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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 27, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-22480
DM MANAGEMENT COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 04-2973769
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
25 RECREATION PARK DRIVE
HINGHAM, MA 02043
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (781) 740-2718
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
-------------------
Common Stock, $0.01 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes[X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
As of March 6, 1998, the aggregate market value of voting stock held by
non-affiliates of the Registrant was $120,180,900 based on the closing price
($20.00 per share) for the common stock as reported on The Nasdaq Stock Market
on March 6, 1998.
Shares outstanding of the Registrant's common stock at March 6, 1998:
6,273,007
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Proxy Statement for the Annual Meeting of
Stockholders of DM Management Company to be held on May 28, 1998, which will be
filed with the Securities and Exchange Commission within 120 days after December
27, 1997, are incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
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DM MANAGEMENT COMPANY AND SUBSIDIARY
INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 27, 1997
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Part I Page
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Item 1. Business.............................................................. 3
Item 2. Properties............................................................ 9
Item 3. Legal Proceedings..................................................... 9
Item 4. Submission of Matters to a Vote of Security Holders................... 9
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. 10
Item 6. Selected Consolidated Financial Data.................................. 11
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................... 12
Item 8. Consolidated Financial Statements and Supplementary Data.............. 18
Item 9. Changes in and Disagreements with Accountants on Accounting and
Consolidated Financial Disclosure..................................... 38
Part III
Item 10. Directors and Executive Officers of the Registrant.................... 38
Item 11. Executive Compensation................................................ 38
Item 12. Security Ownership of Certain Beneficial Owners and Management........ 38
Item 13. Certain Relationships and Related Transactions........................ 38
Part IV
Item 14. Exhibits, Consolidated Financial Statement Schedules, and Reports on
Form 8-K............................................................ 39
Signatures............................................................................. 42
</TABLE>
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PART I
ITEM 1. BUSINESS
THE COMPANY
DM Management Company ("DM Management" or the "Company") is a leading
specialty direct marketer of high quality women's apparel, accessories, shoes
and gifts. The Company currently markets its products through two discrete
catalog concepts, J. Jill and Nicole Summers. These concepts are designed to
appeal to active, affluent women age 35 and older, with each concept aimed at a
distinct lifestyle segment within this demographic group. DM Management's
objective is to be a fashion authority for its target market. The Company seeks
to distinguish its catalogs and reinforce the brand identity of the J. Jill and
Nicole Summers names through exclusive private label merchandise offerings, a
broad assortment of extended sizes, "total look" wardrobing and editorial
lifestyle photography.
The J. Jill concept is characterized by the simple, comfortable style of its
apparel offerings, which range from relaxed career wear to weekend wear. These
apparel offerings are predominantly private label, with emphasis on natural
fibers and creative details. The J. Jill concept's target customers are active,
affluent women age 35 to 55. During the twelve months ended December 27, 1997,
J. Jill net sales accounted for approximately 54% of the Company's total net
sales, up from approximately 27% for the twelve months ended December 28, 1996.
The Company believes that this growth is being driven by the repositioning of J.
Jill's merchandising, marketing and creative strategies, as well as, the
emerging market for more casual apparel, particularly for the workplace, and the
need active, working women have for comfortable, versatile clothing. The Company
also believes that this market has not been well served by other direct
marketers or retailers.
The Nicole Summers concept is characterized by its edited assortment of
updated classic apparel. Its target customers are affluent women age 45 and
older who have an active but formal lifestyle and, most importantly, are younger
in their outlook than their peers in previous generations. Since January 1996,
the merchandise assortment and creative presentation in the Nicole Summers
catalogs have been updated in a continuing effort to align the concept with the
changing tastes and evolving lifestyle needs of these customers. The Company
believes that these women are not well served by the direct marketers and
department stores that have traditionally served older women and that the design
and creative presentation of the Nicole Summers catalogs differentiate the
concept in its target market.
In January 1997 the Company changed its fiscal year end from the last Saturday
in June to the last Saturday in December. References to fiscal 1997 mean the
Company's fiscal year ended December 27, 1997.
In fiscal 1997 the Company completed its second offering of common stock to
the public. The Company issued approximately 1.4 million shares of common stock
at a price to the public of $13.50 per share. The Company received
approximately $17.5 million in net proceeds from the offering, after
underwriting discounts and commissions and expenses incurred by the Company in
conjunction with the offering. Also in connection with this public offering,
approximately 1.8 million shares of the Company's common stock were sold by
selling stockholders. The Company did not receive any proceeds from the sale of
shares by selling stockholders.
BUSINESS STRATEGY
DM Management's objective is to be a fashion authority for its target market.
The Company seeks to combine the personal experience of shopping at an upscale
specialty retailer with the ease and convenience of shopping at home by offering
an edited assortment of high quality products in vibrant, easy-to-read catalogs.
The key elements of the Company's business strategy are set forth below:
Brand building. The Company believes that it has a significant opportunity
to build the brand identity of each of its catalog concepts within its target
market. The Company seeks to enhance brand identity by developing strong
relationships with its customers that foster loyalty and increase repeat
purchases. The consistent application of unique creative and merchandising
techniques tailored to create a signature style for each catalog concept is a
central element of this effort, as is an emphasis on superior customer service.
Large target market. The Company focuses on a target market of active,
affluent women age 35 and older. Each of the Company's catalog concepts is
designed to appeal to the lifestyle needs of a distinct demographic group within
the
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Company's larger target market. The Company believes that the active lifestyles
of its target customers make the convenience of catalog shopping particularly
appealing to them.
Well differentiated merchandise offerings. The Company believes that its
distinctive approach to merchandising enhances its position as a fashion
authority to its target customers. Key components of the Company's merchandising
strategy include:
. Private label program. The Company offers private label merchandise,
principally apparel, through each of its catalog concepts. In fiscal 1997
private label merchandise represented approximately 78% and 29% of the
apparel styles offered in the J. Jill and Nicole Summers catalogs,
respectively. Most private label merchandise is exclusive to DM Management,
which the Company believes reinforces each catalog concept's role as a
fashion authority to its target customers and enhances the brand identity
of the J. Jill and Nicole Summers names.
. Extended sizes. In addition to offering regular sizes from 4 to 20, the
Company offers a broad assortment of apparel in petite and large sizes in
the same styles as its regular size offerings. Management believes that the
Company has particular expertise in scaling fashionable regular size
merchandise to be attractively worn by extended size customers, and that
these hard to fit customers currently have few attractive catalog or retail
shopping alternatives. In fiscal 1997 extended size apparel offerings
accounted for 38% of total merchandise offerings.
. "Total look" wardrobing. The Company's "total look" wardrobing approach
seeks to satisfy the lifestyle needs of the Company's target customers by
offering a coordinated selection of apparel, accessories and shoes to
outfit them from head to toe. Management believes that this approach builds
brand identity while increasing the Company's potential share of household
spending dollars.
Distinctive creative presentation. The Company's catalogs are its primary
vehicles for communicating with its customers. The creative presentation of each
catalog is a crucial factor in attracting customer attention, stimulating
purchases, projecting differentiation in the marketplace and building brand
identity. The signature style of each catalog is enhanced by the use of
editorial lifestyle photography that presents merchandise in settings in which
the Company's target customers might find or imagine themselves and by other
distinctive catalog design elements such as thematic merchandise spreads
highlighting particular colors or fabrics.
Investment in management and infrastructure. The Company is committed to
investments in management and in physical and systems infrastructure in order to
support its anticipated future growth, serve its customers, improve operating
efficiencies and respond to strategic opportunities. Since December 1995, the
Company has made significant investments in management, and it intends to make
additional significant investments in systems and facilities. The Company has
purchased approximately 360 acres of land in Tilton, New Hampshire, which will
house a new operations and fulfillment center. This facility is expected to be
operational by early 1999. The Company is also currently in the process of
upgrading its information systems.
CREATIVE PRESENTATION AND CATALOG PRODUCTION
The objective of the Company's creative approach for each of its catalogs is
to present merchandise in a vibrant, easy-to-read format with a visual style
appropriate for the sophistication of the merchandise and the expectations of
the target customers. Management believes that the use of distinctive catalog
design techniques such as editorial lifestyle photography and thematic
merchandise spreads highlighting particular colors or fabrics helps to create
the signature style of its catalog concepts and establish their position as
fashion authorities for their target customers. The Company's catalogs showcase
merchandise in settings in which their customers might find or imagine
themselves, in order to heighten the customers' identification with the concept
and affinity for its merchandise offerings. The Company's catalogs are also
designed to enhance customer convenience through easy-to-read layouts,
coordinated merchandise placement and the Company's "total look" wardrobing
approach. Management believes that the Company's strategy of presenting
merchandise in real life settings also helps to differentiate it from store-
front retailers.
The Company devotes substantial resources to the design and production of each
edition of its catalogs. After an initial conceptualization meeting, the
creative and merchandising teams work closely together on catalog design,
merchandise selection and presentation and catalog print production. The
materials and direction necessary to produce each catalog are then delivered to
the Company's production team approximately eight weeks before the initial
mailing date of the catalog. The production team creates the electronic files
used to print the catalog and plans and manages the printing and catalog
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distribution processes. The production team ensures that photographs appearing
in the Company's catalogs accurately depict merchandise characteristics such as
color and texture. Catalog production takes place in-house using desktop
publishing systems. As a result, the Company can adjust catalog layout until
approximately two weeks before the planned initial mailing date, allowing the
Company to react to current market and sales trends by adjusting content and
presentation of catalogs while they are in production. All of the Company's
catalogs are printed commercially under the Company's supervision.
MARKETING AND CUSTOMER DATABASE MANAGEMENT
At December 27, 1997, the Company's customer database contained approximately
2.4 million individual customer names, including approximately 915,000
individuals who had made a purchase within the previous 24 months. The Company
estimates that approximately two-thirds of these active customers have made
multiple purchases from the Company. DM Management stores detailed information
on each of its customers, including demographic data and purchase history. The
database is updated on a weekly basis. To determine which of its customers will
receive a particular catalog mailing, the Company analyzes this information
using sophisticated statistical modeling techniques. The Company's customer
database is maintained off-site by a service bureau which sorts and processes
the information in accordance with instructions from the Company. The Company's
agreement with the service bureau requires the service bureau to safeguard the
confidentiality of the Company's database. Additionally, the Company uses
customer research techniques such as focus groups and quantitative surveys to
assess customer perceptions of its catalog concepts and their competitors, in
order to help set distinctive marketing, merchandising and creative strategies
appropriate for each catalog concept.
The Company acquires lists of prospective customers by rental or exchange and
from a database cooperative and other sources. The Company also occasionally
purchases lists of prospective customers. The most productive prospects tend to
come from the customer lists of other women's apparel catalogs, including direct
competitors. The Company rents its list of customers to and exchanges it with
others, including direct competitors. To determine which prospective customers
will receive a particular catalog mailing, the Company analyzes available
information concerning such prospects using the same types of sophisticated
statistical modeling techniques used to target mailings to the Company's own
customers.
As part of its customer retention program and brand building strategy, DM
Management introduced its own private label credit card in September 1995. The
Company believes that this credit card reinforces the Company's relationship
with existing customers and promotes additional purchases by these customers. In
fiscal 1997 approximately 7% of net sales were attributable to purchases made
using the Company's private label credit card. At December 27, 1997 there were
approximately 62,000 holders of the Company's private label credit card. The
credit card program is currently administered by a fee-based outside vendor who
bears the credit risk associated with the credit card without recourse to the
Company.
MERCHANDISING
The Company provides an edited assortment of high quality merchandise designed
to meet the tastes and serve the lifestyle needs of its target customers. Each
of the Company's catalog concepts has its own merchandise selection staff. In
addition to apparel, the Company's catalogs also offer a selection of seasonal
items, gifts and other products selected with the specific lifestyle profiles of
J. Jill and Nicole Summers target customers in mind.
The Company's catalogs offer both brand name and private label merchandise. In
fiscal 1997 approximately 78% of the apparel styles offered through J. Jill
catalogs were private label, and this percentage is expected to increase. During
the same period, approximately 29% of the apparel styles offered through Nicole
Summers catalogs were private label. No significant change is expected in the
percentage of private label apparel included in the Nicole Summers catalog
concept. Private label merchandise is manufactured to the Company's detailed
specifications by foreign vendors, primarily located in Hong Kong, Singapore and
Israel, in addition to domestic vendors. Brand name products are selected from
the regular offerings of the Company's vendors.
Both the J. Jill and Nicole Summers catalogs offer a wide assortment of
merchandise in petite and large sizes, in the same styles as their regular sized
offerings. In fiscal 1997 extended size apparel offerings accounted for 38% of
total merchandise offerings.
DM Management's catalogs feature a "total look" wardrobing approach which
presents a coordinated selection of apparel and related items including
sportswear, dresses, suits, coats, swimwear, shoes and accessories intended to
outfit the customer from head to toe. Management believes that this approach
builds brand identity while increasing the Company's potential share of
household spending dollars.
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INVENTORY MANAGEMENT AND PURCHASING
The Company's inventory management systems are designed to maintain inventory
levels that provide optimum in-stock positions and maximum inventory turnover
rates while minimizing the amount of unsold merchandise at the end of each
selling season. To achieve this goal, the Company seeks to schedule merchandise
deliveries and inventory amounts to conform to expected sales levels.
The Company follows an interdepartmental approach to the inventory planning
process. Conceptual planning for each principal catalog edition begins
approximately nine months in advance of its initial mailing. Early in the
process the Company's inventory control, marketing, creative and merchandising
teams meet to present key strategies and opportunities for specific catalog
editions and merchandise items. The inventory control group then applies
inventory coverage models to plan opening inventory levels for each stock
keeping unit ("sku"), taking into account projected sales, the cost of being out
of stock and ease of reordering. Preliminary commitments with the Company's
private label merchandise vendors typically are made five to seven months in
advance of each principal catalog edition's initial mailing date. To the extent
feasible, the Company seeks to retain flexibility in these commitments in order
to be able to react to market and sales trends. Initial merchandise commitments
for branded merchandise typically are made three to five months before the
edition's initial mailing date. Initial deliveries generally are scheduled to be
received one to three weeks before the edition's initial mailing date.
The inventory control group utilizes a forecasting system which analyzes sales
and returns by sku throughout the selling season to permit purchasing
adjustments based on forecasted sales and returns. The Company attempts to
minimize overstocks through a variety of promotional efforts, including
telemarketing to customers at the time they place orders for other merchandise
and circulation of seasonal clearance catalogs. The Company also sells excess
inventory through its three outlet stores and to "jobbers." The Company's outlet
stores are run solely for the purpose of liquidating overstocks.
The Company sells both domestically produced and imported merchandise, which
it purchases in the open market. In fiscal 1997 the Company purchased
merchandise from approximately 700 vendors, no one of which supplied goods which
represented more than 10% of the Company's inventory purchases during the year.
In fiscal 1997 the Company purchased approximately 12% of its merchandise
directly from foreign vendors, and the Company expects that it will continue to
purchase merchandise from foreign suppliers in the future. In addition, goods
purchased by the Company from domestic vendors may be sourced abroad by such
vendors. The Company seeks to establish long-term relationships with its
merchandise vendors and works closely with them to ensure high standards of
merchandise quality.
CUSTOMER SERVICE AND OPERATIONS
DM Management believes that an emphasis on superior customer service is
important to its ability to expand its customer base and build customer loyalty.
At December 27, 1997, the Company employed approximately 190 telemarketing
representatives. Customer orders are taken 24 hours a day, 365 days a year,
primarily by the Company's telemarketing representatives at its operations
center in Meredith, New Hampshire. The Company also accepts orders by mail or
facsimile. All orders are input directly into the Company's on-line data
processing system, which provides, among other things, customer historical
information, merchandise availability, product specifications, available
substitutes and accessories and expected shipment date. The Company trains its
telemarketing representatives to be knowledgeable in merchandise specifications
and features. These representatives have ready access to samples of the current
season's merchandise assortment, which enables them to answer detailed
merchandise inquiries from customers on-line.
DM Management offers an unconditional merchandise guarantee. If a customer is
not completely satisfied with any item for any reason, the customer may return
it for an exchange or a full refund. To simplify the return process, the Company
includes a self-addressed return label with every shipment, which customers can
use to return any item to the Company through the United States Postal Service
without paying postage fees in advance. Management believes that the Company's
return rates are consistent with industry standards for comparable merchandise.
Returns experience is closely monitored to identify any product quality or fit
issues. Returned merchandise is inspected carefully and, unless damaged, is
cleaned, pressed and returned to inventory. Approximately 95% of returned
merchandise is recycled into inventory.
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FULFILLMENT
DM Management believes that the prompt delivery of merchandise promotes
customer loyalty and repeat buying. To achieve this goal, the Company uses an
integrated picking, packing and shipping system. The system monitors the in-
stock status of each item ordered, processes the order and generates all related
packing and shipping materials, taking into account the location of items within
the fulfillment center. Currently all merchandise is shipped from the Company's
facilities in New Hampshire. The Company's customers normally receive their
orders within three to five business days after shipping, although customers may
request overnight delivery for an extra charge.
The Company's recent rapid growth has accelerated the need to increase its
fulfillment capacity. In September 1997 the Company purchased approximately 360
acres of land in Tilton, New Hampshire. This site will house an approximately
400,000 square foot state-of-the-art facility, of which approximately 370,000
square feet will be devoted to fulfillment operations. This facility is expected
to be operational by early 1999.
The Company currently fulfills orders out of its approximately 93,000 square
foot operations and fulfillment center in Meredith, New Hampshire and, in
addition, has leased approximately 150,000 square feet at two interim facilities
in nearby Laconia, New Hampshire. One of the Laconia facilities serves as a
second distribution center and the other is used for returns processing,
disbursement to outlet stores and storage of less active merchandise. The
Company currently plans to continue using its Meredith facility for some period
of time after the new Tilton facility is operational. The Company has
experienced operational inefficiencies and increased costs due to the operation
of three facilities and expects these inefficiencies and costs to continue
through its first year in the new facility.
INFORMATION SYSTEMS AND TECHNOLOGY
The Company is committed to making ongoing investments in its information
systems to increase operating efficiency, provide superior customer service and
support its anticipated growth. The Company believes that the ability to capture
and analyze operational and financial data and relevant information about its
customers and their purchasing history is critical to its success.
The Company has made, and continues to make, significant investments in
systems to support order taking and customer service, fulfillment, marketing,
merchandising, inventory control, financial control and reporting and
forecasting. DM Management is in the process of implementing a new automated
warehouse management system which will more efficiently support current
warehouse processes and provide additional flexibility to support the Company's
growth plans. The Company has also recently acquired a new order management
system which will provide significant processing enhancements to the Company's
current system. The Company expects to be utilizing these new systems by the
second half of 1998.
In addition to its in-house data processing and information systems resources,
the Company also uses several outside vendors for key services such as list
processing and credit card administration and approval.
COMPETITION
The market for the Company's merchandise is highly competitive. The Company
competes with other direct marketers, specialty apparel and accessory retailers
and traditional department store retailers. There are few barriers to entry in
the women's specialty apparel and accessory market. Moreover, the Company
believes that its recent success, as well as the sales growth in the direct
marketing industry, has or will encourage many new competitors. In particular,
the Company believes that its J. Jill catalog concept serves an emerging market
niche in which competition is limited currently but is likely to increase in the
future. Many of the Company's competitors are larger and have substantially
greater financial, marketing and other resources than the Company. DM Management
believes that it competes principally on the basis of its "total look"
wardrobing approach, extended size offerings, private label product offerings,
creatively distinctive catalogs and superior customer service.
EMPLOYEES
As of March 1, 1998, the Company employed 510 individuals, of whom 453 were
full-time (those employees scheduled to work 30 hours or more per week). None of
the Company's employees is represented by a union. The Company considers its
employee relations to be good.
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TRADEMARKS AND SERVICE MARKS
The Company has registered various trademarks and service marks with the
United States Patent and Trademark Office, including J. Jill Ltd. and Nicole
Summers.
GOVERNMENT REGULATION
The catalog sales business conducted by the Company is subject to the Mail or
Telephone Order Merchandise Rule and related regulations promulgated by the
Federal Trade Commission, which prohibit unfair methods of competition and
unfair or deceptive acts or practices in connection with mail and telephone
order sales and require sellers of mail and telephone order merchandise to
conform to certain rules of conduct with respect to shipping dates and shipping
delays. The Company believes it is in compliance with the Rule and such
regulations.
The Company currently collects sales taxes only on sales to its Massachusetts
customers. Many states have attempted to require that out-of-state direct
marketers collect use taxes on sales of products shipped to their residents. In
1992, the United States Supreme Court held unconstitutional a state's imposition
of use tax collection obligations on an out-of-state mail order company whose
only significant contacts with the state were the distribution of catalogs and
other advertising materials through the mail and subsequent delivery of
purchased goods by mail or common carriers, but stated that Congress could enact
legislation authorizing the states to impose such obligations. In 1995, however,
the United States Supreme Court let stand a decision of New York's highest state
court requiring an out-of-state catalog company to collect use tax (including a
retroactive assessment and penalties) on its mail order sales in the state,
where the catalog company's reported contact with New York included a limited
number of visits by sales force employees. If Congress enacts legislation
permitting states to impose use tax collection obligations on out-of-state mail
order businesses, or if the Company otherwise is required to collect additional
sales or use taxes, such tax collection obligations would make it more expensive
to purchase the Company's products and increase the Company's administrative
costs, and therefore could have a material adverse effect on the Company's
financial condition and results of operations.
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ITEM 2. PROPERTIES
The following table sets forth certain information relating to the Company's
facilities:
<TABLE>
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SQUARE TYPE OF LEASE
LOCATION FOOTAGE FUNCTION INTEREST TERMINATION
--------------------------------- ------- --------------------------------- -------- -----------
<S> <C> <C> <C> <C>
Meredith, NH (approx. 25 acres).. 93,120 Operations and Fulfillment Center Owned --
Laconia, NH...................... 112,900 Interim Fulfillment Center Leased 09/14/99
Laconia, NH...................... 37,800 Interim Returns Processing and Leased 04/01/99
Storage Facility
Hingham, MA...................... 19,642 Corporate Offices Leased 03/31/00
Bedford, MA...................... 5,255 Outlet Store Leased 04/30/00
Meredith, NH..................... 3,600 Outlet Store Leased 07/01/99
North Conway, NH................. 2,567 Outlet Store Leased 02/28/02
</TABLE>
In September 1997 the Company purchased approximately 360 acres of land in
Tilton, New Hampshire. This site will house the Company's new operations and
fulfillment center which is expected to be operational by early 1999. The
estimated cost of this new facility, including land, construction and equipment,
ranges from $36.0 to $38.0 million.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings and did not
settle any material legal proceedings during the quarter ended December 27,
1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock began trading on The Nasdaq Stock Market on
November 2, 1993. Prior to November 2, 1993, there was no public market for the
common stock or any other securities of the Company. The Company's common stock
trades on The Nasdaq Stock Market under the symbol "DMMC." As of March 6, 1998,
the approximate number of holders of record of common stock of the Company was
300. The Company believes that the approximate number of beneficial holders of
common stock of the Company is approximately 1,300.
The following table sets forth, for the periods indicated, the high and low
sales prices for the Company's common stock as reported on The Nasdaq Stock
Market.
<TABLE>
<CAPTION>
HIGH LOW
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<S> <C> <C>
CALENDAR YEAR 1997
Quarter ended December 27, 1997............................... 18 1/4 11 1/2
Quarter ended September 27, 1997.............................. 14 1/4 9 3/4
Quarter ended June 28, 1997................................... 11 1/4 6 3/4
Quarter ended March 29, 1997.................................. 8 1/8 3 5/8
CALENDAR YEAR 1996
Quarter ended December 28, 1996............................... 4 1/4 3
Quarter ended September 28, 1996.............................. 4 7/8 2 7/8
Quarter ended June 29, 1996................................... 5 3/8 2 5/8
Quarter ended March 30, 1996.................................. 2 7/8 2
CALENDAR YEAR 1995
Quarter ended December 30, 1995............................... 2 5/8 1 7/8
Quarter ended September 30, 1995.............................. 4 1/8 1 7/8
Quarter ended June 24, 1995................................... 3 3/4 2 1/4
Quarter ended March 25, 1995.................................. 5 1/4 2 1/2
</TABLE>
The Company has never declared or paid any cash dividends on its common stock.
The Company currently intends to retain any earnings for use in the operation
and expansion of its business and therefore does not anticipate paying any cash
dividends in the foreseeable future.
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data of DM Management Company (the
"Company") set forth below has been derived from the Company's consolidated
financial statements for the periods indicated and should be read in conjunction
with the discussion under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's consolidated financial
statements and footnotes.
The Company's fiscal year ends on the last Saturday in December. The twelve
months ended December 27, 1997 was the first full fiscal year with a December
year end. Previously, the Company's fiscal year had ended on the last Saturday
in June. The Company's change in fiscal year end resulted in a six-month
transition period ended December 28, 1996. Financial information for the twelve
months ended December 28, 1996 and the six months ended December 30, 1995 has
been presented for comparative purposes and is unaudited. References to the
transition periods mean the six-month transition period ended December 28, 1996
and the comparable six-month period ended December 30, 1995.
<TABLE>
<CAPTION>
TRANSITION PERIOD
TWELVE MONTHS ENDED ENDED TWELVE MONTHS ENDED
------------------------ ------------------------- ------------------------------------------------
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29, JUNE 24, JUNE 25, JUNE 26,
1997 1996 1996 (2) 1995 1996 (1) 1995 (1) 1994 1993
----------- ----------- ----------- ------------ ------------ ---------- ---------- ----------
(unaudited) (unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales...................... $135,533 $84,642 $ 43,324 $39,267 $ 80,585 $ 72,691 $63,337 $47,510
Income (loss) from
continuing operations
before income taxes......... 6,392 1,956 1,072 (623) 261 851 3,604 1,608
Income (loss) from
continuing operations......... 3,899 12,358 11,563 (560) 235 765 3,269 1,547
Net income (loss).............. 3,899 3,371 11,563 (1,158) (9,350) 773 3,269 1,547
Income (loss) from
continuing operations
per share (diluted)......... 0.72 2.64 2.44 (0.13) 0.05 0.17 0.80 0.60
Net income (loss) per share
(diluted)..................... $0.72 $0.72 $2.44 $(0.27) $(2.11) $0.17 $0.80 $0.60
Weighted average shares
outstanding (diluted)......... 5,382 4,679 4,736 4,262 4,441 4,610 4,077 2,586
CONSOLIDATED BALANCE SHEET
DATA:
Total assets................... $ 75,381 $38,109 $ 38,109 $34,694 $ 27,069 $ 31,612 $26,923 $ 8,849
Working capital................ 32,835 10,662 10,662 11,019 6,988 6,315 9,305 1,075
Long-term debt, less current
portion....................... 8,346 4,540 4,540 5,522 4,380 3,634 248 417
Stockholders' equity........... $ 43,142 $21,223 $ 21,223 $17,729 $ 9,480 $ 18,851 $17,861 $ 1,645
SELECTED OPERATING DATA:
Catalog circulation (3)........ 50,500 37,900 18,400 22,100 41,600 40,300 32,400 24,000
Total active customers (4)..... 915 657 657 611 638 579 473 448
</TABLE>
(1) In December 1994 the Company purchased certain assets and assumed certain
liabilities of Carroll Reed, Inc. and Carroll Reed International Limited.
In connection with the purchase, the Company paid $5,031,000 and
established accruals totaling $1,180,000. On May 20, 1996, the Company
announced its plan to divest its Carroll Reed segment and recorded a charge
of $8,511,000 for the loss on disposal of discontinued operations. The
results of the Carroll Reed operations through May 20, 1996 have been
classified as income (loss) from discontinued operations. See Note B to the
accompanying consolidated financial statements.
(2) During the six-month period ended December 28, 1996, the Company recognized
a deferred tax benefit of $10,598,000. See Note H to the accompanying
consolidated financial statements.
(3) In order to more closely match net sales to catalog circulation, the
Company calculates catalog circulation on a percentage of completion basis.
This calculation takes into account the total number of catalogs mailed
during all periods and the Company's estimate of the expected sales life of
each catalog edition. The term "catalog circulation" refers to circulation
of the Company's catalogs calculated in such fashion.
(4) The term "active customers" means customers who have made a purchase from
the Company within the previous 24 months.
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
In January 1997 the Company changed its fiscal year end from the last Saturday
in June to the last Saturday in December. References to fiscal 1997 mean the
Company's fiscal year ended December 27, 1997, references to the transition
periods mean the six-month transition period ended December 28, 1996 and the
comparable six-month period ended December 30, 1995, and references to fiscal
1996 and fiscal 1995 mean the Company's fiscal year ended in June 1996 and 1995,
respectively.
Fiscal 1997 was an unprecedented year for the Company. Net sales increased by
60.1% to $135.5 million from $84.6 million during the twelve months ended
December 28, 1996. Pretax income from continuing operations increased by
226.8% to $6.4 million from $2.0 million during the twelve months ended December
28, 1996. The Company believes that these recent financial results demonstrate
the successful implementation of several strategic initiatives undertaken since
December 1995, including the following:
. Emphasizing creative presentation and differentiation in merchandise
execution as well as circulation management as primary drivers of growth
and profitability;
. Assembling a management team to support the Company's future growth;
. Curtailing unproductive mailings to existing customers and
reinvesting the resulting circulation cost savings in increased
prospecting;
. Merging the Company's The Very Thing! concept into its Nicole Summers
concept in order to increase the operating efficiencies of what had become
two very similar catalog concepts with significant overlap in their
customer bases and product offerings; and
. Phasing out the operations of the Carroll Reed segment, which was
incompatible with the Company's new strategic emphasis.
RESULTS OF OPERATIONS
The following table sets forth, for the fiscal periods indicated, certain
items from the Company's consolidated statements of operations expressed as a
percentage of net sales:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED TRANSITION PERIOD ENDED TWELVE MONTHS ENDED
-------------------------- ------------------------- ---------------------
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29, JUNE 24,
1997 1996 1996 1995 1996 1995
---------- --------- --------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Product.................................. 44.1 44.0 44.9 44.0 43.5 42.9
Operations............................... 18.9 16.5 15.9 17.5 17.3 16.9
Selling.................................. 24.7 28.0 27.1 31.6 30.3 30.7
General and administrative............... 7.6 8.8 9.3 8.2 8.2 8.3
Interest, net............................ - 0.4 0.3 0.3 0.4 -
----- ----- ----- ----- ------ -----
Income (loss) from continuing operations
before income taxes......................... 4.7 2.3 2.5 (1.6) 0.3 1.2
Provision (benefit) for income taxes........ 1.8 (12.3) (24.2) (0.2) - 0.1
----- ----- ----- ----- ------ -----
Income (loss) from continuing operations.... 2.9 14.6 26.7 (1.4) 0.3 1.1
Income (loss) from discontinued operations.. - (10.6) - (1.5) (11.9) -
----- ----- ----- ----- ------ -----
Net income (loss)........................... 2.9% 4.0% 26.7% (2.9)% (11.6)% 1.1%
===== ===== ===== ===== ====== =====
</TABLE>
12
<PAGE>
COMPARISON OF FISCAL 1997 TO THE TWELVE MONTHS ENDED DECEMBER 28, 1996
Net Sales
In fiscal 1997 net sales increased by 60.1%, or $50.9 million, to $135.5
million from $84.6 million during the twelve months ended December 28, 1996.
Catalog circulation increased by 33.2% to 50.5 million in fiscal 1997 from 37.9
million during the twelve months ended December 28, 1996. The number of active
customers grew to 915,000 at December 27, 1997 from 657,000 at December 28,
1996, an increase of 39.3%. Fiscal 1997 was the first full year to benefit from
the implementation of the strategic initiatives mentioned above. The result was
a year of dramatic sales growth and brand building. In addition, the Company's
J. Jill concept performed exceptionally well in fiscal 1997. Management believes
that the J. Jill brand has now become a leader in an emerging market for more
casual women's apparel, particularly in the workplace.
Product
Product costs consist primarily of merchandise acquisition costs (net of term
discounts and advertising allowances), including freight costs, and provisions
for markdowns. In fiscal 1997 product costs increased by $22.6 million, or
60.7%, to $59.8 million from $37.2 million during the twelve months ended
December 28, 1996. As a percentage of net sales, product costs increased to
44.1% in fiscal 1997 from 44.0% for the twelve months ended December 28, 1996.
The slight increase in product costs as a percentage of net sales in fiscal 1997
was primarily attributable to increased promotional activity and was offset in
part by lower markdown charges in fiscal 1997 as compared to the prior year.
Operations
Operating expenses consist primarily of order processing costs, such as
telemarketing, customer service, fulfillment, shipping, warehousing and credit
card processing costs. In fiscal 1997 operating expenses increased by $11.6
million, or 82.9%, to $25.6 million from $14.0 million during the twelve months
ended December 28, 1996. As a percentage of net sales, operating expenses
increased to 18.9% in fiscal 1997 from 16.5% for the twelve months ended
December 28, 1996. The Company's recent dramatic growth has resulted in some
operational inefficiencies and capacity issues. Higher than anticipated call
volume resulted in increased costs from greater use of the Company's third party
call center. The need for more fulfillment capacity required the Company to
lease two interim satellite facilities. This arrangement has generated
operational inefficiencies, as well as increased costs both of which are
expected to continue through the first year of operation in the Company's new
Tilton, New Hampshire facility, which is currently under construction. Also
during the second half of fiscal 1997, the Company experienced higher shipping
costs due to the expiration of its contract with Airborne Express, which had
favorable pricing terms, and its subsequent shift to the U.S. Postal Service for
customer package delivery. The Company expects the ratio of operating expenses
to net sales to improve by fiscal 2000.
Selling
Selling expenses consist primarily of the cost to produce, print and
distribute catalogs. In fiscal 1997 selling expenses increased by $9.8 million,
or 41.2%, to $33.5 million from $23.7 million during the twelve months ended
December 28, 1996. As a percentage of net sales, selling expenses decreased to
24.7% in fiscal 1997 from 28.0% for the twelve months ended December 28, 1996.
The impact of the full implementation of the Company's new business strategies
as well as lower paper prices resulted in this decline in selling expenses as a
percentage of net sales. The Company does not expect further decreases in
selling expenses as a percentage of net sales.
General and Administrative
General and administrative expenses consist primarily of executive, marketing,
information systems and finance expenses. In fiscal 1997 general and
administrative expenses increased by $2.8 million, or 37.5%, to $10.2 million
from $7.4 million during the twelve months ended December 28, 1996. This
increase in general and administrative expenses is primarily attributable to
increased management infrastructure, increased outside consulting fees related
to various systems and facilities projects and increased depreciation and
occupancy costs. As a percentage of net sales, general and administrative
expenses decreased to 7.6% in fiscal 1997 from 8.8% for the twelve months ended
December 28, 1996.
COMPARISON OF THE SIX MONTHS ENDED DECEMBER 28, 1996 TO THE SIX MONTHS ENDED
DECEMBER 30, 1995
Net Sales
During the six months ended December 28, 1996 net sales increased by $4.0
million, or 10.3%, to $43.3 million from $39.3 million during the six months
ended December 30, 1995. Catalog circulation declined by 16.7% to 18.4 million
during the six months ended December 28, 1996 from 22.1 million during the six
months ended December 30, 1995. The number of active customers grew to 657,000
at December 28, 1996 from 611,000 at December 30, 1995, an increase of 7.5%.
13
<PAGE>
During the six months ended December 28, 1996, the first edition of the Nicole
Summers catalog after the combination of the Nicole Summers and The Very Thing!
concepts was mailed, and most third mailings of catalog editions were
eliminated. The impact was dramatic, as net sales increased despite a
significant reduction in circulation.
Product
During the six months ended December 28, 1996 product costs increased by $2.1
million, or 12.5%, to $19.4 million from $17.3 million during the six months
ended December 30, 1995. As a percentage of net sales, product costs increased
to 44.9% during the six months ended December 28, 1996 from 44.0% during the six
months ended December 30, 1995. A more competitive pricing environment in the
women's apparel market was responsible for this increase in product costs as a
percentage of net sales.
Operations
During the six months ended December 28, 1996 operating expenses increased by
0.8% to $6.9 million as compared to the six months ended December 30, 1995. As
a percentage of net sales, operating expenses declined to 15.9% during the six
months ended December 28, 1996 from 17.5% during the six months ended December
30, 1995. In response to certain operational inefficiencies at the Company's
fulfillment center in Meredith, New Hampshire, the Company embarked upon a
detailed review and reengineering of its order processing and delivery
mechanisms. This reengineering effort resulted in the decrease in operating
expenses as a percentage of net sales during the six months ended December 28,
1996 compared to the same period of the prior year.
Selling
During the six months ended December 28, 1996 selling expenses decreased by
$0.7 million, or 5.5%, to $11.7 million from $12.4 million during the six months
ended December 30, 1995. As a percentage of net sales, selling expenses
decreased to 27.1% during the six months ended December 28, 1996 from 31.6%
during the six months ended December 30, 1995. This decrease in selling expenses
as a percentage of net sales reflects the impact of the previously mentioned
combination of the Nicole Summers and The Very Thing! concepts as well as the
more targeted mailing strategy which the Company was implementing during this
period.
General and Administrative
During the six months ended December 28, 1996 general and administrative
expenses increased by $0.8 million, or 26.2%, to $4.0 million from $3.2 million
during the six months ended December 30, 1995, primarily as a result of
performance bonuses and additions to the management team. As a percentage of net
sales, general and administrative expenses increased to 9.3% during the six
months ended December 28, 1996 from 8.2% during the six months ended December
30, 1995.
COMPARISON OF FISCAL 1996 TO FISCAL 1995
Net Sales
In fiscal 1996 net sales increased by $7.9 million, or 10.9%, to $80.6 million
from $72.7 million in fiscal 1995. Catalog circulation increased by 3.2% to 41.6
million in fiscal 1996 from 40.3 million in fiscal 1995. The number of active
customers grew to 638,000 at the end of fiscal 1996 from 579,000 at the end of
fiscal 1995, an increase of 10.2%. Fiscal 1996 was a year of transition for the
Company. Although most of the strategic initiatives described above were not
yet in place, the Company had adopted a more selective approach to circulation
which enabled it to achieve an increase in net sales that was significant in
comparison to the increase in circulation.
Product
In fiscal 1996 product costs increased by $3.8 million, or 12.3%, to $35.0
million from $31.2 million in fiscal 1995. As a percentage of net sales, product
costs increased to 43.5% in fiscal 1996 from 42.9% in fiscal 1995. This increase
in product costs as a percentage of net sales was primarily attributable to a
more competitive pricing environment in the women's apparel market.
Operations
In fiscal 1996 operating expenses increased by $1.7 million, or 13.6%, to
$14.0 million from $12.3 million in fiscal 1995. As a percentage of net sales,
operating expenses increased to 17.3% in fiscal 1996 from 16.9% in fiscal 1995.
This increase in operating expenses as a percentage of net sales was primarily
attributable to operational inefficiencies at the Company's Meredith, New
Hampshire fulfillment center.
14
<PAGE>
Selling
In fiscal 1996 selling expenses increased by $2.1 million, or 9.4%, to $24.4
million from $22.3 million in fiscal 1995. As a percentage of net sales, selling
expenses declined to 30.3% in fiscal 1996 from 30.7% in fiscal 1995. As a result
of the Company's more selective circulation strategy during fiscal 1996, this
decline on a percentage basis was accomplished even though increases in U.S.
Postal Service rates and paper prices were in effect for all of fiscal 1996
versus only the latter half of fiscal 1995.
General and Administrative
In fiscal 1996 general and administrative expenses increased by $0.6 million,
or 9.9%, to $6.6 million from $6.0 million in fiscal 1995, primarily due to the
Company's decision to broaden and strengthen its management team. As a
percentage of net sales, general and administrative expenses declined slightly
to 8.2% in fiscal 1996 from 8.3% in fiscal 1995.
INCOME TAXES
The Company provides for income taxes at an effective tax rate that includes
the full federal and state statutory tax rates. Prior to December 1996, the
Company reduced the income tax provision recorded in its financial statements by
recording a tax benefit associated with its net deferred tax assets, primarily
net operating loss ("NOL") carryforwards. Because of the uncertainty surrounding
the realizability of these assets, the Company placed a valuation allowance
against the entire balance of its net deferred tax assets. As a result, the
associated tax benefit was recognized as income was earned, resulting in a
significantly lower effective tax rate for all periods reported prior to
December 1996.
In December 1996, the Company performed a detailed analysis of the future
taxable income levels required for the Company to fully realize the benefit of
its net deferred tax assets. This analysis considered several factors, including
the historical taxable income trends since fiscal 1993, exclusive of a taxable
loss generated in fiscal 1996 by the Company's discontinued Carroll Reed
segment, management's demonstrated ability to increase the Company's active
customer database and the implementation of the Company's new strategic business
initiatives. Based on this analysis, the Company determined that it was more
likely than not that the Company would earn sufficient book and taxable income
to fully realize the benefit of its net deferred tax assets. This determination
required the Company to remove the valuation allowance and recognize the
deferred tax benefit of $10.6 million at December 28, 1996 in its entirety. No
assurance can be given, however, that the Company will achieve taxable income
sufficient to realize the full benefit of its net deferred tax assets.
Because, for financial statement purposes, the benefit associated with the
Company's deferred tax assets has been fully realized, the Company's effective
tax rate can no longer be reduced by the recognition of this tax benefit over
future periods of income generation. As a result, the Company's effective tax
rate is substantially larger in fiscal 1997 than in prior periods. Cash payments
for income taxes continue to be reduced by available NOL carryforwards. See Note
H to the accompanying consolidated financial statements.
DISCONTINUED OPERATIONS
On May 20, 1996, the Company announced its plan to divest its Carroll Reed
segment due to the incompatibility of the customer base and product line of this
segment with those of its other segment. Accordingly, the Carroll Reed segment
has been accounted for as a discontinued operation, and all assets, liabilities,
results of operations and cash flows associated with the Carroll Reed segment
have been segregated from those associated with continuing operations. In
connection with this divestiture, the Company recorded a charge of $8.5 million
in fiscal 1996 for the loss on disposal of discontinued operations, consisting
of $5.3 million related to the write-off of the remaining unamortized intangible
assets and $3.2 million for expected losses during the phase-out period. The
results of the Carroll Reed operations through May 20, 1996 have been classified
as income (loss) from discontinued operations. Since May 20, 1996, the results
of this discontinued operation have been charged to the liability for expected
losses established in connection with the divestiture and have had no impact on
the Company's operating results. As of December 27, 1997, the Company had
completed the phase-out of its Carroll Reed segment and had utilized its reserve
for expected losses.
LIQUIDITY AND CAPITAL RESOURCES
In fiscal 1997 the Company funded its working capital needs through cash
generated from operations and through use of its credit facilities. The Company
used working capital to support costs incurred in advance of revenue generation,
primarily inventory acquisition and catalog development, production and mailing
costs incurred prior to the beginning of each
15
<PAGE>
selling season. The Company has two selling seasons which correspond to the
fashion seasons. The Fall season begins in July and ends in December, and the
Spring season begins in January and ends in early July.
The Company's credit facilities at December 27, 1997 consisted of (i) a $1.7
million real estate loan (the "Real Estate Loan"); (ii) a $3.6 million term loan
(the "Term Loan"); (iii) an $8.5 million revolving line of credit (the
"Revolver"); and (iv) a $4.3 million bridge loan (the "Bridge Loan"). All of
the Company's credit facilities at December 27, 1997 were collateralized by a
security interest in substantially all assets of the Company other than its
marketable securities. The Term Loan was also collateralized by the Company's
marketable securities. These credit facilities contain various lending
conditions and covenants, including restrictions on permitted liens and required
compliance with certain financial coverage ratios.
Payments on the Real Estate Loan are due monthly, based on a 15-year
amortization, with the remaining balance payable on July 30, 2002. Interest on
the Real Estate Loan is fixed at 6.81% per annum until August 31, 1999, at which
time the Company may select from several interest rate options. Payments on the
Term Loan are due quarterly through its maturity on June 1, 2002. The Term Loan
provides for several interest rate options. At December 27, 1997, the Term Loan
bore interest at 7.36% per annum. The Revolver provides for several interest
rate options and expires on June 1, 1999. The Company is required to pay a
commitment fee of 1/8th of 1% per annum on the unused portion of the Revolver
commitment. There were no Revolver borrowings outstanding at December 27, 1997.
At December 27, 1997, interest on the Bridge Loan was fixed at 7.25% per annum.
Proceeds from the Bridge Loan were used to finance the purchase of land in
Tilton, New Hampshire, that will be the site of the Company's new operations and
fulfillment center. The Bridge Loan was scheduled to expire on February 28,
1998. Outstanding import letters of credit at December 27, 1997 totaled
approximately $4.0 million.
Subsequent to December 27, 1997, the Bridge Loan was refinanced with a $4.3
million short-term note (the "Short-Term Note"). The Short-Term Note matures on
December 31, 1998 and bears interest at 7.06%. In addition, the Company
obtained a $17.0 million line of credit (the "Line of Credit"), the proceeds of
which will be used to finance some of the cost of constructing the Company's new
Tilton, New Hampshire facility. Borrowings under the Line of Credit bear
interest at LIBOR plus 125 basis points repriced monthly. The Company is not
required to pay a commitment fee on the unused portion of the Line of Credit
commitment. In connection with these new credit facilities, the Company's
existing credit facilities were amended in certain respects including to provide
for the cross-collateralization and cross-default of all such facilities.
In fiscal 1997 the Company completed its second offering of common stock to
the public. The Company issued approximately 1.4 million shares of common stock
at a price to the public of $13.50 per share. The Company received
approximately $17.5 million in net proceeds from the offering, after
underwriting discounts and commissions and expenses incurred by the Company in
conjunction with the offering. Also in connection with this public offering,
approximately 1.8 million shares of the Company's common stock were sold by
selling stockholders. The Company did not receive any proceeds from the sale of
shares by selling stockholders.
The Company had considerably more liquidity at December 27, 1997 than at
December 28, 1996, as cash and cash equivalents totaled $19.3 million versus
$0.4 million at these respective dates. Cash used in investing activities
totaled $8.5 million in fiscal 1997 and $2.4 million for the twelve months ended
December 28, 1996. In fiscal 1997 investing activities include approximately
$5.9 million in construction and land costs related to the Company's new
operations and fulfillment center in Tilton, New Hampshire. During the twelve
months ended December 28, 1996 capital investments included additions to
property and equipment and a final payment for the Carroll Reed purchase.
Inventory levels at December 27, 1997 were 62.8% higher than at December 28,
1996, primarily due to the past and future projected growth in the business.
Prepaid catalog expenses at December 27, 1997 were 138.6% higher than at
December 28, 1996 primarily due to increased catalog circulation and page counts
and higher paper inventory balances on hand at December 27, 1997 as compared to
December 28, 1996.
In fiscal 1997 the Company began constructing a new operations and fulfillment
center in Tilton, New Hampshire. This new facility is expected to be
operational by early 1999. The estimated cost of this new facility, including
land, construction and equipment, ranges from $36.0 million to $38.0 million.
The Company intends to finance the cost of this new facility with a portion of
the net proceeds from its recently completed public offering, bank financing and
by other financing arrangements, which may include, without limitation,
additional bank financing, a sale-leaseback transaction or government sponsored
financing. The Company is also in the process of upgrading its information
systems, including implementing new
16
<PAGE>
order management and warehouse management systems. Total expenditures for this
purpose are estimated at approximately $4.0 million, of which approximately $1.3
million had been spent as of December 27, 1997.
In fiscal 1997 the Company formulated a plan to handle the Year 2000 issue,
which affects most companies that rely on computer systems to process
transactions and involves the computer software changes necessary to handle the
transition from the year 1999 to 2000. The Company developed a comprehensive
list of all software and hardware applications utilized by the Company and
identified those applications requiring upgrades to become Year 2000 compliant.
In addition, the Company contacted its major third party data processing and
information systems resources including its list processor and credit card
administrators, and requested certificates of compliance from each one. The
Company is in the process of obtaining upgrades for its internal systems that
are not currently Year 2000 compliant. The Company's new order management and
warehouse management systems, which will represent the majority of the Company's
operating systems, will be Year 2000 compliant. The Company does not expect to
spend a material amount on upgrading its other systems to become Year 2000
compliant.
The net proceeds from the Company's recently completed public offering, the
Company's existing credit facilities and cash flows from operations are expected
to be sufficient to provide the capital resources necessary to support the
Company's capital and operating needs for at least the next twelve months.
RECENT ACCOUNTING STANDARDS
In June 1997 the Financial Accounting Standards Board (the "FASB") issued
Statement No. 130 ("SFAS 130"), "Reporting Comprehensive Income" which
establishes standards for reporting and display of comprehensive income and its
components (revenue, expenses, gains and losses) in a full set of general
purpose financial statements. SFAS 130 requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement and
(b) display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the equity section of a
statement of financial position. SFAS 130 is effective for fiscal years
beginning after December 15, 1997. SFAS 130 requires comparative financial
statements for earlier years to be restated. The Company intends to adopt the
provisions of SFAS 130 in its Form 10-Q for the first quarter of fiscal 1998.
In June 1997 the FASB issued Statement No. 131, ("SFAS 131"), "Disclosures
about Segments of an Enterprise and Related Information" which establishes new
standards for the way public companies report information about operating
segments and requires companies to report selected segment information quarterly
to stockholders. This statement is effective for financial statements for
periods beginning after December 15, 1997 and requires comparative information
for earlier years to be restated. Management is currently evaluating the
effects of this change on its reporting of segment information.
FORWARD-LOOKING STATEMENTS
The above discussion contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended which involve risks and
uncertainties. For this purpose, any statements contained herein or
incorporated herein that are not statements of historical fact may be deemed to
be forward-looking statements. Without limiting the generality of the
foregoing, the words "believe," "anticipates," "plans," "expects" and similar
expressions are intended to identify forward-looking statements. The Company's
actual results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to the following: changes in consumer spending and consumer
preferences; general economic and business conditions; increasing competition in
the apparel industry; success of operating initiatives; delays in completing
construction of the Company's new Tilton, New Hampshire operations and
fulfillment center; difficulties in managing the transition of operations to the
new Tilton facility; possible future increases in operating costs; advertising
and promotional efforts; brand awareness; the existence or absence of adverse
publicity; changes in business strategy; quality of management; availability,
terms and deployment of capital; business abilities and judgement of personnel;
availability of qualified personnel; labor and employee benefit costs; change
in, or the failure to comply with, government regulations; and other factors.
17
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
DM MANAGEMENT COMPANY AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants....................................................... 19
Consolidated Balance Sheets at December 27, 1997 and December 28, 1996.................. 20
Consolidated Statements of Operations for the twelve months ended December 27, 1997
and December 28, 1996 (unaudited), the six months ended December 28, 1996 and
December 30, 1995 (unaudited) and the twelve months ended June 29, 1996 and
June 24, 1995......................................................................... 21
Consolidated Statements of Changes in Stockholders' Equity for the twelve months ended
December 27, 1997, the six months ended December 28, 1996 and the twelve months
ended June 29, 1996 and June 24, 1995................................................. 22
Consolidated Statements of Cash Flows for the twelve months ended December 27, 1997
and December 28, 1996 (unaudited), the six months ended December 28, 1996 and
December 30, 1995 (unaudited) and the twelve months ended June 29, 1996 and
June 24, 1995......................................................................... 23
Notes to Consolidated Financial Statements.............................................. 24
</TABLE>
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
DM Management Company:
We have audited the accompanying consolidated balance sheets of DM Management
Company and subsidiary as of December 27, 1997 and December 28, 1996 and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the fiscal year ended December 27, 1997, the six months ended
December 28, 1996 and each of the two fiscal years in the period ended June 29,
1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of DM
Management Company and subsidiary as of December 27, 1997 and December 28, 1996
and the consolidated results of its operations and its cash flows for the fiscal
year ended December 27, 1997, the six months ended December 28, 1996 and each of
the two fiscal years in the period ended June 29, 1996, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 30, 1998
19
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 27, 1997 DECEMBER 28, 1996
----------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 19,260 $ 384
Marketable securities, net of unrealized loss................... 3,890 3,879
Inventory....................................................... 20,579 12,637
Prepaid catalog expenses........................................ 6,475 2,714
Deferred income taxes........................................... 5,295 2,670
Other current assets............................................ 1,229 724
-------- --------
Total current assets........................................... 56,728 23,008
Property and equipment, net....................................... 14,174 7,173
Deferred income taxes............................................. 4,479 7,928
-------- --------
Total assets................................................... $ 75,381 $ 38,109
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................ $ 14,116 $ 8,143
Accrued expenses................................................ 4,161 1,877
Accrued customer returns........................................ 4,779 1,309
Current portion of long-term debt............................... 837 1,017
-------- --------
Total current liabilities..................................... 23,893 12,346
Long-term debt, less current portion.............................. 8,346 4,540
Commitments
Stockholders' equity:
Special preferred stock (par value $0.01)1,000,000 shares
authorized.................................................... -- --
Common stock (par value $0.01) 15,000,000 shares authorized,
6,098,480 and 4,456,908 shares issued and outstanding as of
December 27, 1997 and December 28, 1996, respectively........... 61 44
Additional paid-in capital........................................ 58,041 40,048
Unrealized loss on marketable securities.......................... (105) (115)
Accumulated deficit............................................... (14,855) (18,754)
-------- --------
Total stockholders' equity...................................... 43,142 21,223
-------- --------
Total liabilities and stockholders' equity...................... $ 75,381 $ 38,109
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED TRANSITION PERIOD ENDED TWELVE MONTHS ENDED
---------------------------- ----------------------------- -----------------------------
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29, JUNE 24,
1997 1996 1996 1995 1996 1995
(52 WEEKS) (52 WEEKS) (26 WEEKS) (27 WEEKS) (53 WEEKS) (52 WEEKS)
------------- ------------- ------------- -------------- -------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net sales.............................. $135,533 $ 84,642 $ 43,324 $39,267 $80,585 $72,691
Costs and expenses:
Product............................. 59,788 37,205 19,436 17,277 35,046 31,211
Operations.......................... 25,615 14,007 6,915 6,862 13,954 12,285
Selling............................. 33,505 23,727 11,730 12,419 24,416 22,318
General and administrative.......... 10,236 7,442 4,045 3,205 6,602 6,010
Interest, net....................... (3) 305 126 127 306 16
-------- -------- -------- ------- ------- -------
Income (loss) from continuing operations
before income taxes........ 6,392 1,956 1,072 (623) 261 851
Provision (benefit) for income taxes... 2,493 (10,402) (10,491) (63) 26 86
-------- -------- -------- ------- ------- -------
Income (loss) from continuing
operations............................. 3,899 12,358 11,563 (560) 235 765
Discontinued operations:
Income (loss) from operations....... -- (476) -- (598) (1,074) 8
Loss on disposal.................... -- (8,511) -- -- (8,511) --
-------- -------- -------- ------- ------- -------
Income (loss) from discontinued
operations............................. -- (8,987) -- (598) (9,585) 8
-------- -------- -------- ------- ------- -------
Net income (loss)...................... $ 3,899 $ 3,371 $ 11,563 $(1,158) $(9,350) $ 773
======== ======== ======== ======= ======= =======
NET INCOME (LOSS) PER SHARE:
Basic:
Continuing operations................ $ 0.81 $ 2.86 $ 2.65 $ (0.13) $ 0.05 $ 0.18
Discontinued operations.............. -- (2.08) -- (0.14) (2.24) --
-------- -------- -------- ------- ------- -------
Net income (loss) per share.......... $ 0.81 $ 0.78 $ 2.65 $ (0.27) $ (2.19) $ 0.18
======== ======== ======== ======= ======= =======
Weighted average shares outstanding.... 4,801 4,329 4,365 4,262 4,277 4,229
Diluted:
Continuing operations............... $ 0.72 $ 2.64 $ 2.44 $ (0.13) $ 0.05 $ 0.17
Discontinued operations............. -- (1.92) -- (0.14) (2.16) --
-------- -------- -------- ------- ------- -------
Net income (loss) per share......... $ 0.72 $ 0.72 $ 2.44 $ (0.27) $ (2.11) $ 0.17
======== ======== ======== ======= ======= =======
Weighted average shares outstanding.... 5,382 4,679 4,736 4,262 4,441 4,610
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
21
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
UNREALIZED
ADDITIONAL LOSS ON TOTAL
PREFERRED COMMON PAID-IN MARKETABLE ACCUMULATED STOCKHOLDERS'
STOCK STOCK CAPITAL SECURITIES DEFICIT EQUITY
--------- -------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 25, 1994........................... $ -- $ 42 $ 39,674 $ (115) $ (21,740) $ 17,861
Exercise of stock options.......................... -- -- 55 -- -- 55
Tax benefit from exercise of stock options......... -- -- 61 -- -- 61
Stock granted under the 1993 Employee
Stock Purchase Plan............................... -- -- 37 -- -- 37
Change in unrealized losses, net of tax............ -- -- -- 64 -- 64
Net income......................................... -- -- -- -- 773 773
--------- -------- ----------- ----------- ------------ -------------
Balance at June 24, 1995........................... -- 42 39,827 (51) (20,967) 18,851
Exercise of stock options.......................... -- 1 29 -- -- 30
Stock granted under the 1993 Employee
Stock Purchase Plan.............................. -- -- 34 -- -- 34
Change in unrealized losses, net of tax............ -- -- -- (85) -- (85)
Net loss........................................... -- -- -- -- (9,350) (9,350)
--------- -------- ----------- ----------- ------------ -------------
Balance at June 29, 1996........................... -- 43 39,890 (136) (30,317) 9,480
Exercise of stock options.......................... -- 1 145 -- -- 146
Tax benefit from exercise of stock options......... -- -- 13 -- -- 13
Change in unrealized losses, net of tax............ -- -- -- 21 -- 21
Net income......................................... -- -- -- -- 11,563 11,563
--------- -------- ----------- ----------- ------------ -------------
Balance at December 28, 1996....................... -- 44 40,048 (115) (18,754) 21,223
Issuance of 1,412,861 shares of common stock, net.. -- 14 17,440 -- -- 17,454
Exercise of stock options.......................... -- 3 408 -- -- 411
Tax benefit from exercise of stock options......... -- -- 87 -- -- 87
Stock granted under the 1993 Employee
Stock Purchase Plan.............................. -- -- 58 -- -- 58
Change in unrealized losses, net of tax............ -- -- -- 10 -- 10
Net income......................................... -- -- -- -- 3,899 3,899
--------- -------- ----------- ----------- ------------ -------------
Balance at December 27, 1997....................... $ -- $ 61 $ 58,041 $ (105) $ (14,855) $ 43,142
========= ======== =========== =========== ============ =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
22
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED TRANSITION PERIOD ENDED TWELVE MONTHS ENDED
---------------------------- --------------------------- ------------------------------
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29, JUNE 24,
1997 1996 1996 1995 1996 1995
(52 WEEKS) (52 WEEKS) (26 WEEKS) (27 WEEKS) (53 WEEKS) (52 WEEKS)
------------- ------------- ------------- ------------ ------------ ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss).................... $ 3,899 $ 3,371 $ 11,563 $ (1,158) $ (9,350) $ 773
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization....... 1,493 1,049 571 432 910 704
Deferred income taxes............... 824 (10,598) (10,598) -- -- --
Liability for expected losses....... (231) 231 (2,427) -- 2,658 --
Write-off of intangible assets...... -- 5,336 -- -- 5,336 --
Amortization related to
discontinued operation............ -- 189 -- 226 415 203
Changes in assets and liabilities:
(Increase) decrease in inventory.. (7,942) (2,783) (1,771) 390 (622) (739)
(Increase) decrease in prepaid
catalog expenses................. (3,761) 2,952 1,440 (1,242) 270 (1,436)
(Increase) decrease in other
current assets................... (314) 795 182 (1,170) (557) 118
Increase (decrease) in accounts
payable and accrued expenses..... 8,257 2,084 (1,069) 279 3,432 (292)
Increase (decrease) in accrued
customer returns................. 3,470 444 78 (326) 40 163
(Increase) decrease in net
current assets (liabilities)
of discontinued operations..... 39 1,845 2,619 (1,491) (2,265) (926)
-------- -------- -------- -------- -------- --------
Net cash provided by (used in)
operating activities................ 5,734 4,915 588 (4,060) 267 (1,432)
Cash flows used in investing
activities:
Additions to property and
equipment........................ (8,494) (1,512) (834) (118) (796) (2,656)
Proceeds from sale of marketable
securities....................... -- 6 -- -- 6 4,130
Payments for purchase of Carroll
Reed............................. -- (907) -- -- (907) (4,124)
-------- -------- -------- -------- -------- --------
Net cash used in investing
activities.......................... (8,494) (2,413) (834) (118) (1,697) (2,650)
Cash flows provided by (used in)
financing activities:
Borrowings under debt agreements.. 21,224 21,972 8,863 16,994 30,103 14,805
Payments of debt borrowings....... (17,491) (24,438) (8,520) (12,668) (28,586) (11,244)
Principal payments on capital
lease obligations................ (107) (179) (93) (75) (161) (178)
Proceeds from stock transactions.. 556 186 159 37 64 92
Issuance of common stock, net..... 17,454 -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net cash provided by (used in)
financing activities................ 21,636 (2,459) 409 4,288 1,420 3,475
-------- -------- -------- -------- -------- --------
Net increase (decrease) in cash and
cash equivalents.................... 18,876 43 163 110 (10) (607)
Cash and cash equivalents at:
Beginning of period............... 384 341 221 231 231 838
-------- -------- -------- -------- -------- --------
End of period..................... $ 19,260 $ 384 $ 384 $ 341 $ 221 $ 231
======== ======== ======== ======== ======== ========
SUPPLEMENTAL INFORMATION:
Purchase of Carroll Reed (Note B):
Purchase price.................... $ -- $ 907 $ -- $ -- $ 907 $ 5,304
Accruals recorded, including
liabilities assumed.............. -- -- -- -- -- (1,180)
-------- -------- -------- -------- -------- --------
Cash paid for assets and
ancillary costs.................. $ -- $ 907 $ -- $ -- $ 907 $ 4,124
======== ======== ======== ======== ======== ========
Non-cash financing activities:
Increase in capital lease
obligations...................... $ -- $ 38 $ 38 $ -- $ -- $ 115
Cash paid for interest............... $ 493 $ 545 $ 252 $ 214 $ 506 $ 298
Cash paid for income taxes........... $ 1,068 $ -- $ -- $ 2 $ 2 $ 175
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
23
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF BUSINESS
DM Management Company and subsidiary (the "Company") is a specialty direct
marketer of high quality women's apparel, accessories, shoes and gifts. The
Company currently markets its products through two discrete catalog concepts, J.
Jill and Nicole Summers.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary. Intercompany balances and transactions have
been eliminated.
FISCAL YEAR
The Company's fiscal year ends on the last Saturday in December. The twelve
months ended December 27, 1997 ("fiscal 1997") was a 52-week period, and the
first full fiscal year with a December year end. Previously, the Company's
fiscal year had ended on the last Saturday in June. The Company's change in
fiscal year end resulted in a six-month transition period ended December 28,
1996 (a 26-week period). Financial information for the twelve months ended
December 28, 1996 (a 52-week period) and the six months ended December 30, 1995
(a 27-week period) has been presented for comparative purposes and is unaudited.
References to the transition periods mean the six-month transition period ended
December 28, 1996 and the comparable six-month period ended December 30, 1995.
The twelve months ended June 29, 1996 ("fiscal 1996") was a 53-week period. The
twelve months ended June 24, 1995 ("fiscal 1995") was a 52-week period.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
The Company recognizes sales and the related cost of sales at the time the
products are shipped to customers. The Company provides an allowance based on
projected merchandise returns.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist primarily of cash on deposit in banks and
may also include cash invested in money market mutual funds and overnight
repurchase agreements. The Company considers all highly liquid instruments with
maturity at time of purchase of three months or less to be cash equivalents.
24
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
MARKETABLE SECURITIES
The Company's marketable securities consist of investments in mutual funds
which are primarily invested in U.S. Treasury, U.S. government and corporate
bonds. The marketable securities are classified as available-for-sale and are
carried at fair market value in the accompanying consolidated balance sheets,
based on quoted market prices at each balance sheet date presented. Unrealized
holding losses, net of deferred tax benefits, are included as a separate
component of stockholders' equity and are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, 1997 DECEMBER 28, 1996
------------------ ------------------
<S> <C> <C>
Unrealized loss............................... $170 $187
Deferred tax benefit.......................... (65) (72)
---- ----
Net unrealized loss on marketable securities.. $105 $115
==== ====
</TABLE>
There were no realized gains or losses recorded in any of the reported
periods. The Company may choose to hold its marketable securities for a period
of less than one year and, accordingly, its marketable securities are classified
as current. These marketable securities are exposed to concentrations of credit
risk and are managed by a nationally recognized financial institution.
INVENTORY
Inventory, consisting of merchandise for sale, is stated at the lower of
cost or market, with cost determined using the first-in, first-out method.
SELLING EXPENSES
Selling expenses consist primarily of the cost to produce, print and
distribute catalogs. These costs are considered direct-response advertising and
as such are capitalized as incurred and amortized over the expected sales life
of each catalog, which is generally a period not exceeding four months.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation expense is computed
using the straight-line method over the estimated useful lives of the assets,
which are 30 years for buildings and 1-7 years for equipment, furniture and
fixtures. Improvements to leased premises are amortized on a straight-line basis
over the shorter of the estimated useful life or the lease term. Maintenance and
repairs are charged to expense as incurred. Upon retirement or sale, the cost of
the assets disposed of and the related accumulated depreciation are removed from
the accounts and any resulting gain or loss is credited or charged to income.
Assets under capital leases are recorded at the present value of future lease
payments and are depreciated over the term of the lease.
LONG-LIVED ASSETS
Management periodically considers whether there has been a permanent
impairment in the value of its long-lived assets, primarily property and
equipment and intangible assets, by evaluating various factors, including
current and projected future operating results and undiscounted cash flows.
Based on this assessment, management concluded that as of December 27, 1997 and
December 28, 1996, the Company's long-lived assets were fully realizable.
25
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NET INCOME (LOSS) PER SHARE
The Company calculates net income (loss) per share ("EPS") in accordance
with Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings
per Share." SFAS 128 requires the disclosure of basic and diluted EPS for
financial statements issued for periods ending after December 15, 1997.
Previously, the Company had disclosed primary and fully diluted EPS. The
restatement of all prior period EPS data presented is also required. Basic EPS
excludes potentially dilutive securities and is computed by dividing net income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS, similar to fully diluted EPS, reflects
the potential dilution that could occur if securities or other contracts to
issue common shares were exercised or converted into common shares that then
shared in the earnings of the entity. A reconciliation of the numerators and
denominators of the basic and diluted per share computation for income from
continuing operations follows (in thousands, except per share data):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED TRANSITION PERIOD ENDED TWELVE MONTHS ENDED
----------------------- ------------------------- ----------------------
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29, JUNE 24,
1997 1996 1996 1995 1996 1995
(52 WEEKS) (52 WEEKS) (26 WEEKS) (27 WEEKS) (53 WEEKS) (52 WEEKS)
---------- ----------- ----------- ------------ ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Numerator:
Income (loss) from continuing operations............. $3,899 $12,358 $11,563 $ (560) $ 235 $ 765
====== ======= ======= ====== ====== ======
Denominator (shares):
Basic weighted average shares outstanding............ 4,801 4,329 4,365 4,262 4,277 4,229
Assumed exercise of stock options.................... 581 350 371 -- 164 381
------ ------- ------- ------ ------ ------
Diluted weighted average shares outstanding.......... 5,382 4,679 4,736 4,262 4,441 4,610
====== ======= ======= ====== ====== ======
Income (loss) from continuing operations per share:
Basic................................................ $ 0.81 $ 2.86 $ 2.65 $(0.13) $ 0.05 $ 0.18
Diluted.............................................. $ 0.72 $ 2.64 $ 2.44 $(0.13) $ 0.05 $ 0.17
</TABLE>
Options to purchase 86,000 shares of common stock at $16.13 per share were
outstanding at December 27, 1997 but were not included in the computation of
diluted EPS because the options' exercise price was greater than the average
market price of the common shares. These options were granted during the fourth
quarter of fiscal 1997.
Subsequent to December 27, 1997, options to purchase 100,000 shares of the
Company's common stock were granted and 169,423 options were exercised pursuant
to the Company's stock option plans. Additionally, 30,104 shares of the
Company's common stock were issued to employees pursuant to the Company's 1993
Employee Stock Purchase Plan.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's long-term debt, including current
maturities, approximates fair value because the interest rates on these
instruments change with market interest rates. The carrying amounts for accounts
receivable and accounts payable approximate their fair values due to the short
maturity of these instruments. The Company's marketable securities are stated at
fair value based on quoted market prices.
RECLASSIFICATIONS
Certain financial statement amounts have been reclassified to be consistent
with the presentation for fiscal 1997.
26
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RECENT ACCOUNTING STANDARDS
In June 1997 the Financial Accounting Standards Board (the "FASB") issued
Statement No. 130 ("SFAS 130"), "Reporting Comprehensive Income" which
establishes standards for reporting and display of comprehensive income and its
components (revenue, expenses, gains and losses) in a full set of general
purpose financial statements. SFAS 130 requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement and
(b) display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the equity section of a
statement of financial position. SFAS 130 is effective for fiscal years
beginning after December 15, 1997. SFAS 130 requires comparative financial
statements for earlier years to be restated. The Company intends to adopt the
provisions of SFAS 130 in its Form 10-Q for the first quarter of fiscal 1998.
In June 1997 the FASB issued Statement No. 131, ("SFAS 131"), "Disclosures
about Segments of an Enterprise and Related Information" which establishes new
standards for the way public companies report information about operating
segments and requires companies to report selected segment information quarterly
to stockholders. This statement is effective for financial statements for
periods beginning after December 15, 1997 and requires comparative information
for earlier years to be restated. Management is currently evaluating the
effects of this change on its reporting of segment information.
B. DISCONTINUED OPERATIONS:
During fiscal 1995, the Company purchased certain assets and assumed
certain liabilities of Carroll Reed, Inc. and Carroll Reed International
Limited. In connection with the purchase, the Company paid $5,031,000 and
established accruals totaling $1,180,000. The acquisition was accounted for
under the purchase method of accounting. Accordingly, the cost of the
acquisition was allocated to net tangible assets acquired based on their
estimated fair market value of approximately $257,000. The excess of such costs
over the fair value of those assets of approximately $5,954,000 was allocated to
the Carroll Reed trademark, service mark and customer list.
On May 20, 1996, the Company announced its plan to divest its Carroll Reed
segment due to the incompatibility of the customer base and product line of this
segment with those of its other segment. Accordingly, the Carroll Reed segment
has been accounted for as a discontinued operation, and all assets, liabilities,
results of operations and cash flows associated with the Carroll Reed segment
have been segregated from those associated with continuing operations. In
connection with this divestiture, the Company recorded a charge of $8,511,000 in
fiscal 1996 for the loss on disposal of discontinued operations, consisting of
$5,336,000 related to the write-off of the remaining unamortized intangible
assets and $3,175,000 for expected losses during the phase-out period. The
results of the Carroll Reed operations through May 20, 1996, including fiscal
1996 net sales through May 20, 1996 of $12,415,000, have been classified as
income (loss) from discontinued operations in the accompanying consolidated
statements of operations. Since May 20, 1996, the results of this discontinued
operation have been charged to the liability for expected losses established in
connection with the divestiture and have had no impact on the Company's
operating results. As of December 27, 1997, the Company had completed the phase-
out of its Carroll Reed segment and had utilized its reserve for expected
losses.
The net current assets and liabilities of the Carroll Reed segment, which
have been included in other current assets in the accompanying consolidated
balance sheet at December 28, 1996, is summarized below (in thousands):
<TABLE>
<CAPTION>
DECEMBER 28, 1996
------------------
<S> <C>
Other current assets......................................... $ 49
Accrued customer returns..................................... (9)
Liability for expected losses................................ (231)
-----
Net current assets (liabilities) of discontinued operations.. $(191)
=====
</TABLE>
27
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
C. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, 1997 DECEMBER 28, 1996
------------------ ------------------
<S> <C> <C>
Land and building............................... $ 9,657 $ 5,163
Equipment....................................... 4,176 3,533
Furniture, fixtures and leasehold improvements.. 1,684 816
Construction in progress........................ 2,674 185
------- -------
Total property and equipment.................... 18,191 9,697
Less accumulated depreciation and amortization.. (4,017) (2,524)
------- -------
Property and equipment, net..................... $14,174 $ 7,173
======= =======
</TABLE>
D. DEBT:
The Company's credit facilities at December 27, 1997 consisted of (i) a
$1,650,000 real estate loan (the "Real Estate Loan"); (ii) a $3,600,000 term
loan (the "Term Loan"); (iii) an $8,500,000 revolving line of credit (the
"Revolver"); and (iv) a $4,300,000 bridge loan (the "Bridge Loan"). All of the
Company's credit facilities at December 27, 1997 were collateralized by a
security interest in substantially all assets of the Company other than its
marketable securities. The Term Loan was also collateralized by the Company's
marketable securities. These credit facilities contain various lending
conditions and covenants, including restrictions on permitted liens and required
compliance with certain financial coverage ratios. A summary of the Company's
outstanding long-term credit facilities follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, 1997 DECEMBER 28, 1996
----------------- -----------------
<S> <C> <C>
Real estate loans..................... $1,613 $1,421
Term loans............................ 3,240 4,000
Bridge Loan........................... 4,300 --
Capitalized lease obligations......... 30 136
------ ------
Total long-term debt.................. 9,183 5,557
Less current maturities............... 837 1,017
------ ------
Long-term debt, less current portion.. $8,346 $4,540
====== ======
</TABLE>
Payments on the Real Estate Loan are due monthly, based on a 15-year
amortization, with the remaining balance payable on July 30, 2002. Interest on
the Real Estate Loan is fixed at 6.81% per annum until August 31, 1999, at which
time the Company may select from several interest rate options. Payments on the
Term Loan are due quarterly through its maturity on June 1, 2002. The Term Loan
provides for several interest rate options. At December 27, 1997, the Term Loan
bore interest at 7.36% per annum. The Revolver provides for several interest
rate options and expires on June 1, 1999. The Company is required to pay a
commitment fee of 1/8th of 1% per annum on the unused portion of the Revolver
commitment. There were no Revolver borrowings outstanding at December 27, 1997.
At December 27, 1997, interest on the Bridge Loan was fixed at 7.25% per annum.
Proceeds from the Bridge Loan were used to finance the purchase of land in
Tilton, New Hampshire, that will be the site of the Company's new operations and
fulfillment center. The Bridge Loan was scheduled to expire on February 28,
1998. In fiscal 1997 the Company capitalized approximately $50,000 in interest
charges related to the Bridge Loan. The Company will continue to capitalize
interest on borrowings used to finance the construction of its new facility
until such time as that facility is fully operational.
Subsequent to December 27, 1997, the Bridge Loan was refinanced with a
$4,300,000 short-term note (the "Short-Term Note"). The Short-Term Note matures
on December 31, 1998 and bears interest at 7.06%. In addition, the Company
obtained a $17,000,000 line of credit (the "Line of Credit"), the proceeds of
which will be used to finance some of the cost of constructing the Company's new
Tilton, New Hampshire facility. Borrowings under the Line of Credit bear
interest at
28
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
LIBOR plus 125 basis points repriced monthly. The Company is not required to
pay a commitment fee on the unused portion of the Line of Credit commitment. In
connection with these new credit facilities, the Company's existing credit
facilities were amended in certain respects including to provide for the cross-
collateralization and cross-default of all such facilities.
At December 27, 1997, aggregate maturities of long-term debt for the next
five fiscal years were as follows: fiscal 1998--$837,000; fiscal 1999--
$5,138,000; fiscal 2000--$838,000; fiscal 2001--$837,000; and fiscal 2002--
$1,533,000.
Import letters of credit are for commitments issued through the Company's
bank to guarantee payment of foreign-sourced merchandise within agreed upon time
periods according to the terms of the agreements. Outstanding import letters of
credit totaled approximately $3,993,000 and $407,000 at December 27, 1997 and
December 28, 1996, respectively.
E. STOCKHOLDERS' EQUITY:
COMMON STOCK
In fiscal 1997 the Company completed its second offering of common stock to
the public. The Company issued 1,412,861 shares of common stock at a price to
the public of $13.50 per share. The Company received approximately $17,454,000
in net proceeds from the offering, after underwriting discounts and commissions
and expenses incurred by the Company. Expenses incurred by the Company in
connection with the offering totaled approximately $567,000. Also in connection
with this public offering, 1,752,404 shares of the Company's common stock were
sold by selling stockholders. The Company did not receive any of the proceeds
from the sale of shares by selling stockholders.
SPECIAL PREFERRED STOCK
The Company has 1,000,000 shares of special preferred stock, $0.01 par
value per share, authorized. No special preferred stock was outstanding at any
of the reported balance sheet dates.
F. STOCK-BASED PLANS:
At December 27, 1997, the Company had four stock-based plans--the 1988
Incentive Stock Option Plan (the "1988 Stock Option Plan"), the 1993 Incentive
and Nonqualified Stock Option Plan (the "1993 Stock Option Plan"), the 1993
Employee Stock Purchase Plan (the "1993 Stock Purchase Plan") and the 1998
Employee Stock Purchase Plan (the "1998 Stock Purchase Plan"). The 1998 Stock
Purchase Plan still must be approved by the Company's stockholders. The Company
applies Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for
Stock Issued to Employees," and related interpretations accounting for its stock
option plans and employee stock purchase plans. No compensation cost has been
recognized for these plans.
STOCK OPTION PLANS
The 1988 Stock Option Plan provides for the grant of options to purchase
common stock intended to qualify as incentive stock options as defined in
Section 422 of the Internal Revenue Code of 1986, as amended. During fiscal
1994, the Board of Directors voted not to issue any additional options under the
1988 Stock Option Plan. The maximum term of options granted under the 1988 Stock
Option Plan is 10 years.
The 1993 Stock Option Plan authorizes (i) the grant of options to purchase
common stock intended to qualify as incentive stock options as defined in
Section 422 of the Internal Revenue Code of 1986, as amended, and (ii) the grant
of options that do not so qualify. At December 27, 1997, the 1993 Stock Option
Plan authorized the issuance of options to purchase up to 1,200,000 shares of
common stock. The Compensation Committee of the Board of Directors administers
the 1993 Stock Option Plan and within certain limits has discretion to determine
the terms and conditions of options granted under the plan. The 1993 Stock
Option Plan also provides for the automatic grant of options to purchase a
specified number of shares to non-employee directors. The maximum term of
options granted under the 1993 Stock Option Plan is 10 years.
29
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
STOCK PURCHASE PLAN
Each of the 1993 Stock Purchase Plan and the 1998 Stock Purchase Plan
authorizes the issuance of up to 100,000 shares of the Company's common stock to
eligible employees. Pursuant to the plans, eligible employees may be granted
the opportunity to purchase common stock of the Company at 85% of market value
on the first or last business day of the calendar year, whichever is lower. A
total of 37,302 and 71,480 shares of common stock remained available for
issuance under the 1993 Stock Purchase Plan at December 27, 1997 and December
28, 1996, respectively. On December 31, 1997, 30,104 shares of common stock
were issued under the 1993 Stock Purchase Plan at an aggregate purchase price of
approximately $96,000, immediately after which the 1993 Stock Purchase Plan was
terminated. Other issuances of common stock under the 1993 Stock Purchase Plan
have been made as follows: on December 31, 1996, 34,178 shares at an aggregate
purchase price of approximately $58,000, on December 30, 1995, 19,385 shares at
an aggregate purchase price of approximately $34,000 and prior to December 30,
1995 a total of 9,135 shares. No shares have been issued under the 1998 Stock
Purchase Plan.
The following table reflects the activity under the 1988 Stock Option Plan and
the 1993 Stock Option Plan:
<TABLE>
<CAPTION>
1988 STOCK OPTION PLAN 1993 STOCK OPTION PLAN
---------------------------------------------- -----------------------
EXERCISE WTD. AVG. EXERCISE WTD. AVG.
NUMBER PRICE EXERCISE NUMBER PRICE EXERCISE
OF SHARES PER SHARE PRICE OF SHARES PER SHARE PRICE
---------- ----------- --------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 25, 1994 567,327 $0.17--6.10 $1.49 45,000 $9.00--10.88 $ 9.50
Granted.............. -- -- -- 77,000 2.75--15.00 10.70
Exercised............ (55,673) 0.17--1.67 0.97 -- -- --
Canceled............. (22,310) 0.17--1.67 1.67 -- -- --
-------- ----------- ----- ------- ------------ ------
Balance at June 24, 1995...... 489,344 0.17-6.10 1.54 122,000 2.75-15.00 10.26
Granted................... -- -- -- 421,000 2.06-5.00 2.90
Exercised................. (24,850) 0.17-1.67 1.16 -- -- --
Canceled.................. (1,500) 1.67 1.67 (23,000) 4.00-10.88 8.35
-------- ----------- ----- ------- ------------ ------
Balance at June 29, 1996...... 462,994 0.17-6.10 1.56 520,000 2.06-15.00 4.38
Granted................... -- -- -- 62,500 3.13-3.25 3.20
Exercised................. (149,797) 0.17-1.67 0.94 (1,818) 2.75 2.75
Canceled.................. (2,830) 1.67 1.67 (25,000) 15.00 15.00
-------- ----------- ----- ------- ------------ ------
Balance at December 28, 1996.. 310,367 0.17-6.10 1.86 555,682 2.06-15.00 3.76
Granted................... -- -- -- 432,500 3.63-16.13 9.47
Exercised................. (170,468) 0.17-6.10 2.02 (24,065) 2.25- 5.00 2.72
Canceled.................. (1,500) 1.67 1.67 (7,800) 2.75- 5.00 3.44
-------- ----------- ----- ------- ------------ ------
Balance at December 27, 1997.. 138,399 $ 1.67 $1.67 956,317 $ 2.06-16.13 $ 6.38
======== =========== ===== ======= ============ ======
</TABLE>
30
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Options exercisable under the 1988 Stock Option Plan and the 1993 Stock Option
Plan were as follows:
<TABLE>
<CAPTION>
DECEMBER 27, 1997 DECEMBER 28, 1996
----------------- -----------------
<S> <C> <C>
1988 Stock Option Plan..................... 138,399 293,117
1993 Stock Option Plan..................... 273,382 138,282
-------- --------
Total................................... 411,781 431,399
======== ========
Weighted average exercise price per share.. $ 3.67 $ 2.86
======== ========
</TABLE>
The following table summarizes information about options outstanding under the
1988 Stock Option Plan and the 1993 Stock Option Plan at December 27, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------- -----------------------------
NUMBER WTD. AVG. WTD. AVG. NUMBER WTD. AVG.
RANGE OF EXERCISE OUTSTANDING AT REMAINING EXERCISE EXERCISABLE AT EXERCISE
PRICES DECEMBER 27, 1997 CONTRACTUAL LIFE PRICE DECEMBER 27, 1997 PRICE
------------------- ----------------- ---------------- --------- ----------------- --------
<S> <C> <C> <C> <C> <C>
$ 1.67 -- 2.25..... 396,399 3.5 years $ 2.01 251,899 $ 1.90
2.75 -- 3.63..... 213,817 5.3 years 3.39 58,350 3.24
4.25 -- 5.75..... 119,000 5.5 years 4.68 30,866 4.46
7.50 -- 11.19.... 234,500 5.8 years 9.63 54,000 8.42
11.68 -- 16.13.... 131,000 6.8 years 15.23 16,666 15.00
--------- -------
Total.............. 1,094,716 5.0 years $ 5.79 411,781 $ 3.67
========= =======
</TABLE>
The Company has adopted the disclosure provisions of Statement of Financial
Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation," which requires disclosure of pro forma net income, EPS and other
information as if the fair value method of accounting for stock options and
other equity instruments described in SFAS 123 had been adopted. Pro forma
disclosures include the effects of all options granted after December 25, 1994.
The effects of applying SFAS 123 in this pro forma disclosure are not indicative
of future amounts. SFAS 123 does not apply to awards made prior to December 25,
1994 and additional awards in future years are anticipated.
Had compensation cost for the Company's stock-based plans been based on the
fair value at the grant dates for awards made under these plans consistent with
SFAS 123, the Company's net income (loss) and EPS would have been as follows (in
thousands, except per share data):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED TRANSITION PERIOD ENDED TWELVE MONTHS ENDED
------------------------ ------------------------- --------------------
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29,
1997 1996 1996 1995 1996
(52 WEEKS) (52 WEEKS) (26 WEEKS) (27 WEEKS) (53 WEEKS)
---------- ---------- ------------ ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net income (loss):
As reported...... $3,899 $3,371 $11,563 $(1,158) $(9,350)
Pro forma........ 3,478 3,233 11,498 (1,168) (9,420)
Basic EPS:
As reported...... 0.81 0.78 2.65 (0.27) (2.19)
Pro forma........ 0.72 0.75 2.63 (0.27) (2.20)
Diluted EPS:
As reported...... 0.72 0.72 2.44 (0.27) (2.11)
Pro forma........ $ 0.65 $ 0.69 $ 2.43 $ (0.27) $ (2.12)
</TABLE>
31
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Black-Scholes option-pricing model is used to estimate the fair value on
the date of grant of each option granted after December 25, 1994. The Black-
Scholes model is also used to estimate the fair value of the employees' purchase
rights. In each case, the following assumptions were used for stock option and
employee purchase right grants during fiscal 1997:
<TABLE>
<CAPTION>
1993 STOCK 1993 STOCK
OPTION PLAN PURCHASE PLAN
------------ --------------
<S> <C> <C>
Dividend yield........... 0.0% 0.0%
Expected volatility...... 60.0% 50.0%
Risk free interest rate.. 6.2% 5.4%
Expected lives........... 4.6 years 1 year
</TABLE>
The weighted average fair value of options granted and the average fair
value of the employee purchase rights granted were as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED TRANSITION PERIOD ENDED TWELVE MONTHS ENDED
------------------------ ------------------------ --------------------
<S> <C> <C> <C> <C> <C>
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29,
1997 1996 1996 1995 1996
(52 WEEKS) (52 WEEKS) (26 WEEKS) (27 WEEKS) (53 WEEKS)
-------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
Fair value of options granted.......... $5.30 $1.76 $1.83 $1.20 $1.61
Fair value of purchase rights granted.. $1.36 $0.67 $ -- $ -- $0.67
</TABLE>
G. BENEFIT PLANS:
The Company offers a savings plan (the "Savings Plan") to its employees,
which permits participants to make contributions by salary reduction pursuant to
Section 401(k) of the Internal Revenue Code. At the discretion of the Board of
Directors, the Company may also make contributions dependent on profits each
year for the benefit of all eligible employees under the Savings Plan. Employee
eligibility is based on minimum age and employment requirements. The Company
contributed approximately $100,000, $10,000, $0, and $12,000 to the Savings Plan
for fiscal 1997, the six months ended December 28, 1996, fiscal 1996, and fiscal
1995, respectively.
H. INCOME TAXES:
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." Under SFAS 109, deferred tax assets and liabilities are recognized
based on temporary differences between the financial statement and tax basis of
assets and liabilities using enacted tax rates in effect in the years in which
the differences are expected to reverse. SFAS 109 requires current recognition
of net deferred tax assets to the extent that it is more likely than not that
such net assets will be realized. To the extent that the Company believes that
its net deferred tax assets will not be realized, a valuation allowance must be
placed against those assets.
32
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Significant components of the Company's deferred tax assets and liabilities
are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, 1997 DECEMBER 28, 1996
----------------- -----------------
<S> <C> <C>
Deferred tax assets:
Net operating losses............. $ 4,787 $ 6,771
Inventory........................ 2,593 1,847
Reserve for customer returns..... 1,743 513
Discontinued segment............. 1,947 2,166
Other............................ 768 417
------- -------
Total deferred tax assets....... 11,838 11,714
------- -------
Deferred tax liabilities:
Prepaid catalogs................. 1,899 1,007
Other............................ 165 109
------- -------
Total deferred tax liabilities.. 2,064 1,116
------- -------
Net deferred tax assets....... $ 9,774 $10,598
======= =======
</TABLE>
Prior to December 28, 1996, management believed that the uncertainty
surrounding the realizability of its net deferred tax assets was sufficient to
require a valuation allowance to be placed against the entire balance of those
assets. However, as of December 28, 1996, management determined, based on the
Company's recent profitability trends and anticipated future profitability, that
it was more likely than not that sufficient book and taxable income would be
generated to fully realize the benefit of its net deferred tax assets. This
determination required the Company to remove the valuation allowance and
recognize the deferred tax benefit of $10,598,000 at December 28, 1996 in its
entirety.
At December 27, 1997, the Company had available net operating loss ("NOL")
carryforwards of approximately $13,122,000, of which $297,000 expires in fiscal
2003, $7,912,000 expires in fiscal 2004, $2,530,000 expires in fiscal 2005 and
$2,383,000 expires in fiscal 2006.
Section 382 of the Internal Revenue Code of 1986, as amended, restricts a
corporation's ability to use its NOL carryforwards following certain "ownership
changes." The Company determined that such an ownership change occurred as a
result of its initial public offering ("IPO") and accordingly the amount of the
Company's pre-IPO NOL carryforwards available for use in any particular taxable
year is limited to approximately $1.5 million annually. To the extent that the
Company does not utilize the full amount of the annual NOL limit, the unused
amount may be used to offset taxable income in future years. NOL carryforwards
expire 15 years after the tax year in which they arise, and the last of the
Company's current NOL carryforwards will expire in its fiscal 2006 tax year.
33
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of the Company's provision (benefit) for income taxes for
continuing operations are as follows (in thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED TRANSITION PERIOD ENDED TWELVE MONTHS ENDED
----------------------- ------------------------- --------------------------------
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29, JUNE 24,
1997 1996 1996 1995 1996 1995
(52 WEEKS) (52 WEEKS) (26 WEEKS) (27 WEEKS) (53 WEEKS) (52 WEEKS)
------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Current:
Federal............................ $1,379 $ 98 $ 53 $ (88) $ 8 $ 40
State.............................. 750 98 54 25 18 46
Deferred:
Federal............................ 213 (9,164) (9,164) -- -- --
State.............................. 151 (1,434) (1,434) -- -- --
------ -------- -------- ----- ----- -----
Provision (benefit) for income taxes.. $2,493 $(10,402) $(10,491) $ (63) $ 26 $ 86
====== ======== ======== ===== ===== =====
</TABLE>
The difference in income taxes at the U. S. federal statutory rate and the
income tax provision (benefit) reported in the accompanying consolidated
statements of operations is as follows (in thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED TRANSITION PERIOD ENDED TWELVE MONTHS ENDED
------------------------ -------------------------- --------------------------------
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29, JUNE 24,
1997 1996 1996 1995 1996 1995
(52 WEEKS) (52 WEEKS) (26 WEEKS) (27 WEEKS) (53 WEEKS) (52 WEEKS)
-------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Provision (benefit) for income taxes at the
U.S. federal statutory rate........... $2,173 $ 665 $ 364 $(212) $ 89 $ 289
State taxes, net of federal tax benefits... 320 88 35 17 12 47
Valuation allowance change................. -- (10,598) (10,598) 132 -- (250)
Utilization of NOL carryforward............ -- (557) (275) -- (75) --
Other...................................... -- -- (17) -- -- --
----- -------- -------- ----- ----- -----
Provision (benefit) for income taxes at
effective rate............................ $2,493 $(10,402) $(10,491) $ (63) $ 26 $ 86
========= ======== ======== ===== ===== =====
</TABLE>
I. COMMITMENTS:
The Company leases certain of its facilities under noncancellable operating
leases having initial or remaining terms of more than one year. The majority of
these real estate leases require the Company to pay maintenance, insurance and
real estate taxes. Total rent expense, including these costs, amounted to
approximately $1,052,000 in fiscal 1997, $362,000 during the six months ended
December 28, 1996, $666,000 in fiscal 1996 and $581,000 in fiscal 1995.
At December 27, 1997, future minimum lease payments for operating leases
having a remaining term in excess of one year at such date totaled $2,690,000
and were as follows: fiscal 1998--$1,292,000; fiscal 1999-- $1,106,000; fiscal
2000-- $209,000; fiscal 2001--$71,000; and fiscal 2002--$12,000.
In fiscal 1997 the Company began constructing a new operations and
fulfillment center in Tilton, New Hampshire. This new facility is expected to be
operational by early 1999. The estimated cost of this new facility, including
land, construction and equipment, ranges from $36.0 to $38.0 million.
34
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
J. RELATED PARTY:
In fiscal 1996 the Company terminated its relationship with Shannon North
America, Limited ("Shannon"), a joint venture between the Company and Aer Rianta
cpt. The Company's investment in Shannon was immaterial. In fiscal 1997 the
Company continued to provide various operational services to Shannon. Amounts
charged to Shannon totaled approximately $174,000 in fiscal 1997, $180,000
during the six months ended December 28, 1996, $690,000 in fiscal 1996 and
$555,000 in fiscal 1995.
K. QUARTERLY FINANCIAL DATA (UNAUDITED): (in thousands, except per share data)
<TABLE>
<CAPTION>
FISCAL 1997 QUARTER ENDED
--------------------------------------------------------------
MARCH 29, 1997 JUNE 28, 1997 SEPT. 27, 1997 DEC. 27, 1997
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Net sales..................................................... $24,543 $32,885 $31,649 $46,456
Net income.................................................... 541 1,205 691 1,462
Net income per share (basic).................................. 0.12 0.26 0.15 0.27
Net income per share (diluted)................................ $ 0.11 $ 0.23 $ 0.13 $ 0.24
TRANSITION PERIOD QUARTER ENDED
--------------------------------------------------------------
SEPT. 28, 1996 DEC. 28, 1996
-------------- -------------
Net sales..................................................... $20,541 $22,783
Net income.................................................... 250 11,313
Net income per share (basic).................................. 0.06 2.56
Net income per share (diluted)................................ $ 0.05 $ 2.38
FISCAL 1996 QUARTER ENDED
--------------------------------------------------------------
SEPT. 30, 1995 DEC. 30, 1995 MARCH 30, 1996 JUNE 29, 1996
-------------- ------------- -------------- -------------
Net sales..................................................... $22,312 $16,955 $19,736 $21,582
Income (loss) from continuing operations...................... (274) (286) 250 545
Net income (loss)............................................. (667) (491) 264 (8,456)
Income (loss) from continuing operations per share (basic).... (0.06) (0.07) 0.06 0.13
Income (loss) from continuing operations per share (diluted).. (0.06) (0.07) 0.06 0.11
Net income (loss) per share (basic)........................... (0.16) (0.12) 0.06 (1.97)
Net income (loss) per share (diluted)......................... $ (0.15) $ (0.12) $ 0.06 $ (1.79)
FISCAL 1995 QUARTER ENDED
--------------------------------------------------------------
SEPT. 24, 1994 DEC. 24, 1994 MARCH 25, 1995 JUNE 24, 1995
-------------- ------------- -------------- -------------
Net sales..................................................... $18,536 $14,890 $19,704 $19,561
Income (loss) from continuing operations...................... 1,078 (582) 180 89
Net income (loss)............................................. 1,078 (582) 120 157
Income (loss) from continuing operations per share (basic).... 0.26 (0.14) 0.04 0.02
Income (loss) from continuing operations per share (diluted).. 0.23 (0.13) 0.04 0.02
Net income (loss) per share (basic)........................... 0.26 (0.14) 0.03 0.04
Net income (loss) per share (diluted)......................... $ 0.23 $ (0.13) $ 0.03 $ 0.03
</TABLE>
During the six months ending December 28, 1996, the Company recorded a
deferred tax benefit of $10,598,000 (see Note H).
On May 20, 1996, the Company announced its plan to discontinue the
operations of its Carroll Reed segment and recorded a charge of $8,511,000 for
the loss on disposal of discontinued operations (see Note B).
The sum of the quarterly EPS amounts may not equal the full year amount
since the computations of the weighted average shares outstanding for each
quarter and the full year are made independently.
35
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
DM Management Company:
Our report on the consolidated financial statements of DM Management
Company and subsidiary is included on Page 19 of this Annual Report on Form 10-
K. In connection with our audits of such financial statements, we have also
audited the related financial statement schedule listed in the index on Page 39
of this Annual Report on Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 30, 1998
36
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE, AMOUNTS WRITE-OFFS BALANCE,
BEGINNING CHARGED TO AGAINST END
ACCRUED CUSTOMER RETURNS: OF PERIOD NET INCOME RESERVE OF PERIOD
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended December 27, 1997........ $1,309 $40,276 $36,806 $4,779
====== ======= ======= ======
Six months ended December 28, 1996.. $1,231 $11,634 $11,556 $1,309
====== ======= ======= ======
Year ended June 29, 1996............ $1,191 $22,534 $22,494 $1,231
====== ======= ======= ======
Year ended June 24, 1995............ $1,028 $21,062 $20,899 $1,191
====== ======= ======= ======
</TABLE>
37
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
CONSOLIDATED FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the captions "Directors and Executive
Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance"
appearing in the Company's definitive Proxy Statement to be delivered to
stockholders in connection with the Annual Meeting of Stockholders to be held on
May 28, 1998, which will be filed with the Securities and Exchange Commission
not later than 120 days after December 27, 1997, is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Remuneration of Executive
Officers and Directors" appearing in the Company's definitive Proxy Statement to
be delivered to stockholders in connection with the Annual Meeting of
Stockholders to be held on May 28, 1998, which will be filed with the Securities
and Exchange Commission not later than 120 days after December 27, 1997, is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" appearing in the Company's definitive Proxy
Statement to be delivered to stockholders in connection with the Annual Meeting
of Stockholders to be held on May 28, 1998, which will be filed with the
Securities and Exchange Commission not later than 120 days after December 27,
1997, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
38
<PAGE>
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(1) FINANCIAL STATEMENTS
The financial statements filed as part of this report are listed on the Index
to Consolidated Financial Statements on Page 18
(2) FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
Index to Consolidated Financial Statement Schedule Page
----
<S> <C>
Report of Independent Accountants 36
Schedule II - Valuation and Qualifying Accounts 37
</TABLE>
(3) EXHIBITS
Exhibits 10.6 through 10.15 include the Company's compensatory plans or
arrangements required to be filed as exhibits pursuant to Item 14(c) of Form 10-
K.
CERTIFICATE OF INCORPORATION AND BY-LAWS
3.1 Restated Certificate of Incorporation of the Company (included as Exhibit
4.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 25, 1993, File No. 0-22480, and incorporated herein by
reference)
3.2 By-Laws of the Company, as amended (included as Exhibit 3.2 to the
Company's Current Report on Form 8-K dated January 14, 1997, File No. 0-
22480, and incorporated herein by reference)
MATERIAL CONTRACTS
10.1 Ninth Amended and Restated Registration Rights Agreement, dated as of
August 12, 1993, by and among the Company, Allstate Insurance Company,
Aegis II Limited Partnership and Aegis Select Limited Partnership
(included as Exhibit 10.4 to the Company's Registration Statement on Form
S-1, Registration No. 33-67512, and incorporated herein by reference)
10.2 Lease Agreement dated September 14, 1989, between the Company and Richard
D. Matthews and Richard J. Valentine, Trustees of Bare Cove Realty Trust
established u/d/t dated January 10, 1984, as amended (included as Exhibit
10.13 to the Company's Registration Statement on Form S-1, Registration
No. 33-67512, and incorporated herein by reference)
10.3 Third Amendment to Lease Agreement dated September 14, 1989, between the
Company and Richard D. Matthews and Richard J. Valentine, Trustees of
Bare Cove Realty Trust established u/d/t dated January 10, 1984, as
previously amended (included as Exhibit 10.3 to the Company's Transition
Report on Form 10-K for the transition period from June 30, 1996 to
December 28, 1996, File No. 0-22480, and incorporated herein by
reference)
10.4 Fourth Amendment to Lease Agreement dated September 14, 1989, between the
Company and Richard D. Matthews and Richard J. Valentine, Trustees of
Bare Cove Realty Trust established u/d/t dated January 10, 1984, as
previously amended (included as Exhibit 10.4 to the Company's Transition
Report on Form 10-K for the transition period from June 30, 1996 to
December 28, 1996, File No. 0-22480, and incorporated herein by
reference)
10.5 Lease Agreement dated February 21, 1997, between the Company and MacNeill
Worldwide, Inc. (included as Exhibit 10.6 to the Company's Transition
Report on Form 10-K for the transition period from June 30, 1996 to
December 28, 1996, File No. 0-22480, and incorporated herein by
reference)
10.6 1988 Incentive Stock Option Plan (included as Exhibit 10.17 to the
Company's Registration Statement on Form S-1, Registration No. 33-67512,
and incorporated herein by reference)
10.7 1993 Incentive and Nonqualified Stock Option Plan, as amended (included
as Appendix A to the Company's definitive Proxy Statement on its annual
meeting to Stockholders held on May 8, 1997, File No. 0-22480, and
incorporated herein by reference)
10.8 1993 Employee Stock Purchase Plan (included as Exhibit 10.19 to the
Company's Registration Statement on Form S-1, Registration No. 33-67512,
and incorporated herein by reference)
10.9 1998 Employee Stock Purchase Plan
10.10 1997 Incentive Compensation Plan (included as Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 29,
1997, File No. 0-22840, and incorporated herein by reference)
10.11 1998 Incentive Compensation Plan
39
<PAGE>
10.12 Employment Letter Agreement dated December 21, 1995, between the Company
and Gordon R. Cooke (included as Exhibit 10.4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended December 30, 1995, File No. 0-
22480, and incorporated herein by reference)
10.13 Employment Letter Agreement dated May 7, 1996, between the Company and
John J. Hayes (included as Exhibit 10.12 to the Company's Annual Report
on Form 10-K for the year ended June 29, 1996, File No. 0-22480, and
incorporated herein by reference)
10.14 Employment Letter Agreement dated February 25, 1997, between the Company
and David Brown (included as Exhibit 10.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 29, 1997, File No. 0-
22480, and incorporated herein by reference)
10.15 Employment Letter Agreement between the Company and Kevin E. Burns
(included as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 27, 1997, File No. 0-22480, and
incorporated herein by reference)
10.16 Merchant Services Agreement between the Company and Hurley State Bank,
dated July 18, 1995 (included as Exhibit 10.21 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 24, 1995, File No. 0-
22480, and incorporated herein by reference)
10.17 Grant of Security Interest in Trademarks dated June 5, 1997 between the
Company and Citizens Bank of Massachusetts (included as Exhibit 10.6 to
the Company's Quarterly Report on Form 10-Q for the quarter ended June
28, 1997, File No. 0-22480, and incorporated herein by reference)
10.18 Account Control Agreement dated June 5, 1997 between the Company,
Citizens Bank of Massachusetts and Fleet National Bank (included as
Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 28, 1997, File No. 0-22480, and incorporated herein by
reference)
10.19 Real Estate Note dated July 30, 1997 between the Company and Citizens
Bank of Massachusetts (included as Exhibit 10.8 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 28, 1997, File
No. 0-22480, and incorporated herein by reference)
10.20 Mortgage dated July 30, 1997 between the Company and Citizens Bank of
Massachusetts (included as Exhibit 10.9 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 28, 1997, File No. 0-22480, and
incorporated herein by reference)
10.21 Amended and Restated Loan Agreement dated October 31, 1997 between the
Company and Citizens Bank of Massachusetts (included as Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 27, 1997, File No. 0-22480, and incorporated herein by
reference)
10.22 Bridge Note dated October 31, 1997 between the Company and Citizens Bank
of Massachusetts (included as Exhibit 10.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 27, 1997, File No. 0-
22480, and incorporated herein by reference)
10.23 Mortgage (Bridge Mortgage) dated October 31, 1997 between the Company and
Citizens Bank of Massachusetts (included as Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 27, 1997,
File No. 0-22480, and incorporated herein by reference)
10.24 First Amendment to Security Agreement dated October 31, 1997 between the
Company and Citizens Bank of Massachusetts (included as Exhibit 10.4 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 27, 1997, File No. 0-22480, and incorporated herein by
reference)
10.25 First Amendment to Mortgage dated October 31, 1997 between the Company
and Citizens Bank of Massachusetts (included as Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the quarter ended September
27, 1997, File No. 0-22480, and incorporated herein by reference)
10.26 Replacement Revolving Note dated October 31, 1997 between the Company and
Citizens Bank of Massachusetts (included as Exhibit 10.6 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 27, 1997,
File No. 0-22480, and incorporated herein by reference)
10.27 Second Amended and Restated Loan Agreement dated March 5, 1998 between
the Company and Citizens Bank of Massachusetts
10.28 New Bridge Note dated March 5, 1998 between the Company and Citizens Bank
of Massachusetts
10.29 Short Term Revolving Note dated March 5, 1998 between the Company and
Citizens Bank of Massachusetts
10.30 Second Amendment to Security Agreement dated March 5, 1998 between the
Company and Citizens Bank of Massachusetts
10.31 Assignment of Certificate of Deposit dated March 5, 1998 between the
Company and Citizens Bank of Massachusetts.
10.32 Amended Bridge Mortgage dated March 5, 1998 between the Company and
Citizens Bank of Massachusetts
40
<PAGE>
10.33 Second Amendment to Mortgage (Meredith) dated March 5, 1998 between the
Company and Citizens Bank of Massachusetts
10.34 Purchase and Sale Agreement dated August 12, 1997 between the Company and
Pike Industries, Inc. (included as Exhibit 10.23 to the Company's
Registration Statement on Form S-2 dated September 10, 1997, File No. 0-
22480, and incorporated herein by reference)
10.35 Sales Agreement and Deposit Receipt dated July 25, 1997 between the
Company and Kathryn M. DeLong (included as Exhibit 10.24 to Amendment No.
1 of the Company's Registration Statement on Form S-2 dated October 17,
1997, File No. 0-22480, and incorporated herein by reference)
10.36 Sales Agreement and Deposit Receipt dated July 25, 1997 between the
Company and Alice E. Fabian (included as Exhibit 10.25 to Amendment No. 1
of the Company's Registration Statement on Form S-2 dated October 17,
1997, File No. 0-22480, and incorporated herein by reference)
10.37 Sales Agreement and Deposit Receipt dated July 25, 1997 between the
Company and Ralph S. and Kelly F. Jesseman (included as Exhibit 10.26 to
Amendment No. 1 of the Company's Registration Statement on Form S-2 dated
October 17, 1997, File No. 0-22480, and incorporated herein by reference)
10.38 Lease dated August 15, 1997 between the Company and Central NH Realty,
Inc.(included as Exhibit 10.27 to the Company's Registration Statement on
Form S-2 dated September 10, 1997, File No. 0-22480, and incorporated
herein by reference)
10.39 Construction Agreement dated October 24, 1997 between the Company and
Clayco Construction Company, Inc.
PER SHARE EARNINGS
11.1 Statement re: computation of per share earnings
CONSENT OF EXPERTS AND COUNSEL
23.1 Consent of Coopers & Lybrand L.L.P. dated March 27, 1998
FINANCIAL DATA SCHEDULES
27.1 Financial Data Schedule for the year ended December 27, 1997
27.2 Restated Financial Data Schedule for the quarter ended September 27, 1997
27.3 Restated Financial Data Schedule for the quarter ended June 28, 1997
27.4 Restated Financial Data Schedule for the quarter ended March 29, 1997
27.5 Amended and Restated Financial Data Schedule for the transition period
ended December 28, 1996
27.6 Restated Financial Data Schedule for the quarter ended September 28, 1996
27.7 Restated Financial Data Schedule for the year ended June 29, 1996
27.8 Amended Financial Data Schedule for the quarter ended March 30, 1996
(4) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the quarter ended
December 27, 1997.
41
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DM Management Company
Dated: March 26, 1998 By: /s/ GORDON R. COOKE
-----------------------------
Gordon R. Cooke
President, Chief Executive Officer,
Chairman of the Board of Directors and
Director (Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Chief Executive Officer, March 26, 1998
/s/ GORDON R. COOKE Chairman of the Board of Directors and
- ---------------------------------
Gordon R. Cooke Director (Principal Executive Officer)
Vice President -- Finance, Chief March 26, 1998
/s/ OLGA L. CONLEY Financial Officer and Treasurer
- ---------------------------------
Olga L. Conley (Principal Financial and Accounting
Officer)
/s/ WILLIAM E. ENGBERS Director March 26, 1998
- ---------------------------------
William E. Engbers
/s/ WALTER J. LEVISON Director March 26, 1998
- ---------------------------------
Walter J. Levison
/s/ THOMAS J. LITLE Director March 26, 1998
- ---------------------------------
Thomas J. Litle
/s/ RUTH M. OWADES Director March 26, 1998
- ---------------------------------
Ruth M. Owades
/s/ SAMUEL L. SHANAMAN Director March 26, 1998
- ---------------------------------
Samuel L. Shanaman
</TABLE>
42
<PAGE>
DM MANAGEMENT COMPANY AND SUBSIDIARY
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 27, 1997
EXHIBIT INDEX
-------------
EXHIBIT DESCRIPTION
- ------- -----------
NO.
- ---
MATERIAL CONTRACTS
10.9 1998 Employee Stock Purchase Plan
10.11 1998 Incentive Compensation Plan
10.27 Second Amended and Restated Loan Agreement dated March 5, 1998
between the Company and Citizens Bank of Massachusetts
10.28 New Bridge Note dated March 5, 1998 between the Company and Citizens
Bank of Massachusetts
10.29 Short Term Revolving Note dated March 5, 1998 between the Company and
Citizens Bank of Massachusetts
10.30 Second Amendment to Security Agreement dated March 5, 1998 between
the Company and Citizens Bank of Massachusetts
10.31 Assignment of Certificate of Deposit dated March 5, 1998 between the
Company and Citizens Bank of Massachusetts
10.32 Amended Bridge Mortgage dated March 5, 1998 between the Company and
Citizens Bank of Massachusetts
10.33 Second Amendment to Mortgage (Meredith) dated March 5, 1998 between
the Company and Citizens Bank of Massachusetts
10.39 Construction Agreement dated October 24, 1997 between the Company and
Clayco Construction Company, Inc.
PER SHARE EARNINGS
11.1 Statement re: computation of per share earnings
CONSENT OF EXPERTS AND COUNSEL
23.1 Consent of Coopers & Lybrand L.L.P. dated March 27, 1998
FINANCIAL DATA SCHEDULES
27.1 Financial Data Schedule for the year ended December 27, 1997
27.2 Restated Financial Data Schedule for the quarter ended September 27,
1997
27.3 Restated Financial Data Schedule for the quarter ended June 28, 1997
27.4 Restated Financial Data Schedule for the quarter ended March 29, 1997
27.5 Amended and Restated Financial Data Schedule for the transition
period ended December 28, 1996
27.6 Restated Financial Data Schedule for the quarter ended September 28,
1996
27.7 Restated Financial Data Schedule for the year ended June 29, 1996
27.8 Amended Financial Data Schedule for the quarter ended March 30, 1996
43
<PAGE>
EXHIBIT 10.9
DM MANAGEMENT COMPANY
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
The DM Management Company Employee Stock Purchase Plan (the "Plan") is
intended to provide a method whereby employees of DM Management Company (the
"Company") will have an opportunity to acquire an ownership interest (or
increase an existing ownership interest) in the Company through the purchase of
shares of the Common Stock of the Company. It is the intention of the Company
that the Plan qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"). The provisions of
the Plan shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
2. DEFINITIONS.
(a) "Compensation" means, for the purpose of any Offering pursuant to
this Plan, base pay in effect as of the Offering Commencement Date (as
hereinafter defined). Compensation shall not include any deferred compensation
other than contributions by an individual through a salary reduction agreement
to a cash or deferred plan pursuant to Section 401(k) of the Code or to a
cafeteria plan pursuant to Section 125 of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Committee" means the Compensation Committee of the Board.
(d) "Common Stock" means the common stock, $.01 par value per share, of
the Company.
(e) "Company" shall also include any Parent or Subsidiary of DM
Management Company designated by the Board, unless the context otherwise
requires.
(f) "Employee" means any person who is customarily employed at least
20 hours per week and more than five months in a calendar year by the Company.
(g) "Parent" shall mean any present or future corporation which is or
would constitute a "parent corporation" as that term is defined in Section 424
of the Code.
(h) "Subsidiary" shall mean any present or future corporation which
is or would constitute a "subsidiary corporation" as that term is defined in
Section 424 of the Code.
<PAGE>
3. ELIGIBILITY.
(a) Participation in the Plan is completely voluntary. Participation in
any one or more of the offerings under the Plan shall neither limit, nor
require, participation in any other offering.
(b) Each employee shall be eligible to participate in the Plan on the
first Offering Commencement Date, as hereafter defined, following the
commencement of employment with the Company. Notwithstanding the foregoing, no
employee shall be granted an option under the Plan:
(i) if, immediately after the grant, such employee would own
stock, and/or hold outstanding options to purchase stock, possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company or any Parent or Subsidiary; for purposes of this Paragraph the rules of
Section 424(d) of the Code shall apply in determining stock ownership of any
employee; or
(ii) which permits his rights to purchase stock under all
Section 423 employee stock purchase plans of the Company and any Parent or
Subsidiary to exceed $25,000 of the fair market value of the stock (determined
at the time such option is granted) for each calendar year in which such option
is outstanding; for purposes of this Paragraph, the rules of Section 423(b)(8)
of the Code shall apply.
4. OFFERING DATES.
The right to purchase stock hereunder shall be made available by a
series of one-year offerings (the "Offering" or "Offerings") to employees
eligible in accordance with Paragraph 3 hereof. The applicable date of
commencement ("Offering Commencement Date") and date of termination ("Offering
Termination Date") for each Offering shall be the first and the last business
day of each calendar year, respectively, unless the Committee, in its
discretion, determines otherwise. Participation in any one or more of the
Offerings under the Plan shall neither limit, nor require, participation in any
other Offering.
5. PARTICIPATION.
Any eligible employee may become a participant by completing a payroll
deduction authorization form provided by the Company and filing it with the
office of the Company's Treasurer 20 days prior to each applicable Offering
Commencement Date, as determined by the Committee pursuant to Paragraph 4, or
such other period as may be permitted by the Company in its sole
-2-
<PAGE>
discretion and which shall be applicable in a uniform and nondiscriminatory
manner.
6. PAYROLL DEDUCTIONS.
(a) At the time a participant files his authorization for a payroll
deduction, he shall elect to have deductions made from his pay on each payday
during any Offering in which he is a participant at a specified percentage of
his Compensation as determined on the applicable Offering Commencement Date;
said percentage shall be in increments of one percent up to a maximum percentage
of ten percent.
(b) Payroll deductions for a participant shall commence on the
applicable Offering Commencement Date when his authorization for a payroll
deduction becomes effective and shall end on the Offering Termination Date of
the Offering to which such authorization is applicable unless sooner terminated
by the participant as provided in Paragraph 10.
(c) All payroll deductions made for a participant shall be credited to
his account under the Plan. A participant may not make any separate cash payment
into such account.
(d) A participant may withdraw from the Plan at any time during the
applicable Offering period.
7. GRANTING OF OPTION.
(a) On the Offering Commencement Date of each Offering, a participating
employee shall be deemed to have been granted an option to purchase a maximum
number of shares of the Common Stock equal to an amount determined as follows:
85% of the market value per share of the Common Stock on the applicable Offering
Commencement Date shall be divided into an amount equal to the percentage of the
employee's Compensation which he has elected to have withheld (but no more than
10%) multiplied by the employee's Compensation over the Offering period. Such
market value per share of the Common Stock shall be determined as provided in
clause (i) of Paragraph 7(b).
(b) The option price of the Common Stock purchased with payroll
deductions made during each such Offering for a participant therein shall be the
lower of:
(i) 85% of the closing price per share on the Offering
Commencement Date as reported by a nationally recognized stock exchange, or, if
the Common Stock is not listed on such an exchange, as reported by the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") National
Market System or, if the Common Stock is not listed on the Nasdaq National
Market System, 85% of the mean of the bid and asked
-3-
<PAGE>
prices per share on the Offering Commencement Date or, if the Common Stock is
not traded over the counter, 85% of the fair market value on the Offering
Commencement Date as determined by the Committee; and
(ii) 85% of the closing price per share on the Offering
Termination Date as reported by a nationally recognized stock exchange, or, if
the Common Stock is not listed on such an exchange, as reported by the Nasdaq
National Market System or, if the Common Stock is not listed on the Nasdaq
National Market System, 85% of the mean of the bid and asked prices per share on
the Offering Termination Date or, if the Common Stock is not traded over the
counter, 85% of the fair market value on the Offering Termination Date as
determined by the Committee.
8. EXERCISE OF OPTION.
(a) Unless a participant gives written notice to the Treasurer of the
Company as hereinafter provided, his option for the purchase of Common Stock
with payroll deductions made during any Offering will be deemed to have been
exercised automatically on the Offering Termination Date applicable to such
Offering for the purchase of the number of full shares of Common Stock which the
accumulated payroll deductions in his account at that time will purchase at the
applicable option price (but not in excess of the number of shares for which
options have been granted the employee pursuant to Paragraph 7(a)), and any
excess in his account at that time, other than as described in Paragraph 8(b),
will be automatically returned to the participant.
(b) Fractional shares will not be issued under the Plan and any
accumulated payroll deductions which would have been used to purchase fractional
shares shall be automatically carried forward to the next Offering unless the
participant elects, by written notice to the Treasurer of the Company, to have
the excess cash returned to him.
9. DELIVERY.
The Company will deliver to each participant (as promptly as possible
after the appropriate Offering Termination Date), a certificate representing the
Common Stock purchased upon exercise of his option.
10. WITHDRAWAL AND TERMINATION.
(a) Prior to the Offering Termination Date for an Offering, any
participant may withdraw the payroll deductions credited to his account under
the Plan for such Offering by giving written notice to the Treasurer of the
Company. All of the participant's payroll deductions credited to such account
-4-
<PAGE>
will be paid to him promptly after receipt of notice of withdrawal, without
interest, and no future payroll deductions will be made from his pay during such
Offering. The Company will treat any attempt to borrow by a participant on the
security of accumulated payroll deductions as an election to withdraw such
deductions.
(b) A participant's election not to participate in, or withdrawal from,
any Offering will not have any effect upon his eligibility to participate in any
succeeding Offering or in any similar plan which may hereafter be adopted by the
Company.
(c) Upon termination of the participant's employment for any reason,
including retirement but excluding death, the payroll deductions credited to his
account will be returned to him, or, in the case of his death, to the person or
persons entitled thereto under Paragraph 14.
(d) Upon termination of the participant's employment because of death,
his beneficiary (as defined in Paragraph 14) shall have the right to elect, by
written notice given to the Company's Treasurer prior to the expiration of a
period of 90 days commencing with the date of the death of the participant,
either:
(i) to withdraw all of the payroll deductions credited to the
participant's account under the Plan; or
(ii) to exercise the participant's option for the purchase of
stock on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full shares which the
accumulated payroll deductions in the participant's account at the date of the
participant's death will purchase at the applicable option price (subject to the
limitation contained in Paragraph 7(a)), and any excess in such account will be
returned to said beneficiary. In the event that no such written notice of
election shall be duly received by the office of the Company's Treasurer, the
beneficiary shall automatically be deemed to have elected to withdraw the
payroll deductions credited to the participant's account at the date of the
participant's death and the same will be paid promptly to said beneficiary.
11. INTEREST.
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participating employee.
-5-
<PAGE>
12. STOCK.
(a) The maximum number of shares of Common Stock available for issuance
and purchase by employees under the Plan, subject to adjustment upon changes in
capitalization of the Company as provided in Paragraph 17, shall be 100,000
shares of Common Stock, par value $.01 per share, of the Company. If the total
number of shares for which options are exercised on any Offering Termination
Date in accordance with Paragraph 8 exceeds the maximum number of shares for the
applicable Offering, the Company shall make a pro rata allocation of the shares
available for delivery and distribution in an equitable manner, and the balances
of payroll deductions credited to the account of each participant under the Plan
shall be automatically returned to the participant.
(b) The participant will have no interest in stock covered by his option
until such option has been exercised.
13. ADMINISTRATION.
The Plan shall be administered by the Committee. The interpretation and
construction of any provision of the Plan and adoption of rules and regulations
for administering the Plan shall be made by the Committee. Determinations made
by the Committee with respect to any matter or provision contained in the Plan
shall be final, conclusive and binding upon the Company and upon all
participants, their heirs or legal representatives. Any rule or regulation
adopted by the Committee shall remain in full force and effect unless and until
altered, amended, or repealed by the Committee.
14. DESIGNATION OF BENEFICIARY.
A participant shall file with the Treasurer of the Company a written
designation of a beneficiary who is to receive any Common Stock and/or cash
under the Plan. Such designation of beneficiary may be changed by the
participant at any time by written notice. Upon the death of a participant and
upon receipt by the Company of proof of the identity and existence at the
participant's death of a beneficiary validly designated by him under the Plan,
the Company shall deliver such Common Stock and/or cash to such beneficiary. In
the event of the death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such Common Stock and/or cash to
the executor or administrator of the estate of the participant. No beneficiary
shall prior to the death of the participant by whom he has been designated,
acquire any interest in the Common Stock and/or cash credited to the participant
under the Plan.
-6-
<PAGE>
15. TRANSFERABILITY.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive Common Stock under
the Plan may be assigned, transferred, pledged, or otherwise disposed of in any
way by the participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge, or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Paragraph 8(b).
16. USE OF FUNDS.
All payroll deductions received or held by the Company under this Plan
may be used by the Company for any corporate purpose, and the Company shall not
be obligated to segregate such payroll deductions.
17. EFFECT OF CHANGES OF COMMON STOCK.
If the Company shall subdivide or reclassify the Common Stock which has
been or may be optioned under this Plan, or shall declare thereon any dividend
payable in shares of such Common Stock, or shall take any other action of a
similar nature affecting such Common Stock, then the number and class of shares
of Common Stock which may thereafter be optioned (in the aggregate and to any
participant) shall be adjusted accordingly and in the case of each option
outstanding at the time of any such action, the number and class of shares which
may thereafter be purchased pursuant to such option and the option price per
share shall be adjusted to such extent as may be determined by the Committee,
with the approval of independent public accountants and counsel, to be necessary
to preserve the rights of the holder of such option.
18. AMENDMENT OR TERMINATION.
The Board may at any time terminate or amend the Plan. No such
termination shall affect options previously granted, nor may an amendment make
any change in any option theretofore granted which would adversely affect the
rights of any participant holding options under the Plan.
19. NOTICES.
All notices or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received by the Treasurer of the Company.
-7-
<PAGE>
20. MERGER OR CONSOLIDATION.
If the Company shall at any time merge into or consolidate with another
corporation, the holder of each option then outstanding will thereafter be
entitled to receive at the next Offering Termination Date upon the exercise of
such option, in lieu of the number of shares of Common Stock as to which such
option shall be exercisable, the number and class of shares of stock or other
securities to which such holder would have been entitled pursuant to the terms
of the agreement of merger or consolidation if, immediately prior to such merger
or consolidation, such holder had been the holder of record of a number of
shares of Common Stock equal to the number of shares for which such option was
exercisable. In accordance with this Paragraph and Paragraph 17, the Committee
shall determine the kind and amount of such securities or property which such
holder of an option shall be entitled to receive. A sale of all or
substantially all of the assets of the Company shall be deemed a merger or
consolidation for the foregoing purposes.
21. APPROVAL OF STOCKHOLDERS.
The Plan is subject to the approval of the stockholders of the Company
at their next annual meeting or at any special meeting of the stockholders for
which one of the purposes shall be to act upon the Plan. If the Plan is not
approved by the stockholders of the Company, all payroll deductions credited to
a participant's account under the Plan shall be automatically returned to the
participant.
22. GOVERNMENTAL AND OTHER REGULATIONS.
The Plan, and the grant and exercise of the rights to purchase shares
hereunder, and the Company's obligation to sell and deliver shares upon the
exercise of rights to purchase shares, shall be subject to all applicable
federal, state and foreign laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required. The Plan shall be governed by, and construed and enforced
in accordance with, the provisions of Sections 421, 423 and 424 of the Code and
the substantive laws of the Commonwealth of Massachusetts. In the event of any
inconsistency between such provisions of the Code and any such laws, said
provisions of the Code shall govern to the extent necessary to preserve
favorable federal income tax treatment afforded employee stock purchase plans
under Section 423 of the Code.
* * *
-8-
<PAGE>
EXHIBIT 10.11
1998
INCENTIVE COMPENSATION PLAN
Purpose
- -------
This plan is designed to reward key members of DM Management for their
contribution toward the attainment of the company's financial goals in 1998.
Participation
- -------------
This plan is restricted to key management personnel whose decisions have a
measurable impact on the financial goals of the company. Participation in the
plan and assignment of bonus percentages is made either by the Compensation
Committee of the Board of Directors in the case of executive officers or by the
President of the company in the case of everyone else. The Compensation
Committee and the President may also award additional bonuses at their
discretion.
Eligibility to Receive Bonus Payment
- ------------------------------------
Bonus plan participants will be eligible to receive their bonus payment if the
company meets or exceeds its planned earnings goals for the performance period.
The planned earnings goal is defined as operating income (i.e. earnings before
interest and taxes) as set forth in the company's financial plan.
Calculation of Bonus Payment
- ----------------------------
To determine the amount of bonus to be paid to an individual, simply multiply
the individuals bonus percentage by the individuals base salary earnings for the
performance period.
Performance Period
- ------------------
This plan pertains to the fiscal year ending December 26, 1998. For measurement
purposes the fiscal year will be divided into two seasonal performance periods:
. spring December 28, 1997 to June 27, 1998
. fall June 28, 1998 to December 26, 1998
Payments
- --------
Bonus payments will be made as soon as possible after the close of the
performance period (i.e. season).
<PAGE>
Page 2
1998 Incentive Compensation Plan
Example
- -------
Assume: Base annual salary of $50,000 and a bonus percentage of 10%
Case 1: The company meets the financial plan for both seasons:
Base Salary Bonus % Bonus
----------- ------- ------
Spring $25,000 10% $2,500
Fall $25,000 10% $2,500
------- ------
Fiscal 1998 $50,000 $5,000
------- ------
Case 2: The company meets the spring financial plan but not the fall
financial plan:
Base Salary Bonus % Bonus
----------- ------- ------
Spring $25,000 10% $2,500
Fall $25,000 -- --
------- ------
Fiscal 1998 $50,000 $2,500
------- ------
<PAGE>
EXHIBIT 10.27
SECOND AMENDED AND RESTATED LOAN AGREEMENT
------------------------------------------
This Amended and Restated Agreement made as of March 5, 1998, by and
between Citizens Bank of Massachusetts (herein "BANK"), and DM Management
Company, a Delaware corporation (herein "BORROWER").
Reference is made to a certain Loan Agreement (the "Loan Agreement") made
as of June 5, 1997 by and between BANK and BORROWER, as the same has been
amended and restated in a certain Amended and Restated Loan Agreement, October
31, 1997.
WITNESSETH:
-----------
WHEREAS, the BORROWER wishes to borrow an additional sum of $17,000,000 to
finance the construction of a distribution facility on land owned by it in
Tilton, New Hampshire, wishes to refinance the Bridge Loan and wishes to reprice
certain borrowings, and wishes certain other accommodations; and
WHEREAS, the BANK is willing, on the terms, provisions and conditions
contained herein, to extend additional credit and accommodations subject to
certain conditions;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereby agree that effective as of the date hereof, the
Loan Agreement is hereby further amended and restated as follows:
ARTICLE I
---------
DEFINITIONS
-----------
1.01 Capitalized words and phrases in this Agreement shall have the
meanings ascribed to them in this Article.
"ACCOUNTANTS" shall mean the independent certified public accountants of
recognized national standing, who are selected and engaged by the BORROWER and
who are reasonably satisfactory to the BANK. Any one of the so-called "Big 5"
national accounting firms shall be satisfactory to the BANK.
"ADJUSTED LIBOR RATE" shall mean, for any INTEREST PERIOD, an interest rate
per annum determined by the BANK pursuant to the following formula:
ADJUSTED LIBOR RATE = LIBOR BASE RATE
---------------
1.00 - RESERVE RATE
"ADVANCE(S)" shall mean the amounts loaned by the BANK to the BORROWER
under Section 2.01 which shall be either LIBOR RATE ADVANCES or PRIME RATE
ADVANCES or amounts loaned by the BANK to the BORROWER under Article V(B).
<PAGE>
"ADVANCE FORMULA" shall mean the aggregate sum of (A) fifty percent (50%)
of the lower of the (i) cost or (ii) market value of ELIGIBLE INVENTORY, (B) One
Million Dollars ($1,000,000.00) and (C) one hundred percent (100%) of the lower
of (i) cost or (ii) market value of IN TRANSIT INVENTORY to a maximum such value
of Two Million Five Hundred Thousand Dollars ($2,500,000.00) at any time and
fifty percent (50%) of the lower of (i) cost or (ii) market value of IN TRANSIT
INVENTORY in excess of a maximum such value of Two Million Five Hundred Thousand
Dollars ($2,500,000.00).
"APPRAISAL" shall mean a written APPRAISAL of the fair market value of the
REAL ESTATE as determined by an independent appraiser selected and engaged by
the BANK AT THE EXPENSE OF THE BORROWER made within sixty (60) days of the date
hereof.
"ASSIGNMENT OF CERTIFICATE OF DEPOSIT" shall mean a certain ASSIGNMENT OF
CERTIFICATE OF DEPOSIT of even date hereof in which the BORROWER assigns the
CERTIFICATE OF DEPOSIT to the BANK as COLLATERAL for the payment of the
OBLIGATIONS.
"AVAILABILITY" shall mean the amount determined by application of the
ADVANCE FORMULA.
"AVAILABILITY PERIOD" shall mean the period commencing on the CLOSING DATE
and ending on the TERMINATION DATE.
"BANK" shall mean Citizens Bank of Massachusetts and is successors and
assigns.
"BANK DEPOSIT" shall mean all sums of money on deposit to the credit of the
BORROWER at any bank, trust company, national banking association, savings bank,
savings and loan association or similar institution.
"BANKING DAY" shall mean any BUSINESS DAY on which banks are open for
business in Boston, Massachusetts.
"BANK'S OFFICE" shall mean the office of the BANK located at 28 State
Street, Boston, Massachusetts 02109 or such other office of the BANK as the BANK
shall, from time to time, designate by notice to the BORROWER.
"BORROWER" is defined in the Recitals.
"BORROWING" shall mean the making of an ADVANCE.
"BORROWING DATE" shall mean that date on which an ADVANCE is made.
"BORROWING REQUEST" shall mean a request by the BORROWER for a BORROWING.
"BRIDGE LOAN" shall mean the loan made by the BANK to the BORROWER pursuant
to ARTICLE V(A) hereof.
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<PAGE>
"BRIDGE LOAN RATE" shall mean seven and one sixteenth percent (7.0625%) per
annum.
"BRIDGE MORTGAGE" shall mean a mortgage of the BRIDGE REAL ESTATE dated
October 31, 1997 granted by the BORROWER to the BANK securing repayment of the
OBLIGATIONS including, without limitation, the BRIDGE NOTE and the NEW BRIDGE
NOTE as the same may be amended from time to time.
"BRIDGE NOTE" shall mean a Promissory Note dated October 31, 1997 in the
original principal amount of $4,300,000.00 issued by the BORROWER to the order
of the BANK and evidencing the obligation to repay the BRIDGE LOAN. The BRIDGE
NOTE is being replaced by the NEW BRIDGE NOTE.
"BRIDGE REAL ESTATE" shall mean that real estate owned by the BORROWER
located in Tilton, New Hampshire as described in the BRIDGE MORTGAGE.
"BUSINESS DAY" shall mean a calendar day other than (a) a Saturday, Sunday
or legal holiday in The Commonwealth of Massachusetts, and (b) a calendar day on
which banks are not authorized to be open for business in Boston, Massachusetts.
"CAPITALIZED LEASE OBLIGATION(S)" shall mean all rental obligations which,
under GAAP, are required to be capitalized on the books of the BORROWER in each
case taken at the amount thereof accounted for as indebtedness (net of interest
expense) in accordance with GAAP.
"CATALOG(S)" shall mean the CATALOGS and other written offerings of
INVENTORY made by the BORROWER to the general public from time to time and all
rights therein.
"CERTIFICATE OF DEPOSIT" shall mean a certain Certificate of Deposit of the
BANK issued to the BORROWER numbered 9802250739 in the amount of $18,327,632.99.
"CLOSING" is defined in Article XVI.
"CLOSING DATE" shall mean March 4, 1998.
"CODE" shall mean the Internal Revenue Code of 1986, as amended,
supplemented or modified from time to time, and all regulations issued
thereunder.
"COLLATERAL" shall mean all of BORROWER'S personal property, tangible or
intangible, including without limitation all accounts, BANK DEPOSITS, DOCUMENTS,
INVENTORY, general intangibles, equipment, contracts, CUSTOMER LISTS, INVESTMENT
PROPERTY, LEASES, the CERTIFICATE OF DEPOSIT, EQUIPMENT, CATALOGS, rights to the
trademarks "Nicole Summers" and "J. Jill, Ltd.", and other property described in
the SECURITY AGREEMENT, whether now existing or hereafter arising or acquired
and wherever located, and all proceeds thereof, including, without limitation,
all proceeds of fire and other insurance.
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<PAGE>
"CONTINGENT OBLIGATION" shall mean any undertaking by the BORROWER
guaranteeing or in effect guaranteeing any indebtedness, leases, dividends or
other obligations for borrowed money ("PRIMARY OBLIGATIONS") of any other PERSON
in any manner, whether directly or indirectly, including, without limitation,
any obligations, whether or not contingent: (a) to purchase any such PRIMARY
OBLIGATION or any property constituting direct or indirect security therefor;
(b) to advance or supply funds(i) for the purchase or payment of any such
PRIMARY OBLIGATIONS; or (ii) to maintain working capital or equity capital of
such PERSON or otherwise to maintain the net worth or solvency of such PERSON;
(c) to purchase property, securities or services primarily for the purpose of
assuring the owner of any such PRIMARY OBLIGATION of the ability of such PERSON
to make payment of such PRIMARY OBLIGATION; or (d) otherwise to assure or hold
harmless the owner of such PRIMARY OBLIGATION against loss in respect thereof;
provided, however, that the term "CONTINGENT OBLIGATION" shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business.
"CONTROL AGREEMENT" shall mean that certain account control agreement dated
June 5, 1997 by and between the BANK, the BORROWER and Fleet Bank of
Massachusetts, N.A. with respect to the FLEET INVESTMENT PROPERTY.
"CONVERSION DATE" shall mean any date on which pricing of the TERM LOAN or
REAL ESTATE LOAN shall change by reason of an election by the BORROWER or a
provision of the Agreement.
"COST OF FUNDS REDEPLOYMENT is defined in Section 7.23.
"CREDIT BALANCE" shall mean the aggregate unpaid amount of ADVANCES under
Article II and L/C BALANCE outstanding from time to time.
"CURRENT DEBT" shall mean, at any time, the whole or any portion of any
obligation for borrowed money (and notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money) payable on demand or within a period of one (1) year.
"CURRENT FINANCIALS" are described in Section 9.10 hereof.
"CUSTOMER LISTS" shall mean each and all of the mailing lists to which
CATALOGS are sent from time to time which BORROWER represents to BANK are
proprietary to it regardless of the media on which the same are stored.
"DEBT SERVICE COVERAGE" shall hereafter mean the ratio of (A) the aggregate
of the net earnings of BORROWER before interest expense, taxes, depreciation,
amortization and rent and lease expense, but specifically including interest
income; (i) less UNFINANCED CAPITAL EXPENDITURES less (ii) SHAREHOLDER PAYMENTS;
less (iii) taxes paid in cash; to (B) the aggregate of (i) interest paid and
(ii) the amounts of all maturities of Long Term Debt falling due in the twelve
(12) month period succeeding the calculation date, including principal payments
due on the Loans hereunder plus (iii) rent and lease expense. Long Term Debt is
amounts due in whole or in part more than 12 months after the incurring thereof;
however, for the purposes of
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<PAGE>
calculating this covenant the REVOLVING LOANS are specifically excluded from
Long Term Debt.
"DEFAULT" shall mean the occurrence of an event which with the passage of
time or the requiring of the giving of notice, or both, may become an EVENT OF
DEFAULT.
"DOCUMENTS" shall mean a document of title as defined in the UCC.
"DOLLARS" or "$" shall mean lawful currency of the United States of
America.
"ELIGIBLE INVENTORY" shall mean those items of BORROWER'S INVENTORY which
(i) are finished, first quality and new goods on hand in BORROWER'S possession
on its premises, ready for sale in the ordinary course of BORROWER'S business,
and (ii) (a) have been offered for sale in a CATALOG within the last twelve (12)
months from the date of determination or (b) will be so offered within six (6)
months of said date of determination.
"ENVIRONMENTAL LAW(S)" shall mean any and all present and future federal,
state and local laws, rules and regulations, and any orders and decrees, in each
case as now or hereafter in effect, relating to the regulation or protection of
the environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or toxic (all as defined in such applicable
laws, rules and regulations) or HAZARDOUS MATERIAL into the environment.
"EQUIPMENT" shall mean and include, without limitation, all of BORROWER'S
tangible personal property utilized in the conduct of BORROWER'S business, all
replacements and substitutions therefor, and all accessions thereto, and
including, without in any way limiting the generality of the foregoing, all of
BORROWER'S machinery, equipment, furniture, trade fixtures and motor vehicles,
but excluding therefrom INVENTORY, as said term is defined in the CODE.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, supplemented or modified from time to time, and all regulations issued
thereunder.
"EVENT OF DEFAULT" is defined in Article XII.
"EXCESS CASH FLOW" shall mean funds obtained from sources other than
borrowings.
"FINANCING AGREEMENTS" shall mean, collectively, this Second Amended and
Restated Loan Agreement, the REVOLVING NOTE, the TERM NOTE, the REAL ESTATE
NOTE, the NEW BRIDGE NOTE the ASSIGNMENT OF CERTIFICATE OF DEPOSIT, the BRIDGE
MORTGAGE, the REAL ESTATE MORTGAGE, the CONTROL AGREEMENT, each L/C APPLICATION,
the SECURITY AGREEMENT, all as amended from time to time and all other
agreements executed and delivered by the BORROWER hereunder, including any
additional agreements granting a LIEN, and all other agreements of every kind
and nature now or hereafter in force between the BANK
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<PAGE>
and the BORROWER relating to the OBLIGATIONS, as the same may have been or may,
from time to time, be amended or supplemented.
"FISCAL YEAR" shall mean the fiscal year of the BORROWER.
"FLEET INVESTMENT PROPERTY" shall mean the INVESTMENT PROPERTY currently
held by Fleet Bank of Massachusetts, N.A. in account number 0123680070 and all
additions thereto and substitutions thereof.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time and applied with respect to the preparation of financial
statements.
"GENERAL INTANGIBLES" shall mean the BORROWER'S general intangibles, as
defined in the CODE, and all proceeds thereof, and shall also include goodwill,
trade secrets, computer programs, CUSTOMER LISTS, trade names, trademarks,
patents, rights to tax refunds of every kind and nature and proceeds of each of
the foregoing.
"HAZARDOUS MATERIAL" shall mean any chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any ENVIRONMENTAL LAW.
"INDEBTEDNESS" shall mean, at any time, all items which would, in
conformity with GAAP, be classified as liabilities on a consolidated balance
sheet of BORROWER as at such time, and in any event including (a) indebtedness
arising under acceptance facilities, and (b) all liabilities secured by any LIEN
on any property even though the owner of such property has not assumed or
otherwise become liable for the payment thereof.
"INTEREST PAYMENT DATE" shall mean:
(a) With respect to PRIME RATE ADVANCES, the last day of each month,
commencing with the last day of the month in which the first PRIME RATE ADVANCE
is made.
(b) With respect to LIBOR RATE ADVANCES:
(i) the last day of each INTEREST PERIOD; and
(ii) if the applicable INTEREST PERIOD is more than three months, the
last day of each three-month period during such INTEREST PERIOD.
(c) With respect to the TERM LOAN, the day of each quarterly payment of
principal, commencing with September 5, 1997.
(d) With respect to the REAL ESTATE LOAN, the last day of each monthly
payment of principal, commencing with the first such payment.
(e) With respect to the INTERIM LOAN, at the MATURITY DATE thereof.
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<PAGE>
(f) With respect to the BRIDGE LOAN and ADVANCES under Article V(B) hereof,
the Fifth (5th) day of each month.
"INTEREST PERIOD" shall mean:
(a) With respect to each LIBOR RATE ADVANCE: (i) initially, the period (A)
commencing on the BORROWING DATE of such ADVANCE, and (B) ending one, two, three
or six months thereafter, as the case may be, as determined in accordance with
the provisions of this Agreement; and (ii) thereafter, each subsequent INTEREST
PERIOD for such LIBOR RATE ADVANCE shall begin on the last day of the
immediately preceding INTEREST PERIOD and shall end one, two, three or six
months thereafter, as the BORROWER may select pursuant to Section 2.01; provided
that (A) any INTEREST PERIOD which would otherwise end on a day which is not a
BANKING DAY shall end and the next INTEREST PERIOD shall commence on the next
preceding day which is a BANKING DAY as determined conclusively by the BANK in
accordance with the then current bank practices in London, England, and (B) any
INTEREST PERIOD for a LIBOR RATE ADVANCE that would otherwise extend beyond the
TERMINATION DATE shall end on the TERMINATION DATE.
(b) With respect to each PRIME RATE ADVANCE: the entire period during which
such advance is unpaid.
(c) With respect to the TERM LOAN and the REAL ESTATE LOAN with respect to
any period when LIBOR RATE PRICING is not in effect, the entire period during
which any pricing other than LIBOR RATE PRICING is in effect.
(d) With respect to the TERM LOAN and the REAL ESTATE LOAN with respect to
any period that LIBOR RATE PRICING is in effect: (i) initially, the period (A)
commencing on the BORROWING DATE of such period, and (B) ending one, two, three
or six months thereafter, as the case may be, as determined in accordance with
the provisions of this Agreement; and (ii) thereafter, each subsequent INTEREST
PERIOD for such LIBOR RATE PRICING shall begin on the last day of the
immediately preceding INTEREST PERIOD and shall end one, two, three or six
months thereafter, as the BORROWER may select pursuant to Section 2.01; provided
that (A) any INTEREST PERIOD which would otherwise end on a day which is not a
BANKING DAY shall end and the next INTEREST PERIOD shall commence on the next
preceding day which is a BANKING DAY as determined conclusively by the BANK in
accordance with the then current bank practices in London, England, and (B) any
INTEREST PERIOD during which LIBOR RATE PRICING is in effect that would
otherwise extend beyond the MATURITY DATE of said loan shall end on the
TERMINATION DATE.
(e) With respect to the SHORT TERM REVOLVING LOAN a period of thirty (30)
days ending on the Fifth (5th) day of each month.
(f) With respect to the BRIDGE LOAN, the entire term of said loan.
"INTERIM LOAN" shall mean the loan which was made by the BANK to the
BORROWER pursuant to Article V hereof.
-7-
<PAGE>
"INTERIM NOTE" shall mean a promissory note dated as at the date of the
closing in the face amount provided in Section 5.02 hereof issued by the
BORROWER to the order of the BANK and evidencing the obligation to repay the
INTERIM LOAN.
"IN TRANSIT INVENTORY " shall mean inventory (A) with respect to which (i)
title has passed to BORROWER, (ii) a first security interest has attached
pursuant to the SECURITY AGREEMENT(B) which has been placed in the possession of
a third party for delivery to BORROWER, after delivery of a LETTER OF CREDIT to
the vendor thereof and (C) which consists of finished first quality goods.
"INVENTORY" shall mean all of BORROWER'S inventory, merchandise, finished
inventory and all other tangible personal property held by BORROWER for sale or
lease, furnished or to be furnished under contracts of service, or used or
consumed in BORROWER'S business, including the rights of the BORROWER in TRANSIT
INVENTORY .
"INVENTORY COST" shall mean the cost of INVENTORY to the BORROWER when
computed in accordance with GAAP.
"INVESTMENT PROPERTY" shall mean all of BORROWER'S securities, securities
entitlements and securities accounts.
"LEASE(S)" shall mean any right of BORROWER to use real or personal
property which property is owned by another.
"L/C APPLICATION" shall mean the BANK'S standard form of letter of credit
application and reimbursement agreement from time to time.
"L/C BALANCE shall mean the aggregate undrawn, uncanceled portions of all
LETTER(S) OF CREDIT outstanding from time to time and at any time.
"LETTER(S) OF CREDIT" shall mean LETTER(S) OF CREDIT issued by the BANK for
the account of the BORROWER, payable on sight to a beneficiary who is a supplier
of goods to the BORROWER, which goods will be IN TRANSIT INVENTORY and upon
delivery to BORROWER will be ELIGIBLE INVENTORY and which LETTER(S) OF CREDIT
require the delivery and presentation to BANK at the BANK'S OFFICE of DOCUMENTS
reflecting a sale of such goods to the BORROWER, as a condition of BANK'S
payment thereon.
"LIBOR BASE RATE" shall mean, with respect to any LIBOR RATE ADVANCE for
any INTEREST PERIOD, the rate per annum determined by the BANK to be the rate at
which deposits in DOLLARS are offered to BANK in the London Interbank Market at
approximately 10:00 a.m. (Boston time) (A) two BUSINESS DAYS prior to the first
day of such INTEREST PERIOD for delivery on the first day of such INTEREST
PERIOD for a period equal to such INTEREST PERIOD and in an amount substantially
equal to the principal amount of the BORROWING of which a LIBOR RATE ADVANCE on
LIBOR RATE ELECTION is a part or (B) with respect to the SHORT TERM REVOLVING
LOAN on the first day of the INTEREST PERIOD for delivery on that date for a
period
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<PAGE>
equal to such INTEREST PERIOD and in an amount substantially equal to the
principal amount outstanding.
"LIBOR MARGIN" shall mean one and one half percent 1.5% per annum.
"LIBOR RATE" shall mean, with respect to any INTEREST PERIOD for each LIBOR
RATE ADVANCE, an interest rate per annum equal at all times during such INTEREST
PERIOD to the sum of (i) the ADJUSTED LIBOR RATE and (ii) the LIBOR MARGIN.
"LIBOR RATE ADVANCE(S)" shall mean any ADVANCE, the interest rate on which
is calculated by reference to the LIBOR RATE.
"LIBOR RATE PRICING" shall mean any election of the BORROWER to pay or to
continue to pay the LIBOR RATE for any INTEREST PERIOD with respect to the TERM
LOAN and/or REAL ESTATE LOAN.
"LIEN" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other) or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever including, without limitation, any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing.
"LOAN ACCOUNT" shall mean the account or accounts on the books of BANK in
which will be recorded REVOLVING LOANS, ADVANCES under Article II and any other
extensions of credit made by BANK to the BORROWER pursuant to Article II hereof,
payments made on such REVOLVING LOAN(S) and any other appropriate debits and
credits as provided by the FINANCING AGREEMENTS.
"LOANS" shall mean collectively any and all of the REVOLVING LOAN(S), the
INTERIM LOAN, the SHORT TERM REVOLVING LOAN, the TERM LOAN, the REAL ESTATE
LOAN, and the BRIDGE LOAN.
"LOAN AGREEMENT " shall mean the Loan Agreement as amended from time to
time, including by the instrument.
"MARGIN-STOCK" shall have the meaning set forth in Regulation U (12 CFR
221) of the Board of Governors of the Federal Reserve System.
"MATURITY DATE" shall mean June 1, 2002.
"MULTIEMPLOYER PLAN" shall mean a PLAN which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NEW BRIDGE NOTE" shall mean a promissory note dated as of the date hereof
in the principal amount of Four Million Three Hundred Thousand Dollars
($4,300,000.00) issued by the BORROWER to the order of the BANK evidencing the
obligation to repay the BRIDGE LOAN, as the same may be amended from time to
time.
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<PAGE>
"OBLIGATIONS" shall mean all LOANS, ADVANCES, indebtedness, liabilities,
and amounts, liquidated or unliquidated, owing from the BORROWER to the BANK, at
any time, and arising under the FINANCING AGREEMENTS, absolute or contingent,
due or to become due, now existing or hereafter arising or contracted. Said term
shall also include all interest, fees and other charges chargeable to the
BORROWER or due from the BORROWER to the BANK from time to time hereunder and
also all covenants, agreements or undertakings of the BORROWER to the BANK
whether for the payment of money or otherwise arising under the FINANCING
AGREEMENTS.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to ERISA.
"PERSON" shall mean any individual, corporation (including a business
trust), partnership, trust, unincorporated association, joint stock company or
other legal entity or organization and any government or agent or political
subdivision thereof.
"PLAN" shall mean any plan of a type described in Section 4021(a) of ERISA
in respect of which the BORROWER is an "employer" as defined in Section 3(5) of
ERISA.
"PRIME RATE" shall mean the annual rate of interest announced by the BANK
in Boston from time to time, as its "Prime Rate".
"PRIME RATE ADVANCE(S)" shall mean an ADVANCE, the interest rate on which
is calculated by reference to the PRIME RATE.
"PRIME RATE PRICING" shall mean any election of the BORROWER to pay the
PRIME RATE for any INTEREST PERIOD with respect to the TERM LOAN and/or REAL
ESTATE LOAN or pricing at the PRIME RATE in default of such election.
"REAL ESTATE" shall mean the real property located in Meredith, N.H. at
which the BORROWER maintains a distribution facility and commonly known and
numbered as One Winterbrook Way.
"REAL ESTATE CLOSING" shall mean the date of the closing of the REAL ESTATE
LOAN which occurred on July 30, 1997.
"REAL ESTATE LOAN" shall mean the loan which was made by the BANK to the
BORROWER pursuant to Article VI hereof.
"REAL ESTATE LOAN BALANCE" shall mean the outstanding unpaid balance from
time to time owed with respect to the REAL ESTATE LOAN
"REAL ESTATE MORTGAGE" shall mean a mortgage of the REAL ESTATE granted by
the BORROWER to the BANK securing repayment of the OBLIGATIONS including without
limitation the REAL ESTATE NOTE, which MORTGAGE shall include without
limitation:
(a) A first security interest in the BORROWER'S equipment and fixtures from
time to time located at the REAL ESTATE, and in addition to the foregoing, all
contract
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<PAGE>
rights, accounts, general intangibles and other personal property now owned or
hereafter acquired relating thereto.
(b) A first lien by assignment of the rents, leases and profits which may
from time to time be realized in connection with the REAL ESTATE. This
assignment shall call for exercise by the BANK only upon the occurrence of an
EVENT OF DEFAULT by BORROWER.
"REAL ESTATE NOTE" shall mean the promissory note dated as at the date of
the REAL ESTATE CLOSING in the face amount provided in Section 6.02 hereof
issued by the BORROWER to the order of BANK and evidencing the obligation to
repay the REAL ESTATE LOAN.
"REPORTABLE EVENT" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"REPLACEMENT REVOLVING NOTE" shall mean the promissory note in the face
amount of the REVOLVING CREDIT COMMITMENT AMOUNT provided for under the LOAN
AGREEMENT, issued by the BORROWER to the order of the BANK in substitution and
replacement, and not in payment, of the REVOLVING NOTE and now evidencing the
obligation to repay the REVOLVING LOAN as increased thereunder as the same may
be amended from time to time.
"RESERVE RATE" shall mean the rate (expressed as a decimal) at which the
BANK would be required to maintain reserves under Regulation D (or its
equivalent) of the Board of Governors of the Federal Reserve System against
Eurocurrency Liabilities if such liabilities were outstanding. The ADJUSTED
LIBOR RATE shall be adjusted automatically on and as of the effective date of
any change in the RESERVE RATE, and the rate of interest thereby effected shall
simultaneously change.
"REVOLVING CREDIT COMMITMENT AMOUNT" (sometimes the "REVOLVING COMMITMENT
AMOUNT") shall mean the sum of Eight Million Five Hundred Thousand Dollars
($8,500,000.00).
"REVOLVING LOAN(S)" shall mean the ADVANCES under Article II hereof.
"REVOLVING NOTE" shall mean a promissory note in the face amount of
REVOLVING CREDIT COMMITMENT AMOUNT issued by the BORROWER to the order of the
BANK and evidencing the obligation to repay the REVOLVING LOAN, as the same may
be amended from time to time, including without limitation, as replaced by the
REPLACEMENT REVOLVING NOTE.
"SECURITY AGREEMENT" shall mean a Security Agreement originally dated June
5, 1997, duly executed and delivered by the BORROWER, to the BANK granting a
security interest in all of the assets of the BORROWER, including, without
limitation, the COLLATERAL and securing the payment and performance of the
OBLIGATIONS as provided in Article VIII hereof, as the same may be amended from
time to time.
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"SHAREHOLDER PAYMENTS" shall mean any payment or distribution to or for the
benefit of any holder of any class of capital stock of BORROWER with respect to
such capital stock, directly or indirectly, whether in cash or in kind,
including, without limitation, dividends or payments in redemption or retirement
of any stock.
"SHORT TERM REVOLVING LOAN" shall mean the loan to be made by the BANK to
the BORROWER pursuant to Article V(B) hereof.
"SHORT TERM REVOLVING NOTE" shall mean a promissory note in the face amount
of Seventeen Million Dollars ($17,000,000.00) issued by the BORROWER to the
order of the BANK and evidencing the obligation to repay the SHORT TERM
REVOLVING LOAN as the same may be amended from time to time.
"SPECIAL LIBOR MARGIN" shall mean one and one quarter percent (1.25%) per
annum.
"SPECIAL LIBOR RATE" shall mean with respect to any INTEREST PERIOD an
interest rate per annum equal at all times during an INTEREST PERIOD to the sum
of (i) the ADJUSTED LIBOR RATE, and the SPECIAL LIBOR MARGIN adjusted from time
to time as elsewhere herein provided.
"TANGIBLE NET WORTH" shall mean the net worth of the BORROWER including any
"Deferred Tax Asset" but excluding all other GENERAL INTANGIBLES.
"TERMINATION DATE" shall mean June 1, 1999.
"TERM LOAN" shall mean that certain loan made by BANK to BORROWER in the
principal amount of Three Million Six Hundred Thousand Dollars ($3,600,000.00)
payable on the MATURITY DATE evidenced by the TERM NOTE as provided in Article
IV hereof.
"TERM LOAN BALANCE" shall mean the outstanding unpaid balance from time to
time owed with respect to the TERM LOAN.
"TERM NOTE" shall mean a promissory note in the face amount of Three
Million Six Hundred Thousand Dollars ($3,600,000.00) issued by the BORROWER
dated as at the date of the Closing to the order of the BANK evidencing the
obligation to repay the TERM LOAN. The TERM NOTE shall be substantially in the
form of EXHIBIT "1.01.E".
"TREASURY BASE RATE" shall mean the annual rate of interest equal to the
yield of United States Treasury securities with a three (3) year maturity with
respect to the REAL ESTATE LOAN and a five (5) year maturity with respect to the
TERM LOAN as determined by the BANK.
"TREASURY MARGIN" shall mean one and one-half percent (1.5%).
"TREASURY RATE" shall mean with respect to any INTEREST PERIOD an interest
rate per annum equal at all times during said INTEREST PERIOD to the sum of (i)
the TREASURY BASE RATE and (ii) the TREASURY MARGIN.
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"TREASURY RATE PRICING" shall mean any election of the BORROWER to pay the
TREASURY RATE for any INTEREST PERIOD with respect to the TERM LOAN and/or the
REAL ESTATE LOAN.
"UCC" shall mean the Uniform Commercial Code as in effect in The
Commonwealth of Massachusetts, as amended from time to time.
"UNFINANCED CAPITAL EXPENDITURES" shall mean capital expenditures minus new
long term indebtedness issued during the applicable period plus the aggregate
amount of all long term indebtedness prepaid during such period.
1.02 All terms defined in the UCC and used in this Agreement, and not
otherwise defined herein, shall have the meaning ascribed to them in the UCC.
1.03 All accounting terms used in this agreement, including, without
limitation, "net worth", "current assets", "current liabilities", "liabilities",
"net income", "income" and "expense" shall, except as otherwise specifically
provided herein, be determined in accordance with GAAP.
ARTICLE II
----------
REVOLVING LOANS
---------------
2.01 Subject to, and upon the terms and conditions herein provided, during
the AVAILABILITY PERIOD, the BANK agrees to make ADVANCES to the BORROWER
including, without limitation, those ADVANCES provided for in Section 3.06
hereof which shall be deemed ADVANCES under this Section 2.01 so long as (A)
after giving effect to the making of each ADVANCE, then the CREDIT BALANCE does
not exceed the lesser of REVOLVING CREDIT COMMITMENT AMOUNT or AVAILABILITY and
(B) at the time of such ADVANCE the conditions specified in Section 2.08 have
been and remain fulfilled.
2.02 Whenever the BORROWER wishes to request the making of ADVANCE
hereunder, the BORROWER shall make such borrowing request in writing, which
shall be substantially in the form of EXHIBIT "2.02" to the Loan Agreement of
June 5, 1997, and shall deliver the same to the BANK not later than 12:00 noon
(Boston time) two (2) BUSINESS DAYS prior to the BORROWING DATE specified
therein if the ADVANCE is to be a LIBOR RATE ADVANCE, and not later than 12:00
noon (Boston time) on the BORROWING DATE (followed by written certification
within two (2) BUSINESS DAYS thereafter), if the ADVANCE is to be a PRIME RATE
ADVANCE).
2.03 Each BORROWING REQUEST for an ADVANCE pursuant to Section 2.02 shall
specify the proposed BORROWING DATE, the aggregate amount of the proposed
ADVANCE, whether such ADVANCE will be a PRIME RATE ADVANCE or a LIBOR RATE
ADVANCE and, in the case of a LIBOR RATE ADVANCE, the initial INTEREST PERIOD
with respect thereto.
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2.04 The BANK will credit the amount of each ADVANCE to a demand deposit
account maintained by the BORROWER.
2.05 The debit balance of the LOAN ACCOUNT shall reflect the amount the
BORROWER'S indebtedness to the BANK from time to time by reason of ADVANCES
under this Article II and any other appropriate charges under the FINANCING
AGREEMENTS. At least once each month the BANK shall render to the BORROWER a
statement of account showing as of its date the debit balance on the LOAN
ACCOUNT which, unless within thirty (30) days of such date, notice to the
contrary is received by the BANK from the BORROWER, shall be considered correct
and accepted by the BORROWER and conclusively binding upon it absent manifest
error.
2.06 No ADVANCE under this Article II will be made on or after the
TERMINATION DATE.
2.07 All OBLIGATIONS arising under and by reason of this Article II shall
be paid in full, without notice or demand, on the TERMINATION DATE or upon
earlier acceleration, notwithstanding any provisions of the REVOLVING NOTE or
other instrument evidencing any part of the same.
2.08 No ADVANCES Under this Article II will be made, nor any LETTERS OF
CREDIT issued, unless each of the following conditions shall have been and
remain fulfilled as of the BORROWING DATE.
(a) All conditions precedent as set forth in Article XV shall have been
and remain fulfilled.
(b) No EVENT OF DEFAULT shall have occurred and be continuing, nor shall a
DEFAULT have occurred and be continuing.
(c) The warranties and representations set forth in Article IX hereof
shall be true and correct, in all material respects, as of the date
they were made and, except to the extent that written notice of a
change thereof shall have been given by the BORROWER to the BANK, and
such change would not constitute a default or event of default
pursuant to Section 12.01(e) on the date of the BORROWING REQUEST.
2.09 All ADVANCES under this Article II and repayments of principal of the
PRIME RATE ADVANCES shall be in integral multiples of Ten Thousand Dollars
($10,000.00). All LIBOR RATE ADVANCES shall be in the minimum amount of Five
Hundred Thousand Dollars ($500,000.00) and in integral multiples of One Hundred
Thousand Dollars ($100,000.00).
2.10 If at any time the CREDIT BALANCE exceeds the REVOLVING CREDIT
COMMITMENT AMOUNT or AVAILABILITY, BORROWER shall forthwith pay to the BANK such
amount as may be necessary to reduce the CREDIT BALANCE to the lesser of the
COMMITMENT AMOUNT or AVAILABILITY.
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2.11 During the AVAILABILITY PERIOD, BORROWER may repay, in whole or in
part, without penalty, the outstanding principal of the PRIME RATE ADVANCES.
Such repayment may be effected by a new BORROWING subject to the provisions of
this Article II.
2.12 Notwithstanding the provisions of this Article II, the BANK, in its
discretion, may make ADVANCES in excess of the REVOLVING CREDIT COMMITMENT
AMOUNT or AVAILABILITY.
2.13 The obligation of the BORROWER to repay the REVOLVING LOANS with
interest thereon is and shall be evidenced by the REVOLVING NOTE.
2.14 Prior to the TERMINATION DATE, all LIBOR RATE ADVANCES shall be repaid
in full at the end of each applicable INTEREST PERIOD. Such repayment may be
effected by a new BORROWING.
2.15 A request by the BORROWER for a LIBOR RATE ADVANCE shall be
irrevocable.
2.16 The initial BORROWING was in the form of the making of ADVANCE(S)
pursuant to Section 2.01 in an aggregate principal amount which, when taken
together with the proceeds of the TERM LOAN and the INTERIM LOAN will be at
least equal to the aggregate outstanding principal amount of loans under
existing agreements with Fleet Bank. Such proceeds of such initial ADVANCE(S)
and of the TERM LOAN and of the INTERIM LOAN were applied to repay in full all
such outstanding loans. The proceeds of all subsequent ADVANCES shall be
applied for the working capital needs of the BORROWER.
2.17 At least once each consecutive twelve (12) month period commencing
with the date hereof, the BORROWER shall fully repay the REVOLVING LOANS which
repayment shall not be effected by BORROWING, and BORROWER shall not effect or
permit any ADVANCE for a period of thirty (30) consecutive days thereafter
within said twelve (12) month period provided however that the foregoing shall
not apply to any issuances of LETTERS OF CREDIT during such period.
ARTICLE III
-----------
LETTERS OF CREDIT
-----------------
3.01 Subject to and upon the terms and conditions herein provided, during
the AVAILABILITY PERIOD, the BANK shall issue LETTERS OF CREDIT so long as: (A)
After giving effect to each such issuance, the CREDIT BALANCE does not exceed
the REVOLVING COMMITMENT AMOUNT; (B) All conditions specified in Section 2.08
shall have been fulfilled; (C) BORROWER shall have delivered to the BANK (i) an
L/C APPLICATION, duly completed and executed, or a facsimile application
followed up by the original Documents received by the BANK within Three (3)
BUSINESS DAYS thereafter, ( ii) such other accompanying documentation as the
BANK shall require, and (iii) an amount equal to BANK'S then customary letter of
credit application fee and other fees, which amounts shall be non-refundable.
The face amount of any LETTER OF
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CREDIT shall not exceed the purchase price of the INVENTORY purchased therewith
and covered by the document relating thereto.
3.02 No LETTER OF CREDIT shall be issued after the TERMINATION DATE. No
LETTER OF CREDIT to be issued hereunder shall permit a draft to be presented
thereunder after the earlier of (A) 180 days after the date of issue thereof or
(b) three (3) BANKING DAYS before the TERMINATION DATE.
3.03 Each LETTER OF CREDIT shall be in such form, contain such terms and
support such transactions as shall be satisfactory to the BANK consistent with
its then current practices.
3.04 The BORROWER hereby agrees to indemnify and hold harmless the BANK
from and against any and all claims and damages, losses, liabilities, costs or
expenses which the BANK may incur (or which may be claimed against the BANK by
any PERSON whatsoever) by reason of or in connection with the execution and
delivery or transfer of, or payment or refusal to pay, under any LETTER OF
CREDIT; provided that the BORROWER shall not be required to indemnify the BANK
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by (x) the willful misconduct or gross negligence
or bad faith of the BANK in determining whether a request presented under any
LETTER OF CREDIT complied with the terms of such LETTER OF CREDIT or (y) the
BANK'S failure to pay under any LETTER OF CREDIT after the presentation to it of
a draft and DOCUMENTS strictly complying with the terms and conditions of such
LETTER OF CREDIT. Nothing in this Section is intended to limit the other
obligations of the BORROWER or the BANK under this Agreement.
3.05 Notwithstanding the provisions of Sections 3.01, BANK in its
discretion may issue LETTERS OF CREDIT such that the CREDIT BALANCE exceeds the
REVOLVING COMMITMENT AMOUNT.
3.06 If a draft shall be presented under a LETTER OF CREDIT and the BANK
shall honor the same, the BANK shall charge any demand deposit account of the
BORROWER and if the balance(s) of such account(s) is not sufficient, such
presentation, up to the full amount of the LETTER OF CREDIT, shall be deemed to
be a request of the BANK for a PRIME RATE ADVANCE, pursuant to Section 2.01
hereof without any notice to or from BORROWER being required and the amount paid
by the BANK with respect to such draft shall be deemed to be a PRIME RATE
ADVANCE provided however that if by virtue of such ADVANCE, the CREDIT BALANCE
shall exceed availability or the REVOLVING COMMITMENT AMOUNT, the excess shall
be forthwith repaid by the BORROWER.
ARTICLE IV
----------
TERM LOAN
---------
4.01 At a closing, all of the conditions specified in Article XV and
Section 2.08(a) having been fulfilled, and those in Sections 2.08(b) and 2.08(c)
having been represented by the BORROWER to have been fulfilled, the BANK loaned
to BORROWER the principal sum of Three Million Six Hundred Thousand Dollars
($3,600,000.00) as the TERM LOAN.
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4.02 Until the earliest to occur of (i) the MATURITY DATE, (ii) or, (ii)
acceleration upon the occurrence of an EVENT OF DEFAULT; the principal amount of
the TERM LOAN shall be repaid in consecutive quarterly installments of One
Hundred and Eighty Thousand Dollars ($180,000.00) each commencing on September
2, 1997, with a final payment of the TERM LOAN BALANCE due on the MATURITY DATE.
4.03 The obligation of BORROWER to repay the TERM LOAN with interest
thereon shall be evidenced by the TERM NOTE.
4.04 (a)The proceeds of the TERM LOAN were used to pay the then existing
obligation of the BORROWER to Fleet Bank of Massachusetts, N.A.
4.05 The entire TERM LOAN will be subject to "PRIME RATE PRICING" or at
BORROWER'S election as provided below, "LIBOR RATE PRICING" or the TREASURY RATE
PRICING as follows:
(a) If the BORROWER wishes to convert the TERM LOAN from PRIME RATE PRICING
or what would be PRIME RATE PRICING but for an election as provided herein to
LIBOR RATE PRICING or if BORROWER wishes to continue to pay interest at the
LIBOR RATE after the end of a current INTEREST PERIOD as the case may be,
BORROWER shall give an irrevocable request to the BANK which must be received by
the BANK not later than 10:00 a.m., Boston time, two (2) BANKING DAYS before the
desired CONVERSION DATE, or the last day of any current INTEREST PERIOD
requesting that interest rate be so converted to or continued as the case may be
and the requested CONVERSION DATE if the requirement is to convert from PRIME
RATE PRICING. The request shall specify the duration of the INTEREST PERIOD
applicable to the conversion or continuance.
(b) If the BORROWER wishes to convert the TERM LOAN from PRIME RATE PRICING
or LIBOR RATE PRICING to TREASURY RATE PRICING, BORROWER shall give an
irrevocable request to the BANK which must be received by the BANK not later
than 10:00 a.m., Boston time, two (2) BANKING DAYS before the desired CONVERSION
DATE, or the last day of any current INTEREST PERIOD requesting that interest
rate be so converted and the requested CONVERSION DATE if the request is to
convert from PRIME RATE PRICING. Notwithstanding any other provision hereof,
once TREASURY RATE PRICING is elected, it shall be for the balance of the term
of the TERM LOAN.
(c) No such election to pay any rate other than the PRIME RATE shall be
given effect if on the date of election or the date on which such election would
be given effect, there exists any DEFAULT or EVENT OF DEFAULT.
ARTICLE V
---------
THE INTERIM LOAN
----------------
5.01 At a closing, the conditions of Article XV and Section 2.08(a) having
been fulfilled, and those in Sections 2.08(b) and 2.08(c) having been
represented by the
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BORROWER to have been fulfilled, the BANK loaned to the BORROWER as the INTERIM
LOAN that sum necessary to pay-off the current mortgage loan to the BORROWER
from Fleet Bank of Massachusetts, N.A. with respect to the REAL ESTATE.
5.02 The principal amount of the INTERIM LOAN did not exceed One Million
Six Hundred Fifty Thousand Dollars ($1,650,000.00).
5.03 Interest on the INTERIM LOAN was at the PRIME RATE.
5.04 The INTERIM LOAN was paid in full sixty (60) days from the CLOSING
DATE with the proceeds of the Real Estate Note.
5.05 The obligation to pay the INTERIM LOAN was evidenced by the INTERIM
NOTE.
ARTICLE V(A)
BRIDGE LOAN
-----------
5A.01 At a closing, all of the conditions of Article XV and Section 2.08
having been satisfied, the BANK loaned to the BORROWER as the BRIDGE LOAN the
principal amount of Four Million Three Hundred Thousand Dollars
($4,300,000.00)on October 31, 1997 which sum was used to repay ADVANCES
previously made to purchase the BRIDGE REAL ESTATE.
5A.02 The BRIDGE LOAN was required to be paid in full One Hundred and
Twenty (120) days from the date of making.
5A.03 The obligation to pay the BRIDGE LOAN was evidenced by the BRIDGE
NOTE and, among other things, was secured by the BRIDGE MORTGAGE, which,
notwithstanding that it secured all OBLIGATIONS, if no EVENT OF DEFAULT shall
have occurred, was to be discharged upon payment in full of the BRIDGE LOAN.
5A.04 The BORROWER was to pay interest on the daily outstanding balance
of the BRIDGE LOAN from time to time outstanding at the rate of seven and one
quarter percent (7.25%) per annum, monthly in arrears, except the full balance
of principal and interest of the BRIDGE LOAN shall be paid in full at maturity,
as provided therein.
5A.05 The term of the BRIDGE NOTE having expired, provided that all of the
conditions of Article XV and Section 2.08 shall have been satisfied at the
CLOSING and if no EVENT OF DEFAULT shall have occurred, the BANK agrees to
extend the term for repayment of the BRIDGE LOAN until December 31, 1998 and to
reprice the same in the manner hereinafter provided.
5A.06 The obligation to pay the BRIDGE LOAN, as so modified, shall be
evidenced by the NEW BRIDGE NOTE and among other things be secured by the BRIDGE
MORTGAGE which, notwithstanding that it may secure all OBLIGATIONS, shall, if no
EVENT OF DEFAULT shall have occurred and be continuing, be discharged upon
payment in full of the BRIDGE LOAN.
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5A.08 The BORROWER shall hereafter pay interest, monthly, in arrears, on
the daily outstanding balance of the BRIDGE LOAN at the BRIDGE LOAN RATE
applicable to the INTEREST PERIOD and the full balance of principal and interest
of the BRIDGE LOAN shall be paid in full on December 31, 1998 or as otherwise
provided therein.
ARTICLE V(B)
SHORT TERM REVOLVING LOAN
-------------------------
5B.01 If all of the conditions of Article XV and Section 2.08 shall have
been satisfied the BANK agrees to loan to the BORROWER, as the SHORT TERM
REVOLVING LOAN, the principal amount of Seventeen Million ($17,000,000.00) on
the CLOSING DATE which sum shall be used to construct an approximately four
hundred thousand square foot (400,000') distribution center and offices on the
land of the BORROWER located in Tilton, New Hampshire (sometimes the "Project")
and purchase certain materials handling equipment to be used in its operation.
5B.02 The SHORT TERM REVOLVING LOAN shall be paid in full on the first to
occur of (1) the obtaining of permanent financing with respect to the said
Project or (2) December 31, 1998.
5B.03 The obligation to pay the SHORT TERM REVOLVING LOAN shall be
evidenced by the SHORT TERM REVOLVING NOTE and, among other things, be secured
by the ASSIGNMENT OF CERTIFICATE OF DEPOSIT which, notwithstanding that it may
secure all OBLIGATIONS shall, if no EVENT OF DEFAULT shall have occurred and be
continuing, be discharged upon payment in full of the SHORT TERM REVOLVING NOTE.
5B.04 The BORROWER shall pay interest monthly in arrears, on the daily
outstanding balance of the SHORT TERM REVOLVING LOAN from time to time
outstanding monthly, in arrears, at the SPECIAL LIBOR RATE for each INTEREST
PERIOD except the full balance of principal and interest of the SHORT TERM LOAN
shall be paid in full at maturity as provided in the SHORT TERM REVOLVING NOTE.
5B.05 Subject to, and upon the terms and conditions herein provided,
commencing at the CLOSING, the BANK agrees to make ADVANCES to the BORROWER so
long as after giving effect to the making of each such ADVANCE, the aggregate
amount of such advances outstanding shall not exceed $17,000,000.00.
5B.06 Whenever the BORROWER wishes to request the making of an ADVANCE
under this Article, the BORROWER shall make such BORROWING REQUEST in writing,
and shall deliver the same to the BANK not later than 12:00 noon (Boston time)
on the BORROWING DATE specified therein.
5B.07 The BANK will credit the amount of each ADVANCE under this Article to
a demand deposit account maintained by the BORROWER.
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5B.08 At least once each month the BANK shall render to the BORROWER a
statement of account showing as of its date the amount borrowed under this
Article which, unless within thirty (30) days of such date, notice to the
contrary is received by the BANK from the BORROWER, shall be considered correct
and accepted by the BORROWER and conclusively binding upon it absent manifest
error.
5B.09 No ADVANCE under this Article will be made on or after December 31,
1998.
5B.10 All OBLIGATIONS arising under and by reason of this Article V(B)
shall be paid in full, without notice or demand, on or before December 31, 1998.
5B.11 No ADVANCES will be made under this Article unless each of the
provisions of Article XV and Section 2.08 shall be complied with as of the date
thereof and no EVENT OF DEFAULT shall have occurred and be continuing.
ARTICLE VI
----------
REAL ESTATE LOAN
----------------
6.01 The terms, provisions and conditions hereof having been fulfilled, no
DEFAULT or EVENT OF DEFAULT having occurred and the provisions of Section
2.08(a) having been fulfilled, and those in Sections 2.08(b) and 2.08(c) having
been represented by the BORROWER to have been fulfilled, the BANK made the REAL
ESTATE LOAN to BORROWER in accordance with the terms, provisions and conditions
set forth below.
6.02 The amount of the REAL ESTATE LOAN was the lesser of (i) One Million
Six Hundred Fifty Thousand Dollars ($1,650,000.00) or (ii) 75% of the appraised
value of the REAL ESTATE as determined as determined by the APPRAISAL.
6.03 The proceeds of the REAL ESTATE LOAN were applied solely to payment of
the INTERIM NOTE in whole or in part.
6.04 Payment of the REAL ESTATE LOAN shall be effected in fifty-nine (59)
consecutive monthly payments in the principal amount of Nine Thousand One
Hundred Sixty-Seven Dollars ($9,167.00) and a final payment equal to the then
REAL ESTATE LOAN BALANCE. If the principal amount of the REAL ESTATE LOAN shall
be less than One Million Six Hundred Fifty Thousand Dollars ($1,650,000.00), the
regular monthly payments shall be in the amount of One One Hundred Eightieth
(1/180) of said principal amount.
6.05 The obligation of the BANK to make the REAL ESTATE LOAN was subject to
satisfaction by the BANK of each of the following:.
(a) The BANK shall have received the APPRAISAL.
(b) The BANK shall have been furnished with a satisfactory survey of the
REAL ESTATE depicting the following: that the bounds and measurements shown on
the plan
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are substantially correct, that the title lines and actual lines of
possession are the same; the location of all means of ingress to and egress from
the REAL ESTATE; the actual and/or plan location of all utilities services from
the REAL ESTATE to the nearest public road or right-of-way, and if from the REAL
ESTATE to the public right-of-way they pass over land owned by others, said
passage shall be by means of valid, recorded easement not subject to
divestiture; the bounds of any areas submitted to the Federal Flood Disaster
Protection Act and any other area restricting use; the location of all easements
and takings affecting the REAL ESTATE; and depicting that no encroachment over
any property lines or over any easements, servitudes or rights-of-way exist.
The survey shall have been certified to by a licensed professional engineer
reasonably acceptable to the BANK.
(c) The BANK shall have been furnished with a certificate of a licensed
professional engineer satisfactory to the BANK certifying to the following: (1)
That the utilities services, storm drainage and sewage facilities are sufficient
to adequately service the REAL ESTATE; (2) the REAL ESTATE and its current use
comply with all applicable zoning, building code, health, fire, safety and
environmental statutes, codes, bylaws and regulations.
(d) There shall have been delivered to the BANK the opinions of BORROWER'S
counsel relating to (i) due authorization, enforceability, non-contravention
absence of litigation; (ii) zoning and land use; (iii) such other matters (not
including compliance with ENVIRONMENTAL LAWS) as the BANK shall reasonably
require.
(e) The BANK shall have received satisfactory reports from acceptable,
qualified professionals indicating on the basis of soils tests and other tests
and inspections that the REAL ESTATE complies with ENVIRONMENTAL LAWS and areas
adjacent thereto are free from hazardous materials, hazardous wastes, asbestos,
PCB's or toxic substances and that the REAL ESTATE has not been used as a dump
site for oil, hazardous materials, hazardous wastes, asbestos, PCB's or toxic
substances or otherwise used in such a manner which would cause the likelihood
of incurring any liability under Federal or state legal requirements regarding
oil, hazardous materials, hazardous wastes or toxic substances. Without
limitation, the REAL ESTATE MORTGAGE shall contain a provision whereby BORROWER
shall be obligated to immediately contain and remove any hazardous waste and
toxic substances found on the REAL ESTATE. In addition, it shall be an event of
default under the REAL ESTATE MORTGAGE if BORROWER shall fail to obtain a
satisfaction of any "Notice of Violation" ("NOV") within 60 days after the
issuance thereof or if any "Superlien" claim is filed against the REAL ESTATE
under the Superfund Act.
(f) The REAL ESTATE MORTGAGE shall have been insured by a title insurer
acceptable to the BANK, which policy shall comply with the following: it shall
be in the standard ALTA form; there shall be no exceptions for survey, easements
or other use restrictions not shown on the survey which are acceptable to the
BANK; there shall be no inspection exceptions except in respect to improvements
thereafter added; the standard form so-called pending disbursement exception
shall be permitted; and there shall be no other exceptions which in the opinion
of counsel to the BANK may have an adverse effect upon the use of all or any
portion of the REAL ESTATE as contemplated.
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(g) The conditions specified in Article XV and Section 2.08 shall have
been, and remain, fulfilled.
(h) There shall have been delivered to the BANK an insurance policy,
including liability and extended coverage, in amounts satisfactory to the BANK
and first payable to the BANK as mortgagee. The BANK shall have been furnished
with evidence that flood insurance is not required for the REAL ESTATE under
the Federal Flood Disaster Protection Act. In the event that flood insurance is
required, flood insurance written by a company satisfactory to the BANK and in
an amount and form acceptable to the BANK shall also have been disclosed.
(i) The BANK shall have received such other customary documents as the BANK
shall reasonably have requested.
6.06 All closing documents prepared to close the REAL ESTATE LOAN
contemplated hereby shall be in form and contain terms and provisions consistent
with this Article VI and as reasonably required by counsel to the BANK.
6.07 Whether or not the REAL ESTATE LOAN was closed, all costs and expenses
incurred in connection with the transaction, including, but not limited to,
attorney's fees, title insurance and endorsement premiums, appraisals, surveys,
recording fees, documentary stamps, any taxes, brokerage commissions, and any
and all other reasonable out-of-pocket expenses incurred by the BANK in the
ordinary course in connection with the REAL ESTATE LOAN shall be paid by the
BORROWER.
6.08 While the REAL ESTATE LOAN remains outstanding, no portion of the REAL
ESTATE PREMISES may be sold. While the LOANS remain outstanding, there shall be
no other liens on the REAL ESTATE granted by the BORROWER except such as granted
to the BANK hereunder.
6.09 (a) The REAL ESTATE LOAN shall bear interest at the rate of six and
81/100% (6.81%) per annum from the date of the REAL ESTATE CLOSING until August
31, 1999. Thereafter it shall bear interest at the PRIME RATE unless there
shall be an election as provided below.
(b) If the BORROWER wishes to convert the REAL ESTATE LOAN from PRIME RATE
PRICING or what would be PRIME RATE PRICING but for an election as provided
herein to LIBOR RATE PRICING or if the BORROWER wishes to continue to pay
interest at the LIBOR RATE after the end of a current INTEREST PERIOD as the
case may be, BORROWER shall give an irrevocable request to the BANK which must
be received by the BANK not later than 10:00 a.m., Boston time, two (2) BANKING
DAYS before the CONVERSION DATE, or the last day of any current INTEREST PERIOD
requesting that interest rate be so converted to or continued as the case may be
and the requested CONVERSION DATE of the request is to convert from PRIME RATE
PRICING. The request shall specify the duration of the INTEREST PERIOD
applicable to the conversion or continuance.
(c) If the BORROWER wishes to convert the REAL ESTATE LOAN from PRIME RATE
PRICING or LIBOR RATE PRICING to TREASURY RATE PRICING,
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BORROWER shall give an irrevocable request to the BANK which must be received by
the BANK not later than 10:00 a.m., Boston time, two (2) BANKING DAYS before the
desired CONVERSION DATE, or the last day of any current INTEREST PERIOD
requesting that interest rate be so converted and the requested CONVERSION DATE
if the request is to convert from PRIME RATE PRICING. Notwithstanding any other
provision hereof, once TREASURY RATE PRICING is elected, it shall be for the
balance of the term of the REAL ESTATE LOAN.
(d) No such election to pay any rate other than the PRIME RATE shall be
given effect if on the date of election or the date on which such election would
be given effect, there exists any DEFAULT or EVENT OF DEFAULT.
ARTICLE VII
-----------
INTEREST, FEES AND COMPUTATION
------------------------------
7.01 The BORROWER will pay interest on the daily outstanding unpaid balance
of principal of the ADVANCES at the following rates:
(a) On PRIME RATE ADVANCES, the PRIME RATE; and
(b) On LIBOR RATE ADVANCES, the LIBOR RATE.
7.02 Interest on the unpaid balance of the ADVANCES shall be paid on each
INTEREST PAYMENT DATE and upon the TERMINATION DATE or with respect to the SHORT
TERM REVOLVING LOAN, upon maturity as the case may be or upon acceleration.
7.03 The BORROWER will pay interest on the TERM LOAN BALANCE at the PRIME
RATE unless BORROWER shall have made an election to pay at the TREASURY RATE or
LIBOR RATE as permitted in Section 4.05 in which case interest shall be payable
at the rate so elected.
7.04 The BORROWER shall hereafter pay interest on the daily outstanding
unpaid balance of the SHORT TERM REVOLVING LOAN at the SPECIAL LIBOR RATE for
each INTEREST PERIOD and on the outstanding balance of the BRIDGE LOAN at the
BRIDGE LOAN RATE.
7.05 The BORROWER will pay interest on the REAL ESTATE LOAN BALANCE at the
PRIME RATE unless BORROWER shall have made an election to pay at the TREASURY
RATE or LIBOR RATE as permitted in Section 6.09 in which case interest shall be
payable at the rate so elected.
7.06 Interest shall be paid on the REAL ESTATE LOAN, SHORT TERM
REVOLVING LOAN and the BRIDGE LOAN at the rates herein provided until each of
them shall be paid in full and shall be payable on each INTEREST PAYMENT DATE.
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7.07 The BORROWER will also pay to the BANK on demand such standard and
regular charges as the BANK makes with respect to commercial letters of credit,
including, without limitation insurance negotiation and acceptance fees.
7.08 BORROWER shall pay to BANK a commitment fee (the "Commitment Fee") for
the period commencing on the date hereof, to and including the earlier of the
TERMINATION DATE or acceleration of the CREDIT BALANCE equal to one eighth of
one percent (.125%) per annum (computed daily on the basis of the actual number
of days elapsed over a 360 day year) on the amount by which the REVOLVING CREDIT
COMMITMENT AMOUNT exceeds CREDIT BALANCE. The Commitment Fee shall be payable
monthly in arrears and on the TERMINATION DATE.
7.09 In the event any payment of principal or interest, fee, or other
amount payable by the BORROWER under the FINANCING AGREEMENTS shall not be paid
when due and shall remain unpaid for ten (10) days thereafter, the BORROWER
shall pay interest with respect thereto commencing as of the date such payment
was initially due at a per annum rate equal to the sum of (x) the rate of
interest in effect on the due date of such payment, and (y) four percent (4%)
per annum. In the event that BORROWER shall default under terms of the L/C
Application, amounts due from BORROWER shall bear interest at a rate equal to
(a) PRIME RATE plus (b) three percent (3%) per annum payable daily.
7.10 All rates of interest based on the PRIME RATE shall change immediately
upon the date upon which a change in the PRIME RATE shall become effective.
7.11 Except as otherwise expressly provided in this Agreement, whenever any
payment to be made by the BORROWER hereunder shall be stated to be due on a day
other than a BANKING DAY, such payment shall be made on the next succeeding
BANKING DAY, and such extension of time shall in such case be included in the
computation of such payment.
7.12 All payments by the BORROWER under this Agreement shall be made
without set-off or counterclaim and free and clear of and without deduction for
any taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any country or any political subdivision thereof or taxing
or other authority therein unless the BORROWER is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the BORROWER
with respect to any amount payable by it hereunder, the BORROWER will pay to the
BANK, on the date on which the said amount becomes due and payable hereunder,
such additional amount as shall be necessary to enable the BANK to receive the
same net amount which it would have received on such due date had no such
obligation been imposed upon the BORROWER. The BORROWER will deliver promptly to
the BANK certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the BORROWER hereunder.
7.13 The BORROWER agrees to pay any present or future stamp or documentary
taxes and any other excise or property taxes, charges or similar levies,
excluding, in the case of the BANK, taxes imposed on it by the jurisdiction
under the laws of which the
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BANK is organized or any political subdivision thereof and taxes imposed on its
net income and franchise taxes imposed on it, which arise from any payment made
by the BORROWER hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement, or any other FINANCING AGREEMENT. The
BORROWER will indemnify the BANK on demand for the full amount of any such
taxes, charges or similar levies paid by the BANK or any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
7.14 Without prejudice to the survival of any other agreement of the
BORROWER hereunder, the agreements and obligations of the BORROWER contained in
Sections 7.13 AND 7.14 shall survive the payment in full of principal of and
interest on the LOANS. The BANK agrees to give to the BORROWER notice of any
such taxes, charges or similar levies paid by it and for which demand for
payment may be made hereunder, and the BORROWER shall have the right to contest
the validity or legal assertion thereof; provided, however, that the foregoing
shall in no way limit the BORROWER'S obligation to indemnify the BANK as in this
Agreement provided.
7.15 All interest, fees or other charges payable by BORROWER to BANK shall
be computed on the basis of a year of three hundred sixty (360) days and for the
actual number of days elapsed.
7.16 INTENTIONALLY DELETED
7.17 Interest not paid when due shall become a portion of the loans to
which they relate and bear interest at the applicable rate until paid in full.
7.18 Upon the occurrence and during the continuance of an EVENT OF DEFAULT,
BORROWER hereby authorizes BANK to charge any account maintained by it with BANK
for any payment due from BORROWER hereunder or under any of the FINANCING
AGREEMENTS. In any of such cases, such authorization, however, does not obligate
BANK so to charge nor does it limit BORROWER's obligation to make such payment
when due..
7.19 Each payment to be made by BORROWERS hereunder, whether principal,
interest, fees, or of any other kind, shall be paid not later than 2:00 p.m.
(Boston time) on the day when due to the BANK at its principal office in Boston,
Massachusetts in DOLLARS and in immediately available funds.
7.20 The BANK shall calculate all interest rates arising and all interest
and fees due hereunder.
7.21 In the event that the BORROWER shall, before the due date therefor,
prepay all or any portion of the TERM LOAN or REAL ESTATE LOAN which is subject
to TREASURY RATE pricing, whether by reason of voluntary prepayment or
acceleration, BORROWER shall pay a prepayment charge equal to the BANK'S COST OF
FUNDS REDEPLOYMENT unless such prepayment is made from BORROWER'S EXCESS CASH
FLOW.
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7.22 In addition to and not in limitation of any other provision of this
Agreement, BORROWER will, on demand by the BANK at any time, indemnify the BANK
against COST OF FUNDS REDEPLOYMENT as a consequence of:
(a) The breach by the BORROWER of its OBLIGATIONS to borrow a LIBOR RATE
ADVANCE on the BORROWING DATE thereof;
(b) The failure by the BORROWER to pay, punctually on the due date
thereof, any amount payable hereunder with respect to a LIBOR RATE
ADVANCE;
(c) The repayment or prepayment of any principal of any LIBOR RATE ADVANCE
of the TERM LOAN or the REAL ESTATE LOAN at a time when the said
obligation is subject to LIBOR RATE PRICING, on a date other than the
due date of such principal, whether due to acceleration or otherwise.
7.23 COSTS OF FUNDS REDEPLOYMENT shall mean the following:
(i) any costs incurred by the BANK in carrying funds which were to
have been borrowed by the BORROWER or in carrying funds to cover
the amount of any overdue principal of or overdue interest
thereon;
(ii) any interest payable by the BANK to lenders of the funds
borrowed by the BANK in order to carry the funds referred to in
the immediately preceding sub-clause (i); and
(iii) any losses incurred by the BANK in liquidating or re-employing
funds acquired from third parties to effect or maintain the
same. The amount (and the computations thereof) of any such
losses, costs and expenses shall be determined reasonably by the
BANK and set forth in a certificate signed by an officer of the
BANK, which certificate shall, save for manifest error, be
conclusive and binding upon the BORROWER.
7.24 Without prejudice to any other rights it may have, the BANK may
collect a "late charge" equal to five (5%) percent of any OBLIGATION not paid
within fifteen (15) days of the due date thereof.
7.25 If at any point, during the term of the REVOLVING LOAN, the TERM LOAN,
the REAL ESTATE LOAN, the LIBOR BASE RATE shall cease to be available then,
thereafter, during such period of unavailability, LIBOR RATE ADVANCES and LIBOR
RATE PRICING shall cease to be available hereunder with respect thereto. If
said LIBOR BASE RATE shall cease to be available during the term of the SHORT
TERM REVOLVING LOAN, the SHORT TERM REVOLVING LOAN shall be priced at the
nearest comparable rate as determined by the BANK.
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ARTICLE VIII
------------
Security, Guaranties and Subordination
--------------------------------------
8.01 Any and all deposits or other sums at any time credited by or due from
BANK to BORROWER shall, at all times constitute security for all OBLIGATIONS and
upon and during the continuance of an Event of Default may be set off against
any of the OBLIGATIONS at any time when due whether or not security held by BANK
is deemed to be adequate.
8.02 Subject to any contrary provision of this Agreement, the OBLIGATIONS
including without limitation those represented by the NEW BRIDGE NOTE and the
SHORT TERM REVOLVING NOTE shall also be secured by the ASSIGNMENT OF CERTIFICATE
OF DEPOSIT as well as by all of the other FINANCING AGREEMENTS which shall be
subject to no LIENS except those permitted under Section 11.06.
8.03 [INTENTIONALLY DELETED]
8.04 Without limitation on any other provisions hereof, the OBLIGATIONS
shall, among other things, be secured by a first priority perfected pledge of
the FLEET INVESTMENT PROPERTY pursuant to an agreement satisfactory to the BANK
not subject to any LIENS except those permitted pursuant to Section 11.06
hereof. If at any time that the TERM LOAN shall be outstanding the FLEET
INVESTMENT PROPERTY shall have a value upon an immediate disposition in a
recognized securities market which is less than the unpaid principal of the TERM
LOAN BALANCE, then, in any such event the BORROWER shall immediately either (i)
increase the said value of the FLEET INVESTMENT PROPERTY pledged to the BANK to
an amount at least equal to the TERM LOAN BALANCE or (ii) make a payment in such
amount as will reduce the said TERM LOAN BALANCE to an amount equal to such
value. With respect to the CONTROL AGREEMENT, the BANK shall not originate
"entitlement orders" concerning the "Account" or deliver a "Notice of Exclusive
Control" except after the occurrence of, and during the continuance of an EVENT
OF DEFAULT. Notwithstanding that the FLEET INVESTMENT PROPERTY shall secure
payment and performance of all OBLIGATIONS, provided that no EVENT OF DEFAULT
shall have occurred and be continuing, the security interest of the BANK in the
same shall be released upon payment in full of the TERM LOAN.
ARTICLE IX
----------
Warranties and Representations by BORROWERS
-------------------------------------------
9.01 The BANK enters into this Agreement in reliance upon the warranties
and representations of the BORROWER set forth in this Article, each of which is
acknowledged by the BORROWER to be material. Each such warranty and
representation shall be deemed to have been newly made on each day BORROWER
requests an ADVANCE except to the extent that written notice of a change thereof
shall have been given by the BORROWER to the BANK, and such change would not
constitute a default or event of default pursuant to Section 12.01(e).
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9.02 The BORROWER is a duly organized and existing corporation under the
laws of its state of incorporation and is in good standing under the laws
thereof.
9.03 The BORROWER is duly qualified to do business and is in good standing
as a foreign corporation in each state or other jurisdiction where the failure
to so qualify would have a material adverse effect on the BORROWER. All such
jurisdictions, if any, are listed on EXHIBIT "9.03".
9.04 The BORROWER has good title to all properties and assets which it
purports to own, as reflected in the CURRENT FINANCIALS, free and clear of all
mortgages, liens, pledges, security interests and encumbrances except as set
forth on EXHIBIT 9.04 or permitted by Section 11.06.
9.05 The BORROWER owns or leases and holds all real and personal property
necessary or incidental to the conduct of its businesses, including without
limitation, patents, trademarks, service marks, trade names, copyrights and
licenses and other rights with respect to the foregoing.
9.06 All books and records of the BORROWER, including, but not limited to,
minute books, by-laws and books of account fairly reflect all matters and
transactions which should currently be reflected therein.
9.07 The BORROWER'S business is limited to the sale of personal property
from CATALOGS and activities related thereto (including without limitation the
sale of personal property from retail outlet stores).
9.08 Except as set forth in EXHIBIT 9.08 and except for the FLEET
INVESTMENT PROPERTY, the BORROWER has no subsidiaries nor any investments in the
stock or securities of any other corporation, firm, trust or other entity.
9.09 Except as set forth in EXHIBIT 9.09, there are no actions, suits,
proceedings, or investigations pending or, to the knowledge of BORROWER,
threatened against the BORROWER or any of its properties in any court, before
any governmental authority, arbitration board, or any other tribunal which,
singly or in the aggregate, if decided adversely to BORROWER, would materially
and adversely affect the business, properties or condition (whether financial or
otherwise) of the BORROWER. BORROWER is not, nor by execution and delivery of
the FINANCING AGREEMENTS and performance of the OBLIGATIONS (with or without the
passage of time or the giving of notice), will be, in default with respect to
any order of any court, governmental authority, arbitration board or other
tribunal.
9.10 BORROWER has furnished to the BANK the financial statements at
September 30, 1997 for the prior nine (9) month period. Said statements, the
"CURRENT FINANCIALS," fairly present the condition of the BORROWER at the dates
thereof, all in conformity with GAAP except, in respect of interim statements,
with respect to footnotes, and subject to customary year end adjustments.
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9.11 Except to the extent reflected or reserved against in the CURRENT
FINANCIALS or as set forth on EXHIBIT "9.11," if any, BORROWER, as of the date
of said financial statements, had no material liabilities of any nature, whether
accrued, absolute, contingent or otherwise, including, without limitation, tax
liabilities, due or to become due, or arising out of transactions entered into
or any state of facts existing prior thereto, of a type required by GAAP to be
reflected or reserved against on financial statements.
9.12 Since the date of the CURRENT FINANCIALS and through the date hereof,
and except as shown on EXHIBIT "9.12", there has not been:
(a) any change in the condition of the BORROWER'S assets or liabilities,
other than changes in its ordinary course of business, none of which
has been materially adverse.
(b) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the BORROWER'S properties or
business;
(c) any declaration of, setting aside of, or making of a payment or any
dividend or other distribution with respect to the BORROWER'S capital
stock or any direct or indirect redemption, purchase or other
acquisition of any such stock;
(d) any materially adverse:
(i) controversy with any labor organization or employees;
(ii) claim or controversy involving any federal, state or local
government agencies; or
(iii) other event or condition affecting the businesses of or
properties of the BORROWER.
9.13 The BORROWER has filed all federal and state income tax returns,
excise tax returns and all other tax returns of every kind and nature which are
required to be filed by it and has paid all taxes shown to be due on said
returns, except where in the future such taxes are being contested in good faith
by a appropriate proceedings. To BORROWER's knowledge, no audit or other
investigation is presently being conducted with respect to any tax obligation of
BORROWER.
9.14 INTENTIONALLY DELETED
9.15 The execution and delivery of the FINANCING AGREEMENTS, the borrowing
by BORROWER as herein provided, the execution and delivery by them of all
instruments, agreements and documents of every kind and nature pursuant hereto
and the performance by the BORROWER of the OBLIGATIONS have been duly authorized
by the Board of Directors of the BORROWER and, to the extent required by law or
otherwise, by stockholders, and the FINANCING AGREEMENTS and all instruments,
agreements and documents executed pursuant thereto are valid and binding
obligations of the BORROWER enforceable in accordance with their terms, except
to the extent that such
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enforceability may be limited by laws of general application affecting the
rights of creditors.
9.16 There is no provision in the articles of organization, the by-laws, or
other charter documents of BORROWER, or any other indenture, contract or
agreement to which it is party or by which it is bound, which prohibits the
execution and delivery of the FINANCING AGREEMENTS or the performance by the
BORROWER of the OBLIGATIONS.
9.17 No DEFAULT or EVENT OF DEFAULT exists. Neither the nature of
BORROWER'S businesses or properties, nor any relationships in connection with
the execution or delivery of the FINANCING AGREEMENTS is such as to require a
consent, approval, license, permit or authorization of, or filing, registration,
or qualification with, any governmental authority on the part of BORROWER as a
condition to the execution and delivery of the FINANCING AGREEMENTS or any
instrument, agreement or document contemplated hereby, or the performance by the
BORROWER of the OBLIGATIONS.
9.18 EXHIBIT "9.18" set forth a full list of all patents, patent
applications, registered copyrights, and registered trademarks and service marks
currently used by the BORROWER.
9.19 EXHIBIT "9.19" contains a description of all real property and
material personal property which the BORROWER holds under a term of a LEASE,
including a description of the property, the date of the LEASE and the identity
of the lessor.
ARTICLE X
---------
Affirmative Covenants
---------------------
10.01 BORROWER shall furnish to BANK, in form and detail acceptable to
BANK:
(a) As soon as practicable and in any event within one hundred twenty
(120) days after the end of each fiscal year, statements, on an
unqualified audit basis of income, retained earnings and cash flow of
the BORROWER for such year, and audited balance sheets of the BORROWER
as at the end of such year, setting forth in each case in comparative
form corresponding figures for the preceding fiscal year from the
preceding annual audit, all in reasonable detail and reasonably
satisfactory in scope to the BANK and certified by the ACCOUNTANTS
whose certificate shall be on an unqualified, audited basis
representing an unqualified opinion, all in scope and substance
satisfactory to the BANK, and such financial statements shall be
prepared in accordance with GAAP.
(b) As soon as practicable and in any event within forty-five (45) days
after the end of each of the first three quarterly period in each
FISCAL YEAR, statements of income, retained earnings and cash flow of
the BORROWER for the period from the beginning of the current FISCAL
YEAR to the end of
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such quarterly period, and balance sheet of the BORROWER as at the end
of such quarterly period, setting forth in each case commencing one
year from the date hereof, in comparative form, figures for the
corresponding period in the preceding FISCAL YEAR, all in reasonable
detail, and such financial statements shall be prepared in accordance
with GAAP subject to customary year end adjustments and the absence of
footnotes. Such quarterly statements may be prepared internally.
(c) At the time of delivery of the reports required by Sections 10.01(a)
and 10.01(b); a certificate of the Chief Financial Officer, Vice
President of Finance or Controller of the BORROWER (i) stating that,
in his, her or their opinions, if such be the case, there has been and
is existing no DEFAULT or EVENT OF DEFAULT hereunder, or if that not
be the case, setting forth the details of all such DEFAULT or EVENT OF
DEFAULT, and (ii) showing appropriate calculations indicating
compliance (or non-compliance) with the covenants set forth in Article
XI and XII.
(d) Monthly, within fifteen (15) days of the end of each month, a
certificate signed by BORROWER'S President, Chief Financial Officer,
Vice President of Finance or Controller certifying that the CREDIT
BALANCE does not exceed the lesser of AVAILABILITY or the REVOLVING
CREDIT COMMITMENT AMOUNT and that the TERM LOAN BALANCE does not
exceed the net market value upon sale (as elsewhere herein provided)
of the FLEET INVESTMENT PROPERTY.
(e) Monthly, within thirty (30) days of the end of each month, a report,
certified by the BORROWER'S President, Chief Financial Officer, Vice
President of Finance or Controller showing the aging of BORROWER'S
INVENTORY.
(f) Periodically, promptly after filed, copies of all notices to
shareholders, all proxies, reports and any other publicly available
materials filed with the Securities Exchange Commission and all press
releases.
(g) With reasonable promptness, such other financial data and/or operating
data as the BANK may reasonably request in such form as the BANK may
reasonably request.
(h) Monthly cause its general contractor to submit to the BANK a copy of
the summary of the status of the project being financed by the SHORT
TERM REVOLVING LOAN against budget in such form as the BANK shall
reasonably require at the same time such contractor shall submit the
same to BORROWER.
10.02 The BORROWER will, duly and punctually, pay all interest, principal
and all other amounts of money becoming due from it to the BANK and will duly
and punctually perform all things on its part to be done or performed under the
FINANCING AGREEMENTS.
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10.03 The BORROWER shall, at all times, keep proper books of account which
shall at all times fairly reflect its financial condition and in which entries
will be made of its transactions in accordance with GAAP to the extent
applicable thereto.
10.04 The BORROWER shall make its books and records available, in its
offices, for inspection, examination and copying by the BANK and the BANK'S
representatives and will at all reasonable times (and, prior to a DEFAULT or
EVENT OF DEFAULT, upon reasonable notice), permit inspection of its books and
records and properties by the BANK and the BANK'S representatives.
10.05 The BORROWER will maintain its corporate existence in good standing.
The BORROWER will comply with all laws and regulations of the United States, or
any state or states thereof, of any political subdivision thereof and of any
governmental authority which may be applicable to it or to its business;
provided, however, that a failure so to comply which does not materially and
adversely affect its businesses or financial condition shall not be a breach
hereof.
10.06 The BORROWER will pay all real and personal property taxes,
assessments and charges and all franchise, income, unemployment, old age
benefit, withholding, sales and other taxes assessed against it or payable by it
at such times and in such manner to prevent any penalty from accruing or any
lien or charge from attaching to its properties. The provisions of this
section, however, shall not preclude BORROWER from contesting in good faith any
such tax, nor shall there be a default hereunder, by reason of the existence of
a lien for taxes not then due provided that the BORROWER shall have set aside on
its books reserves certified by the BORROWER to be adequate for the timely
satisfaction of such obligations.
10.07 The BORROWER will put and maintain its properties in good repair,
working condition and order, reasonable wear and tear excepted, and from time to
time, make all needful and proper repairs, renewals and replacements.
10.08 The BORROWER will maintain insurance covering such risks and in such
minimum amounts as BANK may reasonably require, all such insurance to be in such
form and for such periods and written by such companies as shall be reasonably
acceptable to BANK. The BANK shall be named as an additional "loss payee" as
elsewhere herein provided and the BANK shall receive certified copies of such
original policies, if available, and upon the occurrence of an EVENT OF DEFAULT
the BANK shall forthwith be provided with and hold the originals of each such
policy.
10.09 The BORROWER will punctually and promptly make when due, after the
expiration of all applicable periods of grace or notice, all payments and
perform all other obligations which may be required of it with respect to any
indebtedness (whether for money borrowed, goods purchased, services rendered or
however such indebtedness may arise) owing to persons, firms or corporations
other than the BANK, including, without limitation, indebtedness which may be
secured by a security interest in assets of the BORROWER or its property and all
obligations under the terms of any Leases. The provisions of this Section shall
not preclude the BORROWER from contesting in good faith any such indebtedness or
obligation. The BORROWER may accept extended
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payment terms regularly offered by any creditor selling goods to the BORROWER or
furnishing services to the BORROWER.
10.10 The BORROWER shall pay or cause to be paid when due all amounts
necessary to fund in accordance with its terms any deferred compensation and/or
other employee benefit plans, whether now in existence or hereafter created and
whether subject to the applicable provisions of ERISA and all regulations
thereunder, and it will not withdraw from participation in, permit the
termination or partial termination of, or permit the occurrence of any other
event with respect to any deferred compensation plan maintained for the benefit
of employees under circumstances that could result in any liability to "PBGC",
or any of its successors or assigns, or to the entity which provides funds for
such deferred compensation plan. To the extent that BORROWER become subject to
the provision of the ERISA, BORROWER will, promptly upon obtaining knowledge
thereof, notify the BANK of (i) the occurrence of any "reportable event"
described in Section 4043 of ERISA, (ii) receipt of notice of an application by
the PBGC to institute proceedings to terminate an employee benefit plan, and
(iii) receipt of notice of any liability pursuant to Section 4202 of ERISA.
10.11 The BORROWER shall promptly give notice to BANK of the commencement
of any suit or proceedings against the BORROWER, in which the amount claimed
exceeds Two Hundred and Fifty Thousand and 00/100 Dollars ($250,000.00) unless
such liability is fully covered by insurance in effect and the insurer is
defending such action without reservation of rights against the BORROWER.
10.12 Upon the occurrence of any DEFAULT or EVENT OF DEFAULT, BORROWER
shall promptly give the BANK notice thereof.
10.13 The BORROWER will give the BANK not less than thirty (30) days'
prior notice of any proposed change in its principal places of business or chief
executive offices or the establishment of any other location of COLLATERAL,
other than as currently shown on EXHIBIT 10.13.
10.14 The BORROWER will give the BANK not less than thirty (30) days'
prior notice of any intended change in its corporate name or the adoption of any
trade name.
10.15 In the event of any change in the identification of the directors
and statutory officers of the BORROWER as reflected on EXHIBIT "10.15", the
BORROWER shall, within thirty (30) days thereafter, give notice thereof to BANK.
10.16 The BORROWER shall, as of the date hereof commence to maintain its
primary deposit accounts with BANK, from which payments due on LOANS may be
deducted.
ARTICLE XI
----------
NEGATIVE COVENANTS
------------------
11.01 The BORROWER will not issue evidences of INDEBTEDNESS nor create,
assume, become contingently liable for, nor suffer to exist INDEBTEDNESS for
borrowed
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money in addition to indebtedness to the BANK; provided, however, that
BORROWER may incur liabilities other than for money borrowed which are incurred
or arise in the ordinary course of the BORROWER'S business, and may in any
fiscal year of the BORROWER grant purchase money security interests in
connection with the purchase of property with a purchase price not to exceed Two
Hundred Fifty Thousand Dollars ($250,000.00) provided that the amount of
INDEBTEDNESS secured by such purchase money security interests shall not exceed
the lesser of (i) the purchase price or (ii) the fair market value of the
property financed and such purchase money security interest shall not relate to
any other assets or property of the BORROWER except the property thereby
acquired.
11.02 The BORROWER shall not make or continue any loans to any individual,
firm or corporation, including, without limitation, BORROWER'S, officers and
employees except for loans or advances to employees and officers in the ordinary
course of the BORROWER'S business not to exceed $100,000.00 at any time.
11.03 Except as described in Section 9.08, the BORROWER shall not invest
in or purchase any stock or securities of any individual, firm, partnership,
joint venture or corporation without the BANK'S prior written consent; provided,
however, that the BORROWER, without the BANK'S consent may invest in direct
obligations of or securities guaranteed by the United States of America or any
agency thereof, certificates of deposit or other obligations of the BANK or any
other member bank of the Federal Reserve System having assets of not less than
One Hundred Million Dollars, prime banker's acceptances, money-market funds,
commercial paper of a domestic issue rated either A1 by Standard & Poor's
Corporation or P1 by Moody's Investor Service, Inc., and other securities the
cost to BORROWER of which do not exceed One Hundred Thousand Dollars
($100,000.00) in the case of any single issuer.
11.04 The BORROWER will not merge or consolidate or be merged or
consolidated with or into any other corporation or entity.
11.05 Except for sales of INVENTORY in the ordinary course of business,
the BORROWER shall not sell or dispose of any of BORROWER'S assets except that
the BORROWER may sell or otherwise dispose of EQUIPMENT which is no longer
needed by the BORROWER for the conduct of its business.
11.06 Except with respect to the BANK as provided herein, the BORROWER
shall not grant or suffer to exist, any mortgage, pledge, title retention
agreement, security interest, lien or encumbrance with respect to any of its
assets, tangible or intangible, whether now owned or hereafter acquired, or
subject any of its assets to the prior payment of any indebtedness, or transfer
in any manner any of such assets with the intent or purpose, directly or
indirectly, of subjecting such assets to the payment of INDEBTEDNESS except (i)
landlords', carriers', warehousemans', mechanics' and other similar liens
arising by operation of law in the ordinary course of the BORROWER'S businesses;
(ii) liens arising out of pledge or deposits under worker's compensation,
unemployment insurance, old age pension, social security, retirement benefits or
other similar legislation; (iii) liens in favor of the BANK; (iv) liens for
taxes not yet due or which are being contested in good faith by appropriate
proceedings and the BORROWER maintain appropriate reserves (reasonably approved
by the BANK) in respect thereto; (iv) judgment or prejudgment liens with respect
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<PAGE>
to which there has issued a stay of execution pending appeal or otherwise and as
to which the BORROWER maintain appropriate reserves in respect thereto
(reasonably approved by the BANK); (vi) easements, rights of way, restrictions
and other similar charges or liens relating to real property and not interfering
in a material way with the ordinary conduct of the BORROWER'S business; (vii)
liens securing the payment of INDEBTEDNESS permitted under Section 11.01 hereof;
and (viii) encumbrances on the BORROWER'S property or assets created in
connection with the refinancing of INDEBTEDNESS secured by liens on such
property permitted hereunder that do not extend to property and assets of the
BORROWER not encumbered prior to such refinancing.
11.07 The BORROWER will not engage in any business other than the business
in which it is currently engaged or a business reasonably allied thereto.
11.08 The BORROWER shall not guaranty, endorse, contingently agree to
purchase or otherwise become liable for obligations for borrowed money of any
other person, firm partnership, joint venture, corporation or other entity;
provided, however, that the provisions of this Section 11.08 shall not preclude
the BORROWER from endorsing checks, drafts or other similar items for collection
in the ordinary course of business.
11.09 The BORROWER will not make or enter into any so-called management
agreement whereby management, supervision or control of its business or any of
its principal functions shall be delegated to any persons other than its duly
elected officers and directors.
11.10 The BORROWER will not change its FISCAL YEAR.
11.11 The BORROWER will not, for any four (4) consecutive fiscal quarters,
permit DEBT SERVICE COVERAGE to be less than 1.25 to 1. Such covenant shall be
calculated quarterly based upon the preceding 12 months of operations commencing
with the twelve month period year ending June 30, 1997.
11.12 The BORROWER will not as at December 31, 1997 have permitted its
TANGIBLE NET WORTH to be less than Forty Two Million Dollars ($42,000,000.00)
nor at any time in any FISCAL YEAR thereafter permit its tangible net worth to
be less than (a) Forty Two Million Dollars ($42,000,000.00) plus (b) Two Million
Dollars ($2,000,000.00) multiplied by the number of whole years which shall have
elapsed subsequent to December 31, 1997.
11.13 Borrower does not own and has no present intention of acquiring any
MARGIN STOCK. None of the funds advanced to the Borrower hereunder will be used
to purchase or carry any Margin Stock. Neither Borrower, nor any agent acting
on its behalf, has taken any action which might cause this Agreement or either
of the Notes to violate Regulation G, Regulation T, Regulation U, Regulation X
or any other regulation of the Board of Governors of the Federal Reserve System
or to violate the Securities Exchange Act of 1934, as now in effect.
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<PAGE>
ARTICLE XII
-----------
EVENTS OF DEFAULT
-----------------
12.01 The occurrence of any of the following events shall be an EVENT OF
DEFAULT hereunder and under each of the FINANCING AGREEMENTS:
(a) The REVOLVING LOAN(S) and all accrued interest thereon shall not be
paid in full on the TERMINATION DATE.
(b) The BORROWER shall fail to make a payment of interest or principal on
account of the REVOLVING LOAN(S), the REAL ESTATE LOAN, the TERM LOAN,
the BRIDGE LOAN, the SHORT TERM REVOLVING LOAN or any other fee or
charge arising under the FINANCING AGREEMENTS within five (5) days of
when such payment is due, (or if within any grace period provided
therein).
(c) The BORROWER shall fail to observe or perform any covenants contained
in this Agreement other than with respect to the payment of money
within TEN (10) days of notice from the BANK or such earlier date as
may be necessary to protect the interests of the BANK.
(d) The BORROWER shall fail to observe any other covenant or agreement
contained in any FINANCING AGREEMENT or in any instrument, document or
agreement executed pursuant thereto when required or within any grace
period provided therein.
(e) Any written warranty, representation or statement made or furnished to
BANK by or on behalf of the BORROWER proves to have been false in any
material respect when made or furnished.
(f) Any event which results in the acceleration of the maturity of the
indebtedness of the BORROWER (i) to the BANK, or (ii) to any other
party under any indenture, agreement, undertaking or otherwise if the
same relates to aggregate INDEBTEDNESS, in excess of $250,000.00.
(g) Any levy or seizure of any property of the BORROWER in which the
amount involved exceeds in the aggregate $250,000.00 and which levy or
seizure is not stayed within thirty (30) days and if reasonably
required by the BANK adequate security is imposed.
(h) Any attachment of any property of the BORROWER which attachment
secures claim in the aggregate of more than Two Hundred and Fifty
Thousand and 00/100 Dollars ($250,000.00) or more and is not
discharged within thirty (30) days.
(i) Dissolution, termination of existence, as the case may be of the
BORROWER.
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<PAGE>
(j) The BORROWER shall: (i) cease, be unable or admit in writing its,
inability to pay its debts as they mature or make a general assignment
for the benefit of, or enter into any composition, trust mortgage or
other arrangement with creditors; (ii) apply for, or consent (by
admission of material allegations of a petition or otherwise) to the
appointment of a receiver, trustee or liquidator of the BORROWER or of
a substantial part of its assets, or authorize such application or
consent, or proceedings seeking such appointment shall be commenced
against the BORROWER and continue unstayed and undismissed for sixty
(60) days; or (iii) apply for, or consent (by admission of material
allegations of a petition or otherwise) to the application of any
bankruptcy, reorganization, readjustment of debt, insolvency,
dissolution, liquidation or other similar law of any jurisdiction, or
authorize such application or consent, or proceedings to such end
shall be instituted against the BORROWER and remain unstayed and
undismissed for sixty (60) days, be approved as properly instituted or
result in adjudication of bankruptcy or insolvency.
12.02 Upon the occurrence of any EVENT OF DEFAULT, all OBLIGATIONS
including, without limitation, the REVOLVING LOAN, the TERM LOAN, the REAL
ESTATE LOAN the BRIDGE LOAN and the SHORT TERM REVOLVING LOAN, as the case may
be shall, at the BANK'S option, become immediately due and payable without
notice or demand and the BANK shall have all such rights and remedies as are
provided herein or under the other FINANCING AGREEMENTS or at law or in equity.
ARTICLE XIII
------------
NOTICES
-------
13.01 All communications herein provided shall be in writing and shall be
sufficient if (i) sent by United States mail, registered or certified, postage
prepaid, (ii) delivered by national courier service which requires receipt
evidencing delivery or (iii) sent by confirmed telephone facsimile and addressed
as provided in this Article.
13.02 The addresses to which such communications shall be sent are as
follows:
a) If intended for the BORROWER, to:
DM Management Company
25 Recreation Drive
Hingham, MA 02043
Fax: (617) 740-2408
Attn: Olga L. Conley, Chief Financial Officer
with courtesy copies to:
Foley, Hoag & Eliot, LLP
One Post Office Square
Boston, MA 02109
Fax: (617) 832-7000
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<PAGE>
Attn: David R. Pierson, Esq.
b) If intended for BANK to:
Citizens Bank of Massachusetts
28 State Street
Boston, MA 02109
Fax: (617) 725-5690
Attn: Lori B. Leeth, Senior Vice President
with courtesy copies to:
Goldstein & Manello, P.C.
265 Franklin Street
Boston, MA 02110
Fax: 617-946-8181
Attn: Richard J. Snyder, Esq.
13.03 The addresses set forth herein may be changed by notice to the other
party hereunder.
13.04 Any notice sent in accordance with the provisions and this Article
XIII shall be effective (i) if mailed, on the second BUSINESS DAY, (ii) if
delivered by courier service, upon receipt or (iii) if sent by confirmed
telephone facsimile, upon transmission.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
14.01 The BORROWER will, from time to time, execute and deliver to the
BANK all such other and further reasonable instruments and documents and take or
cause to be taken all such other and further action as the BANK may reasonably
request in order to effect and confirm more securely in the BANK all rights
contemplated in this Agreement, and in any other of the FINANCING AGREEMENTS.
14.02 The BORROWER may take any action herein prohibited or omit to
perform any act required to be performed by the BORROWER if the BORROWER shall
obtain the BANK'S prior written consent to each such action, or omission to act.
No waiver on the BANK'S part on any one occasion shall be deemed a waiver on any
other occasion. The BANK shall not be deemed to have waived any of its rights
hereunder unless such waiver shall be in writing and duly signed by an
authorized officer of the BANK.
14.03 This Agreement may be amended only by an instrument in writing and
duly signed by the BORROWER and an authorized officer of the BANK.
14.04 All covenants, agreements, representations and warranties contained
in this Agreement shall bind the BORROWER and its successors and assigns, and
shall inure to the BANK'S benefit and the benefit of the BANK'S successors and
assigns, whether
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expressed or not; provided, however, that the BORROWER may not assign its rights
or benefits hereunder.
14.05 All rights of the BANK hereunder shall be cumulative. The BANK
shall not be required to have recourse to any COLLATERAL or other security
before enforcing its rights or remedies against the BORROWER. BORROWER hereby
waives presentment and protest of any instrument and any notice thereof.
14.06 If any provisions of this Agreement shall be held to be illegal or
unenforceable, such illegality or unenforceability shall relate solely to such
provision and shall not affect the remainder of this Agreement.
14.07 This Agreement shall be construed and enforced as an instrument
under seal in accordance with the laws of the Commonwealth of Massachusetts.
14.08 The captions herein contained are inserted as a matter of
convenience only and such captions do not form a part of this Agreement and
shall not be utilized in the construction hereof.
14.09 In the event the BORROWER fails to make any payment or take any
action required by this Agreement or any other of the FINANCING AGREEMENTS, BANK
may, but shall not be required to, upon prior notice to the BORROWER make such
payment or to take, or cause to be taken, such action. If the BANK chooses to
make any such payment or to take or cause to be taken any such action, the
amount of such payment and the cost of such action shall become part of the
OBLIGATIONS, shall be payable upon demand and, until paid in full, shall bear
interest at the rate set forth in Section 7.09 hereof.
14.10 The BORROWER shall pay on demand all reasonable out-of-pocket costs
and expenses of every kind and nature, including reasonable attorneys' fees and
costs, incurred or expended by the BANK in connection with the preparation of
the FINANCING AGREEMENTS, the making of LOANS hereunder, the collection or sale
or attempted collection or sale of the COLLATERAL and the protection or
supervision thereof and the protection or enforcement of the BANK'S rights
hereunder. The BORROWER acknowledges that such supervision will include audits
of the BORROWER' business, records, and assets by employees, agents, or other
representatives of the BANK but the BORROWER shall not be required for to pay
for such audits unless undertaken after EVENT OF DEFAULT shall have occurred and
while the same shall be continuing.
14.12 THE BANK, and the BORROWER each irrevocably waive all right to a
trial by jury in any proceeding hereafter instituted by or against the BANK or
the BORROWER in respect of this Agreement or arising out of any FINANCING
AGREEMENTS.
ARTICLE XV
----------
CONDITIONS PRECEDENT
--------------------
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<PAGE>
15.01 Unless each of the following conditions are satisfied at the
CLOSING, and until each of the following conditions are satisfied, no new LOANS
or ADVANCES will be made, and the BANK shall have no obligation under this
Agreement:
(a) All instruments and documents required to be executed on or prior to
the CLOSING pursuant to the terms hereof shall have been duly executed
and delivered.
(b) The BANK shall hold a valid and perfected security interest in the
COLLATERAL subject to no other lien, charge, encumbrances or security
interest of any kind or nature except as otherwise explicitly provided
in this Agreement.
(c) The BANK shall have received from counsel to the BORROWER opinions
satisfactory in form and substance to the BANK.
(d) The BANK shall have received a certificate from the Clerk or other
appropriate recording officer of each of the BORROWER in form and
substance satisfactory to the BANK and its counsel, showing the
authority of the BORROWER to enter into and amend this Agreement and,
without limitation, the FINANCING AGREEMENTS, to perform the
OBLIGATIONS and the specific authority of the persons executing this
Agreement and all instruments and documents pursuant hereto so to
execute. The BANK shall have received any amendments, certified
copies of the Articles of Organization (or other charter documents)
and By-Laws of the BORROWER since the same were last submitted to it.
(e) All policies of insurance described herein or in any other of the
FINANCING AGREEMENTS, have been obtained, be in full force and effect,
and shall show BANK as an additional loss payee. The BANK shall have
received a binder with respect to each such policy showing compliance
herewith. Such policies shall not be cancelled except upon thirty
(30) days advance written notice to BANK.
(f) The BANK shall have received such certificates from public officials
with respect to the corporate existence of each of the corporations
constituting the BORROWER and its qualification to do business and
good standing, as the BANK may reasonably require.
(f) BANK shall have received such other and further documents and
instruments as BANK may reasonably require.
ARTICLE XVI
-----------
CLOSING
-------
16.01 All instruments and documents then to be executed pursuant hereto
were executed and delivered at a CLOSING held on March 4, 1998 at the offices of
Goldstein & Manello, P.C., 265 Franklin Street, Boston, Massachusetts.
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<PAGE>
ARTICLE XVII
------------
TERMINATION
-----------
17.01 Upon the TERMINATION DATE, all obligations of BANK to make ADVANCES
shall terminate, and the CREDIT BALANCE shall become immediately due and payable
in full without notice or demand.
17.02 Notwithstanding the passage of the TERMINATION DATE, and the payment
of the CREDIT BALANCE, until all OBLIGATIONS shall have been fully paid,
performed and satisfied, all rights of BANK arising under this Agreement and
other FINANCING AGREEMENTS shall continue, and all obligations of BORROWER
arising under this Agreement and the other FINANCING AGREEMENTS shall continue.
17.03 BANK in its sole discretion, from time to time may extend the
TERMINATION DATE by written notice to BORROWER. BANK may condition any such
extension on such matters that it determines appropriate. BANK is in no way
obligated to extend or to consider extending the TERMINATION DATE.
ARTICLE XVIII
-------------
INCONSISTENCY IN FINANCING AGREEMENTS
-------------------------------------
18.01 In the event that in any provision of the other FINANCING
AGREEMENTS, is inconsistent with a provision of this Second Amended and Restated
Loan Agreement, then and in such event, the provisions of this instrument shall
control.
18.02 The existence of a provision in the other FINANCING AGREEMENTS which
are not present in this Second Amended and Restated Loan Agreement shall not be
deemed to be an inconsistency.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of
the date first above written.
DM MANAGEMENT COMPANY
By: /s/ Peter J. Tulp
------------------------------------
Peter J. Tulp, Corporate Controller
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Lori B. Leeth, SVP
------------------------------------
Lori B. Leeth, Senior Vice President
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<PAGE>
EXHIBIT 10.28
NEW BRIDGE NOTE
Boston, Massachusetts
$ 4,300,000.00 March 5, 1998
On or before December 31, 1998, the undersigned DM Management Company, for
value received, promises to pay to the order of Citizens Bank of Massachusetts
(hereinafter called the "Bank"), at its principal office at 28 State Street,
Boston, Massachusetts 02109, or such other location that the holder may specify
Four Million Three Hundred Thousand DOLLARS ($4,300,000.00)
with interest payable as hereafter set forth. This is the "New Bridge Note"
issued pursuant to the terms of a certain Second Amended and Restated Loan
Agreement dated as of the date hereof, by and between Bank and the undersigned,
as the same may further hereafter be amended or restated (the "Loan Agreement").
Interest shall accrue at the rate provided in the Loan Agreement for the
New Bridge Loan as defined therein and shall be paid monthly, in arrears, during
the term hereof commencing one (1) month from the date hereof and on the like
day of each month thereafter except all accrued but unpaid interest shall be due
and payable at maturity.
Overdue principal and overdue interest from time to time outstanding shall
bear interest in accordance with the terms of the Loan Agreement. If payment is
not made when due hereunder then, without limitation on any other right of the
Holder, there shall be a late charge as provided in the Loan Agreement.
If an "Event of Default" (as defined in the Loan Agreement) shall occur,
the entire unpaid principal balance of this note and all accrued and unpaid
interest may become or be declared due and payable without notice or demand, in
the manner and with the effect provided in the Loan Agreement.
Every maker, endorser and guarantor of this note, or the obligation
represented by this note, waives presentment, demand, notice, protest, and all
other demands or notices in connection with the delivery, acceptance,
endorsement, performance, default, or enforcement of this note, assents to any
and all extensions or postponements of the time of payment or any other
indulgence, to any substitution, exchange, or release of collateral, and/or to
the addition or release of any other party or person primarily or secondarily
liable, and generally waives all suretyship defenses and defenses in the nature
thereof.
The undersigned will pay all reasonable out-of-pocket costs and expenses of
collection, including reasonable attorneys' fees, incurred or paid by the holder
in enforcing this note or the obligations hereby evidenced, to the extent
permitted by law.
No delay or omission of the holder in exercising any right of remedy
hereunder shall constitute a waiver of any such right or remedy.
<PAGE>
The holder need not enter payments of principal or interest upon this note,
but may maintain a record thereof on a separate ledger maintained by the holder.
The word "holder" as used in this note shall mean the payee or indorsee of
this note who is in possession of it or the bearer if this note is at the time
payable to bearer.
This note shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts and shall take effect as an instrument under
seal.
WITNESS: DM MANAGEMENT COMPANY
/s/ Arlene L. Bender By: /s/ Peter J. Tulp
- --------------------------------- -----------------------------------
Peter J. Tulp, Corporate Controller
<PAGE>
EXHIBIT 10.29
SHORT TERM REVOLVING NOTE
Boston, Massachusetts
$17,000,000.00 March 5, 1998
On or before December 31, 1998, the undersigned DM Management Company, for
value received, promises to pay to the order of Citizens Bank of Massachusetts
(hereinafter called the "Bank"), at its principal office at 28 State Street,
Boston, Massachusetts 02109, or such other location that the holder may specify
Seventeen Million DOLLARS ($17,000,000.00)
with interest payable as hereafter set forth. This is the "Short Term Revolving
Note" issued pursuant to the terms of a certain Second Amended and Restated Loan
Agreement dated March 4, 1998, by and between Bank and the undersigned, as the
same may further hereafter be amended or restated (the "Loan Agreement"),
payment of which is secured by an Assignment of Certificate of Deposit of even
date herewith and otherwise as provided in the Loan Agreement.
Interest shall accrue at the rate provided in the Loan Agreement for the
Short Term Revolving Loan as defined therein and shall be paid monthly, in
arrears, during the term hereof commencing one (1) month from the date hereof
and on the like day of each month thereafter except all accrued but unpaid
interest shall be due and payable at maturity.
Overdue principal and overdue interest from time to time outstanding shall
bear interest in accordance with the terms of the Loan Agreement. If payment is
not made when due hereunder then, without limitation on any other right of the
Holder, there shall be a late charge as provided in the Loan Agreement.
If an "Event of Default" (as defined in the Loan Agreement) shall occur,
the entire unpaid principal balance of this note and all accrued and unpaid
interest may become or be declared due and payable without notice or demand, in
the manner and with the effect provided in the Loan Agreement.
Every maker, endorser and guarantor of this note, or the obligation
represented by this note, waives presentment, demand, notice, protest, and all
other demands or notices in connection with the delivery, acceptance,
endorsement, performance, default, or enforcement of this note, assents to any
and all extensions or postponements of the time of payment or any other
indulgence, to any substitution, exchange, or release of collateral, and/or to
the addition or release of any other party or person primarily or secondarily
liable, and generally waives all suretyship defenses and defenses in the nature
thereof.
The undersigned will pay all reasonable out-of-pocket costs and expenses of
collection, including reasonable attorneys' fees, incurred or paid by the holder
in enforcing this note or the obligations hereby evidenced, to the extent
permitted by law.
<PAGE>
No delay or omission of the holder in exercising any right of remedy
hereunder shall constitute a waiver of any such right or remedy.
The holder need not enter payments of principal or interest upon this note,
but may maintain a record thereof on a separate ledger maintained by the holder.
The word "holder" as used in this note shall mean the payee or indorsee of
this note who is in possession of it or the bearer if this note is at the time
payable to bearer.
This note shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts and shall take effect as an instrument under
seal.
WITNESS: DM MANAGEMENT COMPANY
/s/ Arlene L. Bender By: /s/ Peter J. Tulp
- --------------------------------- -----------------------------------
Peter J. Tulp, Corporate Controller
<PAGE>
EXHIBIT 10.30
SECOND AMENDMENT TO SECURITY AGREEMENT
Reference is made to a certain Security Agreement dated June 5, 1997 as
amended by a certain First Amendment to Security Agreement dated October 31,
1997 (the "Security Agreement") by and between DM Management Company, a Delaware
Corporation, (the "Debtor") and Citizens Bank of Massachusetts (the "Secured
Party").
In consideration of Secured Party extending additional credit to the Debtor
in the original principal amount of Seventeen Million Dollars ($17,000,000.00)
and otherwise agreeing to further amend the Loan Agreement dated June 5, 1997 at
the request of the Debtor, by a certain Second Amended and Restated Loan
Agreement of even date herewith (the "Loan Agreement"), which the Secured Party
is unwilling to do unless, among other things paragraph 1(e) of the Security
Agreement is amended, among other things, to confirm that it secures (i) payment
and performance of the Loan Agreement as so further amended, (ii) payment and
performance of the "New Bridge Note" as defined in the Loan Agreement, and
payment and performance of the "Short Term Revolving Note" and "Assignment of
Certificate of Deposit" as defined in the Loan Agreement, as well as certain
other instruments amended as of this date. The Debtor and the Secured Party
hereby agree that the Security Agreement be and the same hereby is, amended by
deleting Paragraph 1 thereof and replacing it with the following:
The Debtor hereby grants to Secured Party, a security interest in all
of the Debtor's present and future right, title and interest in and to
the property described on Exhibit A (all of which is hereinafter
called the "Collateral") to secure (a) the full payment of the sum of
$8,500,000.00, or such lesser amount which shall have been advanced,
together with interest and other charges, all as provided in a certain
"Revolving Note" of the Debtor to the order of the Secured Party dated
June 5, 1997, which note was amended and replaced by a certain
"Replacement Revolving Note" dated October 31, 1997 in the face amount
of $8,500,000.00, all as provided in a certain Loan Agreement dated
June 5, 1997 as amended and restated as of March 5, 1998 (the "Loan
Agreement") together with all substitutions or replacements therefor
and all renewals or extensions thereof and the full performance of all
other obligations of the maker of said note as provided therein; (b)
the full payment of the sum of $1,650,000.00, as provided in a certain
"Real Estate Note" (as defined in the Loan Agreement) of the Debtor to
the order of the Secured Party dated July 30, 1997, executed and
delivered by the Debtor to the Secured Party, pursuant to the Loan
Agreement in the face amount of $1,650,000.00, with interest and other
charges as provided therein, together with all substitutions and
replacements therefor and all renewals and extensions thereof and the
full performance of all other obligations of the maker of said note as
provided therein and under a certain Real Estate Mortgage (as defined
in the Loan Agreement) dated as of the date hereof executed and
delivered in connection therewith; (c) the full payment of the sum of
$3,600,000.00, with interest and other charges, all as provided in a
certain "Term Note" (as defined in the Loan Agreement) of the Debtor
to the order of the Secured Party dated June 5, 1997, executed and
delivered by the Debtor to the Secured Party pursuant to the Loan
Agreement, in the original face amount of $3,600,000.00, together with
all substitutions or replacements therefor and all renewals or
extensions thereof and the full
<PAGE>
performance of all other obligations of the maker of said note as
provided therein; (d) the full payment of the sum of $4,300,000.00,
with interest and other charges, all as provided in a certain "New
Bridge Note" (as defined in the Loan Agreement), of the Debtor to the
order of the Secured Party dated as of the date hereof, executed and
delivered by the Debtor to the Secured Party pursuant to the Loan
Agreement, in the original face amount of $4,300,000.00, together with
all substitutions and replacements therefor and all renewals and
extensions thereof and the full performance of all other obligations
of the maker of said note as provided therein and under a certain
"Bridge Mortgage" (as defined in the Loan Agreement) dated July 31,
1997; (e) the full payment of the sum of $17,000,000.00 together with
interest and other charges, all as provided in a certain "Short Term
Revolving Note" (as defined in the Loan Agreement) of the Debtor to
the order of the Secured Party dated of even date herewith pursuant to
the Loan Agreement in the face amount of $17,000,000.00 and all
renewals and extensions thereof and the full performance of all other
obligations of the maker of said note as provided therein and in a
certain "Assignment of Certificate of Deposit" dated as of the date
hereof executed and delivered in connection therewith; (f) the full
payment and performance by the Debtor of all other indebtedness,
obligations and liabilities of the Debtor to the Secured Party under
the Loan Agreement, direct or indirect, absolute or contingent, now
existing or hereafter arising (including, without limitation, all
"Obligations", as defined in the Loan Agreement, whether or not
specifically referred to herein), which Loan Agreement provides, among
other things, for the establishment of a "Revolving Loan" (as defined
therein) and for the issuance of Letters of Credit pursuant to "L/C
Applications" (as defined therein) therein pursuant to which
"Advances" (as defined therein) may be made from time to time, and for
repayment of all or a portion of the outstanding balance of such
Advances together with interest and other charges, all in accordance
therewith, and for the grant of "Loans" (as defined therein) as
provided therein; and (g) the full payment and performance of all
covenants and agreements herein contained or referred to on the part
of the Debtor to be kept and performed (collectively hereafter
referred to as "Obligations").
In all other respects, the Security Agreement shall remain in full force
and effect in accordance with its terms.
Executed as an instrument under seal as of the 5th day of March, 1998.
DM MANAGEMENT COMPANY
/s/ Arlene L. Bender /s/ Peter J. Tulp
- ---------------------------- -----------------------------------
Witness By: Peter J. Tulp
Corporate Controller
<PAGE>
Agreed: Citizens Bank of Massachusetts
By: /s/ Lori B. Leeth, SVP
-------------------------------------
Lori B. Leeth, Senior Vice President
67343@CD/(1) 2nd Amend. to Sec. Agree. - D2
<PAGE>
EXHIBIT 10.31
ASSIGNMENT OF CERTIFICATE OF DEPOSIT
------------------------------------
Date: March 5, 1998
Certificate of Deposit Issued by: Citizens Bank of Massachusetts
Certificate Number: 9802250739
Face Amount: $18,327,632.99
Date of Issuance: February 25,1998
Maturity Date: January 5, 1999
1. GRANT OF SECURITY INTEREST. In consideration of Citizens Bank of
Massachusetts (the "Bank") having made or making loans, advances or other
financial accommodations to the undersigned debtor (the "Debtor"), pursuant to a
certain Second Amended and Restated Loan Agreement dated March 5, 1998 (the
"Loan Agreement"), the Debtor does hereby assign and transfer to and pledge with
and to the Bank and grant a security interest in, all right, title and interest
of the Debtor in and to the certificate of deposit identified above (the
"Certificate"), together with any and all interest due or to become due on the
Certificate, and all proceeds thereof including, without limitation, each and
every new certificate which may be issued to the Debtor in renewal or
replacement of the Certificate (all of the foregoing being hereinafter referred
to as the "Collateral"). This assignment is made as and shall constitute
additional collateral security for any and all indebtedness and liabilities of
any kind and nature of the Debtor to the Bank under the Loan Agreement, however
evidenced, whether now existing or hereafter arising, direct or indirect,
absolute or contingent or joint or several including without limitation the
"Obligations" described in Exhibit A hereto (the "Obligations," which term shall
include all expenses, including without limitation, reasonable attorneys' fees,
incurred by the Bank in enforcing or collecting any of the Obligations).
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Debtor represents
and warrants that the Debtor is the owner of the Collateral free and clear of
all liens and encumbrances of any nature whatsoever and that the Debtor has full
power, right and authority to execute and deliver this assignment. The Debtor
covenants and agrees to take all such steps deemed reasonable or necessary by
the Bank to maintain, continue or perfect the interest of the Bank in the
Collateral and any proceeds thereof and in the event of any erroneous release of
any Collateral, to restore or redeposit such Collateral and the security
interest of the Bank therein.
3. EVENTS OF DEFAULT. The occurrence of an Event of Default as
defined in the Loan Agreement shall constitute an "Event of Default" under this
assignment.
4. REMEDIES. Upon and after the occurrence of an Event of Default
and while it is continuing, the Bank shall have the following rights and
remedies in addition to any and all the rights and remedies it may have under
the Loan Agreement and instruments executed in connection therewith: (a) the
right to set off and apply the Collateral to the payment of the Obligations and
to withdraw funds for such purpose at such time and in such amounts as it shall
in its discretion determine, all without notice to or demand of any
<PAGE>
kind on the Debtor; and (b) any and all other rights and remedies of a secured
party under the Uniform Commercial Code in effect in the state where the Bank is
headquartered or any other applicable law or at equity, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by law,
and in addition to any other rights and remedies contained in this assignment or
in any other agreement, document or instrument evidencing, governing or securing
the Obligations.
5. POWER OF ATTORNEY. The Debtor hereby constitutes and appoints the
Bank the true and lawful attorney of the Debtor, with full power of substitution
after an Event of Default has occurred and while it is continuing, to take any
and all actions which the Bank may deem necessary or appropriate to protect, and
while it is continuing, preserve or perfect the right, title and interest of the
Bank hereunder, and without limiting the foregoing, the Bank shall have and is
hereby given full power and authority to transfer the Collateral into the name
of the Bank or its nominee.
6. MISCELLANEOUS. This assignment, all representations and
warranties, and all rights and powers herein contained or resulting herefrom are
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. This assignment shall be governed by the
laws of the state in which the Bank is headquartered. This assignment shall be
the joint and several obligation of each person or entity signing below as
Debtor and each provision of this assignment shall apply to each and all jointly
and severally and to the property and Obligations of each.
IN WITNESS WHEREOF, the Debtor and the Bank have executed this
assignment as a sealed instrument as of the date first written above.
WITNESS: DEBTOR:
DM MANAGEMENT COMPANY
/s/ Arlene L. Bender By: /s/ Peter J. Tulp, Controller
- ------------------------- -------------------------------------
Peter J. Tulp, Controller
BANK:
CITIZENS BANK OF MASSACHUSETTS
/s/ Richard J. Snyder By: /s/ Lori B. Leeth, SVP
- ------------------------- -------------------------------------
Lori B. Leeth, Senior Vice President
M067343@CD/Assign Cert of Deposit D2
<PAGE>
EXHIBIT A
(a) the full payment of the sum of $8,500,000.00, or such lesser amount which
shall have been advanced, together with interest and other charges, all as
provided in a certain "Revolving Note" of the Debtor to the order of the Bank
dated June 5, 1997, which Note was amended and replaced by a certain Replacement
Revolving Note dated October 31, 1997 in the face amount of $8,500,000.00 all as
provided in a certain Loan Agreement dated June 5, 1997, as amended and restated
as of the date hereof (the "Loan Agreement") together with all substitutions or
replacements therefor and all renewals or extensions thereof and the full
performance of all other obligations of the maker of said note as provided
therein; (b) the full payment of the sum of $1,650,000.00, as provided in a
certain "Real Estate Note" (as defined in the Loan Agreement) of the Debtor to
the order of the Bank, dated June 30, 1997, executed and delivered by the Debtor
to the Bank, pursuant to the Loan Agreement in the face amount of $1,650,000.00,
with interest and other charges as provided therein, together with all
substitutions and replacements therefor and all renewals and extensions thereof
and the full performance of all other obligations of the maker of said note as
provided therein and a certain Second Amendment to Mortgage dated as of the date
hereof executed and delivered in connection therewith; (c) the full payment of
the sum of $3,600,000.00, with interest and other charges, all as provided in a
certain "Term Note" (as defined in the Loan Agreement) of the Debtor to the
order of the Bank, dated June 5, 1997, executed and delivered by the Debtor to
the Bank pursuant to the Loan Agreement, in the original face amount of
$3,600,000.00, together with all substitutions or replacements therefor and all
renewals or extensions thereof and the full performance of all other obligations
of the maker of said note as provided therein; (d) the full payment of the sum
of Four Million Three Hundred Thousand Dollars ($4,300,000.00) together with
interest and other charges, all as provided in a certain "New Bridge Note" (as
defined in the Loan Agreement) of the Debtor at the order of the Bank dated as
of the date hereof, executed and delivered by the Debtor to the Bank pursuant to
the Loan Agreement in the original face amount of Four Million Three Hundred
Thousand Dollars ($4,300,000.00) together with all substitutes or replacements
therefore and all renewals and extensions thereof and the full performance of
all other obligations of the maker of said note as provided therein; (e) the
full payment of the sum of $17,000,000.00 together with all interest and other
charges all as provided in a certain "Short Term Revolving Note" (as defined in
the Loan Agreement) of the Debtor to the order of the Bank dated March 4, 1998
pursuant to the Loan Agreement in the face amount of $17,000,000.00, and all
renewals and extensions thereof and the full performance of all other
Obligations of the maker of said Note and in a certain "Assignment of
Certificate of Deposit dated as of the date hereof and executed and delivered in
connection therewith; (f) the full payment and performance by the Debtor of all
indebtedness, obligations and liabilities of the Debtor to the Bank under the
Loan Agreement, direct or indirect, absolute or contingent, now existing or
hereafter arising (including, without limitation, all "Obligations", as defined
in the Loan Agreement whether or not specifically referred to herein) which Loan
Agreement provides, among other things, for the establishment of a "Revolving
Loan" (as defined therein) and for the issuance of Letter of Credit pursuant to
L/C Appreciations as defined therein, therein pursuant to which "Advances" (as
defined therein) may be made from time to time, and for repayment of all or a
portion of the outstanding balance of such Advances together with interest and
other charges all in accordance therewith and for the grant of "Loans" (as
defined therein) as provided therein; (g) the full payment and performance of
all covenants and agreements herein contained or referred to on the part of the
Debtor to be kept and performed (collectively hereafter referred to as
"Obligations").
M067343@CD/Assign Cert of Deposit D2
<PAGE>
EXHIBIT 10.32
AMENDED BRIDGE MORTGAGE
-----------------------
Reference is made to a certain mortgage (the "Mortgage") made the 31st day
of October, 1997, recorded with Belknap County Registry of Deeds at Book 1442,
Page 273 by and between DM Management Company, a Delaware corporation with a
principal office at 25 Recreation Park Drive, Hingham, Massachusetts 02043
(herein called "Mortgagor"), and Citizens Bank of Massachusetts with a principal
place of business at 28 State Street, Boston, Massachusetts 02109 (herein called
"Mortgagee" which expression shall include its successors and assigns).
WITNESSETH:
For good and valuable consideration paid by each of the parties to the
other, and in further consideration of the mutual covenants and agreements
herein contained, it is agreed by and between Mortgagor and Mortgagee that the
Mortgage is hereby amended and restated as follows:
The Mortgagor hereby grants to the "Mortgagee", with mortgage covenants, the
real property described on Exhibit A (hereinafter called the "Mortgaged
Premises") to secure (a) the full payment of the sum of $8,500,000.00, or such
lesser amount which shall have been advanced, together with interest and other
charges, all as provided in a certain "Revolving Note" of the Mortgagor to the
order of the Mortgagee dated June 5, 1997, which Note was amended and replaced
by a certain Replacement Revolving Note dated October 31, 1997 in the face
amount of $8,500,000.00 all as provided in a certain Loan Agreement dated June
5, 1997, as amended and restated as of March 5, 1998 (the "Loan Agreement")
together with all substitutions or replacements therefor and all renewals or
extensions thereof and the full performance of all other obligations of the
maker of said note as provided therein; (b) the full payment of the sum of
$1,650,000.00, as provided in a certain "Real Estate Note" (as defined in the
Loan Agreement) of the Mortgagor to the order of the Mortgagee, dated July 30,
1997, executed and delivered by the Mortgagor to the Mortgagee, pursuant to the
Loan Agreement in the face amount of $1,650,000.00, with interest and other
charges as provided therein, together with all substitutions and replacements
therefor and all renewals and extensions thereof and the full performance of all
other obligations of the maker of said note as provided therein and a certain
"Real Estate Mortgage" (as defined in the Loan Agreement) executed and delivered
in connection therewith; (c) the full payment of the sum of $3,600,000.00, with
interest and other charges, all as provided in a certain "Term Note" (as defined
in the Loan Agreement) of the Mortgagor to the order of the Mortgagee, dated
June 5, 1997, executed and delivered by the Mortgagor to the Mortgagee pursuant
to the Loan Agreement, in the original face amount of $3,600,000.00, together
with all substitutions or replacements therefor and all renewals or extensions
thereof and the full performance of all other obligations of the maker of said
note as provided therein; (d) the full payment of the sum of $4,300,000.00 with
interest and other charges, all as provided in a certain "New Bridge Note" (as
defined in the Loan Agreement) of the Mortgagor at the order of the Mortgagee
dated as of March 5, 1998, executed and delivered by the Mortgagor to the
Mortgagee pursuant to the Loan Agreement in the original face amount of Four
Million Three Hundred Thousand Dollars ($4,300,000.00) together with all
substitutions or replacements therefor and all renewals and extensions thereof
and the full performance of all other obligations of the maker of said note as
provided therein; (e) the full payment of the sum of $17,000,000.00 as provided
in a certain "Short Term Revolving Note" (as defined in the Loan Agreement) of
the Mortgagor to the order of the Mortgagee dated March 5, 1998 pursuant to the
Loan Agreement in the face amount of $17,000,000.00 with interest and other
charges as provided therein, and all renewals and extensions thereof and the
full performance of all other obligations of the maker of said note and a
certain Assignment of Certificate of Deposit dated as of March 5, 1998 executed
and delivered in connection therewith; (f) the full payment and performance by
the Mortgagor of all indebtedness, obligations and liabilities of the Mortgagor
to the Mortgagee under the Loan Agreement, direct or indirect, absolute or
contingent, now existing or hereafter arising (including, without limitation,
all "Obligations", as defined in the Loan Agreement), which Loan Agreement
provides, among other things, for the establishment of a "Revolving Loan" (as
defined therein) and for
<PAGE>
the issuance of Letter of Credit pursuant to L/C Applications as defined
therein, therein pursuant to which "Advances" (as defined therein) may be made
from time to time, and for repayment of all or a portion of the outstanding
balance of such Advances together with interest and other charges all in
accordance therewith and for the grant of "Loans" (as defined therein) as
provided therein; (g) the full payment and performance of all covenants and
agreements herein contained or referred to on the part of the Mortgagor to be
kept and performed (collectively hereafter referred to as "Obligations").
Together with all furnaces, machinery, articles, fixtures and equipment
thereon and used in connection with the occupation, maintenance, use or
operation thereof including, without limitation, heaters, gas and electric
fixtures, screens, screen doors, shades, storm doors and windows, awnings,
garbage incinerator, receptacles and disposals, refrigerators and refrigeration
equipment, ventilating and air conditioning equipment, built in cases, cabinets,
counters and drawers, door bell and alarm systems, portable or sectional
buildings, and all other fixtures or equipment of whatever kind or nature at
present contained in or on the Mortgaged Premises, or placed therein prior to
the full payment and discharge of this mortgage including without limitation
together with the proceeds of the foregoing.
Together with all of Mortgagor's right, title and interest in and to all
leases, tenancies and occupancies (the "Leases") whether written or not, which
have been entered into, or which may at any time in the future be entered into
regarding the Mortgaged Premises, together with all rent, income and profit
arising out of the Leases and all security and other deposits held by or held on
behalf of Mortgagor.
TO HAVE AND TO HOLD said granted Mortgaged Premises with all the privileges
and appurtenances to the same belonging to the said Mortgagee and its successors
and assigns as its own property for its own use and benefit forever. The
Mortgagor and Mortgagor's heirs, executors, administrators, successors and
assigns do hereby covenant, grant and agree to, and with the said Mortgagee, and
its successors and assigns, that until the delivery hereof Mortgagor is the
lawful owner of said Mortgaged Premises and is possessed thereof in Mortgagor's
own rights and fee simple; and that Mortgagor has full power and authority to
grant and convey the same in the manner aforesaid; that the said Mortgaged
Premises are free and clear of all and every encumbrance other than those shown
on Exhibit "A", and that Mortgagor will, and Mortgagor's heirs, executors,
administrators, successors and assigns shall and will warrant and defend the
same to the Mortgagee, and its successors and assigns, against the lawful claims
and demands of any person or persons whomsoever.
Provided, nevertheless, that if the said Mortgagor, and Mortgagor's heirs,
executors, administrators, successors and assigns shall faithfully perform the
following covenants and conditions, this mortgage shall be void, and otherwise
to remain in full force.
The Mortgagor for itself and Mortgagor's heirs, executors, administrators,
successors and assigns covenants and agrees as follows:
All Obligations shall be fully and timely kept and performed.
Mortgagor will pay all taxes, assessments, and other governmental or
municipal charges, fines or impositions arising in connection with the Mortgaged
Premises, and in default thereof the Mortgagee may pay the same.
That Mortgagor will keep the Mortgaged Premises above conveyed in good
order and condition and will not permit any waste thereof, reasonable wear and
tear excepted.
-2-
<PAGE>
Mortgagor will keep the structures, fixtures, and improvements now existing
or hereafter erected or situated on the Mortgaged Premises insured against loss
by fire and other hazards, casualties and contingencies, as Mortgagee may, from
time to time, require, said insurance to be placed with such company(ies) and be
for such periods and in such amounts as may be required by the Mortgagee, all
such insurance policies to be deposited with, and payable in case of loss to
Mortgagee, subject only to the rights of the holders of those mortgages, if any,
shown on Exhibit "A" hereto, hereby granting to Mortgagee in the event of
default authorization as attorney irrevocable of the Mortgagor to cancel such
insurance and to retain the return premium thereof and to transfer such
insurance to any person or persons claiming title to the Mortgaged Premises or
any part thereof by virtue of foreclosure proceedings or otherwise.
The Mortgagor covenants to cause, at the request of the Mortgagee, the
Mortgagee to be named as an additional insured on any liability insurance policy
maintained in respect to the Mortgaged Premises and further covenants to effect
such liability insurance at the request of the Mortgagee, such insurance to be
on such terms and in such form and for such periods and amounts as the Mortgagee
shall, from time to time, approve or require.
The Mortgagor covenants, upon demand by the Mortgagee, to make equal monthly
payments to the Mortgagee sufficient to amortize the amount (estimated by the
Mortgagee) of all taxes and assessments laid against the Mortgaged Premises,
within a period ending one month prior to the due date of such taxes and
assessments. The Mortgagee shall hold such monthly payments to pay such taxes
and assessments when due and payable, and in the event of the foreclosure of
this mortgage, all such payments shall be credited to the amount of the
principal obligations remaining unpaid to the extent that they have not been
used for the payment of taxes and assessments as provided herein. So long as
Mortgagor shall make monthly payments of such taxes to any mortgagee whose
mortgage is prior in right to the mortgage herein granted, the covenant of the
Mortgagor with respect to said monthly payments of taxes shall be deemed to have
been performed.
That if the Mortgagor fails to make any payment provided for in the
documents, instruments or agreements evidencing the Obligations, including
without limitation, this Mortgage Deed (hereinafter, collectively, the
"Instruments"), for taxes, insurance premiums, repair of the Mortgaged Premises,
or otherwise, then the Mortgagee may pay the same, and all sums so advanced,
with interest thereon at the same rate as then prevailing under the Loan
Agreement, from the date of such advance, shall be added to the principal of the
Obligations, and shall be secured hereby;
That in the event the said Mortgaged Premises or any part thereof shall be
taken or condemned for public or quasi-public purposes or by the proper
authority, the Mortgagor shall have no claim against the award for damages or be
entitled to any portion of the award until the Obligations have been paid and
performed in full, and all rights to damages of the Mortgagor are hereby
assigned to the Mortgagee to the extent of any such Obligations that remain
unpaid, the Mortgagor, however, having the right to appeal such awards in the
Courts of competent jurisdiction;
That the Mortgagor shall not from this time forward convey or permit the
transfer of the Mortgaged Premises or the structures or improvements thereon, or
any interest therein, (legal or equitable), without the prior written consent of
the Mortgagee;
That if there shall be any default on any of the terms, conditions, or
covenants of the Instruments, all sums due the Mortgagee by the Mortgagor shall
at the option of the Mortgagee
-3-
<PAGE>
become immediately due and payable, and the Mortgagee or its assigns shall have
the STATUTORY POWER OF SALE.
The Obligations which this Mortgage Deed secures may also be secured by
other security documents and agreements and the Mortgagee shall have the
absolute right, in its sole discretion, to determine which rights, security
liens, and security interests it shall at any time pursue or take any action in
respect of, without in any way modifying or affecting any rights thereunder.
This mortgage is upon the STATUTORY CONDITIONS, for any breach of which the
Mortgagee shall have the STATUTORY POWER OF SALE.
The Mortgagor represents that to the best of Mortgagor's knowledge and
belief neither the Mortgagor nor any person for whose conduct the Mortgagor is
responsible ever:
(i) owned, occupied, or operated a site or vessel on which any
hazardous material or oil was or is stored (except if such storage was or is
in compliance with all laws, ordinances, and regulations pertaining thereto)
transported, or disposed of (the term site, vessel, and hazardous material
respectively being used in this Section with the meaning given those terms
under New Hampshire R.S.A. l47-B as amended);
(ii) directly or indirectly transported, or arranged for the
transport, of any hazardous material or oil (except if such transportation
was or is in compliance with all laws, ordinances and regulations pertaining
thereto);
(iii) caused or was legally responsible for any release, or threat of
release, of any hazardous material or oil; or
(iv) received notification from any federal, state, or other
governmental authority of: any potential, known, or threat of release of any
hazardous material or oil on or from the Mortgaged Premises or any other
site or vessel owned, occupied, or operated either by the Mortgagor or any
person for whose conduct the Mortgagor is responsible or whose liability may
result in a lien on the Mortgaged Premises; or the incurrence of any expense
of loss by such governmental authority, or by any other person, in
connection with the assessment, containment, or removal of any release, or
threat of release, of any hazardous material or oil from the Mortgaged
Premises or any such site or vessel.
The Mortgagor represents and warrants that to the best of Mortgagor's
knowledge and belief no hazardous material or oil was ever, or is now, stored on
(except in compliance with all laws, ordinances, and regulations pertaining
thereto), transported, or disposed of on the Mortgaged Premises.
The Mortgagor shall:
(i) not store (except in compliance with all laws, ordinances, and
regulations pertaining thereto), or dispose of any hazardous material or oil
on the Mortgaged Premises, or on any other site or vessel owned, occupied,
or operated either by the Mortgagor, or by any person for whose conduct
Mortgagor is responsible;
(ii) neither directly or indirectly transport or arrange for the
transport of any hazardous material or oil (except in compliance with all
laws, ordinances, and regulations pertaining thereto);
-4-
<PAGE>
(iii) take all such action, including, without limitation, the
conducting of engineering tests (at the sole expense of the Mortgagor) (x)
to confirm that no hazardous material or oil is or ever was stored on the
Mortgaged Premises (y) to assess, contain, and remove any such hazardous
material or oil on the Mortgaged Premises, and (z) to qualify for any
insurance program or safe harbor which may be available under said R.S.A.
l47-B, as amended; and
(iv) provide the Mortgagee with written notice: (x) upon the
Mortgagor's obtaining knowledge of any potential or known release, or threat
of release, of any hazardous material or oil at or from the Mortgaged
Premises, or any other site or vessel owned, occupied or operated by the
Mortgagor or by any person for whose conduct the Mortgagor is responsible or
whose liability may result in a lien on the Premises; (y) upon the
Mortgagor's receipt of any notice to such effect from any federal, state, or
other governmental authority; and (z) upon the Mortgagor's obtaining
knowledge of any incurrence of any expense or loss by such governmental
authority in connection with the assessment, containment, or removal of any
hazardous material or oil for which expense or loss the Mortgagor may be
liable or for which expense a lien may be imposed on the Mortgaged Premises.
The Mortgagor shall indemnify, defend, and hold the Mortgagee harmless of
and from any claim brought or threatened against the Mortgagee by any person,
entity, or governmental agency or authority on account of the failure by the
Mortgagor to comply with the terms and provisions hereof (each of which may be
defended, compromised, settled, or pursued by the Mortgagee with counsel of the
Mortgagor's selection, but at the expense of Mortgagor). The within
indemnification shall survive payment of the Obligations and/or termination,
release, or discharge executed by the Mortgagee in favor of the Mortgagor.
The obligations of Mortgagor hereunder, if more than one, shall be joint and
several.
If any provision of this Mortgage or portion of such provision or the
application thereof to any person or circumstance shall to any extent be held
invalid or unenforceable, the remainder of this Mortgage (or the remainder of
such provision) and the application thereof to other persons or circumstances
shall not be affected thereby.
The use of the singular herein shall include the plural, and the use of the
plural shall include the singular, and the use of the masculine gender shall
include the feminine and the use of the feminine shall include the masculine.
This agreement shall be governed and construed according to the laws of the
State of New Hampshire.
This agreement shall bind Mortgagor and Mortgagor's heirs, executors,
administrators, successors and assigns and shall inure to the benefit of the
Mortgagee and its successors and assigns.
-5-
<PAGE>
IN WITNESS WHEREOF, Mortgagor has caused this instrument to be executed on
this 5th day of March, 1998.
Witness DM MANAGEMENT COMPANY
/s/ Arlene L. Bender /s/ Peter J. Tulp
- ----------------------- By:------------------------------------
Peter J. Tulp, Corporate Controller
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF SUFFOLK March 5, 1998
On this 5th day of March, 1998, before me, personally appeared the
undersigned officer, Peter J. Tulp, known to me (or satisfactorily proven) to be
the person whose name is subscribed to the foregoing written instrument as the
Corporate Controller of DM Management Company in its name and on its behalf and
acknowledged that they executed the same for the purposes therein contained.
IN WITNESS WHEREFORE I have hereunto set my hand and official seal.
/s/ Donna M. Barone
---------------------------------
Notary Public
My Commission Expires: 8-6-2002
-----------
-6-
<PAGE>
Exhibit A to Amended Bridge Mortgage
A certain tract or parcel of land, together with any buildings or other
improvements thereon, situated in Tilton, Belknap County, New Hampshire as shown
on a plan entitled "Plan of Land Prepared for Pike Industries, Inc. (Tilcon
Site)" dated August 21, 1997 by Yerkes Surveying Consultants, PO box 38,
Laconia, NH 03247 and recorded at the Belknap County Registry of Deeds in Drawer
L 28, Plan #37 and #38.
Beginning at a point at the intersection of northwesterly side of Route 3 &
11 and the Gulf Brook; thence by said sideline of the Route 3 & 11 highway
(1) S 51 degrees 11 feet 06 inches W a distance of 244.86 feet to a
concrete bound found; thence by said highway
(2) S 55 degrees 52 feet 42 inches W 180.37 feet to a point; thence by
land of the State of New Hampshire
(3) N 78 degrees 08 feet 07 feet W 228.79 feet to a point; thence
continuing by land of the State of New Hampshire
(4) S 07 degrees 56 feet 22 inches E 196.00 feet to a concrete bound found
at the sideline of Route 3 & 11; thence by said highway
(5) S 51 degrees 13 feet 38 inches W 262.35 feet to a concrete bound found
at the intersection of Route 3 & 11 and the north bound ramp of I-93;
thence by said I-93 the following (20) courses and distances
(6) N 38 degrees 50 feet 34 inches W 273.45 feet to a concrete bound
found; thence
(7) N 77 degrees 28 feet 45 inches W 482.60 feet to a concrete bound
found; thence
(8) N 63 degrees 20 feet 19 inches W 226.27 feet to a concrete bound
found; thence
(9) N 28 degrees 04 feet 52 inches W 499.41 feet to a concrete bound
found; thence
(10) N 27 degrees 20 feet 49 inches W 500.33 feet to a concrete bound
found; thence
(11) N 16 degrees 46 feet 49 inches W 508.92 feet to a concrete bound
found; thence
(12) N 14 degrees 31 feet 44 inches E 885.88 feet to a concrete bound
found; thence
(13) N 58 degrees 29 feet 32 inches E 430.73 feet to a rebar set; thence
<PAGE>
(14) N 05 degrees 11 feet 37 inches W 335.93 feet to a rebar set; thence
(15) S 76 degrees 46 feet 28 inches W 55.90 feet to a concrete bound found;
thence
(16) N 85 degrees 46 feet 19 inches W 281.25 feet to a concrete bound
found; thence
(17) N 65 degrees 47 feet 59 inches W 1388.71 feet to a concrete bound
found; thence
(18) N 41 degrees 44 feet 06 inches W 514.22 feet to a concrete bound
found; thence
(19) N 28 degrees 08 feet 08 inches W 511.98 feet to a concrete bound
found; thence
(20) N 27 degrees 48 feet 17 inches W 198.24 feet to a point 1.12 feet from
a concrete bound found; thence
(21) Northwesterly by a curve to the right having a radius of 5629.58 feet
and an arc distance of 492.49 feet to a concrete bound found; thence
(22) N 21 degrees 27 feet 14 inches W 198.24 feet to a concrete bound
found; thence
(23) N 21 degrees 07 feet 23 inches W 1036.86 feet to a concrete bound
found; thence continuing on the same course;
(24) N 21 degrees 07 feet 23 inches W 999.62 feet to a concrete bound
found; thence continuing on the same course
(25) N 21 degrees 07 feet 23 inches W 47.26 feet to a rebar set at land of
the heirs of Ralph S. Moulton and the sideline of I-93; thence by said
Moulton land
(26) N 68 degrees 48 feet 03 inches E 1012.45 feet to a rebar set; thence
continuing on the same course by said Moulton land
(27) N 68 degrees 48 feet 03 inches E 344.08 feet to a rebar set; thence by
said Moulton land
(28) N 22 degrees 36 feet 57 inches W for a distance of 40.32 feet to the
thread of Gulf Brook at land of Cropsey; thence by land of said
Cropsey and Abbott
(29) Following the thread of Gulf Brook in a southeasterly direction to a
granite bound found at land of Oliver and Rhudick with a direct tie
course and distance of S 45 degrees 34 feet 17 inches E 1,475.44 feet;
thence by said Oliver and Rhudick land
(30) S 69 degrees 00 feet 44 inches W 807.78 feet to a rebar set; thence by
said Oliver and Rhudick land
(31) S 25 degrees 06 feet 16 inches E 831.31 feet to a rebar set; thence by
said Oliver and Rhudick land
(32) N 72 degrees 21 feet 04 inches E 864.90 feet to a rebar set; thence
by said Oliver and Rhudick land crossing the Gulf Brook
(33) N 64 degrees 49 feet 24 inches E 293.44 feet to a drill hole set at
the end of a stone wall; thence along the wall by land of Oliver and
Rhudick
(34) N 68 degrees 13 feet 03 inches E 165.80 feet to a point at the end of
a break in the wall; thence by Oliver and Rhudick land
(35) N 69 degrees 38 feet 02 inches E 305.25 feet to a wall intersection at
land of Oliver-Rhudick and land of Brown, thence along the wall by
said Brown land
(36) N 69 degrees 39 feet 44 inches E 189.44 feet to a point; thence along
the wall by said Brown land
(37) N 68 degrees 30 feet 48 inches E 334.01 feet to a rebar set at the end
of the stone wall on the westerly sideline of Route 132 known as
Sanborn, Road; thence along the sideline of Sanborn Road
2
<PAGE>
(38) S 19 degrees 32 feet 24 inches E 263.10 feet to a rebar set at land of
Morrison & Chabot; thence by said Morrison & Chabot land
(39) S 69 degrees 09 feet 11 inches W 525.00 feet to a drill hole set by a
stone wall; thence by said Morrison & Chabot land
(40) S 19 degrees 28 feet 35 inches E 247.81 feet to a drill hole set in a
stone wall at land of Crowley; thence the stone wall by land of
Crowley and crossing the Gulf Brook; thence
(41) S 69 degrees 22 feet 24 inches W 742.23 feet to a rebar set; thence by
said Crowley land; thence
(42) Southerly along the Gulf Brook 20 feet westerly of the west bank to an
iron pipe found with a direct tie course and distance of S 11 degrees
51 feet 27 inches E 1368.93 feet; thence by said Crowley land crossing
the Gulf Brook; thence
(43) N 69 degrees 10 feet 36 inches E 193.36 feet to a drill hole set at
the end of a stone wall by said Crowley land; thence
(44) N 69 degrees 11 feet 58 inches E 941.58 feet to a iron pipe found at
land of Doubleday; thence by said Doubleday land
(45) S 18 degrees 36 feet 24 inches E 170.08 feet to an iron pipe found;
thence by said Doubleday land
(46) S 03 degrees 44 feet 59 inches E 397.86 feet to an iron pipe found;
thence
(47) S 03 degrees 44 feet 59 feet E 1.80 feet to a point in a stone wall at
land of Vary;
(48) S 69 degrees 18 feet 15 inches W 143.85 feet to a point; thence along
the wall by said Vary land
(49) S 65 degrees 09 feet 43 feet W 36.02 feet to a drill hole set at a
wall intersection; thence along the wall by said Vary land the
following 6 courses and distances
(50) S 20 degrees 24 feet 55 inches E 77.02 feet to a point; thence
(51) S 29 degrees 40 feet 17 inches E 86.45 feet to a point; thence
(52) S 35 degrees 00 feet 12 inches E 45.21 feet to a point; thence
(53) S 57 degrees 59 feet 06 inches E 123.40 feet to a point; thence
(54) N 70 degrees 22 feet 25 inches E 55.25 feet to a corner of stone
walls; thence
(55) S 25 degrees 23 feet 01 inches E 279.89 feet to a rebar set at a wall
intersection at land of the State of New Hampshire; thence by said
State of New Hampshire land
(56) S 66 degrees 06 feet 34 inches W 50.17 feet to a drill hole set;
thence by said State of New Hampshire land
(57) S 21 degrees 06 feet 31 inches E 95.43 feet to a point; thence
(58) S 18 degrees 16 feet 00 inches E 175.19 feet to a rebar set; thence by
said State of New Hampshire land
(59) N 69 degrees 11 feet 55 inches E 499.88 feet to a rebar set on the
westerly sideline of Route 132 known as Sanborn Road; thence by said
road
(60) S 19 degrees 20 feet 44 inches E 45.87 feet to a point of curvature;
thence by said road
(61) Southerly by a curve to the right having a radius of 930 feet a
distance of 276.00 feet to a point to tangency; thence by said road
(62) S 02 degrees 20 feet 29 inches E 177.76 feet to a point of curvature;
thence by said road
(63) Southerly by a curve to the right having a radius of 1500.00 feet a
distance of 71.75 feet to a rebar set at land of
3
<PAGE>
Fabian on the westerly sideline of said road; thence by said Fabian
land; thence
(64) S 70 degrees 50 feet 31 inches W 200.00 feet to a rebar set; thence by
said Fabian land and land of Jesseman
(65) S 02 degrees 48 feet 59 inches W 275.12 feet to a rebar set at land of
Delong; thence by said Delong land
(66) S 70 degrees 50 feet 31 inches W 311.20 feet to a rebar found; thence
by said Delong land
(67) S 23 degrees 10 feet 01 inches E 453.28 feet to a rebar found; thence
by said Delong land
(68) N 73 degrees 17 feet 39 inches E 28.16 feet to an iron rod found;
thence by said Delong land
(69) N 73 degrees 17 feet 39 inches E 51.86 feet to a rebar found at land
of Oliver; thence by said Oliver lend
(70) S 00 degrees 20 feet 21 feet W 218.44 feet to a rebar found; thence by
said Oliver land
(71) S 00 degrees 20 feet 45 inches W 218.46 feet to an iron pipe found;
thence by said Oliver land
(72) N 80 degrees 49 feet 42 inches E 210.09 feet to a rebar found on the
westerly sideline of Route 132 known as Sanborn Road; thence by the
westerly sideline of said road
(73) S 02 degrees 16 feet 48 inches E 917.96 feet to a rebar set at land of
Oliver; thence by said Oliver land
(74) S 89 degrees 24 feet 30 inches W 102.50 feet to an iron pipe found;
thence by said Oliver land
(75) S 11 degrees 42 feet 06 inches W 186.40 feet to an iron pipe found;
thence by said Oliver land
(76) N 66 degrees 17 feet 39 inches E a distance of 6.04 feet to an iron
pipe found by Gulf Brook; thence continuing by land of said Oliver
crossing Gulf Brook
(77) S 03 degrees 19 feet 30 inches E 37.22 feet to a point; thence by Gulf
Brook
(78) N 76 degrees 33 feet 34 inches W a distance of 41.53 feet to the point
of beginning. Said premises contain 353.342 acres, more or less.
Meaning and intending to convey the same premises as recited in the
following deeds:
1) Deed from Burt W. Smith dated May 10, 1951 and recorded in Book 328,
Page 481 of the Belknap County Registry of Deeds.
2) Deed from Myrtle Sanborn dated October 29, 1955 and recorded in Book
368, Page 218 of said Registry of Deeds.
3) Deed from Arthur Whitcomb, Inc. dated May 10, 1951 and recorded in Book
329, Page 179 of said Registry of Deeds.
4) Deed from William M. and Sally P. Lawrence dated January 30, 1957 and
recorded in Book 378, Page 352 of said Registry of Deeds.
4
<PAGE>
5) Deed from Abbie E. Brake dated March 23, 1957 recorded in Book 378,
Page 358 of the Belknap County Registry of Deeds.
6) Deed from Fred L. Morrill dated June 3, 1957 recorded in Book 380, Page
141 of the Belknap County Registry of Deeds.
7) Deed from Town of Tilton, NH dated March 26, 1958 recorded in Book 386,
Page 513 of the Belknap County Registry of Deeds.
8) Deed from Grace R. Morse dated February 20, 1958 recorded in Book 386,
Page 155 of the Belknap County Registry of Deeds.
9) Deed from Frank W. and Bessie M. Abbott dated October 15, 1957 recorded
in Book 385, Page 045 of the Belknap County Registry of Deeds.
10) Deed from Myrtle B. Sanborn dated October 15, 1957 recorded in Book
385, Page 046 of the Belknap County Registry of Deeds.
11) Deed from Mary E. Foss dated October 7, 1958 recorded in Book 392, Page
052 of the Belknap County Registry of Deeds.
12) Deed from Mertie B. Abbott dated December 29, 1958 recorded in Book
393, Page 308 of the Belknap County Registry of Deeds.
13) Deed from Louis H. Sweatt dated April 19, 1961 recorded in Book 413,
Page 371 of the Belknap County Registry of Deeds.
14) Deed from Arthur J. Wyatt dated November 28, 1962 recorded in Book 430,
page 547 of the Belknap County Registry of Deeds.
15) Deed from Spencer A. and Marjorie N. Reed dated May 19, 1964 recorded
in Book 444, Page 021 of the Belknap County Registry of Deeds.
16) Deed from Fred O. and Christine M. Fuller dated August 17, 1963
recorded in Book 444, Page 022 of the Belknap County Registry of Deeds.
17) Deed from Manchester Sand, Gravel & Cement Co., Inc. dated January 5,
1967 recorded in Book 477, page 279 of the Belknap County Registry of Deeds.
18) Deed from Thomas E. Cheney, Executor dated November 12, 1964 recorded
in Book 448, Page 039 of the Belknap County Registry of Deeds.
19) Ronald W. and Verna F. Crowley dated May 15, 1967 recorded in Book 482,
Page 441 of the Belknap County Registry of Deeds.
20) Leslie J. and Doris J. Rose dated December 29, 1980 recorded in Book
800, Page 216 of the Belknap County Registry of Deeds.
5
<PAGE>
21) Leslie J. and Doris Rose dated January 13, 1981 recorded in Book 800,
page 879 of the Belknap County Registry of Deeds.
For reference:
-------------
1) Tilton Sand & Gravel Inc. merged with Arthur Whitcomb, Inc. by State of
New Hampshire Certificate of Merger dated January 4, 1988.
2) Arthur Whitcomb, Inc. filed Articles of Amendment with the Department
of State, State of New Hampshire changing its name to Tilcon Arthur Whitcomb,
Inc. on July 5, 1995.
3) Tilcon Arthur Whitcomb Inc., A New Hampshire corporation and Tilcon
Maine Inc., a Delaware corporation merged with Pike Industries, Inc. by Delaware
Certificate of Merger dated December 26, 1996.
4) Tilcon Arthur Whitcomb Inc., a New Hampshire corporation merged into
Pike Industries, Inc. a Delaware corporation by State of New Hampshire
Certificate of Merger dated December 31, 1996.
For further reference see Tilton Tax Map R-3, Parcels 15 and 16; Tilton Tax
Map R-4, Parcel 4; Parcels 4, 6, 7, 8, 9, 10, 11, 12 on Tilton Tax Map R-12;
Parcels 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 14 on Tilton Tax Map R-19; and Parcels 2
and 3 on Tilton Tax Map R-23.
Said premises are subject to possible rights of access as recited in deed
recorded at the Belknap County Registry of Deeds, Book 123, Page 114 to Sanborn
Road (Route 132) over land now or formerly of Abbott and land now or formerly of
Cropsey from the former Rose Parcel (Book 800, Page 216).
Said premises are further subject to Reimbursement Agreement with Tilton
Sewer Commission recorded at Belknap County Registry of Deeds, Book 1334, Page
621.
Said premises are further subject to utility rights and easements recorded
at said Registry of Deeds, Book 335, Page 124, Book 230, Page 389, Book 336,
Page 274 and Book 1219, page 762.
See also Commissioners return of highway layout of Interstate Route 93
recorded at said Registry of Deeds, Book 431, Page 7; and Commissioners return
of highway layout of Route 3/11 recorded at said Registry of Deeds, Book 404,
Page 525.
This is not homestead property of the grantor.
For Mortgagor's title see deed recorded in Book 1436, Page 705.
<PAGE>
EXHIBIT 10.33
SECOND AMENDMENT TO MORTGAGE
----------------------------
(MEREDITH)
This Second Amendment to Mortgage made as of the 5th day of March, 1998 by
and between DM Management Company ("Mortgagor") and Citizens Bank of
Massachusetts ("Mortgagee").
Reference is made to a certain Mortgage made as of the 30th day of July,
1997 by and between Mortgagor and Mortgagee, which Mortgage is recorded in Book
1429, Page 772, at the Belknap County, New Hampshire Registry of Deeds, as
amended by a certain First Amendment to Mortgage dated October 31, 1998 recorded
in Book 1442, Page 267 at said Registry of Deeds (the "Mortgage").
For good and valuable consideration paid by each of the parties to the
other, and in further consideration of the mutual covenants and agreements
herein contained, it is agreed by and between Mortgagor and Mortgagee that the
Mortgage is hereby amended by deleting the entire paragraph following the word
"WITNESSETH" and the following is hereby inserted in lieu hereof.
The Mortgagor hereby grants to Mortgagee, with mortgage covenants, the
real property described on Exhibit A (hereinafter called the "Mortgaged
Premises") to secure (a) the full payment of the sum of $8,500,000.00, or
such lesser amount which shall have been advanced, together with interest
and other charges, all as provided in a certain "Revolving Note" of the
Mortgagor to the order of the Mortgagee dated June 5, 1997, which note was
amended and replaced by a certain "Replacement Revolving Note" dated
October 31, 1997 in the face amount of $8,500,000.00, all as provided in a
certain Loan Agreement dated June 5, 1997 as amended and restated as of
March 5, 1998 hereof (the "Loan Agreement") together with all substitutions
or replacements therefor and all renewals or extensions thereof and the
full performance of all other obligations of the maker of said note as
provided therein; (b) the full payment of the sum of $1,650,000.00, as
provided in a certain "Real Estate Note" (as defined in the Loan Agreement)
of the Mortgagor to the order of the Mortgagee, dated July 30, 1997,
executed and delivered by the Mortgagor to the Mortgagee, pursuant to the
Loan Agreement in the face amount of $1,650,000.00, with interest and other
charges as provided therein, together with all substitutions and
replacements therefor and all renewals and extensions thereof and the full
performance of all other obligations of the maker of said note as provided
therein and under a certain "Real Estate Mortgage" (as defined in the Loan
Agreement) executed and delivered in connection therewith; (c) the full
payment of the sum of $3,600,000.00, with interest and other charges, all
as provided in a certain "Term Note" (as defined in the Loan Agreement) of
the Mortgagor to the order of the Mortgagee, dated June 5, 1997, executed
and delivered by the Mortgagor to the Mortgagee pursuant to the Loan
Agreement, in the original face amount of $3,600,000.00, together with all
substitutions or replacements therefor and all renewals or extensions
thereof and the full performance of all other obligations of the maker of
said note as provided therein; (d) the full payment of the sum of
$4,300,000.00, with interest and other charges, all as provided in a
certain "New Bridge Note" (as defined in the Loan Agreement) of the
Mortgagor to the order of the Mortgagee dated as of March 5, 1998, executed
and delivered by the Mortgagor to the Mortgagee pursuant to the Loan
Agreement, in the original face amount of $4,300,000.00 together with all
substitutions and replacements therefor and all renewals and extensions
thereof and the full performance of all other obligations of the maker of
said note as provided
<PAGE>
therein, and under a certain "Bridge Mortgage" (as defined in the Loan
Agreement), dated as of the date hereof, executed and delivered in
connection therewith; (e) the full payment of the sum of $17,000,000.00 as
provided in a certain "Short Term Revolving Note" (as defined in the Loan
Agreement) of the Mortgagor to the order of the Mortgagee dated March 5,
1998 pursuant to the Loan Agreement in the face amount of $17,000,000.00
with interest and other charges as provided therein, and all renewals and
extensions thereof and the full performance of all other obligations of the
maker of said note as provided therein and a certain Assignment of
Certificate of Deposit dated as of the date hereof executed and delivered
in connection therewith; (f) the full payment and performance by the
Mortgagor of all other indebtedness, obligations and liabilities of the
Mortgagor to the Mortgagee under the Loan Agreement, direct or indirect,
absolute or contingent, now existing or hereafter arising (including,
without limitation, all "Obligations", as defined in the Loan Agreement)
which Loan Agreement provides, among other things, for the establishment of
a "Revolving Loan" (as defined therein) and for the issuance of Letters of
Credit pursuant to "L/C Applications" (as defined therein) therein pursuant
to which "Advances" (as defined therein) may be made from time to time, and
for repayment of all or a portion of the outstanding balance of such
Advances together with interest and other charges, all in accordance
therewith, and for the grant of "Loans" (as defined therein) as provided
therein; and (g) the full payment and performance of all covenants and
agreements herein contained or referred to on the part of the Mortgagor to
be kept and performed (collectively hereafter referred to as
"Obligations").
In all other respects, the said Mortgage is hereby (as intended therein) shall
hereby remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, Mortgagor has caused this instrument to be executed on
this 5th day of March, 1998.
Witness DM MANAGEMENT COMPANY
/s/ Arlene L. Bender /s/ Peter J. Tulp
______________________ By: ___________________________________
Peter J. Tulp, Corporate Controller
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF SUFFOLK
On this 5th day of March, 1998, before me, personally appeared the
undersigned officer, Peter J. Tulp, known to me (or satisfactorily proven) to be
the person whose name is subscribed to the foregoing written instrument as the
Corporate Controller of DM Management Company in its name and on its behalf and
acknowledged that they executed the same for the purposes therein contained.
IN WITNESS WHEREFORE I have hereunto set my hand and official seal.
/s/ Donna M. Barone
----------------------------------
Notary Public
My Commission Expires: 8-6-2002
------------
M067343@CD/(2) 2ndAmendment to Mortgage
<PAGE>
EXHIBIT A TO SECOND AMENDMENT TO MORTGAGE
from DM MANAGEMENT COMPANY
TO
CITIZENS BANK OF MASSACHUSETTS
DATED March 5, 1998
The following tracts or parcels of land, with the buildings and improvements
thereon, located in Meredith, Belknap County, New Hampshire:
PARCEL 1
A Certain tract of land together with the buildings and improvements
thereon as shown on the Plan entitled "Subdivision of Land Murphy/Miller, Ltd."
dated August 1979 by Associated Surveyors, Meredith, N.H. approved by the
Meredith Planning Board October 18, 1979, recorded with the Belknap county
Registry of Deeds in Plan Book 80, Pages 15 & 16, the tract being situated on
the southerly side of Route 104, so-called, in Meredith, Belknap County, New
Hampshire, and described as follows:
Beginning at the northwesterly corner of the tract herein conveyed at a
point indicated on the Plan as NHHD bound "near the northeasterly corner of Lot
1 as shown on the Plan; thence running along the arc of a curve to the right a
distance of 776.65 feet to a point; the curve having a radius of 1198.33 feet;
thence running North 84 degrees 12 feet 30 inches East a distance of 426.13 feet
to a point at the northeasterly corner of the tract herein conveyed; thence
running South 28 degrees 21 feet 10 inches East a distance of 898.69 feet along
a wire fence to a point; thence running South 59 degrees 27 feet 40 inches West
along a wire fence a distance of 376.20 feet to an iron pin; thence running
North 39 degrees 35 feet 20 inches West a distance of 434.69 feet to an iron
pin; thence running South 59 degrees 33 feet 55 inches West a distance of 583.28
feet to an iron pin; thence running North 31 degrees 16 feet 00 inches West a
distance of 208.12 feet to an iron pin; thence running North 39 degrees 22 feet
50 inches West a distance of 526.38 feet to the point of beginning.
PARCEL 2
A certain tract or parcel of land, together with any buildings and
improvements thereon, located at the southeasterly corner of the intersection of
N.H. Route 104 and Pease Road, Meredith, Belknap County, New Hampshire, shown as
Lot #1 on Plan entitled "Subdivision Plan prepared for Antell and Sons, Inc.,
Meredith, New Hampshire, by Associated Surveyors, Meredith, New Hampshire, dated
April, 1987, recorded in Plan Book 142, Pages 1 and 2, Belknap County Registry
of Deeds, more particularly bounded and described as follows:
<PAGE>
Beginning at a point in a stone wall on the northeasterly sideline of Pease
Road at land now or formerly of Barnes, being the southwesterly corner of the
lot described herein, thence running along land now or formerly of Barnes on the
following courses and distances: North 59 degrees 36 feet 00 inches east, a
distances of 126.48 feet to a point; North 59 degrees 31 feet 45 inches east, a
distance of 146.44 feet to a point; North 59 degrees 29 feet 20 inches east, a
distance of 147.26 feet to a point on the southwesterly boundary of other land
of the Grantee; thence turning and running along land of the Grantee on a course
of North 39 degrees 22 feet 50 inches west a distance of 168.73 feet to a point
on Lot #2, as shown on said Plan; thence turning and running along Lot #2 on the
following courses and distances; South 50 degrees 37 feet 10 inches west, a
distance of 60.00 feet to a point; North 39 degrees 22 feet 50 inches west, a
distance of 35.02 feet to a point; along the arc of a curve to the left with a
radius of 25.00 feet, a distance of 36.23 feet to a point; South 57 degrees 35
feet 16 inches west, a distance of 98.59 feet to a point; along the arc of a
curve to the left with a radius of 70.93 feet, a distance of 79.29 feet to a
point; South 06 degrees 27 feet 32 east, a distance of 97.22 feet to a point;
along the arc of a curve to the right with a radius of 89.64 feet, a distance of
100.45 feet to a point; along the arc of a curve to the left with a radius of
25.00 feet, a distance of 39.27 feet to the point of beginning, containing 1.374
acres, more or less.
PARCEL 3
A certain tract or parcel of land, together with any improvements thereon,
located at the southeasterly corner of the intersection of NH Route 104 and
Pease Road, Meredith, Belknap County, New Hampshire, shown as Lot #2 on Plan
entitled, "Subdivision Plan prepared for Antell and Sons Inc., Meredith Belknap
County, New Hampshire", by Associated Surveyors, dated April, 1987, recorded in
Plan Book 142, Pages 1 and 2, Belknap County Registry of Deeds, more
particularly bounded and described as follows:
Beginning at a point in a stone wall on the northeasterly side of Pease
Road at the intersection of Lot 1, as shown on the Plan, and land now or
formerly of Barnes and the lot conveyed herein, thence running along Lot 1 on
the arc of a curve to the right with a radius of 25.00 feet, a distance of 39.27
feet, to a point; thence continuing on Lot 1 along the arc of a curve to the
left with a radius of 89.64 feet, a distance of 100.45 feet to a point; thence
turning and running North 06 degrees 27 feet 32 inches west, a distance of 97.22
feet to a point; thence continuing along Lot 1 along the arc of a curve to the
right with a radius of 70.93 feet, a distance of 79.29 feet to a point; thence
running North 57 degrees 35 feet 16 inches east, a distance of 98.59 feet to a
point; thence, continuing along Lot 1 on the arc of a curve to the right with a
radius of 25.00 feet, a distance of 36.23 feet to a point; thence turning and
running South 39 degrees 22 feet 50 inches east, a distance of 35.02 feet to a
point; thence turning and running North 50 degrees 37 feet 10 inches east, a
distance of 60.00 feet
<PAGE>
to a point at other land of the Grantee; thence turning and running along land
of the Grantee on a course of North 39 degrees 22 feet 50 inches west, a
distance of 357.65 feet to a New Hampshire Highway Department bound; thence
turning and running North 42 degrees 54 feet 50 inches west, a distance of 25.00
feet, to a point on the southeasterly sideline of the right of way for New
Hampshire Route 104; thence turning and running along the southeasterly sideline
of New Hampshire Route 104 along the arc of a curve to the left with a radius of
1,233.33 feet, a distance of 200.61 feet to the point which marks the
northernmost corner of Lot #3, as shown on said Plan; thence turning and running
along Lot #3 on the following courses and distances; South 41 degrees 14 feet 11
inches east, a distance of 231.78 feet; along the arc of a curve to the left
with a radius of 120.93 feet, a distance of 116.56 feet to a point; South 06
degrees 27 feet 32 inches east, a distance of 97.22 feet to a point; along the
acr of curve to the right with a radius of 39.64 feet, a distance of 44.42 feet
to a point; along the arc of a curve to the right with a radius of 25.00 feet, a
distance of 39.27 feet, to a point in a stone wall on the northeasterly sideline
of Pease Road; thence turning and running along said stone wall and the
northeasterly sideline of Pease Road on a course of South 32 degrees 14 feet 55
inches east, a distance of 100.00 feet to the point of beginning, containing
1,800 acres, more or less, including the right of way for the 50 foot access, as
shown on said Plan.
The foregoing real estate is conveyed subject to and with the benefits of
the following:
1. Easement to NH Electric Coop and New England T &T recorded in Book 791,
Page 616 in the Belknap County Registry of Deeds. [All recording references are
to said Registry of Deeds.]
2. Agreements recorded in Book 779, Page 810 and 812.
3. Easement to White Mountain Power Co. and New England T &T recorded in
Book 453, Pge 231.
4. Rights of State of New Hampshire recorded in Book 421, Page 483 and
Book 431, Page 82.
5. Dam Approval recorded in Book 1284, Page 125.
6. Restrictions, requirements and limitations shown on Amended Site Plan,
recorded as Plan L20-64.
7. Declarations of Covenants and Restrictions recorded in Book 1029 Page
514.
<PAGE>
EXHIBIT 10.39
STANDARD FORM OF AGREEMENT BETWEEN
OWNER AND CONTRACTOR WHERE THE BASIS OF PAYMENT IS
THE COST OF THE WORK PLUS A FEE WITH OR
WITHOUT A GUARANTEED MAXIMUM PRICE
AIA Document A111 - Electronic Format
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES: CONSULTATION WITH AN ATTORNEY IS
ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401.
The 1987 Edition of AIA Document A201, General Conditions of the Contract for
Construction, is adopted in this document by reference. Do not use with other
general conditions unless this document is modified. This document has been
approved and endorsed by The Associated General Contractors of America.
Copyright 1920, 1925, 1951, 1958, 1961, 1967, 1974, 1978, 1987 by The American
Institute of Architects, 1735 New York Avenue N.W., Washington D.C. 20006-5292.
Reproduction of the material herein or substantial quotation of its provisions
without written permission of the AIA violates the copyright laws of the United
States and will be subject to legal prosecution.
- --------------------------------------------------------------------------------
AGREEMENT
made as of the 24th day of OCTOBER in the year of Nineteen Hundred and Ninety-
Seven
BETWEEN THE Owner:
(Name and address)
DM MANAGEMENT, INC., a CORPORATION
25 Recreation PARK DRIVE, SUITE 200
Hingham, MA 02043
and the Contractor:
(Name and address)
CLAYCO CONSTRUCTION COMPANY, INC.
2199 Innerbelt Business Center Drive
St. Louis, MO 63114
ATTN: C. David Moses
the Project is:
(Name and address)
NEW DISTRIBUTION FACILITY
1-93 and Route 3
Tilton, NH
the Architect is:
(Name and address)
MITCHELL-HUGEBACK ARCHITECTS, INC.
400 South Woodsmill Road, Suite 120
Chesterfield, MO 63017
The Owner and Contractor agree as set forth below.
ARTICLE 1
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AIA DOCUMENT AIII - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: CDMMANA111V4.DOC -- 2/27/1998.AIA License Number 105838, which
expires on 7/31/1998 -- Page #1
<PAGE>
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement, Conditions of the
Contract (General, Supplementary and other Conditions), Drawings,
Specifications, Addenda issued prior to execution of this Agreement, other
documents listed in this Agreement and Modifications issued after execution of
this Agreement; these form the Contract, and are as fully a part of the Contract
as if attached to this Agreement or repeated herein. The Contract represents the
entire and integrated agreement between the parties hereto and supersedes prior
negotiations, representations or agreements, either written or oral. An
enumeration of the Contract Documents, other than Modifications, appears in
Article 16. If anything in the other Contract Documents is inconsistent with
this Agreement, this Agreement shall govern.
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract Documents
to be the responsibility of others, or as follows:
Design and construct one 425,270 square foot distribution facility in accordance
with Outline Specifications dated 12-24-97 attached hereto and Mitchell-Hugeback
Floor Plan A2.0 dated 10-24-97, and the other Contract Documents.
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1 The Contractor accepts the relationship of trust and confidence
established by this Agreement and covenants with the Owner to utilize the
Contractor's best skill, efforts and judgment in furthering the interests of the
Owner; to furnish efficient business administration and supervision; to make
best efforts to furnish at all times an adequate supply of workers and
materials; and to perform the Work in the best way and most expeditious and
economical manner consistent with the interests of the Owner. The Owner agrees
to exercise best efforts to enable the Contractor to perform the Work in the
best way and most expeditious manner by furnishing and approving in a timely way
information required by the Contractor and making payments to the Contractor in
accordance with requirements of the Contract Documents. The Contractor will
establish a direct contractual relationship with the Architect, design
professionals and other licensed professionals to provide the design of the
Project; provided, however that the Owner will obtain and pay for all civil
engineering work required in connection with the Project from a licensed civil
engineering firm. The Owner acknowledges and agrees that the Contractor is not a
licensed architect or engineer and is not agreeing to perform services which
require such a license in the State in which the Project is located. Such
services will be performed by licensed architects and engineers and qualified
design build subcontractors under separate agreements. The fees and expenses of
those design professionals contracted and paid for by the Contractor shall be
included as part of the Cost of the Work. The fees and expenses of the civil
engineer retained by the Owner and any other contractor the Owner retains shall
not be included as part of the Cost of the Work or included within the GMP (as
defined herein below). The Contractor shall be responsible to the Owner for acts
and omissions of the Contractor's employees and parties in privity of contract
with the contractor to perform a portion of the Work, including their agents and
employees, including without limitation the Architect, Subcontractors, and
Subsubcontractors. The Contractor agrees that all Work shall be performed in
compliance with (1) customary good practices and professional skill and care,
(2) the drawings and specifications, and (3) any statutes, ordinances, codes,
regulations and standards of public bodies or trade regulators having any
jurisdiction over the Project at the time of contract execution.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the Contract Time of
Subparagraph 4.2 is measured; it shall be the date of this Agreement, as first
written above, unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement, if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice to proceed)
September 11, 1997
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the Contractor shall notify the Owner in writing not less than five
days before commencing the Work to permit timely filing of mortgages, mechanic's
liens and other security interests. Notwithstanding anything provided to the
contrary herein, the parties hereby confirm that the Work has commenced and
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AIA DOCUMENT AIII - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution.. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: CDMMANA111V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #2
<PAGE>
that all Work done by the Contractor on the Project prior to the date hereof
shall be deemed to have been done pursuant to this Agreement and to be subject
to the provisions hereof.
4.2
(insert the calendar date or number of calendar days after the date of
commencement. Also insert any requirements for earlier Substantial Completion of
certain portions of the Work, if not stated elsewhere in the Contract
Documents.)
The Contractor shall have achieved Substantial Completion of the following
portions of the Work on or before the dates indicated below for each portion of
the Work (such dates being referred to herein as the "Substantial Completion
Dates"), subject to extensions for any delays contemplated in Paragraph 8.3.1 of
the form of the General Conditions (AIA Document No. A201) attached hereto:
Warehouse Area 7-1-98
Main Office/Connecting Corridor 8-30-98
, subject to adjustments of this Contract Time as provided in the Contract
Documents.
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time.)
ARTICLE 5
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the Contractor's
performance of the Contract the Contract Sum consisting of the Cost of the Work
as defined in Article 7 and the Contractor's Fee determined as follows:
(State a lump sum, percentage of Cost of the Work or other provision for
determining the Contractor's Fee, and explain how the Contractor's Fee is to be
adjusted for changes in the Work)
The Contractor's Fee shall equal Eight Hundred Ninety-Six Thousand Forty-Seven
Dollars ($896,047.00) which is the product of Five and one-half Percent (5.50%)
times the final estimated Cost of the Work. If Substantial Completion of the
Warehouse Area is achieved on or before July 1, 1998 and Substantial Completion
of the Main Office/Connecting Corridor is achieved on or before August 30, 1998,
then the Contractor shall be entitled to an additional fee equal to one percent
(1%) of the final GMP, which amount shall be due and payable within the later of
(i) thirty (30) days after Final Completion, and (ii) the date on which lien
waivers are delivered by the Contractor to the Owner from all subcontractors (it
being agreed, however that in lieu of lien waivers invoices marked paid or other
reasonable evidence of payment shall only be required where the total
subcontract is less than $10,000.00). The Contractor's Fee shall be fixed at
$896,047.00, subject to adjustment only in the eent of a Change Order or a
Construction Change Directive which results in the final Cost of the Work
exceeding $16,291,780.10, in which event the Contractor shall be entitled to an
additional fee equal to five and one-half percent (5 1/2%) of the final Cost of
the Work in excess of $16,291,780.10.
5.2 GUARANTEED MAXIMUM PRICE (IF APPLICABLE)
5.2.1 The sum of the estimated Cost of the Work and the Contractor's Fee is
guaranteed by the Contractor not to exceed SEVENTEEN MILLION ONE HUNDRED EIGHTY-
SEVEN THOUSAND EIGHT HUNDRED TWENTY-EIGHT Dollars ($17,187,828.00), subject to
additions and deductions by Change Order as provided in the Contract Documents
or as provided in Paragraph 5.2.4 below. Such maximum sum is referred to in the
Contract Documents as the Guaranteed Maximum Price or the "GMP". Costs which
would cause the Guaranteed Maximum Price to be exceeded shall be paid by the
Contractor without reimbursement by the Owner.
(Insert specific provisions if the Contractor is to participate in any savings.)
If the sum of the final Cost of the Work plus the Contractor's Fee is less than
the GMP, then such difference (the "savings") shall be shared by the parties as
follows: seventy-five percent (75%) of the savings shall be retained by the
Owner and twenty-five percent (25%) of the savings shall be paid to the
Contractor as an additional fee. Such payment shall be made by the Owner within
thirty (30) days after Final Completion.
5.2.2 The Guaranteed Maximum Price is based upon the following alternates, if
any, which are described in the Contract Documents and are hereby accepted by
the Owner:
(State the numbers or other identification of accepted alternates, but only if a
Guaranteed Maximum Price is inserted in Subparagraph 5.2.1. if decisions on
other alternates are to be made by the Owner subsequent to the execution of this
Agreement, attach a schedule of such other alternates showing the amount for
each and the date until which that amount is valid.)
See Contractor's Proposal Book Dated 9-4-97.
5.2.3 The amounts agreed to for unit prices, if any, are as follows:
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: CDMMANA111V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #3
<PAGE>
(State unit prices only if a Guaranteed Maximum Price is inserted in
Subparagraph 5.2.1)
See Contractor's Proposal Book Dated 9-4-97.
5.2.4. If the Contract Documents specifically provide for any allowances, then
the parties agree that (i) the GMP shall be reduced by the amount, if any, by
which the allowance exceeds the actual cost of the item for which such allowance
was made, and (ii) the GMP shall be increased by the amount, if any, by which
the actual cost of the item for which such allowance was made exceeds the
allowance.
ARTICLE 6
CHANGES IN THE WORK
6.1 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
6.1.1 Adjustments to the Guaranteed Maximum Price on account of changes in the
Work shall be determined as provided in Paragraph 6.3 below.
6.1.2 [Deleted.]
6.1.3 In calculating adjustments to this Contract, the terms "cost" and "costs"
as used herein shall mean the Cost of the Work as defined in Article 7 of this
Agreement and the terms "fee" and "a reasonable allowance for overhead and
profit" shall mean the Contractor's Fee as defined in Paragraph 5.1 of this
Agreement.
6.2 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
6.2.1 [Deleted.]
6.3 ALL CONTRACTS
6.3.1 If no specific provision is made in paragraph 5.1 for adjustment of the
Contractor's Fee in the case of changes in the Work, or if the extent of such
changes is such, in the aggregate, that application of the adjustment provisions
of Paragraph 5.1 will cause substantial inequity to the Owner or Contractor, the
Contractor's Fee shall be equitably adjusted on the basis of the Fee established
for the original Work.
Insert A: 6.3.2 The Owner shall have the right to order changes in the Work by
giving the Contractor a written change order request (a "CO Request"), setting
forth in detail the nature of the requested change. Upon receipt of a CO Request
the Contractor shall furnish to the Owner a written offer to make the change
requested which offer shall include the Contractor's determination of the
changes, if any, to the (i) the Cost of the Work, (ii) the Contractor's Fee
provided that any CCD (defined below) results in an increase in the Cost of the
Work as provided in Paragraph 5.1 above, (iii) the GMP, (iv) the schedule of
values, or (v) the Substantial Completion Dates, or any one or more of the
foregoing, resulting from the changes described in such CO Request. If the Owner
accepts such offer in writing and without revision then such offer shall
constitute a change order (a "Change Order") which shall operate to amend this
Contract as provided therein. If the Contractor accepts such counteroffer in
writing, then the same shall constitute a Change Order. If the Owner accepts
such offer subject to revisions not previously agreed to by the Contractor in
writing then such "acceptance" shall constitute a construction change directive
(a "CCD") and the Contractor shall promptly proceed with the work described in
the CCD. The cost of the work covered by the CCD shall then be determined on the
basis of reasonable expenditures and savings of those performing the work
covered by the CCD, including the expenses of design services and revisions to
the Contract Documents. The Contractor shall keep and present an itemized
accouting together with appropriate supporting data for inclusion in a CCD.
Unless otherwise provided in the Contract Documents, costs of the work covered
by th CCD shall include the following: costs of labor including social security,
old age and unemployment insurance, fringe benefits required by agreement or
custom, and workers' compensation insurance, costs of material, supplies and
equipment, including costs of transportation, whether incorporated or consumed,
and sales taxes, rental costs of machinery and equipment, costs of premiums for
all bonds and insurance, permit fees and sales, use or similar taxes related to
such work, and additional costs of supervision and field office personnel
directly
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced without
violation until the date of expiration as noted below.
Electronic Format A111-1987
User Document: CDMMANA111V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #4
<PAGE>
attributable to the change, and any increase in the Contractor's Fee as provided
in Paragraph 5.1 above. Pending final determination of the cost of such work,
the Owner shall make reasonable payments on account thereof pursuant to
Applications for payment submitted by the Contractor. The Contractor shall have
no obligation to perform any changes in the Work except pursuant to a Change
Order or a CCD made as provided herein.
ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in the proper performance of the Work. Such costs shall be at rates
not higher than the standard paid at the place of the Project except with prior
consent of the Owner. The Cost of the Work shall include only the items set
forth in this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers directly employed by the Contractor to
perform the construction of the Work at the site or, with the Owner's agreement,
at off-site workshops.
7.1.1.2 Wages or salaries of the Contractor's supervisory and administrative
personnel when stationed at the site with the Owner's agreement.
(If it is intended that the wages or salaries of certain personnel stationed at
the Contractor's principal or other offices shall be included in the Cost of the
Work, identify in Article 14 the personnel to be included and whether for all or
only part of their time.)
7.1.1.3 Wages and salaries of the Contractor's supervisory or administrative
personnel engaged, at factories, workshops or on the road, in expediting the
production or transportation of materials or equipment required for the Work,
but only for that portion of their time required for the Work.
7.1 .1.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective bargaining
agreements and, for personnel not covered by such agreements, customary benefits
such as sick leave, medical and health benefits, holidays, vacations and
pensions, provided such costs are based on wages and salaries included in the
Cost of the Work under Clauses 7.1.l.l through 7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the
requirements of the subcontracts.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment incorporated
or to be incorporated in the completed construction.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in excess
of those actually installed but required to provide reasonable allowance for
waste and for spoilage. Unused excess materials, if any, shall be handed over to
the Owner at the completion of the Work or, at the Owner's option, shall be sold
by the Contractor; amounts realized, if any, from such sales shall be credited
to the Owner as a deduction from the Cost of the Work or shall be paid to the
Owner.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED
ITEMS
7.1.4.1 Costs, including transportation, installation, maintenance, dismantling
and removal of materials, supplies, temporary facilities, machinery, equipment,
and hand tools not customarily owned by the construction workers, which are
provided by the Contractor at the site and fully consumed in the performance of
the Work; and cost less salvage value on such items if not fully consumed,
whether sold to others or retained by the Contractor. Cost for items previously
used by the Contractor shall mean fair market value.
7.1.4.2 Rental charges for temporary facilities, machinery, equipment, and hand
tools not customarily owned by the construction workers, which are provided by
the Contractor at the site, whether rented from the Contractor or others, and
costs of transportation, installation, minor repairs and replacements,
dismantling and removal thereof. Rates and quantities of equipment rented shall
be subject to the Owner's prior approval.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: CDMMANA111V4.DOC - 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #5
<PAGE>
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls, postage and
parcel delivery charges, telephone service at the site and reasonable petty cash
expenses of the site office.
7.1.4.5 That portion of the reasonable travel and subsistence expenses of the
Contractor's personnel incurred while traveling in discharge of duties connected
with the Work.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums for
insurance and bonds.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Contractor is liable.
7.1.5.3 Fees and assessments for the building permit and for other permits,
licenses and inspections for which the Contractor is required by the Contract
Documents to pay.
7.1.5.4 Fees of testing laboratories for tests required by the Contract
Documents, except those related to defective or nonconforming Work for which
reimbursement is excluded by Subparagraph 13.5.3 of the General Conditions or
other provisions of the Contract Documents and which do not fall within the
scope of Subparagraphs 7.2.2 through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suits or claims for infringement of patent rights arising from such requirement
by the Contract Documents; payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and payments of
settlements made with the Owner's consent; provided, however, that such costs of
legal defenses, judgment and settlements shall not be included in the
calculation of the Contractor's Fee or of a Guaranteed Maximum Price, if any,
and provided that such royalties, fees and costs are not excluded by the last
sentence of Subparagraph 3.17.1 of the General Conditions or other provisions of
the Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's fault or
negligence.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to the
extent approved in advance in writing by the Owner.
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR NONCONFORMING WORK
The Cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or loss in case of
an emergency affecting the safety of persons and property, as provided in
Paragraph 10.3 of the General Conditions, provided such threat of damage,
injury or loss does
7.2.2 not result from the fault or negligence of the Contractor or the
Contractor's foremen, engineers or superintendents, or other supervisory,
administrative or managerial personnel of the Contractor or other parties for
whom the Contractor is responsible.
7.2.3 In repairing damaged Work other than that described in Subparagraph
7.2.2, provided such damage did not result from the fault or negligence of the
Contractor or the Contractor's personnel or other parties for whom the
Contractor is responsible and only to the extent that the cost of such repairs
is not recoverable by the Contractor from others and the Contractor is not
compensated therefor by insurance or otherwise.
7.2.4 [Deleted.]
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AIA DOCUMENT AIII - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: CDMMANA111V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #6
<PAGE>
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel stationed
at the Contractor's principal office or offices other than the site office,
except as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as may be
provided in Article 14.
8.1.2 Expenses of the Contractor's principal office and offices other than the
site office.
8.1.3 Overhead and general expenses, except as may be expressly included in
Article 7.
8.1.4 The Contractor's capital expenses, including interest on the Contractor's
capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically provided
in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 and Paragraph
13.5 of this Agreement, costs due to the fault or negligence of the Contractor,
Subcontractors, anyone directly or indirectly employed by any of them, or for
whose acts any of them may be liable, including but not limited to costs for the
correction of damaged, defective or nonconforming Work, disposal and replacement
of materials and equipment incorrectly ordered or supplied, and making good
damage to property not forming part of the Work.
8.1.7 Any cost not specifically and expressly described in Article 7.
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any, to be
exceeded.
Insert B: 8.1.9 The excess of costs, including without limitation wages and
fringe benefits incurred as a result of the use of union labor to perform any
Work over costs which would have been paid or incurred if such Work had been
performed by otherwise qualified non-union labor.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the Contractor shall accrue for
the benefit of the Owner. Trade discounts, rebates, refunds and amounts received
from sales of surplus materials and equipment shall accrue to the Owner, and the
Contractor shall make provisions so that they can be secured.
9.2 Amounts which accrue to the Owner in accordance with the provisions of
Paragraph 9.1 shall be credited to the Owner as a deduction from the Cost of the
Work.
ARTICLE 10
SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not customarily
perform with the Contractor's own personnel shall be performed under
subcontracts or by other appropriate agreements with the Contractor. The
Contractor shall obtain bids from Subcontractors and from suppliers of materials
or equipment fabricated especially for the Work and shall deliver such bids to
the Owner. The Owner will then determine, with the advice of the Contractor,
which bids will be accepted. The Owner may designate specific persons or
entities from whom the Contractor shall obtain bids; however, if a Guaranteed
Maximum Price has been established, the Owner may not prohibit the Contractor
from obtaining bids
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electroic Format A111-1987
User Document: CDMMANA111V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #7
<PAGE>
from others. The Contractor shall not be required to contract with anyone to
whom the Contractor has reasonable objection.
10.2 If a Guaranteed Maximum Price has been established and a specific bidder
among those whose bids are delivered by the Contractor to the Owner (1) is
recommended to the Owner by the Contractor; (2) is qualified to perform that
portion of the Work; and (3) has submitted a bid which conforms to the
requirements of the Contract Documents without reservations or exceptions, but
the Owner requires that another bid be accepted; then the Contractor may require
that a Change Order be issued to adjust the Guaranteed Maximum Price by the
difference between the bid of the person or entity recommended to the Owner by
the Contractor and the amount of the subcontract or other agreement actually
signed with the person or entity designated by the Owner.
10.3 Subcontracts or other agreements shall conform to the payment provisions
of Paragraphs 12.7 and 12.8, and shall not be awarded on the basis of cost plus
a fee without the prior consent of the Owner.
ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and exercise such
controls as may be necessary for proper financial management under this
Contract; the accounting and control Systems shall be satisfactory to the Owner.
The Owner and the Owner's accountants shall be afforded access to the
Contractor's records, books, correspondence, instructions, drawings, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
this Contract, and the Contractor shall preserve these for a period of three
years after final payment, or for such longer period as may be required by law.
Insert C: 11.2 The Contractor shall maintain all records, bookkeeping and
accounts for the Project in accordance with generally accepted accounting
principles and shall make such accounts, records and books available to the
Owner upon request. Cost reports showing original GMP, commitments, actual and
anticipated costs as well as variances, if any, and available contingency (as
well as a detailed written explanation of the reason for use of any contingency)
shall be submitted on a monthly basis to the Owner. The Contractor shall submit
copies of all executed contracts to the Owner.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment submitted to the Owner by the
Contractor, the Owner shall make progress payments on account of the Contract
Sum to the Contractor as provided below and elsewhere in the Contract Documents.
12.2 The period covered by each Application for Payment shall be one calendar
month ending on the last day of the month, or as follows:
12.3 Provided an Application for Payment is received by the Owner not later
than the first (1st) day of a month, the Owner shall make payment to the
Contractor not later than the twentieth (20th) day of the same month. If an
Application for Payment is received after the application date fixed above,
payment shall be made by the Owner not later than twenty (20) days after the
Owner receives the Application for Payment.
12.4 With each Application for Payment the Contractor shall submit payrolls,
petty cash accounts, receipted invoices or invoices with check vouchers
attached, and any other evidence required by the Owner to demonstrate that cash
disbursements already made by the Contractor on account of the Cost of the Work
equal or exceed (1) progress payments already received by the Contractor; less
(2) that portion of those payments attributable to the Contractor's Fee; plus
(3) payrolls for the period covered by the present Application for Payment; plus
(4) retainage provided in Subparagraph 12.5.4, if any, applicable to prior
progress payments. In addition to the foregoing, such supporting evidence shall
consist of lien waivers for work covered by prior Applications for Payment which
previously have been paid, progress photographs reasonably requested in advance
by the Owner, report of pending Change Orders and such invoices with check
vouchers attached and check registers as the Owner may have reasonably requested
in advance. An Application for Payment shall not be deemed to be received by the
Owner until all such supporting documents have been furnished.
12.5 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
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expires on 7/31/1998 -- Page #8
<PAGE>
12.5.1 Each Application for Payment shall be based upon the most recent
schedule of values submitted by the Contractor in accordance with the Contract
Documents. The schedule of values shall allocate the entire Guaranteed Maximum
Price among the various portions of the Work, except that the Contractor's Fee
shall be shown as a single separate item. The schedule of values shall be
prepared in such form and supported by such data to substantiate its accuracy as
the Owner may reasonably require. This schedule, unless objected to by the
Owner, shall be used as a basis for reviewing the Contractor's Applications for
Payment.
12.5.2 Applications for Payment shall show the percentage completion of each
portion of the Work as of the end of the period covered by the Application for
Payment. The percentage completion shall be the lesser of (1) the percentage of
that portion of the Work which has actually been completed or (2) the percentage
obtained by dividing (a) the expense which has actually been incurred by the
Contractor on account of that portion of the Work for which the Contractor has
made or intends to make actual payment prior to the next Application for Payment
by (b) the share of the Guaranteed Maximum Price allocated to that portion of
the Work in the schedule of values.
12.5.3 Subject to other provisions of the Contract Documents, the amount of
each progress payment shall be computed as follows:
12.5.3.1 Take that portion of the Guaranteed Maximum Price properly allocable
to completed Work as determined by multiplying the percentage completion of each
portion of the Work by the share of the Guaranteed Maximum Price allocated to
that portion of the Work in the schedule of values. Pending final determination
of cost to the Owner of changes in the Work, amounts not in dispute may be
included as provided in Subparagraph 7.3.7 of the General Conditions, even
though the Guaranteed Maximum Price has not yet been adjusted by Change Order.
12.5.3.2 Add that portion of the Guaranteed Maximum Price properly allocable to
materials and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing.
12.5.3.3 Add the Contractor's Fee, less retainage of five percent (5%) which
retainage shall be five percent (5%) of the sum of amounts determined under
paragraphs 12.5.3.1, 12.5.3.2 and 12.5.3.3.. The Contractor's Fee shall be
computed upon the Cost of the Work described in the two preceding Clauses at the
rate stated in Paragraph 5.1 or, if the Contractor's Fee is stated as a fixed
sum in that Paragraph, shall be an amount which bears the same ratio to that
fixed-sum Fee as the Cost of the Work in the two preceding Clauses bears to a
reasonable estimate of the probable Cost of the Work upon its completion.
12.5.3.4 Subtract the aggregate of previous payments made by the Owner.
12.5.3.5 Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 to substantiate prior Applications for
Payment, or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
12.5.3.6 Subtract amounts, if any, for which the Owner has withheld or
nullified a Certificate for Payment as provided in Paragraph 9.5 of the General
Conditions.
12.5.4 Additional retainage, if any, shall be as follows:
(If it is intended to retain additional amounts from progress payments to the
Contractor beyond (1) the retainage from the Contractor's Fee provided in Clause
12.5.3.3, (2)the retainage from Subcontractors provided in Paragraph 12.7 below,
and (3) the retainage, if any, provided by other provisions of the Contract,
insert provision for such additional retainage here. Such provision, if made,
should also describe any arrangement for limiting or reducing the amount
retained after the Work reaches a certain state of completion)
12.6 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
12.6.1 [Deleted.]
12.6.2 [Deleted.]
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AIA DOCUMENT A111. OWNER-CONTRACTOR AGREEMENT - TENTH EDITION . AIA - COPYRIGWF
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. . This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
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<PAGE>
12.6.2.1 [Deleted.]
12.6.2.2 [Deleted.]
12.6.2.3 [Deleted.]
12.6.2.4 [Deleted.]
12.6.2.5 [Deleted.]
12.6.3 [Deleted.]
12.7 Except with the Owner's prior approval, payments to Subcontractors
included in the Contractor's Applications for Payment shall not exceed an amount
for each Subcontractor calculated as follows:
12.7.1 Take that portion of the Subcontract Sum properly allocable to completed
Work as determined by multiplying the percentage completion of each portion of
the Subcontractor's Work by the share of the total Subcontract Sum allocated to
that portion in the Subcontractor's schedule of values, less retainage of five
percent (5%). Pending final determination of amounts to be paid to the
Subcontractor for changes in the Work, amounts not in dispute may be included as
provided in Subparagraph 7.3.7 of the General Conditions even though the
Subcontract Sum has not yet been adjusted by Change Order.
Insert D: Notwithstanding the foregoing, if any Subcontractor fully performs all
of its obligations under its Subcontract then, upon the request of the
Contractor, the Owner, at the Owner's sole discretion, may agree to release the
full amount of the retainage for such Subcontractor to the Contractor for
payment to the Subcontractor.
12.7.2 Add that portion of the Subcontract Sum properly allocable to materials
and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing, less retainage of five
percent (5%).
12.7.3 Subtract the aggregate of previous payments made by the Contractor to
the Subcontractor.
12.7.4 Subtract amounts, if any, for which the Owner has withheld Payment to
the Contractor for reasons which are the fault of the Subcontractor.
12.7.5 Add, upon Substantial Completion of the entire Work of the Contractor, a
sum sufficient to increase the total payments to the Subcontractor to one
hundred percent (100%) of the Subcontract Sum, less amounts, if any, for
incomplete Work and unsettled claims; and, if final completion of the entire
Work is thereafter materially delayed through no fault of the Subcontractor, add
any additional amounts payable on account of Work of the Subcontractor in
accordance with Subparagraph 9.10.3 of the General Conditions.
(If it is intended, prior to Substantial Completion of the entire Work of the
Contractor, to reduce or limit the retainage from Subcontractors resulting from
the percentages inserted in Subparagraphs 12.7.1 and 12.7.2 above, and this is
not explained elsewhere in the Contract Documents, insert here provisions for
such reduction or limitation.)
The Subcontract Sum is the total amount stipulated in the subcontract to be paid
by the Contractor to the Subcontractor for the Subcontractor's performance of
the subcontract.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. . This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
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expires on 7/31/1998 -- Page #10
<PAGE>
12.8 Except with the Owner's prior approval, the Contractor shall not make
advance payments to suppliers for materials or equipment which have not been
delivered and stored at the site.
12.9 [Deleted.]
Insert E: 12.10 Upon Substantial Completion, any retainage then held by the
Owner shall be due and payable to the Contractor provided that such payment may
be reduced by such amount as the Owner shall reasonably determine for incomplete
Work and unsettled claims. Owner shall not be deemed unreasonable in withholding
an amount equal to the sum of (i) a reasonable estimate of the cost of the
materials required to complete or correct such items and (ii) two times a
reasonable estimate of the aggregate cost of the labor to complete or correct
such items. The monetized retention for punch-list items shall be paid to the
Contractor monthly as such items are completed and application for payment is
made therefor.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor when (1) the
Contract has been fully performed by the Contractor except for the Contractor's
responsibility to correct defective or nonconforming Work, as provided in
Subparagraph 12.2.2 of the General Conditions, and to satisfy other
requirements, if any, which necessarily survive final payment; and (2) a final
Application for Payment and a final accounting for the Cost of the Work have
been submitted by the Contractor and reviewed by the Owner's accountants. Final
payment shall be made by the Owner not more than 30 days after receipt by the
Owner of all information required to be submitted to it in accordance with the
terms hereof.
13.2 The amount of the final payment shall be calculated as follows:
13.2.1 Take the sum of the Cost of the Work substantiated by the Contractor's
final accounting and the Contractor's Fee; but not more than the Guaranteed
Maximum Price, if any.
13.2.2 Subtract amounts, if any, for which the Owner withholds, in whole or in
part, a final Certificate for Payment as provided in Subparagraph 9.5.1 of the
General Conditions or other provisions of the Contract Documents.
13.2.3 Subtract the aggregate of previous payments made by the Owner.
If the aggregate of previous payments made by the Owner exceeds the amount due
the Contractor, the Contractor shall reimburse the difference to the Owner.
13.3 The Owner's accountants will review and report in writing on the
Contractor's final accounting within 30 days after delivery of the final
accounting to the Owner by the Contractor. Based upon such Cost of the Work as
the Owner's accountants report to be substantiated by the Contractor's final
accounting, and provided the other conditions of Paragraph 13.1 have been met,
the Owner will, within seven days after receipt of the written report of the
Owner's accountants, either pay the amount of such application, or notify the
Contractor in writing of the Owner's reasons for withholding a certificate as
provided in Subparagraph 9.5.1 of the General Conditions. The time periods
stated in this Paragraph 13.3 supersede those stated in Subparagraph 9.4.1 of
the General Conditions.
13.4 If the Owner's accountants report the Cost of the Work as substantiated by
the Contractor's final accounting to be less than claimed by the Contractor, the
Contractor shall be entitled to request mediation of the disputed amount. Such
request for mediation shall be made by the Contractor within 30 days
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987. THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. . This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
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expires on 7/31/1998 -- Page #11
<PAGE>
after the Contractor's receipt of a copy of such report failure to request
mediation within this 30-day period shall result in the substantiated amount
reported by the Owner's accountants becoming binding on the Contractor. Pending
a final resolution, the Owner shall pay the Contractor all undisputed amounts.
13.5 If, subsequent to final payment and at the Owner's request, the Contractor
incurs costs described in Article 7 and not excluded by Article 8 to correct
defective or nonconforming Work, the Owner shall reimburse the Contractor such
costs and the Contractor's Fee applicable thereto on the same basis as if such
costs had been incurred prior to fmal payment, but not in excess of the
Guaranteed Maximum Price, if any. If the Contractor has participated in savings
as provided in Paragraph 5.2, the amount of such savings shall be recalculated
and appropriate credit given to the Owner in determining the net amount to be
paid by the Owner to the Contractor.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of the General
Conditions or another Contract Document, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from the
date payment is due at the rate stated below, or in the absence thereof; at the
legal rate prevailing from time to time at the place where the Project is
located.
(Insert rate of interest agreed upon, if any)
One percent over the "prime rate" as reported in The Wall Street Journal.
(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal places of business, the location of the Project and
elsewhere may affect the validity of this provision. Legal advice should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
14.3 Other provisions:
The Contractor hereby consents to the assignment of this Contract by the Owner
to the Owner's mortgage lender who will finance the Work. The Contractor agrees
to furnish copies of its Applications for Payment and all supporting documents
required under this Contract to said lender.
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in Article 14
of the General Conditions; however, the amount to be paid to the Contractor
under Subparagraph 14.1.2 of the General Conditions shall not exceed the amount
the Contractor would be entitled to receive under Paragraph 15.3 below, except
that the Contractor's Fee shall be calculated as if the Work had been fully
completed by the Contractor, including a reasonable estimate of the Cost of the
Work for Work not actually completed.
15.2 If a Guaranteed Maximum Price is established in Article 5, the Contract
may be terminated by the Owner for cause as provided in Article 14 of the
General Conditions; however, the amount, if any, to be paid to the Contractor
under Subparagraph 14.2.4 of the General Conditions shall not cause the
Guaranteed Maximum Price to be exceeded, nor shall it exceed the amount the
Contractor would be entitled to receive under Paragraph 15.3 below.
15.3 If no Guaranteed Maximum Price is established in Article 5, the Contract
may be terminated by the Owner for cause as provided in Article 14 of the
General Conditions; however, the Owner shall then pay the Contractor an amount
calculated as follows:
15.3.1 Take the Cost of the Work incurred by the Contractor to the date of
termination.
15.3.2 Add the Contractor's Fee computed upon the Cost of the Work to the date
of termination at the rate stated in Paragraph 5.1 or, if the Contractor's Fee
is stated as a fixed sum in that Paragraph, an amount which bears the same ratio
to that fixed-sum Fee as the Cost of the Work at the time of termination bears
to a reasonable estimate of the probable Cost of the Work upon its completion.
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AIA DOCUMENT A111- OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA. COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. . This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
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expires on 7/31/1998 -- Page #12
<PAGE>
15.3.3 Subtract the aggregate of previous payments made by the Owner. The Owner
shall also pay the Contractor fair compensation, either by purchase or rental at
the election of the Owner, for any equipment owned by the Contractor which the
Owner elects to retain and which is not otherwise included in the Cost of the
Work under Subparagraph 15.3.1. To the extent that the Owner elects to take
legal assignment of subcontracts and purchase orders (including rental
agreements), the Contractor shall, as a condition of receiving the payments
referred to in this Article 15, execute and deliver all such papers and take all
such steps, including the legal assignment of such subcontracts and other
contractual rights of the Contractor, as the Owner may require for the purpose
of fully vesting in the Owner the rights and benefits of the Contractor under
such subcontracts or purchase orders.
15.4 The Work may be suspended by the Owner as provided in Article 14 of the
General Conditions; in such case, the Guaranteed Maximum Price, if any, shall be
increased as provided in Subparagraph 14.3.2 of the General Conditions except
that the term "cost of performance of the Contract" in that Subparagraph shall
be understood to mean the Cost of the Work and the term "profit" shall be
understood to mean the Contractor's Fee as described in Paragraphs 5.1 and 6.3
of this Agreement.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modifications issued after execution of
this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed Standard Form of Agreement Between Owner
and Contractor, AIA Document A111, 1987 Edition.
16.1.2 The General Conditions are the General Conditions of the Contract for
Construction, AlA Document A2Ol, 1987 Edition as modified in the form thereof
attached to this Contract.
16.1.3 The Supplementary and other Conditions of the Contract are those
contained in the Project Manual dated , and are as follows:
DOCUMENT TITLE DATE
16.1.4 The Specifications are those contained in the Project Manual dated as in
Paragraph 16.1.3, and are as follows:
(Either list the Specifications here or refer to an exhibit attached to this
Agreement.)
SECTION TITLE PAGES
Clayco Outline Specifications dated 12-24-97 attached to this Contract as
Exhibit B and consisting of 21 pages.
K.S.A. Specifications Dated 8-15-97.
16.1.5 The Drawings are as follows, and are dated unless a different date is
shown below:
(Either list the Drawings here or refer to an exhibit attached to this
Agreement.)
NUMBER TITLE DATE
See Exhibit A attached to this Contract.
16.1.6 The Addenda, if any, are as follows:
NUMBER DATE PAGES
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in this
Article 16.
16.1.7 Other Documents, if any, forming part of the Contract Documents are as
follows:
(List here any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, Instructions to Bidders, sample
forms and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should be listed here only, if intended to be
part of the Contract Documents.)
Clayco Proposal Book Dated 9-4-97.
Clayco letter dated 12-24-97 attached to this Contract as Exhibit D.
Clayco Control Budget dated 12-24-97 attached hereto as Exhibit C.
ARTICLE 17
17.1 Conflicts or discrepancies among the Contract Documents shall be resolved
in the following order of priority:
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. . This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: CDMMANA111V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #13
<PAGE>
.1 This Contract, as the same may be modified by Change Order;
.2 The General Conditions;
.3 The Specifications;
.4 The Drawings; provided , however, that Drawings which are in existance
on the date hereof shall govern over this Contract or the General Conditions for
quantity, location, quality and performance;
17.2 The Contractor and the Owner shall work cooperatively with each other, the
Architect and any design/build Subcontractors to develop design and construction
drawings and specifications for the Project which are satisfactory to the Owner.
This Agreement is entered into as of the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the Architect for use in the administration of the
Contract, and the remainder to the Owner.
OWNER CONTRACTOR
By: /s/ Olga L. Conley By:/s/ Michael Murphy
------------------------ ------------------------------
(Signature) (Signature)
Olga L. Conley Chief Michael Murphy VICE PRESIDENT OF
Financial Officer CLAYCO CONSTRUCTION COMPANY, INC.
an Authorized signatory for DM MANAGEMENT, INC.
(Printed name and title) (Printed name and title)
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
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expires on 7/31/1998 -- Page #14
<PAGE>
GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION
AIA Document A201 - Electronic Format
- --------------------------------------------------------------------------------
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY IS
ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401.
This document has been approved and endorsed by the Associated General
Contractors of America.
Copyright 1911, 1915,1918,1925,1927, 1951,1958,1961,1963, 1967,1970,1976, 1987
by The American Institute of Architects, l735 New York Avenue N.W., Washington
D.C. 20006-5292. Reproduction of the material herein or substantial quotation of
its provisions without written permission of the AIA violates the copyright laws
of the United States and will be subject to legal prosecutions.
- --------------------------------------------------------------------------------
TABLE OF ARTICLES
1. GENERAL PROVISIONS 8. TIME
2. OWNER 9. PAYMENTS AND COMPLETION
3. CONTRACTOR 10. PROTECTION OF PERSONS AND
PROPERTY
4. ADMINISTRATION OF THE CONTRACT 11. INSURANCE AND BONDS
5. SUBCONTRACTORS 12. UNCOVERING AND CORRECTION OF
WORK
6. CONSTRUCTION BY OWNER OR BY 13. MISCELLANEOUS PROVISIONS
SEPARATE CONTRACTORS
7. CHANGES IN THE WORK 14. TERMINATION OR SUSPENSION OF THE
CONTRACT
- --------------------------------------------------------------------------------
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987-THE AMERICAN INSTITUTE OF ARCHITECTS,
1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292.. WARNING; Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
This document was electronically produced with permission of the AIA and can be
reproduced without violation until the date of expiration as noted below.
Electronic Format A201-1987
User Document: CDMANA201V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Acceptance of Nonconforming Work 9.6.6, 9.9.3, 12.3
Acceptance of Work 9.6.6, 9.8.2, 9.9.3, 9.10.1, 9.10.3
Access to Work 3.16, 6.2.1, 12.1
Accident Prevention 4.2.3, 10
Acts and Omissions 3.2.1, 3.2.2, 3.3.2, 3.12.8, 3.18, 4.2.3,
4.3.2, 4.3.9, 8.3.1,10.1.4, 10.2.5, 13.4.2, 13.7, 14.1
Addenda 1.1.1, 3.11
Additional Costs, Claims for 4.3.6, 4.3.7, 4.3.9, 6.1.1, 10.3
Additional Inspections and Testing 4.2.6, 9.8.2, 12.2.1, 13.5
Additional Time, Claims for 4.3.6, 4.3.8, 4.3.9, 8.3.2
ADMINISTRATION OF THE CONTRACT 3.3.3, 4, 9.4, 9.5
Advertisement or Invitation to Bid 1.1.1
Aesthetic Effect 4.2.13, 4.5.1
Allowances 3.8
All-risk Insurance 11.3.1.1
Applications for Payment 4.2.5, 7.3.7, 9.2, 9.3, 9.4, 9.5.1,
9.6.3, 9.8.3, 9.10.1, 9.10.3, 9.10.4, 11.1.3, 14.2.4
Approvals 2.4, 3.3.3, 3.5, 3.10.2, 3.12.4 through 3.12.8,
3.18.3, 4.2.7, 9.3.2, 11.3.1.4, 13.4.2, 13.5
Arbitration 4.1.4, 4.3.2, 4.3.4, 4.4.4, 4.5, 8.3.1,
10.1.2, 11.3.9, 11.3.10
Architect 4.1
Architect, Definition of 4.1.1
Architect, Extent of Authority 2.4, 3.12.6, 4.2, 4.3.2,4.3.6, 4.4,
5.2, 6.3, 7.1.2, 7.2.1, 7.3.6, 7.4, 9.2, 9.3.1,9.4, 9.5,
9.6.3,9.8.2, 9.8.3, 9.10.1, 9.10.3, 12.1,
12.2.1, 13.5.1, 13.5.2, 14.2.2, 14.2.4
Architect, Limitations of Authority
and Responsibility 3.3.3, 3.12.8, 3.12.11, 4.1.2, 4.2.1, 4.2.2, 4.2.3, 4.2.6,
4.2.7, 4.2.10, 4.2.12, 4.2.13, 4.3.2, 5.2.1, 7.4, 9.4.2, 9.6.4, 9.6.6
Architect's Additional Services and
Expenses 2.4, 9.8.2, 11.3.1.1, 12.2.1, 12.2.4, 13.5.2, 13.5.3, 14.2.4
Architect's Administration of the
Contract 4.2, 4.3.6, 4.3.7, 4.4, 9.4, 9.5
Architect's Approvals 2.4, 3.5.1, 3.10.2, 3.12.6, 3.12.8, 3.18.3, 4.2.7
Architect's Authority to Reject
Work 3.5.1, 4.2.6, 12.1.2, 12.2.1
Architect's Copyright 1.3
Architect's Decisions 4.2.6, 4.2.7, 4.2.11, 4.2.12, 4.2.13, 4.3.2, 4.3.6,
4.4.1, 4.4.4, 4.5, 6.3, 7.3.6, 7.3.8, 8.1.3, 8.3.1, 9.2,
9.4, 9.5.1, 9.8.2, 9.9.1, 10.1.2, 13.5.2, 14.2.2, 14.2.4
Architect's Inspections 4.2.2, 4.2.9, 4.3.6, 9.4.2, 9.8.2,
9.9.2, 9.10.1, 13.5
Architect's Instructions 4.2.6, 4.2.7, 4.2.8, 4.3.7,
7.4.1, 12.1, 13.5.2
Architect's Interpretations 4.2.11, 4.2.12, 4.3.7
Architect's On-Site Observations 4.2.2, 4.2.5, 4.3.6, 9.4.2,
9.5.1, 9.10.1, 13.5
Architect's Project Representative 4.2.10
Architect's Relationship with
Contractor 1.1.2, 3.2.1, 3.2.2, 3.3.3, 3.5.1,
3.7.3, 3.11, 3.12.8, 3.12.11, 3.16, 3.18, 4.2.3,
4.2.4, 4.2.6, 4.2.12, 5.2, 6.2.2, 7.3.4,
9.8.2, 11.3.7, 12.1, 13.5
Architect's Relationship with
Subcontractors 1.1.2, 4.2.3, 4.2.4,
4.2.6, 9.6.3, 9.6.4, 11.3.7
Architect's Representations 9.4.2, 9.5.1, 9.10.1
Architect's Site Visits 4.2.2, 4.2.5,4.2.9, 4.3.6, 9.4.2,
9.5.1, 9.8.2, 9.9.2, 9.10.1, 13.5
</TABLE>
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Asbestos 10.1
Attorneys' Fees 3.18.1, 9.10.2, 10.1.4
Award of Separate Contracts 6.1.1
Award of Subcontracts and
Other Contracts
for Portions of the Work 5.2
Basic Definitions 1.1
Bidding Requirements 1.1.1,1.1.7,5.2.1, 11.4.1
Boiler and Machinery
Insurance 11.3.2
Bonds, Lien 9.10.2
Bonds, Performance and
Payment 7.3.6.4, 9.10.3, 11.3.9, 11.4
Building Permit 3.7.1
Capitalization. 1.4
Certificate of Substantial
Completion 9.8.2
Certificates for Payment 4.2.5, 4.2.9, 9.3.3, 9.4, 9.5, 9.6.1,
9.6.6, 9.7.1, 9.8.3, 9.10.1, 9.10.3, 13.7, 14.1.1.3, 14.2.4
Certificates of
Inspection, Testing or
Approval 3.12.11, 13.5.4
Certificates of Insurance 9.3.2, 9.10.2, 11.1.3
Change Orders 1.1.1, 2.4.1, 3.8.2.4, 3.11, 4.2.8, 4.3.3, 5.2.3,
7.1, 7.2, 7.3.2, 8.3.1, 9.3.1.1, 9.l0.3,
11.3.1.2, 11.3.4, 11.3.9, 12.1.2
Change Orders, Definition
of 7.2.1
Changes 7.1
CHANGES IN THE WORK 3.11, 4.2.8, 7, 8.3.1, 9.3.1.1, 10.1.3
Claim, Definition of 4.3.1
Claims and Disputes 4.3, 4.4, 4.5, 6.2.5, 8.3.2, 9.3.1.2,
9.3.3,9.10.4, 10.1.4
Claims and Timely
Assertion of Claims 4.5.6
Claims for Additional Cost 4.3.6, 4.3.7, 4.3.9, 6.1.1, 10.3
Claims for Additional Time 4.3.6, 4.3.8, 4.3.9, 8.3.2
Claims for Concealed or
Unknown Conditions 4.3.6
Claims for Damages 3.18, 4.3.9, 6.1.1, 6.2.5, 8.3.2,
9.5.1.2, 10.1.4
Claims Subject to
Arbitration 4.3.2, 4.4.4, 4.5.1
Cleaning Up 3.15, 6.3
Commencement of Statutory
Limitation Period 13.7
Commencement of the Work,
Conditions Relating to 2.1.2, 2.2.1, 3.2.1, 3.2.2, 3.7.1, 3.10.1, 3.12.6, 4.3.7, 5.2.1,
6.2.2, 8.l.2, 8.2.2, 9.2, 11.1.3, 11.3.6, 11.4.1
Commencement of the Work,
Definition of 8.1.2
Communications
Facilitating Contract
Administration 3.9.1, 4.2.4, 5.2.1
Completion, Conditions
Relating to 3.11, 3.15, 4.2.2, 4.2.9,
4.3.2, 9.4.2, 9.8, 9.9.1, 9.10, 11.3.5, 12.2.2, 13.7.1
COMPLETION, PAYMENTS AND 9
Completion, Substantial 4.2.9, 4.3.5.2, 8.1.1, 8.1.3, 8.2.3, 9.8,
9.9.1, 12.2.2, 13.7
Compliance with Laws 1.3, 3.6, 3.7, 3.13, 4.1.1, 10.2.2,
11.1, 11.3, 13.1, 13.5.1, 13.5.2, 13.6, 14.1.1, 14.2.1.3
Concealed or Unknown
Conditions 4.3.6
Conditions of the Contract 1.1.1, 1.1.7, 6.1.1
Consent, Written 1.3.1, 3.12.8, 3.14.2, 4.1.2, 4.3.4, 4.5.5, 9.3.2,
9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 10.1.3, 11.3.1,
11.3.1.4, 11.3.11, 13.2, 13.4.2
CONSTRUCTION BY OWNER OR BY
SEPARATE CONTRACTORS 1.1.4, 6
Construction Change Directive,
Definition of 7.3.1
</TABLE>
- --------------------------------------------------------------------------------
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987-THE AMERICAN INSTITUTE OF ARCHITECTS,
1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292.. WARNING; Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
This document was electronically produced with permission of the AIA and can be
reproduced without violation until the date of expiration as noted below.
Electronic Format A201-1987
User Document: CDMANA201V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #2.
<PAGE>
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<S> <C>
Construction Change Directives 1.1.1, 4.2.8, 7.1, 7.3, 9.3.1.1
Construction Schedules,
Contractor's 3.10, 6.1.3
Contingent Assignment of
Subcontracts 5.4
Continuing Contract Performance 4.3.4
Contract, Definition of 1.1.2
CONTRACT, TERMINATION OR SUSPENSION
OF THE 4.3.7, 5.4.1.1, 14
Contract Administration 3.3.3, 4, 9.4, 9.5
Contract Award and Execution,
Conditions Relating to 3.7.1,
3.10, 5.2, 9.2, 11.1.3, 11.3.6, 11.4.1
Contract Documents, The 1.1, 1.2, 7
Contract Documents, Copies
Furnished and Use of 1.3, 2.2.5, 5.3
Contract Documents, Definition of 1.1.1
Contract Performance During
Arbitration 4.3.4, 4.5.3
Contract Sum 3.8, 4.3.6, 4.3.7, 4.4.4, 5.2.3, 6.1.3,
7.2,7.3,9.1,9.7, 11.3.1, 12.2.4, 12.3, 14.2.4
Contract Sum, Definition of 9.1
Contract Time 4.3.6, 4.3.8, 4.4.4, 7.2.1.3, 7.3, 8.2.1,
8.3.1,9.7, 12.1.1
Contract Time, Definition of 8.1.1
CONTRACTOR 3
Contractor, Definition of 3.1,6.1.2
Contractor's Bid 1.1.1
Contractor's Construction Schedules 3.10, 6.1.3
Contractor's Employees 3.3.2, 3.4.2, 3.8.1, 3.9, 3.18,4.2.3,
4.2.6, 8.1.2, 10.2, 10.3, 11.1.1, 14.2.1.1
Contractor's Liability Insurance 11.1
Contractor's Relationship with
Separate Contractors and Owner's
Forces 2.2.6, 3.12.5, 3.14.2, 4.2.4, 6, 12.2.5
Contractor's Relationship with
Subcontractors 1.2.4, 3.3.2,
3.18.1, 3.18.2, 5.2, 5.3, 5.4, 9.6.2, 11.3.7, 11.3.8, 14.2.1.2
Contractor's Relationship with the
Architect 1.1.2, 3.2.1, 3.2.2,
3.3.3, 3.5.1, 3.7.3, 3.11, 3.12.8, 3.16, 3.18, 4.2.3, 4.2.4, 4.2.6,
4.2.12, 5.2, 6.2.2, 7.3.4, 9.8.2, 11.3.7, 12.1, 13.5
Contractor's Representations 1.2.2, 3.5.1, 3.12.7, 6.2.2,
8.2.1, 9.3.3
Contractor's Responsibility for
Those Performing the Work 3.3.2,
3.18, 4.2.3, 10
Contractor's Review of Contract
Documents 1.2.2, 3.2, 3.7.3
Contractor's Right to Stop the Work 9.7
Contractor's Right to Terminate
the Contract 14.1
Contractor's Submittals 3.10, 3.11, 3.12, 4.2.7, 5.2.1, 5.2.3,
7.3.6, 9.2,9.3.1, 9.8.2, 9.9.1, 9.10.2, 9.10.3,
10.1.2, 11.4.2, 11.4.3
Contractor's Superintendent 3.9, 10.2.6
Contractor's Supervision and
Construction Procedures 1.2.4, 3.3,
3.4,4.2.3, 8.2.2, 8.2.3, 10
Contractual Liability Insurance 11.1.1.7, 11.2.1
Coordination and Correlation 1.2.2, 1.2.4, 3.3.1, 3.10, 3.12.7,
6.1.3,6.2.1
Copies Furnished of Drawings and
Specifications 1.3,2.2.5,3.11
Correction of Work 2.3, 2.4,4.2.1,9.8.2, 9.9.1,
12.1.2, 12.2, 13.7.1.3
Cost, Definition of 7.3.6, 14.3.5
Costs 2.4, 3.2.1, 3.7.4, 3.8.2, 3.15.2., 4.3.6, 4.3.7, 4.3.8.1,
5.2.3, 6.1.1, 6.2.3, 6.3, 7.3.3.3, 7.3.6, 7.3.7, 9.7, 9.8.2, 9.10.2,
11.3.1.2, 11.3.1.3, 11.3.4, 11.3.9, 12.1, 12.2.1, 12.2.4,
12.2.5, 13.5, 14
Cutting and Patching 3.14,6.2.6
Damage to Construction of Owner
or Separate Contractors 3.14.2,
6.2.4, 9.5.1.5, 10.2.1.2, 10.2.5, 10.3, 11.1, 11.3, 12.2.5
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Damage to the Work 3.14.2,9.9.1, 10.2.1.2, 10.2.5, 10.3, 11.3
Damages, Claims for 3.18, 4.3.9,6.1.1, 6.2.5,
8.3.2, 9.5.1.2, 10.1.4
Damages for Delay 6.1.1, 8.3.3, 9.5.1.6, 9.7
Date of Commencement of the Work,
Definition of 8.1.2
Date of Substantial Completion,
Definition of 8.1.3
Day, Definition of 8.1.4
Decisions of the Architect 4.2.6, 4.2.7, 4.2.11,
4.2.12, 4.2.13, 4.3.2, 4.3.6, 4.4.1, 4.4.4,4.5,6.3,
7.3.6, 7.3.8, 8.1.3, 8.3.1, 9.2, 9.4, 9.5.1, 9.8.2,
9.9.1, 10.1.2, 13.5.2, 14.2.2, 14.2.4
Decisions to Withhold
Certification 9.5, 9.7, 14.1.1.3
Defective or Nonconforming Work,
Acceptance, Rejection and
Correction of 2.3, 2.4, 3.5.1, 4.2.1,
4.2.6, 4.3.5, 9.5.2, 9.8.2, 9.9.1, 10.2.5, 12, 13.7.1.3
Defective Work, Definition of 3.5.1
Definitions 1.1, 2.1.1, 3.1, 3.5.1, 3.12.1, 3.12.2, 3.12.3,
4.1.1, 4.3.1, 5.1, 6.1.2, 7.2.1, 7.3.1, 7.3.6, 8.1, 9.1, 9.8.1
Delays and Extensions of Time 4.3.1, 4.3.8.1, 4.3.8.2,
6.1.1, 6.2.3, 7.2.1, 7.3.1, 7.3.4, 7.3.5, 7.3.8,
7.3.9, 8.1.1, 8.3, 10.3.1, 14.1.1.4
Disputes 4.1.4, 4.3, 4.4, 4.5, 6.2.5, 6.3, 7.3.8, 9.3.1.2
Documents and Samples at the Site 3.11
Drawings, Definition of 1.1.5
Drawings and Specifications, Use
and Ownership of 1.1.1, 1.3,
2.2.5, 3.11, 5.3
Duty to Review Contract Documents
and Field Conditions 3.2
Effective Date of Insurance 8.2.2, 11.1.2
Emergencies 4.3.7, 10.3
Employees, Contractor's 3.3.2., 3.4.2, 3.8.1, 3.9, 3.18.1,
3.18.2, 4.2.3, 4.2.6, 8.1.2,
10.2, 10.3, 11.1.1, 14.2.1.1
Equipment, Labor, Materials and 1.1.3, 1.1.6, 3.4, 3.5.1,
3.8.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.2.7,
6.2.1, 7.3.6, 9.3.2, 9.3.3, 11.3, 12.2.4, 14
Execution and Progress of the Work 1.1.3, 1.2.3, 3.2, 3.4.1,
3.5.1, 4.2.2, 4.2.3, 4.3.4, 4.3.8,6.2.2, 7.1.3,
7.3.9, 8.2, 8.3, 9.5, 9.9.1, 10.2, 14.2, 14.3
Execution, Correlation and Intent
of the Contract Documents 1.2, 3.7.1
Extensions of Time 4.3.1, 4.3.8, 7.2.1.3, 8.3, 10.3.1
Failure of Payment by Contractor 9.5.1.3, 14.2.1.2
Failure of Payment by Owner 4.3.7,9.7, 14.1.3
Faulty Work (See Defective or
Nonconforming Work)
Final Completion and Final Payment 4.2.1, 4.2.9, 4.3.2,
4.3.5, 9.10, 11.1.2, 11.1.3, 11.3.5, 12.3.1, 13.7
Financial Arrangements, Owner's 2.2.1
Fire and Extended Coverage
Insurance 11.3
GENERAL PROVISIONS 1
Governing Law 13.1
Guarantees (See Warranty and
Warranties)
Hazardous Materials 10.1, 10.2.4
Identification of Contract
Documents 1.2.1
Identification of Subcontractors
and Suppliers 5.2.1
Indemnification 3.17, 3.18, 9.10.2, 10.1.4, 11.3.1.2, 11.3.7
Information and Services
Required of the Owner 2.1.2,2.2,
4.3.4, 6.1.3, 6.1.4, 6.2.6, 9.3.2, 9.6.1, 9.6.4, 9.8.3, 9.9.2,
9.10.3, 10.1.4, 11.2, 11.3, 13.5.1, 13.5.2
Injury or Damage to
Person or Property 4.3.9
Inspections 3.3.3, 3.3.4, 3.7.1, 4.2.2,
4.2.6, 4.2.9, 4.3.6, 9.4.2, 9.8.2, 9.9.2, 9.10.1, 13.5
</TABLE>
- --------------------------------------------------------------------------------
AIA DOCUMENT A201 . GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION .
FOURTEENTH EDITION - AIA . COPYRIGHT 1987-THE AMERICAN INSTITUTE OF ARCHITECTS,
1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292.. WARNING; Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
This document was electronically produced with permission of the AIA and can be
reproduced without violation until the date of expiration as noted below.
Electronic Format A201-1987
User Document: CDMANA201V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #3
<PAGE>
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<CAPTION>
<S> <C>
Instructions to Bidders 1.1.1
Instructions to the Contractor 3.8.1, 4.2.8, 5.2.1, 7, 12.1, 13.5.2
Insurance 4.3.9, 6.1.1, 7.3.6.4, 9.3.2, 9.8.2, 9.9.1,9.10.2, 11
Insurance, Boiler and Machinery 11.3.2
Insurance, Contractor's Liability 11.1
Insurance, Effective Date of 8.2.2, 11.1.2
Insurance, Loss of Use 11.3.3
Insurance, Owner's Liability 11.2
Insurance, Property 10.2.5, 11.3
Insurance, Stored Materials 9.3.2, 11.3.1.4
INSURANCE AND BONDS 11
Insurance Companies, Consent to
Partial Occupancy 9.9.1, 11.3.11
Insurance Companies, Settlement
with 11.3.10
Intent of the Contract Documents 1.2.3, 3.12.4,
4.2.6, 4.2.7, 4.2.12, 4.2.13, 7.4
Interest 13.6
Interpretation 1.2.5, 1.4, 1.5, 4.1.1, 4.3.1, 5.1, 6.1.2, 8.1.4
Interpretations, Written 4.2.11, 4.2.12, 4.3.7
Joinder and Consolidation of
Claims Required 4.5.6
Judgment on Final Award 4.5.1, 4.5.4.1, 4.5.7
Labor and Materials, Equipment 1.1.3, 1.1.6, 3.4, 3.5.1, 3.8.2, 3.12.2, 3.12.3,3.12.7,3.12.11, 3.13,3.15.1,
4.2.7, 6.2.1, 7.3.6, 9.3.2, 9.3.3, 12.2.4, 14
Labor Disputes 8.3.1
Laws and Regulations 1.3, 3.6, 3.7, 3.13, 4.1.1, 4.5.5
4.5.7, 9.9.1, 10.2.2, 11.1, 11.3, 13.1,
13.4, 13.5.1, 13.5.2, 13.6
Liens 2.1.2, 4.3.2, 4.3.5.1, 8.2.2, 9.3.3, 9.10.2
Limitation on Consolidation or
Joinder 4.5.5
Limitations, Statutes of 4.5.4.2, 12.2.6, 13.7
Limitations of Authority 3.3.1, 4.1.2, 4.2.1,
4.2.3, 4.2.7, 4.2.10, 5.2.2, 5.2.4, 7.4, 11.3.10
Limitations of Liability 2.3, 3.2.1, 3.5.1, 3.7.3, 3.12.8, 3.12.11,
3.17, 3.18, 4.2.6, 4.2.7, 4.2.12, 6.2.2, 9.4.2,9.6.4,9.10.4,
10.1.4, 10.2.5, 11.1.2, 11.2.1, 11.3.7, 13.4.2, 13.5.2
Limitations of Time, General 2.2.1, 2.2.4, 3.2.1, 3.7.3,
3.8.2, 3.10, 3.12.5, 3.15.1, 4.2.1, 4.2.7, 4.2.11, 4.3.2,
4.3.3, 4.3.4, 4.3.6, 4.3.9, 4.5.4.2, 5.2.1, 5.2.3,6.2.4, 7.3.4, 7.4,
8.2, 9.5, 9.6.2, 9.8, 9.9, 9.10, 11.1.3, 11.3.1, 11.3.2, 11.3.5,
11.3.6, 12.2.1, 12.2.2, 13.5, 13.7
Limitations of Time, Specific 2.1.2, 2.2.1, 2.4, 3.10, 3.11,
3.15.1, 4.2.1, 4.2.11, 4.3, 4.4, 4.5, 5.3, 5.4, 7.3.5, 7.3.9,
8.2, 9.2, 9.3.1, 9.3.3, 9.4.1, 9.6.1, 9.7,9.8.2, 9.10.2, 11.1.3,
11.3.6, 11.3.10, 11.3.11, 12.2.2, 12.2.4, 12.2.6, 13.7, 14
Loss of Use Insurance 11.3.3
Material Suppliers 1.3.1, 3.12.1, 4.2.4, 4.2.6, 5.2.1,
9.3.1,9.3.1.2, 9.3.3,9.4.2,9.6.5, 9.10.4
Materials, Hazardous 10.1, 10.2.4
Materials, Labor, Equipment and 1.1.3, 1.1.6, 3.4, 3.5.1, 3.8.2,
3.12.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.2.7, 6.2.1,
7.3.6, 9.3.2, 9.3.3, 12.2.4, 14
Means, Methods, Techniques,
Sequences and Procedures of
Construction 3.3.1, 4.2.3, 4.2.7, 9.4.2
Minor Changes in the Work 1.1.1, 4.2.8, 4.3.7, 7.1, 7.4
MISCELLANEOUS PROVISIONS 13
Modifications, Definition of 1.1.1
Modifications to the Contract 1.1.1, 1.1.2, 3.7.3, 3.1l,
4.2.1, 5.2.3, 7, 8.3.1, 9.7
Mutual Responsibility 6.2
Nonconforming Work, Acceptance of 12.3
Nonconforming Work, Rejection and
Correction of 2.3.1,
4.3.5, 9.5.2, 9.8.2, 12, 13.7.1.3
Notice 2.3, 2.4, 3.2.1, 3.2.2, 3.7.3, 3.7.4, 3.9, 3.12.8,
3.12.9, 3.17, 4.3, 4.4.4, 4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1,
9.5.1, 9.6.1, 9.7,9.10, 10.1.2, 10.2.6, 11.1.3, 11.3, 12.2.2,
12.2.4, 13.3, 13.5.1, 13.5.2, 14,
Notice, Written 2.3, 2.4, 3.9,3.12.8, 3.12.9, 4.3,
4.4.4, 4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1, 9.5.1, 9.7, 9.10,
10.1.2, 10.2.6, 11.1.3, 11.3, 12.2.2, 12.2.4, 13.3, 13.5.2, 14
Notice of Testing and Inspections 13.5.1, 13.5.2
Notice to Proceed 8.2.2
Notices, Permits, Fees and 2.2.3, 3.7, 3.13, 7.3.6.4, 10.2.2
Observations, Architect's On-Site 4.2.2, 4.2.5, 4.3.6, 9.4.2, 9.5.1, 9.10.1, 13.5
Observations, Contractor's 1.2.2, 3.2.2
Occupancy 9.6.6, 9.8.1, 9.9, 11.3.11
</TABLE>
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On-Site Inspections by the
Architect 4.2.2, 4.2.9, 4.3.6,
9.4.2, 9.8.2, 9.9.2, 9.10.1
On-Site Observations by the
Architect 4.2.2, 4.2.5, 4.3.6,
9.4.2, 9.5.1, 9.10.1, 13.5
Orders, Written 2.3, 3.9, 4.3.7, 7, 8.2.2, 11.3.9, 12.1,
12.2, 13.5.2, 14.3.1
OWNER 2
Owner, Definition of 2.1
Owner, Information and Services
Required of the 2.1.2,
2.2, 4.3.4, 6, 9, 10.1.4, 11.2, 11.3, 13.5.1, 14.1.1.5, 14.1.3
Owner's Authority 3.8.1, 4.1.3, 4.2.9, 5.2.1, 5.2.4, 5.4.1,
7.3.1, 8.2.2, 9.3.1, 9.3.2, 11.4.1, 12.2.4, 13.5.2, 14.2, 14.3.1
Owner's Financial Capability 2.2.1, 14.1.1.5
Owner's Liability Insurance 11.2
Owner's Loss of Use Insurance 11.3.3
Owner's Relationship with
Subcontractors 1.1.2, 5.2.1, 5.4.1, 9.6.4
Owner's Right to Carry Out the
Work 2.4, 12.2.4, 14.2.2.2
Owner's Right to Clean Up 6.3
Owner's Right to Perform
Construction and to Award
Separate Contracts 6.1
Owner's Right to Stop the Work 2.3, 4.3.7
Owner's Right to Suspend the Work 14.3
Owner's Right to Terminate the
Contract 14.2
Ownership and Use of Architect's
Drawings, Specifications and
Other Documents 1.1.1, 1.3, 2.2.5, 5.3
Partial Occupancy or Use 9.6.6, 9.9, 11.3.11
Patching, Cutting and 3.14, 6.2.6
Patents, Royalties and 3.17
Payment, Applications for 4.2.5, 9.2, 9.3, 9.4,
9.5.1, 9.8.3, 9.10.1, 9.10.3, 9.10.4, 14.2.4
Payment, Certificates for 4.2.5, 4.2.9, 9.3.3, 9.4, 9.5,
9.6.1, 9.6.6, 9.7.1, 9.8.3, 9.10.1, 9.10.3, 13.7, 14.1.1.3, 14.2.4
Payment, Failure of 4.3.7, 9.5.1.3, 9.7,
9.10.2, 14.1.1.3, 14.2.1.2
Payment, Final 14.2.1, 4.2.9, 4.3.2, 4.3.5, 9.10, 11.1.2
11.1.3, 11.3.5, 12.3.1
Payment Bond, Performance Bond and 7.3.6.4, 9.10.3,
11.3.9, 11.4
Payments, Progress 4.3.4, 9.3, 9.6, 9.8.3, 9.10.3, 13.6, 14.2.3
PAYMENTS AND COMPLETION 9, 14
Payments to Subcontractors 5.4.2, 9.5.1.3,
9.6.2, 9.6.3, 9.6.4, 11.3.8, 14.2.1.2
PCB 10.1
</TABLE>
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AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987-THE AMERICAN INSTITUTE OF ARCHITECTS,
1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292.. WARNING; Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
This document was electronically produced with permission of the AIA and can be
reproduced without violation until the date of expiration as noted below.
Electronic Format A201-1987
User Document: CDMANA201V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #4
<PAGE>
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Performance Bond and Payment Bond 7.3.6.4,
9.10.3, 11.3.9, 11.4
Permits, Fees and Notices 2.2.3, 3.7, 3.13, 7.3.6.4, 10.2.2
PERSONS AND PROPERTY, PROTECTION
OF 10
Polychlorinated Bipheny 10.1
Product Data, Definition of 3.12.2
Product Data and Samples, Shop
Drawings .11,3.12,4.2.7
Progress and Completion 4.2.2, 4.3.4,8.2
Progress Payments 4.3.4, 9.3,
9.6,9.8.3,9.10.3, 13.6,14.2.3
Project, Definition of the 1.1.4
Project Manual, Definition of the 1.1.7
Project Manuals 2.2.5
Project Representatives 4.2.10
Property Insurance 10.2.5, 11.3
PROTECTION OF PERSONS AND PROPERTY 10
Regulations and Laws 1.3,3.6,3.7,3.13,4.1.1, 4.5.5
4.5.7,10.2.2, 11.1, 11.3, 13.1, 13.4,
13.5.1, 13.5.2, 13.6, 14
Rejection of Work 3.5.1,4.2.6, 12.2
Releases of Waivers and Liens 9.10.2
Representations 1.2.2, 3.5.1, 3.12.7, 6.2.2, 8.2.1,9.3.3,
9.4.2, 9.5.1, 9.8.2, 9.10.1
Representatives 2.1.1, 3.1.1, 3.9, 4.1.1,
4.2.1, 4.2.10, 5.1.1, 5.1.2, 13.2.1
Resolution of Claims and Disputes 4.4, 4.5
Responsibility for Those
Performing the Work 3.3.2, 4.2.3, 6.1.3, 6.2, 10
Retainage 9.3.1, 9.6.2, 9.8.3, 9.9.1, 9.10.2, 9.10.3
Review of Contract Documents and
Field Conditions by Contractor 1.2.2, 3.2, 3.7.3, 3.12.7
Review of Contractor's Submittals
by Owner and Architect 3.10.1, 3.10.2, 3.11, 3.12,
4.2.7, 4.2.9, 5.2.1, 5.2.3, 9.2, 9.8.2
Review of Shop Drawings, Product
Data and Samples by Contractor 3.12.5
Rights and Remedies 1.1.2, 2.3, 2.4, 3.5.1, 3.15.2,
4.2.6, 4.3.6, 4.5, 5.3, 6.1, 6.3, 7.3.1, 8.3.1, 9.5.1, 9.7, 10.2.5,
10.3, 12.2.2, 12.2.4, 13.4, 14
Royalties and Patents 3.17
Rules and Notices for Arbitration 4.5.2
Safety of Persons and Property 10.2
Safety Precautions and Programs 4.2.3, 4.2.7, 10.1
Samples, Definition of 3.12.3
Samples, Shop Drawings, Product
Data and 3.11, 3.12,4.2.7
Samples at the Site, Documents
and 3.11
Schedule of Values 9.2, 9.3.1
Schedules, Construction 3.10
Separate Contracts and Contractors 1.1.4, 3.14.2, 4.2.4,
4.5.5, 6, 11.3.7, 12.1.2, 12.2.5
Shop Drawings, Definition of 3.12.1
Shop Drawings, Product Data and
Samples 3.11, 3.12, 4.2.7
Site, Use of 3.13, 6.1.1, 6.2.1
Site Inspections 1.2.2, 3.3.4, 4.2.2, 4.2.9,
4.3.6, 9.8.2, 9.10.1, 13.5
Site Visits, Architect's 4.2.2, 4.2.5, 4.2.9, 4.3.6,
9.4.2, 9.5.1, 9.8.2, 9.9.2, 9.10.1, 13.5
Special Inspections and Testing 4.2.6, 12.2.1, 13.5
Specifications, Definition of the 1.1.6
Specifications, The 1.1.1, 1.1.6, 1.1.7, 1.2.4, 1.3, 3.11
Statute of Limitations 4.5, 4.2, 12.2.6, 13.7
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Stopping the Work 2.3., 4.3.7, 9.7, 10.1.2, 10.3, 14.1
Stored Materials 6.2.1, 9.3.2, 10.2.1.2, 11.3.1.4, 12.2.4
Subcontractor, Definition of 5.1.1
SUBCONTRACTORS 5
Subcontractors, Work by 1,2,4, 3.3.2, 3.12.1, 4.2.3, 5.3, 5.4
Subcontractual Relations 5.3, 5.4, 9.3.1.2, 9.6.2,
9.6.3, 9.6.4, 10.2.1, 11.3.7, 11.3.8, 14.1.1, 14.2.1.2, 14.3.2
Submittals 1.3, 3.2.3, 3.10,3.11, 3.12, 4.2.7, 5.2.1, 5.2.3,
7.3.6, 9.2, 9.3.1, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 11.1.3
Subrogation, Waivers of 6.1.1, 11.3.5, 11.3.7
Substantial Completion 4.2.9, 4.3.5.2, 8.1.1, 8.1.3,
8.2.3, 9.8, 9.9.1, 12.2.1, 12.2.2, 13.7
Substantial Completion,
Definition of 9.8.1
Substitution of Subcontractors 5.2.3, 5.2.4
Substitution of the Architect 4.1.3
Substitutions of Materials 3.5.1
Sub-subcontractor, Definition of 5.1.2
Subsurface Conditions 4.3.6
Successors and Assigns 13.2
Superintendent 3.9, 10.2.6
Supervision and
Construction Procedures 1.2.4, 3.3, 3.4,
4.2.3, 4.3.4, 6.1.3, 6.2.4, 7.1.3, 7.3.4, 8.2, 8.3.1, 10, 12, 14
Surety 4.4.1, 4.4.4, 5.4.1.2, 9.10.2, 9.10.3, 14.2.2
Surety, Consent of 9.9.1, 9.10.2, 9.10.3
Surveys 2.2.2, 3.18.3
Suspension by the Owner for
Convenience 14.3
Suspension of the Work 4.3.7, 5.4.2, 14.1.1.4, 14.3
Suspension or Termination of the
Contract 4.3.7, 5.4.1.1, 14
Taxes 3.6,7.3.6.4
Termination by the Contractor 14.1
Termination by the Owner for Cause 5.4.1.1, 14.2
Termination of the Architect 4.1.3
Termination of the Contractor 14.2.2
TERMINATION OR SUSPENSION OF THE
CONTRACT 14
Tests and Inspections 3.3.3, 4.2.6, 4.2.9, 9.4.2, 12.2.1, 13.5
TIME 8
Time, Delays and Extensions of 4.3.8, 7.2.1, 8.3
Time Limits, Specific 2.1.2, 2.2.1, 2.4, 3.10, 3.11, 3.15.1,
4.2.1, 4.2.11, 4.3, 4.4, 4.5., 5.3, 5.4, 7.3.5, 7.3.9, 8.2, 9.2, 9.3.1,
9.3.3, 9.4.1, 9.6.1, 9.7, 9.8.2, 9.10.2, 11.1.3, 11.3.6, 11.3.10,
11.3.11, 12.2.2, 12.2.4, 12.2.6, 13.7, 14
Time Limits on Claims 4.3.2, 4.3.3, 4.3.6, 4.3.9, 4.4, 4.5
Title to Work 9.3.2, 9.3.3
UNCOVERING AND CORRECTION OF WORK 12
Uncovering of Work 12.1
Unforeseen Conditions 4.3.6, 8.3.1, 10.1
Unit Prices 7.1.4, 7.3.3.2
Use of Documents 1.1.1, 1.3, 2.2.5, 3.12.7, 5.3
Use of Site 3.13, 6.1.1, 6.2.1
Values, Schedule of 9.2, 9.3.1
Waiver of Claims: Final Payment 4.3.5, 4.5.1, 9.10.3
Waiver of Claims by the Architect 13.4.2
Waiver of Claims by the Contractor 9.10.4, 11.3.7, 13.4.2
Waiver of Claims by the Owner 4.3.5, 4.5.1, 9.9.3,
9.10.3, 11.3.3, 11.3.5, 11.3.7, 13.4.2
Waiver of Liens 9.10.2
Waivers of Subrogation 6.1.1, 11.3.5, 11.3.7
Warranty and Warranties 3.5, 4.2.9,
4.3.5.3, 9.3.3, 9.8.2, 9.9.1, 12.2.2, 13.7.1.3
Weather Delays 4.3.8.2
</TABLE>
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AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987-THE AMERICAN INSTITUTE OF ARCHITECTS,
1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292.. WARNING; Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
This document was electronically produced with permission of the AIA and can be
reproduced without violation until the date of expiration as noted below.
Electronic Format A201-1987
User Document: CDMANA201V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #5
<PAGE>
<TABLE>
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WHEN Arbitration May Be Demanded 4.5.4
Work, Definition of 1.1.3
Written Consent 1.3.1, 3.12.8, 3.14.2,4.1.2,4.3.4,
4.5.5, 9.3.2, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 10.1.3 11.3.1,
11.3.1.4, 11.3.11, 13.2, 13.4.2
Written Interpretations 4.2.11, 4.2.12, 4.3.7
</TABLE>
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Written Notice 2.3,2.4, 3.9, 3.12.8, 3.12.9, 4.3, 4.4.4,
4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1, 9.5.1, 9.7, 9.10, 10.1.2,
10.2.6, 11.1.3, 11.3, 12.2.2, 12.2.4, 13.3, 13.5.2, 14
Written Orders 2.3, 3.9, 4.3.7,
7,8.2.2, 11.3.9, 12.1, 12.2, 13.5.2, 14.3.1
</TABLE>
- -------------------------------------------------------------------------------
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987-THE AMERICAN INSTITUTE OF ARCHITECTS,
1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING; Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
This document was electronically produced with permission of the AIA and can be
reproduced without violation until the date of expiration as noted below.
Electronic Format A201-1987
User Document: CDMANA201V4.DOC -- 2/27/1998. AIA License Number 105838, which
expires on 7/31/1998 -- Page #6
<PAGE>
- --------------------------------------------------------------------------------
GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION
- --------------------------------------------------------------------------------
ARTICLE I
GENERAL PROVISIONS
1.1 BASIC DEFINITIONS
1.1.1 THE CONTRACT DOCUMENTS
The Contract Documents consist of the Agreement between Owner and Contractor
(hereinafter the Agreement), Conditions of the Contract (General, Supplementary
and other Conditions), Drawings, Specifications, addenda issued prior to
execution of the Contract, other documents listed in the Agreement and
Modifications issued after execution of the Contract. A Modification is (1) a
written amendment to the Contract signed by both parties, (2) a Change Order,
[(3) [deleted] (4) [deleted]. Unless specifically enumerated in the
Agreement, the Contract Documents do not include other documents such as bidding
requirements (advertisement or invitation to bid, Instructions to Bidders,
sample forms, the Contractor's bid or portions of addenda relating to bidding
requirements).
1.1.2 THE CONTRACT
The Contract Documents form the Contract for Construction. The Contract
represents the entire and integrated agreement between the parties hereto and
supersedes prior negotiations, representations or agreements, either written or
oral. The Contract may be amended or modified only by a Modification. The
Contract Documents shall not be construed to create a contractual relationship
of any kind (1) [deleted] (2) between the Owner and a Subcontractor or Sub-
subcontractor or (3) between any persons or entities other than the Owner and
Contractor.
1.1.3 THE WORK
The term "Work" means the construction and services required by the Contract
Documents, whether completed or partially completed, and includes all other
labor, materials, equipment and services provided or to be provided by the
Contractor to fulfill the Contractor's obligations. The Work may constitute the
whole or a part of the Project. As part of the Work, the Contractor shall obtain
and pay for the services of a licensed architect and structural engineer in
connection with the design and construction of the Project. Any and all civil
engineering services required for the Project shall be separately contracted and
paid for by the Owner. The Work comprises the total design and completed
construction of the Project, including, without limitation, all design,
construction and services required by the Contract Documents and includes all
labor and materials necessary for the full performance and completion of the
Project, including (but not limited to) all design materials, tools, methods
labor, overtime labor and standby labor as may be required to maintain
construction progress, equipment, supplies, services, supervision,
transportation, power, fuel, water and other items, facilities and services of
every kind necessary to perform and complete the Project, and to maintain
adequate progress so as to be able to meet the requirements of the Project
schedule.
1.1.4 THE PROJECT
The Project is the total construction of which the Work performed under the
Contract Documents may be the whole or a part and which may include construction
by the Owner or by separate contractors.
1.1.5 THE DRAWINGS
The Drawings are the graphic and pictorial portions of the Contract Documents,
wherever located and whenever issued, showing the design, location and
dimensions of the Work, generally including plans, elevations, sections,
details, schedules and diagrams.
1.1.6 THE SPECIFICATIONS
The Specifications are that portion of the Contract Documents consisting of the
written requirements for materials, equipment, construction systems, standards
and workmanship for the Work, and performance of related services.
1.1.7 THE PROJECT MANUAL
The Project Manual is the volume usually assembled for the Work which may
include the bidding requirements, sample forms, Conditions of the Contract and
Specifications.
1.2 EXECUTION, CORRELATION AND INTENT
1.2.1 The Contract Documents shall be signed by the Owner and Contractor as
provided in the Agreement.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #7
<PAGE>
1.2.2 Execution of the Contract by the Contractor is a representation that the
Contractor has visited the site, become familiar with local conditions under
which the Work is to be performed and correlated personal observations with
requirements of the Contract Documents.
1.2.3 The intent of the Contract Documents is to include all items necessary
for the proper execution and completion of the Work by the Contractor. The
Contract Documents are complementary, and what is required by one shall be as
binding as if required by all; performance by the Contractor shall be required
only to the extent consistent with the Contract Documents and reasonably
inferable from them as being necessary to produce the intended results.
1.2.4 Organization of the Specifications into divisions, sections and articles,
and arrangement of Drawings shall not control the Contractor in dividing the
Work among Subcontractors or in establishing the extent of Work to be performed
by any trade.
1.2.5 Unless otherwise stated in the Contract Documents, words which have well-
known technical or construction industry meanings are used in the Contract
Documents in accordance with such recognized meanings.
1.3 OWNERSHIP AND USE OF ARCHITECT'S DRAWINGS, SPECIFICATIONS AND OTHER
DOCUMENTS
1.3.1 The Drawings, Specifications and other documents prepared by the
Architect are instruments of the Architect's service and unless otherwise
indicated the Architect shall be deemed the author of them and will retain all
common law, statutory and other reserved rights, in addition to the copyright.
The Owner shall be permitted to retain copies, including reproducible copies of
the Architect's Drawings, Specifications and other documents (the "Final Plans")
for information and reference in connection with the Owner's use and occupancy
of the Project. The Final Plans shall not be used by the Owner or any of the
Owner's assigns for any other project. Notwithstanding the foregoing, when
services of the Architect have been performed and the Contractor has been paid
therefor in accordance with the terms of this Agreement, the Final Plans may be
used by the Owner in connection with the future development, renovation and
repair of the Project, without further compensation to the Architect or the
Contractor, provided, however, that in the event of such use of the Final Plans
by the Owner or its assigns, neither the Architect nor the Contractor shall have
any liability or responsibility with respect to the use thereof; and provided,
further, that the Owner hereby agrees to indemnify, defend and hold harmless the
Architect and the Contractor from and against any and all claims, causes of
action, losses, damages, liabilities and expenses (including, without
limitation, attorneys' fees and court costs) which may be suffered or incurred
by the Architect or the Contractor as a result of such use of the Final Plans.
Upon Substantial Completion of the Work, the Contractor shall submit to the
Owner two (2) complete sets of as-built drawings, signed by Contractor,
certifying that they show complete and exact as-built conditions, stating sizes,
kind of materials, vital piping, conduit locations and similar matters. The as-
built drawings shall indicate by circling all areas changed from the original
Contract Documents and shall otherwise be in such form as are reasonably
acceptable to the Owner.
1.4 CAPITALIZATION
1.4.1 Terms capitalized in these General Conditions include those which are (1)
specifically defined, (2) the titles of numbered articles and identified
references to Paragraphs, Subparagraphs and Clauses in the document or (3) the
titles of other documents published by the American Institute of Architects.
1.5 INTERPRETATION
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #8
<PAGE>
1.5.1 In the interest of brevity the Contract Documents frequently omit
modifying words such as "all" and "any" and articles such as "the" and "an," but
the fact that a modifier or an article is absent from one statement and appears
in another is not intended to affect the interpretation of either statement.
ARTICLE 2
OWNER
2.1 DEFINITION
2.1.1 The Owner is the person or entity identified as such in the Agreement and
is referred to throughout the Contract Documents as if singular in number. The
term "Owner" means the Owner or the Owner's authorized representative. Until the
Contractor is notified by the Owner in writing to the contrary, Craig Snow shall
be the Owner's authorized representative.
2.1.2 The Owner upon reasonable written request shall furnish to the Contractor
in writing information which is necessary and relevant for the Contractor to
evaluate, give notice of or enforce mechanic's lien rights. Such information
shall include a correct statement of the record legal title to the property on
which the Project is located, usually referred to as the site, and the Owner's
interest therein at the time of execution of the Agreement and, within five days
after any change, information of such change in title, recorded or unrecorded.
2.2 INFORMATION AND SERVICES REQUIRED OF THE OWNER
2.2.1 The Owner shall, at the request of the Contractor, prior to execution of
the Agreement and promptly from time to time thereafter, furnish to the
Contractor reasonable evidence that financial arrangements have been made to
fulfill the Owner's obligations under the Contract. [Note: Unless such
reasonable evidence were furnished on request prior to the execution of the
Agreement, the prospective contractor would not be required to execute the
Agreement or to commence the Work]
2.2.2 The Owner shall furnish surveys describing physical characteristics,
legal limitations and utility locations for the site of the Project, and a legal
description of the site.
2.2.3 Except for permits and fees which are the responsibility of the
Contractor under the Contract Documents, the Owner shall secure and pay for
necessary approvals, easements, assessments and charges required for
construction, use or occupancy of permanent structures or for permanent changes
in existing facilities.
2.2.4 Information or services under the Owner's control shall be furnished by
the Owner with reasonable promptness to avoid delay in orderly progress of the
Work.
2.2.5 Unless otherwise provided in the Contract Documents, the Contractor will
be furnished, free of charge, such copies of Drawings and Project Manuals
prepared by the civil engineer as are reasonably necessary for execution of the
Work.
2.2.6 The foregoing are in addition to other duties and responsibilities of the
Owner enumerated herein and especially those in respect to Article 6
(Construction by Owner or by Separate Contractors), Article 9 (Payments and
Completion) and Article 11 (Insurance and Bonds).
2.3 OWNER'S RIGHT TO STOP THE WORK
2.3.1 If the Contractor fails to correct Work which is not in accordance with
the requirements of the Contract Documents as required by Paragraph 12.2 or
persistently fails to carry out Work in accordance with the Contract Documents,
the Owner, by written order signed personally or by an agent specifically so
empowered by the Owner in writing, may order the Contractor to stop the Work, or
any portion thereof, until the cause for such order has been eliminated;
however, the right of the Owner to stop the Work shall not give rise to a duty
on the part of the Owner to exercise this right for the benefit of the
Contractor or any other person or entity, except to the extent required by
Subparagraph 6.1.3.
2.4 OWNER'S RIGHT TO CARRY OUT THE WORK
2.4.1 If the Contractor defaults or neglects to carry out the Work in
accordance with the Contract Documents and fails within a seven-day period after
receipt of written notice from the Owner to commence and continue correction of
such default or neglect with diligence and promptness, the Owner may after such
seven-day period give the Contractor a second written notice to correct such
deficiencies within a second seven-day period. If the Contractor within such
second seven-day period after receipt of such second notice fails to commence
and continue to correct any deficiencies, the Owner may, without prejudice to
other remedies the Owner may have, correct such deficiencies. In such case an
appropriate Change Order shall be issued deducting from payments then or
thereafter due the Contractor the cost of correcting such deficiencies,
including compensation for the Architect's additional services and expenses made
necessary by such default, neglect or failure.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #9
<PAGE>
If payments then or thereafter due the Contractor are not sufficient to cover
such amounts, the Contractor shall pay the difference to the Owner.
ARTICLE 3
CONTRACTOR
3.1 DEFINITION
3.1.1 The Contractor is the person or entity identified as such in the
Agreement and is referred to throughout the Contract Documents as if singular in
number. The term "Contractor" means the Contractor or the Contractor's
authorized representative.
3.2 REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY CONTRACTOR
3.2.1 The Contractor shall carefully study and compare the Contract Documents
with each other and with information furnished by the Owner pursuant to
Subparagraph 2.2.2 and shall at once report to the Owner errors, inconsistencies
or omissions discovered. The Contractor shall not be entitled to any changes to
the guaranteed maximum price resulting from errors, inconsistencies or omissions
in the Contract Documents unless the Owner recognized such error, inconsistency
or omission and knowingly failed to report it to the Contractor. If the
Contractor performs any construction activity involving an error, inconsistency
or omission in the Contract Documents the Contractor shall assume appropriate
responsibility for such performance and shall bear an appropriate amount of the
attributable costs for correction unless the Owner approved such activity
knowing it involved a recognized error, inconsistency or omission and failed to
notify the Contractor of the same.
3.2.2 The Contractor shall take field measurements and verify field conditions
and shall carefully compare such field measurements and conditions and other
information known to the Contractor with the Contract Documents before
commencing activities. Errors, inconsistencies or omissions discovered shall be
reported to the Owner at once.
3.2.3 The Contractor shall perform the Work in accordance with the Contract
Documents and submittals approved pursuant to Paragraph 3.12.
3.3 SUPERVISION AND CONSTRUCTION PROCEDURES
3.3.1 The Contractor shall supervise and direct the Work, using the
Contractor's best skill and attention. The Contractor shall be solely
responsible for and have control over construction means, methods, techniques,
sequences and procedures and for coordinating all portions of the Work under the
Contract, unless Contract Documents give other specific instructions concerning
these matters.
3.3.2 The Contractor shall be responsible to the Owner for acts and omissions
of the Contractor's employees, Subcontractors and their agents and employees,
and other persons performing portions of the Work under a contract with the
Contractor.
3.3.3 The Contractor shall not be relieved of obligations to performing the Work
in accordance with the Contract Documents by tests, inspections or approvals
required or performed by persons other than the Contractor.
3.3.4 The Contractor shall be responsible for inspection of portions of Work
already performed under this Contract to determine that such portions are in
proper condition to receive subsequent Work.
3.4 LABOR AND MATERIALS
3.4.1 Unless otherwise provided in the Contract Documents, the Contractor shall
provide and pay for labor, materials, equipment, tools, construction equipment
and machinery, water, heat, utilities, transportation, and other facilities and
services necessary for proper execution and completion of the Work, whether
temporary or permanent and whether or not incorporated or to be incorporated in
the Work.
3.4.2 The Contractor shall enforce strict discipline and good order among the
Contractor's employees and other persons carrying out the Contract. The
Contractor shall not permit employment of unfit persons or persons not skilled
in tasks assigned to them.
3.5 WARRANTY
3.5.1 The Contractor warrants to the Owner that materials and equipment
furnished under the Contract will be of good quality and new unless otherwise
required or permitted by the Contract Documents and free of any liens other than
those liens created by the Owner and any mechanic's liens claims that the
Contractor or any Subcontractor may possess in the event the Owner breaches
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #10
<PAGE>
its payment obligations hereunder, that the Work will be free from defects not
inherent in the quality required or permitted, and that the Work will conform
with the requirements of the Contract Documents. Work not conforming to these
requirements, including substitutions not properly approved and authorized, may
be considered defective. The Contractor's warranty excludes remedy for damage or
defect caused by abuse, modifications not executed by the Contractor, improper
or insufficient maintenance, improper operation, or normal wear and tear under
normal usage. If required by the Owner, the Contractor shall furnish
satisfactory evidence as to the kind and quality of materials and equipment. All
warranties under this Section 3.5 shall commence as of the date of Substantial
Completion of the Work and shall continue for a period of one (1) year, except
as otherwise provided in the Contract Documents. Warranties for punch list items
shall commence when such items have been completed, provided, however that when
any punch list item is part of a system, the punch list item shall not delay the
commencement of the warranty period on any other part or parts of such system,
which warranty(ies) shall commence as of the date of Substantial Completion of
the Work.
Insert A: 3.5.3 All Subcontractor's and manufacturers' warranties required under
the Contract Documents shall be deemed furnished and assigned to the Owner
pursuant to this Contract without further action by the Contractor upon the
payment in full by the Owner for all Work as required under this Contract. All
such guarantees and warranties shall extend for the period of time provided
therein. Copies of all appliance, equipment and other warranties shall be
submitted to the Owner prior to Final Payment.
3.6 TAXES
3.6.1 The Contractor shall pay sales, consumer, use and similar taxes for the
Work or portions thereof provided by the Contractor which are legally enacted
when bids are received or negotiations concluded, whether or not yet effective
or merely scheduled to go into effect.
3.7 PERMITS, FEES AND NOTICES
3.7.1 Unless otherwise provided in the Contract Documents, the Contractor shall
secure and pay for the building permit and other permits and governmental fees,
licenses and inspections necessary for proper execution and completion of the
Work which are customarily secured after execution of the Contract and which are
legally required when bids are received or negotiations concluded.
3.7.2 The Contractor shall comply with and give notices required by laws,
ordinances, rules, regulations and lawful orders of public authorities bearing
on performance of the Work.
3.7.3 The Contractor shall cause the Architect to ascertain that the Contract
Documents are in accordance with applicable laws, statutes, ordinances, building
codes, and rules and regulations. However, if the Contractor observes that
portions of the Contract Documents are at variance therewith, the Contractor
shall promptly notify the Architect and Owner in writing, and necessary changes
shall be accomplished by appropriate Modification.
3.7.4 [Deleted.]
3.8 ALLOWANCES
3.8.1 The Contractor shall include in the Contract Sum all allowances stated in
the Contract Documents. Items covered by allowances shall be supplied for such
amounts and by such persons or entities as the Owner may direct, but the
Contractor shall not be required to employ persons or entities against which the
Contractor makes reasonable objection.
3.8.2 Unless otherwise provided in the Contract Documents:
.1 materials and equipment under an allowance shall be selected promptly by
the Owner to avoid delay in the Work;
.2 allowances shall cover the cost to the Contractor of materials and
equipment delivered at the site and all required taxes, less applicable
trade discounts;
.3 Contractor's costs for unloading and handling at the site, labor,
installation costs, overhead, profit and other expenses contemplated for
stated allowance amounts shall be included in the Contract Sum and not in
the allowances;
.4 whenever costs are more than or less than allowances, the Contract Sum
shall be adjusted accordingly by Change Order. The amount of the Change
Order shall reflect (1) the difference between actual costs and the
allowances under Clause 3.8.2.2 and (2) changes in Contractor's costs
under Clause 3.8.2.3.
3.9 SUPERINTENDENT
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #11
<PAGE>
3.9.1 The Contractor shall employ a competent superintendent and necessary
assistants who shall be in attendance at the Project site during performance of
the Work. The superintendent shall represent the Contractor, and communications
given to the superintendent shall be as binding as if given to the Contractor.
Important communications shall be confirmed in writing. Other communications
shall be similarly confirmed on written request in each case.
3.10 CONTRACTOR'S CONSTRUCTION SCHEDULES
3.10.1 The Contractor, promptly after being awarded the Contract, shall prepare
and submit for the Owner's information a Contractor's construction schedule for
the Work. The schedule shall not exceed time limits current under the Contract
Documents, shall be revised at appropriate intervals as required by the
conditions of the Work and Project, shall be related to the entire Project to
the extent required by the Contract Documents, and shall provide for expeditious
and practicable execution of the Work.
3.10.2 The Contractor shall prepare and keep current, a schedule of submittals
which is coordinated with the Contractor's construction schedule and allows the
Architect and the Owner (if requested by the Owner) reasonable time to review
submittals.
3.10.3 The Contractor shall conform to the most recent schedules. The Owner
shall be entitled to call progress meetings to be held at the Work site during
normal business hours or at such other time and location as may be agreed upon
by the parties.
3.11 DOCUMENTS AND SAMPLES AT THE SITE
3.11.1 The Contractor shall maintain at the site for the Owner one record copy
of the Drawings, Specifications, addenda, Change Orders and other Modifications,
in good order and marked currently to record changes and selections made during
construction, and in addition approved Shop Drawings, Product Data, Samples and
similar required submittals. These shall be available to the Architect and shall
be delivered to the Owner upon completion of the Work.
3.12 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES
3.12.1 Shop Drawings are drawings, diagrams, schedules and other data specially
prepared for the Work by the Contractor or a Subcontractor, Sub-subcontractor,
manufacturer, supplier or distributor to illustrate some portion of the Work.
3.12.2 Product Data are illustrations, standard schedules, performance charts,
instructions, brochures, diagrams and other information furnished by the
Contractor to illustrate materials or equipment for some portion of the Work.
3.12.3 Samples are physical examples which illustrate materials, equipment or
workmanship and establish standards by which the Work will be judged.
3.12.4 Shop Drawings, Product Data, Samples and similar submittals are not
Contract Documents. The purpose of their submittal is to demonstrate for those
portions of the Work for which submittals are required the way the Contractor
proposes to conform to the information given and the design concept expressed in
the Contract Documents.
3.12.5 The Contractor shall review, approve and submit to the Owner Shop
Drawings, Product Data, Samples and similar submittals required by the Contract
Documents with reasonable promptness and in such sequence as to cause no delay
in the Work or in the activities of the Owner or of separate contractors.
Submittals made by the Contractor which are not required by the Contract
Documents may be returned without action.
3.12.6 The Contractor shall perform no portion of the Work requiring submittal
and review of Shop Drawings, Product Data, Samples or similar submittals until
the respective submittal has been approved by the Owner. Such Work shall be in
accordance with approved submittals.
3.12.7 By approving and submitting Shop Drawings, Product Data, Samples and
similar submittals, the Contractor represents that the Contractor has determined
and verified materials, field measurements and field construction criteria
related thereto, or will do so, and has checked and coordinated the information
contained within such submittals with the requirements of the Work and of the
Contract Documents.
3.12.8 The Contractor shall not be relieved of responsibility for deviations
from requirements of the Contract Documents by the Owner's approval of Shop
Drawings, Product Data, Samples or similar submittals unless the Contractor has
specifically informed the Owner in writing of such deviation at the time of
submittal and the Owner has given written approval to the specific
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #12
<PAGE>
deviation. The Contractor shall not be relieved of responsibility for errors or
omissions in Shop Drawings, Product Data, Samples or similar submittals by the
Owner's approval thereof.
3.12.9 The Contractor shall direct specific attention, in writing or on
resubmitted Shop Drawings, Product Data, Samples or similar submittals, to
revisions other than those requested by the Owner on previous submittals.
3.12.10 Informational submittals upon which the Owner is not expected to take
responsive action may be so identified in the Contract Documents.
3.12.11 When professional certification of performance criteria of materials,
systems or equipment is required by the Contract Documents, the Owner shall be
entitled to rely upon the accuracy and completeness of such calculations and
certifications.
3.13 USE OF SITE
3.13.1 The Contractor shall confine operations at the site to areas permitted
by law, ordinances, permits and the Contract Documents and shall not
unreasonably encumber the site with materials or equipment.
3.14 CUTTING AND PATCHING
3.14.1 The Contractor shall be responsible for cutting, fitting or patching
required to complete the Work or to make its parts fit together properly.
3.14.2 The Contractor shall not damage or endanger a portion of the Work or
fully or partially completed construction of the Owner or separate contractors
by cutting, patching or otherwise altering such construction, or by excavation.
The Contractor shall not cut or otherwise alter such construction by the Owner
or a separate contractor except with written consent of the Owner and of such
separate contractor; such consent shall not be unreasonably withheld. The
Contractor shall not unreasonably withhold from the Owner or a separate
contractor the Contractor's consent to cutting or otherwise altering the Work.
3.15 CLEANING UP
3.15.1 The Contractor shall keep the premises and surrounding area free from
accumulation of waste materials or rubbish caused by operations under the
Contract. At completion of the Work the Contractor shall remove from and about
the Project waste materials, rubbish, the Contractor's tools, construction
equipment, machinery and surplus materials.
3.15.2 If the Contractor fails to clean up as provided in the Contract
Documents, the Owner may do so and the cost thereof shall be charged to the
Contractor.
3.16 ACCESS TO WORK
3.16.1 The Contractor shall provide the Owner and Architect access to the Work
in preparation and progress wherever located.
3.17 ROYALTIES AND PATENTS
3.17.1 The Contractor shall pay all royalties and license fees. The Contractor
shall defend suits or claims for infringement of patent rights and shall hold
the Owner and Architect harmless from loss on account thereof, but shall not be
responsible for such defense or loss when a particular design, process or
product of a particular manufacturer or manufacturers is required by the
Contract Documents. However, if the Contractor has reason to believe that the
required design, process or product is an infringement of a patent, the
Contractor shall be responsible for such loss unless such information is
promptly furnished to the Owner.
3.18 INDEMNIFICATION
3.18.1 To the fullest extent permitted by law, the Contractor shall indemnify
and hold harmless the Owner, from and against claims, damages, losses and
expenses, including but not limited to attorneys' fees, arising out of or
resulting from performance of the Work, provided that such claim, damage, loss
or expense is attributable to bodily injury, sickness, disease or death, or to
injury to or destruction of tangible property (other than the Work itself)
including loss of use resulting therefrom, but only to the extent caused in
whole or in part by negligent acts or omissions of the Contractor, a
Subcontractor, anyone directly or indirectly employed by them, or anyone for
whose acts they may be liable, regardless of whether or not such claim, damage,
loss or expense is caused in part by a party indemnified hereunder. Such
obligation shall not be construed to negate, abridge, or reduce other rights or
obligations of indemnity which would otherwise exist as to a party or person
described in this Paragraph 3.18.
3.18.2 In claims against any person or entity indemnified under this Paragraph
3.18 by an employee of the Contractor, a Subcontractor, anyone directly or
indirectly employed by them or anyone for whose acts they may be liable, the
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #13
<PAGE>
indemnification obligation under this Paragraph 3.18 shall not be limited by a
limitation on amount or type of damages, compensation or benefits payable by or
for the Contractor or a Subcontractor under workers' or workmen's compensation
acts, disability benefit acts or other employee benefit acts.
3.18.3 [Deleted.]
ARTICLE 4
ADMINISTRATION OF THE CONTRACT
4.1 ARCHITECT
4.1.1 The Architect is the person lawfully licensed to practice architecture
or an entity lawfully practicing architecture identified as such in the
Agreement and is referred to throughout the Contract Documents as, if singular
in number. The term "Architect" means the Architect or the Architect's
authorized representative.
4.1.2 Duties, responsibilities and limitations of authority of the Architect
shall be determined by the Contractor.
4.1.3 In case of termination of employment of the Architect, the Owner shall
appoint an architect against whom the Contractor makes no reasonable objection
and whose status under the Contract Documents shall be that of the former
architect.
4.1.4 Disputes arising under Subparagraphs 4.1.2 and 4.1.3 shall be subject to
arbitration.
4.2 ARCHITECT'S ADMINISTRATION OF THE CONTRACT
4.2.1 The Owner will provide administration of the Contract as described in
the Contract Documents during construction and until all billings are completed
and final payment is made.
4.2.2 [Deleted.]
4.2.3 [Deleted.]
4.2.4 COMMUNICATIONS FACILITATING CONTRACT ADMINISTRATION. The Owner and the
Contractor shall communicate directly with each other, with copies of such
written communications to be provided to the Architect. Communications by and
with Subcontractors and material suppliers shall be through the Contractor.
Communications by and with separate contractors shall be through the Owner.
4.2.5 [Deleted.]
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #14
<PAGE>
4.2.6 The Owner will have authority to reject Work which does not conform to
the Contract Documents. Whenever the Owner considers it necessary or advisable
for implementation of the intent of the Contract Documents, the Owner will have
authority to require additional inspection or testing of the Work in accordance
with Subparagraphs 13.5.2 and 13.5.3, whether or not such Work is fabricated,
installed or completed. However, neither this authority of the Owner nor a
decision made in good faith either to exercise or not to exercise such authority
shall give rise to a duty or responsibility of the Owner to the Contractor,
Subcontractors, material and equipment suppliers, their agents or employees, or
other persons performing portions of the Work.
4.2.7 The Architect will review and approve or take other appropriate action
upon the Contractor's submittals such as Shop Drawings, Product Data and
Samples, but only for the limited purpose of checking for conformance with
information given and the design concept expressed in the Contract Documents.
The Contractor will cause the Architect's action to be taken with such
reasonable promptness as to cause no delay in the Work or in the activities of
the Owner, Contractor or separate contractors. Review of such submittals is not
conducted for the purpose of determining the accuracy and completeness of other
details such as dimensions and quantities, or for substantiating instructions
for installation or performance of equipment or systems, all of which remain the
responsibility of the Contractor as required by the Contract Documents. The
Architect's review of the Contractor's submittals shall not relieve the
Contractor of the obligations under Paragraphs 3.3, 3.5 and 3.12. The
Architect's review shall not constitute approval of safety precautions or,
unless otherwise specifically stated by the Architect, of any construction
means, methods, techniques, sequences or procedures. The Architect's approval of
a specific item shall not indicate approval of an assembly of which the item is
a component.
4.2.8 The Contractor will furnish proposals for Change Orders to the Owner as
set forth in Section 6.3.2 of AIA Document A111 signed by the Owner and the
Contractor.
4.2.9 The Owner will conduct inspections to determine the date or dates of
Substantial Completion and the date of final completion. The Contractor will
receive and forward to the Owner for the Owner's review and records written
warranties and related documents required by the Contract and assembled by the
Contractor.
4.2.10 If the Owner and Architect agree, the Architect will provide one or more
project representatives to assist in carrying out the Architect's
responsibilities at the site. The duties, responsibilities and limitations of
authority of such project representatives shall be as set forth in an exhibit to
be incorporated in the Contract Documents.
4.2.11 [Deleted.]
4.2.12 [Deleted.]
4.2.13 [Deleted.]
4.3 CLAIMS AND DISPUTES
4.3.1 DEFINITION. A Claim is a demand or assertion by one of the parties
seeking, as a matter of right, adjustment or interpretation of Contract terms,
payment of money, extension of time or other relief with respect to the terms of
the Contract. The term "Claim" also includes other disputes and matters in
question between the Owner and Contractor arising out of or relating to the
Contract. Claims must be made by written notice. The responsibility to
substantiate Claims shall rest with the party making the Claim.
4.3.2 DECISION OF ARCHITECT.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #15
<PAGE>
4.3.3 TIME LIMITS ON CLAIMS. Neither party shall intentionally withhold giving
notice of a Claim if the failure to give such notice causes detriment to the
other party. Claims must be made by written notice. An additional Claim made
after the initial Claims has been implemented by Change Order will not be
considered unless submitted in a timely manner.
4.3.4 CONTINUING CONTRACT PERFORMANCE. Pending final resolution of a Claim
including arbitration, unless otherwise agreed in writing the Contractor shall
proceed diligently with performance of the Contract and the Owner shall continue
to make payments in accordance with the Contract Documents.
4.3.5 WAIVER OF CLAIMS: FINAL PAYMENT. The making of final payment shall
constitute a waiver of Claims by the Owner except those arising from:
.1 liens, Claims, security interests or encumbrances arising out of the
Contract and unsettled;
.2 failure of the Work to comply with the requirements of the Contract
Documents; or
.3 terms of special warranties required by the Contract Documents.
4.3.6 CLAIMS FOR CONCEALED OR UNKNOWN CONDITIONS. If conditions are
encountered at the site which are (1) subsurface or otherwise concealed physical
conditions which differ materially from those indicated in the Contract
Documents or (2) unknown physical conditions of an unusual nature, which differ
materially from those ordinarily found to exist and generally recognized as
inherent in construction activities of the character provided for in the
Contract Documents, then notice by the observing party shall be given to the
other party promptly before conditions are disturbed and in no event later than
21 days after first observance of the conditions. The Owner will promptly
investigate such conditions and, if they differ materially and cause an increase
or decrease in the Contractor's cost of, or time required for, performance of
any part of the Work, will agree to an equitable adjustment in the Contract Sum
or Contract Time, or both. If the Owner determines that the conditions at the
site are not materially different from those indicated in the Contract Documents
and that no change in the terms of the Contract is justified, the Owner shall so
notify the Contractor in writing, stating the reasons. If the Owner and
Contractor cannot agree on an adjustment in the Contract Sum or Contract Time,
then the dispute shall be resolved as provided in the Contract Documents.
4.3.7 CLAIMS FOR ADDITIONAL COST. If the Contractor wishes to make Claim for
an increase in the Contract Sum, written notice as provided herein shall be
given before proceeding to execute the Work. Prior notice is not required for
Claims relating to an emergency endangering life or property arising under
Paragraph 10.3. If the Contractor believes additional cost is involved for
reasons including but not limited to (1) an order by the Owner to stop the Work
where the Contractor was not at fault, (2) failure of payment by the Owner, (3)
termination of the Contract by the Owner, (4) Owner's suspension or (5) other
reasonable grounds, Claim shall be filed in accordance with the procedure
established herein.
4.3.8 CLAIMS FOR ADDITIONAL TIME
4.3.8.1 If the Contractor wishes to make Claim for any increase in the Contract
Time, written notice as provided herein shall be given. The Contractor's Claim
shall include an estimate of cost and of probable effect of delay on progress of
the Work. In the case of a continuing delay only one Claim is necessary.
4.3.8.2 If adverse weather conditions are the basis for a Claim for additional
time, such Claim shall be documented by data substantiating that weather
conditions were abnormal for the period of time and could not have been
reasonably
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #16
<PAGE>
anticipated, and that weather conditions had an adverse effect on the scheduled
construction.
4.3.9 INJURY OR DAMAGE TO PERSON OR PROPERTY. If either party to the Contract
suffers injury or damage to person or property because of an act or omission of
the other party, of any of the other party's employees or agents, or of others
for whose acts such party is legally liable, written notice of such injury or
damage, whether or not insured, shall be given to the other party within a
reasonable time. The notice shall provide sufficient detail to enable the other
party to investigate the matter. If a Claim for additional cost or time related
to this Claim is to be asserted, it shall be filed as provided in Subparagraphs
4.3.7 or 4.3.8.
4.4 RESOLUTION OF CLAIMS AND DISPUTES
4.4.1 [Deleted.]
4.4.2 [Deleted.]
4.4.3 [Deleted.]
4.4.4 [Deleted.]
4.5 ARBITRATION
4.5.1 CONTROVERSIES AND CLAIMS SUBJECT TO ARBITRATION. Any controversy or
Claim arising out of or related to the Contract, or the breach thereof, shall be
settled by litigation in a court of competent jurisdiction. The parties agree to
endeavor to resolve their disputes by mediation in accordance with the
Construction Industry Mediation Rules of the American Arbitration Association.
The fee of any mediator shall be shared equally by the parties. The location of
any mediation shall be in the metropolitan area where the Project is located if
the parties do not agree on another location.
4.5.2 RULES AND NOTICES FOR ARBITRATION.
4.5.3 CONTACT PERFORMANCE DURING ARBITRATION.
4.5.4 WHEN ARBITRATION MAY BE DEMANDED.
4.5.4.1 [Deleted.]
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-9292. WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
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Electronic Format A201-1987
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on 7/31/1998 - Page #17
<PAGE>
4.5.4.2 [Deleted.]
4.5.5 LIMITATION ON CONSOLIDATION OR JOINDER.
4.5.6 CLAIMS AND TIMELY ASSERTION OF CLAIMS.
4.5.7 JUDGMENT ON FINAL AWARD.
ARTICLE 5
SUBCONTRACTORS
5.1 DEFINITIONS
5.1.1 A Subcontractor is a person or entity who has a direct contract with the
Contractor to perform a portion of the Work at the site. The term
"Subcontractor" is referred to throughout the Contract Documents as if singular
in number and means a Subcontractor or an authorized representative of the
Subcontractor. The term "Subcontractor" does not include a separate contractor
or subcontractors of a separate contractor.
5.1.2 A Sub-subcontractor is a person or entity who has a direct or indirect
contract with a Subcontractor to perform a portion of the Work at the site. The
term "Sub-subcontractor" is referred to throughout the Contract Documents as if
singular in number and means a Sub-subcontractor or an authorized representative
of the Sub-subcontractor.
5.2 AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR PORTIONS OF THE WORK
5.2.1 Unless otherwise stated in the Contract Documents or the bidding
requirements, the Contractor, as soon as practicable after award of the
Contract, shall furnish in writing to the Owner the names of persons or entities
(including those who are to furnish materials or equipment fabricated to a
special design) proposed for each principal portion of the Work. The Owner will
promptly reply to the Contractor in writing stating whether or not the Owner
after due investigation, has reasonable objection to any such proposed person or
entity. Failure of the Owner to reply promptly shall constitute notice of no
reasonable objection.
5.2.2 The Contractor shall not contract with a proposed person or entity to
whom the Owner has made reasonable and timely objection. The Contractor shall
not be required to contract with anyone to whom the Contractor has made
reasonable objection.
5.2.3 If the Owner has reasonable objection to a person or entity proposed by
the Contractor, the Contractor shall propose another to whom the Owner has no
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
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Electronic Format A201-1987
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on 7/31/1998 - Page #18
<PAGE>
reasonable objection. The Contract Sum shall be increased or decreased by the
difference in cost occasioned by such change and an appropriate Change Order
shall be issued. However, no increase in the Contract Sum shall be allowed for
such change unless the Contractor has acted promptly and responsively in
submitting names as required.
5.2.4 The Contractor shall not change a Subcontractor, person or entity
previously selected if the Owner makes reasonable objection to such change.
5.3 SUBCONTRACTUAL RELATIONS
5.3.1 By appropriate agreement, written where legally required for validity,
the Contractor shall require each Subcontractor, to the extent of the Work to be
performed by the Subcontractor, to be bound to the Contractor by terms of the
Contract Documents, and to assume toward the Contractor all the obligations and
responsibilities which the Contractor, by these Documents, assumes toward the
Owner. Each subcontract agreement shall preserve and protect the rights of the
Owner under the Contract Documents with respect to the Work to be performed by
the Subcontractor so that subcontracting thereof will not prejudice such rights,
and shall allow to the Subcontractor, unless specifically provided otherwise in
the subcontract agreement, the benefit of all rights, remedies and redress
against the Contractor that the Contractor, by the Contract Documents, has
against the Owner. Where appropriate, the Contractor shall require each
Subcontractor to enter into similar agreements with Sub-subcontractors. The
Contractor shall make available to each proposed Subcontractor, prior to the
execution of the subcontract agreement, copies of the Contract Documents to
which the Subcontractor will be bound, and, upon written request of the
Subcontractor, identify to the Subcontractor terms and conditions of the
proposed subcontract agreement which may be at variance with the Contract
Documents. Subcontractors shall similarly make copies of applicable portions of
such documents available to their respective proposed Sub-subcontractors.
5.4 CONTINGENT ASSIGNMENT OF SUBCONTRACTS
5.4.1 Each subcontract agreement for a portion of the Work is assigned by the
Contractor to the Owner provided that:
.1 assignment is effective only after termination of the Contract by the
Owner for cause pursuant to Paragraph 14.2 and only for those
subcontract agreements which the Owner accepts by notifying the
Subcontractor in writing; and
.2 assignment is subject to the prior rights of the surety, if any,
obligated under bond relating to the Contract.
5.4.2 If the Work has been suspended for more than 30 days, the
Subcontractor's compensation shall be equitably adjusted.
ARTICLE 6
CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS
6.1 OWNERS RIGHT TO PERFORM CONSTRUCTION AND TO AWARD SEPARATE CONTRACTS
6.1.1 The Owner reserves the right to perform construction or operations
related to the Project with the Owner's own forces, and to award separate
contracts in connection with other portions of the Project or other construction
or operations on the site under Conditions of the Contract identical or
substantially similar to these including those portions related to insurance and
waiver of subrogation. If the Contractor claims that delay or additional cost is
involved because of such action by the Owner, the Contractor shall make such
Claim as provided elsewhere in the Contract Documents.
6.1.2 When separate contracts are awarded for different portions of the
Project or other construction or operations on the site, the term "Contractor"
in the Contract Documents in each case shall mean the Contractor who executes
each separate Owner-Contractor Agreement.
6.1.3 The Owner shall provide for coordination of the activities of the
Owner's own forces and of each separate contractor with the Work of the
Contractor, who shall cooperate with them. The Contractor shall participate with
other separate contractors and the Owner in reviewing their construction
schedules when directed to do so. The Contractor shall make any revisions to the
construction schedule and Contract Sum deemed necessary by the Owner after a
joint review and mutual agreement. The construction schedules shall then
constitute the schedules to be used by the Contractor, separate contractors and
the Owner until subsequently revised.
6.1.4 Unless otherwise provided in the Contract Documents, when the Owner
performs construction or operations related to the Project with the Owner's own
forces, the Owner shall be deemed to be subject to the same obligations and to
have the same rights which apply to the
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
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on 7/31/1998 - Page #19
<PAGE>
Contractor under the Conditions of the Contract, including, without excluding
others, those stated in Article 3, this Article 6 and Articles 10, 11 and 12.
6.2 MUTUAL RESPONSIBILITY
6.2.1 The Contractor shall afford the Owner and separate contractors
reasonable opportunity for introduction and storage of their materials and
equipment and performance of their activities and shall connect and coordinate
the Contractor's construction and operations with theirs as required by the
Contract Documents.
6.2.2 If part of the Contractor's Work depends for proper execution or results
upon construction or operations by the Owner or a separate contractor, the
Contractor shall, prior to proceeding with that portion of the Work, promptly
report to the Owner apparent discrepancies or defects in such other
construction that would render it unsuitable for such proper execution and
results. Failure of the Contractor so to report shall constitute an
acknowledgment that the Owner's or separate contractors' completed or partially
completed construction is fit and proper to receive the Contractor's Work,
except as to defects not then reasonably discoverable.
6.2.3 Costs caused by delays or by improperly timed activities or defective
construction shall be borne by the party responsible therefor.
6.2.4 The Contractor shall promptly remedy damage wrongfully caused by the
Contractor to completed or partially completed construction or to property of
the Owner or separate contractors as provided in Subparagraph 10.2.5.
6.2.5 Claims and other disputes and matters in question between the Contractor
and a separate contractor shall be subject to the provisions of Paragraph 4.3
provided the separate contractor has reciprocal obligations.
6.2.6 The Owner and each separate contractor shall have the same
responsibilities for cutting and patching as are described for the Contractor in
Paragraph 3.14.
6.3 OWNER'S RIGHT TO CLEAN UP
6.3.1 If a dispute arises among the Contractor, separate contractors and the
Owner as to the responsibility under their respective contracts for maintaining
the premises and surrounding area free from waste materials and rubbish as
described in Paragraph 3.15, the Owner may clean up and allocate the cost among
those responsible as the Owner reasonably determines to be just.
ARTICLE 7
CHANGES IN THE WORK
7.1 CHANGES
7.1.1 Changes in the Work may be accomplished after execution of the Contract,
and without invalidating the Contract, by Change Order, Construction Change
Directive or order for a minor change in the Work, subject to the limitations
stated in this Article 7 and elsewhere in the Contract Documents.
7.1.2 A Change Order shall be based upon agreement between the Owner, and the
Contractor as provided in Paragraph 6.3.2 of the Standard Form of Agreement
Between Owner and Contractor (AIA Document No. A111) ("Par. 6.2.3").
7.1.3 Changes in the Work shall be performed under applicable provisions of
the Contract Documents, and the Contractor shall proceed promptly, unless
otherwise provided in the Change Order, or order for a minor change in the Work.
7.1.4 If unit prices are stated in the Contract Documents or subsequently
agreed upon, and if quantities originally contemplated are so changed in a
proposed Change Order that application of such unit prices to quantities of
Work proposed will cause substantial inequity to the Owner or Contractor, the
applicable unit prices shall be equitably adjusted.
7.2 CHANGE ORDERS
7.2.1 A Change Order is defined in Par. 6.2.3.
.1 [Deleted.]
.2 [Deleted.]
.3 [Deleted.]
7.2.2 [Deleted.]
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
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on 7/31/1998 - Page #20
<PAGE>
7.3 CONSTRUCTION CHANGE DIRECTIVES
7.4.1 A CONSTRUCTION CHANGE DIRECTIVE ("CCD") IS DEFINED IN PAR. 6.2.3.
7.3.2 [Deleted.]
7.3.3 [Deleted.]
.1 [Deleted.]
.2 [Deleted.]
.3 [Deleted.]
.4 [Deleted.]
7.3.4 [Deleted.]
7.3.5 [Deleted.]
7.3.6 [Deleted.]
.1 [Deleted.]
.2 [Deleted.]
.3 [Deleted.]
.4 [Deleted.]
.5 [Deleted.]
7.3.7 [Deleted.]
7.3.8 [Deleted.]
7.3.9 [Deleted.]
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #21
<PAGE>
7.4 MINOR CHANGES IN THE WORK
7.4.1 [Deleted.]
ARTICLE 8
TIME
8.1 DEFINITIONS
8.1.1 Unless otherwise provided, Contract Time is the period of time,
including authorized adjustments, allotted in the Contract Documents for
Substantial Completion of the Work.
8.1.2 The date of commencement of the Work is the date established in the
Agreement. The date shall not be postponed by the failure to act of the
Contractor or of persons or entities for whom the Contractor is responsible.
8.1.3 The date of Substantial Completion is the date Substantial Completion
has been achieved in accordance with Paragraph 9.8.
8.1.4 The term "day" as used in the Contract Documents shall mean calendar day
unless otherwise specifically defined.
8.2 PROGRESS AND COMPLETION
8.2.1 Time limits stated in the Contract Documents are of the essence of the
Contract. By executing the Agreement the Contractor confirms that the Contract
Time is a reasonable period for performing the Work.
8.2.2 The Contractor shall not knowingly, except by agreement or instruction
of the Owner in writing, prematurely commence operations on the site or
elsewhere prior to the effective date of insurance required by Article 11 to be
furnished by the Contractor. The date of commencement of the Work shall not be
changed by the effective date of such insurance. Unless the date of commencement
is established by a notice to proceed given by the Owner, the Contractor shall
notify the Owner in writing not less than five days or other agreed period
before commencing the Work to permit the timely filing of mortgages, mechanic's
liens and other security interests.
8.2.3 The Contractor shall proceed expeditiously with adequate forces and
shall achieve Substantial Completion within the Contract Time.
8.3 DELAYS AND EXTENSIONS OF TIME
8.3.1 If the Contractor is delayed at any time in progress of the Work by an
act or neglect of the Owner, or of an employee of the Owner or of a separate
contractor employed by the Owner, or by changes ordered in the Work, or by labor
disputes, fire, unusual delay in deliveries, unavoidable casualties or other
causes not reasonably foreseeable on the date the Work commenced and which are
beyond the Contractor's control, adverse weather conditions which prevent
construction activities of the type then scheduled, delays caused by
governmental authorities (not caused as a result of fault on the part of the
Contractor), or by delay authorized by the Owner, then the Contract Time shall
be extended by Change Order for a reasonable time.
8.3.2 Claims relating to time shall be made in accordance with applicable
provisions of Paragraph 4.3.
8.3.3 This Paragraph 8.3 does not preclude recovery of damages for delay by
either party under other provisions of the Contract Documents.
ARTICLE 9
PAYMENTS AND COMPLETION
9.1 CONTRACT SUM
9.1.1 The Contract Sum is stated in the Agreement and, including authorized
adjustments, is the total amount payable by the Owner to the Contractor for
performance of the Work under the Contract Documents.
9.2 SCHEDULE OF VALUES
9.2.1 the Contractor shall submit to the Owner a schedule of values allocated
to various portions of the Work, prepared in such form and supported by such
data to substantiate its accuracy as the Owner may reasonably require. This
schedule, unless reasonably objected to by the Owner shall be used as a basis
for reviewing the Contractor's Applications for Payment.
9.3 APPLICATIONS FOR PAYMENT
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
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on 7/31/1998 - Page #22
<PAGE>
9.3.1 At least twenty days before the date established for each progress
payment, the Contractor shall submit to the Owner an itemized Application for
Payment for operations completed in accordance with the schedule of values. Such
application shall be notarized, if required, and supported by such data
substantiating the Contractor's right to payment as the Owner may reasonably
require, such as copies of requisitions from Subcontractors and material
suppliers, and reflecting retainage if provided for elsewhere in the Contract
Documents. See AIA Document A111 for additional provisions relating to
Applications for Payment.
9.3.1.1 Such applications may include requests for payment on account of
changes in the Work which have been properly authorized by Construction Change
Directives but not yet included in Change Orders.
9.3.1.2 Such applications may not include requests for payment of amounts the
Contractor does not intend to pay to a Subcontractor or material supplier
because of a dispute or other reason.
9.3.2 Unless otherwise provided in the Contract Documents, payments shall be
made on account of materials and equipment delivered and suitably stored at the
site for subsequent incorporation in the Work. If approved in advance by the
Owner, payment may similarly be made for materials and equipment suitably stored
off the site at a location agreed upon in writing. Payment for materials and
equipment stored on or off the site shall be conditioned upon compliance by the
Contractor with procedures satisfactory to the Owner to establish the Owner's
title to such materials and equipment or otherwise protect the Owner's interest,
and shall include applicable insurance, storage, and transportation to the site
for such materials and equipment stored off the site.
9.3.3 The Contractor warrants that title to all Work covered by an Application
for Payment will pass to the Owner no later than the time of payment. The
Contractor further warrants that upon submittal of an Application for Payment
all Work for which payments have been previously received from the Owner shall,
be free and clear of liens, claims, security interests or encumbrances favor of
the Contractor, Subcontractors, material suppliers, or other persons or entities
making a claim by reason of having provided labor, materials and equipment
relating to the Work.
9.4 CERTIFICATES FOR PAYMENT
9.4.1 The Owner will, within twenty days after receipt of the Contractor's
Application for Payment, either pay the amount of such Application to the
Contractor or notify the Contractor in writing of the Owner's reasons for
withholding payment in whole or in part as provided in Subparagraph 9.5.1.
9.4.2 The making of a Payment will further constitute a representation that
the Contractor is entitled to payment in the amount certified.
9.5 DECISIONS TO WITHHOLD CERTIFICATION
9.5.1 The Owner may decide not to make a payment and may withhold a Payment in
whole or in part, to the extent reasonably necessary to protect the Owner. If
the Owner is unable to pay the amount of the Application, the Owner will notify
the Contractor as provided in Subparagraph 9.4.1. If the Contractor cannot agree
on a revised amount, the Owner will promptly pay the amount to which the Owner
believes the Contractor is entitled. The
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
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<PAGE>
Owner may also decide not to make a payment or, because of subsequently
discovered evidence or subsequent observations, may request a refund of a
Payment previously made to such extent as may be necessary in the Owner's
reasonable opinion to protect the Owner from loss because of:
.1 defective Work not remedied;
.2 third party claims filed or reasonable evidence indicating probable
filing of such claims;
.3 failure of the Contractor to make payments properly to Subcontractors or
for labor, materials or equipment;
.4 reasonable evidence that the Work cannot be completed for the unpaid
balance of the Contract Sum;
.5 damage to the Owner or another contractor;
.6 reasonable evidence that the Work will not be completed within the
Contract Time, and that the unpaid balance would not be adequate to
cover actual or liquidated damages for the anticipated delay; or
.7 persistent failure to carry out the Work in accordance with the Contract
Documents.
9.5.2 When the above reasons for withholding certification are removed,
certification will be made for amounts previously withheld.
9.6 PROGRESS PAYMENTS
9.6.1 After the - Owner has received an Application for Payment from the
Contractor which complies with the requirements of this Contract, the Owner
shall make payment in the manner and within the time provided in the Contract
Documents.
9.6.2 The Contractor shall promptly pay each Subcontractor, upon receipt of
payment from the Owner, out of the amount paid to the Contractor on account of
such Subcontractor's portion of the Work, the amount to which said Subcontractor
is entitled, reflecting percentages actually retained from payments to the
Contractor on account of such Subcontractor's portion of the Work. The
Contractor shall, by appropriate agreement with each Subcontractor, require each
Subcontractor to make payments to Sub-subcontractors in similar manner.
9.6.3 The Owner - will, on request, furnish to a Subcontractor, if
practicable, information regarding percentages of completion or amounts applied
for by the Contractor and action taken thereon by the Owner on account of
portions of the Work done by such Subcontractor.
9.6.4 The Owner shall not have an obligation to pay or to see to the payment
of money to a Subcontractor except as may otherwise be required by law.
9.6.5 Payment to material suppliers shall be treated in a manner similar to
that provided in Subparagraphs 9.6.2, 9.6.3 and 9.6.4.
9.6.6 A progress payment, or partial or entire use or occupancy of the Project
by the Owner shall not constitute acceptance of Work not in accordance with the
Contract Documents.
9.7 FAILURE OF PAYMENT
9.7.1 If the Owner does not make a Payment, through no fault of the
Contractor, within twenty days after receipt of the Contractor's Application
for Payment, or if the Owner does not pay the Contractor within seven days after
the date established in the Contract Documents the amount due to the Contractor
hereunder then the Contractor may, stop the Work until payment of the amount
owing has been received. The Contract Time shall be extended appropriately and
the Contract Sum shall be increased by the amount of the Contractor's reasonable
costs of shut-down, delay and start-up, which shall be accomplished as provided
in Article 7.
9.8 SUBSTANTIAL COMPLETION
9.8.1 Substantial Completion is the stage in the progress of the Work when the
Work or designated portion thereof is sufficiently complete in accordance with
the Contract Documents so (i) the Owner can occupy or utilize the Work for its
intended use, subject only to minor punchlist items that do not materially
interfere with tenant's occupancy, and (ii) that an occupancy permit is issuable
upon application therefor by the Owner.
9.8.2 When the Contractor considers that the Work, or a
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
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<PAGE>
portion thereof which the Owner agrees to accept separately, is substantially
complete, the Contractor shall prepare and submit to the Owner a comprehensive
list of items to be completed or corrected. The Contractor shall proceed
promptly to complete and correct items on the list. Failure to include an item
on such list does not alter the responsibility of the Contractor to complete all
Work in accordance with the Contract Documents. Upon receipt of the Contractor's
list, the Owner will make an inspection to determine whether the Work or
designated portion thereof is substantially complete. If the Owner's inspection
discloses any item, whether or not included on the Contractor's list, which is
not in accordance with the requirements of the Contract Documents, the
Contractor shall, before issuance of the Certificate of Substantial Completion,
complete or correct such item, upon notification by the Owner. The Contractor
shall then submit a request for another inspection by the Owner to determine
Substantial Completion. When the Work or designated portion thereof is
substantially complete, the Owner and the Contractor will execute a Certificate
of Substantial Completion which shall establish the date of Substantial
Completion, shall establish responsibilities of the Owner and Contractor for
security, maintenance, heat, utilities, damage to the Work and insurance, and
shall fix the time within which the Contractor shall finish all items on the
list accompanying the Certificate. Warranties required by the Contract Documents
shall commence on the date of Substantial Completion of the Work or designated
portion thereof unless otherwise provided in the Certificate of Substantial
Completion.
9.8.3 Upon Substantial Completion of the Work or designated portion thereof
and upon application by the Contractor, the Owner shall make payment, reflecting
adjustment in retainage, if any, for such Work or portion thereof as provided in
the Contract Documents.
9.9 PARTIAL OCCUPANCY OR USE
9.9.1 The Owner may occupy or use any completed or partially completed portion
of the Work at any stage when such portion is designated by separate agreement
with the Contractor, provided such occupancy or use is consented to by the
insurer as required under Subparagraph 11.3.11 and authorized by public
authorities having jurisdiction over the Work. Such partial occupancy or use may
commence whether or not the portion is substantially complete, provided the
Owner and Contractor have accepted in writing the responsibilities assigned to
each of them for payments, retainage if any, security, maintenance, heat,
utilities, damage to the Work and insurance, and have agreed in writing
concerning the period for correction of the Work and commencement of warranties
required by the Contract Documents. When the Contractor considers a portion
substantially complete, the Contractor shall prepare and submit a list to the
Architect as provided under Subparagraph 9.8.2. Consent of the Contractor to
partial occupancy or use shall not be unreasonably withheld. The stage of the
progress of the Work shall be determined by written agreement between the Owner
and Contractor or, if no agreement is reached, by decision of the Architect.
9.9.2 Immediately prior to such partial occupancy or use, the Owner, and
Contractor shall jointly inspect the area to be occupied or portion of the Work
to be used in order to determine and record the condition of the Work.
9.9.3 Unless otherwise agreed upon, partial occupancy or use of a portion or
portions of the Work shall not constitute acceptance of Work not complying with
the requirements of the Contract Documents.
9.10 FINAL COMPLETION AND FINAL PAYMENT
9.10.1 Upon receipt of written notice that the Work is ready for final
inspection and acceptance and upon receipt of a final Application for Payment,
the Owner will promptly make such inspection and, when the Work has been finally
completed in accordance with the Contract Documents and the Contract fully
performed, the Owner will promptly make final Payment of all amounts due and
owing to the Contractor under the Contract Documents.
9.10.2 Neither final payment nor any remaining retained percentage shall become
due until the Contractor submits to the Owner (1) an affidavit that payrolls,
bills for materials and equipment, and other indebtedness connected with the
Work for which the Owner or the Owner's property might be responsible or
encumbered (less amounts withheld by Owner) have been paid or otherwise
satisfied, (2) a certificate evidencing that insurance required by the Contract
Documents to remain in force after final payment is currently
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
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Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #25
<PAGE>
in effect and will not be cancelled or allowed to expire until at least 30 days'
prior written notice has been given to the Owner, (3) a written statement that
the Contractor knows of no substantial reason that the insurance will not be
renewable to cover the period required by the Contract Documents, (4) consent of
surety, if any, to final payment and (5), if required by the Owner, other data
establishing payment or satisfaction of obligations, such as receipts, releases
and waivers of liens, claims, security interests or encumbrances arising out of
the Contract, to the extent and in such form as may be designated by the Owner.
If a Subcontractor refuses to furnish a release or waiver required by the Owner,
the Contractor may furnish a bond satisfactory to the Owner to indemnify the
Owner against such lien. If such lien remains unsatisfied after payments are
made, the Contractor shall refund to the Owner all money that the Owner may be
compelled to pay in discharging such lien, including all costs and reasonable
attorneys' fees.
9.10.3 If, after Substantial Completion of the Work, final completion thereof
is materially delayed through no fault of the Contractor or by issuance of
Change Orders affecting final completion, the Owner shall, upon application by
the Contractor and without terminating the Contract, make payment of the balance
due for that portion of the Work fully completed and accepted. If the remaining
balance for Work not fully completed or corrected is less than retainage
stipulated in the Contract Documents, and if bonds have been furnished, the
written consent of surety to payment of the balance due for that portion of the
Work fully completed and accepted shall be submitted by the Contractor to the
Owner prior to certification of such payment. Such payment shall be made under
terms and conditions governing final payment, except that it shall not
constitute a waiver of claims. The making of final payment shall constitute a
waiver of claims by the Owner as provided in Subparagraph 4.3.5.
9.10.4 Acceptance of final payment by the Contractor, a Subcontractor or
material supplier shall constitute a waiver of claims by that payee except those
previously made in writing and identified by that payee as unsettled at the time
of final Application for Payment. Such waivers shall be in addition to the
waiver described in Subparagraph 4.3.5.
ARTICLE 10
PROTECTION OF PERSONS AND PROPERTY
10.1 SAFETY PRECAUTIONS AND PROGRAMS
10.1.1 The Contractor shall be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection with the
performance of the Contract.
10.1.2 In the event the Contractor encounters on the site material reasonably
believed to be asbestos or polychlorinated biphenyl (PCB), oil, or other
materials, substances or waste determined to be hazardous, or the use of which
is regulated under any other federal or state law ordinance, or regulation
(collectively "Hazardous Materials") which has not been rendered harmless, the
Contractor shall immediately stop Work in the area affected and report the
condition to the Owner in writing. The Work in the affected area shall not
thereafter be resumed except by written agreement of the Owner and Contractor if
in fact the material is Hazardous Material and has not been rendered harmless.
The Work in the affected area shall be resumed in the absence of Hazardous
Material or when it has been rendered harmless, by written agreement of the
Owner and Contractor, or in accordance with final determination by the Architect
on which arbitration has not been demanded, or by arbitration under Article 4.
10.1.3 The Contractor shall not be required pursuant to Article 7 to perform
without consent any Work relating to Hazardous Material.
10.1.4 To the fullest extent permitted by law, the Owner shall indemnify and
hold harmless the Contractor, Architect, Architect's consultants and agents and
employees of any of them from and against claims, damages, losses and expenses,
including but not limited to attorneys' fees, arising out of or resulting from
performance of the Work in the affected area if in fact the material is -
Hazardous Material and has not been rendered harmless, provided that such claim,
damage, loss or expense is attributable to bodily injury, sickness, disease or
death, or to injury to or destruction of tangible property (other than the Work
itself) including loss of use resulting therefrom, but only to the extent caused
in whole or in part by negligent acts or omissions of the Owner, anyone directly
or indirectly employed by the Owner or anyone for whose acts the Owner may be
liable, regardless of whether or not such claim, damage, loss or expense is
caused in part by a party indemnified hereunder. Such obligation shall not be
construed to negate, abridge, or reduce other rights or obligations of indemnity
which would otherwise exist as to a party or person described in this
Subparagraph 10.1.4.
10.2 SAFETY OF PERSONS AND PROPERTY
10.2.1 The Contractor shall take reasonable precautions for
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292_ WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
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Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #26
<PAGE>
safety of, and shall provide reasonable protection to prevent damage, injury or
loss to:
.1 employees on the Work and other persons who may be affected thereby;
.2 the Work and materials and equipment to be incorporated therein, whether
in storage on or off the site, under care, custody or control of the
Contractor or the Contractor's Subcontractors or Sub-subcontractors; and
.3 other property at the site or adjacent thereto, such as trees, shrubs,
lawns, walks, pavements, roadways, structures and utilities not
designated for removal, relocation or replacement in the course of
construction.
10.2.2 The Contractor shall give notices and comply with applicable laws,
ordinances, rules, regulations and lawful orders of public authorities bearing
on safety of persons or property or their protection from damage, injury or
loss.
10.2.3 The Contractor shall erect and maintain, as required by existing
conditions and performance of the Contract, reasonable safeguards for safety and
protection, including posting danger signs and other warnings against hazards,
promulgating safety regulations and notifying owners and users of adjacent sites
and utilities.
10.2.4 When use or storage of explosives or other hazardous materials or
equipment or unusual methods are necessary for execution of the Work, the
Contractor shall exercise utmost care and carry on such activities under
supervision of properly qualified personnel.
10.2.5 The Contractor shall promptly remedy damage and loss (other than damage
or loss insured under property insurance required by the Contract Documents) to
property referred to in Clauses 10.2.1.2 and 10.2.1.3 caused in whole or in part
by the Contractor, a Subcontractor, a Sub-subcontractor, or anyone directly or
indirectly employed by any of them, or by anyone for whose acts they may be
liable and for which the Contractor is responsible under Clauses 10.2.1.2 and
10.2.1.3, except damage or loss attributable to acts or omissions of the Owner
or anyone directly or indirectly employed by the Owner, or by anyone for whose
acts the Owner may be liable, and not attributable to the fault or negligence of
the Contractor. The foregoing obligations of the Contractor are in addition to
the Contractor's obligations under Paragraph 3.18.
10.2.6 The Contractor shall designate a responsible member of the Contractor's
organization at the site whose duty shall be the prevention of accidents. This
person shall be the Contractor's superintendent unless otherwise designated by
the Contractor in writing to the Owner.
10.2.7 The Contractor shall not load or permit any part of the construction or
site to be loaded so as to endanger its safety.
10.3 EMERGENCIES
10.3.1 In an emergency affecting safety of persons or property, the Contractor
shall act, at the Contractor's discretion, to prevent threatened damage, injury
or loss. Additional compensation or extension of time claimed by the Contractor
on account of an emergency shall be determined as provided in Paragraph 4.3 and
Article 7.
ARTICLE 11
INSURANCE AND BONDS
11.1 CONTRACTOR'S LIABILITY INSURANCE
11.1.1 The Contractor shall purchase from and maintain in a company or
companies lawfully authorized to do business in the jurisdiction in which the
Project is located such insurance as will protect the Contractor from claims set
forth below which may arise out of or result from the Contractor's operations
under the Contract and for which the Contractor may be legally liable, whether
such operations be by the Contractor or by a Subcontractor or by anyone directly
or indirectly employed by any of them, or by anyone for whose acts any of them
may be liable:
.1 claims under workers' or workmen's compensation, disability benefit and
other similar employee benefit acts which are applicable to the Work to
be performed;
.2 claims for damages because of bodily injury, occupational sickness or
disease, or death of the Contractor's employees;
.3 claims for damages because of bodily injury, sickness or disease, or
death of any person other than the Contractor's employees;
.4 claims for damages insured by usual personal injury liability coverage
which are sustained (1) by a person as a result of an offense directly
or indirectly related to employment of such person by the Contractor, or
(2) by another person;
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292 WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
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Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #27
<PAGE>
.5 claims for damages, other than to the Work itself, because of injury to
or destruction of tangible property, including loss of use resulting
therefrom;
.6 claims for damages because of bodily injury, death of a person or
property damage arising out of ownership, maintenance or use of a motor
vehicle; and
.7 claims involving contractual liability insurance applicable to the
Contractor's obligations under Paragraph 3.18.
11.1.2 The insurance required by Subparagraph 11.1.1 shall be written for not
less than limits of liability specified in the insurance certificate attached
hereto in the Contract Documents or required by law, whichever coverage is
greater. Coverages, whether written on an occurrence or claims-made basis, shall
be maintained without interruption from date of commencement of the Work until
date of final payment and termination of any coverage required to be maintained
after final payment.
11.1.3 Certificates of Insurance acceptable to the Owner shall be filed with
the Owner prior to commencement of the Work. These Certificates and the
insurance policies required by this Paragraph 11.1 shall contain a provision
that coverages afforded under the policies will not be cancelled or allowed to
expire until at least 30 days' prior written notice has been given to the Owner.
If any of the foregoing insurance coverages are required to remain in force
after final payment and are reasonably available, all additional certificate
evidencing continuation of such coverage shall be submitted with the final
Application for Payment as required by Subparagraph 9.10.2. Information
concerning reduction of coverage shall be furnished by the Contractor with
reasonable promptness in accordance with the Contractor's information and
belief.
11.2 OWNER'S LIABILITY INSURANCE
11.2.1 The Owner shall be responsible for purchasing and maintaining the
Owner's usual liability insurance. Optionally, the Owner may purchase and
maintain other insurance for self-protection against claims which may arise from
operations under the Contract. The Contractor shall not be responsible for
purchasing and maintaining this optional Owner's liability insurance unless
specifically required by the Contract Documents.
11.3 PROPERTY INSURANCE
11.3.1 Unless otherwise provided, the Owner shall purchase and maintain, in a
company or companies lawfully authorized to do business in the jurisdiction in
which the Project is located, property insurance in the amount of the initial
Contract Sum as well as subsequent modifications thereto for the entire Work at
the site on a replacement cost basis without voluntary deductibles. Such
property insurance shall be maintained, unless otherwise provided in the
Contract Documents or otherwise agreed in writing by all persons and entities
who are beneficiaries of such insurance, until final payment has been made as
provided in Paragraph 9.10 or until no person or entity other than the Owner has
an insurable interest in the property required by this Paragraph 11.3 to be
covered, whichever is earlier. This insurance shall include interests of the
Owner, the Contractor, Subcontractors and Sub-subcontractors in the Work.
11.3.1.1 Property insurance shall be on an all-risk policy form and shall insure
against the perils of fire and extended coverage and physical loss or damage
including, without duplication of coverage, theft, vandalism, malicious
mischief, collapse, false-work, temporary buildings and debris removal including
demolition occasioned by enforcement of any applicable legal requirements, and
shall cover reasonable compensation for Architect's services and expenses
required as a result of such insured loss. Coverage for other perils shall not
be required unless otherwise provided in the Contract Documents.
11.3.1.2 If the Owner does not intend to purchase such property insurance
required by the Contract and with all of the coverages in the amount described
above, the Owner shall so inform the Contractor in writing prior to commencement
of the Work. The Contractor may then effect insurance which will protect the
interests of the Contractor, Subcontractors and Sub-subcontractors in the Work,
and by appropriate Change Order the cost thereof shall be charged to the Owner.
If the Contractor is damaged by the failure or neglect of the Owner to purchase
or maintain insurance as described above, without so notifying the Contractor,
then the Owner shall bear all reasonable costs properly attributable thereto.
11.3.1.3 If the property insurance requires minimum deductibles and such
deductibles are identified in the Contract Documents, the Contractor shall pay
costs not covered because of such deductibles. If the Owner or insurer increases
the required minimum deductibles above the amounts so identified or if the Owner
elects to purchase this insurance with voluntary deductible amounts, the Owner
shall be responsible for payment of the additional costs not covered because of
such increased or voluntary deductibles. If deductibles are not identified in
the Contract Documents, the Owner shall pay costs not covered because of
deductibles.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292 WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #28
<PAGE>
11.3.1.4 Unless otherwise provided in the Contract Documents, this property
insurance shall cover portions of the Work stored off the site after written
approval of the Owner at the value established in the approval, and also
portions of the Work in transit.
11.3.2 BOILER AND MACHINERY INSURANCE. The Owner shall purchase and maintain
boiler and machinery insurance required by the Contract Documents or by law,
which shall specifically cover such insured objects during installation and
until final acceptance by the Owner; this insurance shall include interests of
the Owner, Contractor, Subcontractors and Sub-subcontractors in the Work, and
the Owner and Contractor shall be named insureds.
11.3.3 LOSS OF USE INSURANCE. The Owner, at the Owner's option, may purchase
and maintain such insurance as will insure the Owner against loss of use of the
Owner's property due to fire or other hazards, however caused. The Owner waives
all rights of action against the Contractor for loss of use of the Owner's
property, including consequential losses due to fire or other hazards however
caused.
11.3.4 If the Contractor requests in writing that insurance for risks other
than those described herein or for other special hazards be included in the
property insurance policy, the Owner shall, if possible, include such insurance,
and the cost there of shall be charged to the Contractor by appropriate Change
Order.
11.3.5 If during the Project construction period the Owner insures properties,
real or personal or both, adjoining or adjacent to the site by property
insurance under policies separate from those insuring the Project, or if after
final payment property insurance is to be provided on the completed Project
through a policy or policies other than those insuring the Project during the
construction period, the Owner shall waive all rights in accordance with the
terms of Subparagraph 11.3.7 for damages caused by fire or other perils covered
by this separate property insurance. All separate policies shall provide this
waiver of subrogation by endorsement or otherwise.
11.3.6 Before an exposure to loss may occur, the Owner shall file with the
Contractor a copy of each policy that includes insurance coverages required by
this Paragraph 11.3 Each policy shall contain all generally applicable
conditions, definitions, exclusions and endorsements related to this Project.
Each policy shall contain a provision that the policy will not be cancelled or
allowed to expire until at least 30 days' prior written notice has been given to
the Contractor.
11.3.7 WAIVERS OF SUBROGATION. The Owner and Contractor waive all rights
against (1) each other and any of their subcontractors, sub-subcontractors,
agents and employees, each of the other, and (2) the Architect, Architect's
consultants, separate contractors described in Article 6, if any, and any of
their subcontractors, sub-subcontractors, agents and employees, for damages
caused by fire or other perils to the extent covered by property insurance
obtained pursuant to this Paragraph 11.3 or other property insurance applicable
to the Work, except such rights as they have to proceeds of such insurance held
by the Owner as fiduciary. The Owner or Contractor, as appropriate, shall
require of the Architect, Architect's consultants, separate contractors
described in Article 6, if any, and the subcontractors, sub-subcontractors,
agents and employees of any of them, by appropriate agreements, written where
legally required for validity, similar waivers each in favor of other parties
enumerated herein. The policies shall provide such waivers of subrogation by
endorsement or otherwise. A waiver of subrogation shall be effective as to a
person or entity even though that person or entity would otherwise have a duty
of indemnification, contractual or otherwise, did not pay the insurance premium
directly or indirectly, and whether or not the person or entity had an insurable
interest in the property damaged.
11.3.8 A loss insured under Owner's property insurance shall be adjusted by
the Owner as fiduciary and made payable to the Owner as fiduciary for the
insureds, as their interests may appear, subject to requirements of any
applicable mortgagee clause and of Subparagraph 11.3.10. The Contractor shall
pay Subcontractors their just shares of insurance proceeds received by the
Contractor, and by appropriate agreements, written where legally required for
validity, shall require Subcontractors to make payments to their Sub-
subcontractors in similar manner.
11.3.9 If required in writing by a party in interest, the Owner as fiduciary
shall, upon occurrence of an insured loss, give bond for proper performance of
the Owner's duties. The cost of required bonds shall be charged against proceeds
received as fiduciary. The Owner shall deposit in a separate account proceeds so
received, which the Owner shall distribute in accordance with such agreement as
the parties in interest may reach, or in accordance with an arbitration award in
which case the procedure shall be as provided in Paragraph 4.5. If after such
loss no other special agreement is made, replacement of damaged property shall
be covered by appropriate Change Order.
11.3.10 The Owner as fiduciary shall have power to adjust and settle a loss
with insurers unless one of the parties in interest shall object in writing
within five days after
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292 WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #29
<PAGE>
occurrence of loss to the Owner's exercise of this power; if such objection be
made, arbitrators shall be chosen as provided in Paragraph 4.5. The Owner as
fiduciary shall, in that case, make settlement with insurers in accordance with
directions of such arbitrators. If distribution of insurance proceeds by
arbitration is required, the arbitrators will direct such distribution.
11.3.11 Partial occupancy or use in accordance with Paragraph 9.9 shall not
commence until the insurance company or companies providing property insurance
have consented to such partial occupancy or use by endorsement or otherwise. The
Owner and the Contractor shall take reasonable steps to obtain consent of the
insurance company or companies and shall, without mutual written consent, take
no action with respect to partial occupancy or use that would cause
cancellation, lapse or reduction of insurance.
11.4 PERFORMANCE BOND AND PAYMENT BOND
11.4.1 The Owner shall have the right to require the Contractor to furnish
bonds covering faithful performance of the Contract and payment of obligations
arising thereunder as stipulated in bidding requirements or specifically
required in the Contract Documents on the date of execution of the Contract.
11.4.2 Upon the request of any person or entity appearing to be a potential
beneficiary of bonds covering payment of obligations arising under the Contract,
the Contractor shall promptly furnish a copy of the bonds or shall permit a copy
to be made.
ARTICLE 12
UNCOVERING AND CORRECTION OF WORK
12.1 UNCOVERING OF WORK
12.1.1 If a portion of the Work is covered contrary to the Owner's instructions
or to requirements specifically expressed in the Contract Documents, it must, if
required in writing by the Owner, be uncovered for the Owner's observation and
be replaced at the Contractor's expense without change in the Contract Time.
12.1.2 If a portion of the Work has been covered which the Owner has not
specifically requested to observe prior to its being covered, the Owner may
request to see such Work and it shall be uncovered by the Contractor. If such
Work is in accordance with the Contract Documents, costs of uncovering and
replacement shall, by appropriate Change Order, be charged to the Owner. If such
Work is not in accordance with the Contract Documents, the Contractor shall pay
such costs unless the condition was caused by the Owner or a separate contractor
in which event the Owner shall be responsible for payment of such costs.
12.2 CORRECTION OF WORK
12.2.1 The Contractor shall promptly correct Work rejected by the Owner or
failing to conform to the requirements of the Contract Documents, whether
observed before or after Substantial Completion and whether or not fabricated,
installed or completed. The Contractor shall bear costs of correcting such
rejected Work, including additional testing and inspections and compensation for
the Owner's services and expenses made necessary thereby.
12.2.2 If, within one year after the date of Substantial Completion of the Work
or designated portion thereof, or after the date for commencement of warranties
established under Subparagraph 9.9.1, or by terms of an applicable special
warranty required by the Contract Documents, any of the Work is found to be not
in accordance with the requirements of the Contract Documents, the Contractor
shall correct it promptly after receipt of written notice from the Owner to do
so unless the Owner has previously given the Contractor a written acceptance of
such condition. This period of one year shall be extended with respect to
portions of Work first performed after Substantial Completion by the period of
time between Substantial Completion and the actual performance of the Work. This
obligation under this Subparagraph 12.2.2 shall survive acceptance of the Work
under the Contract and termination of the Contract. The Owner shall give such
notice promptly after discovery of the condition.
12.2.3 The Contractor shall remove from the site portions of the Work which are
not in accordance with the requirements of the Contract Documents and are
neither corrected by the Contractor nor accepted by the Owner.
12.2.4 If the Contractor fails to correct nonconforming Work within a
reasonable time, the Owner may correct it in accordance with Paragraph 2.4. If
the Contractor does not proceed with correction of such nonconforming Work
within a reasonable time fixed by written notice from the Architect, the Owner
may remove it and store the salvable materials or equipment at the Contractor's
expense. If the Contractor does not pay costs of such removal and storage within
ten days after written notice, the Owner may upon ten additional days' written
notice sell such materials and equipment at auction or at private sale and shall
account for the proceeds thereof, after deducting costs and damages that should
have been borne by
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292 WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #30
<PAGE>
the Contractor, including compensation for the Architect's services and expenses
made necessary thereby. If such proceeds of sale do not cover costs which the
Contractor should have borne, the Contract Sum shall be reduced by the
deficiency. If payments then or thereafter due the Contractor are not sufficient
to cover such amount, the Contractor shall pay the difference to the Owner.
12.2.5 The Contractor shall bear the cost of correcting destroyed or damaged
construction, whether completed or partially completed, of the Owner or
separate contractors caused by the Contractor's correction or removal of Work
which is not in accordance with the requirements of the Contract Documents.
12.2.6 Nothing contained in this Paragraph 12.2 shall be construed to establish
a period of limitation with respect to other obligations which the Contractor
might have under the Contract Documents. Establishment of the time period of one
year as described in Subparagraph 12.2.2 relates only to the specific obligation
of the Contractor to correct the Work, and has no relationship to the time
within which the obligation to comply with the Contract Documents may be sought
to be enforced, nor to the time within which proceedings may be commenced to
establish the Contractor's liability with respect to the Contractor's
obligations other than specifically to correct the Work.
12.3 ACCEPTANCE OF NONCONFORMING WORK
12.3.1 If the Owner prefers to accept Work which is not in accordance with the
requirements of the Contract Documents, the Owner may do so instead of requiring
its removal and correction, in which case the Contract Sum will be reduced as
appropriate and equitable. Such adjustment shall be effected whether or not
final payment has been made.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 GOVERNING LAW
13.1.1 The Contract shall be governed by the law of the place where the Project
is located.
13.2 SUCCESSORS AND ASSIGNS
13.2.1 The Owner and Contractor respectively bind themselves, their partners,
successors, assigns and legal representatives to the other party hereto and to
partners, successors, assigns and legal representatives of such other party in
respect to covenants, agreements and obligations contained in the Contract
Documents. Neither party to the Contract shall assign the Contract as a whole
without written consent of the other. If either party attempts to make such an
assignment without such consent, that party shall nevertheless remain legally
responsible for all obligations under the Contract.
Insert B: 13.2.2 The Contractor hereby consents to the Owner's assignment of
this Agreement to a bank or other recognized financial institution as collateral
for financing the Project, provided that such assignment does not release the
obligations of the Owner to the Contractor hereunder and provided that a true
copy of said assignment is delivered to the Contractor. The Owner hereby agrees
that in the event of such assignment the Contractor may rely upon written notice
from the assignee as to the fact of such assignment and as to the rights of the
assignee thereunder in the event the Owner defaults under its loan agreements
with such assignee.
13.3 WRITTEN NOTICE
13.3.1 Written notice shall be deemed to have been duly served if delivered in
person to the individual or a member of the firm or entity or to an officer of
the corporation for which it was intended, or if delivered at or sent by
registered or certified mail to the last business address known to the party
giving notice.
13.4 RIGHTS AND REMEDIES
13.4.1 Duties and obligations imposed by the Contract Documents and rights and
remedies available thereunder shall be in addition to and not a limitation of
duties, obligations, rights and remedies otherwise imposed or available by law.
13.4.2 No action or failure to act by the Owner, Architect or Contractor shall
constitute a waiver of a right or duty afforded them under the Contract, nor
shall such action or failure to act constitute approval of or acquiescence in a
breach thereunder, except as may be specifically agreed in writing.
13.5 TESTS AND INSPECTIONS
13.5.1 Tests, inspections and approvals of portions of the Work required by the
Contract Documents or by laws, ordinances, rules, regulations or orders of
public authorities having jurisdiction shall be made at an appropriate time.
Unless otherwise provided, the Contractor shall make arrangements for such
tests, inspections and approvals with an independent testing laboratory or
entity acceptable to the Owner, or with the appropriate public authority, and
shall bear all related costs of tests, inspections and approvals. The Contractor
shall give the Architect timely notice of when and
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292 WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #31
<PAGE>
where tests and inspections are to be made so the Owner may observe such
procedures. The Owner shall bear costs of tests, inspections or approvals which
do not become requirements until after bids are received or negotiations
concluded.
13.5.2 If the Owner or public authorities having jurisdiction determine that
portions of the Work require additional testing, inspection or approval not
included under Subparagraph 13.5.1, the Owner will, instruct the Contractor to
make arrangements for such additional testing, inspection or approval by an
entity acceptable to the Owner, and the Contractor shall give timely notice to
the Owner of when and where tests and inspections are to be made so the Owner
may observe such procedures. The Owner shall bear such costs except as provided
in Subparagraph 13.5.3.
13.5.3 If such procedures for testing, inspection or approval under
Subparagraphs 13.5.1 and 13.5.2 reveal failure of the portions of the Work to
comply with requirements established by the Contract Documents, the Contractor
shall bear all costs made necessary by such failure including those of repeated
procedures and compensation for the Architect's services and expenses.
13.5.4 Required certificates of testing, inspection or approval shall, unless
otherwise required by the Contract Documents, be secured by the Contractor and
promptly delivered to the Owner.
13.5.5 If the Owner is to observe tests, inspections or approvals required by
the Contract Documents, the Owner will do so promptly and, where practicable,
at the normal place of testing.
13.5.6 Tests or inspections conducted pursuant to the Contract Documents shall
be made promptly to avoid unreasonable delay in the Work.
13.6 INTEREST
13.6.1 Payments due and unpaid under the Contract Documents shall bear interest
from the date payment is due at such rate as the parties may agree upon in
writing or, in the absence thereof, at the legal rate prevailing from time to
time at the place where the Project is located.
13.7 COMMENCEMENT OF STATUTORY LIMITATION PERIOD
13.7.1 As between the Owner and Contractor:
.1 BEFORE SUBSTANTIAL COMPLETION. As to acts or failures to act occurring
prior to the relevant date of Substantial Completion, any applicable
statute of limitations shall commence to run and any alleged cause of
action shall be deemed to have accrued in any and all events not later
than such date of Substantial Completion;
.2 BETWEEN SUBSTANTIAL COMPLETION AND FINAL CERTIFICATE FOR PAYMENT. As to
acts or failures to act occurring subsequent to the relevant date of
Substantial Completion and prior to issuance of the final Certificate
for Payment, any applicable statute of limitations shall commence to run
and any alleged cause of action shall be deemed to have accrued in any
and all events not later than the date of issuance of the final
Certificate for Payment; and
.3 AFTER FINAL CERTIFICATE FOR PAYMENT. As to acts or failures to act
occurring after the relevant date of issuance of the final Certificate
for Payment, any applicable statute of limitations shall commence to run
and any alleged cause of action shall be deemed to have accrued in any
and all events not later than the date of any act or failure to act by
the Contractor pursuant to any warranty provided under Paragraph 3.5,
the date of any correction of the Work or failure to correct the Work by
the Contractor under Paragraph 12.2, or the date of actual commission of
any other act or failure to perform any duty or obligation by the
Contractor or Owner, whichever occurs last.
ARTICLE 14
TERMINATION OR SUSPENSION OF THE CONTRACT
14.1 TERMINATION BY THE CONTRACTOR
14.1.1 The Contractor may terminate the Contract if the Work is stopped for a
period of 30 days through no act or fault of the Contractor or a Subcontractor,
Sub-subcontractor or their agents or employees or any other persons performing
portions of the Work under contract with the Contractor, for any of the
following reasons:
.1 issuance of an order of a court or other public authority having
jurisdiction;
.2 an act of government, such as a declaration of national emergency,
making material unavailable;
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292 WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #32
<PAGE>
.3 or because the Owner has not made payment on an Application for Payment,
within the time stated in the Contract Documents;
.4 if repeated suspensions, delays or interruptions by the Owner as
described in Paragraph 14.3 constitute in the aggregate more than 100
percent of the total number of days scheduled for completion, or 120
days in any 365-day period, whichever is less; or
.5 the Owner has failed to furnish to the Contractor promptly, upon the
Contractor's request, reasonable evidence as required by Subparagraph
2.2.1.
14.1.2 If one of the above reasons exists, the Contractor may, upon seven
additional days' written notice to the Owner terminate the Contract and recover
from the Owner payment for Work executed and for proven loss with respect to
materials, equipment, tools, and construction equipment and machinery, including
reasonable overhead, profit and damages.
14.1.3 If the Work is stopped for a period of 60 days through no act or fault
of the Contractor or a Subcontractor or their agents or employees or any other
persons performing portions of the Work under contract with the Contractor
because the Owner has persistently failed to fulfill the Owner's obligations
under the Contract Documents with respect to matters important to the progress
of the Work, the Contractor may, upon seven additional days' written notice to
the Owner terminate the Contract and recover from the Owner as provided in
Subparagraph 14.1.2.
14.2 TERMINATION BY THE OWNER FOR CAUSE
14.2.1 The Owner may terminate the Contract if the Contractor:
.1 persistently or repeatedly refuses or fails to supply enough properly
skilled workers or proper materials;
.2 fails to make payment to Subcontractors for materials or labor in
accordance with the respective agreements between the Contractor and the
Subcontractors;
.3 persistently disregards laws, ordinances, or rules, regulations or
orders of a public authority having jurisdiction; or
.4 otherwise is guilty of substantial breach of a provision of the Contract
Documents.
14.2.2 When any of the above reasons exist, the Owner, upon certification by
the Architect that sufficient cause exists to justify such action, may without
prejudice to any other rights or remedies of the Owner and after giving the
Contractor and the Contractor's surety, if any, seven days' written notice,
terminate employment of the Contractor and may, subject to any prior rights of
the surety:
.1 take possession of the site and of all materials, equipment, tools, and
construction equipment and machinery thereon owned by the Contractor;
.2 accept assignment of subcontracts pursuant to Paragraph 5.4; and
.3 finish the Work by whatever reasonable method the Owner may deem
expedient.
14.2.3 When the Owner terminates the Contract for one of the reasons stated in
Subparagraph 14.2.1, the Contractor shall not be entitled to receive
further payment until the Work is finished.
14.2.4 If the unpaid balance of the Contract Sum exceeds costs of finishing the
Work, including compensation for the Architects services and expenses
made necessary thereby, such excess shall be paid to the Contractor. If
such costs exceed the unpaid balance, the Contractor shall pay the
difference to the Owner. The amount to be paid to the Contractor or
Owner, as the case may be, shall be certified by the Architect, upon
application, and this obligation for payment shall survive termination
of the Contract.
14.3 SUSPENSION BY THE OWNER FOR CONVENIENCE
14.3.1 The Owner may, without cause, order the Contractor in writing to
suspend, delay or interrupt the Work in whole or in part for such period
of time as the Owner may determine.
14.3.2 An adjustment shall be made for increases in the cost of performance of
the Contract, including profit on the increased cost of performance,
caused by suspension, delay or interruption. No adjustment shall be made
to the extent:
.1 that performance is, was or would have been so suspended, delayed or
interrupted by another cause
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292 WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #33
<PAGE>
for which the Contractor is responsible; or
.2 that an equitable adjustment is made or denied under another provision
of this Contract.
14.3.3 Adjustments made in the cost of performance may have a mutually agreed
fixed or percentage fee.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292 WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1987
Document: CDMANA201V4.DOC - 2/27/1998. AIA License Number 105838, which expires
on 7/31/1998 - Page #34
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
--------------------------------
[LOGO OF CLAYCO CONSTRUCTION COMPANY APPEARS HERE] CONTRACT DOCUMENT LIST
--------------------------------
<S> <C>
CLAYCO CONSTRUCTION COMPANY Project No: 97132
2199 INNERBELT BUSINESS CENTER DRIVE Printed 3/2/98
St. Louis, MO 63114 D M Management
314-429-5100, 314-429-3137 - Fax #12 Sanborne Road
Tilton, NH 03276
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
NUM REV TITLE ORIG REV BULL NOTES REFERENCE RFI
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Architectural
Cover Cover 12/19/97 Progress Set #3
- ----------------------------------------------------------------------------------------------------------------------------
Index Index 12/19/97 Progress Set #3
- ----------------------------------------------------------------------------------------------------------------------------
Civil
- ----------------------------------------------------------------------------------------------------------------------------
C0-1 6 Site Abbv., Legends & Symbols, 1/20/98 Final Permit Set
List of Drawings
- ----------------------------------------------------------------------------------------------------------------------------
C0-2 4 Key Sheet 11/17/98 Site Specific Comments
- ----------------------------------------------------------------------------------------------------------------------------
C1-1 Existing Conditions Plan 9/15/97 Original Issue
- ----------------------------------------------------------------------------------------------------------------------------
C1-2 Existing Conditions Plan 9/15/97 Original Issue
- ----------------------------------------------------------------------------------------------------------------------------
C1-3 Existing Conditions Plan 9/15/97 Original Issue
- ----------------------------------------------------------------------------------------------------------------------------
C1-4 Existing Conditions Plan 9/15/97 Original Issue
- ----------------------------------------------------------------------------------------------------------------------------
C1-5 Existing Conditions Plan 9/15/97 Original Issue
- ----------------------------------------------------------------------------------------------------------------------------
C2-1 6 Erosion and Sediment Control Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C2-2 6 Erosion and Sediment Control Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C2-3 6 Erosion and Sediment Control Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C2-4 6 Erosion and Sediment Control Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C2-5 6 Erosion and Sediment Control Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C3-1 6 Layout and Materials Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C3-2 6 Layout and Materials Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C3-3 6 Layout and Materials Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C3-4 6 Layout and Materials Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C3-5 6 Layout and Materials Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C4-1 6 Grading, Drainage and Utilities Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C4-2 6 Grading, Drainage and Utilities Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C4-3 6 Grading, Drainage and Utilities Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C4-4 6 Grading, Drainage and Utilities Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C4-5 6 Grading, Drainage and Utilities Plan 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C4-6 Sanitary Sewer Profile and Plan 1/26/98 Original Issue
- ----------------------------------------------------------------------------------------------------------------------------
C4-7 Sanitary Sewer Profile and Plan 1/26/98 Original Issue
- ----------------------------------------------------------------------------------------------------------------------------
C5-1 6 Site Details 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C5-2 6 Site Details 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C5-3 6 Site Details 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C5-4 6 Site Details 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C5-5 6 Site Details 1/20/98 Final Permit Set
- ----------------------------------------------------------------------------------------------------------------------------
C5.5 Site Details
- ----------------------------------------------------------------------------------------------------------------------------
Landscape
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
CURRENT DRAWING LIST
Clayco Construction Company
Date Range: All Dates
Landscape continued...
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
NUM REV TITLE ORIG REV BULL NOTES REFERENCE RFI
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
L1-1 6 Planting Plan 1/20/98 Final Permit Set
- --------------------------------------------------------------------------------------------------------------------------------
L2-1 6 Planting Details 1/20/98 Final Permit Set
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Architectural
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A0.1 SYMBOLS, LEGENDS, NOTES & INDEX 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------------
A2.0 Overall Floor Plan 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A2.1 First Floor Office Plan 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A2.1.1 First Floor Office Plan 2/18/98 Original Issue
- --------------------------------------------------------------------------------------------------------------------------------
A2.2 Second Floor Office 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A2.2.1 Second Floor Office Plan 2/18/98 Original Issue
- --------------------------------------------------------------------------------------------------------------------------------
A2.3 Mezzanine Plan 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------------
A2.4 Overall Floor Plan 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A2.5 Office Roof Plan 12/19/97 Progress Set #3 - Office
Shell Package
- --------------------------------------------------------------------------------------------------------------------------------
A3.1 Exterior Warehouse Elevations 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------------
A3.2 Exterior Office Elevations 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------------
A3.3 Partial Exterior Link Elevations 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------------
A3.4 Building Section @ Link 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A3.5 Building Section @ Link 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A3.6 Building Section @ Link 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A4.1 Enlarged Office Toilet Core Plans 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A4.2 Enlarged Plans 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A4.3 Enlarged Plans 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A6.1 Reflected Ceiling Plan in Warehouse 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A6.1.1 First Floor Office Reflected 2/18/98 Original Issue
Ceiling Plan
- --------------------------------------------------------------------------------------------------------------------------------
A6.2 Office Second Floor Reflected 2/18/98 Revised
Ceiling Plan
- --------------------------------------------------------------------------------------------------------------------------------
A6.2.1 Mezzanine Warehouse/Link 2/18/98 Original Issue
Reflected Ceiling Plan
- --------------------------------------------------------------------------------------------------------------------------------
A6.3 Warehouse Core Reflected Ceiling Plan 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------------
A7.1 Warehouse Stair Plans 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A7.2 Office Stair and Elevator Sections 10/31/97 Progress Set No. 2 -
Warehouse Permit Package
- --------------------------------------------------------------------------------------------------------------------------------
A8.1 Wall Sections 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------------
A8.2 Wall Sections 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------------
A8.3 Wall Sections 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------------
A8.4 Wall Sections 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A8.5 Wall Sections 12/19/97 Progress Set #3 - Office
Shell Package
- --------------------------------------------------------------------------------------------------------------------------------
A9.1 Door Schedule and Details 12/18/97 Progress Set #3 - Office
Shell Package
- --------------------------------------------------------------------------------------------------------------------------------
A9.1.1 Door/Partition Schedule 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
A9.2 Room Finish Schedule 2/18/98 Revised
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Structrual
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
S1.1 Foundation Plan 2/10/98 For Construction
- --------------------------------------------------------------------------------------------------------------------------------
S1.2 5 Foundation Plan 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------------
S2.1 Foundation Details 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------------
S2.2 Column Schedule 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------------
S3.1 Mezzanine Framing Plan 2/10/98 For Constr.
================================================================================================================================
</TABLE>
Page 2
<PAGE>
CURRENT DRAWING LIST
Clayco Construction Company
Date Range: All Dates
Structural continued...
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NUM REV TITLE ORIG REV BULL NOTES REFERENCE RFI
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
S3.2 1 Mezzanine Framing Plan Office 2/10/98 For Constr.
and Link
- --------------------------------------------------------------------------------------------------------------------------
S4.1 Roof Framing Plan 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------
S4.2 Deck Welding and Conveyor 2/10/98 For Constr.
Plans
- --------------------------------------------------------------------------------------------------------------------------
S4.3 1 Roof Framing Plan (Office and 2/10/98 For Constr.
Link
- --------------------------------------------------------------------------------------------------------------------------
S5.1 Joist Diagrams 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------
S6.1 Roof Framing Sections 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------
S6.2 Sections 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------
S6.3 1 Sections 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------
S6.4 1 Sections 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------
S6.5 Elevations 2/10/98 For Constr.
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Tilt Up
- --------------------------------------------------------------------------------------------------------------------------
TI 1 Panel Layout Plan 12/19/97 Progress Set #7
- --------------------------------------------------------------------------------------------------------------------------
T2 3 Elevations 1/28/98 As Noted
- --------------------------------------------------------------------------------------------------------------------------
T3 Elevations 11/14/97 Construction Set
- --------------------------------------------------------------------------------------------------------------------------
T4 Details 11/14/97 Construction Set
- --------------------------------------------------------------------------------------------------------------------------
T5 2 Details 1/22/98 As Noted
- --------------------------------------------------------------------------------------------------------------------------
T6 1 Details 2/11/98 As Noted
- --------------------------------------------------------------------------------------------------------------------------
T7 1 Elevations and Details 2/11/98 As Noted
- --------------------------------------------------------------------------------------------------------------------------
T8 1 Panel Details 2/11/98 As Noted
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Fire Protection
- --------------------------------------------------------------------------------------------------------------------------
FP01 Site Fire Protection Plan 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
FP02 Partial Automatic Sprinkler Plan 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
FP03 Partial Automatic Sprinkler Plan 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
FP04 Partial Automatic Sprinkler Plan 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
FP05 Partial Automatic Sprinkler Plan 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
FP06 Below Mezzanine Automatic 12/19/97 Progress Set #3
Sprinkler Plan
- --------------------------------------------------------------------------------------------------------------------------
FP07 Enlarged Office Automatic 12/19/97 Progress Set #3
Sprinkler Plan
- --------------------------------------------------------------------------------------------------------------------------
FP08 Elevations 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
FP09 First Floor Enlarged Office 12/19/97 Progress Set #3
Automatic Sprinkler Plan
- --------------------------------------------------------------------------------------------------------------------------
FP10 Second Floor Enlarged Office 12/19/97 Progress Set #3
Automatic Sprinkler Plan
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Plumbing
- --------------------------------------------------------------------------------------------------------------------------
P1 1 Site Plumbing Plan 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Mechanical
- --------------------------------------------------------------------------------------------------------------------------
M1 A Floor Plan - Mechanical 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
M2 Floor Plan - First Floor Office 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
M4 A Floor Plan - Mechanical 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
M5 A Schedules 12/9/97 For Owner Review
- --------------------------------------------------------------------------------------------------------------------------
M6 Floor Plan - Warehouse Offices 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
M7 A Schedules 12/11/97 For Owner Review
- --------------------------------------------------------------------------------------------------------------------------
M8 Details 12/19/97 Progress Set #3
- --------------------------------------------------------------------------------------------------------------------------
Owner Drawing
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 3
<PAGE>
CURRENT DRAWING LIST
Clayco Construction Company
Date Range: All Dates
Owner Drawing continued...
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
NUM REV TITLE ORIG REV BULL NOTES REFERENCE RFI
1 of 1 Owner Racking Drawing 8/15/97 Original Issue
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 4
<PAGE>
EXHIBIT B
---------
OUTLINE SPECIFICATION
---------------------
DM MANAGEMENT
DISTRIBUTION CENTER
TILTON, NEW HAMPSHIRE
DECEMBER 24, 1997 Rev. 2
These specifications are to establish the scope of work to provide a new
distribution facility constructed on a site in Tilton, New Hampshire.
DIVISION 1 - GENERAL REQUIREMENTS
Section lA - Summary of Work
- ---------- ---------------
The on site improvements and new construction of a facility that includes
574,914 Rev. 1 square feet. The facility area breakdown is as follows:
<TABLE>
<CAPTION>
<S> <C>
QA/Receiving 37,800 sq.ft.
Reserve and outlet reserve pallet/case/hanging storage 77,500 sq.ft.
Active area 151,590 Rev. 1
*Active mezzanine 151,590 Rev. 1
* Rev. 1 Returns/packing 59,000 sq.ft.
Shipping 22,721 Rev. 1
Employee Entrance Mezzanine 13,188 sq.ft. Rev. 1
Warehouse/service areas/locker room core 17,419 sq.ft. Rev. 1
General Office 32,356 sq.ft. Rev. 1
Connecting Corridor 11,750 sq.ft. Rev. 1
- --------------------------------------------------------------------------------
TOTAL AREA 574,914 sq. ft. Rev. 1
</TABLE>
*NOTE: The mezzanine floor and structure to be supplied and installed by others.
The main building framing which supports the mezzanine has been sized to allow
for the mezzanine floor loads.
This outline specification is intended for the sole and exclusive use of Clayco
Construction Company and DM Management in the completion of the proposed
project. The building dimensions to be approximately 588' X 624' REV. 1 for the
distribution area with dock loading on one side of the building. REV. 1 The
general office area is A TWO-STORY, 130' X 130' CONNECTED BY A TWO-STORY 11,750
SQUARE FOOT CORRIDOR. REV. 1
Section 1B - General Conditions
- -------------------------------
The Owner shall provide the following items for the use of the General
Contractor:
1. Property survey and property corner pins. General Contractor shall provide
layout and staking (control) for building and site work.
1
<PAGE>
Section 1B - General Conditions - continued
- -------------------------------------------
2. Environmental report and any wetland mitigation process or fees.
3. Utilities available at the property line per SASASKI REV. 1 site plan REV.
1
4. Site grading and compaction to -1' +/-.1' OF FINISHED GRADES REV. 2 for all
parking and building pads.
5. LAWN AREAS TO BE GRADED TO -6" +/- .1' REV. 2
The General Contractor shall include the following items as required for the
execution and/or completion of The Work. PLEASE NOTE: This listing is not to be
considered all-inclusive or complete, but merely as a guide for the major items
to be included under this Division.
1. Architectural and structural engineering, construction documents and
specifications; the engineering documents shall include the plumbing,
mechanical, electrical and fire protection work as these items are being
completed on a design/build basis.
The contractor shall cause the preparation and design of all construction
drawings and specifications and incorporates the intent of the scope
drawings and construction guidelines utilizing a licensed, registered,
insured architect and engineer for all design and structural components of
the building. The contractor will cause the design to comply with all
applicable local, state and national codes and all design requirements for
obtaining the necessary permits. The contractor will include any
specialized design or consulting services needed.
Provide all shop drawings, cut sheets, samples, submittals and other
required items for Owner's review. Simultaneously both contractor and
design professionals are to review and approve all shop drawings and
submittal subject to the final review by Owner.
2. In addition to all other insurance requirements of contractor set forth in
these general conditions, or the general conditions attached to the AIA
Contract Agreement, the contractor shall require all professional
subcontractors to obtain and maintain professional errors and omission
coverage in connection with such subcontractor's work. Professional errors
and omissions insurance shall be endorsed to provide contractual liability
coverage.
Such coverage for the professional subcontractors shall be in amounts not
less than $1,000,000 each. Certified copies of the policies evidencing such
coverage shall be furnished at the same time as the other evidence of
insurance required under this agreement.
Builder's Risk Insurance is supplied by OWNER REV. 2. Owner to be
responsible for all deductibles.
2
<PAGE>
Section 1B - General Conditions - continued
- -------------------------------------------
3. The contractor is not licensed as an architect or engineer in the State of
New Hampshire and is not authorized by law to perform design services.
Accordingly, contractor will not perform or furnish any design service. The
contractor will obtain, administer and pay for such services as provided in
the contract documents. Such services will be provided by licensed
architects and engineers. Such design professionals will be responsible for
quality of such design services and for any errors or omissions. Contractor
is a licensed contractor in the State of New Hampshire.
4. REV. 1
5. Temporary utilities - water, telephone, power and portable toilet
facilities shall be provided by the General Contractor of sufficient
capacity and at the locations required for their work. Pay for all
electrical until the issuance of substantial completion notice.
6. Permits, Taps and Development Fees - All municipal and other political
jurisdiction (including but not limited to; County/Local, Sewer District,
and Fire District) plan check fees, building permits and grading permits
required for the proposed work, will be secured by the Contractor. Provided
as a $15,000 allowance.
7. Supervision - Any and all General Contractor project site and office
supervision required for The Work shall be included, including a full-time
qualified field superintendent, project manager and safety engineer.
8. Security - Provide and maintain job site security, as required to secure
the project during construction term.
9. Insurance Coverage - Provide the minimum insurance requirements as defined
by the Owner-Contractor Agreement.
10. Surveys and Layout - The Owner shall provide a monumented boundary survey
of the parcel. The General Contractor shall perform all work required for
the layout of The Work including line and grade surveying. We have included
a topographical survey and an "as-built" survey for the Owner.
11. Testing and Inspections - The General Contractor shall provide for the
performance of testing and control inspections as required by appropriate
governmental agencies and/or the Owner including, but not limited to,
concrete strength tests, soil compaction and moisture control, asphalt
pavement (base and asphalt compaction).
Reinforcing steel, placing concrete and welding inspection shall be tested
only if required by the Building Department. The General Contractor shall
employ a mutually agreeable independent testing laboratory to perform this
work and the cost of said inspections should be included in the Price.
3
<PAGE>
Section 1B - General Conditions - continued
- -------------------------------------------
12. Cleaning - The General Contractor shall keep the site reasonably clean and
cleared throughout the duration of The Work. Upon completion of The Work,
debris, construction materials and equipment will be removed from the
building and the site. The floors of the building will be left broom clean.
Washing of inside and outside face of exterior glass and all mirrors will
be by the General Contractor.
13. Labor and Supervision - The Work will be done under the direction and
supervision of an experienced superintendent and project manager employed
by the General Contractor and approved by the Owner and these individuals
will be empowered to discuss any matters with Owner's representative as
deemed necessary.
14. The management team, which commences the work, shall be assigned to the
work for the duration until Substantial Completion unless the Owner agrees
otherwise.
15. Materials and Workmanship - Materials used in The Work will conform to the
latest Standard Specifications of the American Society for Testing
Materials, The American Concrete Institute, The American Institute of Steel
Construction, American Welding Society, American Society of Mechanical
Engineers, National Electric Code, N.E.M.A., American Institute of
Electrical Engineers and the rules and regulations of the National Board of
Fire Underwriters.
16. The workmanship will be consistent with the best practice of the various
building trades and will conform to the standards of good construction for
this class of work.
17. Where a product is specified by a brand name, a product of equal
performance may be substituted only with the prior approval of the Owner,
Architect or Engineer of record.
18. Color Selections - The Owner and/or Architect will provide a finish color
schedule of the exposed surfaces of The Work in a timely manner for the
General Contractor's use.
19. Temporary heat, water and power will be provided until the building is
permanently or temporarily enclosed. After this time, it is assumed that
the installation of the permanent heating system will have progressed far
enough for it to be used for heating the building. The Builder has included
the cost of operating the systems until Substantial Completion has been
achieved.
20. Guarantees - Upon notice from the Owner, the General Contractor will remedy
any defects due to defective workmanship or materials, which will appear
within a period of one year from the date of Substantial Completion of the
Work.
21. A FIXED AMOUNT OF $285,00 Rev.2 is included to cover all winter
construction premiums.
4
<PAGE>
Section 1B - General Conditions - continued
- -------------------------------------------
The following items are included in the General Conditions/General Requirements
for the General Contractor:
1 General expenses such as office equipment, stationery and office supplies,
postage, telephone, shop drawing blueprints, reproduction costs, progress
photographs, computer and EDP expenses, first-aid supplies, travel,
lodging, and other such miscellaneous expenses.
2. Project staff including salaries and benefits for Project Manager, Project
Superintendent, Assistants, AND FIELD SECRETARIES,FLELD VISITS BY SAFETY
ENGINEER AND QUALITY CONTROL MANAGER. REV. 2
3. Tools and supplies including hand tools and construction equipment having
an individual new value of less than $200 and consumable items which are
used in the construction operation such as chalk, kerosene, brooms,
brushes, etc....
4. Job office including rental of trailers, temporary buildings or office
space for project staff. Also include interior modification and
mechanical/electrical work as required to said job offices.
5. ON-SITE REV. 2 vehicles and repairs such as purchase of rental
charges for plant owned by General Contractor or outside parties. Items
include transits and levels, rental or purchase of job vehicles and repairs
and maintenance of plant and vehicles used specifically on this project.
6. Temporary buildings, barricades and installations including labor, lumber,
millwork, and other building materials used in the construction of tool
sheds and other temporary structures with the exception of the job office
which is included above.
DIVISION 2- SITE WORK
Section 2A - Subsurface Investigation
- -------------------------------------
Soils and subsurface investigation will be completed by a certified soil
engineer as required by the structural engineer for design of the foundations.
Soil investigation and report will be paid and provided by Owner.
Section 2B - Earthwork
- ----------------------
The site shall be designed by a civil engineer to provide for a balanced cut and
fill condition. Any excess topsoil or excavated materials will be placed in
berms or graded into unpaved areas to preclude hauling of materials off site.
PROVIDE EXCAVATION OF THREE DETENTION PONDS. REV. 1
5
<PAGE>
Section 2B - Earthwork - continued
- -----------------------------------
REV. 1 The entire site will be graded (by others) to within +/- 1" REV. 1 of
fixed Rev. 2 grades as SHOWN ON SASAKI DRAWINGS REV. 2
INCLUDED IS AN ALLOWANCE OF $33,200 FOR MISCELLANEOUS SITE WORK. REV. 2
EXCAVATION OF THE DETENTION PONDS AND OUTFLOW STRUCTURES IS INCLUDED. REV. 2
Excavation of existing conditions for installation of footings and foundations.
Finish grading of areas around the building and paving to achieve proper
drainage and uniform surfaces to a 0.1 foot (+/-) tolerance.
Planting and landscape areas will be finish graded for planting by landscaping
contractor.
Section 2C - Drainage
- ---------------------
Surface run-off of storm water shall be provided for with appropriate grade
level changes for proper drainage in accordance with OUR PROPOSAL DATED 9/4/97
REV. 1. All storm water will flow to inlets, which are piped into detention
basins. AN ALLOWANCE OF $268,979 IS INCLUDED FOR ALL STORM SEWERS AND INLETS.
REV. 1
Roof area to be drained with interior drains and collector pipes and tied to the
underground storm sewer system, which is piped, into detention basins.
Overflow water at roof drains will be collected by overflow drains, which are to
be directly piped into roof drain drop piping. Overflow roof drains with
separate piping or scuppers are not included.
Section 2D - Paving and Surfacing
- ---------------------------------
All asphalt paving and curbs to be in accordance with OUR ORIGIINAL PROPOSAL
DATED 9/4/97. REV. 1
$541,000 ALLOWANCE IS INCLUDED FOR ALL ASPHALT AND CONCRETE PAVING AND ALL
CURBS. REV. 1
Asphalt paving in the employee parking area and entry drive to be 1" WEARING
SURFACE, 2" ASPHALT BASE REV. 2 asphalt paving over 8" REV. 2 of granular base
and asphalt paving in the truck parking and entry drive to be 2" WEARING
SURFACE, 2" ASPHALT BASE REV. 2 asphalt paving over 8" of granular base.
Dock door areas to have 6" thick, concrete with one layer of 6x6x4/4 wire mesh
on 6" of granular base from the dock wall out 65'-0" (65' x 350' area included).
6
<PAGE>
Section 2D - Paving and Surfacing - continued
- ---------------------------------------------
Trailer staging areas to be asphalt paving (4"-2"X 2" REV. 2 asphalt on 8"
granular fill, 95' x 350').
All pavement striping shall be 4" wide and will be two-coat white paint system
and will include handicap areas required by Code.
One (1) 60'-0" long concrete ramp is included.
Concrete curb and gutter used at all paving areas.
4" thick sidewalks and patio slabs per the site plan (2,000 SQ.FT. FOR PATIO)
REV. 1.
Provide 12'-0" wide STONE REV. 2 perimeter road around building and future
expansion areas.
Section 2E - Erosion Control
- ----------------------------
Provide erosion control as required by governing codes or as necessary to
perform construction.
Section 2F - Landscaping/Irrigation
- -----------------------------------
Landscaping/irrigation will be provided as an allowance of $250,000. REV. 1
Include three (3) 35'-0" high aluminum tapered flagpoles.
Section 2G - Miscellaneous Signage
- ----------------------------------
Monument signage allowance of $25,000 is included.
Road signage allowance of $25,000 is included.
Section 2H - Site Gates
- -----------------------
Provide two (2) automatic gates to be located at entrance and exit of dock yard.
Controlled from security room via intercom and closed circuit TV.
DIVISION 3 - CONCRETE
Section 3A - Cast-In-Place Concrete
- -----------------------------------
Reinforced concrete grade beams and column spread footings based on 3500psi
Compressive strength at 28 days and a soil bearing capacity of 4000 REV. 1 psf
for column footings and 4000 REV. 1 psf for continuous wall footings..
7
<PAGE>
Section 3A - Cast-In-Place Concrete - continued
- -----------------------------------------------
REV. 1 The floor slab design will be 6" thick, 4000psi concrete, unreinforced,
for all warehouse areas EXCEPT THE RESERVE AREA, WHICH WILL BE 8" THICK,
UNREINFORCED, 4000PSI CONCRETE. REV. 1
All concrete floors to have 6" of compacted granular fill. Floor flatness to
meet requirements listed in owner's specification Section III.B Article 2 "Floor
Flatness and Levelness".
The slab shall be divided by saw cutting control joints into 16' x 14' sections.
MEZZANINE TO HAVE 3.5"; 4,000PSI CONCRETE (34,366 SQ.FT.) REV. 1
4" thick slab on grade with one layer of 6x6x10/10 WWF and vapor barrier is
included for the office area (ground floor). Office slab to have 4" of compacted
granular fill. Provide recessed floor at computer room for access flooring.
All construction joints to be doweled.
Floors shall be floated smooth and level and burnished with steel trowel and
mechanical equipment to a smooth surface within specified tolerances.
Ashford floor sealer/hardener is included for all warehouse floors. SAWCUT
JOINTS IN WAREHOUSE WILL BE CAULKED WITH MM80. REV. 1
Section 3B - Tilt-Up Concrete Wall Panels
- -----------------------------------------
INSULATED, REV.1 tilt-up, load bearing, reinforced concrete wall panels will be
provided at all exterior walls as indicated per our structural plans included in
this proposal. Concrete design mix per structural engineer requirements. All
vertical wall panels will be smooth finished and caulked. Rustication features
are included on these panels. INSULATED PANELS WILL BE A 2-1/2" THICK FACE WITH
2" OF INSULATION AND A STRUCTURAL BACK OF 9-1/4" REV. 2
Interior finish of plant walls to be smooth trowel and painted REV. 1
Lifting inserts to receive plastic caps fitting flush with interior panel
surface.
Exterior perimeter office walls to be constructed of load-bearing, tilt-up
concrete.
REV. 1
Future "southern" expansion to provide another load bearing concrete wall
(creating a "double" wall condition) to be set on our "expanded" footing.
8
<PAGE>
DIVISION 4 - MASONRY
Section 4A - Masonry
- --------------------
Provide masonry block wall construction for the following interior walls
locations:
* REV. 1 All perimeter walls at office areas within the warehouse distribution
areas are to be constructed with CMU (interior walls to be drywall
construction).
* REV. 1 Toilet facilities, which are located within the warehouse distribution
area, are to be constructed with CMU.
Sizes and structural requirements for these CMU walls will be designed and
incorporated.
A 12" MASONRY FIRE WALL SEPARATING THE ACTIVE AREA FROM THE REMAINDER OF THE
WAREHOUSE IS INCLUDED (801LF). REV. 1
DIVISION 5 - METALS
Section 5A - Structural Metal Framing
- -------------------------------------
Structural steel shall comply with ASTM A-36 and be designed in accordance with
"AISC Specification for Design, Fabrication and Erection of Structural Steel for
Buildings" and applicable local codes, including applicable wind and snow loads.
All structural steel, joists and joist girders shall receive factory primer or
shall receive primer subsequent to fabrication.
Bay spacing to be approximately 42'-0" x 48'-0".
Structural design incorporates Vertical Lateral Bracing between columns per
Alper-Ladd drawings included with this proposal.
The warehouse distribution roof structure shall be designed to accommodate a
ground snow load of 60psf and a total load of 70 psf and, at specific locations
and loading required for conveyors and catwalks.
Section 5B - Metal Joist and Metal Decking
- ------------------------------------------
Joist girders and metal joists will support the roof, mezzanines loads and
suspended conveyor and catwalk loads as described in the owners specification
Section III.E Article 4 "Loading". The metal joists shall be shop primed gray
designed per SJI specifications.
PROVIDE BEAMS, JOISTS AND DECKING FOR 13,188 SQ.FT. RETURNS MEZZANINE. REV. 1
MAIN OFFICE AND CONNECTING CORRIDOR MEZZANINE AREA IS INCLUDED FOR 21,178 SQ.FT.
REV. 1
White metal roof deck (20 and 22 gauge) shall be per the Steel Deck Institute
(SDI) requirements and our structural drawings included with this proposal and
no concrete topping shall be provided at the roof.
9
<PAGE>
Section 5B - Metal Joist and Metal Decking - continued
- ------------------------------------------------------
A clear height of 35'-0" will be achieved at the lowest point of the warehouse.
Miscellaneous steel will be provided as required for the work including; stairs,
ladder/cage, roof top unit supports, exterior stairs and handrails, pipe
bollards (allowance of 100).
Three (3) sets of exterior metal stairs with handrail to be provided at the
building perimeter.
Pipe handrail to be included at the "dock height" drive-in ramp as required.
DIVISION 6 - WOODS AND PLASTICS
Section 6A - Rough Carpentry
- ----------------------------
Wood blocking, nailers, furring and framing with standard construction grade
lumber required to complete the new construction (fire treated where required by
code), if required by architect.
Wood blocking, nailers and cant strips as required for the installation of the
roof system.
* Wood blocking and general rough carpentry at office areas as required.
WAREHOUSE "SERVICES" AREA TO HAVE HEAVY STUD FRAMING WITH A 3/4" PLYWOOD DECKING
FOR LIGHT STORAGE (12,827SQ.FT.) REV. 1
Section 6B - Finish Carpentry
- -----------------------------
* Laminate vanities and tops
* Laminate wall and base cabinets with counter.
* Laminate window sills.
* Laminate work tops and base cabinets.
* Closet rods and miscellaneous shelving.
DIVISION 7 - THERMAL AND MOISTURE PROTECTION
Section 7A - Insulation
- -----------------------
2" rigid polystyrene insulation board on foundation perimeter walls below floor
slab AT OFFICE AREA ONLY. REV. 1
* REV. 1 Provide vinyl backed (R-4 min) rigid insulation at perimeter of tilt-
up panels of the OFFICE REV. 1 AREA. REV. 1
10
<PAGE>
Section 7A - Insulation - continued
- -----------------------------------
Section 7B - Membrane Roofing
- -----------------------------
Provide polyisocyanurate insulation to achieve R=19 REV. 1 DESIGN TO MEET
AN FACTORY MUTUAL, I-60 DESIGN IS THE WAREHOUSE. REV. 1
Single ply, 45 mil, EPDM ballasted roof system with a 10 year "leak free"
warranty an I-60 REV. 1 rating.
MAIN OFFICE AND CONNECTING CORRIDOR ROOFING TO BE STANDING SEAM METAL, R-19,
"HIP" TYPE DESIGN WITH KALWALL ACCENT TRIM AND DORMERS PER THE RENDERING. REV. 1
Full time roof inspector on site during installation.
Walk pads around all roof mounted equipment (ROOF TOP HVAC UNITS) REV. 1.
Section 7C - Flashing and Sheet Metal
- -------------------------------------
All sheet metal shall be "paint-grip" galvanized meeting S.M.A.C.N.A standards.
Section 7D - Caulking
- ---------------------
Caulking at required joints and intersections of two different materials to
provide waterproof seal. Exterior and interior joints (below insulation) shall
be caulked with two component polyurethane-based sealing compounds.
Thresholds shall be caulked with architectural grade caulking compound. Provide
closed cell backer rod as required, material shall be round rod.
FireWalls shall receive fire resistive silicone building sealant, Dow Corning
#700 or equivalent, and backer rod at all joints.
Section 7E- Roof Accessories
- ----------------------------
Provide ONE (1) ROOF hatch. Rev. 1
DIVISION 8 - DOORS AND WINDOWS
Section 8A - Metal Doors and Frames
- -----------------------------------
* All interior wood doors will be solid core, oak veneer, 3'x7' in hollow metal
frames..
11
<PAGE>
Section 8A - Metal Doors and Frames - continued
- -----------------------------------------------
DOORS IN THE FINISHED WAREHOUSE AREA TO BE EITHER 3' X 7'; SOLID CORE WOOD, OR,
INSULATED HOLLOW METAL REV.1
The man doors in the exterior walls and all interior plant doors will be 18
gauge-insulated doors with 16 gauge frames.
All exterior doors shall receive 1-1/2" pair ball bearing hinges, closers,
lever arm locksets, weather-stripping, thresholds, wipe strips, drip caps, storm
chains and latch guards.
All doors required by code to be fire rated shall have labels designating hourly
ratings per underwriters laboratory standards.
Section 8B - Sectional Overhead Doors
- -------------------------------------
The overhead doors will be insulated sectional steel. EIGHTEEN (18) REV. 1 dock
doors. EIGHTEEN (18) REV. 2 will be 9'-0" wide by 9'-0" and two (2) will be
doors 12'-0" wide by 16'-0" high (at drive-in locations). All REV.1 doors will
be ELECTRICALLY REV. 1 operated with vertical lift track and counter balance
assembly.
Doors to have 3" wide, heavy-duty tracks and rollers with one (1) 6" x 12" view
panel.
Section 8C - Openings in FireWall
- ---------------------------------
Provide three (3) fusible link automatic overhead coiling fire shutters at
transit openings within fire separation walls. Three (3) openings to be 20'-0"
wide by 18'-0" high.
Provide THREE (3) REV. 1 fire rated H.M. doors with required egress hardware
within fire wall.
Section 8D - Metal Window Frames
- --------------------------------
Prefinished aluminum window frames at exterior walls with manufacturer's
standard sections; anodized finish and as manufactured by Kawneer or equal;
(Kawneer Nucore 1-3/4" X 4-1/2" system or approved equal).
PROVIDE STRIP WINDOWS AT THE NORTH AND EAST ELEVATION OF THE WAREHOUSE IN
ACCORDANCE WITH MITCHELL HUGEBACK DRAWINGS DATED 10/14/97 REV. 1
Section 8E - Hardware
- ---------------------
Hollow metal, insulated exterior doors shall include cylinder locks, hydraulic
closers, drip cap, strike lock shields, door stops, silencers, sill sweeps, 1-
1/2 pair hinges and code required panic hardware (where required). Hollow metal
interior doors shall have 1-1/2 pair hinges, hydraulic closers, silencers and
doorstops. Toilet room doors shall have push/pull plates.
* Push plates and kick plates to be provided as required. Brushed aluminum
finish.
12
<PAGE>
Section 8F - Glass and Glazing
- ------------------------------
Exterior windows shall be glazed with 1" insulated gray reflective glass.
(laminated or tempered as required by Code). We include 6,594 REV. 1 sq.ft. of
glass and glazing, (4) REV. 1 glass exterior doors and (2) glass interior
doors for THE MAIN OFFICE AND CONNECING CORRIDOR REV.1 PER the architectural
rendering.
WAREHOUSE AREA TO HAVE 3,068 SQ.FT. OF GLASS TO ALLOW NATURAL LIGHT TO INTERIOR.
REV. 1
REV. 2
Glass entry vestibule is included.
DIVISION 9 - FINISHES
*NOTE: All interior finishes, including HVAC, electrical, fire protection, etc..
included at $35.00/SQ.FT. (45,000 SQUARE FEET AT $35.00/SQ.FT. = $1,575,000.00)
REV. 1 IN ADDITION TO THE $35.00/SQ.FT. ALLOWANCE, THE FOLLOWING AMOUNTS ARE
INCLUDED FOR MAIN POWER ELECTRICAL ROUGH-IN ($174,590), SPRINKLER ROUGH-IN (WET
SYSTEM AND COMPUTER ROOM GAS SYSTEM) ($83,155) AND DOMESTIC WATER AND SANITARY
MAIN LINE ($32,000). REV. 2
Section 9A - Painting
- ---------------------
The exterior of the building will be acid etched and include a two coat acrylic
paint system on all surfaces.
* REV. 1 The hollow metal doors and frames will be painted with two coats of
paint.
Rev. 2
All exposed sheet metal to receive paint.
* Office drywall to receive two coat flat Latex paint system. Include allowance
for wallcovering or Zolatone paint upgrade.
All pipe bollards, handrails and miscellaneous exposed metals to be painted.
Columns to be painted and numbered white with yellow at 10' AFF and lower.
All steel joists, girders and interior concrete walls.
* REV. 1 CMU partitions shall receive one (1) coat of block filler and two (2)
coats of flat latex.
13
<PAGE>
Section 9B - VCT Tile - continued
- ---------------------------------
* REV. 1 The cafeteria, locker room, storage rooms and workrooms are to
receive 12"x12" vinyl composite tile. Rev. 2
* REV. 1 4" vinyl cove base shall be provided at VCT and carpet locations.
Section 9C - Acoustical Ceiling
- -------------------------------
* The ceiling tile shall be 2'x4' Armstrong Second Look II, or equivalent,
5/8" thick, white, nondirectional fissured. The 2'x4' ceiling grid shall be
heavy duty as manufactured by Donn or equivalent, and shall be adequate for
supporting 2'x4' inlaid fluorescent fixtures and 2'x2' mechanical diffuser
grills.
WAREHOUSE OFFICES TO HAVE A STANDARD 2'X4', NON-DIRECTIONAL, ACOUSTICAL
CEILING. REV. 1
The office ceiling height shall be 9'-0".
Section 9D - Drywall
- --------------------
THE INTERIOR WALLS OF OFFICE AREA WILL BE INSULATED WITH SOUND INSULATION. REV.
2
* The drywall partitions shall consist of 3 5/8", 25 gauge metal studs at 24"
O.C. with one (1) layer of 5/8" drywall each side.
* The exterior walls of the office shall be furred with METAL STUDS REV. 2 with
rigid or batt insulation (R-19) REV. 2. Provide 5/8" drywall.
* The office area columns shall be furred with drywall enclosures.
* Provide double studs at all jamb conditions.
* Provide sound attenuation blankets within partitions at executive offices,
conferences rooms, computer rooms and security.
* REV. 1 Provide drywall ceilings at all restroom and miscellaneous office
locations.
Section 9E - Ceramic/Quarry Tile
- --------------------------------
* 2"x 2" ceramic floor tile shall be provided at the office toilets.
2"X2" CERAMIC FLOOR TILE SHALL BE PROVIDED AT THE WAREHOUSE TOILETS. REV. 1
* 4"x 4" ceramic wall tile shall be provided at all office toilet wet walls.
4"X4" CERAMIC WALL TILE SHALL BE PROVIDED AT ALL WAREHOUSE TOILET WET WALLS.
REV. 1
* 12"x12" granite tile shall be provided at the lobby area in conjunction
with carpet.
14
<PAGE>
Section 9F - Carpeting
- ----------------------
* Included a $20/SQ.YD. REV. 1 allowance for material and installation.
The carpet shall be a minimum 28 oz. level loop.
DIVISION 10 - SPECIALTIES
Section 1OA - Toilet Partitions and Accessories
- -----------------------------------------------
* Toilet partitions in the office REV. 1 areas shall have a baked enamel finish.
WAREHOUSE TOILET PARTITIONS TO BE FLOOR-MOUNTED, STAINLESS STEEL TYPE. REV. 1
* REV. 1 Toilet accessories to be recessed or semi-recessed and brushed
stainless steel finish.
* REV. 1 One (1) set of handicapped accessories shall be provided at each public
toilet.
Section lOB - Miscellaneous Signage
- -----------------------------------
$2,500 allowance is included for interior signage.
Provide handicap signage as required by Code.
Provide indication signage at restrooms.
Section 10C - Lockers/Benches
- -----------------------------
* REV. 1 Provide double tier lockers (430 total lockers at 12"W x 18"D x 36'H).
Section 10D - Interior Fencing
- ------------------------------
Provide 8'-0" high galvanized fence surrounding the Security Active Storage Area
(1000Lf).
Provide two (2) 10'-0" wide gates.
Provide four (4) cutouts for conveyor pass through locations.
Section 10E - Access Flooring
- -----------------------------
* Provide access flooring at computer room.
DIVISION 11 - EQUIPMENT
Section 1lA - Dock Levelers
- ----------------------------
Provide SEVENTEEN (17) REV. 2 7'X8' recessed dock levelers; McGuire, KELLEY
REV. 1 or Rite-Hite, 30,000# REV. 2 hydraulic dock levelers or equal.
15
<PAGE>
Section 11B - Dock Seals
- -------------------------
Provide SEVENTEEN (17) REV. 2 dock shelter/seals at overhead dock doors with
heavy-duty, urethane coated nylon covering and truck bumpers. Kelley or equal.
Section 11C - Dock Lights
- --------------------------
SEVENTEEN (17) REV. 2 150W dock "swing" lights, fans and receptacles (two duplex
outlets) are included at overhead doors.
Section 11D - Trailer Restraints
- --------------------------------
Provide SEVENTEEN (17) REV. 2 trailer restraints for recessed dock leveler
locations; McGuire MTR-1 / MTR-2 or equal trailer locks/restraints.
Communication sign package or strobe light is included.
DIVISION 12 - FURNISHINGS
Section 12A - Window Treatment
- ------------------------------
* Provide 1" metal leveler or equal, mini-blinds at all exterior and interior
windows IN THE OFFICE AREA. REV. 2
Section 12B - Entrance Mat
- ---------------------------
* Vestibule will have ped-i-mat type entrance mat and frame.
DIVISION 15 - MECHANICAL
Section 15A - Fire Protection Systems
- -------------------------------------
Work shall begin at the split in the 12 in. combination fire and domestic water
service and shall include but not be limited to the following:
Underground piping, valves, hydrants, fittings and blocking.
Backflow preventor.
Standard wet pipe sprinkler system for office, employee entrance,
returns/packing, shipping, receiving/QA, service rooms and mechanical
rooms.
ESFR west pipe sprinkler system for the reserve storage area.
Large drop wet pipe sprinkler systems for the active storage area.
Fire pump and all associated equipment.
PROVIDE SPRINKLER PROTECTION UNDER ACTIVE AND RETURN AREA MEZZANINES. REV.
1
16
<PAGE>
Section 15A - Fire Protection System - continued
- ------------------------------------------------
PROVIDE A ENERGYN GAS SYSTEM IN OFFICE AREA COMPUTER ROOM. REV. 1
References
- ----------
All work will be designed and installed in accordance with all applicable codes
and referenced design standards and Factory Mutual recommendations.
1. 1996 BOCA National Building Code
2. 1994 Life Safety Code
3. NFPA 13, Sprinkler Systems
4. NFPA 20, Centrifugal Fire Pumps
5. NFPA 22, Water Storage Tanks
6. NFPA 24, Private Fire Service Mains
7. NFPA 231, General Indoor Storage
8. NFPA 231C, Rack Storage
System Description
- ------------------
* OFFICE, RESTROOMS and LOCKER ROOMS: (Standard Wet Pipe)
----------------------------------
Density -0.10 gpm/sq.ft.
Operating Area - 1,500 sq.ft.
Temperature Rating/Orifice Size - 165 degrees F /1/2"
Hose Stream Allowance - 250gpm
RETURN/PACKING, SHIPPING, RECEIVING/QA, SERVICE ROOMS and MECHANICAL ROOMS:
- --------------------------------------------------------------------------
(Standard Wet Pipe)
Density -0.20 gpm/sq.ft.
Operating Area - 3,000 sq.ft.
Temperature Rating/Orifice Size - 165 degrees F /17/32"
Hose Stream Allowance - 500gpm
RESERVE (ESFR)
- -------------
Minimum end head pressure - 75psi
Minimum number of sprinkler calculated - twelve (12) hydraulically most
remote sprinklers, four (4) per branchline
Temperature Rating/Sprinkler Type - 165 degrees F / ESFR
17
<PAGE>
Section 15A - Fire Protection System - continued
- ------------------------------------------------
Hose Stream Allowance - 250gpm
ACTIVE: (Large Drop)
- ------
Minimum end head pressure - 50psi
Minimum number of sprinkler calculated - twenty (20)
Temperature Rating/Sprinkler Type - 165 degrees F / Large Drop
Hose Stream Allowance - 250gpm
Quality Assurance
- -----------------
Equipment and components not specifically specified will be listed by
Underwriter's Laboratories, Inc. and Factory Mutual approved for fire protection
systems installation.
Section 15B - Heating, Ventilating and Air Conditioning
- --------------------------------------------------------
* Provide packaged rooftop units with electric cooling and gas heating to
maintain 78 degrees at 86/70 and 68 degrees at -10 degrees in the general
office, service rooms, and employee entrance area. Each unit to be equipped
with roof curb, manual outside air damper, throwaway filters, and temperature
sensor, REV. 2
THE ENERGY MANAGEMENT SYSTEM WILL CONTROL THE RTU IN THE WAREHOUSE. REV. 2
Thirty-six (36) rooftop units (nominal 900 tons total cooling capacity) with
electric cooling and gas heating to maintain 78 degrees at 86/70 and 68 degrees
at -10 degrees in the returns/packaging, shipping, receiving/QA reserve and
active areas including the mezzanine above the active. Each unit to be equipped
with roof curb, manual outside air damper, throwaway filters and temperature
sensor.
ACTIVE AREA AIR DISTRIBUTION TO BE ACCOMPLISHED BY A "DUCTED" AIR MOVEMENT
SYSTEM. REV. 1
Three (3) toilet, locker, and janitor closet exhaust system ducted to the
outside per code.
One (1) battery charging exhaust system ducted to the outside per code.
Two (2) electric entry heaters with integral thermostat.
* REV. 1Rectangular and spiral ductwork with associated perforated supply
air registers, eggcrate type return air grilles, and flexible ductwork.
Ductwork to be insulated as required to avoid noise and condensation.
Plenum area above ceiling to be utilized for return air.
18
<PAGE>
Section 15B - Heating, Ventilating and Air Conditioning - continued
- -------------------------------------------------------------------
Start, check and balance entire system. Standard one year warranty on entire
system. Four year extended warranty on refrigeration compressors only. Balancing
to be performed by NEBB certified contractor.
Hoisting of mechanical equipment.
Controls only.
Permits and inspection fees.
Gas piping from gas meter with minimum 10# pressure to mechanical units. Gas
piping to be located on the roof with expansion loops as required.
Mechanical drawings prepared by professional engineer registered in the State of
New Hampshire.
OFFICE AND WAREHOUSE REV. 2 HVAC WILL BE CONTROLLED BY THE ANDOVER ENERGY
MANAGEMENT SYSTEM. REV. 1
Section 15C - Plumbing
- -----------------------
Domestic Water System - A new 3" service (beginning 5' outside the building)
will be stubbed up and valved in the utility room then distributed to serve the
needs of the facility.
Sanitary, Waste and Vent - To be provided as required with 6" sanitary line
terminating 5' outside the building.
* MAIN OFFICE REV. 1 Fixtures: (per Code Allowables)
-------------------------------------------------
Automatic valve fixtures.
Sinks.
Showers.
Floor drains.
Eye wash stations.
WAREHOUSE OFFICE FIXTURES: REV. 1
- -------------------------
PER MITCHELL HUGEBACK DRAWINGS DATED 10/14/97. REV. 1
* REV. 1 Equipment:
---------
* REV. 1 Domestic water heaters; provide (4) REV. 1 40 gallon IN WAREHOUSE,
*(6) IN MAIN OFFICES
Wall hydrant - Woodford Model #25C, freeze proof, vacuum breaker (4 included).
* REV. 1 Electric water coolers; provide (6) REV. 1 in plant/warehouse area
and *(6) in office areas.
(2) hose bibbs at battery charging area.
Acid dilution sump.
Interior roof drains with overflows.
19
<PAGE>
DIVISION 16 - ELECTRICAL WORK
Section 16A - Electric
- ----------------------
Base Building Scope
- -------------------
The pad mounted transfer, by utility company, will be located 5'-0" from
building as indicated on drawing No. El.
The incoming underground electric service to the building is rated at 7OOOAMP,
277/480/3/4 wire derived from a new utility company pad mounted transfer.
Power distribution:
- ------------------
(1)4000 AMP and (1)4000 REV. 2 AMP (8000 REV. 2 AMP total), 277/480/3/4
distribution panelboard located at the office/warehouse (transformers supplied &
installed by utility).
(6) 400A, 277/480/3/4 lighting and power panelboards.
* (2) 225A, 277/480/3/4 lighting and power panelboards.
* (1) 1OOA, 277/480/3/4 lighting panelboard.
(3) 75KVA transformer.
* (1) 45KVA transformer.
* (1) 3OKVA transformer.
NOTE: Refer to drawing No. E3 for additional power distribution.
- ----
Service up to and including the main distribution panels is to be sized to
support a 25% expansion with the base building system, plus capability to add
50% expansion at a future date.
Provide an 275 KW emergency generator. Generator shall support emergency
lighting, security, phone system PBX, PA system and computer system requirements
in event of a loss of power.
One (1)4" PVC conduit for the incoming underground electric service will be
stubbed to the property line for utility company by the utility company.
The electrical requirements for the mechanical are based on the mechanical
specifications.
Thermostats and duct detectors furnished by mechanical contractor, installed by
electrical contractor.
Starter for exhaust fans furnished and installed.
Proposal based on the following list of electrical devices:
20
<PAGE>
Section 16A - Electric - continued
- ----------------------------------
* MAIN REV. 1 Offices:
-------------------
(550) REV. 1 2' x 4' parabolic, 3-lamp with modular wiring
(120) REV. 1 Switches
(285) REV. 1 Duplex outlets
WAREHOUSE OFFICES REV. 1
- -----------------
(210)2' X 4', PRISMATIC LIGHTS
(50) SWITCHES
(120) DUPLEX OUTLETS
Warehouse:
- ---------
(245)400W, super metal halide fixtures
(60)1000W super metal halide fixtures
(1,514) 8'-0" 2-lamp, high output, fluorescent strips at ceiling of Active
mezzanine.
( 36) Double duplex receptacles at loading docks and future loading dock
locations.
(17) REV. 2 Installation of dock lights.
(17) REV. 2 Installation of dock restraints.
(100) Dedicated duplex receptacles located at conveyor control panels.
(180) Telephone/data stub-ups in warehouse - Refer to unit price for stub-ups
within office area
Central clock system - conduit rough-in only.
Video monitoring - conduit rough-in only interior and exterior.
Door monitoring - conduit rough-in only.
Wiring of Owner furnished equipment:
- -----------------------------------
(20) Battery chargers at 25AMPS AT 480VOLT REV. 2 each.
( 1) Compactor
( 3) Air compressors
( 1) Installation of one (1) 15KVA UPS furnished by others.
Site Lighting:
- -------------
(17) 400W high pressure sodium wall packs
( 1) 2-head 1000W high pressure sodium flood on 30' pole
( 4) 3-head 1000W high pressure sodium floods on 30' poles
( 5) 2-head 1000W high pressure sodium "shoe box" fixtures on 30' poles
( 4) 1-head 1000W high pressure sodium "shoe box" fixtures on 30' poles
Telephone Service:
- -----------------
Telephone distribution system, along with a 2x4 plywood terminal board, will be
provided at the electrical service entrance panelboard with all cable and
conduit stub-ups furnished and installed by others.
Two (2) 4" PVC conduit for the incoming underground telephone system will be
stubbed to the property line.
One (1) dedicated duplex receptacle at the main telephone plywood.
21
<PAGE>
Section 16A - Electric - continued
- -----------------------------------
Proposal based on the entire building being covered by an automatic sprinkler
system.
Paging System:
- -------------
Single zone paging system tied into the telephone system for paging within
office areas and specified areas within the warehouse.
Temporary electric power rated at 600 AMP, 120/240/1/3 wire, including interior
lighting for construction and 120 volt, 1 phase power for small hand tools, is
included within our proposal.
"MC" type cable will be utilized for all branch circuit wiring where possible.
All cabling for the incoming electrical service and panelboards will be aluminum
type "XHHW" conductors.
Switching of lighting in production/warehouse areas will be done at central
lighting panels.
CONVEYOR SYSTEM REV. 1
- ---------------
AN ALLOWANCE OF $321,194 (EXCLUDING GENERAL CONDITIONS AND OVERHEAD AND PROFIT)
IS INCLUDED FOR ALL CONVEYOR POWER WIRING AND DISTRIBUTION IN THE WAREHOUSE
AREA. REV. 1
EXCLUSIONS
- ----------
Site grading or compaction.
Storage Racking
Concrete Paving at parking areas.
Intercom or Security System equipment or wiring (conduit only).
Environmental report (supplied by owner)
Skylights/smoke vents/draft curtains.
Process piping/compressor piping.
Floor striping.
Exterior concrete sealer.
REV. 1
Asphalt sealer.
Equipment pads or foundations.
22
<PAGE>
EXCLUSIONS - continued
- ----------------------
Compressors.
Battery charger equipment.
Unforeseen or unusual underground soils conditions.
Water treatment system (other than sump).
Telephone or computer wiring (conduit stub-ups only).
Buss duct.
Electric/plumbing requirements for equipment
Conveyor fire doors.
Rev. 1
RTU screens.
Rev. 1
Electrical Exclusions:
- ----------------------
Central clock (conduit only)
Rev. 1
23
<PAGE>
EXHIBIT C
---------
DM MANAGEMENT
-------------
425,270 SF DISTRIBUTION CENTER
------------------------------
Dec. 24 1997
------------
<TABLE>
<CAPTION>
CONTROL COST
02000 SITE WORK BUDGET PER/SF
================================================================================================
<S> <C> <C> <C>
02050 Demolition / Site Clearing Allowance 2,200 0.01
- ------------------------------------------------------------------------------------------------
02200 Earthwork Allowance 68,200 0.16
- ------------------------------------------------------------------------------------------------
02210 Finish Grading Curbs & Islands 38,274 0.09
- ------------------------------------------------------------------------------------------------
02300 Surface Water Control 5,125 0.01
- ------------------------------------------------------------------------------------------------
02500 Asphalt Paving and Striping 321,060 0.75
- ------------------------------------------------------------------------------------------------
02510 Concrete Paving & Curbs 219,940 0.52
- ------------------------------------------------------------------------------------------------
02605 Sanitary Sewer 65,500 0.15
- ------------------------------------------------------------------------------------------------
02660 Water Distribution 183,640 0.43
- ------------------------------------------------------------------------------------------------
02680 Gas Main to Building 0 0.00
- ------------------------------------------------------------------------------------------------
02700 Storm Sewers 268,979 0.63
- ------------------------------------------------------------------------------------------------
02780 Electric Co. Charges - Excluded 0 0.00
- ------------------------------------------------------------------------------------------------
02781 Underground Electric Conduit 0 0.00
- ------------------------------------------------------------------------------------------------
02800 Misc. Site Improvements 13,000 0.03
- ------------------------------------------------------------------------------------------------
02802 Pump House 0 0.00
- ------------------------------------------------------------------------------------------------
02806 8' Galvanized Fencing 0 0.00
- ------------------------------------------------------------------------------------------------
02808 Flag Poles 0 0.00
- ------------------------------------------------------------------------------------------------
02850 Landscaping Allowance 175,000 0.41
- ------------------------------------------------------------------------------------------------
02900 Irrigation Allowance 75,000 0.18
- ------------------------------------------------------------------------------------------------
SITE WORK TOTAL 1,435,918 3.38
---------------------------------------------------------------------------------
02000 EARTHWORK
================================================================================================
02220 Excavation and Backfill 47,636 0.11
- ------------------------------------------------------------------------------------------------
02370 Piles and Caissons 0 0.00
- ------------------------------------------------------------------------------------------------
EARTHWORK TOTAL 47,636 0.11
---------------------------------------------------------------------------------
03000 CONCRETE
================================================================================================
03210 Reinforcing Steel 74,376 0.17
- ------------------------------------------------------------------------------------------------
03300 Cast-in-place Concrete 514,395 1.21
- ------------------------------------------------------------------------------------------------
03345 Cement Flatwork 1,187,619 2.79
- ------------------------------------------------------------------------------------------------
03350 Warehouse Floor joints w/ MM8O Sealer 0 0.00
- ------------------------------------------------------------------------------------------------
03355 Warehouse Floor Sealer - Ashford 24,658 0.06
- ------------------------------------------------------------------------------------------------
03400 TiltUp Concrete Wall Panels 1,609,532 3.78
- ------------------------------------------------------------------------------------------------
CONCRETE TOTAL 3,410,580 8.02
---------------------------------------------------------------------------------
</TABLE>
2/17/98 CLAYCO CONSTRUCTION PAGE 1
<PAGE>
<TABLE>
<S> <C> <C> <C>
04000 MASONRY
=====================================================================================================
04210 Masonry 308,220 0.72
- -----------------------------------------------------------------------------------------------------
MASONRY TOTAL 308,220 0.72
--------------------------------------------------------------------------------------
05000 METALS
- -----------------------------------------------------------------------------------------------------
05120 Structural Steel 586,011 1.38
- -----------------------------------------------------------------------------------------------------
05200 Miscellaneous for Tilt-up Panels 10,000 0.02
- -----------------------------------------------------------------------------------------------------
05210 Steel Joists 766,716 1.80
- -----------------------------------------------------------------------------------------------------
05300 Metal Decking 248,266 0.58
- -----------------------------------------------------------------------------------------------------
05340 Structural Erection 400,627 0.94
- -----------------------------------------------------------------------------------------------------
05580 Sheetmetal Fabrications 0 0.00
- -----------------------------------------------------------------------------------------------------
METALS TOTAL 2,011,620 4.73
--------------------------------------------------------------------------------------
06000 WOOD & PLASTICS
=====================================================================================================
06100 Rough Carpentry 35,606 0.08
- -----------------------------------------------------------------------------------------------------
06200 Finish Carpentry 0 0.00
- -----------------------------------------------------------------------------------------------------
WOOD & PLASTICS TOTAL 35,606 0.08
--------------------------------------------------------------------------------------
07000 THERMAL & MOISTURE PROTECTION
=====================================================================================================
07100 Waterproofing 0 0.00
- -----------------------------------------------------------------------------------------------------
07200 Insulation 2,200 0.01
- -----------------------------------------------------------------------------------------------------
07500 Roofing 1,224,250 2.88
- -----------------------------------------------------------------------------------------------------
07600 Flashing and Sheet Metal 11,756 0.03
- -----------------------------------------------------------------------------------------------------
07700 Skylights / Smoke Vents / Roof Hatch 1,700 0.00
- -----------------------------------------------------------------------------------------------------
07920 Sealants and Caulking 143,542 0.34
- -----------------------------------------------------------------------------------------------------
MOISTURE PROTECTION TOTAL 1,383,448 3.25
--------------------------------------------------------------------------------------
08000 DOORS & WINDOWS
=====================================================================================================
08200 Doors, Frames, and Hardware 12,586 0.03
- -----------------------------------------------------------------------------------------------------
08300 Overhead Doors & Operators 40,230 0.09
- -----------------------------------------------------------------------------------------------------
08800 Glass & Glazing 268,892 0.63
- -----------------------------------------------------------------------------------------------------
DOORS & WINDOWS TOTAL 321,708 0.76
--------------------------------------------------------------------------------------
09000 FINISHES
=====================================================================================================
09200 Framing and Drywall 22,035 0.05
- -----------------------------------------------------------------------------------------------------
09500 Acoustical Treatment 0 0.00
- -----------------------------------------------------------------------------------------------------
09650 Ceramic Flooring 0 0.00
- -----------------------------------------------------------------------------------------------------
09680 Carpet & Resilient Flooring 0 0.00
- -----------------------------------------------------------------------------------------------------
09900 Painting 246,447 0.58
- -----------------------------------------------------------------------------------------------------
09950 Wall Covering & Zolotone Allowance 0 0.00
- -----------------------------------------------------------------------------------------------------
FINISHES TOTAL 268,482 0.63
--------------------------------------------------------------------------------------
10000 SPECIALTIES
=====================================================================================================
</TABLE>
2/17/98 CLAYCO CONSTRUCTION PAGE 2
<PAGE>
<TABLE>
<S> <C> <C>
10150 Toilet Partitions and Acces. 0 0.00
- -------------------------------------------------------------------------------------------------
10550 Metal Lockers 0 0.00
- -------------------------------------------------------------------------------------------------
10600 Interior Galvanized Fencing 9,340 0.02
- -------------------------------------------------------------------------------------------------
10610 Appliances 0 0.00
- -------------------------------------------------------------------------------------------------
10900 Interior Signage & Directories 2,500 0.01
- -------------------------------------------------------------------------------------------------
10950 Exterior Signage Allowance 50,000 0.12
- -------------------------------------------------------------------------------------------------
SPECIALTIES TOTAL 61,840 0.15
----------------------------------------------------------------------------------
11000 EQUIPMENT
=================================================================================================
11160 Hydrualic Dock Levelers - 30,000# Capacity 54,400 0.13
- -------------------------------------------------------------------------------------------------
11162 Dock Levelers - Form Pits 8,517 0.02
- -------------------------------------------------------------------------------------------------
11164 Dock Locks 20,400 0.05
- -------------------------------------------------------------------------------------------------
11165 Dock Seals 0 0.00
- -------------------------------------------------------------------------------------------------
11166 Dock Shelters 22,865 0.05
- -------------------------------------------------------------------------------------------------
11167 Dock Lights w/Fans 9,775 0.02
- -------------------------------------------------------------------------------------------------
EQUIPMENT TOTAL 115,957 0.27
----------------------------------------------------------------------------------
12000 FURNISHINGS
=================================================================================================
12510 Horizontal Blinds 0 0.00
- -------------------------------------------------------------------------------------------------
FURNISHINGS TOTAL 0 0.00
----------------------------------------------------------------------------------
13000 SPECIAL CONSTRUCTION
=================================================================================================
13320 Emergency Generator 93,000 0.22
- -------------------------------------------------------------------------------------------------
SPECIAL CONSTRUCTION TOTAL 93,000 0.22
----------------------------------------------------------------------------------
14000 CONVEYING SYSTEMS
=================================================================================================
14200 ELEVATOR 45,000 0.11
- -------------------------------------------------------------------------------------------------
CONVEYING SYSTEMS TOTAL 45,000 0.11
----------------------------------------------------------------------------------
15000 MECHANICAL SYSTEMS
=================================================================================================
15300 Fire Protection 578,913 1.36
- -------------------------------------------------------------------------------------------------
15310 Booster Pumps 45,000 0.11
- -------------------------------------------------------------------------------------------------
15400 Plumbing 264,763 0.62
- -------------------------------------------------------------------------------------------------
15500 HVAC 835,889 1.97
- -------------------------------------------------------------------------------------------------
MECHANICAL SYSTEMS TOTAL 1,724,565 4.06
----------------------------------------------------------------------------------
16000 ELECTRICAL
=================================================================================================
16050 Electrical 1,669,337 3.93
- -------------------------------------------------------------------------------------------------
16100 Site Lighting 100,860 0.24
- -------------------------------------------------------------------------------------------------
ELECTRICAL TOTAL 1,770,197 4.16
----------------------------------------------------------------------------------
17000 CONSULTING SERVICES
=================================================================================================
17000 Preliminary Fees 7,500 0.02
- -------------------------------------------------------------------------------------------------
</TABLE>
2/17/98 CLAYCO CONSTRUCTION PAGE 3
<PAGE>
<TABLE>
<S> <C> <C>
17100 Architectural Services 75,000 0.18
- -----------------------------------------------------------------------------------------
17150 Code Review 17,000 0.04
- -----------------------------------------------------------------------------------------
17200 Structural Services 55,000 0.13
- -----------------------------------------------------------------------------------------
17300 Mechanical-Electrical-Plumbing-Sprinklers 40,000 0.09
- -----------------------------------------------------------------------------------------
17400 Civil Services 25,000 0.06
- -----------------------------------------------------------------------------------------
17470 Subsurface Soil Report 0 0.00
- -----------------------------------------------------------------------------------------
17600 Roofing Inspections 6,000 0.01
- -----------------------------------------------------------------------------------------
17600 Rendering 2,400 0.01
- -----------------------------------------------------------------------------------------
17900 Reimbursables 8,505 0.02
- -----------------------------------------------------------------------------------------
CONSULTING SERVICES TOTAL 236,405 0.56
================================================================================
18000 TENANT FINISH
- -----------------------------------------------------------------------------------------
04210 Masonry 67,125 0.16
- -----------------------------------------------------------------------------------------
06200 Finish Carpentry 17,679 0.04
- -----------------------------------------------------------------------------------------
08200 Hollow Metal Doors & Frames 29,026 0.07
- -----------------------------------------------------------------------------------------
08800 Glazing 8,000 0.02
- -----------------------------------------------------------------------------------------
09200 Framing and Drywall 87,636 0.21
- -----------------------------------------------------------------------------------------
09300 Ceramic Tile 27,332 0.06
- -----------------------------------------------------------------------------------------
09500 Acoustical Treatment 16,959 0.04
- -----------------------------------------------------------------------------------------
09650 Resilient Flooring 31,693 0.07
- -----------------------------------------------------------------------------------------
09680 Carpet Allowance 0 0.00
- -----------------------------------------------------------------------------------------
09900 Painting 14,477 0.03
- -----------------------------------------------------------------------------------------
10150 Toilet Partitions 24,393 0.06
- -----------------------------------------------------------------------------------------
10990 Miscellaneous Specialties 41,050 0.10
- -----------------------------------------------------------------------------------------
15300 0 0 0.00
- -----------------------------------------------------------------------------------------
15300 Fire Protection 15,484 0.04
- -----------------------------------------------------------------------------------------
15400 Plumbing 69,350 0.16
- -----------------------------------------------------------------------------------------
15500 HVAC 77,422 0.18
- -----------------------------------------------------------------------------------------
16050 Electrical 85,356 0.20
- -----------------------------------------------------------------------------------------
16150 Tenant Finish Allowance 1,575,000 3.70
- -----------------------------------------------------------------------------------------
18001 Space Planning & Design 35,000 0.08
- -----------------------------------------------------------------------------------------
TENANT FINISH TOTAL 2,222,982 5.22
================================================================================
01000 GENERAL CONDITIONS
- -----------------------------------------------------------------------------------------
18010 Project Manager 55,500 0.13
- -----------------------------------------------------------------------------------------
18020 Field Superintendent 113,000 0.27
- -----------------------------------------------------------------------------------------
18025 Travel Expenses 88,500 0.21
- -----------------------------------------------------------------------------------------
18030 Drawing Reproduction & Progress Photos 4,250 0.01
- -----------------------------------------------------------------------------------------
18040 Field Engineering & Layout 14,260 0.03
- -----------------------------------------------------------------------------------------
18060 Construction Cleaning & General Labor 88,148 0.21
- -----------------------------------------------------------------------------------------
18100 Equipment Rental & Small Tools 19,460 0.05
- -----------------------------------------------------------------------------------------
18200 Safety / Security / Miscellaneous 27,781 0.07
- -----------------------------------------------------------------------------------------
18210 Winter Protection 285,000 0.67
- -----------------------------------------------------------------------------------------
18220 Temporary Roads 18,500 0.04
- -----------------------------------------------------------------------------------------
18240 Performance Bond 0 0.00
- -----------------------------------------------------------------------------------------
18250 Building Permit Allowance 15,000 0.04
- -----------------------------------------------------------------------------------------
</TABLE>
2/17/98 CLAYCO CCONSTRUCTION PAGE 4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
18255 Builder's Risk Insurance 10,360 0.02
- ---------------------------------------------------------------------------------
18260 Quality Control & Testing 36,923 0.09
- ---------------------------------------------------------------------------------
18270 Temporary Utilities 21,935 0.05
- ---------------------------------------------------------------------------------
GENERAL CONDITIONS TOTAL 798,617 1.88
- ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Summary Control Cost
Budget Per S/F
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
02000 SITE WORK 1,435,918 3.38
- ---------------------------------------------------------------------------------
02000 EARTHWORK 47,636 0.11
- ---------------------------------------------------------------------------------
03000 CONCRETE 3,410,580 8.02
- ---------------------------------------------------------------------------------
04000 MASONRY 308,220 0.72
- ---------------------------------------------------------------------------------
05000 METALS 2,011,620 4.73
- ---------------------------------------------------------------------------------
06000 WOOD & PLASTICS 35,606 0.08
- ---------------------------------------------------------------------------------
07000 THERMAL & MOISTURE PROTECTION 1,383,448 3.25
- ---------------------------------------------------------------------------------
08000 DOORS & WINDOWS 321,708 0.76
- ---------------------------------------------------------------------------------
09000 FINISHES 268,482 0.63
- ---------------------------------------------------------------------------------
10000 SPECIALTIES 61,840 0.15
- ---------------------------------------------------------------------------------
11000 EQUIPMENT 115,957 0.27
- ---------------------------------------------------------------------------------
12000 FURNISHINGS 0 0.00
- ---------------------------------------------------------------------------------
13000 SPECIAL CONSTRUCTION 93,000 0.22
- ---------------------------------------------------------------------------------
14000 CONVEYING SYSTEMS 45,000 0.11
- ---------------------------------------------------------------------------------
15000 MECHANICAL SYSTEMS 1,724,565 4.06
- ---------------------------------------------------------------------------------
16000 ELECTRICAL 1,770,197 4.16
- ---------------------------------------------------------------------------------
18000 TENANT FINISH 2,222,982 5.23
- ---------------------------------------------------------------------------------
17000 CONSULTING SERVICES 236,405 0.56
- ---------------------------------------------------------------------------------
01000 GENERAL CONDITIONS 798,617 1.88
- ---------------------------------------------------------------------------------
MISCELLANEOUS 0 0.00
- ---------------------------------------------------------------------------------
OVERHEAD & PROFIT 896,047 2.11
- ---------------------------------------------------------------------------------
---------------------------------------------------------------------
TOTAL ESTIMATED 17,187,828 40.43
---------------------------------------------------------------------
</TABLE>
2/17/98 CLAYCO CONSTRUCTION PAGE 5
<PAGE>
EXHIBIT D
---------
DM MANAGEMENT
Office vs. Warehouse Comparison (REVISED 12/24/97R2)
<TABLE>
<CAPTION>
WAREHOUSE AND MAIN OFFICE AND
SITE WORK WAREHOUSE OFFICES CONNECTING CORRIDOR TOTAL PROJECT
<S> <C> <C> <C>
Demolition / Site Clearing Allowance $ 2,200 $ 0 $ 2,200
Earthwork Allowance $ 29,600 $ 3,600 $ 33,200
Detention Pond $ 35,000 $ 0 $ 35,000
Finish Grading Curbs & Islands $ 34,147 $ 4,127 $ 38,274
Surface Water Control $ 5,125 $ 0 $ 5,125
Asphalt Paving and Striping $ 181,184 $139,876 $ 321,060
Concrete Paving & Curbs $ 202,850 $ 17,090 $ 219,940
Sanitary Sewer $ 65,500 $ 0 $ 65,500
Water Distribution $ 141,550 $ 42,090 $ 183,640
Gas Main to Building $ 0 $ 0 $ 0
Storm Sewers $ 194,419 $ 74,560 $ 268,979
Electric Co. Charges - Excluded $ 0 $ 0 $ 0
Underground Electric Conduit $ 0 $ 0 $ 0
Misc. Site Improvements $ 13,000 $ 0 $ 13,000
Pump House $ 0 $ 0 $ 0
8' Galvanized Fencing $ 0 $ 0 $ 0
Flag Poles $ 0 $ 0 $ 0
Landscaping Allowance $ 50,000 $125,000 $ 175,000
Irrigation Allowance $ 25,000 $ 50,000 $ 75,000
-------- ----------
SITE WORK TOTAL $ 979,575 $456,343 $1,435,918
EARTHWORK
Excavation and Backfill $ 37,353 $ 10,283 $ 47,636
Piles and Caissons $ 0 $ 0 $ 0
--------
EARTHWORK TOTAL $ 37,353 $ 10,283 $ 47,636
CONCRETE
Reinforcing Steel $ 64,946 $ 9,430 $ 74,376
Cast-in-place Concrete $ 447,790 $ 66,605 $ 514,395
Cement Flatwork $1,077,953 $109,666 $1,187,619
Warehouse Floor joints w/ MM8O Sealer $ 0 $ 0 $ 0
Warehouse Floor Sealer - Ashford $ 24,658 $ 0 $ 24,658
TiltUp Concrete Wall Panels $1,412,272 $197,260 $1,609,532
--------
CONCRETE TOTAL $3,027,619 $382,961 $3,410,580
MASONRY
Masonry $ 308,220 $ 0 $ 308,220
-------- ----------
MASONRY TOTAL $ 308,220 $ 0 $ 308,220
METALS
Structural Steel $ 432,294 $153,717 $ 586,011
Miscellaneous for Tilt-up Panels $ 6,000 $ 4,000 $ 10,000
Steel Joists $ 635,500 $131,216 $ 766,716
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Metal Decking $ 234,367 $ 13,899 $ 248,266
Structural Erection $ 304,416 $ 96,211 $ 400,627
Sheetmetal Fabrications $ 0 $ 0 $ 0
-------- ----------
METALS TOTAL $1,612,577 $399,043 $2,011,620
WOOD & PLASTICS
Rough Carpentry $ 25,211 $ 10,395 $ 35,606
Finish Carpentry $ 0 $ 0 $ 0
-------- ----------
WOOD & PLASTICS TOTAL $ 25,211 $ 10,395 $ 35,606
THERMAL & MOISTURE PROTECTION
Waterproofing $ 0 $ 0 $ 0
Insulation $ 0 $ 2,200 $ 2,200
Roofing $ 642,250 $582,000 $1,224,250
Flashing and Sheet Metal $ 11,756 $ 0 $ 11,756
Skylights / Smoke Vents / Roof Hatch $ 850 $ 850 $ 1,700
Sealants and Caulking $ 130,500 $ 13,042 $ 143,542
-------- ----------
MOISTURE PROTECTION TOTAL $ 785,356 $598,092 $1,383,448
DOORS & WINDOWS
Doors,Frames,and Hardware $ 12,586 $ 0 $ 12,586
Overhead Doors & Operators $ 40,230 $ 0 $ 40,230
Glass & Glazing $ 82,836 $186,056 $ 268,892
-------- ----------
DOORS & WINDOWS TOTAL $ 135,652 $186,056 $ 321,708
FINISHES
Framing and Drywall $ 2,400 $ 19,635 $ 22,035
Acoustical Treatment $ 0 $ 0 $ 0
Ceramic Flooring $ 0 $ 0 $ 0
Carpet & Resilient Flooring $ 0 $ 0 $ 0
Painting $ 227,810 $ 18,637 $ 246,447
Wall Covering & Zolotone Allowance $ 0 $ 0 $ 0
-------- ----------
FINISHES TOTAL $ 230,210 $ 38,272 $ 268,482
SPECIALTIES
Toilet Partitions and Acces. $ 0 $ 0 $ 0
Metal Lockers $ 0 $ 0 $ 0
Interior Galvanized Fencing $ 9,340 $ 0 $ 9,340
Appliances $ 0 $ 0 $ 0
Interior Signage & Directories $ 0 $ 2,500 $ 2,500
Exterior Signage Allowance $ 25,000 $ 25,000 $ 50,000
-------- ----------
SPECIALTIES TOTAL $ 34,340 $ 27,500 $ 61,840
EQUIPMENT
Hydrualic Dock Levelers - 30,000# Capacity $ 54,400 $ 0 $ 54,400
Dock Levelers - Form Pits $ 8,517 $ 0 $ 8,517
Dock Locks $ 20,400 $ 0 $ 20,400
Dock Seals $ 0 $ 0 $ 0
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Dock Shelters $ 22,865 $ 0 $ 22,865
Dock Lights w/Fans $ 9,775 $ 0 $ 9,775
-------- ------------
EQUIPMENT TOTAL $ 115,957 $ 0 $ 115,957
FURNISHINGS
Horizontal Blinds $ 0 $ 0 $ 0
---------- --------- ------------
FURNISHINGS TOTAL $ 0 $ 0 $ 0
SPECIAL CONSTRUCTION
Emergency Generator $ 70,000 $ 23,000 $ 93.000
---------- -------- ------------
SPECIAL CONSTRUCTION TOTAL $ 70,000 $ 23,000 $ 93,000
CONVEYING SYSTEMS
ELEVATOR $ 0 $ 45,000 $ 45,000
-------- ------------
CONVEYING SYSTEMS TOTAL $ 0 $ 45,000 $ 45,000
MECHANICAL SYSTEMS $ 0
Fire Protection $ 495,758 $ 83,155 $ 578,913
Booster Pumps $ 45,000 $ 0 $ 45,000
Plumbing $ 232,763 $ 32,000 $ 264,763
HVAC $ 835,889 $ 0 $ 835,889
-------- ------------
MECHANICAL SYSTEMS TOTAL $1,609,410 $115,155 $ 1,724,565
ELECTRICAL
Electrical $1,494,747 $174,590 $ 1,669,337
Site Lighting $ 63,260 $ 37,600 $ 100,860
-------- ------------
ELECTRICAL TOTAL $1,558,007 $212,190 $ 1,770,197
CONSULTING SERVICES
Preliminary Fees $ 7,500 $ 0 $ 7,500
Architectural Services $ 50,000 $ 25,000 $ 75,000
Code Review $ 13,600 $ 3,400 $ 17,000
Structural Services $ 38,500 $ 16,500 $ 55,000
Mechanical-Electrical-Plumbing-Sprinklers $ 32,000 $ 8,000 $ 40,000
Civil Services $ 25,000 $ 0 $ 25,000
Subsurface Soil Report $ 0 $ 0 $ 0
Roofing Inspections $ 4,000 $ 2,000 $ 6,000
Rendering $ 2,400 $ 0 $ 2,400
Reimbursables $ 7,588 $ 917 $ 8,505
-------- ------------
CONSULTING SERVICES TOTAL $ 180,588 $ 55,817 $ 236,405
TENANT FINISH
Masonry $ 67,125 $ 0 $ 67,125
Finish Carpentry $ 17,679 $ 0 $ 17,679
Hollow Metal Doors & Frames $ 29,026 $ 0 $ 29,026
Glazing $ 8,000 $ 0 $ 8,000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Framing and Drywall $ 87,636 $ 0 $ 87,636
Ceramic Tile $ 27,332 $ 0 $ 27,332
Acoustical Treatment $ 16,959 $ 0 $ 16,959
Resilient Flooring $ 31,693 $ 0 $ 31,693
Carpet Allowance $ 0 $ 0 $ 0
Painting $ 14,477 $ 0 $ 14,477
Toilet Partitions $ 24,393 $ 0 $ 24,393
Miscellaneous Specialties $ 41,050 $ 0 $ 41,050
$ 0 $ 0 $ 0
Fire Protection $ 15,484 $ 0 $ 15,484
Plumbing $ 69,350 $ 0 $ 69,350
HVAC $ 77,422 $ 0 $ 77,422
Electrical $ 85,356 $ 0 $ 85,356
Tenant Finish Allowance $ 0 $1,575,000 $ 1,575,000
Space Planning & Design $ 0 $ 35,000 $ 35,000
---------- -----------
TENANT FINISH TOTAL $ 612,982 $1,610,000 $ 2,222,982
GENERAL CONDITIONS
Project Manager $ 40,500 $ 15,000 $ 55,500
Field Superintendent $ 48,300 $ 64,700 $ 113,000
Travel Expenses $ 59,350 $ 29,150 $ 88,500
Drawing Reproduction & Progress Photos $ 3,250 $ 1,000 $ 4,250
Field Engineering & Layout $ 12,820 $ 1,440 $ 14,260
Construction Cleaning & General Labor $ 70,457 $ 17,691 $ 88,148
Equipment Rental & Small Tools $ 13,900 $ 5,560 $ 19,460
Safety / Security / Miscellaneous $ 9,193 $ 18,588 $ 27,781
Winter Protection $ 230,350 $ 54,650 $ 285,000
Temporary Roads $ 18,500 $ 0 $ 18,500
Performance Bond $ 0 $ 0 $ 0
Building Permit Allowance $ 10,000 $ 5,000 $ 15,000
Builder's Risk Insurance $ 10,360 $ 0 $ 10,360
Quality Control & Testing $ 36,923 $ 0 $ 36,923
Temporary Utilities $ 12,875 $ 9,060 $ 21,935
---------- -----------
GENERAL CONDITIONS TOTAL $ 576,778 $ 221,839 $ 798,617
Overhead & Profit (5.5 %) $ 653,787 $ 242,260 $ 896,047
Totals $12,553,622 $4,634,206 $17,187,828
$ 33.09 $ 101.06 $ 40.42
</TABLE>
<PAGE>
EXHIBIT 11.1
DM MANAGEMENT COMPANY AND SUBSIDIARY
FORM 10-K
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED TRANSITION PERIOD ENDED TWELVE MONTHS ENDED
-------------------- --------------------- --------------------
DEC. 27, DEC. 28, DEC. 28, DEC. 30, JUNE 29, JUNE 24,
1997 1996 1996 1995 1996 1995
(52 weeks) (52 weeks) (26 weeks) (27 weeks) (53 weeks) (52 weeks)
---------- ----------- ----------- ----------- ---------- -----------
BASIC: (UNAUDITED) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Weighted average shares of common
stock outstanding during the period... 4,801,278 4,329,485 4,364,723 4,261,962 4,276,679 4,229,390
========= ========= ========= ========= ========= =========
DILUTED:
Weighted average shares of common
stock outstanding during the period... 4,801,278 4,329,485 4,364,723 4,261,962 4,276,679 4,229,390
Assumed exercise of stock options...... 580,448 349,785 371,719 -- 163,925 380,163
--------- --------- --------- --------- --------- ---------
5,381,726 4,679,270 4,736,442 4,261,962 4,440,604 4,609,553
========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in these registration
statements of DM Management Company and subsidiary on Form S-8 (File Nos. 33-
71266, 33-71776, 33-72166, 33-86982, 333-03845 and 333-42183) of our reports
dated January 30, 1998, on our audits of the consolidated financial statements
and financial statement schedule of DM Management Company and subsidiary as of
December 27, 1997 and December 28, 1996 and for the fiscal year ended December
27, 1997, the six months ended December 28, 1996 and each of the two fiscal
years in the period ended June 29, 1996, which reports are included in this
Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 27, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AT DECEMBER 27, 1997 AND FROM THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 27,
1997 CONTAINED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE TWELVE MONTHS
ENDED DECEMBER 27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
ANNUAL REPORT ON FORM 10-K.
</LEGEND>
<CIK> 0000910721
<NAME> DM MANAGEMENT COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> DEC-27-1997
<CASH> 19,260
<SECURITIES> 3,890
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 20,579
<CURRENT-ASSETS> 56,728
<PP&E> 14,174
<DEPRECIATION> 0
<TOTAL-ASSETS> 75,381
<CURRENT-LIABILITIES> 23,893
<BONDS> 8,346
0
0
<COMMON> 61
<OTHER-SE> 43,081
<TOTAL-LIABILITY-AND-EQUITY> 75,381
<SALES> 135,533
<TOTAL-REVENUES> 135,533
<CGS> 59,788
<TOTAL-COSTS> 85,403
<OTHER-EXPENSES> 43,741
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3)
<INCOME-PRETAX> 6,392
<INCOME-TAX> 2,493
<INCOME-CONTINUING> 3,899
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,899
<EPS-PRIMARY> 0.81
<EPS-DILUTED> 0.72
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S CONSOLIDATED BALANCE SHEET AT SEPTEMBER 27, 1997
AND FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 27, 1997 CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR
THE NINE MONTHS ENDED SEPTEMBER 27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<CIK> 0000910721
<NAME> DM MANAGEMENT COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> SEP-27-1997
<EXCHANGE-RATE> 1
<CASH> 582
<SECURITIES> 3,888
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 18,498
<CURRENT-ASSETS> 33,883
<PP&E> 7,930
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,839
<CURRENT-LIABILITIES> 18,531
<BONDS> 6,150
0
0
<COMMON> 47
<OTHER-SE> 24,111
<TOTAL-LIABILITY-AND-EQUITY> 48,839
<SALES> 89,077
<TOTAL-REVENUES> 89,077
<CGS> 39,399
<TOTAL-COSTS> 55,947
<OTHER-EXPENSES> 29,049
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86
<INCOME-PRETAX> 3,995
<INCOME-TAX> 1,558
<INCOME-CONTINUING> 2,437
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,437
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.48
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S CONSOLIDATED BALANCE SHEET AT JUNE 28, 1997 AND
FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 28,
1997 CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE SIX MONTHS
ENDED JUNE 28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<CIK> 0000910721
<NAME> DM MANAGEMENT COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> JUN-28-1997
<EXCHANGE-RATE> 1
<CASH> 6,388
<SECURITIES> 3,872
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 11,279
<CURRENT-ASSETS> 28,936
<PP&E> 7,033
<DEPRECIATION> 0
<TOTAL-ASSETS> 42,995
<CURRENT-LIABILITIES> 15,132
<BONDS> 4,446
0
0
<COMMON> 46
<OTHER-SE> 23,371
<TOTAL-LIABILITY-AND-EQUITY> 42,995
<SALES> 57,428
<TOTAL-REVENUES> 57,428
<CGS> 25,415
<TOTAL-COSTS> 35,628
<OTHER-EXPENSES> 18,870
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> 2,862
<INCOME-TAX> 1,116
<INCOME-CONTINUING> 1,746
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,746
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0.35
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S CONSOLIDATED BALANCE SHEET AT MARCH 29, 1997 AND
FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
29, 1997 CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE THREE
MONTHS ENDED MARCH 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<CIK> 0000910721
<NAME> DM MANAGEMENT COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-29-1997
<EXCHANGE-RATE> 1
<CASH> 383
<SECURITIES> 3,846
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 12,379
<CURRENT-ASSETS> 24,941
<PP&E> 7,081
<DEPRECIATION> 0
<TOTAL-ASSETS> 39,950
<CURRENT-LIABILITIES> 13,841
<BONDS> 4,311
0
0
<COMMON> 45
<OTHER-SE> 21,753
<TOTAL-LIABILITY-AND-EQUITY> 39,950
<SALES> 24,543
<TOTAL-REVENUES> 24,543
<CGS> 10,852
<TOTAL-COSTS> 14,762
<OTHER-EXPENSES> 8,833
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61
<INCOME-PRETAX> 887
<INCOME-TAX> 346
<INCOME-CONTINUING> 541
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 541
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.11
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS AMENDED AND RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED BALANCE SHEET AT DECEMBER
28, 1996 AND FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS
ENDED DECEMBER 28, 1996 CONTAINED IN THE COMPANY'S TRANSITION REPORT ON FORM 10-
K FOR THE SIX MONTHS ENDED DECEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH TRANSITION REPORT ON FORM 10-K.
</LEGEND>
<CIK> 0000910721
<NAME> DM MANAGEMENT COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> JUN-30-1996
<PERIOD-END> DEC-28-1996
<EXCHANGE-RATE> 1
<CASH> 384
<SECURITIES> 3,879
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 12,637
<CURRENT-ASSETS> 23,008
<PP&E> 7,173
<DEPRECIATION> 0
<TOTAL-ASSETS> 38,109
<CURRENT-LIABILITIES> 12,346
<BONDS> 4,540
0
0
<COMMON> 44
<OTHER-SE> 21,179
<TOTAL-LIABILITY-AND-EQUITY> 38,109
<SALES> 43,324
<TOTAL-REVENUES> 43,324
<CGS> 19,436
<TOTAL-COSTS> 25,704
<OTHER-EXPENSES> 16,422
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 126
<INCOME-PRETAX> 1,072
<INCOME-TAX> (10,491)
<INCOME-CONTINUING> 11,563
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,563
<EPS-PRIMARY> 2.65
<EPS-DILUTED> 2.44
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S CONSOLIDATED BALANCE SHEET AT SEPTEMBER 28, 1996
AND FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED
SEPTEMBER 28, 1996 CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FROM 10-Q FOR
THE QUARTER ENDED SEPTEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<CIK> 0000910721
<NAME> DM MANAGEMENT COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-START> JUN-30-1996
<PERIOD-END> SEP-28-1996
<EXCHANGE-RATE> 1
<CASH> 296
<SECURITIES> 3,862
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 10,200
<CURRENT-ASSETS> 20,148
<PP&E> 6,994
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,142
<CURRENT-LIABILITIES> 12,627
<BONDS> 4,769
0
0
<COMMON> 43
<OTHER-SE> 9,703
<TOTAL-LIABILITY-AND-EQUITY> 27,142
<SALES> 20,541
<TOTAL-REVENUES> 20,541
<CGS> 12,114
<TOTAL-COSTS> 12,114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82
<INCOME-PRETAX> 278
<INCOME-TAX> 28
<INCOME-CONTINUING> 250
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 250
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.05
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S CONSOLIDATED BALANCE SHEET AT JUNE 29, 1996 AND
FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 29, 1996
CONTAINED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE
29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT ON
FORM 10-K.
</LEGEND>
<CIK> 0000910721
<NAME> DM MANAGEMENT COMPANY
<MULTIPLIER> 1000
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> JUN-25-1995
<PERIOD-END> JUN-29-1996
<EXCHANGE-RATE> 1
<CASH> 221
<SECURITIES> 3,858
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 10,866
<CURRENT-ASSETS> 20,197
<PP&E> 6,872
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,069
<CURRENT-LIABILITIES> 13,209
<BONDS> 4,380
0
0
<COMMON> 43
<OTHER-SE> 9,437
<TOTAL-LIABILITY-AND-EQUITY> 27,069
<SALES> 80,585
<TOTAL-REVENUES> 80,585
<CGS> 47,781
<TOTAL-COSTS> 47,781
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 306
<INCOME-PRETAX> 261
<INCOME-TAX> 26
<INCOME-CONTINUING> 235
<DISCONTINUED> (9,585)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,350)
<EPS-PRIMARY> (2.19)
<EPS-DILUTED> (2.11)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS AMENDED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S CONSOLIDATED BALANCE SHEET AT MARCH 30, 1996 AND
FROM THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH
30, 1996 CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED MARCH 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<CIK> 0000910721
<NAME> DM MANAGEMENT COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> JUN-25-1995
<PERIOD-END> MAR-30-1996
<EXCHANGE-RATE> 1
<CASH> 166
<SECURITIES> 3,884
<RECEIVABLES> 1,413
<ALLOWANCES> 0
<INVENTORY> 11,401
<CURRENT-ASSETS> 22,556
<PP&E> 6,859
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,826
<CURRENT-LIABILITIES> 11,380
<BONDS> 5,448
0
0
<COMMON> 43
<OTHER-SE> 17,955
<TOTAL-LIABILITY-AND-EQUITY> 34,826
<SALES> 68,996
<TOTAL-REVENUES> 68,996
<CGS> 41,113
<TOTAL-COSTS> 41,113
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 251
<INCOME-PRETAX> (929)
<INCOME-TAX> (93)
<INCOME-CONTINUING> (836)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (836)
<EPS-PRIMARY> (0.20)
<EPS-DILUTED> (0.20)
</TABLE>
