Section 8.10 of the Master Agreement.
"Contingent Deferred Sales Charge" means the contingent deferred sales
charges, or other similar charges howsoever denominated, payable, either
directly or by withholding from the proceeds of the redemption of the Shares of
such Fund, by the shareholders of such Fund on
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<PAGE> 114
any redemption of Shares relating to such Fund in accordance with the
Distributor's Contract and the Prospectus relating to such Fund.
"Control" shall have the meaning assigned in Section 2(a)(9) of the
Investment Company Act.
"Conversion Feature" means with respect to any Share of any Fund, a
mandatory or elective provision (including a provision which permits or requires
such Share to be converted into a share of a different class) which may result
in a reduction or termination of any amount owing from the related Company or
Fund in respect of the Portfolio Assets relating to such Share (or the Share
obtained by virtue of a conversion of such Share) at some point in the future.
"Corporate Trust Office" means the principal office of Bankers Trust
Company at which, at any particular time, its corporate trust business shall be
administered, which office at the date of the execution of the Program Documents
is located at Four Albany Street, New York, New York 10006, Attention: Corporate
Trust and Agency Group-Structured Finance or at any other time at such other
address as Bankers Trust Company may designate from time to time.
"Custodian" means any Person in its capacity as custodian for the
Funds.
"Data Processing Service Provider" means First Data Corporation.
"Date of Original Issuance" shall have the meaning assigned to such
term in the Allocation Procedures.
"Debt" of any Person means, on any date: (i) all indebtedness of such
Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property, (iv) all lease
obligations of such Person which have been or should be included in total
liabilities in accordance with GAAP, (v) all indebtedness secured by a Lien on
any asset of such Person, whether or not such Person has assumed or is otherwise
liable for such indebtedness, (vi) all Debt of others guaranteed in any manner,
directly or indirectly, by such Person (or in effect guaranteed indirectly by
such Person through an agreement intended to have the effect of enabling an
obligor other than such Person to satisfy Debt or to assure the holder of Debt
of such obligor against loss, whether through an obligation of such Person to
purchase property or services or to maintain such obligor's financial condition
or otherwise), (vii) all reimbursement obligations of such Person in respect of
letters of credit, foreign currency sale agreements and bankers' acceptances,
except such as are obtained by such Person to secure performance of obligations
(other than for borrowed money or similar obligations) incurred in the ordinary
course of such Person's business that are not overdue or in default beyond the
expiration of any applicable grace or cure period and (viii) all obligations of
such Person under interest rate protection agreements (including interest rate
swaps, caps, floors, collars and similar agreements) and other market protection
agreements.
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"Deposited Collection Funds" means all fluids at any time and from time
to time on deposit in or otherwise to the credit of the Program Collection
Account, including Cash Equivalents.
"Distribution Plan" means with respect to any Fund the distribution
plan of the related Company, in respect thereto, pursuant to which Shares of
such Fund are distributed by the Distributor, and provided no Complete
Termination has occurred, any successor or replacement distribution plan.
"Distributor" shall have the meaning assigned to such term in the
preamble to the Master Agreement.
"Distributor CDSC Sub-account" shall have the meaning assigned to such
term in Section 3.05(a) of the Program Collection Agency Agreement.
"Distributor's Asset Based Sales Charge Portion" means the portion of
the Portfolio Assets relating to all Funds constituting Asset Based Sales
Charges allocable to the Distributor pursuant to the Allocation Procedures.
"Distributor's CDSC Portion" means the portion of the Portfolio Assets
relating to all Funds constituting Contingent Deferred Sales Charges allocable
to the Distributor pursuant to the Allocation Procedures.
"Distributor's Contract" means, with respect to any Fund, the
underwriting agreement between the Distributor and the applicable Company of
such Fund and any replacement agreement as may be adopted in the future,
pursuant to which the Distributor has been appointed as the agent of such
Company to sell and distribute the Shares of such Fund and to act as Shareholder
servicer in respect thereof.
"Distributor's Investment Earnings" shall have the meaning assigned to
such term in Section 3.03(c) of the Program Collection Agency Agreement.
"Distributor's Portion" means, on any date, the sum of (i)
Distributor's CDSC Portion, (ii) Distributor's Asset Based Sales Charge Portion
and (iii) the Distributor's Investment Earnings.
"Distributor's Remittance Account" shall mean the account of the
Distributor maintained by First Union National Bank of Florida, Jacksonville,
Florida, ABA No.: 063000021, Acct. No.: 2156320066032 Ref. "Ivy Mackenzie
Distributors, Inc. "or such other account as the Distributor shall designate in
writing to the Program Administrator of the Collection Agent.
"Dollars" and "$" mean lawful money of the United States of America.
"Eligible Fund" means any Company or separate series of any Company:
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<PAGE> 116
(i) which, except in the case of the Ivy Money Market Fund, shall have
in full force and effect a distribution plan and distributor's
contract substantially in the form of Exhibits D and E to the Master
Agreement;
(ii) with respect to which the Distributor shall act as a principal
underwriter and shareholder servicer, and the Advisor shall act as
investment adviser;
(iii) with respect to which, the Distributor shall be entitled to
receive Asset Based Sales Charges, except in the case of the Ivy Money
Market Fund and Contingent Deferred Sales Charges on terms and
conditions and at a level comparable to those applicable to other Funds
on the Closing Date;
(iv) with respect to which there shall be in full force and effect an
Irrevocable Payment Instruction, in the form of Exhibit F to the Master
Agreement, which has been acknowledged and agreed to by the related
Company and the Transfer Agent, on behalf of such Fund as contemplated
thereby; and
(v) in respect of which the Advisor or the Distributor shall have
furnished to the Purchaser and the Program Administrator: (A) a true
and complete copy of the prospectus for such series; (B) a true and
complete copy of the distribution plan in respect of such series; (C)
a true and complete copy of the distributor's contract in respect of
such series; and (D) to the extent not reflected in the prospectus
described in clause (A) above, a statement of the Fundamental
Investment Objectives and Policies of such series; and
(vi) as to which there exists no understanding between the Distributor
on the one hand and the Fund or the directors or trustees thereof on
the other, which if implemented would cause the Fund to fail to meet
any of the above requirements or would cause the Portfolio Assets
relating to such Fund to fail to qualify as Eligible Portfolio Assets.
"Eligible Portfolio Assets" means a Portfolio Asset: (a) which
constitutes an "account" or "general intangible," as such terms are defined
in the UCC of all jurisdictions the laws of which are applicable for
determining whether the interests created by the Program Documents are
perfected, and the obligor in respect of which is an Eligible Fund or a
shareholder of an Eligible Fund resident or organized in the United States
but not a governmental entity (provided that a Portfolio Asset shall not be
deemed to fail to meet the foregoing obligor condition solely because a
minor portion of the Shareholders of a Fund are not organized in or
residents of the United States or are governmental entities); (b) which is
denominated and payable in Dollars; (c) which constitutes a legal, valid
and binding contractual obligation of the obligor thereof enforceable in
accordance with its terms (including the terms of the related Distributor's
Contract permitting termination of the obligation in connection with a
Complete Termination of the related Distribution Plan), which is fully
vested, not executory and shall not be subject to a dispute, offset,
counterclaim, defense or Adverse Claim whatsoever, except as enforceability
may be limited by applicable bankruptcy laws and other similar laws
affecting the rights and remedies of
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<PAGE> 117
creditors of the obligor generally and general principles of equity whether
considered in a proceeding in equity or law; (d) which does not and the
origination of which did not contravene any Applicable Law; (e) which, in
respect of Asset Based Sales Charges, requires the payment thereof at the
Maximum Aggregate Sales Charge Allowable; (f) which, in respect of
Contingent Deferred Sales Charges, the terms of which require (i) the
payment thereof at the rate set forth on Schedule III to the Master
Agreement, it being understood that for purposes of determining the dates
on which the applicable Contingent Deferred Sales Charge declines in
respect of a Commission Share, one shall use (1) for all Commission Shares
(other than those distributed through Merrill Lynch), the last day of the
calendar quarter in which the specified anniversary of the purchase of such
Commission Share occurs and (2) for all Commission Shares distributed
through Merrill Lynch, the date on which the specified anniversary of the
purchase of such Commission Share occurs, and (ii) do not permit Free
Redemptions except in the specific situations set forth in the applicable
Prospectus as in effect on the Closing Date, provided that the provision
included in each applicable Prospectus related to redemptions in connection
with distributions not exceeding 12% annually of the initial account
balance shall be applicable only to those shareholders that have elected to
participate in the Systematic Withdrawal Plan described in the applicable
Prospectus; (g) with respect to which the related Share does not have a
Conversion Feature other than a Permitted Conversion Feature; and (Ii) with
respect to which the related Share does not have a Redemption Feature other
than a Permitted Redemption Feature.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder. Section
references to ERISA are to ERISA, as in effect at the date of this Agreement
and, as of the relevant date, any subsequent provisions of ERISA, amendatory
thereof supplemental thereto or substituted therefor.
"ERISA Affiliate" means, with respect to any Sponsor Entity, any
corporation or trade or business that is a member of any group of organizations
(i) described in Section 414(b) or (c) of the Code of which a Person is a member
and (ii) solely for purposes of potential liability under Section 302(c)(l 1) of
ERISA and Section 412(c)(l 1) 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 such Person is a member.
"Event of Termination" means:
(a) the Parent, the Distributor, the Program Servicer Agent, the
Advisor, any Transfer Agent or any Company or Fund shall fail to make or
cause to be made in the manner and when due any payment or deposit to be
made or to be caused to be made by it under this Agreement or any of the
other Program Documents and such failure shall continue for three (3)
Business Days; or
(b) the Parent, the Distributor, the Program Servicer Agent, the
Advisor, any Transfer Agent or any Selling Agent, or any Company shall fail
to perform or observe any covenant or agreement on its part to be performed
or observed under any Program Document (other than those described in
clause (a)
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<PAGE> 118
of this definition) and such failure could reasonably be expected to give
rise to an Adverse Effect, it being understood that a failure of one
Sponsor Entity to perform a covenant which has already been fully performed
by another Sponsor Entity shall not constitute an Event of Termination
under this clause (b); or
(c) (i) any representation or warranty made or deemed made by
the Parent, the Distributor, the Program Servicer Agent or the Advisor (or
any of their respective officers) under or in connection with any Program
Document (except where such incorrect or misleading representation or
warranty could not reasonably be expected to give rise to an Adverse
Effect) shall have been incorrect when made or deemed made, or (ii) any
Investor Report or any other statement, certificate or report delivered by
or on behalf of the Parent, the Distributor, the Program Servicer Agent or
the Advisor in connection with this Agreement, or any other Program
Document (except where such incorrect or misleading document or statement
could not reasonably be expected to give rise to an Adverse Effect), shall
have been incorrect or misleading when delivered; or
(d) the Purchaser shall fail to acquire in a True Sale, or shall
cease to have, a 100% undivided ownership interest in any Purchased
Portfolio Asset, free and clear of any Adverse Claim; or
(e) (i) the Advisor, the Distributor, the Program Servicer Agent, the
Parent, any Transfer Agent which is a Sponsor Entity, any Company, any Fund
or any Significant Affiliate of the Sponsor Entities shall generally not
pay its Debts as such Debts become due, or shall admit in writing its
inability to pay its Debts generally, or shall make a general assignment
for the benefit of creditors or, in the case of the Distributor, the
Distributor shall otherwise become "insolvent" within the meaning of SIPA;
or (ii) any proceeding shall be instituted by or against the Advisor, the
Distributor, the Program Servicer Agent, the Parent, any Transfer Agent
which is a Sponsor Entity, any Company, any Fund or any Significant
Affiliate of any thereof seeking to adjudicate it as bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its Debts under any
Applicable Law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of sixty (60)
days any of the actions sought in any proceeding described in (ii) above
(including an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for any substantial
part of its property) shall occur; or (iii) the Advisor, the Distributor,
the Program Servicer Agent, the Parent, any Transfer Agent which is a
Sponsor Entity, any Company, any Fund or any Significant Affiliate thereof
shall take any action to authorize any of the actions set forth above in
this clause (e); or
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(f) there shall have occurred any material adverse change in (i) the
financial condition or results of operations of the Parent and its
consolidated subsidiaries taken as a whole since March 31, 1998; or (ii)
the Parent, the Distributor, the Program Servicer Agent, any Advisor, any
Transfer Agent or any other Significant Affiliate of any thereof shall fail
to make payments when due in respect of Debt aggregating in excess of
$1,000,000, provided that the determination of defaults on such Debt is not
being diligently contested in good faith through appropriate proceedings;
or
(g) any Distribution Plan, Distributor's Contract, Prospectus, or the
Contingent Deferred Sales Charge arrangements applicable to holders of
Shares of any fund or the terms of any Conversion Feature in respect of any
Share of any Fund, each as in effect on the date of this Agreement, shall
be amended, waived, supplemented or modified, in any manner or by any means
(including a change in Applicable Law), which could reasonably be expected
to have an Adverse Effect, unless waived by the Program Administrator; or
(h) the Securities Investor Protection Corporation, established under
SIPA, shall have applied for a protective decree against the Distributor;
or
(i) the Distributor shall have failed to meet the minimum capital
requirements prescribed from time to time by Rule 15c3-1 under the Exchange
Act and such failure continues uncured for 10 days after the Distributor
obtains knowledge thereof, or
(j) the SEC shall have modified or terminated Rule 12b-l of the
Investment Company Act or the NASD shall have modified or terminated the
Conduct Rules, in each case in a manner which could reasonably be expected
to give rise to an Adverse Effect; or
(k) the Distributor shall cease to be registered as a broker/dealer
under the Exchange Act and with the NASD or the NASD suspends the
Distributor's membership or registration; or
(l) any Company or any Transfer Agent shall, without the written
consent of the Program Administrator, fail to withhold from redemption
proceeds paid to any holder of a Share any Contingent Deferred Sales
Charges required to be withheld and remit such funds to the Program
Collection Account in accordance with the Irrevocable Payment Instruction,
where (i) such failure together with all other prior failures aggregate in
excess of $25,000 or (ii) where such failure shall not have been corrected
within five (5) Business Days after the occurrence thereof, or shall be
prevented by any Authority or by any Applicable Law from doing so or any
Company or any Transfer Agent shall so assert in writing; or
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(m) any Fund or Company shall be required by any Authority or any
Applicable Law to cease or suspend, or shall voluntarily cease or suspend,
the sale of Shares of any Fund under circumstances that could reasonably be
expected to result in an Adverse Effect; provided, however, that the
voluntary cessation or suspension of the issuance of Shares by a successful
Fund solely as a result of rapid growth or excessive size, does not
constitute such a circumstance; or
(n) any Company in respect of itself or any Fund shall propose or
effect a merger or other combination with another Person (other than a
Permitted Merger) or Liquidation Plan if, in the reasonable judgment of the
Program Administrator, the amount of the potential unrealized Program
Collections from such Fund is material; or
(o) as of any Calculation Date the NAV Decline Ratio (adjusted for
stock splits, capital gains and annual and quarterly income distributions)
from the end of the immediately preceding calendar month shall be twenty
percent (20%) or more; or
(p) the Advisor, or another Affiliate of the Parent which shall have
made each of the representations of the Advisor in, and shall have agreed
to be bound by each of the obligations of the Advisor under, the Program
Documents, shall cease to act as the investment advisor of any Fund under
the applicable Advisory Agreement; or
(q) aggregate Free Redemptions result in the occurrence of the
Redemption Threshold Date; or
(r) there shall occur, or any Person (including any trustee in
bankruptcy of any Person) shall assert, any dispute, offset, counterclaim,
defense or Adverse Claim whatsoever in respect of all or any portion of the
Purchased Portfolio Assets which (i) has resulted in a failure to collect
on a timely basis any potential Program Collections or (ii) has been
asserted but has not yet resulted in a failure to collect on a timely basis
Program Collections, but if such assertion was later resolved unfavorably
to the Purchaser could reasonably be expected to result in a failure to
collect on a timely basis of $25,000 or more of potential Program
Collections; or
(s) any Fund shall cease to be an Eligible Fund under circumstances
that could reasonably be expected to result in an Adverse Effect.
"Exchange Act" means the Securities Exchange Act of 1934, and the
rules and regulations of the SEC thereunder.
"Exchange Share" means, in respect of any Fund, Shares of such Fund
that were issued in a Permitted Free Exchange of Shares of any other Fund.
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"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to 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 for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the two Business
Days closest to such Business Day on which such rate is so published; provided
that, if such publication is terminated or suspended by the Federal Reserve Bank
of New York, the Program Administrator shall specify a commercially reasonable
alternate source for determining such rate.
"Fedwire" means the Fedwire funds transfer system maintained by the
Federal Reserve Banks.
"Free Redemptions" means a redemption of Shares of any Fund (other
than Reinvested Shares of such Fund) by a shareholder of such Fund under any
arrangement which relieves or defers, in whole or in part, such shareholder's
obligation to pay the maximum Contingent Deferred Sales Charge which would have
been payable in the absence of such arrangement by any other shareholder of such
Fund redeeming a Share of such Fund that had been held by such other shareholder
for the same period the Shares of such Fund had been held by the shareholder in
question, including (i) arrangements pursuant to which certain Persons are
entitled to acquire Shares of such Fund under circumstances in which no
Contingent Deferred Sales Charges will be payable by them, and (ii) arrangements
pursuant to which Contingent Deferred Sales Charges are deferred in connection
with the redemption of Shares of such Fund because the redeeming shareholder is
reinvesting all or a portion of the proceeds of such redemption in shares of
another fund; provided, however, that the term "Free Redemptions" shall not
include any Permitted Free Exchanges.
"Free Share" means, in respect of any Fund, each Share of such Fund
other than a Commission Share.
"Fund" means each separate series of a Company specified on
Schedule I to the Master Agreement, as the same may be supplemented pursuant to
Section 8.17 of the Master Agreement.
"Fundamental Investment Objectives and Policies" means, with respect
to any Fund, the fundamental investment objectives and policies and the
fundamental borrowing policies specified in the Prospectus for such Fund in
effect from time to time.
"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authorizations" means all franchises, permits,
licenses, approvals, consents and other authorizations of any kind of all
Authorities
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"Governmental Filings" means all filings, including franchise and
similar tax filings, and the payment of all fees, assessments, interests and
penalties associated with such filings with all Authorities.
"Immediate Parent" shall have the meaning assigned to such term in
Section 5.02(h) of the Master Agreement.
"Inception Date" means, with respect to any Fund, the first date upon
which Shares of such Fund were issued in a transaction taken into account in
computing the Purchase Price paid on the Purchase Date in respect of the
Portfolio Assets of such Fund.
"Indemnified Liabilities" shall have the meaning assigned to such
term in Section 7.01 of the Program Collection Agency Agreement.
"Indemnified Party" shall have the meaning assigned to such term in
Section 8.04(b) of the Master Agreement.
"Investment Advisers Act" means the Investment Advisers Act of 1940,
as amended, and the rules and regulations of the SEC thereunder.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.
"Investment Earnings" means as of any Monthly Settlement Date, the
interest and income resulting from the investment performance of the Cash
Equivalents (taken as a whole), if any, for the most recent calendar month
ending prior to the Monthly Settlement Date in question (or, in the case of a
Monthly Settlement Date which occurs during the first week of a calendar month,
for the second most recent calendar month ending prior to the Monthly Settlement
Date in question).
"Investment Losses" means as of any Monthly Settlement Date, the
losses resulting from the investment performance of the Cash Equivalents (taken
as a whole), if any, for the most recent calendar month ending prior to the
Monthly Settlement Date in question (or, in the case of a Monthly Settlement
Date which occurs during the first week of a calendar month, for the second most
recent calendar month ending prior to the Monthly Settlement Date in question).
"Investor" means in respect of any Person, holders of any equity
securities or Debt of such Person the proceeds of which were used to purchase
interests in the Purchased Portfolio Assets.
"Investor Report" means the report in substantially the form of
Exhibit H to the Master Agreement, together with the Data Processing Service
Provider reports specified in the Program Servicing Procedures.
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"Irrevocable Payment Instruction" means the Distributor's irrevocable
payment instruction to each Company, the Transfer Agent and Custodian in respect
of each Fund, in the form of Exhibit F to the Master Agreement.
"Ivy Money Market Fund" means the mutual fund registered under the
Investment Company Act as an investment company under the name "Ivy Money Market
Fund," the investment of which is managed by Ivy Management, Inc. in accordance
with fundamental investment policies and restrictions consistent with those
typical of money market mutual funds.
"Liability" shall have the meaning assigned to such term in Section
8.04(b) of the Master Agreement.
"Lien" means any claim, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien or security interest (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the UCC or comparable law of any jurisdiction), or other charge
or encumbrance, including the retained security title of a conditional vendor or
lessor.
"Liquidation Plan" shall have the meaning assigned to it in Section
5.02(g) of the Master Agreement.
"Master Agreement" means that certain Mackenzie Program Master
Agreement, dated as of March 16, 1999, among Mackenzie Investment Management
Inc., Ivy Management, Inc., Ivy Mackenzie Distributors, Inc., Ivy Mackenzie
Services Corp., Putnam Lovell Finance L.P., Putnam, Lovell, de Guardiola &
Thornton Inc. and Bankers Trust Company, as Collection Agent.
"Maximum Aggregate Sales Charge Allowable" means with respect to any
Fund the maximum Asset Based Sales Charge which may be paid by the related
Company in respect of Shares of such Fund pursuant to the Distributor's
Contract, together with interest thereon at the Maximum Interest Allowable,
relating to such Fund and pursuant to the "maximum sales charge rule" set forth
in the Conduct Rules, assuming the related Company in respect of such Fund pays
a separate Service Fee in respect of Shares of such Fund, unreduced by payments
theretofore made in respect thereof by such Company, in respect of Shares of
such Fund.
"Maximum Interest Allowable" means the maximum interest which may be
taken into account under Section 2830(d) of the Conduct Rules in computing the
Maximum Aggregate Sales Charge Allowable.
"Monthly Collection Determination Date" means the twenty ninth (29th)
calendar day of each calendar month, or if such day is not a Business Day, the
next succeeding Business Day; provided however, that if there is no such day in
such calendar
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month, the Monthly Collection Determination Date shall occur on the first
Business Day of the immediately following calendar month.
"Monthly Settlement Date" means the Business Day next succeeding each
Monthly Collection Determination Date.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) or 4001(a)(3) of ERISA to which contributions have been, or were
required to have been, made by a Person or any ERISA Affiliate, or under which
such Person or any ERISA Affiliate may incur any liability.
"NASD" means the National Association of Securities Dealers, Inc.
and NASD Regulation, Inc. or any successor entity or entities.
"Net Asset Value" means, (i) with respect to any Fund, as of the date
any determination thereof is made, the net asset value of such Fund computed in
the manner such value is required to be computed by the applicable Company, in
respect of such Fund in its reports to its shareholders, and (ii) with respect
to any Share of such Fund as of any date, the quotient obtained by dividing the
net asset value of such Fund (as computed in accordance with clause (i) above)
as of such date allocated to the Shares of such Fund (in accordance with the
constituent documents and the Prospectus for such Fund) by the number of Shares
of such Fund outstanding on such date.
"Other Taxes" shall have the meaning assigned to such term in Section
8.05 of the Master Agreement.
"Parent" shall have the meaning assigned to such term in the preamble
to the Master Agreement.
"Party" means, with respect to any agreement or document, each Person
who becomes a party to such document as a signatory thereto or to a supplement
to such document or as a permitted successor or assign of any such Person.
"Permitted Bank" shall have the meaning assigned to such term in
Section 3.04(a)(iv) of the Program Collection Agency Agreement.
"Permitted Conversion Feature" means with respect to any Share
(including Free Shares) of any Fund, a Conversion Feature in respect of such
Fund which, by its terms, may not become effective prior to the end of the
calendar quarter in which falls the eighth anniversary of the Date of Original
Issuance, provided that with respect to any Share (including Free Shares)
distributed by Merrill Lynch, the Conversion feature may become effective as of
the eighth anniversary of the Date of Original Issuance of such Share.
"Permitted Debt" means Debt created by, arising out of or
contemplated by the Program Documents.
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"Permitted Designee" means, (a) the Program Administrator and the
Purchaser, and (b) any officer, partner, employee, agent, representative, legal
counsel, auditors or trustee designated by the Purchaser or the Program
Administrator, as the case maybe.
"Permitted Entity" shall have the meaning assigned to such term in
Section 5.02 of the Program Servicer Agent Agreement.
"Permitted Free Exchange" means any exchange of Shares of one Fund
(the "Redeeming Fund") for Exchange Shares of another Fund (the "Issuing Fund"),
where, pursuant to the applicable constituent documents of the Issuing Fund: (i)
the Exchange Shares of the Issuing Fund are obligated to bear an Asset Based
Sales Charge at the same rate as the exchanged shares of the Redeeming Fund,
except in the case where the Ivy Money Market Fund is either the Redeeming Fund
or the Issuing Fund; (ii) Exchange Shares of the Issuing Fund are deemed for all
purposes (including the computation of the amount of' and timing of payment of
the related Contingent Deferred Sales Charge) to have been acquired at the time
when the exchanged Shares of the Redeeming Fund were acquired (or deemed to have
been acquired) by the holder thereof; (iii) the exchanging shareholder becomes
obligated to pay to the Issuing Fund the same Contingent Deferred Sales Charge
in respect of the Exchange Shares of the Issuing Fund and on the same terms as
such holder was obligated to pay to the Redeeming Fund in respect of the Shares
of the Redeeming Fund so exchanged; (iv) the date upon which such Exchange
Shares of the Issuing Fund received in the Exchange are converted pursuant to
the Permitted Conversion Feature is the same as the date the exchanged Shares of
the Redeeming Fund were to be converted pursuant to the Permitted Conversion
Feature of the exchanged Shares; (v) the Maximum Aggregate Sales Charge
Allowable in respect of the Issuing Fund pursuant to the Distributor's Contract,
the Distribution Plan and the Prospectus of the Issuing Fund is increased on the
effective date of the exchange by 6.25% (or the percentage equivalent to the
then Maximum Aggregate Sales Charge Allowable in respect of the Exchange Shares
expressed as a percentage of the original issuance price thereof) of the Net
Asset Value on such exchange date of the Shares of the Redeeming Fund being so
exchanged; provided, that the amount of such increase shall not exceed the
Amortized Maximum Aggregate Sales Charge Allowable of the Redeeming Fund
immediately prior to the exchange; (vi) the Amortized Maximum Aggregate Sales
Charge Allowable in respect of the Redeeming Fund is reduced by the same amount
as the Maximum Aggregate Sales Charge Allowable in respect of such Issuing Fund
is increased; and (vii) both the redemption of the Shares of the Redeeming Fund
so exchanged and the issuance of the Shares of the Issuing Fund are effected at
the Net Asset Value of such Shares at the date of the exchange without any
reduction for fees or expenses attributable to such exchange.
"Permitted Merger" means a merger or consolidation of two or more
Funds: (i) pursuant to which all of the assets of the participating Funds are
transferred to the surviving Fund, (ii) pursuant to which the surviving Fund
assumes all obligations of the participating Funds, including the obligations in
respect of the Portfolio Assets,
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(iii) which is carried out in a manner so that the Distribution Plan of the
participating Funds is continued as part of the Distribution Plan of the
surviving Fund without affecting the rights of the Distributor in respect of the
Portfolio Assets relating to the participating Funds, and (iv) does not
otherwise give rise to a reasonable possibility of an Adverse Effect.
"Permitted Redemption Feature" means with respect to any Share of any
Fund, a Redemption Feature which, by its terms, requires that Shares owned of
record for any Shareholder's account be redeemed in the following order: FIRST,
Free Shares owned of record for such Shareholder account to the extent thereof
(it being understood that under no circumstance shall the redemption of a Free
Share include the appreciation on Commission Shares above the original Net Asset
Value of such Commission Shares at the Date of Original Issuance thereof); and
SECOND, each Commission Share owned of record for such Shareholder account in
the same order as the Date of Original Issuance thereof occurred (it being
understood that the redemption of each individual Commission Share will include
all the appreciation on such Commission Share above the original Net Asset Value
of such Commission Share at the Date of Original Issuance thereof).
"Person" means an individual, a corporation, a partnership, a joint
venture, a limited liability company, a trust or unincorporated organization, a
joint stock company or other similar organization, a government or any political
subdivision thereof, a court, or any other legal entity whether acting in an
individual, fiduciary or other capacity.
"Placement" means any transaction pursuant to which the Purchaser
(including, without limitation, any Placement Trust which obtains such interest
directly or indirectly from the Purchaser) sells or otherwise transfers,
participates or causes to be sold, transferred or participated interests in the
Purchased Portfolio Assets relating to any Fund (including the right to receive
any portion of any Program Collections) to any Person, including a Placement
Trust which publicly or privately sells debt instruments and/or certificates or
other instruments representing ownership interests in such Placement Trust or
interest in any Purchased Portfolio Assets relating to any Fund.
"Placement Agent" means Putnam, Lovell, de Guardiola & Thornton Inc.,
as placement agent for any Placement.
"Placement Trust" means any trust or other special purpose entity to
which any interest in any of the Purchased Portfolio Assets relating to any Fund
or the right to receive any Program Collections with respect thereto has been
transferred in connection with a Placement.
"Plan" means an employee benefit or other plan as defined in Section
3(3) of ERISA established or maintained by a Person or any ERISA Affiliate
during the five year period ended immediately prior to the Purchase Date or to
which such Person or any ERISA Affiliate makes, is obligated to make or has,
within the five-year period ended immediately prior to the Purchase Date, been
required to make contributions or under which such Person or any ERISA Affiliate
may incur any liability or which covers any
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employee or former employee of such Person or any ERISA Affiliate other than a
Multiemployer Plan.
"Portfolio Assets" means with respect to each Fund, all of the rights
under the related Distributor's Contract, the related Distribution Plan and the
related Prospectus to receive amounts paid or payable in respect of Asset Based
Sales Charges (including interest at the Maximum Interest Allowable) and
Contingent Deferred Sales Charges, in each case in respect of the Shares of such
Fund and in respect of Shares of any other Fund acquired in any Permitted Free
Exchange of Shares of the Fund in question, including any similar amount paid or
payable under any replacement distribution plan, distributor's contract or
prospectus, and any continuation payments in respect thereof paid or payable by
the related Company in respect of the Shares of such Fund in the event of a
termination of the related Distribution Plan, Distributor's Contract or
Prospectus.
"Post-Default Rate" means in respect of any amount not paid when due,
a rate per annum during the period commencing on the due date thereof until such
amount is paid in full equal to the Base Rate as in effect from time to time.
"Prime Rate" means the rate of interest published in The Wall Street
Journal in respect of each day (or, if such day is not a Business Day, for the
next preceding Business Day) or, if such rate is not so published for any day
which is a Business Day, the average of the rates for the two Business Days
closest to such Business Day on which such rate is so published; provided that,
if such publication is terminated or suspended by The Wall Street Journal, the
Program Administrator shall specify a commercially reasonable alternate source
for determining such rate. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
"Private Authorizations" means all franchises, permits, licenses,
approvals, consents and other authorizations of all Persons (other than
Authorities) including those with respect to trademarks, service marks, trade
names, copyrights, computer software programs and technical and other know-how.
"Program" means the program established by the Program Documents
pursuant to which the Purchaser will purchase the Purchased Portfolio Assets.
"Program Administrator" shall have the meaning assigned to such term
in the preamble to the Master Agreement.
"Program Collection Account" shall have the meaning assigned to such
term in Section 3.01 of the Program Collection Agency Agreement.
"Program Collection Agency Agreement" means the Mackenzie Program
Collection Agency Agreement, dated as of the date of the Master Agreement
substantially in the form of Exhibit C to the Master Agreement among the
Purchaser, the Program Administrator, the Distributor and the Collection Agent.
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"Program Collections" means (i) all amounts paid or payable in
respect of the Portfolio Assets relating to each Fund by the applicable Fund or
Company or by each shareholder of such Fund that in either case are allocable to
the Purchased Portfolio Assets in accordance with the Allocation Procedures and
(ii) all proceeds of the foregoing.
"Program Costs" means the aggregate Program Servicer Agent fees and
expenses, the aggregate Collection Agent fees and expenses and reasonable
counsel and accountants fees and expenses, the reasonable fees and expenses of
other customary service providers and the amounts due under any interest rate
protection agreements in connection with the Program; provided that amounts due
under any interest rate protection agreements shall be allocated to the
Purchaser pursuant to Section 3.03(b)(ii) of the Program Collection Agency
Agreement.
"Program Documents" means each Distributor's Contract, each
Distribution Plan, each Prospectus, the Master Agreement, the Program Collection
Agency Agreement, the Purchase Agreement, each Transfer Agent's Agreement, each
Advisory Agreement, each Selling Agent's Agreement, each Irrevocable Payment
Instruction and the Program Servicer Agent Agreement, and all exhibits,
schedules and annexes any thereof.
"Program Servicer Agent" shall have the meaning assigned to such term
in the preamble to the Master Agreement.
"Program Servicer Agent Agreement" means the Mackenzie Program
Servicer Agent Agreement dated the date of the Master Agreement substantially in
the form of Exhibit B to the Master Agreement, among the Purchaser, the Program
Administrator, the Program Servicer Agent and the Distributor.
"Program Servicer Agent Fee" shall have the meaning assigned to such
term in Section 3.03 of the Program Servicer Agent Agreement.
"Program Servicer Agent Remittance Account" means the account of the
Program Servicer Agent maintained by First Union National Bank of Florida,
Jacksonville, Florida, ABA No.: 063000021, Account No.2090000535716, Ref.: Ivy
Mackenzie Services Corp. or such other account as the Program Servicer Agent
shall designate in writing to the Program Administrator and the Collection
Agent.
"Program Servicing Procedures" means the Mackenzie Program Servicing
Procedures in the form of Exhibit A to the Program Servicer Agent Agreement and
as amended from time to time by the Program Servicer Agent with the prior
written consent of the Program Administrator.
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"Prospectus" means with respect to any Fund the prospectus filed with
the SEC as a part of the related Company's registration statement on Form N-1A,
as amended, and shall include the related statement of additional information
included in such registration statement.
"Purchase" means each acquisition of Portfolio Assets by the
Purchaser pursuant to the Purchase Agreement and the other Program Documents.
"Purchase Agreement" means the Mackenzie Program Purchase Agreement
dated the date of the Master Agreement substantially in the form of Exhibit B to
the Master Agreement, between the Purchaser and the Distributor.
"Purchase Cut-Off Date" means December 31, 1998.
"Purchase Date" means the date of the purchase of Portfolio Assets
pursuant to the Purchase Agreement.
"Purchase Limit" means at any time, $21,115,000, (or such other
amount as shall be agreed to in writing by the Purchaser and the Program
Administrator) less the outstanding principal amount of Purchaser Warehouse
Funding Debt relating to Purchased Portfolio Assets acquired by the Purchaser on
Purchase Date.
"Purchased Portfolio Assets" means with respect to any Fund, as of
any date, the Portfolio Assets allocated to the Purchaser, in accordance with
the Purchase Agreement and the Allocation Procedures, together with the Program
Collections and Ancillary Rights with respect thereto and all proceeds thereof'
which is intended to include all Asset Based Sales Charges and Contingent
Deferred Sales Charges payable by or in respect of such Fund arising out of the
Shares attributed to the Purchaser.
"Purchase Price" means with respect to the Portfolio Assets relating
to any Fund to be purchased on the Purchase Date, an amount specified in Section
2.01 of the Purchase Agreement; provided, however, that in the event that the
Distributor or any other Sponsor Entity has received any Program Collections in
respect of such Portfolio Assets to be purchased hereunder prior to the purchase
thereof by the Purchaser, the amount of such Program Collections shall be
subtracted from the Purchase Price for such Portfolio Assets.
"Purchaser" shall have the meaning assigned to such term in the
preamble to the Master Agreement.
"Purchaser CDSC Sub-account" shall have the meaning assigned to such
term in Section 3.05(a) of the Program Collection Agency Agreement.
"Purchaser's Asset Based Sales Charge Portion" means the portion of
the Portfolio Assets relating to all Funds constituting Asset Based Sales
Charges allocable to the Purchaser pursuant to the Allocation Procedures.
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"Purchaser's CDSC Portion" means the portion of the Portfolio Assets
relating to all Funds constituting Contingent Deferred Sales Charges allocable
to the Purchaser pursuant to the Allocation Procedures.
"Purchaser's Investment Earnings" shall have the meaning assigned to
such term in Section 3.03(c) of the Program Collection Agency Agreement.
"Purchaser's Portion" means, on any date, the sum of (i) Purchaser's
CDSC Portion, (ii) Purchaser's Asset Based Sales Charge Portion, (iii) the
Purchaser's Investment Earnings, and (iv) all other amounts to which the
Purchaser is entitled under the Program Documents which are deposited in the
Program Collection Account.
"Purchaser's Remittance Account" means the account of the Purchaser
maintained by Bankers Trust Company, at Four Albany Street, New York, New York
10006, ABA No.: 021001033, Acct. No.: 01419647 for further credit to Acct. No.:
23486, Ref. "Mackenzie" or such other account as the Purchaser shall designate
in writing to the Program Administrator and the Collection Agent.
"Purchaser Warehouse Funding Debt" means indebtedness incurred by the
Purchaser pursuant to the funding arrangements established by the Purchaser for
the purpose of funding the Purchase Price paid by it for Purchaser's Purchased
Portfolio Assets acquired pursuant to the Program.
"Purchaser Warehouse Pledge Agreement" shall have the meaning
assigned to such term in Section 4.01 of the Program Collection Agency
Agreement.
"Redemption Feature" means with respect to any Share of any Fund, the
rules applied to determine the order in which Free Shares and Commission Shares
owned of record for any Shareholder account are redeemed.
"Redemption Threshold Date" means the first day during any three
calendar month period on which the aggregate Net Asset Values (determined with
respect to each redeemed Share as of the date of such redemption) of all Shares
relating to Purchased Portfolio Assets, which were redeemed in Free Redemptions
during the portion of such period up to and including the day in question,
equals or exceeds the product of (a) the average of the aggregate Net Asset
Values of all Funds as of the three immediately preceding Calculation Dates, and
(b) one half of one percent (.5%).
"Reinvested Share" means, in respect of any Fund, a Share which is
issued by such Fund as a result of the reinvestment of dividends or other
distributions, whether ordinary income, capital gain or exempt-interest
dividends or other distributions, of such Fund.
"Related Collections" means (i) all amounts paid or payable in
respect of the Portfolio Assets relating to each Fund by the applicable Fund or
Company or by each
X-22
<PAGE> 131
shareholder of such Fund, subject to the terms of the Program Documents, and
(ii) all proceeds of the foregoing, excluding, in the case of (i) above, all
Program Collections.
"Responsible Officer" means, (i) with respect to any Person which is
a corporate entity or business trust other than Bankers Trust Company, any
officer or Person with like authority or employee of such Person with
responsibility and authority for the matters relating to such Person's
participation in the transactions contemplated by the Program Documents,
including the person to whom notices to such Person are to be directed as
identified pursuant to the notice provisions of any Program Document, and (ii)
with respect to Bankers Trust Company, any officer assigned to the Corporate
Trust Office, including any managing director, vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of
Bankers Trust Company customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of the Program Documents, and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Rule 12b-l" means Rule 12b-l adopted under the Investment Company
Act, as the same may from time to time be amended, supplemented or modified.
"Sales Charge" shall have the meaning set forth in Section 2830(b)(8)
of the Conduct Rules.
"SEC" means the United States Securities and Exchange Commission or
any other governmental authority of the United States of America at the time
administrating the Securities Act, the Investment Company Act or the Exchange
Act.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC thereunder.
"Selling Agent" means each Person which acts as direct or indirect
distributor, underwriter, broker, dealer or agent for the Shares of a Fund
together with its successors and assigns.
"Selling Agent's Agreement" means each agreement pursuant to which a
Person undertakes to act as Selling Agent in respect of the Shares of any Fund.
"Service Fee" shall have the meaning set forth in Section 2830(b)(9)
of the Conduct Rules.
"Shareholder" means, in respect of any Fund, a holder of Shares of
such Fund.
"Shareholder Servicing Fee" means the fees payable by a Fund or by a
Company with respect to the Shares of a Fund pursuant to the Distributor's
Contract in
X-23
<PAGE> 132
consideration of account maintenance and personal services to holders of Shares
of such Fund.
"Shares" means in respect of any Fund, any class of shares of such
Fund which are specified on Schedule 1 to the Master Agreement, as the same may
be supplemented pursuant to Section 8.17 of the Master Agreement.
"Significant Affiliate" means (i) any corporation or holding company
or similar entity which after the date hereof owns or controls the majority of
the outstanding voting securities of the Distributor, or (ii) any Affiliate of
the Distributor which is a subsidiary of the Parent if the Parent's beneficial
interest in the total assets of such subsidiary is equal to or greater than ten
percent (10%) of the total assets of the Parent, and in any event shall include
the Parent, the Program Servicer Agent, the Advisor and any Transfer Agent which
is a Sponsor Entity.
"SIPA" means the Securities Investor Protection Act of 1970, as
amended from time to time and the regulations promulgated and the rulings issued
thereunder.
"Sponsor Entities" means each of the Parent, the Distributor, the
Program Servicer Agent, the Advisor and each Transfer Agent which is an
Affiliate of the Parent.
"Standard & Poor's" means Standard & Poor Ratings Services, a
division of The McGraw-Hill Companies, Inc.
"Successor" shall have the meaning assigned to such term in Section
5.02 of the Program Servicer Agent Agreement.
"Taxes" shall have the meaning assigned to such term in Section 8.05
of the Master Agreement.
"Transfer Agent" means any Person in its capacity as transfer agent
for the Funds.
"Transfer Agent's Agreement" means each agreement pursuant to which a
Transfer Agent undertakes to act as transfer agent for any Fund.
"True Sale" means, with respect to any transfer of an asset or
property, the sale of an ownership interest in such asset or property (not the
granting of a security interest therein), within the meaning of all Applicable
Law, including the UCC and the Bankruptcy Code, and, without limiting the
generality of the foregoing, which is enforceable against all creditors of the
Person making such transfer and all Affiliates of such Person in accordance with
the terms of such transfer, notwithstanding the bankruptcy, insolvency or
reorganization of' or similar proceeding with respect to, or the appointment of
a receiver or conservator of the Person making such transfer or any Affiliate of
such Person, and in connection with any proceeding under the Bankruptcy Code, in
respect of which the Person making such transfer or any Affiliate of such Person
X-24
<PAGE> 133
is the "debtor," as such term is used in the Bankruptcy Code, the Purchased
Portfolio Assets and the proceeds thereof will not be deemed the property of the
debtor.
"UCC" means the Uniform Commercial Code, as from time to time in
effect in the applicable jurisdictions.
"Unamortized Gross Purchase Amount" means, in respect of the
Purchaser's Purchased Portfolio Assets relating to any Fund, as of any date of
determination, (i) the Maximum Aggregate Sales Charge Allowable, minus (ii) the
aggregate amounts paid by the applicable Company (including amounts paid by the
holders of Shares of such Fund in respect of Contingent Deferred Sales Charges)
in respect of such Fund and deposited in the Program Collection Account and
applied and distributed to the payment of such Purchaser's Purchased Portfolio
Assets in accordance with the terms of the Program Collection Agency Agreement
through such date of determination.
"Year 2000 Problem" shall mean the risk that computer applications
used by it may be unable to recognize and properly perform date-sensitive
functions involving certain dates prior to, during or after the year 2000.
X-25
<PAGE> 134
IRREVOCABLE PAYMENT INSTRUCTION
IVY MACKENZIE DISTRIBUTORS,INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
March 16, 1999
Each of the Funds and Transfer Agents
and Custodians listed on Schedule I hereto
You are hereby notified that Ivy Mackenzie Distributors, Inc. (the
"Distributor") has entered into a Mackenzie Program Master Agreement, dated as
of March 16, 1999 (as from time to time amended, the "Master Agreement") with
the "Parent," the "Advisor," the "Program Servicer Agent," the "Purchaser," the
"Program Administrator" and the "Collection Agent" (each as defined therein),
pursuant to which and pursuant to the other Program Documents (defined therein)
the Distributor has agreed from time to time to sell, convey, assign and
transfer to the Purchaser all of its right, title and interest in, to and under
the Purchased Portfolio Assets (defined therein) relating to the sales of Shares
(defined therein) relating to each of the Funds (defined therein) during certain
specified periods.
Capitalized terms used herein shall have the respective meanings
ascribed thereto in Schedule X to the Master Agreement.
Each Fund is hereby directed to make, or cause to be made, all
payments in respect of all amounts paid or payable by each Fund pursuant to the
Distributor's Contract, the Distribution Plan, the Prospectus and the Contingent
Deferred Sales Charge arrangements in respect of the Portfolio Assets relating
to such Fund and all proceeds therefrom (hereinafter, "Payments"), which
otherwise would be payable by the Fund to the Distributor, by wire in
immediately available funds:
(A) in the case of Contingent Deferred Sales Charges accruing on
or after March 1, 1999 (except as described in (B) below), directly
from an account owned by the Fund, Transfer Agent or Selling Agent
withholding the same (without any intermediate commingling with funds
of the Distributor) to the account of Bankers Trust Company (the
"Collection Agent") entitled the "Putnam Lovell Finance L.P. -
Mackenzie Program Collection Account" (the "Program Collection
Account"): Bankers Trust Company, ABA No. 021001033, Account No.
00382838, Attn: Structured Finance, for further credit to Account No.
26994 (ref: Putnam Lovell Finance L.P. - Mackenzie Program Collection
Account)
<PAGE> 135
established and maintained by the Collection Agent at Four Albany
Street, New York, New York 10006 no later than the third Business Day
following the end of the calendar week in which the same are withheld
by the Fund, Transfer Agent or Selling Agent in question;
(B) in the case of Contingent Deferred Sales Charges accruing on
or after March 1, 1999 withheld by Selling Agents then listed on
Exhibit I to the Program Allocation Procedures and all other Payments
(other than those described in (C) below), directly (without any
intermediate commingling with funds of the Distributor) from an
account owned by the Fund (or a single account by such Fund and other
Funds) to the Program Collection Account at the above-referenced
address on or before the fifth (5th) Business Day of the calendar
month immediately following the calendar month to which they relate;
and
(C) in the case of Asset Based Sales Charges accruing after the
later of March 8, 1999 or the eighth calendar day of any calendar
month through the eighth calendar day of the next succeeding calendar
month, directly (without any intermediate commingling with funds of
the Distributor) from an account owned by the Fund (or a single
account by such Fund and other Funds) to the Program Collection
Account at the above-referenced address on or before the twelfth
(12th) calendar day of such succeeding calendar month.
You are further notified that:
1. This Irrevocable Payment Instruction is delivered on behalf of the
Purchaser and the Program Administrator and is irrevocable and cannot be changed
without the consent of the Purchaser and the Program Administrator and the
Distributor;
2. By your acknowledgment, you authorize the Distributor to deliver a
copy of this Irrevocable Payment Instruction and your acknowledgment to the
Purchaser, and the Program Administrator and their-respective successors and
assigns; and
3. By its acknowledgement, each Fund agrees to make, or cause to be
made, each Payment due from it in compliance with the directions herein.
THIS IRREVOCABLE PAYMENT INSTRUCTION SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT REGARD TO ITS
CONFLICTS OF LAWS PROVISIONS.
2
<PAGE> 136
By your execution of this Irrevocable Payment Instruction you hereby
acknowledge and agree to abide by the foregoing instructions, it being
understood that such acknowledgment and waiver does not constitute a waiver of
any defenses.
IVY MACKENZIE DISTRIBUTORS, INC.
By: /s/ C. William Ferris
-----------------------------------------
Authorized Signatory
3
<PAGE> 137
PUTNAM LOVELL FINANCE L.P.
as Purchaser
By: Putnam Lovell Finance Inc.,
General Partner
By: /s/ Michael R. Llodra
----------------------------------------
Name: Michael R. Llodra
Title: Vice President
4
<PAGE> 138
Acknowledged and
Agreed to as of the date
first written above:
Each of the Funds listed
on Schedule I hereto
By: /s/ C. William Ferris
----------------------------------
Authorized Signatory
Each of the Transfer Agents
listed on Schedule I hereto
By: /s/ C. William Ferris
----------------------------------
Authorized Signatory
Each of the Custodian's
listed on Schedule I hereto
By: /s/ C. William Ferris
---------------------------------
Authorized Signatory
5
<PAGE> 1
Exhibit 10.3
LEASE AGREEMENT
BETWEEN
VIA MIZNER ASSOCIATES (LANDORD)
AND
MACKENZIE INVESTMENT MANAGEMENT INC. (TENANT)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
------- ----- ----
<S> <C> <C>
I Basic Lease Provisions............................... 3
II Rent................................................. 4
III Construction of Leased Premises...................... 10
IV Conduct of Business by Tenant........................ 12
V Security Deposit..................................... 12
VI Tenant Improvements.................................. 13
VII Repairs and Maintenance of Leased Premises........... 15
VIII Insurance and Indemnity.............................. 17
IX Utilities............................................ 19
X Attornment and Subordination......................... 20
XI Assignment and Subletting............................ 21
XII Waste, Governmental Regulations...................... 24
XIII Rules and Regulations................................ 25
XIV Advertising, Etc. ................................... 25
XV Destruction of Leased Premises....................... 26
XVI Eminent Domain....................................... 27
XVII Default of Tenant.................................... 28
XVIII Access by Landlord................................... 32
XIX Tenant's Property.................................... 33
XX Holding Over Successors.............................. 34
XXI Quiet Enjoyment...................................... 35
XXII Miscellaneous........................................ 35
</TABLE>
<PAGE> 3
LIST OF EXHIBITS
EXHIBIT ONE - Site Plan of Via Mizner Financial Plaza
EXHIBIT TWO - Additional Lease Agreement Provisions
EXHIBIT "A" - Plan of Leased Premises
EXHIBIT "A-1" - Optional Lease Premises Configuration
EXHIBIT "B" - Legal Description
EXHIBIT "C" - Landlord's Work
EXHIBIT "D" - Tenant's Work
EXHIBIT "E" - Sign Specifications
EXHIBIT "F" - Heating and Air Conditioning Maintenance
Provision
EXHIBIT "G" - Maintenance and Cleaning Standards For Tenant
EXHIBIT "H" - Rules and Regulations of Via Mizner Financial Plaza
EXHIBIT "I" - Rules and Regulations for Tenant Construction Work
EXHIBIT "J" - Formula for Calculation of Area Within Leased Premises
EXHIBIT "K" - Standards for Tenant Installation of Equipment on the
Roof or Affixed to the Building
EXHIBIT "L" - Memorandum of Lease
EXHIBIT "M" - Non-Disturbance and Attornment Agreement
EXHIBIT "N" - Collateral Account Escrow Agreement
<PAGE> 4
LEASE AGREEMENT
THIS LEASE, made as of the 10th day of May, 1989 by VIA MIZNER ASSOCIATES, a
Florida general partnership, herein called "Landlord, and MACKENZIE INVESTMENT
MANAGEMENT INC., a Delaware corporation authorized to do business in the State
of Florida, herein called "Tenant".
LEASE SUMMARY
a) Landlord's Mailing
Address: P.O. Drawer 40
Boca Raton Florida 33429
b) Tenant Suite No.: Third Floor, Building No.:
Pavilion 6
c) Tenant's Lease Address: ____________________________________
____________________________________
d) Tenant's Billing
Address: ____________________________________
____________________________________
e) Tenant's Telephone No.: Home( ) _________________________
Business ( ) ____________________
f) Tenant's Name (including
State of formation or
Incorporation): MACKENZIE INVESTMENT MANAGEMENT
INC., a Delaware corporation
g) Tenants Trade Name: ____________________________________
h) Resident Manager or
key person: ____________________________________
i) Guarantor(s): See Exhibit Two, Paragraph 13
j) Lease Commencement Date: See Exhibit Two, Paragraph 1
k) Lease Expiration Date: 11 years from Lease Commencement Date
l) Amendments: See Exhibit Two attached hereto
and made a part hereof
m) Expansion Provisions: See Exhibit Two, Paragraph 3
n) GLA in Premises: See Exhibit J (approximate size
11,664 sq. ft. +/-)
o) Tenant Improvements: See Exhibit Two, Paragraph 2
-1-
<PAGE> 5
p) Minimum Rent:
FIXED
LEASE MINIMUM MONTHLY
YEAR $/SQ. FT. ANNUAL RENT INSTALLMENT
---- --------- ----------- -----------
1 $00.00 $ 0.00 $ .00
2 20.00 233,280.00 19,440.00
3 20.00 233,280.00 19,440.00
4 20.00 233,280.00 19,440.00
5 20.80 242,611.20 20,217.60
6 21.94 255,908.16 21,325.68
7 23.71 276,553.44 23,046.12
8 24.42 284,834.88 23,736.24
9 25.77 300,581.28 25,048.44
10 26.32 306,996.48 25,583.04
11 26.32 306,996.48 25,583.04
q) Permitted Use: General offices providing financial, insurance,
accounting and/or legal services
r) Consumer Price Index: NONE; and N/A
s) Security Deposit: NONE
t) Other Sums Payable: N/A
u) Estimated Annual
Expenses (First Year):
Base Rent: $ -0-
Pavilion No. 6 Operating Costs: 11,724.00
Via Mizner Financial Plaza Operating Costs: Included
Via Mizner Master Facilities Operating Costs: 8,364.00
Real Estate Taxes: 20,424.00
Insurance: 3,456.00
Utility Charges: 3,072.00
Other:
-----------
Sales Tax: 2,822.40
Estimated Annual Total 1st Year: $ 49,862.40
===========
THE INFORMATION SET FORTH IN THIS SECTION (u) HAS BEEN ESTIMATED
BASED ON LANDLORD'S GOOD FAITH ATTEMPT TO CALCULATE SUCH SUMS
FOR DISCLOSURE PURPOSES ONLY. THE LANDLORD DISCLAIMS ANY
RESPONSIBILITY FOR THE ACCURACY OF THE INFORMATION AND DOES NOT WARRANT
OR REPRESENT TO TENANT THAT ANY ESTIMATE IS ACCURATE. THE TENANT SHOULD
ENGAGE AND RELY ONLY UPON INDEPENDENT REAL ESTATE PROFESSIONALS
EMPLOYED BY TENANT TO ASCERTAIN THE ACCURACY OF THESE ESTIMATES.
v) Remarks: Royal te Page (BS)
----------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
THE FOREGOING LEASE SUMMARY IS AN
INTEGRAL PART OF THIS LEASE AGREEMENT
-2-
<PAGE> 6
ARTICLE 1
Basic Lease Provisions
SECTION 1.01 Leased Premises.
In consideration of the rents, covenants and agreements hereafter
reserved and contained on the part of the Tenant to be observed and
performed, the Landlord demises and leases to the Tenant, and Tenant
rents from Landlord, those certain premises now existing or hereafter to
be erected in VIA MIZNER FINANCIAL PLAZA which premises is identified as
Suite No. 300, Building Pavilion 6, containing an area of 11,664 square
feet (which area shall be established in accordance with the criteria
set forth on Exhibit "J" attached hereto and made a part hereof), herein
called the "Leased Premises". The boundaries and location of the Leased
Premises are outlined and identified on the Building Plan marked Exhibit
"A" attached hereto and made a part hereof. Dimensions for all purposes
shall be measured in accordance with the criteria set forth on Exhibit
"J" from the centerline of interior walls or from the exterior face of
exterior walls. The Leased Premises are located in VIA MIZNER FINANCIAL
PLAZA on the real property described in Exhibit "B" attached hereto and
made a part hereof. The boundaries of the VIA MIZNER FINANCIAL PLAZA
(which boundaries may be modified or amended to increase or decrease the
area) are identified on Exhibit "One", the site plan of VIA MIZNER
FINANCIAL PLAZA, attached hereto and made a part hereof.
SECTION 1.02 Use of Additional Areas.
The use and occupation by the Tenant of the Leased Premises shall
include the non-exclusive use in common with others entitled thereto of
the common areas, employees' parking areas, service roads, malls,
loading facilities, sidewalks and customer car parking areas as such
common areas now exist or as such common areas may hereafter be
constructed upon or within the real property described in Exhibit "B",
and other facilities as may be designated from time to tine by the
Landlord, subject however to the terms and conditions of this Lease and
to rules and regulations for the use thereof (including use charges and
parking validation procedures) as prescribed from time to time by the
Landlord.
SECTION 1.03 Commencement and Length of Term.
The term of this Lease shall commence on the date set forth in
Section (j) of the Lease Summary, and shall continue until the
expiration date as set forth in Section (k) of the Lease Summary.
SECTION 1.04 Commencement of Rent.
The Tenant's obligation to pay rent shall commence on the
earliest of the following dates: (a) the _____ day of __________ 19 or,
if no date is completed in this subparagraph (a), then as set forth in
subparagraphs (b) and (c) hereinafter; (b) the 90th day after Landlord
shall have notified Tenant that the Leased Premises are ready for
commencement of Tenant's work, or (c) the date upon which Tenant opens
for business in the Leased Premises. Should the term of this Lease and
the Tenant's obligation to pay rent commence on a day other than the
first day of a month, then the term of this Lease shall continue in full
force and effect for the period from the commencement date hereof to the
first day of the calendar month next succeeding, plus the period of the
term set forth in Section 1.03 hereof; provided, however, that the
Tenant shall pay rent for the fractional month (from the Commencement
Date to and including the last day of the
-3-
<PAGE> 7
fractional month) on a per diem basis (the per diem being calculated on
the basis of a thirty day month) and the rent for the fractional month
shall be payable on the commencement date and thereafter the fixed
minimum rent shall be paid in equal monthly installments on the first
day each and every month in advance. All other monthly payments
hereunder shall likewise be calculated and paid on such per diem basis
for any fractional month.
SECTION 1.05 Failure of Tenant to Open.
In the event that Tenant has received notice that the Leased
Premises are ready for occupancy as herein defined and (i) Tenant fails
to take possession and to open the Leased Premises for business fully
fixtured, stocked and staffed and fail to commence to do business within
the time herein provided, and (ii) Tenant opens a corporate headquarters
facility within a five (5) mile radius of the VIA MIZNER FINANCIAL
PLAZA, then Tenant shall be in default hereunder and the Landlord shall
have the right to enforce all remedies of default as provided in this
Lease.
SECTION 1.06 Excuse of Landlord's Performance.
Anything in this Lease to the contrary notwithstanding; the
Landlord shall not be deemed in default with respect to failure to
perform any of the terms, covenants and conditions of this Lease if same
shall be due to rainstorm, hurricane, or other weather phenomenon, any
strike, lockout, civil commotion, warlike operation, invasion,
rebellion, hostilities, military or usurped power, sabotage,
governmental regulations or controls, inability to obtain any material,
service or financing, through Act of God or other causes beyond the
control of the Landlord.
SECTION 1.07 Obligations of Tenant Before Lease Term Begins.
Tenant shall observe and perform all of its obligations under
this Lease (except its obligations to operate and to pay Fixed Minimum
Rent, its pro rata share of VIA MIZNER FINANCIAL PLAZA's Operating Costs
provided for in Section 2.06, and its pro rata share of real estate
taxes as provided for in Section 2.06) from the date upon which the
Leased Premises are delivered to Tenant for its work until the
Commencement Date of the Lease Term in the same manner as though the
Lease Term began when the Leased Premises were delivered to Tenant.
ARTICLE II
Rent
SECTION 2.01 Fixed Minimum Annual Rent.
(a) Tenant agrees to pay Landlord, subject, however to adjustment
(if any) as herein provided, as fixed minimum annual rent the sum or
sums set forth in Section (p) of the Lease Summary (hereinafter referred
to as "Fixed Minimum Annual Rent"). The Fixed Minimum Annual Rent during
the term of this Lease shall be payable by the Tenant in equal monthly
installments, on or before the first day of each month in advance, at
the office of the Landlord as set forth in Section (a) of the Lease
Summary, or at such other place designated by Landlord in writing,
without notice or demand, and without any deduction, counterclaim, or
set-off whatsoever.
(b) In the event that at any time any personal or corporate check
of Tenant should be returned marked "insufficient funds" or should not
be promptly paid by the drawee bank for any other
-4-
<PAGE> 8
reason (excepting and error made by the drawee bank and acknowledged by
the drawee bank in writing), Landlord may, without prejudice to any
other right or remedy accruing to Landlord under this Lease, require
that all future rental payments are to be made on or before the due date
by cash, cashier's check or money order.
SECTION 2.02 Cost of Living Increases in Fixed Minimum Annual Rent.
The initial term of the Lease is not subject to the provisions of
this Section 2.02 however, if any option term is exercised, then in the
case of any option terms, if any, commencing one (1) year from the first
day of the option term (the Adjustment Date), and annually thereafter,
the Fixed Minimum Annual Rent shall be adjusted (increased but not
decreased) by the following mathematical formula:
A = [(B X C/D)]
A is the Fixed Minimum Annual Rent for the year following the
Adjustment Date (the Adjusted Fixed Minimum Annual Rent).
B is the Fixed Minimum Annual Rent as subsequently established
in accordance with market rental value review provision
contained Lease, if any, or is the Fixed Minimum Annual of the
Commencement Date of any option term, case may be.
C is the Index for two (2) months preceding the month in which
the Adjustment Date occurs.
D is the Commencement Date Index of any option term.
The formula shall adjust the Fixed Minimum Annual Rent as of the
Commencement Date of any option term by the product obtained by
multiplying the Fixed Minimum Annual Rent times a fraction, the
numerator of which shall be the Consumer Price Index for Urban Wage
Earners and Clerical Workers (U.S. City Average: All Items), issued by
the Bureau of Labor Statistics of the U.S. Department of Labor, using
the year 1967 as a base of 100, (the "Index") for the month immediately
preceding the month in which the Adjustment Date occurs, and the
denominator shall be the Commencement Date Index of the option term. The
result of this calculation shall be the Adjusted Fixed Minimum Annual
Rent for the year following the Adjustment Date.
In the event that the Index herein referred to ceases to be
published during the term of this Lease, or if a substantial change is
made in the method of establishing such Index, then the determination of
the adjustment in the Fixed Minimum Annual Rent shall be made with the
use of such conversion factor, formula or table as may be published by
the Bureau of Labor Statistics, or if none is available, the parties
shall accept comparable statistics on the cost of living in the United
States, as shall then be computed and published by an agency of the
United States, or if none, by a respected financial periodical selected
by Landlord.
In the event that Tenant elects to exercise its option(s) (if
any) to extend this Lease, the cost of living increase in the Fixed
Minimum Annual Rent for the option period(s) shall be computed and
applied according to the same procedure described hereinabove for the
initial term of the Lease, except that the Fixed Minimum Annual Rent
shall be the amount established in
-5-
<PAGE> 9
accordance with the terms of any option provisions (if any) attached to
this Lease.
SECTION 2.03 Sales or Use Tax or Excise Tax.
Tenant shall also pay, as additional rent, all sales or use or
excise tax imposed, levied or assessed against the rent or any other
charge or payment required herein by any governmental authority having
jurisdiction thereover, even though the taxing statute or ordinance may
purport to impose such sales tax against the Landlord. The payment of
sales tax shall be made by Tenant on a monthly basis, concurrently with
payment of the Fixed Minimum Annual Rent.
SECTION 2.04 Control of Common Areas by Landlord.
All areas within the exterior boundaries of VIA MIZNER FINANCIAL
PLAZA which are now or hereafter held for lease or occupation by the
Landlord, or used by other persons entitled to occupy floor space in VIA
MIZNER FINANCIAL PLAZA, including, without limitation, all automobile
parking areas, driveways, entrance and exits thereto, and other
facilities furnished by Landlord in or near VIA MIZNER FINANCIAL PLAZA,
including employee parking areas, the truck way or ways, loading docks,
package pick-up stations, pedestrian sidewalks and ramps, landscaped
areas, exterior stairways, and other areas and improvements provided by
Landlord for the general use, in common, of tenants, their officers,
agents, employees and customers, ("Common Areas"), shall at all times be
subject to the exclusive control and management of Landlord, and Landlord
shall have the right, but not the obligation, to construct, maintain and
operate lighting facilities on all said areas and improvements, to police
the same, from time to time to change the area, level, location and
arrangement of parking areas and other facilities herein above referred
to; to restrict parking by tenants, their officers, agents and employees
to employee parking areas, to require tenants, their officers, agents and
employees to provide vehicle license numbers and to use parking decals or
other reasonable parking identification procedures, and to enforce
parking charges (by operation of meters or otherwise), with appropriate
provisions for free parking ticket validating, or in lieu thereof, to
apply the net proceeds from such charges, as follows: (i) the cost of
maintaining and operating the parking facilities; and (ii) the payment of
the cost for constructing the parking facilities and amortization
thereof; and (iii) any remaining receipts shall be received as operating
profit of the Landlord in consideration for providing the parking
facilities and operation thereof.
Landlord shall have the right to close all or any portion of said
areas or facilities to such extent as may, in the opinion of Landlord's
counsel, be legally sufficient to prevent a dedication thereof or the
accrual of any rights to any person or the public therein, to close
temporarily all or any portion of the parking areas or facilities, to
discourage non-customer parking; and to do and perform such other acts in
and to said areas and improvements as, in the use of good business
judgment, the Landlord shall determine to be advisable with a view to the
improvement of the convenience and use thereof by tenants, their
officers, agents, employees and customers. Landlord shall keep said
Common Areas clean and in good repair and available for the purposes for
which they are intended. Landlord shall have the full right and authority
to employ all personnel and to make all rules and regulations pertaining
to and necessary for the proper operation and maintenance of the Common
Areas and facilities.
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SECTION 2.05 License.
All Common Areas and facilities not within the Leased Premises1 which
Tenant may be permitted to use and occupy, are hereby authorized to be used and
occupied under a revocable license, and if any such license be revoked, or if
the amount of such areas be diminished, Landlord shall not be subject to any
liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation or diminution of such areas be
deemed constructive or actual eviction.
SECTION 2.06 Tenant to Bear Pro Rata Share of VIA MIZNER FINANCIAL PLAZA
Operating Costs.
(a) In each Lease Year or partial Lease Year, as defined herein,
Tenant will pay to Landlord, in addition to the rental specified in
Article II hereof, as further additional rent, a proportion of: (i) the
Building Operating Costs, as hereinafter defined; (ii) VIA MIZNER
FINANCIAL PLAZA's Operating Costs, as hereinafter defined; and (iii) Via
Mizner Master Facilities Operating Costs, as hereinafter defined. Each
of the proportionate cost components described above shall be calculated
by multiplying the total of each cost component by a fraction, the
numerator of which shall be the aggregate number of square feet
contained in the Leased Premises and the denominator of which shall be
the aggregate number of square feet of constructed building space in VIA
MIZNER FINANCIAL PLAZA, as the sane may exist from time to time and as
calculated in accordance with the provisions of Exhibit "J". Such
payments shall be made as provided under Section (u) of the Lease
Summary and, thereafter, shall continue as provided under Section
2.06(e).
"Lease Year" as used herein shall mean consecutive twelve-month
periods commencing on each January 1st during the term of this Lease. In
the event that the term of this Lease commences on a date other than
January 1st, or expires on a date other than December 31st, the first
and last years shall be partial lease years and in such case the first
partial lease year shall commence on the date of the commencement of the
term of this Lease and expire on December 31st next following and the
last partial lease year shall commence on the last January 1st occurring
during the term of this Lease and shall expire on the expiration date of
this Lease.
(b) "Building Operating Costs" as used herein means the total
cost and expense incurred in operating, maintaining and repairing the
building identified in Section (b) of the Lease Summary (hereinafter
referred to as the "Building"), together with improvements and common
facilities, actually used or available for use by Tenant and employees,
agents, servants, customers and other invitees of Tenant, excluding only
items of expense commonly known and designated as debt service. The
Building Operating Costs shall specifically include, without limitation
the cost and expense incurred in operating, maintaining, repairing and
providing (i) property management, the annual cost of which shall not
exceed five percent (5%) of the net operating income (ii) gardening,
landscaping and irrigation, (iii) line painting and other parking
facilities serving exclusively the Building, (iv) all utility facilities
and utility expenses and charges serving exclusively the Building, (v)
all common areas and common facilities, serving exclusively the
Building, (vi) sanitary control, removal of trash, rubbish, garbage and
other refuse from the common areas but not from any Leased Premises,
(vii) depreciation on machinery and equipment owned by Landlord or the
rental charges for such machinery and equipment, and the cost of
personnel to implement such services, (viii) personnel to direct parking
and to police the common
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facilities, including watchmen and security personnel, including payroll
and applicable payroll taxes, worker's compensation insurance and fringe
benefits, (ix) Landlord's insurance premiums on or in respect of the
Building, including, but not limited to public liability, property
damage all risk perils, rent and flood insurance, if carried by
Landlord, (x) all ad valorem and real estate taxes and special
assessments for public betterments or improvements levied or assessed by
any lawful authority against the land, buildings and all other
improvements and betterments which are now or which hereafter become a
part of the Building, and (xi) personnel to maintain, repair and operate
the Building and Common Facilities. "Common Facilities" means all areas,
space, parking facilities, equipment and special services used to
operate exclusively the Building or provided by Landlord for the common
or joint use and benefit of the occupants of the Building, their
employees, agents, servants, customers and other invitees, including
without limitation, parking areas, access roads, driveways, retaining
walls, landscaped areas, truck serviceways, loading docks, pedestrian
malls, courts, stairs, ramps and sidewalks, washrooms, and signs,
wherever located, identifying the Building, or providing instruction
signage thereto.
The following items are expressly excluded from Building
Operating Costs: (1) any capital expenditure, (2) costs for maintaining
the roof and load bearing walls, (3) executive salaries excepting that
of the Property Manager, (4) VIA MIZNER FINANCIAL PLAZA, (5) consulting
fees relating to capital expenditures, (6) market study fees, (7) lease
commissions and advertising costs, (8) initial landscaping costs, (9)
structural repairs and replacements, (10) any penalty or late charge
incurred by the Landlord as a result of the failure of the payment of
taxes on its due date, (11) any fee or interest charge resulting from
the Landlord's refinancing of the property, (12) money the Landlord must
pay if Landlord defaults under a lease or other agreement, (13) any
legal fees to resolve disputes involving the Landlord and any particular
tenant, (14) any excessive amount the Landlord pays a contractor or
vendor, (15) costs incurred by the Landlord as a result of any new
construction in any subsequent phase of VIA MIZNER FINANCIAL PLAZA, (16)
any ground rents as they result to ground leases.
(c) "VIA MIZNER FINANCIAL PLAZA Operating Costs" as used herein
means the total cost and expense incurred in operating, maintaining, and
repairing VIA MIZNER FINANCIAL PLAZA's buildings and improvements and
common facilities, hereinafter defined, actually used or available for
use by Tenant and employees, agents, servants, customers and other
invitees of Tenant, excluding only items of expense commonly known and
designated as debt service. The VIA MIZNER FINANCIAL PLAZA Operating
Costs shall specifically include, without limitation the cost and
expense incurred in operating, maintaining, repairing and providing (i)
property management, (ii) gardening, landscaping and irrigation, (iii)
all parking facilities, (iv) all utility facilities (including but not
limited to sewer lines and installations, water lines and installation,
electrical lines and facilities, and storm drainage facilities), and
utility expenses and charges for utility services, (v) sanitary control,
removal of trash, rubbish, garbage and other refuse from the common
areas but not from any Leased Premises, (vi) depreciation on machinery
and equipment owned by Landlord or the rental charges for such machinery
and equipment, and the cost of personnel to implement such services,
(vii) the cost of personnel to direct parking and to police the common
facilities, including watchmen and security personnel, including payroll
and applicable payroll taxes, worker's compensation insurance and fringe
benefits, (viii) Landlord's insurance premiums on or in respect of VIA
MIZNER FINANCIAL PLAZA, including, but not limited to public liability,
property damage all risk perils, rent and flood insurance, if
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carried by Landlord, (ix) all ad valorem and real estate taxes and
special assessments for public betterments or improvements levied or
assessed by any lawful authority against the land, buildings and all
other improvements and betterments which are now or which hereafter
become a part of VIA MIZNER FINANCIAL PLAZA, (x) all common areas and
common facilities, and (xi) personnel to maintain, repair and operate
VIA MIZNER FINANCIAL PLAZA including all of its Common Facilities.
"Common Facilities" means all areas, space, parking facilities,
equipment and special services used to operate VIA MIZNER FINANCIAL
PLAZA, or to provide services to each building within VIA MIZNER
FINANCIAL PLAZA, or provided by Landlord for the common or joint use and
benefit of the occupants of VIA MIZNER FINANCIAL PLAZA, their employees,
agents, servants, customers and other invitees, including without
limitation, parking areas, access roads, driveways, retaining walls,
landscaped areas, truck serviceways, loading docks, pedestrian malls,
courts, stairs, ramps and sidewalks, washrooms, private roads, utility
services and installations, and storm drainage installations and
facilities, and signs (wherever located) identifying VIA MIZNER
FINANCIAL PLAZA, or providing instruction signage thereto. If Landlord
exercises its right to invoke a paid parking program, then all costs of
operating the parking facilities included within the parking program (to
the extent paid for from receipts collected from the parking program)
shall be excluded from the VIA MIZNER FINANCIAL PLAZA Operating Costs.
(d) "Via Mizner Master Facilities Operating Costs" as used
herein means the total cost and expense in operating, repairing and
maintaining the master improvements and common facilities actually used
or made available for use by the tenants and employees, agents,
servants, customers and other invitees of Tenant excluding only items of
expense commonly known and designated as debt service. Via Mizner Master
Facilities Operating Costs shall specifically include, without
limitation the cost and expense incurred in operating, maintaining,
repairing and providing (i) property management, (ii) gardening,
landscaping and irrigation, (iii) all parking facilities, (iv) all
on-site and off-site utility facilities (including but not limited to
sewer lines and installations, water lines and installation, electrical
lines and facilities, and storm drainage systems, facilities and
retention lakes and areas), and utility expenses and charges for utility
services, (v) sanitary control, removal of trash, rubbish, garbage and
other refuse from the common areas but not from any Leased Premises,
(vi) depreciation on machinery and equipment owned by Landlord or the
rental charges for such machinery and equipment, and the cost of
personnel to implement such services, (vii) the cost of personnel to
direct parking and to police the common facilities, including watchmen
and security personnel, including payroll and applicable payroll taxes,
worker's compensation insurance and fringe benefits, (viii) Landlord's
insurance premiums on or in respect of the Master Facilities, including,
but not limited to public liability, property damage all risk perils,
rent and flood insurance, if carried by Landlord, (ix) all ad valorem
and real estate taxes and special assessments for public betterments or
improvements levied or assessed by any lawful authority against the
Master Facilities which now or hereafter service or become a part of VIA
MIZNER FINANCIAL PLAZA, and (x) personnel to maintain, repair and
operate the Master Facilities. "Master Facilities" means all on-site or
off-site areas, space, parking facilities, equipment and special
services used to operate VIA MIZNER FINANCIAL PLAZA, or to provide
services to each building within VIA MIZNER FINANCIAL PLAZA, or provided
by Landlord for the common or joint use and benefit of the occupants of
VIA MIZNER FINANCIAL PLAZA, their employees, agents, servants, customers
and other invitees, including without limitation, parking areas, access
roads, driveways, retaining walls
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landscaped areas, truck serviceways, loading docks, pedestrian malls1
courts, stairs, ramps and sidewalks, washrooms, private roads, utility
services and installations, and storm drainage installations and
facilities, and signs (wherever located) identifying VIA MIZNER
FINANCIAL PLAZA, or providing instruction signage thereto.
(e) Landlord shall estimate (i) the Building Operating Costs,
and (ii) the VIA MIZNER FINANCIAL PLAZA Operating Costs, and (iii) the
Via Mizner Master Facilities Operating Costs, referred to in this
Section 2.06 and Tenant shall pay one-twelfth (1/12) of the collective
sum thereof (as provided for in subparagraph (a) above) monthly in
advance, together with the payment of fixed minimum rent. After the end
of each Lease Year, Landlord shall furnish Tenant a statement of the
actual Building Operating Costs, VIA MIZNER FINANCIAL PLAZA Operating
Costs, and the Via Mizner Master Facilities Operating Costs, and there
shall be an adjustment between Landlord and Tenant, with payment to or
repayment by Landlord, as the case may require, to the end that Landlord
shall receive the entire amount of Tenant's annual share of the
collective operating costs for such period, or, at Landlord's option,
any overpayment by Tenant shall be credited on account of the next
succeeding payment by Tenant of such collective operating costs.
SECTION 2.07 Additional Rent.
In order to give Landlord a lien of equal priority with
Landlord's lien for rent, and for no other purpose, any and all suns of
money or charges required to be paid by Tenant under this Lease, whether
or not the same be so designated, shall be considered "Additional Rent".
If such amounts or charges are not paid at the time provided in this
Lease, they shall nevertheless, if not paid when due, be collectible as
Additional Rent with the next installment of rent thereafter falling due
hereunder; but nothing herein contained shall be deemed to suspend or
delay the payment of any amount of money or charges as the same becomes
due and payable hereunder, or limit any other remedy of the Landlord.
ARTICLE III
Construction of Leased Premises
SECTION 3.01 Landlord's Work.
Landlord agrees that it will construct (subject to the
conditions and limitations set forth in the Individual Development
Approval DDRI IDA NO. CRP 88-4 issued pursuant to the Boca Raton
Community Redevelopment Area Downtown Development of Regional Impact
Development Order), at its own expense the office building, as more
particularly set forth in Exhibit "C" attached hereto and made a part
hereof. Landlord shall notify Tenant when Landlord has completed
Landlord's work in accordance with the provisions of Exhibit "C".
SECTION 3.02 Tenant's Work.
Tenant agrees, at its own cost and expense, to perform all other
work, more particularly described in Exhibit "D" annexed hereto, and on
the outline plans and specifications to be provided by Landlord, which
is necessary to make the Leased Premises conform with Tenant's plans to
be approved by Landlord. All tenant improvements and any other work
performed by Tenant within the Leased Premises shall be accomplished and
completed in accordance with the Rules and Regulations for Tenant
Construction Work set forth in Exhibit "I" attached hereto and made a
part hereof. Within sixty (60) days after the execution of this
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Lease, Tenant shall furnish Landlord, in advance of Tenant's
commencement of work, for Landlord's written approval, plans and
specifications showing a layout, fixturing plans, interior finish, and
any work or equipment to be done or installed by Tenant affecting any
structural, mechanical or electrical part of the Leased Premises or the
building containing same. Landlord agrees it will not unreasonably
withhold such approval, it being the purpose of this requirement that
Tenant's Leased Premises be fixtured and laid out so as not to be a
detriment to the other tenants in VIA MIZNER FINANCIAL PLAZA and that
Tenant's work shall not be detrimental to Landlord's Building.
SECTION 3.03 Acceptance by Tenant.
If Landlord's work is not completed when this Lease is executed,
Tenant agrees that acceptance by Tenant of possession of the Leased
Premises for the purpose of construction of Tenant improvements or the
issuance of a Certificate of Occupancy for the Landlord's work will be
deemed as an acceptance of the Leased Premises in its then existing
condition.
SECTION 3.04 Changes and Additions to Building.
Landlord hereby reserves the right at any time to perform
maintenance operations and to make repairs, alterations, or additions,
to the Building in which the premises are contained and to build
adjoining or annexed to any existing building. Landlord also reserves
the right to construct other buildings or improvements, including, but
not limited to, structures for motor vehicle parking and the enclosing
and air conditioning of improvements and common facilities in VIA MIZNER
FINANCIAL PLAZA from time to time and to make alterations thereof or
additions thereto and to build additional stories on any such building
or buildings and to build adjoining or annexed to any existing building.
Landlord hereby reserves for Landlord's exclusive use (i) all air space
above or surrounding the Leased Premises, (ii) view rights and window
vistas above or surrounding the Leased Premises, and (iii) landscaping
and excavation of the improvements and common facilities in VIA MIZNER
FINANCIAL PLAZA; provided, however, Landlord shall not undertake any
construction or improvements, or modifications to the Building which
would extend above the slab of the second floor of the Building and
further shall undertake no construction or improvements or modifications
to the Building which would any manner impair the view rights of the
Tenant within the "hatched area" as set forth on Exhibit One, Page 1-A
(notwithstanding the foregoing, the Tenant acknowledges that the
Landlord does not own or control the real property or improvements
outside the boundaries of the site plan of VIA MIZNER FINANCIAL PLAZA as
set forth on Exhibit One, Page 1 and therefore any change, modification,
alteration or reconfiguration of the property or improvements, including
but not limited to the installation of landscaping, outside the
boundaries of the site plan of VIA MIZNER FINANCIAL PLAZA, is not within
the control of the Landlord). Tenant agrees to cooperate with Landlord
permitting Landlord to accomplish any such maintenance, repairs,
alterations, additions or construction. Temporary or partial obstruction
of access to the Leased Premises or improvements and common facilities
of VIA NIZNER FINANCIAL PLAZA caused by such construction shall not be a
default of Landlord, provided that shall always be reasonable access.
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ARTICLE IV
Conduct of Business by Tenant
SECTION 4.01 Use of Premises.
Tenant shall use the Leased Premises solely for the purpose of
conducting business as provided in Section (q) of the Lease Summary and
for other purpose.
SECTION 4.02 Occupancy of Premises.
Tenant shall occupy the Leased Premises without delay upon
commencement of the term of this Lease (except as provided for in
Section 1.05 hereinbefore), and shall conduct continuously in the Leased
Premises the business above stated. Tenant will not use or permit, or
suffer the use of the Leased Premises for any business or purpose other
than that stated above, and further agrees to conduct its business in
the premises under the name or trade name as set forth in Section (f) or
(g) of the Lease Summary and under no other name or trade name except
such as may be first approved by Landlord in writing which the Landlord
will not unreasonably withhold. The terms, conditions and rental
conditions of this Lease have been negotiated by the Landlord in
reliance upon the specific permitted use of the Tenant and the terms of
this Lease would be reconsidered by Landlord if another use of the
Leased Premises were contemplated by the Tenant.
SECTION 4.03 Use in Compliance With Regulations.
Tenant shall not at any time use or occupy the Leased Premises
or the Building, or suffer or permit anyone to use or occupy the Leased
Premises, or do anything in the Leased Premises or the Building, or
suffer or permit anything to be done in, brought into or kept on the
Leased Premises, which in any manner in the reasonable determination of
Landlord (a) violates the Certificate of Occupancy for the Leased
Premises or for the Building, (b) causes or is liable to cause injury to
the Leased Premises or the Building or any equipment, facilities or
systems therein, (c) constitutes a violation of the laws and
requirements of any public authorities or the requirements of insurance
bodies, (d) impairs or tends to impair the character, reputation or
appearance of the Building as a first-class office building, (e) impairs
or tends to impair the proper and economic maintenance, operation and
repair of the Building and/or its equipment, common facilities or
systems, (f) annoys or inconveniences or tends to annoy or inconvenience
other tenants or occupants of the Building or VIA MIZNER FINANCIAL
PLAZA, (g) constitutes a nuisance, public or private, or violates any
environmental law, ordinance or regulation, or (h) discharges
objectionable fumes, vapors or odors into the Building vents or
otherwise in such a manner as to offend or inconvenience the other
tenants or occupants of the building.
ARTICLE V
Security Deposit
Landlord and Tenant agree that the Tenant is not required to provide
Landlord with a security deposit.
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ARTICLE VI
Tenant Improvements
SECTION 6.01 Installation by Tenant.
(a) All Tenant improvements and fixtures installed by Tenant
shall be new. Tenant shall not make or cause to be made any alterations,
additions or improvements other than decorating items or install or
cause to be installed any exterior signs, exterior lighting, plumbing
fixtures, shades or awnings or make any changes to the exterior of VIA
MIZNER FINANCIAL PLAZA without first obtaining Landlord's written
approval and consent. Tenant shall present to the Landlord plans and
specifications for such work at the time approval is sought, and
simultaneously demonstrate to Landlord that the proposed alterations
comply with local zoning and building codes. Tenant shall pay to
Landlord the reasonable costs of Landlord's architect and engineers to
review such plans on behalf of the Landlord. Tenant shall not commence
work on any Tenant improvements until Tenant has received from Landlord,
Landlord's written approval of Tenant's plans and specifications and
Tenant shall have filed in the Public Records of Palm Beach County,
Florida a Notice of Commencement executed by the Tenant in compliance
with Florida Statutes 713.
(b) All construction work done by Tenant within the Leased
Premises shall be performed in a good and workmanlike manner, in
compliance with all governmental requirements, and in such manner as to
cause a minimum of interference with other construction in progress (if
any) and with the transaction of business in VIA MIZNER FINANCIAL PLAZA.
Without limitation on the generality of the foregoing, except for the
initial construction of Tenant improvements in a newly constructed
Building, Landlord shall have the right to require that such work be
performed during hours when VIA MIZNER FINANCIAL PLAZA is not open for
business, and in accordance with other rules and regulations which
Landlord may, from time to time prescribe. Tenant agrees to indemnify
Landlord against and hold Landlord harmless from any loss, liability or
damage, resulting from such work, and Tenant shall, if requested by
Landlord, furnish bond or other security satisfactory to Landlord
against any such loss, liability or damage. Tenant shall be liable to
Landlord for any damages resulting from labor disputes, strikes or
demonstrations resulting from Tenant's construction or alteration work
with the employment of non-union workers.
SECTION 6.02 Responsibility of Tenant.
All alterations, decorations, additions and improvements made by
the Tenant or made by the Landlord on the Tenant's behalf by agreement
under this Lease, shall remain the property of the Tenant for the term
of this Lease, or any extension or renewal thereof. Such alterations,
decorations, additions and improvements shall not be removed from the
premises without prior consent in writing from the Landlord. Upon
expiration of this Lease, or any renewal term thereof, the Landlord
shall have the option of requiring the Tenant to remove all such
alterations, decorations, additions and improvements and restore the
Leased Premises as provided in Section 7.02 hereof. If the Tenant fails
to remove such alterations, decorations, additions and improvements and
restore the Leased Premises, then such alterations, decorations,
additions and improvements shall become the property of the Landlord and
in such event, should Landlord so elect, Landlord may restore the
premises to its original condition for which cost, with allowance for
ordinary wear and tear, Tenant shall be responsible and shall pay
promptly upon demand.
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SECTION 6.03 Tenant Shall Discharge All Liens.
Nothing contained in this Lease shall be construed as a consent
on the part of the Landlord to subject the estate of the Landlord to
liability under the Mechanic's Lien Law of the State of Florida, it
being expressly understood that the Landlord's estate shall not be
subject to such liability. Tenant shall strictly comply with the
Mechanic's Lien Law of the State of Florida as set forth in Florida
Statutes Section 713. Prior to any contractor engaged by Tenant to
undertake improvements to the Leased Premises, Tenant shall notify the
contractor making any such improvements of the provisions of this
paragraph and such notification shall be in writing to the contractor
(with a copy to the Landlord) and such notice shall contain at a minimum
a verbatim recitation of the first two sentences of this Section 6.03.
In the event that a mechanic's claim of lien is filed against the
property in connection with any work performed by or on behalf of the
Tenant, the Tenant shall satisfy such claim, or shall transfer same to
security, within ten (10) days from the date of notice to tenant. In the
event that the Tenant fails to satisfy or transfer such claim within
said ten (10) day period, the Landlord may do so and thereafter charge
the Tenant, as additional rent, all costs incurred by the Landlord in
connection with satisfaction or transfer of such claim, including
attorneys' fees. Further, the Tenant agrees to indemnify, defend and
save the Landlord harmless from and against any damage or loss incurred
by the Landlord as a result of any such mechanics' claim of lien. If so
requested by the Landlord, the Tenant shall execute a short form or
memorandum of this Lease in the form set forth as Exhibit "L" attached
hereto, which may, in the Landlord's discretion be recorded in the
Public Records for the purpose of protecting the Landlord's estate from
mechanics' claims of lien, as provided in Florida Statutes Section
713.10. In the event such short form or memorandum of lease is executed,
the Tenant shall simultaneously execute and deliver to the Landlord an
instrument terminating the Tenant's interest in the real property upon
which the Leased Premises are located, which instrument may be recorded
by the Landlord at the expiration of the term of this Lease, or such
earlier termination hereof. Landlord has the right to record the
memorandum without execution by Tenant in the event Tenant fails to
execute the memorandum within seven (7) days of request. The security
deposit paid by the Tenant may be used by the Landlord for the
satisfaction or transfer of any mechanics' claim of lien, as provided in
this Section. This Section shall survive the termination of the Lease.
SECTION 6.04 Signs, Awnings and Canopies.
(a) Tenant will not place or permit to be placed or maintained
on any exterior door, wall or window of the Leased Premises of VIA
MIZNER FINANCIAL PLAZA any sign, awnings or canopy, or advertising
matter or other thing of any kind, and will not place or maintain any
decoration, letter or advertising matter on the glass of any window or
door, nor will any illuminated sign be placed in the window display area
of the Leased Premises without first obtaining Landlord's written
approval and consent which may be arbitrarily withheld.
(b) Tenant shall promptly erect a sign in accordance with the
specifications as outlined in Exhibit "E", within the area designated by
the Landlord. Tenant further agrees that such signs, awning, canopy,
decoration, lettering, advertising matter or other thing as may be
approved shall be maintained in good condition and repair at all times
and shall conform to the criteria established from time to time by
Landlord for the VIA MIZNER FINANCIAL PLAZA in the exercise of its sole
direction.
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(c) Notwithstanding the provisions of subparagraphs (a) and (b)
above, the Tenant acknowledges that prior to the installation of any
sign or other informational material which may be approved by the
Landlord, the Tenant shall obtain all governmental approvals for the
installation of such sign or informational material from all
governmental entities having jurisdiction over the Leased Premises,
including but not limited to, the city of Boca Raton. The approval of
the Landlord of any sign or informational material submitted by the
Tenant shall not be deemed an approval by any governmental entity and
the Tenant shall employ or engage professionals selected by the Tenant
to obtain any and all governmental approvals required prior to the
installation of such sign or informational material. Tenant acknowledges
and agrees that all signs and informational material must comply with
the ordinances and codes of the city of Boca Raton and any other
governmental entities having jurisdiction over such installation.
SECTION 6.05 Bonds.
Landlord shall have the right to require the Tenant to furnish a
performance bond or other security, in form satisfactory to Landlord,
for the prompt and faithful performance by Tenant of all work of Tenant
where the project cost will exceed Fifty Thousand Dollars ($50,000.00).
ARTICLE VII
Repairs and Maintenance of Leased Premises
SECTION 7.01 Responsibility of Landlord.
(a) Landlord agrees to repair and maintain in good order and
condition the roof, roof drains, outside walls, foundations and
structural portions, both interior and exterior, of the Leased Premises.
There is excepted from the preceding covenant, however, (i) repair or
replacement of broken plate or window glass (except in case of damage by
fire or other casualty covered by Landlord's fire and extended coverage
policy); (ii) doors, door closure devices, window and door frames,
moldings, locks and hardware; (iii) repair of damage caused directly or
indirectly by the negligence of the Tenant, its employees, agents,
contractors, customers, invitees; and (iv) interior repainting and
redecoration. In no event, however, shall Landlord be liable for damages
or injuries arising from the failure to make said repairs, nor shall
Landlord be liable for damages or injuries arising from the failure to
make said repairs, nor shall Landlord be liable for damages or injuries
arising from defective workmanship or materials in making any such
repairs. Tenant waives the provision of any law, now or hereafter in
effect or any right under common law, permitting Tenant to make repairs
at Landlord's expense. As to any item which Tenant believes requires
repair and maintenance and which is the responsibility of the Landlord
herein, Tenant shall provide Landlord with written notice of such
maintenance and repair items.
(b) Except as hereinabove provided in Subparagraph (a), Landlord
shall not be obligated or required to make any other repairs, and all
other portions of the Leased Premises shall be kept in good repair and
condition by Tenant, and at the end of the term of this Lease, Tenant
shall deliver the Leased Premises to Landlord in good repair and
condition, reasonable wear and tear and damage from fire and other
casualty excepted.
(c) Neither Landlord nor Landlord's agents or servants shall be
liable for any damages caused by or growing any
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breakage, leakage, getting out of order or defective condition of the
electric wiring, air conditioning or heating pipes or ducts and
equipment, closets, plumbing, appliances, sprinklers, other equipment,
or other facilities serving the Leased Premises excepting in any case
arising out of the negligence of the Landlord or Landlord's agents or
servants. Neither Landlord nor Landlord's agents or servants shall be
liable for any damages caused by, or growing out of any defect in VIA
MIZNER FINANCIAL PLAZA or any part thereof, or in any building attached
or adjacent thereto or a part thereof, or in said Leased Premises or a
part thereof, or caused by, or growing out of fire, rain, wind or other
cause excepting in any case arising out of the negligence of the
Landlord or Landlord's agents or servants.
SECTION 7.02 Responsibilities of Tenant.
(a) Without limiting the generality of the foregoing
Subparagraph 7.01(a), Tenant agrees to repair and maintain in good order
and condition the non-structural interior portions of the Leased
Premises, including the doors, windows, plate and window glass, and
floor covering, plumbing, heating, air conditioning, electrical and
sewage system, facilities and appliances. In those instances where
Tenant repair or maintenance is required as a result of the Landlord's
negligence or the negligence of Landlord's employees, then Landlord
shall reimburse Tenant for such repairs or maintenance. Tenant agrees
with respect to the heating and air conditioning system to comply with
the terms of the "Heating and Air Conditioning Maintenance Provision"
which is attached hereto as Exhibit "F" and made a part of the Lease by
reference.
(b) Tenant will not install any equipment which exceeds the
capacity of the utility lines leading into the Leased Premises or the
Building of which the Leased Premises constitute a portion.
(c) Tenant, its employees, or agents, shall paint, drill or in
any way deface any walls, partitions, floors, wood, stone or ironwork
without Landlord's prior approval and written consent. not mark,
ceilings,
(d) Tenant shall comply with the requirements of all laws,
orders, ordinances and regulations of all governmental authorities and
will not permit any waste of property or same to be done and will take
good care of the Leased Premises at all times.
(e) If Tenant refuses or neglects to repair properly as required
hereunder and to the reasonable satisfaction of Landlord as soon as
reasonably possible after written demand, Landlord may make such repairs
without liability to Tenant for any loss or damage that may accrue to
Tenant's merchandise, fixtures, or other property, or to Tenant's
business by reason thereof and upon completion thereof, Tenant shall pay
Landlord's cost for making such repairs, plus twenty percent (20%) of
such cost for overhead, upon presentation of the bill therefor, as
additional rent. Said bill shall include interest at the rate of fifteen
percent (15%) per annum on said cost from the date of completion of
repairs by Landlord until paid by Tenant. In the event the Landlord
shall undertake any maintenance or repair in the course of which it
shall be determined that such maintenance or repair work was made
necessary by the negligence or willful act of Tenant or any of its
employees or agents or that the maintenance or repair is, under the
terms of this Lease, the responsibility of Tenant, Tenant shall pay
Landlord's costs therefor plus overhead and interest as above provided
in this Section.
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(f) At the expiration of the tenancy hereby created, Tenant
shall surrender the Leased Premises in the same condition as the Leased
Premises were in upon delivery of possession thereto under this Lease,
reasonable wear and tear excepted, and damage by unavoidable casualty
excepted, and shall surrender all keys for the Leased Premises to
Landlord. Tenant shall remove all its trade fixtures, leased equipment
and any alterations or improvements which Landlord requests to be
removed (excluding those improvements which Landlord has approved)
before surrendering the premises as aforesaid and shall repair any
damage to the Leased Premises caused thereby. Tenant's obligation to
observe or perform this covenant shall survive the expiration or other
termination of the term of the Lease.
(g) Tenant shall at its own expense perform all janitorial and
cleaning services within the Leased Premises in order to keep same in a
neat, clean and orderly condition.
(h) Tenant shall give Landlord prompt written notice (and
telephonic notice in the case of an emergency) of any fire or damage
occurring on or to the Leased Premises.
(i) Tenant shall maintain and clean the Leased Premises,
including daily trash removal, window cleaning, bathroom cleaning and
other maintenance and cleaning requirements as adopted from time to time
by Landlord in accordance with the Maintenance and Cleaning Standards
For Tenants attached hereto and made a part hereof as Exhibit "G".
ARTICLE VIII
Insurance and Indemnity
SECTION 8.01 Liability Insurance.
Tenant shall, during the entire term hereof, keep in full force
and effect bodily injury and property damage comprehensive public
liability insurance with respect to the Leased Premises for the combined
single coverage of not less than $1,000,000.00. The policy shall name
Landlord, any person, firms or corporations designated by Landlord, and
Tenant as insured, and shall contain a clause that the insurer will not
cancel or change the insurance without first giving the Landlord fifteen
(15) days prior written notice. The insurance shall be written by a
company approved by Landlord and a copy of the policy or a certificate
of insurance shall be delivered to Landlord prior to the commencement of
the term of this Lease. Nothing herein shall be considered to limit the
liability of the Tenant under this Lease.
SECTION 8.02 Plate Glass Insurance.
The replacement of any plate glass or window glass damaged or
broken from any cause whatsoever in and about the Leased Premises shall
be Tenant's responsibility. Tenant shall, during the entire term hereof,
keep in full force and effect a policy of plate glass insurance covering
all the plate glass or window glass of the Leased Premises, in amounts
satisfactory to Landlord. The policy shall name Landlord and any person,
firm or corporation designated by Landlord, and Tenant as insured, and
shall contain a clause that the insurer will not cancel or change the
insurance without first giving the Landlord fifteen (15) days prior
written notice. The insurance shall be written by a company approved by
the Landlord and a copy of the policy or a certificate of insurance
shall be delivered to Landlord prior to the commencement of the term of
this Lease.
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SECTION 8.03 Fire and Extended Coverage Insurance.
Tenant shall at all times during the term hereof, and at its
cost and expense, maintain in effect, policies of insurance covering its
fixtures and improvements, equipment, and goods located in the Leased
Premises, in an amount not less than eighty percent (80%) of their
actual cash value, providing protection against any peril including
within the standard classification of "Fire and Extended Coverage",
together with insurance against sprinkler damage, vandalism, and
malicious mischief. The proceeds of such insurance, so long as the Lease
remains in effect, shall be used first to repair or replace the fixtures
and improvements within the Leased Premises.
SECTION 8.04 Increase in Fire Insurance Premium.
Tenant agrees that it will not keep, use, sell or offer for sale
in or upon the Leased Premises any article which may be prohibited by
the standard form of fire and extended risk insurance policy. Tenant
agrees to pay any increase in premiums for fire and extended coverage
insurance that may be charged during the term of this Lease on the
amount of such insurance which may be carried by Landlord on said
premises or the building of which they are a part, resulting from the
type of article being located in the Leased Premises, whether or not
Landlord has consented to the same. In determining whether increased
premiums are the result of Tenant's use of the Leased Premises, a
schedule issued by the organization making the insurance rate on the
Leased Premises, showing the various components of such rate, shall be
conclusive evidence of the several items and charges which make up the
fire insurance rate on the Leased Premises. Tenant agrees to promptly
make, at Tenant's cost, any repairs, alterations, changes and/or
improvements to equipment in the Leased Premises required by the company
issuing Landlord's fire insurance so as to avoid the cancellation of, or
the increase in premiums on, said insurance.
In the event Tenant's occupation and use of the Leased Premises
causes any increase of premium for the fire, boiler and/or casualty
rates on the Leased Premises or any part thereof above the rate for the
least hazardous type of occupancy legally permitted in the premises, the
Tenant shall pay the additional premium on the fire, boiler and/or
casualty insurance policies by reason thereof. The Tenant also shall pay
in such event, any additional premium on the rent insurance policy that
may be carried by the Landlord for its protection against rent loss
through fire or other casualty. Bills for such additional premiums shall
be rendered by Landlord to Tenant at such times as Landlord may elect
and shall be due from, and payable by Tenant when rendered, and the
amount thereof shall be deemed to be additional rent.
SECTION 8.05 Indemnification of Landlord.
Neither (i) Landlord, (ii) any superior lessor or any superior
mortgagee of the Landlord, nor (iii) any partner, director, officer,
agent, servant or employee of Landlord, any superior lessor or any
superior mortgagee, shall be liable to Tenant for any loss, injury or
damage to Tenant or to any other person, or to its or their property,
irrespective of the cause of such injury, damage or loss, unless caused
by or resulting from the sole negligence of Landlord, its agents,
servants or employees in the operation or maintenance of the Leased
Premises or the buildings, improvements and common facilities of VIA
MIZNER FINANCIAL PLAZA, without contributory negligence on the part of
Tenant or any of its subtenants or licensees or its or their employees,
agents or contractors. Further, neither (i) Landlord, (ii) any superior
lessor or any superior mortgagee of
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the Landlord, nor (iii) any partner, director, officer, agent, servant
or employee of Landlord, any superior lessor or any superior mortgagee,
shall be liable (a) for any such damage caused by other tenants or
persons in, upon or about the buildings, improvements and common
facilities of VIA MIZNER FINANCIAL PLAZA, or caused by operations in
construction of any private, public or quasi-public work, or (b) for
consequential damages arising out of any loss of use of the Leased
Premises or any equipment or facilities therein by Tenant or any person
claiming through or under Tenant.
Tenant shall indemnify and hold harmless Landlord and all
superior lessors and superior mortgagees and its and their respective
partners, directors, officers, agents and employees from and against any
and all claims arising from or in connection with (a) the conduct or
management of VIA MIZNER FINANCIAL PLAZA or of any business therein, or
any work or thing whatsoever done, or any condition created (other than
by Landlord) in or about the VIA MIZNER FINANCIAL PLAZA during the term
of this Lease or during the period of time, if any, prior to the
Commencement Date that Tenant may have been given access to the Leased
Premises, (b) any act, omission or negligence of Tenant or any of its
subtenants or licensees or its or their partners, directors, offices,
agents, employees or contractors, (c) any accident, injury or damage
whatever (unless caused by Landlord's negligence) occurring in, at or
upon the VIA MIZNER FINANCIAL PLAZA, and (d) any breach or default by
Tenant in the full and prompt payment and performance of Tenant's
obligations under this Lease; together with all costs, expenses and
liabilities incurred in or in connection with each such claim or action
or proceeding brought thereon, including, without limitation, all
attorneys' fees and expenses. In the event Landlord shall be made a
party to any litigation or proceeding commenced by or against Tenant,
them Tenant shall protect, indemnify and hold Landlord harmless and
Tenant shall pay to Landlord all costs, expenses and reasonable
attorneys' fees (for both trial and appellate levels) incurred or paid
by Landlord in connection with such litigation or proceeding. Tenant
shall also pay all costs, expenses and reasonable attorney's fees that
may be incurred or paid by Landlord in enforcing the covenants and
agreements in this Lease.
SECTION 8.06 Waiver of Subrogation.
Tenant waives (unless said waiver should invalidate any such
insurance) its right to recover damages against Landlord for any reason
whatsoever to the extent Tenant recovers indemnity from its insurance
carrier. Any insurance policy procured by Tenant which does not name
Landlord as a named insured shall, if obtainable, contain an express
waiver of any right of subrogation by the insurance company against the
Landlord.
Landlord waives (unless said waiver should invalidate any such
insurance) its right to recover damages against Tenant for any reason
whatsoever to the extent Landlord recovers indemnity from its insurance
carrier. Any insurance policy procured by Landlord which does not name
Tenant as a named insured shall, if obtainable, contain an express
waiver of any right of subrogation by the insurance company against the
Tenant.
ARTICLE IX
Utilities
Tenant shall be solely responsible for and promptly pay all
charges for water, gas, electricity, sewer charges or trash removal (if
any) or any other utility used or consumed in the leased premises. To
the extent that the Landlord supplies to the
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Leased Premises or to VIA MIZNER FINANCIAL PLAZA water, gas,
electricity, sewer charges, trash removal, or any other utility used or
consumed in the Leased Premises or within VIA MIZNER FINANCIAL PLAZA,
the cost of such services and utilities shall be included in the VIA
MIZNER FINANCIAL PLAZA Operating Costs. In no event shall Landlord be
liable for an interruption, failure, or defect in the supply or
character of any such utilities furnished to the Leased Premises,
improvements or common facilities of VIA MIZNER FINANCIAL PLAZA
(including but not limited to water rationing and electrical power
brownouts and blackouts), or any act or omission of the public or
private utility serving VIA MIZNER FINANCIAL PLAZA or for any other
reason not attributable to Landlord. Tenant will at all times comply
with the rules, regulations, terms and conditions applicable to service,
equipment, wiring, and requirements of the public or private utility
supplying electricity to VIA MIZNER FINANCIAL PLAZA. In the event that,
in Landlord's judgment, Tenant's electrical requirements necessitate
installation of additional risers, feeders or other proper and necessary
equipment, the same shall be installed by Landlord at Tenant's sole
expense, which shall be chargeable and collectible as additional rent
and paid with the next rental payment to Landlord after delivery of an
invoice to Tenant by the Landlord. Tenant shall also be required prior
to taking possession of the Leased Premises to pay to the Landlord any
and all meter charges for the Leased Premises if the Landlord has been
required to pay such charges by any private or governmental authority
having jurisdiction thereover. Tenant specifically acknowledges that
Landlord is not the supplier of any utility services including but not
limited to electrical service, telephone service and water service, and
the unavailability of such services to the Leased Premises due to
blackout, moratorium, rationing or any other reason will not constitute
or form the basis of a right by Tenant to abate or adjust any rental
payments due hereunder, the Tenant hereby assuming all responsibility
and risks for obtaining such services.
ARTICLE X
Attornment and Subordination
SECTION 10.01 Attornment.
In the event any proceedings are brought for the foreclosure of,
or in the event of exercise of the power of sale under any mortgage made
by the Landlord covering the Leased Premises or in the event a deed is
given in lieu of foreclosure of any such mortgage, if requested to do
so, Tenant shall attorn to the purchaser or grantee in lieu of
foreclosure upon any such foreclosure or sale and recognize such
purchaser or grantee in lieu of foreclosure as the Landlord under this
Lease.
SECTION 10.02 Subordination.
Tenant agrees that this Lease and the interest of Tenant therein
shall be, and the same hereby is made subject and subordinated at all
times to all covenants, restrictions, easements and other encumbrances
now or hereafter affecting the fee title of VIA MIZNER FINANCIAL PLAZA
and to all ground and underlying leases and to any mortgage in any
amounts and all advances made and to be made thereon, which may now or
hereafter be placed against or affect any or all of the land and/or any
or all of the buildings and improvements, including the Leased Premises,
now or at any time hereafter constituting a part of VIA MIZNER FINANCIAL
PLAZA and/or any ground or underlying leases covering same, and to all
renewals, modifications, consolidations, participations, replacements
and extensions
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thereof. The term "Mortgages" as used herein shall be deemed to include
trust indentures and deeds of trust. The aforesaid provisions shall be
self-operative and no further instrument of subordination shall be
necessary unless required by any such ground or underlying lessors or
mortgagees. Should the Landlord or any ground or underlying lessors or
mortgagees desire confirmation of such subordination, then Tenant,
within ten (10) days following written request therefor, agrees to
execute and deliver, without charge, any and all documents (in form
acceptable to Landlord and such ground or underlying lessors or
mortgagees) subordinating this Lease and the Tenant's rights hereunder.
However, should any such ground or underlying lessors or any mortgagees
request that this Lease be made superior, rather than subordinate, to
any such ground or underlying lease and/or mortgage, then Tenant, within
ten (10) days following Landlord's written request therefor, agrees to
execute and deliver, without charge, any and all documents (in form
acceptable to Landlord and such ground or underlying lessors or
mortgagees) effectuating such priority.
SECTION 10.03 Non-Disturbance.
Notwithstanding anything contained herein to the contrary, the
foregoing shall be expressly conditioned upon Tenant's receipt of a
binding Non-Disturbance Agreement from all parties holding or otherwise
acquiring, now or in the future, any right, title, interest in or to the
Leased Premises or this Lease by virtue of any mortgage or deed of trust
superior to that of the Tenant in a form and content as set forth in
Exhibit M attached hereto and made a part hereof.
ARTICLE XI
Assignment and Subletting
SECTION 11.01 Consent Required.
Tenant shall not, whether voluntarily, involuntarily, or by
operation of law or otherwise, without the prior written consent of
Landlord, (a) assign or otherwise transfer this Lease or the term and
estate hereby granted, or offer or advertise to do so, (b) sublet the
Leased Premises or any part thereof, or offer or advertise to do so, or
allow the same to be used, occupied or utilized by anyone other than
Tenant, (c) mortgage, pledge, encumber or otherwise hypothecate this
Lease or the Leased Premises or any part thereof in any manner
whatsoever, or (d) permit the Leased Premises or any part thereof to be
occupied, or used for desk space, mailing privileges or otherwise, by
any person other than Tenant without in each instance obtaining the
prior written consent of Landlord; provided, however, (i) Tenant shall
have the right to assign or sublet the Leased Premises in whole or in
part provided that the assignee or subtenant shall be acceptable to the
Landlord and such assignee or subtenant shall be as credit worthy as
other occupants of VIA MIZNER FINANCIAL PLAZA and shall conduct a
business consistent with and meet the standards imposed on other
occupants of VIA MIZNER FINANCIAL PLAZA and further the occupancy by
such assignee or subtenant shall not result in a breach of or violation
of any term of any lease between the Landlord and any other occupant of
VIA MIZNER FINANCIAL PLAZA; or (ii) Tenant shall have the right (with 60
days prior written notice to the Landlord) to assign or sublet the
Leased Premises to a related entity owned by the parent entity of the
Tenant which parent entity shall have not less than a twenty percent
(20%) ownership interest in the related entity to which the Tenant
assigns or sublets and such assignee or subtenant shall conduct a
business consistent with the Tenant and meet the standards imposed on
other occupants of VIA MIZNER
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FINANCIAL PLAZA and further the occupancy by the assignee or subtenant
shall not result in a breach of or violation of any term of any lease
between the Landlord and any other occupant of VIA MIZNER FINANCIAL
PLAZA.
Any assignment made pursuant to subparagraph 11.01(i) above
shall be subject to the following provisions: It is further agreed
between the Landlord and Tenant that the Landlord shall be entitled to
receive any increase in the rent or other considerations paid by an
assignee or subtenant in excess of the rental obligations of the Tenant
to the Landlord as set forth in this Lease. The consent by Landlord to
any assignment or subletting shall not constitute a waiver of the
necessity for such consent to any subsequent assignment or subletting.
It is understood that Landlord may refuse to grant consent to any
assignment or subletting by Tenant with or without cause and without
stating in its refusal to grant such consent the basis or reasons for
which it refuses to grant such consent (whether arbitrarily or
otherwise) and may not, under any circumstances, be required or
compelled to grant such consent. If this Lease be assigned without
consent of Landlord, or if the Leased Premises or any part thereof be
underlet or occupied by any party other than Tenant without consent of
Landlord, Landlord may collect rent from the assignee, subtenant or
occupant, and apply the net amount collected to the rent herein
reserved, but no such assignment, underletting, occupancy or collection
shall be deemed a waiver of this covenant, or the acceptance of the
assignee, subtenant or occupant as Tenant1 or a release of Tenant from
the further performance by Tenant of the covenants on the part of Tenant
herein contained, and further provided that Landlord shall have the
option of terminating this Lease on written notice to Tenant given
within twenty (20) days after receipt of the request for Landlord's
approval or notice to Landlord of such assignment or subletting;
provided, however, Tenant may elect to withdraw its request for
assignment or subletting and the Lease shall not terminate as provided
for hereinbefore. This prohibition against assignment or subletting
shall be construed to include prohibition against any assignment or
subleasing by operation of law, legal process, receivership, bankruptcy
or otherwise, whether voluntary or involuntary. Notwithstanding any
assignment or sublease, Tenant shall remain fully liable on this Lease
and shall not be released from performing any of the terms, covenants
and conditions of this Lease.
(b) The Tenant shall have the obligation to pay a reasonable
administrative fee in connection with such assignment.
SECTION 11.02 significant Change of Corporate Ownership.
(a) If Tenant is a corporation, the provisions of Paragraph (a)
of Section 11.01 shall apply to a transfer (by one or more transfers) of
eighty percent (80%) interest of the stock of Tenant as if such transfer
of eighty percent (80%) of the stock of Tenant were an assignment of
this Lease; but said provision shall not apply to transactions with a
corporation into or with which Tenant is merged or consolidated or to
which substantially all of Tenant's assets are transferred or to any
corporation which controls or is controlled by Tenant or is under common
control with Tenant, provided that in any of such events (i) the
successor to Tenant has a net worth computed in accordance with
generally accepted accounting principles at least equal to the greater
of (1) the net worth of Tenant immediately prior to such merger,
consolidation or transfer, or (2) the net worth of the Tenant herein
named on the date of this Lease, and (ii) proof satisfactory to Landlord
of such net worth shall have been delivered to Landlord at least ten
(10) days prior to the effective date of any such transaction, (iii)
Landlord shall received at least ten (10) days prior to the effective
date of
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any such transaction a duplicate original instrument of assignment in
form and substance satisfactory to Landlord, duly executed by Tenant,
and (iv) Landlord shall have received at least ten (10) days prior to
the effective date of any such transaction an original instrument in
form and substance satisfactory to Landlord, duly executed by the
assignee, in which such assignee assumes (as of the Commencement Date)
observance and performance of, and agrees to be personally bound by, all
of the terms, covenants and conditions of this Lease on Tenant's part to
be performed and observed.
(b) The Tenant shall have the obligation to pay a reasonable
administrative fee in connection with such assignment.
SECTION 11.03 Termination at Landlord's Election.
Notwithstanding anything to the contrary contained in this
Article, if Tenant shall at any time or times during the term of this
Lease desire to assign this Lease or sublet all or any portion of the
Leased Premises, Tenant shall give notice thereof to Landlord, which
notice shall state whether Tenant desires to assign this Lease or sublet
all or a portion of the Leased Premises and shall further state the
desire commencement and Expiration Date of any subletting or the desired
effective date of any assignment, as the case may be (which commencement
date or effective date shall in no event be earlier than sixty (60) days
following the giving of such notice). If a portion of the Leased
Premises is proposed to be sublet, such notice shall be accompanied by a
diagram identifying the portion to be so sublet. Such notice shall be
deemed an offer from Tenant to Landlord whereby Landlord (or Landlord's
designee) may, at its option, (i) terminate this Lease (if the proposed
transaction is an assignment or a sublease of all or substantially all
of the Leased Premises), or (ii) terminate this Lease with respect to
the space covered by the proposed sublease (if the proposed transaction
is a sublease of part of the Leased Premises). Said option may be
exercised by Landlord by notice to Tenant at any time within sixty (60)
days after such notice has been given by Tenant to Landlord provided,
however, if Landlord elects to terminate, the Tenant shall have the
option of withdrawing the proposed assignment or subletting and this
Lease shall continue in full force and effect; and during such 60-day
period Tenant shall not assign this Lease or sublet such space to any
person. If Landlord exercises its option to terminate this Lease, then,
this Lease shall end and expire on the date that such assignment or
sublet was to be effective or commence, as the case may be, and the
Fixed Minimum Annual Rent and Additional Rent shall be paid and
apportioned to such date. If Landlord exercises its option to terminate
this Lease with respect to the space covered by Tenant's proposed
sublease in any case where Tenant desires to sublet part of the Leased
Premises, then (a) this Lease shall end and expire with respect to such
part of the Leased Premises on the date that the proposed sublease was
to commence; (b) from and after such date the Fixed Minimum Annual Rent
and Additional Rent shall be adjusted, based upon the proportion that
the rentable area of the Leased Premises remaining bears to the total
rentable area of the Leased Premises; and (c) Tenant shall pay to
Landlord, upon demand, as Additional Rent hereunder the costs incurred
by Landlord in physically separating such part of the Leased Premises
from the balance of the Leased Premises and in complying with any laws
and requirements of any public authorities relating to such separation.
SECTION 11.04 Assignment by Tenant.
Any assignment or transfer, whether made with Landlord's consent
or without Landlord's consent, shall be made only if, and shall not be
effective until, the assignee shall execute
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acknowledge and deliver to Landlord an agreement in form and substance
satisfactory to Landlord whereby the assignee shall assume the
obligations of this Lease on the part of Tenant to be performed or
observed and whereby the assignee shall agree that the provisions in
Section 11.01 shall, notwithstanding such assignment or transfer,
continue to be binding upon it in respect of all future assignments and
transfers. The original named Tenant covenants that, notwithstanding any
assignment or transfer, whether or not in violation of the provisions of
this Lease, and notwithstanding the acceptance of Fixed Minimum Annual
Rent and/or Additional Rent by Landlord from an assignee, transferee, or
any other party, the original named Tenant shall remain fully liable for
the payment of the Fixed Minimum Annual Rent and Additional Rent and for
the other obligations of this Lease on the part of Tenant to be
performed or observed.
SECTION 11.05 Assignment by Landlord.
In the event of the transfer and assignment by Landlord of its
interest in this Lease and in the building containing the Leased
Premises to a person expressly assuming Landlord's obligations under
this Lease, Landlord shall thereby be released from any further
obligations hereunder, and Tenant agrees to look solely to such
successor in interest of the Landlord for performance of such
obligations.
ARTICLE XII
Waste, Governmental Regulations
SECTION 12.01 Waste or Nuisance
Tenant shall not commit or suffer to be committed any waste upon
the Leased Premises or any nuisance or other act or thing which may
disturb the quiet enjoyment of any other tenant in VIA MIZNER FINANCIAL
PLAZA, or which may adversely affect Landlord's interest in the Leased
Premises or VIA MIZNER FINANCIAL PLAZA. Tenant shall abide by and comply
with the Maintenance and Cleaning Standards for Tenants attached hereto
and made a part hereof as Exhibit "G" as adopted and amended from time
to time by Landlord.
SECTION 12.02 Governmental Regulations.
Tenant shall, at Tenant's sole cost and expense, comply with all
county, municipal, state, federal laws, orders, ordinances and other
applicable requirements of all governmental authorities, now in force,
or which may hereafter be in force, pertaining to, or affecting the
condition, use or occupancy of the Leased Premises, and shall faithfully
observe in the use and occupancy of the Leased Premises all municipal
and county ordinances and state and federal statutes now in force or
which may hereafter be in force. Tenant shall indemnify, defend and save
Landlord harmless from all costs, losses, expenses or damages resulting
from Tenant's failure to perform its obligations under this Section.
If the Tenant is required, as a result of the provisions of this
paragraph, to undertake improvements to the Leased Premises, then in
that event, the Landlord shall pay for such improvements and the Tenant
shall pay as additional rent from the date of the completion of such
improvements a prorated amount (including interest on the amount paid by
the Landlord for such improvements at a rate equal to First Union
National Bank of Florida's Prime Rate plus one percent (1%)) determined
by amortizing the reasonable life of such improvements in monthly
payments, which
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monthly payments shall be additional rent for the remaining term of this
Lease.
ARTICLE XIII
Rules and Regulations
Tenant agrees to comply with and abide by the Rules and
Regulations of VIA MIZNER FINANCIAL PLAZA attached hereto and made a
part hereof as Exhibit "H" as adopted and amended from time to time by
Landlord. Nothing contained in this Lease shall be construed to impose
upon Landlord any duty or obligation to enforce the Rules and
Regulations against any other tenant or any employees or agents of any
other tenant, provided such Rules and Regulations are enforced uniformly
and in a non-discriminatory manner and Landlord shall not be liable to
Tenant for violation of the Rules and Regulations by any other tenant or
its employees, agents, invitees or licensees.
ARTICLE XIV
Advertising, Etc.
SECTION 14.01 Solicitation of Business.
Tenant and Tenant's employees and agents shall not solicit
business in the parking or other common areas, nor shall Tenant
distribute any handbills or other advertising matter in the common areas
and specifically on the automobiles parked in the parking areas. Tenant
and Tenant's employees and agents shall not display, advertise or
disseminate any visual or auditory advertising or business information
from a parked or moving vehicle within VIA MIZNER FINANCIAL PLAZA,
including but not limited to window and bumper stickers or sun shades or
blinds, painting or other implementation of advertising materials
affixed to a vehicle and the use of noise producing devises to either
draw attention to or communicate advertising or promotional information.
SECTION 14.02 Advertised Name and Address.
Tenant shall use as its advertised street address the name of
VIA MIZNER FINANCIAL PLAZA. Tenant shall not use the name of VIA MIZNER
FINANCIAL PLAZA for any purpose other than as the address of the
business to be conducted by Tenant in the Leased Premises and Tenant
shall not acquire any property right in or to any name which contains
the name of VIA MIZNER FINANCIAL PLAZA as a part thereof. Any permitted
use by Tenant of the name of VIA MIZNER FINANCIAL PLAZA during the term
of the Lease shall not permit Tenant to use, and Tenant shall not use,
such name of VIA MIZNER FINANCIAL PLAZA either after the termination of
this Lease or at any other location. Tenant shall not use the name of
the Landlord in any advertisement, or otherwise. Tenant shall use only
Tenant's name as set forth in Section (f) of the Lease Summary and
Tenant's trade name as set forth in Section (g) of the Lease Summary in
its advertising and promotional activities and shall not use any other
name in connection with the Leased Premises.
SECTION 14.03 Letters and Marks.
Tenant agrees to use in its advertising and promotional
activities for its business in the Leased Premises such references to
the name of VIA MIZNER FINANCIAL PLAZA and such identifying lettering,
marks or symbols referred to VIA MIZNER FINANCIAL PLAZA in its address
for the Leased Premises and shall
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subscribe to a listing in the yellow pages of the local telephone
directory which shall be printed in bold type.
ARTICLE XV
Destruction of Leased Premises
SECTION 15.01 Total or Partial Destruction.
If VIA MIZNER FINANCIAL PLAZA shall be damaged by fire, the
elements, unavoidable accident or other casualty, without the fault of
Tenant, but are not thereby rendered untenantable in whole or in part,
Landlord shall at its own expense cause such damage, to be repaired, but
only to the extent of Landlord's original obligation to construct
pursuant to Section 3.01, and the rent and other charges shall not be
abated. If by reason of such occurrence, the Leased Premises shall be
rendered untenantable only in part, Landlord shall at its own expense
cause the damage, except Tenant's improvements, equipment and trade
fixtures, to be repaired, but only to the extent of Landlord's original
obligation to construct pursuant to Section 3.01, and the fixed minimum
rent meanwhile shall not be abated as to the portion of the premises
rendered untenantable; provided, however, Landlord shall have the right,
to be exercised by notice to Tenant within sixty (60) days after said
occurrence, to elect not to repair such damage and to cancel and
terminate this Lease effective as of a date stipulated in Landlord's
notice, which shall not be earlier than thirty (30) days nor later than
sixty (60) days after the giving of such notice. If the premises shall
be rendered wholly untenantable by reason of such occurrence, the
Landlord shall at its own expense cause such damage, to be repaired, but
only to the extent of the Landlord's original obligation to construct
pursuant to Section 3.01, and the fixed minimum rent meanwhile shall not
abate in whole or in part except that Landlord shall have the right, to
be exercised by notice to Tenant within sixty (60) days after said
occurrence, to elect not to reconstruct the destroyed premises, and in
such event this Lease and the tenancy hereby created shall cease as of
the date of the said occurrence. If Landlord shall elect to reconstruct,
then Landlord shall have a period of nine (9) months from the date
Landlord issues its notice to Tenant to build and complete the
improvements to the extent of the Landlord's original obligation to
construct pursuant to Section 3.01. Tenant specifically acknowledges the
obligation to maintain insurance coverage at Tenant's expense to pay the
rent costs incurred by Tenant and due Landlord during any period which
the Landlord is partially or totally repairing or reconstructing the
damage or casualty to VIA MIZNER FINANCIAL PLAZA. Nothing in this
Section shall be construed to permit the abatement in whole or in part
of the charges for operating costs, common area maintenance, real estate
taxes attributable, and other charges set forth in Article II of this
Lease to any period during which the Leased Premises shall be in
untenantable condition, nor shall there be any abatement for any other
item due Landlord by Tenant pursuant to the terms of this Lease.
SECTION 15.02 Partial Destruction of VIA MIZNER FINANCIAL PLAZA.
In the event that fifty percent (50%) or more of the rentable
area of VIA MIZNER FINANCIAL PLAZA shall be damaged or destroyed by fire
or other cause, notwithstanding any other provisions contained herein
and that the Leased Premises may be unaffected by such fire or other
cause, Landlord shall have the right, to be exercised by notice in
writing delivered to Tenant within sixty (60) days after said
occurrence, to elect to cancel and terminate this Lease. Upon the giving
of such notice to Tenant, the term of this Lease shall expire by lapse
of time upon
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the third day after such notice is given, and Tenant shall vacate the
Lease Premises and surrender the same to Landlord.
SECTION 15.03 Reconstruction of Improvements.
In the event of any reconstruction of the Leased Premises under
this Section, said reconstruction shall be in substantial conformity
with the provisions of Exhibit "C" hereof to the extent of the work as
therein set forth as "Landlord's Work". Tenant, at its sole cost and
expense, shall be responsible for the repair and restoration of all
items set forth as "Tenant's Work" in Exhibit "D" and the replacement of
its stock in trade fixtures, furniture, furnishings and equipment.
Tenant shall commence the installation of fixtures, equipment, and
merchandise (if any) hereof promptly upon delivery to it of possession
of the Leased Premises and shall diligently prosecute such installation
to completion.
ARTICLE XVI
Eminent Domain
SECTION 16.01 Total Condemnation.
If the whole of the Leased Premises shall be acquired or
condemned by eminent domain for any public or quasi-public use or
purpose, then the term of this Lease shall cease and terminate as of the
date of title vesting in such proceeding and all rentals and other
charges shall be paid up to that date and Tenant shall have no claim
against Landlord for the value of any unexpired term of this Lease.
SECTION 16.02 Partial Condemnation.
If any part of the Leased Premises shall be acquired or
condemned by eminent domain for any public or quasi-public use or
purpose, and in the event that such partial taking or condemnation shall
render the Leased Premises unsuitable for the business of the Tenant
(taking into account applicable parking requirements), then Landlord and
Tenant shall each have the right to terminate this Lease by notice given
to the other within sixty (60) days after the date of title vesting in
such proceeding and Tenant shall have no claim against Landlord for the
value of any unexpired term of this Lease. In the event of a partial
taking or condemnation which is not extensive enough to render the
premises unsuitable for the business of the Tenant, then Landlord shall
promptly restore the Leased Premises (exclusive of Tenant's
improvements, Tenant's equipment and trade fixtures) to a condition
comparable to its condition at the time of such condemnation less the
portion lost in the taking and the building of which the Leased Premises
forms a part to the extent necessary to constitute the portion of the
building not so taken as a complete architectural unit; provided that
Landlord shall not in any event be required to spend for such repair,
restoration or alteration work an amount in excess of the respective
amounts received by Landlord as damages for the taking of such part of
the Leased Premises and of the building of which the same forms a part.
As used herein, the amount "received by Landlord" shall mean that
portion of the award or damages in condemnation received by Landlord
from the condemning authority which is free and clear of all prior
claims or collections by the holders of any mortgages or deeds of trust
or any ground or underlying lessors, and this Lease shall continue in
full force and effect except that the Fixed Minimum Annual Rent shall be
reduced in proportion to the portion of the Leased Premises lost in the
taking. If more than twenty percent (20%) of the floor area of the
buildings in VIA MIZNER FINANCIAL PLAZA shall be taken as
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aforesaid (whether or not the Leased Premises shall be affected by the
taking), Landlord shall have the right to terminate this Lease by notice
to Tenant given within sixty (60) days after the date of title vesting
in such proceeding and Tenant shall have no claim against Landlord for
the value of the unexpired term of this Lease.
SECTION 16.03 Landlord's Damages.
In the event of any condemnation or taking as hereinabove
provided, whether whole or partial, the Tenant shall not be entitled to
any part of the award, as damages or otherwise, for such condemnation
and Landlord is to receive the full amount of such award, the Tenant
hereby expressly waiving any right or claim to any part thereof.
SECTION 16.04 Tenant's Damages.
Although all damages in the event of any condemnation are to
belong to the Landlord whether such damages are awarded as compensation
for diminution in value of the Leasehold or the fee of the Leased
Premises, Tenant shall have the right to claim and recover from the
condemning authority, but not from Landlord, such compensation as may be
separately awarded or recoverable by Tenant in Tenant's own right on
account of any damage to Tenant's business by reason of the condemnation
and for or on account of any cost or loss to which Tenant might be put
in removing Tenant's merchandise, furniture, fixtures, leasehold
improvements and equipment, provided no such claim shall diminish or
otherwise adversely affect Landlord's award. Each party agrees to
execute and deliver to the other all instruments that may be required to
effectuate the provisions of Section 16.03 and this Section 16.04.
SECTION 16.05 Sale Under Threat of Condemnation.
A sale by Landlord to any authority having the power of eminent
domain, either under threat of condemnation or while condemnation
proceedings are pending, shall be deemed a taking under the power of
eminent domain for all purposes under this Article.
ARTICLE XVII
Default of Tenant
SECTION 17.01 Events of Default.
Upon the happening of one or more of the events as expressed
below in (a) to (j), inclusive (individually and collectively, "Event of
Default"), the Landlord shall have any and all rights and remedies
hereinafter set forth:
(a) In the event Tenant should fail to pay any monthly
installment of rent or any other sums required to be paid hereunder
within five (5) days from and when the same become due.
(b) In the event a petition in bankruptcy (including Chapter X
and Chapter XI bankruptcy proceedings or any other reorganization
proceedings under the Bankruptcy Act) be filed by the Tenant, or be
filed against Tenant, and such petition is not dismissed within thirty
(30) days from the filing thereof, or in the event Tenant is adjudged a
bankrupt.
(c) In the event an assignment for the benefit of creditors is
made by Tenant.
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(d) In the event of an appointment by any court of a receiver or
other court officer of Tenant's property and such receivership is not
dismissed within thirty (30) days from such appointment.
(e) In the event Tenant removes, attempts to remove, or permits
to be removed from the Leased Premises, except in the usual course of
trade, the goods, furniture, effects or other property of the Tenant
brought thereon.
(f) In the event Tenant, before the expiration of the term
hereof and without the written consent of the Landlord, vacates the
Leased Premises or abandons the possession thereof, or uses the same for
purposes other than the purposes for which the same are hereby leased.
(g) In the event an execution or other legal process is levied
upon the goods, furniture, effects or other property of Tenant brought
on the Leased Premises, or upon the interest of Tenant in this Lease,
and the same is not satisfied or dismissed within ten (10) days from
this levy.
(h) In the event Tenant abandons or fails to occupy the Leased
Premises or continuously operate Tenant's business within the Leased
Premises during the lease term.
(i) In the event Tenant fails to keep, observe or perform any of
the other terms, conditions or covenants on the part of Tenant herein to
be kept, observed and performed for more than ten (10) days after
written notice thereof is given by Landlord to Tenant specifying the
nature of such default, or if the default so specified shall be of such
a nature that the same cannot reasonably be cured or remedied within
said ten (10) day period, if Tenant shall not in good faith have
commenced the curing or remedying of such default within such ten (10)
day period and shall not thereafter continuously and diligently proceed
therewith to completion.
(j) Tenant shall not place a load upon any floor of the Leased
Premises exceeding the floor load per square foot which such floor was
designed to carry. Any load exceeding the floor load per square foot
maximum, must be placed by Tenant at Tenant's expense so as to safely
distribute the weight in accordance with engineering standards which
Tenant shall obtain from Landlord's engineer at Tenant's expense.
Business machines and mechanical equipment shall be placed and
maintained by Tenant, at Tenant's expense, in settings sufficient in
Landlord's reasonable judgment to absorb and prevent vibration, noise
and annoyance. If the Leased Premises be or become infested with insects
or vermin as a result of the use or any misuse or neglect of the Leased
Premises by Tenant, its agents, employees, visitors or licensees, Tenant
shall at Tenant's expense cause the same to be exterminated from time to
time to the reasonable satisfaction of Landlord and shall employ such
exterminators and such exterminating company or companies as shall be
reasonably approved by Landlord.
SECTION 17.02 Remedies of Landlord.
(a) In the event of any such default or breach, Landlord shall
have the immediate right to re-enter the Leased Premises, either by
summary proceedings, by force or otherwise, and to dispossess Tenant and
all other occupants therefrom and remove and dispose of all property
therein in the manner provided in subdivision (c) of this Section, all
without service of any notice of intention to re-enter and without
Landlord being deemed guilty of trespass or becoming liable for any loss
or damage
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which may be occasioned thereby. Landlord shall also have the right, at
the option of Landlord, to terminate this Lease upon three (3) days
written notice to Tenant, and to thereupon reenter and take possession
of the said premises. In the event of any such default or breach,
Landlord shall have the right, at its option, from time to time, without
terminating this Lease, to reenter and re-let the premises, or any part
thereof, with or without legal process, as the agent and for the account
of Tenant upon such terms and conditions as Landlord may deem advisable
or satisfactory, in which even the rents received on such re-letting
shall be applied first to the expenses of such re-letting and collection
including but not limited to, necessary renovation and alterations of
the Leased Premises, reasonable attorney's fees, any real estate
commissions paid, and thereafter toward payment of all sums due or which
become due Landlord hereunder, and if a sufficient sum shall not be thus
realized or secured to pay such sums and other charges, (i) at
Landlord's option, Tenant shall pay Landlord any deficiency monthly,
notwithstanding Landlord may have received rental in excess of the
rental stipulated in this Lease in previous or subsequent months, and
Landlord may bring an action therefor as such monthly deficiency shall
arise, or (ii) at Landlord's option, the entire deficiency, which is
subject to ascertainment for the remaining term of this Lease, shall be
immediately due and payable by Tenant. Nothing herein, however, shall be
construed to require Landlord to re-enter in any event. The Landlord
shall not, in any event, be required to pay Tenant any surplus of any
sums received by Landlord on a re-letting of said premises in excess of
the rent provided in this Lease.
(b) In the event of any such default or breach, the Landlord
shall have the right, at its option, to declare the rents for the entire
remaining term and other indebtedness, if any, immediately due and
payable without regard to whether or not possession shall have been
surrendered to or taken by Landlord, and may commence action immediately
thereupon and recover judgement therefor which judgement shall be
rendered for the then present value of the aforedescribed sum.
(c) The Landlord in addition to other rights and remedies it may
have, shall have the right to remove all or any part of the, Tenant's
property from said premises and any property removed may be stored in
any public warehouse or elsewhere at the cost of, and for the account of
Tenant and the Landlord shall not be responsible for the care or
safekeeping thereof, and the Tenant hereby waives any and all loss,
destruction and/or damage or injury which may be occasioned by any of
the aforesaid acts.
(d) No such re-entry or taking possession of said Leased
Premises by Landlord shall be construed as an election on Landlord's
part to terminate this Lease unless a written notice of such intention
is given to Tenant. Notwithstanding any such re-letting without
termination, Landlord may at all times thereafter, elect to terminate
this Lease for such previous default or breach. Any such re-entry shall
be allowed by Tenant without hindrance and Landlord shall not be liable
in damages for any such re-entry, or guilty of trespass or forcible
entry.
(e) Any and all rights, remedies and options given in this Lease
to Landlord shall be cumulative and in addition to and without waiver of
or in derogation of any right or remedy given to it under any law now or
hereafter in effect.
SECTION 17.03 Waiver.
The waiver by Landlord of any breach of any term, condition or
covenant herein contained shall not be a waiver of such term, condition
or covenant, or any subsequent breach of the same or any other term,
condition or covenant herein contained. The
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consent or approval by Landlord to or of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent similar
act by Tenant. No re-entry hereunder shall bar the recovery of rents or
damages for the breach of any of the terms, conditions or covenants on
the part of Tenant herein contained. The receipt of rent after breach or
condition broken, or delay on the part of Landlord to enforce any right
hereunder, shall not be deemed a waiver or forfeiture, or a waiver of
the right of Landlord to annul this Lease or to reenter said Leased
Premises or to re-let same.
SECTION 17.04 Past Due Payments.
In the event any payment due under this Lease should not be paid
on the due date, Tenant agrees to pay interest on the amount which is
delinquent at the highest rate permitted under the laws of the state of
Florida, for such delinquent payment until made. In addition thereto, if
Tenant shall fail to pay any rents, additional rents or any other
payments due under this Lease within five (5) days of the due date
thereof, or in the event any check, bank draft, order for payment or
negotiable instrument given to Landlord for any payment under this Lease
shall be dishonored for any reason whatsoever not attributable to
Landlord, then Tenant shall also pay to Landlord an administrative
charge equal to whichever is the greater of the following: (i) One
Hundred Dollars ($100.00), or (ii) five percent (5%) of such unpaid sum.
Tenant recognizes and agrees that the charge which Landlord is entitled
to make upon the conditions stated in this Section represents, at the
time this Lease is made, a fair and reasonable estimate and liquidation
of the cost of Landlord in the administration of VIA MIZNER FINANCIAL
PLAZA resulting to Landlord from the events described which costs are
not contemplated or included in any other rental charges provided to be
paid by Tenant to Landlord in this Lease. The provisions herein for
administration charges shall not be construed to extend the date for
payment of any sums required to be paid by Tenant hereunder or to
relieve Tenant of its obligation to pay all such sums at the time or
times herein stipulated.
SECTION 17.05 Legal Expenses.
In the event that it shall become necessary for Landlord to
employ the services of an attorney to enforce any of its rights under
this Lease or to collect any sums due to it under this Lease or to
remedy the breach of any covenant of this Lease on the part of the
Tenant to be kept or performed, regardless of whether suit be brought,
Tenant shall pay to Landlord such fee as shall be charged by Landlord's
attorney for such services. Should suit be brought for the recovery of
possession of the Leased Premises, or for rent or any other sum due
Landlord under this Lease, or because of the breach of any of Tenant's
covenants under this Lease, Tenant shall pay to Landlord all expenses of
such suit and any appeal thereof, including a reasonable attorney's fee.
In the event that it shall become necessary for Tenant to employ
the services of an attorney to enforce any of its rights under this
Lease or to collect any sums due to it under this Lease or to remedy the
breach of any covenant of this Lease on the part of the Landlord to be
kept or performed, regardless of whether suit be brought, Landlord shall
pay to Tenant such fee as shall be charged by Tenant's attorney for such
services. Should suit be brought for any sum due Tenant under this
Lease, or because of the breach of any of Landlord's covenants under
this Lease, Landlord shall pay to Tenant all expenses of such
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suit and any appeal thereof, including a reasonable attorney's fee.
ARTICLE XVIII
Access by Landlord
SECTION 18.01 Right of Entry.
(a) Provided the Landlord has given reasonable notice to the
Tenant (except in the case of an emergency), Landlord and Landlord's
agents shall have the right to enter the Leased Premises at all
reasonable times to examine the same, and to show them to prospective
purchasers or lessees of the Leased Premises, and to make such repairs,
or alterations, improvements or additions as Landlord may deem necessary
or desirable, and Landlord shall be allowed to take all material into
and upon said premises that may be required therefor without the same
constituting an eviction of Tenant in whole or in part and the rent
reserved shall in no way abate while said repairs, alterations,
improvements or additions are being made unless Tenant is prevented from
operating in the Leased Premises in whole or in part, in which event
rent shall be proportionately abated during said period. During the six
(6) months prior to the expiration of the term of this Lease or any
renewal term, Landlord may exhibit the premises to prospective tenants
or purchasers, and place upon the premises the usual notices "To Let" or
"For Rent" which notices Tenant shall permit to remain thereon without
molestation. If Tenant shall not be personally present to open and
permit an entry into said premises, at any time, when for any reason an
entry therein shall be necessary or permissible, Landlord or Landlord's
agents may enter the same without in any manner affecting the
obligations and covenants of this Lease. Nothing herein contained,
however, shall be deemed or construed to impose upon Landlord any
obligation, responsibility or liability whatsoever, for the care,
maintenance or repair of the Building or any part thereof, except as
otherwise herein specifically provided. Landlord and Tenant agree that
Landlord shall not unreasonably interfere with Tenant's business
operations in connection with Landlord's activities under this
subparagraph (a) except in the case of an emergency.
(b) Except for the space within the inside surfaces of all
walls, drop ceilings, floors, windows and doors bounding the Leased
Premises, all of the Building including without limitations exterior
building walls, atrium walls, core corridor walls and doors, terraces or
roofs adjacent to or above the Leased Premises and any space in or
adjacent to the Leased Premises used for shafts, stacks, pipes,
conduits, utilities rooms, ducts, which service other portions of the
Building in addition to or exclusive of the Leased Premises, are
reserved to the Landlord for the purposes of maintenance, decoration,
repair, operation, construction of additions to the Building or other
leased premises within the Building. Landlord reserves the right and
Tenant shall permit Landlord and persons authorized by Landlord to
access the aforedescribed facilities and to install, erect, use and
maintain the aforedescribed facilities in and through the Leased
Premises. Landlord and persons authorized by the Landlord shall have the
right to enter and/or pass through the Leased Premises at any time or
times to make such repairs, alterations, additions and improvements in
or to the Leased Premises and/or in or to the Building or its
improvements and common facilities as Landlord is required or desires to
make. Landlord and such authorized persons shall be allowed to take all
materials into and upon the Leased Premises that may be required in
connection therewith, without liability to Tenant and without
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any reduction of Tenant's covenants and/or obligations hereunder.
(c) If at any time any windows of the Leased Premises are either
temporarily darkened or obstructed by reason of any repairs,
improvements, maintenance and/or cleaning in or about the Building or
covered by any translucent material for the purpose of energy
conservation, or if any part of the Building, other than the Leased
Premises, is temporarily or permanently closed or inoperable, the same
shall be without liability to Landlord and without any reduction or
diminution of Tenant's obligations under this Lease. Neither this Lease
nor any use by Tenant, shall give Tenant any easement or other right in
or to (i) the use of any door or any passage or any concourse or other
common facility within VIA MIZNER FINANCIAL PLAZA, or (ii) the use of
such doors, passages, concourses and common facilities for access to any
other building or any public conveniences or transportation facilities.
Tenant acknowledges that the use of such doors, passages, concourses and
common facilities may without notice to Tenant be regulated or
discontinued at any time by Landlord.
(d) If an excavation shall be made upon land adjacent to or
under the Building in which the Leased Premises is located, or shall be
authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter the Leased
Premises for the purpose of performing such work as said person shall
deem necessary or desirable to preserve and protect the Building from
injury or damage to support the same by proper foundations, without any
claim for damages or liability against Landlord and without reducing or
otherwise affecting Tenant's obligations under this Lease.
SECTION 18.02 Roof.
Use of the roof and/or air space above the Leased Premises is
reserved exclusively to the Landlord. Any use of the roof and/or air
space above the Lease Premises or the Building shall be controlled by
the terms and conditions of Exhibit "K" attached hereto and made a part
hereof; provided, however, any such use is subject to the approval of
all governmental authorities having jurisdiction over such use (and the
installation of facilities or improvements to accomplish such use) and
nothing contained herein shall be interpreted or construed as a
representation or implication by the Landlord that the use (or the
installation of facilities or improvements to accomplish such use) will
receive the consent or approval of any of the governmental authorities
having jurisdiction and approval rights or control of the use.
ARTICLE XIX
Tenant's Property
SECTION 19.01 Taxes on Leasehold or Personalty.
Tenant shall be responsible for and shall pay before delinquent
all municipal, county or state taxes assessed during the term of this
Lease against any leasehold interest or personal property of any kind,
owned by or placed in, upon or about the Leased Premises by the Tenant.
SECTION 19.02 Loss and Damage.
Landlord shall not be responsible for any damage to property of
Tenant or of others located on the Leased Premises nor for the loss of
or damage to any property of Tenant or others by theft or otherwise
except for the sole negligence of the Landlord or the sole negligence of
the Landlord's employees. Landlord shall not
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be liable for any injury or damage to persons or property resulting from
fire, explosion, falling plaster, steam, gas, electricity, water, rain,
or leaks from any part of the Leased Premises or from the pipes,
appliances or plumbing works or from the roof, street or subsurface or
from any other place or by dampness or by any other cause of whatsoever
nature. Landlord shall not be liable for any such damage caused by other
tenants or persons in the Leased Premises, occupants of adjacent
property within VIA MIZNER FINANCIAL PLAZA, or the public, or caused by
operations in construction of any private, public or quasi-public work.
Landlord shall not be liable in damages or otherwise for any latent
defect in the Leased Premises or in the Building of which they form a
part, except that if Tenant shall give notice to Landlord within a
period of one (1) year from the date Tenant takes possession of the
Leased Premises of the existence of any such latent defect, then
provided such defect shall not have resulted from any act, alteration or
improvement made by Tenant, Landlord shall repair such defect. All
property of Tenant kept or stored on the Leased Premises shall be so
kept or stored at the risk of Tenant only and Tenant shall hold Landlord
harmless from any and all claims arising out of damage to same,
including subrogation claims by Tenant's insurance carriers.
SECTION 19.03 Notice by Tenant.
Tenant shall give immediate notice to Landlord in case of fire
or accidents in the Leased Premises or in the Building of which the
premises are a part or of defects therein or in any fixtures or
equipment, or of any repair or maintenance item for which the Landlord
is responsible under the terms and conditions of this Lease.
ARTICLE XX
Holding Over Successors
SECTION 20.01 Holding Over.
In the event Tenant remains in possession of the Leased Premises
after the expiration of the tenancy created hereunder, and without the
execution of a new lease, Tenant, at the option of Landlord shall be
deemed to be occupying the Leased Premises as a Tenant from
month-to-month, at a monthly rent for the first thirty (30) days equal
to one hundred twenty-five percent (125%) of the fixed minimum rent
payable during the last month of the lease term and thereafter at a
monthly rent equal to two times the fixed minimum rent payable during
the last month of the lease term and a twenty-five percent (25%)
increase from each month occupying the Leased Premises thereafter. In
addition to the fixed minimum rent Tenant agrees to pay monthly all
Additional Rent as provided for in this Lease.
SECTION 20.02 Successors.
All rights and liabilities herein given to, or imposed upon, the
respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors, and permitted
assigns of the said parties; and if there shall be more than one Tenant,
they shall be bound jointly and severally by the terms, covenants and
agreements herein. No rights, however, shall inure to the benefit of any
assignee of Tenant unless the assignment to such assignee has been
approved by Landlord in writing as provided in Section 11.01 hereof.
Nothing contained in this Lease shall in any manner restrict Landlord's
right to assign or encumber this Lease and, in the event Landlord sells
or transfers its interest in VIA MIZNER FINANCIAL PLAZA and the
purchaser or transferee takes assignment of Landlord's
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interest in this Lease, Landlord shall thereupon be relieved of all
further obligations hereunder.
ARTICLE XXI
Quiet Enjoyment
Upon payment by the Tenant of the rents herein provided, and
upon the observance and performance of all the covenants, terms and
conditions on Tenant's part to be observed and performed, Tenant shall
peaceably and quietly hold and enjoy the Leased Premises for the term
hereby demised without hindrance or interruption by Landlord or any
other person or persons lawfully or equitably claiming by, through or
under the Landlord, subject, nevertheless, to the terms and conditions
of this Lease.
ARTICLE XXII
Miscellaneous
SECTION 22.01 Accord and Satisfaction.
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
an account of the earliest stipulated rent, nor shall any endorsement or
statement on any check or any letter accompanying the 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 provided in the
Lease by law.
SECTION 22.02 Entire Agreement.
This Lease and the Exhibits, and any Rider or Addendum, if any,
attached hereto and forming a part hereof, set forth all covenants,
promises, agreements, conditions and understandings between Landlord and
Tenant concerning the Leased Premises and there are no covenants,
promises, conditions or understandings, either oral or written, between
them other than as herein set forth. All understandings and agreements
heretofore made between Landlord and Tenant (including the agents and
employees of either the Landlord or Tenant) are merged into this Lease
and any other written correspondence or agreements made prior to the
execution of this Lease are hereby terminated, and are null and void.
This Lease fully and completely expressed the agreements of the Landlord
and Tenant which Lease is entered into by the Landlord and Tenant after
full investigation by each party, neither party relying upon any
statement or representation not embodied in this Lease or other written
agreement executed simultaneously with this Lease. No provision of this
Lease may be amended or added to except by an agreement in writing
signed by the parties hereto or their respective successors in interest.
SECTION 22.03 No Partnership.
Landlord does not, in any way or for any purpose, become a
partner of Tenant in the conduct of its business, or otherwise, or joint
venturer or a member of a joint enterprise with Tenant.
SECTION 22.04 Force Majeure.
In the event that either party hereto shall be delayed or
hindered in or prevented from the performance of any act required
hereunder by reason of strikes, lock-outs, labor troubles, inability to
procure materials, failure of power, restrictive
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governmental laws or regulations, riots, insurrection, war or other
reason of a like nature not the fault of the party delayed in performing
work or doing acts required under the terms of this Lease, then
performance of such act shall be excused for the period of the delay and
the period for the performance of any such act shall be extended for a
period of such delay. The provisions of this Section 22.04 shall not
operate to excuse Tenant from the prompt payment of rent, percentage
rent, additional rent or any other payments required by the terms of
this Lease.
SECTION 22.05 Notices.
(a) All notices shall be in writing and shall be deemed to have
been given upon receipt.
(b) Any notice by Tenant to Landlord must be served by certified
or registered mail, or private mail service, postage prepaid, addressed
to Landlord at the address first hereinabove given or at such other
address as Landlord may designate by written notice. Any notice by
Landlord to Tenant must be served by certified or registered mail, or
private mail service, postage prepaid, addressed to Tenant at the
address first hereinabove given or at such other address as Tenant may
designate by written notice except as provided in subparagraph (c)
hereinafter.
(c) After commencement of the term hereof any notice by Landlord
to Tenant shall be served by hand delivery or private mail or delivery
service, postage prepaid, addressed to Tenant at the Leased Premises.
(d) Notice shall be deemed to be properly given if addressed to
Tenant at its last known address, if private mail or delivery service or
certified mail return receipt requested, postage pre-paid is refused or
otherwise undeliverable.
SECTION 22.06 Captions and Section Numbers.
The captions, section numbers, article numbers and index
appearing in this Lease are inserted only as a matter of convenience and
in no way define, limit, construe, or describe the scope or intent of
such sections or articles of this Lease not in any way affect this
Lease.
SECTION 22.07 Tenant Defined, Use of Pronoun.
The word "Tenant" shall be deemed and taken to mean each and
every person mentioned as a Tenant herein be the same, one or more and
if there shall be more than one Tenant any notice required or permitted
by the terms of this Lease may be given by or to any one thereof, and
shall have the same force and effect as if given or to all thereof. The
use of the neuter singular pronoun to refer to Landlord or Tenant shall
be deemed a proper reference even though Landlord or Tenant may be an
individual, a partnership, a corporation, or a group of two or more
individuals or corporations. The necessary grammatical changes required
to make the provisions of this Lease apply in the plural sense where
there is more than one Landlord or Tenant and to either corporations,
associations, partnerships, or individuals, males or females, shall in
all instances be assumed as though in each case fully expressed.
SECTION 22.08 Brokers Commission.
Each of the parties represents and warrants that it has dealt
with no broker or brokers in connection with the execution of this
Lease, except as set forth in Section (v) of the Lease
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<PAGE> 40
Summary, and each of the parties agrees to indemnify the other against,
and hold it harmless from, all liabilities arising from any claim for
brokerage commissions or finder's fees resulting from the indemnitor's
acts (including, without limitation, the cost of counsel fees in
connection therewith) except as set forth in Section (v) of the Lease
Summary.
SECTION 22.09 Partial Invalidity.
If any term, covenant or condition of this Lease or the
application thereof to any person or circumstances shall, to any extent,
be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or
condition of this Lease shall be valid and be enforced to the fullest
extent permitted by law.
SECTION 22.10 Effectiveness of Lease.
The submission of this Lease for examination does not constitute
a reservation of or option for the Leased Premises and this Lease
becomes effective as a lease only upon execution and delivery thereof by
Landlord to Tenant, and the receipt of the full security deposit, and if
paid by check, subject to clearance.
SECTION 22.11 Recording.
Tenant shall not record this Lease or any memorandum thereof in
any public records without the written consent and joinder of Landlord.
SECTION 22.12 Liability of Landlord.
Anything contained in this Lease at law or in equity to the
contrary notwithstanding Tenant expressly acknowledges and agrees that
there shall at no time be or be construed as being any personal
liability by or on the part of Landlord under or in respect of this
Lease or in any way related hereto or the Leased Premises; it being
further acknowledged and agreed that Tenant is accepting this Lease and
the estate created hereby upon and subject to the understanding that it
shall not enforce or seek to enforce any claim or judgment or any other
matter, for money or otherwise, personally or directly against any
officer, director, stockholder, partner, principal (disclosed or
undisclosed), representative or agent of Landlord, but will look solely
to the Landlord's interest in the VIA MIZNER FINANCIAL PLAZA for the
satisfaction of any and all claims, remedies or judgments (or other
judicial process) in favor of Tenant requiring the payment of money by
Landlord in the event of any breach by Landlord of any of the terms,
covenants or agreements to be performed by Landlord under this Lease or
otherwise, subject, however, to the prior rights of any ground or
underlying lessors or the holders of the mortgages covering the VIA
MIZNER FINANCIAL PLAZA, and no other assets of Landlord shall be subject
to levy, execution or other judicial process for the satisfaction of
Tenant's claims; such exculpation of personal liability as herein set
forth to be absolute, unconditional and without exception of any kind.
SECTION 22.13 Time of the Essence.
Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor.
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<PAGE> 41
SECTION 22.14 Estoppel Information.
When the commencement date is determined, Tenant agrees, upon
request of Landlord, to execute and deliver to Landlord, without charge
and within ten (10) days following request therefor, a written
declaration in form satisfactory to Landlord:(i)ratifying this Lease;
(ii) confirming the commencement and expiration dates of the term of
this Lease; (iii) certifying that Tenant is in occupancy of the Leased
Premises, the date Tenant commenced operating Tenant's business therein
and that this Lease is in full force and effect and has not been
assigned, modified, supplemented or amended, except by such writings as
shall be stated; (iv) that all conditions under this Lease to be
performed by Landlord have been satisfied, except such as shall be
stated; (v) that there are no defenses or offsets against the
enforcement of this Lease by Landlord, or stating those claimed by
Tenant; (vi) reciting the amount of advance rental, if any, paid by
Tenant and the date to which rental has been paid; and (vii) reciting
the amount of security deposited with Landlord, if any. Tenant agrees to
execute and deliver similar declarations at any time and from time to
time and within ten (10) days following request therefor by Landlord or
by any mortgage lenders or ground or underlying lessor and or
purchaser's of all or any portion of VIA MIZNER FINANCIAL PLAZA, and
each of such parties shall be entitled to rely upon such written
declaration made by Tenant. Tenant's failure or refusal to execute the
declaration required hereunder within ten (10) days following the
request therefor will constitute a default hereunder and Landlord shall
have such rights and remedies against Tenant as is available to Landlord
for Tenant's default.
SECTION 22.15 Cumulative Remedies.
No remedy or election hereunder shall be deemed exclusive but
shall, wherever possible, be cumulative with all other remedies at law
or in equity.
SECTION 22.16 Choice of Law.
This Lease shall be governed by the laws of the State of
Florida.
SECTION 22.17 Affirmative Waivers.
Tenant, on behalf of itself and any and all persons claiming
through or under Tenant, does hereby waive and surrender all right and
privilege which it, they or any of them might have under or by reason of
any present or future law, to redeem the Leased Premises or to have a
continuance of this Lease after being dispossessed or ejected therefrom
by process of law or under the terms of this Lease or after the
termination of this Lease as provided in this Lease. Landlord and Tenant
hereby waive trial by jury in any action, proceeding or counterclaim
brought by either against the other on any matter whatsoever arising out
of or in any way connected with this Lease, the relationship of Landlord
and Tenant, Tenant's use or occupancy of the Leased Premises, including,
without limitation, any claim of injury or damage, and any emergency and
other statutory remedy with respect thereto.
SECTION 22.18 Preparation of Lease.
The submission by Landlord of the Lease in draft form shall be
deemed submitted solely for Tenant's consideration and not for
acceptance and execution. Such submission shall have no binding force or
effect and shall confer no rights nor impose any obligations, including
brokerage obligations, on either party unless and until both Landlord
and Tenant shall have executed the
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Lease and duplicate originals thereof shall have been delivered to the
respective parties.
SECTION 22.19 Counterparts.
This Lease may be executed in multiple copies, each of which
shall be deemed an original, and all of such copies shall together
constitute one and the same instrument.
SECTION 22.20 Acceptance of Funds by Landlord.
No receipt of money by the Landlord from the Tenant after the
termination of this Lease or after the service of any notice or after
the commencement of any suit, or after final judgment for possession of
the Leased Premises shall reinstate, continue or extend the term of this
Lease or affect any such notice, demand or suit.
SECTION 22.21 Attachments.
Exhibits One, Two, A, B, C, D, E, F, G, H, I, J, K, L, N, and N,
as well as any Riders or Addendum which are attached to this Lease are a
part of this Lease and are incorporated herein as if fully set forth
herein.
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed
this Lease on the day and year first above written.
VIA MIZNER ASSOCIATES, a
Florida general partnership,
LANDLORD
BY: VMP, LTD., a Florida
limited partnership,
General Partner of Via
Mizner Associates
Signed, sealed and delivered BY: SVMP, INC., a Florida
in the Presence of corporation, General
Partner of SVMP, LTD.
- ------------------------------
By: /s/ Bill Shubin,
- ------------------------------ ---------------------------------
As to the Landlord Bill Shubin, President
(Corporate Seal)
Date: 4/10/89
Signed, sealed and delivered MACKENZIE INVESTMENT
in the presence of MANAGEMENT, INC., a Delaware
corporation, Tenant
- ------------------------------
By: /s/
- ------------------------------ ---------------------------------
As to Tenant President
(Corporate seal)
Date: 7/16/89
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<PAGE> 43
Exhibit One
To
Lease Agreement
Between Via Mizner Associates
and Mackenzie Investment Management Inc.
Description: Site Plan of Via Mizner Financial Plaza
Page 1 of 3
<PAGE> 44
EXHIBIT ONE
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
The improvements and plans of development depicted on this
Exhibit One are conceptual in nature and tentative in Landlord's
anticipated subsequent development of the site. Landlord agrees only to
construct those improvements designated hereon as Pavilions 5 and 6,
Phase I-A. Landlord anticipates constructing the Phase I-A improvements
substantially as depicted in this Exhibit, however, Tenant acknowledges
that the final, actual location, configuration, elevation and dimensions
of the Phase I-A improvements upon completion of construction may vary
from those improvements depicted hereon due to governmental permit and
approval requirements and upon field and construction conditions and
requirements. Landlord does NOT agree or represent to tenant in any way
that any improvements or development as depicted on this Exhibit, other
than the improvements designated as Pavilions 5 and 6, Phase I-A, shall
be undertaken or completed. Tenant acknowledges that Tenant has not
relied upon any information or the depiction of any improvements on this
Exhibit in entering this Lease other than as expressly set forth in this
narrative statement.
Page 2 of 3
<PAGE> 45
EXHIBIT ONE
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
DESCRIPTION: Site Plan of Via Mizner Financial Plaza
<PAGE> 46
EXHIBIT TWO
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
1. Lease Commencement Date. Tenant acknowledges that Landlord will
construct the office building in accordance with the provisions of Article III
of the Lease. The obligations of the Landlord and Tenant as set forth in this
Lease are expressly CONTINGENT upon the Landlord obtaining from all governmental
entities having jurisdiction over the Leased Premises, all permits and
authorizations to construct and shall commence construction of Pavilion 6 on or
before September 15, 1989. Subject to the foregoing, Landlord agrees to deliver
to Tenant the Leased Premises not later than July 15, 1990. If for any reason
Landlord is unable to deliver the Leased Premises to the Tenant with tenant
improvements reasonably complete (provided Tenant has selected Landlord to
construct the tenant improvements) by July 15, 1990, then in that event Tenant's
sole and exclusive remedy shall be the right of the Tenant to terminate this
Lease, receive a refund of any deposit made by Tenant to Landlord and
thereafter, this Lease will become null and void. Should Tenant elect to
terminate this Lease pursuant to this Paragraph 1, then Tenant must deliver
written notice of such election during the period July 16, 1990 to July 25,
1990, time being of the essence as to Tenant's notice obligation.
The Lease Commencement Date shall commence upon (a) Tenant occupying the
Leased Premises, or (b) ninety (90) days subsequent to the date Landlord obtains
a Certificate of Occupancy (either temporary or permanent) for Pavilion 6
(shell), whichever event shall first occur; provided, however, if Tenant has
complied with the provisions of Paragraph 2 below AND Tenant elects that the
Landlord's contractor will construct the Tenant Improvements, then the Lease
Commencement Date shall be the date that a Certificate of Occupancy is issued
for the Tenant Improvements. If Tenant elects to use a Tenant Improvement
contractor selected by Tenant, then in that event the Landlord agrees that the
Tenant Improvement contractor will have access to the Leased Premises not later
than April 15, 1990 to begin construction of the Tenant Improvements (provided,
however, that Tenant must comply with all governmental regulations and obtain
all governmental permits prior to access to the Leased Premises and initiating
the Tenant Improvements construction). Landlord shall notify Tenant of the date
construction is initiated for Pavilion 6 (shell) and the estimated date of
completion of Pavilion 6 (shell) so that Tenant may coordinate construction of
the Tenant Improvements.
2.Tenant Improvements. In accordance with the provisions of Article III
of this Lease, Tenant shall perform and construct all Tenant Improvements
described in Exhibit "D" annexed hereto and made a part hereof. Upon Tenant
receiving Landlord's notice that construction has been initiated (as provided
for in Paragraph 1 above), Tenant shall have the plans and specifications for
the Tenant Improvements prepared and finalized (it is understood and agreed by
Tenant that none of the materials to be incorporated into the Tenant
Improvements would result in a fabrication and/or delivery date which would
result in the construction of the Tenant Improvements being delayed beyond the
Tenant Improvement completion date a set forth. herein. Tenant
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<PAGE> 47
shall obtain a Tenant Improvements building permit on or before ninety (90) days
from the estimated date of completion of the office building (shell) so that the
Tenant Improvements may be coordinated with the completion of Landlord's Work.
Upon the completion of the tenant Improvements described in Exhibit "D" and
obtaining a certificate of occupancy for the Leased Premises from all
governmental authorities having jurisdiction over the Tenant Improvements,
Landlord shall pay to Tenant (i) a tenant improvement allowance of Thirty-five
Dollars ($35.00) per square foot for each square foot of rental space for which
Tenant pays rent to the Landlord; and (ii) an architectural interior design fee
allowance of Two and 10/100 Dollars ($2.10) per square foot for each square foot
of rental space for which Tenant pays rent to the Landlord. The tenant
improvement allowance and the architectural improvement allowance shall be paid
by Landlord to Tenant within ten (10) days from the date Landlord receives (a)
written notice from the Tenant advising that the Tenant Improvements are
completed, and (b) a copy of the Tenant's certificate of occupancy.
Landlord agrees, upon the request of Tenant, to construct Tenant
Improvements in the premises. If, however, the Tenant Improvement cost estimates
exceeds Fifty Dollars ($50.00) per square foot and Tenant is either unwilling to
redesign the premises in order to reduce cost estimate to under Fifty Dollars
($50.00) per square foot or employ another Tenant Improvement Contractor other
than Landlord's Tenant Improvement Contractor, then Landlord has the option to
either extend the period of time necessary for Tenant Improvement construction
while the lease commencement date remains the same or Landlord may terminate
this Lease Agreement in its entirety (hereinafter referred to as "Landlord's
Termination Right"). Tenant shall agree to submit complete working drawings by
December 15, 1989 (or 90 days from the date Landlord issues notice that
construction has been initiated as provided for in Paragraph 1 above, whichever
date is earlier) and Landlord's Termination Right shall expire on February 15,
1990. Nothing contained in this paragraph shall be construed to modify or change
the tenant improvement allowance which is in the amount of Thirty-five Dollars
($35.00) per square foot for each square foot of rental space for which Tenant
pays rent to Landlord.
3. Approval of Building Plans and Specifications (Shell) by Tenant.
Landlord shall cause to be prepared schematic and preliminary drawings and
outline specifications (hereinafter referred to as "Preliminary Plans") for the
office building (shell) and submit the same to the Tenant for the Tenant's
review and approval. Tenant shall within ten (10) days from the date Tenant
receives the Preliminary Plans review and approve (or disapprove) the
Preliminary Plans and shall notify Landlord in writing of Tenant's rejection of
the Preliminary Plans, otherwise Preliminary Plans shall be deemed approved by
Tenant. Subsequent to Tenant's acceptance of the Preliminary Plans the Landlord
shall cause to be prepared the working drawings for the construction of the
office building (shell). Upon the working drawings being completed by the
Landlord, Landlord shall submit the same to Tenant for Tenant's review and
approval (or disapproval) Provided that the working drawings are substantially
similar to the Preliminary Plans approved by the Tenant, the Tenant shall be
deemed to have approved and accepted the working drawings. In the event the
working drawings deviate substantially from the approved Preliminary Plans,
Tenant shall notify Landlord of any such deviation in writing within ten (10)
days from the date that Landlord submits the working drawings to Tenant,
otherwise the working drawings shall be deemed approved by Tenant. The Landlord
may at Landlord's election modify such substantial deviation, or if the Landlord
elects not to modify such substantial deviation, then the Tenant may elect to
cancel and
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<PAGE> 48
terminate this Lease Agreement by serving written notice upon the Landlord
within ten (10) days from the date Landlord notifies Tenant that Landlord will
not modify the substantial deviation in the working drawings identified by
Tenant.
4. Expansion Provisions. Provided Tenant is in good standing and not in
default under this Lease, Landlord hereby grants to Tenant an option at Tenant's
sole election to lease an additional 3,500 square feet of space on the second
floor of the office building (hereinafter referred to as "Optional Leased
Premises"). The Optional Leased Premises shall be configured in accordance with
the Floor Plan attached hereto as Exhibit "A-l" or such other re-configuration
of the Optional Leased Premises as Landlord may elect to accommodate the primary
user of the second floor of Pavilion 6. Tenant may elect to occupy the Optional
Leased Premises on or before thirty (30) days subsequent to the Lease
Commencement Date. The election to occupy the Optional Leased Premises shall be
made by Tenant delivering written notice to the Landlord of such election not
later than thirty (30) days subsequent to the Lease Commencement Date (time
being of the essence). The written notice shall specifically refer to this
paragraph and shall contain a statement which indicates the Tenant has elected
to occupy the Optional Leased Premises. occupancy of the Optional Leased
Premises by the Tenant shall be subject to all the terms and conditions of this
Lease, including but not limited to additional lease guaranty collateral as
provided for in Paragraph 13 hereinafter, and the term of the Tenant's occupancy
shall be the term remaining under this Lease, together with an options of the
Tenant to extend this Lease.
The Fixed Minimum Annual Rent for the Optional Leased Premises shall be
as provided for in subparagraph (p) of the Lease Summary.
Plans for all Tenant Improvements in the Optional Leased Premises shall
be submitted by Tenant to Landlord and approved in writing by Landlord prior to
Tenant beginning construction of the proposed Tenant Improvements and in
accordance with the provisions of Exhibit "D". Landlord and Tenant agree that
upon Tenant completing the approved Tenant Improvements and obtaining a
certificate of occupancy for the Leased Premises from all governmental
authorities having jurisdiction over the construction over the Tenant
Improvements, Landlord shall pay to Tenant a tenant improvement allowance of
Thirty-five Dollars ($35.00) per square foot for each square foot of rental
space for which Tenant pays rent to the Landlord. The tenant improvement
allowance shall be paid by Landlord and Tenant within ten (10) days from the
date Landlord receives written notice from the Tenant advising that the Tenant
Improvements are completed and a copy of the Tenant's certificate of occupancy.
5. Renewal Options.
Number of Option Terms: Two
Duration of Each Option Term: Five Years
Provided Tenant is in good standing and not in default under this Lease,
Landlord hereby gives and grants to Tenant the right, privilege and option of
extending the Lease for two (2) terms as set forth above. The first extended
term will commence on the date of the expiration of this Lease. Provided the
Tenant has exercised the option for the first extended term and is in good
standing and not in default under this Lease during the first extended term, the
second extended term will commence on the date of the expiration of the first
extended term. In order to exercise the option herein granted, Tenant must give
written notice of Tenant's intention to exercise the option to extend not less
than nine (9) months prior to the expiration of the current term, or the
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<PAGE> 49
first extended term, as the case may be. All of the terms, covenants and
conditions of this Lease will apply during each option term except the Fixed
Minimum Annual Rent will be adjusted as follows: Upon Landlord receiving notice
from Tenant of Tenant's election to extend the Lease for each option term
provided for hereinabove, then Landlord shall within one hundred eighty (180)
days from the receipt of Tenant's notice issue written correspondence to the
Tenant which shall contain the Fixed Minimum Annual Rent which Landlord has
established for the first year of the option term. If the Tenant finds the Fixed
Minimum Annual Rent charge established in Landlord's correspondence
unacceptable, Tenant shall notify Landlord within ten (10) days of receipt of
Landlord's correspondence, and the Landlord and the Tenant shall each select an
independent appraiser within ten (10) days from the date Landlord receives
Tenant's notice. The two (2) independent appraisers shall then select a third
appraiser and the three (3) appraisers shall each independently establish a fair
market rental value for the first year of the option term. Each of the
appraisers described above shall be members of the American Institute of Real
Estate Appraisers, Members Appraisal Institute and shall be familiar with and
conduct the majority of their business in Broward or Palm Beach County, Florida.
The fair market rental values established by the three (3) appraisers shall then
be averaged together and the Fixed Minimum Annual Rent binding upon the Landlord
and Tenant shall be the average of the three (3) appraisals; provided, however,
notwithstanding the result of the appraisal process provided for hereinabove,
the Fixed Minimum Annual Rent for the first year of each option term shall not
be less than the Fixed Minimum Annual Rent for the year preceding the first year
of the option term. This appraisal process procedure shall apply to the first
option term and the second option term of the Tenant, if the Tenant exercises
each of its renewal options. The cost and expense of the appraisal process shall
be the equal responsibility of the Landlord and the Tenant.
6. Tenant Signage. Landlord shall allow (subject to Landlord's approval,
which approval shall not be unreasonably withheld) the Tenant to install signage
as follows: (i) one exclusive sign attached to the exterior rear entrance of
Pavilion 6 which shall not exceed five square feet with no more than four inch
letters (it is further understood that no other exterior signage shall be
attached to the exterior rear entrance of Pavilion 6 except Tenant acknowledges
that Southeast Bank will install automatic teller machines and automatic teller
signage at the rear entrance of Pavilion 6 but such signage will not be located
within 10 feet of Tenant's rear entrance signage); (ii) in the elevator ground
floor lobby; (iii) the interior entrance of the Tenant's Leased Premises; (iv)
on the east side of Pavilions 5 and 6 located adjacent to the rear entry one
attached directory sign of no more than six square feet with letters of no more
than three inches in height; and (v) one free standing Tenant sign with a
maximum height of seven feet, limited to two parallel sign faces, located in a
landscaped area, with sign letters (logo, etc.) not to exceed forty percent of
the sign face; provided, that all signage is of a first class design and
construction and consistent with the quality and character of VIA MIZNER
FINANCIAL PLAZA and otherwise consistent with the provisions of Exhibit "E".
Tenant acknowledges and agrees that all signs and informational material must
comply with the ordinances and codes of the city of Boca Raton and any other
governmental entities having jurisdiction over such installation.
7. Parking Provisions. Notwithstanding the provisions of Section 2.04 of
the Lease during the first five (5) years of the term of this Lease, the cost of
operating the parking facilities for the Leased Premises and VIA MIZNER
FINANCIAL PLAZA
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<PAGE> 50
will be shared prorata by the tenants of VIA MIZNER FINANCIAL PLAZA in
accordance with the provisions of Section 2.06 of the Lease. Subsequent to the
fifth year of the Lease, the Landlord may at the Landlord's option, continue to
collect the cost of operating the parking facilities in accordance with the
provisions of Section 2.06 or the Landlord may elect to exercise the rights of
the Landlord set forth in Section 2.04 to operate the parking facilities under a
charge for parking system.
Landlord shall provide to Tenant during the first five (5) years of the
term of the Lease: (a) three (3) parking spaces for each thousand square feet of
rental space; and (b) six (6) of the spaces provided for in item (a) above shall
be designated "reserved - Mackenzie" and shall be exclusively for the use of the
Tenant or its designees. It is further agreed that if a charge for parking
system is adopted by the Landlord, as set forth in Section 2.04 of the Lease,
then the Tenant shall pay a charge for parking not greater than the minimum
charge imposed by Landlord upon any other Tenant within VIA MIZNER FINANCIAL
PLAZA.
8. Recalculation of Fixed Minimum Annual Rent Upon Completion of
Landlord's Work. The Fixed Minimum Annual Rent and the fixed minimum monthly
rent set forth in Section (p) of the Lease Summary shall be recalculated upon
Landlord completing Landlord's Work as provided in Section 3.01 of this Lease.
The recalculation of the Fixed Minimum Annual Rent shall occur by multiplying
the number of square feet within the Leased Premises times the per square foot
rental amount set forth in Section (p) of the Lease Summary. The number of
square feet within the Leased Premises shall be determined in accordance with
the provisions of Exhibit "J" after the Landlord has completed the Landlord's
Work as provided for in Section 3.01 of this Lease.
9. First Right of Refusal and First Right to Rent (3,500 sq. ft. located
on the second floor). Subsequent to the expiration of the option of Tenant set
forth in Paragraph 4 above, Tenant shall have a first right of refusal to rent
the 3,500 sq. ft. located on the second floor. This first right of refusal shall
expire one (1) year from the Lease Commencement Date. Landlord agrees that prior
to entering into a bona fide Lease for the 3,500 sq. ft. on the second floor,
Landlord shall present to Tenant the proposed Lease for such space. Tenant shall
have a period of five (5) business days from the date Tenant receives the
proposed business Lease to accept the terms of the proposed Lease. If Tenant
does not execute the proposed Lease and return the same to Landlord prior to the
expiration of five (5) business days from the date Landlord delivers the
proposed Lease to the Tenant (time being of the essence as to Tenant's execution
and delivery of the proposed Lease to Landlord within five (5) business days),
then Landlord may proceed to enter into the proposed business Lease with the
Tenant desiring to the lease the 3,500 sq. ft. on the second floor. Subsequent
to one (1) year after the Lease Commencement Date, provided Tenant is in good
standing and not in default under this Lease, the Tenant shall have a first
right to rent the 3,500 sq. ft. on the second floor (as and when the 3,500 sq.
ft. on the second floor is not occupied nor subject to a Lease) under identical
terms and conditions of this Lease except that the fixed minimum annual rent
shall be determined in the same manner as is provided for in determining the
fixed minimum annual rent for any renewal options as described in Paragraph 4
above.
10. First Right to Rent in VIA MIZNER FINANCIAL PLAZA. During the term
of this Lease, or any renewal thereof, provided Tenant is in good standing and
not in default under this Lease, Landlord hereby gives and grants to Tenant a
first right to rent any office space which Landlord shall make available to
lease in Pavilions 5 and 6 of VIA MIZNER FINANCIAL PLAZA PHASE I for a period of
three (3) years under
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<PAGE> 51
identical terms and conditions of this Lease except that the fixed minimum
annual rent shall be determined in the same manner as is provided for in
determining the fixed minimum annual rent for any renewal options as set forth
in Paragraph 4 above. The first right to rent provided hereinabove shall apply
only to speculative office space constructed by the Landlord and shall not apply
to any space leased by the Landlord prior to or simultaneously with the
initiation of construction of the building.
11. First Right of Offer to Purchase. During the term of this Lease, or
any renewal thereof, provided Tenant is in good standing and not in default
under this Lease, Landlord hereby gives and grants to Tenant a first right of
offer to purchase Pavilions 5 and 6 (if offered separately) or Pavilion 6 (if
offered separately) (Pavilions 5 and 6 or Pavilion 6 hereinafter referred to as
"Pavilion Property") should Landlord elect to sell the Pavilion Property. The
foregoing offer of first right of purchase is limited solely to the offer of
Pavilion 5 by itself or the offer of Pavilions 5 and 6 together (it specifically
does not apply to the offer of all of VIA MIZNER FINANCIAL PLAZA or to the offer
of a portion of VIA MIZNER FINANCIAL PLAZA which includes but is more than
Pavilions 5 and 6). The terms and conditions of the First Right of Offer to
Purchase the Pavilion Property are as follows:
a. In the event Landlord elects to offer the Pavilion
Property for sale to an unrelated third party at any
time during the term of this Lease or any renewal
thereof, then Landlord shall first offer the Pavilion
Property to Tenant. Landlord shall serve written notice
on Tenant not less than fifteen (15) days prior to the
date that Landlord submits a contract (hereinafter
referred to as the "Proposed Contract") to Tenant
containing the proposed terms and conditions of the sale
and purchase. If Tenant elects to accept such Proposed
Contract, Tenant shall properly execute the Proposed
Contract and return the Proposed Contract to Landlord
along with the required deposit (if any) as set forth in
the contract on or before the 5th day from the date
Tenant receives the Proposed Contract. Simultaneously
with the delivery of the Proposed Contract, Landlord
shall deliver to Tenant a rent roll and a lease income
statement for the calendar year in which the Proposed
Contract is delivered and for the preceding calendar
year. In the event Tenant notifies Landlord in writing
that it does not intend to accept the Proposed Contract
or if Tenant otherwise fails to execute and return the
Proposed Contract and comply with the terms thereof, the
Right of First Offer shall terminate and Tenant shall
thereafter be divested of any right to acquire the
Pavilion Property and Landlord may offer the Pavilion
Property to any person or entity upon such terms and
conditions as Landlord may elect in its sole discretion.
b. If the Tenant executes the Proposed Contract and returns
the Proposed Contract to the Landlord with the required
deposit (if any) then Landlord shall be obligated to
accept the Contract. If Tenant does not accept the
Proposed Contract, then Landlord shall not sell
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<PAGE> 52
the Pavilion Property on more favorable terms without
again first offering the Pavilion Property to the
Tenant.
c. Any right of Tenant under the terms of this Paragraph 11
shall terminate and be null and void upon the transfer
of title of the Pavilion Property to a third party
unrelated to the Landlord (including but not limited to
a transfer to an entity holding a mortgage on the
Pavilion Property, whether such transfer is by
foreclosure, deed in lieu of foreclosure or otherwise).
The provisions of this Paragraph 11 are specifically
subject and subordinate to any mortgage upon the
Pavilion Property whether now existing or executed
subsequent to the execution of this Lease. It is
expressly understood and agreed between Landlord and
Tenant that this first right of offer to purchase does
not apply to any offer made by a third party to purchase
the Pavilion Property from the Landlord where the offer
was unsolicited by the Landlord. Should an unsolicited
third party offer be accepted by the Landlord, and
thereafter title to the Pavilion Property is transferred
to a third party unrelated to the Landlord in accordance
with the accepted unsolicited third party offer, then in
that event, any right of the Tenant under the terms of
this Paragraph 11 shall terminate and be null and void
thereafter.
d. The provisions of this Paragraph 11 are personal to
MACKENZIE INVESTMENT MANAGEMENT INC., a Delaware
corporation and to MACKENZIE FINANCIAL CORPORATION, a
Canadian corporation, and may not be assigned or
transferred to any other person or entity; and should
the Tenant elect to assign the Tenant's interest in the
Lease, the provisions of this Paragraph 11 shall
terminate and thereafter be null and voi4 upon the
execution by Tenant of an assignment of the Tenant's
interest in this Lease.
12. Tenant Cancellation Provision and Penalty. Tenant may elect to
cancel this Lease at any time after the expiration of seven (7) years from the
Lease Commencement Date. This cancellation provision shall terminate upon the
Lease Expiration Date (eleven years subsequent to the Lease Commencement Date).
This cancellation provision applies only to the Leased Premises identified in
Section 1.01 of the Lease Agreement. To exercise the cancellation provision, the
Tenant shall provide to the Landlord: (a) written notice of Tenant's election to
cancel this Lease, which notice shall refer specifically to the cancellation
provision contained in this Paragraph 12 of Exhibit Two to the Lease Agreement;
and (b) the written notice shall contain a non-refundable cancellation penalty
payment (which shall be deemed earned by the Landlord upon receipt) in the sum
of $362,270.00, which payment shall be made by a cashier's check payable to the
Landlord and drawn on a bank in the State of Florida.
13. Lease Guaranty Collateral.
a. Landlord and Tenant agree that during term of this Lease
Tenant shall not be required to maintain a
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<PAGE> 53
lease guaranty collateral escrow account as provided for
in the subparagraph (b) of this Paragraph 13, provided
that the Tenant shall have net worth at the time of the
execution of this Lease of not less than Seven Million
Dollars (U.S.$7,000,000.00) and continuously thereafter
shall maintain an audited net worth during the term of
this Lease of not less than Five Million Dollars
(U.S.$5,000,000.00). The net worth of the Tenant shall
be established by unaudited financial statements
prepared and filed by Tenant with the Securities
Exchange Commission. The unaudited financial statements
shall be delivered to the Landlord on or before November
15th of each calendar year for the period April 1st
through September 30th, and on or before May 15th of
each calendar year for the period October 1st through
March 31st of the preceding calendar year. In addition,
the Tenant shall deliver to the Landlord on or before
June 1st of each calendar year an audited financial
statement of the Tenant prepared in accordance with
generally accepted accounting principles by a certified
public accountant licensed to do business in Florida. If
any of the unaudited financial statements provided for
above or the annual audited financial statement provided
for above reflects a net worth of the Tenant which is
less than the amounts required above, then in that event
within ten (10) business days from the date Tenant
receives written notification from the Landlord of such
circumstance, Tenant shall establish a collateral escrow
account as provided for in subparagraph (b) of this
Paragraph 13. The failure of the Tenant to execute and
fund the Collateral Account Escrow Agreement in
accordance with the terms of subparagraph (b) of this
Paragraph 13 shall constitute a default in this Lease.
b. Landlord and Tenant agree that if Tenant is required to
establish a collateral escrow account pursuant to the
provisions of subparagraph (a) of this Paragraph 13
(hereinafter referred to as "Collateral Account"), then
such Collateral Account shall constitute a fund to
guaranty payment of the Tenant's obligations under the
terms of this Lease. The Collateral Account shall be
established at Barnett Bank of Florida, 1000 North
Federal Highway, Boca Raton, Florida 33432, and the
funds deposited in the Collateral Account shall be
invested in United States Treasury Bills, Bonds and
Notes. Investment direction of the Collateral Account
shall be the responsibility of the Tenant and all
interest earned in the Collateral Account shall be paid
to Tenant. The minimum required balance
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<PAGE> 54
in the Collateral Account shall be as set forth
hereinafter:
Lease Year Account Balances
---------- ----------------
1 $1,822,768
2 1,822,768
3 1,591,768
4 1,360,768
5 1,129,768
6 889,528
7 636,121
The terms and conditions of the release of the funds in the Collateral Account
to the Landlord and/or to the Tenant shall be set forth in a collateral account
escrow agreement to be entered
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<PAGE> 55
into by Landlord and Tenant. The form of the collateral account escrow agreement
is attached hereto and made a part hereof as Exhibit "N".
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<PAGE> 56
EXHIBIT "A"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
DESCRIPTION: Via Mizner Financial Plaza
Pavilion #6
3rd Floor plan
<PAGE> 57
EXHIBIT "A-1"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
DESCRIPTION: Via Mizner Financial Plaza
Pavilion #6
2nd Floor plan
<PAGE> 58
EXHIBIT "B"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
A portion of Blocks 22, 23, "De Soto Road", and "S.E. 7th Street" as shown on
the plat of Spanish River Land Company's Plat "A", as recorded in Plat Book 16,
Pages 27 through 30, inclusive of the Public Records of Palm Beach County,
Florida and a portion of Lot 33, Block 31 of the Plat of Mizner Development
Corporation Plat 1, as recorded in Plat Book 3, Page 37 of the Public Records of
Palm Beach County, Florida, being more particularly described as follows:
Commencing at the southwest corner of said Block 22; thence north along the east
right-of-way line of that 80.00 foot right-of-way for Federal Highway, as shown
on said Plat, a distance of 70.00 feet; thence east, a distance of 28.00 feet to
the Point of Beginning; thence continuing east, a distance of 142.00 feet;
thence north, a distance of 55.00 feet; thence east, a distance of 18.00 feet;
thence north, a distance of 72.45 feet to a point of intersection with the
southerly boundary line of the plat "Boca Raton Hotel and Club", as recorded in
Plat Book 53, Page 129 of the Public Records of Palm Beach County, Florida;
thence northwesterly along said southerly boundary line along the arc of a curve
to the right whose radius point bears N. 40~43'32" E. having a radius of 375.00
feet, a central angle of l5~50'09", an arc distance of 103.64 feet to a point;
thence west, a distance of 91.73 feet; thence south, a distance of 205.00 feet
to the Point of Beginning; said lands situate in the City of Boca Raton, Palm
Beach County, Florida.
<PAGE> 59
EXHIBIT "C"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
LANDLORD'S WORK
Landlord shall provide all labor, materials and expense to complete Base
Building Improvements. Base building shall include but not be limited to
complete finished elevator lobby, complete men's and women's lavatories,
complete HVAC system, including mixing boxes, run outs, area controls and
louvers in finished ceiling.
<PAGE> 60
EXHIBIT "D"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
TENANT'S WORK AND ALTERATIONS
1. SUBMISSION OF PLANS AND SPECIFICATIONS. Tenant shall make no changes
or alterations in or to the Leased Premises of any nature without Landlord's
prior written approval. Prior to commencing any work in the Leased Premises,
Tenant shall submit to Landlord for Landlord's written approval complete
drawings, plans and specifications (herein collectively referred to as "Tenant's
Plan") for the improvements and installations to be made by Tenant (herein
collectively referred to as "Tenant's Work"). Tenant's Plan shall be fully
detailed, shall show complete dimensions, shall not be conflict with Landlord's
basic plans for the Building, shall not require any changes in the structure of
the building and shall not be in violation of any laws, orders, rules or
regulations of any governmental department or bureau having jurisdiction of the
Leased Premises.
2. REVIEW OF PLANS BY LANDLORD. After submission to Landlord of Tenant's
Plan, Landlord shall either approve same or shall set forth in writing the
particulars in which Landlord does not approve same, in which latter case Tenant
shall, within five (5) days after Landlord's notification, return to Landlord
appropriate corrections thereto. Such corrections shall be subject to Landlord's
reasonable approval. Excepting construction of the initial Tenant improvements
made prior to Tenant's occupancy, Tenant shall pay to Landlord, promptly upon
being billed and as Additional Rent, any charges or expenses Landlord may incur
in reviewing Tenant's Plan. Tenant agrees that any review or approval by
Landlord of Tenant's Plans is solely for Landlord's benefit, and without any
representation or warranty whatsoever to Tenant with respect to the adequacy,
correctness or efficiency thereof or otherwise.
3. REVISIONS BY TENANT. Tenant further agrees that if Tenant makes any
changes in Tenant's Plan subsequent to its approval by Landlord and if Landlord
consents to such changes, Tenant shall pay to Landlord all costs and expenses
caused by such changes, which Landlord may incur or sustain by reason of delays
or changes necessitated in the performance by Landlord of any construction or
work it is performing in the Building; it being understood and agreed, however,
that Landlord shall have the right to refuse to consent to any such changes. Any
charges payable under this Paragraph 3 shall be paid by Tenant from time to time
upon demand as Additional Rent, whether or not the Lease term shall have
commenced.
4. CORRECTIONS BY LANDLORD. If Tenant fails to correct Tenant's Plan in
any particular as hereinabove required, Landlord shall have the right to make
such corrections on Tenant's behalf; but the foregoing right shall not preclude
the exercise by Landlord of any other right or remedy which it may have in such
event.
5. DILIGENT COMPLETION. Following compliance by Tenant with its
obligations under the foregoing Paragraphs, Tenant shall
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<PAGE> 61
timely commence Tenant's Work in order to complete same within a reasonable
period of time. Tenant's Work shall be diligently pursued and shall be performed
in a good and workman like manner.
6.WORK SCHEDULES. Tenant agrees that in the performance of Tenant's Work
(i) neither Tenant nor its agents or employees shall interfere with the work
being done by Landlord and its agents and employees, (ii) that Tenant shall
comply with any reasonable work schedule, rules and regulations proposed by
Landlord, its agents or employees, (iii) that the labor employed by Tenant shall
be harmonious and compatible with the labor employed by Landlord in the
Building, it being agreed that if in Landlord's judgment the labor is
incompatible Tenant shall forthwith upon Landlord's demand withdraw such labor
from the Leased Premises, (iv) that Tenant shall procure and deliver to Landlord
workmen's compensation, public liability, property damage and such other
insurance policies, in such amounts as shall be reasonably acceptable to
Landlord in connection with Tenant's Work, and shall upon Landlord's request
cause Landlord to be named as an insured thereunder, (v) that Tenant shall hold
Landlord harmless from and against any and all claims arising from or in
connection with any act or omission of Tenant or its agents or employees, (vi)
that Tenant's Work shall be performed in accordance with the approved Tenant's
Plan and in compliance with the laws, orders, rules and regulations of any
governmental department or bureau having jurisdiction of the Leased Premises,
and (vii) that Tenant shall promptly pay for Tenant's Work in full and shall not
permit any lien to attached to the Leased Premises or the Building.
7. COST ESTIMATES.
(a) Landlord's approval of Tenant's Plans, Tenant shall submit to
Landlord cost estimates certified by Tenant's architect for such work. Landlord
shall review such estimates in order to determine if they accurately reflect the
cost of Tenant's Work. The determination of Landlord shall control and be
binding on the parties unless there is more than a fifteen percent (15%)
variance in the costs, as estimated by Landlord and Tenant's architect. If there
is more than said fifteen percent (15%) variance Landlord shall appoint an
architect and Landlord's architect and Tenant's architect shall promptly proceed
to settle the dispute as arbitrators (and if they are not able to settle the
dispute, shall appoint a third architect, in which case the three architects
shall proceed to settle the dispute as arbitrators) and the determination of
said architects shall be conclusive. If a third architect is appointed as
aforesaid his fees shall be paid by Tenant. The provisions of this subparagraph
(a) of Paragraph 7 shall not apply to the initial Tenant improvements made prior
to Tenant's occupancy.
(b) Excepting construction of the initial Tenant improvements made prior
to Tenant's occupancy, upon a final determination being made of the estimated
cost of Tenant's Work, as provided in subparagraph (a) above (and prior to
Tenant's commencing any work) Tenant shall deliver to Landlord, to secure the
prompt and proper completion of Tenant's Work an irrevocable1 unconditional,
negotiable letter of credit, issued by and drawn on a New York Clearing House
bank in a form reasonably satisfactory to Landlord, in an amount equal to the
aggregate of (i) the aforesaid final cost estimate and (ii) ten percent (10%) of
such sum. Such letter of credit shall be for one year and shall be renewed by
Tenant each and every year until Tenant's Work is completed and shall be
delivered to Landlord not less than thirty (30) days prior to the expiration of
the then current letter of credit. Failure to deliver such new letter of credit
on or before said date shall be a material breach of this Lease and
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<PAGE> 62
Landlord shall have the right, INTER ALIA, to present the then current letter of
credit for payment.
(c) Upon (i) the completion of Tenant's Work in accordance with the
terms of this Paragraph and (ii) the submission to Landlord of proof evidencing
the payment in full for Tenant's Work, including, without limitation, lien
waivers, the letter of credit (or the balance of the proceeds thereof, if
Landlord has drawn on said letter of credit) shall be returned to Tenant.
(d) Upon the Tenant's failure to properly perform, complete and fully
pay for Tenant's Work, as determined by Landlord, Landlord shall be entitled to
draw down on the letter of credit to the extent it deems necessary in connection
with Tenant's Work, the restoration and/or protection of the Leased Premises or
the Building and the payment or satisfaction of any costs, damages or expenses
in connection with the foregoing and/or Tenant's obligations under this
Paragraph.
8. FULL PAYMENT. All fixtures and equipment installed or used by Tenant
in the Leased Premises shall be fully paid for by Tenant in cash and shall not
be subject to conditional bills of sale, chattel mortgage or other title
retention agreements.
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<PAGE> 63
EXHIBIT "E"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
SIGN SPECIFICATIONS
Landlord and Tenant acknowledge that the terms and provisions of this
Exhibit E for Sign Specifications are not available for inclusion in this Lease
as of the date the parties have executed this Lease. Tenant within forty-five
(45) days of the date both parties execute this Lease shall submit to Landlord
for Landlord's written approval the sign specifications for this Lease. Landlord
in Landlord's absolute discretion may approve or disapprove Tenant's submission
within ten (10) business days of receipt of such submission from Tenant. Upon
Seller approving the sign specifications submitted by Tenant, in writing, such
approved sign specifications shall automatically become and be deemed Exhibit
"E" hereto. In the event Landlord disapproves the submission Tenant shall have
ten (10) business days from the receipt of Landlord's notice of disapproval to
revise and resubmit said sign specifications to Landlord and Landlord shall have
ten (10) business days from receipt of Tenant's resubmitted sign specifications
within which to approve or disapprove the resubmitted sign specifications. If
Tenant fails to make the submission called for herein or if Landlord disapproves
any submission made by Tenant herein and Tenant fails to resubmit the sign
specifications satisfactory to Landlord, either party hereto may deliver written
notice to the other party herein canceling this Lease.
<PAGE> 64
EXHIBIT "F"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
HEATING AND AIR CONDITIONING MAINTENANCE PROVISION
1. For any equipment or component exclusively serving the Leased Premises,
Tenant must obtain a full-service maintenance contract with a licensed
contractor (the "Contractor") acceptable to Landlord, with service to be
performed not less frequently than quarterly. Tenant must provide evidence of
such service contract to Landlord prior to occupancy and thereafter provide
evidence of any contract renewal or change, as it may occur.
2. The Contractor shall park, deliver, and use entrances, stairwells,
elevators and other areas only as designated by Landlord. Access to the roof, if
required for service, will be permitted only with express prior consent of
Landlord (with a minimum 24-hour notice).
3. The Contractor's access to the Leased Premises will be provided by the
Tenant and will be allowed only during normal business hours.
4. The Contractor's employees are to be identified by means of company
uniforms or identification badges, and the Contractor's vehicles by means of
signs.
5. No work is to be performed in the common areas unless required for
access to Tenant's equipment. Any service by the Contractor which could or will
result in the interruption of mechanical/electrical, plumbing or other services
to the Building or to any other tenant in the Building may occur only with
Landlord's express prior consent (with a minimum 48-hour notice to Landlord),
and must occur prior to 7:00 a.m. or after 8:00 p.m. or at such other time as
Landlord may designate.
6. In the event a Tenant system or component is to be replaced, Tenant is
required to inform Landlord prior to the commencement of any work and must abide
by the provisions of Article III, and Exhibits D and 1 of the Lease.
Additionally, Tenant must provide Landlord with evidence of warranty(ies) upon
request for the original system or any replaced system.
<PAGE> 65
EXHIBIT "G"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
MAINTENANCE AND CLEANING STANDARDS FOR TENANT
(MULTI-TENANT BUILDING)
OFFICE/WORK AREAS
1 Empty and damp-wipe ashtrays and cigarette urns (daily).
2. Empty and clean all waste baskets and remove waste to a
designated container (daily).
3. Refill waste baskets with plastic liners (daily).
4. Sweep all hard-surface flooring with treated dust mops; damp-mop
(daily).
5 Spills, any other substance or material on the floors or any
condition on the floor creating a hazardous condition and any
stain on the floor shall be cleaned up and removed immediately.
6. Vacuum all traffic area carpet (daily).
7. Edge vacuum (with edging tool) all baseboard areas, corners,
behind doors, and around furniture legs and bases (weekly).
8. Spot clean carpeting (daily).
9. Hand dust all office furniture, furnishings, and horizontal
surfaces (daily).
10. Spot-clean walls (daily).
11. Hand dust ledges and vertical surfaces (weekly).
12. Spray-buff resilient floors (weekly).
13. Clean telephone handsets and bases with disinfectant (weekly).
14. Clean air supply vents (monthly).
15. Clean lamps and light fixtures (monthly).
16. Vacuum upholstered furniture (monthly).
REST ROOMS
1 Wash and sanitize all wash basins, dispensers, fittings, and
fixtures (daily).
2. Wash and sanitize all lavatories, toilet bowls, and seats
(daily).
3. Clean all mirrors, glass, and metal frames (daily).
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<PAGE> 66
4. Empty all waste and sanitary product receptacles and remove waste
to a designated container (daily).
5. Refill waste and sanitary product receptacles with plastic liners
(daily).
6. Damp-wipe exterior of all waste receptacles (daily).
7. Sweep, wash, and rinse all ceramic/vinyl tile flooring and
fixture bases with a disinfectant cleaner (daily).
8. Hand dust all sills, partitions, ledges, and shelving (daily).
9. Spot-clean partitions, walls, doors, and frames (daily).
10. Replenish all toilet tissue, hand towels, soap, sanitary
products, sanitary disposal bags and toilet seat covers (daily).
11. Empty and damp-wipe cigarette urns (daily).
12. Clean air supply vents (monthly).
13. Clean lamps and light fixtures (monthly).
KITCHEN/FOOD SERVICE AREAS
1. Empty and damp-wipe ashtrays and cigarette urns (daily).
2. Empty and clean all waste baskets and remove waste to a
designated container (daily)
3. Refill waste baskets with plastic liners (daily).
4. Sweep, wash, and rinse all ceramic/vinyl tile flooring and
fixture bases with a disinfectant cleaner (daily).
5. Vacuum all traffic area carpet (daily).
6. Spot clean carpeting (daily).
7. Wash and sanitize all sinks, countertops, and appliance tops
(daily).
8. Wash all table tops (daily).
9. Damp-wipe ledges and vertical surfaces (weekly).
10. Clean air supply vents (monthly).
11. Clean lamps and light fixtures (monthly).
GENERAL
1 Professional clean interior of all windows (not less frequently
than quarterly).
2. Touch-up paint and repainting (as needed).
3. Professional carpet cleaning and floor refinishing (as needed).
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<PAGE> 67
EXHIBIT "H"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
BUILDING RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or encumbered, nor shall
they be used for any purpose other than ingress and egress to and from the
Leased Premises or Common Areas. No show cases or other articles shall be put in
front of or affixed to any part of the exterior of the Building, nor placed in
the halls, corridors or vestibules without the prior written consent of the
Landlord.
2. No awnings or other projections shall be attached to the outside walls
of the Building without the Landlord's prior written consent. No curtains,
blinds, shades, interior window treatments or screens shall be attached to or
hung in, or used in connection with, any window or door of the Leased Premises,
without the prior written consent of the Landlord. Such awnings, projections,
curtains, blinds, shades, interior window treatments screens or other fixtures
must be of a quality, type, design and color, and attached in the manner
approved by the Landlord.
3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed on any part of the outside or inside of the Leased
Premises or the Building without the Landlord's prior written consent. In the
event of the violation of the foregoing, Landlord may remove same without any
liability, and may charge the expense incurred by such removal to the Tenant or
Tenants violating this rule. Interior signs on doors and directory tablet shall
be inscribed, painted or affixed for each Tenant by the Landlord and the
Tenant's expense and shall be of a size, color and uniform style acceptable to
the Landlord.
"Sign" (as used in the Lease and these Rules) is not limited to, but shall
include, raised or illuminated or backlit lettering. Any and all signs shall be
in accordance with applicable law and with aesthetic and other criteria
developed by the Building's architect.
4. The skylights, windows and doors that reflect or admit light into the
halls, passageways or other public places in the Building shall not be covered
or obstructed by any Tenant.
5. Lamps, other lighting, appliances, equipment, fixtures and machinery in
the Leased Premises demised to Tenants which use electrical energy or water
shall be disconnected or switched off other than during hours (i) the Building
is required to be open, and (ii) the Tenant is open for business, except if and
to the extent necessary to prevent food spoilage or other health hazard, except
clocks, and except for items approved in writing as necessary for Tenant's
business.
6. The toilets and urinals and other plumbing fixtures in common areas or
in Leased Premises shall not be used for any
-1-
<PAGE> 68
purpose other than those for which they were constructed, and no sweepings,
rubbish, rags, or other substances shall be thrown into them. All damages
resulting from any misuse of the fixtures shall be borne by the Tenant who, or
whose servants, employees, agents, visitors or licensees, shall have caused the
same. Waste and excessive or unusual use of water shall not be allowed.
7. No Tenant shall mark, paint, drill into, or in any way deface any part
of the Leased Premises demised to him or it, or the Building of which they form
a part. Nor boring, cutting or stringing of wires shall be permitted, except
with the prior written consent of the Landlord, and as the Landlord may direct.
The expense of any breakage, stoppage or damage resulting from a violation of
this Rule shall be borne by the Tenant who has caused such breakage, stoppage or
damage.
8. No bicycles, vehicles or animals of any kind shall be brought into or
kept in or about the Building, and no cooking shall be done or permitted by any
Tenant on the Building without written consent of Landlord which may be withheld
for any reason. No Tenant shall cause, suffer or permit any unusual or
objectionable odors or any nuisance, to be produced upon or permeate from any of
the Leased Premises demised to him or it.
9. No space on or in the Building shall be used for manufacturing, for the
storage or retail sale of tangible personal property of any kind, unless
Landlord gives its prior written consent to such manufacturing, storage or
retail sale, which consent may be unreasonably withheld.
10. No Tenant shall make, or permit to be made, any unusual or disturbing
noises, or disturb or interfere with occupants of this or neighboring buildings
or premises or those having business with them. No Tenant shall throw anything
out of the doors, windows or skylights or down the elevator shafts or along or
across the hallways, lobby or other common areas.
11. No Tenant, nor any of the Tenant's servants, employees, agents,
visitors or licensees, shall at any time bring or keep fluid, chemical or
substance, or any matter forbidden or regulated by any insurance company at risk
with respect to all or any part of the Building.
12. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows, nor shall any changes be made in existing locks or the
mechanism thereof, without the express written consent of Landlord. Each Tenant
must, upon the termination of his Lease, return to the Landlord all keys and
access cards, either furnished by Landlord to, or otherwise procured by such
Tenant, and in the event of the loss of any keys so furnished, the Tenant shall
pay to the Landlord the cost thereof. Neither Tenants, nor their agents or
employees shall have any duplicate keys made.
13. All furniture, building supplies and materials, safes and other heavy
property, equipment, machinery and other freight must be moved into and within
the Building under the Landlord's supervision and according to such regulations
as may be posted in the management office of the Building, but Landlord will not
be responsible for loss of or damage to such freight from any cause.
14. When electric wiring of any kind is introduced it must be connected as
directed by the Landlord and no boring or cutting for wires will be allowed
except with the Landlord's consent. The location of telephones, telegraph
instruments, electric appliance, call boxes, etc., shall be prescribed by the
Landlord.
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<PAGE> 69
No apparatus of any kind shall be connected with the electric wiring without the
written consent of the Landlord. The Tenant agrees not to use or connect with
the electric wires any more lights than are provided for in each room, or any
electric lamp of higher candlepower than provided, or any fan, motor or other
apparatus without the Landlord's written consent. The Tenant agrees not to
connect with the water pipes any apparatus using water, without the express
prior written consent of the Landlord.
15. Landlord shall have the right to prohibit any advertising by and Tenant
which, in Landlord's opinion, tends to impair the reputation of the Building or
its desirability as an Building for offices, and upon written notice from
Landlord, Tenant shall refrain from or discontinue such advertising.
16. The Leased Premises shall not be used for lodging or sleeping or for
immoral or illegal purposes.
17. The requirements of Tenant will be attended to only upon application at
the management office of the Building. Building management employees and
contractors shall not perform any work or do anything outside of their regular
duties, unless under special instructions from the Landlord.
18. Canvassing, soliciting and peddling in the Building or surrounding area
is prohibited and each Tenant shall cooperate to prevent the same.
No part of the Building Common Areas shall be used by any Tenant, or any
agent or employee of a Tenant, for any advertising, political campaigning or
other similar use, including, without limitation, the dissemination of
advertising or campaign leaflets or flyers.
19. The Landlord may waive or modify any one or more of these rules for the
benefit of any particular Tenant of the Building, but no such waiver by the
Landlord of any such rule or rules shall be construed as a waiver or
modification of such rule in favor of any other Tenant or Tenants of the
Building, nor prevent the Landlord from thereafter enforcing any such rule
against any or all of the Tenants of the Building.
20. Landlord reserves the right to make such other and further rules and
regulations as in its judgment may from time to time be necessary for the safety
and cleanliness of, and for the preservation of good order in the Building and
its Common Areas. If a segment of the parking lot is designated for use by
Tenant and its employees, Tenant will cooperate with Landlord in having its
employees only park therein.
21. Reference to Landlord herein shall at Landlord's discretion refer to
the then building manager, if any.
22. No materials may be stored or temporarily placed in halls, stairwells,
elevators or any Common Areas. Any materials of the Tenant will be safely and
cautiously brought upon through the halls, stairwells, elevators or any Common
Areas. Tenant will clean any refuse or remove any materials from these areas.
23. Tenant shall have access to the roof of the Building only for he
purpose of maintaining and repairing that part of the heating, air conditioning
and ventilating system individually serving that Tenant's Leased Premises
located thereon, subject to the following:
(a) Only professional maintenance or repair persons designated by the
Tenant may enter onto the roof.
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<PAGE> 70
(b) Roof access is only permitted during daylight hours.
(c) Tenant assumes full responsibility for the acts of such
professionals and will reimburse any other party for any damage caused to person
or property by such professionals or the Tenant's employees or agents to the
transmitting and receiving devices and other systems and/or machinery on the
roof.
(d) Tenant shall give prior notice to Landlord of Tenant's intention
to allow its employees or agents on the roof.
24. Business machines and mechanical equipment used by any Tenant of the
Building which cause vibration or noise that may be transmitted to any other
portion of the Building, to such a degree to be reasonably objectionable to
Landlord or any other Tenant, shall be placed and maintained by such Tenant at
its expense in a setting of cork, rubber, or spring-type vibration isolators
sufficient to eliminate such vibrations or noise.
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<PAGE> 71
EXHIBIT "I"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
RULES & REGULATIONS FOR TENANT CONSTRUCTION WORK
1 All work shall be performed between 7:00 a.m. and 8:00 p.m. Monday
through Friday. Night/weekend/holiday schedule only with prior consent of
Landlord, with a minimum 24-hour notice to Landlord (any additional security
costs to be the sole responsibility of Tenant).
2. Tenant shall provide a list subcontractors, materialmen, suppliers, etc.
request of contractor, to Landlord upon
3. Tenant's contractor shall not order or consign shipments to Leased
Premises in Landlord's name. Landlord has no responsibility for
accepting/receiving materials and supplies (Landlord held harmless from theft,
casualty, etc. of materials, supplies, equipment, etc.).
4. Tenant's contractor shall abide by all federal, state, and local laws,
including but not limited to laws and regulations affecting the safety of
persons and property on the Leased Premises or in VIA MIZNER FINANCIAL PLAZA.
5. Tenant's contractor shall not interfere with any work being performed in
or on VIA MIZNER FINANCIAL PLAZA or with the conduct of business of any other
tenant.
6. All Tenant construction activities are to be coordinated through the
office of Landlord.
7. Tenant's contractor shall remove all trash and debris (including dust1
spills, stains, etc.) daily or as often as needed so there is no cumulation in
or about the Leased Premises and never in the Common Area(s). Any trash or
debris in Common Area(s) may only be in transit. Use of common trash container
or any other container in or about VIA MIZNER FINANCIAL PLAZA may occur only
with prior written consent of Landlord. Contractor may provide its own container
only with prior written consent of Landlord and in area designated by Landlord
which container must be emptied daily or more often if needed.
8. Work is shall be performed only in the Leased Premises and never in
Common Areas except connections, if necessary, for plumbing,
mechanical/electrical, security, or communications systems.
-1-
<PAGE> 72
9. Tenant shall secure utility services prior to commencement of any work.
If Tenant's contractor utilizes Landlord's or Common Area utilities (water,
electric, etc.), Tenant will pay Landlord $100.00/day for such usage.
10. Any interruption of building or other Tenant mechanical/electrical
(including HVAC), plumbing, security or communications services required due to
connection shall occur only with Landlord's express prior consent (with a
minimum 48-hour notice to Landlord), and must occur prior to 7:00 a.m. or after
8:00 p.m. or at such other time as Landlord may designate.
11. Contractors shall park, deliver, and use entrances, stairwells,
elevators, and other areas only as designated by Landlord. Access to the roof,
if required, will be permitted only with express prior consent of Landlord (with
a minimum 48-hour notice).
12. No fumes or odors (including but not limited to paint, varnish, or
solvents) will be permitted to permeate the Common Areas within VIA MIZNER
FINANCIAL PLAZA or other Tenant premises. Any use of such materials that may
activate life safety systems is permitted only with express prior consent of
Landlord (with a minimum 48-hour notice).
13. Tenant and Tenant's contractor damage to VIA MIZNER FINANCIAL PLAZA,
Tenant premises that may occur as construction or construction activities. are
responsible for any Common Areas, or other a result of Tenant's
14. Any damage, accident, or casualty that occurs during the Tenant's
construction must be reported by a written damage report and/or
accident/casualty report submitted by the Tenant to the Landlord. Such written
report shall be delivered to Landlord no later than forty-eight (48) hours after
the damage, accident or casualty occurs.
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<PAGE> 73
EXHIBIT "J"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
FORMULA FOR CALCULATION OF
AREA WITHIN LEASED PREMISES
1 GROUND FLOOR RENTABLE AREA
The square feet in a ground floor area shall be computed by measuring from
the exterior building walls and from the inner surface of corridor and other
permanent partitions and to the center of partitions that separate the premises
from adjoining rentable areas.
No deduction shall be made for vestibules inside the building line or from
columns or projections necessary to the building.
2. UPPER FULL FLOOR RENTABLE AREA.
The rentable area of all floors above the ground floor shall be computed by
measuring to the inside finished surface of the dominant portion of the
permanent outer building walls excluding any major vertical penetrations of the
floor.
No deductions shall be made for columns and projections necessary for the
building.
3. MULTIPLE TENANT FLOOR USABLE AREA.
The usable area of an office shall be computed by measuring the finished
surface of the office side of corridor and other permanent walls, to the center
of partitions that separate the office from adjoining usable areas, and to the
inside finished surface of the dominant portion of the permanent outer building
walls.
No deductions shall be made for columns and projections necessary to the
building.
4. MULTIPLE TENANT FLOOR RENTABLE AREA.
The rentable area of an office on the floor shall be computed by
multiplying the usable area of that office by quotient of the division of the
total rentable area of the floor by the total usable area of the floor.
Total Rentable
Area of the
Floor
--------------
Rentable Area of Office = Usable Area x Total Usable
of Office Area of the
Floor
For purposes of calculating the Rentable Area of Office, the core area will
not exceed eighteen percent (18%) of the Total Rentable Area of the Floor. Total
Rentable Area for a Multiple Tenant Floor as set forth in this Paragraph 4 shall
be the same
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<PAGE> 74
as Total Rentable Area for an Upper Full Floor as set forth in Paragraph 2
above.
DEFINITIONS:
(a) "Finished Surface" shall mean a wall, ceiling or floor surface, including
glass, as prepared for tenant use, excluding the thickness of any special
surfacing material such as paneling, furring strips and carpet.
(b) "Dominant Portion" shall mean that portion of the inside finished surface
of the permanent outer building wall which is 50% or more of the vertical
floor-to-ceiling dimension measured at the dominant portion. If there is no
dominant portion, or if the dominant portion is not vertical, the
measurement for area shall be to the inside finished surface of the
permanent outer building wall where it intersects the finished floor.
(c) "Major Vertical Penetrations" shall mean stairs, elevator shafts, flues,
pipe shafts, vertical ducts, and the like, and their enclosing walls, which
serve more than one floor of the building, but shall not include stairs,
dumb-waiters, lifts, and the like, exclusively serving a tenant occupying
offices on more than one floor.
(d) "Office" shall mean the premises leased to a tenant for which a measurement
is to be computed.
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<PAGE> 75
EXHIBIT "K"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
STANDARDS FOR TENANT INSTALLATION
OF EOUIPMENT ON THE ROOF OR AFFIXED TO THE BUILDING
Landlord and Tenant acknowledge that the terms and provisions of this
Exhibit "K" for Standards for Tenant Installation of Equipment on the Roof or
Affixed to the Building are not available for inclusion in this Lease as of the
date the parties have executed this Lease. Tenant within forty-five (45) days of
the date both parties execute this Lease shall submit to Landlord for Landlord's
written approval the standards for Tenant installation of equipment on the roof
or affixed to the building for this Lease. Landlord in Landlord's absolute
discretion may approve or disapprove Tenant's submission within ten (10)
business days of receipt of such submission from Tenant. Upon Seller approving
the standards for Tenant installation of equipment on the roof or affixed to the
building submitted by Tenant, in writing, such approved standards for Tenant
installation of equipment on the roof or affixed to the building shall
automatically become and be deemed Exhibit "K" hereto. In the event Landlord
disapproves the submission Tenant shall have ten (10) business days from the
receipt of Landlord's notice of disapproval to revise and resubmit said
standards for Tenant installation of equipment on the roof or affixed to the
building to Landlord and Landlord shall have ten (10) business days from receipt
of Tenant's resubmitted standards for Tenant installation of equipment on the
roof or affixed to the building within which too approve or disapprove the
resubmitted standards for Tenant installation of equipment on the roof or
affixed to the building. If Tenant fails to make the submission called for
herein or if Landlord disapproves any submission made by Tenant herein and
Tenant fails to resubmit the standards for Tenant installation of equipment on
the roof or affixed to the building satisfactory to Landlord, either party
hereto may deliver written notice to the other party herein canceling this
Lease.
<PAGE> 76
EXHIBIT "L"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
MEMORANDUM OF LEASE
(SHORT FORM)
THIS MEMORANDUM OF LEASE, made as of the ______ day of _____________,
19__, by and between VIA MIZNER ASSOCIATES, a Florida general partnership,
herein called the "Landlord", and MACKENZIE INVESTMENT MANAGEMENT INC., a
Delaware corporation, herein called the "Tenant".
WITNESSETH THAT
1. Landlord and Tenant have entered into a Lease of the following described
real property, situated in Palm Beach County, Florida, to-wit:
(The legal description to be inserted here shall be the description in
Exhibit "B" of the Lease.)
This Memorandum is intended to give all persons notice of the Lease
specifically including the notices expressly set forth in this Memorandum.
2. Tenant is precluded by the terms of said Lease from creating or allowing
to be created against Landlord's title to or interest in the demised property,
any mechanic's or materialman's liens, and all persons claiming by, through,
under or against Tenant, are hereby notified that Tenant has no power or
authority to subject the title or interest of Landlord, as fee owner of the
demised property, to any claim for any such lien. All persons dealing with
Tenant and claiming by, through, under or against Tenant shall look entirely to
Tenant for the payment of any and all charges incurred in improving the demised
property at any time during the term of the Lease.
3. The term of the Lease commences on ______________________ and terminates
on ______________________. As of the date of termination of the Lease, this
Memorandum and the notices provided hereunder shall cease. If requested by
Landlord, Tenant agrees upon termination of the Lease to execute a cancellation
and termination of this Memorandum.
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<PAGE> 77
IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum of
Lease to be executed as required by law, on the day and year first above written
and be deemed null and void.
VIA MIZNER ASSOCIATES, a
Florida general partnership,
LANDLORD
BY: SVMP, LTD., a Florida
limited partnership
General Partner of Via
Mizner Associates
Signed sealed and delivered BY: SVMP, INC., a Florida
in the presence of: Corporation, General
Partner of SVMP, LTD.
By:
- -------------------------- --------------------------
Bill Shubin, President
- -------------------------- (Corporate seal)
As to the Landlord
MACKENZIE INVESTMENT
Signed sealed and delivered MANAGEMENT INC., a Delaware
In the presence of: corporation, Tenant
By:
- -------------------------- --------------------------
- -------------------------- (Corporate seal)
As to Tenant
STATE OF FLORIDA
COUNTY OF PALM BEACH
The foregoing instrument was acknowledged before me this ____ day of
____________________, 198__ by BILL SHUBIN, President of SVMP, INC., a Florida
corporation, General Partner of SVMP, LTD., a Florida limited partnership, on
behalf of VIA MIZNER ASSOCIATES, a Florida general partnership.
---------------------------
Notary Public
My commission expires:
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<PAGE> 78
STATE OF ___________________
COUNTY OF __________________
The foregoing instrument was acknowledged before me this ___ day of
_______________, l98__ , by _______________, _______________, of MACKENZIE
INVESTMENT MANAGEMENT INC., a Delaware corporation, on behalf of the corporation
---------------------------
Notary Public
My commission expires:
This instrument prepared by:
James M. Hankins
Osborne, Hankins, MacLaren & Redgrave
P.O. Drawer 40
Boca Raton, Florida 33429
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<PAGE> 79
EXHIBIT "M"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT, INC.
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
WHEREAS, the undersigned party identified as the "Lender" is the mortgagee
under that certain mortgage recorded in Official Record Book ________ at Page
_______, Public Records of _________ ______________ County, Florida (the
"Mortgage"):
WHEREAS, __________________________________, as "Landlord" and
__________________________ as "Tenant" executed a certain lease dated the ______
day of ____________, 19 (the "Lease") covering certain premises (the "Leased
Premises") included within the realty encumbered by the Mortgage; and
WHEREAS, in the Lease Tenant required, among other things, that Lender
execute and deliver to Tenant an agreement obligating any party acquiring title
to, or right of possession of, the Leased Premises under or by virtue of any
mortgage or deed of trust to be bound by the Lease and by all of Tenant's rights
thereunder.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Lender, Lender hereby covenants
and agrees that so long as Tenant is not in default beyond the applicable grace
period in the payment of rent or additional rent or in the performance of any of
the terms and conditions of the Lease, neither Tenant's possession of the Leased
Premises nor Tenant's rights and privileges under the Lease shall be disturbed,
diminished or interfered with by Lender nor will Tenant be named in any
foreclosure action or proceeding instituted by Lender pursuant to the Mortgage.
If the mortgage is foreclosed for any reason, and Lender succeeds to the
interest of Landlord under the Lease, Lender and Tenant shall be bound to each
other, as landlord and tenant, respectively, under the Lease for the balance of
the term thereof (including any extension or renewal terms), and Tenant hereby
attorns to Lender as its landlord, such Attornment to be effective and
self-operative, without the execution of any further instrument on the part of
either of the parties hereto, immediately upon Lender succeeding to the interest
of Landlord under the Lease. In on event shall Lender be liable for any act or
omission of any prior landlord, be subject to any off-sets or defenses which
Tenant might have against any prior landlord, or be bound by the rent or
additional rent which Tenant might have paid to any prior landlord for more than
the then current month. The rights and obligations hereunder of Tenant and
Lender shall bind and inure to the benefit of their respective legal
representatives, successors and assigns.
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<PAGE> 80
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
executed and delivered this ______ day of _______________, 19___.
Signed, sealed and delivered
in the presence of:
By:
- --------------------------- ---------------------------
Lender
- ---------------------------
By:
- --------------------------- ---------------------------
Tenant
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<PAGE> 81
EXHIBIT "N"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND MACKENZIE INVESTMENT MANAGEMENT INC.
COLLATERAL ACCOUNT ESCROW AGREEMENT
This Collateral Account Escrow Agreement (the "Agreement") is entered into
this _____ day of ____________________, 19___ by and between VIA MIZNER
ASSOCIATES, a Florida general partnership (the "Landlord") and MACKENZIE
INVESTMENT MANAGEMENT, INC., a Delaware corporation (the "Tenant") and BARNETT
BANK OF FLORIDA (the "Escrow Agent").
WITNESSETH:
WHEREAS, Landlord and Tenant have entered into a Lease Agreement dated
__________________ 1989, pursuant to which Tenant will occupy leased premises in
Pavilion No. 6 of Via Mizner Financial Plaza (hereinafter referred to as the
"Lease"); and
WHEREAS, Paragraph 13 of Exhibit Two of the Lease provides that under
certain circumstances Landlord and Tenant enter into this Agreement for purposes
of establishing a Collateral Account to constitute a fund to guaranty payment of
the Tenant's obligations under the terms of the Lease; and
WHEREAS, BARNETT BANK OF FLORIDA has agreed to serve as Escrow Agent under
this Agreement;
NOW, THEREFORE, for and in consideration of the sum of $10.00 paid by each
of the parties hereto to the other parties, in further consideration of the
terms and provisions of the Lease and in consideration of other good and
valuable considerations delivered by the parties to each other, Landlord, Tenant
and Escrow Agent agree as follows:
1. If required by Paragraph 13 of Exhibit Two of the Lease, Tenant shall
deliver to Escrow Agent simultaneously with the execution of this Escrow
Agreement an amount equal to the required Account Balance for the Lease Year in
which the collateral account is required, to be held in escrow by Escrow Agent
pursuant to the terms and conditions of this Agreement.
2. The funds held in escrow pursuant to and in accordance with this
Agreement establish the Collateral Account as provided in the Lease and shall be
held by Escrow Agent as security to guarantee payment of Tenant's obligations
under the terms of the Lease as follows:
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<PAGE> 82
Escrow Funds Required
During Lease Year Account Balances
--------------------- ----------------
1 $1,822,768
2 1,822,768
3 1,591,768
4 1,360,768
5 1,129,768
6 889,528
7 636,121
3. Landlord and Tenant acknowledge and agree that the sums escrowed with
Escrow Agent pursuant to this Agreement shall be held to guaranty payment by
Tenant to Landlord of Tenant's obligations due and owing pursuant to the Lease.
If the payment of any obligation of Tenant is not received by Landlord within
fifteen (15) days of its due date, and further after ten (10) days following
written notice to Tenant of such non-payment, Landlord may deliver written
notice of such fact to Escrow Agent, together with an affidavit made under oath
by Landlord stating that a payment has not been received, and Escrow Agent shall
be authorized to disburse and shall disburse funds from the escrowed monies
under this Agreement to pay Landlord for such payment due from Tenant. The
Escrow Agent, upon receipt of the aforesaid written notice and affidavit, shall
deliver to Landlord from the funds escrowed pursuant to this Agreement the
delinquent payment due Landlord by Tenant as set forth in Landlord's notice and
affidavit.
4. Provided Tenant is not in default, Tenant shall be entitled to receive
from Escrow Agent any funds held by Escrow Agent in excess of the Account
Balance required for each Lease Year. Tenant shall request release of any such
excess funds by written notice to Escrow Agent and Landlord at any time such
excess funds may exist. Escrow Agent shall release such excess funds within
fifteen (15) days of Tenant's request unless Escrow Agent has received written
notice from Landlord objecting to Tenant's request for excess funds together
with an affidavit under oath identifying the reason or reasons which constitute
the basis for the Escrow Agent to continue holding all or a portion of the funds
requested by Tenant.
5. The funds paid to Escrow Agent by Tenant pursuant to this Agreement
shall be deposited by Escrow Agent. The funds deposited shall be invested in
United States Treasury Bills, Bonds and Notes. Subject to the foregoing,
investment direction of the funds deposited shall be the sole responsibility of
Tenant and all interest earned on the funds deposited shall be paid to Tenant.
6. Any Escrow Agent receiving funds or equivalent pursuant to this
Agreement is authorized and agrees by acceptance thereof to deposit promptly and
to hold same in escrow and subject to clearance thereof to disburse same in
accordance with terms and conditions of this Agreement. Failure of clearance of
funds shall not excuse performance by the Tenant. In the event of doubt as to
Escrow Agent's duties or liabilities under the provisions of this Agreement, the
Escrow Agent may in Escrow Agent's sole discretion, continue to hold the subject
matter of this escrow until the parties mutually agree to the disbursement
thereof, or until a judgment of a court of competent jurisdiction shall
determine the rights of the parties thereto, or Escrow Agent may deposit same
with the clerk of the circuit court having jurisdiction of the dispute, and upon
notifying all parties concerned of such action, all liability on the part of the
Escrow Agent shall fully terminate, except to the extent of accounting for any
items theretofore delivered out of escrow. In the event
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<PAGE> 83
of any suit between Landlord and Tenant wherein the Escrow Agent is made a part
by virtue of acting as an Escrow Agent hereunder, or in the event of any suit
wherein Escrow Agent interpleads the subject matter of this escrow, the Escrow
Agent shall be entitled to recover reasonable attorney's fees and costs
incurred, said fees and costs to be charged and assessed as court costs in favor
of the prevailing party. All parties agree that the Escrow Agent shall not be
liable to any party or person whomsoever for misdelivery to Landlord or Tenant
of items subject to this escrow, unless such misdelivery shall be due to willful
breach of this Agreement or gross negligence on the part of the Escrow Agent.
7. This Agreement shall be deemed terminated and cancelled upon Escrow
Agent releasing all funds held pursuant to this Agreement. Upon the expiration
of the seventh (7th) lease year, Escrow Agent shall release all funds held
pursuant to this Agreement, not otherwise disbursed hereunder, to Tenant.
8. No prior or present agreements or representations shall be binding upon
any of the parties hereto unless incorporated in this Agreement. No modification
or change in this Agreement shall be valid or binding upon the parties unless in
writing, executed by the parties to be bound thereby.
9. This Agreement shall be construed and enforced in accordance with the
laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
Witnesses: VIA MIZNER ASSOCIATES,
Landlord
- ------------------------------
- ------------------------------- By:
-------------------------------
MACKENZIE INVESTMENT
MANAGEMENT, INC., Tenant
Witnesses:
- ------------------------------
- ------------------------------- By:
-------------------------------
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Escrow Agent's Acceptance
The undersigned, the Escrow Agent, under this Agreement hereby agrees to
serve as Escrow Agent pursuant to the terms and provisions of the foregoing
Agreement.
Dated: ______________, 19___.
BARNETT BANK OF FLORIDA,
Escrow Agent
By:
-------------------------------
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<PAGE> 1
EXHIBIT 10.4
TABLE OF CONTENTS
OF SUBLEASE AGREEMENT BETWEEN
BUENOS AIRES EMBOTELLADORA S.A., AS LESSOR
AND
MACKENZIE INVESTMENT MANAGEMENT, INC., AS LESSEE
PARAGRAPH TITLE PAGE
- --------- ----- ----
1 LEASE TERM AND PREMISES 6
2 USE 6
3 BASE ANNUAL RENT 6
4 OPERATING COSTS PASSTHRU 9
5 LESSEE'S CONSTRUCTION OF
IMPROVEMENTS; ACCEPTANCE BY
LESSEE IN "AS IS" CONDITION;
EXCLUDED OBLIGATIONS 10
6 REPAIRS, MAINTENANCE & SERVICES 11
7 QUIET ENJOYMENT 13
8 ASSIGNMENT,SUBLETTING & CHANGE OF
OWNERSHIP 15
9 ALTERATION AND REMOVAL OF
EQUIPMENT 15
10 LIENS 16
11 CASUALTY AND CONDEMNATION 16
12 INSURANCE 17
13 BROKERAGE 19
14 INSPECTION AND REPAIR 19
15 DEFAULT 20
16 WAIVER OR ESTOPPEL 21
17 ESTOPPEL CERTIFICATE 21
18 HOLDING OVER 22
19 NOTICES 22
20 APPLICABLE LAW 23
21 BINDING EFFECT 23
<PAGE> 2
22 INVALIDITY OF PARTICULAR PROVISIONS 23
23 ENTIRE AGREEMENT 23
24 HAZARDOUS MATERIALS 24
2
<PAGE> 3
SUBLEASE AGREEMENT
This Sublease Agreement (hereinafter referred to as "LEASE",
"SUBLEASE" or "SUBLEASE AGREEMENT) is made and entered into between BUENOS
AIRES EMBOTELLADORA S.A., a stock corporation organized and existing under the
laws of Argentina, (hereinafter the "LESSOR") and MACKENZIE INVESTMENT
MANAGEMENT, INC., a Delaware corporation authorized to do business in the state
of Florida (hereinafter the "LESSEE")
LESSOR does hereby lease unto LESSEE, and LESSEE does hereby hire and
take as lessee under LESSOR, that certain space (the "Premises" or the "Leased
Premises") designated as Suite 101 on the floor plan of the first floor
attached hereto as Exhibit "A", in that certain office building (the
"Building"), located at 700 South Federal Highway, Via Mizner Financial Plaza,
Boca Raton, Florida 33432.
THE LEASED PREMISES CONSTITUTE A PART OF AND ARE INCLUDED IN A LEASE
ENTERED INTO BY LESSOR (AS TENANT) AND VIA MIZNER ASSOCIATES, A FLORIDA GENERAL
PARTNERSHIP (AS LANDLORD, HEREIN REFERRED TO AS THE "MASTER LESSOR") PURSUANT
TO THAT CERTAIN LEASE AGREEMENT DATED MARCH 18, 1994, WHICH MASTER LEASE,
TOGETHER WITH ALL EXHIBITS, AMENDMENTS AND MODIFICATIONS THERETO, IS
COLLECTIVELY REFERRED TO HEREIN AS THE "MASTER LEASE". THIS SUBLEASE
AGREEMENT CONSTITUTES A SUBLEASE UNDER, PURSUANT TO, AND SUBJECT TO THE MASTER
LEASE AND THIS SUBLEASE AGREEMENT SHALL NOT BE CONSTRUED OR INTERPRETED TO
ALTER, MODIFY OR AMEND ANY TERM OR PROVISION OF THE MASTER LEASE. ALL OF THE
TERMS, COVENANTS AND CONDITIONS OF THE MASTER LEASE ARE SUPERIOR TO THIS
SUBLEASE AGREEMENT. ALL OF THE TERMS, COVENANTS, AND CONDITIONS OF THE MASTER
LEASE APPLICABLE TO THE LEASED PREMISES ARE AND WILL BE BINDING UPON THE
LESSEE, AND ITS SUCCESSORS AS IF EXPRESSLY SET FORTH HEREIN, EXCEPT LESSOR'S
EXCLUDED OBLIGATIONS AS SET FORTH IN PARAGRAPH 5.C. HEREINAFTER. A COPY OF THE
MASTER LEASE IS ATTACHED HERETO AS EXHIBIT "E".
3
<PAGE> 4
SUBLEASE INFORMATION SUMMARY
A. Date of Lease: May 1, 1997
B. LESSOR: BUENOS AIRES EMBOTELLADORA S. A., a stock corporation and
existing under the laws of Argentina
C. LESSEE: MACKENZIE INVESTMENT MANAGEMENT, INC., a Delaware
corporation
D. LESSEE'S SUITE NO.: Suite 101 which is a portion of Suite 100 as
described and depicted in the Master Lease; Suite 101 is depicted on Exhibit
"A" attached to this Sublease, (hereinafter referred to as Suite 101) of Via
Mizner Financial Plaza, 700 South Federal Highway, Boca Raton, Florida 33432.
E. Net Rentable area of Premises: 7,378 square feet.
F. Lease Commencement Date: Upon execution of this Lease by Lessor and
Lessee and execution of Consent to Lease by Master Lessor, Lessor and Lessee.
Rent Commencement Date: Upon execution of this Lease by Lessor and
Lessee and execution of Consent to Lease by Master Lessor, Lessor and Lessee,
subject to the provisions of Paragraph 3 (d).
G. Expiration Date: June 30, 2001.
H. Lease Term: Four (4) years, Two (2) months.
I. Improvement Allowance: None
J. Base Rent: See Paragraph 3 hereinafter.
K. Operating Costs Passthru: See Paragraph 4 hereinafter.
L. Security Deposit Received: N/A
M. Use of Premises: Executive, Administrative, and general office
purposes.
4
<PAGE> 5
N. Base Annual Rent:
Term Monthly Annual
Suite 101:
First year from
Rent Commencement Date: $9,640.59 $115,687.04
Consumer Price Index:
1) Adjustment Date: Annually, with the first adjustment
date being one year from Lease
Commencement Date
2) Base Index No.: Index for the month three (3)
months prior to Lease
Commencement Date as set forth
in Paragraph F hereinabove.
0. LESSEE's Address for Notices:
Mackenzie Investment Management, Inc.
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
P. LESSOR's Address for Notices:
Buenos Aires Embotelladora S.A.
c/o Shearman and Sterling
Citicorp Center
153 East 53rd Street
New York, NY 10022
Attn: Beth Rosen
With a copy to:
Mr. James M. Hankins
Attorney at Law
Hodgson, Russ, Andrews, Woods & Goodyear, LLP
2000 Glades Road, Suite 400
Boca Raton, Florida 33431
Q. LESSEE's Real Estate Broker: None
R. LESSOR's Real Estate Broker: Wargo Property Company
Attn: John M. Wargo
5
<PAGE> 6
THE FOREGOING SUBLEASE INFORMATION SUMMARY IS
AN INTEGRAL PART OF THIS SUBLEASE AGREEMENT.
1. LEASE TERM AND PREMISES.
Lease Term. In consideration of the rents, covenants and
agreements hereafter reserved and contained on the part of the LESSEE to be
observed and performed, the LESSOR subleases to the LESSEE, and LESSEE rents
from LESSOR, that certain premises now existing in VIA MIZNER FINANCIAL PLAZA,
which premises is Suite No. 101, 700 South Federal Highway, Boca Raton, Florida
33432 more particularly described on Exhibit "A" attached hereto. LESSOR and
LESSEE agree that Suite 101 contains an area of 7,378 square feet (as depicted
in Exhibit "A" attached hereto) herein called the LEASED PREMISES. The term of
this Lease shall be from the Lease Commencement Date (as defined in Paragraph F
of the Sublease Information Summary) to the Expiration Date (as defined in
Paragraph G of the Sublease Information Summary).
2. USE.
LESSEE covenants and agrees with LESSOR that the Leased
Premises will not be used for any purpose or use other than as provided for in
Paragraph M of the Sublease Information Summary. LESSEE shall comply with all
laws, ordinances, rules and regulations of applicable governmental authorities
respecting the use, operation and activities of the Leased Premises, and shall
not cause offensive use of the Leased Premises or Building or such other areas,
or any part thereof, or cause any nuisance thereon. LESSEE shall not make any
use of the Leased Premises which would make void or voidable any policy of
insurance covering the Leased Premises or the Building or Common Areas or
facilities. LESSEE shall use the Leased Premises only for the purpose stated in
this Paragraph 2 and shall not suffer or permit any waste or mistreatment to
the Leased Premises, or the Building or the Common Areas and facilities;
ordinary commercial wear excepted. LESSEE agrees to abide by all the applicable
provisions of the Master Lease, including, but not limited to, the rules or
regulations promulgated by Master LESSOR as adopted from time to time, the
rules and regulations contained in Exhibit "E" attached hereto.
3. BASE ANNUAL RENT.
a) Base Annual Rent Payments: Tenant agrees to pay
Landlord, (subject, however to adjustment as herein provided), as Base Annual
Rent the sum or sums set forth in Section (N) of the Sublease Information
Summary (hereinafter referred to as "Base Annual Rent"). The Base Annual Rent
during the term of this LEASE shall be payable by the LESSEE in equal monthly
installments, on or before the first day of each month during the term of the
LEASE in advance, by wire transfer to:
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<PAGE> 7
Buenos Aires Embotelladora S.A.
JP Morgan
Account No. 600 12 231
ABA Routing No. 021 000 238
or at such other place designated by LESSOR, without notice or demand, and
without any deduction, counterclaim, or set-off whatsoever.
In the event that at any time any personal or corporate check of
LESSEE should be returned marked "insufficient funds" or should not be promptly
paid by the drawee bank for any other reason, LESSOR may, without prejudice to
any other right or remedy accruing to LESSOR under this LEASE, require that all
future rental payments are to be made on or before the due date by cashier's
check or official check drawn on a bank located in Palm Beach County, Florida.
b) Cost of Living Increases in Base Annual Rent: Commencing July
1, 1997 (being the first Adjustment Date), and annually thereafter, the Base
Annual Rent shall be adjusted (increased but not decreased) by the following
mathematical formula:
A = [(B x C )]
D
A is the Base Annual Rent for the year following the Adjustment Date
(thereafter the "Adjusted Base Annual Rent").
B is the Base Annual Rent set forth in Section (N) of the Sublease Information
Summary.
C is the Consumer Price Index (as described in Section (N) of the Sublease
Information Summary) in effect three (3) months prior to the month in which
each Adjustment Date occurs.
D is the Consumer Price Index (as described in Section (N) of the Sublease
Information Summary) for the month which is three (3) months prior to the Lease
Commencement Date.
The formula shall adjust the Base Annual Rent set forth in Section (N) of the
Sublease Information Summary by the product obtained by multiplying the Base
Annual Rent times a fraction, the numerator of which shall be the Consumer
Price Index for all Urban Consumers (CPI-U) issued by the Bureau of Labor
Statistics of the U.S. Department of Labor, using the year 1982-84 as a base of
100, (the "Index") for the month three (3) months preceding the month in which
the Adjustment Date occurs, and the denominator shall be the
7
<PAGE> 8
Consumer Price Index as described in Section (N) of the Sublease Information
Summary. The result of this calculation shall be the Adjusted Base Annual Rent
for the year following each Adjustment Date.
In the event that the Index herein referred to ceases to be
published during the term of this Lease, or if a substantial change is made in
the method of establishing such Index, then the determination of the adjustment
in the Base Annual Rent shall be made with the use of such conversion factor,
formula or table as may be published by the Bureau of Labor Statistics, or if
none is available, the parties shall accept comparable statistics on the cost
of living in the United States, as shall then be computed and published by an
agency of the United States, or if none, by a respected financial periodical
selected by Master Lessor.
LESSOR and LESSEE agree that notwithstanding anything to the
contrary contained herein, in no event shall such annual adjustment of the Base
Annual Rent calculated on each Adjustment Date (as described in this
Subparagraph b) of Paragraph 3) be less than three percent (3%) per annum nor
more than six percent (6%) per annum for each year of this LEASE.
c) LESSEE shall also pay, as additional rent, all sales or use
or excise tax imposed, levied or assessed against the rent (and any other
charge or payment of LESSEE required herein including but not limited to the
Operating Costs Passthru as provided for in Paragraph 4 hereinafter), by any
governmental authority having jurisdiction thereover, even though the taxing
statute or ordinance may purport to impose such sales tax against the LESSOR.
The payment of sales tax shall be made by LESSEE on a monthly basis,
concurrently with the monthly payment of the Base Annual Rent.
d) Inventory. Provided the LESSEE is not in default under the
terms and conditions of this Sublease Agreement or the Master Lease Agreement
at any time during the first two years of this Sublease Agreement, LESSOR and
LESSEE agree that the items described in the Inventory attached hereto as
Exhibit "D" shall be transferred by Bill of Sale attached hereto as Exhibit
"F" from LESSOR to LESSEE on the second anniversary of the Lease Commencement
Date. LESSEE covenants and agrees that the Inventory shall remain in the Leased
Premises until the second anniversary of the Lease Commencement Date. LESSEE
shall be responsible for the maintenance and care of the Inventory, and LESSEE
shall maintain the Inventory in good condition, ordinary commercial wear
excepted and further LESSEE shall not transfer, sell, encumber or dispose of
the Inventory in any manner prior to the second anniversary of the Lease
Commencement Date.
8
<PAGE> 9
e) Security Agreement. In addition to and independent of any
lien in favor of LESSOR arising by operation of law, LESSEE hereby grants to
LESSOR a security interest in all the Inventory described in Exhibit "D" to
secure the payment of rent and the performance of all other duties and
obligations of LESSEE hereunder. LESSEE agrees to execute upon request by
LESSOR any and all financing statements and to perform any other act reasonably
necessary to the perfection of the security interest in the Inventory granted
herein. The occurrence of any one or more of the events of default set forth in
Paragraph 15 of this LEASE shall constitute default in this security agreement
and shall entitle LESSOR to avail itself, following the expiration of any
relevant cure period specified herein, of any remedy or remedies available to
it at law or in equity, including the provisions of Chapters 679 and 78,
Florida Statutes, and under this LEASE. Further, in event of any default by
LESSEE of any provisions of this LEASE, LESSOR shall be entitled to the
issuance of a pre-judgment writ of replevin without notice and LESSOR shall
have the right to take possession as allowed under Chapter 78, Florida,
Statutes, and to take possession of the Leased Premises. Provided the LESSEE is
not in default on the Lease Expiration Date, the LESSOR shall terminate and
release the security interest in the Inventory simultaneously with the LESSOR
returning LESSEE's Security Deposit.
f) Financing Agreement. LESSEE agrees not to enter into,
execute or deliver any financing statement or security agreement or otherwise
encumber the Inventory and, in the event LESSEE does so execute or deliver such
financing statement, security agreement or otherwise encumber the Inventory,
such action on the part of the LESSEE shall be considered a breach of the terms
and conditions of this LEASE and shall be a default by LESSEE entitling LESSOR
to such remedies as are provided for herein. LESSEE shall execute in recordable
form a UCC-l Financing Statement to create and perfect the first security
interest of LESSOR. If LESSEE defaults in its obligations under this LEASE or
any future amendments, LESSOR shall be entitled to take immediate possession of
all Inventory upon which the LESSOR has a lien or security interest.
4. OPERATING COSTS PASSTHRU.
LESSEE acknowledges and agrees that the Master Lease provides
for the payment by LESSOR to Master Lessor of a pro rata share of the operating
costs as the same are defined and set forth in Section Two and other sections
of the Master Lease. LESSEE covenants and agrees to pay to LESSOR on the first
day of each month following the Lease Commencement Date, all of the Operating
Costs and other expenses applicable to the Lease Premises which are a portion
of Suite 100. LESSEE will pay a pro rata payment of such operating costs and
operating expenses as is provided for in the Master Lease which LESSOR is
obligated to pay to Master Lessor. The payment due from LESSEE to LESSOR on the
first day of the month
9
<PAGE> 10
following the Lease Commencement Date and on the first day of each month
thereafter during the term of this LEASE (subject to adjustments as provided
for in the Master Lease) for the Operating Costs is $3,541.44, together with
applicable sales tax as provided for herein. It is the intent of LESSOR and
LESSEE that this Paragraph 4 requires LESSEE to pay to LESSOR not more than or
less than LESSEE's pro rata share of all Operating Costs and other charges
(payable by LESSOR to MASTER LESSOR pursuant to the provisions of the Master
Lease) applicable to Suite 100 (as said Suite 100 is identified and depicted in
the Master Lease). Additionally, LESSEE shall pay to LESSOR a pro rata share of
(i) electricity and (ii) air conditioning maintenance as provided for in the
Master Lease; and (iii) any janitorial service provided to the common areas of
Suite 100 and to the Leased Premises.
If the Lease Commencement Date occurs on a date other than the
first day of the month, then LESSEE shall pay to LESSOR the Operating Costs for
each day beginning with the Lease Commencement Date through and including the
last day of the month in which the Lease Commencement Date occurs. The
Operating Costs for such partial month shall be paid on a per diem basis,
together with applicable sales tax as provided for herein. The per diem
Operating Costs for this period shall be paid by LESSEE to LESSOR on the Lease
Commencement Date.
5. LESSEE'S CONSTRUCTION OF IMPROVEMENTS; ACCEPTANCE BY LESSEE IN "AS
IS" CONDITION; EXCLUDED OBLIGATIONS
a) LESSEE'S CONSTRUCTION OF IMPROVEMENTS. On or after the
Lease Commencement Date, LESSEE may elect to modify the Leased Premises which
modifications require the reasonable review and approval of LESSOR, AND the
compliance with and approval of the Master Lessor in accordance with the
applicable terms and conditions of the Master Lease. LESSEE shall submit to
LESSOR all documents and plans as required under the Master Lease for LESSOR'S
reasonable review and approval which shall not be unreasonably withheld or
delayed. Upon LESSOR'S approval, LESSOR will submit such reviewed and approved
plans of LESSEE to the Master Lessor. The LESSEE shall comply with all
requirements of Master Lessor as set forth in the Master Lease in connection
with plan review and approval. Additionally all requirements and provisions of
the Master Lease applicable to the construction of the improvements set forth
in the plans prepared by LESSEE and approved by LESSOR and Master LESSOR shall
be complied with by LESSEE. All documents required to be submitted to Master
Lessor in accordance with the terms of the Master Lease shall be first
submitted to LESSOR for its reasonable review and approval. LESSOR shall then
submit such documents to Master LESSOR and LESSOR shall use commercially
reasonably efforts to assist LESSEE in obtaining any necessary approvals and
consents required from the Master Lessor. LESSOR shall use commercially
reasonable efforts to assist LESSEE in communicating with Master Lessor in
joint meetings with Master
10
<PAGE> 11
Lessor, LESSOR and LESSEE in connection with obtaining the necessary consents
and approvals for such construction and in connection with the implementation
of such construction process.
The LESSEE upon expiration of the Lease shall restore the
Leased Premises to the condition the Lease Premises were in on the date the
Lease was entered into ordinary commercial wear excepted, provided, however,
that any alteration, modification or improvement which is approved by LESSOR
and Master Lessor shall at the expiration of the term of the Lease remain in
and not be removed from the Leased Premises. LESSEE and LESSOR covenant and
agree that if LESSOR approves modifications to the Leased Premises, that LESSEE
shall have the obligation to remove such modifications and restore the Leased
Premises to its original condition, as it existed upon delivery of possession
to LESSEE, upon expiration of the Lease. At the expiration of the term of the
Lease, LESSEE shall remove the following items from the Leased Premises:
1. Inventory.
2. All furniture and equipment of the LESSEE.
b) Acceptance by LESSEE in "AS IS" Condition. LESSEE accepts
the Leased Premises in the condition it exists upon delivery of possession and
without any warranty, representation of LESSOR or recourse to the LESSOR for
any condition of or circumstance relating to the Leased Premises, Building,
Common Areas or Inventory located therein; provided, however, that LESSOR is
making to LESSEE certain express representations and warranties with respect to
the Inventory as set forth in this Sublease and in the Bill of Sale.
c) The term "Excluded Obligations" as used in this Lease
shall mean the following (1) any obligations of LESSOR as "Tenant" under the
Master Lease arising prior to the Lease Commencement Date, (2) any obligations
of LESSOR as "Tenant" under the Master Lease arising after the Lease
Commencement Date with respect to Suite 200 as described in the Master Lease,
(3) any obligations of LESSOR as "Tenant" under the Master Lease under
Paragraph 2 of Exhibit Two of the Master Lease, and (4) Lessor's obligation as
"Tenant" under the Master Lease to pay Fixed Minimum Annual Rent to the Master
Lessor as set forth in Article II of the Master Lease.
6. REPAIRS. MAINTENANCE AND SERVICES.
a) LESSEE acknowledges that the LESSOR does not provide, and
is not obligated to provide any repairs, maintenance or services to the Leased
Premises. LESSEE acknowledges and agrees that LESSOR is not providing any
janitorial, maintenance or repair services in connection with the Leased
Premises. LESSOR will pass thru to LESSEE, without recourse or representation,
any and
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<PAGE> 12
all janitorial, maintenance, repair and other services provided by Master
Lessor pursuant to the terms of the Master Lease. LESSOR will reasonably
cooperate with LESSEE to cause such services of the Master Lessor to be
provided as contemplated and pursuant to the terms of the Master Lease. LESSEE
acknowledges that LESSEE has reviewed and understands the Master Lease and
shall perform and pay as LESSEE of this Lease all the costs and expenses of
LESSOR applicable to the Leased Premises as set forth in the Master Lease,
including but not limited to those set forth in Section 7.02 and Article IX of
the Master Lease. These costs and expenses, include, but are not limited to
electricity; HVAC maintenance; repairs and maintenance agreements; janitorial
services; security system for Leased Premises.
b) Parking. LESSEE acknowledges that Master Lessor controls
and allocates all parking in Via Mizner Financial Plaza in accordance with the
terms of the Master Lease. During the term of this Lease, LESSEE shall have Via
Mizner Financial Plaza parking allocated as follows:
(i) 5 Spaces in Reserved section of the garage;
(ii) 9 Spaces in the Open section of the garage;
(iii) 3 Spaces in the open surface parking area;
(iv) 6 Spaces in the Reserved surface parking area.
c) Building Access. Access to the Leased Premises on a twenty
four (24) hour basis shall be provided to the LESSEE by a card key access
system operated and maintained by the Master Lessor. LESSEE shall comply with
all procedures established by Master Lessor in connection with the use and
operation of the card key access system.
d) Building Security. Building security is provided by the
Master Lessor through a card key access system during those hours when the
Building is not open to the public. Building hours are established and
controlled by the Master Lessor and at the time of execution of this Lease are
as follows: Monday through Friday, 7:00 A.M. through 6:00 P.M., E.S.T. The card
key access system provided by Master Lessor allows entry at the front entrance
and at the garage access of the Building in which the Leased Premises is
located. LESSEE acknowledges that the direct outside access points to the
common areas of the building are monitored by a third party for forced entry
and video tape surveillance is employed for the main and garage elevator
lobbies as well as in other areas in the garage, and that these services and
other Building security are provided through and controlled by the Master
Lessor and are passed through to LESSEE without warranty, representation or
recourse to LESSOR.
e) Leased Premises Security. LESSOR authorizes LESSEE to
install a Leased Premises security system at LESSEE'S expense and upon LESSEE
complying with the provisions of Paragraph
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<PAGE> 13
5 (a). Upon completion of installation by LESSEE of the security system for the
Leased Premises, LESSEE shall provide to LESSOR the security system access
codes for use by Master Lessor and LESSOR and LESSOR's designated
representatives for repairs, maintenance and emergencies. LESSOR shall have the
same right, during normal business hours, to enter and to inspect the Leased
Premises as set forth in the Master Lease; provided, however, that except in a
bona fide emergency, all entries into, and inspections of, the Leased Premises
by LESSOR shall be in the presence of an officer or representative of LESSEE.
f) LESSEE Identification. Signage in Via Mizner Financial
Plaza is allocated, permitted and approved by the Master Lessor. LESSEE,
subject to Master Lessor's approval (as to content and style), will be
permitted to: place LESSEE's identification on the three existing tenant
directory signs, which existing tenant directory signs are located: (i) at the
ground floor elevator lobby; (ii) at the garage elevator lobby; and (iii) at
the east entry canopy.
7. QUIET ENJOYMENT.
a. LESSEE'S QUIET ENJOYMENT. LESSOR covenants that so long as
LESSEE pays the rent reserved in this Lease and performs its agreements
hereunder, and under the Master Lease, LESSEE shall, subject only to the
provisions of this Lease, and the Master Lease have the right to quietly enjoy
and use the Leased Premises for the term hereof, except as provided
hereinafter:
1) The provisions pertaining to parking in Section
2.04 beginning at the bottom of Page 12 and continuing to Page 13 of the Master
lease; and
2) The Lessor's right as "Tenant" under the Master
Lease to audit as set forth in Section 2.06(f) on Page 18 and Pages 19 and 20;
and
3) The provisions of the second sentence of Section
6.02 on Page 26 of the Master Lease; and
4) The provisions of Section 10.03 of the Master
Lease; and
5) The provisions pertaining to the rights of Lessor
as "Tenant" under the Master Lease to assign or sublet in Section 11.01
beginning on Page 35 and continuing on Pages 36 and 37 of the Master Lease; and
6) The provisions of Section 11.05 on Pages 38 and
39 of the Master Lease; and
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7) The following provision contained in Section
15.01 on Page 42 of the Master Lease:
"If the building in which the Leased Premises are located shall be
rendered wholly untenable by reason of such occurrence, the Tenant
shall have the right, to be exercised by notice to Landlord within
fifteen (15) days after said occurrence, to elect to cancel and
terminate this Lease and in such event this Lease and the tenancy
hereby created shall cease as of the date of said occurrence and all
insurance proceeds maintained pursuant to the terms of this Lease
payable as a result of said occurrence, shall be paid to Landlord."
and the exercise of such right remains in the sole and absolute discretion of
the Lessor as "Tenant" under the Master Lease; and
8) The following provision contained in Section
15.03 on Page 43 of the Master Lease:
Upon Tenant completing the tenant improvements described in EXHIBIT
"D" and obtaining a certificate of occupancy for the Leased Premises
from all governmental authorities having jurisdiction over the tenant
improvements, Landlord shall pay to Tenant a tenant improvement
allowance of Twenty-Five and 00/100 ($25.00) Dollars per square foot
for each square foot of rental space for which Tenant pays rent to the
Landlord (the total square footage shall be calculated in accordance
with EXHIBIT "J") to the extent insurance proceeds are received
relative to such tenant improvements by Landlord."
and any sum paid pursuant to the above provisions shall be for the sole and
exclusive benefit of Lessor as "Tenant" under the Master Lease; and
9) The provisions pertaining to termination of the
Lease by Lessor as "Tenant" under the Master Lease contained in Section 16.02
on Pages 44 and 45 of the Master Lease.
10) The provisions of Paragraphs 1, 2, and 3 of
Exhibit Two of the Master Lease.
b. LESSOR shall indemnify and hold harmless LESSEE, its
directors, members, officers, employees, and agents (collectively, the "Lessee
Indemnified Parties") from and against any and all claims, liabilities and
damages (including, without limitation, attorneys fees, expenses and costs)
incurred by the Lessee Indemnified Parties arising out of, or related to, any
default by LESSOR as Tenant under the Master Lease or breach by LESSOR as
Tenant under the Master Lease with respect to, or in connection with, any
portion of the Leased Premises covered by the Master Lease.
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LESSEE shall indemnify and hold harmless LESSOR, its
directors, members, officers, employees, and agents (collectively, the "Lessor
Indemnified Parties") from and against any and all claims, liabilities and
damages (including, without limitation, attorneys fees, expenses and costs)
incurred by the Lessor Indemnified Parties arising out of, or related to, any
default by LESSEE or breach by LESSEE with respect to, or in connection with,
LESSEE'S obligations and responsibilities as set forth herein to comply with
the terms of the Master Lease.
8. ASSIGNMENT, SUBLETTING AND CHANGE OF OWNERSHIP.
LESSEE acknowledges that LESSEE'S agreement to operate in the
Leased Premises for the use set forth in Paragraph 2 hereof for the term hereof
was a primary inducement and precondition to LESSOR'S agreement to lease the
Leased Premises to LESSEE. Accordingly, LESSEE'S interest in the Leased
Premises shall be limited to the use and occupancy thereof in accordance with
the provisions hereof and shall be non-transferable. Any attempt by LESSEE to
sublet the Leased Premises in whole or in part grant or supply occupancy rights
to third parties, or to sell, assign, lien, encumber or in any manner transfer
this Lease or any interest therein shall constitute a default hereunder, as
shall any attempt by LESSEE to assign or delegate the management or to permit
the use or occupancy of the Leased Premises or any part thereof by anyone other
than LESSEE. LESSOR and LESSEE acknowledge and agree that the foregoing
provisions have been freely negotiated by the parties hereto and that LESSOR
would not have entered into this Lease without LESSEE'S consent to the terms of
this Paragraph. Any attempt by LESSEE to sublet all or any portion of the
Leased Premises, to encumber same, or in any manner to transfer, convey or
assign LESSEE'S interest therein or allow the use or management thereof shall
be void ab initio.
9. ALTERATION AND REMOVAL OF EQUIPMENT.
Except to the extent and in the manner provided in Paragraph
5(a) above, LESSEE shall not make any alteration or addition to the Leased
Premises, including, but not limited to, the installation of electrical wiring
and partitions without first obtaining the express prior written consent of
LESSOR (which consent by LESSOR shall not be unreasonably withheld or delayed)
and the Master LESSOR. Upon expiration and termination of this Lease, and
subject to LESSEE'S obligations provided for in Paragraph 5(a) above, all
installations, fixtures, improvements and alterations made or installed by
LESSEE, including, but not limited to, electric lighting fixtures, and all
repairs, improvements, replacements and alterations to the Leased Premises are
the sole and absolute property of LESSOR.
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10. LIENS.
LESSEE agrees it will make full and prompt payment of all
sums necessary to pay for cost of repairs, alterations, improvements, changes
or other work done by, or on behalf of, LESSEE to the Leased Premises and
further agrees to indemnify and hold LESSOR harmless from any against any and
all such costs and liabilities incurred by LESSEE, and against any and all
construction, mechanic's, materialman's or laborer's liens arising out of or
from such work, or the cost thereof, which may be asserted, claimed or charged
against the Leased Premises or the Building or the Common Areas or the land
upon which it is located. All modifications to, alterations of or improvements
constructed within the Leased Premises requires the prior written approval of
LESSOR and Master Lessor. Notwithstanding anything to the contrary in this
Lease, the interest of LESSOR in the Leased Premises, the Building, the Common
Areas and the land upon which it is located or otherwise, shall not be subject
to liens for improvements made by or from LESSEE, whether or not the same shall
be made or done in accordance with an agreement between LESSOR and LESSEE, and
it is specifically understood and agreed that in no event shall LESSOR, or the
interest of LESSOR in the Leased Premises, Building, or otherwise, be liable
for or subjected to, any construction, mechanic's, materialman's or laborer's
liens for improvements or repairs made by LESSEE, or for which LESSEE is
responsible for payment under the terms of this Lease. LESSEE shall, not less
than ten (10) days prior to undertaking or initiating any alterations or
improvements of the Leased Premises, forward to LESSOR a copy of the written
notice of the terms of this Paragraph 10 (which LESSEE hereby agrees to give)
which LESSEE shall provide to all persons performing services or furnishing
materials on its behalf. In the event any notice or claim of lien shall be
filed in the Official Records Books of Palm Beach County, Florida against the
interest of LESSOR in the Leased Premises, the Building, or the land upon which
it is located, on account of or arising from any improvement or work done by or
for LESSEE, or any person claiming by, through or under LESSEE, or for
improvements or work the cost of which is the responsibility of LESSEE, LESSEE
agrees to have such of claim of lien cancelled and discharged (either by
payment or bond as permitted by law) within ten (10) days after notice to
LESSEE by LESSOR and, in the event LESSEE shall fail to do so, LESSEE shall be
in default under this Lease. At LESSOR'S option, LESSEE agrees to execute a
Memorandum of Sublease, as set forth in Exhibit "C" attached hereto, to be
recorded in the Public Records of Palm Beach County, Florida, setting forth the
provisions of this Paragraph 10.
11. CASUALTY AND CONDEMNATION.
a. CASUALTY. Within ten (10) days from the date LESSOR
receives written notice from the Master Lessor under the applicable provisions
of the Master Lease, LESSOR shall give the LESSEE written notice of LESSOR's
election under the terms of this
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Subparagraph (a). In the event the Leased Premises or the Building are rendered
untenantable by fire or casualty or other event, LESSOR shall have the option,
in LESSOR's sole and absolute discretion, of terminating this Lease, or
rebuilding those portions of the Leased Premises for which LESSOR is
responsible under the Master Lease within 120 days from the date the Master
Lessor approves the reconstruction plans (submitted by LESSOR to Master Lessor
pursuant to the terms of the Master Lease). LESSOR will submit to the Master
Lessor reconstruction plans within 30 days from the date of casualty and the
receipt of Master Lessor's notice under applicable provisions of the Master
Lease (such date hereinafter referred to as "Reconstruction Plan Submission
Date"). If LESSOR does not submit reconstruction plans on or before the
Reconstruction Plan Submission Date, then LESSEE may elect to terminate this
Sublease by providing LESSOR with written notice of termination not later than
the 5th day following the Reconstruction Plan Submission Date, otherwise this
Sublease shall remain in full force and effect. If LESSOR does not complete
construction in accordance with the reconstruction plans approved by the Master
Lessor within 120 days from the date that Master Lessor approves the
reconstruction plans, then LESSEE may elect to terminate this Sublease by
providing LESSOR with written notice of termination not earlier than 120 days
and not later than 125 days following the Reconstruction Plan Submission Date,
otherwise this Sublease will remain in full force and effect. If LESSOR elects
to terminate this LEASE, the Base Annual Rent, Operating Costs and other
charges and expenses shall be paid by LESSEE to LESSOR through the date of such
fire, casualty or other event.
b. CONDEMNATION. All damages in the event of any condemnation
are to belong to the Master Lessor whether such damages are awarded as
compensation for diminution in value of the Leasehold or the fee of the Leased
Premises, LESSEE shall have the right to claim and recover from the condemning
authority, but not from LESSOR or Master Lessor, such compensation as may be
separately awarded or recoverable by LESSEE in LESSEE's own right on account of
any damage to LESSEE's business by reason of the condemnation and for or on
account of any cost or loss to which LESSEE might be put in removing LESSEE's
merchandise, furniture, fixtures, leasehold improvements and equipment,
provided no such claim shall diminish or otherwise adversely affect Master
Lessor's award. Each party agrees to execute and deliver to the other all
instruments that may be required to effectuate the provisions of this
Paragraph.
12. INSURANCE.
(a) Indemnification. LESSOR shall not be liable for injury
caused to any person or property by reason of the failure of LESSEE to perform
any of its covenants or agreements hereunder, or failure of Master Lessor to
perform any of its covenants or agreements under the Master Lease or for such
damages or injury caused by reason of any
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defect in the Leased Premises or Building now or in the future existing, or for
any damages or injury caused by reason or any present or future defect in the
plumbing, wiring or piping of the Leased Premises or Building, or plumbing
leaks or other consequences of such defects or system failure.
LESSOR shall indemnify and hold harmless LESSEE and its
directors, members, officers, agents and employees from and against any and all
claims arising for or in connection with the conduct, operation or management
of VIA MIZNER FINANCIAL PLAZA, or any condition created by Master Lessor or
LESSOR, their respective licensees, agents, contractors, or employees in or
about VIA MIZNER FINANCIAL PLAZA during the term of this Sublease, or any act
of negligence of Master Lessor or LESSOR, their respective licensees, agents,
contractors, or employees in or about VIA MIZNER FINANCIAL PLAZA during the
term of this Sublease; provided, however, that if the damages were not caused
by the acts or omissions of LESSOR or LESSOR's directors, members, officers,
agents or employees, then the liability of LESSOR under this indemnity shall
not exceed the amount(s) paid by Master Lessor to LESSOR under, or pursuant to
the terms of Section 8.05 of the Master Lease.
LESSEE shall indemnify and hold harmless LESSOR and all
superior lessors and superior mortgagees, and its and their respective
partners, directors, officers, agents and employees from and against any and
all claims arising from or in connection with and (a) any act, omission or
negligence of LESSEE, or any of its guests, invitees or licensees or its or
their partners, directors, officers, agents, employees or contractors and (b)
any breach or default by LESSEE in the full and prompt payment and performance
of LESSEE'S obligations under this Lease; together with all costs, expenses and
liabilities incurred in or in connection with each such claim or action or
proceeding brought thereon, including, without limitation, all reasonable
attorneys' fees and expenses. In the event LESSOR shall be made a party to any
litigation or proceeding commenced by or against LESSEE, then LESSEE shall
protect, indemnify and hold LESSOR harmless and LESSEE shall pay to LESSOR all
costs, expenses and reasonable attorneys' fees (both trial and appellate fees)
incurred or paid by LESSOR in connection with such litigation or proceeding.
LESSEE shall also pay all costs, expenses and reasonable attorney's fees that
may be incurred or paid by LESSOR in enforcing the covenants and agreements in
this Lease.
(b) LESSEE. With respect to the Leased Premises, LESSEE
shall, at its sole cost and expense, provide and maintain in force during the
entire term of this Lease, and any extensions thereof, each and every policy of
insurance required of LESSOR under the terms of the Master Lease (with the
LESSOR and Master Lessor as co-insured as their interest may appear). Each such
policy shall be obtained from a company satisfactory to Master LESSOR and
reasonably satisfactory to LESSOR. The original of each such policy of
insurance or certified duplicates thereof issued by the insurance or insuring
organization shall
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be delivered by LESSEE to LESSOR on or before five (5) business days prior to
occupancy of the Leased Premises by LESSEE. At all times during which
construction is being performed upon the Leased Premises by LESSEE, including,
but not limited to, any initial construction of the Leased Premises and during
any alteration of the Leased Premises, LESSEE shall, at LESSEE'S sole cost and
expense, shall provide and maintain in full force each and every policy of
insurance required of LESSOR under the terms of the Master Lease (with the
LESSOR and Master Lessor as co-insured as their interest may appear). The
original policy or policies of insurance or certified duplicates thereof issued
by the insuring organization shall be delivered by LESSEE to LESSOR on or
before five (5) business days prior to the commencement of such construction.
LESSEE shall indemnify LESSOR in the identical and precise manner that LESSOR
has indemnified Master Lessor as set forth in Section 8.05 of the Master Lease;
provided, however, that the indemnity by LESSEE shall only apply to acts or
omissions occurring on or after the Lease Commencement Date. LESSEE waives its
right of subrogation to LESSOR and Master Lessor in the identical and precise
manner that LESSOR has waived subrogation to the Master Lessor as set forth in
Section 8.06 of the Master Lease. LESSOR waives any right of subrogation that
it may have against LESSEE. LESSOR agrees to immediately give to each such
insurance company written notification of the terms of the mutual waivers
contained in this paragraph, and to have said insurance policies properly
endorsed, if necessary, to prevent the invalidation of said insurance coverage
by reason of said waivers.
13. BROKERAGE.
Each of the parties represents and warrants that it has dealt
with no broker or brokers in connection with the execution of this Lease,
except as set forth in Paragraph Q and R of the Sublease Information Summary
and each of the parties agrees to indemnify the other against, and hold it
harmless from, all liabilities arising from any claim for brokerage commissions
or finder's fees resulting from the indemnitor's acts (including, without
limitation, the cost of counsel fees in connection therewith) except as set
forth in Paragraph Q and R of the Sublease Information Summary. LESSOR shall be
responsible for and shall pay the brokers set for in Paragraph Q and R of the
Sublease Information Summary in accordance with the terms and conditions of the
separate written brokerage agreement between LESSOR and such brokers.
14. INSPECTION AND REPAIR.
Master LESSOR and LESSOR, or its representatives shall have
the right, at any reasonable time upon twenty-four (24) hours notice (except in
the case of emergency), to enter upon the Leased Premises for the purpose of
inspection or for the purpose of making or causing to be made any repairs, but
the right of LESSOR to enter, repair or the exercise or failure to exercise
said right,
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shall in no way diminish LESSEE'S obligations or enlarge LESSOR'S obligations
under this Lease, or affect any right of LESSOR, or create any duty or
liability in LESSOR to LESSEE or to any third party. Notwithstanding the
foregoing, LESSOR shall have the same right, during normal business hours, to
enter and to inspect the Leased Premises as set forth in the Master Lease;
provided, however, that except in a bona fide emergency, all entries by LESSOR
into, and inspections of, the Leased Premises shall be in the presence of an
officer or representative of LESSEE.
15. DEFAULT.
(a) In the event LESSEE shall (i) fail to make any rental or
other payment due hereunder within ten (10) days after receiving written notice
from LESSOR to LESSEE of non-payment, (ii) be adjudged bankrupt, (iii) make a
general assignment for the benefit or creditors, (iv) have its leasehold estate
taken by execution against LESSEE, (v) breach or fail to perform any of the
agreements herein, or in the Master Lease attached hereto, (other than the
agreement to pay rent as provided for in subparagraph (i) above), and shall
fail to cure such default within fifteen (15) days after written notice from
LESSOR, or if such default is of a nature that it cannot be reasonably cured
within such fifteen (15) day period, then such commercially reasonable period
thereafter, (provided LESSEE has commenced to cure and diligently pursues the
curing of such default during such fifteen (15) day period and thereafter is
diligently and expeditiously proceeding to cure such default), then LESSOR, in
any such event(s), shall have the right to:
1. Terminate this Lease, resume possession of the Leased
Premises for its own account and recover immediately
from LESSEE the rent for which provision is made in
this Lease together with any other damage occasioned by
or resulting from a breach or default by LESSEE; and
2. In addition to the remedy provided in subparagraph 1
above, LESSOR may pursue such other remedies as are
provided by law or in equity, or as set forth in this
SUBLEASE AGREEMENT, in the event of any breach or
default by LESSEE which is not cured within the notice
and cure periods set forth hereinabove.
In any event, and irrespective of any remedy exercised by
LESSOR, LESSEE agrees to pay, and LESSOR shall be entitled to recover, all
reasonable costs and expenses incurred by LESSOR, including, but not limited
to, reasonable attorneys' fees
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and appellate attorneys' fees, in connection with collection of rent or damages
or enforcing other rights of LESSOR in the event of breach or default by
LESSEE, irrespective of whether or not LESSOR elects to terminate this Lease by
reason of such breach or default. LESSEE hereby expressly waives all rights of
redemption, if any, granted by or under any present or future law in the event
LESSOR shall obtain possession of the Leased Premises by virtue of the
provisions of this Lease, or otherwise, and LESSOR and LESSEE each hereby
expressly waives any right to trial by jury on any issue which may be litigated
herein.
(b) If LESSEE shall fail to pay any rents, additional rents
or any other payments due under this Lease within ten (10) days of the due date
thereof, or in the event any check, bank draft, order for payment or negotiable
instrument given to LESSOR for any payment under this Lease shall be dishonored
for any reason whatsoever not attributable to LESSOR, then LESSEE shall pay to
LESSOR an administrative charge of One Hundred Dollars ($100.00). LESSEE
recognizes and agrees that the charge which LESSOR is entitled to make upon the
conditions stated in this subparagraph (b) represents, at the time this Lease
is made, a fair and reasonable estimate and liquidation of the cost of LESSOR
in the administration of the collection of payments due hereunder resulting to
LESSOR from the events described which costs are not contemplated or included
in any other rental charges provided to be paid by LESSEE to LESSOR in this
Lease. The provisions herein for administration charges shall not be construed
to extend the date for payment of any sums required to be paid by LESSEE
hereunder or to relieve LESSEE of its obligation to pay all such sums at the
time or times herein stipulated.
(c) EACH OF LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS SUBLEASE AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF LESSOR. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LESSOR ENTERING INTO THIS SUBLEASE AGREEMENT.
16. WAIVER OR ESTOPPEL.
The failure of LESSOR to insist, in any one or more
instances, upon strict performance of covenants, conditions or agreements of
this Lease, or exercise any option of LESSOR herein contained, shall not be
construed as a waiver or relinquishment for the future enforcement of such
covenant, agreement or condition.
17. ESTOPPEL CERTIFICATE.
LESSEE agrees that, from time to time, upon not less than ten
(10) days prior written request by LESSOR, LESSEE will deliver to LESSOR a
statement in writing certifying (i) that this Lease is unmodified and in full
force
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and effect (or if there have been modifications, that the Lease is in full
force and effect as modified), (ii) the dates to which the rent and other
charges have been paid, and (iii) that, so far as the person delivering said
statement knows, LESSOR is not in default under any provision of this Lease (or
if the LESSOR is in default, specifying each such default of which the person
delivering said statement may have knowledge). LESSOR agrees that, from time to
time, upon not less than ten (10) says prior written request by LESSEE, LESSOR
will deliver to LESSEE a statement in writing certifying (i) that this Lease is
unmodified and in full force and effect (of if there have been modifications,
that the Lease is in full force and effect as modified), (ii) the dates to
which the rent and other charges have been paid and (iii) that, so far as the
person delivering said statement knows, LESSEE is not in default under any
provision of this Lease (of if LESSEE is in default, specifying each such
default of which the person delivering said statement may have knowledge).
LESSOR understands and acknowledges that any such statement so delivered may be
relied upon by LESSEE or any lender to LESSEE. LESSEE understands and
acknowledges that any such statement so delivered may be relied upon by LESSOR,
Master Lessor or any prospective purchaser, mortgagee, or any assignee of any
mortgage on the Building, or the land upon which it is located.
18. HOLDING OVER.
If LESSEE retains possession of the Leased Premises, or any
part thereof, after the termination of the term or any extension thereof,
LESSEE shall, for the time LESSEE thus remains in possession, pay to LESSOR
rent at double the Base Monthly Rental Payment payable for the month
immediately preceding said holdover, together with Operating Costs Passthru as
provided for in Paragraph 4 and any other sums provided for in accordance with
the terms of this Lease. The provisions of this Paragraph 18 do not waive
LESS9R'S rights of reentry or any other right hereunder. Any retention of the
Leased Premises after the termination of this Lease, or any extension thereof,
shall be considered as a month-to-month holdover unless otherwise agreed to in
writing by the LESSOR.
19. NOTICES.
All notices required or contemplated by this Lease shall be
in writing and shall be delivered in person or by United States certified mail,
return receipt requested, addressed to whom such notice is directed at the
addresses set forth in the Sublease Information Summary. By giving at least ten
(10) days prior written notice to the other party, either of the parties hereto
may change their address for the purpose of notices hereunder to a mailing
address located within the State of Florida.
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20. APPLICABLE LAW.
This Lease is entered into in the State of Florida and shall
be governed by the applicable law of said State without reference to the
conflict of laws rules. The conditions, covenants and agreements contained in
this Lease shall bind and inure to the benefit of LESSOR and LESSEE and their
respective heirs, distributees, successors and, except as otherwise provided in
this Lease, their assigns or sublessees. A facsimile copy of this Sublease and
the signatures on such facsimile copy of this Sublease shall be considered for
all purposes as originals.
21. BINDING EFFECT.
The conditions, covenants and agreements contained in this
Lease shall bind and inure to the benefit of LESSOR and LESSEE and their
respective heirs, distributees, successors and, except as otherwise provided in
this Lease, their assigns or sublessees.
22. INVALIDITY OF PARTICULAR PROVISIONS.
If any clause or provision of this Lease is or becomes
illegal, invalid, or unenforceable because of present or future laws or any
rule or regulation of any governmental body or entity, the intention of the
parties hereto is that the remaining parts of this Lease shall not be affected
thereby unless such invalidity is, in the sole and absolute discretion of
LESSOR, essential to the rights of both parties, in which event, LESSOR has the
right to terminate this Lease on written notice to LESSEE.
23. ENTIRE AGREEMENT.
LESSEE agrees that LESSOR has not made any statement promise
or agreement, or taken upon itself any engagement whatsoever, verbally or in
writing, in conflict with the terms of this Lease, or in which any way
modifies, varies, alters enlarges or invalidates any of its provisions. This
Lease sets forth the entire understanding between LESSOR and LESSEE, and shall
not be changed, modified, or amended except by an instrument in writing signed
by the party against whom the enforcement of any such change, modification or
amendment is sought. Whenever used herein, the singular number shall include
the plural and the plural the singular and the use of any gender shall include
all genders. The headings set forth in this Lease are for ease of reference
only, and shall not be interpreted to modify or limit the provisions hereof.
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24. HAZARDOUS MATERIALS.
A. PROHIBITION OF STORAGE. As used herein, "Hazardous
Materials Laws" means all federal, state and local laws, statutes ordinances
and regulations, rules, rulings, policies, orders and administrative actions
and orders relating to industrial hygiene, environmental protection or the use,
analysis, generation, manufacture, storage, disposal or transportation of any
oil, flammable explosives, asbestos, urea formaldehyde, radioactive materials
or waste, infectious waste, or other hazardous, toxic, contaminated or
polluting materials, substances or wastes, including, without limitation, any
"hazardous substances," "hazardous wastes," "hazardous materials" or "toxic
substances" under any such laws, ordinances or regulations (collectively,
"Hazardous Materials"). LESSEE shall, at its own expense, at all times and in
all respects: (i) comply with all Hazardous Materials Laws regarding Hazardous
Materials introduced in or about the Building by or at the direction of LESSEE
or in connection with LESSEE'S use of VIA FINANCIAL MIZNER PLAZA, including the
Leased Premises during the Lease Term or any period subsequent to the Lease
Term that LESSEE retains possession of all or any part of the Leased Premises
("LESSEE's Hazardous Materials"); and (ii) procure, maintain in effect and
comply with all conditions of any and all permits, licenses and other
governmental and regulatory approvals relating to LESSEE'S Hazardous Materials
within, on, under or about the Building in conformity with all applicable
Hazardous Materials Laws and prudent industry practices regarding management of
such Hazardous Materials. LESSOR recognizes and agrees that LESSEE may use
LESSEE'S Hazardous Materials in normal quantities that are applicable to
general office use and that such use by LESSEE shall not be deemed a violation
of this Paragraph, so long as the levels are not in violation of any Hazardous
Materials Laws. Upon termination or expiration of the Lease, LESSEE shall, at
its own expense, cause all of LESSEE'S Hazardous Materials to be removed from
the Premises, the Building and Building Common Area and transported for use,
storage or disposal in accordance and compliance with all applicable Hazardous
Materials Laws. LESSOR acknowledges that it is not the intent of this Article
to prohibit LESSEE from operating its business as described in the Lease.
LESSEE may operate its business according to the custom of the industry so long
as the use or presence of LESSEE'S Hazardous Materials is strictly and properly
monitored according to all applicable governmental requirements. LESSEE shall
indemnify, protect, defend (by counsel reasonably acceptable to LESSOR), and
hold LESSOR and LESSOR'S officers, directors, employees and agents free and
harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses and expenses (including reasonable attorneys' fees) or
death of or injury to any person or damage to any property whatsoever,
including, without limitation, the Premises, the Building or the Building
common area, arising from or caused in whole or in part, directly or
indirectly, by the presence in or about the Leased Premises, the Building
common area, the Building of any of LESSEE'S Hazardous Materials or by LESSEE'S
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failure to comply with any Hazardous Materials Law regarding LESSEE'S Hazardous
Materials or in connection with any removal, remediation, clean up, restoration
and materials required hereunder to return the Premises and any other property
of whatever nature to their condition existing prior to the appearance of
LESSEE'S Hazardous Materials.
B. DISCLOSURE WARNING AND NOTICE OBLIGATIONS. LESSEE shall
comply with all Hazardous Material Laws regarding the disclosure of the
presence or danger of Hazardous Materials. LESSEE acknowledges and agrees that
all reporting and warning obligations required under the Hazardous Materials
Laws with respect to Hazardous Materials are the sole responsibility of LESSEE,
whether or not such Hazardous Materials Laws permit or require LESSOR to
provide such reporting or warnings, and LESSEE shall notify LESSOR, in writing,
of any complaints, notices, warnings, reports or asserted violations of which
LESSEE becomes aware relating to Hazardous Materials on or about the Premises
within forty-eight (48) hours of such event. LESSEE shall also within
twenty-four (24) hours notify LESSOR if LESSEE knows or has reason to believe
Hazardous Materials have or will be released in or about the Leased Premises or
the Building.
C. ENVIRONMENTAL TESTS AND AUDITS. LESSEE shall not perform
or cause to be performed, any Hazardous Materials surveys, studies, reports or
inspection, relating to the Premises without obtaining LESSOR'S advance written
consent, which consent may be withheld in LESSOR'S sole discretion. At any time
prior to the expiration of the Lease Term, upon twenty-four (24) hours prior
written notice to LESSEE, LESSOR shall have the right to enter upon the
Premises in the presence of LESSEE or a representative of LESSEE, in order to
conduct appropriate tests and to deliver to LESSEE the results of such tests to
demonstrate that levels of any Hazardous Materials in excess of permissible
levels has occurred as a result of LESSEE'S use of the Premises.
E. SURVIVAL/LESSEE'S OBLIGATIONS. The respective rights and
obligations of LESSOR and LESSEE under this Paragraph 25 shall survive the
expiration or termination of this Lease.
F. RADON. RADON GAS: Radon is a naturally occurring
radioactive gas that, when it has accumulated in a building in sufficient
quantities, may present health risk to persons who are exposed to it over time.
Levels of radon that exceed Federal and State Guidelines have been found in
buildings in Florida. Additional information regarding radon and radon testing
may be obtained from your county public health unit.
25
<PAGE> 26
IN WITNESS WHEREOF, LESSOR and LESSEE have caused this Lease
to be executed, as required by law, as of the day and year first above written.
WITNESSES: "LESSOR"
- ------------------------------- BUENOS AIRES EMBOTELLADORA S A.,
a stock corporation organized and
existing under the laws of Argentina
- ------------------------------
By: /s/
--------------------------------
Its: Executive Vice President
26
<PAGE> 27
WITNESSES: "LESSEE"
Karen I MACKENZIE INVESTMENT MANAGEMENT, INC.
- ------------------------------- a Delaware corporation
Deborah J. Day
- -------------------------------
By: /s/ C
---------------------------------
Its: Senior Vice President
27
<PAGE> 28
LIST OF EXHIBITS
EXHIBIT A Suite 100 Floor Plan
EXHIBIT B Consent to Sublease
EXHIBIT C Memorandum of Sublease
EXHIBIT D Inventory
EXHIBIT E Master Lease
EXHIBIT F Bill of Sale
28
<PAGE> 29
EXHIBIT "A" TO SUBLEASE
[MAP]
29
<PAGE> 30
EXHIBIT "B"
CONSENT TO SUBLEASE
This Agreement is entered into as of May 1, 1997 by and among VIA
MIZNER ASSOCIATES, a Florida general partnership, ("MASTER LANDLORD"), BUENOS
AIRES EMBOTELLADORA, S.A. a stock corporation organized and existing under the
laws of Argentina, ("SUBLANDLORD") and MACKENZIE INVESTMENT MANAGEMENT, INC. a
Delaware corporation ("SUBTENANT").
W I T N E S S E T H:
WHEREAS, SUBLANDLORD is presently leasing certain premises located in
Via Mizner Financial Plaza which is located at 700 South Federal Highway, Boca
Raton, Florida 33432 (the "Premises") from MASTER LANDLORD pursuant to that
certain lease dated March 18, 1994, ("Master Lease"); and
WHEREAS, SUBTENANT desires to sublease a portion of the Premises from
SUBLANDLORD pursuant to the Sublease Agreement (the "SubLease") to which this
Consent to Sublease is attached as Exhibit "B"; and
WHEREAS, SUBLANDLORD and SUBTENANT desire that MASTER LANDLORD consent
to the Sublease as required pursuant to Article XI of the Master Lease, and
MASTER LANDLORD is willing to consent to the Sublease on the terms and
conditions set forth in this Consent to Sublease.
NOW THEREFORE, based upon the foregoing mutual premises, and other
good and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, it is agreed as follows:
1. That the above recitals are true and correct and are
incorporated herein by reference.
2. MASTER LANDLORD does hereby consent to the Sublease as
required pursuant to the terms and provisions of the Master
Lease. This consent does not constitute approval by MASTER
LANDLORD of any of the provisions of the Sublease or
agreement thereto or therewith; nor shall the same be
construed to amend the Master Lease in any respect, any
purported modifications being solely for the purpose of
setting forth the rights and obligations as between SUBTENANT
and SUBLANDLORD, but not binding MASTER LANDLORD.
3. SUBLANDLORD acknowledges and agrees that SUBLANDLORD shall
not be released from, and shall continue to be bound pursuant
to and in accordance with, all terms and conditions of the
Master Lease notwithstanding in any manner whatsoever the
MASTER LANDLORD's consent to the Sublease.
30
<PAGE> 31
4. SUBTENANT acknowledges that SUBTENANT and MASTER LANDLORD are
not contractually bound in any manner except as expressly set
forth in this Consent to Sublease. SUBTENANT specifically
acknowledges that MASTER LANDLORD is not a party to the
Sublease.
5. If SUBLANDLORD breaches any of the terms and provisions of
the Master Lease, MASTER LANDLORD shall receive directly from
SUBTENANT all sums due or payable to SUBLANDLORD by SUBTENANT
pursuant to the Sublease, and upon receipt of a written
notice from MASTER LANDLORD referencing this paragraph,
SUBTENANT shall thereafter pay to MASTER LANDLORD any and all
sums becoming due or payable under the Sublease. SUBLANDLORD
shall receive from MASTER LANDLORD a corresponding credit for
such sums against any payments then due or thereafter
becoming due from SUBLANDLORD. Neither the giving of such
written notice to SUBTENANT nor the receipt of such direct
payments from SUBTENANT shall cause MASTER LANDLORD to assume
any of SUBLANDLORD's duties, obligations and/or liabilities
under the Sublease and shall not in any manner whatsoever
cause the SUBLANDLORD not to be in default and/or cure in any
manner whatsoever any Event of Default by the SUBLANDLORD
pursuant to the Master Lease, constitute a waiver by or on
behalf of the MASTER LANDLORD of such Event of Default,
and/or prohibit, preclude, and/or estop the MASTER LANDLORD
from pursuing any and all remedies available to the MASTER
LANDLORD upon the occurrence of an Event of Default pursuant
to the Master Lease.
6. In the event an Event of Default occurs pursuant to the
Master Lease, then, in that event, MASTER LANDLORD shall
notify the SUBTENANT in writing at the Suite 101 portion of
the Leased Premises ("Default Notice"). Provided the
SUBTENANT properly cures any such Event of Default within
Five (5) days of the delivery of the Default Notice and
thereafter causes the payment of all Fixed Minimum Annual
Rent and Additional Rent as set forth in the Master Lease and
the performance of any and all terms, covenants, and
conditions of the Master Lease to be properly performed in
regard to the Suite 101 portion of the Leased Premises of the
Master Lease, then:
(i) The SUBTENANT'S possession of the Suite 101 portion
of the Leased Premises pursuant to the Master Lease
shall not be disturbed by the MASTER LANDLORD as a
result of or in the exercise of any of the rights of
the MASTER LANDLORD against the SUBLANDLORD pursuant
to the Master Lease;
31
<PAGE> 32
(ii) MASTER LANDLORD shall not join the SUBTENANT as a
party defendant in any action or proceeding for the
purpose of terminating SUBLANDLORD'S possession of
the Suite 101 portion of the Leased Premises
pursuant to the Master Lease during the term of the
Master Lease;
(iii) Effective upon the effective date of any such
termination of the Master Lease, SUBTENANT shall be
deemed to have assumed all of the obligations of the
SUBLANDLORD pursuant to the Master Lease in regard
to the Suite 101 portion of the Master Lease, and
shall attorn to the MASTER LANDLORD pursuant to the
Master Lease in regard to the Suite 101 portion of
the Master Lease. Such attornment shall be effective
and self-operative without the execution of any
further instrument on the part of any party
whatsoever. SUBTENANT shall execute and deliver at
any time and from time to time, upon the request of
the MASTER LANDLORD any instrument or certificate,
in form and substance reasonably acceptable to the
SUBTENANT, which may be reasonably necessary or
appropriate to evidence such attornment.
7. Anything to the contrary contained herein or in any other
document or agreement notwithstanding, in the event the
SUBLANDLORD does not properly exercise the option to extend
the term of the Master Lease pursuant to Paragraph 3
captioned "Renewal Options" of Exhibit Two to the Master
Lease, then, in that event, SUBTENANT shall be entitled to
exercise the option to extend the term of the Master Lease
for all of Suite 100 pursuant to the Master Lease in
accordance with and pursuant to Paragraph 3 of Exhibit Two to
the Master Lease in which event the terms and provisions of
Paragraph 6(iii) hereof shall govern during any such
extension of the term of the Master Lease by SUBTENANT
pursuant to the provisions hereof. In the event the SUBTENANT
exercises the option described above in this Paragraph 7 and
the SUBLANDLORD has not exercised the option to renew set
forth in the Master Lease, then, in that event: (1) the
SUBLANDLORD shall be released from any and all obligations
under the Master Lease and under the Sublease in regard to
matters occurring subsequent to June 30, 2001 in the Suite
100 portion of the Leased Premises pursuant to the Master
Lease upon the expiration of the original term of the Master
Lease (which expiration date is June 30, 2001); (2) under no
circumstances will the SUBLANDLORD be responsible for or have
any liability for any matter occurring subsequent to June 30,
2001, including, but not limited to, any payment due under
the Master Lease or the Sublease for any period of time after
June 30, 2001 unless, SUBLANDLORD exercises (and issues
SUBLANDLORD'S written notice of exercise of) the Renewal
Options described in this Paragraph 7 and/or does not
properly vacate the of the Leased Premises pursuant to the
Master Lease.
32
<PAGE> 33
8. In no event whatsoever shall any terms and/or conditions of
the Master Lease relative to the Suite 101 portion of the
Leased Premises and/or the Sublease be amended, modified,
altered, and/or changed in any manner whatsoever without the
express written consent of the MASTER LANDLORD, SUBLANDLORD,
and SUBTENANT, except that in the event any of such parties
should be in default pursuant to the appropriate governing
instrument, then, in that event, the consent of such
defaulting party shall not be required, provided that no
amendment shall increase the burdens and/or duties of the
non-consenting party.
9. Counterparts. This agreement may be executed in any number of
counterparts with the same effect as if all parties hereto
had signed the same document. All such counterparts shall be
construed together and shall constitute one instrument, but
in making proof hereof it shall only be necessary to produce
one such counterpart. A facsimile copy of this Sublease and
the signatures on such facsimile copy of this Consent to
Sublease shall be considered for all purposes as originals.
10. Modification of Termination. This Agreement may only be
modified or terminated by a written instrument or instruments
executed by the party against which enforcement of the
modification or termination is asserted. Any alleged
modification or termination which is not so documented shall
not be effective as to any party.
11. Negation of Partnership. Nothing contained in this Agreement
is intended to create any partnership, joint venture or
association between the parties hereto or in any way make any
part a co-principal with the other parties with reference to
the property or the agreements referenced herein and any
inferences to the contrary are hereby expressly negated.
12. Governing Law. The terms and provisions of this Agreement
shall be governed by the laws of the State of Florida
(without regard to the conflict of laws rules of such State)
and to applicable federal law.
13. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto with
respect to the transactions referenced herein and supersedes
all prior written or oral understandings and agreements
between the parties hereto with respect thereto, except that
(1) MASTER LANDLORD and SUBLANDLORD are parties to the Master
Lease and (2) SUBLANDLORD and SUBTENANT are parties to the
Sublease.
14. This Consent shall not be construed as a consent by the
MASTER LANDLORD to, or as permitting any other or further
subletting by either the SUBLANDLORD or SUBTENANT or any
assignment of the Sublease.
33
<PAGE> 34
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
Signed, sealed and VIA MIZNER ASSOCIATES, a
delivered in the presence of: Florida general partnership,
MASTER LANDLORD
J. A Welby BY: SVMP, LTD., a Florida
- --------------------------------- limited partnership,
General Partner of Via
Mizner Associates
Judy Curtis
- ---------------------------------
BY: SVMP, LTD., a Florida
corporation General Partner
of SVMP, LTD.
BY: /s/ Bill Shubin
-------------------------------
Bill Shubin, President
Signed, sealed and delivered
in the presence of:
BUENOS AIRES EMBOTELLADORA, S.A.,
- ---------------------------------- a stock corporation organized and
existing under the laws of
Argentina,
- ---------------------------------- SUBLANDLORD
BY: /s/ Osumando H. Banos
-------------------------------
Name: Osumando H. Banos
Title: Executive Vice President
34
<PAGE> 35
Signed, sealed and delivered
in the presence of:
MACKENZIE INVESTMENT
- -------------------------------- MANAGEMENT, INC., a Delaware
corporation organized and existing
under the laws of Florida
SUBTENANT
- --------------------------------
By: /s/ C. William Ferris
------------------------------
Name: C. William Ferris
Title: Senior Vice President
35
<PAGE> 36
CONSENT OF GUARANTOR
The Pepsi-Cola Puerto Rico Bottling Company, a Delaware Corporation, the
Guarantor of the Master Lease, does hereby request that the MASTER LANDLORD
execute and deliver this CONSENT TO SUBLEASE and does hereby evidence and
confirm that the execution and deliver thereof by the MASTER LANDLORD shall not
in any manner whatsoever amend, modify, alter, and/or change the obligations
and duties of Pepsi-Cola Puerto Rico Bottling Company, a Delaware Corporation,
pursuant to the Guaranty executed and delivered to the MASTER LANDLORD which is
hereby ratified and confirmed and remains in full force and effect.
PEPSI-COLA PUERTO RICO BOTTLTNG
- ------------------------------- COMPANY, a Delaware corporation
- ------------------------------- By: /s/ C. L. Timothy
-------------------------------
Name: C. L. Timothy
Title: Senior Vice President
36
<PAGE> 37
EXHIBIT "C"
MEMORANDUM OF SUBLEASE
(SHORT FORM)
THIS MEMORANDUM OF SUBLEASE, made as of the ______ day of May, 1997,
by and between BUENOS AIRES EMBOTELLADORA S.A., a stock corporation organized
and existing under the laws of Argentina, herein called the "Lessor", and
MACKENZIE INVESTMENT MANAGEMENT, INC. herein called the "Lessee".
WITNESSETH THAT
1. LESSOR and LESSEE have entered into a Sublease of the following
Leased Premises, situated in Palm Beach County, Florida, to-wit:
See Exhibit A of the Sublease
This Memorandum is intended to give all persons notice of the
Sublease specifically including the notices expressly set forth in this
Memorandum.
2. LESSEE is precluded by the terms of said Sublease from creating or
allowing to be created against LESSOR's title to or interest in the demised
property, any mechanic's or materialman's liens, and all persons claiming by,
through, under or against LESSEE, are hereby notified that LESSEE has no power
or authority to subject the title or interest of LESSOR, to any claim for any
such lien. All persons dealing with LESSEE and claiming by, through, under or
against LESSEE shall look entirely to LESSEE for the payment of any and all
charges incurred in improving the demised property at any time during the term
of the Sublease.
3. The term of the Sublease commences on ______________ and
terminates on _______________ As of the date of termination of the Sublease,
this Memorandum and the notices provided hereunder shall cease. If requested by
LESSOR, LESSEE agrees upon termination of the Sublease to execute a
cancellation and termination of this Memorandum.
37
<PAGE> 38
IN WITNESS WHEREOF, LESSOR and LESSEE have caused this Memorandum of
Sublease to be executed as required by law, on the day and year first above
written and be deemed null and void.
Signed, sealed and delivered BUENOS AIRES EMBOTELLADORA S.A.
in the presence of:
- ----------------------------------- By:
----------------------------------
- ----------------------------------- (Corporate Seal)
Signed, Sealed and delivered MACKENZIE INVESTMENT MANAGEMENT, INC.
in the presence of:
By:
- ----------------------------------- ---------------------------------
- -----------------------------------
(NOTARY ACKNOWLEDGMENTS ON NEXT PAGE)
38
<PAGE> 39
STATE OF FLORIDA
COUNTY OF PALM BEACH
The foregoing instrument was acknowledged before me this ______
day of ________________, 1997, by _____________ of BUENOS AIRES EMBOTELLADORA
S. A., a stock corporation organized and existing under the laws of Argentina,
on behalf of said corporation, who has produced ______________________________
as identification.
--------------------------------------
Notary Public
My Commission Expires:
--------------------------------------
Printed Name of Notary
Notary Commission No.
-----------------
STATE OF
----------------
COUNTY OF
----------------
The foregoing instrument was acknowledged before me this ______
day of ________________, 1997, by ___________________ _____________ of
MACKENZIE INVESTMENT MANAGEMENT, INC., a __________________ corporation, on
behalf of said company, who has produced __________________ as identification.
--------------------------------------
Notary Public
My Commission Expires:
--------------------------------------
Printed Name of Notary
Notary Commission No.
-----------------
This Instrument Prepared By:
James M. Hankins, Esq.
Hodgson, Russ, Andrews, Woods & Goodyear
2000 Glades Road, Suite 400
Boca Raton, Florida 33431
39
<PAGE> 40
EXHIBIT "D"
<TABLE>
<CAPTION>
Location Qty Description Mfgr./Notes
- -------- --- ------------ ------------
<S> <C> <C> <C>
Room 101 4 Chair/Side: Blue/Walnut Taylor
1 Chair/Arm: Burgundy Teknion
1 Desk 60x30 Artopex
1 Credenza 66x30 Artopex
1 48 Round Table Artopex
1 28x22 Walnut End Table Artopex
2 36x12- 2 shelf bookcases Premium Desk Inc
Room 101 Aisle 1 Wall Mirror 22x44
1 Table 35x2Ox31 Councill
4 drawer
1 Painting 47x36
"Jordan Walk"
Room 102 1 Desk 72x36 Artopex
Double Ped.
1 Credenza 72x20 Descor
1 Arm Chair Teknion
1 Painting 15/275 Lilly Pond
Room 103 1 Arm Chair Teknion
1 Credenza 66x20 Artopex
2 Desks 30x60 Doub. Ped. Artopex
1 Desk 30x66 RH Ret. 20x42 Artopex
</TABLE>
1
<PAGE> 41
Exhibit "D"
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Room 104 Conference 1 Round 48" Tables Artopex
2 Arm Chair: Blue/Walnut Taylor
1 Credenza 72x20 Artopex
1 Side Chair:
Blue Upholstered
1 Painting 29x37
17/295
Room 105 1 Credenza 66x2O Artopex
2 Arm Chair: Blue/Walnut Taylor
Room 106 2 Arm Chair: Blue/Walnut Taylor
1 Desk 72x36 Double Ped. Artopex
Room 107 2 Arm Chair: Blue/Walnut Taylor
1 Desk 72x36 Doub. Ped. Artopex
108 Aisle 1 Painting 58x39
"Dreamscape"
Room 108 2 Arm Chair: Blue/Walnut Taylor
Room 109 1 Painting "Sailboat" Mallet
Room 110 Conference Room 1 Chairs: Blue/Burgundy Pepsi Cola Hillsboro
</TABLE>
2
<PAGE> 42
Exhibit "D"
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 22x22x28 Storage Cabinet HP
1 Painting "Fall Lane" Byram
Room 1ll 1 Whiteboard 48x36
1 Painting 46x37 80/250 "Putuni"
1 Painting 32x42 31/200
10 Arm Chairs: Blue/Walnut Taylor
1 Arm Chair: Blue Taylor
1 Painting "Palm" 72/300 Thompson
1 Printer Stand
3 Arm Side Chair: Blue Taylor
1 Painting 39/200 "Meadows"
112 Aisle 2 Pictures 58x34 No Name 500/950
1 Credenza 20x72 Artopex
Room 117 Computer Room 1 5 dr. Lateral File Storwal
1 "L" Shape Table 72x30, 6Ox30 with
shelf storage
1 Austel Permit A92/83H/0376 ATT
1 Power Panel South Hills
1 5 dr. Lateral File
1 4 dr. Lateral File
1 Magnetic Tape Rack
</TABLE>
3
<PAGE> 43
EXHIBIT "D"
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 Swintec 4040 Typewriter
1 Keyboard
1 IBM Model 70 386 Hard drive
1 IBICO Binder Press
1 IBM Selectric Type
1 IBM Laser Printer lOP
2 Upholstered Arm Chair Councill
1 Steno Chair Gray
1 Vhiteboard
1 5 dr. Lateral File
Room 118 Conference 15 Conference Chairs: Blue AGI Industries
5 Conference Chairs: Red AGI Industries
1 Conference Table 60x238 (3
pieces)
1 48x48 Hardwood Visuals Wallboard
1 Cart-Mobile 27x18x42:Black Bretford
1 36x12x30 Bookcase Premier
2 Arm Chairs: Burgundy Teknion
1 20x60 Credenza Artopex
1 36x72 Doub. Ped. Desk Artopex
2 2Ox36 2 dr Laterals Artopex
1 20x72 Credenza Artopex
1 20x36 3 DR Lateral Artopex
</TABLE>
4
<PAGE> 44
EXHIBIT "D"
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 30x66 Doub. Ped. Desk Artopex
1 20x36 2 Shelf Bookcase Artopex
1 Painting 75/275 "Red Lilly"
1 Painting "Casa By The Sea"
1 Painting "Blue Meadow"
2 Paintings "Sailboats"
1 Painting "House Boat" Mallet
1 30x65 Module Teknion
119 First Floor Supply 1 Ml 909 Printer Brother
Room
1 PL 2000 Printer with stand Standard Register
120 Aisle 2 2 dr. Lateral File Teknion
2 2 dr. Pedestals
2 Flipper 48"
2 WorkSur 66x30
2 WorkSur 48x20
2 WorkSur 66x20
8 Panels 30x66 2 with fab. both sides
4 Panels 36x66 2 with fab. both sides
2 Panels 48x66 fab. one side
4 Panels 20x66 2 with fab. both sides
Room 121 6 2 dr. Lateral File
</TABLE>
5
<PAGE> 45
EXHIBIT "D"
<TABLE>
<CAPTION>
<S> <C> <C> <C>
6 2 dr. Pedestal
6 48" Flipper
6 Work Sur 66x30
7 Work Sur 48x20
6 Work Sur 66x:20
18 Panels 30x66 7 with fab. one side
8 Panels 36x66 2 with fab. one side
7 Panels 48x66 7 fab. one side
12 Panels 2Ox66 6 fab. one side
2 Desk Chairs: Burgundy All Teknion
Aisle 122 1 Painting 3Ox35 "Grotto" 40/125
1 Painting 30x36 "Near the Surf"
97/100
2 2 dr. Lateral File
2 2 dr. Pedestals
2 48" Flipper
2 WorkSur 66x30
2 WorkSur 48X20
2 WorkSur 66X20
8 Panels 3Ox66 4 with fab. both sides
4 Panels 36x66 2 with fab. both sides
2 Panels 48x66 fab. one side
4 Panels 20x66 2 with fab. both sides
</TABLE>
6
<PAGE> 46
EXHIBIT "D"
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Room 123 1 Computer Stand 24x18x41:
Storage Off White
1 Worktable 68x30 Putty Pitney Bowes
1 Top Shelf 68x15x42 Putty Pitney Bowes
2 Tables 72x30 White Tables-Howe White
2 Metal Racks 36x18x75 3 shelves
ea. putty
1 Wood Counter Top Irregular Shape
5 2 dr. Lateral Files Teknion
5 48" Flippers Teknion
5 Pedestals Teknion
1 Picture "Farmhouse"
5 Arm Chairs: Burgundy Teknion
Room 124 2 2 dr. Lateral File
2 2 dr. Pedestal
2 48" Flipper
2 WorkSta 66x30
3 WorkSta 48x20
2 WorkSta 66x20
6 Panels 3Ox66 2 fab. one side
3 Panels 36x66 1 fab. one side
3 Panels 48x66 3 fab. one side
4 Panels 2Ox66 2 fab. one side
1 Desk Chair: Burgundy
1 30x24 Computer Table
</TABLE>
7
<PAGE> 47
EXHIBIT "D"
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Aisle 124 1 Painting 36x30 "Santa
Catalina"
100/350
Room 125 Lunch Room 1 Table 36" Round White
7 Chairs: Chrome Green Lowenstein
1 Rolling Cart 24x20x27: Oak
1 Potscrubber 1410 Dishwasher Putty GE
1 Refrigerator TBx21J1 GE
20.6 CU FT w/icemaker
Almond
1 Portable Water Cooler OASIS
1 Painting 31x25 No Name
125 Aisle 1 Painting 37x30 1/1 "Mist in Meadow"
</TABLE>
8
<PAGE> 1
EXHIBIT 10.5
FIRST AMENDMENT TO SUBLEASE
BETWEEN BUENOS AIRES EMBOTELLADORA S.A. (LESSOR)
AND MACKENZIE INVESTMENT MANAGEMENT, INC.,(LESSEE)
WHEREAS, the Buenos Aires Embotelladora S.A. entered into a sublease
with Mackenzie Investment Management, Inc. with a Lease Commencement Date of
June 1, 1997 (hereinafter referred to as the "sublease"); and
WHEREAS, Lessor and Lessee have agreed to modify the lease as provided
for in Paragraphs 1 through 4, inclusive, hereinafter;
NOW THEREFORE, in consideration of the mutual covenants and other good
and valuable consideration, Lessor and Lessee amend the Lease as of the data
hereof as follows:
1. Delete the words "Exhibit A" in each and every place that it appears
in the Sublease Agreement (including, but not limited to, Paragraph 2. of Page
3; Paragraph d. of Page 4; Paragraph 1. of Page 6; and the list of exhibits on
Page 28.) and inset in lieu thereof; "Exhibit A-1"
2. Delete the words "7,378 square feet" in paragraph E. of the Sublease
Information Summary and insert in lieu thereof: "9,106 square feet"
3. Notwithstanding the provisions of paragraph N. of the Sublease
Information Summary on Page 5. Base Annual Rent and Monthly Rent for the period
commencing March 1, 1999 through June 30, 1999 is: $12,626.99, Monthly, and
$115,523.84, Annually. These calculations were based on the initial rate of
$15.68 per rentable square foot of Leased Premises.
4. A cost of Living Increase in the Base Annual Rent will occur on July
1, 1999 in accordance with Paragraph 3. of the Sublease Agreement.
Lessor and Lessee hereby ratify and confirm all of the
remaining terms, conditions and covenants contained in the Sublease, except as
modified by paragraph 1 through 4 inclusive of this First Amendment to Sublease.
If there is any conflict between any provisions of the Sublease and any
provision of this First Amendment, the terms of the First Amendment shall
control. Neither the Sublease, or the First Amendment to the Sublease nor any
term or provision of either, may be altered, amended or modified in any manner
except by written agreement executed by the Lessor and Lessee. Lessee has no
claim, defenses or offsets against the Lessor nor does the lessee have any
claims, offsets or defenses whatsoever pertaining to the Sublease of this First
Amendment to Sublease, or the Lessee's obligation to perform (including the
payment of rent) under the Sublease and in the First Amendment to Sublease.
Lessee
<PAGE> 2
confirms lessor is not in default under this Sublease and First Amendment
to Sublease; and further Lessee is not aware of any facts which would with the
passing of time or giving of notice, or both, cause Lessor to be in default
under this Sublease or the First Amendment to Sublease.
IN WITNESS WHEREOF, the Lessor and Lessee have executed this First
Amendment to Sublease this _________ day of February, 1999
WITNESSES: BUENOS AIRES EMBOTELLADORA S.A.
a stock corporation and existing
under the laws of Argentina, Lessor
BY:
- --------------------------------- ---------------------------------
Its: President & CEO
--------------------------------
- --------------------------------- DATE: 3/16/99
-------------------------------
WITNESSES:
MACKENZIE INVESTMENT
MANAGEMENT, INC., a Delaware
Corporation, Lessee
BY: /s/ C. William Ferris
- --------------------------------- ---------------------------------
C. William Ferris, Vice President
- --------------------------------- DATE: 2/25/99
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<PAGE> 1
EXHIBIT 10.6
LEASE AGREEMENT
THIS LEASE, made as of the 31st day of January, 1992 by VIA MIZNER ASSOCIATES, a
Florida general partnership, herein called "Landlord, and IVY MANAGEMENT, INC.,
a Massachusetts corporation authorized to do business in the State of Florida,
herein called "Tenant".
LEASE SUMMARY
a) Landlord's Mailing
Address: P.O. Drawer 40
Boca Raton, Florida 33429
b) Tenant Suite No.: Suite 201
c) Tenant's Lease Address: Suite 201
789 S. Federal Highway
Boca Raton, FL 33432
d) Tenant's Billing
Address: Suite 201
798 S. Federal Highway
Boca Raton, FL 33432
e) Tenant's Telephone No.: Business (561) 393-8900
f) Tenant's Name (including
state of formation
or incorporation): IVY MANAGEMENT, INC., a
Massachusetts corporation
g) Tenant's Trade Name: IVY MANAGEMENT, INC.
h) Resident Manager or
Key Person: Bill Ferris
i) Guarantor(s): MACKENZIE INVESTMENT MANAGEMENT
INC., a Delaware corporation
j) Lease Commencement Date: May 1, 1992
k) Lease Expiration Date: September 30, 2001
l) Amendments: See Exhibit Two attached
hereto and made a part
hereof
m) Expansion Provisions: None
n) GLA in Premises: 7,854 sq. ft.
o) Tenant Improvements: See Exhibit Two, Paragraph 2
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p) Minimum Rent:
<TABLE>
<CAPTION>
Fixed
Lease Minimum Monthly
Year $/Sq. Ft. Annual Rent Installment
---- --------- ----------- -----------
<S> <C> <C> <C> <C>
1 $13.32 $ 79,920.00* $ 6,660.00
2 13.32 79,920.00* 6,660.00
3 13.99 109,877.46 9,156.46
4 14.69 115,375.26 9,614.61
5 15.42 121,108.68 10,092.39
6 16.19 127,156.26 10,596.36
7 17.00 133,518.00 11,126.50
8 17.85 140,193.90 11,682.83
9 18.74 147,183.96 12,265.33
10 19.68 154,566.72 12,880.56
</TABLE>
*Lease Years 1 and 2 the Fixed Minimum Annual Rent has been calculated
on an assumed square footage of 6,000 sq. ft. Beginning in Lease Year 3
the GLA provided for in subparagraph (n) above is applicable for
calculating the Annual Rent.
q) Permitted Use: General offices providing
financial, insurance, accounting
and/or legal services
r) Consumer Price Index: None; and N/A
s) Security Deposit: See Exhibit Two, Paragraph 6
t) Other Sums Payable: N/A
u) ESTIMATED Annual
Expenses (First Year):
Fixed Minimum Annual Rent: $ 79,920.00
Building Operating Costs;
Via Mizner Financial Plaza Operating Costs;
Via Mizner Master Facilities Operating Costs: 40,327.32
Sales Tax: 7,214.84
Estimated Annual Total 1st Year: $127,462.16
THE INFORMATION SET FORTH IN THIS SECTION (u) HAS BEEN ESTIMATED BASED
ON LANDLORD'S GOOD FAITH ATTEMPT TO CALCULATE SUCH SUMS FOR DISCLOSURE
PURPOSES ONLY. THE LANDLORD DISCLAIMS ANY RESPONSIBILITY FOR THE
ACCURACY OF THE INFORMATION AND DOES NOT WARRANT OR REPRESENT TO TENANT
THAT ANY ESTIMATE IS ACCURATE. THE TENANT SHOULD ENGAGE AND RELY ONLY
UPON INDEPENDENT REAL ESTATE PROFESSIONALS EMPLOYED BY TENANT TO
ASCERTAIN THE ACCURACY OF THESE ESTIMATES.
v) Remarks: NONE
THE FOREGOING LEASE SUMMARY IS AN
INTEGRAL PART OF THIS LEASE AGREEMENT
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ARTICLE 1
Basic Lease Provisions
SECTION 1.01 Leased Premises.
In consideration of the rents, covenants and agreements hereafter
reserved and contained on the part of the Tenant to be observed and performed,
the Landlord demises and leases to the Tenant, and Tenant rents from Landlord,
those certain premises now existing or hereafter to be erected in VIA MIZNER
FINANCIAL PLAZA which premises is identified as Suite No. 201, 798 S. Federal
Highway, containing an area of 7,854 square feet (which area has been
established in accordance with the criteria set forth on Exhibit "J" attached
hereto and made a part hereof), herein called the "Leased premises". The
boundaries and location of the Leased Premises are outlined and identified on
the Building Plan marked Exhibit "A" attached hereto and made a part hereof.
Dimensions for all purposes shall be measured in accordance with the criteria
set forth on Exhibit "J" from the centerline of interior walls or from the
exterior face of exterior walls. The Leased premises are located in VIA MIZNER
FINANCIAL PLAZA on the real property described in Exhibit "B" attached hereto
and made a part hereof. The boundaries of the VIA MIZNER FINANCIAL PLAZA (which
boundaries may be modified or amended to increase or decrease the area) are
identified on Exhibit "One", the site plan of VIA MIZNER FINANCIAL PLAZA,
attached hereto and made a part hereof.
SECTION 1.02 Use of Additional Areas.
The use and occupation by the Tenant of the Leased Premises shall
include the non-exclusive use in common with others entitled thereto of the
common areas, employees' parking areas, service roads, malls, loading
facilities, sidewalks and customer car parking areas as such common areas now
exist or as such common areas may hereafter be constructed upon or within the
real property described in Exhibit "B", and other facilities as may be
designated from time to time by the Landlord, subject however to the terms and
conditions of this Lease and to rules and regulations for the use thereof
(including use charges and parking validation procedures) as prescribed from
time to time by the Landlord.
SECTION 1.03 Commencement and Length of Term.
The term of this Lease shall commence on the date set forth in Section
(j) of the Lease Summary (or the date upon which Tenant opens for business in
the Leased premises, if earlier than May 1, 1992), and shall continue until the
expiration date as set forth in Section (k) of the Lease Summary.
SECTION 1.04 Commencement of Rent.
The Tenant's obligation to pay rent shall commence on the earliest of
the following dates: (a) the 1st day of May, 1992, and (b) the date upon which
Tenant opens for business in the Leased Premises. Should the term of this Lease
and the Tenant's obligation to pay rent commence on a day other than the first
day of a month, then the term of this Lease shall continue in full force and
effect for the period from the commencement date hereof to the first day of the
calendar month next succeeding, plus the period of the term set forth in Section
1.03 hereof; provided, however, that the Tenant shall pay rent for the
fractional month (from the Commencement Date to and including the last day of
the fractional month) on a per diem basis (the per diem being calculated on the
basis of a thirty day month) and the rent for the fractional month shall be
payable on the commencement date
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and thereafter the fixed minimum rent shall be paid in equal monthly
installments on the first day each and every month in advance. All other monthly
payments hereunder shall likewise be calculated and paid on such per diem basis
for any fractional month.
SECTION 1.05 Failure of Tenant to Open.
In the event that Tenant fails to take possession and to open the Leased
Premises for business fully improved, fixtured and staffed or fails to commence
to do business on the Lease Commencement Date, then Tenant shall be in default
hereunder and the Landlord shall have the right to enforce all remedies of
default as provided in this Lease.
SECTION 1.06 Obligations of Tenant Before Lease Term Begins.
Tenant shall observe and perform all of its obligations under this Lease
(except its obligations to operate and to pay Fixed Minimum Rent, its pro rata
share of VIA MIZNER FINANCIAL PLAZA's Operating Costs provided for in Section
2.06, and its pro rata share of real estate taxes as provided for in Section
2.06) from the date upon which the Leased Premises are delivered to Tenant for
its work until the Commencement Date of the Lease Term in the same manner as
though the Lease Term began when the Leased Premises were delivered to Tenant.
ARTICLE II
Rent
SECTION 2.01 Fixed Minimum Annual Rent.
(a) Tenant agrees to pay Landlord, subject, however to adjustment (if
any) as herein provided, as fixed minimum annual rent the sum or sums set forth
in Section (p) of the Lease Summary (hereinafter referred to as "Fixed Minimum
Annual Rent"). The Fixed Minimum Annual Rent during the term of this Lease shall
be payable by the Tenant in equal monthly installments, on or before the first
day of each month in advance, at the office of the Landlord as set forth in
Section (a) of the Lease Summary, or at such other place designated by Landlord
in writing, without notice or demand, and without any deduction, counterclaim,
or set-off whatsoever.
(b) In the event that at any time any personal or corporate check of
Tenant should be returned marked "insufficient funds" or should not be promptly
paid by the drawee bank for any other reason (excepting and error made by the
drawee bank and acknowledged by the drawee bank in writing), Landlord may,
without prejudice to any other right or remedy accruing to Landlord under this
Lease, require that all future rental payments are to be made on or before the
due date by cash, cashier's check or money order.
SECTION 2.02 Cost of Living Increases in Fixed Minimum Annual Rent.
The initial term of the Lease is not subject to the provisions of this
Section 2.02, however, if any option term is exercised, then in the case of any
option terms, if any, commencing one (1) year from the first day of the option
term (the Adjustment Date), and annually thereafter, the Fixed Minimum Annual
Rent shall be adjusted (increased but not decreased) by the following
mathematical formula:
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C
---
A = [(B x D)]
A is the Fixed Minimum Annual Rent for the year following the Adjustment
Date (the Adjusted Fixed Minimum Annual Rent).
B is the Fixed Minimum Annual Rent as may be subsequently established in
accordance with a fair market rental value review provision contained in
this Lease, if any, or is the Fixed Minimum Annual Rent as of the
Commencement Date of any option term, as the case may be.
C is the Index for two (2) months preceding the month in which the
Adjustment Date occurs.
D is the Commencement Date Index of any option term.
The formula shall adjust the Fixed Minimum Annual Rent as of the
Commencement Date of any option term by the product obtained by multiplying the
Fixed Minimum Annual Rent times a fraction, the numerator of which shall be the
Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. City
Average: All Items), issued by the Bureau of Labor Statistics of the U.S.
Department of Labor, using the year 1982-1984 as a base of 100, (the "Index")
for the month immediately preceding the month in which the Adjustment Date
occurs, and the denominator shall be the Commencement Date Index of the option
term. The result of this calculation shall be the Adjusted Fixed Minimum Annual
Rent for the year following the Adjustment Date.
In the event that the Index herein referred to ceases to be published
during the term of this Lease, or if a substantial change is made in the method
of establishing such Index, then the determination of the adjustment in the
Fixed Minimum Annual Rent shall be made with the use of such conversion factor,
formula or table as may be published by the Bureau of Labor Statistics, or if
none is available, the parties shall accept comparable statistics on the cost of
living in the United States, as shall then be computed and published by an
agency of the United States, or if none, by a respected financial periodical
selected by Landlord.
In the event that Tenant elects to exercise its option(s) (if any) to
extend this Lease, the cost of living increase in the Fixed Minimum Annual Rent
for the option period(s) shall be computed and applied according to the same
procedure described hereinabove for the initial term of the Lease, except that
the Fixed Minimum Annual Rent shall be the amount established in accordance with
the terms of any option provisions (if any) attached to this Lease.
SECTION 2.03 Sales or Use Tax or Excise Tax.
Tenant shall also pay, as additional rent, all sales or use or excise
tax imposed, levied or assessed against the rent or any other charge or payment
required herein by any governmental authority having jurisdiction thereover,
even though the taxing statute or ordinance may purport to impose such sales tax
against the Landlord. The payment of sales tax shall be made by Tenant on a
monthly basis, concurrently with payment of the Fixed Minimum Annual Rent.
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SECTION 2.04 Control of Common Areas by Landlord.
All areas within the exterior boundaries of VIA MIZNER FINANCIAL PLAZA
which are now or hereafter held for lease or occupation by the Landlord, or used
by other persons entitled to occupy floor space in VIA MIZNER FINANCIAL PLAZA,
including, without limitation, all automobile parking areas, driveways, entrance
and exits thereto, and other facilities furnished by Landlord in or near VIA
MIZNER FINANCIAL PLAZA, including employee parking areas, the truck way or ways,
loading docks, package pick-up stations, pedestrian sidewalks and ramps,
landscaped areas, exterior stairways, and other areas and improvements provided
by Landlord for the general use, in common, of tenants, their officers, agents,
employees and customers, ("Common Areas"), shall at all times be subject to the
exclusive control and management of Landlord, and Landlord shall have the right,
but not the obligation, to construct, maintain and operate lighting facilities
on all said areas and improvements, to police the same, from time to time to
change the area, level, location and arrangement of parking areas and other
facilities herein above referred to; to assign parking spaces to the Tenants; to
allocate (in Landlord's sole and absolute discretion) covered and uncovered
parking to the Tenant; to reserve parking spaces for the exclusive use of a
specific tenant; to restrict parking by tenants, their officers, agents and
employees to employee parking areas; to require tenants, their officers, agents
and employees to provide vehicle license numbers and to use parking decals or
other reasonable parking identification procedures, and to enforce parking
charges (by operation of meters or otherwise), with appropriate provisions for
free parking ticket validating, or in lieu thereof, to apply the net proceeds
from such charges, as follows: (i) the cost of maintaining and operating the
parking facilities; and (ii) the payment of the cost for constructing the
parking facilities and amortization thereof; and (iii) any remaining receipts
shall be received as operating profit of the Landlord in consideration for
providing the parking facilities and operation thereof.
Landlord shall have the right to close all or any portion of said areas
or facilities to such extent as may, in the opinion of Landlord's counsel, be
legally sufficient to prevent a dedication thereof or the accrual of any rights
to any person or the public therein, to close temporarily all or any portion of
the parking areas or facilities, to discourage non-customer parking; and to do
and perform such other acts in and to said areas and improvements as, in the use
of good business judgment, the Landlord shall determine to be advisable with a
view to the improvement of the convenience and use thereof by tenants, their
officers, agents, employees and customers. Landlord shall keep said Common Areas
clean and in good repair and available for the purposes for which they are
intended. Landlord shall have the full right and authority to employ all
personnel and to make all rules and regulations pertaining to and necessary for
the proper operation and maintenance of the Common Areas and facilities.
SECTION 2.05 License.
All Common Areas and facilities not within the Leased Premises, which
Tenant may be permitted to use and occupy, are hereby authorized to be used and
occupied under a revocable license, and if any such license be revoked, or if
the amount of such areas be diminished, Landlord shall not be subject to any
liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation or diminution of such areas be
deemed constructive or actual eviction. Tenant shall have reasonable ingress and
egress to the Leased premises.
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SECTION 2.06 Tenant to Bear Pro Rata Share of VIA MIZNER
FINANCIAL PLAZA Operating Costs.
(a) In each Lease Year or partial Lease Year, as defined herein, Tenant
will pay to Landlord, in addition to the rental specified in Article II hereof,
as further additional rent, a proportion of: (i) the Building Operating Costs,
as hereinafter defined; (ii) VIA MIZNER FINANCIAL PLAZA's Operating Costs, as
hereinafter defined; and (iii) Via Mizner Master Facilities Operating Costs, as
hereinafter defined. Each of the proportionate cost components described above
shall be calculated by multiplying the total of each cost component by a
fraction, the numerator of which shall be the aggregate number of square feet
contained in the Leased Premises and the denominator of which shall be the
aggregate number of square feet of constructed building space in VIA MIZNER
FINANCIAL PLAZA, as the same may exist from time to time and as calculated in
accordance with the provisions of Exhibit "J". Such payments shall be made as
provided under Section (u) of the Lease Summary and, thereafter, shall continue
as provided under Section 2.06(e).
"Lease Year" as used herein shall mean consecutive twelve-month
periods commencing on each January 1st during the term of this Lease. In the
event that the term of this Lease commences on a date other than January 1st, or
expires on a date other than December 31st, the first and last years shall be
partial lease years and in such case the first partial lease year shall commence
on the date of the commencement of the term of this Lease and expire on December
31st next following and the last partial lease year shall commence on the last
January 1st occurring during the term of this Lease and shall expire on the
expiration date of this Lease.
(b) "Building Operating Costs" as used herein means the total cost and
expense incurred in operating, maintaining and repairing the building identified
in Section (b) of the Lease Summary (hereinafter referred to as the "Building"),
together with improvements and common facilities, actually used or available for
use by Tenant and employees, agents, servants, customers and other invitees of
Tenant, excluding only items of expense commonly known and designated as debt
service. The Building Operating Costs shall specifically include, without
limitation the cost and expense incurred in operating, maintaining, repairing
and providing (i) property management, the annual cost of which shall not exceed
five percent (5%) of the net operating income (ii) gardening, landscaping and
irrigation, (iii) line painting and other parking facilities serving exclusively
the Building, (iv) all utility facilities and utility expenses and charges
serving exclusively the Building, (v) all common areas and common facilities,
serving exclusively the Building, (vi) sanitary control, removal of trash,
rubbish, garbage and other refuse from the common areas but not from any Leased
Premises, (vii) depreciation on machinery and equipment owned by Landlord or the
rental charges for such machinery and equipment, and the cost of personnel to
implement such services, (viii) personnel to direct parking and to police the
common facilities, including watchmen and security personnel, including payroll
and applicable payroll taxes, worker's compensation insurance and fringe
benefits, (ix) Landlord's insurance premiums on or in respect of the Building,
including, but not limited to public liability, property damage all risk perils,
rent and flood insurance, if carried by Landlord, (x) all ad valorem and real
estate taxes and special assessments for public betterments or improvements
levied or assessed by any lawful authority against the land, buildings and all
other improvements and betterments which are now or which hereafter become a
part of the Building, and (xi) personnel to maintain, repair and operate the
Building and Common Facilities. "Common Facilities" means all areas,
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space, parking facilities, equipment and special services used to operate
exclusively the Building or provided by Landlord for the common or joint use and
benefit of the occupants of the Building, their employees, agents, servants,
customers and other invitees, including without limitation, parking areas,
access roads, driveways, retaining walls, landscaped areas, truck serviceways,
loading docks, pedestrian malls, courts, stairs, ramps and sidewalks, washrooms,
and signs, wherever located, identifying the Building, or providing instruction
signage thereto.
The following items are expressly excluded from Building operating
Costs: (1) any capital expenditure, (2) costs for maintaining the roof and load
bearing walls, (3) executive salaries excepting that of the Property Manager,
(4) (4) consulting fees relating to capital expenditures, (5) market study fees,
(6) lease commissions and advertising costs, (7) initial landscaping costs, (8)
structural repairs and replacements, (9) any penalty or late charge incurred by
the Landlord as a result of the failure of the payment of taxes on its due date,
(10) any fee or interest charge resulting from the Landlord's refinancing of the
property, (11) money the Landlord must pay if Landlord defaults under a lease or
other agreement, (12) any legal fees to resolve disputes involving the Landlord
and any particular tenant, (13) any excessive amount the Landlord pays a
contractor or vendor, (14) costs incurred by the Landlord as a result of any new
construction in any subsequent phase of VIA MIZNER FINANCIAL PLAZA, (15) any
ground rents as they result to ground leases.
(c) "VIA MIZNER FINANCIAL PLAZA operating Costs" as used herein means
the total cost and expense incurred in operating, maintaining, and repairing VIA
MIZNER FINANCIAL PLAZA's buildings and improvements and common facilities,
hereinafter defined, actually used or available for use by Tenant and employees,
agents, servants, customers and other invitees of Tenant, excluding only items
of expense commonly known and designated as debt service. The VIA MIZNER
FINANCIAL PLAZA operating Costs shall specifically include, without limitation
the cost and expense incurred in operating, maintaining, repairing and providing
(i) property management, (ii) gardening, landscaping and irrigation, (iii) all
parking facilities, (iv) all utility facilities (including but not limited to
sewer lines and installations, water lines and installation, electrical lines
and facilities, and storm drainage facilities), and utility expenses and charges
for utility services, (v) sanitary control, removal of trash, rubbish, garbage
and other refuse from the common areas but not from any Leased Premises, (vi)
depreciation on machinery and equipment owned by Landlord or the rental charges
for such machinery and equipment, and the cost of personnel to implement such
services, (vii) the cost of personnel to direct parking and to police the common
facilities, including watchmen and security personnel, including payroll and
applicable payroll taxes, worker's compensation insurance and fringe benefits,
(viii) Landlord's insurance premiums on or in respect of VIA MIZNER FINANCIAL
PLAZA, including, but not limited to public liability, property damage all risk
perils, rent and flood insurance, if carried by Landlord, (ix) all ad valorem
and real estate taxes and special assessments for public betterments or
improvements levied or assessed by any lawful authority against the land,
buildings and all other improvements and betterments which are now or which
hereafter become a part of VIA MIZNER FINANCIAL PLAZA, (x) all common areas and
common facilities, and (xi) personnel to maintain, repair and operate VIA MIZNER
FINANCIAL PLAZA including all of its Common Facilities. "Common Facilities"
means all areas, space, parking facilities, equipment and special services used
to operate VIA MIZNER FINANCIAL PLAZA, or to provide services to each building
within VIA MIZNER FINANCIAL PLAZA, or provided by Landlord for the common or
joint
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use and benefit of the occupants of VIA MIZNER FINANCIAL PLAZA, their employees,
agents, servants, customers and other invitees, including without limitation,
parking areas, access roads, driveways, retaining walls, landscaped areas, truck
serviceways, loading docks, pedestrian malls, courts, stairs, ramps and
sidewalks, washrooms, private roads, utility services and installations, and
storm drainage installations and facilities, and signs (wherever located)
identifying VIA MIZNER FINANCIAL PLAZA, or providing instruction signage
thereto. If Landlord exercises its right to invoke a paid parking program, then
all costs of operating the parking facilities included within the parking
program (to the extent paid for from receipts collected from the parking
program) shall be excluded from the VIA MIZNER FINANCIAL PLAZA Operating Costs.
(d) "Via Mizner Master Facilities Operating Costs" as used herein means
the total cost and expense in operating, repairing and maintaining the master
improvements and common facilities actually used or made available for use by
the tenants and employees, agents, servants, customers and other invitees of
Tenant excluding only items of expense commonly known and designated as debt
service. Via Mizner Master Facilities Operating Costs shall specifically
include, without limitation the cost and expense incurred in operating,
maintaining, repairing and providing (i) property management, (ii) gardening,
landscaping and irrigation, (iii) all parking facilities, (iv) all on-site and
off-site utility facilities (including but not limited to sewer lines and
installations, water lines and installation, electrical lines and facilities,
and storm drainage systems, facilities and retention lakes and areas), and
utility expenses and charges for utility services, (v) sanitary control, removal
of trash, rubbish, garbage and other refuse from the common areas but not from
any Leased Premises, (vi) depreciation on machinery and equipment owned by
Landlord or the rental charges for such machinery and equipment, and the cost of
personnel to implement such services, (vii) the cost of personnel to direct
parking and to police the common facilities, including watchmen and security
personnel, including payroll and applicable payroll taxes, worker's compensation
insurance and fringe benefits, (viii) Landlord's insurance premiums on or in
respect of the Master Facilities, including, but not limited to public
liability, property damage all risk perils, rent and flood insurance, if carried
by Landlord, (ix) all ad valorem and real estate taxes and special assessments
for public betterments or improvements levied or assessed by any lawful
authority against the Master Facilities which now or hereafter service or become
a part of VIA MIZNER FINANCIAL PLAZA, and (x) personnel to maintain, repair and
operate the Master Facilities. "Master Facilities" means all on-site or off-site
areas, space, parking facilities, equipment and special services used to operate
VIA MIZNER FINANCIAL PLAZA, or to provide services to each building within VIA
MIZNER FINANCIAL PLAZA, or provided by Landlord for the common or joint use and
benefit of the occupants of VIA MIZNER FINANCIAL PLAZA, their employees, agents,
servants, customers and other invitees, including without limitation, parking
areas, access roads, driveways, retaining walls, landscaped areas, truck
serviceways, loading docks, pedestrian malls, courts, stairs, ramps and
sidewalks, washrooms, private roads, utility services and installations, and
storm drainage installations and facilities, and signs (wherever located)
identifying VIA MIZNER FINANCIAL PLAZA, or providing instruction signage
thereto.
(e) Landlord shall estimate (i) the Building Operating Costs, and (ii)
the VIA MIZNER FINANCIAL PLAZA Operating Costs, and (iii) the Via Mizner Master
Facilities Operating Costs, referred to in this Section 2.06 and Tenant shall
pay onetwelfth (1/12) of the collective sum thereof (as provided for in
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subparagraph (a) above) monthly in advance, together with the payment of fixed
minimum rent. After the end of each Lease Year, Landlord shall furnish Tenant a
statement of the actual Building Operating Costs, VIA MIZNER FINANCIAL PLAZA
Operating Costs, and the Via Mizner Master Facilities Operating Costs, and there
shall be an adjustment between Landlord and Tenant, with payment to or repayment
by Landlord, as the case may require, to the end that Landlord shall receive the
entire amount of Tenant's annual share of the collective operating costs for
such period, or, at Landlord's option, any overpayment by Tenant shall be
credited on account of the next succeeding payment by Tenant of such collective
operating costs.
SECTION 2.07 Additional Rent.
In order to give Landlord a lien of equal priority with Landlord's lien
for rent, and for no other purpose, any and all sums of money or charges
required to be paid by Tenant under this Lease, whether or not the same be so
designated, shall be considered "Additional Rent". If such amounts or charges
are not paid at the time provided in this Lease, they shall nevertheless, if not
paid when due, be collectible as Additional Rent with the next installment of
rent thereafter falling due hereunder, but nothing herein contained shall be
deemed to suspend or delay the payment of any amount of money or charges as the
same becomes due and payable hereunder, or limit any other remedy of the
Landlord.
ARTICLE III
Construction of Leased Premises
SECTION 3.01 Landlord's Work.
Landlord agrees that it has constructed (subject to the conditions and
limitations set forth in the Individual Development Approval DDRI IDA NO. CRP
88-4 issued pursuant to the Boca Raton Community Redevelopment Area Downtown
Development of Regional Impact Development Order), at its own expense the office
building, in accordance with the provision of Exhibit "C" attached hereto and
made a part hereof.
SECTION 3.02 Tenant's Work.
Tenant agrees, at its own cost and expense, to perform all other work,
more particularly described in Exhibit "D" annexed hereto, and on the outline
plans and specifications to be provided by Landlord, which is necessary to make
the Leased Premises conform with Tenant's plans to be approved by Landlord. All
tenant improvements and any other work performed by Tenant within the Leased
Premises shall be accomplished and completed in accordance with the Rules and
Regulations for Tenant Construction Work set forth in Exhibit "I" attached
hereto and made a part hereof. Within sixty (60) days after the execution of
this Lease, Tenant shall furnish Landlord, in advance of Tenant's commencement
of work, for Landlord's written approval, plans and specifications showing a
layout, fixturing plans, interior finish, and any work or equipment to be done
or installed by Tenant affecting any structural, mechanical or electrical part
of the Leased Premises or the building containing same. Landlord agrees it will
not unreasonably withhold such approval, it being the purpose of this
requirement that Tenant's Leased premises be fixtured and laid out so as not to
be a detriment to the other tenants in VIA MIZNER FINANCIAL PLAZA and that
Tenant's work shall not be detrimental to Landlord's Building.
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SECTION 3.03 Acceptance by Tenant.
(a) If Landlord's work has been completed at the time this Lease is
executed, Tenant certifies that it has inspected the Leased Premises and accepts
same in its existing condition; in such event no repair work, alterations or
remodeling of the Leased premises shall be required to be done by Landlord as a
condition of this Lease or otherwise.
(b) If Landlord's work is not completed when this Lease is executed,
Tenant agrees that acceptance by Tenant of possession of the Leased Premises for
the purpose of construction of Tenant improvements or the issuance of a
Certificate of Occupancy for the Landlord's work will be deemed as an acceptance
of the Leased premises in its then existing condition.
SECTION 3.04 Changes and Additions to Building.
Landlord hereby reserves the right at any time to perform maintenance
operations and to make repairs, alterations, or additions, and to build
additional stories on the Building in which the premises are contained and to
build adjoining or annexed to any existing building. Landlord also reserves the
right to construct other buildings or improvements, including, but not limited
to, structures for motor vehicle parking and the enclosing and air conditioning
of improvements and common facilities in VIA MIZNER FINANCIAL PLAZA from time to
time and to make alterations thereof or additions thereto and to build
additional stories on any such building or buildings and to build adjoining or
annexed to any existing building. Landlord hereby reserves for Landlord's
exclusive use (i) all air space above or surrounding the Leased Premises, (ii)
view rights and window vistas above or surrounding the Leased premises, and
(iii) landscaping and excavation of the improvements and common facilities in
VIA MIZNER FINANCIAL PLAZA. Tenant agrees to cooperate with Landlord permitting
Landlord to accomplish any such maintenance, repairs, alterations, additions or
construction. Temporary or partial obstruction of access to the Leased Premises
or improvements and common facilities of VIA MIZNER FINANCIAL PLAZA caused by
such construction shall not be a default of Landlord, provided that there shall
always be reasonable access.
SECTION 3.05 Right to Relocate.
The purpose of the site plan attached hereto as Exhibit "A" is to show
the approximate location of the various buildings, automobile parking areas, and
other Common Areas as shown on said site plan. Landlord reserves the right at
any time to add to or reduce or to relocate the various buildings, automobile
parking areas, and other Common Areas as shown on said site plan.
ARTICLE IV
Conduct of Business by Tenant
SECTION 4.01 Use of Premises.
Tenant shall use the Leased Premises solely for the purpose of
conducting business as provided in Section (q) of the Lease Summary and for no
other purpose.
SECTION 4.02 Occupancy of Premises.
Tenant shall occupy the Leased Premises without delay upon commencement
of the term of this Lease, except as provided for in Section 1.05 hereinbefore.
Tenant will not use or permit or
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suffer the use of the Leased Premises for any business or purpose other than
that stated above, and further agrees to conduct any business in the premises
under the name or trade name as set forth in Section (f) or (g) of the Lease
Summary and under no other name or trade name except such as may be first
approved by Landlord in writing which the Landlord will not unreasonably
withhold. The terms, conditions and rental conditions of this Lease have been
negotiated by the Landlord in reliance upon the specific permitted use of the
Tenant and the terms of this Lease would be reconsidered by Landlord if another
use of the Leased Premises were contemplated by the Tenant.
Notwithstanding the foregoing, in the event Tenant fails to
continuously conduct in the Leased Premises the business stated above and if
Tenant's failure to continuously conduct business arises as a result of the
relocation of its business to a location which is less than fifty (50) miles
from the Leased Premises, Landlord may, at Landlord's option, declare this Lease
to be in default.
SECTION 4.03 Use in Compliance With Regulations.
Tenant shall not at any time use or occupy the Leased Premises or the
Building, or suffer or permit anyone to use or occupy the Leased Premises, or do
anything in the Leased Premises or the Building, or suffer or permit anything to
be done in, brought into or kept on the Leased Premises, which in any manner in
the reasonable determination of Landlord (a) violates the Certificate of
Occupancy for the Leased Premises or for the Building, (b) causes or is liable
to cause injury to the Leased Premises or the Building or any equipment,
facilities or systems therein, (c) constitutes a violation of the laws and
requirements of any public authorities, including but not limited to any and all
zoning and land use regulations, or the requirements of insurance bodies, (d)
impairs or tends to impair the character, reputation or appearance of the
Building as a first-class office building, (e) impairs or tends to impair the
proper and economic maintenance, operation and repair of the Building and/or its
equipment, common facilities or systems, (f) annoys or inconveniences or tends
to annoy or inconvenience other tenants or occupants of the Building or VIA
MIZNER FINANCIAL PLAZA, (g) constitutes a nuisance, public or private, or
violates any environmental law, ordinance or regulation, or (h) discharges
objectionable fumes, vapors or odors into the Building vents or otherwise in
such a manner as to offend or inconvenience the other tenants or occupants of
the Building. Landlord makes no representations or warranties whatsoever as to
whether the Tenant's intended or actual use of the Leased Premises will
constitute a violation of any laws or requirements of any public authorities,
including but not limited to any and all zoning and land use regulations.
ARTICLE V
Security Deposit
Landlord and Tenant agree that the Tenant is not required to provide
Landlord with a security deposit.
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ARTICLE VI
Tenant Improvements
SECTION 6.01 Installation by Tenant.
(a) All Tenant improvements and fixtures installed by Tenant shall be
new. Tenant shall not make or cause to be made any alterations, additions or
improvements other than decorating items or install or cause to be installed any
exterior signs, exterior lighting, plumbing fixtures, shades or awnings or make
any changes to the exterior of VIA MIZNER FINANCIAL PLAZA without first
obtaining Landlord's written approval and consent. Tenant shall present to the
Landlord plans and specifications for such work at the time approval is sought,
and simultaneously demonstrate to Landlord that the proposed alterations comply
with local zoning and building codes. Tenant shall pay to Landlord the
reasonable costs of Landlord's architect and engineers to review such plans on
behalf of the Landlord. Tenant shall not commence work on any Tenant
improvements until Tenant has received from Landlord, Landlord's written
approval of Tenant's plans and specifications and Tenant shall have filed in the
Public Records of Palm Beach County, Florida a Notice of Commencement executed
by the Tenant in compliance with Florida Statutes 713.
(b) All construction work done by Tenant within the Leased premises
shall be performed in a good and workmanlike manner, in compliance with all
governmental requirements, and in such manner as to cause a minimum of
interference with other construction in progress (if any) and with the
transaction of business in VIA MIZNER FINANCIAL PLAZA. Without limitation on the
generality of the foregoing, except for the initial construction of Tenant
improvements in a newly constructed Building, Landlord shall have the right to
require that such work be performed during hours when VIA MIZNER FINANCIAL PLAZA
is not open for business, and in accordance with other rules and regulations
which Landlord may, from time to time prescribe. Tenant agrees to indemnify
Landlord against and hold Landlord harmless from any loss, liability or damage,
resulting from such work, and Tenant shall, if requested by Landlord, furnish
bond or other security satisfactory to Landlord against any such loss, liability
or damage. Tenant shall be liable to Landlord for any damages resulting from
labor disputes, strikes or demonstrations resulting from Tenant's construction
or alteration work with the employment of non-union workers.
SECTION 6.02 Responsibility of Tenant.
All alterations, decorations, additions and improvements made by the
Tenant or made by the Landlord on the Tenant's behalf by agreement under this
Lease, shall remain the property of the Tenant for the term of this Lease, or
any extension or renewal thereof. Such alterations, decorations, additions and
improvements shall not be removed from the premises without prior consent in
writing from the Landlord. Upon expiration of this Lease, or any renewal term
thereof, the Landlord shall have the option of requiring the Tenant to remove
all such alterations, decorations, additions and improvements and restore the
Leased Premises as provided in Section 7.02 hereof. If the Tenant fails to
remove such alterations, decorations, additions and improvements and restore the
Leased premises, then such alterations, decorations, additions and improvements
shall become the property of the Landlord and in such event, should Landlord so
elect, Landlord may restore the premises to its original condition for which
cost, with allowance for ordinary wear and tear, Tenant shall be responsible and
shall pay promptly upon demand.
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SECTION 6.03 Tenant Shall Discharge All Liens.
Nothing contained in this Lease shall be construed as a consent on the
part of the Landlord to subject the estate of the Landlord to liability under
the Mechanic's Lien Law of the State of Florida, it being expressly understood
that the Landlord's estate shall not be subject to such liability. Tenant shall
strictly comply with the Mechanic's Lien Law of the State of Florida as set
forth in Florida Statutes Section 713. Prior to any contractor engaged by Tenant
to undertake improvements to the Leased Premises, Tenant shall notify the
contractor making any such improvements of the provisions of this paragraph and
such notification shall be in writing to the contractor (with a copy to the
Landlord) and such notice shall contain at a minimum a verbatim recitation of
the first two sentences of this Section 6.03. In the event that a mechanic's
claim of lien is filed against the property in connection with any work
performed by or on behalf of the Tenant, the Tenant shall satisfy such claim, or
shall transfer same to security, within ten (10) days from the date of notice to
tenant. In the event that the Tenant fails to satisfy or transfer such claim
within said ten (10) day period, the Landlord may do so and thereafter charge
the Tenant, as additional rent, all costs incurred by the Landlord in connection
with satisfaction or transfer of such claim, including attorneys' fees. Further,
the Tenant agrees to indemnify, defend and save the Landlord harmless from and
against any damage or loss incurred by the Landlord as a result of any such
mechanics' claim of lien. If so requested by the Landlord, the Tenant shall
execute a short form or memorandum of this Lease in the form set forth as
Exhibit "L" attached hereto, which may, in the Landlord's discretion be recorded
in the Public Records for the purpose of protecting the Landlord's estate from
mechanics' claims of lien, as provided in Florida Statutes Section 713.10. In
the event such short form or memorandum of lease is executed, the Tenant shall
simultaneously execute and deliver to the Landlord an instrument terminating the
Tenant's interest in the real property upon which the Leased Premises are
located, which instrument may be recorded by the Landlord at the expiration of
the term of this Lease, or such earlier termination hereof. Landlord has the
right to record the memorandum without execution by Tenant in the event Tenant
fails to execute the memorandum within seven (7) days of request. The security
deposit paid by the Tenant may be used by the Landlord for the satisfaction or
transfer of any mechanics' claim of lien, as provided in this Section. This
Section shall survive the termination of the Lease.
SECTION 6.04 Signs, Awnings and Canopies.
(a) Tenant will not place or permit to be placed or maintained on any
exterior door, wall or window of the Leased Premises of VIA MIZNER FINANCIAL
PLAZA any sign, awnings or canopy, or advertising matter or other thing of any
kind, and will not place or maintain any decoration, letter or advertising
matter on the glass of any window or door, nor will any illuminated sign be
placed in the window display area of the Leased Premises without first obtaining
Landlord's written approval and consent which may be arbitrarily withheld.
(b) Tenant shall promptly erect a sign in accordance with the
specifications as outlined in Exhibit "E", within the area designated by the
Landlord. Tenant further agrees that such signs, awning, canopy, decoration,
lettering, advertising matter or other thing as may be approved shall be
maintained in good condition and repair at all times and shall conform to the
criteria established from time to time by Landlord for the VIA MIZNER FINANCIAL
PLAZA in the exercise of its sole discretion.
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(c) Notwithstanding the provisions of subparagraphs (a) and (b) above,
the Tenant acknowledges that prior to the installation of any sign or other
informational material which may be approved by the Landlord, the Tenant shall
obtain all governmental approvals for the installation of such sign or
informational material from all governmental entities having jurisdiction over
the Leased Premises, including but not limited to, the city of Boca Raton. The
approval of the Landlord of any sign or informational material submitted by the
Tenant shall not be deemed an approval by any governmental entity and the Tenant
shall employ or engage professionals selected by the Tenant to obtain any and
all governmental approvals required prior to the installation of such sign or
informational material. Tenant acknowledges and agrees that all signs and
informational material must comply with the ordinances and codes of the city of
Boca Raton and any other governmental entities having jurisdiction over such
installation.
SECTION 6.05 Bonds.
Landlord shall have the right to require the Tenant to furnish a
performance bond or other security, in form satisfactory to Landlord, for the
prompt and faithful performance by Tenant of all work of Tenant where the
project cost will exceed Fifty Thousand Dollars ($50,000.00).
ARTICLE VII
Repairs and Maintenance of Leased Premises
SECTION 7.01 Responsibility of Landlord.
(a) Landlord agrees to repair and maintain in good order and condition
the roof, roof drains, outside walls, foundations and structural portions, both
interior and exterior, of the Leased Premises. There is excepted from the
preceding covenant, however, (i) repair or replacement of broken plate or window
glass (except in case of damage by fire or other casualty covered by Landlord's
fire and extended coverage policy); (ii) doors, door closure devices, window and
door frames, moldings, locks and hardware; (iii) repair of damage caused
directly or indirectly by the negligence of the Tenant, its employees, agents,
contractors, customers, invitees; and (iv) interior repainting and redecoration.
In no event, however, shall Landlord be liable for damages or injuries arising
from the failure to make said repairs, nor shall Landlord be liable for damages
or injuries arising from the failure to make said repairs, nor shall Landlord be
liable for damages or injuries arising from defective workmanship or materials
in making any such repairs. Tenant waives the provision of any law, now or
hereafter in effect or any right under common law, permitting Tenant to make
repairs at Landlord's expense. As to any item which Tenant believes requires
repair and maintenance and which is the responsibility of the Landlord herein,
Tenant shall provide Landlord with written notice of such maintenance and repair
items.
(b) Except as hereinabove provided in Subparagraph (a), Landlord shall
not be obligated or required to make any other repairs, and all other portions
of the Leased Premises shall be kept in good repair and condition by Tenant, and
at the end of the term of this Lease, Tenant shall deliver the Leased Premises
to Landlord in good repair and condition, reasonable wear and tear and damage
from fire and other casualty excepted.
(c) Neither Landlord nor Landlord's agents or servants shall be liable
for any damages caused by or growing out any
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breakage, leakage, getting out of order or defective condition of the electric
wiring, air conditioning or heating pipes or ducts and equipment, closets,
plumbing, appliances, sprinklers, other equipment, or other facilities serving
the Leased premises excepting in any case arising out of the negligence of the
Landlord or Landlord's agents or servants. Neither Landlord nor Landlord's
agents or servants shall be liable for any damages caused by, or growing out of
any defect in VIA MIZNER FINANCIAL PLAZA or any part thereof, or in any building
attached or adjacent thereto or a part thereof, or in said Leased premises or a
part thereof, or caused by, or growing out of fire, rain, wind or other cause
excepting in any case arising out of the negligence of the Landlord or
Landlord's agents or servants.
SECTION 7.02 Responsibilities of Tenant.
(a) Without limiting the generality of the foregoing Subparagraph
7.01(a), Tenant agrees to repair and maintain in good order and condition the
non-structural interior portions of the Leased Premises, including the doors,
windows, plate and window glass, and floor covering, plumbing, heating, air
conditioning, electrical and sewage system, facilities and appliances. In those
instances where Tenant repair or maintenance is required as a result of the
Landlord's negligence or the negligence of Landlord's employees, then Landlord
shall reimburse Tenant for such repairs or maintenance. Tenant agrees with
respect to the heating and air conditioning system to comply with the terms of
the "Heating and Air Conditioning Maintenance Provision" which is attached
hereto as Exhibit "F" and made a part of the Lease by reference.
(b) Tenant will not install any equipment which exceeds the capacity of
the utility lines leading into the Leased premises or the Building of which the
Leased Premises constitute a portion.
(c) Tenant, its employees, or agents, shall not mark, paint, drill or in
any way deface any walls, ceilings, partitions, floors, wood, stone or ironwork
without Landlord's prior approval and written consent.
(d) Tenant shall comply with the requirements of all laws, orders,
ordinances and regulations of all governmental authorities and will not permit
any waste of property or same to be done and will take good care of the Leased
Premises at all times.
(e) If Tenant refuses or neglects to repair properly as required
hereunder and to the reasonable satisfaction of Landlord as soon as reasonably
possible after written demand, Landlord may make such repairs without liability
to Tenant for any loss or damage that may accrue to Tenant's merchandise,
fixtures, or other property, or to Tenant's business by reason thereof and upon
completion thereof, Tenant shall pay Landlord's cost for making such repairs,
plus twenty percent (20%) of such cost for overhead, upon presentation of the
bill therefor, as additional rent. Said bill shall include interest at the rate
of fifteen percent (15%) per annum on said cost from the date of completion of
repairs by Landlord until paid by Tenant. In the event the Landlord shall
undertake any maintenance or repair in the course of which it shall be
determined that such maintenance or repair work was made necessary by the
negligence or willful act of Tenant or any of its employees or agents or that
the maintenance or repair is, under the terms of this Lease, the responsibility
of Tenant, Tenant shall pay Landlord's costs therefor plus overhead and interest
as above provided in this Section.
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(f) At the expiration of the tenancy hereby created, Tenant shall
surrender the Leased Premises in the same condition as the Leased Premises were
in upon delivery of possession thereto under this Lease, reasonable wear and
tear excepted, and damage by unavoidable casualty excepted, and shall surrender
all keys for the Leased Premises to Landlord. Tenant shall remove all its trade
fixtures, leased equipment and any alterations or improvements which Landlord
requests to be removed (excluding those improvements which Landlord has
approved) before surrendering the premises as aforesaid and shall repair any
damage to the Leased Premises caused thereby. Tenant's obligation to observe or
perform this covenant shall survive the expiration or other termination of the
term of the Lease.
(g) Tenant shall at its own expense perform all janitorial and cleaning
services within the Leased Premises in order to keep same in a neat, clean and
orderly condition.
(h) Tenant shall give Landlord prompt written notice (and telephonic
notice in the case of an emergency) of any fire or damage occurring on or to the
Leased Premises.
(i) Tenant shall maintain and clean the Leased premises, including daily
trash removal, window cleaning, bathroom cleaning and other maintenance and
cleaning requirements as adopted from time to time by Landlord in accordance
with the Maintenance and Cleaning Standards For Tenants attached hereto and made
a part hereof as Exhibit "G".
ARTICLE VIII
Insurance and Indemnity
SECTION 8.01 Liability Insurance.
Tenant shall, during the entire term hereof, keep in full force and
effect bodily injury and property damage comprehensive public liability
insurance with respect to the Leased premises for the combined single coverage
of not less than $2,000,000.00 (hereinafter referred to as "Minimum Amount of
Coverage"). The foregoing Minimum Amount of Coverage shall be subject to
adjustment upward, but not downward, to reflect increases in the cost of living.
Landlord shall review the Minimum Amount of Coverage on each successive 5th
anniversary of the Commencement Date of this Lease (including any renewal term,
if any). The adjusted Minimum Amount of Coverage shall be determined by the
following formula which incorporates terms defined in Article II of this Lease:
C
New Minimum Amount = Minimum Amount of x = ---
of Coverage Coverage D
C is the Index for two (2) months preceding the month in which the
Adjustment Date occurs.
D is the Commencement Date Index set forth in Section (r) (2) of the
Lease Summary.
(b) In addition to the insurance provided for in subparagraph (a) above,
Tenant shall provide and maintain at Tenant's expense: (i) Workmen's
Compensation Insurance for the benefit of all employees entering upon the office
building as a result of or in connection with their employment by Tenant; (ii)
all other insurance required of Tenant, as an employer, pursuant to any
jurisdiction; and (iii) fire casualty and extended coverage insurance on
Tenant's fixtures, improvements and finishings, which policies of insurance
shall be in such amounts, in such forms and issued by such companies as are
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approved by Landlord and shall name Landlord and Tenant as their interests may
appear.
At all times during construction upon the Leased Premises, including
initial construction of the Leased Premises prior to the Lease Commencement Date
of this Lease and during any alteration of the Leased Premises, Tenant shall
obtain builder's risk insurance with such limits as Landlord shall from time to
time require, and any such policy of insurance shall name as the insured
thereunder Landlord and Tenant as their interests may appear.
(c) All policies obtained and maintained by Tenant under the terms of
this Lease shall name Landlord, any person, firms or corporations designated by
Landlord, and Tenant as insured, and shall contain a clause that the insurer
will not cancel or change the insurance without first giving the Landlord
fifteen (15) days prior written notice. The insurance shall be written by a
company approved by Landlord and a copy of the policy or a certificate of
insurance shall be delivered to Landlord prior to the commencement of the term
of this Lease, or such earlier date as may be required under the provisions of
this Lease. Nothing herein shall be considered to limit the liability of the
Tenant under this Lease.
SECTION 8.02 Plate Glass Insurance.
The replacement of any plate glass or window glass damaged or broken
from any cause whatsoever in and about the Leased Premises shall be Tenant's
responsibility. Tenant shall, during the entire term hereof, keep in full force
and effect a policy of plate glass insurance covering all the plate glass or
window glass of the Leased Premises, in amounts satisfactory to Landlord. The
policy shall name Landlord and any person, firm or corporation designated by
Landlord, and Tenant as insured, and shall contain a clause that the insurer
will not cancel or change the insurance without first giving the Landlord
fifteen (15) days prior written notice. The insurance shall be written by a
company approved by the Landlord and a copy of the policy or a certificate of
insurance shall be delivered to Landlord prior to the commencement of the term
of this Lease.
SECTION 8.03 Fire and Extended Coverage Insurance.
Tenant shall at all times during the term hereof, and at its cost and
expense, maintain in effect, policies of insurance covering its fixtures and
improvements, equipment, and goods located within the Leased Premises, in an
amount not less than eighty percent (80%) of their actual cash value, providing
protection against any peril including within the standard classification of
"Fire and Extended Coverage", together with insurance against sprinkler damage,
vandalism, and malicious mischief. The proceeds of such insurance, so long as
the Lease remains in effect, shall be used first to repair or replace the
fixtures and improvements within the Leased Premises.
SECTION 8.04 Increase in Fire Insurance Premium.
Tenant agrees that it will not keep, use, sell or offer for sale in or
upon the Leased Premises any article which may be prohibited by the standard
form of fire and extended risk insurance policy. Tenant agrees to pay any
increase in premiums for fire and extended coverage insurance that may be
charged during the term of this Lease on the amount of such insurance which may
be carried by Landlord on said premises or the building of which they are a
part, resulting from the type of article being located in the Leased Premises,
whether or not Landlord has consented to the same. In determining whether
increased premiums
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are the result of Tenant's use of the Leased Premises, a schedule issued by the
organization making the insurance rate on the Leased Premises, showing the
various components of such rate, shall be conclusive evidence of the several
items and charges which make up the fire insurance rate on the Leased Premises.
Tenant agrees to promptly make, at Tenant's cost, any repairs, alterations,
changes and/or improvements to equipment in the Leased Premises required by the
company issuing Landlord's fire insurance so as to avoid the cancellation of, or
the increase in premiums on, said insurance.
In the event Tenant's occupation and use of the Leased Premises causes
any increase of premium for the fire, boiler and/or casualty rates on the Leased
Premises or any part thereof above the rate for the least hazardous type of
occupancy legally permitted in the premises, the Tenant shall pay the additional
premium on the fire, boiler and/or casualty insurance policies by reason
thereof. The Tenant also shall pay in such event, any additional premium on the
rent insurance policy that may be carried by the Landlord for its protection
against rent loss through fire or other casualty. Bills for such additional
premiums shall be rendered by Landlord to Tenant at such times as Landlord may
elect and shall be due from, and payable by Tenant when rendered, and the amount
thereof shall be deemed to be additional rent.
SECTION 8.05 Indemnification of Landlord.
Neither (i) Landlord, (ii) any superior lessor or any superior mortgagee
of the Landlord, nor (iii) any partner, director, officer, agent, servant or
employee of Landlord, any superior lessor or any superior mortgagee, shall be
liable to Tenant for any loss, injury or damage to Tenant or to any other
person, or to its or their property, irrespective of the cause of such injury,
damage or loss, unless caused by or resulting from the sole negligence of
Landlord, its agents, servants or employees in the operation or maintenance of
the Leased Premises or the buildings, improvements and common facilities of VIA
MIZNER FINANCIAL PLAZA, without contributory negligence on the part of Tenant or
any of its subtenants or licensees or its or their employees, agents or
contractors. Further, neither (i) Landlord, (ii) any superior lessor or any
superior mortgagee of the Landlord, nor (iii) any partner, director, officer,
agent, servant or employee of Landlord, any superior lessor or any superior
mortgagee, shall be liable (a) for any such damage caused by other tenants or
persons in, upon or about the buildings, improvements and common facilities of
VIA MIZNER FINANCIAL PLAZA, or caused by operations in construction of any
private, public or quasi-public work, or (b) for consequential damages arising
out of any loss of use of the Leased Premises or any equipment or facilities
therein by Tenant or any person claiming through or under Tenant.
Tenant shall indemnify and hold harmless Landlord and all superior
lessors and superior mortgagees and its and their respective partners,
directors, officers, agents and employees from and against any and all claims
arising from or in connection with (a) the conduct or management of VIA MIZNER
FINANCIAL PLAZA or of any business therein, or any work or thing whatsoever
done, or any condition created (other than by Landlord) in or about the VIA
MIZNER FINANCIAL PLAZA during the term of this Lease or during the period of
time, if any, prior to the Commencement Date that Tenant may have been given
access to the Leased Premises, (b) any act, omission or negligence of Tenant or
any of its subtenants or licensees or its or their partners, directors, offices,
agents, employees or contractors, (c) any accident, injury or damage whatever
(unless caused solely by Landlord's negligence) occurring in, at or upon the VIA
MIZNER
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FINANCIAL PLAZA, and (d) any breach or default by Tenant in the full and prompt
payment and performance of Tenant's obligations under this Lease; together with
all costs, expenses and liabilities incurred in or in connection with each such
claim or action or proceeding brought thereon, including, without limitation,
all attorneys' fees and expenses. In the event Landlord shall be made a party to
any litigation or proceeding commenced by or against Tenant, then Tenant shall
protect, indemnify and hold Landlord harmless and Tenant shall pay to Landlord
all costs, expenses and reasonable attorneys' fees (for both trial and appellate
levels) incurred or paid by Landlord in connection with such litigation or
proceeding. Tenant shall also pay all costs, expenses and reasonable attorney's
fees that may be incurred or paid by Landlord in enforcing the covenants and
agreements in this Lease.
SECTION 8.06 Waiver of Subrogation.
Tenant waives (unless said waiver should invalidate any such insurance)
its right to recover damages against Landlord for any reason whatsoever to the
extent Tenant recovers indemnity from its insurance carrier. Any insurance
policy procured by Tenant which does not name Landlord as a named insured shall,
if obtainable, contain an express waiver of any right of subrogation by the
insurance company against the Landlord.
Landlord waives (unless said waiver should invalidate any such
insurance) its right to recover damages against Tenant for any reason whatsoever
to the extent Landlord recovers indemnity from its insurance carrier. Any
insurance policy procured by Landlord which does not name Tenant as a named
insured shall, if obtainable, contain an express waiver of any right of
subrogation by the insurance company against the Tenant.
ARTICLE IX
Utilities
Tenant shall be solely responsible for and promptly pay all charges for
water, gas, electricity, sewer charges or trash removal (if any) or any other
utility used or consumed in the Leased Premises. To the extent that Landlord
supplies to the Leased Premises or to VIA MIZNER FINANCIAL PLAZA water, gas,
electricity, sewer charges, trash removal, or any other utility used or consumed
in the Leased Premises or within VIA MIZNER FINANCIAL PLAZA, the cost of such
services and utilities shall be included in the VIA MIZNER FINANCIAL PLAZA
Operating Costs. In no event shall Landlord be liable for an interruption,
failure, or defect in the supply or character of any such utilities furnished to
the Leased Premises, improvements or common facilities of VIA MIZNER FINANCIAL
PLAZA (including but not limited to water rationing and electrical power
brownouts and blackouts), or any act or omission of the public or private
utility serving VIA MIZNER FINANCIAL PLAZA or for any other reason not
attributable to Landlord. Tenant will at all times comply with the rules,
regulations, terms and conditions applicable to service, equipment, wiring, and
requirements of the public or private utility supplying electricity to VIA
MIZNER FINANCIAL PLAZA. In the event that, in Landlord's judgment, Tenant's
electrical requirements necessitate installation of additional risers, feeders
or other proper and necessary equipment, the same shall be installed by Landlord
at Tenant's sole expense, which shall be chargeable and collectible as
additional rent and paid with the next rental payment to Landlord after delivery
of an invoice to Tenant by the Landlord. Tenant shall also be required prior to
taking possession of the Leased Premises to pay to the Landlord any and all
water or sewer
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connection or meter charges for the Leased premises if the Landlord has been
required to pay such charges by any private or governmental authority having
jurisdiction thereover. Tenant specifically acknowledges that Landlord is not
the supplier of any utility services including but not limited to electrical
service, telephone service and water service, and the unavailability of such
services to the Leased premises due to blackout, moratorium, rationing or any
other reason will not constitute or form the basis of a right by Tenant to abate
or adjust any rental payments due hereunder, the Tenant hereby assuming all
responsibility and risks for obtaining such services.
ARTICLE X
Attornment and Subordination
SECTION 10.01 Attornment.
In the event any proceedings are brought for the foreclosure of, or in
the event of exercise of the power of sale under any mortgage made by the
Landlord covering the Leased premises or in the event a deed is given in lieu of
foreclosure of any such mortgage, if requested to do so, Tenant shall attorn to
the purchaser or grantee in lieu of foreclosure upon any such foreclosure or
sale and recognize such purchaser or grantee in lieu of foreclosure as the
Landlord under this Lease.
SECTION 10.02 Subordination.
Tenant agrees that this Lease and the interest of Tenant therein shall
be, and the same hereby is made subject and subordinated at all times to all
covenants, restrictions, easements and other encumbrances now or hereafter
affecting the fee title of VIA MIZNER FINANCIAL PLAZA and to all ground and
underlying leases and to any mortgage in any amounts and all advances made and
to be made thereon, which may now or hereafter be placed against or affect any
or all of the land and/or any or all of the buildings and improvements,
including the Leased Premises, now or at any time hereafter constituting a part
of VIA MIZNER FINANCIAL PLAZA and/or any ground or underlying leases covering
same, and to all renewals, modifications, consolidations, participations,
replacements and extensions thereof. The term "Mortgages" as used herein shall
be deemed to include trust indentures and deeds of trust. The aforesaid
provisions shall be self-operative and no further instrument of subordination
shall be necessary unless required by any such ground or underlying lessors or
mortgagees. Should the Landlord or any ground or underlying lessors or
mortgagees desire confirmation of such subordination, then Tenant, within ten
(10) days following written request therefor, agrees to execute and deliver,
without charge, any and all documents (in form acceptable to Landlord and such
ground or underlying lessors or mortgagees) subordinating this Lease and the
Tenant's rights hereunder. However, should any such ground or underlying lessors
or any mortgagees request that this Lease be made superior, rather than
subordinate, to any such ground or underlying lease and/or mortgage, then
Tenant, within ten (10) days following Landlord's written request therefor,
agrees to execute and deliver, without charge, any and all documents (in form
acceptable to Landlord and such ground or underlying lessors or mortgagees)
effectuating such priority.
SECTION 10.03 Non-Disturbance.
Notwithstanding anything contained herein to the contrary, the foregoing
shall be expressly conditioned upon Tenant's
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receipt of a binding Non-Disturbance Agreement from all parties holding or
otherwise acquiring, now or in the future, any right, title, interest in or to
the Leased Premises or this Lease by virtue of any mortgage or deed of trust
superior to that of the Tenant in a form and content as set forth in Exhibit M
attached hereto and made a part hereof.
ARTICLE XI
Assignment and Subletting
SECTION 11.01 Consent Required.
Tenant shall not, whether voluntarily, involuntarily, or by operation of
law or otherwise, without the prior written consent of Landlord, (a) assign or
otherwise transfer this Lease or the term and estate hereby granted, or offer or
advertise to do so, (b) sublet the Leased Premises or any part thereof, or offer
or advertise to do so, or allow the same to be used, occupied or utilized by
anyone other than Tenant, (c) mortgage, pledge, encumber or otherwise
hypothecate this Lease or the Leased Premises or any part thereof in any manner
whatsoever, or (d) permit the Leased Premises or any part thereof to be
occupied, or used for desk space, mailing privileges or otherwise, by any person
other than Tenant without in each instance obtaining the prior written consent
of Landlord; provided, however, (i) Tenant shall have the right to assign or
sublet the Leased Premises in whole or in part provided that the assignee or
subtenant shall be acceptable to the Landlord and such assignee or subtenant
shall be as credit worthy as other occupants of VIA MIZNER FINANCIAL PLAZA and
shall conduct a business consistent with and meet the standards imposed on other
occupants of VIA MIZNER FINANCIAL PLAZA and further the occupancy by such
assignee or subtenant shall not result in a breach of or violation of any term
of any lease between the Landlord and any other occupant of VIA MIZNER FINANCIAL
PLAZA; or (ii) Tenant shall have the right (with 60 days prior written notice to
the Landlord) to assign or sublet the Leased Premises to a related entity owned
by the parent entity of the Tenant which parent entity shall have not less than
a twenty percent (20%) ownership interest in the related entity to which the
Tenant assigns or sublets and such assignee or subtenant shall conduct a
business consistent with the Tenant and meet the standards imposed on other
occupants of VIA MIZNER FINANCIAL PLAZA and further the occupancy by the
assignee or subtenant shall not result in a breach of or violation of any term
of any lease between the Landlord and any other occupant of VIA MIZNER FINANCIAL
PLAZA.
Any assignment made pursuant to subparagraph 11.01(i) above shall be
subject to the following provisions: It is further agreed between the Landlord
and Tenant that the Landlord shall be entitled to receive any increase in the
rent or other considerations paid by an assignee or subtenant in excess of the
rental obligations of the Tenant to the Landlord as set forth in this Lease. The
consent by Landlord to any assignment or subletting shall not constitute a
waiver of the necessity for such consent to any subsequent assignment or
subletting. It is understood that Landlord may refuse to grant consent to any
assignment or subletting by Tenant with or without cause and without stating in
its refusal to grant such consent the basis or reasons for which it refuses to
grant such consent (whether arbitrarily or otherwise) and may not, under any
circumstances, be required or compelled to grant such consent. If this Lease be
assigned without consent of Landlord, or if the Leased Premises or any part
thereof be underlet or occupied by any party other than Tenant without consent
of Landlord, Landlord may collect rent from the assignee, subtenant or occupant,
and apply the net
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amount collected to the rent herein reserved, but no such assignment,
underletting, occupancy or collection shall be deemed a waiver of this covenant,
or the acceptance of the assignee, subtenant or occupant as Tenant, or a release
of Tenant from the further performance by Tenant of the covenants on the part of
Tenant herein contained, and further provided that Landlord shall have the
option of terminating this Lease on written notice to Tenant given within twenty
(20) days after receipt of the request for Landlord's approval or notice to
Landlord of such assignment or subletting; provided, however, Tenant may elect
to withdraw its request for assignment or subletting and the Lease shall not
terminate as provided for hereinbefore. This prohibition against assignment or
subletting shall be construed to include prohibition against any assignment or
subleasing by operation of law, legal process, receivership, bankruptcy or
otherwise, whether voluntary or involuntary. Notwithstanding any assignment or
sublease, Tenant shall remain fully liable on this Lease and shall not be
released from performing any of the terms, covenants and conditions of this
Lease.
(b) The Tenant shall have the obligation to pay a reasonable
administrative fee in connection with such assignment.
SECTION 11.02 Significant Change of Corporate Ownership.
(a) If Tenant is a corporation, the provisions of Paragraph (a) of
Section 11.01 shall apply to a transfer (by one or more transfers) of eighty
percent (80%) interest of the stock of Tenant as if such transfer of eighty
percent (80%) of the stock of Tenant were an assignment of this Lease; but said
provision shall not apply to transactions with a corporation into or with which
Tenant is merged or consolidated or to which substantially all of Tenant's
assets are transferred or to any corporation which controls or is controlled by
Tenant or is under common control with Tenant, provided that in any of such
events (i) the successor to Tenant has a net worth computed in accordance with
generally accepted accounting principles at least equal to the greater of (1)
the net worth of Tenant immediately prior to such merger, consolidation or
transfer, or (2) the net worth of the Tenant herein named on the date of this
Lease, and (ii) proof satisfactory to Landlord of such net worth shall have been
delivered to Landlord at least ten (10) days prior to the effective date of any
such transaction, (iii) Landlord shall have received at least ten (10) days
prior to the effective date of any such transaction a duplicate original
instrument of assignment in form and substance satisfactory to Landlord, duly
executed by Tenant, and (iv) Landlord shall have received at least ten (10) days
prior to the effective date of any such transaction an original instrument in
form and substance satisfactory to Landlord, duly executed by the assignee, in
which such assignee assumes (as of the Commencement Date) observance and
performance of, and agrees to be personally bound by, all of the terms,
covenants and conditions of this Lease on Tenant's part to be performed and
observed.
(b) The Tenant shall have the obligation to pay a reasonable
administrative fee in connection with such assignment.
SECTION 11.03 Termination at Landlord's Election.
Notwithstanding anything to the contrary contained in this Article, if
Tenant shall at any time or times during the term of this Lease desire to assign
this Lease or sublet all or any portion of the Leased Premises, Tenant shall
give notice thereof to Landlord, which notice shall state whether Tenant desires
to assign this Lease or sublet all or a portion of the Leased Premises and shall
further state the desire commencement and Expiration Date of any subletting or
the desired effective date
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of any assignment, as the case may be (which commencement date or effective date
shall in no event be earlier than sixty (60) days following the giving of such
notice). If a portion of the Leased Premises is proposed to be sublet, such
notice shall be accompanied by a diagram identifying the portion to be so
sublet. Such notice shall be deemed an offer from Tenant to Landlord whereby
Landlord (or Landlord's designee) may, at its option, (i) terminate this Lease
(if the proposed transaction is an assignment or a sublease of all or
substantially all of the Leased Premises), or (ii) terminate this Lease with
respect to the space covered by the proposed sublease (if the proposed
transaction is a sublease of part of the Leased Premises). Said option may be
exercised by Landlord by notice to Tenant at any time within sixty (60) days
after such notice has been given by Tenant to Landlord provided, however, if
Landlord elects to terminate, the Tenant shall have the option of withdrawing
the proposed assignment or subletting and this Lease shall continue in full
force and effect; and during such 60-day period Tenant shall not assign this
Lease or sublet such space to any person. If Landlord exercises its option to
terminate this Lease, then, this Lease shall end and expire on the date that
such assignment or sublet was to be effective or commence, as the case may be,
and the Fixed Minimum Annual Rent and Additional Rent shall be paid and
apportioned to such date. If Landlord exercises its option to terminate this
Lease with respect to the space covered by Tenant's proposed sublease in any
case where Tenant desires to sublet part of the Leased Premises, then (a) this
Lease shall end and expire with respect to such part of the Leased premises on
the date that the proposed sublease was to commence; (b) from and after such
date the Fixed Minimum Annual Rent and Additional Rent shall be adjusted, based
upon the proportion that the rentable area of the Leased Premises remaining
bears to the total rentable area of the Leased Premises; and (c) Tenant shall
pay to Landlord, upon demand, as Additional Rent hereunder the costs incurred by
Landlord in physically separating such part of the Leased premises from the
balance of the Leased Premises and in complying with any laws and requirements
of any public authorities relating to such separation.
SECTION 11.04 Assignment by Tenant.
Any assignment or transfer, whether made with Landlord's consent or
without Landlord's consent, shall be made only if, and shall not be effective
until, the assignee shall execute, acknowledge and deliver to Landlord an
agreement in form and substance satisfactory to Landlord whereby the assignee
shall assume the obligations of this Lease on the part of Tenant to be performed
or observed and whereby the assignee shall agree that the provisions in Section
11.01 shall, notwithstanding such assignment or transfer, continue to be binding
upon it in respect of all future assignments and transfers. The original named
Tenant covenants that, notwithstanding any assignment or transfer, whether or
not in violation of the provisions of this Lease, and notwithstanding the
acceptance of Fixed Minimum Annual Rent and/or Additional Rent by Landlord from
an assignee, transferee, or any other party, the original named Tenant shall
remain fully liable for the payment of the Fixed Minimum Annual Rent and
Additional Rent and for the other obligations of this Lease on the part of
Tenant to be performed or observed.
SECTION 11.05 Assignment by Landlord.
In the event of the transfer and assignment by Landlord of its interest in
this Lease and in the building containing the Leased Premises to a person
expressly assuming Landlord's obligations under this Lease, Landlord shall
thereby be released from any further obligations hereunder, and Tenant agrees to
look
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solely to such successor in interest of the Landlord for performance of such
obligations.
ARTICLE XII
Waste, Governmental Regulations
SECTION 12.01 Waste or Nuisance.
Tenant shall not commit or suffer to be committed any waste upon the
Leased Premises or any nuisance or other act or thing which may disturb the
quiet enjoyment of any other tenant in VIA MIZNER FINANCIAL PLAZA, or which may
adversely affect Landlord's interest in the Leased Premises or VIA MIZNER
FINANCIAL PLAZA. Tenant shall abide by and comply with the Maintenance and
Cleaning Standards for Tenants attached hereto and made a part hereof as Exhibit
"G" as adopted and amended from time to time by Landlord.
SECTION 12.02 Governmental Regulations.
Tenant shall, at Tenant's sole cost and expense, comply with all county,
municipal, state, federal laws, orders, ordinances and other applicable
requirements of all governmental authorities, now in force, or which may
hereafter be in force, pertaining to, or affecting the condition, use or
occupancy of the Leased Premises, and shall faithfully observe in the use and
occupancy of the Leased Premises all municipal and county ordinances and state
and federal statutes now in force or which may hereafter be in force. Tenant
shall indemnify, defend and save Landlord harmless from all costs, losses,
expenses or damages resulting from Tenant's failure to perform its obligations
under this Section.
If the Tenant is required, as a result of the provisions of this
paragraph, to undertake improvements to the Leased Premises, then in that event,
the Landlord shall pay for such improvements and the Tenant shall pay as
additional rent from the date of the completion of such improvements a prorated
amount (including interest on the amount paid by the Landlord for such
improvements at a rate equal to First Union National Bank of Florida's Prime
Rate plus one percent (1%)) determined by amortizing the reasonable life of such
improvements in monthly payments, which monthly payments shall be additional
rent for the remaining term of this Lease.
Without limiting the foregoing, Tenant shall, upon Landlord's request,
provide the Landlord with a travel mode survey for all employees of Tenant
occupying the Leased Premises and a travel mode survey for all employees of any
subtenant of Tenant. Such travel mode surveys shall be completed on such forms
as may be prescribed by the Landlord. Tenant specifically authorizes Landlord to
disclose the results of the Tenant's (and subtenants) travel mode survey to the
City of Boca Raton, the Community Redevelopment Agency, and such other
governmental authorities as may be necessary or appropriate.
SECTION 12.03 Hazardous or Toxic Materials.
For purposes of this Section 12.03, "Hazardous or Toxic Materials" shall
be defined to include but not be limited to (i) "hazardous substances" as
defined in Section 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. 9601(14)) and as said Act may be
amended from time to time; (ii) "Hazardous Waste" as defined in the Florida
Resource Recovery and Management Act (Florida Statutes, Chapter
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403) and as said Act may be amended from time to time; (iii) asbestos; (iv)
radon; and (v) petroleum products.
During the term of this Lease or any extended term, Tenant shall not
introduce, generate, release, treat, discharge, emit, handle, store, transport
or dispose of any Hazardous or Toxic Materials on or about the Leased Premises
or the Common Areas. Further, Tenant shall not engage in or permit any
activities to be conducted on or about the Leased Premises or in the Common
Areas which would constitute a breach or violation of the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C., 9601 et.
seq.) and as said Act may be amended from time to time or the Florida Resource
Recovery and Management Act (Florida Statute, Chapter 403) and as said Act may
be amended from time to time (hereinafter collectively "Environmental Laws")
during the term of this Lease. To the best of Tenant's knowledge and belief the
Leased Premises and the Common Areas have not in the past been used and are not
presently being used in violation or contravention of any applicable Federal,
State or local laws, ordinances, rules, regulations or requirements, including
the Environmental Laws, pertaining to Hazardous or Toxic Material.
Tenant hereby indemnifies and agrees to defend and save and hold
Landlord, its general partners, limited partners, officers, employees, agents,
successors, assigns and constituent entities harmless from and against any and
all losses, liabilities, obligations, damages (including without limitation all
foreseeable and unforeseeable consequential damages to any person or entity,
including third parties and including punitive damages, injuries, charges,
penalties, interest, expenses, fees (including attorneys' fees and all
administrative and judicial hearings, trial and appellate levels), costs
(including, without limitation, costs of any settlement), judgments,
administrative or judicial proceedings and orders, remedial actions, enforcement
actions, claims and demand of any and every kind whatsoever paid, incurred or
suffered by, or asserted against, Landlord by any person, entity or governmental
agency or body, for, with respect to, related to, arising out of, or as a direct
or indirect result of (a) Tenant's violation or breach of this Section 12.03
relative to the Leased Premises; (b) Tenant's breach of any Environmental Laws
relative to the Leased Premises or Common Areas or any activities of Tenant
conducted thereon; or (c) Tenant's use, introduction, generation, release,
treatment, discharge, emission, escape, seepage, leakage, spillage, handling,
storage, transportation, disposal, cleanup, on, under or about the Leased
Premises and the Common Areas or adjacent to the Leased Premises and the Common
Areas or to the soil, air or to surface or ground water thereon of any Hazardous
or Toxic Materials. All sums paid and costs incurred by Landlord with respect to
the foregoing matters shall bear interest at the highest applicable legal rate.
This indemnification shall survive the term of this Lease and the Tenant's
surrender of the Leased Premises and it shall inure to the benefit of any
transferee of title to the Leased Premises or the Common Areas whomsoever.
If the Tenant receives any notice of or has reason to know of (i) the
happening of any material event involving the use, generation, release,
treatment, discharge, emission, escape, seepage, leakage, spillage, handling,
storage, transportation, disposal or cleanup of any Hazardous or Toxic Materials
on or about the Leased Premises and the Common Areas or adjacent thereto, or in
connection with Tenant's operations thereon, or (ii) any complaint, order,
citation or notice with regard to air emissions, water discharges or any other
environmental, health or safety matter affecting the Tenant or the Leased
Premises or the Common Areas from any person, entity or governmental agency or
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body, then Tenant shall immediately notify Landlord orally and in writing of
said notice.
Any breach of the provisions, representations, covenants or agreements
contained in this Section 12.03 shall entitle the Landlord to exercise any and
all remedies provided in this Lease or otherwise permitted by law.
ARTICLE XIII
Rules and Regulations
Tenant agrees to comply with and abide by the Rules and Regulations of VIA
MIZNER FINANCIAL PLAZA attached hereto and made a part hereof as Exhibit "H" as
adopted and amended from time to time by Landlord. Nothing contained in this
Lease shall be construed to impose upon Landlord any duty or obligation to
enforce the Rules and Regulations against any other tenant or any employees or
agents of any other tenant, provided such Rules and Regulations are enforced
uniformly and in a non-discriminatory manner and Landlord shall not be liable to
Tenant for violation of the Rules and Regulations by any other tenant or its
employees, agents, invitees or licensees.
ARTICLE XIV
Advertising, Etc.
SECTION 14.01 Solicitation of Business.
Tenant and Tenant's employees and agents shall not solicit business in
the parking or other Common Areas, nor shall Tenant distribute any handbills or
other advertising matter in the Common Areas and specifically on the automobiles
parked in the parking areas. Tenant and Tenant's employees and agents shall not
display, advertise or disseminate any visual or auditory advertising or business
information from a parked or moving vehicle within VIA MIZNER FINANCIAL PLAZA,
including but not limited to window and bumper stickers or sun shades or blinds,
painting or other implementation of advertising materials affixed to a vehicle
and the use of noise producing devises to either draw attention to or
communicate advertising or promotional information.
SECTION 14.02 Advertised Name and Address.
Tenant shall use as its advertised street address the name of VIA
MIZNER FINANCIAL PLAZA. Tenant shall not use the name of VIA MIZNER FINANCIAL
PLAZA for any purpose other than as the address of the business to be conducted
by Tenant in the Leased Premises and Tenant shall not acquire any property right
in or to any name which contains the name of VIA MIZNER FINANCIAL PLAZA as a
part thereof. Any permitted use by Tenant of the name of VIA MIZNER FINANCIAL
PLAZA during the term of the Lease shall not permit Tenant to use, and Tenant
shall not use, such name of VIA MIZNER FINANCIAL PLAZA either after the
termination of this Lease or at any other location. Tenant shall not use the
name of the Landlord in any advertisement, or otherwise. Tenant shall use only
Tenant's name as set forth in Section (f) of the Lease Summary and Tenant's
trade name as set forth in Section (g) of the Lease Summary in its advertising
and promotional activities and shall not use any other name in connection with
the Leased Premises.
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SECTION 14.03 Letters and Marks.
Tenant agrees to use in its advertising and promotional activities for
its business in the Leased Premises such references to the name of VIA MIZNER
FINANCIAL PLAZA and such identifying lettering, marks or symbols referred to VIA
MIZNER FINANCIAL PLAZA in its address for the Leased Premises and shall
subscribe to a listing in the yellow pages of the local telephone directory
which shall be printed in bold type.
ARTICLE XV
Destruction of Leased Premises
SECTION 15.01 Total or Partial Destruction.
If VIA MIZNER FINANCIAL PLAZA shall be damaged by fire, the elements,
unavoidable accident or other casualty, without the fault of Tenant, but are not
thereby rendered untenantable in whole or in part, Landlord shall at its own
expense cause such damage, to be repaired, but only to the extent of Landlord's
original obligation to construct pursuant to Section 3.01, and the rent and
other charges shall not be abated. If by reason of such occurrence, the Leased
Premises shall be rendered untenantable only in part, Landlord shall at its own
expense cause the damage, except Tenant's improvements, equipment and trade
fixtures, to be repaired, but only to the extent of Landlord's original
obligation to construct pursuant to Section 3.01, and the fixed minimum rent
meanwhile shall not be abated as to the portion of the premises rendered
untenantable; provided, however, Landlord shall have the right, to be exercised
by notice to Tenant within sixty (60) days after said occurrence, to elect not
to repair such damage and to cancel and terminate this Lease effective as of a
date stipulated in Landlord's notice, which shall not be earlier than thirty
(30) days nor later than sixty (60) days after the giving of such notice. If the
premises shall be rendered wholly untenantable by reason of such occurrence, the
Landlord shall at its own expense cause such damage, to be repaired, but only to
the extent of the Landlord's original obligation to construct pursuant to
Section 3.01, and the fixed minimum rent meanwhile shall not abate in whole or
in part except that Landlord shall have the right, to be exercised by notice to
Tenant within sixty (60) days after said occurrence, to elect not to reconstruct
the destroyed premises, and in such event this Lease and the tenancy hereby
created shall cease as of the date of the said occurrence. If Landlord shall
elect to reconstruct, then Landlord shall have a period of nine (9) months from
the date Landlord issues its notice to Tenant to build and complete the
improvements to the extent of the Landlord's original obligation to construct
pursuant to Section 3.01. Tenant specifically acknowledges the obligation to
maintain insurance coverage at Tenant's expense to pay the rent costs incurred
by Tenant and due Landlord during any period which the Landlord is partially or
totally repairing or reconstructing the damage or casualty to VIA MIZNER
FINANCIAL PLAZA. Nothing in this Section shall be construed to permit the
abatement in whole or in part of the charges for operating costs, common area
maintenance, real estate taxes attributable, and other charges set forth in
Article II of this Lease to any period during which the Leased Premises shall be
in untenantable condition, nor shall there be any abatement for any other item
due Landlord by Tenant pursuant to the terms of this Lease.
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SECTION 15.02 Partial Destruction of VIA MIZNER FINANCIAL PLAZA.
In the event that fifty percent (50%) or more of the rentable area of
VIA MIZNER FINANCIAL PLAZA shall be damaged or destroyed by fire or other cause,
notwithstanding any other provisions contained herein and that the Leased
premises may be unaffected by such fire or other cause, Landlord shall have the
right, to be exercised by notice in writing delivered to Tenant within sixty
(60) days after said occurrence, to elect to cancel and terminate this Lease.
Upon the giving of such notice to Tenant, the term of this Lease shall expire by
lapse of time upon the third day after such notice is given, and Tenant shall
vacate the Lease Premises and surrender the sane to Landlord.
SECTION 15.03 Reconstruction of Improvements.
In the event of any reconstruction of the Leased premises under this
Section, said reconstruction shall be in substantial conformity with the
provisions of Exhibit "C" hereof to the extent of the work as therein set forth
as "Landlord's Work". Tenant, at its sole cost and expense, shall be responsible
for the repair and restoration of all items set forth as 1'Tenant's Work" in
Exhibit "D" and the replacement of its stock in trade fixtures furniture,
furnishings and equipment. Tenant shall commence the installation of fixtures,
equipment, and merchandise (if any) hereof promptly upon delivery to it of
possession of the Leased premises and shall diligently prosecute such
installation to completion.
ARTICLE XVI
Eminent Domain
SECTION 16.01 Total Condemnation.
If the whole of the Leased premises shall be acquired or condemned by
eminent domain for any public or quasi-public use or purpose, then the term of
this Lease shall cease and terminate as of the date of title vesting in such
proceeding and all rentals and other charges shall be paid up to that date and
Tenant shall have no claim against Landlord for the value of any unexpired term
of this Lease.
SECTION 16.02 partial Condemnation.
If any part of the Leased premises shall be acquired or condemned by
eminent domain for any public or quasi-public use or purpose, and in the event
that such partial taking or condemnation shall render the Leased premises
unsuitable for the business of the Tenant (taking into account applicable
parking requirements), then Landlord and Tenant shall each have the right to
terminate this Lease by notice given to the other within sixty (60) days after
the date of title vesting in such proceeding and Tenant shall have no claim
against Landlord for the value of any unexpired term of this Lease. In the event
of a partial taking or condemnation which is not extensive enough to render the
premises unsuitable for the business of the Tenant, then Landlord shall promptly
restore the Leased premises (exclusive of Tenant's improvements, Tenant's
equipment and trade fixtures) to a condition comparable to its condition at the
time of such condemnation less the portion lost in the taking and the building
of which the Leased premises forms a part to the extent necessary to constitute
the portion of the building not so taken as a complete architectural unit;
provided that Landlord shall not in any event be required to spend for such
repair, restoration or alteration work an amount in excess of the respective
amounts received by Landlord as damages for the taking such part of
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the Leased Premises and of the building of which the same forms a part. As used
herein, the amount "received by Landlord" shall mean that portion of the award
or damages in condemnation received by Landlord from the condemning authority
which is free and clear of all prior claims or collections by the holders of any
mortgages or deeds of trust or any ground or underlying lessors, and this Lease
shall continue in full force and effect except that the Fixed Minimum Annual
Rent shall be reduced in proportion to the portion of the Leased Premises lost
in the taking. If more than twenty percent (20%) of the floor area of the
buildings in VIA MIZNER FINANCIAL PLAZA shall be taken as aforesaid (whether or
not the Leased Premises shall be affected by the taking), Landlord shall have
the right to terminate this Lease by notice to Tenant given within sixty (60)
days after the date of title vesting in such proceeding and Tenant shall have no
claim against Landlord for the value of the unexpired term of this Lease.
SECTION 16.03 Landlord's Damages.
In the event of any condemnation or taking as hereinabove provided,
whether whole or partial, the Tenant shall not be entitled to any part of the
award, as damages or otherwise, for such condemnation and Landlord is to receive
the full amount of such award, the Tenant hereby expressly waiving any right or
claim to any part thereof.
SECTION 16.04 Tenant's Damages.
Although all damages in the event of any condemnation are to belong to
the Landlord whether such damages are awarded as compensation for diminution in
value of the Leasehold or the fee of the Leased Premises, Tenant shall have the
right to claim and recover from the condemning authority, but not from Landlord,
such compensation as may be separately awarded or recoverable by Tenant in
Tenant's own right on account of any damage to Tenant's business by reason of
the condemnation and for or on account of any cost or loss to which Tenant might
be put in removing Tenant's merchandise, furniture, fixtures, leasehold
improvements and equipment, provided no such claim shall diminish or otherwise
adversely affect Landlord's award. Each party agrees to execute and deliver to
the other all instruments that may be required to effectuate the provisions of
Section 16.03 and this Section 16.04.
SECTION 16.05 Sale Under Threat of Condemnation.
A sale by Landlord to any authority having the power of eminent domain,
either under threat of condemnation or while condemnation proceedings are
pending, shall be deemed a taking under the power of eminent domain for all
purposes under this Article.
ARTICLE XVII
Default of Tenant
SECTION 17.01 Events of Default.
Upon the happening of one or more of the events as expressed below in
(a) to (k), inclusive (individually and collectively, "Event of Default"), the
Landlord shall have any and all rights and remedies hereinafter set forth:
(a) In the event Tenant should fail to pay any monthly installment of
rent or any other sums required to be paid
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hereunder within five (5) days from and when the same become due.
(b) In the event a petition in bankruptcy (including Chapter X and
Chapter XI bankruptcy proceedings or any other reorganization proceedings under
the Bankruptcy Act) be filed by the Tenant, or be filed against Tenant, and such
petition is not dismissed within thirty (30) days from the filing thereof, or in
the event Tenant is adjudged a bankrupt.
(c) In the event an assignment for the benefit of creditors is made by
Tenant.
(d) In the event of an appointment by any court of a receiver or other
court officer of Tenant's property and such receivership is not dismissed within
thirty (30) days from such appointment.
(e) In the event Tenant removes, attempts to remove, or permits to be
removed from the Leased Premises, except in the usual course of trade, the
goods, furniture, effects or other property of the Tenant brought thereon.
(f) In the event Tenant, before the expiration of the term hereof and
without the written consent of the Landlord, vacates the Leased Premises or
abandons the possession thereof, or uses the same for purposes other than the
purposes for which the same are hereby leased.
(g) In the event an execution or other legal process is levied upon the
goods, furniture, effects or other property of Tenant brought on the Leased
premises, or upon the interest of Tenant in this Lease, and the same is not
satisfied or dismissed within ten (10) days from this levy.
(h) In the event Tenant abandons or fails to occupy the Leased Premises
or in the event Tenant fails to occupy the Leased Premises in accordance with
Section 4.02 hereof.
(i) In the event Tenant fails to keep, observe or perform any of the
other terms, conditions or covenants on the part of Tenant herein to be kept,
observed and performed for more than ten (10) days after written notice thereof
is given by Landlord to Tenant specifying the nature of such default, or if the
default so specified shall be of such a nature that the same cannot reasonably
be cured or remedied within said ten (10) day period, if Tenant shall not in
good faith have commenced the curing or remedying of such default within such
ten (10) day period and shall not thereafter continuously and diligently proceed
therewith to completion.
(j) Tenant shall not place a load upon any floor of the Leased Premises
exceeding the floor load per square foot which such floor was designed to carry.
Any load exceeding the floor load per square foot maximum, must be placed by
Tenant at Tenant's expense so as to safely distribute the weight in accordance
with engineering standards which Tenant shall obtain from Landlord's engineer at
Tenant's expense. Business machines and mechanical equipment shall be placed and
maintained by Tenant, at Tenant's expense, in settings sufficient in Landlord's
reasonable judgment to absorb and prevent vibration, noise and annoyance. If the
Leased Premises be or become infested with insects or vermin as a result of the
use or any misuse or neglect of the Leased premises by Tenant, its agents,
employees, visitors or licensees, Tenant shall at Tenant's expense cause the
same to be exterminated from time to time to the reasonable satisfaction of
Landlord and shall employ such exterminators and
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such exterminating company or companies as shall be reasonably approved by
Landlord.
(k) Any event MANAGEMENT INC., a conditions of that MANAGEMENT INC. as
general partnership of default or breach by MACKENZIE INVESTMENT Delaware
corporation, under the terms and certain lease between MACKENZIE INVESTMENT
tenant and VIA MIZNER ASSOCIATES, a Florida as landlord, dated May 10, 1989 (as
amended).
SECTION 17.02 Remedies of Landlord.
(a) In the event of any such default or breach, Landlord shall have the
immediate right to re-enter the Leased premises, either by summary proceedings,
by force or otherwise, and to dispossess Tenant and all other occupants
therefrom and remove and dispose of all property therein in the manner provided
in subdivision (c) of this Section, all without service of any notice of
intention to re-enter and without Landlord being deemed guilty of trespass or
becoming liable for any loss or damage which may be occasioned thereby. Landlord
shall also have the right, at the option of Landlord, to terminate this Lease
upon three (3) days written notice to Tenant, and to thereupon reenter and take
possession of the said premises. In the event of any such default or breach,
Landlord shall have the right, at its option, from time to time, without
terminating this Lease, to reenter and re-let the premises, or any part thereof,
with or without legal process, as the agent and for the account of Tenant upon
such terms and conditions as Landlord may deem advisable or satisfactory, in
which even the rents received on such re-letting shall be applied first to the
expenses of such re-letting and collection including but not limited to,
necessary renovation and alterations of the Leased premises, reasonable
attorney's fees, any real estate commissions paid, and thereafter toward payment
of all sums due or which become due Landlord hereunder, and if a sufficient sum
shall not be thus realized or secured to pay such sums and other charges, (i) at
Landlord's option, Tenant shall pay Landlord any deficiency monthly,
notwithstanding Landlord may have received rental in excess of the rental
stipulated in this Lease in previous or subsequent months, and Landlord may
bring an action therefor as such monthly deficiency shall arise, or (ii) at
Landlord's option, the entire deficiency, which is subject to ascertainment for
the remaining term of this Lease, shall be immediately due and payable by
Tenant. Nothing herein, however, shall be construed to require Landlord to
re-enter in any event. The Landlord shall not, in any event, be required to pay
Tenant any surplus of any sums received by Landlord on a re-letting of said
premises in excess of the rent provided in this Lease.
(b) In the event of any such default or breach, the Landlord shall have
the right, at its option, to declare the rents for the entire remaining term and
other indebtedness, if any, immediately due and payable without regard to
whether or not possession shall have been surrendered to or taken by Landlord,
and may commence action immediately thereupon and recover judgement therefor
which judgement shall be rendered for the then present value of the
aforedescribed sum.
(c) The Landlord in addition to other rights and remedies it may have,
shall have the right to remove all or any part of the Tenant's property from
said premises and any property removed may be stored in any public warehouse or
elsewhere at the cost of, and for the account of Tenant and the Landlord shall
not be responsible for the care or safekeeping thereof, and the Tenant hereby
waives any and all loss, destruction and/or damage or injury which may be
occasioned by any of the aforesaid acts.
(d) No such re-entry or taking possession of said leased Premises by
Landlord shall be construed as an election on
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Landlord's part to terminate this Lease unless a written notice of such
intention is given to Tenant. Notwithstanding any such re-letting without
termination, Landlord may at all times thereafter, elect to terminate this Lease
for such previous default or breach. Any such re-entry shall be allowed by
Tenant without hindrance and Landlord shall not be liable in damages for any
such re-entry, or guilty of trespass or forcible entry.
(e) Any and all rights, remedies and options given in this Lease to
Landlord shall be cumulative and in addition to and without waiver of or in
derogation of any right or remedy given to it under any law now or hereafter in
effect.
SECTION 17.03 Waiver.
The waiver by Landlord of any breach of any term, condition or covenant
herein contained shall not be a waiver of such term, condition or covenant, or
any subsequent breach of the same or any other term, condition or covenant
herein contained. The consent or approval by Landlord to or of any act by Tenant
requiring Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent similar act by
Tenant. No re-entry hereunder shall bar the recovery of rents or damages for the
breach of any of the terms, conditions or covenants on the part of Tenant herein
contained. The receipt of rent after breach or condition broken, or delay on the
part of Landlord to enforce any right hereunder, shall not be deemed a waiver or
forfeiture, or a waiver of the right of Landlord to annul this Lease or to
reenter said Leased Premises or to re-let same.
SECTION 17.04 Past Due Payments.
In the event any payment due under this Lease should not be paid on the
due date, Tenant agrees to pay interest on the amount which is delinquent at the
highest rate permitted under the laws of the state of Florida, for such
delinquent payment until made. In addition thereto, if Tenant shall fail to pay
any rents, additional rents or any other payments due under this Lease within
five (5) days of the due date thereof, or in the event any check, bank draft,
order for payment or negotiable instrument given to Landlord for any payment
under this Lease shall be dishonored for any reason whatsoever not attributable
to Landlord, then Tenant shall also pay to Landlord an administrative charge
equal to whichever is the greater of the following: (i) One Hundred Dollars
($100.00), or (ii) five percent (5%) of such unpaid sum. Tenant recognizes and
agrees that the charge which Landlord is entitled to make upon the conditions
stated in this Section represents, at the time this Lease is made, a fair and
reasonable estimate and liquidation of the cost of Landlord in the
administration of VIA MIZNER FINANCIAL PLAZA resulting to Landlord from the
events described which costs are not contemplated or included in any other
rental charges provided to be paid by Tenant to Landlord in this Lease. The
provisions herein for administration charges shall not be construed to extend
the date for payment of any sums required to be paid by Tenant hereunder or to
relieve Tenant of its obligation to pay all such sums at the time or times
herein stipulated.
SECTION 17.05 Legal Expenses.
In the event that it shall become necessary for Landlord to employ the
services of an attorney to enforce any of its rights under this Lease or to
collect any sums due to it under this Lease or to remedy the breach of any
covenant of this Lease on the part of the Tenant to be kept or performed,
regardless of whether suit be brought, Tenant shall pay to Landlord such fee as
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shall be charged by Landlord's attorney for such services. Should suit be
brought for the recovery of possession of the Leased Premises, or for rent or
any other sum due Landlord under this Lease, or because of the breach of any of
Tenant's covenants under this Lease, Tenant shall pay to Landlord all expenses
of such suit and any appeal thereof, including a reasonable attorney's fee.
In the event that it shall become necessary for Tenant to employ the
services of an attorney to enforce any of its rights under this Lease or to
collect any sums due to it under this Lease or to remedy the breach of any
covenant of this Lease on the part of the Landlord to be kept or performed,
regardless of whether suit be brought, Landlord shall pay to Tenant such fee as
shall be charged by Tenant's attorney for such services. Should suit be brought
for any sum due Tenant under this Lease, or because of the breach of any of
Landlord's covenants under this Lease, Landlord shall pay to Tenant all expenses
of such suit and any appeal thereof, including a reasonable attorney's fee.
ARTICLE XVIII
Access by Landlord
SECTION 18.01 Right of Entry.
(a) provided the Landlord has given reasonable notice to the Tenant
(except in the case of an emergency), Landlord and Landlord's agents shall have
the right to enter the Leased premises at all reasonable times to examine the
same, and to show them to prospective purchasers or lessees of the Leased
Premises, and to make such repairs, or alterations, improvements or additions as
Landlord may deem necessary or desirable, and Landlord shall be allowed to take
all material into and upon said premises that may be required therefor without
the same constituting an eviction of Tenant in whole or in part and the rent
reserved shall in no way abate while said repairs, alterations, improvements or
additions are being made unless Tenant is prevented from operating in the Leased
Premises in whole or in part, in which event rent shall be proportionately
abated during said period. During the six (6) months prior to the expiration of
the term of this Lease or any renewal term, Landlord may exhibit the premises to
prospective tenants or purchasers, and place upon the premises the usual notices
"To Let" or "For Rent" which notices Tenant shall permit to remain thereon
without molestation. If Tenant shall not be personally present to open and
permit an entry into said premises, at any time, when for any reason an entry
therein shall be necessary or permissible, Landlord or Landlord's agents may
enter the same without in any manner affecting the obligations and covenants of
this Lease. Nothing herein contained, however, shall be deemed or construed to
impose upon Landlord any obligation, responsibility or liability whatsoever, for
the care, maintenance or repair of the Building or any part thereof, except as
otherwise herein specifically provided. Landlord and Tenant agree that Landlord
shall not unreasonably interfere with Tenant's business operations in connection
with Landlord's activities under this subparagraph (a) except in the case of an
emergency.
(b) Except for the space within the inside surfaces of all walls, drop
ceilings, floors, windows and doors bounding the Leased Premises, all of the
Building including without limitations exterior building walls, atrium walls,
core corridor walls and doors, terraces or roofs adjacent to or above the Leased
premises and any space in or adjacent to the Leased
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Premises used for shafts, stacks, pipes, conduits, utilities rooms, ducts, which
service other portions of the Building in addition to or exclusive of the Leased
Premises, are reserved to the Landlord for the purposes of maintenance,
decoration, repair, operation, construction of additions to the Building or
other leased premises within the Building. Landlord reserves the right and
Tenant shall permit Landlord and persons authorized by Landlord to access the
aforedescribed facilities and to install, erect, use and maintain the
aforedescribed facilities in and through the Leased Premises. Landlord and
persons authorized by the Landlord shall have the right to enter and/or pass
through the Leased premises at any time or times to make such repairs,
alterations, additions and improvements in or to the Leased premises and/or in
or to the Building or its improvements and common facilities as Landlord is
required or desires to make. Landlord and such authorized persons shall be
allowed to take all materials into and upon the Leased premises that may be
required in connection therewith, without liability to Tenant and without any
reduction of Tenant's covenants and/or obligations hereunder.
(c) If at any time any windows of the Leased Premises are either
temporarily darkened or obstructed by reason of any repairs, improvements,
maintenance and/or cleaning in or about the Building or covered by any
translucent material for the purpose of energy conservation, or if any part of
the Building, other than the Leased premises, is temporarily or permanently
closed or inoperable, the same shall be without liability to Landlord and
without any reduction or diminution of Tenant's obligations under this Lease.
Neither this Lease nor any use by Tenant, shall give Tenant any easement or
other right in or to (i) the use of any door or any passage or any concourse or
other common facility within VIA MIZNER FINANCIAL PLAZA, or (ii) the use of such
doors, passages, concourses and common facilities for access to any other
building or any public conveniences or transportation facilities. Tenant
acknowledges that the use of such doors, passages, concourses and common
facilities may without notice to Tenant be regulated or discontinued at any time
by Landlord.
(d) If an excavation shall be made upon land adjacent to or under the
Building in which the Leased Premises is located, or shall be authorized to be
made, Tenant shall afford to the person causing or authorized to cause such
excavation, license to enter the Leased premises for the purpose of performing
such work as said person shall deem necessary or desirable to preserve and
protect the Building from injury or damage to support the same by proper
foundations, without any claim for damages or liability against Landlord and
without reducing or otherwise affecting Tenant's obligations under this Lease.
SECTION 18.02 Roof.
Use of the roof and/or air space above the Leased premises is reserved
exclusively to the Landlord. Any use of the roof and/or air space above the
Lease Premises or the Building by the Tenant shall be subject to the Landlord's
absolute and sole discretion; provided, however, any such use is subject to the
approval of all governmental authorities having jurisdiction over such use (and
the installation of facilities or improvements to accomplish such use) and
nothing contained herein shall be interpreted or construed as a representation
or implication by the Landlord that the use (or the installation of facilities
or improvements to accomplish such use) will receive the consent or approval of
any of the governmental authorities having jurisdiction and approval rights or
control of the use.
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ARTICLE XIX
Tenant's Property
SECTION 19.01 Taxes on Leasehold or Personalty.
Tenant shall be responsible for and shall pay before delinquent all
municipal, county or state taxes assessed during the term of this Lease against
any leasehold interest or personal property of any kind, owned by or placed in,
upon or about the Leased Premises by the Tenant.
SECTION 19.02 Loss and Damage.
Landlord shall not be responsible for any damage to property of Tenant
or of others located on the Leased Premises nor for the loss of or damage to any
property of Tenant or others by theft or otherwise except for the sole
negligence of the Landlord or the sole negligence of the Landlord's employees.
Landlord shall not be liable for any injury or damage to persons or property
resulting from fire, explosion, falling plaster, steam, gas, electricity, water,
rain, or leaks from any part of the Leased Premises or from the pipes,
appliances or plumbing works or from the roof, street or subsurface or from any
other place or by dampness or by any other cause of whatsoever nature. Landlord
shall not be liable for any such damage caused by other tenants or persons in
the Leased premises, occupants of adjacent property within VIA MIZNER FINANCIAL
PLAZA, or the public, or caused by operations in construction of any private,
public or quasi-public work. Landlord shall not be liable in damages or
otherwise for any latent defect in the Leased Premises or in the Building of
which they form a part, except that if Tenant shall give notice to Landlord
within a period of one (1) year from the date Tenant takes possession of the
Leased Premises of the existence of any such latent defect, then provided such
defect shall not have resulted from any act, alteration or improvement made by
Tenant, Landlord shall repair such defect. All property of Tenant kept or stored
on the Leased Premises shall be so kept or stored at the risk of Tenant only and
Tenant shall hold Landlord harmless from any and all claims arising out of
damage to same, including subrogation claims by Tenant's insurance carriers.
SECTION 19.03 Notice by Tenant.
Tenant shall give immediate notice to Landlord in case of fire or
accidents in the Leased Premises or in the Building of which the premises are a
part or of defects therein or in any fixtures or equipment, or of any repair or
maintenance item for which the Landlord is responsible under the terms and
conditions of this Lease.
ARTICLE XX
Holding Over Successors
SECTION 20.01 Holding Over.
In the event Tenant remains in possession of the Leased Premises after
the expiration of the tenancy created hereunder, and without the execution of a
new lease, Tenant, at the option of Landlord, shall be deemed to be occupying
the Leased Premises as a Tenant from month-to-month, at a monthly rent for the
first thirty (30) days equal to one hundred twenty-five percent (125%) of the
fixed minimum rent payable during the last month of the lease term and
thereafter at a monthly rent equal to two times the fixed minimum rent payable
during the last month of the lease term and a twenty-five percent (25%) increase
from each month
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occupying the Leased Premises thereafter. In addition to the fixed minimum rent
Tenant agrees to pay monthly all Additional Rent as provided for in this Lease.
SECTION 20.02 Successors.
All rights and liabilities herein given to, or imposed upon, the
respective parties hereto shall extend to and bind the several respective heirs,
executors, administrators, successors, and permitted assigns of the said
parties; and if there shall be more than one Tenant, they shall be bound jointly
and severally by the terms, covenants and agreements herein. No rights, however,
shall inure to the benefit of any assignee of Tenant unless the assignment to
such assignee has been approved by Landlord in writing as provided in Section
11.01 hereof. Nothing contained in this Lease shall in any manner restrict
Landlord's right to assign or encumber this Lease and, in the event Landlord
sells or transfers its interest in VIA MIZNER FINANCIAL PLAZA and the purchaser
or transferee takes assignment of Landlord's interest in this Lease, Landlord
shall thereupon be relieved of all further obligations hereunder.
ARTICLE XXI
Quiet Enjoyment
Upon payment by the Tenant of the rents herein provided, and upon the
observance and performance of all the covenants, terms and conditions on
Tenant's part to be observed and performed, Tenant shall peaceably and quietly
hold and enjoy the Leased Premises for the term hereby demised without hindrance
or interruption by Landlord or any other person or persons lawfully or equitably
claiming by, through or under the Landlord, subject, nevertheless, to the terms
and conditions of this Lease.
ARTICLE XXII
Miscellaneous
SECTION 22.01 Accord and Satisfaction.
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 an account of
the earliest stipulated rent, nor shall any endorsement or statement on any
check or any letter accompanying the 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 provided in the Lease by law.
SECTION 22.02 Entire Agreement.
This Lease and the Exhibits, and any Rider or Addendum, if any, attached
hereto and forming a part hereof, set forth all covenants, promises, agreements,
conditions and understandings between Landlord and Tenant concerning the Leased
Premises and there are no covenants, promises, conditions or understandings,
either oral or written, between them other than as herein set forth. All
understandings and agreements heretofore made between Landlord and Tenant
(including the agents and employees of either the Landlord or Tenant) are merged
into this Lease and any other written correspondence or agreements made prior to
the execution of this Lease are hereby terminated, and are null and void. This
Lease fully and completely expressed the agreements of the Landlord and Tenant
which lease is entered into by the Landlord
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and Tenant after full investigation by each party, neither party relying upon
any statement or representation not embodied in this Lease or other written
agreement executed simultaneously with this Lease. No provision of this Lease
may be amended or added to except by an agreement in writing signed by the
parties hereto or their respective successors in interest.
SECTION 22.03 No Partnership.
Landlord does not, in any way or for any purpose, become a partner of
Tenant in the conduct of its business, or otherwise, or joint venturer or a
member of a joint enterprise with Tenant.
SECTION 22.04 Force Majeure.
In the event that either party hereto shall be delayed or hindered in
or prevented from the performance of any act required hereunder by reason of
strikes, lock-outs, labor troubles, inability to procure materials, failure of
power, restrictive governmental laws or regulations, riots, insurrection, war or
other reason of a like nature not the fault of the party delayed in performing
work or doing acts required under the terms of this Lease, then performance of
such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period of such delay. The
provisions of this Section 22.04 shall not operate to excuse Tenant from the
prompt payment of rent, percentage rent, additional rent or any other payments
required by the terms of this Lease.
SECTION 22.05 Notices.
(a) All notices shall be in writing and shall be deemed to have been
given upon receipt.
(b) Any notice by Tenant to Landlord must be served by certified or
registered mail, or private mail service, postage prepaid, addressed to Landlord
at the address first hereinabove given or at such other address as Landlord may
designate by written notice. Any notice by Landlord to Tenant must be served by
certified or registered mail, or private mail service, postage prepaid,
addressed to Tenant at the address first hereinabove given or at such other
address as Tenant may designate by written notice except as provided in
subparagraph (c) hereinafter.
(c) After commencement of the term hereof any notice by Landlord to
Tenant shall be served by hand delivery or private mail or delivery service,
postage prepaid, addressed to Tenant at the Leased Premises.
(d) Notice shall be deemed to be properly given if addressed to Tenant
at its last known address, if private mail or delivery service or certified mail
return receipt requested, postage pre-paid is refused or otherwise
undeliverable.
SECTION 22.06 Captions and Section Numbers.
The captions, section numbers, article numbers and index appearing in
this Lease are inserted only as a matter of convenience and in no way define,
limit, construe, or describe the scope or intent of such sections or articles of
this Lease not in any way affect this Lease.
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SECTION 22.07 Tenant Defined, Use of Pronoun.
The word "Tenant" shall be deemed and taken to mean each and every
person mentioned as a Tenant herein be the same, one or more and if there shall
be more than one Tenant any notice required or permitted by the terms of this
Lease may be given by or to any one thereof, and shall have the same force and
effect as if given or to all thereof. The use of the neuter singular pronoun to
refer to Landlord or Tenant shall be deemed a proper reference even though
Landlord or Tenant may be an individual, a partnership, a corporation, or a
group of two or more individuals or corporations. The necessary grammatical
changes required to make the provisions of this Lease apply in the plural sense
where there is more than one Landlord or Tenant and to either corporations,
associations, partnerships, or individuals, males or females, shall in all
instances be assumed as though in each case fully expressed.
SECTION 22.08 Brokers Commission.
Each of the parties represents and warrants that it has dealt with no
broker or brokers in connection with the execution of this Lease, except as set
forth in Section (v) of the Lease Summary, and each of the parties agrees to
indemnify the other against, and hold it harmless from, all liabilities arising
from any claim for brokerage commissions or finder's fees resulting from the
indemnitor's acts (including, without limitation, the cost of counsel fees in
connection therewith) except as set forth in Section (v) of the Lease Summary,
and except as provided for in the following paragraph.
Notwithstanding the provisions of the paragraph hereinabove, Tenant has
reviewed, understands and acknowledges all of the provisions of that certain
Letter Agreement dated April 28, 1989 between Landlord and ROYAL LePAGE, and
Tenant agrees to and shall indemnify Landlord and save Landlord harmless from
and against all claims, actions damages, liability and expenses arising from or
out of any claim or demand for payment of a brokerage commission or compensation
by or due to ROYAL LePAGE in connection with or as a result of Landlord entering
into this Lease with Tenant, which indemnification shall include but not be
limited to reasonable counsel fees, whether incurred prior to or in litigation,
court costs, reasonable appellate counsel fees, punitive damages and
pre-judgment interest, if any.
SECTION 22.09 Partial Invalidity.
If any term, covenant or condition of this Lease or the application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term,
covenant or condition to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term, covenant or condition of this Lease shall be valid and be enforced to the
fullest extent permitted by law.
SECTION 22.10 Effectiveness of Lease.
The submission of this Lease for examination does not constitute a
reservation of or option for the Leased premises and this Lease becomes
effective as a lease only upon execution and delivery thereof by Landlord to
Tenant, and the receipt of full security deposit, and if paid by check, subject
to clearance.
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SECTION 22.11 Recording.
Tenant shall not record this Lease or any memorandum thereof in any
public records without the written consent and joinder of Landlord.
SECTION 22.12 Liability of Landlord.
Anything contained in this Lease at law or in equity to the contrary
notwithstanding Tenant expressly acknowledges and agrees that there shall at no
time be or be construed as being any personal liability by or on the part of
Landlord under or in respect of this Lease or in any way related hereto or the
Leased Premises; it being further acknowledged and agreed that Tenant is
accepting this Lease and the estate created hereby upon and subject to the
understanding that it shall not enforce or seek to enforce any claim or judgment
or any other matter, for money or otherwise, personally or directly against any
officer, director, stockholder, partner, principal (disclosed or undisclosed),
representative or agent of Landlord, but will look solely to the Landlord's
interest in the VIA MIZNER FINANCIAL PLAZA for the satisfaction of any and all
claims, remedies or judgments (or other judicial process) in favor of Tenant
requiring the payment of money by Landlord in the event of any breach by
Landlord of any of the terms, covenants or agreements to be performed by
Landlord under this Lease or otherwise, subject, however, to the prior rights of
any ground or underlying lessors or the holders of the mortgages covering the
VIA MIZNER FINANCIAL PLAZA, and no other assets of Landlord shall be subject to
levy, execution or other judicial process for the satisfaction of Tenant's
claims; such exculpation of personal liability as herein set forth to be
absolute, unconditional and without exception of any kind.
SECTION 22.13 Time of the Essence.
Time is of the essence of this Lease and each and all of its provisions
in which performance is a factor.
SECTION 22.14 Estoppel Information.
When the commencement date is determined, Tenant agrees, upon request
of Landlord, to execute and deliver to Landlord, without charge and within ten
(10) days following request therefor, a written declaration in form satisfactory
to Landlord: (i) ratifying this Lease; (ii) confirming the commencement and
expiration dates of the term of this Lease; (iii) certifying that Tenant is in
occupancy of the Leased Premises, the date Tenant commenced operating Tenant's
business therein and that this Lease is in full force and effect and has not
been assigned, modified, supplemented or amended, except by such writings as
shall be stated; (iv) that all conditions under this Lease to be performed by
Landlord have been satisfied, except such as shall be stated; (v) that there are
no defenses or offsets against the enforcement of this Lease by Landlord, or
stating those claimed by Tenant; (vi) reciting the amount of advance rental, if
any, paid by Tenant and the date to which rental has been paid; and (vii)
reciting the amount of security deposited with Landlord, if any. Tenant agrees
to execute and deliver similar declarations at any time and from time to time
and within ten (10) days following request therefor by Landlord or by any
mortgage lenders or ground or underlying lessor and or purchaser's of all or any
portion of VIA MIZNER FINANCIAL PLAZA, and each of such parties shall be
entitled to rely upon such written declaration made by Tenant. Tenant's failure
or refusal to execute the declaration required hereunder within ten (10) days
following the request therefor will constitute a default hereunder and Landlord
shall have such rights and remedies against Tenant as is available to Landlord
for Tenant's default.
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<PAGE> 41
SECTION 22.15 Cumulative Remedies.
No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in equity.
SECTION 22.16 Choice of Law.
This Lease shall be governed by the laws of the State of Florida.
SECTION 22.17 Affirmative Waivers.
Tenant, on behalf of itself and any and all persons claiming through or
under Tenant, does hereby waive and surrender all right and privilege which it,
they or any of them might have under or by reason of any present or future law,
to redeem the Leased Premises or to have a continuance of this Lease after being
dispossessed or ejected therefrom by process of law or under the terms of this
Lease or after the termination of this Lease as provided in this Lease. Landlord
and Tenant hereby waive trial by jury in any action, proceeding or counterclaim
brought by either against the other on any matter whatsoever arising out of or
in any way connected with this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the Leased Premises, including, without limitation,
any claim of injury or damage, and any emergency and other statutory remedy with
respect thereto.
SECTION 22.18 Preparation of Lease.
The submission by Landlord of the Lease in draft form shall be deemed
submitted solely for Tenant's consideration and not for acceptance and
execution. Such submission shall have no binding force or effect and shall
confer no rights nor impose any obligations, including brokerage obligations, on
either party unless and until both Landlord and Tenant shall have executed the
Lease and duplicate originals thereof shall have been delivered to the
respective parties.
SECTION 22.19 Counterparts.
This Lease may be executed in multiple copies, each of which shall be
deemed an original, and all of such copies shall together constitute one and the
same instrument.
SECTION 22.20 Acceptance of Funds by Landlord.
No receipt of money by the Landlord from the Tenant after the
termination of this Lease or after the service of any notice or after the
commencement of any suit, or after final judgment for possession of the Leased
Premises shall reinstate, continue or extend the term of this Lease or affect
any such notice, demand or suit.
SECTION 22.21 Radon Gas Notification.
Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county public health
unit. Pursuant to ss.404.056(8), Florida Statutes.
-41-
<PAGE> 42
SECTION 22.22 Attachments.
Exhibits One, Two, A, B, C, D, E, F, G, H, I, J, K, L, M, N, Guaranty,
as well as any Riders or Addendums which are attached to this Lease are a part
of this Lease and are incorporated herein as if fully set forth herein.
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this
Lease on the day and year first above written.
VIA MIZNER ASSOCIATES, a
Florida general partnership,
LANDLORD
BY: SVMP, LTD., a Florida
limited partnership, General
Partner of Via
Mizner Associates
Signed, sealed and delivered BY: SVMP, INC., a Florida
In the presence of: corporation, General partner
of SVMP LTD.
/s/ (ILLEGIBLE)
- ----------------------------
/s/ Patricia A. Hill BY: /s/ Bill Shubin
- ---------------------------- --------------------------------
As to Landlord Bill Shubin, President
(Corporate Seal)
Date: 1/31/92
--------------------------
Signed, sealed and delivered IVY MANAGEMENT, INC., a
in the presence of: Massachusetts corporation,
TENANT
/s/ (ILLEGIBLE) By: /s/ (ILLEGIBLE)
- ---------------------------- --------------------------------
(Corporate Seal)
/s/ Patricia A. Hill
- ----------------------------
As to Tenant Date: January 31, 1992
1/31/99
-42-
<PAGE> 43
LIST OF EXHIBITS
EXHIBIT ONE - Site Plan of Via Mizner Financial Plaza
EXHIBIT TWO - Additional Lease Agreement Provisions
EXHIBIT "A" - Plan of Leased Premises
EXHIBIT "B" - Legal Description
EXHIBIT "C" - Landlord's Work
EXHIBIT "D" - Tenant's Work
EXHIBIT "E" - Sign Specifications
EXHIBIT "F" - Heating and Air Conditioning Maintenance
Provision
EXHIBIT "G" - Maintenance and Cleaning Standards For Tenant
EXHIBIT "H" - Rules and Regulations of Via Mizner Financial
Plaza
EXHIBIT "I" - Rules and Regulations for Tenant Construction
Work
EXHIBIT "J"- Formula for Calculation of Area Within Leased
Premises
EXHIBIT "K" - Intentionally Omitted
EXHIBIT "L" - Memorandum of Lease
EXHIBIT "M" - Subordination, Non-Disturbance and Attornment
Agreement
EXHIBIT "N" - Collateral Account Escrow Agreement
GUARANTY
<PAGE> 44
Exhibit One
to
Lease Agreement
Between Via Mizner Associates
and
Ivy Management, Inc.
Description: Site Plan of Via Mizner Financial Plaza
Page 1 of 2
<PAGE> 45
EXHIBIT ONE
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
The proposed improvements and plans of development depicted on this
Exhibit One are conceptual in nature and tentative in Landlord's anticipated
subsequent development of the site. Landlord has constructed only those
improvements known as 700, 798 and 800 S. Federal Highway. Landlord
anticipates constructing additional improvements as depicted in this Exhibit,
however, Tenant acknowledges that the actual location, configuration,
elevation and dimensions of the additional improvements (if any) upon
completion of construction may vary from those improvements depicted hereon
due to marketing conditions, site plan revisions by the Landlord, change of
use by the Landlord, governmental permit and approval requirements, field and
construction conditions and marketing requirements of prospective tenants.
Landlord does NOT agree or represent to Tenant in any way that any
improvements or development as depicted on this Exhibit, other than the
improvements known as 700, 798, 800 and 998 S. Federal Highway, shall be
undertaken or completed. Tenant acknowledges that Landlord may (in Landlord's
sole discretion) expand and/or renovate 996 S. Federal Highway. Tenant
acknowledges that Tenant has not relied upon any information or the depiction
of any improvements on this Exhibit in entering this Lease other than as
expressly set forth in this narrative statement.
Page 2 of 2
<PAGE> 46
EXHIBIT TWO
TO LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
1. Lease Commencement Date. See Section 1.03 of Article 1 of the Lease
Agreement.
2. Tenant Improvements. In accordance with the provisions of Article
III of this Lease, Tenant shall perform and construct all Tenant Improvements
described in Exhibit "D" annexed hereto and made a part hereof. Tenant shall
have the plans and specifications for the Tenant Improvements prepared and
finalized on or before February 1, 1992. It is understood and agreed by Tenant
that none of the materials to be incorporated into the Tenant Improvements would
result in a fabrication and/or delivery date which would result in the
construction of the Tenant Improvements being delayed beyond the Tenant
Improvement completion date of May 1, 1992. Tenant shall obtain a Tenant
Improvements building permit on or before February 25, 1992. Upon the completion
of the Tenant Improvements described in Exhibit "D" and obtaining a certificate
of occupancy for the Leased Premises from all governmental authorities having
jurisdiction over the Tenant Improvements, Landlord shall pay to Tenant a tenant
improvement allowance and an architectural interior design fee allowance of
Twenty-five Dollars ($25.00) per square foot for each square foot of rental
space (7,854 sq. ft.) for which Tenant pays rent to the Landlord. The tenant
improvement and architectural improvement allowance shall be paid by Landlord to
Tenant within ten (10) days from the date Landlord receives (a) written notice
from the Tenant advising that the Tenant Improvements are completed, (b) a copy
of the Tenant's certificate of occupancy, and (c) a Final Affidavit of
Contractor and Release of Liens from the Tenant Improvement Contractor. The
Tenant Improvement Allowance may not be assigned, transferred, pledged,
hypothecated, mortgaged or otherwise encumbered by the Tenant (nor may the
Tenant direct the payment of the Tenant Improvement Allowance to any third
party), and the payment of the Tenant Improvement Allowance shall be made
directly to the Tenant only.
3. Tenant Signage. Landlord shall allow (subject to Landlord's
approval, which approval shall not be unreasonably withheld) the Tenant to
install signage as follows: (i) on the existing directory in the elevator ground
floor lobby; (ii) the interior entrance of the Tenant's Leased Premises; and
(iii) on the existing building directory sign located on the east side of
700-798S. Federal Highway, Boca Raton, Florida located adjacent to the rear
entry provided, that all signage is of a first class design and construction and
consistent with the quality and character of VIA MIZNER FINANCIAL PLAZA and
otherwise consistent with the provisions of Exhibit "E". Landlord and Tenant
agree that Tenant shall have signage on any other multi-user tenant information
signage provided by the Landlord which multi-user tenant information signage is
made available to substantially all of the other tenants in VIA MIZNER FINANCIAL
PLAZA. Tenant acknowledges and agrees that all signs and informational material
must comply with the ordinances and codes of the city of Boca Raton and any
other governmental entities having jurisdiction over such installation.
-1-
<PAGE> 47
4. Renewal Options.
Number of Option Terms: Two
Duration of Each Option Term: Five Years
Provided Tenant is in good standing and not in default under this
Lease, Landlord hereby gives and grants to Tenant the right, privilege and
option of extending the Lease for two (2) terms as set forth above. The first
extended term will commence on the date of the expiration of this Lease.
Provided the Tenant has exercised the option for the first extended term and is
in good standing and not in default under this Lease during the first extended
term, the second extended term will commence on the date of the expiration of
the first extended term. In order to exercise the option herein granted, Tenant
must give written notice of Tenant's intention to exercise the option to extend
not less than nine (9) months prior to the expiration of the current term, or
the first extended term, as the case may be. All of the terms, covenants and
conditions of this Lease will apply during each option term except the Fixed
Minimum Annual Rent will be adjusted as follows: Upon Landlord receiving notice
from Tenant of Tenant's election to extend the Lease for each option term
provided for hereinabove, then Landlord shall within one hundred eighty (180)
days from the receipt of Tenant's notice issue written correspondence to the
Tenant which shall contain the Fixed Minimum Annual Rent which Landlord has
established for the first year of the option term. If the Tenant finds the Fixed
Minimum Annual Rent charge established in Landlord's correspondence
unacceptable, Tenant shall notify Landlord within ten (10) days of receipt of
Landlord's correspondence, and the Landlord and the Tenant shall each select an
independent appraiser within ten (10) days from the date Landlord receives
Tenant's notice. The two (2) independent appraisers shall then select a third
appraiser and the three (3) appraisers shall each independently establish a fair
market rental value for the first year of the option term. Each of the
appraisers described above shall be members of the American Institute of Real
Estate Appraisers, Members Appraisal Institute and shall be familiar with and
conduct the majority of their business in Broward or Palm Beach County, Florida.
The fair market rental values established by the three (3) appraisers shall then
be averaged together and the Fixed Minimum Annual Rent binding upon the Landlord
and Tenant shall be the average of the three (3) appraisals; provided, however,
notwithstanding the result of the appraisal process provided for hereinabove,
the Fixed Minimum Annual Rent for the first year of each option term shall not
be less than the Fixed Minimum Annual Rent for the year preceding the first year
of the option term. This appraisal process procedure shall apply to the first
option term and the second option term of the Tenant, if the Tenant exercises
each of its renewal options. The cost and expense of the appraisal process shall
be the equal responsibility of the Landlord and the Tenant.
5. Parking Provisions. Notwithstanding the provisions of Section 2.04
of the Lease during the first four (4) years of the term of this Lease, the cost
of operating the parking facilities for the Leased Premises and VIA MIZNER
FINANCIAL PLAZA will be shared prorata by the tenants of VIA MIZNER FINANCIAL
PLAZA in accordance with the provisions of Section 2.06 of the Lease. Subsequent
to the fifth year of the Lease, the Landlord may at the Landlord's option,
continue to collect the cost of operating the parking facilities in accordance
with the provisions of Section 2.06 or the Landlord may elect to exercise the
rights of the Landlord set forth in Section 2.04 to operate the parking
facilities under a charge for parking system.
-2-
<PAGE> 48
Subject to the provision of Section 2.04 of the Lease, Landlord shall
provide to Tenant during the first four (4) years of the term of the Lease: (a)
three (3) parking spaces for each thousand square feet of rental space; and (b)
four (4) of the spaces provided for in item (a) above shall be designated
"reserved", shall be located in the parking garage, and shall be exclusively for
the use of the Tenant or its designees. It is further agreed that if a charge
for parking system is adopted by the Landlord, as set forth in Section 2.04 of
the Lease, then the Tenant shall pay a charge for parking not greater than the
minimum charge imposed by Landlord upon any other Tenant within VIA MIZNER
FINANCIAL PLAZA
6. Tenant Cancellation Provision and Penalty. Tenant may elect to cancel
this Lease at any time after September 30, 1997. This cancellation provision
shall terminate upon the Lease Expiration Date (as set forth in subparagraph (k)
of the Lease Summary). This cancellation provision applies only to the Leased
Premises identified in Section 1.01 of the Lease Agreement. To exercise the
cancellation provision, the Tenant shall provide to the Landlord: (a) written
notice of Tenant's election to cancel this Lease, which notice shall refer
specifically to the cancellation provision contained in this Paragraph 5 of
Exhibit Two to the Lease Agreement; and (b) the written notice shall contain a
non-refundable cancellation penalty payment (which shall be deemed earned by the
Landlord upon receipt) in the sum of $240,332.40, which payment shall be made by
a cashier's check payable to the Landlord and drawn on a bank in the State of
Florida.
7. Lease Guaranty Collateral.
a. Landlord and Tenant agree that during the term of this Lease Tenant
shall not be required to maintain a lease guaranty collateral escrow account as
provided for in the subparagraph (b) of this Paragraph 6, provided that the
Guarantor shall have a Total Stockholders' Equity at the time of the execution
of this Lease of not less than Seven Million Dollars (U.S.$7,000,000.00) and
beginning January 31, 1992 and continuously thereafter the Guarantor shall
maintain a Total Stockholders' Equity during the term of this Lease of not less
than Eight Million Dollars (U.S.$8,000,000.00). The Total Stockholders' Equity
of the Guarantor shall be established by the quarterly Report, Form l0-Q,
prepared by the Guarantor and submitted to the United States Securities and
Exchange Commission. Simultaneously with the l0-Q filing to the U.S. Securities
and Exchange Commission, the Guarantor shall submit to the Landlord a copy of
the l0-Q for Landlord's examination and review. If the Guarantor fails to file a
l0-Q or is no longer required to do same, then in that event, the net worth of
the Tenant shall be established by a written certification of the certified
public accountant of the Guarantor issued to the Landlord which shall state the
Total Stockholders' Equity of the Guarantor calculated in accordance with
generally accepted accounting principles and using the same format and
calculations as were used in determining the Total Stockholders' Equity in
previously filed Form l0-Qs submitted by the Guarantor to the U.S. Securities
and Exchange Commission. The certified public accountant of the Guarantor shall
be licensed to practice in the State of Florida and the written certification of
Total Stockholders' Equity shall be delivered to the Landlord on or before
November 15th of each calendar year for the period April 1st through September
30th, and on or before May 15th of each calendar year for the period October 1st
through March 31st. In addition, the Guarantor shall deliver to the Landlord on
or before June 1st of each calendar year an audited financial statement of the
Guarantor prepared in accordance with generally accepted accounting principles
by a certified public accountant
-3-
<PAGE> 49
licensed to do business in Florida. If any l0-Q (or certification if applicable
or the annual audited financial statement, if applicable) provided for above
reflects a Total Stockholders' Equity of the Guarantor which is less than the
amounts required above, them in that event within ten (10) business days from
the date Tenant receives written notification from the Landlord of such
circumstance, Tenant shall establish a collateral escrow account as provided for
in subparagraph (b) of this Paragraph 7. The failure of the Tenant to execute
and fund the Collateral Account Escrow Agreement within five (5) business days
of written notification from Landlord in accordance with the terms of
subparagraph (b) of this Paragraph 7 shall constitute a default in this Lease.
b. Landlord and Tenant agree that if Tenant is required to establish a
collateral escrow account pursuant to the provisions of subparagraph (a) of this
Paragraph 7 (hereinafter referred to as "Collateral Account"), then such
Collateral Account shall constitute a fund to guaranty payment of the Tenant's
obligations under the terms of this Lease. The Collateral Account shall be
established at Barnett Bank of Florida, 1000 North Federal Highway, Boca Raton,
Florida 33432, (or such other bank acceptable to Landlord and Tenant) and the
funds deposited in the Collateral Account shall be invested in United States
Treasury Bills, Bonds and Notes. Investment direction of the Collateral Account
shall be the responsibility of the Tenant and all interest earned in the
Collateral Account shall be paid to Tenant. The minimum required balance in the
Collateral Account shall be as set forth hereinafter:
Lease Year Account Balances
---------- ----------------
1 $823,932
2 823,932
3 719,490
4 615,048
5 510,606
6* 406,164
* And any option Terms (if any)
The terms and conditions of the release of the funds in the Collateral Account
to the Landlord and/or to the Tenant shall be set forth in a collateral account
escrow agreement to be entered into by Landlord and Tenant. The form of the
collateral account escrow agreement is attached hereto and made a part hereof as
Exhibit "N".
-4-
<PAGE> 50
EXHIBIT "A" TO
LEASE AGREEMENT
BETWEEN
VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
Description: Via Mizner Financial Plaza
Pavilion 798
Second Floor Plan
<PAGE> 51
EXHIBIT "B"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
A portion of blocks 22, 33, 25A, 26 "De Soto Road","S.E. 7TH Street", and
S.E.8th Street as shown on the plat of Spanish River Land Company's Plat "A", as
recorded in Plat Book 16, Pages 27 through 30, inclusive of the Public Records
of Palm Beach County, Florida and a portion of lot 33, as recorded in Plat Book
of Mizner Development Corporation Plat 1, as recorded in Plat Book 3, Page 37 of
the Public Records of Palm Beach County, Florida, being more particularly
described as follows:
Commencing at the southwest corner of said Block 25A; thence South along the
east right-of-way line of that 80.00 foot right-of-way for Federal Highway, as
shown on said Plat, a distance of 5.00 feet; thence east a distance of 28.00
feet to the Point of Beginning; thence continuing east, a distance of 142.00
feet; thence north, a distance of 190.00 feet; thence east, a distance of 18.00
feet; thence north, a distance of 72.45 feet to a point of intersection with the
southerly boundary line of the plat "Boca Raton Hotel and Club", as recorded in
Plat Book 53, Page 129 of the Public Records of Palm Beach County, Florida;
thence northwesterly along said southerly boundary line along the arc of a curve
to the right whose radius point bears N. 400 43'32" E. having a radius of 375.00
feet, a central angle of l50 50'09", an arc distance of 103.64 feet to a point;
thence west, a distance of 91.73 feet; thence south, a distance of 340.00 feet
to the Point of Beginning; said lands situate in the City of Boca Raton, Palm
Beach County, Florida.
<PAGE> 52
EXHIBIT "C"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND
IVY MANAGEMENT, INC.
LANDLORD'S WORK
Landlord shall provide all labor, materials and expense to complete
Base Building Improvements. Base building shall include but not be limited to
complete finished elevator lobby, complete men's and women's lavatories,
complete IIVAC system, excluding mixing boxes, run outs, area controls and
louvers.
<PAGE> 53
EXHIBIT "D"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
TENANT'S WORK AND ALTERATIONS
1. SUBMISSION OF PLANS AND SPECIFICATIONS. Tenant shall make no changes
or alterations in or to the Leased Premises of any nature without Landlord's
prior written approval. Prior to commencing any work in the Leased Premises,
Tenant shall submit to Landlord for Landlord's written approval complete
drawings plans and specifications (herein collectively referred to as "Tenant's
Plan") for the improvements and installations to be made by Tenant (herein
collectively referred to as "Tenant's work"). Tenant's Plan shall be fully
detailed, shall show complete dimensions, shall not be conflict with Landlord's
basic plans for the Building, shall not require any changes in the structure of
the building and shall not be in violation of any laws, orders, rules or
regulations of any governmental department or bureau having jurisdiction of the
Leased Premises.
2. REVIEW OF PLANS BY LANDLORD. After submission to Landlord of
Tenant's Plan, Landlord shall either approve same or shall set forth in writing
the particulars in which Landlord does not approve same, in which latter case
Tenant shall, within five(5) days after Landlord's notification, return to
Landlord appropriate corrections thereto. Such corrections shall be subject to
Landlord's reasonable approval. Excepting construction of the initial Tenant
improvements made prior to Tenant's occupancy, Tenant shall pay to Landlord,
promptly upon being billed and as Additional Rent, any charges or expenses
Landlord may incur in reviewing Tenant's Plan. Tenant agrees that any review or
approval by Landlord of Tenant's Plans i~ solely for Landlord's benefit, and
without any representation or warranty whatsoever to Tenant with respect to the
adequacy, correctness or efficiency thereof or otherwise.
3. REVISIONS BY TENANT. Tenant further agrees that if Tenant makes any
changes in Tenant's Plan subsequent to its approval by Landlord and if Landlord
consents to such changes, Tenant shall pay to Landlord all costs and expenses
caused by such changes, which Landlord may incur or sustain by reason of delays
or changes necessitated in the performance by Landlord of any construction or
work it is performing in the Building; it being understood and agreed, however,
that Landlord shall have the right to refuse to consent to any such changes. Any
charges payable under this Paragraph 3 shall be paid by Tenant from time to time
upon demand as Additional Rent, whether or not the Lease term shall have
commenced.
4. CORRECTIONS BY LANDLORD. If Tenant fails to correct Tenant's Plan in
any particular as hereinabove required, Landlord shall have the right to make
such corrections on Tenant's behalf; but the foregoing right shall not preclude
the exercise b~ Landlord of any other right or remedy which it may have in such
event.
5. DILIGENT COMPLETION. Following compliance by Tenant with its
obligation under the foregoing paragraphs, Tenant shall
-1-
<PAGE> 54
timely commence Tenant's Work in order to complete 1- same within a reasonable
period of time. Tenant's Work shall be diligently pursued and shall be performed
in a good and workman like manner.
6. WORK SCHEDULES. Tenant agrees that in the performance of Tenant's
Work (i) neither Tenant nor its agents or employees shall interfere with the
work being done by Landlord and its agents and employees, (ii) that Tenant shall
comply with any reasonable work schedule, rules and regulations proposed by
Landlord, its agents or employees, (iii) that the labor employed by Tenant shall
be harmonious and compatible with the labor employed by Landlord in the
Building, it being agreed that if in Landlord's judgment the labor is
incompatible Tenant shall forthwith upon Landlord's demand withdraw such labor
from the Leased Premises, (iv) that Tenant shall procure and deliver to Landlord
workmen's compensation, public liability, property damage and such other
insurance policies, in such amounts as shall be reasonably acceptable to
Landlord in connection with Tenant's Work, and shall upon Landlord's request
cause Landlord to be named as an insured thereunder, (v) that Tenant shall hold
Landlord harmless from and against any and all claims arising from or in
connection with any act or omission of Tenant or its agents or employees, (vi)
that Tenant's Work shall be performed in accordance with the approved Tenant's
Plan and in compliance with the laws, orders, rules and regulations of any
governmental department or bureau having jurisdiction of the Leased Premises,
and (vii) that Tenant shall promptly pay for Tenant's Work in full and shall not
permit any lien to attached to the Leased Premises or the Building.
7. COST ESTIMATES.
(a) Landlord's approval of Tenant's Plans, Tenant shall submit to
Landlord cost estimates certified by Tenant's architect for such work. Landlord
shall review such estimates in order to determine if they accurately reflect the
cost of Tenant's Work. The determination of Landlord shall control and be
binding on: the parties unless there is more than a fifteen percent (15%)
variance in the costs, as estimated by Landlord and Tenant's architect. If there
is more than said fifteen percent (15%) variance Landlord shall appoint an
architect and Landlord's architect and Tenant's architect shall promptly proceed
to settle the dispute as arbitrators (and if they are not able to settle the
dispute, shall appoint a third architect, in which case the three architects
shall proceed to settle the dispute as arbitrators) and the determination of
said architects shall be conclusive. If a third architect is appointed as
aforesaid his fees shall be paid by Tenant. The provisions of this subparagraph
(a) of Paragraph 7 shall not apply to the initial Tenant improvements made prior
to Tenant's occupancy.
(b) Excepting construction of the initial Tenant improvements made
prior to Tenant's occupancy, upon a final determination being made of the
estimated cost of Tenant's Work, as provided in subparagraph (a) above (and
prior to Tenant's commencing any work) Tenant shall deliver to Landlord, to
secure the prompt and proper completion of Tenant's Work an irrevocable,
unconditional, negotiable letter of credit, issued by and drawn on a New York
Clearing House bank in a form reasonably satisfactory to Landlord, in an amount
equal to the aggregate of (i) the aforesaid final cost estimate and (ii) ten
percent (10%) of such sum. Such letter of credit shall be for one year and shall
be renewed by Tenant each and every year until Tenant's Work is completed and
shall be delivered to Landlord not less than thirty (30) days prior to the
expiration of the then current letter of credit. Failure to deliver such new
letter of credit on or before said date shall be a material breach of this
-2-
<PAGE> 55
Lease and Landlord shall have the right, INTER ALIA, to present the then current
letter of credit for payment.
(c) Upon (i) the completion of Tenant's Work ii accordance with the
terms of this Paragraph and (ii) the submission to Landlord of proof evidencing
the payment in full for Tenant's Work, including, without limitation, lien
waivers, the letter of credit (or the balance of the proceeds thereof, if
Landlord has drawn on said letter of credit) shall be returned to Tenant.
(d) Upon the Tenant's failure to properly perform complete and fully
pay for Tenant's Work, as determined b~ Landlord, Landlord shall be entitled to
draw down on the letter of credit to the extent it deems necessary in connection
with Tenant's Work, the restoration and/or protection of the Leased Premises or
the Building and the payment or satisfaction of any costs, damages or expenses
in connection with the foregoing and/or Tenant's obligations under this
Paragraph.
8. FULL PAYMENT. All fixtures and equipment installed or used by Tenant
in the Leased Premises shall be fully paid for by Tenant in cash and shall not
be subject to conditional bills of sale, chattel mortgage or other title
retention agreements.
-3-
<PAGE> 56
EXHIBIT "E"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
SIGN SPECIFICATIONS
Subject to the provisions of Exhibit Two, Tenant acknowledges and agrees
that all Tenant signage shall be in accordance with the conditions and
limitations set forth in the Individual Development Approval DDRI IDA NO. CRP
88-4 issued pursuant to the Boca Raton Community Redevelopment Area Downtown
Development of Regional Impact Development Order.
<PAGE> 57
EXHIBIT "F"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
HEATING AND AIR CONDITIONING MAINTENANCE PROVISION
1. For any equipment or component exclusively serving the Leased
Premises, Tenant must obtain a full-service maintenance contract with a licensed
contractor (the "Contractor") acceptable to Landlord, with service to be
performed not less frequently than quarterly. Tenant must provide evidence of
such service contract to Landlord prior to occupancy and thereafter provide
evidence of any contract renewal or change, as it may occur.
2. The Contractor shall park, deliver, and use entrances, stairwells,
elevators and other areas only as designated by Landlord. Access to the roof, if
required for service, will be permitted only with express prior consent of
Landlord (with a minimum 24-hour notice except in the case of emergencies).
3. The Contractor's access to the Leased Premises will be provided by
the Tenant and will be allowed only during normal business hours.
4. The Contractor's employees are to be identified by means of company
uniforms or identification badges, and the Contractor's vehicles by means of
signs.
5. No work is to be performed in the common areas unless required for
access to Tenant's equipment. Any service by the Contractor which could or will
result in the interruption of mechanical/electrical, plumbing or other services
to the Building or to any other tenant in the Building may occur only with
Landlord's express prior consent (with a minimum 48-hour notice to Landlord),
and must occur prior to 7:00 a.m. or after 8:00 p.m. or at such other time as
Landlord may designate.
6. In the event a Tenant system or component is to be replaced, Tenant
is required to inform Landlord prior to the commencement of any work and must
abide by the provisions of Article III, and Exhibits D and 1 of the Lease.
Additionally, Tenant must provide Landlord with evidence of warranty(ies) upon
request for the original system or any replaced system.
<PAGE> 58
EXHIBIT "G"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
MAINTENANCE AND CLEANING STANDARDS FOR TENANT
(MULTI-TENANT BUILDING)
OFFICE/WORK AREAS
1. Empty and damp-wipe ashtrays and cigarette urns (daily)
2. Empty and clean all waste baskets and remove waste to a designated container
(daily).
3. Refill waste baskets with plastic liners (daily).
4. Sweep all hard-surface flooring with treated dust mops; damp-mop (daily).
5. Spills, any other substance or material on the floors or any condition on
the floor creating a hazardous condition and any stain on the floor shall be
cleaned up and removed immediately.
6. Vacuum all traffic area carpet (daily).
7. Edge vacuum (with edging tool) all baseboard areas, corners, behind doors,
and around furniture legs and bases (weekly).
8. Spot clean carpeting (daily).
9. Hand dust all office furniture, furnishings, and horizontal surfaces
(daily).
10. Spot-clean walls (daily).
11. Hand dust ledges and vertical surfaces (weekly).
12. spray-buff resilient floors (weekly).
13. Clean telephone handsets and bases with (weekly).
14. Clean air supply vents (monthly).
15. Clean lamps and light fixtures (monthly).
16. Vacuum upholstered furniture (monthly).
REST ROOMS
1. Wash and sanitize all wash basins, dispensers, fittings, and fixtures
(daily).
2. Wash and sanitize all lavatories, toilet bowls, and seats (daily).
3. Clean all mirrors, glass, and metal frames (daily).
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<PAGE> 59
4. Empty all waste and sanitary product receptacles and remove waste to a
designated container (daily).
5. Refill waste and sanitary product receptacles with plastic liners (daily).
6. Damp-wipe exterior of all waste receptacles (daily).
7. Sweep, wash, and rinse all ceramic/vinyl tile flooring and fixture bases
with a disinfectant cleaner (daily).
8. Hand dust all sills, partitions, ledges, and shelving (daily).
9. Spot-clean partitions, walls, doors, and frames (daily).
10. Replenish all toilet tissue, hand towels, soap, sanitary products, sanitary
disposal bags and toilet seat covers (daily).
11. Empty and damp-wipe cigarette urns (daily).
12. Clean air supply vents (monthly).
13. Clean lamps and light fixtures (monthly).
KITCHEN/FOOD SERVICE AREAS
1. Empty and damp-wipe ashtrays and cigarette urns (daily).
2. Empty and clean all waste baskets and remove waste to a designated container
(daily).
3. Refill waste baskets with plastic liners (daily).
4. Sweep, wash, and rinse all ceramic/vinyl tile flooring and fixture bases
with a disinfectant cleaner (daily).
5. Vacuum all traffic area carpet (daily).
6. Spot clean carpeting (daily).
7. Wash and sanitize all sinks, countertops, and appliance tops (daily).
8. Wash all table tops (daily)
9. Damp wipe ledges and vertical surfaces (weekly)
10. Clean air supply vents (monthly)
11. Clean lamps and light fixtures (monthly)
GENERAL
1. professional clean interior of all windows (not less frequently than
quarterly).
2. Touch-up paint and repainting (as needed).
3. Professional carpet cleaning and floor refinishing needed).
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<PAGE> 60
EXHIBIT "H"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
BUILDING RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or encumbered, nor shall
they be used for any purpose other than ingress and egress to and from the
Leased Premises or Common Areas. No show cases or other articles shall be put in
front of or affixed to any part of the exterior of the Building, nor placed in
the halls, corridors or vestibules without the prior written consent of the
Landlord.
2. No awnings or other projections shall be attached to the outside
walls of the Building without the Landlord's prior written consent. No curtains,
blinds, shades, interior window treatments or screens shall be attached to or
hung in, or used in connection with, any window or door of the Leased Premises,
without the prior written consent of the Landlord. Such awnings, projections,
curtains, blinds, shades, interior window treatments screens or other fixtures
must be of a quality, type, design and color, and attached in the manner
approved by the Landlord.
3. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed on any part of the outside or inside of
the Leased Premises or the Building without the Landlord's prior written
consent. In the event of the violation of the foregoing, Landlord may remove
same without any liability, and may charge the expense incurred by such removal
to the Tenant or Tenants violating this rule. Interior signs on doors and
directory tablet shall be inscribed, painted or affixed for each Tenant by the
Landlord and the Tenant's expense and shall be of a size, color and uniform
style acceptable to the Landlord.
"Sign" (as used in the Lease and these Rules) is not limited to,
but shall include, raised or illuminated or backlit lettering. Any and all signs
shall be in accordance with applicable law and with aesthetic and other criteria
developed by the Building's architect.
4. The skylights, windows and doors that reflect or admit light into
the halls, passageways or other public places in the Building shall not be
covered or obstructed by any Tenant.
5. Lamps, other lighting, appliances, equipment, fixtures and machinery
in the Leased Premises demised to Tenants which use electrical energy or water
shall be disconnected or switched of f other than during hours (i) the Building
is required to be open, and (ii) the Tenant is open for business, except if and
to the extent necessary to prevent food spoilage or other health hazard, except
clocks, and except for items approved in writing as necessary for Tenant's
business.
6. The toilets and urinals and other plumbing fixtures in common areas
or in Leased Premises shall not be used for any
-1-
<PAGE> 61
purpose other than those for which they were constructed, and no sweepings,
rubbish, rags, or other substances shall be thrown into them. All damages
resulting from any misuse of the fixtures shall be borne by the Tenant who, or
whose servants, employees, agents, visitors or licensees, shall have caused the
same. Waste and excessive or unusual use of water shall not be allowed.
7. No Tenant shall mark, paint, drill into, or in any way deface any
part of the Leased Premises demised to him or it, or the Building of which they
form a part. Nor boring, cutting or stringing of wires shall be permitted,
except with the prior written consent of the Landlord, and as the Landlord may
direct. The expense of any breakage, stoppage or damage resulting from a
violation of this Rule shall be borne by the Tenant who has caused such
breakage, stoppage or damage.
8. No bicycles, vehicles or animals of any kind shall be brought into
or kept in or about the Building, and no cooking shall be done or permitted by
any Tenant on the Building without written consent of Landlord which may be
withheld for any reason. No Tenant shall cause, suffer or permit any unusual or
objectionable odors or any nuisance, to be produced upon or permeate from any of
the Leased Premises demised to him or it.
9. No space on or in the Building shall be used for manufacturing, for
the storage or retail sale of tangible personal property of any kind, unless
Landlord gives its prior written consent to such manufacturing, storage or
retail sale, which consent may be unreasonably withheld.
10. No Tenant shall make, or permit to be made, any unusual or
disturbing noises, or disturb or interfere with occupants of this or neighboring
buildings or premises or those having business with them. No Tenant shall throw
anything out of the doors, windows or skylights or down the elevator shafts or
along or across the hallways, lobby or other common areas.
11. No Tenant, nor any of the Tenant's servants, employees, agents,
visitors or licensees, shall at any time bring or keep fluid, chemical or
substance, or any matter forbidden or regulated by any insurance company at risk
with respect to all or any part of the Building.
12. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows, nor shall any changes be made in existing locks or the
mechanism thereof, without the express written consent of Landlord. Each Tenant
must, upon the termination of his Lease, return to the Landlord all keys and
access cards, either furnished by Landlord to, or otherwise procured by such
Tenant, and in the event of the loss of any keys so furnished, the Tenant shall
pay to the Landlord the cost thereof. Neither Tenants, nor their agents or
employees shall have any duplicate keys made.
13. All furniture, building supplies and materials, safes and other
heavy property, equipment, machinery and other freight must be moved into and
within the Building under the Landlord's supervision and according to such
regulations as may be posted in the management office of the Building, but
Landlord will not be responsible for loss of or damage to such freight from any
cause.
14. When electric wiring of any kind is introduced it must be connected
as directed by the Landlord and no boring or cutting for wires will be allowed
except with the Landlord's consent. The location of telephones, telegraph
instruments, electric appliance, call boxes, etc., shall be Prescribed, by the
Landlord.
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<PAGE> 62
No apparatus of any kind shall be connected with the electric wiring without the
written consent of the Landlord. The Tenant agrees not to use or connect with
the electric wires any more lights than are provided for in each room, or any
electric lamp of higher candlepower than provided, or any fan, motor or other
apparatus without the Landlord's written consent. The Tenant agrees not to
connect with the water pipes any apparatus using water, without the express
prior written consent of the Landlord.
15. Landlord shall have the right to prohibit any advertising by and
Tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as an Building for offices, and upon written notice
from Landlord, Tenant shall refrain from or discontinue such advertising.
16. The Leased Premises shall not be used for lodging or sleeping or
for immoral or illegal purposes.
17. The requirements of Tenant will be attended to only upon
application at the management office of the Building. Building management
employees and contractors shall not perform any work or do anything outside of
their regular duties, unless under special instructions from the Landlord.
18. Canvassing, soliciting and peddling in the Building or surrounding
area is prohibited and each Tenant shall cooperate to prevent the same.
No part of the Building Common Areas shall be used by any Tenant,
or any agent or employee of a Tenant, for any advertising, political campaigning
or other similar use, including, without limitation, the dissemination of
advertising or campaign leaflets or flyers.
19. The Landlord may waive or modify any one or more of these rules for
the benefit of any particular Tenant of the Building, but no such waiver by the
Landlord of any such rule or rules shall be construed as a waiver or
modification of such rule in favor of any other Tenant or Tenants of the
Building, nor prevent the Landlord from thereafter enforcing any such rule
against any or all of the Tenants of the Building.
20. Landlord reserves the right to make such other and further rules
and regulations as in its judgment may from time to time be necessary for the
safety and cleanliness of, and for the preservation of good order in the
Building and its Common Areas. If a segment of the parking lot is designated for
use by Tenant and its employees, Tenant will cooperate with Landlord in having
its employees only park therein.
21. Reference to Landlord herein shall at Landlord's discretion refer
to the then building manager, if any.
22. No materials may be stored or temporarily placed in halls,
stairwells, elevators or any Common Areas. Any materials of the Tenant will be
safely and cautiously brought upon through the halls, stairwells, elevators or
any Common Areas. Tenant will clean any refuse or remove any materials from
these areas.
23. Tenant shall have access to the roof of the Building only for he
purpose of maintaining and repairing that part of the heating, air conditioning
and ventilating system individually serving that Tenant's Leased Premises
located thereon, subject to the following:
(a) Only professional maintenance or repair persons designated by
the Tenant may enter onto the roof.
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<PAGE> 63
(b) Roof access is only permitted during daylight hours.
(c) Tenant assumes full responsibility for the acts of such
professionals and will reimburse any other party for any damage caused to person
or property by such professionals or the Tenant's employees or agents to the
transmitting and receiving devices and other systems and/or machinery on the
roof.
(d) Tenant shall give prior notice to Landlord of Tenant's intention
to allow its employees or agents on the roof.
24. Business machines and mechanical equipment used by any Tenant of
the Building which cause vibration or noise that may be transmitted to any other
portion of the Building, to such a degree to be reasonably objectionable to
Landlord or any other Tenant, shall be placed and maintained by such Tenant at
its expense in a setting of cork, rubber, or spring-type vibration isolators
sufficient to eliminate such vibrations or noise.
-4-
<PAGE> 64
EXHIBIT "I"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
RULES & REGULATIONS FOR TENANT CONSTRUCTION WORK
1. All work shall be performed between 7:00 a.m. and 8:00 p.m. Monday
through Friday. Night/weekend/holiday schedule only with prior consent of
Landlord, with a minimum 24-hour notice to Landlord (any additional security
costs to be the sole responsibility of Tenant).
2. Tenant shall provide a list of contractor, subcontractors,
materialmen, suppliers, etc. to Landlord upon request.
3. Tenant's contractor shall not order or consign shipments to Leased
Premises in Landlord's name. Landlord has no responsibility for
accepting/receiving materials and supplies (Landlord held harmless from theft,
casualty, etc. of materials, supplies, equipment, etc.).
4. Tenant's contractor shall abide by all federal, state and local
laws, including but not limited to laws and regulations effecting the safety of
persons and property on the leased Premises or in VIA MIZNER FINANCIAL PLAZA.
5. Tenant's contractor shall not interfere with any work being
performed in or on VIA MIZNER FINANCIAL PLAZA or with the conduct of business of
any other tenant.
6. All Tenant construction activities are to be coordinated through the
office of Landlord.
7. Tenant's contractor shall remove all trash and debris (including
dust, spills, stains, etc.) daily or as often as needed so there is no
cumulation in or about the Leased Premises and never in the Common Area(s). Any
trash or debris in Common Area(s) may only be in transit. Use of common trash
container or any other container in or about VIA MIZNER FINANCIAL PLAZA may
occur only with prior written consent of Landlord. Contractor may provide its
own container only with prior written consent of Landlord and in area designated
by Landlord which container must be emptied daily or more often if needed.
8. Work is shall be performed only in the Leased Premises in Common
Areas except connections, if necessary, plumbing for mechanical/electrical,
security, or communications
9. Tenant shall secure utility services prior to commencement of any
work. If Tenant's contractor utilizes Landlord's or Common Area utilities
(water, electric, etc.), Tenant will pay Landlord $100.00/day for such usage.
10. Any interruption of building or other Tenant mechanical/electrical
(including HVAC),plumbing, security or
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<PAGE> 65
communications services required due to connection shall occur only with
Landlord's express prior consent (with a minimum 48-hour notice to Landlord),
and must occur prior to 7:00 a.m. or after 8:00 p.m. or at such other time as
Landlord may designate.
11. Contractors shall park, deliver, and use entrances, stairwells,
elevators, and other areas only as designated by Landlord. Access to the roof,
if required, will be permitted only with express prior consent of Landlord (with
a minimum 46-hour notice).
12. No fumes or odors (including but not limited to paint, varnish, or
solvents) will be permitted to permeate the Common Areas within VIA MIZNER
FINANCIAL PLAZA or other Tenant premises. Any use of such materials that may
activate life safety systems is permitted only with express prior consent of
Landlord (with a minimum 46-hour notice).
13. Tenant and Tenant's contractor are responsible for any damage to VIA
MIZNER FINANCIAL PLAZA, Common Areas, or other Tenant premises that may occur as
a result of Tenant's construction or construction activities.
14. Any damage, accident, or casualty that occurs during the Tenant's
construction must be reported by a written damage report and/or
accident/casualty report submitted by the Tenant to the Landlord. Such written
report shall be delivered to Landlord no later than forty-eight (48) hours after
the damage, accident or casualty occurs.
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<PAGE> 66
EXHIBIT "J"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
FORMULA FOR CALCULATION OF
AREA WITHIN LEASED PREMISES
1. GROUND FLOOR RENTABLE AREA.
The square feet in a ground floor area shall be computed by measuring
from the exterior building walls and from the inner surface of corridor and
other permanent partitions and to the center of partitions that separate the
premises from adjoining rentable areas.
No deduction shall be made for vestibules inside the building line or
from columns or projections necessary to the building.
2. UPPER FULL FLOOR RENTABLE AREA.
The rentable area of all floors above the ground floor shall be computed
by measuring to the inside finished surface of the dominant portion of the
permanent outer building walls excluding any major vertical penetrations of the
floor.
No deductions shall be made for columns and projections necessary for
the building.
3. MULTIPLE TENANT FLOOR USABLE AREA.
The usable area of an office shall be computed by measuring the finished
surface of the office side of corridor and other permanent walls, to the center
of partitions that separate the office from adjoining usable areas, and to the
inside finished surface of the dominant portion of the permanent outer building
walls.
No deductions shall be made for columns and projections necessary to the
building.
4. MULTIPLE TENANT FLOOR RENTABLE AREA.
The rentable area of an office on the floor shall be computed by
multiplying the usable area of that office by quotient of the division of the
total rentable area of the floor by the total usable area of the floor.
Total Rentable
Area of the
Rentable Area of Office = Usable Area x Floor
of Office --------------
Total Usable
Area of the
Floor
For purposes of calculating the Rentable core area will not exceed
eighteen percent (18%)of the Total Rentable Area of the Floor. Total Rentable
Area for a Multiple Tenant Floor as set forth in this Paragraph 4 shall be the
same
-1-
<PAGE> 67
as Total Rentable Area for an Upper Full Floor as set forth in Paragraph 2
above.
DEFINITIONS:
(a) "Finished Surface" shall mean a wall, ceiling or floor surface,
including glass, as prepared for tenant use, excluding the thickness of
any special surfacing material such as paneling, furring strips and
carpet.
(b) "Dominant Portion" shall mean that portion of the inside finished
surface of the permanent outer building wall which is 50% or more of the
vertical floor-to-ceiling dimension measured at the dominant portion. If
there is no dominant portion, or if the dominant portion is not
vertical, the measurement for area shall be to the inside finished
surface of the permanent outer building wall where it intersects the
finished floor.
(c) "Major Vertical Penetrations" shall mean stairs, elevator shafts,
flues, pipe shafts, vertical ducts, and the like, and their enclosing
walls, which serve more than one floor of the building, but shall not
include stairs, dumb-waiters, lifts, and the like, exclusively serving a
tenant occupying offices on more than one floor.
(d) "Office" shall mean the premises leased to a tenant for which a
measurement is to be computed.
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<PAGE> 68
EXHIBIT "K"
TO
LEASE AGREEMENT
Between VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
INTENTIONALLY OMITTED
---------------------
<PAGE> 69
EXHIBIT "L"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
MEMORANDUM OF LEASE
(SHORT FORM)
THIS MEMORANDUM OF LEASE, made as of the _________ day of ____
__________, l9__, by and between VIA MIZNER ASSOCIATES, a Florida general
partnership, herein called the "Landlord", and IVY MANAGEMENT, INC., a
Massachusetts corporation, herein called the "Tenant".
W I T N E S S E T H T H A T
1. Landlord and Tenant have entered into a Lease of the following
described real property, situated in Palm Beach County, Florida, to-wit:
[The legal description to be inserted here shall be the
description in Exhibit "B" of the Lease.]
This Memorandum is intended to give all persons notice of the Lease
specifically including the notices expressly set forth in this Memorandum.
2. Tenant is precluded by the terms of said Lease from creating or
allowing to be created against Landlord's title to or interest in the demised
property, any mechanic's or materialman's liens, and all persons claiming by,
through, under or against Tenant, are hereby notified that Tenant has no power
or authority to subject the title or interest of Landlord, as fee owner of the
demised property, to any claim for any such lien. All persons dealing with
Tenant and claiming by, through, under or against Tenant shall look entirely to
Tenant for the payment of any and all charges incurred in improving the demised
property at any time during the term of the Lease.
3. The term of the Lease commences on _____________ and terminates on
_______________. As of the date of termination of the Lease, this Memorandum and
the notices provided hereunder shall cease and be deemed null and void. If
requested by Landlord, Tenant agrees upon termination of the Lease to execute a
cancellation and termination of this Memorandum.
-1-
<PAGE> 70
IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum of
Lease to be executed as required by law, on the day and year first above
written.
VIA MIZNER ASSOCIATES, a
Florida general partnership,
LANDLORD
BY: SVMP, LTD., A Florida
limited partnership
General Partner of Via
Mizner Associates
BY: SVMP, INC., a Florida
Signed sealed and delivered corporation, General
in the presence of: Partner of SVMP, LTD.
By:
- --------------------------- ---------------------------
Bill Shubin, President
- ---------------------------
As to Landlord (Corporate Seal)
IVY MANAGEMENT, INC.,
Signed sealed and delivered a Massachusetts corporation,
in the presence of: Tenant
By:
- --------------------------- ---------------------------
(Corporate Seal)
- ---------------------------
As to Tenant
STATE OF FLORIDA
COUNTY OF PALM BEACH
The foregoing instrument was acknowledged before me this _____ day of
___________, 19__, by BILL SHUBIN, president of SVMP, INC., a Florida
corporation, General Partner of SVMP, LTD., a Florida limited partnership,
General Partner of VIA MIZNER ASSOCIATES, a Florida general partnership, on
behalf of VIA MIZNER ASSOCIATES, a Florida general partnership who is personally
known to me and who did not take an oath.
-------------------------------------
Notary Public
My Commission Expires:
-------------------------------------
Printed Name of Notary
Notary commission No.:
----------------------
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<PAGE> 71
STATE OF
-----------------
COUNTY OF
----------------
The foregoing instrument was acknowledged before me this _______ day of
'__________________, 199__, by ________________, ____________________ of IVY
MANAGEMENT, INC., a Massachusetts corporation, on behalf of said corporation,
who has produced ________________________ as identification and who did not take
an oath.
-----------------------------
Notary Public
My Commission Expires:
-----------------------------
Printed name of Notary
Notary Commission No.:
-------------
This instrument prepared by:
James H. Hankins
Osborne, Hankins, MacLaren & Redgrave
P.O. Drawer 40
Boca Raton, Florida 33429
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<PAGE> 72
EXHIBIT "M"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND
IVY MANAGEMENT, INC.
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
-------------------------------------------------------
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
("Agreement") executed between FIRST UNION NATIONAL BANK OF FLORIDA
("Mortgagee") and IVY MANAGEMENT, INC., a Massachusetts ("Tenant").
WITNESSETH:
WHEREAS, VIA MIZNER ASSOCIATES, a Florida general partnership,
("Landlord") has entered into a certain lease ("Lease) with Tenant dated
_________________, 19____, relating to the premises described in Exhibit "A"
attached hereto and made a part hereof ("Premises"); and
WHEREAS, Mortgagee has made a mortgage loan to Landlord evidenced by a
Mortgage and Security Agreement covering the premises dated ___________ , 19__
and recorded _________, 19__ in Official Records Book ____________ at Page___ of
the Public Records of Palm Beach County, Florida ("Mortgage"). NOW THEREFORE, it
is mutually agreed as follows:
1. The Lease is and shall be subject and subordinate to the Mortgage
and to all renewals, modifications, consolidations, replacements and extensions
of the Mortgage.
2. In the event of a foreclosure of the Mortgage or should Mortgagee
obtain title by deed in lieu thereof, or otherwise, Mortgagee, for itself, its
successors or assigns, agrees that Tenant may continue its occupancy of the
Premises in accordance with the terms and provisions of the Lease, so long as
Tenant continues to pay rent and otherwise to perform its obligations under the
Lease. Mortgagee agrees not to name Tenant as a party defendant in any
foreclosure action.
3. Tenant agrees to attorn to: (a) Mortgagee when in possession of the
Premises; (b) a receiver appointed in an action or proceeding to foreclose the
Mortgage or otherwise; or (c) to any party acquiring title to the Premises as a
result of foreclosure of the Mortgage or deed in lieu thereof. Tenant further
covenants and agrees to execute and deliver, upon request of Mortgagee, or its
assigns, an appropriate agreement of attornment with any subsequent titleholder
of the Premises.
4. So long as the Mortgage on the Premises remains outstanding and
unsatisfied, Tenant will deliver to Mortgagee a copy of all notices permitted or
required to be given to Landlord by Tenant pursuant to which the Tenant proposes
to abate or reduce the rental payable under the Lease or to terminate or cancel
the Lease, and that no such notices to Landlord shall be effective, unless a
copy of such notice is also delivered to Mortgagee. At any time before the
rights of Landlord shall have been forfeited or adversely affected because of
any default or
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<PAGE> 73
failure of performance under the Lease as therein provided, Mortgagee shall have
the right (but not the obligation) to cure such default or failure of
performance within thirty (30) days, or a reasonable period of time (whichever
is the later to occur), from Mortgagee's receipt of such written notice from
Tenant stating the nature of such default or failure of performance.
5. Tenant certifies that the Lease has been duly executed by Tenant;
that Tenant has not made any side agreements with Landlord, except as disclosed
to Mortgagee; that no rent under the Lease has been paid more than thirty (30)
days in advance of its due date; and that Tenant, as of this date, has no
charge, lien or claim of offset under the Lease, or otherwise, against the rents
or other charges due or to become due thereunder.
6. If Mortgagee shall succeed to the interest of Landlord under the
Lease, Mortgagee shall be bound to Tenant under all the terms, covenants and
conditions of the Lease, and Tenant shall, from and after Mortgagee's succession
to the interest of Landlord under the Lease, have the same remedies against
Mortgagee for the breach of any agreement contained in the Lease that Tenant
might have had under the Lease against Landlord if Mortgagee had not succeeded
to the interest of Landlord; provided further, however, that Mortgagee shall not
be:
(a) liable for any warranty, act or omission of any prior landlord
(including Landlord); or
(b) subject to any offsets or defense which Tenant might have against
any prior landlord (including Landlord), except those which arose out of such
Landlord's default under the Lease and accrued after Tenant has notified
Mortgagee and given Mortgagee an opportunity to cure as provided herein; or
(c) bound by any rent or additional rent which Tenant might have paid
for more than the current month to any prior landlord (including Landlord); or
(d) bound by any amendment or modification of the Lease or any
collateral agreement made without Mortgagee's consent.
7. This Agreement shall be binding upon and inure to the benefit of the
heirs, successors and assigns of the parties.
8. MORTGAGEE AND TENANT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY AND ALL RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION (INCLUDING, BUT NOT LIMITED TO, ANY CLAIMS, CROSS-CLAIMS AND
THIRD-PARTY CLAIMS) ARISING IN CONNECTION WITH EACH OF THE PARAGRAPHS OF THIS
AGREEMENT,THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED THEREIN,
AND ALL AND ANY COMBINATIONS OF THE FOREGOING. TENANT HEREBY CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE MORTGAGEE NOR THE MORTGAGEE'S COUNSEL HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE MORTGAGEE WOULD NOT, IN THE EVENT
OF SUCH LITIGATION, SEEK TO ENFORCE TILLS WAIVER OF RIGHT TO JURY TRIAL
PROVISION. TENANT ACKNOWLEDGES THAT THE MORTGAGEE HAS BEEN INDUCED TO ENTER INTO
THIS LOAN, INCLUDING THIS AGREEMENT, BY, INTER ALIA, THE PROVISIONS OF THIS
PARAGRAPH.
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<PAGE> 74
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date indicated below their respective signatures.
Signed, sealed and delivered MORTGAGEE:
in the presence of:
FIRST UNION NATIONAL BANK OF
FLORIDA
By:
- ------------------------ -------------------------------
Title:
- ------------------------ ------------------------
Date:
-------------------------
Signed, sealed and delivered
in the presence of:
TENANT:
IVY MANAGEMENT, INC. a
Massachusetts corporation
By:
- ------------------------ -------------------------------
Title:
- ------------------------ ------------------------
Date:
-------------------------
STATE OF FLORIDA
COUNTY OF PALM BEACH
The foregoing instrument was acknowledged before me this __________ day
of ___________, l99_, by _____________, ____________ of FIRST UNION NATIONAL
BANK OF FLORIDA, on behalf of said corporation, who has produced ______________
______________ as identification and who did not take an oath.
------------------------------
Notary Public
My Commission Expires:
------------------------------
Printed Name of Notary.
Notary Commission No.
--------------
STATE OF _______________
COUNTY OF ______________
The foregoing instrument was acknowledged before me this _____ day of
________________, l99__, by __________________ of IVY MANAGEMENT, INC., a
Massachusetts corporation, on behalf of said corporation, who has produced
_______________________ as identification and who did not take an oath.
-----------------------------
Notary Public
My Commission Expires:
------------------------------
Printed Name of Notary
Notary Commission No.____________
-3-
<PAGE> 75
EXHIBIT "N"
TO
LEASE AGREEMENT
BETWEEN VIA MIZNER ASSOCIATES
AND IVY MANAGEMENT, INC.
COLLATERAL ACCOUNT ESCROW AGREEMENT
This Collateral Account Escrow Agreement (the "Agreement") is entered
into this 31st day of January, l992 by and between VIA MIZNER ASSOCIATES a
Florida' general partnership (the "Landlord") and IVY MANAGEMENT, INC., a
Massachusetts corporation (the "Tenant") and BARNETT BANK OF FLORIDA (the
"Escrow Agent")
WITNESSETH
WHEREAS, Landlord an Tenant have entered into a Lease Agreement dated
31ST day in January, 1992, pursuant to which Tenant will occupy leased premises
in Suite No. 201,798 S. Federal Highway, of Via Mizner Financial Plaza
(hereinafter referred to as the "Lease"); and
WHEREAS, Paragraph 6 of Exhibit Two of the Lease provides that under
certain circumstances Landlord and Tenant enter into this Agreement for purposes
of establishing a Collateral Account to constitute a fund to guaranty payment of
the Tenant's obligations under the terms of the Lease; and
WHEREAS, BARNETT BANK OF FLORIDA has agreed to serve as Escrow Agent
under this Agreement;
NOW, THEREFORE, for and in consideration of the sum of $10.00 paid by
each of the parties hereto to the other parties, in further consideration of the
terms and provisions of the Lease and in consideration of other good and
valuable considerations delivered by the parties to each other, Landlord, Tenant
and Escrow Agent agree as follows:
1. If required by Paragraph 7 of Exhibit Two of the Lease, Tenant shall
deliver to Escrow Agent simultaneously with the execution of this Escrow
Agreement an amount equal to the required Account Balance for the Lease Year in
which the collateral account is required, to be held in escrow by Escrow Agent
pursuant to the terms and conditions of this Agreement.
2. The funds held in escrow pursuant to and in accordance with this
Agreement establish the Collateral Account as provided in the Lease and shall be
held by Escrow Agent as security to guarantee payment of Tenant's obligations
under the terms of the Lease as follows:
Escrow Funds Required
Lease Year Account Balances
---------- ----------------
1 $823,932
2 823,932
3 719,490
4 615,048
5 510,606
6* 406,164
*And any Option Terms (if any)
-1-
<PAGE> 76
3. Landlord and Tenant acknowledge and agree that the sums escrowed
with Escrow Agent pursuant to this Agreement shall be held to guaranty payment
by Tenant to Landlord of Tenant's obligations due and owing pursuant to the
Lease. If the payment of any obligation of Tenant is not received by Landlord
within fifteen (15) days of its due date, and further after ten (10) days
following written notice to Tenant of such non-payment, Landlord may deliver
written notice of such fact to Escrow Agent, together with an affidavit made
under oath by Landlord stating that a payment has not been received, and Escrow
Agent shall be authorized to disburse and shall disburse funds from the escrowed
monies under this Agreement to pay Landlord for such payment due from Tenant.
The Escrow Agent, upon receipt of the aforesaid written notice and affidavit,
shall deliver to Landlord from the funds escrowed pursuant to this Agreement the
delinquent payment due Landlord by Tenant as set forth in Landlord's notice and
affidavit.
4. Provided Tenant is not in default, Tenant shall be entitled to
receive from Escrow Agent any funds held by Escrow Agent in excess of the
Account Balance required for each Lease Year. Tenant shall request release of
any such excess funds by written notice to Escrow Agent AND Landlord at any time
such excess funds may exist. Escrow Agent shall release such excess funds within
fifteen (15) days of Tenant's request unless Escrow Agent has received written
notice from Landlord objecting to Tenant's request for excess funds together
with an affidavit under oath identifying the reason or reasons which constitute
the basis for the Escrow Agent to continue holding all or a portion of the funds
requested by Tenant.
5. The funds paid to Escrow Agent by Tenant pursuant to this Agreement
shall be deposited by Escrow Agent. The funds deposited shall be invested in
United States Treasury Bills, Bonds and Notes. Subject to the foregoing,
investment direction of the funds deposited shall be the sole responsibility of
Tenant and all interest earned on the funds deposited shall be paid to Tenant.
6. Any Escrow Agent receiving funds or equivalent pursuant to this
Agreement is authorized and agrees by acceptance thereof to deposit promptly and
to hold same in escrow and subject to clearance thereof to disburse same in
accordance with terms and conditions of this Agreement. Failure of clearance of
funds shall not excuse performance by the Tenant. In the event of doubt as to
Escrow Agent's duties or liabilities under the provisions of this Agreement, the
Escrow Agent may, in Escrow Agent's sole discretion, continue to hold the
subject matter of this escrow until the parties mutually agree to the
disbursement thereof, or until a judgment of a court of competent jurisdiction
shall determine the rights of the parties thereto, or Escrow Agent may deposit
same with the clerk of the circuit court having jurisdiction of the dispute, and
upon notifying all parties concerned of such action, all liability on the part
of the Escrow Agent shall fully terminate, except to the extent of accounting
for any items theretofore delivered out of escrow. In the event of any suit
between Landlord and Tenant wherein the Escrow Agent is made a part by virtue of
acting as an Escrow Agent hereunder, or in the event of any suit wherein Escrow
Agent interpleads the subject matter of this escrow, the Escrow Agent shall be
entitled to recover reasonable attorney's fees and costs incurred, said fees and
costs to be charged and assessed as court costs in favor of the prevailing
party. All parties agree that the Escrow Agent shall not be liable to any party
or person whomsoever for misdelivery to Landlord or Tenant of items subject to
this escrow, unless such misdelivery shall be due to willful breach of
-2-
<PAGE> 77
this Agreement or gross negligence on the part of the Escrow Agent.
7. This Agreement shall be deemed terminated and cancelled upon Escrow
Agent releasing all funds held pursuant to this Agreement. Upon the expiration
of the sixth (6th) lease year, Escrow Agent shall release all funds held
pursuant to this Agreement, not otherwise disbursed hereunder, to Tenant.
8. No prior or present agreements or representations shall be binding
upon any of the parties hereto unless incorporated in this Agreement. No
modification or change in this Agreement shall be valid or binding upon the
parties unless in writing, executed by the parties to be bound thereby.
9. This Agreement shall be construed and enforced in accordance with
the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
Witnesses: VIA MIZNER ASSOCIATES, a
Florida general partnership,
/s/ (ILLEGIBLE) Landlord
- -------------------------
/s/ Patricia A. Hill By: /s/ (ILLEGIBLE)
- ------------------------- ---------------------------
Witnesses: IVY MANAGEMENT, INC. a
Massachusetts corporation,
/s/ (ILLEGIBLE) Tenant
- -------------------------
/s/ Patricia A. Hill By: /s/ (ILLEGIBLE)
- ------------------------- ----------------------------
Escrow Agent's Acceptance
The undersigned, the Escrow Agent, under this Agreement hereby agrees
to serve as Escrow Agent pursuant to the terms and provisions of the foregoing
Agreement.
Dated:___________________, 19__
BARNETT BANK OF FLORIDA,
Escrow Agent
By
-----------------------------
-3-
<PAGE> 78
GUARANTY
STATE OF FLORIDA
COUNTY OF PALM BEACH
------------------
WHEREAS, VIA MIZNER ASSOCIATES, a Florida general partnership, as
Landlord, and IVY MANAGEMENT, INC., a Massachusetts corporation, as Tenant, have
executed a lease dated the 31st day of January, 1992 with respect to certain
Leased Premises in VIA MIZNER FINANCIAL PLAZA located at Suite 201, 798 S.
Federal Highway, Boca Raton, Florida 33432 (this Guaranty Agreement being
attached to a copy of said lease which is executed contemporaneously herewith,
said lease being referred to hereinafter as the "Lease"); and
WHEREAS, MACKENZIE INVESTMENT MANAGEMENT INC., a Delaware corporation
(hereinafter "Mackenzie") and the Tenant have requested Landlord to enter into,
execute and deliver said Lease on the condition that Mackenzie execute this
Agreement as Guarantor and it is acknowledged that Landlord would not enter into
said Lease without the execution of this Guaranty; and
WHEREAS, the Mackenzie has agreed to execute this Guaranty in order to
induce the Landlord to enter into, execute and deliver the aforesaid Lease;
NOW THEREFORE, in consideration of the execution and delivery of the
aforesaid Lease by the Landlord, and for other valuable consideration, receipt
of which is. hereby acknowledged by the Guarantors, it is agreed as follows:
1. Mackenzie does hereby guarantee to the Landlord and to any mortgagee
holding a mortgage upon the interest of Landlord in the Leased Premises, the due
and punctual payment of all rent. payable under said Lease, and each and every
installment thereof, as well as the full and prompt and complete performance by
the Tenant of all and singular covenants, conditions and provisions contained in
said Lease on the part of the Tenant therein to be kept, observed and performed,
for the full term of said Lease and any EXTENSION thereof, AS PERMITTED BY THE
LEASE, with no less force and effect than if Mackenzie was named as the Tenant
in said Lease, and Mackenzie will forthwith on demand pay all amounts at any
time in arrears, and will make good any and all defaults of Tenant occurring
under said Lease.
2. This Guaranty shall be absolute, continuing and unlimited, and the
Landlord shall not be required to take any proceedings against the Tenant, or
give any notice to Mackenzie before the Landlord has the right to demand payment
or performance by Mackenzie. This Guaranty and the liability of Mackenzie
hereunder shall in no way be impaired or affected by any assignment which may be
made of said Lease, or any subletting thereunder, or by any extension(s) of the
time for payment of any rental or any other sums provided to be paid by Tenant,
or by any forbearance or delay in enforcing any of the terms, conditions,
covenants or provisions of said Lease or any amendment, modification or revision
of said Lease. Mackenzie consents and agrees (without affecting this Guaranty or
the liability of Mackenzie hereunder) that the Landlord may, without notice to
or consent of Mackenzie, and upon such terms as the Landlord may deem advisable,
and with or without consideration: (i) extend by renewal or otherwise as often
as the Landlord may wish the time of payment of any indebtedness owing by the
Tenant to the Landlord; or (ii) include additional space within the Tenant's
Leased Premises; or (iii) modify, amend, extend the period of duration, or
extend the scope of the Tenant's obligations; or (iv) settle or compromise any
claim of the Landlord against the Tenant or against any other person, firm or
corporation claiming by, through or under the Tenant; or (v) release in whole or
in
-1-
<PAGE> 79
part from time to time any person or entity liable for any obligation or
indebtedness of the Tenant to the Landlord and in such event, any such release
shall not affect the liability of Mackenzie for any and all obligations of the
Tenant to the Landlord. Mackenzie hereby ratifies and confirms any such
extensions, renewals, releases, surrenders, exchanges, modifications,
settlements, or compromises, and all such actions which may occur from time to
time shall be binding upon Mackenzie. Mackenzie hereby expressly waives all
defenses, counterclaims or offsets which Mackenzie might have by reason thereof.
Mackenzie further hereby waives any right of subrogation in or under the Lease
or any other document evidencing the Lease or in any way relating to any
obligation of the Tenant to the Landlord which is or may be covered by this
Guaranty, or in the right, title and interest of the Landlord in and to any
collateral or security held by the Landlord or relating to the Landlord's
interest in the Lease. All and any such rights of subrogation and participation
being collectively hereby expressly waived and released by Mackenzie.
3. No action or proceeding brought or instituted under this Guaranty
against Mackenzie, and no recovery had in pursuance thereof shall be any bar or
defense to any further action or proceeding which may be brought under this
Guaranty by reason of any further default or defaults of Tenant.
4. The liability of Mackenzie shall not be deemed to be waived,
released, discharged, impaired or affected by reason of the release or discharge
of the Tenant in any creditors, receivership, bankruptcy (including Chapter X or
Chapter XI bankruptcy proceedings or other reorganization proceedings under the
Bankruptcy Act) or other proceedings, or the rejection or disaffirmance of the
Lease in any proceedings.
5. There shall be no modification of the provisions of this Guaranty
unless the same be in writing and signed by Mackenzie and the Landlord.
Mackenzie also absolutely and unconditionally guarantee the full and timely
performance of all duties, obligations and payments whatsoever of the Tenant to
the Landlord, whether now existing or hereinafter arising, and agrees that in
the event the Tenant fails to fully and timely perform any of said duties,
obligations or payments to fully and timely perform same.
6. All of the terms, agreements and conditions of this Guaranty shall
be joint and several, and shall extend to and be binding upon Mackenzie, its
successors and administrators and shall inure to the benefit of the Landlord,
its successors, and assigns, and to any future owner of the fee of the premises
referred to in the Lease, and to any mortgage on the fee interest of the
Landlord in the Leased Premises. This Guaranty and the obligations and duties of
Mackenzie under this Guaranty shall survive the expiration or termination of the
Lease.
7. In the event Landlord employs the services of an attorney to enforce
the provisions of this Guaranty, Mackenzie agrees to pay all costs, charges and
expenses of enforcement or collection to this Guaranty, including but not
limited to attorneys' fees if this Guaranty is placed in the hands of an
attorney for enforcement or collection whether or not a complaint is filed,
including such attorneys' fees incurred prior to the institution of litigation,
or in litigation, trial and appellate review, in arbitration, bankruptcy or
other administrative or judicial proceedings.
8. MACKENZIE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
(INCLUDING, BUT NOT LIMITED TO, ANY CLAIMS, CROSS-CLAIMS AND THIRD-PARTY CLAIMS)
ARISING IN CONNECTION WITH EACH OF THE PARAGRAPHS OF THIS GUARANTY, THE
-2-
<PAGE> 80
LEASE AND THE TRANSACTIONS CONTEMPLATED THEREIN, AND ALL AND ANY COMBINATIONS OF
THE FOREGOING.
9. This Guaranty supersedes in all respects all prior and
contemporaneous oral and written negotiations, understandings and agreements
between the parties with respect to the subject matter hereof. All of said prior
and contemporaneous negotiations, understandings and agreements are merged
herein and superseded hereby and this Guaranty sets forth the entire
understanding between the parties.
10. If any term of this Guaranty is illegal or unenforceable at law or
in equity, the validity, legality, and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. Any illegal or unenforceable term shall be deemed to be void and of no
force and effect only to the minimum extent necessary to bring such term within
the provisions of any applicable law or laws and such term, as so modified, and
the balance of this Guaranty shall then be fully enforceable. By execution
hereof, Mackenzie acknowledges and agrees that a default or breach by Tenant of
the Lease to which this Guaranty is appended shall be and constitutes a default
(event of default) under the terms of that certain lease between Mackenzie and
Landlord dated May 10, 1989 (as amended) demising Suite 300, 700 S. Federal
highway, Boca Raton, Florida.
11. This Guaranty is delivered and made in, and shall be construed in
accordance with and governed by, the laws of the State of Florida, and is
binding upon Mackenzie and the legal representatives and successors of
Mackenzie, and shall inure to the benefit of the Landlord, its successors and
assigns.
IN WITNESS WHEREOF, Mackenzie has hereunto executed this Guaranty on
the day of 31st day of January, 1991.
MACKENZIE INVESTMENT MANAGEMENT
INC., a Delaware corporation
By: /s/ (ILLEGIBLE)
--------------------------------
(Corporate Seal)
[ATTACH CORPORATE RESOLUTION]
-3-
<PAGE> 81
- ----------
VIA MIZNER
- ----------
February 20, 1992
C. William Ferris
Ivy Management, Inc.
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
RE: IVY LEASE AT VIA MIZNER
MEMORANDUM OF LEASE & NOTICE OF COMMENCEMENT
Dear Bill:
Enclosed are the following documents:
1. Memorandum of Lease; and
2. Notice of Commencement.
It is important that these documents be executed and recorded in connection
with the construction of the 796 Suite.
Please have the documents reviewed, then execute them and return them to
me. We will take care of the recording.
If you have any questions, please do not hesitate to contact me at
395-2000.
Thank you.
Sincerely,
VIA MIZNER FINANCIAL PLAZA
/s/ John M. Wargo
-----------------------------
John M. Wargo
JMW\dm
Enclosures
<PAGE> 82
- ----------
VIA MIZNER
- ----------
February 20, 1992
C.William Ferris
Ivy Management, Inc.
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
RE: IVY LEASE AT VIA MIZNER
MEMORANDUM OF LEASE & NOTICE OF COMMENCEMENT
Dear Bill:
Enclosed are the following documents:
1. Memorandum of Lease; and
2. Notice of Commencement.
It is important that these documents be executed and recorded in
connection with the construction of the 798 Suite.
Please have the documents reviewed, then execute them and return them to
me. We will take care of the recording.
If you have any questions, please do not hesitate to contact me at
395-2000.
Thank you.
Sincerely,
/s/ John M. Wargo
--------------------------
John M. Wargo
JMW\dm
Enclosures
<PAGE> 83
MEMORANDUM OF LEASE
-------------------
(SHORT FORM)
THIS MEMORANDUM OF LEASE, made as of the 28th day of February, 1992, by
and between VIA MIZNER ASSOCIATES, a Florida general partnership, herein called
the "Landlord', and IVY MANAGEMENT, INC., a Massachusetts corporation, herein
called the "Tenant".
W I T N E S S E T H T H A T
1. Landlord and Tenant have entered into a Lease of the following
described real property, situated in Palm Beach County, Florida, to-wit:
SEE EXHIBIT "A"
ATTACHED HERETO AND MADE A PART HEREOF
This Memorandum is intended to give all persons notice of the Lease
specifically including the notices expressly set forth in this Memorandum.
2. TENANT IS PRECLUDED BY THE TERMS OF SAID LEASE FROM CREATING OR
ALLOWING TO BE CREATED AGAINST LANDLORD 'S TITLE TO OR INTEREST IN THE DEMISED
PROPERTY, ANY MECHANIC'S OR MATERIALMAN'S LIENS, AND ALL PERSONS CLAIMING BY,
THROUGH, UNDER OR AGAINST TENANT, ARE HEREBY NOTIFIED THAT TENANT HAS NO POWER
OR AUTHORITY TO SUBJECT THE TITLE OR INTEREST OF LANDLORD, AS FEE OWNER OF THE
DEMISED PROPERTY, TO ANY CLAIM FOR ANY SUCH LIEN. All persons dealing with
TENANT and claiming by, through, under or against TENANT shall look entirely to
TENANT for the payment of any and all charges incurred in improving the demised
property at any time during the term of the Lease.
3. The term of the Lease commences on May 1, 1992 (or earlier as
provided for in the Lease) and terminates on September 30, 2001 (subject to the
terms of a cancellation provision as provided for in the Lease) and two (2)
consecutive five (5) year renewal options. As of the date of termination of the
Lease, this Memorandum and the notices provided hereunder shall cease and be
deemed null and void. If requested by Landlord, Tenant agrees upon termination
of the Lease to execute a cancellation and termination of this Memorandum.
-1-
<PAGE> 84
IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum of
Lease to be executed as required by law, on the day and year first above
written.
VIA MIZNER ASSOCIATES, a
Florida general partnership,
LANDLORD
BY: SVMP, LTD., a Florida
limited partnership,
General Partner of Via
Mizner Associates
BY: SVMP, INC., a Florida
Signed, sealed and delivered corporation, General
in the presence of: Partner of SVMP, LTD.
By:
--------------------
Bill Shubin, President
- ---------------------------
(Corporate Seal)
- ---------------------------
As to Landlord
IVY MANAGEMENT, INC.
Signed, sealed and delivered a Massachusetts corporation
in the presence of: Tenant
/s/ Patricia A. Hill By: /s/ C. William Ferris
- ---------------------------- -----------------------------
/s/ (ILLEGIBLE) C. William Ferris
- ---------------------------- Vice President-Finance and
As to Tenant Administration
(Corporate Seal)
<PAGE> 85
STATE OF FLORIDA
COUNTY OF PALM BEACH
The foregoing instrument was acknowledged before me this ______ day of
______________, l9__, by BILL SHUBIN, President of SVMP, INC., a Florida
corporation, General Partner of SVMP, LTD., a Florida limited partnership,
General Partner of VIA MIZNER ASSOCIATES, a Florida general partnership, on
behalf of VIA MIZNER ASSOCIATES, a Florida general partnership who is personally
known to me and who did not take an oath.
--------------------------------
My Commission Expires: Notary Public
--------------------------------
Printed Name of Notary
Notary Commission No.
-----------------
STATE OF FLORIDA
----------
COUNTY OF PALM BEACH
-----------
The foregoing instrument was acknowledged before me this 5th day of
MARCH, l992 by C. William Ferris, Vice President-Finance and Administration of
IVY MANAGEMENT, INC., a Massachusetts corporation, on behalf of said
corporation, who has produced a drivers license as identification and who did
not take an oath.
/s/ Patricia A. Hill
-------------------------
Notary Public
My Commission Expires: 2/6/93
/s/ Patricia A. Hill
---------------------------
Printed Name of Notary
Notary Commission No.
-----------
This instrument prepared by:
James M. Hankins
Osborne, Hankins, MacLaren & Redgrave
P.O. Drawer 40
Boca Raton, Florida 33429
-3-
<PAGE> 86
MEMORANDUM OF LEASE
EXHIBIT "A"
Tenant's leasehold interest in and to Suite 201 at 798 S. Federal Highway, Boca
Raton, Florida, located on the following described property:
A portion of Blocks 22, 33, 25A, 26, "DE SOTO ROAD" "S.E. 7th Street", and. S.E.
8th Street as shown on the plat of Spanish River Land Company's Plat "A", as
recorded in Plat Book 16, Pages 27 through 30, inclusive of the Public Records
of Palm Beach County, Florida and a portion of Lot 33, Block 31 of the Plat of
Mizner Development Corporation Plat 1, as recorded in Plat Book 3, Page 37 of
the Public Records of Palm Beach County, Florida, being more particularly
described as follows:
Commencing at the southwest corner of said Block 25A; thence South along the
east right-of-way line of that 80.00 foot right-of-way for Federal Highway, as
shown on said Plat, a distance of 5.00 feet; thence east a distance of 28.00
feet to the Point of Beginning; thence continuing east, a distance of 142.00
feet; thence north, a distance of 190.00 feet; thence east, a distance of 18.00
feet; thence north, a distance of 72.45 feet to a point of intersection with the
southerly boundary line of the plat "Boca Raton Hotel and Club", as recorded in
Plat Book 53, Page 129 of the Public Records of Palm Beach County, Florida;
thence northwesterly along said southerly boundary line along the arc of a curve
to the right whose radius point bears N. 40 (degrees) 43'32" E. having a radius
of 375.00 feet, a central angle of l5 (degrees) 50'09", an arc distance of
103.64 feet to a point; thence west, a distance of 91.73 feet; thence south, a
distance of 340.00 feet to the Point of Beginning; said lands situate in the
City of Boca Raton, Palm Beach County, Florida.
<PAGE> 87
Permit No. 920232 Tax Folio No. 06-43-47-28-03-020-0010
NOTICE OF COMMENCEMENT
THE UNDERSIGNED hereby gives notice that improvement will be made to
certain real property, and in accordance with Chapter 713, Florida Statutes, the
following information is provided in this Notice of Commencement.
1. Description of property:
Legal Description:
See Exhibit A attached hereto and made a part hereof.
Street Address (if available):
798 S. Federal Highway, Suite 201
Boca Raton, Florida 33432
2. General description of improvement:
Interior office buildup of Tenant's leasehold interest in
Suite 201 of 798 S. Federal Highway, Boca Raton, Florida
3. Owner information:
a. Name and address
of Tenant: Ivy Management, Inc.
798 S. Federal Highway, Suite 300
Boca Raton, Florida 33432
b. Interest in property: Tenant's leasehold interest
c. Name and address of fee simple title holder (if other than Owner):
Via Mizner Associates
P.O. Drawer 40
Boca Raton Florida 33429
4. Contractor: Coordinated Building Systems, Inc.
P.O. Box 6298
Boca Raton, Florida 33427
5. Surety: N/A
-1-
<PAGE> 88
6. Lender: (name and address) N/A
7. Persons within the State of Florida designated by Owner upon whom
notices or other documents may be served as provided by Section
713.13(l)(a)7., Florida Statutes: (name and address) C. William Ferris,
Ivy Management, Inc., Suite 300, 798 South Federal Highway, Boca Raton,
Florida 33432.
8. In addition to himself, Owner designates James M. Hankins, of Osborne,
Hankins, MacLaren & Redgrave, P. 0. Drawer 40, Boca Raton, Florida
33429 to receive a copy of Liner's Notice as provided in Section
713.13(l)(b), Florida Statutes.
9. Expiration date of notice of commencement: July l, 1992
IVY MANAGEMENT, INC.,
a Massachusetts corporation,
Owner
By: /s/ C. William Ferris
-----------------------------
C. WILLIAM FERRIS,
Vice President-Finance and
Administration
(Corporate Seal)
STATE OF FLORIDA
COUNTY OF PALM BEACH
The foregoing instrument was acknowledged before me this 5TH day of
March ,1992, by C. William Ferris, Vice President-Finance and Administration of
IVY MANAGEMENT, INC., a Massachusetts corporation, on behalf of said
corporation, who has produced a drivers license as identification and who did
not take an oath.
My Commission Expires: 2/6/93 /s/ Patricia A. Hill
-----------------------------
Notary Public
/s/ Patricia A. Hill
-----------------------------
Printed Name of Notary
Notary Commission No._____________
-2-
<PAGE> 89
NOTICE OF COMMENCEMENT
EXHIBIT "A"
Tenant's leasehold interest in and to Suite 201 at 798 S. Federal Highway, Boca
Raton, Florida, located on the following described property:
A portion of Blocks 22, 33, 25A, 26, "DE SOTO ROAD", "S. E. 7th Street", and S.
E. 8th Street as shown on the plat of Spanish River Land Company's Plat "A", as
recorded in Plat Book 16, Pages 27 through 30, inclusive of the Public Records
of Palm Beach County, Florida and a portion of Lot 33, Block 31 of the Plat of
Mizner Development Corporation Plat 1, as recorded in Plat Book 3, Page 37 of
the Public Records of Palm Beach County, Florida, being more particularly
described as follows:
Commencing at the southwest corner of said Block 25A; thence South along the
east right-of-way line of that 80.00 foot right-of-way for Federal Highway, as
shown on said Plat, a distance of 5.00 feet; thence east a distance of 28.00
feet to the Point of Beginning; thence continuing east, a distance of 142.00
feet; thence north, a distance of 190.00 feet; thence east, a distance of 18.00
feet; thence north, a distance of 72.45 feet to a point of intersection with the
southerly boundary line of the plat "Boca Raton Hotel and Club", as recorded in
Plat Book 53, Page 129 of the Public Records of Palm Beach County, Florida;
thence northwesterly along said southerly boundary line along the arc of a curve
to the right whose radius point bears N. 40 (degrees) 43'32" E. having a radius
of 375.00 feet, a central angle of l5 (degrees) 50'09", an arc distance of
103.64 feet to a point; thence west, a distance of 91.73 feet; thence south, a
distance of 340.00 feet to the Point of Beginning; said lands situate in the
City of Boca Raton, Palm Beach County, Florida.
<PAGE> 90
March 18, 1992
C.William Ferris
Ivy Management, Inc.
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
RE: IVY LEASE -- 798 SOUTH FEDERAL HIGHWAY, SUITE 201
Dear Bill:
Enclosed is an executed original of the Ivy Lease for Suite 201 of 798 South
Federal Highway.
The only item still outstanding in connection with the Lease is the Mackenzie
corporate resolution for the Guaranty. When you have a moment please let me know
when you think the resolution will be available.
Thank you.
Sincerely,
VIA MIZNER FINANCIAL PLAZA
/s/ John M. Wargo
- --------------------------
John M. Wargo
Property Manager
JMW/dm
cc: Ray C. Osborne
Bill Shubin
<PAGE> 1
EXHIBIT 10.7
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to the Lease Agreement (hereinafter the "First
Amendment") is made and entered into as of the 16 day of JAN, 1997, by and
between Via Mizner Associates, a Florida general partnership, hereinafter
referred to as the "LANDLORD," and Ivy Management, Inc., a Massachusetts
corporation, hereinafter referred to as the "TENANT".
WITNESSETH:
WHEREAS, the LANDLORD and the TENANT entered into the Lease Agreement
as of the 31st day of January, 1992; and
WHEREAS, the LANDLORD and the TENANT desire to modify and amend the
Lease Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and of good, lawful and valuable considerations moving to and received
by each of the parties to be bound hereby, the LANDLORD and the TENANT agree as
follows:
1. The above recitals are true and correct and are hereby incorporated
herein by reference.
2. Paragraph 6 of Exhibit Two to the Lease Agreement entitled "Tenant
Cancellation Provision and Penalty" is hereby deleted in its
entirety and said Paragraph 6 of Exhibit Two is null and void and of
no further force and effect whatsoever.
4. Except as specifically modified and amended herein, the LEASE
AGREEMENT remains in full force and effect and is hereby ratified
and confirmed by the LANDLORD and TENANT.
IN WITNESS WHEREOF, the parties have caused this First Amendment to
Lease Agreement to be duly executed as of the day and year set forth above.
<PAGE> 2
LANDLORD
VIA MIZNER ASSOCIATES, a
Florida general partnership,
LANDLORD
Dated 1/16/97 By: SVMP, LTD., a Florida
------------------------- Limited partnership,
General Partner of Via
Mizner Associates
Signed, sealed and delivered By: SVMP, INC., a Florida
in the presence of: corporation, General
Partner of SVMP, LTD.
/s/ SHARON J. SHUBIN By: /s/ BILL SHUBIN
- ------------------------------ -------------------------------
Signature Bill Shubin, President
/s/ SHARON J. SHUBIN
- ------------------------------
Printed Name
/s/ (ILLEGIBLE)
- ------------------------------
Signature
/s/ (ILLEGIBLE)
- ------------------------------
Printed Name
<PAGE> 3
TENANT
Ivy Management, Inc.,
a Massachusetts corporation
Dated 1/9/97
------------------------
Signed, sealed, and delivered
in the presence of
/s/ (ILLEGIBLE) By: /s/ (ILLEGIBLE)
- ------------------------------- ---------------------------
Signature Its Vice President
/s/ JACQUELINE LOOK
- -------------------------------
Printed Name
/s/ ROCHELLE SCHUMACHER
- -------------------------------
Signature
ROCHELLE SCHUMACHER
- -------------------------------
Printed Name
<PAGE> 1
EXHIBIT 10.8
SEPTEMBER 10, 1998
MACKENZIE INVESTMENT MANAGEMENT INC.
AMENDED STOCK OPTION PLAN
1. PURPOSE OF PLAN AND GENERAL MATTERS
1.1 Purpose. The purpose of this amended stock option plan (the "Plan")
is to encourage key employees, including officers, of Mackenzie Investment
Management, Inc., a Delaware corporation ("MIMI"), and any present or future
subsidiary and parent of MIMI (hereinafter collectively referred to as the
"Company") to acquire shares of common stock of MIMI, U.S.$.01 par value per
share (the "Common Shares"), and thereby increase their proprietary interest in
the Company's success and provide an added incentive to remain in the employ of
the Company.
1.2 Definitions. The words parent and subsidiary shall be interpreted
in accordance with Section 422 and Section 424 of the Internal Revenue Code of
1986, as from time to time amended (the "Code").
1.3 Status of Options. It is intended that options granted under the
Plan (individually, an "Option" or collectively, "Options") shall constitute
either "incentive stock options", within the meaning of Section 422 of the Code,
or "non-incentive stock options", as determined by the Committee named in
Section 3 of the Plan in its sole discretion and indicated on each form of
option grant (the "Option Grant"), and the terms of the Plan and Option Grants
shall be construed accordingly.
2. SHARES RESERVED UNDER THE PLAN
2.1 Reservation of Shares. Subject to the adjustment provided in
Section 8, the aggregate number of Common Shares which may be issued and sold
pursuant to Options granted under the Plan shall not exceed 3,051,800 shares,
which may be either authorized but unissued shares or treasury shares.
<PAGE> 2
-2-
2.2 Status of Shares in Terminated or Expired Options. If any Option
granted under the Plan shall terminate or expire without being fully exercised,
the shares which have not been purchased under the Option will again become
available for purposes of the Plan.
3. ADMINISTRATION
3.1 Plan Administration. The Plan shall be administered by the
Compensation, Human Resources and Corporate Governance Committee (the
"Committee") of the Board of Directors of MIMI (the "Board").
3.2 Appointment of Committee. The Committee shall be appointed by, and
shall serve at the pleasure of, the Board.
3.3 Powers of the Committee. The Committee shall have the powers
granted to it in Sections 3, 4, 5 and 7 of this Plan. The Committee is
authorized to interpret the Plan and, subject to the provisions of the Plan and
any required regulatory approval, to prescribe, amend, and rescind rules and
regulations relating thereto. The Committee is further authorized, subject to
the express provisions of the Plan, to alter or amend the form of Option Grant
attached hereto and to make all other determinations necessary or advisable in
the administration of the Plan. The interpretation and administration by the
Committee of any provisions of the Plan and the Option Grant shall be final and
conclusive on all persons having any interest therein.
3.4 No Liability for Committee or Board Members. No member of the
Committee or the Board shall be held liable for any action or determination made
in good faith with respect to the Plan or any Option granted thereunder.
<PAGE> 3
-3-
4. OPTIONS GRANTS.
4.1 Selection of Grantees. Options to purchase Common Shares under the
Plan may be granted to key employees (including officers and directors who are
employees) of the Company. In selecting the employees to whom Options will be
granted, in deciding whether to grant Options and whether Options should be
incentive or non-incentive stock options, and in deciding how many Common Shares
will be subject to each Option, the Committee shall give consideration to the
importance of an employee's duties, to his experience with the Company, to his
future value to the Company, to his present and potential contribution to the
success of the Company, and to such other factors as the Committee may deem
relevant.
4.2 Terms of Grants.
4.2.1 In General. Subject to the express provisions of the
Plan and the forms of Option Grant incorporated herein by reference as from time
to time altered or amended, the Committee shall have authority to determine with
respect to each Option Grant executed and delivered to a grantee the number of
installments, the number of Common Shares in each installment, and the exercise
dates, and, to the extent not inconsistent with the applicable provisions of the
Code, if any, may specify additional restrictions and conditions for any Option
Grant executed and delivered to a grantee. Each Option granted under the Plan
shall be evidenced by and subject to the terms and conditions of the Option
Grant, which is incorporated into the Plan by reference as from time to time
amended.
4.2.2 Length of Term. Each non-incentive option granted under
the Plan shall expire five years after the date of the grant. Each incentive
option shall expire not later than ten years from the date of the grant of such
Option.
4.2.3 Minimum Vesting Period. Notwithstanding the provisions
of Section 4.2.1, each grantee of an Option Grant shall not be vested in such
grant until at least one year from the date of grant (or such shorter or longer
period as the Committee shall specify in the Option Grant) and shall vest at the
expiration of the specified vesting period only if he is then employed by the
Company.
<PAGE> 4
-4-
4.2.4 Maximum Amount. Notwithstanding the provisions of
Section 4.2.1, no Option Grant or combination of grants shall be made to any
grantee for an aggregate number of Common Shares in excess of five percent of
the total number of shares of Common Stock outstanding on the date of grant.
4.3 Limitation on Amount of Incentive Stock Options. The aggregate fair
market value (determined at the time the incentive stock option is granted) of
the stock with respect to which incentive stock options are exercisable for the
first time by a grantee during any calendar year under all plans of the Company
shall not exceed U.S.$100,000.
4.4 Effective Date of Grants. The grant date of an Option under the
Plan shall be the date the Committee votes to grant the Option, but no grantee
shall have the right to exercise his Option until the Company has executed and
delivered the Option Grant to such grantee and the applicable minimum vesting
period has expired.
4.5 Assignment Restricted. No Option may be assigned by the grantee,
other than by will or the laws of descent and distribution, and can be exercised
during such individual's life only by him.
4.6 Limits with Respect to Insiders.
4.6.1 Maximum Number of Shares. The maximum number of Common
Shares which may be reserved for issuance to Insiders under the Plan shall be
10% of the Common Shares outstanding at the time of the grant (on a non-diluted
basis) less the aggregate number of Common Shares reserved for issuance to
Insiders under any other employee stock option plan, options for services or
employee stock purchase plans. For purposes of this Plan, Insider shall mean:
(i) an insider as defined in the Securities Act (Ontario), other than a person
who falls within that definition solely by virtue of being a director or senior
officer of a subsidiary of MIMI; and (ii) an associate of any person who is an
insider by virtue of (i) above.
<PAGE> 5
-5-
4.6.2 Maximum Number Within One Year. The maximum number of
Common Shares which may be issued to Insiders under the Plan within a one-year
period shall be 10% of the Common Shares outstanding at the time of the issuance
(on a non-diluted basis), excluding Common Shares issued under the Plan or any
other employee stock option plan, options for services or employee stock
purchase plans over the preceding one-year period. The maximum number of Common
Shares which may be issued to any one Insider under the Plan and such Insider's
associates within a one-year period shall be 5% of the Common Shares outstanding
at the time of the issuance (on a non-diluted basis), excluding Common Shares
issued to such Insider under the Plan or any other stock option plan, options
for services or employee stock purchase plans over the preceding one-year
period.
4.6.3 Shares Granted Prior To Becoming Insider. Any
entitlement to acquire Common Shares granted pursuant to the Plan or any other
employee stock option plan, options for services or employee stock purchase plan
prior to the grantee becoming an Insider shall be excluded for the purposes of
the limits set out in 4.6.1 and 4.6.2 above.
4.7 Termination of Options. If there is a termination of employment of
a person to whom an Option has been granted prior to the time the Option has
been exercised in full or has expired, the Option shall terminate in accordance
with the following provisions, except to the extent that the Option Grant
provides for earlier termination of the Option:
(i) Termination of Employment of Holder of Option Other Than
Because of Total Disability or Death. If there is a termination of employment of
a person to whom an Option has been granted, other than by reason of the
person's death or total disability, each Option held by the person may be
exercised (if otherwise exercisable) until the earliest of (i) the end of the
ninety (90) day period immediately following the date of the termination of
employment, (ii) the expiration of the term specified in the Option, or (iii)
such earlier time as may be determined by the Committee at the time of granting
the Option.
<PAGE> 6
-6-
(ii) Total Disability of Holder of Option. If there is a
termination of employment of a person to whom an Option has been granted by
reason of his or her total disability, each Option held by the person may be
exercised (if otherwise exercisable) until the earliest of (i) the end of the
one-year period immediately following the date of the termination of employment,
(ii) the expiration of the term specified in the Option, or (iii) such earlier
time as may be determined by the Committee at the time of granting the Option.
"Total disability" means disability within the meaning of Code Section 22(e)(3),
which is defined as the inability of an employee to engage in any substantial
gainful activity by reason of a medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months.
(iii) Death of Holder of Option. If there is a termination of
employment of a person to whom an Option has been granted by reason of his or
her death, or a former employee dies following the date of his or her
termination of employment but at a time when an Option still would be
exercisable by that person but for the death of the person, each Option held by
the person at the time of his or her death may be exercised by the person or
persons to whom the Option passed by will or by the laws of descent and
distribution (but by no other persons) until the earliest of (i) the end of the
one-year period immediately following the date of death (or such other period as
may be determined by the Committee at the time of granting the Option), (ii) the
expiration of the term specified in the Option, or (iii) if the death occurs
after the termination of employment, the end of the period in which the Option
could be exercised under subparagraph (i) or (ii) immediately above.
5. OPTION PRICE
5.1 In General. The price per share at which each Option granted under
the Plan may be exercised shall be determined by the Committee subject to the
provisions of this Section 5.
<PAGE> 7
-7-
5.1.1 Stock Options. The exercise price shall not be less than
the market price per share on The Toronto Stock Exchange (the "Exchange") as of
the date of grant, as determined by the Board. For the purpose of this Plan, the
market price for a Common Share at the time an Option is granted (the "Fair
Market Value") is equal to:
(a) the closing price for a Common Share on the Exchange on the
business day prior to the grant of the Option; or
(b) if the Common Shares did not trade on the Exchange on the
business day prior to the grant of the Option, the simple
average of the high and low trading prices for each of the
five trading days before the date of grant.
5.1.2 Incentive Stock Options. An incentive stock option may
not be granted to a person who, at the time the Option is granted, is a Ten
Percent Shareholder, unless (i) the exercise price of the Option is at least
110% of the Fair Market Value of the Common Shares on the date of Option Grant
and (ii) the Option by its terms is not exercisable after the expiration of five
years from the date of grant. "Ten Percent Shareholder" means, with respect to
the grant of any Option, a person who at the date of grant is the beneficial
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of MIMI or of any parent or subsidiary of MIMI.
6. COMPLIANCE WITH APPLICABLE LEGISLATION
6.1 In General. The Plan, the grant and exercise of Options hereunder
and the Company's obligation to sell and deliver Common Shares upon exercise of
Options shall be subject to all applicable federal, state and foreign laws,
rules and regulations, the rules and regulations of any stock
<PAGE> 8
-8-
exchange(s) on which the Common Shares are listed for trading and to such
approvals by any regulatory or governmental agency as may, in the opinion of
counsel to the Company, be required. The Company shall not be obligated by any
provision of the Plan or the grant of any Option hereunder to issue or sell
Common Shares in violation of such laws, rules and regulations or any conditions
of such approvals. No Option shall be granted and no Common Shares issued or
sold hereunder where such grant, issue or sale would require registration of the
Plan or of Common Shares under the securities laws of any foreign jurisdiction
other than any jurisdiction in which the Plan or the Common Shares are
registered or otherwise qualified for sale to the public at the time of the
grant, and any purported grant of any Option or issue or sale of Common Shares
hereunder in violation of this provision shall be void. In addition, the Company
shall have no obligation to issue any Common Shares pursuant to the Plan unless
such Common Shares shall have been duly listed, upon official notice of
issuance, with all stock exchanges on which the Common Shares are listed for
trading. Common Shares issued and sold to participants pursuant to the exercise
of Options may be subject to limitations on sale or resale under applicable
securities laws.
6.2 Section 16(b) Compliance. If the grantee of an Option is at the
time of exercise considered an officer or director of the Company for purposes
of Section 16(b) of the Securities Exchange Act of 1934 (the "Act") or was such
an officer or director at any time during the six-month period immediately
preceding the exercise, and made any purchase or sale of Common Shares during
such six-month period, and if Section 16(b) of the Act applies to the Company at
the date of the exercise, then the grant may only be exercised after the first
six months of its term.
7. NON-INCENTIVE STOCK OPTIONS
7.1 Committee's Power to Designate. Notwithstanding the provisions of
Sections 4, 5 and 6 of this Plan, the Committee may grant Options which in one
or more respects do not meet the requirements for incentive stock options
established by Section 422 of the Code. The Committee shall indicate on each
Option Grant whether an incentive stock option within the meaning of
<PAGE> 9
-9-
Section 422 of the Code or a non-incentive stock option is thereby granted,
provided, however, that only key employees shall be granted incentive stock
options.
7.2 Committee's Power to Set Terms. Except as otherwise provided in
this Plan, the Committee, in its sole discretion, shall establish the terms and
conditions for each non-incentive stock option which it grants. Such terms and
conditions may, but need not, and subject to any required regulatory approval,
include some or all of the provisions of Sections 4, 5 and 6 of this Plan with
respect to incentive stock options. If the Committee grants an Option which in
all respects meets the requirements for incentive stock options it may
nonetheless designate such Option a non-incentive stock option on the Option
Grant.
8. ADJUSTMENT OF SHARES RESERVED UNDER THE PLAN
The aggregate number and kind of shares reserved under the Plan, the
maximum number of shares as to which Options may be granted to any individual
and the Option price per share shall be appropriately adjusted by the Board,
subject to prior approval of the relevant stock exchange, in the event of any
recapitalization, stock split, stock dividend, combination of shares, or other
similar change in the capitalization of the Company, but no adjustment in the
Option price shall be made which would reduce the Option price per share to less
than the par value per share.
9. DISSOLUTION OR REORGANIZATION
9.1 Termination of Options. Prior to a dissolution, liquidation,
merger, consolidation, or reorganization of the Company (the "Event"), the Board
may decide to terminate each outstanding Option. If the Board so decides, such
Option shall terminate as of the effective date of the Event, but the Board
shall suspend the exercise of all outstanding Options a reasonable time prior to
the Event,
<PAGE> 10
-10-
giving each grantee not less than fourteen days written notice of the date of
suspension, prior to which an Option grantee may purchase in whole or in part
the shares available to him as of the date of receipt of the notice.
9.2 Reinstatement of Options. If the Event is not consummated, the
suspension shall be removed and all Options shall continue in full force and
effect.
10. AMENDMENT AND TERMINATION OF PLAN
10.1 Actions by the Board. The Board may amend, suspend, or terminate
the Plan, including the form of Option Grant incorporated herein by reference.
No such action, however, may, without approval or ratification by the
shareholders and the prior approval of the relevant stock exchange, increase the
maximum number of shares reserved under the Plan except as provided in Section
8, alter the class or classes of employees and others eligible for Options, or
make any other change which, pursuant to applicable legislation, requires action
by the shareholders or the prior approval of the relevant stock exchange. No
such action may, without the consent of the holder of the Option, alter or
impair any Option previously granted.
10.2 Automatic Termination after Ten Years. In any event, the Plan
shall terminate 10 years from the date of adoption by the Board of Directors, or
if earlier, from the date of approval by the shareholders. Any shares remaining
under the Plan at the time of termination which are not subject to outstanding
Options and any shares which thereafter become available because of the
expiration or termination of an Option shall cease to be reserved for purposes
of the Plan.
11. RIGHT TO TERMINATE EMPLOYMENT, ETC.
Nothing contained herein or in any Option Grant executed pursuant
hereto shall restrict the right of the Company to terminate the employment or
the Board membership or any contractual arrangement of any grantee at any time.
<PAGE> 11
-11-
12. WITHHOLDING OF TAXES.
(a) In order to exercise an Option, a person must make a payment to
MIMI or authorize withholding in order to enable MIMI to pay any withholding
taxes due as a result of the exercise. In addition, if a person who exercised an
incentive stock option disposes of Common Shares acquired through exercise of
that incentive stock option either (i) within two years after the date of grant
of the incentive stock option or (ii) within one year after the issuance of the
shares on exercise of the incentive stock option, the person will notify MIMI
promptly of the occurrence of the event and, if the event was a disposition of
Common Shares acquired on exercise of an incentive stock option, the amount
realized upon the disposition.
(b) If, whether because of a disposition of Common Shares acquired on
exercise of an incentive stock option, or otherwise, MIMI is required to pay
withholding taxes to any federal, state or other taxing authority and the
employee fails to provide MIMI with the funds with which to pay that withholding
tax, MIMI may withhold up to 50% of each payment of salary or bonus to the
employee (which will be in addition to any other required or permitted
withholding), until MIMI has been reimbursed for the entire withholding tax it
was required to pay.
13. INVESTMENT REPRESENTATION.
If the offering of Common Shares pursuant to this Plan is not
registered under the Securities Act of 1933, as amended, and if in the opinion
of counsel for MIMI the shares of Common Shares subject to the Option may not be
resold without registration, then (i) each Option will be granted on the
condition that the purchase of Common Shares subject to the Option shall be for
investment purposes and not with a view to resale or distribution, (ii) at the
time of the exercise of any Option, or any installment thereof, the grantee will
execute such further agreements as MIMI may require
<PAGE> 12
-12-
to implement the foregoing condition and to acknowledge the grantee's
familiarity with restrictions on the resale of the shares under applicable
securities laws, rules and regulations, and (iii) MIMI may stamp such legend on
the certificate(s) representing the shares as it may deem necessary or
appropriate in light of the foregoing conditions and such additional legend as
may be required by the Exchange.
14. EXERCISE OF OPTIONS.
The exercise price may be paid in cash, by the surrender of Common
Shares, by MIMI withholding the number of shares, otherwise deliverable on
exercise of the Option, having a Fair Market Value equal to the amount payable
on exercise of the Option, by such other method as the Committee, in its
discretion, may permit in an Option Grant, or by any combination of the
foregoing; subject, however, to any requirements of applicable law which may
limit the type or amount of such non-cash consideration.
15. DATE OF ADOPTION
The date of adoption of the 1994 Stock Option Plan by the Board is
August 31, 1994, the date of adoption of the amended Plan by the Board is
December 2, 1996 and the dates of adoption by the Board of the increases in the
aggregate number of Common Shares which may be issued pursuant to Options
granted under the Plan are July 23, 1997 and May 29, 1998.
16. DATE OF APPROVAL
The date of approval of the 1994 Stock Option Plan by the shareholders
and the 1994 Stock Option Plan's effective date is August 31, 1994. The
effective date of the amended Plan is December 2, 1996 and the dates of approval
by shareholders of the increases in the aggregate number of Common Shares which
may be issued pursuant to Options granted under the Plan are September 11, 1997
and September 10, 1998.
<PAGE> 13
FORM OF OPTION GRANT
MEMORANDUM OF AGREEMENT made as of the __ day of __, 199__.
B E T W E E N:
MACKENZIE INVESTMENT MANAGEMENT INC., a corporation
incorporated under the laws of the State of Delaware,
(hereinafter called the "Corporation"),
OF THE FIRST PART,
- and -
--
(hereinafter called the "Employee"),
OF THE SECOND PART.
RECITALS:
1. The Corporation has established the Mackenzie Investment Management Inc.
stock option plan (the "Plan") to encourage key employees of the Corporation and
any present or future subsidiary and parent of the Corporation to participate in
the growth and development of the Corporation by allowing them to acquire shares
of common stock of the Corporation.
2. The Employee is a bona fide full-time employee of the Corporation, one of its
subsidiaries or its parent.
<PAGE> 14
3. The Employee has been granted the share option(s) described in this
Agreement, on the terms and conditions permitted by the Plan.
AGREEMENT:
For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Corporation, the Corporation and the Employee agree
that:
1. In this Agreement and any amendments to it, any defined terms shall
have the meaning as set out in the Plan, unless otherwise defined
below:
(a) "Exchange" means The Toronto Stock Exchange;
(b) "Expiry Time" of each Option means the close of business on
the option period end date set out in the attached Schedule
describing the terms of that Option;
(c) "Option" means each irrevocable option to acquire common
shares of the Corporation which is described on the attached
Schedule to this Agreement;
(d) "Option Grant" means the form of option grant described in the
attached Schedule to this Agreement;
(e) "Option Period" means the period of time commencing on the
date set out in each attached Schedule and terminating on the
Expiry Time set out in that Schedule;
(f) "Optioned Shares" means all shares granted under Options to
the Employee, as listed on the Schedules attached to this
Agreement;
(g) "Schedule" means the one or more schedules attached to this
Agreement which describe the terms of the Option(s) granted to
the Employee; and
<PAGE> 15
-3-
(h) "Share" means a share of common stock, U.S. $.01 par value in
the capital of the Corporation.
2. The Corporation hereby confirms that the Employee has been granted the
Option to purchase the number of Optioned Shares of the Corporation at
the price per Optioned Share described in each Schedule attached to
this Agreement.
3. Each Option described in a Schedule shall terminate at the Expiry Time
described in that Schedule as to any Optioned Shares in respect of
which that Option has not then been exercised.
4. Termination of Options. If there is a termination of employment of an
Employee to whom an Option has been granted prior to the time the
Option has been exercised in full or has expired, the Option shall
terminate in accordance with the following provisions:
(i) Termination of Employment Other Than Because of Total
Disability or Death. If the Employee's employment terminates
other than by reason of the Employee's death or total
disability, each Option held by the Employee may be exercised
(if otherwise exercisable) until the earlier of (i) the end of
the ninety (90) day period immediately following the date of
the termination of employment, or (ii) the expiration of the
term of this Option.
(ii) Total Disability. If the Employee's employment terminates by
reason of his or her total disability, each Option held by the
Employee may be exercised (if otherwise exercisable) until the
earlier of (i) the end of the one-year period immediately
following the date of the termination of employment, or (ii)
the expiration of the term of this Option. "Total disability"
means disability within the meaning of Code Section 22(e)(3),
which is defined as the inability of an employee to engage in
any substantial gainful activity by reason of a medically
determinable physical or mental impairment
<PAGE> 16
-4-
which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less
than 12 months.
(iii) Death. If the Employee's employment terminates by reason of
his or her death, or the Employee dies following the date of
his or her termination of employment but at a time when this
Option still would be exercisable but for the Employee's
death, this Option may be exercised by the person or persons
to whom the Option passed by will or by the laws of descent
and distribution (but by no other persons) until the earliest
of (i) the end of the one-year period immediately following
the date of death, (ii) the expiration of the term of this
Option, or (iii) if the death occurs after the termination of
employment, the end of the period in which the Option could be
exercised under subparagraph (i) or (ii) immediately above.
5. An Option may be exercised by the Employee or the legal personal
representatives by giving notice in writing to the Corporation at its
head office in Boca Raton, Florida to the attention of the Chief
Financial Officer or, if he or she is absent, the Secretary, specifying
the number of Optioned Shares being exercised, indicating the method of
payment of the exercise price and enclosing appropriate payment in full
of the purchase price. The exercise price may be paid in cash, by the
surrender of Common Shares, by the Corporation withholding the number
of shares, otherwise deliverable on exercise of the Option, having a
Fair Market Value equal to the amount payable on exercise of the
Option, or by any combination of the foregoing; subject, however, to
any requirements of applicable law which may limit the type or amount
of such non-cash consideration. If the offering of Common Shares under
the Plan is not at the time of exercise of this Option registered under
the Securities Act of 1933, as amended, then, in order to exercise this
Option, the Employee also must provide to the Corporation an investment
representation in accordance with the Plan. Finally, in order to
exercise this Option, the Employee must make arrangements satisfactory
to the Corporation and in accordance with the Plan to satisfy all tax
withholding obligations resulting from the exercise
<PAGE> 17
-5-
of the Option or the later disposition of Common Shares acquired upon
exercise of the Option.
6. Upon any exercise of an Option, the Corporation shall cause its
transfer agent and registrar to deliver to the Employee or the legal
representatives one or more certificates in the name of the Employee or
the legal personal representatives (or as they may have otherwise
directed) representing in the aggregate the number of Optioned Shares
which the Employee or the legal personal representatives have
exercised.
7. The aggregate number and kind of shares reserved under the Plan, the
maximum number of shares as to which Options may be granted to any
individual and the Option price per share shall be appropriately
adjusted by the Board, subject to prior approval of the relevant stock
exchange, in the event of any recapitalization, stock split, stock
dividend, combination of shares, or other similar change in the
capitalization of the Company, but no adjustment in the Option price
shall be made which would reduce the Option price per share to less
than the par value per share.
8. The Employee shall have no rights as a shareholder in respect of any of
the Optioned Shares (including any right to receive dividends or other
distributions) other than in respect of Optioned Shares which have been
exercised by the Employee.
9. This Agreement is for the benefit of the Employee and the legal
personal representatives of the Employee and is binding upon the
Corporation, its successors and assigns. This Agreement is not
assignable by the Employee or the legal personal representatives of the
Employee.
<PAGE> 18
-6-
10. This Agreement and the grant of each Option to the Employee are
conditional upon:
- the Corporation reporting to the Exchange the grant of the
Option;
- the Exchange accepting the notice; and
- all conditions, if any, specified in the acceptance of the
notice by the Exchange having been fulfilled.
The Corporation shall use all reasonable efforts to obtain the
acceptance of the notice by the Exchange and to fulfil all conditions
within one hundred and twenty (120) days from the date of grant. In the
event that the acceptance is not so obtained or any of the conditions
are not fulfilled within that time, this Agreement shall terminate with
respect to that Option only and the Employee shall have no claim
against the Corporation with respect to this Agreement or that Option
for damages or otherwise.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
12. This Agreement and the attached Schedule(s) incorporate the terms and
conditions of all prior Options granted to the Employee as to all
Optioned Shares which remain unexercised. All prior stock option
agreements between the Corporation and the Employee shall terminate
effective upon execution of this Agreement by the Corporation and the
Employee.
<PAGE> 19
-7-
IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto.
MACKENZIE INVESTMENT MANAGEMENT
INC.
by
--------------------------------------
SIGNED, SEALED & DELIVERED )
in the presence of )
)
)
)
----------------------------------------
Witness [ ]
<PAGE> 20
SCHEDULE "A"
To the Option Agreement of ___ dated __, 199__
1. Date of Option:
2. Option Period: Start Date:
End Date:
3. Number of Optioned Shares:
4. Exercise Price per Optioned Share:
5. Terms and Conditions: same in all other respects
IN WITNESS WHEREOF this Schedule has been executed by the parties
hereto.
MACKENZIE INVESTMENT MANAGEMENT
INC.
by
--------------------------------------
SIGNED, SEALED & DELIVERED )
in the presence of )
)
)
)
----------------------------------------
Witness [ ]
LEGAL DEPARTMENT RECORDS
<TABLE>
<CAPTION>
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Options Exercised Date Market Price Insider Report Compliance
Prepared Officer
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 21
SCHEDULE "B"
To the Option Agreement of ___ dated __, 199__
1. Date of Option:
2. Option Period: Start Date:
End Date:
3. Number of Optioned Shares:
4. Exercise Price per Optioned Share:
5. Terms and Conditions: same in all other respects
IN WITNESS WHEREOF this Schedule has been executed by the parties
hereto.
MACKENZIE INVESTMENT MANAGEMENT
INC.
by
--------------------------------------
SIGNED, SEALED & DELIVERED )
in the presence of )
)
)
)
----------------------------------------
Witness [ ]
LEGAL DEPARTMENT RECORDS
<TABLE>
<CAPTION>
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Options Exercised Date Market Price Insider Report Compliance
Prepared Officer
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 22
SCHEDULE "C"
To the Option Agreement of ____ dated __, 199__
1. Date of Option:
2. Option Period: Start Date:
End Date:
3. Number of Optioned Shares:
4. Exercise Price per Optioned Share:
5. Terms and Conditions: same in all other respects
IN WITNESS WHEREOF this Schedule has been executed by the parties
hereto.
MACKENZIE INVESTMENT MANAGEMENT
INC.
by
--------------------------------------
SIGNED, SEALED & DELIVERED )
in the presence of )
)
)
)
----------------------------------------
Witness [ ]
LEGAL DEPARTMENT RECORDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Options Exercised Date Market Price Insider Report Compliance
Prepared Officer
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 23
SCHEDULE "D"
To the Option Agreement of ___ dated __, 199__
1. Date of Option:
2. Option Period: Start Date:
End Date:
3. Number of Optioned Shares:
4. Exercise Price per Optioned Share:
5. Terms and Conditions: same in all other respects
IN WITNESS WHEREOF this Schedule has been executed by the parties
hereto.
MACKENZIE INVESTMENT MANAGEMENT
INC.
by
--------------------------------------
SIGNED, SEALED & DELIVERED )
in the presence of )
)
)
)
----------------------------------------
Witness [ ]
LEGAL DEPARTMENT RECORDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Options Exercised Date Market Price Insider Report Compliance
Prepared Officer
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 1
Exhibit 10.9
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT-SHARING PLAN
(Conformed September, 1994 to Include the First Amendment)
(Conformed November, 1995 to Include the Second Amendment)
(Conformed April, 1996 to Include the Third Amendment)
<PAGE> 2
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT-SHARING PLAN
TABLE OF CONTENTS
ARTICLE 1 - Name............................................................ 2
ARTICLE II- Definitions..................................................... 3
2.1 Accrued Benefit....................................................... 3
2.3 Actual Pre-tax Contribution Percentage................................ 3
2.4 Adjustment Factor..................................................... 3
2.5 Affiliated Employer................................................... 3
2.6 Anniversary Year...................................................... 4
2.7 Annual Addition....................................................... 4
2.8 Average Actual 401(m) Contribution Percentage......................... 4
2.9 Average Actual Pre-tax Contribution Percentage........................ 4
2.10 Beneficiary.......................................................... 4
2.11 Benefit Commencement Date............................................ 5
2.l2 Board................................................................ 5
2.l3 Code................................................................. 5
2.14 Company.............................................................. 5
2.15 Compensation......................................................... 5
2.16 Disability........................................................... 7
2.17 Early Retirement Date................................................ 7
2.18 Effective Date....................................................... 7
2.l9 Employee............................................................. 7
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<PAGE> 3
2.20 Employee Contribution Account........................................ 7
2.21 Employer Contribution Account........................................ 8
2.22 Employing Company.................................................... 8
2.23 Employment Commencement Date......................................... 8
2.24 Entry Date........................................................... 8
2.25 ERISA................................................................ 8
2.26 Excess Aggregate 401(m) Contributions................................ 8
2.27 Excess Aggregate Pre-tax Contributions............................... 9
2.28 Excess Individual Pre-tax Contributions.............................. 9
2.29 Family Member........................................................ 9
2.30 Highly Compensated Employee.......................................... 9
2.31 Hours of Service..................................................... 11
2.32 Matching Contributions............................................... 14
2.33 Non-highly Compensated Employee...................................... 14
2.34 Normal Retirement Date............................................... 14
2.35 One-Year Break in Service............................................ 14
2.36 Participant.......................................................... 14
2.37 Plan................................................................. 14
2.38 Plan Administrator................................................... 14
2.39 Plan Year............................................................ 14
2.40 Postponed Retirement Date............................................ 15
2.41 Pre-tax Contributions................................................ 15
2.42 Pre-tax Contribution Account......................................... 15
2.43 Reemployment Commencement Date....................................... 15
2.44 Rollover Contributions............................................... 15
-ii-
<PAGE> 4
2.45 Section 415 Compensation............................................ 15
2.46 Service............................................................. 17
2.47 Spouse.............................................................. 17
2.48 Trust or Trust Fund................................................. 17
2.49 Trustees............................................................ 17
2.50 Valuation Date...................................................... 17
2.51 Vested Benefit...................................................... 17
2.52 Vesting Percentage.................................................. 18
2.53 Year of Eligibility Service......................................... 18
2.54 Year of Participation............................................... 18
2.55 Year of Vesting Service............................................. 18
ARTICLE III - Participation Standards...................................... 19
3.1 Initial Participation................................................ 19
3.2 Termination of Participation......................................... 19
3.3 Participation of Re-hired Former Participants........................ 19
3.4 Years of Eligibility Service and Break-in-Service Rules.............. 19
ARTICLE IV - Contributions to Trust........................................ 20
4.1 Employing Company Contributions...................................... 20
4.1.1 Matching Contributions........................................... 20
4.1.2 General Provisions Applicable to Employing Company Contributions. 21
4.2 Pre-tax Contributions................................................ 29
4.2.1 Compensation Reduction Agreements................................ 29
4.2.2 General Provisions Applicable to Pre-tax Contributions........... 30
4.3 Employee Contributions............................................... 36
4.3.1 [Reserved]....................................................... 36
4.3.2 Rollover Contributions and Direct Transfers into Plan............ 36
4.3.3 General Provisions Applicable to Employee Contributions.......... 38
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<PAGE> 5
4.4 Limitations on Annual Additions...................................... 38
4.4.1 In General....................................................... 38
4.4.2 Multiple Defined Contribution Plans.............................. 39
4.4.3 Combination of Defined Contribution and Defined Benefit Plans.... 39
4.4.4 Protective Procedures............................................ 41
ARTICLE V - Benefits....................................................... 43
5.1 Retirement Benefits.................................................. 43
5.1.1 Right to a Benefit............................................... 43
5.1.2 Postponed Retirement............................................. 43
5.2 Disability Benefits.................................................. 43
5.3 Death Benefits....................................................... 43
5.3.1 Right to a Death Benefit......................................... 43
5.3.2 Limitation on Rights of a Married Participant's Beneficiary...... 44
5.3.3 No Beneficiary................................................... 44
5.4 Termination Benefits................................................. 44
ARTICLE VI- Vesting........................................................ 45
6.1 Vesting Percentage................................................... 45
6.2 Forfeiture........................................................... 45
6.3 Reemployment After Termination of Service............................ 46
6.4 Repayment of Vested Benefits......................................... 47
6.5 Restoration of Forfeitures........................................... 47
6.6 Years of Vesting Service and Break-in-Service Rules.................. 48
ARTICLE VII- Calculation of Benefits and Accounts.......................... 49
7.1 Calculation of Benefits.............................................. 49
7.2 Calculation of Accounts.............................................. 49
ARTICLE VIII- Payment of Benefits.......................................... 50
8.1 Form of Benefits..................................................... 50
8.1.1 Retirement, Disability or Termination Benefits................... 50
8.1.2 Death Benefits................................................... 50
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<PAGE> 6
8.2 Notice and Election of Benefit Form.................................. 51
8.3 Annuity Benefits..................................................... 52
8.3.1 Annuity Benefit Generally Not Required........................... 52
8.3.2 Forms of Payment of Benefits Accrued Before 1989................. 53
8.4 Withdrawals During Employment........................................ 56
8.4.1 Withdrawals After Attaining Age 59 1/2........................... 56
8.4.2 Withdrawals Prior to Age 59 1/2.................................. 57
8.4.3 Withdrawals from Employee Contribution Accounts.................. 59
8.4.4 General Provisions Applicable to Withdrawals..................... 59
8.5 Loans to Participants and Beneficiaries.............................. 61
8.5.1 Availability of Loans............................................ 61
8.5.2 Requirements and Limitations..................................... 61
8.6 Effect of Reemployment............................................... 64
8.7 Claims Procedure..................................................... 64
8.8 Transfers to Other Plans............................................. 65
ARTICLE IX - Benefit Commencement Date..................................... 66
9.1 General Rule........................................................ 66
9.2 Optional Termination Benefit Commencement Date...................... 67
9.3 Disability Benefit Commencement Date................................ 67
9.4 Retirement After Reemployment....................................... 67
9.5 Death Benefit Commencement Date..................................... 67
9.6 Limited Administrative Delays....................................... 67
9.7 Latest Benefit Commencement Date.................................... 68
9.8 Payment Date When Benefit is $3,500 or Less......................... 68
ARTICLE X - Top-Heavy Provisions........................................... 69
10.1 Application of Top-Heavy Provisions................................. 69
10.2 Determination of Top-Heavy Plan Status: Top-Heavy Plan Definitions.. 69
10.3 Top-Heavy Plan Requirements......................................... 72
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<PAGE> 7
10.4 Minimum Accrued Benefits............................................ 74
ARTICLE XI - Administration................................................ 75
11.1 Appointment of Administrator........................................ 75
11.2 Expenses of Plan Administrator...................................... 75
11.3 Duties of the Plan Administrator.................................... 75
11.4 Plan Administrator's Rights......................................... 76
ARTICLE XII - Expenses of the Plan......................................... 76
ARTICLE XIII - Amendment of the Plan....................................... 76
13.1 Amendment........................................................... 76
13.2 Effect of Amendments on Vesting..................................... 77
13.3 Amendments to Qualify Trust......................................... 77
ARTICLE - Termination or Merger of Plan and Trust.......................... 78
14.1 Termination......................................................... 78
14.2 Benefits After Plan Termination..................................... 78
14.3 Partial Termination................................................. 79
14.4 Plan Merger......................................................... 79
ARTICLE XV - Fiduciary Responsibilities and Indemnification................ 79
15.1 Allocation of Responsibilities...................................... 79
15.2 No Joint Responsibilities........................................... 80
15.3 Indemnification..................................................... 80
15.4 Liability Insurance................................................. 80
15.5 Fiduciaries......................................................... 80
-vi-
<PAGE> 8
ARTICLE XVI - Miscellaneous................................................ 81
16.1 Investment of Plan Assets........................................... 81
16.2 Notices and Certifications.......................................... 81
16.3 No Employment Contract.............................................. 82
16.4 Return of Company Contributions..................................... 82
16.5 Spendthrift Provisions and Domestic Relations Orders................ 83
16.6 Governing Law....................................................... 84
16.7 Binding Effect...................................................... 85
16.8 Interpretation...................................................... 85
16.9 Titles.............................................................. 85
-vii-
<PAGE> 9
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT-SHARING PLAN
(Conformed September, 1994 to Include the First Amendment)
(Conformed November, 1995 to Include the Second Amendment)
(Conformed April, 1996 to Include the Third Amendment)
WHEREAS, Mackenzie Investment Management Inc., a corporation organized
and operating under the laws of Delaware (the "Company") established the
Mackenzie Investment Management Inc. Profit Sharing and Retirement Plan known
as the "CPI Profit Sharing Plan as adopted by Mackenzie Investment Management
Inc. (the "Plan") effective as of January 1, 1986, and
WHEREAS, the Plan was adopted as a prototype plan offered by
International Central Bank and Trust Corporation which entity served as the
Trustee for the Plan,
WHEREAS, it is now the intention of the Company to amend and restate
the Plan as an individual plan, and for compliance with the Tax Reform Act of
1986 (TRA '86) and other applicable legislative and regulatory changes:
NOW, THEREFORE, generally effective as of January 1, 1989, the Company
hereby amends said Plan by deleting Articles 1 through XXVI of the Plan, being
all the provisions of said Plan, and restates said Plan as follows, provided,
however, that the restatement of said Plan hereby shall not reduce the vested
benefit of any Participant in said Plan as of the day before the effective date
of this restatement.
The effective date of this restatement of said Plan and Trust shall be
modified as follows:
The provisions included to comply with the technical corrections to
the Deficit Reduction Act of 1984 (DEFRA) and the Retirement Equity Act of 1984
(REA) contained in (TRA '86) are effective as if included in the respective
laws to which the corrections apply. The provisions included to comply with the
provisions of TRA '86 other than the technical corrections
<PAGE> 10
to DEFRA and REA are effective as of the date specified in TRA'86. The
provisions included to comply with the provisions of the Omnibus Budget
Reconciliation Act of 1986 (OBRA '86) are effective as of the date specified in
OBRA '86. The provisions included to comply with the provisions of the Omnibus
Budget Reconciliation Act of 1987 (OBRA '87) are effective as of the date
specified in OBRA '87. The provisions included to comply with the final
regulations on optional forms of benefits issued July 11, 1988, are effective
as of the effective date prescribed by such regulations. The provisions
included to comply with the final REA regulations issued August 28, 1988, are
effective as of the effective date prescribed by such regulations. The
provisions included to comply with the provisions of the Technical and
Miscellaneous Revenue Act of 1988 (TAMRA '88) are effective as of the date
specified in TAMRA '88.
Except as otherwise expressly provided herein, the provisions of the
Plan in effect prior to the effective date of this Restatement shall govern in
all matters that are not required by the Code or Act or other applicable law or
regulation to be subject to the provisions of the Plan as amended, including,
without limitation, all matters involving any Employee who does not have at
least one Hour of Service on or after the effective date of this Restatement.
ARTICLE I
Name
The Plan and Trust created in accordance with the terms of this
instrument shall be named "Mackenzie Investment Management Inc. Profit-Sharing
Plan".
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<PAGE> 11
ARTICLE II
Definitions
As used in the Plan, the following terms shall have the meanings set
forth below:
2.1 Accrued Benefit. The sum of a Participant's
(a) Employer Contribution Account; and
(b) Pre-tax Contribution Account.
2.2 Actual 401(m) Contribution Percentage. The ratio (expressed as a
percentage) of Matching Contributions, qualified non-elective contributions (if
any), and elective contributions under the plan on behalf of the Participant
for the Plan Year to the Participant's Compensation for the Plan Year. As used
in this Plan the term Actual 401(m) Contribution Percentage has the same
meaning as the term "contribution percentage" as defined in Code Section
401(m)(3).
2.3 Actual Pre-tax Contribution Percentage. The ratio (expressed as a
percentage) of Pre-tax Contributions on behalf of the Participant for the Plan
Year to the Participant's Compensation for the Plan Year. The Actual Pre-tax
Contribution Percentage of an Employee who is eligible to, but does not make a
Pre-tax Contribution is zero. As used in this Plan the term Actual Pre-tax
Contribution Percentage has the same meaning as the term "actual deferral
percentage" as defined in Code Section 40l(k)(3)(B).
2.4 Adjustment Factor. The cost of living factor prescribed by
Secretary of the Treasury under Code Section 415(d) for Plan Years beginning
after December 1, 1987, as applied to such items and in such manner as the
Secretary shall provide.
2.5 Affiliated Employer. The Employer and any corporation which is a
member of a controlled group of corporations as defined in Code Section 414(b)
which includes the
-3-
<PAGE> 12
Employer; any trade or business whether or not incorporated, which is under
common control as defined in Code Section 414(c) with the Employer; any
organization whether or not incorporated which is a member of an affiliated
service group as defined in Code Section 414(m) which includes the Employer and
any other entity required to be aggregated with the Employer pursuant to
Regulations under Code Section 414(o).
2.6 Anniversary Year. The period consisting of twelve (12) consecutive
months beginning on an Employee's Employment Commencement Date or Reemployment
Commencement Date, as applicable, and each period of twelve (12) consecutive
months beginning on the anniversary of such date.
2.7 Annual Addition. The sum for any Limitation Year of (a) all
forfeitures allocated to a Participant plus (b) all contributions made to the
Plan for or by the Participant, except Rollover Contributions, with respect to
the Limitation Year.
2.8 Average Actual 401(m) Contribution Percentage. The average
(expressed as a percentage) of the Actual 401(m) Contribution Percentages of
the Participants in a testing group, consisting either of all Highly
Compensated Employees or all Non-highly Compensated Employees.
2.9 Average Actual Pre-tax Contribution Percentage. The average
(expressed as a percentage) of the Actual Pre-tax Contribution Percentages of
the Participants in a testing group, consisting either of all Highly
Compensated Employees or all Non-highly Compensated Employees.
2.10 Beneficiary. Any person, estate, trust or organization designated
by a Participant to receive any Plan benefit that is payable upon the death of
such Participant. This term shall include any person, estate, trust or
organization whose entitlement to benefits hereunder has been
-4-
<PAGE> 13
made dependent by a Participant upon the survival of some person other than
such person or upon any other event uncertain to occur hereinafter referred to
as a "Contingent Beneficiary").
2.11 Benefit Commencement Date. The date as of which benefits
hereunder first become payable, in accordance with the provisions of Article
VIII, to or in respect of a Participant who ceases or has ceased to be an
Employee.
2.12. Board. The Board of Directors of the Company.
2.13 Code The Internal Revenue Code of 1986, as amended from time to
time.
2.14 Company. Mackenzie Investment Management Inc. a Delaware
corporation, the corporation signatory to this agreement, and any successor
organization which shall assume the Company's obligations under the Plan. Such
assumption shall be in writing, signed by the organization assuming the
obligations of the Plan and accepted by the predecessor Company and the
Trustee.
2.15 Compensation. The total salaries or wages paid by the Employer to
the Employee during any Plan Year, including overtime pay, bonuses, and
compensation reduction contributions made pursuant to any Code Section 125
"cafeteria" plan but excluding any Employer contributions to this or any other
employee benefit plan not included above. Notwithstanding the foregoing, (i)
the amount taken into account as Compensation for any Plan Year beginning
before December 1, 1989, in which this Plan is a "top heavy plan," as defined
in Section 10.2(b), shall be subject to the limits of Section 10.3 and (ii) the
amount taken into account as "Compensation" for any Plan Year beginning after
December 31, 1988, shall be subject to the limit in effect for the Plan Year
($200,000 initially) determined pursuant to Code Section 401(a) (17) and
regulations thereunder, including applicable inflation adjustments.
-5-
<PAGE> 14
The family aggregation rules of Code Section 414(q)(6)(C), as modified
by Code Section 401(a)(17), and regulations thereunder shall apply to
Compensation in the following manner. In the case of an Employee who is either
a 5% owner or is both a highly compensated employee (within the meaning of Code
Section 414(q)(6)) and one of the ten most highly compensated employees, the
Employee, the Employee's spouse, and any lineal descendants of such Employee
who have not attained age 19 before the close of the Year shall be treated as a
single Employee (a "family unit") with one Compensation to which the annual
compensation limit under the Plan applies. If Compensation for the family unit
exceeds the annual compensation limit under Code Section 401(a)(17), then the
Plan shall allocate the limit among the members of the family unit pro rata to
their Compensation. However, if the Plan provides for permitted disparity under
Code Section 401(1), this proration shall not be applied for purposes of
determining the portion of each individual's Compensation ("Covered
Compensation") that is below the integration level.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual compensation of each employee
taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000 as
adjusted by the Commissioner for increases in the cost of living in accordance
with section 401(a)(l 7)(13) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding
12 months over which Compensation is determined (determination period)
beginning. in such calendar year. If a determination period consists of fewer
than 12 months, the OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the determination
period, and the denominator of which is 12.
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<PAGE> 15
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current Plan
Year, the Compensation for that prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the first
day of the first Plan Year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000.
2.16. Disability. A total and permanent disability, as determined in
the sole discretion of the Plan Administrator, such that the Participant is
unable to perform any gainful activity due to a physical or mental impairment.
2.17 Early Retirement Date. The first day of the month coinciding with
or next following the date on which a Participant (a) has attained the age of
55 and (b) has completed six (6) Years of Vesting Service.
2.18 Effective Date. As restated hereby, January 1, 1989. (For initial
effective date of the Plan, see the Plan Introduction above.)
2.19 Employee. Any individual who, on or after the Effective Date, is
employed by an Employing Company.
2.20 Employee Contribution Account. The separate account maintained in
the records of the Plan Administrator for each Participant's Rollover
Contributions (the "Rollover Contribution Account"), if any, plus the
Participant's cumulative share of any income and gains allocable to each such
separate account and minus the Participant's cumulative share of any
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<PAGE> 16
losses, distributions, expenses and other charges allocable to each such
separate account and plus or minus any other applicable adjustments.
2.21 Employer Contribution Account. The separate account maintained in
the records of the Plan Administrator for each Participant within which each
Participant's share of Fixed Matching Contributions and Discretionary Matching
Contributions, if any, will be maintained in separate accounts, plus the
Participant's cumulative share of any income and gains allocable to each such
separate account and minus the Participant's cumulative share of any losses,
distributions, expenses or other charges allocable to each such separate
account and plus or minus any other applicable adjustments.
2.22 Employing Company. (a) The Company, (b) any corporation included
in a controlled group of corporations in which the Company is included in
accordance with the provisions of Code Section 414(1,), (c) any trade or
business under common control with the Company within the meaning of Code
Section 414(c), and (d) any trade or business, whether incorporated or not
incorporated, designated by the Board as an Employing Company.
2.23 Employment Commencement Date. The date on which an Employee first
performs an Hour of Service.
2.24 Entry Date. The first day of each Plan Year quarter (January 1,
April 1, July 1 or October 1).
2.25 ERISA. Public Law No.93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
2.26 Excess Aggregate 40l(m) Contributions. The amount described in
Code Section 401(m)(6)(B) for a Plan Year if the requirements of Article IV of
the Plan with respect to the Average Actual 401(m) Contribution Percentage for
Highly Compensated Employees are not
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<PAGE> 17
met for the Plan Year. The term Excess Aggregate 401(m) Contributions as used
in the Plan has the same meaning as the term "excess aggregate contributions"
as defined in Code Section 401(m)(6)(B).
2.27 Excess Aggregate Pre-tax Contributions. The aggregate amount by
which Pre-tax Contributions actually paid over to the Trust on behalf of Highly
Compensated Employees for a Plan Year exceed the maximum amount of such Pre-tax
Contributions permitted by Article IV of the Plan and Code Section
401(k)(3)(A)(ii) for the Plan Year. The term Excess Aggregate Pre Tax
Contributions as used in the Plan has the same meaning as the term "excess
contributions" as defined in Code Section 401(k)(8)(B).
2.28 Excess Individual ~ The amount of Pre-tax Contributions for a
calendar year that the Participant allocates to this Plan pursuant to the claim
procedure set forth in Article IV of the Plan. The term Excess Individual
Pre-tax Contributions as used in the Plan has the same meaning as the term
"excess deferrals" as defined in Code Section 402(g)(2)(A).
2.29 Family Member. With respect to any Employee or former employee,
Family Member means such Employee's or former employee's spouse and lineal
ascendants or descendants and the spouses of such lineal ascendants and
descendants. In determining whether an individual is a Family Member with
respect to an Employee or former employee, legal adoptions shall be taken into
account...
2.30 Highly Compensated Employee shall mean any Employee of an
Employing Company (for purposes of this Section, the "Employer") who:
(a) was a five percent (5%) owner of the Employer (as defined in
Code Section 416(i)(1)(A) during the "determination year"
or "look-back year"; or
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(b) earned more than $75,000 (as increased by cost-of-living
adjustments) of Compensation from the Employer during the
"look-back year"; or
(c) earned more than $50,000 (as increased by cost-of-living
adjustments) of Compensation from the Employer during the
"look-back year" and was in the "Top-Paid Group" of Employees
for such year (as defined under Code Section 414(q)(4) and
the regulations promulgated thereunder); or
(d) was an officer of the Employer during the "look-back year"
and received Compensation during the "look-back year" from
the Employer in excess of fifty percent (50%) of the dollar
limitation under Section 415(b)(1)(A) of the Code. The
number of officers shall be limited to the lesser of (i)
fifty (50) Employees; or (ii) the greater of three (3)
Employees or ten percent (10%) of all Employees. If the
Employer does not have at least one officer whose annual
Compensation exceeds fifty percent (50%) of the dollar
limitation under Code Section 415(b)(1)(A), then the
highest paid officer of the Employer shall be treated as a
Highly Compensated Employee.
An Employee who is in the group consisting of the one hundred (100)
Employees paid the greatest Compensation during the "determination year" and
also described in subsections (b), (c) or (d) above when these subsections are
modified to substitute "determination year" for "look-back year," shall be
deemed a Highly Compensated Employee for the determination year.
An Employee who separated from Service prior to the "determination
year" shall be treated as a Highly Compensated Employee for the "determination
year" if such Employee was a Highly Compensated Employee when such Employee
separated from Service, or was a Highly Compensated Employee at any time after
attaining age fifty-five (55).
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<PAGE> 19
For purposes of this Section, the "determination year" shall be the
Plan Year for which a determination is being made as to whether an Employee is
a Highly Compensated Employee. The "look-back year" shall be the twelve (12)
month period immediately preceding the "determination year." However, if the
Employer shall elect, the "look-back year" shall be the calendar year ending
with or within the Plan Year for which testing for the determination of which
Employees are Highly Compensated Employees is being performed, and the
"determination year" (if applicable) shall be the period of time, if any, which
extends beyond the "look-back year" and ends on the last day of the Plan Year
for which such testing is being performed (the "lag period"). If the "lag
period" is less than twelve (12) months, the dollar threshold amounts specified
in (b), (c) and (d) above shall be pro-rated based upon the number of months
in the "lag period."
If an individual is a member of the "family" (within the meaning of
Section 414(q)(6)(B) of the Code) of a five percent (5%) owner or a Highly
Compensated Employee in the group consisting of the ten (10) Highly Compensated
Employees paid the greatest Compensation during the "determination and/or
look-back year," then such individual shall not be considered a separate
Employee, and any Compensation paid to such individual (and any contribution or
benefit on behalf of such individual) shall be treated as if paid to (or on
behalf of) the five percent (5%) owner or such Highly Compensated Employee.
2.31 Hours of Service. Each hour:
(a) for which an Employee directly or indirectly receives
compensation from an Employing Company (such hours to be credited as of the
time when the duties are performed);
(b) for which an Employee directly or indirectly receives
compensation or is entitled to compensation by an Employing Company for reasons
other than the performance of
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<PAGE> 20
duties including, but not limited to, vacation, holiday, illness, disability,
pregnancy, layoff; and jury duty;
(c) during which an Employee is on an unpaid leave of absence
from an Employing Company as determined by the Plan Administrator under uniform
rules prescribed by the Plan Administrator;
(d) for which an Employee is entitled to receive credit under
the laws of the United States (including, but not limited to, those pertaining
to military service) in addition to each Hour of Service credited under the
preceding Clauses (a) through (c); provided, however, that no more than five
hundred and one (501) Hours of Service shall be credited under the preceding
paragraph (c) or this paragraph (d) on account of any single continuous period
during which such employee performs no duties, and provided further, that no
such Hours of Service shall be credited on the basis of any payment, or
entitlement thereto, which is made or due under a plan maintained solely to
comply with applicable workmen's compensation, unemployment compensation or
disability insurance laws or in accordance with a plan under which such
Employee receives reimbursement solely for medical or medically related
expenses incurred by him; and
(e) for which an Employing Company has awarded or agreed to
pay back pay, irrespective of mitigation of damages, other than an hour
credited to an individual under the preceding paragraphs (a) through (d) above.
Such hours shall be credited as of the time to which the award or agreement
pertains.
The Plan Administrator shall credit an Employee's Hours of Service to
the appropriate employment period or periods, as determined in accordance with
Department of Labor
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<PAGE> 21
Regulation 2530.200b-2(c)(2), and shall compute the total Hours of Service
hereunder in accordance with Department of Labor Regulation 2530.200b-2(1,).
Hours of Service that would be credited to a person (i) who is a
"leased employee" of an Employing Company under Code Section 414(n) or (ii) who
is employed by an organization while it is under common control with the
Company (Code Section 414(c)) or while it is a member of a controlled group of
corporations with the Company (Code Section 414(b)) or while it is a member of
an affiliated service group with the Company (Code Section 414(m)) or which
must be aggregated with the Company under Code Section 414(o), if such person
were an Employee, shall be deemed to be Hours of Service with an Employing
Company for all purposes under the Plan; provided, however, that except as
otherwise expressly provided elsewhere in the Plan, no person shall be treated
as an Employee of an Employing Company solely on account of such deemed Hours
of Service.
Solely for the purpose of determining whether a One-Year Break in
Service has occurred, the Plan Administrator shall account for the following
absences from employment as Hours of Service: (1) pregnancy of an Employee; (2)
birth of a child of an Employee; (3) placement of a child with an Employee in
connection with adoption proceedings; (4) caring for a child described in the
preceding (2) or (3) immediately after the birth or placement of such child; or
(5) leave granted under the Family and Medical Leave Act of 1993; provided,
however, that no more than five hundred and one (501) Hours of Service shall be
credited under this paragraph and such Hours of Service shall be credited in
the first Plan Year necessary to avoid a One-Year Break in Service.
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<PAGE> 22
2.32 Matching Contributions made on behalf of each Participant by an
Employing Company pursuant to Section 4.1.1 of the Plan.
2.33 Non-highly Compensated Employee. Any Employee of an Employing
Company who is neither a Highly Compensated Employee nor a Family Member of a
Highly Compensated Employee.
2.34 Normal Retirement Date. A Participant's 65th birthday.
2.35 One-Year Break in Service. For vesting purposes (see Article VI),
a Plan Year during which an Employee completes not more than five hundred (500)
Hours of Service and is not employed by an Employer on the last day of the
Year; for eligibility purposes (see Article III), Plan Year during which an
Employee completes not more than five hundred (500) Hours of Service and is not
employed by an Employer on the last day of the Year.
2.36 Participant. Any Employee who satisfies the requirements for
eligibility in the Plan as long as he continues to satisfy such requirements
and any former employee who retains an interest in the Plan.
2.37 Plan. The Mackenzie Investment Management Inc. Savings Plan and
Trust. This document and the Trust Agreement shall be treated as an integrated
whole and shall be hereinafter referred to as the "Plant'.
2.38 Plan Administrator. The Plan Administrator appointed in
accordance with Article XI of the Plan. The Plan Administrator shall be the
"administrator" referred to in Section 3(16)(A)(i) of ERISA.
2.39 Plan Year. The period of twelve (12) consecutive months
commencing on each January 1. The "Accrual Computation Period," the "Vesting
Computation Period," and the "Limitation Year" as defined in United States
Treasury Department Revenue Ruling 75-481,
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<PAGE> 23
shall be a Plan Year. The Plan Year quarters shall begin on January 1, April 1,
July 1 and October 1 of each Plan Year.
2.40 Postponed Retirement Date. The first day of the month coinciding
with or next following the date of retirement of a Participant who continues in
Service after his Normal Retirement Date.
2.41 Pre-tax Contributions. Contributions made pursuant to the
provisions of Section 4.2 of the Plan by the Employing Company, at the election
of the Participant, in lieu of cash compensation, including contributions that
are made pursuant to a salary or other compensation reduction agreement.
Pre-tax Contributions shall be non-forfeitable when made and shall be
distributable only in accordance with the provisions of Articles VI, VIII and
IX of the Plan governing Pre-tax Contribution Accounts.
2.42 Pre-tax Contribution Account. The separate account maintained in
the records of the Plan Administrator for each Participant's Pre-tax
Contributions, if any, plus the Participant's cumulative share of any income
and gains allocable to such account and minus the Participant's cumulative
share of any losses, distributions, expenses and other charges allocable to
such account and plus or minus any other applicable adjustments.
2.43 Reemployment Commencement Date. The first day on which an
Employee completes an Hour of Service following the most recent Plan Year in
which he incurred a One Year Break in Service.
2.44 Rollover Contributions. A Participant's contributions, if any,
made pursuant to the provisions of Section 4.3.2 of the Plan.
2.45 Section 415 Compensation. The Participant's wages, salaries, fees
for professional service and other amounts for personal services actually
rendered in the course of
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<PAGE> 24
employment with an Employing Company maintaining the Plan (including, but not
limited to, commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums, tips and bonuses
and in the case of a Participant who is an Employee within the meaning of Code
Section 401(c)(l) and the regulations thereunder, the Participant's earned
income (as described in Code Section 401(c)(2) and the regulations thereunder)
paid during the Limitation Year. "Section 415 Compensation" shall exclude:
(a) Contributions made by an Employing Company to a plan of
deferred compensation to the extent that, before the application of the Code
Section 415 limitations to the Plan, the contributions are not includable in
the gross income of the Employee for the taxable year in which contributed;
(b) Employing Company contributions made on behalf of an
Employee to a simplified employee pension plan described in Code Section 408(k)
to the extent such contributions are deductible by the Employee under Code
Section 219(a);
(c) Any distributions from a plan of deferred compensation
regardless of whether such amounts are includable in the gross income of the
Employee when distributed except that any amounts received by an Employee
pursuant to an unfunded non-qualified plan to the extent such amounts are
includable in the gross income of the Employee;
(d) Amounts realized from the exercise of a non-qualified
stock option or when restricted stock (or property) held by an Employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(e) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
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<PAGE> 25
(f) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the
premiums are not includable in the gross income of the Employee), or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of any annuity contract described in Code
Section 403(b) (whether or not the contributions are excludable from the gross
income of the Employee).
2.46 Service. A Participant's period of employment as an employee of
an Employing Company as of the date of hire or as otherwise defined by ERISA.
2.47 Spouse. The person to whom a Participant is legally married at
any relevant time, such as the time a consent is given pursuant to Section
8.3(b) or at the time of the Participant's death.
2.48 Trust or Trust Fund. The fund established by and maintained in
accordance with the terms of the Mackenzie Investment Management Inc.
Profit-Sharing and Savings Trust Agreement.
2.49 Trustee. Michael G. Landry, Keith J. Carlson and C. William
Ferris or any successor trustee appointed by the Board to administer the Trust.
2.50 Valuation Date. The last day of each Plan Year and any other date
or dates during a Plan Year as may be set from time to time by the Plan
Administrator for the valuation of the assets of the Trust.
2.51 Vested Benefit. The sum of a Participant's
(a) Employer Contribution Accounts multiplied by the
Participant's Vesting Percentage;
(b) Pre-tax Contribution Account; and
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<PAGE> 26
(c) Employee Contribution Accounts (if any).
2.52 Vesting Percentage. The percentage determined in accordance with
Article VI.
2.53 Year of Eligibility Service. The first Anniversary Year or any
Plan Year during which an Employee completes at least one thousand (1,000)
Hours of Service whether or not such Employee is employed by an Employing
Company throughout such Year. In case of any change in the computation period
for a Year of Eligibility Service, an Employee shall be credited with one such
Year if the Employee otherwise satisfies the requirements of this Section 2.53
during the final old computation period beginning prior to the change and a
second such Year if the employee otherwise satisfies the requirements of this
Section 2.53 during the first new computation period beginning on the date of
the change.
2.54 Year of Participation. Each Plan Year during which a Participant
completes at least one thousand (1,000) Hours of Service (or a proportionate
number of Hours of Service for any Plan Year that is shorter than twelve
months).
2.55 Year of Vesting Service. Each Plan Year during which a
Participant completes at least one thousand (1,000) Hours of Service except as
otherwise provided in Article VI of the Plan. In case of any change in the
computation period for a Year of Vesting Service, an Employee shall be credited
with one such Year if the Employee otherwise satisfies the requirements of this
Section 2.55 during the final old computation period beginning prior to the
change and a second such Year if the employee otherwise satisfies the
requirements of this Section 2.55 during the first new computation period
beginning on the date of the change.
Whenever used herein, a pronoun in the masculine gender shall include
the feminine gender unless the context clearly indicates otherwise. The words
"hereof', "herein", "hereunder"
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and other similar compounds of the word "here" shall mean and refer to the
entire Plan and not to any particular provision, Section or Article.
ARTICLE III
Participation Standards
3.1 Initial Participation. A full-time Employee shall be eligible to
participate upon the next Entry Date coinciding with or following his
Employment Commencement Date or as of any subsequent Entry Date while he
remains an Employee. A part-time Employee shall be eligible to participate upon
the next Entry Date coinciding with or following his completion of one Year of
Eligibility Service. For these purposes, a full-time Employee is any Employee
who works 37 1/2 or more hours per week. A part-time Employee is any Employee
who works fewer than 37 1/2 hours per week and any temporary or other
time-limited Employee.
3.2 Termination of Participation. Any employee who becomes a
Participant in accordance with the provisions of Section 3.1 shall cease to be
a Participant as of the earlier of (a) the date of his death, or (b) the date
on which he retires or otherwise ceases to be an Employee.
3.3 Participation of Re-hired Former Participants. An Employee who
ceases to be a Participant by reason of Section 3.2(b) shall again become a
Participant as of his Reemployment Commencement Date if he is reemployed
following the date on which he retired or otherwise ceased to be an Employee.
3.4 Years of Eligibility Service and Break-in-Service Rules. All Years
of Eligibility Service shall be taken into account for purposes of this Article
III except as follows:
(a) Years of Eligibility Service credited to an Employee
before a One-Year Break in Service shall be disregarded until and unless he has
completed one Year of Eligibility
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Service after the One-Year Break in Service, but shall then be counted in full
unless ignored pursuant to subsection (b) below.
(b) If a Participant has no Vested Benefit derived from
Employing Company contributions, Years of Eligibility Service before a period
of consecutive One-Year Breaks in Service shall be disregarded if the number of
consecutive One-Year Breaks in Service equals or exceeds the greater of five
(5) or the aggregate number of Years of Eligibility Service not previously
ignored. For purposes of this subsection (b), an Employee shall have two Years
of Eligibility Service upon completing at least 1,000 Hours of Service in both
(i) his first Anniversary Year and (ii) the first Plan Year beginning after his
Employment Commencement Date.
ARTICLE IV
Contributions to Trust
4.1 Employing Company Contributions. Not later than the time
prescribed by law (including extensions thereof) for filing their federal
income tax returns for their respective tax years, or such other time as may be
provided in applicable regulations under the Code, the Employing Companies
shall make contributions to the Trust in such amounts as the Plan Administrator
shall determine to be required pursuant to this Section 4.1.
4.1.1 Matching Contributions. Subject to the provisions of Section
4.1.2, the Employing Companies shall make Matching Contributions in accordance
with the following:
(a) Fixed Matching Contributions:
On behalf of each Participant, an amount equal to fifty
percent (50%) of the Participant's Pre-tax Contributions, but subject to the
following: (i) the aggregate amount of each Participant's Fixed Matching
Contributions on account of any Plan Year shall not exceed three percent (3%)
of his or her Compensation for such Plan Year paid up through the date that
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<PAGE> 29
the Fixed Matching Contribution (or each installment thereof) is made; and (ii)
all Fixed Matching Contributions shall be subject to all other applicable
limitations of this Article IV.
(b) Discretionary Matching Contributions:
An amount, if any, determined annually by the Board in its
sole discretion and allocated, subject to the limitations of this Article IV,
as an equal percentage of each Participant's Pre-tax Contributions made on
account of the same Plan Year.
(c) Limitations Applicable to Highly Compensated Employees:
All Matching Contributions made on behalf of Participants who
are Highly Compensated Employees shall be subject to the provisions of Code
Section 401(m) and Subsections (h) and (i) of Section 4.1.2 of this Plan.
4.1.2 General Provisions Applicable to Employing Company
Contributions.
(a) Eligibility for Employing Company Contributions. In order
to receive allocations of any Employing Company contributions made pursuant to
Section 4.1.1 for a Plan Year, a Participant must complete a Year of
Participation during the Plan Year.
(b) Separate Accounts. Separate accounts within each
Participant's Employer Contribution Account shall be maintained for those
portions of each Participant's Accrued Benefit that are attributable to (i)
Fixed Matching Contributions and (ii) Discretionary Matching Contributions.
Each such separate account shall be credited as of each Valuation Date with the
Participant's share of any applicable contributions, income, gains, losses,
distributions, expenses and other charges and any other adjustments.
(c) Vesting. All Employing Company contributions shall be
vested in accordance with Article VI of the Plan.
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<PAGE> 30
(d) Forfeitures. Any forfeitures of Matching Contributions
shall be applied to reduce future Fixed Matching Contributions by the Employing
Company which originally made the contributions that gave rise to the
forfeiture. If more than one Employing Company made such contributions, then
the forfeitures shall be used to reduce future Fixed Matching Contributions of
each such Employing Company in proportion to the contributions made by that
Employing Company that gave rise to the forfeiture compared to the
contributions made by all Employing Companies that gave rise to the forfeiture.
(e) Distribution. A Participant's Employer Contribution
Account shall be distributable only in accordance with the provisions of
Articles VIII and IX-governing Employer Contribution Accounts; provided that a
Participant's Discretionary Matching Contribution Account shall be distributed
as required pursuant to Section 4.1.2(i).
(f) Status and Use of Contributions. All contributions made
by the Employing Companies to the Trust shall be irrevocable and shall be used
solely to pay benefits under the Plan or to defray the expenses of
administering the Plan, except as otherwise provided in Section 16.4.
(g) No Employee Contributions Required. Except to the extent
of electing Pre-tax Contributions pursuant to Section 4.2 as a condition of
receiving Matching Contributions pursuant to Section 4.1.1, Participants shall
not be required to make contributions to the Trust.
(h) Average Actual 401(m) Contribution Percentage Test.
(i) In General. The Average Actual 401(m) Contribution
Percentage for Highly Compensated Employees for each Plan Year shall not exceed
the greater of:
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(I) the Average Actual 401(m) Contribution
Percentage for Participants who are Non-highly Compensated Employees for the
same Plan Year multiplied by 1.25; or
(II) the Average Actual 401(m) Contribution
Percentage for Participants who are Non-highly Compensated Employees for the
same Plan Year multiplied by 2.0; provided that the Average Actual 401(m)
Contribution Percentage for Participants who are Highly Compensated Employees
does not exceed the Average Actual 401(m) Contribution Percentage for
Participants who are Non-highly Compensated Employees by more than two (2)
percentage points or such lesser amount as the Secretary of the Treasury shall
prescribe to prevent the multiple use of this alternative limitation with
respect to any Highly Compensated Employee.
(ii) Special Rules.
(I) For purposes of the Average Actual 401(m)
Contribution Percentage test and the provisions of Section 4.1.2(i), the Actual
401(m) Contribution Percentage for any Participant who is a Highly Compensated
Employee and who is eligible to have Matching Contributions allocated to his
account under two or more plans described in Code Section 401(a) or
arrangements described in Code Section 401(k), that are maintained by one or
more of the Employing Companies, shall be determined as if the total of such
Matching Contributions was made under each such plan.
(II) If this Plan satisfies the requirements of Code
Section 410(b) only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of Code Section 410(b) only if
aggregated with this Plan, then this Section 4.1.2(h) shall be applied by
determining the Actual 401(m) Contribution Percentages of Participants as if
all such plans were a single plan.
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<PAGE> 32
(III) For purposes of determining the Actual 401(m)
Contribution Percentage of a Participant who is a Highly Compensated Employee,
the Actual 401(m) Contribution Percentages, any Matching Contributions, and the
Compensation of such Participant shall include the Actual 401(m) Contribution
Percentages, any Matching contributions, and the Compensation of Family
Members. Family Members, with respect to Highly Compensated Employees, shall be
disregarded as separate employees in determining the Actual 401(m) Contribution
Percentage both for Participants who are Non-highly Compensated Employees and
for Participants who are Highly Compensated Employees.
(IV) The determination and treatment of the Actual
401(m) Contribution Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury. To the
extent permitted by Treasury Regulations (including Regulations Section
1.401(m)-1(b)(5)), "qualified nonelective contributions" and "elective
contributions" (if any) within the meaning of Regulations Section 1.401(m)-1
(f)(15) and (3) shall be taken into account as necessary to satisfy the
Average Actual 401(m) Contribution Percentage Test.
Qualified nonelective contributions (if any) may be
treated as Matching Contributions to satisfy the Average Actual 401(m)
Contribution Percentage Test. Such contributions, whether or not treated as
Matching Contributions, shall be nonforfeitable when made and shall be
distributable to a Participant only at attainment of age 59-1/2, or in case of
a withdrawal under Section 8.4.2 of Article VIII, or in the event of
retirement, death, disability or other termination of service. Such
contributions shall also be distributable to Participants in the event of
termination of
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<PAGE> 33
the plan without establishment or maintenance of another defined contribution
plan (other than an ESOP or SEP), or in the event of the sale or other
disposition of substantially all of the Company's assets to an entity that does
not assume the Company's obligations under the Plan.
(V) In the case of a Highly Compensated Employee
whose "Actual 401(m) Contribution Percentage," as defined at Section 2.2 of
Article II, is determined under the family aggregation rules of Code Section
414(q)(6) because he is either a 5% owner or one of the 10 most Highly
Compensated Employees, the determination of the amount of excess aggregate
contributions shall be made as follows:
(a) The Actual 401(m) Contribution
Percentage shall be reduced by the amount required to cause the Employee's
Actual 401(m) Contribution Percentage to equal the ratio of the Highly
Compensated Employee with the next highest Actual 401(m) Contribution
Percentage. If a lesser reduction would enable the arrangement to satisfy the
Actual 401(m) Contribution Percentage test, only the lesser reduction shall be
made;
(b) The procedure in (a) above shall be
repeated until the Plan satisfies the Actual 401(m) Contribution Percentage
test;
(c) After the application of (a) and (b)
above, the highest Actual 401(m) Contribution Percentage remaining under the
Plan shall be the highest permitted Actual 401(m) Contribution Percentage; and
(d) Any excess aggregate contributions
shall be allocated among the Family Members in proportion to any Employee and
Matching Contributions of each Family Member that are combined to determine the
Actual 401(m) Contribution Percentage.
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For purposes of this Section 4.1.2 (h), the Actual 401(m) Contribution
Percentage for Family Members shall be determined by combining Employee
Contributions, Matching Contributions, amounts treated as Matching
Contributions and Compensation of all Family Members who are eligible to
participate in the Plan.
(iii) Coordination with Combined Section 401(k)/40l(m) Limit.
In general. Notwithstanding the general rule in paragraph (h)(i) above, the
Average Actual 401(m) Contribution Percentage for Highly Compensated Employees
for each Plan year shall not exceed the combined Code Section 401(k)/401(m)
limit as set forth in this paragraph (h)(iii). If the limit would be exceeded
for a Plan Year, the excess amount shall be deemed to be Excess Aggregate
401(m) Contributions and shall be corrected as provided in paragraph (i) below.
For purposes of this section, the combined Code Section 401(k)/401(m) limit
for any Plan Year is the greater of:
I. The sum of:
(A) 125 percent of the greater of (1) of the Actual Pre-tax
Contribution Percentage of the group of Non-highly Compensated Employees
eligible under the Plan for the Plan Year, or (2) the Actual 401(m)
Contribution Percentage of the group of Non-highly Compensated Employees
eligible under the Plan for the Plan Year, plus
(B) Two percentage points plus the lesser of I(A)( 1) or I(A)(2)
above. In no event, however, shall this amount in (B) exceed 200 percent of the
lesser of I(A)( 1) or I(A)(2) above; or
II. The sum of:
(A) 125 percent of the lesser of (I) the Actual Pre-Tax Contribution
Percentage of the group of Non-highly Compensated Employees eligible under the
Plan for the Plan Year, or (2)
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the Actual 401(m) Contribution Percentage of the group of Non-highly
Compensated Employees eligible under the Plan for the Plan Year, plus
(B) Two percentage points plus the greater of II(A)(1) or II(A)(2)
above. In no event, however, shall this amount in (B) exceed 200 percent of the
greater of II(A)(1) or II(A)(2) above.
(i) Forfeiture or Distribution of Excess Aggregate 401(m)
Contributions.
(i) In General. Notwithstanding any other provisions
of this Plan, Excess Aggregate 401(m) Contributions, plus any income and minus
any loss allocable thereto, (I) shall be forfeited by, if forfeitable, or (11)
if not forfeitable shall be distributed to Participants who are Highly
Compensated Employees and to whose accounts voluntary contributions (to any
plan permitting such contributions which must be aggregated with this Plan for
purposes of Section 4.1.2(h)) or Matching Contributions were allocated for a
Plan Year, and all of the required amounts shall be forfeited or distributed by
the last day of the next Plan Year. Excess Aggregate 401(m) Contributions shall
be treated as Annual Additions under the Plan.
(ii) Determination of Required Forfeitures or
Distributions. Any forfeiture or distribution of Excess Aggregate 401(m)
Contributions for a Plan Year shall be made by or to Participants who are
Highly Compensated Employees on the basis of the respective portions of the
Excess Aggregate 401(m) Contributions attributable to each of such Participants
as determined by reducing, first, the voluntary non-deductible contributions
(to any plan permitting such contributions which must be aggregated with this
Plan for purposes of Section 4.1.2(h)) permitted from such Participants and,
second, the Matching Contributions permitted on behalf of such Participants in
order of the Actual 401(m) Contribution Percentages beginning with the highest
of such percentages.
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(iii) Determination of Income or Loss. All Excess
Aggregate 401(m) Contributions shall be adjusted for income or loss. The income
or loss allocable to Excess Aggregate 401(m) Contributions shall be determined
by multiplying the income or loss allocable to the Participant's voluntary
non-deductible contribution account (in any plan which must be aggregated with
this Plan for purposes of Section 4.1.2(h)) and to his Matching Contribution
Accounts for the Plan Year by a fraction:
(I) the numerator of which is the Excess
Aggregate 401(m) Contributions on behalf of the Participant for the preceding
Plan Year, and
(II) the denominator of which is the sum of
the Participant's account balances in his voluntary nondeductible contribution
account, if any, and in his Matching Contribution Accounts on the last day of
the preceding Plan Year.
(iv) Forfeitures. Any forfeitures of Excess
Aggregate 401(m) Contributions shall be applied to reduce future contributions
by the Employing Company which originally made the contributions that gave rise
to the forfeiture. If more than one Employing Company made such contributions,
then the forfeitures shall be used to reduce future Employing Company
contributions of each such Employing Company in proportion to the contributions
made by that Employing Company that gave rise to the forfeiture compared to the
contributions made by all Employing Companies that gave rise to the forfeiture.
(v) Sources for Distribution of Excess Aggregate
401(m) Contributions. Excess Aggregate 401(m) Contributions shall be
distributed or forfeited as follows: first, they shall be distributed from the
Participant's voluntary nondeductible contribution account (in any plan which
must be aggregated with this Plan for purposes of Section 4.1.2(h)) to the
extent of the balance in such account and, second as necessary, they shall be
forfeited if otherwise
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forfeitable under the terms of the Plan (or, if not forfeitable, distributed)
from the Participant's Matching Contribution Accounts.
(vi) Ordering of Pre-tax Contribution and 401(m)
Contribution Determinations. The determination of Excess Aggregate 401(m)
Contributions shall be made after first determining the Excess Individual
Pre-tax Contributions and then determining the Excess Aggregate Pre-tax
Contributions.
4.2 Pre-tax Contributions. The Employing Companies shall contribute and
allocate to each Participant's Pre-tax Contribution Account an amount equal to
the Pre-tax Contributions elected by the Participant pursuant to a compensation
reduction agreement with the Employing Company as provided in Section 4.2.1 and
subject to the provisions of Section 4.2.2.
4.2.1 Compensation Reduction Agreements. Any Participant
desiring to authorize Pre-tax Contributions to be made to the Trust by an
Employing Company must do so by filling out, signing and filing with the Plan
Administrator a compensation reduction agreement on a form supplied by the Plan
Administrator. Any Pre-tax Contributions authorized by a Participant (a) must
be in whole-number percentages (e.g., 1%, 2%, 3%, etc.) of Compensation, (b)
will apply to a Participant's entire Compensation (except as limited in Section
4.2.2) and (c) shall be funded by payroll deductions against the Participant's
Compensation.
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4.2.2 General Provisions Applicable to Pre-tax Contributions.
(a) Maximum Amount of Pre-tax Contributions. The maximum
amount of Pre-tax Contributions made on behalf of any Participant shall be
subject to all of the following limitations:
(i) no Pre-tax Contributions shall be made on
account of a Plan Year in amounts which the Plan Administrator determines will
cause the Plan to fail the Average Actual Pre-tax Contribution Percentage test
of Section 4.2.2(e);
(ii) no Pre-tax Contributions shall be made to the
Trust for any Participant during any calendar year in excess of $7,000
multiplied by the Adjustment Factor;
(iii) no Pre-tax Contribution shall be made on
account of any Plan Year which would cause the Participant's Annual Addition to
exceed the maximum Annual Addition permitted for such Plan Year pursuant to the
provisions of Section 4.4 after taking into account all Contributions
previously made or committed to be made on behalf of the Participant for such
Plan Year but prior to taking into account all Matching Contributions (and any
other voluntary contributions to a plan which must be aggregated with the Plan
for purposes of Section 4.4) made on behalf of or by the Participant for such
Plan Year.
(b) Commencement of Pre-tax Contributions. Each Participant
shall be eligible to elect a level of Pre-tax Contributions effective as of the
later of his or her Entry Date or the Restatement Date, or as of the first pay
date of any subsequent Plan Year quarter (January 1, April 1, July 1 or October
1) that follows receipt by the Plan Administrator of the Participant's
Compensation reduction agreement by at least fifteen (15) days (or by such
other deadline as the Plan Administrator may set from time to time); provided
that each election pursuant to this Subsection (b) and each
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modification pursuant to Subsection (c) shall be in whole percentages only.
(c) Modification and Termination of Pre-tax Contributions. A
Participant's election to commence Pre-tax Contributions shall remain in effect
until modified or terminated. A Participant may modify his compensation
reduction agreement to increase or decrease the rate of Pre-tax Contributions
made on his behalf effective on the first pay date of any Plan Year quarter
(January 1 April 1, July 1 or October 1).
(d) Distribution of Excess Individual Pre-tax Contributions.
(i) In General. Notwithstanding any other provision
of the Plan, Excess Individual Pre-tax Contributions, plus any income and minus
any losses allocable thereto, shall be distributed no later than the first
April 15 following the Effective Date, and each April 15 thereafter, to
Participants to whose accounts Excess Individual Pre-tax Contributions were
allocated for the preceding calendar year and who claim Excess Individual
Pre-tax Contributions for such calendar year. Excess Individual Pre-tax
Contributions shall be treated as Annual Additions under the Plan.
(ii) Requirements for Making a Claim. A
Participant's claim for distribution of Excess Individual Pre-tax
Contributions:
(I) shall be in writing;
(II) shall be submitted to the Plan
Administrator not later than the March 1 following the calendar year for which
Excess Individual Pre-tax Contributions have been made;
(III) shall specify the amount of the
Participant's Excess Individual Pre-tax Contributions for the calendar year;
and
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(IV) shall be accompanied by the
Participant's written statement that if such amounts are not distributed, then
the Participant's Excess Individual Pretax Contributions, when added to amounts
deferred under other plans or arrangements described in Code Sections 401(11:),
408(k), or 403(b), will exceed the limit imposed on the Participant by Code
Section 402(g) for the year in which the Excess Individual Pre-tax
Contributions occurred.
(iii) Determinations of Income or Loss. Any Excess
Individual Pre-tax Contribution shall be adjusted for income or loss before
being distributed to the Participant. The income or loss applicable to Excess
Individual Pre-tax Contributions shall be determined by multiplying the income
or loss allocable to the Participant's Pre-tax Contribution Account for the
Plan Year by a fraction:
(I) the numerator of which is the Excess
Individual Pre-tax Contributions made on behalf of the Participant for the
preceding Plan Year and
(II) the denominator of which is the
account balance in the Participant's Pre-tax Contribution Account on the last
day of the preceding Plan Year.
(e) Average Actual Pre-tax Contribution Percentage Test.
(i) In General. The Average Actual Pre-tax
Contribution Percentage for Highly Compensated Employees for each Plan Year
shall not exceed the greater of:
(I) the Average Actual Pre-tax Contribution
Percentage for Participants who are Non-highly Compensated Employees for the
same Plan Year multiplied by 1.25; or
(II) the Average Actual Pre-tax
Contribution Percentage for Participants who are Non-highly Compensated
Employees for the same Plan Year multiplied
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by 2.0; provided that the Average Actual Pre-tax Contribution Percentage for
Participants who are Highly Compensated Employees does not exceed the Average
Actual Pre-tax Contribution Percentage for Participants who are Non-highly
Compensated Employees by more than two (2) percentage points or such lesser
amount as the Secretary of the Treasury shall prescribe to prevent the multiple
use of the alternative limitation with respect to any Highly Compensated
Employee.
(ii) Special Rules.
(I) The Actual Pre-tax Contribution
Percentage for any Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to have Pre-tax Contributions allocated to his
account under two or more arrangements described in Code Section 401(k) that
are maintained by one or more of the Employing Companies shall be determined as
if such Pre-tax Contributions were made under a single arrangement.
(II) If any non-elective contributions made
by any Employing Companies to any one or more Section 401(k) arrangements
referred to in paragraph 1 above qualify for, and are actually taken into
account for purposes of; determining a Participant's Actual Pre-tax
Contribution Percentage under such arrangements, then such qualified
non-elective Employing Company contributions shall be taken into account in
applying the Average Actual Pre-tax Contribution Percentage test and all other
rules of this Subsection (e).
(III) For purposes of determining the
Actual Pre-tax Contribution Percentage of a Participant who is a Highly
Compensated Employee, the Pre-tax contributions, any qualified non-elective
Employing Company contributions referred to in paragraph II above, and the
Compensation of such Participant shall include the Pre-tax Contributions, any
qualifying non-elective Employee Company contributions and the
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Compensation of Family Members. Family Members, with respect to Highly
Compensated Employees, shall be disregarded as separate employees in
determining the Actual Pre-tax Contribution Percentage both for Participants
who are Non-highly Compensated Employees and for Participants who are Highly
Compensated Employees.
(IV) The determination and treatment of
Pre-tax Contributions, any qualified non-elective Employing Company
contributions referred to in paragraph II above, and the Actual Pre-tax
Contribution Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(f) Distribution of Excess Aggregate Pre-tax Contributions.
(i) In General. Notwithstanding any other provisions
of the Plan, Excess Aggregate Pre-tax Contributions, plus any income and minus
any loss allocable thereto, shall be distributed to Participants who are Highly
Compensated Employees and to whose accounts Pre-tax Contributions (and, if
applicable, qualified non-elective Employing Company contributions referred to
in paragraph (e)(ii)(II) above) were allocated for a Plan Year, and all of the
required amounts shall be distributed within two and one half (2-1/2) months
after the end of such Plan Year; provided, however, that if the Plan
Administrator is unable to determine and distribute all of the required amounts
within such two-and-one-half-month period, then all of the required amounts
shall nevertheless be distributed by the last day of the Plan Year which
includes such two-and-one-half-month period. Excess Aggregate Pre-tax
Contributions shall be treated as Annual Additions under the Plan.
(ii) Determination of Required Distributions. Any
distribution of Excess Aggregate Pre-tax Contributions for a Plan Year shall be
made to Participants who are Highly Compensated Employees on the basis of the
respective portions of the Excess Aggregate
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Pre-tax Contributions attributable to each of such Participants as determined
by reducing the Pretax Contributions permitted on behalf of such Participants
in order of the Actual Pre-tax Contribution Percentages beginning with the
highest of such percentages.
(iii) Determination of Income or Loss. All Excess Aggregate
Pretax Contributions shall be adjusted for income or loss. The income or loss
allocable to Excess Aggregate Pre-tax Contributions shall be determined by
multiplying the income or loss applicable to the Participant's Pre-tax
Contribution Account for the Plan Year by a fraction:
(I) the numerator of which is the Excess
Aggregate Pre-tax Contributions on behalf of the Participant for the preceding
Plan Year and
(II) the denominator of which is the
account balance in the Participant's Pre-tax Contribution Account plus, if
applicable, the account balance in any qualified non-elective Employing Company
contribution account) on the last day of the preceding Plan Year.
(iv) Sources for Distribution of Excess Aggregate
Pre-tax Contributions. Excess Aggregate Pre-tax Contributions shall be
distributed as follows: first, they shall be distributed from the Participant's
Pre-tax Contribution Account to the extent of the balance in such account and
from other such accounts of the Participant in any other arrangements described
in Code Section 401(k) maintained by an Employing Company to the extent of such
balances and, second as necessary, they shall be distributed from any qualified
non-elective Employing Company contribution account (referred to in paragraph
(e)(ii)(II) above) in such other 401(k) arrangements.
(g) Separate Accounts. A separate Pre-tax Contribution
Account shall be maintained for that portion of each Participant's Accrued
Benefit that is attributable to Pre-tax
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Contributions. Each such separate account shall be credited as of each
Valuation Date with the Participant's share of any applicable contributions,
income, gains, losses, distributions, expenses and other charges and any other
adjustments.
(h) Vesting. Pre-tax Contributions shall be fully vested and
non-forfeitable at all times.
(i) Distribution. A Participant's Pre-tax Contribution
Account shall be distributable only in accordance with the provisions of
Articles VIII and IX governing Pre-tax Contribution Accounts; provided that a
Participant's Pre-tax Contribution Account shall be distributed as required
pursuant to this Section 4.2
(j) Deadline for Pre-tax Contributions. Pre-tax Contributions
shall be contributed and allocated to the Trust no later than thirty (30) days
after the close of the Plan Year for which the Pre-tax Contributions are deemed
to be made, or such other time as may be provided in applicable regulations
under the Code.
4.3 Employee Contributions. Not later than the time prescribed in
Section 4.3.2, as applicable, or such other time as may be provided in
applicable regulations under the Code, Participants may make contributions to
the Trust of such types and in such amounts as are permitted by Sections 4.3.1
and 4.3.2.
4.3.1 [Reserved].
4.3.2 Rollover Contributions and Direct Transfers into Plan.
Subject to the Provisions of Section 8.3.1(c), with the approval of the Plan
Administrator to be exercised in a non-discriminatory manner and without regard
to any limitation on contributions contained in the Plan, (i) the Trust may
receive as a Rollover Contribution any amounts received by a Participant from
another qualified retirement plan, either directly or through the medium of an
Individual Retirement Account
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eligible to hold such distribution, and (ii) the Trust may receive as a
Rollover Contribution any amounts held for the benefit of a Participant by the
trustee of another qualified retirement plan, provided that such transfer is
made directly from the trustee of such other plan to the Trustee and that such
other plan permits such a direct transfer; provided that each Rollover
Contribution of either type shall be subject to the following requirements:
(a) Protection of the Plan. No Rollover Contribution may be
received if the Plan Administrator determines that it may adversely affect the
qualified tax status of the Plan or of the Trust.
(b) Eligibility for Rollover Treatment. No Rollover
Contribution may be received unless the transfer to the Trust is either made
within sixty (60) days of the Participant's receipt of the rollover
distribution or is made by a direct trustee-to-trustee transfer and, in either
case, the Plan Administrator has first determined that the Participant is
allowed under the Code to make a Rollover Contribution to the Trust.
(c) Service Requirement. For purposes of this Section 4.3.2,
an Employee shall be treated as a Participant immediately upon becoming an
Employee.
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<PAGE> 46
4.3.3 General Provisions Applicable to Employee
Contributions.
(a) Separate Accounts. Separate accounts within each
Participant's Employee Contribution Accounts shall be maintained for those
portions of the Participant's Accrued Benefit that are attributable to Rollover
Contributions and any other type of voluntary employee contribution heretofore
or hereafter permitted under the Plan and made by or on behalf of the
Participant. Such separate account shall be credited as of each Valuation Date
with the Participant's share of any applicable contributions, income, gains,
losses, distributions, expenses and other charges and any other adjustments.
(b) Vesting. All Employee Contribution Accounts shall be
fully vested and non-forfeitable at all times.
(c) Distribution. A Participant's Employee Contribution
Accounts shall be distributable only in accordance with the provisions of
Articles VIII and IX governing Employee Contribution Accounts.
4.4 Limitations on Annual Additions.
4.4.1 In General. In no event shall the Annual Addition to
all of a Participant's accounts for any Limitation Year exceed the lesser of
$30,000 (multiplied by any Adjustment Factor in effect for the Limitation Year)
or 25% of such Participant's total Section 415 Compensation. If a short
Limitation Year is created because of an amendment changing the Limitation Year
to a different twelve-consecutive-month period, the maximum permissible amount
will not exceed the amount determined in the paragraph above multiplied by the
following fraction:
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Number of months in the short Limitation Year
12
4.4.2 Multiple Defined Contribution Plans. If a Participant is also a
participant in one or more additional qualified defined contribution plans or
welfare benefit funds (as defined in Code Section 419(e)) maintained by any
Employing Company (or its affiliates within the meaning of Code Sections 415(h)
or 414(m)), the Annual Addition made to the Participant's account under this
Plan shall be limited so that the sum of the Annual Additions made to the
Participant's accounts under all such plans shall not exceed the limitation set
forth in Section 4.4.1. Amounts allocated after March 31, 1984, to an
individual medical account as defined in Code Section 415(1)(1), which is part
of a defined benefit plan maintained by an Employing Company, are treated as
Annual Additions to a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee as defined in Code Section
419(d)(3), under a welfare benefit fund as defined in Code Section 419(e),
which is maintained by an Employing Company, are treated as Annual Additions to
a defined contribution plan.
4.4.3 Combination of Defined Contribution and Defined Benefit Plans.
If a Participant in this Plan is also a participant in a defined benefit plan
or plans maintained by any Employing Company (or its affiliates within the
meaning of Code Sections 415(h) or 414(m)), the Annual Additions made to the
Participant's account under this Plan shall be limited so that the sum of the
following fractions may not exceed 1.0 for any Limitation Year:
(a) Defined Benefit Plan Fraction. A fraction:
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(i) the numerator of which is the projected annual
benefit of the Participant under the defined benefit plan or plans and
(ii) the denominator of which is the lesser of (1)
the product of 1.25 (1.00 if any such plan is either a "top heavy plan" for
which no modification in accrued benefits has been made pursuant to Code
Section 416(h)(2) or a "super top heavy plan" (each as defined in Code Sections
416(g) and 416(h) respectively)) multiplied by the projected annual benefit of
the Participant under such plan or plans if the same provided the maximum
dollar benefit allowable or (II) the product of 1.40 multiplied by the
projected annual benefit of the Participant under such plan or plans if the
same provided the maximum percentage benefit allowable, calculated in each case
as if the Employing Company had no defined contribution plan and as of the
close of the Limitation Year;
(b) Defined Contribution Plan Fraction. A fraction:
(i) the numerator of which is the sum of the Annual
Additions to the Participant's account in the defined contribution plan or
plans and the Annual Additions attributable to all welfare benefit funds (as
defined in Code Section 419(e)) maintained by the Employing Company (or its
affiliates within the meaning of Code Sections 415(h) or 414(m)) as of the
close of the Limitation Year and
(ii) the denominator of which is the sum of the
lesser of (1) the product of 1.25 (1.00 if any such plan is either a "top heavy
plan" for which no modification in contributions has been made pursuant to Code
Section 416(h)(2) and Section 9.3(b)(iv) of this Plan, or a "super top heavy
plan" (each as defined in Code Sections 416(g) and 416(h) respectively))
multiplied by the maximum dollar Annual Additions allowable to the
Participant's accounts or (II) the product of 1.40 multiplied by the maximum
percentage Annual Additions
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allowable to the Participant's accounts, calculated in each case as the
contributions which could have been made under a defined contribution plan with
respect to all years of service with the Employing Company and as if the
Employing Company had no defined benefit plan.
4.4.4 Protective Procedures. The following procedures shall be applied
to determine whether the limitations set forth above may be exceeded by the
allocation of contributions to a Participant's accounts and, if so, to avoid
exceeding the limitations.
(a) Estimation. Prior to determining the Participant's actual
Section 415 Compensation for the Limitation Year, the Plan Administrator may
determine the maximum permissible Annual Addition for a Participant on the
basis of a reasonable estimation of the Participant's Section 415 Compensation
for the Limitation Year, uniformly determined for all Participants similarly
situated.
(b) Determination. As soon as is administratively feasible
after the end of the Limitation Year, each Participant's maximum permissible
Annual Addition for the Limitation Year shall be determined on the basis of the
Participant's actual Section 415 Compensation for the Limitation Year.
(c) Disposition of Excess. If there is an allocation
pensation for the Limitation Year. in excess of such amount, the excess shall
be eliminated in accordance with Code Section 415 and regulations promulgated
thereunder as follows:
(i) Any Voluntary Non-deductible Contributions shall
be returned to the Participant, together with any gains attributed to such
contributions and less any losses, to the extent necessary to eliminate the
excess amount;
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(ii) Any Pre-tax Contributions shall be returned to
the Participant, together with any gains attributable to such contributions and
less any losses, to the extent necessary to eliminate the excess amount;
(iii) If after the application of steps (i) and (ii)
an excess amount still exists, and the Participant is covered by the Plan at
the end of the Limitation Year, the excess amount in the Participant's accounts
shall be used to reduce Matching Contributions and Pre-tax Contributions for
such Participant in the next Limitation Year, and each succeeding Limitation
Year if necessary.
(iv) If after the application of steps (i) and (ii)
an excess amount still exists, and the Participant is not covered by the Plan
at the end of the Limitation Year, the excess amount shall be held unallocated
in a suspense account. The suspense account shall be applied to reduce future
Matching Contributions and Pre-tax Contributions for all remaining Participants
in the next Limitation Year, and each succeeding Limitation Year if necessary.
(v) If Employing Company contributions are reduced
for a Limitation Year pursuant to steps (iii) or (iv), Matching Contributions
shall be reduced before Pre-tax Contributions.
(d) No Allocation of Investment Gains and Losses. If a
suspense account is in existence at any time during the Limitation Year
pursuant to this Section 4.4.4, it shall not participate in the allocation of
the Trust's investment gains and losses.
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ARTICLE V
Benefits
5.1 Retirement Benefits
5.1.1 Right to a Benefit Upon reaching his Normal Retirement
Date, a Participant shall be entitled to receive a nonforfeitable retirement
benefit equal to his Accrued Benefit as determined in accordance with Article
VII, payable in the form provided in Article VIII, and commencing on his
Benefit Commencement Date as determined in Article IX.
5.1.2 Postponed Retirement. If a Participant remains in an
Employing Company's Service after his Normal Retirement Date, the payment of
his retirement benefit shall be deferred until his Postponed Retirement Date
(but subject to the provisions of Article IX) and until then the Participant
shall continue to participate and have all the rights under the Plan that he
would have if he had not reached his Normal Retirement Date. On the
Participant's Postponed Retirement Date, he shall be entitled to benefits equal
to his Accrued Benefit as determined in accordance with Article VII, payable in
the form provided in Article VIII, and commencing on his Benefit Commencement
Date as determined in Article IX.
5.2 Disability Benefits. If a Participant becomes Disabled, and his
Service with the Employing Companies is terminated prior to his retirement,
death or other termination of employment, then he shall be entitled to receive
his Accrued Benefit as determined in accordance with Article VII, payable in
the form provided in Article VIII, and commencing on his Benefit Commencement
Date as determined in Article IX.
5.3 Death Benefits.
5.3.1 Right to a Death Benefit. If a Participant dies prior
to his retirement, or other termination of Service with the Employing
Companies, then his designated Beneficiary
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shall be entitled to receive his Accrued Benefit, as determined in accordance
with Article VII, payable in the form provided in Article VIII, and commencing
on the Benefit Commencement Date as determined in Article IX.
5.3.2 Limitation on Rights of a Married Participant's
Beneficiary. The right of a Participant's designated Beneficiary to receive
death benefits pursuant to this Section 5.3 shall be subject to any rights of
the Participants surviving Spouse if the requirements of Section 8.3 have not
been met with respect to such designated Beneficiary.
5.3.3 No Beneficiary. If no Beneficiary has been designated,
or the designated Beneficiary and any Contingent Beneficiaries shall not
survive the Participant, distribution shall be made to the Participant's
surviving Spouse or, if there is none, then to his issue per stripes. If there
is neither surviving Spouse nor issue then living, the benefit may be paid to
the deceased Participant's executor or administrator or applied to the payment
of his death or funeral expenses, as the Plan Administrator may direct.
5.4 Termination Benefits. If a Participant terminates his Service with
the Employing Companies for any reason other than retirement, Disability or
death and either (a) at the close of the Plan Year he is not again an Employee
or (b) any of the conditions of Section 9.2 for immediate payment of the
termination benefit were met with respect to the terminated Participant prior
to the close of the Plan Year, then he shall be entitled to a termination
benefit equal to his Vested Benefit, as determined in accordance with Articles
VI and VII, payable in the form provided in Article VIII, and commencing on his
Benefit Commencement Date as determined in Article IX.
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ARTICLE VI
Vesting
6.1 Vesting Percentage. The Vesting Percentage of a Participant who is
in the Service of an Employing Company upon the earlier of his (a) 65th
birthday, (b) Disability, or (c) death shall be 100%. If a Participant's
Service is terminated prior to the earliest of the times determined under the
preceding sentence, his Vesting Percentage shall be determined as follows:
Years of Vesting Service Vesting Percentage Forfeited Percentage
- ------------------------ ------------------ --------------------
Less than 2 Years 0% 100%
2 Years but less than 3 20% 80%
3 Years but less than 4 40% 60%
4 Years but less than 5 60% 40%
5 Years but less than 6 80% 20%
6 Years or more 100% 0%
6.2 Forfeiture.
(a) In General. The forfeited percentage (determined from the
table in Section 6.1) of a former Participants Employer Contribution Account
shall be held until the earlier of (i) payment to the Participant of his Vested
Benefit or (ii) he incurs a One-Year Break in Service and then it shall be
forfeited and dealt with as provided in Article IV. Except if a forfeiture must
be restored pursuant to Section 6.5, a forfeiture under the provisions of this
Section 6.2 shall be permanent.
(b) Amounts Not Forfeited. Any balances remaining in a former
Participant's Employer Contribution Account after a forfeiture pursuant to
subsection (a) shall be nonforfeitable and the former Participant's Vested
Benefit shall include such non-forfeitable balances.
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(c) Accounting After Reemployment. If a former Participant is
reemployed by an Employing Company, any non-forfeitable balances held in the
Trust pursuant to subsection (1)) shall be held as sub-accounts in the
Participant's respective Employer Contribution Accounts until the Participant's
Vesting Percentage equals 100%, at which time such sub-accounts shall be
combined with the Participant's respective regular Employer Contribution
Accounts.
6.3 Reemployment After Termination of Service. If a former Participant
is reemployed by an Employing Company and:
(a) no portion of the Participant's Vested Benefit has been
paid to such Participant in accordance with Section 8.1, the balance in his
Employer Contribution Accounts shall be determined in accordance with Section
6.2 (and, if applicable, Section 6.5) and his Vesting Percentage shall be based
upon the number of his Years of Vesting Service after applying Section 6.6;
(b) any portion of the Participant's Vested Benefit has been
paid to such Participant in accordance with Section 8.1 and such Participant
has repaid such portion in accordance with Section 6.4, the balance in his
Employer Contribution Accounts shall be determined in accordance with Sections
6.2 and 6.5, and his Vesting Percentage shall be based upon the number of his
Years of Vesting Service after applying Section 6.6; or
(c) any portion of the Participant's Vested Benefit has been
paid to such Participant in accordance with Section 8.1 and such Participant
has not repaid such portion in accordance with Section 6.4, the balance in his
Employer Contribution Accounts shall be determined in accordance with Section
6.2, and his Vesting Percentage shall be based upon the number of his Years of
Vesting Service after his Reemployment Commencement Date.
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6.4 Repayment of Vested Benefits. If at or after a Participant's prior
separation from Service, he received all or any portion of his Vested Benefit,
he may, if he returns to Service, repay the full amount received before the
earlier of (a) five (5) years from his Reemployment Commencement Date or (1))
his number of consecutive One-Year Breaks in Service equals five (5).
6.5 Restoration of Forfeitures.
(a) In General. A former Participant who has forfeited a
portion of any Employer Contribution Account pursuant to Section 6.2 shall have
the forfeited amount restored (without interest or other adjustment for Trust
income, gains or losses during the period of forfeiture) to such Employer
Contribution Account if:
(i) the former Participant is reemployed by an
Employing Company before incurring five (5) consecutive One-Year Breaks in
Service; or
(ii) if the former Participant received a
distribution of any portion of his Vested Benefit, the former Participant
repays in accordance with the provisions of Section 6.4 such portion of his
Vested Benefit that he received. No forfeiture shall be restored to any
Participant who does not meet the requirement of paragraph (i) and, if
applicable, the requirement of paragraph (ii).
(b) Accounting for Restored Forfeitures. Any forfeiture
restored pursuant to Subsection (a) shall be credited to a sub-account in each
of the Participant's forfeited Employer Contribution Accounts, and the
Participant's Vested Benefit attributable to such subaccounts at any relevant
time shall equal an amount X)determined by the following formula:
X = P(AB + (R x D)) - (R x D)
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For purposes of applying this Formula:
P is the Participant's Vesting Percentage determined pursuant to
Section 6.1 at the relevant time.
D is the amount of the Participant's Vested Benefit originally
distributed to the Participant.
R is the ratio of (i) the balance of the Participant's forfeited
Employer Contribution Account at the relevant time to (ii) the balance of such
Employer Contribution Account after the original distribution of his Vested
Benefits.
AB is the balance of the Participant's forfeited Employer Contribution
Account at the relevant time.
The relevant time is the time at which, under the Plan, the
Participant's Vesting Percentage in his forfeited Employer Contribution Account
cannot increase.
(c) Source of Restored Forfeitures. Any forfeitures restored
pursuant to Subsection (a) shall be restored from amounts forfeited pursuant to
Section 6.2 during the Plan Year in which the restoration is to be made.
Notwithstanding any provisions of the Plan to the contrary, if the aggregate
amount to be so restored to the Employer Contribution Accounts of Participants
exceeds the amount of such forfeitures, the Employing Companies shall make a
contribution to the Plan in the amount of such excess. Any such contribution
shall not be allocated under Article IV.
6.6 Years of Vesting Service and Break-in-Service Rules. All Years of
Vesting Service shall be taken into account for the purpose of determining a
Participant's Vesting Percentage except as follows. Notwithstanding Section
6.3:
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(a) Years of Vesting Service credited to an Employee before a
One-Year Break in Service shall be disregarded until and unless he has
completed one Year of Vesting Service after the One-Year Break in Service.
(b) If a Participant has no Vested Benefit derived from
Employing Company contributions, Years of Vesting Service before a period of
consecutive One-Year Breaks in Service shall be disregarded if the number of
consecutive One-Year Breaks in Service equals or exceeds the greater of five
(5) or the aggregate number of Years of Vesting Service not previously ignored.
(c) Years of Vesting Service credited to an Employee after
five (5) consecutive One-Year Breaks in Service shall be disregarded in
determining his Vesting Percentage in the balance of his Employer Contribution
Accounts that was credited prior to the Service break.
ARTICLE VII
Calculation of Benefits and Accounts
7.1 Calculation of Benefits. For purposes of calculating the amount of
benefits payable under the Plan, the Vested Benefit and Accrued Benefit of a
Participant, former Participant or Beneficiary shall be determined as of the
latest Valuation Date coinciding with or following the event which gives rise
to the benefit and prior to or coinciding with commencement of payment of the
benefit, or as of such other date as the Plan Administrator shall select in any
instance in accordance with a non-discriminatory policy.
7.2 Calculation of Accounts. Any contribution or income, gain, loss,
expense or other credit or charge shall be credited to or charged against the
Participant's accounts on the earliest
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Valuation Date coinciding with or next following the realization or incurrence
of the item. Any benefit payment shall be charged against the Participant's
accounts as of the day after the Valuation Date utilized under Section 7.1 to
determine the amount of the benefit payment.
ARTICLE VIII
Payment of Benefits
8.1 Form of Benefits.
8.1.1 Retirement. Disability or Termination Benefits.
Benefits payable on account of a Participant's retirement, Disability or
termination of Service prior to attaining retirement age shall be payable in
either of the following forms, as selected by the Participant:
(a) in a lump sum; or
(b) except as provided in Section 9.8, in annual
installments payable for a period of years not to exceed the life expectancy of
the Participant or the joint life expectancies of the Participant and his
Beneficiary; provided that: (i) at least 51% of the Participant's Vested
Benefit (as determined when payment commences) shall be payable during the
Participant's life expectancy (as determined when payment commences) and (ii)
the amount distributed each year shall at least equal the quotient obtained by
dividing the Participant's Vested Benefit by the applicable life expectancy or
joint life expectancy. (For purposes of this Subsection (B), payments shall be
calculated by use of the return multiples specified in Section 1.72-9 of the
Income Tax Regulations and the life expectancies of the Participant and his
Spouse (if a Beneficiary) shall be redetermined annually.)
8.1.2 Death Benefits. Benefits payable on account of a
Participant's death shall be payable in either of the following forms, as
selected by the Participant's Beneficiary:
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(a) in a lump sum; or
(b) except as provided in Section 9.8, in annual installments
payable for a period of years not to exceed five (5); provided however, that:
(i) if distribution has commenced pursuant to Section 8.1.1 (b) and the
Participant dies before receiving his entire interest, distribution shall
continue to the Beneficiary in accordance with Section 8.1.1(b) unless the
Beneficiary elects to accelerate payment of the benefit or (ii) if distribution
has not commenced pursuant to Section 8.1.1(b), any portion payable to or for
the benefit of the Participant's Beneficiary may (at the election of such
Beneficiary) be paid over a period of years not to exceed the life expectancy
of the Beneficiary (in accordance with applicable regulations pursuant to Code
Section 401(a)(9)), starting within one year of the Participant's death if such
Beneficiary (including a Contingent Beneficiary) is not the Participant's
Spouse and (if later) at any time until the Participant would have attained age
70 1/2 if such Beneficiary is the Participant's spouse. (For purposes of this
Subsection (1'), payments shall be calculated by use of the return multiples
specified in Section 1.72-9 of the Income Tax Regulations. Furthermore, any
amount paid to the Participant's child shall be treated as if it had been paid
to the Participant's surviving Spouse if the amount becomes payable to the
Spouse when the child reaches the age of majority.
8.2 Notice and Election of Benefit Form. As required by section
1.411(a)-11(c) of the Income Tax Regulations, not less than 30 days and not
more than 90 days before payment or commencement of a benefit, the Plan
Administrator shall give notice to a Participant or Beneficiary concerning the
alternative methods by which such benefits are to be paid.
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(a) After receiving such notice, and subject to Paragraph (b)
below, a Participant or Beneficiary shall elect a form of benefit (if
applicable) and a method of distribution on a form provided by the Plan
Administrator.
(b) If a distribution is one to which sections 401(a)(l 1)
and 417 of the Internal Revenue Code do not apply, such distribution may
commence less than 30 days after the notice required under section 1.411(a)-
11(c) of the Income Tax Regulations is given, provided that:
(i) the Plan Administrator clearly informs the
Participant or Beneficiary that such individual has a right to a period of at
least 30 days after receiving the notice to consider the decision of whether or
not to elect a distribution (and, if applicable, a particular distribution
option), and
(ii) such Participant or Beneficiary, after
receiving the notice, affirmatively elects a distribution.
8.3 Annuity Benefits.
8.3.1 Annuity Benefit Generally Not Required.
(a) In General. This Plan is a profit sharing plan
which meets the following two conditions: (i) Participants may not elect
benefit payments in the form of a life annuity and (ii) upon the death of a
Participant who was married to his surviving Spouse throughout the one-year
period ending on the date of the Participant's death, the Participant's Vested
Benefit shall be paid to the Participant's surviving Spouse unless the
requirements of Subsection (b) are met for payment to an alternate designated
Beneficiary.
(b) Conditions on Payment of Death Benefits to a
Designated Beneficiary. Upon the death of a Participant prior to payment of his
Plan benefits on account of retirement, Disability or termination, his Vested
Benefit shall be paid to its designated
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Beneficiary if all of the requirements specified in paragraph (i) are met or if
any of the conditions of paragraph (ii) exist or the condition of paragraph
(iii) exists:
(i) the Participant's surviving Spouse has
consented in writing to an alternate designated Beneficiary (to receive the
whole or any part of any death benefit payable under the Plan) and such
consent: (1) acknowledges the effect of such designation; (11) is witnessed by
the Plan Administrator or its designate or a notary public; and (III) is the
most recent designation submitted to the Plan Administrator by or for the
Participant at the date of his death;
(ii) the consent referred to in paragraph
(i) cannot be obtained because it is established to the satisfaction of the
Plan Administrator that: (I) the Participant has no surviving Spouse; (II) the
Participant's surviving Spouse cannot be located; or (III) other circumstances,
as may be provided for in regulations under the Code, exist that prevent the
Participant from obtaining the consent referred to in Paragraph (i); or,
(iii) the consent referred to in paragraph
(i) is not required because the Participant was not married to his Spouse
throughout the one-year period ending on the date of the Participant's death.
(c) Restrictions on Transfers into Plan. The Plan
shall not accept any direct or indirect transfers of any benefits from a
defined benefit plan, money purchase pension plan (including a target benefit
plan), or a stock bonus or profit sharing plan which provides for a life
annuity form of payment to a Participant.
8.3.2 Forms of Payment of Benefits Accrued Before 1989.
Notwithstanding any other provision in this Article VIII, if a Participant
accrued a benefit under the Plan prior to January 1, 1989 (the effective date
of its restatement hereby), this Section 8.3.2 shall apply to
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such pre-1989 Accrued Benefit. For purposes of this Section 8.3.2, a
Participant's "pre-1989 Accrued Benefit" is the total amount of his Accrued
Benefit as of December 31, 1988.
(a) Form of Payment. Subject to the conditions set
forth below, in addition to the forms of payment set forth in Sections 8.1.1
and 8.1.2, a Participant may elect to receive his pre-1989 Accrued Benefit in
the form of an annuity which may be purchased from an insurance company by the
Trustees for the Participant and his Spouse or Beneficiary, if applicable.
(b) Election of Benefit. A Participant who is
married on his or her Annuity Starting Date and elects an annuity for a payment
in accordance with this Section 8.3.2 shall receive distribution of his benefit
in the form of a Qualified Joint and Survivor Annuity, unless the Participant
has previously waived his or her right to receive distribution of benefits in
this form. The waiver must be executed by the Participant and consented to by
the Participant's Spouse in accordance with paragraph (d) below during the
90-day period ending on the Participant's Annuity Starting Date. The Spouse's
consent shall permit the Participant to elect any optional form of benefit
available under the Plan and to designate any contingent Beneficiary. Such a
general consent must acknowledge that the Spouse has voluntarily relinquished
rights to limit consent to a specific form of benefit or Beneficiaries or both.
A Participant's waiver of a Qualified Joint and Survivor Annuity under this
paragraph (b) may be revoked at any time before the Participant's Annuity
Starting Date (as such term is defined in paragraph (e) below) and, once
revoked, may be made again before that date.
(c) Notification of Right to Waive Qualified Joint
and Survivor Annuity. Within the period beginning no earlier than 90 days
before the Participant's Annuity Starting Date and no later than 30 days before
his or her Annuity Starting Date, the Plan
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Administrator shall provide each Participant (whether or not married) who is
eligible to receive an annuity benefit under this Section 8.3.2 with a notice
of the Participant's right to elect to waive his or her right to receive
distribution of the pre-1989 Accrued Benefit in the form of a Qualified Joint
and Survivor Annuity. The notice shall contain an explanation, in nontechnical
language, of (i) the terms and conditions of the election and its effect upon
the Participant's benefit, (ii) the requirement that the Participant's Spouse
must consent to the election in accordance with paragraph (d) below, (iii) the
Participant's right to revoke the Participant's election in the manner
prescribed in regulations promulgated by the Secretary of the Treasury and (iv)
a general description of the eligibility conditions and other features of the
optional forms of benefit under the Plan and sufficient information to explain
the relative values of the optional forms of benefits.
(d) Spousal Consent. A Participant's waiver of a
Qualified Joint and Survivor Annuity described in this Section shall be valid
only if the Participant's Spouse executes a written consent to that election
acknowledging the effect of the election and the consent is witnessed by a
notary public or Plan representative. The Spouse's consent is not required if
(i) the Participant establishes that the Spouse's consent cannot be obtained
because the Participant does not have a Spouse, a Participant's Spouse cannot
be located or for such other circumstances as may be provided in regulations
promulgated by the Secretary of the Treasury, (ii) the Participant is legally
separated from the Spouse or (iii) the Participant has been abandoned by his
Spouse (within the meaning of local law) and the Participant has a court order
to that effect. A Participant's waiver of a Qualified Joint and Survivor
Annuity shall be effective only with respect to the Spouse who consents to it
(or whose consent is not required) as provided in this Section.
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(e) Annuity Starting Date. Subject to Article IX, a
Participant's Annuity Starting Date shall be the first day of the first period
for which an amount is payable as an Annuity or in the case of a benefit not
payable in the form of an Annuity, the first day on which all events have
occurred which entitle the Participant to such benefit.
(f) Pre-Retirement Survivor's Benefit. A Participant
may elect on or after his thirty-fifth (35th) birthday to be covered by this
Survivor's Benefit. For purposes of the Plan, "Survivor's Benefit" means (i)
for married Participants, a single life annuity for the Spouse's life based on
the value of the Participant's pre-1989 Accrued Benefit, or (ii) for single
Participants, the benefit payable in accordance with Section 8.1.2. The
Survivor's Benefit, if elected, shall remain in effect until the date of the
Participant's retirement, rescission of election, or the Spouse's death. A
Participant shall automatically be covered by the Survivor's Benefit until age
thirty-five (35). The Plan Administrator may make independent verification of
the facts, but the Plan Administrator shall be entitled to rely on the evidence
submitted by the Participant and, in any event, the Plan Administrator shall be
completely protected for acting in accordance with its determination.
8.4 Withdrawals During Employment. Upon the application by any
Participant, the Plan Administrator shall direct the Trustees to make
distributions to the Participant pursuant to Sections 8.4.1, 8.4.2 or 8.4.3,
subject to the provisions of such Sections and of Section 8.4.4, while the
Participant remains in the Service of an Employing Company.
8.4.1 Withdrawals After Attaining Age 59 1/2. Once a
Participant attains age 59 1/2, he may withdraw all or any portion of the
balance in his Pre-tax Contribution Account and all or any portion of his
Vesting Percentage of the balance of his Employer Contribution
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Account; provided that any such withdrawal shall be restricted to such amounts
as are permitted under Section 8.4.2(a)(i) below.
8.4.2 Withdrawals Prior to Age 59 1/2. Prior to attaining age
59 1/2, a Participant may withdraw all or any portion of his Vesting Percentage
of the balance in his Employer Contribution Account, and any such Participant
may request a withdrawal from his Pre-tax Contribution Account, subject to the
conditions of this Section 8.4.2. Any withdrawal under this Section 8.4.2 shall
be subject to the following conditions:
(a) Restrictions on Amount. Each request for a
withdrawal under this Section 8.4.2:
(i) if from the Employer Contribution
Account and made before the Participant has five (5) Years of Participation,
shall be for no more than the Vesting Percentage of the balance in such Account
less the Employing Company contributions made to such Account during the 24
calendar months ending on the Valuation Date next preceding the date of the
Participant's request; and
(ii) if from a Pre-tax Contribution Account
and made before the Participant attains age 59 1/2, shall be for no more than
the Participant's cumulative Pre-tax Contributions, reduced by amounts
previously withdrawn under this Section 8.4.2.
(b) Required Purposes
(i) Deemed-Need Test. Withdrawals under
this Section 8.4.2(b)(i) shall be permitted only (I) for the purpose of
enabling the Participant (A) to pay medical expenses previously incurred or
necessary to obtain medical care (described in Code Section 213(d)) for himself
and his spouse or dependents, (B) to purchase (but except as provided below,
not to pay mortgage payments on) his principal residence, (C) to pay tuition
and related
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educational fees for the next twelve (12) months of post-secondary education
for himself and his spouse, children or dependents, or (D) to make payments to
prevent eviction or foreclosure on his principal residence and (11) to the
extent such needs cannot be met from other resources reasonably available to
the Participant; provided that withdrawals for the types of needs permitted in
clause (I) shall be deemed to satisfy the requirements of clause (II) if the
Participant has already utilized other available distributions and loans from
this Plan and other employer plans.
(ii) Facts and Circumstances Test.
Withdrawals under this Section 8.4.2(b)(ii) shall be permitted from a Pre-tax
Contribution Account only if the deemed-need test of Section 8.4.2(b)(i) is not
met and (I) in the case of any withdrawal under Section 8.4.2, only for the
purpose of enabling the Participant to meet immediate and heavy financial needs
(including only (A) medical expenses of the Participant or his Family Members,
(B) the cost of purchasing or remodeling the Participant's primary residence,
(C) the cost of funeral expenses for the Participant's Family Members or (D)
the cost of providing education to the Participant's Family Members) and (II)
in the case of any withdrawal from a Pre-tax Contribution Account, only to the
extent such needs cannot be met from other resources reasonably available to
the Participant, including all loans and other withdrawals available under this
Plan; provided that the Plan Administrator shall rely reasonably on the
Participant's representation that he cannot meet the financial need from
insurance, that he has already made reasonable liquidation of other assets and
that he has already utilized other available distributions and loans from other
employer plans and loans from commercial sources.
(c) Limitations on Pre-tax Contributions after
Withdrawal from Pretax Contribution Account Prior to Age 59 1/2. Any
Participant who makes a withdrawal from
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his Pre-tax Contribution Account pursuant to this Section 8.4.2 shall make no
further Pre-tax Contributions for a period of at least twelve (12) months
commencing on the first pay date on or after the date of the withdrawal. At the
end of such twelve-month period, the Participant may again elect to make
Pre-tax Contributions, effective with the next date under Section 4.2.2(b) for
commencing Pre-tax Contributions to the Plan. Furthermore, the limit on the
Participant's Pretax Contributions set forth in Section 4.2.2(a)(ii) shall be
reduced during the calendar year following the year of the withdrawal by the
amount of the Participant's Pre-tax Contributions for the year of the hardship
distribution.
8.4.3 Withdrawals from Employee Contribution Accounts. A
Participant may withdraw all or any portion of the balance in his Employee
Contribution Account at any time.
8.4.4 General Provisions Applicable to Withdrawals
(a) Frequency. Only one withdrawal may be made under
this Section 8.4 during each Plan Year; provided that a Participant may request
to withdraw amounts simultaneously under Sections 8.4.1 and 8.4.3 or under
Sections 8.4.2 and 8.4.3.
(b) Accounting for Withdrawals. Any withdrawal under
this Section 8.4 shall not terminate a Participant's participation in the Plan.
Withdrawals pursuant to Sections 8.4.1 and 8.4.2 shall reduce and be subtracted
from the Participant's accounts in the following order: Discretionary Matching
Contribution Account, Fixed Matching Contribution Account and Pre-tax
Contribution Account. Withdrawals pursuant to Section 8.4.3 shall reduce and be
subtracted from the Participant's respective Employee Contribution Accounts as
designated by the Participant. After a withdrawal from any of his Employer
Contribution Accounts, the Participant's vested interest in each such Employer
Contribution Account at any relevant time shall be equal to an amount (X)
determined by the following formula:
X=P(AB+(R x D))-(R x D)
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For purposes of applying this formula:
P is the Participant's Vesting Percentage determined pursuant to
Section 6.1 at the relevant time.
D is the amount of the withdrawal.
R is the ratio of (i) the balance of the Participant's withdrawn
Employer Contribution Account at the relevant time to (ii) the balance of such
Employer Contribution Account after the withdrawal.
AB is the balance of the Participant's withdrawn Employer Contribution
Account at the relevant time.
The relevant time is the time at which, under the Plan, the
Participant's Vesting Percentage in his withdrawn Employer Contribution Account
cannot increase.
(c) Valuation Adjustments for Withdrawals. The balance in a
Participant's accounts in the Plan will be adjusted equitably to reflect the
effects of any withdrawals made by the Participant in between Plan Valuation
Dates. Any withdrawal requested for disbursement prior to the next Plan
Valuation Date will be limited in amount by any adjustment necessary to
equitably reflect changes to the value of Plan assets since the immediately
preceding Valuation Date.
(d) Rules and Regulations. Any withdrawal request under this
Section 8.4 shall be made by written notice given to the Plan Administrator at
least thirty (30) days prior to the date of the withdrawal; provided that the
Plan Administrator in its discretion may permit a withdrawal on shorter notice.
The Plan Administrator in its discretion shall determine from time
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to time such additional non-discriminatory conditions on and rules governing
withdrawals under this Section 8.4 as it deems appropriate.
8.5 Loans to Participants and Beneficiaries.
8.5.1 Availability of Loans. The Plan Administrator is hereby
authorized to establish a program for loans to Participants or Beneficiaries of
deceased Participants from their Vested Benefits. Upon the Plan Administrator's
direction and subject to the requirements and limitations of Section 8.5.2, the
Trustees shall make such loans.
8.5.2 Requirements and Limitations. All loans to Participants
or Beneficiaries:
(a) Non-discrimination: Spousal Consent. Shall be
available to all such persons on a reasonably equivalent basis and in amounts
relative to each such person's vested interest in the Trust Fund, provided that
no loan shall be made to a Participant who is married on the date the loan is
to be made unless the Participant's spouse has consented in writing to such
loan no more than 90 days prior to such date and such consent has been
witnessed by a notary public or the Plan Administrator or a designate;
(b) Interest Rate: Security. Shall bear a reasonable
rate of interest and be adequately secured, provided that (to the extent
permitted by the Act and notwithstanding any other provision of this Plan) such
security may consist in whole or in part of not more than 50% of the borrower's
Vested Benefit in the Plan;
(c) Directed Investment. Shall be a directed
investment of the borrower's own account;
(d) Term. Shall be repayable within: (i) 5 years if
not used to acquire any dwelling unit which, within a reasonable time, is to be
used (determined at the time the loan
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is made) as a principal residence of the borrower; and (ii) otherwise within a
reasonable period of time; and
(e) Amount Shall be in amounts which, when
aggregated with other loans outstanding to the same borrower (under this or any
other plan maintained by the Employer or a member of a controlled group
including the Employer or a group under common control with the Employer), are:
(i) not in excess of the lesser of 50% of the borrower's vested interest in the
Trust Fund and $50,000 if the borrower's vested interest in the Trust Fund
exceeds $20,000; (ii) not in excess of $10,000 if the borrower's vested
interest in the Trust Fund exceeds $10,000 but does not exceed $20,000; (iii)
not in excess of 100% of the borrower's vested interest in the Trust Fund if
such interest does not exceed $10,000; and (iv) not in excess of such lower
limits as the Plan Administrator may set. Notwithstanding the foregoing, no
loan or loans aggregating (at the time the most recent such loan is made) more
than 50% of the borrower's vested interest in the Trust Fund shall be made
unless the borrower provides security (which the Plan Administrator finds to be
adequate) for the balance of the amount of such loans that exceeds 50% of the
borrower's vested interest in the Trust Fund at the time the most recent such
loan is made; provided that the Plan Administrator shall make judgments as to
the adequacy of any such additional security in a uniform and
non-discriminatory manner and provided further that the Plan Administrator need
not accept any additional security (and in such case the Plan Administrator
shall not grant any loan or loans aggregating more than 50% of the borrower's
vested interest in the Trust Fund) if he determines (on a uniform and
non-discriminatory basis) that taking, holding and/or perfecting a security
interest in such additional security would be administratively burdensome,
inconvenient or expensive.
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(f) Accounting. Loan proceeds disbursed shall be
charged against the borrower's Vested Benefit in the following order: Rollover
Contribution Account; Pre-tax Contribution Account; Fixed Matching Contribution
Account; and Discretionary Matching Contribution Account. Repayments of both
principal and interest shall be credited to the borrowers accounts in the
reverse order. No other Participant's or Beneficiary's accounts in the Trust or
benefits under the Plan shall be put at risk on account of a loan to any
borrower.
(g) Procedures and Other Rules. Any loan request
under this Section 8.5 shall be made by written notice given to the Plan
Administrator at least thirty (30) days prior to the date of the loan
disbursement; provided that the Plan Administrator in its discretion may permit
a loan on shorter notice. All loan payments by employees shall be made by way
of payroll deduction each payday. The Plan Administrator in its discretion
shall determine from time to time such additional non-discriminatory conditions
on and rules governing loans under this Section 8.5 as it deems appropriate.
In the event that the Plan Administrator establishes a loan program
for Participants and Beneficiaries of deceased Participants, the following
terms, procedures, and documents shall be set forth by the Plan Administrator
in a written loan policy statement and made available to all such Participants
and Beneficiaries:
(i) A loan application procedure, together with a Specimen
Application, Promissory Note and Security Agreement;
(ii) the basis for approval of loans;
(iii) the minimum and maximum loans permitted;
(iv) the procedure for setting the loan interest rate;
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(v) the events that constitute default and the consequences of
default; and
(vi) any other information or procedures pertinent to administration
of the loan program. The terms, procedures, and documents of any such written
loan policy statement are hereby incorporated by reference and made part of
this Plan.
8.6 Effect of Reemployment. In the case of a Participant who returns
to Service after his Benefit Commencement Date but before his Normal Retirement
Date, payment of benefits to him shall thereupon cease, and the form of any
benefits payable to him thereafter shall be determined in accordance with the
provisions of this Article VIII but disregarding any previous benefit elections
made by him.
8.7 Claims Procedure.
(a) In order to receive any benefits under the Plan, a
Participant or his Beneficiary (the "Applicant") shall first file a notice with
the Plan Administrator submitting his claim. If a claim for benefits submitted
by the Applicant is denied, the Plan Administrator shall furnish to the
Applicant, within ninety (90) days after receipt of such claim (or within one
hundred and eighty (180) days after such receipt if extenuating or special
circumstances require an extension of time) a written notice which: (i)
specifies the reasons for the denial, (ii) refers to the pertinent provisions
of the Plan on which the denial is based, (iii) describes any additional
material or information necessary for the perfection of the claim and explains
why such material or information is necessary, and (iv) explains the claim
review procedures of this Section 8.7.
(b) Upon the written request of the Applicant submitted
within sixty (60) days after his receipt of such written notice, the Plan
Administrator shall afford the Applicant a full and fair review of the decision
denying the claim, and, if so requested: (i) permit the Applicant
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to review any documents which are pertinent to the claim, (ii) permit the
Applicant to submit to the Plan Administrator issues and comments in writing,
and (iii) afford the Applicant an opportunity to meet with a quorum of the Plan
Administrator as a part of the review procedure.
(c) Within sixty (60) days after its receipt of a request for
review (or within one hundred and twenty (120) days after such receipt if
special circumstances, such as the need to hold a hearing, require an extension
of time) the Plan Administrator shall notify the applicant in writing of its
decision and the reasons for its decision and shall refer the Applicant to the
provisions of the Plan which form the basis for its decision.
8.8 Transfers to Other Plans
(a) In General. Notwithstanding any provision of the plan to
the contrary that would otherwise limit a distributee's election under this
Section, a distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(b) Definitions. For purposes of this Paragraph, the
following definitions shall apply:
(i) Direct rollover: A direct rollover is a payment
by the plan to the eligible retirement plan specified by the distributee.
(ii) Distributee: A distributee includes an employee
or former employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse who is
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are distributees with regard to the interest of the
spouse or former spouse.
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(iii) Eligible retirement plan: An eligible
retirement plan is an individual retirement account described in Section 408(a)
of the Code, an individual retirement annuity described in Section 408(b) of
the Code, an annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual retirement annuity.
(iv) Eligible rollover distribution: An eligible
rollover distribution is any distribution of all or any portion of the balance
to the credit of the distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated beneficiary,
or for a specified period often years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code; and the
portion of any distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities).
ARTICLE IX
Benefit Commencement Date
9.1 General Rule. Subject to Sections 9.2 through 9.7, the Benefit
Commencement Date of a Participant who retires upon his Normal Retirement Date
or Postponed Retirement Date shall be the Valuation Date coinciding with or
next following such date of retirement. Subject to Sections 9.2 through 9.7 and
unless a Participant elects otherwise in accordance with
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the provisions of Section 9.2, the Benefit Commencement Date of a Participant
whose Service is terminated other than (a) by reason of Disability or death or
(1,) on his Postponed Retirement Date shall be the Valuation Date coinciding
with or next following his Normal Retirement Date.
9.2 Optional Termination Benefit Commencement Date. Except as provided
in Sections 9.7 and 9.8 or in this Section 9.2, any terminated Participant may
choose a Valuation Date coinciding with or next following his termination of
employment as his Benefit Commencement Date.
9.3 Disability Benefit Commencement Date. Subject to Sections 9.2
through 9.7, the Benefit Commencement Date of a Participant whose Service is
terminated by reason of Disability shall be the Valuation Date coinciding with
or next following the termination of his Service; provided that if such
Participant is entitled to receive a disability benefit under any plan to which
his Employing Company has contributed, his Benefit Commencement Date shall be
the date disability benefits cease under such plan.
9.4 Retirement After Reemployment. If, upon reemployment by an
Employing Company, benefits payable to a Participant are suspended in
accordance with any provision of this Plan, such Participant's new Benefit
Commencement Date shall be determined in accordance with the provisions of this
Article IX as if he had not previously had a Benefit Commencement Date prior to
such suspension of payment of benefits.
9.5 Death Benefit Commencement Date. If benefits first become payable
to the Spouse or other Beneficiary of a Participant following such
Participant's death, the payment of such benefits shall commence in accordance
with the provisions of Article VIII.
9.6 Limited Administrative Delays. Unless a Participant elects
otherwise, payment of his benefits shall commence not later than sixty (60)
days after the close of the Plan Year in
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which the later of the following occurs: (a) the Participant's Normal
Retirement Date, or (1,) the date on which the Participant actually retires or
his Service is terminated. Subject to the foregoing and to Section 9.8, the
Plan Administrator may take such time as is administratively reasonable and
convenient after the relevant Benefit Commencement Date or other relevant
Valuation Date to determine the amount of a benefit due and to pay or commence
payment of such benefit.
9.7 Latest Benefit Commencement Date. Notwithstanding the provisions
of Sections 9.1, 9.2 and 9.3 but subject to Section 9.8, distributions to a
Participant must commence no later than the first day of April following the
calendar year in which such Participant attains age 70 1/2 and, subject to
Section 9.8, each Participant eligible to receive a distribution may elect (by
giving notice to the Plan Administrator at least thirty (30) days prior to his
Benefit Commencement Date) to postpone such distribution until any Valuation
Date prior to such April first.
9.8 Payment Date When Benefit is $3,500 or Less. If the Participant's
Vested Benefit is $3,500 or less, the Plan Administrator shall as soon as is
administratively convenient distribute such benefit in a lump sum without the
Participant's consent. However, a Participant's Vested Benefit may not be paid
in a lump sum without his written consent if the Participant's Vested Benefit
exceeds $3,500.
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ARTICLE X
Top-Heavy Provisions
10.1 Application of Top-Heavy Provisions. The following provisions
shall become effective in any Plan Year in which the Plan is determined to be a
Top-Heavy Plan, as defined in Section 10.2, and shall supersede any conflicting
provisions in the Plan.
10.2 Determination of Top-Heavy Plan Status: Top-Heavy Plan
Definitions. The following words and phrases shall have the meanings specified:
(a) Key Employee and Non-Key Employee. The phrase "Key
Employee" shall mean any Employee or former Employee (and the Beneficiaries of
such Employee) who at any time during the determination period was:
(i) an officer of an Employing Company if (I) such
individual's annual compensation exceeds 150% of the dollar limitation under
Code Section 415(c)(1)(A) and (II) such individual is in the group of such
officers having the highest annual compensation but that does not exceed the
lesser of (A) fifty officers and (B) the greater of three officers or 10% of
all Employees of such Employing Company;
(ii) an owner (or considered an owner under Code
Section 318) of one of the ten largest interests in an Employing Company if
such individual's compensation exceeds 100% of the dollar limitation under Code
Section 415(c)(1)(A);
(iii) a 5% owner of an Employing Company; or
(iv) a 1 % owner of an Employing Company if such
individual's compensation exceeds $150,000.
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The determination period is the Plan Year containing the Determination Date and
the four preceding Plan Years. The determination as to who is a Key Employee
shall be made in accordance with Code Section 416(i)(1) and the Regulations
thereunder.
The phrase "Non-Key Employee" shall mean any employee (including a
beneficiary of such employee) who is not a key employee.
(b) Top-Heavy Plan. For any Plan Year the Plan shall be
considered a "Top-Heavy Plan" if any of the following conditions exist:
(i) If the Top-Heavy Ratio for the Plan exceeds 60%
and the Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group of plans.
(ii) If the Plan is a part of a Required Aggregation
Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the group of plans exceeds 60%.
(iii) If the Plan is a part of a Required
Aggregation Group and part of a Permissive Aggregation Group of plans and the
Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.
(c) Top-Heavy Ratio.
(i) If an Employing Company maintains one or more
defined contribution plans (including any Simplified Employee Pension Plan) and
an Employing Company maintains or has maintained one or more defined benefit
plans which, during the five-year period ending on the Determination Date(s),
has or has had any accrued benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a fraction:
(I) the numerator of which is the sum of
(A) the account balances under the aggregated defined contribution plan or
plans for all Key Employees and (B) the
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Present Value of the accrued benefits under the aggregated defined benefit plan
or plans for all Key Employees as of the Determination Date(s), and
(II) the denominator of which is the sum of
(A) the account balances under the aggregated defined contribution plan or
plans for all Participants and (B) the Present Value of accrued benefits under
the defined benefit plan or plans for all Participants as of the Determination
Date(s). All Top-Heavy Ratio determinations shall be made in accordance with
Code Section 416 and the Regulations thereunder. The account balances under a
defined contribution plan and the accrued benefits under a defined benefit plan
in both the numerator and the denominator of the Top-Heavy Ratio shall be
adjusted for any distribution of an account balance or an accrued benefit made
in the five-year period ending on the Determination Date.
(ii) For purposes of paragraph (i), the value of
account balances and the Present Value of accrued benefits shall be determined
as of the most recent Valuation Date that falls within or on the ending of the
twelve-month period ending on the Determination Date, except as provided in
Code Section 416 and the Regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances and accrued benefits of a
Participant (1) who is not a Key Employee but who was a Key Employee in a prior
year, or (II) who has not performed any service for any employer maintaining
the plan at any time during the five-year period ending on the Determination
Date shall be disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers and transfers are taken into account
shall be made in accordance with Code Section 416 and the Regulations
thereunder. Deductible employee contributions made pursuant to Section 219 of
the Internal Revenue Code of 1986 shall not be taken into account for purposes
of computing the Top-Heavy Ratio. When
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aggregating plans, the value of account balances and accrued benefits shall be
calculated with reference to the Determination Dates that fall within the same
calendar year.
(d) Permissive Aggregation Group. The "Permissive Aggregation
Group" shall be the Required Aggregation Group of plans plus any other plan or
plans of an Employing Company which, when considered as a group with the
Required Aggregation Group, would continue to satisfy the requirements of Code
Sections 401(a)(4) and 410.
(e) Required Aggregation Grout). The "Required Aggregation
Group" shall be (i) each qualified plan of an Employing Company in which at
least one Key Employee participates and (ii) any other qualified plan of an
Employing Company which enables a plan described in clause (i) to meet the
requirements of Code Sections 401(a)(4) or 410.
(f) Determination Date. The "Determination Date" shall be (i)
for any Plan Year subsequent to the first Plan Year, the last day of the
preceding Plan Year or (ii) for the first Plan Year of the Plan, the last day
of that Year.
(g) Present Value. For purposes of establishing "Present
Value" to compute the Top-Heavy Ratio, any benefit shall be discounted only for
mortality and interest based on (i) annual interest of 5-1/2% and (ii) the 1971
Group Annuity Mortality Table.
(h) Valuation Date. For purposes of computing the Top-Heavy
Ratio, the Valuation Date shall be the last day of each Plan Year.
10.3 Top-Heavy Plan Requirements. If the Plan is a Top-Heavy Plan for
any Plan Year or, as part of a Required or Permissive Aggregation Group, the
Plan is deemed to be a Top-Heavy Plan for any Plan Year, the following
requirements shall be met, notwithstanding any other provisions of the Plan.
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(a) Minimum Vesting Schedule. For any Plan Year in which this
Section applies, the non-forfeitable percentage of each Employee in his Accrued
Benefit shall be determined in accordance with Article VI. The Minimum Vesting
Schedule applies to all benefits within the meaning of Code Section 41 1(a)(7)
except those attributable to Employee contributions and Pre-tax Contributions,
including benefits accrued before the effective date of Code Section 416 and
benefits accrued before the Plan became a Top-Heavy Plan. Further, no reduction
in vested benefits may occur in the event the Plan's status as a Top-Heavy Plan
changes for any Plan Year. This provision does not apply, however, to the
Accrued Benefit of any Employee who does not have an Hour of Service after the
Plan has initially become a Top-Heavy Plan and forfeitures of such Accrued
Benefits shall be determined without regard to this provision.
(b) Minimum Contributions. For any Plan Year in which this
Section applies, except as is otherwise required to satisfy Section 10.4, the
following contribution provisions shall apply to the Plan:
(i) Basic Minimum. Each Employing Company shall, on
behalf of each Participant it employs who is a Non-Key Employee for such
Top-Heavy Plan Year, contribute to the Trust the greater of (I) the Employing
Company contributions determined under Section 4.1 for such Participant for
such Plan Year and (II) lesser of (A) 3% of the Non-Key Employee's Compensation
for the Plan Year and (B) the percentage of the Non-Key Employee's Compensation
for the Plan Year that equals the highest percentage of any Key Employee's
Compensation for the Plan Year contributed by the Employing Companies
(including, for this purpose, any Pre-tax Contributions made on the Key
Employee's behalf).
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(ii) Restriction on Right to a Minimum Contribution.
Except as necessary to meet the Top-Heavy minimum benefit accrual requirements
of any defined benefit plan or plans in the Required or Permissive Aggregation
Group for any Non-Key Employee who has at least 1,000 Hours of Service with an
Employing Company during such Top-Heavy Plan Year, no contribution shall be
made pursuant to paragraph (i) on behalf of a Non-Key Employee who was not
employed by an ]Employing Company on the last day of the Plan Year.
(iii) Minimum Contribution Made in Lieu of Regular
Contribution. No Participant shall receive Employing Company contributions
under both Section 4.1 and this Section 10.3 for any Plan Year.
(iv) Increased Section-415-Limitation Minimum. If
for any Plan Year the Top-Heavy Ratio is in excess of 60% but is not in excess
of 90% and the denominator used in determining dollar limitations on maximum
benefits under Code Section 415(e) on behalf of an Employee who is covered
under the Plan and the Pension Plan is multiplied by a factor of 1.25, then the
contribution rate in clause (II)(A) of paragraph (i) shall be increased to 4%.
10.4 Minimum Accrued Benefits. Notwithstanding the provisions of
Section 10.3(b), for any Plan Year during which the Plan is deemed to be a
Top-Heavy Plan as a member of a Required or Permissive Aggregation Group which
includes a defined benefit pension plan, the contribution rates in clause
(II)(A) of paragraph (i) and in paragraph (iv) of Section 10.3(b) shall be
increased to 5% and 7.5%, respectively.
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ARTICLE XI
Administration
11.1 Appointment of Administrator. The Plan shall be administered by a
Plan Administrator. The Board may remove the Plan Administrator at any time
with or without cause, and the Plan Administrator may resign at any time by
giving written notice thereof to the Board. The Plan Administrator shall serve
until such time as he resigns, dies, or is removed by action of the Board. A
vacancy shall be filled by the Board. The Plan Administrator shall serve
without compensation. The Company may pay all usual and reasonable expenses of
the Plan Administrator in whole or in part, and any expenses not paid by the
Company shall be paid by the Trustees out of the principal or income of the
Trust Fund.
11.2 Expenses of Plan Administrator. Any expenses incurred by the Plan
Administrator in administering the Plan shall be considered a cost of the Plan
and shall be paid in accordance with the applicable provisions of Article XII.
11.3 Duties of the Plan Administrator. In addition to its duties set
forth elsewhere in the Plan, the Plan Administrator shall have the following
rights, powers, and duties, any of which it may delegate to any member or
members of the Plan Administrator:
(a) to design forms and to prepare and enforce such rules,
regulations, and procedures, as shall be necessary for the efficient
administration of the Plan;
(b) to determine when Employees become eligible to
participate in the Plan, to process their applications for participation;
(c) to keep records containing all relevant data pertaining
to the Plan, provided, however, that any information supplied by a Participant
shall be presumed to be correct
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and the Plan Administrator shall incur no liability if it acts upon any such
information which is not correct;
(d) to make all governmental filings required of the Plan;
and
(e) in all instances in which the Plan Administrator is
granted authority or discretion which shall affect the benefits, rights or
privileges of Participants under the Plan, to exercise such authority or
discretion uniformly in such manner as to ensure that all Participants
similarly situated shall be similarly treated.
11.4 Plan Administrator's Rights. The Plan Administrator and each
member of any committee acting as Plan Administrator shall have the right to
vote on or decide any matter relating to himself and to vote on or decide any
matter relating to his rights or benefits under the Plan.
ARTICLE XII
Expenses of the Plan
12.1 All expenses incurred in administering the Plan, including those
necessary for the administration of the Trust, shall be paid out of the
principal or income of the Trust unless paid by the Company in its sole
discretion. Notwithstanding the foregoing, neither the Company nor any other
Employing Company shall have any obligation to pay any of such expenses.
ARTICLE XIII
Amendment of the Plan
3.1 Amendment. The Company reserves the right to amend the Plan at any
time by the action of the Board; provided, however, that any amendment
affecting the duties,
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responsibilities, or compensation of the Trustees shall become effective upon
acceptance in writing by the Trustees of a certified copy of such amendment and
provided, further that no amendment shall diminish, or deprive a Participant of
any benefit already accrued. The Company may amend the Plan, and may do so
retroactively if necessary, to conform the Plan to mandatory provisions of
applicable laws or Regulations or as permitted by the Internal Revenue Service
or the Department of Labor.
13.2 Effect of Amendments on Vesting.
(a) Notwithstanding the provisions of the preceding Section
13.1, the Company shall make no amendment to the Plan's vesting schedule that
shall result in any Participant's Vested Benefit, determined as of the later of
(i) the date of execution of such amendment or (ii) the effective date of such
amendment, being equal to less than such Participant's Vested Benefit computed
without regard to such amendment.
(b) If the Plan's vesting schedule is amended, a Participant
having at least three (3) Years of Vesting Service may elect to have his Vested
Benefit computed without regard to such amendment. A Participant shall make
such election within the period beginning on the date that the Board adopts
such amendment and ending sixty (60) days after the latest of (i) the effective
date of such amendment, (ii) the date on which such Participant is given
written notice of such amendment, or (iii) the date of the adoption of such
amendment. Any election made in accordance with this Section 13.2 shall be
irrevocable.
13.3 Amendments to Qualify Trust. The Board may make any amendment to
the Trust Agreement retroactively in order to ensure the continued
qualification of the Trust for tax exemption under the Code, and farther, to
conform the Plan to applicable provisions of the Code, ERISA, and the
regulations thereunder; provided, however, that any such amendment shall be
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made effective for all purposes for the entire period during which the Plan
shall have failed (if at all) to qualify for such tax exemption. Moreover, at
the election of the Plan Administrator, any amendment shall be deemed to have
been made on the first day of a Plan Year if:
(a) such amendment is adopted no later than 2-1/2 months
after the termination of the Plan Year, and
(b) such amendment does not reduce the Accrued Benefit of any
Participant determined either as of the beginning of the Plan Year or as of the
time of adoption of such amendment.
ARTICLE XIV
Termination or Merger of Plan and Trust
14.1 Termination. The Company (for itself and each Employing Company)
intends to continue the Plan and the payment of contributions hereunder
indefinitely, but it does not assume a contractual obligation to do so. The
Company (for itself and each Employing Company) reserves the right, at any
time, to discontinue contributions hereunder permanently or temporarily. Each
Employing Company reserves the right by action of its board of directors to
withdraw from the Plan or discontinue contributions thereunder.
14.2 Benefits After Plan Termination. In the event of the termination
of the Plan, each Participant shall have a non-forfeitable Vesting Percentage
equal to 100%. Following termination of the Plan, but subject to whatever
reasonable administrative delays may be imposed by the Trustees or Plan
Administrator in the circumstances, all benefits under the Plan shall be paid
at the time and in the manner provided in accordance with Articles VII and
VIII.
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14.3 Partial Termination. In the event of a partial termination of the
Plan, each affected Participant shall have a non-forfeitable Vesting Percentage
equal to 100% in the portion of his Employer Contribution Accounts affected by
the partial termination. If such a Participant has a Vesting Percentage of less
than 100% in any portion of his Employer Contribution Accounts not affected by
or credited after the partial termination, any non-forfeitable balances held in
the Trust pursuant to the preceding sentence shall be held as sub-accounts in
the Participant's Employer Contribution Accounts until the Participant's
Vesting Percentage equals 100%, at which time such sub-accounts shall be
combined with the Participant's regular Employer Contribution Accounts.
14.4 Plan Merger. If the Plan is merged or consolidated with, or if
its assets or liabilities are transferred to any other employee plan, the
benefit that each Participant would receive immediately after such merger,
consolidation, or transfer, if the resulting plan were terminated, shall be
equal to or greater than the benefit such Participant would have been entitled
to receive immediately before such merger, consolidation, or transfer if this
Plan had then been terminated.
ARTICLE XV
Fiduciary Responsibilities and Indemnification
15.1 Allocation of Responsibilities. The Company, the Trustees and the
Plan Administrator shall be Named Fiduciaries. In accordance with the
procedures established herein, such Named Fiduciaries shall have the right to
allocate fiduciary responsibilities (other than trustee responsibilities) among
themselves and to designate other persons to carry out such responsibilities.
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15.2 No Joint Responsibilities. Any allocated fiduciary responsibility
or any fiduciary responsibility which a person has been designated to perform
is intended to be the responsibility only of the fiduciary to whom allocated or
of the designated fiduciary and not the joint responsibility of that fiduciary
and any other fiduciary. Unless a Named Fiduciary has acted imprudently in
making or continuing an allocation or designation, a Named Fiduciary shall not
be responsible for the action or omission of any person who has been designated
by such Named Fiduciary to perform a fiduciary responsibility or to whom a
fiduciary responsibility has been allocated in accordance herewith. A person
acting upon the directions of or in accordance with decisions made by a
fiduciary shall not be deemed to have assumed joint responsibility for such
directions or decisions.
15.3 Indemnification. The Company shall indemnify and save harmless
any individual acting in a fiduciary capacity from, against, for and in respect
of any and all damages, losses, obligations, liabilities, liens, deficiencies,
attorney's fees, costs and expenses incident to the performance of such
person's duties unless resulting from the gross negligence, willful misconduct,
or lack of good faith of such individual. Such indemnification shall apply to
any such individual even though at the time liability is imposed on the
individual he is no longer acting in a fiduciary capacity.
15.4 Liability Insurance. The Company may purchase insurance to cover
the potential liability of persons who serve in a fiduciary capacity with
regard to the Plan.
15.5 Fiduciaries. Any person or group of persons may serve in more
than one fiduciary capacity with respect to the Plan and may participate in the
Plan and receive benefits under the Plan as a Participant or Beneficiary.
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ARTICLE XVI
Miscellaneous
16.1 Investment of Plan Assets. All assets of the Trust Fund under the
Plan shall be invested in accordance with the provisions of the Mackenzie
Investment Management Inc. Savings Plan Trust; provided that if permitted by
the Plan Administrator according to a uniform and non-discriminatory policy, a
Participant or Beneficiary may direct the Trustees as to the investment of any
or all of his accounts in the Trust Fund, either generally or in respect of
some particular investment or investments. Any such direction shall be
submitted to the Trustees by the Plan Administrator and the Trustees shall be
bound by such direction until written notice terminating or changing such
direction is received by the Trustees from the Plan Administrator. All income,
gains and losses attributable to property invested by the Trustees at the
direction of a Participant or Beneficiary shall be allocated solely to the
account of that person and all costs, fees, taxes or other charges of any kind
incurred (or increased, to the extent of the increase) in connection with such
investment shall be charged solely to the account for which the investment is
made.
16.2 Notices and Certifications. (a) In any case in which the Company
or Trustees shall be directed to take any action upon the occurrence of any
event, the Company or the Trustees, as the case may be, shall take the
appropriate action only upon receipt of any notice, paper or document
reasonably believed by any of them to be genuine, and to have been signed or
sent by the person or persons properly authorized. Communications by the
Company concerning the Plan shall be signed by a member of the Plan
Administrator. The Plan Administrator shall advise the Trustees from time to
time of changes in the Company's authorized personnel.
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(b) Any notice required or given hereunder shall be conclusively
deemed to be received by the addressee, if sent by certified or registered
mail, postage prepaid, addressed to the Company or, if to the Trustees or the
Plan Administrator, care of the Company, at the Company's principal place of
business. Any party may change its address for the receipt of notices by
informing the others, in writing, of such change of address.
16.3 No Employment Contract. Nothing contained in this Plan shall be
construed to be a contract of employment between any Employing Company and any
Employee. Nothing contained herein shall be deemed to give to any Employee the
right to be retained in the employ of any Employing Company or to interfere
with the right of any Employing Company to discharge any Employee at any time,
with or without cause, nor shall it be deemed to give any Employing Company the
right to require any Employee to remain in its employ, nor shall it interfere
with the Employee's right to terminate his employment at any time.
16.4 Return of Company Contributions. The Company has established the
Plan for the exclusive benefit of Participants and their Beneficiaries. Except
as provided in this Section with respect to contributions made (a) under a
mistake of fact, (b) conditional upon the qualification of the Plan, or (c)
conditional upon the deductibility of the contributions, no amendment,
termination or other action shall divert any part of the assets of the Trust to
any purposes other than the exclusive benefit of Participants and their
Beneficiaries after defraying reasonable expenses of Plan administration.
(a) Mistake of Fact. If an Employing Company makes a
contribution to the Plan under a mistake of fact, the Trustee shall return such
contribution, less any expenses incurred in connection therewith, to such
Employing Company within one (1) year of the payment of such contribution.
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(b) Denial of Plan Qualification. In the event any District
Director of Internal Revenue or the Secretary of Labor at any time shall
determine that the Plan or Trust is not qualified under the applicable
provisions of the Code or ERISA, any contributions to the Plan made by any
Employing Company for Plan Years that are affected by such disqualification
shall be deemed to be conditioned upon such qualification and shall be returned
to the respective Employing Companies, less expenses incurred in connection
therewith, within one (1) year after the date of denial of qualification.
(c) Denial of Tax Deduction. In the event the deduction of
any contribution to the Plan by any Employing Company is disallowed under the
applicable provisions of the Code, such contribution shall be deemed to be
conditioned upon such deduction and shall be returned to the Employing Company,
less any expenses incurred in connection therewith, within one (1) year after
the date of the disallowance.
16.5 Spendthrift Provisions and Domestic Relations Orders.
(a) The interest hereunder of any Participant or Beneficiary
shall not be alienable by such Participant or Beneficiary either by assignment
or by any other method and shall not be subject to be taken by his creditors by
any process whatever, except as permitted by law. The Trust shall not in any
manner be liable for, or subject to, the debts, contracts, liabilities,
engagements or torts of any person entitled to benefits hereunder.
(b) The preceding paragraph shall also apply to the creation,
assignment or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as defined in Section
414(p) of the Code, or any domestic relations order entered before July 1, 1987.
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<PAGE> 92
(c) The term "qualified domestic relations order" means a
domestic relations order which creates or recognizes the existence of an
alternate payee's right to receive all or a portion of the benefits payable
with respect to a Participant under a plan and with respect to which the
following requirements of this Section 16.5 are satisfied.
(d) The term "domestic relations order" means any judgment,
decree, or order (including approval of a property settlement agreement) which
relates to the provision of child support, alimony payments, or marital
property rights to a spouse, child, or other dependent of a Participant, and is
made pursuant to a State domestic relations law (including a community property
law). A domestic relations order meets the foregoing requirements only if such
order clearly specifies (i) the names and mailing addresses of the Participant
and of each alternate payee covered by the order, (ii) the amount or percentage
of the participant's benefits to be paid by the plan to each alternate payee,
or the manner in which such amount or percentage is to be determined, (iii) the
number of payments or periods to which such order applies, and (iv) each plan
to which such order applies. A domestic relations order meets the requirements
of this Section 16.5 only if such order does not require a plan to provide any
type or form of benefit, or any options, not otherwise provided under the plan,
does not require the plan to provide increased benefits (determined on the
basis of actuarial value) and does not require the payment of benefits to an
alternate payee which are required to be paid to another alternate payee under
another order previously determined to be a "qualified domestic relations
order."
16.6 Governing Law. Except in such areas as have been preempted by
federal law, the Plan shall be construed, enforced, and regulated by the laws
of the State of Florida.
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16.7 Binding Effect. This Plan and every amendment shall be binding
upon the heirs, executors and administrators, successors and assigns of
Participants, Beneficiaries, the Company, Plan Administrator and Trustees.
16.8 Interpretation. As may be appropriate, pronouns used in the Plan
shall be read and construed to refer to the masculine, feminine, or neuter.
Likewise, words in the singular shall be read and construed to refer to the
plural.
16.9 Titles. Titles are included only for convenience and are not to
be considered in the interpretation of this document.
MACKENZIE INVESTMENT
MANAGEMENT INC.
Executed November 11, 1993.
Re-executed as conformed
to Include the Second Amendment:
November 8, 1995.
Re-Executed as conformed
to Include the Third Amendment
May 8, 1996
By: /s/ C William Fuller
------------------------------------
Title: Senior Vice President
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<PAGE> 94
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT-SHARING PLAN
SUMMARY PLAN DESCRIPTION
(Revised April, l998)
<PAGE> 95
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT-SHARING PLAN
TABLE OF CONTENTS
INTRODUCTORY INFORMATION.................................................... 1
1. Name of Plan........................................................... 1
2. Name of Employer....................................................... 1
3. Type of Plan........................................................... 1
4. Plan Administrator..................................................... 2
5. Plan Trustees.......................................................... 2
6. Persons for Service of Legal Process................................... 2
7. Plan Year; Plan Records................................................ 2
ELIGIBILITY TO PARTICIPATE.................................................. 2
CONTRIBUTIONS............................................................... 2
1. Pre-tax Savings Contributions.......................................... 2
2. Company Matching Contributions......................................... 4
3. Rollover Contributions................................................. 6
BENEFITS.................................................................... 6
1. Benefits Provided By Plan.............................................. 6
Savings Contribution Account and Rollover Contribution Account....... 6
Company Matching Contribution Accounts............................... 6
2. Payment of Benefits.................................................... 7
3. Annuity Options........................................................ 8
4. Federal Taxation of Benefits........................................... 9
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<PAGE> 96
INVESTMENT OF TRUST FUND.................................................... 9
1. The Trust Fund......................................................... 9
2. Investment Fund........................................................ 9
3. Your Interest.......................................................... 9
4. Investments............................................................ 9
LOANS....................................................................... 10
WITHDRAWALS................................................................. 11
1. Before Age 59 1/2...................................................... 11
2. After age 59 1/2....................................................... 12
3. Valuation Adjustments for Withdrawals.................................. 12
MISCELLANEOUS............................................................... 12
1. No Benefit Insurance................................................... 12
2. Power to Amend or Terminate............................................ 12
3. Terms of Plan Document Govern.......................................... 12
4. No Employment Contract................................................. 12
5. Top Heavy Provisions................................................... 12
CLAIMS; LEGAL RIGHTS AND DUTIES............................................. 13
1. Claims Procedure....................................................... 13
2. Legal Rights and Duties................................................ 13
<PAGE> 97
ATTACHMENTS
CLAIMS PROCEDURE
Attachment "A"
DESIGNATION OF BENEFICIARY FORMS
Attachment "B"
LOAN DOCUMENTS
Attachment "C"
<PAGE> 98
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT-SHARING PLAN
Summary Plan Description
Revised 4/98
INTRODUCTORY INFORMATION
1. Name of Plan. The name of the Plan is the "Mackenzie Investment
Management Inc. Profit-Sharing Plan". The Plan Number is 001.
2. Name of Employer. The Plan is maintained by Mackenzie Investment
Management Inc. (the "Company"). The Company's Identification Number ("EIN") is
59-2522153.
3. Type of Plan. This Plan is designed to give you an opportunity to
build long-term tax-deferred savings for retirement.
The following types of contributions are permitted under the Plan:
A. Employee Contributions
Pre-Tax Savings Contributions: This type of
contribution is the savings that you elect to have deducted
from your Compensation on a pre-tax basis, as allowed by
Section 401(k) of the Internal Revenue Code. Once you become
a participant in the Plan you will be eligible to have
Savings Contributions made so long as you remain employed by
the Company and meet the requirements described below. Your
Savings Contributions each year (plus any 401(k)-type
contributions during the year to another employer's plan and
any IRA contributions) may never exceed an annual dollar
limit set for each year by the IRS.
B. Company Matching Contributions
(i) Fixed Matching Contributions: This type of
contribution is a percentage of each eligible
participant's Pre-Tax Savings Contributions, subject
to some limitations explained in the "Contributions"
Section below. Its purpose is to encourage and
reward Savings Contributions.
(ii) Discretionary Matching Contributions: The Company
may also make Discretionary Matching Contributions
to the Plan. If this type of contribution is made
for a Plan Year, it will be allocated among all
eligible participants who made Pre-Tax Savings
Contributions, as further explained in the
"Contributions" Section below.
To be eligible for sharing in either Fixed Matching or
Discretionary Matching Contributions, you must meet a service
requirement during the Plan Year, as described in the
"Contributions" Section below.
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C. Rollover Contributions
If you receive an eligible distribution from a previous employer's
qualified retirement plan, you may roll it over tax free to the Plan within 60
days.
4. Plan Administrator. The day to day operation of the Plan will be
administered by C. William Ferris as Plan Administrator. The Plan
Administrator's address is care of Mackenzie Investment Management Inc., Via
Mizner Financial Plaza, Suite 300, 700 South Federal Highway, Boca Raton,
Florida 33432. His telephone number is (561) 393-8900.
5. Plan Trustees. The Trustees of the assets of the Plan are Michael
G. Landry, Keith J. Carlson and C. William Ferris. For purposes of the Plan,
their address is care of the Company at its address above.
6. Persons for Service of Legal Process. Service of legal process may
be made on the Plan Administrator or the Trustees, at the address set out
above.
7. Plan Year: Plan Records. The records of the Plan are kept on the
basis of a Plan Year which is January 1 to December 31.
ELIGIBILITY TO PARTICIPATE
1. Entry Date for Full-Time Employees. If you work 37 1/2 or more
hours per week, you are eligible to participate in the Plan on the first day of
the first Plan Year quarter that coincides with or follows the day you begin
work for the Company.
2. Entry Date for Part-time Employees. If you work fewer than 37 1/2
hours per week or if you are a temporary or other time-limited employee, you
are eligible to participate in the Plan on the first day of the first Plan Year
Quarter that coincides with or follows your completion of twelve consecutive
months of service during which you have worked at least 1,000 hours.
The Plan Year quarters are the calendar year quarters, beginning on
January 1, April 1, July 1, and October 1 in each year. Being a participant in
the Plan means that you are eligible to elect Savings Contributions, but you are
not required to do so. All Savings Contributions are completely voluntary.
CONTRIBUTIONS
1. Pre-tax Savings Contributions. You may have tax-deductible
contributions made to the Plan on your behalf by executing a compensation
reduction (savings) agreement with the Company. These Savings Contributions
will be made by reducing your Compensation through payroll withholding. With
the exceptions described in the following sentences, "Compensation" for the
purpose of this
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<PAGE> 100
Plan means all wages and salaries paid to you by the Company, including
overtime pay, commissions and bonuses. Your Compensation also includes any
Savings Contributions made on your behalf as well as any pre-tax payments
deducted from your pay for benefits under a "cafeteria" type of plan. However,
Compensation does not include any employer matching contributions or other
payments made to this or any other employee benefit plan. Moreover, no more
than $160,000 of Compensation may be taken into account for each participant
during the Plan Year. This legal limit is adjusted periodically for inflation.
Any Savings Contributions you elect will be turned over to the Trustee
for investment in your account in the Trust Fund.
Although Savings Contributions are deductible for federal income tax
purposes, they are subject to FICA (Social Security) tax as they are withheld
from your pay, unless you have already paid the maximum FICA tax for the year.
Depending on the tax laws of the state or states in which you live and work,
your Savings Contributions may also be deductible for state income tax
purposes.
Your Savings Contributions to the Plan are completely voluntary. You
may elect Savings Contributions in whole-percentage increments from one (1)
percent to twenty (20) percent of your Compensation, subject to the following
limitations:
(i) In 1998, you cannot make more than $10,000 of
Savings Contributions to the Plan. This legal limit
is adjusted periodically for inflation.
(ii) The Savings Contributions of all participants must
satisfy certain nondiscrimination tests in Section
401(k) of the Internal Revenue Code.
You may elect to start your Savings Contributions at the beginning of
the Plan Year quarter that coincides with or follows your completion of the
Plan's eligibility requirements, or any subsequent Plan Year quarter (January
1, April 1, July 1, or October 1). Other elections (to stop, restart or change
your rate of Savings Contributions) will be effective as explained below,
provided that you make your election in writing by the applicable deadline set
by the Plan Administrator.
Once you have made a Savings Contribution election, it will continue
in effect at the Savings Contribution rate you have elected until any of the
following occurs:
(i) you elect to increase or decrease your contribution rate,
effective with the first pay date of the next Plan Year quarter; or
(ii) you elect to stop making contributions, effective with the first
pay date of the next Plan Year quarter; or
(iii) you terminate your employment with the Company, effective upon
termination; or
(iv) the Plan Administrator requires you to reduce your contribution
rate (or even to take a taxable refund of some of your Savings Contributions)
to enable the Plan to comply with federal Tax Code requirements, effective as
determined by the Plan Administrator.
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<PAGE> 101
So long as you have a Savings Contribution agreement in effect, the
Savings Contribution rate you have elected will be applied to all "Compensation"
paid to you. Remember, "Compensation" includes only the types of income
described above.
2. Company Matching Contributions.
A. Fixed Matching Contributions. The Company will match your
Savings Contributions as described below.
I. Eligibility for Match. To be eligible to receive
a Fixed Matching Contribution for a Plan Year, you must (i) elect Savings
Contributions during the Year, and (ii) complete 1,000 Hours of Service during
the Year.
"Hour of Service" means:
Each hour for which you are directly or indirectly paid by the Company
for working; and
Each hour, up to a maximum of 501 for any single event, for which you
are directly or indirectly paid or entitled to payment when you were
not working including vacation, jury duty, disability and other
reasons set forth in the plan; and
Each hour for which you receive back pay, either by award or by
agreement of the Company and without regard to mitigation of your
damages.
II. Amount of Match. The amount of your Fixed
Matching Contribution for a Plan Year depends on the amount of your Savings
Contribution.
Your Fixed Matching Contribution will be 50% of your Savings
Contributions; up to a maximum match equal to 3% of your Compensation (as
defined above) for the Year.
To illustrate the above, Fixed Matching Contributions will be made as
follows:
Savings
Contribution Rate Match
(As a percentage (As a percentage
of Compensation) of Compensation
------------------ ----------------
0% 0%
1 0.5
2 1.0
3 1.5
4 2.0
5 2.5
6 or more 3.0
4
<PAGE> 102
Example 1. Assume that you elect to have the Company make a Savings
Contribution of 10% of your Compensation during a Plan Year. Also assume that
your total Compensation for the Plan Year was $26,000. The tax-deductible
Savings Contribution made for you will equal 10% of $26,000, or $2,600.
The Company's Fixed Matching Contribution will be $780, calculated as
follows: 50% of your Savings Contribution (50% x $2,600 = $1,300), but not more
than 3% of your Compensation for the Plan Year (3% x $26,000 = $780).
Therefore, your Savings Contribution of $2,600
plus the Fixed Matching Contribution of 780
------
gives you a total contribution of $3,380
$3,380 would be 13% of your total Compensation for the Plan Year.
Example 2. Assume that you elect to have the Company make a Savings
Contribution of 10% of your compensation during a Plan Year. Also assume that
your total Compensation for the Plan Year was $100,000. The tax deductible
Savings Contribution made for you will equal the lesser of 10% of your
compensation (10% x $100,000 $10,000) or the maximum IRS limit in effect for
the Plan Year ($9,500 for 1997).
The Company's Fixed Matching Contribution will be $3,000, calculated
as follows: 50% of your Savings Contribution (50% x $9,500 during 1997 $4,750),
but not more than 3% of your Compensation for the Plan Year (3% x $100,000
$3,000).
Therefore, your Savings Contribution of $ 9,500
plus the Fixed Matching Contribution of 3,000
-------
gives you a total contribution of $12,500
$12,500 would be 12. 5% of your total Compensation for the Plan Year.
B. Discretionary Matching Contributions. In any Plan Year, at the
discretion of its Board of Directors, the Company may contribute an additional
amount to match a portion or all of your Pre-Tax Savings Contributions.
Discretionary Matching Contributions will be made in the same manner as Fixed
Matching Contributions. Any such contributions will be subject to the same
eligibility requirements (election of Pre-Tax Savings, and 1,000 Hours of
Service) as Fixed Matching Contributions.
3. Rollover Contributions. You may transfer, with the approval of the
Plan Administrator, any amounts you receive as a distribution from another
qualified retirement plan; provided that the transfer does not adversely affect
the qualified tax status of this Plan. Any transfer must be made to the Plan
within 60 days of the distribution to you.
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<PAGE> 103
Any amounts so received will be invested by the Trustee as a separate
account, and the value of such account will not increase or decrease benefits
otherwise payable to you. You will always be fully vested in the amounts
transferred. If you are interested in making a rollover contribution, please
contact the Plan Administrator for further information.
BENEFITS
1. Benefits Provided By Plan.
Retirement. Disability or Death Benefit. Your benefit from the Plan
will be equal to 100% of your account in the Trust Fund and is payable after
your retirement, disability or death prior to reaching your Normal Retirement
Date (age 65).
Termination Benefit. If your employment terminates for any reason
(other than retirement, death or disability), you will be entitled to a
termination benefit equal to your vested interest in the Trust Fund.
Savings Contribution Account and Rollover Contribution
Account. Your vested interest in the Trust Fund attributable to your Savings
Contributions and/or Rollover Contributions, if any, is always 100%.
Company Matching Contribution Accounts. Your vested interest
in the Trust Fund attributable to Company Matching Contributions is based on
your Vesting Years of Service with the Company, in accordance with the
following table.
Vesting Vested Forfeitable
Years of Service Percentage Percentage
- -------- ------- ---------- ----------
Less than 2 years -0- 100%
2 but less than 3 20% 80%
3 but less than 4 40% 60%
4 but less than S 60% 40%
S but less than 6 80% 20%
6 years or more 100% 0%
Thus. if you quit or are discharged before you have 2 Vesting Years of Service.
you will not receive any benefit under the Plan from any Company contributions.
As used in this table, a "Vesting Year of Service" is any Plan Year
during which you complete at least 1,000 Hours of Service. Hours of Service has
the same meaning as in the "Contributions" Section above.
A "Break in Service" occurs if you fail to complete at least 501 Hours
of Service during a Plan Year. You may lose credit for prior Vesting Years of
Service if you incur five or more consecutive
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<PAGE> 104
Breaks in Service. The Plan Administrator will explain these "Break in Service"
rules if they affect you.
If you have any questions about computing your Vesting Years of
Service, please ask the Plan Administrator.
If your employment terminates before you are 100% vested in your
Company Contribution Account in the Trust Fund, the unvested percentage will be
held for you until you have one "Break in Service" (as defined above) and then
will be forfeited. Forfeitures attributable to Company Matching Contributions
are used to reduce the cost of future Matching Contributions. However, if you
die or become disabled before you have a Break in Service, your Account vests
automatically and becomes payable as explained in the "Payment of Benefits"
Section below. Also, if you return as an employee of the Company before you
have five consecutive Breaks in Service, your unvested forfeiture will be
restored to you (without interest) out of then-current forfeitures. The
restored forfeiture will then become vested in accordance with the applicable
table above as you work additional Vesting Years of Service.
2. Payment of Benefits.
Retirement. Disability or Termination Benefit. Your retirement,
disability or termination benefit will be payable in any of the following forms
you select: (i) in a lump sum or (ii) if your vested interest in the Trust Fund
exceeds $5,000, in installments for a period not to exceed your life expectancy
or the joint life expectancies of yourself and your beneficiary.
Timing of Payment. Once your employment ends, you generally may elect
to have your benefit valued and paid as of any subsequent valuation date of the
Plan, by giving at least 30 days' written notice to the Plan Administrator.
However, certain limits and administrative rules apply. If you retire at or
after age 65, your benefit will be paid as of the next Plan valuation date,
unless you elect otherwise. If you terminate prior to age 65, your benefit
won't be paid until you turn age 65, unless you elect otherwise. If you
terminate because of disability, your benefit won't be paid until the earlier
of age 65 and the date when your disability benefits under any Company-paid
disability plan stop. Under no circumstances may the start of your benefits be
delayed beyond the April 1 after you turn age 70 1/2, even if you have not yet
retired. If your total benefit under the Plan is $5,000 or less, your benefit
will be valued and paid (in a lump sum) as of the next Plan valuation date
after you leave the Company's employment.
Death Benefit. If you should die prior to receiving any or all of your
interest in the Trust Fund, your interest will be paid as a death benefit. The
benefit will be payable in either of the following forms your beneficiary
selects: (i) in a lump sum or (ii) if your interest exceeds $5,000, in up to
five annual installments. Under certain circumstances, which will be explained
by the Plan Administrator to your beneficiary in case of your death,
installment payments may be spread out over a period not to exceed your
beneficiary's life expectancy.
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<PAGE> 105
You may designate one or more beneficiaries and you may change your
beneficiary on the form attached to this summary as Attachment B, or on a copy
of the form, which you may obtain from the Plan Administrator. Federal law
requires that if you are married and you wish to designate a primary
beneficiary other than your spouse, the designation will be effective only if
your spouse consents to the designation and if his or her signature is either
notarized by a notary public or witnessed by the Plan Administrator. If you are
not married when you designate a beneficiary and you later marry before
receiving your benefits, your original designation will automatically be
modified by your marriage and you may renew your designation or execute a new
designation for someone other than your spouse only as provided above.
If you do not designate any beneficiary, your death benefit will be
paid to your surviving spouse, or if none, to your children, or if you die
without children, the death benefit will be paid to your estate or applied to
your debts or funeral expenses.
3. Annuity Options.
Some of the features of the Company's prior 401(k) plan (the
"predecessor plan") are retained by this Plan for your account in that
predecessor plan, which was transferred directly to this Plan. The following is
a brief explanation of the predecessor plan features which apply to the portion
of your account in this Plan which represents your benefit from the predecessor
plan.
Payment Options
In addition to the lump sum and annual installment methods of payment
discussed above, if your account value from the predecessor plan exceeds
$5,000, you are eligible to elect to receive your benefit attributable to that
account value in the form of an annuity payable monthly over your lifetime. If
you elect an annuity and you are married, it will be paid monthly over the
joint lives of your spouse and yourself unless your spouse consents to your
election of some other form of payment or beneficiary. Any such consent must be
notarized or witnessed by the Plan Administrator.
Death Benefit
As described above, a death benefit is payable to your beneficiary
upon your death while you are a participant in the Plan. However, if you are
married, the death benefit attributable to the account value from the
predecessor plan is automatically payable as an annuity to your spouse
commencing upon your death and payable monthly for your spouse's lifetime. If
you have attained age 35, you and your spouse may waive this annuity form of
benefit. Your spouse will instead receive the benefit in one of the other forms
available under the Plan.
4. Federal Taxation of Benefits.
Tax Deferred Benefit. Your tax deferred benefits resulting from
Company contributions and any Savings Contributions made on your behalf and
Plan earnings on those contributions will not be taxed until the benefits are
actually paid to you or your beneficiary and then may be eligible for special
favorable
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<PAGE> 106
federal income tax treatment. (Special federal tax treatment is not available
for any benefits you withdraw from the Plan while you are still an employee of
the Company. See "Withdrawals' Section below.)
Any benefits paid to you before you are age 59 1/2 (or age 55, if your
employment with the Company has terminated before you are paid) generally will
be subject to a 10% early payment tax, as well as to any applicable regular
tax. There are a few exceptions to this early payment tax. For example, it
applies only to the extent that the amount you receive from the Plan is not
rolled over to another qualified plan or an individual retirement account and
your distribution exceeds your federal tax deductible medical expenses for the
year. The tax also doesn't apply to payments made on account of your death or
if you qualify for Social Security disability payments or if you are eligible
to and elect to receive your termination benefit in annual installments over
your life expectancy or your and your beneficiary's joint life expectancies.
Responsibility for Tax Matters. The federal tax treatment of your
benefits from the Plan is subject to change if the tax laws or regulations are
changed before you receive your benefits. Therefore, you should check with your
own tax advisor concerning the current federal tax treatment of your benefits
at the time you are eligible to be paid your benefits. You should also check
with your advisor concerning taxation of your benefits by your state. This
description of tax treatment is advisory only and no guarantee is given or
intended as to any tax result or liability.
INVESTMENT OF TRUST FUND
1. The Trust Fund. All contributions are held in a Trust Fund managed
and invested by the Trustees in accordance with the Plan. Each participant has
a separate account in the Trust Fund. Company Contributions are accounted for
separately from Savings Contributions and Rollover Contributions.
2. Investment Fund. The Investment Fund is the fund (or funds)
established by the Trustees within the Trust Fund for investment purposes.
Income, gains and losses of the Investment Fund will be allocated in proportion
to the sizes of the separate accounts in the Investment Fund as of the latest
valuation date. (Valuations are made at least annually.)
3. Your Interest. Your interest in the Trust Fund will be the sum of
your accounts in the Investment Fund. The amount of your interest in the Trust
Fund will be reported to you at least annually.
4. Investments. Investment options for all participants will be
designated from time to time by the Trustees. The options available will be
communicated to you periodically by the Plan Administrator, who will also
advise you about the rules and procedures for changing your investment
selections.
The Trustees and Plan Administrator may revise the Plan's investment
rules at any time. Changes might be made, for example, in the amount and type
of investment choices available, the investment increments you may elect and
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<PAGE> 107
the frequency of asset valuations and dates on which you may make changes.
LOANS
Although the Plan is intended to be a long-term savings plan, we
realize that you may incur some major financial expenses before retirement.
That is why we built flexibility into the program. Specifically, if you need to
use your savings before retirement, you can take a loan against the value of
your vested balances in your accounts in the Plan.
The loan feature may offer you advantages over borrowing from a
commercial lender. For example, there generally will be no need for a credit
check. Repaying the loan means you are restoring your savings. That way your
savings will be available later, when you need them. Plus, the interest you pay
will be credited to your account. The Plan Administrator will tell you the
prevailing interest rate whenever you are considering a loan.
There are a few rules to consider when you apply for a loan. You may
have only one loan outstanding at any time and only one loan may be requested
each year. The maximum amount is $50,000 or, if less, half of your vested
interest in the Plan.(1) For example, if you want to borrow $12,000, you must
have $24,000 in your vested Plan accounts.
When you borrow from the Plan, you must repay your loan in equal
installments over no more than five years (except as described in the following
sentence). If you borrow from the Plan in order to purchase the house or other
dwelling that is your "principal residence," then your repayment of the loan
can be made over a period of up to ten years. WHILE YOU REMAIN EMPLOYED WITH
THE COMPANY, you must make installment payments through payroll deduction each
pay day. You may not prepay the loan unless you repay the full outstanding
balance in a single payment. IF YOUR EMPLOYMENT TERMINATES, you must pay by
check in monthly or quarterly installments. If terminated, you are free to
repay the full outstanding balance in a single payment if you wish.
If you terminate employment and receive your benefit from the Plan
before you have repaid the entire loan, your final distribution from the Plan
will be reduced by the outstanding amount of the loan.
Your accounts in the Plan will be used as security for any loans that
you have outstanding at any time and the loan will be charged to your accounts
as a dedicated investment of those accounts. Thus, your loan balance decreases
your other Plan investments and your loan payments go to restore those other
investments.
You will be charged the reasonable cost of making and administering
your loan, as determined by the Plan Administrator.
- -----------------------
1-Federal law requires that the $50,000 limit be reduced by the highest
outstanding balance of a borrower's loan from the Plan during the 12-month
period ending on the day before the date on which a new loan is made.
10
<PAGE> 108
No loan will be made to a participant who is married on the date
the loan is to be disbursed unless the participant's spouse has consented to
the loan not more than 90 days before such date and the consent is witnessed by
a Notary Public or the Plan Administrator (or a designate). A loan policy
statement and sample loan documents are attached to this summary (Attachment
"C").
WITHDRAWALS
1 Before Age 59 1/2. If you have expenses relating to the purchase of
your principal residence; the prevention of eviction from or foreclosure on
your principal residence; educational expenses for the next semester or term of
college tuition for yourself; or your spouse, children or dependents; or
medical expenses for yourself; your spouse or your dependents not covered by
your health insurance plan; or certain other financial hardships, and you are
not yet age 59 1/2 at the time, you may take what is called a "hardship
withdrawal" from your vested balances in your accounts in the Plan. In order to
take a hardship withdrawal, you must have exhausted all other sources of funds.
As a participant in the Plan, this means you must have taken any Rollover
funds, and taken the maximum loan available under the program that you can
repay. Only then can you withdraw remaining funds.
If you quality for a hardship withdrawal, you may not withdraw more
than what is necessary to resolve your immediate need. You also may not
withdraw any amount attributable to earnings on your Savings Contributions or,
if you have participated in the Plan fewer than five years, any Company
Contributions that have been in the Plan for less than two years. The minimum
amount you can withdraw is $500 or, if less, the value of your vested Plan
accounts (excluding the earnings on your Savings Contributions).
Because of the tax advantage this type of plan offers, there are
additional tax rules on hardship withdrawals that you should know about. One
rule is that you must pay income taxes on your withdrawal. Also, there will be
an additional 10% federal penalty tax imposed on any withdrawal before you
reach age 59-1/2. The only exception to this penalty is a withdrawal used to
pay medical expenses in excess of 7-1/2% of your adjusted gross income.
In accordance with IRS rules, if your withdrawal is for one of the
specific reasons listed in the first paragraph of this Section you may not
contribute to the Plan for the next 12 months after you take a hardship
withdrawal. In the year this 12-month suspension ends, your total Savings
Contributions will be limited by the amount you contributed during the year you
took the hardship withdrawal. Assume, for example, you contribute $1,500 on a
before-tax basis to the Plan in 1997 and on July 1, 1997, you take a hardship
withdrawal. You could not contribute to the Plan for the next 12 months. After
that 12-month period, you could resume contributions, but for the period July
1, 1998 through December 31, 1998, you could contribute on a before tax basis
only in an amount up to the federal limit reduced by the $1,500 you contributed
in 1997.
2. After Age 59 1/2. Once you reach age 59 1/2, you may withdraw funds
from your vested balances in your accounts in the Plan for any reason. You are
still limited to a minimum of $500, but the only maximum that applies is that
until you have at least five years of participation in the Plan you may not
withdraw
11
<PAGE> 109
any Company Contributions that have been in the Plan for less than two years.
You are still subject to federal and any applicable state income tax on any
withdrawals, but the extra 10% penalty tax won't apply.
3. Valuation Adjustments for Withdrawals. The balance in your accounts
in the Plan will be adjusted to reflect the effects of any withdrawals that you
make in between Plan valuation dates. Also, any withdrawal requested for
disbursement prior to the next Plan valuation date will be limited in amount by
any adjustment necessary to equitably reflect changes to the value of Plan
assets since the immediately preceding valuation date.
MISCELLANEOUS
1. No Benefit Insurance. Your benefits are not insured by the Pension
Benefit Guaranty Corporation (the "PBGC") because the PBGC does not insure
benefits provided by defined contribution plans.
2. Power to Amend or Terminate. The Company has the power in the Plan
instrument to amend the Plan or terminate it in whole or in part at any time.
In the event of a termination you would automatically be 100% vested in your
account regardless of your number of Vesting Years of Service.
3. Terms of Plan Document Govern. This is a summary of the Plan and is
necessarily abbreviated. The terms of the actual Plan document will govern in
all matters even if there is any inadvertent inconsistency with the
descriptions in this summary. A copy of the Plan is available from the Plan
Administrator for review or copying. A nominal charge may be made for copies of
the Plan.
4. No Employment Contract. Neither the maintenance of the Plan nor the
participation of any employee in the Plan gives an employee the right to be
retained in the Company's employ or interferes with the Company's right to
discharge any employee at any time or for any reason. The Plan is not an
employment contract between any Company and any employee.
5. Top Heavy Provisions. The federal Tax Code includes special rules
that set minimum vesting rates and contribution or benefit formulas for plans
which become "top heavy." In general, the Plan would become top heavy if the
value of the accounts in the Plan of certain stockholders and officers who are
defined as "key employees" exceeds 60% of the value of all assets in the Plan.
(If the Company adopts additional retirement plans, all of its plans may have
to be aggregated for the top-heavy test.)
If the Plan does become top heavy, you will receive complete
information on any required contribution adjustments. The Plan's vesting
schedule currently is already more favorable than that required for a top-heavy
plan.
12
<PAGE> 110
CLAIMS: LEGAL RIGHTS AND DUTIES
1. Claims Procedure. It is not necessary to file a formal claim to
obtain benefits to which you are entitled under the Plan, except that
disability benefits cannot be paid without an opinion of a qualified physician
and certain optional forms of benefits must be elected by you or your
beneficiary and/or approved by the Plan Administrator. If you disagree with the
determination of a benefit, you may have the question reviewed according to a
claims procedure specified in the Plan. A copy of the claims procedure under
the Plan is annexed as Attachment "A" hereto.
2. Legal Rights and Duties. As a Participant in the Plan, you are
entitled to certain rights and protections under the Employee Retirement Income
Security Act of 1974 (ERISA). ERISA provides that all plan participants shall
be entitled to:
a) Examine, without charge, at the Plan Administrator's office
Plan documents and copies of all documents filed by the Plan
with the U.S. Department of Labor, such as detailed annual
reports and plan descriptions.
b) Obtain copies of all plan documents and other Plan
information upon written request to the Plan Administrator.
The administrator may make a reasonable charge for the
copies.
c) Receive a summary of the Plan's annual financial report. The
Plan Administrator is required by law to furnish each
participant with a copy of this annual report.
d) In addition to creating rights for Plan participants, ERISA
imposes duties upon the people who are responsible for the
operation of the employee benefit plan. The people who
operate your Plan, called "fiduciaries" of the Plan, have a
duty to do so prudently and in your interest and the interest
of other Plan participants and beneficiaries. No one,
including your employer, or any other person, may fire you or
otherwise discriminate against you in any way to prevent you
from obtaining a benefit or exercising your rights under
ERISA. If your claim for a benefit is denied in whole or in
part you must receive a written explanation of the reason for
the denial. You have the right to have the Plan Administrator
review and reconsider your claims.
Under ERISA, there are steps you can take to enforce the
above rights. For instance, if you request materials from the
Plan and do not receive them within 30 days, you may file
suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and
pay you up to $100 a day until you receive the materials,
unless the materials were not sent because of reasons beyond
the control of the Administrator. If you have a claim for
benefits which is denied or ignored, in whole or in part, you
may file suit in a state or federal court. If it should
happen that Plan fiduciaries misuse the Plan's money, or if
you are discriminated against for asserting your rights, you
may seek assistance from the U.S. Department of Labor, or you
may file suit in a federal court. The court will decide who
should pay court costs and legal fees. If you
13
<PAGE> 111
are successful the court may order the person you have sued
to pay these costs and fees. If you lose, the court may order
you to pay these costs and fees, for example, if it finds
your claim is frivolous.
If you have any questions about your Plan, you should contact
the Plan Administrator. If you have any questions about this
statement or about your rights under ERISA, you should
contact the nearest Area Office of the U.S. Labor-Management
Services Administration, Department of Labor.
14
<PAGE> 112
ATTACHMENT "A"
MACKENZIE INVESTMENT MANAGEMENT INC. PROFIT-SHARING PLAN
ARTICLE XI- CLAIMS PROCEDURE
1. Within a reasonable time after the close of the Plan Year in which
an event occurs which entitles a Participant or Beneficiary to any benefit under
the Trust, the Plan Administrator shall notify the Participant or Beneficiary in
writing of the entitlement to the benefit and the amount thereof.
2. If the Participant or Beneficiary shall claim that he is entitled
to any other benefit or amount, he shall notify' the Plan Administrator in
writing within 60 days of the notice provided in Section 1 of such claims.
3. In the event of such a claim, or any other claim for benefits under
the Trust, the following procedures shall apply:
.01 All claims for benefits under this Section shall be in
writing and shall be sufficient to notify' the Plan Administrator of
the type of benefit claimed.
.02 All claims shall be addressed to the Plan Administrator
or the chief personnel officer of the Employer.
.03 If a claim is denied in whole or in part by the Plan
Administrator, he shall furnish the claimant written notice of such
denial within ninety (90) days after receipt of the claim by him (or
within one hundred eighty (180) days after such receipt if extenuating
or special circumstances require an extension of time).
.04 The notice of denial shall set forth, in a manner
calculated to be understood by the claimant, (I) the specific reason
or reasons for the denial, (ii) specific reference to the pertinent
provisions of the Trust, (iii) a description of any additional
material or information necessary for the claimant to perfect the
claim and an explanation of why such material or information is
necessary, and (iv) an explanation of this claims procedure.
.05 Upon receipt of a notice of denial, the claimant may, by
a written application filed with the Plan Administrator within 60 days
of receipt of the notice, request a review by the Plan Administrator
of such denial.
.06 In connection with such review, the claimant may review
pertinent documents, may submit issues and comments in writing and may
request a hearing before the Plan Administrator.
.07 Within sixty (60) days after receipt of a request for
review (or within one hundred and twenty (120) days after such receipt
if special circumstances, such as the need to hold a hearing, require
an extension of time) the Plan Administrator shall notify the
applicant in writing of his decision and the reasons for his decision
and shall refer the Applicant to the provisions of the Plan which form
the basis for his decision.
<PAGE> 113
Revised 4/98
ATTACHMENT "B"
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT-SHARING PLAN 401K PLAN
BENEFICIARY DESIGNATION
I wish to name the following person or persons to receive all proceeds in my
accounts in the event of my death. If I'm married, I understand that by law I'm
required to have my spouse's consent if name a beneficiary other than my
spouse. I understand that if I fail to get my spouse's signature, then my
designation will not be effective. My consenting spouse's signature must be
witnessed by a plan representative or notary public.
Primary Beneficiary (or Trust)
<TABLE>
<CAPTION>
<S> <C> <C>
Name ______________________________________ Birthdate __________________ Social Security No.____________
Address ________________________________________________________________________________________________
Name ______________________________________ Birthdate __________________ Social Security No.____________
Address ________________________________________________________________________________________________
Contingent Beneficiary (or Trust)
Name ______________________________________ Birthdate _________________ Social Security No.____________
Address ________________________________________________________________________________________________
Name ______________________________________ Birthdate _________________ Social Security No.____________
Address ________________________________________________________________________________________________
</TABLE>
The designated contingent beneficiary is to receive any proceeds payable from
this plan if my primary beneficiary dies before me. If none of the designated
beneficiaries are living at the time the death benefit is payable, the benefit
will be paid as so outlined in the document.
_______________________________________________________________________________
Employee Signature Date Date
I hereby consent to the Designation of Beneficiary made herein by my spouse and
fully understand that if I am not a primary beneficiary, by signing this
designation 1 will release all my rights to death benefit under this plan.,
_______________________________________________________________________________
Spouse Signature Date
NOTARY PUBLIC/PLAN REPRESENTATIVE
STATE OF_____________________________ COUNTY OF _______________________________
I, ___________________________ a Notary Public (for said County and State) or
Plan Representative do hereby certify that _____________________________,
personally appeared before me this day and acknowledge the due execution of the
foregoing instrument. Witness my hand and official seal this, day of
____________, 19__.
(Official Seal) ____________________________________
Notary Public
My commission expires: _______________,19________
<PAGE> 114
ATTACHMENT "C"
Revised 4/98
LOAN POLICY STATEMENT
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT SHARING PLAN
By the Plan Administrator
As Plan Administrator for the Mackenzie Investment Management Inc.
Profit Sharing Plan (the "Plan"), 1 am pleased to announce the following policy
for loans to Plan Participants and Beneficiaries:
(1) Availability of Loans.
Loans are available to Plan Participants and to Beneficiaries of
deceased Participants. Loans will be withdrawn from Participants' Vested Plan
Accounts on a pro rata basis.
To ensure that the Plan will suffer no loss in the event of default of
any loan, each loan will be made as a self-directed investment of the vested
portion of the borrower's account (his or her "Account Balance") in the Plan. A
borrower may have only one loan outstanding at any time, and no person may
borrow more than once during any twelve-month period.
(2) Application Procedure.
To apply for a loan, please fill out and return an application form. A
sample application form is attached to this Policy Statement. All approved
loans will be paid out to borrowers as soon as practical after approval.
As required by federal law, no married participant will be granted a
loan from the Plan unless his or her spouse signs a Spouse's Consent Form
(which must also be witnessed by a notary public) to acknowledge the effect of
the loan on the borrower's interest in the Plan.
(3) Amount Available.
No loan will be granted for less than $1,000. As required by federal
law, the aggregate amount of all loans outstanding to any one borrower will be
limited to fifty percent of the borrower's vested Account Balance (but not more
than $50,000) within any twelve-month period.1
(4) Security for Loans.
- -------------------------
1 Federal law requires that the $50,000 limit be reduced by the outstanding
balance of a borrower's loan from the Plan during the 12-month period
ending on the day before the date on which a new loan is made.
1
<PAGE> 115
All loans from the Plan must be secured by fifty percent of the
borrower's vested Account Balance in the Plan. If a borrower fails to repay the
loan, then the portion of the borrower's vested Account Balance used as
security will be applied against the delinquent portion of the borrower's loan
balance by the Plan Administrator as soon as the borrower would otherwise be
eligible for a benefit payment from the Plan. In the meantime, the borrower
will continue to owe interest on the delinquent loan and will suffer adverse
tax consequences.
(5) Interest Rate on Loans.
A reasonable interest rate will be established by the Plan
Administrator periodically to apply to all loans granted before the next time
the rate is set. Once a loan is made, the interest rate will remain fixed for
the duration of the loan. Generally, the interest rate will be approximately
equal to the "prime rate" set by local banks from time to time plus 1%, but the
actual rate will be adjusted to reflect the prevailing rate of interest that a
professional lender might charge an unrelated party in a similar transaction in
light of all the circumstances, as the Administrator deems appropriate. The
interest charge will begin to run as of the date of the Promissory Note for the
loan and will apply only to the outstanding principal balance.
(6) Terms of Loans.
Each loan will be granted for a period of not more than five years
unless used to purchase the borrower's principal residence. A loan for this
purpose will be granted for a period of up to ten years. No prepayments are
allowed (except as described at (8) below).
(7) Form of Promissory Note.
Any loan granted will be evidenced by a Promissory Note and Security
Agreement signed by the borrower. The form of Promissory Note and Security
Agreement attached to this Loan Policy Statement will be used for this purpose.
(8) Repayment of Loans.
Each loan must be repaid in substantially equal installments, similar
to a mortgage. While you remain employed with the Company, the loan payments
will be deducted each pay period from your paycheck. You may prepay the loan
only if you repay the full outstanding balance in a single payment. If your
employment terminates while you have a loan outstanding, the Plan trustees may
agree to change your payments to a monthly or quarterly schedule. Otherwise,
you may either repay the loan in full, or (you may take distribution of all or
(if the amount exceeds $5,000) part of your vested benefit and have the full
amount of the outstanding loan and accrued interest deducted from your benefit
distribution.
(9) Default.
A loan will be in default if:
2
<PAGE> 116
(a) any installment is delinquent for sixty days after
it is due;
(b) if the borrower becomes subject to bankruptcy or
insolvency proceedings;
(c) if the borrower's security for the loan is not
maintained at the level required to repay the entire
loan (principal plus accrued interest);
(d) if the borrower makes any false statements or
breaches any provision of the Promissory Note and
Security Agreement;
(e) if the loan is not repaid in full by the earlier of
(i) the Loan Maturity Date and (ii) the date that
the Plan is terminated; or
(f) if the borrower has terminated service and receives
distribution of all or any portion of the borrower's
account balance.
(10) Loan Fees.
The borrower must pay all fees and expenses incurred by the Plan
trustees to process and administer a loan and to protect the Plan security for
the loan.
(11) Information Concerning Tax Consequences of Loans.
Interest Is Not Deductible. Interest paid on loans from the Plan will
not be deductible by the borrower for federal income tax purposes.
Loan Is Not Taxable If Repaid On Schedule. The federal Tax
Code provides that a loan obtained under this policy will not result in taxable
income to the borrower if the loan is repaid on schedule. However, if a loan is
delinquent at the end of the calendar quarter that follows the quarter in which
the payment is missed, the Tax Code requires us to report the outstanding loan
balance to you and to the IRS as taxable income for the year. Any such taxable
income will be taxed at your regular federal and any applicable state income
tax rates. It will also be subject to the 10% federal penalty tax if you are
under age 59 and 1/2 and none of the exceptions apply to you during the year.
Even if you are taxed on a loan that has become delinquent, you are
still obligated to repay it unless you are also eligible for a benefit
distribution from the Plan. When you do repay a delinquent loan that has been
taxed to you, you receive a "basis" in your Plan account equal to the
delinquent amount, so you will not be taxed on that amount again when you
ultimately receive your retirement benefit.
By the Plan Administrator
/s/ C. William Ferris
---------------------------------------
C. William Ferris
3
<PAGE> 117
REVISED 4/98
PROMISSORY NOTE AND SECURITY AGREEMENT
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT SHARING PLAN
$____________________________ Date:_______________________________
Boca Raton, Florida
For value received, the undersigned hereby promises to pay to the order of the
Trustees of the Mackenzie Investment Management Inc. Profit Sharing Plan (the
"Plan").
$_________________________________ ( __________________________________________
Dollars); on or before _______________ years from the date hereof and to pay
interest on the unpaid principal balance from the date hereof at the rate of
_________ % per annum, all principal and interest to be payable in equal
semi-monthly installments of $_____________ commencing on
_______________________ continuing until all principal and accrued interest
hereunder is paid in full.
To ensure that the Plan will suffer no loss in the event of any failure to
repay the loan, the undersigned hereby acknowledges that the loan will be made
as a directed investment of his or her own account in the Plan.
All payments hereunder shall be made by payroll withholding unless otherwise
permitted by the holder. A borrower who is a current employee of the Plan's
sponsor may prepay the loan only if the full outstanding balance is paid in a
single payment. A borrower who has terminated service with the Plan's sponsor
while a loan is outstanding, and who does not elect to take or is not required
to take distribution of his or her vested benefit, shall be permitted to make
payments by check in monthly or quarterly installments. A borrower who has
terminated service while a loan is outstanding shall be permitted to repay the
full outstanding loan balance in a single payment. Prepayment of an outstanding
loan balance under the terms of this paragraph shall not cause the borrower to
incur a penalty.
Security for Repayment.
As collateral security for the payment of all indebtedness owing under this
Note, the borrower hereby pledges and grants to the holder, and its successors
and assigns, a security interest in the borrower's present and future account
balances under the Plan, and in the borrower's rights and benefits under the
Plan attributable to said account balances, and to any proceeds of said account
balances. To the extent required by regulations of the Department of Labor
pursuant to the Employee Retirement Income Security Act of 1974, or other
applicable federal law, the security interest granted by the borrower to the
holder under this Note shall be limited as follows:
1
<PAGE> 118
(a) Immediately after the origination of any loan under the Plan to
the borrower (including at the close of business on the effective date of this
Note), no more than 50% of the borrower's vested accrued benefit under the Plan
shall be considered as security for the balance of all loans made under the
Plan to the borrower (including the indebtedness under this Note) which is
outstanding at that time.
(b) At all times after the close of business on the effective date of
this Note, the holder shall have a security interest in that portion of the
borrower's vested accrued benefit which shall equal the borrower's total
indebtedness under the Note, including all outstanding principal, all accrued
but unpaid interest and all collection and enforcement costs incurred by the
holder, and under all other outstanding loans made under the Plan to the
borrower.
Events Constituting Default. A loan will be in default:
(a) In the event that the undersigned shall fail to pay any
installment of interest or of principal hereunder when due and the same shall
remain unpaid for sixty days after the due date;
(b) In the event that the undersigned shall become the subject of
bankruptcy or insolvency proceedings or other proceedings for the relief of
debtors;
(c) In the event that the undersigned fails to maintain the holder's
security at the level provided above;
(d) In the event that the undersigned makes any false statement or
breaches any promise made in connection with the loan;
(e) In the event that the undersigned shall fail to repay the entire
loan (principal plus accrued interest) by the earlier of (i) the Loan Maturity
Date identified at page 1 of this Agreement, and (ii) the date that the Plan is
terminated; and
(f) In the event that a borrower who has terminated service with the
Plan's sponsor receives a distribution of all or any portion of the borrower's
account balance.
Upon the occurrence of any or all of the foregoing events of default, the
holder hereof may declare this Note to be due and payable and the same shall
forthwith become due and payable without any further notice, presentment or
demand of any kind.
Upon default in the payment or performance of any of the obligations hereunder,
the payee or any subsequent holder may apply or set off against such
obligations all or any portion of the aforesaid interest as soon as the
borrower is eligible to receive a benefit distribution from the Plan.
No prepayment of the unpaid principal balance of this Note or the interest
thereon shall be allowed, except by a borrower who pays the entire outstanding
balance in a single payment.
2
<PAGE> 119
In the event the undersigned shall default on any payment of principal or
interest due under this Note, and in addition to all other amounts hereunder,
the undersigned shall pay to the holder the costs of collection thereof
(including any reasonable attorneys' fees) actually incurred by the holder.
All amounts not paid when due hereunder shall bear interest at the rate stated
above.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
day and year first above written. This Note shall take effect as a Florida
sealed instrument.
Borrower:
_______________________________________________________
Name
Mackenzie Investment Management Inc.
700 South Federal Highway, Suite 300
Boca Raton, FL 33432
Phone 800-456-5111
Fax 561-391-4955
3
<PAGE> 120
4/98
LOAN DISCLOSURE STATEMENT
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT SHARING PLAN
Borrow Signature:
---------------------------------------------------
Date:
---------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ANNUAL PERCENTAGE FINANCE AMOUNT TOTAL
RATE CHARGE FINANCED PAYMENTS
- ----------------- ---------- -------- --------
The Cost of The dollar The amount The amount
your credit at amount the of credit you will
a yearly rate credit will provided to have paid
cost you you or on after you have
your behalf made all
payments as
scheduled
_____________% $ _________________ $__________________ $__________________
</TABLE>
================================================================================
You have the right to receive at this time an itemization of the Amount
Financed.
____________ I want an itemization. __________ I do not want an itemization
Number of Payments Amount of payments When Payments are Due
- ------------------ ------------------ ---------------------
- ------------------ ------------------ ---------------------
Security: You are giving a security interest in fifty percent of your
account in the Plan attributable to all contributions.
Loan Processing and Administration Fees: $__________________
Late Charge: If a payment of interest or principal is late, you will
be charged interest at the ANNUAL PERCENTAGE RATE on the amount due until the
date payment is made.
<PAGE> 121
No Partial Prepayment: No partial prepayment of your loan is allowed,
but you may pay the entire outstanding balance in a single payment.
Additional Terms: See your Promissory Note and Security Agreement and
any other contract documents for additional information about nonpayment,
default, costs of collection, and any required repayment in full before the
schedule date.
______________________________
"e" means an estimate.
<PAGE> 122
4/98
LOAN DISCLOSURE STATEMENT
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT SHARING PLAN
Borrow Signature:
---------------------------------------------------
Date:
---------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ANNUAL PERCENTAGE FINANCE AMOUNT TOTAL
RATE CHARGE FINANCED PAYMENTS
- ----------------- ---------- -------- --------
The Cost of The dollar The amount The amount
your credit at amount the of credit you will
a yearly rate credit will provided to have paid
cost you you or on after you have
your behalf made all
payments as
scheduled
_____________% $ _________________ $__________________ $__________________
</TABLE>
================================================================================
You have the right to receive at this time an itemization of the Amount
Financed.
____________ I want an itemization. __________ I do not want an itemization
Number of Payments Amount of payments When Payments are Due
- ------------------ ------------------ ---------------------
- ------------------ ------------------ ---------------------
Security: You are giving a security interest in fifty percent of your
account in the Plan attributable to all contributions.
Loan Processing and Administration Fees: $___________________
Late Charge: If a payment of interest or principal is late, you will
be charged interest at the ANNUAL PERCENTAGE RATE on the amount due until the
date payment is made.
<PAGE> 123
No Partial Prepayment: No partial prepayment of your loan is allowed,
but you may pay the entire outstanding balance in a single payment.
Additional Terms: See your Promissory Note and Security Agreement and
any other contract documents for additional information about nonpayment,
default, costs of collection, and any required repayment in full before the
schedule date.
<PAGE> 124
Revised 4/98
ITEMIZATION OF AMOUNT FINANCED
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT SHARING PLAN
Borrower: ___________________________________
Date: ___________________________________
Total Amount Financed: $__________________________________
Amount given directly to you: $__________________________________
Amount paid on your account $__________________________________
Amount paid to others on
your behalf: $__________________________________
<PAGE> 125
SPOUSAL CONSENT FORM
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT SHARING PLAN
[ ] I declare that I am unmarried and the spousal consent requirements do not
apply.
[ ] I am married. Below please find the consent of my spouse.
I hereby consent to the foregoing election by my spouse to withdraw his/her
benefit from the above named plan.
____________________________________ ___________________________________
Spouse's Signature Participant's Signature
Witnessed By:
____________________________________ __________________
Plan Administrator's Signature Date
or
____________________________________ __________________
Notary Public Date
<PAGE> 126
Revised 4/98
APPLICATION FOR LOAN
MACKENZIE INVESTMENT MANAGEMENT, INC.
PROFIT SHARING PLAN
Member Name________________________________ Date______________________________
Loan Amount Requested $_____________________________
Repayment Frequency Semi-Monthly
______________________________
Term of the Loan ______________________________
______________________________________________________
Member's Signature
===============================================================================
APPROVED
$_____________________________
Interest Rate ________________%
______________________________ Plan Administrator's Signature
______________________________
Date
FEE SCHEDULE:
LOAN APPLICATION FEE - $50.00
ANNUAL MAINTENANCE FEE - $40.00
<PAGE> 127
MACKENZIE INVESTMENT MANAGEMENT INC.
401(k) PLAN
ENROLLMENT AND ELECTION CHANGE FORM
CONTRIBUTION ELECTION
I elect a salary reduction of ____________% (elect 1 - 20%) to be contributed
to the plan each pay period. The Company will match 100% of the first 6% of my
compensation that I contribute to the Plan.
INVESTMENT ELECTION
I hereby authorize and direct the investment of my salary reduction
contributions and the Company contributions as follows:
Contributions
Ivy Growth Fund %
----------------------------------
Ivy Growth with Income Fund %
----------------------------------
Ivy Bond Fund %
----------------------------------
Ivy International Fund %
----------------------------------
Ivy Global Fund %
----------------------------------
Ivy US Emerging Growth Fund %
----------------------------------
Ivy International II %
----------------------------------
Ivy Developing Nations Fund %
----------------------------------
Ivy Canada Fund %
----------------------------------
Ivy Pan Europe %
----------------------------------
Fidelity Cash Reserve Fund %
----------------------------------
(Enter contribution amount in 5% increments to total 100%)
( ) Self directed brokerage accounts
AUTHORIZATION
- -------------------------------------------------------------------------------
I understand that the elections made herein will be effective as of the first
day of the calendar quarter following the date indicated below, and that my
elections will remain in force as long as I continue to qualify for the Plan or
until 1 authorize a change in writing as provided by the Plan.
Name ______________________________________________ SS #______________________
(please print)
Address________________________________________________________________________
City, State, Zip_______________________________________________________________
Signature _________________________________ Date______________________________
<PAGE> 128
FIRST AMENDMENT TO THE
MACKENZIE INVESTMENT MANAGEMENT, ~
PROFIT-SHARING PLAN
This First Amendment to the Mackenzie Investment Management, Inc.
Profit-Sharing Plan (the "Plan"), is adopted effective as of January 1, 1994,
unless otherwise indicated, by Mackenzie Investment Management, Inc. (the
"Company"), in accordance with Article XIII of the Plan and the requirements of
the Tax Reform Act of 1986 ("TRA '86"), Code Section 414(q)(6)(C), Code Section
401(a)(17) as appearing in the Model Amendment of IRS Revenue Procedure 94-13,
and Code Section 411(a)(11) as appearing in the Model Amendment of IRS Revenue
Procedure 9347. The Company hereby amends the Plan as follows:
1. Effective January 1, 1989, Section 2.15 of Article II is amended by adding
the following new paragraphs after Paragraph One:
The family aggregation rules of Code Section 414(q)(6)(C), as modified
by Code Section 401(a)(17), and regulations thereunder shall apply to
Compensation in the following manner. In the case of an Employee who is either
a 5% owner or is both a highly compensated employee (within the meaning of Code
Section 414(q)(6)) and one of the ten most highly compensated employees, the
Employee, the Employee's spouse, and any lineal descendants of such Employee
who have not attained age 19 before the close of the Year shall be treated as a
single Employee (a "family unit") with one Compensation to which the annual
compensation limit under the Plan applies. If Compensation for the family unit
exceeds the annual compensation limit under Code Section 401(a)(17), then the
Plan shall allocate the limit among the members of the family unit pro rata to
their Compensation. However, if the Plan provides for permitted disparity under
Code Section 401(1), this proration shall not be applied for purposes of
determining the portion of each individual's Compensation ("Covered
Compensation") that is below the integration level.
2. Section 2.15 of Article II is further amended by adding the following new
Paragraphs at the end of the Section:
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual compensation of each employee
taken into account under the Plan shall not exceed the OBRA '93 annual
compensation
<PAGE> 129
limit. The OBRA '93 annual compensation limit is $150,000 as adjusted by the
Commissioner for increases in the cost of living in accordance with section
401(a)(17)~) of the Internal Revenue Code. The cost-of-living adjustment in
effect for a calendar year applies to any period, not exceeding 12 months over
which Compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12 months, the
OBRA '93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period, and the
denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current Plan
Year, the Compensation for that prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the first
day of the first Plan Year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000.
3. Section 8.2 of Article VIII is deleted in its entirety and replaced with the
following:
8.2 Noticeand Election of Benefit Form. As required by section
1.411(a)-11(c) of the Income Tax Regulations, not less than 30 days and not
more than 90 days before payment or commencement of a benefit, the Plan
Administrator shall give notice to a Participant or Beneficiary concerning the
alternative methods by which such benefits are to be paid.
(a) After receiving such notice, and subject to Paragraph (1)) below,
a Participant or Beneficiary shall elect a form of benefit (if applicable) and
a method of distribution on a form provided by the Plan Administrator.
(b) If a distribution is one to which sections 401(a)(11) and 417 of
the Internal Revenue Code do not apply, such distribution may commence less
than 30 days after the notice required under section 1.411(a)-11(c) of the
Income Tax Regulations is given, provided that:
(i) the Plan Administrator clearly informs the Participant or
Beneficiary that such individual has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or not to elect
a distribution (and, if applicable, a particular distribution option), and
2
<PAGE> 130
(ii) such Participant or Beneficiary, after receiving the
notice, affirmatively elects a distribution.
Except as specifically amended hereby, the Plan is hereby reaffirmed
in all respects.
SIGNED AS A SEALED INSTRUMENT EFFECTIVE AS OF THE DATE STATED ABOVE.
MACKENZIE INVESTMENT
MANAGEMENT, INC.
Dated: October 19, 1994 By: /s/ C. William Ferris
----------------------------------
Title: Senior Vice President
3
<PAGE> 131
SECOND AMENDMENT
TO THE
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT SHARING PLAN
This Second Amendment to the Mackenzie Investment Management, Inc.
Profit-Sharing Plan (the "Plan") is adopted effective as of January 1, 1989,
unless otherwise indicated, by Mackenzie Investment Management Inc. (the
"Company"). In accordance with Article XIII of the Plan, the Company hereby
amends the Plan as follows:
1. Section 2.2 of Article II is deleted and replaced with the following:
2.2 Actual 401(m) Contribution Percentage. The ratio (expressed as a
percentage) of Matching Contributions, qualified non-elective contributions (if
any), and elective contributions under the plan on behalf of the Participant
for the Plan Year to the Participant's Compensation for the Plan Year. As used
in this Plan the term Actual 401(m) Contribution Percentage has the same
meaning as the term "contribution percentage" as defined in Code Section 401
(m)(3).
2. Section 2.29 of Article II is deleted and replaced with the following:
2.29 Family Member. With respect to any Employee or former employee,
Family Member means such Employee's or former employee's spouse and lineal
ascendants or descendants and the spouses of such lineal ascendants and
descendants. In determining whether an individual is a Family Member with
respect to an Employee or former employee, legal adoptions shall be taken into
account.
3. Section 2.30 of Article II is deleted and replaced with the following:
2.30 Highly Compensated Employee shall mean any Employee of an
Employing Company (for purposes of this Section, the "Employer") who:
(a) was a five percent (5%) owner of the Employer (as defined in
Code Section 416(i)(1)(A) during the "determination year"
or "look-back year"; or
(b) earned more than $75,000 (as increased by cost-of-living
adjustments) of Compensation from the Employer during the
"look-back year"; or
(c) earned more than $50,000 (as increased by cost-of-living
adjustments) of Compensation from the Employer during the
"look-back year" and was in the "Top-Paid Group" of Employees
for such year (as defined under Code Section 4l4(q)(4) and
the regulations promulgated thereunder); or
<PAGE> 132
(d) was an officer of the Employer during the "look-back year"
and received Compensation during the "look-back year" from
the Employer in excess of fifty percent (50%) of the dollar
limitation under Section 415(b)(1)(A) of the Code. The
number of officers shall be limited to the lesser of (i)
fifty (50) Employees; or (ii) the greater of three (3)
Employees or ten percent (10%) of all Employees. If the
Employer does not have at least one officer whose annual
Compensation exceeds fifty percent (50%) of the dollar
limitation under Code Section 415(b)(l)(A), then the highest
paid officer of the Employer shall be treated as a Highly
Compensated Employee.
An Employee who is in the group consisting of the one hundred (100)
Employees paid the greatest Compensation during the "determination year" and
also described in subsections (b), (c) or (d) above when these subsections are
modified to substitute "determination year" for "look-back year," shall be
deemed a Highly Compensated Employee for the determination year.
An Employee who separated from Service prior to the "determination
year" shall be treated as a Highly Compensated Employee for the "determination
year" if such Employee was a Highly Compensated Employee when such Employee
separated from Service, or was a Highly Compensated Employee at any time after
attaining age fifty-five (55).
For purposes of this Section, the "determination year" shall be the
Plan Year for which a determination is being made as to whether an Employee is
a Highly Compensated Employee. The "look-back year" shall be the twelve (12)
month period immediately preceding the "determination year." However, if the
Employer shall elect, the "look-back year" shall be the calendar year ending
with or within the Plan Year for which testing for the determination of which
Employees are Highly Compensated Employees is being performed, and the
"determination year" (if applicable) shall be the period of time, if any, which
extends beyond the "look-back year" and ends on the last day of the Plan Year
for which such testing is being performed (the "lag period"). If the "lag
period" is less than twelve (12) months, the dollar threshold amounts specified
in (1,), (c) and (d) above shall be pro-rated based upon the number of months
in the "lag period."
If an individual is a member of the "family" (within the meaning of
Section 414(q)(6)(B) of the Code) of a five percent (5%) owner or a Highly
Compensated Employee in the group consisting of the ten (10) Highly Compensated
Employees paid the greatest Compensation during the "determination and/or
look-back year," then such individual shall not be considered a separate
Employee, and any Compensation paid to such individual (and any contribution or
benefit on behalf of such individual) shall be treated as if paid to (or on
behalf of) the five percent (5%) owner or such Highly Compensated Employee.
4. Subparagraph (Iv) of Section 4.1.2 (h)(ii) is amended by adding the
following new paragraph thereto:
2
<PAGE> 133
Qualified nonelective contributions (if any) may treated as Matching
Contributions to satisfy the Average Actual 401(m) Contribution Percentage
Test. Such contributions, whether or not treated as Matching Contributions,
shall be nonforfeitable when made and shall be distributable to a Participant
only at attainment of age 59 1/2 , or in case of a withdrawal under Section
8.4.2 of Article VIII, or in the event of retirement, death, disability or
other termination of service. Such contributions shall also be distributable to
Participants in the event of termination of the plan without establishment or
maintenance of another defined contribution plan (other than an ESOP or SEP),
or in the event of the sale or other disposition of substantially all of the
Company's assets to an entity that does not assume the Company's obligations
under the Plan.
5. Section 4.1.2(h)(ii) of Article IV is further amended by inserting the
following new subparagraph (V):
(V) In the case of a Highly Compensated Employee whose "Actual 401(m)
Contribution Percentage," as defined at Section 2.2 of Article II, is
determined under the family aggregation rules of Code Section 414(q)(6) because
he is either a owner or one of the 10 most Highly Compensated Employees, the
determination of the amount of excess aggregate contributions shall be made as
follows:
(a) The Actual 401(m) Contribution Percentage shall be
reduced by the amount required to cause the Employee's Actual 401(m)
Contribution Percentage to equal the ratio of the Highly Compensated Employee
with the next highest Actual 401(m) Contribution Percentage. If a lesser
reduction would enable the arrangement to satisfy the Actual 401(m)
Contribution Percentage test, only the lesser reduction shall be made;
(b) The procedure in (a) above shall be repeated until the
Plan satisfies the Actual 401(m) Contribution Percentage test;
(c) After the application of (a) and (b) above, the highest
Actual 401(m) Contribution Percentage remaining under the Plan shall be the
highest permitted Actual 401(m) Contribution Percentage; and
(d) Any excess aggregate contributions shall be allocated
among the Family Members in proportion to any Employee and Matching
Contributions of each Family Member that are combined to determine the Actual
401(m) Contribution Percentage.
For purposes of this Section 4.1.2 (h), the Actual 401(m) Contribution
Percentage for Family Members shall be determined by combining Employee
Contributions, Matching Contributions, amounts treated as Matching
Contributions and Compensation of all Family Members who are eligible to
participate in the Plan.
3
<PAGE> 134
Except as specifically amended hereby, the Plan is hereby reaffirmed
in all respects.
Signed as a sealed instrument effective as of the date stated above.
MACKENZIE INVESTMENT
MANAGEMENT, INC.
Dated: November 8, 1995 By: /s/ C. William Ferris
--------------------------------
Title: Senior Vice President
4
<PAGE> 135
THIRD AMENDMENT
TO THE
MACKENZIE INVESTMENT MANAGEMENT INC.
PROFIT SHARING PLAN
This Third Amendment to the Mackenzie Investment Management, Inc.
Profit-Sharing Plan (the "Plan") is adopted effective as of April 1, 1996,
unless otherwise indicated, by Mackenzie Investment Management Inc. (the
"Company"). In accordance with Article XIII of the Plan, the Company hereby
amends the Plan as follows:
1. Section 2.24 of Article II is deleted and replaced with the following:
2.24 Entry Date. The first day of each Plan Year quarter (January 1,
April 1, July 1 or October i).
2. Section 2.39 of Article II is amended by adding the following sentence at
the end of the section:
**** The Plan Year quarters shall begin on January 1, April 1, July 1
and October 1 of each Plan Year.
3. Section 3.1 of Article III is deleted and replaced with the following:
3.1 Initial Participation. A full-time Employee shall be eligible to
participate upon the next Entry Date coinciding with or following his
Employment Commencement Date or as of any subsequent Entry Date while he
remains an Employee. A part-time Employee shall be eligible to participate upon
the next Entry Date coinciding with or following his completion of one Year of
Eligibility Service. For these purposes, a full-time Employee is any Employee
who works 37-1/2 or more hours per week. A part-time Employee is any Employee
who works fewer than 37-1/2 hours per week and any temporary or other
time-limited Employee.
<PAGE> 136
4. Paragraphs (a) (b) and (c) of Section 4.1.1 of Article IV are deleted and
replaced with the following:
(a) Fixed Matching Contributions:
On behalf of each Participant, an amount equal to fifty percent (~o%)
of the Participant's Pre-tax Contributions, but subject to the following: (i)
the aggregate amount of each Participant's Fixed Matching Contributions on
account of any Plan Year shall not exceed three percent (3%) of his or her
Compensation for such Plan Year paid up through the date that the Fixed
Matching Contribution (or each installment thereof) is made; and (ii) all Fixed
Matching Contributions shall be subject to all other applicable limitations of
this Article IV.
(b) Discretionary Matching Contributions:
An amount, if any, determined annually by the Board in its sole
discretion and allocated, subject to the limitations of this Article Iv, as an
equal percentage of each Participant's Pre-tax Contributions made on account of
the same Plan Year.
(c) Limitations Applicable to Highly Compensated Employees:
All Matching Contributions made on behalf of Participants who are
Highly Compensated Employees shall be subject to the provisions of Code Section
401(m) and Subsections (h) and (i) of Section 4.1.2 of this Plan.
5. Paragraph (c) of Section 4.2.2 of Article IV is deleted and replaced with
the following:
* * *
(c) Modification and Termination of Pre-tax Contributions.
2
<PAGE> 137
A Participant's election to commence Pre-tax Contributions shall
remain in effect until modified or terminated. A Participant may modify his
compensation reduction agreement to increase or decrease the rate of Pre-tax
Contributions made on his behalf effective on the first pay date of any Plan
Year quarter (January 1 April 1, July 1 or October i).
Except as specifically amended hereby, the Plan is hereby reaffirmed
in all respects.
Signed as a sealed instrument effective as of the date stated above.
MACKENZIE INVESTMENT
MANAGEMENT INC.
Dated: March 29, 1996 By: /s/ C. William Ferris
-----------------------------------------
C. William Ferris, Senior Vice President
<PAGE> 1
Exhibit 10.10
MASTER ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 1ST day of SEPTEMBER, 1992 by Ivy Fund
(the "Trust") and Mackenzie Investment Management Inc. ("MIMI")
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of one or more separate investment
portfolios (the "Funds") as may be established and designated from time to time;
WHEREAS, the Trust desires certain administrative services of MIMI
with respect to such Funds as shall be designated in supplements to this
Agreement as further agreed between the Trust and MIMI; and
WHEREAS, MIMI has developed the capability to provide certain of
the administrative services required by the Funds.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. APPOINTMENT. The Trust hereby appoints MIMI to provide the
administrative services specified in this Agreement with regard to such Funds as
shall be designated in supplements to this Agreement, and MIMI hereby accepts
such appointment.
2. ADMINISTRATIVE SERVICES.
(a) MIMI shall at its expense provide such of the following
administrative services as are required by the Funds:
(i) maintaining the registration or
qualification of the Funds and their
shares under state "Blue Sky" or
securities laws and regulations, provided
that the Funds shall pay all related
filing fees and registration or
qualification fees;
(ii) assisting the Funds and third party
solicitors (if any) in connection with
soliciting and gathering shareholder
proxies;
(iii) preparing the Funds' U.S. Federal, state
and local income tax returns, provided
that the Funds shall pay all charges for
services and expenses of the Funds'
independent accountants in reviewing such
returns;
(iv) preparing the financial information for
the Funds' prospectuses, statements of
additional information and periodic
reports to shareholders, provided that
the Funds shall
<PAGE> 2
pay all charges for services and expenses
of the Funds' independent accountants;
(v) preparing the semi-annual report on Form
NSAR or on such other substitute form as
the Securities and Exchange Commission
(the "SEC") from time to time may
prescribe under Section 30(b) of the
Investment Company Act of 1940, as
amended (the "1940 Act");
(vi) assisting the Funds' legal counsel with
the preparation and filing with the SEC
of the Funds' registration statement
(including prospectuses and statements of
additional information), and any
amendments or supplements that may be
made from time to time, and with the
preparation and filing with the SEC of
notices and proxy materials for meetings
of shareholders;
(vii) assisting in the printing of the Funds'
prospectuses, periodic reports to
shareholders and proxy materials; and
(viii) providing executive, clerical and
secretarial personnel competent to carry
out the above responsibilities.
(b) MIMI shall provide such other services required by
the Funds as the parties from time to time may agree in writing are appropriate
to be provided under this Agreement. In the event that MIMI provides any
services to the Funds or pays or assumes any expenses of the Funds, which MIMI
is not obligated to provide, pay or assume under this Agreement, MIMI shall not
be obligated hereby to provide the same or any similar service to the Funds or
to pay or assume the same or any similar expenses of the Funds in the future;
provided, that nothing herein contained shall be deemed to relieve MIMI of any
obligations to the Funds under any separate agreement or arrangement between the
parties.
3. STANDARD OF CARE. MIMI shall give the Funds the benefit of
MIMI's best judgment and efforts in rendering the Funds administrative services
pursuant to paragraph 2 of this Agreement. As an inducement to MIMI's
undertaking to render these services, the Funds agree that MIMI shall not be
liable under this Agreement for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing in this
Agreement shall be deemed to protect or purport to protect MIMI against any
liability to the Funds or their
-2-
<PAGE> 3
shareholders to which MIMI would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of MIMI's duties
under this Agreement or by reason of MIMI's reckless disregard of its
obligations and duties hereunder.
4. FEES. In consideration of the services to be rendered by MIMI
pursuant to paragraph 2 of this Agreement, each Fund shall pay MIMI a monthly
fee on the first business day of each month, based on the average daily value
(as determined on each business day at the time set forth in the currently
effective prospectus and statement of additional information (the "Prospectus")
of the Fund for determining net asset value per share) of the net assets of the
Fund during the preceding month at the annual rates set forth in a Supplement to
this Agreement with respect to each Fund. If the fees payable to MIMI pursuant
to this paragraph 4 begin to accrue before the end of any month or if this
Agreement terminates before the end of any month, the fees for the period from
that date to the end of that month or from the beginning of that month to the
date of termination, as the case may be, shall be prorated according to the
proportion which the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating the monthly fees, the value
of the net assets of a Fund shall be computed in the manner specified in the
Fund's Prospectus for the computation of net asset value. For purposes of this
Agreement, a "business day" is any day on which the New York Stock Exchange is
open for trading.
5. RECORDS. All records required to be maintained and preserved by
the Funds pursuant to the provisions or rules or regulations of the SEC under
Section 31(a) of the 1940 Act and maintained and preserved by MIMI on behalf of
the Funds, including any such records maintained by MIMI in connection with the
performance of its obligations hereunder, are the property of the Funds and
shall be surrendered by MIMI promptly on request by the Funds; pROVIDED, that
MIMI at its own expense may make and retain copies of any such records.
6. SOFTWARE AND RELATED MATERIALS. All computer programs, written
procedures, and similar items developed or acquired and used by MIMI in
performing its obligations under this Agreement shall be the property of MIMI,
and the Funds will not acquire any ownership interest therein or property rights
with respect thereto.
7. SERVICES TO OTHER CLIENTS. Nothing herein contained shall limit
the freedom of MIMI or any affiliated person of MIMI to render services of the
types contemplated hereby to other
-3-
<PAGE> 4
persons, firms or corporations, including but not limited to other investment
companies, or to engage in other business activities.
8. TERM. The term of this Agreement shall begin as of the date
specified above and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect for a period of two years from that date.
Thereafter, this Agreement shall continue in effect with respect to a Fund from
year to year, subject to the termination provisions and all other terms and
conditions hereof; PROVIDED, that such continuance with respect to that Fund is
approved at least annually by the Trust's Board of Trustees, including the vote
or written consent of a majority of the Trust's trustees who are not interested
persons of MIMI or the Trust (the "Independent Trustees"). MIMI shall furnish to
the Funds, promptly upon their request, such information (including MIMI's costs
of delivering the services provided to the Funds hereunder) as may reasonably be
necessary to enable the Trust's Board of Trustees to evaluate the terms of this
Agreement or any extension, renewal or amendment hereof. MIMI shall permit the
Funds and their accountants, counsel or other representatives to review its
books and records relating to the services provided hereunder at reasonable
intervals during normal business hours upon reasonable notice requesting such
review.
9. ASSIGNMENT. This Agreement may not be assigned by MIMI, and MIMI
may not assign or transfer any interest hereunder, voluntarily, by operation of
law or otherwise, without the prior written consent of the Funds. Any consent by
the Funds to any assignment hereof or assignment or transfer of any interest
hereunder by MIMI shall not be effective unless and until authorized by the
Trust's Board of Trustees, including the vote or written consent of a majority
of the Trust's Independent Trustees.
10. TERMINATION OF AGREEMENT. This Agreement may be terminated with
respect to a Fund, without the payment of any penalty, by MIMI upon at least
sixty (60) days' prior written notice to that Fund, or by the Fund upon at least
sixty (60) days' prior written notice to MIMI; PROVIDED, that in the case of
termination by a Fund, such action shall have been authorized by the Trust's
Board of Trustees, including the vote or written consent of a majority of the
Trust's Independent Trustees. This Agreement shall automatically and immediately
terminate in the event of its assignment by MIMI, or MIMI's assignment or
transfer of any interest hereunder, without the prior written consent of the
Funds as provided in paragraph 9 hereof.
-4-
<PAGE> 5
11. INTERPRETATION AND DEFINITION OF TERMS Any question or
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any. Specifically, the terms "interested persons,"
"assignment" and "affiliated person," as used in this Agreement, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act.
12. MISCELLANEOUS.
(a) This Agreement shall be construed in accordance with the
laws of the State of Florida, provided that nothing herein shall be construed in
a manner inconsistent with the 1940 Act.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
(c) The Trust's Agreement and Declaration of Trust has been
filed with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Trust are not personally binding upon, nor shall resort be
had to the private property of, any of the trustees, shareholders, officers,
employees or agents of the Trust, but only the Trust's property shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
IVY FUND
By:
--------------------------------------
TITLE:PRESIDENT
MACKENZIE INVESTMENT MANAGEMENT INC.
By:
--------------------------------------
TITLE: PRESIDENT
-5-
<PAGE> 1
EXHIBIT 10.11
MASTER BUSINESS MANAGEMENT AND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 31st day of December, 1991, by Ivy Fund
(the "Fund") and Ivy Management Inc. (the "Manager")
WHEREAS, the Fund is an open-end investment company organized as
a Massachusetts business trust and consists of one or more separate investment
portfolios (the "Portfolios") as may be established and designated from time to
time;
WHEREAS, the Fund desires the services of the Manager as business
manager and investment adviser with respect to such Portfolios as shall be
designated in supplements to this Agreement as further agreed between the Fund
and the Manager; and
WHEREAS, the Fund engages in the business of investing and
reinvesting the assets of the Portfolios in the manner and in accordance with
the investment objectives and restrictions specified in the currently effective
prospectus and statement of additional information (the "Prospectus") relating
to the Portfolios included in the Fund's Registration Statement, as amended from
time to time, filed by the Fund under the Investment Company Act of 1940 (the
"1940 Act") and the Securities Act of 1933;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. APPOINTMENT. The Fund hereby appoints the Manager to provide
the business management and investment advisory services specified in this
Agreement with regard to such Portfolios as shall be designated in supplements
to this Agreement, and the Manager hereby accepts such appointment.
2. INVESTMENT ADVISORY SERVICES.
(a) As investment adviser to the Portfolios, the Manager shall
make investments for the account of each Portfolio in accordance with the
Manager's best judgment and within the investment objectives and restrictions
set forth in the Prospectus applicable to the Portfolios, the 1940 Act and the
provisions of the Internal Revenue Code relating to regulated investment
companies, subject to policy decisions adopted by the Fund's Board of Trustees.
(b) The Manager will determine the securities to be purchased
or sold by each Portfolio and will place orders pursuant to its determinations
with any broker or dealer who deals in such securities. The Manager also shall
(i) comply with
<PAGE> 2
all reasonable requests of the Fund for information, including information
required in connection with the Fund's filing with the Securities and Exchange
Commission (the "SEC") and state securities commissions, and (ii) provide such
other services as the Manager shall from time to time determine to be necessary
or useful to the administration of the Portfolios.
(c) The Manager shall furnish to the Fund's Board of Trustees
periodic reports on the investment performance of each Portfolio and on the
performance of its obligations under this Agreement and shall supply such
additional reports and information as the Fund's officers or Board of Trustees
shall reasonably request.
(d) On occasions when the Manager deems the purchase or sale
of a security to be in the best interest of a Portfolio as well as other
customers, the Manager, to the extent permitted by applicable law, may aggregate
the securities to be so sold or purchased in order to obtain the best execution
or lower brokerage commissions, if any. The Manager also may purchase or sell a
particular security for one or more customers in different amounts. On either
occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Manager in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Portfolio involved and to such other customers.
3. BUSINESS MANAGEMENT SERVICES.
(a) The Manager shall supervise the Portfolios' business
and affairs and shall provide such services reasonably necessary for the
operation of the Portfolios as are not provided by employees or other agents
engaged by the Portfolios; provided, that the Manager shall not have any
obligation to provide under this Agreement any direct or indirect services to
the Portfolios' shareholders, any services related to the distribution of the
Portfolios' shares, or any other services which are the subject of a separate
agreement or arrangement between the Portfolios and the Manager. Subject to the
foregoing, in providing business management services hereunder, the Manager
shall, at its expense, (1) coordinate with the Portfolios' Custodian and monitor
the services it provides to the Portfolios; (2) coordinate with and monitor any
other third parties furnishing services to the Portfolios; (3) provide the
Portfolios with the necessary office space, telephones and other communications
facilities as are adequate for the Portfolios' needs; (4) provide the services
of individuals competent to perform administrative and clerical functions which
are not performed by employees or other agents
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<PAGE> 3
engaged by the Portfolios or by the Manager acting in some other capacity
pursuant to a separate agreement or arrangement with the Portfolios; (5)
maintain or supervise the maintenance by third parties of such books and records
of the Fund as may be required by applicable Federal or state law; (6) authorize
and permit the Manager's directors, officers and employees who may be elected or
appointed as trustees or officers of the Fund to serve in such capacities; and
(7) take such other action with respect to the Fund, after approval by the Fund,
as may be required by applicable law, including without limitation the rules and
regulations of the SEC and of state securities commissions and other regulatory
agencies.
(b) The Manager may retain third parties to provide these
services to the Fund, at the Manager's own cost and expense. The Manager shall
make periodic reports to the Fund's Board of Trustees on the performance of its
obligations under this Agreement, other than services provided to the Fund by
third parties retained in accordance with the previous sentence.
4. EXPENSES OF THE FUND. Except as provided in paragraph 3 or as
provided in any separate agreement between the Portfolios and the Manager, the
Fund shall be responsible for all of its expenses and liabilities, including:
(1) the fees and expenses of the Fund's Trustees who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of any such party
("Independent Trustees"); (2) the salaries and expenses of any of the Fund's
officers or employees who are not affiliated with the Manager; (3) interest
expenses; (4) taxes and governmental fees, including any original issue taxes or
transfer taxes applicable to the sale or delivery of shares or certificates
therefor; (5) brokerage commissions and other expenses incurred in acquiring or
disposing of portfolio securities; (6) the expenses of registering and
qualifying shares for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8) insurance premiums; (9) fees
and expenses of the Fund's Custodian and Transfer Agent and any related
services; (10) expenses of obtaining quotations of portfolio securities and of
pricing shares; (11) expenses of maintaining the Fund's legal existence and of
shareholders' meetings; (12) expenses of preparation and distribution to
existing shareholders of periodic reports, proxy materials and prospectuses; and
(13) fees and expenses of membership in industry organizations.
5. STANDARD OF CARE. The Manager shall give the Fund the benefit of the
Manager's best judgment and efforts in rendering business management and
investment advisory services pursuant to paragraphs 2 and 3 of this Agreement.
As an inducement to the Manager's undertaking to render these services, the
Fund agrees that the Manager shall not be liable under this Agreement for
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<PAGE> 4
any mistake in judgment or in any other event whatsoever except for lack of
good faith, provided that nothing in this Agreement shall be deemed to protect
or purport to protect the Manager against any liability to the Fund or its
shareholders to which the Manager would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Manager's duties under this Agreement or by reason of the Manager's reckless
disregard of its obligations and duties hereunder.
6. FEES. In consideration of the services to be rendered by the Manager
pursuant to paragraphs 2 and 3 of this Agreement, each Portfolio shall pay the
Manager a monthly fee on the first business day of each month, based on the
average daily value (as determined on each business day at the time set forth in
the Prospectus of the Portfolio for determining net asset value per share) of
the net assets of the Portfolio during the preceding month at the annual rates
set forth in a supplement to this Agreement with respect to each Portfolio. If
the fees payable to the Manager pursuant to this paragraph 6 begin to accrue
before the end of any month or if this Agreement terminates before the end of
any month, the fees for the period from that date to the end of that month or
from the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion which the period bears to the full
month in which the effectiveness or termination occurs. For purposes of
calculating the monthly fees, the value of the net assets of a Portfolio shall
be computed in the manner specified in the Portfolio's Prospectus for the
computation of net asset value. For purposes of this Agreement, a "business day"
is any day on which the New York Stock Exchange is open for trading.
7. EXPENSE LIMITATION. If the aggregate expenses of every character
incurred by, or allocated to, a Portfolio in any fiscal year, other than
interest, taxes, distribution expenses, brokerage commissions and other
portfolio transaction expenses, other expenditures which are capitalized in
accordance with generally accepted accounting principles and any extraordinary
expense (including, without limitation, litigation and indemnification
expenses), but including the fees provided for in paragraph 6 ("includable
expenses"), shall exceed the expense limitations applicable to the Portfolio
imposed by state securities laws or regulations thereunder, as these limitations
may be raised or lowered from time to time, the Manager shall pay to the
Portfolio an amount equal to that excess. With respect to portions of a fiscal
year in which this Agreement shall be in effect, the foregoing limitations shall
be prorated according to the proportion which that portion of the fiscal year
bears to the full fiscal year. At the end of each month of the Fund's fiscal
year, the Manager will review the includable expenses accrued
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<PAGE> 5
during that fiscal year to the end of the period and shall estimate the
contemplated includable expenses for the balance of that fiscal year. If, as a
result of that review and estimation, it appears likely that the includable
expenses will exceed the limitations referred to in this paragraph 7 for a
fiscal year with respect to a Portfolio, the Manager shall pay the Portfolio,
subject to a later reimbursement to reflect actual expenses, an amount equal to
a pro rata portion (prorated on the basis of remaining months of the fiscal
year, including the month just ended) of the amount by which the includable
expenses for the fiscal year (less an amount equal to the aggregate of actual
reductions made pursuant to this provision with respect to prior months of the
fiscal year) are expected to exceed the limitations provided in this paragraph
7. For the purposes of the foregoing, the value of the net assets of the
Portfolio shall be computed in the manner specified in paragraph 6, and any
payments required to be made by the Manager shall be made once a year promptly
after the end of the Fund's fiscal year.
8. OWNERSHIP OF RECORDS. All records required to be maintained
and preserved by the Portfolios pursuant to the provisions or rules or
regulations of the SEC under Section 31(a) of the 1940 Act and maintained and
preserved by the Manager on behalf of the Portfolios are the property of the
Portfolios and shall be surrendered by the Manager promptly on request by the
Portfolios; provided, that the Manager may at its own expense make and retain
copies of any such records.
9. DURATION AND TERMINATION.
(a) This Agreement shall become effective as of the closing of
the acquisition of the capital stock of the Manager by Mackenzie Investment
Management Inc. on December 31, l991, subject to prior shareholder approval
thereof as required by the 1940 Act, and shall continue in effect for a period
of two (2) years from that date, provided, that the Agreement will continue
in effect with respect to a Portfolio for more than two (2) years only so long
as the continuance is specifically approved at least annually (i) by the vote of
a majority of the outstanding voting securities of that Portfolio (as defined in
the 1940 Act) or by the Fund's entire Board of Trustees, and (ii) by the vote,
cast in person at a meeting called for that purpose, of a majority of the Fund's
Independent Trustees.
(b) This Agreement may be terminated with respect to a
Portfolio at any time, without the payment of any penalty, by a vote of a
majority of the outstanding voting securities of that Portfolio (as defined in
the 1940 Act) or by a vote of majority of the Fund's entire Board of Trustees on
sixty (60) days' written notice to the Manager or by the Manager on sixty
(60) days' written notice to the Fund. This Agreement shall
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<PAGE> 6
terminate automatically in the event of its assignment (as defined in the 1940
Act).
10. RETENTION OF SUB-ADVISERS. Subject to a Portfolio's
obtaining any initial and periodic approvals that are required under Section 15
of the 1940 Act, the Manager may retain a sub-adviser with respect to that
Portfolio, at the Manager's own cost and expense.
11. SERVICES TO OTHER CLIENTS. Nothing herein contained shall
limit the freedom of the Manager or any affiliated person of the Manager to
render investment supervisory and administrative services to other investment
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities.
12. MISCELLANEOUS.
(a) This Agreement shall be construed in accordance with
the laws of the State of Florida, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
(c) The Fund's Agreement and Declaration of Trust has been
filed with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Fund are not personally binding upon, nor shall resort be had
to the private property of, any of the Trustees, shareholders, officers,
employees or agents of the Fund, but only the Fund's property shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
IVY FUND
By:/s/ (ILLEGIBLE)
---------------------------------
TITLE: CHAIRMAN
IVY MANAGEMENT INC.
By: /s/ (ILLEGIBLE)
---------------------------------
TITLE: PRESIDENT
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<PAGE> 1
EXHIBIT 10.12
MASTER FUND ACCOUNTING SERVICES AGREEMENT
AGREEMENT made as of the 25th day of January, 1993 by Ivy Fund (the
"Trust") and Mackenzie Investment Management Inc. (herein called the "Agent").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of one or more separate investment
portfolios (the "Funds") as may be established and designated from time to time;
WHEREAS, the Trust desires certain accounting and pricing services of
the Agent with respect to such Funds as shall be designated in supplements to
this Agreement as further agreed between the Trust and the Agent; and
WHEREAS, the Agent has developed the capability to provide certain of
the accounting and pricing services required by the Funds.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
Section 1. DUTIES OF AGENT - GENERAL.
The Agent is authorized to act under the terms of this Agreement as the Trust's
agent, and as such will:
a. Maintain and preserve the Funds' accounts, books, records and
other documents as are required of the Trust under Section 31
of the Investment Company Act of 1940 and Rules 31a-1 and
31a-2 thereunder;
b. Record the current day's trading activity and such other
proper bookkeeping entries as are necessary for determining
that day's net asset value for the Funds;
c. Render statements or copies of records for the Funds from time
to time as requested by the Trust (see Exhibit A);
d. Facilitate audits of accounts by the Trust's auditors or by
any other auditors employed or engaged by the Trust or by any
regulatory body with jurisdiction over the Trust; and
e. Compute each Fund's net asset value per share and, if
applicable, its public offering price, total returns and
yields, and notify the Trust and such other persons as the
Trust may reasonably request of the net asset
<PAGE> 2
value per share, the public offering price and/or the total
return or yield.
Section 2. VALUATION OF SECURITIES.
Securities will be valued in accordance with the specific provisions of the
Funds' prospectuses. In general, consistent with a Fund's prospectus, (i) a
security listed or traded on a recognized stock exchange will be valued at its
last sale price prior to the time the valuation is made, or (ii) the Fund's
portfolio securities will be valued using the amortized cost method.
Section 3. COMPUTATION OF NET ASSET VALUE, PUBLIC OFFERING PRICE, TOTAL RETURNS
AND YIELDS
The Agent will compute each Fund's net asset value in a manner consistent with
the specific provisions of the Fund's prospectus. In general, such computation
will be made by dividing the value of the Fund's portfolio securities, cash and
any other assets, less its liabilities, by the number of shares of the Fund
outstanding, adjusted to the nearest cent. Such computation will be made as of
the close of regular trading on the New York Stock Exchange (normally 4:00 p.m.,
Eastern time) on each day that the New York Stock Exchange is open for trading.
If applicable, the Agent will also compute the public offering price by dividing
the net asset value per share by the appropriate factor as provided by the Fund;
the total return; and the yield.
Each Fund's liabilities are allocated between its classes. The total of such
liabilities allocated to a class plus that class' distribution fee and any other
expenses specially allocated to that class are then deducted from the class'
proportionate interest in the Fund's assets, and the resulting amount for each
class is divided by the number of shares of that class outstanding to produce
the "net asset value" per share.
Section 4. AGENT'S RELIANCE ON INSTRUCTIONS AND ADVICE.
In maintaining the Funds' books of account and making the necessary
computations, the Agent shall be entitled to receive, and may rely upon, (i)
information furnished by a pricing or other similar service pursuant to an
agreement between the Agent, on behalf of a Fund, and such service provider,
approved by the Trust's Board of Trustees, and (ii) information furnished it by
any authorized officer of the Trust relating to:
a. The manner and amount of accrual of expenses other than
management fees to be recorded on the books of the Funds;
b. If applicable, the source of quotations to be used for such
portfolio securities as may not be available through the
Agent's normal pricing services;
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<PAGE> 3
c. If applicable, the value to be assigned to any portfolio
security or other asset for which no price quotations are
readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary; and
e. Notification of transactions in portfolio securities.
The Agent shall be entitled to rely upon any certificate, letter or other
instrument or telephone call reasonably believed by the Agent to be genuine and
to have been properly made or signed by an officer or other authorized agent of
the Trust, on behalf of a Fund, and shall be entitled to receive as conclusive
proof of any fact or matter required to be ascertained by it hereunder a
certificate signed by an officer of the Trust, on behalf of a Fund or any other
person authorized by the Trust's Board of Trustees.
The Agent shall be entitled to receive and act upon advice of Counsel (which may
be Counsel for the Trust) at the expense of the Trust and shall be without
liability for any action taken or thing done in good faith in reliance upon such
advice.
The Trust agrees to furnish the Agent with a copy of the Funds' Prospectuses as
in effect from time to time.
Section 5. DUTY OF CARE AND INDEMNIFICATION.
The Agent shall at all times use reasonable care and act in good faith in
performing its duties hereunder. The Agent shall incur no liability to the Trust
or a Fund in connection with its performance of services hereunder, except to
the extent that it does not comply with the foregoing standards.
The Trust agrees to indemnify and hold harmless the Agent and its employees,
agents and nominees from all taxes, charges, expenses, assessments, claims and
liabilities (including attorney's fees) incurred or assessed against them in
connection with the performance of this Agreement, except such as may arise from
their own negligent action, negligent failure to act or willful misconduct. The
foregoing notwithstanding, the Agent will in no event be liable for any loss
resulting from the acts, omissions, lack of financial responsibility, or failure
to perform the obligations of any person or organization designated by the Trust
to be the authorized agent of the Trust as a party to the transaction.
The Agent's responsibility for damage or loss arising from military power, war,
insurrection, or nuclear fission, fusion or radioactivity shall be limited to
the use of the Agent's best
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<PAGE> 4
efforts to recover the Funds' records determined to be lost, missing or
destroyed.
Section 6. COMPENSATION AND AGENT'S EXPENSES.
The Agent shall be paid for its services pursuant to this Agreement such
compensation as may from time to time be agreed upon in writing between the two
parties. The Agent shall be entitled to recover its telephone, delivery and
other out-of-pocket expenses as incurred.
Each Fund shall pay the Agent a monthly fee based upon the rate(s) set forth in
a Fee Schedule attached to the Supplement to this Agreement with respect to such
Fund. A Fund shall be responsible for fees incurred in connection with a pricing
or other similar service furnishing information pursuant to Section 4 of this
Agreement.
If the fees payable to the Agent pursuant to this section begin to accrue before
the end of any month or if this Agreement terminates before the end of any
month, the fees for the period from that date to the end of that month or for
the period from the beginning of that month to the date of termination, as the
case may be, shall be prorated according to the proportion which the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of a Fund
shall be computed in the manner specified in the Fund's Prospectus for the
computation of its net asset value.
Section 7. TERMINATION OF AGREEMENT.
This Agreement may be terminated with respect to a Fund, without the payment of
any penalty, by the Agent upon at least ninety (90) days' prior written notice
to that Fund, or by the Fund upon at least ninety (90) days' prior written
notice to the Agent; provided, that in the case of termination by the Fund, such
action shall have been authorized by the Trust's Board of Trustees, including
the vote or written consent of a majority of the Trust's Independent Trustees.
Any termination date is to be no earlier than four months from the effective
date hereof. Upon termination, the Agent will turn over to the Trust and cease
to retain in the Agent's files, records of the calculations of the net asset
value of the Fund and other records pertaining to its services hereunder.
Section 8. REPORTS AND MAINTENANCE OF RECORDS BY AGENT.
The Agent will furnish to the Trust and to properly authorized auditors,
examiners, distributors, dealers, underwriters, salesmen, insurance companies,
investors, and others designated by the Trust in writing, such books, records,
and reports at such times as are prescribed for each service in Exhibit A
attached hereto. The Trust shall examine or shall cause any other
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<PAGE> 5
authorized recipient to examine promptly each such book, record, or report, or
copy thereof, and shall report or shall cause to be reported any errors or
discrepancies therein, but the Trust's failure to observe or report any such
error or discrepancy shall not relieve the Agent of its responsibilities or
liabilities as agreed to under the terms of this Agreement. The Agent may at its
option at any time and shall forthwith upon the Trust's demand turn over to the
Trust and cease to retain in the Agent's files, records and documents created
and maintained by the Agent pursuant to this Agreement that are no longer needed
by the Agent in the performance of its services or for its protection.
If not so turned over to the Trust, such documents and reports will be retained
by the Agent for six years from the year of creation, during the first two of
which the same will be in readily accessible form. At the end of six years, such
records and documents shall be turned over to the Trust by the Agent unless the
Trust authorizes their destruction.
Section 9. TERM.
The term of this Agreement shall begin as of the date specified above and unless
sooner terminated as hereinafter provided, this Agreement shall remain in effect
for a period of one year from that date. Thereafter, this Agreement shall
continue in effect with respect to a Fund from year to year, subject to the
termination provisions and all other terms and conditions hereof; provided, that
such continuance with respect to that Fund is approved at least annually by the
Trust's Board of Trustees, including the vote or written consent of a majority
of the Trust's trustees who are not interested persons of Ivy Management Inc.,
the Agent or the Trust (the "Independent Trustees"). The Agent shall furnish to
the Funds, promptly upon their request, such information (including the Agent's
costs of delivering the services provided to the Funds hereunder) as may
reasonably be necessary to enable the Trust's Board of Trustees to evaluate the
terms of this Agreement or any extension, renewal or amendment hereof. The Agent
shall permit the Trust and its accountants, counsel or other representatives to
review its books and records relating to the services provided hereunder at
reasonable intervals during normal business hours upon reasonable notice
requesting such review.
Section 10. INTERPRETATION AND DEFINITION OF TERMS.
Any question or interpretation of any term or provision of this Agreement having
a counterpart in or otherwise derived from a term or provision of the Investment
Company Act of 1940, as amended, (the "1940 Act") shall be resolved by reference
to such term or provision of the 1940 Act and to interpretation thereof, if any.
Specifically, the terms "interested persons," "affiliated person," and
"assignment," as used in this Agreement, shall have the meanings assigned to
them by Section 2(a) of the 1940 Act.
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<PAGE> 6
Section 11. SOFTWARE AND RELATED MATERIALS.
All computer programs, written procedures, and similar items developed or
acquired and used by the Agent in performing its obligations under this
Agreement shall be the property of the Agent, and neither the Trust nor the
Funds will acquire any ownership interest therein or property rights with
respect thereto.
Section 12. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Agent or any affiliated
person of the Agent to render services of the types contemplated hereby to other
persons, firms or corporations, including but not limited to other investment
companies, or to engage in other business activities.
Section 13. MISCELLANEOUS.
This agreement shall be governed and construed in accordance with the laws of
the Commonwealth of Massachusetts.
This Agreement may not be assigned by the Agent without the consent of the Trust
as authorized or approved by resolution of its Board of Trustees.
The captions in this Agreement are included for convenience of reference only
and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
The Trust's Amended and Restated Declaration of Trust has been filed with the
Secretary of State of the Commonwealth of Massachusetts. The obligations of the
Trust or a Fund are not personally binding upon, nor shall resort be had to the
private property of, any of the trustees, shareholders, officers, employees or
agents of the Trust or the Fund, but only that Fund's property shall be bound.
In connection with the operation of this Agreement, the Trust and the Agent may
agree from time to time on such provisions interpretive of or in addition to the
provisions of this Agreement as in their joint opinions may be consistent with
the general tenor of this Agreement. Any such interpretive or additional
provisions are to be signed by both parties and annexed hereto, but no such
provision shall be deemed to be an amendment of this Agreement.
Nothing in this Agreement shall give or be construed to give any shareholder of
the Trust any rights against the Agent.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
written above.
IVY FUND
By: /s/ (ILLEGIBLE)
---------------------------------
MACKENZIE INVESTMENT MANAGEMENT INC.
By: /s/ (ILLEGIBLE)
---------------------------------
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<PAGE> 8
EXHIBIT A
Fund Accounting Services Agreement
STANDARD REPORTS AND AVAILABILITY
The following reports will be provided to the Fund on a regular basis with
availability as indicated:
A. Daily
1. Printed Trial Balance
2. Net Asset Value Worksheet
3. Cash Forecast
4. Yield Computation, if applicable
B. Weekly - Tax Lot Ledgers
C. Monthly
1. Tax Lot Ledgers as of month-end
2. Working Appraisal as of month-end
3. Purchase and Sale Journal for the month
4. Summary of Gains and Losses on Securities for the month
5. Dividend Ledger for the month (Receivable as of month-end
and earned)
6. Interest Income Analysis for the month (receivable as of
month-end and earned)
7. Trial Balance as of month-end
8. Net Asset Value Worksheet as of month-end
9. Open Trades (payable and receivable for unsettled securities
transactions)
D. Annually
1. Purchase and Sale Journal for the year
2. Summary of Gains and Losses on Securities for the year
3. Broker Allocation Report for the year
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<PAGE> 1
EXHIBIT 10.13
MASTER BUSINESS MANAGEMENT AND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 28th day of June, 1999, by Mackenzie Solutions
(the "Trust") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Trust is an open-end investment company organized as
a Massachusetts business trust and consists of one or more separate investment
portfolios as may be established and designated from time to time;
WHEREAS, the Trust desires the services of the Manager as business
manager and investment adviser with respect to such separate investment
portfolios of the Trust as shall be designated in supplements to this Agreement
as further agreed between the Trust and the Manager (the "Funds"); and
WHEREAS, the Trust engages in the business of investing and
reinvesting the assets of the Funds in the manner and in accordance with the
investment objectives and restrictions specified in the currently effective
prospectus and statement of additional information (the "Prospectus") relating
to the Funds included in the Trust's Registration Statement, as amended from
time to time, filed by the Trust under the Investment Company Act of 1940 (the
"1940 Act") and the Securities Act of 1933;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. APPOINTMENT. The Trust hereby appoints the Manager to provide
the business management and investment advisory services specified in this
Agreement with regard to the Funds, and the Manager hereby accepts such
appointment.
2. INVESTMENT ADVISORY SERVICES.
(a) As investment adviser to the Funds, the Manager shall
make investments for the account of each Fund in accordance with the
Manager's best judgment and within the investment objectives and
restrictions set forth in the Prospectus applicable to the Funds, the 1940
Act and the provisions of the Internal Revenue Code of 1986 relating to
regulated investment companies, subject to any policy decisions adopted by
the Trust's Board of Trustees.
(b) The Manager will determine the securities to be
purchased or sold by each Fund and will place orders pursuant to its
determinations with any broker or dealer who deals in such securities. The
Manager also shall (i) comply with all reasonable requests of the Trust for
information, including information required in connection with the Trust's
filings with the Securities and Exchange Commission (the "SEC") and any
state securities commissions, and (ii) provide such other services as the
Manager shall from time to time determine to be necessary or useful to the
administration of the Funds.
<PAGE> 2
(c) The Manager shall furnish to the Trust's Board of Trustees
periodic reports on the investment performance of each Fund and on the
performance of its obligations under this Agreement and shall supply such
additional reports and information as the Trust's officers or Board of Trustees
shall reasonably request.
(d) On occasions when the Manager deems the purchase or sale
of a security to be in the best interest of a Fund as well as other customers,
the Manager, to the extent permitted by applicable law, may aggregate the
securities to be so sold or purchased in order to obtain the best execution or
lower brokerage commissions, if any. The Manager also may purchase or sell a
particular security for one or more customers in different amounts. On either
occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Manager in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Funds involved and to such other customers.
3. BUSINESS MANAGEMENT SERVICES.
(a) The Manager shall supervise the Funds' business and
affairs and shall provide such services reasonably necessary for the operation
of the Funds as are not provided by employees or other agents engaged by the
Funds, provided that the Manager shall not have any obligation to provide under
this Agreement any direct or indirect services to the Funds' shareholders, any
services related to the distribution of the Funds' shares, or any other services
which are the subject of a separate agreement or arrangement between the Funds
and the Manager. Subject to the foregoing, in providing business management
services hereunder, the Manager shall, at its expense, (1) coordinate with the
Funds' Custodian and monitor the services it provides to the Funds; (2)
coordinate with and monitor any other third parties furnishing services to the
Funds; (3) provide the Funds with the necessary office space, telephones and
other communications facilities as are adequate for the Funds' needs; (4)
provide the services of individuals competent to perform administrative and
clerical functions which are not performed by employees or other agents engaged
by the Funds or by the Manager acting in some other capacity pursuant to a
separate agreement or arrangement with the Funds; (5) maintain or supervise the
maintenance by third parties of such books and records of the Trust as may be
required by applicable Federal or state law; (6) authorize and permit the
Manager's directors, officers and employees who may be elected or appointed as
trustees or officers of the Trust to serve in such capacities; and (7) take such
other action with respect to the Trust, after approval by its Board of Trustees,
as may be required by applicable law, including without limitation the rules and
regulations of the SEC and of state securities commissions and other regulatory
agencies.
(b) The Manager may retain third parties to provide these
services to the Trust, at the Manager's own cost and expense. The Manager shall
make periodic reports to the Trust's Board of Trustees on the performance of its
obligations under this Agreement, other than services provided to the Trust by
third parties retained in accordance with the previous sentence.
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<PAGE> 3
4. EXPENSES OF THE TRUST. Except as provided in paragraph 3 or as
provided in any separate agreement between the Funds and the Manager, the Trust
shall be responsible for all of its expenses and liabilities, including: (1) the
fees and expenses of the Trust's Trustees who are not parties to this Agreement
or "interested persons" (as defined in the 1940 Act) of any such party
("Independent Trustees"); (2) the salaries and expenses of any of the Trust's
officers or employees who are not affiliated with the Manager; (3) interest
expenses; (4) taxes and governmental fees, including any original issue taxes or
transfer taxes applicable to the sale or delivery of shares or certificates
therefor; (5) brokerage commissions and other expenses incurred in acquiring or
disposing of portfolio securities; (6) the expenses of registering and
qualifying shares for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8) insurance premiums; (9) fees
and expenses of the Trust's Custodian and Transfer Agent and any related
services; (10) expenses of obtaining quotations of portfolio securities and of
pricing shares; (11) expenses of maintaining the Trust's legal existence and of
shareholders' meetings; (12) expenses of preparing and distributing to existing
shareholders periodic reports, proxy materials and prospectuses; and (13) fees
and expenses of membership in industry organizations.
5. STANDARD OF CARE. The Manager shall give the Trust the benefit
of the Manager's best judgment and efforts in rendering business management and
investment advisory services pursuant to paragraphs 2 and 3 of this Agreement.
As an inducement to the Manager's undertaking to render these services, the
Trust agrees that the Manager shall not be liable under this Agreement for any
mistake in judgment or in any other event whatsoever except for lack of good
faith, provided that nothing in this Agreement shall be deemed to protect or
purport to protect the Manager against any liability to the Funds or their
shareholders to which the Manager would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Manager's duties under this Agreement or by reason of the Manager's reckless
disregard of its obligations and duties hereunder.
6. FEES. In consideration of the services to be rendered by the
Manager pursuant to paragraph 2 and 3 of this Agreement, each Fund shall pay the
Manager a monthly fee on the first business day of each month, based on the
average daily value (as determined on each business day at the time set forth in
the Prospectus of that Fund for determining net asset value per share) of the
net assets of that Fund during the preceding month, at the annual rates set
forth in a supplement to this Agreement with respect to each Fund. If the fees
payable to the Manager pursuant to this paragraph 6 begin to accrue before the
end of any month, or if this Agreement terminates before the end of any month,
the fees for the period from that date to the end of that month or from the
beginning of that month to the date of termination, as the case may be, shall be
prorated according to the proportion which the period bears to the full month in
which the effectiveness or termination occurs. For purposes of calculating the
monthly fees, the value of the net assets of a Fund shall be computed in the
manner specified in that Fund's Prospectus of the computation of net asset
value. For purposes of this Agreement, a "business day" is any day on which the
New York Stock Exchange is open for trading.
7. EXPENSE LIMITATION. If the aggregate expenses of every
character incurred by, or allocated to, a Fund in any fiscal year, other than
interest, taxes, distribution expenses, brokerage
3
<PAGE> 4
commissions and other portfolio transaction expenses, other expenditures which
are capitalized in accordance with generally accepted accounting principles and
any extraordinary expense (including, without limitation, litigation and
indemnification expenses), but including the fees provided for in paragraph 6
("includible expenses"), shall exceed the expense limitations applicable to the
Fund imposed by state securities laws or regulations thereunder, as these
limitations may be raised or lowered from time to time, the Manager shall pay to
that Fund an amount equal to that excess. With respect to any portion of a
fiscal year in which this Agreement shall be in effect, the foregoing
limitations shall be prorated according to the proportion which that portion of
the fiscal year bears to the full fiscal year. At the end of each month of the
Trust's fiscal year, the Manager will review the includible expenses accrued
during that fiscal year to the end of the period and shall estimate the
contemplated includible expenses for the balance of that fiscal year. If, as a
result of that review and estimation, it appears likely that the includible
expenses will exceed the limitations referred to in this paragraph 7 for a
fiscal year with respect to a Fund, the Manager shall pay that Fund, subject to
a later reimbursement to reflect actual expenses, an amount equal to a pro rata
portion (prorated on the basis of remaining months of the fiscal year, including
the month just ended) of the amount by which the includible expenses for the
fiscal year (less an amount equal to the aggregate of actual reductions made
pursuant to this provision with respect to prior months of the fiscal year) are
expected to exceed the limitations provided in this paragraph 7. For the
purposes of the foregoing, the value of the net assets of the Fund shall be
computed in the manner specified in paragraph 6, and any payments required to be
made by the Manager shall be made once a year promptly after the end of the
Trust's fiscal year.
8. OWNERSHIP OF RECORDS. All records required to be maintained and
preserved by the Funds pursuant to rules or regulations of the SEC, including
but not limited to Section 31(a) of the 1940 Act, and maintained and preserved
by the Manager on behalf of the Funds are the property of the Funds and shall be
surrendered by the Manager promptly on request by the Funds; provided, that the
Manager may at its own expense make and retain copies of any such records.
9. DURATION AND TERMINATION.
(a) This Agreement shall become effective as of the date first
set forth above, subject to prior shareholder approval thereof as required by
the 1940 Act, and shall continue in effect for a period of two (2) years from
that date; provided, that the Agreement will continue in effect with respect
to a Fund for more than two (2) years only so long as the continuance is
specifically approved at least annually (i) by the vote of a majority of the
outstanding voting securities of that Fund (as defined in the 1940 Act) or by
the Trust's entire Board of Trustees, and (ii) by the vote, cast in person at a
meeting called for that purpose, of a majority of the Trust's Independent
Trustees.
(b) This Agreement may be terminated with respect to a Fund at
any time, without the payment of any penalty, by a vote of a majority of the
outstanding voting securities of that Fund (as defined in the 1940 Act) or by a
vote of majority of the Trust's entire Board of Trustees on sixty (60) days'
written notice to the Manager or by the Manager on sixty (60) days' written
notice to the Trust.
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<PAGE> 5
This Agreement shall terminate automatically in the event of its assignment (as
defined in the 1940 Act).
10. RETENTION OF SUB-ADVISERS. Subject to a Fund's obtaining any
initial and periodic approvals that are required under Section 15 of the 1940
Act, the Manager may retain a sub-adviser with respect to that Fund, at the
Manager's own cost and expense.
11. SERVICES TO OTHER CLIENTS. Nothing herein contained shall limit the
freedom of the Manager or any affiliated person of the Manager to render
investment supervisory and administrative services to other investment
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities.
12. MISCELLANEOUS.
(a) This Agreement shall be construed in accordance with the
laws of the State of Florida, provided that nothing herein shall be construed in
a manner inconsistent with the 1940 Act.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
(c) The Trust's Agreement and Declaration of Trust has been
filed with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Trust are not personally binding upon, nor shall resort be
had to the private property of any of the Trustees, shareholders, officers,
employees or agents of the Trust, but only the Trust's property shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MACKENZIE SOLUTIONS
By: /s/ KEITH J. CARLSON
------------------------------
Keith J. Carlson, President
IVY MANAGEMENT, INC.
By: /s/ MICHAEL G. LANDRY
------------------------------
Michael G. Landry, President
5
<PAGE> 1
Exhibit 10.14
MASTER FUND ACCOUNTING SERVICES AGREEMENT
AGREEMENT made as of the 28th day of June, 1999 by Mackenzie Solutions
(the "Trust") and Mackenzie Investment Management Inc. (the "Agent").
WHEREAS, the Trust is an open-end investment company organized as a
Massachusetts business trust and consists of one or more separate investment
portfolios (the "Funds") as may be established and designated from time to
time;
WHEREAS, the Trust desires certain accounting and pricing services of
the Agent with respect to such Funds as shall be designated in supplements to
this Agreement as further agreed between the Trust and the Agent; and
WHEREAS, the Agent has developed the capability to provide certain of
the accounting and pricing services required by the Funds.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. Duties of Agent - General.
The Agent is authorized to act under the terms of this Agreement as
the Trust's agent, and as such will:
a. Maintain and preserve the Funds' accounts, books, records and
other documents as are required of the Trust under Section 31 of
the Investment Company Act of 1940 and Rules 31a-1 and 31a-2
thereunder;
b. Record the current day's trading activity and such other proper
bookkeeping entries as are necessary for determining that day's
net asset value for the Funds;
c. Render statements or copies of records for the Funds from time to
time as requested by the Trust (see Exhibit A);
d. Facilitate audits of accounts by the Trust's auditors or by any
other auditors employed or engaged by the Trust or by any
regulatory body with jurisdiction over the Trust; and
e. Compute each Fund's net asset value per share and, if applicable,
its public offering price, total returns and yields, and notify
the Trust and such other persons as the Trust may reasonably
request of the net asset value per share, the public offering
price and/or the total return or yield.
<PAGE> 2
2. Valuation of Securities.
Securities will be valued in accordance with the specific provisions
of each Fund's Prospectus.
3. Computation of Net Asset Value. Public Offering
Price. Total Returns and Yields.
The Agent will compute each Fund's net asset value in a manner
consistent with the specific provisions of the Fund's prospectus. In general,
such computation will be made by dividing the value of the Fund's portfolio
securities, cash and any other assets, less its liabilities, by the number of
shares of the Fund outstanding, adjusted to the nearest cent. Such computation
will be made as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern time) on each day that the New York Stock Exchange
is open for trading. If applicable, the Agent will also compute the public
offering price by dividing the net asset value per share by the appropriate
factor as provided by the Fund; the total return; and the yield.
Each Fund's liabilities are allocated between its classes. The total
of such liabilities allocated to a class plus that class's distribution fee and
any other expenses specially allocated to that class are then deducted from the
class's proportionate interest in the Fund's assets, and the resulting amount
for each class is divided by the number of shares of that class outstanding to
produce the "net asset value" per share.
4. Agent's Reliance on Instructions and Advice.
In maintaining the Funds' books of account and making the necessary
computations, the Agent shall be entitled to receive, and may rely upon, (i)
information furnished by a pricing or other similar service pursuant to an
agreement between the Agent, on behalf of a Fund, and such service provider,
approved by the Trust's Board of Trustees, and (ii) information furnished it by
any authorized officer of the Trust relating to:
a. The manner and amount of accrual of expenses other than management
fees to be recorded on the books of the Funds;
b. If applicable, the source of quotations to be used for such
portfolio securities as may not be available through the Agent's
normal pricing services;
c. If applicable, the value to be assigned to any portfolio security
or other asset for which no price quotations are readily
available;
d. If applicable, the manner of computation of the public offering
price and such other computations as may be necessary; and
e. Notification of transactions in portfolio securities.
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<PAGE> 3
The Agent shall be entitled to rely upon any certificate, letter or
other instrument or telephone call reasonably believed by the Agent to be
genuine and to have been properly made or signed by an officer or other
authorized agent of the Trust, on behalf of a Fund, and shall be entitled to
receive as conclusive proof of any fact or matter required to be ascertained by
it hereunder a certificate signed by an officer of the Trust, on behalf of a
Fund or any other person authorized by the Trust's Board of Trustees.
The Agent shall be entitled to receive and act upon advice of counsel
(which may be counsel for the Trust) at the expense of the Trust and shall be
without liability for any action taken or thing done in good faith in reliance
upon such advice.
The Trust agrees to furnish the Agent with a copy of each Fund's
Prospectus as in effect from time to time.
5. Duty of Care and Indemnification.
The Agent shall at all times use reasonable care and act in good faith
in performing its duties hereunder. The Agent shall incur no liability to the
Trust or a Fund in connection with its performance of services hereunder,
except to the extent that it does not comply with the foregoing standards.
The Trust agrees to indemnify and hold harmless the Agent and its
employees, agents and nominees from all taxes, charges, expenses, assessments,
claims and liabilities (including attorney's fees) incurred or assessed against
them in connection with the performance of this Agreement, except such as may
arise from their own willful misfeasance, bad faith or gross negligence. The
foregoing notwithstanding, the Agent will in no event be liable for any loss
resulting from the acts, omissions, lack of financial responsibility, or
failure to perform the obligations of any person or organization designated by
the Trust to be the authorized agent of the Trust as a party to the
transaction.
The Agent's responsibility for damage or loss arising from military
power, war, insurrection, or nuclear fission, fusion or radioactivity shall be
limited to the use of the Agent's best efforts to recover the Funds' records
determined to be lost, missing or destroyed.
6. Compensation and Agent's Expenses.
The Agent shall be paid for its services pursuant to this Agreement
such compensation as may from time to time be agreed upon in writing between
the two parties. The Agent shall be entitled to recover its reasonable
telephone, delivery and other out-of-pocket expenses as incurred.
Each Fund shall pay the Agent a monthly fee based upon the rate(s) set
forth in a Fee Schedule attached to a Supplement to this Agreement with respect
to such Fund. A Fund shall
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<PAGE> 4
be responsible for fees incurred in connection with a pricing or other similar
service furnishing information pursuant to Section 4 of this Agreement.
If the fees payable to the Agent pursuant to this Section begin to
accrue before the end of any month or if this Agreement terminates before the
end of any month, the fees for the period from that date to the end of that
month or for the period from the beginning of that month to the date of
termination, as the case may be, shall be prorated according to the proportion
which the period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating the monthly fees, the value of
the net assets of a Fund shall be computed in the manner specified in the
Fund's Prospectus for the computation of its net asset value.
7. Termination of Agreement.
This Agreement may be terminated with respect to a Fund, without the
payment of any penalty, by the Agent upon at least ninety (90) days' prior
written notice to the Trust, or by a Fund upon at least ninety (90) days' prior
written notice to the Agent; provided, that in the case of termination by the
Fund, such action shall have been authorized by the Trust's Board of Trustees,
including the vote or written consent of a majority of the Trust's Independent
Trustees. Any termination date is to be no earlier than four months from the
effective date hereof Upon termination, the Agent will turn over to the Trust
and cease to retain in the Agent's files, records of the calculations of the
net asset value of the Fund and other records pertaining to its services
hereunder.
8. Reports and Maintenance of Records by Agent.
The Agent will furnish to the Trust and to properly authorized
auditors, examiners, distributors, dealers, underwriters, salesmen, insurance
companies, investors, and others designated by the Trust in writing, such
books, records, and reports at such times as are prescribed for each service in
Exhibit A attached hereto. The Trust shall examine or shall cause any other
authorized recipient to examine promptly each such book, record, or report, or
copy thereof, and shall report or shall cause to be reported any errors or
discrepancies therein, but the Trust's failure to observe or report any such
error or discrepancy shall not relieve the Agent of its responsibilities or
liabilities as agreed to under the terms of this Agreement. The Agent may at
its option at any time and shall forthwith upon the Trust's demand turn over to
the Trust and cease to retain in the Agent's files, records and documents
created and maintained by the Agent pursuant to this Agreement that are no
longer needed by the Agent in the performance of its services or for its
protection.
If not so turned over to the Trust, such documents and reports will be
retained by the Agent for six years from the year of creation, during the first
two of which the same will be in readily accessible form. At the end of six
years, such records and documents shall be turned over to the Trust by the
Agent unless the Trust authorizes their destruction.
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<PAGE> 5
9. Term.
The term of this Agreement shall begin as of the date first set forth
above and unless sooner terminated as hereinafter provided, this Agreement
shall remain in effect for a period of one year from that date. Thereafter,
this Agreement shall continue in effect with respect to a Fund from year to
year, subject to the termination provisions and all other terms and conditions
hereof provided, that such continuance with respect to that Fund is approved at
least annually by the Trust's Board of Trustees, including the vote or written
consent of a majority of the Trust's trustees who are not interested persons of
Ivy Management, Inc., the Agent or the Trust (the "Independent Trustees"). The
Agent shall furnish to the Funds, promptly upon their request, such information
(including the Agent's costs of delivering the services provided to the Funds
hereunder) as may reasonably be necessary to enable the Trust's Board of
Trustees to evaluate the terms of this Agreement or any extension, renewal or
amendment hereof The Agent shall permit the Trust and its accountants, counsel
or other representatives to review its books and records relating to the
services provided hereunder at reasonable intervals during normal business
hours upon reasonable notice requesting such review.
10. Interpretation and Definition of Terms.
Any question or interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Investment Company Act of 1940, as amended (the "1940 Act") shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof if any. Specifically, the terms "interested persons,"
"affiliated person," and "assignment," as used in this Agreement, shall have
the meanings assigned to them by Section 2(a) of the 1940 Act.
11. Software and Related Materials.
All computer programs, written procedures, and similar items developed
or acquired and used by the Agent in performing its obligations under this
Agreement shall be the property of the Agent, and neither the Trust nor the
Funds will acquire any ownership interest therein or property rights with
respect thereto.
12. Services to Other Clients.
Nothing herein contained shall limit the freedom of the Agent or any
affiliated person of the Agent to render services of the types contemplated
hereby to other persons, firms or corporations, including but not limited to
other investment companies, or to engage in other business activities.
13. Miscellaneous.
(a) This agreement shall be governed and construed in accordance with the
laws of Florida, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act.
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<PAGE> 6
(b) This Agreement may not be assigned by the Agent without the consent of
the Trust as authorized or approved by resolution of its Board of
Trustees.
(c) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
(d) The Trust's Amended and Restated Declaration of Trust has been filed
with the Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Trust or any Fund are not personally binding upon,
nor shall resort be had to the private property of any of the
trustees, shareholders, officers, employees or agents of the Trust or
the Fund, but only that Fund's property shall be bound.
(e) In connection with the operation of this Agreement, the Trust and the
Agent may agree from time to time on such provisions interpretive of
or in addition to the provisions of this Agreement as in their joint
opinions may be consistent with the general tenor of this Agreement.
Any such interpretive or additional provisions are to be signed by
both parties and annexed hereto, but no such provision shall be deemed
to be an amendment of this Agreement.
(f) Nothing in this Agreement shall give or be construed to give any
shareholder of the Trust any rights against the Agent.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
MACKENZIE SOLUTIONS
By: /s/ Keith J. Carlson
------------------------------------
KEITH J. CARLSON, PRESIDENT
MACKENZIE INVESTMENT MANAGEMENT INC.
By: /s/ Michael G. Landry
------------------------------------
MICHAEL G. LANDRY, PRESIDENT
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<PAGE> 8
EXHIBIT A
Fund Accounting Services Agreement
Standard Reports and Availability
The following reports will be provided to the Fund on a regular basis with
availability as indicated:
A. Daily
1. Printed Trial Balance
2. Net Asset Value Worksheet
3. Cash Forecast
4. Yield Computation, if applicable
B. Weekly - Tax Lot Ledgers
C. Monthly
1. Tax Lot Ledgers as of month-end
2. Working Appraisal as of month-end
3. Purchase and Sale Journal for the month
4. Summary of Gains and Losses on Securities for the month
5. Dividend Ledger for the month (Receivable as of month-end and
earned)
6. Interest Income Analysis for the month (receivable as of
month-end and earned)
7. Trial Balance as of month-end
8. Net Asset Value Worksheet as of month-end
9. Open Trades (payable and receivable for unsettled securities
transactions)
D. Annually
1. Purchase and Sale Journal for the year
2. Summary of Gains and Losses on Securities for the year
3. Broker Allocation Report for the year
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<PAGE> 1
Exhibit 10.15
SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of July, 1999, between IVY
MANAGEMENT, INC., 700 South Federal Highway, Boca Raton, Florida 33432 U.S.A.,
a Massachusetts corporation (hereinafter called the "Manager"), and GARMAISE
INVESTMENT TECHNOLOGIES (US) INC., 30 St. Clair Avenue West, Suite 1110,
Toronto, Ontario M4V 3A 1 Canada, a Delaware corporation (hereinafter called
the "Subadviser").
WHEREAS, Mackenzie Solutions (the "Trust") is a Massachusetts business
trust organized with one or more series of shares, and is registered as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Manager has entered into a Master Business and Investment
Advisory Agreement dated as of June 28, 1999, as amended (the "Advisory
Agreement"), with the Trust, pursuant to which the Manager acts as investment
adviser to the portfolio assets of certain series of the Trust listed on
Schedule A hereto, as amended from time to time (each a "Fund" and,
collectively, the "Funds"); and
WHEREAS, the Manager desires to utilize the services of the Subadviser
as investment subadviser with respect to each Fund; and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will serve the Manager as
investment subadviser with respect to each Fund.
(a) As investment subadviser to the Funds, the Subadviser hereby
agrees, in accordance with the Subadviser's best judgment and
subject to the stated investment objectives, policies and
restrictions of the Funds as set forth in the current
prospectuses and statements of additional information of the
Trust (including amendments) and in accordance with the
Trust's Declaration of Trust, as amended, and By-laws
governing the offering of its shares (collectively, the
"Trust Documents"), the 1940 Act and the provisions of the
Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), relating to regulated investment companies,
and subject to such resolutions as from time to time may be
adopted by the Trust's Board of Trustees, to render
investment advice to the Manager as to the selection of the
investment companies that shall comprise each Fund's
portfolio (the "underlying funds") and the re-balancing once
or twice yearly of each Fund's assets in underlying funds
compatible with the investment objectives, policies and
restrictions of the Funds as stated in the aforesaid
prospectuses. The Subadviser shall have no responsibility for
the implementation or execution of transactions which it
recommends to the Manager for any Fund, such responsibility
being solely with the Manager. The Subadviser shall dedicate
approximately 75 hours per year of its time in connection
with rendering investment advice to the Manager under this
Agreement. Time involved in travel in connection with
services provided under this Agreement will count towards the
75 hours.
<PAGE> 2
(b) The Subadviser shall (i) comply with all reasonable requests
of the Trust for information, including information required
in connection with the Trust's filings with the Securities
and Exchange Commission (the "SEC") and state securities
commissions, and (ii) provide such other services as the
Subadviser shall from time to time determine to be necessary
or useful to the administration of the Funds.
(c) The Subadviser shall furnish to the Trust's Board of Trustees
periodic reports on the performance of its obligations under
this Agreement and shall supply such additional reports and
information as the Trust's officers or Board of Trustees
shall reasonably request.
(d) The investment advisory services provided by the Subadviser
under this Agreement are not to be deemed exclusive and the
Subadviser shall be free to render similar services to
others, as long as such services do not impair the ability of
the Subadviser to provide the services described herein.
2. Delivery of Documents to the Manager. The Subadviser has furnished the
Manager with copies of each of the following documents:
(a) The Subadviser's current Form ADV and any amendments thereto;
(b) The Subadviser's most recent balance sheet; and
(c) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish the Manager from time to time with copies,
properly certified or otherwise authenticated, of all material
amendments of or supplements to the foregoing, if any. Additionally,
the Subadviser will provide to the Manager such other documents
relating to its services under this Agreement as the Manager may
reasonably request on a periodic basis. Such amendments or supplements
to items (a) through (c) above will be provided within 30 days of the
time such materials became available to the Subadviser.
3. Expenses. The Subadviser shall pay all of its expenses arising from
the performance of its obligations under Section 1, other than
expenses incurred in connection with travel by the Subadviser to the
Manager's offices or to other locations at the request of the Manager
relating to the provision of services under this Agreement. Such
travel expenses will be reimbursed by the Manager or an affiliate of
the Manager.
4. Compensation. The Manager shall pay to the Subadviser for its services
hereunder, and the Subadviser agrees to accept as full compensation
therefor, a fee of US$50,000 per year. Such fee shall be paid
quarterly in arrears in equal installments of US$12,500. To the extent
that the Subadviser agrees to dedicate more than 75 hours per year in
connection with rendering services under this Agreement, the Manager
shall pay the Subadviser for such additional time at an hourly rate of
US$667 (the "Hourly Rate"). The Subadviser will notify the Manager
promptly if it appears that the Subadviser will dedicate more than 75
hours per year to providing services under this Agreement.
If the Subadviser serves hereunder for less than the whole of any
year, the fee hereunder shall be prorated as follows: The Subadviser
shall be entitled to the full quarterly payment
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<PAGE> 3
described above for the quarter in which the Agreement is terminated;
provided, however, that if the Subadviser has completed more than
18.75 hours of work under this Agreement per quarter multiplied by the
number of quarters concluded (the quarter in which such termination
takes place counting as a full quarter), then the Subadviser shall be
compensated for each additional hour in excess of such total at the
Hourly Rate. If the Subadviser has completed less than the total of
18.75 hours of work under this Agreement per quarter multiplied by the
number of quarters concluded (the quarter in which the termination
takes place counting as a full quarter), then the Hourly Rate will be
deducted from the final payment under this Agreement for each hour
less than such total.
All fees for Subadviser's services shall be paid within 30 days after
an invoice for such fees is delivered.
5. Independent Contractor. In the performance of its duties hereunder,
the Subadviser is and shall be an independent contractor and except as
expressly provided herein or otherwise authorized in writing, shall
have no authority to act for or represent the Trust, the Funds, any
other series of the Trust or the Manager in any way or otherwise be
deemed to be an agent of the Trust, the Funds, any other series of the
Trust or the Manager.
6. Term of Agreement. This Agreement shall continue in full force and
effect until July 1, 2001, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the
Subadviser shall not have notified the Manager in writing at least 60
days prior to July 1, 2001 or prior to July 1 of any year thereafter
that it does not desire such continuance. This Agreement may be
terminated at any time, without payment of penalty by a Fund, by vote
of the Trust's Board of Trustees or a majority of the outstanding
voting securities of the applicable Fund (as defined by the 1940 Act),
or by the Manager or by the Subadviser upon 60 days' written notice.
This Agreement will automatically terminate in the event of its
assignment (as defined by the 1940 Act) or upon the termination of the
Advisory Agreement.
7. Amendments. This Agreement may be amended by consent of the parties
hereto provided that the consent of the applicable Fund is obtained in
accordance with the requirements of the 1940 Act.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the
performance of its obligations hereunder is to be regarded as
confidential and for use only by the Manager, the Trust or such
persons as the Manager may designate in connection with the Funds. It
is also understood that any information supplied to the Subadviser in
connection with the performance of its obligations hereunder,
particularly, but not limited to, any list of securities which, on a
temporary basis, may not be bought or sold for the Funds, is to be
regarded as confidential and for use only by the Subadviser in
connection with its obligation to provide investment advice and other
services to the Funds.
9. Representations and Warranties. The Subadviser hereby represents and
warrants as follows:
(a) The Subadviser is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and such registration is current,
complete and in full compliance with all material applicable
provisions of the Advisers Act and the rules and regulations
thereunder;
-3-
<PAGE> 4
(b) The Subadviser has all requisite authority to enter into,
execute, deliver and perform the Subadviser's obligations
under this Agreement;
(c) The Subadviser' 5 performance of its obligations under this
Agreement does not conflict with any law, regulation or order
to which the Subadviser is subject; and
(d) The Subadviser has reviewed the portion of (i) the
registration statement filed with the SEC, as amended from
time to time, for the Funds ("Registration Statement"), and
(ii) each Fund's prospectuses and statements of additional
information (including amendments) thereto, in each case in
the form received from the Manager with respect to the
disclosure about the Subadviser and the Funds of which the
Subadviser has knowledge ("Subadviser and Fund Information")
and except as advised in writing to the Manager such
Registration Statement, prospectuses and statements of
additional information (including amendments) contain, as of
their respective dates, no untrue statement of any material
fact of which the Subadviser has knowledge and do not omit
any statement of a material fact of which the Subadviser has
knowledge which was required to be stated therein or
necessary to make the statements contained therein not
misleading.
10. Covenants. The Subadviser hereby covenants and agrees that, so long as
this Agreement shall remain in effect:
(a) The Subadviser shall maintain the Subadviser's registration
as an investment adviser under the Advisers Act, and such
registration shall at all times remain current, complete and
in full compliance with all material applicable provisions of
the Advisers Act and the rules and regulations thereunder;
(b) The Subadviser's performance of its obligations under this
Agreement shall not conflict with any law, regulation or
order to which the Subadviser is then subject;
(c) The Subadviser shall at all times comply with the Advisers
Act and the 1940 Act, and all rules and regulations
thereunder, and all other applicable laws and regulations,
and the Registration Statement, prospectuses and statements
of additional information (including amendments) and with any
applicable procedures adopted by the Trust's Board of
Trustees, provided that such procedures are identified in
writing to the Subadviser;
(d) The Subadviser shall promptly notify the Manager and the
Funds upon the occurrence of any event that might disqualify
or prevent the Subadviser from performing its duties under
this Agreement. The Subadviser shall promptly notify the
Manager and the Funds if there are any changes to its
organizational structure or the Subadviser has become the
subject of any adverse regulatory action imposed by any
regulatory body or self-regulatory organization. The
Subadviser further agrees to notify the Manager of any
changes relating to it or the provision of services by it
that would cause the Registration Statement, prospectuses or
statements of additional information (including amendments)
for
-4-
<PAGE> 5
the Funds to contain any untrue statement of a material fact
or to omit to state a material fact which is required to be
stated therein or is necessary to make the statements
contained therein not misleading, in each case relating to
Subadviser and Fund Information; and
(e) The Subadviser will render advice to the Manager regarding
the investment of each Fund's assets which is consistent with
maintaining the Fund's status as a regulated investment
company under Subchapter M of the Internal Revenue Code
11. Use of Names.
(a) The Subadviser acknowledges and agrees that the names
"Mackenzie Solutions," "International Solutions" and "Ivy
Management, Inc.," and abbreviations or logos associated with
those names, are not the property of the Subadviser; and that
the Subadviser shall use the names "Mackenzie Solutions,"
"International Solutions" and "Ivy Management, Inc.," and
associated abbreviations and logos, only in connection with
the Subadviser's performance of its duties hereunder.
Further, in any communication with the public and in any
marketing communications of any sort, Subadviser agrees to
obtain prior written approval from Manager before using or
referring to "Mackenzie Solutions," "International Solutions"
and "Ivy Management, Inc.," or the Funds or any abbreviations
or logos associated with those names.
(b) The Manager acknowledges that "Garmaise," "Garmaise
Investment Technologies (US) Inc." and "Garmaise Investment
Technologies," and abbreviations or logos associated with
those names, are valuable property of the Subadviser and its
affiliates and are distinctive in connection with investment
advisory and related services provided by the Subadviser, the
"Garmaise" name is a property right of the Subadviser, and
the "Garmaise," "Garmaise Investment Technologies (US) Inc."
and "Garmaise Investment Technologies" names are understood
to be used by each Fund upon the conditions hereinafter set
forth; provided that each Fund may use such names only so
long as the Subadviser shall be retained as the investment
subadviser of the Fund pursuant to the terms of this
Agreement.
(c) The Subadviser acknowledges that each Fund and its agents may
use the "Garmaise," "Garmaise Investment Technologies (US)
Inc." and "Garmaise Investment Technologies" names in
connection with accurately describing the activities of the
Fund, including use with marketing and other promotional and
informational material relating to the Fund with the prior
written approval always of the Subadviser. In the event that
the Subadviser shall cease to be the investment subadviser of
a Fund, then the Fund at its own or the Manager's expense,
upon the Subadviser's written request: (i) shall cease to use
the Subadviser's name for any commercial purpose; and (ii)
shall use its best efforts to cause the Fund's officers and
trustees to take any and all actions which may be necessary
or desirable to effect the foregoing and to reconvey to the
Subadviser all rights which a Fund may have to such name.
Manager agrees to take any and all reasonable actions as may
be necessary or desirable to effect the foregoing and
Subadviser agrees to allow the Funds and their agents a
reasonable time to effectuate the foregoing.
-5-
<PAGE> 6
(d) The Subadviser hereby agrees and consents to the use of the
Sub adviser's name upon the foregoing terms and conditions.
12. Reports by the Subadviser and Records of the Funds. The Subadviser
shall furnish the Manager information and reports necessary to the
operation of the Funds, including information required to be disclosed
in the Trust's Registration Statement, in such form as may be mutually
agreed. The Subadviser shall immediately notify and forward to both
the Manager and legal counsel for the Trust any legal process served
upon it on behalf of the Manager or the Trust.
At least annually, Subadviser will provide to Manager an accounting of
the number of hours worked under this Agreement during the prior year.
In the event that this Agreement is terminated, Subadviser will
promptly provide to Manager an accounting of the number of hours
worked under this Agreement since the last such accounting.
In compliance with the requirements of Rule 31 a-3 under the 1940 Act,
the Subadviser agrees that all records it maintains for the Trust are
the property of the Trust and further agrees to surrender promptly to
the Trust or the Manager any such records upon the Trust's or the
Manager's request The Subadviser further agrees to maintain for the
Trust the records the Trust is required to maintain under Rule 31 a-
1(b) insofar as such records relate to the investment affairs of each
Fund. The Subadviser further agrees to preserve for the periods
prescribed by Rule 31 a-2 under the 1940 Act the records it maintains
for the Trust.
13. Indemnification. The Subadviser agrees to indemnify and hold harmless
the Manager, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person') of the Manager and each
person, if any, who, within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "1933 Act"), controls
("controlling person") the Manager, against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which the Manager, the Trust or such
affiliated person or controlling person may become subject under the
1933 Act, the 1940 Act, the Advisers Act, under any other statute, at
common law or otherwise, arising out of Subadviser's responsibilities
as subadviser of the Funds only (1) to the extent of and as a result
of the willful misconduct, bad faith, or gross negligence of the
Subadviser, any of the Subadviser's employees or representatives or
any affiliate of or any person acting on behalf of the Subadviser, or
(2) as a result of any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, prospectuses
or statements of additional information covering the Funds or the
Trust or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement therein not
misleading, if such a statement or omission was made in reliance upon
written information furnished by the Subadviser to the Manager, the
Trust or any affiliated person of the Manager or the Trust expressly
for use in the Trust's Registration Statement, or upon verbal
information confirmed by the Subadviser in writing expressly for use
in the Trust's Registration Statement; provided, however, that in no
case is the Subadviser's indemnity in favor of the Manager or any
affiliated person or controlling person of the Manager deemed to
protect such person against any liability to which any such person
would otherwise be subject by reason of willful misconduct, bad faith,
or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this
Agreement.
-6-
<PAGE> 7
The Manager agrees to indemnify and hold harmless the Subadviser, any
affiliated person of the Subadviser and each controlling person of the
Subadviser, against any and all losses, claims, damages, liabilities
or litigation (including reasonable legal and other expenses), to
which the Subadviser or such affiliated person or controlling person
may become subject under the 1933 Act, the 1940 Act, the Advisers Act,
under any other statute, at common law or otherwise, arising out of
the Manager's responsibilities as investment manager of the Funds (1)
to the extent of and as a result of the willful misconduct, bad faith,
or gross negligence of the Manager, any of the Manager's employees or
representatives or any affiliate of or any person acting on behalf of
the Manager, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement, prospectuses or statements of additional information
covering the Funds or the Trust or any amendment thereof or any
supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement therein not misleading, if such a statement or
omission was made by the Trust other than in reliance upon written
information furnished by the Subadviser, or any affiliated person of
the Subadviser, expressly for use in the Trust's Registration
Statement or other than upon verbal information confirmed by the
Subadviser in writing expressly for use in the Trust's Registration
Statement; provided, however, that in no case is the Manager's
indemnity in favor of the Subadviser or any affiliated person or
controlling person of the Subadviser deemed to protect such person
against any liability to which any such person would otherwise be
subject by reason of willful misconduct, bad faith, or gross
negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
In addition, the Manager shall indemnify the Subadviser from liability
for any actions commenced against the Subadviser by shareholders of a
Fund which are unrelated to the services provided by the Subadviser
under this Agreement or which do not relate to a breach by the
Subadviser of its standard of care under this Agreement.
14. Notices. All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be delivered or sent
by pre-paid first class letter post to the following addresses or to
such other address as the relevant addressee shall hereafter specify
for such purpose to the others by notice in writing and shall be
deemed to have been given at the time of delivery.
-7-
<PAGE> 8
If to the Manager: IVY MANAGEMENT, INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432, U.S.A.
Attention: C. William Ferris
If to the Trust: Mackenzie Solutions
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432, U.S.A.
Attention: C. William Ferris
If to the Subadviser: GARMAISE INVESTMENT TECHNOLOGIES (US) INC.
30 St. Clair Avenue West, Suite 1110
Toronto, Ontario M4V 3A1, Canada
Attention: Gordon Garmaise
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
Anything herein to the contrary notwithstanding, this Agreement shall
not be construed to require, or to impose any duty upon either of the
parties, to do anything in violation of any applicable laws or
regulations.
16. Severability. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, IVY MANAGEMENT, INC. AND GARMAISE INVESTMENT
TECHNOLOGIES (US) INC. have each caused this instrument to be signed in
duplicate on its behalf by the officer designated below thereunto duly
authorized.
IVY MANAGEMENT, INC.
By: /s/
-----------------------------------
Title Senior Vice President
GARMAISE INVESTMENT
TECHNOLOGIES (US) INC.
By: /s/
-----------------------------------
Title
-8-
<PAGE> 9
SCHEDULE A
TO SUBADVISORY AGREEMENT BETWEEN
IVY MANAGEMENT, INC. AND GARMAISE INVESTMENT TECHNOLOGIES (US) INC.
DATED AS OF JULY 1, 1999
------------------------------
Funds:
INTERNATIONAL SOLUTIONS 1 - CONSERVATIVE GROWTH
INTERNATIONAL SOLUTIONS II- BALANCED GROWTH
INTERNATIONAL SOLUTIONS III- MODERATE GROWTH
INTERNATIONAL SOLUTIONS IV - LONG-TERM GROWTH
INTERNATIONAL SOLUTIONS V - AGGRESSIVE GROWTH
-9-
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES
Ivy Management Inc. incorporated in Massachusetts
Ivy Mackenzie Distributors, Inc. incorporated in Florida
Ivy Mackenzie Services Corporation incorporated in Florida
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
Each individual whose signature appears below hereby constitutes and
appoints C. William Ferris, Keith J. Carlson and Joseph R. Fleming, and each of
them, his true and lawful attorney-in-fact and agent with full powers of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign the Registration Statement on Form S-8 and the
Registration Statement on Form 10 of Mackenzie Investment Management Inc. and
any and all amendments and supplements (including post-effective amendments)
thereto, and to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
- ---- -------- ----
<S> <C> <C>
/s/ KEITH J.CARLSON
- ----------------------------------
Keith J. Carlson President, Director September 24, 1999
and Chief Executive Officer
/s/ C. WILLIAM FERRIS
- ----------------------------------
C. William Ferris Senior Vice President, Chief Financial September 24, 1999
Officer and Secretary/Treasurer
/s/ NEIL LOVATT
- ----------------------------------
Neil Lovatt Chairman and Director September 24, 1999
/s/ JAMES W. BROADFOOT III
- ----------------------------------
James W. Broadfoot III Executive Vice President and Director September 24, 1999
/s/ ALAN J. DILWORTH
- ----------------------------------
Alan J. Dilworth Director September 24, 1999
/s/ ALLAN S. MOSTOFF
- ----------------------------------
Allan S. Mostoff, Esq. Director September 24, 1999
/s/ JAMES L. HUNTER
- ----------------------------------
James L. Hunter Director September 24, 1999
/s/ ALASDAIR J. MCKICHAN
- ----------------------------------
Alasdair J. McKichan Director September 24, 1999
/s/ MICHAEL R. PEERS
- ----------------------------------
Michael R. Peers Director September 24, 1999
/s/ DOLPH W. VON ARX
- ----------------------------------
Dolph W. von Arx Director September 24, 1999
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 51,032
<SECURITIES> 0
<RECEIVABLES> 6,227
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,259
<PP&E> 3,569
<DEPRECIATION> (2,262)
<TOTAL-ASSETS> 68,169
<CURRENT-LIABILITIES> 15,865
<BONDS> 0
0
0
<COMMON> 192
<OTHER-SE> 52,112
<TOTAL-LIABILITY-AND-EQUITY> 68,169
<SALES> 0
<TOTAL-REVENUES> 66,256
<CGS> 0
<TOTAL-COSTS> 52,082
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 474
<INCOME-PRETAX> 13,700
<INCOME-TAX> 5,151
<INCOME-CONTINUING> 8,549
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,549
<EPS-BASIC> 0.45
<EPS-DILUTED> 0.44
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 39,518
<SECURITIES> 0
<RECEIVABLES> 6,382
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,900
<PP&E> 3,765
<DEPRECIATION> (2,426)
<TOTAL-ASSETS> 59,639
<CURRENT-LIABILITIES> 7,734
<BONDS> 0
0
0
<COMMON> 188
<OTHER-SE> 51,717
<TOTAL-LIABILITY-AND-EQUITY> 59,639
<SALES> 0
<TOTAL-REVENUES> 14,873
<CGS> 0
<TOTAL-COSTS> 12,714
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,158
<INCOME-TAX> 963
<INCOME-CONTINUING> 1,195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,195
<EPS-BASIC> 0.06
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</TABLE>
