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Exhibit 10.8
60 SPEAR STREET
SAN FRANCISCO, CALIFORNIA
OFFICE LEASE AGREEMENT
BETWEEN
EOP-60 SPEAR, L.L.C., a Delaware limited liability company
("LANDLORD") "
AND
INDUS INTERNATIONAL, INC., a California corporation
("TENANT")
TABLE OF CONTENTS
I.
Basic Lease Information
1
11.
Lease Grant
3
III.
Possession
3
IV.
Rent
3
V.
Compliance with Laws; Use
7
VI.
Secur,ity Deposit
8
VII.
Services to be Furnished by Landlord
8
VIII.
Leasehold Improvements
9
IX.
Repairs and Alterations
9
X.
Use of Electrical Services by Tenant
10
XI.
Entry by Landlord
11
XII.
Assignment and Subletting
11
XIII.
Liens
12
XIV.
Indemnity and Waiver of Claims
13
XV.
Insurance
13
XVI.
Subrogation
14
XVII.
Casualty Damage
14
XVIII.
Condemnation
15
XIX.
Events of Default
15
XX.
Remedies
16
XXI.
Limitation of Liability
17
XXII.
No Waiver
17
XXIII.
Quiet Enjoyment
17
XXIV.
Relocation
17
XXV.
Holding Over
17
XXVI.
Subordination to Mortgages; Estoppel Certificate
18
XXVII.
Attorneys' Fees
18
XXVIII.
Notice
18
XXIX.
Excepted Rights
19
XXX.
Surrender of Premises
19
XXXI.
Miscellaneous
19
XXXII.
Entire Agreement
21
OFFICE LEASE AGREEMENT
THIS OFFICE LEASE AGREEMENT (the "Lease") is made and entered into as of the 3rd
day of March 2000, by and between EOP-60 SPEAR, L.L.C., a Delaware limited
liability company ("Landlord") and INDUS INTERNATIONAL, INC., a California
corporation ("Tenant").
I. Basic Lease Information.
A. .."Building" shall mean the building located at 60 Spear Street, San
Francisco, California, commonly known as 60 Spear Street.
B. "Rentable Square Footage of the Building" is deemed to be 133,782 square
feet.
C. "Premises" shall mean the area shown on Exhibit A-1 to this Lease. The
Premises are located on the 2nd, 3rd,5th, 6th, 7th, 9th, 10th, 11th floors and
the basement level of the Building and known as suite numbers 200, 300, 500,
600, 700, 900, 1000 and 1100, respectively. The "Rentable Square Footage of the
Premises" is deemed to be 95,323 square feet consisting of approximately (i)
6,286 rentable square feet described as Suite No.200 on the 2nd floor; (ii)
12,835 rentable square feet described as Suite No.300 on the 3rd floor; (iii)
12,835 rentable square feet described as Suite No.500 on the 5th floor; (iv)
12,835 rentable square feet described as Suite No.600 on the 6th floor; (v)
12,835 rentable square feet described as Suite No.700 on the 7th floor; (vi)
12,835 rentable square feet described as Suite No.900 on the 9th floor; (vii)
12,835 rentable square feet described as Suite No.1000, Suite No.1000E and Suite
No.1050 on the 10th floor; and (viii) 12,027 rentable square feet described as
Suite No.11 00 on the 11th floor of the Building. If the Premises include one or
more floors in their entirety, all corridors and restroom facilities located on
such full fioor(s) shall be considered part of the Premises. Landlord and Tenant
stipulate and agree that the Rentable Square Footage of the Building and the
Rentable Square Footage of the Premises are correct and shall not be remeasured.
D. "Base Rent":
Base Rent for Suite NO. 300
Period
Annual Rate Per Square Foot
Annual Base Rent
Base Rent per Month/Period
4/15/2000 - 4/30/2000
$42.50
$545,487.48
$24,243.84
5/01/2000 - 3/31/2003
$42.50
$545,487.48
$45,457.29
4/01/2003 - 4/14/2003
$42.50
$545,487.48
$21,213.36
4/15/2003 - 4/30/2003
$44.50
$571,157.52
$25,384.80
5/01/2003 - 5/31/2008
$44.50
$571,157.52
$47,596.46
Base Rent for Suite NOs. 200, 500, 600, 700, 900, 1000, 1000E, 1050 and 1100
Period
Annual Base Rent
Base Rent per Month/Period
4/15/2000 - 4/30/2000
$2,285,757.48
$101,589.28
5/01/2000 - 5/31/2001
$2,285,757.48
$190,479.86
6/01/2001 - 5/31/2004
$3,711,960.00
$309,330.00
6/01/2004 - 5/31/2008
$3,819,194.40
$318,266.20
E. "Tenant's Pro Rata Share": 71.2525%.
F. "Base Year": For the period commencing on the Commencement Date and
continuing through the Termination Date, Base Year for Taxes and Base Year for
Expenses shall mean 2000 for Suite No.300. For the period commencing on the
Commencement Date and continuing through May 31, 2001, Base Year for Taxes and
Base Year for Expenses shall mean: (i) 1995 for Suite No.200, Suite No.700,
Suite No.900, Suite No.1000, Suite No.1050, Suite No.1000E and Suite No.1100;
(ii) 1998 for Suite No.600; and (iii) 2000 for Suite No.500. For the period
commencing on June l' 2001 and continuing through the Termination Date, Base
Year for Taxes and Base Year for Expenses shall mean 2001 for Suite No.200,
Suite No.500, Suite No.600, Suite No.700, Suite No.900, Suite No.1000, Suite
No.1050, Suite No.1000E and Suite No.1100.
G. "Term": A period of 97 months and 16 days. The Term shall commence on April
15, 2000 (the "Commencement Date") and, unless terminated early in accordance
with this Lease, end on May 31, 2008 (the "Termination Date"). However, if
Landlord fails to deliver possession of Suite No.300 to Tenant in the manner
required herein on or before February l' 2000: (1) the date set forth in the
prior sentence as the "Commencement Date" shall instead be defined as the
"Target Commencement Date"; and (2) the actual "Commencement Date" shall be the
date which is 75 days after the date Landlord delivers possession of Suite
No.300 to Tenant in the manner required herein. In such circumstances, the
Termination Date, at the option of Landlord, may be postponed by an equal number
of days. Landlord's failure to deliver possession of Suite No.300 to Tenant in
the manner required herein on or before February 1, 2000, shall not be a default
by Landlord or otherwise render Landlord liable for damages. Promptly after the
determination of the Commencement Date, Landlord and Tenant shall enter into a
commencement letter agreement in the form attached as Exhibit C.
H. Tenant allowance(s): More fully set forth in Exhibit D attached hereto.
I. "Security Deposit": $2,250,000.00 in the form of a letter of credit as more
fully described in Article VI below.
J. "Guarantor(s)": As of the date of this Lease, there are no Guarantors.
K. "Broker(s)": Cushman & Wakefield of California, Inc.
L. "Permitted Use": General office use.
M. "Notice Addresses":
Tenant:
Prior to, on and after the Commencement Date, notices shall be sent to Tenant at
the Premises to the attention of Chief Financial Officer.
Landlord: With a copy to:
EOP-60 Spear, L.L.C., a Delaware Equity Office Properties
limited liability company Two North Riverside Plaza
c/o
Equity Office Properties Suite 2200
One Market Chicago, Illinois 60606
Spear Street Tower Attention: Regional Counsel- Pacific Region
Suite 725
San Francisco, California 94105
Attention: Building Manager
Rent (defined in Section IV.A) is payable to the order of Equity Office
Properties at the following address: EOP Operating Limited Partnership, DBA 60
Spear Street, Dept. #8789, Los Angeles, California 90084-8789.
N. "Business Day(s)" are Monday through Friday of each week, exclusive of New
Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day ("Holidays"). Landlord may designate additional Holidays,
2
provided that the additional Holidays are commonly recognized by other office
buildings in the area where the Building is located.
O. "Landlord Work" means the work, if any, that Landlord is obligated to perform
in the Premises pursuant to a separate work letter agreement (the "Work
Letter"), if any, attached as Exhibit D. If a Work Letter is not attached to
this Lease or if an attached Work Letter does not require Landlord to perform
any work, the occurrence of the Commencement Date shall not be conditioned upon
the performance of work by Landlord and, accordingly, Section III.A. shall not
be applicable to the determination of the Commencement Date.
P. "Law(s)" means all applicable statutes, codes, ordinances, orders, rules and
regulations of any municipal or governmental entity.
Q. "Normal Business Hours" for the Building are 8:00 A.M. to 6:00 P.M. on
Business Days.
R. "Property" means the Building and the parcel(s) of land on which it is
located and, at Landlord's discretion, the Building parking facility and other
improvements serving the Building, if any, and the parcel(s) of land on which
they are located.
II. Lease Grant.
Landlord leases the Premises to Tenant and Tenant leases the Premises from
Landlord, together with the right in common with others to use any portions of
the Property that are designated by Landlord for the common use of tenants and
others, such as sidewalks, unreserved parking areas, common corridors, elevator
foyers, restrooms, vending areas and lobby areas (the "Common Areas").
III. Possession.
A. INTENTIONALLY OMITTED.
B. Subject to Landlord's obligations under Section IX.B., the Premises are
accepted by Tenant in ''as is" condition and configuration. As of the date
hereof, Tenant is currently occupying the Premises (other than Suite No.300),
and Tenant agrees that the Premises are in good order and satisfactory
condition, and that there are no representations or warranties by Landlord
regarding the condition of the Premises or the Building. Notwithstanding the
foregoing to the contrary, Landlord shall tender possession of Suite No.300 to
Tenant in broom clean condition, free of any prior tenant's personal property.
If Landlord is delayed delivering possession of Suite No.300 due to the holdover
or unlawful possession of such space by any party , Landlord shall use
reasonable efforts to obtain possession of the space. In such event, the
Commencement Date shall be postponed until the date which is 75 days after the
date Landlord delivers possession of Suite No. 300 to Tenant free from occupancy
by any party, and the Termination Date, at the option of Landlord, may be
postponed by an equal number of days.
C. If Tenant takes possession of Suite No.300 before the Commencement Date, such
possession shall be subject to the terms and conditions of this Lease and Tenant
shall pay Rent (defined in Section IV.A.) to Landlord for each day of possession
before the Commencement Date. However, except for the cost of services requested
by Tenant (e.g. freight elevator usage), Tenant shall not be required to pay
Rent for any days of possession before the Commencement Date during which
Tenant, with the approval of Landlord, is in possession of Suite No. 300 for the
sole purpose of performing improvements or installing furniture, equipment or
other personal property .
IV. Rent.
A. Payments. As consideration for this Lease, Tenant shall pay Landlord, without
any setoff or deduction, the total amount of Base Rent and Additional Rent due
for the Term. "Additional Rent" means all sums (exclusive of Base Rent) that
Tenant is required to pay Landlord. Additional Rent and Base Rent are sometimes
collectively referred to as "Rent". Tenant shall pay and be liable for all
3
rental, sales and use taxes '(but excluding income taxes), if any, imposed upon
or measured by Rent under applicable Law. Base Rent and recurring monthly
charges of Additional Rent shall be due and payable in advance on the first day
of each calendar month without notice or demand, provided that the installment
of Base Rent for the first full calendar month of the Term shall be payable upon
the execution of this Lease by Tenant. All other items of Rent shall be due and
payable by Tenant on or before 30 days after billing by Landlord. All payments
of Rent shall be by good and sufficient check or by other means (such as
automatic debit or electronic transfer) acceptable to Landlord. If Tenant fails
to pay any item or installment of Rent when due, Tenant shall pay Landlord an
administration fee equal to 4% of the past due Rent, provided that Tenant shall
be entitled to a grace period of 5 days for the first 2 late payments of Rent in
a given calendar year. If the Term commences on a day other than the first day
of a calendar month or terminates on a day other than the last day of a calendar
month, the monthly Base Rent and Tenant's Pro Rata Share of any Tax Excess
(defined in Section IV.B.) or Expense Excess (defined in Section IV.B.) for the
month shall be prorated based on the number of days in such calendar month.
Landlord's acceptance of less than the correct amount of Rent shall be
"considered a payment on account of the earliest Rent due. No endorsement or
statement on a check or letter accompanying a check or payment shall be
considered an accord and satisfaction, and either party may accept the check or
payment without prejudice to that party's right to recover the balance or pursue
other available remedies. Tenant's covenant to pay Rent is independent of every
other covenant in this Lease.
B. Expense Excess and Tax Excess. Tenant shall pay Tenant's Pro Rata Share of
the amount, if any, by which Expenses (defined in Section IV.C.) for each
calendar year during the Term exceed Expenses for the applicable Base Year (the
"Expense Excess") and also the amount, if any, by which Taxes (defined in
Section IV.D.) for each calendar year during the Term exceed Taxes for the
applicable Base Year (the "Tax Excess"). If Expenses and/or Taxes in any
calendar year decrease below the amount of Expenses and/or Taxes for the
applicable Base Year, Tenant's Pro Rata Share of Expenses and/or Taxes, as the
case may be, for that calendar year shall be $0. Landlord shall provide Tenant
with a good faith estimate of the Expense Excess and of the Tax Excess for each
calendar year during the Term. On or before the first day of each month, Tenant
shall pay to Landlord a monthly installment equal to one-twelfth of Tenant's Pro
Rata Share of Landlord's estimate of the Expense Excess and one- twelfth of
Tenant's Pro Rata Share of Landlord's estimate of the Tax Excess. If Landlord
determines that its good faith estimate of the Expense Excess or of the Tax
Excess was incorrect by a material amount, Landlord may provide Tenant with a
revised estimate. After its receipt of the revised estimate, Tenant's monthly
payments shall be based upon the revised estimate. If Landlord does not provide
Tenant with an estimate of the Expense Excess or of the Tax Excess by January 1
of a calendar year, Tenant shall continue to pay monthly installments based on
the previous year's estimate(s) until Landlord provides Tenant with the new
estimate. Upon delivery of the new estimate, an adjustment shall be made for any
month for which Tenant paid monthly installments based on the previous year's
estimate(s). Tenant shall pay Landlord the amount of any underpayment within 30
days after receipt of the new estimate. Any overpayment shall be refunded to
Tenant within 30 days or credited against the next due future installment(s) of
Additional Rent.
As soon as is practical following the end of each calendar year, Landlord shall
furnish Tenant with a statement of the actual Expenses and Expense Excess and
the actual" Taxes and Tax Excess for the prior calendar year. If the estimated
Expense Excess and/or estimated Tax Excess for the prior calendar year is more
than the: actual Expense Excess and/or actual Tax Excess, as the case may be,
for the prior calendar year, Landlord shall apply any overpayment by Tenant
against Additional Rent due or next becoming due, provided if the Term expires
before the determination of the overpayment, Landlord shall refund any
overpayment to Tenant after first deducting the amount of Rent due. If the
estimated Expense Excess and/or estimated Tax Excess for the prior calendar year
is less than the actual Expense Excess and/or actual Tax Excess, as the case may
be, for such prior year, Tenant shall pay Landlord, within 30 days after
4
its receipt of the statement 'of Expenses and/or Taxes, any underpayment for the
prior calendar year.
C. Expenses Defined.
"Expenses" means all costs and expenses incurred in each calendar year In
connection with operating, maintaining, repairing, and managing the Building and
the Property, including, but not limited to:
1. Labor costs, including, wages, salaries, social security and employment
taxes, medical and other types of insurance, uniforms, training, and retirement
and pension plans.
2. Management fees, the cost of equipping and maintaining a management office,
accounting and bookkeeping services, legal fees not attributable to leasing or
collection activity, and other administrative costs. Landlord, by itself or
through an affiliate, shall have the right to directly perform or provide any
services under this Lease (including management services), provided that the
cost of any such services shall not exceed the cost that would have been
incurred had Landlord entered into an arms-length contract for such services
with an unaffiliated entity of comparable skill and experience.
3. The cost of services, including amounts paid to service providers and the
rental and purchase cost of parts, supplies, tools and equipment.
4. Premiums and deductibles paid by Landlord for insurance, including workers
compensation, fire and extended coverage, earthquake, general liability, rental
loss, elevator, boiler and other insurance customarily carried from time to time
by owners of comparable office buildings. As of the date of this lease, landlord
currently carries earthquake insurance for the Building.
5. Electrical Costs (defined below) and charges for water, gas, steam and sewer,
but excluding those charges for which Landlord is reimbursed by tenants.
"Electrical Costs" means: (a) charges paid by Landlord for electricity; (b)
costs incurred in connection with an energy management program for the Property;
and (c) if and to the extent permitted by Law, a fee for the services provided
by Landlord in connection with the selection of utility companies and the
negotiation and administration of contracts for electricity , provided that such
fee shall not exceed 50% of any savings obtained by landlord. Electrical Costs
shall be adjusted as follows: (i) amounts received by Landlord as reimbursement
for above standard electrical' consumption shall be deducted from Electrical
Costs; (ii) the cost of electricity incurred to provide overtime HVAC to
specific tenants (as reasonably estimated by landlord) shall be deducted from
Electrical Costs; and (iii) if Tenant is billed directly for the cost of
building standard electricity to the Premises as a separate charge in addition
to Base Rent, the cost of electricity to individual tenant spaces in the
Building shall be deducted from Electrical Costs.
6. The amortized cost of capital improvements (as distinguished from replacement
parts or components installed in the ordinary course of business) made to the
Property which are: (a) performed primarily to reduce operating expense costs or
otherwise improve the operating efficiency of the Property; or (b) required to
comply with any Laws that are enacted, or first interpreted to apply to the
Property, after the date of this Lease. The cost of capital improvements shall
be amortized by Landlord over the lesser of the Payback Period (defined below)
or 5 years. The amortized cost of capital improvements may, at landlord's
option, include actual or imputed interest at the rate that Landlord would
reasonably be required to pay to finance the cost of the capital improvement.
"Payback Period" means the reasonably estimated period of time that it takes for
the cost savings resulting from a capital improvement to equal the total cost of
the capital improvement.
5
If Landlord incurs Expenses for the Property together with one or more other
buildings or properties, whether pursuant to a reciprocal easement agreement,
common area agreement or otherwise, the shared costs and expenses shall be
equitably prorated and apportioned between the Property and the other buildings
or properties. Expenses shall not include: the cost of capital improvements
(except as set forth above); depreciation; interest (except as provided above
for the amortization of capital improvements); principal payments of mortgage
and other non-operating debts of Landlord; ground lease rental; the cost of
repairs or other work to the extent Landlord is reimbursed by insurance or
condemnation proceeds; costs in connection with leasing space in the Building,
including brokerage commissions; lease concessions, including rental abatements
and construction allowances, granted to specific tenants; costs incurred in
connection with the sale, financing or refinancing of the Building; fines,
interest and penalties incurred due to the late payment of Taxes (defined in
Section IV.D) or Expenses; organizational expenses associated with the creation
and operation of the entity which constitutes Landlord; marketing, advertising
and promotional expenditures; any fines or penalties incurred due to violations
by Landlord of any law, order, rule or regulations of any governmental
authority; Landlord's costs of electricity and other services sold or provided
to tenants in the Building and for which Landlord is entitled to be reimbursed
by such tenants as a separate additional charge or rental over and above the
base rental or additional base rental payable under the lease with such tenant;
any cost or expense related to removal, cleaning, abatement or remediation of
I/hazardous materials" in or about the Building, Common Area or Property,
including, without limitation, hazardous substances in the ground water or soil,
except to the extent such removal, cleaning, abatement or remediation is related
to the general repair and maintenance of the Building, Common Area or Property;
Landlord's charitable and political contributions; all bad debt loss, rent loss,
or reserves for bad debt or rent loss; court costs and legal fees incurred to
enforce the obligations of tenants under leases of portions of the Building
(other than court costs and attorney's fees and expenses incurred by Landlord in
seeking to enforce Building rules and regulations); or any penalties or damages
that Landlord pays to Tenant under this Lease or to other tenants in the
Building under their respective leases. If the Building is not at least 95%
occupied during any calendar year or if Landlord is not supplying services to at
least 95% of the total Rentable Square Footage of the Building at any time
during a calendar year, Expenses shall, at Landlord's option, be determined as
if the Building had been 95% occupied and Landlord had been supplying services
to 95% of the Rentable Square Footage of the Building during that calendar year.
If Tenant pays for its Pro Rata Share of Expenses based on increases over a
"Base Year" and Expenses for a calendar year are determined as provided in the
prior sentence, Expenses for the applicable Base Year shall also be determined
as if the Building had been 95% occupied and Landlord had been supplying
services to 95% of the Rentable Square Footage of the Building. The
extrapolation of Expenses under this Section shall be performed by appropriately
adjusting the cost of those components of Expenses that are impacted by .changes
in the occupancy of the Building.
D. Taxes Defined. "Taxes" shall mean: (1) all real estate taxes and other
assessments on the Building and/or Property, including, but not limited to,
assessments for special improvement districts and building improvement
districts, taxes and assessments levied in substitution or supplementation in
whole or in part of any such taxes and assessments and the Property's share of
any real estate taxes and assessments under any reciprocal easement agreement,
common area agreement or similar agreement as to the Property; (2) all personal
property taxes for property that is owned by Landlord and used in connection
with the operation, maintenance and repair of the Property; and (3) all costs
and fees incurred in connection with seeking reductions in any tax liabilities
described in (1) and (2), including, without limitation, any costs incurred by
Landlord for compliance, review and appeal of tax liabilities. Without
limitation, Taxes shall not include any income, capital levy , franchise,
capital stock, gift, estate or inheritance tax. If an assessment is payable in
installments, Taxes for the year shall include the amount of the installment and
any interest due and payable during that year. For all other real estate taxes,
Taxes for that year shall, at Landlord's election, include either the amount
accrued, assessed or otherwise imposed for the year or the amount due and
payable for that year, provided that
6
Landlord's election shall be applied consistently throughout the Term. If a
change in Taxes is obtained for any year of the Term during which Tenant paid
Tenant's Pro Rata Share of any Tax Excess, then Taxes for that year will be
retroactively adjusted and Landlord shall provide Tenant with a credit, if any,
based on the adjustment. Likewise, if a change is obtained for Taxes for any
applicable Base Year, Taxes for such applicable Base Year shall be restated and
the Tax Excess for all subsequent years shall be recomputed. Tenant shall pay
Landlord the amount of Tenant's Pro Rata Share of any such increase in the Tax
Excess within 30 days after Tenant's receipt of a statement from Landlord.
E. Audit Rights. Tenant may, within 90 days after receiving Landlord's statement
of Expenses, give Landlord written notice ("Review Notice") that Tenant intends
to review Landlord's records of the Expenses for that calendar year. Within a
reasonable time after receipt of the Review Notice, Landlord shall make all
pertinent records available for inspection that are reasonably necessary .for
Tenant to conduct its review. If any records are maintained at a location other
than the office of the Building, Tenant may either inspect the records at such
other location or pay for the reasonable cost of copying and shipping the
records. If Tenant retains an agent to review Landlord's records, the agent must
be with a licensed CPA firm. Tenant shall be solely responsible for all costs,
expenses and fees incurred for the audit. Within 60 days after the records are
made available to Tenant, Tenant shall have the right to give Landlord written
notice (an "Objection Notice") stating in reasonable detail any objection to
Landlord's statement of Expenses for that year. If Tenant fails to give Landlord
an Objection Notice within the 60 day period or fails to provide Landlord with a
Review Notice within the 90 day period described above, Tenant shall be deemed
to have approved Landlord's statement of Expenses and shall be barred from
raising any claims regarding the Expenses for that year. If Tenant provides
Landlord with a timely Objection Notice, Landlord and Tenant shall work together
in good faith to resolve any issues raised in Tenant's Objection Notice. If
Landlord and Tenant determine that Expenses for the calendar year are less than
reported, Landlord shall provide Tenant with a credit against the next
installment of Rent in the amount of the overpayment by Tenant. Likewise, if
Landlord and Tenant determine that Expenses for the calendar year are greater
than reported, Tenant shall pay Landlord the amount of any underpayment within
30 days. In addition, if Landlord and Tenant determine that Expenses for the
Building for the year in question were less than stated by more than 5%,
Landlord, within 30 days after its receipt of paid invoices therefor from
Tenant, shall reimburse Tenant for any reasonable amounts paid by Tenant to
third parties in connection with such review by Tenant. The records obtained by
Tenant shall be treated as confidential. In no event shall Tenant be permitted
to examine Landlord's records or to dispute any statement of Expenses unless
Tenant has paid and continues to pay all Rent when due.
V. Compliance with Laws; Use.
The Premises shall be used only for the Permitted Use and for no other use
whatsoever. Tenant shall not use or permit the use of the Premises for any
purpose which is illegal, dangerous to persons or property or which, in
Landlord's reasonable opinion, unreasonably disturbs any other tenants of the
Building or interferes with the operation of the Building. Tenant shall comply
with all Laws, including the Americans with Disabilities Act, regarding the
operation of Tenant's business and the use, condition, configuration and
occupancy of the Premises. Tenant, within 10 days after receipt, shall provide
Landlord with copies of any notices it receives regarding a violation or alleged
violation of any Laws. Except to the extent properly included in Expenses,
Landlord shall be responsible for the cost of correcting any violations of Title
III of the Americans with Disabilities Act (ADA) with respect to the Common
Areas of the Building. .Notwithstanding the foregoing, Landlord shall have the
right to contest any alleged violation in good faith, including, without
limitation, the right to apply for and obtain a waiver or deferment of
compliance, the right to assert any and all defenses allowed by law and the
right to appeal any decisions, judgments or rulings to the fullest extent
permitted by law. Landlord, after the exhaustion of any and all rights to appeal
or contest, will make all repairs, additions, alterations or improvements
necessary to comply with the terms of any final order or judgment. Tenant shall
comply with the rules and regulations of the Building attached as Exhibit B and
such other reasonable rules and regulations adopted by Landlord from time to
time. Tenant shall also cause its agents, contractors, subcontractors,
employees, customers, and subtenants to comply
7
with all rules and regulations. Landlord shall not knowingly discriminate
against Tenant in Landlord's enforcement of the rules and regulations.
VI. Security Deposit.
A. The Security Deposit shall be in the form of an irrevocable letter of credit
(the "Letter of Credit") which shall: (a) be in the amount of $2,250,000.00; (b)
be issued on the form attached hereto as Exhibit H; (c) name Landlord as its
beneficiary; (d) be drawn on an FDIC insured financial institution satisfactory
to Landlord; and (e) expire no earlier than 90 days after the Termination Date
of this Lease. The Security Deposit shall be delivered to Landlord upon the
execution of this Lease by Tenant and shall be held by Landlord without
liability for interest (unless required by Law) as security for the performance
of Tenant's obligations. The Security Deposit is not an advance payment of Rent
or a measure of Tenant's liability for damages. Landlord may, from time to time,
without prejudice to any other remedy, use all or a portion of the Security
Deposit to satisfy past due Rent or to cure any uncured default by Tenant. If
Landlord uses the Security Deposit, Tenant shall on demand restore the Security
Deposit to its original amount. Landlord shall return any unapplied portion 'of
the Security Deposit to Tenant within 45 days after the later to occur of: (1)
the determination of Tenant's Pro Rata Share of any Tax Excess and Expense
Excess for the final year of the Term; (2) the date Tenant surrenders possession
of the Premises to Landlord in accordance with this Lease; or (3) the
Termination Date. If Landlord transfers its interest in the Premises, Landlord
may assign the Security Deposit to the transferee and, following the assignment,
Landlord shall have no further liability for the return of the Security Deposit.
Landlord shall not be required to keep the Security Deposit separate from its
other accounts.
B. Notwithstanding anything herein to the contrary, provided (1) Tenant is not
in default under this Lease, and (2) Tenant's then-applicable current ratio (as
determined in accordance with generally accepted accounting principles) is
greater .than or equal to 2:1 and Tenant's then-applicable return on equity (as
determined in accordance with generally accepted accounting principles) is
greater than or equal to the average return on equity for Tenant's peer industry
group (as the same is reasonably determined by Landlord) (the "Benchmarks"), as
evidenced by Tenant's audited financial statements delivered by Tenant to
Landlord and prepared by an independent CPA for the most recent calendar year,
Tenant shall have the right to reduce the amount of the Security Deposit (i.e.,
the Letter of Credit) by $260,000.00 on each anniversary of the Commencement
Date that Tenant has successfully met the Benchmarks. Such reduction shall be
accomplished by having Tenant provide Landlord with a substitute Letter of
Credit in the form of the letter of credit attached hereto as Exhibit H in the
reduced amount.
VII. Services to be Furnished by Landlord.
A. Landlord agrees to furnish Tenant with the following services: (1) Water
service for use in the lavatories on each floor on which the Premises are
located; (2) Heat and air conditioning in season during Normal Business Hours,
at such temperatures and in such amounts as are standard for comparable
buildings or as required by governmental authority .Tenant, upon such advance
notice as is reasonably required by Landlord, shall have the right to receive
HVAC service during hours other than Normal Business Hours. Tenant shall pay
Landlord the standard charge for the additional service as reasonably determined
by Landlord from time to time. As of the date of this Lease, Landlord's charge
for after-hours heating and air conditioning is $40.00 per hour per floor for
each of floors 2 through 10, and $32.00 per hour per floor for floor 11, subject
to change; (3) Maintenance and repair of the Property as described in Section
IX.B.; (4) Janitor service on Business Days. If Tenant's use, floor covering or
other improvements require special services in excess of the standard services
for the Building, Tenant shall pay the additional cost attributable to the
special services; (5) Elevator service; (6) Electricity to the Premises for
general office use, in accordance with and subject to the terms and conditions
in Article X; and (7) such other services as Landlord reasonably determines are
necessary or appropriate for the Property.
8
B. Landlord's failure to furnish, or any interruption or termination of,
services due to the application of Laws, the failure of any equipment, the
performance of repairs, improvements or alterations, or the occurrence of any
event or cause beyond the reasonable control of Landlord (a "Service Failure")
shall not render Landlord liable to Tenant, constitute a constructive eviction
of Tenant, give rise to an abatement of Rent, nor relieve Tenant from the
obligation to fulfill any covenant or agreement. However, if the Premises, or a
material portion of the Premises, is made untenantable for a period in excess of
3 consecutive Business Days as a result of the Service Failure, then Tenant, as
its sole remedy, shall be entitled to receive an abatement of Rent payable
hereunder during the period beginning on the 4th consecutive Business Day of the
Service Failure and ending on the day the service has been restored. If the
entire Premises has not been rendered untenantable by the Service Failure, the
amount of abatement that Tenant is entitled to receive shall be prorated based
upon the percentage of the Premises rendered untenantable and not used by
Tenant. In no event, however, shall Landlord be liable to Tenant for any loss or
damage, Including the theft of Tenant's Property (defined in Article XV),
arising out of or in connection with the failure of any security services,
personnel or equipment.
VIII. Leasehold Improvements.
All improvements to the Premises (collectively, "Leasehold Improvements") shall
be owned by Landlord and shall remain upon the Premises without compensation to
Tenant. However, Landlord, by written notice to Tenant within 30 days prior to
the Termination Date, may require Tenant to remove, at Tenant's expense: (1)
Cable (defined in Section IX.A) installed by or for the exclusive benefit of
Tenant and located in the Premises or other portions of the Building; and (2)
any Leasehold Improvements that are performed by or for the benefit of Tenant
and, in Landlord's reasonable judgment, are of a nature that would require
removal and repair costs that are materially in excess of the removal and repair
costs associated with standard office improvements (collectively referred to as
"Required Removables"). Without limitation, it is agreed that Required
Removables include internal stairways, raised floors, personal baths and
showers, vaults, rolling file systems and structural alterations and
modifications of any type. The Required Removables designated by Landlord shall
be removed by Tenant before the Termination Date, provided that upon prior
written notice to Landlord, Tenant may remain in the Premises for up to 5 days
after the Termination Date for the sole purpose of removing the Required
Removables. Tenant's possession of the Premises shall be subject to all of the
terms and conditions of this Lease, including the obligation to pay Rent on a
per diem basis at the rate in effect for the last month of the Term. Tenant
shall repair damage caused by the installation or removal of Required
Removables. If Tenant fails to remove any Required Removables or perform related
repairs in a timely manner, Landlord, at Tenant's expense, may remove and
dispose of the Required Removables and perform the required repairs. Tenant,
within 30 days after receipt of an invoice, shall reimburse Landlord for the
reasonable costs incurred by Landlord. Notwithstanding the foregoing, Tenant, at
the time it requests approval for a proposed Alteration (defined in Section
IX.C), may request in writing that Landlord advise Tenant whether the Alteration
or the Initial Alterations, as the case may be, or any portion of the Alteration
or the Initial Alterations, as the case may be, will be designated as a Required
Removable. Within 10 days after receipt of Tenant's request, Landlord shall
advise Tenant in writing as to which portions of the Alteration or the Initial
Alterations, as the case may be, if any, will be considered to be Required
Removables.
IX. Repairs and Alterations.
A. Tenant's Repair Obligations. Tenant shall, at its sole cost and expense,
promptly perform all maintenance and repairs to the Premises that are not
Landlord's express responsibility under this Lease, and shall keep the Premises
in good condition and repair, reasonable wear and tear excepted. Tenant's repair
obligations include, without limitation, repairs to: (1) floor covering; (2)
interior partitions; (3) doors; (4) the interior side of demising walls; (5)
electronic, phone and data cabling and related equipment (collectively, "Cable")
that is installed by or for the exclusive benefit of Tenant and located in the
Premises or other portions of the Building; (6) supplemental air conditioning
units, private showers and kitchens, including hot water heaters, plumbing, and
similar facilities serving Tenant exclusively; and (7) Alterations performed by
contractors retained by Tenant, including related HVAC balancing. All work shall
be performed in
9
accordance with the rules and procedures described in Section IX.C. below. If
Tenant fails to make any repairs to the Premises for more than 15 days after l
notice from Landlord (although notice shall not be required if there Is an [i
emergency), landlord may make the repairs, and Tenant shall pay the ~ reasonable
cost of the repairs to Landlord within 30 days after receipt of an [i invoice,
together with an administrative charge in an amount equal to 7% of the cost of
the repairs.
B. Landlord's Repair Obligations. Landlord shall keep and maintain in good
repair and working order and make repairs to and perform maintenance upon: (1)
structural elements of the Building; (2) mechanical (including HVAC), fi
electrical, plumbing and fire/life safety systems serving the Building in
general; (3) Common Areas; (4) the roof of the Building; (5) exterior windows of
the Building; and (6) elevators serving the Building. Landlord shall promptly
make repairs (considering the nature and urgency of the repair) for which
Landlord is responsible.
C. Alterations. Tenant shall not make alterations, additions or improvements to
the Premises or install any Cable in the Premises or other portions of the
Building (collectively referred to as "Alterations") without first obtaining the
written consent of Landlord In each instance, which consent shall not be
unreasonably withheld i or delayed. However, Landlord's consent shall not be
required for any Alteration that satisfies all of the following criteria (a
"Cosmetic Alteration"): (1) is of a cosmetic nature such as painting,
wallpapering, hanging pictures and installing carpeting; (2) is not visible from
the exterior of the Premises or Building; (3) will not affect the systems or
structure of the Building; and (4) does not require work to be performed inside
the walls or above the ceiling of the Premises. However, even though consent is
not required, the performance of Cosmetic Alterations , shall be subject to all
the other provisions of this Section IX.C. Prior to starting work, tenant shall
furnish Landlord with plans and specifications reasonably f acceptable to
Landlord; names of contractors reasonably acceptable to Landlord (provided that
Landlord may designate specific contractors with respect to Building systems);
copies of contracts; necessary permits and approvals; evidence of contractor's
and subcontractor's insurance in amounts reasonably required by Landlord; and
any security for performance that is reasonably required by Landlord. Changes to
the plans and specifications must also be submitted to Landlord for its
approval. Alterations shall be constructed in a good and workmanlike manner
using materials of a quality that is at least equal to the quality designated by
Landlord as the minimum standard for the Building. Landlord may designate
reasonable rules, regulations and procedures for the performance of work in the
Building and, to the extent reasonably necessary to avoid disruption to the
occupants of the Building, shall have the right to designate , the time when
Alterations may be performed. Tenant shall reimburse Landlord I within 30 days
after receipt of an invoice for sums paid by Landlord for third party
examination of Tenant's plans for non-Cosmetic Alterations. In addition, within
30 days after receipt of an invoice from Landlord, Tenant shall pay Landlord a
fee for Landlord's oversight and coordination of any non-Cosmetic Alterations
equal to 7% of the cost of the non-Cosmetic Alterations. Upon completion, Tenant
shall
furnish ''as-built'' plans (except for Cosmetic Alterations), completion
affidavits, full and final waivers of lien in recordable form, and receipted
bills covering all labor and materials. Tenant shall assure that the Alterations
comply with all insurance requirements and Laws. Landlord's approval of an
Alteration shall not be a representation by Landlord that the Alteration
complies with applicable Laws or will be adequate for Tenant's use.
X. Use of Electrical Services by Tenant
A. Electricity used by Tenant in the Premises shall, at Landlord's option, be
paid for 11 by Tenant either: (1) through inclusion in Expenses (except as
provided in Ii Section X.B. for excess usage); (2) by a separate charge payable
by Tenant to i Landlord within 30 days after billing by Landlord; or (3) by
separate charge billed by the applicable utility company and payable directly by
Tenant. Electrical service to the Premises may be furnished by one or more
companies providing electrical generation, transmission and distribution
services, and the cost of
.electricity may consist of several different components or separate charges for
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such services, such as generation, distribution and stranded cost charges.
Landlord shall have the exclusive right to select any company providing
electrical service to the Premises, to aggregate the electrical service for the
Property and Premises with other buildings, to purchase electricity through a
broker and/or buyers group and to change the providers and manner of purchasing
electricity. Landlord shall be entitled to receive a fee (if permitted by Law)
for the selection of utility companies and the negotiation and administration of
contracts for electricity, provided that the amount of such reasonable fee shall
not exceed 50% of any savings obtained by Landlord.
B. Tenant's use of electrical service shall not exceed, either in voltage, rated
capacity , use beyond Normal Business Hours or overall load, that which Landlord
deems to be standard for the Building. If Tenant requests permission to consume
excess electrical service, Landlord may refuse to consent or may condition
consent upon conditions that Landlord reasonably elects (including, without
limitation, the installation of utility service upgrades, meters, submeters, air
handlers or cooling units), and the additional usage (to the extent permitted by
Law), installation and maintenance costs shall be paid by Tenant. Landlord shall
have the right to separately meter electrical usage for the Premises and to
measure electrical usage by surveyor other commonly accepted methods.
XI. Entry by Landlord.
Landlord, its agents, contractors and representatives may enter the Premises to
inspect or show the Premises, to clean and make repairs, alterations or
additions to the Premises, and to conduct or facilitate repairs, alterations or
additions to any portion of the Building, including other tenants' premises.
Except in emergencies or to provide janitorial and other Building services after
Normal Business Hours, Landlord shall provide Tenant with reasonable prior
notice of entry into the Premises, which may be given orally. However, with
respect to Tenant's data center in the Premises, except in emergencies or to
provide janitorial and other Building services after Normal Business Hours,
Landlord shall provide Tenant with at least 24 hours notice prior to entry,
which notice may be given orally. If reasonably necessary for the protection and
safety of Tenant and its employees, Landlord shall have the right to temporarily
close all or a portion of the Premises to perform repairs, alterations and
additions. However, except in emergencies, Landlord will not close the Premises
if the work can reasonably be completed on weekends and after Normal Business
Hours. Entry by Landlord shall not constitute constructive eviction or entitle
Tenant to an abatement or reduction of Rent.
XII. Assignment and Subletting.
A. Except in connection with a Permitted Transfer (defined in Section XII.E.
below), Tenant shall not assign, sublease, transfer or encumber any interest in
this Lease or allow any third party to use any portion of the Premises
(collectively or individually, a "Transfer") without the prior written consent
of Landlord, which consent shall not be unreasonably withheld if Landlord does
not elect to exercise its termination rights under Section XII.B below. Without
limitation, it is agreed that Landlord's consent shall not be considered
unreasonably withheld if: (1) the proposed transferee's financial condition does
not meet the criteria Landlord uses to select Building tenants having similar
leasehold obligations; (2) the proposed transferee's business is not suitable
for the Building considering the business of the other tenants and the
Building's prestige, or would result in a violation of another tenant's rights;
(3) the proposed transferee is a governmental agency or 'occupant of the
Building; (4) Tenant is in default after the expiration of the notice and cure
periods in this Lease; or (5) any portion of the Building or Premises would
likely become subject to additional or different Laws as a consequence of the
proposed Transfer. Tenant shall not be entitled to receive monetary damages
based upon a claim that Landlord unreasonably withheld its consent to a proposed
Transfer and Tenant's sole remedy shall be an action to enforce any such
provision through specific performance or declaratory judgment. Any attempted
Transfer in violation of this Article shall, at Landlord's option, be void.
Consent by Landlord to one or more Transfer(s) shall not operate as a waiver of
Landlord's rights to approve any subsequent Transfers. In no event shall any
Transfer or Permitted Transfer release or relieve Tenant from any obligation
under this Lease.
11
B. As part of its request for Landlord's consent to a Transfer, Tenant shall
provide Landlord with financial statements for the proposed transferee, a
complete copy of the proposed assignment, sublease and other contractual
documents and such other information as Landlord may reasonably request.
Landlord shall, by written notice to Tenant within 30 days of its receipt of the
required information and documentation, either: (1) consent to the Transfer by
the execution of a consent agreement in a form reasonably designated by Landlord
or reasonably refuse to consent to the Transfer in writing; or (2) exercise its
right to terminate this Lease with respect to the portion of the Premises that
Tenant Is proposing to assign or sublet. Any such termination shall be effective
on the proposed effective date of the Transfer for which Tenant requested
consent. Tenant shall pay Landlord a review fee of $750.00 for Landlord's review
of any Permitted Transfer or requested Transfer, provided if Landlord's actual
reasonable costs and expenses (including reasonable attorney's fees) exceed
$750.00, Tenant shall reimburse Landlord for its actual reasonable costs and
expenses in lieu of a fixed review fee.
C. Tenant shall pay Landlord 50% of all rent and other consideration which
Tenant receives as a result of a Transfer that is in excess of the Rent payable
to Landlord for the portion of the Premises and Term covered by the Transfer.
Tenant shall pay Landlord for Landlord's share of any excess within 30 days
after Tenant's receipt of such excess consideration. Tenant may deduct from the
excess all reasonable and customary expenses directly incurred by Tenant
attributable to the Transfer (other than Landlord's review fee), including
brokerage fees, legal fees and construction costs. If Tenant is in Monetary
Default (defined in Section XIX.A. below), Landlord may require that all
sublease payments be made directly to Landlord, in which case Tenant shall
receive a credit against Rent in the amount of any payments received (less
Landlord's share of any excess).
D. Except as provided below with respect to a Permitted Transfer, if Tenant is a
corporation, limited liability company, partnership, or similar entity , and if
the entity which owns or controls a majority of the voting shares/rights at any
time changes for any reason (including but not limited to a merger,
consolidation or reorganization), such change of ownership or control shall
constitute a Transfer: The foregoing shall not apply so long as Tenant is an
entity whose outstanding stock is listed on a recognized security exchange. or
if at least 80% of its voting stock is owned by another entity , the voting
stock of which is so listed.
E. Tenant may assign its entire interest under this Lease to a successor to
Tenant by purchase, merger, consolidation or reorganization without the consent
of Landlord, provided that all of the following conditions are satisfied (a
"Permitted Transfer"): (1) Tenant is not in default under this Lease; (2)
Tenant's successor shall own all or substantially all of the assets of Tenant;
(3) Tenant's successor shall have a net worth which is at least equal to the
greater of Tenant's net worth at the date of this Lease or Tenant's net worth as
of the day prior to the proposed purchase, merger, consolidation or
reorganization; (4) the Permitted Use does not allow the Premises to be used for
retail purposes; and (5) Tenant shall give Landlord written notice at least 30
days prior to the effective date of the proposed purchase, merger, consolidation
or reorganization. Tenant's notice to Landlord shall include information and
documentation showing that each of the above conditions has been satisfied. If
requested by Landlord, Tenant's successor shall sign a commercially reasonable
form of assumption agreement.
XIII. Liens.
Tenant shall not permit mechanic's or other liens to be placed upon the
Property, Premises or Tenant's leasehold interest in connection with any work or
service done or purportedly done by or for benefit of Tenant. If a lien is so
placed, Tenant shall, within 10 days of notice from Landlord of the filing of
the lien, fully discharge the lien by settling the claim which resulted in the
lien or by bonding or insuring over the lien in the manner prescribed by the
applicable lien Law. If Tenant fails to discharge the lien, then, in addition to
any other right or remedy of Landlord, Landlord may bond or insure over the lien
or otherwise discharge the lien. Tenant shall reimburse Landlord for any amount
paid by Landlord to bond or insure over the lien or discharge the lien,
including, without limitation, reasonable attorneys' fees (if and to the extent
permitted by Law) within 30 days after receipt of an invoice from Landlord.
12
XIV. Indemnity and Waiver of Claims.
A. Except to the extent caused by the negligence or willful misconduct of
Landlord or any Landlord Related Parties (defined below), Tenant shall
indemnify, defend and hold Landlord, its trustees, members, principals,
beneficiaries, partners, officers, directors, employees, Mortgagee(s) (defined
in Article XXVI) and agents ("Landlord Related Parties") harmless against and
from all liabilities, obligations, damages, penalties, claims, actions, costs,
charges and expenses, including, without limitation, reasonable attorneys' fees
and other professional fees (if and to the extent permitted by Law), which may
be imposed upon, incurred by or asserted against Landlord or any of the Landlord
Related Parties and arising out of or in connection with any damage or injury
occurring in the Premises or any acts or omissions (including violations of Law)
of Tenant, the Tenant Related Parties (defined below) or any of Tenant's
transferees, contractors or licensees.
B. Except to the extent caused by the negligence or willful misconduct of Tenant
or any Tenant Related Parties (defined below), Landlord shall indemnify, defend
, and hold Tenant, its trustees, members, principals, beneficiaries, partners,
officers, directors, employees and agents ("Tenant Related Parties") harmless
against and from all liabilities, obligations, damages, penalties, claims,
actions, costs, charges and expenses, including, without limitation, reasonable
attorneys' t fees and other professional fees (if and to the extent permitted by
Law), which may be imposed upon, incurred by or asserted against Tenant or any
of the Tenant Related Parties and arising out of or in connection with the acts
or omissions (including violations of Law) of Landlord, the Landlord Related
Parties or any of Landlord's contractors.
C. Landlord and the Landlord Related Parties shall not be liable for, and Tenant
waives, all claims for loss or damage to Tenant's business or loss, theft or
damage to Tenant's Property or the property of any person claiming by, through
or under Tenant resulting from: (1) wind or weather; (2) the failure of any I
sprinkler, heating or air-conditioning equipment, any electric wiring or any
gas, water or steam pipes; (3) the backing up of any sewer pipe or downspout;
(4) the bursting, leaking. or running of any tank, water closet, drain or other
pipe; (5) water, snow or ice upon or coming through the roof, skylight, stairs,
doorways, windows, walks or any other place upon or near the Building; (6) any
act or omission of any party other than Landlord or Landlord Related Parties;
and (7) any causes not reasonably within the control of Landlord. Tenant shall
insure itself against such losses under Article XV below.
XV. Insurance.
Tenant shall carry and maintain the following insurance ("Tenant's Insurance"),
at its sole cost and expense: (1) Commercial General Liability Insurance
.applicable to the premises .and its appurtenances providing, on an occurrence
basis, a minimum combined single limit of $2,000,000.00; (2) All Risk
Property/Business Interruption Insurance, including earthquake, written at
replacement cost value and with a replacement cost endorsement covering all of
Tenant's trade fixtures, equipment, furniture and other personal property within
the Premises ("Tenant's Property"); (3) Workers' Compensation Insurance as
required by the state in which the Premises is located and in amounts as may be
required by applicable statute; and, (4) Employers Liability Coverage of at
least $1,000,000.00 per occurrence. Any company writing any of Tenant's
Insurance shall have an A.M. Best rating of not less than A-VIII. All Commercial
General Liability Insurance policies shall name Tenant as a named insured and
Landlord (or any successor), Equity Office Properties Trust, a Maryland real
estate investment trust, EOP Operating Limited Partnership, a Delaware limited
partnership, and their respective , members, principals, beneficiaries,
partners, officers, directors, employees, and agents, and other designees of
Landlord as the interest of such designees shall appear, as additional,
insureds. All policies of Tenant's Insurance shall contain endorsements that the
insurer(s) shall give Landlord and its designees at least 30 days' advance
written notice of any change, cancellation, termination or lapse of insurance.
Tenant shall provide Landlord with a certificate of insurance evidencing
Tenant's Insurance prior to the earlier to occur of the Commencement Date or the
date Tenant is provided with possession of the Premises for any reason, and upon
i renewals at least 15 days prior to the expiration of the insurance coverage.
So long as the same is available at commercially reasonable rates, Landlord
shall maintain so called All Risk
13
property insurance on the Building at replacement cost value, as reasonably
estimated by Landlord. Except as specifically provided to the contrary, the
limits of either party's' insurance shall not limit such party's liability under
this Lease.
XVI. Subrogation.
Notwithstanding anything in this Lease to the contrary, Landlord and Tenant
hereby waive and shall cause their respective insurance carriers to waive any
and all rights of recovery , claim, action or causes of action against the other
and their respective trustees, principals, beneficiaries, partners, officers,
directors, agents, and employees, for any loss or damage that may occur to
Landlord or Tenant or any party claiming by, through or under Landlord or
Tenant, as the case may be, with respect to Tenant's Property, the Building, the
Premises, any additions or improvements to the Building or Premises, or any
contents thereof, including all rights of recovery , claims, actions or causes
of action arising out of the negligence of Landlord or any Landlord Related
Parties or the negligence of Tenant or any Tenant Related Parties, which loss or
damage is (or would have been, had the insurance required by this Lease been
carried) covered by insurance.
XVII. Casualty Damage.
A. If all or any part of the Premises is damaged by fire or other casualty,
Tenant shall immediately notify Landlord in writing. During any period of time
that all or a material portion of the Premises is rendered untenantable as a
result of a fire or other casualty , the Rent shall abate for the portion of the
Premises that is untenantable and not used by Tenant. Landlord shall have the
right to terminate this Lease if: (1) the Building shall be damaged so that, in
Landlord's reasonable judgment, substantial alteration or reconstruction of the
Building shall be required (whether or not the Premises has been damaged); (2)
Landlord is not permitted by Law to rebuild the Building in substantially the
same form as existed before the fire or casualty; (3) the Premises have been
materially damaged and there is less than 2 ' years of the Term remaining on the
date of the casualty; (4) any Mortgagee requires that the insurance proceeds be
applied to the payment of the mortgage debt; or (5) a material uninsured loss to
the Building occurs. Landlord may exercise its right to terminate this Lease by
notifying Tenant in writing within 90 days after the date of the casualty .In
addition to Landlord's rights to terminate as provided herein, Tenant shall have
the right to terminate this Lease if: (1) a substantial portion of the Premises
has been damaged by fire or other casualty and such damage cannot reasonably be
repaired within 60 days after the date of such fire or other casualty; (2) there
is less than one year of the Lease Term remaining on the date of such casualty;
(3) the casualty was not caused by the negligence or willful misconduct of
Tenant or its agents, employees or contractors; and (4) Tenant provides Landlord
with written notice of its intent to terminate within 30 days after the date of
the fire or other casualty .If neither Landlord nor Tenant elect to terminate
this Lease, Landlord shall commence and proceed with reasonable diligence to
repair and restore the Building and the Leasehold Improvements (excluding any
Alterations that were performed by Tenant in violation of this Lease). However,
in no event shall Landlord be required to spend more than the insurance proceeds
received by Landlord. Landlord shall not be liable for any loss or damage to
Tenant's Property or to the business of Tenant resulting in any way from the
fire or other casualty or from the repair and restoration of the damage.
Landlord and Tenant hereby waive the provisions of any Law relating to the
matters addressed in this Article, and agree that their respective rights for
damage to or destruction of the Premises shall be those specifically provided in
this Lease.
B. If all or any portion of the Premises shall be made untenantable by fire or
other casualty, Landlord shall, with reasonable promptness, cause an architect
or general contractor selected by Landlord to provide Landlord and Tenant with a
written estimate of the amount of time required to substantially complete the
repair and restoration of the Premises and make the Premises tenantable again,
using standard working methods ("Completion Estimate"). If the Completion
Estimate indicates that the Premises cannot be made tenantable within 270 days
from the date the repair and restoration is started, then regardless of anything
in Section XVII.A above to the contrary, either party shall have the right to
terminate this Lease by giving written notice to the other of such election
within 10 days
14
after receipt of the Completion Estimate. Tenant, however, shall not have the
right to terminate this Lease if the fire or casualty was caused by the
negligence or intentional misconduct of Tenant, Tenant Related Parties or any of
Tenant's transferees, contractors or licensees.
XVIII. Condemnation.
Either party may terminate this Lease if the whole or any material part of the
Premises shall be taken or condemned for any public or quasi-public use under
Law, by eminent domain or private purchase in lieu thereof (a "Taking").
Landlord shall also have the right to terminate this Lease if there Is a Taking
of any portion of the Building or Property which would leave the remainder of
the Building unsuitable for use as an office building in a manner comparable to
the Building's use prior to the Taking. In order to exercise its right to
terminate the Lease, Landlord or Tenant, as the case may be, must provide
written notice of termination to the other within 45 days after the terminating
party first receives notice of the Taking. Any such termination shall be
effective as of the date the physical taking of the Premises or the portion of
the Building or Property occurs. If this Lease is not terminated, the Rentable
Square Footage of the Building, the Rentable Square Footage of the Premises and
Tenant's Pro Rata Share shall, if applicable, be appropriately adjusted. In
addition, Rent for any portion of the Premises taken or condemned shall be
abated during the unexpired Term of this Lease effective when the physical
taking of the portion of the Premises occurs. All compensation awarded for a
Taking, or sale proceeds, shall be the property of Landlord, any right to
receive compensation or proceeds being expressly waived by Tenant. However,
Tenant may file a separate claim at its sole cost and expense for Tenant's
Property, Tenant's goodwill and Tenant's reasonable relocation expenses,
provided the filing of the claim does not diminish the award which would
otherwise be receivable by Landlord.
XIX. Events of Default.
Tenant shall be considered to be in default of this Lease upon the occurrence of
any of the following events of default:
A. Tenant's failure to pay when due all or any portion of the Rent, if the
failure continues for 5 days after written notice to Tenant ("Monetary
Default").
B. Tenant's failure (other than a Monetary Default) to comply with any term,
provision or covenant of this Lease, if the failure is not cured within 30 days
after written notice to Tenant. However, if Tenant's failure to comply cannot
reasonably be cured within 30 days, Tenant shall be allowed additional time (not
to exceed 60 days) as is reasonably necessary to cure the failure so long as:
(1) Tenant commences to cure the failure within 30 days, and (2) Tenant
diligently pursues a course of action that will cure the failure and bring
Tenant back into compliance with the Lease. However, if Tenant's failure to
comply creates a hazardous condition, the failure must be cured immediately upon
notice to Tenant. In addition, if Landlord provides Tenant with notice of
Tenant's failure to comply with any particular term, provision or covenant of
the Lease on 3 occasions during any 12 month period, Tenant's subsequent
violation of such term, provision or covenant shall, at Landlord's option, be an
incurable event of default by Tenant.
C. Tenant or any Guarantor becomes insolvent, makes a transfer in fraud of
creditors or makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts when due.
D. The leasehold estate is taken by process or operation of Law.
E In the case of any ground floor or retail Tenant, Tenant does not take
possession of, or abandons or vacates all or any portion of the Premises.
F. Tenant is in default beyond any notice and cure period under any other lease
or agreement with Landlord, including, without limitation, any lease or
agreement for parking.
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XX. Remedies.
A. Upon the occurrence of any event or events of default under this Lease,
whether enumerated in Article XIX or not, Landlord shall have the option to
pursue anyone or more of the following remedies without any notice (except as
expressly prescribed herein) or demand whatsoever (and without limiting the
generality of the foregoing, Tenant hereby specifically waives notice and demand
for payment of Rent or other obligations and waives any and all other notices or
demand requirements imposed by applicable law):
1. Terminate this Lease and Tenant's right to possession of the Premises and
recover from Tenant an award of damages equal to the sum of the following:
a. The Worth at the Time of Award of the unpaid Rent which had been earned at
the time of termination;
b. The Worth at the Time of Award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds the
amount of such Rent loss that Tenant affirmatively proves could have been
reasonably avoided;
c. The Worth at the Time of Award of the amount by which the unpaid Rent for
the balance of the Lease Term after the time of award exceeds the amount of
such Rent loss that Tenant affirmatively proves could be reasonably avoided;
d. Any other amount necessary to compensate Landlord for all the detriment
either proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom; and
e. All such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time under applicable law.
The 'Worth at the Time of Award" of the amounts referred to in parts (a) and (b)
above, shall be computed by allowing interest at the lesser of a per annum rate
equal to: (i) the greatest per annum rate of interest permitted from time to
time under applicable law, or (ii) the Prime Rate plus five percent (5%). For
purposes hereof, the "Prime Rate" shall be the per annum interest rate publicly
announced as its prime or base rate by a federally insured bank selected by
Landlord in the State of California. The 'Worth at the Time of Award" of the
amount referred to in part (c), above, shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%);
2. Employ the remedy described in California Civil Code § 1951.4 (Landlord may
continue this Lease in effect after Tenant's breach and abandonment and recover
Rent as it becomes due, if Tenant has the right to sublet or assign, subject
only to reasonable limitations); or
3. Notwithstanding Landlord's exercise of the remedy described in California
Civil Code § 1951.4 in respect of an event or events of default, at such time
thereafter as Landlord may elect in writing, to terminate this Lease and
Tenant's right to possession of the Premises and recover an award of damages as
provided above in Paragraph XX.A.1.
B. The subsequent acceptance of Rent hereunder by Landlord shall not be deemed
to be a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease, other than the failure of Tenant to pay the particular
Rent so accepted, regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such Rent. No waiver by Landlord of any breach hereof
shall be effective unless such waiver is in writing and signed by Landlord.
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C. TENANT HEREBY WAIVES ANY AND ALL RIGHTS CONFERRED BY SECTION 3275 OF THE
CIVIL CODE OF CALIFORNIA AND BY SECTIONS 1174 (C) AND 1179 OF THE CODE OF CIVIL
PROCEDURE OF CALIFORNIA AND ANY AND ALL OTHER LAWS AND RULES OF LAW FROM TIME TO
TIME IN EFFECT DURING THE LEASE TERM PROVIDING THAT TENANT SHALL HAVE ANY RIGHT
TO REDEEM, REINSTATE OR RESTORE THIS LEASE FOLLOWING ITS TERMINATION BY REASON
OF TENANT'S BREACH. TENANT ALSO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATING
TO THIS LEASE.
D. No right or remedy herein conferred upon or reserved to Landlord is intended
to be exclusive of any other right or remedy, and each and every right and
remedy shall be cumulative and in addition to any other right or remedy given
hereunder or now or hereafter existing by agreement, applicable law or in
equity. In addition to other remedies provided in this Lease, Landlord shall be
entitled, to the extent permitted by applicable law, to injunctive relief, or to
a decree compelling performance of any of the covenants, agreements, conditions
or provisions of this Lease, or to any other remedy allowed to Landlord at law
or in equity. Forbearance by Landlord to enforce one or more of the remedies
herein provided . upon an event of default shall not be deemed or construed to
constitute a waiver
of such default.
E. This Article XX shall be enforceable to the maximum extent such .enforcement
is not prohibited by applicable law, and the unenforceability of any portion
thereof shall not thereby render unenforceable any other portion.
XXI. Limitation of Liability.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY
OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) TO TENANT SHALL BE LIMITED TO THE
INTEREST OF LANDLORD IN THE PROPERTY. TENANT SHALL LOOK SOLELY TO LANDLORD'S
INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST
LANDLORD. NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE PERSONALLY
LIABLE FOR ANY. JUDGMENT OR DEFICIENCY. BEFORE FILING SUIT FOR AN ALLEGED
DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S) (DEFINED IN
ARTICLE XXVI BELOW) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES (DEFINED IN
ARTICLE XXVI BELOW) ON THE PROPERTY , BUILDING OR PREMISES, NOTICE AND
REASONABLE TIME TO CURE THE ALLEGED DEFAULT.
XXII. No Waiver.
Either party's failure to declare a default immediately upon its occurrence, or
delay in taking action for a default shall not constitute a waiver of the
default, nor shall it constitute an estoppel. Either party's failure to enforce
its rights for a default shall not constitute a waiver of its rights regarding
any subsequent default. Receipt by Landlord of Tenant's keys to the Premises
shall not constitute an acceptance or surrender of the Premises.
XXIII. Quiet Enjoyment.
Tenant shall, and may peacefully have, hold and enjoy the Premises, subject to
the terms of this Lease, provided Tenant pays the Rent and fully performs all of
its covenants and agreements. This covenant and all other covenants of Landlord
shall be binding upon Landlord and its successors only during its or their
respective periods of ownership of the Building, and shall not be a personal
covenant of Landlord or the Landlord Related Parties.
XXIV. Relocation.
INTENTIONALLY OMITTED
XXV. Holding Over.
Except for any permitted occupancy by Tenant under Article VIII, if Tenant fails
to surrender the Premises at the expiration or earlier termination of this
Lease, occupancy of the
17
Premises after the termination or expiration shall be that of a tenancy at
sufferance. Tenant's occupancy of the Premises during the holdover shall be
subject to all the terms and provisions of this Lease and Tenant shall pay an
amount (on a per month basis without reduction for partial months during the
holdover) equal to 150% of the greater of: (1) the sum of the Base Rent and
Additional Rent due for the period immediately preceding the holdover; or (2)
the fair market gross rental for the Premises as reasonably determined by
Landlord. No holdover by Tenant or payment by Tenant after the expiration or
early termination of this Lease shall be construed to extend the Term or prevent
Landlord from immediate recovery of possession of the Premises by summary
proceedings or otherwise. In addition to the payment of the amounts provided
above, if Landlord is unable to deliver possession of the Premises to a new
tenant, or to perform improvements for a new tenant, as a result of Tenant's
holdover and Tenant fails to vacate the Premises within 30 days after Landlord
notifies Tenant of Landlord's inability to deliver possession, or perform
improvements, Tenant shall be liable to Landlord for all damages, including;
without limitation, consequential damages, that Landlord suffers from the
holdover.
XXVI. Subordination to Mortgages; Estoppel Certificate.
Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of
trust, ground lease(s) or other lien(s) now or subsequently arising upon the
Premises, the Building or the Property, and to renewals, modifications,
refinancings and extensions thereof (collectively referred to as a "Mortgage").
The party having the benefit of a Mortgage shall be referred to as a
"Mortgagee". This clause shall be self-operative, but upon request from a
Mortgagee, Tenant shall execute a commercially reasonable subordination
agreement in favor of the Mortgagee. In lieu of having the Mortgage be superior
to this Lease, a Mortgagee shall have the right at any time to subordinate its
Mortgage to this Lease. If requested by a successor-in-interest to all or a part
of Landlord's interest in the Lease, Tenant shall, without charge, attorn to the
successor-in-interest. Landlord and Tenant shall each, within 10 days after
receipt of a written request, from the other, execute and deliver an estoppel
certificate to those parties as are reasonably requested by the other (including
a Mortgagee or prospective purchaser). The estoppel certificate shall include a
statement certifying that this Lease is unmodified (except as identified in the
estoppel certificate) and in full force and effect, describing the dates to
which Rent and other charges have been paid, representing that, to such party's
actual knowledge, there is no default (or stating the nature of the alleged
default) and indicating other matters with respect to the Lease that may
reasonably be requested. Notwithstanding the foregoing, as a condition precedent
to the subordination of this Lease, Landlord shall be required to provide Tenant
with a non-disturbance, subordination and attornment agreement in favor of
Tenant from any Mortgagee who comes into existence after the Commencement Date.
Such non-disturbance, subordination and attornment agreement in favor of Tenant
shall provide that, so long as Tenant is paying the rent due under the Lease and
is not otherwise in default under the Lease, its right to possession and other
terms of the Lease shall remain in full force and effect. Such non- disturbance,
subordination and attornment agreement may include additional time on behalf of
the Mortgagee to cure defaults of the Landlord and provide that (a) neither
Mortgagee nor any successor-in-interest shall be bound by (i) any payment of the
Base Rent, Additional Rent, or other sum due hereunder for more than 1 month in
advance or (ii) any amendment or modification to the Lease made without the
express written consent of Mortgagee or any successor-in-interest; (b) neither
Mortgagee nor any successor-in-interest will be liable for (i) any act or
omission or warranties of any prior landlord (including Landlord), (ii) the
breach of any warranties or obligations relating to construction of improvements
on the property or any tenant finish work performed or to have been performed by
any prior landlord (including Landlord), or (iii) the return of any security
deposit, except to the extent such deposits have been received by Mortgagee; and
(c) neither Mortgagee nor any successor-in-interest shall be subject to any
offsets or defenses which Tenant might have against any prior landlord
(including Landlord).
XXVII. Attorneys' Fees.
If either party institutes a suit against the other for violation of or to
enforce any 'covenant or condition of this Lease, or if either party intervenes
in any suit in which the other is a party to enforce or protect its interest or
rights, the prevailing party shall be entitled to all of its costs and expenses,
including, without limitation, reasonable attorneys' fees.
XXVIII. Notice.
If a demand, request, approval, consent or notice (collectively referred to as a
"notice") shall or may be given to either party by the other, the notice shall
be in writing and delivered by
18
hand or sent by registered or certified mail with return receipt requested, or
sent by overnight or same day courier service at the party's respective Notice
Address(es) set forth in Article I, except that if Tenant has vacated the
Premises (or if the Notice Address for Tenant is other than the Premises, and
Tenant has vacated such address) without providing Landlord a new Notice
Address, Landlord may serve notice in any manner described in this Article or in
any other manner permitted by Law. Each notice shall be deemed to have been
received or given on the earlier to occur of actual delivery or the date on
which delivery is refused, or, if Tenant has vacated the Premises or the other
Notice Address of Tenant without providing a new Notice Address, three (3) days
after notice is deposited in the U.S. mail or with a courier service in the
manner described above. Either party may, at any time, change its Notice Address
by giving the other party written notice of the new address in the manner
described in this Article.
XXIX. Excepted Rights.
This Lease does not grant any rights to light or air over or about the Building.
Landlord excepts and reserves exclusively to itself the use of: (1) roofs, (2)
telephone, electrical and janitorial closets, (3) equipment rooms, Building
risers or similar areas that are used by Landlord for the provision of Building
services, (4) rights to the land and improvements below the floor of the
Premises, (5) the improvements and air rights above the Premises, (6) the
improvements and air rights outside the demising walls of the Premises, and (7)
the areas within the Premises used for the installation of utility lines and
other installations serving occupants of the Building. Landlord has the right to
change the Building's name or address. Landlord also has the right to make such
other changes to the Property and Building as Landlord deems appropriate,
provided the changes do not materially affect Tenant's ability to use the
Premises for the Permitted Use. Landlord shall also have the right (but not the
obligation) to temporarily close the Building if Landlord reasonably determines
that there is an imminent danger of significant damage to the Building or of
personal injury to Landlord's employees or the occupants of the Building. The
circumstances under which Landlord may temporarily close the Building shall
include, without limitation, electrical interruptions, hurricanes and civil
disturbances. A closure of the Building under such circumstances shall not
constitute a constructive eviction nor entitle Tenant to an abatement or
reduction of Rent.
XXX. Surrender of Premises.
At the expiration or earlier termination of this Lease or Tenant's right of
possession, Tenant shall remove Tenant's Property (defined in Article XV) from
the Premises, and quit and surrender the Premises to Landlord, broom clean, and
in good order, condition and repair, ordinary wear and tear excepted. Tenant
shall also be required to remove the Required Removables in accordance with
Article VIII. If Tenant falls to remove any of Tenant's Property within 2 days
after the termination of this Lease or of Tenant's right to possession,
Landlord, at Tenant's sole cost and expense, shall be entitled (but not
obligated) to remove and store Tenant's Property .Landlord shall not be
responsible for the value, preservation or safekeeping of Tenant's Property.
Tenant shall pay Landlord, upon demand, the expenses and storage charges
incurred for Tenant's Property. In addition, if Tenant fails to remove Tenant's
Property from the Premises or storage, as the case may be, within 30 days after
written notice, Landlord may deem all or any part of Tenant's Property to be
abandoned, and title to Tenant's Property shall be deemed to be immediately
vested in Landlord.
XXXI. Miscellaneous.
A. This Lease and the rights and obligations of the parties shall be
interpreted, construed and enforced in accordance with the Laws of the State of
California and Landlord and Tenant hereby irrevocably consent to the
jurisdiction and proper venue of such state. If any term or provision of this
Lease shall to any extent be invalid or unenforceable, the remainder of this
Lease shall not be affected, and each provision of this Lease shall be valid and
enforced to the fullest extent permitted by Law. The headings and titles to the
Articles and Sections of this Lease are for convenience only and shall have no
effect on the interpretation of any part of the Lease.
B. Tenant shall not record this Lease or any memorandum without Landlord's prior
written consent.
C. Landlord and Tenant hereby waive any right to trial by jury in any proceeding
based upon a breach of this Lease.
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D. Whenever a period of time is prescribed for the taking of an action by
Landlord or Tenant, the period of time for the performance of such action shall
be extended i by the number of days that the performance is actually delayed due
to strikes, acts of God, shortages of labor or materials, war, civil
disturbances and other causes beyond the reasonable control of the performing
party ("Force Majeure"). However, events of Force Majeure shall not extend any
period of time for the payment of Rent or other sums payable by either party or
any period of time for the written exercise of an option or right by either
party.
E. Landlord shall have the right to transfer and assign, in whole or in part,
all of its rights and obligations under this Lease and in the Building and/or
Property referred to herein, and upon such transfer Landlord shall be released
from any I further obligations hereunder, and Tenant agrees to look solely to
the successor I in interest of Landlord for the performance of such obligations.
F. Tenant represents that it has dealt directly with and only with the Broker as
a broker in connection with this Lease. Tenant shall indemnify and hold Landlord
and the Landlord Related Parties harmless from all claims of any other brokers
claiming to have represented Tenant in connection with this Lease. Landlord
agrees to indemnify and hold Tenant and the Tenant Related Parties harmless from
all claims of any brokers claiming to have represented Landlord in connection
with this Lease. Landlord agrees to pay a brokerage commission to Broker in
accordance with the terms of a separate written commission agreement to be
entered into by and between Landlord and Broker, provided that in no event shall
Landlord be obligated to pay a commission to Broker in connection with any
extension of the Lease Term or in connection with any additional space that is
leased by Tenant pursuant to the terms of this Lease.
G. Tenant covenants, warrants and represents that: (1) each individual
executing, I attesting and/or delivering this Lease on behalf of Tenant is
authorized to do so on behalf of Tenant; (2) this Lease is binding upon Tenant;
and (3) Tenant is duly organized and legally existing in the state of its
organization and is qualified to do business in the State of California. If
there is more than one Tenant, or if Tenant is comprised of more than one party
or entity, the obligations imposed upon Tenant shall be joint and several
obligations of all the parties and entities. Notices, payments and agreements
given or made by, with or to anyone person or entity shall be deemed to have
been given or made by, with and to all of them.
H. Time is of the essence with respect to Tenant's exercise of any expansion,
renewal or extension rights granted to Tenant. This Lease shall create only the
relationship of landlord and tenant between the parties, and not a partnership,
joint venture or any other relationship. This Lease and the covenants and
conditions in this Lease shall inure only to the benefit of and be binding only
upon Landlord and Tenant and their permitted successors and assigns.
I. The expiration of the Term, whether by lapse of time or otherwise, shall not
relieve either party of any obligations which accrued prior to or which may
continue to accrue after the expiration or early termination of this Lease.
Without limiting the scope of the prior sentence, it is agreed that Tenant's
obligations under Sections IV.A, IV.B., VIII, XIV, XX, XXV and XXX shall survive
the expiration or early termination of this Lease.
J. Landlord has delivered a copy of this Lease to Tenant for Tenant's review
only, and the delivery of it does not constitute an offer to Tenant or an
option. This Lease shall not be effective against any party hereto until an
original copy of this Lease has been signed by such party.
K. All understandings and agreements previously made between the parties are If
superseded by this Lease, and neither party is relying upon any warranty,
statement or representation not contained in this Lease. This Lease may be
modified only by a written agreement signed by Landlord and Tenant.
L. Tenant, within 15 days after request, shall provide Landlord with a current
financial statement and such other information as Landlord may reasonably
20
request in order to create a '"business profile" of Tenant and determine
Tenant's ability to fulfill its obligations under this Lease. Landlord however
shall not require Tenant to provide such information unless Landlord is
requested to produce the information in connection with a proposed financing or
sale of the Building. Upon written request by Tenant, Landlord shall enter into
a commercially reasonable confidentiality agreement covering any confidential
information that is disclosed by Tenant.
XXXII. Entire Agreement.
This Lease and the following exhibits and attachments constitute the entire
agreement between the parties and supersede all prior agreements and
understandings related to the Premises, including all lease proposals, letters
of intent and other documents: Exhibit A-1 (Outline and Location of Premises),
Exhibit A-2 (Outline and Location of 4th Floor Space), Exhibit A-3 (Outline and
Location of 8th Floor Expansion Space), Exhibit B (Rules and Regulations),
Exhibit C (Commencement Letter), Exhibit D (Work Letter Agreement), Exhibit E
(Additional Provisions) and Exhibit F (Parking Agreement), Exhibit G (Storage
Space Supplement), Exhibit G-1 (Outline and Location of Storage Space), and
Exhibit H (Form of Letter of Credit).
Landlord and Tenant have executed this Lease as of the day and year first above
written.
LANDLORD:
EOP-60 SPEAR, L.L.C., a Delaware limited liability
company
By: EOP Operating Limited Partnership, a Delaware
limited partnership, its sole member
By: Equity Office Properties Trust, a Maryland
real estate investment trust,
its managing general partner
By: /s/ Peter H. Adams
Name: Peter Adams.
Title: Senior Vice President
TENANT:
INDUS INTERNATIONAL, INC., a California corporation
By: /s/ Henry C. Montgomery
Name: Henry C. Montgomery
Title: Chief Financial Officer
By: /s/ Onagh M Ash
Name: Onagh M. Ash
Title: Executive VP of Sales and Services
EXHIBIT B
BUILDING RULES AND REGULATIONS
The following rules and regulations shall apply, where applicable, to the
Premises, the Building, the parking garage (if any), the Property and the
appurtenances. Capitalized terms have the same meaning as defined in the Lease.
1. Sidewalks, doorways, vestibules, halls, stairways and other similar areas
shall not be obstructed by Tenant or used by Tenant for any purpose other than
ingress and egress to and from the Premises. No rubbish, litter, trash, or
material shall be placed, emptied, or thrown in those areas. At no time shall
Tenant permit Tenant's employees to loiter In Common Areas or elsewhere about
the Building or Property.
2. Plumbing fixtures and appliances shall be used only for the purposes for
which designed, and no sweepings, rubbish, rags or other unsuitable material
shall be thrown or placed in the fixtures or appliances. Damage resulting to
fixtures or appliances by Tenant, its agents, employees or invitees, shall be
paid for by Tenant, and Landlord shall not be responsible for the damage.
3. No signs, advertisements or notices shall be painted or affixed to windows,
doors or other parts of the Building, except those of such color, size, style
and in such places as are first approved in writing by Landlord. All tenant
identification and suite numbers at the entrance to the Premises shall be
installed by Landlord, at Tenant's cost and expense, using the standard graphics
for the Building. Except in connection with the hanging of lightweight pictures
and wall decorations, no nails, hooks or screws shall be inserted into any part
of the Premises or Building except by the Building maintenance personnel.
4. Landlord may provide and maintain in the first floor (main lobby) of the
Building an alphabetical directory board or other directory device listing
tenants, and no other directory shall be permitted unless previously consented
to by Landlord in writing.
5. Tenant shall not place any lock(s) on any door in the Premises or Building
without Landlord's prior written consent and Landlord shall have the right to
retain at all times and to use keys to all locks within and into the Premises. A
reasonable number of keys to the locks on the entry doors in the Premises shall
be furnished by Landlord to Tenant at Tenant's cost, and Tenant shall not make
any duplicate keys. All keys shall be returned to Landlord at the expiration or
early termination of this Lease.
6. All contractors, contractor's representatives and installation technicians
performing work in the Building shall be subject to Landlord's prior approval-
and shall be required to comply with Landlord's standard rules, regulations,
policies and procedures, which may be revised from time to time.
7. Movement in or out of the Building of furniture or office equipment, or
dispatch or receipt by Tenant of merchandise or materials requiring the use of
elevators, stairways, lobby areas or loading dock areas, shall be restricted to
hours designated by Landlord. Tenant shall obtain Landlord's prior approval by
providing a detailed listing of the activity. If approved by Landlord, the
activity shall be under the supervision of Landlord and performed in the manner
required by Landlord. Tenant shall assume all risk for damage to articles moved
and injury to any persons resulting from the activity. If equipment, property,
or personnel of Landlord or of any other party is damaged or injured as a result
of or in connection with the activity, Tenant shall be solely liable for any
resulting damage or loss.
8. Landlord shall have the right to approve the weight, size, or location of
heavy equipment or articles in and about the Premises. Damage to the Building by
the installation, maintenance, operation, existence or removal of Tenant's
Property shall be repaired at Tenant's sole expense.
9. Corridor doors, when not in use, shall be kept closed.
10. Tenant shall not: (1) make or permit any improper, objectionable or
unpleasant noises or odors in the Building, or otherwise interfere in any way
with other tenants or persons
having business with them; (2) solicit business or distribute, or cause to be
distributed, in any portion of the Building, handbills, promotional materials or
other advertising; or (3) conduct or permit other activities in the Building
that might, in Landlord's sole opinion, constitute a nuisance.
11. No animals, except those assisting handicapped persons, shall be brought
into the Building or kept in or about the Premises.
12. No inflammable, explosive or dangerous fluids or substances shall be used or
kept by Tenant in the Premises, Building or about the Property. Tenant shall
not, without Landlord's prior written consent, use, store, install, spill,
remove, release or dispose of, within or about the Premises or any other portion
of the Property, any asbestos- containing materials or any solid, liquid or
gaseous material now or subsequently considered toxic or hazardous under the
provisions of 42 U.S.C. Section 9601 et seq. or any other applicable
environmental Law which may now or later be in effect. Tenant shall comply with
all Laws pertaining to and governing the use of these materials by Tenant, and
shall remain solely liable for the costs of abatement and removal.
13. Tenant shall not use or occupy the Premises in any manner or for any purpose
which might injure the reputation or impair the present or future value of the
Premises or the Building. Tenant shall not use, or permit any part of the
Premises to be used, for lodging, sleeping or for any illegal purpose.
14. Tenant shall not take any action which would violate Landlord's labor
contracts or which would cause a work stoppage, picketing, labor disruption or
dispute, or interfere with Landlord's or any other tenant's or occupant's
business or with the rights and privileges of any person lawfully in the
Building ("Labor Disruption"). Tenant shall take the actions necessary to
resolve the Labor Disruption, and shall have pickets removed and, at the request
of Landlord, immediately terminate any work in the Premises that gave rise to
the Labor Disruption, until Landlord gives its written consent for the work to
resume. Tenant shall have no claim for damages against Landlord or any of the
Landlord Related Parties, nor shall the Commencement Date of the Term be
extended as a result of the above actions.
15. Tenant shall not install, operate or maintain in the Premises or in any
other area of the Building, electrical equipment that would overload the
electrical system beyond its capacity for proper, efficient and safe operation
as determined solely by Landlord. Tenant shall not furnish cooling or heating to
the Premises, including, without limitation, the use of electronic or gas
heating devices, without Landlord's prior written consent. Tenant shall not use
more than its proportionate share of telephone lines and other telecommunication
facilities available to service the Building.
16. Tenant shall not operate or permit to be operated a coin or token operated
vending machine or similar device (including, without limitation, telephones,
lockers, toilets, scales, amusement devices and machines for sale of beverages,
foods, candy, cigarettes and other goods), except for machines for the exclusive
use of Tenant's employees, and then only if the operation does not violate the
lease of any other tenant
in the Building.
17. Bicycles and other vehicles are not permitted inside the Building or on the
walkways outside the Building, except in areas designated by Landlord.
18. Landlord may from time to time adopt systems and procedures for the security
and safety of the Building, its occupants. entry, use and contents. Tenant, its
agents, employees, contractors, guests and invitees shall comply with Landlord's
systems and procedures.
19. Landlord shall have the right to prohibit the use of the name of the
Building or any other publicity by Tenant that in Landlord's sole opinion may
impair the reputation of the Building or its desirability. Upon written notice
from Landlord, Tenant shall refrain from and discontinue such publicity
immediately.
20. Tenant shall not canvass, solicit or peddle in or about the Building or the
Property.
21. Neither Tenant.nor its agents, employees, contractors, guests or invitees
shall smoke or permit smoking in the Common Areas, unless the Common Areas have
been declared a designated smoking area by Landlord, nor shall the above parties
allow smoke from the Premises to emanate into the Common Areas or any other part
of the Building. Landlord shall have the right to designate the Building
(including the Premises) as a non-smoking building.
22. .Landlord shall have the right to designate and approve standard window
coverings for the Premises and to establish rules to assure that the Building
presents a uniform exterior appearance. Tenant shall ensure, to the extent
reasonably practicable, that window coverings are closed on windows in the
Premises while they are exposed to the direct rays of the sun.
23. Deliveries to and from the Premises shall be made only at the times, in the
areas and through the entrances and exits designated by Landlord. Tenant shall
not make deliveries to or from the Premises in a manner that might interfere
with the use by any other tenant of its premises or of the Common Areas, any
pedestrian use, or any use which Is inconsistent with good business practice.
24. The work of cleaning personnel shall not be hindered by Tenant after 5:30
P.M., and cleaning work may be done at any time when the offices are vacant.
Windows, doors and fixtures may be cleaned at any time. Tenant shall provide
adequate waste and rubbish receptacles to prevent unreasonable hardship to the
cleaning service.
EXHIBIT C
COMMENCEMENT LETTER
(EXAMPLE)
Date ______________
Tenant _____________
Address _____________
Re: Commencement Letter with respect to that certain Lease dated as of .2000, Qy
and between EOP-60 SPEAR, L.L.C., a Delaware limited liability company, as
Landlord, and INCUS INTERNATIONAL, INC., a CalIfornia corporation as Tenant, for
rentable square feet on the ___________floor of the Building located at 60 Spear
Street, San Francisco, California.
Dear ________________:
In accordance with the terms and conditions of the above referenced Lease,
Tenant accepts possession of the Premises and agrees:
1. The Commencement Date of the Lease is ________________________:
2. The Termination Date of the Lease is ___________________________.
Please acknowledge your acceptance of possession and agreement to the terms set
forth above by signing all 3 counterparts of this Commencement Letter in the
space provided and returning 2 fully executed counterparts to my attention.
Sincerely,
___________________________________
Property Manager
Agreed and Accepted:
Tenant: _______________________
By: _______________________
Name: _______________________
Title: _______________________
Date: _______________________
EXHIBIT D
WORK LETTER
This Exhibit Is attached to and made a part of the Lease dated as of March 3,
2000, by and between EOP-60 SPEAR, L.L.C., a Delaware limited liability company
("Landlord") and INDUS INTERNATIONAL, INC., a California corporation ("Tenant")
for space in the Building located at 60 Spear Street, San Francisco, California.
I. Alterations and Allowance.
A. Tenant, following the delivery of the Premises by Landlord and the full and
final execution and delivery of this Lease and all prepaid rental and security
deposits required hereunder, shall have the right to perform alterations and
improvements in the Premises (the "Initial Alterations"). Notwithstanding the
foregoing, Tenant and its contractors shall not have the right to perforl11
Initial Alterations in the Premises unless and until Tenant has complied with
all of the terms and conditions of Article IX.C. of this Lease, including,
without limitation, approval by Landlord of the final plans for the Initial
Alterations and the contractors to be retained by Tenant to perform such Initial
Alterations. Tenant shall be responsible for all elements of the design of
Tenant's plans (including, without limitation, compliance with law,
functionality of design, the structural integrity of the design, the
configuration of the premises and the placement of Tenant's furniture,
appliances and equipment), and Landlord's approval of Tenant's plans shall in no
event relieve Tenant of the responsibility for such design. Landlord's approval
of the contractors to perform the Initial Alterations shall not be unreasonably
withheld. The parties agree that Landlord's approval of the general contractor
to perform the Initial Alterations shall not be considered to be unreasonably
withheld if any such general contractor (i) does not have trade references
reasonably acceptable to Landlord, (ii) does not maintain insurance as required
pursuant to the terms of this Lease, (iii) does not have the ability to be
bonded for the work in an amount of no less than $1,000,000.00, (iv) does not
provide current financial statements reasonably acceptable to Landlord, or (v)
is not licensed as a contractor in the state/municipality in which the Premises
is located. Tenant acknowledges the foregoing is not intended to be an exclusive
list of the reasons why Landlord may reasonably withhold its consent to a
general contractor. Notwithstanding the foregoing to the contrary, Tenant shall
utilize the designated Building engineer (Glumac International) for all
engineering work performed in the Premises and Tenant shall utilize the fire,
life and safety subcontractor required by Landlord for all fire, life and safety
work performed in the Premises.
B. Provided Tenant is not in default, Landlord agrees to contribute the sum of
(i) $659,904.00 (the "Main Allowance and (ii) 192,525.00 (the "Suite 300
Allowance") (collectively, the "Allowance") toward the cost of performing the
Initial Alterations in preparation of Tenant's occupancy of the Premises.
Landlord shall be entitled to deduct from the Allowance a construction
management fee for Landlord's oversight of the Initial Alterations in an amount
equal to (i) 2.5% of the Main Allowance, (ii) 2.5% of the Suite 300 Allowance,
and (iii) 1.5% of any additional costs incurred by Landlord or Tenant in
connection with the construction of the Initial Alterations for the Main
Premises and Suite No.300 which are in excess of the Allowance. Landlord and
Tenant agree that the Main Allowance shall be used only for the Initial
Alterations to Suite Nos. 200, 500, 600, 700, 900, 1000, 1000E, 1050 and 1100
(the "Main Premises"); and the Suite300 Allowance shall only be used for Initial
Alterations to Suite300. Notwithstanding the foregoing to the contrary, Tenant
may apply up to 50% of the Suite300 Allowance toward the initial tenant
improvement work to be performed in the remainder of the Premises. The Allowance
may only be used for the cost of preparing design and construction documents and
mechanical and electrical plans for the Initial Alterations and for hard costs
in connection with the Initial Alterations. Notwithstanding the foregoing, at
Tenant's option, up to $59,486.90 of the Allowance may be allocated to real
estate consulting or brokerage services. The Main Allowance and the Suite 300
Allowance, as the case may be, shall be paid to Tenant or, at Landlord's option,
to the order of the general contractor that
performed the Initial Alterations, within 30 days following receipt by Landlord
of (1) receipted bills covering all labor and materials or other allowed
expenses expended and used in the Initial Alterations for the Main Premises or
Suite300, as the case may be: (2) a sworn contractors affidavit from the general
contractor and a request to disburse from Tenant containing an approval by
Tenant of the work done for the Main Premises or Suite 300, as the case may be;
(3) full and final waivers of lien for the Main Premises or Suite300, as the
case may be; (4) as-built plans of the Initial Alterations for the Main Premises
or Suite300, as the case may be: and (5) the certification of Tenant and its
architect that the Initial Alterations for the Main Premises or Suite 300, as
the case may be, have been installed in a good and workmanlike manner in
accordance with the approved plans, and in accordance with applicable laws,
codes and ordinances. The Main Allowance and Suite 300 Allowance, as the case
may be, shall be disbursed in the amount reflected on the receipted bills
meeting the requirements above. Notwithstanding anything herein to the contrary,
Landlord shall not be obligated to disburse any portion of the Main Allowance or
the Suite 300 Allowance during the continuance of an uncured default under the
Lease, and Landlord's obligation to disburse shall only resume when and if such
default is cured.
C. In no event shall the Allowance be used for the purchase d equipment,
furniture or other items of personal property of Tenant. In the event Tenant
does not use the entire Main Allowance and Suite 300 Allowance by March 31, 2001
any unused amount shall accrue to the sole benefit of Landlord, it being
understood that Tenant
shall not be entitled to any credit, abatement or other concession in connection
therewith. Tenant shall be responsible for all applicable state sales or use
taxes, if any, payable in connection with the Initial Alterations, Main
Allowance and/or the Suite 300 Allowance.
D. Tenant agrees to accept the Premises in its ''as-is'' condition and
configuration, it being agreed that Landlord shall not be required to perform
any work or, except as provided above with respect to the Initial Alterations,
the Main Allowance or the Suite 300 Allowance, incur any costs in connection
with the construction or demolition of any improvements in the Premises.
E. This Exhibit D shall not be deemed applicable to any additional space (other
than the 4th Floor Space) added to the original Premises at any time or from
time to time, whether by any options under the Lease or otherwise, or to any
portion of the original Premises or any additions to the Premises in the event
of a renewal or extension of the original Term of this Lease, whether by any
options under the Lease or otherwise, unless expressly so provided in the Lease
or any amendment or supplement to the Lease.
Landlord and Tenant have executed this exhibit as of the day and year first
above written.
LANDLORD:
EOP-60 SPEAR, L.L.C., a Delaware limited liability
company
By: EOP Operating Limited Partnership, a Delaware
limited partnership, its sole member
By: Equity Office Properties Trust, a Maryland
real estate investment trust,
its managing general partner
By: /s/ Peter H. Adams
Name: Peter Adams.
Title: Senior Vice President
TENANT:
INDUS INTERNATIONAL, INC., a California corporation
By: /s/ Henry C. Montgomery
Name: Henry C. Montgomery
Title: Chief Financial Officer
By: /s/ Onagh M Ash
Name: Onagh M. Ash
Title: Executive VP of Sales and Services
.
EXHIBIT E
ADDITIONAL PROVISIONS
This Exhibit Is attached to and made a part of the Lease dated as of March 3,
2000, by and between EOP-60 SPEAR, L.L.C., a Delaware limited liability company
("Landlord"') and INDUS INTERNATIONAL, INC., a California corporation
("'Tenant") for space in the Building located at 60 Spear Street, San Francisco,
California.
I. MUST TAKE SPACE.
A. Tenant hereby leases from Landlord and Landlord hereby leases to Tenant the
12,835 square feet of rentable area described as Suite No.400 on the 4th floor
of the Building and shown on Exhibit A-2 attached hereto (the "4 th Floor
Space"). The Term with respect to the 4th Floor Space shall commence on the date
(the "4th Floor Space Commencement Date") which is the earlier to occur of
(i)the date which is 75 days after Landlord delivers possession of the 4th Floor
Space to Tenant, and (ii) the date Tenant's initial improvement work to the 4th
Floor Space is substantially complete (as reasonably determined by Landlord).
Landlord and Tenant agree that the date which is 75 days after the date Landlord
delivers possession of the 4th Floor Space to Tenant is currently anticipated to
be June 16, 2000 (the "Anticipated 4th Floor Commencement Date"). For purposes
hereof, the initial tenant improvements to the 4th Floor Space shall be deemed
to be substantially completed on the date such work has been completed, other
than any details of construction, mechanical adjustment or other matter, the
noncompletion of which does not materially interfere with Tenant's use of the
4th Floor Space. The Term for the 4th Floor Space shall terminate on the
Termination Date. The period commencing on the 4th Floor Space Commencement Date
and ending on the Termination Date is hereinafter referred to herein as the "4th
Floor Space Term". Effective as of the 4th Floor Space Commencement Date, the
4th Floor Space shall be deemed to be a part of the Premises; and from and after
the 41 Floor Space Commencement Date, the Premises shall be deemed to be 108,158
rentable square feet. Notwithstanding the foregoing to the contrary, the 4th
Floor Space Commencement Date shall be delayed to the extent that Landlord fails
to deliver possession of the 4th Floor Space for any reason, including but not
limited to, holding over by prior occupants. Landlord shall use its good faith
efforts to ensure that the 4th Floor Space Commencement Date is the Anticipated
4th Floor Commencement Date. However, any delay in the 4th Floor Space
Commencement Date shall not subject Landlord to any liability for any loss or
damage resulting therefrom. If the 4th Floor Space Commencement Date is delayed,
the Termination Date under the Lease shall not be similarly extended.
B. The 4th Floor Space is leased by Tenant pursuant to all of the terms and
conditions of the Lease, except that the financial terms and conditions (i.e.
8ase Rent, Additional Rent and improvement allowance) for the 4th Floor Space
shall be as follows:
1. Tenant shall pay Landlord Base Rent for the 4th Floor Space in monthly
installments as follows:
a. One installment of $22,728.60 (i.e. $1,515.24 per diem x 15 days) payable on
or before June 16, 2000 for the period beginning June 16, 2000 and ending June
30, 2000.
b. 36 equal installments of $45,457.29, each payable on or before the first day
of each month during the period beginning July 1, 2000 and ending June 30, 2003.
c. 59 equal installments of $47,596.46, each payable on or before the first day
of each month during the period beginning July 1, 2003 and ending May 31, 2008.
Landlord and Tenant acknowledge that the foregoing schedule is based on the
assumption that the Anticipated 4th Floor Commencement Date is the
4th Floor Space Commencement Date. If the 4th Floor Space Commencement Date is
other than the Anticipated 4th Floor Commencement Date, the schedule set forth
above with respect to the payment of any installment(s) of Base Rent for the 4th
Floor Space shall be appropriately adjusted on a per diem basis to reflect the
actual 4th Floor Space Commencement Date and the actual 4th Floor Space
Commencement Date shall be set forth in a confirmation letter to be prepared by
landlord. However, the effective date of any increases or decreases in the Base
Rent rate and the Termination Date shall not be postponed as a result of an
adjustment of the 4h Floor Space Commencement Date as provided above.
2. Tenant shall pay Additional Rent (i.e. Expenses and Taxes) for the 4th Floor
Space on the same terms and conditions set forth in ArticlelV of this Lease,
provided that effective as of the 4th Floor Space Commencement Date, Tenant's
Pro Rata Share shall increase by 9.5940% to account for the addition of the 4th
Floor Space, and the Base Year for purposes of the 4th Floor Space shall be
2000.
3. Notwithstanding any of the foregoing to the contrary, if Tenant takes
possession of the 4th Floor Space prior to the 4th Floor Space Commencement Date
for any reason whatsoever (other than the performance of work in the 4th Floor
Space with landlord's prior approval), such possession shall be subject to all
the terms and conditions of the Lease, and Tenant shall pay Base Rent and
Additional Rent as applicable to the 4th Floor Space to Landlord on a per diem
basis for each day of occupancy prior to the 4th Floor Space Commencement Date.
If Landlord is delayed delivering possession of 4th Floor Space due to the
holdover or f unlawful possession of such space by any party, Landlord shall use
r reasonable efforts to obtain possession of the space. In such event, the
Commencement Date shall be postponed until the date which is 75 days after the
date landlord delivers possession of 4th Floor Space to Tenant free from
occupancy by any party, and the Termination Date, at the option of Landlord, may
be postponed by an equal number of days.
4. Improvements to 4th Floor Space.
Tenant has inspected the 4th Floor Space and agrees to accept the same ''as is"
without any agreements, representations, understandings or obligations on the
part of Landlord to perform any alterations, repairs or improvements. Cost of
Improvements to 4th Floor Space. Any construction, alterations or improvements
made to the 4th Floor Space shall be made by Tenant, at Tenant's sole cost and
expense. Notwithstanding the foregoing, provided Tenant is not in default,
Tenant shall be entitled to receive an improvement allowance (the "4th Floor
Allowance") in an amount not b exceed $192,525.00 to be applied toward the cost
of performing initial construction, alteration or improvement of the 4th Floor
Space. Notwithstanding the foregoing to the contrary, after the date landlord
tenders possession of the 4th Floor Space to Tenant, and provided Tenant is "not
then in default under this Lease, Tenant may apply up to 50% of the 4th Floor
Allowance toward the initial tenant improvement work to be performed In the
Premises. Landlord shall be entitled to deduct , from the 4th Floor Allowance a
construction management fee for Landlord's oversight of the improvement work to
the 4th Floor Space in an amount equal to (i) 2.5% of the 4th Floor Allowance
and (ii) 1.5% of any additional costs incurred by Landlord or Tenant in
connection with the initial construction, alteration or improvement of the 4th
Floor Space which are in excess of the 4th Floor Allowance. In the event the
total cost of the initial improvements to the 4th Floor Space exceeds the 4th
Floor Allowance, Tenant shall pay for such excess upon demand. In the event
Tenant has not utilized any portion of the 4th Floor Allowance prior to July 31,
2001, the entire unused balance of the 4th Floor Allowance, if any, shall accrue
to the sole benefit of Landlord. Landlord shall pay such 4th Floor Allowance
directly to the contractors retained to perform the construction, design or
related improvement work to the 4th Floor Space. Responsibility for Improvements
to 4th Floor Space. Any construction. alterations or improvements to the 4th
Floor Space shall be performed by Tenant using contractors selected by Tenant
and approved by Landlord and shall be governed in all respects by the provisions
of Article IX.C of the Lease and Exhibit D of the Lease attached hereto. In any
and all events. the 4th Floor Space Commencement Date shall not be postponed or
delayed if the initial improvements to the 4th Floor Space are incomplete on the
4" Floor Space Commencement Date for any reason whatsoever. Any delay in the
completion of initial improvements to the 4th Floor Space shall , not subject
Landlord to any liability for any loss or damage resulting therefrom.
C. Parking. Effective as of the 4th Floor Space Commencement Date, Landlord
shall lease to Tenant one reserved parking space in connection with the 4th
Floor Space. Such parking space shall be subject to the terms and conditions of
Exhibit F attached hereto.
RENEWAL OPTION
A. Tenant shall have the right to extend the Term (the "Renewal Option") for one
additional period of 5 years commencing on the day following the Termination
Date of the initial Term and ending on the 51h anniversary of the
Termination Date (the "Renewal Term"), if:
1. Landlord receives notice of exercise of the Renewal Option ("Initial Renewal
Notice") not less than 9 full calendar months prior to the expiration of the
initial Term and not more than 12 full calendar months prior to the
expiration of the initial Term; and
2. Tenant is not in default under the Lease beyond any applicable cure periods
at the time that Tenant delivers its Initial Renewal Notice or at the time
Tenant delivers its Binding Notice (as hereinafter defined); and
3. No more than 20% of the Premises in the aggregate is sublet (other than
pursuant to a Permitted Transfer) at the time that Tenant delivers its
Initial Renewal Notice or at the time Tenant delivers its Binding Notice;
and
4. The Lease has not been assigned (other than pursuant to a Permitted
Transfer) prior to the date that Tenant delivers its Initial Renewal Notice
or prior to the date Tenant delivers its Binding Notice; and
5. Tenant executes and returns the Renewal Amendment (as hereinafter defined)
within 15 days after its submission to Tenant.
B. The initial Base Rent rate per rentable square foot for the Premises during
the Renewal Term shall equal the Prevailing Market (as hereinafter defined) rate
per rentable square foot for the Premises.
C. Tenant shall pay Additional Rent (i.e. Expenses and Taxes) for the Premises
during the Renewal Term in accordance with Article IV of the Lease.
D. Within 30 days after receipt of Tenant's Initial Renewal Notice, Landlord
shall advise Tenant of the applicable Base Rent rate for the Premises for the
Renewal Term. Tenant, within 15 days after the date on which Landlord advises
Tenant of the applicable Base Rent rate for the Renewal Term, shall either (i)
give Landlord final binding written notice ("Binding Notice") of Tenant's
exercise of its option, or (ii) if Tenant disagrees with Landlord's
determination, provide Landlord with written notice of rejection (the "Rejection
Notice"). If Tenant fails to provide Landlord with ,either a Binding Notice or
Rejection Notice within such 15 day penod, Tenant s Renewal Option shall be null
and void and of no further force and effect. If Tenant provides Landlord with a
Binding Notice, Landlord and Tenant shall enter into the Renewal Amendment upon
the terms and conditions set forth herein. If Tenant provides. Landlord with a
Rejection Notice, Landlord and Tenant shall work together in good faith to agree
upon the Prevailing Market Base Rent rate for the Premises during the Renewal
Term. Upon agreement Tenant shall provide Landlord with Binding Notice and
Landlord and Tenant shall enter into the Renewal Amendment in accordance with
the terms and conditions hereof. Notwithstanding the foregoing, if Landlord and
Tenant are unable to agree upon the Prevailing Market Base Rent rate for the
Premises within 30 days after the date on which Tenant provides Landlord with a
Rejection Notice, Tenant may elect to either rescind its intention to renew, or
subject the process to binding arbitration. Tenant's election to cause the
disagreement to be resolved by arbitration shall be deemed to be its Binding
Notice. If Tenant fails to require arbitration by notice (the "Arbitration
Notice") within 3 days of the expiration of the 30 day period set forth above,
Tenant's right to extend the Lease shall be null and void and of no further
force and effect.
If Tenant provides Landlord with an Arbitration Notice, Landlord and Tenant,
within 10 days after the date of the Arbitration Notice, shall each
simultaneously submit to the other, in a sealed envelope, its good faith
estimate of the Prevailing Market rate (collectively referred to as the
"Estimates"). If the higher of such , Estimates is not more than 105% of the
lower of such Estimates, then Prevailing Market rate shall be the average of the
two Estimates. If the Prevailing Market f rate is not resolved by the exchange
of Estimates, Landlord and Tenant, within 7 days after the exchange of
Estimates, shall each select an appraiser to determine which of the two
Estimates most closely reflects the Prevailing Market rate for the Premises
during the Renewal Term. Each appraiser so selected shall be certified as an MAI
appraiser or as an ASA appraiser and shall have had at least 5 years experience
within the previous 10 years as a real estate appraiser working in the San
Francisco, California financial district area, with working knowledge of current
rental rates and practices. For purposes of this Lease, an "MAI" appraiser means
an individual who holds an MAI designation conferred by, and is l an independent
member of, the American Institute of Real Estate Appraisers (or its successor
organization, or in the event there is no successor organization, the
organization and designation most similar), and an "ASA" appraiser means an
individual who holds the Senior Member designation conferred by, and is an
independent member of, the American Society of Appraisers (or its successor
organization, or, in the event there is no successor organization, the
organization and designation most similar). Upon selection, Landlord's and
Tenant's appraisers shall work together in good faith to agree upon which of the
two Estimates most closely reflects the Prevailing Market rate for the Premises
during the Renewal Term. The Estimate chosen by such appraisers shall be binding
on both Landlord and Tenant as the Base Rent rate for the Premises during the
Renewal Term. If either Landlord or Tenant fails to appoint an appraiser within
. the seven day period referred to above, the appraiser appointed by the other
party shall be the sole appraiser for the purposes hereof. If the two appraisers
cannot agree upon which of the two Estimates most closely reflects the
Prevailing Market within the 20 days after their appointment, then, within 10
days after the expiration of such 20 day period, the 2 appraisers shall select a
third appraiser meeting the aforementioned criteria. Once the third appraiser
has been selected as provided for above, then, as soon thereafter as practicable
but in any case within 14 days, the third appraiser shall make his determination
of which of the two Estimates most closely reflects the Prevailing Market rate
and such Estimate shall be binding on both Landlord and Tenant as the Base Rent
rate for the Premises during the Renewal Term. If the third appraiser believes
that expert , advice would materially assist him, he may retain one or more
qualified persons, to provide such expert advice. The parties shall share
equally in the costs of the third appraiser and of any experts retained by the
third appraiser. Any fees of any appraiser, counselor experts engaged directly
by Landlord or Tenant, however, shall be borne by the party retaining such
appraiser, counselor expert. In the event that the Prevailing Market rate has
not been determined by the commencement date of the Renewal Term, Tenant shall
pay Base Rent upon the terms and conditions in effect for initial Term until
such time as the Prevailing
Market rate has been determined. Upon such determination, the Base Rent for the
Premises during the Renewal Term shall be retroactively adjusted to the
commencement of the Renewal Term. If such adjustment results in an underpayment
of Base Rent by Tenant, Tenant shall pay Landlord the amount of such
underpayment within 30 days after the determination thereof. If such adjustment
results in an overpayment of Base Rent by Tenant, Landlord shall credit such
overpayment against the next installment of Base Rent due under the Lease and,
to the extent necessary , any subsequent installments until the entire amount of
such overpayment has been credited against Base Rent.
E. If Tenant is entitled to and properly exercises its Renewal Option, Landlord
shall prepare an amendment (the "Renewal Amendment") to reflect changes in the
Base Rent, Term, Termination Date and other appropriate terms. The Renewal
Amendment shall be:
1. sent to Tenant within a reasonable time after receipt of the Binding Notice;
and
2. executed by Tenant and returned to Landlord in accordance with Paragraph
A.5. above.
An otherwise valid exercise of the Renewal Option shall, at Landlord's option,
be fully effective whether or not the Renewal Amendment is executed.
F. For purpose hereof, "Prevailing Market" shall mean the arms length fair
market annual rental rate per rentable square foot under renewal leases and
amendments entered into on or about the date on which the Prevailing Market is
being determined hereunder for space comparable to the Premises in the Building
and office buildings comparable to the Building in the downtown San Francisco,
California area. The determination of Prevailing Market shall take into account
any material economic differences between the terms of this Lease and any
comparison lease, such as rent abatements, construction costs and other
concessions and the manner, if any, in which the Landlord under any such lease
is reimbursed for operating expenses and taxes. The determination of Prevailing
Market shall also take into consideration any reasonably anticipated changes in
the Prevailing Market rate from the time such Prevailing Market rate is being
determined and the time such Prevailing Market rate will become effective under
this Lease.
8TH FLOOR EXPANSION OPTION.
A. Tenant shall have the option (the "8th Floor Expansion Option") to lease the
12,835 square feet of rentable area: located on the 8th floor of the Building
and shown cross-hatched on Exhibit A-3 to this Lease (the "8th Floor Expansion
Space") if:
1. Landlord receives written notice (the "8th Floor Expansion Notice") from
Tenant of the exercise of its 8th Floor Expansion Option not prior to July
31' 2001 and not later than September 30, 2001; and
2. Tenant is not in default under this Lease at the time Landlord receives the
8th Floor Expansion Notice; and
1. no part of the premises is sublet (other than pursuant to a Permitted
Transfer) at the time Landlord receives the 8th Floor Expansion Notice; and
2. this Lease has not been assigned (other than pursuant to a Permitted
Transfer) prior to the time Landlord receives the 8th Floor Expansion
Notice; and
3. the 8th Floor Expansion Space is intended for the exclusive use of Tenant
only during the Term; and
4. Tenant has not vacated or abandoned the Premises at the time Landlord
receives the 8th Floor Expansion Notice; and
5. Tenant executes the 8th Floor Expansion Amendment (as defined in Paragraph
E, below) and returns the same to Landlord in accordance with Paragraph E
below.
B. Terms for 8th Floor Expansion Space.
The initial annual Base Rent rate per square foot for the 8th Floor Expansion
Space shall be the Fair Market rate (as hereinafter defined) per square foot for
the 8th Floor Expansion Space. Within 30 days after Landlord's receipt of
Tenant's 8th Floor Expansion Notice, Landlord shall advise Tenant of the
applicable Fair Market rate for the 8th Floor Expansion Space (the "Fair Market
Notice"). Tenant, within 15 days after the date on which Landlord advises Tenant
of the applicable Fair Market rate for the 8th Floor Expansion Space, shall
either (i) give Landlord notice accepting Landlord's determination of the Fair
Market rate for the 8th Floor Expansion Space (the "8th Floor Acceptance
Notice"), or (ii) if Tenant disagrees with Landlord's determination, provide
Landlord with written notice of rejection (the "8th Floor Expansion Rejection
Notice"). If Tenant fails to provide Landlord with either an 8th Floor
Acceptance Notice or 8th Floor Expansion Rejection Notice within such 15 day
period, Tenant shall be deemed to have delivered an 8th Floor Expansion
Rejection Notice. If Tenant provides Landlord with an 8th Floor Acceptance
Notice, Landlord and Tenant shall enter into the 8th Floor Expansion Amendment
upon the terms and conditions set forth herein. If Tenant provides Landlord with
an 8th Floor Expansion Rejection Notice (or is deemed to have provided Landlord
with an 8th Floor Expansion Rejection Notice), Landlord and Tenant shall work
together in good faith to agree upon the Fair Market rate for the 8th Floor
Expansion Space. Upon agreement Tenant shall provide Landlord with an 8th Floor
Acceptance Notice and Landlord and Tenant shall enter into the 8th Floor
Expansion Amendment in accordance with the terms and conditions hereof.
Notwithstanding the foregoing, if Tenant provides Land1ord with an 8th Floor
Expansion Rejection Notice (or is deemed to have provided Landlord with an 8th
Floor Expansion Rejection Notice) and Landlord and Tenant are unable to agree
upon the Fair Market rate for the 8th Floor Expansion Space within 30 days after
the date on which Tenant provides (or is deemed to have provided) Landlord with
an 8th Floor Expansion Rejection Notice, Tenant's 8th Floor Expansion Option
shall be null and void and of no further force and effect. Base Rent for the 8th
Floor Expansion Space shall be payable in monthly installments in accordance
with the terms and conditions of Article IV of the Lease; Notwithstanding the
foregoing, if (i) Tenant exercises its 8th Floor Expansion Option, but Tenant
subsequently provides (or is deemed to have provided) Landlord with an 8th Floor
Rejection Notice and Landlord and Tenant are then unable to agree upon the Fair
Market Rate within thirty (30) days after the date of the 8th Floor Rejection
Notice, and (ii) Landlord, within a period of six (6) months after the
expiration of such thirty (30) day period, proposes to lease the entire 8th
Floor Expansion Space to a prospective third-party tenant on terms that are not
substantially the same as those set forth in the Fair Market Notice which
Landlord previously delivered to Tenant (the "New Offer"), then Landlord, prior
to consummating a new lease with such prospective third-party tenant, shall
first offer the entire 8th Floor Expansion Space to Tenant on the terms set
forth in the New Offer. Tenant shall have five (5) days after Tenant's receipt
of the New Offer to accept or reject, in writing, the New Offer. Tenant's
failure to respond within such five (5) day period shall be deemed to be a
rejection of the New Offer. In the event Tenant rejects or is deemed to have
rejected the New Offer, Tenant shall have no further rights with respect to the
8th Floor Expansion Space. In the event Tenant accepts the New Offer, the terms
of the New Offer shall be binding on Landlord and Tenant with respect to the 8th
Floor Expansion Space, and Landlord and Tenant shall comply with all of the
other terms set forth herein with respect to the 8th Floor Expansion Space,
including, but not limited to, the obligation to enter into the 8th Floor
Expansion Amendment as provided below. For purposes hereof, the terr11S offered
to a prospective third-party tenant shall be deemed to be substantially the same
as those set forth in the Fair Market Notice as long as there is no more than a
ten percent (10%) reduction in the "bottom line" cost per rentable square foot
of the 8th Floor Expansion Space to the prospective third-party tenant when
compared with the "bottom line" cost per rentable square foot under the Fair
Market Notice from Landlord, considering all of the economic terms of the both
deals, respectively, including, without limitation, the length of term, the net
rent, any tax or expense escalation or other financial escalation and any
financial concessions.
Tenant shall pay Additional Rent (i.e. Expenses and Taxes) for the 8th Floor
Expansion Space on the same terms and conditions set forth in Article IV of the
Lease, provided that Tenant's Pro Rata Share shall I increase appropriately to
account for the addition of the 8th Floor Expansion Space, and further provided
that the Base Year with respect to the 8th Floor Expansion Space shall be
calendar year 2002. In the event Tenant properly exercises its Expansion Option
with respect to the Expansion Space, Tenant may lease from Landlord 3 reserved
parking spaces in the Building parking facilities subject to the terms and
provisions of Exhibit F. Tenant shall pay as Additional Rent in accordance with
Article IV of the Lease, the standard monthly charges for such parking spaces
established from time to time by Landlord for parking.
C. The term for the 8th Floor Expansion Space shall commence on the earlier to
occur of (i) 60 days after the date Landlord has tendered possession of the 8th
Floor Expansion Space to Tenant, and (ii) the substantial completion of the
initial tenant improvements for the 8th Floor Expansion Space (as reasonably
determined by Landlord). The Term for the 8th Floor Expansion Space shall
terminate on the Termination Date. Landlord and Tenant agree that as of the date
of this Lease, the anticipated commencement date for the 8th Floor Expansion
Space is October l, 2002 ("Anticipated 8th Floor Commencement Date"). For
purposes hereof, the initial tenant improvements to the 8th Floor Expansion
Space shall be deemed to be substantially complete on the date such work has
been completed, other than any details of construction, mechanical adjustment or
other matter, the noncompletion of which does not materially interfere with
Tenant's use of the 8th Floor Expansion Space. Notwithstanding the foregoing to
the contrary , if Landlord is delayed in delivering possession of the 8th Floor
Expansion Space for any reason, including, but not limited to the holdover or
unlawful possession of the 8th Floor Expansion Space by any party, Landlord
shall use reasonable efforts to obtain possession of the 8th Floor Expansion
Space, and the commencement date for the 8th Floor Expansion Space shall be
postponed until the date Landlord delivers possession of the 8th Floor Expansion
Space to Tenant free from occupancy by any party. Landlord shall use its good
faith, reasonable efforts to ensure that the commencement date for the 8th Floor
Expansion Space is the Anticipated 8th Floor Commencement Date. However, any
such delay in the commencement date of the 8th Floor Expansion Space shall not
subject Landlord to any liability for any loss or damage therefrom. If the
commencement date of the 8th Floor Expansion Space is delayed, the Termination
Date under the Lease shall not be similarly extended. The 8th Floor Expansion
Space shall be considered Premises, subject to all the terms and conditions of
this Lease, except that no allowances, credits, abatements or other concessions
(if any) set forth in this Lease for the initial Premises shall apply to the 8th
Floor Expansion Space. Tenant hereby acknowledges that the 8th Floor Expansion
Space is currently leased by Landlord to Liberty Mutual Insurance Company, a
Massachusetts corporation pursuant to the terms of a lease dated July 8, 1997,
as the same may be amended from time to time (the "8th Floor Expansion Lease").
Notwithstanding anything herein to the contrary, if the 8th Floor Expansion
Lease terminates (or the existing tenant's right to possession is terminated)
prior to its stated expiration date due to a default by the tenant under the 8th
Floor Expansion Lease, Landlord, at its option, may provide Tenant with written
notice of such prior termination (the "Prior Terr11ination Notice"). If
Landlord provides Tenant with a Prior Termination Notice, Tenant shall have the
option to lease the 8th Floor Expansion Space in accordance with the terms and
conditions set forth above, except that the 8th Floor Expansion Notice shall be
due within 30 days after the date of Landlord's Prior Termination Notice and the
commencement date for such 8th Floor Expansion Space shall be the first day of
the month following Landlord's receipt of Tenant's 8th Floor Expansion Notice.
If Tenant does not provide Landlord with an 8th Floor Expansion Notice within
such 30 day period or if Tenant is not entitled to exercise its 8th Floor
Expansion Option due to a violation of one of the conditions set forth in
Section IV.A above, Tenant's 8th Floor Expansion Option shall be deemed to be
null and void and Tenant shall have no further rights to lease the 8th Floor
Expansion Space hereunder.
D. The 8th Floor Expansion Space (including improvements and personalty , if
any) shall be accepted by Tenant In its ''as-built'' condition and
configuration existing on the earlier of the date Tenant takes possession of
the 8th Floor Expansion Space or as of the date the term for the 8th Floor
Expansion Space commences. Notwithstanding the foregoing to the contrary,
Landlord shall tender possession of the 8th Floor Expansion Space to Tenant
in broom clean condition, free of any prior tenant's personal property.
E. If Tenant is entitled to and properly exercises the 8th Floor Expansion
Option, Landlord shall prepare an amendment (the "8th Floor Expansion
Amendment") to reflect the commencement date of the term for the 8th Floor
Expansion Space and the changes in Base Rent, Rentable Square Footage of the
Premises, tenant's Pro Rata Share and other appropriate terms. A copy of the
8th Floor Expansion Amendment shall be (1) sent to Tenant within a
reasonable time after receipt of the 8th Floor Expansion Notice, and (2)
executed by Tenant and returned to Landlord within 15 days thereafter.
F. For purposes of this 8th Floor Expansion Option, Fair Market rate shall mean
the annual rental rate per square foot for the 8th Floor Expansion Space in
its "AS-IS" condition based on comparison space comparable to the 8th Floor
Expansion Space in the Building and office buildings comparable to the
Building in the downtown financial district of San Francisco, California,
under leases and renewal and expansion amendments being entered into at or
about the time that Fair Market is being determined giving appropriate
consideration to the length of the term, tenant concessions, brokerage
commissions, tenant improvement allowances, and the method of allocating
operating expenses and taxes. Notwithstanding the foregoing, space leased
under any of the following circumstances shall not be considered to be
comparable for purposes hereof: (i) the lease term is for less than a five
year term, (ii) the space is encumbered by the option rights of another
tenant, or (iii) the space has a lack of windows and/or an awkward or
unusual shape or configuration. The foregoing is not intended to be an
exclusive list of space that will not be considered to be comparable.
IV. AUXILIARY COOLING TOWER.
Landlord, upon Landlord's receipt of written request from Tenant, shall provide
Tenant exclusive use of the auxiliary cooling tower facility located on the roof
of the Building (the "Auxiliary Cooling Tower"). In the event Tenant elects to
utilize the Auxiliary Cooling Tower, Tenant shall pay to Landlord as Additional
Rent hereunder, all costs incurred by Landlord relating to the refurbishment of
the Auxiliary Cooling Tower. In addition, Tenant shall pay to Landlord as
Additional Rent hereunder, all costs incurred by Landlord relating to all
on-going maintenance, repair and construction in connection with the Auxiliary
Cooling Tower, and Tenant shall also pay to Landlord as Additional Rent
hereunder, the cost of relocating piping from the main cooling tower of the
Building to the Auxiliary Cooling Tower in order to effectuate Tenant's
exclusive use of
the Auxiliary Cooling Tower.
SIGNAGE.
A. Tenant Slgn. Landlord and Tenant acknowledge and agree that pursuant to the
terms of the Existing Lease (as defined in Section VI below), Tenant has
installed an exterior sign identifying Tenant's presence in the Building
(the "Tenant Sign"). Tenant specifically agrees that:
1. Illumination, if any, of the Tenant Sign shall comply with all applicable
governmental codes, restrictions and regulations;
2. Tenant will promptly repair and replace light bulbs or filaments, as
applicable, to assure a constant and uniform illumination, if any, of the
Tenant Sign, and if Tenant fails to promptly repair or replace Illuminated
letters, if any, Landlord may do so, and Tenant shall reimburse Landlord's
costs plus a reasonable administrative fee in doing so; and
3. Tenant shall be responsible for all costs related to the removal of the
Tenant Sign and repair of any damage to the Building or Property caused
thereby.
If, during the Term (and any extensions thereof), (a) Tenant is in default under
the terms of this Lease after notice and the expiration of any applicable cure
periods; or (b) Tenant fails to occupy at least 3 full floors of the Building,
the Tenant's rights to the Tenant Sign granted herein will terminate, and
Landlord may remove any Tenant Sign and repair any damage to the Building caused
thereby at Tenant's sole cost and expense.
New Tenant Sign.
Provided Tenant is not in default beyond the expiration of any applicable cure
periods under the terms of this Lease, Tenant may replace, for Tenant's benefit
and at Tenant's sole cost and expense the Tenant Sign with a new exterior sign
identifying Tenant's presence in the Building (the "New Tenant Sign"). Tenant
shall be responsible for obtaining all permits associated with the New Tenant
Sign required by the City of San Francisco, California or any other governmental
authority with jurisdiction. Following installation of the New Tenant Sign,
Tenant shall remain liable for all costs related to the maintenance and, if
applicable, illumination of the New Tenant Sign. Tenant specifically agrees
that:
1. illumination, if any, of the New Tenant Sign shall comply with all
applicable governmental codes, restrictions and regulations;
2. Tenant will promptly repair and replace light bulbs or filaments, as
applicable, to assure a constant and uniform illumination, if any, of the
New Tenant Sign, and if Tenant fails to promptly repair or replace
illuminated letters, if any, Landlord may do so, and Tenant shall reimburse
Landlord's costs plus a reasonable administrative fee in doing so; and
3. Tenant shall be responsible for all costs related to the removal of the New
Tenant Sign and repair of any damage to the Building or Property caused
thereby.
Tenant must obtain Landlord's written consent to the New Tenant Sign prior to
its fabrication and installation as well
as approval of the City of San Francisco, California. Landlord reserves the
right to withhold consent to any New Tenant Sign that, in the sole judgment of
Landlord, is not harmonious with the design standards of the Building. To obtain
Landlord's consent, Tenant shall submit design drawings to Landlord, showing the
type and sizes of all lettering; the colors, finishes and types of materials
used; the method of attachment; and (if applicable and Landlord consents) any
provisions for illumination.
If, during the Term (and any extensions thereof), (a) Tenant is in default under
the terms of this Lease after notice and the expiration of any applicable cure
periods; or (b) Tenant fails to occupy at least 3 full floors of the Building,
the Tenant's rights to the New Tenant Sign granted herein will terminate, and
Landlord may remove any New Tenant Sign and repair any damage to the Building
caused thereby at Tenant's sole cost and expense.
V1. EXISTING LEASE.
Landlord and Tenant are currently landlord and tenant under that .certain lease
(the "Existing Lease") dated the 2411 day of January, 1990, as amended, for
approximately 95,323 square feet of space on the 2nd, 5 th, 6th, 7th, 9th, 10th
and 11th floors of the Building. Landlord and Tenant hereby agree that the
Existing Lease shall terminate effective as of the day prior to the Commencement
Date of this Lease (the "Existing Lease Termination Date") as if such date were
originally stated to be the termination date of the
Existing Lease, Tenant shall remain liable for all monthly base rent, additional
rent and other sums coming due under the Existing Lease up to and including the
Existing Lease Termination Date, even if such sums are billed subsequent to the
Existing Lease Termination Date, The termination of the Existing Lease shall be
effective without further documentation, provided that Tenant, upon request from
Landlord, shall enter into an amendment to the Existing Lease to document such
early termination.
IN WITNESS WHEREOF,
Landlord and Tenant have executed this exhibit as of the day and year first
above written.
LANDLORD:
EOP-60 SPEAR, L.L.C., a Delaware limited liability
company
By: EOP Operating Limited Partnership, a Delaware
limited partnership, its sole member
By: Equity Office Properties Trust, a Maryland
real estate investment trust,
its managing general partner
By: /s/ Peter H. Adams
Name: Peter Adams.
Title: Senior Vice President
TENANT:
INDUS INTERNATIONAL, INC., a California corporation
By: /s/ Henry C. Montgomery
Name: Henry C. Montgomery
Title: Chief Financial Officer
By: /s/ Onagh M Ash
Name: Onagh M. Ash
Title: Executive VP of Sales and Services
EXHIBIT F
PARKING AGREEMENT
This Exhibit is attached to and made a part of the lease dated as of March 3,
2000, by and between EOP-60 SPEAR, L.L.C., a Delaware limited liability company
("landlord") and INDUS INTERNATIONAL, INC., a California corporation ("Tenant")
for space in the Building located at 60 Spear Street, San Francisco, California.
1. The parties acknowledge that they are contemporaneously herewith entering
into a certain lease dated March 3, 2000 (the "Lease") for the premises
known as Suite Nos. 200, 300, 500, 600, 700, 900, 1000 and 1100 (the
"Premises") located in the building known as 60 Spear Street (the
"Building"). In the event of any conflict between the lease and this Parking
Agreement, the latter shall control.
2. Landlord hereby grants to Tenant and persons designated by Tenant a license
to use 6 reserved parking spaces in the Building parking facilities. The
term of such license shall commence on the Commencement Date under the lease
and shall continue until the earlier to occur of the Termination Date under
the lease, or termination of the Lease or Tenant's abandonment of the
Premises thereunder. During the term of this license, Tenant shall pay
Landlord the monthly charges established from time to time by Landlord for
parking in the Building parking facilities, payable in advance, with
Tenant's payment of monthly Base Rent. The initial charge for such parking
spaces is $300.00 per reserved parking space, per month. No deductions from
the monthly charge shall be made for days on which the Building parking
facilities are not used by Tenant. Tenant may, from time to time request
additional parking spaces, and if landlord shall provide the same, such
parking spaces shall be provided and used on a month-to-month basis, and
otherwise on the foregoing terms and provisions, and at such monthly parking
charges as landlord shall establish from time to time.
3. Tenant shall at all times comply with all applicable ordinances, rules,
regulations, codes, laws, statutes and requirements of all federal, state,
county and municipal governmental bodies or their subdivisions respecting
the use of the Building parking facilities. landlord reserves the right to
adopt, modify and enforce reasonable rules ("Rules") governing the use of
the Building parking facilities from time to time including any key-card,
sticker or other identification or entrance system and hours of operation.
The Rules set forth herein are currently in effect. landlord may refuse to
permit any person who violates such Rules to park in the Building parking
facilities, and any violation of the Rules shall subject the car to removal
from the Building parking facilities.
4. Tenant may validate visitor parking by such method or methods as landlord
may approve, at the validation rate from time to time generally applicable
to visitor parking. Unless specified to the contrary above, the parking
spaces hereunder shall be provided on a reserved basis. Tenant acknowledges
that landlord has or may arrange for the Building parking facilities to be
operated by an independent contractor, not affiliated with landlord. In such
event, Tenant acknowledges that landlord shall have no liability for claims
arising through acts or omissions of such independent contractor, if such
contractor is reputable. Landlord shall have no liability whatsoever for any
damage to building or any other items located in the Building parking
facilities, nor for any personal injuries or death arising out of any matter
relating to the Building parking facilities, and in all events, tenant
agrees to look first to its insurance carrier and to require that Tenant's
employees look first to their respective insurance carriers for payment of
any losses sustained in connection with any use of the Building parking
facilities. Tenant hereby waives on behalf of its insurance carriers all
rights of subrogation against landlord or landlord's agents. landlord
reserves the right to assign specific parking spaces, and to re.serve
parking spaces for visitors, small cars, handicapped persons and for other
tenants, guests of tenants or other parties which assignment and reservation
of spaces may be relocated as determined by landlord from time to time, and
Tenant and persons designated by Tenant hereunder shall not park in any such
assigned or reserved parking spaces. landlord also reserves the right to
close all or any portion of the Building parking facilities in order to make
repairs or perform maintenance services, or to alter, modify , re-stripe or
renovate the Building parking facilities, or if required by casualty I
strike, condemnation, act of God, governmental law or requirement or other
reason beyond landlord's reasonable control. In such event, landlord shall
refund any prepaid parking rent hereunder, prorated on a per diem basis. If,
for any other reason, Tenant or persons properly designated by Tenant, shall
be denied access to the Building parking facilities, and Tenant or such
persons shall have complied with this Parking Agreement and this Parking
Agreement shall be in effect, Landlord's liability shall be limited to such
parking charges (excluding tickets for parking violations) incurred by
Tenant or such persons in utilizing alternative parking, which amount
Landlord shall pay upon presentation or documentation supporting Tenant's
claims in connection therewith.
5. If Tenant shall default under this Parking Agreement, Landlord shall have
the right to remove from the Building parking facilities any vehicles
hereunder which shall have been involved or shall have been owned or driven
by parties involved in causing such default, without liability therefore
whatsoever. In addition, if Tenant shall default under this Parking
Agreement, Landlord shall have the right to cancel this Parking Agreement on
10 days' written notice, unless within such 10 day period, Tenant cures such
default. If Tenant defaults with respect to the same term or condition under
this Parking Agreement more than three times during any 12 month period, and
Landlord notifies Tenant thereof promptly after each such default, the next
default of such term or condition during the succeeding 12 month period,
shall, at Landlord's election, constitute an incurable default. Such
cancellation right shall be cumulative and in addition to any other rights
or remedies available to Landlord at law or equity, or provided under the
Lease (all of which rights and remedies under the Lease are hereby
incorporated herein, as though fully set forth). Any default by Tenant under
the Lease shall be a default under this Parking Agreement, and any default
under this Parking Agreement shall be a default under the Lease.
RULES
(i) Building parking facilities hours shall be 7:00 a.m. to 8:00 p.m., however,
Tenant shall have access to the parking facilities on a 24 hour basis, 7 days a
week. Tenant shall not store or permit its employees to store any automobiles in
the Building parking facilities without the prior written consent of Landlord.
Except for emergency repairs, Tenant and its employees shall not perform any
work on any automobiles while located in the Building parking facilities, or on
the Property or Project. If it is necessary for Tenant or its employees to leave
an automobile in the Building parking facilities or on the Property or Project
overnight, Tenant shall provide Landlord with prior notice thereof designating
the license plate number and model of such automobile.
(ii) Cars must be parked entirely within the stall lines painted on the floor,
and only small cars may be parked in areas reserved for small cars.
(iii) All directional signs and arrows must be observed. (iv) The speed limit
shall be 5 miles per hour.
(v) Parking spaces reserved for handicapped parking must be used only by
vehicles properly designated.
(vi) Parking is prohibited in all areas not expressly designated for parking,
including without limitation:
a. Areas not striped for parking
b. aisles
c. where "no parking" signs are posted
d. ramps
(e) loading zones
(vii) Parking stickers, key cards or any other devices or forms of
identification or entry supplied by Landlord shall remain the property of
Landlord. Such devices must be displayed as requested and may not be mutilated
in any manner. The serial number of the parking identification device; may not
be obliterated. Devices are not transferable and any device in the possession of
an unauthorized holder will be void.
(viii) Monthly fees shall be payable in advance prior to the first day of each
month. Failure to do so will automatically cancel parking privileges and a
charge at the prevailing daily parking rate will be due. No deductions or
allowances from the monthly rate will be made for days on which the Building
parking facilities is not used by Tenant or its designees.
(ix) Building parking facilities managers or attendants are not authorized to
make or allow any exceptions to these Rules.
(x) Every parker is required to park and lock his/her own car.
(xi) Loss or theft of parking identification, key cards or other such devices
must be reported to Landlord and to any parking facilities manager immediately.
Any parking devices reported lost or stolen found on any authorized car will be
confiscated and the illegal holder will be subject to prosecution. Lost or
stolen devices found by Tenant or its employees must be reported to the office
of the garage immediately.
(xii) Washing, waxing, cleaning or servicing of any vehicle by the customer
and/or his agents is prohibited. Parking spaces may be used only for parking
automobiles.
(xiii) By signing this Parking Agreement, Tenant agrees to acquaint all persons
to whom Tenant assigns parking spaces with these Rules.
1. NO LIABILITY. TENANT ACKNOWLEDGES AND AGREES THAT, TO THE FULLEST EXTENT
PERMITTED BY LAW, LANDLORD SHALL NOT BE RESPONSIBLE FOR ANY LOSS OR DAMAGE
TO TENANT OR TENANTS PROPERTY (INCLUDING, WITHOUT LIMITATIONS, ANY LOSS OR
DAMAGE TO TENANTS AUTOMOBILE OR THE CONTENTS THEREOF DUE TO THEFT, VANDALISM
OR ACCIDENT) ARISING FROM OR RELATED TO TENANTS USE OF THE BUILDING PARKING
FACILITIES OR EXERCISE OF ANY RIGHTS UNDER THIS PARKING AGREEMENT, WHETHER
OR NOT SUCH LOSS OR DAMAGE RESUL TS FROM LANDLORD'S ACTIVE NEGLIGENCE OR
NEGLIGENT OMISSION. THE LIMITATION ON LANDLORD'S LIABILITY UNDER THE
PRECEDING SENTENCE SHALL NOT APPL Y HOWEVER TO LOSS OR DAMAGE ARISING
DIRECTLY FROM LANDLORD'S WILLFUL MISCONDUCT.
2. Release of liability. Without limiting the provisions of Paragraph 6 above,
Tenant hereby voluntarily releases, discharges, waives and relinquishes any
and all actions or causes of action for personal injury or property damage
occurring to Tenant arising as a result of parking in the Building parking
facilities, or any activities incidental thereto, wherever or however the
same may occur, and further agrees that Tenant will not prosecute any claim
for personal injury or property damage against Landlord or any of its
officers, agents, servants or employees for any said causes of action. It is
the intention of Tenant by this instrument, to exempt and relieve Landlord
from liability for personal injury or property damage caused by negligence.
3. The provisions of Article XXI of the Lease are hereby incorporated by
reference as if fully recited.
Tenant acknowledges that Tenant has read the provisions of this Parking
Agreement, has been fully and completely advised of the potential dangers
incidental to parking In the Building parking facilities and is fully aware of
the legal consequences of signing this instrument.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Exhibit as of the day
and year first above written.
LANDLORD:
EOP-60 SPEAR, L.L.C., a Delaware limited liability
company
By: EOP Operating Limited Partnership, a Delaware
limited partnership, its sole member
By: Equity Office Properties Trust, a Maryland
real estate investment trust,
its managing general partner
By: /s/ Peter H. Adams
Name: Peter Adams.
Title: Senior Vice President
TENANT:
INDUS INTERNATIONAL, INC., a California corporation
By: /s/ Henry C. Montgomery
Name: Henry C. Montgomery
Title: Chief Financial Officer
By: /s/ Onagh M Ash
Name: Onagh M. Ash
Title: Executive VP of Sales and Services
EXHIBIT G
STORAGE SPACE SUPPLEMENT
THIS STORAGE SPACE SUPPLEMENT ("Agreement") is made as of this 3rd day of March,
2000, by and EOP-60 SPEAR, L.L.C., a Delaware limited liability company
("Landlord") and INDUS INTERNATIONAL, INC., a California corporation ('Tenant").
RECITALS:
Landlord and Tenant entered into a certain lease agreement dated March 3, 2000,
(the "Lease") for approximately 83,308 rentable square feet of office space (the
"Premises") on the 2nd, , 3rd, 6th, 7th, 9 th, 10th 11h floors and the basement
level of the building known as 60 Spear Street located at 60 Spear Street, San
Francisco, California ("Building"). Landlord and Tenant desire to enter into
this Agreement for the purpose of supplementing the Lease as hereinafter set
forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
whereof being acknowledged, Landlord and Tenant agree as follows:
1. Landlord leases to Tenant and Tenant accepts the space containing
approximately2,345 square feet consisting of approximately (i) 314 square
feet described as Space No.857, (ii) 214 square feet described as Space
No.859, (i ii) 325 square feet described as Space No. B60, (iv) 257 square
feet described as Space No.861, (v) 415 square feet described as Space
No.862, and (vii) 820 square feet described as Space No.8500 on the basement
level of the 8uilding, as shown on Exhibit G-1 attached hereto (the "Storage
Space"), for the term (the "Storage Term") commencing on the Commencement
Date ("Storage Commencement Date") and ending on the Termination Date
("Storage Expiration Date"), unless the Lease or Tenant's right to
possession of the Premises thereunder terminates sooner, in which case the
Storage Expiration Date shall be such earlier termination date. The Storage
Space shall be used by Tenant for the storage of equipment, inventory or
other non-perishable items normally used in Tenant's business, and for no
other purpose whatsoever. Tenant agrees to keep the Storage Space in a neat
and orderly fashion and to keep all stored items in cartons, file cabinets
or other suitable containers. Landlord shall have the right to designate the
location within the Storage Space of any items to be placed therein. All
items stored in the Storage Space shall be elevated at least 6 inches above
the floor on wooden pallets, and shall be at least 18 ,inches below the
bottom of all sprinklers located in the ceiling of the Storage Space, if
any. Tenant shall not store anything in the Storage Space which is unsafe or
which otherwise may create a hazardous condition, or which may increase
Landlord's insurance rates, or cause a cancellation or modification of
Landlord's insurance coverage. Without limitation, Tenant shall not store
any flammable, combustible or explosive fluid, chemical or substance nor any
perishable food or beverage products, except with Landlord's prior written
approval. Landlord reserves the right to adopt and enforce reasonable rules
and regulations governing the use of the Storage Space from time to time.
Upon expiration or earlier termination of this Agreement, Tenant shall
completely vacate and surrender the Storage Space. to Landlord in accordance
with the terms of this Agreement. Without limitation, Tenant shall leave the
Storage Space in the condition in which it was delivered to Tenant,
broom-clean and empty of all personalty and other items placed therein by or
on behalf of Tenant.
2. Tenant shall pay rent for the Storage Space ("Storage Base Rent") in 98
monthly Installments according to the following schedule of Storage Base
Rent:
Period
Storage Base Rent per Month/Period
4/15/2000 - 4/30/2000
$2,292.95
5/01/2000 - 5/31/2001
$4,299.17
6/01/2001 - 5/31/2002
$4,428.15
6/01/2002 - 5/31/2003
$4,561.00
6/01/2003 - 5/31/2004
$4,697.83
6/01/2004 - 5/31/2005
$4,838.76
6/01/2005 - 5/31/2006
$4,983.92
6/01/2006 - 5/31/2007
$5,133.44
6/01/2007 - 5/31/2008
$5,287.44
Each installment of Storage Base Rent shall be payable in advance on or before
the first day of each month of the Storage Term. Any partial month shall be
appropriately prorated. All Storage Base Rent shall be payable in the same
manner that Base Rent is payable under the Lease.
All terms and, provisions of the Lease shall be applicable to this Agreement,
including, without limitation, Article XIV (Indemnity and Waiver of Claims) and
Article XV (Insurance), except that Landlord need not supply air-cooling, heat,
water, janitorial service, cleaning, :passenger or freight elevator service,
window washing or electricity to the Storage Space and Tenant shall not be
entitled to any work allowances, rent credits, expansion rights or renewal
rights with respect to the Storage Space unless such concessions or rights are
specifically provided for herein with respect to the Storage Space. Landlord
shall not be liable for any theft or damage to any items or materials stored in
the Storage Space, it being understood that Tenant is using the Storage Space at
its own risk. Any default by Tenant under the Lease remaining uncured for a
period extending beyond the expiration of any applicable cure period shall be a
default under this Agreement; any default by Tenant under this Agreement shall
be a default under the Lease; and the provisions of the Lease with respect to
Tenant defaults shall apply to any default by Tenant hereunder. The Storage
Space shall not be included in the determination of Tenant's Pro Rata Share
under the Lease nor shall Tenant be required to pay Expenses in connection with
the Storage Space. Tenant agrees to accept the Storage Space in its condition
and ''as-built'' configuration existing on the earlier of the date Tenant takes
possession of the Storage Space or the Storage Commencement Date. In the event
Tenant subleases more than 4 floors of the Premises (or the equivalent thereof)
In the aggregate, then at any time and from time to time thereafter, Landlord
shall have the right to relocate the Storage Space to a new location which shall
be no smaller than the square footage of the Storage Space. Landlord shall pay
the direct, out-of-pocket, reasonable expenses of such relocation. Storage Base
Rent is deemed Rent under the Lease. If Tenant sublets more than 4 floors of the
Premises (or the equivalent thereof) in the aggregate, or assigns the Lease
(other than pursuant to a Permitted Transfer), Landlord, at its option, may
cancel this Agreement effective as of 30 days after notice to Tenant.
Additionally, notwithstanding anything set forth in ArticleXl1 of the Lease to
the contrary, except pursuant to a Permitted Transfer, Tenant shall not, without
the prior written consent of Landlord, which consent may be withheld in
Landlord's sole discretion, assign, sublease, transfer or encumber the Storage
Space or grant any license, concession or other right of occupancy or permit the
use of the Storage Space by any party other than Tenant. Notwithstanding
anything to the contrary contained In this Agreement, the liability of Landlord
to Tenant hereunder shall be limited to the interest of Landlord in the
Building, and Tenant agrees to look solely to Landlord's interest in the
Building for the recovery of any judgment or award against the Landlord, it
being. intended that Landlord shall not be personally liable for any judgment or
deficiency. Tenant hereby covenants that, prior to the filing of any suit for
direct and proximate damages, it shall give Landlord and all mortgagees whom
Tenant has been notified hold mortgages or deed of trust liens on the property,
Building or Premises notice and reasonable time to cure any alleged default by
Landlord.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
LANDLORD:
EOP-60 SPEAR, L.L.C., a Delaware limited liability
company
By: EOP Operating Limited Partnership, a Delaware
limited partnership, its sole member
By: Equity Office Properties Trust, a Maryland
real estate investment trust,
its managing general partner
By: /s/ Peter H. Adams
Name: Peter Adams.
Title: Senior Vice President
TENANT:
INDUS INTERNATIONAL, INC., a California corporation
By: /s/ Henry C. Montgomery
Name: Henry C. Montgomery
Title: Chief Financial Officer
By: /s/ Onagh M Ash
Name: Onagh M. Ash
Title: Executive VP of Sales and Services
EXHIBIT
H
FORM OF LETTER OF CREDIT
[Name of Financial Institution]
Irrevocable Standby
Letter of Credit
No.
Issuance Date:
Expiration Date:
Applicant:
Beneficiary
EOP-60 SPEAR, L.L.C., a Delaware limited liability company
Two North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Ladies/Gentlemen:
We hereby establish our Irrevocable Standby Letter of Credit in your favor for
the account of the above referenced Applicant in the amount of Two Million Two
Hundred Fifty Thousand and 00/100 U.S. Dollars ($2,250,000.00) available for
payment at sight by your draft drawn on us when accompanied by the following
documents:
1. An original copy of this Irrevocable Standby Letter of Credit.
2. Beneficiary's dated statement purportedly signed by one of its officers
reading: "This draw in the amount of __________ U.S. Dollars ($__________ )
under your Irrevocable Standby Letter of Credit No. represents funds due and
owing to us as a result of the Applicant's failure to comply with one or more of
the terms of that certain lease by and between _____________ as landlord, and
____________________as tenant."
.It is a condition of this Irrevocable Standby Letter of Credit that it will be
considered automatically renewed for a one year period upon the expiration date
set forth above and upon each anniversary of such date, unless at least sixty
(60) days prior to such expiration date or applicable anniversary thereof, we
notify you in writing by certified mail, return receipt requested, that we elect
not to so renew this Irrevocable Standby Letter of Credit. A copy of any such
notice shall also be sent to: Equity Office Properties Trust, 2 North Riverside
Plaza, Suite 2200, Chicago, IL 60606, Attention: Senior Vice
President-Treasurer. In addition to the foregoing, we understand and agree "that
you shall be entitled to draw upon this Irrevocable Standby Letter of Credit in
accordance with 1 and 2 above in the event that we elect not to renew this
Irrevocable Standby Letter of Credit and, in addition, you provide us with a
dated statement proportedly signed by one of Beneficiary's officers stating that
the Applicant has failed to provide you with an acceptable substitute
irrevocable standby letter of credit in accordance with the terms of the above
referenced lease. We further acknowledge and agree that: (a) upon receipt of the
documentation required herein, we will honor your draws against this Irrevocable
Standby Letter of Credit without inquiry into the accuracy of Beneficiary's
signed statement and regardless of whether Applicant disputes the content of
such statement; (b) this Irrevocable Standby Letter of Credit shall permit
partial draws and, in the event you elect to draw upon less than the full stated
amount hereof, the stated amount of this Irrevocable Standby Letter of Credit
shall be automatically reduced by the amount of such partial draw; and (c) you
shall be entitled to assign your interest in this Irrevocable Standby Letter of
Credit from time to time without our approval and without charge. In the event
of an assignment, we reserve the right to require reasonable evidence of such
assignment as a condition to any draw hereunder.
This Irrevocable Standby Letter of Credit is subject to the Uniform Customs and
Practice for Documentary Credits (1993 revision) ICC Publication No.500.
We hereby engage with you to honor drafts and documents drawn under and in
compliance with the terms of this Irrevocable Standby Letter of Credit.
All communications to us with respect to this Irrevocable Standby Letter of
Credit must be addressed to our office located at
___________________________________ to the attention of
_________________________
Very truly yours,
[name]
[title} |
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made as of September 8,
2000, by and between The Dixie Group, Inc., a Tennessee corporation ("Dixie"),
and Royce R. Renfroe (the "Secured Party").
W I T N E S S E T H
:
WHEREAS, Dixie has purchased from the Secured Party all of his shares of the
Class A Common Stock (the "Stock") of Fabrica International, a California
corporation ("Fabrica"), in accordance with that certain Amended and Restated
Stock Purchase Agreement dated as of September 8, 2000 by and among Dixie, the
Secured Party, Scott D. Guenther, the Albert A. Frink and Denise Frink
Charitable Remainder Unitrust and the Albert A. Frink Loving Trust (the "Fabrica
Stock Purchase Agreement");
WHEREAS, Dixie is obligated to make a Contingent Sales Payment (as defined in
the Fabrica Stock Purchase Agreement) to the Secured Party under the Fabrica
Stock Purchase Agreement in the event the Sales Contingency is satisfied under
the Fabrica Stock Purchase Agreement; and
WHEREAS, Dixie desires to pledge to and grant a security interest in the Stock
to the Secured Party to secure the payment of the Contingent Sales Payment in
the event the Sales Contingency is satisfied (such payment being the
"Obligation");
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Dixie hereby agrees with the Secured Party as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to them in the Fabrica Stock Purchase Agreement.
2. Pledge. As collateral security for the prompt payment and performance in full
when due, if ever, of the Obligation, Dixie hereby hypothecates, pledges and
assigns and transfers to the Secured Party, and grants to the Secured Party, a
security interest in all of Dixie's right, title and interest in, to and under,
or as holder of, the following property, whether now owned or hereafter acquired
(all being collectively referred to herein as the "Collateral"):
(a) the Stock, together with the certificate or certificates evidencing the
same;
(b) all securities, monies or property representing a distribution in respect of
the Stock (a "Distribution"), or return of capital upon or in respect of the
Stock, or resulting from a revision, reclassification or other like change of
the Stock or otherwise received in exchange therefor by merger or otherwise, any
subscription, warrants, rights or options issued to Dixie, or otherwise in
respect of, the Stock and any certificates, accounts, chattel paper,
instruments, general intangibles, cash, books, records, notices and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for the Stock or any Distribution; provided, however,
that so long as no Event of Default has occurred and is continuing, all sums or
property paid, declared or distributed with respect to the Stock, including all
dividends declared with respect to the Stock, shall be the property of Dixie and
shall not be subject to the terms of this Agreement, and the Secured Party shall
have no security interest therein; and
(c) all proceeds of the foregoing.
3. Voting Rights. So long as no Event of Default has occurred and is continuing,
Dixie shall be entitled to vote the Stock and shall be entitled to all rights,
provisions and options of ownership with respect thereto, except for the right
to encumber, to take possession or to transfer ownership of said Stock or
proceeds thereof.
4. Default by Dixie. The occurrence of any one or more of the following events,
acts or occurrences shall, at the option of the Secured Party, constitute an
"Event of Default" under this Agreement:
(a) Dixie shall fail to pay the Contingent Sales Payment when such amount is due
and such failure shall continue for five (5) or more business days following
written notice thereof from the Secured Party to Dixie;
(b) Dixie shall commence a voluntary case concerning itself under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Dixie (each, a "Bankruptcy Law"); an involuntary
case is commenced against Dixie under a Bankruptcy Law which is not controverted
by Dixie within 30 days, or is not dismissed within 90 days, after the
commencement of the case; a custodian, receiver or liquidator is appointed for,
or takes charge of, all or substantially all of the property of Dixie; Dixie
commences any other proceeding under any Bankruptcy Law, or there is commenced
against Dixie any such proceeding which remains undismissed for a period of 90
days; Dixie is adjudicated insolvent or bankrupt; any order of relief or other
order approving any such case or proceeding is entered; Dixie suffers any
appointment of any custodian, receiver or liquidator or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 90 days; or Dixie makes a general assignment for the benefit of
creditors; or
(c) Dixie shall materially breach any covenant contained in this Agreement and
such breach shall continue for five (5) or more business days following written
notice thereof from the Secured Party to Dixie.
5. Rights and Duties of the Secured Party. The Secured Party shall have all the
rights and duties, subject to Section 13, with respect to the Collateral as a
secured party has with respect to collateral under the California Uniform
Commercial Code (the "UCC"), and the Secured Party, in exercising or observing
such rights and duties, shall act in accordance therewith. Notwithstanding
anything contained herein or in the UCC to the contrary, the Secured Party shall
have all rights with respect to the Collateral as collateral upon the occurrence
of an Event of Default, including, without limitation, the retention of the
Collateral and/or the right to all proceeds upon foreclosure of the Collateral
by the Secured Party. Without limiting the foregoing, upon the occurrence of an
Event of Default the Secured Party may elect to retain the Collateral without
effecting a sale thereof, upon which election all of Dixie's right, title and
interest in and to the Collateral shall automatically vest in the Secured Party.
If upon the occurrence of an Event of Default the Secured Party determines to
sell any of the Collateral, Dixie shall do all things that are necessary or
advisable or that the Secured Party may reasonably request to cause such sale of
such Collateral to be exempt from registration under the Securities Act of 1933,
as amended, and under state securities laws.
6. No Disposition, Etc. Without the prior written consent of the Secured Party,
Dixie agrees that Dixie will not sell, assign, transfer, exchange, convert, or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, nor will Dixie create, incur or permit to exist any Lien (as
hereinafter defined) with respect to any of the Collateral, except for the Lien
provided for by this Agreement. Without the prior written consent of the Secured
Party, Dixie agrees that Dixie will not vote to enable any Person or any agent
or representative of any Person, to, and will not otherwise permit any Person,
or any agent or representative of any Person, to, issue any stock or other
securities of any nature in addition to or in exchange or substitution for the
Stock.
7. Termination of Security Interest. The Secured Party's security interest in
the Collateral shall terminate upon the earlier of (i) the date of Dixie's
payment and performance in full of the Contingent Sales Payment or (ii) July 1,
2003 if the Sales Contingency is not satisfied; provided, however, that if on
July 1, 2003 a dispute between Dixie and the Secured Party exists as to whether
the Sales Contingency has been satisfied, the Secured Party's security interest
in the Collateral shall continue and shall not terminate until such dispute has
been resolved in accordance with the terms of the Stock Purchase Agreement
whereupon (a) if the resolution of the dispute is that the Sales Contingency has
been satisfied, the Secured Party's security interest in the Collateral shall
terminate upon Dixie's payment and performance in full of the Contingent Sales
Payment or (b) if the resolution of the dispute is that the Sales Contingency
has not been satisfied, the Secured Party's security interest in the Collateral
shall immediately terminate. Upon termination of the Secured Party's security
interest under this Section 7, the Secured Party shall promptly deliver the
Collateral to Dixie, including all certificates or other instruments evidencing
the Collateral.
8. Further Assurances. Dixie and the Secured Party agree that at any time and
from time to time upon the written request of the other, they will execute and
deliver such further documents and do such further acts and things as the other
party may reasonably request in order to effect the purposes of this Agreement.
Dixie agrees to execute a uniform commercial code financing statement, as
debtor, with Secured Party, as secured party, covering the Collateral and to
cause the same to be filed in the applicable filing office in Tennessee and
maintained as an effective financing statement.
9. Governing Law; Submission to Jurisdiction; Arbitration.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without regard to principles of conflict of
laws. The parties hereto hereby declare that it is their intention that this
Agreement shall be regarded as made under the laws of the State of California
and that the laws of said State shall be applied in interpreting its provisions
in all cases where legal interpretation shall be required.
(b) Any dispute between the parties concerning this Agreement shall be submitted
to binding arbitration before a single arbitrator in accordance with the
following provisions:
(i) If a dispute arises concerning this Agreement, the dispute shall be resolved
through binding and non----appealable arbitration pursuant to the Commercial
Arbitration Rules of the American Arbitration Association (the "Rules"), except
where the Rules conflict with the provisions of this Section 9(b), in which
event the provisions of this Section 9(b) shall prevail. The arbitration shall
be before one (1) arbitrator selected by the parties, or if the parties cannot
agree upon a single arbitrator within thirty (30) days of a party giving notice
to the other of a proposed choice for an arbitrator, then by a single arbitrator
selected by the New York City office of the American Arbitration Association,
who shall be a person (i) who is admitted to practice law in the State of New
York, (ii) who is a partner in a law firm having at least one hundred attorneys,
and (iii) who is familiar with the terms of stock pledges entered into in the
context of acquisitions. Any arbitrator so appointed shall be neutral and
subject to disqualification for the reasons specified in Section 19 of the
Rules.
(ii) Unless the arbitrator decides to the contrary, each party shall pay the
fees of his or its own attorneys, expenses of witnesses and all other expenses
connected with the preparation and presentation of such party's case. The cost
of the arbitration, including the cost of the record or transcripts thereof, if
any, administrative fees, and all other fees involved, shall be shared equally,
unless the arbitrators otherwise direct.
(iii) The parties agree to request that the arbitrator appointed pursuant to the
procedure agreed upon above shall, as soon as reasonably practicable after his
or her appointment, and after consultation with the parties, set an arbitration
date of no later than thirty (30) days after his or her appointment. If that
arbitrator is unable to conduct the arbitration during such 30----day period
then the parties shall select a new arbitrator in accordance with Section
9(b)(i).
(iv) The arbitration shall be conducted pursuant to the Rules, as then in
effect. Without limitation of the arbitrator's general authority, the arbitrator
shall have the right to order reasonable discovery in accordance with the
California Rules of Civil Procedure. Conformity to the legal rules of evidence
shall not be required in the arbitration. At any oral hearing of evidence in
connection with the arbitration, each party thereto or its legal counsel shall
have the right to examine its witnesses and to cross----examine the witnesses of
any opposing party. No evidence of any witness shall be presented in written
form unless the opposing party shall have the opportunity to cross----examine
such witness, except as the parties to the dispute otherwise agree in writing or
except under extraordinary circumstances where the interests of justice require
a different procedure.
(v) The decision of the arbitrator shall be binding upon all parties and no
appeal may be taken therefrom; provided, however, that no decision by such
arbitrator shall include the award of punitive damages. The decision of the
arbitrator shall be enforced and honored by the parties hereto without the
necessity of confirmation by a court. The parties hereby waive, to the extent
permitted by law, any rights to appeal or to review of any such decision by any
court or tribunal.
(vi) This arbitration shall be conducted in New York, New York. In the event a
party desires to obtain judicial confirmation of an arbitration award, the
parties consent to the exclusive jurisdiction of the appropriate state court in
New York, New York for the entry and enforcement of a judgment upon any
arbitration award rendered in connection with any state law, and of the United
States District Court for the Southern District of New York, for the entry and
enforcement of judgment upon any arbitration award rendered in connection with
any federal law, and the parties agree to both subject matter and in personam
jurisdiction for those purposes.
(vii) Notwithstanding any provision of this Section 9(b), the requirement to
arbitrate disputes under this Section shall not apply to any application for
interim injunctive or other equitable relief from any court of competent
jurisdiction with respect to this Agreement or any matter it contemplates.
10. Representations, Warranties and Covenants of Dixie. Dixie represents and
warrants that:
(a) it is the legal, record and beneficial owner of, and has good and marketable
title to, the Collateral, subject to no Lien (except the Lien created by this
Agreement);
(b) it has full power, authority and legal right to pledge all of such
Collateral pursuant to this Agreement and to execute and deliver and perform
each of its obligations under this Agreement;
(c) this Agreement is the legal, valid and binding obligation of Dixie,
enforceable against Dixie in accordance with the terms hereof;
(d) this Agreement creates, as security for Dixie's performance of the
Obligations, a valid, enforceable and perfected Lien on the Collateral
(including, without limitation, the Stock), subject to no Lien in favor of any
other Person;
(e) to Dixie's knowledge, no consent, filing, recording or registration is
required to perfect the Lien purported to be created by this Agreement except as
provided in Section 9; and
(f) it will defend the Secured Party's right, title and Lien in and to the
Collateral against any and all claims and demands whatsoever.
As used in this Agreement, "Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the Uniform Commercial Code or any other similar recording or notice statute,
and any lease having substantially the same effect as any of the foregoing).
11. Time of the Essence; Exercise of Remedies. Time and exactitude of each of
the terms, obligations, covenants and conditions set forth in this Agreement
shall be of the essence. The rights, powers and remedies given to the Secured
Party pursuant to this Agreement shall be in addition to all rights, powers and
remedies given to the Secured Party by virtue of any statute, rule of law, or
any other agreement between Dixie and the Secured Party. Any forbearance or
failure or delay by the Secured Party in exercising any right, power or remedy
hereunder shall not preclude the further exercise thereof. Every right, power
and remedy of the Secured Party shall continue in full force and effect until
such right, power or remedy is specifically waived by an instrument in writing
executed by the Secured Party. The taking of any action by the Secured Party
shall not be deemed to be an election of the action, but rather the rights,
powers and remedies given to the Secured Party by this Agreement shall be deemed
cumulative, the one with the other, and not alternative.
12. Limits on the Secured Party's Duties. The Secured Party shall not be liable
for any failure to collect or realize upon any or all of the Collateral, or for
any delay in so doing, nor shall the Secured Party be under any duty to take any
action whatsoever with regard thereto. The Secured Party shall use reasonable
care in the custody and preservation of any Collateral in its possession. The
Secured Party shall have no duty to comply with any recording, filing, or other
legal requirements necessary to establish or maintain the validity, priority or
enforceability of, or the Secured Party's rights in or to, any of the
Collateral. Neither this Agreement nor the exercise by the Secured Party of (or
the failure to so exercise) any right, power, or remedy conferred herein or by
law shall be construed as relieving Dixie from full liability for the
Obligations and for any deficiency thereon.
13. Non----Judicial Remedies. THE SECURED PARTY MAY ENFORCE ANY RIGHTS CONFERRED
HEREUNDER WITHOUT PRIOR JUDICIAL PROCESS OR JUDICIAL HEARING, AND DIXIE
EXPRESSLY WAIVES, RENOUNCES AND KNOWINGLY RELINQUISHES ANY AND ALL LEGAL RIGHTS
WHICH MIGHT OTHERWISE REQUIRE THE SECURED PARTY TO ENFORCE ITS RIGHTS BY
JUDICIAL PROCESS. IN SO PROVIDING FOR NON----JUDICIAL REMEDIES, DIXIE RECOGNIZES
AND CONCEDES THAT SUCH REMEDIES ARE CONSISTENT WITH AND RESPONSIVE TO COMMERCIAL
NECESSITY, AND ARE THE RESULT OF BARGAINING AT ARM'S LENGTH. NOTHING HEREIN IS
INTENDED TO PREVENT THE SECURED PARTY FROM RESORTING TO ARBITRATION IN
ACCORDANCE WITH THIS AGREEMENT.
14. Dixie's Waivers. Dixie hereby waives, to the extent permitted by applicable
law:
(a) any right to require the Secured Party to proceed against any person or to
proceed against or exhaust any other security held by the Secured Party at any
time or to pursue any other remedy in the Secured Party's power before
proceeding against Dixie or before proceeding against the Collateral;
(b) the defense of the statute of limitations in any action under this Agreement
or for the collection of any indebtedness or the performance of any obligation
hereby secured;
(c) any defense based upon any legal disability or other defense of Dixie, any
other guarantor or any other person or by reason of the cessation or limitation
of the liability of Dixie or any other guarantor from any cause other than
payment in full of the obligations under this Agreement;
(d) any defense based upon any lack of authority of the directors, officers,
agents or employees acting or purporting to act on behalf of Dixie;
(e) any defense based upon any failure by the Secured Party to obtain any
Collateral or failure by the Secured Party to perfect a Lien on any Collateral;
(f) presentment, demand, protest and notice of any kind;
(g) any defense based upon any failure of the Secured Party to give notice of
the disposition of any of the Collateral to any other person or entity or any
defect in any notice that may be given in connection with any such disposition;
(h) any defense based upon any failure of the Secured Party to comply with
applicable laws in connection with the disposition of the Collateral;
(i) any defense based upon any election by the Secured Party, in any bankruptcy
proceeding, of the application or non----application of Section 1111(b)(2) of
the United States Bankruptcy Code or any successor statute;
(j) any defense based upon any agreement or stipulation entered into by the
Secured Party with respect to the provision of adequate protection in any
bankruptcy proceeding;
(k) any defense based upon any borrowing or any grant of a security interest
under Section 364 of the United States Bankruptcy Code;
(l) any defense based upon the avoidance of any security interest in favor of
the Secured Party for any reason; and
(m) any defense based upon any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding,
including any discharge of, or bar or stay against collecting, the Obligations.
15. Waiver of Claims. Except as otherwise provided in this Agreement, DIXIE
HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL
HEARING IN CONNECTION WITH THE SECURED PARTY'S TAKING POSSESSION OR THE SECURED
PARTY'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY
AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY
SUCH RIGHT WHICH PLEDGOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY
STATUTE OF THE UNITED STATES OR OF ANY STATE, and Dixie hereby further waives,
to the extent permitted by law (a) all damages occasioned by such taking of
possession except any damages which are the direct result of the Secured Party's
gross negligence or willful misconduct, (b) all other requirements as to the
time, place and terms of sale or other requirements with respect to the
enforcement of the Secured Party's rights hereunder and (c) all rights of
redemption, appraisement, valuation, stay, extension or moratorium now or
hereafter in force under any applicable law in order to prevent or delay the
enforcement of this Agreement or the absolute sale of the Collateral or any
portion thereof, and Dixie, for itself and all who may claim under it, insofar
as it or they now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any of the Collateral shall operate to divest all right, title, interest, claim
and demand, either at law or in equity, of Dixie therein and thereto, and shall
be a perpetual bar both at law and in equity against Dixie and against any and
all persons claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, from, through and under Dixie.
16. Discontinuance of Proceedings. In case the Secured Party shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Secured Party, then and in every such case Dixie and the Secured Party
shall be restored to their former positions and rights hereunder with respect to
the Collateral subject to the pledge created under this Agreement, and all
rights, remedies and powers of the Secured Party shall continue as if no such
proceeding had been instituted.
17. Indemnification.
(a) Dixie agrees to indemnify, reimburse and hold the Secured Party harmless
from any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses or disbursements (including
reasonable attorneys' fees and expenses) (for the purposes of this Section, the
foregoing are collectively called "expenses") of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Secured Party in any way
relating to or arising out of the enforcement of any of the terms of or the
preservation of any rights under any this Agreement; provided that the Secured
Party shall not be indemnified pursuant to this Section for expenses to the
extent caused by the gross negligence or willful misconduct of the Secured
Party. Dixie agrees that upon written notice by the Secured Party of any
assertion that could give rise to an expense, Dixie shall assume full
responsibility for the defense thereof. The Secured Party agrees to use its best
efforts to promptly notify Dixie of any such assertion of which the Secured
Party has knowledge.
(b) Without limiting the application of Section 17(a), Dixie agrees to pay or
reimburse the Secured Party for any fees, costs and expenses incurred by the
Secured Party in order to create, perfect and/or preserve the Secured Party's
Lien on, and security interest in, the Collateral hereunder.
18. No Assignment. Neither this Agreement nor any rights, benefits or
obligations hereunder, may be assigned, directly, indirectly, voluntarily or by
operation of law, by any party to this Agreement.
19. Notices. All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party; overnight courier;
registered or certified mail, return receipt requested, postage prepaid; or
facsimile transmission addressed as follows:
If to Secured Party:
Royce R. Renfroe
2801 Pullman Street
Santa Ana, California 92705
with a copy to:
White & Case LLP
633 West Fifth Street, 19th Floor
Los Angeles, California 90071
Attention: Neil W. Rust
Telecopier No.: (213) 687----0758
If to Dixie:
Attention:
Facsimile:
The Dixie Group, Inc.
1100 South Watkins Street
Chattanooga, Tennessee 37404
Daniel K. Frierson
423----493----7442
With a copy to:
Witt, Gaither & Whitaker, P.C.
1100 SunTrust Bank Bldg.
Chattanooga, Tennessee 37402
Attention: Ralph M. Killebrew, Jr.
Telecopier No.: (423) 266----4138
or to such other address as either party shall have famished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
20. Severability. If any provision of this Agreement is found in binding
arbitration or by a court or other tribunal of competent jurisdiction to be
invalid or unenforceable, the attempt shall first be made to read the provision
in such a way as to make it valid and enforceable in light of the parties'
apparent intent as evidenced by this Agreement. If such reading is impossible,
the tribunal having jurisdiction may revise the provision in any reasonable
manner, to the extent necessary to make it binding and enforceable. If no such
revision is possible, the offending provision shall be deemed stricken from the
Agreement, and every other provision shall remain in full force and effect.
21. Waivers. The Secured Party's or Dixie's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a waiver of such
provision or any other provision thereof. Any waiver of any provision of this
Agreement shall be valid only if set forth in an instrument in writing signed on
behalf of the party making the waiver. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall much waiver constitute a
continuing waiver unless otherwise expressly provided.
22. Entire Agreement; Modification. This Agreement and the Stock Purchase
Agreement contain the entire understanding of Dixie and Secured Party with
respect to the granting of any security interest in the Collateral to the
Secured Party. This Agreement may be modified only in a writing signed by both
parties.
23. Construction. The parties have participated collectively in negotiating and
drafting this Agreement. If a question concerning intent or interpretation
arises, no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of authorship. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all related rules and
regulations unless the context requires otherwise.
24. Counterparts. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument. In
proving this Agreement in any proceeding, it shall not be necessary to produce
or account for more than one such counterpart signed by the party against whom
such enforcement is sought. Any signature delivered by a party by facsimile
transmission shall be deemed to be an original signature hereto.
IN WITNESS WHEREOF, Dixie and the Secured Party have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
DIXIE:
THE DIXIE GROUP, INC.
By:
_________________________________
Name: Daniel K. Frierson
Title: Chairman and CEO
SECURED PARTY:
_________________________________
Royce R. Renfroe
|
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EXHIBIT 10.16
THIRD AMENDMENT TO
ONE THOUSAND BROADWAY BUILDING LEASE AGREEMENT
By and Between
One Thousand Broadway Building Limited Partnership
And
This Third Amendment is entered into and executed by ONE THOUSAND BROADWAY
BUILDING LIMITED PARTNERSHIP ("Landlord"), and PREVIEW SYSTEMS, INC. a Delaware
Corporation ("Tenant").
RECITALS
A.Landlord and Tenant's predecessor have previously entered into an agreement to
lease space in the One Thousand Broadway office building which lease was dated
July 3, 1996, and amended on November 26, 1996 and November 4, 1997, covering
the following premises:
Approximately 11,578 rentable square feet of space (the "Premises") and situated
on the eighteenth (18th) floor and 6,224 rentable square feet situated on the
seventeenth (17th) floor of the One Thousand Broadway Building (the "Building")
located at Lots 5, 6, 7 and 8, Block 182, City of Portland, in the City of
Portland, County of Multnomah, State of Oregon, the Premises being more
particularly described in the Lease to which reference is here made for all
purposes.
B.Portland Software, Inc. has since execution of the original Lease and First
and Second Amendments been succeeded by Preview Systems, Inc.
C.Tenant has requested and Landlord has agreed to expand Tenant into additional
space on the 17th floor as indicated on the attached Exhibit A.
D.Unless otherwise indicated, all capitalized terms used herein shall have the
same meanings as are attributed thereto in the Lease.
NOW, THEREFORE, Landlord and Tenant desire to amend the Lease to evidence
their agreement with respect to the foregoing:
TERMS AND CONDITIONS
1.Premises: Tenant agrees to expand into approximately 3,019 rentable square
feet as of October 1, 2000 or as soon as the required tenant improvements are
completed and the subject space is available for occupancy, resulting in a total
of 20,821 rentable square feet.
2.Tenant Improvements: Landlord has agreed to provide Tenant with an allowance
of $3.50 per rentable square foot ($10,566.50) to improve the subject space.
3.Base Rent: Effective October 1, 2000, or as soon as the required tenant
improvements are completed and the expansion space is available for occupancy,
the monthly base rent charges will be as follows:
Existing Premises
--------------------------------------------------------------------------------
Expansion Premises
--------------------------------------------------------------------------------
Total
--------------------------------------------------------------------------------
October 2000—February 2002: $ 29,782.47 $ 6,038.00; ($24.00 psf ) $
35,820.47 March 2002—December 2002: $ 33,378.75 $ 6,038.00; ($24.00 psf ) $
39,416.75
--------------------------------------------------------------------------------
4.Tenant's Percentage of Operating Expenses: Tenant's percentage of operating
expenses will be adjusted as follows:
Existing Premises
--------------------------------------------------------------------------------
Expansion Premises
--------------------------------------------------------------------------------
Total
--------------------------------------------------------------------------------
7.41% 1.26 % 8.67 %
5.Base Year for Operating Expenses: The base year for operating expenses for the
expansion space shall be the 2000 calendar year.
6.Parking: Landlord will provide Tenant with two (2) additional parking stalls
in the building at the then current market rate; total parking stalls after the
expansion is completed will total sixteen (16) spaces.
Executed in multiple counterparts, effective as of the day
of , 2000.
LANDLORD: TENANT:
One Thousand Broadway Building Limited
Preview Systems, Inc. Partnership, an Oregon limited partnership By:
--------------------------------------------------------------------------------
By: 1000, Inc., General Partner
Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
By:
--------------------------------------------------------------------------------
Thomas P. Moyer, President
--------------------------------------------------------------------------------
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THIRD AMENDMENT TO ONE THOUSAND BROADWAY BUILDING LEASE AGREEMENT By and Between
One Thousand Broadway Building Limited Partnership And
RECITALS
TERMS AND CONDITIONS
|
May 17, 2001
Jim Jones
Vice President and Treasurer
LSB Industries
16 South Pennsylvania Ave
Oklahoma City, OK 73107
Dear Mr. Jones:
Reference is made to that certain Loan and Security Agreement dated October 31,
1994, as amended (the "Agreement") between DSN Corporation, ("Debtor"), and the
CIT Group/Equipment Financing, Inc. ("CIT"). Debtor has advised CIT that LSB
Industries Inc., a guarantor of Debtor's obligation to CIT was not in compliance
with certain covenants as of December 31, 2000.
Debtor has requested, that notwithstanding anything to the contrary in the
Agreement, that CIT waive the instances of non-compliance through April 1, 2002.
CIT hereby waives, as of this date, the instances of non-compliance under the
Agreement, under the following condition:
a) receipt of a $3,000.00 processing fee.
All other terms, conditions and agreements under the Loan Agreement, together
with all schedules, attachments and amendments thereto shall remain in full
force and effect. Please note that CIT's willingness to waive this particular
covenant violation should not be interpreted as CIT's agreement or willingness
to waive any further breach or violation of the Agreement.
Sincerely,
The CIT Group Equipment Financing Inc.
By: /s/ Anthony Joseph
Title: V.P.
Acknowledged and Agreed to
LSB Industries, Inc.
By: /s/ Jim D. Jones
Title: Vice President
|
Exhibit 10.9
MASTER SUPPORT AGREEMENT
This Master Support Agreement (“Agreement”) is made and entered into 6-15-00
(“Effective Date”) by and between Sun Microsystems, Inc., a Delaware
corporation, located at 901 San Antonio Road, Palo Alto, California 94303
(“Sun”) and Inprise, Inc. located at 100 Enterprise Way, Scotts Valley, CA 95066
(“Customer”).
This Agreement sets forth the terms under which Customer purchases technical
support from Sun and Sun delivers such support to Customer. The specific
technical support provided is set forth in the Program Modules (as defined
below).
The parties have caused this Agreement to be executed by their authorized
representatives.
Sun Microsystems, Inc. Customer: By: /s/ Richard M. Larsen By: /s/
Edward M. Shelton
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Name: LARSEN Name: Edward M. Shelton
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(printed or typed) (printed or typed) Title: DIRECTOR Title: Sr.
V.P. Business Development
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date: 6/15/00 Date: 6/3/2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The parties agree as follows:
TERMS AND CONDITIONS
1.0
DEFINITIONS
1.1 “Confidential Information” means (i) all technical information and any
source code which Sun discloses to Customer under this Agreement, (ii) that
technical information of Customer or business information of either party
disclosed to the other pursuant to this Agreement which is designated as
“confidential” (or with words of similar meaning) in writing by the disclosing
party, or if disclosed orally, designated as “confidential” (or with words of
similar meaning) prior to disclosure.
1.2 “Customer Contact” means employees of Customer designated to access
Support from Sun and coordinate Support activities with Customer.
1.3 “Customer Site” means the Customer facility physically located at the
address identified in Attachment A.
1.4 “Distributor” means an entity that distributes Customer’s products and
which is under a contractual obligation to Customer as set forth in this
Agreement.
1.5 “End User” means the entity to whom the binary code license included
with the Supported Products and Technologies applies and to whom Customer and/or
Distributors furnish the binary products for use on or with Customer’s products
for internal use and not for resale, marketing, or leasing.
1.6 “Error” means any reproducible failure of a Supported Product to
perform its intended functions or any significant inaccuracies in associated
end-user documentation.
1.7 “Error Corrections” means a modification, addition, procedure, routine
or work-around intended to correct the practical adverse effects of an Error.
1.8 “Incident” means a request for Support for a specific technical issue
that is initiated by Customer by telephone, fax, e-mail, or internet
communications as specified in the applicable Program Module. A request that
raises multiple technical issues will generate multiple Incidents.
1.9 “Incident Pack” means the maximum number of Incidents during the term
of this Agreement that a Customer initiates.
1.10 “Program Module” means the attachments to this Agreement which describe
the features and terms of Support. Certain Program Modules require Customer to
execute an additional Program Module to add a Supported Product or Technology.
In such cases, the additional Program Modules will become incorporated by
reference herein when executed by the parties.
1.11 “Project Team” means a group of development engineers organized to work
together on a common set of objectives or issues that results in a finished
product.
1.12 “Software License” and “Technology License” mean an agreement in effect
with Sun or any of its affiliated companies at the time of an Incident and
pursuant to which, Customer has been granted at a minimum the right to use or
distribute Supported Products and Technologies in binary form.
1.13 “Support” means Sun technical support described in the Program Modules
including any software, technical data and documentation.
1
--------------------------------------------------------------------------------
1.14 “Supported Product(s) and Technology(ies)” means a Sun supported
product or technology licensed to Customer pursuant to a Software License or a
Technology License and for which Customer has paid the appropriate Support fee.
2.0
TERM AND TERMINATION
2.1 Term and Termination. This Agreement will commence upon the Effective
Date and remain in effect for a period of one (1) year. Thereafter, the
Agreement may be renewed by mutual written agreement of the parties, or for a
subsequent additional year upon timely payment of Sun’s invoice for such year.
Either party may terminate this Agreement by written notice (i) immediately,
upon material breach by the other party of the confidentiality provisions of
this Agreement; or (ii) if the other party fails to cure any material remediable
breach within thirty (30) days of receipt of written notice of the breach.
2.2 Effect of Termination. Upon termination or expiration of this
Agreement, Customer must discontinue use of Support and Sun Confidential
Information in its control or possession. Rights and obligations which by their
nature should survive, will remain in effect after termination or expiration of
this Agreement.
2.3 No Liability for Termination. To the fullest extent allowed by any
applicable law, Customer agrees that it will have no rights to damages or
indemnification of any nature due to any expiration or rightful termination of
this Agreement by Sun pursuant to its terms. CUSTOMER EXPRESSLY WAIVES AND
RENOUNCES ANY CLAIM TO COMPENSATION OR INDEMNITIES FOR ANY TERMINATION OF
BUSINESS RELATIONSHIP BY A FOREIGN BUSINESS ENTITY, WHICH MAY EXIST UNDER THE
LAWS OF ANY APPLICABLE JURSIDICTION.
3.0
CONFIDENTIAL INFORMATION
3.1 Obligations. Neither party may disclose Confidential Information or use
it except for the purposes specified in this Agreement. Each party will protect
the confidentiality of Confidential Information to the same degree of care, but
no less than reasonable care, as such party uses to protect its own Confidential
Information. Each party’s obligations regarding Confidential Information will
expire no less than five (5) years from the date of receipt of the Confidential
Information, except for Sun source code which will be protected by Licensee in
perpetuity. Neither party may use Confidential Information except for the
purposes specified in this Agreement.
3.2 Exceptions. The obligations of Section 3.1 will not apply to any
portion of the Confidential Information which a receiving party can demonstrate:
(i) is now, or hereafter through no act or failure to act on the part of the
receiving party becomes, generally known in the software industry; (ii) is
independently developed by the receiving party without use of any manifestations
of the Confidential Information; or (iii) is hereafter rightfully furnished to
the receiving party by a third party without restriction on disclosure.
4.0
PAYMENTS
4.1 Payment Terms. Unless otherwise provided in a Program Module, all
payments under this Agreement are due within thirty (30) days of Sun’s invoice
date. Sun may, at its sole option, immediately terminate or suspend Support in
the event Customer is delinquent in the payment of any invoice from Sun for a
period in excess of thirty (30) days.
4.2 Additional Charges. Any on-Customer Site service performed outside the
scope of this Agreement, will be charged at the then prevailing Sun rates for
labor, travel, lodging and materials. The minimum time charged for any travel
will be four (4) hours including travel time to and from the Customer Site.
4.3 Taxes. All payments required by this Agreement are exclusive of taxes
and Customer agrees to be responsible for the payment of all such taxes
(excluding taxes based on Sun’s income).
5.0
WARRANTIES
Sun warrants that for a period of ninety (90) days from receipt of
software provided under this Agreement, if any, the media on which the software
is furnished will be free of defects in materials and workmanship under normal
use. Customer’s exclusive remedy and Sun’s entire liability under this limited
warranty will be at Sun’s option to repair or replace the software.
6.0
DISCLAIMER OF WARRANTIES
6.1 Disclaimer. Unless specified in this Agreement, all express or implied
conditions, representations and warranties, including any implied warranty of
merchantability, fitness for a particular purpose, or non-infringement, are
disclaimed, except to the extent that such disclaimers are held to be legally
invalid.
6.2 Aircraft Products and Nuclear Applications. Support is not designed or
intended for use in on-line control of aircraft, air traffic, aircraft
navigation or aircraft communications; or in the design, construction, operation
or maintenance of any nuclear facility. Sun disclaims any express or implied
warranty of fitness for such uses. Customer represents and warrants that it will
not use or resell Support for such purposes and that it will use its best
efforts to ensure that its customers and end-users of Support are provided with
a copy of the foregoing notice.
7.0
LIMITATION OF LIABILITY
2
--------------------------------------------------------------------------------
Except for obligations under Section 6.2 (Aircraft Products and
Nuclear Applications) and any applicable Software License or Technology License,
and to the extent not prohibited by applicable law:
A. Each party’s aggregate liability to the other for claims
relating to this Agreement, whether for breach or in tort, will be limited to
the amount paid by Customer for the Support which is the subject matter of the
claims.
B. Neither party will be liable for any indirect, punitive,
special, incidental or consequential damage in connection with or arising out of
this Agreement (including loss of business, revenue, profits, use, data or other
economic advantage), however it arises, whether for breach or in tort, even if
that party has been previously advised of the possibility of such damage.
C. Liability for damages will be limited and excluded, even if
any exclusive remedy provided for in this Agreement fails of its essential
purpose.
8.0
MISCELLANEOUS
8.1 Assignment. Neither party may assign or otherwise transfer any of its
rights or obligations under this Agreement, without the prior written consent of
the other party, except that Sun may assign its right to payment and may assign
this Agreement to an affiliated company.
8.2 Force Majeure. A party is not liable under this Agreement for
non-performance caused by events or conditions beyond that party’s control, if
the party makes reasonable efforts to perform. This provision does not relieve
Customer of its obligation to make payments then owing.
8.3 Notices. All written notices required by this Agreement must be
delivered in person or by means evidenced by a delivery receipt and will be
effective upon receipt.
8.4 Import and Export Laws. All Support delivered under this Agreement is
subject to U.S. Export control laws and may be subject to export or import
regulations in other countries. Customer agrees to comply strictly with all such
laws and regulations and acknowledges that is has the responsibility to obtain
such licenses to export, re-export or import as may be required after delivery
to Customer.
8.5 Waiver. Any express waiver or failure to exercise promptly any right
under this Agreement will not create a continuing waiver or any expectation of
non-enforcement.
8.6 Governing Law. Any action related to this Agreement will be governed by
California law and controlling U.S. federal law. The United Nations’ Convention
on Contracts for the International Sale of Goods and the choice of law rules of
any jurisdiction will not apply.
8.7 Official Language. The official text of this Agreement will be in the
English language and any interpretation or construction of this Agreement will
be based thereon. In the event that this Agreement or any documents or notices
related to it are translated into any other language, the English language
version will control.
8.8 Relationship of the Parties. This Agreement is not intended to create a
relationship such as a partnership, franchise, joint venture, agency, or
employment relationship. Neither party may act in a manner which expresses or
implies a relationship other than that of independent contractor, nor bind the
other party.
8.9 Entire Agreement. This Agreement (including the Program Module(s)) is
the parties’ entire agreement relating to its subject matter. It supersedes all
prior or contemporaneous oral or written communications, proposals, conditions,
representations and warranties and prevails over any conflicting or additional
terms of any quote, order, acknowledgment, or other communication between the
parties relating to its subject matter during the term of this Agreement. No
modification to this Agreement will be binding, unless in writing and signed by
an authorized representative of each party.
3
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ATTACHMENT A-1
JAVA TECHNOLOGY PROGRAM MODULE
(UPDATES AND UPGRADES FOR J2EE)
This Program Module sets forth the Updates and Upgrades (defined
below) program provided by Sun directly to Customer for Supported Products and
Technologies. For purposes of this Program Module, “Technology License” means an
agreement in effect with Sun or any of its affiliated companies at the time of
an Incident and pursuant to which, Customer has been granted at a minimum the
right to use Supported Products and Technology(ies) in source form.
1.0
Supported Products and Technologies:
Java2 Platform, Enterprise Edition (source)
2.0
Definitions
2.1 “Updates” means modifications, variations and enhancements, to the
extent included in a patch or release of the Supported Product or Technology
unless otherwise specified herein, which Sun generally licenses as a part of a
Supported Product or Technology. This term does not include additional reference
implementations or parts of any Java technology unless specifically licensed in
the Technology License.
2.2 “Upgrades” means new versions of the Supported Products and
Technologies designated exclusively by Sun as an “Upgrade” and released by Sun
from time to time.
3.0
Support Features
*Access to Java Technology Licensee Website: On-line access to: Each Supported
Product or Technology in source form, Upgrades, Updates, early access versions
and interim builds of the same. As available, on-line access to: additional
documentation, such as, technology specifications, white papers, and frequently
asked questions (FAQs). Ability to submit, query, edit and retrieve Incident and
Error reports related to Customer’s account and access Error Corrections. All
Java Technology Licensee Website Updates, Upgrades, interim builds and early
access versions related to a Supported Product or Technology shall be made
available to Customer at the same time that other Customers who have purchased
Update and Upgrade Support from Sun for such Supported Product or Technology,
which in some cases, may be earlier than other Customers with a Technology
License from Sun who have not purchased these Support services.
*Learning Modules: Customer shall have access to the learning modules that Sun
makes available from time to time for certain of the Supported Products and
Technologies.
*Response Time: Sun will use reasonable commercial efforts to acknowledge
receipt of service requests related to downloading issues within three (3)
business days. Acknowledgements are measured from the time Customer first
contacts Sun with a service request to the time Sun makes its response.
*Product Release Information and Updates: Periodic description of plans for
Supported Products and Technologies.
*Customer Contacts: One (1) Customer Contact.
*Unique User ID: Sun will provide the Customer Contact with an unique user ID
and password which cannot be transferred to other Customer employees,
contractors or agents.
4.0
Customer Obligations and Exclusions
4.1 Customer Contact. The Customer Contact must be identified in writing to
Sun within thirty (30) days of the Effective Date. The Customer Contact must be
located at Customer Site. Customer must notify Sun’s Licensee Support Engineer
in writing whenever the Customer Contact changes. Sun will not be responsible
for any delays or damages resulting from Customer’s failure to notify Sun of a
change in its Customer Contact.
5.0
Payments
5.1 Fees. In order to receive the Support described in this Program Module,
Customer must pay a Program fee per Supported Product and Technology specified
in this Program Module. Fees will be invoiced annually in advance. Program Fees
shall be non-refundable and shall be due at Sun upon execution of this Agreement
by the parties. The Program Fee for the initial year of Support under this
Program Module is ***** for the single Supported Technology indicated above.
5.2 Additional Supported Products. The term of Support for any additional
Supported Products and Technologies hereunder will be coterminous with the term
of the Agreement. Fees due for such Support will be prorated on a twelve (12)
month basis. The commencement
*****
Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
4
--------------------------------------------------------------------------------
date of additional Support will be the date the parties execute an additional
Program Module for such additional Supported Products and Technologies.
6.0
Customer Site: 100 Enterprise Way, Scotts Valley, CA 95066
Sun Microsystems, Inc. Customer: By: /s/ Richard M. Larsen By: /s/
Edward M. Shelton
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Name: LARSEN Name: Edward M. Shelton
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(printed or typed) (printed or typed) Title: DIRECTOR Title: Sr.
V.P. Business Development
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date: 6/15/00 Date: 6/3/2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5
--------------------------------------------------------------------------------
ATTACHMENT A-2
JAVA TECHNOLOGY PROGRAM MODULE
(JAVA ENGINEERING CONNECTION FOR J2EE)
This Program Module sets forth the Support provided by Sun directly
to Customer for Supported Products and Technologies. For purposes of this
Program Module, “Technology License” means an agreement in effect with Sun or
any of its affiliated companies at the time of an Incident and pursuant to
which, Customer has been granted at a minimum the right to use Supported
Products and Technology(ies) in source form.
1.0
Customer Support Information
1.1
Supported Products and Technologies:
Java2 Platform, Enterprise Edition (source)
1.2
Customer Site:
Address: 100 Enterprise Way
Scotts Valley, CA 95066
2.0
Support Features
*Access to Java Technology Licensee Website: On-line access to: porting guides;
additional documentation (as available), such as, white papers; frequently asked
questions (FAQs), and technology-related informational updates. Ability to
submit, query, edit and retrieve Incident and Error reports related to
Customer’s account and access Error Corrections. Access to contact information
for business and non-technical issues related to the Supported Products and
Technologies. All Java Technology Licensee Website contents related to a
Supported Product or Technology shall be made available to Customer at the same
time that Sun, in its sole discretion, makes it available to Customers with a
Technology License from Sun for that Supported Product or Technology.
*Areas Covered: Architectural advice, Error and Incident tracking, and questions
regarding building a binary version of the Supported Product or Technology for
one of Sun’s reference platforms on the supported hardware and operating system
configurations listed in the product “readme” file. TCK-related Incidents and
Errors are specifically excluded.
*Licensee Support Engineer. Includes the following:
–A Licensee Support Engineer (“LSE”) designated by Sun will serve as a point of
contact for the Customer and assist the Customer in evaluating service levels
and resolving outstanding technical issues related to Supported Products and
Technologies. The LSE will also provide first-hand information about Java
technology source development. The LSE will contact Customer within thirty (30)
days from the Agreement Effective Date to schedule an initial meeting or
conference call, as appropriate. As a result of the initial meeting, the LSE
will produce a Customer Support needs and requirements document which will serve
to guide Sun’s delivery of Support Services to Customer.
–Customer and the LSE may hold further meetings or calls as necessary to
finalize the needs and requirements document for Customer’s project. The LSE and
Customer, at minimum, will meet at the start of any new Customer project
involving the Supported Products and Technologies.
–Each party generally will be responsible for its own travel expenses related to
all meetings. However, Sun in its sole discretion, may agree to pay certain
travel expenses for Customer if a meeting is held at Sun’s facilities.
*Product Release Information: Periodic description of plans for Supported
Products and Technologies.
*Technical Assistance and Support: Access to Sun Java technology support staff
composed of one (1) LSE which Sun will identify to Customer in writing and other
advisory personnel as needed by telephone, e-mail, facsimile and internet
communications to receive up to 20 staff hours per week of debugging advice,
porting assistance and bug or other issue tracking. Customer cannot carry
forward, transfer or obtain a refund for unused support hours. Such Sun
personnel will be available Monday through Friday, excluding Sun holidays.
6
--------------------------------------------------------------------------------
Hours of Support Coverage:
Europe, Middle East and Africa – 8:30AM to 4:30PM United Kingdom time zone.
Americas – 8:00AM to 5:00 PM Pacific time zone
Asia/Pacific – 8:00AM to 5:00PM local time for Singapore.
*Response Time: Sun will use reasonable commercial efforts to acknowledge
receipt of service requests within three (3) business days. Acknowledgments are
measured from the time Customer first contacts Sun with a service request to the
time Sun makes its response.
*Error Corrections: When made generally available by Sun to commercial licensees
of the applicable Java Technology. Also made available in response to an
Incident if Sun, in its sole discretion, deems it appropriate.
*Customer Contacts: Up to three (3) Customer Contacts.
*Unique User ID: Sun will provide the Customer Contacts with a unique user ID
and password which cannot be transferred to other Customer employees,
contractors or agents.
*Product Release Information: Periodic description of plans for Supported
Products and Technologies.
*Technology Forums: Subject to availability and space limitations, Customer may
send up to two (2) employees to attend one (1) technology-specific event
sponsored by Sun during the term of this Agreement at no charge. Sun, at its
option, may charge Customer for attendance at additional technology events
within the Agreement term. These technology events are provided by Sun on a
periodic basis at Sun-designated sites. Customer is responsible for all travel,
lodging and other expenses for its employees attending such events.
3.0
Customer Responsibilities
3.1 Error Corrections. Customer may make identical copies of Error
Corrections for its internal use only. Customer may make no more copies than the
number of Sun authorized copies of the Supported Products and Technologies
permitted in the Technology License. Each copy of an Error Correction made by
Customer must contain a label (a legend, for on-line versions) which includes
the information included on the original copy provided by Sun, including all
applicable copyright and trademark notices.
3.2 Unmodified Supported Product.
A. Binary Code. To the extent portions of a Supported Product or
Technology are provided by Sun in binary form only, Customer may obtain Support
for such binary code portions only if: (i) Customer is requesting Support for an
unmodified portion of the Supported Product or Technology, and (ii) Customer is
able to demonstrate the problem with an unmodified copy of the Supported Product
or Technology to Sun’s satisfaction.
B. Source Code. Customer may obtain Support for the source code
version of the Supported Product or Technology under this Agreement only if: (i)
Customer is requesting Support for an unmodified portion of the Supported
Product or Technology running on platforms then currently supported by Sun and
licensed to Customer in the Technology License; (ii) Customer is able to
demonstrate the problem with an unmodified copy of the Supported Product or
Technology to Sun’s satisfaction; and (iii) Customer makes reasonable efforts to
identify the lines of source code related to a service request. If Customer
cannot correctly identify the lines of source code related to a problem, Sun
will use commercially reasonable efforts to meet the response times described in
this Program Module but will not be obligated to provide Support within such
response times.
3.3 Customer Contacts. Customer Contacts must be identified in writing to
Sun within thirty (30) days of the Effective Date. All Customer Contacts must be
located at the Customer Site. Customer must notify Sun’s Licensee Support
Engineer in writing whenever the Customer Contacts change. Sun will not be
responsible for any delays or damages resulting from Customer’s failure to
notify Sun of a change in its Customer Contacts.
3.4 End User Support. Customer shall provide technical and maintenance
support services to Customer’s Distributors and End Users in accordance with
Customer’s standard support practices. Sun shall not be responsible for
providing any support to Customer’s Distributors and End Users for the Supported
Products and Technologies.
4.0
Exclusions
4.1 Exceptions to Support Obligations. Sun has no obligation to provide
Support under this Program Module, should such Support be required because of:
(i) failure of Supported Product or Technology due to improper use; (ii) any
alterations or modifications not authorized by Sun; (iii) causes external to
Supported Product or Technology, including but not limited to, degrading effects
caused by other software, hardware or environmental factors which prevents
Supported Product or Technology from functioning properly. Support of the source
code version of a Supported Product or Technology will not include writing or
testing new source code, modified source code or device drivers on behalf of the
Customer.
7
--------------------------------------------------------------------------------
4.2 Customer Sites. Support under this Program Module is provided only for
Supported Product or Technology located at the Customer Site. Support for
additional Customer Sites may be purchased from Sun at an additional fee.
4.3 Supported Releases. Support is only available for the most current
release, and in Sun’s sole discretion, one (1) previous version release of the
Supported Product or Technology.
5.0
Payments
In order to receive the Support described in this Program Module,
Customer must pay the Program Fees specified in this Program Module. Fees will
be invoiced annually in advance. Program Fees shall be non-refundable and shall
be due at Sun upon execution of this Agreement by the parties. The Program Fee
for the initial year of Support under this Program Module is ***** for the
single Supported Technology indicated above.
6.0
Additional Supported Products
The term of Support for any additional Supported Products and
Technologies hereunder will be coterminous with the term of the Agreement. Fees
due for such Support will be prorated on a twelve (12) month basis. The
commencement date of additional Support will be the date the parties execute an
additional Program Module for such additional Supported Products and
Technologies.
Sun Microsystems, Inc. Customer: By: /s/ Richard M. Larsen By: /s/
Edward M. Shelton
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Name: LARSEN Name: Edward M. Shelton
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(printed or typed) (printed or typed) Title: DIRECTOR Title: Sr.
V.P. Business Development
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date: 6/15/00 Date: 6/3/2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
*****
Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
8
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ATTACHMENT A-3
JAVA TECHNOLOGY PROGRAM MODULE
(TCK SUPPORT FOR J2EE)
This Program Module sets forth the Support provided by Sun directly
to Customer for the Technology Compatibility Kit (“TCK”) for Supported Products
and Technologies. For purposes of this Program Module, “Technology License”
means an agreement in effect with Sun or any of its affiliated companies at the
time of an Incident and pursuant to which, Customer has been granted, at a
minimum, the right to use Supported Products and Technology(ies) in source form.
1.0
Customer Support Information.
1.1
Supported Products and Technologies:
Java2 Platform, Enterprise Edition (source)
1.2
Customer Product Line(s):
Inprise Application Server
1.3
Customer Site(s): Inprise, Inc.
Address: 100 Enterprise Way
Scotts Valley, CA 95066
2.0
Definitions
2.1 “Product Line” means one (1) or more Customer products that, in
addition to implementing or incorporating the same Supported Product or
Technology, have substantially similar specifications for hardware, software,
processors and other design elements. The Customer Product Lines for which Sun
will provide Support shall be specified in this Program Module.
3.0
Support Features
*Access to TCK: Customer will have on-line access to the TCK for each Supported
Product or Technology in binary and source form, the TCK User Guide, Error
Corrections to the same; frequently asked questions (FAQs) and TCK informational
updates. The TCK for each Supported Product or Technology shall be made
available to Customer at the same time that Sun, in its sole discretion, makes
it available to commercial licensees of that Supported Product or Technology.
*Test Harness Set-Up Support: Customer will submit Incidents and receive Support
related to the TCK test harness set-up via an email alias that Sun will provide
Customer.
*Technical TCK Assistance and Support: Access to an e-mail alias through which
Customer can receive technical assistance related to setting up, running and
interpreting the tests in the TCK, and Error or Incident tracking. Support under
this Program Module will not exceed 5 staff hours per week. Customer cannot
carry forward, transfer or obtain a refund for unused support hours.
Hours of Support Coverage (Monday through Friday, excluding Sun holidays):
Europe, Middle East and Africa – 8:30AM to 4:30PM United Kingdom time zone
Americas – 8:00AM to 5:00 PM Pacific time zone
Asia/Pacific – 8:00AM to 5:00PM local time for Singapore.
In the event Sun requires third-party TCK certification and/or validation, this
Program Module will exclude Incidents related to TCK certification and/or
validation issues.
*Compatibility Logo: Provided that Customer is in compliance with the applicable
Sun trademark license and upon receipt of Customer’s, or a third-party’s (if
required by Sun) certification that the compatibility requirements in the User’s
Guide and the applicable Technology License have been met, Sun personnel will
assist Customer in obtaining the appropriate compatibility and other logos for
each of the Supported Products and Technologies that have fulfilled such
compatibility requirements.
*Response Time: Sun will use reasonable commercial efforts to acknowledge
receipt of service requests within three (3) business days. Acknowledgements are
measured from the time Customer first contacts Sun with a service request to the
time Sun makes its response.
9
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*Customer Product Lines: Support in connection with Customer Product Line(s)
includes any new versions, updates or upgrades to the same created by Customer
during the term of this Program Module.
*Customer Contacts: Up to two (2) Customer Contacts.
*Unique User ID: Sun will provide each Customer Contact(s) with an unique user
ID and password which cannot be transferred to other Customer employees,
contractors or agents.
4.0
Customer Responsibilities
4.1 Customer Contacts. Customer Contacts must be identified in writing to
Sun within thirty (30) days of the Effective Date. All Customer Contacts must be
located at Customer Site. Customer must notify Sun’s Licensee Support Engineer
in writing whenever the Customer Contacts change. Sun will not be responsible
for any delays or damages resulting from Customer’s failure to notify Sun of a
change in its Customer Contacts.
4.2 Compatibility Testing. Customer shall be responsible for running and
passing the TCK tests as required by the Technology License, including
Attachment E of the Sun Community Source License as applicable. Any product
tested or used with the TCK cannot be deployed or distributed unless such
product is subject to and in compliance with a valid Technology License
permitting commercial redistribution.
4.3 No Modifications. Customer shall not modify the source or binary code
of the TCK test suites.
5.0
Exclusions
5.1 Exceptions to Support Obligations. Sun has no obligation to provide
debugging assistance for Customer’s applications under this Program Module.
5.2 Customer Sites. Support under this Program Module is provided only for
TCKs located at the Customer Site. Support for additional Customer Sites may be
purchased from Sun at an additional fee.
5.3 Supported Releases. Support is only available for the most current
release of a TCK, and in Sun’s sole discretion, certain previous version
releases of the TCK for a particular Supported Product or Technology.
6.0
Payments
In order to receive the Support described in this Program Module,
Customer must pay the Program Fees specified in this Program Module. Fees will
be invoiced annually in advance. Program Fees shall be non-refundable and shall
be due at Sun upon execution of this Agreement by the parties. The Program Fee
for the initial year of Support under this Program Module is ***** for the
single Supported Technology indicated above.
7.0
Additional Supported Products
The term of Support for any additional Supported Products and
Technologies hereunder will be coterminous with the term of the Agreement. Fees
due for such Support will be prorated on a twelve (12) month basis. The
commencement date of additional Support will be the date the parties execute an
additional Program Module for such additional Supported Products and
Technologies
Sun Microsystems, Inc. Customer: By: /s/ Richard M. Larsen By: /s/
Edward M. Shelton
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Name: LARSEN Name: Edward M. Shelton
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(printed or typed) (printed or typed) Title: DIRECTOR Title: Sr.
V.P. Business Development
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date: 6/15/00 Date: 6/3/2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
*****
Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
10
-------------------------------------------------------------------------------- |
EXLN CONFIDENTIAL
SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release ("Agreement") is made and entered into this
22nd day of January, 2001 by and between eXcelon Corporation, a Delaware Corporation ("EXLN"); and
Lawrence Alston, an individual residing at 7 Morningside Avenue, Natick, MA 01760 ("Alston").
W I T N E S S E T H T H A T:
WHEREAS, EXLN has employed Alston most recently as Vice President, Product Strategy and
Chief Technology Officer; and
WHEREAS, EXLN and Alston wish to set forth the terms of the termination of Alston's
employment with EXLN;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, EXLN and Alston hereby agree as follows:
1. Alston hereby agrees to resign as Vice President, Product Strategy and Chief Technology
Officer of EXLN, effective as of January 22, 2001 (the "Effective date of Termination"). At the
request of EXLN, Alston will execute and deliver to EXLN a separate instrument embodying such
resignation.
2. EXLN agrees to pay Alston a total amount of $112,500 payable in installments of $7,500
on a semi-monthly basis, less applicable deductions, for a period of seven and one half (71/2)
months in accordance with EXLN's standard payroll policies, and EXLN shall provide Alston with
medical and dental insurance benefits consistent with those provided to Alston immediately prior to
termination, less Alston's applicable contribution, for a period of seven and one half (71/2) months
following the Effective Date of Termination, provided, however, that if Alston becomes re-employed
with another employer and is eligible to receive such insurance benefits under another
employer-provided plan, the insurance benefits set forth herein shall terminate immediately upon the
initialization of such benefits under another employer-provided plan. In addition, EXLN shall pay
Alston his performance bonus amount, pursuant to existing compensation agreements in effect for the
year 2000, less applicable deductions.
3. EXLN agrees that Alston may retain the personal computer provided to him during his
employment with EXLN, provided that Alston agrees and acknowledges by his signature below that (i)
all Confidential Information and material belonging to EXLN, including without limitation all
software, documentation, records, forms, customer lists and data, has been removed and deleted from
such computer; (ii) Alston has ceased any and all utilization of such Confidential Information and
material; and (iii) no copies of such Confidential Information and material have been made.
4. All options which have heretofore been granted to Alston under EXLN's 1997 Nonqualified
Stock Option Plan,1996 Stock Incentive and Nonqualified Stock Option Plan, 1995 Nonqualified Stock
Option Plan, and/or 1996 Employee Stock Purchase Plan (the "Options") shall be exercisable, and
expire, in accordance with their terms in effect as of the date of this Agreement. The Options shall
continue to vest until the Effective date of Termination and no Option or portion thereof shall vest
after the Effective Date of Termination. Notwithstanding the foregoing and anything contrary set
forth in the terms and conditions of the foregoing plans, and subject to the Board of Directors of
EXLN's approval, which approval shall not be unreasonably withheld, Alston shall have the right to
exercise any vested Options, as of the Effective Date of Termination, up until July 22, 2001.
1
EXLN CONFIDENTIAL
5. Alston specifically acknowledges that the payments made and benefits extended hereunder
by EXLN are in lieu of all other benefits and payments which otherwise may have been payable to
Alston as a result of his separation from EXLN under benefit plans or policies of EXLN, including,
without limitation, additional severance, bonus payments and separation pay, and Alston hereby
waives any rights he may have in or to any such other benefits or payments, it being the intention
of the parties hereto to convert and merge all such rights into this Agreement.
6. Alston hereby acknowledges and ratifies his obligations under the NON-COMPETITION,
NON-SOLICITATION, NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT, dated November 19, 1998 between Alston
and EXLN, which is attached hereto and incorporated herein by reference, and further agrees to be
bound by the terms thereof.
7. Alston, for good and valuable consideration the receipt of which is hereby acknowledged,
for himself and his legal representatives, successors, and assigns hereby releases, remises, and
forever discharges EXLN, its subsidiaries and affiliates, and their respective past, present and
future agents, officers, directors, shareholders, attorneys, employees, servants, and
representatives and all of EXLN's heirs, successors, predecessors, and assigns, of and from all
manner of actions, causes of actions, suits, debts, demands, damages, costs, expenses, obligations,
agreements, and claims whatsoever, at law, in equity, or otherwise, known or unknown, which Alston
has or may have, either now or at any time before the date of this Agreement, against EXLN,
including but not limited to any claims arising out of or in any way related to Alston's employment
by EXLN, Alston's resignation as Vice President, Product Strategy and Chief Technology Officer of
EXLN, and/or the termination of Alston's employment by EXLN; provided, however, that any claims that
Alston may make against EXLN for breach of this Agreement are specifically exempted from this
release. Alston acknowledges and agrees that the payments and benefits to be made to Alston pursuant
to this Agreement are over and above any other money or benefits that would be due to Alston under
the terms of his employment with EXLN and EXLN's usual policies and practices.
8. Alston and EXLN hereby agree to be publicly supportive of each other. Alston agrees not
to criticize, disparage or otherwise comment negatively about, orally or in writing, directly or
indirectly, EXLN, its subsidiaries, affiliates or any of their respective past, present or future
officers, directors, employees, agents, businesses, products or services. Alston agrees to use his
best efforts to ensure that none of the members of his family so criticize or disparage any of such
persons or entities. Alston further agrees that he shall be publicly and privately cooperative and
supportive of EXLN in regard to its personnel, corporate practices and policies and other matters.
EXLN agrees not to disparage or make negative statements about Alston and to be publicly and
privately cooperative and supportive of Alston in regard to his transition.
9. Alston agrees that, except as may be required by law or as may be mutually agreed,
Alston will keep the terms and existence of this Agreement completely and strictly confidential, and
that Alston will not hereafter disclose any information concerning this Agreement to anyone, except
to the extent necessary to enforce this Agreement.
10. With the exception of the personal computer set forth above, Alston agrees to return
any and all property, whether tangible or intangible, provided to Alston by EXLN, as a condition
precedent to EXLN's obligations hereunder.
2
EXLN CONFIDENTIAL
11. This Agreement and the NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT, attached hereto, embodies the entire understanding and agreement between the
parties, and supersedes all other oral or written agreements or understandings, between the parties
regarding the subject matter hereof, including without limitation any terms and conditions of any
employment agreement or other similar agreement(s), and it shall be binding and inure to the benefit
of the successors and assigns of each. No change, alteration or modification hereof may be made
except in a writing signed by both parties hereto. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts (disregarding any choice of law rules which may look to the laws of
any other jurisdiction).
12. The parties represent and acknowledge that in executing this Agreement they do not rely
and have not relied upon any other representation or statement made by any person or entity with
regard to the subject matter, basis, or effect of this Agreement, with the sole exception of the
provisions set forth herein. Mistakes of fact or law shall not constitute grounds for modification,
avoidance or rescission of the terms and conditions of this Agreement. The fact that a party or
counsel for a party drafted a provision or provisions of this Agreement shall not cause that
provision or those provisions to be construed against the drafting party.
13. This Settlement may be executed in one or more counterparts, each of which when so
executed shall be deemed an original, but all of which together shall constitute one and the same
instrument.
14. In entering into this Agreement, the parties represent that they have had the
opportunity to seek the advice of legal counsel and that the terms of the Agreement have been
completely read and explained to them and that those terms are fully understood and voluntarily
agreed to.
EXLN: Alston:
eXcelon Corporation Larry Alston
By:_____________________________ By:___________________________
Name:___________________________ Name:_________________________
(Printed or Typed) (Printed or Typed)
Title:____________________________
3
|
AGREEMENT FOR
FINANCIAL PUBLIC RELATIONS SERVICES
THIS AGREEMENT is entered into on this 1st day of January 2001 by and between
Market Pathways Financial Relations Incorporated (hereinafter "MP"), with its
principal place of business at 1920 Main Street, Suite 980, Irvine, California,
92614 and VirtualSellers.com, Inc. (hereinafter "Client"), a British Columbia,
Canada corporation, with its principal place of business at Suite 1000 - 120
North LaSalle Street, Chicago Illinois 60602.
HEREAFTER, the Client and MP are referred to collectively as "Parties", and
singularly as "Party".
WHEREAS, the Parties desire to set forth the terms and conditions under which
services shall be performed.
NOW, THEREFORE, in consideration of these promises of the mutual covenants
herein, the Parties hereto agree as follows:
ARTICLE I - SCOPE OF SERVICES
MP agrees to perform for the Client the financial services described as follows:
(a) MP will develop, implement, and maintain an ongoing stock market support
system with the general objective of expanding stockbroker awareness of the
Client's activities, and hence a commensurate interest in the Client's stock.
This market support system will have a four-part approach:
(i) A SHAREHOLDER COMMUNICATION SYSTEM to keep existing stockholders informed
about the Clients activities and potential.
(ii) A STOCKBROKER / INSTITUTION SUPPORT SYSTEM to build a national network of
stockbrokers, analysts and institutions who are informed about and interested in
the Client.
(iii) AN INVESTOR LEAD GENERATION SYSTEM to develop investor leads for selected
stockbrokers and to assist them in their marketing of the Client's stock.
(iv) A MEDIA RELATIONS SYSTEM to increase corporate visibility through
informational press releases, placement of articles and copy consulting on
annual and quarterly reports.
(b) OPTIONAL SERVICES: Additional projects, such as design and production of
annual and quarterly reports, video or slide presentations, speech writing, and
introductions related to financing or investment banking activities, will be
performed and billed as mutually agreed upon by both Parties on a case by case
basis.
ARTICLE II - PERIOD OF PERFORMANCE
The period of performance under this agreement shall be for a primary term of
one (1) year from the date hereof unless earlier terminated pursuant to the
terms of this Article II. Either Party may terminate this Agreement for any
reason upon ninety days written notice of termination. Subject to the foregoing
provisions of this Article II and unless otherwise specified in any written
notice of termination, this Agreement shall terminate on the first to occur of
the one (1) year anniversary of this Agreement or the ninety-first day following
delivery of a written notice of termination of this Agreement by the terminating
party to the non-terminating party (the "Termination Date").
ARTICLE III - CONTRACTUAL RELATIONSHIP
In performing the services under this Agreement, MP shall operate as, and have
the status of an independent contractor. The Client and MP will be mutually
responsible for determining the means and the methods for performing the
services described in ARTICLE I.
ARTICLE IV - COMPENSATION
As full consideration for the performance of the basic (four-part) services
described above, the Client shall pay MP compensation as follows:
(a) CASH.- $72,000 plus reasonable expenses. Said $72,000 shall be paid monthly
in advance at the rate of $6,000 per month.
(i) Initial payment for the first month shall be due at the time this Agreement
is signed. Following the initial payment, ensuing payments are payable monthly
in advance to MP's principal place of business and are due on the first day of
each month.
(ii) Expenses: Expenses are expected to be approximately $600 per month for
phones and postage. Expenses include, but are not limited to, the following:
travel and lodging;.. telephone, fax, and other communications; fare of public
carrier; photocopy and printing; postage and special mailings. MP agrees to
obtain prior client approval for any single expense over $100. MP shall submit a
monthly invoice to the Client, which covers the monthly fee and reimbursable
expenses.
(b) PRORATED COMPENSATION. If this Agreement is terminated for any reason, the
cash amount due will be prorated to the final date of service under this
Agreement.
ARTICLE V - CLIENT INFORMATION
Since MP must at all times rely upon the accuracy and completeness of
information supplied to it by the Client's officers, directors, agents, and
employees, the Client agrees to indemnify, hold harmless, and defend, MP, its
officers, agents, employees at the Client's expense, in any proceeding or suit
which may arise out of and/or due to any inaccuracy or incompleteness of such
material supplied by the Client to MP.
ARTICLE VI - GRANT OF LICENSE
(a) MP hereby grants a license to the Client, through the duration of this
Agreement, to use MP's exclusive system, lists, manuals and trademarked and
copyrighted materials. Due to the unique and proprietary nature of these systems
and materials, MP will revoke this license upon termination of this Agreement
for any reason and all such materials, and lists must be returned to MP
immediately thereafter and their use by the Client discontinued.
(b) MP agrees that all information disclosed to it about the Client's products,
processes and services are the sole property of the Client and it will not
assert any rights to any confidential or proprietary information or material,
nor will it directly or indirectly, except as required in the conduct of its
duties under this Agreement, disseminate or disclose any such confidential
information; and
(c) Upon termination of this Agreement, MP will return to the Client all
documents, records, notebooks and similar items of or containing confidential
information then in its possession, including copies thereof, whether prepared
by MP or others.
ARTICLE VII - REPRESENTATIVE AND NOTICES
Notices provided for hereunder shall be in writing and may be served personally
to the Client's Representative and MP's representative at their respective place
of business or by registered mail to the address of each Party as first set
forth herein above or may be transmitted by FAX.
ARTICLE VIII - ARBITRATION/JURISDICTION OF COURT
Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in the County of Orange,
California, in accordance with the rules of the American Arbitration Association
there in effect, except that the parties thereto shall have any right to
discovery as would be permitted by the Federal Rules of Civil Procedure and the
prevailing Party shall be entitled to actual costs and actual attorney's fees
from arbitration or any other civil action. Judgment upon the award rendered
therein may be entered in any Court having jurisdiction thereof. Jurisdiction
for any legal action is stipulated between the Parties to lie in the County of
Orange, California.
ARTICLE IX - MISCELLANEOUS
This Agreement constitutes the entire agreement between the Client and MP
relating to providing financial relations services. It supersedes all prior or
contemporaneous communications, representations or agreements, whether oral or
written, with respect to the subject matter hereof and has been induced by no
representations, statements or agreements other than those herein expressed. No
agreement hereafter made between the Parties shall be binding on either Party
unless reduced to writing and signed by an authorized officer of the Party bound
thereby.
This Agreement shall in all respects be interpreted and construed, and the
rights of the Parties hereto shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized officers.
VIRTUALSELLERS.COM INC.
By:
/s/ Dr. Dennis Sinclair
Dr. Dennis Sinclair, CEO
Date:
1-1-01
MARKET PATHWAYS FINANCIAL RELATIONS INCORPORATED
By: /s/ Shannon T. Squyres
Shannon T. Squyres, President
Date:
1-1-01
|
EXHIBIT 10.14
MANAGEMENT EQUITY AGREEMENT, dated as of ______________, between
KINETIC CONCEPTS, INC., a Texas corporation (the "Company") and
_________________ (the " Participant").
WHEREAS, the Participant is now employed by the Company in a key
capacity and the Company desires to have Participant remain in such employment
and to allow Participant a direct proprietary interest in the Company's success
in recognition of Participant's contribution to the Company, the Company has
agreed to award to Participant nonqualified stock options (the "Options") to
purchase shares of Common Stock; and
WHEREAS, in connection with the foregoing, the Company's Management
Equity Plan (the "Plan") will govern the terms and conditions of the Options;
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto agree as follows:
1. Definitions; Incorporation of Plan Terms. Capitalized terms
used herein without definition
shall have the meanings assigned to them in the Plan, a copy
of which is attached
hereto. This Agreement and the Options shall be subject to the
Plan, the terms of which
are hereby incorporated herein by reference, and in the event
of any conflict or
inconsistency between the Plan and this Agreement, the Plan
shall govern.
2. Grant of Options. Subject to the terms and conditions contained
herein and in the Plan,
the Company has granted to the Participant the total number of
Options set forth on the
signature page hereto (which number includes _______ options
(the "Liquidity Options")
that vest solely upon the consummation of a Liquidity Event
(as defined in Section 3(b)
hereof)) at a per share exercise price as set forth of the
signature page hereto (the
"Option Price"). The Options are not intended to qualify as
Incentive Stock Options
under Section 422 of the Code. Each such Option shall entitle
(subject to the terms of
this Agreement and the Plan) the Participant to purchase, upon
payment of the Option
Price, one share of Common Stock. The shares of Common Stock
issuable upon exercise
of the Options are from time to time referred to herein as the
"Option Shares". For
purposes of the Plan and this Agreement, the Date of Grant
shall be as set forth on the
signature page hereto. The Options shall be exercisable as
hereinafter provided.
3. Terms and Conditions of Options. The Options evidenced hereby
are subject to the
following terms and conditions in addition to the terms of the
Plan:
(a) Vesting of Options. The Options shall vest and become
exercisable solely as set
forth below, unless the Options are previously
forfeited in accordance with the Plan
or as indicated in this Agreement:
Number of Options
Vesting Time
First Anniversary of Date of Grant
Second Anniversary of Date of Grant
Third Anniversary of Date of Grant
Fourth Anniversary of Date of Grant
Fifth Anniversary of Date of Grant
(Liquidity Options)
Solely upon the earlier to occur of the
consummation of a Liquidity Event and the
tenth anniversary of the Date of Grant
Notwithstanding anything to the contrary contained in the Plan
or this Agreement, the
Options shall only vest as set forth above and nothing in the
Plan or this Agreement shall
accelerate the time of such vesting.
(b) Liquidity Event. For purposes of Section 3(a) of this
Agreement, a "Liquidity Event"
shall mean a Closing Price Event (as defined below), a
Bona Fide Public Offering (as
defined below) or a Sale Transaction (as defined
below) in which the per share price
of the Company's Common Stock is $9.00 or more
(subject to adjustments for
stock splits, stock dividends or similar
transactions). In the case of a Closing Price
Event, the per share price shall be the closing price
of the Company's Common
Stock as reported by a national securities exchange or
the Nasdaq National Market.
In the event of a Bona Fide Public Offering, the per
share price shall be the "price to
the public" as set forth in the prospectus relating to
the Bona Fide Public Offering.
In the event of a Sale Transaction, the per share
price shall be the per share
amount distributed to shareholders for each share of
Common Stock in connection
with such transaction. "Closing Price Event" means the
closing price of the
Company's Common Stock as reported by a national
securities exchange or the
Nasdaq National Market has been at least $9.00 per
share for thirty consecutive
trading days. "Bona Fide Public Offering" means the
consummation of a bona fide
underwritten public offering of Common Stock by the
Company following the Date
of Grant, subsequent to which more than 20% of the
outstanding Common Stock of
the Company is traded on a national securities
exchange, the Nasdaq National
Market or a similar market. "Sale Transaction" shall
mean any sale of two-thirds or
more of the then outstanding Common Stock, either
through stock purchase,
merger, consolidation, business combination,
recapitalization, or similar transaction
or otherwise or any sale of all or substantially all of
the assets of the Company.
(c) Option Period. The Options shall not be exercisable
following the seventh
anniversary of the Date of Grant, except for the
Liquidity Options which will not be
exercisable after the tenth anniversary of the Date of
Grant. The Options shall be
subject to earlier termination as provided herein.
Upon termination of the
Participant's employment with the Company and its
Subsidiaries for any reason, the
Options, to the extent then vested, may be exercised
in accordance with Section
8(a)(iv) of the Plan. The Options shall be exercisable
during the Participant's
lifetime only by the Participant. Except as otherwise
set forth in Section 3(a), upon
termination of the Participant's employment with the
Company and its Subsidiaries
for any reason, all Options which have not theretofore
vested (it being understood
that neither Section 8(a)(ii)(B) of the Plan nor any
other section in the Plan shall
have the effect of accelerating the vesting of the
Liquidity Options or any other
Options) shall terminate and be canceled without any
payment therefore.
(d) Notice of Exercise. Subject to Sections 3(e), 3(g) and
5(b) hereof, the Participant
may exercise any or all of the Options (to the extent
vested and not forfeited) by
giving written notice to the Committee. The date of
exercise of an Option shall be
the later of (i) the date on which the Committee
receives such written notice or (ii)
the date on which the conditions provided in Sections
3(e), 3(g) and 5(b) hereof
are satisfied.
(e) Payment. Prior to the issuance of a Legended
Certificate pursuant to Section 3(f)
hereof evidencing Option Shares, the Participant shall
have paid to the Company
the Option Price of all Option Shares purchased
pursuant to exercise of such
Options in cash or, with the consent of the Committee
(which consent shall be
granted in the sole discretion of the Committee), in
shares of Common Stock
already owned by the Participant (valued at their
Applicable Value) or in any
combination of cash or shares of Common Stock.
(f) Stockholder Rights. The Participant shall have no
rights as a stockholder with
respect to any shares of Common Stock issuable upon
exercise of the Options until a
certificate or certificates evidencing such shares
shall have been issued to the
Participant, and no adjustment shall be made for
dividends or distributions or other
rights in respect of any share for which the record
date is prior to the date upon
which the Participant shall become the holder of record
thereof.
(g) Limitation on Exercise. The Options shall not be
exercisable unless the offer and
sale of the shares of Common Stock subject thereto
have been registered under
the 1933 Act and qualified under applicable state
"blue sky" laws, or the Company
has determined that an exemption from registration
under the 1933 Act and from
qualification under such state "blue sky" laws is
available. The Company may
require, as a condition to exercise of an Option, that
the Participant make certain
representations and warranties as to the Participant's
investment intent with
respect to the Option Shares.
(h) Delivery of Certificate. As soon as practicable
following the exercise of any
Options, a Legended Certificate evidencing the
appropriate number of shares of
Common Stock issued in connection with such exercise
shall be issued in the name
of the Participant.
(i) Dividends and Distributions. Any shares of Common Stock
or other securities of the
Company received by the Participant as result of a
stock dividend or other
distribution in respect of Option Shares shall be
subject to the same restrictions as
such Option Shares and all references to Option Shares
hereunder shall be deemed
to include such shares of Common Stock or other
securities.
4. Representations and Warranties.
(a) The Participant has been advised that the Options and
Option Shares have not been
registered under the 1933 Act and, therefore, cannot
be resold unless they are
registered or unless an exemption from registration is
available. The Participant is
acquiring the Options, and Option Shares for
Participant's own account, for
investment and not with a view to, or for resale in
connection with, the distribution
thereof, and the Participant has no present intention
of selling, assigning,
transferring, distributing or otherwise disposing of,
or causing the sale, assignment,
transfer, distribution or other disposition of, any
thereof. In making the foregoing
representation, the Participant is aware that
Participant must bear the economic
risk of an investment in the Options and Option Shares
for an indefinite period of
time since, in the view of the Commission, the
statutory basis for exemption from
registration under the 1933 Act would not be present
if such representation meant
merely that the Participant's current intention is to
hold these securities only for the
long-term capital gains period of the Code, or for a
deferred sale, or for any fixed
period in the future.
(b) The Participant has been given the opportunity to ask
questions of, and receive
answers from, the Company concerning the terms and
conditions of the Options
and Option Shares to be transferred hereunder and
other related matters. The
Participant represents and warrants that Participant
has been furnished with and
has carefully read the Plan and this Agreement, and
that the Company has made
available to the Participant or Participant's agents
all documents and information
requested by Participant or on Participant's behalf in
connection with Participant's
investment in the Options and Option Shares and that
Participant understands and
has evaluated the merits and risks of an investment in
the Options and Option
Shares. In evaluating the suitability of an investment
in such Options and Option
Shares, the Participant has not relied upon any other
representations or other
information (whether oral or written) made by or on
behalf of the Company other
than as contemplated by the two preceding sentences.
(c) The Participant is aware of and familiar with the
restrictions imposed on the
transfer of any Options and Option Shares, including,
without limitation, the
restrictions contained in this Agreement and the Plan.
(d) The Participant represents that this Agreement has been
duly executed and
delivered by the Participant and constitutes a legal,
valid and binding agreement of
the Participant, enforceable against the Participant
in accordance with its terms.
5. Confidentiality and Competition.
(a) The Participant's duties and obligations as a Company
executive bring the
Participant into close contact with the personal and
confidential affairs of the
Company, including matters of a business nature, such
as information about costs,
profits, markets, sales, trade secrets, potential
patents and other business
concepts, customer lists, plans for future
development and information of a nature
not generally known outside of the Company
("Confidential Matters"). The
Participant hereby agrees:
(i) during the Participant's employment with the
Company, and for two (2) years
after termination of the Participant's
employment with the Company, to keep
all Confidential Matters of the Company
confidential and not to disclose to
anyone outside of the Company, or otherwise
use such Confidential Matters or
use the Participant's knowledge of them for
the Participant's benefit, except
with the Company's prior written consent;
(ii) to deliver promptly to the Company at the
termination of the Participant's
employment with the Company or at any time the
Company may request, all
memoranda, notices, records, reports and other
documents (and all copies
thereof) relating to the business of the
Company or any of its subsidiaries or
affiliates, including but not limited to
documentation with respect to
Confidential Matters which the Participant may
then possess or have under
the Participant's control.
(b) During the Participant's employment with the Company,
and for a period of two (2)
years following the termination of the Participant's
employment with the Company,
the Participant shall not, directly or indirectly
(whether for compensation or
otherwise), alone or as an officer, director,
stockholder (except for investments in
securities of publicly traded companies), partner,
employee, agent, principal,
consultant, creditor, representative, or in any other
capacity, participate with or
become associated with any person, firm, partnership,
corporation or other entity
which is engaged in a business which competes with the
businesses (i) that the
Company is engaged in as of the date of this
Agreement, (ii) that the Company is
actively developing as of the date of this Agreement,
or (iii) that the Participant
assists the Company in developing or acquiring under
the term of this Agreement.
In addition to any other rights which the Company may
have under this Section 5
or as provided by law, the Company shall have the
right to have the provisions of
this Section 5 specifically enforced by any court
having equity jurisdiction, it being
acknowledged and agreed that any such breach or
threatened breach will cause
irreparable injury to the Company and that money
damages will not provide an
adequate remedy to the Company.
(c) During the Participant's employment with the Company,
and for a period of one (1)
year after termination of the Participant's employment
with the Company, the
Participant shall not, directly or indirectly,
solicit, offer employment (whether on a
full-time, part-time, temporary or consulting basis)
to or hire any of the Company's
employees without the Company's prior written consent.
6. Miscellaneous.
(a) No Rights to Grants or Continued Employment. The
Participant shall not have any
claim or right to receive grants of Awards under the
Plan. Neither the Plan or this
Agreement nor any action taken or omitted to be taken
hereunder or thereunder
shall be deemed to create or confer on the Participant
any right to be retained in
the employ of the Company or any Subsidiary or other
Affiliate thereof, or to
interfere with or to limit in any way the right of the
Company or any Subsidiary or
other Affiliate thereof to terminate the employment of
the Participant at any time.
(b) Tax Withholding. The Company and its Subsidiaries shall
have the right, prior to
the delivery of any certificates evidencing shares of
Common Stock to be issued
pursuant to this Agreement, to require the Participant
to remit to the Company any
amount sufficient to satisfy any federal, state or
local tax withholding requirements.
Prior to the Company's determination of such
withholding liability, the Participant
may make an irrevocable election to satisfy, in whole
or in part, such obligation to
remit taxes by directing the Company to withhold
shares of Common Stock that
would otherwise be received by the Participant. Such
election may be denied by
the Committee in its discretion, or may be made
subject to certain conditions
specified by the Committee, including, without
limitation, conditions intended to
avoid the imposition of liability against the
Participant under Section 16(b) of the
1934 Act. The Company and its Subsidiaries shall also
have the right to deduct
from all cash payments made pursuant to or in
connection with any Award any
federal, state or local taxes required to be withheld
with respect to such payments.
(c) No Restriction on Right of Company to Effect Corporate
Changes. Neither the Plan
nor this Agreement shall affect in any way the right
or power of the Company or its
stockholders to make or authorize any or all
adjustments, recapitalizations,
reorganizations or other changes in the Company's
capital structure or its business,
or any merger or consolidation of the Company, or any
issue of stock or of options,
warrants or rights to purchase stock or of bonds,
debentures, preferred to or prior
preference stocks whose rights are superior to or
affect the Common Stock or the
rights thereof or which are convertible into or
exchangeable for Common Stock, or
the dissolution or liquidation of the Company, or any
sale or transfer of all or any
part of its assets or business, or any other corporate
act or proceeding, whether of
a similar character or otherwise.
(d) 1934 Act. Notwithstanding anything contained in the
Plan or this Agreement to the
contrary, if the consummation of any transaction under
the Plan or this Agreement
would result in the possible imposition of liability
to the Participant pursuant to
Section 16(b) of the 1934 Act, the Committee shall
have the right, in its sole
discretion, but shall not be obligated, to defer such
transaction to the extent
necessary to avoid such liability, but in no event for
a period in excess of 180 days.
(e) Restrictions on Transfer. Options and Option Shares
shall not be transferable
except as specifically provided in the Plan or this
Agreement.
7. Survival; Assignment.
(a) All agreements, representations and warranties made
herein and in the certificates
delivered pursuant hereto shall survive the issuance
to the Participant of the
Options and any Option Shares and, notwithstanding any
investigation heretofore
or hereafter made by the Participant or the Company or
on the Participant's or the
Company's behalf, shall continue in full force and
effect. Without the prior written
consent of the Company, the Participant may not assign
any of Participant's rights
thereunder except as permitted by the Plan or by will
or the laws of descent and
distribution. Whenever in this Agreement any of the
parties hereto is referred to,
such reference shall be deemed to include the heirs
and permitted successors and
assigns of such party; and all agreements herein by or
on behalf of the Company,
or by or on behalf of the Participant, shall bind and
inure to the benefit of the heirs
and permitted successors and assigns of such parties
hereto.
(b) The Company shall have the right to assign any of its
rights and to delegate any of
its duties under this Agreement to any of its
Affiliates, provided, however, that
such assignment shall not release the Company from any
duty hereunder which
remains unfulfilled by such an assignee.
8. Notices. All notices and other communications provided for
herein shall be in writing
and shall be delivered by hand or sent by certified or
registered mail, return receipt
requested, postage prepaid, addressed, if to the Participant,
to Participant's attention at
the mailing address set forth on the signature page hereto (or
to such other address as
the Participant shall have specified to the Company in
writing) and, if to the Company, to
the General Counsel of the Company. All such notices shall be
conclusively deemed to
be received and shall be effective, if sent by hand delivery,
upon receipt, or if sent by
registered or certified mail, on the fifth day after the day
on which such notice is mailed.
9. Waiver. The waiver by either party of compliance with any
provision of this Agreement
by the other party shall not operate or be construed as a
waiver of any other provision of
this Agreement, or of any subsequent breach by such party of a
provision of this
Agreement.
10. Entire Agreement; Governing Law. This Agreement and the
other related agreements
expressly referred to herein set forth the entire agreement
and understanding between
the parties hereto and supersede all prior agreements and
understandings relating to the
subject matter hereof. This Agreement may be executed in one
or more counterparts,
each of which shall be deemed to be an original, but all such
counterparts shall together
constitute one and the same agreement. The headings of
sections and subsections
herein are included solely for convenience of reference and
shall not affect the meaning
of any of the provisions of this Agreement. This Agreement
shall be governed by, and
construed in accordance with, the laws of the State of
Delaware.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly
authorized officer and the Participant has executed this Agreement, both as of
the day and year first
above written.
KINETIC CONCEPTS, INC.
By: ____________________________________
Name: Dennert O. Ware
Title: President and CEO
Number of
Option
Date of
Options
Price
Grant
PARTICIPANT
___________________________________________
Print Name: ________________________________
Notice Address:
___________________________________________
___________________________________________
|
EXHIBIT 10.11
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
by and between
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
and
BURLINGTON COAT FACTORY WAREHOUSE
OF NEW JERSEY, INC.
Relating to: Economic Development Refunding Bonds
(Burlington Coat Factory Warehouse of New Jersey, Inc. - 1995 Project)
Dated as of August 1, 1995
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of the first day of
August, 1995, is by and between FIRST FIDELITY BANK, NATIONAL ASSOCIATION (the
"Bank"), a national banking association, and BURLINGTON COAT FACTORY WAREHOUSE
OF NEW JERSEY, INC. (the "Company"), a corporation organized and existing under
the laws of the State of New Jersey.
WHEREAS, the New Jersey Economic Development Authority Act, constituting Chapter
80 of the Pamphlet Laws of 1974 of the State of New Jersey, approved on
August 7, 1974, as amended and supplemented (the "Act"), declares it to be in
the public interest and to be the policy of the State of New Jersey (the
"State") to foster and promote the economy of the State, increase opportunities
for gainful employment and improve living conditions, assist in the economic
development or redevelopment of political subdivisions within the State, and
otherwise contribute to the prosperity, health and general welfare of the State
and its inhabitants by inducing manufacturing, industrial, commercial,
recreational, retail, service and other employment promoting enterprises to
locate, remain or expand within the State by making available financial
assistance; and
WHEREAS, the New Jersey Economic Development Authority (the "Authority"), a
public body corporate and politic constituting an instrumentality of the State
of New Jersey was created to aid in remedying the aforesaid conditions and to
implement the purposes of the Act, and the Legislature has determined that the
authority and powers conferred upon the Authority under the Act and the
expenditure of moneys pursuant thereto constitute a serving of a valid public
purpose and that the enactment of the provisions set forth in the Act is in the
public interest and for the public benefit and good and has been so declared to
be as a matter of express legislative determination; and
WHEREAS, the Authority, to accomplish the purposes of the Act, is empowered to
extend credit to such employment promoting enterprises in the name of the
Authority on such terms and conditions and in such manner as it may deem proper
for such consideration and upon such terms and conditions as the Authority may
determine to be reasonable; and
WHEREAS, the Company submitted an application (the "Original Application") to
the Authority for financial assistance in the principal amount of $10,000,000
for financing a portion of the costs of a project (the "1985 Project")
consisting of the acquisition of 46.779 acres of land in the Township of
Burlington, Burlington County, New Jersey, the construction of an approximately
500,000 square foot building situate thereon for use as a national distribution
center for the Company's products (which building currently contains 75,000
square feet of office space), the equipping of such building with conveyor
systems, rolling racks and automated machinery and the construction of a parking
lot adjacent to such building, and the Authority, by resolution duly adopted
July 3, 1985 in accordance with the Act, accepted the application of the Company
for assistance in financing the 1985 Project; and
WHEREAS, the Authority, by resolution duly adopted September 4, 1985 in
accordance with the Act, authorized the issuance of not to exceed $10,000,000
aggregate principal amount of its Economic Development Bonds (Burlington Coat
Factory Warehouse of New Jersey, Inc. - 1985 Project) for the purpose of making
a loan to the Company to finance the 1985 Project (the "Original Loan"); and
WHEREAS, on September 20, 1985 the Authority issued $10,000,000 of its Economic
Development Bonds dated September 1, 1985 to finance the 1985 Project (the
"Prior Bonds"); and
WHEREAS, those Prior Bonds maturing on or after September 1, 1996 are subject to
redemption prior to maturity, at the option of the Company, on any interest
payment date on or after September 1, 1995; and
WHEREAS, the Company desires to redeem $10,000,000 aggregate principal amount of
the Prior Bonds maturing on or after September 1, 1996 (the "Refunded Bonds") on
September 1, 1995; and
WHEREAS, the Company, by letter dated May 10, 1995, notified the Authority of
its intent to redeem the Refunded Bonds on September 1, 1995 and has requested
the Authority's assistance in the issuance of not to exceed $10,000,000
aggregate principal amount of bonds to refinance the 1985 Project and to redeem
the Refunded Bonds; and
WHEREAS, on July 11, 1995, the Authority, by resolution duly adopted (the
"Resolution"), authorized the issuance of its Economic Development Refunding
Bonds (Burlington Coat Factory Warehouse of New Jersey, Inc. - 1995 Project)
(the "Refunding Bonds" or the "Bonds") for the purpose of providing funds for
the Company to refinance the 1985 Project and to redeem the Refunded Bonds (the
"Project"); and
WHEREAS, the Authority has determined to issue the Bonds concurrently herewith
pursuant to the Act, the Resolution and the Indenture (as hereinafter defined);
and
WHEREAS, the Loan shall be secured by a first mortgage lien (subject only to the
defeasance of the Prior Bonds and the release of all liens created under the
Prior Indenture (as defined herein)) on the Premises (as hereinafter defined),
an Assignment of Leases on the Project Facility (as hereinafter defined), a
first priority security interest in the Machinery and Equipment (as hereinafter
defined), a Guaranty (as hereinafter defined), and such other security granted
by the Company in connection with this transaction; and
WHEREAS, the Authority, contemporaneously with the execution and delivery of
this Agreement, shall enter into a Loan Agreement with the Company, and an
Indenture of Trust dated as of August 1, 1995 (the "Indenture") wherein the
Authority has assigned certain of its rights under the Loan Agreement to the
Trustee for the benefit of the Holders from time to time of the Bonds;
WHEREAS, to facilitate the issuance and sale of the Bonds and to enhance the
marketability of the Bonds, the Company has requested the Bank to issue an
irrevocable direct pay letter of credit substantially in the form of Annex A
attached hereto, in an amount up to an aggregate amount of $10,357,293 (as
reduced and reinstated from time to time in accordance with the provisions
hereof and of the Letter of Credit), of which (a) the sum of $10,000,000 shall
be available to pay the principal amount of the Bonds either at maturity
(whether at the stated maturity date or by acceleration) or upon redemption
thereof, and (b) the remainder shall be available to pay up to 210 days'
interest on the outstanding Bonds computed at the rate of six and one hundred
twenty-five thousandths percent (6.125%) per annum accrued on the outstanding
Bonds, as such interest becomes due;
WHEREAS, as a condition, among others, to its issuance of the Letter of Credit,
the Bank has required that the Company enter into this Letter of Credit
Reimbursement Agreement;
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, covenants and agreements herein set forth (each of which is
incorporated herein by reference), intending to be legally bound hereby, and in
order to induce the Bank to issue the Letter of Credit, the Company and the Bank
hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. The following words and terms as used herein shall
have the following meanings unless the context or use indicates another or
different meaning or intent.
(a) "Account" shall mean any account created under the Indenture;
(b) "Acquisition Fund" shall mean the fund so designated which is established
pursuant to Section 407 of the Indenture;
(c) "Act" shall mean the New Jersey Economic Development Authority Act,
constituting N.J.S.A.
' 34:1B-1, et seq., as amended, or any successor legislation, and the
regulations promulgated thereunder;
(d) "Act of Bankruptcy" shall mean the filing of a petition in bankruptcy (or
other commencement of a bankruptcy or similar proceeding) by or against the
Company, the Corporate Guarantor or the Authority under any applicable
bankruptcy, insolvency, reorganization or similar law, now or hereafter in
effect;
(e) "Act of Bankruptcy of the Bank" shall occur when the Bank, as issuer of the
Letter of Credit, or any Letter of Credit Issuer, becomes insolvent or fails to
pay its debts generally as such debts become due or admits in writing its
inability to pay any of its indebtedness or consents to or petitions for or
applies to any authority for the appointment of a receiver, liquidator, trustee
or similar official for itself or for all or any substantial part of its
properties or assets or any such trustee, receiver, liquidator or similar
official is otherwise appointed or when insolvency, reorganization, arrangement
or liquidation proceedings (or similar proceedings) are instituted by or against
the Bank, or any Letter of Credit Issuer, provided that any such proceedings
brought against the Bank or any Letter of Credit Issuer, will constitute such an
Act of Bankruptcy only if not dismissed within one hundred twenty (120) days;
(f) "Agreement" or "Reimbursement Agreement" shall mean this Letter of Credit
Reimbursement Agreement dated as of August 1, 1995 between the Company and the
Bank, as the same may be amended from time to time and filed with the Trustee,
under which terms the Bank agrees to issue the Letter of Credit, and any
successor agreement of the Company with a Letter of Credit Issuer under which
terms the Company and such Letter of Credit Issuer agree to issue the Letter of
Credit;
(g) "Alternate Letter of Credit" shall mean any letter of credit substituted for
the Letter of Credit, including any renewals or extensions of the Letter of
Credit by the Letter of Credit Issuer, pursuant to and meeting the requirements
of Section 404 of the Indenture;
(h) "Alternate Letter of Credit Issuer" shall mean the issuer of an Alternate
Letter of Credit which meets the standards set forth in Section 404(d) of the
Indenture;
(i) "Applicable Environmental Laws" shall mean (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. 9601, et seq. ("CERCLA"); (ii) the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. 6901, et seq. ("RCRA"); (iii) the New Jersey
Industrial Site Recovery Act, as amended, P.L. 1995, C. 139 ("ISRA"); (iv) the
New Jersey Spill Compensation and Control Act, as amended, N.J.S.A.
58:10-23.11b, et seq. ("Spill Act"); (v) the New Jersey Underground Storage Tank
Act, as amended, N.J.S.A. 58:10A-21, et seq. ("UST"); (vi) the New Jersey Solid
Waste Management Act, as amended, N.J.S.A. 13:1E-1, et seq.; (vii) the New
Jersey Toxic Catastrophe Prevention Act, as amended, N.J.S.A. 13:1K-19, et seq.;
(viii) the New Jersey Water Pollution Control Act, as amended, N.J.S.A.
58:10A-1, et seq.; (ix) the Clean Air Act, as amended, 42 U.S.C. 7401, et seq.;
(x) the New Jersey Air Pollution Control Act, as amended, N.J.S.A. 26:2C-1, et
seq.; and (xi) any and all laws, regulations, and executive orders, both
Federal, State and local, pertaining to pollution or protection of the
environment (including laws, regulations and other requirements relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, or hazardous or toxic material or wastes),
as the same may be amended or supplemented from time to time. Any capitalized
terms which are defined in any Applicable Environmental Law shall have the
meanings ascribed to such terms in said laws; provided, however, that if any of
such laws are amended so as to broaden any term defined therein, such broader
meaning shall apply subsequent to the effective date of such amendment.
(j) "Application" shall mean the Company's letter to the Authority, dated
May 10, 1995, with respect to the Project, and all attachments, exhibits,
correspondence and modifications submitted in writing to the Authority in
connection with said application;
(k) "Article" shall mean a specified article hereof, unless otherwise indicated;
(l) "Assignment of Leases" shall mean the assignment, which is made a part of
the Record of Proceedings, dated as of August 1, 1995, executed by the Company
and assigning to the Bank all of the Company's right, title and interest in and
to, and, the benefits of all existing and future leases on the Project Facility,
as the same may be amended from time to time;
(m) "Authority" shall mean the New Jersey Economic Development Authority, a
public body corporate and politic constituting an instrumentality of the State
of New Jersey exercising governmental functions and any body, board, authority,
agency or political subdivision or other instrumentality of the State which
shall hereafter succeed to the powers, duties and functions thereof;
(n) "Authorized Authority Representative" shall mean any individual or
individuals duly authorized by the Authority to act on its behalf pursuant to
the Resolution;
(o) "Authorized Company Representative" shall mean any individual or individuals
duly authorized by the Company to act on its behalf;
(p) "Bank" shall mean First Fidelity Bank, National Association, issuer of the
irrevocable direct pay Letter of Credit dated the Issue Date, and its successors
and assigns.
(q) "Base Rate" shall mean the rate of interest established by the Bank from
time to time as its reference rate in making loans but which does not reflect
the rate of interest charged to any particular class of borrower. The Base Rate
is not tied to any external or index rate of interest. Any rate of interest as
tied to the Base Rate shall automatically and immediately change as of the date
of change in the Base Rate without any notice to the Company.
(r) "Bond" or "Bonds" or "Refunding Bond" or "Refunding Bonds" shall mean the
Economic Development Refunding Bonds (Burlington Coat Factory Warehouse of New
Jersey, Inc. - 1995 Project) in the aggregate principal amount not to exceed
$10,000,000 issued by the Authority to provide funds to finance the Project, in
the form attached to the General Certificate of the Authority and made a part of
the Record of Proceedings;
(s) "Bond Counsel" shall mean the law firm of Wilentz, Goldman & Spitzer, P.A.,
90 Woodbridge Center Drive, Woodbridge, New Jersey or any other nationally
recognized bond counsel acceptable to the Authority, the Trustee and the Bank;
(t) "Bond Fund" shall mean the fund so designated which is established and
created by Section 402 of the Indenture;
(u) "Bond Proceeds" shall mean the amount, including any accrued interest, paid
to the Authority by the Placement Agent pursuant to the Placement Agreement as
the purchase price of the Bonds, and the interest income earned thereon;
(v) "Bond Year" shall mean the one-year period commencing August 1 and ending on
the following July 31; except that the first Bond Year shall commence on the
Issue Date and end on July 31, 1996;
(w) "Business Day" shall mean a day of the year, other than (i) a Saturday or
Sunday, or (ii) any other day on which commercial banking institutions located
in the municipality in which the Principal Offices of the Trustee, the Paying
Agent, the Bond Registrar (as defined in Section 209 of the Indenture) or the
Bank is located are authorized or required by law to be closed;
(x) "Capitalization" shall mean the amount equal to Net Worth plus Long-Term
Liabilities;
(y) "Cash Collateral Account" shall mean that certain deposit account
established and maintained by the Company at the Bank as a separate account from
the Letter of Credit Account, the proceeds of which shall be used in accordance
with Section 7.2 hereof;
(z) "Code" shall mean the Internal Revenue Code of 1986, as amended and the
Treasury Regulations and rules promulgated thereunder;
(aa) "Collateral" shall mean all the real property subject to the lien of the
Mortgage and the Assignment of Leases, the Machinery and Equipment, as well as
all those assets of the Company in which the Authority and the Bank are granted
a security interest and all other real and personal property owned by the
Company and pledged, conveyed or in which the Authority or the Bank are
otherwise granted a lien and/or security interest in connection with this
Agreement or any other Loan Document;
(bb) "Commitment Letter" shall mean the letter dated June 28, 1995 from the Bank
to the Company confirming the Bank's commitment to provide the Company with an
irrevocable direct pay letter of credit and executed by the Company on June 30,
1995;
(cc) "Company" shall mean Burlington Coat Factory Warehouse of New Jersey, Inc.,
a corporation organized and existing under the laws of the State of New Jersey
and its successors and assigns;
(dd) "Consolidated" shall mean the consolidation of the accounts of the
Corporate Guarantor and its subsidiaries in accordance with generally accepted
accounting principles, including principles of consolidation, applied in a
manner consistent with the application of such principles in the preparation of
the audited financial statements mentioned in Section 5.1 hereof;
(ee) "Corporate Guarantor" shall mean the Burlington Coat Factory Warehouse
Corporation, a corporation of the State of Delaware, the Company's parent
corporation;
(ff) "Cost" shall mean those items set forth in Section 3(c) of the Act and all
expenses as may be necessary or incident to acquiring, constructing, installing
or restoring the Project;
(gg) "Counsel for the Bank" shall mean the law firm of Pepper, Hamilton &
Scheetz, Philadelphia, Pennsylvania;
(hh) "Counsel for the Company" shall mean the general counsel to the Company,
Paul C. Tang, Esquire;
(ii) "Counsel for the Escrow Agent" shall mean the law firm of Reid & Riege,
P.C., Hartford, Connecticut;
(jj) "Counsel for the Placement Agent" shall mean the law firm of Robinson, St.
John & Wayne, Newark, New Jersey;
(kk) "Counsel for the Trustee" shall mean the law firm of Reid & Riege, P.C.,
Hartford, Connecticut;
(ll) "Current Assets" shall mean all assets of the Company on a Consolidated
basis that, in accordance with generally accepted accounting principles
consistently applied, would be classified as current assets of the Company on a
Consolidated basis;
(mm) "Current Liabilities" shall mean all liabilities of the Company on a
Consolidated basis that, in accordance with generally accepted accounting
principles consistently applied, would be classified as current liabilities of
the Company on a Consolidated basis. If the Company has committed letters of
credit in amounts in excess of Forty Million Dollars ($40,000,000), the amount
of such letters of credit in excess of Forty Million Dollars ($40,000,000) shall
be included as "Current Liabilities," but only to the extent of the first Forty
Million Dollars ($40,000,000) of such excess;
(nn) "Debt Service" shall mean the scheduled amount of interest and amortization
of principal payable for any Bond Year with respect to the Bonds as defined in
Section 148(d)(3)(D) of the Code;
(oo) "Determination of Taxability" shall be deemed to have occurred upon the
happening of any of the following:
(i) the issuance of a published or private written ruling of the Internal
Revenue Service in which the Company or any "related person" has participated or
with respect to which the Company or "related person" has been given written
notice and the opportunity to participate and defend, to the effect that the
interest payable on the Bonds is wholly includable in the gross income for
Federal income tax purposes of one or more Owners thereof; or
(ii) a final, nonappealable determination by a court of competent
jurisdiction in the United States in a proceeding with respect to which the
Company or "related person" has been given written notice and the opportunity to
participate and defend, to the effect that the interest payable on the Bonds is
wholly includable in the gross income for Federal income tax purposes of one or
more Owners thereof; or
(iii) the enactment of legislation of the Congress of the United States
with the effect that interest payable on the Bonds is, or would be, in the
opinion of Bond Counsel, includable in the gross income of the Owners (except
Owners who are "substantial users" or "related persons" within the meaning of
Section 147(a) of the Code);
(pp) "Escrow Agent" shall mean Shawmut Bank Connecticut, National Association,
or its successor in interest, as applicable;
(qq) "Escrow Deposit Agreement" shall mean the Escrow Deposit Agreement dated as
of August 1, 1995 pursuant to which proceeds of the Bonds will be deposited with
the Escrow Agent which will be used to redeem the Refunded Bonds;
(rr) "Event of Default" shall mean any of the events, conditions, acts or
omissions defined as an event of default in Article 7 hereof;
(ss) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, together with the rules and regulations promulgated
thereunder or pursuant thereto as from time to time in effect;
(tt) "Financing Statements" shall mean the Uniform Commercial Code financing
statements executed by the Company, as 'Debtor', in favor of the Bank, as
'Secured Party', delivered pursuant to Section 4.1(d) hereof;
(uu) "Funds" shall mean the Acquisition Fund and the Bond Fund and shall not
include the Rebate Fund;
(vv) "GAAP" shall mean generally accepted accounting principles, consistently
applied;
(ww) "General Certificate of the Authority" shall mean the certificate of the
Authority which is made a part of the Record of Proceedings;
(xx) "Gross Proceeds" shall have the meaning set forth in Section 1.148-1(b) of
the Treasury Regulations, presently including, without limitation:
(i) Sale proceeds, which are amounts actually or constructively received on
the sale (or other disposition) of the Bonds, excluding amounts included in the
issue price used to pay accrued interest within one (1) year of the date of
issuance;
(ii) Investment proceeds, which are amounts actually or constructively
received from the investment of sale proceeds or investment proceeds;
(iii) Transferred proceeds, which are proceeds of a refunded issue that are
allocable to a refunding issue at the time the refunded issue is discharged;
(iv) Replacement proceeds, which are amounts replaced by proceeds of an
issue, including amounts held in a sinking fund, pledged fund, or reserve or
replacement fund for an issue; and
(v) Amounts not otherwise taken into account which are received as a result
of investing the amounts described above;
(yy) "Guaranty" or "Guaranty Agreement" shall mean the guaranty and suretyship
agreement dated as of August 1, 1995 executed and delivered by the Corporate
Guarantor to the Bank;
(zz) "Hazardous Substance(s)" shall mean pollutants, contaminants, or hazardous
or toxic materials or wastes into ambient air, surface water, ground water or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
or hazardous or toxic material or wastes);
(aa) "Holder", "holder" or "Bondholder" shall mean any person who shall be the
registered owner of any Bond or Bonds;
(bbb) "Indemnified Parties" shall mean the State, the Authority, the Bank, the
Placement Agent, the Holders, the Trustee, any person who "controls" the State,
the Authority, the Bank, the Placement Agent, the Holders or the Trustee within
the meaning of Section 15 of the Securities Act of 1933, as amended, and any
member, officer, official, employee or attorney of the Authority, the State, the
Trustee, the Bank, the Placement Agent or the Holders;
(ccc) "Indenture" shall mean the Indenture of Trust dated as of August 1, 1995,
by and between the Authority and the Trustee, as the same may have been from
time to time amended, modified or supplemented by Supplemental Indentures as
permitted thereby;
(ddd) "Issue Date" shall mean August 24, 1995, being the date on which the Bank
issues the Letter of Credit;
(eee) "LC Indebtedness" means the liability of the Company to pay to the Bank
(a) the sums due to the Bank pursuant to Article 2 hereof, together with the
contingent liability of the Company with respect to reimbursement of draws on
the Letter of Credit, and any and all other advances made pursuant to this
Agreement and all other payment obligations of the Company hereunder, (b) all
liabilities and obligations of the Company to the Bank under the other Loan
Documents, and (c) any and all reasonable expenses and out-of-pocket costs
incurred by the Bank in connection with the enforcement of this Agreement or any
other Loan Document or the protection of the Bank's rights hereunder or
thereunder;
(fff) "Letter of Credit" shall mean the irrevocable direct pay Letter of Credit
dated the Issue Date, in the form of Annex A attached hereto issued by the Bank;
(ggg) "Letter of Credit Account" shall mean the account so designated which is
established and created as a separate account within the Bond Fund pursuant to
Section 402 of the Indenture;
(hhh) "Letter of Credit Issuer" shall mean the Bank as issuer of the Letter of
Credit and any issuer of an Alternate Letter of Credit;
(iii) "Letter of Credit Maturity Date" shall mean the date of expiration of the
Letter of Credit which is September 15, 2000, unless extended or renewed, as
provided in Section 2.2 hereof, in which case the term "Letter of Credit
Maturity Date" shall mean such extended date;
(jjj) "Loan" shall mean the loan from the Authority to the Company, in the
aggregate principal amount not to exceed $10,000,000, being an amount equal to
the principal of (including redemption premium and interest on) the Bonds;
(kkk) "Loan Agreement" shall mean the Loan Agreement dated as of August 1, 1995
by and between the Authority and the Company and any amendments thereof and
supplements thereto relating to the Project to be financed from proceeds of the
Bonds;
(lll) "Loan Documents" shall mean any or all of this Reimbursement Agreement,
the Letter of Credit, the Loan Agreement, the Indenture, the Mortgage, the
Financing Statements, the Placement Agreement, the Assignment of Leases, the
Escrow Deposit Agreement, the documents securing the Company's obligations under
this Agreement, the Loan Agreement and Indenture, and all documents and
instruments executed in connection therewith and all amendments and
modifications thereto;
(mmm) "Long-Term Liabilities" shall mean the liabilities of the Company on a
Consolidated basis other than Current Liabilities and deferred taxes;
(nnn) "Maximum Stated Amount" shall mean the amount of $10,357,293.00, as
reduced and reinstated from time to time in accordance with the provisions
hereof and of the Letter of Credit;
(ooo) "Mortgage" shall mean the first mortgage lien on and security interest in
the Premises securing the obligations of the Company to the Bank, which Mortgage
is made a part of the Record of Proceedings, executed by the Company, as
Mortgagor, and given to the Bank, as Mortgagee;
(ppp) "Net Proceeds" shall mean the Bond Proceeds less any amounts placed in a
reasonably required reserve or replacement fund within the meaning of Section
150(a)(3) of the Code;
(qqq) "Net Working Capital" shall mean the amount by which Current Assets exceed
Current Liabilities;
(rrr) "Net Worth" shall mean the amount by which the Consolidated assets of the
Company exceed its Total Indebtedness;
(sss) "1985 Project" shall mean the acquisition of 46.779 acres of land in the
Township of Burlington, Burlington County, New Jersey and the construction of an
approximately 500,000 square foot building situate thereon for use as a national
distribution center for the Company's products (which building currently
contains 75,000 square feet of office space) the equipping of such building with
conveyor systems, rolling racks and automated machinery and the construction of
a parking area adjacent to such building, a portion of such costs being financed
with the proceeds of the Refunded Bonds;
(ttt) "Obligations" shall mean the obligations of the Company created pursuant
to this Agreement and the other Loan Documents and secured by the Collateral;
(uuu) "Original Application" shall have the meaning set forth in the recital
paragraphs hereof;
(vvv) "Original Loan" shall mean the loan from the Authority to the Company in
the aggregate principal amount not to exceed $10,000,000 to pay for a portion of
the Costs of the 1985 Project;
(www) "Outstanding", when used with reference to Bonds and as of any particular
date, shall describe all Bonds theretofore and thereupon being authenticated and
delivered except (a) any Bond canceled by the Trustee or proven to the
satisfaction of the Trustee to have been canceled by the Authority or by any
other Fiduciary, at or before said date, (b) any Bond for payment or Redemption
of which moneys equal to the principal amount or redemption price thereof, as
the case may be, with interest to the date of maturity or redemption date, shall
have theretofore been deposited with one or more of the Fiduciaries in trust
(whether upon or prior to maturity or the redemption date of such Bond) and,
except in the case of a Bond to be paid at maturity, of which notice of
redemption shall have been given or provided for in accordance with the
Indenture, (c) any Bond in lieu of or in substitution for which another Bond
shall have been authenticated and delivered pursuant to the Indenture, and
(d) any Bond held by the Company;
(xxx) "Paragraph" shall mean a specified paragraph of a Section, unless
otherwise indicated;
(yyy) "Payment Date" shall mean each March 1 and September 1 of each year during
the term of this Agreement, commencing with March 1, 1996;
(zzz) "Permitted Encumbrances" shall mean, as of any particular time: (i) liens
for taxes and assessments not then delinquent or, provided there is no risk of
forfeiture or sale of any of the Collateral, which are being contested in good
faith and for which reserves have been established by the Company which are
satisfactory to the Bank, all in accordance with the provisions of Section 5.8
hereof; (ii) liens granted pursuant to this Agreement, the Indenture, the Loan
Agreement, the Mortgage, the Assignment of Leases, the Financing Statements and
the other Loan Documents; (iii) utility access and other easements and rights of
way, restrictions and exceptions that the Title Insurance Policy insures will
not interfere with or impair the Project Facility and previously approved by and
acceptable to the Bank; (iv) liens securing claims of mechanics and materialman
or other like liens; (v) purchase money security interests encumbering (A)
property other than the Collateral or (B) property acquired after the date
hereof and otherwise comprising Collateral, provided, however, that the Bank's
lien shall remain in effect with respect to such Collateral subject only to such
purchase money security interest(s); (vi) those exceptions shown on Schedule B
of the Title Insurance Policy acceptable to the Bank and the Authority; (vii)
liens of or resulting from any litigation or legal proceeding which are being
contested in good faith by appropriate actions or proceedings or any judgment or
award, the time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Company shall at any time in good faith be
prosecuting an appeal or proceeding for a review and in respect of which a stay
of execution pending such appeal or proceeding for review shall have been
secured or for which a supersedeas bond has been timely posted; (viii) minor
survey exceptions or minor encumbrances, easements or reservations, or rights of
others for rights-of-way, utilities and other similar purposes, or zoning or
other restrictions as to the use of real properties, which are necessary for the
conduct of the activities of the Company or which customarily exist on
properties of corporations engaged in similar activities and similarly situated
and which do not in the aggregate materially impair the operation of the
business of the Company; and (ix) liens in favor of the City of Burlington in
connection with an Urban Development Act Grant (UDAG Grant Number
B-85-AB-34-0262), which liens are subordinate to the lien of and mortgage in
favor of the Bank.
(aaa) "Permitted Investments" shall mean those investments described in Article
VI of the Indenture;
(bbb) "Person" or "Persons" shall mean any individual, corporation, partnership,
joint venture, trust, or unincorporated organization, or a governmental agency
or any political subdivision thereof;
(cccc) "Placement Agent" shall mean First Fidelity Bank, National Association,
in its capacity as agent in connection with the placement of the Bonds;
(dddd) "Placement Agreement" shall mean the Placement Agreement dated as of
August 1, 1995 by and among the Placement Agent, the Bank, the Authority and the
Company;
(eeee) "Premises" shall mean the premises and all improvements thereon located
in the Project Municipality, all as described in Annex B to this Agreement and
the Mortgage;
(ffff) "Principal User" shall mean any principal user within the meaning of
Section 1.103-10 of the Treasury Regulations and the proposed amendments thereto
published by the Internal Revenue Service in the Federal Register on
February 21, 1986 or any Related Person to a Principal User within the meaning
of Section 144(a)(3) of the Code;
(gggg) "Prior Bonds" shall have the meaning set forth in the recital paragraphs
hereof;
(hhhh) "Prior Indenture" shall mean the Indenture of Trust dated as of September
1, 1985, by and between the Authority and the Trustee governing the Prior Bonds;
(iiii) "Project" shall mean the refinancing of the 1985 Project and the
redemption of the Refunded Bonds with the proceeds of the Bonds;
(jjjj) "Project Facility" or "Project Facilities" shall mean the land, the
improvements and the building situate thereon located in the Project
Municipality acquired and constructed by the Company, including any additions,
substitutions or replacements which have been constructed or acquired thereon
with the proceeds of the Refunded Bonds;
(kkkk) "Project Municipality" shall mean the Township of Burlington, County of
Burlington, State of New Jersey;
(llll) "Proper Charge" shall mean (i) issuance costs for the Bonds, including,
without limitation, certain attorneys' fees, printing costs, initial trustee's
fees and similar expenses; or (ii) an expenditure for the Project incurred for
the purposes of redeeming the Refunded Bonds which were issued for the purposes
of acquiring and constructing the 1985 Project;
(mmmm) "Rating Agency" shall mean Moody's Investor Service;
(nnnn) "Rebate Fund" shall mean the fund so designated which is established and
created pursuant to Section 413 of the Indenture;
(oooo) "Record of Proceedings" shall mean the Loan Documents, certificates,
affidavits, opinions and other documentation executed in connection with the
sale of the Bonds and the making of the Loan;
(pppp) "Refunded Bonds" shall have the meaning set forth in the recital
paragraphs hereof;
(qqqq) "Related Person" shall mean a related person within the meaning of
Section 144(a)(3) or Section 147(a)(2) of the Code, as is applicable;
(rrrr) "Resolution" shall mean the resolution duly adopted by the Authority on
July 11, 1995, accepting the Application, making certain findings and
determinations and authorizing the issuance and sale of the Bonds and
determining other matters in connection with the Project, as the same may be
amended or supplemented from time to time;
(ssss) "Section" shall mean a specified section hereof, unless otherwise
indicated;
(tttt) "Securities Act" shall mean the Federal Securities Act of 1933, as
amended from time to time, together with the rules and regulations promulgated
thereunder or pursuant thereto, as from time to time in effect;
(uuuu) "State" shall mean the State of New Jersey;
(vvvv) "Subordinated Debt" shall mean any indebtedness now existing or hereafter
arising (a true and correct list of which, as of the date hereof, is set forth
on Schedule I attached hereto) so long as the documents evidencing such
indebtedness provide that (i) the rights of the holders of such indebtedness are
expressly subordinate to the rights of the Bank, (ii) the holders of such
indebtedness will not collect any moneys in excess of the scheduled amortization
payments on such indebtedness without the written consent of the Bank,
including, but not limited to, proceeds from the sale of any of the Collateral,
except as provided herein, (iii) the holders of such indebtedness shall not
challenge, contest or attempt to defeat the priority of the liens created by the
Mortgage and other Loan Documents securing the payment of amounts owing under
this Agreement, the Loan Agreement, the Indenture, and the Bonds, in any
dissolution, liquidation, bankruptcy, insolvency, receivership or other similar
proceedings for the Company whether voluntary or involuntary, (iv) the holders
of such indebtedness shall provide notice to the Bank of a payment default
thereunder and such holder's intention to accelerate such indebtedness at least
ten (10) days prior to the date of such acceleration, (v) the holders of such
indebtedness shall provide notice to the Bank of nonpayment defaults and of such
holder(s)' intention to accelerate such indebtedness at the same time such
holder gives notice to the Company thereof, and (vi) the Bank shall be deemed a
third party beneficiary of such provisions;
(wwww) "Subsidiary" means, as to any Person, any corporation of which more than
fifty percent (50%) of the outstanding capital stock having (in the absence of
contingencies) ordinary voting power to elect directors (or Persons performing
similar functions) of such corporation is, at the time of determination, owned
by such Person directly, or indirectly through one or more intermediaries;
(xxxx) "Substantial User" shall mean a substantial user of the Project Facility
or any Related Person to a Substantial User within the meaning of Section 147(a)
of the Code;
(yyyy) "Tangible Net Worth" shall mean the amount by which the Consolidated
tangible assets of the Company exceed its Total Indebtedness;
(zzzz) "Tax Certificate" shall mean the certificate executed by the Company in
form and substance acceptable to the Authority, wherein the Company certifies as
to such matters as the Authority shall require;
(aaaa) "Title Insurance Policy" shall mean the title insurance policy issued
pursuant to Commitment No. CO 95-0126 by Commonwealth Land Title Insurance
Company on the Project Facilities and made part of the Record of Proceedings;
(bbbb) "Treasury Regulations" shall mean the Income Tax Regulations promulgated
by the Department of Treasury pursuant to Sections 103 and 141-150 of the Code
as the same shall be amended or supplemented from time to time;
(cccc) "Trustee" shall mean Shawmut Bank Connecticut, National Association, a
national banking association duly organized and validly existing and authorized
to accept and execute the trusts of the character set forth in the Indenture
under and by virtue of the laws of the United States of America, with its
principal corporate trust office located in Hartford, Connecticut, in its
capacity as Trustee, Registrar and Paying Agent, and its successors and assigns
in such capacities;
(ddddd) "UCC" shall mean the Uniform Commercial Code as now or hereafter in
effect under the laws of the State of New Jersey or any other jurisdiction which
controls the perfection of a security interest in favor of the Bank in any of
the Collateral;
(eeeee) "Yield" shall mean the yield as calculated in the manner set forth in
Section 148 of the Code; thus, yield with respect to an investment allocated to
the Bonds is that discount rate which produces the same present value when used
in computing the present value of all receipts received and to be received with
respect to investments and the present value of all the payments with respect to
the investments. The yield on the Bonds is that discount rate which produces the
same present value on the date hereof when used in computing the present value
of all payments of principal, interest and charges for a "qualified guarantee"
to be made with respect to the Bonds and the present value of all of the issue
prices for the Bonds. The issue price for each maturity of the Bonds is the
initial offering price of such Bonds to the public.
Section 1.2. Rules of Construction.
(a) Any capitalized term used herein which is not defined herein but is defined
in the Indenture shall herein have the respective meaning given to it in the
Indenture;
(b) Terms used herein which are not otherwise defined herein (or in the
Indenture) but which are defined in or used in Article 9 of the UCC, shall
herein have the respective meanings given to them in such Article 9;
(c) All accounting terms used herein without definition shall be interpreted in
accordance with GAAP, and except as otherwise expressly provided herein all
computations herein required shall be made in accordance with GAAP, and all
principles and practices applied to financial data submitted pursuant to this
Agreement shall be applied in manner consistent with the application of such
principles and practices in the preparation of the audited financial statements
mentioned in Section 5.1 hereof;
(d) The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section, subsection, paragraph,
clause and similar references are to this Agreement unless otherwise specified;
the term "heretofore" means before the date of execution of this Agreement; and
the term "hereafter" means after the date of execution of this Agreement; and
(e) Wherever required by the context of this Agreement, the singular shall
include the plural, and vice versa, unless otherwise specified; and each use of
or reference to this masculine, feminine or neuter gender shall include any or
all of such genders, as appropriate.
ARTICLE
2
THE LETTER OF CREDIT
Section 2.1. Agreement of the Bank to Issue the Letter of Credit. Subject to the
terms and conditions of this Agreement, the Bank agrees to issue the Letter of
Credit in favor of the Trustee on the Issue Date in the stated amount of Ten
Million Three Hundred Fifty-Seven Thousand Two Hundred Ninety-Three Dollars
($10,357,293.00).
Section 2.2. Term of Letter of Credit.
(a) Original Term; Extension. The Letter of Credit shall, subject to earlier
termination in accordance with the terms of the Letter of Credit, expire on
September 15, 2000 (the "Letter of Credit Maturity Date"); provided, that the
expiry date of the Letter of Credit may be extended at the request of the
Company, by written notice to the Bank not less than 210 days prior to the
Letter of Credit Maturity Date, and at the Bank's sole discretion and on terms
or conditions acceptable to the Bank, for a term not to exceed an additional
five (5) years. The Bank shall give prior written notice to the Company, the
Trustee and the Rating Agency of any such renewal. If the Bank elects not to
renew the Letter of Credit, the Bank shall notify the Company, the Trustee and
the Rating Agency, in writing not less than 150 days prior to the then
applicable Letter of Credit Maturity Date that it will not renew the term of the
Letter of Credit.
(b) Company's Right to Terminate. The Company may terminate the Letter of Credit
at any time prior to the Letter of Credit Maturity Date, without premium or
penalty, provided that: (i) the Company provides the Bank with written notice
not less than ten (10) Business Days prior to the effective date of such
termination; (ii) the Letter of Credit Beneficiary has consented to such
termination and provides to the Bank (A) the original Letter of Credit, and (B)
written authorization evidencing its consent and release of its interest in the
Letter of Credit, all in accordance with the terms and conditions of the
Indenture; and (iii) all obligations and all amounts due and payable to the Bank
under the Reimbursement Agreement or any other Loan Document have been fully
satisfied or paid, as applicable, prior to the effective date of such
termination.
Section 2.3. Draws and Other Fees and Expenses Under the Letter of Credit.
(a) Payments. The Company hereby agrees to pay to the Bank:
(i) Drawings. Five (5) Business Days prior to each Payment Date, commencing
initially on the Payment Date of March 1, 1996, an amount necessary to pay the
amount to be drawn under the Letter of Credit on the immediately succeeding date
of any drawing for each of the payments described in Section 2.7 hereof;
(ii) Drawing Fee. On each date that any amount is drawn under the Letter of
Credit pursuant to any drawing referred to in clause (i) herein above, a drawing
fee in the amount of $100 per each draw;
(iii) Transfer Fee. Upon each transfer of the Letter of Credit in
accordance with its terms a sum equal to $1,500;
(iv) Customary Charges. On demand, any and all reasonable charges the Bank
may make in connection with drawings under the Letter of Credit and any and all
reasonable expenses which the Bank incurs relative to the Letter of Credit;
(v) Enforcement Expenses. On demand, any and all expenses incurred by the
Bank in enforcing any rights under this Agreement and the other Loan Documents;
(vi) Interest. On demand, interest on any and all amounts drawn on the
Letter of Credit and not reimbursed to the Bank through the amounts deposited
pursuant to clause (i) of this paragraph or otherwise, from the date of drawing
of such amounts under the Letter of Credit until payment in full by or on behalf
of the Company at a fluctuating rate of interest per annum equal to three
percent (3.0%) plus the Base Rate announced by the Bank from time to time. All
interest calculations shall be based upon a year of 360 days consisting of
twelve (12) thirty (30) day months;
(vii) Commission. An annual non-refundable fee with respect to the Letter
of Credit, computed for the period from and including the Issue Date to and
including the last day a drawing is available under the Letter of Credit (the
"Termination Date"), at a rate of three quarters of one percent (.75%) per annum
on the amount from time to time available to be drawn under the Letter of
Credit, payable annually, on each anniversary date of the Issue Date, with the
first such payment (reduced by the $25,000 previously paid by the Company) due
on the Issue Date;
(viii) Payments in Respect of Increased Costs. If any adoption of or if any
change in any law, regulation, policy, or guideline or in the interpretation or
application of any of the foregoing by any court, administrative or governmental
authority charged with the interpretation and/or administration thereof shall
either (i) impose, modify or make applicable any reserve, special deposit,
capital or capital equivalency or ratio, assessment, insurance premium, or
similar requirement in connection with the Letter of Credit, or documents,
advances, or refinancing in connection therewith or (ii) impose on the Bank (or,
if applicable, any of its affiliates or correspondents) any other condition
regarding the Letter of Credit, and the result of any event referred to in
clause (i) or (ii) above shall be to increase the Bank's (or, if applicable,
such affiliate's or correspondent's) costs of issuing, maintaining, renewing or
extending the Letter of Credit then, upon demand by the Bank, the Company shall
immediately pay to the Bank, from time to time as the Bank shall specify,
additional amounts (calculated on the basis of such Company's pro rata share of
the aggregate amount of obligations to the Bank of the Company and all similarly
situated customers of the Bank), which shall be sufficient to compensate for
such increased cost; provided, however that (x) Company shall not be responsible
for penalties or fines payable by Bank for Bank's failure to comply with such
laws, rules, policies or guidelines following the Bank's charge to the Company
for the same in accordance with this paragraph, and (y) such increased costs
charged to Company shall not exceed the actual increase in costs to, or loss in
profit of, the Bank related to the transactions contemplated by this Agreement
Letter. The obligation of the Company set forth in the foregoing sentence shall
apply to and include each such increased cost incurred by the Bank as a result
of any event mentioned in clause (i) or (ii) above for the period through and
including the Termination Date. A certificate setting forth in reasonable detail
(including detailed calculations of) such increased cost incurred by the Bank as
a result of any event mentioned in clause (i) or (ii) above, submitted by the
Bank to the Company, shall be conclusive, absent manifest error, as to the
amount thereof; and
(ix) Cash Collateral Payments. Upon the occurrence of an Event of Default
as specified in Section 7.2(b) hereof, an amount equal to the then Maximum
Stated Amount of the Letter of Credit, such amount (together with all interest
earned thereon and all investments and proceeds of investments thereof) to be
held by the Bank as cash collateral in the Cash Collateral Account to secure
reimbursement to the Bank of the LC Indebtedness, including without limitation,
all amounts paid by the Bank pursuant to draws under the Letter of Credit and
payment of all other obligations of the Company to the Bank hereunder and under
the other Loan Documents.
(b) Applications of Certain Funds. The Company hereby authorizes the Bank to
apply (i) the amounts set forth in clause (i) of paragraph (a) above to
reimburse the Bank for any such drawings honored by the Bank and made by the
Trustee on the Letter of Credit and further acknowledges that the Company is
paying said amounts set forth in clause (i) of paragraph (a) above to the Bank
for the purpose of reimbursing the Bank for drawings honored on the Letter of
Credit; and (ii) any and all amounts in the Cash Collateral Account on account
of any LC Indebtedness of the Company or the Guarantor due and owing to the
Bank;
(c) Default Rate. Any amount not paid when due or demanded, as the case may be
under this Section 2.3 shall bear interest from the date such payment is due or
demanded, as applicable at a per annum rate equal to three percent (3.0%) above
the Base Rate.
Section 2.4. Security for Obligations. As security for the payment of the LC
Indebtedness and the other obligations of the Company to the Bank under this
Agreement and the other Loan Documents, the Company will (a) grant to the Bank
(i) the Mortgage on the Premises, and (ii) the Assignment of Leases, and (b)
cause the Corporate Guarantor to provide to the Bank the Guaranty.
Section 2.5. Place of Payment; Computation of Interest. All payments by or on
behalf of the Company to the Bank hereunder shall be made on the date such
payment becomes due or, if demand must be made by the Bank in accordance with
Section 2.3 hereof, upon demand, in lawful currency of the United States and in
immediately available funds at the Bank's office at 123 South Broad Street,
Philadelphia, Pennsylvania 19109 or at such other place as may be designated by
the Bank by written notice to the Company. Any payment due or demanded on a day
which is not a Business Day (as defined in the Letter of Credit) shall be paid
on the next succeeding Business Day.
Section 2.6. Evidence of Debt. The Bank shall maintain in accordance with its
usual practice an account or accounts evidencing the indebtedness of the Company
resulting from each drawing under the Letter of Credit, the amounts of principal
and interest payable and paid from time to time hereunder or other reimbursable
costs and expenses hereunder.
Section 2.7. Permitted Drawings.
(a) Generally. So long as the Letter of Credit is in effect, all payments of
principal and interest on the Bonds shall be paid from draws by the Trustee on
the Letter of Credit in accordance with the terms of the Indenture. The
outstanding balance of the Loan shall be reduced by the amount of any such
payments made by the Trustee through a draw on the Letter of Credit. The Company
shall reimburse the Bank for moneys drawn on the Letter of Credit in accordance
with the terms of Section 2.3 hereof.
(b) Acceleration of Payment to Redeem Bonds. As permitted by the Indenture and
the Reimbursement Agreement, whenever the Bonds are subject to optional
redemption pursuant to the Indenture, the Authority will, but only upon request
of the Company, direct the Trustee in writing to call the same for Redemption as
provided in the Indenture. Whenever the Bonds are subject to mandatory
redemption pursuant to the Indenture, the Company will cooperate with the
Authority and the Trustee in effecting such Redemption. In the event of any
mandatory or optional redemption of the Bonds, the Company will pay or cause to
be paid on or before the date of Redemption an amount equal to the applicable
redemption price (including the redemption premium (if any) and interest accrued
to the date of redemption) as a prepayment of that portion of the Loan
corresponding to the Bonds to be redeemed, or will reimburse the Bank for any
drawings under the Letter of Credit for such purposes (exclusive of the
redemption premium) in accordance with this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1. Company Representations. The Company represents and warrants to the
Bank that:
(a) Organization, Powers, Etc. It is a corporation duly organized, created and
in good standing under the laws of the State and all other jurisdictions in
which the conduct of its activities or the ownership or lease of its properties
or assets requires such qualification, and in which such qualification is
material to the conduct of its business, has the full corporate power and
authority to own its properties and assets and to carry on its business as now
being conducted (and as now contemplated by the Company) and has the power and
authority to perform all the undertakings of this Agreement and the other Loan
Documents, to borrow hereunder and to execute and deliver this Agreement and the
other Loan Documents.
(b) Execution of Loan Documents. The execution, delivery and performance by the
Company of this Agreement and the other Loan Documents and other instruments
required or contemplated to be delivered by the Company pursuant to this
Agreement:
(i) have been duly authorized by all requisite corporate action;
(ii) do not and will not conflict with or violate any provision of law,
rule or governmental regulation, any order, decree, writ, injunction,
determination, award or judgment of any court, arbitrator or other agency of
government;
(iii) do not and will not conflict with or violate any provision of the
certificate of incorporation and by-laws of the Company; and
(iv) do not and will not conflict with any of the terms of, or result in a
breach of, or constitute a default under, or result in the creation or
imposition of any lien or charge upon any assets of the Company pursuant to, any
mortgage, indenture, contract, lease, loan or credit agreement, or other
agreement or instrument to which the Company is a party or by which any of its
assets are bound (excepting those liens as are created by the Loan Documents).
(c) Title to Collateral. Except as described in on Schedule II hereto, the
Company has good and marketable title to the Collateral, free and clear of any
lien or encumbrance except for the Permitted Encumbrances, if any. Assuming
adequate consideration therefor has been given by the Bank, upon recording in
the appropriate office, the Mortgage (subject to the defeasance of the liens
created by the Indenture governing the Prior Bonds) will constitute a valid
first mortgage lien on the Premises and an assignment of the leases thereon and
upon recording, the Financing Statements will perfect valid first lien security
interests in the Collateral, other than the Premises.
(d) Litigation. Except as described in Schedule II hereto, there is no action,
suit or proceeding at law or in equity or by or before any governmental
instrumentality or other agency or arbitrator now pending or, to the knowledge
of the Company, threatened against or affecting it or any of its properties or
powers which, if adversely determined, would (i) affect the transactions
contemplated hereby, (ii) affect the validity or enforceability of the Loan
Documents, (iii) affect the ability of the Company to perform its obligations
under the Loan Documents, (iv) impair the value of the Collateral,
(v) materially impair the Company's right to carry on its business substantially
as is now being conducted, (vi) adversely affect the validity or the
enforceability of the Bonds, the Indenture, this Agreement, the Loan Agreement
and the Loan Documents, (vii) have a material adverse effect on the Company's
financial condition or (viii) in which the relief sought is in excess of
$500,000.
(e) Payment of Taxes. The Company has filed or caused to be filed all Federal,
State and local tax returns (including, without limitation, information returns)
which are required to be filed, and has paid or caused to be paid all taxes as
shown on said returns or on any assessment made against the Company or against
any of its properties or assets and all other taxes, fees or other charges
imposed on it by any governmental authority, to the extent that such taxes have
become due; and no tax liens have been filed, and to the knowledge of the
Company, no claims have been asserted against the Company or any of its
properties or assets, with respect to any taxes, fees or charges by any
governmental authority.
(f) No Defaults. The Company is not as of the date hereof in default or
noncompliance in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any material agreement or
instrument to which it is a party (including without limitation, the Indenture
and the other Loan Documents) or by which it is bound or with respect to any
law, statute, judgment, writ, injunction, decree, rule or regulation of any
court or governmental authority.
(g) Consents. No consent of any other person and no consent, license, approval
or authorization of, or registration, filing or declaration with, any court or
governmental authority, is or will be necessary to the valid execution, delivery
or performance by the Company of any of the Loan Documents.
(h) Important Inducement. The availability of the financial assistance by the
Authority as provided herein was an important inducement to the Company to
undertake the 1985 Project and to locate the Project Facility in the State.
(i) Obligations of the Company. Each of the Loan Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
the Company enforceable against it in accordance with their respective terms.
(j) No Untrue Statements. No representation contained herein or in any Loan
Document, and no information, certification, instrument, agreement, exhibit,
report furnished by or on behalf of the Company to the Authority and the
Trustee, the Application, or any other document, certificate or statement
furnished to the Trustee and the Authority, by or on behalf of the Company
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading or incomplete. The Company specifically represents that it is not
involved in any litigation required to be disclosed in the Original Application
nor is it the subject of any investigation or administrative proceeding except
as disclosed in the Application or on Schedule II hereto. Further, it is
specifically acknowledged by the Company that all such statements,
representations and warranties shall be deemed to have been relied upon by the
Authority as an inducement to undertake the Project and make the Loan and by the
Holders as an inducement to purchase the Bonds and that if any such statements,
representations and warranties were false at the time they were made, the
Authority or the Holders may, in its sole discretion, consider any such
misrepresentation or breach of warranty an Event of Default as defined in
Section 7.1 hereof and exercise the remedies provided for in this Agreement.
(k) No Subsidiaries. The Company (i) has no subsidiaries and no investment in
any other corporation; (ii) has no investment in any partnership, limited
partnership or joint venture; and (iii) is not a member or participant in any
partnership, limited partnership or joint venture.
(l) No Action. The Company has not taken and will not take any action and knows
of no action that any other Person has taken or intends to take, which would
cause interest income on the Bonds to be includable in the gross income of the
recipients thereof under the Code.
(m) Compliance with Laws. The Company has complied in all material respects with
all filings, permits, licenses and other requirements of Federal, State and
local laws necessary to prevent the Company from being precluded, by reason of
its failure to comply with any such requirement, from continuing to conduct its
activities as now conducted in the jurisdictions in which it is now conducting
activities.
(n) Acquisition/Operation of the Project Facility. The operation of the Project
Facility in the manner presently contemplated and as described in the Original
Application will not conflict with any current zoning, water, air pollution or
other ordinances, orders, laws or regulations applicable thereto. The Company
has caused the Project Facility to be acquired in accordance, in all material
respects, with all Federal, State and local laws or ordinances (including rules
and regulations) relating to zoning, building, safety and environmental quality.
The Company will complete the Project pursuant to the terms of this Agreement in
all material respects.
(o) Environmental Representations.
(i) The Company has obtained all permits, licenses and other authorizations
which are required with respect to its businesses, properties and assets under
all Applicable Environmental Laws. The activities, properties and assets of the
Company are in compliance with all terms and conditions of the required permits,
licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or contained in
any regulation, code, plan, order, decree, judgment, notice or demand letter
issued, entered, promulgated or approved thereunder. There are no past or
present events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with, or prevent, continued compliance on
the part of the Company, or which may give rise to any liability on the part of
the Company, or otherwise form the basis of any claim, action, suit, proceeding
or investigation against the Company, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge, release or threatened release into the
environment, of any Hazardous Substance;
(ii) There have been no claims, litigation, administrative proceedings,
whether actual or threatened, or judgments or orders, relating to any Hazardous
Substances or other forms of pollution relating in any way to any property or
activities of the Company, including without limitation, the Premises or the
Project Facility;
(iii) Neither the Company nor the Premises or the Project Facilities are in
violation of any Applicable Environmental Law or subject to any existing,
pending or threatened investigation or inquiry by any governmental authority
pertaining to any Applicable Environmental Law, other than as disclosed in
writing to the Bank and the Authority prior to the date hereof. The Company
shall not cause or permit the Premises or the Project Facilities to be in
violation of, or do anything which would subject the Premises or the Project
Facilities to any remedial obligations under any Applicable Environmental Law,
and shall promptly notify the Authority and the Bank, in writing, of any
existing, pending or threatened investigation or inquiry by any governmental
authority in connection with any Applicable Environmental Law;
(iv) No friable asbestos, or any asbestos containing substance deemed
hazardous by Federal or State regulations, has been installed in the Project
Facilities other than as disclosed in writing to the Authority prior to the date
hereof. The Company covenants that it will not install in the Project Facilities
friable asbestos or any asbestos containing substance deemed hazardous by
Federal or State regulations. In the event any such materials are found to be
present at the Project Facilities, the Company agrees to remove the same
promptly upon discovery at its sole cost and expense; and
(v) The Company has taken all steps necessary (which without limitation
includes at a minimum all actions necessary to meet the "all appropriate
inquiry" standard set forth in N.J.S.A. 58:10A-23.11g as amended by ISRA) to
determine and has determined that no Hazardous Substances have been disposed of
or otherwise released or discharged on or to the Premises or the Project
Facilities other than as disclosed in writing to the Authority prior to the date
hereof. The use which the Company makes of the Project Facilities will not
result in the disposal or other release or discharge of any Hazardous Substance
on or to the Premises or the Project Facilities. During the term of this
Agreement, the Company shall take all steps necessary to determine whether
Hazardous Substances have been disposed of or otherwise released or discharged
on or to the Premises or the Project Facilities and if so will remove the same
promptly upon discovery at its sole expense;
The Company further represents, warrants, covenants and agrees as follows:
(vi) None of the real property owned and/or occupied by the Company and
located in the State, including without limitation the Premises and the Project
Facilities, has, to the best of the Company's knowledge, ever been used by
previous owners and/or operators nor will be used in the future to (i) refine,
produce, store, handle, transfer, process or transport Hazardous Substances; or
(ii) generate, manufacture, refine, transport, treat, store, handle or dispose
of Hazardous Substances other than as disclosed in writing to the Authority
prior to the date hereof;
(vii) The Company has not received any communication, written or oral, from
the State Department of Environmental Protection, the United States
Environmental Protection Agency, or any other governmental entity concerning any
intentional or unintentional action or omission on the Company's part on the
Premises or Project Facilities resulting in the releasing, spilling, leaking,
pumping, pouring, emitting, emptying or dumping of Hazardous Substances other
than as disclosed in writing to the Authority prior to the date hereof;
(viii) None of the real property owned and/or occupied by the Company and
located in the State, including without limitation the Premises and the Project
Facilities, has or is now being used as a Major Facility, as such term is
defined in ISRA, and the Company shall not use any such property as a Major
Facility in the future without the prior express written consent of the
Authority and the Bank. If the Company ever becomes an owner or operator of a
Major Facility, then the Company shall furnish the State Department of
Environmental Protection with all the information required by N.J.S.A.
' 58:10-23 11d, and shall duly file with the Director of the Division of
Taxation in the New Jersey Department of the Treasury a tax report or return,
and shall pay all taxes due therewith, in accordance with N.J.S.A.
' 58:10-23.11h;
(ix) The Company shall not conduct or cause or permit to be conducted on
the Premises or the Project Facilities any activity which constitutes an
Industrial Establishment, as such term is defined in ISRA, without the prior
express written consent of the Authority and the Bank. In the event that the
provisions of ISRA become applicable to the Premises or the Project Facilities
subsequent to the date hereof, the Company shall give prompt written notice
thereof to the Authority and the Bank and shall take immediate requisite action
to insure full compliance therewith. The Company shall deliver to the Authority
and the Bank copies of all correspondence, notices, reports, and submissions
that the Company generates, or sends to or receives from the State Department of
Environmental Protection, in connection with such ISRA compliance. The Company's
obligation to comply with ISRA shall, notwithstanding its general applicability,
also specifically apply to a sale, transfer, closure or termination of
operations associated with any foreclosure action by the Authority, the Trustee
or the Bank;
(x) No lien has been attached to any revenue or any personal property owned
by the Company and located in the State, including, without limitation, the
Premises or the Project Facilities, as a result of (i) the Administrator of the
New Jersey Spill Compensation Fund expending moneys from said fund to pay for
Damages and/or Cleanup and Removal Costs; or (ii) the Administrator of the
United States Environmental Protection Agency expending moneys from the
Hazardous Substance Superfund for Damages and/or Response Action Costs. In the
event that any such lien is or has been filed, then the Company shall, within
thirty (30) days from the date that the Company is given such notice of such
lien (or within such shorter period of time in the event that the State or the
United States has commenced steps to have the Premises or the Project Facilities
sold), either: (i) pay the claim and remove the lien from the Premises or
Project Facilities; or (ii) furnish (a) a bond satisfactory to the Authority and
the Bank in the amount of the claim out of which the lien arises, (b) a cash
deposit in the amount of the claim out of which the lien arises, or (c) other
security satisfactory to the Authority and the Bank in an amount sufficient to
discharge the claim out of which the lien arises; and
(xi) In the event that the Company shall cause or permit to exist a
releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of
Hazardous Substances or Hazardous Wastes, the Company shall promptly remove and
remediate such release, spill, leak, pumping, pouring, emission, emptying or
dumping in accordance with the provisions of any Applicable Environmental Law.
(p) Project Municipality. The Project Facilities are located wholly within the
borders of the Project Municipality and the Premises are not contiguous with the
borders of any portion of the Project Municipality. The operation of the Project
Facilities is not integrated with any other facility in any neighboring
municipality operated by any Principal User of the Project Facilities. All of
the facilities financed by the Refunded Bonds are located within one state, and
neither the Company nor any Related Person is a user of any facility financed by
the proceeds of the Refunded Bonds other than the 1985 Project.
(q) No Tenancies. No Principal User of the Project Facilities is a tenant in any
facility in the Project Municipality, the landlord of which is a Person other
than a Principal User of the Project Facilities.
(r) Preservation of Tax Exemption. The Company shall at all times do and perform
all acts and things necessary to be done and performed under the Loan Documents
in order to assure that interest paid on the Bonds shall, for purposes of
Federal income taxation, be excludable from the gross income of the recipients
thereof and exempt from taxation, except in the event that such recipient is a
Substantial User of the Project Facility or a Related Person thereto.
Section 3.2. Representations and Warranties as to the Acquisition of Project
Facilities.
(a) Acquisition of Project Facilities. The Company agrees that it used the Prior
Bonds to finance the Project Facilities as soon as practicable after the
proceeds of the Prior Bonds became available and that it will use its best
efforts to effectuate the redemption of the Refunded Bonds with the proceeds of
the Bonds as soon as practicable after the proceeds of the Bonds become
available.
(b) Notices and Permits. The Company has given or caused to be given all notices
and comply or cause compliance with all laws, ordinances, municipal rules and
regulations and requirements of public authorities applying to or affecting the
acquisition and the conduct of the work on the Project Facilities, and the
Company will defend and save the Authority, its members, officers, agents and
employees, the Bank, its officers, agents and employees, and the Trustee, its
officers, agents and employees harmless from all fines due to failure to comply
therewith. The Company has procured or has caused to be procured all permits and
licenses necessary for the prosecution of the acquisition and installation of
the Project Facilities.
(c) Additions and Changes to Project Facilities. The Company may, at its option
and at its own cost and expense, at any time and from time to time, make such
improvements, additions, renovations and changes to the Project Facilities as it
may deem to be desirable for its uses and purposes, provided that (i) such
improvements, additions and changes shall constitute part of the Project
Facilities and be subject to the liens and security interests created by this
Agreement and the Indenture, and (ii) that the Company shall not permit any
alienation, removal, demolition, substitution, improvement, alteration or
deterioration of the Project Facilities or any other act which might materially
impair or reduce the usefulness or value thereof, or the security provided under
the Indenture, without the prior written consent of the Authority and the Bank.
The Company shall request in writing that the Bank, shall execute termination
statements for any filings made to perfect the security interests created
pursuant to this Agreement, the Loan Agreement, and the Indenture for any
fixture or item of equipment permanently removed from the Project Facilities by
the Company, provided that any item of property so removed by the Company shall
be replaced by other property of similar value or function.
ARTICLE 4
CONDITIONS TO ISSUANCE OF THE LETTER OF CREDIT
Section 4.1. Loan Documents. On or before the Issue Date, the Bank shall have
received the following, each in form and substance satisfactory to the Bank:
(a) this Letter of Credit and Reimbursement Agreement providing for the terms of
repayment of all draws under the Letter of Credit duly executed by the Company;
(b) the Mortgage constituting a valid first lien (subject only to the defeasance
of the Prior Bonds and the release of lien securing the Prior Indenture) on the
Premises including, without limitation, all real estate fixtures located and
attached to the Premises, as security for the obligations of the Company under
the Letter of Credit;
(c) an Assignment of Leases providing for the assignment by the Company to the
Bank of all its right, title and interest in and to any leases, tenancy
agreements or any other rental arrangements with respect to the Premises or
Project Facilities;
(d) Financing Statements as may be deemed reasonably necessary by the Bank or
its counsel so as to perfect a valid first priority lien in favor of the Bank
with regard to all personalty, furniture, furnishings, fixtures, building
materials and equipment owned by the Company now or hereinafter located at or
affixed to the Premises and the Machinery and Equipment;
(e) a Guaranty Agreement from the Corporate Guarantor providing for the
unconditional irrevocable guaranty of the obligations of the Company under the
Loan Documents;
(f) secretary's certificates of the Company and Corporate Guarantor, to which
are attached certified true copies of (i) the articles of incorporation of the
Company and Corporate Guarantor and all amendments thereto, certified by the
Secretary of State of the state of their incorporation, (ii) the By-Laws of the
Company and Corporate Guarantor and all amendments thereto, (iii) appropriate
resolutions and shareholder consents of the Company and Corporate Guarantor
authorizing the transactions contemplated by this Agreement, and (iv) incumbency
certificates as to officers, and any amendments thereto;
(g) a good standing certificate issued by the appropriate official of the state
in which each of the Company and Corporate Guarantor is incorporated, which
identifies all the dates on which the Company's and Corporate Guarantor's
articles of incorporation and amendments thereto were filed; and a good standing
certificate issued by the appropriate official of the states in which the
Company and Corporate Guarantor are qualified as a foreign corporation, as
applicable;
(h) a certificate in form and substance satisfactory to the Authority and the
Bank, to the effect that the Project Facilities are not within a special flood
hazard area, as described in the Flood Disaster Protection Act of 1973 and the
National Flood Insurance Act of 1968, or a certification from the Project
Municipality to that effect. Should the Project Facilities be located in a
special flood hazard area as designated by the Secretary of Housing and Urban
Development, the Company shall furnish the Bank with a flood insurance policy in
the lesser of (i) the amount of the Letter of Credit or (ii) the maximum amount
obtainable under the National Flood Insurance Act, naming the Authority and the
Bank as insureds, together with a receipted bill for the premium. Thereafter,
the Company shall furnish the Bank with a renewal flood insurance policy on the
anniversary date of such policy;
(i) true and correct copies of certificates, in form and substance acceptable to
the Authority and the Bank, evidencing the insurances on the Premises and
Project Facilities required to be maintained pursuant to this Agreement and the
Loan Agreement, and naming the Bank as lender/loss payee, mortgagee, and an
additional insured;
(j) evidence that the security interest to be granted to the Bank in the
personal property of the Company constitutes a first-priority lien and security
interest (subject only to the defeasance of the Prior Bonds and the release of
all liens created under the Prior Indenture), including, without limitation, any
appropriate State and county UCC searches, judgment searches and tax liens
searches against the Company and Corporate Guarantor;
(k) evidence that all applicable consents, licenses, permits and approvals for
the use and occupancy of the Premises and Project Facilities have been obtained
from all governmental agencies or public utility companies having jurisdiction
with respect thereto including, to the extent applicable, but not limited to:
all environmental approvals (including, without limitation, written evidence of
the State Department of Environmental Protection certifying as to the proper
authorized closure and/or removal of underground storage tanks); approvals for
sewer, water, gas, electric and other utilities; a final certificate of
occupancy; all zoning, site plan and/or subdivision approvals. All of such
approvals and permits shall be legally valid and shall remain in full force and
effect throughout the term of the Letter of Credit. In the event that any of
such approvals is invalidated, rescinded or suspended by any governmental
agencies or court of competent jurisdiction, the Bank shall not be obligated to
issue the Letter of Credit;
(l) a current boundary and location survey of the Premises acceptable to the
Bank, its counsel and the title insurer, prepared by a licensed New Jersey
surveyor acceptable to the Bank, its counsel and the title insurer, which survey
shall be prepared in accordance with the requirements set forth by the Bank and
shall be certified to the Bank and the title insurer;
(m) a completed and certified Environmental Questionnaire;
(n) an ALTA (as hereinafter defined) Standard title policy on the form currently
in use in the State at the time of the issuance of the Letter of Credit in the
amount of the Letter of Credit, reinsuring with direct access agreements and/or
co-insured in amounts and with title insurance companies reasonably acceptable
to the Bank, insuring that the Mortgage is a valid first lien mortgage on the
Premises, subject only to those exceptions, whether of record or otherwise that
have been previously approved by the Bank;
(o) an environmental indemnity agreement pursuant to which the Company and the
Corporate Guarantor agree to indemnify the Bank for any and all environmental
liability which the Bank may incur by virtue of issuing the Letter of Credit;
(p) a written certification of an architect or engineer selected by the Bank
stating that the Project Facilities located at the Premises (i) are structurally
sound, (ii) show no signs of structural distress, and (iii) have a remaining
life span for current or proposed usage well in excess of the term of the Letter
of Credit. All deficiencies which said architect or engineer may deem to be
material shall be corrected by the Company, at its expense, prior to closing to
the satisfaction of the Bank and said architect/engineer. The cost of such
inspection report shall be borne by the Company;
(q) the Tax Certificate, in form and substance satisfactory to Bond Counsel;
(r) a Continuing Disclosure certification evidencing the Company's and the
Corporate Guarantor's intent to comply with the provisions of Rule 15c2-12 of
the Securities and Exchange Commission as long as this Agreement is in effect
and the Bonds remain Outstanding;
(s) any and all other documents reasonably required by the Authority and the
Bank.
Section 4.2. Payment of Fees. On the Issue Date, the following shall have been
duly paid:
(a) all fees required to be paid to the Bank and the Trustee under any of the
Loan Documents; and
(b) the fees and disbursements of Counsel for the Bank as agreed in Section 5.20
hereof.
Section 4.3. Opinions of Counsel.
(a) Opinion of Counsel for Company. On the Issue Date, the Authority, the
Trustee, the Bank and the Placement Agent shall have received the opinion of
Counsel for the Company addressed to them and satisfactory in form and substance
to Bond Counsel, Counsel for the Trustee, Counsel for the Bank and Counsel for
the Placement Agent to the effect that, inter alia: (i) the Loan Documents have
been duly executed and delivered by the Company and the Corporate Guarantor, as
applicable, and constitute the valid and binding obligations of the Company and
the Corporate Guarantor, as applicable, enforceable in accordance with their
respective terms, except to the extent that the enforceability of such documents
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and (ii) all of the Bond Proceeds will be used for
Proper Charges; and containing any other provisions deemed necessary and proper
by, and otherwise in form and substance satisfactory to, the Bank and its
counsel;
(b) Opinion of Bond Counsel. On the Issue Date, the Authority, the Bank, the
Placement Agent and the Trustee shall have received the opinion of Bond Counsel
to the effect that, inter alia:
(i) interest income on the Bonds is not includable in gross income under
the Code except for those tax consequences set forth therein;
(ii) interest income on the Bonds is not includable as gross income under
the New Jersey Gross Income Tax Act (P.L. 1976, Chapter 47);
(iii) the offering of the Bonds is not required to be registered under the
Securities Act of 1933, as amended, or under the rules and regulations
promulgated thereunder; and
(iv) the Bonds have been duly authorized and issued under the provisions of
the Indenture, the Resolution and the Act;
(c) Opinion of Counsel for the Trustee. On the Issue Date, the Authority, the
Bank and the Placement Agent shall have received an opinion of Counsel for the
Trustee, addressed to them and satisfactory in form and substance to Bond
Counsel (and the Company shall have received a reliance letter with respect
thereto) stating that the Trustee is lawfully empowered, authorized and duly
qualified to serve as Trustee and to perform the provisions of and to accept the
trusts contemplated by the Indenture, and the Trustee has duly authorized the
acceptance of the trusts contemplated by the Indenture;
(d) Opinion of Counsel for the Bank. On the Issue Date, the Authority, the
Trustee and the Placement Agent shall have received an opinion of Counsel for
the Bank, addressed to them and satisfactory in form and substance to Bond
Counsel, Counsel for the Trustee and Counsel for the Placement Agent (and the
Company shall have received a reliance letter with respect thereto) stating that
the Letter of Credit has been duly authorized and delivered and constitutes a
valid and binding obligation of the Bank; and
(e) Opinion of Counsel for the Escrow Agent. On the Issue Date, the Authority,
the Trustee, the Bank and the Placement Agent shall have received an opinion of
counsel for the Escrow Agent, addressed to them and satisfactory in form and
substance to Bond Counsel and Counsels for the Trustee and Placement Agent (and
the Company shall have received a reliance letter with respect thereto) stating
that the Escrow Agent is lawfully empowered, authorized and duly qualified to
serve as Escrow Agent and to perform the provisions of and to accept the trusts
contemplated by the escrow deposit agreement, and the Escrow Agent has duly
authorized the acceptance of the trusts contemplated by the escrow deposit
agreement.
Section 4.4. Conditions Subsequent; Defeasance of Prior Bonds. Upon the
defeasance of the Prior Bonds and the release of the lien of the Prior Indenture
following the full payment of the Prior Bonds and the Original Loan and pursuant
to and in accordance with Article IX of such Prior Indenture, the Company shall
provide to the Bank evidence of the cancellation and discharge of the liens and
security interests granted to the Trustee to secure the Prior Bonds and the
proper recording of the documents pursuant to which such liens have been
satisfied or released. The Company shall, and shall cause the Authority and
Trustee to, execute and deliver to the Bank copies of all such instruments as
may be appropriate to evidence such discharge and satisfaction of such liens and
security interests.
ARTICLE 5
COVENANTS OF THE COMPANY
The Company covenants and agrees, so long as this Agreement shall remain in
effect as follows:
Section 5.1. Financial Statements.
(a) Annual Report: as soon as available and in any event within 105 days after
the end of each fiscal year, the Company will submit annual audited consolidated
financial statements for the Corporate Guarantor and its consolidated
subsidiaries (including the Company) to the Trustee and to the Bank during the
term of the Letter of Credit including therein the balance sheet of the
Corporate Guarantor and its Consolidated Subsidiaries as of the end of such
fiscal year and the statements of operations of the Corporate Guarantor and its
Consolidated Subsidiaries for such fiscal year, setting forth in comparative
form the corresponding figures for the preceding fiscal year, prepared in
accordance with GAAP consistently applied, all in reasonable detail and in each
case duly certified by independent certified public accountants of recognized
standing acceptable to the Bank, and by the chief financial or chief accounting
officer of the Corporate Guarantor, together with a certificate of said
accounting firm stating that, in the statements of the Corporate Guarantor and
its consolidated subsidiaries (including the Company) for such fiscal year, it
did not discover that an Event of Default (or an event which, with notice or the
lapse of time or both, would constitute an Event of Default) had occurred at any
time during such fiscal year, or, if an Event of Default (or such other event)
did occur, the nature thereof; and (iii) a certificate of the chief financial or
chief accounting officer of the Company and Corporate Guarantor stating that
such officer does not have any knowledge that an Event of Default (or an event
which, with notice or the lapse of time or both, would constitute an Event of
Default) exists, a statement of the nature thereof and the actions which the
Company and Corporate Guarantor propose to take with respect thereto.
(b) Quarterly Report: as soon as available and in any event within sixty (60)
days after the end of each of the first three (3) quarters of each fiscal year
of the Corporate Guarantor and its consolidated subsidiaries (including the
Company), during the term of the Letter of Credit, management prepared
consolidated financial statements, including a balance sheet, income statement
and cash flow statement prepared in accordance with GAAP, in form and substance
satisfactory to the Bank for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, to the Trustee and to the
Bank during the term of the Letter of Credit.
(c) Company will submit annual management letters, if any, for the Company or
Corporate Guarantor, from the independent certified public accountants for the
Corporate Guarantor.
(d) Compliance Certificate. At times referred to above, "no default"
certificates showing the calculations of the financial covenants set forth in
Article 6 hereof, and signed by an Authorized Company Representative showing
that the Company and Corporate Guarantor are in compliance with all covenants
and agreements in this Agreement.
(e) SEC Reports. Promptly after sending or filing, copies of all proxy
statements, financial statements and other notices and reports to the Trustee
and the Bank when the Company or the Corporate Guarantor sends to its
shareholders as well as copies of all regular, annual, periodic and special
reports and all Registration Statements filed with the Securities and Exchange
Commission or similar government authority or with any national security
exchange succeeding to the functions of the Securities and Exchange Commission
(other than those on Form S-8), including, without limitation, Forms 10Q and
10K.
Section 5.2. Preservation of Corporate Existence and Qualification. The Company
shall preserve and maintain its corporate existence, rights, franchises and
privileges in its jurisdiction of incorporation, qualify and remain qualified as
a foreign corporation in each jurisdiction in which such qualification is
material to its business, activities and operations and the ownership or lease
of its properties, and comply with all provisions of its Certificate of
Incorporation and By-Laws.
Section 5.3. Keeping of Records and Books of Account. The Company shall keep
adequate records and books of account reflecting all of its financial
transactions regarding the Project Facilities.
Section 5.4. Maintenance of Properties. The Company shall maintain and preserve
all of its properties, necessary or useful in the proper conduct of its
activities, in good working order and condition, ordinary wear and tear excepted
and from time to time will make or will cause to be made, all needed and proper
repairs, renewals, replacements, betterments and improvements thereto.
Section 5.5. Maintenance of Licenses. The Company shall maintain and keep in
effect licensing, know-how and similar agreements necessary in the proper
conduct of its activities.
Section 5.6. Further Assurances. The Company shall do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered all such
further instruments, acts, deeds, and assurances as may be reasonably requested
by the Bank and the Authority for the purpose of carrying out the provisions and
intent of this Agreement, the Loan Agreement and any of the Loan Documents.
Section 5.7. Maintenance of Insurance.
(a) The Company agrees to insure the Project Facility and Collateral or cause
such to be insured with insurance companies licensed to do business in the
State, in such amounts as indicated herein or in such amounts, manner and
against such loss, damage and liability (including liability to third parties),
as is customary with companies in the same or similar business and located in
the same or similar areas, and to pay the premiums thereon. The form and amount
of each insurance policy issued pursuant to this Section 5.7 shall be
satisfactory to the Authority and the Bank.
(b) Each insurance policy issued pursuant to this Section 5.7 shall name the
Company and the Bank as insureds, as their interests may appear.
(c) Such insurance coverage shall include:
(i) mortgage title insurance in an amount not less than the stated amount
of the Letter of Credit insuring that title to the Premises is marketable and
insurable at regular rates, with no exceptions other than those approved by the
Bank and Counsel for the Bank and that the Mortgage is a valid first mortgage
lien. Such policy shall be issued by a title insurance company acceptable to the
Bank and in a form approved by the American Land Title Association ("ALTA"),
subject to the approval of the Bank and shall include affirmative coverage
against all future liens which might take- priority over the Mortgage; and
(ii) fire, hazard and "All-Risk" insurance, including extended coverage for
flood and earthquake, together with vandalism, malicious mischief and
Replacement Cost endorsements (non- reporting form), covering the Project
Facilities which shall be in an amount not less than 100% of the agreed upon
fully insurable replacement value of the Project Facilities on a completed value
basis by an insurer satisfactory to the Bank, so written and endorsed as to make
losses, if any, payable to the Bank and the Trustee, as Mortgagee and/or
Lender/Loss Payee, as their interests may appear; and
(iii) flood insurance, as described in Section 4.1(h), if the Project
Facility is located in an area designated by the United States Department of
Housing and Urban Development as being subject to a special flood hazard in the
maximum amount of flood insurance available through the Federal Flood Insurance
Program for the improvements located on the Premises, naming the Bank and the
Trustee, as the Mortgagee and/or Lender/Loss Payee, as their interests may
appear; and
(iv) comprehensive general public liability insurance, including XCU coverage,
Broad Form Endorsement, protective liability coverage on operations of
independent contractors engaged in construction, blanket contractual liability
insurance, completed operations and products liability coverage against any and
all liability of the Company or claims of liability of the Company arising out
of, occasioned by or resulting from any bodily injury, death, personal injury
and property damage liability with limits of liability in minimum amounts of
$1,000,000 per person per occurrence, $3,000,000 aggregate per occurrence and
$1,000,000 aggregate property damage; and
(v) Excess/Umbrella Liability Insurance on a "follow form" basis with a
minimum limit of liability of $10,000,000 for the Premises.
(d) The insurance policies or endorsements shall cover the entire Project
Facilities and shall provide that the coverage will not be reduced, canceled or
not renewed without thirty (30) days prior written notice to the Bank. The
Company shall provide the Authority and the Bank with certificates from the
insurers at closing, and evidence of renewal or replacement of policies required
to be maintained by this Section shall be provided to the Bank and the Trustee
on behalf of the Authority at least ten (10) days prior to the expiration of any
such policy. The Company may furnish, instead of original or duplicate policies,
certificates of blanket coverage provided the Project Facilities are identified
and specifically allocated amounts are shown.
Section 5.8. Payment of Taxes, Etc. The Company will promptly pay and discharge
or cause to be promptly paid and discharged all taxes, assessments and
governmental charges or levies imposed upon it or in respect of any of its
property and assets before the same shall become in default, as well as all
lawful claims which, if unpaid, might become a lien or charge upon such property
and assets or any part thereof, except such that are contested in good faith by
the Company with diligence and continuity and by appropriate proceedings for
which the Company has maintained adequate reserves satisfactory to the Bank.
Section 5.9. Concerning the Project Facility. The Company shall operate or cause
the Project Facility to be operated as an authorized project for a purpose and
use as provided for under the Act until the expiration or earlier termination of
this Agreement. The Project Facility is of a character included within the
definition of "project" in the Act, and its estimated cost was $20,000,000. The
Company operates the Project Facility substantially in the form represented in
the Original Application and will neither (a) materially alter the operation of
the Project Facility without the prior written consent of the Authority and the
Bank, nor (b) cause a change in the use of the Project Facility such that the
Bonds would cease to be qualified small issue bonds (within the meaning of
Section 144(a) of the Code).
Section 5.10. Compliance with Applicable Laws. The Company shall operate and
maintain the Project Facilities in accordance with all applicable Federal,
State, county and municipal laws, ordinances, rules and regulations now in force
or that may be enacted hereafter including, but not limited to ERISA, the
Americans with Disabilities Act and Applicable Environmental Laws, workers'
compensation, sanitary, safety, non-discrimination and Zoning laws, ordinances,
rules and regulations as shall be binding upon the Company and which might
adversely affect its activities or credit.
Section 5.11. Environmental Covenant. The Company shall not permit any action to
occur which would be in direct violation of any and all applicable Federal,
State, county and municipal laws, ordinances, rules and regulations now in force
or hereinafter enacted, including Applicable Environmental Laws, the regulations
of the Authority and the regulations of the Department of Environmental
Protection.
The Company shall give immediate written notice, in the manner provided in
Section 8.14 hereof, to the Bank, the Authority, and the Trustee of any inquiry,
notices of investigation or any similar communication from the Department of
Environmental Protection and the United States Department of Environmental
Protection regarding violation of any Applicable Environmental Laws.
Section 5.12. Mergers, Etc.
(a) The Company will not merge into or consolidate with or into, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person without the prior express written consent of
the Authority and the Bank as set forth below.
(b) The Company shall, during the period commencing on the Issue Date of the
Bonds and continuing for three (3) years thereafter, maintain or cause to be
maintained separate books and records with respect to the Project Facilities and
any and all other facilities located wholly or partly within the Project
Facility Municipality of which the Company, any Principal User of the Project
Facilities or any Related Person thereto is a Principal User, which books and
records shall be sufficient to indicate the nature of any and all capital
expenditures with respect to the Project Facilities and such other facilities.
Section 5.13. Lease or Transfer of Project Facilities. Except as set forth in
the Original Application, the Company shall not lease, sublease, sell or
otherwise dispose of any possessory interest in whole or part of the Project
Facilities without the prior express written consent of the Authority and the
Bank. In the event that the Company leases or subleases the Project Facilities
or any portion thereof, the Company and the proposed lessee shall submit to the
Authority and the Bank an application for project occupants in the form
currently in use by the Authority and a copy of the lease. The Authority may
review the proposed lease and application to determine if it tends to further
the public purposes for which the Authority was created, and if the Authority
determines that the lease would not promote these purposes, it may disapprove
the proposed lease.
In making the determination described above, the Authority may consider, among
other criteria, (i) if the proposed occupancy complies with the conditions
specified in the Act for the Authority's assistance to "projects" as defined in
the Act; (ii) if the proposed occupancy is consistent with the provisions
respecting tax-exempt qualified small issue bond financings set forth in Section
144 of the Code; and (iii) if the proposed lease will result in the loss of
employment for a substantial number of New Jersey workers by reason of
relocating the business of the lessee from one part of the State to another or
for any other reason.
If the Authority fails to deliver notice of either approval or disapproval of a
proposed lease within twenty (20) days from the day the Authority receives a
proposed lease, including all of the information identified above and such other
information as the Authority may reasonably require, the proposed lease shall be
deemed to be approved by the Authority; provided further that the Company shall
still be required to obtain the affirmative consent of the Bank. The Company
shall promptly send a copy of each executed lease to the Authority and the Bank.
Section 5.14. Inspection of the Project Facility. The Company agrees that the
Authority and the Bank, and their duly authorized agents or representatives
shall have the right, at all reasonable times and upon prior reasonable notice,
to enter upon and to examine and inspect the Project Facility. The Authority,
the Trustee and the Bank, and their respective officers and agents shall also be
permitted, at all reasonable times and upon prior notice, to examine the books
and records of the Company with respect to the Project Facility, to discuss its
affairs, finances and accounts with any of its officers or directors and to make
copies or abstracts thereof.
Section 5.15. Relocation of the Project Facilities. The Company covenants and
agrees that during the term of this Agreement it will not relocate the Project
Facility or a substantial number of its employees to another location either
within or without the State without first obtaIning the prior express written
consent of the Authority and the Bank.
Section 5.16. Annual Certificate. On each anniversary date of the Loan, the
Company shall furnish to the Bank, the Authority and the Trustee the following:
(a) A certificate indicating whether or not the Company is aware of any
condition, event or act which constitutes an Event of Default, or which would
constitute an Event of Default with the giving of notice or the passage of time,
or both, under any of the Loan Documents.
(b) A written description of the present use of the Project Facilities,
including a report from every entity that leases or occupies space at the
Project Facilities and the number of persons employed by the lessee, as
applicable, and a description of any anticipated material change in the use of
the Project Facilities or in the number of employees employed at the Project
Facilities.
(c) The Company shall also furnish to the Authority upon request, which request
shall not be made more frequently than once a year, an employment report on a
form to.be supplied by the Authority.
Section 5.17. Payment of Compensation and Expenses of Trustee and Placement
Agent. Except to the extent payment is otherwise provided from the Acquisition
Fund, the Company will pay the Trustee's (and any other paying agent's or
authenticating agent's) compensation and expenses under the Indenture,
including, but not limited to, reasonable attorneys' fees and all costs of
redeeming Bonds thereunder. The Company will also pay the reasonable
compensation of the Placement Agent for the performance of its duties and
services under the Placement Agreement.
Section 5.18. Payment of Authority's Fees and Expenses. Except to the extent
payment is provided from the Acquisition Fund, the Company will pay the
Authority's standard administration fee and all reasonable expenses (other than
day-to-day Operating expenses of the Authority), including legal and accounting
fees, incurred by the Authority in connection with the issuance of the Bonds and
the performance by the Authority of its functions and duties under this
Agreement and the Indenture. The Authority's standard administration fees in
respect of this Agreement is $25,000 payable upon the execution and delivery of
this Agreement.
Section 5.19. Indemnity Against Claims. In the exercise of the powers of the
Bank, hereunder, including without limitation the application of moneys, the
investment of funds and disposition of the Project Facilities upon the
occurrence of an Event of Default, neither the Bank nor its directors, officers,
shareholders, employees or agents shall be accountable to the Company for any
action taken or omitted by any of them in good faith and with the belief that it
is authorized or within the discretion or rights or powers conferred hereunder
or under the Indenture. The Bank and its directors, officers, shareholders,
employees and agents shall be protected in acting upon any paper or document
believed to be genuine, and any of them may conclusively rely upon the advice of
counsel and may (but need not) require further evidence of any fact or matter
before taking any action. No recourse shall be had by the Company for any claims
based hereon or on the Indenture against any member, director, officer, employee
or agent of the Bank alleging personal liability on the part of such person
unless such claims are based upon the gross negligence or willful misconduct of
such person. As such, the Company shall indemnify and hold harmless the Bank,
and each director, officer, shareholder, employee, attorney and agent of the
Bank (collectively the "Indemnified Parties") against any and all claims,
losses, damages or liabilities, joint and several, to which the Indemnified
Parties become subject, insofar as such losses, claims, damages or liabilities
(including all costs, expenses and reasonable counsel fees incurred in
investigating or defending such claim) (or actions in respect thereof) suffered
by any of the Indemnified Parties caused by, relating to, arising directly or
indirectly out of, resulting from or in any way connected to the Project
Facility or the Project or are based upon any other act or omission in
connection with (a) the condition, use, possession, conduct, management,
planning, design, acquisition, construction, installation, financing or sale of
the Project Facility or any part thereof; or (b) any untrue statement of a
material fact contained in information submitted or to be submitted to the
Indemnified Parties by the Company with respect to the transactions contemplated
hereby; or (c) any omission of a material fact necessary to be stated therein in
order to make such statement to the Indemnified Parties not misleading or
incomplete unless the losses, damages or liabilities arise from the gross
negligence or willful misconduct of the person to be indemnified. In the event
any claim is made or action brought against an Indemnified Party, except for
claims or actions brought which arise from the gross negligence or willful
misconduct of any such person, the Indemnified Party may direct the Company to
assume the defense of the claim and any action brought thereon and pay all
reasonable expenses (including attorneys' fees) incurred therein; or such
Indemnified Party may assume the defense of any such claim or action, the
reasonable cost (including attorneys' fees) of which shall be paid by the
Company upon written request of the Indemnified Party to the Company, provided,
that if the Bank assumes such defense, no settlement of any such claim or action
shall be made without the consent of the Company, which consent shall not be
unreasonably withheld. The Company may engage its own counsel to participate in
the defense of any such action. The defense of any such claim shall include the
taking of all actions necessary or appropriate thereto. The Company shall not be
liable for any settlement of any such action effected without Company's consent,
but if settled with the consent of the Company, or if there is a final judgment
for the claimant on any such action, the Company agrees to indemnify and hold
harmless the Indemnified Parties from and against any loss or liability by
reason of such settlement or judgment.
The indemnification provisions of this Section 5.19 shall survive the
termination of this Agreement and the other Loan Documents.
Section 5.20. Costs and Expenses; Indemnity.
(a) The Company agrees to pay on demand all reasonable costs and expenses of the
Bank in connection with the preparation, execution, delivery, administration,
modification and enforcement of the Commitment Letter and any and all of the
other Loan Documents (including, without limitation, the fees and disbursements
of Counsel for the Bank); provided, however, that the Company shall not be
responsible to pay more than $18,000 in attorneys' fees (on aggregate basis for
counsel for the Bank and counsel for the Placement Agent) plus out-of-pocket and
reasonable disbursements in connection with the preparation of the Loan
Documents to be executed and delivered in connection with the issuance of the
Bonds.
(b) the Company agrees to indemnify, save, and hold harmless the Bank and its
directors, officers, agents and employees (collectively the "indemnitees") from
and against:
(i) any and all claims, demands, actions, or causes of action that are
asserted against any indemnitee by any person arising, directly or indirectly,
from or as a result of any of the transactions contemplated by the Term Sheet or
the Loan Documents; and
(ii) any and all liabilities, losses, costs or expenses (including
attorneys' fees) that any indemnitee suffers or incurs as a result of the
assertion of any claim, demand, action, or cause of action specified in the
immediately preceding subparagraph (i).
The covenants and agreements of this Section 5.20 shall be unconditional,
whether or not the Letter of Credit closing occurs as a result of the Company's
failure to perform all of its obligations under the Loan Documents and shall
survive the repayment of the obligations, the termination of this Agreement and
other Loan Documents and the cancellation of the Letter of Credit.
Section 5.21. Damage to or Condemnation of Project Facilities. In the event of
damage, destruction or condemnation of part or all of the Project Facilities,
the Company shall notify the Trustee and the Bank not later than five (5) days
after the occurrence of such event (the "Initial Notice").
(a) In the event of any partial damage, destruction or condemnation of the
Project Facilities in an amount aggregating less than $5,000,000 the Company
shall use said funds for restoration, repair or replacement of the Project
Facility. Such funds shall be paid in accordance with the Bank's standard
construction loan disbursement conditions as set forth on Schedule III hereto
and in accordance with Section 5.24 of the Loan Agreement and Section 408 of the
Indenture.
(b) In the event (i) the Company fails, or fails to commence, to repair, replace
or reconstruct the damaged, destroyed or condemned Project Facilities within
sixty (60) days after the Initial Notice when such proceeds aggregate less than
$5,000,000, or (ii) such proceeds exceed $5,000,000, the Bank shall have the
option to (A) apply such funds to the costs of repair, reconstruction and
restoration of the Project Facilities to a substantially equivalent condition or
value existing immediately prior to such event or to a condition of at least an
equivalent value, in which case such funds shall be deposited with the Trustee
in the Acquisition Fund in accordance with Section 407 of the Indenture; or (B)
use such proceeds to reduce any outstanding principal balance of unreimbursed
draws under the Letter of Credit or other outstanding LC Indebtedness and remit
the balance to the Company; or (C) retain such proceeds (up to the amount of the
Company's obligations to the Bank under the Letter of Credit and the documents
executed in connection therewith) as cash collateral for the Company's
obligations under the Letter of Credit; or (D) redeem Bonds from moneys from the
Letter of Credit pursuant to Section 301(b) of the Indenture and apply the
amount of such net proceeds of any insurance, casualty or condemnation award to
reimburse the Bank for any draw on the Letter of Credit, but only to the extent
of any such proceeds. The Bank shall notify the Trustee and the Company in
writing of its election within seventy (70) days after the Initial Notice.
(c) The Company shall cooperate and consult with the Bank in all matters
pertaining to the settlement or adjudication of any insurance claims and all
claims and demands for damages on account of any taking or condemnation of the
Project Facility or pertaining to the settlement, compromising or arbitration of
any claim on account of any damage or destruction of the Project Facility. In no
event shall the Company voluntarily settle, or consent to the settlement of, any
insurance claim equal to or greater than $2,500,000 with relation to the Project
Facility or any proceedings arising out of any condemnation of the Project
Facility without the prior written consent of the Bank, which consent will not
be unreasonably withheld.
(d) Damage to, destruction of or condemnation of all or a portion of the Project
Facilities shall not terminate the Agreement, or cause any abatement of or
reduction in the payments to be made by the Company or otherwise affect the
respective obligations of the Authority or the Company, except as set forth in
this Agreement.
Section 5.22. Prohibition of Liens. The Company shall not create, or suffer to
be created by any other person any lien or charge upon the Acquisition Fund or
the Project Facilities (other than Permitted Encumbrances) or any part thereof
or upon the rents, contributions, charges, receipts or revenues therefrom,
without the consent of the Authority and the Bank, provided that nothing in this
Agreement shall limit the right of the Company to enforce payments from the
Acquisition Fund pursuant to Section 408 of the Indenture. The Company further
agrees to pay or cause to be discharged or make adequate provision to satisfy
and discharge, within thirty (30) days after the same shall become due, any such
lien or charge and also all lawful claims or demands for labor, materials,
supplies or other charges which, if unpaid, might be or become a lien upon the
Acquisition Fund, the Project Facilities or any part thereof or the revenues or
income therefrom. Nothing in this Section shall require the Company to pay or
cause to be discharged or make provision for any such lien or charge so long as
the validity thereof shall be diligently contested in good faith and by
appropriate proceedings so long as the Acquisition Fund, the Project Facilities
or any part thereof are not subject to loss or forfeiture. The Authority shall
cooperate with the Company in any such contest and shall cooperate with the
Company with respect to obtaining any necessary releases of liens or other
encumbrances on the Project Facilities.
Section 5.23. Financing Statements. The Company shall, at the Company's own
expense, cause financing statements under the New Jersey Uniform Commercial Code
to be filed in the places required by law in order to perfect the security
interests created or contemplated by Section 2.4 hereof naming the Bank as
secured party. From time to time, as reasonably requested by the Holder of any
Bond, but not more often than once each year, the Company shall furnish to the
Trustee an opinion of counsel setting forth what actions, if any, should be
taken by the Company to preserve such security interest and/or the Trustee to
preserve the right, title and interest of the Trustee in and to the trust estate
created under the Indenture. The Company shall execute and file or cause to be
executed and filed all further instruments as shall be required by law to
preserve such security interest, and shall furnish satisfactory evidence to the
Authority and the Bank of the filing and refiling of such instruments.
Section 5.24. Change in Nature of Corporate Activities. The Company shall not
make any material change in the nature of its corporate activities; provided
that the foregoing shall not prohibit the Company from engaging in additional
activities related to its present corporate activities and not otherwise
prohibited under the Code or the Act.
Section 5.25. Notice and Certification With Respect to Bankruptcy Proceedings.
The Company shall promptly notify the Trustee and the Bank in writing of the
occurrence of any of the following events and shall keep the Trustee and the
Bank informed of the status of any petition in bankruptcy filed (or bankruptcy
or similar proceeding otherwise commenced) against the Company: (i) application
by the Company for or consent by the Company to the appointment of a receiver,
trustee, liquidator or custodian or the like of itself or of its property, or
(ii) is not generally paying its debts as they become due, or (iii) general
assignment by the Company for the benefit of creditors, or (iv) adjudication of
the Company as a bankrupt or insolvent, or (v) commencement by the Company of a
voluntary case under the United States Bankruptcy Code or filing by the Company
of a voluntary petition or answer seeking reorganization of the Company, an
arrangement with creditors of the Company or an order for relief or seeking to
take advantage of any insolvency law or filing by the Company of an answer
admitting the material allegations of an insolvency proceeding, or action by the
Company for the purpose of effecting any of the foregoing, (vi) if without the
application, approval or consent of the Company, a proceeding shall be
instituted in any court of competent jurisdiction, under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect
of the Company an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the Company or of all
or any substantial part of its assets, or other relief in respect thereof under
any bankruptcy or insolvency law.
Except where expressly provided to the contrary, all covenants in this Article
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of an Event of Default or default if such action
is taken or condition exists.
Section 5.26. Rebate Covenant. The Company shall calculate or cause to be
calculated the rebate requirement and shall pay to the Trustee at such times as
required under the Code an amount equal to the rebate requirement for deposit by
the Trustee into the Rebate Fund. To the extent the amounts on deposit in the
Rebate Fund as of any date of computation are not sufficient to meet the rebate
requirement, the Company shall immediately pay the amounts necessary to the
Trustee for deposit in the Rebate Fund in accordance with the provisions of
Section 413 of the Indenture.
Section 5.27. Continuing Disclosure. The Company shall provide or cause to be
provided by the Corporate Guarantor (a) on a timely basis, all of the
information described in Section 515 of the Indenture relating to compliance
with Rule 15c2-12 of the Exchange Act, and (b) on or prior to the effective date
of any such transaction, notification of the purchase or sale, by or for the
account of the Company, of any of the Bonds, together with a detailed
description of such transaction.
ARTICLE 6
FINANCIAL COVENANTS
Section 6.1. Current Assets and Liabilities. The Corporate Guarantor and its
Consolidated Subsidiaries will maintain Current Assets in an amount which is not
less than one hundred twenty percent (120%) of Current Liabilities.
Section 6.2. Tangible Net Worth. The Corporate Guarantor and its Consolidated
Subsidiaries' Consolidated Tangible Net Worth as at the end of any of its fiscal
years during the term of this Agreement shall be equal to not less than (a) One
Hundred Forty Million dollars ($140,000,000) plus (b) Six Million Dollars
($6,000,000) multiplied by the number of full fiscal years which have elapsed
since the end of the 1994 fiscal year. If the Company changes its fiscal year,
the minimum Tangible Net Worth as at the end of the new fiscal year end shall be
equal to the minimum Tangible Net Worth which would have been required had the
fiscal year end not been changed, plus Six Million Dollars ($6,000,000)
multiplied by a fraction the numerator of which is the number of months between
the previous fiscal year end and the new fiscal year end and the denominator of
which is twelve (12).
Section 6.3. Total Indebtedness. The Corporate Guarantor and its Consolidated
Subsidiaries will not permit the total indebtedness of the Corporate Guarantor
and its Consolidated Subsidiaries to exceed one hundred eighty percent (180%) of
such Consolidated group's Tangible Net Worth.
Section 6.4. Long-Term Liabilities. The Corporate Guarantor and its Consolidated
Subsidiaries will not permit Long-Term Liabilities to exceed sixty percent (60%)
of the Capitalization.
Section 6.5. Indebtedness for Borrowed Money. The Company will not borrow any
funds except pursuant to the following types of borrowings: (a) borrowings to
finance the acquisition of personal property (including capital leases) secured
by a security interest encumbering such personal property, provided that the
amount of any such encumbrance does not exceed the greater of the purchase price
or fair market value of such property and (b) borrowings from Bank hereunder.
The foregoing exceptions, in the aggregate, are subject, however, to the
provisions of Sections 6.2 and 6.3 hereof. Nothing herein contained shall be
deemed in any way to limit the right and ability of the Company to post letters
of credit or to incur trade indebtedness in the ordinary course of their
respective businesses, to the extent such activities are otherwise permitted
under this Agreement.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default: Acceleration. Each of the following events is
hereby defined as, and is declared to be and to constitute, an "Event of
Default" hereunder:
(a) Failure by the Company to make or cause to be made any payment required to
be made under Section 2.3 on or before the date the same is due; or
(b) Any material misrepresentation or warranty by or on behalf of the Company
contained in this Agreement or in any report, certificate, financial instrument
or other instrument furnished in connection with this Agreement or any other
Loan Document shall prove to be false or misleading;
(c) Failure of the Company to observe, perform or comply with any of the
covenants or conditions contained in Article 6 hereof;
(d) Failure or refusal by the Company to observe, perform or comply with any of
its other covenants hereunder or under any of the other Loan Documents and such
failure or refusal shall continue for a period of thirty (30) days after the
earlier of (i) the date on which the Company first becomes aware of such failure
or (ii) the date on which the Bank has provided written notice thereof to the
Company; provided that (A) if such failure is of such nature that it can be
corrected but not within thirty (30) days, it will not be an Event of Default so
long as prompt corrective action is instituted and is diligently pursued by the
Company and the Bank consents to such extension or is not required to consent
thereto pursuant to the Agreement, which consent may not be unreasonably
withheld, and (B) if such failure results in the interest on the Bonds becoming
subject to Federal income taxation and the Bonds are redeemed as a result
thereof in accordance with their terms, such failure shall not constitute an
Event of Default, and provided further, however, that failure of the Company to
comply with the covenant contained in Section 5.27(a) hereof shall not
constitute an Event of Default; or
(e) The Company shall fail to pay in full when due (i) any amount owing by the
Company with respect to the Bonds (including payments due under any indenture,
loan agreements, lease agreements or similar agreements), or (ii) the principal
of, premium (if any) on or interest on any other Indebtedness of the Company in
a principal amount exceeding $100,000, as and when the same shall become due
(unless such amount owing is being contested in good faith by the Company with
diligence and continuity and by appropriate proceedings for which the Company
has maintained adequate reserves in accordance with GAAP), or the occurrence of
any default under any mortgage, agreement or other instrument under or pursuant
to which the Bonds or such Indebtedness is incurred, secured, or issued, and
continuance of which default beyond the period of grace, if any, allowed with
respect thereto; or
(f) The entry or filing of any judgment, writ or warrant of attachment or of any
similar process in an amount in excess of $500,000 against the Company or
against its property and failure of the Company to vacate, pay, bond, stay or
contest in good faith such judgment, writ, warrant of attachment or other
process for a period of thirty (30) days, unless the Company delivers the Bank
evidence, satisfactory to the Bank, that such amount is fully covered by
third-party insurance; or
(g) The Company shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of itself or of its property, or
(ii) admit in writing its inability to pay its debts generally as they become
due, or (iii) make a general assignment for the benefit of creditors, or (iv) be
adjudicated a bankrupt or insolvent, or (v) commence a voluntary case under the
United States Bankruptcy Code, or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief, or seeking
to take advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization, or
insolvency proceeding, or action shall be taken by it for the purpose of
effecting any of the foregoing, or (vi) if without the application, approval or
consent of the Company, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Company an order
for relief or an adjudication in bankruptcy, reorganization, dissolution,
winding up, liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of the Company or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by the Company in
good faith, the same shall (A) result in the entry of an order for relief or any
such adjudication or appointment or (B) remain unvacated, undismissed,
undischarged, unstayed or unbonded for a period of sixty (60) days; or
(h) For any reason the Bonds are declared due and payable by acceleration in
accordance with Section 902 of the Indenture; or
(i) This Agreement, or any of the other Loan Documents ceases to be valid and
binding on the Company or is deemed null and void or the validity or
enforceability thereof is contested by the Company or the Corporate Guarantor or
the Company denies that it has further liability under this Agreement or any of
the other Loan Documents, or the Guarantor denies that it has further liability
under the Guaranty;
(j) The transfer of title to or possession of the Project Facilities or any part
thereof (in one or more transactions) for any reason without prior express
written consent of the Authority and the Bank as provided in Section 5.13
hereof; or
(k) The voluntary close of business or voluntary cessation of operations of the
Company at the Project Facilities for a continuous period in excess of
one-hundred twenty (120) days; or
Section 7.2. Remedies.
(a) Upon the occurrence of any Event of Default (other than one referred to in
clause (f) or (g) of Section 7.1, with respect to which the remedies provided in
clause (i) of this Section 7.2(a) shall automatically and immediately be
applicable, without notice or demand of any kind), the Bank (i) may, by mailing
of notice to the Company declare an amount equal to the maximum amount which may
at any time be drawn under the Letter of Credit whether or not the Trustee shall
have presented, or shall be entitled at such time to present, the drafts,
certificates or other documents required to draw on the Letter of Credit)
together with the other obligations of the Company hereunder or under the other
Loan Documents to be forthwith due and payable, and the same shall thereupon
become due and payable without demand, presentment, protest or further notice of
any kind, all of which are hereby expressly waived, (ii) subject to the terms of
the Letter of Credit, may refuse to reinstate (A) the Maximum Stated Amount and
any interest portion of the Letter of Credit with respect to any draft
representing interest following the payment by the Bank of the amount set forth
in such draft, and/or (B) the Maximum Stated Amount, the interest portion and
the principal portion of the Letter of Credit with respect to any draft
representing payment of principal following the payment by the Bank of an amount
set forth in such draft, and (iii) may pursue any other rights or remedies it
may have at law or in equity or pursuant hereto or to any of the other Loan
Documents.
(b) In addition to the remedies provided in Section 7.2(a) hereof, upon the
occurrence of any Event of Default under Section 7.1(a), (f) or (g) hereof, or
upon the Bank's declaring the obligations of the Company hereunder to be due and
payable, the Bank shall have the right to foreclose on the Mortgage, and collect
and sell or otherwise liquidate any Collateral and (A) apply the proceeds
thereof to payment of the LC Indebtedness outstanding or (B) deposit such
proceeds in the Cash Collateral Account, to be applied in accordance with
Section 7.2(c) hereof.
(c) So long as the Letter of Credit shall remain outstanding, any amounts due
and payable as described in the previous subparagraphs (a) and (b), when
received by the Bank, shall (in such manner and order as the Bank shall
determine in its sole discretion): (i) to the extent of the Maximum Stated
Amount (and any reinstatements thereof which the Bank is obligated to make, if
any), be deposited in the Cash Collateral Account and held by the Bank as cash
collateral for the obligation of the Company to reimburse the Bank for the
amounts of any draws under the Letter of Credit; and/or (ii) be applied to
payment of any or all of the LC Indebtedness or the Company's obligations under
any one or more of the other Loan Documents. Upon any draw under the Letter of
Credit, the Bank shall have the unconditional right to debit any and all
accounts of the Company at the Bank, including the Cash Collateral Account to
reimburse the Bank for the amount of such draw. The Company shall have the right
to direct the investment in Permitted Investments of any funds in such accounts,
and the Bank shall not have any duty or liability with respect to such
investments (including, without limitation, any liability for any loss due to
change in value or for any penalty, charge or loss upon liquidation thereof
prior to maturity in accordance with the immediately succeeding sentence) except
to make the investments directed by the Company, and to hold, receive the
proceeds of, liquidate as necessary, and apply such investments and the proceeds
thereof in accordance with this Section 7.2(c). In the event that any of the
funds held in the Cash Collateral Account are invested in an investment that
requires payment or deduction of a prepayment, breakage or similar penalty or
charge upon liquidation prior to maturity (including without limitation a
certificate of deposit), the Company shall have a further obligation under this
Agreement to reimburse or pay to the Bank, upon demand, the full amount of each
such penalty, charge, loss of investment earnings, or loss of funds attributable
to any action by the Bank in so liquidating any such investment in order to
apply the proceeds of the Cash Collateral Account in accordance with this
paragraph, and such obligation until paid in full shall be added to and become a
part of the LC Indebtedness of the Company, shall bear interest as provided in
Section 2.3(c) hereof, and shall be secured by the Collateral granted pursuant
to the terms of this Agreement and the other Loan Documents. In the event the
Letter of Credit is canceled or expires or in the event at any time of any
permanent reduction of the Maximum Stated Amount (i.e., a reduction not subject
to any possible subsequent reinstatement pursuant to the terms of the Letter of
Credit, except voluntarily by the Bank at its sole option) at any time, the Bank
shall apply the amounts then in the Cash Collateral Account (to the extent that
funds are available therein, including, as and to the extent necessary, the
liquidation of any investments held in the Cash Collateral Account subject to
the provisions of this paragraph), by, first, setting aside in the Cash
Collateral Account (to the extent so available) an amount of funds and
investments (excluding any accrued or expected interest or earnings thereon to
the extent not actually received by the Bank) equal to the Maximum Stated Amount
immediately after such cancellation, expiration or permanent reduction, second,
applying any remaining amounts (if any) to the payment of the outstanding LC
Indebtedness, and third, after payment in full of all such obligations to the
Bank, paying any remaining amounts (if any) to the Company.
(d) Upon the occurrence or existence of any Event of Default, the Bank shall be
entitled to notify the Trustee and the Paying Agent thereof and demand the
acceleration of the maturity of the Bonds pursuant to Section 6.2 of the Loan
Agreement and Section 902(c) of the Indenture and request the Paying Agent to
draw under the Letter of Credit.
Section 7.3. No Remedy Exclusive. No remedy herein conferred or reserved to the
Bank is intended to be exclusive of any other available remedy or remedies, but
each and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Agreement and the other Loan Document or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power occurring upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
or power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Bank to exercise any remedy reserved to it in
this Article, it shall not be necessary to give notice to any party, other than
such notice as may be required in this Article 7. The rights and remedies of the
Bank specified herein are for the sole and exclusive benefit, use and protection
of the Bank and the Bank is entitled, but shall have no duty or obligation to
the Company, the Corporate Guarantor, the Authority, the Trustee, the
Bondholders, or any other Person, (a) to exercise or refrain from exercising any
right or remedy reserved to the Bank hereunder or under any other Loan Document,
or (b) to cause the Trustee, the Authority or any other Person to exercise or
refrain from exercising any right or remedy available to it under any of the
Loan Documents to which it is a party.
Section 7.4. Agreement to Pay Attorneys Fees and Expenses. In the event the
Company shall default under any of the provisions of this Agreement and the Bank
shall require and employ attorneys or incur other expenses for the collection of
payments due or to become due or for the enforcement or performance or
observance of any obligation or agreement on the part of the Company herein
contained, the Company agrees that it will on demand therefor pay to the Bank
the reasonable fees of such attorneys and such other expenses so incurred by the
Bank whether or not suit be brought.
Section 7.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Agreement should be breached by any party and
thereafter waived by any other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 7.6. Waiver. The Company expressly waives any right of redemption it
might otherwise have with respect to the Project Facilities under the laws of
the State, to the extent such right may be exercised on or after the date of any
foreclosure sale. The Company hereby waives and relinquishes the benefits of any
present or future law exempting the Project Facilities from attachment, levy or
sale on execution, or any part of the proceeds arising from the sale thereof,
and all benefits of stay of execution or other process.
Section 7.7. Additional Rights of the Bank. So long as the Letter of Credit is
in full force and effect, the Bank shall have the sole right and power to take,
make, give or withhold any consent to any amendment, substitution or release of
any of the Mortgage, the Assignment of Leases or the property subject to the
lien or interests created therein and (except for the right of the Authority to
declare an event of default and to exercise its other remedies thereunder) to
exercise all rights and remedies provided for herein, in the Indenture, or in
the other Loan Documents with respect to the Collateral.
ARTICLE 8
MISCELLANEOUS
Section 8.1. Severability. If any provision hereof is found by a court of
competent jurisdiction to be prohibited or unenforceable, it shall be
ineffective only to the extent of such prohibition or unenforceability, and such
prohibition or unenforceability shall not invalidate the balance of such
provision to the extent it is not prohibited or unenforceable, nor invalidate
the other provisions hereof, all of which shall be liberally construed in order
to effect the provisions of this Agreement.
Section 8.2. Successors and Assigns.
(a) The provisions of the Loan Documents shall be binding upon and inure to the
benefit of the parties thereto and their respective successors and permitted
assigns, except that the Company or Corporate Guarantor may not assign the
Letter of Credit, or their respective rights and obligations under this
Agreement and the other Loan Documents or any of its obligations, liabilities,
rights or benefits thereunder without the prior written consent of the Bank,
which the Bank may withhold in its absolute discretion.
(b) Without limiting any other rights of the Bank under applicable law, the Bank
may at any time grant to one or more banks or other institutions or entities
participating interests in the Letter of Credit made or to be made to the
Company under this Agreement.
Subject to the foregoing, this Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their respective successors and
assigns, and the terms "Authority", "Company" and "Trustee" shall, where the
context requires, include the respective successors and assigns of such persons.
No assignment pursuant to this Section shall release the Company from its
obligations under this Agreement.
Section 8.3. Amendments, Etc. No amendment, modification, termination or waiver
of any provision of this Agreement or the other Loan Documents to which the Bank
is a party or beneficiary, and no consent to any departure there from by the
Company or the Corporate Guarantor or any other party thereto, shall in any
event be effective unless the same shall be in writing and signed by the Bank
(and such other parties as each such document shall specify) and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No notice to or demand on the Company or the
Corporate Guarantor in any case shall entitle the Company or the Corporate
Guarantor to any other or further notice or demand in similar or other
circumstances.
Section 8.4. Execution in Counterparts. This Agreement and the other Loan
Documents may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an original
and all of which (taken together) shall constitute one and the same agreement.
Section 8.5. Governing Law. This Agreement and the other Loan Documents shall be
governed by, and construed in accordance with, the internal laws of the State
(without giving effect to principles of conflicts of law), except to the extent
that the perfection and enforcement of any lien are required to be governed by
the law of the State in which the property subject to such lien is located.
Section 8.6. Adjustments and Additional Costs. In addition to any and all other
expenses, costs and obligations of the Company set forth herein, the Company
agrees to pay all charges and costs which are required and whenever required in
connection with the Authority's acquisition of the Project Facilities and in
connection with the conveyance of the Project Facilities from the Authority to
the Company.
Section 8.7. Reasonable Consent. Any and all consents required to be given,
pursuant to this Agreement or any of the Loan Documents, by the Authority, the
Bank, or the Trustee shall be based on a reasonable standard other than when the
Trustee is acting upon the direction of any of the parties pursuant to any of
the Loan Documents, except that any consent to any sale, transfer, other lien or
encumbrance on the Collateral shall be in the sole discretion of the Bank.
Section 8.8. Amounts Remaining in Bond Fund or Acquisition Fund. It is agreed by
the parties hereto that any amounts remaining in the Bond Fund or Acquisition
Fund, after payment in full of the Bonds (or provision for payment thereof
having been made in accordance with the provisions of the Indenture) and of the
fees, charges and expenses of the Trustee and the Authority in accordance with
the Indenture, shall upon release of the Indenture pursuant to Section 1101
thereof, be paid first by the Trustee to the Bank to the extent of any
unreimbursed drawing under the Letter of Credit, or any other obligations owing
by the Company to the Bank under this Agreement and any remaining moneys shall
belong to and be paid to the Company by the Trustee as overpayment of the Loan.
Section 8.9. Receipt of Indenture. The Company hereby acknowledges that it has
received an executed copy of the Indenture and is familiar with its provisions,
and agrees that it will take all such actions as are required or contemplated of
it under the Indenture to preserve and protect the rights of the Trustee and of
the Bondholders thereunder and that it will not take any action which would
cause a default thereunder. Any redemption of Bonds prior to maturity shall be
effected as provided in the Indenture. The Company agrees to comply with the
provisions of Section 702 of the Indenture.
Section 8.10. Headings. The captions or headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provision hereof.
Section 8.11. Waiver of Jury Trial. The Company hereby waives any and all rights
that it may now or hereafter have under the laws of the United States of America
or any state, to a trial by jury of any and all issues arising either directly
or indirectly in any action or proceeding between the Authority, the Trustee or
the Bank or their successors and assigns, out of or in any way connected with
the Letter of Credit, this Agreement and the other Loan Documents. It is
intended that said waiver shall apply to any and all defenses, rights, and/or
counterclaims in any action or proceeding.
Section 8.12. Integration: Entire Agreement. This Agreement and the other Loan
Documents and other instruments and documents to be delivered hereunder and
thereunder, are intended by the parties hereto and thereto to be, an integrated
contract, which together contain the entire understandings of the parties with
respect to the subject matter contained herein. This Agreement and the other
Loan Documents supersede all prior agreements and understandings between the
parties with respect to such subject matter, whether written or oral.
Section 8.13. Survival of Agreements. All agreements, covenants, representations
and warranties made herein shall survive the delivery of the Letter of Credit
and this Agreement and the respective obligations of the parties hereto shall
remain in full force and effect from the date of execution and delivery of this
Agreement until (i) the date on which the principal or redemption price of and
all interest on the Bonds and any other expenses of the Authority with respect
to the Bonds shall have been fully paid or provision for the payment thereof
shall have been made pursuant to the Indenture, (ii) the Company shall have
fully performed and satisfied all other covenants, agreements and obligations
under this Agreement, the Loan Agreement and (iii) the Indenture shall have been
released and discharged pursuant to the Indenture.
Section 8.14. Addresses for Notices, Etc. All notices requests, demands,
directions and other communications provided for hereunder or under any other
Loan Document shall be sufficient if made in writing and delivered personally
(including by Federal Express or other recognized courier), if mailed by
certified mail, return receipt requested, or if telecopied, to the applicable
party at the addresses indicated below:
If to the Authority
:
New Jersey Economic Development Authority
Capital Place One
CN 990
200 South Warren Street
Trenton, New Jersey 08625
Attention: Executive Director
Telecopier Number: (609) 633-7751
If to the Company:
Burlington Coat Factory Warehouse of New Jersey, Inc.
1830 Route 130
Burlington, New Jersey 08016
Attention: Chief Accounting Officer
- with a duplicate copy -
Burlington Coat Factory Warehouse Corporation
1830 Route 130
Burlington, New Jersey 08016
Attention: Paul C. Tang, Esquire
Telecopier Number: (609) 387-7071
If to the Bank:
First Fidelity Bank, N.A.
123 South Broad Street - PMB 006
Philadelphia, Pennsylvania 19109
Attention: Stephen H. Clark, Vice President
Telecopier: (215) 985-8793
If to the Trustee:
Shawmut Bank Connecticut, National Association
777 Main Street, MSN 238
Hartford, Connecticut 06115
Attention: Corporate Trust Department
Telecopier:
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of the Loan Documents. All notices, requests, demands, directions and other
communications shall (if delivered personally) be effective when delivered or
(if mailed) three (3) days after having been deposited in the mail, addressed as
aforesaid.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
caused this Agreement to be executed and delivered as of the date first written
above.
ATTEST:
BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.
By:
Name: Mark A. Nesci
Title: Vice President
FIRST FIDELITY BANK, NATIONAL,
ASSOCIATION
By:
Name: Stephen H. Clark
Title: Vice President
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FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
William R. Klesse (“Executive”) and Ultramar Diamond Shamrock Corporation, a
Delaware corporation (the “Company”), hereby enter into this First Amendment to
the Employment Agreement between Executive and the Company, dated as of October
23, 1996, and effective as of December 3, 1996 (the “Agreement”).
WHEREAS, the Executive serves as Executive Vice President, Operations, of the
Company; and
WHEREAS, the Executive and the Company entered into the Agreement as of the date
stated above; and
WHEREAS, Section 12.8 of the Agreement provides that it may be amended only by
an instrument in writing approved by the Company and signed by the Executive and
the Company; and
WHEREAS, the Company considers it in the best interests of its stockholders to
foster the continued employment of certain key management personnel; and
WHEREAS, the Company wishes to amend the Agreement to add certain provisions
approved by the Compensation Committee of the Board of Directors of the Company
at a meeting held on May 1, 2000.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and in the Agreement, it is agreed that, effective as of May 1, 2000, the
Agreement shall be amended as follows:
I.
A new final sentence is added to Section 4.2 of the Agreement as follows:
Notwithstanding any other provision of the Agreement, or the terms of the
Ultramar Diamond Shamrock Corporation Retirement Restoration Plan (the “RRP”),
to the contrary, Executive (and Executive’s beneficiaries) shall be entitled to
no benefits under, or with respect to, the RRP, in acknowledgment of the fact
that such benefits will be provided under the supplemental executive retirement
plan of the Company in which Executive participates.
II.
Section 5.2(i) of the Agreement is hereby deleted and substituted with the
following:
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Klesse First Amendment to Employment Agreement
Page 2 of 8
(i) If the Company determines in good faith that the Executive has
incurred a Disability (as defined below) during the Term, the Company may give
the Executive written notice of its intention to terminate its obligations under
this Agreement, which notice may, but need not, include a statement of the
Company’s intent to terminate the Executive’s employment. In such event, the
Company’s obligations under this Agreement, and the Executive’s employment (if
applicable), will terminate effective on the 30th day after receipt of such
notice by the Executive (the “Disability Termination Date”), provided that
within the 30 days after such receipt, the Executive will not have returned to
full-time performance of his duties. The Executive will continue to receive his
annual base salary until the Disability Termination Date. The Executive will
continue to receive benefits until the Disability Termination Date, provided
that if the Company has not elected to terminate the Executive’s employment
under this provision (but rather to terminate only its obligations under this
Agreement), the Executive’s right to continue to receive benefits following the
Disability Termination Date will be governed by the policies and procedures of
the Company generally applicable to disabled employees. In that event, the
Executive will be considered an “employee at will” following the Disability
Termination Date, and either the Executive or the Company may thereafter
terminate the Executive’s employment for any reason or for no reason, and the
rights and obligations of the Executive and the Company upon such termination
will be governed by the policies and procedures of the Company applicable to
employees at will, and by applicable law.
In the event of the Executive’s disability, the Company will pay the
Executive, promptly after the Disability Termination Date, (a) the unpaid annual
base salary to which he is entitled, pursuant to Section 4.1, through the
Disability Termination Date, (b) for any accrued but unused vacation days, to
the extent and in the amounts, if any, provided under the Company’s usual
policies and arrangements, and (c) a lump sum in cash in an amount equal to 50%
of his annual base salary at the Disability Termination Date. This Section 5.2
will not limit the entitlement of the Executive, the Executive’s estate or
beneficiaries to any disability or other benefits then available to the
Executive under any disability insurance or other benefit plan or policy that is
maintained by the Company for the Executive’s benefit; provided that (i) any
amounts paid as base salary shall offset, on a dollar-for-dollar basis (but not
below zero), the Company’s obligation to pay the Executive short-term disability
benefits under any short-term disability plan, program or arrangement of the
Company, in respect of the same period for which such base salary is paid, and
(ii) any benefits paid pursuant to the Company’s long-term disability plan shall
reduce, on a dollar-for-dollar basis (but not below zero), the Company’s
obligation to pay the Executive base salary in respect of the same period for
which such benefits are paid; provided, however, that any such offset or
reduction shall not affect, or be affected by, the payments provided to be made
in accordance with clauses (a), (b), or (c) of this Section 5.2(i).
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III.
Section 5.5(i)(a) of the Agreement shall be revised to read as follows:
(i) Form and Amount. Upon Executive’s involuntary termination, other
than for Cause, the Company shall:
(a) subject to Section 5.5(iii), pay or provide Executive
(1) his annual salary and benefits until the date of termination,
(2) within five business days after any revocation period in the
release described in Section 5.5(iii) has expired, a lump sum cash payment equal
to three multiplied by the sum of (x) and (y), where (x) is Executive’s highest
annual base salary in effect during the three years prior to his date of
termination, and (y) is the highest annual incentive compensation earned by
Executive during the three years prior to his termination; provided, however,
that all amounts received by Executive pursuant to the Ultramar Diamond Shamrock
Corporation Intermediate Incentive and Performance-Based Restricted Stock Plan
shall not be considered “annual incentive compensation” for purposes of this
Section 5.5(i)(a)(2),
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Klesse First Amendment to Employment Agreement
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(3) three additional years of age and service credit under all
Company-sponsored employee benefit plans, including all retirement income plans
and welfare benefit plans, policies or programs or arrangements in which
Executive participates, including any savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, short or long-term
disability, and any other deferred compensation, group and/or executive life,
health, retiree health, medical/hospital, or other insurance (whether funded by
actual insurance or self-insured by the Company), expense reimbursement or other
employee benefit plans, policies, programs or arrangements or any equivalent
successor plans, policies, programs or arrangements that may not now exist or
may be adopted hereafter by the Company (but only to the extent that
eligibility, vesting, or the timing or amount of the benefit are dependent upon
age and service); provided, however, that in the case of a qualified defined
benefit pension plan (hereafter, the “Qualified Plan”), (i) if such
aforementioned involuntary termination occurs prior to, or contemporaneous with,
the occurrence of an event entitling Executive to a lump sum payment under the
provisions of either the Ultramar Corporation Supplemental Executive Retirement
Plan (or any equivalent successor plan, policy, program or arrangement)
(collectively, the “Ultramar SERP”) or the Diamond Shamrock, Inc. Supplemental
Executive Retirement Plan (or any equivalent successor plan, policy, program or
arrangement) (collectively, the “DS SERP”) pertaining to “Change in Control” (as
defined in either the Ultramar SERP or the DS SERP, as the case may be),
disregarding for this purpose, any “Change in Control” occurring prior to
December 4, 1996 (collectively, a “SERP Lump Sum Payment”), in lieu of granting
any such actual additional years of age and service credit under the Qualified
Plan, an amount equal to the present value of the additional benefit Executive
would have accrued if he had been credited for all purposes with the three
additional years of age and service under the Qualified Plan as of his date of
termination with the Company will be paid in a lump sum in cash within five
business days after any revocation period in the release described in Section
5.5(iii) has expired and (ii) if such aforementioned involuntary termination
occurs following the occurrence of an event entitling Executive to a SERP Lump
Sum Payment, in lieu of granting any such additional years of age and service
credit under the Qualified Plan, an amount equal to the excess of (A) the
present value of the additional benefit Executive would have accrued if he had
been credited for all purposes with the three additional years of age and
service under the Qualified Plan as of his date of termination with the Company
over (B) the amount by which the SERP Lump Sum Payment would, under the terms of
the Ultramar SERP or DS SERP (as the case may be), have been reduced had the
aforementioned involuntary termination instead occurred contemporaneous with the
occurrence of the event entitling Executive to the SERP Lump Sum Payment, will
be paid in a lump sum in cash within five business days after any revocation
period in the release described in Section 5.5(iii) has expired, with (i) in the
event that Executive’s aforementioned involuntary termination occurs on or after
a “Change in Control” of the Company, as defined in Section 6.2 (or prior to,
but in anticipation of, such a “Change in Control”), such present value being
determined, in both cases, using the interest rate and mortality table set forth
in Section 4.1(m) (i) and 4.1(n)(i), respectively, of the Ultramar SERP and (ii)
in the event that Employee’s aforementioned involuntary termination occurs prior
to such a “Change in Control” of the Company (other than such a termination in
anticipation of such a “Change in Control”), such present value being
determined, in each such case, using in the interest rate and mortality table
set forth in Section 4.1(m)(ii) and 4.1(n)(ii), respectively, of the Ultramar
SERP; further, provided, however, that, in determining the amount of the benefit
which Executive is entitled to receive, determined with respect to the DS SERP,
the three additional years of age and service credit which the Company would
otherwise pay, or provide, Executive under the DS SERP shall not, pursuant to
this clause (3), be taken into account under the DS SERP, to the extent that
Executive was otherwise previously so credited with three additional years of
age and service credit under the terms of the DS SERP pertaining to “Change in
Control;” and further, provided, in crediting the three additional years of age
and service for purposes of calculating current and unused vacation such
additional years shall be applied in determining the amount of annual vacation
to which Executive is entitled, but shall not be deemed to cause Executive to
have earned three additional years worth of unused vacation,
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Klesse First Amendment to Employment Agreement
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(4) within five business days after any revocation period in the
release described in Section 5.5(iii) has expired, a lump sum cash payment equal
to three times the maximum amount the Company could have contributed on behalf
of Executive to all of the Company-sponsored qualified and nonqualified defined
contribution retirement plans in which Executive participated for any of the
three years ending on the date of Executive’s termination of employment,
assuming that Executive made the maximum voluntary contributions thereto,
(5) for a period of three years after the date of Executive’s
termination of employment, the continuation of the employee welfare benefits set
forth in Section 4.2 (other than short-term or long-term disability benefits),
except as offset by benefits paid by other sources as set forth in Section 8.2,
or as provided in Section 5.5(ii) (provided, however, that in the event that any
such continued coverage is not permitted under the terms of any applicable
welfare plan or policy, the Company shall provide Executive with the after-tax
economic equivalent to be deemed to be no less than the total cost to Executive
of obtaining such coverage on an individual basis and to be paid quarterly in
advance without discount);
IV.
Section 5.5(i) of the Agreement shall be amended by striking the period at the
end of Subsection 5.5(i)(b) and inserting the following in lieu thereof:
; and (c) the Company shall provide Executive with outplacement services for a
period of one year commencing on the date his employment is terminated in
accordance with the Company’s executive outplacement policy in effect at the
time his employment is terminated or immediately prior to a Change in Control
(if prior to his termination of employment), whichever is more generous.
--------------------------------------------------------------------------------
Klesse First Amendment to Employment Agreement
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V.
Section 5.5(ii) of the Agreement shall be amended by striking the reference to
“Section 5.5(i)(a)(4)” and inserting “Section 5.5(i)(a)(5)” in lieu thereof and
adding a new sentence to the end thereof which shall read as follows:
Notwithstanding the above, if Executive’s continued participation in any of
the benefits referenced in Section 5.5(i)(a)(5) would violate any applicable law
or cause any benefits plan, policy, or arrangement of the Company to fail to
qualify for tax-favored status, the Company shall not be required to provide
such benefits to Executive through the Company’s plans, policies, or
arrangements, but instead shall either (A) arrange to make a substantially
similar benefit available to Executive at no cost to the Executive or (B) pay
Executive a sufficient amount of cash to allow Executive to purchase, on an
after-tax basis, a substantially similar benefit on the open market at no
incremental cost to Executive.
VI.
Section 5.5 of the Agreement shall be amended by adding a new subsection (iv) to
the end thereof which shall read as follows:
(iv) Other Severance Benefits. Notwithstanding any provision of this
Agreement to the contrary, Executive shall be entitled to receive the greater of
(a) the termination payments and benefits provided under Section 5.5 of this
Agreement, or (b) the termination payments and benefits provided by any other
Company-sponsored plan, program or policy which has as its primary purpose the
provision of severance benefits, but in no event shall Executive be eligible to
receive termination payments and benefits provided under both this Agreement and
any such plan, program or policy.
VII.
Section 8 of the Agreement shall be revised to read as follows:
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Klesse First Amendment to Employment Agreement
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8. Mitigation and Offset.
8.1 Executive’s right to receive when due the payments and
other benefits provided for under and in accordance with the terms of this
Agreement is absolute, unconditional and subject to no set-off, counterclaim or
legal equitable defense. Any claim which the Company may have against Executive,
whether for breach of this Agreement or otherwise, shall be brought in a
separate action or proceeding and not part of any action or proceeding brought
by Executive to enforce the rights against the Company under this Agreement.
8.2 Executive shall not have any duty to mitigate the
amounts payable by the Company under this Agreement upon any termination of
employment by seeking new employment following termination. All amounts payable
pursuant to this Agreement shall be paid without reduction regardless of any
amount of salary, compensation or other amounts which may be paid or payable to
Executive as the result of Executive’s employment by another employer; provided,
however, that Executive’s coverage under the Company’s welfare benefit plans
will be reduced to the extent that Executive becomes covered under any
comparable employee benefit plan made available by another employer and covering
the same type of benefits. Executive shall report to the Company any such
benefits actually received by him.
VIII.
Section 12.5(i) of the Agreement shall be amended to read as follows:
(i) To The Company. If to the Company, addressed to the attention of
the Chief Executive Officer at P.O. Box 696000, San Antonio, Texas, 78269-6000,
with a copy sent to the attention of the General Counsel at such address.
IX.
Section 12 of the Agreement shall be amended to add a new Subsection 12.11 which
shall read as follows:
12.11 Dialogue. Unless Executive otherwise consents by the execution
of an instrument in writing that specifically refers to Section 12.11 of this
Agreement, no claim or dispute arising out of or related to this Agreement or
any other agreement, policy, plan, program or arrangement, including without
limitation, any qualified or nonqualified retirement plan, stock option plan or
agreement, or any other equity incentive plan in which Executive participated
prior to his termination, shall be subject to the Company’s Dialogue Dispute
Resolution Program.
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Klesse First Amendment to Employment Agreement
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X.
The model release attached to this First Amendment as “Exhibit A“ shall be
substituted for the exhibit referred to in Section 5.5(iii) of the Agreement.
XI.
Except as otherwise provided herein, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the first day
of May, 2000.
/s/ William R. Klesse
——————————————
William R. Klesse
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ Jean Gaulin
——————————————
Title Chairman, President and CEO
--------------------------------------------------------------------------------
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
Timothy J. Fretthold (“Executive”) and Ultramar Diamond Shamrock Corporation, a
Delaware corporation (the “Company”), hereby enter into this First Amendment to
the Employment Agreement between Executive and the Company, dated as of October
23, 1996, and effective as of December 3, 1996 (the “Agreement”).
WHEREAS, the Executive serves as Executive Vice President, Chief Administrative
and Legal Officer, of the Company; and
WHEREAS, the Executive and the Company entered into the Agreement as of the date
stated above; and
WHEREAS, Section 12.8 of the Agreement provides that it may be amended only by
an instrument in writing approved by the Company and signed by the Executive and
the Company; and
WHEREAS, the Company considers it in the best interests of its stockholders to
foster the continued employment of certain key management personnel; and
WHEREAS, the Company wishes to amend the Agreement to add certain provisions
approved by the Compensation Committee of the Board of Directors of the Company
at a meeting held on May 1, 2000.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and in the Agreement, it is agreed that, effective as of May 1, 2000, the
Agreement shall be amended as follows:
I.
A new final sentence is added to Section 4.2 of the Agreement as follows:
Notwithstanding any other provision of the Agreement, or the terms of the
Ultramar Diamond Shamrock Corporation Retirement Restoration Plan (the “RRP”),
to the contrary, Executive (and Executive’s beneficiaries) shall be entitled to
no benefits under, or with respect to, the RRP, in acknowledgment of the fact
that such benefits will be provided under the supplemental executive retirement
plan of the Company in which Executive participates.
II.
Section 5.2(i) of the Agreement is hereby deleted and substituted with the
following:
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Fretthold First Amendment to Employment Agreement
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(i) If the Company determines in good faith that the Executive has
incurred a Disability (as defined below) during the Term, the Company may give
the Executive written notice of its intention to terminate its obligations under
this Agreement, which notice may, but need not, include a statement of the
Company’s intent to terminate the Executive’s employment. In such event, the
Company’s obligations under this Agreement, and the Executive’s employment (if
applicable), will terminate effective on the 30th day after receipt of such
notice by the Executive (the “Disability Termination Date”), provided that
within the 30 days after such receipt, the Executive will not have returned to
full-time performance of his duties. The Executive will continue to receive his
annual base salary until the Disability Termination Date. The Executive will
continue to receive benefits until the Disability Termination Date, provided
that if the Company has not elected to terminate the Executive’s employment
under this provision (but rather to terminate only its obligations under this
Agreement), the Executive’s right to continue to receive benefits following the
Disability Termination Date will be governed by the policies and procedures of
the Company generally applicable to disabled employees. In that event, the
Executive will be considered an “employee at will” following the Disability
Termination Date, and either the Executive or the Company may thereafter
terminate the Executive’s employment for any reason or for no reason, and the
rights and obligations of the Executive and the Company upon such termination
will be governed by the policies and procedures of the Company applicable to
employees at will, and by applicable law.
In the event of the Executive’s disability, the Company will pay the
Executive, promptly after the Disability Termination Date, (a) the unpaid annual
base salary to which he is entitled, pursuant to Section 4.1, through the
Disability Termination Date, (b) for any accrued but unused vacation days, to
the extent and in the amounts, if any, provided under the Company’s usual
policies and arrangements, and (c) a lump sum in cash in an amount equal to 50%
of his annual base salary at the Disability Termination Date. This Section 5.2
will not limit the entitlement of the Executive, the Executive’s estate or
beneficiaries to any disability or other benefits then available to the
Executive under any disability insurance or other benefit plan or policy that is
maintained by the Company for the Executive’s benefit; provided that (i) any
amounts paid as base salary shall offset, on a dollar-for-dollar basis (but not
below zero), the Company’s obligation to pay the Executive short-term disability
benefits under any short-term disability plan, program or arrangement of the
Company, in respect of the same period for which such base salary is paid, and
(ii) any benefits paid pursuant to the Company’s long-term disability plan shall
reduce, on a dollar-for-dollar basis (but not below zero), the Company’s
obligation to pay the Executive base salary in respect of the same period for
which such benefits are paid; provided, however, that any such offset or
reduction shall not affect, or be affected by, the payments provided to made in
accordance with clauses (a), (b), or (c) of this Section 5.2(i).
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Fretthold First Amendment to Employment Agreement
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III.
Section 5.5(i)(a) of the Agreement shall be revised to read as follows:
(i) Form and Amount. Upon Executive’s involuntary termination, other
than for Cause, the Company shall:
(a) subject to Section 5.5(iii), pay or provide Executive
(1) his annual salary and benefits until the date of termination,
(2) within five business days after any revocation period in the
release described in Section 5.5(iii) has expired, a lump sum cash payment equal
to three multiplied by the sum of (x) and (y), where (x) is Executive’s highest
annual base salary in effect during the three years prior to his date of
termination, and (y) is the highest annual incentive compensation earned by
Executive during the three years prior to his termination; provided, however,
that all amounts received by Executive pursuant to the Ultramar Diamond Shamrock
Corporation Intermediate Incentive and Performance-Based Restricted Stock Plan
shall not be considered “annual incentive compensation” for purposes of this
Section 5.5(i)(a)(2),
--------------------------------------------------------------------------------
Fretthold First Amendment to Employment Agreement
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(3) three additional years of age and service credit under all
Company-sponsored employee benefit plans, including all retirement income plans
and welfare benefit plans, policies or programs or arrangements in which
Executive participates, including any savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, short or long-term
disability, and any other deferred compensation, group and/or executive life,
health, retiree health, medical/hospital, or other insurance (whether funded by
actual insurance or self-insured by the Company), expense reimbursement or other
employee benefit plans, policies, programs or arrangements or any equivalent
successor plans, policies, programs or arrangements that may not now exist or
may be adopted hereafter by the Company (but only to the extent that
eligibility, vesting, or the timing or amount of the benefit are dependent upon
age and service); provided, however, that in the case of a qualified defined
benefit pension plan (hereafter, the “Qualified Plan”), (i) if such
aforementioned involuntary termination occurs prior to, or contemporaneous with,
the occurrence of an event entitling Executive to a lump sum payment under the
provisions of either the Ultramar Corporation Supplemental Executive Retirement
Plan (or any equivalent successor plan, policy, program or arrangement)
(collectively, the “Ultramar SERP”) or the Diamond Shamrock, Inc. Supplemental
Executive Retirement Plan (or any equivalent successor plan, policy, program or
arrangement) (collectively, the “DS SERP”) pertaining to “Change in Control” (as
defined in either the Ultramar SERP or the DS SERP, as the case may be),
disregarding for this purpose, any “Change in Control” occurring prior to
December 4, 1996 (collectively, a “SERP Lump Sum Payment”), in lieu of granting
any such actual additional years of age and service credit under the Qualified
Plan, an amount equal to the present value of the additional benefit Executive
would have accrued if he had been credited for all purposes with the three
additional years of age and service under the Qualified Plan as of his date of
termination with the Company will be paid in a lump sum in cash within five
business days after any revocation period in the release described in Section
5.5(iii) has expired and (ii) if such aforementioned involuntary termination
occurs following the occurrence of an event entitling Executive to a SERP Lump
Sum Payment, in lieu of granting any such additional years of age and service
credit under the Qualified Plan, an amount equal to the excess of (A) the
present value of the additional benefit Executive would have accrued if he had
been credited for all purposes with the three additional years of age and
service under the Qualified Plan as of his date of termination with the Company
over (B) the amount by which the SERP Lump Sum Payment would, under the terms of
the Ultramar SERP or DS SERP (as the case may be), have been reduced had the
aforementioned involuntary termination instead occurred contemporaneous with the
occurrence of the event entitling Executive to the SERP Lump Sum Payment, will
be paid in a lump sum in cash within five business days after any revocation
period in the release described in Section 5.5(iii) has expired, with (i) in the
event that Executive’s aforementioned involuntary termination occurs on or after
a “Change in Control” of the Company, as defined in Section 6.2 (or prior to,
but in anticipation of, such a “Change in Control”), such present value being
determined, in both cases, using the interest rate and mortality table set forth
in Section 4.1(m) (i) and 4.1(n)(i), respectively, of the Ultramar SERP and (ii)
in the event that Employee’s aforementioned involuntary termination occurs prior
to such a “Change in Control” of the Company (other than such a termination in
anticipation of such a “Change in Control”), such present value being
determined, in each such case, using in the interest rate and mortality table
set forth in Section 4.1(m)(ii) and 4.1(n)(ii), respectively, of the Ultramar
SERP; further, provided, however, that, in determining the amount of the benefit
which Executive is entitled to receive, determined with respect to the DS SERP,
the three additional years of age and service credit which the Company would
otherwise pay, or provide, Executive under the DS SERP shall not, pursuant to
this clause (3), be taken into account under the DS SERP, to the extent that
Executive was otherwise previously so credited with three additional years of
age and service credit under the terms of the DS SERP pertaining to “Change in
Control;” and further, provided, in crediting the three additional years of age
and service for purposes of calculating current and unused vacation such
additional years shall be applied in determining the amount of annual vacation
to which Executive is entitled, but shall not be deemed to cause Executive to
have earned three additional years worth of unused vacation,
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Fretthold First Amendment to Employment Agreement
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(4) within five business days after any revocation period in the
release described in Section 5.5(iii) has expired, a lump sum cash payment equal
to three times the maximum amount the Company could have contributed on behalf
of Executive to all of the Company-sponsored qualified and nonqualified defined
contribution retirement plans in which Executive participated for any of the
three years ending on the date of Executive’s termination of employment,
assuming that Executive made the maximum voluntary contributions thereto,
(5) for a period of three years after the date of Executive’s
termination of employment, the continuation of the employee welfare benefits set
forth in Section 4.2 (other than short-term or long-term disability benefits),
except as offset by benefits paid by other sources as set forth in Section 8.2,
or as provided in Section 5.5(ii) (provided, however, that in the event that any
such continued coverage is not permitted under the terms of any applicable
welfare plan or policy, the Company shall provide Executive with the after-tax
economic equivalent any coverage foregone, such economic equivalent to be deemed
to be no less than the total cost to Executive of obtaining such coverage on an
individual basis and to be paid quarterly in advance without discount);
IV.
Section 5.5(i) of the Agreement shall be amended by striking the period at the
end of Subsection 5.5(i)(b) and inserting the following in lieu thereof:
; and (c) the Company shall provide Executive with outplacement services for a
period of one year commencing on the date his employment is terminated in
accordance with the Company’s executive outplacement policy in effect at the
time his employment is terminated or immediately prior to a Change in Control
(if prior to his termination of employment), whichever is more generous.
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Fretthold First Amendment to Employment Agreement
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V.
Section 5.5(ii) of the Agreement shall be amended by striking the reference to
“Section 5.5(i)(a)(4)” and inserting “Section 5.5(i)(a)(5)” in lieu thereof and
adding a new sentence to the end thereof, which shall read as follows:
Notwithstanding the above, if Executive’s continued participation in any of
the benefits referenced in Section 5.5(i)(a)(5) would violate any applicable law
or cause any benefits plan, policy, or arrangement of the Company to fail to
qualify for tax-favored status, the Company shall not be required to provide
such benefits to Executive through the Company’s plans, policies, or
arrangements, but instead shall either (A) arrange to make a substantially
similar benefit available to Executive at not cost to the Executive or (B) pay
Executive a sufficient amount of cash to allow Executive to purchase, on an
after-tax basis, a substantially similar benefit on the open market at no
incremental cost to Executive.
VI.
Section 5.5 of the Agreement shall be amended by adding a new subsection (iv) to
the end thereof which shall read as follows:
(iv) Other Severance Benefits. Notwithstanding any provision of this
Agreement to the contrary, Executive shall be entitled to receive the greater of
(a) the termination payments and benefits provided under Section 5.5 of this
Agreement, or (b) the termination payments and benefits provided by any other
Company-sponsored plan, program or policy which has as its primary purpose the
provision of severance benefits, but in no event shall Executive be eligible to
receive termination payments and benefits provided under both this Agreement and
any such plan, program or policy.
VII.
Section 8 of the Agreement shall be revised to read as follows:
--------------------------------------------------------------------------------
Fretthold First Amendment to Employment Agreement
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8. Mitigation and Offset.
8.1 Executive’s right to receive when due the payments and other
benefits provided for under and in accordance with the terms of this Agreement
is absolute, unconditional and subject to no set-off, counterclaim or legal
equitable defense. Any claim which the Company may have against Executive,
whether for breach of this Agreement or otherwise, shall be brought in a
separate action or proceeding and not part of any action or proceeding brought
by Executive to enforce the rights against the Company under this Agreement.
8.2 Executive shall not have any duty to mitigate the amounts
payable by the Company under this Agreement upon any termination of employment
by seeking new employment following termination. All amounts payable pursuant to
this Agreement shall be paid without reduction regardless of any amount of
salary, compensation or other amounts which may be paid or payable to Executive
as the result of Executive’s employment by another employer; provided, however,
that Executive’s coverage under the Company’s welfare benefit plans will be
reduced to the extent that Executive becomes covered under any comparable
employee benefit plan made available by another employer and covering the same
type of benefits. Executive shall report to the Company any such benefits
actually received by him.
VIII.
Section 12.5(i) of the Agreement shall be amended to read as follows:
(i) To The Company. If to the Company, addressed to the attention of the
Chief Executive Officer at P.O. Box 696000, San Antonio, Texas, 78269-6000, with
a copy sent to the attention of the General Counsel at such address.
IX.
Section 12 of the Agreement shall be amended to add a new Subsection 12.11 which
shall read as follows:
12.11 Dialogue. Unless Executive otherwise consents by the execution of
an instrument in writing that specifically refers to Section 12.11 of this
Agreement, no claim or dispute arising out of or related to this Agreement or
any other agreement, policy, plan, program or arrangement, including without
limitation, any qualified or nonqualified retirement plan, stock option plan or
agreement, or any other equity incentive plan in which Executive participated
prior to his termination, shall be subject to the Company’s Dialogue Dispute
Resolution Program.
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Fretthold First Amendment to Employment Agreement
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X.
The model release attached to this First Amendment as “Exhibit A” shall be
substituted for the exhibit referred to in Section 5.5(iii) of the Agreement.
XI.
Except as otherwise provided herein, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the first day
of May, 2000.
/s/ Timothy J. Fretthold
——————————————
Timothy J. Fretthold
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ Jean Gaulin
——————————————
TITLE Chairman, President and CEO
--------------------------------------------------------------------------------
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
W. Paul Eisman (“Executive”) and Ultramar Diamond Shamrock Corporation, a
Delaware corporation (the “Company”), hereby enter into this First Amendment to
the Employment Agreement between Executive and the Company, dated as of October
23, 1996, and effective as of December 3, 1996 (the “Agreement”).
WHEREAS, the Executive serves as Senior Vice President, Supply and Development,
of the Company; and
WHEREAS, the Executive and the Company entered into the Agreement as of the date
stated above; and
WHEREAS, Section 12.8 of the Agreement provides that it may be amended only by
an instrument in writing approved by the Company and signed by the Executive and
the Company; and
WHEREAS, the Company considers it in the best interests of its stockholders to
foster the continued employment of certain key management personnel; and
WHEREAS, the Company wishes to amend the Agreement to add certain provisions
approved by the Compensation Committee of the Board of Directors of the Company
at a meeting held on May 1, 2000.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and in the Agreement, it is agreed that, effective as of May 1, 2000, the
Agreement shall be amended as follows:
I.
A new final sentence is added to Section 4.2 of the Agreement as follows:
Notwithstanding any other provision of the Agreement, or the terms of the
Ultramar Diamond Shamrock Corporation Retirement Restoration Plan (the “RRP”),
to the contrary, Executive (and Executive’s beneficiaries) shall be entitled to
no benefits under, or with respect to, the RRP, in acknowledgment of the fact
that such benefits will be provided under the supplemental executive retirement
plan of the Company in which Executive participates.
II.
Section 5.2(i) of the Agreement is hereby deleted and substituted with the
following:
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(i) If the Company determines in good faith that the Executive has
incurred a Disability (as defined below) during the Term, the Company may give
the Executive written notice of its intention to terminate its obligations under
this Agreement, which notice may, but need not, include a statement of the
Company’s intent to terminate the Executive’s employment. In such event, the
Company’s obligations under this Agreement, and the Executive’s employment (if
applicable), will terminate effective on the 30th day after receipt of such
notice by the Executive (the “Disability Termination Date”), provided that
within the 30 days after such receipt, the Executive will not have returned to
full-time performance of his duties. The Executive will continue to receive his
annual base salary until the Disability Termination Date. The Executive will
continue to receive benefits until the Disability Termination Date, provided
that if the Company has not elected to terminate the Executive’s employment
under this provision (but rather to terminate only its obligations under this
Agreement), the Executive’s right to continue to receive benefits following the
Disability Termination Date will be governed by the policies and procedures of
the Company generally applicable to disabled employees. In that event, the
Executive will be considered an “employee at will” following the Disability
Termination Date, and either the Executive or the Company may thereafter
terminate the Executive’s employment for any reason or for no reason, and the
rights and obligations of the Executive and the Company upon such termination
will be governed by the policies and procedures of the Company applicable to
employees at will, and by applicable law.
In the event of the Executive’s disability, the Company will pay the
Executive, promptly after the Disability Termination Date, (a) the unpaid annual
base salary to which he is entitled, pursuant to Section 4.1, through the
Disability Termination Date, (b) for any accrued but unused vacation days, to
the extent and in the amounts, if any, provided under the Company’s usual
policies and arrangements, and (c) a lump sum in cash in an amount equal to 50%
of his annual base salary at the Disability Termination Date. This Section 5.2
will not limit the entitlement of the Executive, the Executive’s estate or
beneficiaries to any disability or other benefits then available to the
Executive under any disability insurance or other benefit plan or policy that is
maintained by the Company for the Executive’s benefit; provided that (i) any
amounts paid as base salary shall offset, on a dollar-for-dollar basis (but not
below zero), the Company’s obligation to pay the Executive short-term disability
benefits under any short-term disability plan, program or arrangement of the
Company, in respect of the same period for which such base salary is paid, and
(ii) any benefits paid pursuant to the Company’s long-term disability plan shall
reduce, on a dollar-for-dollar basis (but not below zero), the Company’s
obligation to pay the Executive base salary in respect of the same period for
which such benefits are paid; provided, however, that any such offset or
reduction shall not affect, or be affected by, the payments provided to be made
in accordance with clauses (a), (b), or (c) of this Section 5.2(i).
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III.
Section 5.5(i)(a) of the Agreement shall be revised to read as follows:
(i) Form and Amount. Upon Executive’s involuntary termination, other
than for Cause, the Company shall:
(a) subject to Section 5.5(iii), pay or provide Executive
(1) his annual salary and benefits until the date of termination,
(2) within five business days after any revocation period in the
release described in Section 5.5(iii) has expired, a lump sum cash payment equal
to three multiplied by the sum of (x) and (y), where (x) is Executive’s highest
annual base salary in effect during the three years prior to his date of
termination, and (y) is the highest annual incentive compensation earned by
Executive during the three years prior to his termination; provided, however,
that all amounts received by Executive pursuant to the Ultramar Diamond Shamrock
Corporation Intermediate Incentive and Performance-Based Restricted Stock Plan
shall not be considered “annual incentive compensation” for purposes of this
Section 5.5(i)(a)(2),
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(3) three additional years of age and service credit under all
Company-sponsored employee benefit plans, including all retirement income plans
and welfare benefit plans, policies or programs or arrangements in which
Executive participates, including any savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, short or long-term
disability, and any other deferred compensation, group and/or executive life,
health, retiree health, medical/hospital, or other insurance (whether funded by
actual insurance or self-insured by the Company), expense reimbursement or other
employee benefit plans, policies, programs or arrangements or any equivalent
successor plans, policies, programs or arrangements that may not now exist or
may be adopted hereafter by the Company (but only to the extent that
eligibility, vesting, or the timing or amount of the benefit are dependent upon
age and service); provided, however, that in the case of a qualified defined
benefit pension plan (hereafter, the “Qualified Plan”), (i) if such
aforementioned involuntary termination occurs prior to, or contemporaneous with,
the occurrence of an event entitling Executive to a lump sum payment under the
provisions of either the Ultramar Corporation Supplemental Executive Retirement
Plan (or any equivalent successor plan, policy, program or arrangement)
(collectively, the “Ultramar SERP”) or the Diamond Shamrock, Inc. Supplemental
Executive Retirement Plan (or any equivalent successor plan, policy, program or
arrangement) (collectively, the “DS SERP”) pertaining to “Change in Control” (as
defined in either the Ultramar SERP or the DS SERP, as the case may be),
disregarding for this purpose, any “Change in Control” occurring prior to
December 4, 1996 (collectively, a “SERP Lump Sum Payment”), in lieu of granting
any such actual additional years of age and service credit under the Qualified
Plan, an amount equal to the present value of the additional benefit Executive
would have accrued if he had been credited for all purposes with the three
additional years of age and service under the Qualified Plan as of his date of
termination with the Company will be paid in a lump sum in cash within five
business days after any revocation period in the release described in Section
5.5(iii) has expired and (ii) if such aforementioned involuntary termination
occurs following the occurrence of an event entitling Executive to a SERP Lump
Sum Payment, in lieu of granting any such additional years of age and service
credit under the Qualified Plan, an amount equal to the excess of (A) the
present value of the additional benefit Executive would have accrued if he had
been credited for all purposes with the three additional years of age and
service under the Qualified Plan as of his date of termination with the Company
over (B) the amount by which the SERP Lump Sum Payment would, under the terms of
the Ultramar SERP or DS SERP (as the case may be), have been reduced had the
aforementioned involuntary termination instead occurred contemporaneous with the
occurrence of the event entitling Executive to the SERP Lump Sum Payment, will
be paid in a lump sum in cash within five business days after any revocation
period in the release described in Section 5.5(iii) has expired, with (i) in the
event that Executive’s aforementioned involuntary termination occurs on or after
a “Change in Control” of the Company, as defined in Section 6.2 (or prior to,
but in anticipation of, such a “Change in Control”), such present value being
determined, in both cases, using the interest rate and mortality table set forth
in Section 4.1(m)(i) and 4.1(n)(i), respectively, of the Ultramar SERP and (ii)
in the event that Employee’s aforementioned involuntary termination occurs prior
to such a “Change in Control” of the Company (other than such a termination in
anticipation of such a “Change in Control”), such present value being
determined, in each such case, using in the interest rate and mortality table
set forth in Section 4.1(m)(ii) and 4.1(n)(ii), respectively, of the Ultramar
SERP; further, provided, however, that, in determining the amount of the benefit
which Executive is entitled to receive, determined with respect to the DS SERP,
the three additional years of age and service credit which the Company would
otherwise pay, or provide, Executive under the DS SERP shall not, pursuant to
this clause (3), be taken into account under the DS SERP, to the extent that
Executive was otherwise previously so credited with three additional years of
age and service credit under the terms of the DS SERP pertaining to “Change in
Control;” and further, provided, in crediting the three additional years of age
and service for purposes of calculating current and unused vacation such
additional years shall be applied in determining the amount of annual vacation
to which Executive is entitled, but shall not be deemed to cause Executive to
have earned three additional years worth of unused vacation,
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Fretthold First Amendment to Employment Agreement
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(4) within five business days after any revocation period in the
release described in Section 5.5(iii) has expired, a lump sum cash payment equal
to three times the maximum amount the Company could have contributed on behalf
of Executive to all of the Company-sponsored qualified and nonqualified defined
contribution retirement plans in which Executive participated for any of the
three years ending on the date of Executive’s termination of employment,
assuming that Executive made the maximum voluntary contributions thereto,
(5) for a period of three years after the date of Executive’s
termination of employment, the continuation of the employee welfare benefits set
forth in Section 4.2 (other than short-term or long-term disability benefits),
except as offset by benefits paid by other sources as set forth in Section 8.2,
or as provided in Section 5.5(ii) (provided, however, that in the event that any
such continued coverage is not permitted under the terms of any applicable
welfare plan or policy, the Company shall provide Executive with the after-tax
economic equivalent of any coverage foregone, such economic equivalent to be
deemed to be no less than the total cost to Executive of obtaining such coverage
on an individual basis and to be paid quarterly in advance without discount);
IV.
Section 5.5(i) of the Agreement shall be amended by striking the period at the
end of Subsection 5.5(i)(b) and inserting the following in lieu thereof:
; and (c) the Company shall provide Executive with outplacement services for a
period of one year commencing on the date his employment is terminated in
accordance with the Company’s executive outplacement policy in effect at the
time his employment is terminated or immediately prior to a Change in Control
(if prior to his termination of employment), whichever is more generous.
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V.
Section 5.5(ii) of the Agreement shall be amended by striking the reference to
“Section 5.5(i)(a)(4)” and inserting “Section 5.5(i)(a)(5)” in lieu thereof and
adding a new sentence to the end thereof which shall read as follows:
Notwithstanding the above, if Executive’s continued participation in any of
the benefits referenced in Section 5.5(i)(a)(5) would violate any applicable law
or cause any benefits plan, policy, or arrangement of the Company to fail to
qualify for tax-favored status, the Company shall not be required to provide
such benefits to Executive through the Company’s plans, policies, or
arrangements, but instead shall either (A) arrange to make a substantially
similar benefit available to Executive at no cost to the Executive or (B) pay
Executive a sufficient amount of cash to allow Executive to purchase, on an
after-tax basis, a substantially similar benefit on the open market at no
incremental cost to Executive.
VI.
Section 5.5 of the Agreement shall be amended by adding a new subsection (iv) to
the end thereof which shall read as follows:
(iv) Other Severance Benefits. Notwithstanding any provision of this
Agreement to the contrary, Executive shall be entitled to receive the greater of
(a) the termination payments and benefits provided under Section 5.5 of this
Agreement, or (b) the termination payments and benefits provided by any other
Company-sponsored plan, program or policy which has as its primary purpose the
provision of severance benefits, but in no event shall Executive be eligible to
receive termination payments and benefits provided under both this Agreement and
any such plan, program or policy.
VII.
Section 8 of the Agreement shall be revised to read as follows:
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Fretthold First Amendment to Employment Agreement
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8. Mitigation and Offset.
8.1 Executive’s right to receive when due the payments and other
benefits provided for under and in accordance with the terms of this Agreement
is absolute, unconditional and subject to no set-off, counterclaim or legal
equitable defense. Any claim which the Company may have against Executive,
whether for breach of this Agreement or otherwise, shall be brought in a
separate action or proceeding and not part of any action or proceeding brought
by Executive to enforce the rights against the Company under this Agreement.
8.2 Executive shall not have any duty to mitigate the amounts
payable by the Company under this Agreement upon any termination of employment
by seeking new employment following termination. All amounts payable pursuant to
this Agreement shall be paid without reduction regardless of any amount of
salary, compensation or other amounts which may be paid or payable to Executive
as the result of Executive’s employment by another employer; provided, however,
that Executive’s coverage under the Company’s welfare benefit plans will be
reduced to the extent that Executive becomes covered under any comparable
employee benefit plan made available by another employer and covering the same
type of benefits. Executive shall report to the Company any such benefits
actually received by him.
VIII.
Section 12.5(i) of the Agreement shall be amended to read as follows:
(i) To The Company. If to the Company, addressed to the attention of the
Chief Executive Officer at P.O. Box 696000, San Antonio, Texas, 78269-6000, with
a copy sent to the attention of the General Counsel at such address.
IX.
Section 12 of the Agreement shall be amended to add a new Subsection 12.11 which
shall read as follows:
12.11 Dialogue. Unless Executive otherwise consents by the execution of
an instrument in writing that specifically refers to Section 12.11 of this
Agreement, no claim or dispute arising out of or related to this Agreement or
any other agreement, policy, plan, program or arrangement, including without
limitation, any qualified or nonqualified retirement plan, stock option plan or
agreement, or any other equity incentive plan in which Executive participated
prior to his termination, shall be subject to the Company’s Dialogue Dispute
Resolution Program.
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X.
The model release attached to this First Amendment as “Exhibit A” shall be
substituted for the exhibit referred to in Section 5.5(iii) of the Agreement.
XI.
Except as otherwise provided herein, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the first day
of May, 2000.
/s/ W. Paul Eisman
——————————————
W. Paul Eisman
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ Jean Gaulin
——————————————
TITLE Chairman, President and CEO
|
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Exhibit 10.42
AMENDMENT TO WARRANT
TO PURCHASE COMMON STOCK
This Amendment to Warrant to Purchase Common Stock (the “Amendment”) is
made and entered into as of June 5, 2000, by and between The Gymboree
Corporation, a Delaware corporation (the “Company”), and ____________ (the
“Holder”), the holder of a Warrant to Purchase Common Stock (the “Warrant”).
RECITALS
A. On June 2, 2000, the Company issued the Warrant to purchase _________ shares
of the Company’s Common Stock to the Holder in connection with equity investment
made by such Holder on May ___, 2000 (the “Equity Investment”).
B. Pursuant to Section 1(b) of the Warrant, the Warrant is exercisable after the
date that is six (6) months after June 2, 2000.
C. In consideration of the Company’s promise to make the Warrant exercisable as
of the date that is six (6) months from May 16, 2000, the Company and the Holder
of the Warrant wish to amend Section 1(b).
AGREEMENT
1. The first sentence of Section 1(b) shall be amended and restated in
its entirety as follows:
(b) Net Exercise. In lieu of exercising this Warrant in a cash exercise,
after November 16, 2000, the Holder may elect to exercise this Warrant in whole
or in part, on a “net exercise” basis, and upon such net exercise shall be
entitled to receive shares equal to the value of the portion of this Warrant
canceled upon such net exercise.
2. All other terms and conditions in the Warrant shall remain unchanged.
THE GYMBOREE CORPORATION
By:
——————————————
Print Name: Lawrence H. Meyer
Title: Chief Financial Officer
|
Exhibit 10.33
DEVELOPMENT, SUPPLY, MARKETING AND DISTRIBUTION AGREEMENT
THIS PRODUCT DEVELOPMENT, SUPPLY, MARKETING AND DISTRIBUTION AGREEMENT (this
“Agreement”) is made and entered into as of October 24, 2001, by and between
E-Z-EM, INC., a Delaware corporation (“EZEM”) and Vital Images, Inc., a
Minnesota corporation (“VTAL”).
RECITALS:
WHEREAS, VTAL is engaged in the development and manufacture of 2D and 3D
visualization and analysis software products for medical imaging;
WHEREAS, VTAL and EZEM desire VTAL to develop a particular visualization and
analysis software product and grant to EZEM an exclusive, worldwide right to
market such software product, all in accordance herewith.
AGREEMENT:
NOW, THEREFORE, EZEM and VTAL agree as follows:
1. DEFINITIONS:
As used in this Agreement, the following terms shall have the meanings indicated
(whether used in the singular or plural form), unless otherwise expressly
provided:
1.1. “PERSON” SHALL MEAN AN INDIVIDUAL, A CORPORATION, A PARTNERSHIP,
AN ASSOCIATION, A JOINT VENTURE, LIMITED LIABILITY COMPANY, GOVERNMENT (OR ANY
AGENCY OR POLITICAL SUBDIVISION THEREOF), AN UNINCORPORATED ORGANIZATION, A
TRUST OR OTHER ENTITY, INCLUDING, WITHOUT LIMITATION, AN EMPLOYEE PENSION,
PROFIT SHARING OR OTHER BENEFIT PLAN OR TRUST.
1.2. “VITREA 2 SOFTWARE” MEANS THE CURRENT VITREA® 2 SOFTWARE PRODUCT
OF VTAL AND ANY NEW VERSIONS THEREOF MADE COMMERCIALLY AVAILABLE BY VTAL (IT
BEING UNDERSTOOD THAT VTAL RESERVES THE RIGHT TO DESIGNATE WHETHER A SOFTWARE
PRODUCT CONSTITUTES A NEW VERSION OF THE VITREA 2 SOFTWARE PRODUCT OR A NEW
PRODUCT).
1.3. “SPECIFICATION” SHALL MEAN THE SPECIFICATION FOR THE VIRTUAL
COLONOSCOPY VISUALIZATION AND ANALYSIS SOFTWARE MODULES OF THE APPLIANCE AND THE
OPTION, TOGETHER WITH THE AGREED DEVELOPMENT ACTIVITIES AND TIMELINES FOR
DEVELOPMENT AND RELEASE, AS SET FORTH IN EXHIBIT 1.3 HEREOF; PROVIDED THAT SUCH
SPECIFICATION IS INTENDED ONLY AS A GENERAL DESCRIPTION OF THE PARTIES’
EXPECTATIONS WITH RESPECT TO THE SPECIFICATION, GOALS AND TIMELINES WITH RESPECT
TO THE PRODUCTS AND SHALL BE INITIALLY ESTABLISHED BY VTAL, AND SHALL THEREAFTER
BE SUBJECT TO MODIFICATION IN ACCORDANCE WITH SECTION 2.4.
1.4. “OPTION”MEANS A VIRTUAL COLONOSCOPY VISUALIZATION AND ANALYSIS
SOFTWARE PRODUCT CONSISTENT WITH THE SPECIFICATION, WHICH IS DESIGNED TO BE
LICENSED AS AN OPTION FOR USE IN CONJUNCTION WITH VITREA 2 SOFTWARE, OR IF VTAL
SO ELECTS INCORPORATED INTO THE VITREA 2 SOFTWARE AS A STANDARD FEATURE.
1.5. “APPLIANCE” MEANS A VIRTUAL COLONOSCOPY VISUALIZATION AND ANALYSIS
SOFTWARE PRODUCT SUBSTANTIALLY CONSISTENT WITH THE SPECIFICATION WHICH (I) IS
DESIGNED TO BE LICENSED AND FUNCTION ON A STANDALONE BASIS, THAT IS, WITHOUT
NEED FOR A SEPARATE LICENSE FOR VITREA 2 SOFTWARE AND (II) THE PRINCIPAL
FUNCTIONALITY OF WHICH IS LIMITED TO CT VIRTUAL COLONOSCOPY.
1.6. “APPLIANCE PLATFORM” SHALL MEAN THE HARDWARE AND SOFTWARE
ENVIRONMENT IN WHICH THE APPLIANCE WILL BE DESIGNED TO OPERATE, WHICH
ENVIRONMENT IS CURRENTLY EXPECTED TO BE COMPRISED OF THE HARDWARE AND SOFTWARE
IDENTIFIED IN EXHIBIT 1.6 HEREOF.
1.7. “APPLIANCE SYSTEM” SHALL MEAN AN INTEGRATED SYSTEM COMPRISED OF
THE APPLIANCE AND THE APPLIANCE PLATFORM.
1.8. “PRODUCTS”MEANS THE APPLIANCE AND THE OPTION.
1.9. “AFFILIATE” MEANS, WITH RESPECT TO A DESIGNATED PERSON, ANY ENTITY
CONTROLLED BY, IN CONTROL OF, OR UNDER COMMON CONTROL WITH SUCH PERSON. FOR THE
PURPOSES OF THIS DEFINITION, “CONTROL” MEANS OWNERSHIP OR CONTROL, DIRECT OR
INDIRECT, OF MORE THAN FIFTY PERCENT (50%) OF THE VOTING CAPITAL OR EQUITY
PARTICIPATION OF AN ENTITY, OR THE POSSESSION OTHERWISE, DIRECTLY OR INDIRECTLY,
OF THE POWER TO DIRECT THE MANAGEMENT OR POLICIES OF SUCH PERSON.
1.10. “NON-AFFILIATE” MEANS, WITH RESPECT TO A DESIGNATED PERSON, A
PERSON WHICH IS NOT SUCH PERSON OR AN AFFILIATE THEREOF.
1.11. “APPLIANCE SYSTEM SALES PRICE” MEANS THE GROSS SALES PRICES OF AN
APPLIANCE SYSTEM SOLD BY EZEM OR ANY EZEM AFFILIATES TO A NON-AFFILIATE.
1.12. “INTELLECTUAL PROPERTY” MEANS ALL PATENTS, PATENT APPLICATIONS AND
RIGHTS TO FILE PATENT APPLICATIONS THROUGHOUT THE WORLD, INCLUDING ANY
SUBSTITUTIONS, EXTENSIONS, REISSUES, RENEWALS, DIVISIONS, CONTINUATIONS, OR
CONTINUATIONS-IN-PART, AND ALL COPYRIGHTED WORKS, AS WELL AS ANY CONFIDENTIAL
INFORMATION, OF A DESIGNATED PERSON.
1.13. “CLAIM” MEANS ANY CLAIM, SUIT, ACTION, DEMAND OR JUDGMENT, WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, CLAIMS
BASED ON THEORIES OF WARRANTY OR STRICT LIABILITY).
1.14. “FOB POINT” HAS THE MEANING SET FORTH IN SECTION 6.3 OF THIS
AGREEMENT.
1.15. “REMEDIAL ACTION” MEANS ANY RECALL, FIELD CORRECTIVE ACTION OR
OTHER REGULATORY ACTION WITH RESPECT TO ANY PRODUCT TAKEN EITHER BY VIRTUE OF
APPLICABLE FEDERAL, STATE, FOREIGN OR OTHER LAW OR REGULATION OR GOOD BUSINESS
JUDGMENT.
1.16. “CONFIDENTIAL INFORMATION” SHALL MEAN ALL INFORMATION DESIGNATED BY
A PARTY AS CONFIDENTIAL AND WHICH IS DISCLOSED BY VTAL TO EZEM, IS DISCLOSED BY
EZEM TO VTAL, OR IS EMBODIED IN THE PRODUCTS, REGARDLESS OF THE FORM IN WHICH IT
IS DISCLOSED, RELATING TO MARKETS, CUSTOMERS, PRODUCTS, PATENTS, INVENTIONS,
PROCEDURES, METHODS, DESIGNS, STRATEGIES, PLANS, ASSETS, LIABILITIES, PRICES,
COSTS, REVENUES, PROFITS, ORGANIZATION, EMPLOYEES, AGENTS, RESELLERS OR BUSINESS
IN GENERAL, OR, IN THE CASE OF VTAL, THE ALGORITHMS, PROGRAMS, USER INTERFACES
AND ORGANIZATION OF THE PRODUCTS.
1.17. “END USER AGREEMENT” SHALL MEAN THE END USER SOFTWARE LICENSE
AGREEMENT FOR THE PRODUCTS, IN THE FORM ATTACHED HERETO AS EXHIBIT 1.17, OR SUCH
OTHER FORM AS VTAL MAY FROM TIME TO TIME PROVIDE TO EZEM.
1.18. “ACT” MEANS THE UNITED STATES FOOD, DRUG AND COSMETIC ACT, AS
AMENDED, AND THE REGULATIONS IN FORCE THEREUNDER FROM TIME TO TIME.
1.19. “FDA” MEANS THE FOOD AND DRUG ADMINISTRATION OF THE U.S. DEPARTMENT
OF HEALTH AND HUMAN SERVICES.
1.20. “GOVERNMENT APPROVAL” SHALL MEAN ANY APPROVALS, LICENSES,
REGISTRATIONS OR AUTHORIZATIONS OF ANY FEDERAL, STATE OR LOCAL REGULATORY
AGENCY, DEPARTMENT, BUREAU OR OTHER GOVERNMENT ENTITY, FOREIGN OR DOMESTIC,
NECESSARY FOR USE, MARKETING, SALE OR DISTRIBUTION OF THE PRODUCTS IN A
REGULATORY JURISDICTION, INCLUDING WITHOUT LIMITATION THE FDA.
1.21. “TERRITORY” SHALL MEAN THE ENTIRE WORLD.
1.22. “CENTER OF EXCELLENCE” SHALL MEAN A RADIOLOGY GROUP OR DEPARTMENT
WITH SIGNIFICANT CLINICAL EXPERTISE IN THE AREA OF CT COLONOGRAPHY WITH WHOM
BOTH VTAL AND EZEM WISH TO DEVELOP A CLOSE COOPERATIVE RELATIONSHIP TO PROMOTE
CT COLONOGRAPHY.
1.23. “OPTION SALES PRICE” MEANS THE GROSS SALES PRICES OF AN OPTION SOLD
BY VTAL OR ANY VTAL AFFILIATE TO A NON-AFFILIATE OF VTAL,AND NOT REJECTED UNDER
AN ACCEPTANCE/REJECTION PROVISION SUBSTANTIALLY THE SAME AS THAT SET FORTH IN
SUBSECTION 4.1(P), NET TO THE EXTENT OTHERWISE INCLUDED IN SUCH SALES PRICE OF
ANY TRANSPORTATION CHARGES, INSURANCE CHARGES AND SALES, USE, EXCISE OR OTHER
TAXES, DUTIES OR IMPOSTS PAID OR ALLOWED AND ANY OTHER GOVERNMENTAL CHARGES
IMPOSED UPON THE IMPORTATION, USE OR SALE OF THE OPTION; PROVIDED THAT IF THE
OPTION IS SOLD AS AN INTEGRAL UNSEGREGATED PART OF VITREA 2 SOFTWARE, THE GROSS
SALES PRICE OF AN OPTION SHALL BE COMPRISED OF ONLY THE PART OF THE PRICE OF
SUCH VITREA 2 SOFTWARE ALLOCABLE TO THE OPTION AS REASONABLY DETERMINED BY
VTAL. IT IS UNDERSTOOD THAT THE OPTION SALES PRICE DOES NOT INCLUDE CHARGES FOR
HARDWARE, SOFTWARE OTHER THAN THE OPTION, SERVICES (INCLUDING INSTALLATION,
TRAINING AND MAINTENANCE) OR OTHER FEE OR CHARGES. WHILE EZEM ACKNOWLEDGES THAT
VTAL HAS COMPLETE DISCRETION IN PRICING THE VITREA 2 SOFTWARE AND THE OPTION, IN
THE EVENT IT DISCOUNTS ITS SOFTWARE PRODUCTS, INCLUDING THE OPTION, SOLD
TOGETHER FROM LIST PRICE, SUCH DISCOUNT SHALL FOR PURPOSES OF DETERMINING THE
OPTION SALES PRICES BE ALLOCATED RATABLY OVER SUCH SOFTWARE PRODUCTS BASED ON
THEIR RESPECTIVE LIST PRICES.
1.24. “APPLIANCE SALES PRICE” MEANS THE GROSS SALES PRICES OF AN
APPLIANCE SOLD BY EZEM OR ANY EZEM AFFILIATE TO A NON-AFFILIATE OF EZEM, NET TO
THE EXTENT OTHERWISE INCLUDED IN SUCH SALES PRICE OF ANY TRANSPORTATION CHARGES,
INSURANCE CHARGES AND SALES, USE, EXCISE OR OTHER TAXES, DUTIES OR IMPOSTS PAID
OR ALLOWED AND ANY OTHER GOVERNMENTAL CHARGES IMPOSED UPON THE IMPORTATION, USE
OR SALE OF SUCH APPLIANCE. IT IS UNDERSTOOD THAT THE APPLIANCE SALES PRICE DOES
NOT INCLUDE CHARGES FOR HARDWARE, SOFTWARE OTHER THAN THE APPLIANCE, SERVICES
(INCLUDING INSTALLATION, TRAINING AND MAINTENANCE) OR OTHER FEE OR CHARGES.
1.25. “APPLIANCE COMMERCIAL AVAILABILITY DATE” SHALL MEAN THE EARLIER OF
THE DATE ON WHICH THE APPLIANCE IS FIRST SOLD BY EZEM IN THE UNITED STATES OR
THIRTY (30) DAYS AFTER THE APPLIANCE IS AVAILABLE FOR COMMERCIAL SALE IN THE
UNITED STATES BASED ON (I) COMPLETION OF AN INTERNAL “LETTER TO FILE” BY VTAL
(FOLLOWING FDA GUIDANCE DOCUMENT - JANUARY 10, 1997, “DECIDING WHEN TO SUBMIT A
510(K) FOR A CHANGE TO AN EXISTING DEVICE”) OR CLEARANCE BY THE FDA OF A
PREMARKET NOTIFICATION 510(K) SUBMISSION FOR THE APPLIANCE AND (II) VTAL RELEASE
OF THE APPLIANCE FOR DISTRIBUTION, INCLUDING BUT NOT LIMITED TO THE COMPLETION
OF VTAL’S OBLIGATION UNDER SECTION 4.3.(A).
1.26. “ALLOWABLE EXPENSE” SHALL MEAN THE FOLLOWING EXPENSES INCURRED BY
EZEM:
(A) ANY PAYMENTS MADE PURSUANT TO ARTICLE 9.3 (A), (B), (C), (D) AND
(E);
(B) ANY PAYMENTS MADE BY EZEM FOR THE PURCHASE OF THE APPLIANCE
PLATFORM;
(C) ANY TRANSPORTATION AND FREIGHT CHARGES, INSURANCE CHARGES, SALES,
USE, EXCISE OR TAXES TO THE EXTENT PAID BY EZEM AND NOT OTHERWISE REIMBURSED, IT
BEING AGREED THAT EZEM WILL SEEK TO HAVE ALL CHARGES AND TAXES OF THIS TYPE PAID
DIRECTLY BY, OR REIMBURSED BY, THE CUSTOMER AND IN SUCH EVENT SUCH CHARGES AND
TAXES SHALL NOT CONSTITUTE ALLOWABLE EXPENSE; AND
(D) THE $______ IN FEES PAID TO EZEM FOR EZEM CUSTOMER TRAINING.
1.27. “DEALER ASSOCIATE” SHALL MEAN AN AGENT APPOINTED BY EZEM TO MARKET
AND DISTRIBUTE THE APPLIANCE IN ONE OR MORE COUNTRIES OR PARTS THEREOF OUTSIDE
OF THE UNITED STATES; PROVIDED THAT THE IDENTITY OF EACH DEALER ASSOCIATE AND
THE TERMS OF SUCH APPOINTMENT, WHICH MUST BE REFLECTED IN A WRITTEN AGREEMENT,
MUST BE APPROVED IN WRITING IN ADVANCE BY VTAL, SUCH APPROVAL NOT TO BE
UNREASONABLY WITHHELD.
1.28. “SERVICE ASSOCIATE” SHALL MEAN A PERSON APPOINTED BY EZEM TO
PROVIDE APPLIANCE AND APPLIANCE SYSTEM INSTALLATION, AND PERHAPS TRAINING AND
WARRANTY/MAINTENANCE SERVICE, TO CUSTOMERS LOCATED IN COUNTRIES OR PARTS THEREOF
OUTSIDE OF THE UNITED STATES; PROVIDED THAT THE IDENTITY OF EACH SERVICE
ASSOCIATE AND THE TERMS OF SUCH APPOINTMENT, WHICH MUST BE REFLECTED IN A
WRITTEN AGREEMENT, MUST BE APPROVED IN WRITING IN ADVANCE BY VTAL.
1.29. “PRIMARY COUNTRIES” SHALL MEAN CANADA, THE UNITED KINGDOM, FRANCE,
GERMANY, ITALY, SPAIN, THE BENELUX, SWITZERLAND, JAPAN AND AUSTRALIA.
In addition to the foregoing, terms such as “sale” and “purchase” and variants
and synonyms thereof are used herein for convenience only and refer to
transactions involving the grant of a software license for a Product.
2. DEVELOPMENT.
2.1. DEVELOPMENT PROGRAM. VTAL WILL USE COMMERCIALLY REASONABLE
EFFORTS TO DEVELOP THE PRODUCTS IN ACCORDANCE WITH THE SPECIFICATION IN
ACCORDANCE WITH THE TIMELINE SET FORTH IN EXHIBIT 1.3
2.2. GOVERNMENT APPROVALS. VTAL SHALL, AT ITS COST AND EXPENSE, BE
SOLELY RESPONSIBLE FOR OBTAINING AND MAINTAINING, AND SHALL USE COMMERCIALLY
REASONABLE EFFORTS TO OBTAIN AND MAINTAIN GOVERNMENT APPROVALS REQUIRED FOR THE
FULLY AUTHORIZED SALE, DISTRIBUTION AND USE OF THE PRODUCTS IN THE USA, CANADA
AND THE COUNTRIES OF THE EUROPEAN UNION AS CONSTITUTED ON THE DATE HEREOF. VTAL
SHALL BE SOLELY RESPONSIBLE FOR OBTAINING AND MAINTAINING, AND SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO OBTAIN AND MAINTAIN GOVERNMENT APPROVALS
REQUIRED FOR THE FULLY AUTHORIZED SALE, DISTRIBUTION AND USE OF THE APPLIANCE IN
JAPAN, HOWEVER, EZEM AND VTAL SHALL SPLIT THE OUT-OF-POCKET COSTS THEREOF
EQUALLY (50/50), WITH COST REIMBURSEMENT PAID WITHIN THIRTY DAYS OF VTAL
INVOICE, TO BE ISSUED NO MORE OFTEN THAN MONTHLY. EZEM SHALL PROVIDE SUCH
COOPERATION IN CONNECTION THEREWITH AS VTAL SHALL REASONABLY REQUEST. SHOULD
EZEM DESIRE FROM TIME TO TIME TO MARKET AND SELL THE APPLIANCE IN COUNTRIES IN
ADDITION TO THOSE REFERENCED ABOVE IN THIS SECTION 2.2 IT SHALL SO NOTIFY VTAL
IN WRITING, AND THEREAFTER VTAL SHALL USE COMMERCIALLY REASONABLE EFFORTS TO
OBTAIN AND MAINTAIN GOVERNMENT APPROVALS REQUIRED FOR THE FULLY AUTHORIZED SALE,
DISTRIBUTION AND USE OF THE APPLIANCE IN SUCH OTHER COUNTRIES, AND EZEM AND VTAL
SHALL SPLIT THE OUT-OF-POCKET COSTS THEREOF EQUALLY (50/50), WITH COST
REIMBURSEMENT PAID WITHIN THIRTY DAYS OF VTAL INVOICE, TO BE ISSUED NO MORE
OFTEN THAN MONTHLY. EZEM SHALL PROVIDE SUCH COOPERATION IN CONNECTION THEREWITH
AS VTAL SHALL REASONABLY REQUEST. UPON EZEM’S REQUEST, VTAL SHALL SEEK TO
PROVIDE ESTIMATES OF THE COST OF OBTAINING AND MAINTAINING ANY GOVERNMENT
APPROVALS. IN NO EVENT SHALL VTAL INCUR COST THAT WOULD OBLIGATE EZEM TO
REIMBURSE VTAL IN EXCESS OF $25,000 WITHOUT OBTAINING PRIOR WRITTEN APPROVAL
FROM EZEM.
2.3. NON-RECURRING ENGINEERING CHARGES. IN CONNECTION WITH THE DESIGN,
ENGINEERING, AND DEVELOPMENT OF THE INITIAL VERSIONS OF THE PRODUCTS, EZEM
SHALL PAY VTAL A TOTAL OF $______ AS A NON-RECURRING ENGINEERING CHARGE. SUCH
PAYMENTS SHALL BE MADE IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:
(A) $_______ SHALL BE DUE UPON THE EXECUTION OF THIS AGREEMENT;
(B) $______ SHALL BE DUE UPON COMPLETION OF AN INTERNAL “LETTER TO
FILE” BY VTAL (FOLLOWING FDA GUIDANCE DOCUMENT - JANUARY 10, 1997, “DECIDING
WHEN TO SUBMIT A 510(K) FOR A CHANGE TO AN EXISTING DEVICE”), OR A PREMARKET
NOTIFICATION 510(K) SUBMISSION TO THE FDA FOR THE APPLIANCE, WHICHEVER IS DEEMED
APPROPRIATE BY VTAL; AND
(C) $______ SHALL BE DUE ON THE APPLIANCE COMMERCIAL AVAILABILITY
DATE.
The parties agree and acknowledge that all Intellectual Property developed by
VTAL, whether existing as of the date of this Agreement or developed hereafter,
shall remain its sole and exclusive property notwithstanding the payment of such
non-recurring engineering charge.
2.4. UPGRADES. THE PARTIES SHALL MEET TWICE ANNUALLY TO DISCUSS THE
EVOLUTION OF AND UPGRADES TO THE PRODUCTS AND THE ASSOCIATED ENGINEERING AND
DEVELOPMENT COSTS. IF AS A RESULT OF SUCH DISCUSSION THE PARTIES AGREE TO AN
UPGRADE TO BOTH THE OPTION AND APPLIANCE, VTAL SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO IMPLEMENT SUCH UPGRADE TO THE OPTION AND THE APPLIANCE AND THE COST
THEREOF SHALL BE SHARED EQUALLY BY THE PARTIES. IN THE EVENT EZEM DOES NOT
DESIRE TO SHARE THE COST OF A PROPOSED UPGRADED DESIRED BY VTAL, VTAL MAY ELECT
TO SO UPGRADE THE OPTION, OR IN ITS DISCRETION THE OPTION AND THE APPLIANCE, AT
ITS EXPENSE. IN THE EVENT VTAL DOES NOT DESIRE TO SHARE THE COST OF A PROPOSED
UPGRADE DESIRED BY EZEM, UPON THE WRITTEN REQUEST OF EZEM VTAL SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO IMPLEMENT SUCH UPGRADE TO THE APPLIANCE AT
THE COST OF EZEM.
3. APPOINTMENT
3.1. SCOPE. SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT,
VTAL HEREBY APPOINTS EZEM AS VTAL’S EXCLUSIVE RESELLER OF THE APPLIANCE DURING
THE TERM OF THIS AGREEMENT IN THE TERRITORY, AND EZEM HEREBY ACCEPTS SUCH
APPOINTMENT; PROVIDED THAT :
(A) IF THIS APPOINTMENT BECOMES NON-EXCLUSIVE AS DESCRIBED IN SECTION
3.1.(B) OR SECTION 3.2, VTAL MAY ITSELF DISTRIBUTE THE APPLIANCE OR APPOINT GE,
SIEMENS OR PHILIPS OR OTHER APPROPRIATE PARTY AS A NON-EXCLUSIVE DISTRIBUTOR AND
MARKET AND SELL THE APPLIANCE UNDER SUCH TRADEMARKS AS VTAL SHALL SELECT, AND
(B) IN THE EVENT THAT EZEM DOES NOT (I) DURING THE TWO YEAR PERIOD
ENDING ON THE FIFTH ANNIVERSARY HEREOF SELL AT LEAST ONE HUNDRED AND TWENTY-FIVE
PERCENT (125%) OF THE NUMBER OF APPLIANCES IT SOLD DURING THE TWO YEAR PERIOD
ENDING ON THE THIRD ANNIVERSARY HEREOF; (II) DURING THE TWO YEAR PERIOD ENDING
ON THE SEVENTH ANNIVERSARY HEREOF SELL AT LEAST ONE HUNDRED AND TWENTY-FIVE
PERCENT (125%) OF THE NUMBER OF APPLIANCES IT SOLD DURING THE TWO YEAR PERIOD
ENDING ON THE FIFTH ANNIVERSARY HEREOF; OR (III) DURING THE TWO YEAR PERIOD
ENDING ON THE NINTH ANNIVERSARY HEREOF SELL AT LEAST ONE HUNDRED AND TWENTY-FIVE
PERCENT (125%) OF THE NUMBER OF APPLIANCES IT SOLD DURING THE TWO YEAR PERIOD
ENDING ON THE SEVENTH ANNIVERSARY HEREOF, SUCH APPOINTMENT SHALL BECOME
NON-EXCLUSIVE WITHOUT FURTHER ACTION BY THE PARTIES AS OF THE END OF THE TWO
YEAR PERIOD DURING WHICH A SHORTFALL OCCURS.
So long as such appointment shall remain exclusive, VTAL shall (i) refer all
inquiries concerning the Appliance to EZEM and (ii) not supply, market or sell
the Appliance, either directly or indirectly, on its own, through distributors,
sub-distributors or sub-licensees or on an OEM basis and (iii) EZEM shall be
authorized to hold itself out as the only authorized seller of the Appliance in
the Territory. Should such appointment become non-exclusive, VTAL agrees that
it will nevertheless not, so long as this Agreement remains in effect, appoint
as a distributor of the Appliance Bracco, Tyco/Mallinckrodt, Nycomed or Schering
AG/MedRad or any of their Affiliates, including their subsidiaries.
3.2. DEALER AND SERVICE ASSOCIATES. EZEM WILL MARKET THE APPLIANCE IN
THE UNITED STATES ONLY DIRECTLY TO CUSTOMERS, HOWEVER, THE PARTIES ANTICIPATE
THAT DEALER ASSOCIATES AND/OR SERVICE ASSOCIATES WILL BE UTILIZED IN SOME OR ALL
OF THE BALANCE OF THE TERRITORY. THE PARTIES SHALL DISCUSS THE BEST MEANS OF
SELECTING SUCH DEALER AND SERVICE ASSOCIATES AND PROMOTING THE SALE AND SUPPORT
OF APPLIANCES IN MARKETS OUTSIDE THE UNITED STATES. VTAL SHALL, UPON EZEM’S
REQUEST AND AT EZEM’S EXPENSECOOPERATE IN ASSISTING EZEM IN SEEKING TO APPOINT
VTAL’S VITREA 2 SOFTWARE, AS WELL AS OTHER, DEALERS AS DEALER ASSOCIATES. THE
PARTIES AGREE THAT THE APPLIANCE MAY NOT BE SOLD THROUGH A DEALER ASSOCIATE
OUTSIDE THE UNITED STATES EXCEPT TO THE EXTENT THAT SUCH RELATIONSHIP HAS BEEN
ESTABLISHED WITH A MUTUALLY ACCEPTABLE DEALER ASSOCIATE IN THE COUNTRY OR PART
THEREOF WHERE THE APPLIANCE IS TO BE INSTALLED AND MAINTAINED. EZEM SHALL
REMAIN FULLY LIABLE FOR THE PERFORMANCE OF ANY DEALER OR SERVICE ASSOCIATE AND
EZEM HEREBY INDEMNIFIES AND HOLDS VTAL HARMLESS FROM ALL DAMAGES, LOSSES, COSTS
OR EXPENSES ARISING IN ANY MANNER FROM ANY ACT OR OMISSION ON THE PART OF ANY
DEALER ASSOCIATE. IF NO SALES OF AN APPLIANCE SHALL HAVE TAKEN PLACE IN A
PRIMARY COUNTRY WITHIN EIGHTEEN (18) MONTHS OF THE LATER OF (I) VTAL RELEASE OF
THE APPLIANCE FOR DISTRIBUTION AND (II) THE DATE THAT GOVERNMENT APPROVALS
REQUIRED FOR THE FULLY AUTHORIZED SALE, DISTRIBUTION AND USE OF THE APPLIANCE IN
SUCH COUNTRY ARE OBTAINED, THE APPOINTMENT SET FORTH IN SECTION 3.1 SHALL BECOME
NON-EXCLUSIVE WITH RESPECT TO SUCH COUNTRY WITHOUT FURTHER ACTION BY THE PARTIES
AS OF THE END OF SUCH EIGHTEEN (18) MONTH PERIOD.
3.3. EXCEPTION AT CUSTOMER INSISTENCE. IN THE EVENT THAT A PROSPECTIVE
CUSTOMER APPROACHES VTAL AND INSISTS THAT IT OBTAIN AN APPLIANCE DIRECTLY FROM
IT AND NOT THROUGH EZEM, OR IN THE EVENT THAT EZEM APPROACHES A PROSPECTIVE
CUSTOMER WHICH TAKES THE SAME POSITION, THE PARTY SO INFORMED BY SUCH POTENTIAL
CUSTOMER SHALL SO INFORM THE OTHER PARTY, AND THE CHIEF EXECUTIVES OF THE
PARTIES SHALL PROMPTLY DISCUSS AND RESOLVE THE SITUATION. VTAL SHALL NOT,
HOWEVER, MAKE SUCH SALE WITHOUT THE APPROVAL OF EZEM, WHICH APPROVAL MAY NOT BE
UNREASONABLY WITHHELD.
4. GENERAL OBLIGATIONS OF EZEM
4.1. MARKETING. EZEM SHALL HAVE THE FOLLOWING OBLIGATIONS WITH RESPECT
TO THE MARKETING AND DISTRIBUTION OF THE APPLIANCE; PROVIDED THAT THE
OBLIGATIONS SET OUT IN SUBSECTIONS (A), (K), (L) AND (O) SHALL NOT APPLY TO THE
EXTENT THAT THE APPOINTMENT HEREUNDER SHALL BECOME NON-EXCLUSIVE WITH RESPECT TO
THE UNITED STATES. THE OBLIGATIONS SET OUT IN SUBSECTIONS (K), (L) AND (O)
SHALL NOT APPLY IN ANY COUNTRY OR PART THEREOF IN THE TERRITORY IN ALL OR PART
OF WHICH THE APPOINTMENT HEREUNDER SHALL BECOME NON-EXCLUSIVE:
(A) TO USE ITS COMMERCIALLY REASONABLE EFFORTS TO FURTHER THE
PROMOTION, MARKETING AND DISTRIBUTION OF THE APPLIANCE IN THE TERRITORY. IT IS
EZEM’S OBLIGATION TO EXPEND AT LEAST _____________ DOLLARS ($__________) ON
CLINICAL, MARKETING AND SALES SUPPORT OF THE APPLIANCE AND CENTERS OF EXCELLENCE
DURING THE TWO YEARS FOLLOWING THE APPLIANCE COMMERCIAL AVAILABILITY DATE;
(B) TO OBTAIN FROM EACH END USER AN END USER AGREEMENT, WHICH HAS BEEN
SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE CUSTOMER;
(C) TO PROMPTLY RESPOND TO ALL INQUIRIES OR COMPLAINTS FROM ITS
CUSTOMERS, RECOGNIZING, HOWEVER, THAT APPLIANCE SYSTEM INSTALLATION SERVICES AND
SOFTWARE MAINTENANCE ARE TO BE PROVIDED AS SET OUT IN SUBSECTION 6.5 AND SECTION
7;
(D) TO PROVIDE OR CAUSE TO BE PROVIDED BY QUALIFIED PERSONNEL
REASONABLY ACCEPTABLE TO VTAL TRAINING TO EACH CUSTOMER IN USE OF THE SOFTWARE
APPLIANCE IN ACCORDANCE WITH VTAL GUIDELINES AND PROCEDURES AS COMMUNICATED BY
VTAL FROM TIME TO TIME,;
(E) TO ACQUIRE OR CAUSE TO BE ACQUIRED BY THE CUSTOMER THE APPLIANCE
PLATFORM IN THE CONFIGURATION DESIGNATED BY VTAL;
(F) TO PROVIDE VTAL WITH APPROPRIATE DETAILS OF ALL COMPLAINTS AND
BUGS FOUND IN THE APPLIANCE, WHETHER SUCH COMPLAINTS OR BUGS WERE DISCOVERED BY
EZEM OR CUSTOMERS OF EZEM;
(G) TO INVESTIGATE ALL LEADS WITH RESPECT TO POTENTIAL CUSTOMERS FOR
THE APPLIANCE IN THE TERRITORY WHO ARE REFERRED TO EZEM BY VTAL;
(H) TO MAINTAIN AN ADEQUATELY TRAINED AND STAFFED SALES AND TECHNICAL
SUPPORT GROUP FOR THE MARKETING, SALES, TRAINING, AND SUPPORT OF THE APPLIANCE
IN THE UNITED STATES;
(I) TO TAKE ALL COMMERCIALLY REASONABLE STEPS TO ENSURE THAT EZEM,
ITS AFFILIATES OR A DEALER ASSOCIATE SELECTED IN ACCORDANCE HEREWITH MAINTAINS
AN ADEQUATELY TRAINED AND STAFFED SALES AND TECHNICAL SUPPORT GROUP FOR THE
MARKETING, SALES, TRAINING, INSTALLATION AND SUPPORT OF THE APPLIANCE THROUGHOUT
THE TERRITORY OUTSIDE OF THE UNITED STATES;
(J) TO PROVIDE, AND CAUSE DEALER AND SERVICE ASSOCIATES TO PROVIDE,
APPROPRIATE SALES AND TECHNICAL SUPPORT STAFF FOR TRAINING BY VTAL AT ANY
MUTUALLY-AGREEABLE LOCATION;
(K) TO PARTICIPATE, IN ITS SOLE DISCRETION AND WHERE COMMERCIALLY
REASONABLE IN FAIRS AND EXHIBITIONS IN THE TERRITORY WHERE SUCH PARTICIPATION
WILL PROMOTE THE APPLIANCE; AND TO DEVELOP AND IMPLEMENT ITS OWN INTERNAL
PROGRAMS FOR THE PROMOTION OF THE APPLIANCE;
(L) TO PROVIDE VTAL WITH REPORTS OF ITS ACTIVITIES AND OTHER
INFORMATION REGARDING THE APPLIANCE IN THE TERRITORY IN SUCH DETAIL AND WITH
SUCH FREQUENCY AS IS REASONABLY REQUESTED BY VTAL;
(M) TO CONDUCT ITS BUSINESS IN A PROFESSIONAL MANNER, WHICH WILL
REFLECT POSITIVELY UPON VTAL AND THE APPLIANCE;
(N) TO PROVIDE VTAL WITH CUSTOMER REGISTRATION INFORMATION AS IS
REASONABLY REQUIRED BY VTAL;
(O) TO MEET WITH VTAL (I) NOT LESS OFTEN THAN EVERY SIX (6) MONTHS AT
A LOCATION PROPOSED ALTERNATIVELY BY VTAL AND EZEM AND APPROVED BY THE OTHER
PARTY, WHICH APPROVAL MAY NOT BE UNREASONABLY WITHHELD, TO DISCUSS DEVELOPMENT,
SERVICE, INSTALLATION, MARKETING, CLINICAL AND OTHER SUPPORT PROGRAMS, AND
SELLING ISSUES AND (II) NOT LESS OFTEN THAN EVERY TWO (2) YEARS TO REVIEW THE
STRATEGIC PLAN AND ANY ISSUES RELATING TO THE IMPLEMENTATION OF THIS AGREEMENT
AND THE BUSINESS RELATIONSHIP CONTEMPLATED THEREBY;
(P) TO DETERMINE AFTER INSTALLATION OF THE APPLIANCE WHETHER IT
CONFORMS TO THE SPECIFICATION. NEITHER EZEM NOR THE END-USER SHALL HAVE ANY
RIGHT OF RETURN OF AN APPLIANCE UNLESS VTAL RECEIVES WRITTEN NOTICE OF SUCH
NON-CONFORMITY AND THE BASIS THEREFOR WITHIN THIRTY (30) DAYS AFTER SUCH
INSTALLATION. VTAL’S SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO ANY RIGHTFUL
RETURN (WHICH IS IN LIEU OF ANY RIGHTS OF ACCEPTANCE OR REJECTION) SHALL BE (I)
TO PROVIDE AND CAUSE TO BE INSTALLED AN APPLIANCE CONFORMING WITH THE
SPECIFICATION WITHIN THIRTY (30) DAYS OF THE DATE VTAL IS PROPERLY NOTIFIED OF
SUCH RETURN, FAILING WHICH (II) VTAL SHALL CREDIT EZEM WITH THE AMOUNT PAID FOR
THE APPLIANCE, ITS INSTALLATION AND MAINTENANCE; PROVIDED THAT NO SUCH RIGHT OF
RETURN SHALL APPLY TO ANY APPLIANCE LICENSED UNDER THE DEMONSTRATION LICENSE
REFERRED TO IN SECTION 4.2.
(Q) TO ABIDE BY ALL APPLICABLE LAWS AND REGULATIONS IN THE TERRITORY,
INCLUDING, IF APPLICABLE, THE U.S. EXPORT ADMINISTRATION REGULATIONS AND THE
U.S. FOREIGN CORRUPT PRACTICES ACT.
4.2. EZEM DEMONSTRATION LICENSE. EZEM SHALL MAINTAIN UP TO FIFTEEN
(15) SOFTWARE LICENSES FOR THE APPLIANCE AT NO COST TO EZEM SOLELY FOR ITS OWN
CUSTOMER DEMONSTRATION AND PROMOTIONAL USES, SUBJECT TO THE PROVISIONS OF THE
DEMONSTRATION LICENSE AGREEMENT ATTACHED HERETO AS EXHIBIT 4.2. VTAL WILL
PROVIDE ADDITIONAL SOFTWARE LICENSES, AT NO COST, AS REASONABLY REQUESTED BY
EZEM TO SUPPORT EZEM’S SALES AND MARKETING EFFORTS.
4.3. PROMOTIONAL MATERIALS AND APPLIANCE PACKAGING.
(A) VTAL SHALL BE RESPONSIBLE FOR THE DEVELOPMENT OF DATA SHEETS,
BROCHURES AND OTHER MARKETING MATERIALS FOR THE OPTION IN THE ENGLISH LANGUAGE,
AND IF IT SO ELECTS IN OTHER LANGUAGES. SUCH MATERIALS SHALL BE MADE AVAILABLE
BY VTAL FOR EZEM, WHICH MAY USE SUCH MATERIALS TO DEVELOP PARALLEL MATERIALS
WITH RESPECT TO THE APPLIANCE AT ITS EXPENSE. SUCH PARALLEL MATERIALS SHALL BE
SUBMITTED TO VTAL FOR REVIEW AND APPROVAL PRIOR TO BEING PROVIDED TO ANY THIRD
PARTY, SUCH APPROVAL NOT TO BE UNREASONABLY WITHHELD. IN THE EVENT THAT EZEM
SUBMITS MARKETING AND SALES MATERIALS RELATING TO THE APPLIANCE TO VTAL, VTAL
SHALL REVIEW SUCH MATERIALS AND RESPOND TO EZEM WITHIN FOUR (4) WEEKS FOLLOWING
SUBMISSION BY EZEM. THE PARTIES AGREE THAT IT IS THEIR INTENTION THAT THE
APPLIANCE BE IDENTIFIED SO LONG AS THE APPOINTMENT CONTAINED IN SECTION 3.1
SHALL REMAIN EXCLUSIVEAS A PRODUCT DEVELOPED, MANUFACTURED AND SUPPLIED BY VTAL
AND OFFERED, MARKETED AND SOLD EXCLUSIVELY BY EZEM, AND THE MATERIALS DEVELOPED
BY EZEM IN ACCORDANCE WITH THE FOREGOING SHALL BE CONSISTENT WITH SUCH
INTENTION.
(B) IN THE EVENT EZEM DESIRES TO DEVELOP ITS OWN MARKETING AND SALES
MATERIALS RELATING TO THE APPLIANCE IT MAY DO SO, SUBJECT TO THE UNDERSTANDING
THAT THE APPLIANCE WILL BE IDENTIFIED SO LONG AS THE APPOINTMENT CONTAINED IN
SECTION 3.1 SHALL REMAIN EXCLUSIVEAS A PRODUCT OFFERED JOINTLY BY THE PARTIES
AND SUBJECT TO REVIEW AND APPROVAL OF SUCH MATERIALS BY VTAL, SUCH APPROVAL NOT
TO BE UNREASONABLY WITHHELD. IN THE EVENT THAT EZEM SUBMITS MARKETING AND SALES
MATERIALS RELATING TO THE APPLIANCE TO VTAL, VTAL SHALL REVIEW SUCH MATERIALS
AND RESPOND TO EZEM WITHIN FOUR (4) WEEKS FOLLOWING SUBMISSION BY EZEM. IN NO
EVENT SHALL EZEM DISTRIBUTE ANY PROMOTIONAL MATERIALS FOR OR RELATED TO THE
APPLIANCE THAT HAVE NOT BEEN PREVIOUSLY APPROVED IN WRITING BY VTAL.
(C) THE PARTIES AGREE THAT THE APPLIANCE AND APPLIANCE PACKAGING,
MANUALS AND LABELING SHALL IDENTIFY BOTH VTAL AND EZEM IN EQUAL PROMINENCE.
PRIOR TO RELEASE OF THE APPLIANCE AND THE APPLIANCE PACKAGING, MANUALS AND
LABELING, THE PARTIES SHALL MEET TO DISCUSS AND MUTUALLY AGREE ON THE PLACEMENT
AND REFERENCE TO BOTH VTAL’S AND EZEM’S RESPECTIVE TRADEMARKS AND/OR TRADE
NAMES.
4.4. OWNERSHIP AND REVERSE ENGINEERING. EZEM HEREBY ACKNOWLEDGES VTAL
RETAINS ALL RIGHT, TITLE AND INTEREST IN AND TO THE COPYRIGHTS AND OTHER
INTELLECTUAL PROPERTY PROTECTING OR EMBODIED IN THE PRODUCTS AND THAT THE
APPLIANCE IS TO BE DISTRIBUTED TO EZEM’S CUSTOMERS ONLY THROUGH THE END USER
AGREEMENT. EZEM SHALL NOT REVERSE ENGINEER, DECOMPILE OR DISASSEMBLE THE
APPLIANCE.
4.5. COMPETING PRODUCTS. DURING THE TERM OF THIS AGREEMENT, EZEM SHALL
NOT MANUFACTURE, CLINICALLY TEST, SELL, RENT, MARKET, DISTRIBUTE, PROMOTE OR
SOLICIT THE SALE OF ANY SOFTWARE PRODUCTS WHICH PERMIT VIRTUAL ENDOSCOPY. THE
OBLIGATIONS OF THIS SECTION 4.5 SHALL NOT APPLY TO ANY PARTICULAR COUNTRY IN THE
TERRITORY OR THE ENTIRE TERRITORY TO THE EXTENT THAT THE APPOINTMENT HEREUNDER
SHALL BECOME NON-EXCLUSIVE WITH RESPECT TO SUCH COUNTRY IN THE TERRITORY OR THE
ENTIRE TERRITORY.
4.6. EZEM EXPENSES. EZEM ASSUMES FULL RESPONSIBILITY FOR ALL ITS OWN
COSTS AND EXPENSES INCURRED IN CARRYING OUT ITS OBLIGATIONS UNDER THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO ALL RENTS, SALARIES, COMMISSIONS,
ADVERTISING, DEMONSTRATIONS, TRAVEL AND ACCOMMODATIONS; PROVIDED, HOWEVER, VTAL
WILL PROVIDE TO EZEM AT NO CHARGE THE FOLLOWING ITEMS:
(A) TRAINING FOR A REASONABLE NUMBER OF EZEM’S SALES AND TECHNICAL
SUPPORT STAFF, AT VTAL’S FACILITIES OR AT ANY OTHER MUTUALLY-AGREEABLE LOCATION,
IN THE FUNCTION AND APPLICATION OF THE APPLIANCE; PROVIDED, HOWEVER, EZEM SHALL
PAY THE SALARIES AND ALL TRANSPORTATION AND LIVING EXPENSES FOR ITS STAFF; AND
(B) A REASONABLE QUANTITY OF VTAL’S THEN-CURRENT END USER AGREEMENT
(OR ELECTRONIC MEDIA IN LIEU THEREOF), PROVIDED, HOWEVER, EZEM SHALL IMMEDIATELY
STOP USING ALL SUPERSEDED VERSIONS OF THE END USER AGREEMENT UPON ITS RECEIPT OF
A NEW VERSION OF THE END USER AGREEMENT FROM VTAL.
5. GENERAL OBLIGATIONS OF VTAL
5.1. GENERAL OBLIGATIONS. VTAL SHALL HAVE THE FOLLOWING OBLIGATIONS
WITH RESPECT TO PERFORMING ITS OBLIGATIONS HEREUNDER:
(A) TO USE ITS COMMERCIALLY REASONABLE EFFORTS TO TIMELY MANUFACTURE
AND SUPPLY SUCH QUANTITY OF ORDERED APPLIANCES THAT EZEM AND/OR ITS CUSTOMERS
ORDERS AND TO MANUFACTURE AND SUPPLY THE APPLIANCE IN ACCORDANCE WITH THE
SPECIFICATIONS;
(B) TO ABIDE BY ALL APPLICABLE LAWS, RULES AND REGULATIONS IN THE
TERRITORY, INCLUDING WITHOUT LIMITATION THOSE PORTIONS OF THE ACT, AS AMENDED,
WHICH APPLY TO THE MANUFACTURE AND DISTRIBUTION OF MEDICAL SOFTWARE AND DEVICES,
CURRENT FDA QUALITY SYSTEM REGULATIONS AND THE U.S. FOREIGN CORRUPT PRACTICES
ACT;
(C) TO PROVIDE OR CAUSE TO BE PROVIDED ADEQUATE TRAINING AND
INSTRUCTION TO EZEM PERSONNEL IN ORDER TO ALLOW THEM TO PROPERLY SELL TO AND
TRAIN EZEM CUSTOMERS;
(D) TO PROVIDE EZEM WITH APPROPRIATE DETAILS OF ALL MATERIAL
COMPLAINTS AND BUGS FOUND IN THE APPLIANCE OR OPTION, WHETHER SUCH COMPLAINTS OR
BUGS WERE DISCOVERED BY VTAL, CUSTOMERS OF VTAL, EZEM OR CUSTOMERS OF EZEM;
(E) TO MAINTAIN AN ADEQUATELY TRAINED AND STAFFED TECHNICAL,
ENGINEERING AND MANUFACTURING SUPPORT GROUP IN ORDER TO FULFILL ITS OBLIGATIONS
HEREUNDER;
(F) TO CONDUCT ITS BUSINESS IN A PROFESSIONAL MANNER, WHICH WILL
REFLECT POSITIVELY UPON EZEM AND THE APPLIANCE;
(G) TO MAINTAIN ADEQUATELY TRAINED TECHNICAL STAFF TO RESPOND OR
ASSIST EZEM IN RESPONDING TO QUESTIONS AND/OR PROBLEMS CONCERNING THE APPLIANCE
SYSTEM FROM EZEM OR EZEM CUSTOMERS;
(H) TO ASSIST EZEM IN ACQUIRING FROM THIRD PARTY SUPPLIERS DESIGNATED
BY VTAL THE APPLIANCE PLATFORM;
(I) TO PROVIDE AND MAINTAIN ADEQUATELY TRAINED STAFF FOR THE
INSTALLATION AND MAINTENANCE OF THE APPLIANCE SYSTEM IN THE UNITED STATES.
5.2. VTAL EXPENSES. VTAL ASSUMES FULL RESPONSIBILITY FOR ALL ITS OWN
COSTS AND EXPENSES INCURRED IN CARRYING OUT ITS OBLIGATIONS UNDER THIS
AGREEMENT.
6. ORDERS FOR PRODUCTS
6.1. PURCHASE ORDERS. EZEM SHALL SUBMIT PURCHASE ORDERS FOR THE
APPLIANCE TO VTAL IN WRITING (PREFERABLY BY FACSIMILE) AT LEAST FIFTEEN (15)
BUSINESS DAYS PRIOR TO ITS CONFIRMED DELIVERY DATE OF THE APPLIANCE (IT BEING
UNDERSTOOD THAT INSTALLATION WILL BE PROVIDED IN ACCORDANCE WITH THEN CURRENT
LEAD-TIMES), WHICH ORDERS SHALL INCLUDE THE FOLLOWING INFORMATION:
(A) CUSTOMER IDENTIFICATION INFORMATION, INCLUDING, BUT NOT LIMITED TO
NAME, ADDRESS, TELEPHONE AND FACSIMILE NUMBERS;
(B) QUANTITY OF COPIES;
(C) REQUESTED DELIVERY AND INSTALLATION DATES;
(D) SHIPPING INSTRUCTIONS AND SHIPPING ADDRESS; AND
(E) IF APPLICABLE, ANY RELEVANT EXPORT CONTROL INFORMATION OR
DOCUMENTATION TO ENABLE EZEM AND VTAL TO COMPLY WITH APPLICABLE U.S. EXPORT
CONTROL LAWS.
6.2. ACCEPTANCE OF ORDERS. ALL PURCHASE ORDERS FROM EZEM ARE SUBJECT
TO ACCEPTANCE BY VTAL.
6.3. DELIVERY TERMS. ALL DELIVERIES OF THE APPLIANCE SHALL BE FROM
VTAL’S OR ITS DESIGNATED VENDOR’S FACILITIES. VTAL SHALL CHARGE EZEM REASONABLE
AND CUSTOMARY SHIPPING CHARGES FOR THE SHIPMENT OF ANY APPLIANCE TO EZEM OR THE
CUSTOMERS, AS EZEM SHALL DESIGNATE IN ITS PURCHASE ORDER. ALL RISK OF DAMAGE TO
OR LOSS OR DELAY OF THE APPLIANCE SHALL PASS TO EZEM UPON THEIR DELIVERY TO (I)
A COMMON CARRIER, OR (II) AN AGENT OR ANY OTHER PERSON SPECIFIED BY EZEM ACTING
ON BEHALF OF EZEM.
6.4. TERMS OF ORDERS AND ACCEPTANCES. ALL PURCHASE ORDERS, ACCEPTANCES
AND CHANGE ORDERS SHALL BE SUBJECT TO ALL PROVISIONS OF THIS AGREEMENT, WHETHER
OR NOT THE PURCHASE ORDER, ACCEPTANCE OR CHANGE ORDER SO STATES, AND ANY TERMS
OR CONDITIONS OF SUCH PURCHASE ORDER, ACCEPTANCE OR CHANGE ORDER WHICH CONFLICT
WITH THE TERMS OR CONDITIONS OF THIS AGREEMENT SHALL BE DEEMED EXCLUDED AND OF
NO LEGAL EFFECT AS BETWEEN THE PARTIES EXCEPT AS EXPRESSLY AGREED UPON IN A
WRITING SIGNED BY BOTH PARTIES. AN ACCEPTED PURCHASE ORDER MAY BE MODIFIED OR
CANCELED UP TO THE TIME OF SHIPMENT TO THE CUSTOMER. VTAL MAY SHIP ITS LATEST
AUTHORIZED VERSION OR RELEASE OF AN APPLIANCE IN RESPONSE TO ANY ACCEPTED
PURCHASE ORDER.
6.5. INSTALLATION OF APPLIANCE. FOR EACH CUSTOMER PURCHASING A LICENSE
FOR THE APPLIANCE IN THE UNITED STATES, THE LICENSING FEE SHALL INCLUDE
INSTALLATION OF THE APPLIANCE SYSTEM. PRIOR TO INSTALLATION, VTAL SHALL HAVE
RECEIVED AN ORIGINAL END USER AGREEMENT SIGNED BY AN AUTHORIZED REPRESENTATIVE
OF THE CUSTOMER. VTAL SHALL BE RESPONSIBLE FOR PROVIDING, EITHER DIRECTLY OR
INDIRECTLY, THE INSTALLATION SERVICES FOR EACH APPLIANCE SYSTEM SOLD IN THE
UNITED STATES.
7. SOFTWARE MAINTENANCE SERVICES
For each customer purchasing a license for the Appliance in the United States,
the licensing fee shall include software maintenance for a period of one (1)
year. Thereafter Software Maintenance shall be provided under an annual
maintenance arrangement with the customer. VTAL shall be responsible for
providing, either directly or indirectly (i) first tier maintenance services for
each Appliance sold in the United States and (ii) second tier maintenance and
support for each Appliance sold in the Territory outside of the United States.
8. CENTERS OF EXCELLENCE
EZEM shall use commercially reasonable efforts to enter into arrangements with
not less than three nor more than five institutions from among those identified
in Exhibit 8.1, or such other institutions, if any, as upon which the parties
may agree in writing, to establish and manage Centers of Excellence to validate
and promote the use of virtual colonoscopy and the use of the Appliance and/or
Vitrea 2 with the Option. VTAL shall cooperate and assist EZEM, at VTAL’s
expense, in the establishment of each Center of Excellence as EZEM shall
reasonably request, and VTAL shall further supply (without charge subject to the
last sentence of this Section) one Appliance per Center of Excellence or at its
discretion one Option if such Center already licenses a Vitrea 2 Software
product, together with installation of such Appliance or Option, as the case may
be, and maintenance thereof. Except as specifically set forth above, EZEM shall
bear all cost associated with the establishment and support of each Center of
Excellence, including cost of training with respect to use of the Appliance,
which EZEM agrees to provide to each Center. Any revenue derived from the sale
of an Appliance to a Center for Excellence shall be shared equally by the
parties.
9. PRICING, PROFIT SHARING AND OTHER COMPENSATION
9.1. PRICING, BILLING AND COLLECTION. EZEM SHALL HAVE THE UNILATERAL
RIGHT TO DETERMINE THE APPLIANCE SYSTEM SALE PRICE OF EACH APPLIANCE SYSTEM, AS
WELL AS THE APPLIANCE PRICE IF IT IS SOLD WITHOUT THE APPLIANCE PLATFORM;
PROVIDED THAT SUCH PRICE SHALL IN ANY EVENT COVER THE COSTS EACH PARTY IS
ENTITLED TO RECOVER AS DESCRIBED IN SECTION 9.3. EZEM SHALL INVOICE THE
CUSTOMER FOR EACH APPLIANCE SYSTEM SOLD AND SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO COLLECT ALL INVOICES.
9.2. UNITED STATES SALES. WITH RESPECT TO EACH APPLIANCE SYSTEM SOLD
FOR INSTALLATION IN THE UNITED STATES, EZEM SHALL ORDER FROM VTAL THE APPLIANCE
AND APPLIANCE INSTALLATION, AS WELL AS FIRST YEAR WARRANTY/MAINTENANCE SERVICES,
ALL OF WHICH WILL BE BUNDLED WITH THE APPLIANCE SYSTEM AND THE COSTS FOR WHICH
SHALL BE INCLUDED IN THE APPLIANCE SYSTEM SALE PRICE. VTAL AGREES TO SCHEDULE
APPLIANCE AND, WHEN ORDERED APPLIANCE SYSTEM, INSTALLATION ON THE SAME BASIS AS,
AND SO AS NOT TO DISCRIMINATE IN FAVOR OF, THE OPTION AND VITREA 2 SOFTWARE
INSTALLATION, AND VTAL SHALL PROVIDE NOT LESS FREQUENTLY THAN ONCE PER QUARTER
REASONABLE EVIDENCE THEREOF ON THE REQUEST OF EZEM. MAINTENANCE SERVICES AFTER
THE FIRST YEAR WILL BE PROVIDED UNDER AN ARRANGEMENT BETWEEN VTAL AND THE
CUSTOMER.
VTAL agrees to a reduction in the payment to VTAL with respect to an Appliance
pursuant to Section 9.3 for delays in installing such Appliance according to
the following schedule:
(A) IF INSTALLATION OF AN APPLIANCE DOES NOT OCCUR WITHIN SIXTY (60)
BUSINESS DAYS OF THE SUBMISSION OF A COMPLETED CUSTOMER CHECKLIST AND ORDER FOR
SUCH APPLIANCE, VTAL NEED NOT BE PAID THE INSTALLATION FEE CONTEMPLATED BY
SECTION 9.3(C) WITH RESPECT TO SUCH APPLIANCE; AND
(B) IN ADDITION, IF INSTALLATION OF AN APPLIANCE DOES NOT OCCUR WITHIN
NINETY (90) BUSINESS DAYS OF THE SUBMISSION OF A COMPLETED CUSTOMER CHECKLIST
AND ORDER FOR SUCH APPLIANCE, THE FEE PAYABLE TO VTAL WITH RESPECT TO SUCH
APPLIANCE PURSUANT TO SECTION 9.3(E) SHALL BE REDUCED BY _________ DOLLARS
($______).
The parties further agree that:
(1) IN THE EVENT THAT (I) A CUSTOMER REQUESTS AN INSTALLATION
DATE LATER THAN THE TIMEFRAMES DESCRIBED ABOVE, (II) THERE IS A DELAY IN VTAL’S
RECEIPT OF A DULY SIGNED END USER AGREEMENT FROM A CUSTOMER WHICH ADVERSELY
IMPACTS THE ABILITY OF VTAL TO INSTALL THE APPLIANCE IN ACCORDANCE WITH THE THEN
EXISTING SCHEDULE, (III) A CONFIRMED INSTALLATION DATE IS CHANGED DUE TO
CUSTOMER REQUEST, (IV) THERE IS A DELAY IN RECEIPT OF THE APPLIANCE PLATFORM
WHICH ADVERSELY IMPACTS THE ABILITY OF VTAL TO INSTALL THE APPLIANCE IN
ACCORDANCE WITH THE THEN EXISTING SCHEDULE OR (V) ANY OTHER MATTERS BEYOND
VTAL’S DIRECT CONTROL ADVERSELY IMPACT THE ABILITY OF VTAL TO INSTALL THE
APPLIANCE IN ACCORDANCE WITH THE THEN EXISTING SCHEDULE, A REVISED INSTALLATION
DATE WILL BE ESTABLISHED AND CONFIRMED BY AGREEMENT OF VTAL, EZEM AND THE
CUSTOMER; AND
(2) IF A PAYMENT IS MADE WHICH IS NOT IN CONFORMITY WITH
SUBSECTION (A) OR (B) OF THIS SECTION (E.G., VTAL IS PAID THE INSTALLATION FEE
DESCRIBED IN SECTION 9.3(C) NOTWITHSTANDING THAT INSTALLATION OF AN APPLIANCE
OCCURRED MORE THAN SIXTY (60) BUSINESS DAYS FOLLOWING SUBMISSION OF A COMPLETED
CUSTOMER CHECKLIST AND ORDER FOR SUCH APPLIANCE), EZEM SHALL HAVE THE RIGHT TO
RECOVER SUCH PAYMENT BY OFFSET AGAINST AMOUNTS OTHERWISE PAYABLE TO VTAL UNDER
SECTIONS 9.3 AND/OR 9.4 WITH RESPECT TO SUCH APPLIANCE.
9.3. REIMBURSEMENT AND PAYMENTS FROM APPLIANCE SYSTEM SALES PRICE FOR
SALES WITHIN THE UNITED STATES. EZEM SHALL MAKE THE FOLLOWING PAYMENTS TO VTAL
FOR APPLIANCE SALES WITHIN THE UNITED STATES :
(A)
(B)
(C)
(D)
(E)
VTAL agrees to notify EZEM in writing within ten (10) business days of each
Adjustment Date of the average sales price of the Option (excluding sales to
collaboration sites as identified in Exhibit 9.3) during the six (6) month
period ending on such Adjustment Date. Any payments made to VTAL in accordance
with the foregoing shall be made within thirty (30) days of the date of VTAL’s
invoice, which invoice may be issued any time on or after the date of shipment
of the Appliance by VTAL to the location specified in the purchase order
pursuant to Section 6.1; provided that the date such payment is required to be
made following invoice in accordance with the foregoing shall be delayed by a
day for each day by which shipment occurs more than ten (10) days prior to the
confirmed installation date.
9.4. PROFIT PAYMENT. SUBJECT TO PARAGRAPH 9.2, EZEM SHALL PAY VTAL
WITH RESPECT TO EACH APPLIANCE LICENSED TO A CUSTOMER HEREUNDER FOR UNITED
STATES INSTALLATION (EXCEPT AS PROVIDED IN SECTION 4.2) _______ PERCENT (___%)
OF THE EXCESS, IF ANY, OF THE APPLIANCE SYSTEM SALE PRICE, OR THE APPLIANCE
PRICE IF NO APPLIANCE PLATFORM IS PROVIDED BY EZEM, PAYABLE BY SUCH CUSTOMER
MINUS THE SUM OF (I) ALLOWABLE EXPENSES PAYABLE IN CONNECTION WITH SUCH SALE,
(II) AN AMOUNT EQUAL TO THE AMOUNT PAID TO VTAL UNDER SUBSECTION 9.3(E) (WHICH
EQUAL AMOUNT EZEM MAY RETAIN FOR ITS OWN ACCOUNT) AND (III) THE AMOUNT OF ANY
REDUCTION IN PAYMENT INCURRED IN CONNECTION WITH SUCH SALE AS SET FORTH IN
SUBSECTIONS 9.2(A) AND/OR(B). SUCH PAYMENT SHALL BE MADE WITHIN THIRTY (30)
DAYS OF THE CLOSE OF THE CALENDAR QUARTER DURING WHICH SUCH APPLIANCE WAS
SHIPPED. AN EXAMPLE OF THE COMPUTATIONS REQUIRED BY THIS SECTION 9.4 IS SET
FORTH IN EXHIBIT 9.4.
9.5. ROYALTIES. VTAL SHALL PAY TO EZEM AN AMOUNT EQUAL TO _______
PERCENT (___%) OF THE OPTION SALES PRICE FOR EACH OPTION. SUCH PAYMENT SHALL BE
MADE WITHIN THIRTY (30) DAYS OF THE CLOSE OF THE CALENDAR QUARTER DURING WHICH
SUCH OPTION WAS SHIPPED.
9.6. SALES OUTSIDE OF UNITED STATES. FOR EACH APPLIANCE PURCHASED
HEREUNDER AND SOLD BY EZEM OR A DEALER ASSOCIATE FOR INSTALLATION OUTSIDE OF THE
UNITED STATES, EZEM SHALL PAY TO VTAL _________ DOLLARS ($______), PLUS THE
AMOUNT OF ANY TRANSPORTATION AND FREIGHT CHARGES, INSURANCE CHARGES, SALES, USE,
EXCISE OR TAXES, IMPORT OR EXPORT DUTIES OR TAXES, IMPOSTS PAID OR ALLOWED AND
ANY OTHER GOVERNMENTAL CHARGES IMPOSED UPON THE IMPORTATION, EXPORTATION, SALE,
DISTRIBUTION AND USE OF THE APPLIANCE OR THE APPLIANCE SYSTEM TO THE EXTENT PAID
BY VTAL AND NOT OTHERWISE REIMBURSED, WITHIN THIRTY (30) DAYS OF THE DATE OF
VTAL’S INVOICE, WHICH INVOICE MAY BE ISSUED ANY TIME ON OR AFTER THE DATE OF
SHIPMENT OF THE APPLIANCE BY VTAL. PAYMENT OF THIS AMOUNT WITH RESPECT TO AN
APPLIANCE SHALL ENTITLE EZEM DURING THE YEAR FOLLOWING DELIVERY TO SECONDARY
WARRANTY/MAINTENANCE SERVICES PROVIDED BY VTAL WITH RESPECT TO THE APPLIANCE, IT
BEING UNDERSTOOD THAT EZEM OR ITS DEALER OR SERVICE ASSOCIATE SHALL PROVIDE THE
FIRST LEVEL OF WARRANTY/MAINTENANCE SERVICE, MEANING THAT IT SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO RESOLVE WARRANTY/MAINTENANCE ISSUES WITHOUT
VTAL INTERVENTION. FOR THE AVOIDANCE OF DOUBT, EZEM SHALL NOT BE OBLIGATED IN
CONNECTION WITH ANY SUCH SALE TO REIMBURSE VTAL FOR THE COST OF ANY ROYALTIES OR
OTHER PAYMENTS PAYABLE TO ANY THIRD PARTY WITH RESPECT TO THE SALE OF AN
APPLIANCE.
9.7. RECORD-KEEPING; INSPECTION AND AUDIT. EZEM AND VTAL RESPECTIVELY
AGREE TO KEEP AND MAINTAIN ACCURATE RECORDS THROUGHOUT THE TERM OF THIS
AGREEMENT OF ALL SALES OF APPLIANCE SYSTEMS AND OPTIONS SUFFICIENT TO PERMIT
CALCULATION/CONFIRMATION OF THE AMOUNTS PAYABLE UNDER THIS ARTICLE 9, BUT SHALL
ONLY BE REQUIRED TO MAINTAIN SUCH RECORDS FOR A PERIOD OF FIVE (5) YEARS AFTER
THE END OF THE CALENDAR QUARTER TO WHICH SUCH RECORDS RELATE. EACH PARTY SHALL
HAVE THE RIGHT, FROM TIME TO TIME DURING THE TERM OF THIS AGREEMENT, UPON TWENTY
(20) DAYS WRITTEN NOTICE TO THE OTHER AND AT THE NOTIFYING PARTY’S EXPENSE, TO
HAVE AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT REASONABLY ACCEPTABLE TO THE
NOTIFIED PARTY, AUDIT THE BOOKS OR ACCOUNTS RELATING TO CALCULATION/CONFIRMATION
OF THE SUCH AMOUNTS PAYABLE TO THE EXTENT NECESSARY TO VERIFY THE FACTS
NECESSARY TO DETERMINE THE ACCURACY THEREOF. THE NOTIFYING PARTY SHALL BEAR THE
COST OF ANY SUCH ACCOUNTING BY IT, UNLESS THE AUDIT SHOWS A DISCREPANCY IN SUCH
PARTY’S FAVOR OF MORE THAN 10%, IN WHICH CASE THE OTHER PARTY SHALL BE
RESPONSIBLE FOR ALL COSTS AND EXPENSES RELATED TO THE AUDIT. EACH PARTY AGREES
TO TREAT THE OTHER’S BOOKS, ACCOUNTS, AND RECORDS AS CONFIDENTIAL AT ALL TIMES.
9.8. MOST “FAVORED BUYER” AND COMPARATIVE END-USER PROVISIONS. IN THE
EVENT THAT THE APPOINTMENT OF EZEM HEREUNDER BECOMES NON-EXCLUSIVE WITH RESPECT
TO THE UNITED STATES AND:
(A) THEREAFTER VTAL SELLS THE APPLIANCE TO ANOTHER DISTRIBUTOR FOR
INSTALLATION IN THE UNITED STATES AT RATES, TERMS AND CONDITIONS THAT ARE
OVERALL AND IN THE AGGREGATE SUBSTANTIALLY MORE FAVORABLE TO SUCH OTHER
DISTRIBUTOR THAN THE RATES, TERMS AND CONDITIONS HEREOF ARE FAVORABLE TO EZEM,
THEN VTAL WILL NOTIFY EZEM THEREOF IN WRITING (THE “MFB NOTICE”). EZEM SHALL
HAVE THE OPTION, BY GIVING WRITTEN NOTICE TO VTAL (THE “ELECTION NOTICE”) WITHIN
SIXTY (60) DAYS OF DELIVERY TO IT OF THE MFB NOTICE, TO ELECT (I) TO CONTINUE TO
ACQUIRE THE APPLIANCE FOR INSTALLATION IN THE UNITED STATES UNDER THE TERMS OF
THIS AGREEMENT IN EFFECT ON THE DATE HEREOF OR (II) TO SUBSTITUTE THEREFOR SUCH
SUBSTANTIALLY MORE FAVORABLE RATES, TERMS AND CONDITIONS AS DESCRIBED IN THE MFB
NOTICE FOR SUCH INSTALLATIONS ONLY, EFFECTIVE AS OF THE LATER OF (Y) THE FIRST
EZEM ORDER FOR THE APPLIANCE FOR INSTALLATION IN THE UNITED STATES AFTER THE
MORE FAVORABLE RATES, TERMS AND CONDITIONS ARE GRANTED TO SUCH OTHER DISTRIBUTOR
AND (Z) THE DATE OF DELIVERY OF THE ELECTION NOTICE. IT IS FURTHER AGREED THAT
IF SUCH SUBSTANTIALLY MORE FAVORABLE RATES, TERMS AND CONDITIONS CEASE TO BE
AVAILABLE TO SUCH OTHER DISTRIBUTOR WITH RESPECT TO INSTALLATIONS IN THE UNITED
STATES AND EZEM ELECTED TO SUBSTITUTE FOR THE TERMS IN EFFECT ON THE DATE HEREOF
SUCH SUBSTANTIALLY MORE FAVORABLE RATES, TERMS AND CONDITIONS, THEN THE RATES,
TERMS AND CONDITIONS HEREOF SHALL BE REINSTATED WITH RESPECT TO EZEM AS OF THE
DATE OF SUCH CESSATION, WHICH REINSTATEMENT, HOWEVER, SHALL BE WITHOUT PREJUDICE
TO THE FURTHER APPLICATION OF THIS SUBSECTION (A) THEREAFTER, AND
(B) DURING THE TWELVE (12) MONTH PERIOD FOLLOWING THE DATE SUCH
APPOINTMENT BECAME NON-EXCLUSIVE, OR DURING ANY TWELVE (12) MONTH PERIOD
FOLLOWING ANY ANNIVERSARY OF SUCH DATE WHILE SUCH NON-EXCLUSIVE APPOINTMENT
REMAINS IN EFFECT, THE AVERAGE SALES PRICE OF VTAL FOR APPLIANCES SOLD DIRECTLY
TO END-USERS FOR INSTALLATION IN THE UNITED STATES IS LESS THAN THE AVERAGE
SALES PRICE OF ALL SALES BY EZEM OF THE APPLIANCE FOR INSTALLATION IN THE UNITED
STATES DURING THE TWELVE (12) MONTHS PRECEDING SUCH DATE, VTAL WILL SO NOTIFY
EZEM IN WRITING WITHIN THIRTY (30) DAYS OF THE CLOSE OF SUCH TWELVE (12) MONTH
PERIOD. UPON EZEM’S WRITTEN REQUEST THEREAFTER, VTAL SHALL MEET WITH EZEM AT A
TIME (ON A BUSINESS DAY WITHIN THIRTY (30) DAYS OF DELIVERY OF SUCH REQUEST) AND
PLACE DESIGNATED BY VTAL SUBJECT TO THE APPROVAL OF EZEM, WHICH APPROVAL MAY NOT
BE UNREASONABLE WITHHELD, AT WHICH MEETING THE PARTIES WILL NEGOTIATE IN GOOD
FAITH AN EQUITABLE REDUCTION, TO BE EFFECTIVE RETROACTIVELY FROM AND AFTER THE
DATE OF EZEM’S WRITTEN REQUEST FOR SUCH NEGOTIATION, TO THE MINIMUM PRICES
PAYABLE TO VTAL BY EZEM FOR EACH APPLIANCE.
In the event that pricing adjustments are called for under the terms of by both
Subsection 9.8(a) and 9.8(b), EZEM may elect to proceed under either provision.
9.9. OVERDUE PAYMENTS. IF AND FOR SO LONG AS ANY PAYMENT FROM A PARTY
UNDER THIS AGREEMENT SHALL BE OVERDUE VTAL RESERVES THE RIGHT TO WITHHOLD OR
SUSPEND SHIPMENT OF THE APPLIANCE TO EZEM AND/OR ITS CUSTOMERS IF THERE IS AN
UNSETTLED OUTSTANDING BALANCE OWED BY EZEM TO VTAL FOR MORE THAN FORTY-FIVE (45)
DAYS BEYOND THE AGREED UPON DUE DATE, SUBJECT TO ITS HAVING GIVEN TO EZEM AT
LEAST TEN (10) BUSINESS DAYS PRIOR WRITTEN NOTICE OF ITS INTENT TO EXERCISE SUCH
RIGHT OF WITHHOLDING OR SUSPENSION AND THE REASON THEREFOR. EZEM RESERVES THE
RIGHT TO OFFSET ANY UNSETTLED OUTSTANDING BALANCE OWED BY VTAL TO EZEM AGAINST
PAYMENTS DUE TO VTAL, SUBJECT TO ITS HAVING GIVEN TO VTAL AT LEAST TEN (10)
BUSINESS DAYS PRIOR WRITTEN NOTICE OF ITS INTENT TO EXERCISE SUCH RIGHT OF
SETOFF AND THE REASON THEREFOR.
10. ADVERSE REACTIONS; PRODUCT RECALLS
10.1. COMPLIANCE. VTAL AND EZEM SHALL EACH COMPLY WITH ALL APPLICABLE
REGULATORY REQUIREMENTS, INCLUDING THE PROVISION OF INFORMATION BY EZEM TO VTAL
NECESSARY FOR VTAL TO COMPLY WITH ITS MEDICAL DEVICE REPORTING REQUIREMENTS TO
THE FDA OR ANY OTHER COMPARABLE REGULATORY BODY ELSEWHERE IN THE WORLD. VTAL
AND EZEM SHALL EACH COMPLY WITH ALL HEALTH REGISTRATION LAWS, REGULATIONS AND
ORDERS OF ANY GOVERNMENT ENTITY WITHIN THE TERRITORY AND WITH ALL OTHER
GOVERNMENTAL REQUIREMENTS RELATING TO THE PROMOTION, MARKETING AND SALE OF THE
APPLIANCE IN EACH COUNTRY IN THE TERRITORY. EZEM SHALL SUBMIT ALL ADVERTISING
CLAIMS TO VTAL FOR WRITTEN APPROVAL PRIOR TO THEIR FIRST USE BY ANY PARTY, SUCH
CONSENT NOT TO BE UNREASONABLY WITHHELD. VTAL SHALL REVIEW SUCH ADVERTISING
CLAIMS AND RESPOND TO EZEM WITHIN FOUR (4) WEEKS FOLLOWING SUBMISSION BY EZEM.
10.2. ADVERSE EVENT REPORTING. EACH PARTY SHALL ADVISE THE OTHER PARTY
BY TELEPHONE OR FACSIMILE, WITHIN TWENTY-FOUR (24) HOURS AFTER IT BECOMES AWARE
OF ANY ADVERSE EVENT FROM THE USE OF ANY APPLIANCE. VTAL SHALL BE RESPONSIBLE
FOR CONTACTING THE FDA OR ANY OTHER COMPARABLE REGULATORY AGENCY ELSEWHERE IN
THE WORLD AS REQUIRED IN THE EVENT OF ANY ADVERSE EVENTS REGARDING THE
APPLIANCE. EZEM SHALL COOPERATE WITH VTAL REGARDING THE INVESTIGATION OF ANY
ADVERSE EVENTS RELATING TO THE APPLIANCE. VTAL SHALL ADVISE EZEM, BY TELEPHONE
OR FACSIMILE, WITHIN FORTY-EIGHT (48) HOURS AFTER IT BECOMES AWARE OF ANY
ADVERSE EVENT FROM THE USE OF THE OPTION WHICH MAY ADVERSELY IMPACT OR AFFECT
THE APPLIANCE OR APPLIANCE SYSTEM.
10.3. CORRECTIVE ACTION.
(A) NOTICE OF CORRECTIVE ACTION. IF VTAL BELIEVES THAT A CORRECTIVE
ACTION WITH RESPECT TO THE APPLIANCE IS DESIRABLE OR REQUIRED BY LAW, OR IF ANY
GOVERNMENTAL AGENCY HAVING JURISDICTION (INCLUDING, WITHOUT LIMITATION, THE FDA)
SHALL REQUEST OR ORDER ANY CORRECTIVE ACTION WITH RESPECT TO THE APPLIANCE,
INCLUDING ANY RECALL, CUSTOMER NOTICE, RESTRICTION, CHANGE, CORRECTIVE ACTION OR
MARKET ACTION OR ANY APPLIANCE CHANGE, VTAL SHALL PROMPTLY NOTIFY EZEM. ANY AND
ALL CORRECTIVE ACTIONS WITH RESPECT TO THE APPLIANCE SHALL BE CONDUCTED AT THE
EXPENSE OF VTAL, EXCEPT COSTS ASSOCIATED WITH NOTIFYING CUSTOMERS OF SUCH
CORRECTIVE ACTION. EZEM SHALL MAINTAIN COMPLETE AND ACCURATE RECORDS, FOR SUCH
PERIODS AS MAY BE REQUIRED BY APPLICABLE LAW, OF ALL APPLIANCES SOLD BY IT AND
ANY OF ITS DEALER ASSOCIATES. THE PARTIES SHALL COOPERATE FULLY WITH EACH OTHER
IN EFFECTING ANY CORRECTIVE ACTION WITH RESPECT TO THE APPLIANCE PURSUANT TO
THIS SECTION 10.3, INCLUDING COMMUNICATION WITH ANY CUSTOMERS, AND EZEM AND ITS
DEALER ASSOCIATES SHALL COMPLY WITH ALL REASONABLE DIRECTIONS OF VTAL REGARDING
SUCH CORRECTIVE ACTION. THIS SECTION 10.3 SHALL NOT LIMIT THE OBLIGATIONS OF
EITHER PARTY UNDER LAW REGARDING ANY CORRECTIVE ACTION WITH RESPECT TO THE
APPLIANCE REQUIRED BY LAW OR PROPERLY MANDATED BY GOVERNMENTAL AUTHORITY.
(B) REFUND. IF ANY APPLIANCE IS REQUIRED TO BE RETURNED TO VTAL
PURSUANT TO THIS SECTION 10.3 AND NO REPLACEMENT IS PROVIDED THEREFOR BY VTAL,
VTAL SHALL REFUND TO EZEM THE AMOUNT PAID TO VTAL FOR THE APPLIANCE HEREUNDER,
LESS A REASONABLE VALUE FOR USE DETERMINED BY PRORATING THE LICENSE FEE PAID ON
A THIRTY-SIX (36) MONTH STRAIGHT-LINE DEPRECIATION METHOD FROM THE INSTALLATION
DATE. IF NO SUCH RETURN IS REQUIRED WITHIN THIRTY-SIX (36) MONTHS OF THE
INSTALLATION DATE, NO PART OF SUCH COST WILL BE REFUNDED. EZEM SHALL PROVIDE A
LIKE REFUND TO ITS CUSTOMERS.
(C) INSPECTIONS. VTAL WILL NOTIFY EZEM WITHIN TWO (2) BUSINESS DAYS
OF THE COMPLETION OF ANY INSPECTION ACTIVITY DIRECTED AT THE APPLIANCE BY ANY
REGULATORY AUTHORITY, INCLUDING WITHOUT LIMITATION THE FDA, AND SHALL PROMPTLY
PROVIDE EZEM WITH THE RESULTS THEREFROM, INCLUDING WITHOUT LIMITATION ANY FDA
FORM 483 OR WARNING LETTERS.
11. WARRANTIES AND REPRESENTATIONS; INDEMNIFICATION; INSURANCE
11.1. APPLIANCE WARRANTIES TO CUSTOMERS. VTAL WARRANTIES WITH RESPECT TO
THE APPLIANCE SHALL ARISE ONLY UNDER THE END USER AGREEMENT. EZEM SHALL IN NO
EVENT MAKE ANY OTHER WARRANTIES WITH RESPECT TO AN APPLIANCE, WHETHER ON BEHALF
OF VTAL OR ON BEHALF OF EZEM TO ANY THIRD PARTY.
11.2. EXCLUDED CLAIMS. WITHOUT LIMITING SECTION 11.1, VTAL SHALL HAVE NO
OBLIGATION TO EZEM OR EZEM’S CUSTOMERS UNDER SECTION 11.1 ABOVE IF:
(A) IF THE APPLIANCE HAS NOT BEEN PROPERLY INSTALLED BY A PERSON OTHER
THAN VTAL OR RETAINED BY VTAL, OR NOT USED OR MAINTAINED IN ACCORDANCE WITH
VTAL’S THEN-APPLICABLE OPERATING MANUALS OR SOFTWARE MAINTENANCE ARRANGEMENT;
(B) THE APPLIANCE HAS BEEN MODIFIED IN ANY MANNER OR IS USED OR
COMBINED WITH OTHER COMPUTER SOFTWARE PROGRAMS, HARDWARE OR DATA (I) NOT
SUPPLIED BY VTAL, (II) NOT SUPPLIED IN ACCORDANCE HEREWITH OR (III) SUPPLIED
WITHOUT THE PRIOR WRITTEN CONSENT OF VTAL; OR
(C) THE APPLIANCE HAS BEEN DISTRIBUTED TO A CUSTOMER WITH ANY
WARRANTIES OR REPRESENTATIONS, ORAL OR WRITTEN, MADE BY EZEM OR ANY THIRD PARTY
BEYOND THOSE EXPRESSLY SET FORTH IN THE END USER AGREEMENT.
11.3. WARRANTY TO EZEM. VTAL HEREBY REPRESENTS AND WARRANTS TO EZEM:
(A) VTAL OWNS OR HAS THE LAWFUL RIGHT FROM OTHERS TO GRANT THE RIGHTS
TO MARKET AND DISTRIBUTE THE APPLIANCE AS SET FORTH IN THIS AGREEMENT;
(B) VTAL HAS NO KNOWLEDGE OF ANY INFRINGEMENT BY THE APPLIANCE OF ANY
THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, SUCH AS PATENTS, COPYRIGHTS, TRADE
SECRETS OR TRADEMARKS; AND
(C) VTAL HAS TAKEN ALL APPROPRIATE CORPORATE ACTION TO AUTHORIZE
EXECUTION AND PERFORMANCE OF THIS AGREEMENT.
11.4. LIMITED WARRANTY. THE WARRANTIES TO THE CUSTOMER SET FORTH IN THE
END USER AGREEMENT AND THE WARRANTIES TO EZEM SET FORTH IN SECTION 11.3 ABOVE
ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, ALL SUCH OTHER
WARRANTIES BEING HEREBY DISCLAIMED AND EXCLUDED BY VTAL, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
USE, AND ALL OBLIGATIONS OR LIABILITIES ON THE PART OF VTAL FOR DAMAGES ARISING
OUT OF OR IN CONNECTION WITH THE DISTRIBUTION, USE, REPAIR OR PERFORMANCE OF THE
APPLIANCE.
11.5. INDEMNIFICATION. VTAL AND EZEM SHALL EACH DEFEND, INDEMNIFY AND
HOLD ONE ANOTHER, THEIR AGENTS, EMPLOYEES AND INDEPENDENT CONTRACTORS HARMLESS
FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSS AND EXPENSES INCLUDING
WITHOUT LIMITATION, REASONABLE ATTORNEY’S FEES, WHICH MAY HEREAFTER BE ASSERTED
AGAINST OR SUFFERED BY VTAL OR EZEM, AS THE CASE MAY BE, ITS AGENTS, EMPLOYEES
AND INDEPENDENT CONTRACTORS FOR INJURY OR DEATH, DAMAGE TO PROPERTY OR OTHER
THIRD PARTY CLAIMS TO THE EXTENT SUCH CLAIMS ARISE FROM THE PRODUCTS OF, OR THE
FAULT OR NEGLIGENCE OF, THE INDEMNIFYING PARTY, ITS AGENTS, EMPLOYEES AND
INDEPENDENT CONTRACTORS. SUCH INDEMNIFICATION OBLIGATION UNDER THIS SECTION
SHALL NOT BE LIMITED IN ANY WAY BY ANY LIMITATION ON THE AMOUNT OR TYPES OF
DAMAGES, COMPENSATION OR BENEFITS, PAYABLE BY OR FOR VTAL OR EZEM UNDER WORKERS’
COMPENSATION ACTS, DISABILITY BENEFIT ACTS OR OTHER EMPLOYEE BENEFIT ACTS OR BY
THE PROVISIONS OF ANY INSURANCE.
VTAL and EZEM agree to give each other prompt written notice (including the
fullest information obtainable at the time) of any indemnifiable claims, demand,
loss, damage, liability or expense of which it obtains knowledge. The
indemnifying party shall have the right to select counsel for and control
defense of the claim (which counsel shall be reasonably accepted to all such
parties). Each party agrees to cooperate fully in the defense of any claim,
demand, loss, damage, liability, or expense. Neither party shall have the right
to settle any claim, demand, loss, damage, liability, or expense for which it is
indemnifying any party hereunder without the written consent of the other party,
which consent shall not be unreasonably withheld or delayed.
11.6. THIRD PARTY INFRINGEMENT INDEMNITY.
VTAL hereby agrees to indemnify, defend and hold EZEM harmless from any third
party suit, claim or other legal action, including any and all claims, damages,
loss and expenses arising therefrom, including without limitation, reasonable
attorney’s fees, (“Legal Action”) that alleges the Appliance infringes any
United States patent, copyright, or trade secret, including specifically any
patents held by PointDx Inc. VTAL shall be given written notice of any Legal
Action within fifteen (15) days of EZEM’s first knowledge thereof and VTAL shall
provide EZEM written notice of any Legal Action within fifteen (15) days of
VTAL’s first knowledge thereof. VTAL shall have sole and exclusive control of
the defense of any Legal Action, including the choice and direction of any legal
counsel, and EZEM may not settle or compromise any Legal Action without the
written consent of VTAL. If an Appliance is found to infringe any such third
party intellectual property right in such a Legal Action, it shall so notify
EZEM in writing, which will thereupon cease and be excused from further sales
and marketing efforts with respect to the Appliance hereunder, pending
resolution in accordance with the following: at VTAL’ sole discretion and
expense, VTAL may (i) obtain a license from such third party for the benefit of
EZEM and its customers; (ii) replace or modify the Appliance so that it is no
longer infringing; or (iii) if neither of the foregoing is commercially
feasible, terminate this Agreement, and VTAL shall refund to EZEM the amount of
any Non-Recurring Engineering Charges which have then been paid per Section 2.3,
reduced by prorating such Non-Recurring Engineering Charges on a thirty-six (36)
month straight-line depreciation method from the scheduled date of payment. If
no such refund is required within thirty-six (36) months of the scheduled date
for the last payment under Section 2.3, no part of such cost will be refunded.
VTAL’s obligation to a customer with respect to infringement shall be controlled
exclusively by the End User Agreement.
11.7. INSURANCE. DURING THE TERM OF THIS AGREEMENT AND FOR A PERIOD OF
THREE (3) YEARS THEREAFTER, EACH PARTY SHALL CARRY ADEQUATE INSURANCE TO COVER
ITS OBLIGATIONS HEREUNDER, PROVIDED, HOWEVER THAT IN NO EVENT SHALL ANY PRODUCT
LIABILITY INSURANCE COVERAGE BE LESS THAN FIVE MILLION DOLLARS ($5,000,000) PER
OCCURRENCE. UPON REQUEST, EITHER PARTY SHALL PROVIDE THE OTHER PARTY WITH A
CERTIFICATE OF INSURANCE EVIDENCING THE INSURANCE COVERAGE REQUIRED BY THIS
SECTION 11.7.
12. LIMITATION OF REMEDIES
12.1. CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL EITHER PARTY’S LIABILITY
OF ANY KIND INCLUDE ANY SPECIAL, INDIRECT, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL
LOSS OR DAMAGE, EVEN IF THE OTHER PARTY SHALL HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE.
12.2. DAMAGES LIMITATION. SUBJECT TO ITS INDEMNIFICATION OBLIGATIONS
UNDER SECTIONS 11.5 AND 11.6, VTAL’S CUMULATIVE LIABILITY FOR DAMAGES TO EZEM
FOR ANY CAUSE WHATSOEVER, AND REGARDLESS OF THE FORM OF ACTION, WHETHER IN
CONTRACT OR IN TORT INCLUDING NEGLIGENCE, SHALL BE LIMITED TO FOUR HUNDRED
THOUSAND U.S. DOLLARS ($400,000).
13. CONFIDENTIALITY
13.1. CONFIDENTIAL INFORMATION; TERM. ALL CONFIDENTIAL INFORMATION SHALL
BE DEEMED CONFIDENTIAL AND PROPRIETARY TO THE PARTY DISCLOSING SUCH INFORMATION
HEREUNDER. EACH PARTY MAY USE THE CONFIDENTIAL INFORMATION OF THE OTHER PARTY
DURING THE TERM OF THIS AGREEMENT ONLY AS PERMITTED OR REQUIRED FOR THE
RECEIVING PARTY’S PERFORMANCE HEREUNDER. THE RECEIVING PARTY SHALL NOT DISCLOSE
OR PROVIDE ANY CONFIDENTIAL INFORMATION TO ANY THIRD PARTY AND SHALL TAKE
REASONABLE MEASURES TO PREVENT ANY UNAUTHORIZED DISCLOSURE BY ITS EMPLOYEES,
AGENTS, CONTRACTORS OR CONSULTANTS DURING THE TERM HEREOF INCLUDING APPROPRIATE
INDIVIDUAL NONDISCLOSURE AGREEMENTS. THE FOREGOING DUTY SHALL APPLY TO ANY
CONFIDENTIAL INFORMATION FOR A PERIOD OF FIVE (5) YEARS FROM THE DATE OF ITS
DISCLOSURE OR TWO YEARS FOLLOWING THE TERMINATION OF THIS AGREEMENT, WHICH EVER
IS LATER; PROVIDED THAT SUCH OBLIGATION SHALL CONTINUE INDEFINITELY AS TO THE
APPLIANCE; PROVIDED THAT IT IS OTHERWISE CONSIDERED CONFIDENTIAL INFORMATION
UNDER SECTION 13.2.
13.2. EXCLUSIONS. THE FOLLOWING SHALL NOT BE CONSIDERED CONFIDENTIAL
INFORMATION FOR PURPOSES OF THIS ARTICLE 13
(A) INFORMATION WHICH IS OR BECOMES IN THE PUBLIC DOMAIN THROUGH NO
FAULT OR ACT OF THE RECEIVING PARTY;
(B) INFORMATION WHICH WAS INDEPENDENTLY DEVELOPED BY THE RECEIVING
PARTY WITHOUT THE USE OF OR RELIANCE ON THE DISCLOSING PARTY’S CONFIDENTIAL
INFORMATION;
(C) INFORMATION WHICH WAS PROVIDED TO THE RECEIVING PARTY BY A THIRD
PARTY UNDER NO DUTY OF CONFIDENTIALITY TO THE DISCLOSING PARTY; OR
(D) INFORMATION WHICH IS REQUIRED TO BE DISCLOSED BY LAW, PROVIDED,
HOWEVER, PROMPT PRIOR NOTICE THEREOF SHALL BE GIVEN TO THE PARTY WHOSE
CONFIDENTIAL INFORMATION IS INVOLVED.
14. TRADEMARKS
14.1. USE OF TRADEMARKS. EACH PARTY (IN THIS CONTEXT THE “LICENSING
PARTY”) HEREBY GRANTS TO THE OTHER (IN THE CONTEXT THE “LICENSED PARTY”), AND
THE OTHER HEREBY ACCEPTS, A NONEXCLUSIVE, NONTRANSFERABLE AND ROYALTY-FREE
LICENSE TO USE THE LICENSING PARTY’S TRADEMARKS AS SPECIFIED IN THE LIST OF
TRADEMARKS, EXHIBIT 14.1 HERETO, AS SUCH LIST MAY BE MODIFIED AT THE REASONABLE
REQUEST OF THE LICENSING PARTY FROM TIME TO TIME, SOLELY IN CONNECTION WITH THE
DISTRIBUTION, PROMOTION, ADVERTISING AND MAINTENANCE OF THE APPLIANCE IN
ACCORDANCE HEREWITH. NEITHER PARTY SHALL USE ANY OTHER MARKS OR TRADE NAMES IN
CONNECTION WITH THE MARKETING AND DISTRIBUTION OF THE APPLIANCE. A LICENSING
PARTY’S TRADEMARKS SHALL BE USED BY THE OTHER ONLY IN ACCORDANCE WITH ITS
STANDARDS, SPECIFICATIONS AND INSTRUCTIONS, BUT IN NO EVENT BEYOND THE TERM OF
THIS AGREEMENT. EACH LICENSING PARTY MAY INSPECT AND MONITOR THE ACTIVITIES OF
THE LICENSED PARTY TO ENSURE THAT SUCH USE OF THE LICENSING PARTY’S TRADEMARKS
IS IN ACCORDANCE WITH SUCH STANDARDS, SPECIFICATIONS AND INSTRUCTIONS. NEITHER
PARTY IS GRANTED ANY RIGHT, TITLE OR INTEREST IN SUCH TRADEMARKS OTHER THAN THE
FOREGOING LIMITED LICENSE, AND NEITHER PARTY SHALL USE ANY OF THE OTHER PARTY’S
TRADEMARKS AS PART OF ITS CORPORATE OR TRADE NAME OR AUTHORIZE ANY THIRD PARTY
TO DO SO.
14.2. REGISTRATION. EACH LICENSING PARTY SHALL USE COMMERCIALLY
REASONABLE EFFORTS TO REGISTER ITS TRADEMARKS SPECIFIED IN THE LIST OF
TRADEMARKS, EXHIBIT 14.1, AS SUCH LIST MAY BE MODIFIED DURING THE TERM OF THIS
AGREEMENT, WITHIN THE UNITED STATES AND THE PRIMARY COUNTRIES WHEN AND IF SUCH
LICENSING PARTY DETERMINES, IN ITS SOLE DISCRETION, THAT REGISTRATION IS
NECESSARY OR USEFUL TO THE SUCCESSFUL DISTRIBUTION OF THE APPLIANCE. EACH
LICENSING PARTY SHALL BE THE SOLE PARTY TO INITIATE ANY SUCH REGISTRATION AND
SHALL BEAR ALL THE EXPENSES THEREOF.
14.3. MARKINGS. NEITHER PARTY SHALL REMOVE OR ALTER ANY TRADE NAMES,
TRADEMARKS, COPYRIGHT NOTICES, SERIAL NUMBERS, LABELS, TAGS OR OTHER IDENTIFYING
MARKS, SYMBOLS OR LEGENDS OF THE OTHER AFFIXED TO ANY APPLIANCE, DOCUMENTATION,
CONTAINERS OR PACKAGES.
14.4. INFRINGEMENT. EACH LICENSED PARTY SHALL PROMPTLY NOTIFY THE
LICENSING PARTY IN WRITING OF ANY UNAUTHORIZED USE OF THE LICENSING PARTY’S
TRADEMARKS OR SIMILAR MARKS WHICH MAY CONSTITUTE AN INFRINGEMENT OR PASSING OFF
OF THE LICENSING PARTY’S TRADEMARKS. EACH LICENSING PARTY RESERVES THE RIGHT IN
ITS SOLE DISCRETION TO INSTITUTE ANY PROCEEDINGS AGAINST SUCH THIRD PARTY
INFRINGERS, AND EACH LICENSED PARTY SHALL REFRAIN FROM DOING SO. EACH LICENSED
PARTY SHALL COOPERATE FULLY WITH THE LICENSING PARTY IN ANY LEGAL ACTION TAKEN
BY THE LICENSING PARTY AGAINST SUCH THIRD PARTIES, PROVIDED THAT THE LICENSING
PARTY SHALL PAY ALL EXPENSES OF SUCH ACTION. ALL DAMAGES, WHICH MAY BE AWARDED
OR AGREED UPON IN SETTLEMENT OF ANY LEGAL ACTION, SHALL ACCRUE TO THE LICENSING
PARTY.
14.5. TERMINATION OF USE. NEITHER PARTY SHALL ADOPT, USE OR REGISTER ANY
WORDS, PHRASES OR SYMBOLS WHICH ARE IDENTICAL TO OR CONFUSINGLY SIMILAR TO ANY
OF TRADEMARKS OF THE OTHER PARTY. UPON TERMINATION OF THIS AGREEMENT, EACH
LICENSED PARTY SHALL IMMEDIATELY CEASE ANY USE OF THE TRADEMARKS OF THE
LICENSING PARTY IN ANY MANNER. IN ADDITION, EACH LICENSED PARTY HEREBY EMPOWERS
THE LICENSING PARTY AND SHALL ASSIST THE LICENSING PARTY, IF REQUESTED, TO
CANCEL, REVOKE OR WITHDRAW ANY GOVERNMENTAL REGISTRATION OR AUTHORIZATION
PERMITTING THE LICENSED PARTY TO USE THE LICENSING PARTY’S TRADEMARKS IN THE
TERRITORY.
15. IMPORT AND EXPORT OF PRODUCTS
15.1. IMPORT DOCUMENTATION. IF APPLICABLE, EZEM SHALL BE RESPONSIBLE FOR
OBTAINING ALL LICENSES AND PERMITS REQUIRED TO IMPORT THE APPLIANCE FROM THE
UNITED STATES INTO ANY OTHER COUNTRY IN ACCORDANCE WITH APPLICABLE LAWS OR
REGULATIONS IN THE TERRITORY OTHER THAN THE UNITED STATES. VTAL SHALL COOPERATE
AND SUPPLY EZEM ON A TIMELY BASIS WITH ALL NECESSARY INFORMATION AND
DOCUMENTATION THAT IT HAS WITHIN ITS POSSESSION REQUESTED BY EZEM FOR THE IMPORT
OF THE APPLIANCE IN ACCORDANCE WITH THE APPLICABLE IMPORTATION LAWS OR
REGULATIONS IN THE TERRITORY.
15.2. EXPORT REGULATIONS. IF APPLICABLE, EZEM SHALL SUPPLY VTAL ON A
TIMELY BASIS WITH ALL NECESSARY INFORMATION AND DOCUMENTATION, THAT IT HAS
WITHIN ITS POSSESSION, REQUESTED BY VTAL FOR EXPORT OF THE APPLIANCE IN
ACCORDANCE WITH U.S. EXPORT CONTROL LAWS OR REGULATIONS. IF APPLICABLE, EZEM
HEREBY ASSURES VTAL THAT:
(A) EZEM SHALL NOT RE-EXPORT, DIRECTLY OR INDIRECTLY, THE APPLIANCE OR
THE DIRECT PRODUCT OF ANY APPLIANCE TO ANY DESTINATION FORBIDDEN UNDER THE
THEN-APPLICABLE U.S. EXPORT ADMINISTRATION REGULATIONS;
(B) EZEM’S COMMITMENT IN PARAGRAPH (A) ABOVE SHALL APPLY IN ALL CASES
UNLESS THE U.S. EXPORT ADMINISTRATION REGULATIONS EXPRESSLY PERMIT SUCH
RE-EXPORT OR THE U.S. COMMERCE DEPARTMENT’S OFFICE OF EXPORT LICENSING HAS
GRANTED SUCH AUTHORIZATION IN WRITING; AND
(C) EZEM’S COMMITMENT IN PARAGRAPH (A) ABOVE SHALL SURVIVE TERMINATION
OF THIS AGREEMENT.
16. TERM AND TERMINATION
16.1. TERM. THIS AGREEMENT SHALL TAKE EFFECT AS OF THE DATE ON PAGE 1
ABOVE AND SHALL HAVE A TERM OF TEN (10) YEARS. THEREAFTER, THIS AGREEMENT SHALL
BE DEEMED AUTOMATICALLY TERMINATED UNLESS VTAL AND EZEM SHALL AGREE IN WRITING
TO EXTEND THIS AGREEMENT.
16.2. TERMINATION. NOTWITHSTANDING THE PROVISIONS OF SECTION 16.1 ABOVE,
THIS AGREEMENT MAY BE TERMINATED EARLIER UPON WRITTEN NOTICE AS FOLLOWS:
(A) BY EITHER PARTY IF THE OTHER PARTY FILES A PETITION OF ANY TYPE AS
TO ITS BANKRUPTCY, IS DECLARED BANKRUPT, BECOMES INSOLVENT, MAKES AN ASSIGNMENT
FOR THE BENEFIT OF CREDITORS, GOES INTO LIQUIDATION OR RECEIVERSHIP OR OTHERWISE
LOSES LEGAL CONTROL OF ITS BUSINESS VOLUNTARILY;
(B) BY EITHER PARTY IF THE OTHER PARTY IS IN MATERIAL BREACH OF THIS
AGREEMENT AND HAS FAILED TO CURE SUCH BREACH WITHIN THIRTY (30) DAYS OF RECEIPT
OF WRITTEN NOTICE THEREOF FROM THE FIRST PARTY; IT BEING AGREED THAT IT SHALL
CONSTITUTE A MATERIAL BREACH OF THIS AGREEMENT BY VTAL IF DURING ANY SIX (6)
MONTH PERIOD THE AVERAGE NUMBER OF BUSINESS DAYS BETWEEN (A) THE LATER OF (I)
THE CONFIRMED INSTALLATION DATE FOR AN APPLIANCE AND (II) SUBMISSION OF A
COMPLETED CUSTOMER CHECKLIST AND ORDER FOR SUCH APPLIANCE, AND (B) THE DATE OF
INSTALLATION OF SUCH APPLIANCE EXCEEDS NINETY (90) BUSINESS DAYS;
(C) BY EITHER PARTY IF THE OTHER PARTY IS AFFECTED BY AN EVENT OF
FORCE MAJEURE FOR MORE THAN SIX (6) MONTHS.
(D) IF VTAL SO ELECTS DUE TO A LEGAL ACTION, AS SPECIFIED IN ARTICLE
11.6 ABOVE.
(E) IF EZEM SO ELECTS ANY TIME AFTER SIX MONTHS FOLLOWING COMMENCEMENT
OF A LEGAL ACTION, AS SPECIFIED IN ARTICLE 11.6 ABOVE; PROVIDED THAT AS OF SUCH
TIME THERE SHALL HAVE BEEN NO RESOLUTION TO SUCH LEGAL ACTION AS CONTEMPLATED BY
SECTION 11.6.
(F) BY THE MUTUAL WRITTEN CONSENT OF BOTH PARTIES.
16.3. RIGHTS AND OBLIGATIONS ON TERMINATION. IN THE EVENT OF TERMINATION
OF THIS AGREEMENT FOR ANY REASON, THE PARTIES SHALL HAVE THE FOLLOWING RIGHTS
AND OBLIGATIONS:
(A) NEITHER PARTY SHALL BE RELEASED FROM THE OBLIGATION TO MAKE
PAYMENT OF ALL AMOUNTS THEN OR THEREAFTER DUE AND PAYABLE;
(B) THE RIGHTS OF ANY CUSTOMER OF EZEM WHO HOLDS A VALID AND BINDING
END USER AGREEMENT FOR THE APPLIANCE PRIOR TO THE EFFECTIVE DATE OF SUCH
TERMINATION SHALL NOT BE AFFECTED;
(C) INDEMNIFICATION RIGHTS AND OBLIGATION UNDER SECTIONS 3.2, 11.5 AND
11.6, AND THE PARTIES’ RIGHTS AND OBLIGATIONS UNDER ARTICLES 10 AND 11 SHALL
SURVIVE ANY TERMINATION OF THIS AGREEMENT; AND
(D) EZEM SHALL RETURN ALL COPIES OF THE APPLIANCE AND ANY OTHER ITEMS
OF CONFIDENTIAL INFORMATION TO VTAL AND, IF APPLICABLE, SHALL ERASE ALL COPIES
OF THE APPLIANCE FROM ITS COMPUTER SYSTEMS AND SHALL CERTIFY IN WRITING TO VTAL
THAT IT HAS DONE SO, EXCEPT THAT EZEM MAY RETAIN THOSE COPIES OF THE APPLIANCE
AND ANY INFORMATION OR DATA RELATING THERETO IN ORDER TO PROVIDE ADEQUATE
CUSTOMER SERVICE FOR THE THEN CURRENT INSTALLED BASE OF ITS APPLIANCE CUSTOMERS.
16.4. NO COMPENSATION. IN THE EVENT OF ANY TERMINATION OF THIS AGREEMENT
UNDER ARTICLE 16.2 (A), (C), (D) AND (E), SUBJECT TO SECTION 16.3(A), NEITHER
PARTY SHALL OWE ANY COMPENSATION TO THE OTHER PARTY FOR LOST PROFITS, LOST
OPPORTUNITIES, GOODWILL OR ANY CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES AS
A RESULT OF OR ARISING FROM SUCH TERMINATION.
17. FORCE MAJEURE
17.1. DEFINITION. “FORCE MAJEURE” SHALL MEAN ANY EVENT OR CONDITION
BEYOND THE REASONABLE CONTROL OF EITHER PARTY WHICH PREVENTS, IN WHOLE OR IN
MATERIAL PART, THE PERFORMANCE BY ONE OF THE PARTIES OF ITS OBLIGATIONS
HEREUNDER OR WHICH RENDERS THE PERFORMANCE OF SUCH OBLIGATIONS SO DIFFICULT OR
COSTLY AS TO MAKE SUCH PERFORMANCE COMMERCIALLY UNREASONABLE. WITHOUT LIMITING
THE FOREGOING, THE FOLLOWING SHALL CONSTITUTE EVENTS OR CONDITIONS OF FORCE
MAJEURE: ACTS OF STATE OR GOVERNMENTAL ACTION, RIOTS, DISTURBANCE, WAR,
STRIKES, LOCKOUTS, SLOWDOWNS, PROLONGED SHORTAGE OF ENERGY OR OTHER SUPPLIES,
EPIDEMICS, FIRE, FLOOD, HURRICANE, TYPHOON, EARTHQUAKE, LIGHTNING AND EXPLOSION,
OR ANY REFUSAL OR FAILURE OF ANY GOVERNMENTAL AUTHORITY TO GRANT ANY EXPORT
LICENSE LEGALLY REQUIRED.
17.2. NOTICE. UPON WRITTEN NOTICE TO THE OTHER PARTY, A PARTY AFFECTED
BY AN EVENT OF FORCE MAJEURE SHALL BE SUSPENDED WITHOUT ANY LIABILITY ON ITS
PART FROM THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, EXCEPT FOR
THE OBLIGATION TO PAY ANY AMOUNTS DUE AND OWING HEREUNDER. SUCH NOTICE SHALL
INCLUDE A DESCRIPTION OF THE NATURE OF THE EVENT OF FORCE MAJEURE, AND ITS CAUSE
AND POSSIBLE CONSEQUENCES. THE PARTY CLAIMING FORCE MAJEURE SHALL ALSO PROMPTLY
NOTIFY THE OTHER PARTY OF THE TERMINATION OF SUCH EVENT.
17.3. SUSPENSION OF PERFORMANCE. DURING THE PERIOD THAT THE PERFORMANCE
BY ONE OF THE PARTIES OF ITS OBLIGATIONS UNDER THIS AGREEMENT HAS BEEN SUSPENDED
BY REASON OF AN EVENT OF FORCE MAJEURE, THE OTHER PARTY MAY LIKEWISE SUSPEND THE
PERFORMANCE OF ALL OR PART OF ITS OBLIGATIONS HEREUNDER TO THE EXTENT THAT SUCH
SUSPENSION IS COMMERCIALLY REASONABLE.
18. ARBITRATION
18.1. DISPUTE RESOLUTION. EXCEPT AS PROVIDED IN ARTICLE 18.2 BELOW, VTAL
AND EZEM SHALL EACH USE ITS REASONABLE EFFORTS TO RESOLVE ANY DISPUTE BETWEEN
THEM PROMPTLY AND AMICABLY AND WITHOUT RESORT TO ANY LEGAL PROCESS IF FEASIBLE
WITHIN THIRTY (30) DAYS OF RECEIPT OF A WRITTEN NOTICE BY ONE PARTY TO THE OTHER
PARTY OF THE EXISTENCE OF SUCH DISPUTE. EXCEPT AS PROVIDED IN ARTICLE 18.2
BELOW, NO FURTHER ACTION MAY BE TAKEN UNDER THIS ARTICLE 18 UNLESS AND UNTIL
EXECUTIVE OFFICERS OF VTAL AND EZEM HAVE MET IN GOOD FAITH TO DISCUSS AND SETTLE
SUCH DISPUTE. THE FOREGOING REQUIREMENT IN THIS SECTION 18.1 SHALL BE WITHOUT
PREJUDICE TO EITHER PARTY’S RIGHT, IF APPLICABLE, TO TERMINATE THIS AGREEMENT
UNDER SECTION 16.2 ABOVE.
18.2. LITIGATION RIGHTS RESERVED. IF ANY DISPUTE ARISES WITH REGARD TO
THE UNAUTHORIZED USE OR INFRINGEMENT OF CONFIDENTIAL INFORMATION BY A PARTY, THE
OTHER PARTY MAY SEEK ANY AVAILABLE REMEDY AT LAW OR IN EQUITY FROM A COURT OF
COMPETENT JURISDICTION.
18.3. PROCEDURE FOR ARBITRATION. EXCEPT AS PROVIDED IN SECTION 18.2
ABOVE, ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT WHICH HAS NOT BEEN SETTLED THROUGH NEGOTIATION WITHIN A PERIOD OF
THIRTY (30) DAYS AFTER THE DATE ON WHICH EITHER PARTY SHALL FIRST HAVE NOTIFIED
THE OTHER PARTY IN WRITING OF THE EXISTENCE OF A DISPUTE SHALL BE SETTLED BY
FINAL AND BINDING ARBITRATION UNDER THE THEN-APPLICABLE COMMERCIAL ARBITRATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION (“AAA”). ANY SUCH ARBITRATION
SHALL BE CONDUCTED BY THREE (3) ARBITRATORS APPOINTED BY MUTUAL AGREEMENT OF THE
PARTIES OR, FAILING SUCH AGREEMENT, IN ACCORDANCE WITH SAID RULES. AT LEAST ONE
(1) ARBITRATOR SHALL BE AN EXPERIENCED COMPUTER SOFTWARE PROFESSIONAL, AND AT
LEAST ONE (1) ARBITRATOR SHALL BE AN EXPERIENCED BUSINESS ATTORNEY WITH A
BACKGROUND IN THE LICENSING AND DISTRIBUTION OF COMPUTER SOFTWARE. ANY SUCH
ARBITRATION SHALL BE CONDUCTED IN CHICAGO, ILLINOIS IN THE ENGLISH LANGUAGE. AN
ARBITRAL AWARD MAY BE ENFORCED IN ANY COURT OF COMPETENT JURISDICTION.
NOTWITHSTANDING ANY CONTRARY PROVISION IN THE AAA RULES, THE FOLLOWING
ADDITIONAL PROCEDURES AND RULES SHALL APPLY TO ANY SUCH ARBITRATION:
(A) EACH PARTY SHALL HAVE THE RIGHT TO REQUEST FROM THE ARBITRATORS,
AND THE ARBITRATORS SHALL ORDER UPON GOOD CAUSE SHOWN, REASONABLE AND LIMITED
PRE-HEARING DISCOVERY, INCLUDING (I) EXCHANGE OF WITNESS LISTS, (II) DEPOSITIONS
UNDER OATH OF NAMED WITNESSES AT A MUTUALLY CONVENIENT LOCATION, (III) WRITTEN
INTERROGATORIES AND (IV) DOCUMENT REQUESTS.
(B) UPON CONCLUSION OF THE PRE-HEARING DISCOVERY, THE ARBITRATORS
SHALL PROMPTLY HOLD A HEARING UPON THE EVIDENCE TO BE ADDUCED BY THE PARTIES AND
SHALL PROMPTLY RENDER A WRITTEN OPINION AND AWARD.
(C) THE ARBITRATORS MAY NOT AWARD OR ASSESS PUNITIVE DAMAGES AGAINST
EITHER PARTY.
(D) EACH PARTY SHALL BEAR ITS OWN COSTS AND EXPENSES OF THE
ARBITRATION AND ONE-HALF (1/2) OF THE FEES AND COSTS OF THE ARBITRATORS, SUBJECT
TO THE POWER OF THE ARBITRATORS, IN THEIR SOLE DISCRETION, TO AWARD ALL SUCH
REASONABLE COSTS, EXPENSES AND FEES TO THE PREVAILING PARTY.
19. MISCELLANEOUS
19.1. ESCROW AGREEMENT. THE PARTIES SHALL EXECUTE AN ESCROW AGREEMENT IN
THE FORM OF EXHIBIT 19.1, SUBJECT TO ANY VARIATION REQUIRED BY THE ESCROW AGENT,
AND VTAL WILL PLACE SOURCE CODE FOR THE APPLIANCE IN THE ESCROW CREATED THEREBY,
ALL WITHIN TWENTY (20) BUSINESS DAYS OF THE APPLIANCE COMMERCIAL AVAILABILITY
DATE. IN THE EVENT AND FROM THE TIME THAT EZEM PROPERLY OBTAINS SUCH SOURCE
CODE FROM THE ESCROW, VTAL GRANTS TO EZEM AND EZEM ACCEPTS A RESTRICTED
NON-EXCLUSIVE LICENSE, WITHOUT RIGHT TO SUBLICENSE, FOR EZEM, OR A THIRD PARTY
DESIGNATED BY EZEM SUBJECT TO (I) VTAL’S CONSENT TO THE SELECTION OF SUCH THIRD
PARTY, WHICH CONSENT MAY NOT BE UNREASONABLY WITHHELD AND (II) SUCH THIRD PARTY
AGREEING ON TERMS REASONABLY SATISFACTORY TO VTAL AS TO SUCH MATTERS AS
MAINTENANCE OF THE CONFIDENTIALITY OF THE SOURCE CODE, TO USE SUCH SOURCE CODE
SOLELY FOR THE MAINTENANCE AND SUPPORT OF APPLIANCES LICENSED BY VTAL AS
CONTEMPLATE BY THIS AGREEMENT TO THE EXTENT THAT VTAL OR ITS SUCCESSORS ARE
UNABLE AND UNWILLING TO DO SO FOR A COMMERCIALLY REASONABLE FEE AND WITHIN A
COMMERCIALLY REASONABLE TIMEFRAME. SUCH SOURCE CODE WILL NOT BE DISCLOSED TO
ANY PERSON WHO IS NOT EMPLOYED BY EZEM OR ONE OF ITS AFFILIATES, AND CONSISTENT
WITH THE FOREGOING, EZEM SHALL PROTECT SUCH SOURCE CODE AS CONFIDENTIAL
INFORMATION OF VTAL IN THE MANNER SPECIFIED IN ARTICLE 13. THE PARTIES AGREE TO
TERMINATE THE ESCROW AGREEMENT BY MUTUAL WRITTEN CONSENT IN THE EVENT THAT THIS
AGREEMENT IS TERMINATED FOR ANY REASON WHICH IS NOT A RELEASE CONDITION AS
DEFINED IN THE ESCROW AGREEMENT.
19.2. RELATIONSHIP. THIS AGREEMENT DOES NOT MAKE EITHER PARTY THE
EMPLOYEE, AGENT OR LEGAL REPRESENTATIVE OF THE OTHER FOR ANY PURPOSES
WHATSOEVER. NEITHER PARTY IS GRANTED ANY RIGHT OR AUTHORITY TO ASSUME OR TO
CREATE ANY OBLIGATION OR RESPONSIBILITY, EXPRESS OR IMPLIED, ON BEHALF OF OR IN
THE NAME OF THE OTHER PARTY. EACH PARTY IS ACTING AS AN INDEPENDENT CONTRACTOR.
19.3. ASSIGNMENT. NEITHER THIS AGREEMENT NOR ANY RIGHT OR OBLIGATION
ARISING HEREUNDER MAY BE ASSIGNED BY ANY PARTY HERETO, IN WHOLE OR IN PART,
WITHOUT THE PRIOR WRITTEN CONSENT OF EACH OTHER PARTY HERETO, WHICH MAY BE
WITHHELD IN THE ABSOLUTE DISCRETION OF SUCH OTHER PARTY, AND ANY ATTEMPTED
ASSIGNMENT IN VIOLATION OF THE TERMS HEREOF WILL BE NULL AND VOID AND OF NO
FORCE OR EFFECT; PROVIDED, HOWEVER, THAT NO SUCH CONSENT SHALL BE REQUIRED FOR
ASSIGNMENT, IN WHOLE OR IN PART, IN CONNECTION WITH ANY MERGER OR SALE OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE ASSIGNING PARTY, PROVIDED, HOWEVER THAT
IN THE EVENT THAT A PARTY DESIRES TO ASSIGN THIS AGREEMENT THROUGH MERGER OR
SALE OF ALL OR SUBSTANTIALLY ALL OF ITS ASSETS, IT SHALL OBTAIN, PRIOR TO ANY
ASSIGNMENT, A WRITTEN ASSURANCE FROM THE ACQUIRING OR MERGING PARTY SPECIFICALLY
ASSURING THE OTHER PARTY THAT IT WILL CONTINUE TO HONOR AND ASSUME ALL OF THE
ASSIGNING PARTY’S OBLIGATIONS UNDER THIS AGREEMENT. SUBJECT TO THE FOREGOING
SENTENCE, THIS AGREEMENT WILL BE BINDING UPON AND INURE TO THE BENEFIT OF THE
PARTIES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
19.4. NOTICES. NOTICES PERMITTED OR REQUIRED TO BE GIVEN HEREUNDER SHALL
BE DEEMED SUFFICIENT IF GIVEN BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
RETURN RECEIPT REQUESTED, BY PRIVATE OVERNIGHT COURIER SERVICE, OR BY CONFIRMED
FACSIMILE ADDRESSED TO THE RESPECTIVE ADDRESSES OF THE PARTIES AS FIRST WRITTEN
ABOVE OR AT SUCH OTHER ADDRESSES AS THE RESPECTIVE PARTIES MAY DESIGNATE BY LIKE
NOTICE FROM TIME TO TIME. NOTICES SO GIVEN SHALL BE EFFECTIVE UPON (I) RECEIPT
BY THE PARTY TO WHICH NOTICE IS GIVEN, OR (II) ON THE FIFTH (5TH) DAY FOLLOWING
DOMESTIC MAILING OR THE TENTH (10TH) DAY FOLLOWING INTERNATIONAL MAILING, AS MAY
BE THE CASE, WHICHEVER OCCURS FIRST.
19.5. ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING THE EXHIBITS HERETO
WHICH ARE INCORPORATED HEREIN, CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PROPOSALS, ORAL OR
WRITTEN, AND ALL NEGOTIATIONS, CONVERSATIONS, DISCUSSIONS, AND PREVIOUS
DISTRIBUTION OR VALUE ADDED RESELLER AGREEMENTS HERETOFORE BETWEEN THE PARTIES.
EACH PARTY HEREBY ACKNOWLEDGES THAT IT HAS NOT BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY ANY REPRESENTATIONS OR STATEMENTS, ORAL OR WRITTEN, NOT EXPRESSLY
CONTAINED HEREIN.
19.6. AMENDMENT. THIS AGREEMENT MAY NOT BE MODIFIED, AMENDED, RESCINDED,
CANCELED OR WAIVED, IN WHOLE OR IN PART, EXCEPT BY WRITTEN AMENDMENT SIGNED BY
BOTH PARTIES HERETO.
19.7. SECTION HEADINGS. THE SECTION HEADINGS APPEARING IN THIS AGREEMENT
ARE INSERTED ONLY AS MATTER OF CONVENIENCE AND IN NO WAY DEFINE, LIMIT,
CONSTRUE, OR DESCRIBE THE SCOPE OR EXTENT OF SUCH SECTION OR IN ANY WAY AFFECT
SUCH SECTION.
19.8. PUBLICITY. THIS AGREEMENT IS CONFIDENTIAL, AND NO PARTY SHALL
ISSUE PRESS RELEASES OR ENGAGE IN OTHER TYPES OF PUBLICITY OF ANY NATURE DEALING
WITH THE COMMERCIAL OR LEGAL DETAILS OF THIS AGREEMENT WITHOUT THE OTHER PARTY’S
PRIOR WRITTEN APPROVAL, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD;
PROVIDED THAT THE PARTIES AGREE THAT PROMPTLY FOLLOWING THE DATE HEREOF THEY
SHALL MAKE A JOINT PRESS RELEASE. IT SHALL NOT BE A BREACH OF THE FOREGOING
OBLIGATION AS TO NON-DISCLOSURE AND PRESS RELEASES TO INCLUDE IN FUTURE PRESS
RELEASES FACTS WHICH ARE RECITED IN THE JOINT PRESS RELEASE DESCRIBED ABOVE OR
TO MAKE OTHER DISCLOSURES AS MAY BE NECESSARY (A) AS TO THE NON-DISCLOSURE
OBLIGATION ONLY, IN CONNECTION WITH THE PREPARATION OF A PARTY’S TAX RETURNS OR
FINANCIAL RECORDS; (B) IN ORDER TO SATISFY THE REQUIREMENTS OF LAW, INCLUDING
THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934; (C) IN ORDER TO COMPLY
WITH THE LAWFUL ORDERS OR PROCESSES OF COURTS AND OTHER GOVERNMENT AGENCIES; OR
(D) IN ORDER TO ENFORCE OR COMPLY WITH THIS AGREEMENT. IF EITHER PARTY RECEIVES
ANY SUBPOENA OR OTHER LEGAL PROCESS THAT PURPORTS TO REQUIRE OR COMPEL
INFORMATION THAT IS PROTECTED UNDER THIS AGREEMENT, IT SHALL GIVE THE OTHER
PARTY PROMPT WRITTEN NOTICE THEREOF.
19.9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF MINNESOTA, U.S.A., EXCLUDING (I) ITS CHOICE OF
LAW RULES, AND (II) THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE
INTERNATIONAL SALE OF GOODS.
19.10. SEVERABILITY. IF ANY PROVISION OF THIS AGREEMENT IS FOUND
UNENFORCEABLE UNDER ANY OF THE LAWS OR REGULATIONS APPLICABLE THERETO, SUCH
PROVISION TERMS SHALL BE DEEMED STRICKEN FROM THIS AGREEMENT, BUT SUCH
INVALIDITY OR UNENFORCEABILITY SHALL NOT INVALIDATE ANY OF THE OTHER PROVISIONS
OF THIS AGREEMENT.
19.11. COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS IN THE ENGLISH LANGUAGE AND EACH SUCH COUNTERPART SHALL BE DEEMED
AN ORIGINAL HEREOF. IN CASE OF ANY CONFLICT BETWEEN THE ENGLISH VERSION AND ANY
TRANSLATED VERSION OF THIS AGREEMENT, THE ENGLISH VERSION SHALL GOVERN.
19.12. WAIVER. NO FAILURE BY EITHER PARTY TO TAKE ANY ACTION OR ASSERT ANY
RIGHT HEREUNDER SHALL BE DEEMED TO BE A WAIVER OF SUCH RIGHT IN THE EVENT OF THE
CONTINUATION OR REPETITION OF THE CIRCUMSTANCES GIVING RISE TO SUCH RIGHT.
COURSE OF CONDUCT BETWEEN THE PARTIES, WHETHER OR NOT CONTRARY TO THE TERMS OF
THIS AGREEMENT, SHALL NOT BE CONSTRUED AS A WAIVER OF ANY TERM OF THIS
AGREEMENT.
19.13. NON-SOLICITATION.
(A) NEITHER VTAL NOR ITS AFFILIATES SHALL BE PERMITTED TO RETAIN, AS
AN EMPLOYEE OR A SELF-EMPLOYED INDEPENDENT CONTRACTOR, DURING THE TERM OF THIS
AGREEMENT OR WITHIN ONE YEAR THEREAFTER, ANY PERSON WHO WAS EMPLOYED BY EZEM OR
ITS AFFILIATES AT ANYTIME DURING THE THEN PRECEDING TWO (2) YEAR PERIOD.
(B) NEITHER EZEM NOR ITS AFFILIATES SHALL BE PERMITTED TO RETAIN, AS
AN EMPLOYEE OR A SELF-EMPLOYED INDEPENDENT CONTRACTOR, DURING THE TERM OF THIS
AGREEMENT OR WITHIN ONE YEAR THEREAFTER, ANY PERSON WHO WAS EMPLOYED BY VTAL OR
ITS AFFILIATES AT ANYTIME DURING THE THEN PRECEDING TWO (2) YEAR PERIOD.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives below.
VITAL IMAGES, INC.
E-Z-EM, INC.
By:
/s/ Albert Emola
By:
/s/ Anthony A. Lombardo
Its:
President & CEO
Its:
President & CEO
[Remainder of page intentionally left blank]
TABLE OF CONTENTS
1.
DEFINITIONS:
1.1.
“Person”
1.2.
“Vitrea 2 Software”
1.3.
“Specification”
1.4.
“Option”
1.5.
“Appliance”
1.6.
“Appliance Platform”
1.7.
“Appliance System”
1.8.
“Products”
1.9.
“Affiliate”
1.10.
“Non-Affiliate”
1.11.
“Appliance System Sales Price”
1.12.
“Intellectual Property”
1.13.
“Claim”
1.14.
“FOB Point”
1.15.
“Remedial Action”
1.16.
“Confidential Information”
1.17.
“End User Agreement”
1.18.
“Act”
1.19.
“FDA”
1.20.
“Government Approval”
1.21.
“Territory”
1.22.
“Center of Excellence”
1.23.
“Option Sales Price”
1.24.
“Appliance Sales Price”
1.25.
“Appliance Commercial Availability Date”
1.26.
“Allowable Expense”
1.27.
“Dealer Associate”
1.28.
“Service Associate”
1.29.
“Primary Countries”
2.
DEVELOPMENT
2.1.
Development Program
2.2.
Government Approvals
2.3.
Non-Recurring Engineering Charges
2.4.
Upgrades
3.
APPOINTMENT
3.1.
Scope
3.2.
Dealer and Service Associates
3.3.
Exception at Customer Insistence
4.
GENERAL OBLIGATIONS OF EZEM
4.1.
Marketing
4.2.
EZEM Demonstration License
4.3.
Promotional Materials and Appliance Packaging
4.4.
Ownership and Reverse Engineering
4.5.
Competing Products
4.6.
EZEM Expenses
5.
GENERAL OBLIGATIONS OF VTAL
5.1.
General Obligations
5.2.
VTAL Expenses
6.
ORDERS FOR PRODUCTS
6.1.
Purchase Orders
6.2.
Acceptance of Orders
6.3.
Delivery Terms
6.4.
Terms of Orders and Acceptances
6.5.
Installation of Appliance
7.
SOFTWARE MAINTENANCE SERVICES
8.
CENTERS OF EXCELLENCE
9.
PRICING, PROFIT SHARING AND OTHER COMPENSATION
9.1.
Pricing, Billing and Collection
9.2.
United States Sales
9.3.
Reimbursement and Payments from Appliance System Sales Price for Sales within
the United States
9.4.
Profit Payment
9.5.
Royalties
9.6.
Sales Outside of United States
9.7.
Record-keeping; Inspection and Audit
9.8.
Most “Favored Buyer” Terms
9.9.
Overdue Payments
10.
ADVERSE REACTIONS; PRODUCT RECALLS
10.1.
Compliance
10.2.
Adverse Event Reporting
10.3.
Corrective Action
11.
WARRANTIES AND REPRESENTATIONS; INDEMNIFICATION; INSURANCE
11.1.
Appliance Warranties to Customers
11.2.
Excluded Claims
11.3.
Warranty to EZEM
11.4.
Limited Warranty
11.5.
Indemnification
11.6.
Third Party Infringement Indemnity
11.7.
Insurance
12.
LIMITATION OF REMEDIES
12.1.
CONSEQUENTIAL DAMAGES
12.2.
DAMAGES LIMITATION
13.
CONFIDENTIALITY
13.1.
Confidential Information; Term
13.2.
Exclusions
14.
TRADEMARKS
14.1.
Use of Trademarks
14.2.
Registration
14.3.
Markings
14.4.
Infringement
14.5.
Termination of Use
15.
IMPORT AND EXPORT OF PRODUCTS
15.1.
Import Documentation
15.2.
Export Regulations
16.
TERM AND TERMINATION
16.1.
Term
16.2.
Termination
16.3.
Rights and Obligations on Termination
16.4.
No Compensation
17.
FORCE MAJEURE
17.1.
Definition
17.2.
Notice
17.3.
Suspension of Performance
18.
ARBITRATION
18.1.
Dispute Resolution
18.2.
Litigation Rights Reserved
18.3.
Procedure for Arbitration
19.
MISCELLANEOUS
19.1.
Escrow Agreement
19.2.
Relationship
19.3.
Assignment
19.4.
Notices
19.5.
Entire Agreement
19.6.
Amendment
19.7.
Section Headings
19.8.
Publicity
19.9.
Governing Law
19.10
Severability
19.11
Counterparts
19.12
Waiver
19.13
Non-solicitation
LIST OF EXHIBITS
1.3
Specification
1.6
Appliance Platform
1.17
End User Agreement
4.2
Demonstration DSM&D Agreement
8.1
Potential Centers of Excellence
9.3
Collaboration Sites
9.4
Example of Computation
14.1
List of VTAL and EZEM Trademarks and Desired Registrations
19.1
Software Escrow Agreement
EXHIBIT 1.3
SPECIFICATION
1.0 PRODUCT OBJECTIVE
The objective of the Appliance is to provide a product similar to Vitrea 2 that
offers a single protocol: Colon CT. Planned release for this feature is in year
2001, quarter 3 release (September, 2001).
2.0 COLON APPLIANCE
2.1 No new claims will be associated with the colon that would need a
510 (k) or letter to file (for its initial launch).
2.2 The Appliance must be upgradeable to a full Vitrea 2.
2.3 3D Textures is part of the colon effort, and is listed in the
Quality FRS.
2.4 When new releases of Vitrea 2 are launched, the Appliance will be
updated to include those new tools / advancements if they improve the use of
colon analysis.
2.5 The Appliance must work on the same hardware as required for the
Vitrea 2 system.
2.6 The standard workflow for the Appliance will remain the same as
Vitrea 2. Using the Appliance, the user will move through the same standard
tabs and will use the product in the same way as Vitrea 2. This is important
for ease of use (consistency) and training reasons (Vitrea 2 customers may use
the colon appliance, and colon appliance customers may upgrade to a complete
Vitrea 2 system), and also for speed of development for the initial release of
the Appliance.
2.7 All standard Vitrea 2 base features (non-licensable) will be
available in the Appliance, with the exception of the Protocol menu items that
are not Colon, and those functions that are tied specifically to Protocols that
are not the colon protocol (such as brain tumor volume). This means that
functions such as visualization parameters, batching, viewing formats, sculpting
tools, and reporting capabilities will all be available in the Appliance.
2.8 No Study Directory changes are required for the first version of
the Appliance. Users will select a study and a series as they would in Vitrea 2,
and will load it using the same methods as in Vitrea 2. Non-colon scans can be
listed in the Study Directory and loaded, but will only be able to be viewed
using the colon protocol and presets.
2.9 No changes to the Gallery Page will be required for the first
version of the Appliance, with the exception of the removal of non-colon
protocols and presets from the protocol menu. When the loaded series appears on
the Gallery Page, only the protocol is offered on the protocol menu. The
presets shown are those specifically designed for colon review.
2.10 The Viewer tab will be the same as in Vitrea 2, and will offer the
user all the standard 2D and 3D formats that are offered in Vitrea 2.
2.11 No reporting enhancements are required for the first version of the
Appliance. The report page should function the same as the report page in
Vitrea 2.
3.0 OPTION
3.1 The software must not require operations to manually create a
license for the Option for the installed base upgrades.
3.2 Option includes only the access to the colon protocol.
EXHIBIT 1.6
APPLIANCE PLATFORM
Dell 530 Dual Processor Workstation including:
• Dual Intel® Xeon® 1.7 GHz processors, 400MHz Bus
• 2 GB RDRAM
• 4 x 73 GB disks with RAID5 controller (more than 219 GB of usable disk
storage)
• 3Dlabs Wildcat II 5110 AGP4x graphics card
• 16X/10X/40X CD Read-Write, IDE
• Dell Quiet Chassis
• Windows NT 4.0 with Service Pack 6
• Enhanced Quietkey Keyboard, PS/2, 3 Hot Keys, Dell PrecisionX30
• Viewsonic VP201mb 20.1” LCD Flat Panel Monitor with Speakers
• MS Intellimouse, 2-Button, with Scroll, PS/2 Mouse
• 3.5”, 1.44MB floppy drive
• Internal Dell V.90 PCI Data/Fax Controllerless Modem
• Surge protector
• 24x7 Service, with 4-hour onsite parts and labor for 3 years (major
cities)
EXHIBIT 1.17
END USER AGREEMENT
VITAL IMAGES, INC.
SOFTWARE LICENSE AGREEMENT
THIS SOFTWARE LICENSE AGREEMENT (“License Agreement”) is made as of
_________________, 200__, by and between Vital Images, Inc., 3300 Fernbrook Lane
N., Suite 200, Plymouth, Minnesota 55447 U.S.A. (“Vital Images”) and
__________________________________________, having its principal place of
business at ___________________________________________________ (“Licensee”).
Recitals
A. Vital Images develops and licenses proprietary medical
visualization software products (defined below as the “Products”).
B. Licensee desires to license and use the Products, and Vital Images
so agrees, subject to the terms and conditions of this License Agreement.
ARTICLE 1: DEFINITIONS
For purposes of this License Agreement, the following words, terms and phrases
shall have the following meanings unless the context otherwise requires:
1.1 Confidential Information. “Confidential Information” shall mean
all information disclosed by Vital Images to Licensee or embodied in the
Products, regardless of the form in which it is disclosed, which relates to
markets, customers, products, patents, inventions, procedures, methods, designs,
strategies, plans, assets, liabilities, prices, costs, revenues, profits,
organization, employees, agents, resellers or business in general of Vital
Images, or the algorithms, programs, user interfaces and organization of the
Products.
1.2 Products. “Products” shall mean only those computer software
products in object code form as described in Exhibit A and any related user
documentation as released from time to time by Vital Images, including any later
authorized releases or versions of such software or documentation during the
term of this License Agreement.
ARTICLE 2: LICENSE GRANT AND USE
2.1 License Grant. In consideration for Licensee’s payment of the
applicable license fee, and subject to the terms of this License Agreement,
Vital Images hereby grants to Licensee a nonexclusive, non-transferable license
(“License”) to use the Products only on one (1) computer of the type described
in Exhibit B attached hereto (“Designated Equipment”), and only at the site
described in Exhibit B (“Designated Site”). Licensee must purchase a License
for each computer at a Designated Site on which it desires to install and use
the Products. Licensee’s use of the Products shall be limited to Licensee’s
internal business activities.
2.2 Restrictions on Use. Licensee agrees not to engage in, cause or
permit the reverse engineering, disassembly, recompilation, modification or any
similar manipulation of the Products, nor may Licensee loan, lease, distribute,
assign or otherwise transfer the Products or copies thereof, in whole or in
part, to any third party. Licensee may not install, use or access the Products
at or from any location other than a Designated Site, or on any type of computer
other than the Designated Equipment, without the prior written approval of Vital
Images.
2.3 Copying. Licensee shall not copy the Products, except that
Licensee may make and maintain one (1) copy of the Products for back-up and
archival purposes, provided such copy includes all Vital Images copyright,
proprietary rights and other notices included on or in the Products.
2.4 Ownership. All right, title and interest in the Products shall at
all times remain the property of Vital Images and its licensors, subject to the
Licenses granted to Licensee under this License Agreement. Licensee understands
and agrees that it takes title only to the media on which the Products are
provided to it, but that the Products shall remain the property of, and
proprietary to, Vital Images.
ARTICLE 3: TERMINATION
3.1 Termination.
(a) Either party may terminate this License Agreement at any time if
the other party fails to cure its material breach hereof within thirty (30) days
after its receipt of notice specifying such breach from the other party.
(b) Vital Images may terminate this License Agreement at any time
immediately upon Licensee (i) becoming insolvent, (ii) commencing, or having
commenced against it (without dismissal within sixty (60) days), any bankruptcy,
insolvency, liquidation, reorganization or similar proceeding under any U.S. or
foreign law, (iii) making an assignment for the benefit of its creditors, (iv)
admitting in writing its inability to satisfy its debts in the ordinary course
of business or that its business or financial condition indicates that it is
presently unable to continue as a going concern, or (v) taking an action
resulting in or directed to ceasing, on a permanent basis, its business or
relevant operations; or
(c) Licensee may terminate this License Agreement or any License
granted hereunder at any time by giving written notice to Vital Images.
3.2 Effect of Termination of a License. Upon any termination of a
License, Licensee shall (a) immediately cease all use of the Products licensed
pursuant to such License, and (b) certify in writing to Vital Images within
thirty (30) days after such termination that Licensee has either destroyed,
permanently erased or returned to Vital Images the Products and all copies
thereof licensed pursuant to such License.
3.3 Effect of Termination of License Agreement. Upon termination of
this License Agreement for any reason, all Licenses to the Products granted
hereunder shall immediately terminate, and Licensee shall return to Vital Images
all Confidential Information. Articles 2.4, 5, 6, 7, 8 and 9 shall survive any
termination of this License Agreement.
ARTICLE 4: ADVERSE REACTIONS; PRODUCT RECALLS
4.1 Adverse Event Reporting. Licensee shall advise Vital Images, by
telephone or facsimile, within twenty-four (24) hours after it becomes aware of
any adverse event from the use of any Product or malfunction of any Product.
Unless otherwise required by applicable local laws, Licensee shall advise Vital
Images of any such adverse event prior to any report or filing being made with
the U.S. Food and Drug Administration (“FDA”) or any other comparable regulatory
body elsewhere in the world.
4.2 Product Recall; Corrective Action.
(a) Corrective Action. If Vital Images believes that a corrective
action with respect to the Products is desirable or required by law, or if any
governmental agency having jurisdiction (including without limitation, the FDA)
shall request or order any corrective action with respect to the Products,
including any recall, customer notice, restriction, change, corrective action or
market action or any Product change, Vital Images or its reseller shall promptly
notify Licensee. Licensee shall comply with all reasonable directions regarding
such corrective action, including the return of the Products to Vital Images or
a reseller at Vital Images’ expense.
(b) Refund. If any Products are required to be returned to Vital
Images or its resellers pursuant to this Article 4.2 and no replacement is
provided therefor by Vital Images, Vital Images shall refund to Licensee any
unearned license fees paid (the amount of the license fee Licensee paid for the
Products, less a reasonable value for use determined by prorating the license
fee paid on a thirty-six (36) month straight line amortization method).
ARTICLE 5: WARRANTIES; INDEMNIFICATION
5.1 Limited Warranty. Vital Images warrants to Licensee for one (1)
year from the delivery date (the “Warranty Period”), that the Products, when
properly installed and operated, will substantially perform the functions
described in the functional specifications for the Products, as contained in the
applicable written documentation for the Products. Vital Images shall have no
obligation to Licensee or any third party under this Article 5.1 if (a) the
Products have not been properly installed, used or maintained, whether by
Licensee or any third party, in accordance with the Licenses granted hereunder
or Vital Images’ then-applicable operating manuals; or (b) the Products have
been modified in any manner or are used or combined with other computer software
programs, hardware or data not supplied by Vital Images and without the prior
written consent of Vital Images.
5.2 Exclusive Remedy. Vital Images’ entire liability, and Licensee’s
exclusive remedy, for any warranty claim made by Licensee under Article 5.1
above during the Warranty Period shall be for Vital Images, at its option, to
either (a) replace any defective media which prevents the Products from
satisfying the limited warranty described in Article 5.1; (b) attempt to correct
any material and reproducible errors reported by Licensee; or (c) terminate this
License Agreement and refund the license fee paid for the Products. Vital
Images does not warrant that the operation of the Products will be uninterrupted
or error-free, that all errors in the Products will be corrected, that the
Products will satisfy Licensee’s requirements or that the Products will operate
in the combinations which Licensee may select for use.
5.3 Limited Warranty. Vital Images warrants to Licensee that the
Products, when properly installed and operated, will produce no material errors
when processing dates prior to, during and after the calendar year 2000. Vital
Images shall have no obligation to Licensee or any third party under this
Article 5.3 if (a) the Products have not been properly installed, used or
maintained, whether by Licensee or any third party, in accordance with the
Licenses granted hereunder or Vital Images’ then-applicable operating manuals;
(b) the Products have been modified in any manner or are used or combined with
other computer software programs, hardware or data; or (c) the material error
reported by Licensee is not reproducible by Vital Images.
5.4 Exclusive Remedy. Vital Images’ entire liability, and Licensee’s
exclusive remedy, for any breach of the warranty in Article 5.3 above shall be
for Vital Images, at its option, to either (a) attempt to correct such material
and reproductive errors, or (b) terminate the License to such Products and
refund any unearned license fees paid (the amount of the license fee Licensee
paid for the Products, less a reasonable value for use determined by prorating
the license fee paid on a thirty-six (36) month straight-line depreciation
method) with no further liability to Licensee. This Article 5.4 states
Licensee’s exclusive remedy, and Vital Images and its licensors’ entire
liability for any breach of the warranty set forth in Article 5.3.
5.5 Warranty Disclaimer. THE WARRANTIES SET FORTH IN ARTICLES 5.1 AND
5.3 ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
WHICH ARE HEREBY DISCLAIMED AND EXCLUDED BY VITAL IMAGES, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OR USE, AND ALL OBLIGATIONS OR LIABILITIES ON THE PART OF VITAL
IMAGES FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE USE, MAINTENANCE OR
PERFORMANCE OF THE LICENSED SOFTWARE. Repair or replacement of all or any part
of the Products does not extend the Warranty Period, which shall begin on the
delivery date. Vital Images and its third party licensors expressly disclaim
any commitment to provide maintenance or support of the Products beyond the
Warranty Period, in the absence of a Licensee entering into a separate agreement
with Vital Images or its reseller. Furthermore, the Products are derived from
and include software from third party licensors, who make no warranty, express
or implied, regarding the Products, who disclaim any and all liability for the
Products and who will not undertake to provide any information or support
regarding the Products.
5.6 Infringement Indemnity. Vital Images hereby agrees to
indemnify, defend and hold Licensee harmless from any third from any third party
suit, claim or other legal action (“Legal Action”) that alleges the Licensed
Software infringes any United States patent, copyright, or trade secret,
including any award of damages and costs made against Licensee by a final
judgment of a court of last resort based upon a Legal Action, provided that:
(a) Licensee gives written notice of any Legal Action to Vital Images within
fifteen (15) days of Licensee’s first knowledge thereof; (b) Vital Images has
sole and exclusive control of the defense of any Legal Action, including the
choice and direction of any legal counsel, and all related settlement
negotiations; and (c) Licensee provides Vital Images (at Vital Images’ expense
for reasonable out-of-pocket expenses) with assistance, information and
authority to perform the above.
Notwithstanding the foregoing, Vital Images and its licensors shall have no
liability for any Legal Action based on or arising out of: (a) the failure by
Licensee to use a non-infringing version or release of the Products if made
available by Vital Images, (b) the combination, operation or use of the Products
with software, hardware or data not furnished by Vital Images, if such Legal
Action would have been avoided by use of the Products without such software,
hardware or data, or (c) the use of any Products in a manner for which it was
neither designed nor contemplated.
In the event that the Products are held or are believed by Vital Images to
infringe, Vital Images shall, at its option and expense, (a) modify the
infringing Products, (b) obtain for Licensee a license to continue using such
Products, (c) substitute the Products with other software reasonably suitable to
Licensee, or (d) if none of the foregoing are commercially feasible, terminate
the License to such Products and refund any unearned license fees paid (the
amount of the license fee paid for the Products, less a reasonable value for use
determined by prorating the license fee paid on a thirty-six (36) month
straight-line amortization method) with no further liability to Licensee.
This Article 5.4 states Licensee’s exclusive remedy, and Vital Images’ and its
licensors’ entire liability, for any infringement claim related to the Products
or their use.
ARTICLE 6: LIMITATION OF REMEDIES
6.1 Delay. VITAL IMAGES SHALL NOT BE LIABLE FOR ANY LOSS OR DAMAGE
CAUSED BY DELAY IN FURNISHING PRODUCTS OR SERVICES OR ANY OTHER PERFORMANCE
UNDER THIS LICENSE AGREEMENT.
6.2 Sole Remedies. THE SOLE AND EXCLUSIVE REMEDIES FOR BREACH OF ANY
AND ALL WARRANTIES AND THE SOLE REMEDIES FOR VITAL IMAGES’ LIABILITY OF ANY KIND
(INCLUDING LIABILITY FOR NEGLIGENCE OR PRODUCT LIABILITY) WITH RESPECT TO THE
PRODUCTS AND SERVICES COVERED BY THIS LICENSE AGREEMENT AND ALL OTHER
PERFORMANCE BY VITAL IMAGES UNDER THIS LICENSE AGREEMENT SHALL BE LIMITED TO THE
REMEDIES PROVIDED IN ARTICLE 5 OF THIS LICENSE AGREEMENT.
6.3 Damages Limitation. VITAL IMAGES SHALL HAVE NO LIABILITY OF ANY
KIND FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE, EVEN
IF VITAL IMAGES SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL
LOSS OR DAMAGE, INCLUDING ANY LIABILITY FOR DAMAGES ARISING OUT OF OR RESULTING
FROM THE USE, MAINTENANCE OR PERFORMANCE OF THE PRODUCTS, INCLUDING, WITHOUT
LIMITATION, THE LOSS OR CORRUPTION OF LICENSEE’S OR ANY THIRD PARTY DATA. IN NO
EVENT SHALL VITAL IMAGES BE LIABLE FOR ANY DAMAGES IN EXCESS OF THE AGGREGATE
AMOUNTS ACTUALLY PAID BY LICENSEE TO VITAL IMAGES UNDER THIS LICENSE AGREEMENT.
ARTICLE 7: CONFIDENTIALITY
7.1 Confidential Information. All Confidential Information shall be
deemed confidential and proprietary to Vital Images, and are the sole and
exclusive property of Vital Images. Licensee may use the Confidential
Information during the term of this License Agreement only as permitted
hereunder or as necessary in order to use the Products in accordance with the
License(s) granted hereunder. Licensee shall not disclose or provide any
Confidential Information to any third party and shall take reasonable measures
to prevent any unauthorized disclosure by Licensee’s employees, agents,
contractors or consultants during the term hereof including appropriate
individual nondisclosure agreements.
7.2 Exclusions. The following information shall not be considered
Confidential Information under this Article 7:
(a) Information which is or becomes in the public domain through no
fault or act of Licensee;
(b) Information which was independently developed by Licensee without
the use or reliance on Vital Images’ Confidential Information;
(c) Information which was provided to Licensee by a third party under
no duty of confidentiality to Vital Images; or
(d) Information which is required to be disclosed by Licensee under
law, provided, however, Licensee gives prompt notice thereof to Vital Images
prior to such disclosure.
7.3 Cooperation. At Vital Images’ request, Licensee shall cooperate
fully with Vital Images in any and all legal actions taken by Vital Images to
protect its rights in the Products and in the Confidential Information. Vital
Images shall bear all costs and expenses reasonably incurred by Licensee in the
course of cooperating with Vital Images in such legal action.
ARTICLE 8: ARBITRATION
8.1 Dispute Resolution. Except as provided in Article 8.2 below,
Vital Images and Licensee shall each use its best efforts to resolve any dispute
between them promptly and without resort to any legal process if feasible within
thirty (30) days of receipt of a written notice by one party to the other party
of the existence of such dispute. The foregoing requirement in this Article 8.1
shall be without prejudice to either party’s right, if applicable, to terminate
this License Agreement under Article 3.1 above.
8.2 Litigation Rights Reserved. If any dispute arises with regard to
Licensee’s unauthorized use of the Products or unauthorized use or infringement
of Confidential Information, Vital Images may seek any available remedy at law
or in equity from a court of competent jurisdiction.
8.3 Procedure for Arbitration. Except as provided in Article 8.2
above, any dispute, claim or controversy arising out of or in connection with
this License Agreement which has not been settled through negotiation within a
period of thirty (30) days after the date on which either party shall first have
notified the other party in writing of the existence of a dispute shall be
settled by final and binding arbitration under the then-applicable Commercial
Arbitration Rules or, if Licensee’s principal place of business is outside the
United States, the International Arbitration Rules of the American Arbitration
Association (“AAA”). Any such arbitration shall be conducted by three (3)
arbitrators appointed by mutual agreement of the parties or, failing such
agreement, in accordance with said Rules. At least one (1) arbitrator shall be
an experienced computer software professional, and at least one (1) arbitrator
shall be an experienced business attorney with a background in the licensing and
distribution of computer software. Any such arbitration shall be conducted in
Minneapolis, Minnesota, U.S.A. in the English language. An arbitral award may
be enforced in any court of competent jurisdiction. Notwithstanding any
contrary provision in the AAA Rules, the following additional procedures and
rules shall apply to any such arbitration:
(a) Each party shall have the right to request from the arbitrators,
and the arbitrators shall order upon good cause shown, reasonable and limited
pre-hearing discovery, including (i) exchange of witness lists, (ii) depositions
under oath of named witnesses at a mutually convenient location, (iii) written
interrogatories and (iv) document requests.
(b) Upon conclusion of the pre-hearing discovery, the arbitrators
shall promptly hold a hearing upon the evidence to be adduced by the parties and
shall promptly render a written opinion and award.
(c) The arbitrators may not award or assess punitive damages against
either party.
(d) Each party shall bear its own costs and expenses of the
arbitration and one-half (1/2) of the fees and costs of the arbitrators, subject
to the power of the arbitrators, in their sole discretion, to award all such
reasonable costs, expenses and fees to the prevailing party.
ARTICLE 9: MISCELLANEOUS
9.1 Assignment. Licensee shall not have the right to assign or
otherwise transfer its rights or obligations under this License Agreement except
with the prior written consent of Vital Images, which consent shall not be
unreasonably withheld. This License Agreement shall be binding on the parties
hereto and their respective successors and permitted assigns. Any prohibited
assignment shall be null and void.
9.2 Notices. Notices permitted or required to be given hereunder
shall be deemed sufficient if given by registered or certified mail, postage
prepaid, return receipt requested, by private courier service, or by facsimile
addressed to the respective addresses of the parties as first above written or
at such other addresses as the respective parties may designate by like notice
from time to time. Notices so given shall be effective upon (a) receipt by the
party to which the notice is given, or (b) on the fifth (5th) day following
domestic mailing or the tenth (10th) day following international mailing, as may
be the case, whichever occurs first.
9.3 Exports and U.S. Government Rights. Licensee hereby acknowledges
that it will not export or reexport any of the Products or technical data (which
includes, among other things, any technical information relating to the
Products, written or otherwise), or any product incorporating any Products or
technical data. The Products are provided with Restricted Rights. Use,
duplication or disclosure by the U.S. government is subject to restrictions as
set forth in (a) this License Agreement pursuant to DFARs 227.7202-3(a); (b)
subparagraph (c)(1)(i) of the Rights in Technical Data and Computer Software
clause at DFARs 252.227-7013; or (c) the Commercial Computer Software Restricted
Rights clause at FAR 52.227-19 subdivision (c)(1) and (2), as applicable.
Contractor/manufacturer is Vital Images, Inc., 3100 West Lake Street, Suite 100,
Minneapolis, Minnesota 55416 U.S.A.
9.4 Entire Agreement. This License Agreement, including the Exhibits
attached hereto which are incorporated herein, constitutes the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements by and between Licensee and Vital Images as well as all
proposals, oral or written, and all prior negotiations, conversations and
discussions between the parties related hereto.
9.5 Amendment. This License Agreement may not be modified, amended,
rescinded, canceled or waived, in whole or in part, except by written amendment
signed by both parties hereto.
9.6 Governing Law. This License Agreement shall be governed by and
interpreted under the laws of the State of Minnesota, U.S.A., excluding (a) its
choice of law rules, and (b) the United Nations Convention on the International
Sale of Goods.
9.7 Severability. If any provision of this License Agreement is found
unenforceable under any of the laws or regulations applicable thereto, such
provision terms shall be deemed stricken from this License Agreement, but such
invalidity or unenforceability shall not invalidate any of the other provisions
of this Agreement.
9.8 Waiver. No failure by either party to take any action or assert
any right hereunder shall be deemed to be a waiver of such right in the event of
the continuation or repetition of the circumstances giving rise to such right.
IN WITNESS WHEREOF, the parties have executed this License Agreement by their
duly authorized representatives.
VITAL IMAGES, INC.
LICENSEE
By
By
Name
Name
Title
Title
EXHIBIT 4.2
DEMONSTRATOR LICENSE AGREEMENT
VITAL IMAGES, INC.
DEMONSTRATION LICENSE AGREEMENT
THIS SOFTWARE LICENSE AGREEMENT (“License Agreement”) is made as of
_________________, 200__, by and between Vital Images, Inc., 3300 Fernbrook Lane
N., Suite 200, Plymouth, Minnesota 55447 U.S.A. (“Vital Images”) and
__________________________________________, having its principal place of
business at ___________________________________________________ (“Licensee”).
Recitals
A. Vital Images develops and licenses proprietary medical
visualization software products (defined below as the “Products”).
B. Licensee desires to license and use the Products for a specific
period of time for the purposes of demonstration, evaluation, testing or other
short-term uses, and Vital Images so agrees, subject to the terms and conditions
of this License Agreement.
ARTICLE 1: DEFINITIONS
For purposes of this License Agreement, the following words, terms and phrases
shall have the following meanings unless the context otherwise requires:
1.1 Confidential Information. “Confidential Information” shall mean
all information disclosed by Vital Images to Licensee or embodied in the
Products, regardless of the form in which it is disclosed, which relates to
markets, customers, products, patents, inventions, procedures, methods, designs,
strategies, plans, assets, liabilities, prices, costs, revenues, profits,
organization, employees, agents, resellers or business in general of Vital
Images, or the algorithms, programs, user interfaces and organization of the
Products.
1.2 Products. “Products” shall mean only those computer software
products in object code form as described in Exhibit A and any related user
documentation as released from time to time by Vital Images, including any later
authorized releases or versions of such software or documentation during the
term of this License Agreement.
ARTICLE 2: LICENSE GRANT AND USE
2.1 License Grant. Subject to the terms of this License Agreement,
Vital Images hereby grants to Licensee a nonexclusive, non-transferable license
(“License”) to use the Products only on one (1) computer of the type described
in Exhibit B attached hereto (“Designated Equipment”), and only at the site
described in Exhibit B (“Designated Site”). Licensee must purchase a License
for any other computer at a Designated Site on which it desires to install and
use the Products. Licensee’s use of the Products shall be limited solely to
demonstration, evaluation, testing or otherwise as described on Exhibit B.
Licensee hereby agrees that the Products under this License shall not be used
for any business activities of the Licensee without the prior written consent of
Vital Images, such consent to be at the sole discretion of Vital Images.
2.2 Restrictions on Use. Licensee agrees not to engage in, cause or
permit the reverse engineering, disassembly, recompilation, modification or any
similar manipulation of the Products, nor may Licensee loan, lease, distribute,
assign or otherwise transfer the Products or copies thereof, in whole or in
part, to any third party. Licensee may not install, use or access the Products
at or from any location other than a Designated Site, or on any type of computer
other than the Designated Equipment, without the prior written approval of Vital
Images.
2.3 Copying. Licensee shall not copy the Products, except that
Licensee may make and maintain one (1) copy of the Products for back-up and
archival purposes, provided such copy includes all Vital Images copyright,
proprietary rights and other notices included on or in the Products.
2.4 Ownership. All right, title and interest in the Products shall at
all times remain the property of Vital Images and its licensors, subject to the
Licenses granted to Licensee under this License Agreement. Licensee understands
and agrees that it takes title only to the media on which the Products are
provided to it, but that the Products shall remain the property of, and
proprietary to, Vital Images.
ARTICLE 3: TERM AND TERMINATION
3.1 Term. The term of this License Agreement shall be as described on
Exhibit B, such term not to exceed twelve (12) months.
3.2 Termination. Either party may terminate this License Agreement at
any time by giving written notice to the other party.
3.3 Effect of Termination of a License. Upon any termination of a
License, Licensee shall
(a) immediately cease all use of the Products licensed pursuant to such License,
and (b) certify in writing to Vital Images within thirty (30) days after such
termination that Licensee has either destroyed, permanently erased or returned
to Vital Images the Products and all copies thereof licensed pursuant to such
License.
3.4 Effect of Termination of License Agreement. Upon termination of
this License Agreement, all Licenses to the Products granted hereunder shall
immediately terminate, and Licensee shall return to Vital Images all
Confidential Information. Articles 2.4, 5, 6, 7, 8 and 9 shall survive any
termination of this License Agreement.
ARTICLE 4: ADVERSE REACTIONS; PRODUCT RECALLS
4.1 Adverse Event Reporting. In the event that Vital Images has
granted Licensee the right to use the Products under this License Agreement in
its business activities, Licensee shall advise Vital Images, by telephone or
facsimile, within twenty-four (24) hours after it becomes aware of any adverse
event from the use of any Product or malfunction of any Product. Unless
otherwise required by applicable local laws, Licensee shall advise Vital Images
of any such adverse event prior to any report or filing being made with the U.S.
Food and Drug Administration (“FDA”) or any other comparable regulatory body
elsewhere in the world.
4.2 Product Recall; Corrective Action. If Vital Images believes that
a corrective action with respect to the Products is desirable or required by
law, or if any governmental agency having jurisdiction (including without
limitation, the FDA) shall request or order any corrective action with respect
to the Products, including any recall, customer notice, restriction, change,
corrective action or market action or any Product change, Vital Images or its
reseller shall promptly notify Licensee. Licensee shall comply with all
reasonable directions regarding such corrective action, including the return of
the Products to Vital Images or a reseller at Vital Images’ expense.
ARTICLE 5: WARRANTIES; INDEMNIFICATION
5.1 No Warranty. Vital Images makes no warranty to Licensee that the
Products, when properly installed and operated, will substantially perform the
functions described in the functional specifications for the Products, as
contained in the applicable written documentation for the Products. All
Products are provided to Licensee “AS IS.”
5.2 Exclusive Remedy. Vital Images’ entire liability, and Licensee’s
exclusive remedy, for any claim made by Licensee under Article 5.1 above shall
be for Vital Images to terminate this License Agreement. Vital Images does not
warrant that the operation of the Products will be uninterrupted or error-free,
that all errors in the Products will be corrected, that the Products will
satisfy Licensee’s requirements or that the Products will operate in the
combinations which Licensee may select for use.
5.3 Warranty Disclaimer. THE WARRANTY SET FORTH IN ARTICLE 5.1 ABOVE
IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE
HEREBY DISCLAIMED AND EXCLUDED BY VITAL IMAGES, INCLUDING WITHOUT LIMITATION ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OR USE, AND ALL OBLIGATIONS OR LIABILITIES ON THE PART OF VITAL IMAGES FOR
DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE USE, MAINTENANCE OR PERFORMANCE
OF THE LICENSED SOFTWARE. Furthermore, the Products are derived from and
include software from third party licensors, who make no warranty, express or
implied, regarding the Products, who disclaim any and all liability for the
Products and who will not undertake to provide any information or support
regarding the Products.
5.4 Infringement Indemnity. Vital Images hereby agrees to indemnify,
defend and hold Licensee harmless from any third from any third party suit,
claim or other legal action (“Legal Action”) that alleges the Licensed Software
infringes any United States patent, copyright, or trade secret, including any
award of damages and costs made against Licensee by a final judgment of a court
of last resort based upon a Legal Action, provided that: (a) Licensee gives
written notice of any Legal Action to Vital Images within fifteen (15) days of
Licensee’s first knowledge thereof; (b) Vital Images has sole and exclusive
control of the defense of any Legal Action, including the choice and direction
of any legal counsel, and all related settlement negotiations; and (c) Licensee
provides Vital Images (at Vital Images’ expense for reasonable out-of-pocket
expenses) with assistance, information and authority to perform the above.
Notwithstanding the foregoing, Vital Images and its licensors shall have no
liability for any Legal Action based on or arising out of: (a) the failure by
Licensee to use a non-infringing version or release of the Products if made
available by Vital Images, (b) the combination, operation or use of the Products
with software, hardware or data not furnished by Vital Images, if such Legal
Action would have been avoided by use of the Products without such software,
hardware or data, or (c) the use of any Products in a manner for which it was
neither designed nor contemplated.
In the event that the Products are held or are believed by Vital Images to
infringe, Vital Images shall, at its option and expense, terminate the License
to such Products.
This Article 5.4 states Licensee’s exclusive remedy, and Vital Images’ and its
licensors’ entire liability, for any infringement claim related to the Products
or their use.
ARTICLE 6: LIMITATION OF REMEDIES
6.1 Delay. VITAL IMAGES SHALL NOT BE LIABLE FOR ANY LOSS OR DAMAGE
CAUSED BY DELAY IN FURNISHING PRODUCTS OR SERVICES OR ANY OTHER PERFORMANCE
UNDER THIS LICENSE AGREEMENT.
6.2 Sole Remedies. THE SOLE AND EXCLUSIVE REMEDIES FOR BREACH OF ANY
AND ALL WARRANTIES AND THE SOLE REMEDIES FOR VITAL IMAGES’ LIABILITY OF ANY KIND
(INCLUDING LIABILITY FOR NEGLIGENCE OR PRODUCT LIABILITY) WITH RESPECT TO THE
PRODUCTS AND SERVICES COVERED BY THIS LICENSE AGREEMENT AND ALL OTHER
PERFORMANCE BY VITAL IMAGES UNDER THIS LICENSE AGREEMENT SHALL BE LIMITED TO THE
REMEDIES PROVIDED IN ARTICLE 5 OF THIS LICENSE AGREEMENT.
6.3 Damages Limitation. VITAL IMAGES SHALL HAVE NO LIABILITY OF ANY
KIND FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE, EVEN
IF VITAL IMAGES SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL
LOSS OR DAMAGE, INCLUDING ANY LIABILITY FOR DAMAGES ARISING OUT OF OR RESULTING
FROM THE USE, MAINTENANCE OR PERFORMANCE OF THE PRODUCTS, INCLUDING, WITHOUT
LIMITATION, THE LOSS OR CORRUPTION OF LICENSEE’S OR ANY THIRD PARTY DATA. IN NO
EVENT SHALL VITAL IMAGES BE LIABLE FOR ANY DAMAGES IN EXCESS OF THE AGGREGATE
AMOUNTS ACTUALLY PAID BY LICENSEE TO VITAL IMAGES UNDER THIS LICENSE AGREEMENT.
ARTICLE 7: CONFIDENTIALITY
7.1 Confidential Information. All Confidential Information shall be
deemed confidential and proprietary to Vital Images, and are the sole and
exclusive property of Vital Images. Licensee may use the Confidential
Information during the term of this License Agreement only as permitted
hereunder or as necessary in order to use the Products in accordance with the
License(s) granted hereunder. Licensee shall not disclose or provide any
Confidential Information to any third party and shall take reasonable measures
to prevent any unauthorized disclosure by Licensee’s employees, agents,
contractors or consultants during the term hereof including appropriate
individual nondisclosure agreements.
7.2 Exclusions. The following information shall not be considered
Confidential Information under this Article 7:
(a) Information which is or becomes in the public domain through no
fault or act of Licensee;
(b) Information which was independently developed by Licensee without
the use or reliance on Vital Images’ Confidential Information;
(c) Information which was provided to Licensee by a third party under
no duty of confidentiality to Vital Images; or
(d) Information which is required to be disclosed by Licensee under
law, provided, however, Licensee gives prompt notice thereof to Vital Images
prior to such disclosure.
7.3 Cooperation. At Vital Images’ request, Licensee shall cooperate
fully with Vital Images in any and all legal actions taken by Vital Images to
protect its rights in the Products and in the Confidential Information. Vital
Images shall bear all costs and expenses reasonably incurred by Licensee in the
course of cooperating with Vital Images in such legal action.
ARTICLE 8: ARBITRATION
8.1 Dispute Resolution. Except as provided in Article 8.2 below,
Vital Images and Licensee shall each use its best efforts to resolve any dispute
between them promptly and without resort to any legal process if feasible within
thirty (30) days of receipt of a written notice by one party to the other party
of the existence of such dispute. The foregoing requirement in this Article 8.1
shall be without prejudice to either party’s right, if applicable, to terminate
this License Agreement under Article 3.1 above.
8.2 Litigation Rights Reserved. If any dispute arises with regard to
Licensee’s unauthorized use of the Products or unauthorized use or infringement
of Confidential Information, Vital Images may seek any available remedy at law
or in equity from a court of competent jurisdiction.
8.3 Procedure for Arbitration. Except as provided in Article 8.2
above, any dispute, claim or controversy arising out of or in connection with
this License Agreement which has not been settled through negotiation within a
period of thirty (30) days after the date on which either party shall first have
notified the other party in writing of the existence of a dispute shall be
settled by final and binding arbitration under the then-applicable Commercial
Arbitration Rules or, if Licensee’s principal place of business is outside the
United States, the International Arbitration Rules of the American Arbitration
Association (“AAA”). Any such arbitration shall be conducted by three (3)
arbitrators appointed by mutual agreement of the parties or, failing such
agreement, in accordance with said Rules. At least one (1) arbitrator shall be
an experienced computer software professional, and at least one (1) arbitrator
shall be an experienced business attorney with a background in the licensing and
distribution of computer software. Any such arbitration shall be conducted in
Minneapolis, Minnesota, U.S.A. in the English language. An arbitral award may
be enforced in any court of competent jurisdiction. Notwithstanding any
contrary provision in the AAA Rules, the following additional procedures and
rules shall apply to any such arbitration:
(a) Each party shall have the right to request from the arbitrators,
and the arbitrators shall order upon good cause shown, reasonable and limited
pre-hearing discovery, including (i) exchange of witness lists, (ii) depositions
under oath of named witnesses at a mutually convenient location, (iii) written
interrogatories and (iv) document requests.
(b) Upon conclusion of the pre-hearing discovery, the arbitrators
shall promptly hold a hearing upon the evidence to be adduced by the parties and
shall promptly render a written opinion and award.
(c) The arbitrators may not award or assess punitive damages against
either party.
(d) Each party shall bear its own costs and expenses of the
arbitration and one-half (1/2) of the fees and costs of the arbitrators, subject
to the power of the arbitrators, in their sole discretion, to award all such
reasonable costs, expenses and fees to the prevailing party.
ARTICLE 9: MISCELLANEOUS
9.1 Assignment. Licensee shall not have the right to assign or
otherwise transfer its rights or obligations under this License Agreement except
with the prior written consent of Vital Images, which consent shall be at the
sole discretion of Vital Images. This License Agreement shall be binding on the
parties hereto and their respective successors and permitted assigns. Any
prohibited assignment shall be null and void.
9.2 Notices. Notices permitted or required to be given hereunder
shall be deemed sufficient if given by registered or certified mail, postage
prepaid, return receipt requested, by private courier service, or by facsimile
addressed to the respective addresses of the parties as first above written or
at such other addresses as the respective parties may designate by like notice
from time to time. Notices so given shall be effective upon (a) receipt by the
party to which the notice is given, or (b) on the fifth (5th) day following
domestic mailing or the tenth (10th) day following international mailing, as may
be the case, whichever occurs first.
9.3 Exports and U.S. Government Rights. Licensee hereby acknowledges
that it will not export or reexport any of the Products or technical data (which
includes, among other things, any technical information relating to the
Products, written or otherwise), or any product incorporating any Products or
technical data. The Products are provided with Restricted Rights. Use,
duplication or disclosure by the U.S. government is subject to restrictions as
set forth in (a) this License Agreement pursuant to DFARs 227.7202-3(a); (b)
subparagraph (c)(1)(i) of the Rights in Technical Data and Computer Software
clause at DFARs 252.227-7013; or (c) the Commercial Computer Software Restricted
Rights clause at FAR 52.227-19 subdivision (c)(1) and (2), as applicable.
Contractor/manufacturer is Vital Images, Inc., 3100 West Lake Street, Suite 100,
Minneapolis, Minnesota 55416 U.S.A.
9.4 Entire Agreement. This License Agreement, including the Exhibits
attached hereto which are incorporated herein, constitutes the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements by and between Licensee and Vital Images as well as all
proposals, oral or written, and all prior negotiations, conversations and
discussions between the parties related hereto.
9.5 Amendment. This License Agreement may not be modified, amended,
rescinded, canceled or waived, in whole or in part, except by written amendment
signed by both parties hereto.
9.6 Governing Law. This License Agreement shall be governed by and
interpreted under the laws of the State of Minnesota, U.S.A., excluding (a) its
choice of law rules, and (b) the United Nations Convention on the International
Sale of Goods.
9.7 Severability. If any provision of this License Agreement is found
unenforceable under any of the laws or regulations applicable thereto, such
provision terms shall be deemed stricken from this License Agreement, but such
invalidity or unenforceability shall not invalidate any of the other provisions
of this Agreement.
9.8 Waiver. No failure by either party to take any action or assert
any right hereunder shall be deemed to be a waiver of such right in the event of
the continuation or repetition of the circumstances giving rise to such right.
IN WITNESS WHEREOF, the parties have executed this License Agreement by their
duly authorized representatives.
VITAL IMAGES, INC.
LICENSEE
By
By
Name
Name
Title
Title
EXHIBIT 8.1
POTENTIAL CENTERS OF EXCELLENCE
EXHIBIT 9.3
VITAL IMAGES, INC. U.S. COLLABORATION SITES AS OF OCTOBER 1, 2001
Vital Images also has foreign collaboration sites not listed above. Vital
Images reserves the right to negotiate collaboration agreements with other
hospitals and clinics. As agreements with such sites are finalized with U.S.
hospitals and clinics, they will automatically be deemed collaboration sites for
purposes of the Agreement of which this Exhibit is a party. Vital Images will
advise EZEM of such additional collaboration sites from time to time upon
request.
EXHIBIT 9.4
EXAMPLE OF COMPUTATION
EXHIBIT 14.1
LIST OF VTAL AND EZEM TRADEMARKS AND DESIRED REGISTRATIONS
LIST OF VITAL IMAGES TRADEMARKS
Vitreaâ
VScoreÔ
VScore with EKG GateÔ
VScore with AutoGateÔ
VoxelViewâ
API for VoxelViewÒ
VoxelViewMacÒ
LIST OF EZEM TRADEMARKS
EZEMâ
InnerviewGIÔ
EXHIBIT 19.1
ESCROW AGREEMENT
PREFERRED ESCROW AGREEMENT
Account Number ______________________
This agreement (“Agreement”) is effective __________________, 20_____ among DSI
Technology Escrow Services, Inc. ("DSI"), Vital Images, Inc. ("Depositor") and
(“Depositor”) and E-Z-EM, Inc., ("Preferred Beneficiary"), who collectively may
be referred to in this Agreement as the parties (“Parties”).
A. Depositor and Preferred Beneficiary have entered or will enter
into a Development, Supply, Marketing and Distribution Agreement regarding
certain proprietary technology of Depositor (referred to in this Agreement as
the “DSM&D Agreement").
B. Depositor desires to avoid disclosure of its proprietary
technology except under certain limited circumstances.
C. The availability of the proprietary technology of Depositor may be
critical to Preferred Beneficiary in the conduct of its business and, therefore,
Preferred Beneficiary needs access to the proprietary technology under certain
limited circumstances.
D. Depositor and Preferred Beneficiary desire to establish an escrow
with DSI to provide for the retention, administration and controlled access of
the proprietary technology materials of Depositor.
E. The parties desire this Agreement to be supplementary to the
DSM&D Agreement pursuant to 11 United States [Bankruptcy] Code, Section 365(n).
ARTICLE 1 -- DEPOSITS
1.1 Obligation to Make Deposit. Upon the signing of this Agreement by
the parties, Depositor shall deliver to DSI the proprietary technology and other
materials ("Deposit Materials") required to be deposited by the DSM&D Agreement
or, if the DSM&D Agreement does not identify the materials to be deposited with
DSI, then such materials will be identified on Exhibit A. If Exhibit A is
applicable, it is to be prepared and signed by Depositor and Preferred
Beneficiary. DSI shall have no obligation with respect to the preparation,
signing or delivery of Exhibit A.
1.2 Identification of Tangible Media. Prior to the delivery of the
Deposit Materials to DSI, Depositor shall conspicuously label for identification
each document, magnetic tape, disk, or other tangible media upon which the
Deposit Materials are written or stored. Additionally, Depositor shall complete
Exhibit B to this Agreement by listing each such tangible media by the item
label description, the type of media and the quantity. Exhibit B shall be
signed by Depositor and delivered to DSI with the Deposit Materials. Unless and
until Depositor makes the initial deposit with DSI, DSI shall have no obligation
with respect to this Agreement, except the obligation to notify the parties
regarding the status of the account as required in Section 2.2 below.
1.3 Deposit Inspection. When DSI receives the Deposit Materials and
Exhibit B, DSI will conduct a deposit inspection by visually matching the
labeling of the tangible media containing the Deposit Materials to the item
descriptions and quantity listed on Exhibit B. In addition to the deposit
inspection, Preferred Beneficiary may elect to cause a verification of the
Deposit Materials in accordance with Section 1.6 below.
1.4 Acceptance of Deposit. At completion of the deposit inspection,
if DSI determines that the labeling of the tangible media matches the item
descriptions and quantity on Exhibit B, DSI will date and sign Exhibit B and
mail a copy thereof to Depositor and Preferred Beneficiary. If DSI determines
that the labeling does not match the item descriptions or quantity on Exhibit B,
DSI will (a) note the discrepancies in writing on Exhibit B; (b) date and sign
Exhibit B with the exceptions noted; and (c) mail a copy of Exhibit B to
Depositor and Preferred Beneficiary. DSI's acceptance of the deposit occurs
upon the signing of Exhibit B by DSI. Delivery of the signed Exhibit B to
Preferred Beneficiary is Preferred Beneficiary's notice that the Deposit
Materials have been received and accepted by DSI.
1.5 Depositor's Representations. Depositor represents as follows:
a. Depositor lawfully possesses all of the Deposit Materials
deposited with DSI;
b. Both the content and the media of the Deposit Materials are not
subject to any lien or other encumbrance inconsistent with or that would prevent
the implementation of the terms of this Agreement or the DSM&D Agreement;
d. The Deposit Materials consist of the proprietary technology and
other materials identified either in the DSM&D Agreement or Exhibit A, as the
case may be; and
e. The Deposit Materials are readable and useable in their current
form or, if any portion of the Deposit Materials is encrypted, the decryption
tools and decryption keys, as well as any specialized hardware or other tools
necessary to access the Deposit Materials and which are not otherwise available
to Preferred Beneficiary, have also been deposited.
1.6 Verification. Preferred Beneficiary shall have the right, at
Preferred Beneficiary's expense, to cause a verification of any Deposit
Materials. Preferred Beneficiary shall notify Depositor and DSI of Preferred
Beneficiary’s request for verification. Depositor shall have the right to be
present at the verification. A verification determines, in different levels of
detail, the accuracy, completeness, sufficiency and quality of the Deposit
Materials. If a verification is elected after the Deposit Materials have been
delivered to DSI, then only DSI, or at DSI's election an independent person or
company selected and supervised by DSI, may perform the verification.
1.7 Deposit Updates. Unless otherwise provided by the DSM&D
Agreement, Depositor shall update the Deposit Materials within 30 days of each
release of a new, revised or otherwise modified version of the product which is
subject to the DSM&D Agreement. Such updates will be added to the existing
deposit. All deposit updates shall be listed on a new Exhibit B and Depositor
shall sign the new Exhibit B and provide the Preferred Beneficiary with a copy
thereof. Each Exhibit B will be held and maintained separately within the
escrow account. An independent record will be created which will document the
activity for each Exhibit B. The processing of all deposit updates shall be in
accordance with Sections 1.2 through 1.6 above. All references in this
Agreement to the Deposit Materials shall include the initial Deposit Materials
and any updates.
1.8 Removal of Deposit Materials. The Deposit Materials may be
removed and/or exchanged only on written instructions signed by Depositor and
Preferred Beneficiary, or as otherwise provided in this Agreement.
ARTICLE 2 -- CONFIDENTIALITY AND RECORD KEEPING
2.1 Confidentiality. DSI shall maintain the Deposit Materials in a
secure, environmentally safe, locked facility which is accessible only to
authorized representatives of DSI. DSI shall have the obligation to reasonably
protect the confidentiality of the Deposit Materials. Except as provided in
this Agreement, DSI shall not disclose, transfer, make available, or use the
Deposit Materials. DSI shall not disclose the content of this Agreement to any
third party. If DSI receives a subpoena or any other order from a court or
other judicial tribunal pertaining to the disclosure or release of the Deposit
Materials, DSI will immediately notify the parties to this Agreement unless
prohibited by law. It shall be the responsibility of Depositor and/or Preferred
Beneficiary to challenge any such order; provided, however, that DSI does not
waive its rights to present its position with respect to any such order. DSI
will not be required to disobey any order from a court or other judicial
tribunal. (See Section 7.5 below for notices of requested orders.)
2.2 Status Reports. DSI will issue to Depositor and Preferred
Beneficiary a report profiling the account history at least semi-annually. DSI
may provide copies of the account history pertaining to this Agreement upon the
request of any party to this Agreement.
2.3 Audit Rights. During the term of this Agreement, Depositor and
Preferred Beneficiary shall each have the right to inspect the written records
of DSI pertaining to this Agreement. Any inspection shall be held during normal
business hours and following reasonable prior notice.
ARTICLE 3 -- GRANT OF RIGHTS TO DSI
3.1 Title to Media. Depositor hereby transfers to DSI the title to
the media upon which the proprietary technology and materials are written or
stored. However, this transfer does not include the ownership of the
proprietary technology and materials contained on the media such as any
copyright, trade secret, patent or other intellectual property rights.
3.2 Right to Make Copies. DSI shall have the right to make copies of
the Deposit Materials as reasonably necessary to perform this Agreement. DSI
shall copy all copyright, nondisclosure, and other proprietary notices and
titles contained on the Deposit Materials onto any copies made by DSI. With all
Deposit Materials submitted to DSI, Depositor shall provide any and all
instructions as may be necessary to duplicate the Deposit Materials including
but not limited to the hardware and/or software needed.
3.3 Right to Transfer Upon Release. Depositor hereby grants to DSI
the right to transfer the Deposit Materials to Preferred Beneficiary upon any
release of the Deposit Materials for use by Preferred Beneficiary in accordance
with Section 4.5. Except upon such a release or as otherwise provided in this
Agreement, DSI shall not transfer the Deposit Materials.
ARTICLE 4 -- RELEASE OF DEPOSIT
4.1 Release Conditions. As used in this Agreement, "Release
Condition" shall mean Depositor's failure to carry out in any material respect
the obligations imposed on it pursuant to the DSM&D Agreement insofar as
carrying out such obligations require possession of some or all of the Deposit
Materials, which failure continues to a period of thirty (30) days following
written notice thereof from Preferred Beneficiary.
4.2 Filing For Release. If Preferred Beneficiary believes in good
faith that a Release Condition has occurred, Preferred Beneficiary may provide
to DSI written notice of the occurrence of the Release Condition and a request
for the release of the Deposit Materials. Upon receipt of such notice, DSI
shall provide a copy of the notice to Depositor by commercial express mail.
4.3 Contrary Instructions. From the date DSI mails the notice
requesting release of the Deposit Materials, Depositor shall have ten business
days to deliver to DSI contrary instructions ("Contrary Instructions").
Contrary Instructions shall mean the written representation by Depositor that a
Release Condition has not occurred or has been cured. Upon receipt of Contrary
Instructions, DSI shall send a copy to Preferred Beneficiary by commercial
express mail. Additionally, DSI shall notify both Depositor and Preferred
Beneficiary that there is a dispute to be resolved pursuant to Section 7.3 of
this Agreement. Subject to Section 5.2 of this Agreement, DSI will continue to
store the Deposit Materials without release pending (a) joint instructions from
Depositor and Preferred Beneficiary; (b) dispute resolution pursuant to Section
7.3; or (c) order of a court, which ever first occurs.
4.4 Release of Deposit. If DSI does not receive Contrary Instructions
from the Depositor, DSI is authorized to release the Deposit Materials to the
Preferred Beneficiary. However, DSI is entitled to receive any fees due DSI
before making the release. Any copying expense in excess of $300 will be
chargeable to Preferred Beneficiary. This Agreement will terminate upon the
release of the Deposit Materials held by DSI.
4.5 Right to Use Following Release. Unless otherwise provided in the
DSM&D Agreement, upon release of the Deposit Materials in accordance with this
Article 4, Preferred Beneficiary shall have the right to use the Deposit
Materials for the sole purpose of continuing the benefits afforded to Preferred
Beneficiary by the DSM&D Agreement. Preferred Beneficiary shall be obligated to
maintain the confidentiality of the released Deposit Materials.
ARTICLE 5 -- TERM AND TERMINATION
5.1 Term of Agreement. The initial term of this Agreement is for a
period of one year. Thereafter, this Agreement shall automatically renew from
year-to-year unless: (a) Depositor and Preferred Beneficiary jointly instruct
DSI in writing that the Agreement is terminated; or (b) DSI instructs Depositor
and Preferred Beneficiary in writing that the Agreement is terminated for
nonpayment in accordance with Section 5.2 or by resignation in accordance with
Section 5.3 or (c) if so ordered by an arbitrator or a court. If the Deposit
Materials are subject to another escrow agreement with DSI, DSI reserves the
right, after the initial one year term, to adjust the anniversary date of this
Agreement to match the then prevailing anniversary date of such other escrow
arrangements.
5.2 Termination for Nonpayment. In the event of the nonpayment of
fees owed to DSI, DSI shall provide written notice of delinquency to all parties
to this Agreement. Any party to this Agreement shall have the right to make the
payment to DSI to cure the default. If the past due payment is not received in
full by DSI within one month of the date of such notice, then DSI shall have the
right to terminate this Agreement at any time thereafter by sending written
notice of termination to all parties. DSI shall have no obligation to take any
action under this Agreement so long as any payment due to DSI remains unpaid.
5.3 Termination by Resignation. DSI reserves the right to terminate
this Agreement, for any reason, by providing Depositor and Preferred Beneficiary
with 60-days’ written notice of its intent to terminate this Agreement. Within
the 60-day period, the Depositor and Preferred Beneficiary may provide DSI with
joint written instructions authorizing DSI to forward the Deposit Materials to
another escrow company and/or agent or other designated recipient. If DSI does
not receive said joint written instructions within 60 days of the date of DSI’s
written termination notice, then DSI shall destroy, return or otherwise deliver
the Deposit Materials in accordance with Section 5.4.
5.4 Disposition of Deposit Materials Upon Termination. Subject to the
foregoing termination provisions, and upon termination of this Agreement, DSI
shall destroy, return, or otherwise deliver the Deposit Materials in accordance
with Depositor’s instructions. If there are no instructions, DSI may, at its
sole discretion, destroy the Deposit Materials or return them to Depositor. DSI
shall have no obligation to destroy or return the Deposit Materials if the
Deposit Materials are subject to another escrow agreement with DSI or have been
released to the Preferred Beneficiary in accordance with Section 4.4.
5.5 Survival of Terms Following Termination. Upon termination of this
Agreement, the following provisions of this Agreement shall survive:
a. Depositor's Representations (Section 1.5);
b. The obligations of confidentiality with respect to the Deposit
Materials;
c. The rights granted in the sections entitled Right to Transfer
Upon Release (Section 3.3) and Right to Use Following Release (Section 4.5), if
a release of the Deposit Materials has occurred prior to termination;
d. The obligation to pay DSI any fees and expenses due;
e. The provisions of Article 7; and
f. Any provisions in this Agreement which specifically state they
survive the termination of this Agreement.
ARTICLE 6 -- DSI'S FEES
6.1 Fee Schedule. DSI is entitled to be paid its standard fees and
expenses applicable to the services provided. DSI shall notify the party
responsible for payment of DSI's fees at least 60 days prior to any increase in
fees. For any service not listed on DSI's standard fee schedule, DSI will
provide a quote prior to rendering the service, if requested. Preferred
Beneficiary and Depositor shall each be responsible for one half of the initial
and any annual fees payable hereunder. The person requesting any service
requiring the payment of any additional fees shall pay such fees.
6.2 Payment Terms. DSI shall not be required to perform any service
unless the payment for such service and any outstanding balances owed to DSI
are paid in full. Fees are due upon receipt of a signed contract or receipt of
the Deposit Materials whichever is earliest. If invoiced fees are not paid,
DSI may terminate this Agreement in accordance with Section 5.2.
ARTICLE 7 -- LIABILITY AND DISPUTES
7.1 Right to Rely on Instructions. DSI may act in reliance upon any
instruction, instrument, or signature reasonably believed by DSI to be genuine.
DSI may assume that any officer of a party to this Agreement who gives any
written notice, request, or instruction has the authority to do so. DSI will
not be required to inquire into the truth or evaluate the merit of any statement
or representation contained in any notice or document. DSI shall not be
responsible for failure to act as a result of causes beyond the reasonable
control of DSI.
7.2 Indemnification. Depositor and Preferred Beneficiary each agree
to indemnify, defend and hold harmless DSI from any and all claims, actions,
damages, arbitration fees and expenses, costs, attorney's fees and other
liabilities (“Liabilities”) incurred by DSI relating in any way to this escrow
arrangement except to the extent that such Liabilities were caused by the
negligence, recklessness or willful misconduct of DSI.
7.3 Dispute Resolution. Any dispute relating to or arising from this
Agreement shall be resolved by arbitration under the Commercial Rules of the
American Arbitration Association by one arbitrator selected in accordance with
such rules. Unless otherwise agreed by Depositor and Preferred Beneficiary,
arbitration will take place in San Francisco, California, U.S.A. Any court
having jurisdiction over the matter may enter judgment on the award of the
arbitrator(s). Service of a petition to confirm the arbitration award may be
made by First Class mail or by commercial express mail, to the attorney for the
party or, if unrepresented, to the party at the last known business address.
7.4 Controlling Law. This Agreement is to be governed and construed
in accordance with the laws of the State of California, without regard to its
conflict of law provisions.
7.5 Notice of Requested Order. If any party intends to obtain an
order from the arbitrator or any court of competent jurisdiction which may
direct DSI to take, or refrain from taking any action, that party shall:
a. Give DSI at least two business days' prior notice of the hearing;
b. Include in any such order that, as a precondition to DSI's
obligation, DSI be paid in full for any past due fees and be paid for the
reasonable value of the services to be rendered pursuant to such order; and
c. Ensure that DSI not be required to deliver the original (as
opposed to a copy) of the Deposit Materials if DSI may need to retain the
original in its possession to fulfill any of its other duties.
ARTICLE 8 -- GENERAL PROVISIONS
8.1 Entire Agreement. This Agreement, which includes Exhibits
described herein, embodies the entire understanding among the parties with
respect to its subject matter and supersedes all previous communications,
representations or understandings, either oral or written. DSI is not a party
to the DSM&D Agreement between Depositor and Preferred Beneficiary and has no
knowledge of any of the terms or provisions of any such DSM&D Agreement. DSI’s
only obligations to Depositor or Preferred Beneficiary are as set forth in this
Agreement. No amendment or modification of this Agreement shall be valid or
binding unless signed by all the parties hereto, except that Exhibit A need not
be signed by DSI, Exhibit B need not be signed by Preferred Beneficiary and
Exhibit C need not be signed.
8.2 Notices. All notices, invoices, payments, deposits and other
documents and communications shall be given to the parties at the addresses
specified in the attached Exhibit C. It shall be the responsibility of the
parties to notify each other as provided in this Section in the event of a
change of address. The parties shall have the right to rely on the last known
address of the other parties. Unless otherwise provided in this Agreement, all
documents and communications may be delivered by First Class mail.
8.3 Severability. In the event any provision of this Agreement is
found to be invalid, voidable or unenforceable, the parties agree that unless it
materially affects the entire intent and purpose of this Agreement, such
invalidity, voidability or unenforceability shall affect neither the validity of
this Agreement nor the remaining provisions herein, and the provision in
question shall be deemed to be replaced with a valid and enforceable provision
most closely reflecting the intent and purpose of the original provision.
8.4 Successors. This Agreement shall be binding upon and shall inure
to the benefit of the
successors and assigns of the parties. However, DSI shall have no obligation in
performing this Agreement to recognize any successor or assign of Depositor or
Preferred Beneficiary unless DSI receives clear, authoritative and conclusive
written evidence of the change of parties.
8.5 Regulations. Depositor and Preferred Beneficiary are responsible
for and warrant compliance with all applicable laws, rules and regulations,
including but not limited to customs laws, import, export, and re-export laws
and government regulations of any country from or to which the Deposit Materials
may be delivered in accordance with the provisions of this Agreement.
Vital Images, Inc., Depositor
E-Z-EM, Inc., referred Beneficiary
By
By
Name
Name: Anthony A. Lombardo
Title
Title: President
Date:
Date:
DSI Technology Escrow Services, Inc.
By:
Name:
Title:
Date:
EXHIBIT A
MATERIALS TO BE DEPOSITED
Account Number ______________________
Depositor represents to Preferred Beneficiary that Deposit Materials delivered
to DSI shall consist of the following:
Depositor
Preferred Beneficiary
By:
By:
Name:
Name: Anthony A. Lombardo
Title:
Title: President
Date:
Date:
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIALS
Depositor Company Name
Account Number
20. PRODUCT NAME VERSION
(Product Name will appear as the Exhibit B Name on Account History report)
DEPOSIT MATERIAL DESCRIPTION:
Quantity
Media Type & Size
Label Description of Each Separate Item
Disk 3.5” or ____
DAT tape ____mm
CD-ROM
Data cartridge tape ____
TK 70 or ____ tape
Magnetic tape ____
Documentation
Other ______________________
PRODUCT DESCRIPTION:
Environment
_____________________________________________________________________________________
DEPOSIT MATERIAL INFORMATION:
Is the media or are any of the files encrypted? Yes / No If yes, please
include any passwords and the decryption tools.
Encryption tool name____________________________________ Version
Hardware required
_________________________________________________________________________________
Software required
_________________________________________________________________________________
Other required
information____________________________________________________________________________
I certify for Depositor that the above described
DSI has inspected and accepted the above
Deposit Materials have been transmitted to DSI:
materials (any exceptions are noted above):
Signature______________________________
Signature ____________________________
Print Name ____________________________
Print Name___________________________
Date _________________________________
Date Accepted ________________________
Exhibit B# ___________________________
Send materials to: DSI, 9265 Sky Park Ct., Suite 202, San Diego, CA 92123
(858) 499-1600
EXHIBIT C
DESIGNATED CONTACT
Account Number ______________________
Notices, deposit material returns and communications to Depositor should be
addressed to:
Invoices to Depositor should be addressed to:
Company Name: Vital Images, Inc.
Address: 3300 Fernbrook Lane North
Plymouth Minnesota 55447
Designated Contact: Albert Emola, President and CEO
Telephone: 763-852-4171
Facsimile: 763-852-4110
E-mail: [email protected]
Vital Images, Inc.
3300 Fernbrook Lane North
Plymouth Minnesota 55447
Contact: Greg Furness, CFO
E-mail: [email protected]
Notices and communications to Preferred Beneficiary should be addressed to:
Invoices to Preferred Beneficiary should be addressed to:
Company Name: E-Z-Em, Inc.
Address: 717 Main Street
Westbury, NY 11590
Designated Contact: Anthony A. Lombardo, President and CEO
Telephone: (515) 333-8230
Facsimile: (515) 333-8209
E-mail: [email protected]
E-Z-Em, Inc.
717 Main Street
Westbury, NY 11590
Contact:Dennis Curtin, Senior Vice President and CFO
_______________________________________
E-mail: [email protected]
Requests from Depositor or Preferred Beneficiary to change the designated
contact should be given in writing by the designated contact or an authorized
employee of Depositor or Preferred Beneficiary.
Contracts, Deposit Materials and notices to DSI should be addressed to:
Invoice inquiries and fee remittances to DSI should be addressed to:
DSI Technology Escrow Services, Inc.
Contract Administration
9265 Sky Park Court, Suite 202
San Diego, CA 92123
Telephone: (858) 499-1600
Facsimile:(858) 694-1919
E-mail: [email protected]
DSI Technology Escrow Services, Inc.
PO Box 45156
San Francisco, CA 94145-0156
(858) 499-1636
(858) 499-1637
Date:
|
Exhibit 10.19
SURETY BOND Bond No. 08167820
KNOW ALL PERSONS BY THESE PRESENTS, that LABOR READY SOUTHEAST, INC. a
Corporation – of the State of Washington with headquarters in the City of
Tacoma, WA, as Principal, and FIDELITY AND DEPOSIT COMPANY OF MARYLAND a
corporation authorized to transactbusiness in Louisiana, as Surety, are held and
firmly bound unto the State of Louisiana for the use and benefit of all
employees of the Principal to whom or to the dependents of whom the Principal
may, during the life of this bond, become liable for benefits as the Louisiana
Workers, Compensation Act, in the full and just sum of Five Hundred Thousand and
No/100Dollars ($500,000.00––),for the payment of which we bind ourselves, our
successors or assigns, jointly and severally, firmly by these presents.
WHEREAS, in accordance with the provisions of the Louisiana Workers'
Compensation Act and the rules of the Louisiana Office of Workers, Compensation
Administration, the Principal desires to self-insure its workers' compensation
benefits, and has made application for, or received from the Director of the
Office of Workers, Compensation Administration of the State of Louisiana, a
Certificate of Authority to Self-Insure, upon furnishing satisfactory proof of
the ability to self-insure and to compensate any or all employees of said
principal for injury or disability, and their dependents for death incurred or
sustained by said employees, pursuant to the terms provisions and limitations of
said Louisiana Workers' Compensation Act.
NOW THEREFORE, the conditions of this bond or obligation are such that
if Principal shall pay and furnish compensation, pursuant to the terms,
provisions and limitations of said Louisiana Workers’ Compensation Act to its
employees for injury or disability, and to the dependents of its employees for
death incurred or sustained by said employees, then this bond or obligation
shall be null and void; otherwise to remain in full force and effect.
FURTHERMORE, it is understood and agreed that:
1. This bond may be amended, by agreement between the parties hereto
and the Director of the Louisiana Office of Workers' Compensation
Administration, as to the identity of the principal herein named and, by
agreement of the parties hereto, as to the premium or rate of premium. Such
amendment must be by endorsement upon, or rider to, this bond, executed by the
surety and delivered to or filed with the Director.
2. The surety does, by these presents, undertake and agree that the
benefits of this bond shall cover and extend to all past, present, existing and
potential liability of said principal, as a self-insurer, to the extent of the
amount herein named, without regard to specific injuries, date or dates of
injuries, happenings or events.
3. Should the principal post with the Director of the Louisiana
Office of Workers' Compensation Administration a replacement security deposit,
in the form of a surety bond, irrevocable letter of credit, cash, securities or
any combination thereof, in the full amount as may be required by the Director
to secure all incurred liabilities for the payment of benefits of said principal
under the Louisiana Workers’ Compensation Act, the surety is released from the
obligations under this surety bond upon the date of acceptance by the Director
of said replacement security deposit.
4. If the said principal shall suspend payment of workers’
compensation benefits or shall become insolvent or a receiver shall be appointed
for its business, and upon written demand by the Director, the undersigned
surety shall pay or cause to be paid to the Office of Workers' Compensation
Administration the entire amount of the bond within thirty (30) days of receipt
of such demand.
5. The surety shall have the right to cancel this bond at any
time by giving the principal and the Office of Workers' Compensation
Administration of Louisiana at least sixty (60) days prior written notice of its
desire to cancel the bond. Such cancellation, however, is not to affect its
liability as to any compensation for injuries to the principal's employees
occurring prior to the date of cancellation specified in such notice.
6. If any part or provision of this bond shall be declared
unenforceable or held to be invalid by a court or proper jurisdiction, such
determination shall not affect the validity or enforceability of the other
provisions or parts of this bond.
This bond is issued for an indefinite term to begin on the 1st day
of July, 2000, and will continue in full force and effect unless terminated in
accordance with the above provisions.
IN WITNESS WHEREOF,. the principal and surety have executed this
surety bond on the 17th day of July, 2000 .
WITNESSES:
LABOR READY SOUTHEAST, INC.
/s/ Gary Gibson
PRINCIPAL
FIDELITY AND DEPOSIT COMPANY OF MARYLAND
By:
/s/ Deborah L. Poppe
SURETY
Deborah L. Poppe, Attorney-in-Fact |
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Exhibit 10.50
[Wind River Letterhead]
September 14, 2001
Mr. Curtis Schacker
171 Alpine Terrace
Oakland, CA 94618
Re: Separation Agreement
Dear Curtis:
As you have been informed, Wind River Systems (the "Company") has eliminated
your job position as part of its recent restructuring. This Agreement sets forth
the substance of the separation agreement (the "Agreement") that the Company is
offering you to aid in your employment transition.
1. SEPARATION. You acknowledge that your last day of employment with the
Company will be October 4, 2001 (the "Separation Date").
2. ACCRUED SALARY AND PAID TIME OFF. On the Separation Date, the Company
will pay you your final check, including all salary and accrued and unused
vacation through the Separation Date, subject to standard payroll deductions and
withholdings. You are entitled to these payments regardless of whether you sign
this Agreement.
3. OUTPLACEMENT SERVICES. The Company has engaged the services of Right
Management Consultants to assist you with your search for new employment. As
part of this Agreement, the Company will allow you time to consult with Right
Management Consultants and to conduct job search activities consistent with your
job responsibilities during the last two months of your employment.
4. SEVERANCE BENEFITS. As part of this Agreement, you are eligible for
severance benefits pursuant to the terms of the Wind River Systems, Inc. Vice
Presidents' Severance Benefit Plan ("Severance Plan"), a copy of which is
attached as Exhibit A. Under the Severance Plan, the Company will make severance
payments to you in amounts equal to your base salary in effect on the Separation
Date for 52 weeks following the Separation Date (the "Severance Period"). These
payments will be subject to standard payroll withholdings and deductions and
shall be made on the Company's ordinary payroll dates, beginning with the first
payroll date following the Effective Date of the Release of Claims attached
hereto as Exhibit B, provided, however that this Release of Claims should not be
signed by you until on or after the Separation Date.
5. HEALTH INSURANCE. After the Separation Date, to the extent provided by
federal COBRA law and the Company's current group health insurance policies, you
will be eligible to continue your group health insurance benefits. Later, you
may be able to convert to an individual policy through the provider of the
Company's health insurance, if you wish. You will be provided with a separate
notice of your COBRA rights. As part of this Agreement, and under the terms of
the Severance Plan, if you timely elect continued coverage under COBRA, the
Company will pay your COBRA premium for thirteen (13) months of coverage. After
that time, you will be responsible for the full cost of your COBRA premium for
the remainder of the applicable COBRA period.
6. STOCK OPTIONS. Your stock options will continue to vest until the
Separation Date. You will then have until the close of market on January 3, 2002
to exercise any option shares that were vested as of the Separation Date. All
other terms, conditions, and limitations applicable to your options will remain
in full force and effect pursuant to the applicable stock option agreements
between you and the Company, the applicable stock option plan documents, and any
other documents applicable to the options.
--------------------------------------------------------------------------------
Page 2
7. REPAYMENT OF LOAN. On May 26, you and the Company entered into a
Secured Promissory Note ("Loan Agreement') under which the Company loaned you
and you agreed to repay a principal amount of one million, eight hundred and
fifty thousand dollars ($1,850,000), plus interest. Under the terms of the Loan
Agreement, the full amount of the loan becomes due and payable on the Separation
Date. Subject to securing the agreement of all required parties to the Loan
Agreement, as part of this Agreement, the Company will allow you to repay the
outstanding balance of principal and interest due on the loan, including
interest accrued through the payoff date, on or before June 30, 2002.
8. EXPENSE REIMBURSEMENTS. You agree that, within ten (10) days following
the Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement. The Company will reimburse you
in accordance with its regular business practices.
9. RETURN OF COMPANY PROPERTY. You agree that on or before the Separation
Date you will return to the Company all Company documents (and all copies
thereof) and other Company property in your possession or control, including,
but not limited to, Company files, correspondence, memoranda, notes, notebooks,
drawings, books and records, plans, forecasts, reports, proposals, studies,
agreements, financial information, personnel information, sales and marketing
information, research and development information, systems information,
specifications, computer-recorded information, tangible property and equipment
(including, but not limited to the Company-issued laptop computer and cellular
telephone), credit cards, entry cards, identification badges and keys; and any
materials of any kind that contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof in whole or in part).
10. NO ADMISSIONS. You understand and agree that the promises and payments
in consideration of this Agreement shall not be construed to be an admission of
any liability or obligation by the Company to you or to any other person, and
that the Company makes no such admission.
11. PROPRIETARY INFORMATION OBLIGATIONS. Both during and after your
employment, you acknowledge your continuing obligations under your Proprietary
Information and Inventions Agreement, a copy of which is attached hereto as
Exhibit C.
12. CONFIDENTIALITY. The provisions of this Agreement shall be held in
strictest confidence by you and the Company and shall not be publicized or
disclosed in any manner whatsoever, except that: (a) you may disclose this
Agreement on confidence to your immediate family; (b) the parties may disclose
this Agreement in confidence to their respective attorneys, accountants,
auditors, tax preparers, and financial advisors; (c) the Company may disclose
this Agreement as necessary to fulfill standard or legally required corporate
reporting or disclosure requirements; and (d) the parties may disclose this
Agreement insofar as such disclosure may be necessary to enforce its terms or as
otherwise required by law. In particular, and without limitation, you agree not
to discuss this Agreement with any present or former Company employees,
consultants or independent contractors.
13. NONCOMPETITION. During your continued employment by the Company until
the Separation Date, and during the Severance Period, except on behalf of the
Company, you agree that you will not, directly or indirectly, whether as an
officer, director, stockholder, employee, partner, proprietor, associate,
representative, consultant, or in any capacity whatsoever, be employed by,
perform services for, or have any business connection with the following
companies or their successors: Microsoft, Green Hills Software, ENEA, LINEO,
Linux Works, Red Hat, Symbian, Rationale, Palm, QNX, Monta Vista Software.
However, anything above to the contrary notwithstanding, you may own, as a
passive investor, publicly- traded securities of any Competitor, so long as your
direct holdings in any one such corporation shall not in the aggregate
constitute more than two percent (2%) of the voting stock of such corporation.
--------------------------------------------------------------------------------
Page 3
14. NONSOLICITATION. During your continued employment by the Company until
the Separation Date, and during the Severance Period, except on behalf of the
Company, you agree that you will not, directly or indirectly, solicit, entice,
induce, or encourage any of the Company's employees or independent contractors
to become employees or independent contractors to or for any other person or
entity.
15. BREACH OF NONCOMPETITION OR NONSOLICITATION PROVISIONS. You agree that
if you breach your Noncompetition or Nonsolicitation obligations under this
Agreement, the Company's obligation to make any severance payments hereunder or
to continue paying your premiums for COBRA coverage will cease immediately.
Nothing in this paragraph 15 waives the Company's right to pursue other action
against you for any breach of your obligations under this Agreement.
16. NONDISPARAGEMENT. Both you and the Company (by its officers and
directors) agree not to disparage the other in any manner likely to be harmful
to the business or personal reputation of the other party or its officers,
directors, employees, agents, and affiliates provided that both you and the
Company will respond accurately and fully to any question, inquiry, or request
for information when required by legal process.
17. RELEASE. In exchange for and as a condition to receiving the severance
payments, COBRA premiums, outplacement services, extension of the loan repayment
period and other consideration under this Agreement and the Severance Plan to
which you would not otherwise be entitled, you agree to sign, deliver to the
Company, and make effective the Release of Claims, attached hereto as Exhibit B.
The Release of Claims should be signed by you on or after the Separation Date.
18. MISCELLANEOUS. This Agreement and its exhibits constitute the
complete, final, and exclusive embodiment of your entire agreement with the
Company, and supersedes all prior and contemporaneous agreements, promises and
representations, with regard to its subject matters. It is entered into without
reliance on any promise or representation, written or oral, other than those
expressly contained herein. It may not be modified except in a writing signed by
you and a duly authorized officer of the Company. This Agreement shall be deemed
to have been entered into and shall be construed and enforced in accordance with
the laws of the State of California as applied to contracts made and to be
performed entirely within California. This Agreement shall bind the heirs,
personal representatives, successors, and assigns of both you and the Company,
and inure to the benefit of both you and the Company, their heirs, successors,
and assigns.
--------------------------------------------------------------------------------
Page 4
If this letter accurately sets forth our understanding, please sign below
and return the entire Agreement to me. On behalf of the Company, I wish you the
best of luck in your future endeavors.
Sincerely,
Wind River Systems, Inc.
By: /s/ John P. Brennan
--------------------------------------------------------------------------------
John P. Brennan
Vice President, Human Resources
Exhibit A: Wind River Systems, Inc. Vice Presidents' Severance Benefit
Plan
Exhibit B:
Release of Claims
Exhibit C:
Proprietary Information and Invention Agreement
Exhibit D:
ADEA Disclosure
I UNDERSTAND AND AGREE TO THE TERMS SET FORTH ABOVE.
/s/ Curtis Schacker
--------------------------------------------------------------------------------
10/8/01
--------------------------------------------------------------------------------
Curtis Schacker Date
--------------------------------------------------------------------------------
EXHIBIT A
Wind River Systems, Inc.
Vice Presidents' Severance Benefit Plan*
*Omitted. Document previously filed on June 13, 2001 by the Registrant as
Exhibit 10.40 to Form 10-Q for the period ended April 30, 2001.
--------------------------------------------------------------------------------
EXHIBIT B
RELEASE OF CLAIMS
(To be signed on or after October 4, 2001)
In exchange for and as a condition to receiving the severance payments,
COBRA premiums, outplacement services, extension of the loan repayment period
and other consideration under the Wind River Systems, Inc. Vice Presidents'
Severance Benefit Plan and the separation agreement between Wind River
Systems, Inc. (the "Company") and me dated September 14, 2001 (the "Separation
Agreement"), I hereby release, acquit and forever discharge the Company, its
officers, directors, agents, employees, attorneys, shareholders, successors,
assigns and affiliates, of and from any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys' fees, damages, indemnities and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or
in any way related to agreements, events, acts or conduct at any time prior to
and including the date I sign this Release, including but not limited to: all
such claims and demands directly or indirectly arising out of or in any way
connected with my employment with the Company or the termination of that
employment; claims or demands related to salary, bonuses, commissions, stock,
stock options, or any other equity or ownership interests in the Company,
vacation pay, fringe benefits, expense reimbursements, severance pay, or any
other form of compensation; claims pursuant to any federal, state or local law,
statute, or cause of action including, but not limited to, the federal Civil
Rights Act of 1964, as amended; the federal Americans with Disabilities Act of
1990; the federal Age Discrimination in Employment Act of 1967, as amended
("ADEA"); the California Fair Employment and Housing Act, as amended; tort law;
contract law; wrongful discharge; discrimination; harassment; fraud; defamation;
emotional distress; and breach of the implied covenant of good faith and fair
dealing.
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the ADEA and that the consideration given for the waiver
and release in the preceding paragraph hereof is in addition to anything of
value to which I was already entitled. I further acknowledge that I have been
advised by this writing, as required by the ADEA, that: (a) my waiver and
release do not apply to any rights or claims that may arise after the date I
sign this Release; (b) that I have the right to consult with an attorney prior
to executing this Release; (c) I have had forty-five (45) days to consider this
Release; (d) I have seven (7) days following the date I sign this Release to
revoke it; (e) I have received a disclosure from the Company including a list of
the ob titles and ages of all employees selected for this group termination and
ages of those individuals in the same job classification or organizational unit
who were not selected for termination; and (f) this Agreement will not be
effective until the date upon which the revocation period has expired, which
will be the eighth (8h) day after this Agreement is executed by me, or on the
date it is received by the Company, whichever is later ("Effective Date").
I UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS. In giving this release, which includes claims which may be unknown to me
at present, I acknowledge that I have read and understand Section 1542 of the
California Civil Code, which states: "A general release does not extend to
claims which the creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have materially
affected his settlement with the debtor." I hereby expressly waive and
relinquish all rights
1
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and benefits under that section and any law of any jurisdiction of similar
effect with respect to my release of any unknown or unsuspected claims I may
have against the Company.
By: /s/ Curtis Schacker
--------------------------------------------------------------------------------
Curtis Schacker
Date:
10/8/01
--------------------------------------------------------------------------------
2
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EXHIBIT C
INVENTION ASSIGNMENT AND
PROPRIETARY INFORMATION AGREEMENT
In consideration of my employment or continued employment by Wind River
Systems, Inc. (the "Company") and the compensation now and hereafter paid to me,
I hereby represent and agree as follows:
1.I understand that the Company is engaged in a continuous program of research,
development, production and marketing in connection with its business and that,
as an essential part of my employment with the Company, I am expected to make
new contributions to and create inventions of value for the Company.
2.I will promptly disclose in confidence to the Company all inventions,
improvements, original works or authorship, formulas, processes, computer
programs, databases and trade secrets ("Inventions"), whether or not patentable,
copyrightable or protectable as trade secrets, that are made or conceived or
first reduced to practice or created by me, either alone or jointly with others,
during the period of my employment, whether or not in the course of my
employment, which are related in any way to the business of the Company, similar
to or competitive with the products or research and development activities of
the Company, or sold to the Company's customers or potential customers.
3.I agree that all Inventions that (a) are developed using equipment, supplies,
facilities or trade secrets of the Company, (b) result from work performed by me
for the Company or (c) relate to the business or the actual or anticipated
research or development of the Company, will be the sole and exclusive property
of and are hereby assigned to the Company. I understand that the provisions of
this paragraph do not apply to any Invention that qualifies fully under
Section 2870 of the California Labor Code, which is set forth in the Appendix to
this Agreement.
4.I acknowledge that all original works of authorship which are made by me
(solely or jointly with others) within the scope of my employment and which are
protectable by copyright are "works made for hire," as that term is defined in
the United States Copyright Act (17 U.S.C. Section 101).
5.I agree to assist the Company in every proper way to obtain for the Company
and enforce patents, copyrights and other legal protections for the Company's
Inventions in any and all countries. I will execute any documents that the
Company may reasonably request for use in obtaining or enforcing such patents,
copyrights and other legal protections. My obligations under this paragraph will
continue beyond the termination of my employment with the Company, provided that
the Company will compensate me at a reasonable rate after such termination for
time actually spent by me at the Company's request on such assistance. In the
event the Company is unable for any reason, after reasonable effort, to secure
my signature on any document needed in connection with the actions specified in
this paragraph, I hereby irrevocably appoint the Company and its duly authorized
officers and agents as my agent and attorney in fact, which appointment is
coupled with an interest, to ad for and in my behalf to execute, verify and file
any such documents and to do all other lawfully permitted acts to further the
purposes of the preceding paragraph with the same legal force and effect as if
executed by me. I hereby waive and quitclaim to the Company any and all claims,
of any nature whatsoever, which I now or may hereafter have for infringement of
any Proprietary Rights assigned hereunder to the Company.
6.I understand that my employment by the Company creates a relationship of
confidence and trust with respect to any information of a confidential or secret
nature that may be disclosed to me by the Company that relates to the business
of the Company or to the business of any parent, subsidiary, affiliate, customer
or supplier of the Company or other third party ("Proprietary
1
--------------------------------------------------------------------------------
Information"). Such Proprietary Information includes but is not limited to
Inventions, ideas, data, know-how, developments, designs, techniques, marketing
plans, product plans, business strategies, financial information, forecasts,
personnel information and customer lists.
7.At all times, both during my employment and after its termination, I will keep
all such Proprietary Information in confidence and trust, and I will not use or
disclose any of such Proprietary Information without the written consent of the
Company, except as may be necessary to perform my duties as an employee of the
Company. Upon termination of my employment with the Company, I will promptly
deliver to the Company all documents and materials of any nature pertaining to
my work with the Company and I will not take with me any documents or materials
or copies thereof containing any Proprietary Information.
8.I agree that during the period of my employment by the Company I will not,
without the Company's express written consent, engage m any employment or
business activity other than for the Company. I agree further that for the
period of my employment with the Company and for one (1) year after the date of
termination of my employment with the Company, I will not (i) induce any
employee of the Company to leave the employ of the Company or (ii) solicit the
business of any client or customer of the Company (other than on behalf of the
Company).
9.I represent that my performance of all terms of this Agreement and my duties
as an employee of the Company will not breach any invention assignment or
proprietary information agreement with any former employer or other party. I
represent that I will not bring with me to the Company or use in the performance
of my duties for the Company any documents or materials of a former employer
that ate not generally available to the public.
10.To preclude any possible uncertainty, I have set forth on Exhibit A attached
hereto a complete list of all Inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be conceived,
developed or reduced to practice prior to the commencement of my employment with
the Company, that I consider to be my property or the property of third parties
and that I wish to have excluded from the scope of this Agreement. If disclosure
of any such Invention on Exhibit A would cause me to violate any prior
confidentiality agreement, I understand that I am not to list such Inventions in
Exhibit A but am to inform the Company that all such Inventions have not been
listed for that reason.
11.This Agreement will be governed by and construed according to the laws of the
State of California. If any provision of this Agreement is deemed unenforceable
by law, then such provision will be deemed stricken from this Agreement, unless
it can be modified by a court so as to render it enforceable consistent with the
intent of the Agreement, and the remaining provisions will continue in full
force and effect. I understand that in the event of a breach or threatened
breach of this Agreement by me the Company may suffer irreparable harm and will
therefore be entitled to injunctive relief to enforce this Agreement.
12.This Agreement is the final, complete and exclusive agreement of the parties
with respect to the subject matter hereof and supersedes all prior
representations. No modification of or amendment to this Agreement, nor any
waiver of any rights under this Agreement, will be effective unless in writing
and signed by the party to be charged.
13.The provisions of this Agreement shall survive the termination of my
employment and the assignment of this Agreement by the Company to any successor
in interest or other assignee.
14.I understand that this Agreement does not constitute a contract of employment
or obligate the Company to employ me for any stated period of time. This
Agreement shall be effected as of the first day of my employment by the Company.
2
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I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.
EMPLOYEE COMPANY
By:
/s/ Curtis Schacker
By:
/s/ Heather Schilling
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Title:
V.P. Marketing
Title:
H.R. Rep
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date:
3/29/98
Date:
4/2/98
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3
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EXHIBIT A
Prior Inventions
The following is a complete list of all inventions or improvements relevant
to the subject matter of my employment by Wind River Systems, Inc. (the
"Company") that have been made or conceived or first reduced to practice by me
alone or jointly with others prior to my engagement by the Company:
X
--------------------------------------------------------------------------------
No inventions or improvements.
--------------------------------------------------------------------------------
See below:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Due to confidentiality agreements with prior employer, I cannot disclose certain
inventions that would otherwise be included on the above-described list.
--------------------------------------------------------------------------------
Additional sheets attached.
/s/ Curtis Schacker
--------------------------------------------------------------------------------
Employee Signature
Curtis Schacker
--------------------------------------------------------------------------------
Employee—Print Name
4/3/98
--------------------------------------------------------------------------------
Date
1
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APPENDIX
California Labor Code Section 2870
(a)Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities, or trade secret information except for those inventions
that either:
(1)Relate at the time of conception or reduction to practice of the invention to
the employer's business, or actual or demonstrably anticipated research or
development of the employer; or
(2)Result from any work performed by the employee for the employer.
(b)To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.
--------------------------------------------------------------------------------
QuickLinks
Exhibit 10.50
|
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Exhibit 10.38
January 25, 2001
Ms. Anna Hall
Director of Business Development
Genentech, Inc.
1 DNA Way
South San Francisco
CA 94080-4990
RE: AMENDMENT NO. 5 TO THE INTERMUNE/GENENTECH LICENSE AGREEMENT
Dear Ms. Hall:
Please consider this document as Amendment No. 5 to that certain License
Agreement for Interferon Gamma, dated May 5, 1998; as amended on December 26,
1998; January 15, 1999; April 27, 1999; and June 23, 2000 (collectively, the
"Agreement"), between INTERMUNE PHARMACEUTICALS, INC. and GENENTECH, INC.
(collectively, the "Parties").
1. The Parties agree that the first sentence of Section 2.2(b) of the
Agreement is hereby terminated in its entirety and amended and superseded as
follows:
"(b)Use of the Mark. In using the Actimmune mark, InterMune shall display said
mark with either the first letter in uppercase (i.e., Actimmune) or all letters
in uppercase (i.e., ACTIMMUNE)."
2. All other sections and exhibits of the Agreement remain unchanged.
3. This Amendment No. 5 to the Agreement is made effective as of
January 25, 2001.
IN WITNESS THEREOF, the parties have executed this Amendment No. 5 to the
Agreement as of the date set forth below.
INTERMUNE PHARMACEUTICALS, INC. GENENTECH, INC.
By
/s/ JOHN J. WULF
--------------------------------------------------------------------------------
John Wulf
Sr. Vice President of Corporate Development
By
/s/ JOSEPH S. MCCRACKEN
--------------------------------------------------------------------------------
Print Name
Joseph S. McCracken
--------------------------------------------------------------------------------
Title
VP BUSINESS DEVELOPMENT
--------------------------------------------------------------------------------
Date
January 25, 2001
--------------------------------------------------------------------------------
Date
4/5/01
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QuickLinks
Exhibit 10.38
|
SYNALLOY CORPORATION
SUBSIDIARY AND DIVISIONAL MANAGEMENT INCENTIVE PLAN
INCENTIVE POOL
A separate incentive pool will be established for the 1998 and subsequent fiscal
years for Synalloy's subsidiary and divisional management. The incentive pool
will equal ten percent (10%) of the fiscal year's earnings before interest and
income taxes (EBIT) in excess of a return on capital. Return on capital will be
an amount equal to ten percent (10%) of average equity at the beginning of each
quarter of the fiscal year. Equity shall be determined by adding back
intercompany debt and environmental reserves to book equity.
DESIGNATED PARTICIPANTS
Designated Participants in this Plan will be limited to officers and other key
managers of the Company's subsidiaries and divisions who are designated by the
Chief Executive Officer of Synalloy as employees who are responsible for and
significantly influence profits.
ALLOCATION OF INCENTIVE POOL
A maximum of thirty percent (30%) of the incentive pool may be distributed to
employees who are not Designated Participants in this Plan at the discretion of
the Chief Executive Officer of Synalloy. A minimum of sixty percent (60%) of the
incentive pool will be paid to Designated Participants pro rata to their
salaries. A minimum of ten percent (10%) and a maximum of forty percent (40%) of
the incentive pool may be paid to Designated Participants in any proportion as
the Chief Executive Officer of Synalloy deems appropriate.
TIME OF PAYMENT
Payments will be made as soon as practical after completion of the annual audit
of financial statements for the fiscal year in which the incentive is earned.
ADDITIONAL REQUIREMENTS FOR RECEIPT OF ANY PAYMENT UNDER THIS PLAN
Employed by the Company at the year-end for which the incentive is earned unless
termination of employment results from death, disability or retirement in which
case payment will be prorated to cover time worked during the year.
Also employed at the time of payment unless termination of employment results
from involuntary termination, retirement, disability or death between year-end
and payment date.
Designated participants must have entered into an agreement acceptable to the
Chief Executive Officer of Synalloy under which they agree not to compete with
the Company. for a minimum period of one year after the termination of their
employment.
DURATION OF PLAN
The Plan will remain in effect until modified or terminated by the Board of
Directors of Synalloy. The Plan will not be changed for a fiscal year after the
beginning of such year. Prior to the beginning of a fiscal year, the Board of
Directors of Synalloy may modify or cancel this Plan at their sole discretion. |
EXHIBIT 10.1
Amendment to Form of Severance Letter Agreement
between the Company and Terry Vandewarker
March 14, 2001
Mr. Terry Vandewarker
6059 Cornerstone Court West
San Diego, CA 92121
Dear Mr. Vandewarker:
We are pleased to inform you that the Company’s Board of
Directors has recently approved an amendment to your existing special severance
benefit program established for you on January 21, 2000 (“Letter Agreement”).
The purpose of this letter is to set forth those changes, and to evidence your
agreement to them. Unless specifically noted in this letter, all of the terms
and condition of your existing Letter Agreement will be preserved.
The following Section of your Letter Agreement is hereby amended
and restated in its entirety to read as follows:
PART TWO — CHANGE IN CONTROL BENEFITS
Subject to the release requirement of Part Four of this letter
agreement, should your employment be terminated Without Cause within eighteen
(18) months after a Change in Control, then you will become entitled to receive
the special severance benefits provided in this Part Two.
You will be entitled to a lump sum payment equal to two (2.0)
times your Total Compensation and payable within thirty (30) days after your
termination Without Cause.
Your payments will be subject to the Company’s collection of
applicable federal and state income and employment withholding taxes.
Each of your outstanding Options shall (to the extent not then
otherwise fully excercisable) automatically accelerate so that each such Option
shall become fully vested and immediately excercisable for the total number of
shares of Common Stock at the time subject to that Option. Each such
accelerated Option, together with all of your other vested Options, shall remain
excercisable for fully-vested shares until the earlier of (i) the expiration
date of the option term or (ii) the end of the three (3)-month period measured
from the date of your Termination Without Cause.
Please indicate your agreement to the foregoing by signing the
enclosed copy of this letter and returning it to the Company.
Very truly yours, ENCAD, INC. By: /s/ Charles E. Volpe
--------------------------------------------------------------------------------
Name: Charles E. Volpe Title: Director
AGREEMENT
I hereby agree to and accept all of the modifications to the
terms and provisions of the Letter Agreement made hereinabove, governing the
severance benefits to which I may become entitled upon a termination of my
employment under certain prescribed circumstances.
Dated: April 25, 2001 /s/ Terry Vandewarker
--------------------------------------------------------------------------------
Terry Vandewarker
|
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Exhibit 10.13
FIRST AMENDMENT
TO
SECURITIES PURCHASE AGREEMENT
This First Amendment to Securities Purchase Agreement is made this third day
of August, 2001, by and between Perceptronics, Inc., a Delaware corporation (the
"Company"), and Global Alpha Corporation, a British Virgin Islands company
("Purchaser").
R E C I T A L S
WHEREAS, the Company and Purchaser entered into a Securities Purchase
Agreement dated April 5, 2001, a true copy of which is attached hereto as
"Exhibit A" and incorporated herein by reference; and
WHEREAS, the parties hereto are desirous of amending the Securities Purchase
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereunder, the parties agree as follows:
1. Subparagraph 1.1 of the Securities Purchase Agreement is hereby amended
to read as follows:
" 1.1 Sale and Purchase of Shares. Subject to the terms and conditions set
forth herein, upon execution of this Agreement and receipt of the consideration
set forth in Sections 1.2 and 1.3 hereof, the Company hereby agrees to issue and
sell to Purchaser at the Closing (as defined in Section 2.1 hereof) 14,616,444
shares of its Common Stock, which shall consist of (i) 500,000 shares of the
Company's Common Stock to be issued at the Closing (the "Initial Shares"), and
(ii) 14,116,444 shares of the Company's Common Stock issuable upon exercise of
twelve (12) warrants, the terms of which are set forth in Section 1.3 below
(each, a "Warrant" and, collectively, the "Warrants"). The Warrants are attached
hereto as Exhibit A. The Initial Shares and the shares of the Company's Common
Stock issuable upon exercise of the Warrants shall be referred to herein
collectively as the "Shares."
2. Subparagraphs 1.3 (d)and (e) of the Securities Purchase Agreement are
hereby deleted in their entirety, and new subparagraphs 1.3(d), (e), (f), (g),
(h), (i), (j), (k), and (l) are substituted therein as follows:
" (d) Fourth Warrant. The Company shall execute and deliver to Purchaser a
warrant to purchase One Million Three Hundred Sixty-Three Thousand Six Hundred
Thirty-Six (1,363,636) shares of the Company's Common Stock (the "Fourth
Warrant"). The exercise price for the Fourth Warrant shall be Twenty-Two Cents
($0.22) per share. Subject to the terms and conditions of the Fourth Warrant,
the Fourth Warrant shall terminate on August 7, 2001.
" (e) Fifth Warrant. The Company shall execute and deliver to Purchaser a
warrant to purchase One Million Three Hundred Sixty-Three Thousand Six Hundred
Thirty-Six (1,363,636) shares of the Company's Common Stock (the "Fifth
Warrant"). The exercise price for the Fifth Warrant shall be Twenty-Two Cents
($0.22) per share. Subject to the terms and conditions of the Fifth Warrant, the
Fifth Warrant shall terminate on September 7, 2001.
" (f) Sixth Warrant. The Company shall execute and deliver to Purchaser a
warrant to purchase One Million Three Hundred Sixty-Three Thousand Six Hundred
Thirty-Six (1,363,636) shares of the Company's Common Stock (the "Sixth
Warrant").
--------------------------------------------------------------------------------
The exercise price for the Sixth Warrant shall be Twenty-Two Cents ($0.22) per
share. Subject to the terms and conditions of the Sixth Warrant, the Sixth
Warrant shall terminate on October 5, 2001.
" (g) Seventh Warrant. The Company shall execute and deliver to Purchaser a
warrant to purchase One Million Three Hundred Sixty-Three Thousand Six Hundred
Thirty-Six (1,363,636) shares of the Company's Common Stock (the "Seventh
Warrant"). The exercise price for the Seventh Warrant shall be Twenty-Two Cents
($0.22) per share. Subject to the terms and conditions of the Seventh Warrant,
the Seventh Warrant shall terminate on November 9, 2001.
" (h) Eighth Warrant. The Company shall execute and deliver to Purchaser a
warrant to purchase One Million Three Hundred Thirty Thousand Five Hundred
Ninety-Three (1,330,593) shares of the Company's Common Stock (the "Eighth
Warrant"). The exercise price for the Eighth Warrant shall be Twenty-Two and
55/100 Cents ($0.2255) per share. Subject to the terms and conditions of the
Eighth Warrant, the term of the Eighth Warrant shall terminate on December 7,
2001.
" (i) Ninth Warrant. The Company shall execute and deliver to Purchaser a
warrant to purchase One Million Three Hundred Four Thousand Three Hundred
Forty-Eight (1,304,348) shares of the Company's Common Stock (the "Ninth
Warrant"). The exercise price for the Ninth Warrant shall be Twenty-Three Cents
($0.23) per share. Subject to the terms and conditions of the Ninth Warrant, the
Ninth Warrant shall terminate on January 4, 2002.
" (j) Tenth Warrant. The Company shall execute and deliver to Purchaser a
warrant to purchase One Million Three Hundred Four Thousand Three Hundred
Forty-Eight (1,304,348) shares of the Company's Common Stock (the "Tenth
Warrant"). The exercise price for the Tenth Warrant shall be Twenty-Three Cents
($0.23) per share. Subject to the terms and conditions of the Tenth Warrant, the
Tenth Warrant shall terminate on February 8, 2002.
" (k) Eleventh Warrant. The Company shall execute and deliver to Purchaser a
warrant to purchase One Million Three Hundred Four Thousand Three Hundred
Forty-Eight (1,304,348) shares of the Company's Common Stock (the "Eleventh
Warrant"). The exercise price for the Eleventh Warrant shall be Twenty-Three
Cents ($0.23) per share. Subject to the terms and conditions of the Eleventh
Warrant, the Eleventh Warrant shall terminate on March 8, 2002.
" (l) Twelfth Warrant. The Company shall execute and deliver to Purchaser a
warrant to purchase One Million Four Hundred Eighteen Thousand Two Hundred
Sixty-One (1,418,261) shares of the Company's Common Stock (the "Twelfth
Warrant"). The exercise price for the Twelfth Warrant shall be Twenty-Three
Cents ($0.23) per share. Subject to the terms and conditions of the Twelfth
Warrant, the Twelfth Warrant shall terminate on April 5, 2002."
3. Except as expressly provided for herein, all other provisions of the
Securities Purchase Agreement dated April 5, 2001, between the parties shall
remain in full force and effect.
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to
Securities Purchase Agreement as of the day and year first above written.
"COMPANY" PERCEPTRONICS, INC.,
a Delaware corporation
By:
/s/ RICHARD MOSKOWITZ
--------------------------------------------------------------------------------
Name: Richard Moskowitz
Title: Chairman and Chief Executive Officer Address: 405 South Beverly
Drive, Fourth Floor
Beverly Hills, CA 90212 Facsimile No.: (310) 432-6222
"PURCHASER"
GLOBAL ALPHA CORPORATION
a British Virgin Islands company
By:
/s/ BARRY DIDATO
--------------------------------------------------------------------------------
Name: Barry Didato
Title: Authorized Signatory Address: Craigmuir Chambers
P.O. Box 71
Road Town
Tortola, British Virgin Islands
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QuickLinks
Exhibit 10.13
FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT
R E C I T A L S
AGREEMENT
|
Exhibit 10.38(a)
AMENDMENT No. 1 TO LETTER AGREEMENT DCT-055/98
This Amendment No. 1 dated as of July 24, 2000 ("Amendment No. 1") relates to
the Letter Agreement DCT-055/98 dated December 23, 1998 as amended from time to
time ("Letter Agreement"), between EMBRAER - Empresa Brasileira de Aeronautica
S.A. ("EMBRAER") and Continental Express, Inc. ("BUYER"), and which concerns the
Purchase Agreement DCT-054/98 dated December 23, 1998, as amended from time to
time ("EMB-135 Purchase Agreement"), (collectively referred to herein as the
"Agreement"). This Amendment No. 1 is between EMBRAER and BUYER, collectively
referred to herein as the "PARTIES".
This Amendment No. 1 sets forth further agreements between EMBRAER and BUYER
relative to the EMB-135 Purchase Agreement.
This Amendment No. 1 constitutes an amendment and modification of the Letter
Agreement. All terms defined in the EMB-135 Purchase Agreement and not defined
herein shall have the meaning given in the EMB-135 Purchase Agreement when used
herein, and in case of any conflict between this Amendment No. 1, the Letter
Agreement and the EMB-135 Purchase Agreement, the terms of this Amendment No. 1
shall control.
WHEREAS, Buyer desires to buy and Embraer desires to sell certain EMB-145
aircraft which have an increased range capacity ("XR AIRCRAFT") in accordance
with the terms of Purchase Agreement GPJ-003/96 dated August 5, 1996 as amended
from time to time, and;
WHEREAS, simultaneous with the signing and delivery of this Amendment, BUYER and
EMBRAER are amending Purchase Agreement GPJ-003/96 to provide for the purchase
by BUYER of the XR AIRCRAFT and amending the EMB-135 Purchase Agreement to
reduce the number of AIRCRAFT that will be purchased by BUYER thereunder from 75
AIRCRAFT to 50 AIRCRAFT; and
WHEREAS, EMBRAER and BUYER wish to make certain corresponding amendments to the
Letter Agreement as provided for herein;
NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, EMBRAER and BUYER hereby agree as follows:
The text of Article 1 of the Letter Agreement is hereby deleted and replaced
with the following:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
The text of Article 2 of the Letter Agreement is hereby deleted and replaced
with the following:
INTENTIONALLY DELETED
3.
Article 4 is hereby amended to read in its entirety as follows:
INTENTIONALLY DELETED
A new Article 7 shall be included in the Letter Agreement to read in its
entirety as follows:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
5.
A new Article 8 shall be included in the Letter Agreement to read in its
entirety as follows:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
All other terms and conditions of the Letter Agreement which are not
specifically amended by this Amendment No. 1 shall remain in full force and
effect without any change.
IN WITNESS WHEREOF, EMBRAER and BUYER, by their duly authorized officers, have
entered into and executed this Amendment No. 1 to be effective as of the date
first written above.
EMBRAER - Empresa Brasileira CONTINENTAL EXPRESS, INC.
de Aeronautica S.A.
By : /s Horacio Aragones Forjax By : /s/ Jim Ream
Name : Horacio Aragones Forjax Name : Jim Ream
Title : Executive Vice President Title : President
Organizational Development
By : /s/ Carlos Rocha Dillela
Name : Carlos Rocha Dillela
Title : Executive Vice President &
General Counsel
Date: July 24, 2000 Date: July 24, 2000
Place : S. J. Campos, Brazil Place : Houston, TX
Witness: /s/Jose Molina Witness: /s/ Fred Cromer
Name : Jose Molina Name : Fred Cromer
|
Exhibit 10.39
I.C.H. CORPORATION
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
ROBERT H. DRECHSLER
This Amended and Restated Employment Agreement ("Agreement") is
effective as of the 29th day of June, 2000, by and between I.C.H. Corporation
("ICH"), a Delaware corporation with offices at 9255 Towne Centre Drive, Suite
600, San Diego, CA 92121, and its subsidiaries, Sybra, Inc., a Michigan
corporation ("Sybra"), Lyon’s of California, Inc., a California corporation
("Lyons"), and Care Financial Corp., a Delaware corporation ("Care", and
collectively, with ICH, Sybra and Lyons, the "Companies"), each with offices at
c/o I.C.H. Corporation, 9255 Towne Centre Drive, Suite 600, San Diego,
California 92121 and Robert H. Drechsler, an individual residing at 15 Deer Run,
Rye Brook, New York 10573 (the "Executive").
Whereas, Executive has served as Executive Vice President –
Acquisitions & Capital Markets and Corporate Counsel and in similar capacities
for each of the other Companies pursuant to his prior employment agreement with
ICH and the other Companies dated as of September 1, 1999 (the "Prior
Agreement") and through such service, has acquired special and unique knowledge,
abilities and expertise; and
Whereas, ICH desires to employ Executive as its Co-Chief Executive
Officer and to have Executive serve as Co-Chairman of the Board of Directors of
ICH (the "ICH Board") and the other Companies desire to employ Executive in
similar capacities and the Companies desire to employ Executive in such
capacities with any future subsidiaries of the Companies and wish to be assured
of his continued services on the terms and conditions hereinafter set forth; and
Whereas, Executive desires to be employed by ICH as its Co-Chief
Executive Officer and to serve as Co-Chairman of the ICH Board, and by the other
Companies and any future subsidiaries of the Companies in similar capacities and
to perform and to serve the Companies on the terms and conditions hereinafter
set forth.
Now, Therefore, in consideration of the premises and of the mutual
promises, agreements and covenants set forth herein, the parties hereto agree as
follows:
1. Employment.
(a) Duties. The Companies hereby agree to
employ Executive, and Executive hereby accepts such employment as the Co-Chief
Executive Officer of ICH and agrees to serve as Co-Chairman of the ICH Board and
as Co-Chief Executive Officer and Co-Chairman of the Board of Directors of each
of the other Companies. In his role as Co-Chief Executive Officer of ICH and
the other Companies, Executive shall be responsible for duties of a supervisory
or managerial nature as may be directed from time to time by the ICH Board and
each other respective Board of Directors, provided, that such duties are
reasonable and customary for an Co-Chief Executive Officer. Executive agrees
that he shall, during the term of this Agreement, except during reasonable
vacation periods, periods of illness and the like, devote substantially all his
business time, attention and ability to his duties and responsibilities
hereunder; provided, however, that nothing contained herein shall be construed
to prohibit or restrict Executive from (i) serving as a director of any
corporation, with or without compensation therefor; (ii) serving in various
capacities in community, civic, religious or charitable organizations or trade
associations or leagues; or (iii) attending to personal business; provided,
however, that no such service or activity permitted in this Section 1(a) shall
materially interfere with the performance by Executive of his duties hereunder.
Executive shall report directly to the ICH Board and each other Board of
Directors.
(b) Term.
(i) Except as otherwise
provided in this Agreement to the contrary, the terms and conditions of this
Agreement shall be and remain in effect during the period of employment (the
"Employment Period") established under this Section 1(b). The initial
Employment Period shall be for a term commencing on the date of this Agreement
and ending on the third anniversary of the date of this Agreement; provided,
however, that commencing on the first day after the date of this Agreement and
on each day thereafter, the Employment Period shall be extended for one
additional day so that a constant three (3) year Employment Period shall be in
effect, unless (A) ICH (on its behalf and on behalf of the other Companies) or
Executive elects not to extend the term of this Agreement by giving written
notice to the other party in accordance with Sections 4(b) and 11 hereof, in
which case, the term of this Agreement shall become fixed and shall end on the
third anniversary of the date of such written notice ("Notice of Non-Renewal"),
or (B) Executive’s employment terminates hereunder.
(ii) Notwithstanding anything
contained herein to the contrary, (A) Executive’s employment with the Companies
may be terminated by ICH (on its behalf and on behalf of the other Companies) or
Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (B) nothing in this Agreement shall mandate or prohibit a
continuation of Executive’s employment following the expiration of the
Employment Period upon such terms and conditions as the ICH Board and Executive
may mutually agree.
(iii) If Executive’s employment
with the Companies is terminated, for purposes of this Agreement, the term
"Unexpired Employment Period" shall mean the period commencing on the date of
such termination and ending on the last day of the Employment Period.
(c) Location/Travel. Executive shall work at
ICH's offices in New York, New York. Executive shall not be required to
relocate from the New York City area during the Employment Period.
2. Compensation. Subject to the provisions of Section 7
hereof, the Companies shall each be responsible and have joint and several
liability for all compensation and benefits owed to Executive under this
Agreement. A reference to an ICH plan, program, obligation or commitment shall
also be considered an obligation or commitment of each of the other Companies
but shall not result in duplicate benefits being paid or provided to Executive.
(a) Salary. Executive shall receive an
annual base salary of Three Hundred Thousand Dollars ($300,000). The annual
base salary payable to Executive pursuant to this Section 2(a), which may be
increased but not decreased by the ICH Board or the Compensation Committee of
the ICH Board, shall be hereinafter referred to as the "Annual Base Salary" (it
being understood that if and when such Annual Base Salary is increased, it may
not be subsequently decreased below such new Annual Base Salary).
(b) Annual Bonus.
(i) Executive shall be entitled
to receive an annual cash bonus, hereinafter referred to as the "Annual Bonus,"
based upon the performance of ICH and Executive as determined by the ICH Board.
The target Annual Bonus payable to Executive for each fiscal year shall be an
amount equal to at least forty percent (40%) of Executive’s Annual Base Salary
for such year.
(ii) Executive’s Annual Bonus
shall be paid to Executive no later than forty five (45) days following the end
of the period for which the bonus is being paid.
(c) Reimbursement of Business Expenses. ICH
shall reimburse Executive for all reasonable out-of-pocket expenses incurred by
him during the Employment Period, including, but not limited to, all reasonable
travel and entertainment expenses. Executive may only obtain reimbursement
under this Section 2(c) upon submission of such receipts and records as may be
required under the reimbursement policies established by ICH.
(d) Additional Benefits; General Rights.
During the Employment Period, Executive shall be entitled to:
(i) participate in all employee
stock option, pension, savings, and other similar benefit plans of ICH and/or
such other plans or programs of the other Companies as ICH may designate from
time to time;
(ii) participate in all welfare
plans established by ICH such as life insurance, medical, dental, disability,
and business travel accident plans and programs and/or such other plan or
programs of the other Companies as ICH may designate from time to time. In
addition, ICH shall reimburse Executive for (i) any premium costs Executive may
incur with respect to the health insurance plan currently maintained by ICH (and
which may be maintained by ICH from time to time) in which Executive (and his
spouse and children) participates and (ii) for all other medical and dental
expenses not covered by any medical or dental plan in which Executive (and his
spouse and children) participates, including, without limitation, deductibles
and out of pocket expenses;
(iii) reimbursement from ICH for
any premium costs associated with the life insurance policy in the face amount
of Two Million Dollars ($2,000,000) issued by Security Connecticut Life
Insurance Company and currently owned by Executive; provided, that such
reimbursement shall not exceed Seventy-Five Hundred Dollars ($7,500) per year;
(iv) a minimum Four Hundred
Dollars ($400) per month parking/transportation allowance;
(v) four (4) weeks paid vacation
per year; and
(vi) any other benefits provided
by ICH to its executive officers.
(e) One Time Cash Bonus. ICH has paid to
Executive on January 1, 2000 a one time cash bonus in an amount equal to
$35,004.38 that enabled Executive to exercise 6,223 of the vested option shares
granted to Executive on February 15, 1999. In addition to the aforesaid cash
bonus payment, ICH shall pay Executive, on or prior to April 15th of the next
following calendar year, a cash payment in an amount equal to thirty percent
(30%) of Executive's taxable income resulting from the payment of the aforesaid
cash bonus.
(f) Withholding. ICH and/or the other
Companies, as the case may be, shall deduct from all compensation paid to
Executive under this Agreement, any Federal, State or city withholding taxes,
social security contributions and any other amounts which may be required to be
deducted or withheld by the Companies pursuant to Federal, State or city laws,
rules or regulations.
3. Option Grant.
(a) (i) Executive has received
options issued pursuant to ICH’s 1997 Employee Stock Option Plan, as amended
(the "Stock Option Plan") as follows:
Herein Referred To As Grant Date Number of Shares Granted Exercise
Price/Share ($) Vesting 1999 Options February 15, 1999 60,000 5.625
10,000 shares on February 15, 1999, 20,000 shares on each of January 1, 2000 and
January 1, 2001 and 10,000 on January 1, 2002 May 7, 1999 35,000 12.25
25% installments on May 7, 1999, January 1, 2000, January 1, 2001 and January 1,
2002 2000 Options June 29, 2000 35,000 5.06 50% on the grant date, 25%
installments on January 1, 2001 and January 1, 2002
The terms and conditions of each option grant set forth above are memorialized
in written option grant agreements between ICH and Executive dated the dates
thereof. Such 1999 Options, 2000 Options plus any additional options granted to
Executive in the future (collectively referred to herein as the "Options") shall
expire on the tenth anniversary of each respective grant date.
(ii) The Options were and are
intended to qualify as incentive stock options within the meaning of Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code"); provided,
however, that to the extent that any Options do not satisfy the requirements of
Section 422(b) of the Code either at the time of grant or before or after
exercise, including, without limitation, upon disposition of the underlying
stock acquired by the exercise of Options prior to the requisite holding period,
they shall be treated as non-qualified stock options.
(b) In the event that Executive incurs taxable
income as a result of any or all of his Options being treated as non-qualified
options (i.e. Options have been exercised and the requirements of Section 422(b)
of the Code have not been or are no longer met) (the "Taxable Event") as soon as
practicable after a determination by ICH and Executive that the Options are
non-qualified and a Taxable Event has occurred, ICH shall make an additional
single sum cash payment to Executive in an amount equal to thirty percent (30%)
of Executive’s taxable income resulting from the Taxable Event. Such payment
shall only be made in the event Executive’s employment with ICH has not
terminated for Cause within the meaning of Section 4(a)(i) of this Agreement.
(c) Notwithstanding any provisions in an
Option grant agreement to the contrary, upon termination of his employment for
any reason, Executive shall have the right to exercise his Options at any time
through the tenth anniversary of the grant date of such Options. Executive
understands that the effect of exercising any incentive stock options on a day
that is more than ninety (90) days after the date of termination of employment
(or, in the case of a termination of employment on account of death or
disability, on a day that is more than one (1) year after the date of such
termination) shall be to cause such incentive stock options to be treated as
non-qualified stock options.
(d) In the event ICH issues additional shares
of Common Stock and/or any class of stock convertible into Common Stock and/or
any other security convertible into Common Stock (including, without limitation,
options and warrants which may be granted to individuals or entities other than
employees and directors but excluding (i) the exercise of any currently
outstanding options or warrants, (ii) any future grants of options, but only to
the extent such grants relate to shares of Common Stock currently authorized to
be granted under the Stock Option Plan or the ICH 1997 Director Stock Option
Plan (collectively, the "Option Plans") (i.e. any options that may be granted by
virtue of an increase in the number of shares of Common Stock currently
authorized under the Option Plans shall not be excluded) and (iii) the exercise
of any of such options) at any time during the Employment Period and prior to
Executive’s termination of employment and in connection with a public or private
equity offering or in connection with an acquisition (the "Issuance"), Executive
shall be granted additional stock options and/or provided with a loan to
purchase Common Stock, as determined by the ICH Board, in an amount equal to
three and one-half percent (3.5%) of the number of shares issued pursuant to
such Issuance. The foregoing notwithstanding, in the event ICH repurchases any
shares of Common Stock, stock convertible into shares of Common Stock and/or any
other security convertible into shares of Common Stock, the anti-dilution
provisions set forth in this Section 3(d) shall not apply until an equal number
of such shares of Common Stock, stock convertible into shares of Common Stock
and/or other securities convertible into shares of Common Stock are first
reissued by ICH. In addition, equitable adjustments shall be made to such
anti-dilution provisions in the event ICH effectuates a stock split, reverse
stock split, stock dividend or other recapitalization transaction.
(e) To the extent any Options are not vested
upon a "Change in Control" of ICH, such unvested Options shall become fully
vested and immediately exercisable upon a "Change in Control" of ICH (whether or
not such Change in Control is approved of by the Continuing Directors of ICH (as
defined in the Rights Agreement between ICH and Mid-America Bank of Louisville
and Trust Company dated as of February 19, 1997 and amended as of February 10,
1998)). A "Change in Control" of ICH shall be deemed to have occurred upon the
happening of any of the following events:
(i) approval by the ICH Board or stockholders of ICH of a transaction that
would result in the reorganization, merger, or consolidation of ICH with one or
more other "Persons" within the meaning of Sections 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 ("Exchange Act"), other than a transaction
following which:
(A) at least seventy-one percent (71%) of the equity ownership interests of the
entity resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially the
same relative proportions by Persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least seventy-one percent (71%) of the outstanding equity
ownership interests in ICH; and
(B) at least seventy-one percent (71%) of the securities entitled to vote
generally in the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) in substantially the same relative proportions by
Persons who, immediately prior to such transaction, beneficially owned (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) at least
seventy-one percent (71%) of the securities entitled to vote generally in the
election of directors of ICH;
(ii) the acquisition of all or substantially all of the assets of ICH;
(iii) a complete liquidation or dissolution of ICH, or approval by the
stockholders of ICH of a plan for such liquidation or dissolution;
(iv) the occurrence of any event in the nature of an event described in this
Section 3(e) if, immediately following such event, at least seventy-five percent
(75%) of the members of the ICH Board do not belong to any of the following
groups:
(A) individuals who were members of the ICH Board on the date of this
Agreement; or
(B) individuals who first became members of the ICH Board after the date of
this Agreement either:
(I) upon election to serve as a member of the ICH Board by affirmative vote of
three-quarters of the members of such ICH Board, or of a nominating committee
thereof, in office at the time of such first election; or
(II) upon election by the stockholders of ICH to serve as a member of the ICH
Board, but only if nominated for election by affirmative vote of three-quarters
of the members of the ICH Board, or of a nominating committee thereof, in office
at the time of such first nomination; provided, however, that such individual's
election or nomination did not result from an actual or threatened election
contest (within the meaning of Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) other than by or on behalf of the ICH Board.
(v) in a single transaction or a series of related transactions, one or more
other Persons, other than an employee benefit plan sponsored by ICH, becomes the
"beneficial owner," as such term is used in Section 13 of the Exchange Act, of
shares of Common Stock of ICH (including newly issued shares) which equal thirty
percent (30%) or more of the issued and outstanding shares of Common Stock of
ICH prior to such person or persons becoming such a "beneficial owner."
(f) In the event of a conflict between the
terms of any Option grant agreement or the Stock Option Plan and this Agreement,
the terms of this Agreement shall control.
4. Termination of Employment; Events of Termination.
(a) Executive’s employment hereunder may be
terminated during the Employment Period under the following circumstances:
(i) Cause. Executive’s employment hereunder shall terminate for "Cause" ten
days after the date ICH shall have given Executive notice of the termination of
his employment for "Cause". For purposes of this Agreement, "Cause" shall mean
(A) the commission by Executive of fraud, embezzlement or an act of serious,
criminal moral turpitude against any of the Companies; (B) the commission of an
act by Executive constituting material financial dishonesty against any of the
Companies; or (C) Executive's gross neglect in carrying out his material duties
and responsibilities under this Agreement which has a material adverse effect on
any of the Companies and which is not cured within thirty (30) days subsequent
to written notice from ICH to Executive of such breach.
(ii) Death. Executive’s employment hereunder shall terminate upon his death.
(iii) Disability. Executive’s employment hereunder shall terminate ten days
after the date on which ICH shall have given Executive notice of the termination
of his employment by reason of his physical or mental incapacity or disability
on a permanent basis. For purposes of this Agreement, Executive shall be deemed
to be physically or mentally incapacitated or disabled on a permanent basis if
the ICH Board determines he is unable to perform his duties hereunder for a
period exceeding six (6) months in any twelve (12) month period.
(iv) Good Reason. Executive shall have the right to terminate his employment
for "Good Reason." This Agreement shall terminate effective immediately on the
date Executive shall have given the ICH Board notice of the termination of his
employment with ICH for "Good Reason." For purposes of this Agreement, "Good
Reason" shall mean (A) any material and substantial breach of this Agreement by
any of the Companies, (B) a diminution of Executive’s responsibilities, loss of
title or position in which Executive currently serves, failure to reelect
Executive to the ICH Board or the Board of Directors of any of the other
Companies or reappoint Executive Co-Chairman of the ICH Board or Co-Chairman of
the Board of Directors of any of the other Companies, but not including the loss
of responsibilities and title associated with any of the Companies other than
ICH upon the sale of the stock or substantially all of the assets of such other
Company, (C) a Change in Control occurs and Executive voluntarily quits at any
time within the six (6) month period on or immediately following the Change in
Control, (D) ICH issues a Notice of Non-Renewal to Executive, (E) a reduction in
Executive’s Annual Base Salary or a material reduction in other benefits (except
for bonuses or similar discretionary payments) as in effect at the time in
question, or any other failure by the Companies to comply with Sections 2 and 3,
hereof, (F) the relocation of Executive’s office outside the New York City area,
or (G) this Agreement is not assumed by a successor to ICH.
(v) Without Cause. ICH shall have the right to terminate Executive’s
employment hereunder without Cause subject to the terms and conditions of this
Agreement. In such event, this Agreement shall terminate, effective immediately
upon the date on which ICH shall have given Executive notice of the termination
of his employment for reasons other than for Cause or due to Executive’s
Disability.
(vi) Without Good Reason. Executive shall have the right to terminate his
employment hereunder without Good Reason subject to the terms and conditions of
this Agreement. This Agreement shall terminate, effective immediately upon the
date as of which Executive shall have given the ICH Board notice of the
termination of his employment without Good Reason.
(b) Notice of Termination. Any termination of
Executive's employment by ICH or any such termination by Executive (other than
on account of death) shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated. In the event of the
termination of Executive’s employment on account of death, written Notice of
Termination shall be deemed to have been provided on the date of death.
5. Payments Upon Termination.
(a) Without Cause, for Good Reason, Death or
Disability. If Executive's employment is terminated by ICH without Cause
(pursuant to Section 4(a)(v)), by Executive for Good Reason (pursuant to Section
4(a)(iv)), due to death of Executive (pursuant to Section 4(a)(ii)), or by ICH
due to Executive’s Disability (pursuant to Section 4(a)(iii)), Executive, or in
the case of Executive’s Death or Disability, Executive’s legal representative
estate or beneficiaries, as the case may be, shall be entitled to receive from
ICH (i) a lump sum payment in an aggregate amount equal to three (3) times the
sum of (A) then current Annual Base Salary and (B) the average of all bonuses,
including, without limitation, Executive's Annual Bonus, earned by or paid to
Executive during the two (2) immediately preceding full fiscal years of
employment ending prior to the date of termination (the "Severance Payment");
(ii) any bonuses which have been earned but not been paid prior to such
termination ("Prior Bonus Payment") and (iii) reimbursement of expenses incurred
prior to date of termination (the "Expense Reimbursement"). The aforesaid
amounts shall be payable in cash without discount for early payment, at the
option of Executive, either in full immediately upon such termination or monthly
over the Unexpired Employment Period (the "Payment Election"). In addition, (x)
Executive's fringe benefits specified in Section 2 shall continue through the
end of the Unexpired Employment Period, provided, however, that such benefits
which may not continue pursuant to law, such as participation in a qualified
pension plan, shall terminate on the date of termination and further provided,
that Executive shall be entitled to COBRA continuation coverage and to continue
the applicable life insurance policies thereafter, at his cost ("Fringe Benefit
Continuation); and (y) all outstanding Options which are not vested as of the
date of termination, if any, shall upon such date of termination vest and become
immediately exercisable in accordance with the terms of the Option grant
agreements and this Agreement ("Vested Options").
In the event Executive terminates his employment
within the six month period on or immediately following a Change in Control
which constitutes a termination for Good Reason under this Agreement pursuant to
Section 4(a)(iv)(C), Executive shall be entitled to receive from ICH an
additional lump sum cash payment in an amount sufficient to pay any excise taxes
which may be imposed on Executive pursuant to Section 4999 of the Code (or any
successor provisions) plus any excise or income tax liability on the gross up
payment itself so that on a net after tax basis Executive shall be in the same
position as if the excise tax under Section 4999 of the Code (or any successor
provisions) had not been imposed.
In the event Executive is terminated by ICH without
Cause or due to Executive’s Disability, or Executive terminates his employment
with ICH for Good Reason, Executive shall have no duty to mitigate the amount of
the payment received pursuant to this Section 5(a), it being understood that
Executive's acceptance of other employment shall not reduce ICH’s or the other
Companies’ obligations hereunder.
(b) Termination With Cause or Voluntary Quit.
If ICH terminates Executive's employment for Cause (pursuant to Section 4(a)(i))
or in the event Executive voluntarily terminates his employment without Good
Reason (pursuant to Section 4(a)(vi)) ("Voluntary Quit"), Executive shall be
entitled to his Annual Base Salary through the date of the termination of such
employment and Executive shall be entitled to any bonuses which have been earned
but not paid prior to such termination. Executive shall not be entitled to any
other bonuses. Executive's additional benefits specified in Section 2 shall
terminate at the time of such termination. Additionally, Executive shall be
entitled to all Options that have vested as of the date of such termination.
All outstanding Options, if any, which have not vested, as of the date of such
termination shall be forfeited, and if the termination is for Cause, no further
payments pursuant to Section 3(b) shall be made to Executive.
(c) Termination by ICH Upon Change in
Control. If ICH terminates Executive’s employment for any reason in connection
with a Change in Control which is not approved by the Continuing Directors of
ICH, Executive shall receive from ICH in one lump sum, payable on the
consummation of the Change in Control an amount equal to the Severance Payment,
the Prior Bonus Payment and the Expense Reimbursement. The aforesaid amount
shall be payable in cash without discount for early payment on the consummation
of such Change in Control. Executive shall be entitled to his Vested Options
and Executive (and his spouse and children) shall be entitled to Fringe Benefit
Continuation. In addition to the aforesaid cash payment, ICH shall pay
Executive, on the consummation of the Change in Control, in one lump sum, a cash
payment in an amount sufficient to pay any excise taxes which may be imposed on
Executive pursuant to Section 4999 of the Code (or any successor provisions)
plus any excise or income tax liability on the gross up payment itself so that
on a net after tax basis Executive shall be the same as if the excise tax under
Section 4999 of the Code (or any successor provisions) had not been imposed.
In the event Executive is terminated by ICH in
connection with a Change in Control which is not approved by the Continuing
Directors of ICH, Executive shall have no duty to mitigate the amount of the
payment received pursuant to this Section 5(c), it being understood that
Executive's acceptance of other employment shall not reduce the Companies
obligations hereunder.
(d) Vesting Trust. At Executive’s option, the
Companies shall establish a vesting trust into which the Companies shall, to the
extent economically feasible, contribute and/or pledge assets to secure their
severance obligations to Executive under this Agreement.
6. Successors and Assigns.
(a) This Agreement shall be binding upon and
inure to the benefit of ICH, its successors and assigns. ICH shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all its assets to expressly assume and agree
to perform this Agreement in the same manner and to the same extent ICH would be
required to perform if no such succession had taken place.
(b) Executive agrees that this Agreement is
personal to him and may not be assigned by him other than by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by Executive's legal representative.
7. Joint and Several Liability.
(a) No Duplication of Payments. The
Companies shall be jointly and severally liable for any amounts payable to
Executive under this Agreement. Any amounts payable to Executive shall be paid
in the first instance by ICH, and to the extent not paid by ICH shall be paid by
the other Companies. In no event shall any amount payable pursuant to this
Agreement be paid by ICH and any other Company, or any two or more Companies and
Executive shall not be entitled to receive duplicate benefits or payments under
any of the provisions of this Agreement.
(b) New Subsidiaries. Any subsidiary of the
Companies that is formed or acquired on or after the date hereof shall be
required to become a signatory to this Agreement and shall become jointly and
severally liable with the Companies for the obligations hereunder.
(c) Sale of Subsidiaries. Upon the sale of
the stock or substantially all of the assets of any subsidiary of the Companies,
which is approved by the ICH Board, such subsidiary shall be automatically
released from its obligations hereunder and shall not be considered as having
any continuing liability for the obligations hereunder, and Executive shall be
released from his obligations to such subsidiary hereunder.
8. Governing Law. This Agreement shall be construed in
accordance with, and its validity, interpretation, performance and enforcement
shall be governed by, the laws of the State of New York without regard to
conflicts of law principles thereof. Each of the parties hereto hereby (a)
irrevocably and unconditionally submits to the non-exclusive jurisdiction of any
New York State or Federal court sitting in New York County, New York in any
action or proceeding arising out of or relating to this Agreement, (b)
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding, and
(c) irrevocably and unconditionally consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process by certified mail to such party and its counsel at their respective
addresses specified in Section 11 hereof.
9. Entire Agreement.
(a) This instrument contains the entire
understanding and agreement among the parties relating to the subject matter
hereof, except as otherwise referred to herein, and supersedes all other prior
agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof. The parties recognize that the Prior
Agreement has been amended and restated in its entirety by this Agreement and
the terms of the Prior Agreement are of no further force and effect.
(b) Neither this Agreement nor any provisions
hereof may be waived or modified, except by an agreement in writing signed by
the party(ies) against whom enforcement of any waiver or modification is sought.
10. Provisions Severable. In case any one or more of the
provisions of this Agreement shall be invalid, illegal or unenforceable in any
respect, or to any extent, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
11. Notices. Any notice required or permitted to be given
under the provisions of this Agreement shall be in writing and delivered by
courier or personal delivery, facsimile transmission (to be followed promptly by
written confirmation mailed by certified mail as provided below) or mailed by
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to ICH or any of the other Companies:
ICH Corporation
9255 Towne Centre Drive
Suite 600
San Diego, California 92121
Attention: Board of Directors
Facsimile Number: (858) 638-2083
With a copy to:
Christopher J. Sues, Esq.
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
Facsimile Number: (212) 326-0806
If to Executive:
Robert H. Drechsler, Esq.
15 Deer Run
Rye Brook, New York 10573
Facsimile Number: (914) 937-9675
If delivered personally, by courier or facsimile transmission (confirmed as
aforesaid and provided written confirmation and receipt is obtained by the
sender), the date on which a notice is delivered or transmitted shall be the
date on which such delivery is made. Notices given by mail as aforesaid shall
be effective and deemed received upon the date of actual receipt or upon the
third business day subsequent to deposit in the U.S. mail, whichever is
earlier. Either party hereto may change its or his address specified for
notices herein by designating a new address by notice in accordance with this
Section 11.
12. Counterparts. This Agreement may be executed in
separate counterparts, each of which is deemed to be an original and both of
which taken together shall constitute one and the same agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
In Witness Whereof, the Companies and Executive have executed this Agreement as
of the date first above written.
EXECUTIVE ICH CORPORATION /s/ Rober H. Drechsler /s/ John A. Bicks
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Robert H. Drechsler Name: John A. Bicks Title: C+o-Chairman and CEO
SYBRA, INC. /s/ John A. Bicks
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Name: John A. Bicks Title: Co-Chairman and CEO LYON’S OF
CALIFORNIA, INC. /s/ John A. Bicks
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Name: John A. Bicks Title: Co-Chairman and CEO CARE
FINANCIAL CORP. /s/ John A. Bicks
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Name: John A. Bicks Title: Co-Chairman and CEO
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TABLE OF CONTENTS
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of October 26, 2001
Between
DAL-TILE CORPORATION
as Seller
and
DTSC, INC.
as Purchaser
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TABLE OF CONTENTS
PRELIMINARY STATEMENTS
ARTICLE I
DEFINITIONS SECTION 1.01. Certain Defined Terms SECTION 1.02. Other
Terms
ARTICLE II
AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS SECTION 2.01. Facility
SECTION 2.02. Making Purchases (a) Initial Purchase
(b) Subsequent Purchases (c) Payment of Purchase
Price (d) Ownership of Receivables and Related Security
SECTION 2.03. Collections. SECTION 2.04. Settlement Procedures
SECTION 2.05. Payments and Computations, Etc SECTION 2.06. Contributions
ARTICLE III
CONDITIONS OF PURCHASES SECTION 3.01. Conditions Precedent to Initial
Purchase from the Seller SECTION 3.02. Conditions Precedent to All
Purchases
ARTICLE IV
REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and
Warranties of the Seller
ARTICLE V
COVENANTS SECTION 5.01. Covenants of the Seller SECTION 5.02. Grant
of Security Interest SECTION 5.03. Covenant of the Seller and the
Purchaser
ARTICLE VI
ADMINISTRATION AND COLLECTION SECTION 6.01. Designation of Collection
Agent SECTION 6.02. Duties of Collection Agent SECTION 6.03.
Collection Agent Fee SECTION 6.04. Certain Rights of the Purchaser
SECTION 6.05. Rights and Remedies. SECTION 6.06. Transfer of Records to
Purchaser.
ARTICLE VII
EVENTS OF TERMINATION SECTION 7.01. Events of Termination
ARTICLE VIII
INDEMNIFICATION SECTION 8.01. Indemnities by the Seller
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ARTICLE IX
MISCELLANEOUS SECTION 9.01. Amendments, Etc SECTION 9.02. Notices,
Etc SECTION 9.03. Binding Effect; Assignability SECTION 9.04. Costs,
Expenses and Taxes SECTION 9.05. No Proceedings SECTION 9.06.
Confidentiality SECTION 9.07. GOVERNING LAW SECTION 9.08. Third
Party Beneficiary SECTION 9.09. Execution in Counterparts SECTION
9.10. Consent to Jurisdiction SECTION 9.11. WAIVER OF JURY TRIAL
EXHIBITS
EXHIBIT A
Credit and Collection Policy
EXHIBIT B Lock-Box Banks and Collection Account EXHIBIT C Form of
Promissory Note for Deferred Purchase Price EXHIBIT D Form of Promissory
Note for Purchaser Loans EXHIBIT E Store Accounts EXHIBIT F
Tradenames and Doing-Business-As Names
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PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of October 26, 2001
DAL-TILE CORPORATION, a Pennsylvania corporation (the "Seller"), and
DTSC, INC., a Delaware corporation (the "Purchaser"), agree as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized and used
throughout this Agreement (in addition to those defined above) are defined in
Article I of this Agreement.
(2) The Seller has Receivables that it wishes to sell to the Purchaser, and
the Purchaser is prepared to purchase such Receivables on the terms set forth
herein.
(3) The Seller may also wish to contribute Receivables to the capital of the
Purchaser on the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Account Agreement" means an agreement with respect to the Collection
Account, in substantially the form of Annex E-2 to the Sale Agreement.
"Adverse Claim" means a lien, security interest, or other charge or
encumbrance, or any other type of preferential arrangement.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person.
"Alternate Base Rate" means, as of any date, a fluctuating interest rate per
annum, which rate shall be equal to the higher of:
(a) the rate of interest announced by Credit Lyonnais from time to time as
its base rate (it being understood that such rate is not necessarily intended to
be the lowest rate of interest determined by Credit Lyonnais in connection with
extensions of credit); and
(b) 0.50% per annum above the Federal Funds Rate for such date.
"Bank Direction Agreement" means an agreement, in substantially the form of
Annex D to the Sale Agreement, among the Seller, Credit Lyonnais and a Store
Account Bank, pursuant to which such Store Account Bank agrees to remit all
funds deposited in the Store Account maintained by it to the Collection Account.
"Business Day" means any day on which banks are not authorized or required
to close in New York City or Dallas, Texas.
"Collection Account" means the bank account maintained by the Purchaser for
the purpose of receiving funds remitted from all of the Store Accounts.
"Collection Agent" means at any time the Person then authorized pursuant to
Section 6.01 to service, administer and collect Transferred Receivables.
"Collection Agent Fee" has the meaning specified in Section 6.03.
"Collections" means, with respect to any Transferred Receivable, all cash
collections and other cash proceeds of such Transferred Receivable, including,
without limitation, all cash proceeds of
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Related Security with respect to such Receivable, and all funds deemed to have
been received by the Seller or any other Person as a Collection pursuant to
Section 2.04.
"Contract" means an agreement between the Seller and an Obligor,
substantially in the form of one of the written contracts or (in the case of any
open account agreement) one of the invoices approved by the Purchaser, pursuant
to or under which such Obligor shall be obligated to pay for merchandise or
services from time to time.
"Contributed Receivable" has the meaning specified in Section 2.06.
"Credit and Collection Policy" means those receivables credit and collection
policies and practices of the Seller in effect on the date of this Agreement
applicable to the Receivables and described in Exhibit A hereto, as modified in
compliance with this Agreement.
"Credit Lyonnais" means Credit Lyonnais New York Branch, a branch licensed
under the laws of the State of New York of a banking corporation organized under
the laws of the Republic of France.
"Dal-Tile Group" means Dal-Tile Group Inc., a Delaware corporation.
"Dal-Tile International" means Dal-Tile International Inc., a Delaware
corporation.
"Debt" means (i) indebtedness for borrowed money, (ii) obligations evidenced
by bonds, debentures, notes or other similar instruments, (iii) obligations to
pay the deferred purchase price of property or services (other than current
unsecured accounts payable incurred in the ordinary course of business),
(iv) obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, and (v) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through
(iv) above.
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid for 91 or
more days from the original due date for such payment;
(ii) as to which the Obligor thereof or any other Person obligated thereon
or owning any Related Security in respect thereof has taken any action, or
suffered any event to occur, of the type described in Section 7.01(g); or
(iii) which has been or, consistent with the Credit and Collection Policy,
would be written off on the books of the Seller or the Purchaser as
uncollectible.
"Deferred Purchase Price" means the portion of the Purchase Price of
Purchased Receivables purchased on any Purchase Date exceeding the amount of the
Purchase Price under Section 2.02 to be paid in cash, which portion when added
to the cumulative amount of all previous Deferred Purchase Prices (after giving
effect to any payments made on account thereof) shall not exceed 50% of the
Outstanding Balance of the Transferred Receivables. The obligations of the
Purchaser in respect of the Deferred Purchase Price shall be evidenced by the
Purchaser's subordinated promissory note in the form of Exhibit C hereto.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and:
(i) as to which any payment, or part thereof, remains unpaid for 61 or more
days from the original due date for such payment or
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(ii) which has been or, consistent with the Credit and Collection Policy,
would be classified as delinquent by the Seller.
"Diluted Receivable" means that portion (and only that portion) of any
Transferred Receivable which is either (a) reduced or canceled as a result of
(i) any defective, rejected or returned merchandise or services or any failure
by the Seller to deliver any merchandise or provide any services or otherwise to
perform under the underlying Contract, (ii) any change in the terms of or
cancellation of a Contract or any cash discount, discount for quick payment or
other adjustment by the Seller or any other Person which reduces the amount
payable by the Obligor on the related Transferred Receivable (except any such
change or cancellation resulting from or relating to the financial inability to
pay or insolvency of the Obligor of such Transferred Receivable) or (iii) any
set-off by an Obligor in respect of any claim by such Obligor as to amounts owed
by it on the related Receivable (whether such claim arises out of the same or a
related transaction or an unrelated transaction) or (b) subject to any specific
dispute, offset, counterclaim or defense whatsoever (except the discharge in
bankruptcy of the Obligor thereof), including, without limitation, any
non-payment by the Obligor due to failure by the Seller to deliver any
merchandise or provide any services; provided that Diluted Receivables are
calculated assuming that all chargebacks are resolved in the Obligor's favor.
"Discount" means, in respect of each Purchase, 3.0% of the Outstanding
Balance of the Receivables that are the subject of such Purchase; provided,
however, the foregoing Discount may be revised prospectively by request of
either of the parties hereto to reflect changes in recent experience with
respect to write-offs, timing and cost of Collections and cost of funds,
provided that such revision is consented to by both of the parties (it being
understood that each party agrees to duly consider such request but shall have
no obligation to give such consent). The then current Discount shall be set
forth on each Monthly Report.
"DTC Store" means any sales service center operated by the Seller.
"Eligible Receivable" means a Receivable:
(i) the Obligor of which (A) is a United States resident, (B) is not an
Affiliate of Dal-Tile International, Dal-Tile Group or the Seller and (C) is not
a government or a governmental subdivision or agency that has the benefit of an
anti-assignment statute or other statute imposing restrictions on the assignment
of Receivables due from it;
(ii) which, at the time of the transfer thereof to the Purchaser under this
Agreement, is not a Defaulted Receivable or a Delinquent Receivable;
(iii) which, according to the Contract related thereto, is required to be
paid in full either (A) within less than 60 days of the original billing date
therefor or (B) within 60 days of the original billing date therefor if the
aggregate Outstanding Balance of such Receivable and all other Receivables
having similar payment terms does not exceed 50% of the Outstanding Balance of
all Transferred Receivables;
(iv) which is an "account" within the meaning of Article 9 of the UCC of the
applicable jurisdictions governing the perfection of the Purchaser's ownership
of and security interest in such Receivable;
(v) which is denominated and payable only in United States dollars in the
United States;
(vi) which arises under a Contract which, together with such Receivable, is
in full force and effect and constitutes the legal, valid and binding obligation
of the Obligor of such Receivable and is not subject to any Adverse Claim or any
dispute, offset, counterclaim or defense whatsoever (except the potential
discharge in bankruptcy of such Obligor);
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(vii) which, together with the Contract related thereto, does not contravene
in any material respect any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating to usury,
consumer protection, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and privacy)
and with respect to which no party to the Contract related thereto is in
violation of any such law, rule or regulation in any material respect;
(viii) which arises under a Contract which (A) does not require the Obligor
under such Contract to consent to the transfer, sale or assignment of the rights
and duties of the Seller under such Contract and (B) does not contain a
confidentiality provision that purports to restrict the ability of the Purchaser
and its assignees to exercise their rights under this Agreement, including,
without limitation, their right to review the Contract;
(ix) which was generated in the ordinary course of the Seller's business;
(x) which, at the time of the transfer of such Receivable under this
Agreement, has not been extended, rewritten or otherwise modified from the
original terms thereof, except, with respect to a Receivable that is Purchased
by, or contributed to, the Purchaser on the date of the initial Purchase
hereunder, as permitted under Section 6.02(d), but only for non-credit-related
reasons;
(xi) the transfer, sale or assignment of which does not contravene any
applicable law, rule or regulation;
(xii) which satisfies all applicable requirements of the Credit and
Collection Policy;
(xiii) which does not constitute a "bill and hold" sale; and
(xiv) as to which, prior to the time of the transfer of such Receivable under
this Agreement, the Purchaser or its assignee has not notified the Seller that
such Receivable (or the Obligor of such Receivable) is, in the reasonable good
faith judgment of the Purchaser or such assignee, no longer acceptable for
transfer hereunder for credit-related reasons.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Event of Termination" has the meaning specified in Section 7.01.
"Facility" means the willingness of the Purchaser to consider making
Purchases of Receivables from the Seller from time to time pursuant to the terms
of this Agreement.
"Facility Termination Date" means the earliest of (i) October 26, 2004,
(ii) the date of termination of the Facility pursuant to Section 7.01 and
(iii) the date which the Seller designates by at least two Business Days' notice
to the Purchaser.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Credit Lyonnais from three Federal funds brokers of
recognized standing selected by it.
"Fiscal Month" means a fiscal month of Dal-Tile International containing
four or five weeks as determined under the accounting policies and procedures of
Dal-Tile International Inc. and its Affiliates, as in effect on the date hereof.
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"General Trial Balance" of the Seller on any date means the Seller's
accounts receivable trial balance (whether in the form of a computer printout,
magnetic tape or diskette) on such date, listing Obligors and the Receivables
respectively owed by such Obligors on such date together with the aged
Outstanding Balances of such Receivables, in form and substance satisfactory to
the Purchaser.
"Incipient Event of Termination" means an event that but for notice or lapse
of time or both would constitute an Event of Termination.
"Indemnified Amounts" has the meaning specified in Section 8.01.
"Lock-Box Account" means a post office box administered by a Lock-Box Bank
and the associated account maintained at a Lock-Box Bank, in each case
maintained for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement among the Seller, the Purchaser (or
its assignees or designees) and any Lock-Box Bank in form and substance
satisfactory to the Purchaser (or its assignees or designees).
"Lock-Box Bank" means any of the banks holding one or more Lock-Box
Accounts.
"Monthly Report" means a report, in form and substance satisfactory to the
Purchaser, furnished by the Collection Agent to the Purchaser pursuant to
Section 6.02(b).
"Obligor" means a Person obligated to make payments to the Seller pursuant
to a Contract.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Person" means an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"Purchase" means a purchase by the Purchaser of Receivables from the Seller
pursuant to Article II.
"Purchase Date" means each day on which a Purchase is made pursuant to
Article II.
"Purchase Price" for any Purchase means an amount equal to the Outstanding
Balance of the Receivables that are the subject of such Purchase as set forth in
the Seller's General Trial Balance, minus the Discount for such Purchase.
"Purchased Receivable" means any Receivable which is purchased by the
Purchaser pursuant to Section 2.02.
"Purchaser Loan" means any loan made by the Purchaser, at its option, to the
Seller, upon the Seller's request, provided that no such Purchaser Loans may be
made if an Event of Termination or an Incipient Event of Termination has
occurred and is continuing, or would occur after giving effect thereto, or if
any amounts are outstanding under the Deferred Purchase Price. Purchaser Loans
made by the Purchaser hereunder shall be evidenced by the promissory note of the
Seller in substantially the form of Exhibit D hereto.
"Receivable" means the indebtedness of any Obligor (other than an Obligor
which is an Affiliate of Dal-Tile International or the Seller) under a Contract,
and includes the right to payment of any interest or finance charges and other
obligations of such Obligor with respect thereto; provided, however, that
"Receivable" does not include any such indebtedness created by the Corporate
Strategic Business Unit or the R&M Strategic Business Unit of the Seller.
"Receivables Purchase Request" has the meaning specified in Section 2.02(a).
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"Related Security" means with respect to any Receivable:
(i) all of the Seller's interest in any merchandise (including returned
merchandise) the sale of which gives rise to such Receivable;
(ii) all security interests or liens and property subject thereto from time
to time purporting to secure payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise, together with all financing
statements signed by an Obligor describing any collateral securing such
Receivable;
(iii) all guaranties, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise; and
(iv) the Contract and all other books, records and other information
(including, without limitation, computer programs, tapes, discs, punch cards,
data processing software and similar property and rights) to the extent relating
to such Receivable and the related Obligor.
"Sale Agreement" means that certain Receivables Purchase Agreement, dated as
of the date hereof, among the Purchaser, as seller, Atlantic Asset
Securitization Corp., as an investor, Credit Lyonnais, as a bank and as agent,
and the Seller, as collection agent and originator, as amended or restated from
time to time.
"Settlement Date" means the tenth Business Day of each Fiscal Month;
provided, however, that following the occurrence of an Event of Termination,
Settlement Dates shall occur on such days as are selected from time to time by
the Purchaser or its designee in a written notice to the Collection Agent.
"Store Account" means a bank account maintained by the Seller for the
purpose of receiving Collections, funds constituting cash sales of merchandise
and other funds of any DTC Store.
"Store Account Bank" means the bank holding any Store Account.
"Transferred Receivable" means a Purchased Receivable or a Contributed
Receivable.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"Weekly Report" means a report, in form and substance satisfactory to the
Purchaser, furnished by the Collection Agent to the Purchaser pursuant to
Section 6.02(c).
SECTION 1.02. Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles. All terms used in Article 9 of the UCC in the State of New York, and
not specifically defined herein, are used herein as defined in such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS
SECTION 2.01. Facility. On the terms and conditions hereinafter set forth
and without recourse to the Seller (except to the extent specifically provided
herein), the Seller may at its option sell or contribute to the Purchaser all
Receivables originated by it from time to time and the Purchaser may at its
option purchase or accept as a contribution from the Seller all Receivables of
the Seller from time to time, in each case during the period from the date
hereof to the Facility Termination Date.
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SECTION 2.02. Making Purchases.
(a) Initial Purchase. The Seller shall give the Purchaser at least one
Business Day's notice of its request for the initial Purchase hereunder, which
request shall specify the date of such Purchase (which shall be a Business Day)
and the proposed Purchase Price for such Purchase. The Purchaser shall promptly
notify the Seller whether it has determined to make such Purchase. On the date
of such Purchase, the Purchaser shall, upon satisfaction of the applicable
conditions set forth in Article III, pay the Purchase Price for such Purchase in
the manner provided in Section 2.02(c).
(b) Subsequent Purchases. On each Business Day following the initial
Purchase, unless either party shall notify the other party to the contrary, the
Seller shall sell to the Purchaser and the Purchaser shall purchase from the
Seller, upon satisfaction of the applicable conditions set forth in Article III,
all Receivables originated by the Seller which have not previously been sold or
contributed to the Purchaser; provided, however, that the Seller may, at its
option on any Purchase Date, contribute all or any of such Receivables to the
Purchaser pursuant to Section 2.06, instead of selling such Receivables to the
Purchaser pursuant to this Section 2.02(b). On or within five Business Days
after the date of each such Purchase, the Purchaser shall pay the Purchase Price
for such Purchase in the manner provided in Section 2.02(c).
(c) Payment of Purchase Price. The Purchase Price for each Purchase shall
be paid on or within five Business Days after the Purchase Date therefor by
means of any one or a combination of the following: (i) a deposit in same day
funds to the Seller's account designated by the Seller, (ii) an increase in the
Deferred Purchase Price (subject at all times to the limitations contained in
the definition thereof), or (iii) a credit against interest and/or principal
owed by the Seller with respect to any Purchaser Loan. The allocation of the
Purchase Price as among such methods of payment shall be subject in each
instance to the approval of the Purchaser and the Seller.
(d) Ownership of Receivables and Related Security. On each Purchase Date,
after giving effect to the Purchase (and any contribution of Receivables) on
such date, the Purchaser shall own all Receivables originated by the Seller as
of such date (including Receivables which have been previously sold or
contributed to the Purchaser hereunder). The Purchase or contribution of any
Receivable shall include all Related Security with respect to such Receivable.
SECTION 2.03. Collections. (a) Unless otherwise agreed, the Collection
Agent shall, on each Settlement Date, deposit into an account of the Purchaser
or the Purchaser's assignee all Collections of Transferred Receivables then held
by the Collection Agent.
(b) In the event that the Seller believes that funds which are not
Collections of Transferred Receivables have been deposited into an account of
the Purchaser or the Purchaser's assignee, the Seller shall so advise the
Purchaser and, on the Business Day following such identification, the Purchaser
shall remit, or shall cause to be remitted, to the Seller all funds so deposited
which are identified, to the Purchaser's satisfaction, as not being Collections
of Transferred Receivables.
(c) On each Settlement Date, the Purchaser shall pay to the Seller accrued
interest on the Deferred Purchase Price and the Purchaser may, at its option,
prepay in whole or in part the principal amount of the Deferred Purchase Price;
provided that each such payment shall be made solely from (i) Collections of
Transferred Receivables after all other amounts then due from the Purchaser
under the Sale Agreement have been paid in full and all amounts then required to
be set aside by the Purchaser or the Collection Agent, on their respective
books, under the Sale Agreement have been so set aside or (ii) excess cash flow
from operations of the Purchaser which is not required to be applied to the
payment of other obligations of the Purchaser; and provided further, that no
such payment shall be made at any time when an Event of Termination shall have
occurred and be continuing. At such time following the Facility Termination Date
when all Capital, Yield and other amounts owed by the Purchaser under the Sale
Agreement shall have been paid in full, the Purchaser shall apply, on each
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Settlement Date, all Collections of Transferred Receivables received by the
Purchaser pursuant to Section 2.03(a) (and not previously distributed) first to
the payment of accrued interest on the Deferred Purchase Price, and then to the
reduction of the principal amount of the Deferred Purchase Price.
SECTION 2.04. Settlement Procedures. (a) If on any day any Purchased
Receivable becomes (in whole or in part) a Diluted Receivable, the Seller shall
be deemed to have received on such day a Collection of such Purchased Receivable
in the amount of such Diluted Receivable. The Seller shall pay to the Collection
Agent on or prior to the earlier of (i) the next Settlement Date or (ii) the
occurrence of an Event of Termination all amounts deemed to have been received
pursuant to this subsection.
(b) Upon discovery by the Seller or the Purchaser of a breach of any of the
representations and warranties made by the Seller in Section 4.01(j) with
respect to any Transferred Receivable, such party shall give prompt written
notice thereof to the other party, as soon as practicable and in any event
within three Business Days following such discovery. The Seller shall, upon not
less than two Business Days' notice from the Purchaser or its assignee or
designee, repurchase such Transferred Receivable on the next succeeding
Settlement Date for a repurchase price equal to the Outstanding Balance of such
Transferred Receivable. Each repurchase of a Transferred Receivable shall
include the Related Security with respect to such Transferred Receivable. The
proceeds of any such repurchase shall be deemed to be a Collection in respect of
such Transferred Receivable. If the Seller is not the Collection Agent, the
Seller shall pay to the Collection Agent on or prior to the next Settlement Date
the repurchase price required to be paid pursuant to this subsection.
(c) Except as stated in subsection (a) or (b) of this Section 2.04 or as
otherwise required by law or the underlying Contract, all Collections from an
Obligor of any Transferred Receivable shall be applied to the Receivables of
such Obligor in the order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates its payment for
application to specific Receivables.
SECTION 2.05. Payments and Computations, Etc. (a) All amounts to be paid
or deposited by the Seller or the Collection Agent hereunder shall be paid or
deposited no later than 12:00 noon (New York City time) on the day when due in
same day funds to an account or accounts designated by the Purchaser from time
to time, which accounts, during the existence of the Sale Agreement, shall be
those set forth in the Sale Agreement.
(b) The Seller shall, to the extent permitted by law, pay to the Purchaser
interest on any amount not paid or deposited by the Seller (whether as
Collection Agent or otherwise) when due hereunder at an interest rate per annum
equal to 2.00% per annum above the Alternate Base Rate, payable on demand.
(c) All computations of interest and all computations of fees hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed. Whenever any payment
or deposit to be made hereunder shall be due on a day other than a Business Day,
such payment or deposit shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of such payment or
deposit.
SECTION 2.06. Contributions. The Seller may from time to time at its
option, by notice to the Purchaser on or prior to the date of the proposed
contribution, identify Receivables which it proposes to contribute to the
Purchaser as a capital contribution. On the date of each such contribution and
after giving effect thereto, the Purchaser shall own the Receivables so
identified and contributed (collectively, the "Contributed Receivables") and all
Related Security with respect thereto. The foregoing notwithstanding, on the
date of the initial Purchase hereunder the Seller agrees to contribute to the
Purchaser all Receivables which are not included in such initial Purchase.
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ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase from the Seller.
The initial Purchase of Receivables from the Seller hereunder is subject to
the conditions precedent that the Purchaser shall have received on or before the
date of such Purchase the following, each (unless otherwise indicated) dated
such date, in form and substance satisfactory to the Purchaser:
(a) Certified copies of the resolutions of the Board of Directors of the
Seller approving this Agreement and certified copies of all documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to this Agreement.
(b) A certificate of the Secretary or Assistant Secretary of the Seller
certifying the names and true signatures of the officers of the Seller
authorized to sign this Agreement and the other documents to be delivered by it
hereunder.
(c) Acknowledgment copies or time stamped receipt copies (or other evidence
of filing) of proper financing statements, duly filed on or before the date of
the initial Purchase, naming the Seller as the seller/debtor and the Purchaser
as the purchaser/secured party, or other similar instruments or documents, as
the Purchaser may deem necessary or desirable under the UCC of all appropriate
jurisdictions or other applicable law to perfect the Purchaser's ownership of
and security interest in the Receivables and Related Security and Collections
with respect thereto.
(d) Proper financing statements (together with such written authorizations
to file such financing statements or such other written statements with respect
to the filing of such financing statements as the Agent may request), if any,
necessary to release all security interests and other rights of any Person in
the Transferred Receivables, Contracts or Related Security previously granted by
the Seller.
(e) Completed requests for information, dated on or before the date of such
initial Purchase, listing the effective financing statements filed in
Pennsylvania and Texas that name the Seller as debtor, together with copies of
such other financing statements (none of which shall cover any Transferred
Receivables, Contracts or Related Security).
(f) Favorable opinions of (i) Fried, Frank, Harris, Shriver & Jacobson,
(ii) Olshan, Grundman, Frome, Rosenzweig & Wolosky LLP, (iii) Dechert and
(iv) Mark A. Solls, each as counsel for the Seller, in form and substance
satisfactory to the Purchaser, as to such matters as the Purchaser may
reasonably request.
(g) Executed copies of Lock-Box Agreements with each Lock-Box Bank and the
Account Agreement with the bank holding the Collection Account.
(h) Executed copies of Bank Direction Agreements with respect to the Store
Accounts maintained at Bank of America-East, Bank of America-West, Bank One
Chicago, Bank One Michigan, Bank One Texas, First Union and Wells Fargo Bank.
SECTION 3.02. Conditions Precedent to All Purchases. Each Purchase
(including the initial Purchase) hereunder shall be subject to the further
conditions precedent that:
(a) with respect to any such Purchase, on or prior to the date of such
Purchase, the Seller shall have delivered to the Purchaser, if requested by the
Purchaser, (i) the Seller's General Trial Balance (which if in magnetic tape or
diskette format shall be compatible with the Purchaser's computer equipment) as
of a date not more than 31 days prior to the date of such Purchase, and (ii) a
written report identifying, among other things, the Receivables to be included
in such
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Purchase and such additional information concerning such Receivables as may
reasonably be requested by the Purchaser;
(b) with respect to any such Purchase, on or prior to the date of such
Purchase, the Collection Agent shall have delivered to the Purchaser, in form
and substance satisfactory to the Purchaser, a completed Monthly Report (or, in
the case of the initial Purchase, a pro forma Monthly Report for the period
ending September 28, 2001) for the most recently ended reporting period for
which information is required pursuant to Section 6.02(b) and containing such
additional information as may reasonably be requested by the Purchaser;
(c) at its expense, the Seller shall have caused the master data processing
records evidencing Transferred Receivables to be marked to indicate that such
Receivables, the Related Security and Collections with respect thereto have been
sold and/or contributed in accordance with this Agreement; and
(d) on the date of such Purchase or contribution the following statements
shall be true (and the Seller, by accepting the Purchase Price for such
Purchase, shall be deemed to have certified that):
(i) The representations and warranties contained in Section 4.01 are
correct on and as of the date of such Purchase as though made on and as of such
date,
(ii) No event has occurred and is continuing, or would result from such
Purchase, that constitutes an Event of Termination or an Incipient Event of
Termination and
(iii) The Purchaser shall not have delivered to the Seller a notice that the
Purchaser shall not make any further Purchases hereunder; and
(e) the Purchaser shall have received such other approvals, opinions or
documents as the Purchaser may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The Seller
represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of Pennsylvania, and is duly qualified to do
business, and is in good standing, in every jurisdiction where the nature of its
business requires it to be so qualified, unless the failure to so qualify would
not reasonably be expected to have a material adverse effect on (i) the
interests of the Purchaser hereunder, (ii) the collectibility of the Transferred
Receivables, or (iii) the ability of the Seller or the Collection Agent to
perform their respective obligations hereunder.
(b) The execution, delivery and performance by the Seller of this Agreement
and the other documents to be delivered by it hereunder, including the Seller's
sale and contribution of Receivables hereunder and the Seller's use of the
proceeds of Purchases, (i) are within the Seller's corporate powers, (ii) have
been duly authorized by all necessary corporate action, (iii) do not contravene
(1) the Seller's certificate of incorporation or by-laws, (2) any law, rule or
regulation applicable to the Seller, (3) any material contractual restriction
binding on or affecting the Seller or its property or (4) any order, writ,
judgment, award, injunction or decree binding on or affecting the Seller or its
property, and (iv) do not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect to any of
its properties (except for the transfer of the Seller's interest in the
Transferred Receivables pursuant to this Agreement)
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pursuant to any material agreement. This Agreement has been duly executed and
delivered by the Seller.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Seller of this Agreement or any
other document to be delivered by it hereunder.
(d) This Agreement constitutes the legal, valid and binding obligation of
the Seller enforceable against the Seller in accordance with its terms, except
that such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium (whether general or specific) and other similar laws now or hereafter
in effect affecting creditors' rights generally.
(e) Sales and contributions made pursuant to this Agreement will constitute
a valid sale, transfer, and assignment of the Transferred Receivables to the
Purchaser, enforceable against creditors of, and purchasers from, the Seller.
The Seller shall have no remaining property interest in any Transferred
Receivable.
(f) The consolidated balance sheet of Dal-Tile International and its
consolidated Subsidiaries as at December 29, 2000, and the related consolidated
statements of income and retained earnings of Dal-Tile International and its
consolidated Subsidiaries for the fiscal year then ended, copies of which have
been furnished to the Purchaser, fairly present, in all material respects, the
financial condition of Dal-Tile International and its consolidated Subsidiaries
as at such date and the results of the operations of Dal-Tile International and
its consolidated Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently applied,
and since December 29, 2000, there has been no material adverse change in the
business, financial condition or operations of Dal-Tile International and its
consolidated Subsidiaries taken as a whole that could reasonably be expected to
adversely affect the value or collectibility of the Transferred Receivables or
the ability of the Seller to collect Transferred Receivables or otherwise
perform its obligations under this Agreement;
(g) There is no pending or threatened action or proceeding affecting the
Seller or any of its subsidiaries before any court, governmental agency or
arbitrator which may reasonably be expected to materially adversely affect the
financial condition or operations of the Seller or any of its subsidiaries or
the ability of the Seller to perform its obligations under this Agreement, or
which purports to affect the legality, validity or enforceability of this
Agreement.
(h) No proceeds of any Purchase will be used, whether directly or
indirectly, to purchase or carry Margin Stock (as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System of the
United States, as in effect from time to time) or to extend credit to others for
the purpose of purchasing or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose.
(i) No transaction contemplated hereby requires compliance with any bulk
sales act or similar law.
(j) Each Receivable characterized as an Eligible Receivable in a Monthly
Report, a Weekly Report (or any other statement made by the Collection Agent or
the Seller) is an Eligible Receivable as of the date of such Monthly Report,
Weekly Report or statement, and each such Receivable and each Transferred
Receivable, together with the Related Security, is owned (immediately prior to
its sale or contribution hereunder) by the Seller free and clear of any Adverse
Claim (other than any Adverse Claim arising solely as the result of any action
taken by the Purchaser). When the Purchaser makes a Purchase it shall acquire
valid and perfected first priority ownership of each Purchased Receivable and
the Related Security and Collections with respect thereto free and clear of any
Adverse Claim (other than any Adverse Claim arising solely
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as the result of any action taken by the Purchaser), and no effective financing
statement or other instrument similar in effect covering any Transferred
Receivable, any interest therein, the Related Security or Collections with
respect thereto is on file in any recording office except such as may be filed
in favor of Purchaser in accordance with this Agreement or in connection with
any Adverse Claim arising solely as the result of any action taken by the
Purchaser.
(k) Each Monthly Report and Weekly Report (if prepared by the Seller or one
of its Affiliates, or to the extent that information contained therein is
supplied by the Seller or one of its Affiliates), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished at any time by or on behalf of the Seller to the Purchaser in
connection with this Agreement is or will be accurate in all material respects
as of its date or (except as otherwise disclosed to the Purchaser at such time)
as of the date so furnished, and no such document contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
(l) The principal place of business and chief executive office of the
Seller and the office where the Seller keeps its records concerning the
Transferred Receivables are located at the address or addresses referred to in
Section 5.01(b).
(m) The names and addresses of all the Lock-Box Banks, together with the
account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified
in Exhibit B (as the same may be updated from time to time pursuant to
Section 5.01(g)). The name and address of the bank holding the Collection
Account, together with the account number of the Collection Account, are as
specified in Exhibit B (as the same may be updated from time to time pursuant to
Section 5.01(g)). The names and addresses of all the Store Account Banks,
together with the account numbers of the Store Accounts at such Store Account
Banks, are as specified in Exhibit E hereto, as such Exhibit E may be updated
from time to time pursuant to Section 5.01(i).
(n) Other than as set forth on Exhibit F hereto, the Seller has not been
since January 1, 1996, and is not currently, known by any tradename or
doing-business-as name. Other than as set forth on Exhibit F hereto, the Seller
has not used since January 1, 1996, and does not currently use, any tradename or
doing-business-as name.
(o) With respect to any programs used by the Seller in the servicing of the
Receivables, no sublicensing agreements are necessary in connection with the
designation of a new Collection Agent pursuant to Section 6.01(b) so that such
new Collection Agent shall have the benefit of such programs (it being
understood that, however, the Collection Agent, if other than the Seller, shall
be required to be bound by a confidentiality agreement reasonably acceptable to
the Seller).
(p) The transfers of Transferred Receivables by the Seller to the Purchaser
pursuant to this Agreement, and all other transactions between the Seller and
the Purchaser, have been and will be made in good faith and without intent to
hinder, delay or defraud creditors of the Seller.
ARTICLE V
COVENANTS
SECTION 5.01. Covenants of the Seller. From the date hereof until the
first day following the Facility Termination Date on which all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables:
(a) Compliance with Laws, Etc. The Seller will comply in all material
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges except to the extent that the failure so to comply
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with such laws, rules and regulations or the failure so to preserve and maintain
such rights, franchises, qualifications, and privileges would not materially
adversely affect the collectibility of the Transferred Receivables or the
ability of the Seller to perform its obligations under this Agreement.
(b) Offices, Records and Books of Account. The Seller will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Transferred Receivables at the address of the
Seller set forth under its name on the signature page to this Agreement or, upon
30 days' prior written notice to the Purchaser, at any other locations within
the United States. The Seller will not change its name or its state of
organization, unless (i) the Seller shall have provided the Purchaser with at
least 30 days' prior written notice thereof, (ii) no later than the effective
date of such change, all actions required by Section 5.01(l) shall have been
taken and completed and (iii) such name change would not be reasonably likely to
mislead a Person as to the separate identity of the Purchaser and the Seller.
The Seller also will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Transferred Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Transferred Receivables (including, without limitation,
records adequate to permit the daily identification of each new Transferred
Receivable and all Collections of and adjustments to each existing Transferred
Receivable). The Seller shall make a notation in its books and records,
including its computer files, to indicate which Receivables have been sold or
contributed to the Purchaser hereunder.
(c) Performance and Compliance with Contracts and Credit and Collection
Policy. The Seller will, at its expense, timely and fully perform and comply
with all material provisions, covenants and other promises required to be
observed by it under the Contracts related to the Transferred Receivables, and
timely and fully comply in all material respects with the Credit and Collection
Policy in regard to each Transferred Receivable and the related Contract.
(d) Sales, Liens, Etc. Except for the sales and contributions of Receivables
contemplated herein, the Seller will not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, any Transferred Receivable, Related Security,
related Contract or Collections, or upon or with respect to any account to which
any Collections of any Transferred Receivable are sent, or assign any right to
receive income in respect thereof.
(e) Extension or Amendment of Transferred Receivables. Except as provided in
Section 6.02(d), the Seller will not extend, amend or otherwise modify the terms
of any Transferred Receivable, or amend, modify or waive any term or condition
of any Contract related thereto.
(f) Change in Business or Credit and Collection Policy. The Seller will not
make any change in the character of its business or in the Credit and Collection
Policy that would, in either case, materially adversely affect the
collectibility of the Transferred Receivables or the ability of the Seller to
perform its obligations under this Agreement.
(g) Change in Payment Instructions to Obligors. The Seller will not add or
terminate any bank or bank account as a Lock-Box Bank or Lock-Box Account from
those listed in Exhibit B to this Agreement, or make any change in its
instructions to Obligors regarding payments to be made to any Lock-Box Bank,
unless the Purchaser shall have received notice of such addition, termination or
change (including an updated Exhibit B) and executed copies of Lock-Box
Agreements with each new Lock-Box Bank or with respect to each new Lock-Box
Account. The Seller will not change the Collection Account, unless the Purchaser
shall have received notice of such change
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(including an updated Exhibit B) and a fully executed Account Agreement with
respect to such new Collection Account.
(h) Deposits to Lock-Box Accounts. The Seller will instruct, or cause the
Collection Agent (if not the Seller) to instruct, all Obligors to remit all
their payments in respect of Transferred Receivables to a Lock-Box Account. The
Seller will instruct, or cause the Collection Agent (if not the Seller) to
instruct, the appropriate responsible employees at each DTC Store to remit all
payments in respect of Receivables which, notwithstanding the aforementioned
instructions given to the Obligors, are received at such DTC Store on any
Business Day to a Store Account at the end of such Business Day or by noon on
the next Business Day. If the Seller shall receive any Collections directly
(rather than at a DTC Store), it shall immediately (and in any event within two
Business Days) deposit the same to a Lock-Box Account or the Collection Account.
The Seller will not deposit or otherwise credit, or cause or permit to be so
deposited or credited, to any Lock-Box Account cash or cash proceeds other than
Collections of Transferred Receivables. The Seller will instruct, or cause the
Collection Agent (if not the Seller) to instruct, each bank holding a Store
Account to remit, on each Business Day from and after the date of this
Agreement, by wire transfer, ACH debit or other electronic method, all funds
deposited and collected in each Store Account to the Collection Account.
(i) Store Accounts. The Seller will not open or close any Store Account,
unless the Purchaser and its assigns shall have received prior notice of such
change (including an updated Exhibit E) and a fully executed Bank Direction
Agreement with respect to each new Store Account.
(j) Bank Direction Agreements. On or prior to March 31, 2002, the Seller
will deliver to the Purchaser fully executed Bank Direction Agreements in form
reasonably acceptable to the Purchaser and its assignee with respect to each
Store Account other than those Store Accounts for which (i) the Purchaser and
its assignee may waive the requirements of this Section 5.01(j) or (ii) Bank
Direction Agreements have already been delivered pursuant to Section 3.01(h).
(k) Audits. The Seller will, from time to time during regular business hours
as reasonably requested by the Purchaser or its assigns, permit the Purchaser,
or its agents, representatives or assigns, (i) to examine and make copies of and
abstracts from all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of the Seller
relating to Transferred Receivables and the Related Security, including, without
limitation, the related Contracts, and (ii) to visit the offices and properties
of the Seller for the purpose of examining such materials described in
clause (i) above, and to discuss matters relating to Transferred Receivables and
the Related Security or the Seller's performance hereunder or under the
Contracts with any of the officers or employees of the Seller having knowledge
of such matters.
(l) Further Assurances. (i) The Seller agrees from time to time, at its
expense, promptly to execute and deliver all further instruments and documents,
and to take all further actions, that to the Seller's knowledge may be
necessary, or that the Purchaser or its assignee may reasonably request, to
perfect, protect or more fully evidence the sale and contribution of Receivables
under this Agreement, or to enable the Purchaser or its assignee to exercise and
enforce its respective rights and remedies under this Agreement. Without
limiting the foregoing, the Seller will, upon the request of the Purchaser or
its assignee, (A) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments and documents, that may be
necessary or desirable to perfect, protect or evidence such Transferred
Receivables; and (B) deliver to the Purchaser copies of all Contracts relating
to the Transferred Receivables and all records relating to such Contracts and
the Transferred Receivables, whether in hard copy or in magnetic tape or
diskette format (which if in magnetic tape or diskette format shall be
compatible with the Purchaser's computer equipment).
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(ii) The Seller authorizes the Purchaser or its assignee to file financing
or continuation statements, and amendments thereto and assignments thereof,
relating to the Transferred Receivables and the Related Security, the related
Contracts and the Collections with respect thereto without the signature of the
Seller where permitted by law.
(m) Reporting Requirements. The Seller will provide to the Purchaser the
following:
(i) as soon as available and in any event within 45 days after the end of
the first three quarters of each fiscal year of Dal-Tile International, an
unaudited consolidated balance sheet of Dal-Tile International and its
consolidated Subsidiaries as of the end of such quarter and consolidated
statements of income and retained earnings of Dal-Tile International and its
consolidated Subsidiaries for the period commencing at the end of the previous
fiscal year of Dal-Tile International and ending with the end of such quarter,
certified by the chief financial officer of Dal-Tile International;
(ii) as soon as available and in any event within 90 days after the end of
each fiscal year of Dal-Tile International, a copy of the annual report for such
fiscal year of Dal-Tile International and its consolidated Subsidiaries,
containing consolidated financial statements for such year audited by an
independent public accountants acceptable to the Purchaser;
(iii) as soon as possible and in any event within three Business Days after
the occurrence of each Event of Termination or Incipient Event of Termination, a
statement of the chief financial officer of the Seller setting forth details of
such Event of Termination or Incipient Event of Termination and the action that
the Seller has taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, copies of all reports
that Dal-Tile International sends to any of its security holders generally, and
copies of all Form 10-K, Form 10-Q and Form 8-K reports and all other reports
and registration statements that Dal-Tile International or any Subsidiary
thereof files with the Securities and Exchange Commission or any national
securities exchange;
(v) promptly after the filing or receiving thereof, copies of all reports
and notices that the Seller or any Affiliate files under ERISA with the Internal
Revenue Service or the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or that the Seller or any Affiliate receives from any of the
foregoing or from any multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) to which the Seller or any Affiliate is or was,
within the preceding five years, a contributing employer, in each case in
respect of the assessment of withdrawal liability or an event or condition which
could, in the aggregate, result in the imposition of liability on the Seller
and/or any such Affiliate in excess of $5,000,000;
(vi) at least 30 days prior to any change in the Seller's name or the
Seller's state of incorporation, a notice setting forth the new name or state of
incorporation and the effective date thereof; and
(vii) such other information respecting the Transferred Receivables or the
condition or operations, financial or otherwise, of the Seller as the Purchaser
may from time to time reasonably request.
(n) Separate Conduct of Business. The Seller will: (i) maintain separate
corporate records and books of account from those of the Purchaser; (ii) conduct
its business from an office separate from that of the Purchaser, which office
would not be reasonably likely to mislead a Person as to the separate identity
of the Purchaser and the Seller; (iii) ensure that all oral and written
communications, including without limitation, letters, invoices, purchase
orders, contracts, statements and applications, will be made solely in its own
name; (iv) have stationery and other
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business forms and a mailing address and a telephone number separate from those
of the Purchaser; (v) not pay or hold itself out as having agreed to pay, or as
being liable for, the obligations of the Purchaser; (vi) not engage in any
transaction with the Purchaser except as contemplated by this Agreement or as
permitted by the Sale Agreement; (vii) continuously maintain as official records
the resolutions, agreements and other instruments underlying the transactions
contemplated by this Agreement; and (viii) disclose on its annual financial
statements (A) the effects of the transactions contemplated by this Agreement in
accordance with generally accepted accounting principles and (B) that the assets
of the Purchaser are not available to pay its creditors.
(o) Taxes. The Seller will file all Federal and other material tax returns
and reports required by law to be filed by it and will promptly pay all Federal
and other material taxes and governmental charges at any time owing, except such
as are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with, and to the extent
required by, generally accepted accounting principles in the United States. The
Seller will pay when due any taxes payable in connection with the Receivables,
exclusive of taxes on or measured by income or gross receipts of the Agent, the
Investors and the Banks (as each such term is defined in the Sale Agreement) and
the Purchaser.
SECTION 5.02. Grant of Security Interest. To secure all obligations of
the Seller arising in connection with this Agreement, and each other agreement
entered into in connection with this Agreement, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
including, without limitation, Indemnified Amounts, payments on account of
Collections received or deemed to be received, and any other amounts due the
Purchaser hereunder, the Seller hereby assigns and grants to Purchaser a
security interest in all of the Seller's right, title and interest now or
hereafter existing in, to and under all Receivables which do not constitute
Transferred Receivables, the Related Security and all Collections with regard
thereto and each Store Account, together with all funds on deposit therein.
SECTION 5.03. Covenant of the Seller and the Purchaser. The Seller and
the Purchaser have structured this Agreement with the intention that each
Purchase of Receivables hereunder and each contribution of Receivables hereunder
shall be treated as a sale of such Receivables by the Seller to the Purchaser
and/or an absolute transfer of such Receivables by the Seller to the Purchaser
for all purposes. The Seller and the Purchaser shall record each Purchase and
contribution as a sale and purchase and/or a capital contribution, on its books
and records, and reflect each Purchase and contribution in its financial
statements and tax returns as a sale and purchase and/or capital contribution.
In the event that, contrary to the mutual intent of the Seller and the
Purchaser, any Purchase or contribution of Receivables hereunder is not
characterized as a sale and/or absolute transfer, the Seller shall, effective as
of the date hereof, be deemed to have granted (and the Seller hereby does grant)
to the Purchaser a first priority security interest in and to any and all
Receivables that are intended to be or are purported to be Transferred
Receivables, the Related Security and the proceeds thereof to secure the
repayment of all amounts advanced to the Seller hereunder with accrued interest
thereon, and this Agreement shall be deemed to be a security agreement.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. The servicing,
administration and collection of the Transferred Receivables shall be conducted
by such Person (the "Collection Agent") so designated hereunder from time to
time. Until the Purchaser or its assignee gives notice to the Seller of the
designation of a new Collection Agent, the Seller is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Collection Agent
pursuant to the terms hereof. The Seller agrees that
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such notice may be given at any time during the existence of an Event of
Termination in the Purchaser's or assignee's discretion. Upon the Seller's
receipt of such notice, the Seller agrees that it will terminate its activities
as Collection Agent hereunder in a manner which the Purchaser (or its designee)
believes will facilitate the transition of the performance of such activities to
the new Collection Agent, and the Seller shall use its best efforts to assist
the Purchaser (or its designee) to take over the servicing, administration and
collection of the Transferred Receivables, including, without limitation,
providing access to and copies of all computer tapes or disks and other
documents or instruments that evidence or relate to Transferred Receivables
maintained in its capacity as Collection Agent and access to all employees and
officers of the Seller responsible with respect thereto. The Purchaser at any
time after giving such notice may designate as Collection Agent itself or any
Person that is a financial institution and/or in the business of servicing pools
of receivables to succeed the Seller or any successor Collection Agent, if such
Person shall consent and agree to the terms hereof. The Collection Agent may,
with the prior consent of the Purchaser, subcontract with any other Person for
the servicing, administration or collection of Transferred Receivables. Any such
subcontract shall not affect the Collection Agent's liability for performance of
its duties and obligations pursuant to the terms hereof.
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SECTION 6.02. Duties of Collection Agent. (a) The Collection Agent shall
take or cause to be taken all such actions as may be necessary or advisable to
collect each Transferred Receivable from time to time, all in accordance with
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy. The Purchaser hereby
appoints the Collection Agent, from time to time designated pursuant to
Section 6.01, as agent to enforce its ownership and other rights in the
Transferred Receivables, the Related Security and the Collections with respect
thereto. In performing its duties as Collection Agent, the Collection Agent
shall exercise the same care and apply the same policies as it would exercise
and apply if it owned the Transferred Receivables and shall act in the best
interests of the Purchaser and its assignees.
(b) Prior to the 10th Business Day of each Fiscal Month, the Collection
Agent shall prepare and forward to the Purchaser (i) a Monthly Report, relating
to all then outstanding Transferred Receivables, and the Related Security and
Collections with respect thereto, in each case, as of the close of business of
the Collection Agent on the last day of the immediately preceding Fiscal Month,
and (ii) if requested by the Purchaser, a listing by Obligor of all Transferred
Receivables, together with an aging report of such Transferred Receivables.
(c) So long as any Event of Termination or Incipient Event of Termination
shall have occurred and be continuing, and if the Purchaser (or its assignee)
shall so request, on or prior to the second Business Day of each week, the
Collection Agent shall prepare and forward to the Purchaser or such assignee a
Weekly Report, relating to all then outstanding Transferred Receivables, and the
Related Security and Collections with respect thereto, in each case, as of the
close of business of the Collection Agent on the last day of the immediately
preceding week.
(d) If no Event of Termination or Incipient Event of Termination shall have
occurred and be continuing, the Seller, while it is the Collection Agent, may,
in accordance with the Credit and Collection Policy, extend the maturity or
adjust the Outstanding Balance of any Transferred Receivable as the Seller deems
appropriate to maximize Collections thereof, or otherwise amend or modify the
terms of any Transferred Receivable.
(e) The Seller shall deliver to the Collection Agent, and the Collection
Agent shall hold in trust for the Seller and the Purchaser in accordance with
their respective interests, all documents, instruments and records (including,
without limitation, computer tapes or disks) which evidence or relate to
Transferred Receivables.
(f) The Collection Agent shall as soon as practicable following receipt
turn over to the Seller or any other Person entitled thereto any cash
collections or other cash proceeds received with respect to Receivables or other
property not constituting Transferred Receivables.
(g) The Collection Agent also shall perform the other obligations of the
"Collection Agent" set forth in this Agreement with respect to the Transferred
Receivables.
SECTION 6.03. Collection Agent Fee. The Purchaser shall pay to the
Collection Agent, so long as it is acting as the Collection Agent hereunder, a
periodic collection fee (the "Collection Agent Fee") of 0.50% per annum on the
average daily aggregate Outstanding Balance of the Transferred Receivables,
payable on each Settlement Date or such other day during each calendar month as
the Purchaser and the Collection Agent shall agree.
SECTION 6.04. Certain Rights of the Purchaser. (a) The Purchaser may, at
any time, notify the Obligors of Transferred Receivables of the Purchaser's
ownership of the Transferred Receivables. The Seller hereby transfers to the
Purchaser (and its assigns and designees) the exclusive ownership and control of
the Lock-Box Accounts maintained by the Seller for the purpose of receiving
Collections.
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(b) At any time during the existence of an Event of Termination or an
Incipient Event of Termination:
(i) The Purchaser may direct the Obligors of Transferred Receivable that
payment of all amounts payable under any Transferred Receivable shall be made
directly to the Purchaser or its designee.
(ii) The Seller shall, upon the Purchaser's request and at the Seller's
expense, give notice of the Purchaser's ownership to each Obligor of Transferred
Receivables and direct that payments of all amounts payable under the
Transferred Receivables be made directly to the Purchaser or its designee.
(iii) At the Purchaser's request and at the Seller's expense, the Seller and
the Collection Agent shall (A) assemble all of the documents, instruments and
other records (including, without limitation, computer tapes and disks) that
evidence or relate to the Transferred Receivables, and the related Contracts and
Related Security, or that are otherwise necessary or desirable to collect the
Transferred Receivables, and shall make the same available to the Purchaser at a
place selected by the Purchaser or its designee, and (B) segregate all cash,
checks and other instruments received by it from time to time constituting
Collections of Transferred Receivables in a manner acceptable to the Purchaser
and, promptly upon receipt, remit all such cash, checks and instruments, duly
indorsed or with duly executed instruments of transfer, to the Purchaser or its
designee. The Purchaser shall also have the right to make copies of all such
documents, instruments and other records at any time.
(iv) The Seller authorizes the Purchaser to take any and all steps in the
Seller's name and on behalf of the Seller that are necessary or desirable, in
the determination of the Purchaser, to collect amounts due under the Transferred
Receivables, including, without limitation, endorsing the Seller's name on
checks and other instruments representing Collections of Transferred Receivables
and enforcing the Transferred Receivables and the Related Security and related
Contracts.
SECTION 6.05. Rights and Remedies. (a) If the Seller or the Collection
Agent fails to perform any of its obligations under this Agreement, the
Purchaser may (but shall not be required to) itself perform, or cause
performance of, such obligation, and, if the Seller (as Collection Agent or
otherwise) fails to so perform, the costs and expenses of the Purchaser incurred
in connection therewith shall be payable by the Seller as provided in
Section 8.01 or Section 9.04 as applicable.
(b) The Seller shall perform all of its obligations under the Contracts
related to the Transferred Receivables to the same extent as if the Seller had
not sold or contributed Transferred Receivables hereunder and the exercise by
the Purchaser of its rights hereunder shall not relieve the Seller from such
obligations or its obligations with respect to the Transferred Receivables. The
Purchaser shall not have any obligation or liability with respect to any
Transferred Receivables or related Contracts, nor shall the Purchaser be
obligated to perform any of the obligations of the Seller thereunder.
(c) The Seller shall cooperate with the Collection Agent in collecting
amounts due from Obligors in respect of the Transferred Receivables.
(d) The Seller hereby grants to Collection Agent an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to take in
the name of the Seller all steps necessary or advisable to endorse, negotiate or
otherwise realize on any writing or other right of any kind held or transmitted
by the Seller or transmitted or received by Purchaser (whether or not from the
Seller) in connection with any Transferred Receivable.
SECTION 6.06. Transfer of Records to Purchaser. Each Purchase and
contribution of Receivables hereunder shall include the transfer to the
Purchaser of all of the Seller's right and title to and interest in the records
relating to such Receivables and shall include an irrevocable non-exclusive
license to the
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use of the Seller's computer software system to access and create such records.
Such license shall be without royalty or payment of any kind, is coupled with an
interest, and shall be irrevocable until all of the Transferred Receivables are
either collected in full or become Defaulted Receivables.
The Seller shall take such action requested by the Purchaser, from time to
time hereafter, that may be necessary or appropriate to ensure that the
Purchaser has an enforceable ownership interest in the records relating to the
Transferred Receivables and rights (whether by ownership, license or sublicense)
to the use of the Seller's computer software system to access and create such
records.
In recognition of the Seller's need to have access to the records
transferred to the Purchaser hereunder, the Purchaser hereby grants to the
Seller an irrevocable license to access such records in connection with any
activity arising in the ordinary course of the Seller's business or in
performance of its duties as Collection Agent, provided that (i) the Seller
shall not disrupt or otherwise interfere with the Purchaser's use of and access
to such records during such license period and (ii) the Seller consents to the
assignment and delivery of the records (including any information contained
therein relating to the Seller or its operations) to any assignees or
transferees of the Purchaser provided they agree to hold such records
confidential.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following events
("Events of Termination") shall occur and be continuing:
(a) The Collection Agent (i) shall fail to perform or observe any term,
covenant or agreement under this Agreement (other than as referred to in
clause (ii) of this subsection (a)) and such failure shall remain unremedied for
five Business Days, or in the case of a failure of the Collection Agent to
deliver any Monthly Report or Weekly Report when required hereunder, three
Business Days or (ii) shall fail to make when due any payment or deposit to be
made by it under this Agreement; or
(b) The Seller shall fail to make any payment required under Section 2.04(a)
or 2.04(b); or
(c) Any representation or warranty made or deemed made by or on behalf of
the Seller under or in connection with this Agreement or any information or
report delivered by the Seller pursuant to this Agreement shall prove to have
been incorrect or untrue in any material respect when made or deemed made or
delivered; or
(d) The Seller shall fail to perform or observe any other term, covenant or
agreement contained in this Agreement on its part to be performed or observed
and any such failure shall remain unremedied for 10 Business Days after written
notice thereof shall have been given to the Seller by the Purchaser or its
assignees; or
(e) The Seller or any of its Affiliates shall fail to pay any principal of
or premium or interest on any of its Debt (other than Debt outstanding under the
Credit Agreement) which is outstanding in a principal amount of at least
$5,000,000 in the aggregate when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate the maturity of such Debt; or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), redeemed, purchased or defeased, or an
offer to repay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof; or
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(f) Any Purchase or contribution of Receivables hereunder, the Related
Security and the Collections with respect thereto shall for any reason cease to
constitute valid and perfected ownership of such Receivables, Related Security
and Collections free and clear of any Adverse Claim; or
(g) Dal-Tile International, Dal-Tile Group or the Seller shall generally not
pay its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against Dal-Tile
International, Dal-Tile Group or the Seller seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by Dal-Tile International, Dal-Tile Group or the Seller),
either such proceeding shall remain undismissed or unstayed for a period of
45 days, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or Dal-Tile International,
Dal-Tile Group or the Seller shall take any corporate action to authorize any of
the actions set forth above in this subsection (g); or
(h) an Event of Termination shall have occurred under the Sale Agreement; or
(i) There shall have occurred any material adverse change in the business,
financial condition or operations of the Seller since December 29, 2000, that
could reasonably be expected to adversely affect the value or collectibility of
the Transferred Receivables or the ability of the Seller to collect Transferred
Receivables or otherwise perform its obligations under this Agreement;
then, and in any such event, the Purchaser may, by notice to the Seller, take
either or both of the following actions: (x) declare the Facility Termination
Date to have occurred (in which case the Facility Termination Date shall be
deemed to have occurred) and (y) without limiting any right under this Agreement
to replace the Collection Agent, designate itself or another Person that is a
financial institution and/or in the business of servicing pools of receivables
to succeed the Seller as Collection Agent; provided, that, automatically upon
the occurrence of any event (without any requirement for the passage of time or
the giving of notice) described in paragraph (g) of this Section 7.01, the
Facility Termination Date shall occur, the Seller (if it is then serving as the
Collection Agent) shall cease to be the Collection Agent, and the Purchaser (or
its assigns or designees) shall become the Collection Agent. Upon any such
declaration or designation or upon such automatic termination, the Purchaser
shall have, in addition to the rights and remedies under this Agreement, all
other rights and remedies with respect to the Receivables provided after default
under the UCC and under other applicable law, which rights and remedies shall be
cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Seller. Without limiting any other
rights which the Purchaser may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Purchaser and its assigns and transferees
(each, an "Indemnified Party") from and against any and all damages, claims,
losses, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts"), awarded against or incurred by any
Indemnified Party arising out of or as a result of this Agreement or the
purchase or
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contribution of any Transferred Receivables or in respect of any Transferred
Receivable or any Contract, including, without limitation, arising out of or as
a result of:
(i) the characterization in any Monthly Report or Weekly Report or other
statement made by the Seller of any Transferred Receivable as an Eligible
Receivable which is not an Eligible Receivable as of the date of such Monthly
Report or Weekly Report or statement;
(ii) any representation or warranty or statement made or deemed made by the
Seller (or any of its officers) under or in connection with this Agreement,
which shall have been incorrect in any material respect when made;
(iii) the failure by the Seller to comply with any applicable law, rule or
regulation with respect to any Transferred Receivable or the related Contract;
or the failure of any Transferred Receivable or the related Contract to conform
to any such applicable law, rule or regulation;
(iv) the failure to vest in the Purchaser absolute ownership of the
Receivables that are, or that purport to be, the subject of a Purchase or
contribution under this Agreement and the Related Security and Collections in
respect thereof, free and clear of any Adverse Claim;
(v) the failure of the Seller to have filed, or any delay in filing,
financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Receivables that are, or that purport to be, Transferred Receivables and the
Related Security and Collections in respect thereof, whether at the time of any
Purchase or contribution or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor or other financial inability of the Obligor to pay) of
the Obligor to the payment of any Receivable that is, or that purports to be, a
Transferred Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its terms),
or any other claim resulting from the sale of the merchandise or services
related to such Receivable or the furnishing or failure to furnish such
merchandise or services or relating to collection activities with respect to
such Receivable (if such collection activities were performed by the Seller
acting as Collection Agent);
(vii) any failure of the Seller, as Collection Agent or otherwise, to perform
its duties or obligations in accordance with the provisions hereof or to perform
its duties or obligations under any Contract;
(viii) any products liability or other claim arising out of or in connection
with merchandise, insurance or services which are the subject of any Contract;
(ix) the commingling of Collections of Transferred Receivables by the Seller
or a designee of the Seller, as Collection Agent or otherwise, at any time with
other funds of the Seller or an Affiliate of the Seller;
(x) any investigation, litigation or proceeding related to this Agreement or
the use of proceeds of Purchases or the ownership of Receivables, the Related
Security, or Collections with respect thereto or in respect of any Receivable,
Related Security or Contract;
(xi) any failure of the Seller to comply with its covenants contained in
this Agreement;
(xii) any Collection Agent Fees or other costs and expenses payable to any
replacement Collection Agent which are reasonable and consistent with industry
practice, to the extent in excess of the Collection Agent Fees payable to the
Seller hereunder;
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(xiii) any claim brought by any Person other than an Indemnified Party
arising from any activity by the Seller or any Affiliate of the Seller in
servicing, administering or collecting any Transferred Receivable; or
(xiv) any Transferred Receivable becoming (in whole or in part) a Diluted
Receivable.
It is expressly agreed and understood by the parties hereto (i) that the
foregoing indemnification is not intended to, and shall not, constitute a
guarantee of or other recourse for the collectibility or payment of the
Transferred Receivables and (ii) that nothing in this Section 8.01 shall require
the Seller to indemnify any Person (A) for Receivables which are not collected,
not paid or uncollectible on account of the insolvency, bankruptcy, or financial
inability to pay of the applicable Obligor, (B) for damages, losses, claims or
liabilities or related costs or expenses to the extent found in a final
non-appealable judgment of a court of competent jurisdiction to have resulted
from such Person's gross negligence or willful misconduct, or (C) for any income
taxes or franchise taxes incurred by such Person arising out of or as a result
of this Agreement or in respect of any Transferred Receivable or any Contract.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or consent to any departure by the Seller therefrom shall be
effective unless in a writing signed by the Purchaser and, in the case of any
amendment, also signed by the Seller, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No failure on the part of any party hereto to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.
SECTION 9.02. Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and be faxed or delivered, to each party
hereto, at its address set forth under its name on the signature pages hereof or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. Notices and communications by facsimile shall be
effective when sent (and shall be followed by hard copy sent by regular mail),
and notices and communications sent by other means shall be effective when
received.
SECTION 9.03. Binding Effect; Assignability. (a) This Agreement shall be
binding upon and inure to the benefit of the Seller, the Purchaser and their
respective successors and assigns; provided, however, that the Seller may not
assign its rights or obligations hereunder or any interest herein without the
prior written consent of the Purchaser. In connection with any sale or
assignment by the Purchaser of all or a portion of the Transferred Receivables,
the buyer or assignee, as the case may be, shall, to the extent of its purchase
or assignment, have all rights of the Purchaser under this Agreement (as if such
buyer or assignee, as the case may be, were the Purchaser hereunder) except to
the extent specifically provided in the agreement between the Purchaser and such
buyer or assignee, as the case may be.
(b) This Agreement shall create and constitute the continuing obligations of
the parties hereto in accordance with its terms, and shall remain in full force
and effect until such time, after the Facility Termination Date, when all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables; provided, however, that rights and remedies with respect to any
breach of any representation and warranty made by the Seller pursuant to
Article IV and the provisions of Article VIII and Sections 9.04, 9.05 and 9.06
shall be continuing and shall survive any termination of this Agreement.
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SECTION 9.04. Costs, Expenses and Taxes. (a) In addition to the rights of
indemnification granted to the Purchaser pursuant to Article VIII hereof, the
Seller agrees to pay on demand all reasonable costs and expenses in connection
with the preparation, execution and delivery of this Agreement and the other
documents and agreements to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Purchaser with respect thereto and with respect to advising the Purchaser as to
its rights and remedies under this Agreement, and the Seller agrees to pay all
costs and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder excluding, however, any costs of enforcement or collection
of Transferred Receivables which are not paid on account of the insolvency,
bankruptcy or financial inability to pay of the applicable Obligor.
(b) In addition, the Seller agrees to pay any and all stamp and other taxes
and fees payable in connection with the execution, delivery, filing and
recording of this Agreement or the other documents or agreements to be delivered
hereunder, and the Seller agrees to save each Indemnified Party harmless from
and against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
SECTION 9.05. No Proceedings. The Seller hereby agrees that it will not
institute or join any other Person in instituting against the Purchaser any
proceeding of the type referred to in Section 7.01(g) so long as there shall not
have elapsed one year plus one day since the later of (i) the Facility
Termination Date and (ii) the date on which all of the Transferred Receivables
are either collected in full or become Defaulted Receivables.
SECTION 9.06. Confidentiality. Unless otherwise required by applicable
law, each party hereto agrees to maintain the confidentiality of this Agreement
in communications with third parties and otherwise; provided that this Agreement
may be disclosed to (i) third parties to the extent such disclosure is made
pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the other party hereto, and (ii) such party's legal
counsel and auditors and the Purchaser's assignees, if they agree in each case
to hold it confidential; provided, that such party shall have no obligation of
confidentiality in respect of any information which may be generally available
to the public or becomes available to the public through no fault of such party.
SECTION 9.07. GOVERNING LAW. THIS AGREEMENT SHALL, IN ACCORDANCE WITH
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR
THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT
THAT, PURSUANT TO THE UCC OF THE STATE OF NEW YORK, THE PERFECTION AND THE
EFFECT OF PERFECTION OR NON-PERFECTION OF THE PURCHASER'S OWNERSHIP OF OR
SECURITY INTEREST IN THE RECEIVABLES ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 9.08. Third Party Beneficiary. Each of the parties hereto hereby
acknowledges that the Purchaser may assign all or any portion of its rights
under this Agreement and that such assignees may (except as otherwise agreed to
by such assignees) further assign their rights under this Agreement, and the
Seller hereby consents to any such assignments. All such assignees, including
parties to the Sale Agreement in the case of assignment to such parties, shall
be third party beneficiaries of, and shall be entitled to enforce the
Purchaser's rights and remedies under, this Agreement to the same extent as if
they were parties thereto, except to the extent specifically limited under the
terms of their assignment.
SECTION 9.09. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.
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SECTION 9.10. Consent to Jurisdiction. (a) Each party hereto hereby
irrevocably submits to the non-exclusive jurisdiction of any New York State or
Federal court sitting in New York City in any action or proceeding arising out
of or relating to this Agreement, and each party hereto hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court. The parties hereto hereby irrevocably waive, to the fullest
extent they may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each party hereto consents to the service of any and all process in any
such action or proceeding by the mailing of copies of such process to it at its
address specified in Section 9.02. Nothing in this Section 9.10 shall affect the
right of the parties hereto to serve legal process in any other manner permitted
by law.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED OR DELIVERED PURSUANT HERETO.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.
SELLER: DAL-TILE CORPORATION
By:
--------------------------------------------------------------------------------
Title:
7834 C.F. Hawn Freeway
P.O. Box 170130
Dallas, Texas 75217
Attention: Scott Veldman
Facsimile Number: (214) 309-4390
PURCHASER:
DTSC, INC.
By:
--------------------------------------------------------------------------------
Title:
c/o Global Securitization Services, LLC
103 Foulk Road, Suite 205-11
Wilmington, Delaware 19803
Attention: Frank B. Bilotta
Facsimile Number: (302) 652-8667
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EXHIBIT A
CREDIT AND COLLECTION POLICY
A–1
--------------------------------------------------------------------------------
EXHIBIT B
LOCK-BOX BANKS AND COLLECTION ACCOUNT
Lock-Box Banks
Bank
--------------------------------------------------------------------------------
P.O. Box
--------------------------------------------------------------------------------
Account Number
--------------------------------------------------------------------------------
Bank One, N.A.
1717 Main Street
Dallas, Texas 75201 70671 5596297
Collection Account
Bank
--------------------------------------------------------------------------------
P.O. Box
--------------------------------------------------------------------------------
Account Number
--------------------------------------------------------------------------------
Bank of America, N.A.
901 Main Street
P.O. Box 832409
Dallas, Texas 75202 N.A. 3751842080
B–1
--------------------------------------------------------------------------------
EXHIBIT C
FORM OF DEFERRED PURCHASE PRICE NOTE
New York, New York
October 26, 2001
FOR VALUE RECEIVED, DTSC, INC., a Delaware corporation (the "Purchaser"),
hereby promises to pay to DAL-TILE CORPORATION (the "Seller") the principal
amount of this Note, determined as described below, together with interest
thereon at a rate per annum equal at any time to 2.00% per annum above the
current rate of interest quoted for 30 day commercial paper in the Wall Street
Journal under the caption Dealer Commercial Paper, in each case in lawful money
of the United States of America. Capitalized terms used herein but not defined
herein shall have the meanings assigned to such terms in the Purchase and
Contribution Agreement dated as of October 26, 2001 between the Seller and the
Purchaser (such agreement, as it may from time to time be amended, restated or
otherwise modified in accordance with its terms, the "Purchase and Contribution
Agreement"). This Note is the note referred to in the definition of "Deferred
Purchase Price" in the Purchase and Contribution Agreement.
The aggregate principal amount of this Note at any time shall be equal to
the difference between (a) the sum of the aggregate principal amount of this
Note on the date of the issuance hereof and each addition to the principal
amount of this Note pursuant to the terms of Section 2.02 of the Purchase and
Contribution Agreement minus (b) the aggregate amount of all payments made in
respect of the principal amount of this Note, in each case, as recorded on the
schedule annexed to and constituting a part of this Note, but failure to so
record shall not affect the obligations of the Purchaser to the Seller.
The entire principal amount of this Note shall be due and payable one year
and one day after the Facility Termination Date or such later date as may be
agreed in writing by the Seller and the Purchaser. The principal amount of this
Note may, at the option of the Purchaser, be prepaid in whole at any time or in
part from time to time. Interest on this Note shall be paid in arrears on each
Settlement Date, at maturity and thereafter on demand. All payments hereunder
shall be made by wire transfer of immediately available funds to such account of
the Seller as the Seller may designate in writing.
Notwithstanding any other provisions contained in this Note, in no event
shall the rate of interest payable by the Purchaser under this Note exceed the
highest rate of interest permissible under applicable law.
The obligations of the Purchaser under this Deferred Purchase Price Note are
subordinated in right of payment, to the extent set forth in Section 2.03(c) of
the Purchase and Contribution Agreement, to the prior payment in full of all
Capital, Yield, Fees and other obligations of the Purchaser under the Sale
Agreement.
Notwithstanding any provision to the contrary in this Deferred Purchase
Price Note or elsewhere, other than with respect to payments specifically
permitted by Section 2.03(c) of the Purchase and Contribution Agreement, no
demand for any payment may be made hereunder, no payment shall be due with
respect hereto and the Seller shall have no claim for any payment hereunder
prior to the occurrence of the Facility Termination Date and then only on the
date, if ever, when all Capital, Yield, Fees and other obligations owing under
the Sale Agreement shall have been paid in full.
In the event that, notwithstanding the foregoing provision limiting such
payment, the Seller shall receive any payment or distribution on this Deferred
Purchase Price Note which is not specifically permitted by Section 2.03(c) of
the Purchase and Contribution Agreement, such payment shall be
C–1
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received and held in trust by the Seller for the benefit of the entities to whom
the obligations are owed under the Sale Agreement and shall be promptly paid
over to such entities.
The Purchaser hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever.
Neither this Note, nor any right of the Seller to receive payments
hereunder, shall, without the prior written consent of the Purchaser and (so
long as the Sale Agreement remains in effect or any amounts remain outstanding
thereunder) the Agent under the Sale Agreement, be assigned, transferred,
exchanged, pledged, hypothecated, participated or otherwise conveyed, other than
the pledge of this Note to the administrative agent under the Credit Agreement
(as defined in the Sale Agreement).
THIS NOTE SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.
DTSC, INC.
By:
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Title:
C–2
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SCHEDULE TO DEFERRED PURCHASE PRICE NOTE
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Date
Addition to Principal Amount
Amount of Principal Paid Paidor Prepaid
Unpaid Principal Balance
Notation Made By
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C–3
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EXHIBIT D
FORM OF PURCHASER LOAN NOTE
New York, New York
October 26, 2001
FOR VALUE RECEIVED, DAL-TILE CORPORATION, a Pennsylvania corporation (the
"Company"), hereby promises to pay to DTSC, INC. (the "Lender"), no later than
twelve (12) months from the date hereof or on demand if sooner made, the
aggregate unpaid principal amount of the Purchaser Loans made by the Lender to
the Company under the Purchase and Contribution Agreement referred to below, and
to pay on each Settlement Date interest on the unpaid principal amount of the
Purchaser Loans at a rate per annum equal at all times to 1.625% per annum above
the Eurodollar Rate (as defined in the Sale Agreement) for periods of one month,
in each case in lawful money of the United States of America and in immediately
available funds.
The date and amount of each Purchaser Loan made by the Lender to the Company
from the date hereof until the repayment of all sums due hereunder, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of this Note, endorsed by the
Lender on the schedule attached hereto or any continuation thereof.
This Note is the Purchaser Loan Note referred to in the Purchase and
Contribution Agreement (as amended, restated or otherwise modified from time to
time, the "Purchase and Contribution Agreement") dated as of October 26, 2001
between the Company and the Lender, as the Seller and the Purchaser,
respectively, and evidences Purchaser Loans made by the Lender thereunder.
Capitalized terms used in this Note and not defined herein have the respective
meanings assigned to them in the Purchase and Contribution Agreement.
The principal amount of this Note may, at the option of the Company, be
prepaid in whole at any time or in part from time to time.
Notwithstanding any other provisions contained in this Note, in no event
shall the rate of interest payable by the Company under this Note exceed the
highest rate of interest permissible under applicable law.
The Company hereby waives diligence, presentment, demand, protest and notice
of any kind whatsoever with respect to this Note.
In the event the Lender shall refer this Note to an attorney for collection,
the Company agrees to pay, in addition to unpaid principal and interest, all the
costs and expenses incurred in attempting or effecting collection hereunder,
including reasonable attorney's fees, whether or not suit is instituted.
THIS NOTE SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.
DAL-TILE CORPORATION
By:
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Name:
Title:
D–1
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SCHEDULE TO PURCHASER LOAN NOTE
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Date
Amount of Purchaser Loan
Amount of Principal Paid Paidor Prepaid
Unpaid Principal Balance
Notation Made By
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D–2
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EXHIBIT E
STORE ACCOUNTS
E–1
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EXHIBIT F
TRADENAMES AND DOING-BUSINESS-AS NAMES
daltile
Dal-Tile
Dal Tile
American Olean
Dal-Tile International
Dal-Tile Manufacturing,Inc.
F–1
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|
Exhibit 10.35
AMENDMENT TO PROMISSORY NOTE
This AMENDMENT TO PROMISSORY NOTE (the “Amendment”) is made this 31st day of
August 2001, between EpicEdge, Inc., a Texas corporation (“Maker”), and Carl R.
Rose (“Payee”).
PREAMBLE
WHEREAS, Maker executed a Convertible Promissory Note on the 11th day of
November, 2000 whereby it promised to pay to the order of Payee the sum of
$500,000, (the “Original Note”), and
WHEREAS, in order to maximize the purposes for which the Original Note was
procured, Maker and Payee have agreed to amend the payment terms.
NOW, THEREFORE, in exchange for ten and no/100 dollars ($10), the mutual
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend the Original Note as follows:
1. Section (a) of the introductory paragraph of the Original Note shall be
amended to reflect that interest shall be paid based on the principal amount
plus accrued interest commencing September 1, 2001;
2. Section 1(b) of the Original Note shall be deleted;
3. Section 3(a) of the Original Note shall be amended to increase the
conversion rate from fifty cents ($.50) to one dollar ($1.00);
4. Section 2 of the Original Note shall be amended to increase the cure
period upon written notice of an event of default from ten (10) days to thirty
(20) days;
5. Section (b) of introductory paragraph of the Original Note shall be
amended to reflect that the principal shall mature on December 1, 2002. If the
company defaults, the Payee has at its sole discretion the right to either
convert the note at $.50 per share, demand payment or to extend the maturity
date until December 1, 2003. If the company again defaults, the Payee has at its
sole discretion the right to either convert the note at $.25 per share, demand
payment or extend the maturity date until December 1, 2004.
6. All other terms of the Original Note shall remain unmodified.
IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment or
has caused this Amendment to be executed on its behalf by a representative duly
authorized, all as of the date first above set forth.
MAKER:
EPICEDGE, INC.
By:
Name:
Title:
PAYEE:
CARL R. ROSE
|
THIS CREDIT AGREEMENT (the "Agreement") dated as of June 30, 2000 (the
"Effective Date") is between Wells Fargo Bank Minnesota, National Association
(the "Bank") and Datalink Corporation (the "Borrower").
BACKGROUND
The Borrower has asked the Bank to provide it with a $10,000,000.00 line of
credit to be used for financing potential acquisitions. The Borrower has also
asked the Bank to provide it with a $5,000,000.00 line of credit for financing
its working capital needs. The Bank is agreeable to meeting the Borrower's
request, provided that the Borrower agrees to the terms and conditions of this
Agreement.
For purposes of this Agreement, Revolving Note A and Revolving Note B shall
collectively be referred to as the "Notes." The Notes and this Agreement, and
any modifications, amendments or replacements thereto shall be referred to
collectively as the "Documents."
In consideration of the above premises, the Bank and the Borrower agree as
follows:
1. LINE OF CREDIT A 1.1 Line of Credit A Amount. During the Line A
Availability Period defined below, the Bank agrees to provide a revolving line
of credit ("Line A") to the Borrower. Outstanding amounts under Line A shall
not, at any one time, exceed TEN MILLION AND 00/100 DOLLARS ($10,000,000.00).
1.2 Line A Availability Period. The "Line A Availability Period" shall mean
the period of time from the Effective Date or the date on which all conditions
precedent described in this Agreement have been met, whichever is later, to the
Line A Expiration Date of June 30, 2001. 1.3 Revolving Note A. The
Borrower's obligation to repay advances under Line A shall be evidenced by a
single promissory note ("Revolving Note A") dated as of the Effective Date, and
in form and content acceptable to the Bank. Reference is made to Revolving Note
A for interest rate and repayment terms.
2. LINE OF CREDIT B 2.1 Line of Credit B Amount. During the Line B
Availability Period defined below, the Bank agrees to provide a revolving line
of credit ("Line B") to the Borrower. Outstanding amounts under Line B shall
not, at any one time, exceed FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00).
2.2 Line B Availability Period. The "Line B Availability Period" shall mean
the period of time from the Effective Date or the date on which all conditions
precedent described in this Agreement have been met, whichever is later, to the
Line B Expiration Date of June 30, 2001. 2.3 Revolving Note B. The
Borrower's obligation to repay advances under Line B shall be evidenced by a
single promissory note ("Revolving Note B") dated as of the Effective Date, and
in form and content acceptable to the Bank. Reference is made to Revolving Note
B for interest rate and repayment terms. 2.4 Standby Letters of Credit
(a) Issuance and Expiration. During the Line B Availability Period, the Bank
agrees to issue standby letters of credit ("Standby L/Cs") for the account of
the Borrower, provided that the Borrower is in compliance with the terms of this
Agreement. Each Standby L/C must expire at the earlier of the Line B Expiration
Date or 180 days after issuance, or at such time as the Bank and the Borrower
may agree to at the time of issuance. Prior to the issuance of a Standby L/C,
the Borrower will execute the Bank's standard Application and Agreement for
Irrevocable Standby Letter of Credit (the "Standby L/C Agreement") and such
other documents as the Bank deems necessary. (b) Fees. The Borrower shall
pay a standby letter of credit fee of 1.50% per annum on the face amount of each
Standby L/C, subject to a minimum fee of $300, and calculated on the basis of
actual days elapsed in a 360-day year. This fee shall be paid quarterly in
advance and is in addition to all other fees or expenses provided for in the L/C
Application. (c) Reduction of Line Availability. Availability under Line B
shall be reduced dollar for dollar by the face amount of all outstanding Standby
L/Cs, plus any unreimbursed draws. Without limiting any rights and remedies
available to the Bank under any Standby L/C Agreement, any draw under a Standby
L/C may, at the Bank's option, be repaid through an automatic advance under Line
B, which shall be repayable according to the terms of this Agreement. (d)
Cash Collateralization of Outstanding Standby L/Cs. Should a default occur
under this Agreement, the Bank may require the Borrower to deposit with it in a
non-interest bearing account, immediately available funds equal to the face
amount of outstanding Standby L/Cs. The Borrower hereby grants the Bank a
security interest in these funds as security for all of the Borrower's
obligations to the Bank.
2.5 Documentary Letters of Credit (a) Issuance and Expiration. During the
Line B Availability Period, the Bank agrees to issue documentary letters of
credit ("Documentary L/Cs") for the account of the Borrower, provided that the
Borrower is in compliance with the terms of this Agreement. Each Documentary
L/C must expire prior to the Line B Expiration Date or at such time as the Bank
and the Borrower agree to at the time of issuance, and must require drafts
payable at sight. Prior to the issuance of a Documentary L/C, the Borrower will
execute the Bank's standard Application and Agreement for Irrevocable
Documentary Letters of Credit (the "Documentary L/C Agreement") and such other
documents as the Bank deems necessary. (b) Fees and Expenses. Fees and
expenses related to each Documentary L/C will be agreed upon at issuance.
(c) Reduction of Line Availability. Availability under Line B shall be reduced
dollar for dollar by the face amount of all outstanding Documentary L/Cs, plus
any unreimbursed draws. Without limiting any rights and remedies available to
the Bank under the Documentary L/C Agreement and related documents, any draw
under a Documentary L/C may, at the Bank's option, be repaid through an
automatic advance under Line B, which shall be repayable according to the terms
of this Agreement. (d) Cash Collateralization of Outstanding Documentary
L/Cs. Should a default occur under this Agreement the Bank may require the
Borrower to deposit with it in a non-interest bearing account immediately
available funds equal to the face amount of outstanding Documentary L/Cs. The
Borrower hereby grants the Bank a security interest in these funds as security
for all of the Borrower's obligations to the Bank
.
2.6 Line B Commitment Fee. During the Line B Availability Period, the Borrower
shall pay the Bank a commitment fee of 0.15% per annum on the average daily
unused amount of Line B. This fee shall be calculated on the basis of actual
days elapsed in a 360 day year and shall be paid quarterly in arrears.
3. FEES AND EXPENSES 3.1 Documentation Expense. The Borrower agrees to
reimburse the Bank for its reasonable expenses relating to the preparation of
the Documents and any possible future amendments to the Documents, which
reimbursement may include, but shall not be limited to, reimbursement of
reasonable attorneys' fees, including the allocated costs of the Bank's in-house
counsel. Despite such reimbursement the Borrower acknowledges that the Bank's
counsel is engaged solely to represent the Bank and does not represent the
Borrower. 3.2 Collection Expense. In the event the Borrower fails to
comply with any covenant or condition of this Agreement or the Documents, or
fails to pay the Bank any amounts due under this Agreement or under the
Documents, the Borrower shall pay all costs of workout and collection, including
reasonable attorneys' fees and legal expenses incurred by the Bank. 4.
ADVANCES AND PAYMENTS
4.1 Requests for Advances. Any line advance requested under the terms of this
Agreement shall be requested by telephone or in a writing delivered to the Bank
(or transmitted via facsimile) by any person reasonably believed by the Bank to
be authorized by the Borrower to do so. The Bank will not consider any such
request following an event which is, or with notice or the lapse of time would
be, an event of default under this Agreement. Proceeds shall be deposited into
the Borrower's account at the Bank or disbursed in such other manner as the
parties may agree. 4.2 Interest Rate Options For Revolving Notes A and
B. Revolving Notes A and B permit the Borrower to fix an interest rate for a
time period and principal amount agreeable to the Bank and the Borrower, based
on (1) the Base Rate (as defined in each note), floating, minus 1.0% (the “Base
Rate Option”), which shall apply at all times whenever the rate has not
otherwise been fixed by the agreement of the Bank and the Borrower, or (2) an
interest rate or rates described in each note that is derived from and available
to the Bank on international money markets for a similar time period and
principal amount, which rates are more fully described in each note, plus a
margin that, with respect to Revolving Note A, will vary based upon the
Borrower’s financial performance as provided in Section 4.3 of this Agreement,
and, with respect to Revolving Note B, of 1.10% (the “LIBOR Interest Rate
Option”). To elect the LIBOR Interest Rate Option, the Borrower must
request a quote from the Bank two days prior to funding. This request must
designate an amount (the "LIBOR Interest Rate Portion") and a period (the "LIBOR
Interest Rate Period"). The LIBOR Interest Rate Portion must be at least
$100,000 and the LIBOR Interest Rate Period will be for 30, 60 or 120 days, or
any other period to which the parties may agree. The Bank shall not be
obligated to provide a LIBOR Interest Rate quote if it determines that no
deposits with an amount and maturity equal to those for which a quotation has
been requested are available to it in the London Interbank Market. The Borrower
must orally accept a quote when received or it will be deemed rejected. If
accepted, the LIBOR Interest Rate Option will remain in effect for the LIBOR
Interest Rate Period specified in the quote. At the end of each LIBOR Interest
Rate Period the principal amount subject to the LIBOR Interest Rate Option shall
bear interest at the Base Rate Option.
4.3 Performance Based Rate Pricing For Line A. Following its review of the
Borrower’s interim financial statements and quarterly Compliance Certificate,
the Bank shall adjust the LIBOR Interest Rate Option margin applicable to
Revolving Note A to a margin that is based on the following performance
criteria: (a) Effective the first day of the calendar quarter in which the
Borrower’s Funded Debt to EBITDA Ratio, as defined in Section 7.2(d), is
determined by the Bank to be less than 0.55 to 1.0, the margin shall be 1.10%.
(b) Effective the first day of the calendar quarter in which the Borrower’s
Funded Debt to EBITDA Ratio, as defined in Section 7.2(d), is determined by the
Bank to be at least 0.55 to 1.0 but no more than 1.10 to 1.0, the margin shall
be 1.30%. (c) Effective the first day of the calendar quarter in which the
Borrower’s Funded Debt to EBITDA Ratio, as defined in Section 7.2(d), is
determined by the Bank to be more than 1.10 to 1.0, the margin shall be 1.50%,
unless the default rate of interest set forth in Section 4.5 of this Agreement
is applicable.
4.4 Effective Date of Performance Based Pricing Changes. Any margin change
described above shall become effective on the first day of the calendar quarter
following the Bank’s receipt of the Borrower’s interim financial statements and
Compliance Certificate as provided in Sections 7.1(b) and 7.1(c) of this
Agreement. Following any event of default defined described in Section 8 of
this Agreement, and regardless of whether or not the Revolving Note has been
accelerated, Revolving Note A shall commence accruing interest at the rate
described in Section 4.3(c) herein. 4.5 Default Rate of Interest. Following
the occurrence of any event of default as defined in Section 8 of the Agreement,
or following the maturity of each of Line A and Line B and the acceleration of
Revolving Note A and Revolving Note B, the interest rate applicable to Revolving
Note A and Revolving Note B shall be increased to annual rate equal to the Base
Rate plus 2.0%, floating. This rate of interest shall commence as of the date
that the Bank in its sole discretion determines that the last event constituting
the event of default takes place, which period shall include any applicable
grace period, if any, and shall continue through the last day of the fiscal
quarter in which the event of default has been cured. The rate shall also apply
in the event that Line A and Line B have matured and that Revolving Note A and
Revolving Note B have been accelerated.
The Bank's assessment or acceptance of interest paid at an increased rate
shall not constitute a waiver of any default under the terms of the Agreement
and Revolving Note A and Revolving Note B, or a waiver of the Bank's right to
terminate Line A and Line B and accelerate or demand payment of Revolving Note A
or Revolving Note B.
4.6 Payments. All principal, interest and fees due under the Documents shall be
paid by the direct debit of available funds deposited in the Borrower's account
with the Bank. The Bank shall debit the account on the dates the payments
become due. If a due date does not fall on a day on which the Bank is open for
substantially all of its business (a "Banking Day", except as otherwise
provided), the Bank shall debit the account on the next Banking Day, and
interest shall continue to accrue during the extended period. If there are
insufficient funds in the account on the day the Bank enters any debit
authorized by this Agreement, the debit will be reversed and the payment shall
be due immediately without necessity of demand by direct remittance of
immediately available funds. For amounts bearing interest at the LIBOR Rate (if
any), a Banking Day is a day on which the Bank is open for business and on which
dealings in U.S. dollar deposits are carried on in the London Interbank Market.
5. CONDITIONS PRECEDENT The Borrower must deliver to the Bank the
documents described in Exhibit B, properly executed and in form and content
acceptable to the Bank, prior to the Bank's initial advance or disbursement
under this Agreement.
6. REPRESENTATIONS AND WARRANTIES To induce the Bank to enter into this
Agreement, the Borrower, to the best of its knowledge and upon due inquiry,
makes the representations and warranties contained in Exhibit C. Each request
for an advance or a disbursement under this Agreement following the Effective
Date constitutes a reaffirmation of these representations and warranties.
7. COVENANTS 7.1 Financial Information and Reporting. Except as otherwise
stated in this Agreement, all financial information provided to the Bank shall
be compiled using generally accepted accounting principles consistently applied.
During the time period that credit is available under this Agreement, and
afterward until all amounts due under the Documents are paid in full, unless the
Bank shall otherwise agree in writing, the Borrower agrees to:
(a) Annual Financial Statements. Provide the Bank within 120 days of the
Borrower's fiscal year end, the Borrower's annual financial statements. The
statements must be audited with an unqualified opinion by a certified public
accountant acceptable to the Bank, and must be accompanied by a certificate of
such accountants stating that, in conducting their audit, they have no knowledge
of any event of default under this Agreement, or any event which would, after
the lapse of time or the giving of notice, or both, constitute an event of
default under this Agreement or any of the other Documents, specifying the
nature and duration of the default. (b) Interim Financial Statements.
Provide the Bank within 45 days of each fiscal quarter end, the Borrower's
interim financial statements for the interim period then ending. The statements
must be current through the end of that period and must be certified as correct
by an officer of the Borrower in form acceptable to the Bank. (c) Compliance
Certificate. Provide the Bank concurrently with the interim financial statements
required above, a Compliance Certificate in the form of Exhibit D, that has been
signed by an officer of the Borrower, which: (1) certifies that the statements
have been accurately prepared in accordance with generally accepted accounting
principles applied consistently with the last annual financial statements
provided by the Borrower; (2) certifies that the officer has no knowledge of any
event which has or might, after the lapse of time or the giving of notice, or
both, constitute an event of default under this Agreement or the Documents, or
of any event which would, after the lapse of time or the giving of notice, or
both, constitute an event of default under the Agreement or the Documents; and
(3) demonstrates that the Borrower remains in compliance with all financial
covenants that must be complied with as of the date of the financial statements.
(d) Financial Projections. Provide the Bank no later than 120 days prior to
each fiscal year end, financial projections for the Borrower's operations in the
next fiscal year in form acceptable to the Bank. (e) Notices. Provide the
Bank prompt written notice of: (1) any event of default or any event which
would, after the lapse of time or the giving of notice, or both, constitute an
event of default under the Agreement or any of the Documents; or (2) any future
event that would cause the representations and warranties contained in this
Agreement to be untrue when applied to the Borrower's circumstances as of the
date of such event. (f) Additional Information. Provide the Bank with such
other information as it may reasonably request, and permit the Bank to visit and
inspect its properties and examine its books and records.
7.2 Financial Covenants. During the time period that credit is available
under this Agreement, and afterward until all amounts due under the Documents
are paid in full, unless the Bank shall otherwise agree in writing, the Borrower
agrees to comply with the financial covenants described below, which shall be
calculated using generally accepted accounting principles consistently applied,
except as they may be otherwise modified by the following capitalized
definitions: "Net Working Capital" means Current Assets less Current
Liabilities. "Subordinated Debt" means debt that is expressly
subordinated to the Bank in a writing acceptable to the Bank.
"Tangible Net Worth" means total assets less total liabilities and less the
following types of assets: (1) leasehold improvements; (2) receivables and
other investments in or amounts due from any shareholder, director, officer,
employee or other person or entity related to or affiliated with the Borrower;
and (3) goodwill, patents, copyrights, mailing lists, trade names, trademarks,
servicing rights, organizational and franchise costs, bond underwriting costs
and other like assets properly classified as intangible.
(a) Tangible Net Worth plus Subordinated Debt. Maintain a minimum Tangible Net
Worth plus Subordinated Debt of at not less than $15,000,000.00, as of its
fiscal quarter ending March 31, 2000, and, for each fiscal quarter end
thereafter, amount equal to $15,000,000.00 plus 75% of its cumulative net
earnings for each preceding fiscal quarter, starting with the fiscal quarter
ending as of March 31, 2000.
(b) Senior Liabilities to Tangible Net Worth plus Sub Debt. Maintain a ratio of
total liabilities less Subordinated Debt to Tangible Net Worth plus Subordinated
Debt of not greater than 2.25 to 1.0 as of the end of each fiscal quarter.
(c) Net Working Capital. Maintain Net Working Capital of not less than
$14,500,000.00 as of the end of each fiscal quarter. (d) Funded Debt to
EBITDA. Maintain a ratio of total interest bearing debt to earnings plus
interest, taxes, depreciation and amortization of 1.65 to 1.0 as of the end of
each fiscal quarter based on a rolling four quarter period. (e) Net Profit.
Obtain a profit of at least $1.00 as of the end of each fiscal quarter.
7.3 Other Covenants. During the time period that credit is available under this
Agreement, and afterward until all amounts due under the Documents are paid in
full, unless the Bank shall otherwise agree in writing, the Borrower agrees to:
(a) Additional Borrowings. Refrain from incurring any indebtedness except: (1)
trade credit incurred in the ordinary course of business; (2) indebtedness
expressly subordinated to the Bank in a writing acceptable to the Bank; and
(3) indebtedness in existence on the date of this Agreement and disclosed in
advance to the Bank in writing. (b) Other Liens, Assignments, and
Subordinations. Refrain from allowing any security interest or lien on property
it owns now or in the future, or assign any interest that it may have in any
assets or subordinate any rights that it may have in any assets now or in the
future, except: (1) liens, assignments, or subordinations in favor of the
Bank; (2) liens, assignments, or subordinations outstanding on the date of
this Agreement and disclosed in advance to the Bank in writing; (3) liens for
taxes or assessments or other governmental charges not delinquent or which the
Borrower is contesting in good faith; and (4) liens that are imposed by law for
obligations for labor or materials not overdue for more than 120 days, such as
mechanics’, materialmen’s, carriers’, landlords’, and warehousemen’s liens, or
liens, pledges, or deposits under workers’ compensation, unemployment insurance,
Social Security, or similar legislation. (c) Capital Expenditures. Refrain
from making, or committing to make, capital expenditures (including the total
amount of any capital leases) in an aggregate amount exceeding $2,000,000.00 in
any single fiscal year. (d) Out of Debt Period. Reduce the principal
outstanding under Revolving Note B to $0.00 for 30 consecutive days each
calendar year. (e) Change of Ownership. Refrain from permitting or suffering
any change in the capital ownership of the Borrower that results in any one
person or entity from obtaining a controlling interest in the Borrower. (g)
Guaranties. Refrain from assuming, guaranteeing, endorsing or otherwise becoming
contingently liable for any obligations of any other person, except for those
guaranties outstanding as of the Effective Date and disclosed to the Bank in
writing. (h) Deposit Accounts. Maintain its principal deposit accounts with
the Bank. (i) Form of Organization and Mergers. Refrain from changing its
legal form of organization, or consolidating, merging, pooling, syndicating or
otherwise combining with any other entity. (j) Maintenance of Properties.
Make all repairs, renewals or replacements necessary to keep its plant,
properties and equipment in good working condition. (k) Books and Records.
Maintain adequate books and records, refrain from making any material changes in
its accounting procedures for tax or other purposes, and permit the Bank to
inspect same upon reasonable notice. (l) Compliance with Laws. Comply in all
material respects with all laws applicable to its form of organization,
business, and the ownership of its property.
(m) Preservation of Rights. Maintain and preserve all permits, licenses, rights,
privileges, charters and franchises that it now owns. These covenants were
negotiated by the Bank and Borrower based on information provided to the Bank by
the Borrower. A breach of a covenant is an indication that the risk of the
transaction has increased. As consideration for any waiver or modification of
these covenants, the Bank may require: additional collateral, guaranties or
other credit support; higher fees or interest rates; and possible modifications
to the Documents and the monitoring of the Agreement. The waiver or
modification of any covenant that has been violated by the Borrower shall be
made at the sole discretion of the Bank. These options do not limit the Bank's
right to exercise its rights under Section 8 of this Agreement.
8. EVENTS OF DEFAULT AND REMEDIES 8.1 Default. Upon the occurrence of any
one or more of the following events of default, or at any time afterward unless
the default has been cured, the Bank may declare Line A and Line B to be
terminated and in its discretion accelerate and declare the unpaid principal,
accrued interest and all other amounts payable under the Notes and the Documents
to be immediately due and payable:
(a) Failure by the Borrower to make any payment of principal or interest due
under either Revolving Note A or Revolving Note B, which continues for ten (10)
days after its due date. (b) Default by the Borrower in the observance or
performance of any covenant or agreement contained in this Agreement, and
continuance for more than fifteen (15) days. (c) Default by the Borrower
with respect to any indebtedness or obligation owed to the Bank, which is
unrelated to any loan or facility subject to the terms of this Agreement, or to
any third party creditor, which would allow the maturity of any such
indebtedness or obligation to be accelerated. (d) Any representation or
warranty made by the Borrower to the Bank in this Agreement, or any financial
statement or report submitted to the Bank by or on behalf of the Borrower before
or after the Effective Date is untrue or misleading in any material respect.
(e) Any litigation or governmental proceeding against the Borrower seeking an
amount that would have a material adverse effect on the Borrower and its
operations which is not insured or subject to indemnity by a solvent third party
either (1) results in a judgment in an amount that would have a material adverse
effect on the Borrower or (2) remains unresolved on the 270th day following the
date of service on the Borrower. (f) A garnishment, levy or writ of
attachment, or any local, state, or federal notice of tax lien or levy is made
or issues against the Borrower, or any post judgment process or procedure is
commenced or any supplementary remedy for the enforcement of a judgment is
employed against the Borrower or the Borrower's property. (g) A material
adverse change occurs in the Borrower's financial condition or ability to repay
its obligations to the Bank.
8.2 Immediate Default. If, with or without the Borrower's consent, a custodian,
trustee or receiver is appointed for any of the Borrower's properties, or if a
petition is filed by or against the Borrower under the United States Bankruptcy
Code, or the Borrower is dissolved, liquidated, or winds up its business then
Line A and Line B shall immediately terminate without notice, and the unpaid
principal, accrued interest, and all other amounts payable under the Notes and
the Documents shall become immediately due and payable without notice or demand.
9. MISCELLANEOUS 9.1 No Waiver; Cumulative Remedies. No failure or delay by
the Bank in exercising any rights under this Agreement shall be deemed a waiver
of those rights. The remedies provided for in this Agreement and the Documents
are cumulative and not exclusive of any remedies provided by law. 9.2
Amendments or Modifications. Any amendment or modification of this Agreement
must be in writing and signed by the Bank and Borrower. Any waiver of any
provision in this Agreement must be in writing and signed by the Bank. 9.3
Binding Effect: Assignment. This Agreement and the Documents are binding on the
successors and assigns of the Borrower and Bank. The Borrower may not assign
its rights under this Agreement and the Documents without the Bank's prior
written consent. The Bank may sell participations in or assign this Agreement
and the Documents and exchange financial information about the Borrower with
actual or potential participants or assignees.
9.4 Minnesota Law. This Agreement and the Documents shall be governed by the
substantive laws (other than conflict of laws) of the State of Minnesota, and
the Bank and Borrower consent to the personal jurisdiction of the state and
federal courts located in the State of Minnesota. 9.5 Severability of
Provisions. If any part of this Agreement or the Documents are unenforceable,
the rest of this Agreement or the Documents may still be enforced. 9.6
Integration. This Agreement and the Documents describe the entire understanding
and agreement of the parties and supersede all prior agreements between the Bank
and the Borrower relating to each credit facility subject to this Agreement,
whether verbal or in writing, and may be executed in counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and
the same instrument. In the event of any inconsistency between the Agreement
and the Documents, inconsistent terms shall, where possible, be construed as
conferring cumulative rights and remedies upon the Bank, and, to the extent that
such construction is not possible, the terms of this Agreement shall govern.
Address for notices to Bank: Address for notices to Borrower: Wells
Fargo Bank Minnesota,
National Association
MAC N9305-114 Sixth & Marquette
Minneapolis, MN 55479
Attention: Michael Krutsch,
Vice President Datalink Corporation
7423 Washington Avenue South
Minneapolis, Minnesota 55439
Attention: Daniel J. Kinsella,
Chief Financial Officer WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION DATALINK CORPORATION By:
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By:
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Its
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Its
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|
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Exhibit 10.4
April 2, 2001
Jay Scott
Re: Employment with rStar Corporation
Dear Jay:
This letter shall serve to confirm the agreement we reached in connection
with your continued employment with rStar Corporation (the "Company") as its
Chief Operating Officer. In that position, you will continue to report to the
Chief Executive Officer of the Company.
As Chief Operating Officer, an exempt position, you will continue to receive
a base salary of $17,500 per month, which will be paid in accordance with the
Company's normal payroll procedures ("Annual Base Salary"). You will also be
eligible to participate in an executive incentive program for the 2001 calendar
year, with a bonus payable upon the meeting of specific performance objectives
mutually agreed upon by you and the Company. The maximum sum payable to you
under the 2001 executive incentive program shall be 30% of your Annual Base
Salary.
In the event the Company terminates your employment with Cause (as defined
below), you will not be entitled to receive any compensation or benefits of any
type following the effective date of the termination for Cause.
In the event (a) you are terminated by the Company without Cause, or (b) you
voluntarily terminate your employment for Good Reason (as defined below) within
twelve (12) months following a Change of Control (as defined below), then you
shall be entitled to receive: (x) a lump sum cash severance payment in an amount
equal to fifty percent (50%) of your Annual Base Salary then in effect, subject
to applicable withholdings in accordance with the Company's normal payroll
practices; (y) one hundred percent (100%) of the executive incentive bonus that
could be earned in that year, and (z) health insurance benefits at the same
level of coverage as was provided to you immediately prior to the termination
without Cause or the termination for Good Reason ("Health Care Coverage") by
electing Federal COBRA continuation coverage, or similar coverage required under
state law (collectively, "COBRA"), in which event the Company shall pay one
hundred percent (100%) of your Health Care Coverage premiums and those of your
dependents under COBRA for six (6) full months following the month in which you
were terminated without Cause or you voluntarily terminated your employment for
Good Reason.
For purposes of this letter, the following terms shall be defined as
follows:
(a) "Cause" is defined as: (i) a material act of dishonesty made by you in
connection with your responsibilities as an executive officer of the Company;
(ii) conviction of, or plea of nolo contendere to, a felony, or a crime
involving moral turpitude; (iii) your gross misconduct in connection with your
duties as an executive officer of the Company; or (iv) continued substantial
violations of your employment duties after (A) you have received a written
demand for performance from the Company's Board of Directors that specifically
sets forth the factual basis for the Board's belief that you have not
substantially performed your duties, and (B) following a reasonable opportunity,
not to be less than thirty (30) days, for you to cure any substantial failure of
performance of your duties.
(b) "Change of Control" of the Company is defined as; (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) becoming the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing more than 51% of the total voting power
represented by the
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Company's then outstanding voting securities; or (ii) the date of the
consummation of a merger or consolidation of the Company with any other
corporation that has been approved by the stockholders or the Board of the
Company; or (iii) the date on which the stockholders or the Board of the Company
approve a plan of complete liquidation of the Company; or (iv) the date of the
consummation of the sale or disposition by the Company of all or substantially
all the Company's assets.
(c) "Good Reason" shall mean your voluntary resignation from the Company
within ninety (90) days after the occurrence of any of the following; (i)
without your express written consent, a material reduction of the duties, title,
authority or responsibilities, relative to your duties, title, authority or
responsibilities as in effect immediately prior to such reduction, or the
assignment to you of such reduced duties, title, authority or responsibilities;
(ii) a reduction by the Company in your annual Base Salary as in effect
immediately prior to such reduction; (iii) a material reduction by the Company
in the kind or level of employee benefits, including bonuses, to which you were
entitled immediately prior to such reduction, with the result that your overall
benefits package is materially reduced; (iv) your relocation to a facility or a
location more than forty (40) miles from your residence at the time of the
relocation without your express written consent; or (v) the failure of the
Company to obtain the assumption of this agreement by any person, firm,
corporation or other business entity which at any time, whether by purchase,
merger or otherwise, directly or indirectly acquires all or substantially all of
the assets or business of the Company.
The terms of this agreement may not be modified or amended except by a
written agreement executed by you and an executive officer of the Company, and
shall, together with the Confidential Information, Invention Assignment and
Terms of Employment Agreement and such other written agreements you and the
Company may enter in connection with your employment, constitute the entire
agreement between you and the Company relating to the terms of your employment.
In order to indicate your assent to this agreement, please sign this letter
and return it to me at your earliest convenience.
Very truly yours,
RSTAR CORPORATION
/s/ Lance Mortensen
Lance Mortensen
Chief Executive Officer and President
Agreed and Accepted:
/s/ Jay Scott
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Jay Scott
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QuickLinks
Exhibit 10.4
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AMENDMENT NUMBER 1 TO
MASTER LOAN AGENCY AGREEMENT
This Amendment Number 1 to Master Loan Agency Agreement (this "Amendment")
is made as of this 29th day of March, 2001, by and between Goleta National Bank,
a national banking association ("GNB"), and Ace Cash Express, Inc., a Texas
corporation ("Ace"), with regard to the following:
A. GNB and Ace entered into that certain Master Loan Agency Agreement dated
August 11, 1999 (the "Agreement").
B. Section 11.7 of the Agreement permits GNB and Ace to amend the Agreement by
a writing signed by them.
C. GNB, after consultation with the Bank Regulatory Authority, has determined
that it is in the best interests of GNB to implement certain revisions and
adjustments to the origination, processing and collection of Bank Loans,
which revisions and adjustments are set forth in, and have been communicated
to Ace in the form of, a set of compliance manuals, which may be amended
from time to time by GNB.
D. GNB and Ace wish to amend the Agreement to reflect revisions in their
relationship as a result of the implementation of the bank loan compliance
manuals and as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, Ace and GNB hereby agree as follows:
1. The first sentence of Section 1.6(a) of the Agreement is hereby amended by
deleting the "and" preceding "(ii)," deleting the "." at the end of that
sentence, and adding the following after clause (ii):
> ", and (iii) Ace may offer, in lieu of Bank Loans, short-term loans
> substantially similar to the Bank Loans from one or more other bank or
> other financial institution lenders in approximately * Locations, but not
> more than * Locations, in the aggregate at any one time from the one or
> more other bank or other financial institution lenders."
2. Section 2.1 of the Agreement is hereby amended to read as follows:
> "2.1 Participation Agreement. Contemporaneous with this Agreement, the
> Parties are entering into a Master Loan Participation Agreement under
> which GNB agrees to sell to Ace, and Ace agrees to purchase from GNB, a *
> % participation in each of the Bank Loans made by GNB from the Effective
> Date and prior to the POS Compliance Date (as defined in Section 3.4(i)),
> and a* % participation in each of the Bank Loans made by GNB from and
> after the POS Compliance Date. That Master Loan Participation Agreement
> (as amended by Amendment Number 1 to Master Loan Participation Agreement
> dated March 29, 2001) is Exhibit D to this Agreement."
--------------------------------------------------------------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
Section 3.2(f) of the Agreement is hereby amended to read as follows:
> "(f) GNB will pay Ace the portion of the ATM charges received by GNB
> described in, and in accordance with, Exhibit E to this Agreement (as
> amended by Amendment Number 1 to Schedule of Interest and Fees dated March
> 29, 2001)."
The following is hereby added as Section 3.2(h) of the Agreement:
> "(h) GNB has delivered to Ace, in written form, a set of manuals setting
> forth the policies, procedures, training, and systems regarding the
> origination, processing, and collection of Bank Loans resulting from GNB's
> consultation with the Bank Regulatory Authority through the date thereof,
> for Ace to implement and make operational in order to serve as GNB's agent
> to facilitate and provide administrative services regarding Bank Loans at
> Locations; a complete set thereof shall be delivered to Ace on or before
> April 27, 2001, and that complete set as so delivered and as identified
> separately by GNB to Ace as definitive as of March 30, 2001, will
> collectively be the "Initial Bank Loan Operating Manuals." (In this
> Agreement, "Bank Loan Operating Manuals" refers collectively to the
> Initial Bank Loan Operating Manuals and the Initial Bank Loan Operating
> Manuals as amended or revised, including any further amendment or
> revision, in any case as in effect from time to time.) GNB may amend and
> revise the Bank Loan Operating Manuals, in its sole discretion to
> reasonably comply with requirements or recommendations of the Bank
> Regulatory Authority, from time to time, and shall deliver all such
> amendments and revisions to Ace; all such amendments and revisions shall,
> upon their effectiveness in accordance with this Agreement, be deemed part
> of the "Bank Loan Operating Manuals." GNB shall also conduct such training
> sessions for Ace's personnel regarding the Bank Loan Operating Manuals,
> including any amendments and revisions thereto, as the Parties may deem
> necessary or reasonably appropriate to permit or facilitate Ace's
> implementation and operation of the requirements of the Bank Loan
> Operating Manuals or any amendments or revisions thereto, as the case may
> be."
The following is hereby added as Section 3.2(i) of the Agreement:
> "(i) GNB shall pay its proportionate share, in accordance with its
> interest in the Bank Loans made from time to time after giving effect to
> the participations in the Bank Loans sold to Ace, of all of the expenses
> of the lobbying and related activities, regarding legislation and pending
> legislation affecting short-term loans, which the Parties mutually
> determine to engage in or support from time to time during the Term;
> provided, that the maximum amount GNB shall be obligated to pay for such
> expenses in any one year is $20,000, unless the Parties agree otherwise;
> and provided further, that such lobbying and related activities shall not
> involve any direct or indirect contribution, payment, distribution, loan,
> advance, deposit, gift of money or any services, or anything of value to
> any candidate, campaign committee, political action committee or political
> party or organization in connection with any election."
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* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission. The
following is hereby added as Section 3.4(i) of the Agreement:
> "(i) Ace shall use its commercially reasonable efforts in good faith to
> develop, implement and make operational all revisions or adjustments to
> the POS System as are necessary to comply with the software requirements
> of the Initial Bank Loan Operating Manuals, on or before 5:00 p.m.,
> Pacific Time, on April 30, 2001, but in any event, Ace shall develop,
> implement and make operational all adjustments to the POS System as are
> necessary to comply with the software requirements of the Initial Bank
> Loan Operating Manuals not later than 11:59:59 p.m., Pacific Time, on June
> 30, 2001. For purposes of this Agreement, the "POS Compliance Date" shall
> mean the earlier of (i) the day on which Ace has developed, implemented,
> and made operational all revisions or adjustments to the POS System
> necessary to comply with the software requirements of the Bank Loan
> Operating Manuals as required in this Section 3.4(i), or (ii) July 1,
> 2001."
The following is hereby added as Section 3.4(j) of the Agreement:
> "(j) Ace shall use its commercially reasonable efforts in good faith to
> substantially comply with and implement all of the terms, conditions,
> policies, and procedures required by the Initial Bank Loan Operating
> Manuals on or before 5:00 p.m., Pacific Time, on April 30, 2001, but in
> any event, Ace shall comply with and implement all of the terms,
> conditions, policies and procedures required by the Initial Bank Loan
> Operating Manuals on or before 5:00 p.m., Pacific Time, on October 1, 2001
> (the "Final Compliance Date"). In addition, Ace shall take all action
> necessary to comply with and implement the terms, conditions, policies,
> and procedures required by each amendment or revision to the Bank Loan
> Operating Manuals not later than 60 days from and after the date of
> delivery to Ace of such amendment or revision by GNB, when Ace must be in
> compliance."
The following is hereby added as Section 3.4(k) of the Agreement:
> "(k) Ace shall pay its proportionate share, in accordance with its
> participations in the Bank Loans purchased from GNB from time to time, of
> all of the expenses of the lobbying and related activities, regarding
> legislation and pending legislation affecting short-term loans, which the
> Parties mutually determine to engage in or support from time to time
> during the Term; provided, that such lobbying and related activities shall
> not involve any direct or indirect contribution, payment, distribution,
> loan, advance, gift of money or any services, or anything of value to a
> candidate, campaign committee, political action committee, or political
> party or organization in connection with any election."
Section 4.2(c) of the Agreement is hereby amended to read as follows:
> "(c) Either Party may terminate this Agreement upon 30 business days'
> Notice upon the occurrence of any material breach or default by the other
> Party under this Agreement (other than as described in Section 4.2(b),
> Section 4.2(f), Section 4.2(g), or the provisions of Section 4.2 after
> Section 4.2(g)) which is not cured within such 30 business-day period."
--------------------------------------------------------------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
The following is hereby added as Section 4.2(f) of the Agreement:
> "(f) GNB may terminate this Agreement at any time after the Final
> Compliance Date, upon nine (9) months' Notice, if GNB reasonably
> determines that Ace is not in compliance with the requirements of the Bank
> Loan Operating Manuals. Such Notice must describe with reasonable
> specificity the basis or bases for the termination and the corrective
> actions to be taken to make Ace in compliance with the requirements of the
> Bank Loan Operating Manuals. Such termination shall be effective
> immediately upon the expiration of such nine (9) month period, unless Ace
> is in compliance with the requirements of the Bank Loan Operating Manuals
> within forty-five (45) days after GNB has given the nine (9) months'
> Notice to terminate."
The following is hereby added as Section 4.2(g) of the Agreement:
> "(g) Ace may terminate this Agreement at any time after the Final
> Compliance Date, upon nine (9) months' Notice (which Notice must describe
> with reasonable specificity the basis or bases for the termination) if GNB
> amends and/or revises the Bank Loan Operating Manuals and any such
> amendment or revision changes the operation, policies, procedures,
> training and/or system(s) regarding the origination, processing, or
> collection of Bank Loans in a material way, Ace uses its commercially
> reasonable efforts to comply with the amendment or revision, and Ace
> reasonably determines that compliance, or the use of resources to effect
> or maintain compliance, by Ace with the amendment or revision would have a
> material adverse effect upon Ace's loan-related business, operations or
> financial condition. Such termination shall be effective immediately upon
> the expiration of such nine (9) month period, unless Ace, by Notice to GNB
> within forty-five (45) days after Ace has given the nine (9) months'
> Notice to terminate, withdraws such termination Notice and has effected
> compliance with the amendment or revision to the Bank Loan Operating
> Manuals."
The following is hereby added at the end of Section 4.2, after Section
4.2(g), of the Agreement:
> "In addition, if GNB should reasonably determine, from time to time, that
> Ace's operations regarding the Bank Loans at any particular Locations or
> Locations ("Noncomplying Locations") are not in substantial compliance
> with the requirements of the Bank Loan Operating Manuals, GNB may give Ace
> a Notice which (i) describes with reasonable specificity both the
> circumstances that constitute noncompliance at each Noncomplying Location
> and the corrective actions to be taken to make the operations at each
> Noncomplying Location comply with the requirements of the Bank Loan
> Operating Manuals, and (ii) states that the agency appointment made in
> Section 1.3 with respect to each Noncomplying Location will be revoked if
> the specified corrective actions are not taken. If the specified
> corrective actions are not taken regarding Ace's operations at a
> Noncomplying Location within ten (10) business days after the giving of
> the Notice, Ace shall no longer have the right to legally serve as GNB's
> agent to facilitate and provide administrative services regarding new Bank
> Loans at any continuing Noncomplying Location unless thereafter authorized
> by GNB (though Ace may continue to serve as agent regarding any and all
> then-outstanding Bank
>
>
>
> --------------------------------------------------------------------------------
>
> * Confidential treatment has been requested for certain portions of this
> document pursuant to an application for confidential treatment sent to the
> Securities and Exchange Commission. Such portions are omitted from this
> filing and filed separately with the Securities and Exchange Commission.
>
> Loans made at such Noncomplying Location). If, however, Ace's right to
> legally serve as GNB's agent is terminated by GNB in accordance with the
> preceding two sentences at more than * Locations, in the aggregate from
> the Effective Date, then either Party may terminate this Agreement upon
> nine (9) months' Notice to the other Party. Such termination, when Notice
> is given by Ace, shall be effective immediately upon the expiration of
> such nine (9) month period. Such termination, when Notice is given by GNB,
> shall be effective immediately upon the expiration of such nine (9) month
> period, unless Ace has, within forty-five (45) days after GNB has given
> the nine (9) months' Notice to terminate, corrected the noncompliance at
> each Noncomplying Location which was the subject of GNB's last Notice of
> noncompliance which caused the number of Noncomplying Locations to exceed
> * Locations, in the aggregate from the Effective Date."
The following is hereby added as Section 5.3 of the Agreement:
> "5.3 Compliance Examination. At such reasonable intervals as GNB shall
> deem appropriate during the Term and upon reasonable prior Notice from
> GNB, Ace shall afford GNB, through its authorized representatives,
> counsel, accountants, agents, and employees (the "GNB Representatives"),
> reasonable access during normal business hours to all of Ace's business
> operations, properties (including each Location at which Bank Loans are
> offered), books, files and records, and will take all such other actions
> reasonably necessary, to enable the GNB Representatives to make a complete
> examination of Ace's financial statements and business operations
> regarding the origination, documentation, processing and collection of
> Bank Loans for the sole purpose of determining Ace's compliance with the
> requirements of the Bank Loan Operating Manuals. Such examination shall be
> conducted in cooperation with the officers and agents of Ace and in such a
> manner as to minimize, to the extent possible consistent with the
> reasonable conduct of a comprehensive examination, any disruption of, or
> interference with, the normal business operations of Ace. The cost of such
> examination shall be paid by GNB."
Section 8.1(a) of the Agreement is hereby amended to read as follows:
> "(a) * of all losses, claims, obligations, demands, assessments,
> penalties, liabilities, costs (including reasonable attorneys' fees and
> expenses) and damages asserted against Ace or any Ace Indemnified Person
> or relating to any Third-Party Claims (as defined below in this Section
> 8.1) asserted against Ace or any Ace Indemnified Person if the Third-Party
> Claims arise out of one or more Bank Loans made or services or products
> provided under this Agreement solely from the Effective Date and prior to
> April 1, 2001, except any Third-Party Claims described in Section 8.1(b)
> or Section 8.1(c); and * of all Ace Losses by reason of, resulting from,
> or relating to any Third-Party Claims asserted against Ace or any Ace
> Indemnified Person if the Third-Party Claims arise out of one or more Bank
> Loans made or services or products provided under this Agreement solely
> from and after April 1, 2001, except any Third-Party Claims described in
> Section 8.1(b) or Section 8.1(c); and for purposes of his Section 8.1(a),
> (i) each Renewal of a Bank Loan shall be deemed
--------------------------------------------------------------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
> made on the date the Bank Loan was originally made or funded by GNB and
> (ii) the foregoing percentages of Ace Losses to be indemnified by GNB
> shall apply regardless of when any Third-Party Claims are asserted or
> arise (i.e., whether before or after April 1, 2001) and regardless of when
> the Ace Losses are suffered or incurred."
Section 8.2(a) of the Agreement is hereby amended to read as follows:
> "(a) * of all losses, claims, obligations, demands, assessments,
> penalties, liabilities, costs (including reasonable attorneys' fees and
> expenses) and damages asserted against GNB or any GNB Indemnified Person
> or incurred by GNB or any GNB Indemnified Person (collectively, "GNB
> Losses") by reason of, resulting from, or relating to any Third-Party
> Claims asserted against GNB or any GNB Indemnified Person if the
> Third-Party Claims arise out of one or more Bank Loans made or services or
> products provided under this Agreement solely from the Effective Date and
> prior to April 1, 2001, except any Third-Party Claims described in Section
> 8.2(b) or Section 8.2(c); and * of all GNB Losses by reason of, resulting
> from, or relating to any Third-Party Claims asserted against GNB or any
> GNB Indemnified Person if the Third-Party Claims arise out of one or more
> Bank Loans made or services or products provided under this Agreement
> solely from and after April 1, 2001, except any Third-Party Claims
> described in Section 8.2(b) or Section 8.2(c); and for purposes of this
> Section 8.2(a), (i) each Renewal of a Bank Loan shall be deemed made on
> the date the Bank Loan was originally made by GNB and (ii) the foregoing
> percentages of GNB Losses to be indemnified by Ace shall apply regardless
> of when any Third-Party Claims are asserted or arise (i.e., whether before
> or after April 1, 2001) and regardless of when the GNB Losses are suffered
> or incurred."
The fourth sentence of Section 8.5 of the Agreement is hereby amended to
read as follows:
> "The premium cost of that insurance policy shall be paid (a) * by Ace and
> * by GNB from the Effective Date and prior to the POS Compliance Date, and
> (b) * by Ace and * by GNB from and after the POS Compliance Date."
Section 11.3 of the Agreement is hereby amended to substitute "President and
Chief Operating Officer" for the title "Chief Financial Officer" after "Jay
B. Shipowitz," in the address for any Notice to Ace.
Section 11.5 of the Agreement is hereby amended by deleting the "and" at the
end of subsection (g) thereof, deleting the "." at the end of subsection (h)
hereof, adding "; and" at the end of subsection (h) thereof, and adding a
new subsection (i) to read as follows:
> "(i) a reference in this Agreement to any agreement or other document or
> to any Exhibit to this Agreement shall include any amendment or supplement
> to, or restatement of, that agreement or other document or that Exhibit to
> this Agreement to the extent permitted by the terms of that agreement or
> other document or that Exhibit to which reference is made."
--------------------------------------------------------------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and filed separately with the Securities and Exchange Commission.
GNB and Ace hereby acknowledge that the Preemptive and Refusal Rights
Agreement, which was Exhibit F to the Agreement, has been terminated and
superseded effective March 30, 2000.
Except as set forth in this Amendment, all terms used herein that are
defined in the Agreement shall have the respective meanings set forth in the
Agreement.
Except as amended hereby, the Agreement is hereby affirmed in its entirety.
This Amendment may be signed in counterparts with the same effect as if both
Parties had signed the same paper; all counterparts are to be construed
together to be one and the same document.
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly
executed by their respective officers as of the day and year first above
written.
GOLETA NATIONAL BANK
By:
--------------------------------------------------------------------------------
Name: Llewellyn W. Stone
Title: President and Chief Executive Officer
ACE CASH EXPRESS, INC.
By:
--------------------------------------------------------------------------------
Name: Jay B. Shipowitz
Title: President and Chief Operating Officer
--------------------------------------------------------------------------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
|
EXHIBIT 10.72
PROMISSORY NOTE
$2,653,701 College Park, Maryland as of April 30, 2001
FOR VALUE RECEIVED, Neuralstem, Inc., a Delaware corporation
(hereinafter called the “Maker”), promises to pay to the order of Gene Logic,
Inc. (hereinafter, together with all subsequent holders of this Note, called the
“Payee”) the principal sum of Two Million Six Hundred and Fifty Three Thousand
Seven Hundred and One Dollars ($2,653,701), together with interest on the unpaid
principal balance hereof from time to time outstanding, at a fixed rate of
interest equal to six percent (6%) per annum, said principal and interest being
due and payable in the following manner:
This Note will mature and the entire unpaid balance of principal
hereof, together with all accrued and unpaid interest hereon, shall become due
and payable on the earlier to occur of (i) three (3) business days after the
closing of an equity financing by the Maker of at least Ten Million
($10,000,000) or (ii) April 30, 2005, if not earlier paid.
The Maker shall pay, promptly upon demand, all costs of collection,
including reasonable attorneys’ fees if this Note is referred to an attorney for
collection after default, whether or not any action shall be instituted to
enforce or collect this Note. Time is of the essence hereof for all purposes.
All payments on this Note shall be applied first to the payment of
accrued but unpaid interest, and any remainder shall be applied to reduction of
the principal balance hereof. The rate of interest hereon shall be calculated on
the basis of a 360-day year factor applied to actual days elapsed. All payments
hereunder shall be payable in lawful money of the United States of America and
shall be made to the Payee in immediately available funds at such address as the
Payee may from time to time designate in writing to the Maker.
The Maker shall have the right and privilege to prepay this Note,
in whole or in part, at any time provided that each prepayment shall include all
accrued and unpaid interest on or with respect to the principal amount to be
prepaid. Such prepayment shall not be subject to any premium for prepayment.
The Maker and any endorsers or guarantors hereof severally waive
presentment and demand for payment, notice of intent to accelerate maturity,
notice of acceleration of maturity, protest or notice of protest and nonpayment,
bringing of suit and diligence in taking any action to collect any sums owing
hereunder or in proceeding against any of the rights and properties securing
payment hereof. From time to time, without affecting the obligation of the Maker
to pay the outstanding principal balance of this Note and to observe the
covenants of the Maker contained herein, without affecting the duties and
obligations of any endorser hereto, without affecting the duties and obligations
of any guarantor hereof, without giving notice to or obtaining the consent of
the Maker or any endorser hereto or guarantor hereof, and without
1.
--------------------------------------------------------------------------------
liability on the part of the Payee, the Payee may, at the option of the Payee,
extend the time for payment of interest hereon and/or principal hereof, reduce
the payments hereunder, release anyone liable on this Note, accept a renewal of
this Note, modify the terms and time of payment of this Note, join in any
extension or subordination or exercise any option or election hereunder, modify
the rate of interest or period of principal repayment or principal due date of
this Note or exercise any option or election hereunder. No one or more of such
actions shall constitute a novation.
The indebtedness evidenced by this Note is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of the Senior Indebtedness.
“Senior Indebtedness” shall mean, unless expressly subordinated to
or made on a parity with the amounts due under this Note, the principal of,
unpaid interest on and amounts reimbursable, fees, expenses, costs of
enforcement and other amounts due in connection with (a) indebtedness of the
Maker to banks or commercial finance or other lending institutions regularly
engaged in the business of lending money (including venture capital, investment
banking or similar institutions and their affiliates which sometimes engage in
lending activities but which are primarily engaged in investments in equity
securities), whether or not secured, and (b) any such indebtedness or any
debentures, notes or other evidence of indebtedness issued in exchange for such
Senior Indebtedness, or any indebtedness arising from the satisfaction of such
Senior Indebtedness by a guarantor. “Senior Indebtedness” shall not include any
form of equity securities of the Maker.
By acceptance of this Note, the Payee agrees to execute and deliver
customary forms of subordination agreement requested from time to time by the
holders of Senior Indebtedness and, as a condition to the Payee’s rights
hereunder, the Maker may require that the Payee execute such forms of
subordination agreement, provided that such forms shall not impose on the Payee
terms less favorable than those provided herein.
Any of the following shall constitute an event of default hereunder
(each an “Event of Default”): (a) default in the payment of the principal and
unpaid accrued interest of this Note when due and payable; (b) a breach of any
representations and warranties contained in this Note; (c) any petition in
bankruptcy being filed by or against the Maker or any proceedings in bankruptcy,
insolvency or under any other laws relating to the relief of debtors being
commenced for the relief or readjustment of any indebtedness of the Maker,
either through reorganization, composition, extension or otherwise and which, in
the case of any involuntary proceedings shall be acquiesced to by the Maker or
shall continue for a period of 30 days undismissed, undischarged or unbonded;
(d) the making by the Maker of an assignment for the benefit of creditors; or
(e) the appointment of a receiver of any property of the Maker which shall not
be vacated or removed within thirty (30) days after appointment.
When any Event of Default has occurred and is continuing, at any
time after the occurrence of any such Event of Default, the entire outstanding
amount of principal and interest of this Note may, at the option of the Payee,
be declared to be immediately due and payable, without presentment, demand
protest or together notice of any kind, all of which are hereby
2.
--------------------------------------------------------------------------------
expressly waived. When any Event of Default under (c), (d) or (e) hereof has
occurred and is continuing, then the entire outstanding amount of principal and
interest of this Note shall immediately become due and payable, together with
all other amounts payable under this Note, without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived. Failure to
exercise any of the foregoing options upon the happening of one or more of the
foregoing events shall not constitute a waiver of the right to exercise the same
or any other option at any subsequent time in respect to the same or any other
event, and no single or partial exercise of any right or remedy shall preclude
other or further exercise of the same or any other right or remedy. Upon an
Event of Default, Payee may pursue any and all other rights, remedies and
recourses available to the Payee, or pursue any combination of the foregoing,
all remedies hereunder being cumulative. The Payee shall have the right to
rescind any acceleration in payment of this Note for default as aforesaid, if
the Payee so elects, in which event this Note shall be construed, interpreted
and enforced in the same manner as if the Payee had not elected to declare the
unpaid principal balance and accrued interest of this Note at once due and
payable. The Payee shall have no duty to exercise any or all of the rights and
remedies herein provided or contemplated. The acceptance by the Payee of any
payment hereunder that is less than payment in full of all amounts due and
payable at the time of such payment shall not constitute a waiver of the right
to exercise any of the foregoing options at that time or at any subsequent time,
or nullify any prior exercise of any such option without the express written
consent of the Payee.
The terms and conditions of this Note shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties.
Notwithstanding the foregoing, the Maker may not assign this Note. The Payee may
not assign, pledge, or otherwise transfer this Note without the prior written
consent of the Maker, except (a) for transfers to its affiliates or (b) upon
(i) a sale, lease or other disposition of all or substantially all of the assets
of the Payee, (ii) a merger or consolidation in which the Payee is not the
surviving corporation; (iii) a consolidation, merger, reorganization of the
Payee in which the stockholders of the Payee immediately prior to such
transaction own less than 50% of the Payee’s voting power immediately after such
transaction, or any transaction or series of related transactions in which in
excess of 50% of the Payee’s voting power is transferred, or (iv) a reverse
merger in which the Payee is the surviving corporation but the shares of common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise. Subject to the preceding sentence, this Note may be transferred only
upon surrender of the original Note for registration of transfer, duly endorsed,
or accompanied by a duly executed written instrument of transfer in a form
satisfactory to the Maker. Thereupon, a new note for the same principal amount
and interest will be issued to, and registered in the name of, the transferee.
Interest and principal are payable only to the registered Payee of this Note.
Maker hereby represents and warrants that the execution and
delivery of, and compliance with the terms of, this Note will not, with or
without the passage of time, or giving of notice, result in a violation, or be
in conflict with or constitute a default or require prior written consent of any
third party under any term or provision of any mortgage, indenture, contract,
agreement or instrument or of the charter or by-laws of the Maker as of the date
hereof.
This Note shall be governed by and construed according to the laws
of the State of Maryland, without regard to principles of conflict of laws.
3.
--------------------------------------------------------------------------------
Any attorney at law may appear in any court of record in the State
of Maryland or in the United States, after demand on this Note following an
Event of Default, and waive the issuing of service of process and confess a
judgment against the Maker in favor of the Payee for the amount then appearing
due hereunder, together with interest, costs of suit and reasonable attorneys’
fees, and thereupon release all errors and waive all right of appeal.
It is expressly stipulated and agreed that the loan evidenced by
this Note is a “commercial loan” as defined in the Commercial Law Article of the
Annotated Code of Maryland.
In any case where the date of maturity of interest on, or principal
of, this Note shall be a Sunday or legal holiday, or a day on which banking
institutions in the city of payment are authorized by law or executive order to
close (any other day being herein referred to as a “Banking Day”), then payment
of interest or principal need not be made on such date, but may be made on the
next succeeding Banking Day; provided, however, that interest shall continue to
accrue through the actual date of payment.
[Signature page follows]
4.
--------------------------------------------------------------------------------
Executed under seal in College Park, Maryland, and intending this
Note to be a sealed instrument, as of the date and year first above written.
ATTEST: Neuralstem, Inc. /s/ Kathy Mattis By: /s/ I. Richard
Garr (SEAL)
Name: I. Richard Garr
Title: President
[Promissory Note Signature Page] |
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as of
January 1, 2001, by and among MMI Products, Inc., a Delaware corporation (the
"Company"), MMI Management Services LP, a Delaware limited partnership and
Julius S. Burns, residing at 8506 Tranquil Park, Spring, Texas, 77379 (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to continue to employ the Employee, and the
Employee desires to accept such continued employment, on the terms and
conditions set forth in this Agreement; and
WHEREAS, in connection with the Employee's employment by the Company the
Employee and the Company entered into an employment agreement, dated as of
January 1, 2000 and amended as of August 1, 2000, which employment agreement and
amendment shall hereafter be null and void and superseded by this Agreement; and
WHEREAS, in connection with the Employee's employment by the Company, the
Employee has entered into Stock Repurchase Agreements (the "Stock Repurchase
Agreements") with Merchants Metals Holding Company, a Delaware corporation and
parent of the Company ("MMHC"), dated as of November 12, 1999 and April 28, 2000
which, as amended, shall remain in full force and effect;
THEREFORE, in consideration of the premises and the covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Employee
hereby agree as follows:
1. Employment. The Company hereby employs the Employee as its Chairman, and
the Employee hereby accepts such employment, upon the terms and conditions
set forth in this Agreement.
2. Duties of the Employee. During the term of this Agreement, the Employee
shall, under the direction of the Board of Directors of the Company,
perform such executive, management, consulting, business development and
other duties as may be assigned to him from time to time, upon reasonable
advance notice, by the President or the Board of Directors of the Company.
The Employee shall devote only such time, attention and energy to the
Company as is reasonably required to perform his assigned duties, which
shall not unreasonably interfere with his other professional activities;
provided that the Employee's other professional activities do not otherwise
violate the terms of this Agreement. Employee shall provide notice to the
President of the Company of such other outside professional activities.
3. Compensation.
The Employee shall receive as compensation for his services hereunder per
diem payments of $2,873.56 (less deductions required by law or otherwise
authorized by Employee) for each day on which he performs the duties
assigned to him under this Agreement. The Employee shall be paid
semi-monthly in arrears. There shall be no minimum obligation on the part
of the Company to utilize the services of the Employee. The maximum
compensation payable to the Employee under this Section 3.1 (including
vacation pay under Section 4) shall be $750,000 per annum.
All cash payments made by the Company to or on behalf of the Employee shall
be an obligation of and made by MMI Management Services LP.
4. Other Benefits. The Employee shall be entitled to participate in any health
insurance, life insurance or other benefits that are generally extended,
from time to time, to the employees of the Company (or to executives of the
Company, if different from those provided to employees generally). The
Employee shall be entitled to twenty (20) vacations days during each full
calendar year of the term of this Agreement, which shall be compensated at
the per diem rate set forth in Section 3.1 of this Agreement. Vacation days
during partial calendar years of the term of this Agreement shall accrue on
a pro rata basis. Upon the submission of properly documented expense
account reports, the Company shall reimburse the Employee for all
reasonable travel and entertainment expenses incurred by the Employee in
the course of his employment. The Company will also provide the Employee a
car allowance in accordance with Company policy.
5. Term. The term of employment hereunder shall commence upon the date hereof
and continue until April 30, 2004, unless sooner terminated in accordance
with the provisions hereof.
6. Termination.
0. Death or Disability. The employment of the Employee shall terminate
automatically upon the death or total disability of the Employee. For
the purpose of this Agreement, "total disability" shall be deemed to
have occurred if in the sole judgment of the Board of Directors the
Employee shall have been unable to perform the duties of his employment
due to his mental or physical condition for a period of 180 days.
1. Change of Control. The employment of the Employee shall terminate
automatically upon a Change of Control as defined in Section 7.3 of
this Agreement.
2. Cause. The Company may terminate the employment of the Employee under
this Agreement for Cause. For purposes of this Agreement, "Cause" means
conduct of the Employee (i) resulting in the conviction of, or plea of
nolo contendre to, a felony, (ii) which constitutes a material breach
of, or continued gross neglect of his duties or responsibilities under,
this Agreement, (iii) which constitutes fraud, dishonesty in connection
with his employment, competition with the Company, MMHC or any of their
respective subsidiaries, or unauthorized use of Confidential
Information (as defined below), or (iv) which constitutes his failure
or refusal to properly perform his assigned duties in the reasonable
good faith judgment of the Board of Directors of the Company; provided,
however, the Company shall give Employee written notice of any actions
alleged to constitute Cause under clause (ii) or (iv) above, and the
Employee shall have a reasonable opportunity (as specified by the Board
of Directors) to cure any such alleged Cause.
3. Without Cause. The Company may terminate the employment of the Employee
under this Agreement Without Cause. For purposes of this Agreement,
"Without Cause" shall mean any reason other than the reasons described
in Sections 6.1, 6.2, 6.3, 6.5 and 6.6 or no reason.
4. Good Reason. The Employee may terminate his employment by the Company
under this Agreement for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean (i) assignment to Employee of duties or
responsibilities that are materially inconsistent with the duties of
Chairman, without Employee's consent; or (ii) the Company's failure to
pay to Employee any compensation due to Employee under this Agreement
within thirty (30) days of the time such compensation is due to be
paid.
5. Without Good Reason. The Employee may terminate his employment by the
Company under this Agreement Without Good Reason. For purposes of this
Agreement, "Without Good Reason" shall mean any reason other than the
reasons described in Sections 6.1, 6.2, 6.3, 6.4 and 6.5 or no reason.
6. Notice. The Board of Directors of the Company may terminate the
employment of the Employee upon written notice delivered to the
Employee in accordance with Section 9 of this Agreement. The Employee
may terminate his employment by the Company upon written notice
delivered to the Company in accordance with Section 9 of this
Agreement.
7. Compensation Upon Termination.
0. Death or Disability. If the employment of the Employee is terminated
pursuant to the provisions of Section 6.1, all rights of the Employee
under this Agreement shall terminate, and no further compensation shall
be payable to the Employee except as specifically provided herein;
provided, however, that the Employee or the Employee's estate, heirs
and beneficiaries, as applicable, shall be entitled to receive in a
lump sum cash payment promptly after termination of the Employee's
employment of (a) any unpaid compensation accrued under Section 3.1 of
this Agreement through the date of termination, as well as any
reimbursable expenses incurred pursuant to Section 4 of this Agreement;
and (b) any other benefits specifically provided to the Employee under
any benefit plan which has vested or to which he is otherwise entitled
as of the date of termination.
1. Termination of Employment. Except as provided in Section 7.3 of this
Agreement, if the employment of the Employee under this Agreement is
terminated pursuant to the provisions of Sections 6.2 6.3, 6.4, 6.5 or
6.6, all rights of the Employee under this Agreement shall terminate,
and no further compensation shall be payable to the Employee other than
(a) any unpaid compensation earned under Section 3.1 of this Agreement
through the date of termination, as well as any reimbursable expenses
incurred pursuant to Section 4 of this Agreement, and (b) any of the
benefits specifically provided to the Employee under any benefit plan
which has vested or to which he is otherwise entitled as of the date of
termination.
2. Change in Control. If the employment of the Employee under this
Agreement is terminated upon a Change in Control (as defined below),
the Employee agrees to provide consulting services to a successor
entity or owner, if the successor entity or owner elects to retain
Employee as a consultant on the material terms set forth in this
Agreement (or as otherwise may be agreed), for a period of up to six
(6) months following a Change in Control. In the event such successor
entity or owner elects to engage Employee as a consultant following a
Change of Control it shall guarantee Employee minimum compensation of
$250,000 during the six (6) month consulting period. As used herein, a
"Change in Control" shall occur when a party unaffiliated with the
current stockholders of the Company's parent, MMHC, acquires all or
substantially all of the Company's assets or on a post-transaction
basis acquires, directly or indirectly or by merger, recapitalization,
or consolidation, at least a majority in voting power and in economic
interest of MMHC's outstanding equity.
Confidential Information and Agreement Not to Compete
0. Disclosure of Information. The Employee will not, during or after the
term of his employment, disclose any trade secrets or confidential
information of the Company, Holding or any of their respective
subsidiaries (such trade secrets and confidential information being
"Confidential Information") to any person or entity for any reason or
purpose whatsoever, except as may be required by law.
1. Agreement Not to Compete. During the term of this Agreement, and for a
period of six (6) months following a Change in Control if the successor
entity or owner elects to engage Employee as a consultant pursuant to
Section 7.3 of this Agreement, the Employee agrees that that neither he
nor any affiliate shall, either on his own behalf or as a partner,
officer, director, employee, agent or shareholder (other than as the
holder of less than 5% of the outstanding voting capital stock of any
corporation with a class of equity security registered under the
Securities Act of 1934, as amended) engage in or invest in any business
in which a significant portion of such businesses activities include
the manufacture or distribution of fence, wire mesh, concrete
accessories or any combination thereof within any states of the United
States of America (a "Competitive Business") (excluding activities on
behalf of himself or other persons or entities not engaged in a
Competitive Business related to the purchase and sale of steel rod);
provided, however, that if the Employee's employment is terminated
pursuant to Section 6.3, 6.4, 6.5 or 6.6 of this Agreement, the Company
may elect to extend the foregoing restriction for a period of six (6)
months following such termination upon the payment of the sum of
$250,000 to the Employee. Nothing contained in this Section shall be
construed as restricting the Employee's right to sell or otherwise
dispose of any business or investments owned or operated by the
Employee as of the date of termination.
2. Agreement Not to Solicit Employees. During the term of this Agreement,
and for a period of six (6) months following the termination of his
employment with the Company, the Employee agrees that neither he nor
any affiliate shall, either alone or on behalf of any business engaged
in a Competitive Business, solicit or induce, or in any manner attempt
to solicit or induce, any person employed by, or any agent of, the
Company or any of its subsidiaries to terminate his employment
relationship, contract of employment or agency, as the case may be,
with the Company or any of its subsidiaries.
3. Injunctive Relief. The parties agree that the remedy at law for the
breach of any provision of this Section 8 will be inadequate and that,
in addition to any other remedies it may have in the event, of breach,
the Company shall be entitled to temporary and permanent injunctive
relief to prevent the Employee's continued breach of such provisions
without the necessity of proving actual damage. The covenants in this
Section 8 are independent, and the existence of any claim or cause of
action of the Employee or any of his affiliates against the Company,
whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement of this Agreement by the Company.
8. Notice. Any notice required or permitted hereunder shall be deemed
sufficiently given if in writing and either personally delivered or sent by
registered, certified, or first class mail, postage prepaid, addressed to
the part at the address set forth below, or at such other address as the
party may subsequently designate:
If to the Employee, to: (a) Julius S. Burns
8506 Tranquil Park
Spring, Texas 77379
If to the Company, to: (b) MMI Products, Inc.
515 West Greens Road, #710
Houston, Texas 77067
Attn: Thomas F. McWilliams
Copies to: Citicorp Venture Capital Ltd.
399 Park Avenue
Floor 14/Zone 4
New York, New York 10022
Attn: Thomas F. McWilliams
Weil, Gotshal and Manges, LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attn: Michael A. Saslaw
9. Amendment; Waiver. No modification or amendment hereof shall be valid and
binding, unless it be in writing and signed by the parties hereto. The
waiver of any provision hereof shall be effective only in the specific
instance and for the particular purpose for which it was given. No failure
to exercise, and no delay in exercising, any right or power hereunder shall
operate as a waiver thereof.
10. Benefit. This Agreement shall inure to the benefit of and shall be binding
upon the Employee, his heirs and personal representatives, and the Company,
its successors and assigns. Neither this Agreement, nor the rights and
obligations created hereunder, may be assigned by either party without the
consent of the other party.
11. Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provisions had never comprised a part hereof; and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision, there shall be added automatically as
a part of this Agreement a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid
and enforceable.
12. Headings. The headings of the paragraphs of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.
13. Attorney's Fees. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements
in addition to any other relief to which he or it may be entitled.
14. Entire Agreement; Modification. This Agreement and the Stock Repurchase
Agreement contain the entire agreement among the parties and MMHC and
supersede all prior agreements and understandings, oral or written, with
respect to the transactions contemplated herein and the Stock Repurchase
Agreement, including any and all severance pay agreements between the
Company or its predecessors and the Employee.
15. Governing Law. This Agreement has been entered into the State of Texas and
shall be construed in accordance with, and governed by, the laws, excluding
the conflicts of law rules, of the State of Texas.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have duly executed this Agreement, as of the
date and year first above written.
MMI PRODUCTS, INC.
By: /s/ Thomas F. McWilliams
Thomas F. McWilliams,
Director
MMI MANAGEMENT SERVICES LP
By: MMI PRODUCTS, INC.,
its general partner
By: /s/ Thomas F. McWilliams
Thomas F. McWilliams,
Director
EMPLOYEE:
/s/ Julius S. Burns
Julius S. Burns
|
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PROMISSORY NOTE
$272,500 June 2, 2000
Monrovia, California
FOR VALUE RECEIVED, the receipt and sufficiency of which is acknowledged,
Peter J. Utrata ("Maker"), hereby promises to pay to STAAR Surgical Company, or
order ("Holder"), at the address designated on the signature page of this Note,
or at such other place as Holder may designate by written notice to Maker, the
principal sum hereinbelow described ("Principal Amount"), together with interest
thereon, in the manner and at the times provided and subject to the terms and
conditions described herein.
1. Principal Amount.
The Principal Amount means the sum of two hundred seventy-two thousand five
hundred dollars ($272,500).
2. Interest.
Interest on the Principal Amount from time-to-time remaining unpaid shall
accrue from the date of this Note at the lower of: (i) the rate of seven percent
(7%) per annum, compounded annually; or (ii) at the lowest rate that may accrue
without causing the imputation of interest under the Internal Revenue Code.
Interest shall be computed on the basis of a three hundred sixty (360) day year
and a thirty (30) day month.
3. Payment of Principal and Interest.
Subject to paragraph 8, below, Maker shall pay the Principal Amount and all
accrued and unpaid interest on the Principal Amount and all other indebtedness
due under this Note five (5) years from the date of this Note, on June 1, 2005.
4. Security/Release of Security.
Maker shall pledge as security for the repayment of all sums payable under
this Note 20,000 shares of Staar Surgical Company common stock (the "Stock").
Maker shall execute a Stock Pledge Agreement of even date herewith evidencing
Holder's security interest in the Stock. If, for a period of fifteen
(15) consecutive days, the fair market value of the Stock falls below all sums
unpaid under this Note, then Maker will be required to transfer to Holder, upon
receipt of Holder's written request, additional security, in any form acceptable
to Holder, in an amount equal to the difference between all sums due under this
Note and the fair market value of the Stock.
5. Prepayments.
Maker shall have the right to prepay any portion of the Principal Amount
without prepayment penalty or premium or discount.
6. Manner of Payments/Crediting of Payments.
Payments of any amount required hereunder shall be made in lawful money of
the United States or in such other property as Holder, in its sole and absolute
discretion, may accept, without deduction or offset, and shall be credited first
against accrued but unpaid late charges, if any, thereafter against accrued but
unpaid interest, if any, and thereafter against the unpaid balance of the
Principal Amount.
7. Interest on Delinquent Payments.
Any payment under this Note not paid when due shall bear interest at the
same rate and method as interest is charged on the Principal Amount from the due
date until paid.
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8. Acceleration Upon Default.
At the option of Holder, all or any part of the indebtedness of Maker
hereunder shall immediately become due and payable, irrespective of any agreed
maturity date, upon the happening of any of the following events of default:
(a) If any part of the Principal Amount and/or interest thereon under this
Note are not paid when due, provided, however, Maker shall be entitled to a
grace period of ten (10) days following written notice of such event of default
to cure said event of default;
(b) If Maker shall breach any non-monetary condition or obligation imposed
on Maker pursuant to the terms of this Note, provided, however, that if any such
breach is reasonably susceptible of being cured, Maker shall be entitled to a
grace period of thirty (30) days following written notice of such event of
default to cure;
(c) If Maker shall make an assignment for the benefit of creditors;
(d) If a custodian, trustee, receiver, or agent is appointed or takes
possession of substantially all of the property of Maker;
(e) If Maker shall be adjudicated bankrupt or insolvent or admit in writing
Maker's inability to pay Maker's debts as they become due;
(f) If Maker shall apply for or consent to the appointment of a custodian,
trustee, receiver, intervenor, liquidator or agent of Maker, or commence any
proceeding related to Maker under any bankruptcy or reorganization statute, or
under any arrangement, insolvency, readjustment of debt, dissolution, or
liquidation law of any jurisdiction, whether now or hereafter in effect;
(g) If any petition is filed against Maker under the Bankruptcy Code and
either (A) the Bankruptcy Court orders relief against Maker, or (B) such
petition is not dismissed by the Bankruptcy Court within thirty (30) days of the
date of filing; or
(h) If any attachment, execution, or other writ is levied on substantially
all of the assets of Maker and remains in effect for more than five (5) days.
Maker shall notify Holder immediately if any event of default which is described
in sub-paragraph (c) through sub-paragraph (h), above, occurs.
9. Collection Costs and Attorneys' Fees.
Maker agrees to pay Holder all costs and expenses, including reasonable
attorneys' fees, paid or incurred by Holder in connection with the collection or
enforcement of this Note or any instrument securing payment of this Note,
including without limitation, defending the priority of such instrument or
conducting a trustee sale thereunder. In the event any litigation is initiated
concerning the enforcement, interpretation or collection of this Note, the
prevailing party in any proceeding shall be entitled to receive from the
non-prevailing party all costs and expenses including, without limitation,
reasonable attorneys' and other fees incurred by the prevailing party in
connection with such action or proceeding.
10. Notice.
Any notice to either party under this Note shall be given by personal
delivery or by express mail, Federal Express, DHL or similar airborne/overnight
delivery service, or by mailing such notice by first class or certified mail,
return receipt requested, addressed to such party at the address set forth
below, or to such other address as either party from time to time may designate
by written notice. Notices delivered by overnight delivery service shall be
deemed delivered the next business day following consignment for such delivery
service. Mailed notices shall be deemed delivered and received in accordance
with this provision three (3) days after deposit in the United States mail.
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11. Usury Compliance.
All agreements between Maker and Holder are expressly limited, so that in no
event or contingency whatsoever, whether by reason of the consideration given
with respect to this Note, the acceleration of maturity of the unpaid Principal
Amount and interest thereon, or otherwise, shall the amount paid or agreed to be
paid to Holder for the use, forbearance, or detention of the indebtedness which
is the subject of this Note exceed the highest lawful rate permissible under the
applicable usury laws. If, under any circumstances whatsoever, fulfillment of
any provision of this Note shall involve transcending the highest interest rate
permitted by law which a court of competent jurisdiction deems applicable, then
the obligations to be fulfilled shall be reduced to such maximum rate, and if,
under any circumstances whatsoever, Holder shall ever receive as interest an
amount that exceeds the highest lawful rate, the amount that would be excessive
interest shall be applied to the reduction of the unpaid Principal Amount under
this Note and not to the payment of interest, or, if such excessive interest
exceeds the unpaid balance of the Principal Amount under this Note, such excess
shall be refunded to Maker. This provision shall control every other provision
of all agreements between Maker and Holder.
12. Jurisdiction; Venue.
This Note shall be governed by, interpreted under and construed and enforced
in accordance with the laws of the State of California. Any action to enforce
payment of this Note shall be filed and heard solely in Los Angeles County,
California.
THIS PROMISSORY NOTE IS A REPLACEMENT PROMISSORY NOTE. THE ORIGINAL NOTE HAS
BEEN LOST.
MAKER:
/s/ PETER J. UTRATA
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Peter J. Utrata
MAKER'S ADDRESS:
303 East Town Street, Suite 270
Columbus, Ohio 43215
HOLDER'S ADDRESS:
STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
Attn.: Chief Financial Officer
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PROMISSORY NOTE
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EMPLOYMENT AGREEMENT
BENJAMIN B. HONG
THIS EMPLOYMENT AGREEMENT is made effective July 1, 1994, by and between
Nara Bank, National Association (hereinafter sometimes referred to as "Bank"),
and Benjamin B. Hong, (hereinafter sometimes referred to as "Hong"), as follows:
1. EMPLOYMENT: Bank hereby employs Hong as President and Chief Executive
Officer, and Hong accepts said employment, upon the terms and conditions
hereinafter set forth.
2. DUTIES: Hong shall perform the duties of President and Chief Executive
Officer of Bank, subject to the powers by law vested in the Board of Directors
of Bank and in Bank's shareholders. During the term of this Employment
Agreement, Hong shall perform his duties faithfully, diligently and to the best
of his ability, consistent with the highest and best standards of the banking
industry and in compliance with all applicable laws and the Bank's Articles of
Incorporation and Bylaws. Hong shall devote his full time and efforts to this
position.
3. TERM: The term of this Agreement shall be five (5) years from its
effective date but Hong has an option to extend the term of this Agreement for
an additional period of four (4) years if the Bank achieves a regulatory
examination rating of "satisfactory or better and a composite CAMEL rating of
"1" or "2" at the end of 1998, and return on average assets (ROA) for 1998
surpasses the average ROA of California banks. Said option shall be exercised by
Hong, if it is to be exercised at all, within one hundred eighty (180) days
prior to the expiration of the above-referenced five (5) year term from the
effective date of this Agreement, and shall be exercised by a writing addressed
to the Board of Directors of Bank. Said option shall not be exercisable if at
the time of exercise Hong's employment has been duly and rightfully terminated
pursuant to the provisions of paragraph 10 and 11 hereof.
4. SALARY AND BONUS: During the term of this Agreement, Hong shall be
compensated and receive an annual salary of one hundred twenty thousand dollars
($120,000 per year) payable in twelve (12) equal monthly installments. The base
salary shall be reviewed at least annually and may be increased from time to
time as the Board of directors of the Bank in its sole discretion shall
determine. This shall be the "basic compensation" for performing his duties as
President and Chief Executive Officer of the Bank. In addition to the basic
compensation, the Bank agrees to pay to Hong an additional bonus in the amount
of seven percent (7%) of the Bank's profit before tax. The computation of the
Bank's pre- tax profit shall be done by the Bank's outside auditors and
certified public accountants and shall receive the approval of the Bank's Board
of Directors. As so approved, such computation shall be a conclusive
determination binding both upon the Bank and Hong. Such bonus shall be paid only
on a pro-rata basis for that portion of the fiscal year that Hong serves as
President and Chief Executive Officer. If the 7% bonus is less than regular
employee bonus percentage in any given year, Hong will receive bonus equivalent
to the regular employee bonus percentage.
5. STOCK OPTIONS: Pursuant to and subject to the terms of the Bank's Stock
Option Plan, the Bank will grant to Hong a stock option consisting of a total of
hundred thousand (100,000) shares of Bank's common stock. The option price will
be three dollars per share (price as of July 1, 1994). This option will be
exercisable within five years from the date of this Agreement. But the exercise
period will be extended for four more years, if Hong's term is extended. Any
such option will be subject to all of the terms and provisions of the Bank's
Stock Option Plan and the form of Stock Option Agreement to be executed by Bank
and Hong. Should Hong be terminated for cause, this option shall expire
immediately. Reference should be made to the Bank's Stock Option Plan and form
of Stock Option Agreement for full and complete terms and conditions governing
any stock option to be granted.
6. AUTOMOBILE ALLOWANCE AND INSURANCE: Bank will provide Hong with a
suitable automobile for his use in the performance of his duties and shall pay
all costs and expenses of maintaining and operating said automobile, including
insurance.
7. EXPENSES: Hong shall be entitled to reimbursement by Bank for any
business expenses reasonably and necessarily incurred in the performance of his
duties on behalf of Bank during the term of this Agreement, which the Board of
Directors of the Bank deems are satisfactorily documented.
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Bank shall also reimburse Hong for the annual membership fees in the Wilshire
Country Club and shall, in addition, reimburse Hong for any and all
business-related charges incurred at the Wilshire Country Club.
8. VACATION: Hong shall be entitled to four (4) weeks paid vacation during
each year of the term of this Agreement. Hong shall take at lease two
consecutive weeks vacation during each year of his employment by Bank.
9. INSURANCE BENEFITS: Bank shall provide for Hong and Hong's spouse and
dependent children, where appropriate, at the Bank's expense, participation in
accident and health, term life insurance benefits to the maximum benefits
available under the Bank's Group Insurance program.
10. TERMINATION: The Bank may terminate the employment of Hong at any time
during this Agreement by a simple majority vote of the Board of Directors,
exclusive of the vote of Hong in the event he is a Director, and said
termination shall be only for cause the effective date of termination in such
event shall be determined by the Board. In the event Hong is terminated for
cause, Hong shall be entitled to no further compensation of any sort, excepting
only for basic compensation and expenses earned prior to such termination.
Termination for cause shall include termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith, or any conduct detrimental to the interests of the Bank or
a subsidiary corporation and in any event, the determination of the Board of
Directors with respect thereto shall be final and conclusive.
11. ACTION BY SUPERVISORY AUTHORITY: If Bank is ordered to remove Hong or
Bank is closed or taken over by the Comptroller of the Currency, the Federal
Reserve, The Federal Deposit Insurance Corporation, or other supervisory
authority, such bank supervisory authority may immediately terminate this
Agreement without further liability, compensation or obligation to Hong, except
that Hong shall be entitled to his rights, if any, under Paragraph 5 hereof and
the Stock Option Plan referred to therein.
12. ARBITRATION: Any controversy or claim arising out of, or relating to
this Agreement or the breach thereof, shall be settled by arbitration in the
City of Los Angeles, State of California, in accordance with the rules of the
American Arbitration Association, and a judgement upon the award rendered may be
entered in any court having jurisdiction thereof.
13. NOTICES: Any notice required or permitted to be given hereunder shall
be in writing and delivered by ordinary mail or served personally, addressed to
Bank or Hong, as the case may be, at the address set forth after their signature
below or as may be changed from time to time by notice given to the other party.
14. PARTIAL INVALIDITY: If any provision of this Agreement is held by a
court of competent jurisdiction, or by arbitration, to be invalid, void or
unenforceable, the remaining provisions shall nevertheless continue in full
force without being impaired or invalidated in any way.
15. MISCELLANEOUS: It is hereby agreed that Hong's rights and obligations
under this Agreement are personal and not assignable. This Agreement contains
the entire agreement and understanding of the parties to it and shall be binding
on and insure to the benefit of the heirs, personal representatives, successors,
beneficiaries, and assigns of the parties, subject, however, to the restrictions
on assignment contained herein. This Agreement is drawn to be effective in the
State of California, and shall be construed in accordance with California law.
No amendment or variation of the terms of this Agreement shall be valid unless
made in writing and executed by Hong and a duly authorized representative of the
Bank.
16. ENFORCEMENT: Both Hong and Bank acknowledge they have had the
opportunity to consult with legal terms and provisions of this Agreement. If
arbitration or legal action is employed to enforce any of the provisions hereof,
the parties hereto agree that the recover all reasonable costs and attorneys'
fees.
17. This Agreement constitutes the only agreement between the parties with
respect to Hong's employment by Bank and it supersedes any and all written or
oral understandings of any sort. This Agreement may be amended or modified only
in writing in an instrument signed by both parties.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement on
July 1, 1994.
By:
/s/ BRIAN B. WOO
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Brian B. Woo
Chairman of the Board
Nara Bank, National Association
Accepted by:
/s/ BENJAMIN HONG
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Benjamin Hong
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EMPLOYMENT AGREEMENT
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STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (hereinafter "Agreement") is made and entered
into as of the 2nd day of June, 2000, by and between Peter J. Utrata, an
individual ("Pledgor") and Staar Surgical Company, a Delaware corporation
("Pledgee") with reference to the following facts:
RECITALS
WHEREAS, Pledgor has executed in favor of Pledgee a promissory note (the
"Note"), a copy of which is attached hereto as Exhibit "1" and is incorporated
herein by this reference, for the sum of two hundred seventy-two thousand five
hundred dollars ($272,500); and
WHEREAS, Pledgor desires to pledge to Pledgee the interest of Pledgor in
certain common stock, which is included on Exhibit "2", attached hereto and
incorporated herein by this reference, pursuant to the terms of this Agreement,
for the purpose of securing payment of the Note.
THEREFORE, in consideration of mutual covenants and promises contained
herein, and for valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement (hereinafter collectively
"parties" and individually "party") agree as follows:
AGREEMENT
1. Pledge of Stock and Proceeds.
(a) Original Pledge. As collateral security for the payment and/or
performance of all of Pledgor's presently existing or hereinafter arising
obligations and liabilities to Pledgee under the Note, Pledgor hereby pledges,
grants and assigns to Pledgee a continuing security interest in the following:
(i) Twenty thousand (20,000) shares of the Common Stock of Staar Surgical
Company (the "Stock"); and
(ii) the proceeds of the Stock including, without limitation, any and all
dividends, cash, instruments and other property from time-to-time received,
receivable, or otherwise distributed in respect of or in exchange for any of the
Stock ("Proceeds"). (The Stock and the Proceeds shall hereinafter be
collectively referred to as the "Collateral").
(b) Increase in Security. If, for a period of fifteen (15) consecutive
days, the fair market value of the Stock falls below all sums due under the
Note, then Pledgor will be required to transfer to Pledgee, upon receipt of
Pledgee's written request, additional security, in any form acceptable to
Pledgee, in an amount equal to the difference between all sums due under the
Note and the fair market value of the Stock.
(c) Delivery of Stock Power to Pledgee. Pledgor shall deliver to Pledgee,
concurrently with the execution of this Agreement, the Stock along with an
Assignment of Corporate Shares in the form of Exhibit "3" attached hereto and
incorporated herein by this reference ("Stock Assignment"), signed by Pledgor,
in blank, such Stock Assignment to be used by Pledgee in accordance with the
terms of this Agreement.
(d) Pledgee's Acceptance of Collateral and Appointment as Pledgor's
Attorney-In-Fact. Pledgee hereby agrees to accept the Collateral and agrees to
hold and dispose of the Collateral in accordance with and subject only to the
terms of this Agreement. Pledgor hereby irrevocably appoints Pledgee as
Pledgor's attorney-in-fact to arrange for the transfer of the Collateral and to
do and perform all actions that are necessary or appropriate in order to effect
the terms of this Agreement.
(e) Release of Collateral. Pledgee shall release the Collateral from this
Agreement and return the Collateral to Pledgor upon satisfaction in full of
Pledgor's obligations under the Note.
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2. Matters Pertaining to the Collateral.
(a) Voting and Consensual Rights. Pledgor shall retain the right to vote
the Stock and to exercise any other rights pertaining to the Stock, provided,
however, so long as Pledgor is in "Default" as defined in Paragraph 3 of this
Agreement, Pledgee shall vote the Stock and exercise any rights pertaining to
the Stock.
(b) Rights to Dividends and Distributions. So long as Pledgor is not in
Default and except as expressly limited below, Pledgor shall be entitled to
receive and retain any proceeds distributed on account of the Stock.
Notwithstanding the foregoing, Pledgee, rather than Pledgor, shall be entitled
to collect and receive all of the following types of proceeds, which shall be
added to and shall become a part of the Collateral:
(i) all proceeds paid or payable other than in cash, and all instruments
and other property distributed in respect of, or in exchange for, the Stock;
(ii) all proceeds paid or payable with respect to the Stock in connection
with a partial or total liquidation or dissolution of the issuing corporation or
in connection with a reduction of capital, capital surplus or paid-in surplus of
the issuing corporation; and
(iii) all proceeds distributed in redemption of, or in exchange for, the
Stock. To the extent the foregoing proceeds exceed the amount of Pledgor's
obligations and liabilities under the Note and/or this Agreement, Pledgor shall
be entitled to receive these excess proceeds.
In the event and for so long as Pledgor is in Default, Pledgee shall be paid
any proceeds with respect to the Stock; provided, however, Pledgee shall apply
such payments against the outstanding balance of the Note.
(c) Stock Adjustments. In the event that, during the term of this
Agreement, any stock dividend, reclassification, readjustment, or other change
is declared or made in the capital structure of the issuing corporation, all
new, substituted and additional shares or other securities issued with respect
to the Stock by reason of any such change shall be delivered to and held by
Pledgee under the terms of this Agreement in the same manner as the Stock.
3. Default and Remedy on Default.
At the option of Pledgee, upon the happening of any of the following events
of default ("Default"), Pledgee shall have all of the rights and remedies set
forth therein:
(a) Default Under Note. If an event of default, as set forth in
paragraph 9 of the Note, occurs and is not cured as specifically provided
therein; or
(b) Default Under This Agreement. If Pledgor defaults in the due
performance or observance of any representation or obligation under this
Agreement.
4. Pledgor's Representations, Warranties and Covenants.
Pledgor represents, warrants and covenants to Pledgee as follows:
(a) Upon delivery to Pledgee as contemplated hereby, the Collateral will be
free of any security interests, liens, pledges or encumbrances created by
Pledgor (except for the security interest created hereby), or any claims of
third parties of any nature whatsoever, charges, escrows, options, rights of
first refusal, or other agreements, restrictions, arrangements, commitments or
obligations, written or oral, created by Pledgor, affecting the legal or
beneficial ownership of the Collateral.
(b) From and after the date hereof, Pledgor shall not make any agreements
restricting in any manner the transferability of the Collateral or otherwise
affecting the Collateral;
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(c) Pledgor shall, at Pledgor's expense, take any steps necessary to
preserve Pledgee's rights in the Collateral against any claims of third parties;
and
(d) Pledgor has arrangements for keeping informed of changes or potential
changes affecting the Collateral (including, without limitation, rights to
convert, rights to subscribe, payment of dividends, reorganization or other
exchanges, tender offers and voting rights), and Pledgee shall not have any
responsibility or liability for informing Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto.
5. Miscellaneous.
(a) It is acknowledged by each party that such party either had separate and
independent advice of counsel or the opportunity to avail himself or itself of
same. This Agreement was prepared by each party in conjunction with counseling
from such party's respective attorney or the opportunity to obtain such
counseling. In light of these facts it is acknowledged that no party shall be
construed to be solely responsible for the drafting of this Agreement, and
therefore any ambiguity shall not be construed against any party as the alleged
draftsman of it. Each party shall pay all costs and expenses incurred or to be
incurred by such party in negotiating and preparing this Agreement and in
performing and complying with all representations, warranties, covenants,
agreements and conditions contained in this Agreement to be performed or
complied with by such party, including legal fees.
(b) Each party agrees, without further consideration, to cooperate and
diligently perform any further acts, deeds and things and to execute and deliver
any documents that may be reasonably necessary to consummate, evidence, confirm
and/or carry out the intent and provisions of this Agreement, all without undue
delay or expense. Pledgor shall reimburse Pledgee for any costs and expenses
incurred by Pledgee in connection with any breach or default of Pledgor under
this Agreement, including collection efforts, whether or not suit is commenced
or judgement is entered. Furthermore, should any party institute or should the
parties otherwise become a party to any action or proceeding to enforce or
interpret this Agreement, the prevailing party in any such action or proceeding
shall be entitled to receive from the non-prevailing party all costs and
expenses of prosecuting or defending the action or proceeding. This Agreement
and the rights of each party under this Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with the laws of the
State of Delaware.
(c) The parties expressly acknowledge and agree that this Agreement: (i) is
the final, complete and exclusive statement of the parties' agreement with
respect to the subject matter hereof, (ii) supersedes any prior or
contemporaneous promises, assurances, guarantees, representations,
understandings, conduct, proposals, conditions, commitments, acts, course of
dealing, warranties, interpretations or terms of any kind, oral or written
(collectively "Prior Agreements"), and that any such Prior Agreements are of no
force or effect except as expressly set forth herein, and (iii) may not be
varied, supplemented or contradicted by evidence of such Prior Agreements or by
evidence of subsequent oral agreements. Any agreement hereafter made shall be
ineffective to modify, supplement or discharge the terms of this Agreement, in
whole or in part, unless such agreement is in writing and signed by the party
against whom enforcement of the modification, supplement or discharge is sought.
By execution hereof, the parties specifically disavow any desire or intention to
create a "third party" beneficiary contract, and specifically declare that no
person or entity, save and except for the parties and their permitted
successors, and assigns, shall have any rights hereunder nor any right of
enforcement hereof. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof. If any term or provision of this Agreement or the application thereof
to any person or circumstance shall, to any extent, be determined to be invalid,
illegal or unenforceable, then the remaining part of this Agreement shall
nevertheless not be affected thereby and shall continue in full force and effect
to the fullest extent provided by law. This Agreement is to be read, construed
and applied together with the Note, which, taken together, set forth
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the complete understanding and agreement of the parties with respect to the
matters referred to herein and therein.
(d) Pledgor may not delegate its duties under this Agreement, in whole or in
part, without the prior written consent of Pledgee, which consent may be
withheld in Pledgee's sole and arbitrary discretion. Notwithstanding the
preceding sentence, no such delegation shall release Pledgor from any liability
or obligation under this Agreement without the written consent of Pledgee, which
consent may be withheld in Pledgee's sole and arbitrary discretion. Subject to
the foregoing, all of the representations, warranties, covenants, conditions and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of each party and such party's respective heirs, executors,
administrators, legal representatives, successors and/or assigns.
(e) The headings used in this Agreement are for convenience and reference
purposes only, and shall not be used in construing or interpreting the scope or
intent of this Agreement or any provision hereof. References to this Agreement
shall include all amendments or renewals thereof. As used in this Agreement,
each gender shall be deemed to include each other gender, including neutral
genders or genders appropriate for entities, if applicable, and the singular
shall be deemed to include the plural, and vice versa, as the context requires.
(f) All notices, demands, requests, consents, approvals or other
communications ("Notices") given hereunder shall be as provided in the Note.
THIS STOCK PLEDGE AGREEMENT IS A REPLACEMENT AGREEMENT. THE ORIGINAL AGREEMENT
HAS BEEN LOST.
WHEREFORE, the parties hereto have executed this Agreement as of the date
first set forth above.
Pledgor:
/s/ PETER J. UTRATA
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Peter J. Utrata Address: 303 East Town Street, Suite 270
Columbus, Ohio 43215
Pledgee:
STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
By:
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EXHIBIT "1"
PROMISSORY NOTE
$272,500 June 2, 2000
Monrovia, California
FOR VALUE RECEIVED, the receipt and sufficiency of which is acknowledged,
Peter J. Utrata ("Maker"), hereby promises to pay to STAAR Surgical Company, or
order ("Holder"), at the address designated on the signature page of this Note,
or at such other place as Holder may designate by written notice to Maker, the
principal sum hereinbelow described ("Principal Amount"), together with interest
thereon, in the manner and at the times provided and subject to the terms and
conditions described herein.
1. Principal Amount.
The Principal Amount means the sum of two hundred seventy-two thousand five
hundred dollars ($272,500).
2. Interest.
Interest on the Principal Amount from time-to-time remaining unpaid shall
accrue from the date of this Note at the lower of: (i) the rate of seven percent
(7%) per annum, compounded annually; or (ii) at the lowest rate that may accrue
without causing the imputation of interest under the Internal Revenue Code.
Interest shall be computed on the basis of a three hundred sixty (360) day year
and a thirty (30) day month.
3. Payment of Principal and Interest.
Subject to paragraph 8, below, Maker shall pay the Principal Amount and all
accrued and unpaid interest on the Principal Amount and all other indebtedness
due under this Note five (5) years from the date of this Note, on June 1, 2005.
4. Security/Release of Security.
Maker shall pledge as security for the repayment of all sums payable under
this Note 20,000 shares of Staar Surgical Company common stock (the "Stock").
Maker shall execute a Stock Pledge Agreement of even date herewith evidencing
Holder's security interest in the Stock. If, for a period of fifteen
(15) consecutive days, the fair market value of the Stock falls below all sums
unpaid under this Note, then Maker will be required to transfer to Holder, upon
receipt of Holder's written request, additional security, in any form acceptable
to Holder, in an amount equal to the difference between all sums due under this
Note and the fair market value of the Stock.
5. Prepayments.
Maker shall have the right to prepay any portion of the Principal Amount
without prepayment penalty or premium or discount.
6. Manner of Payments/Crediting of Payments.
Payments of any amount required hereunder shall be made in lawful money of
the United States or in such other property as Holder, in its sole and absolute
discretion, may accept, without deduction or offset, and shall be credited first
against accrued but unpaid late charges, if any, thereafter against accrued but
unpaid interest, if any, and thereafter against the unpaid balance of the
Principal Amount.
7. Interest on Delinquent Payments.
Any payment under this Note not paid when due shall bear interest at the
same rate and method as interest is charged on the Principal Amount from the due
date until paid.
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8. Acceleration Upon Default.
At the option of Holder, all or any part of the indebtedness of Maker
hereunder shall immediately become due and payable, irrespective of any agreed
maturity date, upon the happening of any of the following events of default:
(a) If any part of the Principal Amount and/or interest thereon under this
Note are not paid when due, provided, however, Maker shall be entitled to a
grace period of ten (10) days following written notice of such event of default
to cure said event of default;
(b) If Maker shall breach any non-monetary condition or obligation imposed
on Maker pursuant to the terms of this Note, provided, however, that if any such
breach is reasonably susceptible of being cured, Maker shall be entitled to a
grace period of thirty (30) days following written notice of such event of
default to cure;
(c) If Maker shall make an assignment for the benefit of creditors;
(d) If a custodian, trustee, receiver, or agent is appointed or takes
possession of substantially all of the property of Maker;
(e) If Maker shall be adjudicated bankrupt or insolvent or admit in writing
Maker's inability to pay Maker's debts as they become due;
(f) If Maker shall apply for or consent to the appointment of a custodian,
trustee, receiver, intervenor, liquidator or agent of Maker, or commence any
proceeding related to Maker under any bankruptcy or reorganization statute, or
under any arrangement, insolvency, readjustment of debt, dissolution, or
liquidation law of any jurisdiction, whether now or hereafter in effect;
(g) If any petition is filed against Maker under the Bankruptcy Code and
either (A) the Bankruptcy Court orders relief against Maker, or (B) such
petition is not dismissed by the Bankruptcy Court within thirty (30) days of the
date of filing; or
(h) If any attachment, execution, or other writ is levied on substantially
all of the assets of Maker and remains in effect for more than five (5) days.
Maker shall notify Holder immediately if any event of default which is described
in sub-paragraph (c) through sub-paragraph (h), above, occurs.
9. Collection Costs and Attorneys' Fees.
Maker agrees to pay Holder all costs and expenses, including reasonable
attorneys' fees, paid or incurred by Holder in connection with the collection or
enforcement of this Note or any instrument securing payment of this Note,
including without limitation, defending the priority of such instrument or
conducting a trustee sale thereunder. In the event any litigation is initiated
concerning the enforcement, interpretation or collection of this Note, the
prevailing party in any proceeding shall be entitled to receive from the
non-prevailing party all costs and expenses including, without limitation,
reasonable attorneys' and other fees incurred by the prevailing party in
connection with such action or proceeding.
10. Notice.
Any notice to either party under this Note shall be given by personal
delivery or by express mail, Federal Express, DHL or similar airborne/overnight
delivery service, or by mailing such notice by first class or certified mail,
return receipt requested, addressed to such party at the address set forth
below, or to such other address as either party from time to time may designate
by written notice. Notices delivered by overnight delivery service shall be
deemed delivered the next business day following consignment for such delivery
service. Mailed notices shall be deemed delivered and received in accordance
with this provision three (3) days after deposit in the United States mail.
6
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11. Usury Compliance.
All agreements between Maker and Holder are expressly limited, so that in no
event or contingency whatsoever, whether by reason of the consideration given
with respect to this Note, the acceleration of maturity of the unpaid Principal
Amount and interest thereon, or otherwise, shall the amount paid or agreed to be
paid to Holder for the use, forbearance, or detention of the indebtedness which
is the subject of this Note exceed the highest lawful rate permissible under the
applicable usury laws. If, under any circumstances whatsoever, fulfillment of
any provision of this Note shall involve transcending the highest interest rate
permitted by law which a court of competent jurisdiction deems applicable, then
the obligations to be fulfilled shall be reduced to such maximum rate, and if,
under any circumstances whatsoever, Holder shall ever receive as interest an
amount that exceeds the highest lawful rate, the amount that would be excessive
interest shall be applied to the reduction of the unpaid Principal Amount under
this Note and not to the payment of interest, or, if such excessive interest
exceeds the unpaid balance of the Principal Amount under this Note, such excess
shall be refunded to Maker. This provision shall control every other provision
of all agreements between Maker and Holder.
12. Jurisdiction; Venue.
This Note shall be governed by, interpreted under and construed and enforced
in accordance with the laws of the State of California. Any action to enforce
payment of this Note shall be filed and heard solely in Los Angeles County,
California.
MAKER:
EXHIBIT ONLY—DO NOT SIGN
--------------------------------------------------------------------------------
Peter J. Utrata
MAKER'S ADDRESS:
303 East Town Street, Suite 270
Columbus, Ohio 43215
HOLDER'S ADDRESS:
STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
Attn.: Chief Financial Officer
7
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EXHIBIT "2"
LIST OF SHARES
20,000 shares of the common stock of STAAR Surgical Company represented by
certificate number SS .
8
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EXHIBIT "3"
ASSIGNMENT OF CORPORATE SHARES
(Without Certificate)
FOR VALUE RECEIVED, the undersigned hereby assigns to Staar Surgical
Company, a Delaware corporation, as Pledgee under that certain Stock Pledge
Agreement entered into on June 2, 2000 by and between Peter J. Utrata and Staar
Surgical Company, twenty thousand (20,000) shares of the common stock of Staar
Surgical Company, represented by certificate number(s) standing in
the undersigned's name on the books of said corporation, and does hereby
instruct and appoint the custodian of that corporation's stock books to so
transfer the said stock on the books of said corporation.
Dated:
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EXHIBIT ONLY—DO NOT SIGN
WITNESS:
--------------------------------------------------------------------------------
9
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QuickLinks
STOCK PLEDGE AGREEMENT
RECITALS
AGREEMENT
EXHIBIT "1" PROMISSORY NOTE
EXHIBIT "2" LIST OF SHARES
EXHIBIT "3" ASSIGNMENT OF CORPORATE SHARES (Without Certificate)
|
EXHIBIT 10.28
First Amendment to Consulting Agreement
In consideration of the receipt of mutual promises of the companies and
other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the companies set forth below hereby
agree:
To amend the Consulting Agreement among the companies dated September
30, 2000 to substitute "e-Solutions.biz, LLC" as the Consultant in the
opening paragraph for "e-Solutions, LLC.
All other terms and provisions of the Consulting Agreement shall remain
unchanged.
AGREED and effective as of the 2nd day of January, 2001.
Signatures
The Timken Company e-Solutions.biz
/s/ James W. Griffith /s/ Thomas W. Strouble
__________________________ ___________________________
January 2, 2001 January 2, 2001
__________________________ ___________________________
Date Date |
QuickLinks -- Click here to rapidly navigate through this document
EXHIBIT 10.03
SECOND AMENDMENT TO
KEEP-WELL AGREEMENT
Dated as of June 15, 2001,
effective as of May 29, 2001
(amending the Keep-Well Agreement
dated as of
February 26, 1998)
by
LONDON CLUBS INTERNATIONAL, PLC,
THE TRUST UNDER ARTICLE SIXTH UNDER
THE WILL OF SIGMUND SOMMER
ALADDIN BAZAAR HOLDINGS, LLC
and
ALADDIN HOLDINGS, LLC
as the Sponsors,
and
THE BANK OF NOVA SCOTIA,
as the Administrative Agent for various financial institutions
as the Lenders
--------------------------------------------------------------------------------
SECOND AMENDMENT TO KEEP-WELL AGREEMENT
THIS SECOND AMENDMENT TO KEEP-WELL AGREEMENT (this "Second Amendment to
Keep-Well Agreement") dated as of June 15, 2001, effective as of May 29, 2001,
by and among LONDON CLUBS INTERNATIONAL, PLC, a company registered in England
and Wales under company number 2862479 ("LCI"), THE TRUST UNDER ARTICLE SIXTH
UNDER THE WILL OF SIGMUND SOMMER (the "Trust"), ALADDIN BAZAAR HOLDINGS, LLC, a
Nevada limited-liability company ("ABH") and ALADDIN HOLDINGS, LLC, a Delaware
limited liability company ("AHL"; AHL, ABH, the Trust and LCI are individually
called a "Sponsor" and collectively called the "Sponsors") and THE BANK OF NOVA
SCOTIA, as administrative agent (together with any successor thereto in such
capacity, the "Administrative Agent") for the various financial institutions as
are or may become parties hereto (individually, a "Lender" and collectively, the
"Lenders").
In consideration of the mutual agreements herein contained and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of February 26, 1998
(together with that certain First Amendment to Credit Agreement dated as of
January 29, 1999, that certain Second Amendment to Credit Agreement dated as of
April 5, 1999, effective as of March 10, 1999, that certain Third Amendment to
Credit Agreement dated as of June 2, 2000, that certain Fourth Amendment to
Credit Agreement dated as of July 27, 2000, that certain Fifth Amendment to
Credit Agreement dated as of December 29, 2000, that certain Sixth Amendment to
Credit Agreement dated as of March 30, 2001 and that certain Seventh Amendment
to Credit Agreement (the "Seventh Amendment to Credit Agreement") of even date
herewith and all other amendments and other modifications from time to time
hereafter made thereto, the "Credit Agreement"), among Aladdin Gaming, LLC, a
Nevada limited-liability company (the "Borrower"), the Lenders and the
Administrative Agent, Merrill Lynch Capital Corporation, as the syndication
agent, and CIBC Oppenheimer Corp., as the documentation agent, the Lenders have
extended Commitments to make Loans to the Borrower and to issue Letters of
Credit for the account of the Borrower; and
WHEREAS, the Borrower has requested the Lenders to enter into the Seventh
Amendment to Credit Agreement; and
WHEREAS, LCI, ABH, and AHL executed and delivered a Keep-Well Agreement (the
"Keep-Well Agreement") in favor of the Lenders and the Administrative Agent
dated as of February 26, 1998 pursuant to which LCI, ABH and AHL agreed, inter
alia, to perform the obligations set forth in the Keep-Well Agreement and
certain subsidiaries of LCI (the "Subsidiary Guarantors") have agreed to
guarantee fully and unconditionally the payment of LCI's obligations under the
Keep-Well Agreement pursuant to a guaranty agreement dated February 26, 1998
(the "LCI Subsidiary Guaranty"); and
WHEREAS, the Trust executed and delivered a Joinder Agreement and Consent
(the "Joinder Agreement") in favor of the Lenders and the Administrative Agent
dated as of July 27, 2000 pursuant to which the Trust agreed to become a Sponsor
under the Keep-Well Agreement; and
WHEREAS, the Sponsors entered into that certain First Amendment to Keep-Well
Agreement (the "First Amendment to Keep-Well Agreement") dated as of March 30,
2001; and
WHEREAS, the Sponsors have requested the Lenders to enter into certain
additional amendments to the Keep-Well Agreement; and
WHEREAS, the Sponsors have duly authorized the execution, delivery and
performance of this Second Amendment to Keep-Well Agreement and the Subsidiary
Guarantors have duly authorized the execution, delivery and performance of a
ratification, reaffirmation and consent agreement (the "Ratification of LCI
Subsidiary Guaranty") with respect to the Subsidiary Guaranty, an executed
–2–
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counterpart of which is annexed hereto (the LCI Subsidiary Guaranty, together
with the Ratification of LCI Subsidiary Guaranty and all other amendments and
other modifications from time to time hereafter made thereto, the "Subsidiary
Guaranty"); and
WHEREAS, it is in the best interests of the Sponsors to execute this Second
Amendment to Keep-Well Agreement and the Subsidiary Guarantors to execute the
Ratification of LCI Subsidiary Guaranty inasmuch as the Sponsors and the
Subsidiary Guarantors have and will continue to derive substantial direct and
indirect benefits from the Loans (as such term is defined in the Credit
Agreement; each capitalized term not otherwise defined herein shall have the
meaning ascribed to such term in the Credit Agreement) made to the Borrower by
the Lenders pursuant to the Credit Agreement; and
WHEREAS, each of the parties hereto is willing, on the terms and subject to
the conditions hereinafter set forth, to so amend the Keep-Well Agreement upon
the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1
AMENDMENTS
SECTION 1.1 Amendments. The parties hereto hereby agree that from and
after the Effective Date (as defined in Section 3.1) the following amendments
shall be made to the Keep-Well Agreement, as amended by the First Amendment to
Credit Agreement:
(a) The definition of "Keep-Well Termination Date" set forth in Section 1 of
the Keep-Well Agreement, as amended by the First Amendment to Keep-Well
Agreement, shall be deleted in its entirety and the following definition of
"Keep-Well Termination Date" shall be substituted in its place:
" 'Keep-Well Termination Date' shall mean the earliest of (i) the day on which
full and indefeasible payment of the Obligations of the Borrower under the
Credit Agreement has been made to reduce the Commitments of the Lenders
thereunder to $145,000,000 or less, (ii) the last day of the period of six
consecutive fiscal quarters from and after the Conversion Date during which the
Borrower shall have satisfied each of the financial covenants set forth in the
Credit Agreement (without giving effect to the Seventh Amendment to Credit
Agreement or to any other amendment of the Credit Agreement which became
effective prior to the date of the Seventh Amendment to Credit Agreement or to
any payments to or investments by the Sponsors in or for the benefit of the
Borrower), (iii) the date on which both of the following shall have been
satisfied: (a) construction of the Aladdin Hotel and Casino and renovation of
the Theater has been completed in accordance with all terms of the Credit
Agreement and (b) the Commitments and the aggregate outstanding principal amount
of the Obligations under the Credit Agreement shall have been reduced to an
amount not in excess of the amount specified for such date on Schedule 1 hereto,
(iv) the date on which the Sponsors shall have made full payment of the
Accelerated Payment Amount described under Section 4 below or (v) in the case of
LCI only, the date on which it shall have made full payment of the Accelerated
Payment Amount described under Section 13 below."
(b) The following sentences shall be added after the second sentence of
Section 2 of the Keep-Well Agreement, as amended by the First Amendment to
Keep-Well Agreement:
"Notwithstanding the foregoing, with respect only to the Fiscal Quarter ending
March 31, 2001, the amount of the Cash Equity Contributions for such Fiscal
Quarter (the 'FQ2 Cash Equity Contributions') shall equal all Debt Service
(including, without limitation, Debt Service payments due on or about June 29,
2001 and August 1, 2001) and such other amounts
–3–
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reasonably required by the Board of Managers of the Borrower to perform in all
material respects its covenants in the first four sentences of Section 7.1.3 of
the Credit Agreement (without giving effect to any grace, notice or cure period
granted to the Borrower under the Credit Agreement), in each case which is due
and payable or otherwise required by the Borrower on or before August 1, 2001
and which has not been funded by the Borrower in accordance with the Loan
Documents (without giving effect to any grace, notice or cure period granted to
the Borrower under the Credit Agreement). With respect to such Debt Service
which is due and payable on or before August 1, 2001, such Cash Equity
Contributions shall be made by the Sponsors on or before the date that such
amount is due and payable under the Loan Documents, in each case without giving
effect to any grace, notice or cure period granted to the Borrower thereunder.
With respect to amounts reasonably required by the Borrower to perform in all
material respects its covenants in the first four sentences of Section 7.1.3 of
the Credit Agreement, such Cash Equity Contributions shall be made within three
Business Days after request therefor has been made by the Borrower, without
giving effect to any grace, notice or cure period granted to the Borrower under
the Loan Documents."
ARTICLE 2
RATIFICATION AND REAFFIRMATION
SECTION 2.1 Ratification and Reaffirmation. This Second Amendment to
Keep-Well Agreement shall be deemed to be an amendment to the Keep-Well
Agreement, as amended by the First Amendment to Keep-Well Agreement, and the
Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement
and this Second Amendment to Keep-Well Agreement, shall continue in full force
and effect and is hereby ratified, approved and confirmed in each and every
respect.
ARTICLE 3
CONDITIONS PRECEDENT AND COVENANT
SECTION 3.1 Conditions to Effectiveness. The amendments in Section 1.1 of
this Second Amendment to Keep-Well Agreement shall become effective on the date
(the "Effective Date") on which each of the following conditions precedent shall
have been satisfied.
(a) Execution of Documents. The Administrative Agent shall have received
counterparts of (i) this Second Amendment to Keep-Well Agreement executed by an
Authorized Representative of the parties hereto, (ii) the Ratification of LCI
Subsidiary Guaranty executed by the Authorized Representatives of the Subsidiary
Guarantors and LCI, (iii) the Seventh Amendment to Credit Agreement executed by
Authorized Representatives of the Borrower and the Administrative Agent and
(iv) all documentation required by Section 3.1 of the Seventh Amendment to
Credit Agreement.
(b) Seventh Amendment to Credit Agreement. The Seventh Amendment to Credit
Agreement shall have become effective in accordance with its terms.
(c) Incumbency, etc. The Administrative Agent shall have received (with
copies for each Lender) a certificate, dated as of the Effective Date, of an
Authorized Representative of each Sponsor certifying
(i) as to the incumbency and signatures of the Person or Persons authorized
to execute and deliver this Second Amendment to Keep-Well Agreement and any
instruments or agreements required hereunder,
(ii) as to an attached copy of one or more resolutions or other
authorizations of the Sponsors certified by the Authorized Representative of
each such Sponsor as being in full
–4–
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force and effect on the date hereof, authorizing the execution, delivery and
performance of this Second Amendment to Keep-Well Agreement and any instruments
or agreements required hereunder, and
(iii) that the Organizational Documents of such Sponsor have not been
modified since the date on which they were last delivered to the Administrative
Agent,
upon which certificate the Administrative Agent and the Lenders (collectively,
the "Financing Parties") may conclusively rely until the Administrative Agent
has received a further certificate of an Authorized Representative of such
Sponsor canceling or amending such prior certificate.
(c) Fees. All reasonable fees and costs and expenses of Mayer, Brown &
Platt and other professionals employed by the Administrative Agent and all other
reasonable expenses of the Administrative Agent in connection with the
negotiation, execution and delivery of this Second Amendment to Keep-Well
Agreement and the transactions contemplated herein shall have been paid in full.
(d) Satisfactory Legal Form. Each Financing Party and its counsel shall
have received all information, approvals, opinions, documents or instruments as
each Financing Party or its counsel may have reasonably requested, and all
documents executed or submitted pursuant hereto by or on behalf of each Sponsor
shall be reasonably satisfactory in form and substance to each Financing Party
and its counsel.
(e) Default. After giving effect to this Second Amendment to Keep-Well
Agreement and the Seventh Amendment to Credit Agreement the following statements
shall be true and correct: (i) to the best knowledge of each Sponsor, no act or
condition exists which, with the giving of notice or passage of time would
constitute a "Default" or "Event of Default" (as defined in the Credit
Agreement, the GECC Facilities Agreement and Discount Note Indenture) has
occurred and is continuing as of the date hereof and (ii) no material adverse
change in (A) the financial condition, business, property, prospects or ability
of the Sponsors or the Borrower to perform in all material respects its
respective obligations under any Operative Document or any of the documents
evidencing and securing the FF&E Financing to which it is a party or (B) the
financial condition, business, property, prospects and ability of any other
Aladdin Party or, to the best knowledge of such Sponsor, LCNI to perform in all
material respects its obligations under any Operative Document to which it is a
party has occurred since the Closing Date.
(f) Consents and Approvals. All approvals and consents required to be
taken, given or obtained, as the case may be, by or from any Governmental
Instrumentality or another Person, or by or from any trustee (including, without
limitation, GECC and the Discount Note Indenture Trustee) or holder of any
indebtedness or obligation of the Borrower or the Sponsor, that are necessary
or, in the reasonable opinion of the Administrative Agent, advisable in
connection with the execution, delivery and performance of this Second Amendment
to Keep-Well Agreement by all parties hereto, shall have been taken, given or
obtained, as the case may be, shall be in full force and effect and the time for
appeal with respect to any thereof shall have expired (or, if an appeal shall
have been taken, the same shall have been dismissed) and shall not be subject to
any pending proceedings or appeals (administrative, judicial or otherwise) and
shall be in form and substance reasonably satisfactory to the Administrative
Agent.
(g) Delivery of Second Amendment to Keep-Well Agreement. The Sponsor shall
have delivered this Second Amendment to Keep-Well Agreement to all Persons
entitled thereto under the Operative Documents to receive delivery hereof.
(h) Opinions. The Administrative Agent shall have received such opinions
of counsel as it deems necessary, dated as of the Effective Date and addressed
to the Administrative Agent and the Lenders which shall be in form and substance
reasonably satisfactory to the Administrative Agent.
–5–
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
In order to induce each Financing Party to enter into this Second Amendment
to Keep-Well Agreement, each Sponsor, as to itself, reaffirms, as of the
Effective Date, its representations and warranties contained in the Keep-Well
Agreement (as amended by the First Amendment to Keep-Well Agreement and this
Second Amendment to Keep-Well Agreement) and additionally represents and
warrants, as to itself, unto each Financing Party as set forth in this
Article IV.
SECTION 4.1 Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by each Sponsor of this Second Amendment to Keep-Well
Agreement and each other document executed or to be executed by it in connection
with this Second Amendment to Keep-Well Agreement are within such Sponsor's
powers, have been duly authorized by all necessary action, and do not
(a)contravene such Sponsor's Organizational Documents; (b)contravene any
contractual restriction binding on or affecting such Sponsor; (c)contravene any
court decree or order or Legal Requirement binding on or affecting such Sponsor;
or (d)result in, or require the creation or imposition of, any Lien on any of
such Sponsor's properties except as expressly contemplated by the Operative
Documents,
and the Financing Parties may conclusively rely on such representation and
warranty.
SECTION 4.2 Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Sponsor of this Second Amendment to Keep-Well
Agreement or any other document to be executed by it in connection with this
Second Amendment to Keep-Well Agreement.
SECTION 4.3 Validity, etc. This Second Amendment to Keep-Well Agreement
constitutes the legal, valid and binding obligations of the Sponsors enforceable
in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors rights generally and by general principles of equity.
SECTION 4.4 Limitation. Except as expressly provided hereby, all of the
representations, warranties, terms, covenants and conditions of the Keep-Well
Agreement, as amended by the First Amendment to Credit Agreement and this Second
Amendment to Credit Agreement and each other Operative Document shall remain
unamended and unwaived and shall continue to be, and shall remain, in full force
and effect in accordance with their respective terms. The amendments and
modifications set forth herein shall be limited precisely as provided for
herein, and shall not be deemed to be a waiver of, amendment or modification of
any other term or provision of the Keep-Well Agreement or other Instrument
referred to therein or herein, or of any transaction or further or future action
on the part of the Borrower or any other Person which would require the consent
of the Agents, the Lenders, GECC or the Discount Note Indenture Trustee.
SECTION 4.5 Offsets and Defenses. The Sponsors have no offsets or defenses
to their obligations under the Loan Documents to which they are a party and no
claims or counterclaims against any of the Agents or the Lenders.
–6–
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ARTICLE 5
MISCELLANEOUS PROVISIONS
SECTION 5.1 Headings. The various headings of this Second Amendment to
Keep-Well Agreement are inserted for convenience only and shall not affect the
meaning or interpretation of this Second Amendment to Keep-Well Agreement or any
provisions hereof.
SECTION 5.2 Applicable Law. THIS SECOND AMENDMENT TO KEEP-WELL AGREEMENT
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SECOND AMENDMENT TO
KEEP-WELL AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND
CONFLICTS OF LAW RULES OF SUCH STATE.
SECTION 5.3 Cross-References. References in this Second Amendment to
Keep-Well Agreement to any Article or Section are, unless otherwise specified,
to such Article or Section of this Second Amendment to Keep-Well Agreement.
SECTION 5.4 Operative Document. This Second Amendment to Keep-Well
Agreement is a Loan Document executed pursuant to the Credit Agreement and shall
(unless otherwise expressly indicated therein) be construed, administered and
applied in accordance with the terms and provisions of the Credit Agreement.
SECTION 5.5 Successors and Assigns. This Second Amendment to Keep-Well
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
SECTION 5.6 Counterparts. This Second Amendment to Keep-Well Agreement may
be executed by the parties hereto in any number of counterparts and on separate
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
–7–
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IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
to Keep-Well Agreement as of the day and year first above written.
ALADDIN BAZAAR HOLDINGS, LLC
By:
--------------------------------------------------------------------------------
Name: Title:
ALADDIN HOLDINGS, LLC
By:
--------------------------------------------------------------------------------
Name: Title:
THE TRUST UNDER ARTICLE SIXTH
UNDER THE WILL OF SIGMUND SOMMER
By:
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Name: Title: Trustee
By:
--------------------------------------------------------------------------------
Name: Title: Trustee
LONDON CLUBS INTERNATIONAL PLC
By:
--------------------------------------------------------------------------------
Name: Title:
THE BANK OF NOVA SCOTIA,
as the Administrative Agent
By:
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Name: Title:
–8–
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QuickLinks
SECOND AMENDMENT TO KEEP-WELL AGREEMENT
SECOND AMENDMENT TO KEEP-WELL AGREEMENT
W I T N E S S E T H
ARTICLE 1 AMENDMENTS
ARTICLE 2 RATIFICATION AND REAFFIRMATION
ARTICLE 3 CONDITIONS PRECEDENT AND COVENANT
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
ARTICLE 5 MISCELLANEOUS PROVISIONS
|
Exhibit 10.121
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of November 1, 2000, is by and between JAMES F. YOUNG (the "Employee") and
MEDIMMUNE, INC., a Delaware corporation (the "Company") and supercedes the Employment Agreement between them dated as of November 1,
1998.
The Company and the Employee hereby agree as follows:
1. Employment. The Company hereby employs the Employee, and the Employee hereby accepts employment by the
Company, upon the terms and conditions hereinafter set forth.
2. Term. Subject to the provisions for earlier termination as herein provided, the employment of the Employee
hereunder will be for the period commencing on the date hereof and ending on the second anniversary of such date. Such period may be
extended, with the consent of the Employee, for one or more one-year periods by resolution adopted by the Compensation and Stock
Committee (the "Compensation Committee") of the Board of Directors of the Company (the "Board"). The period of the Employee's
employment under this Agreement, as it may be terminated or extended from time to time as provided herein, is referred to hereafter
as the "Employment Period."
3. Duties and Responsibilities. The Employee will be employed by the Company in the position set forth on
Annex A, a copy of which is attached hereto and the terms of which are incorporated herein by reference. The Employee will
faithfully perform the duties and responsibilities of such office, as they may be assigned from time to time by the Board or the
Board's designee.
4. Time to be Devoted to Employment. Except for vacation in accordance with the Company's policy in effect
from time to time and absences due to temporary illness, the Employee shall devote full time, attention and energy during the
Employment Period to the business of the Company. During the Employment Period, the Employee will not be engaged in any other
business activity which, in the reasonable judgment of the Board or its designee, conflicts with the duties of the Employee
hereunder, whether or not such activity is pursued for gain, profit or other pecuniary advantage.
5. Compensation; Reimbursement.
(a) Base Salary. The Company (or, at the Company's option, any subsidiary or affiliate thereof) will pay to
the Employee an annual base salary of not less than the amount specified as the Initial Base Salary on Annex A, payable
semi-monthly. The Employee's base salary shall be reviewed annually by the Compensation Committee and shall be subject to increase
at the option and sole discretion of the Compensation Committee.
(b) Bonus. The Employee shall be eligible to receive, at the sole discretion of the Compensation Committee, an
annual cash bonus based on pre-determined performance standards of the Company.
(c) Benefits; Stock Options. In addition to the salary and cash bonus referred to above, the Employee shall be
entitled during the Employment Period to participate in such employee benefit plans or programs of the Company, and shall be entitled
to such other fringe benefits, as are from time to time made available by the Company generally to employees of the Employee's
position, tenure, salary, age, health and other qualifications. Without limiting the generality of the foregoing, the Employee shall
be eligible for such awards, if any, under the Company's stock option plan as shall be granted to the Employee by the Compensation
Committee or other appropriate designee of the Board acting in its sole discretion. The Employee acknowledges and agrees that the
Company does not guarantee the adoption or continuance of any particular employee benefit plan or program or other fringe benefit
during the Employment Period, and participation by the Employee in any such plan or program shall be subject to the rules and
regulations applicable thereto.
(d) Expenses. The Company will reimburse the Employee, in accordance with the practices in effect from time to
time for other officers or staff personnel of the Company, for all reasonable and necessary traveling expenses and other
disbursements incurred by the Employee for or on behalf of the Company in the performance of the Employee's duties hereunder, upon
presentation by the Employee to the Company of appropriate vouchers.
6. Death; Disability. If the Employee dies or is incapacitated or disabled by accident, sickness or
otherwise, so as to render the Employee mentally or physically incapable of performing the services required to be performed by the
Employee under this Agreement for a period that would entitle the Employee to qualify for long-term disability benefits under the
Company's then-current long-term disability insurance program or, in the absence of such a program, for a period of 90 consecutive
days or longer (such condition being herein referred to as a "Disability"), then (i) in the case of the Employee's death, the
Employee's employment shall be deemed to terminate on the date of the Employee's death or (ii) in the case of a Disability, the
Company, at its option, may terminate the employment of the Employee under this Agreement immediately upon giving the Employee notice
to that effect. Disability shall be determined by the Board or the Board's designee. In the case of a Disability, until the Company
shall have terminated the Employee's employment hereunder in accordance with the foregoing, the Employee shall be entitled to receive
compensation provided for herein notwithstanding any such physical or mental disability.
7. Termination For Cause. The Company may, with the approval of a majority of the Board, terminate the
employment of the Employee hereunder at any time during the Employment Period for "cause" (such termination being hereinafter called
a "Termination for Cause") by giving the Employee notice of such termination, upon the giving of which such termination will take
effect immediately. For purposes of this Agreement, "cause" means (i) the Employee's willful and substantial misconduct, (ii) the
Employee's repeated, after written notice from the Company, neglect of duties or failure to act which can reasonably be expected to
affect materially and adversely the business or affairs of the Company or any subsidiary or affiliate thereof, (iii) the Employee's
material breach of any of the agreements contained in Sections 13, 14 or 15 hereof, (iv) the commission by the Employee of any
material fraudulent act with respect to the business and affairs of the Company or any subsidiary or affiliate thereof or (v) the
Employee's conviction of (or plea of nolo contendere to) a crime constituting a felony.
8. Termination Without Cause. The Company may terminate the employment of the Employee hereunder at any time
without "cause" (such termination being hereinafter called a "Termination Without Cause") by giving the Employee notice of such
termination, upon the giving of which such termination will take effect not later than 30 days from the date such notice is given.
9. Voluntary Termination. Any termination of the employment of the Employee hereunder, otherwise than as a
result of death or Disability, a Termination For Cause, a Termination Without Cause or a termination for Good Reason (as defined
below) following a Change in Control (as defined below), will be deemed to be a "Voluntary Termination." A Voluntary Termination
will be deemed to be effective immediately upon such termination.
10. Effect of Termination of Employment.
(a) Voluntary Termination; Termination For Cause. Upon the termination of the Employee's employment hereunder
pursuant to a Voluntary Termination or a Termination For Cause, neither the Employee nor the Employee's beneficiaries or estate will
have any further rights or claims against the Company under this Agreement except the right to receive (i) the unpaid portion of the
base salary provided for in Section 5(a) hereof, computed on a pro rata basis to the date of termination, (ii) payment of his accrued
but unpaid rights in accordance with the terms of any incentive compensation, stock option, retirement, employee welfare or other
employee benefit plans or programs of the Company in which the Employee is then participating in accordance with Sections 5(b) and
5(c) hereof and (iii) reimbursement for any expenses for which the Employee shall not have theretofore been reimbursed as provided in
Section 5(d) hereof.
(b) Termination Without Cause. Upon the termination of the Employee's employment as a Termination Without
Cause, neither the Employee nor the Employee's beneficiaries or estate will have any further rights or claims against the Company
under this Agreement except the right to receive (i) the payments and other rights provided for in Section 10(a) hereof, (ii)
severance payments in the form of semi-monthly payment of the Employee's base salary (as in effect immediately prior to such
termination) and of the Pro-Rata Bonus Amount (as defined below) for a period of 24 months following the effective date of such
termination, and (iii) continuation of the medical benefits coverage to which the Employee is entitled under Section 5(c) hereof over
the 24 month period provided in clause (ii) above, with such coverage to be provided at the same level and subject to the same terms
and conditions (including, without limitation, any applicable co-pay obligations of the Employee, but excluding any applicable tax
consequences for the Employee) as in effect from time to time for officers of the Company generally. For the purposes of this
Agreement, "Pro-Rata Bonus Amount" shall mean one-twenty-fourth (1/24th) of the greater of (a) the most recent annual cash bonus paid
to the Employee prior to the date of his termination, or (b) the average of the three most recent annual cash bonuses paid to the
Employee prior to the date of his termination. The rights of the Employee and the obligations of the Company under this Section
10(b) shall remain in full force and effect notwithstanding the expiration of the Employment Period, whether by failure of the
Compensation Committee to extend such period or otherwise.
(c) Death and Disability. Upon the termination of the Employee's employment hereunder as a result of death or
Disability, neither the Employee nor the Employee's beneficiaries or estate will have any further rights or claims against the
Company under this Agreement except the right to receive (i) the payments and other rights provided for in Section 10(a) hereof, (ii)
a lump-sum payment, within 15 days after the effective date of such termination, equal to the aggregate amount of the Employee's base
salary as in effect immediately prior to such termination that would be payable over a period of 12 months following the effective
date of such termination and (iii) in the case of Disability only, continuation of the medical benefits coverage to which the
Employee is entitled under Section 5(c) hereof over the same period with respect to which the lump-sum payment is calculated under
clause (ii) above, with such coverage to be provided at the same level and subject to the same terms and conditions (including,
without limitation, any applicable co-pay obligations of the Employee, but excluding any applicable tax consequences for the
Employee) as in effect from time to time for officers of the Company generally.
(d) Forfeiture of Rights. In the event that, subsequent to termination of employment hereunder, the Employee
(i) breaches any of the provisions of Section 13, 14 or 15 hereof or (ii) directly or indirectly makes or facilitates the making of
any adverse public statements or disclosures with respect to the business or securities of the Company, all payments and benefits to
which the Employee may otherwise have been entitled pursuant to Section 10(a), 10(b) or 11 hereof shall immediately terminate and be
forfeited, and any portion of such amounts as may have been paid to the Employee shall forthwith be returned to the Company.
11. Change in Control Provisions.
(a) Effect of Change in Control. In the event of a Change in Control during the Employment Period, all options
held by the Employee to purchase shares of the Company's stock that are not then vested and exercisable shall become immediately and
fully vested and exercisable as of the effective date of the Change in Control.
(b) Effect of Termination Following Change in Control. In the event of a Change in Control during the
Employment Period and a subsequent termination of the Employee's employment, either by the Company as a Termination Without Cause or
by the Employee for Good Reason, whether or not such termination is during the Employment Period, the Employee shall be entitled to
receive (i) the payments and other rights provided in Section 10(a) hereof, (ii) a severance payment in the form a cash lump sum,
which shall be paid within 15 days of the date of termination, equal to the sum of the Employee's semi-monthly base salary (as in
effect immediately prior to such termination) and the Pro-Rata Bonus Amount (as determined under Section 10(b) above) multiplied by
72 (i.e., that would have been payable on a semi-monthly basis during the 36 months following such termination), but discounted to
present value from the dates such payments would be made if paid on a semi-monthly basis for such 36 month period, based on the 100%
short-term Applicable Federal Rate (compounded annually) under Section 1274(d) of the Internal Revenue Code of 1986, as amended (the
"Code") as in effect at the time of payment, and (iii) continuation of the medical benefits coverage to which the Employee is
entitled under Section 5(c) hereof for a period of 36 months from the date of the Employee's termination of employment, with such
coverage to be provided at the same level and subject to the same terms and conditions (including, without limitation, any applicable
co-pay obligations of the Employee, but excluding any applicable tax consequences for the Employee) as in effect from time to time
for officers of the Company generally. In addition, upon any such Termination Without Cause or for Good Reason that occurs within
six months following the effective date of a Change in Control, the Employee shall retain the right to exercise any options to
purchase shares of the Company's stock until the earlier of (a) 36 months following the date of such termination or (b) the
expiration of the original full term of each such option.
(c) Definition of Change in Control. For purposes of this Agreement, a "Change in Control" shall be deemed to
have occurred upon:
(i) an acquisition subsequent to the date hereof by any person, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person"), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then
outstanding shares of common stock of the Company ("Common Stock") or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition
by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from
the Company, (2) any acquisition by the Company and (3) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company;
(ii) a change in the composition of the Board such that during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this
paragraph) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at
least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of
the members thereof;
(iii) the approval by the stockholders of the Company of a merger, consolidation, reorganization or similar
corporate transaction, whether or not the Company is the surviving corporation in such transaction, in which outstanding
shares of Common Stock are converted into (A) shares of stock of another company, other than a conversion into shares of
voting common stock of the successor corporation (or a holding company thereof) representing 80% of the voting power of all
capital stock thereof outstanding immediately after the merger or consolidation or (B) other securities (of either the
Company or another company) or cash or other property;
(iv) the approval by stockholders of the Company of the issuance of shares of Common Stock in connection with a
merger, consolidation, reorganization or similar corporate transaction in an amount in excess of 40% of the number of shares
of Common Stock outstanding immediately prior to the consummation of such transaction;
(v) the approval by the stockholders of the Company of (A) the sale or other disposition of all or
substantially all of the assets of the Company or (B) a complete liquidation or dissolution of the Company; or
(vi) the adoption by the Board of a resolution to the effect that any person has acquired effective control of
the business and affairs of the Company.
(d) Good Reason Following Change in Control. For purposes of this Agreement, termination for "Good Reason"
shall mean termination by the Employee of his employment with the Company, within six months immediately following a Change in
Control, based on:
(i) any diminution in the Employee's position, title, responsibilities or authority from those in effect
immediately prior to such Change in Control; or
(ii) the breach by the Company of any of its material obligations under this Agreement.
12. Parachute Tax Indemnity
(a) If it shall be determined that any amount paid, distributed or treated as paid or distributed by the
Company to or for the Employee's benefit (whether paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments required under this Section 12) (a "Payment") would
be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties are incurred by the Employee with
respect to such excise tax (such excise tax, together with any such interest and penalties, being hereinafter collectively referred
to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Employee of all federal, state and local taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon all the Payments.
(b) All determinations required to be made under this Section 12, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by a nationally recognized accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Employee within 15 business days of the receipt of notice from the
Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm
is serving as accountant or auditor for the individual, entity or group effecting the change in control, the Employee shall appoint
another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 12, shall be paid by the Company to the Employee within five days of the
receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the
Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to this Section 12 and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the Employee's benefit.
(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later then ten business days after the Employee is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to
the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by the Company relating to such claim,
(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected
by the Company,
(iii) cooperate with the Company in good faith in order to effectively contest such claim, and
(iv) permit the Company to participate in any proceeding relating to such claim; provided, however, that the Company shall bear
and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and payment of costs and expense. Without limitation on
the foregoing provisions of this Section 12, the Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension
of the statute of limitations relating to payment of taxes for the Employee's taxable year with respect to which such contested
amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the Employee's receipt of an amount advanced by the Company pursuant to this Section 12, the
Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying
with the requirements of this Section 12) promptly pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the Employee's receipt of an amount advanced by the Company pursuant to
this Section 12, a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the
Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) The foregoing provisions of this Section 12 are intended to supersede the provisions of Section 7(b) of the
Company's 1991 Stock Option Plan as applied to the Employee.
13. Disclosure of Information. The Employee will not, at any time during or after the Employment Period,
disclose to any person, firm, corporation or other business entity, except as required by law, any non-public information concerning
the business, products, clients or affairs of the Company or any subsidiary or affiliate thereof for any reason or purpose
whatsoever, nor will the Employee make use of any of such non-public information for personal purposes or for the benefit of any
person, firm, corporation or other business entity except the Company or any subsidiary or affiliate thereof.
14. Restrictive Covenant. (a) The Employee hereby acknowledges and recognizes that, during the Employment
Period, the Employee will be privy to trade secrets and confidential proprietary information critical to the Company's business and
the Employee further acknowledges and recognizes that the Company would find it extremely difficult or impossible to replace the
Employee and, accordingly, the Employee agrees that, in consideration of the benefits to be received by the Employee hereunder, the
Employee will not, from and after the date hereof until the first anniversary of the termination of the Employment Period (or six
months after the termination of the Employment Period if such termination is as a result of a termination for Good Reason following a
Change in Control), (i) directly or indirectly engage in the development, production, marketing or sale of products that compete (or,
upon commercialization, would compete) with products of the Company being developed (so long as such development has not been
abandoned), marketed or sold at the time of the Employee's termination (such business or activity being hereinafter called a
"Competing Business") whether such engagement shall be as an officer, director, owner, employee, partner, affiliate or other
participant in any Competing Business, (ii) assist others in engaging in any Competing Business in the manner described in the
foregoing clause (i), or (iii) induce other employees of the Company or any subsidiary thereof to terminate their employment with the
Company or any subsidiary thereof or engage in any Competing Business. Notwithstanding the foregoing, the term "Competing Business"
shall not include any business or activity that was not conducted by the Company prior to the effective date of a Change in Control.
(b) The Employee understands that the foregoing restrictions may limit the ability of the Employee to earn a
livelihood in a business similar to the business of the Company, but nevertheless believes that the Employee has received and will
receive sufficient consideration and other benefits, as an employee of the Company and as otherwise provided hereunder, to justify
such restrictions which, in any event (given the education, skills and ability of the Employee), the Employee believes would not
prevent the Employee from earning a living.
15. Company Right to Inventions. The Employee will promptly disclose, grant and assign to the Company, for its
sole use and benefit, any and all inventions, improvements, technical information and suggestions relating in any way to the business
of the Company which the Employee may develop or acquire during the Employment Period (whether or not during usual working hours),
together with all patent applications, letters patent, copyrights and reissues thereof that may at any time be granted for or upon
any such invention, improvement or technical information. In connection therewith:
(i) the Employee shall, without charge, but at the expense of the Company, promptly at all times hereafter
execute and deliver such applications, assignments, descriptions and other instruments as may be necessary or proper in the
opinion of the Company to vest title to any such inventions, improvements, technical information, patent applications,
patents, copyrights or reissues thereof in the Company and to enable it to obtain and maintain the entire right and title
thereto throughout the world; and
(ii) the Employee shall render to the Company, at its expense (including a reasonable payment for the time
involved in case the Employee is not then in its employ), all such assistance as it may require in the prosecution of
applications for said patents, copyrights or reissues thereof, in the prosecution or defense of interferences which may be
declared involving any said applications, patents or copyrights and in any litigation in which the Company may be involved
relating to any such patents, inventions, improvements or technical information.
16. Enforcement. It is the desire and intent of the parties hereto that the provisions of this Agreement be
enforceable to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, to the extent that a restriction contained in this Agreement is more restrictive than permitted by the laws of
any jurisdiction where this Agreement may be subject to review and interpretation, the terms of such restriction, for the purpose
only of the operation of such restriction in such jurisdiction, will be the maximum restriction allowed by the laws of such
jurisdiction and such restriction will be deemed to have been revised accordingly herein.
17. Remedies; Survival. (a) The Employee acknowledges and understands that the provisions of the covenants
contained in Sections 13, 14 and 15 hereof, the violation of which cannot be accurately compensated for in damages by an action at
law, are of crucial importance to the Company, and that the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. In the event of a breach or threatened breach by the Employee of the provisions of Section 13,
14 or 15 hereof, the Company will be entitled to an injunction restraining the Employee from such breach. Nothing herein contained
will be construed as prohibiting the Company from pursuing any other remedies available for any breach or threatened breach of this
Agreement.
(b) Notwithstanding anything contained in this Agreement to the contrary, the provisions of Sections 10(b), 13,
14, 15, 16 and 17 hereof will survive the expiration or other termination of this Agreement until, by their terms, such provisions
are no longer operative.
18. Notices. Notices and other communications hereunder will be in writing and will be delivered personally or
sent by air courier or first class certified or registered mail, return receipt requested and postage prepaid, addressed as follows:
if to the Employee: as specified in Annex A
and if to the Company: MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, Maryland 20878
Attention: Chief Executive Officer
with a copy to: Frederick W. Kanner, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
All notices and other communications given to any party hereto in accordance with the provisions of this Agreement will be deemed to
have been given on the date of delivery, if personally delivered; on the business day after the date when sent, if sent by air
courier; and on the third business day after the date when sent, if sent by mail, in each case addressed to such party as provided in
this Section 18 or in accordance with the latest unrevoked direction from such party.
19. Binding Agreement; Benefit. The provisions of this Agreement will be binding upon, and will inure to the
benefit of, the respective heirs, legal representatives and successors of the parties hereto.
20. Governing Law. This Agreement will be governed by, and construed and enforced in accordance with, the laws
of the State of Maryland.
21. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement by the other
party must be in writing and will not operate or be construed as a waiver of any subsequent breach by such other party.
22. Entire Agreement; Amendments. This Agreement (including Annex A) contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements or understandings among the parties with
respect thereof including, without limitation, that certain employment agreement between the parties dated as of April 1, 1997. This
Agreement may be amended only by an agreement in writing signed by the parties hereto.
23. Headings. The section headings contained in this Agreement are for reference purposes only and will not
affect in any way the meaning or interpretation of this Agreement.
24. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction
will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render
unenforceable such provision in any other jurisdiction.
25. Assignment. This Agreement is personal in its nature and the parties hereto shall not, without the consent
of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, that the provisions hereof
(including, without limitation, Sections 13, 14 and 15) will inure to the benefit of, and be binding upon, each successor of the
Company, whether by merger, consolidation, transfer of all or substantially all of its assets or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.
EMPLOYEE MEDIMMUNE, INC.
/s/ James F. Young By: /s/ David M. Mott
James F. Young David M. Mott
F-1
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EXHIBIT 10.24
PREVIEW SYSTEMS, INC.
OFFICER RETENTION, SEVERANCE, AND ACCELERATED VESTING AGREEMENT
Name: Patrick Reutens Date: March 16, 2001
Preview Systems wishes to provide you with an incentive to continue in the
service of the Company through certain potential transactions and for a
reasonable period of time thereafter. If you wish to receive the benefits of the
Retention Bonus and Severance Agreement, please sign the bottom of this letter
indicating your acknowledgement and agreement to the terms described in this
letter, and return it to HR no later than 5:00 p.m. on March 23, 2001.
Retention Bonus Amount:
Lump sum payment equal to three months of your base salary plus 25% of your
target bonus for this year, reduced by applicable withholding taxes.
Severance Amount: Lump sum payment equal to three months of your base
salary plus 25% of your target bonus for this year, reduced by applicable
withholding taxes.
Accelerated Vesting: 50% of unvested options or unvested stock subject to
repurchase.
Conditions for Receipt of the Retention Bonus: You will receive the
Retention Bonus if
One of the following circumstances applies to you:
•You continue in the active full time employment of Preview until June 30, 2001;
or
•You are terminated from your employment by Preview other than for cause before
June 30, 2001.
And you meet each of the following conditions:
•You maintain the confidentiality of this Retention Bonus offer.
•You sign and return a general release of claims in a form provided by Preview
Systems (a copy of which is attached) within the time frame described on the
release.
Conditions for Receipt of the Severance Amount:
•Your employment with the Company is terminated by the Company other than for
cause, and other than on account of your commencement of employment with an
acquiring company.
And you meet each of the following conditions:
•You maintain the confidentiality of this Severance offer.
•You sign and return a general release of claims in a form provided by Preview
Systems (a copy of which is attached) within the time frame described on the
release.
--------------------------------------------------------------------------------
Condition for Receipt of Accelerated Vesting: Termination of employment
other than for cause, and you sign and return a general release of claims.
Preview Systems, Inc.
By:
--------------------------------------------------------------------------------
Title: President & CEO
ACKNOWLEDGED AND ACCEPTED:
--------------------------------------------------------------------------------
Date:
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EXHIBIT 10.24
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Exhibit 10.5
MODIFICATION OF PROMISSORY NOTE
This Modification of Promissory Note ("Modification") is made this 15th day
of September 2000 by and between William C. Huddleston ("Maker") and STAAR
Surgical Company ("Holder") in reference to the following facts:
RECITALS
A. On February 28, 1991, Maker executed a Promissory Note ("Note") in favor
of Holder for the amount of $119,185.
B. The current unpaid principal balance of the Note is $89,185.
C. Maker and Holder have agreed to modify the terms of the Note.
AGREEMENT
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are acknowledged, Maker and Holder agree as follows:
1. Extension of Term. Paragraph 3 of the Note shall be modified to state,
"Subject to paragraph 7 below, Maker shall pay the Principal Amount and all
accrued and unpaid interest on the Principal Amount and all other indebtedness
due under this Note on September 4, 2003, provided, however, that if Maker's
employment with Holder is terminated prior to September 4, 2003 (a) by Holder
without cause or (b) by Maker for any reason, then Maker shall pay the Principal
Amount and all accrued and unpaid interest on the Principal Amount and all other
indebtedness due under this Note on a date which is the later of September 4,
2003 or two years from the date of such termination. Irrespective of the
foregoing, payment of this Note is subject to the terms of that certain
Employment Agreement dated October 1, 1999 by and between Maker and Holder, as
such Employment Agreement was modified on August 21, 2000, the terms of which
are incorporated into this Note by reference."
2. Remaining Provisions Shall Remain. All other terms and provisions of the
Note shall remain the same.
3. Attachment to Note Upon Execution. Upon execution, this Modification
shall be attached by Holder to the Note and shall become a part of it.
WHEREAS, Maker and Holder have executed this Modification as of the date set
forth above.
"MAKER"
/s/ WILLIAM C. HUDDLESTON
--------------------------------------------------------------------------------
William C. Huddleston
"HOLDER"
STARR Surgical Company, a Delaware corporation
By:
/s/ ANDREW F. POLLET
--------------------------------------------------------------------------------
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Exhibit 10.5
MODIFICATION OF PROMISSORY NOTE
RECITALS
AGREEMENT
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Exhibit 10.1
EQUITY MARKETING, INC.
FIRST AMENDMENT
TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated as of
November 14, 2001 by and among EQUITY MARKETING, INC., a Delaware corporation
("Borrower"), the financial institutions party to the Amended Agreement (as
defined below) from time to time ("Lenders"), and BANK OF AMERICA, N.A., as
Administrative Agent, Swing Line Lender and Issuing Lender and is made with
reference to that certain Credit Agreement dated as of April 24, 2001 (the
"Credit Agreement"), by and among Borrower, Lenders, Administrative Agent, Swing
Line Lender and Issuing Lender. Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Credit Agreement.
RECITAL
WHEREAS, Borrower and Lenders desire to amend the Credit Agreement as set
forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
2. AMENDMENTS TO THE CREDIT AGREEMENT
(a)Amendments to Section 1.01.
1.The definition for "Consolidated Fixed Charges" is hereby amended and restated
as follows:
"Consolidated Fixed Charges" means, for any period, (without duplication) the
sum of (a) Consolidated Interest Charges payable in cash during such period,
(b) scheduled principal payments during such period on Indebtedness (not
including scheduled principal payments or reductions of Commitments under this
Agreement), (c) the Applicable Average Commitment Amount, and (d) the aggregate
amount of Restricted Payments (excluding any stock purchased to be held as
treasury stock) made by Borrower during such period, all for Borrower and its
Subsidiaries on a consolidated basis determined in accordance with GAAP."
2.The definition for "Applicable Average Commitment Amount" is hereby amended
and restated as follows":
"Applicable Average Commitment Amount" means for the Fiscal Quarter ending on
December 31, 2001 and each Fiscal Quarter thereafter, 15% of the Average
Commitment Amount."
(b)Amendments to Section 7.01.
Section 7.01 is hereby amended by (1) deleting the "and" at the end of
clause (g), (2) deleting the "." at the end of clause (h) and inserting "; and"
in its place, and (3) adding the following clause (i):
"(i) Indebtedness of Borrower to any of its Subsidiaries permitted under
Section 7.05(d) not exceeding $1,000,000 in the aggregate at any time
outstanding."
(c)Amendment to Section 7.05.
Section 7.05 is hereby amended and restated in its entirety as follows:
"7.05 Investments; Acquisitions. Make or commit to make any Investments or
Acquisitions, except:
(a)Investments existing on the date hereof;
(b)Ordinary Course Investments;
(c)Investments permitted by Section 7.03;
--------------------------------------------------------------------------------
(d)other Investments of Borrower or any Subsidiary of Borrower not exceeding
$1,000,000 in the aggregate at any time; and
(e)so long as no Trigger Event has occurred or would occur after giving pro
forma effect thereto, Permitted Acquisitions."
(d)Amendment to Section 7.06.
Section 7.06 is hereby amended by (1) deleting "." at the end of clause (b)
and inserting ";" in its place, and (2) inserting the following proviso at the
end of the entire section:
"provided, however, immediately after any Restricted Payment expressly relating
to treasury stock is made and after giving pro forma effect thereto, Borrower's
cash and cash equivalents plus the unused and available Borrowing Base shall be
equal to or exceed $28,000,000."
(e)Amendment to Section 7.12(a).
Section 7.12(a) is hereby amended and restated in its entirety as follows:
"(a) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio as
of the last day of any Fiscal Quarter set forth below to be less than the
correlative ratio set forth below:
Fiscal Quarter Ending On
--------------------------------------------------------------------------------
Fixed Charge Coverage Ratio
--------------------------------------------------------------------------------
December 31, 2001 1.30:1.00 March 31, 2002 1.30:1.00 June 30, 2002
1.30:1.00 September 30, 2002 1.30:1.00 December 31, 2002 and each Fiscal
Quarter thereafter 1.50:1.00"
3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and thereby amend
the Credit Agreement in the manner provided herein, Borrower represents and
warrants to each Lender that the following statements are true, correct and
complete:
(a) Corporate Power and Authority. Borrower has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").
(b) Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Borrower.
(c) Binding Obligation. This Amendment and the Amended Agreement are the
legal, valid and binding obligation of Borrower, enforceable against it in
accordance with their terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles, and any instrument or
agreement required hereunder or by the Amended Agreement, in each case, when
executed and delivered, will be similarly valid, binding and enforceable.
(d) Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 5 of the
Credit Agreement are true, correct and complete in all material respects, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
(e) Absence of Default. No event has occurred and is continuing or will
result from the consummation of this Amendment that would constitute an Event of
Default or a Default.
--------------------------------------------------------------------------------
4. MISCELLANEOUS
(a) Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
1. On and after the Effective Date, each reference in the Credit Agreement
to "this Agreement", "hereunder", "hereof", "herein" or words of like import
referring to the Credit Agreement, and each reference in the other documents
entered pursuant to the Credit Agreement to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.
2. Except as specifically amended by this Amendment, the Credit Agreement
and the other documents entered pursuant to the Credit Agreement shall remain in
full force and effect and are hereby ratified and confirmed.
3. The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision of, or
operate as a waiver of any right, power or remedy of Administrative Agent or any
Lender under the Credit Agreement or any of the other Loan Documents.
(b) Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
(c) California Law. This Agreement shall be governed by, and shall be
construed and enforced in accordance with, the internal laws of the State of
California, without regard to conflicts of laws principles.
(d) Counterparts; Effectiveness. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment shall become effective as of September 30,
2001 (the "Effective Date") upon the execution of a counterpart hereof by
Borrower and Required Lenders and receipt by Borrower and Administrative Agent
of written or telephonic notification of such execution and authorization of
delivery thereof.
[Remainder of page intentionally left blank]
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Credit Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
EQUITY MARKETING, INC.
as Borrower
By:
/s/ KENT R. CRANDALL
--------------------------------------------------------------------------------
Name: Kent R. Crandall
Title: Treasurer
BANK OF AMERICA, N.A.
as Administrative Agent
By:
/s/ KEN PURO
--------------------------------------------------------------------------------
Name: Ken Puro
Title: Vice President
BANK OF AMERICA, N.A.
as Lender, Issuing Lender and Swine Line Lender
By:
/s/ DAVID J. STASSEL
--------------------------------------------------------------------------------
Name: David J. Stassel
Title: Vice President
--------------------------------------------------------------------------------
QuickLinks
EQUITY MARKETING, INC. FIRST AMENDMENT TO CREDIT AGREEMENT
RECITAL
|
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Exhibit 10-o
STOCK SAVINGS PLAN
Plan Effective: January 1, 1991
As amended through: March 31, 2000
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Article Page
1 Statement of Purpose 1
2 Definitions 1
3 Administration of the Plan 4
3.1 The Committee 4
3.2 Authorized Shares of Stock 4
4 Contributions 5
4.1 Election to Make Contributions 5
4.2 Purchase of Share Units 5
4.3 Reinvestment of Dividends 6
4.4 Deferral of Other Stock Awards 6
5 SBC Match 7
5.1 SBC Match 7
5.2 Vesting and Distribution of Share Units Acquired with 7
Matching
Contributions
6 Distributions 7
6.1 Distributions of Share Units 7
6.2 Accelerated Distribution 8
6.3 Small Distribution 8
6.4 Determination by Internal Revenue Service 8
6.5 Emergency Distribution 8
6.6 Ineligible Participant 9
6.7 Distribution Process 9
7 Transition Provisions 9
7.1 Effective Dates 9
7.2 Combination of Share Units 9
7.3 Termination of Elections 10
7.4 Annual Base Salary Contribution Transition 10
7.5 Stock Options 10
8 Options 10
8.1 Grants 10
8.2 Term of Options 11
8.3 Exercise Price 11
8.4 Issuance of Options 11
8.5 Exercise and Payment of Options 12
8.6 Restrictions on Exercise and Transfer 13
8.7 Termination of Employment 13
9 Discontinuation, Termination, Amendment 13
9.1 SBC's Right to Discontinue Offering Share Units 13
9.2 SBC's Right to Terminate Plan 13
9.3 Amendment 14
10 Miscellaneous 14
10.1 Additional Benefit 14
10.2 Tax Withholding 14
10.3 Elections and Notices 15
10.4 Unsecured General Creditor 15
10.5 Offset 15
10.6 Non-Assignability 15
10.7 Employment Not Guaranteed 16
10.8 Errors 16
10.9 Captions 16
10.10 Governing Law 16
10.11 Validity 16
10.12 Successors and Assigns 16
10.13 Participation in Predecessor Plans 16
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SBC COMMUNICATIONS INC.
STOCK SAVINGS PLAN
As amended through March 31, 2000
Article 1 - Statement of Purpose
The purpose of the Stock Savings Plan ("Plan") is to increase stock
ownership by, and to provide retirement and savings opportunities to, a
select group of management employees consisting of Eligible Employees of SBC
Communications Inc. ("SBC" or the "Company") and its Subsidiaries.
Article 2 - Definitions
For the purposes of this Plan, the following words and phrases shall
have the meanings indicated, unless the context indicates otherwise:
After-Tax Account. The account maintained on an after-tax basis on the
books of account of SBC for each Participant.
Base Compensation. The following types of cash-based compensation, in
each case as determined by SBC, paid by an Employer (but not including
payments made by a non-Employer, such as state disability payments), before
reduction due to any contribution pursuant to this Plan or reduction pursuant
to any deferral plan of an Employer, including but not limited to a plan that
includes a qualified cash or deferral arrangement under Section 401(k) of the
Internal Revenue Code, as amended ("Code"):
(a) annual base salary;
(b) commissions;
(c) Team Award (the annual award determined to be the "Team Award" by
SBC together with the individual award determined by SBC to be the
Individual Discretionary Award made in connection therewith) or
comparable awards, if any, determined by SBC to be used in lieu of
these awards. Unless otherwise provided by SBC, Team Award shall
include, among other things, bonus awards under the Ameritech
Management Incentive Plan or the Ameritech Senior Management Short Term
Incentive Plan.
Payments by an Employer under a Disability plan made in lieu of any
compensation described in (a), (b) or (c), above, shall be deemed to be a
part of the respective form of compensation it replaces for purposes of this
definition. Base Compensation does not include zone allowances or any other
geographical differential and shall not include payments made in lieu of
unused vacation or other paid days off, and such payments shall not be
contributed to this Plan.
Business Day. Any day during regular business hours that SBC is open
for business.
Chairman. The Chairman of the Board of Directors of SBC Communications
Inc.
Committee. The Human Resources Committee of the Board of Directors of
SBC Communications Inc.
Disability. Absence of an Employee from work with an Employer under
the relevant Employer's disability plan, but only while such Employee is
deemed by the Employer to be an Employee of such Employer.
Eligible Employee. An Employee who:
(a) is a full time, salaried Employee of SBC or an Employer in which
SBC has a direct or indirect 100% ownership interest and who is on active
duty, Disability or Leave of Absence;
(b) is, as determined by SBC, a member of Employer's "select group of
management or highly compensated employees" within the meaning of the
Employment Retirement Income Security Act of 1974, as amended, and
regulations thereunder ("ERISA"), and
(c) has an employment status which has been approved by the Committee
or the Chairman to be eligible to participate in this Plan.
Notwithstanding the foregoing, SBC may, from time to time, exclude any
Employee or group of Employees from being deemed an "Eligible Employee" under
this Plan.
In the event a court or other governmental authority determines that an
individual was improperly excluded from the class of persons who would be
considered Eligible Employees during a particular time for any reason, that
individual shall not be an Eligible Employee for purposes of the Plan for the
period of time prior to such determination.
Any Employee that holds options to acquire shares of AirTouch
Communications, Inc. or ordinary shares or American Depository Shares of
Vodafone AirTouch plc (or any similar rights), under the Pacific Telesis
Group Stock Option and Stock Appreciation Rights Plan or any other stock
option plan of an Employer is not an Eligible Employee and may not
participate in this Plan.
Employee. Any person employed by an Employer, excluding persons hired
for a fixed maximum term and excluding persons who are neither citizens nor
permanent residents of the United States, all as determined by SBC. For
purposes of this Plan, a person on Leave of Absence who otherwise would be an
Employee shall be deemed to be an Employee.
Employer. SBC Communications Inc. or any of its Subsidiaries.
Exercise Price. The price per share of Stock purchasable under an
Option.
Fair Market Value or FMV. In valuing Stock or any other item subject
to valuation under this Plan, the Committee may use such index or measurement
as the Committee may reasonably determine from time to time, and such index
or measurement shall be the FMV of such Stock or other item. In the absence
of such action by the Committee, FMV means, with respect to Stock, the
closing price on the New York Stock Exchange ("NYSE") of the Stock on the
relevant date, or if on such date the Stock is not traded on the NYSE, then
the closing price on the immediately preceding date such Stock is so traded.
Leave of Absence. Where a person is absent from employment with an
Employer on a formally granted leave of absence (i.e., the absence is with
formal permission in order to prevent a break in the continuity of term of
employment, which permission is granted (and not revoked) in conformity with
the rules of the Employer which employs the individual, as adopted from time
to time). For purposes of this Plan, a Leave of Absence shall be deemed to
also include a transfer of a person to an entity by an Employer for a
rotational work assignment. In the event a transfer to such an entity lasts
more than 5 years or the entity's rotational work assignment status is
canceled by SBC, it shall be deemed a Termination of Employment with the
Employer at that time for purposes of this Plan. To be a rotational work
assignment, the Employer must have indicated in writing to the person that
the person was to be rehired by the Employer on termination of the rotational
work assignment.
Options or Stock Options. Options to purchase Stock issued pursuant to
this Plan.
Participant. An Eligible Employee or former Eligible Employee who
participates in this Plan.
Pre-Tax Account. The account maintained on a pre-tax basis on the
books of account of SBC for each Participant.
Retirement or Retire. The Termination of Employment for reasons other
than death, on or after the earlier of the following dates: (1) the date the
Employee is eligible to retire with an immediate pension pursuant to the SBC
Supplemental Retirement Income Plan ("SRIP"); or (2) the date the Employee
has attained one of the following combinations of age and service at
Termination of Employment, except as otherwise indicated below:
Net Credited Service Age
10 years or more 65 or older
20 years or more 55 or older
25 years or more 50 or older
30 years or more Any age
With respect to an Employee who is granted an EMP Service Pension under
and pursuant to the provisions of the SBC Pension Benefit Plan - Nonbargained
Program upon Termination of Employment, the term "Retirement" shall include
such Employee's Termination of Employment.
Shares or Share Units. An accounting entry representing the right to
receive an equivalent number of shares of Stock.
Short Term Incentive Award. An award paid by an Employer (and not by a
non-Employer, such as state disability payments) under the Short Term
Incentive Plan; an award under a similar plan intended by the Committee to be
in lieu of an award under such Short Term Incentive Plan; the Key Executive
Officer Short Term Award paid under the 1996 Stock and Incentive Plan; or any
other award that the Committee designates as a Short Term Incentive Award
specifically for purposes of this Plan (regardless of the purpose of the
award).
Stock. The common stock of SBC Communications Inc.
Subsidiary. Any corporation, partnership, venture or other entity in
which SBC holds, directly or indirectly, a 50% or greater ownership
interest. The Committee may, at its sole discretion, designate any other
corporation, partnership, venture or other entity a Subsidiary for the
purpose of participating in this Plan.
Termination of Employment. References herein to "Termination of
Employment," "Terminate Employment" or a similar reference, shall mean the
event where the Employee ceases to be an Employee of any Employer, including
but not limited to where the employing company ceases to be an Employer.
Article 3 - Administration of the Plan
3.1 The Committee.
The Committee shall be the administrator of the Plan and will
administer the Plan, interpret, construe and apply its provisions in
accordance with its terms. The Committee may further establish, adopt or
revise such rules and regulations as it may deem necessary or advisable for
the administration of the Plan. References to determinations or other
actions by SBC, herein, shall mean actions authorized by the Committee, the
Chairman, the Senior Executive Vice President of SBC in charge of Human
Resources, or their respective successors or duly authorized delegates, in
each case in the discretion of such person. All decisions by SBC shall be
final and binding.
3.2 Authorized Shares of Stock.
(a) Except as provided below, the number of shares of Stock which may
be distributed pursuant to the Plan, exclusive of Article 8, is 21,000,000.
The number of Stock Options and shares of Stock which may be issued pursuant
to Article 8 of the Plan is 34,000,000 each. Of the foregoing Stock Options,
the number of incentive Stock Options which may be issued pursuant to the
Plan is 34,000,000. Conversions of stock awards into Share Units pursuant to
Section 4.4 and their eventual distribution shall count only against the
limits of the plans from which they are transferred or contributed and shall
not be applied against the limits in this Plan. To the extent Share Units
are acquired through deferrals of Stock or contributions of cash where the
payment of which would otherwise be deductible by SBC under Section 162(m) of
the Code regardless of the size of the distribution, and such Share Units are
available for distribution, they shall be distributed first. In the event
SBC determines that continuing the purchase of Share Units under the Plan may
cause the number of shares of Stock that are to be distributed under this
Plan (which may take into account, among other things, the number of Share
Units acquired and the number of Stock Options issued or required to be
issued, reduced by the number of shares of Stock that would be withheld for
income tax purposes) to exceed the number of authorized shares of Stock, then
SBC may cancel further purchases of Share Units and require that any further
dividend equivalents on Share Units be paid in cash to the Participants.
(b) In the event of a merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, stock split, share
combination, or other change in the corporate structure of SBC affecting the
shares of Stock, such adjustment shall be made to the number and class of the
shares of Stock which may be delivered under the Plan (including but not
limited to individual limits), and in the number and class of and/or price of
shares of Stock subject to outstanding Options granted under the Plan, and/or
in the number of outstanding Options and Share Units, in each case as may be
determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights.
Article 4 - Contributions
4.1 Election to Make Contributions.
(a) An Eligible Employee may elect to purchase Share Units through
payroll deductions contributed to the Plan as follows (such contributions to
the Plan are "Employee Contributions"):
(i) An Eligible Employee may elect to contribute from 6% to 30%
(in whole percentage increments) of his or her monthly Base
Compensation, as the same may change from time to time.
(ii) An Eligible Employee may elect to contribute up to 100% (in
whole percentage increments) of a Short Term Incentive Award.
(b) An Eligible Employee may only make an election, change an election,
or terminate an election to purchase Share Units with Employee Contributions
as follows:
(i) An Employee who is an Eligible Employee as of September 30
may make an election on or prior to the last Business Day of the
immediately following November with respect to the contribution
of Base Compensation and/or Short Term Incentive Awards paid on
or after the immediately following January 1.
(ii) An Employee who was not an Eligible Employee as of September
30 but who is an Eligible Employee the immediately following
December 31 (or such later date chosen by the Chairman or the
Committee, but not later than April 30) may make an election on
or prior to the last Business Day of the immediately following
May with respect to the contribution of Base Compensation and/or
Short Term Incentive Awards paid on or after the immediately
following July 1.
SBC may refuse or terminate any election to purchase Share Units in the
Plan at any time; provided, however, only the Committee may take such action
with respect to persons who are "officer level" Employees as shown on the
records of SBC.
4.2 Purchase of Share Units.
(a) Employee Contributions (as well as any corresponding SBC matching
contribution) shall be made solely pursuant to a proper election and only
during the Employee's lifetime and while the Employee remains an Eligible
Employee (if the Employee ceases to be an Eligible Employee, his or her
election to make Employee Contributions shall be cancelled); provided,
however, Termination of Employment of an Eligible Employee shall not
constitute loss of eligibility solely with respect to contribution of annual
base salary earned prior to termination but paid within 60 days thereafter or
with respect to a Short Term Incentive Award paid after Retirement (and such
person shall be deemed an Eligible Employee for such contributions).
(b) The number of Share Units purchased by a Participant during a
calendar month shall be found by dividing the Participant's contributions
during the month by the FMV on the last day of such month.
(c) Contributions to the Plan shall be deemed contributed when the
compensation would have otherwise actually been paid (using the "check date"
of the payment or contribution) were it not for an election under this Plan.
For example, a contribution from a payment of Base Compensation, delayed for
any reason, shall be deemed contributed when the delayed payment is made.
4.3 Reinvestment of Dividends.
In the month containing a record date for a regular cash dividend on
SBC Stock, each Participant shall be credited with that number of Share Units
equal to the declared dividend per share of Stock multiplied by the number of
Share Units held by the Participant and divided by the FMV on the last day of
the month containing the dividend record date.
4.4 Deferral of Other Stock Awards.
(a) Any Eligible Employee who (i) would receive from SBC a distribution
of Stock (including but not limited to the removal of restrictions on
restricted stock) pursuant to the 1996 Stock and Incentive Plan or pursuant
to any other plan or award specifically permitted to be contributed to this
Plan by the Committee and (ii) has not recognized any part of such
distribution for Federal income taxation purposes, may make an election on or
prior to the last Business Day of the calendar year prior to the calendar
year such Stock would otherwise actually been paid (or, for restricted stock,
the calendar year such restrictions would be removed and the stock recognized
for Federal income tax purposes) to convert such distribution into the number
of Share Units under this Plan equal to the number of shares of Stock to
which the Eligible Employee would be entitled; provided such person remains
an Eligible Employee at the time of such conversion. Distribution of such
Share Units shall be governed solely by the provisions of this Plan. SBC may
refuse or terminate any election under this Section 4.4 to convert a
distribution into Share Units in the Plan at any time; provided, however,
only the Committee may take such action with respect to persons who are
"officer level" Employees as shown on the records of SBC.
(b) Effective January 1, 2001, except for persons who die prior to
2001, deferrals of Stock made prior thereto under the Salary and Incentive
Award Deferral Plan will be converted into the number of Share Units equal to
the number of shares of Stock or the equivalent thereof then held by the
Participant through such Salary and Incentive Award Deferral Plan. Any such
conversion shall not reduce or offset the number of authorized shares of
Stock under this Plan. All elections made under such plan shall be
terminated and the distribution of such Share Units shall be governed solely
by the provisions of this Plan.
(c) The Committee may permit an Eligible Employee to purchase Share
Units under this Plan with amounts other than Base Compensation or Short Term
Incentive Awards on such terms and conditions as such Committee may permit
from time to time.
(d) In no event shall an acquisition of Share Units pursuant to this
Section 4.4 result in the crediting of an SBC matching contribution or
Options.
Article 5 - SBC Match
5.1 SBC Match.
SBC shall credit each Participant's account with the number of Share
Units found by taking eighty percent (80%) of the Participant's contributions
from no more than six percent (6%) the Participant's Base Compensation made
during the month and dividing the resulting figure by the FMV of the Stock on
the last day of such month. However, if during any month the Participant is
concurrently participating in this Plan and (a) the match eligible portion of
the SBC Savings Plan (which may be referred to as "basic contributions") or
(b) the match eligible portion of any other tax qualified or nonqualified
plan of an Employer, then the monthly matching contribution under this Plan
shall be reduced so that the total monthly matching contribution shall be
paid with respect to no more than:
(x) six percent (6%) minus
(y) the Participant's match eligible percentage determined under such other plan,
of the Participant's monthly Base Compensation. In no event shall matching
contributions under this Plan and all other plans of SBC and all Employers
combined (including but not limited to the SBC Savings Plan) be paid with
respect to more than six percent (6%) of Participant's monthly Base
Compensation. SBC match shall only be paid on Base Compensation contributed
to the Plan.
5.2 Vesting and Distribution of Share Units Acquired with Matching Contributions.
A Participant's interest in Share Units purchased with SBC matching
contributions, as well as earnings thereon, shall vest at such time as
Participant shall have five (5) years of service as reflected on the records
of SBC and may be distributed in accordance with the Plan's distribution
provisions only after the Participant Terminates Employment or in or after
the calendar year in which the Participant reaches age 55. Upon Termination
of Employment, all unvested Share Units shall be forfeited.
Article 6 - Distributions
6.1 Distributions of Share Units.
(a) Beginning March 10 (or such other date as determined by SBC) of the
first (1st) calendar year following the calendar year of the Retirement of a
Participant and on March 10 (or such other date as determined by SBC) of each
of the successive 14 calendar years, SBC shall distribute that number of
Share Units that is equal to the total number of Share Units then held by the
Participant divided by the number of remaining installments. Not withstanding
the foregoing, if the Participant Retires prior to 2001, then any undistributed
Share Units will be distributed in a lump sum on March 10 of the fifteenth
(15th) calendar following the calendar year of the Retirement of the
Participant.
(b) Beginning March 10 (or such other date as determined by SBC) of
the calendar year following the calendar year of Termination of Employment
which is not a Retirement and on March 10 (or such other date as determined
by SBC) of each of the successive 2 calendar years, SBC shall distribute that
number of Share Units that is equal to the total number of Share Units then
held by the Participant divided by the number of remaining installments.
Notwithstanding the foregoing, non-Retirement eligible Participants who
Terminate Employment prior to January 1, 2001, shall receive all
undistributed Share Units in a lump sum.
(c) Notwithstanding (a) or (b), above, to the contrary, in the event
of the death of a Participant, all undistributed Share Units shall be
promptly distributed to the Participant's beneficiary in accordance with
the SBC Rules for Employee Beneficiary Designations, as the same may be
amended from time to time.
6.2 Accelerated Distribution.
(a) On or before the last Business Day of a calendar year, a
Participant may elect to receive a distribution of all or a specified number
of the Participant's vested Share Units. Such distribution shall be made
March 10 (or such other date as determined by SBC) of the immediately
following calendar year. This distribution shall be in addition to the
number of Share Units to be distributed at the same time under Section 6.1,
to the extent any remain available for distribution, which Distribution shall
be calculated without regard to an election under this section. No
distribution under this Section 6.2 (a) shall be made of Share Units acquired
with Employee Contributions or SBC matching contributions in the same
calendar year as the distribution.
(b) In the event the Participant Terminates Employment for reasons
other than Retirement, SBC may, at its sole discretion, accelerate the
distribution of all or part of the Share Units credited to the Participant to
the date of SBC's choosing, without notice to, or the consent of, the
Participant.
6.3 Small Distribution.
Notwithstanding any election made by the Participant, after the
Termination of Employment of the Participant for any reason, if at the time
of a distribution the Participant's Share Units have a FMV of less than
$10,000, SBC may, in its discretion, convert and distribute the Participant's
Share Units in the form of a lump sum distribution.
6.4 Determination by Internal Revenue Service.
In the event that a final determination shall be made by the Internal
Revenue Service or any court of competent jurisdiction that a Participant has
recognized gross income for Federal income tax purposes in excess of the
Share Units actually distributed by SBC, SBC shall promptly convert and
distribute to the Participant those Share Units to which such additional
gross income is attributable.
6.5 Emergency Distribution.
In the event that SBC, upon written petition of the Participant,
determines in its sole discretion that the Participant has suffered an
unforeseeable financial emergency, SBC shall convert and distribute to the
Participant, as soon as practicable following such determination, the number
of Share Units determined by SBC to meet the emergency (the "Emergency
Distribution"). For purposes of this Plan, an unforeseeable financial
emergency is an unexpected need for cash arising from an illness, casualty
loss, sudden financial reversal, or other such unforeseeable occurrence.
Cash needs arising from foreseeable events such as the purchase of a house or
education expenses for children shall not be considered to be the result of
an unforeseeable financial emergency. Upon such distribution, any election
to make Employee Contributions by such Participant shall be immediately
cancelled, and the Participant shall not be permitted to make a new election
with respect to Employee Contributions that would be contributed during the
then current and immediately following calendar year.
6.6 Ineligible Participant.
Notwithstanding any other provisions of this Plan to the contrary, if
SBC receives an opinion from counsel selected by SBC, or a final
determination is made by a Federal, state or local government or agency,
acting within its scope of authority, to the effect that an individual is
not, or was not at the time of his or her making Employee Contributions to
this Plan, to be a "management or highly compensated employee" within the
meaning of ERISA, then such person will not be eligible to participate in
this Plan and shall receive an immediate lump sum distribution of shares of
Stock corresponding to the vested portion of the Share Units standing
credited to his or her account. Upon such payment no other distribution
shall thereafter be payable under this Plan either to the individual or any
beneficiary of the individual, except as provided under Section 10.1
Additional Benefit.
6.7 Distribution Process.
Share Units shall be distributed under this Plan by taking the number
of Share Units to be distributed and converting them into an equal number of
shares of Stock. (Once distributed, a Share Unit shall be canceled.)
Article 7 - Transition Provisions
The transition rules of this Article 7 shall supercede all other terms
of this Plan.
7.1 Effective Dates.
Except as otherwise provided in this Article, the amendments to this
Plan made March 31, 2000 (the "2000 Amendments") shall be effective March 31,
2000. No election to begin a Savings Unit nor an election regarding the
distribution or further deferral of a distribution of a Savings Unit may be
made on or after March 31, 2000. (As used herein, "Savings Units" shall have
the same meaning as used in this Plan prior to such amendments.)
7.2 Combination of Share Units.
(a) Effective January 1, 2001, all Share Units (previously referred to
as "Shares") acquired under Savings Units by a Participant shall be combined
in a single account regardless of date acquired or the Savings Unit to which
they were related, except for the Share Units to be distributed under (b),
below.
(b) Share Units equal in value to, and constituting, a Participant's
tax basis in the Share Units acquired on an after-tax basis shall be valued
and distributed on or promptly after March 10, 2001, unless a later
distribution is required by SBC.
(c) To the extent any Participant who retires before 2001 would, were
it not for the 2000 Amendments, under valid elections made prior to March 31,
2000, receive a distribution under a Savings Unit(s) that would extend the
Participant's distributions beyond 2015, then the Savings Unit(s) so affected
shall not be combined with other Share Units and shall be distributed in
accordance with such elections. Notwithstanding the foregoing, the
Participant may, with the consent of SBC, elect to have all undistributed
Shares in such Savings Unit(s) be governed by this Plan as in effect after
March 31, 2000.
(d) In the event a Participant dies prior to 2001, the Participant's
Savings Unit(s) shall not be combined with other Savings Units and shall be
distributed in accordance with the Plan as it existed immediately prior to
March 31, 2000, and deferrals under the Salary and Incentive Award Deferral
Plan by such Participant will not be transferred to this Plan but will be
paid out in accordance with the terms of that plan as it existed immediately
prior to March 31, 2000.
7.3 Termination of Elections.
(a) Distributions from the Plan that would be made in the year 2000
under the Plan as it existed immediately prior to March 31, 2000, based on
elections made before March 31, 2000, shall continue to be made in the year
2000 as provided in the Plan immediately prior to March 31, 2000. All other
distribution elections are cancelled, including but not limited to
distributions which have already commenced, but only to the extent such
elections call for distributions after the year 2000. All Share Units
remaining undistributed after such distributions shall be held and
distributed in accordance with the terms of the Plan as in effect after March
31, 2000.
(b) Contributions to the Plan that would be made in the year 2000
under the Plan as it existed immediately prior to March 31, 2000, based on
elections made before March 31, 2000, shall continue to be made in the year
2000 as provided in the Plan immediately prior to March 31, 2000. Elections
to participate in the Plan shall not automatically be renewed for the year
2001. Each Eligible Employee must make a new election after March 31, 2000,
in order to purchase Share Units with Employee Contributions after 2000.
Provided, however, valid elections made prior to March 31, 2000, to
contribute Short Term Incentive Awards in 2001 shall be valid elections under
this Plan.
7.4 Annual Base Salary Contribution Transition.
Annual base salary earned prior to January 1, 2001, shall be
contributed when earned, while annual base salary earned on or after such
date shall be contributed when paid. In order to avoid any double
contribution of annual base salary, that part of annual base salary earned in
the year 2000 shall not be included in any determination of contributions to
the Plan in a later calendar year, even though paid in such calendar year.
This section shall not apply to employees of Ameritech Corporation or its
direct or indirectly held subsidiaries or to Employees who did not make
contributions to the Plan in 2000.
7.5 Stock Options.
The August 2000 and February 2001 issuances of Options shall be
determined and made as the Plan was written immediately prior to March 31,
2000, so as not to enlarge or reduce the rights of Participants with Savings
Units commencing in 2000.
Article 8 - Options
8.1 Grants. The Committee shall determine at its discretion whether the
Options issued pursuant to this Plan shall be non-qualified Stock Options or
incentive Stock Options within the meaning of Section 422 of the Code. Any
Options issued hereunder shall be non-qualified Options unless the Committee
specifies prior to the issuance thereof that they shall be incentive Stock
Options. Notwithstanding any other provision of the Plan, any incentive
Stock Options issued under this Plan shall be issued and exercised in
accordance with Section 422 of the Code. The Options may be issued in
definitive form or recorded on the books and records of SBC for the account
of the Participant, at the discretion of SBC. If SBC elects not to issue the
Options in definitive form, they shall be deemed issued, and the Participants
shall have all rights incident thereto as if they were issued on the dates
provided herein, without further action on the part of SBC or the
Participant. In addition to the terms herein, all Options shall be subject
to such additional provisions and limitations as provided in any
Administrative Procedures adopted by the Committee prior to the issuance of
such Options. The number of Options issued to a Participant shall be
reflected on the Participant's annual statement of account.
8.2 Term of Options.
The Options may only be exercised: (a) after the earlier of (i) the
expiration of one (1) year from date of issue or (ii) the Participant's
Termination of Employment, and (b) no later than the tenth (10th) anniversary
of their issue; and Options shall be subject to earlier termination as
provided herein.
8.3 Exercise Price.
The Exercise Price of an Option shall be the FMV of the Stock on the
date of issuance of the Options.
8.4 Issuance of Options.
(a) On each June 1 a Participant shall receive two (2) Options for
each Share Unit acquired by the Participant during the immediately preceding
January through April period with Employee Contributions of Base Compensation
and/or Short Term Incentive Award. A fractional number of Options shall be
rounded up to the next whole number.
(b) On each February 1 a Participant shall receive:
(i) two (2) Options for each Share Unit acquired by the
Participant during the immediately preceding May through December
with Employee Contributions of Base Compensation and/or Short
Term Incentive Award; and
(ii) two (2) Options for each Share Unit acquired prior to such
date by the Participant with dividend equivalents that were
derived, directly or indirectly (such as dividend equivalents
paid on Share Units acquired with dividend equivalents), from
Share Units acquired with Employee Contributions during the
immediately preceding January through December.
A fractional number of Options shall be rounded up to the next whole
number.
(c) If Stock is not traded on the NYSE on any of the foregoing Option
issuance dates, then the Options shall not be issued until the next such day
on which Stock is so traded.
(d) If a Participant Terminates Employment other than (i) while
Retirement eligible or (ii) because of death or Disability, no further
Options shall be issued to or with respect to such Participant.
(e) No more than 400,000 Options shall be issued to any individual
under this Plan during a calendar year. No Share Unit may be counted more
than once for the issuance of Options.
(f) The Committee may, in its sole discretion, at any time increase or
lower the number of Options that are to be issued for each Share Unit
acquired. However, if the Committee lowers the number of Options, then such
change shall only be effective with respect to the next period in which a
Participant may change his or her Share Unit purchase election.
(g) The Committee may also, at any time and in any manner, limit the
number of Options which may be acquired as a result of the Short Term
Incentive Award being contributed to the Plan. Further, except as otherwise
provided by the Committee, in determining the number of Options to be issued
to a Participant with respect to a Participant's contribution of a Short Term
Incentive Award to the Plan and subsequent crediting of Share Units, Options
may be issued only with respect to an amount which does not exceed the target
amount of such award (or such other portion of the award as may be determined
by the Committee).
8.5 Exercise and Payment of Options.
Options shall be exercised by providing notice to the designated agent
selected by SBC (if no such agent has been designated, then to SBC), in the
manner and form determined by SBC, which notice shall be irrevocable, setting
forth the exact number of shares of Stock with respect to which the Option is
being exercised and including with such notice payment of the Exercise
Price. When Options have been transferred, SBC or its designated agent may
require appropriate documentation that the person or persons exercising the
Option, if other than the Participant, has the right to exercise the Option.
No Option may be exercised with respect to a fraction of a share of Stock.
The Exercise Price shall be paid in full at the time of exercise. No
Stock shall be issued or transferred until full payment has been
received therefor.
Payment may be made:
(a) in cash, or
(b) unless otherwise provided by the Committee at any time, and
subject to such additional terms and conditions and/or modifications as
SBC may impose from time to time, and further subject to suspension or
termination of this provision by SBC at any time, by:
(i) delivery of Stock owned by the Participant in partial (if in
partial payment, then together with cash) or full payment;
provided, however, as a condition to paying any part of the
Exercise Price in Stock, at the time of exercise of the Option,
the Participant must establish to the satisfaction of SBC that
the Stock tendered to SBC must have been held by the Participant
for a minimum of six (6) months preceding the tender; or
(ii) if SBC has designated a stockbroker to act as SBC's agent to
process Option exercises, issuance of an exercise notice to such
stockbroker together with instructions irrevocably instructing
the stockbroker: (A) to immediately sell (which shall include an
exercise notice that becomes effective upon execution of a limit
order) a sufficient portion of the Stock to pay the Exercise
Price of the Options being exercised and the required tax
withholding, and (B) to deliver on the settlement date the
portion of the proceeds of the sale equal to the Exercise Price
and tax withholding to SBC. In the event the stockbroker sells
any Stock on behalf of a Participant, the stockbroker shall be
acting solely as the agent of the Participant, and SBC disclaims
any responsibility for the actions of the stockbroker in making
any such sales. No Stock shall be issued until the settlement
date and until the proceeds (equal to the Exercise Price and tax
withholding) are paid to SBC.
If payment is made by the delivery of Stock, the value of the Stock
delivered shall be equal to the FMV of the Stock on the day preceding
the date of exercise of the Option.
Restricted Stock may not be used to pay the Option exercise price.
8.6 Restrictions on Exercise and Transfer.
No Option shall be transferable except: (a) upon the death of a
Participant in accordance with SBC's Rules for Employee Beneficiary
Designations; and (b) in the case of any holder after the Participant's
death, only by will or by the laws of descent and distribution. During the
Participant's lifetime, the Participant's Options shall be exercisable only
by the Participant or by the Participant's guardian or legal representative.
After the death of the Participant, an Option shall only be exercised by the
holder thereof (including but not limited to an executor or administrator of
a decedent's estate) or his or her guardian or legal representative.
8.7 Termination of Employment.
(a) Not Retirement Eligible. If a Participant Terminates Employment
while not Retirement eligible, a Participant's Options may be exercised, to
the extent then exercisable:
(i) if such Termination of Employment is by reason of death or
Disability, then for a period of three (3) years from the date of
such Termination of Employment or until the expiration of the
stated term of such Option, whichever period is shorter; or
(ii) if such Termination of Employment is for any other reason,
then for a period of one (1) year (three (3) months for Options
granted before August 1, 1998) from the date of such Termination
of Employment or until the expiration of the stated term of such
Option, whichever period is shorter.
(b) Retirement Eligible. If a Participant Terminates Employment while
Retirement eligible, a Participant's Option may be exercised, to the extent
then exercisable: (i) for a period of five (5) years (three (3) years for
options granted before August 1, 1998) from the date of Retirement or (ii)
until the expiration of the stated term of such Option, whichever period is
shorter. If a Participant Terminated Employment because of death or
Disability on or before March 31, 2000, the Participant will be deemed to
have Terminated Employment while not Retirement eligible for purposes of this
section.
Article 9 - Discontinuation, Termination, Amendment.
9.1 SBC's Right to Discontinue Offering Share Units.
SBC may at any time discontinue offerings of Share Units under the
Plan. Any such discontinuance shall have no effect upon existing Share Units
or the terms or provisions of this Plan as applicable to such Share Units.
9.2 SBC's Right to Terminate Plan.
No Share Units may be purchased with Employee Contributions after
December 31, 2004. The Committee may terminate the Plan at any earlier
time. Upon termination of the Plan, contributions shall no longer be made
under the Plan.
After termination of the Plan, Participants shall continue to earn
dividend equivalents in the form of Share Units on undistributed Share Units
and shall continue to receive all distributions under this Plan at such time
as provided in and pursuant to the terms and conditions of Participant's
elections and this Plan.
9.3 Amendment.
The Committee may at any time amend the Plan in whole or in part
including but not limited to changing the formulas for determining the amount
of SBC matching contributions under Article 5 or increasing or decreasing the
number of Options to be issued under Article 8; provided, however, that no
amendment, including but not limited to an amendment to this section, shall
be effective, without the consent of a Participant, to alter, to the material
detriment of such Participant, the distributions described in this Plan as
applicable to Share Units of the Participant or to decrease the number of
Share Units standing credited to such Participant's Accounts under the Plan.
For purposes of this section, an alteration to the material detriment of a
Participant shall mean a material reduction in the period of time over which
Stock may be distributed to a Participant, any reduction in the Participant's
number of vested Share Units or Options, or an increase in the Exercise Price
or decrease in the term of an Option. Any such consent may be in a writing,
telecopy, or e-mail or in another electronic format. An election to acquire,
or to modify an election to acquire, Share Units with Employee Contributions
and the failure to terminate an election to acquire Share Units with Employee
Contributions when able to do so shall each be conclusively deemed to be the
consent of the Participant to any and all amendments to the Plan prior to
such election or failure to terminate an election, and such consent shall be
a condition to making any election with respect to Employee Contributions.
Notwithstanding anything to the contrary contained in this section of
the Plan, the Committee may modify this Plan with respect to any person
subject to the provisions of Section 16 of the Securities Exchange Act of
1934 as amended ("Exchange Act") to place additional restrictions on the
exercise of any Option or the transfer of any Stock not yet issued under the
Plan.
Article 10 - Miscellaneous
10.1 Additional Benefit.
The reduction of any benefit payable under the SBC Pension Benefit Plan
(or comparable plan identified by SBC as a replacement therefor), which
results from participation in this Plan, will be restored as an additional
benefit ("make-up piece") under this Plan. The Participant shall elect prior
to commencement of payment of the make-up piece whether to receive such
benefit in cash in a lump sum (consisting of the present value equivalent of
the pension retirement benefit (life annuity) make-up piece) or such benefit
in an annuity form of payment. Notwithstanding the proceeding provisions of
this section, if all or a portion of the make-up piece is paid pursuant to
SRIP or another non-qualified plan, then such amount shall not be payable
pursuant to this Plan.
10.2 Tax Withholding.
Upon distribution of Stock, including but not limited to, shares of
Stock issued upon the exercise of an Option, SBC shall withhold shares of
Stock sufficient in value, using the FMV on the date determined by SBC to be
used to value the Stock for tax purposes, to satisfy the minimum amount of
Federal, state, and local taxes required by law to be withheld as a result of
such distribution.
Any fractional share of Stock payable to a Participant shall be
withheld as additional Federal withholding, or, at the option of SBC, paid in
cash to the Participant.
Unless otherwise determined by the Committee, when the method of
payment for the Exercise Price is from the sale by a stockbroker pursuant to
Section 8.5(b)(ii), hereof, of the Stock acquired through the Option
exercise, then the tax withholding shall be satisfied out of the proceeds.
For administrative purposes in determining the amount of taxes due, the sale
price of such Stock shall be deemed to be the FMV of the Stock.
10.3 Elections and Notices.
Notwithstanding anything to the contrary contained in this Plan, all
elections and notices of every kind shall be made on forms prepared by SBC or
made in such other manner as permitted or required by SBC, including through
electronic means, over the Internet or otherwise. An election shall be
deemed made when received by SBC, which may waive any defects in form.
Unless made irrevocable by the electing person, each election with regard to
making Employee Contributions or distributions of Share Units shall become
irrevocable at the close of business on the last day to make such election.
SBC may limit the time an election may be made in advance of any deadline.
Any notice or filing required or permitted to be given to SBC under the
Plan shall be delivered to the principal office of SBC, directed to the
attention of the Senior Executive Vice President-Human Resources of SBC or
his or her successor. Such notice shall be deemed given on the date of
delivery.
Notice to the Participant shall be deemed given when mailed (or sent by
telecopy) to the Participant's work or home address as shown on the records
of SBC or, at the option of SBC, to the Participant's e-mail address as shown
on the records of SBC. It is the Participant's responsibility to ensure that
the Participant's addresses are kept up to date on the records of SBC. In
the case of notices affecting multiple Participants, the notices may be given
by general distribution at the Participants' work locations.
By participating in the Plan, each Participant agrees that SBC may
provide any documents required or permitted under the Federal or state
securities laws, including but not limited to the Securities Act of 1933 and
the Securities Exchange Act of 1934 by e-mail, by e-mail attachment, or by
notice by e-mail of electronic delivery through SBC's Internet Web site or by
other electronic means.
10.4 Unsecured General Creditor.
Participants and their beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, interest, or claims in any property
or assets of any Employer. No assets of any Employer shall be held under any
trust for the benefit of Participants, their beneficiaries, heirs,
successors, or assigns, or held in any way as collateral security for the
fulfilling of the obligations of any Employer under this Plan. Any and all
of each Employer's assets shall be, and remain, the general, unpledged,
unrestricted assets of such Employer. The only obligation of an Employer
under the Plan shall be merely that of an unfunded and unsecured promise of
SBC to distribute shares of Stock corresponding to Share Units, and Options,
under the Plan.
10.5 Offset.
SBC may offset against the amount of Stock otherwise distributable to a
Participant, any amounts due an Employer by a Participant, including but not
limited to overpayments under any compensation or benefit plans. In
addition, SBC may also cancel a Stock Option to satisfy such an obligation to
an Employer. For this purpose, each Stock Option shall be valued by
subtracting the Exercise Price of the Stock Option from the FMV of the Stock
on such date.
10.6 Non-Assignability.
Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt,
shares of Stock corresponding to Share Units under the Plan, if any, or any
part thereof, which are, and all rights to which are, expressly declared to
be unassignable and non-transferable. No part of the Stock distributable
shall, prior to actual distribution, be subject to seizure or sequestration
for the payment of any debts, judgments, alimony or separate maintenance owed
by a Participant or any other person, nor be transferable by operation of law
in the event of a Participant's or any other person's bankruptcy or
insolvency.
10.7 Employment Not Guaranteed.
Nothing contained in this Plan nor any action taken hereunder shall be
construed as a contract of employment or as giving any employee any right to
be retained in the employ of an Employer or to serve as a director.
10.8 Errors.
At any time SBC may correct any error made under the Plan without
prejudice to SBC. Such corrections may include, among other things, changing
or revoking a Stock Option issuance, cancelling Share Units and refunding
contributions to a Participant with respect to any period he or she made
Employee Contributions while not an Eligible Employee, or cancelling the
enrollment of a non-Eligible Employee.
10.9 Captions.
The captions of the articles, sections, and paragraphs of this Plan are
for convenience only and shall not control nor affect the meaning or
construction of any of its provisions.
10.10 Governing Law.
To the extent not preempted by ERISA, this Plan shall be governed by
and construed in accordance with the substantive laws of the State of Texas,
excluding any conflicts or choice of law rule or principle that might
otherwise refer constructive or interpretation of this Plan to provisions of
the substantive law of any jurisdiction other than the State of Texas. Any
action seeking to enforce the rights of an employee, former employee or
person who holds such rights through, from or on behalf of such employee or
former employee under this Plan may be brought only in a Federal or state
court located in Bexar County, Texas.
10.11 Validity.
In the event any provision of this Plan is held invalid, void, or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of this Plan.
10.12 Successors and Assigns.
This Plan shall be binding upon SBC and its successors and assigns.
10.13 Participation in Predecessor Plans.
Effective November 21, 1997, the plans of the Stock Savings Program
were merged into the Stock Savings Plan. All Share Units under the Stock
Based Savings Plan or the Management Stock Savings Plan were transferred to
this Plan as of that date and are governed by the terms of this Plan.
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EXHIBIT 10.2
CATERPILLAR INC.
1987 STOCK OPTION PLAN
(Amended and Restated as of 12/31/2000)
1. Establishment of Plan
Caterpillar Inc. (hereafter referred to as the "Company") proposes to grant to
selected key employees of the Company and its subsidiaries restricted stock
awards, options to purchase common stock of the Company and stock appreciation
rights in conjunction therewith for the purposes of (i) furnishing to such
employees maximum incentive through ownership of Company shares to improve
operations and increase profits and (ii) encouraging such persons to accept or
continue employment with the Company and its subsidiaries. Such restricted stock
awards, options and stock appreciation rights will be granted pursuant to the
plan herein set forth, which shall be known as the Caterpillar Inc. 1987 Stock
Option Plan (hereafter referred to as the "Plan").
The Company also proposes to grant to the members of the Company's Board of
Directors who are not officers or employees of the Company at the time of a
grant (hereinafter referred to as "Outside Directors") options to purchase
common stock of the Company pursuant to the Plan. The Company also proposes to
grant to Outside Directors restricted shares of Company common stock pursuant to
the Plan. The purpose of such grants is to provide incentives for highly
qualified individuals to stand for election to the Board and to continue service
on the Board and to encourage increased stock ownership by Outside Directors in
order to promote long-term stockholder value. Stock appreciation rights, and
incentive stock options, as defined in Section 422A of the Internal Revenue
Code, will not be granted to Outside Directors under the Plan.
2. Stock Reserved for Options and Restricted Stock Awards
Subject to adjustment as provided in Section 3, the maximum number of shares of
the Company that may be issued upon the granting of restricted stock awards,
performance awards or the exercise of options and Stock Appreciation Rights
under the Plan or any Supplement hereto shall not exceed 7,500,000. The shares
so issued may be authorized but unissued shares, Treasury shares, or previously
issued shares purchased for purposes of the Plan. Any shares subject to options
or awards may thereafter be subject to new stock options or awards under the
Plan if there is a forfeiture of any such awards or lapse, expiration or
termination of any such option but not if there is a surrender of an option or
portion thereof pursuant to a stock appreciation right as provided hereafter in
Section 7.
1
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3. Adjustment Provisions
If there is any change in the outstanding shares of common stock without any
consideration to the Company by stock dividend, stock split-up, change in par or
no par value, or other similar event, the number and kind of shares then
remaining available for issue under the Plan shall be correspondingly changed,
and a similar adjustment shall be made in the unexercised portion of all options
then outstanding without change in the aggregate purchase price to be paid.
Options and stock appreciation rights may also contain provisions for the
continuation thereof, and for other equitable adjustments, after other changes
in the Company's shares, including changes resulting from recapitalization,
reorganization, sale, merger, consolidation, or other similar occurrence.
4. Administration of the Plan
The authority to grant restricted stock awards, options and stock appreciation
rights to officers and employees under the Plan shall be vested in the Stock
Option and Officers' Compensation Committee (hereafter referred to as the
"Committee") consisting of not less than three members of the Board of Directors
appointed from time to time by the Board. No member of the Board shall serve on
the Committee at a time when such member is, or within one year prior thereto
has been, eligible to receive restricted stock awards, options, or stock
appreciation rights under the Plan, or restricted stock awards, options, or
stock appreciation rights under any other stock option or stock bonus plan of
the Company; provided, however, that Outside Directors who receive options and
restricted stock under this Plan may serve on the Committee. The Committee shall
have no authority regarding the granting of options and restricted stock to
Outside Directors.
Subject to the provisions of the Plan, the Committee from time to time shall
determine (except as to options and restricted stock granted to Outside
Directors) the individuals to whom, and the time or times at which, restricted
stock awards, options, or stock appreciation rights shall be granted; the number
of shares to be subject to each restricted stock award, each option, and each
stock appreciation right; the option price per share; the extent to which stock
appreciation rights are exercisable for cash, or stock, or a combination of cash
and stock; whether restricted shares [shares of common stock issued under
restrictions which subject them to a "substantial risk of forfeiture" (as
defined in Section 83 of the Internal Revenue Code of 1986, as amended) until
the restrictions lapse] should be issued on the exercise of an option or stock
appreciation right and, if so, the nature of the restrictions; the duration of
each option; the specific restrictions applicable to restricted stock awards and
the other terms and provisions of each restricted stock award, option, and stock
appreciation right. In the case of officers to whom restricted stock awards,
options, or stock appreciation rights may be granted, the selection of such
officers and all of the foregoing determinations shall be made directly by the
Committee in its sole discretion. In the case of key employees other than
officers, the selection of such employees and all of the foregoing
determinations may be delegated by the Committee to an administrative group of
officers chosen by the Committee. Neither restricted stock awards, options, nor
stock appreciation rights granted to one employee need be identical to those
granted other employees.
Subject to share ownership requirements, commencing with the 1988 annual meeting
of stockholders, options with a term of ten years and one day shall be granted
to each Outside Director for 1,000 shares of the Company's common stock
effective as of the close of each annual meeting of the stockholders (i) at
which such individual is elected a director or (ii) following which such
individual will continue to serve as a director as a member of a continuing
class of directors. Any option so granted shall be a nonqualified stock option.
In the event any change in the outstanding shares of the Company's common stock
occurs and an adjustment is made in the unexercised portion of options
outstanding, as provided in Section 3 above, a similar adjustment shall be made
in the number of shares to be granted to Outside Directors thereafter under this
paragraph.
On April 14, 1995, and each January 1 thereafter, 200 shares of restricted stock
shall be granted to each Outside Director. The stock will be held in escrow for
a period of three years from the award date. Stock issued as restricted stock
shall be forfeited if the director ceases to serve as a director of the Company
for any reason other than death, disability, or retirement under the Directors'
Retirement Plan. In the event any change in the outstanding shares of the
Company's common stock occurs as provided in Section 3 above, a similar
adjustment shall be made in the number of restricted shares to be granted to
Outside Directors thereafter under this paragraph.
Subject to the provisions of the Plan specifically governing options and
restricted stock granted or to be granted to Outside Directors, the Committee
may also interpret the Plan; prescribe, amend and rescind rules and regulations
relating to the Plan; and make all other determinations necessary or advisable
for the administration of the Plan. The determinations of the Committee shall be
made in accordance with its judgment as to the best interests of the Company and
its stockholders and in accordance with the purposes of the Plan. The
Committee's determinations shall in all cases be conclusive.
A majority of the members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its members. Any
determination of the Committee may be made, without notice or meeting, by the
written consent of a majority of the Committee members.
5. Eligibility
Restricted stock awards, options, and stock appreciation rights may be granted
to officers and other key employees of the Company or of its present or future
subsidiaries. Options and restricted stock will be granted to Outside Directors
as provided in Sections 4 and 14 hereof.
A director of the Company or a subsidiary who is not also an employee of the
Company or a subsidiary shall not be eligible to receive a stock appreciation
right or an alternative stock option. An employee or officer who has been
granted a restricted stock award, option, or stock appreciation right under this
or any other stock option plan may or may not be granted additional restricted
stock awards, options, and stock appreciation rights at the direction of the
Committee.
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Options and Stock Appreciation Rights
6. Option Price
The per share option price shall not be less than 100% of the fair market value
of the common stock at the time the option is granted. The per share option
price of options granted to Outside Directors shall be 100% of the market value
of the common stock at the time an option is granted.
7. Stock Appreciation Rights
Stock appreciation rights will permit the holder to elect to surrender any
option or any portion thereof which is then exercisable and receive in exchange
therefor shares of common stock, cash, or a combination thereof. Such stock,
cash, or combination shall have an aggregate value equal to the excess of the
fair market value of one share of common stock over the purchase price specified
in such option multiplied by the number of shares of common stock covered by
such option or portion thereof which is so surrendered. The fair market value of
one share of common stock shall equal (a) in the case of such a holder who is
not a Company officer, the mean of the highest and lowest quoted selling price
of shares of the Company's common stock on the New York Stock Exchange on the
date of surrender and (b) in the case of such a holder who is a Company officer,
but subject to the provisions of the succeeding sentence, the highest of the
means of the highest and lowest quoted selling price of shares of the Company's
common stock on the New York Stock Exchange determined for each day occurring
during the window period during which such election to surrender the option or
portion thereof is made; and the window period is the applicable period for
making such an election (currently ten business days) prescribed from time to
time pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of
1934. In the case of such a holder who is a Company officer, the fair market
value of one share of common stock with respect to the surrender of an incentive
stock option granted, shall equal the mean of the highest and lowest quoted
selling price of shares of the Company's common stock on the New York Stock
Exchange on the date of surrender unless it is specifically provided in the
option form, or any amendment thereto, that the valuation described in item (b)
above shall apply. In the case of any option holder who at the time of an
election is an officer of the Company, each election to receive cash alone or in
combination with stock shall be subject to the approval of the Committee in its
sole discretion.
Stock appreciation rights may be granted as part of a stock option or as a
separate right to any holder of any option theretofore or then being granted
under this Plan. A stock appreciation right shall be exercisable upon any
additional terms and conditions (including, without limitation, the issuance of
restricted shares and the imposition of restrictions upon the timing of
exercise) which may be determined as provided in Section 4 of the Plan.
In the event of the exercise of a stock appreciation right, the number of shares
reserved for issuance under the Plan shall be reduced by the number of shares of
common stock covered by such option or portion thereof which is surrendered in
connection with such exercise. No fractional shares shall be issued on the
exercise of a stock appreciation right.
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8. Exercise of Options and Stock Appreciation Rights
Options (other than options granted to Outside Directors) shall be exercisable
in such installments and during such periods as may be fixed by the Committee at
the time of granting. Options granted to Outside Directors shall become
exercisable as follows: one-third at the end of each of the three successive
one-year periods commencing on the date of each option grant. Notwithstanding
any other provision hereof, no option and no stock appreciation right shall be
exercisable after the expiration of ten years and one day from the date such
option or stock appreciation right is granted, provided that no incentive stock
option (or related stock appreciation right) shall be exercisable after the
expiration of ten years from the date such option is granted.
Payment of the purchase price shall be made upon exercise of all or a portion of
any option. Such payment shall be made pursuant to rules adopted by the
Committee and the Company in cash or by the tendering (through one transaction
or in a series of consecutive transactions) of shares of common stock of the
Company having a fair market value equal to 100% of such purchase price or by
any combination thereof. The fair market value of a share of common stock so
tendered shall be the mean of the highest and lowest quoted selling price of
shares of the Company's common stock on the New York Stock Exchange on date of
exercise. In addition, on the exercise of an option, surrender of a stock
appreciation right, or upon the granting of any restricted stock award or
performance award, any applicable taxes which the Company is required to
withhold shall be paid to the Company and any information which the Company
deems necessary shall be provided to the Company. In fulfilling its withholding
obligation, the Company may withhold a portion of any shares to be issued to
satisfy such withholding obligation in accordance with rules promulgated by the
Committee, in its sole discretion.
9. Termination of Employment
Each option granted to an officer or employee shall, and each stock appreciation
right granted to an officer or employee may, in the Committee's sole discretion
require a period or periods of continued employment with the Company and/or its
subsidiaries before it may be exercised in whole or in part. No such period
shall be less than one year except that the Committee may permit a shorter
period in the event of termination of employment by reason of retirement or
death.
Termination of the employment with the Company and its subsidiaries of an
officer or employee who holds an option shall terminate any remaining rights
under options and stock appreciation rights then held by such holder except as
hereinafter provided.
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Each option and stock appreciation right granted to an officer or employee may
provide that if employment of the holder with the Company and its subsidiaries
terminates after completion of a period of employment so specified, the option
or stock appreciation right may be exercised (to the extent then exercisable) by
the holder (or, in the event of the holder's death, by whoever shall have
received the holder's rights under the option or stock appreciation right)
during a specified period of time after such termination of employment. Such a
specified period of time may not exceed sixty months where termination of
employment is caused by retirement or death and sixty days where it results from
any other cause; provided that if death occurs after termination of employment
but during the period of time so specified, such period may be extended to not
more than sixty-six months after retirement, or thirty-eight months after
termination of employment for any other cause. In the event that any such option
or stock appreciation right granted under the Plan has a specified period for
exercise after retirement or death which is less than the maximum period
permitted under this section, the Committee may modify such option or right to
extend such specified period up to such maximum period.
Such options and stock appreciation rights shall not be affected by authorized
leaves of absence or by any change of employment so long as the holder continues
to be an employee of the Company or a subsidiary.
Nothing in the Plan or in any such option or stock appreciation right shall
interfere with or limit in any way the right of the Company or of any of its
subsidiaries to terminate any employee's employment at any time, nor confer upon
any employee any right to continue in the employ of the Company or any of its
subsidiaries. Notwithstanding the foregoing, the Committee may change the
post-termination period of exercisability of an option or stock appreciation
right provided that no such change shall extend the original maximum term of the
option or stock appreciation right.
9A. Termination of Outside Directorship
No period of continued service as an Outside Director following the grant of an
option shall be required to render exercisable an option granted to an Outside
Director in the event an Outside Director holding an option which has not become
exercisable or has not been fully exercised shall cease to be an Outside
Director. In such event any such option may be exercised at any time within
sixty months of the date such Director ceased to be a Director. In the event an
Outside Director shall die holding an option which has not become exercisable or
has not been fully exercised, his executors, administrators, heirs or
distributees, as the case may be, may exercise such option at any time within
sixty months of the date of such death provided that if death occurs after the
date an Outside Director ceases to be a Director, such option shall be
exercisable within sixty-six months of such date. In no event, however, shall an
option which has expired by its terms be exercisable.
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10. Incentive Stock Options
Notwithstanding anything contained herein to the contrary, there may be granted
under the Plan, other than to Outside Directors, incentive stock options as
defined in Section 422A of the Internal Revenue Code as it may be amended from
time to time. The Committee from time to time shall determine whether any
incentive stock options shall be granted. It shall also determine in its full
discretion the individuals to whom, and the time or times at which, any such
grants shall be made. Incentive stock options shall not by their terms be
transferable by the holder other than by will or the laws of descent and
distribution and shall be exercisable during the holder's lifetime only by the
holder. The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by the holder during any calendar year (under all
incentive stock option plans of the Company) shall not exceed $100,000;
provided, however, that all or any portion of an option which cannot be
exercised as an incentive stock option because of such limitation may be
converted by the Committee to an option other than an incentive stock option.
The Board of Directors of the Company may amend the Plan from time to time as
may be necessary (1) to comply with Section 422A of the Internal Revenue Code,
or other sections of the Code or other applicable laws or regulations, and (2)
to permit any options granted as, or converted to, incentive stock options to
have all of the features provided for incentive stock options in the applicable
laws and regulations.
11A. Transferability of Options and Stock Appreciation Rights
Except as otherwise permitted in Section 11B, options and stock appreciation
rights shall not be transferable otherwise than by will or the laws of descent
and distribution, and shall be exercisable, during the holder's lifetime, only
by the holder except in the case of holder's incapacity or disability when such
options and stock appreciation rights may be exercised by the holder's duly
appointed guardian or representative.
A holder, however, may file with the Company a written designation of a
beneficiary or beneficiaries (subject to such limitations as to the classes and
number of beneficiaries and contingent beneficiaries and such other limitations
as the Committee from time to time may prescribe) to exercise, in the event of
the death of the optionee, an option or stock appreciation right, subject to the
provisions of the Plan. A holder may from time to time revoke or change any such
designation of beneficiary and any designation of beneficiary under the Plan
shall be controlling over any other disposition, testamentary or otherwise;
provided, however, that if the Committee shall be in doubt as to the right of
any such beneficiary to exercise any option or stock appreciation right, the
Committee may determine to recognize only an exercise by the legal
representative of the optionee, in which case the Company, the Committee and the
members thereof shall not be under any further liability to anyone.
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11B. Permissible Transfers of Options
> (a) Notwithstanding the provisions of Section 11A, and in addition to
> permissible transfers under that provision, options granted to persons at the
> level of Vice President and above, as well as directors of this corporation
> and persons retired from those positions, may be transferred to any one or
> more "Permitted Transferees," as long as those options are vested and are not
> incentive stock options as defined above.
>
> (b) For purposes of Section 11B(b), the term "Permitted Transferees" shall
> mean the members of the group that consists exclusively of the individual to
> whom the option is granted, the spouse of the individual to whom the option is
> granted, the lineal descendants of the individuals to whom the option is
> granted, the spouses of the lineal descendents to whom the option is granted,
> the lineal descendants of any spouse or former spouse of the individual to
> whom the option is granted, the spouses of the lineal descendants of any
> spouse or former spouse of the individual to whom the option is granted, the
> estate (and any trust that serves a distributive function of an estate) of the
> Permitted Transferee, all trusts that an individual who is a Permitted
> Transferee can revoke and all trusts, corporations, partnerships, limited
> liability companies and other entities in which, directly or indirectly, but
> for the exercise of a power of appointment or the death of the survivor of the
> individual who are Permitted Transferees. Each owner of an equitable interest
> is an individual who is a Permitted Transferee.
Restricted Stock Awards to Company Employees
12. Granting of Awards
The Committee from time to time may determine whether any restricted stock
awards shall be granted to other than an Outside Director either alone or in
combination with the granting of options under the Plan. The Committee will in
so granting establish the time, conditions and restrictions in connection with
the issuance or transfer of a restricted stock award, including the restriction
period which may differ with respect to each grantee.
13. Shares and Restrictions
Restricted stock awards will be made from shares of Company common stock
otherwise available for stock option grants under the Plan. During the
restriction period the grantee shall have a beneficial interest in the
restricted stock and all rights and privileges of a stockholder with respect
thereto, including the right to vote and receive dividends, subject to the
restrictions imposed by the Committee at the time of grant.
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The following restrictions will be imposed on shares of common stock issued as a
restricted stock award until the expiration of the restricted period:
> (a) The grantee shall not be entitled to delivery of the stock certificate
> which certificate shall be held in escrow by the secretary of the Committee;
>
> (b) None of the stock issued as a restricted stock award may be transferred
> other than by will or by the laws of descent and distribution; and
>
> (c) Stock issued as a restricted stock award shall be forfeited and the
> stock certificate shall be returned to the Company if the grantee terminates
> employment with the Company and its subsidiaries except for termination due to
> retirement after a specified age, disability, death or other special
> circumstances approved by the Committee.
Shares awarded as a restricted stock award will be issued subject to a
restriction period set by the Committee of no less than two nor more than ten
years. The Committee except for the restrictions specified in the preceding
paragraphs shall have the discretion to remove any or all of the restrictions on
a restricted stock award whenever it may determine that such action is
appropriate. Upon the expiration of the restriction period with respect to any
shares of a restricted stock award, a stock certificate will be delivered out of
escrow, subject to satisfaction by the grantee of the applicable withholding tax
requirements, without charge to the grantee.
Restricted Stock Awards to Outside Directors
14. Terms of Grant and Restrictions
On April 14, 1995, and each January 1 thereafter, 200 shares of restricted stock
shall be granted to each Outside Director who following such date continues to
serve as a director. Restricted stock awards will be made from shares of Company
common stock otherwise available for stock option grants under the Plan.
The stock will be subject to a restriction period of three years from the date
of grant. During that restricted period, subject to the restrictions set forth
in the next paragraph, the grantee shall have a beneficial interest in the
restricted stock and all rights and privileges of a stockholder with respect
thereto, including the right to vote and receive dividends.
The following restrictions will be imposed on shares of common stock issued as a
restricted stock award until the expiration of the restricted period:
> (a) The grantee shall not be entitled to delivery of the stock certificate
> which certificate shall be held in escrow by the secretary of the Committee;
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> (b) None of the stock issued pursuant to a restricted stock award may be
> transferred other than by will or by the laws of descent and distribution; and
>
> (c) Stock issued pursuant to a restricted stock award shall be forfeited and
> the stock certificate returned to the Company if the grantee ceases to serve
> as a director of the Company, except for termination due to death, disability,
> or retirement under the Directors' Retirement Plan.
Upon expiration of the restricted period with respect to any shares of a
restricted stock award, a stock certificate will be delivered out of escrow,
subject to satisfaction by the grantee of applicable tax withholding
requirements, without charge to the grantee.
General Provisions
15. Amendment and Termination
The Plan may be terminated at any time by the Board of Directors except with
respect to any restricted stock awards, options, or stock appreciation rights
then outstanding. Also, the Board may, from time to time, amend the Plan as it
may deem proper and in the best interests of the Company or as may be necessary
to comply with any applicable laws or regulations, provided that no such
amendment shall (i) increase the total number of shares which may be issued
under the Plan, (ii) reduce the minimum purchase price or otherwise materially
increase the benefits under the Plan, (iii) change the basis for valuing stock
appreciation rights, (iv) impair any outstanding option, stock appreciation
right or restricted stock award without the consent of the holder, (v) alter the
class of employees eligible to receive options, stock appreciation rights or
restricted stock awards, or (vi) amend any provision of the Plan insofar as it
applies specifically to options and restricted stock granted or to be granted to
Outside Directors, unless, in each case, such amendment is required in order to
assure the Plan's continued compliance with applicable laws, including Rule
16b-3 under the Securities Exchange Act of 1934.
Plan provisions applicable to Outside Director option and restricted stock
awards shall not be amended more than once every six months other than to comply
with changes in the Internal Revenue Code, Employee Retirement Income Security
Act, or rules thereunder.
16. Regulatory Compliance
Notwithstanding any other provision of the Plan, the issuance or delivery of any
shares of common stock may be postponed for such period as may be required to
comply with any applicable requirements of any national securities exchange or
any requirements under any other law or regulation applicable to the issuance or
delivery of such shares. The Company shall not be obligated to issue or deliver
any shares if such issuance or delivery shall constitute a violation of any
provision of any law or regulation of any governmental authority or national
securities exchange.
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17. Miscellaneous
For purposes of this Plan:
(i) The term "subsidiary" means any corporation in which the Company
owns, directly or indirectly, at least 35% of the total combined voting power of
all classes of stock; except that for purposes of any option subject to the
provisions of Section 425 of the Internal Revenue Code, as amended, the term
"subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of an option, each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
(ii) "Retirement" as used herein means retirement under any pension or
retirement plan of the Company or of a subsidiary, or termination of employment
with the Company or a subsidiary, by action of the employing company, because of
disability.
11
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CATERPILLAR INC.
LONG TERM INCENTIVE SUPPLEMENT
ARTICLE I - PURPOSE
The provisions of this Long Term Incentive Supplement (the "Supplement") shall
supplement the provisions of the Caterpillar Inc. 1987 Stock Option Plan (the
"Plan") and, unless otherwise expressly qualified by the context of the
Supplement, the conditions contained in the Plan shall be applicable to the
Supplement and terms used in the Supplement shall have the meanings defined in
the Plan.
The purposes of the Supplement are to (i) strengthen the commonality of interest
between management and Caterpillar Inc.'s stockholders, (ii) link effectively
executive motivation and compensation with Caterpillar Inc.'s performance, (iii)
provide incentives and rewards for key executives to accomplish Caterpillar
Inc.'s goals and objectives over the long term, (iv) offer a comprehensive and
competitive total compensation program, and (v) attract and retain executives of
high caliber and ability.
ARTICLE II - DEFINITIONS
For purposes of the Supplement:
2.1 "AWARD"
shall mean the sum of the cash amount and/or restricted stock awarded to a
Participant following the conclusion of a Performance Period in which
Performance Measures were met or exceeded.
2.2 "DISABILITY"
shall mean the total and permanent disability of a Participant as defined by any
Caterpillar Inc. long-term disability plan in effect for such Participant.
2.3 "PARTICIPANT"
shall mean any employee of Caterpillar Inc. or any subsidiary of Caterpillar
Inc. holding a position which the Committee has determined is eligible to
participate in the Supplement.
2.4 "PERFORMANCE MEASURES"
shall mean the criteria established by the Committee at the beginning of each
Performance Period as the basis for making Awards.
2.5 "PERFORMANCE PERIOD"
shall mean any period of time determined by the Committee for which the
Performance Measures are established
ARTICLE III - TERM OF PLAN
This Supplement shall be effective from the 1st day of January, 1993, and shall
remain in effect until terminated by the Board of Directors of Caterpillar Inc.
12
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ARTICLE IV - PAYMENT AND AMOUNT OF BENEFITS
4.1 Payment of Awards
- Awards shall be paid in cash, shares of restricted stock, or a combination of
cash and restricted stock as determined by the Committee in its sole discretion.
A check for any cash Award or a certificate for shares of restricted stock
awarded shall be delivered to each Participant not later than 90 days following
the end of the relevant Performance Period. The number of Caterpillar Inc.
shares of restricted stock awarded shall be determined by dividing the portion
of the Award payable in restricted stock by the average of the high and low
price of Caterpillar Inc. shares on the New York Stock Exchange on the last
business day of the Performance Period for which payment is made. The terms of
any such restricted stock shall be determined by the Committee in its sole
discretion subject to the restrictions of Section 13 of the Plan. Federal, state
and local taxes will be withheld as appropriate.
4.2 Amount of Award
- Prior to the beginning of any Performance Period, the Committee in its sole
discretion will determine the target award for each salary grade or position for
all Participants. The Award amount will be calculated by multiplying such target
award by the percentage of the Award payable based on attainment of the
applicable Performance Measures.
4.3 Required Employment
- An eligible Participant shall receive an Award under this Supplement for a
Performance Period provided he is actively employed by Caterpillar Inc. on the
last day of the Performance Period, except for a Participant whose employment
terminates during a Performance Period by reason of death, disability, or
retirement in which case a prorated Award shall be paid for the time during the
Performance Period that he was actively employed. Participants who are employed
on the last day of the Performance Period but were not Participants for the
entire Performance Period shall receive an Award prorated for that part of the
Performance Period for which they were Participants
ARTICLE V - ADMINISTRATION
5.1 Authority
- The Supplement shall be administered by the Committee which shall have full
power and authority to administer and interpret the Supplement within its terms.
The Committee's authority shall include, but not be limited to, (i) selecting
participants, (ii) determining the timing, amounts and composition of Awards,
(iii) setting the duration of Performance Periods, (iv) establishing performance
goals for the Performance Periods, and (v) measuring such performance at the end
of each Performance Period. All decisions made by the Committee shall be final
and binding and shall be given the maximum deference provided by law.
5.2 Adjustments of Company Performance Measures
- At any time during a Performance Period, the Committee may, in its discretion,
increase or decrease previously set Performance Measures for such Performance
Period to reflect changes in tax laws, regulations or rulings; changes in
accounting principles or practices; mergers, acquisitions or divestitures; major
technical innovations; or extraordinary, nonrecurring or unusual items.
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5.3 Suspension and Termination
- The Committee and/or the Board of Directors of Caterpillar Inc. may suspend or
terminate this Supplement at any time. In such event, all Performance Periods
then in effect shall be deemed to have
ended on the effective date of such suspension or termination, the applicable
Performance Measures shall be appropriately prorated and modified to apply to
the shortened Performance Periods, and Awards shall be appropriately prorated
and based upon results accomplished over the time intervals from the start of
each respective Performance Period through the effective date of suspension or
termination.
5.4 Rules and Regulations
- The Committee may adopt from time to time such rules and regulations as it
reasonably deems appropriate to assist in administration of this Supplement.
ARTICLE VI - MISCELLANEOUS
6.1 Other Benefit Plans
- No Award amount shall be taken into account under the Retirement Income Plan,
the Employees' Investment Plan, the Insurance Benefits Plan, or any other
employee benefit plan or payroll practice of Caterpillar Inc. or its
subsidiaries.
6.2 Beneficiaries
- If an Employee is deceased at the time any benefit is payable to him, the
amount of such benefit shall be payable to the same person or persons and in the
same proportionate amount as shall be payable to the beneficiary or
beneficiaries for his basic life insurance under the applicable insurance plan
of Caterpillar Inc. or its subsidiaries, or if no beneficiary is so designated,
to the executor of his estate.
6.3 Employment Rights
- Participation in the Supplement will not give any Participant the right to be
retained in the service of Caterpillar Inc., or its subsidiaries, nor shall such
participation provide any right or claim to any benefit under the Supplement
unless such right or claim has specifically accrued under the terms of the
Supplement.
6.4 Gender and Number
- Where the context permits, words in the masculine gender shall include the
feminine gender, the plural shall include the singular, and the singular shall
include the plural.
6.5 Governing Law
- The Supplement shall be construed in accordance with and governed by the laws
of the State of Illinois.
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Links:
1. Establishment of Plan
2. Stock Reserved for Options and Restricted Stock Awards
3. Adjustment Provisions
4. Administration of the Plan
5. Eligibility
6. Option Price
7. Stock Appreciation Rights
8. Exercise of Options and Stock Appreciation Rights
9. Termination of Employment
10. Incentive Stock Options
11A. Transferability of Options and Stock Appreciation Rights
11B. Permissible Transfers of Options
Restricted Stock Awards to Company Employees
12. Granting of Awards
13. Shares and Restrictions
Restricted Stock Awards to Outside Directors
14. Terms of Grant and Restrictions
General provisions
15. Amendment and Termination
16. Regulatory Compliance
17. Miscellaneous
LONG TERM INCENTIVE SUPPLEMENT
Article I - Purpose
Article II - Definitions
Article III - Term of Plan
Article IV - Payment and Amount of Benefits
Article V - Administration
Article VI - Miscellaneous
|
EIGHTEENTH AMENDMENT TO FORBEARANCE AGREEMENT
AND SIXTEENTH AMENDMENT TO POST-CONFIRMATION
LOAN AND SECURITY AGREEMENT
THIS EIGHTEENTH AMENDMENT TO FORBEARANCE AGREEMENT AND SIXTEENTH
AMENDMENT TO POST-CONFIRMATION LOAN AND SECURITY AGREEMENT
(the "Agreement") is effective as of this 3rd day of August, 2001, among THE CIT
GROUP/BUSINESS CREDIT, INC., a New York corporation in its capacity as Agent and
Lender ("Agent"), each of the financial institutions party to the Loan Agreement
(each is referred to herein as a "Lender" and collectively as the "Lenders"),
TRISM, INC., a Delaware corporation ("Trism"), TRISM SECURED TRANSPORTATION,
INC., a Delaware corporation ("Trism Secured"), TRI-STATE MOTOR TRANSIT CO., a
Delaware corporation ("TSMT"), DIABLO SYSTEMS INCORPORATED D/B/A DIABLO
TRANSPORTATION, INC., a California corporation ("Diablo"), TRISM EASTERN, INC.
D/B/A C.I. WHITTEN TRANSFER, a Delaware corporation ("CI Whitten"), TRISM HEAVY
HAUL, INC., a Delaware corporation ("Heavy Haul"), TRISM SPECIALIZED CARRIERS,
INC., a Georgia corporation ("Specialized"), TRISM SPECIAL SERVICES, INC., a
Georgia corporation ("Special Services"), TRISM LOGISTICS, INC., a Delaware
corporation ("Logistics"), TRISM EQUIPMENT, INC., a Delaware corporation ("TEI")
(each of Trism, Trism Secured, TSMT, Diablo, CI Whitten, Heavy Haul,
Specialized, Special Services, Logistics and TEI is herein referred to
individually as a "Borrower" and collectively as the "Borrowers"), AERO BODY AND
TRUCK EQUIPMENT, INC., a Delaware corporation ("Aero Body"), E.L. POWELL & SONS
TRUCKING CO., INC., an Oklahoma corporation ("EL Powell"), TRISM TRANSPORT,
INC., a Delaware corporation ("Transport"), and TRISM TRANSPORT SERVICES, INC.
("Transport Services") (each of Aero Body, EL Powell, Transport and Transport
Services is individually referred to herein as a "Guarantor" and collectively as
the "Guarantors").
W
I T N E S S E T H:
WHEREAS, Borrowers, Agent and Lenders are party to that certain
Post-Confirmation Loan and Security Agreement, dated February 9, 2000 (as the
same has been amended from time to time, the "Loan Agreement");
WHEREAS
, Borrowers, Agent and Lenders desire to amend the Loan Agreement as set forth
herein; and
WHEREAS
, Borrowers, Guarantors, Agent and Lenders are party to that certain Forbearance
Agreement, dated as of November 8, 2000 (as the same has been amended from time
to time, the "Forbearance Agreement;" all capitalized terms used herein and not
otherwise expressly defined herein shall have the respective meanings given to
such terms in the Forbearance Agreement); and
WHEREAS
, Agent, Lenders, Borrowers and Guarantors desire to amend the Forbearance
Agreement as set forth herein.
--------------------------------------------------------------------------------
NOW, THEREFORE
, in consideration of the foregoing premises, and other good and valuable
consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendments to Loan Agreement and Forbearance Agreement.
A. Amendments to Loan Agreement. Section 1.1 of Article 1 of the Loan Agreement
is hereby amended by deleting therefrom the definition of "Initial
Anniversary Date" in its entirety and inserting the following in lieu
thereof:
"Initial Anniversary Date" shall mean August 10, 2001.
B. Amendments to Forbearance Agreement. Paragraph 2 of the Forbearance
Agreement is hereby amended by deleting therefrom the reference to the date
"August 3, 2001" and inserting in lieu thereof the date "August 10, 2001."
2. Representations, Warranties, Covenants and Acknowledgments. To
induce Agent and Lenders to enter into this Agreement:
Each Borrower and Guarantor does hereby represent and warrant that (i) as of the
date hereof, all of the representations and warranties made or deemed to be made
under the Forbearance Agreement and the other Loan Documents are true and
correct, (ii) as of the date hereof, after giving effect to the terms hereof,
there exists no (A) default or breach of the Forbearance Agreement or (B)
Default or Event of Default under the Loan Agreement or any of the Loan
Documents, other than any Default or Event of Default which may arise from the
failure of Borrowers to pay, during the Forbearance Period, certain interest
payments with respect to the Senior Notes (as defined below), (iii) such
Borrower and Guarantor has the power and is duly authorized to enter into,
deliver and perform this Agreement, and (iv) this Agreement and each of the
Forbearance Agreement and the other Loan Documents is the legal, valid and
binding obligation of the such Borrower and Guarantor enforceable against it in
accordance with its terms; and
Each Borrower and Guarantor does hereby reaffirm each of the agreements,
covenants, and undertakings set forth in the Forbearance Agreement and each and
every other Loan Document executed in connection therewith or pursuant thereto
as if such Borrower or Guarantor were making said agreements, covenants and
undertakings on the date hereof; and
Each Borrower and Guarantor does hereby acknowledge and agree that no right of
offset, defense, counterclaim, claim, causes of action or objection in favor of
any Borrower or Guarantor against Agent or any Lender exists arising out of or
with respect to (i) the Secured Obligations, this Agreement, the Forbearance
Agreement, the Loan Agreement or any of the other Loan Documents, (ii) any other
documents now or heretofore evidencing, securing or in any way relating to the
foregoing or (iii) the administration or funding of the Revolving Credit Loans;
and
--------------------------------------------------------------------------------
Each Borrower and Guarantor does hereby acknowledge and agree that any and all
references to the Loan Agreement herein or in the Forbearance Agreement shall
mean and refer to the Loan Agreement, as amended by (i) that certain First
Amendment to Post-Confirmation Loan and Security Agreement, dated August 31,
2000, (ii) that certain Second Amendment to Post-Confirmation Loan and Security
Agreement, dated January 26, 2001, (iii) that certain Third Amendment to
Post-Confirmation Loan and Security Agreement, dated February 28, 2001, (iv)
that certain Fourth Amendment to Post-Confirmation Loan and Security Agreement,
dated March 30, 2001, (v) that certain Fifth Amendment to Post-Confirmation Loan
and Security Agreement, dated April 13, 2001, (vi) that certain Sixth Amendment
to Post-Confirmation Loan and Security Agreement, dated April 27, 2001, (vii)
that certain Seventh Amendment to Post-Confirmation Loan and Security Agreement,
dated May 18, 2001, (viii) that certain Eighth Amendment to Post-Confirmation
Loan and Security Agreement, dated June 4, 2001, (ix) that certain Ninth
Amendment to Post-Confirmation Loan and Security Agreement, dated June 8, 2001,
(x) that certain Tenth Amendment to Post-Confirmation Loan and Security
Agreement, dated June 15, 2001, (xi) that certain Eleventh Amendment to
Post-Confirmation Loan and Security Agreement, dated June 27, 2001, (xii) that
certain Twelfth Amendment to Post-Confirmation Loan and Security Agreement,
dated July 6, 2001, (xiii) that certain Thirteenth Amendment to
Post-Confirmation Loan and Security Agreement, dated July 13, 2001, (xiv) that
certain Fourteenth Amendment to Post-Confirmation Loan and Security Agreement,
dated July 20, 2001, (xv) that certain Fifteenth Amendment to Post-Confirmation
Loan and Security Agreement, dated July 27, 2001, and (xvi) that certain
Sixteenth Amendment to Post-Confirmation Loan and Security Agreement, as
contained herein.
3. Releases; Indemnities.
In further consideration of Agent's and each Lender's execution of this
Agreement, each Borrower and each Guarantor, individually and on behalf of its
successors (including, without limitation, any trustees acting on behalf of such
Borrower or Guarantor and any debtor-in-possession with respect to such Borrower
or Guarantor), assigns, subsidiaries and Affiliates, hereby forever releases
Agent and each Lender and their respective successors, assigns, parents,
subsidiaries, Affiliates, officers, employees, directors, agents and attorneys
(collectively, the "Releasees") from any and all debts, claims, demands,
liabilities, responsibilities, disputes, causes, damages, actions and causes of
actions (whether at law or in equity) and obligations of every nature
whatsoever, whether liquidated or unliquidated, whether known or unknown,
matured or unmatured, fixed or contingent (collectively, "Claims") that such
Borrower or Guarantor may have against the Releasees which arise from or relate
to any actions which the Releasees may have taken or omitted to take in
connection with the Forbearance Agreement or other Loan Documents prior to the
date this Agreement was executed including without limitation with respect to
the Secured Obligations, any Collateral, the Loan Agreement, the Forbearance
Agreement, any other Loan Document and any third parties liable in whole or in
part for the Secured Obligations. This provision shall survive and continue in
full force and effect whether or not such Borrower or Guarantor shall satisfy
all other provisions of this Agreement, the Forbearance Agreement, the Loan
Documents or the Loan Agreement including payment in full of all Secured
Obligations.
--------------------------------------------------------------------------------
Each Borrower hereby agrees that its obligation to indemnify and hold the
Releasees harmless as set forth in Section 3(a) above shall include an
obligation to indemnify and hold the Releasees harmless with respect to any and
all liabilities, obligations, losses, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever incurred by
the Releasees, or any of them, whether direct, indirect or consequential, as a
result of or arising from or relating to any proceeding by, or on behalf of any
Person, including, without limitation, officers, directors, agents, trustees,
creditors, partners or shareholders of such Borrower or Guarantor any subsidiary
or Affiliate of such Borrower, such Guarantor whether threatened or initiated,
asserting any claim for legal or equitable remedy under any statutes, regulation
or common law principle arising from or in connection with the negotiation,
preparation, execution, delivery, performance, administration and enforcement of
this Agreement or any other document executed in connection herewith. The
foregoing indemnity shall survive the payment in full of the Secured Obligations
and the termination of this Agreement, the Forbearance Agreement, the Loan
Agreement and the other Loan Documents
4. Conditions Precedent. The effectiveness of this Agreement is
subject to the following conditions precedent:
A. Delivery of Documents. Borrowers and Guarantors shall have delivered to
Agent, on behalf of Lenders, all in form and substance acceptable to Agent
in its sole discretion, (i) executed counterpart originals of this
Agreement, and (ii) such other documentation as Agent may reasonably require
in connection herewith; and
B. Accuracy of Representations and Warranties. All of the representations and
warranties made or deemed to be made in this Agreement and under the
Forbearance Agreement and the other Loan Documents shall be true and correct
as of the date of this Agreement, except such representations and warranties
which, by their terms, are applicable to a prior specific date or period;
and
C. Expenses. Borrowers and Guarantors shall have agreed to jointly and
severally pay to Agent the costs and expenses referred to in Section 6
hereof; and
D. Fees. Borrowers and Guarantors shall have paid to Agent, for the ratable
benefit of Lenders, an amendment and forbearance fee in an amount equal to
$25,000, which fee shall be deemed fully earned as of the date hereof.
5. Effect of this Agreement; Relationship of Parties. As expressly
amended hereby, the Forbearance Agreement and the other Loan Documents shall be
and remain in full force and effect as originally written, and shall constitute
the legal, valid, binding and enforceable obligations of Borrowers and
Guarantors to Agent and Lenders. The relationship of Agent and Lenders, on the
one hand, and Borrowers and Guarantors, on the other hand, has been and shall
continue to be, at all times, that of creditor and debtor and not as joint
venturers or partners. Nothing contained in this Agreement, any instrument,
document or agreement delivered in connection herewith or in the Forbearance
Agreement, the Loan Agreement or any of the other Loan Documents shall be deemed
or construed to create a fiduciary relationship between or among the parties.
--------------------------------------------------------------------------------
6. Expenses. Borrowers and Guarantors agree to jointly and severally
pay on demand all reasonable costs and expenses of Agent and Lenders in
connection with the preparation, execution, delivery and enforcement of this
Agreement and all other documents and any other transactions contemplated
hereby, including, without limitation, the reasonable fees and out-of-pocket
expenses of legal counsel to Agent and Lenders. Borrowers authorize Agent to
charge the foregoing expenses to the Borrowers' loan account by increasing the
principal amount of the Revolving Credit Loans by the amount of such expenses
owed by Borrowers in connection herewith.
7. Miscellaneous. Borrowers and Guarantors agree to take such further
action as Agent or any Lender shall reasonably request in connection herewith to
evidence the amendments herein contained to the Forbearance Agreement. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which, when so executed and delivered,
shall be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same instrument. This Agreement shall be
binding upon and inure to the benefit of the successors and permitted assigns of
the parties hereto. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Georgia. This Agreement embodies the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior oral or written negotiations,
agreements and understandings of the parties with respect to the subject matter
hereof, except the agreements embodied in the Forbearance Agreement, the Loan
Agreement and the other Loan documents (as modified herein). Time is of the
essence of this Agreement and of the Forbearance Agreement and the Loan
Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF
, Borrowers, Guarantors, Lenders and Agent have caused this Agreement to be duly
executed as of the date first above written.
BORROWERS:
TRISM, INC.
By:
Name:
Ralph Nelson
Title:
Senior Vice President and General Counsel
TRISM SECURED TRANSPORTATION, INC.
By:
Name: Ralph Nelson Title: Senior Vice President and General Counsel
TRI-STATE MOTOR TRANSIT CO.
By:
Name: Ralph Nelson Title: Senior Vice President and General Counsel
--------------------------------------------------------------------------------
DIABLO SYSTEMS INCORPORATED,
D/B/A DIABLO TRANSPORTATION, INC.
By:
Name:
Ralph Nelson
Title:
Senior Vice President and General Counsel
TRISM EASTERN, INC., D/B/A C. I.
WHITTEN TRANSFER
By:
Name:
Ralph Nelson
Title:
Senior Vice President and General Counsel
TRISM HEAVY HAUL, INC.
By:
Name: Ralph Nelson Title: Senior Vice President and General Counsel
TRISM SPECIALIZED CARRIERS, INC.
By:
Name: Ralph Nelson Title: Senior Vice President and General Counsel TRISM
SPECIAL SERVICES, INC.
By:
Name: Ralph Nelson Title: Senior Vice President and General Counsel TRISM
LOGISTICS, INC.
By:
Name: Ralph Nelson Title: Senior Vice President and General Counsel
--------------------------------------------------------------------------------
TRISM EQUIPMENT, INC.
By:
Name: Ralph Nelson Title: Senior Vice President and General Counsel GUARANTORS:
AERO BODY AND TRUCK EQUIPMENT,
INC.
By:
Name: Ralph Nelson Title: Senior Vice President and General Counsel E.L.
POWELL & SONS TRUCKING, INC.
By:
Name:
Ralph Nelson
Title: Senior Vice President and General Counsel TRISM TRANSPORT, INC.
By:
Name: Ralph Nelson Title: Senior Vice President and General Counsel
TRISM TRANSPORT SERVICES, INC.
By:
Name:
Ralph Nelson
Title: Senior Vice President and General Counsel
--------------------------------------------------------------------------------
LENDERS:
FLEET CAPITAL CORPORATION
By:
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT,
INC.
By:
Name:
Title:
AGENT:
THE CIT GROUP/BUSINESS CREDIT,
INC.
By:
Name:
Title:
|
EXHIBIT 10.49
INDEMNITY AGREEMENTS BETWEEN THE COMPANY
AND ITS DIRECTORS AND/OR EXECUTIVE OFFICERS
Name of Indemnitee
Capacity in which Indemnified
Date of Agreement
Robert P. Collins
Director and Executive Officer
February 1, 2001
Mark A. Kirk
Director and Executive Officer
February 1, 2001
Debra L. Kackley
Executive Officer
February 1, 2001
Fred A. Breidenbach
Director
February 1, 2001
N. Colin Lind
Director
February 1, 2001
Glen W. Lindemann
Director
February 1, 2001
Frank N. Linsalata
Director
February 1, 2001
F. Rush McKnight
Director
February 1, 2001
John P. Reilly
Director
February 1, 2001
SCOTT TECHNOLOGIES, INC.
INDEMNITY AGREEMENT
THIS AGREEMENT is made as of the _____ day of February, 2001, by and
between Scott Technologies, Inc., a Delaware corporation (the "Corporation"),
and ___________ ("Indemnitee"), a [Director and/or Officer] of the Corporation.
WHEREAS, it is essential to the Corporation to retain and attract as
Directors and/or Officers the most capable persons available, such as
Indemnitee; and
WHEREAS, the prevalence of corporate litigation subjects directors and
officers to expensive litigation risks and it is the policy of the Corporation
to indemnify its Directors and/or Officers so as to provide them with the
maximum possible protection permitted by law; and
WHEREAS, in addition, because the statutory indemnification provisions
of the Delaware General Corporation Law (the "DGCL") expressly provide that they
are non-exclusive, it is the policy of the Corporation to indemnify directors
and officers of the Corporation who have, on behalf of the Corporation, entered
into settlements of derivative suits provided they have not breached the
applicable statutory standard of conduct; and
WHEREAS, Indemnitee does not regard the protection available under the
Corporation's Amended and Restated By-laws (the "By-laws") and insurance, if
any, as adequate in the present circumstances, and considers it necessary and
desirable to his or her service as a Director and/or Officer to have adequate
protection, and the Corporation desires to provide such protection to induce
Indemnitee to serve in such capacity; and
WHEREAS, the DGCL provides that indemnification of directors and
officers of a corporation may be authorized by agreement, and thereby
contemplates that contracts of this nature may be entered into between the
Corporation and Indemnitee.
NOW, THEREFORE, for good and valuable consideration, the adequacy of
which is hereby acknowledged, the Corporation and Indemnitee do hereby agree as
follows:
1. Agreement to Serve. Indemnitee agrees to serve or continue to
serve as a [Director and/or Officer] of the Corporation for so long as he or she
is duly elected or appointed or until such time as he or she tenders his or her
resignation in writing or is otherwise terminated or properly removed from
office.
The Corporation expressly confirms and agrees that it has entered into
this agreement and assumed the obligations imposed on the Corporation hereby in
order to induce Indemnitee to continue to serve as a [Director and/or Officer]
of the Corporation, and acknowledges that Indemnitee is relying upon this
agreement in continuing in such capacity.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending, or
completed action, suit or proceeding, whether brought by or in the right of the
Corporation or otherwise and whether of a civil, criminal, administrative or
investigative nature, in which Indemnitee may be or may have been involved as a
party or otherwise, by reason of the fact that Indemnitee is or was a Director
and/or Officer of the Corporation or any subsidiary of the Corporation, by
reason of any action taken by Indemnitee or of any inaction on his or her part
while acting as such a Director and/or Officer, or by reason of the fact that he
or she is or was serving at the request of the Corporation as a director,
officer, member or manager, partner, trustee, employee or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company or a partnership, joint venture, trust or other enterprise; in each case
whether or not he or she is acting or serving in any such capacity at the time
any liability or expense is incurred for which indemnification or reimbursement
3. Indemnity in Third-Party Proceedings. The
Corporation shall indemnify Indemnitee in accordance with the provisions of this
Paragraph 3 if Indemnitee is a party to or threatened to be made a party to or
otherwise involved in any Proceeding (other than a Proceeding by or in the right
of the Corporation to procure a judgment in its favor) by reason of the fact
that Indemnitee is or was a Director and/or Officer of the Corporation or a
subsidiary of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, member or manager, partner, trustee,
employee or agent of another corporation, domestic or foreign, nonprofit or for
profit, a limited liability company or a partnership, joint venture, trust or
other enterprise, against all Expenses, judgments, settlements, fines and
penalties, actually and reasonably incurred by Indemnitee in connection with the
defense or settlement of such Proceeding, but only if Indemnitee acted in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe that his or her conduct was
unlawful. The termination of any such Proceeding by judgment, order of court,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal proceeding, that such person had reasonable cause to believe that his
or her conduct was unlawful.
4. Indemnity for Expenses in Proceedings by
or in the Right of the Corporation. The Corporation shall indemnify Indemnitee
in accordance with the provisions of this Paragraph 4 if Indemnitee is a party
to or threatened to be made a party to any Proceeding by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that
Indemnitee is or was a Director and/or Officer of the Corporation or a
subsidiary of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, member or manager, partner, trustee,
employee, or agent of another corporation, domestic or foreign, nonprofit or for
profit, a limited liability company or a partnership, joint venture, trust or
other enterprise, against all Expenses actually and reasonably incurred by
Indemnitee in connection with the defense of such Proceeding, but only if he or
she acted in good faith and in a manner which he or she reasonably believed to
be in or not opposed to the best interests of the Corporation, except that no
indemnification for Expenses shall be made under this Paragraph 4 in respect of
any claim, issue or matter as to which Indemnitee shall have been adjudged by
court order or judgment to be liable to the Corporation, unless and only to the
extent that any court in which such Proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
5. Indemnity for Amounts Paid in Settlement
in Proceedings by or in the Right of the Corporation. The Corporation shall
indemnify Indemnitee in accordance with the provisions of this Paragraph 5 if
Indemnitee is a party to or threatened to be made a party to any Proceeding by
or in the right of the Corporation to procure a judgment in its favor by reason
of the fact that Indemnitee is or was a Director and/or Officer of the
Corporation or a subsidiary of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, member or manager, partner,
trustee, employee, or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company or a partnership, joint
venture, trust or other enterprise, against all amounts actually and reasonably
paid in settlement by Indemnitee in connection with any such Proceeding, but
only if he or she acted in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Corporation.
6. Indemnification of Expenses of Successful
Party. Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
Proceeding or in defense of any claim, issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
7. Advances of Expenses. Any Expenses incurred
by or on behalf of Indemnitee pursuant to Paragraphs 3 or 4 in any Proceeding
shall be paid by the Corporation in advance upon the written request of
Indemnitee if Indemnitee shall undertake to (a) repay such amount to the extent
that it is ultimately determined that Indemnitee is not entitled to
indemnification hereunder, and (b) reasonably cooperate with the Corporation
concerning the action, suit or proceeding giving rise to the Expenses. Any
advances to be made under this Paragraph 7 shall be paid by the Corporation to
Indemnitee within twenty (20) days following delivery of a written request
therefor by Indemnitee to the Corporation.
8. Procedure. Any indemnification and advances
provided for in Paragraph 3, 4, 5 and 6 shall be made no later than thirty (30)
days after receipt of the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the Corporation's
Amended and Restated Certificate of Incorporation (the "Certificate") or By-laws
providing for indemnification, is not paid in full by the Corporation within
thirty (30) days after a written request for payment thereof has first been
received by the Corporation, Indemnitee may, but need not, at any time
thereafter bring an action against the Corporation to recover the unpaid amount
of the claim and, subject to the other provisions of this Agreement, Indemnitee
shall also be entitled to be paid for the Expenses of bringing such action. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in connection with any action, suit or proceeding in
advance of its final disposition) that Indemnitee has not met the standards of
conduct which make it permissible under applicable law for the Corporation to
indemnify Indemnitee for the amount claimed, but the burden of proving such
defense shall be on the Corporation and Indemnitee shall be entitled to receive
advance payments of expenses pursuant to Paragraph 7 hereof unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the parties' intention that if the
Corporation contests Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be for the court to decide, and
neither the failure of the Corporation (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel or
its stockholders) to have made a determination that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct required by applicable law, nor an actual
determination by the Corporation (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.
9. Allowance for Compliance with SEC
Requirements. Indemnitee acknowledges that the Securities and Exchange
Commission ("SEC") has expressed the opinion that indemnification of directors
and officers from liabilities under the Securities Act of 1933 ("Act"), as
amended, is against public policy as expressed in the Act and, is therefore,
unenforceable. Indemnitee hereby agrees that it will not be a breach of this
Agreement for the Corporation to undertake with the SEC in connection with the
registration for sale of any stock or other securities of the Corporation from
time to time that, in the event a claim for indemnification against such
liabilities (other than the payment by the Corporation of expenses incurred or
paid by a director or officer of the Corporation in the successful defense of
any action, suit or proceeding) is asserted in connection with such stock or
other securities being registered, the Corporation will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of competent jurisdiction on the question of whether or not such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue. Indemnitee further agrees
that such submission to a court of competent jurisdiction shall not be a breach
of this Agreement.
10. Indemnification Hereunder Not Exclusive. The
indemnification provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may be entitled under the Certificate or the
By-laws of the Corporation, any agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding such office.
The indemnification under this Agreement for any action taken or not
taken while serving in an indemnified capacity shall continue as to Indemnitee
even though he or she may have ceased to be a Director and/or Officer and shall
inure to the benefit of the heirs, executors and personal representatives of
Indemnitee.
11. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Corporation for some
claims, issues or matters, but not as to other claims, issues or matters, or for
some or a portion of the Expenses, judgments, fines or penalties actually and
reasonably incurred by Indemnitee or amounts actually and reasonably paid in
settlement by Indemnitee in the investigation, defense, appeal or settlement of
any Proceeding, but not for the total amount thereof, the Corporation shall
nevertheless indemnify Indemnitee for the portion of such claims, issues or
matters or Expenses, judgments, fines, penalties or amounts paid in settlement
to which Indemnitee is entitled.
12. No Rights of Continued Employment. Nothing contained in this
Agreement is intended to create in Indemnitee any right to continued employment.
13. Reimbursement to Corporation by Indemnitee; Limitation on Amounts
Paid by Corporation. To the extent Indemnitee has been indemnified by the
Corporation hereunder and later receives payments from any insurance carrier
covering the same Expenses, judgments, fines, penalties or amounts paid in
settlement so indemnified by the Corporation hereunder, Indemnitee shall
immediately reimburse the Corporation hereunder for all such amounts received
from the insurer.
Notwithstanding anything contained herein to the contrary, Indemnitee
shall not be entitled to recover amounts under this Agreement which, when added
to the amount of indemnification payments made to, or on behalf of, Indemnitee,
under the Certificate or By-laws of the Corporation, in the aggregate exceed the
Expenses, judgments, fines, penalties and amounts paid in settlement actually
and reasonably incurred by Indemnitee ("Excess Amounts"). To the extent the
Corporation has paid Excess Amounts to Indemnitee, Indemnitee shall be obligated
to reimburse the Corporation for such Excess Amounts.
Notwithstanding anything contained herein to the contrary, the
Corporation shall not be obligated under the terms of this Agreement, to
indemnify Indemnitee:
(a) or advance expenses to Indemnitee with respect to proceedings or
claims initiated or brought voluntarily by Indemnitee and not by way of defense,
except with respect to Proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise as
required under Section 145 of the DGCL, but such indemnification or advancement
of expenses may be provided by the Corporation in specific cases if the Board of
Directors finds it appropriate;
(b) if it is proved by final judgment in a court of law or other final
adjudication to have been based upon or attributable to the Indemnitee's in fact
having gained any personal profit or advantage to which he or she was not
legally entitled;
(c) for any expenses incurred by Indemnitee with respect to any
proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a
court of competent jurisdiction determines that each of the material assertions
made by Indemnitee in such proceeding was not made in good faith or was
frivolous;
(d) for a disgorgement of profits made from the purchase and sale by
the Indemnitee of securities pursuant to Section 16(b) of the Securities
Exchange Act of 1934, as amended, or similar provisions of any state statutory
law or common law; or
(e) for any judgment, fine or penalty which the Corporation is
prohibited by applicable law from paying as indemnity or for any other reason.
14. Scope. Notwithstanding any other provision of this Agreement,
the Corporation hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Corporation's
Certificate, the By-laws, or by statute. In the event of any change, after the
date of this Agreement, in any applicable law, statute, or rule which expands
the right of a Delaware corporation to indemnify a member of its board of
directors or an officer, such change shall be deemed to be within the purview of
the Indemnitee's rights and the Corporation's obligations under this Agreement.
In the event of any change in any applicable law, statute or rule which narrows
the right of a Delaware corporation to indemnify a member of its board of
directors or an officer, such change, to the extent not otherwise required by
such law, statute or rule to be applied to this Agreement, shall have no effect
on this Agreement or the parties' rights and obligations hereunder.
15. Notice to Insurers. If, at the time of the receipt of a written
request of Indemnitee pursuant to Paragraph 8 hereof, the Corporation has
director and officer liability insurance in effect, the Corporation shall give
prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The
Corporation shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such proceeding in accordance with the terms of such policies.
16. Continuation of Rights and Obligations. All rights and
obligations of the Corporation and Indemnitee hereunder shall continue in full
force and effect despite the subsequent amendment or modification of the
Corporation's Certificate or By-Laws, as such are in effect on the date hereof,
and such rights and obligations shall not be affected by any such amendment or
modification, any resolution of directors or stockholders of the Corporation, or
by any other corporate action which conflicts with or purports to amend, modify,
limit or eliminate any of the rights or obligations of the Corporation and/or
Indemnitee hereunder.
17. Amendment and Modification. This Agreement may only be amended,
modified or supplemented by the written agreement of the Corporation and
Indemnitee.
18. Assignment. This Agreement shall not be assigned by the
Corporation or Indemnitee without the prior written consent of the other party
thereto, except that the Corporation may freely assign its rights and
obligations under this Agreement to any subsidiary for whom Indemnitee is
serving as a director and/or officer thereof; provided, however, that no
permitted assignment shall release the assignor from its obligations hereunder.
Subject to the foregoing, this Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, including, without limitation, any successor
to the Corporation by way of merger, consolidation and/or sale or disposition of
all or substantially all of the capital stock of the Corporation.
19. Saving Clause. If this Agreement or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify Indemnitee as to Expenses, judgments,
fines, penalties and amounts paid in settlement with respect to any Proceeding
to the full extent permitted by any applicable portion of this Agreement that
shall not have been invalidated or by any other applicable law.
20. Counterparts. This Agreement may be executed in two or more
fully or partially executed counterparts each of which shall be deemed an
original binding the signer thereof against the other signing parties, but all
counterparts together shall constitute one and the same instrument. Executed
signature pages may be removed from counterpart agreements and attached to one
or more fully executed copies of this Agreement. The parties may execute and
deliver this Agreement by facsimile signature, which shall have the same binding
effect as an original ink signature.
21. Notice. Indemnitee shall, as a condition precedent to his or her
right to be indemnified under this Agreement, give to the Corporation notice in
writing as soon as practicable of any claim made against him or her for which
indemnity will or could be sought under this Agreement. Notice to the
Corporation shall be directed to the Corporation at its headquarters located at
One Chagrin Highlands, 2000 Auburn Drive, Suite 400, Beachwood, Ohio 44122,
Attention: Mark A. Kirk, President and Chief Executive Officer (or such other
address as the Corporation shall designate in writing to Indemnitee). Notice
shall be deemed received three days after the date postmarked if sent by prepaid
mail, properly addressed. In addition, Indemnitee shall give the Corporation
such information and cooperation as it may reasonably require within
Indemnitee's power.
22. Applicable Law. All matters with respect to this Agreement,
including, without limitation, matters of validity, construction, effect and
performance shall be governed by the internal laws of the State of Delaware
applicable to contracts made and to be performed therein between the residents
thereof (regardless of the laws that might otherwise be applicable under
principles of conflicts of law).
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be duly executed and signed as of the day and year first above written.
SCOTT TECHNOLOGIES, INC.
THE "CORPORATION"
By
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Mark A. Kirk, President and Chief
Executive Officer
"INDEMNITEE"
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Name:
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REDACTED
[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
BLOOD SCREENING
HIV PROBE LICENSE AGREEMENT
between
CHIRON CORPORATION
F. HOFFMANN-LA ROCHE LTD.
and
ROCHE MOLECULAR SYSTEMS, INC.
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BLOOD SCREENING HIV PROBE LICENSE AGREEMENT
TABLE OF CONTENTS
Page
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RECITALS 3
ARTICLE 1: DEFINITIONS
3
ARTICLE 2: LICENSE AND OPTION GRANTS
7
ARTICLE 3: PAYMENTS, ROYALTIES
9
ARTICLE 4: RECORDS AND REPORTS
9
ARTICLE 5: OTHER ACTIONS
12
ARTICLE 6: REPRESENTATIONS AND WARRANTIES
12
ARTICLE 7: TERM AND TERMINATION
13
ARTICLE 8: CONFIDENTIALITY
15
ARTICLE 9: INDEMNITY
16
ARTICLE 10: ALTERNATIVE DISPUTE RESOLUTION
16
ARTICLE 11: MISCELLANEOUS
18
ARTICLE 12: FIELD RESTRICTIONS AND OTHER COVENANTS
20
ARTICLE 13: INFRINGEMENT BY THIRD PARTIES
21
ARTICLE 14: EUROPEAN COMMUNITY PROVISIONS
22
EXHIBIT A: COMPENSATION TO CHIRON
EXHIBIT B: CHIRON PATENT LIST
EXHIBIT C: ROCHE PATENT LIST
EXHIBIT D: CHIRON LICENSED PRODUCTS
EXHIBIT E: FORM OF REPORT
EXHIBIT F: EXISTING LICENSES
EXHIBIT G: REGIONS
2
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BLOOD SCREENING HIV PROBE LICENSE AGREEMENT
This agreement (hereinafter "Agreement") is made by and between CHIRON
CORPORATION, a Delaware corporation, of 4560 Horton Street, Emeryville,
California 94608 (hereinafter referred to as "CHIRON"), F. HOFFMANN-LA
ROCHE LTD., a Swiss corporation, of Grenzacherstrasse 124, Basel, Switzerland
(hereinafter referred to as "ROCHE PARENT"), and ROCHE MOLECULAR SYSTEMS, INC.,
a Delaware corporation, of 1145 Atlantic Avenue, Suite 100, Alameda, California
94501 (hereinafter referred to as "RMS" and collectively with ROCHE PARENT,
"ROCHE").
BACKGROUND
WHEREAS, CHIRON and ROCHE currently own or control certain patent rights
relating to the human immunodeficiency virus ("HIV"), as defined below.
WHEREAS, CHIRON and ROCHE entered into that certain Settlement Agreement
dated as of October 10, 2000 (the "Settlement Agreement") pertaining to the
settlement of the certain litigation matters described therein.
WHEREAS, in consideration of and subject to the execution and delivery of
the Settlement Agreement, CHIRON granted licenses to ROCHE under certain patent
rights relating to HIV for use in assays for the detection of nucleic acid
sequences for use in Blood Screening, subject to certain geographic and time
limitations, under that certain Blood Screening HCV/HIV Probe License Agreement
dated as of October 10, 2000 (the "Interim Agreement").
WHEREAS, CHIRON and ROCHE now desire to enter into a long term, worldwide
collaboration in Blood Screening, superceding the terms and conditions of the
Interim Agreement, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above provisions and the mutual
covenants contained herein, CHIRON and ROCHE hereby agree as follows:
ARTICLE 1
DEFINITIONS
In this Agreement the following words and phrases shall have the following
meanings:
1.1 "ADR" means Alternative Dispute Resolution in accordance with
Article 10.
1.2 "Affiliate" means an entity that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with, a specified entity. For the purposes of this definition, "control"
(including with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any entity, means: (a) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that entity, whether through the
ownership of voting securities or by contract or otherwise; or (b) the ownership
of at least fifty percent (50%) of the voting securities of that entity.
Notwithstanding anything to the contrary contained herein, "Affiliate" shall not
include, in the case of CHIRON, Novartis AG or any Affiliate of Novartis AG,
unless Novartis shall have acquired direct control of a majority of the Board of
Directors of CHIRON. Notwithstanding anything to the contrary contained herein,
"Affiliate" shall not include, in the case of ROCHE, Genentech Inc. or any
Affiliate of Genentech Inc., nor Laboratory Corporation of America Holdings or
any Affiliate of Laboratory Corporation of America Holdings.
1.3 "Authorized Distributor" means a bona fide, unaffiliated distributor,
but excluding any entity which is a Major IVD Manufacturer (as defined below)
that is not licensed in the Field (as defined below) under one or more of the
CHIRON Licensed Patents (as defined below) or is affiliated with, or directly or
indirectly controlled by, such a Major IVD Manufacturer, except to the extent
that such unlicensed Major IVD Manufacturer or its Affiliates distributes CHIRON
Licensed Products for
3
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ROCHE or its Affiliates on a local country basis and in the same manner in which
it distributes other diagnostic products for ROCHE or its Affiliates and ROCHE
and its Affiliates are not otherwise selling CHIRON Licensed Products in such
country.
1.4 "Blood Screening" means the commercial use of products that detect
nucleic acid sequences(s) for: (a) the screening of blood, plasma or blood
components intended for transfusion; and (b) confirmatory or supplemental
testing of the same samples otherwise screened for purposes described in
Section 1.4(a).
1.5 "Calendar Quarter" means the three (3) month period beginning January 1,
April 1, July 1 or October 1.
1.6 "Calendar Year" means January 1 through December 31.
1.7 "CHIRON Future HIV Sequence Patent Rights" means any and all Valid
Claims Directed to HIV of United States and foreign patents and patent
applications: (a) which are based upon inventions conceived or rights acquired
[**] (as defined below); (b) are not CHIRON Licensed Patents (as defined below);
(c) which claim HIV nucleic acid sequence(s) or a method to use (other than in
the manufacture of peptides) or detect such sequences specifically; (d) which
are owned by, licensed to or otherwise controlled by CHIRON or its Affiliates,
with rights to license or sublicense; and (e) with respect to which CHIRON has
the right to grant the option provided for in Section 2.4 of this Agreement. For
purposes of this Agreement, an invention will be deemed to have been conceived
if there is a patent, patent application, written invention disclosure statement
or other tangible document (whether or not witnessed) describing such invention.
1.8 "CHIRON Licensed Patents" means Valid Claims Directed to HIV which cover
the manufacture, use, sale, offer for sale or importation of a Products that are
contained within any of the following: (a) the patents and applications
identified in Exhibit B and any continuation, continuation-in-part and
divisional applications therefrom; (b) any reissued or reexamined patents
obtained from such patents and applications; (c) all foreign counterparts of
such patents and applications; and (d) all future patents and applications which
are based on inventions conceived by CHIRON or its Affiliates on or before the
Effective Date.
1.9 "CHIRON Licensed Products" means Products which are used by, or for, or
sold to an End User under circumstances, and in jurisdictions, such that in the
absence of the license granted under Section 2.1 such use or sale would
constitute an infringement of a Valid Claim of the CHIRON Licensed Patents,
including without limitation the Products identified in Exhibit D, as modified
from time to time by mutual agreement of the parties or as determined in
accordance with Section 5.2.
1.10 "CHIRON Non-HCV/HIV Analyte Patent Rights" means any and all Valid
Claims of U.S. and foreign patents and patent applications: (a) which claim any
nucleic acid sequence(s) or transmissible disease-causing agent(s), other than
HCV or HIV; (b) which is a blood borne, infectious disease or virus to the
extent such Valid Claims cover the detection of any nucleic acid sequence(s) or
transmissible disease-causing agent(s) of such infectious disease or virus;
(c) which are owned by, licensed to or otherwise controlled by CHIRON or its
Affiliates, with right to license or sublicense; and (d) with respect to which
CHIRON has the right to grant the option provided for in Section 2.4 of this
Agreement.
1.11 "CHIRON Optioned Rights" means the CHIRON Future HIV Sequence Patent
Rights and the CHIRON Non-HCV/HIV Analyte Patent Rights.
1.12 "Directed to HIV" means that the claim or technology in question is
directed to methods, compositions, reagents or kits specifically for use in
nucleic acid-based diagnostic assays for the detection of HIV nucleic acid
sequence(s), or specifically for use in the manufacture of any compositions or
reagents for use in, or manufacture of nucleic acid-based diagnostic assays for
4
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detection of HIV nucleic acid sequence(s) (excluding, for example, PCR claims
and technology and other methods for detection of nucleic acid sequence(s)
generally which involve nucleic acid amplification). The terminology
"specifically for use" as used in this Section 1.12, is intended to exclude
inventions suitable for use with viruses or analytes other than HIV (including
by way of example and not by way of limitation, inventions relating to PCR, or
assay formats, improved expression systems, detectable labels, instrumentation,
packaging and the like), which shall not be considered "specifically for use" in
HIV detection as contemplated by this Section 1.12 and shall therefore not be
considered as "Directed to HIV" hereunder.
1.13 "Earned Royalty" and "Earned Royalty Amount" shall have the meanings
specified in Paragraph 1 of Exhibit A.
1.14 "Effective Date" means [**].
1.15 "End User" means a person or entity who is a final purchaser of a
Product, and whose use of a Product results in the Product's consumption,
operation, destruction or loss of activity.
1.16 "Existing End Users" means as of May 1, 2001, those End Users for which
ROCHE has been selling and continues to sell a commercially significant volume
of the Products required by such End Users for Blood Screening use; provided
however, that "Existing End Users" shall not include any End User located in
[**] or the [**].
1.17 "Field" means Blood Screening and Plasma Fractionation.
1.18 "Foundational Patents" means the CHIRON Licensed Patents identified in
Exhibit B which are stated therein to be Foundational Patents.
1.19 "HIV" means any viral isolate of the human immunodeficiency virus
classified as HIV by the International Committee on the Taxonomy of Viruses (or
any body that replaces such Committee) or any subtype of such isolate and
further includes any isolate that is at least forty percent (40%) homologous to
any such isolate and of the same genomic type and substantially the same genomic
organization, any isolate that has a genome that either hybridizes to or is
substantially identical to any such isolate or its compliment, and any defective
or modified form of any of the above isolates.
1.20 "HIV Diagnostics Agreement" means that certain HIV Probe License
Agreement between CHIRON and ROCHE, dated as of October 10, 2000, as amended
from time to time.
1.21 "Infringing Third Party Sales" means (a) as to Blood Screening, sales
by a Major IVD Manufacturer of Products for use in Blood Screening, and (b) as
to Plasma Fractionation, sales or use by any third party for use in Plasma
Fractionation, which in either case: (i) infringe one or more of the CHIRON
Licensed Patents, or (b) as to which a license under one or more of the CHIRON
Licensed Patents has been granted, but as to which the licensee is not paying
royalties thereunder.
1.22 "Interim Agreement" means the Blood Screening HCV/HIV Probe License
Agreement by and between CHIRON and ROCHE dated as of October 10, 2000, as
amended from time to time.
1.23 "In Vitro Diagnostics" means the commercial use of products that detect
nucleic acid sequence(s) of HIV in individual human specimens, including the use
of such products for diagnosis, prognosis, monitoring or classification
purposes, including without limitation use for Transplantation but specifically
excluding use for Blood Screening and Plasma Fractionation.
1.24 "Licensed/Optioned Patents" means the CHIRON Licensed Patents and the
ROCHE Optioned Patents.
1.25 "Major IVD Manufacturer" means a commercial entity (and its Affiliates)
that manufactures, sells and engages in other commercial activities with respect
to In Vitro Diagnostic products and has a significant marketing presence in one
or more Regions. Major IVD Manufacturers include Abbott,
5
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Bayer, Johnson & Johnson, Pasteur, Sanofi, Dade Behring, Organon Teknika, Becton
Dickinson, bioMerieux, BioRad, Fujirebio, Beckman Coulter, Visible Genetics,
Innogenetics, and PE Corporation and each of their successors and assigns and
any other entity which commands in the future at least an equivalent presence as
measured by total product sales as do any of the foregoing entities as of the
Effective Date in such Region.
1.26 "PCR" means polymerase chain reaction technology.
1.27 "Plasma Fractionation" means the commercial use of products that detect
nucleic acid sequence(s) for the screening of plasma or blood components
intended for use in blood products (e.g., without limitation, immunoglobulins).
1.28 "Product(s)" means reagents, compositions or kits suitable for use in
the Field.
1.29 "Region" means one of the four (4) regions set forth on Exhibit G, as
modified from time to time in accordance with Paragraph 1(e) of Exhibit A.
1.30 "Release Screening" means, as to Plasma Fractionation only, the quality
control testing of plasma samples that have previously been screened for the
presence of HIV using (a) a CHIRON Licensed Product for which at least the
applicable Earned Royalty Amount has been paid, (b) any other Product for the
detection of HIV licensed by CHIRON for sale or use in Plasma Fractionation or
(c) a Product sold or used by CHIRON for the detection of HIV.
1.31 "ROCHE Future HIV Sequence Patent Rights" means any and all Valid
Claims Directed to HIV of United States and foreign patents and patent
applications: (a) which are based on inventions conceived or rights acquired
[**]; (b) are not ROCHE Optioned Patents (as defined below); (c) which claim HIV
nucleic acid sequence(s) or a method to use (other than in the manufacture of
peptides) or detect such sequences specifically; (d) which are owned by,
licensed to or otherwise controlled by ROCHE or its Affiliate, with rights to
license or sublicense; and (e) with respect to which ROCHE has the right to
grant the option provided for in Section 2.5 of this Agreement. For purposes of
this Agreement, an invention will be deemed to have been conceived if there is a
patent, patent application, written invention disclosure statement or other
tangible document (whether or not witnessed) describing such invention.
1.32 "ROCHE Non-HCV/HIV Analyte Patent Rights" means any and all Valid
Claims of U.S. and foreign patents and patent applications: (a) which claim any
nucleic acid sequence(s) or transmissible disease-causing agent(s), other than
HCV or HIV; (b) which is a blood borne, infectious disease or virus to the
extent such Valid Claims cover the detection of any nucleic acid sequence(s) or
transmissible disease-causing agent(s) of such infectious disease or virus;
(c) which are owned by, licensed to or otherwise controlled by ROCHE or its
Affiliates, with right to license or sublicense; and (d) with respect to which
ROCHE has the right to grant the option provided for in Section 2.5 of this
Agreement.
1.33 "ROCHE Optioned Patents" means: (a) the patents and applications
identified in Exhibit C and any continuation, continuation-in-part and
divisional applications therefrom; (b) any reissued or reexamined patents
obtained from such patents and applications; (c) all foreign counterparts of
such patents and applications; and (d) all future patents and applications which
are based on inventions conceived by ROCHE or its Affiliates on or before the
Effective Date, to the extent the items described in clauses (a) through (d) of
this Section 1.33 contain a Valid Claim Directed to HIV which covers the
manufacture, use, sale, offer for sale or importation of a product in the Field
or in Transplantation.
1.34 "ROCHE Optioned Product" means a Product which is manufactured, used,
offered for sale, imported or sold under circumstances which would, in the
absence of the license for which an option is
6
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granted under Section 2.3, constitute an infringement of a Valid Claim of the
ROCHE Optioned Patents.
1.35 "ROCHE Optioned Rights" means the ROCHE Future HIV Sequence Patent
Rights and the ROCHE Non-HCV/HIV Analyte Patent Rights.
1.36 "Transplantation" means the commercial use of products that detect
nucleic acid sequences for the screening of any biological materials intended
for transfusion or transplantation, in each case from any donor, including
autologous donors, other than the transfusion or transplantation of blood or its
derivatives, components or replacements.
1.37 "Units" means the number of individual donations of blood, plasma or
other blood components that are tested for Blood Screening by End Users through
the use of a CHIRON Licensed Product. In the event that ROCHE or its Affiliates
perform assays for commercial purposes utilizing CHIRON Licensed Product, Units
shall include the number of individual donations of blood, plasma or other blood
components that are so tested by ROCHE or its Affiliates. Notwithstanding the
foregoing, Units shall not include those CHIRON Licensed Products used by or for
End Users at no charge by ROCHE for (A) reasonable quantities of quality control
or evaluation testing or (B) replacement of defective goods.
1.38 "Valid Claim" means a claim in any issued, active, unexpired patent
which has not been withdrawn, cancelled, lapsed or disclaimed, or held
unpatentable, invalid or permanently unenforceable by a non-appealed or
nonappealable final decision by a court or other appropriate body of competent
jurisdiction. The scope of a Valid Claim shall be limited to its terms as
defined by any such court or decision-making body of competent jurisdiction in a
nonappealable or non-appealed final decision.
ARTICLE 2
LICENSE AND OPTION GRANTS
2.1 CHIRON Grants. Subject to the terms and conditions of this Agreement,
CHIRON hereby grants to ROCHE and its Affiliates, so long as they remain
Affiliates of ROCHE, a worldwide, nonexclusive license, without the right to
sublicense except to have made or to conduct research, under the CHIRON Licensed
Patents to research, develop, make, have made, import, use, offer for sale and
sell CHIRON Licensed Products for use in the Field. CHIRON covenants not to sue
any End User of a CHIRON Licensed Product (with respect to which ROCHE has
performed all of its material obligations under this Agreement) to the extent of
activities in the Field or otherwise permitted under this Agreement. Conversely
no immunity from suit shall apply to End User activities in In Vitro
Diagnostics, except as provided in the HIV Diagnostics Agreement, or otherwise
outside of the Field. Subject to Paragraph 4 of Exhibit A, CHIRON retains the
nonexclusive right to practice and to grant licenses under the CHIRON Licensed
Patents to make, have made, use, import, offer for sale and sell any Products in
the Field and all rights outside of the Field.
2.2 Exclusion from CHIRON License. ROCHE acknowledges that neither ROCHE nor
its Affiliates are licensed under this Agreement to perform research or to
develop any product other than a CHIRON Licensed Product.
2.3 ROCHE Optioned Patents. Subject to the terms and conditions of this
Agreement, ROCHE hereby grants to CHIRON and its Affiliates, so long as they
remain Affiliates of CHIRON, an option to enter into a worldwide, non-exclusive
license, with no right to sublicense except to have made or to conduct research,
under ROCHE Optioned Patents to research, develop, make, have made, import, use,
offer for sale and sell ROCHE Optioned Products for use in the Field and in
Transplantation. [**]
2.4 CHIRON Optioned Rights. CHIRON grants to ROCHE a nonexclusive option to
obtain one or more nonexclusive, worldwide licenses, or sublicenses, as the case
may be, with a right to sublicense to ROCHE Affiliates only, under the CHIRON
Optioned Rights, to make, have made, use, import, offer
7
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for sale and sell CHIRON Licensed Products and/or products in the Field and in
Transplantation (including as to CHIRON Non-HCV/HIV Analyte Patent Rights
products for the detection of other transmissible disease-causing agents). [**]
2.5 ROCHE Optioned Rights. ROCHE grants to CHIRON a nonexclusive option to
obtain one or more nonexclusive, worldwide licenses, or sublicenses, as the case
may be, with a right to sublicense to CHIRON Affiliates only, under the ROCHE
Optioned Rights, to make, have made, use, import, offer for sale and sell
products in the Field and in Transplantation (including as to ROCHE Non-HCV/HIV
Analyte Patent Rights products for the detection of other transmissible
disease-causing agents). [**]
2.6 Option Terms. As to any Valid Claim(s) included within CHIRON Optioned
Rights or ROCHE Optioned Rights, the options set forth in Sections 2.4 and 2.5
may be exercised at any time [**] during the life of such patent(s), by written
notice from the option grantee to the option grantor identifying the patent(s)
under which the grantee wishes to obtain a license; [**] The terms of such
license agreement will be subject to the following:
(b) [**]
(b) [**]
(c) [**]
(d) The licensee will be able to terminate the license agreement at any time
by giving the licensor prior written notice;
(e) The licensee will not have any right of enforcement, and will not
receive from the licensor any warranty of validity or noninfringement; provided,
however, the licensor shall disclose to the licensee prior to entering into such
license, any knowledge it has of any pending or written threatened claim that is
material to any challenge of validity or enforceability, except to the extent
that such disclosure is subject to an obligation of confidentiality, protective
order or legal privilege; and
(f) [**]
2.7 Need for Option. CHIRON may, at any time hereunder, provide written
notification to ROCHE that certain products being sold or used by ROCHE are
believed by CHIRON to be covered by one or more Valid Claims of a patent
included within CHIRON Optioned Rights not licensed to ROCHE. In the event ROCHE
does not, [**] of receipt of such notification, exercise the relevant option
provided for under Section 2.4 to obtain a license under such CHIRON Optioned
Right, then CHIRON and ROCHE shall promptly thereafter confer in good faith to
discuss their respective positions concerning whether such products being sold
or used by ROCHE are covered by a Valid Claim of the patent in question. [**]
within ninety (90) days following the above-mentioned notification, [**].
2.8 Option Exercise. [**]
2.9 Effect on Option by Termination. Termination of this Agreement pursuant
to Article 7 shall terminate the provisions of Sections 2.3 to 2.9; provided,
however, that if at the time of such termination or, if prior notification is
required under Section 7.3, then if immediately prior to the effective date of
termination set forth in such notification: (a) a license agreement arising out
of the options granted under Section 2.3, 2.4 or 2.5 is in effect, such license
shall survive such termination under Article 7 and shall remain in effect in
accordance with its terms; or (b) a party has properly exercised an option
pursuant to Section 2.3, 2.4 or 2.5 and is proceeding in good faith to negotiate
a license agreement thereunder, the parties shall complete such negotiations in
good faith.
2.10 Third Party Patents. Each party shall use reasonable commercial efforts
to acquire the right to grant the options provided in Sections 2.4 and 2.5 when
it acquires rights under patents of third parties.
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ARTICLE 3
PAYMENTS, ROYALTIES
With respect to all Units, ROCHE shall make payments to CHIRON as set forth
in Exhibit A. For the avoidance of doubt, payments are due CHIRON only with
respect to [**]
ARTICLE 4
RECORDS AND REPORTS
4.1 Units Data. ROCHE shall use commercially reasonable efforts to collect
Units data for each Calendar Quarter from End Users in such detail and accuracy
so as to enable a determination of the amounts payable by ROCHE to CHIRON
hereunder. In the event an End User fails to timely report its Units data for a
Calendar Quarter to ROCHE, ROCHE shall include in the report for such Calendar
Quarter required under Section 4.3 a reasonable estimate of the number of such
Units, subject to a "true up" correction in the subsequent Calendar Quarter.
[**].
4.2 Earned Royalty Report. ROCHE shall, within ninety (90) days after the
last day of each Calendar Quarter commencing on or after [**], deliver to CHIRON
a true and accurate report for the prior Calendar Quarter, substantially in the
form attached as Exhibit E to this Agreement, which shall state the amount of
monies due hereunder, if any, as Earned Royalties, and shall include all
information reasonably necessary to calculate such amount, including, but not
limited to, the following information, presented by Region and by Product and
Field Category (as defined in Paragraph 1 of Exhibit A):
(a) the number of Units and the applicable Earned Royalty Amounts, together
with any "true-up" adjustments to (i) Units from prior Calendar Quarters (e.g.,
late reporting End Users) or (ii) the estimate of Earned Royalties paid pursuant
to Section 4.3; and
(b) a statement of the basis for any deviation from the Earned Royalty rates
and Earned Royalty Amounts as expressed in Paragraphs 1 and 2 of Exhibit A.
Upon written request by CHIRON, ROCHE will annotate and redeliver to CHIRON any
Earned Royalty Report four (4) or more Calendar Quarters old to include Units
and Earned Royalty Amounts on a country-by-country basis. Notwithstanding the
above, ROCHE shall deliver to CHIRON the Earned Royalty Report for the Calendar
Quarter ending [**] not later than [**].
4.3 Payment Dates. Not later than seventy-five (75) days after the last day
of each Calendar Quarter commencing on or after [**], ROCHE shall pay to CHIRON
a good faith estimate of the Earned Royalty for such Calendar Quarter due under
this Agreement. Such good faith estimate shall be based on the most recent Units
data available to ROCHE, together with such reasonable growth and seasonality
assumptions utilized by ROCHE for external planning purposes. If no Earned
Royalties are due, ROCHE shall so report, stating the reasons why no such
royalty is due. Not later than the date each Earned Royalty Report required
under Section 4.2 is due, ROCHE shall "true-up" its estimated Earned Royalty
payment based on the number of Units set forth in the Earned Royalty Report for
such Calendar Quarter and, if it is determined that the estimate of Earned
Royalties paid was less than the amount actually due for such Calendar Quarter,
pay the underpaid amount, plus interest at the rate described in Section 4.9. If
it is determined that the estimate of Earned Royalties paid was more than the
amount actually due for such Calendar Quarter, such overpaid amount shall be
credited against Earned Royalties payable on Units in the subsequent Calendar
Quarter, plus interest at the rate described in Section 4.9.
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4.4 Payment Procedures. ROCHE shall pay royalties and all other payments due
hereunder to CHIRON in immediately available funds on the due date by wire
transfer to:
Bank of America-San Francisco
San Francisco, California
Account Name: Chiron Corporation
Account Number: [**]
ABA #: [**]
Reference: ROCHE Blood Screening HIV Probe License Agreement
or at such place and in such other manner as CHIRON may designate in a notice
signed by CHIRON's Treasurer or Controller to ROCHE.
4.5 Taxes on Royalties. ROCHE shall deduct from amounts payable hereunder
all taxes assessed or imposed against, or required to be withheld from, royalty
payments due and shall pay such amount to the appropriate fiscal or tax
authorities on behalf of CHIRON. ROCHE shall forward promptly to CHIRON all tax
receipts received by ROCHE evidencing payment of such taxes.
4.6 Audit Rights.
(a) End Users. ROCHE shall use commercially reasonable efforts to include
sufficient audit rights in all agreements with End Users of CHIRON Licensed
Products to enable ROCHE to confirm the validity of such End Users' periodic
Units data. Upon thirty (30) days written notice by CHIRON, not more frequently
than once per Calendar Year and either in conjunction with an audit permitted
under Section 4.6(c) or not within the same Calendar Year as such an audit,
CHIRON may have such End User agreements examined during reasonable business
hours by a mutually acceptable independent certified public accountant selected
by CHIRON and at CHIRON's expense, whose acceptance shall not unreasonably be
withheld by ROCHE, for the purpose of verifying the existence of such audit
rights; provided that such independent accountant agrees to provide CHIRON only
the information necessary to verify the existence of such audit rights without
the disclosure of any End User identity; and provided further, that ROCHE may
propose an alternative methodology of confirming to CHIRON the validity of such
End Users' periodic Units data, subject to CHIRON's prior written consent, which
may not be unreasonably withheld.
(b) Existing End Users. Within thirty (30) days of the Effective Date or as
soon as possible thereafter, CHIRON shall have all End User agreements examined
during reasonable business hours by a mutually acceptable independent certified
public accountant selected by CHIRON and at CHIRON's expense, whose acceptance
shall not unreasonably be withheld by ROCHE, for the purpose of preparing and
verifying a schedule of Existing End Users sufficient to determine the basis
upon which Earned Royalties shall be calculated in accordance with Exhibit A for
each of the Calendar Quarters in the Calendar Year ending December 31, 2001;
provided that such independent accountant agrees to provide CHIRON only the
information necessary to verify the calculation of such Earned Royalties without
the disclosure of any End User identity or contractual terms.
(c) Earned Royalties. ROCHE shall keep reasonably detailed and accurate
records and books of account, including without limitation retaining all End
User Units data and End User audit materials, to enable a determination of the
amounts payable by ROCHE and its Affiliates to CHIRON hereunder. Upon thirty
(30) days written notice by CHIRON, not more frequently than once per Calendar
Year and either in conjunction with an audit permitted under Section 4.6(a) or
not within the same Calendar Year as such an audit, CHIRON may have such records
and books of account examined during reasonable business hours by a mutually
acceptable independent certified public accountant selected by CHIRON and at
CHIRON's expense, whose acceptance
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shall not unreasonably be withheld by ROCHE, for the purpose of verifying the
amounts due hereunder; provided that such independent accountant agrees to
provide CHIRON only the information necessary to verify the calculation of
amounts due hereunder. A copy of any final written report provided by the
independent accountant to CHIRON shall be given concurrently to ROCHE. Such
examination shall not be permitted unless it is requested within three (3) years
following the end of the Calendar Year to which the books and records pertain.
Where such examination results in a finding that ROCHE underpaid CHIRON by the
greater of [**] or [**] over any one year period, ROCHE shall reimburse CHIRON
for its reasonable costs and expenses in conducting such examination. ROCHE and
CHIRON shall promptly rectify any overpayments or underpayments by repaying such
amounts together with interest thereon at an annual rate equal to the lesser of:
(a) [**] as published in the Wall Street Journal, or (b) the maximum rates
permitted by applicable law, from the time such payment was originally due to
the time it is paid.
4.7 Confidentiality of Audit. CHIRON agrees that all audited information
shall be confidential to ROCHE and its Affiliates, and that any person or entity
conducting an audit on behalf of CHIRON pursuant to Section 4.6 shall be
required to protect the confidentiality of such information.
4.8 Payment in United States Currency. All payments shall be made in United
States Dollars and shall be made on the dates set forth herein.
4.9 Late Payment Fee. Any payment, including, without limitation, royalty
payments, made by ROCHE hereunder after the date such payment is due, as set
forth in this Article 4 hereof, shall bear interest at the lesser of: (a) [**]
as published in the Wall Street Journal as of the date such payment was due, or
(b) the maximum rate permitted by applicable law.
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ARTICLE 5
OTHER ACTIONS
5.1 Patent Validity; Enforceability. Immediately upon the Effective Date, or
as soon as possible thereafter, ROCHE shall discontinue any opposition,
challenge, compulsory license application or the like with respect to the CHIRON
Licensed Patents.
5.2 Compulsory Licensing. ROCHE covenants and agrees on behalf of itself and
its Affiliates to not support any third party in seeking compulsory licensing of
the CHIRON Licensed Patents in any jurisdiction. As used in this Section,
"support" shall have the same meanings as in Section 7.2(b).
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Corporate Authority. Each party represents and warrants to the other
party that it has the necessary corporate authority to enter into this
Agreement.
6.2 Right to Grant. Each party represents and warrants that they have the
right to grant the licenses and options granted in Article 2 hereof and that
they are the sole owner of their respective Licensed/Optioned Patents, subject
to licenses existing as of the Effective Date. CHIRON represents and warrants to
ROCHE that, to the best of its knowledge, neither CHIRON nor any of its
Affiliates have transferred to [**] or any if its Affiliates (a) before
December 1, 1998, title to any patent or patent application Directed to HIV in
the Field existing on that date; or (b) on or after that date, title to any
patent, patent application or invention Directed to HIV in the Field.
6.3 Current Licenses. CHIRON represents and warrants that: (a) as of the
Effective Date the entities set forth in Exhibit F are the only parties to which
it has granted any licensed rights or other grants or immunities to one or more
of the CHIRON Licensed Patents in the Field; and (b) Exhibit F contains a
complete and accurate description of the effective scope, field and territory of
such grant as of the Effective Date. CHIRON also represents and warrants that
[**] except as disclosed in Exhibit F.
6.4 Complete Patent List. CHIRON represents and warrants to ROCHE that, to
the best of its knowledge and belief, Exhibit B contains a complete list, as of
the Effective Date, of all patents and patent applications owned by, licensed to
(with a right to sublicense), or otherwise controlled by CHIRON or its
Affiliates containing claims Directed to HIV in the Field. To the extent that
any other patent or patent application owned by, licensed to (with a right to
sublicense) or otherwise controlled by CHIRON or its Affiliates and filed on or
before the Effective Date contains a claim Directed to HIV in the Field, such
patent or patent application shall be automatically added to the CHIRON Licensed
Patents. Upon ROCHE's written request, not more frequently than annually, CHIRON
shall provide ROCHE with an updated Exhibit B and a report of the prosecution
status of applications within CHIRON Licensed Patents. ROCHE represents and
warrants to CHIRON that, to the best of its knowledge and belief, Exhibit C
contains a complete list, as of the Effective Date, of all patents and patent
applications owned by, licensed to (with a right to sublicense), or otherwise
controlled by ROCHE or its Affiliates containing claims Directed to HIV in the
Field. To the extent that any other patent or patent application owned by,
licensed to (with a right to sublicense) or otherwise controlled by ROCHE or its
Affiliates and filed on or before the Effective Date contains a claim Directed
to HIV in the Field, such patent or patent application shall be automatically
added to the ROCHE Optioned Patents. Upon CHIRON's written request, not more
frequently than annually, ROCHE shall provide CHIRON with an updated Exhibit C
and a report of the prosecution status of applications within ROCHE Optioned
Patents.
6.5 Exclusions. Nothing contained in this Agreement shall be construed as:
(a) A representation or warranty by any party hereto as to the validity of
any patent rights which are the subject of this Agreement;
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(b) A representation or warranty that anything made, used, imported, offered
for sale, sold or otherwise disposed of under any of the patent rights which are
the subject of this Agreement is or will be free from infringement of patents of
third parties or of patents of either party that are not Directed to HIV;
(c) An obligation to bring or prosecute actions or suits against third
parties for infringement of any patent rights which are the subject of this
Agreement;
(d) A grant of any right to bring or prosecute actions or suits against
third parties for infringement of any patent rights which are the subject of
this Agreement; or
(e) A grant, by implication, estoppel or otherwise, of any license, option,
covenant or right other than those which are expressly stated herein, including
without limitation (i) any license under any patent or patent application (or
claim thereof) not within the Licensed/Optioned Patents, or (ii) any covenant by
CHIRON or ROCHE not to sue under any such patent or patent application (or claim
thereof).
6.6 Further ROCHE Assurance. ROCHE acknowledges that the inclusion of ROCHE
Affiliates within the license and option grants pursuant to Sections 2.1 and 2.4
is intended to enable ROCHE to utilize the manufacturing and sales capabilities
of its Affiliates in connection with the manufacture and sale of CHIRON Licensed
Products in a manner substantially similar to the involvement of such Affiliates
in the manufacture and sale of ROCHE's products generally. ROCHE shall not,
directly or indirectly, take any action having or intended to have the effect of
sublicensing ROCHE's rights under any of the CHIRON Licensed Patents, other than
to a bona fide Affiliate, including, without limitation, by creating Affiliates
specifically in connection with CHIRON Licensed Products, or through other third
party arrangements such as joint ventures, collaborations, or distribution
arrangements with distributors. ROCHE and its Affiliates are licensed hereunder
to sell and distribute CHIRON Licensed Products only under the label, name and
trademark rights owned by, licensed to or otherwise controlled by ROCHE or its
Affiliates, and only through the sales force of ROCHE or its Affiliates, or
through Authorized Distributors. ROCHE and its Affiliates are not licensed to
perform OEM manufacturing of CHIRON Licensed Products for a third party other
than an Authorized Distributor; to supply CHIRON Licensed Products for resale to
any third party other than an Authorized Distributor; to permit any Authorized
Distributor or other third party to sell any CHIRON Licensed Products under
another third party label, name or trademark or to permit any Authorized
Distributor or other third party to sell any CHIRON Licensed Products under the
Authorized Distributor's or any third party's own label, name or trademark for
use on an instrument bearing the label name or trademark of a party other than
ROCHE or its Affiliates; provided, however, that nothing in this Section 6.6
shall be construed to limit the rights of ROCHE or its Affiliates to engage in
activities with such third parties, to the extent such third parties have
obtained rights under the CHIRON Licensed Patents permitting such activities.
6.7 Limitation of Warranty. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, NO
PARTY MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, ARISING
BY LAW OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 7
TERM AND TERMINATION
7.1 Term. This Agreement shall be in effect from the Effective Date until
the last to expire of the CHIRON Licensed Patents issued under the authority of
the Patent and Trademark Office of the United States (the "Term"), unless
earlier terminated pursuant to Sections 7.2 or 7.3 below.
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7.2 Voluntary Termination. ROCHE may voluntarily terminate all, but not less
than all, licenses granted to ROCHE and its Affiliates under this Agreement on a
country-by-country basis, on not less than six (6) months prior written notice
to CHIRON.
7.3 Termination by CHIRON. CHIRON may terminate this Agreement only upon any
of the following grounds:
(a) ROCHE's or its Affiliate's material breach of this Agreement, including,
without limitation, a breach resulting from ROCHE's or its Affiliate's failure
to pay any sums due hereunder, where such breach shall not have been remedied
within thirty (30) days of the receipt of a written notification from CHIRON
identifying the breach and requiring its remedy; whereupon termination under
this Section 7.3(a) shall be effective upon the expiration of such thirty
(30) day cure period, subject to Section 7.6; or
(b) [**]
7.4 Enforcement After Termination. Upon valid termination of this Agreement
under Section 7.2 or 7.3, ROCHE and its Affiliates shall have no further rights
under CHIRON Licensed Patents and CHIRON shall not be limited to its remedies
under this Agreement, to the extent of such termination.
7.5 Accrued Rights. Termination of this Agreement for whatever reason shall
not affect any rights which have accrued prior to termination, including without
limitation royalty obligations occurring during the Term, calculated in
accordance with Article 3 and Exhibit A.
7.6 ROCHE Challenge to Section 7.3(a) Termination. In the event ROCHE
provides written notification to CHIRON prior to expiration of the thirty
(30) day notice/cure period referenced in Section 7.3(a) that ROCHE disputes
whether the grounds for termination under Section 7.3(a) are present, such
dispute shall be submitted to ADR pursuant to Article 10. The thirty (30) day
notice/cure period shall be suspended during the pendancy of such ADR, provided
that during the pendancy of the ADR, ROCHE shall continue to make any disputed
payments to CHIRON, on the condition that CHIRON shall repay ROCHE the amounts
of such disputed payments if ROCHE prevails in the ADR, plus interest at the
rate described in Section 4.9. Notwithstanding anything in this Section 7.6 to
the contrary, ROCHE may submit a dispute concerning a method by which amounts
payable by ROCHE and its Affiliates to CHIRON hereunder are calculated only one
time, and any resolution from the ADR shall bind the parties as to such
calculation method thereafter.
7.7 ROCHE Challenge to Section 7.3(b) Termination. In the event that ROCHE,
within thirty (30) days of receiving notice of termination by CHIRON for the
grounds set forth in Section 7.3(b) above, provides written notice to CHIRON
that ROCHE disputes whether such grounds are present, such dispute shall be
submitted to ADR pursuant to Article 10 and termination of this Agreement shall
be suspended during the pendancy of the ADR, provided that ROCHE suspends its
action, suit or proceeding (other than in an ADR proceeding between the parties
as permitted by Section 7.3 (b) and Article 10) [**] and continues to perform
all of its material obligations hereunder.
7.8 Audit Results Not Grounds for Termination. CHIRON's request for an audit
under Section 4.6 shall not be treated as a notice of breach under
Section 7.3(a). In the event such audit determines there has been an
underpayment by ROCHE, such underpayment shall not constitute grounds for
termination by CHIRON under Section 7.3(a) unless: (a) ROCHE has failed to
rectify such underpayment in accordance with Section 4.6; (b) ROCHE has failed
to rectify such underpayment after notification and opportunity to cure under
Section 7.3(a); and (c) any ADR requested by ROCHE, pursuant to Section 7.6, and
directed to any dispute concerning such underpayment, results in a determination
favorable to CHIRON and ROCHE has failed to rectify such underpayment.
Notwithstanding the foregoing, ROCHE shall continue to make the disputed
payments to CHIRON, on the condition that CHIRON shall repay ROCHE the amounts
of such disputed payments with respect to which ROCHE prevails in the ADR, plus
interest at the rate described in Section 4.9.
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7.9 Survival. The following provisions of this Agreement shall survive
termination or expiration of this Agreement, in accordance with their respective
terms: Article 1; Sections 4.6, 4.7, 4.8, 4.9, 6.7, 7.4, 7.5 and 7.9; Articles
8, 9, and 10; Sections 11.9 through 11.14; and Section 14.1.
ARTICLE 8
CONFIDENTIALITY
8.1 Obligation. From time to time during the Term, CHIRON and ROCHE may
provide to each other information concerning patents, patent applications,
license agreements and other confidential or proprietary information related to
this Agreement (the "Information"). Notwithstanding anything in this Agreement
to the contrary, following the execution of this Agreement, Earned Royalty
Amounts payable under this Agreement shall be deemed "Information" as to which
both CHIRON and ROCHE shall be deemed to be the party receiving the Information
(the "Receiving Party"). Each Receiving Party shall during the Term and for a
period of three (3) years after termination hereof: (a) maintain the Information
in confidence; (b) not disclose the Information to any third party, other than
employees, agents or consultants of the Receiving Party, its Affiliates or
permitted sublicensees who have a need to know the Information and who are bound
by confidentiality obligations to the Receiving Party no less restrictive than
those contained herein; and (c) not use the Information for any purpose not
directly related to performance hereunder or otherwise authorized under this
Agreement.
8.2 Exclusions. The obligations of this Article 8 shall not apply to any
Information which: (a) is or which becomes generally known to the public by
publication or by means other than a breach of a duty by the Receiving Party;
(b) is otherwise known by the Receiving Party at the time of disclosure by the
other party; (c) otherwise becomes available to the Receiving Party from a third
party not in breach of confidentiality obligations to the other party; or (d) is
developed by or for the Receiving Party independent of any disclosure from the
other party. The Receiving Party also shall be permitted to make disclosures of
Information which are reasonably necessary in connection with a possible grant
of a permitted sublicense by the Receiving Party or in due diligence related to
a possible acquisition, merger, consolidation, substantial asset transfer or
similar transaction of the Receiving Party, provided that the recipient is bound
to the Receiving Party by confidentiality obligations with respect to the
Information no less restrictive than those contained herein. Nothing herein
shall prevent the Receiving Party from making such disclosures of Information as
are reasonably required by law, regulation (including 37 C.F.R. § 1.56), or
order of any court or governmental agency; provided that the Receiving Party has
provided reasonable advance notice to allow the disclosing party the opportunity
to seek a protective order or otherwise contest, prevent or limit such
disclosure.
8.3 Return of Information. Upon termination of this Agreement for any
reason, the Receiving Party shall return, or at the option of the disclosing
party, certify destruction of, all Information and copies thereof; provided that
the Receiving Party may retain one copy thereof in its law department files
solely for evidentiary and regulatory purposes.
8.4 Disclosure of Agreements and Terms. Each of the parties may issue a
press release disclosing the existence of this Agreement. Subject to mutual
agreement as to form and substance, the parties may make selected disclosure of
the material financial terms in such press releases. Each party may disclose any
of the terms of this Agreement to any Affiliate; provided that the recipient of
such disclosure is obligated to confidentiality terms no less restrictive than
those contained in this Article 8. Each party may disclose any information
contained in or regarding this Agreement to the extent required in its
respective reasonable judgment by applicable law, regulation or order of any
court or governmental agency. Further, each party may determine in its
respective discretion to file this Agreement under the Securities and Exchange
Act of 1934 or otherwise with any United States or foreign governmental agency,
even if that filing may result in this Agreement becoming available to the
public generally. The filing party shall seek confidential treatment for at
least the essential financial terms hereof in connection with any such filing,
subject to applicable law and regulation, and shall
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notify the other party in advance of any such filing and consider such
suggestions as the other party may make as to the terms herein as to which the
filing party should seek confidential treatment.
ARTICLE 9
INDEMNITY
9.1 ROCHE Indemnity. ROCHE shall indemnify, defend and hold harmless CHIRON
and its Affiliates and their officers, directors, shareholders, employees,
representatives and agents, against any claim, demand, loss, damage or injury,
including reasonable attorneys' fees, asserted by a third party, arising from,
relating to, or otherwise in respect of, (a) the manufacture, use or sale of
CHIRON Licensed Products, or (b) any breach by ROCHE or its Affiliates of any
representation, warranty or covenant under this Agreement; provided, however,
that such indemnity shall not extend to damages arising directly from any breach
or willful or negligent act of CHIRON or its Affiliates.
9.2 CHIRON Indemnity. CHIRON shall indemnify, defend and hold harmless ROCHE
and its Affiliates and their officers, directors, shareholders, employees,
representatives and agents, against any claim, demand, loss, damage or injury,
including reasonable attorneys' fees, asserted by a third party, arising from,
relating to, or otherwise in respect of, (a) the manufacture, use or sale of
ROCHE Optioned Products, or (b) any breach by CHIRON or its Affiliates of any
representation, warranty or covenant under this Agreement; provided, however,
that such indemnity shall not extend to damages arising directly from any breach
or willful or negligent act of ROCHE or its Affiliates.
9.3 Indemnification Procedures. In the event either party claims
indemnification pursuant to this Article 9, the indemnified party shall promptly
notify the indemnifying party in writing upon becoming aware of any claim to
which such indemnification may apply. Delay in providing such notice shall
constitute a waiver of the indemnifying party's indemnity obligations hereunder
only if the indemnifying party's ability to defend such claim is materially
impaired thereby. The indemnifying party shall have the right to assume and
solely control the defense of the claim at its own expense. If the right to
assume and solely control the defense is exercised, the indemnified party shall
have the right to participate in, but not to control, such defense at its own
expense, and the indemnifying party's indemnity obligations shall be deemed not
to include attorneys' fees and litigation expenses incurred by the indemnified
party after the assumption of the defense by the indemnifying party. If the
indemnifying party does not assume the defense of the claim, the indemnified
party may defend the claim at the indemnifying party's expense. The indemnified
party shall not settle or compromise the claim without the prior written consent
of the indemnifying party, and the indemnifying party shall not settle or
compromise the claim in any manner which would have an adverse effect on the
indemnified party without the consent of the indemnified party, which consent,
in each case, shall not be unreasonably withheld. The indemnified party shall
reasonably cooperate with the indemnifying party and shall make available to the
indemnifying party all pertinent information under the control of the
indemnified party, all at the expense of the indemnifying party.
9.4 Sunset. The provisions of Sections 9.1 and 9.2 shall continue in effect
on a claim-by-claim basis, after the termination of this Agreement, only until
the expiration of the last to expire statute of limitations applicable to such
claim.
9.5 Limitation of Liability. Neither party shall be liable to the other for
any consequential, special, indirect or exemplary damages or for the loss of
profits arising from the performance or nonperformance of this Agreement or any
acts or omissions associated herewith.
ARTICLE 10
ALTERNATIVE DISPUTE RESOLUTION
The parties recognize that bona-fide disputes may from time to time arise
which relate to any aspect of this Agreement, including, without limitation, any
of the parties' rights and/or obligations
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hereunder, and including, without limitation, disputes relating to the
interpretation, form, validity, performance and/or termination of this Agreement
or relating to infringement, scope, claims construction, or (without limiting
the effect of Section 7.3(b)) validity or enforceability of the CHIRON Licensed
Patents. In the event of the occurrence of any dispute, a party may, by notice
to the other party, have such dispute referred to their respective employees
designated below or their successors, for attempted resolution by good faith
negotiations within ninety (90) days after such notice is received. Said
designated officers are as follows:
For ROCHE:
President
Roche Molecular Systems, Inc.
For CHIRON:
President
Blood Testing
In the event the designated officers, after such good faith negotiations,
are not able to resolve such dispute within such ninety (90) day period, or any
agreed extension thereof, a party may invoke the provisions for binding ADR as
set forth in Paragraph 9 of the Settlement Agreement. Neither party shall seek
recourse against the other hereunder in any court or other forum, except as
permitted by Paragraph 9 of the Settlement Agreement or as may be necessary to
enforce a determination made in ADR pursuant to this Article 10 and Paragraph 9
of the Settlement Agreement.
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ARTICLE 11
MISCELLANEOUS
11.1 Assignment.
(a) ROCHE and its Affiliates may not assign or transfer any rights under
this Agreement without the prior written consent of CHIRON, except to a ROCHE
Affiliate, and then only for so long as the assignee remains a ROCHE Affiliate,
or as part of the sale or transfer of all or substantially all of ROCHE's and
all of its Affiliates' assets and businesses to which this Agreement relates. In
the case of a permitted assignment or transfer, the performance of the assignee
shall be guaranteed by ROCHE.
(b) CHIRON and its Affiliates may not assign or transfer any rights under
this Agreement without the prior written consent of ROCHE, except to a CHIRON
Affiliate, and then only for so long as the assignee remains a CHIRON Affiliate,
or as part of the sale or transfer of all or substantially all of CHIRON's and
all of its Affiliates' assets and businesses to which this Agreement relates. In
the case of a permitted assignment or transfer, the performance of the assignee
shall be guaranteed by CHIRON.
11.2 Force Majeure. A party hereto shall not be liable for, nor shall this
Agreement be terminable or cancelable by reason of, any delay or default in any
such party's performance hereunder, to the extent that such default or delay is
caused by events beyond such party's reasonable control including, but not
limited to: acts of God; regulation, law or action of any government or agency
thereof; war or insurrection; civil commotion; labor disturbances; epidemic; or
failure of suppliers, public utilities or common carriers. Each party shall give
prompt notice to the other party of such cause, and shall take whatever
reasonable steps are necessary to relieve the effect of such cause as rapidly as
possible.
11.3 Severability. In the event that any one or more of the provisions of
this Agreement should for any reason be held by any court or authority having
jurisdiction over this Agreement or over the parties hereto to be invalid,
illegal or unenforceable, such provision or provisions shall be reformed to
approximate as nearly as possible the intent of the parties, in such
jurisdiction; elsewhere, this Agreement shall not be affected.
11.4 Entire Agreement; Termination of Interim Agreement. This Agreement
together with the Exhibits, Attachments and Schedules constitutes the entire
agreement among the parties relating to the subject matter of this Agreement.
Upon execution and delivery of this Agreement, the parties acknowledge and agree
that the Interim Agreement shall be terminated and of no further force or
effect, except as to those provisions of the Interim Agreement that expressly
survive any termination or expiration or as specifically referenced in this
Agreement. There are no other understandings, representations or warranties of
any kind.
11.5 Amendment. This Agreement shall not be altered, extended or modified
except by written agreement of the parties.
11.6 Waiver. Failure by a party hereunder to enforce any right under this
Agreement shall not be construed as a waiver of such right or any other rights
under this Agreement; nor shall a waiver by a party hereunder in one or more
instances be construed as constituting a continuing waiver or as a waiver in
other instances.
11.7 Costs. Each of the parties hereto shall be responsible for its
respective legal and other costs incurred in relation to the preparation of this
Agreement.
11.8 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same instrument. Facsimile copies
of signatures for a party shall be deemed to be originals for purposes of
execution of the Agreement.
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11.9 Notices.
(a) Any notice or other document to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if personally delivered
or sent by first class mail, or express or air mail or other postal service, or
by certified mail, return receipt requested.
(b) Any notice required by this Agreement shall be forwarded to the
respective addresses and marked for the attention of the persons set forth below
unless such addresses subsequently change by written notice to the other party:
ROCHE: F. Hoffmann-La Roche Ltd.
Grenzacherstrasse 124
Basel
Bale 4002
Switzerland
Attn: Head of Diagnostics Division
Copy to:
General Counsel
Roche Molecular Systems, Inc.
1145 Atlantic Avenue
Alameda, CA 94501
CHIRON:
Chiron Corporation
4560 Horton Street
Emeryville, California 94608
Attn.: President, Blood Testing
Copy to:
General Counsel
Chiron Corporation
4560 Horton Street
Emeryville, CA 94608
(c) Any such notice or other document shall be deemed to have been effective
when received by the addressee. To prove the giving of a notice or other
document it shall be sufficient to show that it was received.
11.10 Governing Law. All matters affecting the interpretation, form,
validity, performance and termination of this Agreement shall be decided and
interpreted under the laws of the State of New York, excluding any choice of law
rules which may direct application of the laws of any other jurisdiction.
11.11 Relationship of the Parties. The relationship of the parties under
this Agreement is that of independent contractors. Nothing contained in this
Agreement is intended or is to be construed so as to constitute the parties as
partners, joint venturers or agents of the other. Neither party or its
Affiliates has any express or implied right or authority under this Agreement to
assume or create any obligations or make any representations or warranties on
behalf of or in the name of the other party or its Affiliates.
11.12 Headings. The headings of the Articles and Sections in this Agreement
have been inserted for convenience only and do not constitute part of this
Agreement.
11.13 No Trademark Rights. No right, express or implied, is granted by this
Agreement to either party to use in any manner the name, trade name or trademark
of the other party in connection with the performance of this Agreement.
19
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11.14 No Implied Licenses. No license, express or implied, is granted by
this Agreement to either party, other than the licenses or options granted under
Sections 2.1, 2.3, 2.4 and 2.5.
ARTICLE 12
FIELD RESTRICTIONS AND OTHER COVENANTS
12.1 ROCHE Covenant Regarding In Vitro Diagnostics
(a) ROCHE and its Affiliates shall not label or promote any CHIRON Licensed
Product labeled or promoted for use in the Field in any respect for use in In
Vitro Diagnostics; and ROCHE shall use commercially reasonable efforts to
prevent its Authorized Distributors from labeling or promoting any CHIRON
Licensed Products labeled or promoted for use in the Field in any respect for
use in In Vitro Diagnostics. Similarly, ROCHE and its Affiliates shall not label
or promote any Product licensed under the HIV Diagnostics Agreement and labeled
or promoted for use in In Vitro Diagnostics in any respect for use in the Field;
and ROCHE shall use commercially reasonable efforts to prevent its Authorized
Distributors from labeling or promoting any Products licensed under the HIV
Diagnostics Agreement and labeled or promoted for use in In Vitro Diagnostics in
any respect for use in the Field.
(b) Further, ROCHE and its Affiliates and Authorized Distributors shall
include on or with each CHIRON Licensed Product labeled or promoted for use in
the Field a statement to the effect that the CHIRON Licensed Product is not
intended for use in In Vitro Diagnostics, using language to be determined by
ROCHE and approved in advance in writing by CHIRON, which approval shall not be
unreasonably withheld. The location of such notice shall be the product insert
of such CHIRON Licensed Products or such other reasonably prominent location to
be determined by ROCHE.
(c) In the event that ROCHE or CHIRON becomes aware of any material use in
In Vitro Diagnostics of CHIRON Licensed Products labeled or promoted for use in
the Field, such party will promptly notify the other in writing of the relevant
facts and, if so requested by CHIRON, ROCHE will (i) meet and confer with CHIRON
in good faith to determine what steps either or both should take to abate such
infringing use and (ii) notify in writing any of its customers that engages in
such infringing use that use of the relevant CHIRON Licensed Product in In Vitro
Diagnostics may infringe one or more of the CHIRON Licensed Patents. Similarly,
in the event that ROCHE or CHIRON becomes aware of any material use in the Field
of Products licensed under the HIV Diagnostics Agreement and labeled or promoted
for use in In Vitro Diagnostics, such party will promptly notify the other in
writing of the relevant facts and, if so requested by CHIRON, ROCHE will
(i) meet and confer with CHIRON in good faith to determine what steps either or
both should take to abate such infringing use and (ii) notify in writing any of
its customers that engages in such infringing use that use of the relevant
Product in the Field may infringe one or more of the CHIRON Licensed Patents.
(d) Enforcement of the provisions set forth in this Section 12.1 shall be
suspended until [**]; provided however, that following such period of
suspension, subject to compliance with all applicable laws and regulations,
ROCHE shall not offer for sale or sell to End Users other than Existing End
Users for use in Blood Screening Products configured for use primarily in In
Vitro Diagnostics, and provided further, that effective [**], ROCHE shall not
offer for sale or sell to any End User for use in Blood Screening Products
configured for use primarily in In Vitro Diagnostics. Nothing in this
Section 12.1(d) shall prohibit ROCHE from offering for sale or selling to End
Users Products configured for use primarily in In Vitro Diagnostics to satisfy
the bona fide requirements of such End Users for use in In Vitro Diagnostics and
any Blood Screening use by such End Users of any such Products configured for
use primarily in In Vitro Diagnostics shall not be deemed a breach of this
Section 12.1(d).
20
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12.2 Patent Marking. ROCHE and its Affiliates shall include a patent notice
on each CHIRON Licensed Product to identify the CHIRON Licensed Patents which
such CHIRON Licensed Product, but for the licenses granted herein, would
infringe one or more Valid Claims (or for which royalties are being paid);
provided, however, identification of CHIRON Licensed Patents on a CHIRON
Licensed Product shall in no way be deemed to be an admission by ROCHE or its
Affiliates, or raise a presumption, that such CHIRON Licensed Product is in fact
covered by such CHIRON Licensed Patent.
ARTICLE 13
INFRINGEMENT BY THIRD PARTIES
13.1 Notice of Infringement. Each party shall notify the other if it becomes
aware of Infringing Third Party Sales. CHIRON shall have the exclusive right to
take action against any infringement of any of the CHIRON Licensed Patents, in
its sole discretion, subject to this Article 13.
13.2 Infringement Litigation.
(a) In the event that "substantial" Infringing Third Party Sales are
occurring in a country in which ROCHE or its Affiliates or an Authorized
Distributor is selling a CHIRON Licensed Product (in each such country, the
"Impacted Product"), and ROCHE has notified CHIRON pursuant to Section 13.1 of
the existence of such infringement in [**] (an "Infringement Notice"), then the
provisions of this Section 13.2 shall apply. For purposes of this Section 13.2,
"Major Country" shall mean [**].
(b) For purposes of this Section 13.2, an Infringing Third Party Sale shall
be considered substantial in a country if the infringing third party achieves
market share, in the case of Blood Screening of at [**], and in the case of
Plasma Fractionation of at [**] of the Aggregated Products in such country [**].
For purposes of this Section 13.2, "Aggregated Products" means the number of
Units of CHIRON Licensed Products of the applicable Field Category plus the
number of Competitive Products sold (or used, in the case of Plasma
Fractionation) in a country, and "Competitive Products" means the number of
Units of Products which are sold (or used, in the case of Plasma Fractionation)
of the applicable Field Category and which compete with a CHIRON Licensed
Product sold or used by ROCHE or its Affiliates in a country.
(c) If the Infringement Notice identifies an Impacted Product in a Major
Country and CHIRON fails to institute legal action in a Major Country or other
country acceptable to ROCHE [**] following receipt by CHIRON of the Infringement
Notice and infringement is not otherwise abated, then ROCHE shall be relieved of
the obligation to pay the portion of Earned Royalties set forth in
Section 13.2(d) with respect to the Impacted Product until such time as CHIRON
institutes such legal action as described in this Section 13.2(c); provided,
however, that CHIRON need not initiate or continue any such legal action, if,
after reasonably diligent effort (including reasonably diligent effort by ROCHE
if requested by CHIRON), CHIRON is unable to acquire admissible evidence
sufficient to establish a prima facia case of infringement under the law of the
applicable country; and provided further, that CHIRON shall not be obligated to
institute or maintain more than one such action [**] of this Agreement nor more
than three such actions at any time with regard to Impacted Products in Plasma
Fractionation.
(d) If CHIRON has not instituted such legal action at the end of such [**],
to the extent required under Section 13.2(c), and such infringement is not
otherwise abated, the Earned Royalty with respect to an Impacted Product in
Blood Screening shall be reduced by [**] from the amount otherwise payable under
Paragraph 1 of Exhibit A (excluding the effect of any reduction in Earned
Royalty Amounts triggered by operation of Paragraph 2 of Exhibit A) and with
respect to an Impacted Product in Plasma Fractionation shall be reduced by [**].
If, at the end of [**] thereafter, CHIRON has not instituted such legal action,
to the extent so required, and
21
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infringement is not otherwise abated, Earned Royalties on such Impacted Product
shall be reduced by an [**] of the original Earned Royalties, such that if legal
action required under Section 13.2(c) has not commenced and the infringement is
not otherwise abated by, in the case of an Impacted Product in Blood Screening
the end of the [**] following receipt by CHIRON of the Infringement Notice and
in the case of an Impacted Product in Plasma Fractionation the end of the [**]
following receipt by CHIRON of the Infringement Notice, [**] shall be payable
hereunder with respect to the Impacted Product.
(e) The obligations to pay Earned Royalties shall be reinstated on a
prospective basis at such time as ROCHE receives written notice of the
institution of legal action in accordance with Section 13.2(c) or the
infringement is otherwise abated, all subject to Section 13.2(f).
(f) If legal action required under Section 13.2(c) has not been instituted
and the infringement is not otherwise abated in the case of an Impacted Product
in Blood Screening for more than [**] following receipt by CHIRON of the
Infringement Notice and in the case of an Impacted Product in Plasma
Fractionation for more than [**] following receipt by CHIRON of the Infringement
Notice, and if, as a result of the infringement, sales of the Impacted Product
[**] by ROCHE, its Affiliates or an Authorized Distributor have declined by [**]
or more during the preceding [**], then upon reinstatement of Earned Royalties
pursuant to Section 13.2(e), the parties shall meet and confer regarding
possible adjustments to the Earned Royalties for the Impacted Product in view of
such degradation of the market. The parties will discuss possible rate
reductions, as well as a plan for reinstating the original economic expectations
of the parties. It is expected that any agreement for reduction of Earned
Royalties will be phased out over time, so as to return to the Earned Royalties
set forth in Exhibit A. If the parties fail to reach agreement on any such
adjustment, the matter shall be submitted for resolution by ADR, except that in
the event of ADR, each party shall submit to the neutral a proposal with respect
to adjustments pursuant to this Section 13.2(f). The neutral shall be empowered
to choose one proposal or the other, but shall not be empowered to order any
such adjustment other than as proposed by one of the parties.
13.3 Cooperation. ROCHE and its Affiliates shall cooperate with CHIRON in
connection with any legal action referred to in this Article 13.
ARTICLE 14
EUROPEAN COMMUNITY PROVISIONS
14.1 Termination in European Community. Notwithstanding the provisions of
Article 7, this Agreement, with respect to the European Community, shall
terminate in each member country seventeen (17) years from the Effective Date or
on the expiration of the last to expire of the patents within the CHIRON
Licensed Patents in such member country based upon a patent existing or a patent
application pending as of the Effective Date, whichever is later; provided,
however, that prior to the termination of this Agreement in the first member
country in which it would otherwise terminate pursuant to the foregoing, ROCHE
may, in its discretion, elect by written notice to CHIRON to extend this
Agreement as to all such member countries for an additional term which shall
expire on a country-by-country basis on the expiration date of the last to
expire patent within the CHIRON Licensed Patents existing in such member country
as of the date of such extension.
14.2 Competition Notification. If either party (the "Notifying Party")
elects to file a notification with respect to this Agreement (a "Notification")
with the Competition Directorate of Commission of European Community (the
"Commission") in accordance with regulations established by the Commission, the
Notifying Party shall provide a non-confidential version of the final draft to
the other party for comment at least thirty (30) days before making the filing
and shall consider in good faith the modification thereto, if any, that the
other party may propose. The other party shall execute all documents reasonably
required by the Notifying Party and shall otherwise reasonably cooperate in
22
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connection with the Notification. The Notifying Party shall bear all costs
incurred by it relating to the Notification.
14.3 Reformation. If, at any time during the Term, either party receives a
request or other communication from the Commission with respect to the
Notification (a "Request"), such party shall promptly inform the other of the
nature of the Request. In the event that the Commission indicates in a Statement
of Objection(s) that this Agreement will violate the provisions of Article 81 or
82 of the Treaty of Rome, then the parties shall amend this Agreement by making
those minimal modifications necessary to satisfy the concerns of the Commission
as set forth in the Statement of Objection(s). Notwithstanding the foregoing,
the parties agree that ROCHE shall retain substantially the same license rights
at substantially the same royalties as specified under this Agreement.
IN WITNESS WHEREOF this Agreement has been executed by duly authorized
officers of CHIRON and ROCHE as of the Effective Date.
CHIRON CORPORATION
By:
/s/ SEÁN P. LANCE
--------------------------------------------------------------------------------
Seán P. Lance
Title:
Chairman and Chief Executive Officer
Date: May 22, 2001
F. HOFFMANN-LA ROCHE LTD
By:
/s/ HEINO VON PRONDYZNSKI
--------------------------------------------------------------------------------
Heino von Prondyznski
Title:
Head of Roche Diagnostics
Date:
21/05/01
By:
--------------------------------------------------------------------------------
Title:
Date:
--------------------------------------------------------------------------------
ROCHE MOLECULAR SYSTEMS, INC.
By:
/s/ HEINER DREISMANN
--------------------------------------------------------------------------------
Heiner Dreismann
Title:
President, RMS
Date:
05/09/01
23
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REDACTED
Exhibit A
Compensation to Chiron Corporation
1. Earned Royalty. Subject to the adjustments referenced in this Exhibit A,
royalties paid to CHIRON under this Agreement in any Calendar Quarter (the
"Earned Royalty") shall be calculated as follows:
The Earned Royalty for each Calendar Quarter shall be the [**]:
Earned Royalty Amounts
Field Category:
--------------------------------------------------------------------------------
Region I
--------------------------------------------------------------------------------
Region II
--------------------------------------------------------------------------------
Region III
--------------------------------------------------------------------------------
Region IV
--------------------------------------------------------------------------------
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
(a) Notwithstanding the above:
(i) For Blood Screening:
(1) In Region I, for Existing End Users only, the Earned Royalty Amount
shall be [**] used by such Existing End Users in Region I [**], and as to Units
used by End Users other than Existing End Users, the Earned Royalty Amount shall
be as set forth above;
(2) In Region II,
(A) As to the [**], the Earned Royalty Amount shall be [**]; provided,
however, that [**]; and
(B) As to [**], the Earned Royalty Amount shall be [**]; provided, however,
that [**]; and
(3) In Region III, the Earned Royalty Amount shall be [**]; and
(ii) [**], as such terms are defined in the Interim Agreement, referenced in
that certain letter agreement dated October 10, 2000 by and between CHIRON and
F. Hoffmann-La Roche Ltd. (the "Plasma Letter") [**].
(b) Notwithstanding the above, [**].
(c) [**], the parties shall meet and reasonably consider adjustment to the
Earned Royalty Amount with respect to each CHIRON Licensed Product [**]. Any
such adjustment should reflect both [**]. Accordingly, an increase in Earned
Royalty Amounts may be justified by an increase [**]. Generally, the parties
intend that Earned Royalty Amounts should be not less than [**]. No adjustment
shall be made to any Earned Royalty Amount unless mutually agreed; [**].
(d) Earned Royalties shall be payable quarterly, commencing with the
Calendar Quarter ending [**], within seventy-five (75) days following the end of
each Calendar Quarter. Such payment shall be made in accordance with the payment
and reporting obligations set forth in Article 4 and is fully earned when paid
and is non-refundable.
(e) [**], the parties shall meet and reasonably consider adjustment to the
allocation of jurisdictions among the Regions set forth on Exhibit G. Generally,
the parties intend that a [**]. No adjustment shall be made to the allocation of
jurisdictions among the Regions unless mutually agreed.
--------------------------------------------------------------------------------
2. Home Brew Adjustment. With respect to sales of CHIRON Licensed Products
in [**] for use in Blood Screening, [**] as set forth in this Paragraph 2, [**],
if in the[**]:
[**]
[**]
Reduced
Earned Royalty Amount
--------------------------------------------------------------------------------
(in units)
greater than [**] [**] of existing Earned Royalty Amount greater than [**]
[**] of existing Earned Royalty Amount
If the parties are unable otherwise to agree within thirty (30) days of a
request by either party, [**]. In the event that Home Brew Screening achieve a
market share in [**] Blood Screening in [**], the parties shall meet and confer,
at ROCHE's request, to consider reasonably and in good faith the actions that
CHIRON might take to abate such Home Brew Screening. [**]. As used herein, "Home
Brew Screening" shall mean the use in Blood Screening of probe screening methods
Directed to HIV not licensed by CHIRON and not utilizing any assay, kit, reagent
or other component Directed to HIV made by or for ROCHE. ROCHE may have the
benefit of the adjustment to Earned Royalty Amounts provided by this Paragraph 2
or the adjustment to Earned Royalty Amounts provided under Section 13.2, at its
election, but not both.
3. Pre-Licensing Royalties. Notwithstanding anything to the contrary in the
Agreement or this Exhibit A, Earned Royalties shall be paid on Units in the
United States under investigational new drug (IND) status and, similarly, on
Units in any other jurisdiction for investigational or other pre-licensure use.
4. Most Favored Licensee. CHIRON shall promptly notify ROCHE if it grants
to a third party a license under CHIRON Licensed Patents to practice in Blood
Screening or Plasma Fractionation under terms that impose [**] of the applicable
Earned Royalty Amounts. With such notification, CHIRON shall provide ROCHE with
a summary of [**]. At ROCHE's election, to be made in writing [**] hereunder
shall be adjusted [**]. Any such adjustment will be subject to the same terms as
are applicable to such minimum amounts payable by such third party, including,
without limitation, [**]. This Paragraph 4 only applies to licenses that enable
a third party to sell or use Products Directed to HIV for Blood Screening;
provided, however, it does not apply to licenses of Products Directed to HIV for
Blood Screening that do not compete with Products then being sold by ROCHE. It
also does not apply to a license that amends, replaces or supplements CHIRON's
arrangement [**].
5. Single Royalty Per CHIRON Licensed Product. Only one payment of Earned
Royalty shall be due with respect to any Net Sales or only one payment of Earned
Royalty Amount shall be due with respect to any Unit of CHIRON Licensed Product
Shipped, irrespective of the number of patents or Valid Claims in the CHIRON
Licensed Patents covering such CHIRON Licensed Product.
6. Dispute Resolution. Except as set forth in Paragraph 2 of this
Exhibit A, any dispute between CHIRON and ROCHE regarding whether any adjustment
to or credits against Earned Royalties under this Exhibit A is appropriate, and
which the parties fail to resolve themselves may only be resolved by resort to
the ADR provisions of Article 10. Until such dispute is resolved, ROCHE shall
pay CHIRON the Earned Royalty provided for herein without benefit of the
applicable disputed adjustment on the condition that CHIRON shall repay ROCHE
the amounts of such disputed payments if ROCHE prevails in the ADR, plus
interest at the rate described in Section 4.9.
--------------------------------------------------------------------------------
REDACTED
Exhibit B — Blood Screening
Page 1 of 1
Chiron HIV Patents
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
--------------------------------------------------------------------------------
REDACTED
Exhibit C — HIV
Page 1 of 1
Roche HIV Patents
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
--------------------------------------------------------------------------------
REDACTED
EXHIBIT D
Product Codes, BS kits:
Description
--------------------------------------------------------------------------------
SAP/Part No.
--------------------------------------------------------------------------------
[**] [**] [**] [**] [**]
[**]
[**]
--------------------------------------------------------------------------------
Exhibit E
Form of Report
[To Be Agreed To By The Parties.]
--------------------------------------------------------------------------------
Exhibit F
Existing Licenses or Rights granted in the Field under the Licensed Patents
as of the Effective Date
2. Agreement between Gen-Probe Incorporated and Chiron Corporation dated as
of June 11, 1998 (the "Gen-Probe Agreement").
[**]
[**]
[**]
[**]
--------------------------------------------------------------------------------
REDACTED
Exhibit G
Regions
Region I
[**] [**] [**] [**] [**] [**] [**] [**] [**] 1 [**] [**]
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
[**] [**] [**] [**]
Region II
[**]
[**]
Region III
[**]
Region IV
[**]
--------------------------------------------------------------------------------
1 If [**], as the case may be, fails to implement a program for use of
Products Directed to HCV for Blood Screening prior to [**], the parties shall
meet and confer to determine whether [**] shall be deemed to be within
Region IV, subject to Paragraph 5 of Exhibit A. If such failure continues beyond
[**], then [**], as the case may be, shall thereafter be deemed to be within
Region IV, subject to Paragraph 5 of Exhibit A
[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
--------------------------------------------------------------------------------
QuickLinks
BLOOD SCREENING HIV PROBE LICENSE AGREEMENT between CHIRON CORPORATION F.
HOFFMANN-LA ROCHE LTD. and ROCHE MOLECULAR SYSTEMS, INC.
BLOOD SCREENING HIV PROBE LICENSE AGREEMENT TABLE OF CONTENTS
BLOOD SCREENING HIV PROBE LICENSE AGREEMENT
BACKGROUND
ARTICLE 1 DEFINITIONS
ARTICLE 2 LICENSE AND OPTION GRANTS
ARTICLE 3 PAYMENTS, ROYALTIES
ARTICLE 4 RECORDS AND REPORTS
ARTICLE 5 OTHER ACTIONS
ARTICLE 6 REPRESENTATIONS AND WARRANTIES
ARTICLE 7 TERM AND TERMINATION
ARTICLE 8 CONFIDENTIALITY
ARTICLE 9 INDEMNITY
ARTICLE 10 ALTERNATIVE DISPUTE RESOLUTION
ARTICLE 11 MISCELLANEOUS
ARTICLE 12 FIELD RESTRICTIONS AND OTHER COVENANTS
ARTICLE 13 INFRINGEMENT BY THIRD PARTIES
ARTICLE 14 EUROPEAN COMMUNITY PROVISIONS
Exhibit A Compensation to Chiron Corporation
Earned Royalty Amounts
Exhibit B — Blood Screening Page 1 of 1 Chiron HIV Patents
Exhibit C — HIV Page 1 of 1 Roche HIV Patents
EXHIBIT D
Exhibit E Form of Report [To Be Agreed To By The Parties.]
Exhibit F Existing Licenses or Rights granted in the Field under the Licensed
Patents as of the Effective Date
Exhibit G Regions
|
Exhibit 10.150
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
This Amended and Restated Executive Employment Agreement ("Agreement") is
entered into as of the 27th day of March, 2001 (the "Effective Date"), by and
between William J. Newell ("Executive") and Axys Pharmaceuticals, Inc. (the
"Company").
Whereas
, the Company desires to continue to employ Executive to provide personal
services to the Company, and wishes to provide Executive with certain
compensation and benefits in return for Executive's services;
Whereas
, Executive wishes to continue to be employed by the Company and provide
personal services to the Company in return for certain compensation and
benefits; and
Whereas
, Executive and the Company wish to amend and restate that Employment Agreement
entered into between the two parties as of March 14, 1999 (the "Prior
Agreement").
Now, Therefore
, in consideration of the mutual promises and covenants contained herein, it is
hereby agreed by and between the parties hereto as follows:
DEFINITIONS
For purposes of the Agreement, the following terms are defined as follows:
"Board" means the Board of Directors of the Company.
"Cause" means:
Executive's intentional action or intentional failure to act that was performed
in bad faith and to the material detriment of the business of the Company;
Executive's intentional refusal or intentional failure to act in accordance with
any lawful and proper direction or order of the Board or the appropriate
individual to whom Executive reports;
Executive's willful and habitual neglect of Executive's duties of employment;
Executive's violation of any noncompetition or noninterference agreement that
Executive has entered into with the Company; or
Executive's conviction of a felony crime involving moral turpitude; provided,
however, that if any of the foregoing events under clauses (a), (b), (c) or (d)
above is capable of being cured, the Company shall provide written notice to
Executive describing the nature of such event and Executive shall thereafter
have ten (10) business days to cure such event.
"Change in Control" means the occurrence of any of the following events:
a dissolution, liquidation or sale of all or substantially all of the assets of
the Company;
a merger or consolidation in which the Company is not the surviving corporation;
a reverse merger in which the Company is the surviving corporation but shares
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or
the acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Exchange Act, or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or maintained
by the Company or any Affiliate of the Company) of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors.
"Company" means Axys Pharmaceuticals, Inc. or, following a Change in Control,
the surviving entity resulting from such transaction.
"Covered Termination" means (i) an Involuntary Termination Without Cause that
occurs at any time, without regard to a Change in Control, or (ii) a voluntary
termination for Good Reason that occurs on or after the effective date of a
Change in Control.
"Exchange Act"
means the Securities Exchange Act of 1934, as amended.
"Good Reason" means that any of the following are undertaken without Executive's
express written consent:
the assignment to Executive of any duties or responsibilities that results in
any diminution or adverse change of Executive's position, status, circumstances
of employment or scope of responsibilities;
a reduction by the Company in Executive's annual base salary as in effect on the
effective date of the Change in Control;
the taking of any action by the Company that would adversely affect Executive's
participation in, or reduce Executive's benefits under, the Company's benefit
plans (including equity benefits) as of the effective date of the Change in
Control, except to the extent the benefits of all other executives of the
Company are similarly reduced;
a relocation of Executive's principal office to a location more than forty (40)
miles from the location at which Executive was performing Executive's duties as
of the effective date of the Change in Control, except for required travel by
Executive on the Company's business;
any material breach by the Company of any provision of this Agreement; or
any failure by the Company to obtain the assumption of this Agreement by any
successor or assign of the Company.
"Involuntary Termination Without Cause" means Executive's dismissal or discharge
other than for Cause. The termination of Executive's employment as a result of
Executive's death or disability will not be deemed to be an Involuntary
Termination Without Cause.
EMPLOYMENT BY THE COMPANY
Position and Duties.
Subject to terms set forth herein, the Company agrees to continue to employ
Executive in the position of Senior Vice President, Corporate and Business
Development and Executive hereby accepts such continued employment. Executive
shall serve in an executive capacity and shall perform such duties as are
customarily associated with the position of Senior Vice President, Corporate and
Business Development and such other duties as are assigned to Executive by the
Company's Chief Executive Officer. Executive will report to the Chief Executive
Officer. During the term of Executive's employment with the Company, Executive
will devote Executive's best efforts and substantially all of Executive's
business time and attention (except for vacation periods as set forth herein and
reasonable periods of illness or other incapacities permitted by the Company's
general employment policies or as otherwise set forth in this Agreement) to the
business of the Company.
Employment at Will.
Both the Company and Executive shall have the right to terminate Executive's
employment with the Company at any time, with or without Cause, and without
prior notice. If Executive's employment with the Company is terminated,
Executive will be eligible to receive severance benefits to the extent provided
in this Agreement.
Employment Policies.
The employment relationship between the parties shall also be governed by the
general employment policies and practices of the Company, including those
relating to protection of confidential information and assignment of inventions,
except that when the terms of this Agreement differ from or are in conflict with
the Company's general employment policies or practices, this Agreement shall
control.
COMPENSATION
Base Salary.
Executive shall receive for services to be rendered hereunder an annual base
salary of $275,000.00, payable on the regular payroll dates of the Company,
subject to increase in the sole discretion of the Board of Directors.
Annual Bonus.
Executive will be eligible for an annual bonus up to thirty percent (30%) of
Executive's then current annual base salary upon achievement of reasonable goals
specified by the Board (the "Target Bonus"). Such goals shall be set forth in
writing by the Board prior to the close of the first quarter of each fiscal year
of the Company, with fifty percent (50%) of such goals to be dependent on
Executive's individual performance and fifty percent (50%) of such goals to be
dependent on the Company's performance.
Standard Company Benefits.
Executive shall be entitled to all rights and benefits for which Executive is
eligible under the terms and conditions of the standard Company benefits and
compensation practices that may be in effect from time to time and are provided
by the Company to its executive employees generally.
Compensatory Stock Award.
The Board has previously granted Executive an option to acquire seventy-five
thousand (75,000) shares of the common stock of the Company (the "Option"). The
Option has been granted pursuant to the Company's 1997 Equity Incentive Plan.
The Option is an incentive stock option for purposes of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), to the extent permitted
under the Code. The exercise price per share of the Option is equal to one
hundred percent (100%) of the fair market value of the Company's common stock,
as determined pursuant to the Company's 1997 Equity Incentive Plan, on the date
of grant. Subject to Executive's continued employment by the Company, the Option
vests as to one-forty-eighth (1/48) of the shares of common stock subject to the
Option each calendar month for forty-eight (48) months, counted from the
Option's date of grant. In all other respects, the Option is to be governed by
the terms of the Plan, including the option agreement and grant notice
thereunder.
SEVERANCE AND CHANGE IN CONTROL BENEFITS
Severance Benefits.
If Executive's employment terminates due to a Covered Termination after the date
of execution of this Agreement, Executive shall receive any annual base salary
and bonus compensation that has accrued but is unpaid as of the date of such
Covered Termination. Within thirty (30) days following the date on which the
Release described in Section 4.4 below becomes effective in accordance with its
terms, Executive shall also receive a lump sum payment equal to the sum of (i)
one hundred percent (100%) of Executive's annual base salary as in effect during
the last regularly scheduled payroll period immediately preceding the Covered
Termination and (ii) one hundred percent (100%) of Executive's Target Bonus in
effect for the year in which Executive's employment terminates, all of the
foregoing subject to applicable tax withholding. In addition, following a
Covered Termination, Executive and Executive's covered dependents shall be
eligible to continue their health care benefit coverage as permitted by COBRA
(Internal Revenue Code Section 4980B) at the same cost to Executive as in effect
immediately prior to the Covered Termination for the one (1)-year period
following the Covered Termination. Executive shall be entitled to maintain
coverage for Executive and Executive's eligible dependents at Executive's own
expense or the balance of the period that Executive is entitled to coverage
under COBRA.
Acceleration of Vesting of Outstanding Options.
If Executive's employment with the Company terminates due to a Covered
Termination within eighteen (18) months following the effective date of a Change
in Control, then any options to purchase the Company's common stock granted to
Executive (including without limitation the Option) shall become immediately
fully vested and exercisable as of the date of such Covered Termination.
Parachute Payments.
If any payment or benefit Executive would receive in connection with a Change in
Control from the Company or otherwise ("Payment") would (i) constitute a
"parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and (ii) but for this sentence, be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then such Payment shall be reduced to the Reduced Amount. The "Reduced
Amount" shall be either (x) the largest portion of the Payment that would result
in no portion of the Payment being subject to the Excise Tax or (y) the largest
portion, up to and including the total, of the Payment, whichever amount, after
taking into account all applicable federal, state and local employment taxes,
income taxes, and the Excise Tax (all computed at the highest applicable
marginal rate), results in Executive's receipt, on an after-tax basis, of the
greater amount of the Payment notwithstanding that all or some portion of the
Payment may be subject to the Excise Tax. If a reduction in payments or benefits
constituting "parachute payments" is necessary so that the Payment equals the
Reduced Amount, reduction shall occur in the following order unless Executive
elects in writing a different order (provided, however, that such election shall
be subject to Company approval if made on or after the effective date of the
Change in Control): reduction of cash payments; cancellation of accelerated
vesting of stock awards; reduction of employee benefits. In the event that
acceleration of vesting of stock award compensation is to be reduced, such
acceleration of vesting shall be cancelled in the reverse order of the date of
grant of Executive's stock awards unless Executive elects in writing a different
order for cancellation.
The accounting firm engaged by the Company for general audit purposes as of the
day prior to the effective date of the Change in Control shall perform the
foregoing calculations. If the accounting firm so engaged by the Company is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, the Company shall appoint a nationally recognized
accounting firm to make the determinations required hereunder. The Company shall
bear all expenses with respect to the determinations by such accounting firm
required to be made hereunder.
The accounting firm engaged to make the determinations hereunder shall provide
its calculations, together with detailed supporting documentation, to the
Company and Executive within fifteen (15) calendar days after the date on which
Executive's right to a Payment is triggered (if requested at that time by the
Company or Executive) or such other time as requested by the Company or
Executive. If the accounting firm determines that no Excise Tax is payable with
respect to a Payment, either before or after the application of the Reduced
Amount, it shall furnish the Company and Executive with an opinion reasonably
acceptable to Executive that no Excise Tax will be imposed with respect to such
Payment. Any good faith determinations of the accounting firm made hereunder
shall be final, binding and conclusive upon the Company and Executive.
Release.
Upon the occurrence of a Covered Termination, and prior to the receipt of any
benefits under Section 4.1 (except pursuant to the first sentence thereof) and
Section 4.2 on account of the occurrence of such Covered Termination, Executive
shall execute a Release (the "Release") in the form attached hereto as Exhibit A
or Exhibit B, as appropriate. Such Release shall specifically relate to all of
Executive's rights and claims in existence at the time of such execution and
shall confirm Executive's obligations under the Company's standard form of
proprietary information agreement. It is understood that Executive has a certain
period to consider whether to execute such Release, and Executive may revoke
such Release within seven (7) business days after execution. In the event
Executive does not execute such Release within the applicable period, or if
Executive revokes such Release within the subsequent seven (7) business day
period, none of the aforesaid benefits shall be payable under this Agreement and
this Agreement shall be null and void.
Mitigation.
Executive shall not be required to mitigate damages or the amount of any payment
provided under this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement be reduced by
any compensation earned by Executive as a result of employment by another
employer or by any retirement benefits received by Executive after the date of
the Covered Termination, or otherwise.
PROPRIETARY INFORMATION OBLIGATIONS
Agreement.
Executive agrees to execute and abide by the Proprietary Information and
Inventions Agreement attached hereto as Exhibit C.
Remedies.
Executive's duties under the Proprietary Information and Inventions Agreement
shall survive termination of Executive's employment with the Company and the
termination of this Agreement. Executive acknowledges that a remedy at law for
any breach or threatened breach by Executive of the provisions of the
Proprietary Information and Inventions Agreement would be inadequate, and
Executive therefore agrees that the Company shall be entitled to injunctive
relief in case of any such breach or threatened breach.
OUTSIDE ACTIVITIES
Except with the prior written consent of the Board, Executive shall not during
the term of this Agreement undertake or engage in any other employment,
occupation or business enterprise, other than ones in which Executive is a
passive investor. Executive may engage in civic and not- for-profit activities
so long as such activities do not materially interfere with the performance of
Executive's duties hereunder.
During the term of Executive's employment by the Company, except on behalf of
the Company, Executive shall not directly or indirectly, whether as an officer,
director, stockholder, partner, proprietor, associate, representative,
consultant, or in any capacity whatsoever engage in, become financially
interested in, be employed by or have any business connection with any other
person, corporation, firm, partnership or other entity whatsoever which were
known by Executive to compete directly with the Company, throughout the world,
in any line of business engaged in (or planned to be engaged in) by the Company;
provided, however, that anything above to the contrary notwithstanding,
Executive may own, as a passive investor, securities of any competitor
corporation, so long as Executive's direct holdings in any one such corporation
shall not in the aggregate constitute more than 1% of the voting stock of such
corporation.
noninterference
While employed by the Company, and for one (1) year immediately following the
date on which Executive terminates employment or otherwise ceases providing
services to the Company, Executive agrees not to interfere with the business of
the Company by soliciting or attempting to solicit any employee of the Company
to terminate such employee's employment in order to become an employee,
consultant or independent contractor to or for any competitor of the Company.
Executive's duties under this Article 7 shall survive termination of Executive's
employment with the Company and the termination of this Agreement.
general provisions
Notices.
Any notices provided hereunder must be in writing and shall be deemed effective
upon the earlier of personal delivery (including personal delivery by telex) or
the third day after mailing by first class mail, to the Company at its primary
office location and to Executive at Executive's address as listed on the Company
payroll.
Severability.
Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provisions had
never been contained herein.
Waiver.
If either party should waive any breach of any provisions of this Agreement,
they shall not thereby be deemed to have waived any preceding or succeeding
breach of the same or any other provision of this Agreement.
Complete Agreement.
This Agreement and its Exhibit A, Exhibit B and Exhibit C constitute the entire
agreement between Executive and the Company and are the complete, final, and
exclusive embodiment of their agreement with regard to this subject matter;
provided, however, that this Agreement shall not supersede the letter agreement
entered into between Executive and the Company on June 11, 1998, and in the
event of any inconsistency between the terms of this Agreement and those of said
side letter agreement, the terms of the latter shall control. They are entered
into without reliance on any promise or representation other than those
expressly contained herein or therein, and they cannot be modified or amended
except in a writing signed by an officer of the Company.
Counterparts.
This Agreement may be executed in separate counterparts, any one of which need
not contain signatures of more than one party, but all of which taken together
will constitute one and the same Agreement.
Headings.
The headings of the sections hereof are inserted for convenience only and shall
not be deemed to constitute a part hereof nor to affect the meaning thereof.
Successors and Assigns.
This Agreement is intended to bind and inure to the benefit of and be
enforceable by Executive and the Company, and their respective successors,
assigns, heirs, executors and administrators, except that Executive may not
assign any of Executive's duties hereunder and Executive may not assign any of
Executive's rights hereunder, without the written consent of the Company, which
shall not be withheld unreasonably.
Arbitration.
Unless otherwise prohibited by law or specified below, all disputes, claims and
causes of action, in law or equity, arising from or relating to this Agreement
or its enforcement, performance, breach, or interpretation shall be resolved
solely and exclusively by final and binding arbitration held in San Francisco
County, California through Judicial Arbitration & Mediation Services/Endispute
("JAMS") under the then existing JAMS arbitration rules. However, nothing in
this section is intended to prevent either party from obtaining injunctive
relief in court to prevent irreparable harm pending the conclusion of any such
arbitration. Each party in any such arbitration shall be responsible for its own
attorneys' fees, costs and necessary disbursement; provided, however, that if
one party refuses to arbitrate and the other party seeks to compel arbitration
by court order, if such other party prevails, it shall be entitled to recover
reasonable attorneys' fees, costs and necessary disbursements. Pursuant to
California Civil Code Section 1717, each party warrants that it was represented
by counsel in the negotiation and execution of this Agreement, including the
attorneys' fees provision herein.
Attorneys' Fees.
If either party hereto brings any action to enforce rights hereunder, each party
in any such action shall be responsible for its own attorneys' fees and costs
incurred in connection with such action.
Choice of Law.
All questions concerning the construction, validity and interpretation of this
Agreement will be governed by the law of the State of California.
Amended and Restated Agreement.
This Agreement shall supersede in its entirety the Prior Agreement as of the
Effective Time.
In Witness Whereof
, the parties have executed this Agreement on the day and year first above
written.
Axys Pharmaceuticals, Inc.
By: /s/ Paul J. Hastings
Date: March 27, 2001
Accepted and agreed this
27th day of March, 2001
/s/ William J. Newell
William J. Newell
Exhibit A: Release (Individual Termination)
Exhibit B: Release (Group Termination)
Exhibit C: Proprietary Information and Inventions Agreement
--------------------------------------------------------------------------------
Exhibit A
RELEASE
(Individual Termination)
Certain capitalized terms used in this Release are defined in the Executive
Employment Agreement (the "Agreement") which I have executed and of which this
Release is a part.
I hereby confirm my obligations under the Company's proprietary information and
inventions agreement.
I acknowledge that I have read and understand Section 1542 of the California
Civil Code which reads as follows: "A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor." I hereby expressly waive and relinquish all rights
and benefits under that section and any law of any jurisdiction of similar
effect with respect to my release of any claims I may have against the Company.
Except as otherwise set forth in this Release, in consideration of benefits I
will receive under the Agreement, I hereby release, acquit and forever discharge
the Company, its parents and subsidiaries, and their officers, directors,
agents, servants, employees, shareholders, successors, assigns and affiliates,
of and from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys' fees, damages, indemnities and obligations of every kind
and nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed (other than any claim for indemnification
I may have as a result of any third party action against me based on my
employment with the Company), arising out of or in any way related to
agreements, events, acts or conduct at any time prior to and including the date
I execute this Release, including, but not limited to: all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including but
not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with Disabilities
Act of 1990; the California Fair Employment and Housing Act, as amended; tort
law; contract law; statutory law; common law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the implied
covenant of good faith and fair dealing; provided, however, that nothing in this
paragraph shall be construed in any way to release the Company from its
obligation to indemnify me pursuant to the Company's indemnification obligation
pursuant to agreement or applicable law.
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
under the Agreement for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (A) my waiver and release do not apply to any rights or claims that may
arise on or after the date I execute this Release; (B) I have the right to
consult with an attorney prior to executing this Release; (C) I have twenty-one
(21) days to consider this Release (although I may choose to voluntarily execute
this Release earlier); (D) I have seven (7) days following the execution of this
Release by the parties to revoke the Release; and (E) this Release shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth (8th) day after this Release is executed by me.
William J. Newell
Date:___________________________
--------------------------------------------------------------------------------
Exhibit B
RELEASE
(Group Termination)
Certain capitalized terms used in this Release are defined in the Executive
Employment Agreement (the "Agreement") which I have executed and of which this
Release is a part.
I hereby confirm my obligations under the Company's proprietary information and
inventions agreement.
I acknowledge that I have read and understand Section 1542 of the California
Civil Code which reads as follows: "A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor." I hereby expressly waive and relinquish all rights
and benefits under that section and any law of any jurisdiction of similar
effect with respect to my release of any claims I may have against the Company.
Except as otherwise set forth in this Release, in consideration of benefits I
will receive under the Agreement, I hereby release, acquit and forever discharge
the Company, its parents and subsidiaries, and their officers, directors,
agents, servants, employees, shareholders, successors, assigns and affiliates,
of and from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys' fees, damages, indemnities and obligations of every kind
and nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed (other than any claim for indemnification
I may have as a result of any third party action against me based on my
employment with the Company), arising out of or in any way related to
agreements, events, acts or conduct at any time prior to and including the date
I execute this Release, including, but not limited to: all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including but
not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with Disabilities
Act of 1990; the California Fair Employment and Housing Act, as amended; tort
law; contract law; statutory law; common law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the implied
covenant of good faith and fair dealing; provided, however, that nothing in this
paragraph shall be construed in any way to release the Company from its
obligation to indemnify me pursuant to the Company's indemnification obligation
pursuant to agreement or applicable law.
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
under the Agreement for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (A) my waiver and release do not apply to any rights or claims that may
arise on or after the date I execute this Release; (B) I have the right to
consult with an attorney prior to executing this Release; (C) I have forty-five
(45) days to consider this Release (although I may choose to voluntarily execute
this Release earlier); (D) I have seven (7) days following the execution of this
Release by the parties to revoke the Release; (E) this Release shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day (8th) after this Release is executed by me; and (F) I
have received with this Release a detailed list of the job titles and ages of
all employees who were terminated in this group termination and the ages of all
employees of the Company in the same job classification or organizational unit
who were not terminated.
William J. Newell
Date:_____________________________
--------------------------------------------------------------------------------
Exhibit C
Proprietary Information and Inventions Agreement
--------------------------------------------------------------------------------
|
Exhibit 10(k)
AGREEMENT entered into as of the first day July 2000, by and between
Tosco Corporation, a Nevada corporation (“Tosco”), and Wilkes McClave III
(“Executive”) (the “Agreement”).
W I T N E S S E T H
WHEREAS, Executive is a key employee of Tosco; and
WHEREAS, Tosco deems it important and appropriate to assure to itself
the continued availability of certain services and assistance of Executive,
particularly in the event a Change of Control is contemplated; and
WHEREAS Executive is willing to be available to perform such services,
provided he is appropriately compensated in conjunction with any such Change of
Control,
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and other good and valuable consideration the
adequacy and receipt whereof is hereby acknowledged, Tosco and Executive agree
as follows:
1. In the event a transaction is contemplated that may result in a
Change of Control, Executive shall assist in the furtherance of such
transaction, as requested; and
2. If an event or transaction causes, or will likely result in, a
Change of Control before Executive is 55 years of age, for purposes of any
termination or retirement in conjunction with or following such Change of
Control, Executive shall be treated as though he had attained the age of 55 in
the employ of Tosco.
Tosco Corporation
By: /s/ Executive
/s/
Wilkes McClave III |
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EXHIBIT 10.21
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and entered into as of
the 17th day of October, 2000, by and between Geoffrey A. Sage (the "EXECUTIVE")
and Anchor Gaming ("ANCHOR" or "EMPLOYER"), a Nevada corporation.
BACKGROUND
Employer is presently completing a restructuring of its ownership (the
"TRANSACTION"), which will include changes in its executive management. Employer
acknowledges that, following the Transaction, continued access to the
experience, knowledge and expertise possessed by Executive will be critical to
Employer's success. Employer wishes to ensure that it will retain the services
of Executive for a period following the Transaction, and to memorialize the
terms of said employment relationship in writing.
This Agreement supercedes all previous employment agreements by and between
the Company and the Executive. Save and except for that Letter Agreement dated
January 13, 2000, which is specifically excepted from this Agreement and which
shall remain unaffected by any provision hereof. Termination under Executive's
new employment agreement will constitute termination under his previous option
agreements. Furthermore, a change in control under Executive's new employment
agreement will constitute a change of control under his previous option
agreements.
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the parties agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions set forth in this
Agreement, Employer will employ Executive, and Executive hereby accepts such
employment with Employer.
2. DUTIES OF EXECUTIVE.
(a) Executive will serve in the capacity of Chief Financial Officer and
Treasurer of Anchor, as well as Secretary of the Board of Directors of Anchor
(the "BOARD"), and will be subject to supervision by the Chief Executive Officer
("CEO") and/or the Board. In such capacity, Executive will have all necessary
powers to discharge his duties and responsibilities, which will include
oversight of all financial matters in which Anchor and its affiliated and/or
subsidiaries are involved and consulting with other officers of Anchor, as
needed; together with such other duties as the Board and/or CEO may reasonably
assign, consistent with duties typically assigned to employees who hold
positions similar to that of Executive.
(b) During the term of this Agreement and except as provided below,
Executive will perform to the best of his abilities all duties assigned to him
hereunder, will devote substantially all of his primary business time, attention
and effort to the affairs of Anchor and will use his reasonable best efforts to
promote the interests of Anchor. Notwithstanding the foregoing or anything else
in this Agreement, Executive may engage in reasonable charitable, civic or
community activities.
(c) Executive has obtained and possesses, or will obtain and possess, and
will maintain throughout the Term of this Agreement, all licenses, approvals,
permits, and authorization (the "LICENSES") necessary to perform Executive's
duties hereunder, including without limitation, any licenses required by any
agency of any state or county having jurisdiction to regulate gaming, liquor or
the activities undertaken by Employer. Any costs, attorneys' fees,
investigations fees or other expenses incurred in connection with obtaining such
Licenses shall be borne by Employer. Executive warrants that he is fully
eligible, under all standards and requirements, to obtain or possess such
licenses and that Executive will commit no acts during the term hereof that
would jeopardize or eliminate his ability to possess or maintain such Licenses.
(d) Executive agrees to submit to drug testing in accordance with the
Company policy, and to execute a consent form attached as EXHIBIT A.
--------------------------------------------------------------------------------
3. TERM. The term of this Agreement (the "TERM") will commence as of
October 17, 2000 (the "EFFECTIVE DATE"), and will continue for a period of
4 years from the Effective Date, at which time this Agreement expires, unless
earlier terminated by either party in accordance with the terms and conditions
in this Agreement (the date on which Employee's employment with Employer
terminates is referred to as (the "SEPARATION DATE").
4. COMPENSATION.
(a) SALARY. Commencing on the Effective Date and during the Term of this
Agreement, Employer will pay Executive a minimum base salary of
two-hundred-and-fifty-thousand dollars ($250,000.00, or $20,833.33 per month),
which will be payable in accordance with Employer's standard payroll practice,
but in any event, not less frequently than monthly. Such base salary will not
include any other benefits made available to Executive, or any contributions or
payments made on his behalf pursuant to any employee benefit plan or program of
Employer, including health, disability or life insurance plans or programs,
401(k) plans, cash bonus plans, stock option plans, retirement plans, severance
plans or any similar plans or programs of any nature that may be offered at any
time during the Term of this Agreement.
(b) BONUS COMPENSATION. In addition to the Salary set forth above, Employer
will pay Executive an annual bonus in an amount to be determined by, and subject
to the sole discretion of, the Board, up to a maximum of two-hundred thousand
dollars ($200,000.00), such bonus to be paid at a time and in a manner
consistent with payment of such bonuses to other of Employer's officers and/or
executives.
(c) EMPLOYEE BENEFITS. During the term of this Agreement, Employer will
provide Executive with all benefits made available from time to time by Employer
to employees and/or officers generally and to employees who hold positions
similar to that of Executive (including benefits granted to other officers
and/or directors of Employer), as per company policy. Executive's benefits will
include, without limit, participation in any and all Employer-sponsored medical,
dental and/or vision plans or programs, which will include coverage for
Executive's immediate family; disability insurance; life insurance payable to
Executive's designated beneficiary; participation in any and all
Employer-sponsored retirement plans and/or 401(k) plans; and paid vacation.
(d) EXPENSES. During the term of this Agreement, Executive shall be entitled
to reimbursement for all reasonable and necessary expenses incurred on behalf of
Employer, in accordance with the general policy of Employer.
5. RESTRICTED STOCK GRANT.
(a) GRANT. As additional consideration for the services provided by
Executive pursuant to this Agreement, Employer will confer upon Executive a
restricted stock grant in the amount of five-thousand (5,000) shares of common
stock of Employer, which will vest 20% on the date on which the Transaction
closes, and vest rateable over twelve successive calendar quarters in equal
increments. The restricted stock grant will be subject to the terms and
conditions of the Restricted Stock Agreement in substantially the form attached
as EXHIBIT B.
6. STOCK OPTIONS. As additional consideration for the services provided by
Executive pursuant to this Agreement, Employer will grant to Executive options
to purchase thirty-five thousand (35,000) shares of Employer's Common Stock (the
"OPTION GRANT") at an exercise price of seventy-one dollars and eighty-seven and
one-half cents ($71.875), such grant to be governed by the existing Anchor
Gaming 1995 Stock Option Plan and the 2000 Stock Incentive Plan, which is to be
presented to shareholders at Employer's next annual meeting. The terms and
conditions of this Option Grant shall be set forth in a separate Stock Option
Agreement, which is attached hereto as EXHIBIT C.
2
--------------------------------------------------------------------------------
7. SEVERANCE.
(a) In the event that Executive's employment is terminated by Employer for
Cause (as defined below), Executive will receive no severance of any kind.
(b) In the event that Executive voluntarily terminates his employment with
Employer, he will receive no severance payment of any kind.
(c) In the event that Employer chooses to terminate Executive's employment
for other than Cause, Executive will receive a severance payment equal to one
year's salary, as set forth in SECTION 4(a), together with an appropriately
prorated bonus, as provided in SECTION 4(b), less any and all applicable
withholding.
(d) "CAUSE" means that the Board reasonably finds that any one or more of
the following events has occurred: (i) performance by Participant of illegal or
fraudulent acts, criminal conduct, or willful misconduct relating to the
activities of the Company, including, without limit, violation by Participant of
any material gaming laws or regulations, which violation materially and
adversely affects the ability of Participant to perform his duties to the
Company or may subject the Company to liability; (ii) conviction of, or nolo
contendere plea by Participant to, any criminal acts involving moral turpitude
having a material adverse effect upon the Company, including, without
limitation, upon its profitability, reputation, or goodwill; (iii) willful and
material disregard of any reasonable directive(s) from the Board that are not
inconsistent with the terms of any contract with the Company to which
Participant is party, PROVIDED that the Board will provide Participant with
written notice that such event has occurred ("NOTICE OF DISREGARD") and will
further allow Participant 30 days in which to cure such disregard, and PROVIDED
FURTHER that the Board will provide an opportunity for Participant to be heard
if there is no cure within 30 days of the Notice of Disregard; (iv) breach of
fiduciary duty, PROVIDED that the Board will provide Participant with written
notice that such event has occurred ("NOTICE OF BREACH OF FIDUCIARY DUTY") and
will further allow Participant 30 days in which to cure such breach of fiduciary
duty, and PROVIDED FURTHER that the Board will allow an opportunity for
Participant to be heard if there is no cure within 30 days of the Notice of
Breach of Fiduciary Duty; (v) material violation, not cured in a reasonable time
after notice from the Company, by Participant of any of the covenants and
agreements contained in any agreement with the Company to which Participant is
party; (vi) failure or inability of Participant to obtain or maintain required
gaming licenses or approvals.
(e) "CHANGE OF CONTROL" means the occurrence of any of the following events,
as a result of one transaction or a series of transactions: (i) any "person" (as
that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended, (the "Exchange Act"), but excluding the Company, its
affiliates, and any qualified or non-qualified plan maintained by the Company or
its affiliates) becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Anchor Gaming representing more than 50% of the combined voting power of the
Anchor Gaming's then outstanding securities; (ii) individuals who constitute a
majority of the Board of Directors of the Company immediately prior to a
contested election for positions on the Board cease to constitute a majority as
a result of such contested election; (iii) Anchor Gaming is combined (by merger,
share exchange, consolidation, or otherwise) with another entity and as a result
of such combination, less than 50% of the outstanding securities of the
surviving or resulting entity are owned in the aggregate by the former
shareholders of Anchor Gaming; (iv) the Company sells, leases, or otherwise
transfers all or a majority of all of its properties, assets or income or
revenue generating capacity to another person or entity; (v) a dissolution or
liquidation of Anchor Gaming or; (vi) any other transaction or series of
transactions is consummated that results in a required disclosure under Item 1
of Form 8-K or successor form.
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(f) TERMINATION FOLLOWING CHANGE OF CONTROL. In the event that Executive is
for any reason terminated or subjected to Constructive Termination (as defined
below), following a Change in Control, Executive will receive a severance
payment equal to one year's salary, as set forth in SECTION 4(a), together with
a bonus as set forth in SECTION 4(b), less any and all applicable withholding. A
"CONSTRUCTIVE TERMINATION", for purposes of this Agreement, is defined as: (i) a
significant reduction in the duties or responsibilities of Executive from those
set forth in this Agreement; (ii) a change in job title of Executive that
reflects a reduction in duties, responsibilities and/or stature; (iii) a change
or reduction in Executive's total remuneration (including salary, bonus,
qualified retirement benefits, welfare benefits, stock option benefits and any
other employee benefits) from that provided in this Agreement; (iv) a change in
Executive's direct reporting relationship such that Executive is no longer
reporting directly to the CEO or the Board; or (v) a change by Employer in the
location of Executive's principal place of employment, which moves the principal
place of business more than 35 miles from the location specified in this
Agreement.
8. PAYMENTS UPON TERMINATION; TAX TREATMENT. In the event that the total
compensation paid to Executive as severance in the event of a Change in Control,
taking into account all cash severance payments, shares of stock, accelerated
vesting of stock options, and bonuses, if any (such payments referred to, for
purposes of this SECTION 8, as the "Severance Payment"), is found to constitute
"an excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "CODE), then Employer will pay to
Executive, in addition to the compensation paid as Severance Payment, an
additional amount (the "ADDITIONAL AMOUNT") which, after reduction for income
taxes and excise taxes on the additional amount, is sufficient to provide for
the payment of any excise tax that may be due by Executive on the Severance
Payment.
9. CONFIDENTIAL INFORMATION.
(a) DEFINITION OF "CONFIDENTIAL INFORMATION." As used herein, the term
"CONFIDENTIAL INFORMATION" means information of any kind, nature and description
disclosed to, discovered by or otherwise known by Employee as a direct or
indirect consequence of or through Executive's employment with Employer that is
not generally known within the industry or industries in which Employer is or
may become engaged, about Employer's business, merchandise, client base,
marketing procedures, processes and services, including but not limited to,
information relating to research, marketing, development, inventions, product
lines, design, purchasing, finances and financial affairs, accounting,
merchandising, selling, engineering, employees, trade secrets, business
practices, methods, acquisitions, potential acquisitions, customer lists,
customer contact lists, vendor lists, pricing agreements, merchandise resources,
supply resources, service resources, system designs, procedures manuals, the
prices it obtains or has obtained or at which it sells or has sold its services
or products, or the name of its personnel and reports.
(b) NONDISCLOSURE. In order to perform his duties hereunder, Executive will
require access to trade secrets and proprietary information of Employer, and
Employer agrees to make such trade secrets and Confidential Information
available to Executive as necessary. Executive acknowledges that, in the course
of his employment with Employer pursuant to this Agreement, he will become
familiar with trade secrets and customer lists of, and other confidential
information concerning, Employer; that he will receive extraordinary and
specialized training in the operation of Employer's products and/or the nature
of Employer's services; that he will represent Employer and develop contacts and
relationships with other persons and entities, including but not limited to
customers, potential customers and employees of such entities; and that his
services will be of special, unique and extraordinary value to Employer.
Executive expressly covenants and agrees that he will not, during the term of
employment with Employer hereunder or at any time following the termination
thereof, without regard to the party terminating this Agreement or the reason
for
4
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termination, if any, directly or indirectly, reveal, divulge, disclose or
communicate to any Person ("Person" includes, but is not limited to, any
individual, corporation, institution, limited liability company, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, proprietorship or government or any agency or political
subdivision thereof), other than authorized officers, directors, and employees
of Employer, in any manner whatsoever, any Confidential Information of Employer
without the prior written consent of a duly authorized officer of Employer or
member of the Board.
(c) RETURN OF CONFIDENTIAL INFORMATION AND OTHER PROPERTY. Upon termination
of Executive's employment with Employer, Executive will surrender to Employer
all Confidential Information including, without limitation, all samples,
articles of manufacture, lists, charts, schedules, reports, financial
statements, books, and records, and all copies thereof, of Employer and all
other property belonging to Employer whatsoever.
10. COVENANT NOT TO COMPETE:
(a) CONSIDERATION FOR COVENANT. As consideration for his continued
employment with Employer and the grant of access by Employer to Confidential
Information, as provided in SECTION 9(b) of this Agreement, Executive will use
this information, training and good will solely for the benefit of Employer, and
further agrees to the Covenants set forth in this SECTION 10. Executive agrees
and acknowledges that the covenants set forth in this SECTION 10 are ancillary
to the agreements regarding Confidential Information contained in SECTION 9 of
this Agreement, and that these covenants set forth in this SECTION 10 are
reasonably necessary to protect Employer's interests in the Confidential
Information to which Executive is given access hereunder.
(b) NON-COMPETITION. During the term of this Agreement and for a period of
one (1) year thereafter (the "NONCOMPETITION PERIOD"), Executive will not, in
the United States or in any foreign country in which Employer is then selling,
marketing, providing or soliciting to sell, market or provide its products or
services, directly or indirectly engage in, own or control an interest in
(except as to those investments held at the effective date of this agreement or
as a passive investor in publicly held companies, i.e., Executive and
Executive's relatives do not own of record, or beneficially, an aggregate of
more than two percent (2%) of any class of outstanding securities) or act as an
officer, director, or employee of, or consultant or adviser to, any firm,
corporation, institution or entity, directly or indirectly in competition with
or engaged in a business substantially similar to that of Employer, including
the development, manufacture, sale or marketing of products, services, devices,
instruments, methods or techniques (or any related services or activities)
similar to any products, services, devices, instruments, methods or techniques
which Employer is engaged in the development of, manufacture, selling, or
marketing, or has under consideration to do the same (whether or not such
products, devices, instruments, methods or techniques or the technology related
thereto were obtained from Executive), during the term of the Executive's
employment.
(c) NON-SOLICITATION. Executive further agrees that during the
Noncompetition Period he will not: (i) in any manner, directly or indirectly,
induce or attempt to induce any employee of Employer or any of its affiliates to
terminate or abandon his or her employment for any purpose whatsoever, or:
(ii) in connection with any business to which SECTION 9(b) applies, call on,
solicit, promote, merchandise, provide products or services to, or otherwise do
business with any customer of Employer whom Executive has solicited or otherwise
dealt with during the one-year period prior to the Separation Date; provided
that, such products or services are in competition with, or similar to, products
or service offered by Employer.
(d) CONSENT TO MODIFICATION. If, at any time, a court of competent
jurisdiction or an arbitrator holds that the restrictions stated in this SECTION
10 are overly broad under
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then-existing circumstances, the parties agree that the maximum period, scope or
geographical area reasonable under such circumstances will be substituted for
the stated period, scope or area, and that the court or arbitrator will be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
11. ENFORCEMENT OF COVENANTS. Executive has carefully read and considered
the provisions of SECTIONS 9 and 10 of this Agreement, and Executive agrees that
the restrictions contained therein (including, but not limited to, the time
period and geographic restriction) are fair and reasonable and that these
provisions are reasonably required for protection of Employer's interests.
Executive further agrees that a violation by Executive of any of the covenants
contained in SECTIONS 9 and 10 hereof will cause damage to Employer that will be
significant, material and difficult or impossible to adequately measure, and
that in the event of such a breach, notwithstanding any language or provision in
SECTION 12, Employer will be entitled to seek and obtain injunctive relief.
Executive expressly acknowledges and agrees that the respective covenants and
agreements will be construed in such a manner as to be enforceable under
applicable laws if a more limited scope is determined by a court of competent
jurisdiction to be required.
12. NEGOTIATION, MEDIATION AND ARBITRATION.
(a) SUBJECT CLAIMS. The matters, claims, rights, and obligations subject to
these arbitration provisions include all rights, claims and obligations arising
out of or relating to this Agreement or to Executive's employment and/or its
termination, including, without limitation, any and all claims, rights or causes
of action which may ever arise or be asserted under any federal, state, local or
foreign statutory, regulatory or common law, and including, without limitation,
claims of discrimination on the basis of any protected status (including,
without limit, age, race, gender, religion and/or disability), wrongful
discharge or termination, breach of contract, tort (such as intentional
infliction of emotional distress, libel, slander, wrongful invasion of privacy
or personal injury), workers compensation or unemployment compensation. All of
the foregoing types of matters, claims, rights and obligations subject to these
arbitration provisions are herein called "SUBJECT CLAIMS." The parties agree and
acknowledge that an action by Employer to enforce any of the covenants set forth
in SECTIONS 9 and/or 10 of this Agreement will not be a Subject Claim covered by
this SECTION 12.
(b) NEGOTIATION. The parties will attempt in good faith to resolve promptly
any controversy regarding a Subject Claim by negotiations between or among the
parties. If any party reaches the conclusion that the controversy or dispute
cannot be resolved by unassisted negotiations, such party may notify the
American Arbitration Association ("AAA"), 140 West 51st Street, New York, New
York 10020 [telephone (212) 484-3266; fax (212) 307-4387], AAA will promptly
designate a mediator who is independent and impartial, and AAA's decision about
the identity of the mediator will be final and binding. The parties agree to
conduct at least eight (8) consecutive hours of mediated negotiations in Las
Vegas, Nevada, or other mutually convenient location to which the parties agree,
within thirty (30) days after the notice is sent.
(c) INITIATION OF BINDING ARBITRATION. If any controversy or dispute
regarding a Subject Claim is not resolved by negotiation or mediation within
thirty (30) days after the first notice to AAA is sent, then, upon notice by any
party to the other affected parties and to AAA ("ARBITRATION NOTICE"), said
controversy or dispute will be submitted to a sole arbitrator who is independent
and impartial, selected by AAA, for binding arbitration in Las Vegas, Nevada, or
any other mutually convenient location to which the parties agree, in accordance
with AAA's Commercial Arbitration Rules. The arbitration will be governed by the
United States Arbitration Act, 9 U.S.C. Sections 1-16 (or by the same principles
enunciated by such Act in the event it may not be technically applicable).
6
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(d) SELECTION OF ARBITRATOR. Promptly after the Arbitration Notice is given,
AAA will select five possible arbitrators, to whom AAA will give the identities
of the parties and the general nature of the controversy. If any of those
arbitrators disqualifies himself or declines to serve, AAA will continue to
designate additional potential arbitrators until the parties have five to select
from. After the panel of five potential arbitrators has been completed, a two
page summary of the background of each of the potential arbitrators will be
given to each of the parties, and the parties will have a period of 10 days
after receiving the summaries in which to attempt to agree upon the arbitrator
to conduct the arbitration. If the parties are unable to agree upon an
arbitrator, then one of the parties will notify AAA and the other party, and AAA
will notify each party that it has five days from the AAA notice to strike two
names from the list and advise AAA of the two names stricken. After expiration
of the strike period, if all but one candidate has been stricken, the remaining
one will be the arbitrator, but, if two or more have not been stricken, AAA will
select the arbitrator from one of those not stricken. The decision of AAA with
respect to the selection of the arbitrator will be final and binding in such
case.
(e) ARBITRATION HEARING. Within 20 days after the selection of the
arbitrator, the parties and their counsel will appear before the arbitrator at a
place and time designated by the arbitrator for the purpose of each party making
a one hour or less presentation and summary of the case. Thereafter, the
arbitrator will set dates and times for additional hearings in accordance with
the Rules until the proceeding is concluded. The desire and goal of the parties
is, and the arbitrator will be advised that his goal should be, to conduct and
conclude the arbitration proceeding as expeditiously as possible. If any party
or his counsel fails to appear at any hearing, the arbitrator will be entitled
to reach a decision based on the evidence that has been presented to him by the
parties who did appear.
(f) NO LITIGATION, DAMAGES LIMITATION. The parties agree that they will
faithfully observe this Agreement and will abide by and perform any award
rendered by the arbitrator. The award or judgment of the arbitrator will be
final and binding on all parties, and judgment upon the award or judgment of the
arbitrator may be entered and enforced by any court having jurisdiction. Unless
and only to the extent mandatory arbitration is validly prohibited or limited by
applicable statute or regulation, no litigation or other proceeding may ever be
instituted at any time in any court or before any administrative agency or body
for the purpose of adjudicating, interpreting or enforcing any of the rights,
duties, liabilities or obligations of the parties hereto or any rights, duties,
liabilities or obligations relating to any Subject Claim, whether or not covered
by the express terms of this Agreement, or for the purpose of adjudicating a
breach or determination of the validity of this Agreement, or for the purpose of
appealing any decision of an arbitrator, except a proceeding instituted (i) for
the purpose of having the award or judgment of an arbitrator entered and
enforced or (ii) to seek an injunction or restraining order (but not damages in
connection therewith) in circumstances where such relief is available. Unless
and only to the extent a limitation of damages is validly prohibited or limited
by applicable statute or regulation, no punitive, exemplary or consequential
damages may ever be awarded by the arbitrator or anyone else, and each of the
parties hereby waives any and all rights to make, claim or recover any such
damages.
(g) BANKRUPTCY. If any party becomes the subject of a bankruptcy,
receivership or other similar proceeding under the laws of the United States of
America, any state or commonwealth or any other nation or political subdivision
thereof, then, to the extent permitted or not prohibited by applicable law, any
factual or substantive legal issues arising in or during the pendency of any
such proceeding will be subject to all of the foregoing mandatory mediation and
arbitration provisions and will be resolved in accordance therewith. The
Agreements contained herein have been given for valuable consideration, are
coupled with an interest and are not intended to be executory
7
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contracts. The fees and expenses of the arbitrator will be shared equitably (as
determined by the arbitrator) by all parties engaged in the dispute or
controversy.
13. DEATH OR DISABILITY. In the event that Executive dies or becomes unable,
by virtue of any physical or mental impairment, to perform the essential
functions of his position, with or without reasonable accommodation, for a
period of 90 consecutive days or more ("Disability"), Employer will pay to
Executive, or to his estate, heirs and/or assigns, as appropriate, all salary
owed to Executive by Employer pursuant to SECTION 4 of this Agreement; any bonus
owed to Executive as of the date of said death or Disability, pursuant to
SECTION 4 of this Agreement; and a severance payment equal to six times
Executive's monthly salary.
14. NOTICE PROVISION. Any notice, demand or request required or permitted to
be given or made under this Agreement will be in writing and will be deemed
given or made when delivered in person, when sent by United States registered or
certified mail, or postage prepaid, or when telecopied to a party at its address
or telecopy number specified below:
If to Employer:
Anchor Gaming
815 Pilot Road, Suite G
Las Vegas, NV 89119
Telecopy number: (702) 896-6992
If to Executive:
Geoffrey A. Sage
c/o Anchor Gaming
815 Pilot Road, Suite G
Las Vegas, NV 89119
Telecopy number: (702) 896-6992
The parties to this Agreement may change their addresses for notice by notifying
the other parties in the manner provided in this SECTION 14.
15. HEADINGS NON-BINDING. All section titles and captions in this Agreement
are for convenience only, will not be deemed part of this Agreement, and in no
way will define, limit, extend or describe the scope or intent of any provisions
hereof.
16. WORDS TO HAVE CONTEXTUAL MEANING. Whenever the context may require, any
pronoun used in this Agreement will include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
will include the plural and vice versa. Additionally, the words "and" and "or"
will be given their contextual meaning and not be interpreted as being solely
conjunctive or disjunctive, as the case may be.
17. EXECUTION OF AGREEMENT. The parties will execute all documents, provide
all information and take or refrain from taking all actions as may be reasonably
necessary or appropriate to achieve the purposes of this Agreement.
18. LIMITATION OF BENEFITS CLAUSE. None of the provisions of this Agreement
will be for the benefit of or enforceable by any creditors of the parties,
except as otherwise expressly provided herein.
19. NON-WAIVER PROVISION. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof will constitute
waiver of any such breach or any other covenant, duty, agreement or condition.
8
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20. MULTIPLE ORIGINALS. This Agreement may be executed in counterparts, all
of which together will constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.
21. CHOICE OF LAWS. THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW.
22. SEVERABILITY AND REFORMATION. If any provision of this Agreement is
declared or found to be illegal, unenforceable, or void, in whole or in part,
then the parties will be relieved of all obligations arising under such
provision, but only to the extent that it is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement will be deemed
amended by modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
23. ENTIRE AGREEMENT. This Agreement, and the agreements in the forms of
exhibits attached hereto, constitute the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersede and
preempt any prior written or prior or contemporaneous oral understandings,
agreements or representations by or between the parties, written or oral, which
may have related in any manner to the subject matter hereof.
24. WRITTEN AMENDMENTS PROVISION. No supplement, modification or amendment
of this agreement or waiver of any provision of this Agreement will be binding
unless executed in writing by all parties to this Agreement. No waiver of any of
the provisions of this Agreement will be deemed or will constitute a waiver of
any other provision of this Agreement (regardless of whether similar), nor will
any such waiver constitute a continuing wavier unless otherwise expressly
provided.
25. WRITTEN CONSENT FOR ASSIGNMENT. No party may assign this Agreement or
any rights or benefits thereunder without the written consent of the other
parties to this Agreement.
26. CHOICE OF FORUM. Any action arising and initiated pursuant to this
Agreement must proceed in a state or federal district court in Clark County,
Nevada. If such an action cannot proceed in a state or federal district court
due to jurisdictional limitations, then it will proceed in any state or county
court of competent jurisdiction in Clark County, Nevada.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
EXECUTED as of the date first above written.
ANCHOR GAMING
By:
/s/ T.J. MATTHEWS
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and
EXECUTIVE
By:
/s/ GEOFFREY A. SAGE
--------------------------------------------------------------------------------
Geoffrey A. Sage
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EXHIBIT A
LOGO [g901284.jpg]
Consent & Release Form
Drug Testing
Pre-Employment, Reclassification/Promotion
It is the policy of Anchor to prohibit the possession, drinking, selling,
exchanging or being under the influence of alcohol, intoxicants, or
non-prescribed or illegal drugs when reporting for duty, or on duty. It is also
the policy of Anchor to conduct pre-employment drug tests to determine an
applicant's suitability for employment and/or an employee's suitability for
reclassification/promotion for positions supervisory or above, as well, for
positions whose essential job duties involve security, safety, and/or money
handling.
I,
, therefore voluntarily give my
permission to Anchor and the
(Print Name)
laboratory/clinic it has selected, to draw samples, and conduct tests required
for drug testing as a pre-requisite for employment as identified above. Further,
I give my consent for the results of this test to be released to Anchor for the
purpose of evaluating my condition for prospective or continued employment.
I understand that if positive results to the test are caused by
medication(s) prescribed by an accredited physician for treatment of a current
condition, Anchor may verify the circumstances with the physician prior to any
offer of employment.
I understand that if the prescribed medication that I am taking will
adversely affect my ability to perform the job that I am being considered for in
a safe and efficient manner, Anchor has the right to defer my application until
such time that I no longer require the medication or discontinue considering me
for employment of the position if the position must be filled immediately. I
understand that if a positive result of the test is caused by medications that
are not part of a currently prescribed medical treatment, I will not be hired.
I understand that if I am currently employed by Anchor that in the absence
of an acceptable explanation, a positive result to a drug test will result in my
termination.
I agree to hold Anchor, it's agents, directors, officers and employees
harmless from any and all liability in connection with this and/or any future
testing, and I hereby release and discharge Anchor from any and all claims,
potential claims, or actions resulting from or relating to such testing,
including the taking of samples, the testing process, procedures and analysis,
and the disclosure and utilization of tests results in considering my employment
or continue employment with Anchor.
Acknowledged,
--------------------------------------------------------------------------------
Signature of Applicant/Employee
--------------------------------------------------------------------------------
Date
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Signature of Anchor Witness
--------------------------------------------------------------------------------
Date
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EXHIBIT B
ANCHOR GAMING
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, dated as of September 24, 2000, is by and between Anchor
Gaming, a Nevada corporation ("ANCHOR GAMING"), and Geoffrey A. Sage (the
"PARTICIPANT").
RECITALS
The Board of Directors of Anchor Gaming has adopted the Anchor Gaming 2000
Stock Incentive Plan (the "2000 PLAN") to enable directors, officers, and
employees of Anchor Gaming and its majority-owned subsidiaries to acquire shares
of Common Stock, $.01 par value, of Anchor Gaming ("COMMON STOCK") in accordance
with the provisions of the 2000 Plan.
The 2000 Plan is subject to the approval of the stockholders of the Company
at the next annual meeting of stockholders.
The Board of Directors (the "BOARD") has selected Participant to participate
in the 2000 Plan and has determined to grant Participant restricted shares of
Common Stock in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises
and other terms and conditions set forth in this Agreement, Anchor Gaming and
Participant agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
meanings indicated:
(a) "CAUSE" means that the Board reasonably finds that any one or more of
the following events has occurred: (i) performance by Participant of illegal or
fraudulent acts, criminal conduct, or willful misconduct relating to the
activities of the Company, including, without limit, violation by Participant of
any material gaming laws or regulations, which violation materially and
adversely affects the ability of Participant to perform his duties to the
Company or may subject the Company to liability; (ii) conviction of, or nolo
contendere plea by Participant to, any criminal acts involving moral turpitude
having a material adverse effect upon the Company, including, without
limitation, upon its profitability, reputation, or goodwill; (iii) willful and
material disregard of any reasonable directive(s) from the Board that are not
inconsistent with the terms of any contract with the Company to which
Participant is party, PROVIDED that the Board will provide Participant with
written notice that such event has occurred ("NOTICE OF DISREGARD") and will
further allow Participant 30 days in which to cure such disregard, and PROVIDED
FURTHER that the Board will provide an opportunity for Participant to be heard
if there is no cure within 30 days of the Notice of Disregard; (iv) breach of
fiduciary duty, PROVIDED that the Board will provide Participant with written
notice that such event has occurred ("NOTICE OF BREACH OF FIDUCIARY DUTY") and
will further allow Participant 30 days in which to cure such breach of fiduciary
duty, and PROVIDED FURTHER that the Board will allow an opportunity for
Participant to be heard if there is no cure within 30 days of the Notice of
Breach of Fiduciary Duty; (v) material violation, not cured in a reasonable time
after notice from the Company, by Participant of any of the covenants and
agreements contained in any agreement with the Company to which Participant is
party; (vi) failure or inability of Participant to obtain or maintain required
gaming licenses Or approvals.
(b) "CHANGE OF CONTROL" means the occurrence of any of the following events,
as a result of one transaction or a series of transactions: (i) any "person" (as
that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended, (the "Exchange Act"), but excluding the Company, its
affiliates, and any qualified or non-qualified plan maintained by the Company or
its affiliates) becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Anchor Gaming
--------------------------------------------------------------------------------
representing more than 50% of the combined voting power of the Anchor Gaming's
then outstanding securities; (ii) individuals who constitute a majority of the
Board of Directors of the Company immediately prior to a contested election for
positions on the Board cease to constitute a majority as a result of such
contested election; (iii) Anchor Gaming is combined (by merger, share exchange,
consolidation, or otherwise) with another entity and as a result of such
combination, less than 50% of the outstanding securities of the surviving or
resulting entity are owned in the aggregate by the former shareholders of Anchor
Gaming; (iv) the Company sells, leases, or otherwise transfers all or a majority
of all of its properties, assets or income or revenue generating capacity to
another person or entity; (v) a dissolution or liquidation of Anchor Gaming or;
(vi) any other transaction or series of transactions is consummated that results
in a required disclosure under Item 1 of Form 8-K or successor form.
(c) "COMPANY" means Anchor Gaming and its majority-owned subsidiaries.
(d) "CONFIDENTIAL INFORMATION" means all written, machine-reproducible, oral
and visual data, information, and material, including, but not limited to,
business, financial, and technical information, records regarding sales, price
and cost information, marketing plans, customer names, customer lists, sales
techniques, manufacturing or distribution plans or procedures; and computer
programs, documents, and records (including those that Participant develops in
the scope of his or her employment) that (i) the Company or any of its customers
or suppliers treats as proprietary or confidential through markings or
otherwise, (ii) relates to the Company or any of its customers or suppliers or
any of their business activities, products, or services (including software
programs and techniques) and is competitively sensitive and not generally known
in the relevant trade or industry, or (iii) derives independent economic value
from not being generally known to, and is not readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or
use. Confidential Information does not include any information or material that
is approved by Anchor Gaming for unrestricted public disclosure.
(e) "NET INVESTMENT PROCEEDS," with respect to any share of Restricted Stock
sold or otherwise transferred by Participant or Participant's successor in
interest, means the greater of the value of the gross proceeds received for such
share or the Market Value of such share on the date of sale or transfer less, in
either case, (i) $5.00 per share (adjusted to appropriately for any stock split,
reverse stock split, merger, consolidation, or other similar change in the
Common Stock), (ii) any reasonable and customary commission actually paid for
the sale or transfer, and (iii) the verified amount of any income taxes paid or
payable on the sale or transfer.
(f) "PUBLICLY TRADED" means Common Stock has been listed on a registered
national securities exchange or approved for quotation in the Nasdaq-Registered
Trademark- National Market ("NASDAQ") or another national securities exchange of
automated quotation service.
(g) "RESTRICTED STOCK" means the shares of restricted stock granted under
this Agreement, together with any successor security, property or cash issued or
distributed by Anchor Gaming or any successor entity, whether by way of merger,
consolidation, share exchange, reorganization, liquidation, recapitalization, or
otherwise.
(h) "TRANSFER" or derivations thereof includes any sale, assignment, gift,
pledge, encumbrance, hypothecation, mortgage, exchange, or any other disposition
or any interest in this Agreement, the Restricted Stock, or securities issued on
exercise of this Option."
(i) "VEST" or derivations thereof with respect to any Restricted Stock
issued under this Agreement, means receiving the right to receive a stock
certificate evidencing ownership of the stock subject to Restricted Stock grant
and to transfer ownership of the shares of formerly Restricted Stock.
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2. GRANT OF OPTION; PURCHASE OF STOCK.
(a) Subject to the terms, conditions, and restrictions set forth in the 2000
Plan, and in this Agreement, Anchor Gaming hereby grants to Participant, and
Participant hereby accepts from Anchor Gaming, a restricted stock grant of the
number of shares of Common Stock specified in ATTACHMENT A to this Agreement,
which will vest in Participant in accordance with the Vesting Schedule set forth
on ATTACHMENT A to this Agreement. The Restricted Stock will continue to vest
only for as long as Participant is an employee of Company, unless the Board or
the Committee, in its sole discretion, agrees in writing otherwise. The Board or
the Committee may, however, in its sole discretion, provide for the lapse of any
of the vesting restrictions placed upon the Restricted Stock and may accelerate
or waive any of such restrictions in whole or in part at any time, based upon
performance and/or such other factors as the Board or the Committee may
determine, in its sole discretion. Upon the vesting of any part of the
Restricted Stock by virtue of the lapse of the Restricted Period, the Company
will deliver a stock certificate covering the requisite number of shares to the
Participant whereupon the Participant will be free to hold or dispose of such
stock at will. The stock certificate(s) evidencing the shares covered by the
Restricted Stock Award Agreement will be registered on the Company's books in
the name of the Participant as of the date hereof. Physical possession or
custody of such stock certificate(s) together with a stock power, endorsed in
blank, relating thereto will be retained by the Company until such time as the
shares of stock are fully vested. While in its possession, the Company reserves
the right to place a legend on the stock certificate(s) restricting the
transferability of such certificate(s) and referring to the terms and conditions
(including forfeiture) approved by the Committee and applicable to the
Restricted Stock.
(b) Notwithstanding the other provisions of this Agreement or ATTACHMENT A,
if Participant is terminated from employment with the Company without Cause, the
Restricted Stock not yet vested under ATTACHMENT A will vest immediately.
(c) Notwithstanding any other provision of this Agreement, in the event of
Change of Control, the Restricted Stock not yet vested under ATTACHMENT A will
vest immediately.
(d) In the event that the total compensation paid to Participant as
severance in the event of a Change of Control, taking into account all cash
severance payments, shares of stock, accelerated vesting of stock options, and
bonuses, if any (such payments being the "SEVERANCE PAYMENT"), is found to
constitute "an excess parachute payment" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the "CODE"), then Anchor Gaming
will pay to Participant, in addition to the compensation paid as the Severance
Payment, an additional amount (the "additional amount") which, after reduction
for income taxes and excise taxes on the additional amount, is sufficient to
provide for the payment of any excise tax that may be due by Participant on the
Severance Payment.
3. RESTRICTIONS ON TRANSFER. The Restricted Stock may not be sold or
otherwise transferred until it is vested. Anchor Gaming is not obligated to
recognize any purported sale or other transfer of the Option or any Restricted
Stock in violation of this Section 3 and, unless it elects to do otherwise, may
treat any such purported sale or transfer as null, void, and of no effect.
4. RIGHTS TO BUY BACK RESTRICTED STOCK AND TO REQUIRE PAYBACK OF CERTAIN
PROFITS.
(a) If the Participant has engaged in any conduct prohibited by SECTION 5,
Anchor Gaming will have as its sole remedy under this Agreement (and not in
limitation of Anchor Gaming's rights under any other agreement) the right
exercisable until the expiration of 395 days after the termination of employment
(i) to buy back from Participant any shares of Restricted Stock then owned by
Participant, at a purchase price equal to $5.00 per share plus the verified
amount of any
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income taxes paid or payable on the grant or vesting of the Restricted Stock
(adjusted to appropriately for any stock split, reverse stock split, merger,
consolidation, or other similar change in the Common Stock), and (ii) to require
Participant to pay back to Anchor Gaming in cash the Net Investment Proceeds
with respect to any shares of Restricted Stock sold or otherwise transferred by
Participant.
(b) Whenever Anchor Gaming has a right to buy back shares of Restricted
Stock or to require Participant to pay back to Anchor Gaming Participant's Net
Investment Proceeds with respect to any shares of Restricted Stock under this
SECTION 4, Anchor Gaming may exercise its right by notifying Participant or the
subsequent holder of Anchor Gaming's election to exercise its right within the
designated exercise period. In the case of a buyback under SECTION 4(a), the
giving of such notice will give rise to an obligation on the part of Participant
or the subsequent holder to tender to Anchor Gaming, within 10 days, any
previously issued certificate representing shares of Restricted Stock to be
bought back, duly endorsed in blank or having a duly executed stock power
attached in proper form for transfer free and clear of any claim by any other
person or entity. If any such certificate is not tendered within 10 days, Anchor
Gaming may cancel any outstanding certificate representing shares to be bought
back. Anchor Gaming is required to tender the purchase price for shares to be
bought back under this SECTION 4 within 20 days of giving notice of its election
to exercise its right to buy back shares. If the person from whom the shares are
to be bought back has not complied with an obligation to return a certificate
representing shares to be bought back, however, Anchor Gaming is not required to
tender the purchase price until 20 days after the certificate is duly returned
or 20 days after it cancels the certificate, whichever occurs first.
(c) The provisions of this Section 4 will expire on the occurrence of a
Change of Control.
5. COMPETITION AND NON-DISCLOSURE. Participant acknowledges that: (i) in
the course and as a result of employment with the Company, Participant will
obtain special training and knowledge and will come in contact with the
Company's current and potential customers, which training, knowledge, and
contacts would provide invaluable benefits to competitors of the Company;
(ii) the Company is continuously developing or receiving Confidential
Information, and that during Participant's employment he or she will receive
Confidential Information from the Company, its customers and suppliers and
special training related to the Company's business methodologies; and
(iii) Participant's employment by Company creates a relationship of trust that
extends to all Confidential Information that becomes known to Participant.
Accordingly, and as a material inducement to Anchor Gaming to grant the
Restricted Stock to Participant and other good and valuable consideration,
Participant agrees that Anchor Gaming, as its sole remedy under this Agreement,
will be entitled to terminate all vesting of the Restricted Stock and to
exercise the rights specified in SECTION 4 if Participant does any of the
following without the prior written consent of the Company:
(a) while employed by the Company or within one year thereafter:
(i) directly or indirectly engages in, owns or controls an interest in
(except as to those investments held at the effective date of this agreement or
as a passive investor in publicly held companies, i.e., Participant and
Participant's spouse or lineal descendants do not own of record, or
beneficially, an aggregate of more than two percent (2%) of any class of
outstanding securities) or acts as an officer, director, or employee of, or
consultant or adviser to, any firm, corporation, institution or entity, directly
or indirectly in competition with or engaged in a business substantially similar
to that of the Company in the United States or in any foreign country in which
the Company during the term of the Participant's employment sold, marketed,
provided or solicited to sell, market or provide products or services, including
the development, manufacture, sale or marketing of products, services, devices,
instruments,
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methods or techniques (or any related services or activities) similar to any
products, services, devices, instruments, methods or techniques that the Company
was engaged in the development of, manufacturing, selling, or marketing, or had
under consideration to do the same (whether or not such products, devices,
instruments, methods or techniques or the technology related thereto were
obtained from Participant), during the term of the Participant's employment with
the Company;
(ii) solicits or performs services, as an employee, independent contractor,
or otherwise, for any person or entity (including any affiliates or subsidiaries
of that person or entity) that is or was a customer or prospect of the Company
during the six months before Participant's employment with the Company ended if
Participant solicited business from or performed services for that customer or
prospect while employed by Company; or
(iii) recruits, hires, or assist, directly or indirectly, anyone to recruit
or hire anyone who was an employee of the Company within the six months before
Participant's employment with the Company ended; or
(b) discloses or uses any Confidential Information, except in connection
with the good faith performance of Participant's duties as an employee; or fails
to take reasonable precautions against the unauthorized disclosure or use of
Confidential Information; fails, upon Anchor Gaming' request, to execute and
comply with a third party's agreement to protect its confidential and
proprietary information; solicits or induces the unauthorized disclosure or use
of Confidential Information; or fails to return on Anchor Gaming's request any
and all Confidential Information in the Participant's care, custody, or control.
The existence of any claim or cause of action of Participant against the
Company, whether predicated on this Agreement or otherwise, will not constitute
a defense of the Company's enforcement of the covenants set forth in this
SECTION 5. The Participant hereby submits to the jurisdiction of the courts of
the State of Nevada and federal courts therein for the purposes of any actions
or proceedings instituted by the Company to obtain such injunctive relief.
Participant further acknowledges and agrees that the obligations contained in
SECTION 5 of this Agreement are fair, do not unreasonably restrict Participant's
further employment and business opportunities, and are commensurate with the
compensation arrangements set out in this Agreement. The covenants contained in
SECTION 5 will each be construed as an Agreement independent of any other
provision of this Agreement. Both parties intend to make the covenants of
SECTION 5 binding only to the extent that it may be lawfully done under existing
applicable laws.
If any court of competent jurisdiction finds any provision of this SECTION 5
to be unreasonable as to substantive scope, duration or geographic scope, then
the Participant expressly agrees that, at Anchor's sole discretion, and in
addition to any other remedies at law or equity that may be available to Anchor
Gaming: (i) such provision will be considered to be amended to provide the
broadest scope of protection to the Company that such court would find
reasonable and enforceable or (ii) Anchor Gaming may require that this Agreement
be rescinded.
This SECTION 5 of this Agreement will survive either termination of the
employment relationship or termination of this Agreement for the full period set
forth in this SECTION 5.
6. COMPLIANCE WITH SECURITIES LAWS. Participant agrees that neither
Participant nor any successor in interest of Participant will sell or otherwise
transfer any shares of Restricted Stock in any way that might result in a
violation of any federal or state securities laws or regulations. Participant
acknowledges and agrees that Anchor Gaming may require Participant or any
subsequent holder of the any shares of Restricted Stock to provide Anchor
Gaming, prior to any sale or other transfer, with such other representations,
commitments, and opinions regarding compliance with applicable securities laws
and regulations as Anchor Gaming may deem necessary or advisable. Anchor Gaming
agrees to use its
5
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best efforts to cause a registration statement covering resales of the
Restricted Stock to be filed with the Securities and Exchange Commission and to
be effective, and to list the Restricted Stock on Nasdaq and any other
securities exchange on which the common stock of Anchor Gaming is listed for
trading.
7. STOCK CERTIFICATES; RIGHTS AS SHAREHOLDER. All certificates
representing shares of Restricted Stock will bear such legends as the Board
determines are necessary or appropriate. Such legends will be removed at
vesting. Whether or not certificates representing shares of Restricted Stock
have been issued or delivered, Participant will have all the rights of a
shareholder of Restricted Stock, including voting, dividend and distribution
rights, with respect to shares of Restricted Stock owned by Participant.
8. INCOME TAX WITHHOLDING. Participant will, upon request by the Company,
reimburse the Company for, or the Company may withhold from sums or property
otherwise due or payable to Participant, any amounts the Company is required to
remit to applicable taxing authorities as income tax withholding with respect to
any Restricted Stock. If Participant fails to reimburse the Company for any such
amount when requested, the Company has the right to recover that amount by
selling or canceling sufficient shares of any Restricted Stock held by
Participant.
9. COMPLIANCE WITH PLANS. Participant acknowledges receipt of a copy of
the 2000 Plan and further acknowledges that this Agreement is entered into, and
the Option is granted, pursuant to the 2000 Plan. If the provisions of the 2000
Plan are inconsistent with the provisions of this Agreement, the provisions of
the 2000 Plan supersedes the provisions of this Agreement.
10. NOTICES. Any notice to Anchor Gaming or the Company that is required or
permitted by this Agreement will be addressed to the attention of the Secretary
of Anchor Gaming at its principal office. Any notice to Participant that is
required or permitted by this Agreement will be addressed to Participant at the
most recent address for Participant reflected in the appropriate records of the
Company. Either party may at any time change its address for notification
purposes by giving the other written notice of the new address and the date upon
which it will become effective. Whenever this Agreement requires or permits any
notice from one party to another, the notice must be in writing to be effective
and, if mailed, will be deemed to have been given on the third business day
after the same is enclosed in an envelope, addressed to the party to be notified
at the appropriate address, properly stamped, sealed, and deposited in the
United States mail, and, if mailed to the Company, by certified mail, return
receipt requested.
11. REMEDIES. Anchor Gaming is entitled, in addition to any other remedies
it may have at law or in equity, to temporary and permanent injunctive and other
equitable relief to enforce the provisions of this Agreement. Any action to
enforce the provisions of, or relating to, this Agreement may be brought in the
state or federal courts having jurisdiction in the State of Nevada. By signing
this Agreement, Participant consents to the personal jurisdiction of such courts
in any such action.
12. ASSIGNMENT. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors, and assigns. However, Participant does not have the power or right
to assign this Agreement without the prior written consent of Anchor Gaming.
13. ATTORNEYS' FEES. If any legal proceeding is brought to enforce or
interpret the terms of this Agreement, the prevailing party will be entitled to
reasonable attorneys' fees, costs, and necessary disbursements in addition to
any other relief to which that party may be entitled.
14. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable for any reason, the validity and enforceability of all other
provisions of this Agreement will not be affected.
6
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15. HEADINGS. The section headings used herein are for reference and
convenience only and do not affect the interpretation of this Agreement.
16. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEVADA, WITHOUT REGARD TO THE CHOICE OF
LAW RULES IN SUCH LAW OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION.
17. ENTIRE AGREEMENT. This Agreement, together with the 2000 Plan and any
procedure adopted by the Board or the Committee under the Plan, constitutes the
entire agreement between the parties with respect to its subject matter and may
be waived or modified only in writing.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Participant
and a duly-authorized representative of Anchor Gaming have executed this
Agreement as of the date first above written.
PARTICIPANT ANCHOR GAMING
/s/ GEOFFREY A. SAGE
--------------------------------------------------------------------------------
By:
/s/ T. J. MURPHY
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Signature Title: President & CEO
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Geoffrey A. Sage
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Printed Name
CONSENT OF SPOUSE
As the spouse of Participant, I consent to be bound by this Stock Option
Agreement and agree that this consent will be binding on my interest under this
Agreement and on my heirs, legatees, and assigns.
/s/ BRENDA M. SAGE
--------------------------------------------------------------------------------
Signature
Brenda M. Sage
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Printed Name
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ATTACHMENT A
RESTRICTED STOCK AGREEMENT
1. Shares of Restricted Stock granted: 5,000
2. Vesting Schedule:
Conditioned on stockholder approval of the 2000 Plan and closing of the
transactions contemplated by the Stock Purchase Agreement dated as of
September 24, 2000 between Anchor Gaming and the Fulton Parties named therein,
twenty percent (20%) of the shares of Restricted Stock granted specified in Item
1 above will Vest on approval of the 2000 Plan by the stockholders of Anchor
Gaming. Thereafter, beginning on March 31, 2001, 5% of the number of shares of
Restricted Stock granted specified in Item 1 above will Vest, and 5% will vest
on each subsequent June 30, September 30, December 31 and March 31 until all
Options have vested.
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EXHIBIT C
ANCHOR GAMING
EXECUTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of September 24, 2000, is by and between Anchor
Gaming, a Nevada corporation ("ANCHOR GAMING"), and Geoffrey A. Sage (the
"PARTICIPANT").
RECITALS
The Board of Directors of Anchor Gaming has adopted the Anchor Gaming 2000
Stock Incentive Plan (the "2000 PLAN") to enable directors, officers, and
employees of Anchor Gaming and its majority-owned subsidiaries to acquire shares
of Common Stock, $.01 par value, of Anchor Gaming ("COMMON STOCK") in accordance
with the provisions of the 2000 Plan.
The 2000 Plan is subject to the approval of the stockholders of the Company
at the next annual meeting of stockholders.
All Options granted under this Agreement that Vest on the consummation of
the Fulton Transactions (as defined in ATTACHMENT A) are granted under and will
be subject to the terms of the Anchor Gaming 1995 Stock Option Plan (as amended,
the "1995 PLAN").
The Board of Directors (the "BOARD") has selected Participant to participate
in the 1995 Plan and the 2000 Plan and has determined to grant Participant the
right and option to purchase shares of Common Stock in accordance with the terms
and conditions of this Agreement, provided that if any change is made in the
shares of Common Stock (including, but not limited to, changes by stock
dividend, stock split, merger or consolidation, but not including the issuance
of additional shares for consideration), the Board of Directors or the Committee
appointed to administer the Plan (the "COMMITTEE"), will make such adjustments
in the number and kind of shares (which may consist of shares of a surviving
corporation to a merger) that may thereafter be optioned and sold under the 1995
Plan or the 2000 Plan, as applicable, and the number and kind of securities or
other property (which may consist of shares of a surviving corporation to a
merger) and purchase price per share of shares subject to outstanding Stock
Option Agreements under the 1995 Plan and the 2000 Plan as the Board of
Directors or the Committee determines are equitable to preserve the respective
rights of the Participants under the 1995 Plan or the 2000 Plan, as applicable.
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises
and other terms and conditions set forth in this Agreement, Anchor Gaming and
Participant agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
meanings indicated:
(a) "CAUSE" means that the Board reasonably finds that any one or more of
the following events has occurred: (i) performance by Participant of illegal or
fraudulent acts, criminal conduct, or willful misconduct relating to the
activities of the Company, including, without limit, violation by Participant of
any material gaming laws or regulations, which violation materially and
adversely affects the ability of Participant to perform his duties to the
Company or may subject the Company to liability; (ii) conviction of, or nolo
contendere plea by Participant to, any criminal acts involving moral turpitude
having a material adverse effect upon the Company, including, without
limitation, upon its profitability, reputation, or goodwill; (iii) willful and
material disregard of any reasonable directive(s) from the Board that are not
inconsistent with the terms of any contract with the Company to which
Participant is party, PROVIDED that the Board will provide Participant with
written notice that such event has occurred ("NOTICE OF DISREGARD") and will
further allow Participant 30 days in which to cure such disregard, and PROVIDED
FURTHER that the Board will provide an opportunity for Participant to be heard
if there is no cure within 30 days of the Notice of Disregard; (iv) breach of
fiduciary duty, PROVIDED that the Board will provide Participant with written
notice that such event has occurred ("NOTICE OF BREACH OF FIDUCIARY DUTY") and
will further allow Participant 30 days in which to cure such breach of fiduciary
duty, and PROVIDED FURTHER that the Board will allow an opportunity for
Participant to be heard if there is no cure within 30 days of the Notice of
Breach of Fiduciary
--------------------------------------------------------------------------------
Duty; (v) material violation, not cured in a reasonable time after notice from
the Company, by Participant of any of the covenants and agreements contained in
any agreement with the Company to which Participant is party; (vi) failure or
inability of Participant to obtain or maintain required gaming licenses or
approvals.
(b) "CHANGE OF CONTROL" means the occurrence of any of the following events,
as a result of one transaction or a series of transactions: (i) any "person" (as
that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended, (the "Exchange Act"), but excluding the Company, its
affiliates, and any qualified or non-qualified plan maintained by the Company or
its affiliates) becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Anchor Gaming representing more than 50% of the combined voting power of the
Anchor Gaming's then outstanding securities; (ii) individuals who constitute a
majority of the Board of Directors of the Company immediately prior to a
contested election for positions on the Board cease to constitute a majority as
a result of such contested election; (iii) Anchor Gaming is combined (by merger,
share exchange, consolidation, or otherwise) with another entity and as a result
of such combination, less than 50% of the outstanding securities of the
surviving or resulting entity are owned in the aggregate by the former
shareholders of Anchor Gaming; (iv) the Company sells, leases, or otherwise
transfers all or a majority of all of its properties, assets or income or
revenue generating capacity to another person or entity; (v) a dissolution or
liquidation of Anchor Gaming or; (vi) any other transaction or series of
transactions is consummated that results in a required disclosure under Item 1
of Form 8-K or successor form.
(c) "COMPANY" means Anchor Gaming and its majority-owned subsidiaries.
(d) "CONFIDENTIAL INFORMATION" means all written, machine-reproducible, oral
and visual data, information, and material, including, but not limited to,
business, financial, and technical information, records regarding sales, price
and cost information, marketing plans, customer names, customer lists, sales
techniques, manufacturing or distribution plans or procedures; and computer
programs, documents, and records (including those that Participant develops in
the scope of his or her employment) that (i) the Company or any of its customers
or suppliers treats as proprietary or confidential through markings or
otherwise, (ii) relates to the Company or any of its customers or suppliers or
any of their business activities, products, or services (including software
programs and techniques) and is competitively sensitive and not generally known
in the relevant trade or industry, or (iii) derives independent economic value
from not being generally known to, and is not readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or
use. Confidential Information does not include any information or material that
is approved by Anchor Gaming for unrestricted public disclosure.
(e) "EXPIRATION DATE" means the date and time as of which the Option
expires, which is the earlier of (i) the close of business on the date one
(1) year after the entire Option has Vested or (ii) the date and time as of
which all rights to exercise the Option are terminated under SECTION 2(e).
(f) "MARKET VALUE" of a share of Purchased Stock on a given date means
(i) if the Purchased Stock is Publicly Traded, the closing sale price for
Purchased Stock, as determined in good faith by the Board of Directors, on such
date or, if no closing sale price is available for such date, on the most recent
prior date for which a closing sale price is available or, if no closing sale
price is available, the closing bid price, as so determined, on such date or, if
no closing bid price is available for such date, the closing bid price on the
most recent prior date for which a closing bid price is available, or (ii) if
the Purchased Stock is not Publicly Traded, its fair market value, as determined
in good faith by the Board of Directors, as of such date.
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(g) "NET INVESTMENT PROCEEDS," with respect to any share of Purchased Stock
sold or otherwise transferred by Participant or Participant's successor in
interest, means the greater of the value of the gross proceeds received for such
share or the Market Value of such share on the date of sale or transfer less, in
either case, (i) the exercise price of the Option for such share, (ii) any
reasonable and customary commission actually paid for the sale or transfer, and
(iii) the verified amount of any income taxes paid or payable on the sale or
transfer.
(h) "OPTION" means the right and option to purchase shares of Common Stock
evidenced by this Agreement.
(i) "PUBLICLY TRADED" means Common Stock has been listed on a registered
national securities exchange or approved for quotation in the Nasdaq-Registered
Trademark- National Market ("NASDAQ") or another national securities exchange of
automated quotation service.
(j) "PURCHASED STOCK" means any security or property purchased upon the
exercise of this Option, together with any successor security, property or cash
issued or distributed by Anchor Gaming or any successor entity, whether by way
of merger, consolidation, share exchange, reorganization, liquidation,
recapitalization, or otherwise.
(k) "TRANSFER" or derivations thereof includes any sale, assignment, gift,
pledge, encumbrance, hypothecation, mortgage, exchange, or any other disposition
or any interest in this Agreement, the Option, or securities issued on exercise
of this Option."
(l) "VEST" or derivations thereof with respect to any Option issued under
this Agreement, means receiving the right to exercise the Option.
(m) "VESTING PERIOD" means the period of time commencing on the date of this
Agreement and ending on the date on which the entire Option has vested.
2. GRANT OF OPTION; PURCHASE OF STOCK.
(a) Subject to the terms, conditions, and restrictions set forth in the 1995
Plan and the 2000 Plan, as applicable, and in this Agreement, Anchor Gaming
hereby grants to Participant, and Participant hereby accepts from Anchor Gaming,
the Option to purchase from Anchor Gaming the number of shares of Common Stock
specified in ATTACHMENT A to this Agreement, at the exercise price so specified,
which option will vest in Participant in accordance with the Vesting Schedule
set forth on ATTACHMENT A to this Agreement. The Option will continue to vest
only for as long as Participant is an employee of Company, unless the Board or
the Committee, in its sole discretion, agrees in writing otherwise. Participant
will have the right to exercise the Option and purchase Common Stock after the
Option vests as provided in SECTION 2(d).
(b) The exercise price of shares as to which the Option is exercised must be
paid to Anchor Gaming at the time of the exercise either in cash or in such
other consideration as the Board or the Committee may approve consistent with
the 1995 Plan or the 2000 Plan, as applicable, or a combination of cash and such
other consideration having a total fair market value, as determined by the Board
or the Committee, equal to the purchase price.
(c) The Option is only exercisable as to vested Options. If Participant is
subject to termination for Cause or voluntary termination, Participant may only
exercise only those vested Options held by Participant at the time of
termination.
(d) Notwithstanding the other provisions of this Agreement or ATTACHMENT A,
if Participant is terminated from employment with the Company without Cause,
Options not yet vested under ATTACHMENT A will vest immediately.
(e) Once vested, (i) if the Participant ceases to be an employee of the
Company for any reason whatsoever, voluntary or involuntary, other than death,
the Option may be exercised only
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until 5:00 p.m. Las Vegas time on the business day immediately preceding the
first anniversary of such cessation the date of cessation of employment and in
any case no later than because of death of the Participant, the Option may be
exercised by the Participant's estate only for two years after the Participant's
death and in any case no later than the Expiration Date.
(f) Notwithstanding any other provision of this Agreement, in the event of
Change of Control, Options not yet vested under ATTACHMENT A will vest
immediately.
(g) In the event that the total compensation paid to Participant as
severance in the event of a Change of Control, taking into account all cash
severance payments, shares of stock, accelerated vesting of stock options, and
bonuses, if any (such payments being the "SEVERANCE PAYMENT"), is found to
constitute "an excess parachute payment" within the meaning of then Anchor
Gaming will pay to Participant, in addition to the compensation paid as the
Severance Payment, an additional amount (the "additional amount") which, after
reduction for income taxes and excise taxes on the additional amount, is
sufficient to provide for the payment of any excise tax that may be due by
Participant on the Severance Payment.
3. RESTRICTIONS ON TRANSFER. The Option may not be sold or otherwise
transferred and is exercisable only by Participant during Participant's lifetime
unless the transfer is by will or the laws of descent and distribution upon
Participant's death. Anchor Gaming is not obligated to recognize any purported
sale or other transfer of the Option or any Purchased Stock in violation of this
Section 3 and, unless it elects to do otherwise, may treat any such purported
sale or transfer as null, void, and of no effect.
4. RIGHTS TO BUY BACK PURCHASED STOCK AND TO REQUIRE PAYBACK OF CERTAIN
PROFITS.
(a) If Participant has engaged in any conduct prohibited by SECTION 5,
Anchor Gaming will have the right as its sole remedy under this Agreement (and
not in limitation of Anchor Gaming's rights under any other agreement)
exerciseable until the expiration of 395 days after termination of employment
(i) to cancel any unexercised Option, whether or not vested, and to buy back
from Participant any shares of Purchased Stock then owned by Participant, at a
purchase price equal to the price per share paid by Participant for the shares,
and (ii) to require Participant to pay back to Anchor Gaming in cash the Net
Investment Proceeds with respect to any shares of Purchased Stock sold or
otherwise transferred by Participant.
(b) Whenever Anchor Gaming has a right to buy back shares of Purchased Stock
or to require Participant to pay back to Anchor Gaming Participant's Net
Investment Proceeds with respect to any shares of Purchased Stock under this
SECTION 4, Anchor Gaming may exercise its right by notifying Participant or the
subsequent holder of Anchor Gaming's election to exercise its right within the
designated exercise period. In the case of a buyback under SECTION 4(a), the
giving of such notice will give rise to an obligation on the part of Participant
or the subsequent holder to tender to Anchor Gaming, within 10 days, any
previously issued certificate representing shares of Purchased Stock to be
bought back, duly endorsed in blank or having a duly executed stock power
attached in proper form for transfer free and clear of any claim by any other
person or entity. If any such certificate is not tendered within 10 days, Anchor
Gaming may cancel any outstanding certificate representing shares to be bought
back. Anchor Gaming is required to tender the purchase price for shares to be
bought back under this SECTION 4 within 20 days of giving notice of its election
to exercise its right to buy back shares. If the person from whom the shares are
to be bought back has not complied with an obligation to return a certificate
representing shares to be bought back, however, Anchor Gaming is not required to
tender the purchase price until 20 days after the certificate is duly returned
or 20 days after it cancels the certificate, whichever occurs first.
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(c) The provisions of this SECTION 4 will expire on the occurrence of a
Change of Control.
5. COMPETITION AND NON-DISCLOSURE. Participant acknowledges that: (i) in
the course and as a result of employment with the Company, Participant will
obtain special training and knowledge and will come in contact with the
Company's current and potential customers, which training, knowledge, and
contacts would provide invaluable benefits to competitors of the Company;
(ii) the Company is continuously developing or receiving Confidential
Information, and that during Participant's employment he or she will receive
Confidential Information from the Company, its customers and suppliers and
special training related to the Company's business methodologies; and
(iii) Participant's employment by Company creates a relationship of trust that
extends to all Confidential Information that becomes known to Participant.
Accordingly, and as a material inducement to Anchor Gaming to grant this Option
to Participant and other good and valuable consideration, Participant agrees
that Anchor Gaming will be entitled, as its sole remedy under this Agreement, to
terminate all rights to exercise the Option and to exercise the rights specified
in SECTION 4 if Participant does any of the following without the prior written
consent of the Company:
(a) while employed by the Company or within one year thereafter:
(i) directly or indirectly engages in, owns or controls an interest in
(except as to those investments held at the effective date of this agreement or
as a passive investor in publicly held companies, i.e., Participant and
Participant's spouse or lineal descendants do not own of record, or
beneficially, an aggregate of more than two percent (2%) of any class of
outstanding securities) or acts as an officer, director, or employee of, or
consultant or adviser to, any firm, corporation, institution or entity, directly
or indirectly in competition with or engaged in a business substantially similar
to that of the Company in the United States or in any foreign country in which
the Company during the term of the Participant's employment sold, marketed,
provided or solicited to sell, market or provide products or services, including
the development, manufacture, sale or marketing of products, services, devices,
instruments, methods or techniques (or any related services or activities)
similar to any products, services, devices, instruments, methods or techniques
that the Company was engaged in the development of, manufacturing, selling, or
marketing, or had under consideration to do the same (whether or not such
products, devices, instruments, methods or techniques or the technology related
thereto were obtained from Participant), during the term of the Participant's
employment with the Company;
(ii) solicits or performs services in any manner that the Board of Directors
reasonably and in good faith determines, after request by the Participant, is
detrimental to the business or financial condition of the Company, as an
employee, independent contractor, or otherwise, for any person or entity
(including any affiliates or subsidiaries of that person or entity) that is or
was a customer or prospect of the Company during the six months before
Participant's employment with the Company ended if Participant solicited
business from or performed services for that customer or prospect while employed
by the Company; or
(iii) recruits, hires, or assist, directly or indirectly, anyone to recruit
or hire anyone who was an employee of the Company, within the six months before
Participant's employment with the Company ended; or
(b) discloses or uses any Confidential Information, except in connection
with the good faith performance of Participant's duties as an employee; or fails
to take reasonable precautions against the unauthorized disclosure or use of
Confidential Information; fails, upon Anchor Gaming' request, to execute and
comply with a third party's agreement to protect its confidential and
proprietary information; solicits or induces the unauthorized disclosure or use
of Confidential Information; or fails to return on Anchor Gaming's request any
and all Confidential Information in the Participant's care, custody, or control.
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The existence of any claim or cause of action of Participant against the
Company, whether predicated on this Agreement or otherwise, will not constitute
a defense of the Company's enforcement of the covenants set forth in this
SECTION 5. The Participant hereby submits to the jurisdiction of the courts of
the State of Nevada and federal courts therein for the purposes of any actions
or proceedings instituted by the Company to obtain such injunctive relief.
Participant further acknowledges and agrees that the obligations contained in
SECTION 5 of this Agreement are fair, do not unreasonably restrict Participant's
further employment and business opportunities, and are commensurate with the
compensation arrangements set out in this Agreement. The covenants contained in
SECTION 5 will each be construed as an Agreement independent of any other
provision of this Agreement. Both parties intend to make the covenants of
SECTION 5 binding only to the extent that it may be lawfully done under existing
applicable laws.
If any court of competent jurisdiction finds any provision of this SECTION 5
to be unreasonable as to substantive scope, duration or geographic scope, then
the Participant expressly agrees that, at Anchor's sole discretion, and in
addition to any other remedies at law or equity that may be available to Anchor
Gaming: (i) such provision will be considered to be amended to provide the
broadest scope of protection to the Company that such court would find
reasonable and enforceable or (ii) Anchor Gaming may require that this Agreement
be rescinded.
This SECTION 5 of this Agreement will survive either termination of the
employment relationship or termination of this Agreement for the full period set
forth in this SECTION 5.
6. COMPLIANCE WITH SECURITIES LAWS. Participant agrees that neither
Participant nor any successor in interest of Participant will sell or otherwise
transfer the Option or any shares of Purchased Stock in any way that might
result in a violation of any federal or state securities laws or regulations.
Participant acknowledges and agrees that Anchor Gaming may require Participant
or any subsequent holder of the Option or of any shares of Purchased Stock to
provide Anchor Gaming, prior to any sale or other transfer, with such other
representations, commitments, and opinions regarding compliance with applicable
securities laws and regulations as Anchor Gaming may deem necessary or
advisable. Anchor Gaming agrees to use its best efforts to cause a registration
statement covering resales of the Purchased Shares to be filed with the
Securities and Exchange Commission and to be effective, and to list the
Purchased Shares on Nasdaq and any other securities exchange on which the common
stock of Anchor Gaming is listed for trading.
7. STOCK CERTIFICATES; RIGHTS AS SHAREHOLDER. All certificates representing
shares of Purchased Stock will bear such legends as the Board determines are
necessary or appropriate. Whether or not certificates representing shares of
Purchased Stock have been issued or delivered, Participant will have all the
rights of a shareholder of Purchased Stock, including voting, dividend and
distribution rights, with respect to shares of Purchased Stock owned by
Participant. Participant will not have any rights as a shareholder with respect
to any shares of Common Stock subject to the Option before the date of issuance
to Participant of shares upon exercise of the Option.
8. INCOME TAX WITHHOLDING. Participant will, upon request by the Company,
reimburse the Company for, or the Company may withhold from sums or property
otherwise due or payable to Participant, any amounts the Company is required to
remit to applicable taxing authorities as income tax withholding with respect to
the Option or any Purchased Stock. If shares of Purchased Stock are withheld for
such purpose, they will be withheld at Market Value. If Participant fails to
reimburse the Company for any such amount when requested, the Company has the
right to recover that amount by selling or canceling sufficient shares of any
Purchased Stock held by Participant.
9. COMPLIANCE WITH PLANS. Participant acknowledges receipt of a copy of the
2000 Plan and the 1995 Plan and further acknowledges that this Agreement is
entered into, and the Option is granted, pursuant to the applicable Plan. If the
provisions of such Plans are inconsistent with the provisions of this Agreement,
the provisions of such Plans supersede the provisions of this Agreement.
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10. NOTICES. Any notice to Anchor Gaming or the Company that is required or
permitted by this Agreement will be addressed to the attention of the Secretary
of Anchor Gaming at its principal office. Any notice to Participant that is
required or permitted by this Agreement will be addressed to Participant at the
most recent address for Participant reflected in the appropriate records of the
Company. Either party may at any time change its address for notification
purposes by giving the other written notice of the new address and the date upon
which it will become effective. Whenever this Agreement requires or permits any
notice from one party to another, the notice must be in writing to be effective
and, if mailed, will be deemed to have been given on the third business day
after the same is enclosed in an envelope, addressed to the party to be notified
at the appropriate address, properly stamped, sealed, and deposited in the
United States mail, and, if mailed to the Company, by certified mail, return
receipt requested.
11. REMEDIES. Anchor Gaming is entitled, in addition to any other remedies
it may have at law or in equity, to temporary and permanent injunctive and other
equitable relief to enforce the provisions of this Agreement. Any action to
enforce the provisions of, or relating to, this Agreement may be brought in the
state or federal courts having jurisdiction in the State of Nevada. By signing
this Agreement, Participant consents to the personal jurisdiction of such courts
in any such action.
12. ASSIGNMENT. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors, and assigns. However, Participant does not have the power or right
to assign this Agreement without the prior written consent of Anchor Gaming.
13. ATTORNEYS' FEES. If any legal proceeding is brought to enforce or
interpret the terms of this Agreement, the prevailing party will be entitled to
reasonable attorneys' fees, costs, and necessary disbursements in addition to
any other relief to which that party may be entitled.
14. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable for any reason, the validity and enforceability of all other
provisions of this Agreement will not be affected.
15. HEADINGS. The section headings used herein are for reference and
convenience only and do not affect the interpretation of this Agreement.
16. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEVADA, WITHOUT REGARD TO THE CHOICE OF
LAW RULES IN SUCH LAW OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION.
17. ENTIRE AGREEMENT. This Agreement, together with the 1995 Plan and the
2000 Plan, as applicable, and any procedure adopted by the Board or the
Committee under the Plan, constitutes the entire agreement between the parties
with respect to its subject matter and may be waived or modified only in
writing.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, Participant
and a duly-authorized representative of Anchor Gaming have executed this
Agreement as of the date first above written.
PARTICIPANT ANCHOR GAMING
/s/ GEOFFREY A. SAGE
--------------------------------------------------------------------------------
By:
/s/ T.J. MATTHEWS
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Signature
Geoffrey A. Sage
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Title:
President and CEO
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Printed Name
CONSENT OF SPOUSE
As the spouse of Participant, I consent to be bound by this Stock Option
Agreement and agree that this consent will be binding on my interest under this
Agreement and on my heirs, legatees, and assigns.
/s/ Brenda M. Sage
--------------------------------------------------------------------------------
Signature
Brenda M. Sage
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Printed Name
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ATTACHMENT A
EXECUTIVE STOCK OPTION AGREEMENT
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1. Exercise Price: $71.875 per Share.
2.
Number of Options granted:
35,000
3.
Expiration Date:
As defined in SECTION 1(d) of this Agreement.
4.
Vesting Schedule:
Twenty percent (20%) of the Number of Options granted specified in Item 2 above
will Vest upon closing of the transactions contemplated by the Stock Purchase
Agreement dated as of September 24, 2000 between Anchor Gaming and the Fulton
Parties named therein. Thereafter, beginning on March 31, 2001, 5% of the Number
of Options granted specified in Item 2 above will vest, and 5% will vest on each
subsequent June 30, September 30, December 31 and March 31, until all Options
have vested.
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EXHIBIT 10.21
EXHIBIT A
Consent & Release Form Drug Testing Pre-Employment, Reclassification/Promotion
EXHIBIT B
ANCHOR GAMING RESTRICTED STOCK AGREEMENT
RECITALS
CONSENT OF SPOUSE
ATTACHMENT A
RESTRICTED STOCK AGREEMENT
EXHIBIT C
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Exhibit 10.33
THIRD AMENDMENT TO LEASE
This THIRD AMENDMENT TO LEASE (this "Amendment") is dated as of this 27th
day of March, 2001 by and between GRAND/ROEBLING INVESTMENT COMPANY, a
California limited partnership ("Landlord") and TULARIK INC., a Delaware
corporation ("Tenant").
RECITALS
A. Landlord and Shaman Pharmaceuticals, Inc. ("Shaman") entered into that
certain Industrial Lease Agreement dated January 1, 1993, as first amended by
that certain letter agreement dated July 20, 1993 and as amended a second time
by that certain First (sic) Amendment to Lease Agreement dated April 29, 1994
(collectively, the "Lease") for premises located in the City of South San
Francisco, County of San Mateo, State of California, commonly known as 333
Roebling Road, 213 East Grand Avenue, 217 East Grand Avenue, and 317 Roebling
Road ("Premises"); and
B. Pursuant to an Assignment of Lease executed on or about March 20, 2001,
Shaman assigned the Lease to Tenant in accordance with that certain Stipulation
Regarding Assumption and Assignment of Debtor's Lease filed on March 20, 2001
with, and approved by order of, the United States Bankruptcy Court, Northern
District of California, San Francisco Division (the "Stipulation"); and
C. Landlord and Tenant now desire to amend the Lease according to the terms
and conditions set forth herein and in the Stipulation. Capitalized terms used
in this Amendment and not otherwise defined shall have the meanings assigned to
them in the Lease.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:
1. Term. Tenant hereby exercises Option #1 to extend the Term of the Lease
pursuant to Section 2.02 of the Lease and Landlord accepts such exercise,
notwithstanding anything to the contrary contained in the Lease. Accordingly,
the Term Expiration Date is hereby extended from February 28, 2003 to
February 28, 2008. The period of time from the original Term Expiration Date of
February 28, 2003, through the new Term Expiration Date of February 28, 2008 is
referred to herein as the "First Extension Period," provided that the First
Extension Period shall be deemed part of the Term for all purposes under the
Lease. If Tenant timely exercises Option #2, the period of time between
March 1, 2008 and February 28, 2013 shall be referred to as the "Second
Extension Period."
2. Rent for Extension Period. Notwithstanding anything to the contrary
contained in the Lease, the Base Rent for the First Extension Period shall be
$250,000 per month for March 1, 2003 through February 28, 2004. On March 1, 2004
and on each anniversary thereafter during the First Extension Period, the Base
Rent shall be increased at a rate of three percent (3%) per annum compounded
annually.
3. Annual Option Period Base Rent. Section 3.03 shall not apply to Option
#2. Notwithstanding anything to the contrary contained in the Lease, the Annual
Base Rent for the each year of the Second Extension Period (including the first
year thereof) shall be calculated pursuant to Section 3.02 of the Lease,
provided that each annual increase shall not exceed five percent (5%).
4. Security Deposit. Pursuant to the Stipulation, Shaman forfeited the
Security Deposit previously deposited by Shaman under the Lease and Tenant has
deposited the amount of $128,080 as a replacement Security Deposit under the
Lease. Such amount shall be held by Landlord in accordance with Article 5 of the
Lease.
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5. Deferred Maintenance. Pursuant to the terms of the Lease, on or before
February 28, 2003, Tenant shall correct (using plans, specifications and
contractors reasonably approved by Landlord) the deferred maintenance items at
the Premises identified on Schedule 1 attached hereto (the "Deferred
Maintenance"). In the event that the costs incurred by Tenant for the Deferred
Maintenance exceed $100,000, Tenant shall have the right to apply the Deferred
Amount (as defined in the Stipulation) towards the payment of such costs. Tenant
shall have no responsibility for performing any pre-existing Deferred
Maintenance to the extent it costs more than $100,000 plus the Deferred Amount.
Any repairs or replacements to the Deferred Maintenance items listed on
Schedule 1 which first become necessary after the date of this Amendment shall
be the responsibility of Tenant pursuant to the terms of the Lease.
6. 217 Grand Avenue. Prior to February 28, 2008, Tenant shall repair the
interior of the building located at 217 Grand Avenue (the "217 Grand Space") to
a usable and habitable condition pursuant to plans and specifications approved
by Landlord, which approval shall not be unreasonably withheld, delayed or
conditioned. Tenant may repair the 217 Grand Space to laboratory space, office
or administrative space or a mixture of those types of spaces and warehouse
space. Tenant's repairs to the 217 Grand Space shall otherwise be carried out in
accordance with the terms of the Lease.
7. Assignment and Subletting. Section 10.02(d) shall be deleted from the
Lease effective February 28, 2003.
8. Alterations. Notwithstanding anything to the contrary contained in
Section 8.01 of the Lease, Tenant shall have the right to make Alterations which
change the use of any Building to be laboratory space, office or administrative
space or a mixture of those types of spaces or to any use allowed by
Section 6.01 of the Lease.
8.1 The amount "Ten Thousand Dollars ($10,000)" in the first sentence of
Section 8.01 is hereby deleted and replaced with "One Hundred Thousand Dollars
($100,000)."
8.2 Section 8.02 of the Lease is hereby amended by adding the following new
provisions to the end thereof:
Notwithstanding anything to the contrary herein:
(a) Tenant shall not be required to remove any alterations or additions
made, constructed or installed after the date of this Amendment for which Tenant
has obtained Landlord's consent unless Landlord has indicated, at the time of
granting such consent, that such removal will be required; and
(b) The following provision shall apply only to the building located at 333
Roebling Road and to the building located at 217 East Grand Avenue and then only
if Tenant has timely exercised Option #2 and the Lease has not been terminated
prior to the expiration of the Second Extension Period as a result of Tenant's
default thereunder: Tenant shall be entitled to remove, at any time, its
furniture, trade fixtures, and other personal property in said buildings
(including the following items and items of a similar nature: portable cold
rooms (even though connected to the building plumbing system), modular cage
washing machine(s), casework, casework accessories, fume hoods, autoclaves,
warehouse racks, parts racks, proprietary research equipment, movable unattached
lunch room and office furnishings and equipment, telecommunications and data
equipment (other than cabling), machine shop tools and portable equipment,
portable glass wash equipment and machines and equipment used to produce
Tenant's products), provided Tenant repairs any damage caused by such removal.
(c) The following provision shall apply only to the building located at 213
East Grand Avenue and to the building located at 317 Roebling Road: Tenant shall
be entitled to remove at any time its furniture, trade fixtures and other
personal property from said buildings. For
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purposes of this subparagraph (c), trade fixtures shall include additional
equipment or components installed in the buildings by Tenant after the date of
this Amendment but shall not include any equipment or components installed by
Tenant which replace equipment or components existing in the buildings on the
date of this Amendment (it being the intent of the parties with regard to such
buildings that at the expiration of the Term, Tenant surrender the same level of
equipment or components as existed on the date of this Amendment). Tenant shall
repair any damage caused by the removal of such additional equipment or
components.
(d) Landlord waives any and all rights, title and interest Landlord now has,
or hereafter may have, whether statutory or otherwise, to Tenant's inventory,
equipment, furnishings, trade fixtures, books and records, and personal
property, located at the Premises (including the items listed in the immediately
preceding subparagraphs (b) and (c) which are removable by Tenant) (singly
and/or collectively, the "Collateral"). Landlord acknowledges that Landlord has
no lien, right, claim, interest or title in or to the Collateral. Landlord
further agrees that Tenant have the right, at its discretion, to mortgage,
pledge, hypothecate or grant a security interest in the Collateral as security
for its obligations under any equipment lease or other financing arrangement
related to the conduct of Tenant's business at the Premises. The Collateral
shall not become the property of Landlord or a part of the realty no matter how
affixed to the Premises and may be removed by Tenant or any equipment lessors at
any time and from time to time during the entire term of this Lease in
accordance with the immediately preceding subparagraphs (b) and (c). Tenant
shall promptly repair any damage caused by the removal of such property, whether
effected by Tenant or equipment lessors. Upon request, Landlord agrees to
execute a standard Landlord's Waiver allowing a lender or equipment lessor
access to the Premises for removal of the Collateral.
9. Signage. Tenant shall be entitled to install illuminated building
signage on the exterior of each of the Buildings at Tenant's sole cost and
expense, subject to the provisions of Section 9.02 of the Lease.
10. Subordination. The following is hereby added to the end of the first
sentence of Section 28.01: "; provided, however, that subordination of this
Lease to any mortgage or deed of trust placed on the Premises after the Term
Commencement Date is conditioned upon Holder (as defined below) recognizing
Tenant's rights under this Lease and agreeing not to disturb Tenant's possession
of the Premises so long as Tenant is not in default hereunder."
11. Ratification. The Lease, as amended by this Amendment, is hereby
ratified by Landlord and Tenant and Landlord and Tenant hereby agree that the
Lease, as so amended, shall continue in full force and effect.
12. Miscellaneous.
(a) Voluntary Agreement. The parties have read this Amendment and on the
advice of counsel they have freely and voluntarily entered into this Amendment.
(b) Counterparts. This Amendment may be signed in two or more counterparts.
When at least one such counterpart has been signed by each party, this Amendment
shall be deemed to have been fully executed, each counterpart shall be deemed to
be an original, and all counterparts shall be deemed to be one and the same
agreement.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of
the date first written above.
LANDLORD:
GRAND / ROEBLING INVESTMENT COMPANY,
a California limited partnership
By:
/s/ J. STANLEY MATTISON
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J. Stanley Mattison
TENANT:
TULARIK INC.,
a Delaware corporation
By:
/s/ WILLIAM J. RIEFLIN
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Name: William J. Rieflin
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Its: Executive Vice President
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SCHEDULE 1
Deferred Maintenance
1. Approximately 100,000 square feet of paved driveways and parking areas
exist at the Property, which Shaman has never maintained. There is extensive
asphalt cracking, alligatoring and numerous potholes.
2. Curbed landscaped areas need replanting, irrigation system needs
maintenance, broken curbs need replacement and repair.
3. Heating, ventilating and air-conditioning equipment at 213 East Grand,
317 Roebling Road and 333 Roebling Road buildings require maintenance and
repair.
As soon as reasonably acceptable, Landlord shall provide Tenant with sufficient
detail regarding the above-listed items for Tenant to complete the necessary
repairs and replacements.
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Exhibit 10.33
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Exhibit 10.127
November 16, 2000
Mr. David M. Mott
c/o MedImmune, Inc.
35 W. Watkins Mill Road
Gaithersburg, MD 20878
Dear David:
Reference is made to your Employment Agreement, dated as of November 1, 1998 (the "Employment Agreement"), with
MedImmune, Inc. (the "Company").
This letter agreement will confirm that the Employment Agreement was amended, effective as of October 1, 2000, to
reflect your new position as Vice Chairman and Chief Executive Officer and your new annual base salary of $600,000. In addition, the
Employment Agreement is hereby amended so that the Employment Period referred to in Section 2 thereof is extended to November 1,
2002. All other provisions of the Employment Agreement remain unchanged.
Very truly yours,
MEDIMMUNE, INC.
By: /s/ Wayne T. Hockmeyer
Wayne T. Hockmeyer
Chairman of the Board
Accepted and agreed to by:
/s/ David M. Mott
David M. Mott
Date: 11/22/00
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AMENDMENT AGREEMENT NO. 6 AND WAIVER
AMENDMENT AGREEMENT NO. 6 AND WAIVER, effective as of April 13, 2001 (this
"Amendment"), to the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 15,
1999 (as heretofore amended and as may be further amended, modified or
supplemented from time to time the "Credit Agreement"), among GENTLE DENTAL
SERVICE CORPORATION, a Washington corporation ("Dental Service"), GENTLE DENTAL
MANAGEMENT, INC., a Delaware corporation ("Dental Management") and DENTAL CARE
ALLIANCE, INC., a Delaware corporation ("DCA"; DCA, Dental Service and Dental
Management, each a "Borrower" and collectively, the "Borrowers"), the Guarantors
named therein, the financial institutions from time to time party thereto
(collectively, the "Lenders"), UNION BANK OF CALIFORNIA, N.A., as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and THE
CHASE MANHATTAN BANK ("Chase"), as syndication agent for the Lenders (in such
capacity, the "Syndication Agent").
WHEREAS, the Borrowers, the Guarantors and the Lenders desire to amend
certain provisions of the Credit Agreement as set forth herein;
WHEREAS, the Borrowers have requested that the Lenders waive and the Lenders
have agreed to waive noncompliance with certain provisions of the Credit
Agreement as specified more particularly herein;
WHEREAS, the Borrowers have requested that the Lenders consent, and the
Lenders have agreed to consent, to (i) the sale of assets of Dental Service and
its subsidiary, DentalCo. Management Services of Maryland, Inc. ("DMSM"), that
are used in the operations of the Affiliated Dental Practices known as
Mid-Atlantic Dental Associates of Annapolis and Mid-Atlantic Dental Associates
of Cross Keys (the "Annapolis/Cross Keys Practices") to MON Acquisition Corp.,
pursuant to an Asset Purchase Agreement dated on or about April 12, 2001 (the
"MON Disposition") and (ii) the sale of assets of Dental Management that are
used in the operations of the Affiliated Dental Practice conducted by Burns
Dental Corporation under the name Naismith Dental Group to Villanova, LLC.,
pursuant to an Asset Purchase Agreement dated April 2001 (the "Villanova
Disposition"; the MON Disposition and the Villanova Disposition being herein
referred to as the "Dispositions");
WHEREAS, in connection with the MON Disposition, Dental Service will enter
into an amendment to the Management Agreement for the Annapolis/Cross Keys
Practices, which amendment requires the consent of Required Lenders; and
WHEREAS, the Borrowers intend to enter into amendments with respect to
outstanding Subordinated Indebtedness, which amendments require consent of
Requisite Lenders.
NOW, THEREFORE, the Borrowers, the Guarantors, the Lenders, the
Administrative Agent and the Syndication Agent hereby agree as follows:
SECTION 1. CAPITALIZED TERMS. Capitalized terms used herein and not
defined shall have the respective meanings assigned to such terms in the Credit
Agreement.
SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT. Upon the fulfillment of the
conditions set forth in Section 6 hereof, the Credit Agreement is hereby amended
as follows:
2.1 DEFINITIONS. A. Section 1.01 of the Credit Agreement is hereby amended
by adding the following definitions:
"Bank Loans" means Loans and "Loans" as defined in the 2000 Credit
Agreement.
"Bankruptcy Code" shall mean Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
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"Cash Equivalents" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's ("S&P") or Moody's Investors
Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year
from the date of creation thereof and having, at the time of the acquisition
thereof, a rating of at least A-1 from S&P or at least P-1 from Moody's;
(iv) certificates of deposit or bankers' acceptances maturing within one year
after such date and issued or accepted by any Lender or by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia that (a) is at least "adequately capitalized" (as
defined in the regulations of its primary Federal banking regulator) and (b) has
Tier 1 capital (as defined in such regulations) of not less than $100,000,000;
and (v) shares of any money market mutual fund that (a) has at least 95% of its
assets invested continuously in the types of investments referred to in clauses
(i) and (ii) above, (b) has net assets of not less than $500,000,000, and
(c) has the highest rating obtainable from either S&P or Moody's.
"Cash Flow" means, for Holdings and its Consolidated subsidiaries, for any
period, (i) EBITDA minus (ii) Capital Expenditures minus (iii) any change (which
may be a negative number) in the principal amount of notes and advances
receivable from professional associations, as shown on the Consolidated balance
sheet of Holdings and its Subsidiaries, from the beginning of such period to the
end of such period.
"Common Stock" shall mean the common stock, $.001 par value, of Holdings.
"Current Assets" shall mean, as at any date of determination, the total
assets of any person that may properly be classified as current assets in
conformity with GAAP excluding cash and Cash Equivalents.
"Current Liabilities" shall mean, as at any date of determination, the total
liabilities of any person that may properly be classified as current liabilities
in conformity with GAAP excluding the current portions of Funded Debt.
"Dispositions" shall mean (i) the sale of assets of Dental Service and its
subsidiary, DentalCo. Management Services of Maryland, Inc., that are used in
the operations of the Affiliated Dental Practices known as Mid-Atlantic Dental
Associates of Annapolis and Mid-Atlantic Dental Associates of Cross Keys to MON
Acquisition Corp., pursuant to an Asset Purchase Agreement dated on or about
April 12, 2001 and (ii) the sale of assets of Dental Management that are used in
the operations of the Affiliated Dental Practice conducted by Burns Dental
Corporation under the name Naismith Dental Group to Villanova, LLC, pursuant to
an Asset Purchase Agreement dated April 2001.
"Earnout Arrangements" shall mean payments to be made to the seller of an
Affiliated Dental Practice based on the performance of such practice pursuant to
the Purchase Agreement effecting the sale of that Affiliated Dental Practice.
"Incremental Fee" shall have the meaning set forth in Section 2.17 hereof.
"New Capital Transaction" shall mean, collectively, a debt and/or equity
investment by one or more persons in Holdings or a subsidiary of Holdings made
after the Sixth Amendment Date, which, if in the form of debt, contains
subordination provisions, restrictive covenants, payment provisions and other
terms and conditions satisfactory to Required Lenders, and, if in the form of
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preferred equity, contains restrictive covenants and dividend and redemption
provisions satisfactory to Required Lenders.
"Seller Notes" shall mean those promissory notes delivered to the seller of
an Affiliated Dental Practice at the closing of the acquisition of that
Affiliated Dental Practice pursuant to the Purchase Agreement effecting the sale
of that Affiliated Dental Practice.
"Sixth Amendment Date" shall mean April 13, 2001.
"Warrants" shall mean warrants in substantially the form of Exhibit R
representing the right to purchase 1,000,000 shares of Common Stock (expiring on
April 13, 2011) at an exercise price equal to the closing stock price of Common
Stock on the day immediately preceding the Sixth Amendment Date, subject to the
anti-dilution provisions contained therein.
"Working Capital" shall mean, as at any date of determination, the excess
(or deficit) of Current Assets over Current Liabilities.
"Working Capital Adjustment" shall mean, for any period, the amount (which
may be a negative number) by which Working Capital as of the beginning of such
period exceeds (or is less than) Working Capital as of the end of such period.
B. Section 1.01 of the Credit Agreement is hereby further amended by
deleting the definitions of the terms 'Adjusted Senior Debt', 'Capital
Expenditures', 'Change of Control', 'Credit Event', 'Credits', 'Debt Service
Expense', 'EBITDA', 'Excess Cash Flow', 'Final Maturity Date', 'Guarantor',
'Interest Margin', 'Interest Payment Date', 'Leverage Ratio', 'Mandatory
Prepayment', 'Obligations' and 'Permitted Acquisition', and inserting the
following in lieu thereof:
"Adjusted Senior Debt", at any date, means (i) the outstanding principal
amount of Bank Loans plus (ii) Capitalized Lease Obligations.
"Capital Expenditures" shall mean, with respect to any person, all
expenditures incurred by such person with respect to any fixed assets or
improvements or replacements, substitutions or additions thereto, which have a
useful life of more than one year, including the direct or indirect acquisition
of such assets by way of increased product or service charges, offset items or
otherwise.
"Change of Control" shall mean the occurrence of any of the following
events: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), is or becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 of the Securities Exchange Act of
1934, as amended, provided that such person shall be deemed to have "beneficial
ownership" of all shares that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the outstanding
capital stock of Holdings, (ii) Holdings shall cease to own directly or
indirectly 100% of all outstanding shares of all classes of stock of each of the
Borrowers and each subsidiary thereof or (iii) the occurrence of a "Change in
Control" as defined in the Senior Subordinated Note or the Convertible
Subordinated Notes.
"Credit Event" shall mean each borrowing.
"Credits" shall mean the Loans.
"Debt Service Expense" shall mean, with respect to any person for any
period, the aggregate of regularly scheduled principal payments and cash
interest payments of all Indebtedness (including, without limitation,
Subordinated Indebtedness) made or to be made by such person during such period
on a Consolidated basis in accordance with GAAP.
"EBITDA" shall mean, with respect to any person for any period, without
duplication, the sum of (i) Net Income, (ii) Interest Expense,
(iii) depreciation and amortization and other non-cash
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items properly deducted in determining Net Income and (iv) federal, state and
local income taxes, in each case of such person for such period minus interest
income, computed and calculated in accordance with GAAP.
"Excess Cash Flow" shall mean, with respect to any person for any period,
the amount, if any, by which Net Cash Flow plus the Working Capital Adjustment
of such person and its subsidiaries on a Consolidated basis for such period
exceeds the Debt Service Expense of such person and its subsidiaries on a
Consolidated basis for such period.
"Final Maturity Date" shall mean September 30, 2003.
"Guarantor" shall mean, collectively, Holdings, each subsidiary of any of
the Borrowers (other than Dedicated Dental, Dental Oregon, Capitol Dental
Care, Inc., an Oregon corporation, and Gencare Dental Plans, Inc., an Oregon
corporation) in existence on the Closing Date and any subsidiary of any of the
Borrowers which becomes a guarantor of the Obligations after the date hereof.
Upon the execution of a Joinder Agreement by a person as a "Guarantor", such
person shall be deemed to be a party to this Agreement as a Guarantor and shall
be bound by, and subject to all terms and provisions set forth herein and in the
other Loan Documents applicable to "Guarantors", including, without limitation,
the provisions of Article XII of this Agreement.
"Interest Margin" shall mean, with respect to any Eurodollar Loan, 5.50% or,
with respect to any Alternative Base Loan, 3.75%. Upon the consummation of one
or more New Capital Transactions and subject to the corresponding prepayment of
the Loans hereunder and "Loans" under the 2000 Credit Agreement, in an aggregate
amount not less than $25,000,000, as set forth herein, the Interest Margins
shall, effective on the fourth Business Day following the date of such
prepayment, be, with respect to any Eurodollar Loan, 3.50% or, with respect to
any Alternative Base Loan, 1.75%. Notwithstanding the foregoing, effective on
the Conversion Date, each of the foregoing Interest Margins shall be increased
by 1.00% and shall continue to increase by 1.00% on each anniversary of the
Conversion Date.
"Interest Payment Date" shall mean (i) the first Business Day of each month,
(ii) on the date of the prepayment of principal of any Loan, as provided in
Section 2.04(b) and Section 2.09(g) and (iii) with respect to any Eurodollar
Loan, in addition to (i) and (ii), the last day of the Interest Period
applicable thereto.
"Leverage Ratio" shall mean, with respect to any person for any period, the
ratio of (i) Adjusted Senior Debt as at the date of determination to (ii) EBITDA
of such person for such period. For purposes of calculating the Leverage Ratio
for the period ending March 31, 2001, EBITDA for the fiscal quarter then ended
shall be multiplied by 4; for purposes of calculating the Leverage Ratio for the
period ending June 30, 2001, EBITDA for the two fiscal quarters then ended shall
be multiplied by 2; for purposes of calculating the Leverage Ratio for the
period ending September 30, 2001, EBITDA for the three fiscal quarters then
ended shall be multiplied by 1.33; and for purposes of calculating the Leverage
Ratio for all subsequent periods EBITDA for the four fiscal quarters then ended
shall be used.
"Mandatory Prepayment" shall mean an amount equal to seventy-five percent
(75%) of Excess Cash Flow, if any, of the Borrowers and their subsidiaries for
the fiscal quarter then ended.
"Obligations" shall mean all obligations, liabilities and Indebtedness of
the Borrowers to the Lenders and the Administrative Agent, arising under one or
more of the Loan Documents, whether now existing or hereafter created, direct or
indirect, due or not, whether created directly or acquired by assignment,
participation or otherwise, including without limitation all obligations,
liabilities and Indebtedness of the Borrowers with respect to the Security
Documents and other Loan Documents, the principal of and interest on the
Revolving Credit Loans, the Term Loans and the payment or performance of all
other obligations, liabilities, and Indebtedness of the
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Borrowers to the Lenders and the Administrative Agent hereunder, under any one
or more of the Loan Documents (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, and interest that, but for the filing of a petition in
bankruptcy with respect to any Borrower, would accrue on such obligations,
whether or not a claim is allowed against such Borrower for such interest in the
related bankruptcy proceeding), including without limitation all fees, costs,
expenses and indemnity obligations hereunder and thereunder.
"Permitted Acquisition" means an acquisition of an Affiliated Dental
Practice that was permitted under this Credit Agreement and was consummated by
Borrowers prior to the Sixth Amendment Date.
C. Section 1.01 of the Credit Agreement is hereby further amended by
deleting the definitions of the terms 'Acquisition Basket', 'Acquisition Capital
Expenditures', 'Adjusted EBITDA', 'Adjusted Total Funded Debt', 'DCA Merger',
'De Novo Capital Expenditures', 'De Novo Dental Practice', 'Equity Transaction',
'Excess Proceeds', 'Fixed Charge Coverage Ratio', 'Interest Leverage Ratio',
'Letter of Credit', 'Letter of Credit Usage', 'Net Worth', 'Permitted De Novo
Capital Expenditure', 'Pro Forma Adjusted EBITDA', 'Pro Forma Adjusted Senior
Funded Debt', 'Pro Forma Adjusted Total Funded Debt', 'Pro Forma Cash Interest
Expense', 'Pro Forma EBITDA', 'Pro Forma Interest Coverage Ratio', 'Pro Forma
Interest Leverage Ratio' and 'Pro Forma Leverage Ratio'.
2.2 THE LOANS.
A. The Credit Agreement (including, without limitation, Sections 2.01,
2.06, 2.07, 2.09, 2.10, 2.12, 2.14 and 5.01 of the Credit Agreement) is hereby
amended by deleting the references to Letters of Credit and Letter of Credit
Usage and any references to Sections 2.17-2.20 (as in effect prior to the Sixth
Amendment Date) appearing therein.
B. Section 2.03 of the Credit Agreement is hereby amended to read in full
as follows:
'SECTION 2.03. Notice of Loans. The Borrowers shall, through a Responsible
Officer of any of the Borrowers, give the Administrative Agent irrevocable
written, telex or facsimile notice (promptly confirmed in writing) of each
borrowing (including, without limitation, a conversion as permitted by
Section 2.02(e) hereof) not later than 9:00 A.M., Los Angeles, California time,
(i) three (3) Business Days before a proposed Eurodollar Loan borrowing or
conversion and (ii) on the day of an Alternate Base Loan borrowing or
conversion. Such notice shall be in the form of Exhibit O annexed hereto and
which shall specify (w) whether the Loans then being requested are to be
Alternate Base Loans or Eurodollar Loans, (x) the date of such borrowing (which
shall be a Business Day) and amount thereof, (y) if such Loans are to be
Eurodollar Loans, the Interest Period with respect thereto and (z) that (A) the
Borrowers have concurrently given notice under the 2000 Credit Agreement of a
borrowing which is pro rata (based on the aggregate of the Total Revolving
Credit Commitment under this Agreement and the Total Revolving Credit Commitment
under the 2000 Credit Agreement) and (B) the allocation of such borrowing
between this Agreement and the 2000 Agreement. If no election as to the type of
Loan is specified in any such notice, all such Loans shall be Alternate Base
Loans. If no Interest Period with respect to any Eurodollar Loan is specified in
any such notice, then an Interest Period of one (1) month's duration shall be
deemed to have been selected. The Administrative Agent shall promptly advise the
Lenders of any notice given pursuant to this Section 2.03 and of each Lender's
portion of the requested borrowing.'
C. Section 2.04(c) of the Credit Agreement is hereby amended to read in
full as follows:
'(c) Subject to Section 2.09(g), the aggregate principal amount of the Term
Loan, as evidenced by the Term Notes, shall be payable in consecutive quarterly
installments on the first Business Day of each October, January, April and July
of each year (the date of each such
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installment, a "Repayment Date"), commencing October 1, 2001, in the amount of
$6,428,571.40, and such payments shall be distributed ratably among the Lenders
in accordance with their pro rata share of such Term Loan. Notwithstanding
anything herein to the contrary, the final installment under such Term Note
shall be in the amount of the unpaid principal balance of such Term Note and
shall be payable on the Final Maturity Date.
To the extent not previously paid, the Term Loan shall be due and payable on
the Final Maturity Date. Each Term Note shall bear interest from its date on the
outstanding principal balance thereof, as provided in Section 2.05. All
principal payments in respect of the Term Loan shall be accompanied by accrued
interest on the principal amount being repaid to the date of payment. No
scheduled payment of principal in respect of the Term Loan shall be made to the
extent that a lesser principal payment would result in the payment in full of
the outstanding amount of the Term Loan, and such lesser amount is paid.'
D. Section 2.07(d) of the Credit Agreement is hereby amended to read in
full as follows:
'(d) Simultaneously with the prepayment of the Revolving Credit Loans
outstanding under this Agreement pursuant to Section 2.09(d) or (f) hereof, the
Total Revolving Credit Commitment hereunder shall be permanently reduced by the
amount prepaid.'
E. Section 2.08(a) of the Credit Agreement is hereby amended to read in
full as follows:
'Upon the occurrence and during the continuation of any Event of Default,
the outstanding principal amount of all Loans and, to the extent permitted by
applicable law, any interest payments thereon not paid when due and any fees and
other amounts then due and payable hereunder, shall thereafter bear interest
(including post-petition interest in any proceeding under the Bankruptcy Code or
other applicable bankruptcy laws) payable upon demand at a rate that is 2% per
annum in excess of the interest rate otherwise payable thereto; provided that,
in the case of Eurodollar Loans, upon the expiration of the Interest Period in
effect at the time any such increase in interest rate is effective such
Eurodollar Loans shall thereupon become Alternate Base Loans and shall
thereafter bear interest payable upon demand at a rate which is 2% per annum in
excess of the interest rate otherwise payable for Alternate Base Loans. Payment
or acceptance of the increased rates of interest provided for in this
Section 2.08(a) is not a permitted alternative to timely payment and shall not
constitute a waiver of any Default or Event of Default or otherwise prejudice or
limit any rights or remedies of the Agents or any Lender.'
F. Section 2.09(d) of the Credit Agreement is hereby amended to read in
full as follows:
'(d) (i) Within three (3) Business Days of the sale or other disposition of
any assets of any Loan Party (excluding (x) sales of assets in the ordinary
course of business, and (y) subject to Section 6.02 hereof, sales of worn-out or
obsolete assets (but only to the extent that the net proceeds realized are
applied within three (3) Business Days of any sale or other disposition to
purchase other assets and pending such application or prepayment all such net
proceeds shall be maintained in a cash collateral account with the
Administrative Agent on terms and conditions acceptable to the Administrative
Agent)), the Borrowers shall pay the Incremental Fee or make a mandatory
prepayment of the Bank Loans (in the order set forth in paragraph (g) below), in
an amount equal to (1) 25% of the first $4,000,000 of proceeds received (net of
taxes due and any reasonable expenses of sale), plus (2) 90% of such proceeds in
excess of $4,000,000 (in each case, calculated on a cumulative basis, taking
into account all such proceeds subsequent to the Sixth Amendment Date), which
proceeds shall be applied as set forth in paragraph (g) below; nothing contained
in this paragraph (d) shall be or be deemed to be a consent to the sale of any
assets of any Loan Party;
(ii) within three (3) Business Days of the consummation of a New Capital
Transaction subsequent to the Sixth Amendment Date, the Borrowers shall pay the
Incremental Fee or make a
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mandatory prepayment of the Bank Loans (in the order set forth in paragraph (g)
below) in an amount equal to (1) 100% of the first $1,000,000 in cash proceeds
received (net of taxes due and any reasonable expenses of sale) in excess of
$5,000,000 plus (2) 90% of the cash proceeds received (net of taxes due and any
reasonable expenses of sale) in excess of $6,000,000 (in each case calculated on
a cumulative basis, taking into account all such proceeds), which proceeds shall
be applied as set forth in paragraph (g) below; nothing contained in this
paragraph (d) shall be or be deemed to be a consent to the sale of any stock or
the issuance of any stock or debt securities;
(iii) on the later of (a) June 30, 2001 and (b) 30 days after receipt of any
federal income tax refund by Holdings or any of its subsidiaries after the Sixth
Amendment Date, the Borrowers shall pay the Incremental Fee or make a mandatory
prepayment of the Bank Loans (in the order set forth in paragraph (g) below) in
an amount equal to 50% of the amount of such refund, which shall be applied as
set forth in paragraph (g) below.'
G. Section 2.09(e) of the Credit Agreement is hereby amended to read in
full as follows:
'(e) Within 45 days of the end of each fiscal quarter of the Borrowers,
commencing with the fiscal quarter ending December 31, 2001, the Borrowers shall
make a mandatory prepayment of the Bank Loans (in the order set forth in
paragraph (g) below) in an amount equal to the Mandatory Prepayment, if any, of
the Borrowers and their subsidiaries for the fiscal quarter then ended, such
payment or prepayment to be applied as set forth in paragraph (g) below.'
H. Section 2.09(g) of the Credit Agreement is hereby amended to read in
full as follows:
'(g) Voluntary prepayments of the Term Loan shall be applied pro rata
(based on the aggregate of the unpaid amount of the Term Loan under this
Agreement and the unpaid principal amount of the Term Loan under the 2000 Credit
Agreement) and, with respect to the portion being applied to the Term Loan under
this Agreement, to the installments due on the next four consecutive Repayment
Dates from receipt of the prepayment in direct order of maturity and then on a
pro rata basis over the remaining Repayment Dates. Payments pursuant to
paragraph (d), (e) or (f) above shall be applied first to the Incremental Fee to
the extent any amounts of the $1,000,000 portion of such fee payable pursuant to
Section 2.17(i) remain unpaid and then, (A) prior to the Conversion Date, pro
rata (based on the aggregate of the Total Revolving Credit Commitment under this
Agreement and the Total Revolving Credit Commitment under the 2000 Credit
Agreement) between the Revolving Credit Loans and the Revolving Credit Loans
under the 2000 Credit Agreement and (B) from and after the Conversion Date, pro
rata (based on the aggregate of the unpaid principal amount of the Term Loan
under this Agreement and the unpaid principal amount of the Term Loan under the
2000 Credit Agreement) and, with respect to the portion being applied to the
Term Loan under this Agreement, to the installments due on the next four
consecutive Repayment Dates from receipt of the prepayment and then on a pro
rata basis over the remaining Repayment Dates to the extent of such prepayment
in direct order of maturity. Any prepayment made pursuant to paragraphs (d) and
(f) above before the Conversion Date shall be credited against installments due
after the Conversion Date on the first four consecutive Repayment Dates in
direct order of maturity and then on a pro rata basis over the remaining
Repayment Dates to the extent of such prepayment. Any prepayments required by
paragraphs (d), (e) and (f) shall be applied first to outstanding Alternate Base
Loans and then to outstanding Eurodollar Loans. When paying the Incremental Fee
or making a prepayment, whether mandatory or otherwise, pursuant to paragraphs
(a)-(f) above, the Borrowers shall furnish to the Administrative Agent, not
later than 11:00 A.M. (Los Angeles, California time) three (3) Business Days
prior to the date of such payment or prepayment, written, telex or facsimile
notice (promptly confirmed in writing) of such payment or prepayment which shall
specify the payment or prepayment date and the Incremental Fee (or portion
thereof) and/or the principal amount of each Loan (or portion thereof) to be
paid or prepaid, which notice shall be irrevocable and shall
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commit the Borrowers to make such payment or prepayment in the amount stated
therein on the date stated therein. All prepayments of Loans shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of prepayment.'
I. Section 2.09(j) of the Credit Agreement is hereby amended to read in
full as follows, and Sections 2.09(k) and (l) are hereby deleted:
'(j) Once prepaid the amount of the Term Loan may not be reborrowed.'
J. Sections 2.17 and 2.18 of the Credit Agreement are hereby amended to
read in full as follows, and Sections 2.19 and 2.20 of the Credit Agreement are
hereby deleted:
'SECTION 2.17 Incremental Fee. Upon execution of this Agreement, the
Lenders and the "Lenders" under the 2000 Credit Agreement shall fully earn a fee
equal to $2,000,000 (the "Incremental Fee"). The Incremental Fee shall be
payable to the Administrative Agent (for the ratable benefit of the Lenders
hereunder and the "Lenders" under the 2000 Credit Agreement) in the following
manner: (i) $1,000,000 on September 30, 2001 and (ii) $1,000,000 on the Final
Maturity Date; provided that the portion of the Incremental Fee due on
September 30, 2001 shall be prepaid in whole or in part upon an asset sale or
other disposition, a New Capital Transaction or receipt of a federal income tax
refund as provided in Section 2.09. If all Obligations are repaid or otherwise
satisfied and all Revolving Credit Commitments are terminated prior to March 31,
2002, payment of the $1,000,000 portion of the Incremental Fee due on the Final
Maturity Date shall be forgiven.
SECTION 2.18. Warrants. Concurrently with the delivery of this Agreement,
Holdings shall execute and deliver to each Lender and each "Lender" under the
2000 Credit Agreement (or, in each case, its designee) a Warrant in
substantially the form attached as Exhibit R. Each Lender and each "Lender"
under the 2000 Credit Agreement (or, in each case, its designee) shall receive a
Warrant to purchase such number of shares of Common Stock as is set forth
opposite such Lender's name on Schedule 2.18 hereto (the number of shares for
which the Warrants may be exercised are shown in the aggregate for each Lender,
whether being received under this Agreement or the 2000 Credit Agreement).'
2.3 REPRESENTATIONS AND WARRANTIES. A. Section 4.01 of the Credit
Agreement is hereby amended to read in full as follows:
SECTION 4.01. Organization, Legal Existence. Each Loan Party is a legal
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, has the requisite power and authority to
own its property and assets and to carry on its business as now conducted and as
currently proposed to be conducted and is qualified to do business in every
jurisdiction where such qualification is required, except where the failure to
so qualify would not have a Material Adverse Effect (all such jurisdictions
being listed in Schedule 4.01 annexed hereto). Each Loan Party has the corporate
power to execute, deliver and perform its obligations under this Agreement and
the other Loan Documents to which it is a party, and to borrow hereunder and to
execute and deliver the Notes.
B. 4.14 of the Credit Agreement is hereby amended to read in full as
follows:
'SECTION 4.14 Use of Proceeds. All proceeds of each borrowing subsequent
to the Sixth Amendment Date under the Total Revolving Credit Commitment shall be
used to provide for working capital requirements and for general corporate
purposes of the Borrowers.'
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C. Article IV of the Credit Agreement is further amended by adding the
following as Section 4.25:
'SECTION 4.25 Loans to Affiliated Dental Practices. Borrowers have made no
loans or advances to Affiliated Dental Practices that are made pursuant to or
are evidenced by a promissory note or other instrument.'
2.4 AFFIRMATIVE COVENANTS. A. Section 6.05(e) of the Credit Agreement is
hereby amended by deleting the reference to Section 7.11 appearing in clause (i)
thereof.
B. Section 6.05(j) of the Credit Agreement is hereby amended to read in
full as follows:
'(j) promptly upon any Responsible Officer of the Borrowers obtaining
knowledge (i) of any condition or event that constitutes a Default or an Event
of Default, or becoming aware that any Lender has given any notice (other than
to Administrative Agent) or taken any other action with respect to a claimed
Default or Event of Default, (ii) that any person has given any notice to any
Borrower or any subsidiary thereof or taken any other action with respect to a
claimed default or event or condition of the type referred to in subsection
(g) of Article VIII hereof, or (iii) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, a certificate of the Financial Officer of each of the Borrowers
specifying the nature and period of existence of such condition, event or
change, or specifying the notice given or action taken by any such person and
the nature of such claimed Default, Event of Default, default, event or
condition, and what action the Borrowers have taken, is taking and proposes to
take with respect thereto;'
C. Section 6.05 of the Credit Agreement is hereby further amended by adding
the following as paragraphs (l), (m) and (n) thereof:
'(l) on the second Business Day of each week, (i) a Consolidated cash flow
forecast for the eight-week period commencing on such Business Day, (ii) a
Consolidated statement of actual Consolidated cash flows for the week just
ended, and (iii) a comparison of actual Consolidated cash flows against
forecasted cash flows for such prior week, in each case in the format attached
as Schedule 6.05(l);
(m) within 15 days after the end of each fiscal quarter of Holdings, a
written progress report concerning (i) the status of and plans for negotiations
of deferments of Earnout Arrangements and Seller Notes, including a narrative
report describing the steps taken and to be taken to comply with Section 6.17
and (ii) the status of and plans for any sales of assets and New Capital
Transactions; and
(n) within 30 days after the end of each month, a report, satisfactory in
form and substance to the Required Lenders, concerning the status of
applications for and receipt of any federal income tax refunds.'
D. Sections 6.19, 6.20 and 6.26 of the Credit Agreement are hereby deleted
and Section 6.17 of the Credit Agreement is hereby amended to read in full as
follows:
'SECTION 6.17 Earnout Arrangements and Seller Notes. By January 1, 2002,
reach binding agreements with certain of the persons entitled to receive any
cash payments in calendar year 2001 under the Earnout Arrangements or the Seller
Notes, which agreements shall provide for the deferral of a minimum aggregate
amount of $4,500,000 of such cash payments to calendar year 2002 or later in a
manner satisfactory to the Required Lenders.'
E. Section 6.18 of the Credit Agreement is hereby amended to read in full
as follows:
'SECTION 6.18 Collateral Arrangements with Affiliated Dental
Practices. Use commercially reasonable efforts to cause (i) the execution and
delivery of a security agreement between each
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Affiliated Dental Practice set forth in column A of Schedule VI and the
appropriate Borrower or Guarantor, (ii) the filing by each Affiliated Dental
Practice set forth in column B of Schedule VI of a UCC-1 Financing Statement in
favor of the appropriate Borrower or Guarantor and the filing by such Borrower
or Guarantor of a UCC assignment in favor of the Administrative Agent and
(iii) delivery of a copy of such agreement, UCC-1 financing statement and UCC
assignment to Administrative Agent, in each case within 30 days of the Sixth
Amendment Date.'
F. Section 6.21 of the Credit Agreement is hereby amended by adding the
following at the beginning thereof:
'Within 60 days of the Sixth Amendment Date, as to the location of DCA's
headquarters, and'
G. Section 6.24 of the Credit Agreement is hereby amended by deleting the
phrase 'Within 60 days of the Closing Date,' and inserting the following in lieu
thereof:
'Within 45 days of the Sixth Amendment Date,'
2.5 NEGATIVE COVENANTS. A. Section 7.04 of the Credit Agreement is hereby
amended to read in full as follows:
'SECTION 7.04 Dividends, Distributions and Payments. Declare or pay,
directly and indirectly, any cash dividends or make any other distribution,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of its capital stock
or directly or indirectly redeem, purchase, retire or otherwise acquire for
value (or permit any subsidiary to purchase or acquire) any shares of any class
of its capital stock or set aside any amount for any such purpose; provided,
however, that a subsidiary may pay dividends to its immediate parent so long as
such parent is a Guarantor or a Borrower; provided, further, that the Borrowers
may pay dividends to Holdings, so long as no Default or Event of Default shall
have occurred and be continuing at such time or shall occur as a result of such
payment, for the purpose of enabling Holdings to repurchase preferred stock of
Holdings in accordance with the terms and provisions of its certificate of
incorporation (as in effect on the Closing Date); provided, that in no event
shall the amount distributed to Holdings pursuant to this clause exceed $100 in
the aggregate.'
B. Section 7.05 of the Credit Agreement is hereby amended to read in full
as follows:
'SECTION 7.05 Consolidations, Mergers, Sales of Assets and
Acquisitions. Consolidate with or merge into any other person, or sell, lease,
transfer or assign to any persons or otherwise dispose of (whether in one
transaction or a series of transactions) any portion of its assets (whether now
owned or hereafter acquired), or sell any of its inventory, other than in the
normal course of business, or permit another person to merge into it, or acquire
all or substantially all of the capital stock or other evidence of beneficial
ownership of, or the business or assets of, any other person or any division or
line of business of any person.'
C. Section 7.06 of the Credit Agreement is hereby amended by deleting
paragraph (g) thereof and amending paragraphs (f) and (j) thereof to read in
full as follows:
'(f) investments in the stock of any subsidiary existing on the Sixth
Amendment Date, but not any additional investments therein;'
'(j) loans or advances by a Borrower to an Affiliated Dental Practice, made
in the ordinary course of business to fund operating expenses in accordance with
the terms of the related Management Agreement; provided that such loans or
advances are not made pursuant to or evidenced by a promissory note or other
instrument unless such note or other instrument is delivered to the
Administrative Agent as Collateral;'
10
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D. Section 7.07 of the Credit Agreement is hereby amended to read in full
as follows:
'SECTION 7.07 Capital Expenditures. Make any Capital Expenditures, other
than Maintenance Capital Expenditures or Capital Expenditures with respect to
existing facilities'.
E. Section 7.08 of the Credit Agreement is hereby amended, effective
March 31, 2001, to read in full as follows:
'SECTION 7.08 Cash Flow. Permit Cash Flow at the end of the fiscal quarter
ended March 31, 2001, the two fiscal quarter period ending June 30, 2001, the
three fiscal quarter period ending September 30, 2001 and any four fiscal
quarter period ending thereafter to be less than the amounts shown below
opposite such quarter end date:
Quarter Ending
--------------------------------------------------------------------------------
Cash Flow
--------------------------------------------------------------------------------
March 31, 2001 $ 4,500,000 June 30, 2001 9,100,000 September 30, 2001
13,700,000 December 31, 2001 18,600,000 March 31, 2002 19,700,000 June
30, 2002 20,800,000 September 30, 2002 21,900,000 December 31, 2002
23,000,000 March 31, 2003 24,250,000 June 30, 2003 and thereafter
25,000,000
F. Section 7.09 of the Credit Agreement is hereby amended, effective
March 31, 2001, to read in full as follows:
'SECTION 7.09 Leverage Ratio. Permit the Leverage Ratio of Holdings and
its subsidiaries (on a Consolidated basis) at the end of any fiscal quarter to
be greater than:
Quarter Ending
--------------------------------------------------------------------------------
Ratio
--------------------------------------------------------------------------------
March 31, 2001 3.20:1.00 June 30, 2001 3.20:1.00 September 30, 2001
3.20:1.00 December 31, 2001 3.00:1.00 March 31, 2002 2.75:1.00 June 30, 2002
2.50:1.00 September 30, 2002 2.25:1.00 December 31, 2002 1.90:1.00 March
31, 2003 1.70:1.00 June 30, 2003 and thereafter 1.50:1.00
G. Section 7.10 of the Credit Agreement is hereby amended, effective
March 31, 2001, to read in full as follows:
'SECTION 7.10 Liquidity. Permit the sum of (i) the undrawn Revolving
Credit Commitments under this Agreement and the undrawn Revolving Credit
Commitments under the 2000 Credit Agreement (as such term is defined in the 2000
Credit Agreement) plus (ii) unused commitments under new debt financing ranked
junior to the Obligations and junior to the 2000 Obligations plus (iii) cash on
hand of the Borrowers, Holdings and other Guarantors on deposit with the
Administrative Agent or subject to blocked account
11
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agreements, on the last day of each month shown below, to be less than the
correlative amount for such month:
Month
--------------------------------------------------------------------------------
Liquidity Amount
--------------------------------------------------------------------------------
March 31, 2001 $ 2,300,000 April 30, 2001 2,300,000 May 31, 2001
2,300,000 June 30, 2001 3,800,000 July 31, 2001 3,500,000 August 31,
2001 3,200,000 September 30, 2001 2,900,000 October 31, 2001 and
thereafter 2,500,000
provided, that the minimum liquidity amount at April 30, 2001 and May 31, 2001
shall increase to $3,800,000 if the Dispositions occur in April 2001, and the
minimum liquidity amount at May 31, 2001 shall increase to $3,800,000 if the
Dispositions occur in May 2001.'
H. Section 7.11 and Section 7.21 of the Credit Agreement are hereby
deleted.
I. Section 7.17(a) of the Credit Agreement is hereby amended to read in
full as follows:
'(a) Directly or indirectly prepay, redeem, purchase or retire any
Indebtedness, including, without limitation, any Subordinated Indebtedness,
other than Indebtedness incurred hereunder and under the 2000 Credit Agreement
on a pro rata basis, or make any cash payment of interest or premium in respect
of any Subordinated Indebtedness, other than Seller Notes; provided the
Convertible Subordinated Notes may be retired upon conversion thereof, in
accordance with their terms.'
2.6 MISCELLANEOUS.
A. Section 11.01(c) of the Credit Agreement is hereby amended to read in
full as follows:
'(c) if to the Administrative Agent, at 400 California Street, 8th Floor,
San Francisco, California 94104-1402, Attention: Nancy A. Perkins, Vice
President, Special Assets Department (Telecopy No. (415) 765-2170), with a copy
to Buchalter, Nemer, Fields & Younger, 333 Market Street, 29th Floor, San
Francisco, CA 94105-2130, Attention: Robert Izmirian, Esq. (Telecopy No.
(415) 227-0770); and'
B. Section 11.01 of the Credit Agreement is hereby amended by adding the
following as subsection (e):
'(e) in the case of any notice pursuant to subsections (b), (c) or (d), with
a copy to O'Melveny & Myers LLP, 400 South Hope Street, 10th Floor, Los Angeles,
California 90071, Attention: Ben H. Logan, Esq. (Telecopy No. (213) 430-6407).'
C. Section 11.04(a) of the Credit Agreement is hereby amended to read in
full as follows:
'(a) Each of the Borrowers agrees to pay all reasonable out-of-pocket
expenses incurred by the Agents in connection with the preparation of this
Agreement and the other Loan Documents (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Agents or any of the
Lenders in connection with any amendments, modifications, waivers, extensions,
renewals, renegotiations or "workouts" or the enforcement or protection of its
rights in connection with this Agreement or any of the other Loan Documents or
with the Loans made or the Notes issued hereunder, or in connection with any
pending or threatened action, proceeding, or investigation relating to the
foregoing, including but not limited to the reasonable fees and disbursements of
counsel for the Agents and ongoing field examination expenses and charges, and,
12
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in connection with such amendment, modification, waiver, extension, renewal,
renegotiation, "workout," enforcement or protection, the reasonable fees and
disbursements of counsel for the Lenders. Each of the Borrowers further
indemnifies the Lenders from and agrees to hold them harmless against any
documentary taxes, assessments or charges made by any governmental authority by
reason of the execution and delivery of this Agreement or the Notes. In
addition, each of the Borrowers agrees to pay the reasonable fees and expenses
of O'Melveny & Myers LLP, counsel to the Lenders, in connection with any matters
referred to in this Section 11.04(a) undertaken at the request of Agents or
Lenders.'
D. SECTION 11.05 of the Credit Agreement is hereby amended to read in full
as follows:
'SECTION 11.05 Applicable Law. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).'
E. SECTION 11.06 of the Credit Agreement is hereby amended to read in full
as follows:
'SECTION 11.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender shall and is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of any of the Borrowers or any
Guarantor against any and all of the obligations of the Borrowers or any
Guarantor now or hereafter existing under this Agreement and the 2000 Credit
Agreement and the Notes held by such Lender and the Notes held by the Lenders
under the 2000 Credit Agreement, irrespective of whether or not such Lender
shall have made any demand under this Agreement or the 2000 Credit Agreement or
the Notes or the Notes held by the Lenders under the 2000 Credit Agreement or
under any Guarantee and although such obligations may be unmatured. Each Lender
agrees to notify promptly the Administrative Agent and the Borrowers after any
such setoff and application made by such Lender, but the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of each Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which may be available
to such Lender; provided, however, that such rights are subject to the
provisions of Section 2.14 hereof.'
F. Article XIII of the Credit Agreement is hereby amended to read in full
as follows:
'Notwithstanding any language to the contrary in this Agreement or in any
other Loan Document, the Administrative Agent and the Lenders signatory hereto
hereby acknowledge and agree that to the extent required under the Knox-Keene
Health Care Service Plan Act or 1975, as amended, or any rules or regulations
promulgated thereunder or related thereto, any transfer or assignment (whether
for value or otherwise) of any ownership interest in the capital stock of
Dedicated Dental or Dental Service on foreclosure or otherwise will require the
filing of a notice of a material modification and prior approval by the
California Department of Managed Care or its successor.'
G. Exhibit L to the Credit Agreement (Form of Covenant Compliance
Certificates) is hereby amended to read as set forth in Exhibit L hereto.
SECTION 3. WAIVER AND CONSENT. A. Subject to the terms and conditions set
forth herein and in reliance on the representations and warranties of Borrowers
herein contained, the Lenders hereby waive (i) Events of Default arising by
reason of defaults existing under the Convertible Subordinated Notes and the
Senior Subordinated Notes to the extent such defaults are waived pursuant to the
amendments to the Convertible Subordinated Notes and the Senior Subordinated
Note delivered
13
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pursuant to Section 6.1 and Section 6.5 of this Amendment and (ii) noncompliance
by the Borrowers with the provisions of (a) Sections 7.08, 7.09, 7.10 and 7.11,
as such provisions were in effect prior to the Sixth Amendment Date, at
September 30, 2000, December 31, 2000 and March 31, 2001, and for the periods
then ended and (b) Sections 6.01 and 7.05 resulting from the dissolution of SPDS
DMI, Inc., Gentle Dental IF, Inc. and GMS Dental Group Management of Southern
California, Inc. and the merger of Serra Park into Dental Management, provided
that (1) each such dissolution results in the assets (if any) and liabilities
(if any) of each dissolving company being assumed by the dissolving company's
immediate parent and (2) the merger of Serra Park results in the assets and
liabilities of Serra Park being assumed by Dental Management. Upon delivery of
evidence of completion of a dissolution or merger to the Administrative Agent
satisfactory to the Administrative Agent, the dissolving or merged company shall
cease to be a "Grantor" under the Security Agreement and a "Guarantor" under the
Credit Agreement and the stock of such subsidiary shall no longer be considered
"Pledged Stock" or "Collateral" under the Pledge Agreement. Notwithstanding the
foregoing, the security interest of the Administrative Agent (for the ratable
benefit of the Lenders) in the assets of each subsidiary that is dissolved or
merged as permitted hereby shall continue.
B. Subject to the terms and conditions set forth herein and in reliance on
the representations and warranties of the Borrowers herein contained, the
Lenders hereby consent to (i) the Dispositions, provided that the Dispositions
occur by April 30, 2001 and result in the Borrowers receiving cash proceeds of
not less than $3,000,000 (before deduction of expenses and taxes), an 8%
$254,000 Promissory Note due March 2002, and forgiveness of Indebtedness of not
less than $696,000, which Indebtedness is evidenced by a promissory note dated
February 24, 1997, (ii) the release of Liens in favor of the Lenders to the
extent that such Liens encumber assets sold pursuant to the Dispositions and
(iii) the entering into by Dental Service of an amendment to the Management
Agreement with Mid-Atlantic Dental Associates, P.A. that excludes the
Annapolis/Cross Keys Practices from the operation of such agreement; provided
that the cash proceeds of the Dispositions shall be applied as set forth in
Section 2.09 of the Credit Agreement, as amended hereby.
C. Subject to the terms and conditions set forth herein and in reliance on
the representations and warranties of the Borrowers herein contained, the
Lenders hereby consent to the amendments to the Senior Subordinated Note and the
Convertible Subordinated Notes reflected in the amendments delivered pursuant to
Sections 6.1, 6.2 and 6.3 hereof and the amendment to the Senior Subordinated
Note requiring an increase of the rate of interest thereon, during such time as
interest is not paid in cash, to not more than 161/2% per annum and payment of
an amendment fee in the form of an additional subordinated note having the same
terms and conditions as the Senior Subordinated Note in an amount not to exceed
$2,250,000; provided that the payment of interest is subject to the amendment
referred to in Section 6.1 of this Amendment.
SECTION 4. LIMITATION OF WAIVER AND CONSENT. Without limiting the
generality of the provisions of Section 11.08 of the Credit Agreement, the
waiver and consent set forth in Section 3 shall be limited precisely as written
and are provided solely with respect to (a) the defaults under the Senior
Subordinated Note and the Convertible Subordinated Notes described in Section 3,
(b) noncompliance by the Borrowers with Sections 6.01, 7.05, 7.08, 7.09, 7.10
and 7.11, (c) the Dispositions and the release of Liens on related Collateral as
specified in Section 3 and (d) the amendments to the Senior Subordinated Note
and the Convertible Subordinated Notes described in Section 3. Nothing in this
Amendment shall be deemed to constitute (i) a waiver of any other defaults under
the Senior Subordinated Note and the Convertible Subordinated Notes or of
compliance by Borrowers with respect to Sections 6.01, 7.05, 7.08, 7.09, 7.10
and 7.11 of the Credit Agreement in any other instance, (ii) a consent to any
sale or disposition of assets or release of Collateral other than the
Dispositions and release of Liens on Collateral as specified in Section 3,
(iii) a consent to any amendment of any Subordinated Indebtedness other than as
specified in Section 3 or (iv) a waiver of
14
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or consent to noncompliance with any other term, provision or condition of the
Credit Agreement or any other instrument or agreement referred to therein.
SECTION 5. ADDITIONAL COMPANIES. By each company's signature below,
DentalCo Management Services of Maryland, Inc. and The Dental Center, Inc. (each
an "Additional Company") shall each become a party to and be bound by the
provisions of the Credit Agreement as a Guarantor and shall have the rights and
obligations of a Guarantor hereunder, thereunder and under the other Loan
Documents.
SECTION 6. CONDITIONS PRECEDENT. This Amendment shall become effective
upon the execution and delivery of counterparts hereof by the Borrowers, the
Guarantors, the Lenders and each of the Agents to the Administrative Agent and
the fulfillment of the following conditions:
6.1 The Administrative Agent shall have received a copy of an executed
amendment, in form and substance satisfactory to the Administrative Agent,
certified by an officer of each Borrower as being a true and correct copy in
full force and effect, to the Senior Subordinated Note providing, among other
things, that (i) interest payable thereon on and after December 31, 2000 and
through the date of payment in full of the Obligations shall be payable solely
in kind and not payable in cash, (ii) the financial covenants applicable to the
Senior Subordinated Note shall be revised so that there are no financial
covenants other than those set in the Credit Agreement, and the levels of the
financial covenants applicable to the Senior Subordinated Note shall not be more
restrictive than 85% of the covenant levels set forth in the Credit Agreement
and (iii) other provisions of the Senior Subordinated Note are amended or
waived, so as to ensure that the Senior Subordinated Note is not subject to
stricter provisions than the Credit Agreement.
6.2 The Administrative Agent shall have received a copy of an executed
affirmation and amendment, in form and substance satisfactory to the
Administrative Agent, certified by an officer of each Borrower as being a true
and correct copy in full force and effect, to the Subordination Agreement.
6.3 The Administrative Agent shall have received a copy of (i) an
amendment, in form and substance satisfactory to the Administrative Agent,
executed by the Requisite Purchasers (as such term is defined in the Convertible
Subordinated Notes) and certified by an officer of each Borrower as being a true
and correct copy in full force and effect, to the Convertible Subordinated Notes
and (ii) an amendment, in form and substance satisfactory to the Administrative
Agent, executed by the Requisite Purchasers and certified by an officer of each
Borrower as being a true and correct copy in full force and effect, to the
Securities Purchase Agreement for the Convertible Subordinated Notes, each
providing that interest payable thereon on and after December 31, 2000 and
through the date of payment in full of the Obligations shall be payable solely
in kind and not payable in cash.
6.4 The Administrative Agent shall have received evidence that Amendment
Agreement No. 3, dated as of April 13, 2001, to the 2000 Credit Agreement has
been executed and delivered by each of the parties thereto concurrently with the
execution and delivery of this Amendment.
6.5 The Administrative Agent shall have received evidence that the holders
of the Senior Subordinated Note, the Convertible Subordinated Notes and any
other Indebtedness of the Borrowers, Holdings or a subsidiary have waived all
defaults existing immediately prior to the Sixth Amendment Date.
6.6 The Administrative Agent shall have received a certificate signed by a
Financial Officer of each Borrower and Guarantor that (i) both before and after
giving effect to the transactions contemplated herein all representations and
warranties contained in this Amendment or otherwise made in writing to the
Administrative Agent in connection herewith shall be true and correct in all
material respects on and as of the date hereof (except insofar as such
representations and
15
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warranties relate expressly to an earlier date) and (ii) after giving effect to
the transactions contemplated herein, there exists no unwaived Default or Event
of Default.
6.7 The Administrative Agent shall have received certified copies of
resolutions of the Board of Directors of each Borrower, approving and
authorizing the execution, delivery, and performance of this Amendment, the
amendment to the Senior Subordinated Note referred to above in Section 6.1, the
affirmation and amendment to the Subordination Agreement referred to above in
Section 6.2 and the amendment to the Convertible Subordinated Notes and the
amendment to the Securities Purchase Agreement for the Convertible Subordinated
Notes, each referred to above in Section 6.3, certified as of the Sixth
Amendment Date by its corporate secretary or an assistant secretary as being in
full force and effect without modification or amendment.
6.8 The Administrative Agent shall have received signature and incumbency
certificates of the officers of each Borrower.
6.9 The Lenders shall have received an opinion or opinions of counsel to
the Borrowers, in form and substance satisfactory to the Lenders.
6.10 Counsel to the Lenders, including O'Melveny & Myers LLP, counsel to
each of the Lenders and counsel to each of the Agents, shall have received
payment in full for all unpaid legal fees charged, and all costs and expenses
incurred, by such counsel through the date hereof and all legal fees charged,
and all costs and expenses incurred, by such counsel in connection with the
transactions contemplated under this Amendment and the other Loan Documents and
instruments in connection herewith and therewith.
6.11 Completion of field exam of accounts receivable, accounts payable,
inventory and other matters of the Borrowers to satisfaction of Required
Lenders.
6.12 The Administrative Agent shall have received evidence satisfactory to
Required Lenders of the engagement by the Borrowers of a consultant satisfactory
to the Required Lenders knowledgeable with respect to health care operational
matters to advise the Borrowers on cost-containment matters.
6.13 The Administrative Agent shall have received evidence satisfactory to
it and counsel to the Lenders that all steps have been taken to perfect the
Liens required to be granted to the Administrative Agent for the benefit of the
Lenders pursuant to the Loan Documents.
6.14 The Administrative Agent shall have received from Dental Service and
each Additional Company an executed Joinder Agreement.
6.15 The Administrative Agent shall have received executed amendments to
the Pledge Agreement, the Security Agreement and each Assignment of Contract
satisfactory in form and substance to it.
6.16 The Administrative Agent shall have received such other documents,
including, without limitation, such other documents from the holder of the
Senior Subordinated Note, the holders of the Convertible Subordinated Notes and
the holders of any other Subordinated Indebtedness, as the Lenders or their
counsel shall reasonably deem necessary.
SECTION 7. CONFIRMATION OF LOAN DOCUMENTS. Each Loan Party, by its
execution and delivery of this Amendment, irrevocably and unconditionally
ratifies and confirms in favor of the Administrative Agent that it consents to
the terms and conditions of the Credit Agreement as it has been amended by this
Amendment and that notwithstanding this Amendment, each Loan Document to which
such Loan Party is a party shall continue in full force and effect in accordance
with its terms, as
16
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it has been amended on the date hereof, and is and shall continue to be
applicable to all of the Obligations.
SECTION 8. MISCELLANEOUS.
8.1 Each Borrower and each Guarantor reaffirms and restates the
representations and warranties set forth in Article IV of the Credit Agreement,
as amended by this Amendment and after giving effect to the transactions
contemplated herein, and all such representations and warranties shall be true
and correct in all material respects on and as of the date hereof (except
insofar as such representations and warranties relate expressly to an earlier
date). Each Loan Party represents and warrants (which representations and
warranties shall survive the execution and delivery hereof) to the Agent that:
(a) It has the corporate power and authority to execute, deliver and carry
out the terms and provisions of this Amendment and the transactions contemplated
hereby and has taken or caused to be taken all necessary corporate action to
authorize the execution, delivery and performance of this Amendment and the
transactions contemplated hereby;
(b) No consent of any other person (including, without limitation,
shareholders or creditors of any Loan Party), and no action of, or filing with
any governmental or public body or authority is required to authorize, or is
otherwise required in connection with the execution, delivery and performance of
this Amendment;
(c) This Amendment has been duly executed and delivered on behalf of each
Loan Party by a duly authorized officer, and constitutes a legal, valid and
binding obligation of each Loan Party enforceable in accordance with its terms,
subject to bankruptcy, reorganization, insolvency, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and the exercise
of judicial discretion in accordance with general principles of equity; and
(d) The execution, delivery and performance of this Amendment will not
violate any law, statute or regulation, or any order or decree of any court or
governmental instrumentality, or conflict with, or result in the breach of, or
constitute a default under any contractual obligation of any Loan Party.
8.2 Except, as herein expressly amended, the Credit Agreement is ratified
and confirmed in all respects and shall remain in full force and effect in
accordance with its terms, including, without limitation, the provisions set
forth in Section 11.04 of the Credit Agreement.
8.3 All references to the Credit Agreement contained in the Credit
Agreement and the other Loan Documents and the other documents and instruments
delivered pursuant to or in connection therewith shall mean the Credit
Agreement, as amended hereby and as may in the future be amended, restated,
supplemented or modified from time to time.
8.4 This Amendment may be executed by the parties hereto individually or
in combination, in one or more counterparts, each of which shall be an original
and all of which shall constitute one and the same agreement.
8.5 Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
8.6 THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OR
CONFLICT OF LAW PRINCIPLES THEREOF.
8.7 The parties hereto shall, at any time and from time to time following
the execution of this Amendment, execute and deliver all such further
instruments and take all such further actions as may be reasonably necessary or
appropriate in order to carry out the provisions of this Amendment.
17
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IN WITNESS WHEREOF, the Borrowers, Guarantors, the Administrative Agent, the
Syndication Agent and the Required Lenders have caused this Amendment to be duly
executed by their respective authorized officers as of the day and year first
above written.
GENTLE DENTAL SERVICE CORPORATION, as a Borrower
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
Title: President
GENTLE DENTAL MANAGEMENT, INC., as a Borrower
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
Title: President
DENTAL CARE ALLIANCE, INC., as a Borrower
By:
/s/ STEVEN R. MATZKIN
--------------------------------------------------------------------------------
Name: Steven R. Matzkin
Title: President
GMS DENTAL GROUP MANAGEMENT OF HAWAII, INC., as a Guarantor
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
Title: President
GMS DENTAL GROUP MANAGEMENT OF SOUTHERN CALIFORNIA, INC., as a Guarantor
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
Title: President
18
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GENTLE DENTAL OF IRVINE, as a Guarantor
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
Title: President
GDSC OF PIEDMONT, INC., as a Guarantor
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
Title: President
GENTLE DENTAL LEGACY, INC., as a Guarantor
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
Title: President
DENTAL CARE ALLIANCE OF FLORIDA, INC., as a Guarantor
By:
/s/ STEVEN R. MATZKIN
--------------------------------------------------------------------------------
Name: Steven R. Matzkin
Title: President
DENTAL CARE ALLIANCE OF MICHIGAN, INC., as a Guarantor
By:
/s/ STEVEN R. MATZKIN
--------------------------------------------------------------------------------
Name: Steven R. Matzkin
Title: President
DENTAL CARE ALLIANCE OF GEORGIA, INC., as a Guarantor
By:
/s/ STEVEN R. MATZKIN
--------------------------------------------------------------------------------
Name: Steven R. Matzkin
Title: President
19
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DENTAL CARE ALLIANCE OF INDIANA, INC., as a Guarantor
By:
/s/ STEVEN R. MATZKIN
--------------------------------------------------------------------------------
Name: Steven R. Matzkin
Title: President
DENTAL ONE ASSOCIATES, INC., as a Guarantor
By:
/s/ STEVEN R. MATZKIN
--------------------------------------------------------------------------------
Name: Steven R. Matzkin
Title: President
DENTAL CARE ALLIANCE OF PENNSYLVANIA, INC., as a Guarantor
By:
/s/ STEVEN R. MATZKIN
--------------------------------------------------------------------------------
Name: Steven R. Matzkin
Title: President
Additional Companies as Guarantors:
DENTALCO MANAGEMENT SERVICES OF MARYLAND, INC., as a Guarantor
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
Title: President
THE DENTAL CENTER, INC., as a Guarantor
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
Title: President
20
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Lenders:
UNION BANK OF CALIFORNIA, N.A.. as Administrative Agent and Lender
By:
/s/ THOMAS FRATAR
--------------------------------------------------------------------------------
Name: Thomas Fratar
Title: Vice President
THE CHASE MANHATTAN BANK, as Syndication Agent and as a Lender
By:
/s/ ERIC GROBERG
--------------------------------------------------------------------------------
Name: Eric Groberg
--------------------------------------------------------------------------------
Title: Vice President
--------------------------------------------------------------------------------
U.S. BANK NATIONAL ASSOCIATION, as Lender
By:
/s/ DANIEL J. FALSTAD
--------------------------------------------------------------------------------
Name: Daniel J. Falstad
--------------------------------------------------------------------------------
Title: Vice President
--------------------------------------------------------------------------------
FLEET CAPITAL CORPORATION, as a Lender
By:
/s/ LESLIE REUTER
--------------------------------------------------------------------------------
Name: Leslie Reuter
--------------------------------------------------------------------------------
Title: Sr. Vice President
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21
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BANK OF AMERICA, N.A. (successor by merger to NationsBank, N.A.), as a Lender
By:
/s/ RONALD J. PARISI
--------------------------------------------------------------------------------
Name: Ronald J. Parisi
--------------------------------------------------------------------------------
Title: Sr. Vice President
--------------------------------------------------------------------------------
FIRST NATIONAL BANK, as a Lender
By:
/s/ DANIEL T. GRENCY
--------------------------------------------------------------------------------
Name: Daniel T. Grency
--------------------------------------------------------------------------------
Title: CEO
--------------------------------------------------------------------------------
CITIZENS BANK OF MASSACHUSETTS, as a Lender
By:
/s/ LAWRENCE E. JACOBS
--------------------------------------------------------------------------------
Name: Lawrence E. Jacobs
--------------------------------------------------------------------------------
Title: Vice President
--------------------------------------------------------------------------------
SOVEREIGN BANK, as a Lender
By:
/s/ ROLAND D. LAMOTHE
--------------------------------------------------------------------------------
Name: Roland D. Lamothe
--------------------------------------------------------------------------------
Title: Vice President
--------------------------------------------------------------------------------
Solely as to Sections 7 and 8:
INTERDENT, INC., as a Guarantor
By:
/s/ MICHAEL T. FIORE
--------------------------------------------------------------------------------
Name: Michael T. Fiore
--------------------------------------------------------------------------------
Title: CEO
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22
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Schedule VI
PA UCC Financing Statements and Security Agreements
Column A
--------------------------------------------------------------------------------
Column B
--------------------------------------------------------------------------------
Burns Dental Corporation
Burrell Dental Corporation
Dental Care Centers of Hawaii
Francis Dental Corporation
Hualalai Dental Services, Inc.
Joseph M. Checchio & Alex J. Gonzales (A Partnership)
Pacific Dental Services Administrative Office
Yep Dental Corporation Bajwa Dental Corporation
Charles Murillo, D.D.S.
Frank Potts, D.D.S., A Dental Corporation
Gerald Aaron, P.C.
Lynda Watanabe, D.D.S., Inc.
Merzenich Dental Corporation
Ned Greenberg, D.D.S. & Associates, P.C.
Schlesinger Dental Corporation
Tej Johl D.D.S., Dental Corporation
23
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Schedule 2.18
Schedule of Warrants
Lender
--------------------------------------------------------------------------------
Shares of Common Stock
--------------------------------------------------------------------------------
Union Bank of California, N.A. 148,515
The Chase Manhattan Bank
148,515
U.S. Bank National Association
148,515
Fleet Capital Corporation
148,515
Bank of America, N.A.
148,515
First National Bank
59,405
Citizens Financial Group, Inc.
99,010
Sovereign Bank
99,010
24
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Schedule 6.05(l)
Form of Cash Flow Reports
(See Attached)
25
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AMENDMENT AGREEMENT NO. 6 AND WAIVER
Schedule VI
Schedule 2.18
Schedule 6.05(l)
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EXHIBIT 10.24
LEASE AGREEMENT
BASIC LEASE INFORMATION
The following Basic Lease Information is hereby incorporated into and made a
part of the Lease between Landlord and Tenant to which it is attached. Each
reference in the Lease to any of the Basic Lease Information shall mean the
respective information set forth below, and such information shall be deemed
incorporated as part of the terms provided under the particular Lease Section
pertaining to such information. In the event of any conflict between any Basic
Lease Information and the Lease, the Basic Lease Information shall control.
1. Premises: That certain real property consisting of approximately
twenty-six and eighty-three one-hundredths (26.83) acres, including the
Building, as defined below, and all other improvements thereon or to be
constructed thereon by Landlord pursuant to EXHIBIT C (the "premises"). The
above-described real property is herein referred to as the "Land" and more
specifically set forth in EXHIBIT A.
2.
Landlord: GED-IFC, LLC, an Oregon limited liability company.
3.
Landlord's Address for Giving of Notices and Payment of Rent:
GED-IFC, LLC
% Gerding/Edlen Development Company
4650 SW Macadam Avenue, Suite 220
Portland, Oregon 97201
ATTN: Mark Edlen or Kelly Saito
4.
Tenant: InFocus Corporation, an Oregon corporation
5.
Tenant's Address for Giving of Notices:
InFocus Corporation
27700B SW Parkway Avenue
Wilsonville, Oregon 97070
ATTN: Tim Carlson
6.
Building: The Building to be constructed on the Land which shall include four
(4) floors and approximately 140,000 square feet as outlined on the floor plan
of the building attached hereto as EXHIBIT B ("Building"). (Section 1.2; EXHIBIT
B)
7.
Parking: All parking spaces on the Premises.
8.
Use of Premises: General office use and technological research and development.
(Section 2)
9.
Lease Document Issuance and Reference Date: August 28, 2000
10.
Commencement Date: Upon substantial completion (as defined in Section 30.6.9)
of Landlord's Work (as defined in EXHIBIT C).
11.
Rent Commencement Date: The earlier of (i) the Commencement Date, or (ii)
November 15, 2001.
12.
Term: One hundred twenty (120) months plus any partial month following the
Commencement Date.
--------------------------------------------------------------------------------
13.
Rent:
Months
--------------------------------------------------------------------------------
Annual Base Rent Amount
--------------------------------------------------------------------------------
1* - 48
$1,974,000
49 - 96
$2,225,346
97 - 120
$2,508,695
* plus any partial month at the beginning of the term.
The Base Rent referred to above is stated on an annual basis. Base Rent shall be
payable in twelve equal monthly installments at the rate specified for the first
full calendar month when Base Rent is payable. Tenant shall pay Landlord
$164,500 to be applied against the first full month's Rent upon execution of
this Lease. (Section 1.5).
14.
Security Deposit: None
15.
Brokers: None
16.
Guarantors: None
LANDLORD TENANT
GED-IFC, LLC, an Oregon limited liability company
INFOCUS CORPORATION, an Oregon corporation
By:
/s/ Mark Edlen
By:
/s/ John V. Harker
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Title: Manager Title: Co-Chairman of the Board, President and CEO
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date: Date:
--------------------------------------------------------------------------------
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LEASE AGREEMENT BASIC LEASE INFORMATION
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EXHIBIT 10.38
Employment Letter for Martin E. McGough
May 10, 2000
Mr. Martin E. McGough
2028 Country Meadows
Grand Junction, CO 81503
Dear Marty,
I'm pleased to confirm your promotion to the position of Sr. Vice President,
Development and Operations, continuing to report to me as CEO and effective
May 3, 2000. 3D Systems will relocate your family from Grand Junction, CO to the
Valencia, CA area in order for you to work out of our corporate offices.
Your annual base salary of $240,000 will be reviewed annually at the time of
your performance evaluation.
You will continue to participate in 3D Systems' annual Executive Incentive
Plan and your pay-out opportunity, as a percent of base salary, for fiscal year
2000 will be 10% @ threshold plan achievement (90% of annual revenue goal, plus
your other corporate and individual objectives), 30% @ plan achievement (100% of
revenue and other goals) and 1X @ stretch achievement (approximately 122% of
revenue and other goals). Earned payment for fiscal year 2000 will be prorated
between your former salary of $165,000 and your new salary of $240,000. If you
choose to amortize any part of your base salary for the purpose of purchasing a
home in the Valencia area; any earned incentive will be based on your gross
salary before amortization.
You will be awarded additional stock options in an amount deemed appropriate
for the level of your new responsibility by the Compensation Committee of our
Board of Directors.
You and your family will relocate from Grand Junction to the Valencia,
California area to accept this position. For this relocation, 3D Systems will
pay for:
•All costs associated with the purchase of your Colorado residence by a
relocation service to be selected, probably Prudential Real Estate Company.
•A reasonable number of trips to the Valencia area to find and purchase a
residence.
•All normal closing costs (including loan point fees but excluding mortgage
interest and property tax pro-rations, repairs and the like) related to the
purchase of a home in the Valencia area.
•The moving of all household effects to include packing and unpacking and
insurance.
•Reimbursement for actual out-of-pocket miscellaneous expenses incurred for the
relocation, such as charges for the connection or disconnection of appliances
and utilities.
•Reasonable costs to transport your family, vehicles and pets from Grand
Junction to the Valencia area.
•Reasonable temporary living expenses in Valencia, for a period not to exceed
one month, for lodging and meals while awaiting the arrival of your household
goods shipment.
•Storage of household effects for a reasonable period, if needed.
•An advanced capitalized amount of your new base salary in the amount of up to
$100,000 for the purpose of purchasing a residence in the Valencia area. Such
advance will be debited against your base salary over a 5 year period (a
$100,000 advance will reduce your paid base salary by $20,000 per year for
5 years). Credited base salary for annual incentive payment calculation and
--------------------------------------------------------------------------------
all other salary related benefits will remain at the full level ($240,000 for
year 2000), and will be taxable at that level in each of the five (5) years.
•All taxable relocation expenses, for which you are reimbursed, will be reported
as taxable income. All taxable relocation reimbursements will be grossed-up to
offset any additional tax liability on your part.
•Should you resign from 3D Systems or be discharged for cause within one year
from the date of receipt of all relocation allowances, the entire allowance will
be refundable to the Company and you agree to repay 3D Systems in full.
Marty I believe this accurately reflects all of the items we have agreed to
regarding this new position. If I've missed anything, please bring it to my
attention.
I'm delighted with your acceptance of this new role and look forward to
continuing to work with you as we achieve our objectives and move the company
forward.
Sincerely,
Brian Service
President and Chief Executive Officer
3D Systems
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EXHIBIT 10.38
Employment Letter for Martin E. McGough
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Exhibit 10.7
AMENDMENT NO. 6
TO
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS AMENDMENT NO. 6 TO REAL ESTATE PURCHASE AND SALE AGREEMENT (this
"Amendment") dated as of May 18, 2001, is made by and between Pope Resources, a
Delaware limited partnership, its wholly owned subsidiary Olympic Property Group
LLC, a Washington limited liability company, and its wholly owned subsidiaries
Olympic Real Estate Development LLC, a Washington limited liability company,
Olympic Real Estate Management, Inc., a Washington corporation, and Olympic
Resorts LLC, a Washington limited liability company (collectively "Seller"), HCV
Pacific Partners LLC, a California limited liability company (or its assigns as
permitted herein) ("Buyer"), and Port Ludlow Associates LLC, a Washington
limited liability company (or its assigns as permitted herein) ("Assignee"),
regarding that certain Real Estate Purchase and Sale Agreement dated January 12,
2001, between Buyer and Seller, as amended by Amendment No. 1 dated February 8,
2001, Amendment No. 2 dated February 14, 2001, Amendment No. 3 dated
February 27, 2001, Amendment No. 4 dated March 26, 2001, and Amendment No. 5
dated May 15, 2001 (as amended, the "Agreement"), for the purchase and sale of
certain property located in Jefferson and Pierce Counties, Washington, described
therein (the "Property").
I. EFFECT OF AMENDMENT. This Amendment amends and modifies the Agreement.
In the event of any conflict between the Agreement and this Amendment, this
Amendment shall control. Except as contained within the Agreement and this
Amendment, there are no other agreements or understandings between Buyer and
Seller relating to the Property. Capitalized terms not otherwise defined herein
shall have the meanings given them under the Agreement.
II. EXTENSION OF TIME. In Sections XII and XIII of Amendment No. 5 and in
Section 16.9 of the Agreement (as amended by Section XVI of Amendment No. 5),
the date "May 18, 2001," is hereby replaced in each instance by the date
"May 25, 2001." In Section XIX of Amendment No. 5, the date "May 22, 2001," is
hereby replaced by the date "May 25, 2001."
--------------------------------------------------------------------------------
Except as expressly amended by this Amendment, the Agreement is hereby
ratified and confirmed and shall take full force and effect.
BUYER: PORT LUDLOW ASSOCIATES LLC, a Washington limited liability company
By West Coast Northwest Pacific Partners LLC, a Washington limited liability
company, its manager
By:
/s/ RANDALL J. VERRUE
--------------------------------------------------------------------------------
Print Name: Randall J. Verrue
--------------------------------------------------------------------------------
Its: President & CEO
--------------------------------------------------------------------------------
Date:
5/18/01
--------------------------------------------------------------------------------
SELLER:
POPE RESOURCES L.P., a Delaware limited partnership, by POPE MGP, Inc., a
Delaware corporation, its managing general partner
By:
/s/ GREGORY M. MCCARRY
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Print Name: Gregory M. McCarry
--------------------------------------------------------------------------------
Its: V.P. Real Estate
--------------------------------------------------------------------------------
Date:
5/18/01
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OLYMPIC PROPERTY GROUP LLC, a Washington limited liability company
By:
/s/ GREGORY M. MCCARRY
--------------------------------------------------------------------------------
Print Name: Gregory M. McCarry
--------------------------------------------------------------------------------
Its: C.O.O.
--------------------------------------------------------------------------------
Date:
5/18/01
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2
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OLYMPIC REAL ESTATE DEVELOPMENT LLC, a Washington limited liability company
By:
/s/ GREGORY M. MCCARRY
--------------------------------------------------------------------------------
Print Name: Gregory M. McCarry
--------------------------------------------------------------------------------
Its: C.O.O.
--------------------------------------------------------------------------------
Date:
5/18/01
--------------------------------------------------------------------------------
OLYMPIC REAL ESTATE MANAGEMENT, INC., a Washington corporation By: /s/ TOM
GRIFFIN
--------------------------------------------------------------------------------
Print Name: Tom Griffin
--------------------------------------------------------------------------------
Its: Vice President
--------------------------------------------------------------------------------
Date:
5/18/01
--------------------------------------------------------------------------------
OLYMPIC RESORTS LLC, a Washington limited liability company
By:
/s/ GREGORY M. MCCARRY
--------------------------------------------------------------------------------
Print Name: Gregory M. McCarry
--------------------------------------------------------------------------------
Its: C.O.O.
--------------------------------------------------------------------------------
Date:
5/18/01
--------------------------------------------------------------------------------
3
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Exhibit 10.7
AMENDMENT NO. 6 TO REAL ESTATE PURCHASE AND SALE AGREEMENT
|
Exhibit 10.45
SEVERANCE AGREEMENT
(Amended and Restated August 14, 2001)
This Severance Agreement originally effective as of _______ is hereby amended
and restated in its entirety effective _______________, is made by and between
FRESH CHOICE, INC. (“Fresh Choice” or the “Company”) and _____________________
(“the Employee”).
RECITALS
A. The Employee presently serves as ________________________ of the
Company and performs significant strategic and management responsibilities
necessary to the continued conduct of the Company’s business and operations.
B. The Board of Directors (the “Board”) has determined that it is in
the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility or occurrence of an Involuntary Termination.
C. The Company recognizes the possibility of a Transfer of Control or
Hostile Takeover exists. The Company also recognizes that economic events
beyond its control may affect its business and operations. The Company realizes
that the Employee possesses an intimate knowledge of the Company and its Board
believes that it is necessary to be able to retain the Employee as well as call
on the Employee for advice upon the occurrence of a Transfer of Control or
Hostile Takeover. The Board also believes that the existence of this Agreement
will enhance the Company’s ability to call on and rely upon the Employee.
D. The Board believes that it is imperative to provide the Employee
with certain severance benefits upon the Employee’s Involuntary Termination,
termination for Good Reason or Involuntary Termination of employment following a
Transfer of Control or upon consummation of a Hostile Takeover that will provide
the Employee with enhanced financial security and provide sufficient incentive
and encouragement to the Employee to remain with the Company.
In consideration of and inducement for the Employee’s continued employment with
the Company, the Company and the Employee agree to the following:
I. DEFINITIONS.
A. CAUSE. “CAUSE” SHALL MEAN ANY OF THE FOLLOWING: (I) THE
EMPLOYEE’S THEFT, DISHONESTY, OR FALSIFICATION OF ANY COMPANY DOCUMENTS OR
RECORDS; (II) THE EMPLOYEE’S IMPROPER USE OR DISCLOSURE OF THE COMPANY’S
CONFIDENTIAL OR PROPRIETARY INFORMATION; (III) ANY ACTION BY THE EMPLOYEE WHICH
HAS A DETRIMENTAL EFFECT ON THE COMPANY’S REPUTATION OR BUSINESS; (IV) THE
EMPLOYEE’S FAILURE OR INABILITY TO PERFORM ANY REASONABLE ASSIGNED DUTIES AFTER
WRITTEN NOTICE FROM THE COMPANY OF, AND A REASONABLE OPPORTUNITY TO CURE, SUCH
FAILURE OR INABILITY; (V) ANY MATERIAL BREACH BY THE EMPLOYEE OF ANY EMPLOYMENT
AGREEMENT BETWEEN THE EMPLOYEE AND THE COMPANY, WHICH BREACH IS NOT CURED
PURSUANT TO THE TERMS OF SUCH AGREEMENT; OR (VI) THE EMPLOYEE’S CONVICTION
(INCLUDING ANY PLEA OF GUILTY OR NOLO CONTENDERE) OF ANY CRIMINAL ACT WHICH
IMPAIRS THE EMPLOYEE’S ABILITY TO PERFORM HIS OR HER DUTIES WITH THE COMPANY.
B. COMPENSATION. COMPENSATION SHALL MEAN THE EMPLOYEE’S FINAL BASE
SALARY.
C. GOOD REASON. “GOOD REASON” SHALL MEAN ANY ONE OR MORE OF THE
FOLLOWING:
(I) WITHOUT THE EMPLOYEE’S EXPRESS WRITTEN CONSENT, THE ASSIGNMENT TO
THE EMPLOYEE OF ANY DUTIES, OR ANY LIMITATION OF THE EMPLOYEE’S
RESPONSIBILITIES, SUBSTANTIALLY INCONSISTENT WITH THE EMPLOYEE’S POSITIONS,
DUTIES, RESPONSIBILITIES AND STATUS WITH THE COMPANY IMMEDIATELY PRIOR TO THE
DATE OF THE TRANSFER OF CONTROL;
(II) WITHOUT THE EMPLOYEE’S EXPRESS WRITTEN CONSENT, THE RELOCATION OF
THE PRINCIPAL PLACE OF THE EMPLOYEE’S EMPLOYMENT TO A LOCATION THAT IS MORE THAN
FIFTY (50) MILES FROM THE EMPLOYEE’S PRINCIPAL PLACE OF EMPLOYMENT IMMEDIATELY
PRIOR TO THE DATE OF THE TRANSFER OF CONTROL, OR THE IMPOSITION OF TRAVEL
REQUIREMENTS SUBSTANTIALLY MORE DEMANDING OF THE EMPLOYEE THAN SUCH TRAVEL
REQUIREMENTS EXISTING IMMEDIATELY PRIOR TO THE DATE OF THE TRANSFER OF CONTROL;
(III) ANY FAILURE BY THE COMPANY TO PAY, OR ANY REDUCTION BY THE
COMPANY OF, (1) THE EMPLOYEE’S BASE SALARY IN EFFECT IMMEDIATELY PRIOR TO THE
DATE OF THE TRANSFER OF CONTROL (UNLESS REDUCTIONS COMPARABLE IN AMOUNT AND
DURATION ARE CONCURRENTLY MADE FOR ALL OTHER EMPLOYEES OF THE COMPANY WITH
RESPONSIBILITIES, ORGANIZATIONAL LEVEL AND TITLE COMPARABLE TO THE EMPLOYEE’S),
OR (2) THE EMPLOYEE’S BONUS COMPENSATION, IF ANY, IN EFFECT IMMEDIATELY PRIOR TO
THE DATE OF THE TRANSFER OF CONTROL (SUBJECT TO APPLICABLE PERFORMANCE
REQUIREMENTS WITH RESPECT TO THE ACTUAL AMOUNT OF BONUS COMPENSATION EARNED BY
THE EMPLOYEE); OR
(IV) ANY FAILURE BY THE COMPANY TO (1) CONTINUE TO PROVIDE THE EMPLOYEE
WITH THE OPPORTUNITY TO PARTICIPATE, ON TERMS NO LESS FAVORABLE THAN THOSE IN
EFFECT FOR THE BENEFIT OF ANY EMPLOYEE OR SERVICE PROVIDER GROUP WHICH
CUSTOMARILY INCLUDES A PERSON HOLDING THE EMPLOYMENT OR SERVICE PROVIDER
POSITION OR A COMPARABLE POSITION WITH THE COMPANY THEN HELD BY THE EMPLOYEE, IN
ANY BENEFIT OR COMPENSATION PLANS AND PROGRAMS, INCLUDING, BUT NOT LIMITED TO,
THE COMPANY’S LIFE, DISABILITY, HEALTH, DENTAL, MEDICAL, SAVINGS, PROFIT
SHARING, STOCK PURCHASE AND RETIREMENT PLANS, IF ANY, IN WHICH THE EMPLOYEE WAS
PARTICIPATING IMMEDIATELY PRIOR TO THE DATE OF THE TRANSFER OF CONTROL, OR THEIR
EQUIVALENT, OR (2) PROVIDE THE EMPLOYEE WITH ALL OTHER FRINGE BENEFITS (OR THEIR
EQUIVALENT) FROM TIME TO TIME IN EFFECT FOR THE BENEFIT OF ANY EMPLOYEE OR
SERVICE PROVIDER GROUP WHICH CUSTOMARILY INCLUDES A PERSON HOLDING THE
EMPLOYMENT OR SERVICE PROVIDER POSITION OR A COMPARABLE POSITION WITH THE
COMPANY THEN HELD BY THE EMPLOYEE.
D. HOSTILE TAKEOVER. A “HOSTILE TAKEOVER” SHALL MEAN THE OCCURRENCE
OF THE FOLLOWING:
(I) DURING ANY PERIOD OF TWO (2) CONSECUTIVE YEARS BEGINNING ON OR
AFTER THE DATE HEREOF, THE PERSONS WHO WERE MEMBERS OF THE BOARD IMMEDIATELY
BEFORE THE BEGINNING OF SUCH PERIOD (THE “INCUMBENT DIRECTORS”) CEASE (FOR ANY
REASON OTHER THAN DEATH) TO CONSTITUTE AT LEAST A MAJORITY OF THE BOARD OR THE
BOARD OF DIRECTORS OF ANY SUCCESSOR TO THE COMPANY, PROVIDED THAT, ANY DIRECTOR
WHO WAS NOT A DIRECTOR AS OF THE DATE HEREOF SHALL BE DEEMED TO BE AN INCUMBENT
DIRECTOR IF SUCH DIRECTOR WAS ELECTED TO THE BOARD BY, OR ON THE RECOMMENDATION
OF OR WITH THE APPROVAL OF, AT LEAST TWO-THIRDS OF THE DIRECTORS WHO THEN
QUALIFIED AS INCUMBENT DIRECTORS EITHER ACTUALLY OR BY PRIOR OPERATION OF THE
FOREGOING UNLESS SUCH ELECTION, RECOMMENDATION OR APPROVAL OCCURS AS A RESULT OF
AN ACTUAL OR THREATENED ELECTION CONTEST OR OTHER ACTUAL OR THREATENED
SOLICITATION OF PROXIES OR CONTESTS BY OR ON BEHALF OF A PERSON OTHER THAN A
MEMBER OF THE BOARD; OR
(II) ANY PERSON (AS DEFINED IN SECTION 3(A)(9) OF THE EXCHANGE ACT AND
AS USED IN SECTIONS 13(D) AND 14(D) THEREOF), EXCLUDING THE COMPANY, ANY
SUBSIDIARY OF THE COMPANY AND ANY EMPLOYEE BENEFIT PLAN SPONSORED OR MAINTAINED
BY THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY (INCLUDING ANY TRUSTEE OF ANY
SUCH PLAN ACTING IN HIS CAPACITY AS TRUSTEE), BECOMES THE “BENEFICIAL OWNER” (AS
DEFINED IN RULE 13D-3 UNDER THE EXCHANGE ACT) OF SECURITIES OF THE COMPANY
REPRESENTING THIRTY PERCENT (30%) OF THE TOTAL COMBINED VOTING POWER OF THE
COMPANY’S THEN OUTSTANDING SECURITIES OTHER THAN PURSUANT TO A TRANSACTION
APPROVED BY AT LEAST TWO-THIRDS OF THE DIRECTORS WHO THEN QUALIFY AS INCUMBENT
DIRECTORS.
E. INVOLUNTARY TERMINATION. “INVOLUNTARY TERMINATION” SHALL MEAN
(I) A LAYOFF OF THE EMPLOYEE THAT IS APPROVED BY THE PRESIDENT AND/OR CHAIRMAN,
OR (II) A TERMINATION WITHOUT CAUSE.
F. OWNERSHIP CHANGE. AN “OWNERSHIP CHANGE” SHALL BE DEEMED TO HAVE
OCCURRED IN THE EVENT ANY OF THE FOLLOWING OCCURS WITH RESPECT TO THE COMPANY:
(I) THE DIRECT OR INDIRECT SALE OR EXCHANGE BY THE SHAREHOLDERS OF
THE COMPANY OF ALL OR SUBSTANTIALLY ALL OF THE STOCK OF THE COMPANY;
(II) A MERGER IN WHICH THE COMPANY IS A PARTY; OR
(III) THE SALE, EXCHANGE, OR TRANSFER (INCLUDING, WITHOUT LIMITATION,
PURSUANT TO A LIQUIDATION OR DISSOLUTION) OF ALL OR SUBSTANTIALLY ALL OF THE
COMPANY’S ASSETS (OTHER THAN A SALE, EXCHANGE, OR TRANSFER TO ONE (1) OR MORE
CORPORATIONS WHERE THE SHAREHOLDERS OF THE COMPANY BEFORE SUCH SALE, EXCHANGE,
OR TRANSFER RETAIN, DIRECTLY OR INDIRECTLY, AT LEAST A MAJORITY OF THE
BENEFICIAL INTEREST IN THE VOTING STOCK OF THE CORPORATION(S) TO WHICH THE
ASSETS WERE TRANSFERRED).
G. SEVERANCE PAY. SEVERANCE PAY SHALL MEAN COMPENSATION PAID TO THE
EMPLOYEE DURING THE SEVERANCE PERIOD. SEVERANCE PAY SHALL BE PAYABLE IN EQUAL
BI-WEEKLY INSTALLMENTS, LESS APPLICABLE STATE AND FEDERAL TAXES, THROUGH
PAYROLL. IF THE EMPLOYEE’S SEPARATION DATE DOES NOT COINCIDE WITH THE END OF A
PAYROLL PERIOD, THEN THE FIRST AND LAST INSTALLMENT MAY BE PRORATED TO REFLECT
THE PARTIAL PAY PERIOD.
H. SEPARATION DATE. SEPARATION DATE SHALL MEAN THE EMPLOYEE’S LAST
DAY OF ACTIVE EMPLOYMENT WITH THE COMPANY.
I. SEVERANCE PERIOD. SEVERANCE PERIOD SHALL MEAN THE PERIOD
COMMENCING ON THE EMPLOYEE’S SEPARATION DATE AND ENDING TWELVE (12) MONTHS
THEREAFTER.
J. TRANSFER OF CONTROL. A “TRANSFER OF CONTROL” SHALL MEAN AN
OWNERSHIP CHANGE IN WHICH THE SHAREHOLDERS OF THE COMPANY BEFORE SUCH OWNERSHIP
CHANGE DO NOT RETAIN, DIRECTLY OR INDIRECTLY, AT LEAST A MAJORITY OF THE
BENEFICIAL INTEREST IN THE VOTING STOCK OF THE COMPANY.
II. SEVERANCE BENEFITS UPON AN INVOLUNTARY TERMINATION.
A. SEVERANCE PAY. IF THE EMPLOYEE’S EMPLOYMENT IS INVOLUNTARILY
TERMINATED BY THE COMPANY, AND IF THE EMPLOYEE SIGNS A GENERAL RELEASE OF KNOWN
AND UNKNOWN CLAIMS IN FORM SATISFACTORY TO THE COMPANY, THE COMPANY SHALL PAY
SEVERANCE PAY TO THE EMPLOYEE FOR THE SEVERANCE PERIOD.
B. MEDICAL AND DENTAL INSURANCE BENEFITS. MEDICAL AND DENTAL
INSURANCE BENEFITS WILL END THE LAST DAY OF THE MONTH IN WHICH THE SEPARATION
DATE OCCURS. SHOULD THE EMPLOYEE BE ELIGIBLE FOR AND PROPERLY AND TIMELY ELECT
COBRA COVERAGE FOR MEDICAL AND/OR DENTAL BENEFITS, THE COMPANY WILL PAY A
PORTION OF THE COBRA PREMIUMS EQUAL TO THE DOLLAR AMOUNT THE COMPANY PAID TOWARD
THE EMPLOYEE’S MEDICAL AND/OR DENTAL BENEFITS AS OF THE SEPARATION DATE. THE
EMPLOYEE SHALL PAY THE REMAINING COBRA PREMIUM (I.E., THE TOTAL COBRA PREMIUM
LESS THE COMPANY CONTRIBUTION), INCLUDING ANY SUBSEQUENT COBRA PREMIUM
INCREASES. THE COMPANY’S OBLIGATION TO CONTRIBUTE TOWARDS THE COBRA PREMIUMS
SHALL CEASE UPON THE EARLIER OF (I) THE APPLICABLE SEVERANCE PERIOD; (II) THE
ACTUAL COBRA CONTINUATION PERIOD; OR (III) THE EMPLOYEE’S FAILURE TO TIMELY
REMIT ANY COBRA PREMIUM OR CONTRIBUTIONS TOWARD SUCH PREMIUMS.
C. NO SEVERANCE BENEFITS UPON VOLUNTARY OR OTHER TERMINATIONS.
EMPLOYEE ACKNOWLEDGES THAT SEVERANCE PAY PURSUANT TO THIS ARTICLE I SHALL ONLY
BE PAYABLE UPON AN INVOLUNTARY TERMINATION. THE EMPLOYEE SHALL NOT BE ELIGIBLE
FOR SEVERANCE PAY FOR ANY OTHER SEPARATION OF EMPLOYMENT, INCLUDING BUT NOT
LIMITED TO TERMINATION FOR CAUSE, VOLUNTARY RESIGNATIONS, OR MUTUALLY AGREEABLE
SEPARATIONS.
III. SEVERANCE BENEFITS UPON TERMINATION FOLLOWING A TRANSFER OF
CONTROL. IF, WITHIN TWELVE (12) MONTHS FOLLOWING A TRANSFER OF CONTROL, THE
EMPLOYEE’S EMPLOYMENT IS INVOLUNTARILY TERMINATED OR THE EMPLOYEE RESIGNS FOR
GOOD REASON, THE EMPLOYEE SHALL BE ENTITLED TO RECEIVE THE SEVERANCE PAY AND
MEDICAL AND DENTAL INSURANCE BENEFITS AS SET FORTH IN ARTICLE II.A AND
ARTICLE II.B.
IV. SEVERANCE BENEFITS UPON CONSUMMATION OF HOSTILE TAKEOVER. UPON
THE CONSUMMATION OF A HOSTILE TAKEOVER, THE EMPLOYEE SHALL BE ENTITLED TO
RECEIVE SEVERANCE PAY AND MEDICAL AND DENTAL INSURANCE BENEFITS AS SET FORTH IN
ARTICLE II.A AND ARTICLE II.B.
V. OPTION ACCELERATION UPON TRANSFER OF CONTROL OR HOSTILE TAKEOVER.
IN ACCORDANCE WITH THE SECOND AMENDED AND RESTATED 1988 STOCK OPTION PLAN AND
THE RELATED INCENTIVE STOCK OPTION AGREEMENT AND/OR NONQUALIFIED STOCK OPTION
AGREEMENT BETWEEN THE COMPANY AND THE EMPLOYEE, THE EMPLOYEE’S OPTIONS (AS SUCH
TERM IS DEFINED THEREIN) SHALL BECOME FULLY VESTED AND EXERCISABLE UPON (I) AN
INVOLUNTARY TERMINATION OR RESIGNATION FOR GOOD REASON WITHIN TWELVE (12) MONTHS
FOLLOWING A TRANSFER OF CONTROL OR (II) UPON THE CONSUMMATION OF A HOSTILE
TAKEOVER.
VI. LIMITATION OF PAYMENTS AND BENEFITS. TO THE EXTENT THAT ANY OF
THE PAYMENTS AND BENEFITS PROVIDED FOR IN THIS AGREEMENT OR OTHERWISE PAYABLE TO
EMPLOYEE CONSTITUTE “PARACHUTE PAYMENTS” WITHIN THE MEANING OF SECTION 280G OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), AND, BUT FOR THIS
ARTICLE VI, WOULD BE SUBJECT TO THE EXCISE TAX IMPOSED BY SECTION 4999 OF THE
CODE OR ANY SIMILAR OR SUCCESSOR PROVISION, THE AGGREGATE AMOUNT OF SUCH
PAYMENTS AND BENEFITS WILL BE REDUCED, BUT ONLY TO THE EXTENT NECESSARY SO THAT
NONE OF SUCH PAYMENTS AND BENEFITS ARE SUBJECT TO ANY EXCISE TAX.
VII. MISCELLANEOUS PROVISIONS.
A. IT IS INTENDED BY THE PARTIES HERETO THAT THE PROVISIONS OF THIS
AGREEMENT, AS AMENDED, SHALL BECOME EFFECTIVE AS OF THE DATE OF APPROVAL BY THE
BOARD’S COMPENSATION COMMITTEE.
B. DURING THE SEVERANCE PERIOD, IT IS UNDERSTOOD BY THE COMPANY AND
THE EMPLOYEE THAT THE EMPLOYEE SHALL NOT BE CONSIDERED AN EMPLOYEE OF THE
COMPANY AND, THEREFORE, SHALL NOT BE ELIGIBLE FOR ANY OTHER EMPLOYER-PROVIDED
BENEFITS INCLUDING BUT NOT LIMITED TO VACATION ACCRUAL, SICK DAYS, DISABILITY
BENEFITS, OR ANY OTHER BENEFIT PROGRAM IN WHICH ACTIVE EMPLOYEES OF THE COMPANY
MAY PARTICIPATE.
C. THE EXECUTION OF THIS SEVERANCE AGREEMENT DOES NOT CONSTITUTE AN
EMPLOYMENT CONTRACT BETWEEN THE COMPANY AND THE EMPLOYEE OR AN AGREEMENT BY THE
COMPANY TO CONTINUE TO EMPLOY THE EMPLOYEE. BY SIGNING THIS SEVERANCE
AGREEMENT, THE EMPLOYEE ACKNOWLEDGES THAT HIS EMPLOYMENT WITH THE COMPANY IS AND
CONTINUES TO BE “AT-WILL”, AND THAT SUCH EMPLOYMENT MAY BE TERMINATED AT ANY
TIME WITH OR WITHOUT CAUSE.
D. SUBJECT TO THE BENEFITS SET FORTH ABOVE, THE EMPLOYEE SHALL BE
ENTITLED TO NO FURTHER COMPENSATION FOR ANY DAMAGE OR INJURY ARISING OUT OF THE
TERMINATION OF THE EMPLOYEE’S EMPLOYMENT BY THE COMPANY.
E. IN THE EVENT OF ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF
OR IN ANY WAY RELATED TO THIS AGREEMENT, THE INTERPRETATION OF THIS AGREEMENT OR
THE ALLEGED BREACH THEREOF, SUCH DISPUTE, CLAIM OR CONTROVERSY SHALL BE
SUBMITTED BY THE PARTIES TO BINDING ARBITRATION PROVIDED BY THE AMERICAN
ARBITRATION ASSOCIATION IN SANTA CLARA COUNTY, CALIFORNIA.
F. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE
COMPANY AND THE EMPLOYEE REGARDING SEVERANCE PAY AND OTHER BENEFITS THAT ARE THE
SUBJECT MATTER HEREOF, AND SUPERSEDES ALL AGREEMENTS PRIOR TO THE EFFECTIVE DATE
OF THIS AGREEMENT, WHETHER WRITTEN OR ORAL. FRESH CHOICE RESERVES THE RIGHT TO
AMEND OR TERMINATE THIS AGREEMENT IN WHOLE OR IN PART UPON WRITTEN NOTIFICATION
TO THE EMPLOYEE.
G. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED HEREIN.
H. THIS AGREEMENT SHALL BE BINDING ON THE COMPANY’S SUCCESSORS.
I. AMOUNTS PAID TO THE EMPLOYEE SHALL BE SUBJECT TO ALL APPLICABLE
FEDERAL, STATE AND LOCAL WITHHOLDING TAXES.
J. ALL PAYMENTS PROVIDED UNDER THIS AGREEMENT, OTHER THAN PAYMENTS
MADE PURSUANT TO A PLAN WHICH PROVIDES OTHERWISE, SHALL BE PAID IN CASH FROM THE
GENERAL FUNDS OF THE COMPANY.
IN WITNESS WHEREOF, the Company and Employee have executed this Agreement on
_______________ effective as of the day and year first above written. This
Agreement may be executed in counter parts, each of which shall be deemed to be
an original but all of which shall constitute one and the same instrument.
“FRESH CHOICE”
“EMPLOYEE”
FRESH CHOICE, INC.,
a Delaware Corporation
By:
|
Exhibit 10.1
SEPARATION AGREEMENT
This separation agreement (“Agreement”) is entered into this 10th day of
April, 2001 (the “Effective Date”), by and between Getty Images, Inc. of 701 N.
34th Street, 4th Floor, Seattle, WA 98103 (“Getty”), and John Hallberg
(“Hallberg”).
In consideration of the mutual covenants set forth below, the parties
agree as follows:
1. Separation of Employment. Hallberg resigns from his employment with
Getty effective April 30, 2001 (the “Separation Date”). Hallberg will formally
announce his resignation no sooner than April 30, 2001.
2. Separation Package. Getty agrees to provide Hallberg with the following
benefits:
(a) Separation Pay. Getty will pay Hallberg a lump sum equal to
twelve (12) months salary as severance pay ($260,000.00) less all lawful or
required deductions, within 7 days after the effective date of this Agreement.
(b) Medical, Welfare, and Retirement Benefits. Getty will provide
Hallberg and his dependents with continued medical, welfare, and retirement
benefits through April 30 2001. Beginning in May 2001, Hallberg and/or his
dependents may elect a temporary continuation of group health insurance coverage
at group rates (called “COBRA continuation coverage”). Getty will provide
Hallberg and his covered dependents with a separate notice summarizing their
COBRA continuation coverage rights and obligations, as well as an election form.
If Hallberg and/or his covered dependents wish to continue COBRA coverage,
Hallberg must pay all applicable premiums for the duration of the COBRA
eligibility period.
(c) Stock Options. Getty agrees that the stock options granted to
Hallberg on October 26, 1998, August 3, 1999, October 22, 1999 and April 6,
2000, totaling 75,000, (less any options exercised prior to March 22, 2001),
shall be accelerated and deemed fully vested as of March 22, 2001. Hallberg may
exercise any vested options at any time between March 22, 2001 and the close of
business on March 22, 2002.
(d) Accrued Vacation. Getty agrees to pay Hallberg for seven (7) days
of accrued but unused vacation, in the amount of Seven Thousand Dollars
($7,000.00). Payment shall be made on or before May 31, 2001.
(e) Tax Withholding. All payments made under this Agreement shall be
subject to applicable federal income tax, social security and any other required
withholdings.
(f) 401(k) Match. Getty agrees to continue the employer’s
non-discretionary matching contribution to Hallberg’s 401(k) account through
April 30, 2001 and confirm that all amounts are vested.
3. D&O Coverage. Getty warrants that Hallberg has been, and will continue
to be, protected under Getty’s D&O insurance policies, for acts or omissions
committed while employed by Getty on or before April 30, 2001.
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4. Releases. Hallberg accepts the Separation Package contained in this
Agreement in full satisfaction of all his rights and interests relating to his
employment with and separation from Getty and in full satisfaction of all his
rights and interests arising under any pre-existing agreement between the
parties including, without limitation, the Employment Agreement dated April 10,
2000, between Hallberg and Getty and any and all option agreements between
Hallberg and Getty or between Hallberg and Getty Images. In consideration
therefore, Hallberg and his heirs, executors, successors and assigns, hereby
releases and forever discharges Getty and its respective subsidiaries,
successors, past and present officers, directors, agents, and employees from any
and all claims, causes of action or liabilities, at law or in equity, judicial
or administrative, debts, sums of money, accounts, judgments or demands,
suspected or unsuspected and irrespective of any present lack of knowledge of
any possible claim or of any fact or circumstance pertaining thereto, which have
arisen or may arise related to Hallberg’s employment, or separation from
employment, with Getty on or before the date of this Agreement.
This release specifically covers, but is not limited to, any disability
claims under state law; any claims of discrimination based on race, color,
national origin, sex, marital status, or physical or mental disability under any
federal, state, or local law, rule, or regulation; any contract or tort claims
arising under federal, state, or local law; any claims arising under federal,
state or local law based on promises made or allegedly made by Getty to
Hallberg; any claims under any express or implied contract or legal restrictions
on Getty’s right to terminate its employees; any claims of unfair dismissal
pursuant to the laws of the United States, the United Kingdom or any other
foreign country. Hallberg hereby covenants not to assert any such claims or
causes of action.
Getty and its respective subsidiaries, successors, past and present
officers, directors, agents, and employees, hereby releases and forever
discharges Hallberg and his heirs, executors, successors and assigns from any
and all claims, causes of action or liabilities, at law or in equity, judicial
or administrative, debts, sums of money, accounts, judgments or demands,
suspected or unsuspected and irrespective of any present lack of knowledge of
any possible claim or of any fact or circumstance pertaining thereto, which have
arisen or may arise related to Hallberg’s employment, or separation from
employment, with Getty on or before the date of this Agreement.
5. Non-Disparagement. Hallberg and Getty agree for themselves and all
others acting on their behalf, either directly or indirectly, not to take,
support, encourage, induce or voluntarily participate in any action or attempted
action that would negatively comment on, disparage, or call into question the
business operations, policies, or conduct of the other, or any parent,
subsidiaries, affiliates, officers or employees thereof, or to act in any way
with respect to such business operations, policies or conduct that would damage
the other’s reputation, business relationships, or present or future business,
or the reputation of any past or present directors, executives, officers,
agents, employees or parents, affiliates and subsidiaries of the other. Each
party agrees that they will not comment about the other party to any person or
entity, including but not limited to current or former employees, officers or
customers, concerning such business operations, policies or conduct except as
required or permitted by law or as necessary for that party to defend itself in
any civil, criminal, administrative, judicial, arbitral, or administrative
proceeding. Each party further agrees that from this point forward it will not
state, comment or suggest to any persons any false reasons for Hallberg’s
separation from employment with Getty.
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Nothing in this paragraph shall prevent Hallberg from commenting about his work
experience at Getty in connection with any bona fide efforts at seeking
employment, but in such event, he will not disparage Getty in any way.
6. Non-Solicitation. Hallberg agrees that he will not, during the twelve
(12) months following the Separation Date, seek to procure the services of any
officer or employee of Getty.
7. Confidentiality. Hallberg and Getty agree to keep the terms of this
Agreement confidential, except for communications about it by Hallberg with his
immediate family, attorney or accountants or other professional financial
advisors, or communications by Getty with its attorneys, financial advisors, or
executive management personnel with a bona fide need to know. Hallberg and Getty
further agree to take all reasonable steps necessary to ensure that
confidentiality is maintained by any of the individuals referenced above to whom
disclosure is authorized, and agree to accept responsibility for any breach of
confidentiality by any individual to whom the terms of the Agreement are
disclosed. The parties agree that damages for breach of this Confidentiality
provision would be difficult to determine and therefore agree that this
provision may be enforced by temporary or permanent injunction. The right to
such injunctive relief shall be in addition to and not in place of any further
remedies to which the non-breaching party may be entitled.
8. Complete Agreement. This Agreement constitutes a full and final
resolution of all matters in any way related to Hallberg’s employment with, and
separation from, Getty. This Agreement supersedes any and all other agreements
between the parties including without limitation the Employment Agreement dated
April 10, 2000, between Hallberg and Getty. Except as provided in this
Agreement, there are no other wages, bonuses or benefits of any kind owed by
Getty to Hallberg.
9. No Admission. Nothing in this Agreement shall be construed as any
indication that Getty has acted wrongfully towards Hallberg or any other person.
10. Voluntary Execution. Hallberg represents that he has read, considered,
and fully understands this Agreement and all its terms, and executes it freely
and voluntarily. Hallberg represents that in entering into this Agreement, he
does not rely and has not relied upon any representation or statement made by
Getty or any of their respective employees or agents concerning this Agreement.
Hallberg has a period of twenty-one (21) days in which to consider this
Agreement, but may sign it in less than 21 days at his option.
Hallberg shall have a period of seven (7) days following his signing this
Agreement in which to revoke it. This Agreement shall not become effective or
enforceable until the revocation period has expired.
11. Construction of Agreement; Governing Law, Venue. Each party has had a
full and complete opportunity to review this Agreement, and has been given the
opportunity to have counsel review it. Accordingly, the parties agree that the
common law principles of construing ambiguities against the drafter shall have
no application to this Agreement. Interpretation of this Agreement shall be
under Washington law. Any action to determine the construction, validity or
performance of this Agreement will be settled by adjudication before the
Superior Courts of the
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State of Washington in King County or the Federal District Courts of the Western
District of Washington (as permitted by law) and each party hereby consents to
the jurisdiction of such courts for all disputes, controversies and claims and
waives any venue or non conveniens argument.
12. Amendment. The parties agree that no modification, change or amendment
of this Agreement or any of its provisions shall be valid, unless in writing and
signed by the party against whom such claimed modification, change or amendment
is sought to be enforced
13. Severability. If any provision of this Agreement, or portion thereof,
shall be held invalid or unenforceable by a court of competent jurisdiction or
in any arbitration proceeding, such invalidity or unenforceability shall attach
only to such provision or portion thereof, and shall not in any way affect or
render invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provision or portion thereof were not contained herein. In
addition, any such invalid or unenforceable provision shall be deemed, without
further action on the part of the parties, modified, amended or limited to the
extent necessary to render the same valid and enforceable.
14. Attorney’s fees. In the event any proceeding or lawsuit is brought in
connection with this Agreement, the prevailing party in such proceeding shall be
entitled to receive its costs, expert witness fees and reasonable attorneys’
fees, including costs and fees on appeal.
15. Counterparts. This Agreement may be executed via facsimile and in
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same document
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first written above.
JOHN HALLBERG
/s/ JOHN HALLBERG
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John Hallberg
GETTY IMAGES, INC.
By /s/ JEFF BEYLE
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Jeff Beyle, SVP & General Counsel
4 |
Exhibit 10.3
UNANIMOUS WRITTEN CONSENT
OF
THE NOMINATING AND COMPENSATION COMMITTEE
OF
DEL MONTE FOODS COMPANY
A Delaware Corporation
The undersigned being all the members of the duly authorized Nominating and
Compensation Committee (the "Compensation Committee") of the Board of Directors
(the "Board") of Del Monte Foods Company, a Delaware corporation (the
"Corporation"), do hereby approve, adopt and consent to the following
resolutions as the action of the Compensation Committee without the formality of
a meeting. It is the intent of the undersigned that this consent be executed in
lieu of a meeting of the Compensation Committee, and that it shall be filed with
the minutes of proceedings of the Compensation Committee.
RESOLUTIONS
WHEREAS
, the Board has authorized the officers of the Corporation to explore the
possibility of entering into a stockholder value- enhancing transaction (a
"Sale"), including a sale, merger or other consolidation of the Corporation by
or with another company ("Acquiror");
WHEREAS
, in connection with a potential Sale, the Corporation seeks to enhance
stockholder value by incentivizing certain key employees to remain with the
Corporation through the transition process and the consummation of a Sale;
WHEREAS
, to reward the officers for enhancing the value of the Corporation and to
provide incentives for them to remain employed by the Corporation, the
Corporation is creating an incentive compensation pool (the "Incentive
Compensation Pool") to be allocated among certain key employees (the amount of
which would be determined by reference to the incentive formula set forth on
Schedule A hereto), payable in cash after consummation of a Sale as described
herein (the "Retention Plan");
WHEREAS
, the members of the Compensation Committee have been presented with and have
reviewed certain materials regarding the Retention Plan and have engaged in
discussions among themselves and with various advisors regarding fiduciary and
other issues raised by the Retention Plan;
WHEREAS
, the Compensation Committee has concluded that the Retention Plan is an
appropriate tool for retaining and incentivizing the employees critical to the
Corporation through a successful Sale; and
WHEREAS
, the Compensation Committee has determined it to be in the best interests of
the Corporation to: (i) adopt and approve the Retention Plan as described
herein; (ii) adopt and approve the specific allocation of the Incentive
Compensation Pool as set forth on Schedule B hereto among the key employees
identified thereon (the "Key Employees"); and (iii) authorize certain officers
of the Corporation on its behalf to enter into retention agreements with the Key
Employees or to amend existing employment agreements with the Key Employees to
reflect these resolutions, as deemed necessary or desirable by such officers.
ADOPTION AND APPROVAL OF RETENTION PLAN TO GRANT BONUSES TO CERTAIN EMPLOYEES OF
THE CORPORATION
NOW, THEREFORE, BE IT RESOLVED
, that the Retention Plan is hereby adopted and approved in all respects,
including the following guidelines:
* The total amount of the Incentive Compensation Pool shall be calculated with
reference to the aggregate price per share at which a Sale is consummated as
set forth on Schedule B hereto;
* The bonuses shall be payable if, and only if, the Sale results in a "Change
of Control" of the Corporation as defined on Schedule C hereto (a "Change of
Control");
* If a Change of Control occurs, each Key Employee's bonus shall be payable in
cash five (5) business days after the Change of Control occurs, provided the
Key Employee is still employed by the Corporation as of the time of the
Change of Control; and
* The Corporation will make Gross Up Payments (as defined on Schedule D hereto)
to a Key Employee substantially on the terms described in Schedule D in the
event it is determined (substantially pursuant to the provisions set forth in
Schedule D) that payments to such Key Employee under the Retention Plan are
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended, or any successor provision or any comparable
provision of state or local income tax law.
ADOPTION AND APPROVAL OF ALLOCATIONS OF BONUSES AMONG EMPLOYEES OF THE
CORPORATION
RESOLVED FURTHER
, that the specific allocation of percentages of the Incentive Compensation Pool
among the Key Employees as set forth on Schedule B hereto is hereby approved and
adopted in all respects.
AUTHORIZATION TO ENTER INTO RETENTION AGREEMENTS OR AMEND EMPLOYMENT AGREEMENTS
RESOLVED FURTHER
, that the Chief Executive Officer and the Chief Financial Officer of the
Corporation be, and each of them acting alone hereby is, authorized, directed
and empowered on behalf of the Corporation and in its name to enter into
retention agreements with the Key Employees or amend existing employment
agreements with the Key Employees to reflect these resolutions, as deemed
necessary or desirable by such officer, such approval to be conclusively
evidenced by the execution and delivery of any such document by such officer of
the Corporation.
GENERAL
RESOLVED FURTHER
, that the officers of the Corporation be, and each of them acting alone hereby
is, authorized, directed and empowered on behalf of the Corporation and in its
name to take or cause to be taken all actions and to execute and deliver all
such instruments which the officers of the Corporation, or any one or more of
them, approve as necessary or desirable in connection with the foregoing
resolutions, such approval to be conclusively evidenced by the taking of any
such action or the execution and delivery of any such instrument by an officer
of the Corporation.
RESOLVED FURTHER
, that any specific resolutions that may be required to have been adopted by the
Compensation Committee in connection with the actions contemplated by the
foregoing resolutions be, and they hereby are, adopted, and the Secretary or any
Assistant Secretary of the Corporation be, and each of them acting alone hereby
is, authorized to certify as to the adoption of any and all such resolutions and
attach such resolutions hereto.
RESOLVED FURTHER
, that all actions heretofore taken by any officer, director or other employee
of the Corporation in connection with or otherwise in contemplation of the
transactions contemplated by any of the foregoing resolutions be, and they
hereby are, ratified, confirmed and approved in all respects.
IN WITNESS WHEREOF
, the undersigned, being all of the members of the Compensation Committee, have
caused this consent to be executed and adopted effective as of the 24th day of
October, 2000.
_/s/ Denise M. O'Leary__________
Denise O'Leary
_/s/ William S. Price, III_
_________
William S. Price, III
_/s/ Jeffrey A. Shaw
_____________
Jeffrey A. Shaw
SCHEDULE A
Sale Incentive Formula for Incentive Compensation Pool
XXX
OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT
FULL TEXT FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
SCHEDULE B
Allocation of Incentive Compensation Pool among Key Employees
XXX
OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT
FULL TEXT FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
SCHEDULE C
Change of Control Definition
"Change of Control" shall mean the occurrence of one or more of the following
events:
(1) any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Corporation to any individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof (a "Person") or group of related Persons
for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended
(a "Group"), together with any Affiliates (as defined below) thereof other than
to TPG Partners, L.P. ("TPG") or its Affiliates;
(2) the approval by the holders of any and all shares, interests, participations
or other equivalents (however designated and whether or not voting) of corporate
stock, including each class of common stock and preferred stock, of the
Corporation ("Capital Stock") of any plan or proposal for the liquidation or
dissolution of the Corporation;
(3) (i) any Person or Group (other than TPG or its Affiliates) shall become the
owner, directly or indirectly, beneficially or of record, of shares representing
more than 40% of the aggregate ordinary voting power represented by the issued
and outstanding Capital Stock (the "Voting Stock") of the Corporation and (ii)
TPG and its Affiliates shall beneficially own, directly or indirectly, in the
aggregate a lesser percentage of the Voting Stock of the Corporation than such
other Person or Group;
(4) the replacement of a majority of the Board over a two- year period from the
directors who constituted the Board at the beginning of such period, and such
replacement shall not have been approved by a vote of at least a majority of the
Board then still in office who either were members of such Board at the
beginning of such period or whose election as a member of such Board was
previously approved or who were nominated by, or designees of TPG or its
Affiliates (any such individual who was a director at the beginning of such
period or is so approved, nominated or designated being referred to herein as an
"Incumbent Director"); provided, however, that no individual shall be considered
an Incumbent Director if the individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board (a
"Proxy Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
(5) a merger or consolidation involving the Corporation in which the Corporation
is not the surviving corporation, or a merger or consolidation involving the
Corporation in which the Corporation is the surviving corporation but the
holders of shares of common stock of the Corporation receive securities of
another corporation and/or other property, including cash, or any other similar
transaction.
"Affiliate" shall mean, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" or "controlled" have meanings correlative of the
foregoing.
SCHEDULE D
Gross Up Payments
a) In the event it is determined (pursuant to clause (b) below) or finally
determined (as defined in clause (c)(iii) below) that any payment, distribution,
transfer, benefit or other event with respect to the Corporation or its
predecessors, successors, direct or indirect subsidiaries or affiliates (or any
predecessor, successor or affiliate of any of them, and including any benefit
plan of any of them), to or for the benefit of the Key Employee or the Key
Employee's dependents, heirs or beneficiaries (whether such payment,
distribution, transfer, benefit or other event occurs pursuant to the terms of
the Retention Plan or otherwise, but determined without regard to any additional
payments required under this Schedule D) (each a "Payment" and collectively the
"Payments") is or was subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), and any successor
provision or any comparable provision of state or local income tax law
(collectively, "Section 4999"), or any interest, penalty or addition to tax is
or was incurred by the Key Employee with respect to such excise tax (such excise
tax, together with any such interest, penalty or addition to tax, hereinafter
collectively referred to as the "Excise Tax"), then, within ten (10) days after
such determination or final determination, as the case may be, the Corporation
shall pay to the Key Employee an additional cash payment (hereinafter referred
to as the "Gross-Up Payment") in an amount such that after payment by the Key
Employee of all taxes, interest, penalties and additions to tax imposed with
respect to the Gross-Up Payment (including, without limitation, any income and
excise taxes imposed upon the Gross-Up Payment), the Key Employee retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon such Payment
or Payments and the Gross-Up Payment. This provision is intended to put the Key
Employee in the same position as the Key Employee would have been had no Excise
Tax been imposed upon or incurred as a result of any Payment.
(b) Except as provided in clause (c) below, the determination that a Payment is
subject to an Excise Tax shall be made in writing by a certified public
accounting firm selected by the Key Employee ("Key Employee's Accountant"). Such
determination shall include the amount of the Gross-Up Payment and detailed
computations thereof, including any assumptions used in such computations (the
written determination of the Key Employee's Accountant, hereinafter, the "Key
Employee's Determination"). The Key Employee's Determination shall be reviewed
on behalf of the Corporation by a certified public accounting firm selected by
the Corporation (the "Corporation's Accountant"). The Corporation shall notify
the Key Employee within ten (10) business days after receipt of the Key
Employee's Determination of any disagreement or dispute therewith, and failure
to so notify within that period shall be considered an agreement by the
Corporation with the Key Employee's Determination, and any agreement by the
Corporation with the Key Employee's Determination shall obligate the Corporation
to make payment as provided in clause (a) above within ten (10) days from the
expiration of such ten (10) business-day period. In the event of an objection by
the Corporation to the Key Employee's Determination, any amount not in dispute
shall be paid within ten (10) days following the ten (10) business-day period
referred to herein, and with respect to the amount in dispute the Key Employee's
Accountant and the Corporation's Accountant shall jointly select a third
nationally recognized certified public accounting firm to resolve the dispute
and the decision of such third firm shall be final, binding and conclusive upon
the Key Employee and the Corporation. In such a case, the third accounting
firm's findings shall be deemed the binding determination with respect to the
amount in dispute, obligating the Corporation to make any payment as a result
thereof within ten (10) days following the receipt of such third accounting
firm's determination. All fees and expenses of each of the accounting firms
referred to in this Schedule D shall be borne solely by the Corporation.
(c) The rights of a Key Employee under this Schedule D shall be contingent on
the agreement by the Key Employee to the provisions set forth in this clause
(c):
(i) The Key Employee shall notify the Corporation in writing of any claim by the
Internal Revenue Service (or any successor thereof) or any state or local taxing
authority (individually or collectively, the "Taxing Authority") that, if
successful, would require the payment by the Corporation of a Gross-Up Payment.
Such notification shall be given as soon as practicable and shall apprise the
Corporation of the nature of such claim and the date on which such claim is
requested to be paid. The Key Employee shall not pay such claim prior to the
expiration of the fifteen (15)-day period following the date on which the Key
Employee gives such notice to the Corporation (or such shorter period ending on
the date that any payment of taxes, interest, penalties or additions to tax with
respect to such claim is due). If the Corporation notifies the Key Employee in
writing prior to the expiration of such fifteen (15)-day period that it desires
to contest such claim (and demonstrates to the reasonable satisfaction of the
Key Employee its ability to make the payments to the Key Employee that may
ultimately be required under this section before assuming responsibility for the
claim), the Key Employee shall:
(A) give the Corporation any information reasonably requested by the Corporation
relating to such claim;
(B) take such action in connection with contesting such claim as the Corporation
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney selected by the Corporation that is reasonably acceptable to the Key
Employee;
(C) cooperate with the Corporation in good faith in order effectively to contest
such claim; and
(D) permit the Corporation to participate in any proceedings relating to such
claim; provided, however, that the Corporation shall bear and pay directly all
attorneys fees, costs and expenses (including additional interest, penalties and
additions to tax) incurred in connection with such contest and shall indemnify
and hold harmless the Key Employee, on an after-tax basis, for all taxes
(including, without limitation, income and excise taxes), interest, penalties
and additions to tax imposed in relation to such claim and in relation to the
payment of such costs and expenses or indemnification. Without limitation on the
foregoing provisions of this Schedule D, and to the extent its actions do not
unreasonably interfere with or prejudice the Key Employee's disputes with the
Taxing Authority as to other issues, the Corporation shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the Taxing Authority in respect of such claim and may, at its
sole option, either direct the Key Employee to pay the tax, interest or
penalties claimed and sue for a refund or contest the claim in any permissible
manner, and the Key Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Corporation shall determine; provided,
however, that if the Corporation directs the Key Employee to pay such claim and
sue for a refund, the Corporation shall advance an amount equal to such payment
to the Key Employee, on an interest-free basis, and shall indemnify and hold
harmless the Key Employee, on an after-tax basis, from all taxes (including,
without limitation, income and excise taxes), interest, penalties and additions
to tax imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and, provided, further, that any extension
of the statute of limitations relating to payment of taxes, interest, penalties
or additions to tax for the taxable year of the Key Employee with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount; and, provided, further, that any settlement of any claim shall
be reasonably acceptable to the Key Employee and the Corporation's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder, and the Key Employee shall be entitled to settle or
contest, as the case may be, any other issue.
(ii) If, after receipt by the Key Employee of an amount advanced by the
Corporation pursuant to clause (c)(i), the Key Employee receives any refund with
respect to such claim, the Key Employee shall (subject to the Corporation's
complying with the requirements of Schedule D) promptly pay to the Corporation
an amount equal to such refund (together with any interest paid or credited
thereon after taxes applicable thereto), net of any taxes (including without
limitation any income or excise taxes), interest, penalties or additions to tax
and any other costs incurred by the Key Employee in connection with such
advance, after giving effect to such repayment. If, after the receipt by the Key
Employee of an amount advanced by the Corporation pursuant to clause (c)(i), it
is finally determined that the Key Employee is not entitled to any refund with
respect to such claim, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall be treated as a
Gross-Up Payment and shall offset, to the extent thereof, the amount of any
Gross-Up Payment otherwise required to be paid.
(iii) For purposes of this Schedule D, whether the Excise Tax is applicable to a
Payment shall be deemed to be "finally determined" upon the earliest of: (A) the
expiration of the 15-day period referred to in clause (c)(i) above if the
Corporation has not notified the Key Employee that it intends to contest the
underlying claim, (B) the expiration of any period following which no right of
appeal exists, (C) the date upon which a closing agreement or similar agreement
with respect to the claim is executed by the Key Employee and the Taxing
Authority (which agreement may be executed only in compliance with this Schedule
D), (D) the receipt by the Key Employee of notice from the Corporation that it
no longer seeks to pursue a contest (which notice shall be deemed received if
the Corporation does not, within 15 days following receipt of a written inquiry
from the Key Employee, affirmatively indicate in writing to the Key Employee
that the Corporation intends to continue to pursue such contest).
(d) As a result of uncertainty in the application of Section 4999 that may exist
at the time of any determination that a Gross- Up Payment is due, it may be
possible that in making the calculations required to be made hereunder, the
parties or their accountants shall determine that a Gross-Up Payment need not be
made (or shall make no determination with respect to a Gross-Up Payment) that
properly should be made ("Underpayment"), or that a Gross-Up Payment not
properly needed to be made should be made ("Overpayment"). The determination of
any Underpayment shall be made using the procedures set forth in clause
(b) above and shall be paid to the Key Employee as an additional Gross-Up
Payment. The Corporation shall be entitled to use procedures similar to those
available to the Key Employee in clause (b) to determine the amount of any
Overpayment (provided that the Corporation shall bear all costs of the
accountants as provided in clause (b)). In the event of a determination that an
Overpayment was made, any such Overpayment shall be treated for all purposes as
a loan to the Key Employee with interest at the applicable Federal rate provided
for in Section 1274(d) of the Code; provided, however, that the amount to be
repaid by the Key Employee to the Corporation shall be subject to reduction to
the extent necessary to put the Key Employee in the same after-tax position as
if such Overpayment were never made.
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|
EXHIBIT 10.7
PREVIEW SYSTEMS, INC.
OFFICER RETENTION, SEVERANCE, AND ACCELERATED VESTING
AGREEMENT
Name: Luke
Hohmann
Date: April 6, 2001
Preview Systems wishes to provide you with an incentive to continue
in the service of the Company through certain potential transactions and for a
reasonable period of time thereafter. If you wish to receive the benefits of
the Retention Bonus, Severance and Accelerated Vesting Agreement, please sign
the bottom of this letter indicating your acknowledgement and agreement to the
terms described in this letter, and return it to HR no later than 5:00 p.m. on
April 13, 2001.
Retention Bonus Amount:
Lump sum payment equal to six months of your base salary plus 50% of your target
bonus for this year, reduced by applicable withholding taxes.
Severance Amount:
Lump sum payment equal to three months of your base salary plus 25% of your
target bonus for this year, reduced by applicable withholding taxes.
Incentive Bonus Amount:
Lump sum payment equal to nine months of your base salary, reduced by applicable
withholding taxes.
Accelerated Vesting:
50% of unvested options or unvested stock subject to repurchase
Conditions for Receipt of the Retention Bonus: You will receive the Retention
Bonus if
One of the following circumstances applies to you:
• You continue in the active full time employment of Preview until June 30,
2001; or • You are terminated from your employment by Preview other than
for cause before June 30, 2001.
And you meet each of the following conditions:
• You accept an offer of employment with an acquiring company made before June
30, 2001, providing for base salary at least equal to your current base salary
and not requiring a change in location of your place of work in excess of 50
miles from your current place of work. • You maintain the
confidentiality of this Retention Bonus offer. • You sign and return a
general release of claims in a form provided by Preview Systems (a copy of which
is attached) within the time frame described on the release.
Conditions for Receipt of the Severance Amount:
• Your employment with the Company is terminated by the Company other than for
cause, and other than on account of your commencement of employment with an
acquiring company.
And you meet each of the following conditions:
• You maintain the confidentiality of this Severance offer. • You sign
and return a general release of claims in a form provided by Preview Systems (a
copy of which is attached) within the time frame described on the release.
Conditions for Receipt of the Incentive Bonus:
• You accept an offer of employment with an acquiring company. • You
are in your position with the acquiring company as of December 15, 2001.
Conditions for Receipt of Accelerated Vesting: You will receive the
Acceleration of Vesting on the earlier of the following events:
• You are employed by the Company immediately prior to the closing of a
transaction involving the sale of substantially all of the Company’s assets or
the acquisition of more than 50% of the voting shares of the Company’s stock.
• Termination of your employment other than for cause, and you sign and
return a general release of claims.
Preview Systems, Inc. By:
--------------------------------------------------------------------------------
Title: President & CEO ACKNOWLEDGED AND ACCEPTED: Date:
--------------------------------------------------------------------------------
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Exhibit 10.1
AMENDMENT NO. 1
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 ("Amendment") is entered into as of September 1,
2001 by and between SYSTEMAX INC., a corporation organized under the laws of the
State of Delaware ("SYX"), SYSTEMAX MANUFACTURING INC. (formerly known as
Midwest Micro Corp.), a corporation organized under the laws of the State of
Delaware ("SMI"), GLOBAL COMPUTER SUPPLIES INC. (successor by merger to
Continental Dynamics Corp.), a corporation organized under the laws of the State
of New York ("GCS"), GLOBAL EQUIPMENT COMPANY, INC., a corporation organized
under the laws of the State of New York ("GEC"), TIGER DIRECT, INC., a
corporation organized under the laws of the State of Florida ("Tiger"), DARTEK
CORPORATION, a corporation organized under the laws of the State of Delaware
("Dartek"), NEXEL INDUSTRIES, INC., a corporation organized under the laws of
the State of New York ("NII"), MISCO AMERICA INC., a corporation organized under
the laws of the State of Delaware ("Misco"), SYSTEMAX RETAIL SALES INC., a
corporation organized under the laws of the State of Delaware ("SRS"), PAPIER
CATALOGUES, INC., a corporation organized under the laws of the State of New
York ("PCI"), CATALOG DATA SYSTEMS, INC., a corporation organized under the laws
of the State of New York ("CDS"), MILLENNIUM FALCON CORP., a corporation
organized under the laws of the State of Delaware ("MFC"), TEK SERV INC., a
corporation organized under the laws of the State of Delaware ("TSI"), B.T.S.A.,
Inc., a corporation organized under the laws of the State of New York ("BTSA")
and KEYBOARDMALL.COM INC., a corporation organized under the laws of the State
of Delaware ("KMC") (SYX, SMI, GCS, GEC, Tiger, Dartek, NII, Misco, SRS, PCI,
CDS, MFC, TSI, BTSA and KMC, each a "Borrower" and jointly and severally the
"Borrowers"), the lenders who are parties to the Loan Agreement, as defined
herein ("Lenders") and The Chase Manhattan Bank, as agent for the Lenders
("Agent").
BACKGROUND
Borrowers, Lenders and Agent are parties to a Loan and Security
Agreement dated as of June 13, 2001 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Loan Agreement") pursuant to which
Lenders provide Borrowers with certain financial accommodations.
Borrowers have requested Agent and the Lenders to amend certain
provisions of the Loan Agreement to permit additional Capital Expenditures to be
made during the current fiscal year, with a corresponding reduction in the next
succeeding fiscal year, and Agent and Lenders are willing to do so on the terms
and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrowers by
Lenders, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 3 below, Section 7.6 to the Loan
Agreement is hereby amended as follows:
(a) In clause (i), the sum "$15,000,000" is hereby amended to read
"$17,500,000"; and.
(b) In clause (ii), the sum "$16,000,000" is hereby amended to read
"$13,500,000".
3. Conditions of Effectiveness. This Amendment shall become effective
as of September 1, 2001, when and only when Agent shall have received four (4)
copies of this Amendment in form and substance satisfactory to Agent executed by
Borrowers and each of the Lenders.
4. Representations and Warranties. Borrower hereby represents and
warrants as follows:
(a) This Amendment and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of Borrower and are enforceable
against Borrowers in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each Borrower hereby
reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is continuing or
would exist after giving effect to this Amendment.
(d) Borrowers have no defense, counterclaim or offset with respect to
the Loan Agreement.
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of this Amendment, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
like import shall mean and be a reference to the Loan Agreement as amended
hereby.
(b) Except as specifically amended herein, the Loan Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of Agent or any Lender,
nor constitute a waiver of any provision of the Loan Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.
6. Governing Law. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of New York.
7. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
8. Counterparts; Telecopied Signatures. This Amendment may be executed
by the parties hereto in one or more counterparts, each of which shall be deemed
an original and all of which taken together shall be deemed to constitute one
and the same agreement. Any signature delivered by a party via telecopier shall
be deemed to be an original signature hereto.
IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed as of
the day and year first written above.
SYSTEMAX INC.
By: /s/ Steven M. Goldschein
Name: Steven M. Goldschein
Title: Senior Vice President
SYSTEMAX MANUFACTURING INC.
GLOBAL COMPUTER SUPPLIES INC.
GLOBAL EQUIPMENT COMPANY, INC.
TIGER DIRECT, INC.
DARTEK CORPORATION
NEXEL INDUSTRIES, INC.
MISCO AMERICA INC.
SYSTEMAX RETAIL SALES INC.
PAPIER CATALOGUES, INC.
CATALOG DATA SYSTEMS, INC.
MILLENNIUM FALCON CORP.
TEK SERV INC.
B.T.S.A., INC.
KEYBOARDMALL.COM INC.
By: /s/ Steven M. Goldschein
Name: Steven M. Goldschein
Title: Vice President
THE CHASE MANHATTAN BANK,
as Lender and as Agent
By: /s/ Donna M. DiForio
Name: Donna M. DiForio
Title: Vice President
TRANSAMERICA BUSINESS CAPITAL CORPORATION,
as Lender and as Co-Agent
By: /s/ Michael S. Burns
Its: Senior Vice President
GMAC COMMERCIAL CREDIT LLC,
as Lender
By: /s/ Frank Imperato
Its: Senior Vice President
|
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EXHIBIT 10.32
[LETTERHEAD]
June 19, 2001
Linda Palmor
CFO
HearMe
Dear Linda,
You are among a select group of executives who we believe are crucial to
HearMe's transition over the next six months based on your relationships with
customers, vendors and employees. The Compensation Committee of the Board of
Directors has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of HearMe's executive team,
including yourself, to their assigned duties without distraction in the face of
potentially disruptive circumstances arising from the possibility of a change in
control of the Company and/or the Company's dissolution.
If you remain employed with the Company and devote your full attention and
time, during normal business hours, to the business and affairs of the Company,
and use your best efforts to perform faithfully and efficiently such
responsibilities for the next several months, the Company will do the following.
•You will be eligible to receive a retention bonus in the amount of $110,000
(less applicable taxes). To earn this retention bonus you must remain an
employee in good standing through November 30, 2001. The retention bonus will be
paid on November 30, 2001, or earlier in the event HearMe is either acquired by
another company (in which case payment will be on the close of the transaction)
or, if HearMe terminates your employment without "cause," on the last day of
your employment.
•You will be eligible to have up to $110,000 of the note you issued to HearMe in
connection with your purchase of shares of HearMe common stock forgiven, and
your shares repurchased by HearMe. We refer to this as the Stock Repurchase. To
earn this benefit you must remain an employee in good standing through
November 30, 2001. The Stock Repurchase will be effective on November 30th, or
earlier either in the event HearMe is acquired by another company (in which case
it will occur on the close of the transaction) or, if HearMe terminates your
employment without "cause," on the last day of your employment.
•You have been granted an option to purchase 100,000 shares of HearMe common
stock with an exercise price of $0.40 per share. This option was granted to you
on April 23, 2001. All of these options (100%) will vest on the earlier date of
the closing date of the sale of the Company or February 28, 2002.
•You will be eligible for an extension of your exercise period for all vested
options from the 90 days provided in your option agreement to one year following
your termination of your employment if you remain an employee of HearMe in good
standing through November 30, 2001.
The retention bonus, stock repurchase, options, and the extension of your
exercise period are based on the premise that you stay with HearMe and perform
at or above the expectation level in your position.
This letter does not change the at-will nature of your employment
relationship with HearMe. The specifics of the terms and conditions under which
the benefits described above are being offered to you
--------------------------------------------------------------------------------
are described in more detail in the attached Exhibit A: HearMe, Change of
Control/Retention Agreement. Please read and sign this Agreement.
Thank you for your continued support and hard work.
Sincerely,
/s/ ROB CSONGOR
Rob Csongor
Chief Executive Officer
Acknowledge receipt by signing below and returning original to John
Alexander.
Signature: /s/ Linda Palmor
--------------------------------------------------------------------------------
Date: 7/3/01
--------------------------------------------------------------------------------
Name: Linda Palmor
--------------------------------------------------------------------------------
EXHIBIT A
HEARME
CHANGE OF CONTROL / RETENTION AGREEMENT
This Change of Control / Retention Agreement (the "Agreement") is made and
entered into by and between Linda Palmor (the "Employee") and HearMe (the
"Company"), effective as of the latest date set forth by the signatures of the
parties hereto below (the "Effective Date").
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control.
Additionally, a number of activities will be required of the Employee that are
outside the normal scope of his or her responsibility in the event that the
Company elects to dissolve. The Board of Directors of the Company (the "Board")
recognizes that such considerations can be a distraction to the Employee and can
cause the Employee to consider alternative employment opportunities. The Board
has determined that it is in the best interests of the Company and its
stockholders and creditors to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of the Company
and notwithstanding any increased duties required of him or her in the future.
B. The Board believes that it is in the best interests of the Company, its
stockholders and its creditors to provide the Employee with an incentive to
continue his/her employment and to motivate the Employee to maximize the value
of the Company, for the benefit of its stockholders and/or creditors, despite
the possibility of a Change of Control and/or dissolution.
C. The Board believes that it is necessary and appropriate to provide the
Employee with certain benefits in order to provide the Employee with incentives
and encouragement to remain with the Company notwithstanding the possibility of
a Change of Control and/or dissolution.
D. Certain capitalized terms used in the Agreement are defined in Section 8
below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate on the date that all
obligations of the parties hereto with respect to this Agreement have been
satisfied.
2. At-Will Employment. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason, whether
with or without Cause and with or without notice, the Employee shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Agreement, or as may otherwise be available in accordance
with the Company's established employee plans or pursuant to other written
agreements with the Company.
3. Retention Bonus. In order to incent the Employee to remain employed
with the Company for the next several months and provide added stockholder and
creditor value during this difficult and uncertain business climate, Employee
will be eligible to receive a cash bonus of $110,000, less applicable tax
withholdings. To earn this retention bonus you, the Employee must remain an
employee in good standing through November 30, 2001. This means that the Company
shall not have terminated the Employee's employment for Cause (including a
deemed termination under the definition below) prior to November 30, 2001. This
retention bonus will be paid on November 30th, or earlier as follows: (a) in the
event the Company undergoes a Change of Control that closes prior to
November 30, 2001, on the closing date of the transaction, or (b) in the event
the Company terminates the Employee's employment without Cause prior to
November 30, 2001, on the last day of his or her employment. If the Employee's
employment terminates prior to November 30, 2001 for any reason other than as a
result of the Company's terminating his or her employment for Cause, the
Employee shall not be entitled to payment of any portion of the retention bonus.
--------------------------------------------------------------------------------
4. Stock Repurchase. In order to incent the Employee to remain employed
with the Company for the next several months and provide added stockholder and
creditor value during this difficult and uncertain business climate, the Company
shall, at the request of the Employee, repurchase all of the shares of Common
Stock purchased by the Employee pursuant to the stock option exercise(s) listed
on Schedule 1 hereto for a purchase price equal to the fair market value of the
Company's Common Stock as of the date of the repurchase. The purchase price for
such repurchase will be paid by canceling a corresponding amount of the
promissory note(s) dated February 5, 1999, issued by the Employee to the Company
in payment of the exercise price for the shares purchased in connection with the
option exercise(s) listed on Schedule 1. The Company also will forgive up to
$110,000 of the excess of the outstanding balance of such promissory note(s)
over the portion of such promissory note canceled in payment for the repurchased
shares as provided in the preceding sentence (the "Loan Forgiveness"). As part
of the Loan Forgiveness, accrued interest that resulted from the note for the
repurchased shares will be forgiven at the time of the repurchase. The
repurchase of the stock provided for in this Section 4, and the Loan
Forgiveness, will be effective on November 30, 2001, or earlier as follows:
(a) in the event the Company undergoes a Change of Control that closes prior to
November 30, 2001, on the closing date of the transaction, or (b) in the event
the Company terminates the Employee's employment without Cause prior to
November 30, 2001, on the last day of his or her employment. If the Employee's
employment terminates prior to November 30, 2001 for any reason other than as a
result of the Company's terminating his or her employment for Cause, the
Employee shall not be entitled to require the Company to repurchase his or her
shares.
In addition, the Company shall make a cash payment to the Employee to
reimburse him or her for federal and California income and employment taxes
payable by him or her with respect to the income the Employee recognizes as a
result of (i) the Loan Forgiveness and (ii) the cash payment provided for by
this sentence. The Company shall pay such amount to the Employee at the times of
the Loan Forgiveness (which shall be deemed paid to the Employee by payment of
such withholding taxes on his or her behalf). The amount of the taxes required
to be paid under this Section 4 shall be based on the Employee's actual marginal
income tax rates on the income recognized as a result of the payments under this
Agreement.
5. Option Grant. In order to incent the Employee to continue to build
shareholder value and remain employed with the Company for the next several
months and provide added stockholder and creditor value during this difficult
and uncertain business climate, the Company has granted the Employee an option
(the "Option") to purchase 100,000 shares of Common Stock of the Company with an
exercise price of $0.40 per share. The Option was granted on April 23, 2001, is
a nonstatutory stock option under applicable tax law, has a term of ten
(10) years, and is subject to the terms and conditions of the Company's 1999
Stock Incentive Plan and a standard stock option agreement. The Option will vest
in full (meaning that the Employee will be able to exercise and retain all
(100%) of shares underlying the Option) on the earlier date of the closing date
of a Change of Control of the Company, February 28, 2002, or the date Employee
is terminated by the Company without Cause.
6. Extension of Exercise Period. As further incentive for the Employee's
continuing employment, the Company will allow him or her to receive an extension
of the period in which he or she has to exercise all vested (as of the date the
Employee's employment terminates) options held by him or her from the 90 days
provided for in the applicable option agreements to one year following the
termination of employment. The extension of the option exercise period shall be
available if the Employee remains employed until the earlier to occur of
(a) November 30, 2001, (b) the closing date of the Company, or (c) the date the
Company terminates the Employee's employment without Cause. Except as provided
in the prior sentence, this extension shall not be available in the event the
Employee's employment terminates prior to November 30, 2001 for any reason other
than a termination without Cause by the Company. Any extension to the exercise
period shall be effective as of (a) November 30, 2001, (b) the closing date of
the Company, or (c) the date the Company terminates the Employee's employment
without Cause.
7. Other Terminations. Other than as specified above in this Agreement,
the Employee shall not be entitled to any benefits or payments in connection
with termination of his or her employment with
--------------------------------------------------------------------------------
the Company (other than those benefits to which he or she is entitled under
then-applicable Company policies or applicable law). If the Employee's
employment is terminated for Cause (including a deemed termination under the
definition below), he or she shall not be entitled to any benefits provided for
under this Agreement. In the event of the Employee's death or termination of his
or her employment as a result of a Disability, in either case occurring before
the date on which this Agreement provides that a benefit is to be provided, then
the Employee (or his or her heirs) shall be entitled to any such benefit.
8. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
(a) Cause. "Cause" for termination of the Employee's employment with the
Company shall exist in the event of (i) an act of personal dishonesty taken by
the Employee in connection with his or her responsibilities as an employee and
intended to result in substantial personal enrichment of the Employee, (ii)
Employee's being convicted of, or entering a plea of nolo contendre to, a
felony, or (iii) a willful act by the Employee which constitutes misconduct and
which is injurious to the Company; or material violations of this Agreement, any
other agreement between the Employee and inventions assignment agreement(s)) or
of Employer's written policies as set forth in Employer's employee handbook. In
addition, "Cause" for termination of the Employee's employment shall exist,
whether or not the Company chooses to terminate his or her employment, such that
the Employee's employment shall be deemed to have terminated for Cause, for
purposes of this Agreement only, in the event of the Employee's failure to
devote his or her full time and attention, during normal business hours, to the
business and affairs of the Company in a manner that meets or exceeds the
Board's performance expectations with respect to an officer holding the
Employee's position, provided that in the event the Employee's performance falls
below this level, the Company shall provide notice to the Employee of such
performance shortfall and, if the shortfall is curable, the Employee shall have
five (5) business days in which to cure the shortfall.
(b) Change of Control. "Change of Control" means the occurrence of any of
the following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d)
Section 13(d) of the Securities Exchange Act of 1934, as amended is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities without the approval of the Board of Directors of the Company;
or
(ii) A merger or consolidation of the Company, whether or not approved by
the Board of Directors of the Company, other than a merger or consolidation
which would result in holders of more than fifty percent (50%) of the voting
power represented by the voting securities of the Company outstanding
immediately prior thereto continuing to hold (either by the voting securities
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company, or such surviving entity
outstanding immediately after such merger or consolidation, or the Company sells
all or substantially all of the Company's assets.
(e) Disability. "Disability" shall mean that the Employee has been unable
to perform his or her Company duties as the result of his or her incapacity due
to physical or mental illness, and such inability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Employee or the Employee's
legal representative (such Agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may be effected only after at
least 30 days' written notice by the Company of its intention to terminate the
Employee's employment as a result of the Disability. In the event that the
Employee resumes the performance of substantially all of his or her duties
hereunder before the termination of his or her employment becomes effective, the
notice of intent to terminate shall automatically be deemed to have been
revoked.
--------------------------------------------------------------------------------
9. Successors.
(a) Company's Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and or assets
shall assume the obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term "Company" shall
include any successor to the Company's business and/or assets which executes and
delivers the assumption agreement described in this Section 9(a) or which
becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights of
the Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
10. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. This Agreement represents the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior arrangements and understandings regarding same matter.
This Agreement supercedes any arrangements in any offer letters, addendums to
offer letters or any other agreements.
(c) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California, with the exception of its conflict of laws provisions.
(d) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
(e) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year set
forth below.
HEARME
By:
/s/ ROB CSONGOR
--------------------------------------------------------------------------------
Title:
Chief Executive Officer
Date:
8/3, 2001
Linda Palmor /s/ LINDA PALMOR
--------------------------------------------------------------------------------
Date: 7/3, 2001
--------------------------------------------------------------------------------
Schedule 1
List of Stock Options Affected by Stock Repurchase
Date of
Note
--------------------------------------------------------------------------------
Loan
Forgiven
--------------------------------------------------------------------------------
Total
Loan
--------------------------------------------------------------------------------
Total
Underlying
Shares
--------------------------------------------------------------------------------
Price Per
Share
(Basis)
--------------------------------------------------------------------------------
Interest
Rate
--------------------------------------------------------------------------------
Shares
Repurchased on
Forgiveness
--------------------------------------------------------------------------------
2/5/1999 $ 110,000 $ 221,398 37,500 $ 5.904 4.71 % 18,632
--------------------------------------------------------------------------------
QuickLinks
EXHIBIT 10.32
|
Exhibit 10-31
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT to the EMPLOYMENT AGREEMENT, dated as of May 19,
2000 (the "Agreement"), by and between Energy East Corporation, a New York
corporation ("Energy East") and Wesley W. von Schack (the "Executive") is dated
as of August 1, 2001. Capitalized terms used and not defined herein shall have
the meanings given to them in the Agreement.
Energy East and the Executive desire to amend the Agreement as set
forth below.
1. The Agreement is hereby amended by (i) substituting for the clause "NYSEG's
Supplemental Executive Retirement Plan" wherever it appears in the Agreement
the clause "the Company's Supplemental Executive Retirement Plan", and (ii)
substituting for the clause "NYSEG's Long Term Executive Incentive Share
Plan" wherever it appears in the Agreement the clause "the Company's Long
Term Executive Incentive Share Plan."
2. The second sentence of the second paragraph of Section 5.2 of the Agreement
is hereby amended to read in its entirety as follows:
Notwithstanding the foregoing sentence of this Section 5.2, and any
provision of the Company's Supplemental Executive Retirement Plan (or any
successor plan) that may be to the contrary, if the Executive Retires from
the Company subsequent to April 15, 2004, there shall instead be paid to the
Executive under the Company's Supplemental Executive Retirement Plan (or any
successor plan) an amount that shall be determined by (i) giving the
Executive, for purposes of that plan, service credit for 40 years of
service, (ii) deeming the Executive to be a "Key Person" as defined in, and
for all purposes under, that plan and (iii) deeming the Executive's "highest
three consecutive years of earnings within the last five years of
employment" for purposes of that plan to be equal to the Executive's Base
Salary at the rate in effect at the time he Retires plus the average of the
highest three consecutive incentive compensation awards earned by the
Executive within the last five years of employment under the AEIP (as
hereinafter defined), or any successor annual executive incentive
compensation plan.
3. The first and second paragraphs of Section 9.1(C) of the Agreement are
hereby amended to read in their entirety as follows:
The second paragraph of Section 5.2 hereof shall be inapplicable, and
notwithstanding any provision of the Company's Supplemental Executive
Retirement Plan (or any successor plan) that may be to the contrary, the
Company shall pay to the Executive under the Company's Supplemental
Executive Retirement Plan (or any successor plan) an amount that shall be
determined by (i) deeming the Executive (a) to have 40 years of service
credit, for purposes of that plan, (b) to be at least 60 years of age and
(c) to be a "Key Person" as defined in, and for all purposes under, that
plan and (ii) deeming the Executive's "highest three consecutive years of
earnings within the last five years of employment" for purposes of that plan
to be equal to the Executive's Base Salary as determined pursuant to Section
9.1(A)(i) hereof plus the average of the highest three consecutive incentive
compensation awards earned by the Executive within the last five years of
employment under the AEIP, or any successor annual executive incentive
compensation plan, and such benefits shall be determined without regard to
any amendment to the Company's Supplemental Executive Retirement Plan (or
any successor plan) made subsequent to a Change-in-Control and on or prior
to the Date of Termination, which amendment adversely affects in any manner
the computation of retirement benefits thereunder.
Notwithstanding any provision in the Company's Supplemental Executive
Retirement Plan (or any successor plan) that may be to the contrary, the
benefits otherwise payable to the Executive pursuant to this Section 9.1(C)
shall be paid to the Executive in a lump sum payment that is equal in amount
to the present value (determined in accordance with the methodology used to
calculate the "Actuarial Equivalent" pursuant to Section 6(C) of the
Company's Supplemental Executive Retirement Plan (or any successor plan)) of
such benefits and such payments shall be in lieu of payments to which the
Executive otherwise would have been entitled under the Company's
Supplemental Executive Retirement Plan (or any successor plan) and shall
satisfy any obligations that the Company would otherwise have to the
Executive under the Company's Supplemental Executive Retirement Plan (or any
successor plan). Such lump sum payment shall be paid to the Executive no
later than the due date of the first payment that is or would be due to the
Executive under the Company's Supplemental Executive Retirement Plan (or any
successor Plan) assuming that the Executive were entitled to receive
payments thereunder.
4. Section 19(F) of the Agreement is hereby amended to read in its entirety as
follows:
(F) A "Change-in-Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs (i), (ii), (iii)
or (iv) shall have been satisfied during the Term:
(i) an acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of either (l) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or (2)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the following:
(1) any acquisition directly from the Company, other than an acquisition by
virtue of the exercise of a conversion privilege unless the security being
so converted was itself acquired directly from the Company, (2) any
acquisition by the Company, (3) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any entity
controlled by the Company, or (4) any acquisition pursuant to a transaction
which complies with clauses (1), (2) and (3) of subsection (iii) of this
definition; or
(ii) a change in the composition of the Board such that the individuals
who, as of August 1, 2001, constitute the Board (such Board shall be
hereinafter referred to as the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, for purposes
of this Section 19(F), that any individual who becomes a member of the Board
subsequent to August 1, 2001, whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least two-thirds of
those individuals who are members of the Board and who were also members of
the Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board,
but, provided, further, that any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or
(iii) consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company ("Corporate Transaction"); excluding, however, such a Corporate
Transaction pursuant to which (1) all or substantially all of the
individuals and entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 60% of, respectively, the outstanding
shares of common stock, and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
Corporate Transaction (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no Person
(other than the Company, any employee benefit plan (or related trust) of the
Company or any entity controlled by the Company or such corporation
resulting from such Corporate Transaction) will beneficially own, directly
or indirectly, 25% or more of, respectively, the outstanding shares of
common stock of the Company resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of such
corporation entitled to vote generally in the election of directors except
to the extent that such ownership existed prior to the Corporate
Transaction, and (3) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the board of directors
of the corporation resulting from such Corporate Transaction; or
(iv) the approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
5. Subparagraph (III) of Section 19(O) of the Agreement is hereby amended to
read in its entirety as follows:
(III) requiring the Executive to be based anywhere that is not
within a 50-mile radius of his current residence (1035 Fifth Avenue, New
York, New York 10028), except for required travel on the Company's business
to an extent substantially consistent with the Executive's present business
travel obligations;
6. Section 19(U) of the Agreement is hereby amended to read in its entirety
"Intentionally Left Blank".
7. The Agreement is in all other aspects ratified and confirmed without
amendment.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
ENERGY EAST CORPORATION
By: /s/ Kenneth M. Jasinski
Kenneth M. Jasinski
Executive Vice President,
General Counsel and Secretary
EXECUTIVE
/s/ Wesley W. von Schack
WESLEY W. von SCHACK |
Exhibit 10.21
Bond No. 08167821 Effective Date July 17, 2000
GEORGIA SELF–INSURERS GUARANTY TRUST FUND
Bond Required of Employer to Operate as Self-insurer
KNOW ALL PERSONS BY THESE PRESENTS, that we, LABOR READY SOUTH EAST III L.P., an
employer as defined by the laws of the State of Georgia, hereinafter "Principal"
and FIDELITY AND DEPOSIT COMPANY OV MARYLAND, a corporation duly incorporated
under the laws of the State of Maryland hereinafter "Surety", are held and
firmly bound to the Georgia Self-insurers Guaranty Trust Fund, hereinafter
referred to as "Fund", in the full sum off FIVE HUNDRED THOUSAND AND NO/100
–––––––– Dollars, currency of the United States, to be paid to the Fund, to
payment we hereby bind ourselves and each of us, our successors and assigns,
jointly and severally, by these presents.
WHEREAS, in accordance with the Georgia Workers' Compensation Act,
O.C.G.A. §34-9-1, et. seq. hereinafter referred to as the "Act", and the rules
and regulations pertaining thereto, the Principal filed its application for
acceptance as a self-insurer as permitted by O.C.G.A. §34-9-121 and
O.C.G.A. §34-9-382.
WHEREAS, on the 17th day of May, 2000, State Board of Workers’
Compensation entered an order granting Principal Authority to conduct business
as a self-insurer for a continuous period from year to year on the date of said
order until revocation by the State Board of Workers' Compensation this
authority is conditioned upon the Principal providing a surety bond in the penal
amount of $500,000.00––––––– and the Principal abiding by and performing all
obligations under the Act and the rules and regulations that are now or may
hereafter be adopted by the State Board of Workers' Compensation or the Fund,
including without limitation, paying for weekly indemnity benefits, disability,
medical, hospital and surgical expenses, rehabilitation, death benefits, and
funeral expenses.
WHEREAS, the intent of this bond is to ensure that the rights of the
Principal's employees under the Georgia Workers' Compensation Act are protected,
and that the Principal's obligations to its employees under that Act will
continue to be met even if the Principal itself is unable to meet them for
whatever reason
NOW, THEREFORE, the conditions of the obligations under this bond are such that:
(a) if the Principal discharges all of its obligations under the Act and rules
and regulations thereof, and subsequent amendment thereto;
(b) if the Principal promptly satisfies all of its obligations to its injured or
deceased employees or beneficiaries, including without limitation paying weekly
indemnity, disability, medical, hospital and surgical expenses, rehabilitation,
death benefits,and funeral expenses;
(c) if the Principal promptly pays any and all assessments and fines imposed by
the Fund or the State Board of Workers' Compensation, including without
limitation, any interest, cost and reasonable attorney's fees;
(d) if the Principal promptly pays any and all claims for reimbursement by the
Fund, including without limitation reasonable administrative costs and
reasonable attorney's fees;
(e) if the Principal promptly satisfies all obligations under any other
agreement or undertaking, either in the past, present or future, executed by
Principal as a self-insurer; and
(f) if the Principal promptly complies with all orders of the State Board of
Workers’ Compensation;
then the obligations under this bond shall be null and void; otherwise the bond
shall remain in full force and effect, subject to the following additional
conditions:
1. In the event of a default or failure of the Principal for any
reason to satisfy any obligations or conditions which are listed above,
including without limitation, all obligations for payment of weekly indemnity
compensation, disability, expenses of medical, hospital, surgical,
rehabilitation and other services, death benefits and funeral expenses provided
for under the Act, which occur on or after the effective date of this bond or in
the event of insolvency, bankruptcy or receivership of the Principal, then the
Fund may from time to time make demand upon the Surety to pay such sum or sums
as the Fund may, in its sole discretion. require to discharge promptly all or
any part of the obligations of the Principal, past, present, future or
potential, or pursuant to the Act, rules and regulations issued thereunder, or
any agreement or undertaking by the Principal as a self-insurer. Such payment
shall be made within fifteen (15) business days after receipt of such demand by
the Surety.
2. This is a continuous bond effective as of July 17, 2000, and shall
remain in full force and effect until terminated by the Surety as hereinafter
provided, or until the Principal's status as a self-insurer has been revoked or
terminated by the Fund or the State Board of Workers' Compensation, and in
either of such events the Surety shall have no further liability except for
obligations of the Principal which arose during the period that this bond is in
effect. Notwithstanding anything to the contrary herein, the Principal and
Surety shall remain fully obligated under this bond after its termination for
all obligations of the Principal arising from any act, event, occurrence, injury
or death or undertaking of the Principal which occurred before the termination
hereof, even where the current obligation to pay (e.g., to pay for future
medical expenses) may not arise until after the date of termination of this
bond.
3. This bond may be terminated at any time by the Surety upon the
giving of thirty (30) days' prior written notice to the Fund, the principal, and
the State Board of Workers' Compensation, in which event the liability of the
Surety shall, at the expiration of said thirty–day period, cease and terminate
except as to such obligations of the Principal on account of injury or death to
any of its employees or on account of liability to the Fund for assessments or
reimbursements which arose due to illness, injury or exposure prior to the
expiration of said thirty-day period. Unless the Principal replaces this bond
with acceptable security as described below, the Principal and Surety shall
remain fully obligated under this bond after its termination for all obligations
of the Principal arising from any act, event. occurrence, injury or death or
undertaking of the Principal which occurred before the termination hereof, even
where the current obligation to pay (e.g., to pay for future medical expenses)
may not arise until after the date of termination of this bond. In the event the
Principal posts with the Fund, a replacement bond in the full amount as may be
required by the State Board of Workers' Compensation and the Fund to secure all
liabilities, past, present and future, as described in this bond form, the
Surety under this bond is hereby released from any and all obligations of this
from the effective date of the replacement surety bond.
4. The total of all payments by the Surety of all the obligations of
the Principal hereunder shall not exceed in aggregate, the penal amount of this
bond. However, administrative and legal costs incurred by the Surety in
discharging its obligations shall not be charged against the penal sum of this
bond, it being the intent of the State Board of Workers' Compensation and the
Fund that this security is available only to satisfy the obligations of the
Principal to its employees under the Workers' compensation Act.
5. In the event that it is necessary for the Fund to institute legal
action to enforce this bond. the Principal and Surety shall pay to the Fund, the
Fund's expenses of litigation, including without limitation, reasonable
attorneys' fees, court costs and prejudgement interest at the rate of ten (10)
percent per annum.
IN WITNESS WHEREOF, said Principal and Surety have caused these
presents to be executed in their names and by their seal to be hereunder affixed
on this the __ day of ___________19____.
Principal: LABOR READY SOUTH EAST III L.P. (Seal)
Attest:
/s/ Ronald L. Junck
Secretary
Surety: FIDELITY AND DEPOSIT COMPANY OF MARYLAND (Seal)
By:
/s/ Deborah L. Poppe
Deborah L. Poppe, Attorney-in-Fact |
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
Exhibit 10.18
SECOND AMENDMENT TO
COLLABORATION AGREEMENT
This Second Amendment to Collaboration Agreement (“Amendment”) is entered into
as of July 6, 2001 (“Amendment Date”) by and between Rigel Pharmaceuticals,
Inc., a Delaware corporation (“Rigel”) having offices at 240 East Grand Avenue,
South San Francisco, CA 94080, and Novartis Pharma AG, a Swiss corporation
(“Novartis”) having offices at Lichtstrasse 35, CH-4058, Basel, Switzerland.
Rigel and Novartis are referred to herein collectively as the “Parties,” and
each individually as a “Party.”
Recitals
Whereas, Rigel has, as of the Amendment Date, conducted significant research
regarding the role of endothelial cell function in angiogenesis (some of which
research Rigel has conducted pursuant to a collaborative program with Cell
Genesys, Inc., a Delaware corporation (“Cell Genesys”), and has substantial
expertise in the discovery of intracellular target molecules that modulate human
disease states, which expertise is applicable to further research on endothelial
cell function in angiogenesis;
Whereas, Novartis is engaged in the research, development, marketing and
manufacture of pharmaceutical compounds useful in treating or preventing human
diseases and conditions, including diseases and conditions which may affect or
be affected by angiogenesis, and therefore desires to have access to the results
of Rigel’s research up to the Amendment Date in such area, as well as to
cooperate with Rigel and employ Rigel technology to pursue further research in
such area;
Whereas, Rigel and Novartis are parties to that certain Collaboration Agreement
dated May 26, 1999 as amended by a First Amendment dated 18 May, 2001 (referred
to as the “Collaboration Agreement”) pursuant to which Novartis may have access
to up to five (5) collaborative research projects with Rigel, as more completely
described in the Collaboration Agreement, and in connection with research
surrounding such process that Rigel has ongoing under its collaboration with
Cell Genesys in order to benefit from the synergies and efficiencies of a
combined research program;
Whereas, the Parties wish to conduct their further research regarding
endothelial cell function in angiogenesis as a Joint Project within the
framework of their existing collaboration pursuant to the Collaboration
Agreement;
Whereas, the Parties have, as of the Amendment Date, initiated three (3)
collaborative projects pursuant to the Collaboration Agreement, of which two (2)
have been Joint Projects (as defined by the Collaboration Agreement) and one (1)
has been an At-Novartis Projects (as defined by the Collaboration Agreement);
Whereas, the Collaboration Agreement provides for the Parties to conduct a
maximum of three (3) At-Novartis Projects; and
[Signature Page]
Whereas, the Parties wish to amend the Collaboration Agreement as provided
herein to accommodate conducting a collaborative project relating to endothelial
cell function in angiogenesis as a Joint Project pursuant to the Collaboration
Agreement in conjunction and consistent with Rigel’s research for and
responsibilities to Cell Genesys, as well as to provide for Rigel to be
compensated for its prior work outside the scope of the Collaboration Agreement
in such area of research.
Now, Therefore, in consideration of the foregoing and the covenants and promises
contained in this Amendment, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Terms Defined in Collaboration Agreement. Any initially
capitalized terms not otherwise defined herein shall have the meanings given in
the Collaboration Agreement.
1.2 Additional Defined Terms. As used herein and in the Collaboration
Agreement, the following terms shall have the following meanings:
(a) “Angiogenesis Project” shall mean the Program of Research directed
to the identification of Novel Validated Targets involved in endothelial cell
function as part of the angiogenesis process, as such Program of Research is
more fully described in Exhibit A.
(b) “CG Agreement” shall mean that certain License and Research
Agreement made effective by and between Rigel and Cell Genesys as of September
2, 1999, as first amended and restated by such parties on March 26, 2001 and
subsequently amended and restated by such parties effective July 1, 2001, a
partially redacted copy of the signed CG Agreement being appended to this
Amendment as Exhibit C.
(c) “Novel Validated Angiogenesis Project Target” shall mean a Novel
Validated Target identified in the Angiogenesis Project.
1.3 Research Period. The Collaboration Agreement is hereby amended to
replace the definition of “Research Period” in its entirety with the following:
““Research Period” shall mean, for each Joint Project and At-Novartis Project
other than the Angiogenesis Project, five years commencing as of the
corresponding Commencement Date, subject to earlier termination as permitted
hereby.
With respect to the Angiogenesis Project, the Research Period shall mean three
(3) years after its Commencement Date.”
ARTICLE 2
NUMBER OF PROJECTS; ANGIOGENESIS PROJECT; RIGHTS IN NOVEL
VALIDATED ANGIOGENESIS TARGETS
2.1 Number of Projects. The Collaboration Agreement is hereby amended
to replace the text of Section 2.1 thereof in its entirety with the following:
“Novartis may have access to up to five (5) Programs of Research of which at
least three (3) will be Joint Projects and no more than two (2) will be
At-Novartis Projects.”
2.2 Angiogenesis Project. The Collaboration Agreement is hereby
amended to insert, after Section 2.5 thereof, a Section 2.6 entitled
“Angiogenesis Project” having the following as its text:
“The Program of Research constituting the Angiogenesis Project is as described
at Exhibit A to this Second Amendment. The Angiogenesis Project shall be
conducted as a Joint Project as provided in Section 4.1 of the Agreement and is
one of the Programs of Research referred to in Section 2.1 of the Agreement;
provided, that Novartis acknowledges that the Program of Research for the
Angiogenesis Project may describe, and the Angiogenesis Project may therefore
include, research that is also covered by the CG Agreement. The number of FTEs
for each of the first three years of the Angiogenesis Project are set forth in
Exhibit B, row B-4.”
2.3 Discretionary Termination of Research Period: Section 4.5.1 of the
Collaboration Agreement is hereby amended to insert the phrase “if applicable”
immediately after the phrases “given Joint Project” and “such Joint Project” in
the sixth and eighth lines, respectively, of such Section.
2.4 Exclusivity Term: Section 5.2 of the Collaboration Agreement is
hereby amended to insert the phrase “and, with respect to the Angiogenesis
Project only, subject furthermore to the provisions of the CG Agreement,”
immediately after the phrase “and subject to the provisions of Section 5.5,” in
the third line of such Section.
2.5 Novel Validated Angiogenesis Project Target. A new Section 6.5
shall be added to the Collaboration Agreement with the following as its text:
“Novel Validated Angiogenesis Project Target. The Parties recognize and
acknowledge that as a part of Rigel’s ongoing relationship with Cell Genesys in
the angiogenesis field, Rigel has certain obligations and has granted certain
rights to Cell Genesys that are each described and defined in the CG Agreement.
Such rights of Cell Genesys may include without limitation (i) the nonexclusive
right to use Novel Validated Angiogenesis Targets to research and develop
Therapeutic Candidates (within the meaning of such term as defined and used in
the CG Agreement); and (ii) pursuant to Section 2.2(b)(i) of the CG Agreement,
the “royalty-free, exclusive, worldwide license, with the right to grant and
authorize sublicenses, under any Information and intellectual property created
by Rigel (solely or jointly with Novartis) under the Novartis Angiogenesis
Collaboration, to make, have made, use, sell, offer for sale and import
Therapeutic Candidates within the CG Program Field”. The rights with respect to
Novel Validated Angiogenesis Targets and Project Technology granted Novartis
pursuant to the Collaboration Agreement and this Amendment are hereby made
subject to any conflicting rights granted Cell Genesys pursuant to the CG
Agreement solely to the extent of the conflict with such rights of Cell
Genesys.”
ARTICLE 3
FINANCIAL TERMS
3.1 Milestone Payments to Rigel. Novartis will pay Rigel Milestone
Payments in respect of achievements in the Angiogenesis Project in the amounts
and upon the events specified in Section 7.2 of the Collaboration Agreement.
3.2 Access Payment.
(a) Section 7.3 of the Collaboration Agreement is hereby amended to
insert the phrase “other than the Angiogenesis Project” immediately after the
phrase “each Joint Project” in the second line of such Section.
(b) Novartis shall pay Rigel a project access fee in relation to the
Angiogenesis Project of four million dollars ($4,000,000) within thirty (30)
days after the receipt of an invoice from Rigel on or after the Amendment Date.
3.3 Extension Fee. The Extension Fee payable by Novartis to extend the
Exclusivity Term with respect to any Novel Validated Angiogenesis Project Target
shall be as specified (with respect to any Novel Validated Target) pursuant to
Section 7.5 of the Collaboration Agreement.
3.4 Research Support of Angiogenesis Project. The Collaboration
Agreement is hereby amended by replacing Exhibit B thereto with the amended and
restated Exhibit B appended to this Amendment.
ARTICLE 4
CONFIDENTIALITY
4.1 The following Section 10.2.3 shall be added to the Collaboration
Agreement:
“Novartis is aware and authorizes that Rigel may disclose to Cell Genesys under
the CG Agreement Confidential Information generated by Rigel solely or jointly
with Novartis under the Angiogenesis Project, such Confidential Information to
be used by Cell Genesys exclusively as provided in the CG Agreement.”
ARTICLE 5
MISCELLANEOUS
5.1 This Amendment shall become effective upon the Amendment Date and
will form an integral part of the Collaboration Agreement.
5.2 Except as expressly amended hereby, all clauses of the
Collaboration Agreement shall remain unchanged in full force and effect.
5.3 This Amendment may be executed in two (2) or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
In Witness Whereof, the Parties hereto have duly executed this Second Amendment.
Rigel Pharmaceuticals, Inc.
Novartis Pharma AG
By:
/s/ Raul R. Rodriguez
By:
/s/ J. Heim
Name:
Raul R. Rodriguez
Name:
J. Heim
Title:
Vice President, Business Development
Title:
Sr. Scientific Expert MCB
EXHIBIT A
Angiogenesis Project
[*]
Exhibit B
Exhibit B to the Collaboration Agreement shall be deleted and replaced in its
entirety with the following:
“EXHIBIT B
Project
Number of Rigel FTEs
Commencement Date
Type of Project
B-1: T-Cell Project
12
Effective Date
Joint Project
B-2: B-Cell Project
12
August 24, 1999
Joint Project
B-3: Epithelial Cell Project
n.a.
January 1, 2000
At-Novartis Project
B-4: Angiogenesis Project
12 in first and second year after Commencement Date
8 in third year after Commencement Date
Amendment Date
Joint Project
EXHIBIT C
RIGEL-CELL GENESYS AGREEMENT (Redacted)
See Exhibit 10.19 to Rigel Pharmaceuticals, Inc.’s Quarterly Report on Form 10Q
for the quarter ended September 30, 2001
[ * ]
=
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
|
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EXHIBIT 10.33(c)
AMENDMENT NUMBER TWO
to the
Warehouse Loan and Security Agreement
dated as of February 10, 2000,
as Amended and Restated to and including January 24, 2001
Among
AAMES CAPITAL CORPORATION,
AAMES FUNDING CORPORATION
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
This AMENDMENT NUMBER TWO (this "Amendment") is made this 30th day of March,
2001, among AAMES CAPITAL CORPORATION, AAMES FUNDING CORPORATION (each, a
"Borrower" and collectively, the "Borrowers") and GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC. ("Lender") to the WAREHOUSE LOAN AND SECURITY AGREEMENT, dated as
of February 10, 2000, as Amended and Restated to and including January 24, 2001
between Lender and Borrowers (the "Loan Agreement").
RECITALS
WHEREAS, Borrowers have requested that Lender agree to the amendments to the
Loan Agreement as set forth herein; and
WHEREAS, Lender has consented to such amendments to the Loan Agreement as
set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. Effective as of March 30, 2001, the definition of "Tangible Net
Worth" in Section 1.01 of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:
"Tangible Net Worth" shall mean, with respect to any Person, as of any date of
determination, the consolidated Net Worth of such Person and its Subsidiaries,
less the consolidated net book value of all assets of such Person and its
Subsidiaries (to the extent reflected as an asset in the balance sheet of such
Person or any Subsidiary at such date) which will be treated as intangibles
under GAAP; provided, that residual securities issued by such Person or its
Subsidiaries shall not be treated as intangibles for purposes of this
definition.
SECTION 2. Fees and Expenses. Borrowers agree to pay to Lender all fees and
out of pocket expenses incurred by Lender in connection with this Amendment
(including all reasonable fees and out of pocket costs and expenses of the
Lender's legal counsel incurred in connection with this Amendment Number Two),
in accordance with Section 10.03 of the Loan Agreement
SECTION 3. Defined Terms. Any terms capitalized but not otherwise defined
herein shall have the respective meanings set forth in the Loan Agreement.
SECTION 4. Representations. In order to induce the Lender to execute and
deliver this Amendment Number Two, the Borrowers hereby represent to the Lender
that as of the date hereof, after giving effect to this Amendment Number Two,
the Borrowers are in full compliance with all of the terms and conditions of the
Loan Agreement.
SECTION 5. Limited Effect. Except as expressly amended and modified by this
Amendment, the Loan Agreement shall continue in full force and effect in
accordance with its terms. Reference to this Amendment Number Two need not be
made in the Loan Agreement or any other instrument or
--------------------------------------------------------------------------------
document executed in connection therewith, or in any certificate, letter or
communication issued or made pursuant to, or with respect to, the Loan
Agreement, any reference in any of such items to the Loan Agreement being
sufficient to refer to the Loan Agreement as amended hereby.
SECTION 6. Governing Law. THIS AMENDMENT NUMBER TWO SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE.
SECTION 7. Counterparts. This Amendment Number Two may be executed by each
of the parties hereto on any number of separate counterparts, each of which
shall be an original and all of which taken together shall constitute one and
the same instrument.
[SIGNATURE PAGE FOLLOWS]
2
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IN WITNESS WHEREOF, Borrowers and Lender have caused this Amendment Number
Two to be executed and delivered by their duly authorized officers as of the day
and year first above written.
AAMES CAPITAL CORPORATION Borrower
By:
--------------------------------------------------------------------------------
Name: John Kohler
Title: Executive Vice President
AAMES FUNDING CORPORATION Borrower
By:
--------------------------------------------------------------------------------
Name: John Kohler
Title: Executive Vice President
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., Lender
By:
--------------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
Acknowledged and Agreed:
AAMES FINANCIAL CORPORATION
By:
--------------------------------------------------------------------------------
Name: John Kohler
Title: Executive Vice President
3
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QuickLinks
EXHIBIT 10.33(c)
AMENDMENT NUMBER TWO to the Warehouse Loan and Security Agreement dated as of
February 10, 2000, as Amended and Restated to and including January 24, 2001
Among AAMES CAPITAL CORPORATION, AAMES FUNDING CORPORATION and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC.
RECITALS
|
EXHIBIT 10.3
AGREEMENT
THIS IS AN AGREEMENT dated as of July 17, 1986 (the
"Agreement"), between MANATRON, INC., a Michigan corporation, maintaining its
principal executive offices in Kalamazoo, Michigan ("Manatron"), and RANDALL L.
PEAT ("Employee"), who resides at 47801 - 45th Street North, Paw Paw, Michigan
49079.
In view of Employee's substantial experience, knowledge
and reputation, the Board of Directors of Manatron believes the interests of the
corporation are best served by the continued employment of Employee, and desires
to provide Employee additional financial and job security.
Accordingly, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment. Manatron hereby employs Employee, and Employee
hereby accepts this employment, on the terms and subject to the conditions set
forth herein.
2. Term of Employment. The term of Employee's employment
under this Agreement shall commence as of July 17, 1986, and shall continue for
a period of five (5) years; provided, however, that during December of each
year, the board of Directors of Manatron shall consider and vote upon whether or
not the term of Employee's employment should be extended for an additional one
(1) year beyond the term then in effect. If the Board of Directors votes to
extend the term of Employee's employment or fails to vote upon such extension
during each such December, then such term shall be increased by one additional
year beyond the term then in effect.
3. Compensation. In consideration for his services, Employee
shall be paid a monthly salary, annual bonuses and other fringe benefits, as
determined from time to time by the Board of Directors. For any given year,
Employee's monthly salary and fringe benefits shall in no event be less than
those received by Employee during the prior year; provided, however, that in the
event of a significant decline in the business and profitability of Manatron for
a sustained period of time, such monthly salary and fringe benefits need not be
maintained at then current levels if, after reasonable notice to Employee, at
least two thirds (2/3) of the entire Board of Directors reasonably determine
that it would not be in the best interests of Manatron to continue such monthly
salary and fringe benefits at then current levels. Employee's annual bonuses
shall be determined in accordance with a formula which shall in no event be less
favorable to Employee than the formula used during the one-year period prior to
the date hereof; provided, however, that the amount of Employee's annual bonus
for any given year shall not exceed sixty percent (60%) of the total salary paid
to Employee during the one-year period immediately preceding payment of such
bonus. Employee shall be considered for an increase in compensation no less
frequently than once during each one-year period.
4. Early Termination.
(a) Death. If Employee, while in the employ of Manatron, shall die
prior to the expiration of the term of employment, this Agreement shall
terminate upon his death, which for purposes of this Agreement shall be deemed
to have occurred on the last day of the month in which his death shall occur.
Manatron shall continue to pay compensation at the rate then in effect pursuant
to paragraph 3 above for a period of twelve (12) months following the date of
death.
(b) Disability. If Employee shall be unable to substantially perform
the duties described in Paragraph 6 below for a period of nine (9) successive
months by reason of illness or other similar incapacity or disability, this
Agreement may be terminated as of the end of any calendar month following such
nine (9) months: (i) by Manatron based upon a determination that Employee is
disabled and by notice in writing to that effect to Employee; or (ii) by
Employee by his resignation in writing to Manatron. Any determination as to
whether Employee is disabled shall be made by a licensed physician selected by
agreement of Manatron and Employee or, if they cannot agree upon a physician,
then by a majority of a panel of three licensed physicians, one selected by
Manatron, one selected by Employee, and the third selected by the first two. If
this Agreement is terminated pursuant to this subparagraph 4(b) all of the
rights of Employee to compensation shall cease at the end of the sixth month
following such termination.
(c) Termination for Cause. Manatron shall have the right to terminate
Employee's employment for "Cause." For purposes of this Agreement, "Cause" shall
be limited to (i) the willful and continued failure by Employee to substantially
perform the duties described in paragraph 6 below (other than any failure
resulting from an illness or other similar incapacity or disability), after a
demand for substantial performance is delivered to Employee on behalf of the
board of directors of Manatron which specifically identifies the manner in which
it is alleged that Employee has not substantially performed his duties, or (ii)
the willful engaging by Employee in misconduct which is materially injurious to
Manatron monetarily or otherwise. For purposes of this subparagraph, no act, or
failure to act on Employee's part shall be considered "willful" unless done, or
omitted to be done, by Employee not in good faith and without reasonable belief
that his action or omission was in the best interests of Manatron.
Notwithstanding the foregoing, Employee shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a notice of termination on behalf of the board of directors of Manatron
after reasonable notice to him and an opportunity for him, together with
counsel, to be heard before the board, finding that in the reasonable opinion of
at least two-thirds (2/3) of the entire board of directors, Employee was guilty
of conduct set forth above in clauses (i) or (ii) of the second sentence of this
subparagraph 4(c) and specifying the particulars thereof in detail.
(d) Termination by Employee for Good Reason. Employee shall have the
right to terminate his employment for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean:
(i) without Employee's expressed written consent, the assignment to
Employee of any duties inconsistent with Employee's present positions, duties,
responsibilities and status with Manatron or a change in Employee's reporting
responsibilities, titles or offices as presently in effect, or any removal of
Employee from or any failure to reelect Employee to any of such positions,
except in connection with the termination of Employee's employment by Manatron
due to the death of Employee, the disability of Employee as determined under
subparagraph 4(b) above, or Cause as determined under subparagraph 4(c) above,
or by Employee other than for Good Reason;
(ii) a reduction by Manatron in Employee's monthly salary as in effect
on the date hereof or as the same may be increased from time to time; or the
failure by Manatron to increase such monthly salary each year by a percentage
which at least equals the average percentage which at least equals the average
percentage increase in monthly salary for all other executive officers for the
then current calendar year;
(iii) a reduction or termination by Manatron of Employee's bonus
compensation formula;
(iv) the relocation of Manatron's principal executive offices to a
location outside Kalamazoo County, Michigan, or Manatron's requiring Employee to
be based anywhere other than Manatron's principal executive offices except for
required travel on Manatron's business to an extent substantially consistent
with Employee's present business travel obligations;
(v) the failure by Manatron to continue in effect any benefit or
compensation plan, pension plan, life insurance plan, health and accident plan
or disability plan in which Employee is participating (or plans providing
Employee with benefits which are at least as favorable as the benefits of the
discontinued plan or plans), the taking of any action by Manatron which would
adversely affect Employee's participation in or materially reduce Employee's
benefits under any of such plans or deprive Employee of any material fringe
benefit enjoyed by Employee, or the failure by Manatron to provide Employee with
the number of paid vacation days to which Employee is then entitled on the basis
of years of service with Manatron in accordance with Manatron's normal vacation
policy in effect on the date hereof;
(vi) the failure of Manatron to obtain the agreement of any successor
to assume and perform this Agreement as contemplated in paragraph 8 hereof; or
(vii) the failure of Manatron to fulfill any of its obligations under
this Agreement.
5. Severance Pay. If the Employee's employment under this
Agreement shall be terminated prior to the expiration of the term of employment
by Employee for Good Reason, or by Manatron for any reason other than the death
of Employee, the disability of Employee as determined under subparagraph 4(b)
above, or Cause as determined under subparagraph 4(c) above, Employee shall be
entitled to receive the following during the remainder of the term of employment
(the "compensation period");
(a) Monthly severance payments which shall
continue for the term of the compensation period. The amount of each monthly
payment shall be equal to Employee's monthly salary for the last full month
immediately preceding his termination plus one-twelfth (1/12) of the lesser of:
(i) his average annual bonus for the two (2) calendar years
immediately preceding his termination; or
(ii) sixty percent (60%) of the total salary paid to Employee
during the one-year period immediately preceding his termination.
(b) continued treatment as an "employee" under
any stock option, employee benefit or other long-term compensation arrangement
for the term of the compensation period. In the event Employee's participation
in any such plan or program is barred or otherwise prevented, Manatron-shall
provide Employee with benefits substantially similar to and not less favorable
than the benefits which Employee would otherwise be entitled to receive under
such plan or program;
(c) out-placement services selected by Employee;
(d) during the compensation period, Manatron
shall maintain in full force and effect for the continued benefit of Employee -
each employee welfare benefit plan (as such term is defined in the Employment
Retirement Income Security Act of 1974, as amended) in which Employee was
entitled to participate immediately prior to the date of his termination. In the
event Employee's participation in any such plan is barred or otherwise
prevented, Manatron shall provide Employee with benefits substantially similar
to and not less favorable than the benefits which Employee would otherwise be
entitled to receive under such plan;
(e) in addition to the retirement benefits to
which Employee is entitled under the Manatron, Inc. Pension Plan, as amended
from time to time or any successor or predecessor plan (the "Pension Plan"),
Manatron shall pay a supplemental retirement benefit hereunder (the
"Supplemental; Benefit"). The Supplemental Benefit, subject to the reduction
described below, shall be determined in accordance with and payable in the form
and at the times provided in the Pension Plan, assuming Employee is fully vested
under the Pension Plan and has credited service under the Pension Plan for
full-time employment for the remainder of the compensation period. The amount of
the benefit shall be based upon the greater of Employee's average monthly
compensation under the Pension Plan at the time of termination or Employee's
average monthly compensation determined by including subparagraph 5(a) above.
The Supplemental Benefit shall be reduced by the amount of the retirement
benefit actually payable from the Pension Plan. For purposes of this
subparagraph, the term "retirement benefit" shall include any benefit payable
under the Pension Plan including any death benefit, disability benefit,
survivors benefit or other benefit payable to Employee or with respect to
Employee's participation in the Pension Plan;
(f) a reimbursement for all legal fees and
expenses incurred by Employee as a result of termination (including all such
fees, if any, incurred in contesting or disputing any such termination or in
seeking to enforce any right or benefit provided by this Agreement); and
(g) Manatron shall enable Employee to immediately
exercise in full all stock options, stock appreciation rights, or similar rights
or options, notwithstanding the fact that such options might not be exercisable
in full at that time under their terms, or under the terms of any plan,
agreement or similar arrangement under which they were granted.
Employee shall not be required to mitigate the amount of
any payments of severance benefits provided in this paragraph 5 by seeking other
employment or otherwise, nor shall the amount of any payment provided in this
paragraph 5 be reduced by any compensation earned by Employee as a result of his
employment with another employer after termination, or otherwise.
6. Duties. Employee shall be employed as the Vice President
and Secretary of Manatron. If by reason of a consolidation, merger, combination
or other reorganization of Magnetron the business of Manatron is continued under
some other corporate entity, Employee shall be employed in substantially the
same capacity with such other entity with the same authority and responsibility
as he enjoyed at the time of such transaction. During the period of his
employment by Manatron, Employee shall devote substantially his entire business
time and energy to the business and affairs of Manatron and will use his
reasonable best efforts to perform his duties as an executive officer of
Manatron.
7. No Parachute Payments. Notwithstanding any contrary
provision of this Agreement, Manatron shall not make any payment to Employee
which would be a "parachute payment" as defined in Section 28OG(b)(2) of the
Internal Revenue Code, and which would cause any payments made to Employee to be
subject to an excise tax payable by Employee. If any "parachute payment" would
otherwise be made under this Agreement, the remaining payments due to Employee
shall be adjusted to reduce the present value of such payments to the extent
that no "parachute payment" will be made. In Employee's sole discretion, such
reduction may be effected by eliminating any payments, by reducing the amount of
any payments, or by extending the date upon which any payments would otherwise
be due. In the event a dispute over whether any payment provided for under this
Agreement would be a "parachute payment," the opinion of Employee's attorneys or
certified public accountants shall be conclusive and binding upon the parties.
8. Loyalty, Inventions and Secrecy.
(a) Employee agrees that during the term of this
Agreement and thereafter for a period of two years, without prior approval of
the board of directors:
(i) Employee shall not, either for himself or on behalf of
any other person, firm or corporation directly or indirectly, divert or attempt
to divert from the Manatron any business whatsoever or attempt to so influence
any customers with whom Employee may have dealings.
(ii) Employee shall not solicit or approach any employee of
the Manatron for the purpose of inducing such employee to terminate his
employment.
(iii) All inventions, improvements and developments made or
conceived by Employee, either solely or in collaboration with others, during his
employment by Manatron whether or not during working hours, and relating to any
methods, apparatus, products or components thereof, which, prior to the end of
his employment, are manufactured, sold, leased, used, or developed by or pertain
to the business of the Manatron, shall become and remain the property of
Manatron, its successors and assigns unless expressly released by Manatron as
hereinafter provided.
(iv) Employee shall disclose promptly in writing to Manatron
all said inventions, improvements and developments.
(v) At the request of the Manatron and without expense to
him, Employee shall make, execute, and deliver all application papers,
assignments or instruments, and perform or cause to be performed, such other
lawful acts as Manatron may deem necessary or desirable in making or prosecuting
applications, domestic -or foreign, for patents, re-issues, and extensions
thereof, and assist and cooperate with Manatron or its representative in any
controversy or legal proceedings relating to said inventions, improvements and
developments, or to the patents which may be procured thereon.
(vi) At the time of leaving the employ of Manatron, Employee
shall deliver to Manatron , and not keep or deliver to anyone else, any and all
materials relating to Manatron's business including without limitation all
customer lists, drawings, blueprints, notes, memoranda, specifications, devices
and documents.
(b) Employee agrees that during the term of this
Agreement and forever thereafter, Employee shall hold in strictest confidence,
and not disclose to any person, firm, or corporation any information,
manufacturing technique, process, formula, development or experimental work,
work in process, business, trade secret, or any other secret or confidential
matter relating to the products, sales or business of Manatron except as such
disclosure or use may be required in connection with his work for Manatron.
(c) Manatron will consider each disclosure
submitted by Employee. The election of whether or not to file a patent
application on such disclosure and the manner of preparation and prosecution of
any patent application or applications filed in the United States of America or
in foreign countries shall be wholly within the discretion of Manatron, and at
its expense.
(d) If Employee petitions Manatron in writing to
release any of his rights to any inventions or improvements which by this
Agreement are assigned to Manatron, the Manatron will promptly consider and act
on such petition, but is not obligated to release any of its rights.
(e) Employee warrants that all unpatented
inventions, improvements and developments which he made, invented, or conceived
prior to entering the employ of Manatron, to which he now claims title, and
which are to be specifically excluded from this Agreement, are completely
described on an attached sheet.
(f) Remedies. Employee recognizes and
acknowledges that in the event of any default in, or breach of any of, the
terms, conditions and provisions of this paragraph 8 of this Agreement (either
actual or threatened) by Employee, Manatron's remedies at law shall be
inadequate. Accordingly, Employee agrees that in such event, the Manatron shall
have the right to specific performance and/or injunctive relief in addition to
any and all other remedies and rights at law or in equity, and such rights and
remedies shall be cumulative.
9. Successors; Binding Agreement.
(a) Manatron shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Manatron, by agreement in
form and substance satisfactory to Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Manatron
would be required to perform it if no such succession had taken place. Failure
of Manatron to obtain such agreement prior to the effectiveness of any
succession shall be a breach of this Agreement and shall entitle Employee to
compensation from Manatron in the same amount and on the same terms as Employee
would be entitled hereunder if Employee terminated his employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
termination. As used in this Agreement, "Manatron" shall mean Manatron and any
successor to Manatron's business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Paragraph 8 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die while any amount would still be payable to him hereunder if
he had continued to live, all such amount, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there be no such designee, to his estate.
9. Notice. For the purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
State's registered mail, return receipt requested, postage prepaid, addressed to
Employee at the address set forth on the first page of this Agreement, or to
Manatron at its principal executive offices to the attention of the Chief
Executive Officer of Manatron with a copy to the Secretary of Manatron, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon request.
10. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and such officer as may be specifically
designated by the board of directors of Manatron. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the time or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
specific subject matter hereof have been made by either party which are not set
forth expressly in this Agreement. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Michigan.
11. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
MANATRON, INC.
By
/s/Paul R. Sylvester
--------------------------------------------------------------------------------
Paul R. Sylvester
Its
President
--------------------------------------------------------------------------------
/s/Randall L. Peat
--------------------------------------------------------------------------------
Randall L. Peat
"Employee"
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EXHIBIT 10.3
SEPARATION AGREEMENT
The following sets forth an Agreement between Optimark, Inc. (the “Company”) and
James G. Rickards (“Employee”) regarding his separation from employment with the
Company.
WHEREAS, Employee's employment with the Company was
terminated on April 6, 2001; and
WHEREAS, the parties mutually agree to resolve any issues
that may exist between them regarding the circumstances of Employee’s
termination of employment,
THEREFORE, the parties agree as follows:
1. Payments and Benefits Supporting Agreement. In
consideration for signing this Agreement and compliance with the promises made
herein, OptiMark, Inc. agrees to and hereby does forgive Employee's repayment to
OptiMark, Inc. of a Promissory Note, dated February 27, 2001, in the amount of
FIFTY THOUSAND DOLLARS ($50,000) and all accrued interest thereon.
2. No Consideration Absent Execution of this
Agreement. Employee understands and agrees that he would not have received the
consideration specified in paragraph "1" above except for his execution of this
Agreement and fulfillment of the promises contained herein.
3. General Release of Claims. Employee recognizes that
the consideration referred to in paragraph “1” is above and beyond any amounts
otherwise due him for services rendered or to be rendered or under the Company’s
general policies or programs or under the Employee’s employment agreement with
the Company.
In consideration of and as a condition to this consideration, Employee hereby,
to the extent allowed by law, releases and forever discharges the Company and
all of its respective affiliates, subsidiaries, parent, present or former
partners, members, stockholders, officers, directors, employees, subsidiaries,
agents, successors or assigns (collectively, the “Releasees”) from any claim for
future employment, and of and from all claims or causes of action or other
demands whatsoever, which he ever had, now has, or hereafter can, shall or may
have against the Releasees, arising out of or related to his employment
relationship with the Company or the termination of that relationship.
This general release or giving up of claims is binding on the Employee, his
heirs, his assigns, and/or his representatives.
Listed below are examples of the statutes and legal theories from which the
Employee has released and discharged the Releasees and under which the Employee
will not bring any claim. In the event that the law prohibits a release or
waiver of claims under any such statute or theory, the Employee hereby waives
the right to seek or accept damages in a proceeding under the statute or theory
and/or hereby acknowledges that he has no valid claim under such statute or
theory. The claims released or acknowledged not to exist include, but are not
limited to, any alleged violation of: The Age Discrimination in Employment Act
of 1967, as amended, and including the Older Workers Benefit Protection Act of
1990, 29 U.S.C. § 621 et seq.; any other federal, state or local civil or human
rights law or any other local, state or federal law, regulation or ordinance
prohibiting, among other things, sexual harassment or discrimination on the
basis of sex, race, color, creed, religion, age, disability, national origin,
sexual orientation or marital status; and any public policy, contract, tort, or
other common law claim or cause of action, including but not limited to breach
of implied or express contract, intentional or negligent infliction of emotional
distress, negligent misrepresentation, defamation, wrongful discharge.
4. Unknown Claims Released. Employee understands that
he is releasing Claims that he may not know about. This is Employee’s knowing
and voluntary intent, even though Employee recognizes that someday he might
learn that some or all of the facts he currently believes to be true are untrue
and even though he might then regret having signed this Agreement. Nevertheless,
Employee assumes that risk and agrees that this Agreement shall remain effective
in all respects in any such case. Employee expressly waives all rights he might
have under any law that is intended to protect Employee from waiving unknown
claims, and he understands the significance of doing so.
5. Claims Not Released. Employee understands that he is
not releasing any claim that relates to his right to enforce this Agreement, any
rights or claims that arise after the signing of this Agreement, or his right,
if any, to government provided unemployment benefits. The Company agrees that it
will not contest Employee seeking or otherwise obtaining unemployment
compensation benefits
6. No Participation In Claims. Employee understands
that if this Agreement were not signed, he would have the right to voluntarily
assist other individuals or entities in bringing claims against the Company.
Employee hereby waives that right and he will not provide any such assistance,
other than assistance in an investigation or proceeding conducted by an agency
of the United States government. To the extent that the law prohibits Employee
from waiving his right to bring and/or participate in the investigation of a
claim, he nevertheless waives his right to seek or accept any damages or relief
in any proceeding.
7. Prohibited Statements. Employee agrees to refrain
from taking action or making statements, written or oral, which disparage or
defame the goodwill or
2
reputation of the Releasees or which could adversely affect the morale of other
employees of the Company.
8. Confidentiality. Except for informing his spouse and
communicating with legal or financial advisers, and except as otherwise may be
required by applicable law, Employee will keep confidential the terms and
conditions of this Agreement.
9. Nonadmission Of Liability. Employee recognizes and
agrees that this Agreement is not intended to imply any wrongdoing on the
Company’s part with respect to his employment or its termination, or any other
reason, and shall not constitute evidence of the same. Employee acknowledges
that he resigned from the employment with the Company on April 6, 2001; that
such resignation was not a constructive termination; and that such resignation
was voluntary on his part.
10. Return of Company Property. Employee represents
that he has returned all Company property, documents and copies of documents,
including but not limited to “Confidential Information.” “Confidential
Information” means inventions, trade secrets, designs, discoveries and
improvements, patentable and unpatentable, concerning products and solutions
related to the actual and anticipated business of the Company, price and
customer lists, customer contact information, materials, research or test
reports, sales organization or methods, sales presentations, weekly reports,
operating organization or methods, supplier relationships, and inventories of
the Company.” Employee further agrees not to disclose or use any Confidential
Information.
11. Duty of Cooperation. Employee covenants and agrees
to cooperate with the Company with respect to any reasonable request to provide
information or assist in any matter relating to the business of the Company of
which he may have knowledge or information including, but not limited to, the
defense of any pending or threatened litigation or government audit.
12. Voluntary Agreement. Employee’s decision to enter
into this Agreement is based solely on the mutual considerations described above
and is wholly his free act and deed. Before signing this Agreement, Employee has
had the opportunity for up to twenty-one (21) days to carefully consider the
terms and ramifications of the Agreement and the opportunity to consult with his
advisors, legal or otherwise, which the Company has encouraged Employee to do.
13. Governing Law and Interpretation. This Agreement
shall be governed and conformed in accordance with the laws of the State of New
Jersey without regard to its conflict of laws provision.
3
14. Limitations on Changing Agreement. This Agreement
may not be modified, altered or changed except upon express written consent of
both parties wherein specific reference is made to this Agreement.
15. Entire Agreement. Employee acknowledges that he has
not relied on any representations, promises, or agreements of any kind made to
him in connection with his decision to sign this Agreement, except for those set
forth in this Agreement.
16. Revocation. Employee may revoke this Agreement for
a period of seven (7) days following the day he executes this Agreement. Any
revocation within this period must be submitted, in writing, to Neil Cohen, Esq.
and state, “I hereby revoke my acceptance of our Agreement and General Release.”
This Agreement shall not become effective or enforceable until the revocation
period has expired. If the last day of the revocation period is a Saturday,
Sunday, or legal holiday, then the revocation period shall not expire until the
next following day which is not a Saturday, Sunday, or legal holiday.
17. Severability. If any provision of this Agreement
shall be deemed invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed and enforced as if it had never contained such invalid or
unenforceable provision. In addition, in place of such invalid or unenforceable
provision, there shall automatically be added hereto a provision as similar to
such invalid or unenforceable provision as may be possible and still be valid
and enforceable.
EMPLOYEE HAS HAD TWENTY ONE (21) DAYS TO CONSIDER THIS
AGREEMENT AND GENERAL RELEASE AND CONFIRMS THAT THE COMPANY ADVISED HIM TO
CONSULT WITH HIS ATTORNEY BEFORE EXECUTING THE AGREEMENT.
EMPLOYEE AGREES THAT ANY MODIFICATIONS, MATERIAL OR
OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE DO NOT RESTART OR AFFECT
IN ANY MANNER THE ORIGINAL TWENTY ONE DAY CONSIDERATION PERIOD.
HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL
RELEASE, TO FULFILL THE PROMISES SET FORTH HEREIN, AND TO RECEIVE THE
CONSIDERATION SET FORTH IN PARAGRAPH “1” ABOVE, EMPLOYEE FREELY AND KNOWINGLY,
AND AFTER DUE CONSIDERATION ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE
INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS HE HAS OR MIGHT HAVE AGAINST
THE RELEASED ENTITIES.
4
IN WITNESS WHEREOF, the parties knowingly and voluntarily
executed this agreement as of the date set forth below:
October 15, 2001 /s/ JAMES G. RICKARDS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date Employee
Optimark, Inc.
October 15, 2001 By: /s/ NEIL G. COHEN
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date Its Secretary
5 |
Exhibit 10.6
SYSTEMS AND MARKETING AGREEMENT
This Systems and Marketing Agreement ("Agreement") is entered into as of April
1, 2001 ("Effective Date") between H&R Block Mortgage Corporation, a
Massachusetts corporation having an address at 3 Ada, Irvine, California 92618
("HRBM") and E-LOAN, Inc., a Delaware corporation having an office at 5875
Arnold Road, Dublin, California 94568 ("E-LOAN") (collectively, the "Parties")
WHEREAS, HRBM is engaged in providing mortgage services that include processing,
origination, and funding mortgage loans secured by residential properties
located in the United States; and
WHEREAS, E-LOAN is engaged in marketing mortgage services via the Internet
including attracting visitors to E-LOAN's website, providing visitors with a
variety of mortgage options, and displaying a variety of competitive loan
products available on the market;
WHEREAS, HRBM and E-LOAN wish to develop and continue a systems communication
and marketing program ("Program") to facilitate and market HRBM's loan products
to visitors of E-LOAN's website;
NOW, THEREFORE, in consideration of their mutual promises, the Parties hereby
agree as follows:
I. The Program
(a) E-LOAN shall market HRBM's various mortgage programs and products to
Internet users. The Program shall include a comprehensive marketing plan
designed, executed, and paid for by E-LOAN, to attract visitors to E-LOAN's
website ("Customers") for the purpose of obtaining mortgage loans from HRBM and
other mortgage companies. All Customers meeting HRBM Specified Criteria, as set
forth in Exhibit A, will be noted and the on-line preliminary application will
be transferred to HRBM for processing; provided, however, that all such
preliminary applications relating to Customers sourced by or through any of
E-LOAN's affinity relationships ("Affinity Customers") shall be processed by E-
LOAN and shall not be transferred to HRBM under this Agreement. For purposes of
this Agreement, "Affinity Customers" are Customers (1) who are employed by or in
like manner associated with companies or other entities with which E-LOAN has a
significant strategic relationship evidenced by a strategic alliance agreement
(or similarly named agreement), and (2) for whom E-LOAN elects to retain the
right to process such loans in order to maintain or support a strategic alliance
in accordance with a strategic alliance agreement (or similarly named
agreement), including the fulfillment of promotion or special advantage programs
offered to such Customers by virtue of such alliance.
(b) Although E-LOAN shall market HRBM to its Customers as required by the
Program: (i) E-LOAN shall not be required to, and shall not, endorse HRBM, in
any communications under the Program that are targeted to Customers;(ii) E-LOAN
shall not be required to recommend HRBM as a mortgage provider and (iii) E-LOAN
shall not be required to, and shall not as part of the Program, provide advice,
counseling or assistance to Customers (other than Affinity Customers) in
connection with any particular HRBM mortgage product or program, for which they
have applied. E-Loan shall not hold itself out as a partner, joint venturer, or
similar business affiliate of HRBM.
(c) E-LOAN agrees that in the event E-LOAN makes loans meeting the Specified
Criteria set forth on Exhibit A to Affinity Customers, E-LOAN will make its best
efforts to work with HRBM to transfer such loans to HRBM on a wholesale basis.
2. Compensation.
(a) HRBM shall pay E-Loan a marketing fee of $[*] per month (the "Monthly
Marketing Fee") for the marketing activities provided under this Agreement in
connection with the Program. Each Monthly Marketing Fee shall be paid on or
before the twentieth (20th) day following the end of each month. To illustrate,
the Monthly Marketing Fee due for April, 2001 marketing shall be due on or
before May 20, 2001. The Parties each acknowledge
and agree that the Monthly Marketing Fee reflects the reasonable and fair market
value of the goods and services to be provided by E-LOAN under the Program,
without regard to the value or volume of mortgage loans that may be attributable
to the Program.
3. Term and Termination.
(a) The term of this Agreement shall be for a period of three (3) months
commencing on its Effective Date unless earlier terminated in accordance with
the provisions of this Section 3.
(b) Notwithstanding anything to the contrary in this Agreement, either party may
terminate this Agreement at any time, in the following situations ("Events of
Default"):
(1) Material breach or this Agreement by the other party which remains uncured
after thirty (30) days' written notice thereof;
(2) A party makes a general assignment for the benefit of creditors, or files a
voluntary petition in bankruptcy or for reorganization or arrangement under the
bankruptcy laws, or a petition in bankruptcy is filed against a party and is not
dismissed within sixty (60) days after filing, or a receiver or trustee is
appointed for all or any part of the property or assets of a party.
(c) Upon expiration or earlier termination of this Agreement, all of the
parties' obligations hereunder shall terminate, except: (i) HRBM shall continue
to process, in due course any mortgage loan applications submitted by any
Customer and transferred to HRBM prior to the date of termination; (ii) HRBM's
obligation to pay any then due Monthly Marketing Fee will be prorated as of such
date; and (iii) the provisions of Sections 7, 8 and 14 of this Agreement shall
survive.
4. Relationship. The relationship between HRBM and E-LOAN shall be that of
independent contractors and neither party shall be or represent itself to be an
agent, employee, partner or joint venturer of the other, nor shall either party
have or represent itself to have any power or authority to act for, bind or
commit the other.
5. Representations and Warranties.
(a) HRBM's Authority/Legal Actions. HRBM is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts with full corporate power and authority to transact the business
contemplated by this Agreement and it possesses all requisite authority, power,
license, permits and franchises to conduct its business as presently conducted.
Its execution, delivery and compliance with its obligations under the terms of
this Agreement are not prohibited or restricted by any government agency. There
is no claim, action, suit, proceeding or investigation pending or, to the best
of HRBM's knowledge, threatened against it or against any of its principal
officers, directors or key employees, which, either in any one instance or in
the aggregate may result in an adverse change in the business, operations,
financial condition, properties or assets of HRBM, or in any impairment of the
right or ability of HRBM to carry on its business substantially as now conducted
through its existing management group, or in any material liability on the part
of HRBM, or which would draw into question the validity of this Agreement.
(b) E-LOAN's Authority/Legal Actions. E-LOAN is a corporation duly organized,
validly existing and in good standing under the laws of the State or Delaware
with full corporate power and authority to transact any and all business
contemplated by this Agreement and it possesses all requisite authority, power,
license, permits and franchises to conduct its business as presently conducted.
Its execution, delivery and compliance with its obligations under the terms of
this Agreement are not prohibited or restricted by any government agency. There
is no claim, action, suit, proceeding or investigation pending or, to the best
of E-LOAN's knowledge, threatened against it or against any of its principal
officers, directors or key employees which, either in any one instance or in the
aggregate, may result in an adverse change in the business, operations, original
condition, properties or assets of E-LOAN, or in any impairment of the right or
ability of E-LOAN to carry on its business substantially as now conducted
through its existing management group, or in any material liability on the part
of E-LOAN, or which would draw into question the validity of this Agreement. The
information and content on the E-LOAN website (other than information supplied
by HRBM)and the E-LOAN Marks (as defined below) licensed hereunder, do not and
will not infringe on the patent, copyright, trademark, trade name or other
proprietary right of any third party.
(c) E-LOAN's Compliance. E-LOAN's website structure, format, information, and
content, as built and as used by E-LOAN shall be in full compliance with all
applicable federal and state laws and this Agreement. E-LOAN has obtained, or
will have obtained in connection with the transactions contemplated by this
Agreement, all necessary federal and state approvals in connection with
operation and ownership or its website and the content thereof and will make the
necessary changes to its website to reflect this Agreement and insure accurate
representation. The Privacy notices and Privacy Policies of E-LOAN's website
shall be consistent with the Federal Trade Commission's procedure or rules, and
comply with acceptable trade practices.
6. Execution/Conflict with Existing Laws or Contracts. The parties have taken
all necessary action to authorize their respective execution, delivery and
performance of this Agreement The execution and delivery of this Agreement and
the performance of the obligations of the respective parties hereunder will not
(i) conflict with or violate the Certificate or Incorporation or By-laws of
either party or any provision of any law or regulation or any decree, demand or
order to which either pad is subject or (ii) conflict with or result in a breach
of or constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under any or the terms, conditions or
provisions of any agreement or instrument to which either party is a party or by
which it is bound, or any order or decree applicable to either party, or result
in the creation or imposition of any lien on any of their assets or property.
7. Confidential Information. Each party recognizes that during the term of this
Agreement, its directors, officers, employees and authorized representatives
such as attorneys and accountants, may obtain knowledge or trade secrets,
customer lists, membership lists and other confidential information or the other
party which is valuable, proprietary, special or unique to the continued
business of that party, which information is initially delivered in written form
including electronic form or is summarized and delivered in writing within
thirty (30) days after initial delivery in non-written form, and which writing
is marked "Confidential" or in a similar nature to indicate its nonpublic and
proprietary nature ("Confidential information. However, Confidential Information
does not include information that is or (i) becomes available to the general
public other than through a breach by the recipient party, (ii) already known to
the recipient party as or the time of communication to the recipient party,
(iii) developed by the recipient party independently or and without reference to
information communicated by the other party, or (iv) rightfully received by the
recipient party from a third party which third party is not under a legal duty
of confidentiality with respect to such information. Accordingly, each party as
a recipient of the other's Confidential Information agrees to hold the
Confidential Information of the communicating party and the terms and conditions
of this Agreement in confidence and to use diligent efforts to ensure that the
communicating party's Confidential Information the terms hereof are held in
confidence by it officers, directors, employees, representatives and others over
whom it exercises control Upon discovering any unauthorized disclosure of the
communicating party's Confidential Information or the terms or this Agreement,
the recipient will use diligent efforts to recover such information and to
prevent its further disclosure to additional third parties. In addition, the
recipient party will promptly notify the communicating party in writing of any
such unauthorized disclosure of the communicating party's Confidential
Information. The parties' obligations under this paragraph will survive for a
period or three (3) years following the expiration or earlier termination of
this Agreement.
8. Hold Harmless.
(a) HRBM agrees to indemnify, defend and hold E-LOAN harmless from and against
any and all claims, suits, actions, liability, losses, expenses or damages which
may hereafter arise, which E-LOAN, its affiliates, directors, officers, agents
or employees may sustain due to or arising out of any misrepresentation,
negligent act or omission by HRBM, its affiliates, officers, agents,
representatives or employees or out of any act by HRBM, its affiliates,
officers, agents, representatives or employees in violation of this Agreement or
in violation of any applicable law or regulation. Provided, however, the above
indemnification shall not provide coverage for (a) any claim, suit or action,
liability or loss, expense or damage that resulted from E-LOAN'S negligent act
or omission or a breach by E-LOAN of any of its representations, warranties or
obligations under this Agreement, or (b) the amount by which any cost, fee,
expense or loss associated with any of the foregoing were increased as a result
of an act or omission on the part of F-LOAN. As a condition of the foregoing
indemnity obligation, E-LOAN agrees to give HRBM reasonably prompt notice of any
third party claim.
(b) E-LOAN agrees to indemnify, defend and hold HRBM harmless from and against
any and all claims, suits, actions, liability, losses, expenses or damages which
may hereafter arise, which HRBM, its affiliates, directors, officers, agents or
employees may sustain due to orarising out of any misrepresentation, negligent
act or omission by E-LOAN, its affiliates, officers, agents, representatives or
employees or out of any act by E-LOAN, its affiliates, officers, agents,
representatives or employees in violation of this Agreement or in violation of
any applicable law or regulation. Provided, however, the above indemnification
shall not provide coverage for (a) any claim, suit or action, liability or loss,
expense or damage that resulted from a negligent act or omission of HRBM or that
is attributable to a breach by HRBM of any of its representations, warranties or
obligations pursuant to this Agreement, or (b) the amount by which any cost,
fee, expense or loss associated with any of the foregoing were increased as a
result of an act or omission on the part of HRBM. As a condition of the
foregoing indemnity obligation, HRBM agrees to give E-LOAN reasonably prompt
notice of any third party claim.
9. Notices. All notices required or permitted by this Agreement shall be in
writing and shall be given by certified mail, return receipt requested or by
reputable overnight courier with package tracing capability and sent to the
address at the read of this Agreement or such other address that a party
specified in writing in accordance with this paragraph.
10. Disclaimer Concerning Tax Effects. Neither party to this Agreement makes any
representation or warranty to the other regarding the effect that this Agreement
and the consummation of the transactions contemplated hereby may have upon the
foreign, federal, state or local tax liability of the other.
11 . Disclaimer of Warranties. Neither E-LOAN nor HRBM guarantees continuous or
uninterrupted display or distribution of any links contemplated hereunder, or
continuous or uninterrupted operation of their respective websites. In the event
of interruption of display or distribution of E-LOAN's or HRBM's links or the
parties' websites (or any portion there to the parties' sole obligation to each
other shall be to restore service as soon as practical. In no event will either
party be liable for consequential, punitive. special or indirect damages in
connection with this Agreement or the obligations contemplated hereby even if
they are advised of the possibility of such damages.
Notwithstanding the foregoing, or any other provision in this Agreement, should
operation be interrupted for eight or more hours throughout a day (an
"Interrupted Day") for five consecutive calendar days or longer, the Monthly
Marketing Fee shall be reduced by that amount equal to $2,500 per day for each
Interrupted Day.
12. Capitalized Terms. Capitalized terms used herein shall have the meanings set
forth herein.
13. Amendment. The terms and conditions of this Agreement may not be modified or
amended other than by a writing signed by both parties.
14. Trademark License. Neither party may use the other parties trademarks,
service marks, trade names, logos, or other commercial or product designation
(collectively "Marks") for any purpose whatsoever without the prior written
consent of the other party.
15. Assignment/Binding Nature. Neither party may assign, voluntarily, by
operation of law, or otherwise, any rights, or delegate any duties under this
Agreement to any party that is not an affiliate of itself as of the Effective
Date, without the other party's prior written consent, except that either party
may assign this Agreement or any of its rights or obligations arising hereunder
to the surviving entity in a merger, acquisition, reorganization or
consolidation in which it participates, or to a purchaser of substantially all
of its assets; providing that the assigning party will give reasonable written
notice to the non-assigning party in advance of such merger, acquisition or
other assignment and that the surviving entity is not a competitor to the non-
assigning party. Subject to the foregoing, this Agreement shall be binding upon
and shall inure to the benefit of the successors and assigns of the Parties.
16. Entire Agreement. This Agreement and any Exhibits attached hereto constitute
the entire Agreement between the Parties and supersede all oral and written
negotiations of the Parties with respect to the subject matter hereof.
17. Governing Law. This agreement shall be subject to and construed under the
laws of the State of California, without reference to conflicts of law
provisions thereof.
18. Severability. If any provision of this Agreement should be invalid, illegal
or in conflict with any applicable state or federal law or regulation, such law
or regulation shall control, to the extent or such conflict, without affecting
the remaining provisions or this Agreement. This Agreement shall be deemed to be
severable and, if any provision is determined to be void or unenforceable, then
that provision will be deemed severed and the remainder or the Agreement will
remain in effect. Without limiting the foregoing, if either party is advised by
counsel or a regulatory body having jurisdiction over the party's activities
that any provision of this Agreement violates any applicable federal or state
law or regulation, then the parties agree cooperate to comply with such advice
by modifying or terminating this Agreement (in whole or in part).
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the
day and year first above written.
E-LOAN, Inc. ,
H&R Block Mortgage Corporation
By:
By:
/s/ Joseph J. Kennedy
/s/ Tim Owens
--------------------------------------------------------------------------------
Exhibit A
HRBM Specified Criteria
* Credit scores must be less than [*]
* Property loan to value must be [*]% or less
* Residential 1-4 unit properties only
* First mortgage purchase and refinance applications
* Minimum loan size of $[*]
All states except for Alaska, Hawaii and Alabama.
--------------------------------------------------------------------------------
|
EXHIBIT 10.1
SIXTH AMENDMENT
to Seitel, Inc. Revolving Credit Agreement
This Sixth Amendment dated as of May 11, 2001 (this "Sixth Amendment") is
among Seitel, Inc., a Delaware corporation (the "Borrower"), the lenders set
forth on the signature pages hereto (the "Lenders") and Bank One, NA, formerly
known as The First National Bank of Chicago, individually and as agent for the
Lenders (in such capacity, the "Agent").
FOR VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Unless amended pursuant hereto or unless the context
otherwise requires, all terms used herein which are defined in the Revolving
Credit Agreement dated as of July 22, 1996 (as amended pursuant to a First
Amendment to Seitel, Inc. Revolving Credit Agreement dated as of August 30,
1996, a Second Amendment to Seitel, Inc. Revolving Credit Agreement dated as of
May 1, 1997, a Third Amendment to Seitel, Inc. Revolving Credit Agreement dated
as of March 16, 1998, Amendment No. 4 dated as of August 10, 1999, a Fifth
Amendment to Seitel, Inc. Revolving Credit Agreement dated as of March 16, 2001,
and as it may have been further amended, supplemented or otherwise modified from
time to time through the date hereof, the "Credit Agreement") among the
Borrower, the Agent and the Lenders, shall have the meanings assigned to them in
the Credit Agreement.
2. Amendments. Upon the satisfaction of the conditions precedent set
forth in Section 4 of this Sixth Amendment and effective as of the date hereof,
the definition of "Facility Termination Date" set forth in Article I of the
Credit Agreement is hereby amended to read in its entirety as follows:
"'Facility Termination Date' means July 15, 2001 or any earlier date on
which the Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof."
3. Representations and Warranties. The Borrower hereby confirms,
reaffirms and restates as of the date hereof the representations and warranties
set forth in Article V of the Credit Agreement, provided that, with respect to
the representations and warranties set forth in Section 5.6, the reference to
"March 31, 1996" therein shall be deemed to read "December 31, 2000," and with
respect to the representations and warranties set forth in Section 5.15, the
references to "May 1, 1997" therein shall be deemed to be a reference to the
date of this Sixth Amendment."
4. Conditions Precedent. This Sixth Amendment and the amendments to the
Credit Agreement provided for in Section 2 hereof shall become effective as of
the date hereof when all of the following conditions precedent shall have been
satisfied:
--------------------------------------------------------------------------------
(a) The Agent shall have received counterparts of this Sixth Amendment
duly executed and delivered by the Borrower and by all of the Lenders and
consented to by all of the Subsidiary Guarantors.
(b) No Default or Unmatured Default shall have occurred and be
continuing.
5. Effect on the Credit Agreement. Except to the extent of the
amendments expressly provided for herein, all of the representations,
warranties, terms, covenants and conditions of the Loan Documents (a) shall
remain unaltered, (b) shall continue to be, and shall remain, in full force and
effect in accordance with their respective terms, and (c) are hereby ratified
and confirmed in all respects. Upon the effectiveness of this Sixth Amendment,
all references in the Credit Agreement (including references in the Credit
Agreement as amended by this Sixth Amendment) to "this Agreement" (and all
indirect references such as "hereby", "herein", "hereof" and "hereunder") shall
be deemed to be references to the Credit Agreement as amended by this Sixth
Amendment.
6. Entire Agreement. This Sixth Amendment, the Credit Agreement as
amended by this Sixth Amendment and the other Loan Documents embody the entire
agreement and understanding among the parties hereto and supersede any and all
prior agreements and understandings between the parties hereto relating to the
subject matter hereof.
7. APPLICABLE LAW. THIS SIXTH AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
8. Headings. The headings, captions and recitals used in this Sixth
Amendment are for convenience only and shall not affect the interpretation of
this Sixth Amendment.
9. Counterparts. This Sixth Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment
to be duly executed as of the date first above written.
SEITEL, INC.
By:
/s/ Debra D. Valice
Debra D. Valice
Executive Vice President
- Chief Financial Officer
--------------------------------------------------------------------------------
BANK ONE, NA,
f/k/a The First National Bank of Chicago and
successor by merger to Bank One, Texas, N.A.,
individually and as Agent
By:
/s/ Helen A. Carr
First Vice President
ACKNOWLEDGMENT AND CONSENT BY SUBSIDIARY GUARANTORS
Each of the undersigned Subsidiary Guarantors (i) acknowledges its
receipt of a copy of and hereby consents to all of the terms and conditions of
the foregoing Fifth Amendment, and (ii) reaffirms its obligations under the
Subsidiary Guaranty dated as of July 22, 1996 in favor of Bank One, NA, formerly
known as The First National Bank of Chicago, as agent.
SEITEL DELAWARE, INC.
SEITEL GEOPHYSICAL, INC.
DDD ENERGY, INC.
SEITEL GAS & ENERGY CORP.
SEITEL POWER CORP.
SEITEL NATURAL GAS, INC.
MATRIX GEOPHYSICAL, INC.
EXSOL, INC.
DATATEL, INC.
SEITEL OFFSHORE CORP.
GEO-BANK, INC.
ALTERNATIVE COMMUNICATIONS ENTERPRISES, INC.
SEITEL INTERNATIONAL, INC.
AFRICAN GEOPHYSICAL, INC.
By:
/s/ Debra D. Valice
Debra D. Valice
Vice President
SEITEL DATA CORP.
By:
/s/ Lisa Oakes
Lisa Oakes
Vice President
SEITEL MANAGEMENT, INC.
By:
/s/ Debra D. Valice
Debra D. Valice
President
SEITEL DATA LTD.
By:
Seitel Delaware, Inc.,
its general partner
By:
/s/ Debra D. Valice
Debra D. Valice
Vice President |
Exhibit 10.35
FORM OF EMPLOYMENT AGREEMENT BETWEEN THE
COMPANY AND ITS EXECUTIVE OFFICERS
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into _______________, 200_ by and between MITY
Enterprises, Inc., a Utah corporation (the "Company") and _________________,
("Employee").
NOW THEREFORE, it is agreed as follows:
1. Employment. Effective ___________, 200_, The Company hereby agrees to
employ the Employee and the Employee hereby accepts such employment by the
Company on the terms contained herein.
2. Duties. During the term of this Agreement, Employee will be employed as
___________ of the Company to perform such duties for the Company commensurate
with such position and may be determined and assigned to him from time to time
by the President of the Company. The President or the Board of Directors may
change at its discretion the title and responsibilities of the Employee.
3. Performance. Employee hereby accepts such employment for the compensation
hereinafter provided. During the period of his employment, Employee agrees to
devote his full-time efforts to the operations and affairs of the Company and to
the performance of such duties hereunder as may be assigned to him from time to
time by the President of the Company. During the term of this Agreement,
Employee shall not engage in any business or activity which is detrimental to
the Company or which interferes with Employee's discharge of his duties and
responsibilities hereunder. Employee may, however, be engaged in other
activities such as consulting and serving on other Boards of Directors, upon the
approval of the Company's Board of Directors.
4. Compensation. For all employment services rendered by Employee during the
period of employment hereunder, the Company agrees to compensate Employee as set
forth below:
(a) The annual base salary of Employee shall be ________________ and such
annual base salary shall be reviewed annually by the Board of Directors of the
Company and, at the Board's sole discretion, may be increased or decreased
depending upon the Company's success, Employee's performance during the year and
other factors deemed relevant by the Board of Directors of the Company;
(b) Participation in the company's bonus plan at the Board's sole
discretion.
(c) All compensation payable under this Agreement shall be subject to
customary withholding taxes and other employment taxes as required with respect
to compensation paid by a corporation to an employee.
5. Additional Benefits. The Employee shall be entitled to participate in all
executive benefit programs offered from time to time and for which he is
eligible, including, without limitation, all health, medical, dental, and life
insurance programs, retirement plans, and any bonus plans adopted by the
Company. During the period of his employment, Employee shall be reimbursed for
his reasonable actual out-of-pocket business expenses incurred in the
performance of services to the Company hereunder, in accordance with the general
policy of the Company in effect from time to time.
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6. Term and Termination. Except in the case of earlier termination as
provided herein, or unless extended by written agreement of the parties hereto,
this Agreement shall be for a term of five (5) years from the effective date
hereof and shall terminate immediately upon the expiration of the term. The
Company shall have the right, on written notice to Employee, to terminate
Employee's employment as follows:
(a) Immediately at any time for cause. For purposes of this paragraph 6, the
term "cause" shall mean the willful breach or habitual neglect of Employee's
duties under this Agreement or as an employee of the Company, conviction of a
felony, or abuse of drugs or alcoholic beverages; or
(b) At any time without cause provided the Company shall be obligated to pay
Employee his base salary for a ____________ month period under the terms of this
Agreement. This amount will be net of applicable taxes and other required
withholdings and any amount Employee may owe to the Company and shall not
include any amounts related to any executive bonus plans of the Company, payable
in equal monthly installments on the last day of each month commencing with the
month next following the date of termination.
The Employee's obligations set forth in paragraph 11 hereof and under the
Proprietary Information Agreement referenced in paragraph 10 below, shall
survive the expiration or termination of this Agreement.
7. Death. In the event of Employee's death during the term of this
Agreement, this Agreement shall terminate immediately and Employee's legal
representative shall be entitled to receive the compensation due employee
through the last day of the calendar month in which the death shall have
occurred.
8. Disability. If during the term of this Agreement Employee should fail to
perform his duties hereunder on account of illness or other incapacity which the
Board of Directors of the Company shall in good faith determine renders the
Employee incapable of performing his duties hereunder, and such illness or other
incapacity shall continue for a period of more than sixty (60) days, the Company
shall have the right, upon fifteen (15) days' notice to Employee, to terminate
this Agreement. In such event, Employee's right to be paid compensation
hereunder shall terminate thirty (30) days after the giving of such notice, but
Employee shall be entitled to disability payments and coverage upon the basis
available to Company employees under disability benefit plans, if any, of the
Company which may from time to time be in effect. However, if prior to the date
specified in such notice the Board of Directors of the Company determines that
Employee's illness or incapacity has terminated and that he is then capable of
satisfactorily performing his duties hereunder, and if Employee shall have
resumed the performance of such duties, Employee shall be entitled to resume his
employment hereunder as though such notice had not been given.
9. Assignability. This Agreement shall not be assignable by either party
without the prior written consent of the other party, except that the Company
may assign this Agreement to any entity which acquires the Company resulting in
the exchange of more than 50% of the outstanding voting securities of the
Company for consideration issued, or caused to be issued, by the acquiring
corporation or its subsidiary.
10. Proprietary Information Agreement. Employee will sign a MITY
Enterprises, Inc. Proprietary Information Agreement in the form attached hereto
as Exhibit "A."
- 2 -
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11. Non-Compete Covenant. The Company and Employee agree that the Company's
successful operation depends, to a great extent, on Employee's special knowledge
and expertise regarding the Company's business and activities. Consequently,
during the term of this Agreement and for a period of three (3) years from the
date of termination of Employee's employment with the Company, Employee, in
consideration of the Company's agreement to employ Employee, agrees not to
engage, directly or indirectly, personally or as an employee, agent, consultant,
partner, manager, officer, director, shareholder or otherwise, in any activities
similar or reasonably related to those in which Employee shall have engaged
while employed by the Company nor render services similar or reasonably related
to those in which Employee shall have engaged while employed by the Company for
or on behalf of himself or any person, firm or business organization which
directly competes with the Company in any line of business in which the Company
engages or in which the Company's operating plan or budget prior to the
Employee's termination calls for the Company to engage during the following
three (3) years, nor shall Employee engage in such activities or render such
services to any other person or entity engaged in or about to become engaged in
such activities for or on behalf of such person, firm or business organization,
nor shall employee entice, induce, or encourage any of the Company's other
employees to engage in any activity which, were it done by Employee, would
violate any provision of the Proprietary Information Agreement referred to in
paragraph 10. Application of this paragraph shall apply only with respect to any
state, country or geographic area in which the Company does business, has done
business or anticipates doing business (as may be evidenced by the Company's
operating plan or budget prior to Employee's termination).
12. Violation of Covenants. If any of the covenants or agreements contained
in paragraph 11 above or in the Proprietary Information Agreement referenced in
paragraph 10 above are violated, Employee agrees and acknowledges that any such
violation or threatened violation will cause irreparable injury to the Company
and that the remedy at law for any such violation or threatened violation will
be inadequate and that the Company will be entitled to injunctive relief without
the necessity of proving actual damages.
13. Effect of Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other provision or of any subsequent breach of the same provision thereof.
14. Severability. In the event that any portion, including any part of a
section or subsection, of this Agreement is invalid or unenforceable for any
reason, the remaining portions of this Agreement, including the remaining
section or subsection, if any, shall be severable and shall remain in full force
and effect. The Parties to this Agreement agree that the court making a
determination that any term of provision of this Agreement is unenforceable
shall modify the scope, duration, geographic area or application of the term or
provision to the maximum extent permitted by applicable law.
15. Notices. Any notice required to be given hereunder by any party to
another shall be in writing and delivered personally or sent by certified mail,
postage pre-paid, return receipt requested, as follows: if to Employee, at his
address appearing on the payroll records of the Company, and, if to the Company,
at its principal executive office at 1301 West 400 North, Orem, Utah 84075.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah.
17. Other Agreements. This Agreement does not conflict with or violate any
other employment agreement or covenant not to compete to which Employee is a
party. This Agreement, including any Exhibits hereto, constitutes the complete
contract between the Company and Employee. All other prior written or oral
understandings between the Company and Employee regarding the matters set forth
herein are superseded by this Agreement. Any modification of this Agreement must
be in writing and signed by both parties.
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IN WITNESS WHEREFORE, the parties hereto have executed this Agreement effective
as of the day and year first above written.
MITY ENTERPRISES, INC.
By: ______________________________
Gregory L. Wilson, President
__________________________________
Executive Officer
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EXHIBIT 10.39
AMENDMENT NO. 3
TO
AGENCY AGREEMENT
This Agreement No. 3 to Agency Agreement (this "Agreement") is entered into
as of the 30th day of November 2000 with reference to that certain Agency
Agreement between PAULA Insurance Company and Pan American Underwriters, Inc.
dated as of March 1, 1992, as amended (the "Agreement"). All capitalized terms
used herein without definition shall have the meaning ascribed to them in the
Agreement.
In consideration of the mutual covenants set forth herein and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Agent and the Company agree to amend the Agreement as follows:
1.The relevant provisions of Schedule C to the Agreement are hereby amended as
follows:
"The Company agrees to pay to the Agent the following bonus commission
during the 2000 calendar year contingent upon the Agent meeting the following
quarterly premium volume thresholds:
Invoiced Quarterly 2000 Premium Volume
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Bonus Commission
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$750,000 1% of Invoiced Premium $1,500,000 Additional 1% of Invoiced Premium
$2,250,000 Additional 1% of Invoiced Premium $3,500,000 Additional 1% of
Invoiced Premium
The foregoing will be paid quarterly based on invoiced premium written prior
to the end of the applicable quarter. The bonus will apply to all premium
written, not merely the amount of premium over the premium threshold. The bonus
will be subject to offset to the same extent as commissions payable under this
Agreement."
2. In all other respects, the Agreement (including the unamended provisions
of Schedule C) shall continue in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above:
PAULA INSURANCE COMPANY
PAN AMERICAN UNDERWRITERS, INC.
By:
/s/ JEFFREY A. SNIDER
--------------------------------------------------------------------------------
By:
/s/ JAMES A. NICHOLSON
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QuickLinks
EXHIBIT 10.39
AMENDMENT NO. 3 TO AGENCY AGREEMENT
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Exhibit (10)(a)* to Report
on Form 10-K for Fiscal
Year Ended June 30, 2001
by Parker-Hannifin Corporation
Form of Change in Control Severance Agreement
entered into by the Registrant and executive officers.
*Numbered in accordance with Item 601 of Regulation S-K.
PARKER-HANNIFIN CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the ____ day of ________, 19__, by
and between Parker-Hannifin Corporation (the "Company") and ____________ (the
"Executive").
W I T N E S S E T H
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its stockholders; and
WHEREAS, the Company recognizes that, as is the case with many publicly
held corporations, the possibility of a change in control may arise and that
such possibility may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board (as defined in Section 1) has determined that it is
in the best interests of the Company and its stockholders to secure the
Executive's continued services and to ensure the Executive's continued and
undivided dedication to his duties in the event of any threat or occurrence of a
change in control of the Company; and
WHEREAS, the Board has authorized the Company to enter into this
Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and the Executive hereby
agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
-1-
(b) "Bonus" means the annual bonuses payable pursuant to the RONA
Plan and the Target Incentive Program.
(c) "Cause" means (i) a material breach by the Executive of the
duties and responsibilities of the Executive (other than as a result of
incapacity due to physical or mental illness) which is demonstrably willful and
deliberate on the Executive's part, which is committed in bad faith or without
reasonable belief that such breach is in the best interests of the Company and
which is not remedied in a reasonable period of time after receipt of written
notice from the Company specifying such breach or (ii) the commission by the
Executive of a felony involving moral turpitude. The determination of Cause
shall be made by the Board. Cause shall not exist unless and until the Company
has delivered to the Executive a copy of a resolution duly adopted by
three-quarters (3/4) of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive's counsel, to be heard before the
Board), finding that in the good faith opinion of the Board the Executive was
guilty of the conduct set forth in this Section 1(c) and specifying the
particulars thereof in detail. The Company must notify the Executive that it
believes Cause has occurred within ninety (90) days of its knowledge of the
event or condition constituting Cause or such event shall not constitute Cause
under this Agreement. For purposes of clause (i) above, any act, or failure to
act, by the Executive based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.
(d) "Change in Control" means the occurrence of one of the
following events:
(i) any "person" (as such term is defined in
Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities eligible to
vote for the election of the Board (the "Company Voting Securities"); provided,
however, that the event described in this paragraph shall not be deemed to be a
Change in Control by virtue of any of the following situations: (A) an
acquisition by the Company or any Subsidiary; (B) an acquisition by any employee
benefit plan sponsored or maintained by the Company or any Subsidiary; (C) an
acquisition by any underwriter temporarily holding securities pursuant to an
offering of such securities; (D) a Non-Control Transaction (as defined in
paragraph (iii)); (E) any acquisition by the Executive or any group of persons
(within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
including the Executive (or any entity in which the Executive or a group of
persons including the Executive, directly or indirectly, holds a majority of the
voting power of such entity's outstanding voting interests); or (F) the
acquisition of Company Voting Securities from the Company, if a majority of the
Board approves a resolution providing expressly that the acquisition pursuant to
this clause (F) does not constitute a Change in Control under this paragraph
(i);
-2-
(ii) individuals who, at the beginning of any period of twenty-four
(24) consecutive months, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority thereof; provided, that any person
becoming a director subsequent to the beginning of such twenty-four (24) month
period, whose election, or nomination for election, by the Company's
shareholders was approved by a vote of at least two-thirds of the directors
comprising the Incumbent Board who are then on the Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without objection to such nomination) shall
be, for purposes of this paragraph (ii), considered as though such person were a
member of the Incumbent Board; provided, however, that no individual initially
elected or nominated as a director of the Company as a result of an actual or
threatened election contest with respect to directors or any other actual or
threatened solicitation of proxies or consents by or on behalf of any person
other than the Board shall be deemed to be a member of the Incumbent Board;
(iii) the consummation of a merger, consolidation, share exchange or
similar form of corporate reorganization of the Company or any Subsidiary that
requires the approval of the Company's stockholders, whether for such
transaction or the issuance of securities in connection with the transaction or
otherwise (a "Business Combination"), unless (A) immediately following such
Business Combination: (1) more than 50% of the total voting power of the
corporation resulting from such Business Combination (the "Surviving
Corporation") or, if applicable, the ultimate parent corporation which directly
or indirectly has beneficial ownership of 100% of the voting securities eligible
to elect directors of the Surviving Corporation (the "Parent Corporation"), is
represented by Company Voting Securities that were outstanding immediately prior
to the Business Combination (or, if applicable, shares into which such Company
Voting Securities were converted pursuant to such Business Combination), and
such voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities among the
holders thereof immediately prior to the Business Combination, (2) no person
(other than any employee benefit plan sponsored or maintained by the Surviving
Corporation or Parent Corporation) is or becomes the beneficial owner, directly
or indirectly, of 20% or more of the total voting power of the outstanding
voting securities eligible to elect directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation), and (3) at least a
majority of the members of the board of directors of the Parent Corporation (or,
if there is no Parent Corporation, the Surviving Corporation), following the
Business Combination, were members of the Incumbent Board at the time of the
Board's approval of the execution of the initial agreement providing for such
Business Combination (a "Non-Control Transaction") or (B) the Business
Combination is effected by means of the acquisition of Company Voting Securities
from the Company, and a majority of the Board approves a resolution providing
expressly that such Business Combination does not constitute a Change in Control
under this paragraph (iii); or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or the sale or other disposition of
all or substantially all of the assets of the Company and its Subsidiaries.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any person acquires beneficial ownership of more than
20% of the Company Voting Securities as a result of the acquisition of Company
Voting Securities by the Company which, by reducing the number of Company Voting
Securities outstanding, increases the percentage of shares beneficially owned by
such person; provided, that if a Change in Control would occur as a result of
such an acquisition by the Company (if not for the operation of this sentence),
and after the Company's acquisition such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control shall then occur.
Notwithstanding anything in this Agreement to the contrary, if the
Executive's employment is terminated prior to a Change in Control, and the
Executive reasonably demonstrates that such termination was at the request of a
third party who has indicated an intention or taken steps reasonably calculated
to effect a Change in Control (a "Third Party"), then for all purposes of this
Agreement, the date immediately prior to the date of such termination of
employment shall be deemed to be the date of a Change in Control.
(e) "Company" means Parker-Hannifin Corporation, an Ohio corporation.
(f) "Date of Termination" means the date on which the Executive's
employment by the Company terminates.
(g) "Good Reason" means, without the Executive's express written
consent, the occurrence of any of the following events after a Change in
Control:
(i) the assignment to the Executive of any duties (including a
diminution of duties) inconsistent in any adverse respect with the Executive's
position(s), duties, responsibilities or status with the Company immediately
prior to such Change in Control; (ii) an adverse change in the Executive's
reporting responsibilities, titles or offices with the Company as in effect
immediately prior to such Change in Control; (iii) any removal or involuntary
termination of the Executive from the Company otherwise than as expressly
permitted by this Agreement or any failure to re-elect the Executive to any
position with the Company
-4-
held by the Executive immediately prior to such Change in Control; (iv) a
reduction by the Company in the Executive's rate of annual base salary as in
effect immediately prior to such Change in Control or as the same may be
increased from time to time thereafter; (v) any requirement of the Company that
the Executive (A) be based anywhere more than twenty-five (25) miles from the
facility where the Executive is located at the time of the Change in Control or
(B) travel on Company business to an extent substantially more burdensome than
the travel obligations of the Executive immediately prior to such Change in
Control; (vi) the failure of the Company to (A) continue in effect any employee
benefit plan or compensation plan in which the Executive is participating
immediately prior to such Change in Control, or the taking of any action by the
Company which would adversely affect the Executive's participation in or reduce
the Executive's benefits under any such plan (including the failure to provide
the Executive with a level of discretionary incentive award grants consistent
with the past practice of the Company in granting such awards to the Executive
during the three-Year period immediately preceding the Change in Control),
(B) provide the Executive and the Executive's dependents with welfare benefits
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive immediately prior to such Change in
Control, (C) provide fringe benefits in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive immediately prior to such Change in
Control, or (D) provide the Executive with paid vacation in accordance with the
most favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive immediately prior to such
Change in Control, unless in the case of any violation of (A), (B) or (C) above,
the Executive is permitted to participate in other plans, programs or
arrangements which provide the Executive (and, if applicable, the Executive's
dependents) with no less favorable benefits at no greater cost to the Executive;
or (vii) the failure of the Company to obtain the assumption agreement from any
successor as contemplated in Section 9(b).
Any event or condition described in Sections 1(g)(i) through (vi) which
occurs prior to a Change in Control, but was at the request of a Third Party,
shall constitute Good Reason following a Change in Control for purposes of this
Agreement (as if a Change in Control had occurred immediately prior to the
occurrence of such event or condition) notwithstanding that it occurred prior to
the Change in Control. For purposes of this Agreement, any good faith
determination of Good Reason made by the Executive shall be conclusive;
provided, however, that an isolated, insubstantial and inadvertent action taken
in good faith and which is remedied by the Company promptly after receipt of
notice thereof given by an Executive shall not constitute Good Reason. The
Executive's right to terminate employment for Good Reason shall not be affected
by the Executive's incapacitation due to mental or physical illness and the
Executive's continued employment shall not constitute consent to or a waiver of
rights with respect to any event or condition constituting Good Reason. The
Executive must provide notice of termination within
ninety (90) days of his knowledge of an event or condition constituting Good
Reason hereunder or such event shall not constitute Good Reason hereunder. A
transaction which results in the Company no longer being a publicly traded
entity shall not in and of itself be treated as Good Reason unless and until one
of the events or conditions set forth in Sections 1(g)(i) through (vii) occurs.
Notwithstanding anything in this Section 1(g) to the contrary, if during
the 180-day period commencing upon the 91st day immediately following a Change
in Control, the Executive's employment terminates for any or no reason (other
than for Cause) such termination shall be treated as a termination for Good
Reason hereunder.
(h) "Nonqualifying Termination" means a termination of the Executive's
employment (i) by the Company for Cause, (ii) by the Executive for any reason
other than Good Reason, (iii) as a result of the Executive's death, (iv) by the
Company due to the Executive's absence from his duties with the Company on a
full-time basis for at least one hundred eighty (180) consecutive days as a
result of the Executive's incapacity due to physical or mental illness or (v) as
a result of the Executive's Retirement.
(i) "Projected Bonus Amount" means, with respect to any Year, the
greater of (i) the Executive's Target Bonus Amount for such Year; or (ii) to the
extent calculable after at least one calendar quarter of the Year, the Bonus the
Executive would have earned in the Year in which the Executive's Date of
Termination occurs had the Company's financial performance through the end of
the fiscal quarter immediately preceding the Date of Termination continued
throughout said Year (the "Earned Bonus Amount").
(j) "Retirement" means the Executive's mandatory retirement (not
including any mandatory early retirement) in accordance with the Company's
retirement policy generally applicable to its salaried employees, as in effect
immediately prior to the Change in Control, or in accordance with any retirement
arrangement established with respect to the Executive with the Executive's
written consent.
(k) "RONA Plan" means the Company's Return on Net Assets Plan, or any
successor thereto.
(l) "Subsidiary" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities of such corporation or
other entity.
(m) "Target Bonus Amount" means, with respect to any Year, the
Participant's target Bonus for such Year based upon the Company's forecasted
Operational Plan.
-6-
(n) "Target Incentive Program" means the Company's Target Incentive
Program, or any successor thereto.
(o) "Termination Period" means the period of time beginning with a
Change in Control and ending three (3) years following such Change in Control.
(p) "Year" means the fiscal year of the Company.
2. Payments Upon Termination of Employment.
(a) If during the Termination Period the employment of the Executive
shall terminate, other than by reason of a Nonqualifying Termination, then the
Company shall pay to the Executive (or the Executive's beneficiary or estate),
within five (5) days following the Date of Termination, as compensation for
services rendered to the Company:
(i) a lump-sum cash amount equal to the sum of (A) the Executive's base
salary from the Company and its Subsidiaries through the Date of Termination and
any outstanding Bonus or long-term bonus awards for which payment is due and
owing at such time, (B) any compensation previously deferred by the Executive
other than pursuant to a tax-qualified plan (together with any interest and
earnings thereon) (the "Deferred Amount"), plus an additional adjustment payment
calculated in accordance with the formula set forth in Exhibit A hereto, (C) any
accrued vacation pay, and (D) to the extent not provided under the Company's
Bonus plans, a pro-rata portion of the Executive's Projected Bonus Amount for
the Year in which the Executive's Date of Termination occurs, in each case to
the extent not theretofore paid; plus (ii) a lump-sum cash amount
equal to the product of (A) the lesser of (1) three (3) and (2) the quotient
resulting from dividing the number of full and partial months from the
Executive's Date of Termination until the Executive would be subject to
Retirement, by twelve (12) and (B) the sum of (1) the Executive's highest annual
rate of base salary during the 12-month period immediately preceding the Date of
Termination and (2) the highest of (x) the Executive's average Bonus (annualized
for any partial Years of employment) earned during the 3-Year period immediately
preceding the Year in which the Date of Termination occurs (or shorter
annualized period if the Executive had not been employed for the full three-Year
period), (y) the Executive's Target Bonus Amount for the Year in which the
Change in Control occurs and (z) the Executive's Target Bonus Amount for the
Year in which the Date of Termination occurs; provided, that any amount paid
pursuant to this Section 2(a)(ii) shall offset an equal amount of any severance
relating to salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan, policy, or
arrangement of the Company.
-7-
(b) If during the Termination Period, the employment of the Executive
shall terminate, other than by reason of a Nonqualifying Termination, for a
period of three (3) years (or, if lesser, the period ending on the date on which
the Executive would be subject to Retirement) commencing on the Date of
Termination, the Company shall continue to keep in full force and effect (or
otherwise provide) all policies of medical, accident, disability and life
insurance with respect to the Executive and his dependents with the same level
of coverage, upon the same terms and otherwise to the same extent (and on the
same after-tax basis), as such policies shall have been in effect immediately
prior to the Date of Termination (or, if more favorable to the Executive,
immediately prior to the Change in Control), and the Company and the Executive
shall share the costs of the continuation of such insurance coverage in the same
proportion as such costs were shared immediately prior to the Date of
Termination.
(c) If during the Termination Period the employment of the Executive
shall terminate, other than by reason of a Nonqualifying Termination, then the
Executive shall be credited with three (3) years additional age and service
credit for purposes of qualifying for any retiree medical benefits programs of
the Company, although receipt of such retiree medical benefits shall not
commence until the Executive is otherwise eligible under the terms of the
retiree medical plan. If the Executive is terminated pursuant to a Nonqualifying
Termination and would have been eligible to retire under the terms and
conditions of the Company's retiree medical program as of immediately prior to
the Executive's Date of Termination (or, if more favorable to the Executive, as
of immediately prior to the Change in Control), the Executive's termination of
employment shall be treated as a retirement under the Company's retiree medical
program. The retiree medical benefits (and cost) to be provided to the Executive
(and the Executives's eligible dependents) by the Company shall be no less
favorable than the benefits (and cost) under the retiree medical program of the
Company as of immediately prior to the Executive's Date of Termination (or, if
more favorable to the Executive, as of immediately prior to the Change in
Control), and shall be provided notwithstanding any amendment to, or termination
of, the Company's retiree medical program.
(d) If during the Termination Period the employment of the Executive
shall terminate by reason of a Nonqualifying Termination, then the Company shall
pay to the Executive within thirty (30) days following the Date of Termination,
a cash amount equal to the sum of (i) the Executive's base salary from the
Company and its Subsidiaries through the Date of Termination and any outstanding
Bonus or long-term bonus awards for which payment is due and owing at such time,
(ii) any compensation previously deferred by the Executive other than pursuant
to a tax-qualified plan (together with any interest and earnings thereon),
(iii) any accrued vacation pay, and (iv) if the Nonqualifying Termination is
other than for Cause, to the extent not provided under the Company's Bonus
plans, a pro-rata portion of the Executive's Earned Bonus Amount for the Year in
which the Executive's Date of Termination occurs, in each case to the extent not
theretofore paid.
(e) If subsequent to a Change in Control and the end of the Termination
Period, the employment of the Executive shall be terminated by the Company
(other than by reason of a Nonqualifying Termination), the Company shall pay the
Executive within five (5) days following his Date of Termination a lump sum cash
payment equal to the sum of (i) the Executive's highest
annual rate of base salary during the 12-month period immediately preceding the
Date of Termination and (ii) the higher of (A) the Executive's average Bonus
(annualized for any partial years of employment) earned during the 3-year period
immediately preceding the year in which the Date of Termination occurs and
(B) the Executive's Target Bonus Amount for the year in which the Date of
Termination occurs; provided, that any amount paid pursuant to clauses (i) and
(ii) of this Section 2(e) shall offset an equal amount of any severance relating
to salary or bonus continuation to be received by the Executive upon termination
of employment of the Executive under any severance plan, policy or arrangement
of the Company.
(f) If subsequent to a Change in Control and the end of the Termination
Period, the employment of the Executive shall be terminated by the Company, the
Company shall pay the Executive within five (5) days following his Date of
Termination a lump sum cash payment equal to (i) the Executive's base salary
from the Company and its Subsidiaries through the Date of Termination and any
outstanding Bonus or long-term bonus awards for which payment is due and owing
at such time, (ii) any accrued vacation pay, and (iii) if the termination is
other than for Cause, to the extent not provided under the Company's Bonus
plans, a pro-rata portion of the Executive's Earned Bonus Amount for the year in
which the Executive's Date of Termination occurs, in each case to the extent not
theretofore paid.
3. Gross-Up Payment.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, distribution or acceleration of
vesting of any award or benefit by the Company or its Subsidiaries to or for the
benefit of the Executive (whether paid or payable, distributed or distributable
or accelerated or subject to acceleration pursuant to the terms of this
Agreement or otherwise) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes) imposed upon the Gross-Up Payment, the Executive retains an
amount equal to the sum of (i) the Excise Tax imposed upon the Payments and
(ii) the product of any deductions disallowed because of the inclusion of the
Gross-Up Payment in the Executive's adjusted gross income for federal income tax
purposes and the highest applicable marginal rate of federal income taxation for
the calendar year in which the Gross-Up Payment is to be made. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
(1) pay applicable federal income taxes at the highest applicable marginal rates
of federal income taxation for the calendar year in which the Gross-Up Payment
is to be made, (2) pay applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes and
(3) have otherwise allowable deductions for federal income tax purposes at least
equal to those
which could be disallowed because of the inclusion of the Gross-Up Payment in
the Executive's adjusted gross income. The payment of a Gross-Up Payment under
this Section 3(a) shall in no event be conditioned upon the Executive's
termination of employment or the receipt of severance benefits under this
Agreement.
(b) Subject to the provisions of Section 3(a), all determinations
required to be made under this Section 3, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Mullin
Consulting Inc. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days of the receipt of notice from the Company or the Executive that there has
been a Payment, or such earlier time as is requested by the Company
(collectively, the "Determination"). In the event that the Accounting Firm is
serving as a consultant for the individual, entity or group effecting the Change
in Control, the Executive may appoint a nationally recognized public accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company and the Company shall
enter into any agreement requested by the Accounting Firm in connection with the
performance of the services hereunder. The Gross-Up Payment under this Section 3
with respect to any Payments shall be made no later than thirty (30) days
following the date of such Payment. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion to such effect, and to the effect that failure to report the
Excise Tax, if any, on the Executive's applicable federal income tax return will
not result in the imposition of a negligence or similar penalty. The
Determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the Determination, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made
("Underpayment") or Gross-Up Payments are made by the Company which should not
have been made ("Overpayment"), consistent with the calculations required to be
made hereunder. In the event that the Executive thereafter is required to make
payment of any additional Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall
be promptly paid by the Company to or for the benefit of the Executive. In the
event the amount of the Gross-Up Payment exceeds the amount necessary to
reimburse the Executive for his Excise Tax, the Accounting Firm shall determine
the amount of the Overpayment that has been made and any such Overpayment
(together with interest at the rate provided in Section 1274(b)(2) of the Code)
shall be promptly paid by the Executive to or for the benefit of the Company.
The Executive shall cooperate, to the extent his expenses are reimbursed by the
Company, with any reasonable requests by the Company in connection with any
contests or disputes with the Internal Revenue Service in connection with the
Excise Tax.
(c) Notwithstanding Section 6 hereof, this Section 3 shall survive
the termination of this Agreement unless the Executive's employment was
terminated by the Company for Cause.
-10-
4. Withholding Taxes. The Company may withhold from all payments
due to the Executive (or his beneficiary or estate) hereunder all taxes which,
by applicable federal, state, local or other law, the Company is required to
withhold therefrom.
5. Reimbursement of Expenses. If any contest or dispute shall arise
under this Agreement involving termination of the Executive's employment with
the Company or involving the failure or refusal of the Company to perform fully
in accordance with the terms hereof, the Company shall reimburse the Executive,
on a current basis, for all legal fees and expenses, if any, incurred by the
Executive in connection with such contest or dispute (regardless of the result
thereof), together with interest in an amount equal to the prime rate of Key
Bank from time to time in effect, but in no event higher than the maximum legal
rate permissible under applicable law, such interest to accrue from the date the
Company receives the Executive's statement for such fees and expenses through
the date of payment thereof.
6. Termination of Agreement. This Agreement shall be effective on
the date hereof and shall continue until the first to occur of (i) the
termination of the Executive's employment with the Company prior to a Change in
Control (except as otherwise provided hereunder), (ii) a Nonqualifying
Termination, or (iii) the Executive's termination of employment following the
Termination Period.
7. Scope of Agreement. Nothing in this Agreement shall be deemed to
entitle the Executive to continued employment with the Company or its
Subsidiaries, and if the Executive's employment with the Company shall terminate
prior to a Change in Control, the Executive shall have no further rights under
this Agreement (except as otherwise provided hereunder); provided, however, that
notwithstanding anything herein to the contrary, any termination of the
Executive's employment following a Change in Control shall be subject to all of
the benefit and payment provisions of this Agreement.
8. Obligations of the Executive.
The Executive agrees that if a Change in Control shall occur, the
Executive shall not voluntarily leave the employ of the Company without Good
Reason during the 90-day period immediately following a Change in Control.
9. Successors' Binding Obligation.
-11-
(a) This Agreement shall not be terminated by any Business Combination
or transfer of assets. In the event of any Business Combination or transfer or
assets, the provisions of this Agreement shall be binding upon the surviving or
resulting corporation or any person or entity to which the assets of the Company
are transferred.
(b) The Company agrees that concurrently with any Business Combination
or transfer of assets, it will cause any successor or transferee unconditionally
to assume by written instrument delivered to the Executive (or his beneficiary
or estate) all of the obligations of the Company hereunder. Failure of the
Company to obtain such assumption prior to the effectiveness of any such
Business Combination or transfer of assets that results in a Change in Control
shall constitute Good Reason hereunder and shall entitle the Executive to
compensation and other benefits from the Company in the same amount and on the
same terms as the Executive would be entitled hereunder if the Executive's
employment were terminated following a Change in Control other than by reason of
a Nonqualifying Termination. For purposes of implementing the foregoing, the
date on which any such Business Combination or transfer of assets becomes
effective shall be deemed the date Good Reason occurs, and the Executive may
terminate employment for Good Reason on or following such date.
(c) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amounts would be payable to the Executive hereunder had the
Executive continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons appointed in writing by the Executive to receive such amounts or, if no
person is so appointed, to the Executive's estate.
10. Notice. (a) For purposes of this Agreement, all notices and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five (5) days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed as follows:
-12-
If to the Executive:
If to the Company:
Parker-Hannifin Corporation
6035 Parkland Boulevard
Cleveland, Ohio 44124-4141
Attention: Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt. Alternatively, notice may be deemed to have been
delivered when sent by facsimile or telex to a location provided by the other
party hereto.
(b) A written notice of the Executive's Date of Termination by the
Company or the Executive, as the case may be, to the other, shall (i) indicate
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated and (iii) specify the termination date (which date shall
not be less than fifteen (15) nor more than sixty (60) days after the giving of
such notice). The failure by the Executive or the Company to set forth in such
notice any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or circumstance
in enforcing the Executive's or the Company's rights hereunder.
11. Full Settlement; No Mitigation. The Company's obligation to make
any payments provided for by this Agreement to the Executive and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement and such amounts shall not be reduced whether or not the
Executive obtains other employment.
12. Employment with Subsidiaries. Employment with the Company for
purposes of this Agreement shall include employment with any Subsidiary.
13. Governing Law; Validity. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal
laws of the State of Ohio without regard to the principle of conflicts of laws.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which other provisions shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and signed by
the Executive and by a duly authorized officer of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by the
Executive or the Company to insist upon strict compliance with any provision of
this Agreement or to assert any right the Executive or the Company may have
hereunder, including without limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement. Except as otherwise
specifically provided herein, the rights of, and benefits payable to, the
Executive, his estate or his beneficiaries pursuant to this Agreement are in
addition to any rights of, or benefits payable to, the Executive, his estate or
his beneficiaries under any other employee benefit plan or compensation program
of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by a duly authorized officer of the Company and the Executive has executed this
Agreement as of the day and year first above written.
PARKER-HANNIFIN CORPORATION By:
____________________________________________
_______________________________________________
-14-
EXHIBIT A
The purpose of the adjustment payment to be added to the Deferred Amount
pursuant to Section 2(a)(i)(3) (the "Make Whole Amount") is to offset the
Executive's inability to defer until retirement or later the payment of taxes on
both the Deferred Amount and the earnings and interest that would have otherwise
accrued between the Date of Termination and the date on which the Executive
elected to commence receipt of the Deferred Amount (the "Commencement Date")
under the Company's Executive Deferral Plan (the "Plan").
The Make Whole Amount shall be calculated as follows:
1.
The Executive's Deferred Amount under the Plan as of the Date of Termination
(the "EDP Amount") will be projected forward to the Commencement Date at an
assumed tax-deferred annual earnings rate equal to the Moody's Seasoned Baa
Corporate Bond Yield Average for the last twelve full calendar months prior to
the Date of Termination (the "Moody's Rate") (such projected amount shall be
known as the "Projected Balance"). The Projected Balance will then be converted
into annual installment benefit payments based upon the Executive's elected form
of retirement payments under the Plan, assuming continued tax-deferred earnings
on the undistributed balance at the Moody's Rate (the "Projected Annual
Payouts"). The Projected Annual Payouts will then be reduced for assumed income
taxes at the highest applicable federal, state and local marginal rates of
taxation in effect in the Executive's taxing jurisdiction(s) for the calendar
year in which the Make Whole Amount is paid (the "Tax Rate"). The after-tax
Projected Annual Payouts will be known as the "After-Tax Projected Benefits".
2.
The term "Made Whole Amount", as used herein, shall mean the EDP Amount plus the
Make Whole Amount. The Make Whole Amount is the amount which, when added to the
EDP Amount, will yield After-tax Annuity Benefits (as hereinafter defined) equal
to the After-tax Projected Benefits, based on the following assumptions:
a. The Made Whole Amount will be taxed at the Tax Rate upon
receipt by the Executive. b. The after-tax Made Whole Amount
will be deemed to be invested by the Executive in a tax-deferred annuity that is
structured to make payments beginning on the Commencement Date in the same form
as elected by the Executive under the Plan (the "Annuity"). c. The
Annuity will accrue interest at the Moody's Rate, less 80 basis points (i.e.,
0.80%). d.
Annual Annuity payments will be taxed at the Tax Rate (after taking into account
the annuity exclusion ratio), yielding "After-tax Annuity Benefits".
|
EXHIBT 10.31
CONSENT AND AMENDMENT NO. 6 TO
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of December 31, 1997
THIS CONSENT AND AMENDMENT NO. 6 TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT ("Amendment") is made as
of the 26th day of January, 2001 by and among SCP DISTRIBUTORS LLC, a Delaware limited liability company and
successor by conversion from South Central Pool Supply, Inc. (the "Borrower"), the financial institutions listed
on the signature pages hereof (the "Lenders"), LASALLE BANK NATIONAL ASSOCIATION, in its individual capacity as a
Lender and in its capacity as agent ("Agent") under that certain Third Amended and Restated Credit Agreement
dated as of December 31, 1997 by and among the Borrower, the Lenders and the Agent (as amended, the "Credit
Agreement") and each of the Persons identified on the signature pages hereto as a Loan Party (individually, a
"Loan Party" and collectively, the "Loan Parties"). Capitalized terms used herein and not otherwise defined
herein shall have the meaning given to them in the Credit Agreement.
WITNESSETH:
WHEREAS, the Borrower, the Lenders and the Agent are parties to the Credit Agreement;
WHEREAS, Agent and the Required Lenders desire to consent to (i) the creation by Borrower of SCP
Acquisition Co. LLC, a Delaware limited liability company and wholly-owned Subsidiary of Borrower ("Acquisition
Co.") (the "Subsidiary Formation"), (ii) the acquisition by Borrower, Superior Pool Products, LLC, a Delaware
limited liability company and wholly-owned Subsidiary of Borrower ("Superior"), and Acquisition Co. of
substantially all of the assets of Hughes Supply, Inc., a Florida corporation ("Hughes"), Allstate Pool Supplies,
Inc., a Delaware corporation ("Allstate"), and Allstate Pool Business, L.P., a Delaware limited liability
partnership ("Pool LP"; together with Hughes and Allstate, the "Seller"), in each instance, used in its business
of wholesale distribution of pool supplies, in accordance with the terms of the Asset Purchase Agreement dated
January 26, 2001 (the "Allstate Acquisition" and the assets so acquired by Acquisition Co. (and not Borrower),
the "Acquisition Co. Assets"), (iii) the execution and delivery by Acquisition Co. to Pool LP of a $25 million
promissory note payable to Pool LP (the "Note") and a security agreement (the "Security Agreement") granting Pool
LP a first-priority lien on the Acquisition Co. Assets, (iv) the execution and delivery by Borrower of a guaranty
(the "Borrower Guaranty"), and (v) the execution and delivery by Superior of a guaranty (the "Superior
Guaranty"), all on the terms and subject to the conditions set forth herein; and
WHEREAS, the Borrower, the Lenders and the Agent have agreed to amend the Credit Agreement on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the agreements, provisions and covenants herein
contained, Borrower, Agent, and the Lenders agree as follows:
1. Consent. Subject to the terms and provisions of this Amendment, Agent and Lenders hereby
consent to the following:
a. the Subsidiary Formation;
b. the Allstate Acquisition and Borrower's use of proceeds of Revolving Loans to complete the same;
c. the execution and delivery by Acquisition Co. of the Note and the Security Agreement and the
granting of the liens on the Acquisition Co. Assets and other assets acquired by Acquisition
Co. as permitted herein, it being understood (and Borrower covenants and agrees) that (i) the
Note and the Security Agreement shall not be amended, supplemented, restated or otherwise
modified without the prior written consent of Agent and the Required Lenders, and (ii) upon
payment by Acquisition Co. of the indebtedness evidenced by the Note, Seller shall release all
liens granted under the Security Agreement and Agent shall have a first-priority lien on any
and all Acquisition Co. Assets; and
d. the execution and delivery by Borrower of the Borrower Guaranty, and the execution and delivery
by Superior of the Superior Guaranty.
2. Amendments to Credit Agreement. Agent, the Lenders, and Borrower hereby agree to amend the
Credit Agreement as follows:
1. Each of Schedule 1.1.1, Schedule 1.1.2, Schedule 1.1.3, Schedule 1.1.4 and Schedule 5.8 to the Credit
Agreement are deleted in their entirety and Schedule 1.1.1, Schedule 1.1.2, Schedule 1.1.3,
Schedule 1.1.4 and Schedule 5.8 attached hereto are substituted therefor.
2. Section 2.8(a) is amended by deleting the table therein and substituting the following therefor:
====================== ================ =================== =================== ==================
Leverage Applicable Applicable Applicable Applicable
Ratio Eurodollar Floating Rate Commitment Fee Letter of Credit
Margin Margin
---------------------- ---------------- ------------------- ------------------- ------------------
---------------------- ---------------- ------------------- ------------------- ------------------
‹ 2.00 to 1.00 0.875% 0.125% 0.25% 0.875%
---------------------- ---------------- ------------------- ------------------- ------------------
---------------------- ---------------- ------------------- ------------------- ------------------
=› 2.01 to 1.00 and 1.125% 0.125% 0.30% 1.125%
‹= 2.50 to 1.00
---------------------- ---------------- ------------------- ------------------- ------------------
---------------------- ---------------- ------------------- ------------------- ------------------
=› 2.51 to 1.00 and 1.375% 0.125% 0.35% 1.375%
‹= 3.00 to 1.00
---------------------- ---------------- ------------------- ------------------- ------------------
---------------------- ---------------- ------------------- ------------------- ------------------
=› 3.01 to 1.00 and 1.625% 0.125% 0.40% 1.625%
‹= 3.50 to 1.00
---------------------- ---------------- ------------------- ------------------- ------------------
---------------------- ---------------- ------------------- ------------------- ------------------
=› 3.51 to 1.00 and 1.875% 0.375% 0.45% 1.875%
‹= 4.00 to 1.00
---------------------- ---------------- ------------------- ------------------- ------------------
---------------------- ---------------- ------------------- ------------------- ------------------
› 4.01 to 1.00 2.125% 0.625% 0.50% 2.125%
====================== ================ =================== =================== ==================
3. Section 6.3(G) of the Credit Agreement is hereby amended by deleting the last sentence therein and
substituting the following therefor:
"Notwithstanding anything herein to the contrary, but without limiting the
foregoing, Borrower shall not, and shall not permit any of its Subsidiaries, without
the prior written consent of Agent and Required Lenders, to enter into any Acquisition
or transaction or series of transactions in which Borrower and/or any of its
Subsidiaries acquires all or any significant portion of the assets of another Person,
if the aggregate purchase price thereof (including, without duplication, Indebtedness
assumed or incurred in connection therewith and the fair market value of any non-cash
consideration thereof), (a) when combined with the aggregate purchase price of all
such transactions consummated within the same calendar year, exceeds $10,000,000
(excluding, for purpose of calculating such dollar limitation, the aggregate purchase
price paid in connection with the Allstate Acquisition) or (b) when combined with the
aggregate purchase price of all such transactions consummated since January __, 2001
through the Termination Date, exceeds $20,000,000 (excluding, for purpose of
calculating such dollar limitation, the aggregate purchase price paid in connection
with the Allstate Acquisition)."
4. Section 6.4(D) is hereby amended by deleting the last line of the Maximum Ratio table therein and
substituting the following therefor:
--------------------------------------------- ----------------------------------
Fiscal Quarter Ending Maximum Ratio
--------------------------------------------- ----------------------------------
--------------------------------------------- ----------------------------------
March 31, 2000 3.50 to 1.00
--------------------------------------------- ----------------------------------
--------------------------------------------- ----------------------------------
June 30, 2000 3.50 to 1.00
--------------------------------------------- ----------------------------------
--------------------------------------------- ----------------------------------
September 30, 2000 3.50 to 1.00
--------------------------------------------- ----------------------------------
--------------------------------------------- ----------------------------------
December 31, 2000 3.50 to 1.00
--------------------------------------------- ----------------------------------
--------------------------------------------- ----------------------------------
March 31, 2001 and thereafter 2.75 to 1.00
--------------------------------------------- ----------------------------------
5. Notwithstanding anything herein or in the Credit Agreement to the contrary, Borrower shall not, and
shall not permit any Subsidiary, to make any Investment in, or intercompany loan to,
Acquisition Co., other than such amounts Borrower may provide to Acquisition Co. for the sole
purpose of making, and not in excess of the amount of, the installment payments as and when
required to be made pursuant to terms of the Note; provided however, any such funds received by
Acquisition Co. are immediately forwarded to Pool L.P. pursuant to the terms of the Note.
6. Borrower (i) acknowledges and agrees that until payment in full of the Note and the release of all liens
granted pursuant to the Security Agreement, Inventory and Receivables owned by Acquisition Co.
shall not constitute Eligible Inventory or Eligible Receivables and (ii) covenants and agrees
to use its commercially reasonable best efforts to obtain as soon as possible, landlord
agreements in accordance with the Loan Documents with respect to all leased facilities of
Acquisition Co.
7. Borrower covenants and agrees (i) to deliver as soon as possible Phase I environmental reports with
respect to real property acquired (both fee title and leasehold interests) pursuant to the
Allstate Acquisition, (ii) to obtain and deliver to Agent as soon as reasonably possible any
other reports or assessments Agent may reasonably require with respect to such properties and
(iii) to the extent the reports described in clauses (i) and/or (ii) of this paragraph disclose
or identify any violations of any Environmental, Health or Safety Requirements of Law or
otherwise recommends remedial action, to take all necessary remedial actions in order to comply
with such Environmental, Health or Safety Requirements of Law or with such recommendations.
3. Conditions of Effectiveness. This Amendment shall not become effective unless the Agent shall
have received the following on or before January __, 2001:
8. the documents and other items identified in the Closing Checklist, a copy of which is attached hereto as
Exhibit A, all in form and substance reasonably satisfactory to Agent, Lenders and Borrower.
9. for the benefit of each Lender, a fee of .05% of the sum of such Lender's Revolving Loan Commitment,
plus the outstanding principal balances of such Lender's Term Loans as of January __, 2001.
4. Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as
follows:
10. This Amendment and the Credit Agreement as amended hereby, constitute legal, valid and binding
obligations of the Borrower and are enforceable against the Borrower in accordance with their
terms.
11. Upon the effectiveness of this Amendment, the Borrower hereby reaffirms all covenants, representations
and warranties made in the Credit Agreement and the other Loan Documents to the extent the same
are not amended hereby, and agrees that all such covenants, representations and warranties
shall be deemed to have been remade as of the effective date of this Amendment.
12. After giving effect to the consents in Section 1 hereof, no Default or Unmatured Default has occurred
and is continuing or would result from the execution of this Amendment or the transactions
contemplated hereby.
13. The execution, delivery and performance of this Amendment (i) has been duly authorized by all necessary
corporate action and (ii) does not conflict with, result in a breach of, or constitute (with or
without notice or lapse of time or both) a default under any Contractual Obligation of
Holdings, Borrower or any of its Subsidiaries.
2. Reference to the Effect on the Credit Agreement.
1. Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Credit
Agreement and other Loan Documents to "this Credit Agreement," "hereunder," "hereof," "herein"
or words of like import shall mean and be a reference to the Credit Agreement as amended hereby.
2. Except as specifically amended above, the Credit Agreement and all other documents, instruments and
agreements executed and/or delivered in connection therewith, shall remain in full force and
effect, and are hereby ratified and confirmed.
3. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right,
power of remedy of the Agent or the Lenders, nor constitute a waiver of any provision of the
Credit Agreement or any other documents, instruments and agreements executed and/or delivered
in connection therewith.
5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF ILLINOIS.
6. Headings. Section headings in this Amendment are included herein for convenience of reference
only and shall not constitute a part of this Amendment for any other purpose.
7. Counterparts. This Amendment may be executed by one or more of the parties to the Amendment on
any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. This Amendment may be executed by facsimile and a facsimile transmission of a signature
to the Agent or the Agent's counsel shall be effective as though an original signature had been so delivered.
8. No Strict Construction. The parties hereto have participated jointly in the negotiation and
drafting of this Amendment and the Credit Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Amendment and the Credit Agreement as hereby amended shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provisions of this Amendment or the Credit Agreement.
9. Reaffirmation. Each of the Loan Parties as debtor, grantor, pledgor, guarantor, assignor, or in
other any other similar capacity in which such Loan Party grants liens or security interests in its property or
otherwise acts as accommodation party or guarantor, as the case may be, hereby (i) ratifies and reaffirms all of
its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is
a party (after giving effect hereto) and (ii) to the extent such Loan Party granted liens on or security
interests in any of its property pursuant to any such Loan Document as security for or otherwise guaranteed the
Borrower's Obligations under or with respect to the Loan Documents, ratifies and reaffirms such guarantee and
grant of security interests and liens and confirms and agrees that such security interests and liens hereafter
secure all of the Obligations as amended hereby. Each of the Loan Parties hereby consents to this Amendment and
acknowledges that each of the Loan Documents remains in full force and effect and is hereby ratified and
reaffirmed. The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the
Agent or Lenders, constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation
of the Obligations. In addition, SCP Property Co., in its capacity as holder of the Subordinated Intercompany
Indebtedness, consents to the transactions described in Section 1 of this Amendment.
[remainder of page intentionally left blank; signature pages follow]
Consent and Amendment No. 6 to Third
Amended and Restated Credit Agreement
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.
LASALLE BANK NATIONAL ASSOCIATION, as a Lender and as Agent
By: /S/
Its: ___________________________________
HIBERNIA NATIONAL BANK, as a Lender
By: /S/
Its: ___________________________________
NATIONAL CITY BANK, as a Lender
By: /S/
Its: ___________________________________
BANK ONE, N.A., formerly known as THE FIRST NATIONAL BANK OF
CHICAGO, as a Lender
By: /S/
Its: ___________________________________
AGREED AND ACKNOWLEDGED THIS
26TH Day of January, 2001
BORROWER:
SCP DISTRIBUTORS LLC, successor by
conversion from South Central Pool Supply, Inc.
By: /S/
Its: ___________________________________
LOAN PARTIES:
SCP POOL CORPORATION
By: /S/
Consent and Amendment No. 6 to Third
Amended and Restated Credit Agreement
Its: ___________________________________
ALLIANCE PACKAGING, INC.
By: /S/
Its: ___________________________________
SCP INTERNATIONAL, INC.
By: /S/
Its: ___________________________________
SUPERIOR POOL PRODUCTS, LLC
By: /S/
Its: ___________________________________
SCP PROPERTY CO.
By: /S/
Its: ___________________________________
|
THIRD RENEWAL PROMISSORY NOTE
$85,000,000.00 As of April 1, 2001
FOR VALUE RECEIVED, the undersigned, COMMERCIAL NET LEASE REALTY
SERVICES, INC., a Maryland corporation (“Borrower”), promises to pay to the
order of COMMERCIAL NET LEASE REALTY, INC., a Maryland corporation (“Lender”),
the principal sum of EIGHTY-FIVE MILLION AND NO/100 DOLLARS ($85,000,000.00), or
so much thereof as may be advanced, and to pay interest on the principal amount
remaining from time to time outstanding from the date hereof until due at the
rate and at the times specified in the Amended and Restated Secured Revolving
Line of Credit and Security Agreement, effective as of May 1, 1999, as modified
by that certain Modification of Amended and Restated Secured Revolving Line of
Credit and Security Agreement and Other Loan Documents, effective as of April 1,
2000, and that certain Second Modification of Amended and Restated Secured
Revolving Line of Credit and Security Agreement and Other Loan Documents,
effective as of October 1, 2000, and further modified by that certain Third
Modification of Amended and Restated Secured Revolving Line of Credit and
Security Agreement and Other Loan Documents, effective as of even date herewith,
between Borrower and Lender (collectively, the “Agreement”). Capitalized terms
used but not defined herein shall have the meanings assigned those terms in the
Agreement.
In no event shall the interest rate applicable to principal
outstanding under this Note exceed the maximum rate of interest allowed by
applicable law, as amended from time to time. Lender does not intend to charge
any amount of interest or other fees or charges in the nature of interest that
exceeds the maximum rate allowed by applicable law. If any payment of interest
or in the nature of interest hereunder would cause the foregoing interest rate
limitation to be exceeded, then such excess payment shall be credited as a
payment of principal unless the undersigned notifies Lender in writing that the
undersigned wishes to have such excess sum returned, together with interest at
the rate specified in Section 687.04(2), Florida Statutes, or any successor
statute.
Principal outstanding hereunder shall be due and payable in a single
payment at the Revolving Credit Maturity Date. Interest shall be payable
quarterly and at such other times specified in the Agreement, as long as any
principal amount remains outstanding hereunder, and at the Revolving Credit
Maturity Date. Prepayment shall be permitted as provided in the Agreement.
All payments of principal and interest shall be made in lawful money
of the United States of America in same day funds at the office of Lender
located in Orlando, Florida or at such other place as shall be designated in
writing for such purpose in accordance with the provisions of the Agreement.
This Note is issued pursuant to, and is subject to, the provisions of
the Agreement. This Note is secured by mortgages or deeds of trust on all
properties owned by (or leased to) Borrower, together with all leases, rents,
profits, and accounts receivable arising from such properties as described more
fully in the Security Documents executed pursuant to the
1
Agreement (collectively, together with this Note and the Agreement, the “Loan
Documents”). Reference is made to such Loan Documents for a description of
additional rights and obligations of Borrower and Lender, including events of
default, rights of prepayment and rights of acceleration of maturity in the
event of default.
Borrower agrees to pay or reimburse Lender for all of its costs and
expenses incurred in connection with administration, supervision, collection,
enforcement, or preservation of any rights under this Note and the Loan
Documents, including, without limitation, the fees and disbursements of counsel
for Lender, including attorneys’ fees out of court, in trial, on appeal, in
bankruptcy proceedings, or otherwise.
All persons now or at any time liable for payment of this Note hereby
waive presentment, protest, notice of protest, and notice of dishonor. Borrower
expressly consents to any extensions and renewals of this Note, in whole or in
part, and all delays in time of payment or other performance under this Note
which may be granted at any time and from time to time, without limitation and
without notice or further consent of the undersigned. All notices, demands, and
other communications required or permitted in connection with this Note shall be
given in the manner specified in the Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Agreement.
The remedies of Lender, as provided herein, or in any other Loan
Document are cumulative and concurrent (except as may be provided in the
Agreement) and may be pursued singularly, successively, or together, and may be
exercised as often as the occasion therefor shall arise.
This Note renews the debt evidenced by that certain Second Renewal
Promissory Note by Borrower in favor of Lender, effective as of October 1, 2000,
in the principal sum of $65,000,000.00, and increases the principal sum to
$85,000,000.00, and otherwise is subject to the terms and conditions of the
Agreement.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Florida, excluding those laws relating
to the resolution of conflicts between the laws of different jurisdictions.
[SIGNATURE ON NEXT PAGE]
2
IN WITNESS WHEREOF, the undersigned have caused this Note to be
executed as of the day and year first above written.
COMMERCIAL NET LEASE REALTY
SERVICES, INC., a Maryland corporation
By: ______________________________
Kevin B. Habicht,
Executive Vice President
Address: 450 South Orange Avenue
Suite 900
Orlando, Florida 32801
NOTARY ACKNOWLEDGMENT OF CORPORATE BORROWER
STATE OF _________________
COUNTY OF _______________
The foregoing Third Renewal Promissory Note in the amount of
Eighty-Five Million and No/100 Dollars ($85,000,000.00), effective as of April
1, 2001, made by Commercial Net Lease Realty Services, Inc., a Maryland
corporation (“CNLRS”), and payable to the order of Commercial Net Lease Realty,
Inc., was acknowledged before me this _____ day of __________, 2001, by Kevin B.
Habicht, as Executive Vice President of CNLRS, who is personally known to me or
who has produced ________________________________ as identification.
NOTARY PUBLIC
Print Name: ______________________________
Commission No.:__________________________
My Commission Expires:____________________
3 |
Exhibit 10.69
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is entered into as of February 1,
2001, by and between Aastrom Biosciences, Inc., a Michigan corporation
(“Employer”) and Steven Wolff (“Employee”).
NOW, THEREFORE, the parties agree as follows:
1. Employment Employer hereby engages Employee, and Employee hereby accepts
such engagement, upon the terms and conditions set forth herein.
2. Duties Employee is engaged as Vice President Medical Affairs. Employee
shall perform faithfully and diligently the duties customarily performed by
persons in the position for which employee is engaged, together with such other
reasonable and appropriate duties as Employer shall designate from time to time.
Employee shall devote Employee’s full business time and efforts to the rendition
of such services and to the performance of such duties. As a full-time employee
of Employer, Employee shall not be entitled to provide consulting services or
other business or scientific services to any other party, without the prior
written consent of Employer.
3. Compensation
3.1 Base Salary During the term of this Agreement, as compensation for
the proper and satisfactory performance of all duties to be performed by
Employee hereunder, Employer shall pay Employee at an annual salary rate of Two
Hundred Ten Thousand Dollars ($210,000), payable in semi-monthly installments,
less required deductions for state and federal withholding tax, Social Security
and all other employee taxes and payroll deductions. The base salary shall be
subject to review and adjustment on an annual basis.
4. Term
4.1 Commencement The employment relationship pursuant to this
Agreement shall commence April 9, 2001.
4.2 Termination at Will Although Employer and Employee anticipate a
long and mutually rewarding employment relationship, either party may terminate
this Agreement, without cause, upon fourteen (14) days’ prior written notice
delivered to the other. It is expressly understood and agreed that the
employment relationship is “at will”, and with no agreement for employment for
any specified term, and with no agreement for employment for so long as Employee
performs satisfactorily. Provided, however, before Employer exercises this right
of termination at will, Employer shall first either (i) discuss with Employee
the needs of Employer and why Employee no longer meets those needs, or (ii)
discuss with Employee any concerns or dissatisfactions which Employer has with
Employee’s performance, and give to Employee a reasonable opportunity to remedy
those concerns or dissatisfactions, to the reasonable satisfaction of Employer.
4.3 Termination for Cause Either party may terminate this employment
relationship immediately upon notice to the other party in the event of any good
cause, such as a default, dishonesty, neglect of duties, failure to perform by
the other party, or death or disability of Employee.
4.4 Payment of Compensation Upon Termination Upon termination for
cause, Employee shall be entitled to the compensation set forth as “base salary”
herein, prorated to the effective date of such termination as full compensation
for any and all claims of Employee under this Agreement.
5. Fringe Benefits
5.1 Customary Fringe Benefits Employee shall be entitled to such
fringe benefits as Employer customarily makes available to employees of Employer
engaged in the same or similar position as Employee (“Fringe Benefits”). Such
Fringe Benefits may include vacation leave, sick leave, and health insurance
coverage. Employer reserves the right to change the Fringe Benefits on a
prospective basis, at any time, effective upon delivery of written notice to
Employee.
5.2 Accumulation Employee shall not earn and accumulate unused
vacation in excess of Fifteen (15) days. Employee shall not earn and accumulate
sick leave or other Fringe Benefits in excess of an unused amount equal to twice
the amount earned for one year. Further, Employee shall not be entitled to
receive payments in lieu of said Fringe Benefits, other than for unused vacation
leave earned and accumulated at the time the employment relationship terminates.
6. Invention, Trade Secrets and Confidentiality
6.1 Definitions
6.1.1 Invention Defined. As used herein “Invention” means
inventions, discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including but not limited to processes, methods, formulas,
techniques, materials, devices, designs, programs (including computer programs),
computer graphics, apparatus, products, as well as improvements thereof or
know-how related thereto, relating to any present or anticipated business or
activities of Employer.
6.1.2 Trade Secret Defined. As used herein “Trade Secret” means,
without limitation, any document or information relating to Employer’s products,
processes or services, including documents and information relating to
Inventions, and to the research, development, engineering or manufacture of
Inventions, and to Employer’s purchasing, customer or supplier lists, which
documents or information have been disclosed to Employee or known to Employee as
a consequence of or through Employee’s employment by Employer (including
documents, information or Inventions conceived, originated, discovered or
developed by Employee), which is not generally known in the relevant trade or
industry.
6.2 Inventions
6.2.1 Disclosure. Employee shall disclose promptly to Employer
each Invention, whether or not reduced to practice, which is conceived or
learned by Employee (either alone or jointly with others) during the term of his
employment with Employer. Employee shall disclose in confidence to Employer all
patent applications filed by or on behalf of Employee during the term of his
employment and for a period of three (3) years thereafter. Any disclosure of an
Invention, or any patent application, made within one (1) year after termination
of employment shall be presumed to relate to an Invention made during Employee’s
term of Employment with Employer, unless Employee clearly proves otherwise.
6.2.2 Employer Property; Assignment. Employee acknowledges and
agrees that all Inventions which are discovered, conceived, developed, made,
produced or prepared by Employee (alone or in conjunction with others) during
the duration of Employee’s employment with Employer shall be the sole property
of Employer. Said property rights of Employer include without limitation all
domestic and foreign patent rights, rights of registration or other protection
under the patent and copyright laws, and all other rights pertaining to the
Inventions. Employee further agrees that all services, products and Inventions
that directly or indirectly result from engagement with Company shall be deemed
“works for hire” as that term is defined in Title 17 of the United States Codes,
and accordingly all rights associated therewith shall vest in the Company.
Notwithstanding the foregoing, Employee hereby assigns to Employer all of
Employee’s right, title and interest in any such services, products and
Inventions, in the event any such services, products and Inventions shall be
determined not to constitute “works for hire.”
6.2.3 Exclusion Notice. The Assignment by Employee of Inventions
under this Agreement does not apply to any Inventions which are owned or
controlled by Employee prior to the commencement of employment of Employee by
Employer (all of which are set forth on Exhibit “A” hereto). Additionally,
Employee is not required to assign an idea or invention where the invention or
idea meets all of the following criteria; namely if the invention or idea: (i)
was created or conceived without the use of any of Employer’s equipment,
supplies, facilities, or trade secret information, and (ii) was developed
entirely on Employee’s own time, and (iii) does not relate to the business of
Employer, and (iv) does not relate to Employer’s actual or demonstrably
anticipated research or development, and (v) does not result from any work
performed by Employee for Employer.
6.2.4 Patents and Copyrights; Attorney-in Fact. Both before and
after termination of this Agreement (and with reasonable compensation paid by
Employer to Employee after termination), Employee agrees to assist the Employer
to apply for, obtain and enforce patents on, and to apply for, obtain and
enforce copyright protection and registration of, the Inventions described in
Section 6.2.2 in any and all countries. To that end, Employee shall (at
Employer’s request) without limitation, testify in any proceeding, and execute
any documents and assignments determined to be necessary or convenient for use
in applying for, obtaining, registering and enforcing patent or copyright
protection involving any of the Inventions. Employee hereby irrevocably appoints
Employer, and its duly authorized officers and agents, as Employee’s agent and
attorney-in-fact, to act for and in behalf of Employee in filing all patent
applications, applications for copyright protection and registration,
amendments, renewals, and all other appropriate documents in any way related to
the Inventions described in Section 6.2.2.
6.3 Trade Secrets
6.3.1 Acknowledgment of Proprietary Interest. Employee recognizes
the proprietary interest of Employer in any Trade Secrets of Employer. Employee
acknowledges and agrees that any and all Trade Secrets of Employer, whether
developed by Employee alone or in conjunction with others or otherwise, shall be
and are the property of Employer.
6.3.2 Covenant Not to Divulge Trade Secrets. Employee
acknowledges and agrees that Employer is entitled to prevent the disclosure of
Trade Secrets of Employer. As a portion of the consideration for the employment
of Employee and for the compensation being paid to Employee by Employer,
Employee agrees at all times during the term of the employment by Employer and
thereafter to hold in strictest confidence, and not to use, disclose or allow to
be disclosed to any person, firm, or corporation, Trade Secrets of Employer,
including Trade Secrets developed by Employee, other than disclosures to persons
engaged by Employer to further the business of Employer, and other than use in
the pursuit of the business of Employer.
6.3.3 Confidential Information of Others. Employee represents and
warrants that if Employee has any confidential information belonging to others,
Employee will not use or disclose to Employer any such information or documents.
Employee represents that his employment with Employer will not require him to
violate any obligation to or confidence with any other party.
6.4 No Adverse Use Employee will not at any time use Employer’s Trade
Secrets or Inventions in any manner which may directly or indirectly have an
adverse effect upon Employer’s business, nor will Employee perform any acts
which would tend to reduce Employer’s proprietary value in Employer’s Trade
Secrets or Inventions.
6.5 Return of Materials at Termination In the event of any termination
of Employee’s employment, Employee will promptly deliver to Employer all
materials, property, documents, data, and other information belonging to
Employer or pertaining to Trade Secrets or Inventions. Employee shall not take
any materials, property, documents or other information, or any reproduction or
excerpt thereof, belonging to Employer or containing or pertaining to any Trade
Secrets or Inventions.
6.6 Remedies Upon Breach In the event of any breach by Employee of the
provision in this Section 6, Employer shall be entitled, if it so elects, to
institute and prosecute
proceedings in any court of competent jurisdiction, either in law or in equity,
to enjoin Employee from violating any of the terms of this Section 6, to enforce
the specific performance by Employee of any of the terms of this Section 6, and
to obtain damages for any of them, but nothing herein contained shall be
construed to prevent such remedy or combination of remedies as Employer may
elect to invoke. The failure of Employer to promptly institute legal action upon
any breach of this Section 6 shall not constitute a waiver of that or any other
breach hereof.
7. Covenant Not to Compete Employee agrees that, during Employee’s
employment, Employee will not directly or indirectly compete with Employer in
any way, and that Employee will not act as an officer, director, employee,
consultant, shareholder, lender or agent of any other entity which is engaged in
any business of the same nature as, or in competition with, the business in
which Employer is now engaged, or in which Employer becomes engaged during the
term of Employee’s employment, or which is involved in science or technology
which is similar to Employer’s science or technology.
8. General Provisions
8.1 Attorneys’ Fees In the event of any dispute or breach arising with
respect to this Agreement, the party prevailing in any negotiations or
proceedings for the resolution or enforcement thereof shall be entitled to
recover from the losing party reasonable expenses, attorneys’ fees and costs
incurred therein.
8.2 Amendments No amendment or modification of the terms or conditions
of this Agreement shall be valid unless in writing and signed by both parties
hereto. There shall be no implied-in-fact contracts modifying the terms of this
Agreement.
8.3 Entire Agreement This Agreement constitutes the entire agreement
between the parties with respect to the employment of Employee. This Agreement
supersedes all prior agreements, understandings, negotiations and representation
with respect to the employment relationship.
8.4 Successors and Assigns The Rights and obligations of Employer
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Employer. Employee shall not be entitled to assign any
of Employee’s rights or obligations under this Agreement.
8.5 Waiver Either party’s failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.
8.6 Severable Provisions The provisions of this Agreement are
severable, and if any or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.
8.7 Employment Eligibility During the term of this Agreement, Employee
shall maintain citizenship in the United States or documentation to establish
employment eligibility in compliance with the Federal Immigration Reform and
Control Act of 1986.
9. Employee’s Representations Employee represents and warrants that
Employee (i) is free to enter into this Agreement and to perform each of the
terms and covenants contained herein, (ii) is not restricted or prohibited,
contractually or otherwise, from entering into and performing this Agreement,
and (iii) will not be in violation or breach of any other agreement by reason of
Employee’s execution and performance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
EMPLOYER:
Aastrom Biosciences, Inc.
By: /s/ R. Douglas Armstrong Ph.D.
R. Douglas Armstrong, Ph.D.
President and Chief Executive Officer
EMPLOYEE:
/s/ Steven Wolff
Steven Wolff
Address:
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Exhibit 10.3
April 2, 2001
Christophe Morin
Re: Employment with rStar Corporation
Dear Christophe:
This letter shall serve to confirm the agreement we reached in connection
with your continued employment with rStar Corporation (the "Company") as its
Vice President, Marketing. In that position, you will continue to report to the
Chief Executive Officer of the Company.
As Vice President, Marketing, an exempt position, you will continue to
receive a base salary of $15,416.66 per month, which will be paid in accordance
with the Company's normal payroll procedures ("Annual Base Salary"). You will
also be eligible to participate in an executive incentive program for the 2001
calendar year, with a bonus payable upon the meeting of specific performance
objectives mutually agreed upon by you and the Company. The maximum sum payable
to you under the 2001 executive incentive program shall be 30% of your Annual
Base Salary.
In the event the Company terminates your employment with Cause (as defined
below), you will not be entitled to receive any compensation or benefits of any
type following the effective date of the termination for Cause.
In the event (a) you are terminated by the Company without Cause, or (b) you
voluntarily terminate your employment for Good Reason (as defined below) within
twelve (12) months following a Change of Control (as defined below), then you
shall be entitled to receive: (x) a lump sum cash severance payment in an amount
equal to fifty percent (50%) of your Annual Base Salary then in effect, subject
to applicable withholdings in accordance with the Company's normal payroll
practices; (y) one hundred percent (100%) of the executive incentive bonus that
could be earned in that year, and (z) health insurance benefits at the same
level of coverage as was provided to you immediately prior to the termination
without Cause or the termination for Good Reason ("Health Care Coverage") by
electing Federal COBRA continuation coverage, or similar coverage required under
state law (collectively, "COBRA"), in which event the Company shall pay one
hundred percent (100%) of your Health Care Coverage premiums and those of your
dependents under COBRA for six (6) full months following the month in which you
were terminated without Cause or you voluntarily terminated your employment for
Good Reason.
For purposes of this letter, the following terms shall be defined as
follows:
(a) "Cause" is defined as: (i) a material act of dishonesty made by you in
connection with your responsibilities as an executive officer of the Company;
(ii) conviction of, or plea of nolo contendere to, a felony, or a crime
involving moral turpitude; (iii) your gross misconduct in connection with your
duties as an executive officer of the Company; or (iv) continued substantial
violations of your employment duties after (A) you have received a written
demand for performance from the Company's Board of Directors that specifically
sets forth the factual basis for the Board's belief that you have not
substantially performed your duties, and (B) following a reasonable opportunity,
not to be less than thirty (30) days, for you to cure any substantial failure of
performance of your duties.
(b) "Change of Control" of the Company is defined as; (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) becoming the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing more than 51% of the total voting power
represented by the
--------------------------------------------------------------------------------
Company's then outstanding voting securities; or (ii) the date of the
consummation of a merger or consolidation of the Company with any other
corporation that has been approved by the stockholders or the Board of the
Company; or (iii) the date on which the stockholders or the Board of the Company
approve a plan of complete liquidation of the Company; or (iv) the date of the
consummation of the sale or disposition by the Company of all or substantially
all the Company's assets.
(c) "Good Reason" shall mean your voluntary resignation from the Company
within ninety (90) days after the occurrence of any of the following; (i)
without your express written consent, a material reduction of the duties, title,
authority or responsibilities, relative to your duties, title, authority or
responsibilities as in effect immediately prior to such reduction, or the
assignment to you of such reduced duties, title, authority or responsibilities;
(ii) a reduction by the Company in your annual Base Salary as in effect
immediately prior to such reduction; (iii) a material reduction by the Company
in the kind or level of employee benefits, including bonuses, to which you were
entitled immediately prior to such reduction, with the result that your overall
benefits package is materially reduced; (iv) your relocation to a facility or a
location more than forty (40) miles from your residence at the time of the
relocation without your express written consent; or (v) the failure of the
Company to obtain the assumption of this agreement by any person, firm,
corporation or other business entity which at any time, whether by purchase,
merger or otherwise, directly or indirectly acquires all or substantially all of
the assets or business of the Company.
The terms of this agreement may not be modified or amended except by a
written agreement executed by you and an executive officer of the Company, and
shall, together with the Confidential Information, Invention Assignment and
Terms of Employment Agreement and such other written agreements you and the
Company may enter in connection with your employment, constitute the entire
agreement between you and the Company relating to the terms of your employment.
In order to indicate your assent to this agreement, please sign this letter
and return it to me at your earliest convenience.
Very truly yours,
RSTAR CORPORATION
/s/ Lance Mortensen
Lance Mortensen
Chief Executive Officer and President
Agreed and Accepted:
/s/ Christophe Morin
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Christophe Morin
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Exhibit 10.3
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Exhibit 10.3
LASER MORTGAGE MANAGEMENT, INC.
780 THIRD AVENUE, 16TH FLOOR
NEW YORK, NEW YORK 10017
As of November 1, 2001
Mr. Charles R. Howe II
780 Third Avenue, 16th Floor
New York, New York 10017
Dear Mr. Howe:
We hereby extend an offer to you to join LASER Mortgage Management, Inc. (the
"Company") as an employee under the following terms:
Title: Vice President, Treasurer and Secretary.
Function: Responsible for assisting the President with the day-to-day investment
management and operating decisions for the Company, pursuant to the practices
and policies of the Company as set forth from time to time by the Company's
Board of Directors. You shall perform such duties, services and responsibilities
and have the authority commensurate to your positions as determined from time to
time by the Company's Board of Directors. You shall devote such time and
attention to performing your duties hereunder as is necessary.
Term: The term shall commence on the date hereof and shall terminate on January
31, 2002; provided, however, the Company or you may terminate this agreement
without cause and without penalty (but subject to paying you the salary which
has accrued as of the date of such termination at any time during the term) upon
30 days' prior written notice to the other party (unless such party agrees in
writing to shorten such period). After January 31, 2002, this agreement shall
continue in effect for automatic successive one-month terms unless and until
either party hereto has given notice in accordance with this paragraph.
Compensation: Your salary will be paid at the rate of $10,000 per month (less
applicable deductions), payable in accordance with the Company's normal payroll
practices.
Confidential Information: You acknowledge that the information and knowledge
obtained from the Company and not generally available from other sources in the
course of your performance of the services requested hereunder relating to the
Company's business (the "Confidential Information") are of a confidential
nature, that the Confidential Information is a valuable and unique asset of the
Company, access to and knowledge of which being essential to the performance of
your duties. Except as required to perform the services required as an officer
of the Company, you shall not, during your employment or any time thereafter,
disclose, in whole or in part, such Confidential Information to any person,
firm, corporation, association, or other entity for any reasons or purpose
whatsoever, or make use of such Confidential Information for your own purposes
or for the benefit of such person or other entity under any circumstances.
You shall, prior to or upon leaving the Company, deliver to the Company any and
all records, items, media of any type (including all partial or complete copies
or duplicates) containing or otherwise relating to Confidential Information
whether prepared or acquired by you or provided to you by the Company. You also
acknowledge that all such records, items and media are at all times and shall
remain the property of the Company.
You acknowledge that the improper use or disclosure of any Confidential
Information may cause irreparable damage, and that the Company shall have the
right to seek injunctive relief to prevent such unauthorized use or disclosure,
and to such damages as are occasioned by such unauthorized use or disclosure.
Limitation of Liability; Indemnity:: The Company agrees that you shall not be
liable to the Company, its affiliates or their directors, officers or
stockholders for any losses, damages, expenses or claims occasioned by any of
your acts or omissions in connection with the performance of your duties
hereunder, other than as a result of your own gross negligence or reckless
disregard of your duties hereunder.
The Company agrees to indemnify you against and hold you harmless from any and
all liabilities, losses, damages, costs, expenses (including reasonable
attorneys’ fees), demands or claims arising out of any claim asserted or
threatened to be asserted by any third party in connection with your performance
pursuant to this agreement; provided, however, that you shall not be entitled to
indemnification with respect to any liabilities, losses, damages, costs,
expenses, demands or claims caused by your own gross negligence or reckless
disregard of your duties hereunder. The Company shall advance to you the
reasonable costs and expenses of investigating and/or defending any such claim,
subject to receiving a written undertaking from you to repay any such amounts
advanced to you in the event and to the extent of such determination that you
were not entitled to indemnification hereunder. The right to indemnification
provided above shall be in addition to any other rights to indemnification you
may be entitled to by reason of your serving as an officer or director of the
Company.
Governing Law: This agreement will be governed by and construed in accordance
with the laws of the State of New York.
Modification: This agreement contains the entire understanding of the parties
and may be modified only in a document signed by the parties and referring
explicitly hereto.
If you accept this offer, please sign in the space provided below and return a
copy of this letter to the undersigned.
Very truly yours,
LASER MORTGAGE MANAGEMENT, INC.
By: /s/ William J. Michaelcheck
William J. Michaelcheck
President
Agreed to and Accepted by:
/s/ Charles R. Howe II
Charles R. Howe II |
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Exhibit 10.27
LOAN AGREEMENT
(Kinsen Shohi Taishaku Keiyaku Shosho)
LOAN AGREEMENT, dated as of November 9, 2001, made by SILICON
GRAPHICS, INC., a Delaware corporation ("SGI-US"), and SILICON GRAPHICS WORLD
TRADE B.V., a private limited company incorporated in the Netherlands
("SGI-BV"), in favor of SGI JAPAN, LTD, a Japanese corporation ("Lender").
SGI-US and SGI-BV are referred to herein individually as a "Borrower" and
collectively as the "Borrowers".
RECITALS
A. WHEREAS, Lender has made advances to the Borrowers or their Affiliates
and all of the obligations relating to the repayment of such advances have been
assumed by the Borrowers, and Lender and the Borrowers desire to enter into this
Agreement to evidence the amounts owing by the Borrowers to Lender and to set
forth the terms of repayment and other applicable terms and conditions.
B. WHEREAS, SGI-BV is the record and beneficial owner of 40% of the issued
and outstanding capital stock of Lender, and pursuant to the Pledge Agreement
dated the date hereof (the "Pledge Agreement") by SGI-BV for the benefit of
Lender and NEC Corporation ("NEC"), SGI-BV, in its capacity as pledgor
thereunder ("Pledgor") is pledging all of its ownership interest in the shares
of capital stock of Lender to Lender and to NEC as collateral security for the
obligations of the Borrowers under this Agreement and the obligations of Pledgor
and the Borrowers in respect of a Buyback Event under the Stockholders'
Agreement, dated as of the date hereof (the "Stockholders' Agreement") by and
among the Borrowers, Lender, Silicon Graphics World Trade Corporation, NEC and
NEC Soft ("NEC Soft").
NOW, THEREFORE, in consideration of the premises, the Borrowers hereby agree
with Lender, as follows:
1. The Loan
The Borrowers hereby acknowledge their joint and several obligation to pay
to Lender an amount determined as set forth on Schedule 1 attached hereto (the
"Loan"), together with interest thereon as provided herein, and all other
amounts payable to Lender from time to time hereunder.
2. Repayment
The Borrowers jointly and severally agree to repay the entire principal
amount of the Loan in accordance with the amortization schedule set forth on
Schedule 2 attached hereto (the "Amortization Schedule") or, if any payment date
set forth on the Amortization Schedule is not a Business Day, on the next
succeeding Business Day to occur after such payment date; provided, however,
that the entire unpaid principal balance of the Loan shall be due and payable in
full on the Maturity Date. Notwithstanding anything herein to the contrary, the
entire unpaid principal balance of the Loan, and any accrued and unpaid interest
thereon, shall be immediately due and payable upon the earlier to occur of
(i) the Maturity Date and (ii) the acceleration of the Loan pursuant to
Section 8 hereof. As used herein, "Maturity Date" means December 31, 2004.
3. Interest
(a)The principal amount of the Loan remaining unpaid from time to time shall
bear interest (i) from the date hereof until the Interim Period End Date, at a
rate of two and seven one-hundredths percent (2.07%) per annum (the "Interim
Interest Rate") and (ii) from the Interim Period End Date, until paid in full,
at a rate of ten percent (10%) per annum (the
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"Interest Rate"). All interest on this Loan shall be calculated on the basis of
a 365 day year and the actual number of days elapsed. Accrued interest on all
amounts outstanding hereunder shall be payable on each March 31, June 30,
September 30 and December 31 of each year, commencing on March 31, 2002 or, if
any such date is not a Business Day, on the next succeeding Business Day to
occur after such date. The Borrowers agree to pay all outstanding amounts of
interest on the Maturity Date.
(b)If an Event of Default shall occur, then, in lieu of interest payable under
Section 3(a), interest shall accrue on the unpaid principal amount of the Loan
and, to the extent permitted by law, on any other amount due under this
Agreement, from and including the date such Event of Default occurred until such
Event of Default is cured or waived in writing by Lender or all past due
payments are made, at a rate per annum equal to two percent (2%) per annum above
the Applicable Interest Rate. Accrued interest payable under this Section 3(b)
shall be payable on demand of Lender.
(c)Notwithstanding anything herein to the contrary, the interest payable by the
Borrowers with respect to the Loan shall not exceed the maximum amount permitted
by applicable law and, to the extent that any payments in excess of such
permitted amount are received by Lender, such excess shall be considered
payments in respect of the principal amount of the Loan.
4. Payments
Principal amount of the Loan and interest hereunder shall be payable to
Lender without set-off or counterclaim in lawful money of Japan in immediately
available funds to the bank account of Lender as notified in writing to the
Borrowers.
5. Prepayment
(a)At their option, the Borrowers may prepay the Loan together with accrued and
unpaid interest thereon in whole or in part at any time (the "Optional
Redemption"). If the Borrowers exercise such Optional Redemption, there shall be
no prepayment penalty or premium. Unless otherwise agreed by the Borrowers, all
prepayments shall be applied to reduce scheduled payments of the principal
amount of the Loan in order of stated maturity.
(b)The Borrowers shall prepay the Loan in full together with all accrued and
unpaid interest thereon prior to or concurrently with the consummation of any
SGI Change of Control (as defined in the Stockholders' Agreement).
(c)Any amounts required to be paid by Borrowers pursuant to Borrowers' guarantee
of the Existing Loans shall be deemed to be a prepayment on the Loan pursuant to
this Section 5. In addition, so long as Borrowers' guarantee of the Existing
Loans remains in effect, Borrowers may elect, upon written notice to Lender, to
effect prepayments under Section 5(a) or 5(b) by making a prepayment in respect
of the Existing Loans directly to the lenders under the Existing Loans (the
"Bank Lenders"); provided, that prepayments are then permitted pursuant to the
terms of the Existing Loans, and subject to the condition that concurrently with
any such prepayment to the Bank Lenders, Borrowers shall pay to the Bank Lenders
the full amount of any penalties or other charges payable in connection with
such prepayment (it being understood that the amount of any such penalties or
charges shall be excluded from the calculation of the amount to be applied in
prepayment of the principal of and interest on the Loan).
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6. Representations and Warranties
The Borrowers hereby jointly and severally represent and warrant to Lender
as follows:
(a)Organization; Power and Authority. Each Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
lawful authority to own, lease and operate its properties and to carry on its
business as now being and heretofore conducted. Each Borrower is duly qualified
or otherwise authorized to transact business and is in good standing under the
laws of all other jurisdictions that require such qualification or
authorization, except where the failure to so qualify or be authorized could not
reasonably be expected to have a Material Adverse Effect.
(b)Authorization, etc. Such Borrower has all necessary corporate power and
authority required to enter into, execute and deliver this Agreement and to
perform fully such Borrower's obligations hereunder. This Agreement has been
duly authorized by all necessary corporate action on the part of each Borrower,
and constitutes a legal, valid and binding obligation of such Borrower
enforceable against such Borrower in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
(c)Compliance with Laws, Other Instruments, etc. The execution, delivery and
performance by each Borrower of this Agreement will not (i) violate any
provision of the Certificate or Articles of Incorporation or other material
organizational instruments of such Borrower, (ii) require such Borrower to
obtain any consent, approval, authorization or action of, or make any filing
with or give any notice to, any Governmental Authority or any other Person,
other than consents, approvals, authorizations or actions already obtained or
taken (iii) violate, conflict with or result in the breach of any of the terms
and conditions of, result in a material modification of the effect of, or
otherwise cause the termination or give any contracting party the right to
terminate, or constitute (or with notice or lapse of time or both constitute) a
default under, any material contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, franchise,
commitment or other binding arrangement to which such Borrower is a party or by
or to which such Borrower or any of its properties is or may be bound or
subject, or result in the creation of any Lien upon any of the properties of
such Borrower, (iv), violate any order, judgment, injunction, award, decree or
ruling of any nature of any Governmental Authority, or any law, statute, code,
ordinance, regulation or other requirement of any Governmental Authority,
applicable to such Borrower.
7. Covenants
In addition to the other undertakings herein contained, the Borrowers hereby
covenant to Lender that so long as any amount payable hereunder is outstanding
the Borrowers shall perform the following obligations:
(a)Compliance with Law. Each Borrower will comply with all laws, ordinances or
governmental rules or regulations to which it is subject, and will obtain and
maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of its properties or to
the conduct of its businesses, in each case to the extent necessary to ensure
that non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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(b)Existence. Each Borrower shall at all times preserve and keep in full force
and effect its corporate existence.
(c)Information. The Borrowers shall deliver to Lender:
(i)if and when filed and within 5 days of filing, Form 10-Q quarterly reports,
Form 10-K annual reports, Form 8-K current reports or comparable annual or
periodic reports and any other filings made by either Borrower with the U.S.
Securities and Exchange Commission or comparable regulatory body of any other
jurisdiction;
(ii)any other information that is provided by either Borrower to its
shareholders generally, promptly upon delivery;
(iii)as soon as either Borrower has knowledge of any event or condition that
constitutes an Event of Default hereunder or a default or event of default under
the Foothill Loan and Security Agreement or other agreement evidencing, securing
or otherwise relating to Indebtedness of either Borrower in an amount exceeding
$25 million, notice thereof and a statement of the curative action that the
Borrowers propose to take with respect thereto; and
(iv)Upon request of Lender, any other report reasonably requested relating to
the financial condition of either Borrower.
(d)Additional Indebtedness. SGI-US shall not create, incur, assume, permit,
guarantee or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness or permit any Subsidiary to do the same, except such
Indebtedness the amount of which does not, in the aggregate, exceed
$414,983,000; provided, that with respect to Indebtedness outstanding on the
date hereof and denominated in non-U.S. currency, any increase in the dollar
value of such Indebtedness that is attributable to currency exchange
fluctuations shall be excluded for the purpose of this provision.
(e)Liens. SGI-US shall not create, incur, assume, permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom, or
permit any Subsidiary to do the same except: (i) Liens under the Foothill Loan
Documents and any refinancings, renewals or extensions thereof; (b) any Lien of
a type that is expressly permitted by the terms of the Foothill Loan Documents
or, if the Foothill Loan Documents are refinanced, renewed or extended, by the
terms of such refinancing, renewal or extension thereof (in each case, without
regard to any waiver of such terms by the lenders); and (c) if the Foothill Loan
Documents or any refinancing, renewal or extension thereof terminate and are no
longer in effect, any Lien of a type that would have been permitted if created
during the effectiveness of the Foothill Loan Documents or such refinancing,
renewal or extension.
(f)Reorganization, Recapitalization, Reclassification, Liquidation. SGI-US shall
not and shall not permit SGI-BV to (i) enter into any reorganization or
recapitalization, except for transactions that do not materially diminish
Lender's rights and protections under this Agreement, and that do not result in
a deterioration in the credit quality of the Borrowers taken as a whole or
expose the Lender to additional credit risk, (ii) reclassify its capital stock
other than pursuant to the terms thereof, or (iii) liquidate, wind up, or
dissolve itself (or suffer any liquidation or dissolution).
(g)Distributions. Neither SGI-US nor (unless SGI-BV is at the time a direct or
indirect wholly owned subsidiary of SGI-US) SGI-BV shall make any distribution
or declare and pay any dividends (in cash or other property, other than common
stock and other than the distribution to shareholders of interests in SGI's
Alias/Wavefront business) on, or purchase, acquire,
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redeem or retire any of such Borrower's capital stock, of any class, whether now
or hereafter outstanding.
(h)Further Documents. Each Borrower shall execute all such other documents and
instruments and do all such other acts and things as Lender may from time to
time reasonably require to carry out the transactions contemplated herein.
8. Events of Default
Except upon the occurrence of an event under (d), (e) or (g) below,
whereupon the Loan and all accrued and unpaid interest thereon shall become
immediately due and payable without notice or declaration by Lender, Lender may,
by written notice to the Borrowers, declare the Loan immediately due and
payable, whereupon the Loan, all accrued and unpaid interest thereon, and all
other sums due hereunder shall become immediately due and payable without
protest, presentment, demand or notice (except the notice referred to above in
this Section 8) or without petition to any court, all of which are expressly
waived by the Borrowers, if any of the following events (each an "Event of
Default") shall occur:
(a)principal amount of the Loan or interest due under this Agreement shall not
be paid as and when due, whether at maturity, by acceleration or otherwise; or
(b)any representation by the Borrowers herein or by Pledgor in the Pledge
Agreement shall prove to be false or incorrect in any material respect as of the
date made; or
(c)Either Borrower shall default in any material respect in the due performance
of any term or covenant of this Agreement or Pledgor shall default in any
material respect in the due performance of any term or covenant of the Pledge
Agreement (which is not the subject of another subsection of this Section 8)
which default, if remediable, shall continue unremedied for a period of thirty
(30) days after the earlier of (i) the day an officer of either Borrower or
Pledgor obtains actual knowledge of such default, and (ii) the day Lender gives
written notice of such default to the Borrowers (any such written notice to be
identified as a "notice of default" and to refer specifically to this
paragraph (c) of this Section 8); or
(d)Either Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator for itself or any of its assets or properties,
(ii) admit in writing its inability to pay its debts as they mature, (iii) make
a general assignment for the benefit of creditors, (iv) file a voluntary
petition in bankruptcy, or a petition or an answer seeking reorganization or an
arrangement with creditors or to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute, or any answer admitting the material allegations of a petition filed
against it in any proceeding under any such law or action shall be taken by
Borrower for the purpose of effecting any of the foregoing, (v) have commenced
against it any case, proceeding or other action of a nature described in
(i) through (iv) above which remains undismissed for a period of sixty
(60) days, (vi) be adjudicated a bankrupt or insolvent, including by entry of an
order in any case, proceeding or other action of a nature described in
(i) through (iv) above or (vii) take or be subject to any action similar to
those specified in clauses (i) through (vi) in any jurisdiction; or
(e)an order, judgment or decree shall be entered with respect to either Borrower
or all or a substantial part of the assets of such Borrower, appointing a
receiver, trustee or liquidator of such Borrower, or any similar order, judgment
or decree shall be entered or appointment made in any jurisdiction, and such
order, judgment or decree or appointment shall continue unstayed and in effect
for a period of sixty (60) days; or
(f)a final judgment or judgments for the payment of money aggregating in excess
of US$25,000,000 are rendered against either Borrower and which judgments are
not, within sixty
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(60) days after entry thereof, bonded, discharged or stayed pending appeal, or
are not discharged within sixty (60) days after the expiration of such stay; or
(g)(i) either Borrower shall fail to pay when due, or within any applicable
period of grace, any payment in respect of any obligation for borrowed money or
other Indebtedness in an amount greater than $25 million, or (ii) any
Indebtedness of such Borrower in an amount greater than $25 million shall be
declared due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof.
(h)this Agreement or the Pledge Agreement shall for any reason, fail or cease to
create a valid and perfected, first priority Lien on and security interest in
and to the Collateral.
(i)any material provision of this Agreement or the Pledge Agreement shall at any
time for any reason be declared null and void, or the validity or enforceability
thereof shall be contested by the Borrowers in a proceeding commenced by either
Borrower, or by any Governmental Authority having jurisdiction over either
Borrower, seeking to establish the invalidity or unenforceability thereof.
9. Application of Payments
Each payment or prepayment received by Lender hereunder, except as expressly
set forth herein, shall be applied, first, to the payment of accrued interest on
the Loan to the date of such payment and second, to the payment of the principal
amount of the Loan.
10. Additional Definitions
As used herein, the following terms have the respective meanings set forth
below:
"Affiliate" or "Affiliates" means, with respect to any Person, at any time,
any other Person that, directly or indirectly through one or more intermediaries
controls, or is controlled by or is under common control with such Person. For
the purpose of this definition, "control" (including the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by contract, agency or otherwise.
"Applicable Interest Rate" means, prior to the Interim Period End Date, the
Interim Interest Rate and, after the Interim Period End Date, the Interest Rate.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in Tokyo, Japan or the City of New York are authorized or
required by law or executive order to close.
"Existing Loans" means the loans made pursuant to (i) the Banking
Transaction Contract, dated February 21, 1992, between Sumitomo Mitsui Banking
Corporation (as the successor to The Sumitomo Bank, Limited) and Lender and
(ii) the Loan Agreement, dated December 20, 1996, between The Dai-Ichi Kangyo
Bank, Ltd. and Lender.
"Foothill Loan and Security Agreement" means the Loan and Security
Agreement, dated as of April 10, 2001, by and among SGI-US, each of SGI-US's
subsidiaries signatory thereto, the lenders party thereto, Foothill Capital
Corporation, as arranger and administrative agent, and Bank of America, N.A., as
documentation agent.
"Foothill Loan Documents" means the Foothill Loan and Security Agreement and
the other Loan Documents referred to therein, as the same may be supplemented,
amended or otherwise modified from time to time.
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"GAAP" means generally accepted accounting principles as in effect from time
to time in the United States, consistently applied.
"Governmental Authority" means the government of any nation, state, city,
locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Indebtedness" of a Borrower means (a) all obligations of such Borrower for
borrowed money, including pursuant to the Foothill Loan Documents and any
refinancings, renewals or extensions thereof, (b) all obligations of such
Borrower evidenced by bonds, debentures, notes or other similar instruments and
all reimbursement or other obligations of such Borrower in respect of letters of
credit (other than letters of credit issued in connection with transactions in
the ordinary course of such Borrower's business), bankers acceptances, interest
rate swaps or other financial products, (c) all obligations of such Borrower
under any lease that is required to be capitalized for financial reporting
purposes under GAAP, (d) all obligations or liabilities of others secured by a
Lien on any asset of such Borrower, irrespective of whether such obligation or
liability is assumed, (e) all obligations of such Borrower for the deferred
purchase price of assets (other than trade debt incurred in the ordinary course
of such Borrowers' business and repayable in accordance with customary trade
practices), and (f) any obligation of a Borrower guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse to such Borrower) any obligation of any other
Person.
"Interim Period End Date" means the earlier to occur of (i) the effective
date of any refinancing or extension of the Existing Loans and (ii) December 20,
2001.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, statutory or other lien, charge or other security
interest or any 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).
"Material Adverse Effect" means a material adverse effect on (a) the
properties, business, results of operations or financial condition of either
Borrower or (b) the ability of either Borrower to perform its obligations under
this Agreement and the Pledge Agreement, or (c) the validity or enforceability
of this Agreement and the Pledge Agreement.
"Person" means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Authority or other entity.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as of
October 26, 2001, among the Borrowers, Silicon Graphics World Trade Corporation,
NEC Corporation and NEC Soft, Ltd.
"Subsidiary" means, with respect to any Person, a corporation or other
entity in which such Person directly or indirectly owns or has the power to vote
shares of any capital stock or other ownership interests having the power to
elect a majority of the directors (or other persons performing similar
functions) of such corporation or other entity.
11. Unconditional Obligations
Except as expressly set forth herein, the obligations of the Borrowers
hereunder are unconditional and no reference to any other document or agreement
herein is intended or shall be deemed to render the Borrowers' obligations
hereunder conditional. The illegality or unenforceability of, or the default by
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any party under, any other document or agreement referred to herein shall not
constitute a defense to any claim by Lender for the payment of principal,
interest or any other amount hereunder.
12. Modification in Event of Extension of Existing Loans
From and after the date hereof, SGI-US shall use commercially reasonable
efforts to negotiate an extension of the term of the Existing Loans for a period
beyond the current due date of December 20, 2001 until at least December 20,
2004, without the provision of a guarantee or other form of credit support from
NEC or any of its Affiliates. If SGI-US is able to obtain such an extension on
terms and conditions reasonably satisfactory to Lender and NEC, and without the
provision of a guarantee or other form of credit support from NEC or any of its
Affiliates, then the terms and conditions of this Agreement shall be amended to
correspond, as nearly as practicable, to the terms and conditions of such
extension (including provisions as to maturity, interest rate and payment,
defaults and events of default, representations and warranties and covenants);
provided, however, that (1) the Maturity Date will in no event be extended
beyond December 20, 2006, and (2) the obligations of Lender hereunder shall
continue to be secured by the Collateral (as defined in the Pledge Agreement)
pursuant to the terms of the Pledge Agreement, subject only to such
modifications thereto as Lender and NEC may in their discretion agree.
13. Further Payment by Lender
If the Existing Loans are extended beyond December 20, 2001, unless and
until SGI-US is relieved of its obligation to guarantee the entire amount of the
Existing Loans in connection with or following such extension, then:
(a)if the initial principal amount of the Loan is less than ¥6 billion, the
Lender will, on or before February 28, 2002, to the extent it is able to do so
under the terms of the Existing Loans, as extended, without incurring any
prepayment penalties or other charges, make a payment under the Existing Loans
so that, after such payment, the principal balance outstanding under the
Existing Loans will, at such time, be no greater than the principal balance
outstanding under the Loan; provided, that the Lender shall have no obligation
to make the payment contemplated under this Section 13(a) if, in the Lender's
reasonable judgment, the working capital reserves of the Lender after such
payment would be inadequate; and
(b)At any time that the Borrowers (i) make a scheduled payment of the principal
amount outstanding under the Loan pursuant to Section 2 or (ii) make a
prepayment of the principal amount outstanding under the Loan pursuant to
Section 5(a) or (b), the Lender will, to the extent it is able to do so under
the terms of the Existing Loans, as extended, without incurring any prepayment
penalties or other charges, make a payment under the Existing Loans so that,
after such payment, the principal amount outstanding under the Existing Loans
will, at such time, be no greater than the principal amount outstanding under
the Loan; provided, that the Lender shall not be required to make any payment
under the Existing Loans pursuant to this Section 13(b) in excess of the amount
of the prepayment received from the Borrowers.
14. Indemnification
The Borrowers shall jointly and severally pay, indemnify, and hold Lender
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including attorneys' fees
and expenses) or disbursements of any kind or nature whatsoever ("Losses")
arising out of or in connection with (a) the enforcement of any rights of Lender
under this Agreement or the Pledge Agreement, and (b) any claim (whether or not
asserted in any legal proceeding), litigation, investigation, arbitration or
proceeding relating to this Agreement or the Pledge Agreement (collectively,
"indemnified liabilities"); provided, that the Borrowers shall have no
obligation
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hereunder to Lender with respect to indemnified liabilities arising from the
gross negligence or willful misconduct of Lender. The agreements in this section
shall survive for twenty-four (24) months after repayment of the Loan and all
other amounts payable hereunder.
15. Severability
If any provision or any portion of any provision of this Agreement shall be
held invalid or unenforceable, the validity and enforceability of the remaining
portion of such provision and the remaining provisions of this Agreement, and
the application thereof to any other Person or circumstance, shall not be
affected thereby.
16. Governing Law
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of Japan.
17. Submission to Jurisdiction
The parties hereby irrevocably submit to the exclusive jurisdiction of the
Tokyo District Court in any action or proceeding arising out of or relating to
this Agreement, and each party hereto hereby irrevocably agrees that all claims
in respect of such action or proceeding may be heard and determined in such
court. Each party hereby irrevocably waives, to the fullest extent that it may
legally do so, the defense of an inconvenient forum to the maintenance of such
action or proceeding. Each party irrevocably consents to the service of any and
all process in any action or proceeding by the mailing or delivery of copies of
such process to it at the office of such party set forth for notices hereunder.
Each party agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
18. Delay, Amendment and Waiver
(a)Lender shall not by any act (except by a written instrument signed by
Lender), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of Lender, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. A waiver
by Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Lender would otherwise have on
any future occasion. The remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any remedies that may
be available to Lender at law, in equity or otherwise.
(b)Any amendment, supplement or modification of or to any provision of this
Agreement, any waiver of any provision of this Agreement, and any consent to any
departure by any party from the terms of any provision of this Agreement, shall
be effective only if it is made or given in writing and signed by each of the
parties hereto. Any such amendment, supplement, modification, waiver or consent
shall be binding upon the parties hereto.
19. Notices
All notices and other communications pursuant to this Agreement shall be
delivered personally, delivered by facsimile or air-mailed by certified or
registered mail, postage prepaid, return receipt
9
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requested, to the parties, their successors in interest or their assignees at
the following address or at such other addresses as the parties may designate by
written notice in the manner as aforesaid:
If to the Borrowers, to:
Silicon Graphics, Inc.
1600 Amphitheatre Parkway
Mountain View, CA 94043-1351
Telephone: +1 (650) 933-3009
Facsimile: +1 (650) 933-0298
Attention: Sandra Escher, Senior Vice President and General Counsel
with a copy to:
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, CA 94025
Telephone: +1 (650) 752-2003
Facsimile: +1 (650) 752-2112
Attention:
If to Lender, to:
SGI Japan, Ltd.
Yebisu Garden Place Tower
4-20-3 Ebisu Shibuya-ku
Tokyo 150-6031, Japan
Telephone: +81 (3) 5488-7300
Facsimile: +81 (3) 5420-7020
Attention: Norio Izumi, President
with a copy to:
SGI Japan, Ltd.
Yebisu Garden Place Tower
4-20-3 Ebisu Shibuya-ku
Tokyo 150-6031, Japan
Telephone: +81 (3) 5488-6996
Facsimile: +81 (3) 5420-1867
Attention: Hisao Hattori, Legal Manager
A notice shall be deemed given when delivered, in the case of personal
delivery or delivery by facsimile, or seven (7) Business Days after mailing in
the manner prescribed herein.
20. Entire Agreement
This Agreement and the Exhibits hereto contain the entire agreement among
the parties hereto regarding the matters described herein and supersede all
previous and contemporaneous oral and written discussions and all prior
agreements and understandings among the parties regarding such matters.
21. Specific Performance
Without limiting the rights of each party hereto to pursue all other legal
and equitable rights available to such party for the other party's failure
perform its obligations under this Agreement, the parties hereto acknowledge and
agree that the remedy at law for any failure to perform their
10
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obligations hereunder would be inadequate and that each of them, respectively,
shall be entitled to specific performance, injunctive relief or other equitable
remedies in the event of any such failure.
22. Successors and Assigns
This Agreement shall be binding upon Borrower and its successors and
permitted assigns and shall inure to the benefit of Lender and its successors
and assigns. Neither Borrower may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of Lender. Lender may
sell, assign or transfer this Agreement or any of its rights hereunder to NEC or
any of its Affiliates without any requirement of consent by the Borrowers.
23. Counterparts
This Agreement may be executed in several counterparts, each of which when
so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument.
24. Expenses
Except as otherwise specifically provided herein, the parties to this
agreement shall bear their respective expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement, including
all fees and expenses of agents, representatives, counsel and accountants.
25. Descriptive Headings
The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
11
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered on the date first written above.
BORROWERS:
SILICON GRAPHICS, INC.
By:
--------------------------------------------------------------------------------
Name: Title:
SILICON GRAPHICS WORLD TRADE B.V.
By:
--------------------------------------------------------------------------------
Name: Title:
LENDER:
SGI JAPAN, LTD.
By:
--------------------------------------------------------------------------------
Name: Title:
--------------------------------------------------------------------------------
Schedule 1
Principal Amount of the Loan
The principal amount of the Loan shall be an amount equal to the lesser of
(1) ¥6 billion and (2) the amount of Advanced Payments appearing on the Closing
Cash/Debt Statement (as defined in the Stock Purchase Agreement).
Schedule 21
Amortization Schedule
Payment Date
--------------------------------------------------------------------------------
Payment Amount
--------------------------------------------------------------------------------
March 31, 2002 ¥500,000,000 June 30, 2002 ¥500,000,000 September 30, 2002
¥500,000,000 December 31, 2002 ¥500,000,000 March 31, 2003 ¥500,000,000 June
30, 2003 ¥500,000,000 September 30, 2003 ¥500,000,000 December 31, 2003
¥500,000,000 March 31, 2004 ¥500,000,000 June 30, 2004 ¥500,000,000
September 30, 2004 ¥500,000,000 December 31, 2004 ¥500,000,000
--------------------------------------------------------------------------------
1Subject to adjustment pursuant to Section 7.7(c) of the Stock Purchase
Agreement upon completion of all closing adjustments contemplated by Section 2.3
of the Stock Purchase Agreement.
--------------------------------------------------------------------------------
This Amortization Schedule is hereby accepted and agreed on this day
of , 2001 by each of the following:
BORROWERS:
SILICON GRAPHICS, INC.
By:
--------------------------------------------------------------------------------
Name: Title:
SILICON GRAPHICS WORLD TRADE B.V.
By:
--------------------------------------------------------------------------------
Name: Title:
LENDER:
SGI JAPAN, LTD.
By:
--------------------------------------------------------------------------------
Name: Title:
--------------------------------------------------------------------------------
QuickLinks
Exhibit 10.27
LOAN AGREEMENT (Kinsen Shohi Taishaku Keiyaku Shosho)
RECITALS
Schedule 1 Principal Amount of the Loan
Schedule 21 Amortization Schedule
|
AGREEMENT
FOR PURCHASE AND SALE OF SHARES OF
PREFERRED STOCK
OF PEPGEN CORPORATION
This Agreement is entered into effective as of April 17, 2001, (the
“Effective Date”), by and between Biotechnology Development Fund I, L.P., a
limited partnership organized under the laws of Delaware (“BDF I”),
Biotechnology Development Fund II, L.P., a limited partnership organized under
the laws of Delaware (“BDF II”), (together the “Purchasers”), and Calypte
Biomedical Corporation (“Seller”), a Delaware corporation. The principal
offices for the Purchasers and the Seller are shown below each party’s signature
at the end of this Agreement. Pepgen Corporation (“Pepgen”), a California
corporation with its principal offices at 1255 Harbor Parkway, Alameda, CA
94502, has executed and delivered this Agreement solely to acknowledge and
consent to the sale of shares of Pepgen effected hereby.
1. Purchase and Sale of Shares. Seller hereby agrees to
sell and transfer to Purchasers, and Purchasers hereby agree to purchase from
Seller, the entirety of Sellers’ shares of Pepgen Series A Preferred Stock (the
“Series A Shares”) and shares of Pepgen Series C Preferred Stock (the “Series C
Shares”) in the amounts listed on the attached Schedule A to this Agreement
(collectively the “Shares”) for an aggregate purchase price of $500,000 (the
“Consideration”) on the relevant closing dates as set forth below in Section 4.
2. Assignment of Rights and Obligations. Seller hereby
irrevocably assigns, transfers and conveys to the Purchasers all rights and
obligations accorded to Seller (a) by the Master Stock Purchase Agreement dated
September 19, 1995 by and among Pepgen, Seller and the parties listed on the
attached Schedule B to this Agreement (the “Series A Agreement”), (b) by the
Series C Preferred Stock Purchase Agreement dated August 20, 1999 by and among
Pepgen, Seller and the parties listed on the attached Schedule C to this
Agreement (the “Series C Agreement”), and (c) by related principle documents to
the Series C Agreement and by the associated documents listed on the attached
Schedule D to this Agreement. Such rights and obligations will be transferred
from Sellers to Purchasers on the relevant closing dates as set forth below in
Section 4.
3. Notice of Sale. Seller hereby notifies Pepgen of the
transfer of Shares and all rights and obligations of the Shares’ ownership to
Purchasers pursuant to the terms of this Agreement.
4. Closings.
(a) First Closing.. The first closing of the
purchase and sale of the Shares will take place at the offices of Heller Ehrman
White & McAuliffe LLP, 275 Middlefield Road, Menlo Park, California 94025-3506
at 10:00 a.m. California time, on April 17, 2001 or at such other time and place
as Seller and BDF I ( the “First Closing”) mutually agree. At the First
Closing, BDF I shall deliver $171,000 to Seller in the form of a check payable
to Seller or a wire transfer of funds to Seller. At the First Closing, Seller
shall deliver to BDF I the certificates representing the number of Shares
purchased by BDF I as set forth in Schedule A together with the following
documents: (i) the Series A Agreement and related principle financing
documents; (ii) the Series C Agreement and related principle financing
documents; and (iii) documents listed on Schedule D to this Agreement.
(b) Second Closing. The second closing of the
purchase and sale of the Shares will take place at the offices of Heller Ehrman
White & McAuliffe LLP, 275 Middlefield Road, Menlo Park, California 94025-3506
at 10:00 a.m. California time, on May 1, 2001 or at such other time and place as
Seller and BDF II (the “Second Closing”) mutually agree. At the Second Closing,
BDF II shall deliver $329,000 to Seller in the form of a check payable to Seller
or a wire transfer of funds to Seller. Seller shall deliver to BDF II
certificates representing the number of Shares purchased by BDF II as set forth
in Schedule A.
5. Pepgen Board of Directors. Effective as of the Second
Closing, Nancy E. Katz, President, Chief Executive Officer and Chief Financial
Officer of Seller, shall resign her position as the member of Pepgen’s Board of
Directors (the “Board”) who is selected by the holders of a majority of the
shares of the Series A Preferred Stock and the Series B Preferred Stock of
Pepgen pursuant to Section 1.1 of the Voting Agreement between Pepgen and the
parties listed on Schedule C to this Agreement (the “Voting Agreement”).
6. Voting Agreement. Pursuant to Section 6.1 of the
Voting Agreement, Purchasers hereby agree to be bound by the terms of the Voting
Agreement.
7. Representations and Warranties of Purchasers.
Purchasers represent and warrant to Seller, and to Pepgen, that:
(a) Purchase for Own Account for Investment.
Purchasers are purchasing the Shares from Seller for Purchasers' own account for
investment purposes only and not with a view to, or for sale in connection with,
a distribution of the Shares within the meaning of the Securities Act of 1933,
as amended (the “1933 Act”). Purchasers have no present intention of selling or
otherwise disposing of all or any portion of the Shares and no one other than
Purchasers have any beneficial ownership of any of the Shares.
(b) Access to Information. Purchasers are
“accredited” investors as defined under Regulation D under the 1933 Act, have
had access to all information regarding Pepgen and Pepgen’s present and
prospective business, assets, liabilities and financial condition that
Purchasers reasonably consider important in making the decision to purchase the
Shares, and have had ample opportunity to ask questions of Pepgen's
representatives concerning such matters and this investment. Purchasers are not
relying upon any representations or warranties from Seller with respect to the
Shares, except as specifically set forth in Section 3 hereof as to Seller’s
authority to sell, and title to, the Shares, or with respect to Pepgen.
(c) Understanding of Risks. Purchasers are
fully aware of: (i) the highly speculative nature of the investment in the
Shares; (ii) the financial hazards involved; (iii) the lack of liquidity of the
Shares and the restrictions on transferability of the Shares (e.g., that
Purchasers may not be able to sell or dispose of the Shares or use them as
collateral for loans); (iv) the qualifications and backgrounds of the management
of Pepgen; and (v) the tax consequences of investment in the Shares.
(d) Purchasers’ Qualifications. Purchasers
have a preexisting personal or business relationship with Pepgen and/or certain
of its officers and/or directors of a nature and duration sufficient to make
Purchasers aware of the character, business acumen and general business and
financial circumstances of Pepgen and/or such officers and directors. By reason
of Purchasers’ business or financial experience, Purchasers are capable of
evaluating the merits and risks of this investment, have the ability to protect
Purchasers’ own interests in this transaction and is financially capable of
bearing a total loss of this investment.
(e) No General Solicitation. At no time were
Purchasers presented with or solicited by any publicly issued or circulated
newspaper, mail, radio, television or other form of general advertising or
solicitation in connection with the offer, sale and purchase of the Shares.
(f) Compliance with Securities Laws.
Purchasers understand and acknowledge that, in reliance upon the
representations and warranties made by Purchasers herein, the Shares are not
being registered with the Securities and Exchange Commission (“SEC”) nor are
they being qualified under the California Corporate Securities Law of 1968, as
amended or the laws of any other state, but instead are being issued under an
exemption or exemptions from the registration and qualification requirements of
relevant law, which impose certain restrictions on Purchasers’ ability to
transfer the Shares.
(g) Restrictions on Transfer. Purchasers
understand that any subsequent transfer by the Purchasers of some or all of the
Series A Shares and/or the Series C Shares are subject to limitations set forth
in Section 4.5 of the Series C Agreement and that the subsequent transfer of
certain rights and obligations associated with ownership of the Shares may be
subject to further conditions and limitations set forth in the Voting Agreement
and in the Information and Registration Rights Agreement between Pepgen and the
parties listed on Schedule C to this Agreement.
(h) Rule 144. Purchasers understand that SEC
Rule 144 promulgated under the 1933 Act, which permits certain limited sales of
unregistered securities, is not presently available with respect to the Shares
and, in any event, requires that the Shares be held for a minimum period, after
they have been purchased and paid for (within the meaning of Rule 144), before
they may be resold under Rule 144. Purchasers understand that Rule 144 may
indefinitely restrict transfer of the Shares if Purchasers are, and for so long
as Purchasers remain, “affiliates” of Pepgen and “current public information”
about Pepgen (as defined in Rule 144) is not publicly available.
(i) Legends and Stop-Transfer Orders.
Purchasers understand that certificates or other instruments representing any of
the Shares acquired by Purchasers will bear legends required by federal or state
laws or by the Bylaws of Pepgen or under any agreements to which the Shares are
subject and which would impose legend obligations on the Shares as transferred
hereby. Purchasers agree that, in order to ensure and enforce compliance with
the restrictions imposed by applicable law and those referred to in the
foregoing legends, or elsewhere herein, Pepgen may issue appropriate “stop
transfer” instructions to its transfer agent, if any, with respect to any
certificate or other instrument representing the Shares, or if Pepgen transfers
its own securities, that it may make appropriate notations to the same effect in
Pepgen's records.
(j) Rights and Obligations Applicable to the
Shares as Sold; Execution and Delivery of Additional Documents as Condition to
Sale. Purchasers have made their own investigation of any restrictions imposed
upon, or rights applicable to, the Shares, or upon or for the benefit of
Purchasers as the holders thereof, by law or by any written agreement applicable
to the Shares as held by Purchasers as transferees from Seller, and Purchasers
have executed and delivered all instruments and documents and otherwise complied
with all obligations required, as of the Effective Date, to be complied with by
Purchasers under written agreements applicable to the Shares and to this
transfer and sale to Purchasers.
8. Representations and Warranties By Seller. Seller
represents and warrants to Purchasers that:
(a) Seller has full authority and power to
execute and deliver this Agreement and, subject in part to the truthfulness of
Purchasers’ representations herein, to sell and transfer the Shares to
Purchasers as provided herein. This Agreement has been duly executed and
delivered by Seller and constitutes the valid and binding obligation of Seller
enforceable against Seller in accordance with its respective terms.
(b) Seller is the sole and exclusive owner,
beneficially and of record, of all the Shares, free and clear of all liens,
encumbrances, security agreements, pledges, preemptive rights, options, proxies,
claims and charges. Upon each of the First Closing and the Second Closing, and
the delivery of the certificates representing the Shares pursuant to this
Agreement, Seller will transfer to Purchasers good and valid title to the Shares
and such Shares shall be free and clear of any liens, adverse claims,
encumbrances or agreements, preemptive rights, co-sale rights, rights of
refusal, repurchase rights, voting trusts and other restrictions of any kind.
(c) Seller has held the Shares continuously
since the date such Shares were issued by Pepgen.
(d) Seller is not aware that the initial
issuance and sale of the Shares to Seller by Pepgen was not in compliance with
all applicable federal and State of California securities laws.
(e) At no time did Sellers present or solicit
by means of any publicly issued or circulated newspaper, mail, radio, television
or other form of general advertising or solicitation in connection with the
offer, sale and purchase of the Shares.
(f) The execution, delivery of this Agreement
and the performance of its respective terms will not, with or without the giving
of notice or the passage of time, conflict with, constitute a violation or
breach of or result in a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel or require any
notice or consent under (a) any contract, lease, license, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of indebtedness,
security interest, or other arrangement to which Seller is a party or by which
Seller is bound or to which any of Seller’s assets are subject, (b) any order,
writ, injunction, award, decree, decision or ruling of any court, arbitrator or
governmental or regulatory body against or binding Seller, or (c) any statute,
law, rule or regulation of any jurisdiction to which Seller may be subject.
(g) Subject in part to the truth and accuracy
of the Purchasers’ representations set forth in Section 5, the offer, sale and
transfer of the Shares as contemplated by this Agreement is exempt from the
registration requirements of the Securities Act of 1933, as amended (the “Act”)
and from the registration and qualification requirements of applicable state
securities laws, and neither the Seller, nor any authorized agent acting on its
behalf, will take any action hereafter that would cause the loss of such
exemptions.
9. Legal Fees. Seller shall reimburse the Purchasers for
legal fees incurred by the Purchasers in connection with this transaction in an
amount not to exceed $5,000.
10. Further Assurances. Seller agrees, at its sole cost and
expense, to assist Purchasers to effectuate the purposes and intent of this
Agreement and shall cooperate with Purchasers to effectuate the transfer of the
record title to the Shares on the books and records of Pepgen from Seller to
Purchasers
11. General. This Agreement may be executed in
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement will be
governed by the laws of the State of California without regard to its body of
law controlling conflict of laws. This Agreement is the complete and exclusive
agreement of the parties hereto regarding the specific subject matter of this
Agreement and supersedes in their entirety all prior agreements, understandings
and communications, oral or written, between or among the parties regarding the
specific subject matter of this Agreement, will be binding upon and inure to the
parties’ respective successors and assigns, and may only be amended by a writing
signed by the parties hereto or their respective successors, assigns or
authorized representatives.
Rest of Page Left Intentionally Blank
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the Effective Date.
SELLER: PURCHASERS: CALYPTE BIOMEDICAL CORPORATION
BIOTECHNOLOGY DEVELOPMENT FUND I, L.P By: /s/ Nancy E. Katz By:
BioAsia Investments, LLC, General Partner
--------------------------------------------------------------------------------
Name: Nancy E. Katz Title: Chief Executive Officer, President
and Chief By: /s/ Frank Kung Financial Officer
--------------------------------------------------------------------------------
Name: Frank Kung Title: Managing Member Address:
1265 Harbor Bay Parkway, Alameda, California 94502 Address: 575
High Street, Suite 201, Palo Alto, California 94301
BIOTECHNOLOGY DEVELOPMENT FUND II, L.P. By: BioAsia
Management, LLC, General Partner By: /s/ Frank Kung
--------------------------------------------------------------------------------
Name: Frank Kung Title: Managing Member
Address: 575 High Street, Suite 201, Palo Alto, California 94301
ACKNOWLEDGED AND SALE OF SHARES CONSENTED TO:
PEPGEN CORPORATION By: /s/ C. P. Liu
--------------------------------------------------------------------------------
Name: C. P. Liu
--------------------------------------------------------------------------------
Title: President
--------------------------------------------------------------------------------
|
Exhibit 10.38
LETTER OF AGREEMENT
DCT - 055/98
This Letter of Agreement ("Agreement") dated December 23, 1998, is an agreement
between Continental Express, Inc., with its principal place of business at 1600
Smith Street, Houston, Texas, 77002 ("BUYER"), and EMBRAER - Empresa Brasileira
de Aeronáutica S.A. ("EMBRAER"), with its principal place of business at São
José dos Campos, São Paulo, Brazil, relating to Purchase Agreement DCT - 054/98
(the "Purchase Agreement") for the purchase by BUYER of twenty five firm and up
to fifty (50) option new EMB-135 aircraft (respectively the "FIRM AIRCRAFT" and
the "OPTION AIRCRAFT").
This Agreement sets forth additional agreements of the PARTIES with respect to
the matters set forth in the Purchase Agreement. All terms defined in the
Purchase Agreement shall have the same meaning when used herein, and in case of
any conflict between this Agreement and the Purchase Agreement, this Agreement
shall govern.
NOW, THEREFORE, for good and valuable consideration, EMBRAER and BUYER agree as
follows:
1.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
5. CONFIDENTIALITY
EMBRAER and BUYER shall not disclose the terms and conditions of, or the
execution of, the Purchase Agreement, or this Agreement to any third party until
the execution of the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]. After the execution of the [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT], the disclosure of the [CONFIDENTIAL MATERIAL OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT], the Purchase Agreement and this Agreement
shall be governed by the terms of the Purchase Agreement. The confidentiality
provision of this Agreement will not prohibit disclosure to legal counsel or
financial advisors of the undersigned, or to relevant governmental authorities,
or as otherwise may be required by law.
6. MISCELLANEOUS
All terms and conditions of the Purchase Agreement which have not been
specifically altered or modified hereunder shall remain in full force and
effect, and time is of the essence under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers and to be
effective as of the day and year first above written.
CONTINENTAL EXPRESS, INC. EMBRAER - EMPRESA BRASILEIRA DE AERONÁUTICA S.A
By : /s/ Fred S. Cromer By : /s/ Antonio L.P. Manso
Name : Frederick S. Cromer Name : Antonio L. P. Manso
Title : Vice President, Finance Title : Executive Vice President
Chief Financial Officer and CFO
By : /s/ FlavioRimoli
Name : Flavio Rimoli
Title : Director of Contracts
Witness: /s/ John J. Mannion Witness: /s/ Jose Luis P. Molina
Name : John J. Mannion Name : Jose Luis P. Molina
|
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Exhibit 10E
CONFORMED COPY
PRECISION CASTPARTS CORP.
EXECUTIVE DEFERRED COMPENSATION PLAN
January 1, 1995
(As Amended Through Amendment No. 5)
Precision Castparts Corp.
an Oregon corporation
4650 SW Macadam, Suite 240
Portland, Oregon 97201 Company
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
--------------------------------------------------------------------------------
1. Plan Administration 1
2.
Eligibility; Deferral
1
3.
Executive Deferred Compensation Accounts
3
4.
Time and Manner of Payment
4
5.
Death
5
6.
Termination; Amendment
6
7.
Claims Procedure
7
8.
General Provisions
7
9.
Definition of Change of Control
8
10.
Effective Date
9
ii
--------------------------------------------------------------------------------
PRECISION CASTPARTS CORP.
EXECUTIVE DEFERRED COMPENSATION PLAN
January 1, 1995
(As Amended Through Amendment No. 5)
Precision Castparts Corp.
an Oregon corporation
4650 SW Macadam, Suite 240
Portland, Oregon 97201 Company
Precision Castparts Corp. (the Company) adopts this Executive Deferred
Compensation Plan (the plan) to create a deferred compensation arrangement for a
select group of management or highly compensated employees (Executives) whose
deferred compensation under the Company's other retirement plans may be
restricted by law or otherwise may not provide fully for their retirement
benefit needs. In order to help the Company attract and retain key Executives,
this plan of deferred compensation is adopted effective January 1, 1995 on the
terms set forth below.
1. Plan Administration
1.1 The plan shall apply to the Company and to any Affiliate that employs
an eligible employee. "Affiliate" means a corporation or other entity that is
more than 50% owned by the Company.
1.2 The Compensation Committee of the Board of Directors of the Company
shall appoint one or more employees of the Company as Administrator of the plan.
The Administrator shall interpret and administer the plan and for that purpose
may make, amend or revoke rules and regulations at any time. The Administrator
shall have absolute discretion to carry out responsibilities established under
this plan.
2. Eligibility; Deferral Elections
2.1 The following employees of the Company will be eligible to participate
in the plan, subject to 2.2:
(a) Executives currently covered under the Company's Supplemental Executive
Retirement Program.
(b) Any additional Executives added by the chief executive officer of the
Company.
2.2 Executives may be removed from eligibility prospectively by the
Compensation Committee or chief executive officer of the Company.
2.3 An eligible Executive may elect as provided below to defer a whole
number percentage of the Executive's salary or bonuses or both (Compensation).
Different percentages may be selected for salary and for bonuses, up to a
maximum deferral percentage set by the Compensation Committee. Initially, the
maximum deferral percentage is 25% for salary, 100% for bonuses. The
Compensation Committee may change the maximum deferral percentage on or before
December 31 to be effective for succeeding calendar years. An eligible Executive
may limit a bonus deferral election to the portion of the percentage deferral
that exceeds a floor dollar amount designated by the Executive in the deferral
election, or to the lesser of a stated dollar amount or a percentage of the
bonus.
2.4 An election shall be in writing on a form provided by the Administrator
and shall specify the time and manner of payment of the deferred amounts in
accordance with other provisions of this plan.
--------------------------------------------------------------------------------
2.5 An election to defer Compensation shall be effective as follows:
(a) A salary deferral election received by the Administrator on or before
December 31 of any year shall be effective for the succeeding calendar year. A
new salary deferral election must be made for each calendar year.
(b) Except as provided in (c), a bonus deferral election must be received by
the Administrator before the first day of the bonus period to which the deferral
applies. A bonus deferral election shall be effective only for a single bonus
period. A new election must be made prior to each bonus period. If no election
is made, no deferrals shall be made for the bonus period. The bonus period is
the Company's fiscal year, based on the fiscal twelve-month period ending on the
Sunday nearest March 31.
(c) In the first year in which an Executive becomes eligible to participate
in the Plan, the newly eligible Executive may make an election to defer
compensation for services to be performed subsequent to the election within
30 days after the date the Executive first becomes eligible. The election shall
be effective at the beginning of the next calendar month.
2.6 The Company may withhold from any deferral any amounts required.
3. Executive Deferred Compensation Accounts
3.1 The Company shall deduct from an Executive's Compensation as applicable
and credit to an Executive Deferred Compensation Account (the Account) each
Compensation amount deferred under this plan. The Account shall be credited as
of the day the Compensation would otherwise have been paid to the Executive.
3.2 Until full payment of an Account balance has been made to the Executive
or beneficiaries entitled to the amount identified by the Account (the
Participant), the Company shall adjust the Account monthly for investment
performance as follows:
3.2-1 The investment result shall be determined by the Performance
Option(s) selected by the Participant. A participant may select more than one
Performance Option in accordance with procedures designated by the
Administrator.
3.2-2 Participants may make the Performance Option selections under 3.2-3
effective during the first five business days of each month (an election
period). A Performance Option selection shall either apply to all amounts in a
Participant's Account, or shall apply only to future deferral amounts, as
selected by the Participant. Selections shall be made in writing on a form
prescribed by the Administrator. Selections may only be made during an election
period or the last week of the preceding month. Selections shall be irrevocable
when submitted and shall be effective as follows:
(a) As of the first business day of the election period, if the election
form is received by the Administrator on or before that date.
(b) As of the first business day on or after the form is received, if the
form is received by the Administrator after the first business day of the
election period but before the end of the election period.
3.2-3 Performance Options are designated by the Compensation Committee of
the Board of Directors of the Company. Performance Options are as follows:
(a) Fidelity Intermediate Government Income Fund.
(b) Fidelity Investment Grade Bond.
2
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(c) Fidelity U.S. Equity Index Fund.
(d) Vanguard Index Growth.
(e) Fidelity Equity Income.
(f) Fidelity Contrafund.
(g) Vanguard Small Cap.
(h) Fidelity Aggressive Growth.
(i) Fidelity Aggressive International Fund.
(j) Prime Rate plus 2 Percent, based on the average of the prime rate at
Bank of America or its successor in effect on the last business day of each
month.
3.2-4 When any of the Performance Options in 3.2-3(a)-(i) has been
selected, amounts deferred during the month shall be credited as equivalent
shares at the closing price on the day of the deferral. Cash dividend yield
shall be applied to all deferrals under the relevant Performance Option during
the month, prorated daily, and shall be credited as additional equivalent shares
at the end of the month based on the relevant Performance Option's closing price
on the last day of the month. All equivalent shares shall be revalued up or down
to the closing price on the last business day of the month.
3.2-5 When the Prime Rate plus 2 Percent Performance Option has been
selected, amounts deferred during a month shall be adjusted as of the last day
of the month based on the month's average Prime Rate plus 2 Percent, prorated
daily.
3.3 Each Participant's Account shall be maintained on the books of the
Company until full payment has been made to the Participant entitled to the
amount identified by the Account. No assets shall be set aside or earmarked to
fund the Account, which shall be purely a bookkeeping device. It is the
intention of the parties that the plan be unfunded for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as
amended. Even if specific assets are set aside or earmarked for Company
financial planning purposes or for other reasons, that shall not cause this plan
to be a funded employee benefit plan for tax purposes or for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as amended.
4. Time and Manner of Payment
4.1 Subject to 4.5, 5.1 and 6.3, the Account shall be paid or payment
commenced as of the January 31 next after one of the following dates as selected
under 4.3:
(a) The date the Executive retires or terminates employment with the
Company, or
(b) The expiration of a specified deferral term (minimum five years; maximum
10 years) if later.
4.2 Subject to 4.5, 5.1 and 6.3, the Account shall be paid in one of the
following ways as selected under 4.3:
(a) In a single lump sum.
(b) In not more than ten substantially equal annual installments of
principal with Performance Option Adjustments, except that the ten-installment
limit shall be reduced by the number of years, if any, elected under 4.1(b). For
example, the first payment shall be one-fifth of the balance on the December 31
preceding the first payment date, the second shall be one-fourth of the balance
on the December 31 preceding the second
3
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payment date, and so on. The final payment shall be the remaining balance
adjusted to the final January 31 payment date.
4.3 The time and manner of payment under 4.1 and 4.2 shall be selected by
the Executive as follows:
(a) The selection shall be made in the deferral election.
(b) The selection shall be irrevocable for the portion of the Account
attributable to amounts deferred under the election in which the selection is
made.
(c) If the time or method of payment is different under different elections,
the Account shall be appropriately divided for distribution.
(d) Other payment options may be established by the Compensation Committee
of the Board of Directors of the Company, and made available prospectively for
selection by Executives for future deferrals.
4.4 The Company may withhold from any payments any income tax or other
amounts as required by law.
4.5 If an Executive's employment with the Company ends involuntarily by
termination of the Executive's employment within 12 months after a Change in
Control as defined in 9, the Executive's Account shall be paid in one lump sum
within 30 days after termination of employment, regardless of the otherwise
applicable election. The Executive's Account shall be adjusted based on the
applicable Performance Option as of the most recent month end.
5. Death
5.1 An Executive's Account shall be payable under 5.2 on the Executive's
death regardless of the provisions of 4.
5.2 On death of an Executive the Account shall be paid in the following
order of priority:
(a) To the surviving beneficiaries designated by the Executive in writing to
the Administrator in the Executive's deferral election(s), or if none then
(b) To the Executive's surviving spouse, or if none then
(c) To the Executive's surviving children in equal shares, or if none then
(d) To the Executive's estate.
5.3 The manner of payment under 5.2 shall be as follows:
(a) If the beneficiary is the surviving spouse and the Executive elected
installments but died before starting to receive payments, the spouse's payments
shall begin as soon as practicable and the period selected under 4.2(b) for the
Executive's payments shall govern. If the Executive had already started
receiving installments, the surviving spouse shall receive the installments for
the remainder of the term selected by the Executive.
(b) If the beneficiary is the surviving spouse and the Executive did not
elect installments, or if the beneficiary is not the surviving spouse, a lump
sum shall be paid as soon as practicable to the beneficiary.
5.4 On death of a surviving spouse receiving installments under 5.3(a), the
Account shall be paid in a single sum to the spouse's estate within 30 days
after death.
4
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6. Termination; Amendment
6.1 The Board of Directors of the Company may terminate this plan effective
the first day of any calendar year after notice to the eligible Executives. On
termination, amounts in an Account shall remain to the credit of the Account,
shall continue to be adjusted monthly and shall be paid in accordance with 4, 5
or 6, as applicable.
6.2 Subject to 6.3, the Board of Directors of the Company may amend this
plan effective the first day of any calendar year after notice to the eligible
Executives.
6.3 The chief executive officer of the Company may amend this plan at any
time to make technical, editorial or operational changes on advice of counsel to
comply with applicable law or to simplify or clarify the plan. The chief
executive officer may delegate the amendment authority.
6.4 If the Internal Revenue Service rules that any amounts deferred under
this plan will be subject to current income tax, all amounts to which the ruling
is applicable shall be paid within 30 days to all Participants with Accounts.
7. Claims Procedure
7.1 Any Participant claiming a benefit, requesting an interpretation or
ruling under the plan, or requesting information under the plan shall present
the request in writing to the Administrator, who shall respond in writing as
soon as practicable.
7.2 If the claim or request is denied, the written notice of denial shall
state the following:
(a) The reasons for denial, with specific reference to the plan provisions
on which the denial is based.
(b) A description of any additional material or information required and an
explanation of why it is necessary.
(c) An explanation of the plan's review procedure.
7.3 The initial notice of denial shall normally be given within 90 days
after receipt of the claim. If special circumstances require an extension of
time, the claimant shall be so notified and the time limit shall be 180 days.
7.4 Any person whose claim or request is denied or who has not received a
response within 30 days may request review by notice in writing to the
Administrator. The original decision shall be reviewed by the Administrator
which may, but shall not be required to, grant the claimant a hearing. On
review, whether or not there is a hearing, the claimant may have representation,
examine pertinent documents and submit issues and comments in writing.
7.5 The decision on review shall ordinarily be made within 60 days. If an
extension of time is required for a hearing or other special circumstances, the
claimant shall be so notified and the time limit shall be 120 days. The decision
shall be in writing and shall state the reasons and the relevant plan
provisions. All decisions on review shall be final and bind all parties
concerned.
8. General Provisions
8.1 All amounts of deferred Compensation under this plan shall remain at
all times the unrestricted assets of the Company and the promise to pay the
deferred amounts shall at all times remain unfunded as to the Participants. The
rights of Participants under the plan shall only be as general creditors of the
Company.
8.2 Any notice under this plan shall be in writing or by electronic means
and shall be received when actually delivered or, if mailed, when deposited
postpaid as first class mail. Mail
5
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should be directed to the Company at the address stated in this plan, to an
Executive at the address stated in the Executive's election, to a beneficiary
entitled to benefits at the address stated in the Executive's beneficiary
designation or to such other address as either party may specify by notice to
the other party.
8.3 The interests of an Executive or beneficiary under this plan are
personal and no such interest may be assigned, seized by legal process or in any
way subjected to the claims of any creditor. The foregoing limitation prohibits,
for example, any alienation, anticipation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment by creditors of a participant or a
participant's beneficiary.
9. Definition of Change of Control
For purposes of this plan, a "change in control of the Company" shall be deemed
to have occurred if:
(a) Any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20 percent or more of the combined voting
power of the Company's then outstanding securities;
(b) During any period of two consecutive years (not including any period
prior to the execution of this Agreement), individuals who at the beginning of
such period constitute the Board of Directors of the Company (the Board), and
any new director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in
clause (a), (c) or (d) of this Section) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority thereof;
(c) The stockholders of the Company approve a merger or consolidation of the
Company with any other company, other than (1) a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than
50 percent of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as hereinabove defined) acquires more than 20 percent of the combined voting
power of the Company's then outstanding securities; or
(d) The stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
6
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10. Effective Date
This plan shall be effective January 1, 1995.
PRECISION CASTPARTS CORP.
By
/s/ R. M. MARVIN
--------------------------------------------------------------------------------
Executed: December 5, 1994
AMENDMENT NO. 1 EXECUTED AS FOLLOWS EFFECTIVE JANUARY 1, 1995:
Adopted : March 24, 1995
PRECISION CASTPARTS CORP.
By
/s/ R. M. MARVIN
--------------------------------------------------------------------------------
Executed: March 24, 1995
AMENDMENT NO. 2 EXECUTED AS FOLLOWS EFFECTIVE OCTOBER 1, 1995:
PRECISION CASTPARTS CORP.
By
/s/ WILLIAM D. LARSSON
--------------------------------------------------------------------------------
Executed: October 16, 1995
AMENDMENT NO. 3 EXECUTED AS FOLLOWS EFFECTIVE JANUARY 1, 1995:
PRECISION CASTPARTS CORP.
By
/s/ WILLIAM D. LARSSON
--------------------------------------------------------------------------------
William D. Larsson
Executed: March 20, 1996
AMENDMENT NO. 4 EXECUTED AS FOLLOWS EFFECTIVE JANUARY 1, 1998:
Company
PRECISION CASTPARTS CORP.
By
/s/ W. C. MCCORMICK
--------------------------------------------------------------------------------
Executed: December 3, 1997
7
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QuickLinks
EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
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EXHIBIT 10.15
AMENDMENT NO. 4 TO OPTION AGREEMENT II
* Confidential Treatment Requested: Portions of this document have been omitted
and filed separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment.
This Amendment No. 4 to Option Agreement II (the "Amendment No. 4") is
effective as of March 1, 2001 (the "Effective Date") by and between Adaptec
Manufacturing (S) Pte. Ltd., a company organized under the laws of Singapore,
with its current registered address at 6 Battery Road, 532-00, Singapore 049909
("Customer"), and Taiwan Semiconductor Manufacturing Co., Ltd., a company
organized under the laws of the Republic of China, with its registered address
at No. 121, Park Avenue 3, Science-Based Industrial Park, Hsin-Chu, Taiwan,
Republic of China ("TSMC"), for the purpose of amending the Option Agreement II
entered into by Customer and TSMC on October 23, 1995 (the "Option Agreement
II") as follows:
1.Replace Section 20 from Amendment No. 4 with the following:
"Section 20 Non-Publicity
(a) No publicity or information regarding the existence or contents of this
Agreement shall be given or released by either party in any case, other than as
required by law. In the event that any applicable law or regulation requires the
disclosure of this Agreement, the disclosing party must provide details of the
disclosure request prior to submission of such information to the requesting
authority.
(b) The exchange of information by either party for the purposes of review of
the contents prior to disclosure as described in the foregoing Section 20(a)
will be handled directly by the TSMC and Customer representatives responsible
for official company communications and public relations:
For TSMC
Name:
Rick Tsai Title: Executive Vice President, Worldwide Marketing and Sales
Address: No. 121, Park Avenue 3, Science-Based Industrial Park, Hsin-Chu,
Taiwan, Republic of China
Telephone No:
011-886-3-578-0221 Fax No: 011-886-3-578-1545
CC to:
Name:
David Keller Title: Vice President, Business Management, TSMC North
America Address: 2585 Junction Avenue, San Jose, CA 95134, USA
Telephone No: 408-382-8068 Fax No: 408-382-8008
For Customer
Name:
Dolores Marciel Title: Vice President of Worldwide Materials,
Adaptec, Inc. Address: 691 South Milpitas Boulevard, Milpitas, CA95035,
USA Telephone No: 408-945-8600 Fax No: 408-957-8227
(c) In the event that either party breaches Section 20(a) of this Agreement,
the non-breaching party may terminate this Agreement immediately with a 180 days
written notice to the breaching party pursuant to Section 7(c) of this
Agreement."
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2.Replace Exhibits B and D with the new Exhibits B and D attached hereto.
3.All the other terms and conditions of the Option Agreement II and prior
Amendments, shall remain unchanged to the extent not in conflict with the terms
and conditions in this Amendment No. 4.
Taiwan Semiconductor
Manufacturing Co., Ltd. Adaptec Manufacturing (S) Pte. Ltd.
/s/ RICK TSAI
--------------------------------------------------------------------------------
Name: Rick Tsai
Title: Executive Vice President
/s/ DOLORES MARCIEL
--------------------------------------------------------------------------------
Name: Dolores Marciel
Title: Vice President of Worldwide Materials Worldwide Marketing & Sales
--------------------------------------------------------------------------------
Exhibit B
CUSTOMER/TSMC COMMITTED CAPACITY
Unit: K 6" Wafer Equivalent
2001
--------------------------------------------------------------------------------
2002
--------------------------------------------------------------------------------
2003
--------------------------------------------------------------------------------
2004
--------------------------------------------------------------------------------
Base Capacity
(For Options) [*] [*] [*] [*]
X% of Base Capacity
[*]
[*]
[*]
[*]
Option
[*]
[*]
[*]
[*]
TSMC Committed Capacity
(Base Capacity + Option Capacity)
[*]
[*]
[*]
[*]
Customer Committed Capacity
(X% Base Capacity + Option Capacity)
[*]
[*]
[*]
[*]
Option Capacity [*] wafers times US $[*] per wafer = US $8.4 Million for 2001
Option Capacity [*] wafers times US $[*] per wafer = US $8.4 Million for 2002
Option Capacity [*] wafers times US $[*] per wafer = US $20 Million for years
2003 and 2004
[*] Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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Exhibit D
OPTION FEE
Year
--------------------------------------------------------------------------------
Option Capacity
(Unit: Wafer Equivalent)
--------------------------------------------------------------------------------
Option Fee
(Unit: US$)
--------------------------------------------------------------------------------
Due Date
--------------------------------------------------------------------------------
2000 [*] $8.4M Paid 2001 [*] $8.4M Paid 2002 [*] $8.4M Paid
2003 [*] $10M Paid 2004 [*] $10M Paid
[*] Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
--------------------------------------------------------------------------------
QuickLinks
EXHIBIT 10.15
AMENDMENT NO. 4 TO OPTION AGREEMENT II
Exhibit B
Exhibit D
|
Exhibit 10.1
META Group, Inc./JMI Long Term Incentive Compensation Plan
Waiver and Release Agreement
Background
I understand that (i) META Group, Inc., a Delaware corporation
(“META” or the “Company”), plans to terminate the META Group, Inc./JMI Long Term
Incentive Compensation Plan (the “Plan”) pursuant Section VI.E of the Plan; (ii)
META plans to sell its entire partnership interest in all JMI Funds; and (iii)
the termination of the Plan and sale by META of its partnership interest in all
JMI Funds adversely affects my unvested ownership interest in and to all Units
granted to me under the Plan. Based on these express understandings, I hereby
consent to the termination of my interest and rights in and to all Units that I
have been granted pursuant to the Plan, all of which are unvested, effective as
of the date below (the “Effective Date”). All capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Plan.
Grant of Stock Options
In consideration for executing this Waiver and Release Agreement
(the “Agreement”) and subject to approval of the Company’s Board of Directors,
META will grant to me an option to purchase that number of shares of the
Company’s common stock, par value $.01 per share (“Common Stock”) equal to the
number of Units previously granted to and currently held by me multiplied by
1,000 (one thousand). The purchase price for a share of Common Stock subject to
such option shall be equal to the fair market value of one share of Common Stock
at the close of business on the date of the grant (the “Exercise Price”). The
options will be subject to the terms and conditions of the Company’s Amended and
Restated 1995 Stock Plan (the “Stock Option Plan”) and the Company’s standard
Incentive Stock Option Agreement or Non-Qualified Stock Option Agreement, as
applicable, between the Company and me. One-third of such options shall be
vested on the date of grant, another one-third shall vest on the date which is 6
months from the grant date and the final one-third shall vest on the date which
is the one year anniversary date of the grant date (in the latter two cases,
subject to continued employment with the Company). To the maximum extent
possible, such options shall be intended to qualify as “incentive stock options”
under Section 422 of the Internal Revenue Code of 1986, as amended.
Release
In consideration for META’s stock option grant to me as described
above, I and my representatives, agents, estate, heirs, successors and assigns
absolutely and unconditionally hereby voluntarily release, discharge, disclaim,
waive, indemnify and hold harmless META and its parents, subsidiaries or
affiliates, predecessors, successors or assigns, and its and their respective
current and/or former partners, directors, trustees, investors,
shareholders/stockholders, officers, employees, attorneys and/or agents, all
both individually and in their official capacities, from any and all actions,
claims, rights, liabilities or damages, whether existing or contingent, known or
unknown, that arise from and/or are related to the Plan, the termination of such
Plan and/or the termination of my interest and rights in and to all Units that I
have been granted pursuant to the Plan.
Documentation Provided
Additionally, I hereby acknowledge receipt of the following
documentation provided to me in connection with my execution of this Agreement,
each of which is attached as an exhibit to this Agreement:
• the Plan (Exhibit A), • the Stock Option Plan (Exhibit B), • the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (Exhibit
C), • the Company’s Definitive Proxy Statement on Schedule 14A for the Annual
Meeting of Stockholders to be held in May 2001 (Exhibit D), • Limited
Partnership Agreement of JMI Equity Side Fund, L.P. dated as of July 31, 1998
(Exhibit E), • Confidential Memorandum dated June 1998 for JMI Equity Side Fund,
L.P. and Confidential Offering Memorandum for JMI Equity Fund III, L.P. (Exhibit
F), • the JMI Equity Side Fund, L.P. financial statements and schedule for the
twelve months ended December 31, 2000 and 1999 (with independent auditors report
thereon) (Exhibit G), • the JMI Equity Side Fund, L.P. Portfolio Review as of
December 31, 2000 (Exhibit H) and • the JMI Equity Side Fund, L.P. Portfolio
Review Schedule as of March 31, 2001 (Exhibit I).
I acknowledge that I have thoroughly read and understand the above
documentation and have had a sufficient amount of time and opportunity to
consider these materials and ask questions of META management about them in
connection with my execution of this Agreement.
Opportunity to Ask Questions
I also acknowledge that I have had an opportunity to discuss the
Company’s business, management and financial affairs with directors, officers
and management of the Company. I have also had the opportunity to ask questions
of and receive answers from, the Company and its management regarding the terms
and conditions of this Waiver Agreement and Release and the subject matter
hereof (namely the termination of the Plan, the termination of my Units and the
granting of stock options in the Company) and the business and operations of the
Company.
I further acknowledge that I have had an opportunity to discuss the
business, management, prospects and financial affairs of the JMI Funds with
representatives of management of the JMI Funds. I have also had the opportunity
to ask questions of and receive answers from, such JMI Funds representatives
regarding the terms and conditions of this Waiver Agreement and Release and the
subject matter hereof (namely the historical and prospective financial
performance and direct and indirect portfolio holdings of the JMI Funds).
Miscellaneous
I understand that I and the other Participants under the Plan are
the only persons who are eligible to execute a form of this Agreement. I
acknowledge that the terms hereof were made pursuant to arms’ length good faith
negotiation among the parties. I further understand that the effectiveness of
this Agreement is not contingent on any other Participant signing a form of this
Agreement.
No commission or other remuneration is being paid or given directly
or indirectly in connection with soliciting the transactions contemplated by
this Agreement.
Each Participant is urged, at his or her own expense, to consult
with and rely on his or her own advisors with respect to the individual
consequences – tax, legal and otherwise – to him or her of entering into this
Agreement. I understand and acknowledge that Testa, Hurwitz & Thibeault, LLP
represents META and the JMI Funds, and not me.
I acknowledge and agree that I have received the advice of
independent counsel in connection with this Agreement (or I have independently
and of my own free-will decided not to obtain such advice). I acknowledge that
I have reviewed the terms of this Agreement (with independent counsel if I have
so chosen to do so), and that I am not relying upon any other party concerning
this Agreement. I hereby represent and acknowledge that I have made this
Agreement, including the release stated herein, of my own free will and accord,
and in accordance with my own judgment upon advice of my own legal counsel (if
applicable), and state that I have not been induced to enter into this Agreement
by any statement, act or representation of any kind or character on the part of
anyone (other than my own counsel, if applicable).
This Agreement shall be interpreted, construed and enforced in
accordance with the substantive laws of the State of Connecticut without regard
to its principles of conflict of laws.
This Agreement and the Plan set forth the complete and sole
agreement between the parties regarding my agreement to terminate and waive all
rights I have in and to any Units, and supersedes any and all other agreements
or understandings regarding this specific subject matter, whether written or
oral, express or implied.
I intend this Agreement to constitute my consent pursuant to the
last sentence of Section VI.E. of the Plan.
--------------------------------------------------------------------------------
Signature
--------------------------------------------------------------------------------
Print Name
--------------------------------------------------------------------------------
Date Agreed and accepted to
as of the date written above: META GROUP, INC. By:
--------------------------------------------------------------------------------
Name: Title:
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EXHIBIT 10.24
[HEARME LETTERHEAD]
September 10, 2001
Michael Cottle
HearMe
Dear Mike,
This letter documents decisions made by the HearMe Board of Directors with
regard to your compensation during this challenging period of shutting down the
Company. The goal of the Board of Directors is two-fold: 1) to retain you as the
best person for the job of product sale and customer liability reduction in the
hopes of providing the best possible return to the shareholders, and 2) to
provide you an incentive to maximize the return to shareholders.
The provisions of this agreement are as follows:
•Your $50,000 retention bonus, reflected in the letter agreement between you and
HearMe dated June 19, 2001 (the "June Letter"), will be paid out in
15 increments (subject to applicable tax withholding) on a weekly basis
beginning August 24, 2001. This means that this bonus, rather than being payable
in full based upon your remaining an employee in good standing with HearMe
through November 30, 2001, will become payable incrementally as described in the
preceding sentence assuming you remain an employee in good standing on each
successive payment date. As stated in the June Letter, you will be entitled to
the full amount of this bonus if (1) the Company undergoes a Change of Control
(as defined in the June Letter) that closes prior to November 30, 2001 (in which
case, you will receive any then-unpaid portion on the closing date of such
transaction), or (2) the Company terminates your employment without Cause (as
defined in the June Letter) prior to November 30, 2001 (in which case, you will
receive any then-unpaid portion on the last day of your employment). If your
employment terminates prior to November 30, 2001 under any circumstances other
than the Company's terminating your employment without Cause, you will forfeit
any portion of the bonus that remains unpaid following the final date of your
employment.
•You will be entitled to an additional cash bonus (which will be subject to
applicable taxes and withholding) to be paid from the total cash in excess of
$1.5 Million available for distribution to stockholders in connection with the
liquidation of HearMe pursuant to Plan of Liquidation and Dissolution approved
by the HearMe Board on August 10, 2001 (the "Liquidation"), after all
obligations of the Company are met (the "Distributable Excess Assets"). Your
bonus will equal to 5% of the Distributable Excess Assets and payment of this
bonus (or proportionate amounts of this bonus) will be made to you at the same
time distributions from the Distributable Excess Assets are made to the
stockholders. If your employment terminates prior to any distribution date
related to the Liquidation under any circumstances other than the Company's
terminating your employment without Cause, you will forfeit any portion of this
bonus relating to distributions following the final date of your employment. If
the Company terminates your employment without Cause (including, but not limited
to, in connection with the retention of a liquidation management company or the
transfer of the Company's assets to a liquidating trust), you will continue to
be entitled to the proportionate amount of this bonus on each distribution date
related to the Liquidation. To the extent it is necessary to make any
determination as to the amount of the Distributable Excess Assets, the Board of
Directors or its Compensation Committee will make such determination in good
faith and such determination will be binding upon you.
•By way of example, pursuant to the foregoing paragraph, if an aggregate of
$5,000,000 were available for distribution to stockholders pursuant to the
Liquidation, then (i) the stockholders would receive the initial $1,500,000,
(ii) the Distributable Excess Assets would equal $3,500,000,
--------------------------------------------------------------------------------
(iii) you would receive a bonus (less applicable withholding) of $175,000 and
(iv) the stockholders would receive the remaining Distributable Excess Assets
after payment of all similar bonus payments.
You understand that your employment continues at all times to be on an
at-will basis.
Mike, I personally want to thank you for your commitment and dedication to
your tasks. Throughout your time with HearMe you have consistently demonstrated
an ability to perform effectively in the most challenging of situations.
Sincerely,
/s/ JAMES SCHMIDT
10-SEP-2001
James Schmidt
CEO
AGREED TO AND ACCEPTED:
/s/ MICHAEL COTTLE
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Michael Cottle
9/10/01
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Date
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|
ALLIANCE CAPITAL MANAGEMENT L.P.
UNIT OPTION PLAN AGREEMENT
AGREEMENT, dated June 20, 2000 between Alliance Capital Management
L.P. (the "Partnership"), Alliance Capital Management Holding L.P. (“Alliance
Holding”) and David R. Brewer, Jr. (the "Participant"), an employee of the
Partnership or a subsidiary of the Partnership (an "Employee Participant").
The 1997 Option Committee (the "Administrator") of the Board of the
Board of Directors (the “Board”) of Alliance Capital Management Corporation, the
general partner of the Partnership and Alliance Holding, pursuant to the
Alliance Capital Management L.P. 1997 Long Term Incentive Plan, a copy of which
has been delivered to the Participant (the "Plan"), has granted to the
Participant an option to purchase units representing assignments of beneficial
ownership of limited partnership interests in Alliance Holding (the "Units") as
hereinafter set forth, and authorized the execution and delivery of this
Agreement.
In accordance with that grant, and as a condition thereto, the
Partnership, Alliance Holding and the Participant agree as follows:
1. Grant of Option. Subject to and under the terms and
conditions set forth in this Agreement and the Plan, the Participant is the
owner of an option (the "Option") to purchase the number of Units set forth in
Section 1 of Exhibit A attached hereto at the per Unit price set forth in
Section 2 of Exhibit A.
2. Term and Exercise Schedule. This Option shall not be
exercisable to any extent prior to June 20, 2001 or after June 20, 2010 (the
"Expiration Date"). Subject to the terms and conditions of this Agreement and
the Plan, the Participant shall be entitled to exercise the Option prior to the
Expiration Date and to purchase Units hereunder in accordance with the schedule
set forth in Section 3 of Exhibit A.
The right to exercise this Option shall be cumulative so that to the
extent this Option is not exercised when it becomes initially exercisable with
respect to any Units, it shall be exercisable with respect to such Units at any
time thereafter until the Expiration Date and any Units subject to this Option
which have not then been purchased may not, thereafter, be purchased
hereunder. A Unit shall be considered to have been purchased on or before the
Expiration Date if notice of the purchase has been given and payment therefor
has actually been received pursuant to Sections 3 and 13, on or before the
Expiration Date.
3. Notice of Exercise, Payment and Certificate. Exercise of
this Option, in whole or in part, shall be by delivery of a written notice to
the Partnership and Alliance Holding pursuant to Section 14 which specifies the
number of Units being purchased and is accompanied by payment therefor in cash.
Promptly after receipt of such notice and purchase price, the Partnership and
Alliance Holding shall deliver to the person exercising the Option a certificate
for the number of Units purchased. Units to be issued upon the exercise of this
Option may be either authorized and unissued Units or Units which have been
reacquired by the Partnership, a subsidiary of the Partnership, Alliance Holding
or a subsidiary of Alliance Holding.
4. Termination of Employment. This Option may be exercised by
an Employee Participant only while the Employee Participant is employed
full-time by the Partnership, except as follows:
(a) Disability. If the Employee Participant's
employment with the Partnership terminates because of Disability, the Employee
Participant (or his personal representative) shall have the right to exercise
this Option, to the extent that the Employee Participant was entitled to do so
on the date of termination of his employment, for a period which ends not later
than the earlier of (i) three months after such termination, and (ii) the
Expiration Date. "Disability" shall mean a determination by the Administrator
that the Employee Participant is physically or mentally incapacitated and has
been unable for a period of six consecutive months to perform the duties for
which he was responsible immediately before the onset of his incapacity. In
order to assist the Administrator in making a determination as to the
Disability of the Employee Participant for purposes of this paragraph (a), the
Employee Participant shall, as reasonably requested by the Administrator, (A)
make himself available for medical examinations by one or more physicians chosen
by the Administrator and approved by the Employee Participant, whose approval
shall not unreasonably be withheld, and (B) grant the Administrator and any
such physicians access to all relevant medical information concerning him,
arrange to furnish copies of medical records to them, and use his best efforts
to cause his own physicians to be available to discuss his health with them.
(b) Death. If the Employee Participant dies (i) while
in the employ of the Partnership, or (ii) within one month after termination of
his employment with the Partnership because of Disability (as determined in
accordance with paragraph (a) above), or (iii) within one month after the
Partnership terminates his employment for any reason other than for Cause (as
determined in accordance with paragraph (c) below), this Option may be
exercised, to the extent that the Employee Participant was entitled to do so on
the date of his death, by the person or persons to whom the Option shall have
been transferred by will or by the laws of descent and distribution, for a
period which ends not later than the earlier of (A) six months from the date of
the Employee Participant's death, and (B) the Expiration Date.
(c) Other Termination. If the Partnership terminates
the Employee Participant's employment for any reason other than death,
Disability or for Cause, the Employee Participant shall have the right to
exercise this Option, to the extent that he was entitled to do so on the date of
the termination of his employment, for a period which ends not later than the
earlier of (i) three months after such termination, and (ii) the Expiration
Date. "Cause" shall mean (A) the Employee Participant's continuing willful
failure to perform his duties as an employee (other than as a result of his
total or partial incapacity due to physical or mental illness), (B) gross
negligence or malfeasance in the performance of the Employee Participant's
duties, (c) a finding by a court or other governmental body with proper
jurisdiction that an act or acts by the Employee Participant constitutes (1) a
felony under the laws of the United States or any state thereof (or, if the
Employee Participant's place of employment is outside of the United States, a
serious crime under the laws of the foreign jurisdiction where he is employed,
which crime if committed in the United States would be a felony under the laws
of the United States or the laws of New York), or (2) a violation of federal or
state securities law (or, if the Employee Participant's place of employment is
outside of the United States, of federal, state or foreign securities law) by
reason of which finding of violation described in this clause (2) the Board
determines in good faith that the continued employment of the Employee
Participant by the Partnership would be seriously detrimental to the Partnership
and its business, (D) in the absence of such a finding by a court or other
governmental body with proper jurisdiction, such a determination in good faith
by the Board by reason of such act or acts constituting such a felony, serious
crime or violation, or (E) any breach by the Employee Participant of any
obligation of confidentiality or non-competition to the Partnership.
For purposes of this Agreement, employment by a subsidiary of the
Partnership shall be deemed to be employment by the Partnership. A "subsidiary"
of the Partnership shall be any corporation or other entity of which the
Partnership and/or its subsidiaries (a) have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of its
board of directors, or (b) otherwise have the power to direct or cause the
direction of its management and policies.
5. No Right to Continued Employment. This Option shall not
confer upon the Participant any right to continue in the employ of the
Partnership or any subsidiary of the Partnership or to be retained as a
Director, and shall not interfere in any way with the right of the Partnership
to terminate the service of the Participant at any time for any reason.
6. Non-Transferability. This Option is not transferable other
than by will or the laws of descent and distribution and, except as otherwise
provided in Section 4, during the lifetime of the Participant this Option is
exercisable only by the Participant; except that a Participant may transfer this
Option, without consideration, subject to such rules as the Committee may adopt
to preserve the purposes of the Plan (including limiting such transfers to
transfers by Participants who are senior executives), to a trust solely for the
benefit of the Participant and the Participant's spouse, children or
grandchildren (including adopted and stepchildren and grandchildren) (each a
"Permitted Transferee").
7. Payment of Withholding Tax. (a) In the event that the
Partnership or Alliance Holding determines that any federal, state or local tax
or any other charge is required by law to be withheld with respect to the
exercise of this Option, the Participant shall promptly pay to the Partnership,
a subsidiary specified by the Partnership or Alliance Holding, on at least seven
business days' notice, an amount equal to such withholding tax or charge or (b)
if the Participant does not promptly so pay the entire amount of such
withholding tax or charge in accordance with such notice, or make arrangements
satisfactory to the Partnership and Alliance Holding regarding payment thereof,
the Partnership or any subsidiary of the Partnership may withhold the remaining
amount thereof from any amount due the Participant from the Partnership or the
subsidiary.
8. Dilution and Other Adjustments. The existence of this Option
shall not impair the right of the Partnership or Alliance Holding or their
respective partners to, among other things, conduct, make or effect any change
in the Partnership's or Alliance Holding’s business, any distribution (whether
in the form of cash, limited partnership interests, other securities or other
property), recapitalization (including, without limitation, any subdivision or
combination of limited partnership interests), reorganization, consolidation,
combination, repurchase or exchange of limited partnership interests or other
securities of the Partnership or Alliance Holding, issuance of warrants or other
rights to purchase limited partnership interests or other securities of the
Partnership or Alliance Holding, or any incorporation of the Partnership or
Alliance Holding. In the event of such a change in the partnership interests of
the Partnership or Alliance Holding, the Board shall make such adjustments to
this Option, including the purchase price specified in Section 1, as it deems
appropriate and equitable. In the event of incorporation of the Partnership
or Alliance Holding, the Board shall make such arrangements as it deems
appropriate and equitable with respect to this Option for the Participant to
purchase stock in the resulting corporation in place of the Units subject to
this Option. Any such adjustment or arrangement may provide for the
elimination of any fractional Unit or shares of stock which might otherwise
become subject to this Option. Any decision by the Board under this Section
shall be final and binding upon the Participant.
9. Rights as an Owner of a Unit. The Participant (or a
transferee of this Option pursuant to Sections 4 and 6) shall have no rights as
an owner of a Unit with respect to any Unit covered by this Option until he
becomes the holder of record of such Unit, which shall be deemed to occur at the
time that notice of purchase is given and payment in full is received under
Section 3 and 13. By such actions, the Participant (or such transferee) shall
be deemed to have consented to, and agreed to be bound by, all other terms,
conditions, rights and obligations set forth in the then current Amended and
Restated Agreement of Limited Partnership of Alliance Holding, and the
thencurrent Amended and Restated Agreement of Limited Partnership of the
Partnership. Except as provided in Section 9, no adjustment shall be made with
respect to any Unit for any distribution for which the record date is prior to
the date on which the Participant becomes the holder of record of the Unit,
regardless of whether the distribution is ordinary or extraordinary, in cash,
securities or other property, or of any other rights.
10. Administrator. If at any time there shall be no 1997 Option
Committee of the Board, the Board shall be the Administrator.
11. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
12. Interpretation. The Participant accepts this Option subject
to all the terms and provisions of the Plan, which shall control in the event of
any conflict between any provision of the Plan and this Agreement, and accepts
as binding, conclusive and final all decisions or interpretations of the Board
or the Administrator upon any questions arising under the Plan and/or this
Agreement.
13. Notices. Any notice under this Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Partnership, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, in the
case of Alliance Holding, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if
Alliance Holding should move its principal office, to such principal office,
and, in the case of the Participant, to his last permanent address as shown on
the Partnership's records, subject to the right of either party to designate
some other address at any time hereafter in a notice satisfying the requirements
of this Section.
14. Sections and Headings. All section references in
this Agreement are to sections hereof for convenience of reference only and are
not to affect the meaning of any provision of this Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation, its General Partner By: /s/
John D. Carifa
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John D. Carifa President
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.
By: Alliance Capital Management Corporation, its General Partner By: /s/
John D. Carifa
--------------------------------------------------------------------------------
John D. Carifa President /s/ David R. Brewer, Jr.
--------------------------------------------------------------------------------
David R. Brewer, Jr.
Exhibit A To Unit Option Plan Agreement Dated June 20, 2000
between Alliance Capital Management L.P.,
Alliance Capital Management Holding L.P. and David R. Brewer, Jr.
1. The number of Units that the Participant is entitled to purchase pursuant to
the Option granted under this Agreement is 50,000. 2. The per Unit price to
purchase Units pursuant to the Option granted under this Agreement is $48.50 per
Unit. 3. Percentage of Units With Respect to Which the Option First
Becomes Exercisable on the Date Indicated
--------------------------------------------------------------------------------
1. June 20, 2001 20% 2. June 20, 2002 20% 3. June 20, 2003 20% 4.
June 20, 2004 20% 5. June 20, 2005 20%
|
* IMPORTANT NOTE: CERTAIN MATERIAL, INDICATED BY AN ASTERISK ("*"), HAS
BEEN
OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Execution Copy
FIRST AMENDMENT AGREEMENT
THIS FIRST AMENDMENT AGREEMENT (this "Amendment"), dated as of February
26, 2001, is made between Pathnet Operating, Inc., a Delaware corporation
("Borrower") and Cisco Systems Capital Corporation , a Nevada corporation
("Lender").
Borrower and Lender are parties to an Agreement dated as of September
7, 2000 (the "Credit Agreement"). Borrower has requested that Lender provide
certain additional financing constituting Eligible Secured Debt. Lender has
agreed to such request, subject to the terms and conditions hereof.
Accordingly, the parties hereto agree as follows:
SECTION 1 Definitions; Interpretation.
(a) Terms Defined in Credit Agreement. All capitalized terms
used in this Amendment (including in the recitals hereof) and not otherwise
defined herein shall have the meanings assigned to them in the Credit Agreement.
(b) Interpretation. The rules of interpretation set forth in
Section 1.2 of the Credit Agreement shall be applicable to this Amendment and
are incorporated herein by this reference.
SECTION 2 Amendments to the Credit Agreement.
(a) Amendments. The Credit Agreement shall be amended as follows,
effective as of the date of satisfaction of the conditions set forth in Section
4 (the “Effective Date”):
(i) The preamble to the Credit Agreement is hereby
amended by replacing the reference therein to "$50,000,000" with a reference to
"$95,000,000".
(ii) Section 1.1 of the Credit Agreement is hereby
amended by adding the following definition thereto in alphabetical order:
"Availability Period" has the meaning set forth in the
Schedule."
"First Amendment Effective Date" means the "Effective Date" as
that terms in defined in that certain First Amendment Agreement dated as of
February 26, 2001 between Borrower and Lender.”
(iii) The preamble to the Schedule is hereby amended by
striking the reference to "Pathnet Telecommunications, Inc." contained therein.
(iv) Section 1(a) of the Schedule is hereby amended by deleting
current Section 1(a) in its entirety and replacing such Section with the
following:
"(a) Availability Period:
(i) Up to $60,000,000 ("Tranche A") shall be available from the
Closing Date through the second anniversary of the Closing Date (the "Commitment
Expiry Date").
(ii) Up to $10,000,000 ("Tranche B") shall be available from
the Closing Date through the Commitment Expiry Date.
(iii) Up to $25,000,000 shall be available as follows: (A)
$8,500,000 from February 28, 2001 through March 31, 2001 (“Tranche C1”) and (B)
$16,500,000 from the First Amendment Effective Date through the Commitment
Expiry Date (“Tranche C2”) (Tranche C1 and Tranche C2 shall be collectively
referred to as “Tranche C”).
A tranche becomes available hereunder on the first Banking Day that
Loans under such tranche are available to the Borrower under this Section 1(a).
The period from the Closing Date through the Commitment Expiry Date shall be
referred to herein as the "Availability Period"."
(v) Section 1(c) of the Schedule is hereby amended by deleting
the reference to "$50,000,000" contained therein and replacing such reference
with a reference to "$95,000,000".
(vi) Section 1(g) of the Schedule is hereby amended by adding a
new Section 1(g)(iii) to read in full as follows:
"(iii) Conditions Precedent to Additional Loans: The following
conditions precedent shall be satisfied on or prior to each borrowing of
Additional Loans: (A) no “Default” or “Event of Default” (as such terms are
defined in the Financing Documents) shall have occurred and be continuing under
the Financing Documents on the date of such borrowing and (B) Borrower shall be
in compliance with each of the financial covenants set forth in the Financing
Documents determined on a pro forma basis as of the last day of the most
recently ended fiscal quarter of Borrower for which financial statements are
available as though the relevant borrowing of Additional Loans had been incurred
on the last day of such fiscal quarter for testing compliance with each such
covenant before and after the effect of such incurrence.
For purposes of this Section 1(g)(iii), the term "Additional
Loans" shall mean each of the following: (A) the last $20,000,000 of Loans under
Tranche A and (B) all Loans under Tranche C.
(iv) Conditions Precedent to Tranche C1: The following
conditions precedent shall be satisfied on or prior to the borrowing under
Tranche C1: (A) Borrower shall have presented evidence in form and substance
reasonably satisfactory to Lender that Holdings and/or PNI have retained an
advisor to assist in the restructuring of the PNI Senior Notes and that Holdings
and/or PNI have held at least one meeting with representatives of a significant
portion of the holders of the PNI Senior Notes to discuss a restructuring of
such notes, (B) Borrower shall have presented evidence in form and substance
reasonably satisfactory to Lender that Holdings or Borrower has held at least
one meeting with a credible equity source and (C) Borrower shall present
evidence in form and substance reasonably satisfactory to Lender that it will
have a pro forma positive cash balance for the month of February, 2001 after
giving effect to the borrowing under Tranche C1.
(v) Conditions Precedent to Tranche C2: (A) The following
conditions precedent shall be satisfied on or prior to the first borrowing of
Loans under Tranche C2: (1) Holdings and PNI shall have completed a
restructuring of the PNI Senior Notes in form and substance reasonably
satisfactory to Lender, (2) Borrower shall have received at least $100,000,000
in cash equity on or after the First Amendment Effective Date from one or more
equity investors (whether directly from such equity investors or indirectly as
an equity contribution from Holdings) and (3) Borrower shall have paid an
availability fee in the amount of “*” to Lender. (B) In addition, prior to each
borrowing of Loans under Tranche C2, Borrower shall present evidence in form and
substance reasonably satisfactory to Lender that it will have a pro forma
positive cash balance during any month in which a borrowing under Tranche C2
occurs after giving effect to all borrowings under Tranche C2 for such month
(including the borrowing for which such evidence is presented).”
(vii) Section 2(a) of the Schedule is hereby amended by
deleting the current Section 2(a) in its entirety and replacing such Section
with the following:
"(a) Use of Proceeds: Up to $60,000,000 under Tranche A for the
financing of Borrower’s purchase of Cisco Systems networking and
telecommunications equipment and services from the Vendor thereof; provided that
proceeds from Loans made under Tranche A may be used for the financing of Cisco
Systems networking and telecommunications equipment and services purchased by
Borrower on or after April 24, 2000; provided, further, that with respect to the
last $20,000,000 of availability under Tranche A, such Cisco Systems networking
and telecommunications equipment and services shall be purchased only from Cisco
Systems and only $3,000,000 shall be used to purchase Cisco Systems networking
and telecommunications services without the Lender’s prior written consent; up
to $10,000,000 under Tranche B for the financing of any costs incurred by the
Borrower for hardware or other goods and services associated with the
integration and installation of Cisco Systems networking and telecommunications
equipment, but excluding any such costs for hardware, goods or services payable
to direct competitors of Cisco Systems; up to $25,000,000 under Tranche C for
the financing of Borrower’s acquisition, construction, installation or
improvement of capital assets that constitute part of the Collateral; provided
that the use of proceeds under Tranche C to finance any such acquisition,
construction, installation or improvement shall occur within 270 days of such
purchase, construction, installation or improvement, and shall not exceed 100%
of the aggregate cost of such acquisition, construction, installation or
improvement.”
(viii) Section 2(b) of the Schedule is hereby amended by
deleting the current Section 2(b) in its entirety and replacing such Section
with the following:
"(b) Note(s): Amended and Restated Promissory Note in
substantially the form of Exhibit C evidencing the Loans under Tranche A (the
“Tranche A Loans”); Promissory Note in the form of Exhibit D, evidencing the
Loans under Tranche B (the “Tranche B Loans”); and Promissory Note in the form
of Exhibit F, evidencing the Loans under Tranche C (the “Tranche C Loans”).”
(ix) Section 2(c) of the Schedule is hereby amended by deleting
the third paragraph thereto in its entirety and replacing such third paragraph
with the following:
"Except to the extent that any such prepayment is required to
be applied to a particular tranche, any such amounts received as a mandatory
prepayment of the Loans shall be applied first to the Tranche C Loans, second to
the Tranche B Loans and third to the Tranche A Loans.”
(x) Exhibit C to the Credit Agreement is hereby deleted in its
entirety and replaced with Exhibit A hereto.
(xi) A new Exhibit F shall be added to the Credit Agreement in
substantially the form of Exhibit B hereto.
(b) References Within Credit Agreement. Each reference in the Credit
Agreement to “this Agreement” and the words “hereof,” “herein,” “hereunder,” or
words of like import, shall mean and be a reference to the Credit Agreement as
amended by this Amendment.
SECTION 3 Fees. Borrower shall pay an amendment fee of "*" payable
on the date of this Amendment. Such amendment fee shall be fully earned upon
becoming due and payable, shall be non-refundable for any reason whatsoever and
shall be in addition to any other fee, cost or expense payable pursuant to the
Credit Agreement.
SECTION 4 Conditions of Effectiveness. The effectiveness of Section 2
of this Amendment shall be subject to the satisfaction of each of the following
conditions precedent:
(a) Fees and Expenses. Borrower shall have paid (i) all fees then due
in accordance with Section 3 and (ii) all invoiced costs and expenses then due
in accordance with Section 6(c).
(b) Closing Documents. Lender shall have received the following
additional Loan Documents and consents, in form and substance satisfactory to
it:
(i) an Amended and Restated Tranche A Note substantially in the form of
Exhibit A hereto executed by Borrower;
(ii) a Tranche C Note substantially in the form of Exhibit B hereto
executed by Borrower;
(iii) a "Permitted Obligations Designation" executed by Borrower and
each Guarantor;
(iv) a Perfection Certificate executed by Borrower;
(v) the consent of the Guarantors, substantially the form of Exhibit C
hereto executed by the Guarantors; and
(vi) the consent of the Creditor, substantially the form of Exhibit D
hereto executed by the Creditor.
(c) Additional Closing Documents and Actions. Lender shall have
received the following, in form and substance satisfactory to it:
(i) evidence that all (A) authorizations or approvals of any
Governmental Authority, and (B) approvals or consents of any other Person,
required in connection with the execution, delivery and performance of this
Amendment shall have been obtained;
(ii) a certificate of a senior officer of Borrower, stating that
(A) the representations and warranties contained in Section 5 are true and
correct on and as of the date of such certificate as though made on and as of
the Effective Date and (B) on and as of the Effective Date, after and giving
effect to the amendment of the Credit Agreement contemplated hereby, no Default
shall have occurred and be continuing; and
(iii) a certificate of the Secretary or Assistant Secretary of
Borrower, dated the Effective Date, certifying (A) copies of the Certificate of
Incorporation of Borrower, (B) copies of the Bylaws of Borrower, (C) copies of
the resolutions of the Board of Directors of Borrower authorizing the execution,
delivery and performance of this Amendment and (D) the incumbency, authority and
signatures of each officer of Borrower authorized to execute and deliver this
Amendment;
(d) Legal Opinions. Lender shall have received the opinion of counsel
to Loan Parties, dated the Effective Date, in form and substance satisfactory to
Lender.
(e) Material Adverse Change. On and as of the Effective Date, there
shall have occurred no Material Adverse Change since the date of this Amendment.
(f) Representations and Warranties; No Default. On the Effective Date,
after giving effect to the amendment of the Credit Agreement contemplated
hereby:
(i) the representations and warranties contained in Section 5 shall be
true and correct on and as of the Effective Date as though made on and as of
such date; and
(ii) no Default shall have occurred and be continuing.
(g) Additional Documents. Lender shall have received, in form and
substance satisfactory to it, such additional approvals, opinions, documents and
other information as Lender may reasonably request.
SECTION 5 Representations and Warranties. To induce Lender to enter
into this Amendment, Borrower hereby confirms and restates, as of the date
hereof, the representations and warranties made by it in Section 4.1 of the
Credit Agreement and in the other Loan Documents; provided that any
representations in Section 4.1 of the Credit Agreement made as of a certain date
only shall be true and correct as of such date. For the purposes of this
Section 5, (i) each reference in Section 4.1 of the Credit Agreement to “this
Agreement,” and the words “hereof,” “herein,” “hereunder,” or words of like
import in such Section, shall mean and be a reference to the Credit Agreement as
amended by this Amendment, and (ii) , clause (i) shall take into account any
amendments to any disclosures made in writing by Borrower and any Guarantor to
Lender after the Closing Date and approved by Lender.
SECTION 6 Release of Claims.
(a) Release of Claims. Effective on the First Amendment Effective Date,
each of Borrower, Holdings and any of their respective Subsidiaries and
Affiliates (collectively, the "Releasing Parties") hereby irrevocably releases
and forever discharges Lender and Cisco Systems and their successors, assigns,
agents, shareholders, directors, officers, employees, agents, attorneys, parent
corporations, subsidiary corporations, affiliated corporations, affiliates, and
each of them (collectively, the "Cisco Released Parties"), from any and all
claims, debts, liabilities, demands, offsets, obligations, costs, expenses,
actions and causes of action, whether sounding in contract or tort or otherwise,
of every nature and description, known and unknown, contingent or
non-contingent, which any of the Releasing Parties now has or at any time may
hold, by reason of any matter, cause or thing occurred, done, omitted or
suffered to be done (collectively, the "Cisco Released Claims") arising prior to
the date of this Amendment; provided, that the Cisco Released Claims shall not
include any claims against Cisco Systems, Inc. arising under the Cisco Purchase
Agreement or any invoices or purchase orders evidencing the purchase of Cisco
Products or services in connection with the use, manufacture or function of any
Cisco Products or services (including, but not limited to, any warranty claims
in connection therewith). For purposes of this Amendment, a Cisco Released Claim
shall be deemed to exist or arise before the date of this Amendment if it arises
from events, facts, conditions, circumstances or the conduct of any Cisco
Released Parties occurring on or before the date of this Amendment (even if the
damages caused by such events, facts, conditions, circumstances or conduct are
not suffered until after the date of this Amendment and even if the Cisco
Released Claim does not arise until such damages are suffered).
(b) Waiver of California Civil Code Section 1542. Each of Releasing
Parties hereby irrevocably waives the benefits of California Civil Code Section
1542 which provides: "A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of executing
the release, which known by him must have materially affected his settlement
with the debtor."
(c) Additional Waivers. EACH RELEASING PARTY FURTHER AGREES TO ASSUME
THE RISK OF ANY AND ALL UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD DEFENSES,
CLAIMS, CAUSES OF ACTION, CONTRACTS, LIABILITIES, INDEBTEDNESS AND OBLIGATIONS
WHICH ARE RELEASED, WAIVED AND DISCHARGED BY THIS AMENDMENT IN FAVOR OF ANY
CISCO RELEASED PARTY, AND HEREBY WAIVES AND RELINQUISHES ALL RIGHTS AND BENEFITS
WHICH IT MIGHT OTHERWISE HAVE UNDER THE AFOREMENTIONED SECTION 1542 OF THE
CALIFORNIA CIVIL CODE OR ANY SIMILAR LAW, TO THE EXTENT ANY SUCH LAW MAY BE
APPLICABLE, WITH REGARD TO THE RELEASE OF SUCH UNKNOWN, UNANTICIPATED OR
MISUNDERSTOOD DEFENSES, CLAIMS, CAUSES OF ACTION, CONTRACTS, LIABILITIES,
INDEBTEDNESS AND OBLIGATIONS RELEASED HEREUNDER. TO THE EXTENT (IF ANY) THAT
SUCH LAWS MAY BE APPLICABLE, EACH RELEASING PARTY WAIVES AND RELEASES (TO THE
MAXIMUM EXTENT PERMITTED BY LAW) ANY RIGHT OR DEFENSE WHICH IT MIGHT OTHERWISE
HAVE UNDER ANY OTHER LAW OF ANY APPLICABLE JURISDICTION WHICH MIGHT LIMIT OR
RESTRICT THE EFFECTIVENESS OR SCOPE OF ANY OF ITS WAIVERS OR RELEASES UNDER THIS
AMENDMENT.
(d) No Prosecution of Released Claims. Each of the Releasing Parties
agrees that, from and after the First Amendment Effective Date, it shall not
commence or prosecute any action, suit, litigation or proceeding against any
Cisco Released Party to collect or enforce any Cisco Released Claim.
SECTION 7 Miscellaneous.
(a) Credit Agreement Otherwise Not Affected. Except as expressly
amended pursuant hereto, the Credit Agreement shall remain unchanged and in full
force and effect and is hereby ratified and confirmed in all respects. Lender’s
execution and delivery of, or acceptance of, this Amendment and any other
documents and instruments in connection herewith (collectively, the “Amendment
Documents”) shall not be deemed to create a course of dealing or otherwise
create any express or implied duty by it to provide any other or further
amendments, consents or waivers in the future.
(b) No Reliance. Borrower hereby acknowledges and confirms to Lender
that Borrower is executing this Amendment and the other Amendment Documents on
the basis of its own investigation and for its own reasons without reliance upon
any agreement, representation, understanding or communication by or on behalf of
any other Person.
(c) Costs and Expenses. Borrower agrees to pay to Lender on demand the
reasonable out-of-pocket costs and expenses of Lender, and the reasonable fees
and disbursements of counsel to Lender, in connection with the negotiation,
preparation, execution and delivery of this Amendment and any other documents to
be delivered in connection herewith.
(d) Binding Effect. This Amendment shall be binding upon, inure to the
benefit of and be enforceable by Borrower, Lender and their respective
successors and assigns.
(e) Governing Law. This Amendment shall be governed by, and construed
in accordance with, the law of the State of New York.
(f) Complete Agreement; Amendments. This Amendment, together with the
other Amendment Documents and the other Loan Documents, contains the entire and
exclusive agreement of the parties hereto and thereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior
commitments, drafts, communications, discussions and understandings, oral or
written, with respect thereto. This Amendment may not be modified, amended or
otherwise altered except in accordance with the terms of Section 7.1 of the
Credit Agreement.
(g) Severability. Whenever possible, each provision of this Amendment
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Amendment
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Amendment, or the validity or effectiveness of such provision
in any other jurisdiction.
(h) Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
(i) Investigation. Each of the Releasing Parties acknowledges that it
and its counsel have had an adequate opportunity to make whatever investigation
or inquiry they may deem necessary or desirable in connection with the subject
matter of this Amendment prior to the execution hereof and thereof. Each of the
Releasing Parties acknowledges that (i) it has been represented by independent
counsel of its own choice throughout all of the negotiations which preceded the
execution of this Amendment, (ii) it has executed this Amendment, or any
consent, document or agreement related thereto to which it is a party, after
seeking the advice of such independent legal counsel, and (iii) it has executed
such agreement, documents or consents voluntarily and knowingly.
(j) Interpretation. This Amendment and the other Amendment Documents
are the result of negotiations between and have been reviewed by counsel to
Lender, Borrower and other parties, and are the product of all parties hereto.
Accordingly, this Amendment and the other Amendment Documents shall not be
construed against Lender merely because of Lender's involvement in the
preparation thereof.
(k) Loan Documents. This Amendment and the other Amendment Documents
shall constitute Loan Documents.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, as of the date first above written.
Pathnet Telecommunications, Inc., solely in its
capacity as a "Releasing Party"
By /S/ James M Craig
Title: Chief Financial Officer
Pathnet Operating, Inc.
By /S/ James M Craig
Title: Chief Financial Officer
Cisco Systems Capital Corporation
By /S/ James Fukhara
Title: Chief Credit Officer
Acknowledged:
State Street Bank and Trust Company, as Collateral Agent
By
Title:
--------------------------------------------------------------------------------
EXHIBIT A
FORM OF AMENDED AND RESTATED TRANCHE A PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY OTHER APPLICABLE SECURITIES LAWS. IT MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED UNDER CIRCUMSTANCES THAT WOULD RESULT IN A VIOLATION OF THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 OR SUCH OTHER LAWS.
U.S.$60,000,000
FOR VALUE RECEIVED, the undersigned, Pathnet Operating, Inc. ("Borrower"), a
corporation organized and existing under the laws of the State of Delaware,
HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of Cisco Systems Capital
Corporation ("Lender"), a corporation organized and existing under the laws of
the State of Nevada, the principal sum of SIXTY MILLION United States Dollars
(U.S.$60,000,000), or such greater or lesser amount as represents the aggregate
principal amount of the Tranche A loans (the "Loans") made by Lender to Borrower
pursuant to the Credit Agreement referred to below, quarterly in arrears,
payable on the dates and in the amounts indicated in the amortization schedules
set forth in the Annex attached hereto (the last such date being hereinafter
referred to as the "Maturity Date").
Borrower further promises to pay interest on the principal amount of
each Loan outstanding hereunder on each Interest Payment Date (as defined below)
until the Maturity Date, at a rate per annum equal at all times during each
Interest Period for such Loan to LIBOR for such Interest Period plus "*" per
annum.
The period between the date of a Loan and the Maturity Date shall be
divided into successive periods, each such period being an "Interest Period" for
purposes of this Promissory Note. The initial Interest Period for a Loan shall
begin on the date such Loan is made and end on the next Quarterly Date. Each
subsequent Interest Period shall begin on the last day of the immediately
preceding Interest Period and shall end on the next succeeding Quarterly Date
(with the last Interest Period to end on the Maturity Date). As used herein,
"LIBOR" means for any Interest Period the rate of interest per annum determined
by Lender to be the rate of interest per annum (rounded upward, if necessary, to
the nearest 1/100 of 1%) for deposits in Dollars for three months appearing on
the display page designated as "3750" in the Dow Jones Market Service (formerly
known as the Telerate Service), or any replacement page thereof in the Dow Jones
Market Service displaying London interbank offered rates of major banks for
Dollar deposits, at or about 11:00 a.m. (London time) on the second Banking Day
preceding the first day of the applicable calendar quarter in which such
Interest Period occurs, provided that if no, or only one, such offered quotation
appears on such display page (or such other replacement page), "LIBOR" shall be
determined by reference to the Reuters Screen LIBO Page of the Reuters Monitor
Money Rates Service (or any replacement page thereof or other applicable Reuters
display page) or other comparable source of interest quotations for such
interbank rates selected by Lender; and "Quarterly Date" means the last day of
each calendar quarter.
Interest on each Loan shall be payable in arrears to Lender on the
last day of each calendar quarter and on the Maturity Date (each such date, an
"Interest Payment Date"); provided that if any prepayment hereof is effected
other than on an Interest Payment Date, accrued interest hereon shall be due on
such prepayment date as to the principal amount prepaid.
In the event that any amount of principal hereof or interest thereon,
or any other amount payable hereunder or under the Credit Agreement, shall not
be paid in full when due (whether at stated maturity, by acceleration or
otherwise), Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on such unpaid amount to
Lender, from the date such amount becomes due until the date such amount is paid
in full, payable on demand of Lender, at a fluctuating rate per annum equal at
all times to the Prime Rate (as defined below) plus "*" per annum (the "Default
Rate"). Additionally, and without limiting the foregoing, following the
occurrence and during the continuance of any Event of Default, at the option of
Lender, the interest rate on all Loans outstanding hereunder shall be the
Default Rate.
As used herein, "Prime Rate" means for any day the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America, N.A., as its prime rate. Each change in the interest rate hereon based
on a change in the prime rate shall be effective at the opening of business on
the day specified in the public announcement of such change.
All computations of interest hereunder shall be made on the basis of
a year of 360 days for the actual number of days occurring in the period for
which any such interest or fee is payable.
Whenever any payment hereunder shall be stated to be due, or whenever
any Interest Payment Date or any other date specified hereunder would otherwise
occur, on a day other than a Banking Day, then, except to the extent otherwise
provided hereunder, such payment shall be made, and such Interest Payment Date
or other date shall occur, on the next succeeding Banking Day, and such
extension of time shall in such case be included in the computation of payment
of interest hereunder; provided, however, that if such extension would cause
such payment to be made, or such Interest Payment Date or other date to occur,
in the next following calendar month, such payment shall be made and such
Interest Payment Date or other date shall occur on the next preceding Banking
Day. As used herein, "Banking Day" means a day other than a Saturday or Sunday
on which commercial banks are not required or authorized by law to close in San
Jose, California, except that if the applicable Banking Day relates to any
determination of LIBOR, "Banking Day" means such a day on which dealings are
carried out in the applicable offshore U.S. Dollar interbank market.
Each such payment shall be made on the date when due, in immediately
available funds, to Lender's account at Bank of America, N.A., Concord,
California, ABA no. 12100358, to account number 1233124070, ref. "Pathnet
Operating, Inc.," or to such other account of Lender as it from time to time
shall designate in a written notice to Borrower.
All payments of principal, interest and other amounts made on or in respect to
this Promissory Note shall be made in United States Dollars for value received
on the date of payment, without setoff, counterclaim or, to the extent permitted
by applicable law, defense, and free and clear of and without deduction for any
present and future Taxes or charges whatsoever.
Lender shall record the date and amount of each Loan made to Borrower, the
amount of principal and interest due and payable from time to time hereunder,
each payment thereof, and the resulting unpaid principal balance hereof, in
Lender's internal records, and any such records shall be conclusive evidence
absent manifest error of the amount of the Loans made by Lender and the interest
and payments thereon; provided, however, that Lender's failure so to record
shall not limit or otherwise affect the obligations of Borrower hereunder and
under the Credit Agreement to repay the principal of and interest on the Loans.
This Promissory Note replaces and supercedes in its entirety that
certain Tranche A Promissory Note (the "Original Tranche A Note") dated as of
September 7, 2000, made by Borrower to the order of Lender in connection with
the Credit Agreement dated as of September 7, 2000 (as amended, modified,
renewed or extended from time to time, the "Credit Agreement") between Borrower
and Lender and evidences a continuation and not a novation or repayment of the
Loans evidenced by the Original Tranche A Note.
This Promissory Note is a Note referred to in, and is subject to and
entitled to the benefits of, the Credit Agreement. Capitalized terms used herein
shall have the respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived.
This Promissory Note is subject to prepayment in whole or in part as
provided in the Credit Agreement.
Borrower hereby waives diligence, presentment, protest or notice of
total or partial nonpayment or dishonor with respect to this Promissory Note.
Failure by the holder hereof to exercise any of its rights hereunder
in any instance shall not constitute a waiver thereof in that or any other
instance.
Borrower agrees to pay on demand all costs and expenses of Lender and
its affiliates, and fees and disbursements of counsel (excluding allocated costs
and expenses for internal legal services), in connection with the enforcement or
attempted enforcement of, and preservation of any rights or interests under, (i)
this Promissory Note, and (ii) any out-of-court workout or other refinancing or
restructuring or any bankruptcy or insolvency case or proceeding, including any
losses, costs and expenses sustained by Lender as a result of any failure by
Borrower to perform or observe its obligations contained herein.
This Promissory Note shall be governed by, and construed in
accordance with, the law of the State of New York.
Borrower hereby (a) submits to the non-exclusive jurisdiction of the
courts of the State of New York and the Federal courts of the United States
sitting in the Borough of Manhattan (collectively, the "New York Courts"), for
the purpose of any action or proceeding arising out of or relating to this
Promissory Note, (b) irrevocably waives (to the extent permitted by applicable
law) any objection which it now or hereafter may have to the laying of venue of
any such action or proceeding brought in any of the New York Courts, and any
objection on the ground that any such action or proceeding in any New York Court
has been brought in an inconvenient forum, and (c) agrees that (to the extent
permitted by applicable law) a final judgment in any such action or proceeding
brought in a New York Court shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner permitted by law.
IN WITNESS WHEREOF, Borrower by its duly authorized legal
representatives has executed this Promissory Note on the date and in the year
first above mentioned.
Borrower
Pathnet Operating, Inc.
By
Title:
--------------------------------------------------------------------------------
ANNEX TO TRANCHE A PROMISSORY NOTE
Amortization
"*"
--------------------------------------------------------------------------------
EXHIBIT B
FORM OF TRANCHE C PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY OTHER APPLICABLE SECURITIES LAWS. IT MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED UNDER CIRCUMSTANCES THAT WOULD RESULT IN A VIOLATION OF THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 OR SUCH OTHER LAWS.
U.S.$25,000,000
FOR VALUE RECEIVED, the undersigned, Pathnet Operating, Inc.
("Borrower"), a corporation organized and existing under the laws of the State
of Delaware, HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of Cisco
Systems Capital Corporation ("Lender"), a corporation organized and existing
under the laws of the State of Nevada, the principal sum of TWENTY FIVE MILLION
United States Dollars (U.S.$25,000,000), or such greater or lesser amount as
represents the aggregate principal amount of the Tranche C loans (the "Loans")
made by Lender to Borrower pursuant to the Credit Agreement referred to below,
quarterly in arrears, payable on the dates and in the amounts indicated in the
amortization schedules set forth in the Annex attached hereto (the last such
date being hereinafter referred to as the "Maturity Date").
Borrower further promises to pay interest on the principal amount of
each Loan outstanding hereunder on each Interest Payment Date (as defined below)
until the Maturity Date, at a rate per annum equal at all times during each
Interest Period for such Loan to LIBOR for such Interest Period plus "*" per
annum.
The period between the date of a Loan and the Maturity Date shall be
divided into successive periods, each such period being an "Interest Period" for
purposes of this Promissory Note. The initial Interest Period for a Loan shall
begin on the date such Loan is made and end on the next Quarterly Date. Each
subsequent Interest Period shall begin on the last day of the immediately
preceding Interest Period and shall end on the next succeeding Quarterly Date
(with the last Interest Period to end on the Maturity Date). As used herein,
"LIBOR" means for any Interest Period the rate of interest per annum determined
by Lender to be the rate of interest per annum (rounded upward, if necessary, to
the nearest 1/100 of 1%) for deposits in Dollars for three months appearing on
the display page designated as "3750" in the Dow Jones Market Service (formerly
known as the Telerate Service), or any replacement page thereof in the Dow Jones
Market Service displaying London interbank offered rates of major banks for
Dollar deposits, at or about 11:00 a.m. (London time) on the second Banking Day
preceding the first day of the applicable calendar quarter in which such
Interest Period occurs, provided that if no, or only one, such offered quotation
appears on such display page (or such other replacement page), "LIBOR" shall be
determined by reference to the Reuters Screen LIBO Page of the Reuters Monitor
Money Rates Service (or any replacement page thereof or other applicable Reuters
display page) or other comparable source of interest quotations for such
interbank rates selected by Lender; and "Quarterly Date" means the last day of
each calendar quarter.
Interest on each Loan shall be payable in arrears to Lender on the last
day of each calendar quarter and on the Maturity Date (each such date, an
"Interest Payment Date"); provided that if any prepayment hereof is effected
other than on an Interest Payment Date, accrued interest hereon shall be due on
such prepayment date as to the principal amount prepaid.
In the event that any amount of principal hereof or interest thereon,
or any other amount payable hereunder or under the Credit Agreement, shall not
be paid in full when due (whether at stated maturity, by acceleration or
otherwise), Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on such unpaid amount to
Lender, from the date such amount becomes due until the date such amount is paid
in full, payable on demand of Lender, at a fluctuating rate per annum equal at
all times to the Prime Rate (as defined below) plus "*" per annum (the "Default
Rate"). Additionally, and without limiting the foregoing, following the
occurrence and during the continuance of any Event of Default, at the option of
Lender, the interest rate on all Loans outstanding hereunder shall be the
Default Rate.
As used herein, "Prime Rate" means for any day the rate of interest in
effect for such day as publicly announced from time to time by Bank of America,
N.A., as its prime rate. Each change in the interest rate hereon based on a
change in the prime rate shall be effective at the opening of business on the
day specified in the public announcement of such change.
All computations of interest hereunder shall be made on the basis of a
year of 360 days for the actual number of days occurring in the period for which
any such interest or fee is payable.
Whenever any payment hereunder shall be stated to be due, or whenever
any Interest Payment Date or any other date specified hereunder would otherwise
occur, on a day other than a Banking Day, then, except to the extent otherwise
provided hereunder, such payment shall be made, and such Interest Payment Date
or other date shall occur, on the next succeeding Banking Day, and such
extension of time shall in such case be included in the computation of payment
of interest hereunder; provided, however, that if such extension would cause
such payment to be made, or such Interest Payment Date or other date to occur,
in the next following calendar month, such payment shall be made and such
Interest Payment Date or other date shall occur on the next preceding Banking
Day. As used herein, "Banking Day" means a day other than a Saturday or Sunday
on which commercial banks are not required or authorized by law to close in San
Jose, California, except that if the applicable Banking Day relates to any
determination of LIBOR, "Banking Day" means such a day on which dealings are
carried out in the applicable offshore U.S. Dollar interbank market.
Each such payment shall be made on the date when due, in immediately
available funds, to Lender's account at Bank of America, N.A., Concord,
California, ABA no. 12100358, to account number 1233124070, ref. "Pathnet
Operating, Inc.," or to such other account of Lender as it from time to time
shall designate in a written notice to Borrower.
All payments of principal, interest and other amounts made on or in
respect to this Promissory Note shall be made in United States Dollars for value
received on the date of payment, without setoff, counterclaim or, to the extent
permitted by applicable law, defense, and free and clear of and without
deduction for any present and future Taxes or charges whatsoever.
Lender shall record the date and amount of each Loan made to Borrower,
the amount of principal and interest due and payable from time to time
hereunder, each payment thereof, and the resulting unpaid principal balance
hereof, in Lender's internal records, and any such records shall be conclusive
evidence absent manifest error of the amount of the Loans made by Lender and the
interest and payments thereon; provided, however, that Lender's failure so to
record shall not limit or otherwise affect the obligations of Borrower hereunder
and under the Credit Agreement to repay the principal of and interest on the
Loans.
This Promissory Note is a Note referred to in, and is subject to and
entitled to the benefits of, the Agreement dated as of September 7, 2000 (as
amended, modified, renewed or extended from time to time, the "Credit
Agreement") between Borrower and Lender. Capitalized terms used herein shall
have the respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived.
This Promissory Note is subject to prepayment in whole or in part as
provided in the Credit Agreement.
Borrower hereby waives diligence, presentment, protest or notice of
total or partial nonpayment or dishonor with respect to this Promissory Note.
Failure by the holder hereof to exercise any of its rights hereunder in
any instance shall not constitute a waiver thereof in that or any other
instance.
Borrower agrees to pay on demand all costs and expenses of Lender and
its affiliates, and fees and disbursements of counsel (excluding allocated costs
and expenses for internal legal services), in connection with the enforcement or
attempted enforcement of, and preservation of any rights or interests under, (i)
this Promissory Note, and (ii) any out-of-court workout or other refinancing or
restructuring or any bankruptcy or insolvency case or proceeding, including any
losses, costs and expenses sustained by Lender as a result of any failure by
Borrower to perform or observe its obligations contained herein.
This Promissory Note shall be governed by, and construed in accordance
with, the law of the State of New York.
Borrower hereby (a) submits to the non-exclusive jurisdiction of the
courts of the State of New York and the Federal courts of the United States
sitting in the Borough of Manhattan (collectively, the "New York Courts"), for
the purpose of any action or proceeding arising out of or relating to this
Promissory Note, (b) irrevocably waives (to the extent permitted by applicable
law) any objection which it now or hereafter may have to the laying of venue of
any such action or proceeding brought in any of the New York Courts, and any
objection on the ground that any such action or proceeding in any New York Court
has been brought in an inconvenient forum, and (c) agrees that (to the extent
permitted by applicable law) a final judgment in any such action or proceeding
brought in a New York Court shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner permitted by law.
IN WITNESS WHEREOF, Borrower by its duly authorized legal
representatives has executed this Promissory Note on the date and in the year
first above mentioned.
Borrower
Pathnet Operating, Inc.
By
Title:
--------------------------------------------------------------------------------
ANNEX TO TRANCHE C PROMISSORY NOTE
Amortization
"*"
--------------------------------------------------------------------------------
EXHIBIT C
Form of Guarantor Consent
February __, 2001
Cisco Systems Capital Corporation
Worldwide Financial Services
Mailstop SJ-Linc 1/2
170 West Tasman Drive
San Jose, CA 95134-1706
Re: Pathnet Operating, Inc.
Gentlemen:
The undersigned acknowledges receipt of a copy of the First Amendment
Agreement dated February __, 2001 (the "Amendment") being entered into
concurrently herewith by and between you and Pathnet Operating, Inc. (the
"Borrower").
The undersigned, in its capacity as guarantor, acknowledges that
its consent to the foregoing Amendment is not required, but the undersigned
nevertheless does hereby consent to the foregoing Amendment and to the documents
and agreements referred to therein and to all future modifications and
amendments thereto (subject to the terms of the Guaranty executed by the
undersigned in favor of the State Street Bank and Trust as Collateral Agent and
dated August 9, 2000 (the "Guaranty"), as such Guaranty may be amended from time
to time), and any termination thereof, and to any and all other present and
future documents and agreements between or among the foregoing parties. Nothing
herein shall in any way limit any of the terms or provisions of the Guaranty of
the undersigned or any Collateral Documents related thereto all of which are
hereby ratified and affirmed in all respects. The undersigned acknowledges that
it has read Section 6 and Section 7(i) of the Amendment and agrees to be bound
to the provisions, acknowledgements and representations set forth therein as a
"Releasing Party".
Sincerely yours,
[Guarantor]
By: _____________________________________________
Title: ______________________________________________
--------------------------------------------------------------------------------
EXHIBIT D
FORM OF CONSENT OF REQUIRED COMMITTED SECURED PARTIES
CONSENT (this "Consent") dated as of February __, 2001 is executed by each of
the undersigned in favor of Pathnet Operating, Inc., a Delaware corporation
("Borrower"), Pathnet Telecommunications, Inc., a Delaware corporation
("Holdings") and Cisco Systems Capital Corporation., a Nevada corporation (the
"Cisco"). Capitalized terms used herein but not otherwise defined shall have the
meanings set forth in the Intercreditor Agreement (as defined below).
RECITALS
WHEREAS, Borrower, Holdings, the Subsidiaries of the Borrower, the
Nortel Networks Credit Facility Lenders and the Nortel Networks Credit Facility
Administrative Agent are parties to the Nortel Networks Credit Agreement; and
WHEREAS, Borrower and Cisco are parties to the Cisco Credit Agreement;
and
WHEREAS, Borrower, Holdings, the Subsidiaries of Borrower, the Nortel
Networks Credit Facility Administrative Agent, Cisco and the Collateral Agent
are parties to that certain Amended and Restated Collateral Agency and
Intercreditor Agreement (the "Intercreditor Agreement") dated as of September 7,
2000 pursuant to which the Secured Parties have agreed to share the Collateral
as set forth therein; and
WHEREAS, Borrower represents and warrants that there exists no Default
or Event of Default under the Nortel Networks Credit Agreement, the Cisco Credit
Agreement or any other Support Document, and that no Notice of Enforcement in is
effect, in each case, on the date of this Consent; and
WHEREAS, Cisco desires to extend to Borrower and Borrower desires to
receive from Cisco additional financing which would qualify as "Permitted
Additional Obligations" under the terms of the Intercreditor Agreement and as
"Eligible Secured Debt" under the terms of the Nortel Networks Credit Agreement
pursuant to the form of amendment attached hereto as Exhibit A (the "First
Amendment Agreement"); and
WHEREAS, as a condition of the consent of the Required Committed
Secured Lenders set forth herein, Borrower is delivering a Permitted Additional
Obligations Designation and is otherwise complying with the provisions of
Section 2.01 of the Intercreditor Agreement for the purposes of confirming that
the additional financing described in the Amendment Agreement would constitute
"Permitted Additional Obligations" under the Intercreditor Agreement even if
such additional obligations shall constitute "Cisco Credit Facility Obligations"
under the Intercreditor Agreement after the effective date of this Consent; and
WHEREAS, the parties desire to memorialize the consent of the Required
Committed Secured Parties to the First Amendment Agreement and the amendments
set forth therein (the "Amendments");
NOW THEREFOR, the undersigned agree as follows:
1. Consent: Subject to the limitations set forth in Section 2 hereof,
the Required Committed Secured Parties hereby consent (a) to the execution,
delivery and performance of the First Amendment Agreement by Borrower and Cisco;
(b) to each of the Amendments set forth in the First Amendment Agreement and (c)
to the Borrower and/or Cisco (as the case may be) issuing or entering into any
promissory notes, documents, instruments or agreements necessary or desirable to
execute and consummate the intent of the First Amendment Agreement and the
Amendments set forth therein. The Required Committed Secured Parties further
agree that after the effectiveness of the First Amendment Agreement (A) the
definition of "Cisco Credit Agreement" in the Intercreditor Agreement shall mean
the Cisco Credit Agreement as amended by the First Amendment Agreement, (B) the
definition of "Cisco Credit Facility Obligations shall include, without
limitation, the additional financing described in the Amendment Agreement, and
(C) the definition of "Obligations" in the Intercreditor Agreement shall include
all of the obligations of Borrower (including, without limitation, all
principal, interest and fees due under the "Loans" (as defined the Cisco Credit
Agreement)) to Lender under the Cisco Credit Agreement as amended by the First
Amendment Agreement.
2. Reservation of Rights. Other than as expressly set forth in this
Consent, the Nortel Networks Credit Agreement, the Cisco Credit Agreement, the
Intercreditor Agreement and any other Support Documents and Security Documents
remain in full force effect and are fully enforceable in accordance with their
terms. This Consent creates no course of dealing that would require the Required
Committed Secured Parties to grant similar waivers or consents to Cisco or
Borrower in the future.
3. Counterparts. This consent may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed an original and all of which taken
together shall constitute but one in the same agreement.
IN WITNESS WHEREOF, this Consent is executed as of the first date
written above.
Required Committed Secured Parties:
NORTEL NETWORKS, INC. as Nortel Networks
Credit Facility Administrative Agent
By
Title:
CISCO SYSTEMS CAPITAL CORPORATION, as a Secured Party
By
Title:
Acknowledged and Agreed:
PATHNET OPERATING, INC., a Delaware
corporation
By:_______________________
Name:
Title:
PATHNET TELECOMMUNICATIONS, INC., a
Delaware corporation
By:_______________________
Name:
Title:
PATHNET FIBER EQUIPMENT, LLC., a Delaware
limited liability company
By:_______________________
Name:
Title: Title:
PATHNET REAL ESTATE, LLC., a Delaware
limited liability company
By:_______________________
Name:
Title: |
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EXHIBIT 10.2
THIS FIRST AMENDMENT TO AMENDED AND RESTATED FACILITY B CREDIT AGREEMENT
("First Amendment"), dated as of April 20, 2001, is entered into by and among
CROWN PACIFIC LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Company"), BANK OF AMERICA, N.A., as letter of credit issuing bank and agent
for itself and the Banks (the "Agent"), and those financial institutions parties
to the Credit Agreement (collectively, the "Banks") signatory hereto.
RECITALS
A. The Company, Banks, and Agent are parties to an Amended and Restated
Facility B Credit Agreement dated as of December 1, 1999 (the "Credit
Agreement") pursuant to which the Agent and the Banks have extended certain
credit facilities to the Company.
B. The Company, the Banks, and the Agent now hereby wish to amend the
Credit Agreement in certain respects, all as set forth in greater detail below.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings, if any, assigned to them in the Credit
Agreement.
2. Amendments to the Credit Agreement.
(a) The definition of "Applicable Margin" set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting such definition in its entirety,
and inserting in its place the following:
"Applicable Margin" means, in respect of all Loans outstanding on any date,
a per annum rate equal to 3.00% for Offshore Rate Loans and 2.00% for Base Rate
Syndicated Loans and Swingline Loans.
(b) The definition of "Available Cash" set forth in Section 1.1 of the
Credit Agreement is hereby amended and restated (until the Company exercises its
Interest Coverage Replacement Option as referenced in Section 8.15(c)) to
conform to the blacklined form of the definition of "Available Cash" attached as
Exhibit A hereto. Upon the Company's exercise of its Interest Coverage
Replacement Option as referenced in Section 8.15(c), the definition of
"Available Cash" shall revert to the definition set forth in the Credit
Agreement before giving effect to this Amendment.
(c) The definition of "Commitment Fee Percentage" set forth in Section 1.1
of the Credit Agreement is hereby amended by deleting such definition in its
entirety, and inserting in its place the following:
"Commitment Fee Percentage" means a rate per annum equal to 0.50%.
(d) The definition of "Collateral Event" set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting such definition in its entirety,
and inserting in its place the following:
"Collateral Event" means the Effective Date of the First Amendment hereto.
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(e)The definition of "Letter of Credit Rate" set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting such definition in its entirety,
and inserting in its place the following:
"Letter of Credit Rate" means a per annum rate equal to 3.00%.
(f) Subsection 2.7(a)(i) of the Credit Agreement is hereby amended and
restated to conform to the blacklined form of subsection 2.7(a)(i) attached as
Exhibit A hereto.
(g) Section 7.1 of the Credit Agreement is hereby amended and restated by
adding to such Section the following new paragraph (i):
(i) as soon as available, but in any event within 30 days after the end of
each calendar month, (1) internal management reports discussing the financial
position and results of operations of the Company and its Subsidiaries and (2) a
detailed report discussing updates on any sale, conveyance or disposition of any
assets or any other form of acquisition, disposition or liquidation of the
Company and its Subsidiaries, which report shall set forth, in reasonable
detail, the assets to be sold, the nature of the proposed transaction, the
approximate value of the proposed transaction, the number of bidders or
potential purchasers involved, and the current status of negotiations.
(h) Section 8.2 of the Credit Agreement is hereby amended and restated to
conform to the blacklined form of Section 8.2 attached as Exhibit A hereto.
(i) Section 8.4 of the Credit Agreement is hereby amended and restated to
conform to the blacklined form of Section 8.4 attached as Exhibit A hereto.
(j) The Credit Agreement is hereby amended by deleting subsections 8.5(f)
and 8.5(g) thereof in their entirely and replacing such subsections with
"[intentionally omitted]."
3. Representations and Warranties. The Company hereby represents and
warrants to the Agent and the Banks, as of the Effective Date (as defined
below), as follows:
(a) No Default or Event of Default has occurred and is continuing.
(b) None of the representations or warranties made by the Company in the
Loan Documents as of the date such representations and warranties are made or
deemed made, and none of the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of the Company in connection
with the Loan Documents (including the offering and disclosure materials
delivered by or on behalf of the Company to the Banks prior to the Effective
Date (as defined below)), contains any untrue statement of a material fact or
omits any material fact required to be stated therein or otherwise necessary to
make the statements made therein, in light of the circumstances under which they
are made, not misleading as of the time when made or delivered.
(c) The execution, delivery and performance by the Company of this First
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of,
notice to or action by, any person (including any Governmental Authority) in
order to be effective and enforceable. The Credit Agreement as amended by this
First Amendment constitutes the legal, valid and binding obligations of the
Company, enforceable against it in accordance with its terms, without defense,
counterclaim or offset except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to or
limiting creditors' rights generally or by equitable principles relating to
enforceability whether enforcement is sought in a proceeding at law or in
equity.
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(d) All representations and warranties of the Company contained in the
Credit Agreement and the Security Agreement (including those made only as of the
occurrence of the Collateral Event) are true and correct.
(e) The Company is entering into this First Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the Agent and
the Banks or any other person.
4. Effective Date. This Amendment will become effective on April 20, 2001
or the first Business Day thereafter as of which each of the following
conditions precedent has been satisfied (the "Effective Date"):
(a) The Agent has received from the Company and the Required Banks a duly
executed original or facsimile counterpart of this Amendment (any such
facsimiles to be promptly followed by the originals thereof).
(b) The "Effective Date" as defined in the First Amended and Restated
Facility A Credit Agreement has occurred or is occurring contemporaneously as of
the Effective Date hereunder.
(c) The Agent has received an opinion of Ball Janik LLP, as counsel to the
Company and the Partner Entities addressed to the Agent and the Banks, in form
and substance reasonably satisfactory to the Required Banks.
(d) The Company shall have paid to the Agent, (i) for the account of each
Bank that has executed a counterpart of this Amendment and delivered (by hard
copy or facsimile) the same to the Agent or its counsel by 5:00 p.m. (San
Francisco time) the Business Day before the Effective Date, a nonrefundable
amendment fee in an amount equal to such Bank's Commitment multiplied by 0.350%;
which amounts the Company hereby covenants to pay to the Agent for the account
of such Banks on demand and (ii) for the Agent's own account, all reasonable
costs and expenses incurred in connection with the Agent's recent appraisal of
the timberlands of the Company.
5. Reservation of Rights. The Company acknowledges and agrees that the
execution and delivery by the Agent and the Banks of this First Amendment shall
not be deemed to create a course of dealing or otherwise obligate the Agent or
the Banks to enter into similar amendments under the same or similar
circumstances in the future.
6. Miscellaneous.
(a) Except as herein expressly amended, all terms, covenants and provisions
of the Credit Agreement are and shall remain in full force and effect and all
references therein to such Credit Agreement shall henceforth refer to the Credit
Agreement as amended by this First Amendment. This First Amendment shall be
deemed incorporated into, and a part of, the Credit Agreement.
(b) This First Amendment shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns. No
third party beneficiaries are intended in connection with this First Amendment.
(c) This First Amendment shall be governed by and construed in accordance
with the law of the State of California.
(d) This First Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
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(e) This First Amendment, together with the Credit Agreement, contains the
entire and exclusive agreement of the parties hereto with reference to the
matters discussed herein and therein. This First Amendment supersedes all prior
drafts and communications with respect thereto. This First Amendment may not be
amended except in accordance with the provisions of Section 11.1 of the Credit
Agreement.
(f) If any term or provision of this First Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this First Amendment
or the Credit Agreement, respectively.
(g) Company confirms its obligations under Section 11.4(a) of the Credit
Agreement to reimburse the Agent for all costs and expenses including reasonable
attorneys' fees and expenses incurred by the Agent in connection with this First
Amendment.
[Remainder of Page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
First Amendment as of the date first above written.
CROWN PACIFIC LIMITED PARTNERSHIP, a Delaware limited partnership
By:
CROWN PACIFIC MANAGEMENT LIMITED PARTNERSHIP, a Delaware limited partnership,
its general partner
By:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
BANK OF AMERICA, N.A., as Agent, a Bank, the Swingline Bank and the Issuing Bank
By:
--------------------------------------------------------------------------------
Title:
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UNION BANK OF CALIFORNIA, N.A., as Syndication Agent and as a Bank
By:
--------------------------------------------------------------------------------
Title:
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BANK OF MONTREAL, as Co-Agent and as a Bank
By:
--------------------------------------------------------------------------------
Title:
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KEYBANK NATIONAL ASSOCIATION, as Co-Agent and as a Bank
By:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
ABN AMRO BANK, N.V.
By:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
SUNTRUST BANK
By:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
WELLS FARGO BANK, N.A.
By:
--------------------------------------------------------------------------------
Title:
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SUMITOMO MITSUI BANKING CORPORATION
By:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
BNP PARIBAS (Successor in Interest to Paribas)
By:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
FIRST UNION NATIONAL BANK
By:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
BANK HAPOALIM, B.M.
By:
--------------------------------------------------------------------------------
Title:
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Exhibit A
"Available Cash" means, with respect to any fiscal quarter and without
duplication:
(a) the sum of:
(i) all cash receipts of the Company during such fiscal quarter from all
sources;
(ii) any reduction with respect to such fiscal quarter in a cash reserve
previously established pursuant to clause (b)(ii) below (either by reversal or
utilization) from the level of such reserve at the end of the prior fiscal
quarter; and
(iii) the amount available to be borrowed on the last day of such fiscal
quarter under this Agreement but only so long as the conditions relating to a
Borrowing set forth in subsections 5.2(b) and (c) would be satisfied or waived
on such date;
(b) less the sum of:
(i) all cash disbursements of the Company during such fiscal quarter,
including, without limitation, disbursements for operating expenses (including,
without limitation, the amounts described in the second sentence of
Section 8.7), taxes, if any, debt service (including, without limitation, the
payment of principal, premium and interest), redemption of Partnership Interests
(as defined in the Company Partnership Agreement), capital expenditures and cash
distributions to Partners (as defined in the Company Partnership Agreement) (but
only to the extent that such cash distributions to Partners exceed Available
Cash for the immediately preceding fiscal quarter); and
(ii) any cash reserves established with respect to such fiscal quarter, and
any increase with respect to such fiscal quarter in a cash reserve established
pursuant to this clause (b)(ii) from the level of such reserve at the end of the
prior fiscal quarter, in such amounts as the Managing General Partner determines
in its reasonable discretion to be necessary or appropriate (A) to provide for
the proper conduct of the business of the Company (including, without
limitation, reserves for future capital expenditures and those established with
respect to the Obligations hereunder, the "Obligations" under and as defined in
the Facility A Credit Agreement, and the Senior Notes), provided that the
reserves established during such fiscal quarter pursuant to this
clause (b)(ii) shall include an amount not less than (w) 100% of all capital
expenditures budgeted to be incurred during the next fiscal year, (x) [200]% of
the aggregate amount of all interest in respect of the Senior Notes to be paid
on the interest payment date immediately following such fiscal quarter,
(y) [400]% of the aggregate amount of all accrued and unpaid interest in respect
of the Loans and Facility A Loans on the date of determination, and (z) [100]%
of the aggregate amount of all principal in respect of the Senior Notes
scheduled to be paid during the nine calendar month period immediately following
such fiscal quarter, (B) to provide funds for distributions to the Partners in
respect of any one or more of the next four fiscal quarters, or (C) because the
distribution of such amounts would be prohibited by applicable law or by any
loan agreement, security agreement, mortgage, debt instrument or other agreement
or obligation to which the Company is a party or by which it is bound or its
assets are subject.
Taxes paid by the Company on behalf of, or amounts withheld with respect to, all
or less than all of the Partners (as defined in the Company Partnership
Agreement) shall not be considered cash disbursements of the Company that reduce
Available Cash, but the payment or withholding thereof shall be deemed to be a
distribution of Available Cash to such Partners. Alternatively, in the
discretion of the Managing General Partner, such taxes (if pertaining to all
Partners) may be considered to be cash disbursements of the Company which reduce
Available Cash, but the payment or withholding thereof shall not be deemed to be
a distribution of Available Cash to such Partners.
1
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2.7(a) Mandatory Prepayments.
(i) If the Company or any of its Subsidiaries shall receive Net Proceeds
from a sale of properties permitted by subsection 8.2(f)(ii), or harvest excess
timber permitted by Section 8.4, then (A) the Net Proceeds of such sale shall be
paid by the Company as a prepayment of such Senior Debt as and to the extent
required by subsection 8.2(f), and (B) the net proceeds of such excess harvest
shall be paid by the Company as a prepayment of such Senior Debt as required by
Section 8.4; provided that, in each case, the Company may not prepay Senior Debt
other than the Loans and the Facility A Loans pursuant to this subsection
2.7(a)(i) unless (1) the Company also prepays the Loans and the Facility A Loans
in an aggregate amount as shall be necessary to cause the Banks together with
the "Banks" as defined in the Facility A Credit Agreement to share such
prepayment with the other Senior Debt at least pro rata and (2) the Senior Debt
so prepaid does not exceed, in the aggregate, $37,500,000. Prepayments to be
made with respect to the Loans and the Facility A Loans pursuant to this
subsection 2.7(a)(i) shall be applied first to prepay or to cash collateralize
any Facility A Loans then outstanding in accordance with Section 2.7(a)(i) of
the Facility A Credit Agreement, second, to prepay any Base Rate Syndicated
Loans, third, to prepay Swingline Loans, and fourth, at the Company's option, to
Cash Collateralize (which cash collateral shall be applied on the maturity date
of their Interest Periods to prepay then outstanding Offshore Rate Loans in the
order of their maturities) or to prepay any Offshore Rate Loans then outstanding
(in the order of the maturity of their Interest Periods).
8.2 Asset Dispositions.
The Company will not, and will not permit any of its Subsidiaries to, sell,
transfer, lease, contribute or otherwise convey, or grant options, warrants or
other rights with respect to, all or any part of its assets (including accounts
receivable and capital stock of Subsidiaries) to any Person, other than:
(a) sales of timber, logs, lumber and other inventory in the ordinary course
of business for fair market value;
(b) sales for fair market value of equipment, which is surplus, worn-out or
obsolete or no longer useful in the ordinary course of business;
(c) [intentionally omitted];
(d) [intentionally omitted];
(e) exchanges of timberland for other timberland in the ordinary course of
business with Persons who are not Affiliates of the Company, if:
(i) the aggregate fair market value of all timberland so exchanged by the
Company and any of its Subsidiaries, collectively, does not exceed on a
cumulative basis $400,000,000 during the term of this Agreement or $25,000,000
in any fiscal year;
(ii) the timberland to be received in exchange is of at least an equivalent
fair market value to the timberland to be exchanged or, if such timberland is
not of at least an equivalent fair market value, the amount of any shortfall
shall constitute a permitted disposition under subsection 8.2(c) or (f);
(iii) the timberland to be received in exchange is located in the United
States; and
(iv) at the time of such exchange, no Default or Event of Default exists or
shall result from such exchange;
2
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provided, however, that any exchange permitted by this subsection 8.2(e) may be
in the form of a tax deferred exchange so long as such tax deferred exchange is
completed within 180 days; and
(f) dispositions for fair market value thereof of assets not otherwise
permitted hereunder to Persons who are not Affiliates of the Company if:
(i) at the time of such disposition no Default or Event of Default exists
or shall result from such disposition; and
(ii) (A) the Net Proceeds of such disposition are applied within 180 days of
such disposition to the purchase of productive assets in a Permitted Business
(including purchases not consummated during such 180 days if a binding agreement
for such purchase is entered into during such period and such purchase is
completed within 90 days after the expiry of such 180 day period) located in the
United States provided that the aggregate Net Proceeds applied to such purchases
pursuant to this clause (A) shall not exceed $5,000,000 in any given fiscal year
or (B) if the aggregate Net Proceeds of such dispositions (not applied as
described in clause (A) above) received by the Company and its Subsidiaries in
any fiscal year exceeds $5,000,000, the entirety of such Net Proceeds (not
applied as described in clause (A) above) are applied within 10 Business Days
after receipt thereof (or, if less than $5,000,000 of such Net Proceeds have
been previously received by the Company and its Subsidiaries during any fiscal
year, within 10 Business Days after receipt of Net Proceeds causing the
aggregate to exceed $5,000,000) to the repayment of such Senior Debt as the
Company may elect to so prepay. If, at any time the Company shall elect to repay
Senior Debt other than the Loans and the Facility A Loans, (x) the Company shall
also repay Loans and Facility A Loans by at least a pro rata amount (based on
the then outstanding principal of amount of all Senior Debt) and (y) a
Responsible Officer shall have notified the Agent promptly after its
determination to so apply the Net Proceeds and shall have certified the proper
application of such Net Proceeds in accordance with this subsection 8.2(f); and
(g) dispositions of assets permitted under subsection 8.3(b).
8.4 Harvesting Restrictions
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, in any calendar year, commencing with 2001, harvest timber or
sell standing timber on its or any Subsidiary's timberlands in excess of Planned
Volume for that year unless the net proceeds from such excess harvest (which
shall be determined based upon the average prices received on the sale of all
timber harvested during such period and a reasonable allocation of direct cash
expenses incurred in connection with the harvesting and sale of timber during
such period), are, within ten Business Days after the end of such period,
applied to the repayment of Senior Debt as required by subsection 2.7(a)(i).
"Planned Volume" shall mean for each calendar year 340,000,000 board feet of
timber, as decreased for any year in which there is an Annual Timber Decrease
effective upon the Effective Date for such Annual Timber Decrease by the same
percentage that such Annual Timber Decrease represents as a percentage of the
inventory of standing timber owned by the Company and its Subsidiaries at the
end of the prior calendar year. For purposes of the foregoing:
"Annual Timber Decrease" shall mean, for any calendar year, the amount, in
board feet, by which the number of board feet of timber sold by the Company and
its Subsidiaries during such calendar year shall exceed the number of board feet
of timber acquired by the Company and its Subsidiaries during such calendar
year.
"Effective Date" for any Annual Timber Decrease shall be July 1 of the
calendar year for which such Annual Timber Decrease occurs.
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RECITALS
Exhibit A
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Exhibit 10.1
STOCK PURCHASE AGREEMENT
This agreement is dated October , 2001 between [ ]
("Purchaser"), and Microvision, Inc., a Washington corporation ("Company"),
whereby the parties agree as follows:
The Purchaser shall buy and the Company agrees to sell and issue to
Purchaser (i) [ ] shares ("Shares") of the Company's Common Stock at
a price of [$ ] per share and (ii) warrants ("Warrants") to purchase
[ ] shares of the Company's Common Stock ("Warrant Shares"), in
substantially the form attached as Exhibit A hereto, for an aggregate purchase
price of [$ ] ("Purchase Price").
The Shares, Warrants, and Warrant Shares have been registered on a Form S-3,
Registration No. 333-69652 ("Registration Statement"), which registration
statement has been declared effective by the Securities and Exchange Commission.
The Shares and Warrants are free of restrictive legends and are free of any
resale restrictions and, when issued upon due exercise of the Warrants, the
Warrant Shares will be free of restrictive legends and resale restrictions. The
Company shall deliver to Purchaser with the confirmation of sale the prospectus
that constitutes a part of the Registration Statement and a prospectus
supplement regarding the sale of the Shares and Warrants hereunder.
The Purchaser shall wire the Purchase Price to the Company to the account
set forth below.
Wire Transfer Instructions:
[ ]
[ ]
[ ]
Concurrent with confirmation of receipt of the Purchase Price, the Company
shall (i) cause its transfer agent to transmit the Shares electronically to
Purchaser by crediting the account set forth below through the Deposit
Withdrawal Agent Commission system and (ii) deliver Warrants to Purchaser or its
designee at the address set forth on the signature page hereof.
DWAC Instructions:
[ ]
[ ]
[ ]
AGREED AND ACCEPTED:
COMPANY: MICROVISION, INC.
By:
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Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
PURCHASER:
By:
--------------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
Address: [ ] [ ] [ ]
--------------------------------------------------------------------------------
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Exhibit 10.1
STOCK PURCHASE AGREEMENT
|
Exhibit 10.10
[BIOTRANSPLANT LOGO]
Building 75, 3rd Avenue
Charlestown Navy Yard
Charlestown, MA 02129
Tel: 617/241-5200
Fax: 612/241-8780
November 13, 1991
Richard V. Capasso
39 Rocky Nook
Malden, MA 02148
Dear Rick:
This letter will confirm our offer to you to join BioTransplant, Inc. on the
following terms:
Title: Controller Terms: This offer is contingent on your starting on or
about December 9, 1991. Compensation: $65,000 per year/six month review, no
guarantee of salary increase. Bonus: Eligible; with a guaranteed minimum of
$5,000 for 1992. Equity: 10,000 options; subject to approval by the Board of
Directors. Agreements: Your employment is subject to your signing a
Confidentiality, Invention Agreement and a Non-Compete Agreement with
BioTransplant and review of any agreement you may have with others to insure
that your employment with BioTransplant is not in conflict with any such
agreements.
If these terms are acceptable, please sign and return one copy of this
agreement.
We look forward to your joining the company and sharing in our new challenge.
Best regards,
/s/ Elliot Lebowitz
Elliot Lebowitz, Ph.D.
President and C.E.O
AGREED TO:
By: /s/ Richard V. Capasso Date: 11/14/91
--------------------------------------------------------------------------------
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Richard V. Capasso
[BIOTRANSPLANT LOGO]
Building 75, 3rd Avenue
Charlestown Navy Yard
Charlestown, MA 02129
Tel: 617/241-5200
Fax: 612/241-8780
March 31, 1996
Mr. Richard Capasso
10 Rolling Lane
Wayland, MA 01778
Dear Rick:
Reference is made to the Letter Agreement dated November 13, 1991,
by and between BioTransplant Incorporated and you (the “Letter Agreement”). The
Letter Agreement is hereby amended to add the following additional term:
Severance: In the event your employment is terminated without cause, you will
receive up to 6 months base salary, payable in 12 equal installments which will
be discontinued upon your securing other employment.
Please sign below to acknowledge your agreement with the foregoing.
Very truly yours, /s/ Elliot Lebowitz
--------------------------------------------------------------------------------
Elliot Lebowitz, Ph.D. President and Chief Executive Officer
AGREED:
By: /s/ Richard V. Capasso
--------------------------------------------------------------------------------
Richard V. Capasso
Date: April 15, 1996 |
EXHIBIT 10(a)(2)
COMMERCIAL SECURITY AGREEMENT
Principal
$5,000,000.00 Loan Date
03-26-2001 Maturity
Loan No
Call / Coll
Account
8211400008 Officer
Initials
References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.
Any item above containing ” * * * ” has been omitted due to text length
limitations.
Borrower:
Grantor:
HICKOK INCORPORATED
10514 DUPONT AVENUE
CLEVELAND, OH 44108-1348
SUPREME ELECTRONICS CORP.
1714 CARROLLTON AVE
GREENWOOD, MS 38930
Lender:
THE HUNTINGTON NATIONAL BANK
MIDDLEBURG HEIGHTS COMMERCIAL LENDING
P. 0. BOX 1558 - HZ0325
COLUMBUS, OH 43272-4195
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THIS COMMERCIAL SECURITY AGREEMENT dated 4-2-01 , is made and executed among
SUPREME ELECTRONICS CORP.(“Grantor”); HICKOK INCORPORATED ("Borrower") and THE
HUNTINGTON NATIONAL BANK (“Lender”).
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a security Interest in the Collateral to secure the Indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.
COLLATERAL DESCRIPTION. The word “Collateral” as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note and this
Agreement:
All Inventory, Chattel Paper, Accounts, Equipment and General Intangibles
In addition, the word “Collateral” also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
> (A) All accessions, attachments, accessories, tools, parts, supplies,
> replacements and additions to any of the collateral described herein, whether
> added now or later.
>
> (B) All products and produce of any of the property described in this
> Collateral section.
>
> (C) All accounts, general intangibles, instruments, rents, monies, payments,
> and all other rights, arising out of a sale, lease, or other disposition of
> any of the property described in this Collateral section.
>
> (D) All proceeds (including insurance proceeds) from the sale, destruction,
> loss, or other disposition of any of the property described in this Collateral
> section, and sums due from a third party who has damaged or destroyed the
> Collateral or from that party’s insurer, whether due to judgment, settlement
> or other process.
>
> (E) All records and data relating to any of the property described in this
> Collateral section, whether in the form of a writing, photograph, microfilm,
> microfiche, or electronic media, together with all of Grantor’s right, title;
> and interest in and to all computer software required to utilize, create,
> maintain, and process any such records or data on electronic media.
Despite any other provision of this Agreement, Lender is not granted, and will
not have, a nonpurchase money security interest in household goods, to the
extent such a security interest would be prohibited by applicable law. In
addition, if because of the type of any Property, Lender is required to give a
notice of the right to cancel under Truth in Lending for the Indebtedness, then
Lender will not have a security interest in such Collateral unless and until
such a notice is given.
CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures all
obligations, debts and liabilities, plus interest thereon, of Borrower to
Lender, or any one or more of them, as well as all claims by Lender against
Borrower or any one or more of them, whether now existing or hereafter arising,
whether related or unrelated to the purpose of the Note, whether voluntary or
otherwise, whether due or not due, direct or indirect, absolute or contingent,
liquidated or unliquidated and whether Borrower may be liable individually or
jointly with others, whether obligated as guarantor, surety, accommodation party
or otherwise, and whether recovery upon such amounts may be or hereafter may
become barred by any statute of limitations, and whether the obligation to repay
such amounts may be or hereafter may become otherwise unenforceable.
BORROWER’S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this
Agreement or by applicable law, (A) Borrower agrees that Lender need not tell
Borrower about any action or inaction Lender takes in connection with this
Agreement; (B) Borrower assumes the responsibility for being and keeping
informed about the Collateral; and (C) Borrower waives any defenses that may
arise because of any action or inaction of Lender, including without limitation
any failure of Lender to realize upon the Collateral or any delay by Lender in
realizing upon the Collateral; and Borrower agrees to remain liable under the
Note no matter what action Lender takes or fails to take under this Agreement.
GRANTOR’S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this
Agreement is executed at Borrower’s request and not at the request of Lender;
(B) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lender; (C) Grantor has established adequate
means of obtaining from Borrower on a continuing basis information about
Borrower’s financial condition; and (D) Lender has made no representation to
Grantor about Borrower or Borrower’s creditworthiness.
GRANTOR’S WAIVERS. Grantor waives all requirements of presentment, protest,
demand, and notice of dishonor or non-payment to Borrower or Grantor, or any
other party to the Indebtedness or the Collateral. Lender may do any of the
following with respect to any obligation of any Borrower, without first
obtaining the consent of Grantor: (A) grant any extension of time for any
payment, (B) grant any renewal, (C) permit any modification of payment terms or
other terms, or (D) exchange or release any Collateral or other security. No
such act or failure to act shall affect Lender’s rights against Grantor or the
Collateral.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Grantor’s accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.
GRANTOR’S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL . With
respect to the Collateral, Grantor represents and promises to Lender that:
> Perfection of Security Interest. Grantor agrees to execute financing
> statements and to take whatever other actions are requested by Lender to
> perfect and continue. Lender’s security interest in the Collateral. Upon
> request of Lender, Grantor will deliver to Lender any and all of the documents
> evidencing or constituting the Collateral, and Grantor will note Lender’s
> interest upon any and all chattel paper if not delivered to Lender for
> possession by Lender. This is a continuing Security Agreement and will
> continue in effect even though all or any part of the Indebtedness is pald in
> full and even though for a period of time Grantor may not be indebted to
> Lender.
>
> Notices to Lender. Grantor will promptly notify Lender in writing at Lender’s
> address shown above (or such other addresses as Lender may designate from time
> to time) prior to any (1) change in Grantor’s name; (2) change in Grantor’s
> assumed business name(s); (3) change in the management of the corporation
> Grantor; (4) change in the authorized signer(s); (5) change in Grantor’s
> principal office address; (6) conversion of Grantor to a new or different type
> of business entity; or (7) change in any other aspect of Grantor that directly
> or indirectly relates to any agreements between Grantor and Lender. No change
> in Grantor’s name will take effect until after Lender has been notified.
>
> No Violation. The execution and delivery of this Agreement will not violate
> any law or agreement governing Grantor or to which Grantor is a party, and its
> certificate or articles of incorporation and bylaws or code of regulations do
> not prohibit any term or condition of this Agreement.
>
> Enforceability of Collateral. To the extent the Collateral consists of
> accounts, chattel paper, or general intangibles, as defined by the Uniform
> Commercial Code, the Collateral is enforceable in accordance with its terms,
> is genuine, and fully complies with all applicable laws and regulations
> concerning form, content and manner of preparation and execution, and all
> persons appearing to be obligated on the Collateral have authority and
> capacity to contract and are in fact obligated as they appear to be on the
> Collateral. At the time any Account becomes subject to a security interest in
> favor of Lender, the Account shall be a good and valid account representing an
> undisputed, bona fide indebtedness incurred by the account debtor, for
> merchandise held subject to delivery instructions or previously shipped or
> delivered pursuant to a contract of sale, or for services previously performed
> by Grantor with or for the account debtor. So long as this Agreement remains
> in effect, Grantor shall not, without Lender's prior written consent,
> compromise, settle, adjust, or extend payment under or with regard to any such
> accounts. There shall be no setoffs or counterclaims against any of the
> Collateral, and no agreement shall have been
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(CONTINUED)
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> made under which any deductions or discounts may be claimed concerning the
> Collateral except those disclosed to Lender in writing.
>
> Location of the Collateral. Except in the ordinary course of Grantor's
> business, Grantor agrees to keep the Collateral (or to the extent the
> Collateral consists of intangible property such as accounts or general
> intangibles, the records concerning the Collateral) at Grantor's address shown
> above or at such locations as are acceptable to Lender. Upon Lender's request,
> Grantor will deliver to Lender in form satisfactory to Lender a schedule of
> real properties and Collateral locations relating to Grantor's operations,
> including without limitation thefollowing: (1) all real property Grantor owns
> or is purchasing; (2) all real property Grantor is renting or leasing; (3) all
> storage facilities Grantor owns, rents, leases, or uses; and (4) all other
> properties where Collateral is or may be located.
>
> Removal of the Collateral. Except in the ordinary course of Grantor's
> business, including the sales on inventory, Grantor shall not remove the
> Collateral from its existing location without Lender's prior written consent.
> To the extent that the Collateral consists of vehicles, or other titled
> property, Grantor shall not take or permit any action which would require
> application for certificates of title for the vehicles outside the State of
> Mississippi, without Lender's prior written consent. Grantor shall, whenever
> requested, advise Lender of the exact location of the Collateral.
>
> Transactions Involving Collateral. Except for inventory sold or accounts
> collected in the ordinary course of Grantor's business, or as otherwise
> provided for in this agreement, Grantor shall not sell, offer to sell, or
> otherwise transfer or dispose of the Collateral. While Grantor is not in
> default under this Agreement, Grantor may sell inventory, but only in the
> ordinary course of its business and only to buyers who qualify as a buyer in
> the ordinary course of business. A sale in the ordinary course of Grantor's
> business does not include a transfer in partial or total satisfaction of a
> debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or
> otherwise permit the Collateral to be subject to any lien, security interest,
> encumbrance, or charge, other than the security interest provided for on this
> Agreement, without the prior written consent of Lender. This includes security
> interests even if junior in right to the security interests granted under this
> Agreement. Unless waived by Lender, all proceeds from any disposition of the
> Collateral (for whatever reason) shall be held in trust for Lender and shall
> not be commingled with any other funds; provided however, this requirement
> shall not constitute consent by Lender to any sale or other disposition. Upon.
> receipt, Grantor shall immediately deliver any such proceeds to Lender.
>
> Title. Grantor represents and warrants to Lender that Grantor holds good and
> marketable title to the Collateral, free and clear of all liens and
> encumbrances except for the lien of this Agreement. No financing statement
> covering any of the Collateral is on file in any public office other than
> those which reflect the security interest created by this Agreement or to
> which Lender has specifically consented. Grantor shall defend Lender’s rights
> in the Collateral against the claims and demands of all other persons.
>
> Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause
> others to keep and maintain, the Collateral in good order, repair and
> condition at all times while this Agreement remains in effect. Grantor further
> agrees to pay when due all claims for work done on, or services rendered or
> material furnished in connection with the Collateral so that no lien or
> encumbrance may ever attach to or be filed against the Collateral.
>
> lnspection of Collateral. Lender and Lender’s designated representatives and
> agents shall have the right at all reasonable times to examine and inspect the
> Collateral wherever located.
>
> Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments
> and liens upon the Collateral, its use or operation, upon this Agreement, upon
> any promissory note or notes evidencing the Indebtedness, or upon any of the
> other Related Documents. Grantor may withhold any such payment or may elect to
> contest any lien if Grantor is in good faith conducting an appropriate
> proceeding to contest the obligation to pay and so long as Lender’s interest
> in the Collateral is not jeopardized in Lender’s sole opinion. If the
> Collateral is subjected to a lien which is not discharged within fifteen (15)
> days, Grantor shall deposit with Lender cash, a sufficient corporate surety
> bond or other security satisfactory to Lender in an amount adequate to provide
> for the discharge of the lien plus any interest, costs, attorneys’ fees or
> other charges that could accrue as a result of foreclosure or sale of the
> Collateral. In any contest Grantor shall defend itself and Lender and shall
> satisfy any final adverse judgment before enforcement against the Collateral.
> Grantor shall name Lender as an additional obligee under any surety bond
> furnished in the contest proceedings.. Grantor further agrees to furnish
> Lender with evidence that such taxes, assessments, and governmental and other
> charges have been paid in full and in a timely manner. Grantor may withhold
> any such payment or may elect to contest any lien if Grantor is in good faith
> conducting an appropriate proceeding to contest the obligation to pay and so
> long as Lender’s interest in the Collateral is not jeopardized.
>
> Compliance with Governmental Requirements. Grantor shall comply promptly with
> all laws, ordinances, rules and regulations of all governmental authorities,
> now or hereafter in effect, applicable to the ownership, production,
> disposition, or use of the Collateral. Grantor may contest in good faith any
> such law, ordinance or regulation and withhold compliance during any
> proceeding, including appropriate appeals, so long as Lender’s interest in the
> Collateral, in Lender’s opinion, is not jeopardized.
>
> Hazardous Substances. Grantor represents and warrants that the Collateral
> never has been, and never will be so long as this Agreement remains a lien on
> the Collateral, used in violation of any Environmental Laws or for the
> generation, manufacture, storage, transportation, treatment, disposal, release
> or threatened release of any Hazardous Substance. The representations and
> warranties contained herein are based on Grantor’s due diligence in
> investigating the Collateral for Hazardous Substances. Grantor hereby (1)
> releases and waives any future claims against Lender for indemnity or
> contribution in the event Grantor becomes liable for cleanup or other costs
> under any Environmental Laws, and (2) agrees to indemnify and hold harmless
> Lender against any and all claims and losses resulting from a breach of this
> provision of this Agreement. This obligation to indemnify shall survive the
> payment of the Indebtedness and the satisfaction of this Agreement.
>
> Maintenance of Casualty Insurance. Grantor shall procure and maintain all
> risks insurance, including without limitation fire, theft and liability
> coverage together with such other insurance as Lender may require with respect
> to the Collateral, in form, amounts, coverages and basis reasonably acceptable
> to Lender and issued by a company or companies reasonably acceptable to
> Lender. Grantor, upon request of Lender, will deliver to Lender from time to
> time the policies or certificates of insurance in form satisfactory to Lender,
> including stipulations that coverages will not be cancelled or diminished
> without at least twenty (20) days’ prior written notice to Lender and not
> including any disclaimer of the insurer’s liability for failure to give such a
> notice. Each insurance policy also shall include an endorsement providing that
> coverage in favor of Lender will not be impaired in any way by any act,
> omission or default of Grantor or any other person. In connection with all
> policies covering assets in which Lender holds or is offered a security
> interest, Grantor will provide Lender with such loss payable or other
> endorsements as Lender may require. If Grantor at any time fails to obtain or
> maintain any insurance as required under this Agreement, Lender may (but shall
> not be obligated to) obtain such insurance as Lender deems appropriate,
> including if Lender so chooses “single interest insurance,” which will cover
> only Lender’s interest in the Collateral.
>
> Application of Insurance Proceeds. Grantor shall promptly notify Lender of any
> loss or damage to the Collateral. Lender may make proof of loss if Grantor
> fails to do so within fifteen (15) days of the casualty. All proceeds of any
> insurance on the Collateral, including accrued proceeds thereon, shall be held
> by Lender as part of the Collateral. If Lender consents to repair or
> replacement of the damaged or destroyed Collateral, Lender shall, upon
> satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds
> for the reasonable cost of repair or restoration. If Lender does not consent
> to repair or replacement of the Collateral, Lender shall retain a sufficient
> amount of the proceeds to pay all of the Indebtedness, and shall pay the
> balance to Grantor. Any proceeds which have not been disbursed within six (6)
> months after their receipt and which Grantor has not committed to the repair
> or restoration of the Collateral shall be used to prepay the Indebtedness.
>
> Insurance Reserves. Lender may require Grantor to maintain with Lender
> reserves for payment of insurance premiums, which reserves shall be created by
> monthly payments from Grantor of a sum estimated by Lender to be sufficient to
> produce, at least fifteen (15) days before the premium due date, amounts at
> least equal to the insurance premiums to be paid, If fifteen (15) days before
> payment is due, the reserve funds are insufficient, Grantor shall upon demand
> pay any deficiency to Lender. The reserve funds shall be held by Lender as a
> general deposit and shall constitute a non-interest-bearing account which
> Lender may satisfy by payment of the insurance premiums required to be paid by
> Grantor as they become due. Lender does not hold the reserve funds in trust
> for Grantor, and Lender is not the agent of Grantor for payment of the
> insurance premiums required to be paid by Grantor. The responsibility for the
> payment of premiums shall remain Grantor’s sole responsibility.
>
> Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender
> reports on each existing policy of insurance showing such information as
> Lender may reasonably request including the following: (1) the name of the
> insurer; (2) the risks insured; (3) the amount of the policy; (4) the property
> insured; (5) the then current value on the basis of which insurance has been
> obtained and the manner of determining that value; and (6) the expiration date
> of the policy. In addition, Grantor shall upon request by .Lender (however not
> more often than annually) have an independent appraiser satisfactory to Lender
> determine, as applicable, the cash value or replacement cost of the
> Collateral.
GRANTOR’S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor’s right to possession
and beneficial use shall not app!y to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender’s security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for
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EXHIBIT 10(a)(2) Page 3
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(CONTINUED)
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application to the Indebtedness. If Lender at any time has possession of any
Collateral, whether before or after an Event of Default, Lender shall be deemed
to have exercised reasonable care in the custody and preservation of the
Collateral if Lender takes such action for that purpose as Grantor shall request
or as Lender, in Lender’s sole discretion, shall deem appropriate under the
circumstances, but failure to honor any request by Grantor shall not of itself
be deemed to be a failure to exercise reasonable care. Lender shall not be
required to take any steps necessary topreserve any rights in the Collateral
against prior parties, nor to protect, preserve or maintain any security
interest .given to secure the indebtedness.
LENDER’S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender’s interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor’s failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor’s behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B)
be added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1,) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due end payable at the Note’s
maturity. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
> Payment Default. Borrower fails to make any payment when due under the
> Indebtedness.
>
> Other Defaults. Borrower or Grantor fails to comply with or to perform any
> other term, obligation, covenant or condition contained in this Agreement or
> in any of the Related Documents or to comply with or to perform any term,
> obligation, covenant or condition contained in any other agreement between
> Lender and Grantor.
>
> False Statements. Any warranty, representation or statement made or furnished
> to Lender by Borrower or Grantor or on Borrower's or Grantor’s behalf under
> this Agreement, the Note, or the Related Documents is false or misleading in
> any material respect, either now or at the time made or furnished becomes
> false or misleading at any time thereafter.
>
> Defective Collateralization. This Agreement or any of the Related Documents
> ceases to be in full force and effect (including failure of any collateral
> document to create a valid and perfected security interest or lien) at any
> time and for any reason.
>
> Insolvency. The dissolution or termination of Borrower's or Grantor’s
> existence as a going business, the insolvency of Borrower or Grantor, the
> appointment of a receiver for any part of Borrower's or Grantor’s property,
> any assignment for the benefit of creditors, any type of creditor workout, or
> the commencement of any proceeding under any bankruptcy or insolvency laws by
> or against Borrower or Grantor.
>
> Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
> proceedings, whether by judicial proceeding, self-help, repossession or any
> other method, by any creditor of Borrower or Grantor or by any governmental
> agency against any collateral securing the Indebtedness. This includes a
> garnishment of any of Borrower's or Grantor’s accounts, including deposit
> accounts, with Lender. However, this Event of Default shall not apply if there
> is a good faith dispute by Borrower or Grantor as to the validity or
> reasonableness of the claim which is the basis of the creditor or forfeiture
> proceeding and if Borrower or Grantor gives Lender written notice of the
> creditor or forfeiture proceeding and deposits with Lender monies or a surety
> bond for the creditor or forfeiture proceeding, in an amount determined by
> Lender, in its sole discretion, as being an adequate reserve or bond for the
> dispute.
>
> Events Affecting Guarantor. Any of the preceding events occurs with respect to
> Guarantor of any of the lndebtedness dies or becomes incompetent or revokes or
> disputes the validity of, or liability under, any Guaranty of the
> Indebtedness.
>
> Adverse Change. A material adverse change occurs in Borrower's or Grantor’s
> financial condition, or Lender believes the prospect of payment or performance
> of the lndebteidness is impaired.
>
> Insecurity. Lender in good faith-believes itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Mississippi Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
> Accelerate indebtedness. Lender may declare the entire Indebtedness, including
> any prepayment penalty which Borrower would be required to pay, immediately
> due and payable, without notice of any kind to Borrower or Grantor.
>
> Assemble Collateral. Lender may require Grantor to deliver to Lender all or
> any portion of the Collateral and any and all certificates of title and other
> documents relating to the Collateral. Lender may require Grantor to assemble
> the Collateral and make it available to Lender at a place to be designated by
> Lender. Lender also shall have full power to enter upon the property of
> Grantor to take possession of and remove the Collateral. If the Collateral
> contains other goods not covered by this Agreement at the time of
> repossession, Grantor agrees Lender may take such other goods, provided that
> Lender makes reasonable efforts to return them to Grantor after repossession.
>
> Sell the Collateral. Lender shall have full power to sell, lease, transfer, or
> otherwise deal with the Collateral or proceeds thereof in Lender’s own name or
> that of Grantor. Lender may sell the Collateral at public auction or private
> sale. Unless the Collateral threatens to decline speedily in value or is of a
> type customarily sold on a recognized market, Lender will give Grantor
> reasonable notice of the time after which any private sale or any other
> intended disposition of the Collateral is to be made. The requirements of
> reasonable notice shall be met if such notice is given at least fifteen (15)
> days before the time of the sale or disposition. All expenses relating to the
> disposition of the Collateral, including without limitation the expenses of
> retaking, holding, insuring, preparing. for sale and selling the Collateral,
> shall become a part of the Indebtedness secured by this Agreement and shall be
> payable on demand, with interest at the Note rate from date of expenditure
> until repaid.
>
> Appoint Receiver. Lender shall have the right to have a receiver appointed to
> take possession of all or any part of the Collateral, with the power to
> protect and preserve the Collateral, to operate the Collateral preceding
> foreclosure or sale, and to collect the Rents from the Collateral and apply
> the proceeds, over and above the cost of the receivership, against the
> Indebtedness. The receiver may serve without bond if permitted by law.
> Lender’s right to the appointment of a receiver shall exist whether or not the
> apparent value of the Collateral exceeds the Indebtedness by a substantial
> amount. Employment by Lender shall not disqualify a person from serving as a
> receiver.
>
> Collect Revenues, Apply Accounts. Lender, either itself or through a receiver,
> may collect the payments, rents, income, and revenues from the Collateral.
> Lender may at any time in Lender’s discretion transfer any Collateral into
> Lender’s own name or that of Lender’s nominee and receive the payments, rents,
> income, and revenues therefrom and hold the same as security for the
> Indebtedness or apply it to payment of the Indebtedness in such order of
> preference as Lender may determine. Insofar as the Collateral consists of
> accounts, general intangibles, insurance policies, instruments, chattel paper,
> chases in action, or similar property, Lender may demand, collect, receipt
> for, settle, compromise, adjust, sue for, foreclose, or realize on the
> Collateral as Lender may determine, whether or not Indebtedness or Collateral
> is then due, For these purposes, Lender may, on behalf of and in the name of
> Grantor, receive, open and dispose of mail addressed to Grantor; change any
> address to which mail and payments are to be sent; and endorse notes, checks,
> drafts, money orders, documents of title, instruments and items pertaining to
> payment, shipment, or storage of any Collateral. To facilitate collection,
> Lender may notify account debtors and obligors on any Collateral to make
> payments directly to Lender.
>
> Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
> Lender may obtain a judgment against Borrower for any deficiency remaining on
> the Indebtedness due to Lender after application of all amounts received from
> the exercise of the rights provided in this Agreement. Borrower shall be
> liable for a deficiency even if the transaction described in this subsection
> is a sale of accounts or chattel paper.
>
> Other Rights and Remedies. Lender shall have all the rights and remedies of a
> secured creditor under the provisions of the Uniform Commercial Code, as may
> be amended from time to time. In addition, Lender shall have and may exercise
> any or all other rights and remedies it may have available at law, in equity,
> or otherwise.
>
> Election of Remedies. Except as may be prohibited by applicable law, all of
> Lender’s rights and remedies, whether evidenced by this Agreement, the Related
> Documents, or by any other writing, shall be cumulative and may be exercised
> singularly or concurrently. Election by Lender to pursue any remedy shall not
> exclude pursuit of any other remedy, and an election to make expenditures or
> to take action to perform an obligation of Grantor under this Agreement, after
> Grantor’s failure to perform, shall not affect Lender’s right to declare a
> default and exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
> Amendments. This Agreement, together with any Related Documents, constitutes
> the entire understanding and agreement of the parties as to the matters set
> forth in this Agreement. No alteration off or amendment to this Agreement
> shall be effective unless given in writing
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EXHIBIT 10(a)(2) Page 4
COMMERCLAL SECURLTY AGREEMENT
(CONTINUED)
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> and signed by the party or parties sought to be charged or bound by the
> alteratiom of amendment.
>
> Attorneys’ Fees; Expenses. Grantor agrees to pay upon demand all of Lender’s
> costs and expenses, including Lender’s attorneys’ fees and Lender’s legal
> expenses, incurred in connection with the enforcement of this Agreement.
> Lender may hire or pay someone else to help enforce this Agreement, and
> Grantor shall pay the costs and expenses of such enforcement. Costs and
> expenses include Lender’s attorneys’ fees and legal expenses whether or not
> there is a lawsuit, including attorneys’ fees and legal expenses for
> bankruptcy proceedings (including efforts to modify or vacate any automatic
> stay or injunction), appeals, and any anticipated post-judgment collection
> services. Grantor also shall pay all court costs and such additional fees as
> may be directed by the court.
>
> Caption Headings. Caption headings in this Agreement are for convenience
> purposes only and are not to be used to interpret or define the provisions of
> this Agreement.
>
> Governing Law. This Agreement will be governed by, construed and enforced in
> accordance with federal law and the laws of the State of Ohio, except and only
> to the extent of procedural matters related to the perfection and enforcement
> of Lender’s rights and remedies against the Collateral, which matters shall be
> governed by the laws of the State of Mississippi. However, in the event that
> the enforceability or validity of any provision of this Agreement is
> challenged or questioned, such provision shall be governed by whichever
> applicable state or federal law would uphold or would enforce such challenged
> or questioned provision. The loan transaction which is evidenced by the Note
> and this Agreement has been applied for, considered, approved and made, and
> till necessary loan documents have been accepted by Lender in the State of
> Ohio.
>
> Joint and Several Liability. All obligations of Borrower and Grantor under
> this Agreement shall be joint and several, and all references to Grantor shall
> mean each and every Grantor, and all references to Borrower shall mean each
> and every Borrower. This means that each Borrower and Grantor signing below is
> responsible for all obligations in this Agreement. Where any one or more of
> the parties is a corporation, partnership, limited liability company or
> similar entity, it is not necessary for Lender to inquire into the powers of
> any of the officers, directors, partners, members, or other agents acting or
> purporting to act on the entity’s behalf, and any obligations made or created
> in reliance upon the professed exercise of such powers shall be guaranteed
> under this Agreement.
>
> No Waiver by Lender. Lender shall not be deemed to have waived any rights
> under this Agreement unless such waiver is given in writing and signed by
> Lender. No delay or omission on the part of Lender in exercising any right
> shall operate as a waiver of such right or any other right. A waiver by Lender
> of a provision of this Agreement shall not prejudice or constitute a waiver of
> Lender’s right otherwise to demand strict compliance with that provision or
> any other provision of this Agreement. No prior waiver by Lender, nor any
> course of dealing between Lender and Grantor, shall constitute a waiver of any
> of Lender’s rights or of any of Grantor’s obligations as to any future
> transactions. Whenever the consent of Lender is required under this Agreement,
> the granting of such consent by Lender in any instance shall not constitute
> continuing consent to subsequent instances where such consent is required and
> in all cases such consent may be granted or withheld in the sole discretion of
> Lender.
>
> Notices. Any notice required to be given under this Agreement shall be given
> in writing, and shall be effective when actually delivered, when actually
> received by telefacsimile (unless otherwise required by law), when deposited
> with a nationally recognized overnight courier, or, if mailed, when deposited
> in the United States mail, as first class, certified or registered mail
> postage prepaid, directed to the addresses shown near the beginning of this
> Agreement. Any party may change its address for notices under this Agreement
> by giving formal written notice to the other parties, specifying that the
> purpose of the notice is to change the party’s address. For notice purposes,
> Grantor agrees to keep Lender informed at all times of Grantor’s current
> address. Unless otherwise provided or required by law, If there is more than
> one Grantor, any notice given by Lender to any Grantor Is deemed to be notice
> given to all Grantors.
>
> Power of Attorney. Grantor hereby appoints Lender as Grantor’s irrevocable
> attorney-in-fact for the purpose of executing any documents necessary to
> perfect or to continue the security interest granted in this Agreement .
> Lender may at any time, and without further authorization from Grantor, file a
> carbon, photographic or other reproduction of any financing statement or of
> this Agreement for use as a financing statement. Grantor will reimburse Lender
> for all expenses for the perfection and the continuation of the perfection of
> Lender’s security interest in the Collateral.
>
> Severability. If a court of competent jurisdiction finds any provision of this
> Agreement to be illegal, invalid, or unenforceable as to any circumstance,
> that finding shall not make the offending provision illegal, invalid, or
> unenforceable as to any other circumstance. If feasible, the offending
> provision shall be considered modified so that it becomes legal, valid and
> enforceable. If the offending provision cannot be so modified, it shall be
> considered deleted from this Agreement. Unless otherwise required by law, the
> illegality, invalidity, or unenforceability of any provision of this Agreement
> shall not affect the legality, validity or enforceability of any other
> provision of this Agreement.
>
> Successors and Assigns. Subject to any limitations stated in this Agreement on
> transfer of Grantor’s interest, this Agreement shall be binding upon and inure
> to the benefit of the parties, their successors and assigns. If ownership of
> the Collateral becomes vested in a person other than Grantor, Lender, without
> notice to Grantor, may deal with Grantor’s successors with reference to this
> Agreement and the Indebtedness by way of forbearance or extension without
> releasing Grantor from the obligations of this Agreement or liability under
> the Indebtedness.
>
> Survival of Representations and Warranties. All representations, warranties,
> and agreements made by Grantor in this Agreement shall survive the execution
> and delivery of this Agreement,shall be continuing in nature, and shall remain
> in full force and effect until such time as Borrower’s Indebtedness shall be
> paid in full.
>
> Time is of the Essence. Time is of the essence in the performance of this
> Agreement.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:
> Account. The word “Account” means a trade account, account receivable, other
> receivable, or other right to payment for goods sold or services rendered
> owing to Grantor (or to a third party grantor acceptable to Lender).
>
> Agreement. The word “Agreement” means this Commercial Security Agreement; as
> this Commercial Security Agreement may be amended or modified from time to
> time, together with all exhibits and schedules attached to this Commercial
> Security Agreement from time to time.
>
> Borrower. The word “Borrower” means HICKOK INCORPORATED, and all other persons
> and entities signing the Note in whatever capacity.
>
> Collateral. The word “Collateral” means all of Grantor’s right, title and
> interest in and to all the Collateral as described in the Collateral
> Description section of this Agreement.
>
> Default. The word “Default” means the Default set forth in this Agreement in
> the section titled “Default”.
>
> Environmental Laws. The words “Environmental Laws” mean any and all state,
> federal and local statutes, regulations and ordinances relating to the
> protection of human health or the environment, including without limitation
> the Comprehensive Environmental Response, Compensation, and Liability Act of
> 1980, as amended, 42 U.S.C. Section 9601; et seq. (“CERCLA”), the Superfund
> Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the
> Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
> Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
> other applicable state or federal laws, rules, or regulations adopted pursuant
> thereto.
>
> Event of Default. The words “Event of Default” mean any of the events of
> default set forth in this Agreement in the default section of this Agreement.
>
> Grantor. The word “Grantor” means SUPREME ELECTRONICS CORP.
>
> Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation
> party of any or all of the Indebtedness.
>
> Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender,
> including without limitation a guaranty of all or part of the Note
>
> Hazardous Substances. The words “Hazardous Substances” mean materials that,
> because of their quantity, concentration or physical, chemical or infectious
> characteristics, may cause or pose a present or potential hazard to human
> health or the environment when improperly used, treated, stored, disposed of,
> generated, manufactured, transported or otherwise handled. The words
> “Hazardous Substances” are used in their very broadest sense and include
> without limitation any and all hazardous or toxic substances, materials or
> waste as defined by or listed under the Environmental Laws. The term
> “Hazardous Substances” also includes, without limitation, petroleum and
> petroleum by-products or any fraction thereof and asbestos.
>
> Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the
> Note or Related Documents, including all principal and interest together with
> all other indebtedness and costs and expenses for which Borrower is
> responsible under this Agreement or under any of the Related Documents.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXHIBIT 10(a)(2) Page 5
COMMERCLAL SECURLTY AGREEMENT
(CONTINUED)
--------------------------------------------------------------------------------
> Lender. The word “Lender” means THE HUNTINGTON NATIONAL BANK; its successors
> and assigns.
>
> Note. The word “Note” means the Note executed by Grantor in the principal
> amount of $5,000,000.00 dated 2-28-97 together with all renewals of,
> extensions of, modifications of, refinancings of, consolidations of, and
> substitutions for the note or credit agreement.
>
> Related Documents. The words “Related Documents” mean all promissory notes,
> credit agreements, loan agreements, environmental agreements, guaranties,
> security agreements, mortgages, deeds of trust, security deeds, collateral
> mortgages, and all other instruments, agreements and documents, whether now or
> hereafter existing, executed in connection with the Indebtedness.
BORROWER AND GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
4-2-01
GRANTOR:
SUPREME ELECTRONICS CORP.
By: /s/ Robert L. Bauman
ROBERT L. BAUMAN,
CHAIRMAN of SUPREME ELECTRONICS CORP.
BORROWER:
HICKOK INCORPORATED
By: /s/ Robert L. Bauman
ROBERT L. BAUMAN,
President of HICKOK INCORPORATED
-------------------------------------------------------------------------------- |
Exhibit 10.5
HUNGRY MINDS
909 Third Avenue, 20th Floor
New York, NY 10022
Mr. John Kilcullen
Chairman & CEO
Hungry Minds, Inc.
909 Third Avenue, 20th Floor
New York, NY 10022
Re: HMI Executive Retention Plan
Dear John,
This letter Agreement between Hungry Minds, Inc. (HMI) and John Kilcullen
(Executive) describes the Executive Retention Program approved by the
Compensation Committee of the Board of Directors. This plan is effective January
8, 2001 and concludes no later than June 30, 2001 subject to the provisions
outlined below.
The purpose of this Executive Retention Program is to provide an added financial
incentive for key Executives to continue employment with HMI during a period of
critical importance to the long-term success of the enterprise and in light of
the recently announced head count reduction program and reorganization of the
company. It is prudent to recognize the contribution, as well as the operating
importance of retaining key Executives in this situation.
If you do not leave the employ of the company prior to the earlier of; the date
of (i) the successful conclusion of a transaction the result of which is that
the Company ceases to be a public company required to file reports with the
Securities and Exchange Commission under Section 13(a) of the Securities
Exchange Act or the sale or conveyance of all, or significant part or parts of
the Company to a new owner or owners, or (ii) June 30, 2001, you will receive a
retention bonus of $ 150,000.00 in a single payment.
If, however, after January 8, 2001 and before the earlier of the dates defined
in the above paragraph, you resign for "good reason," as defined in your
employment or compensation agreement dated July 1, 1998, a "change of control"
event occurs, as defined in your employment or compensation agreement dated July
1, 1998, you are terminated without cause, or your death or incapacity, payment
of your full retention bonus will be made concurrent with such event.
For the purposes of this agreement, "Cause" for termination is defined as:
i. your conviction of, or entry of a nolo contendere or guilty plea to, a
felony or any other crime involving moral turpitude, by or before a court
of competent jurisdiction;
ii. your commission of any act or acts of dishonesty or moral turpitude;
iii. your malfeasance, fraud or willful misconduct in connection with your
employment;
iv. gross negligence by you in the performance of your duties or in the
violation of the policies of the Company.
Any payment you receive from this Retention Program is in addition to all
other payments to which you are entitled under any compensation, or bonus
plan and under any other Company benefit or incentive plan existing at
the time this plan commences or that is instituted prior to its
conclusion.
Payment under this plan is subject to all regular and customary payroll
taxes and withholding. At the election of the Executive, the Federal Tax
withholding calculation used in this payment may either be the current
applicable "Flat Percent Rate" for bonus payments or the applicable
standard table withholding.
This agreement does not change or supercede any other employment or
compensation agreement or arrangement with HMI but is in addition
thereto.
Employee: Hungry Minds:
/s/ John Kilcullen
3/22/01
/s/ Kelly Conlin
3/22/01
Date Date
--------------------------------------------------------------------------------
HUNGRY MINDS
909 Third Avenue, 20th Floor
New York, NY 10022
Mr. Bill Barry
President & COO
Hungry Minds, Inc.
909 Third Avenue, 20th Floor
New York, NY 10022
Re: HMI Executive Retention Plan
Dear Bill,
This letter Agreement between Hungry Minds, Inc. (HMI) and Bill Barry
(Executive) describes the Executive Retention Program approved by the
Compensation Committee of the Board of Directors. This plan is effective
January 8, 2001 and concludes no later than June 30, 2001 subject to the
provisions outlined below.
The purpose of this Executive Retention Program is to provide an added
financial incentive for key Executives to continue employment with HMI
during a period of critical importance to the long-term success of the
enterprise and in light of the recently announced head count reduction
program and reorganization of the company. It is prudent to recognize the
contribution, as well as the operating importance of retaining key
Executives in this situation.
If you do not leave the employ of the company prior to the earlier of;
the date of (i) the successful conclusion of a transaction the result of
which is that the Company ceases to be a public company required to file
reports with the Securities and Exchange Commission under Section 13(a)
of the Securities Exchange Act or the sale or conveyance of all, or
significant part or parts of the Company to a new owner or owners, or
(ii) June 30, 2001, you will receive a retention bonus of $ 80,682.00 in
a single payment.
If, however, after January 8, 2001 and before the earlier of the dates
defined in the above paragraph, you resign for "good reason," as defined
in your employment or compensation agreement dated March 1, 2000, a
"change of control" event occurs, as defined in your employment or
compensation agreement dated March 1, 2000, you are terminated without
cause, or your death or incapacity, payment of your full retention bonus
will be made concurrent with such event.
For the purposes of this agreement, "Cause" for termination is defined
as:
v. your conviction of, or entry of a nolo contendere or guilty plea to, a
felony or any other crime involving moral turpitude, by or before a court
of competent jurisdiction;
vi. your commission of any act or acts of dishonesty or moral turpitude;
vii. your malfeasance, fraud or willful misconduct in connection with your
employment;
viii. gross negligence by you in the performance of your duties or in the
violation of the policies of the Company.
Any payment you receive from this Retention Program is in addition to all
other payments to which you are entitled under any compensation, or bonus
plan and under any other Company benefit or incentive plan existing at
the time this plan commences or that is instituted prior to its
conclusion.
Payment under this plan is subject to all regular and customary payroll
taxes and withholding. At the election of the Executive, the Federal Tax
withholding calculation used in this payment may either be the current
applicable "Flat Percent Rate" for bonus payments or the applicable
standard table withholding.
This agreement does not change or supercede any other employment or
compensation agreement or arrangement with HMI but is in addition
thereto.
Employee: Hungry Minds:
/s/ William Barry
4/10/01
/s/ John J. Kilcullen
3/22/01
Date Date
--------------------------------------------------------------------------------
HUNGRY MINDS
909 Third Avenue, 20th Floor
New York, NY 10022
Mr. John Harris
Senior Vice President & CFO
Hungry Minds, Inc.
909 Third Avenue, 20th Floor
New York, NY 10022
Re: HMI Executive Retention Plan
Dear John,
This letter Agreement between Hungry Minds, Inc. (HMI) and John Harris
(Executive) describes the Executive Retention Program approved by the
Compensation Committee of the Board of Directors. This plan is effective
January 8, 2001 and concludes no later than June 30, 2001 subject to the
provisions outlined below.
The purpose of this Executive Retention Program is to provide an added
financial incentive for key Executives to continue employment with HMI
during a period of critical importance to the long-term success of the
enterprise and in light of the recently announced head count reduction
program and reorganization of the company. It is prudent to recognize the
contribution, as well as the operating importance of retaining key
Executives in this situation.
If you do not leave the employ of the company prior to the earlier of;
the date of (i) the successful conclusion of a transaction the result of
which is that the Company ceases to be a public company required to file
reports with the Securities and Exchange Commission under Section 13(a)
of the Securities Exchange Act or the sale or conveyance of all, or
significant part or parts of the Company to a new owner or owners, or
(ii) June 30, 2001, you will receive a retention bonus of $ 58,007.00 in
a single payment.
If, however, after January 8, 2001 and before the earlier of the dates
defined in the above paragraph, you resign for "good reason," as defined
in your employment or compensation agreement dated May 1, 2000, a "change
of control" event occurs, as defined in your employment or compensation
agreement dated May 1, 2000, you are terminated without cause, or your
death or incapacity, payment of your full retention bonus will be made
concurrent with such event.
For the purposes of this agreement, "Cause" for termination is defined
as:
ix. your conviction of, or entry of a nolo contendere or guilty plea to, a
felony or any other crime involving moral turpitude, by or before a court
of competent jurisdiction;
x. your commission of any act or acts of dishonesty or moral turpitude;
xi. your malfeasance, fraud or willful misconduct in connection with your
employment;
xii. gross negligence by you in the performance of your duties or in the
violation of the policies of the Company.
Any payment you receive from this Retention Program is in addition to all
other payments to which you are entitled under any compensation, or bonus
plan and under any other Company benefit or incentive plan existing at
the time this plan commences or that is instituted prior to its
conclusion.
Payment under this plan is subject to all regular and customary payroll
taxes and withholding. At the election of the Executive, the Federal Tax
withholding calculation used in this payment may either be the current
applicable "Flat Percent Rate" for bonus payments or the applicable
standard table withholding.
This agreement does not change or supercede any other employment or
compensation agreement or arrangement with HMI but is in addition
thereto.
Employee: Hungry Minds:
/s/ John Harris
3/22/01
/s/ William Barry
3/22/01
Date Date
--------------------------------------------------------------------------------
HUNGRY MINDS
909 Third Avenue, 20th Floor
New York, NY 10022
Mr. John Ball
Executive Vice President & Secretary
Hungry Minds, Inc.
909 Third Avenue, 20th Floor
New York, NY 10022
Re: HMI Executive Retention Plan
Dear John,
This letter Agreement between Hungry Minds, Inc. (HMI) and John Ball
(Executive) describes the Executive Retention Program approved by the
Compensation Committee of the Board of Directors. This plan is effective
January 8, 2001 and concludes no later than June 30, 2001 subject to the
provisions outlined below.
The purpose of this Executive Retention Program is to provide an added
financial incentive for key Executives to continue employment with HMI
during a period of critical importance to the long-term success of the
enterprise and in light of the recently announced head count reduction
program and reorganization of the company. It is prudent to recognize the
contribution, as well as the operating importance of retaining key
Executives in this situation.
If you do not leave the employ of the company prior to the earlier of;
the date of (i) the successful conclusion of a transaction the result of
which is that the Company ceases to be a public company required to file
reports with the Securities and Exchange Commission under Section 13(a)
of the Securities Exchange Act or the sale or conveyance of all, or
significant part or parts of the Company to a new owner or owners, or
(ii) June 30, 2001, you will receive a retention bonus of $ 139,743.00 in
a single payment.
If, however, after January 8, 2001 and before the earlier of the dates
defined in the above paragraph, you resign for "good reason," as defined
in your employment or compensation agreement dated July 1, 1998, a
"change of control" event occurs, as defined in your employment or
compensation agreement dated July 1, 1998, you are terminated without
cause, or your death or incapacity, payment of your full retention bonus
will be made concurrent with such event.
For the purposes of this agreement, "Cause" for termination is defined
as:
xiii. your conviction of, or entry of a nolo contendere or guilty plea to, a
felony or any other crime involving moral turpitude, by or before a court
of competent jurisdiction;
xiv. your commission of any act or acts of dishonesty or moral turpitude;
xv. your malfeasance, fraud or willful misconduct in connection with your
employment;
xvi. gross negligence by you in the performance of your duties or in the
violation of the policies of the Company.
Any payment you receive from this Retention Program is in addition to all other
payments to which you are entitled under any compensation, or bonus plan and
under any other Company benefit or incentive plan existing at the time this plan
commences or that is instituted prior to its conclusion.
Payment under this plan is subject to all regular and customary payroll taxes
and withholding. At the election of the Executive, the Federal Tax withholding
calculation used in this payment may either be the current applicable "Flat
Percent Rate" for bonus payments or the applicable standard table withholding.
This agreement does not change or supercede any other employment or compensation
agreement or arrangement with HMI but is in addition thereto.
Employee: Hungry Minds:
/s/ John Ball
3/22/01 /s/ William Barry 3/22/01
Date Date
|
SYNALLOY CORPORATION, INC.
1998 Long Term Incentive Stock Plan
Purpose. This 1998 Long Term Incentive Stock Plan (the "Plan") is intended to
provide key executive employees of Synalloy Corporation (the "Company", which
term shall include Synalloy Corporation and any of its affiliates or
subsidiaries) with the opportunity to participate in the Company's future
prosperity and growth by purchasing stock of the Company. The purpose of the
Plan is to provide long-term incentive for gain through outstanding service to
the Company and its shareholders and to assist in attracting and retaining
executives of ability and initiative.
Administration
. The Plan shall be administered by the Compensation and Long Term Incentive
Committee (the "Committee") which shall consist of three members of the
Company's Board of Directors who are Non-Employee Directors. Members of the
Committee are not eligible to participate in the Plan (or any other option or
incentive plan of the Company) while serving on the Committee, nor shall they
have been so eligible for the twelve (12) months immediately preceding such
appointment. A Non-Employee Director shall mean a director who (1) is not
currently an officer of the Company (as defined in 17 CFR § 240.16a-1(f)) or a
parent or subsidiary of the Company, or otherwise currently employed by the
Company or a parent or subsidiary of the Company; (2) does not receive
compensation, either directly or indirectly, from the Company or a parent or
subsidiary of the Company, for services rendered as a consultant or in any
capacity other than as a director, except for an amount that does not exceed the
dollar amount for which disclosure would be required pursuant to 17 CFR
§ 229.404(a); (3) does not possess an interest in any other transaction for
which disclosure would be required pursuant to 17 CFR § 229.404(a); and (4) is
not engaged in a business relationship for which disclosure would be required
pursuant to 17 CFR § 229.404(b).
The Committee shall have complete authority and discretion to interpret all
provisions of this Plan consistent with law, to prescribe the form of
instruments evidencing the stock options granted under the Plan, to adopt,
amend, and rescind general and special rules and regulations for its
administration, and to make all other determinations necessary or advisable for
the administration of the Plan. No member of the Committee shall be liable for
any action or determination in respect thereto, if made in good faith, and shall
be entitled to indemnification by the Company with respect to all matters
arising from his service on the Committee to the fullest extent allowable under
applicable law.
Eligibility
. Any salaried employee of the Company who in the judgment of the Committee
occupies a management position in which his efforts contribute to the profit and
growth of the Company may be granted one or more options under the Plan. The
Committee will designate employees to whom options are to be granted and will
specify the number of shares subject to each option. The Committee shall have
the discretion to determine to what extent, if any, persons employed on a
part-time or consulting basis will be eligible to participate in the Plan;
provided however, that an employee who, immediately before an option is granted,
owns more than 10% of the combined voting power of the Company, shall not be
eligible for an option grant.
4. Stock. The stock to be subject to options under the Plan shall be shares of
the Company's common stock of the par value of $1.00 per share (the "common
stock"), and may be either authorized and unissued or held in the treasury of
the Company. The total amount of stock on which options may be granted under the
Plan shall not exceed 350,000 shares, subject to adjustment to reflect any
change in the capitalization of the Company, as more fully provided in Section
10 hereof. The Committee will maintain records showing the cumulative total of
all shares subject to options outstanding under this Plan.
If any option is terminated, in whole or in part, for any reason other than the
exercise thereof, the shares allocated to the option or portion thereof so
terminated may be reallocated to another option or options to be granted under
this Plan.
5. Option Price. The price per share for shares purchased upon the exercise of
any option granted under the Plan will be one hundred percent (100%) of the fair
market value per share of such shares on the date of grant of the option.
Payment shall be made to the Company either (i) in cash or, at the discretion of
the Committee; (ii) by delivery to the Company of shares of common stock owned
by the option holder and having a fair market value on the date of exercise
equal to the fair market value of the shares covered by the option on the date
of the grant of the option, or (iii) a combination of cash and the value of such
shares mentioned in (ii) above. As used in this Plan "fair market value" per
share of the common stock shall mean the average of the bid and ask prices at
the closing of the common stock on the day before the date of the grant as
reported on NASDAQ National Market System (or such other exchange or market on
which such value is being determined) or, if the Exchange shall be closed on
that date, then on the last preceding date on which the Exchange was open for
trading. In determining fair market value, the Committee may rely upon sales
information reported on the consolidated tape or other consolidated reporting
system and, in the absence of any sale or sales on the dates referred to in the
preceding sentence, or a recognized market for the Company's common stock, the
Committee may determine fair market value by whatever recognized method it deems
appropriate.
6. Grant of Options. The Committee, at any time, during the duration of the
Plan, may authorize the granting of options to employees of the Company eligible
under Section 3 hereof, subject to the limitations provided herein. The date on
which an option shall be granted shall be the date the Committee authorizes such
grant or such later date as may be determined by the Committee at the time such
grant is authorized. Any employee may hold more than one option.
7. Exercise of Options. Options granted under the Plan shall be exercisable only
in the following manner; provided, however, that in no event shall an option be
exercisable more than ten years of the date of grant as set forth in paragraph 6
above.
By an Employee During Continuous Employment
. The aggregate fair market value of the shares of the Company's common stock,
as determined at the time of grant, as to which options are exercisable for the
first time by an employee during any calendar year shall not exceed $100,000.00.
Subject to this limitation, an employee may exercise any option during the
applicable Exercise Periods in accordance with the following schedule:
Time from Grant Date
(Exercise Period)
Percentages of Options
Granted Which may be
Exercisable in that Exercise
Period (including those
previously exercised)
Up to One Year
0%
One to Two Years
20%
Two to Three Years
40%
Three to Four Years
60%
Four to Five Years
80%
Five to Ten Years
100%
An employee may not exercise any part of an option granted under this Plan
unless, at the time of such exercise, he has been in the continuous employment
of the Company since the date the option was granted. The Committee may decide
in each case to what extent leaves of absence for government or military
service, illness, temporary disability, or other reasons shall not for this
purpose be deemed interruptions of continuous employment.
By a Former Employee
. No person may exercise an option after he ceases to be an employee of the
Company unless he ceases to be an employee of the Company as a result of normal
retirement, early retirement, or disability retirement, either physical or
mental, or on account of physical or mental disability. In these instances, the
option may be exercised by him, his attorney-in-fact, or his guardian, as
appropriate, at any time after the date on which he ceased to be an employee,
but not later than the end of the fixed term of the option and no earlier
(except in the event of a cessation of employment by reason of disability) than
one year from the date the option was granted.
In Case of Death
. If any employee or former employee who was granted an option dies, and at the
time of death was entitled to exercise any option granted under this Plan,
pursuant to Sub-Sections A and B above, the option may be exercised within six
(6) months after the death of the employee or former employee (but no later than
the end of the fixed term of the option) by his estate, or by a person who
acquired the right to exercise the option by bequest or inheritance.
Sale or Merger
. Notwithstanding the limitation on the Exercise Period set forth in Section 7A
above, (except as pertains to the $100,000 per year limitation), an employee may
exercise all options then exercisable by him as provided for in Section 7A above
plus fifty percent (50%) of the options granted to him but which are not then
exercisable because the requisite time from the date of grant has not lapsed in
the event that either (i) all or substantially all of the assets or common stock
of the Company (or a subsidiary or division of the Company in which he is
employed) is sold to an entity not affiliated with the Company, (ii) a merger or
share exchange with an unaffiliated party occurs in which the Company is not the
surviving entity or (iii) a similar sale or exchange transaction occurs which in
the Committee's sole discretion justifies such exercise right.
8. Method of Exercise. Each option granted under the Plan shall be deemed
exercised when the holder shall so notify the Company in writing, addressed to
the Company's secretary, together with payment in full for the shares for which
the option is exercised, and tender of any related agreements or instruments, as
required by the Committee, and shall comply with such other reasonable
requirements as the Committee may establish pursuant to Section 12 of the Plan.
However, this provision shall not preclude exercise of, or payment for, an
option by any other proper method specifically approved by the Committee. No
person, estate, or other entity shall have or exercise any of the rights of a
shareholder with reference to shares subject to an option until a certificate or
certificates for the shares has been duly issued and delivered.
An option granted under this Plan may be exercised for any lesser number of
shares than the full amount for which it could be exercised. Such a partial
exercise of an option shall not affect the right to exercise the option from
time to time in accordance with the Plan for the remaining shares subject to the
option.
9. Assignability. Options granted under the Plan to an employee shall not be
transferable by him except by will or the laws of descent and distribution.
10. Adjustment upon Change of Shares. In the event of a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
shares, stock split, stock dividend, rights offering or other event affecting
shares of the Company, the number and class of shares for which options may
thereafter be granted, the number and class of shares then subject to options
previously granted, and the price per share payable upon exercise of such
options shall be equitably adjusted by the Committee to reflect the change.
11. Compliance with Law and Approval of Regulatory Bodies. No option shall be
exercisable and no shares shall be delivered under the Plan except in compliance
with all applicable Federal and state laws and regulations including, without
limitation, compliance with applicable withholding tax requirements and with the
rules of all domestic stock exchanges on which the Company's shares may be
listed. Any share certificate issued to evidence shares may be listed on any
domestic stock exchange authorized by the Company. Any share certificate issued
to evidence shares for which an option is exercised may bear legends and
statements, and be subject to such restrictions, as the Company shall deem
advisable to assure compliance with Federal and state laws and regulations. No
options shall be exercisable, and no shares will be delivered under the Plan,
until the Company has obtained such consents or approvals from regulatory
bodies, Federal or state, having jurisdiction over such matters as the Company
may deem advisable.
In the case of the exercise of an option by a person or estate acquiring the
right to exercise the option by bequest or inheritance, the Committee may
require reasonable evidence as to the ownership of the option and may require
consents and releases of taxing authorities that it may deem advisable.
12. General Provisions. Neither the adoption of the Plan nor its operation, nor
any document describing or referring to the Plan, or any part thereof, shall
confer upon any employee any right to continue in the employ of the Company or
any subsidiary, or shall in any way affect the right and power of the Company to
terminate the employment of any employee at any time with or without assigning a
reason therefor to the same extent as the Company might have done if the Plan
had not been adopted.
13. Effective Date of the 1998 Plan. This Plan was adopted by the Board of
Directors of the Company effective March 5, 1998, which will be the effective
date of the Plan if and when approved by shareholders holding a majority of the
Company's outstanding shares of common stock entitled to vote on the Plan at the
Annual Meeting of Shareholders in 1998.
14. Amendment to the Plan. The Board of Directors of the Company may alter,
amend, or terminate the Plan from time to time. Such action by the Board of
Directors, however, will not be effective to change or modify the Plan, unless
approved by shareholders holding a majority of the Company's outstanding shares
of common stock, if such changes or modifications in the Plan would:
Increase the total number of shares of stock on which options may be granted
under the Plan, except as contemplated in Section 10;
Change the manner of determining the option price;
Assign the administration of the Plan otherwise than to a committee of the Board
of Directors;
Permit any person while a member of the Committee or any other committee of the
Board of Directors administering the Plan to be eligible to receive or hold an
option under the Plan or permit a person who is not a key employee of the
Company at the time of grant to be granted an option; or
Extend the term of this Plan.
15. Duration of the Plan. Unless previously terminated by the Board of
Directors, the Plan shall be effective for a period of ten years from the
effective date of the Plan, and no option shall be granted after such date.
Options granted before that date shall remain valid thereafter in accordance
with their terms.
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[CIBC WORLD MARKETS LETTERHEAD]
Exhibit 10.58
September 8, 2000
PERSONAL AND CONFIDENTIAL
Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016
Dear Mr. Pollet:
This letter will confirm the understanding and agreement (the "Agreement")
among CIBC World Markets Corp. (the "Lead Placement Agent"), Adams, Harkness &
HIll, Inc. (the "Co-Placement Agent") (collectively, the "Agents") and STAAR
Surgical Company (the "Company") as follows:
1.Engagement: The Company hereby engages the Agents as its exclusive agents in
the private placement of one or more classes or series of securities of the
Company to a limited number of sophisticated
investors (the "Investors"), pursuant to the following terms and conditions.
Such securities (the "Securities") may take the form of common stock or other
equity-linked securities. Such placement shall be referred to as the
"Transaction."
Currently, the Company plans to sell up to 1,500,000 shares of it's common
stock. The selection of each of the Investors from a list of potential Investors
and the number of shares sold to each of such Investors shall be mutually agreed
by the Company and the Agents. The number and price of the Securities the
Company shall ultimately agree to sell, pursuant to the Purchase Agreements
(defined below), are entirely within its discretion.
2.The Agents' Role: The Agents hereby accept the engagement described herein
and, in that connection, agree to:
(a)assist in preparing a private placement memorandum (the "Memorandum")
describing the Company and the Securities;
(b)review with the Company a list of the Investors to whom the Memorandum will
be provided;
(c)prepare other communications to be used in placing the Securities, whether in
the form of letter, circular, notice or otherwise, and
(d)assist and advise the Company with respect to the negotiation of the sale of
the Securities to the Investors.
3.Due Diligence: It is understood that the Agents' assistance in the
Transaction will be subject to the satisfactory completion of such investigation
and inquiry into the affairs of the Company as the Agents deem appropriate under
the circumstances (such investigation hereinafter to be referred to as "Due
Diligence") and the approval of each Agents' internal committees. Each Agent
shall have the right, in
its sole discretion, to terminate its involvement in the Transaction if the
outcome of the Due Diligence is not to its satisfaction or if approval of its
internal committees is not obtained. The termination by any one of the Agents
shall not be imputed to the other Agents. If both Agents exercise their
discretion to terminate their involvement in the Transaction, then this
Agreement will terminate ("Early Termination").
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4.Term; Exclusivity: The term of the Agreement shall extend from the date
hereof until the earlier of September 8, 2001 or Early Termination, and that
during the term of this Agreement: (1) the Company will not, and will not permit
its representatives to, other than in coordination with the Lead Placement
Agent, contact or solicit institutions, corporations or other entities as
potential purchasers of the Securities and (ii) the Company will not pursue any
financing transaction which would be in lieu of a Transaction. Futhermore, the
Company agrees that during the term of the Agreement all inquiries, whether
direct or indirect, from prospective Investors will be referred to the Lead
Placement Agent and will be deemed to have been contacted by the Lead Placement
Agent in connection with the Transaction. The Company may reject any potential
Investor if in its discretion, the Company believes that the inclusion of such
Investor in the Company would be incompatible with the best interests of the
Company. The Company shall not be obligated to sell the Securities or to accept
any offer thereof, and the terms of such Securities and the final decision to
issue the same shall be subject to the discretionary approval of the Company.
Any party may terminate its engagement at any time by giving the other parties
at least thirty (30) days prior written notice of such termination, at which
time the Company shall reimburse the Agents for all reasonable expenses
incurred, in accordance with Paragraph 9 hereof. The Company agrees to pay the
Agents any fees specified in Paragraph 8 if the events specified therein shall
occur during the term of this Agreement or within twelve months after the
termination or expiration of this Agreement. Any obligation pursuant to this
Paragraph 4 shall survive the termination or expiration of this Agreement.
No offers or sales of any securities of the same or similar class as the
Securities will be made by the Company or any affiliate during the six-month
period after the completion of the offering of the Securities in each case
except in compliance with the registration requirements of the Securities Act of
1933, as amended, or an exemption therefrom (the "Securities Act").
5.Best Efforts: It is understood that the Agents' involvement in the
Transaction is strictly on a best efforts basis and that the consummation of the
Transaction will be subject to, among other things, market conditions.
6.Information: The Company shall furnish, or cause to be furnished, to the
Agents and to the Investors all information reasonably requested by the Agents
for the purpose of rendering services hereunder or in connection with the
purchase of the Securities, including the Memorandum (and together with all such
other information, the "Information"). In addition, the Company agrees to make
available to the Agents upon request from time to time the officers, directors,
accountants, counsel and other advisors of the Company. The Company recognizes
and confirms that the Agents (a) will use and rely on the information (including
the Memorandum that will be delivered to each of the Investors) and on
information available from generally recognized public sources in performing the
services contemplated by this Agreement without having independently verified
the same; (b) does not assume responsibility for the accuracy or completeness of
the Memorandum or the Information and such other information; and (c) will not
make an appraisal of any of the assets or liabilities of the Company.
The Company represents and warrants to the he Agents that: (i) all such
information, including the Memorandum, any documents attached as exhibits
thereto and/or incorporated by reference therein, and any communications
prepared pursuant to paragraph 2(a) above, will be true and accurate in all
material respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made in the light of the circumstances under which they were made,
not misleading and (ii) any projected financial information or other
forward-looking information which the Campany provided to the
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Agent will be made by the Company in good faith, based on management's best
estimates then available and based on facts and assumptions which the Company
believes to be reasonable. The Company agrees that, upon reasonable request, it
will meet with the Agents or its representatives to discuss all information
relevant for disclosure in the Memorandum and will cooperate in any
investigation undertaken by the Agents thereof, including any document included
or incorporated by reference therein.
7.Company's Responsibilities, Representations and Warranties:
(a)The sale of Securities to any Investor will be evidenced by a purchase
agreement ("Purchase Agreement") between the Company and such Investor in a form
reasonably satisfactory to the Company and the Agents. Prior to the signing of
any Purchase Agreement, officers of the Company with responsibility for
financial affairs will be available to answer inquires from prospective
investors.
(b)The selling price of the Securities to be issued and sold by the Company
pursuant to the Purchase Agreements will be specified in writing by the Agents
on behalf of the Company to the prospective investors prior to the execution of
the Purchase Agreements, subject to the Company's approval.
(c)The Company will perform the covenants set forth in the Purchase Agreements.
The Purchase Agreements will require the Company to file, as soon as practicable
after it has signed and delivered such Purchase Agreements (the "Closing") but
in any event no later than two weeks following the Closing, a registration
statement with the Securities and Exchange Commission (the "SEC") for the resale
from time to time of the Securities to be issued pursuant to such Purchase
Agreements (the "Registration Statement"). The Company will not modify any such
Purchase Agreements, nor will it execute and deliver any additional Purchase
Agreements after the time it has filed the Registration Statement.
(d)The Company (i) represents and warrants that the representations and
warranties contained in the Purchase Agreements will be true and correct in all
respects on the date of such Purchase Agreements and on the Closing Date and
(ii) agrees that the Agents shall be entitled to rely on such representations
and warranties as if they were made directly to the Agents.
(e)The Company agrees that the Company shall have sole responsibility for
ensuring that the sale of Securities contemplated by this Agreement shall be
exempt from registration requirements of the Securities Act, and will otherwise
comply with the securities laws of any applicable country or other jurisdiction.
The Company shall not take any action or permit to be taken any action on its
behalf that
would cause such sale of securities to fail (i) qualify for such an exemption,
or (ii) otherwise comply with such securities laws. The Company hereby
represents, warrants and covenants that the Company has not, and agrees that it
will not, directly or indirectly, engage in any form of general solicitation or
general advertising or directed selling efforts.
(f)At the Closing, the Company will cause its independent public accountants to
address and deliver to the Company and the Agents a letter or letters (which
letters are frequently referred to as "Comfort Letters") dated as of the
Closing, which letter or letters shall be in the form reasonably satisfactory to
the agents.
(g)At the Closing, the Company will cause its counsel to address and deliver to
the Company and the Agents (stating that each of the Investors may rely thereon
as if directly addressed to each of them) an opinion satisfactory to the Agents,
dated as of the Closing, with respect to such
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matters as the Agents and its counsel shall reasonably request, including
opinions customary for transactions of the type contemplated by this Agreement,
including an opinion that the offering and sale of the Securities are not
required to be registered under the Securities Act, as well as an opinion
substantially in the form of Annex A hereto. In rendering such opinion, such
counsel may rely upon the representations and warranties of the purchasers
contained in the Purchase Agreements and upon certificates from officers of the
company as to factual matters.
(h)The Company will cause its outside intellectual property and/or regulatory
counsel to deliver one or more opinions satisfactory to the Agents, dated as of
the Closing, to the Agents regarding such matters as the Agents and its counsel
shall reasonably request. Furthermore, the Company acknowledges that the
Purchase Agreements will require the Company's counsel, its intellectual
property counsel and/or its regulatory counsel to deliver one or more opinions
to the Investors. The Company agrees that the Agents shall be entitled to rely
on any opinions delivered as the Investors in connection with the Transaction
and resale of the Securities under the Registration Statement.
(i)The Company agrees that it will not consummate the sale of the Securities
unless it delivers or causes to be delivered the items described in paragraphs
(f) through (h) above to the Agents at the Closing.
(j)For a period of ninety (90) days from the effective date of the Registration
Statement, the Company will not, without the prior written consent of the Lead
Placement Agent, sell, contract to sell or otherwise dispose of or issue any
securities of the Company, except pursuant to previously issued options, any
agreements providing for anti-dilution or other stock purchase or share issuance
rights in existence on the date hereof, any employee benefit or similar plan of
the Company in existence on the date hereof, or any technology license
agreement, strategic alliance or joint venture in existence on the date hereof
or which the Company may enter into hereafter. This paragraph shall not apply to
the sale of the Company to any third party.
(k)During the time the Registration Statement is effective covering the resales
of any Securities sold to Investors, the Company will furnish to the Agents:
(i)as soon as practicable (but in the case of the annual report of the Company
to its stockholders, within 120 days after the end of each fiscal year of the
Company), one copy of: (a) its annual report to its stockholders (which annual
report shall contain financial statements audited in accordance with generally
accepted accounting principles in the United States by a firm of certified
public accountants of recognized standing), (b) if not included in substance in
its annual report to stockholders, its annual report on Form 10-K, (c) each of
its quarterly reports to its stockholders and, if not included in substance in
its quarterly report to stockholders, its quarterly report on Form 10-Q and any
other document or agreement that is incorporated by reference into the
Registration Statement, and (d) the full Registration Statement (the foregoing
in each case, excluding exhibits); and
(ii)upon reasonable request, all exhibits excluded by the parenthetical to the
last clause of the immediately preceding paragraph and all other information
that is generally available to the public.
8.Fees. As compensation for the services to be rendered by the Agents
hereunder, the Company will pay the Agents at the Closing, by wire transfer of
immediately available funds, from the
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proceeds of the sale of the Securities, a transaction fee (the "Transaction
Fee") equal to 7.0% of the gross proceeds raised from the sale of the
Securities. 70.0% of the Transaction Fee shall be paid to CIBC World Markets
Corp. and 30.0% of the Transaction Fee shall be paid to Adams, Harkness & Hill,
Inc. Further, the Company will pay the Agents the Transaction Fee if within
twelve months from the termination of this Agreement the Company reaches an
agreement in principle for the sale of the Securities to any Investors which the
Agents previously solicited or sought to solicit (but were not permitted to do
so due to the Company's rejection of such proposed Investors pursuant to the
third sentence of Section 4 hereof) on its behalf or from which the Company has
received any inquiry pursuant to Section 4 hereof. The preceding sentence will
not apply to any securities sold to Pharmacia Corporation. Upon the Company's
request, at the termination or expiration of this Agreement, the Agents will
supply the Company with a list of Investors which the Agents have solicited or
sought to solicit (but were not permitted to do so due to the Company's
rejection of such proposed Investors pursuant to the third sentence of Section 4
hereof) on its behalf. The Company's obligations hereunder shall survive the
termination or expiration of this Agreement.
9.Expense Reimbursement: In addition to the Transaction Fee, and regardless of
whether the sale of the Securities contemplated hereby is consummated, the
Company agrees to reimburse the Agents for all of its reasonable out-of-pocket
expenses in connection with the performance of its activities under the terms of
this Agreement. Reasonable out-of-pocket expenses include, but are not limited
to, costs such as printing, telephone, telex, courier service, direct computer
expenses, accommodations and travel. The Company will reimburse the Agents for
fees and expenses of legal counsel employed by and for the Agents, if any, in
connection with this Agreement and the engagement hereunder. All such fees,
expenses and costs shall be reimbursed promptly upon submission by the Lead
Placement Agent of the expenses to be reimbursed to each of the Agents. The
parties' obligations under this paragraph shall survive the termination or
expiration of this Agreement. The Agents estimate that the expenses will be
approximately $50,000.
10.Indemnity. In addition to the fees and reimbursement of expenses provided
for above, the parties agree to the indemnification provisions set forth as
Annex B hereto, which are incorporated herein by reference as if fully set forth
below. The parties' obligations under this paragraph shall survive the
termination or expiration of this Agreement.
11.GOVERNING LAWS: THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
THE COMPANY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT OF THE STATE OF
NEW YORK, IN NEW YORK, NEW YORK, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF THIS LETTER AGREEMENT OR OUR ENGAGEMENT HEREUNDER.
EACH OF THE COMPANY AND CIBC WORLD MARKETS HEREBY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BROUGHT BY OR ON BEHALF OF EITHER
PARTY BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS LETTER AGREEMENT,
OUR ENGAGEMENT HEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY.
12. Confidentiality. Except as required by law, this Agreement and the services
and advice to be provided by the Agents hereunder, shall not be disclosed to
third parties without the Agents' prior written permission. Notwithstanding, the
Agents shall be permitted to advertise the services it provided in connection
with the private placement subsequent to the consummation of the private
placement. Such expense shall not be reimbursable under paragraph 9 hereof.
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13.No Brokers: The company represents and warrants to the Agents that there are
no brokers, representatives or other persons which have an interest in
compensation due to the Agents from any transaction contemplated herein or which
would otherwise be due any fee, commission or remuneration upon consummation of
any Transaction. The Company hereby represents and warrants to the Agents that
during the term of this engagement, the Company will not have, prior to the
Closing, any discussions with any person other than representatives of the
Agents for the purpose of engaging, or considering the engagement of, such
person as a finder or broker in connection with the sale by the Company of the
Securities covered by this letter to prospects in the United States of America
or overseas.
14.Authorization: The Company and the Agents represent and warrant that each
has all requisite power and authority to enter into and carry out the terms and
provisions of this Agreement and the execution, delivery and performance of this
Agreement does not breach or conflict with any agreement, document or instrument
to which it is a party or bound.
15.Miscellaneous: This Agreement constitutes the entire understanding and
agreement between the Company and the Agents with respect to the subject matter
hereof and supersedes all prior understanding or agreements between the parties
with respect thereto, whether oral or written, express or implied. Any
amendments or modifications must be executed in writing by both parties. This
Agreement and all rights, liabilities and obligations hereunder shall be binding
upon and inure to the benefit of each party's successors but may not be assigned
without the prior written approval of the other party. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together, constitute only one instrument.
The descriptive headings of the Paragraphs of this Agreement are inserted for
convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement.
The Agents are delighted to accept this engagement and look forward to
working with you. Please confirm that the foregoing correctly sets forth our
agreement by signing the enclosed duplicate of this
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letter in the space provided and returning it, whereupon this letter shall
constitute a binding agreement as of the date first above written.
Very truly yours,
CIBC WORLD MARKETS CORP.
By:
/s/ MICHAEL FEKETE
--------------------------------------------------------------------------------
Michael Fekete
Managing Director
ADAMS, HARKNESS & HILL, INC.
By:
/s/ GREGORY BROWN, M.D.
--------------------------------------------------------------------------------
Gregory Brown, M.D.
Managing Director
ACCEPTED AND AGREED TO
AS OF THE ABOVE DATE:
STAAR Surgical Company
By:
/s/ ANDREW F. POLLET
--------------------------------------------------------------------------------
Andrew F. Pollet
Chairman
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ANNEX A
The opinion of counsel to the Company shall be to the effect that nothing
has come to their attention that caused them to believe that either the
Registration Statement of the Company (the "Registration Statement") or the
Private Placement Memorandum (the "Private Placement Memorandum"), each as of
its date (or if any amendment thereof or supplement thereto has been made on or
prior to the date of such opinion, then as of the date of such amendment or
supplement) and as of the Closing, contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading (it being understood no opinion is expressed with respect to the
financial statements and related notes, financial statement schedules and other
financial information included or incorporated by reference therein or omitted
therefrom.)
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ANNEX B: INDEMNIFICATION
The Company agrees to indemnify and hold harmless the Agents and their
affiliates and their respective directors, officers, employees, agents and
controlling persons (each such person, including the Agents, an "Indemnified
Party") from and against any losses, claims, damages and liabilities, joint or
several (collectively, the "Damages"), to which such Indemnified Party may
become subject in connection with or otherwise relating to or arising from
(i) any transaction contemplated by this Agreement or the engagement of or
performance of services by an Indemnified Party thereunder or (ii) an untrue
statement or an alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact necessary in order to make a statement
not misleading in light of the circumstances under which its was made, and will
reimburse each Indemnified Party for all fees and expenses (including the fees
and expenses of counsel) (collectively, "Expenses") as incurred in connection
with investigating, preparing, pursuing or defending any threatened or pending
claim, action, proceeding or investigation (collectively, the "Proceedings")
arising therefrom, whether or not such Indemnified Party is a formal party to
such Proceeding; provided, that the Company will not be liable to any such
Indemnified Party to the extent that any Damages are found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Indemnified Party seeking
indemnification hereunder. The Company also agrees that no Indemnified Party
will have any liability (whether direct or indirect, in contract, tort or
otherwise) to the Company or any person asserting claims on behalf of the
Company arising out of or in connection with any transactions contemplated by
this Agreement or the engagement of or performance of services by any
Indemnified Party thereunder except to the extent that any Damages are found in
a final non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Indemnified
Party.
If for any reason other than in accordance with this Agreement, the
foregoing indemnity is unavailable to an Indemnified Party or insufficient to
hold an Indemnified Party harmless, then the Company will contribute to the
amount paid or payable by an Indemnified Party as a result of such Damages
(including all Expenses incurred) in such proportion as is appropriate to
reflect the relative benefits to the Company and/or its stockholders on the one
hand, and the Agents on the other hand, in connection with the matters covered
by this Agreement or, if the foregoing allocation is not permitted by applicable
law, not only such relative benefits but also the relative faults of such
parties as well as any relevant equitable considerations. The Company agrees
that for purposes of this paragraph the relative benefits to the Company and/or
its stockholders and the Agents in connection with the matters covered by this
Agreement will be deemed to be in the same proportion that the total value paid
or received or to be paid or received by the Company and/or its stockholders in
connection with the transactions contemplated by this Agreement, whether or not
consummated, bears to the fees paid to the Agents under this Agreement;
provided, that in no event will the total contribution of all Indemnified
Parties to all such Damages exceed the amount of fees actually received and
retained by the Agents hereunder (excluding any amounts received by the Agents
as reimbursement of expenses).
The Company agrees not to enter into any waiver, release or settlement of
any Proceeding (whether or not the Agent or any other Indemnified Party is a
formal party to such Proceeding) in respect of which indemnification may be
sought hereunder without the prior written consent of the Agents (which consent
will not be unreasonably withheld), unless such waiver, release or settlement
includes an unconditional release of Agents and each Indemnified Party from all
liability arising out of such Proceeding.
The indemnity, reimbursement and contribution obligations of the Company
hereunder will be in addition to any liability which the Company may otherwise
have to any Indemnified Party and will be
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binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company or an Indemnified Party. The provisions
of this Annex will survive the modification, termination or expiration of this
Agreement.
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The Agents are delighted to accept this engagement and look forward to
working with you. Please confirm that the foregoing correctly sets forth our
agreement by signing the enclosed duplicate of this letter in the space provided
and returning it, whereupon this letter shall constitute a binding agreement as
of the date first above written.
Very truly yours,
CIBC World Markets Corp.
By:
/s/ MICHAEL FEKETE
--------------------------------------------------------------------------------
Michael Fekete
Managing Director
Adams, Harkness & Hill, Inc.
By:
/s/ GREGORY BROWN, M.D.
--------------------------------------------------------------------------------
Gregory Brown, M.D.
Managing Director
ACCEPTED AND AGREED TO
AS OF THE ABOVE DATE:
STAAR Surgical Company
By:
/s/ ANDREW F. POLLET
--------------------------------------------------------------------------------
Andrew F. Pollet
Chairman
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QuickLinks
Exhibit 10.58
ANNEX A
ANNEX B: INDEMNIFICATION
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EMPLOYMENT CONTRACT
EMPLOYMENT CONTRACT
, dated as of January 22, 2001, between EATERIES, INC., an Oklahoma corporation
(the "Company"), and JAMES M. BURKE, an Oklahoma resident ("BURKE").
BURKE currently serves as the Vice President-Operations of the Company under a
three year Employment Contract dated October 1, 1995 and extended to December
31, 2000;
The Company desires to enter into a new three (3) year Employment Contract with
BURKE to be effective on January 1, 2001 in substitution of his existing three
year Employment Agreement and BURKE desires to accept such Employment Contract
in accordance with the terms and conditions hereinafter set forth.
NOW THEREFORE, BURKE and the Company, in consideration of the mutual covenants
and promises herein contained do hereby agree as follow:
1. Term. The Company shall employ BURKE, and BURKE shall serve as the Vice
President-Operations of the Company, on the terms and conditions of this
Employment Contract for a three (3) year term commencing January 1, 2001, and
ending December 31, 2003, unless extended or terminated earlier as hereinafter
provided. The initial three (3) year Term of this Employment Contract shall be
automatically extended for one (1) additional calendar year on the 31st day of
each December during Term hereof unless BURKE is given written notice by the
Compensation Committee of the Board of Directors of the Company sixty (60) days
prior to the 31st day of December that the Term is not to be thus automatically
extended for one (1) additional year. If thus extended each year, then on
January 1st of each year, this Employment Contract shall have three (3) years
remaining to the Term hereof.
2. Duties and Services. During the Term hereof BURKE shall be employed in the
business of the Company as Vice President-Operations and shall perform such
services diligently, faithfully and consistent with the responsibilities of such
positions. In performance of his duties BURKE shall report to the Board of
Directors of the Company. BURKE shall be available to travel as the needs of the
business require.
3. Compensation.
(a) Salary. As a compensation for his services hereunder, the Company shall pay
BURKE, during the Term, a salary payable in equal bi-weekly installments at the
annual rate of $200,000.00, subject to annual re-evaluation by the Compensation
Committee of the Board of Directors of the Company. The annual re-evaluation
shall be based in part upon the attainment of corporate objectives mutually
agreed upon by BURKE and the Board of Directors of the Company. Nothing
contained herein shall preclude BURKE from participating in future executive
bonus plans, pension or profit sharing, deferred compensation, stock option, or
other employee benefit plans of the Company, if he meets the eligibility
requirements therefor.
(b) Options. As additional compensation BURKE has been granted nonqualified
options of Eateries, Inc. BURKE shall be entitled to additional grants of
nonqualified stock options of Eateries, Inc. upon approval of the Compensation
Committee of the Board of Directors of the Company.
4. Expenses and Vacation. BURKE shall be entitled to reimbursement for
reasonable travel and other out-of-pocket expenses necessarily incurred in the
performance of his duties hereunder, upon submission and approval of written
statements and bills in accordance with the then regular policies and procedures
of the Company. BURKE shall be entitled to a car allowance payable in equal
bi-weekly installments of $235.00 commencing January 1, 2001. BURKE shall be
entitled to reasonable vacations in accordance with the then regular policies
and procedures of the Company governing executives.
5. Representations and Warranties of BURKE. BURKE represents and warrants to the
Company that (a) he is under no contractual or other restriction or obligation
which is inconsistent with the execution of this Contract, the performance of
his duties hereunder, or the other rights of the Company hereunder and (b) he is
under no physical or mental disability that would hinder his performance of
duties under this Employment Contract.
6. Confidential Information. All trade secrets, or other proprietary or
confidential information which BURKE may now possess, may obtain during or after
the Term hereof, or may create prior to the end of the period BURKE is employed
by the Company under this Contract or otherwise relating to the business of the
Company or its affiliates shall not be published, disclosed, or made accessible
by him to any other person, firm, or corporation either during or after the
termination of his employment or used by him except during the Term hereof in
the business and for the benefit of the Company. BURKE shall return all tangible
evidence of such trade secrets, or other proprietary or confidential information
to the Company prior to or at the termination of his employment. "Trade secrets"
shall include, but not be limited to recipes developed or utilized by the
Company, as well as methods of operations developed and utilized by the Company.
Additionally, during the Term hereof, BURKE shall not acquire, directly or
indirectly, any interest in any restaurants with concepts similar to Company
restaurants, unless specifically authorized by the Board or Directors of the
Company in writing. Notwithstanding the foregoing, BURKE shall not be prevented
from owning any securities of any competitor of the Company which are regularly
traded on any national securities exchange or in the over-the-counter market;
provided, that the same shall not result in BURKE and his immediate family
owning, legally or beneficially, at any time, ten percent (10%) or more of the
voting securities of any such company. In the event that the provisions of this
section should ever be deemed to exceed the time, geographic or occupational
limitations permitted by applicable law, then such provisions shall be reformed
to the maximum time, geographic, or occupational limitations permitted by
applicable law.
7. Termination. Notwithstanding anything herein contained, if on or after the
date hereof and prior to the end of the Term hereof,
(a) either (i) BURKE shall be physically or mentally incapacitated or disabled
or otherwise unable fully to discharge his duties hereunder for a period of six
(6) months, (ii) BURKE shall be convicted of a felony crime by a court of last
resort, (iii) BURKE shall commit any act or omit to take any action in bad faith
and to the substantial detriment of the Company, or (iv) BURKE shall breach any
term of this Contract and such breach shall directly cause a material adverse
impact upon the Company and he shall fail to cure and correct such breach within
ten (10) days after notice to BURKE by the Company of the same, or such longer
period as may be necessary with due diligence to cure such breach then, and in
each case, the Company shall have the right to give notice of termination of
BURKE's services hereunder as of a date (not earlier than ten (10) days from
such notice in the case of items (ii), (iii) or (iv) and not earlier than six
(6) months from such notice in the case of item (i) to be specified in such
notice and this Agreement shall terminate on the date so specified; or
(b) BURKE shall die, then this Employment Contract shall terminate on the date
of BURKE's death,
Whereupon BURKE or his estate, as the case may be, shall be entitled to receive
only his salary at the rate provided in Section 3 to the date on which
termination shall take effect. In the event of BURKE's death, his estate or
designated beneficiary shall receive, in addition to the foregoing amount, an
amount equal to two (2) year's salary payable by the Company upon receipt of the
life insurance proceeds of BURKE's key man insurance policy, if any and if not
sufficient then within ninety (90) days of BURKE's death.
8. Merger, Et Cetera. In the event of a future disposition of (or including) the
properties and business of the Company, substantially as an entirety, by merger,
consolidation, sale of assets, or otherwise, then the Company may elect:
(a) To assign this Contract and all of its rights and obligations hereunder to
the acquiring of surviving entity; provided that such entity shall be capable of
assuming and performing and shall assume in writing and perform all of the
obligations of the Company hereunder; provided further that the Company (in the
event and so long as it remains in business as an independent going enterprise)
shall remain liable for the performance of its obligations hereunder in the
event of an unjustified failure of the acquiring entity to perform its
obligations under this Contract; and provided finally that the duties assigned
BURKE are commensurate with those held prior to the merger and that a relocation
of more than 50 miles from the city limits of the City of Oklahoma City, is not
required to fulfill such duties; or
(b) In addition to its other rights of termination, to terminate this Contract
upon at least sixty (60) days' written notice by paying BURKE two (2) year's
salary and car allowance at the rate provided in Section 3 and 4 on the date
which such termination shall take effect.
9. Liquidation Damages. The parties hereto covenant and agree that, in the event
the Company shall breach the terms of this Employment Contract or the Contract
shall terminate under Section 8 (b), it shall pay to BURKE, as liquidated
damages for such breach or termination, an amount equal to that which would have
been received by him under Section 3(a) and 4 for then remaining Term of this
Employment Contract, plus reasonable attorneys' fees, if any. Such amount shall
be promptly paid upon a determination of breach or termination, but in no event
later than thirty (30) days after such determination.
10. Survival. The covenants, agreements, representation, and warranties
contained in or made pursuant to this Employment Contract shall survive BURKE's
termination of employment, irrespective of any investigation made by or on
behalf of any party.
11. Modification. This Employment Contract sets forth the entire understanding
of the parties with respect to the subject matter hereof, and may be modified
only by a written instrument duly executed by each party.
12. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt, to the party to whom it is to
be given at the then address of such party (or to such other address as the
party shall have furnished in writing). Notice to the estate of BURKE shall be
sufficient if addressed to BURKE as provided in this Section 12. Any notice or
other communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
13. Waiver. Any waiver by either party of a breach of any provision of this
Contract shall not operate as or be construed to be a waiver of any other breach
of such provision or of any breach of any provision in this Contract. The
failure of a party to insist upon strict adherence to any term of this Contract
on one or more occasions shall not be considered a waiver or deprive that party
of the right hereafter to insist upon strict adherence to that term or any other
term of this Contract. Any waiver must be in writing and signed by the parties.
14. Binding Effect. BURKE's rights and obligations under this Contract shall not
be transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrance, or the claims of BURKE's creditors, and any attempt to
do any of the foregoing shall be void. The provisions of this Contract shall be
binding upon and inure to the benefit of BURKE and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of the
Company and its successors and those who are its assigns.
15. No Third Party Beneficiaries. This Employment Contract does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Employment Contract (except as provided in Section 14).
16. Headings. The headings in this Employment Contract are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Contract.
17. Counterparts: Governing Law. This Employment Contract may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of Oklahoma,
without given effect to the conflict of laws.
IN WITNESS WHEREOF, the parties have duly executed this Employment Contract as
of the date first above written.
"COMPANY"
EATERIES, INC.
, an Oklahoma corporation
By: /s/
President
"BURKE"
By:/s/
JAMES M. BURKE
As approved by a vote of the Compensation Committee of the Board of Directors of
Eateries, Inc. on January 10, 2001. |
EXHIBIT 10.109.1
FIRST AMENDMENT
TO THE
EMPLOYMENT AGREEMENT
This Amendment approved by the Board of Directors and executed as of
the 18th day of
March, 1999, by and between CENTRAL MAINE POWER COMPANY (the "Company")
and RAYMOND W. HEPPER of Readfield, Maine (the "Executive").
WHEREAS, the Company and the Executive entered into an Employment
Agreement dated June 30, 1997 (the "Employment Agreement); and
WHEREAS
, the Company and the Executive hereby mutually agree to amend the contract.
NOW, THEREFORE
, the Employment Agreement is hereby amended as follows effective as of the date
first above written:
(1) Section 1.a. is hereby deleted and shall henceforth provide as
follows:
"a. Term. The term of this Agreement shall begin on June 1, 1997 (hereinafter
referred to as the "Effective Date") and shall expire on May 31, 2000; provided,
however, that on May 31, 2000 and on each May 31 thereafter, the term of this
Agreement shall automatically be extended for one (1) additional year unless not
later than the preceding January 31st, either the Company or the Executive shall
have given notice that such party does not wish to extend the term of this
Agreement. If a Change of Control occurs during the original term of this
Agreement or any extension, the term of this Agreement shall be automatically
extended for 365 days after the consummation of the Change of Control (the
"Extended Expiration Date"), which shall be deemed for this purpose to be a date
on which all action necessary to complete a Change of Control shall have been
accomplished, including any regulatory approvals."
(2) Section 1.b.(iii) is hereby deleted and shall henceforth
provide as follows:
"(iii) the normal or Extended Expiration Date as specified in
Section a above."
(3) Section 5.a.(i) is hereby amended by changing the term "2.0
times" to "1.0 times".
(4) Section 5.b. is hereby amended by adding the following
sentence at the end of the first sentence thereof:
"Notwithstanding the foregoing, the reduction provided for herein shall be made
only if the amount of the reduction in the payments specified in Section 5.a. is
less than the excise tax imposed pursuant to Section 4999 of the Code on the
portion of the Total Payments which constitute "excess parachute payments"."
(5) Section 7.a. is hereby deleted in its entirety.
(6) A new Section 8.b. is hereby added which shall henceforth
provide as follows:
"b. In the event the Executive is entitled to Severance Benefits under Section
5.a. above, the Executive agrees not to compete with the Company (as competition
defined in Section a.(i) above) for a period of one (1) year after his
termination of employment, and in consideration for such agreement not to
compete and as reasonable compensation therefor, the Company shall pay the
Executive one (1) times the Executive's then-current base salary in twelve (12)
equal monthly installments payable on the first day of each calendar month
commencing on the first day of the month following termination of employment. In
the event the Executive breaches this provision during the one year payment
period, the Company shall cease making additional payments hereunder."
(7) A new Section 18 is hereby added which shall henceforth
provide as follows:
"18. General Release. The obligations of the Company to make any
post-termination payments under this Agreement (including, without limitation,
under Sections 4.a., 5.a., 5.c. and 8.b.) are contingent upon the prior receipt
by the Company of a general release reasonably satisfactory to the Company
releasing the Company, and all parties connected therewith, from any and all
claims and liabilities which the Executive may have against the Company,
including any claims arising out of or in any way connected with the Executive's
employment relationship with the Company and its affiliates, and the termination
of said employment relationship. In the event that the Executive (or the
Executive's estate, in the event of the death of the Executive) fails to execute
and deliver the general release described above within 60 days of the date of
receipt of the release, the Company shall be relieved of all obligations to make
any post-termination payments of any kind or nature under this Agreement."
(8) In all other respects, the Employment Agreement will continue
in full force and effect.
IN WITNESS WHEREOF
, the parties hereto have executed this Amendment
effective as of the date first above written.
CENTRAL MAINE POWER COMPANY
By: /s/ David M. Jagger /s/Raymond W.
Hepper
Chairman, Board of Directors Raymond W.
Hepper
|
RESTRICTED UNIT AWARD AGREEMENT
UNDER THE AMENDED AND RESTATED
ALLIANCE PARTNERS COMPENSATION PLAN
You have been granted restricted Units under the Amended and Restated
Alliance Partners Compensation Plan (the “Plan”), as specified below, in
connection with your 2000 award under the Plan:
Participant (“you”): Robert Joseph
Amount of Award (to be
converted to Restricted Units): $500,000.00
Date of Grant: December 31, 2000
Vesting Commencement Date: January 31, 2001
In connection with your grant of restricted Units, you, Alliance
Capital Management Holding L.P. and Alliance Capital Management L.P.
(“Alliance”) agree as set forth in this agreement (the “Agreement”). The Plan
provides a description of the terms and conditions governing restricted Units.
If there is any inconsistency between the terms of this Agreement and the terms
of the Plan, the Plan’s terms completely supersede and replace the conflicting
terms of this Agreement. All capitalized terms have the meanings given them in
the Plan, unless specifically stated otherwise in the Agreement. The restricted
Units granted under this Agreement are referred to in the Agreement as the
“Restricted Units.”
1. Restrictions. Until restrictions lapse as described in
Paragraph 2, you may not sell, transfer, pledge or otherwise assign or dispose
of any Restricted Units.
2. Vesting of Restricted Units. (a) Except as provided in
Paragraph 2(b) below, restrictions will lapse with respect to the Restricted
Units in equal annual installments during the applicable Vesting Period (as
defined below), with restrictions as to the first such installment lapsing on
the first anniversary of the Vesting Commencement Date set forth above, and
restrictions as to the remaining installments lapsing on the subsequent
anniversaries of the Vesting Commencement Date, provided in each case that you
are employed by a Company on such anniversary. The Vesting Period is as set
forth in the following table, based on your age as of December 31, 2000:
Your Age
As of December 31, 2000
--------------------------------------------------------------------------------
Vesting Period
--------------------------------------------------------------------------------
Up to and including 47 8 years 48 7 years 49 6 years 50-57 5 years 58 4
years 59 3 years 60 2 years 61 1 year 62 or older Fully vested at grant
(b) If your employment with the Companies terminates due to death or
Disability, restrictions on any remaining Restricted Units that you hold as of
the date of your termination shall immediately lapse.
3. Forfeitures. If your employment with the Companies
terminates for reasons other than death or Disability, you will immediately
forfeit all of your rights and interests in any Restricted Units as to which
restrictions have not previously lapsed, unless the Committee determines, in its
sole discretion, to accelerate the vesting of those Restricted Units.
4. Unit Certificates. Your Restricted Units will be held for
you by Alliance. After your Restricted Units have vested, a certificate for
those Units will be released to you.
5. Distributions. Any distributions paid by Alliance Capital
Management Holding L. P. in connection with Restricted Units (whether or not
vested) will be paid directly to you.
6. Section 83(b) Election. You agree not to make an election
under section 83(b) of the Code with respect to your Restricted Units unless,
before you file the election with the Internal Revenue Service, you (i) notify
the Committee of your intention to file the election, (ii) furnish the Committee
with a copy of the election to be filed and (iii) pay (or make satisfactory
arrangements for paying) the necessary tax withholding amount to Alliance in
accordance with Section 8.
7. Tax Withholding. If the Committee determines that any
federal, state or local tax or any other charge is required by law to be
withheld with respect to the Restricted Units, the vesting of Restricted Units,
or an election under Section 83(b) of the Code (a “Withholding Amount”) then, in
the discretion of the Committee, either (a) prior to or contemporaneously with
the delivery to you of Restricted Units, you agree to pay the Withholding Amount
to Alliance in cash or in vested Units that you already own (which are not
subject to a pledge or other security interest), or a combination of cash and
such Units, having a total fair market value equal to the Withholding Amount;
(b) Alliance Capital Management Holding L.P. will retain from any vested
Restricted Units to be delivered to you that number of Units having a fair
market value, as determined by the Committee, equal to the necessary Withholding
Amount; or (c) if Restricted Units are delivered without the payment of the
Withholding Amount under either clause (a) or (b) above, you agree promptly to
pay the Withholding Amount to Alliance on at least seven business days notice
from the Committee either in cash or in vested Units that you already own
(which are not subject to a pledge or other security interest), or a combination
of cash and such Units, having a total fair market value equal to the
Withholding Amount. You agree that if you do not pay the Withholding Amount to
Alliance or make satisfactory payment arrangements as described above, Alliance
may withhold any unpaid portion of the Withholding Amount from any amount
otherwise due to you.
8. Adjustments in Authorized Units. In the event of a
partnership restructuring, extraordinary distribution or similar event, the
Committee has the sole discretion to adjust the number of Restricted Units in
accordance with the Plan.
9. Administration. It is expressly understood that the
Committee is authorized to administer, construe, and make all determinations
necessary or appropriate to the administration of the Plan and this Agreement,
all of which shall be binding upon you. The Committee is under no obligation to
treat you or your award consistently with the treatment provided for other
participants in the Plan.
10. Miscellaneous.
(a) This Agreement does not confer upon you any right
to continuation of employment by a Company, nor does this Agreement interfere in
any way with a Company’s right to terminate your employment at any time.
(b) This Agreement will be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental agencies
or national securities exchanges as may be required.
(c) This Agreement will be governed by, and construed
in accordance with, the laws of the state of New York (without regard to
conflict of law provisions).
(d) This Agreement and the Plan constitute the entire
understanding between you and the Companies regarding this award. Any prior
agreements, commitments or negotiations concerning this award are superseded.
This Agreement may be amended only by another written agreement, signed by both
parties.
BY SIGNING BELOW, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED ABOVE AND IN THE PLAN.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed effective as of December 31, 2000.
Alliance Capital Management L.P. By: Alliance Capital Management
Corporation, General Partner
Participant
/s/ Robert Joseph
--------------------------------------------------------------------------------
Robert Joseph
|
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Exhibit 10.4
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, effective as of April 27,
2001 (this "Agreement"), is made by and between NANOGEN, INC., a Delaware
corporation (hereinafter the "Company"), and VERA P. PARDEE, Esq. (hereinafter
"Executive").
RECITALS
WHEREAS, the Company and Executive entered into an Employment Agreement,
dated as of November 1, 2000 (the "Previous Employment Agreement"); and
WHEREAS, the Company and Executive wish to amend and restate the Previous
Employment Agreement.
NOW, THEREFORE, the Company and Executive, in consideration of the
Executive's continued employment with the Company, agree as follows:
ARTICLE I.
TERM OF AGREEMENT
A. Commencement Date. The terms of this Agreement shall govern Executive's
employment with the Company from November 1, 2000 ("Commencement Date") and this
Agreement shall expire after a period of three (3) years from the Commencement
Date, unless terminated earlier pursuant to Article 6.
B. Renewal. The term of this Agreement shall be automatically renewed for
successive, additional three (3) year terms unless either party delivers written
notice to the other at least ninety (90) days prior to the expiration date of
this Agreement of an intention to terminate this Agreement or to renew it for a
term of less than three (3) years but not less than (1) year. If the term of
this Agreement is renewed for a term of less than three (3) years, then
thereafter the term of this Agreement shall be automatically renewed for
successive, additional identical terms unless either party delivers a written
notice to the other at least ninety (90) days prior to a termination date of
this Agreement of an intention to terminate this Agreement or to renew it for a
different term of not less than one (1) year. Any renewal bonus will be
negotiated as mutually agreed to at the time of any renewal of this Agreement.
If this Agreement is not renewed at the end of any term hereof by the
Company for any reason except death, disability or retirement of Executive,
notwithstanding anything herein elsewhere contained, Executive shall be paid his
salary, as provided for in Section 3.A hereof, and receive the other benefits
applicable under Article 4 hereof, for an additional six months after the
termination date hereof.
ARTICLE II.
EMPLOYMENT DUTIES
A. Title/Responsibilities. Executive hereby accepts employment with the
Company pursuant to the terms and conditions hereof. Executive agrees to serve
the Company in the position of Vice President, Assistant General Counsel and
Secretary. Executive shall have the powers and duties commensurate with such
position, including but not limited to, hiring personnel necessary (in the
judgment of the Board of Directors) to carry out the responsibilities for such
position.
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B. Full Time Attention. Executive shall devote her best efforts and her
full business time and attention to the performance of the services customarily
incident to such office and to such other services as the Board may reasonably
request.
C. Other Activities. Except upon the prior written consent of the Board of
Directors, Executive shall not during the period of employment engage, directly
or indirectly, in any other business activity (whether or not pursued for
pecuniary advantage) that is or may be competitive with, or that might place her
in a competing position to that of the Company or any other corporation or
entity that directly or indirectly controls, is controlled by, or is under
common control with the Company (an "Affiliated Company"), provided that
Executive may own less than two percent of the outstanding securities of any
such publicly traded competing corporation.
ARTICLE III.
COMPENSATION
A. Base Salary. Executive shall receive a Base Salary at an annual rate of
two hundred thousand dollars ($200,000), payable in accordance with the
Company's customary payroll practices. The Company's Board of Directors shall
provide Executive with annual performance reviews, and, thereafter, Executive
shall be entitled to such Base Salary as the Board of Directors may from time to
time establish in its sole discretion.
B. Achievement Bonus. The Company shall pay Executive an Achievement Bonus
of up to 50% of Executive's Base Salary annually based upon achievement by the
Company of its corporate goals as established and determined by the Board of
Directors annually and for other achievements by the Company or the Executive
during the year as approved by the Compensation Committee. The Board of
Directors or Compensation Committee, as applicable, shall, in their respective
sole discretion, determine whether such corporate or other goals have been
attained or other achievements have occurred.
C. Transaction Bonus. In addition, in the event of a transaction involving
a Change in Control, in a transaction approved by the Company's Board of
Directors, which transaction results in the receipt by the Company's
stockholders of consideration with a value representing, in the sole judgment of
the Board of Directors, a significant premium over the average of the closing
prices per share of the Company's common stock as quoted on the Nasdaq National
Market for 20 trading days ending one day prior to the public announcement of
such transaction (a "Change in Control Transaction"), Executive shall be paid a
Transaction Bonus at the closing of such a transaction in the amount equal to
one (1) times 50% of Executive's Base Salary in effect immediately preceding the
closing of such a transaction. Executive shall also be paid said Transaction
Bonus if the Company enters into a transaction approved by the Board of
Directors which is not a Change in Control Transaction, but which, nonetheless,
involves a significant change in the ownership of the Company or the composition
of the Board of Directors of the Company, and which results in significant
additional value for the Company's stockholders, as determined by the Board of
Directors in its sole discretion and as specifically designated a significant
event by the Board of Directors (a "Significant Event"). In the event Executive
receives a Transaction Bonus, no Achievement Bonus will be paid to Executive in
the year in which such Transaction Bonus is paid.
If the Company enters into a transaction which is a Change in Control
Transaction, then all of the Executive's stock options received before the
effective date of the transaction shall become exercisable in full and all of
the shares of the common stock of the Company awarded to Executive under the
Company's 1997 Stock Incentive Plan shall become fully vested. If the Company
enters into a transaction which is not a Change in Control Transaction but which
is a Significant Event, then the Board of Directors may, in its sole discretion,
determine that all, or a portion, of the Executive's stock options received
before the effective date of the transaction shall become exercisable in full
and all, or
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a portion, of the shares of the common stock of the Company awarded to Executive
under the Company's 1997 Stock Incentive Plan shall become fully vested.
D. Withholdings. All compensation and benefits to Executive hereunder
shall be subject to all federal, state, local and other withholdings and similar
taxes and payments required by applicable law.
ARTICLE IV.
EXPENSE ALLOWANCES AND FRINGE BENEFITS
A. Vacation. Executive shall be entitled to three (3) weeks, plus one
(1) additional day for each completed year of employment with the Company, of
annual paid vacation during the term of this Agreement.
B. Benefits. During the term of this Agreement, the Company shall also
provide Executive with the usual health insurance benefits it generally provides
to its other senior management employees, other than life insurance (which shall
be paid directly by Executive). As Executive becomes eligible in accordance with
criteria to be adopted by the Company, the Company shall provide Executive with
the right to participate in and to receive benefits from accident, disability,
medical, pension, bonus, stock, profit-sharing and savings plans and similar
benefits made available generally to employees of the Company as such plans and
benefits may be adopted by the Company, provided that Executive shall during the
term of this Agreement be entitled to receive at a minimum standard medical and
dental benefits similar to those typically afforded to Chief Executive Officers
in similar sized biotechnology companies, excluding life insurance. The amount
and extent of benefits to which Executive is entitled shall be governed by the
specific benefit plan as it may be amended from time to time.
C. Business Expense Reimbursement. During the term of this Agreement,
Executive shall be entitled to receive proper reimbursement for all reasonable
out-of-pocket expenses incurred by her (in accordance with the policies and
procedures established by the Company for its senior executive officers) in
performing services hereunder, provided Executive properly accounts therefor.
ARTICLE V.
CONFIDENTIALITY
A. Proprietary Information. Executive represents and warrants that she has
executed and delivered to the Company the Company's standard Proprietary
Information and Inventions Agreement in form acceptable to the Company's
counsel.
B. Return of Property. All documents, records, apparatus, equipment and
other physical property which is furnished to or obtained by Executive in the
course of her employment with the Company shall be and remain the sole property
of the Company. Executive agrees that, upon the termination of her employment,
she shall return all such property (whether or not it pertains to Proprietary
Information as defined in the Proprietary Information and Inventions Agreement),
and agrees not to make or retain copies, reproductions or summaries of any such
property.
ARTICLE VI.
TERMINATION
A. By Death. The period of employment shall terminate automatically upon
the death of Executive. In such event, the Company shall pay to Executive's
beneficiaries or her estate, as the case may be, any accrued Base Salary, any
bonus compensation to the extent earned, any vested deferred compensation (other
than pension plan or profit-sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of the
Company in which Executive is a participant to the full extent of Executive's
rights under such plans, any accrued vacation pay and any
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appropriate business expenses incurred by Executive in connection with her
duties hereunder, all to the date of termination (collectively "Accrued
Compensation"), but no other compensation or reimbursement of any kind,
including, without limitation, severance compensation, and thereafter, the
Company's obligations hereunder shall terminate.
B. By Disability. If Executive is prevented from properly performing her
duties hereunder by reason of any physical or mental incapacity for a period of
more than 90 days in the aggregate in any 365-day period, then, to the extent
permitted by law, the Company may terminate the employment on the 90th day of
such incapacity. In such event, the Company shall pay to Executive all Accrued
Compensation, and shall continue to pay to Executive the Base Salary until such
time (but not more than 90 days following termination), as Executive shall
become entitled to receive disability insurance payments under the disability
insurance policy maintained by the Company, which disability policy shall
provide for full payment of Executive's Base Salary during the period of
disability, but no other compensation or reimbursement of any kind, including
without limitation, severance compensation, and thereafter the Company's
obligations hereunder shall terminate. Nothing in this Section shall affect
Executive's rights under any disability plan in which she is a participant.
C. By Company for Cause. The Company may terminate Executive's employment
for Cause (as defined below) without liability at any time with or without
advance notice to Executive. The Company shall pay Executive all Accrued
Compensation, but no other compensation or reimbursement of any kind, including
without limitation, severance compensation, and thereafter the Company's
obligations hereunder shall terminate. Termination shall be for "Cause" in the
event of the occurrence of any of the following: (a) any intentional action or
intentional failure to act by Executive which was performed in bad faith and to
the material detriment of the Company; (b) Executive intentionally refuses or
intentionally fails to act in accordance with any lawful and proper direction or
order of the Board; (c) gross negligence by Executive in carrying out the duties
of employment; or (d) Executive is convicted of a felony crime involving moral
turpitude, provided that in the event that any of the foregoing events is
capable of being cured, the Company shall provide written notice to Executive
describing the nature of such event and Executive shall thereafter have five
(5) business days to cure such event.
D. At Will. At any time, the Company may terminate Executive's employment
without liability other than as set forth below, for any reason not specified in
Section 6.C above, by giving thirty (30) days advance written notice to
Executive. If the Company elects to terminate Executive pursuant to this
Section 6.D prior to a Change in Control, the Company shall pay to Executive all
Accrued Compensation and shall continue to pay to Executive as provided herein
Executive's Salary for six (6) months from the date of such termination as
severance compensation. If the Company or its successor elects to terminate
Executive pursuant to this Section after a Change in Control, the Company (or
its successor) shall continue to pay to Executive as provided herein Executive's
Salary for twelve (12) months from the date of such termination as severance
compensation. Upon payment of the severance benefits described herein, all
obligations of the Company (or its successor) shall terminate.
During the period when such severance compensation is being paid to
Executive, Executive shall not (i) engage, directly or indirectly, in any other
business activity that is competitive with, or that places him in a competing
position to that of the Company or any Affiliated Company (provided that
Executive may own less than two percent (2%) of the outstanding securities of
any publicly traded corporation), or (ii) hire, solicit, or attempt to hire on
behalf of herself or any other party any employee or exclusive consultant of the
Company. If the Company terminates this Agreement or the employment of Executive
with the Company other than pursuant to Section 6.A, 6.B or 6.C, then this
Section 6.D shall apply.
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E. Constructive Termination. In the event that the Company shall
materially reduce the powers and duties of employment of Executive resulting in
a material decrease in the responsibilities of Executive which are inconsistent
with Executive acting as Vice President and Assistant General Counsel of the
Company, such action shall be deemed to be a termination of employment of
Executive without cause pursuant to Section 6.D. In the event of a Change in
Control of the Company in which the Company shall become a division or
subsidiary of a larger organization, references to the Vice President and
Assistant General Counsel Science of the Company shall be deemed to mean the
Vice President and Assistant General Counsel of such division or subsidiary for
purposes of this Section 6.E.
1. Change in Control. For purposes of this Agreement, a "Change in
Control" shall have occurred if at any time during the term of Executive's
employment hereunder, any of the following events shall occur:
a.The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if more than 50% of the
combined voting power of the continuing or surviving entity's securities
outstanding immediately after such merger, consolidation or other reorganization
is owned by persons who were not stockholders of the Company immediately prior
to such merger, consolidation or other reorganization;
b.A change in the composition of the Board, as a result of which fewer than
one-half of the incumbent directors are directors who either (1) had been
directors of the Company 24 months prior to such change; or (2) were elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the directors who had been directors of the Company 24 months prior
to such change and who were still in office at the time of the election or
nomination; or
c.Any "person" (as such term is used in Section 13(d) and Section 14 of the
Exchange Act) by the acquisition of securities is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote at elections of directors (the "Base Capital Stock") except
that any change in the relative beneficial ownership of the Company's securities
resulting solely from a reduction in the aggregate number of outstanding shares
of Base Capital Stock, and any decrease thereafter in such person's ownership of
securities shall be disregarded until such person increases in any manner,
directly or indirectly, such person's beneficial ownership of any securities of
the Company. Thus, for example, any person who owns less than 50% of the
Company's outstanding shares, shall cause a Change in Control to occur as of any
subsequent date if such person then acquires an additional interest in the
Company which, when added to the person's previous holdings, causes the person
to hold more than 50% of the Company's outstanding shares.
The term "Change in Control" shall not include a transaction, the sole
purpose of which is to change the state of the Company's incorporation.
ARTICLE VII.
GENERAL PROVISIONS
A. Governing Law. The validity, interpretation, construction and
performance of this Agreement and the rights of the parties thereunder shall be
interpreted and enforced under California law without reference to principles of
conflicts of laws. The parties expressly agree that inasmuch as the Company's
headquarters and principal place of business are located in California, it is
appropriate that California law govern this Agreement.
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B. Assignment; Successors; Binding Agreement.
1. Executive may not assign, pledge or encumber his interest in this
Agreement or any part thereof.
2. The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, operation of law or by agreement in form
and substance reasonably satisfactory to Executive, to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
3. This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributee, devisees and legatees. If Executive should die
while any amount is at such time payable to her hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive's devisee, legates or other designee or, if there be
no such designee, to her estate.
C. No Waiver of Breach. The waiver by any party of the breach of any
provision of this Agreement shall not be deemed to be a waiver of any subsequent
breach.
D. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
To the Company: Nanogen, Inc.
10398 Pacific Center Court
San Diego, CA 92121
Attn: Chief Executive Officer
To Executive:
Vera P. Pardee, Esq.
c/o Nanogen, Inc.
10398 Pacific Center Court
San Diego, CA 92121
E. Modification; Waiver; Entire Agreement. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Executive and such officer as may be
specifically designated by the Board of the Company. No waiver by either party
hereto at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
F. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
G. Controlling Document. This Agreement supersedes any and all prior
employment agreements between the Company and Executive, but does not supersede
any other agreements between Company and Executive, including but not limited
to, the Nanogen Inc. Restricted Stock Purchase Agreement, any stock option
agreements or common stock purchase agreements entered into pursuant to the
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Company's 1997 Stock Incentive Plan, and the Nanogen Employees' Handbook and
Policies, except as expressly provided herein. In case of conflict between any
of the terms and conditions of this Agreement and the documents herein referred
to, the terms and conditions of this Agreement shall control.
H. Executive Acknowledgment. Executive acknowledges (a) that she has
consulted with or has had the opportunity to consult with independent counsel of
her own choice concerning this Agreement, and has been advised to do so by the
Company, and (b) that she has read and understands the Agreement, is fully aware
of its legal effect, and has entered into it freely based on her own judgment.
I. Remedies.
1. Injunctive Relief. The parties agree that the services to be rendered
by Executive hereunder are of a unique nature and that in the event of any
breach or threatened breach of any of the covenants contained herein, the damage
or imminent damage to the value and the goodwill of the Company's business will
be irreparable and extremely difficult to estimate, making any remedy at law or
in damages inadequate. Accordingly, the parties agree that the Company shall be
entitled to injunctive relief against Executive in the event of any breach or
threatened breach of any such provisions by Executive, in addition to any other
relief (including damages) available to the Company under this Agreement or
under law.
2. Exclusive. Both parties agree that the remedy specified in
Section 7.I.1 above is not exclusive of any other remedy for the breach by
Executive of the terms hereof.
J. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
Agreement.
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Executed by the parties as of the day and year first above written.
NANOGEN, INC.
By:
/s/ V. RANDY WHITE
--------------------------------------------------------------------------------
V. Randy White
Chief Executive Officer
EXECUTIVE:
By:
/s/ VERA P. PARDEE
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Vera P. Pardee
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QuickLinks
Exhibit 10.4
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
ARTICLE I. TERM OF AGREEMENT
ARTICLE II. EMPLOYMENT DUTIES
ARTICLE III. COMPENSATION
ARTICLE IV. EXPENSE ALLOWANCES AND FRINGE BENEFITS
ARTICLE V. CONFIDENTIALITY
ARTICLE VI. TERMINATION
ARTICLE VII. GENERAL PROVISIONS
|
EXHBIT 10.29
CONSENT AGREEMENT
July 31, 2000
South Central Pool Supply, Inc.
109 Northpark Boulevard
Covington, Louisiana 70433-5070
Attention: Craig Hubbard
Ladies and Gentlemen:
Reference hereby is made to that certain Third Amended and Restated Credit Agreement dated as of
December 31, 1997 (as the same has been and further may be amended, modified, supplemented or restated from time
to time, the "Credit Agreement") among South Central Pool Supply, Inc., a Delaware corporation ("Borrower"), the
institutions from time to time party thereto as lenders (the "Lenders") and LaSalle Bank National Association, as
contractual agent (in such capacity, the "Agent") for the "Holders of Secured Obligations" (this term and all
other capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such
terms in the Credit Agreement).
Notwithstanding anything contained in the Credit Agreement or the other Loan Documents to the contrary,
but subject to the conditions and terms herein contained, Agent and the Required Lenders hereby consent to the
following occurrences and/or transactions:
1. the formation of SCP Superior Acquisition Company LLC, a Delaware limited liability
company ("SCP Acquisition"), 100% of the limited liability company and membership interests and units
of which shall be owned by the Borrower; and
2. the acquisition by SCP Acquistion of substantially all of the assets of Superior Pool
Products, Inc., a Delaware corporation, in accordance with the terms of the Asset Purchase Agreement
dated June 14, 2000;
provided, that, such consent shall be subject to the following:
a. Borrower shall have executed and delivered to Agent, for the benefit of the Holders of
Secured Obligations, a pledge agreement (the "SCP Pledge Agreement"), in substantially the form attached
hereto as Exhibit A, together with assignments separate from certificate, proxies and other documents as
Agent reasonably shall request, pursuant to which the Agent shall have received, for the benefit of the
Holders of Secured Obligations, a first priority security interest in 100% of the issued and outstanding
limited liability company and membership interests and units of SCP Acquisition;
3
b. SCP Acquisition shall have (i) joined in the execution and delivery of the Guaranty
and (ii) executed and delivered to Agent, for the benefit of the Holders of Secured Obligations, a
security agreement (the "SCP Security Agreement"), in substantially the form attached hereto as Exhibit
B, together with UCC financing statements and other documents Agent reasonably shall request, pursuant to
which the Agent shall have received, for the benefit of the Holders of Secured Obligations, upon
recordation of such UCC financing statements, a first priority security interest in substantially all of
the property and assets of SCP Acquisition;
c. Each of Borrower and SCP Acquisition shall (a) ensure that all written information,
exhibits and reports furnished to the Agent or the Lenders do not and will not contain any untrue
statement of a material fact and do not and will not omit to state any material fact or any fact
necessary to make the statements contained therein not misleading in light of the circumstances in which
made, and will promptly disclose to the Agent and the Lenders and correct any defect or error that may
be discovered therein or in any Loan Document or in the execution, acknowledgement or recordation
thereof, and (b) promptly upon request by the Agent, take such additional actions as the Agent may
reasonably require from time to time in order (i) to carry out more effectively the purposes of this
Agreement or any other Loan Document, (ii) to subject to the Liens created by any of the Collateral
Documents any of the properties, rights or interests covered by any of the Collateral Documents, (iii)
to perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and
the Liens intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Agent and Lenders the rights granted or now or hereafter intended
to be granted to the Agent and the Lenders under any Loan Document or under any other document executed
in connection therewith; and
The Borrower, by its signature hereto below, hereby agrees and acknowledges that: (i) the SCP Pledge
Agreement and the SCP Security Agreement constitute, and shall be deemed to be, "Collateral Documents" under the
Credit Agreement and the other Loan Documents; and (ii) SCP Acquisition is a Domestic Incorporated Subsidiary and
a Subsidiary and shall be subject to the terms, conditions, agreements and covenants contained in the Credit
Agreement and the other Loan Documents in respect thereof.
This Letter Consent may be executed by one or more of the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to constitute one and the same
instrument. This Letter Consent may be executed by facsimile and a facsimile transmission of a signature to the
Agent or the Agent's counsel shall be effective as though an original signature has been so delivered.
Each of the Loan Parties as debtor, grantor, pledgor, guarantor, assignor, or in any other similar
capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as
accommodation party or guarantor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and
performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party (after
giving effect hereto) and (ii) to the extent such Loan Party granted liens on or security interests in any of its
property pursuant to any such Loan Document as security therefor or otherwise guaranteed the Obligations under or
with respect to the Loan Documents, ratifies and reaffirms such guarantee and grant of security interests and
liens and confirms and agrees that such security interests and liens hereafter secure all of the Obligations.
Each of the Loan Parties hereby consents to this Consent Letter and acknowledges that each of the Loan Documents
remains in full force and effect and is hereby ratified and reaffirmed. The execution of this Consent letter
shall not operate as a waiver of any right, power or remedy of the Agent or Lenders, constitute a waiver of any
provision of any of the Loan Documents (except as specifically set forth herein), constitute a course of dealing
among the parties or serve to effect a novation of the Obligations.
[remainder of page intentionally left blank; signature pages follow]
Consent Letter
IN WITNESS WHEREOF, this Consent Letter has been duly executed as of the day and year first above
written.
LASALLE BANK NATIONAL ASSOCIATION, as a Lender and as Agent
By: /S/
Its:
HIBERNIA NATIONAL BANK, as a Lender
By: /S/
Its:
NATIONAL CITY BANK, as a Lender
By: /S/
Its:
BANK ONE, N.A., formerly known as THE FIRST NATIONAL BANK OF
CHICAGO, as a Lender
By: /S/
Its:
AGREED AND ACKNOWLEDGED THIS
31 Day of July, 2000
SOUTH CENTRAL POOL SUPPLY, INC.
By: /S/
Its:
SCP POOL CORPORATION
By: /S/
Its:
Consent Letter
ALLIANCE PACKAGING, INC.
By: /S/
Its:
SCP INTERNATIONAL, INC.
By: /S/
Its:
SCP SUPERIOR ACQUISITION COMPANY LLC
By: /S/
Its:
EXHIBIT A
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "Pledge Agreement"), dated as of July 31, 2000, is executed by and
between South Central Pool Supply, Inc., a Delaware corporation ("Pledgor"), and LaSalle Bank National
Association, as contractual representative (the "Agent") for itself and for the "Holders of Secured Obligations"
under (and as defined in) the Credit Agreement described below. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement.
WITNESSETH:
WHEREAS, Pledgor, the Agent and certain financial institutions (the "Lenders") have entered into a
certain Third Amended and Restated Credit Agreement, dated as of December 31, 1997 (as the same has been and
further may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"),
pursuant to which the Lenders have agreed, subject to certain conditions precedent, to make loans and other
financial accommodations to the Pledgor from time to time (collectively, the "Loans");
WHEREAS, as set forth on Schedule I hereto, the Pledgor owns 100% of the issued and outstanding limited
liability company and membership interests and units of SCP Superior Acquisition Company LLC, a Delaware limited
liability company (the "Pledged Subsidiary");
WHEREAS, the Agent and the Lenders have required, as a condition under the Credit Agreement and to
continue making the Loans, and as further security for the Secured Obligations, that the Pledgor execute and
deliver this Pledge Agreement;
NOW, THEREFORE, for and in consideration of the foregoing and of any financial accommodations or
extensions of credit (including, without limitation, any loan or advance by renewal, refinancing or extension of
the agreements described hereinabove or otherwise) heretofore, now or hereafter made to or for the benefit of the
Pledgor pursuant to the Credit Agreement or any other agreement, instrument or document executed pursuant to or
in connection therewith, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor and the Agent hereby agree as follows:
1. Pledge. Pledgor hereby pledges to the Agent, for the benefit of the Agent and the Holders of
Secured Obligations, and grants to the Agent for the benefit of the Agent and the Holders of Secured Obligations,
a security interest in, the collateral described in subsections (a) through (g) below (collectively, the "Pledged
Collateral"):
11
(a) All of the limited liability company and membership interests and units and other
securities and all warrants, options and other rights to acquire limited liability company and
membership interests and units in the Pledged Subsidiary owned by Pledgor, whether now owned or
hereafter acquired by Pledgor, including, without limitation, as described in Schedule I hereto, all of
the certificates and/or instruments representing such limited liability company and membership interests
and units and other securities, and all cash, securities, dividends, distributions, rights and other
property at any time and from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such limited liability company and membership interests and units and
other securities;
(b) All of Pledgor's interests in the profits and losses of the Pledged Subsidiary and all
of Pledgor's rights and interests as a member of the Pledged Subsidiary to receive dividends or other
distributions of the Pledged Subsidiary's assets and properties;
(c) All of Pledgor's rights and interests, if any, to participate in the management of the
Pledged Subsidiary;
(d) All rights, privileges, authority and powers of Pledgor as owner or holder of the
limited liability company and membership interests and units in the Pledged Subsidiary, including,
without limitation, all general intangibles and other property incident or related thereto;
(e) All other property hereafter delivered to the Agent in substitution for or in addition
to any of the foregoing, all certificates and instruments representing or evidencing such property, and
all cash, securities, interest, dividends, distributions, rights and other property at any time and from
time to time received, receivable or otherwise distributed in respect of or in exchange for any or all
thereof;
(f) The property and interests in property described in Section 3 below; and
(g) All products and proceeds of the collateral described in subsections (a) through (f)
above.
2. Security for Obligations. The Pledged Collateral secures the prompt payment, performance and
observance of all obligations (monetary or otherwise) of Pledgor under the Credit Agreement, any Note, any other
Loan Document or any other agreement, document or instrument executed in connection therewith to the extent
Pledgor is a party thereto, and including, without limitation, the Secured Obligations.
3. Pledged Collateral Adjustments. If, during the term of this Pledge Agreement:
(a) Any distribution, reclassification, readjustment or other change is declared or made
in the capital structure of the Pledged Subsidiary, or any option included within the Pledged Collateral
is exercised, or both, or
(b) Any subscription warrants or any other rights or options shall be issued in connection
with the Pledged Collateral,
then all new, substituted and additional certificates, shares, warrants, rights, options, investment property or
other securities, issued by reason of any of the foregoing, shall be immediately delivered to and held by the
Agent under the terms of this Pledge Agreement and shall constitute Pledged Collateral hereunder; provided,
however, that nothing contained in this Section 3 shall be deemed to permit any distribution or distribution,
issuance of additional stock, warrants, rights or options, reclassification, readjustment or other change in the
capital structure of the Pledged Subsidiary which is not expressly permitted in the Credit Agreement.
4. Subsequent Changes Affecting Pledged Collateral. Pledgor represents and warrants that it has
made its own arrangements for keeping itself informed of changes or potential changes affecting the Pledged
Collateral (including, but not limited to, rights to convert, rights to subscribe, payment of dividends, cash
distributions or other distributions reorganization or other exchanges, tender offers and voting rights), and
Pledgor agrees that neither the Agent nor any of the Holders of Secured Obligations shall have any obligation to
inform Pledgor of any such changes or potential changes or to take any action or omit to take any action with
respect thereto. The Agent may, after the occurrence and during the continuance of a Default, without notice and
at its option, transfer or register the Pledged Collateral or any part thereof into its or its nominee's name
with or without any indication that such Pledged Collateral is subject to the security interest hereunder.
5. Representations and Warranties. Pledgor represents and warrants as follows:
(a) Pledgor is the legal and beneficial owner of 100% of the issued and outstanding
limited liability company and membership interests and units of the Pledged Subsidiary, free and clear
of any Lien except for the security interest created by this Pledge Agreement;
(b) Pledgor has full corporate power and authority to enter into this Pledge Agreement;
(c) There are no restrictions upon the voting rights associated with, or upon the transfer
of, any of the Pledged Collateral;
(d) Pledgor has the right to vote, pledge and grant a security interest in or otherwise
transfer such Pledged Collateral free of any Liens;
(e) Pledgor owns the Pledged Collateral free and clear of any pledge, mortgage,
hypothecation, lien, charge, encumbrance or any security interest therein, except for the pledge and
security interest granted to the Agent and the Holders of Secured Obligations hereunder;
(f) The pledge of the Pledged Collateral does not violate (1) the articles or by-laws,
Operating Agreements or Partnership Agreements, as applicable, of the Pledged Subsidiary, or any
indenture, mortgage, bank loan or credit agreement to which either the Pledgor or the Pledged
Subsidiary is a party or by which any of their respective properties or assets may be bound; or (2) any
restriction on such transfer or encumbrance of such Pledged Collateral;
(g) Pledgor agrees to execute and file financing statements pursuant to the Uniform
Commercial Code as the Agent may reasonably request to perfect the security interest granted hereby;
(h) No authorization, approval, or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required either (i) for the pledge of the Pledged
Collateral pursuant to this Pledge Agreement or for the execution, delivery or performance of this
Pledge Agreement by the Pledgor or (ii) for the exercise by the Agent of the voting or other rights
provided for in this Pledge Agreement or the remedies in respect of the Pledged Collateral pursuant to
this Pledge Agreement (except as may be required in connection with such disposition by laws affecting
the offering and sale of securities generally);
(i) Pledgor has no obligation to make further capital contributions or make any other
payments to the Pledged Subsidiary with respect to its interest therein.
6. Voting Rights. During the term of this Pledge Agreement, and except as provided in this Section
6 below, Pledgor shall have the right to exercise all voting powers pertaining to the Pledged Collateral for any
purpose in a manner not inconsistent with the terms of this Pledge Agreement, the Credit Agreement and any other
agreement, instrument or document executed pursuant thereto or in connection therewith. After the occurrence and
during the continuance of a Default, the Agent or the Agent's nominee may, at the Agent's or such nominee's
option and following written notice from the Agent to the Pledgor, (i) exercise all voting powers pertaining to
the Pledged Collateral and (ii) exercise, or direct the Pledgor as to the exercise of any and all rights of
conversion, exchange, subscription or any other rights, privileges or options pertaining to the applicable
Pledged Collateral, as if the Agent were the absolute owner thereof, all without liability except to account for
property actually received by it, but the Agent shall have no duty to exercise any of the aforesaid rights,
privileges or options and shall not be responsible for any failure so to do or delay in so doing. Such
authorization shall constitute an irrevocable voting proxy from the Pledgor to the Agent or, at the Agent's
option, to the Agent's nominee.
7. Dividends and Other Distributions. (a) So long as no Default shall have occurred and is
continuing:
(i) The Pledgor shall be entitled to receive and retain any and all dividends, cash
distributions and interest paid in respect of the Pledged Collateral to the extent such distributions
are not prohibited by the Credit Agreement, provided, however, that any and all
(A) distributions, dividends and interest paid or payable other than in cash with
respect to, and instruments and other property received, receivable or otherwise distributed
with respect to, or in exchange for, any of the Pledged Collateral;
(B) dividends and other distributions paid or payable in cash with respect to any
of the Pledged Collateral on account of a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or paid-in surplus; and
(C) cash paid, payable or otherwise distributed with respect to principal of, or
in redemption of, or in exchange for, any of the Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered to the Agent to hold, for the benefit of
the Agent and the Holders of Secured Obligations, as Pledged Collateral and shall, if received by the
Pledgor, be received in trust for the Agent, for the benefit of the Agent and the Holders of Secured
Obligations, be segregated from the other property or funds of the Pledgor, and be delivered immediately
to the Agent as Pledged Collateral in the same form as so received (with any necessary endorsement); and
(ii) The Agent shall execute and deliver (or cause to be executed and delivered) to the
Pledgor all such proxies and other instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to receive the dividends or interest payments which it is authorized to receive and
retain pursuant to clause (i) above.
(b) After the occurrence and during the continuance of a Default:
(i) All rights of the Pledgor to receive the dividends, distributions and interest
payments which it would otherwise be authorized to receive and retain pursuant to Section 7(a)(i) hereof
shall cease, and all such rights shall thereupon become vested in the Agent, for the benefit of the
Agent and the Holders of Secured Obligations, which shall thereupon have the sole right to receive and
hold as Pledged Collateral such dividends, distributions and interest payments;
(ii) All dividends, distributions and interest payments which are received by the Pledgor
contrary to the provisions of clause (i) of this Section 7(b) shall be received in trust for the Agent,
for the benefit of the Agent and the Holders of Secured Obligations, shall be segregated from other
funds of the Pledgor and shall be paid over immediately to the Agent as Pledged Collateral in the same
form as so received (with any necessary endorsements).
8. Transfers and Other Liens. Except as permitted in the Credit Agreement, Pledgor agrees that it
will not (i) sell or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral
without the prior written consent of the Agent, or (ii) create or permit to exist any Lien upon or with respect
to any of the Pledged Collateral, except for the security interest under this Pledge Agreement.
9. Remedies. (a) The Agent shall have, in addition to any other rights given under this Pledge
Agreement or by law, all of the rights and remedies with respect to the Pledged Collateral of a secured party
under the Uniform Commercial Code as in effect in the State of Illinois. The Agent (personally or through an
agent) is hereby authorized and empowered to transfer and register in its name or in the name of its nominee the
whole or any part of the Pledged Collateral, subject to Section 6 hereto, to exercise all voting rights with
respect thereto, subject to Section 7 hereto, to collect and receive all cash dividends or distributions and
other distributions made thereon, and to otherwise act with respect to the Pledged Collateral as though the Agent
were the outright owner thereof, each Pledgor hereby irrevocably constituting and appointing the Agent as the
proxy and attorney-in-fact of such Pledgor, with full power of substitution to do so, provided, however, that the
Agent shall have no duty to exercise any such right or to preserve the same and shall not be liable for any
failure to do so or for any delay in doing so; provided, further, however that the Agent agrees to exercise such
proxy and powers to transfer and register the Pledged Collateral only so long as a Default shall have occurred
and is continuing. In addition, after the occurrence and during the continuance of a Default, the Agent shall
have such powers of sale and other powers as may be conferred by applicable law and regulatory requirements. With
respect to the Pledged Collateral or any part thereof which shall then be in or shall thereafter come into the
possession or custody of the Agent or which the Agent shall otherwise have the ability to transfer under
applicable law, the Agent may, in its sole discretion, without notice except as specified below, after the
occurrence and during the continuance of a Default, sell or cause the same to be sold at any broker's board or at
public or private sale, in one or more sales or lots, at such price as the Agent may deem best, for cash or on
credit or for future delivery, without assumption of any credit risk, and the purchaser of any or all of the
Pledged Collateral so sold shall thereafter own the same, absolutely free from any claim, encumbrance or right of
any kind whatsoever. The Agent and each of the Holders of Secured Obligations may, in its own name, or in the
name of a designee or nominee, buy the Pledged Collateral at any public sale and, if permitted by applicable law,
buy the Pledged Collateral at any private sale. Pledgor will pay to the Agent all reasonable expenses (including,
without limitation, court costs and reasonable attorneys' and paralegals' fees and expenses) of, or incidental
to, the enforcement of any of the provisions hereof. The Agent agrees to distribute any proceeds of the sale of
the Pledged Collateral in accordance with the Credit Agreement and the Pledgor shall remain liable for any
deficiency following the sale of the Pledged Collateral.
(b) Unless any of the Pledged Collateral threatens to decline speedily in value or is or
becomes of a type sold on a recognized market, the Agent will give the Pledgor reasonable notice of the
time and place of any public sale thereof, or of the time after which any private sale or other intended
disposition is to be made. Any sale of the Pledged Collateral conducted in conformity with reasonable
commercial practices of banks, commercial finance companies, insurance companies or other financial
institutions disposing of property similar to the Pledged Collateral shall be deemed to be commercially
reasonable. Notwithstanding any provision to the contrary contained herein, Pledgor agrees that any
requirements of reasonable notice shall be met if such notice is received by Pledgor as provided in
Section 21 below at least five (5) Business Days before the time of the sale or disposition; provided,
however, that Agent may give any shorter notice that is commercially reasonable under the circumstances.
Any other requirement of notice, demand or advertisement for sale is waived, to the extent permitted by
law.
10. Agent Appointed Attorney-in-Fact. Pledgor hereby appoints the Agent its attorney-in-fact, with
full authority, in the name of Pledgor or otherwise, from time to time in the Agent's sole discretion, to take
any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without limitation, to receive, endorse and collect all instruments
made payable to Pledgor representing any dividend, distribution, interest payment or other distribution in
respect of the Pledged Collateral or any part thereof and to give full discharge for the same and to arrange for
the transfer of all or any part of the Pledged Collateral on the books of the Pledged Subsidiary to the name of
the Agent or the Agent's nominee; provided, however, that the Agent agrees to exercise such powers only so long
as a Default shall have occurred and is continuing.
11. Waivers. (i) Pledgor waives presentment and demand for payment of any of the Secured
Obligations, protest and notice of dishonor or Default with respect to any of the Secured Obligations and all
other notices to which the Pledgor might otherwise be entitled except as otherwise expressly provided herein or
in the Credit Agreement.
(ii) Pledgor understands and agrees that its obligations and liabilities under this Pledge
Agreement shall remain in full force and effect, notwithstanding foreclosure of any real property securing all or
any part of the Secured Obligations by trustee sale or any other reason impairing the right of Pledgor, the Agent
or any of the Holders of Secured Obligations to proceed against the Pledged Subsidiary, any other guarantor or
the Pledged Subsidiary or such guarantor's property. Pledgor agrees that all of its obligations under this Pledge
Agreement shall remain in full force and effect without defense, offset or counterclaim of any kind,
notwithstanding that Pledgor's rights against the Pledged Subsidiary may be impaired, destroyed or otherwise
affected by reason of any action or inaction on the part of the Agent or any Holder of Secured Obligations. By
way of example and without limiting the foregoing, if the Agent shall release or foreclose by private power of
sale any real property that secures the Secured Obligations, then notwithstanding that the Pledged Subsidiary may
be entitled thereby to assert a defense against such Secured Obligations (and thus also against its obligations
to Pledgor to the extent that Pledgor may be subrogated to the rights of the Holders of Secured Obligations)
based upon the applicability of California Code of Civil Procedure Section 580d or other antideficiency laws,
Pledgor nonetheless shall remain fully obligated hereunder. Pledgor waives all defenses, protections and benefits
of Sections 580a, 580b, 580d and 726 of the California Code of Civil Procedure, and all judicial decisions
construing or pertaining to the same, and all rules and principles of like kind or similar effect (including,
without limitation, the so-called one-action rule, the one-form-of-action rule and the security-first rule), in
each case as applicable to or in favor of Pledgor, the Pledged Subsidiary or otherwise. In addition, Pledgor
hereby waives, to the fullest extent permitted by law, without limiting the generality of the foregoing or any
other provision hereof, all rights and benefit under California Civil Code Sections 2810, 2819, 2839, 2845, 2849,
2850, 2899, and 3433 (or any similar law in any other jurisdiction).
(iii) Pledgor hereby expressly waives the benefits of Section 2815 of the California Civil Code
(or any similar law in any other jurisdiction) purporting to allow a guarantor or pledgor to revoke a continuing
guaranty or pledge with respect to any transactions occurring after the date of the guaranty or pledge.
12. Term. This Pledge Agreement shall remain in full force and effect until the Secured Obligations
have been fully and indefeasibly paid in cash (other than contingent indemnification obligations) and the Credit
Agreement has terminated pursuant to its terms. Upon the termination of this Pledge Agreement as provided above
(other than as a result of the sale of the Pledged Collateral), the Agent will release the security interest
created hereunder.
13. Definitions. The singular shall include the plural and vice versa and any gender shall include
any other gender as the context may require.
14. Successors and Assigns. This Pledge Agreement shall be binding upon and inure to the benefit of
Pledgor, the Agent, for the benefit of itself and the Holders of Secured Obligations, and their respective
successors and assigns. Pledgor's successors and assigns shall include, without limitation, a receiver, trustee
or debtor-in-possession of or for the Pledgor.
15. GOVERNING LAW. ANY DISPUTE AMONG THE PLEDGORS AND THE AGENT, ANY HOLDER OF SECURED OBLIGATIONS
OR ANY INDEMNITEE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH, THIS PLEDGE AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT
LIMITATION, 735 ILCS SECTION 105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF
THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
16. CONSENT TO JURISDICTION: SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF THE PARTIES
HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS PLEDGE AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS
LOCATED IN CHICAGO, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES
BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING
THE DISPUTE.
(B) OTHER JURISDICTIONS. PLEDGOR AGREES THAT THE AGENT, ANY HOLDER OF SECURED OBLIGATIONS
OR ANY INDEMNITEE SHALL HAVE THE RIGHT TO PROCEED AGAINST THE PLEDGOR OR ITS PROPERTY IN A COURT IN ANY LOCATION
TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER THE PLEDGOR OR (2) REALIZE ON THE PLEDGED
COLLATERAL OR ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. PLEDGOR AGREES THAT IT
WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE ON THE PLEDGED
COLLATERAL OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. PLEDGOR WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
(C) SERVICE OF PROCESS; VENUE. PLEDGOR WAIVES PERSONAL SERVICE OF ANY PROCESS UPON
IT AND IRREVOCABLY APPOINTS THE PRENTICE HALL CORPORATION SYSTEM, INC., WHOSE ADDRESS IS 33 NORTH LASALLE STREET,
SUITE 1925, CHICAGO, ILLINOIS 60602, AS PLEDGOR'S AGENT, FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS ISSUED
BY ANY COURT IN CONNECTION WITH ANY DISPUTE BETWEEN THE PLEDGOR AND THE AGENT ARISING OUT OF OR RELATED
TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS PLEDGE AGREEMENT OR ANY OTHER LOAN
DOCUMENT TO WHICH THE PLEDGOR IS A PARTY. EACH OF THE PLEDGOR AND THE AGENT IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS PLEDGE AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT
OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS PLEDGE AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. PLEDGOR WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF ANY PARTY
HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO REALIZE ON THE COLLATERAL, OR TO ENFORCE ANY
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER PARTY HERETO THAT IT HAS
DISCUSSED THIS PLEDGE AGREEMENT AND, SPECIFICALLY, THE PROVISIONS OF THIS SECTION 16, WITH ITS COUNSEL.
17. No Strict Construction. The parties hereto have participated jointly in the negotiation and
drafting of this Pledge Agreement. In the event an ambiguity or question of intent or interpretation arises, this
Pledge Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Pledge
Agreement.
18. Severability. Whenever possible, each provision of this Pledge Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but, if any provision of this Pledge Agreement
shall be held to be prohibited or invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining
provisions of this Pledge Agreement.
19. Further Assurances. Pledgor agrees that it will cooperate with the Agent and will execute and
deliver, or cause to be executed and delivered, all such other stock powers, proxies, instruments and documents,
and will take all such other actions, including, without limitation, the execution and filing of financing
statements, as the Agent may reasonably request from time to time in order to carry out the provisions and
purposes of this Pledge Agreement.
20. The Agent's Duty of Care. The Agent shall not be liable for any acts, omissions, errors of
judgment or mistakes of fact or law including, without limitation, acts, omissions, errors or mistakes with
respect to the Pledged Collateral, except for those arising out of or in connection with the Agent's (i) Gross
Negligence or willful misconduct, or (ii) failure to use reasonable care with respect to the safe custody of the
Pledged Collateral in the Agent's possession. Without limiting the generality of the foregoing, the Agent shall
be under no obligation to take any steps necessary to preserve rights in the Pledged Collateral against any other
parties but may do so at its option. All expenses incurred in connection therewith shall be for the sole account
of the Pledgor, and shall constitute part of the Secured Obligations.
21. Notices. All notices and other communications provided to any party hereto under this Agreement
shall be in writing or by facsimile and addressed or delivered to such party at its address set forth below or at
such other address as may be designated by such party in a notice to the other parties. Any notice, if mailed and
properly addressed with postage prepaid, shall be deemed given when received; any notice, if transmitted by telex
or facsimile, shall be deemed given when transmitted (answerback confirmed in the case of facsimile
transmission).
if to Pledgor:
South Central Pool Supply, Inc.
109 Northpark Boulevard
Covington, LA 70433-5070
Attn.: Craig Hubbard
Facsimile No.: (504) 892-1657
with a copy (which shall not constitute notice to Pledgor) to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
201 St. Charles Avenue
New Orleans, LA 70170-5100
Attn.: Lisa Manget Buchanan, Esq.
Facsimile No.: (504) 582-8012
if to the Agent:
LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603
Attn.: John Thurston
Facsimile No.: (312) 904-6225
with a copy to:
Katten Muchin Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attn: Stuart P. Shulruff, Esq.
Facsimile No.: (312) 902-1061
22. Amendments, Waivers and Consents. No amendment or waiver of any provision of this Pledge
Agreement nor consent to any departure by the Pledgor herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Agent pursuant to the terms of the Credit Agreement, and then such
amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for
which given.
23. Section Headings. The section headings herein are for convenience of reference only, and shall
not affect in any way the interpretation of any of the provisions hereof.
24. Execution in Counterparts. This Pledge Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall together constitute one and the same agreement.
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Pledge Agreement- SCP Acquisition
IN WITNESS WHEREOF, the Pledgors and the Agent have executed this Pledge Agreement as of the date set
forth above.
SOUTH CENTRAL POOL SUPPLY, INC.
By: /S/
Name:_______________________________
Title:_______________________________
LASALLE BANK NATIONAL ASSOCIATION, as agent for itself and
the Holders of Secured Obligations
By: /S/
Name:_______________________________
Title:________________________________
Pledge Agreement- SCP Acquisition
ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the foregoing Pledge Agreement, agrees promptly
to note on its books the security interests granted under such Pledge Agreement, and waives any rights or
requirement at any time hereafter to receive a copy of such Pledge Agreement in connection with the registration
of any Pledged Collateral in the name of the Agent or its nominee or the exercise of voting rights by the Agent
or its nominee.
SCP SUPERIOR ACQUISITION COMPANY LLC, a Delaware limited
liability company
By: /S/
Name:_______________________________
Title:________________________________
EXHIBIT B
SECURITY AGREEMENT
SECURITY AGREEMENT ("Agreement"), dated as of July 31, 2000, made by SCP SUPERIOR ACQUISITION
COMPANY LLC, a Delaware limited liability company ("Grantor"), in favor of LASALLE BANK NATIONAL ASSOCIATION, in
its capacity as contractual representative for itself and the other "Lenders" (as defined below) (in such
capacity, the "Agent") for its benefit and for the benefit of the "Holders of Secured Obligations" (as defined
below) who are, or may hereafter become, parties to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
WHEREAS, South Central Pool Supply, Inc. (the "Borrower") has entered into a certain Third Amended and
Restated Credit Agreement dated as of December 31, 1997 among, the Borrower, the institutions from time to time
party thereto as lenders (the "Lenders") and the Agent, as amended (as the same has been and further may be
amended, modified, supplemented or restated from time to time, the "Credit Agreement"), providing for the making
of loans, advances and other financial accommodations (including, without limitation, issuing letters of credit)
(all such loans, advances and other financial accommodations being hereinafter referred to collectively as the
"Loans") to or for the benefit of the Borrower;
WHEREAS, the Borrower owns 100% of the issued and outstanding limited liability company and membership
interests and units of Grantor and, accordingly, Grantor will derive direct and indirect economic benefit from
the Loans and other financial accommodations made to the Borrower under the Credit Agreement;
WHEREAS, to secure the Loans, among other things, the Borrower shall have pledged its interests in
Grantor to the Agent for its benefit and the benefit of the Holders of the Secured Obligations;
WHEREAS, Grantor joined, or shall join, that certain Guaranty dated December 31, 1998 (as the same may
be amended, modified, supplemented or restated from time to time, the "Guaranty") in favor of the Agent for its
benefit and the benefit of Holders of Secured Obligations which will provide for the guarantee of the Secured
Obligations of the Borrower;
WHEREAS, as a condition under the Credit Agreement, Grantor is required to execute and deliver, and
perform its obligations under, this Agreement to secure the "Liabilities" (as defined herein);
NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:
15
Defined Terms. Unless otherwise defined herein, terms defined in the Credit Agreement are used herein
as therein defined, and the following terms shall have the following meanings (such meanings being equally
applicable to both the singular and the plural forms of the terms defined):
"Agreement" shall mean this Security Agreement, as the same may from time to time be further amended,
restated, modified or supplemented, and shall refer to this Agreement as the same may be in effect at the time
such reference becomes operative.
"Collateral" shall mean all property and rights in property now owned or hereafter at any time acquired
by Grantor in or upon which a Lien is granted in favor of the Agent by Grantor or a Subsidiary of Grantor under
this Agreement, including, without limitation, the property described in Section 2.
"Holders of Secured Obligations" shall mean the holders of the Secured Obligations from time to time and
shall include their respective successors, transferees and assigns.
"Notification Period" shall mean the period from and after the date on which the Agent notifies,
following the occurrence and during the continuance of a Default, a Restricted Account Bank, in writing, that the
Agent is exercising its rights under the applicable Restricted Account Agreement until the date on which the
Agent notifies, promptly following the absence or curing of any Default, such Restricted Account Bank that it is
withdrawing such notice.
"UCC" shall mean the Uniform Commercial Code as the same may, from time to time, be in effect in the
State of Illinois; provided, however, in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection or priority of the Agent's and the Holders of Secured Obligations' security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State
of Illinois, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
SECTION 1. Grant of Security. To secure the prompt and complete payment, observance and performance of
(i) obligations and liabilities of Grantor under the Guaranty between the parties to this Agreement; and (ii) the
Grantor's obligations and liabilities under this Agreement and each document, instrument, or agreement executed
in connection with or pursuant to this Agreement (all such liabilities and obligations of Grantor now or
hereafter existing being, hereinafter referred to as the "Liabilities"), Grantor hereby assigns and pledges to
Agent, for the benefit of itself and the Holders of Secured Obligations, and hereby grants to Agent, for the
benefit of itself and the Holders of Secured Obligations, a security interest in all of Grantor's right, title
and interest in and to the following, whether now owned or existing, or hereafter arising or acquired and
wheresoever located:
ACCOUNTS: All "accounts" as such term is defined in Section 9-106 of the UCC, whether now owned or
hereafter acquired or arising, and shall include, without limitation all present and future accounts, accounts
receivable and other rights of Grantor to payment for goods sold or leased or for services rendered (except those
evidenced by instruments or chattel paper), whether now existing or hereafter arising and wherever arising, and
whether or not they have been earned by performance (collectively, "Accounts");
INVENTORY: All "inventory" as defined in Section 9-109(4) of the UCC, whether now owned or hereafter
acquired or arising, and shall include, without limitation, all goods now owned or hereafter acquired by Grantor
(wherever located, whether in the possession of Grantor or of a bailee or other person for sale, storage,
transit, processing, use or otherwise and whether consisting, of whole goods, spare parts, components, supplies,
materials, or consigned, returned or repossessed goods) which are held for sale or lease, which are to be
furnished (or have been furnished) under any contract of service or which are raw materials, work in process or
materials used or consumed in Grantor's business (collectively, "Inventory");
EQUIPMENT: All "equipment" as such term is defined in Section 9-109(2) of the UCC, whether now owned or
hereafter acquired or arising, and shall include, without limitation, all machinery, all manufacturing,
distribution, selling, data processing, and office equipment, all furniture, furnishings, appliances, fixtures
and trade fixtures, tools, tooling, molds, dies, vehicles, vessels, trucks, buses, motor vehicles and all other
goods of every type and description (other than Inventory), in each instance whether now owned or hereafter
acquired by Grantor and wherever located (collectively, "Equipment");
GENERAL INTANGIBLES: All "general intangibles" as defined in Section 9-106 of the UCC, whether now owned
or hereafter acquired or arising, and shall include, without limitation, all rights, interests, choices in
action, causes of actions, claims and all other intangible property of Grantor of every kind and nature (other
than Accounts), in each instance whether now owned or hereafter acquired by Grantor and however and whenever
arising, including, without limitation, all corporate and other business records; all loans, royalties, and other
obligations receivable; customer lists, credit files, correspondence, and advertising materials; firm sale
orders, other contracts and contract rights; all interests in partnerships and joint ventures; all tax refunds
and tax refund claims; all right, title and interest under leases, subleases, licenses and concessions and other
agreements relating to real or personal property; all payments due or made to Grantor in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of any property by any person or governmental
authority; all deposit accounts (general or special) with any bank or other financial institution, including,
without limitation, any deposits or other sums at any time credited by or due to Grantor from any of the Holders
of Secured Obligations or any of their respective Affiliates with the same rights therein as if the deposits or
other sums were credited by or due from such Holder of Secured Obligations: all credits with and other claims
against carriers and shippers; all rights to indemnification; all patents, and patent applications (including all
reissues, divisions, continuations and extensions); all trade secrets and inventions; all copyrights (including
all computer software and related documentation); all rights and interests in and to trademarks, trademark
registrations and applications therefor, trade names, corporate names, brand names, slogans, all goodwill
associated with the foregoing; all license agreements and franchise agreements, all reversionary interests in
pension and profit sharing plans and reversionary, beneficial and residual interest in trusts; all proceeds of
insurance of which Grantor is beneficiary; and all letters of credit, guaranties, liens, security interests and
other security held by or granted to Grantor; and all other intangible property, whether or not similar to the
foregoing;
LAB PROCESSING AND ENGINEERING INFORMATION: All rights and interests in and to processes, lab journals,
and notebooks, data, trade secrets, know-how, product formulae and information, manufacturing, engineering and
other drawings and manuals, technology, blueprints, research and development reports, agency agreements,
technical information, technical assistance, engineering data, design and engineering specifications, and similar
materials recording or evidencing expertise used in or employed by Grantor (including any license for the
foregoing);
CONTRACT RIGHTS: All rights and interests in and to any pending or executory contracts, requests for
quotations, invitations for bid, agreements, leases and arrangements of which Grantor is a party to or has an
interest in;
CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, leases, all instruments, including, without
limitation, the notes and debt instruments described in Schedule I (the "Pledged Debt") and all payments
thereunder and instruments and other property from time to time delivered in respect thereof or in exchange
therefor, and all bills of sale, bills of lading, warehouse receipts and other documents of title, in each
instance whether now owned or hereafter acquired by Grantor;
INVESTMENT PROPERTY: All "investment property" as such term is defined in Section 9-115(f) of the UCC,
whether now owned or hereafter acquired or arising, and shall include, without limitation, all securities,
financial assets, security entitlements, securities accounts, commodities contracts, and commodities accounts in
each instance whether now owned or hereafter acquired by Grantor ("Investment Property");
INTEREST AND CURRENCY CONTRACTS: Any and all interest rate or currency exchange agreements, including
without limitation, cap, collar, floor, forward or similar agreements or other rate protection arrangements; and
OTHER PROPERTY: All property or interests in property now owned or hereafter acquired by Grantor which
now may be owned or hereafter may come into the possession, custody or control of Agent or any of the Holders of
Secured Obligations or any agent or Affiliate of any of them in any way and for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or otherwise); and all rights and interests of
Grantor, now existing or hereafter arising and however and wherever arising, in respect of any and all (i) notes,
drafts, letters of credit, stocks, bonds, and debt and equity securities, whether or not certificated, and
warrants, options, puts and calls and other rights to acquire or otherwise relating to the same; (ii) money or
deposit accounts; (iii) proceeds of loans, including, without limitation, loans made under the Credit Agreement;
and (iv) insurance proceeds and books and records relating to any of the property covered by this Agreement;
together, in each instance, with all accessions and additions thereto, substitutions therefor, and replacements,
proceeds and products thereof.
SECTION 2. Authorization. Grantor hereby authorizes Agent to retain and each Holder of Secured
Obligations, and each Affiliate of Agent and of each Holder of Secured Obligations, to pay or deliver to Agent,
for the benefit of the Holders of Secured Obligations, without any necessity on any Holder of Secured
Obligation's part to resort to other security or sources of reimbursement for the Liabilities, at any time
following the occurrence and during the continuance of any Default, and without further notice to Grantor (such
notice being expressly waived), any of the deposits referred to in Section 2 (whether general or special, time or
demand, provisional or final) or other sums or property held by such Person, for application against any portion
of the Liabilities, irrespective of whether any demand has been made or whether such portion of the Liabilities
is mature. Agent will promptly notify Grantor of Agent's receipt of such funds or other property for application
against the Liabilities, but failure to do so will not affect the validity or enforceability thereof. Agent may
give notice of the above grant of security interest and assignment of the aforesaid deposits and other sums, and
authorization, to, and make any suitable arrangements with, any such Holder of Secured Obligations for
effectuation thereof, and Grantor hereby irrevocably appoints Agent as its attorney to collect, following the
occurrence and during the continuance of a Default, any and all such deposits or other sums to the extent any
such payment is not made to Agent by such Holder of Secured Obligation or Affiliate thereof.
SECTION 3. Grantor Remains Liable. Anything herein to the contrary notwithstanding, (a) Grantor shall
remain solely liable under the contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not
been executed, (b) the exercise by Agent of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the Collateral, and (c) neither Agent nor
the Holders of Secured Obligations shall have any responsibility, obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall Agent or the Holders of Secured
Obligations be required or obligated, in any manner, to (i) perform or fulfill any of the obligations or duties
of Grantor thereunder, (ii) make any payment, or make any inquiry as to the nature or sufficiency of any payment
received by Grantor or the sufficiency of any performance by any party under any such contract or agreement or
(iii) present or file any claim, or take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. Representations and Warranties. Grantor represents and warrants, as of the date of this
Agreement and as of each date hereafter (except for changes permitted or contemplated by this Agreement) until
termination of this Agreement pursuant to Section 25:
(a) The correct corporate name of Grantor is set forth in the first paragraph of this
Agreement. The locations listed on Schedule 2 constitute all locations at which Inventory and/or
Equipment is located and Grantor has exclusive possession and control of such Equipment and Inventory,
except for such Inventory and Equipment which is (i) temporarily in transit between such locations, or
(ii) temporarily stored with third parties or held by third parties for processing, engineering,
evaluation or repairs the proper corporate names of which third parties, the location of such Inventory
and/or Equipment, the nature of the relationship between Grantor and such third parties, and the maximum
value of Inventory and/or Equipment at such third parties is set forth in Schedule 2-A. Schedule 2 may
be amended to reflect additional locations acquired in connection with Permitted Acquisitions. The chief
place of business and chief executive office of Grantor are located at 109 Northpark Boulevard,
Covington, Louisiana 70433. All records concerning any Accounts and all originals of all chattel paper
which evidence any Account are located at the addresses listed on Schedule 2 and none of the Accounts is
evidenced by a promissory note or other instrument except for such notes and other instruments delivered
to Agent;
(b) Grantor is the legal and beneficial owner of the Collateral free and clear of all
Liens except for Liens permitted by the terms of the Credit Agreement and, in certain areas and for
certain operations, the trade names listed on Schedule 3;
(c) This Agreement creates in favor of Agent a legal, valid and enforceable security
interest in the Collateral. When financing statements have been filed in the appropriate offices against
Grantor in the locations listed on Schedule 2-B, Agent will have a fully perfected first priority lien
on, and security interest in, the Collateral in which a security interest may be perfected by such
filing, subject only to Liens permitted by the applicable terms of the Credit Agreement;
(d) No authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority that have not already been taken or made and which are in full force and effect,
are required (i) for the grant by Grantor of the security interest in the Collateral granted hereby;
(ii) the execution, delivery or performance of this Agreement by Grantor; or (iii) for the exercise by
Agent of any of its other rights or remedies hereunder;
(e) The Pledged Debt issued by any Affiliate of Grantor, and to the best of Grantor's
knowledge, all other Pledged Debt, has been duly authorized, issued and delivered, and is the legal,
valid, binding and enforceable obligation of the respective issuers thereof; and
(f) Schedule 4 contains a completed list of all of the deposit accounts of Grantor and
Grantor will amend and update Schedule 4 by delivering supplemental reports to Agent on a calendar
quarterly basis unless more frequently requested by the Agent.
SECTION 5. Perfection and Maintenance of Security Interest and Lien. Grantor agrees that until
all of the Liabilities (other than contingent indemnity Obligations) have been fully satisfied and the Credit
Agreement has been terminated, Agent's security interests in and Liens on and against the Collateral and all
proceeds and products thereof, shall continue in full force and effect. Grantor shall perform any and all steps
reasonably requested by Agent to perfect, maintain and protect Agent's security interests in and Liens on and
against the Collateral granted or purported to be granted hereby or to enable Agent to exercise its rights and
remedies hereunder with respect to any Collateral, including, without limitation, (i) executing and filing
financing or continuation statements, or amendments thereof, in form and substance reasonably satisfactory to
Agent, (ii) delivering to Agent all certificates, notes and other instruments (including, without limitation, all
letters of credit on which Grantor is named as a beneficiary) representing or evidencing Collateral duly endorsed
and accompanied by duly executed instruments of transfer or assignment, including, but not limited to, note
powers, all in form and substance satisfactory to Agent, (iii) delivering to Agent warehouse receipts covering
that portion of the Collateral, if any, located in warehouses and for which warehouse receipts are issued,
(iv) after the occurrence and during the continuance of a Default, transferring, Inventory and Equipment to
warehouses designated by Agent or taking such other steps as are deemed necessary by Agent to maintain Agent's
control of the Inventory and Equipment, (v) marking conspicuously each document, contract, chattel paper and all
records pertaining to the Collateral with a legend, in form and substance satisfactory to Agent, indicating that
such document, contract, chattel paper, or Collateral is subject to the security interest granted herein, (vi)
using its best efforts to obtain as soon as reasonably possible, but in no event later than 30 days after the
date hereof, waivers of Liens and access agreements in substantially the form of Exhibit A hereto (or such other
form as may be agreed to by the Agent) from landlords and mortgagees with respect to the Grantor's leased
premises as of the date hereof, (vii) using its reasonable good faith efforts to obtain waivers of Liens and
access agreements in substantially the form of Exhibit A hereto (or such other form as may be agreed to by the
Agent) from landlord and mortgagees with respect to all premises leased after the date hereof; and
(viii) executing and delivering all further instruments and documents, and taking all further action, as Agent may
reasonably request.
SECTION 6. Financing Statements. To the extent permitted by applicable law, Grantor hereby
authorizes Agent to file one or more financing or continuation statements and amendments thereto, disclosing the
security interest granted to Agent under this Agreement without Grantor's signature appearing thereon and Agent
agrees to notify Grantor when such a filing has been made. Grantor agrees that a carbon, photographic,
photostatic, or other reproduction of this Agreement or of a financing statement is sufficient as a financing
statement. If any Inventory or Equipment is in the possession or control of any warehouseman or Grantor's agents
or processors, Grantor shall, upon Agent's request, notify such warehouseman, agent or processor of Agent's
security interest in such Inventory and Equipment and, upon Agent's request, instruct them to hold all such
Inventory or Equipment for Agent's account and subject to Agent's instructions.
SECTION 7. Filing Costs. Grantor shall pay the costs of, or incidental to, all recordings or
filings of all financing statements, including, without limitation, any filing expenses incurred by Agent
pursuant to Section 7.
SECTION 8. Schedule of Collateral. Grantor shall furnish to Agent from time to time statements
and schedules further identifying and describing the Collateral and such other reports in connection with the
Collateral as Agent may reasonably request, all in reasonable detail.
SECTION 9. Equipment and Inventory. Grantor covenants and agrees with Agent that from the date of this
Agreement and until termination of this Agreement pursuant to Section 25, Grantor shall:
(a) Keep the Equipment and Inventory (other than Equipment or Inventory sold in the
ordinary course of business) at the places specified in Section 5(a), except for Equipment and Inventory
(i) temporarily in transit between such locations or (ii) temporarily stored with the third parties set
forth on Schedule 2-A in amounts not in excess of the maximum amounts indicated for each such location,
and deliver written notice to Agent at least thirty (30) days prior to establishing any other location
at which or third party with which it reasonably expects to maintain Inventory and/or Equipment in which
location or with which third party all action required by this Agreement shall have been taken with
respect to all such Equipment and Inventory;
(b) Maintain or cause to be maintained in good repair, working, order and condition,
excepting, ordinary wear and tear and damage due to casualty, all of the Equipment, and make or cause to
be made all appropriate repairs, renewals and replacements thereof, as quickly as practicable after the
occurrence of any loss or damage thereto which are necessary or desirable to such end;
(c) Comply with the terms of the Credit Agreement with respect to such Equipment and
Inventory, including, without limitation, the maintenance and insurance provisions set forth in the
Credit Agreement;
SECTION 10. Accounts. Grantor covenants and agrees with Agent that from and after the date of this
Agreement and until termination of this Agreement pursuant to Section 25, Grantor shall:
(a) Keep its chief place of business and chief executive office and the office where it
keeps its records concerning the Accounts at its address set forth in Section 5(a) hereof, and keep the
offices where it keeps all originals of all chattel paper which evidence Accounts, at the locations
therefor specified in Section 5(a) or, upon thirty (30) days prior written notice to Agent, at such
other locations within the United States in a jurisdiction where all actions required by Section 6 shall
have been taken with respect to the Accounts. Grantor will hold and preserve such records (in accordance
with Grantor's usual document retention practices) and chattel paper and will permit representatives of
Agent at any time during normal business hours to inspect and make abstracts from such records and
chattel paper; and
(b) In any suit, proceeding or action brought by Agent under any Account comprising part
of the Collateral, Grantor will save, indemnify and keep each of the Holders of Secured Obligations
harmless from and against all expenses, loss or damage suffered by reason of any defense, set off,
counterclaim, recoupment or reduction of liability whatsoever of the obligor thereunder, arising out of
a breach by Grantor of any obligation or arising out of any other agreement, indebtedness or liability
at any time owing to or in favor of such Holder of Secured Obligations from Grantor, and all such
obligations of Grantor shall be and shall remain enforceable against and only against Grantor and shall
not be enforceable against any of the Holders of Secured Obligations.
(c) When Grantor or any of its Subsidiaries (or any Affiliates, shareholders, directors,
officers, employees, agents or those Persons acting for or in concert with Grantor or a Subsidiary of
Grantor) shall receive or come into the possession or control of any monies, checks, notes, drafts or
any other payment relating to, or proceeds of, Grantor's Accounts or other property constituting
Collateral hereunder (individually, a "Payment Item", and, collectively, "Payment Items"), then, except
as otherwise permitted in a writing signed by the Agent, Grantor shall, or shall cause such Subsidiary
or such other Person to, deposit the same, in kind in precisely the form in which such Payment Item was
received (with all Payment Items endorsed if necessary for collection), into an account maintained by
the Grantor as permitted under the Credit Agreement.
SECTION 11. Leased Real Property. Grantor covenants and agrees with Agent that from and after the date
of this Agreement and until termination of this Agreement pursuant to Section 25, that:
(a) Promptly following, but not later than ninety (90) days after, the close of each
fiscal year Grantor will furnish to Agent a report certified to be true and correct by Grantor
containing a list of each of the Grantor's leased premises; the name or names of all owners; rentals
being paid; and whether Grantor has obtained waivers of Liens and access agreements from landlords and
mortgagees with respect to such premises in accordance with Section 6; and
(b) Grantor agrees that, from and after the occurrence of a Default, Agent may, but need
not, make any payment or perform any act hereinbefore required of Grantor with respect to the Grantor's
leased premises in any form and manner deemed expedient. All money paid for any of the purposes herein
authorized and all other moneys advanced by Agent to protect the lien hereof shall be additional
Liabilities secured hereby and shall become immediately due and payable without notice and shall bear
interest thereon at the default interest rate as provided in the Credit Agreement until paid to Agent in
full.
SECTION 12. General Covenants. Grantor covenants and agrees with Agent that from and after the date of
this Agreement and until termination of this Agreement pursuant to Section 25, Grantor shall:
(a) Keep and maintain at Grantor's own cost and expense satisfactory and complete records
of Grantor's Collateral in a manner consistent with Grantor's current business practice, including,
without limitation, a record of all payments received and all credits granted with respect to such
Collateral. Grantor shall, for Agent's further security, deliver and turn over to Agent or Agent's
designated representatives at any time following the occurrence and during the continuation of a
Default, any such books and records (including, without limitation, any and all computer tapes, programs
and source and object codes relating to such Collateral in which Grantor has an interest or any part or
parts thereof); and
(b) Grantor will not create, permit or suffer to exist, and will defend the Collateral
against, and take such other action as is necessary to remove, any Lien on such Collateral other than
Liens permitted under the Credit Agreement, and will defend the right, title and interest of Agent in
and to Grantor's rights to such Collateral, including, without limitation, the proceeds and products
thereof, against the claims and demands of all Persons whatsoever.
SECTION 13. Agent Appointed Attorney-in-Fact. Grantor hereby irrevocably appoints Agent as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in the name of Grantor or otherwise,
from time to time in Agent's discretion, to take any action and to execute any instrument which Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, (a) following
the occurrence and during the continuance of a Default, to:
(i) obtain and adjust insurance required to be paid to the Agent or any Holders of
Secured Obligations pursuant to the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect of any of the
Collateral;
(iii) receive, endorse, and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (i) or (ii) above; and
(iv) file any claims or take any action or institute any proceedings which Agent
may deem necessary or desirable for the collection of any of the Collateral, or otherwise to
enforce the rights of Agent with respect to any of the Collateral;
and (b) at any time, to:
(i) obtain access to records maintained for Grantor by computer services companies
and other service companies or bureaus;
(ii) send requests under Grantor's, the Agent's or a fictitious name to Grantor's
customers or account debtors for verification of Accounts provided that the Agent gives the
Grantor notice prior to initiating any such verifications; and
(iii) do all other things reasonably necessary to carry out this Agreement.
SECTION 14. Agent May Perform. If Grantor fails to perform any agreement contained herein or in the
Credit Agreement, Agent may, upon three days prior notice to the Grantor, perform, or cause performance of, such
agreement, and the expenses of Agent incurred in connection therewith shall be payable by Grantor under Section
22.
SECTION 15. Agent's Duties. The powers conferred on Agent hereunder are solely to protect its interest
in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually received by it hereunder, Agent shall
not have any duty as to any Collateral. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal
to that which Agent accords its own property, it being understood that Agent shall be under no obligation to take
any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral,
but may do so at its option, and all reasonable expenses incurred in connection therewith shall be for the sole
account of Grantor and shall be added to the Liabilities.
SECTION 16. Remedies. (a) If any Default shall have occurred and be continuing:
(i) Agent shall have, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured party upon default under
the UCC (whether or not the UCC applies to the affected Collateral) and further, Agent may,
without notice, demand or legal process of any kind (except as may be required by law), all of
which Grantor waives, at any time or times, (x) enter Grantor's owned or leased premises and
take physical possession of the Collateral and maintain such possession on Grantor's owned or
leased premises, at no cost to Agent or any of the Holders of Secured Obligations, or remove
the Collateral, or any part thereof, to such other place(s) as Agent may desire, (y) require
Grantor to, and Grantor hereby agrees that it will at its expense and upon request of Agent
forthwith, assemble all or any part of the Collateral as directed by Agent and make it
available to Agent at a place to be designated by Agent which is reasonably convenient to Agent
and (z) without notice except as specified below, sell, lease, assign, grant an option or
options to purchase or otherwise dispose of the Collateral or any part thereof at public or
private sale at any exchange, broker's board or at any of the offices of Agent or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as Agent may deem
commercially reasonable. Grantor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days' notice to Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable notification. Agent
shall not be obligated to make any sale of Collateral regardless of notice of sale having been
given. Agent may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned;
(ii) Agent shall apply all cash proceeds received by Agent in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral (after payment
of any amounts payable to Agent pursuant to Section 22), for the benefit of the Holders of
Secured Obligations, against all or any part of the Liabilities in such order as may be
required by the Credit Agreement or, to the extent not specified therein, as is determined by
the Required Lenders. Any surplus of such cash or cash proceeds held by Agent and remaining
after payment in full of all the Liabilities shall be paid over to Grantor or to whomsoever may
be lawfully entitled to receive such surplus;
(b) Grantor waives all claims, damages and demands against Agent arising out of the
repossession, retention or sale of any of the Collateral or any part or parts thereof, except any such
claims, damages and awards arising out of the gross negligence or willful misconduct of Agent or any of
the Holders of Secured Obligations, as the case may be, as determined in a final non-appealed judgment
of a court of competent jurisdiction; and
(c) The rights and remedies provided under this Agreement are cumulative and may be
exercised singly or concurrently and are not exclusive of any rights and remedies provided by law or
equity.
SECTION 17. Exercise of Remedies. In connection with the exercise of its remedies pursuant to
Section 17, Agent may, (i) exchange, enforce, waive or release any portion of the Collateral and any other
security for the Liabilities; (ii) apply such Collateral or security and direct the order or manner of sale
thereof as Agent may, from time to time, determine; and (iii) settle, compromise, collect or otherwise liquidate
any such Collateral or security in any manner following the occurrence of a Default, without affecting or
impairing Agent's right to take any other further action with respect to any Collateral or security or any part
thereof.
SECTION 18. License. Agent is hereby granted a license or other right to use, following the occurrence
and during the continuance of a Default, without charge, (a) Grantor's labels, patents, copyrights, trade
secrets, trade names, trademarks, service marks, customer lists and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling
any Collateral, provided that Agent uses quality standards at least substantially equivalent to those of Grantor
for the manufacture, advertising, sale and distribution of Grantor's products and services and (b) Grantor's
rights under all licenses and all franchise agreements shall inure to Agent's benefit.
SECTION 19. Injunctive Relief. Grantor recognizes that in the event Grantor falls to perform, observe
or discharge any of its obligations or liabilities under this Agreement, any remedy of law may prove to be
inadequate relief to the Holders of Secured Obligations; therefore, Grantor agrees that the Holders of Secured
Obligations, if Agent so determines and requests, shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
SECTION 20. Interpretation and Inconsistencies. The rights and duties created by this Agreement shall,
in all cases, be interpreted consistently with, and shall be in addition to (and not in lieu of), the rights and
duties created by the Credit Agreement and the other Loan Documents. In the event that any provision of this
Agreement shall be inconsistent with any provision of any other Loan Document, such provision of the other Loan
Document shall govern.
SECTION 21. Expenses. Grantor will upon demand pay to Agent and/or the Holders of Secured Obligations
the amount of any and all reasonable expenses, including the reasonable fees and disbursements of their counsel
and of any experts and agents, as provided in the applicable provisions of the Credit Agreement.
SECTION 22. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to
any departure by Grantor herefrom shall in any event be effective unless the same shall be in writing and signed
by Agent and Grantor, and then such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
SECTION 23. Notices. All notices and other communications provided for hereunder shall be delivered in
the manner set forth in the Guaranty.
SECTION 24. Continuing Security Interest, Termination.
(a) Except as provided in Section 25(b), this Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until the later of the payment
or satisfaction in full of the Liabilities (other than contingent indemnity obligations) and the
termination of the Credit Agreement, (ii) be binding upon Grantor, its successors and assigns and
(iii) except to the extent that the rights of any transferor, or assignor are limited by the terms of the
Credit Agreement, inure, together with the rights and remedies of Agent hereunder, to the benefit of
Agent and any of the Holders of Secured Obligations. Nothing set forth herein or in any other Loan
Document is intended or shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Agreement or any other Loan Document or any Collateral. Grantor's successors and
assigns shall include, without limitation, a receiver, trustee or debtor-in-possession thereof or
therefor.
(b) Upon the payment in full in cash of the Liabilities (other than contingent indemnity
obligations) and the termination of the Credit Agreement, this Agreement and the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to Grantor. Upon any such
termination of security interest, Grantor shall be entitled to the return, upon its request and at its
expense, of such of the Collateral held by Agent as shall not have been sold or otherwise applied
pursuant to the terms hereof and Agent will, at Grantor's expense, execute and deliver to Grantor such
other documents as Grantor shall reasonably request to evidence such termination. In connection with any
sales of assets permitted under the Credit Agreement, the Agent will release and terminate the liens and
security interests granted under this Agreement with respect to such assets.
SECTION 25. Severability. It is the parties' intention that this Agreement be interpreted in such a
way that it is valid and effective under applicable law. However, if one or more of the provisions of this
Agreement shall for any reason be found to be invalid or unenforceable, the remaining provisions of this
Agreement shall be unimpaired.
SECTION 26. Reserved.
SECTION 27. GOVERNING LAW. THE AGENT HEREBY ACCEPTS THIS AGREEMENT, ON BEHALF OF ITSELF AND THE
LENDERS, AT CHICAGO, ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. ANY DISPUTE BETWEEN THE GRANTOR AND THE
AGENT, ANY LENDER, OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF THE PARTIES
HERETO AGREES THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED
IN CHICAGO, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO WAIVES IN ALL
DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. GRANTOR AGREES THAT THE AGENT, ANY LENDER OR ANY HOLDER OF
SECURED OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST GRANTOR OR ITS PROPERTY IN A COURT AT ANY
LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER THE GRANTOR OR (2) REALIZE ON
THE COLLATERAL OR ANY OTHER SECURITY FOR THE LIABILITIES OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF SUCH PERSON. GRANTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN
ANY PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
LIABILITIES OR TO ENFORCE A JUDGMENT OR OTHER COURT OR-DER IN FAVOR OF SUCH PERSON. GRANTOR WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING
DESCRIBED IN THIS SUBSECTION.
(C) SERVICE OF PROCESS. GRANTOR WAIVES PERSONAL SERVICE OF ANY PROCESS UPON IT AND, AS
ADDITIONAL SECURITY FOR THE LIABILITIES, IRREVOCABLY APPOINTS THE PRENTICE HALL CORPORATION SYSTEM,
INC., GRANTOR'S REGISTERED AGENT, WHOSE ADDRESS IS 33 NORTH LASALLE, SUITE 1925, CHICAGO, ILLINOIS
60602, AS GRANTOR'S AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS ISSUED BY ANY COURT. GRANTOR
IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING
OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. GRANTOR WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF ANY PARTY
HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE LIABILITIES OR TO ENFORCE ANY JUDGEMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH
PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT
INJUNCTION, THIS AGREEMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER PARTY HERETO THAT IT HAS
DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE PROVISIONS OF THIS SECTION 28, WITH ITS COUNSEL.
[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]
Security Agreement
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duty executed and delivered by its
officer thereunto duly authorized as of the date first above written.
SCP SUPERIOR ACQUISITION COMPANY LLC
By:/S/
Name:
Title:
LASALLE BANK NATIONAL ASSOCIATION, as AGENT
By:/S/
Name:
Title:
|
RESTRICTED UNIT AWARD AGREEMENT
UNDER THE AMENDED AND RESTATED
ALLIANCE PARTNERS COMPENSATION PLAN
You have been granted restricted Units under the Amended and Restated
Alliance Partners Compensation Plan (the “Plan”), as specified below, in
connection with your 2000 award under the Plan:
Participant (“you”): David Brewer
Amount of Award (to be
converted to Restricted Units): $500,000.00
Date of Grant: December 31, 2000
Vesting Commencement Date: January 31, 2001
In connection with your grant of restricted Units, you, Alliance
Capital Management Holding L.P. and Alliance Capital Management L.P.
(“Alliance”) agree as set forth in this agreement (the “Agreement”). The Plan
provides a description of the terms and conditions governing restricted Units.
If there is any inconsistency between the terms of this Agreement and the terms
of the Plan, the Plan’s terms completely supersede and replace the conflicting
terms of this Agreement. All capitalized terms have the meanings given them in
the Plan, unless specifically stated otherwise in the Agreement. The restricted
Units granted under this Agreement are referred to in the Agreement as the
“Restricted Units.”
1. Restrictions. Until restrictions lapse as described in
Paragraph 2, you may not sell, transfer, pledge or otherwise assign or dispose
of any Restricted Units.
2. Vesting of Restricted Units. (a) Except as provided in
Paragraph 2(b) below, restrictions will lapse with respect to the Restricted
Units in equal annual installments during the applicable Vesting Period (as
defined below), with restrictions as to the first such installment lapsing on
the first anniversary of the Vesting Commencement Date set forth above, and
restrictions as to the remaining installments lapsing on the subsequent
anniversaries of the Vesting Commencement Date, provided in each case that you
are employed by a Company on such anniversary. The Vesting Period is as set
forth in the following table, based on your age as of December 31, 2000:
Your Age As of December 31, 2000
--------------------------------------------------------------------------------
Vesting Period
--------------------------------------------------------------------------------
Up to and including 47 8 years 48 7 years 49 6 years 50-57 5 years 58 4 years 59
3 years 60 2 years 61 1 year 62 or older Fully vested at grant
(b) If your employment with the Companies terminates due to death or
Disability, restrictions on any remaining Restricted Units that you hold as of
the date of your termination shall immediately lapse.
3. Forfeitures. If your employment with the Companies
terminates for reasons other than death or Disability, you will immediately
forfeit all of your rights and interests in any Restricted Units as to which
restrictions have not previously lapsed, unless the Committee determines, in its
sole discretion, to accelerate the vesting of those Restricted Units.
4. Unit Certificates. Your Restricted Units will be held for
you by Alliance. After your Restricted Units have vested, a certificate for
those Units will be released to you.
5. Distributions. Any distributions paid by Alliance Capital
Management Holding L. P. in connection with Restricted Units (whether or not
vested) will be paid directly to you.
6. Section 83(b) Election. You agree not to make an election
under section 83(b) of the Code with respect to your Restricted Units unless,
before you file the election with the Internal Revenue Service, you (i) notify
the Committee of your intention to file the election, (ii) furnish the Committee
with a copy of the election to be filed and (iii) pay (or make satisfactory
arrangements for paying) the necessary tax withholding amount to Alliance in
accordance with Section 8.
7. Tax Withholding. If the Committee determines that any
federal, state or local tax or any other charge is required by law to be
withheld with respect to the Restricted Units, the vesting of Restricted Units,
or an election under Section 83(b) of the Code (a “Withholding Amount”) then, in
the discretion of the Committee, either (a) prior to or contemporaneously with
the delivery to you of Restricted Units, you agree to pay the Withholding Amount
to Alliance in cash or in vested Units that you already own (which are not
subject to a pledge or other security interest), or a combination of cash and
such Units, having a total fair market value equal to the Withholding Amount;
(b) Alliance Capital Management Holding L.P. will retain from any vested
Restricted Units to be delivered to you that number of Units having a fair
market value, as determined by the Committee, equal to the necessary Withholding
Amount; or (c) if Restricted Units are delivered without the payment of the
Withholding Amount under either clause (a) or (b) above, you agree promptly to
pay the Withholding Amount to Alliance on at least seven business days notice
from the Committee either in cash or in vested Units that you already own
(which are not subject to a pledge or other security interest), or a combination
of cash and such Units, having a total fair market value equal to the
Withholding Amount. You agree that if you do not pay the Withholding Amount to
Alliance or make satisfactory payment arrangements as described above, Alliance
may withhold any unpaid portion of the Withholding Amount from any amount
otherwise due to you.
8. Adjustments in Authorized Units. In the event of a
partnership restructuring, extraordinary distribution or similar event, the
Committee has the sole discretion to adjust the number of Restricted Units in
accordance with the Plan.
9. Administration. It is expressly understood that the
Committee is authorized to administer, construe, and make all determinations
necessary or appropriate to the administration of the Plan and this Agreement,
all of which shall be binding upon you. The Committee is under no obligation to
treat you or your award consistently with the treatment provided for other
participants in the Plan.
10. Miscellaneous.
(a) This Agreement does not confer upon you any right to
continuation of employment by a Company, nor does this Agreement interfere in
any way with a Company’s right to terminate your employment at any time.
(b) This Agreement will be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
(c) This Agreement will be governed by, and construed in
accordance with, the laws of the state of New York (without regard to conflict
of law provisions).
(d) This Agreement and the Plan constitute the entire
understanding between you and the Companies regarding this award. Any prior
agreements, commitments or negotiations concerning this award are superseded.
This Agreement may be amended only by another written agreement, signed by both
parties.
BY SIGNING BELOW, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED ABOVE AND IN THE PLAN.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed effective as of December 31, 2000.
Alliance Capital Management L.P.
By: Alliance Capital Management Corporation, General Partner
Participant
/s/ David Brewer
David Brewer
|
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AMENDMENT NUMBER ONE
to the
Warehouse Loan and Security Agreement
dated as of February 10, 2000,
as Amended and Restated to and including January 24, 2001
Among
AAMES CAPITAL CORPORATION,
AAMES FUNDING CORPORATION
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
This AMENDMENT NUMBER ONE (this "Amendment") is made this 1st day of May,
2001, among AAMES CAPITAL CORPORATION, AAMES FUNDING CORPORATION (each, a
"Borrower" and collectively, the "Borrowers") and GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC. ("Lender") to the WAREHOUSE LOAN AND SECURITY AGREEMENT, dated as
of February 10, 2000, as Amended and Restated to and including January 24, 2001
between Lender and Borrowers (the "Loan Agreement").
RECITALS
WHEREAS, Borrowers have requested that Lender agree to amend the Loan
Agreement to permit the financing of concurrent second lien mortgage loans
originated by the Borrowers and Lender has agreed to make such amendment as more
expressly set forth below to the Loan Agreement.
WHEREAS, as of the date of this Amendment, Borrowers represent to the Lender
that they are in compliance with all of the representations and warranties and
all of the affirmative and negative covenants set forth in the Loan Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. Effective as of May 1, 2001, Section 1 of the Loan Agreement is
hereby amended to include the following definition of "Concurrent Second Lien
Mortgage Loan" to read in its entirety as follows:
"Concurrent Second Lien Mortgage Loan" shall mean a Second Lien Mortgage Loan as
to which the prior lien on such Mortgaged Property is secured by financing which
was obtained by the related Mortgagor from the related Borrower at the same time
that such Second Lien Mortgage Loan was originated.
SECTION 2. Effective as of May 1, 2001, the definition of "Collateral Value"
in Section 1 of the Loan Agreement is hereby amended by deleting the word "or"
at the end of clause (13) thereto, by amending the "." at the end of clause (14)
thereto to be "; or" and by adding the following new clause (15) to read in its
entirety as follows:
(15) if such Mortgage Loan is a Concurrent Second Lien Mortgage Loan and the
Collateral Value of such Concurrent Second Lien Mortgage Loan when added to the
aggregate Collateral Value of all other Concurrent Second Lien Mortgage Loans
exceeds, at any time, the lesser of (a) $3,000,000, and (b) 5% of the aggregate
outstanding amount of all Advances;
SECTION 3. Effective as of May 1, 2001, the last sentence of representation
(j) in Schedule 1 to the Loan Agreement is hereby amended to read in its
entirety as follows:
Except with respect to any First Lien Mortgage Loan which was originated in
connection with a Concurrent Second Lien Mortgage Loan, the Mortgaged Property
was not, as of the date of origination of the Mortgage Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security instrument
creating a lien subordinate to the lien of the Mortgage.
--------------------------------------------------------------------------------
SECTION 4. Effective as of May 1, 2001, representation (v) in Schedule 1 to
the Loan Agreement is hereby amended by adding the following sentence to the end
thereof:
Any Concurrent Second Lien Mortgage Loan satisfies the Aames Guidelines for the
80-20 Program which are provided pursuant to the applicable Underwriting
Guidelines.
SECTION 5. Fees and Expenses. Borrowers agree to pay to Lender all fees and
out of pocket expenses incurred by Lender in connection with this Amendment
(including all reasonable fees and out of pocket costs and expenses of the
Lender's legal counsel incurred in connection with this Amendment Number One),
in accordance with Section 10.03 of the Loan Agreement
SECTION 6. Defined Terms. Any terms capitalized but not otherwise defined
herein shall have the respective meanings set forth in the Loan Agreement.
SECTION 7. Representations. In order to induce the Lender to execute and
deliver this Amendment Number One, the Borrowers hereby represent to the Lender
that as of the date hereof, after giving effect to this Amendment Number One,
the Borrowers are in full compliance with all of the terms and conditions of the
Loan Agreement.
SECTION 8. Limited Effect. Except as expressly amended and modified by this
Amendment, the Loan Agreement shall continue in full force and effect in
accordance with its terms. Reference to this Amendment Number One need not be
made in the Loan Agreement or any other instrument or document executed in
connection therewith, or in any certificate, letter or communication issued or
made pursuant to, or with respect to, the Loan Agreement, any reference in any
of such items to the Loan Agreement being sufficient to refer to the Loan
Agreement as amended hereby.
SECTION 9. Governing Law. THIS AMENDMENT NUMBER ONE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE.
SECTION 10. Counterparts. This Amendment Number One may be executed by each
of the parties hereto on any number of separate counterparts, each of which
shall be an original and all of which taken together shall constitute one and
the same instrument.
[SIGNATURE PAGE FOLLOWS]
2
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IN WITNESS WHEREOF, Borrowers and Lender have caused this amendment to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
AAMES CAPITAL CORPORATION Borrower
By:
--------------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
AAMES FUNDING CORPORATION Borrower
By:
--------------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., Lender
By:
--------------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
Acknowledged and Agreed:
AAMES FINANCIAL CORPORATION
By:
--------------------------------------------------------------------------------
Name: John Kohler
Title: Executive Vice President
3
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AMENDMENT NUMBER ONE to the Warehouse Loan and Security Agreement dated as of
February 10, 2000, as Amended and Restated to and including January 24, 2001
Among AAMES CAPITAL CORPORATION, AAMES FUNDING CORPORATION and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC.
RECITALS
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EXHIBIT 10.25
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made by and between
Vesta Insurance Group, Inc. and J. Gordon Gaines, Inc,, both Delaware
corporations, and Vesta Fire Insurance Corporation, an Illinois corporation
(collectively, the “Company”), and W. Perry Cronin, an individual resident of
Birmingham, Alabama (the “Executive”), effective the 5th day of February, 2001
(the “Effective Date”).
RECITALS:
A. The Company is a holding company for a group of property and
casualty insurance subsidiaries which offer primary insurance primarily on
personal risks;
B. The Executive serves as Senior Vice President, Chief Financial
Officer and Treasurer of the Company and as a member of the Board of Directors
of Vesta Fire Insurance Corporation;
C. The Company wishes to assure itself of the continued services of
the Executive so that it will have the continued benefit of his ability,
experience and services, and the Executive is willing to enter into an agreement
to that end, upon the terms and conditions hereinafter set forth; and
D. Certain capitalized terms used in this Agreement shall have the
meanings given them in Section 16 hereof.
NOW, THEREFORE, in consideration of good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
covenant and agree as follows:
1. Employment
(a) The Company hereby agrees to continue to employ the Executive as
Senior Vice President, Chief Financial Officer and Treasurer of the Company and
any other position agreed upon by the parties; the Company agrees to use its
best efforts to cause Executive to be elected as a member of the Board of
Directors of Vesta Fire Insurance Corporation; and Executive hereby agrees to
serve the Company in the foregoing capacities, upon the terms and conditions set
forth herein. The Executive shall have such authority and responsibilities
consistent with his position that may be set forth in the Company's Bylaws or
assigned by the Board from time to time.
(b) The Executive agrees to devote such amount of his time, efforts
and skills as is reasonably necessary to the performance of his duties and
responsibilities under this Agreement; provided, however, that nothing in this
Agreement shall preclude the Executive from devoting reasonable periods required
for (i) participating in professional, educational, philanthropic, public
interests charitable, social or community activities, (ii) serving as a director
or member of an advisory committee of any corporation or other entity that the
Executive is serving on or any other corporation or entity that is not in direct
competition with the Company, or (iii) managing his personal investments,
provided that such activities do not materially interfere with the Executive's
regular performance of his duties and responsibilities hereunder.
2. Term. Unless earlier terminated as provided herein, the
Executive's employment under this Agreement shall be for a term (the "Term") of
three (3) years from the Effective Date. The Term shall be automatically
extended for an additional year on each anniversary of the Effective Date,
unless written notice of non-extension is provided by either party to the other
party at least 90 days prior to such anniversary.
3. Compensation and Benefits. In consideration of the services
rendered by the Executive during the Term, the Company shall pay or provide to
the Executive the amounts and benefits set forth below.
(a) Salary. Executive shall receive an annual base salary of
$250,000. The base salary shall be paid in accordance with the Company's normal
payroll practices. The Executive's base salary shall be reviewed at least
annually by the Compensation Committee for consideration of appropriate merit
increases and, once established, the base salary shall not be decreased during
the Employment Period.
(b) Other Incentive Plans. The Executive shall participate in all
annual and long-term bonus or incentive plans or arrangements in which other
senior executives of the Company of a comparable level are eligible to
participate from time to time, including, without limitation, the Company's Cash
Bonus Plan. The Executive's incentive compensation opportunities under such
plans and arrangements shall be determined from time to time by the Compensation
Committee.
(c) Equity Incentives. The Executive shall be given
consideration, at least annually, by the Compensation Committee for the grant of
options to purchase shares of the common stock of the Company. In addition, the
Executive shall be entitled to receive awards under any stock option, stock
purchase or equity-based incentive compensation plan or arrangement adopted by
the Company from time to time for which senior executives of the Company of a
comparable level are eligible to participate. The Executive's awards under such
plans and arrangements shall be determined from time to time by the Compensation
Committee.
(d) Employee Benefits. The Executive shall be entitled to
participate in all employee benefit plans, programs, practices or arrangements
of the Company in which other senior executives of the Company of a comparable
level are eligible to participate from time to time, including, without
limitation, any qualified or non-qualified pension profit sharing and savings
plans, any death benefit and disability benefit plans, and any medical, dental,
health and welfare plans. Without limiting the generality of the foregoing, the
Company shall provide the Executive with the following:
(i) long-term disability insurance coverage in an amount
and on terms consistent with the coverage in place for other management
personnel of the Company;
(ii) continued provision of life insurance coverage in an
amount and on term consistent with the coverage in place for other management
personnel of the Company; and
(iii) provision of the pension benefits provided under the
Company's Post-Retirement Benefits Plan.
(e) Fringe Benefits and Perquisites. The Executive shall be
entitled to continuation of all fringe benefits and perquisites provided to the
Executive on the Effective Date, and to all fringe benefits and perquisites
which are generally made available to senior executives of the Company of a
comparable level from time to time. Without limiting the generality of the
foregoing, the Company shall provide the Executive with the following:
(i) provision of executive offices and secretarial staff;
(ii) vacation in accordance with the Company's policy for
other senior executives of a comparable level;
(iii) an automobile owned or leased by the Company of a
make and model appropriate for the Executive's position or, in lieu thereof,
provision of a non-accountable automobile allowance in an amount to be
determined from time to time by the Board or the Compensation Committee; and
(iv) continued payment of initiation and other fees and
annual dues for one or more country clubs (but in no event less than one country
club membership of Executive’s choice) and/or dining clubs which the Company was
paying for on the Effective Date, and, payment of dues for any professional
associations of which Executive is a member in furtherance of his duties
hereunder;
(v) reimbursement of all reasonable travel and other
business expenses and disbursements incurred by the Executive in the performance
of his duties under this Agreement, upon proper accounting in accordance with
the Company's normal practices and procedures for reimbursement of business
expenses.
4. Termination.
(a) The Executive's employment under this Agreement may be
terminated prior to the end of the Term only as follows:
(i) upon the resignation or death of the Executive;
(ii) by the Company due to the Disability of the Executive
upon delivery of a Notice of Termination to the Executive;
(iii) by the Company for Cause upon delivery of a Notice of
Termination to the Executive; and
(iv) by the Executive for Good Reason upon delivery of a
Notice of Termination to the Company after any occurrence of a Change in
Control.
(b) If the Executive's employment with the Company shall be
terminated during the Term (1) by reason of the Executive's resignation or
death, or (ii) by the Company for Disability or Cause, the Company shall pay to
the Executive (or in the case of his death, the Executive's estate) within
thirty (30) days after the Termination Date a lump sum cash payment equal to the
Accrued Compensation and, if such termination is other than as a result of
Executive's resignation or by the Company for Cause, the Pro Rata Bonus.
(c) If the Executive's employment with the Company shall be
terminated by the Company in violation of this Agreement or by the Executive for
Good Reason, in addition to other rights and remedies available in law or
equity, the Executive shall be entitled to the following:
(i) the Company shall pay the Executive in cash within
thirty (30) days of the Termination Date an amount equal to all Accrued
Compensation and the Pro Rata Bonus,
(ii) the Company shall pay to the Executive in cash at
the end of each of the thirty-six consecutive 30-day periods following the
Termination Date an amount equal to one-twelfth of the sum of the Base Amount
(including any increases in base salary) plus the Bonus Amount (including any
increases in bonus amount) plus all benefits provided in Section 3) hereof, or
in the alternative, the Executive may elect to receive a lump sum equal to the
present value of the payments due under this paragraph (c)(ii), to be payable
within thirty (30) days of such election; provided, however, that such lump sum
amount shall be reduced to its net present value assuming an interest rate equal
to six percent (6%) and 36 equal monthly payments commencing on the Termination
Date,
(iii) for the period from the Termination Date through the
date that Executive attains the age of sixty-five (65) (the “Continuation
Period”), the Company shall at its expense continue on behalf of the Executive
and his dependents and beneficiaries the life insurance, disability, medical,
dental and hospitalization benefits provided (x) in the case of a Change in
Control, to the Executive at any time during the 90-day period prior to the
Change in Control or at any time thereafter or (y) in other instances, to other
similarly situated executives who continue in the employ of the Company during
the Continuation Period. The coverage and benefits (including deductibles and
costs) provided in this Section 4(c)(iii) during the Continuation Period shall
be no less favorable to the Executive and his dependents and beneficiaries than
the most favorable of such coverages and benefits during either of the periods
referred to in clauses (x) and (y) above; provided, however, the Company’s
obligation hereunder with respect to the foregoing benefits shall be limited to
the extent that the Executive obtains any such benefits pursuant to a subsequent
employer’s benefit plans, in which case the Company may reduce the coverage of
any benefits it is required to provide the Executive hereunder as long as the
aggregate coverages and benefits of the combined benefit plans are no less
favorable to the Executive than the coverages and benefits required to be
provided hereunder; provided, further, subject to the last sentence of this
Section 4(c), life insurance shall not be continued longer than three years
after the Termination Date, even if the Executive has not obtained such other
benefits under another employer’s benefit plan, and
(iv) the restrictions on any incentive awards whether now
in effect for, or hereafter granted to, the Executive under any stock option
plan or under any other incentive plan, deferred compensation plan, agreement or
arrangement of the Company of any of its affiliates shall lapse and such
incentive awards shall become 100% accrued and vested, so that, for example, all
stock options and stock appreciation rights granted to the Executive shall be
immediately exercisable and shall be 100% vested, all restrictions on any
restricted stock held by the Executive shall lapse such that the Executive has
full title to such shares, and any deferred compensation payable under any plan,
agreement or arrangement shall accrue in total and be immediately due and
payable in full. The period in which Executive may exercise any option granted
shall be the full term of such option.
This Section 4(c) shall not be interpreted so as to limit any benefits to which
the Executive or his dependents or beneficiaries may be entitled under any of
the Company’s employee benefit plans, programs or practices following the
Executive’s termination of employment, including, without limitation, retiree
medical and life insurance benefits.
(d) The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to the Executive in any subsequent employment except as
provided in Section 4(c)(iii).
(e) In the event that any payment or benefit (within the meaning of
Section 28OG(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code")) to the Executive (or for his benefit) paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in connection
with, or arising out of, his relationship with the Company or a change in
ownership or effective control of the Company or of a substantial portion of its
assets (a "Payment" or "Payments"), would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to any such excise or other taxes (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax" and any other tax together with any such
interest and penalties are herein referred to as "Other Taxes"), then the
Executive will be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all Excise
Taxes and Other Taxes on the Payments and All Excise Taxes or Other Taxes
imposed upon the Gross-Up Payment, the Executive shall retain that portion of
the Gross-Up Payment equal to the Excise Tax or Other Taxes imposed upon the
Payments.
5 . Confidential Information. During the Term and at all times
thereafter, the Executive agrees that he will not divulge to anyone (other than
the Company or any persons employed or designated by the Company) any knowledge
or information of a confidential nature relating to the business of the Company
or any of its subsidiaries or affiliates, including, without limitation, all
types of trade secrets (unless readily ascertainable from public or published
information or trade sources) and confidential commercial information, and the
Executive further agrees not to disclose, publish or make use of any such
knowledge or information without the consent of the Company.
6. Successors, Binding Agreement.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company (including each of its subsidiaries), its successors and
assigns and any person, firm, corporation or other entity which succeeds to all
or substantially all of the business, assets or property of the Company. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the
business, assets or property of the Company, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place,
As used in this Agreement, the "Company" shall mean the Company as hereinbefore
defined and any successor to its business, assets or property as aforesaid which
executes and delivers an agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devisees and legatees. If the Executive should die while any amounts are due and
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid to the Executive's designated beneficiary or, if there be no such
designated beneficiary, to the legal representatives of the Executive's estate.
7. Fees and Expenses. To induce the Executive to execute this
Agreement and to provide the Executive with reasonable assurance that the
purposes of this Agreement will not be frustrated by the cost of its enforcement
should the Company fail to perform its obligations under this Agreement or
should the Company or any subsidiary, affiliate or stockholder of the Company
contest the validity or enforceability of this Agreement, the Company shall pay
and be solely responsible for any attorneys' fees and expenses and courts costs
incurred by the Executive as a result of a claim that the Company has breached
or otherwise failed to perform this Agreement or any provision hereof to be
performed by the Company or as a result of the Company or any subsidiary,
affiliate or stockholder of the Company contesting the validity or
enforceability of this Agreement or any provision hereof to be performed by the
Company, in each case regardless of which party, if any, prevails in the
contest.
8. Notice. All notices and other communications provided for in
this Agreement (including the Notice of Termination) shall be in writing and
shall be deemed to have been duly given upon personal delivery or receipt when
sent by certified mail, return receipt requested, postage prepaid, or a
nationally recognized overnight courier service that provides written proof of
delivery, addressed to the respective addresses last given by each party to the
other; provided, however, that all notices to the Company shall be directed to
the attention of the Board of Directors with a copy to the Chief Executive
Officer and the General Counsel of the Company.
9. Settlement of Claims. The Company's obligation to make the
payments provided for in this Agreement and to otherwise perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others. The Company may, however,
withhold from any benefits payable under this Agreement all federal, state, city
or other taxes as shall be required pursuant to any law or governmental
regulation or ruling,
10. Modification and Waiver. No provisions of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and the Company. No waiver
by any party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
11. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Alabama without giving
effect to the conflict of laws principles thereof
12. Severability, The provisions of this Agreement shall be
deemed severable, and the invalidity invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof
13. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreement, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof,
14. Headings. The headings of Sections herein are included solely
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each shall be deemed an original but all of which together shall
constitute one and the same instrument.
16. Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Accrued Compensation" shall mean an amount which shall include
all amounts earned or accrued through the Termination Date but not paid as of
the Termination Date, including without limitation, (1) base salary, (ii)
deferred compensation accumulated under any plan, arrangement or agreement,
(iii) reimbursement for reasonable and necessary expenses incurred by the
Executive on behalf of the Company prior to Termination Date, and (iv) bonuses
and incentive compensation, including stock options (other than the Pro Rata
Bonus).
(b) "Base Amount" shall mean the greater of the Executive's annual
base salary (1) at the rate in effect on the Termination Date or (ii) the
highest rate in effect at any time during the 90-day period prior to a Change in
Control, and shall include all amounts of his base salary that are deferred
under any plans, arrangements or agreements of the Company or any of its
affiliates.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Bonus Amount" shall mean the greater of (i) the most recent
annual cash bonus paid or payable to the Executive, or, if greater, the annual
cash bonus paid or payable for the year ended prior to the fiscal year during
which a Change in Control occurred, or (ii) the average of the annual cash
bonuses paid or payable during the three full fiscal years ended prior to the
Termination Date if greater, the three full fiscal years prior to a Change in
Control (or, in each case, such lesser period for which annual bonuses were paid
or payable to the Executive).
(e) The termination of the Executive's employment shall be for
"Cause" if it is a result of any act that (A) constitutes, on the part of the
Executive, fraud, dishonesty gross malfeasance of duty and (B) is demonstrably
likely to lead to material injury to the Company , provided, however, that, such
conduct shall not constitute Cause;
(x) unless (A) there shall have been delivered to the
Executive a written notice setting forth with specificity the reasons that the
Board believes the Executive’s conduct meets the criteria set forth in clause
(i), (B) the Executive shall have been provided the opportunity to be heard in
person by the Board (with the assistance of the Executive’s counsel if the
Executive so desires), and (C) after such hearing, the termination is evidenced
by a resolution adopted in good faith by two-thirds of the members of the Board
(other than the Executive); or
(y) if such conduct was believed by the Executive in good
Faith to have been in or not opposed to the interests of the Company.
(f) A "Change in Control" shall mean the occurrence during the Term
of any of the following events:
(i) An acquisition (other than directly from the Company)
of any voting securities of the Company (the “Voting Securities”) by an “Person”
(as the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the “1934 Act”)) immediately after which such
Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of 20% or more of the combined voting power of the Company’s
then outstanding Voting Securities; provided, however, that in determining
whether a Change in Control has occurred, Voting Securities which are acquired
in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A “Non-Control Acquisition”
shall mean an acquisition by (A) an employee benefit plan (or a trust forming a
part thereof maintained by (x) the Company or (y) any corporation or other
Person of which a majority of its voting power or its equity securities or
equity interest is owned directly or indirectly by the Company (a “Subsidiary”),
(B) the Company or any 80% owned subsidiary, (C) any Person in connection with a
“Non-Control Transaction” (as hereinafter defined).
(ii) The individuals who, as of the date of this Agreement,
are members of the Board (the “Incumbent Board”) cease for any reason to
constitute at least two-thirds of the Board; provided, however, that if the
election, or nomination for election by the Company’s stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board
with no more than one (1) member of the Incumbent Board voting against such new
director, such new director shall, for purposes of this Agreement, be considered
as a member of the Incumbent Board; provided, further, that no individual shall
be considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened “Election Contest”
(as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a “Proxy Contest”) including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest, or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation of reorganization
involving the Company, unless
(1) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own, directly or
indirectly, immediately following such merger, consolidation or reorganization,
a least two-thirds of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger of consolidation or
reorganization (the “Surviving Corporation”) in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization, and
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving Corporation.
(A transaction described in the immediately preceding
clauses (1) and (2) shall herein be referred to as a “Non-Control Transaction.”)
(B) A complete liquidation, or dissolution of the
Company, or
(C) An agreement for the sale or other disposition of
all or substantially all of the assets of the Company to any Person,
(iv) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive’s employment is terminated prior to a Change in
Control and the Executive reasonably demonstrates that such termination (A) was
at the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who effectuates a Change
in Control (a “Third Party”) or (B) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control with respect to the
Executive shall mean the date immediately prior to the date of such termination
of the Executive’s employment.
(g) "Compensation Committee" shall mean the Compensation Committee
of the Board.
(h) "Disability" shall mean the inability of the Executive to
perform his duties to the Company on account of physical or mental illness for a
period of six consecutive full months, or for a period of eight full months
during any 12-month period. The Executive's employment shall terminate in such a
case on the last day of the applicable period; provided, however, in no event
shall the Executive be terminated by reason of Disability unless (i) the
Executive is eligible for the long-term disability benefits set forth in Section
3(e)(i) hereof and (ii) the Executive receives written notice from the Company,
at least 30 days in advance of such termination, stating its intention to
terminate the Executive for reason of Disability and setting forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination.
(i) "Effective Date" shall mean the day and year first above
written.
(j) "Good Reason" shall mean the occurrence at any time within three
(3) years following Change in Control of any of the events or conditions
described in subsections (i) through (viii) hereof
(i) a change in the Executive’s status, title, position or
responsibilities (including reporting responsibilities) which, in the
Executive’s reasonable judgment, represents an adverse change from his status,
office, title, position or responsibilities as in effect at any time within 90
days preceding the date of a Change in Control or at any time thereafter the
assignment to the Executive of any duties or responsibilities which, in the
Executive’s reasonable ‘judgment, are inconsistent with his status, office,
title, position or responsibilities as in effect at any time within 90 days
preceding the date of a Change in Control or at any time thereafter; any removal
of the Executive from, or failure to reappoint or reelect him to, any such
status, office, title, position or responsibility, or any other change in
condition or circumstances that in the Executive’s reasonable judgment makes it
materially more difficult for the Executive to carry out the duties and
responsibilities of his office that existed at any time within 90 days preceding
the date of a Change in Control or at any time thereafter;
(ii) a reduction in the Executive's base salary or any
failure to pay the Executive any compensation or benefits to which he is
entitled within five days of the date due;
(iii) the Company’s requiring the Executive to be based at
any place outside a 30-mile radius from the executive offices occupied by the
Executive immediately prior to a Change in Control, except for reasonably
required travel on the Company’s business which is not materially greater than
such travel requirements prior to the Change in Control;
(iv) the failure by the Company to (A) continue in effect
(without reduction in benefit level and/or reward opportunities) any material
compensation or employee benefit plan in which the Executive was participating
at any time within ninety (90) days preceding the date of a Change in Control or
at any time thereafter, unless such plan is replaced with a plan that provides
substantially equivalent compensation or benefits to the Executive or (B)
provide the Executive with compensation and benefits, in the aggregate, at least
equal (in terms of benefit levels and/or reward opportunities) to those provided
for under each other employee benefit plan, program and practice in which the
Executive was participating at any time within 90 days preceding the date of a
Change in Control or at any time thereafter,
(v) the insolvency, or the filing by any person or entity,
including the Company or any of its subsidiaries, of a petition for bankruptcy
of the Company, or other relief under any other moratorium or similar law, which
petition is not dismissed within 60 days,
(vi) any material breach by the Company of this Agreement,
(vii) any purported termination of the Executive's employment
for Cause by the Company which does not comply with the terms of this Agreement;
or
(viii) the failure of the Company to obtain an agreement,
satisfactory to the Executive, from any Successors and Assigns to assume and
agree to perform this Agreement, as required by Section 6(a) hereof
Any event or condition described in clause (1) through (viii) above which occurs
prior to a Change in Control but which the Executive reasonably demonstrates (A)
was at the request of a Third Party, or (B) otherwise arose in connection with,
or in anticipation of, a Change in Control which actually occurs, shall
constitute Good Reason for purposes of this Agreement, notwithstanding that It
occurred prior to the Change in Control. The Executive’s right to terminate his
employment for Good Reason shall not be affected by his incapacity due to
physical or mental illness.
(k) "Notice of Termination" shall mean a written notice of
termination from the Company or the Executive which specifies an effective date
of termination, indicates the specific termination provision in this Agreement
relied upon, and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment,
(1) "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days in the
applicable year through the Termination Date and the denominator of which is
365.
(m) "Successors and Assigns" shall mean a corporation or other
entity acquiring all or substantially all the assets and business of the Company
(including this Agreement), whether by operation of law or otherwise.
(n) "Termination Date" shall mean, in the case of the Executive's
death, his date of death, and in all other cases, the date specified in the
Notice of Termination.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its officers thereunto duly authorized, and the Executive has signed this
Agreement, effective as of the date first above written.
VESTA INSURANCE GROUP, INC.
By: /s/ Norman W. Gayle III
Its: President
J. GORDON GAINES, INC.
By: /s/ Donald W. Thornton
Its: Senior Vice President
VESTA FIRE INSURANCE CORPORATION
By: /s/ James E. Tait
Its: Chairman
EXECUTIVE:
/s/ W. Perry Cronin |
SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release ("Agreement") is made and entered into this
22nd day of January, 2001 by and between eXcelon Corporation, a Delaware Corporation ("EXLN"); and
Daniel E. O'Connor, an individual residing at 1319 Monument Street, Concord, MA 01742 ("O'Connor").
W I T N E S S E T H T H A T:
WHEREAS, EXLN has employed O'Connor most recently as Senior Vice President, Business Development;
and
WHEREAS, EXLN and O'Connor wish to set forth the terms of the termination of O'Connor's employment
with EXLN;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, EXLN and O'Connor hereby agree as follows:
1. O'Connor hereby agrees to resign as Senior Vice President, Business Development of EXLN,
effective as of January 22, 2001 (the "Effective date of Termination"). At the request of EXLN,
O'Connor will execute and deliver to EXLN a separate instrument embodying such resignation.
2. EXLN agrees to pay O'Connor a total amount of $112,500 payable in installments of $7,500
on a semi-monthly basis, less applicable deductions, for a period of seven and one half (71/2)
months in accordance with EXLN's standard payroll policies, and EXLN shall provide O'Connor with
medical and dental insurance benefits consistent with those provided to O'Connor immediately prior
to termination, less O'Connor's applicable contribution, for a period of seven and one half (71/2)
months following the Effective Date of Termination, provided, however, that if O'Connor becomes
re-employed with another employer and is eligible to receive such insurance benefits under another
employer-provided plan, the insurance benefits set forth herein shall terminate immediately upon the
initialization of such benefits under another employer-provided plan. In addition, EXLN shall pay
O'Connor his performance bonus amount, pursuant to existing compensation agreements in effect for
the year 2000, less applicable deductions, and shall provide O'Connor with up to a $8,000 credit for
reasonable expenses related directly to out-placement-service assistance, provided O'Connor has his
chosen out-placement agency bill EXLN directly for not more than said $8,000 allowance. Any
expenses, in relation towards out-placement-service for O'Connor, over and above such allowance
shall be O'Connor's sole responsibility.
3. EXLN agrees that O'Connor may retain the personal computer and mobile phone provided to
him during his employment with EXLN(collectively the "Equipment"), provided that O'Connor agrees and
acknowledges by his signature below that (i) all Confidential Information and material belonging to
EXLN, including without limitation all software, documentation, records, forms, customer lists and
data, has been removed and deleted from such Equipment; (ii) O'Connor has ceased any and all
utilization of such Confidential Information and material; and (iii) no copies of such Confidential
Information and material have been made. In addition, EXLN agrees to provide O'Connor with
voice-mail and e-mail facilities for a period ending the earlier of (i) seven and one half (71/2)
months from the Effective Date of Termination or (ii) upon O'Connor's request.
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4. All options which have heretofore been granted to O'Connor under EXLN's 1997
Nonqualified Stock Option Plan,1996 Stock Incentive and Nonqualified Stock Option Plan, 1995
Nonqualified Stock Option Plan, and/or 1996 Employee Stock Purchase Plan (the "Options") shall be
exercisable, and expire, in accordance with their terms in effect as of the date of this Agreement.
The Options shall continue to vest until the Effective date of Termination and no Option or portion
thereof shall vest after the Effective Date of Termination. Notwithstanding the foregoing and
anything contrary set forth in the terms and conditions of the foregoing plans, and subject to the
Board of Directors of EXLN's approval, which approval shall not be unreasonably withheld, O'Connor
shall have the right to exercise any vested Options, as of the Effective Date of Termination, up
until July 22, 2001.
5. O'Connor specifically acknowledges that the payments made and benefits extended
hereunder by EXLN are in lieu of all other benefits and payments which otherwise may have been
payable to O'Connor as a result of his separation from EXLN under benefit plans or policies of EXLN,
including, without limitation, additional severance, bonus payments and separation pay, and O'Connor
hereby waives any rights he may have in or to any such other benefits or payments, it being the
intention of the parties hereto to convert and merge all such rights into this Agreement.
6. O'Connor hereby acknowledges and ratifies his obligations under the RESTATED AND AMENDED
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT, dated January 22, 2001
between O'Connor and EXLN, which is attached hereto as EXHIBIT A and incorporated herein by
reference, and further agrees to be bound by the terms thereof.
7. O'Connor, for good and valuable consideration the receipt of which is hereby
acknowledged, for himself and his legal representatives, successors, and assigns hereby releases,
remises, and forever discharges EXLN, its subsidiaries and affiliates, and their respective past,
present and future agents, officers, directors, shareholders, attorneys, employees, servants, and
representatives and all of EXLN's heirs, successors, predecessors, and assigns, of and from all
manner of actions, causes of actions, suits, debts, demands, damages, costs, expenses, obligations,
agreements, and claims whatsoever, at law, in equity, or otherwise, known or unknown, which O'Connor
has or may have, either now or at any time before the date of this Agreement, against EXLN,
including but not limited to any claims arising out of or in any way related to O'Connor's
employment by EXLN, O'Connor's resignation as Senior Vice President, Business Development of EXLN,
the termination of O'Connor's employment by EXLN, any claims of wrongful discharge, any claims of
intentional or negligent misrepresentation and any claims of discrimination under the common law or
any statute (including, without implication of limitation, Title VII of the Civil Rights Act of 1964
and the Age Discrimination in Employment Act of 1967); provided, however, that any claims that
O'Connor may make against EXLN for breach of this Agreement are specifically exempted from this
release. O'Connor acknowledges and agrees that the payments and benefits to be made to O'Connor
pursuant to this Agreement are over and above any other money or benefits that would be due to
O'Connor under the terms of his employment with EXLN and EXLN's usual policies and practices.
O'Connor hereby waives any claim for attorney's fees or costs and any claim for reinstatement. In
the event any waiver hereunder is found invalid, O'Connor must return all amounts paid to O'Connor
by EXLN pursuant to Section 2 hereof.
8. EXLN hereto releases, remises, and forever discharges O'Connor of and from any and all
debts, demands, actions, causes of action, suits, damages, costs and expenses, and any and all other
claims, known or unknown, which it now has or has ever had against O'Connor, including without
limitation any such claims in relation towards O'Connor's employment with EXLN; provided, however,
that any claims that EXLN may make against O'Connor as set forth herein and for breach of this
Agreement are specifically exempted from this release.
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9. O'Connor and EXLN hereby agree to be publicly supportive of each other. O'Connor agrees
not to criticize, disparage or otherwise comment negatively about, orally or in writing, directly or
indirectly, EXLN, its subsidiaries, affiliates or any of their respective past, present or future
officers, directors, employees, agents, businesses, products or services. O'Connor agrees to use his
best efforts to ensure that none of the members of his family so criticize or disparage any of such
persons or entities. O'Connor further agrees that he shall be publicly and privately cooperative and
supportive of EXLN in regard to its personnel, corporate practices and policies and other matters.
EXLN agrees not to disparage or make negative statements about O'Connor and to be publicly and
privately cooperative and supportive of O'Connor in regard to his transition.
10. O'Connor agrees that, except as may be required by law or as may be mutually agreed,
O'Connor will keep the terms and existence of this Agreement completely and strictly confidential,
and that O'Connor will not hereafter disclose any information concerning this Agreement to anyone,
except to the extent necessary to enforce this Agreement.
11. With the exception of the Equipment, O'Connor agrees to return any and all property,
whether tangible or intangible, provided to O'Connor by EXLN, as a condition precedent to EXLN's
obligations hereunder.
12. O'Connor acknowledges that he has been given the opportunity to consider this Agreement
for twenty-one (21) days before executing it. If the Agreement is not signed by O'Connor and
returned to EXLN so that EXLN receives it within twenty-one (21) days of O'Connor's receipt of the
Agreement, this Agreement will not be valid. In the event that O'Connor executes and returns this
Agreement within less than twenty-one (21) days of the date that O'Connor receives it, O'Connor
acknowledges that such decision was entirely voluntary and that O'Connor had the opportunity to
consider this Agreement for the entire twenty-one (21) day period. EXLN acknowledges that for a
period of seven (7) days from the date of execution of this Agreement, O'Connor will retain the
right to revoke this Agreement by written notice that EXLN receives prior to the expiration of such
seven (7) day period, and that this Agreement shall not become effective or enforceable until the
expiration of such revocation period.
13. This Agreement and the NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT, attached hereto, embodies the entire understanding and agreement between the
parties, and supersedes all other oral or written agreements or understandings, between the parties
regarding the subject matter hereof, including without limitation any terms and conditions of any
employment agreement or other similar agreement(s), and it shall be binding and inure to the benefit
of the successors and assigns of each. No change, alteration or modification hereof may be made
except in a writing signed by both parties hereto. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts (disregarding any choice of law rules which may look to the laws of
any other jurisdiction).
14. The parties represent and acknowledge that in executing this Agreement they do not rely
and have not relied upon any other representation or statement made by any person or entity with
regard to the subject matter, basis, or effect of this Agreement, with the sole exception of the
provisions set forth herein. Mistakes of fact or law shall not constitute grounds for modification,
avoidance or rescission of the terms and conditions of this Agreement. The fact that a party or
counsel for a party drafted a provision or provisions of this Agreement shall not cause that
provision or those provisions to be construed against the drafting party.
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15. This Settlement may be executed in one or more counterparts, each of which when so
executed shall be deemed an original, but all of which together shall constitute one and the same
instrument.
16. In entering into this Agreement, the parties represent that they have had the
opportunity to seek the advice of legal counsel and that the terms of the Agreement have been
completely read and explained to them and that those terms are fully understood and voluntarily
agreed to.
EXLN: O'Connor:
eXcelon Corporation Daniel O'Connor
By:_____________________________ By:___________________________
Name:___________________________ Name:_________________________
(Printed or Typed) (Printed or Typed)
Title:____________________________
EXHIBIT A
AMENDED AND RESTATED
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE
AND DEVELOPMENTS AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
EXLN (the "Company") and O'Connor ("I") hereby agree as follows:
1. NON-COMPETE AND NON-SOLICITATION AGREEMENT
(a) As long as I am employed or retained by the Company and for a period of one year after the
termination of my Employment with the Company by me or the Company for any reason, including
expiration of the previously agreed upon term of my Employment, or by the Company for Cause (as
defined in the Executive Employment Agreement), I shall not, directly or indirectly, on my behalf or
on behalf of any third-party, or as owner, manager, stockholder, consultant, director, officer or
employee of any business entity, participate in the development, manufacture, license, provision or
sale of any goods or services which are directly competitive with goods or services sold or
licensed, or under development, by the Company without the prior written authorization of the
Company; provided, however, that I may, without the Company's prior written authorization, own up to
one percent (1%) of the issued and outstanding securities of any publicly held corporation or any
securities in any non-public corporation which I owned prior to the date of my Employment.
(i) In the event that the Company and I disagree about whether any business entity develops
or provides goods or services which are directly competitive with goods or services sold or
licensed, or under development, by the Company, the disagreement shall be resolved either by
decision of the Company's Board of Directors at their next regularly scheduled board meeting acting
in good faith after giving me a suitable opportunity to present my view in person and/or in writing,
or if either I or the Company gives notice to the Board of our objection to the decision of the
Board within 30 days after such decision, by arbitration as provided herein.
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(ii) The Company and I agree that goods or services which are directly competitive with
goods or services developed or provided, or under development, by the Company shall not include
goods and services used by any person or entity for use as a component in a good or service which is
not directly competitive with goods or services developed or provided, or under development, by the
Company.
(iii) If after the commencement of my Employment with the Company the Company determines to
change its line of business so as to provide goods or services other than those sold or licensed, or
under development, by the Company at the commencement of my Employment, then the Company shall give
me notice of such determination.
(b) Except with the prior written consent of the Company, during my employment with the Company and
for a period of one year after that employment ends for any reason, including expiration of the
previously agreed upon term of my Employment, or by the Company for Cause, I will not directly or
indirectly, either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity, take away any of the
customers that the Company had enjoyed during my Employment with the Company.
(c) Except with the prior written consent of the Company, during my employment with the Company and
for a period of one year after that employment ends for any reason, including expiration of the
previously agreed upon term of my Employment, or by the Company for Cause, I shall not directly or
indirectly, either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity, solicit, induce or
attempt to hire away from the Company any employee of the Company (or any other person who may have
been employed by the Company during the six months prior to the termination of my Employment), or
assist in such hiring by any other person or business entity or encourage any such employee to
terminate his or her employment with the Company.
(d) I recognize that the Company is developing highly specialized products and services in
competition with other business entities throughout the United States and the world, which products
and services are designed to compete in regional, nation-wide and world-wide markets. In light of
the competitive nature of the Company's products and services, I agree that the restrictions
contained in this Section 1 cannot be limited to any geographic area, and I further recognize that
the restrictions set forth in this Section 1 are intended to protect the Company's interests in its
Confidential Information and established commercial relationships and goodwill, and agree that such
restrictions are reasonable and appropriate for this purpose.
(e) If the period of time, geographic area, or other term of any non-competition or non-solicitation
restraint specified in this Agreement is judged by a court to be unreasonable, I agree that such
term should be modified by the court so that the term can be enforced as the court decides is
reasonable.
(f) If I violate any non-competition or non-solicitation restraint specified in this Agreement, I
agree that the period of the restraint shall not run during the period of the violation. I
understand that the purpose of this paragraph is to give the Company the protection of the restraint
for the full agreed-upon duration.
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2. CONFIDENTIALITY AGREEMENT
(a) I acknowledge that in the course of my employment, I will gain access to and may gain possession
of Confidential Information of the Company. The term "Confidential Information" as used throughout
this Agreement shall mean all trade secrets, proprietary information and other data or information
(and any tangible evidence, record or representation thereof), whether prepared, conceived or
developed by an employee of the Company (including myself) or received by the Company from an
outside source, which is in the possession of the Company (whether or not the property of the
Company), which in any way relates to the present or future business of the Company or any customer
or supplier of the Company, and/or which is maintained in confidence by the Company. Without
limiting the generality of the foregoing, "Confidential Information" shall mean all trade secrets,
know-how, proprietary information and other information or data relating to the present or future
business of the Company, including but not limited to:
(i) any idea, improvement, invention, innovation, development, technical data, design,
formula, device, pattern, concept, computer program, software, firmware, source code, object code,
algorithm, subroutine, object module, schematic, model, diagram, flow chart, chip masking
specification, user manual, training or service manual, product specification, plan for a new or
revised product, compilation of information, or work in process, and any and all revisions and
improvements relating to any of the foregoing (in each case whether or not reduced to tangible
form); and
(ii) the name of any customer, employee, prospective customer or consultant, any sales
plan, marketing material, plan or survey, business plan or projections, customer list, product or
development plan or specification, business proposal, financial record, business record, advertiser
lists, supplier lists, customer sales analyses, price lists and any other non-public information or
other record relating to the business of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not apply to information
which has otherwise lawfully entered the public domain, or is generally known in the industry.
(b) I agree to keep all Confidential Information strictly confidential and not to use Confidential
Information for any purpose or disclose Confidential Information, including Confidential Information
of any third party which the Company is under an obligation to keep confidential, to any person or
entity during my employment, except as expressly authorized by and for the benefit of the Company
and in the course of my duties as an employee, or at any time after my employment ends. As part of
my obligations to maintain the confidentiality of Confidential Information, I agree to comply with
any Company policy, if any, on the protection of intellectual property. I further agree that after
the termination and/or expiration of my employment, I shall not use or permit the use of any
Confidential Information, it being agreed that all Confidential Information shall be and remain the
sole and exclusive property of the Company and that within ten (10) days after the termination or
expiration of my employment I shall either (i) deliver all Confidential Information, and all copies
thereof, to the Company, at its main office or (ii) destroy all Confidential Information, and all
copies thereof, and deliver a sworn notice to the Company certifying to such destruction.
(c) I hereby represent that my performance of all of the terms of this Agreement and as an employee,
consultant or advisor of the Company does not and will not breach any agreement to keep in
confidence Confidential Information acquired by me prior to my Employment by the Company. I have not
entered into, and I agree I will not enter into, any agreement either written or oral in conflict
herewith.
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3. DEVELOPMENTS AGREEMENT
(a) If at any time or times during my Employment, I shall (either alone or with others) make,
conceive, learn, discover or reduce to practice any invention, modification, discovery, design,
development, improvement, process, software program, work of authorship, documentation, formula,
data, technique, know-how, secret, concept, idea, and fixed expression thereof or any interest
therein (whether or not patentable or registrable under copyright, patent, trademark or similar
statutes or subject to analogous protection) (herein called "Developments") that relate to the
business of the Company, whether directly or indirectly, and/or that relate to software provided by
suppliers to the Company and incorporated in the Company's products, or any of the goods and
services sold, licensed or under development by the Company; and/or result from the use of premises,
facilities or personal property tangible or intangible owned, leased or contracted for by the
Company; and/or that occur during the period of, as a consequence of, or in connection with my
employment by the Company; and/or that result from tasks assigned to me by the Company; such
Developments and the benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns, and I shall promptly disclose to the Company (or any persons designated by
it) each such Development and hereby assign any rights I may have or acquire in the Developments and
benefits and/or rights resulting therefrom to the Company and its assigns without further
compensation and waive any and all moral rights to all Developments. All Developments shall be the
sole property of the Company and its assigns. The Company shall be the sole owner of all patents,
copyrights and other rights relating to Developments. I acknowledge that all Developments are
"work(s) made for hire", as defined under the United States Copyright Act, and become the property
of the Company, and shall communicate, without cost or delay, and without publishing the same, all
available information relating thereto (with all necessary plans and models) to the Company.
(b) Upon disclosure of each Development to the Company, I will, during my Employment and at any time
thereafter, at the request and cost of the Company, sign, execute, make and do all such deeds,
documents, acts and things as the Company and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Company alone (unless the Company
otherwise directs) letters of patent, copyrights or other analogous protection in any country
throughout the world and when so obtained or vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such applications and any
opposition proceedings or petitions or applications for revocation of such letters of patent,
copyright or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure my signature on any letters
of patent, copyright or other analogous protection relating to a Development, whether because of my
physical or mental incapacity or for any other reason whatsoever, I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and attorney-in-fact, to
act for and in my behalf and stead to execute and file any such application or applications and to
do all other lawfully permitted acts to further the prosecution and issuance of letters of patent,
copyright or other analogous protection thereon with the same legal force and effect as if executed
by me.
(c) This Section 3 shall not apply to any Development which meets all of the following three
conditions: (i) I do the work entirely by myself without use of the Company's facilities, knowledge,
property or resources, (ii) I do the work entirely on my own time, and (iii) the Development does
not relate, either, directly or indirectly, to the Company's business or research or to its planned
business or research.
7
4. MISCELLANEOUS
(a) I agree that because of the nature of the Company's business, the restrictions contained in this
Agreement are reasonable and necessary in order to protect the legitimate interests of the Company.
(b) I understand that this Agreement does not create an obligation on the Company or any other
person or entity to continue my Employment.
(c) Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach of such provision or any other provision hereof.
(d) I hereby agree that each provision herein shall be treated as a separate and independent clause,
and the unenforceability of any one clause shall in no way impair the enforceability of any of the
other clauses herein. Moreover, if one or more of the provisions contained in this Agreement shall
for any reason be held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the appropriate judicial
body by limiting and reducing it or them, so as to be enforceable to the maximum extent compatible
with the applicable law as it shall then appear.
(e) I recognize that money damages alone would not adequately compensate the Company in the event of
breach by me of this Agreement, and I therefore agree that, in addition to all other remedies
available to the Company at law or in equity, the Company shall be entitled to injunctive relief for
the enforcement hereof. Failure by the Company to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such terms, covenants or
conditions.
(f) My obligations under this Agreement shall survive the termination or expiration of my Employment
regardless of the manner of termination, except that the provisions of Section 1 shall survive in
accordance with their terms.
(g) The term "Company" shall include eXcelon Corporation and any of its subsidiaries, subdivisions
or affiliates. The Company shall have the right to assign this Agreement to its successor and
assigns, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable
by said successors or assigns.
(h) This Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts (disregarding any choice of law rules which may look to the laws of
any other jurisdiction). In the event of any court action to enforce any provision of this
Agreement, The parties consent to and submit to the jurisdiction of the Superior Court of the
Commonwealth of Massachusetts and the United States District Court for the District of
Massachusetts.
(i) This Agreement embodies the entire understanding, and supersedes all other oral or written
agreements or understandings, between the parties regarding the subject matter hereof, including
without limitation any terms and conditions of any employment agreement or other similar
agreement(s). No change, alteration, modification, waiver or termination of this Agreement or any of
the provisions herein contained shall be binding upon me or the Company unless made in writing and
signed by myself and an authorized officer of the Company. In the event of any inconsistency between
this Agreement and any other contract between me and the Company, the provisions of this Agreement
shall prevail.
(j) All notices, requests, demands and other communications hereunder must be in writing and shall
be deemed to have been duly given if delivered by hand or mailed, within the continental United
States by first class, registered mail, receipt requested, postage and registry fees prepaid, to the
applicable party at the address set forth below or at such other address as is provided by a party
pursuant to the terms hereof.
8
(k) Any controversy or claim arising out of or relating to this Agreement, or the breach thereof,
shall be settled by arbitration in Boston, Massachusetts in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof and shall be final and
binding upon the parties hereto. Notwithstanding anything to the contrary contained in this Section
4(k), the Company shall have the right to seek injunctive relief, specific performance or other
equitable relief against me in a court of competent jurisdiction.
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL OF THE PROVISIONS OF THIS
AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
SIGNATURE:
-------------------------------------------
Daniel E. O'Connor
ADDRESS: 1319 Monument Street, Concord, MA 01742
DATE: January 22, 2001
ACCEPTED:
EXCELON CORPORATION
25 Mall Road
Burlington, MA 01803
SIGNATURE:
-------------------------------------------
Brian Greene
TITLE: Vice President and General Counsel
DATE: January 22, 2001
|
Amendment of Tax Allocation Agreement
Between
MAXXAM Inc.
and
Kaiser Aluminum & Chemical Corporation
WHEREAS, MAXXAM Inc. ("MAXXAM") and Kaiser Aluminum & Chemical
Corporation ("KACC") executed a tax allocation agreement as of December 21, 1989
covering all taxable years during which KACC and its U.S. subsidiaries (the
"KACC Subgroup") were included in MAXXAM's Federal consolidated income tax
returns (the "Tax Allocation Agreement");
WHEREAS, the Tax Allocation Agreement is relevant for taxable periods
through June 30, 1993, the date on which the KACC Subgroup became disaffiliated
with MAXXAM, and after which the KACC Subgroup was no longer included in
MAXXAM's Federal consolidated income tax returns;
WHEREAS, paragraphs 2 and 3 of the Tax Allocation Agreement were
intended to place the KACC Subgroup in the same U.S. income tax position as if
it was a separate affiliated group of corporations filing separate consolidated
tax returns and was never affiliated with MAXXAM;
WHEREAS, the Tax Allocation Agreement follows general U.S. income tax
laws and principles governed by the Internal Revenue Code of 1986, as amended,
and Treasury Regulations promulgated thereunder;
WHEREAS, Kaiser Alumina Australia Corporation ("KAAC"), a U.S.
subsidiary of KACC, is currently undergoing an Australian income tax audit (the
"Audit"), including years covered by the Tax Allocation Agreement;
WHEREAS, Treasury Regulation Section 301.6511(d)-3(a) only allows until
March 15, 2001 to claim foreign tax credits with respect to 1990, beyond which
claims for refunds with respect to such foreign tax credits would be disallowed;
WHEREAS, the Tax Allocation Agreement similarly allows KACC only until
March 15, 2001 to claim additional foreign tax credits with respect to 1990 if
KAAC subsequently pays additional Australian income taxes attributable to 1990;
WHEREAS, in view of the foregoing and other relevant facts, MAXXAM and
KACC desire to extend the March 15, 2001 deadline for claiming such foreign tax
credits under the Tax Allocation Agreement for one year to March 15, 2002; and
WHEREAS, MAXXAM and KACC wish to reach an agreement regarding the
consequences resulting under the Tax Allocation Agreement prior to KAAC agreeing
to any tax assessment received from the Australian Taxation Office or settlement
in connection with the Audit,
NOW, THEREFORE, (a) MAXXAM agrees to extend to March 15, 2002 the March
15, 2001 deadline under the Tax Allocation Agreement for KACC to claim
additional foreign tax credits that may be attributable to 1990; and (b) KACC
agrees that prior to KAAC agreeing to any tax assessment received from the
Australian Taxation Office with respect to 1990 or settlement in connection with
the Audit, it will reach an agreement with MAXXAM regarding the consequences
resulting under the Tax Allocation Agreement. MAXXAM and KACC agree to use their
respective reasonable best efforts to reach such agreement.
IN WITNESS WHEREOF, MAXXAM and KACC have executed this Amendment of Tax
Allocation Agreement by duly authorized officers thereof as of March 12, 2001.
MAXXAM Inc.
By: /S/ PAUL N. SCHWARTZ
Title: President and Chief Financial Officer
Kaiser Aluminum & Chemical Corporation
By: /S/ JOHN T. LA DUC
Title: Executive Vice President and
Chief Financial Officer
|
May 17, 2001
Jim Jones
Vice President and Treasurer
LSB Industries
16 South Pennsylvania Ave
Oklahoma City, OK 73107
Dear Mr. Jones:
Reference is made to that certain Loan and Security Agreement dated October 31,
1994, as amended (the "Agreement") between DSN Corporation, ("Debtor"), and the
CIT Group/Equipment Financing, Inc. ("CIT"). Debtor has advised CIT that LSB
Industries Inc., a guarantor of Debtor's obligation to CIT was not in compliance
with certain covenants as of December 31, 2000.
Debtor has requested, that notwithstanding anything to the contrary in the
Agreement, that CIT waive the instances of non-compliance through April 1, 2002.
CIT hereby waives, as of this date, the instances of non-compliance under the
Agreement, under the following condition:
a) receipt of a $3,000.00 processing fee.
All other terms, conditions and agreements under the Loan Agreement, together
with all schedules, attachments and amendments thereto shall remain in full
force and effect. Please note that CIT's willingness to waive this particular
covenant violation should not be interpreted as CIT's agreement or willingness
to waive any further breach or violation of the Agreement.
Sincerely,
The CIT Group Equipment Financing Inc.
By:______________________________
Title: _____________________________
Acknowledged and Agreed to
LSB Industries, Inc.
By:_____________________
Title: ____________________
|
EXHIBIT 10.3
Supplemental Agreement No. 22
to
Purchase Agreement No. 1951
between
The Boeing Company
and
Continental Airlines, Inc.
Relating to Boeing Model 737 Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of May 23, 2001, by and between THE
BOEING COMPANY, a Delaware corporation with its principal office in Seattle,
Washington, (Boeing) and Continental Airlines, Inc., a Delaware corporation with
its principal office in Houston, Texas (Buyer);
WHEREAS, the parties hereto entered into Purchase Agreement No. 1951 dated July
23, 1996 (the Agreement), as amended and supplemented, relating to Boeing
Model 737-500, 737-600, 737-700, 737-800, and 737-900 aircraft (the Aircraft);
and
WHEREAS, Boeing and Buyer have agreed to the 737-924 Aircraft configuration; and
WHEREAS, Buyer has selected the Inflight Entertainment and Cabin Communications
System (IFE/CCS) and a Cabin Systems Equipment Letter Agreement is being added
to the Agreement; and
WHEREAS, Boeing and Buyer have agreed to certain changes to provisions relating
to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]; and
WHEREAS, Boeing and Buyer have agreed to amend and restate the terms of the
"Special Matters" letter applicable to the Aircraft to reflect certain
agreements between Boeing and the customer; and
WHEREAS, Boeing and Buyer have mutually agreed to amend the Agreement to
incorporate the effect of these and certain other changes;
NOW THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree to amend the Agreement as follows:
1. Table of Contents, Articles, Tables and Exhibits:
1.1 Remove and replace, in its entirety, the "Table of Contents", with the Table
of Contents attached hereto, to reflect the changes made by this Supplemental
Agreement No. 22.
1.2 Remove and replace, in its entirety, Article 3 "Price of Aircraft", pages
3-1 through 3-4, with revised pages 3-1 through 3-4 attached hereto, to reflect
the revised 737-924 Special Features Price and Aircraft Basic Price.
1.3 Remove and replace, in its entirety, page T-5 of Table 1, entitled "Aircraft
Deliveries and Descriptions, Model 737-900 Aircraft", with revised page T-5
attached hereto, to reflect the revised prices.
1.4 Remove and replace, in its entirety, Exhibit A-5 "Aircraft Configuration
Relating to Boeing Model 737-924 Aircraft", with revised Exhibit A-5 attached
hereto, to reflect the most current incorporated features and prices.
2. Letter Agreements:
2.1 Remove and replace, in its entirety, Letter Agreement 1951-12R1, "Option
Aircraft - Model 737-924 Aircraft" with Letter Agreement 1951-12R2, "Option
Aircraft - Model 737-924 Aircraft", attached hereto, to reflect the revised
prices in the Attachment.
2.2 Add Letter Agreement No. 1951-14, "Installation of Cabin Systems Equipment",
attached hereto, to describe the responsibilities of the parties, terms and
conditions, equipment and systems selection, estimated prices and critical
impact events for Inflight Entertainment and Cabin Communication System
(IFE/CCS) equipment.
2.3 Remove and replace, in its entirety, Letter Agreement 6-1162-MMF-311R3,
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT], with
Letter Agreement 6-1162-MMF-311R4, [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT], attached hereto, to reflect certain changes to the
calculations of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].
2.4 Remove and replace, in its entirety, Letter Agreement 6-1162-GOC-131R2,
"Special Matters", with Letter Agreement 6-1162-GOC-131R3, "Special Matters",
attached hereto, to reflect certain new agreements regarding the 737-924.
The Agreement will be deemed to be supplemented to the extent herein provided as
of the date hereof and as so supplemented will continue in full force and
effect.
EXECUTED IN DUPLICATE as of the day and year first written above.
THE BOEING COMPANY Continental Airlines, Inc.
By: /s/ Henry H. Hart By: /s/ Gerald Laderman__________
Its: Attorney-In-Fact Its: Senior Vice President-Finance
TABLE OF CONTENTS
Page SA
Number Number
ARTICLES
1. Subject Matter of Sale 1-1 SA 5
2. Delivery, Title and Risk of Loss 2-1
3. Price of Aircraft 3-1 SA 22
4. Taxes 4-1
5. Payment 5-1
6. Excusable Delay 6-1
7. Changes to the Detail Specification 7-1 SA 5
8. Federal Aviation Requirements and
Certificates and Export License 8-1 SA 5
9. Representatives, Inspection, Flights and Test Data 9-1
10. Assignment, Resale or Lease 10-1
11. Termination for Certain Events 11-1
12. Product Assurance; Disclaimer and Release;
Exclusion of Liabilities; Customer Support;
Indemnification and Insurance 12-1
13. Buyer Furnished Equipment and Spare Parts 13-1
14. Contractual Notices and Requests 14-1 SA 17
15. Miscellaneous 15-1
TABLE OF CONTENTS
Page SA
Number Number
TABLES
1. Aircraft Deliveries and Descriptions - 737-500 T-1 SA 3
Aircraft Deliveries and Descriptions - 737-700 T-2 SA 13
Aircraft Deliveries and Descriptions - 737-800 T-3 SA 21
Aircraft Deliveries and Descriptions - 737-600 T-4 SA 4
Aircraft Deliveries and Descriptions - 737-900 T-5 SA 22
EXHIBITS
A-1 Aircraft Configuration - Model 737-724 SA 2
A-2 Aircraft Configuration - Model 737-824 SA 2
A-3 Aircraft Configuration - Model 737-624 SA 1
A-4 Aircraft Configuration - Model 737-524 SA 3
A-5 Aircraft Configuration - Model 737-924 SA 22
B Product Assurance Document SA 1
C Customer Support Document - Code Two -
Major Model Differences SA 1
C1 Customer Support Document - Code Three -
Minor Model Differences SA 1
D Aircraft Price Adjustments - New
Generation Aircraft (1995 Base Price) SA 1
D1 Airframe and Engine Price Adjustments - Current
Generation Aircraft SA 1
D2 Aircraft Price Adjustments - New
Generation Aircraft (1997 Base Price) SA 5
E Buyer Furnished Equipment Provisions Document SA 20
F Defined Terms Document SA 5
TABLE OF CONTENTS
SA
Number
LETTER AGREEMENTS
1951-1 Not Used
1951-2R3 Seller Purchased Equipment SA 5
1951-3R14 Option Aircraft-Model 737-824 Aircraft SA 21
1951-4R1 Waiver of Aircraft Demonstration SA 1
1951-5R2 Promotional Support - New Generation Aircraft SA 5
1951-6 Configuration Matters
1951-7R1 Spares Initial Provisioning SA 1
1951-8R2 Escalation Sharing - New Generation Aircraft SA 4
1951-9R9 Option Aircraft-Model 737-724 Aircraft SA 21
1951-11R1 Escalation Sharing-Current Generation Aircraft SA 4
1951-12R2 Option Aircraft - Model 737-924 Aircraft SA 22
1951-13 Configuration Matters - Model 737-924 SA 5
1951-14 Installation of Cabin Systems Equipment SA 22
TABLE OF CONTENTS
SA
Number
RESTRICTED LETTER AGREEMENTS
6-1162-MMF-295 Performance Guarantees - Model 737-724 Aircraft
6-1162-MMF-296 Performance Guarantees - Model 737-824 Aircraft
6-1162-MMF-308R3 Disclosure of Confidential Information SA 5
6-1162-MMF-309R1 [CONFIDENTIAL MATERIAL OMITTED AND SA 1
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
6-1162-MMF-311R4 [CONFIDENTIAL MATERIAL OMITTED AND SA 22
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
6-1162-MMF-312R1 Special Purchase Agreement Provisions SA 1
6-1162-MMF-319 Special Provisions Relating to the Rescheduled Aircraft
6-1162-MMF-378R1 Performance Guarantees - Model 737-524 Aircraft SA 3
6-1162-GOC-015 [CONFIDENTIAL MATERIAL OMITTED AND SA 2
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
6-1162-GOC-131R3 Special Matters SA 22
6-1162-DMH-365 Performance Guarantees - Model 737-924 Aircraft SA 5
6-1162-DMH-624 [CONFIDENTIAL MATERIAL OMITTED AND SA 8
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
6-1162-DMH-680 Delivery Delay Resolution Program SA 9
6-1162-DMH-1020 [CONFIDENTIAL MATERIAL OMITTED AND SA 14
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
6-1162-DMH-1035 [CONFIDENTIAL MATERIAL OMITTED AND SA 15
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
6-1162-DMH-1054 [CONFIDENTIAL MATERIAL OMITTED AND SA 16
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
TABLE OF CONTENTS
SUPPLEMENTAL AGREEMENTS
DATED AS OF:
Supplemental Agreement No. 1 October 10,1996
Supplemental Agreement No. 2 March 5, 1997
Supplemental Agreement No. 3 July 17, 1997
Supplemental Agreement No. 4 October 10,1997
Supplemental Agreement No. 5 May 21,1998
Supplemental Agreement No. 6 July 30,1998
Supplemental Agreement No. 7 November 12,1998
Supplemental Agreement No. 8 December 7,1998
Supplemental Agreement No. 9 February 18,1999
Supplemental Agreement No. 10 March 19, 1999
Supplemental Agreement No. 11 May 14,1999
Supplemental Agreement No. 12 July 2,1999
Supplemental Agreement No. 13 October 13, 1999
Supplemental Agreement No. 14 December 13,1999
Supplemental Agreement No. 15 January 13,2000
Supplemental Agreement No. 16 March 17,2000
Supplemental Agreement No. 17 May 16, 2000
Supplemental Agreement No. 18 September 11, 2000
Supplemental Agreement No. 19 October 31, 2000
Supplemental Agreement No. 20 December 21, 2000
Supplemental Agreement No. 21 March 30, 2001
Supplemental Agreement No. 22 May 23, 2001
ARTICLE 3. Price of Aircraft.
3.1 Definitions.
3.1.1 Current Generation Aircraft.
3.1.1.1 Special Features are the features listed in Exhibit A-4 which Buyer has
selected for incorporation in Current Generation Aircraft.
3.1.1.2 Base Airframe Price is the Aircraft Basic Price excluding the price of
Special Features and Engines.
3.1.1.3 Engine Price is the price established by the Engine manufacturer for the
Engines installed on the Aircraft including all accessories, equipment and parts
set forth in Exhibit D-1.
3.1.1.4 Aircraft Basic Price is comprised of the Base Airframe Price, the Engine
Price and the price of the Special Features.
3.1.1.5 Economic Price Adjustment is the adjustment to the Aircraft Basic Price
(Base Airframe, Engine and Special Features) as calculated pursuant to Exhibit
D-1.
3.1.1.6 Base Airplane Price is the Aircraft Basic Price excluding the price of
Special Features, but including Engines.
3.1.2 New Generation Aircraft
3.1.2.1 Special Features are the features listed in Exhibits A-1, A-2, A-3, and
A-5, which Buyer has selected for incorporation in New Generation Aircraft.
3.1.2.2 Base Airplane Price is the Aircraft Basic Price excluding the price of
Special Features, but including Engines.
3.1.2.3 Aircraft Basic Price is comprised of the Base Airplane Price and the
price of the Special Features.
3.1.2.4 Economic Price Adjustment is the adjustment to the Aircraft Basic Price
(Base Airplane and Special Features) as calculated pursuant to Exhibit D for
Aircraft expressed in July 1995 dollars and Exhibit D-2 for Aircraft expressed
in July 1997 dollars.
3.2 Aircraft Basic Price.
3.2.1 Current Generation Aircraft:
3.2.1.1 Model 737-524 Aircraft.
The Aircraft Basic Price of each 737-524 Aircraft, expressed in July 1995
dollars, is set forth below:
Base Airframe Price: [CONFIDENTIAL MATERIAL
Special Features OMITTED AND FILED SEPARATELY
Engine Price WITH THE SECURITIES AND
EXCHANGE COMMISSION
Aircraft Basic Price PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
3.2.2 New Generation Aircraft.
3.2.2.1 Model 737-624 Aircraft.
The Aircraft Basic Price of each 737-624 Aircraft, expressed in July 1995
dollars, is set forth below:
Base Airplane Price: [CONFIDENTIAL MATERIAL
Special Features OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
Aircraft Basic Price EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
3.2.2.2 Model 737-724 Aircraft.
The Aircraft Basic Price of each 737-724 Aircraft, expressed in July 1995
dollars, is set forth below:
Base Airplane Price: [CONFIDENTIAL MATERIAL
Special Features OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
Aircraft Basic Price EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
3.2.2.3 Model 737-824 Aircraft.
The Aircraft Basic Price of each 737-824 Aircraft, expressed in July 1995
dollars, is set forth below:
Base Airplane Price: [CONFIDENTIAL MATERIAL
Special Features OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
Aircraft Basic Price EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
3.2.2.4 Model 737-924 Aircraft.
The Aircraft Basic Price of each 737-924 Aircraft, expressed in July 1997
dollars, is set forth below:
Base Airplane Price: [CONFIDENTIAL MATERIAL
Special Features OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
Aircraft Basic Price EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
3.3 Aircraft Price. The total amount that Buyer is to pay for the Aircraft at
the time of delivery (Aircraft Price) will be established at the time of
delivery of such Aircraft to Buyer and will be the sum of:
3.3.1 the Aircraft Basic Price, set forth in Table 1; plus
3.3.2 the Economic Price Adjustments for the Aircraft Basic Price, as calculated
pursuant to the formulas set forth in Exhibits D or D-1 or D-2, as applicable;
plus
3.3.3 other price adjustments made pursuant to this Agreement or other written
agreements executed by Boeing and Buyer.
3.4 Advance Payment Base Price.
3.4.1 Advance Payment Base Price. For advance payment purposes, the estimated
delivery prices of the Aircraft have been established, using currently available
forecasts of the escalation factors used by Boeing as of the date of signing
this Agreement. The Advance Payment Base Price of each Aircraft is set forth in
Table 1.
3.4.2 Adjustment of Advance Payment Base Prices - Long-Lead Aircraft. For
Aircraft scheduled for delivery 36 months or more after the date of this
Agreement, the Advance Payment Base Prices appearing in Article 3.4.1 will be
used to determine the amount of the first advance payment to be made by Buyer on
the Aircraft. No later than 25 months before the scheduled month of delivery of
each affected Aircraft, Boeing will increase or decrease the Advance Payment
Base Price of such Aircraft as required to reflect the effects of (i) any
adjustments in the Aircraft Basic Price pursuant to this Agreement and (ii) the
then-current forecasted escalation factors used by Boeing. Boeing will provide
the adjusted Advance Payment Base Prices for each affected Aircraft to Buyer,
and the advance payment schedule will be considered amended to substitute such
adjusted Advance Payment Base Prices.
Table 1 to Purchase Agreement 1951
Aircraft Deliveries and Descriptions,
Model 737-900 Aircraft
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
Continental Airlines, Inc.
Exhibit A-5 to Purchase Agreement Number 1951
AIRCRAFT CONFIGURATION
Dated May 23, 2001
relating to
BOEING MODEL 737-924 AIRCRAFT
Exhibit A-5
The Detail Specification is Boeing Detail Specification D019A001CAL39P-1 dated
as of December 5, 2000. Such Detail Specification will be comprised of Boeing
Specification D6-39127, Revision 0, dated July 25, 1997 as amended to
incorporate the Options listed below, including the effects on Manufacturer's
Empty Weight (MEW) and Operating Empty Weight (OEW). Such Options are set forth
in Boeing Document D019ACR1CAL39P-1. As soon as practicable, Boeing will furnish
to Buyer copies of the Detail Specification, which copies will reflect such
Options. The Aircraft Basic Price reflects and includes all effects of such
Options, except such Aircraft Basic Price does not include the price effects of
any Buyer Furnished Equipment, Seller Purchased Equipment or Inflight
Entertainment/Cabin Communications Systems (IFE/CCS) Equipment.
CR / TITLE
PRICE PER A/P
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
1951-12R2
May 23, 2001
Continental Airlines, Inc.
1600 Smith Street
Houston, TX 77002
Subject: Option Aircraft - Model 737-924 Aircraft
Reference: Purchase Agreement No. 1951 dated July 23, 1996 (the Agreement)
between The Boeing Company (Boeing) and Continental Airlines, Inc. (Buyer)
relating to Model 737-924 aircraft (the Aircraft)
Ladies and Gentlemen:
This Letter Agreement amends and supplements the Agreement. All terms used but
not defined in this Letter Agreement have the same meaning as in the Agreement.
This Letter Agreement supersedes and replaces in its entirety Letter Agreement
1951-12R1 dated May 16, 2000.
Boeing agrees to manufacture and sell to Buyer up to
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] additional
Model 737-924 aircraft (the Option Aircraft), on the same terms and conditions
set forth in the Agreement, subject to the terms and conditions set forth below.
The delivery months, number of aircraft, Advance Payment Base Price per aircraft
and advance payment schedule are listed in the Attachment to this Letter
Agreement (the Attachment).
1. Aircraft Description and Changes
1.1 Aircraft Description: The Option Aircraft are described by the Detail
Specification listed in the Attachment.
1.2 Changes: The Detail Specification will be revised to include:
i. Changes applicable to the basic Model 737 aircraft which are developed by
Boeing between the date of the Detail Specification and the signing of the
supplemental agreement to purchase the Option Aircraft;
(ii) Changes required to obtain required regulatory certificates; and
(iii)Changes mutually agreed upon.
1.3 Effect of Changes: Changes to the Detail Specification pursuant to the
provisions of the clauses above shall include the effects of such changes upon
Option Aircraft weight, balance, design and performance.
2. Price
2.1 The pricing elements of the Option Aircraft are listed in the Attachment.
2.2 Price Adjustments.
2.2.1 Optional Features. The price for Optional Features selected for the Option
Aircraft will be adjusted to Boeing's current prices as of the date of execution
of the supplemental agreement for the Option Aircraft.
2.2.2 Escalation Adjustments. The Airplane Price and the price of Optional
Features for Option Aircraft delivering before January, 2004, will be escalated
on the same basis as the Aircraft.
Base Price Adjustments
. The Airplane
Price of the Option Aircraft delivering before January, 2004, will be adjusted
to Boeing's then current prices as of the date of execution of the supplemental
agreement for the Option Aircraft.
2.2.4 Prices for Long Lead Time Aircraft. Boeing has not established prices and
escalation provisions for Model 737-900 aircraft for delivery in the year 2004
and after. When prices and the pricing bases are established for the Model
737-900 aircraft delivering in the year 2004 and after, the information listed
in the Attachment will be appropriately amended.
3. Option Aircraft Payment.
3.1 Buyer has paid a deposit to Boeing in the amount shown in the Attachment for
each Option Aircraft (the Option Deposit) prior to the date of this Letter
Agreement. If Buyer exercises an option, the Option Deposit applicable to such
aircraft will be credited against the first advance payment due for such
aircraft. If Buyer does not exercise an option, Boeing will retain the Option
Deposit.
3.2 Following option exercise, advance payments in the amounts and at the times
listed in the Attachment will be payable for the Option Aircraft. The remainder
of the Aircraft Price for the Option Aircraft will be paid at the time of
delivery.
4. Option Exercise.
4.1 To exercise its option to purchase the Option Aircraft, Buyer shall give
written notice thereof to Boeing on or before the first business day of the
month in each Option Exercise Date shown below:
Option Aircraft Option Exercise Date
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
4.2 If Boeing must make production decisions which are dependent on Buyer
exercising an option earlier than the Option Exercise Date, Boeing may
accelerate the Option Exercise Date subject to Buyer's agreement. If Boeing and
Buyer fail to agree to a revised Option Exercise Date, either party may
terminate the option
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].
5. Contract Terms.
Boeing and Buyer will use their best efforts to reach a definitive agreement for
the purchase of an Option Aircraft, including the terms and conditions contained
in this Letter Agreement, in a supplemental agreement to the Agreement, and
other terms and conditions as may be agreed upon. In the event the parties have
not entered into a supplemental agreement within 30 days following option
exercise, either party may terminate the purchase of such Option Aircraft by
giving written notice to the other within 5 days.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
8. Applicability.
Except as otherwise specifically provided, limited or excluded herein, all
Option Aircraft that are added to the Agreement by an Option Aircraft
supplemental agreement as firm Aircraft shall benefit from all the applicable
terms, conditions and provisions of the Agreement.
Very truly yours,
THE BOEING COMPANY
By /s/ Henry H. Hart
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 23, 2001
CONTINENTAL AIRLINES, INC.
By /s/ Gerald Laderman
Its Senior Vice President - Finance
Attachment
Attachment to
Letter Agreement 1951-12R2 Option Aircraft Delivery,
Description, Price and Advance Payments
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
1951-14
May 23, 2001
Continental Airlines, Inc.
1600 Smith Street
Houston, TX 77002
Subject: Installation of Cabin Systems Equipment
Reference: Purchase Agreement No. 1951 (the Purchase Agreement) between The
Boeing Company (Boeing) and Continental Airlines, Inc. (Buyer) relating to
Model 737-900 aircraft (the Aircraft)
Ladies and Gentlemen:
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
Buyer has requested that Boeing install in the Aircraft the inflight
entertainment and cabin communications systems (IFE/CCS) described in
Attachment A to this Letter Agreement.
Because of the complexity of the IFE/CCS, special attention and additional
resources will be required during the development, integration, certification,
and manufacture of the Aircraft to achieve proper operation of the IFE/CCS at
the time of delivery of the Aircraft. To assist Buyer, Boeing will perform the
functions of project manager (the Project Manager) as set forth in Attachment B,
according to the requirement of Attachment C.
1. Responsibilities.
1.1 Buyer will:
1.1.1 Provide Buyer's IFE/CCS system requirements to Boeing;
1.1.2 Select the IFE/CCS suppliers (Suppliers) from among those suppliers
identified in the Change Requests listed in Attachment A to this Letter
Agreement (completed April 18, 2000); or as otherwise formally offered by
Boeing.
1.1.3 Promptly after selecting Suppliers, participate with Boeing in meetings
with Suppliers to ensure that Supplier's functional system specifications meet
Buyer's and Boeing's respective requirements. Such functional systems
specifications define functionality to which Boeing will test prior to delivery
but is not a guarantee of functionality at delivery;
1.1.4 Select Supplier part numbers;
1.1.5 Negotiate and obtain agreements on product assurance, product support
following Aircraft delivery (including spares support), and any other special
business arrangements directly with Suppliers;
1.1.6 Provide pricing information for part numbers selected above to Boeing by a
mutually selected date;
1.1.7 Negotiate and obtain agreements with any required service providers;
1.1.8 Include in Buyer's contract with any seat supplier a condition obligating
such seat supplier to enter into and comply with a Boeing approved bonded stores
agreement. This bonded stores agreement will set forth the procedures concerning
the use, handling and storage for the Boeing owned IFE/CCS equipment during the
time such equipment is under the seat supplier's control; and
1.1.9 Authorize Boeing to obtain production IFE/CCS spares for test and or
rejection replacement as follows:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] overage
for in-seat LCD monitors, in-seat cables, handsets, cord reels, and remote
jacks; [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
overage for seat boxes; and one each of the head-end equipment. Unused parts
will be returned to the Buyer with the Aircraft delivery and any parts returned
to the Supplier for repair will be returned to the Buyer, at no further cost,
after Aircraft delivery.
1.2 Boeing will:
1.2.1 Perform the Project Manager functions stated in Attachment B;
1.2.2 Provide Aircraft interface requirements to Suppliers;
1.2.3 Assist Suppliers in the development of their IFE/CCS system specifications
and approve such specifications;
1.2.4 Negotiate terms and conditions (except for price, product assurance,
product support following Aircraft delivery and any other special business
arrangements) and enter into contracts with Suppliers and manage such contracts
for the IFE/CCS;
1.2.5 Coordinate the resolution of technical issues with Suppliers;
1.2.6 Ensure that at time of Aircraft delivery the IFE/CCS configuration meets
the requirements of the Change Requests contained in Attachment A to this Letter
Agreement as such Attachment A may be amended from time to time by written
agreement of the parties; and
1.2.7 Obtain FAA certification of the Aircraft with the IFE/CCS installed
therein.
2. Software.
IFE/CCS systems may contain software of the following two types.
2.1 Systems Software. The software required to operate and certify the IFE/CCS
systems on the Aircraft is the Systems Software and is part of the IFE/CCS.
2.2 Buyer's Software. The software accessible to the Aircraft passengers which
controls Buyer's specified optional features is Buyer's Software and is not part
of the IFE/CCS.
2.2.1 Buyer is solely responsible for specifying Buyer's Software functional and
performance requirements and ensuring that Buyer's Software meets such
requirements. Buyer and Buyer's Software supplier will have total responsibility
for the writing, certification, modification, revision, or correction of any of
Buyer's Software. Boeing will not perform the functions and obligations
described in paragraph 1.2 above, nor the Project Manager's functions described
in Attachment B, for Buyer's Software.
2.2.2 The omission of any Buyer's Software or the lack of any functionality of
Buyer's Software will not be a valid condition for Buyer's rejection of the
Aircraft at the time of Aircraft delivery.
2.2.3 Boeing has no obligation to approve any documentation to support Buyer's
Software certification. Boeing will only review and operate Buyer's Software if
in Boeing's reasonable opinion such review and operation is necessary to certify
the IFE/CCS system on the Aircraft.
2.2.4 Boeing will not be responsible for obtaining FAA certification for Buyer's
Software.
3. Changes.
3.1 After Boeing and Supplier have entered into a contract for the purchase of
the IFE/CCS, changes to such contract may only be made by Boeing. Any Buyer
request for changes to the IFE/CCS specification after the Boeing/Supplier
contract has been signed must be made in writing directly to Boeing. Boeing
shall respond to such request by Buyer in a timely manner. If such change is
technically feasible and Boeing has the resources and time to incorporate such
change, then Boeing shall negotiate with the Supplier to incorporate such change
into the contract for the IFE/CCS. Any Supplier price increase resulting from
such a change will be negotiated between Buyer and Supplier.
3.2 Boeing and Buyer recognize that the developmental nature of the IFE/CCS may
require changes to the IFE/CCS or the Aircraft in order to ensure (i)
compatibility of the IFE/CCS with the Aircraft and all other Aircraft systems,
and (ii) FAA certification of the Aircraft with the IFE/CCS installed therein.
In such event Boeing will notify Buyer and recommend to Buyer the most practical
means for incorporating any such change. If within 15 days after such
notification Buyer and Boeing through negotiations cannot mutually agree on the
incorporation of any such change or alternate course of action, then the
remedies available to Boeing in Paragraph 6 shall apply.
3.3 The incorporation into the Aircraft of any mutually agreed change to the
IFE/CCS may result in Boeing adjusting the price of the Change Request contained
in Attachment A to this Letter Agreement.
3.4 Boeing's obligation to obtain FAA certification of the Aircraft with the
IFE/CCS installed is limited to the IFE/CCS as described in Attachment A, as
Attachment A may be amended from time to time by written agreement of the
parties.
4. Supplier Defaults.
Boeing shall notify Buyer in a timely manner in the event of a default by a
Supplier under the Supplier's contract with Boeing. Within 15 days of Buyer's
receipt of such notification, Boeing and Buyer shall agree through negotiations
on an alternative Supplier or other course of action. If Boeing and Buyer are
unable to agree on an alternative Supplier or course of action within such time,
the remedies available to Boeing in Paragraph 6 shall apply.
5. Exhibits B and C to the AGTA.
IFE/CCS is deemed to be BFE for the purposes of Exhibit B, Buyer Support
Document, and Exhibit C, the Product Assurance Document, of the AGTA.
6. Boeing's Remedies.
If Buyer does not comply with any of its obligations set forth herein, Boeing
may:
6.1 delay delivery of the Aircraft pursuant to the provisions of Article 7,
Excusable Delay, of the AGTA; or
6.2 deliver the Aircraft without part or all of the IFE/CCS installed, or with
part or all of the IFE/CCS inoperative; or
6.3 increase the Aircraft Price by the amount of Boeing's additional costs
attributable to such noncompliance.
7. Advance Payments.
7.1 Estimated Price for the IFE/CCS. An estimated price for the IFE/CCS
purchased by Boeing will be included in the Aircraft Advance Payment Base Price
to establish the advance payments for each Aircraft. The estimated price for the
Boeing purchased IFE/CCS installed on each Aircraft by Change Requests
2332-002423, 2332A390B08, 2334A390B36 and 2332A683D12 is
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] U.S.
dollars expressed in 1997 base year dollars.
7.2 Aircraft Price. The Aircraft Price will include the actual IFE/CCS prices
and any associated transportation costs charged Boeing by Suppliers.
8. Buyer's Indemnification of Boeing.
Buyer will indemnify and hold harmless Boeing from and against all claims and
liabilities, including costs and expenses (including attorneys' fees) incident
thereto or incident to successfully establishing the right to indemnification,
for injury to or death of any person or persons, including employees of Buyer
but not employees of Boeing, or for loss of or damage to any property, including
Aircraft, arising out of or in any way connected with any nonconformance or
defect in any IFE/CCS, and whether or not arising in tort or occasioned in whole
or in part by the negligence of Boeing. This indemnity will not apply with
respect to any nonconformance or defect caused solely by Boeing's installation
of the IFE/CCS.
9. Title and Risk of Loss.
Title and risk of loss of IFE/CCS equipment will remain with Boeing until the
Aircraft title is transferred to Buyer.
If the foregoing correctly sets forth your understanding of our agreement with
respect to the matters treated above, please indicate your acceptance and
approval below.
Very truly yours,
THE BOEING COMPANY
By /s/ Henry H. Hart
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 23, 2001
By /s/ Gerald Laderman
Its Senior Vice President - Finance
Attachment A
Cabin Systems Equipment
The following Change Requests describe the items of equipment that under the
terms and conditions of this Letter Agreement are considered to be IFE/CCS. Each
such Change Request is fully described in Exhibit A to the Purchase Agreement.
Final configuration is based on Buyer acceptance of any or all changes listed
below.
Change Request Number
Title
2332-002423 VIDEO ENTERTAINMENT - OVERHEAD VIDEO SYSTEM - PARTIAL PROVISIONS -
VIDEO DISTRIBUTION UNIT (VDU) BASED SYSTEMS
2332A390B08 VIDEO ENTERTAINMENT - OVERHEAD VIDEO
- SYSTEM MATSUSHITA
2334A390B36 AUDIO ENTERTAINMENT - MATSUSHITA -
MULTIPLEX PASSENGER ENTERTAINMENT SYSTEM (MPES)
2332A683D12 MP-VIDEO SYSTEM REVISIONS-CONTINENTAL
737-900-SPE
Attachment A to
Letter Agreement No. 1951-14
Page 1
Attachment B
Project Manager
This Attachment B describes the functions that Boeing will perform as Project
Manager to support (i) the development and integration of the IFE/CCS and (ii)
the FAA certification of the IFE/CCS when installed on the Aircraft.
1. Project Management
Boeing will perform the following functions for the IFE/CCS. Boeing will have
authority to make day-to-day management decisions, and decisions on technical
details which in Boeing's reasonable opinion do not significantly affect form,
fit, function, cost or aesthetics. Boeing will be responsible for:
A. Managing the development of all program schedules;
B. Evaluating and approving Supplier's program management and developmental
plans;
C. Defining program metrics and status requirements;
D. Scheduling and conducting program status reviews;
E. Scheduling and conducting design and schedule reviews with Buyer and
Suppliers;
F. Monitoring compliance with schedules;
G. Evaluating and approving any recovery plans or plan revisions which may be
required of either Suppliers or Buyer;
H. Leading the development of a joint IFE/CCS project management plan (the
Program Plan); and
I. Managing the joint development of the System Specification.
2. System Integration
Boeing's performance as Project Manager will include the functions of systems
integrator (Systems Integrator). As Systems Integrator Boeing will perform the
following functions:
Attachment B to
Letter Agreement No. 1951-14
Page 2
A. As required, assist Suppliers in defining their system specifications for the
IFE/CCS, approve such specifications and develop an overall system functional
specification;
B. Coordinate Boeing, Buyer and Supplier teams to ensure sufficient Supplier and
Supplier sub system testing and an overall cabin system acceptance test are
included in the Program Plan; and
C. Organize and conduct technical coordination meetings with Buyer and Suppliers
to review responsibilities, functionality, Aircraft installation requirements
and overall program schedule, direction and progress.
3. Seat Integration
A. Boeing will coordinate the interface requirements between seat suppliers and
Suppliers. Interface requirements are defined in Boeing Document Nos. D6-36230,
"Passenger Seat Design and Installation"; D6-36238, "Passenger Seat Structural
Design and Interface Criteria"; D222W232, "Seat Wiring and Control
Requirements"; and D222W013-4, "Seat Assembly Functional Test Plan".
B. The Suppliers will be required to coordinate integration testing and provide
seat assembly functional test procedures for seat electronic parts to seat
suppliers and Boeing, as determined by Boeing.
A. The Suppliers will assist the seat suppliers in the preparation of seat
assembly functional test plans.
Attachment C to
Letter Agreement No. 1951-14
Page 1
Attachment C
Critical Impact Events
The contingency plan is the alternate course of action which will be implemented
if the critical decision date is not met or other course of action is not agreed
to by Boeing and Buyer. The critical impact events listed below are milestones
which must be met by BFE and IFE/CCS Suppliers to achieve the in-sequence
installation of the IFE/CCS. The Required Due Dates are the dates on which
Boeing begins to incur disruption costs. The Critical Decision Dates are the
dates after which the critical impact event cannot be accomplished to maintain
the delivery schedule and/or full system functionality. A meeting to discuss a
recovery plan cost impact and/or an alternate course of action will be held
within one week of knowledge of delinquency or impending delinquency.
Required Critical
Event Due Date Decision Date Contingency Plan
P.O. placed for In Seat Equip. [CONFIDENTIAL Complete
(Seven month lead-time) MATERIAL
OMITTED AND
Part Numbers defined by FILED SEPARATELY
IFE Supplier WITH THE Complete
SECURITIES AND
Production IFE Parts on-dock EXCHANGE
At Seat Supplier COMMISSION Complete
PURSUANT TO A
P.O. placed for Video and REQUEST FOR
Head End Audio Equipment CONFIDENTIAL Complete
TREATMENT]
Video and Head end Audio
Equipment on dock at Boeing Complete
Koito Seat On-Dock Complete
YD 601 Shop Complete Complete
Contract Delivery Month
6-1162-MMF-311R4
May 23, 2001
Continental Airlines, Inc.
1600 Smith Street
Houston, TX 77002
Subject: Letter Agreement No. 6-1162-MMF-311R4 to Purchase Agreement No. 1951 -
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Ladies and Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1751 dated July 23, 1996(the
Agreement) between The Boeing Company (Boeing) and Continental Airlines, Inc.
(Buyer) relating to Model 737 aircraft (the Aircraft). This Letter Agreement
supersedes and replaces in its entirety Letter Agreement 6-1162-MMF-311R3 dated
May 21, 1998.
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
5. Confidential Treatment.
Boeing and Buyer agree that certain commercial and financial information
contained in this Letter Agreement is confidential and subject to the
confidentiality provisions of Letter Agreement 6-1162-MMF-308R3, "Disclosure of
Confidential Information."
If this Letter Agreement correctly states your understanding of the matters
treated herein, please so indicate by signature below.
Very truly yours,
THE BOEING COMPANY
By_____/s/ Henry H. Hart_______
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 23, 2001
CONTINENTAL AIRLINES, INC.
By___/s/ Gerald Laderman
Its Senior Vice President - Finance
Date: ____________________
Continental Airlines, Inc.
1600 Smith Street
Houston, TX 77002
Attention: Technical Department
Reference: Letter Agreement 6-1162-MMF-311R4 to
Boeing/CAL Purchase Agreement 1951
Transmitted by Facsimile: TBD
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Very truly yours,
THE BOEING COMPANY
By: __________________
Its: __________________
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
May 23, 2001
6-1162-GOC-131R3
Continental Airlines, Inc.
1600 Smith Street
Houston, Texas 77002
Subject: Letter Agreement No. 6-1162-GOC-131R3 to Purchase
Agreement No. 1951 - Special Matters
Ladies and Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1951 dated as of July 23,
1996 (the Agreement) between The Boeing Company (Boeing) and Continental
Airlines, Inc. (Buyer) relating to Model 737 aircraft (the Aircraft). This
Letter Agreement supersedes and replaces in its entirely Letter Agreement
6-1162-GOC-131R2 dated May 21, 1998.
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
2.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Advance
Payment Schedule.
2.1 Firm Aircraft. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
2.2 Option Aircraft.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
3.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
4. Option Aircraft.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
5.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
6. Assignment of Credits.
Buyer may not assign the credit memoranda described in this Letter Agreement
without Boeing's prior written consent
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].
7. Confidential Treatment.
Boeing and Buyer understand that certain information contained in this Letter
Agreement, including any attachments hereto, are considered by both parties to
be confidential. Notwithstanding the provisions of Letter Agreement
6-1162-MMF-308R2, Boeing and Buyer agree that each party will treat this Letter
Agreement and the information contained herein as confidential and will not,
without the other party's prior written consent, disclose this Letter Agreement
or any information contained herein to any other person or entity except as may
be required by applicable law or governmental regulations.
Very truly yours,
THE BOEING COMPANY
By /s/ Henry H. Hart
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 23, 2001
CONTINENTAL AIRLINES, INC.
By /s/ Gerald Laderman
Its Senior Vice President - Finance
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