SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 18, 1997
QMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-9348 63-0737870
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Magnum Pass
Mobile, Alabama 36618
(Address of principal executive offices)
Registrant's telephone number, including area code 334-633-4300
Item 2. Acquisition or Disposition of Assets.
On February 18, 1997, the Registrant sold certain real
property (the "Property") in Mobile, Alabama to INK (AL) QRS 12-
21, Inc., an Alabama corporation ("Purchaser") and wholly owned
subsidiary of W.P. Carey and Co., Inc. The Property is located
at One Magnum Pass, Mobile, Alabama, and includes improvements
which the Registrant uses to house its corporate headquarters and
its engineering and manufacturing operations. The purchase price
for the conveyance of the Property was $13,874,000.00. $125,000
of the purchase price was held in escrow pursuant to an Escrow
Agreement between Registrant and Purchaser (the "Escrow
Agreement") and is to be used for certain remedial environmental
actions to be undertaken on the Property. The Escrow Agreement
is attached as Exhibit 2 to this report and is incorporated
herein by reference. The proceeds from the sale of the Property
are being used primarily to pay off existing indebtedness of the
Registrant.
Contemporaneously with the sale of the Property, the
Registrant entered into a Lease Agreement (the "Lease") with
Purchaser whereby Registrant would lease the Property from the
Purchaser. The Lease is for an initial term of fifteen years
with renewal options for five additional five year periods, and
the initial quarterly base rental amount is $422,343.75. The
Property will continue to be used by the Registrant for the same
purposes as prior to the transactions herein described. A copy
of the Lease is attached as Exhibit 1 to this report and is
incorporated herein by reference. Purchaser's lender,
Creditanstalt-Bankverein, an Austrian banking corporation,
("Lender"), required the Registrant to enter into a
Subordination, Non-Disturbance and Attornment Agreement (the
"SNDA"). The SNDA was executed by Lender, Purchaser and
Registrant and is attached as Exhibit 3 to this report and is
incorporated herein by reference.
In connection with the above described transactions, the
Registrant also issued to the Purchaser a Warrant, (the
"Warrant"), granting Purchaser the right to purchase up to
100,000 shares of the Registrant's common stock for $6.50 a
share. The exercise period of the Warrant expires in December,
2001. A copy of the Warrant is attached as Exhibit 4 to this
report and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
1. Lease Agreement dated as of February 18, 1997 between
Registrant and INK (AL) QRS 12-21, Inc.
2. Escrow Agreement dated as of February 18, 1997 between
Registrant and INK (AL) QRS 12-21, Inc.
3. Subordination, Non-Disturbance and Attornment Agreement
between Registrant, Creditanstalt-Bankverein and INK
(AL) QRS 12-21, Inc. dated as of February 18, 1997.
4. Warrant given by Registrant to INK (AL) QRS:12-21,
Inc. dated February 18, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
QMS, INC.
/s/ Gerald G. Roenker
Gerald G. Roenker
Executive Vice President
Date: March 4, 1997
EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
1. Lease Agreement dated as of
February 18, 1997 between
Registrant and INK (AL) QRS 12-21,
Inc.
2. Escrow Agreement dated as of
February 18, 1997 between
Registrant and INK (AL) QRS 12-21,
Inc.
3. Subordination, Non-Disturbance
and Attornment Agreement between
Registrant, Creditanstalt-
Bankverein and INK (AL) QRS 12-21,
Inc. dated as of February 18, 1997.
4. Warrant given by Registrant to
INK (AL) QRS 12-21, Inc. dated
February 18, 1997.
EXHIBIT 1
LEASE AGREEMENT
by and between
INK (AL) QRS 12-21, INC.,
an Alabama corporation
as LANDLORD
and
QMS, INC.,
a Delaware corporation,
as TENANT
Premises: Parcel A
Parcel B
Mobile, Alabama
Dated as of: February 18, 1997
TABLE OF CONTENTS
Page
Parties 1
1. Demise of Premises 1
2. Certain Definitions 1
3. Title and Condition 9
4. Use of Leased Premises; Quiet Enjoyment 10
5. Term 11
6. Basic Rent 12
7. Additional Rent 12
8. Net Lease; Non-Terminability 14
9. Payment of Impositions 15
10. Compliance with Laws and Easement Agreements;
Environmental Matters 16
11. Liens; Recording and Title 18
12. Maintenance and Repair 19
13. Alterations and Improvements 19
14. Permitted Contests 20
15. Indemnification 21
16. Insurance 23
17. Casualty and Condemnation 26
18. Termination Events 28
19. Restoration 29
20. Intentionally Deleted 31
21. Assignment and Subletting; Prohibition
against Leasehold Financing 31
22. Events of Default 33
23. Remedies and Damages Upon Default 35
24. Notices 39
25. Estoppel Certificate 39
26. Surrender 40
27. No Merger of Title 40
28. Books and Records 40
29. Determination of Value 41
30. Non-Recourse as to Landlord 43
31. Financing 43
32. Subordination 44
33. Financial Covenants 44
34. Tax Treatment; Reporting 44
35. Right of First Refusal 44
36. Right of First Refusal to Purchase Excess Land 46
37. Security Deposit 49
38. Miscellaneous 49
EXHIBITS
Exhibit "A" - Parcel A Premises, Parcel B Premises
Excess Land
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Schedule of Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Allocation of Basic Rent
Exhibit "F" - Allocation of Acquisition Cost
Exhibit "G" - Financial Covenants
Exhibit "H" - Termination Values
LEASE AGREEMENT, made as of this day of ,
1997, between INK (AL) QRS 12-21, INC., an Alabama corporation
("Landlord"), with an address c/o W. P. Carey & Co., Inc., 50
Rockefeller Plaza, 2nd Floor, New York, New York 10020, and QMS,
INC., a Delaware corporation ("Tenant"), with an address at One
Magnum Pass, Mobile, Alabama 36618.
In consideration of the rents and provisions herein
stipulated to be paid and performed, Landlord and Tenant hereby
covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets
to Tenant, and Tenant hereby takes and leases from Landlord, for
the term and upon the provisions hereinafter specified, the
following described property (hereinafter referred to
collectively as the "Leased Premises" and individually as the
"Parcel A Premises" (comprised of four buildings used for
(w) manufacturing and containing approximately 95,550 square
feet, (x) warehouse and containing approximately 52,860 square
feet, (y) technical services and containing approximately 19,000
square feet) and (z) engineering and containing approximately
50,135 square feet and the "Parcel B Premises" (comprised of one
building used for office/headquarters and containing
approximately 60,164 square feet: (a) the premises described in
Exhibit "A" hereto, together with the Appurtenances
(collectively, the "Land"); (b) the buildings, structures and
other improvements now or hereafter constructed on the Land
(collectively, the "Improvements"); and (c) the fixtures,
machinery, equipment and other property described in Exhibit "B"
hereto (collectively, the "Equipment").
2. Certain Definitions.
"Acquisition Cost" of each of the Related
Premises shall mean the amount set forth opposite such premises
on Exhibit "F" hereto.
"Additional Rent" shall mean Additional Rent as defined
in Paragraph 7.
"Adjoining Property" shall mean all
sidewalks, driveways, curbs, gores and vault spaces adjoining any
of the Leased Premises.
"Affected Premises" shall mean Affected
Premises as defined in Paragraph 18.
"Alterations" shall mean all changes,
additions, improvements or repairs to, all alterations,
reconstructions, renewals, replacements or removals of and all
substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and
non-structural, and ordinary and extraordinary.
"Appurtenances" shall mean all tenements,
hereditaments, easements, rights-of-way, rights, privileges in
and to the Land, including (a) easements over other lands granted
by any Easement Agreement and (b) any streets, ways, alleys,
vaults, gores or strips of land adjoining the Land.
"Assignment" shall mean any assignment of
rents and leases from Landlord to a Lender which (a) encumbers
any of the Leased Premises and (b) secures Landlord's obligation
to repay a Loan, as the same may be amended, supplemented or
modified from time to time.
"Basic Rent" shall mean Basic Rent as defined
in Paragraph 6.
"Basic Rent Payment Dates" shall mean the
Basic Rent Payment Dates as defined in Paragraph 6.
"Business days" shall mean any day except
Saturday, Sunday and days that are designated national holidays.
"Casualty" shall mean any loss of or damage
to any property (including the Leased Premises) included within
or related to the Leased Premises or arising from the Adjoining
Property.
"Commencement Date" shall mean Commencement
Date as defined in Paragraph 5.
"Condemnation" shall mean a Taking.
"Condemnation Notice" shall mean notice of
the institution of or intention to institute any proceeding for
Condemnation.
"Costs" of a Person shall mean all reasonable
costs and expenses incurred by such Person directly associated
with the specified occurrence to which such Costs relate.
"Covenants" shall mean the covenants and
agreements described on Exhibit "G".
"Default Rate" shall mean the Default Rate as
defined in Paragraph 7(a)(iv).
"Easement Agreement" shall mean any
conditions, covenants, restrictions, easements, declarations,
licenses and other agreements listed as Permitted Encumbrances or
as may hereafter affect the Leased Premises.
"Environmental Law" shall mean (i) whenever
enacted or promulgated, any applicable federal, state, foreign
and local law, statute, ordinance, rule, regulation, license,
permit, authorization, approval, consent, court order, judgment,
decree, injunction, code, requirement or agreement with any
governmental entity, (x) relating to pollution (or the cleanup
thereof), or the protection of air, water vapor, surface water,
groundwater, drinking water supply, land (including land surface
or subsurface), plant, aquatic and animal life from injury caused
by a Hazardous Substance or (y) concerning exposure to, or the
use, containment, storage, recycling, reclamation, reuse,
treatment, generation, discharge, transportation, processing,
handling, labeling, production, disposal or remediation of
Hazardous Substances, Hazardous Conditions or Hazardous
Activities, in each case as amended and as now or hereafter in
effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may
impose liability or obligations or injuries or damages due to or
threatened as a result of the presence of, exposure to, or
ingestion of, any Hazardous Substance. The term Environmental
Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act, the federal
Water Pollution Control Act, the federal Clean Air Act, the
federal Clean Water Act, the federal Resources Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the
federal Toxic Substance Control Act, the federal Insecticide,
Fungicide and Rodenticide Act, the federal Occupational Safety
and Health Act of 1970, the federal National Environmental Policy
Act and the federal Hazardous Materials Transportation Act, each
as amended and as now or hereafter in effect and any similar
state or local Law.
"Environmental Violation" shall mean any of
the following events which occurs during the Term or any Renewal
Term of this Lease: (a) any direct or indirect discharge,
disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting
of any Hazardous Substance at, upon, under, onto or within the
Leased Premises, or from the Leased Premises to the environment,
in violation of any Environmental Law or in excess of any
reportable quantity established under any Environmental Law or
which could result in any liability to Landlord, Tenant or
Lender, any Federal, state or local government or any other
Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (b) any
deposit, storage, dumping, placement or use of any Hazardous
Substance at, upon, under or within the Leased Premises or which
extends to any Adjoining Property in violation of any
Environmental Law or in excess of any reportable quantity
established under any Environmental Law or which could result in
any liability to any Federal, state or local government or to any
other Person for the costs of any removal or remedial action or
natural resources damage or for bodily injury or property damage,
(c) the abandonment or discarding of any barrels, containers or
other receptacles containing any Hazardous Substances in
violation of any Environmental Laws, (d) any activity, occurrence
or condition which could result in any liability, cost or expense
to Landlord or Lender or any other owner or occupier of the
Leased Premises, or which could result in a creation of a lien on
the Leased Premises under any Environmental Law, or (e) any
violation of or noncompliance with any Environmental Law.
"Equipment" shall mean the Equipment as
defined in Paragraph 1.
"Escrow Payments" shall mean Escrow Payments
as defined in Paragraph 9(b).
"Event of Default" shall mean an Event of
Default as defined in Paragraph 22(a).
"Excess Land" shall mean that portion of
Parcel A described in Exhibit "A" hereof.
"Excess Land Sale Contract" shall mean Excess
Land Sale Contract as defined in Paragraph 36.
"Fair Market Value" shall mean the fair
market value of the Excess Land as if unaffected and unencumbered
by this Lease and without consideration for any Improvements made
to the Excess Land by Tenant. Fair Market Value shall be
determined in accordance with the procedure specified in
Paragraph 29.
"Fair Market Value Date" shall mean the date
when the Fair Market Value is determined in accordance with
Paragraph 29.
"Federal Funds" shall mean federal or other
immediately available funds which at the time of payment are
legal tender for the payment of public and private debts in the
United States of America.
"GAAP" shall mean GAAP as defined in
Paragraph 28(a).
"Hazardous Activity" means any activity,
process, procedure or undertaking which directly or indirectly
(i) procures, generates or creates any Hazardous Substance;
(ii) causes or results in (or threatens to cause or result in)
the release, seepage, spill, leak, flow, discharge or emission of
any Hazardous Substance into the environment (including the air,
ground water, watercourses or water systems), (iii) involves the
containment or storage of any Hazardous Substance; or (iv) would
cause the Leased Premises or any portion thereof to become a
hazardous waste treatment, recycling, reclamation, processing,
storage or disposal facility within the meaning of any
Environmental Law.
"Hazardous Condition" means any condition
which would support any claim or liability under any
Environmental Law, including the presence of underground storage
tanks.
"Hazardous Substance" means (i) any
substance, material, product, petroleum, petroleum product,
derivative, compound or mixture, mineral (including asbestos),
chemical, gas, medical waste, or other pollutant, in each case
whether naturally occurring, man-made or the by-product of any
process, that is toxic, harmful or hazardous or acutely hazardous
to the environment or public health or safety or (ii) any
substance supporting a claim under any Environmental Law, whether
or not defined as hazardous as such under any Environmental Law.
Hazardous Substances include, without limitation, any toxic or
hazardous waste, pollutant, contaminant, industrial waste,
petroleum or petroleum-derived substances or waste, radon,
radioactive materials, asbestos, asbestos containing materials,
urea formaldehyde foam insulation, lead and polychlorinated
biphenyls.
"Impositions" shall mean the Impositions as
defined in Paragraph 9(a).
"Improvements" shall mean the Improvements as
defined in Paragraph 1.
"Indemnitee" shall mean an Indemnitee as
defined in Paragraph 15.
"Index" shall mean Index as defined in
Exhibit "D" hereto.
"Insurance Requirements" shall mean the
requirements of all insurance policies required to be maintained
in accordance with this Lease.
"Land" shall mean the Land as defined in
Paragraph 1.
"Law" shall mean any constitution, statute,
rule of law, code, ordinance, order, judgment, decree,
injunction, rule, regulation, policy, requirement or
administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority,
court or agency, now or hereafter enacted or in effect.
"Lease" shall mean this Lease Agreement.
"Lease Year" shall mean, with respect to the
first Lease Year, the period commencing on the Commencement Date
and ending at midnight on the last day of the twelfth (12th)
consecutive calendar month following the month in which the
Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.
"Leased Premises" shall mean the Leased
Premises as defined in Paragraph 1.
"Legal Requirements" shall mean the
requirements of all present and future Laws (including but not
limited to Environmental Laws and Laws relating to accessibility
to, usability by, and discrimination against, disabled
individuals) and all covenants, restrictions and conditions now
or hereafter of record which may be applicable to Tenant or to
any of the Leased Premises, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair
or restoration of any of the Leased Premises, even if compliance
therewith necessitates structural changes or improvements or
results in interference with the use or enjoyment of any of the
Leased Premises.
"Lender" shall mean any person or entity (and
their respective successors and assigns) which may, after the
date hereof, make a Loan to Landlord or is the holder of any
Note.
"Loan" shall mean any loan made by one or
more Lenders to Landlord, which loan is secured by a Mortgage and
an Assignment and evidenced by a Note.
"Monetary Obligations" shall mean Rent and
all other sums payable by Tenant under this Lease to Landlord, to
any third party on behalf of Landlord or to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of
trust from Landlord to a Lender which (a) encumbers any of the
Leased Premises and (b) secures Landlord's obligation to repay a
Loan, as the same may be amended, supplemented or modified.
"Net Award" shall mean (a) the entire award
payable to Landlord or Lender by reason of a Condemnation whether
pursuant to a judgment or by agreement or otherwise, or (b) the
entire proceeds of any insurance required under clauses (i), (ii)
(to the extent payable to Landlord or Lender), (iv), (v) or (vi)
of Paragraph 16(a), as the case may be, less any expenses
incurred by Landlord and Lender in collecting such award or
proceeds.
"Note" shall mean any promissory note
evidencing Landlord's obligation to repay a Loan, as the same may
be amended, supplemented or modified.
"Partial Casualty" shall mean any Casualty
which does not constitute a Termination Event.
"Partial Condemnation" shall mean any
Condemnation which does not constitute a Termination Event.
"Permitted Encumbrances" shall mean those
covenants, restrictions, reservations, liens, conditions and
easements and other encumbrances, other than any Mortgage or
Assignment, listed on Exhibit "C" hereto (but such listing shall
not be deemed to revive any such encumbrances that have expired
or terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual,
partnership, association, corporation or other entity.
"Prepayment Premium" shall mean any payment
(other than a payment of principal and/or interest which Landlord
is required to make under a Note or a Mortgage) by reason of any
prepayment by Landlord of any principal due under a Note or
Mortgage, and which may be (in lieu of such prepayment premium or
prepayment penalty) a "make whole" clause requiring a prepayment
premium in an amount sufficient to compensate the Lender for the
loss of the benefit of the Loan due to a prepayment.
"Present Value" of any amount shall mean such
amount discounted by a rate per annum which is the lower of
(a) the Prime Rate at the time such present value is determined
or (b) eight percent (8%) per annum.
"Prime Rate" shall mean the annual interest
rate as published, from time to time, in the Wall Street Journal
as the "Prime Rate" in its column entitled "Money Rate". The
Prime Rate may not be the lowest rate of interest charged by any
"large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event the
Wall Street Journal ceases publication or ceases to publish the
"Prime Rate" as described above, the Prime Rate shall be the
average per annum discount rate (the "Discount Rate") on
ninety-one (91) day bills ("Treasury Bills") issued from time to
time by the United States Treasury at its most recent auction,
plus three hundred (300) basis points. If no such 91-day
Treasury Bills are then being issued, the Discount Rate shall be
the discount rate on Treasury Bills then being issued for the
period of time closest to ninety-one (91) days.
"Related Premises" shall mean either one of
the Parcel A Premises or Parcel B Premises.
"Remaining Premises" shall mean the Related
Premises that are not Affected Premises under Paragraph 18 or, if
applicable, the Retained Premises (as defined in Paragraph 36).
"Renewal Term" shall mean Renewal Term as
defined in Paragraph 5(b).
"Rent" shall mean, collectively, Basic Rent
and Additional Rent.
"Sale Contract" shall mean Sale Contract as
defined in Paragraph 35.
"Security Deposit" shall mean Security
Deposit as defined in Paragraph 37.
"Site Assessment" shall mean a Site
Assessment as defined in Paragraph 10(c).
"State" shall mean the State of Alabama.
"Subsidiary" shall mean Subsidiary as defined
in the Covenants.
"Surviving Obligations" shall mean any
obligations of Tenant under this Lease, actual or contingent,
which arise on or prior to the expiration or prior termination of
this Lease or which survive such expiration or termination by
their own terms.
"Taking" shall mean (a) any taking or loss of
use of all or a portion of any of the Leased Premises (i) in or
by condemnation or other eminent domain proceedings pursuant to
any Law, general or special, or (ii) by reason of any agreement
with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any
other means, or (b) any de facto condemnation. The Taking shall
be considered to have taken place as of the earlier of the date
actual physical possession is taken by the condemnor, or the date
on which the right to compensation and damages accrues under the
law applicable to the Leased Premises.
"Term" shall mean the Term as defined in
Paragraph 5.
"Termination Amount" shall mean the sum of
the applicable amount specified on Exhibit "H" hereto and the
applicable Prepayment Premium which Landlord will be required to
pay in prepaying any Loan with proceeds of the Termination
Amount.
"Termination Date" shall mean Termination
Date as defined in Paragraph 18.
"Termination Event" shall mean a Termination
Event as defined in Paragraph 18.
"Termination Notice" shall mean Termination
Notice as defined in Paragraph 18(a).
3. Title and Condition.
(a) The Leased Premises are demised and let
subject to (i) the rights of any Persons in possession of the Leased
Premises, (ii) the existing state of title of any of the Leased
Premises, including any Permitted Encumbrances, (iii) any state
of facts which an accurate survey or physical inspection of the
Leased Premises might show, (iv) all Legal Requirements,
including any existing violation of any thereof, and (v) the
condition of the Leased Premises as of the commencement of the
Term, without representation or warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises
is in good condition and repair at the inception of this Lease. LANDLORD
LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED
PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER
ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT
MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE
MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR
REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY
PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR
PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE
WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION,
(x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION,
(xiii) DURABILITY, (xiv) OPERATION, (xv) THE EXISTENCE OF ANY
HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR
(xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL
REQUIREMENT; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY
TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES IS OF ITS
SELECTION AND TO ITS SPECIFICATIONS AND THAT THE LEASED PREMISES
HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES
OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE
ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY
IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN
NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND
NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE
UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN
EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant
has examined the title to the Leased Premises prior to the execution
and delivery of this Lease and has found the same to be satisfactory
for the purposes contemplated hereby. Tenant acknowledges that
(i) fee simple title (both legal and equitable) is in Landlord
and, except as provided in Paragraphs 35 and 36 hereof with
respect to certain rights of refusal to purchase the Leased
Premises or the Excess Land, that Tenant has only the leasehold
right of possession and use of the Leased Premises as provided
herein, (ii) to the best of Tenant's knowledge, the Improvements
conform to all material Legal Requirements and all Insurance
Requirements, (iii) all easements necessary or appropriate for
the use or operation of the Leased Premises have been obtained,
(iv) all contractors and subcontractors who have performed work
on or supplied materials to the Leased Premises have been fully
paid, and all materials and supplies have been fully paid for,
(v) the Improvements have been fully completed in all material
respects in a workmanlike manner of first class quality, and
(vi) all Equipment necessary or appropriate for the use or
operation of the Leased Premises has been installed and is
presently fully operative in all material respects.
(d) Landlord hereby assigns to Tenant, without
recourse or warranty whatsoever, all warranties, guaranties, indemnities
and similar rights which Landlord may have against any manufacturer,
seller, engineer, contractor or builder in respect of any of the
Leased Premises. Such assignment shall remain in effect until an
Event of Default occurs or until the expiration or earlier
termination of this Lease, whereupon such assignment shall cease
and all of said warranties, guaranties, indemnities and other
rights shall automatically revert to Landlord.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises
for manufacturing, warehouse, office and retail use, including
employee amenities such as a cafeteria and sports facilities and
uses ancillary to the foregoing and for no other purpose without
the prior written consent of Landlord, which shall not be
unreasonably withheld. Tenant shall not use or occupy or permit
any of the Leased Premises to be used or occupied, nor do or
permit anything to be done in or on any of the Leased Premises,
in a manner which would or might (i) violate any Law or Legal
Requirement, (ii) make void or voidable or cause any insurer to
cancel any insurance required by this Lease, or make it difficult
or impossible to obtain any such insurance at commercially
reasonable rates, (iii) cause structural injury to any of the
Improvements or (iv) constitute a public or private nuisance or
waste.
(b) Subject to the provisions hereof, so long as
no Event of Default has occurred and is continuing, Tenant shall quietly
hold, occupy and enjoy the Leased Premises throughout the Term,
without any hindrance, ejection or molestation by Landlord or
other Persons claiming by or under Landlord with respect to
matters that arise after the date hereof, provided that Landlord
or its agents may enter upon and examine any of the Leased
Premises at such reasonable times as Landlord may select and upon
reasonable notice to Tenant (except in the case of an emergency,
in which case no notice shall be required) for the purpose of
inspecting the Leased Premises, verifying compliance or
non-compliance by Tenant with its obligations hereunder and the
existence or non-existence of an Event of Default or event which
with the passage of time and/or notice would constitute an Event
of Default, showing the Leased Premises to prospective Lenders
and purchasers and taking such other action with respect to the
Leased Premises as is permitted by any provision hereof.
Notwithstanding anything herein to the contrary, excluding,
however, Landlord's right of re-entry and other possessory rights
arising by reason of an Event of Default, wherever in this Lease
Landlord or any other Person is given the right to inspect,
review or any other right to enter the Leased Premises, exercise
of such right shall be subject to Tenant's customary conditions
and requirements respecting security and confidentiality
concerning the operation of its business on the Leased Premises.
5. Term.
(a) Subject to the provisions hereof, Tenant shall
have and hold the Leased Premises for an initial term (such term, as
extended or renewed in accordance with the provisions hereof,
being called the "Term") commencing on the date hereof (the
"Commencement Date") and ending on the last day of the one
hundred eightieth (180th) calendar month next following the date
hereof (the "Expiration Date").
(b) Provided that if, on or prior to the Expiration
Date or any other Renewal Date (as hereinafter defined) this Lease shall
not have been terminated pursuant to any provision hereof, then
on the Expiration Date and on the fifth (5th), tenth (10th),
fifteen (15th), twentieth (20th) and twenty-fifth (25th)
anniversaries of the Expiration Date (the Expiration Date and
each such anniversary being a "Renewal Date"), the Term shall be
deemed to have been automatically extended for an additional
period of five (5) years (each such five (5) year period, a
"Renewal Term"), unless Tenant shall notify Landlord in writing
in recordable form at least one (1) year prior to the next
Renewal Date that Tenant is terminating this Lease as of the next
Renewal Date. Any such extension of the Term shall be subject to
all of the provisions of this Lease, as the same may be amended,
supplemented or modified.
(c) If Tenant exercises its option not to extend
or further extend the Term, or if an Event of Default occurs, then
Landlord shall have the right during the remainder of the Term then in
effect and, in any event, Landlord shall have the right during
the last year of the Term, to (i) advertise the availability of
the Leased Premises for sale or reletting and to erect upon the
Leased Premises signs indicating such availability and (ii) show
the Leased Premises to prospective purchasers or tenants or
their agents at such reasonable times as Landlord may select.
6. Basic Rent. Tenant shall pay to Landlord, as
annual rent for the Leased Premises during the Term, the amounts
determined in accordance with Exhibit "D" hereto ("Basic Rent"),
commencing on the first day of March, 1997, and continuing on the
first day of each June, September, December and March thereafter
during the Term (each such day being a "Basic Rent Payment
Date"). Each such rental payment shall be made, at Landlord's
sole discretion, to Landlord at its address set forth above
and/or to one other Person, at such address and in such
proportions as Landlord may direct by fifteen (15) days' prior
written notice to Tenant (in which event Tenant shall give
Landlord notice of each such payment concurrent with the making
thereof), by a check mailed at least ten (10) days before the
applicable Basic Rent Payment Date, or in Federal Funds. Pro
rata Basic Rent for the period from February 19, 1997 through the
last day of the month hereof shall be paid on the date hereof.
7. Additional Rent.
(a) Tenant shall pay and discharge, as
additional rent (collectively, "Additional Rent"):
(i) except as otherwise specifically provided
herein, all costs and expenses of Tenant and Landlord which are incurred
in connection or associated with (A) the ownership, use, non-use,
occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of
any of the Leased Premises, (B) the performance of any of
Tenant's obligations under this Lease, (C) any sale or other
transfer of any of the Leased Premises to Tenant under this
Lease, (D) any Condemnation proceedings, (E) the adjustment,
settlement or compromise of any insurance claims involving or
arising from any of the Leased Premises, (F) the prosecution,
defense or settlement of any litigation involving or arising from
any of the Leased Premises or this Lease provided that such
litigation relates to any matter, action or non-action that
occurs during the Term or any Renewal Term or is otherwise a
Surviving Obligation, or the sale of the Leased Premises to
Landlord, (G) the exercise or enforcement by Landlord, its
successors and assigns, of any of its rights under this Lease,
(H) any amendment to or modification or termination of this Lease
made at the request of Tenant, (I) Costs of Landlord's counsel
incurred in connection with any act undertaken by Landlord (or
its counsel) at the request of Tenant, or incurred in connection
with any act of Landlord performed on behalf of Tenant, and
(J) any other items specifically required to be paid by Tenant
under this Lease;
(ii) the amounts payable to any Indemnitee
pursuant to Paragraph 15 hereof;
(iii) after the date all or any portion of
any installment of Basic Rent is due and not paid, an amount equal to
five percent (5%) of the amount of such unpaid installment or portion
thereof (the "Late Charge"), provided, however, that with respect
to the first late payment of all or any portion of any
installment of Basic Rent in any Lease Year, the Late Charge
shall not be due and payable unless the Basic Rent has not been
paid within five (5) days' following the due date thereof, and in
addition, Tenant shall be entitled to a second five (5) day grace
period in a Lease Year before a Late Charge is payable if Tenant
furnishes Landlord proof that such payment of Basic Rent was
timely posted and properly addressed (in the case of mailing) or
timely initiated (if payment is made in Federal Funds);
(iv) a sum net of the Late Charge and Default Rate
(including any late charge, default penalties, interest and fees of Lender's
counsel) which are payable by Landlord to any Lender under any
Note by reason of Tenant's late payment or non-payment of Basic
Rent or by reason of an Event of Default; and
(v) interest at the rate (the "Default Rate") of
five percent (5%) over the Prime Rate per annum on the following sums until
paid in full: (A) after any Event of Default, all overdue
installments of Basic Rent from the respective due dates thereof,
(B) all overdue amounts of Additional Rent relating to
obligations which Landlord shall have paid on behalf of Tenant,
from the date of payment thereof by Landlord, and (C) all other
overdue amounts of Additional Rent, from the date when any such
amount becomes overdue.
(b) Tenant shall pay and discharge (i) any
Additional Rent referred to in Paragraph 7(a)(i) when the same shall
become due, provided that amounts which are billed to Landlord, but not
to Tenant, shall be paid within fifteen (15) days after Landlord's
demand for payment thereof, and (ii) any other Additional Rent,
within fifteen (15) days after Landlord's demand for payment
thereof.
(c) In no event shall amounts payable under
Paragraph 7(a)(iii), (iv) and (v) exceed the maximum amount permitted by
applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and, except as otherwise
specifically provided hereunder, all Monetary Obligations shall
be paid without notice or demand and without set-off, abatement,
suspension, deferment, diminution, deduction or reduction
(collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein,
this Lease and the rights of Landlord and the obligations of Tenant
hereunder shall not be affected by any event or for any reason,
including the following: (i) any damage to or theft, loss or
destruction of any of the Leased Premises, (ii) any Condemnation,
(iii) Tenant's acquisition of ownership of any of the Leased
Premises other than pursuant to an express provision of this
Lease, (iv) any default on the part of Landlord hereunder or
under any Note, Mortgage, Assignment or any other agreement,
(v) any latent or other defect in any of the Leased Premises,
(vi) the breach of any warranty of any seller or manufacturer of
any of the Equipment, (vii) any violation of any provision of
this Lease by Landlord, (viii) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation,
dissolution or winding-up of, or other proceeding affecting
Landlord, (ix) the exercise of any remedy, including foreclosure,
under any Mortgage or Assignment, (x) any action with respect to
this Lease (including the disaffirmance hereof) which may be
taken by Landlord, any trustee, receiver or liquidator of
Landlord or any court under the Federal Bankruptcy Code or
otherwise, (xi) any interference with Tenant's use of the Leased
Premises, (xii) market or economic changes or (xiii) any other
cause, whether similar or dissimilar to the foregoing, any
present or future Law to the contrary notwithstanding.
(c) The obligations of Tenant hereunder shall be
separate and independent covenants and agreements, all Monetary
Obligations shall continue to be payable in all events (or, in
lieu thereof, Tenant shall pay amounts equal thereto), and the
obligations of Tenant hereunder shall continue unaffected unless
the requirement to pay or perform the same shall have been
terminated pursuant to an express provision of this Lease. All
Rent payable by Tenant hereunder shall constitute "rent" for all
purposes (including Section 502(b)(6) of the Bankruptcy Code).
(d) Except as otherwise expressly provided herein,
Tenant shall have no right and hereby waives all rights which it may
have under any Law (i) to quit, terminate or surrender this Lease
or any of the Leased Premises, or (ii) to any Set-Off of any
Basic Rent, Impositions and premiums for the insurance required
under Paragraph 16 hereof and any other Additional Rent payable
directly to Landlord or any other Indemnitee.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are
due thereon, pay and discharge all taxes (including real and personal
property, franchise, sales and rent taxes), all charges for any
easement or agreement maintained for the benefit of any of the
Leased Premises, all assessments and levies, all permit,
inspection and license fees, all rents and charges for water,
sewer, utility and communication services relating to any of the
Leased Premises, all ground rents and all other public charges
whether of a like or different nature, even if unforeseen or
extraordinary, imposed upon or assessed against (i) Tenant,
(ii) Tenant's leasehold interest in the Leased Premises,
(iii) any of the Leased Premises, (iv) Landlord as a result of or
arising in respect of the acquisition, ownership, occupancy,
leasing, use, possession or sale of any of the Leased Premises,
any activity conducted on any of the Leased Premises, or the
Rent, or (v) any Lender by reason of any Note, Mortgage,
Assignment or other document evidencing or securing a Loan and
which (as to this clause (v)) are normal and customary and which
Landlord has agreed, and borrowers generally agree, to pay
(collectively, the "Impositions"); provided, that nothing herein
shall obligate Tenant to pay (A) income, excess profits,
franchise or other taxes of Landlord which are determined on the
basis of Landlord's net income or net worth (unless such taxes
are in lieu of or a substitute for any other tax, assessment or
other charge upon or with respect to the Leased Premises which,
if it were in effect, would be payable by Tenant under the
provisions hereof or by the terms of such tax, assessment or
other charge), (B) any estate, inheritance, succession, gift or
similar tax imposed on Landlord or (C) any capital gains tax or
other tax (except for transfer taxes if the sale is to Tenant or
its designee) imposed on Landlord in connection with the sale of
the Leased Premises to any Person. If any Imposition may be paid
in installments without interest or penalty, Tenant shall have
the option to pay such Imposition in installments; in such event,
Tenant shall be liable only for those installments which accrue
or become due and payable during the Term. Tenant shall prepare
and file all tax reports required by governmental authorities
which relate to the Impositions. Tenant shall deliver to
Landlord (1) copies of all settlements and notices pertaining to
the Impositions which may be issued by any governmental authority
within ten (10) days after Tenant's receipt thereof, (2) receipts
for payment of all taxes required to be paid by Tenant hereunder
within thirty (30) days after the due date thereof and
(3) receipts for payment of all other Impositions within ten (10)
days after Landlord's request therefor.
(b) Landlord shall have the right if at any time
required by a Lender and, in any event, during the occurrence of an Event
of Default to require Tenant to pay to Landlord an additional
monthly sum (each an "Escrow Payment") sufficient to pay the
Escrow Charges (as hereinafter defined) as they become due. As
used herein, "Escrow Charges" shall mean real estate taxes on the
Leased Premises or payments in lieu thereof and premiums on any
insurance required by this Lease. Landlord shall determine the
amount of the Escrow Charges and of each Escrow Payment based
upon current or projected Escrow Charges. As long as the Escrow
Payments are being held by Landlord the Escrow Payments shall not
be commingled with other funds of Landlord or other Persons and
interest thereon shall accrue for the benefit of Tenant from the
date such monies are received and invested until the date such
monies are disbursed to pay Escrow Charges. Landlord shall apply
the Escrow Payments to the payment of the Escrow Charges in such
order or priority as Landlord shall determine or as required by
law. If at any time the Escrow Payments theretofore paid to
Landlord shall be insufficient for the payment of the Escrow
Charges, Tenant, within ten (10) days after Landlord's demand
therefor, shall pay the amount of the deficiency to Landlord.
10. Compliance with Laws and Easement Agreements;
Environmental Matters.
(a) Tenant shall, at its expense, comply with and
conform to, and cause the Leased Premises and any other Person occupying
any part of the Leased Premises to comply with and conform to,
all Insurance Requirements and Legal Requirements (including all
applicable Environmental Laws). Tenant shall not at any time
(i) cause, permit or suffer to occur any Environmental Violation
or (ii) permit any sublessee, assignee or other Person occupying
the Leased Premises under or through Tenant to cause, permit or
suffer to occur any Environmental Violation.
(b) Tenant, at its sole cost and expense, will at
all times promptly and faithfully abide by, discharge and perform all
of the covenants, conditions and agreements contained in any
Easement Agreement on the part of Landlord or the occupier to be
kept and performed thereunder. Tenant will not alter, modify,
amend or terminate any Easement Agreement, give any consent or
approval thereunder, or enter into any new Easement Agreement
without, in each case, the prior written consent of Landlord.
(c) Upon prior written notice from Landlord,
Tenant shall permit such persons as Landlord may designate ("Site
Reviewers") to visit the Leased Premises and perform, as agents of
Tenant, environmental site investigations and assessments ("Site
Assessments") on the Leased Premises for the purpose of
determining whether there exists on the Leased Premises any
Environmental Violation or any condition which could result in
any Environmental Violation. Such Site Assessments may include
both above and below the ground testing for Environmental
Violations and such other tests as may be necessary, in the
opinion of the Site Reviewers, to conduct the Site Assessments.
Tenant shall supply to the Site Reviewers such historical and
operational information regarding the Leased Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site
Assessments, and shall make available for meetings with the Site
Reviewers appropriate personnel having knowledge of such matters.
Provided that a reasonable basis for any proposed Site Assessment
shall have been first disclosed to Tenant, the cost of performing
and reporting Site Assessments shall be paid by Tenant.
(d) If an Environmental Violation occurs or is
found to exist and, in the reasonable judgment of the Site Reviewer,
the cost of remediation of the same is likely to exceed $100,000,
Tenant shall provide to Landlord, within ten (10) days after
Landlord's request therefor, adequate financial assurances that
Tenant will effect such remediation in accordance with applicable
Environmental Laws. Such financial assurances shall be a bond or
letter of credit reasonably satisfactory to Landlord in form and
substance and in an amount equal to or greater than Landlord's
reasonable estimate, based upon a Site Assessment performed
pursuant to Paragraph 10(c), of the anticipated cost of such
remedial action.
(e) Notwithstanding any other provision of this
Lease, if an Environmental Violation occurs or is found to exist and
the Term would otherwise terminate or expire, then, at the option of
Landlord, the Term shall be automatically extended beyond the
date of termination or expiration and this Lease shall remain in
full force and effect beyond such date until the earlier to occur
of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) the date specified in a
written notice from Landlord to Tenant terminating this Lease.
(f) If Tenant fails to correct any Environmental
Violation which occurs or is found to exist, Landlord shall have the
right (but no obligation) to take any and all actions as Landlord shall
deem necessary or advisable in order to cure such Environmental
Violation.
(g) Tenant shall notify Landlord immediately after
becoming aware of any Environmental Violation (or alleged Environmental
Violation) or noncompliance with any of the covenants contained
in this Paragraph 10 and shall forward to Landlord immediately
upon receipt thereof copies of all orders, reports, notices,
permits, applications or other communications relating to any
such violation or noncompliance.
(h) All future leases, subleases or concession
agreements relating to the Leased Premises entered into by Tenant shall
contain covenants of the other party to not at any time (i) cause
any Environmental Violation to occur or (ii) permit any Person
occupying the Leased Premises through said subtenant or
concessionaire to cause any Environmental Violation to occur.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly,
create or permit to be created or to remain and shall promptly
discharge or remove any lien, levy or encumbrance on any of the
Leased Premises or on any Rent or any other sums payable by Tenant under
this Lease, other than any Mortgage or Assignment, the Permitted
Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of
Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE
LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS'
OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL
ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE
LEASED PREMISES. LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S
REQUEST TENANT SHALL PROMPTLY, POST ANY NOTICES ON THE LEASED
PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD.
(b) Tenant shall execute, deliver and record,
file or register (collectively, "record") all such instruments as may be
required or permitted by any present or future Law in order to
evidence the respective interests of Landlord and Tenant in the
Leased Premises, and shall cause a memorandum of this Lease (or,
if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and
in such places as may be required or permitted by any present or
future Law in order to protect the validity and priority of this
Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain the
Leased Premises and the Adjoining Property in as good repair and
appearance as they are in on the date hereof and fit to be used for
their intended use in accordance with the better of the practices
generally recognized as then acceptable by other companies in its
industry or observed by Tenant with respect to the other real
properties owned or operated by it, and, in the case of the
Equipment, in as good mechanical condition as it was on the later
of the date hereof or the date of its installation, except for
ordinary wear and tear. Tenant shall take every other action
necessary or appropriate for the preservation and safety of the
Leased Premises. Tenant shall promptly make all Alterations of
every kind and nature, whether foreseen or unforeseen, which may
be required to comply with the foregoing requirements of this
Paragraph 12(a). Landlord shall not be required to make any
Alteration, whether foreseen or unforeseen, or to maintain any of
the Leased Premises or Adjoining Property in any way, and Tenant
hereby expressly waives any right which may be provided for in
any Law now or hereafter in effect to make Alterations at the
expense of Landlord or to require Landlord to make Alterations.
Any Alteration made by Tenant pursuant to this Paragraph 12 shall
be made in conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed,
shall (i) encroach upon any setback or any property, street or
right-of-way adjoining the Leased Premises, (ii) violate the
provisions of any restrictive covenant affecting the Leased
Premises, (iii) hinder or obstruct any easement or right-of-way
to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant
shall, promptly after receiving notice or otherwise acquiring
knowledge thereof, either (A) obtain from all necessary parties
waivers or settlements of all claims, liabilities and damages
resulting from each such encroachment, violation, hindrance,
obstruction or impairment, whether the same shall affect
Landlord, Tenant or both, or (B) take such action as shall be
necessary to remove all such encroachments, hindrances or
obstructions and to end all such violations or impairments,
including, if necessary, making Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having
obtained the prior written consent of Landlord and Lender, to make
(i) Alterations or a series of related Alterations that, as to
any such Alterations or series of related Alterations, do not
cost in excess of $500,000 and (ii) to install Equipment in the
Improvements or accessions to the Equipment that, as to such
Equipment or accessions, do not cost in excess of $500,000, so
long as at the time of construction or installation of any such
Equipment or Alterations no Event of Default exists and the value
and utility of the Leased Premises is not diminished thereby. If
the cost of any Alterations, series of related Alterations,
Equipment or accessions thereto is in excess of $500,000, the
prior written approval of Landlord shall be required, such
approval not to be unreasonably withheld, delayed or conditioned.
Tenant shall not construct upon the Land any additional buildings
without having first obtained the prior written consent of
Landlord, which consent shall not be unreasonably withheld.
(b) If Tenant makes any Alterations pursuant to
this Paragraph 13 or as required by Paragraph 12 or 17 (such
Alterations and actions being hereinafter collectively referred
to as "Work"), whether or not Landlord's consent is required,
then (i) the market value of the Leased Premises shall not be
lessened by any such Work or its usefulness impaired, (ii) all
such Work shall be performed by Tenant in a good and workmanlike
manner, (iii) all such Work shall be expeditiously completed in
compliance with all Legal Requirements, (iv) all such Work shall
comply with the Insurance Requirements, (v) if any such Work
involves the replacement of Equipment or parts thereto, all
replacement Equipment or parts shall have a value and useful life
equal to the greater of (A) the value and useful life on the date
hereof of the Equipment being replaced or (B) the value and
useful life of the Equipment being replaced immediately prior to
the occurrence of the event which required its replacement,
(vi) Tenant shall promptly discharge or remove all liens filed
against any of the Leased Premises arising out of such Work,
(vii) Tenant shall procure and pay for all permits and licenses
required in connection with any such Work, (viii) all such Work
shall be the property of Landlord and shall be subject to this
Lease, and Tenant shall execute and deliver to Landlord any
document requested by Landlord evidencing the assignment to
Landlord of all estate, right, title and interest (other than the
leasehold estate created hereby) of Tenant or any other Person
thereto or therein, and (ix) if the cost of such Work is
reasonably estimated to exceed $500,000, Tenant shall comply, to
the extent requested by Landlord or required by this Lease, with
the provisions of Paragraph 19(a), whether or not such Work
involves restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other
provision of this Lease, Tenant shall not be required to (a) pay
any Imposition, (b) discharge or remove any lien referred to in
Paragraph 11 or 13 or (c) take any action with respect to any
encroachment, violation, hindrance, obstruction or impairment
referred to in Paragraph 12(b) (such non-compliance with the
terms hereof being hereinafter referred to collectively as
"Permitted Violations"), so long as at the time of such contest
no Event of Default exists and so long as Tenant shall contest,
in good faith, the existence, amount or validity thereof, the
amount of the damages caused thereby, or the extent of its or
Landlord's liability therefor by appropriate proceedings which
shall operate during the pendency thereof to prevent or stay
(i) the collection of, or other realization upon, the Permitted
Violation so contested, (ii) the sale, forfeiture or loss of any
of the Leased Premises or any Rent to satisfy or to pay any
damages caused by any Permitted Violation, (iii) any interference
with the use or occupancy of any of the Leased Premises, (iv) any
interference with the payment of any Rent, (v) the cancellation
or increase in the rate of any insurance policy or a statement by
the carrier that coverage will be denied or (vi) the enforcement
or execution of any injunction, order or Legal Requirement with
respect to the Permitted Violation. Tenant shall provide
Landlord security which is satisfactory, in Landlord's reasonable
judgment, to assure that such Permitted Violation is corrected,
including all Costs, interest and penalties that may be incurred
or become due in connection therewith. While any proceedings
which comply with the requirements of this Paragraph 14 are
pending and the required security is held by Landlord, Landlord
shall not have the right to correct any Permitted Violation
thereby being contested unless Landlord is required by law to
correct such Permitted Violation and Tenant's contest does not
prevent or stay such requirement as to Landlord. Each such
contest shall be promptly and diligently prosecuted by Tenant to
a final conclusion, except that Tenant, so long as the conditions
of this Paragraph 14 are at all times complied with, has the
right to attempt to settle or compromise such contest through
negotiations. Tenant shall pay any and all losses, judgments,
decrees and Costs of Landlord and Tenant in connection with any
such contest and shall, promptly after the final determination of
such contest, fully pay and discharge the amounts which shall be
levied, assessed, charged or imposed or be determined to be
payable therein or in connection therewith, together with all
penalties, fines, interest and the aforesaid Costs thereof or in
connection therewith, and perform all acts the performance of
which shall be ordered or decreed as a result thereof. No such
contest shall subject Landlord to the risk of any civil penalties
or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, defend,
save and hold harmless Landlord, Lender and all other Persons described
in Paragraph 30 (each an "Indemnitee") from and against any and all
liabilities, losses, damages (including punitive damages),
penalties, Costs (including attorneys' fees and costs), causes of
action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused (unless caused by the gross
negligence or willful misconduct of the Indemnitee seeking the
benefits of this Paragraph 15), without regard to the form of
action and whether based on strict liability, negligence or any
other theory of recovery at law or in equity, arising from
(i) any matter pertaining to the acquisition (or the negotiations
leading thereto), ownership, use, non-use, occupancy, operation,
condition, design, construction, maintenance, repair or
restoration of the Leased Premises or Adjoining Property,
(ii) any injury to or death of any Person in any manner arising
from the Leased Premises or Adjoining Property, whether or not
Indemnitee has or should have knowledge or notice of any defect
or condition causing or contributing to such injury or death of
any Person, (iii) any violation by Tenant of any provision of
this Lease, any contract or agreement to which Tenant is a party,
any Legal Requirement or any Permitted Encumbrance, (iv) any
underinsured or uninsured loss or damage to the Leased Premises
or (v) any alleged, threatened or actual Environmental Violation,
including (A) liability for response costs and for costs of
removal and remedial action incurred by the United States
Government, any state or local governmental unit or any other
Person by reason of any Environmental Violation, or damages from
injury to or destruction or loss of natural resources, including
the reasonable costs of assessing such injury, destruction or
loss, incurred pursuant to Section 107 of CERCLA by reason of any
Environmental Violation, or any successor section or act or
provision of any similar state or local Law, (B) liability for
costs and expenses of abatement, correction or clean-up, fines,
damages, response costs or penalties which arise from the
provisions of any of the other Environmental Laws and
(C) liability for personal injury or property damage arising
under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or
for carrying on of a dangerous activity.
(b) In case any action or proceeding is brought
against any Indemnitee by reason of any such claim, (i) Tenant shall
have the right, except in the event of a conflict of interest or a dispute
between Tenant and any such Indemnitee or during the continuance
of an Event of Default, to retain its own counsel and defend such
action (it being understood that Landlord may employ counsel of
its choice to monitor the defense of any such action) and
(ii) such Indemnitee shall notify Tenant to resist or defend such
action or proceeding and to retain counsel reasonably
satisfactory to such Indemnitee, and such Indemnitee will
cooperate and assist in the defense of such action or proceeding
if reasonably requested so to do by Tenant.
(c) The obligations of Tenant under this Paragraph 15
shall survive any termination, expiration or rejection in bankruptcy of
this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on
or in connection with the Leased Premises:
(i) Insurance against physical loss or damage
to the Improvements and Equipment as provided under a standard "All
Risk" property policy, including but not limited to flood (if the
Leased Premises is in a flood zone) and earthquake coverage. The
amounts of such insurance shall be not less than the actual
replacement cost of the Improvements and Equipment except that
Tenant shall maintain earthquake and flood coverage of not less
than $10,000,000. Such policies shall contain Replacement Cost
and Agreed Amount Endorsements and shall contain deductibles not
more than $50,000 per occurrence except that the deductible for
windstorms "named" by the National Weather Bureau shall be not
more than 2% per occurrence.
(ii) Commercial General Liability Insurance (including
but not limited to Incidental Medical Malpractice and Host Liquor
Liability) and Business Automobile Liability Insurance (including
Non-Owned and Hired Automobile Liability) against claims for
personal and bodily injury, death or property damage occurring
on, in or as a result of the use of the Leased Premises, in an
amount not less than $12,000,000 per occurrence/annual aggregate
and all other coverage extensions that are usual and customary
for properties of this size and type provided, however, that the
Landlord shall have the right to require such higher limits as
may be reasonable and customary for properties of this size and
type, as provided in the following clause (vii).
(iii) Worker's compensation insurance covering
all persons employed by Tenant in connection with any work done on or about
any of the Leased Premises for which claims for death, disease or
bodily injury may be asserted against Landlord, Tenant or any of
the Leased Premises or, in lieu of such worker's compensation
insurance, a program of self-insurance complying with the rules,
regulations and requirements of the appropriate agency of the
State.
(iv) Comprehensive Boiler and Machinery Insurance
on any of the Equipment or any other equipment on or in the Leased Premises,
in an amount not less than $1,000,000 per accident for damage to
property. Such policies shall include at least $5,000,000 per
accident for Off-Premises Service Interruption, Expediting
Expenses, Ammonia Contamination, and Hazardous Materials Clean-Up
Expense and may contain a deductible not to exceed $10,000.
(v) Loss of rents insurance at limits sufficient
to cover 100% of the annual rent payable to Landlord with a period of indemnity
not less than one year from time of loss. Such insurance shall
name Landlord as additional insured solely with respect to Rent
payable to or for the benefit of Landlord under this Lease.
(vi) During any period in which substantial Alterations
at the Leased Premises are being undertaken, builder's risk insurance
covering the total completed value including any "soft costs"
with respect to the Improvements being altered or repaired (on a
completed value, non-reporting basis), replacement cost of work
performed and equipment, supplies and materials furnished in
connection with such construction or repair of Improvements or
Equipment, together with such "soft cost" endorsements and such
other endorsements as Landlord may reasonably require and general
liability, worker's compensation and automobile liability
insurance with respect to the Improvements being constructed,
altered or repaired.
(vii) Such other insurance (or other terms with
respect to any insurance required pursuant to this Paragraph 16, including
without limitation amounts of coverage, deductibles, form of
mortgagee clause) on or in connection with any of the Leased
Premises as Landlord or Lender may reasonably require, which at
the time is usual and commonly obtained in connection with
properties similar in type of building size, use and location to
the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall
be written by companies which have a Best's rating either of A-:X or
above or A:VII or above (except that the insurance to be
maintained pursuant to Paragraph 16(a)(iii) may be written by a
company which has a Best's rating of A-:VII) and are admitted in,
and approved to write insurance policies by, the State Insurance
Department for the State or, if not admitted in the State, that
Tenant pay the surplus lines tax or similar tax. The insurance
policies (i) shall be for such terms as Landlord may reasonably
approve and (ii) shall be in amounts sufficient at all times to
satisfy any coinsurance requirements thereof. The insurance
referred to in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall
name Landlord as owner and Lender as loss payee and Tenant as its
interest may appear. The insurance referred to in
Paragraph 16(a)(ii) shall name Landlord and Lender as additional
insureds, and the insurance referred to in Paragraph 16(a)(v)
shall name Landlord as insured and Lender as loss payee. If said
insurance or any part thereof shall expire, be withdrawn, become
void, voidable, unreliable or unsafe for any reason, including a
breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other
reason whatsoever said insurance shall become reasonably
unsatisfactory to Landlord, Tenant shall immediately obtain new
or additional insurance reasonably satisfactory to Landlord.
(c) Each insurance policy referred to in clauses
(i), (iv), (v) and (vi) of Paragraph 16(a) shall contain standard
non-contributory mortgagee clauses in favor of and acceptable to
Lender. Each policy required by any provision of Paragraph
16(a), except clause (iii) thereof, shall provide that it may not
be cancelled except after thirty (30) days' prior notice to
Landlord and Lender. Each such policy shall also provide that
any loss otherwise payable thereunder shall be payable
notwithstanding (i) any act or omission of Landlord or Tenant
which might, absent such provision, result in a forfeiture of all
or a part of such insurance payment, (ii) the occupation or use
of any of the Leased Premises for purposes more hazardous than
those permitted by the provisions of such policy, (iii) any
foreclosure or other action or proceeding taken by Lender
pursuant to any provision of the Mortgage, Note, Assignment or
other document evidencing or securing the Loan upon the happening
of an event of default therein or (iv) any change in title to or
ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due all premiums
for the insurance required by Paragraph 16(a) or in accordance with
the terms of Paragraph 9(a), shall renew or replace each policy
and deliver to Landlord evidence of the payment of the full
premium therefor or installment then due at least thirty (30)
days prior to the expiration date of such policy, and shall
promptly deliver to Landlord all original policies.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain
pursuant to Paragraph 16(a) may be carried under a "blanket" or
umbrella policy or policies covering other properties or
liabilities of Tenant, provided that such "blanket" or umbrella
policy or policies otherwise comply with the provisions of this
Paragraph 16 and provided further that Tenant shall provide to
Landlord a Statement of Values which shall be reviewed annually
and amended as necessary based on current Replacement Cost
Valuations. The original or a certified copy of each such
"blanket" or umbrella policy shall promptly be delivered to
Landlord.
(f) Tenant shall promptly comply with and conform
to (i) all provisions of each insurance policy required by this
Paragraph 16 and (ii) all requirements of the insurers thereunder
applicable to Landlord, Tenant or any of the Leased Premises or
to the use, manner of use, occupancy, possession, operation,
maintenance, alteration or repair of any of the Leased Premises,
even if such compliance necessitates Alterations or results in
interference with the use or enjoyment of any of the Leased
Premises.
(g) Tenant shall not carry separate insurance concurrent
in form or contributing in the event of a Casualty with that
required in this Paragraph 16 unless (i) Landlord and Lender are
included therein as named insureds, with loss payable as provided
herein, and (ii) such separate insurance complies with the other
provisions of this Paragraph 16. Tenant shall immediately notify
Landlord of such separate insurance and shall deliver to Landlord
the original policies thereof.
(h) All policies shall contain effective waivers by the
carrier against all claims for insurance premiums against
Landlord and shall contain full waivers of subrogation against
Landlord.
(i) All proceeds of any insurance required under Paragraph
16(a) shall be payable as follows:
(i) Except for proceeds payable under clauses (ii),
(iii) and (iv) of Paragraph 16(a) to a Person other than Landlord, Tenant
or Lender, all proceeds of insurance required under clauses (i),
(iv), (v), (vi) and (vii) of Paragraph 16(a) and proceeds
attributable to the general liability coverage provisions of
Builder's Risk insurance under clause (vi) of Paragraph 16(a)
shall be payable to Landlord or, if required by the Mortgage, to
Lender and, if applicable, applied as set forth in Paragraph 17.
Tenant shall apply the Net Award to restoration of the Leased
Premises in accordance with the applicable provisions of this
Lease.
(ii) Each insurer is hereby authorized and directed
to make payment under said policies, including return of unearned
premiums, directly to Landlord or, if required by the Mortgage,
to Lender instead of to Landlord and Tenant jointly, and Tenant
hereby appoints each of Landlord and Lender as Tenant's
attorneys-in-fact to endorse any draft therefor.
17. Casualty and Condemnation.
(a) If any Casualty occurs to the Leased Premises,
Tenant shall give Landlord and Lender immediate notice thereof.
Landlord and Lender are hereby authorized to adjust, collect and
compromise, upon notice to and in cooperation with Tenant (except
that no notice to or cooperation with Tenant shall be required if
an Event of Default has occurred and is continuing), all claims
under any of the insurance policies required by Paragraph 16(a)
(except public liability insurance claims payable to a Person
other than Tenant, Landlord or Lender) and to execute and deliver
on behalf of Tenant all necessary proofs of loss, receipts,
vouchers and releases required by the insurers. Provided that no
Event of Default has occurred and is continuing, Tenant shall be
entitled to participate with Landlord and Lender in any
adjustment, collection and compromise of the Net Award payable in
connection with a Casualty. Tenant agrees to sign, upon the
request of Landlord and Lender, all such proofs of loss,
receipts, vouchers and releases. If Landlord or Lender so
requests, Tenant shall adjust, collect and compromise any and all
such claims, and Landlord and Lender shall have the right to join
with Tenant therein. Any adjustment, settlement or compromise of
any such claim shall be subject to the prior written approval of
Landlord and Lender, and Landlord and Lender shall have the
right, based upon their reasonable judgment, to prosecute or
contest, or to require Tenant to prosecute or contest, any such
claim, adjustment, settlement or compromise. The rights of
Landlord under this Paragraph 17(a) shall be extended to Lender
if and to the extent that any Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation
Notice, shall notify Landlord and Lender thereof. Landlord and
Lender are authorized to collect, settle and compromise (and, if
no Event of Default exists, upon notice to and in cooperation
with Tenant), the amount of any Net Award. Provided that no
Event of Default has occurred and is continuing, Tenant shall be
entitled to participate with Landlord and Lender in any
Condemnation proceeding or negotiations under threat thereof and
to contest the Condemnation or the amount of the Net Award
therefor. No agreement with any condemnor in settlement or under
threat of any Condemnation shall be made by Tenant without the
written consent of Landlord and Lender. Subject to the
provisions of this Paragraph 17(b), Tenant hereby irrevocably
assigns to Landlord any award or payment to which Tenant is or
may be entitled by reason of any Condemnation, whether the same
shall be paid or payable for Tenant's leasehold interest
hereunder or otherwise; but nothing in this Lease shall impair
Tenant's right to any award or payment on account of Tenant's
trade fixtures, equipment or other tangible property which is not
part of the Equipment, moving expenses or loss of business, if
available, to the extent that and so long as (i) Tenant shall
have the right to make, and does make, a separate claim therefor
against the condemnor and (ii) such claim does not in any way
reduce either the amount of the award otherwise payable to
Landlord for the Condemnation of Landlord's fee interest in the
Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest
hereunder. The rights of Landlord under this Paragraph 17(b)
shall also be extended to Lender if and to the extent that any
Mortgage so provides.
(c) If any Partial Casualty (whether or not
insured against) or Partial Condemnation shall occur, this Lease
shall continue, notwithstanding such event, and there shall be no
abatement or reduction of any Monetary Obligations except that
scheduled Basic Rent payments shall be reduced by an amount equal
to the proceeds received by Landlord under Paragraph 16(a)(v).
Promptly after such Partial Casualty or Partial Condemnation,
Tenant, as required in Paragraph 12(a) and 13(b), shall commence
and diligently continue to restore the Leased Premises as nearly
as possible to their value, condition and character immediately
prior to such event (assuming the Leased Premises to have been in
the condition required by this Lease). So long as no Event of
Default exists, any Net Award up to and including $500,000 shall
be paid by Landlord to Tenant and Tenant shall restore the Leased
Premises in accordance with the requirements of Paragraph 12(a)
and 13(b) of this Lease. So long as no Event of Default exists,
any Net Award in excess of $500,000 shall (unless such Casualty
resulting in the Net Award is a Termination Event) be made
available by Landlord (or Lender, if required by the terms of any
Mortgage) to Tenant for the restoration of any of the Leased
Premises pursuant to and in accordance with the provisions of
Paragraph 19 hereof. If any Casualty or Condemnation which is
not a Partial Casualty or Partial Condemnation shall occur,
Tenant shall comply with the terms and conditions of
Paragraph 18.
18. Termination Events.
(a) If (i) all of any Related Premises shall be
taken by a Taking or (ii) any substantial portion of any Related Premises
shall be taken by a Taking or all or any substantial portion of
any Related Premises shall be damaged or destroyed by a Casualty
and, in such case, Tenant certifies and covenants to Landlord
that it will forever abandon operations at the Related Premises
so taken or damaged (any one or both of the Related Premises
described in the above clauses (i) and (ii) above being
hereinafter referred to as the "Affected Premises" and each of
the events described in the above clauses (i) and (ii) shall
hereinafter be referred to as a "Termination Event"), then (x) in
the case of (i) above, Tenant shall be obligated, within thirty
(30) days after the Taking and (y) in the case of (ii) above,
Tenant shall have the option, within thirty (30) days after the
taking or thirty (30) days after the Casualty, as the case may
be, to give to Landlord written notice in the form described in
Paragraph 18(b) of the Tenant's election to terminate this Lease
(a "Termination Notice") as to the Affected Premises.
(b) A Termination Notice shall contain (i) notice of
Tenant's intention to terminate this Lease as to the Affected
Premises on the first Basic Rent Payment Date which occurs at
least sixty (60) days after the date of the Termination Notice,
(ii) a binding and irrevocable offer of Tenant to pay to Landlord
the Termination Amount and (iii) if the Termination Event is an
event described in Paragraph 18(a)(ii), the certification and
covenants described therein and a certified resolution of the
Board of Directors of Tenant authorizing the same.
(c) On the Termination Date, Tenant shall pay to
Landlord the Termination Amount and all remaining Monetary Obligations
and this Lease shall terminate on the Termination Date; provided
that, if Tenant has not satisfied all remaining Monetary
Obligations which have arisen on or prior to the Termination Date
on the Termination Date, then Landlord may, at its option, extend
the date on which this Lease may terminate as to the Affected
Premises to a date which is no later than the first Basic Rent
Payment Date after the Termination Date on which Tenant has
satisfied all remaining Monetary Obligations. Upon such
termination (i) all obligations of Tenant hereunder shall
terminate as to the Affected Premises except for any Surviving
Obligations, (ii) Tenant shall immediately vacate and shall have
no further right, title or interest in or to any of the Affected
Premises and (iii) the Landlord's entire interest in the Net
Award shall be paid to or, to the extent not collected by
Landlord, assigned to Tenant.
(d) In the event of the termination of this Lease
as to the Affected Premises as hereinabove provided, this Lease shall
remain in full force and effect as to the Remaining Premises;
provided, that the Basic Rent for the Remaining Premises to be
paid after such termination shall be the Basic Rent otherwise
payable hereunder with respect to the Leased Premises multiplied
by a percentage equal to the percentage set forth in Exhibit "E"
for the Remaining Premises.
19. Restoration.
(a) Landlord (or Lender if required by any Mortgage)
shall hold any Net Award in excess of $500,000 in a fund (the
"Restoration Fund") and disburse amounts from the Restoration
Fund only in accordance with the following conditions:
(i) prior to commencement of restoration, (A)
the architects, contracts, contractors, plans and specifications for the
restoration shall have been approved by Landlord, (B) Landlord
and Lender shall be provided with mechanics' lien insurance (if
available) and acceptable performance and payment bonds which
insure satisfactory completion of and payment for the
restoration, are in an amount and form and have a surety
acceptable to Landlord, and name Landlord, Tenant and Lender as
additional dual obligees, and (C) appropriate waivers of
mechanics' and materialmen's liens shall have been filed;
(ii) at the time of any disbursement, no Event of
Default shall exist and no mechanics' or materialmen's liens shall have
been filed against any of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from time
to time in an amount not exceeding the cost of the work completed since
the last disbursement, upon receipt of (A) satisfactory evidence,
including architects' certificates, of the stage of completion,
the estimated total cost of completion and performance of the
work to date in a good and workmanlike manner in accordance with
the contracts, plans and specifications, (B) waivers of liens,
(C) contractors' and subcontractors' sworn statements as to
completed work and the cost thereof for which payment is
requested, (D) a satisfactory bringdown of title insurance and
(E) other evidence of cost and payment so that Landlord can
verify that the amounts disbursed from time to time are
represented by work that is completed, in place and free and
clear of mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be accompanied
by a certificate of Tenant, signed by the president or a vice
president of Tenant, describing the work for which payment is
requested, stating the cost incurred in connection therewith,
stating that Tenant has not previously received payment for such
work and, upon completion of the work, also stating that the work
has been fully completed and complies with the applicable
requirements of this Lease;
(v) Landlord may retain ten percent (10%) of the
Restoration Fund until the restoration is fully completed;
(vi) if the Restoration Fund is held by Landlord, the
Restoration Fund shall not be commingled with Landlord's other
funds and shall bear interest at a rate agreed to by Landlord and
Tenant; and
(vii) such other reasonable conditions as Landlord or
Lender may impose and which are customarily required by
construction lenders.
(b) Prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the
restoration work free and clear of all liens, as determined by
the supervising architect, but if none, then by Landlord, exceeds
the amount of the Net Award available for such restoration, the
amount of such excess shall, upon demand by Landlord, be paid by
Tenant to Landlord to be added to the Restoration Fund. Any sum
so added by Tenant which remains in the Restoration Fund upon
completion of restoration shall be refunded to Tenant. For
purposes of determining the source of funds with respect to the
disposition of funds remaining after the completion of
restoration, the Net Award shall be deemed to be disbursed prior
to any amount added by Tenant.
(c) If any sum remains in the Restoration Fund after
completion of the restoration and any refund to Tenant pursuant
to Paragraph 19(b), such sum shall be retained by Landlord.
20. INTENTIONALLY DELETED.
21. Assignment and Subletting; Prohibition against
Leasehold Financing.
(a) (i) Tenant shall have the right, upon thirty (30) days
prior written notice to Landlord and Lender, with no consent of
Landlord or Lender being required or necessary "Preapproved
Assignment") to assign this Lease to any Person that, immediately
following such assignment has a publicly traded unsecured senior
debt rating of "BBB" or better from Moody's Investors Services,
Inc. or a rating of "Baa2" or better from Standard & Poor's
Corporation, and in the event all of such rating agencies cease
to furnish such ratings, then a comparable rating by any rating
agency reasonably acceptance to Landlord and Lender.
(ii) Any assignment of this Lease
except for a Preapproved Assignment shall require the prior
written consent of Landlord and Lender. Tenant shall, not less
than ninety (90) days prior to the date on which it desires to
make an assignment, submit to Landlord and Lender information
regarding the following with respect to the assignee (the
"Criteria"): (i) credit, (ii) capital structure,
(iii) management, (iv) operating history, (v) proposed use of the
Leased Premises and (vi) risk factors associated with the
proposed use of the Leased Premises by the proposed assignee,
taking into account factors such as environmental concerns,
product liability and the like. Landlord and Lender shall review
the Criteria, advise Tenant no later than the fifteenth (15th)
day following receipt of the Criteria if additional information
is required and shall approve or disapprove the proposed assignee
no later than the thirtieth (30th) day following receipt of all
required information, and Landlord and Lender shall be deemed to
have acted reasonably in granting or withholding consent if such
grant or disapproval is based on their review of the Criteria.
Any purported assignment that is not a Preapproved Assignment or
that is not otherwise consented to under this Paragraph 21(a),
including any assignment by operation of law, shall be null and
void.
(b) Tenant shall have the right, without obtaining the
consent of Landlord, to have under sublease at any time up to and
including but not in excess of twenty-five percent (25%) of the
net leaseable space in the Leased Premises. Any sublease that,
when added to all other subleases then in effect, would result in
more than twenty-five percent (25%) of the net leaseable space in
the Leased Premises being under sublease at any one time shall
require the prior written approval of Landlord and Lender.
(c) If Tenant assigns all its rights and interest under
this Lease, the assignee under such assignment shall expressly
assume all the obligations of Tenant hereunder, actual or
contingent, including obligations of Tenant which may have arisen
on or prior to the date of such assignment, by a written
instrument delivered to Landlord at the time of such assignment.
Each sublease of any of the Leased Premises shall be subject and
subordinate to the provisions of this Lease and Landlord's right
hereunder. No assignment or sublease shall affect or reduce any
of the obligations of Tenant hereunder, and all such obligations
shall continue in full force and effect as obligations of a
principal and not as obligations of a guarantor, as if no
assignment or sublease had been made. No assignment or sublease
shall impose any additional obligations on Landlord under this
Lease.
(d) Tenant shall, within ten (10) days after the execution
and delivery of any assignment or sublease consented to by
Landlord or otherwise permitted by the terms of this Lease,
deliver a duplicate original copy thereof to Landlord which, in
the event of an assignment, shall be in recordable form.
(e) As security for performance of its obligations under
this Lease, Tenant hereby grants, conveys and assigns to Landlord
all right, title and interest of Tenant in and to all subleases
now in existence or hereafter entered into for any or all of the
Leased Premises, any and all extensions, modifications and
renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy
all rents and other sums of money payable under any sublease of
any of the Leased Premises, provided, however, that upon the
occurrence of an Event of Default Landlord shall have the
absolute right to revoke said license and to collect such rents
and sums of money and to retain the same. Tenant shall not
consent to, cause or allow any modification or alteration of any
of the terms, conditions or covenants of the lease dated January,
1996 as amended February 13, 1996 with Rust Engineering, Inc.,
which lease has been assigned by Rust Engineering and
Construction, Inc. to Raytheon Engineers & Constructors, Inc.
("Raytheon Sublease") or the termination thereof, without the
prior written approval of Landlord, which consent shall not be
unreasonably withheld, nor shall Tenant accept any rents more
than thirty (30) days in advance of the accrual thereof under any
sublease nor do nor permit anything to be done, the doing of
which, nor omit or refrain from doing anything, the omission of
which, will or could be a breach of or default in the terms of
the Raytheon Sublease.
(f) Tenant shall not have the power to mortgage,
pledge or otherwise encumber its interest under this Lease or any
sublease of the Leased Premises, and any such mortgage, pledge or
encumbrance made in violation of this Paragraph 21 shall be void.
(g) Subject to the provisions of Paragraphs
35 and 36 hereof, Landlord may sell or transfer the Leased Premises at
any time without Tenant's consent to any third party (each a "Third
Party Purchaser"). In the event of any such transfer, Tenant
shall attorn to any Third Party Purchaser as Landlord so long as
such Third Party Purchaser and Landlord notify Tenant in writing
of such transfer. At the request of Landlord, Tenant will
execute such documents confirming the agreement referred to above
and such other agreements as Landlord may reasonably request,
provided that such agreements do not, in Tenant's reasonable
judgment, increase the liabilities and obligations of Tenant
hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the
following (after expiration of any applicable cure period as provided
in Paragraph 22(b)) shall, at the sole option of Landlord,
constitute an "Event of Default" under this Lease:
(i) a failure by Tenant to make any payment of
any Monetary Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and observe,
or a violation or breach of, any other provision hereof not otherwise
specifically mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by
Tenant herein or in any certificate, demand or request made pursuant
hereto proves to be incorrect, now or hereafter, in any material
respect;
(iv) a default beyond any applicable cure period
or at maturity by Tenant in any payment of principal or interest on any
obligations for borrowed money having an outstanding principal
balance of $5,000,000 or more in the aggregate, or in the
performance of any other provision contained in any instrument
under which any such obligation is created or secured (including
the breach of any covenant thereunder), (x) if such payment is a
payment at maturity or a final payment, or (y) if an effect of
such default is to cause or permit any Person to cause such
obligation to become due prior to its stated maturity;
(v) a default by Tenant beyond any applicable cure
period in the payment of rent under, or in the performance of any other
material provision of, any other lease or leases that have, in
the aggregate, rental obligations over the terms thereof of
$3,000,000 or more if the landlord under any such lease or leases
has elected to exercise its remedies thereunder;
(vi) a final, non-appealable judgment or judgments for
the payment of money in excess of $5,000,000 in the aggregate shall
be rendered against Tenant and the same shall remain undischarged
for a period of sixty (60) consecutive days;
(vii) The breach of any Covenant shall occur;
(viii) Tenant shall (A) voluntarily be adjudicated
a bankrupt or insolvent, (B) seek or consent to the appointment of
a receiver or trustee for itself or for the Leased Premises,
(C) file a petition seeking relief under the bankruptcy or other
similar laws of the United States, any state or any jurisdiction,
(D) make a general assignment for the benefit of creditors, or
(E) be unable to pay its debts as they mature;
(ix) a court shall enter an order, judgment or
decree appointing, without the consent of Tenant, a receiver or trustee
for it or for any of the Leased Premises or approving a petition
filed against Tenant which seeks relief under the bankruptcy or
other similar laws of the United States, any state or any
jurisdiction, and such order, judgment or decree shall remain
undischarged or unstayed sixty (60) days after it is entered;
(x) any building on either Related Premises shall
have been vacated or abandoned;
(xi) Tenant shall be liquidated or dissolved or shall
begin proceedings towards its liquidation or dissolution;
(xii) the estate or interest of Tenant in any of
the Leased Premises shall be levied upon or attached in any proceeding and
such estate or interest is about to be sold or transferred or
such proceeding shall not be vacated or discharged within sixty
(60) days after it is made;
(xiii) a failure by Tenant to perform or observe,
or a violation or breach of, or a misrepresentation by Tenant under
any provision of any Assignment to which Tenant is a party or any
other document between Tenant and Lender, if such failure,
violation, breach or misrepresentation gives rise to a default
beyond any applicable cure period with respect to any Loan.
(b) No notice or cure period shall be required in any
one or more of the following events: (A) the occurrence of an Event
of Default under clause (i) (except as otherwise set forth
below), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi),
(xii) or (xiii) of Paragraph 22(a); (B) the default consists of
a failure to provide any insurance required by Paragraph 16 or an
assignment or sublease entered into in violation of Paragraph 21;
or (C) the default is such that any delay in the exercise of a
remedy by Landlord could reasonably be expected to cause
irreparable harm to Landlord. If the default consists of the
failure to pay any Monetary Obligation under clause (i) of
Paragraph 22(a), the applicable cure period shall be five (5)
Business days from the date on which notice is given, but for
failure to pay Basic Rent Landlord shall not be obligated to give
notice of, or allow any cure period for, any such default more
than one (1) time within any Lease Year, and in addition, if
Tenant furnishes to Landlord proof that payment was timely posted
(in the case of mailing) or timely initiated (if payment is made
with Federal Funds by wire transfer), Tenant shall be entitled to
a second five (5) Business day cure period within any Lease Year.
If the default consists of a default under clause (ii) of
Paragraph 22(a), other than the events specified in clauses (B)
and (C) of the first sentence of this Paragraph 22(b), the
applicable cure period shall be twenty (20) days from the date on
which notice is given or, if the default cannot be cured within
such twenty (20) day period and delay in the exercise of a remedy
would not (in Landlord's reasonable judgment) cause any material
adverse harm to Landlord or any of the Leased Premises, the cure
period shall be extended for the period required to cure the
default (but such cure period, including any extension, shall not
in the aggregate exceed sixty (60) days), provided that Tenant
shall commence to cure the default within the said twenty-day
period and shall actively, diligently and in good faith proceed
with and continue the curing of the default until it shall be
fully cured. If the default consists of a default under clause
(vii) of Paragraph 22(a) with respect to any breach of the
Covenants described in Sections 3, 4 or 5 of Exhibit "G", the
applicable cure period shall be the two (2) consecutive fiscal
quarters after the fiscal quarter in which the default occurred.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred
and is continuing, Landlord shall have the right, at its sole option,
then or at any time thereafter, to exercise its remedies and to
collect damages from Tenant in accordance with this Paragraph 23,
subject in all events to applicable Law, without demand upon or
notice to Tenant except as otherwise provided in Paragraph 22(b)
and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in such notice.
Upon such date, this Lease, the estate hereby granted and all rights
of Tenant hereunder shall expire and terminate. Upon such
termination, Tenant shall immediately surrender and deliver
possession of the Leased Premises to Landlord in accordance with
Paragraph 26. If Tenant does not so surrender and deliver
possession of the Leased Premises, Landlord may re-enter and
repossess the Leased Premises, with or without legal process, by
peaceably entering the Leased Premises and changing locks or by
summary proceedings, ejectment or any other lawful means or
procedure. Upon or at any time after taking possession of the
Leased Premises, Landlord may, by peaceable means or legal
process, remove any Persons or property therefrom. Landlord shall
be under no liability for or by reason of any such entry,
repossession or removal. Notwithstanding such entry or
repossession, Landlord may collect the damages set forth in
Paragraph 23(b)(i) or 23(b)(ii).
(ii) After repossession of the Leased Premises pursuant
to clause (i) above, Landlord shall have the right to relet any of
the Leased Premises to such tenant or tenants, for such term or
terms, for such rent, on such conditions and for such uses as
Landlord in its reasonable judgment may determine, and collect
and receive any rents payable by reason of such reletting.
Landlord may make such Alterations in connection with such
reletting as it may deem advisable in its sole discretion.
Notwithstanding any such reletting, Landlord may collect the
damages set forth in Paragraph 23(b)(ii).
(iii) Landlord may declare by notice to Tenant
the entire Basic Rent (in the amount of Basic Rent then in effect) for the
remainder of the then current Term to be immediately due and
payable, in which event Tenant shall immediately pay to Landlord
all such Basic Rent discounted to its Present Value, all accrued
Rent then due and unpaid, all other Monetary Obligations which
are then due and unpaid and all Monetary Obligations which arise
or become due by reason of such Event of Default (including any
Costs of Landlord). Upon receipt by Landlord of all such
discounted accelerated Basic Rent and Monetary Obligations, this
Lease shall remain in full force and effect and Tenant shall have
the right to possession of the Leased Premises from the date of
such receipt by Landlord to the end of the Term, and subject to
all the provisions of this Lease, including the obligation to pay
all increases in Basic Rent and all Monetary Obligations that
subsequently become due, except that (A) no Basic Rent which has
been prepaid hereunder shall be due thereafter during the Term
and (B) Tenant shall have no option to extend or renew the Term.
(b) The following constitute damages to which
Landlord shall be entitled if Landlord exercises its remedies under
Paragraph 23(a)(i) or 23(a)(ii):
(i) If Landlord exercises its remedy under
Paragraph 23(a)(i) but not its remedy under Paragraph 23(a)(ii)
(or attempts to exercise such remedy and is unsuccessful in reletting
the Leased Premises) then, upon written demand from Landlord, Tenant
shall pay to Landlord, as liquidated and agreed final damages for
Tenant's default and in lieu of all current damages beyond the
date of such demand (it being agreed that it would be
impracticable or extremely difficult to fix the actual damages),
an amount equal to the Present Value of the excess, if any, of
(A) all Basic Rent from the date of such demand to the date on
which the Term is scheduled to expire hereunder in the absence of
any earlier termination, re-entry or repossession over (B) the
then fair market rental value of the Leased Premises for the same
period. Tenant shall also pay to Landlord all of Landlord's
Costs in connection with the repossession of the Leased Premises
and any attempted reletting thereof, including all brokerage
commissions, legal expenses, attorneys' fees, employees'
expenses, costs of Alterations and expenses and preparation for
reletting.
(ii) If Landlord exercises its remedy under
Paragraph 23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii),
then Tenant shall, until the end of what would have been the Term in
the absence of the termination of the Lease, and whether or not
any of the Leased Premises shall have been relet, be liable to
Landlord for, and shall pay to Landlord, as liquidated and agreed
current damages all Monetary Obligations which would be payable
under this Lease by Tenant in the absence of such termination
less the net proceeds, if any, of any reletting pursuant to
Paragraph 23(a)(ii), after deducting from such proceeds all of
Landlord's Costs (including the items listed in the last sentence
of Paragraph 23(b)(i) hereof) incurred in connection with such
repossessing and reletting; provided, that if Landlord has not
relet the Leased Premises, such Costs of Landlord shall be
considered to be Monetary Obligations payable by Tenant. Tenant
shall be and remain liable for all sums aforesaid, and Landlord
may recover such damages from Tenant and institute and maintain
successive actions or legal proceedings against Tenant for the
recovery of such damages. Nothing herein contained shall be
deemed to require Landlord to wait to begin such action or other
legal proceedings until the date when the Term would have expired
by its own terms had there been no such Event of Default.
(c) Landlord shall be entitled to apply the Security
Deposit to any amounts due under Paragraph 23(a)(i) or 23(a)(ii)
if this Lease shall be terminated, or, if this Lease shall remain
in full force and effect, to any amounts due under Paragraph
23(a)(iii) and in any event to past due Basic Rent and to cure
any other monetary Event of Default.
(d) Notwithstanding anything to the contrary herein
contained, in lieu of or in addition to any of the foregoing
remedies and damages, Landlord may exercise any remedies and
collect any damages available to it at law or in equity. If
Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it
has hereunder or at law or in equity.
(e) Landlord shall not be required to mitigate any
of its damages hereunder unless required to by applicable Law. If any
Law shall validly limit the amount of any damages provided for
herein to an amount which is less than the amount agreed to
herein, Landlord shall be entitled to the maximum amount
available under such Law.
(f) No termination of this Lease, repossession or
reletting of the Leased Premises, exercise of any remedy or collection of
any damages pursuant to this Paragraph 23 shall relieve Tenant of
any Surviving Obligations.
(g) WITH RESPECT TO ANY REMEDY OR PROCEEDING WITH
RESPECT TO THIS LEASE, LANDLORD AND TENANT WAIVE ANY RIGHT TO A TRIAL BY
JURY.
(h) Upon the occurrence of any Event of Default,
Landlord shall have the right (but no obligation) to perform any act
required of Tenant hereunder and, if performance of such act
requires that Landlord enter the Leased Premises, Landlord may
enter the Leased Premises for such purpose.
(i) No failure of Landlord (i) to insist at any time
upon the strict performance of any provision of this Lease or (ii) to
exercise any option, right, power or remedy contained in this
Lease shall be construed as a waiver, modification or
relinquishment thereof. A receipt by Landlord of any sum in
satisfaction of any Monetary Obligation with knowledge of the
breach of any provision hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision hereof
shall be deemed to have been made unless expressed in a writing
signed by Landlord.
(j) Tenant hereby waives and surrenders, for itself
and all those claiming under it, including creditors of all kinds,
(i) any right and privilege which it or any of them may have
under any present or future Law to redeem any of the Leased
Premises or to have a continuance of this Lease after termination
of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the
benefits of any present or future Law which exempts property from
liability for debt or for distress for rent.
(k) Except as otherwise provided herein, all
remedies are cumulative and concurrent and no remedy is exclusive
of any other remedy. Each remedy may be exercised at any time an
Event of Default has occurred and is continuing and may be exercised
from time to time. No remedy shall be exhausted by any exercise
thereof.
24. Notices. All notices, demands, requests, consents,
approvals, offers, statements and other instruments or
communications required or permitted to be given pursuant to the
provisions of this Lease shall be in writing and shall be deemed
to have been given for all purposes when delivered in person or
by Federal Express or other reliable 24-hour delivery service or
five (5) business days after being deposited in the United States
mail, by certified mail, return receipt requested, postage
prepaid, addressed to the other party at its address stated
above. A copy of any notice given by Tenant to Landlord shall
simultaneously be given by Tenant to Reed Smith Shaw & McClay,
2500 One Liberty Place, Philadelphia, PA 19103, Attention:
Chairman, Real Estate Department. A copy of any notice given by
Landlord to Tenant shall simultaneously be given by Landlord to
Hand Arendall, 107 St. Francis Street, First National Bank
Building, 26th Floor, Mobile, Alabama 36602, Attention: Harold
D. Parkman, Esquire. For the purposes of this Paragraph, any
party may substitute another address stated above (or substituted
by a previous notice) for its address by giving fifteen (15)
days' notice of the new address to the other party, in the manner
provided above.
25. Estoppel Certificate. At any time upon not less
than ten (10) days' prior written request by either Landlord or Tenant
(the "Requesting Party") to the other party (the "Responding
Party"), the Responding Party shall deliver to the Requesting
Party a statement in writing, executed by an authorized officer
of the Responding Party, certifying (a) that, except as otherwise
specified, this Lease is unmodified and in full force and effect,
(b) the dates to which Basic Rent, Additional Rent and all other
Monetary Obligations have been paid, (c) that, to the knowledge
of the signer of such certificate and except as otherwise
specified, no default by either Landlord or Tenant exists
hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party
that, except as otherwise specified, there are no proceedings
pending or, to the knowledge of the signer, threatened, against
Tenant before or by any court or administrative agency which, if
adversely decided, would materially and adversely affect the
financial condition and operations of Tenant. Any such
statements by the Responding Party may be relied upon by the
Requesting Party, any Person whom the Requesting Party notifies
the Responding Party in its request for the statement is an
intended recipient or beneficiary of the statement, any Lender or
their assignees and by any prospective purchaser or mortgagee of
any of the Leased Premises. Any statement required under this
Paragraph 25 and delivered by Tenant shall state that, in the
opinion of each person signing the same, he has made such
examination or investigation as is necessary to enable him to
express an informed opinion as to the subject matter of such
statement, and shall briefly state the nature of such examination
or investigation.
26. Surrender. Upon the expiration or earlier
termination of this Lease, Tenant shall peaceably leave and surrender
the Leased Premises to Landlord in the same condition in which the
Leased Premises was at the commencement of this Lease, except as
repaired, rebuilt, restored, altered, replaced or added to as
permitted or required by any provision of this Lease, and except
for ordinary wear and tear and Casualty and Condemnation unless
Tenant is required to restore pursuant to the applicable
provisions hereof. Upon such surrender, Tenant shall (a) remove
from the Leased Premises all property which is owned by Tenant or
third parties other than Landlord and (b) repair any damage
caused by such removal. Property not so removed shall become the
property of Landlord, and Landlord may thereafter cause such
property to be removed from the Leased Premises. The cost of
removing and disposing of such property and repairing any damage
to any of the Leased Premises caused by such removal shall be
paid by Tenant to Landlord upon demand. Landlord shall not in
any manner or to any extent be obligated to reimburse Tenant for
any such property which becomes the property of Landlord pursuant
to this Paragraph 26.
27. No Merger of Title. There shall be no merger of
the leasehold estate created by this Lease with the fee estate in any
of the Leased Premises by reason of the fact that the same Person
may acquire or hold or own, directly or indirectly, (a) the
leasehold estate created hereby or any part thereof or interest
therein and (b) the fee estate in any of the Leased Premises or
any part thereof or interest therein, unless and until all
Persons having any interest in the interests described in (a) and
(b) above which are sought to be merged shall join in a written
instrument effecting such merger and shall duly record the same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of
account with respect to the finances and business of Tenant generally and
with respect to the Leased Premises, in accordance with generally
accepted accounting principles ("GAAP") consistently applied, and
shall permit Landlord and Lender by their respective agents,
accountants and attorneys, upon reasonable notice to Tenant, to
visit and inspect the Leased Premises and examine (and make
copies of) the records and books of account and to discuss the
finances and business with the officers of Tenant, at such
reasonable times as may be requested by Landlord. Upon the
request of Lender or Landlord (either telephonically or in
writing) made not more than once each Lease Year unless an Event
of Default exists, Tenant shall provide the requesting party with
copies of any information to which such party would be entitled
in the course of a personal visit.
(b) Tenant shall deliver to Landlord and to Lender
within ninety (90) days of the close of each fiscal year, annual audited
financial statements of Tenant prepared by a nationally
recognized firm of independent certified public accountants.
Tenant shall also furnish to Landlord within forty-five (45) days
after the end of each of the three remaining quarters unaudited
financial statements and all other quarterly reports of Tenant,
certified by Tenant's chief financial officer, and all filings,
if any, of Form 10-K, Form 10-Q and other required filings with
the Securities and Exchange Commission pursuant to the provisions
of the Securities Exchange Act of 1934, as amended, or any other
Law. All financial statements of Tenant shall be prepared in
accordance with GAAP consistently applied. All annual financial
statements shall be accompanied (i) by an opinion of said
accountants stating that (A) there are no qualifications as to
the scope of the audit and (B) the audit was performed in
accordance with GAAP and (ii) by the affidavit of the president
or a vice president of Tenant, dated within five (5) days of the
delivery of such statement, stating to the best knowledge of
affiant that (C) the affiant knows of no Event of Default, or
event which, upon notice or the passage of time or both, would
become an Event of Default which has occurred and is continuing
hereunder or, if any such event has occurred and is continuing,
specifying the nature and period of existence thereof and what
action Tenant has taken or proposes to take with respect thereto
and (D) except as otherwise specified in such affidavit, that
Tenant has fulfilled all of its obligations under this Lease
which are required to be fulfilled on or prior to the date of
such affidavit.
29. Determination of Value of Excess Land.
(a) Tenant acknowledges that if Landlord receives
an offer to purchase the Excess Land for a purchase price equal to the
Fair Market Value of the Excess Land, the Excess Land Sale
Contract shall contain the following procedures for determination
of Fair Market Value:
(i) Landlord and Third Party Purchaser shall
first endeavor to agree upon such Fair Market Value within thirty (30)
days after the date (the "Applicable Initial Date") on which Landlord
enters into an Excess Land Sale Contract for the purchase of the Excess
Land.
(ii) If the parties shall not have signed such
agreement within thirty (30) days after the Applicable Initial Date,
Third Party Purchaser shall within fifty (50) days after the Applicable
Initial Date select an appraiser and notify Landlord in writing
of the name, address and qualifications of such appraiser.
Within twenty (20) days following Landlord's receipt of Third
Party Purchaser's notice of the appraiser selected by Third Party
Purchaser, Landlord shall select an appraiser and notify Third
Party Purchaser of the name, address and qualifications of such
appraiser. Such two appraisers shall endeavor to agree upon Fair
Market Value based on a written appraisal made by each of them
(and given to Landlord by Third Party Purchaser). If such two
appraisers shall agree upon a Fair Market Value, the amount of
such Fair Market Value as so agreed shall be binding and
conclusive upon Landlord and Third Party Purchaser.
(iii) If such two appraisers shall be unable
to agree upon a Fair Market Value within twenty (20) days after the
selection of an appraiser by Landlord, then such appraisers shall
advise Landlord and Third Party Purchaser of their respective
determinations of Fair Market Value and shall select a third
appraiser to make the determination of Fair Market Value. The
selection of the third appraiser shall be binding and conclusive
upon Landlord and Third Party Purchaser.
(iv) If such two appraisers shall be unable to
agree upon the designation of a third appraiser within ten (10) days
after the expiration of the twenty (20) day period referred to in clause
(iii) above, or if such third appraiser does not make a
determination of Fair Market Value within twenty (20) days after
his selection, then such third appraiser or a substituted third
appraiser, as applicable, shall, at the request of either party
hereto, be appointed by the President or Chairman of the American
Arbitration Association in New York, New York. The determination
of Fair Market Value made by the third appraiser appointed
pursuant hereto shall be made within twenty (20) days after such
appointment.
(v) If a third appraiser is selected, Fair Market
Value shall be the average of the determination of Fair Market Value made
by the third appraiser and the determination of Fair Market Value
made by the appraiser (selected pursuant to Paragraph 29(a)(ii)
hereof) whose determination of Fair Market Value is nearest to
that of the third appraiser. Such average shall be binding and
conclusive upon Landlord and Third Party Purchaser.
(vi) All appraisers selected or appointed pursuant
to this provision shall (A) be independent qualified MAI appraisers
(B) have no right, power or authority to alter or modify the
provisions of this Lease, (C) utilize the definition of Fair
Market Value hereinabove set forth above, and (D) be registered
in the State if the State provides for or requires such
registration. The Cost of the procedure described in this
provision shall be borne entirely by Third Party Purchaser.
30. Non-Recourse as to Landlord. Anything contained
herein to the contrary notwithstanding, any claim based on or in respect
of any liability of Landlord under this Lease shall be enforced
only against the Leased Premises and any undistributed Net Award
and Security Deposit and not against any other assets, properties
or funds of (i) Landlord, (ii) any director, officer, general
partner, shareholder, limited partner, beneficiary, employee or
agent of Landlord or any general partner of Landlord or any of
its general partners (or any legal representative, heir, estate,
successor or assign of any thereof), (iii) any predecessor or
successor partnership or corporation (or other entity) of
Landlord or any of its general partners, shareholders, officers,
directors, employees or agents, either directly or through
Landlord or its general partners, shareholders, officers,
directors, employees or agents or any predecessor or successor
partnership or corporation (or other entity), or (iv) any Person
affiliated with any of the foregoing, or any director, officer,
employee or agent of any thereof.
31. Financing.
(a) Tenant agrees to pay all costs and expenses
incurred by Landlord in connection with the purchase, leasing and
initial financing of the Leased Premises including, without limitation,
the cost of appraisals, environmental reports, title insurance,
surveys, legal fees and expenses and Lender's commitment fees.
(b) If Landlord desires to obtain or refinance
any Loan, Tenant shall agree, upon request of Landlord, to supply any
such Lender with such notices and information as Tenant is required to
give to Landlord hereunder and to extend the rights of Landlord
hereunder to any such Lender and to consent to such financing if
such consent is requested by such Lender. Tenant shall provide
any other consent or statement and shall execute any and all
other documents that such Lender reasonably requires in
connection with such financing, including any environmental
indemnity agreement and subordination, non-disturbance and
attornment agreement ("SNDA"), so long as the same do not
adversely affect any right, benefit or privilege of Tenant under
this Lease or materially increase Tenant's obligations under this
Lease and are in form and substance reasonably satisfactory to
Tenant. Any SNDA (a) shall require Lender to acknowledge (1)
that if it elects to maintain the Restoration Fund it will do so
in accordance with Paragraph 19 hereof and (2) that if it is the
holder of the Security Deposit, it shall be bound by the terms of
this Lease with respect thereto and (b) may require Tenant to
confirm that (3) Lender and its assigns will not be liable for
any misrepresentation, act or omission of Landlord and (4) Lender
and its assigns will not be subject to any counterclaim, demand
or offset which Tenant may have against Landlord.
32. Subordination. This Lease and Tenant's interest
hereunder shall be subordinate to any Mortgage or other security
instrument hereafter placed upon the Leased Premises by Landlord,
and to any and all advances made or to be made thereunder, to the
interest thereon, and all renewals, replacements and extensions
thereof, provided that Tenant receives an SNDA that provides for
the recognition of this Lease and all Tenant's rights hereunder
unless and until an Event of Default exists or Landlord shall
have the right to terminate this Lease pursuant to any applicable
provision hereof.
33. Financial Covenants. Tenant hereby covenants and
agrees to comply with all the covenants and agreements described
in Exhibit "G" hereto.
34. Tax Treatment; Reporting. Landlord and Tenant each
acknowledge that each shall treat this transaction as a true
lease for state law purposes and shall report this transaction as
a Lease for Federal income tax purposes. For Federal income tax
purposes each shall report this Lease as a true lease with
Landlord as the owner of the Leased Premises and Equipment and
Tenant as the lessee of such Leased Premises and Equipment
including: (1) treating Landlord as the owner of the property
eligible to claim depreciation deductions under Section 167 or
168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant
reporting its Rent payments as rent expense under Section 162 of
the Code, and (3) Landlord reporting the Rent payments as rental
income.
35. Right of First Refusal.
(a) Except as otherwise provided in clause (g) of
this Paragraph 35, and provided an Event of Default does not then
exist if Landlord shall enter into a contract for the sale (the
"Sale Contract") of the Leased Premises with a Third Party
Purchaser, which Sale Contract shall be conditioned upon Tenant's
failure to exercise its right under this Paragraph 35(a),
Landlord shall give written notice to Tenant of the Sale
Contract, together with a copy of the executed Sale Contract and
the name and business address of the Third Party Purchaser.
(b) For a period of fifteen Business days following
receipt of such notice, Tenant shall have the right and option,
exercisable by written notice to Landlord given within said
fifteen (15) Business day period, to elect to purchase the Leased
Premises at the purchase price and upon all the terms and
conditions set forth in such Sale Contract, except that no
conditions or contingencies contained in such Sale Contract as to
environmental assessments, engineering studies, inspection of the
Leased Premises, state of the title to or encumbrances on the
Leased Premises, or any other condition or contingency to the
Third Party Purchaser's obligation to purchase the Leased
Premises which pertains to the condition of the Leased Premises
shall apply to Tenant's obligation to purchase the Leased
Premises under this Paragraph 35, and Tenant shall be obligated
to purchase the Leased Premises without any such condition or
contingency.
(c) If at the expiration of the aforesaid fifteen (15)
Business day period Tenant shall have failed to exercise the
aforesaid option, Landlord may sell the Leased Premises to such
Third Party Purchaser upon the terms set forth in such contract.
(d) Except as otherwise specifically provided herein,
the closing date for any purchase of the Leased Premises by Tenant
pursuant to this Paragraph 35 shall be the closing date provided
in the Sale Contract. At such closing Landlord shall convey the
Leased Premises to Tenant in accordance with, and Tenant shall
pay to Landlord the purchase price and other consideration set
forth in, the Sale Contract.
(e) Tenant shall have the right during the Term to
exercise the foregoing right of first refusal upon (i) each proposed sale
of the Leased Premises prior to the tenth (10th) anniversary of
this Lease and (ii) if Tenant does not exercise its purchase
option described in Paragraph 35(b), one (1) time after the tenth
(10th) anniversary of this Lease; provided, that if, following
compliance with the procedure described in Paragraph 35(a), a
Third Party Purchaser does not purchase the Leased Premises, such
event shall not count as an exercise of Tenant's right of first
refusal. Notwithstanding anything to the contrary, if Tenant
fails to exercise the right of first refusal granted pursuant to
this Paragraph 35(e), subsection (ii), after the tenth (10th)
anniversary of the date of this Lease and the sale to the Third
Party Purchaser is consummated or if this Lease terminates or the
Term expires, such right shall terminate and be null and void and
of no further force and effect. In such event Tenant shall
execute a quitclaim deed and such other documents as Landlord
shall reasonably request evidencing the termination of its right
of first refusal.
(f) If Tenant does not exercise its right of first
refusal to purchase the Leased Premises and the Leased Premises are
transferred to a Third Party Purchaser, Tenant will attorn to any
Third Party Purchaser as Landlord so long as such Third Party
Purchaser and Landlord notify Tenant in writing and furnish
appropriate evidence of such transfer.
(g) The provisions of this Paragraph 35 shall not
apply to or prohibit (i) any mortgaging, subjection to deed of trust or
other hypothecation of Landlord's interest in the Leased
Premises, (ii) any sale of the Leased Premises pursuant to a
private power of sale under or judicial foreclosure of any
Mortgage or other security instrument or device to which
Landlord's interest in the Leased Premises is now or hereafter
subject, (iii) any transfer of Landlord's interest in the Leased
Premises to a Lender, beneficiary under deed of trust or other
holder of a security interest therein by deed in lieu of
foreclosure, (iv) any transfer of the Leased Premises to any
governmental or quasi-governmental agency with power of
condemnation, (v) any transfer of the Leased Premises to any
affiliate of Landlord or to any entity for whom W.P. Carey & Co.,
Inc., W.P. Carey Incorporated or any of their affiliates provides
management services or investment advice, (vi) any Person to whom
Landlord sells all or substantially all of its assets, or
(vii) any transfer of the Leased Premises to any of the
successors or assigns of any of the Persons referred to in the
foregoing clauses (i) through (vi).
36. Right of First Refusal to Purchase Excess Land.
(a) Except as otherwise provided in clause (e) of
this Paragraph 36, and provided an Event of Default does not then
exist, if Landlord shall enter into a contract for the sale of
the Excess Land (the "Excess Land Sale Contract") (as opposed to
a Sale Contract for the Leased Premises which shall be governed
by the terms of Paragraph 35) with a Third Party Purchaser, which
Excess Land Sale Contract shall be conditioned upon Tenant's
failure to exercise its right under this Paragraph 36, and
Landlord shall give written notice to Tenant of the Excess Land
Sale Contract, together with a copy of the executed Excess Land
Sale Contract and the name and business address of the Third
Party Purchaser.
(b) For a period of fifteen (15) days following receipt
of such notice, Tenant shall have the right and option, exercisable
by written notice to Landlord given within said fifteen (15) day
period, to elect to purchase the Excess Land at the purchase
price and upon all the terms and conditions set forth in such
Excess Land Sale Contract except that no contingencies contained
in such Excess Land Sale Contract as to environmental
assessments, engineering studies, inspection of the Excess Land,
state of the title to or encumbrances on the Excess Land, or any
other condition or contingency to the Third Party Purchaser's
obligation to purchase the Excess Land which pertains to the
condition of the Excess Land, shall apply to Tenant's obligation
to purchase the Excess Land under this Paragraph 36, and Tenant
shall be obligated to purchase the Excess Land without any such
condition or contingency.
(c) If at the expiration of the aforesaid fifteen (15)
day period Tenant shall have failed to exercise the aforesaid option,
Landlord may sell the Excess Land to such Third Party Purchaser
upon the terms set forth in such contract. For the purposes of
this Paragraph 36, any Excess Land Sale Contract with a Third
Party Purchaser shall be acceptable to Landlord if the terms of
such Excess Land Sale Contract provides (i) for a purchase price
for an amount equal to or greater than Fair Market Value of the
Excess Land (which shall be determined by Landlord and Third
Party Purchaser in accordance with the procedure described in
Paragraph 29 of this Lease), (ii) that the Third Party Purchaser
pays all costs in connection with such purchase, (iii) that such
purchase price is payable in cash at the closing of the sale of
the Excess Land and (iv) the closing date for such purchase will
occur on any date acceptable to Landlord and Tenant.
(d) Tenant acknowledges that any Excess Land Sale
Contract shall require that the Third Party Purchaser, at its sole cost
and expense, cause the Parcel A Premises to be subdivided in
compliance with all applicable subdivision laws, Legal
Requirements and Easement Agreements so that the Excess Land and
the remainder of the Parcel A Premises (the "Retained Premises")
are separate tracts and after such sale both the Excess Land and
the Retained Premises shall comply with all applicable Laws,
Legal Requirements and Easement Agreements and Landlord and Third
Party Purchaser shall have executed a restrictive covenant and
easement agreement in form and substance satisfactory to Landlord
and Third Party Purchaser in recordable form which shall govern
the development of the Excess Land in order to ensure that any
such development shall not reduce the value of or create an undue
burden on the Retained Premises and the Parcel B Premises and
that the design of any Improvements shall be compatible with the
design of the Improvements and which shall provide for the
benefit of the Excess Land customary utility easements and access
easements and (v) all Costs of Landlord, Lender and Third Party
Purchaser in connection with the sale of the Excess Land and in
complying with the above conditions, including reasonable
attorneys' fees, shall be borne solely by Third Party Purchaser.
The Excess Land Sale Contract shall also provide that
concurrently with the transfer of the Excess Land, Landlord shall
agree to grant to Third Party Purchaser customary utility
easements along the property lines of the Retained Premises in
locations approved by Landlord, and Landlord shall grant to
Tenant an access easement in a location selected by Landlord in
its sole discretion and subject to such terms and conditions as
Landlord in its sole discretion shall determine. If Landlord
conveys the Excess Land to Tenant or to any Third Party
Purchaser, then this Lease shall terminate with respect to the
Excess Land, but shall remain in full force and effect with
respect to the Retained Premises, provided, however, that Tenant
agrees that in no event will the release of the Excess Land from
this Lease amend, reduce or modify any of the obligations and
liabilities of Tenant hereunder, including the obligation to pay
Basic Rent in the amount set forth in Exhibit "D" hereto. Tenant
shall execute such documents confirming such termination as
Landlord shall reasonably request.
(e) Notwithstanding anything to the contrary, if
this Lease terminates or the Term expires or the Leased Premises is sold
in its entirety to a Third Party Purchaser, the right of first
refusal granted in this Paragraph 36, shall terminate and be null
and void and of no further force and effect. In such event
Tenant shall execute a quitclaim deed and such other documents as
Landlord shall reasonably request evidencing the termination of
its right of first refusal to purchase the Excess Land.
(f) The provisions of this Paragraph 36 shall not
apply to or prohibit (i) any mortgaging, subjection to deed of trust or
other hypothecation of Landlord's interest in the Excess Land,
(ii) any sale of the Excess Land pursuant to a private power of
sale under or judicial foreclosure of any Mortgage or other
security instrument or device to which Landlord's interest in the
Excess Land is now or hereafter subject, (iii) any transfer of
Landlord's interest in the Excess Land to a Lender, beneficiary
under deed of trust or other holder of a security interest
therein or the designees by deed in lieu of foreclosure, (iv) any
transfer of the Excess Land to any governmental or
quasi-governmental agency with power of condemnation, (v) any
transfer of the Excess Land to any affiliate of Landlord or to
any entity for whom W.P. Carey & Co., Inc., W.P. Carey
Incorporated or any of their affiliates provides management
services or investment advice, (vi) any Person to whom Landlord
sells all or substantially all of its assets, (vii) any transfer
of the Excess Land to any of the successors or assigns of any of
the Persons referred to in the foregoing clauses (i) through (iv)
or (viii) any sale of the Leased Premises in its entirety.
(g) Tenant expressly acknowledges and agrees that
the right of first refusal to purchase and any sale of the Leased
Premises is independent of the right of first refusal to purchase the
Excess Land, and, notwithstanding anything to the contrary,
Tenant shall have no right to exercise its right of first refusal
to purchase the Excess Land independent of the Leased Premises if
Landlord shall enter into a Sale Contract to sell the entire
Leased Premises and in such event the right of first refusal
granted in this Paragraph 36 shall be null and void and Tenant
shall execute a quitclaim deed and such other documents as
Landlord shall reasonably request evidencing the termination of
its right of first refusal to purchase the Excess Land.
37. Security Deposit.
(a) Concurrently with the execution of this Lease,
Tenant shall deliver to Landlord cash security in the amount of Five
Hundred Thousand and no/100 Dollars ($500,000) (the "Security
Deposit"). The Security Deposit shall be held in an interest
bearing account and, so long as no Event of Default exists, all
interest thereon shall be disbursed to Tenant on the first
business day of each Lease Year, commencing with the second Lease
Year. The Security Deposit (and interest thereon) shall be
security for the payment by Tenant of the Rent and all other
charges or payments to be paid hereunder and the performance of
the covenants and obligations contained herein, and upon the
occurrence of any Event of Default Landlord shall have the right
to apply the Security Deposit as provided in Paragraph 23(c). So
long as no Event of Default then exists, the Security Deposit
shall be applied to the final quarterly installment of Basic
Rent, and, upon the stated expiration of the Term or upon any
earlier termination under Paragraph 18 and, in either such case,
an Event of Default does not then exist, the balance, if any, of
the Security Deposit and interest thereon then held by Landlord
shall be promptly delivered to Tenant.
(b) Landlord shall have the right to assign
to Lender or any other holder of a Mortgage the Security Deposit during
the term of the applicable Loan, and the Lender or such other holder
of a Mortgage shall have all of the rights of, and shall be
subject to the terms of, this Paragraph 37. Tenant covenants and
agrees to execute such agreements, consents and acknowledgments
as may be reasonably requested by Landlord and Lender from time
to time to acknowledge the assignment of the Security Deposit.
38. Miscellaneous.
(a) The paragraph headings in this Lease are
used only for convenience in finding the subject matters and are not
part of this Lease or to be used in determining the intent of the
parties or otherwise interpreting this Lease.
(b) As used in this Lease, the singular shall
include the plural and any gender shall include all genders as the
context requires and the following words and phrases shall have the
following meanings: (i) "including" shall mean "including without
limitation"; (ii) "provisions" shall mean "provisions, terms,
agreements, covenants and/or conditions"; (iii) "lien" shall mean
"lien, charge, encumbrance, title retention agreement, pledge,
security interest, mortgage and/or deed of trust";
(iv) "obligation" shall mean "obligation, duty, agreement,
liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or
any part thereof or interest therein"; (vii) "any of the
Improvements" shall mean "the Improvements or any part thereof or
interest therein"; (viii) "any of the Equipment" shall mean "the
Equipment or any part thereof or interest therein"; and (ix) "any
of the Adjoining Property" shall mean "the Adjoining Property or
any part thereof or interest therein".
(c) Any act which Landlord is permitted to
perform under this Lease may be performed at any time and from time
to time by Landlord or any person or entity designated by Landlord.
Each appointment of Landlord as attorney-in-fact for Tenant hereunder
is irrevocable and coupled with an interest. Except as otherwise
specifically provided herein, Landlord shall have the right, at
its sole option, to withhold or delay its consent whenever such
consent is required under this Lease for any reason or no reason.
Time is of the essence with respect to the performance by Tenant
of its obligations under this Lease.
(d) Landlord shall in no event be construed
for any purpose to be a partner, joint venturer or associate of Tenant
or of any subtenant, operator, concessionaire or licensee of Tenant
with respect to any of the Leased Premises or otherwise in the conduct
of their respective businesses.
(e) This Lease and any documents which may
be executed by Landlord and/or Tenant on or about the effective date
hereof at Landlord's request constitute the entire agreement between
the parties and supersede all prior understandings and agreements,
whether written or oral, between the parties hereto relating to
the Leased Premises and the transactions provided for herein.
Landlord and Tenant are business entities having substantial
experience with the subject matter of this Lease and have each
fully participated in the negotiation and drafting of this Lease.
Accordingly, this Lease shall be construed without regard to the
rule that ambiguities in a document are to be construed against
the drafter.
(f) This Lease may be modified, amended,
discharged or waived only by an agreement in writing signed by the
party against whom enforcement of any such modification, amendment,
discharge or waiver is sought.
(g) The covenants of this Lease shall run with the
land and bind and inure to the benefit of Tenant, its successors and
assigns and shall bind all present and subsequent encumbrancers
and subtenants of any of the Leased Premises, and shall bind and
inure to the benefit of Landlord, its successors and assigns. If
there is more than one Tenant, the obligations of each shall be
joint and several.
(h) If any one or more of the provisions contained
in this Lease shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Lease, but this Lease shall be construed as if such invalid,
illegal or unenforceable provision had never been contained
herein.
(i) This Lease shall be governed by and construed
and enforced in accordance with the Laws of the State.
IN WITNESS WHEREOF, Landlord and Tenant have caused
this Lease to be duly executed under seal as of the day and year
first above written.
LANDLORD:
INK (AL) QRS 12-21, INC., an
Alabama corporation
By: /s/ W. Sean Sovak
Title: Second Vice President
ATTEST: TENANT:
QMS, INC.,
a Delaware corporation
By: /s/ R A Wiggins By: /s/ Gerald G. Roenker
Title: Secretary Title: Executive Vice President
[Corporate Seal]
PREMISES
PARCEL A: From the Southwest corner of Section 6, Township 4
South, Range 2 West, Mobile County, Alabama, said point also
being the Northwest corner of Section 7, Township 4 South,
Range 2 West, run North 89 degrees 45 minutes East 30 feet to the
East line of Schillinger Road for the point of beginning of the
property herein described; thence North 00 degrees 10 minutes
46 seconds West along the East line of Schillinger Road
829.9 feet to a point; thence North 89 degrees 42 minutes
31 seconds East, 1372.67 feet, more or less, to the East line of
the West Half of the Southwest Quarter of Section 6; thence South
00 degrees 26 minutes 43 seconds West along said East line and
along a common boundary established by an instrument recorded in
Real Property Book 2943, Page 967 Probate Court records, Mobile
County, Alabama, a distance of 830.96 feet to the South line of
Section 6, said point also being on the North line of Section 7;
thence North 89 degrees 45 minutes East along said North line
697.07 feet to a point; thence South 00 degrees 17 minutes
10 seconds East, 662.78 feet to a point; thence South 89 degrees
42 minutes 55 seconds West, 697.78 feet to a point; thence South
00 degrees 14 minutes 05 seconds East, 607.67 feet to a point on
the North right-of-way line of Howells Ferry Road; thence North
71 degrees 39 minutes 50 seconds West along said North
right-of-way line, 1217.03 feet to a point; thence North
00 degrees 17 minutes 19 seconds West 250 feet to a point; thence
North 82 degrees 32 minutes 35 seconds West, 190.75 feet to a
point on the East right-of-way line of Schillinger Road; thence
North 00 degrees 17 minutes 19 seconds West along said East
right-of-way line 187.33 feet to a point; thence North 89 degrees
42 minutes 41 seconds East, 240 feet to a point; thence North
00 degrees 17 minutes 19 seconds West 160 feet to a point; thence
South 89 degrees 42 minutes 41 seconds West 240 feet to a point
on the East right-of-way line of Schillinger Road; thence North
00 degrees 17 minutes 19 seconds West along said East
right-of-way line 218.00 feet; thence continue along said
right-of-way line as follows: South 89 degrees 42 minutes
41 seconds West 10.0 feet; thence North 00 degrees 17 minutes
19 seconds West, 42.07 feet to a point on the North line of
Section 7; thence South 89 degrees 45 minutes West along said
North line 10 feet to the point of beginning.
PARCEL B: Commencing at the Northwest corner of Section 7,
Township 4 South, Range 2 West, Mobile County, Alabama, run North
89 degrees 45 minutes East along the North line of said
Section 7, a distance of 2090.68 feet to a point; thence run
South 00 degrees 09 minutes 21 seconds East 662.78 feet to the
point of beginning of the property herein described; thence
continuing South 00 degrees 09 minutes 21 seconds East run
545.71 feet to a point; thence run North 89 degrees 35 minutes
55 seconds West 80 feet to a point; thence run South 00 degrees
09 minutes 21 seconds East 120.0 feet to a point; thence run
North 89 degrees 35 minutes 55 seconds West 305.63 feet to a
point; thence run South 00 degrees 27 minutes 10 seconds East
50.92 feet to a point on the North right-of-way line of Howells
Ferry Road; thence along said North right-of-way line of Howells
Ferry Road run North 71 degrees 39 minutes 50 seconds West
326.78 feet to a point; thence run North 00 degrees 14 minutes
05 seconds West 607.67 feet to a point; thence run North
89 degrees 42 minutes 55 seconds East along the South boundary of
property described in Real Property Book 2297, Page 0442, Probate
Court records, Mobile County, Alabama, a distance of 696.17 feet
to the point of beginning.
EXCESS LAND: From the Southwest corner of Section 6, Township 4
South, Range 2 West, Mobile County, Alabama, said point also
being the Northeast corner of Section 7, Township 4 South, Range
2 West, run North 89 degrees 45 minutes East, 30.0 feet to the East line of
Schillinger Road for the point of beginning of the property
herein described; thence North 00 degrees 10 minutes 46 seconds West along
the East line of Schillinger Road 42.0 feet, more or less, to a point that
is 10.0 feet from, when measured perpendicular, to the South edge
of an existing asphalt drive as shown on Plat of Survey by Rowe
Surveying and Engineering Company, Inc., dated December 17, 1996;
thence Eastwardly and Southwardly along a line that is 10.0 feet
from and parallel to said drive to a point that is 10.0 feet
from, when measured perpendicular, to the West edge of an
existing asphalt drive that runs Southwardly to Howells Ferry
Road (said point bears South 75 degrees 41 minutes 30 seconds East,
1300.0 feet from the point of Beginning); thence Southwardly along a line
that is 10.0 feet Westwardly from and parallel to said West edge to a
point on the North right-of-way line of Howells Ferry Road;
thence North 71 degrees 39 minutes 50 seconds West along said North
right-of-way line, 888.0 feet, more or less, to the Southeast corner of
property shown as BP Oil Company property on aforesaid survey; thence
North 00 degrees 17 minutes 19 seconds West, 250.0 feet to a point; thence
North 82 degrees 32 minutes 35 seconds West, 190.75 feet to a point on the
East right-of-way line of Schillinger Road; thence North 00 degrees
17 minutes 19 seconds West along said East right-of-way line, 187.33 feet
to a point; thence North 89 degrees 42 minutes 41 seconds East, 240.0 feet
to a point; thence North 00 degrees 17 minutes 19 seconds West, 160.0 feet
to a point; thence South 89 degrees 42 minutes 41 seconds West 240.0 feet
to a point on the East right-of-way line of Schillinger Road, then North
00 degrees 17 minutes 19 seconds West along said East right-of-way line,
218.00 feet; thence continue along said right-of-way as follows: South
89 degrees 42 minutes 41 seconds West, 10.0 feet; North 00 degrees 17
minutes 19 seconds West, 42.07 feet to a point on the North line of
Section 7; thence South 89 degrees 45 minutes West along said North line
10.0 feet to the point of beginning.
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and
appliances of every kind and nature whatsoever now or hereafter
affixed or attached to or installed in any of the Leased Premises
(except as hereafter provided), including all electrical,
anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning,
humidification, sprinkling, plumbing, lifting, cleaning, fire
prevention, fire extinguishing and ventilating systems, devices
and machinery and all engines, pipes, pumps, tanks (including
exchange tanks and fuel storage tanks), motors, conduits, ducts,
steam circulation coils, blowers, steam lines, compressors, oil
burners, boilers, doors, windows, loading platforms, lavatory
facilities, stairwells, fencing (including cyclone fencing),
passenger and freight elevators, overhead cranes and garage
units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this
Lease, but excluding all personal property and all trade
fixtures, machinery, office, manufacturing and warehouse
equipment which are not necessary to the operation, as buildings,
of the buildings which constitute part of the Leased Premises.
PERMITTED ENCUMBRANCES
1. Taxes for the year 1997, which are a lien but not yet due
and payable and all subsequent years.
2. Right of way conveyed Alabama Power Company by Jacob
Kamphius and wife, by instrument dated April 21, 1941 and
recorded in Deed Book 314, page 99. (Affects Parcel A only).
3. Right of ways granted United Gas and Pipe Line Company over
and across the property described in Schedule A by instrument
dated September 19, 1941 and recorded in Deed Book 314, page 524
and December 18, 1958 and recorded in Real Property Book 35, page
98. (Affects Parcel A only).
4. Easement grated Alabama Power Company by Jacob Kamphius by
instrument dated June 2, 1954 and recorded in Deed Book 609,
page 293. (Affects Parcel A only).
5. Avigation easement established by the City of Mobile under
ordinance entitled "Mobile Municipal Airport Zoning Ordinance"
dated September 25, 1955 and all amendments thereto. (Parcels A
& B).
6. Sanitary sewer easement granted Board of Water and Sewer
Commissioners by Jake Kamphius dated April 11, 1983 and recorded
in Real Property Book 2469, page 193. (Affects Parcel A only).
7. Pipeline easement granted Water Works Board of the City of
Mobile by Jacob Kamphius dated December 30, 1950 and recorded in
Deed Book 558, page 121. (Affects Parcel A only).
8. Easement granted Alabama Power Company by Jacob Kamphius and
wife, by instrument dated November 26, 1938 and recorded in Deed
Book 280, page 651. (Affects Parcel A only).
9. Easement granted Alabama Power Company by Jacob Kamphius by
instrument dated May 14, 1947 and recorded in Deed Book 432,
page 571. (Affects Parcel A only).
10. Reservation of one-half of all oil, gas and other minerals
and all rights in connection therewith, as contained in deed from
A.P. Ogburn, Jr., et al, to John L. Godwin, et al, dated
September 25, 1977 and recorded in Real Property Book 1751,
page 810. (Affects Parcel A only).
11. Reservation of one-half oil, gas and other minerals and all
rights in connection therewith, as contained in deed from Skyline
Executive Venture to The American National Bank & Trust Company
of Mobile, dated December 30, 1975 and recorded in Real Property
Book 1540, page 247. (Affects Parcel A only).
12. Conveyance of 37.50 percent of one-half interest in all oil,
gas and other minerals and all rights in connection therewith, by
Skyline Executive Venture to C.B. Root by instrument dated
July 13, 1981 and recorded in Real Property Book 2259, page 278.
(Affects Parcel A only).
13. Conveyance of 43.75 percent of one-half interest in all oil,
gas and other minerals and all rights in connection therewith, by
Skyline Executive Venture to Thomas Root as Trustee to Perch
Creek Trust by instrument dated July 13, 1981 and recorded in
Real Property Book 2259, page 276. (Affects Parcel A).
14. Permit granted Alabama Power Company by Quality Micro
Systems, Inc., and The Industrial Development Board of the County
of Mobile dated October, 1983 and recorded in Real Property
Book 2451, page 434. (Affects Parcel A only).
15. Sanitary sewer easement granted Board of Water and Sewer
Commissioners dated April 8, 1983 and recorded in Real Property
Book 2469, page 191. (Affects Parcel A only).
16. Easement granted Alabama Power Company by Hazel D. Driver by
instrument dated April 21, 1937 and recorded in Deed Book 269,
page 2. (Affects Parcel B only).
17. Easement granted Alabama Power Company by George Kuhla by
instrument dated April 12, 1983 and recorded in Deed Book 268,
page 628. (Affects Parcel B only).
18. Easement granted Alabama Power Company by James Moore by
instrument dated October 30, 1944 and recorded in Deed Book 365,
page 665. (Affects Parcel B only).
19. Easement granted Alabama Power Company by E.L. Stewart by
instrument dated October 19, 1966 and recorded in Real Property
Book 753, page 58. (Affects Parcel B only).
20. Reservation of one-half oil, gas and other minerals, and all
rights in connection therewith, as contained in deed from Edward
L. Stewart to Midtown II, Inc., dated December 27, 1984 and
recorded in Real Property Book 2704, page 796. (Affects Parcel A
only).
21. Reservation of minerals in deed from J.L. Godwin to Quality
Micro Systems, Inc., by instrument dated October 12, 1983 and
recorded in Real Property Book 2530, page 996. (Affects Parcel A
only).
22. Easement granted Alabama Power Company by J. Jacob Kamphius
and wife, by instrument dated March 12, 1937 and recorded in Deed
Book 268, page 619. (Affects Parcel A only)
23. Easement granted Mobile County by QMS, Inc., dated September
11, 1996 and recorded in Real Property Book 4401, page 1791.
(Affects Parcels A & B).
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided
for in Paragraphs 2, 3 and 4 below, Basic Rent payable in respect
of the Term shall be $1,689,375 per annum, payable quarterly in
advance on each Basic Rent Payment Date, in equal installments of
$422,343.75 each.
2. Adjustments to Basic Rent. The Basic Rent shall
be subject to adjustment, in the manner hereinafter set forth,
for increases in the index known as United States Department of
Labor, Bureau of Labor Statistics, Consumer Price Index, All
Urban Consumers, United States City Average, All Items,
(1982-84=100) ("Index") or the successor index that most closely
approximates the Index. If the Index shall be discontinued with
no successor or comparable successor index, Landlord and Tenant
shall attempt to agree upon a substitute index or formula, but if
they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American
Arbitration Association then prevailing in New York City. Any
decision or award resulting from such arbitration shall be final
and binding upon Landlord and Tenant and judgment thereon may be
entered in any court of competent jurisdiction. In no event will
the Basic Rent as adjusted by the Index adjustment be less than
the Basic Rent in effect for the three (3) year period
immediately preceding such adjustment.
3. Effective Dates of Adjustments. Basic Rent shall
not be adjusted to reflect changes in the Index until the third
(3rd) anniversary of the Basic Rent Payment Date on which the
first full quarterly installment of Basic Rent shall be due and
payable (the "First Full Basic Rent Payment Date"). As of the
third (3rd) anniversary of the First Full Basic Rent Payment Date
and thereafter on the sixth (6th), ninth (9th), twelfth (12th)
and, if the initial Term is extended, on the fifteenth (15th),
eighteenth (18th), twenty-first (21st), twenty-fourth (24th),
twenty-seventh (27th), thirtieth (30th), thirty-third (33rd),
thirty-sixth (36th), thirty-ninth (39th) and forty-second (42nd)
anniversaries of the First Full Basic Rent Payment Date, Basic
Rent shall be adjusted to reflect increases in the Index during
the most recent three (3) year period immediately preceding each
of the foregoing dates (each such date being hereinafter referred
to as the "Basic Rent Adjustment Date").
4. Method of Adjustment.
(a) As of each Basic Rent Adjustment Date when
the average Index determined in clause (i) below exceeds the
Beginning Index (as defined in this Paragraph 4(a)), the Basic
Rent in effect immediately prior to the applicable Basic Rent
Adjustment Date shall be multiplied by a fraction, the numerator
of which shall be the difference between (i) the average Index
for the three (3) most recent calendar months (the "Prior
Months") ending prior to such Basic Rent Adjustment Date for
which the Index has been published on or before the forty-fifth
(45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning Index, and the denominator of which shall be the
Beginning Index. The product of such multiplication shall be
added to the Basic Rent in effect immediately prior to such Basic
Rent Adjustment Date. As used herein, "Beginning Index" shall
mean the average Index for the three (3) calendar months
corresponding to the Prior Months, but occurring three (3) years
earlier. If the average Index determined in clause (i) is the
same or less than the Beginning Index, the Basic Rent will remain
the same for the ensuing three (3) year period.
(b) Effective as of a given Basic Rent Adjustment
Date, Basic Rent payable under this Lease until the next
succeeding Basic Rent Adjustment Date shall be the Basic Rent in
effect after the adjustment provided for as of such Basic Rent
Adjustment Date.
(c) Notice of the new annual Basic Rent shall be
delivered to Tenant on or before the tenth (10th) day preceding
each Basic Rent Adjustment Date, but any failure to do so by
Landlord shall not be or be deemed to be a waiver by Landlord of
Landlord's rights to collect such sums. Tenant shall pay to
Landlord, within ten (10) days after a notice of the new annual
Basic Rent is delivered to Tenant, all amounts due from Tenant,
but unpaid, because the stated amount as set forth above was not
delivered to Tenant at least ten (10) days preceding the Basic
Rent Adjustment Date in question.
PERCENTAGE ALLOCATION OF BASIC RENT
Parcel A Premises 73.9%
Parcel B Premises 26.1%
100%
If either Related Premises ceases to be subject to this Lease,
the percentage shown on this Exhibit E for the Related Premises
which remains subject to this Lease shall be 100%.
ACQUISITION COST
Parcel A Premises $10,253,141
Parcel B Premises $ 3,621,204
$13,874,345
COVENANTS
1. Corporate Existence; Control; Mergers, Etc.
(a) Tenant shall, and shall cause each of its
Subsidiaries to, maintain its corporate existence, rights and
franchises in full force and effect. Tenant shall not
reincorporate in another jurisdiction without prior notice to
Landlord. Tenant shall, and shall cause each of its Subsidiaries
to, qualify and remain qualified as a foreign corporation in each
jurisdiction in which failure to receive or retain such
qualification would have an adverse effect on the business,
operations or financial condition of the enterprise comprised of
the Tenant and its Subsidiaries taken as a whole.
(b) The Tenant shall not consolidate or merge
with any other corporation or, in a single transaction or series
of related transactions, sell or convey, transfer, abandon or
lease all or substantially all of its assets to any Person or
make any substantial change in the nature of its business.
2. Restricted Payments. Tenant will not, directly or
indirectly make, or cause or permit any Subsidiary of the Tenant
to make, any Restricted Payment, unless at the time thereof, and
after giving effect thereto:
(i) no Event of Default shall have
occurred and be continuing; and
(ii) such Restricted Payment, together
with all other Restricted Payments made from the
commencement date of the Term to the date of such
Restricted Payment does not exceed the sum of Two
Million Dollars ($2,000,000) and 50% of the
Tenant's Consolidated Net Income on a cumulative
basis beginning with and including the fiscal year
in which the Term commenced to and including the
month immediately preceding the date of such
Restricted Payment.
3. Fixed Charge Coverage Ratio. The Consolidated
Fixed Charge Coverage Ratio of Tenant for the twelve (12) month
period ending on the last day of each fiscal quarter of Tenant
that occurs during the Term shall not be less than 1.50 to 1.
4. Net Worth. The Consolidated Net Worth of Tenant
shall not at any time be less than $29,000,000, increased by 50%
of cumulative Consolidated Net Income beginning with fiscal
quarter of Tenant that ends December, 1996 and for each fiscal
quarter thereafter during the Term.
5. Current Ratio. The Current Ratio of Tenant shall
not on the last day of each fiscal quarter of Tenant that occurs
during the Term be less than 1.2 to 1.0.
6. Debt to Equity Ratio. The Debt to Equity Ratio of
Tenant shall not on the last day of each fiscal quarter of Tenant
that occurs during the Term be greater than .5 to 1.0.
7. Fiscal Year. Tenant shall not change its fiscal
year without the prior written consent of Landlord, which will
not be unreasonably withheld.
8. Definitions. For the purpose of this Exhibit "E"
the following terms shall have the following meanings:
"Affiliate" shall mean, with respect to a
corporation, (i) any officer or director thereof and any person,
trust, corporation, partnership, venture or other entity who or
which is, directly or indirectly, the beneficial owner of more
than 10% of any class of shares or other equity security of such
corporation, or (ii) any person, trust, corporation, partnership,
venture or other entity which, directly or indirectly controls or
is controlled by or under common control with such corporation,
or (iii) any general partner, general partner of a general
partner, partnership with a common general partner, or
co-venturer of or with any person or entity described in (i) or
(ii) above, or (iv) if any general partner or co-venturer is a
corporation, any person, trust, corporation, partnership, venture
or other entity which is an Affiliate as defined above of such
corporation, or (v) if any of the foregoing is a natural person,
his or her parents, spouse, children, siblings and their
children, and spouse's parents, children, siblings and their
children.
"Capital Expenditures" of any Person shall mean,
for any period, all expenditures (whether paid in cash or accrued
as liabilities during such period) of such Person during such
period which would be classified as capital expenditures in
accordance with GAAP (including, without limitation, expenditures
for maintenance and repairs which are capitalized).
"Closing Date" shall mean February 19, 1997.
"Consolidated Fixed Charges" for any period, with
respect to Tenant and its consolidated Subsidiaries, shall mean
the sum of the total interest expense for such period,
capitalized lease payments and Tenant's Mobile, Alabama facility
rent payments for such period, determined on a consolidated basis
in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of the
Tenant at the end of any period shall mean the ratio of
(a) Consolidated Operating Cash Flow of the Tenant for such
period to (b) Consolidated Fixed Charges for such period.
"Consolidated Net Income" shall mean, for any
period, the aggregate net income (or loss) of Tenant and its
Subsidiaries for such period on a consolidated basis, determined
in accordance with GAAP.
"Consolidated Net Worth" shall mean, at any date,
the net worth of Tenant and its Subsidiaries on a consolidated
basis, determined in accordance with GAAP.
"Consolidated Operating Cash Flow" shall mean the
cash flow from continuing operations, exclusive of extraordinary
items, if any, before taxes, interest expense, amortization
expense and depreciation, less the amount of Capital Expenditures
for the period for which Consolidated Operating Cash Flow is
being determined.
"Controls", "controlled by" and "under common
control with" each refers to the effective power, directly or
indirectly, to direct or cause the direction of the management
and policies of the person, trust, corporation, partnership,
venture or other entity in question, whether by contract or
otherwise.
"Current Assets" shall mean, at any date, the
amount which, in conformity with GAAP, would be set forth
opposite the caption "total current assets" (or any like caption)
on a consolidated balance sheet of the Tenant at such date.
"Current Liabilities" shall mean, at any date, the
amount which, in conformity with GAAP, would be set forth
opposite the caption "total current liabilities" (or any like
caption) on a consolidated balance sheet of the Tenant at such
date.
"Current Ratio" of the Tenant at the end of any
period shall mean the ratio of Current Assets to Current
Liabilities.
"Debt to Equity Ratio" of Tenant at the end of any
period shall mean the ratio of Limited Debt of Tenant and its
consolidated Subsidiaries to Shareholder's Equity.
"GAAP" shall mean generally accepted accounting
principles as in effect from time to time in the United States of
America.
"Indebtedness" of any Person shall mean, as of any
date, all obligations which would in accordance with GAAP be
classified as debt, and shall include (a) all obligations of such
Person for borrowed money, (b) all obligations of such person in
respect of letters of credit, surety bonds or similar obligations
issued for the account of such Person, (c) all obligations of
such Person as lessee, user or obligor under any lease of real or
personal property which, in accordance with GAAP, are or should
be capitalized on the books of the lessee, user or obligor
(excluding, in the case of Tenant, any lease classified in
accordance with GAAP as an operating lease but including any so
called "synthetic lease"), and (d) all obligations of others
similar in character to those described in clauses (a) and (b) of
this definition to the extent such Person is liable, contingently
or otherwise, as obligor, guarantor or in any other capacity, or
in respect of which obligations such Person assures a creditor
against loss or agrees to take any action to prevent any such
loss and, in the case of Tenant, all Indebtedness which is
non-recourse to the credit of Tenant but which is secured by the
assets or property of Tenant (but excluding any such non-recourse
Indebtedness of Subsidiaries of Tenant in which Tenant has no
liability). Any Indebtedness which is extended or renewed (other
than by an option created with the original creation of such
Indebtedness) will be deemed to have been created when extended
or renewed.
"Limited Debt" of any Person shall mean, as of any
date, (a) all obligations which by their terms bear interest
whether payable on a current basis or accrued, (b) all
obligations of such Person as lessee, user or obligor under any
lease of real or personal property which, in accordance with
GAAP, are or should be capitalized on the books of the lessee,
user or obligor (excluding, in the case of Tenant, this Lease and
any other lease classified in accordance with GAAP as an
operating lease, but including any so called "synthetic lease")
and (c) all obligations of others similar in character to those
described in clauses (a) and (b) of this definition to the extent
such Person is liable, contingently or otherwise, as obligor,
guarantor or in any other capacity, or in respect of which
similar obligations such Person assures a creditor against loss
or agrees to take any action to prevent any such loss. Any
Limited Debt which is extended or renewed (other than by an
option created with the original creation of such Limited Debt)
will be deemed to have been created when extended or renewed.
"Person" shall mean an individual, partnership,
association, corporation or other entity.
"Restricted Payment" shall mean and include
(a) any direct or indirect purchase, redemption or other
acquisition or retirement for value of any equity security of
Tenant or any option, warrant or right to acquire any such equity
security, or any security convertible into or exchangeable for
any such equity security, (b) any dividend, distribution, loan
advance, extension of credit or other payment or transfer,
whether in cash or property and whether direct or indirect, to or
for the benefit any Person holding an equity interest in the
Tenant, whether or not such interest is evidenced by a security,
or any Affiliate of any such Person, and (c) any direct or
indirect purchase, redemption, prepayment or other acquisition or
retirement for value, prior to its stated maturity, scheduled
repayment or scheduled sinking fund payment of any Indebtedness
of the Tenant or any Subsidiary held by any Person described in
clause (b) above.
"Shareholder's Equity" shall mean, at any date,
the amount which, in conformity with GAAP, would be set forth
opposite the caption "total shareholder's equity" (or any like
caption) on a consolidated balance sheet of Tenant at such date.
"Subsidiary" of any Person means a corporation a
majority of the Voting Stock of which is at the time owned, or
the management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries by such Person.
"Voting Stock" means shares of stock of a
corporation having ordinary voting power to elect the board of
directors or other managers of such corporation.
TERMINATION VALUES
Lease Year Termination Amount
1 $15,800,000
2 $15,761,084
3 $13,815,271
4 $13,815,271
5 $12,453,202
6 $12,453,202
7 $12,453,202
8 $12,453,202
9 $10,974,384
10 $10,974,384
11 $10,974,384
12 $10,974,384
13 $10,740,887
14 $10,740,887
15 $10,740,887
If a Termination Event occurs with respect to the Parcel A
Premises, the Termination Amount shall be 73.9% of the applicable
Termination Amount specified above, and if a Termination Event
occurs with respect to the Parcel B Premises, the Termination
Amount shall be 26.1% of the applicable Termination Amount
specified above.
EXHIBIT 2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement"), dated
as of this 18th day of February, 1997, between QMS, INC., a
Delaware corporation with an address at One Magnum Pass, Mobile,
Alabama 36618 ("QMS"), and INK (AL) QRS 12-21, INC., an Alabama
corporation with an address c/o W. P. Carey & Co., Inc., 50
Rockefeller Plaza, New York, New York 10020 ("QRS:12-21").
WITNESSETH:
WHEREAS, QMS has agreed to sell and QRS:12-21 has
agreed to buy certain real estate located in Mobile County,
Alabama, as more particularly described on Exhibit A hereto
together with the improvements constructed thereon (said real
estate and improvements, collectively, the "Property"), pursuant
to a Warranty Deed of even date herewith from QMS to QRS:12-21;
and
WHEREAS, in order to secure certain agreements of QMS
with respect to the environmental condition of the Property as
described on Exhibit B attached hereto (the "Obligations"), QMS
has agreed to deposit with QRS:12-21 an amount equal to One
Hundred Twenty-Five Thousand and No/100 Dollars ($125,000.00)
(the "Escrowed Funds").
NOW, THEREFORE, for and in consideration of the
foregoing and the mutual covenants set forth herein, the parties
hereby agree as follows:
1. Deposit of Escrowed Funds. Concurrently herewith,
QMS has deposited the Escrowed Funds with QRS:12-21 to be held by
QRS:12-21 in an interest bearing account (the "Escrow Account")
for the benefit of QMS.
2. Agreement to Hold Escrowed Funds. QRS:12-21 agrees
to hold and disburse the Escrowed Funds strictly in accordance
with the terms of this Agreement.
3. Disbursement of Escrowed Funds. At any time prior to
December 31, 1997, QRS:12-21 shall deliver the Escrowed Funds to
QMS upon receipt by QRS:12-21 of a written request from QMS for
delivery of such funds together with a statement setting forth
the Costs (as hereinafter defined) in connection with the
Obligations. As used in this Escrow Agreement, "Costs" shall mean
all reasonable costs and expenses incurred by QMS in connection
with the Obligations. QMS shall deliver to QRS:12-21 a
certificate in the form attached as Exhibit C, which shall
request QRS:12-21 to disburse the amount shown on such
certificate to QMS from time to time (but not more often than
once in any calendar month). Upon receipt by QRS:12-21 from QMS
of both a written request for payment and evidence satisfactory
to QRS:12-21 that the amount requested has been paid by QMS,
QRS:12-21 shall disburse to QMS the amount requested in
accordance with instructions provided by QMS to QRS:12-21;
provided, that all completed Obligations must be satisfactory to
and approved by QRS:12-21 and QMS before any disbursement of
Escrowed Funds shall be made. Provided, however, that if QMS
shall not have completed the Obligations by December 31, 1997,
QRS:12-21 shall have the right, as agent for QMS, to complete the
Obligations and shall be entitled to use the Escrowed Funds for
the payment of costs and expenses associated therewith.
4. Remaining Escrowed Funds. If any portion of the
Escrowed Funds remains in the Escrow Account after all of the
Costs of the Obligations have been paid, then on the earlier of
thirty (30) days following the payment of all Costs or January 1,
1998, QRS:12-21 shall promptly disburse the remainder of the
Escrowed Funds to QMS in accordance with written instructions
received by QRS:12-21 from QMS. Upon the satisfactory completion
of all of the Obligations, any portion of the Escrowed Funds
remaining in the Escrow Account shall be disbursed by QRS:12-21
to QMS in accordance with written instructions received by QRS:12-
21 from QMS.
5. Provisions Relating to QRS:12-21.
(a) QRS:12-21 shall not be liable for any error of
judgment or for any act done or any step taken or omitted by it
in good faith, or for anything which it may do or refrain from
doing in connection herewith, except its own negligence or
willful misconduct, and QRS:12-21 shall have no duties to anyone
except those signing this Escrow Agreement.
(b) If a dispute arises with regard to the performance
of this Escrow Agreement, QRS:12-21 has the right, but not the
obligation, to file an interpleader proceeding and deposit the
Escrowed Funds into the registry of the court. The cost to QRS:12-
21 of any such interpleader proceeding shall be borne by the
losing party.
6. Notices. Any notice, demand or request hereunder
shall be in writing and shall be deemed to have been sufficiently
given or served for all purposes on the third business day after
it is mailed by registered or certified mail, return receipt
requested or on the first business day after it is sent by a
recognized overnight courier, to the parties at their respective
addresses set forth above, or at such other address as any party
may from time to time designate by notice to the others. A copy
of any Certificate required to be provided hereunder for the
purpose of disbursing Escrowed Funds may be sent via facsimile,
to be followed by a hard copy via a recognized overnight courier.
7. Binding Effect. This Escrow Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective heirs, successors and assigns.
8. Governing Law. This Escrow Agreement shall be
governed by and construed in accordance with the laws of the
State of Alabama.
9. Modification. This Escrow Agreement may not be
amended, modified or supplemented except by a writing signed by
all parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed
this Escrow Agreement the day and year first written above.
INK (AL) QRS 12-21, INC.
By: /s/ W. Sean Sovak
Its: Second Vice President
QMS, INC.
By: /s/ Gerald G. Roenker
Its: Executive Vice President
EXHIBIT A
PARCEL A: From the Southwest corner of Section 6, Township 4
South, Range 2 West, Mobile County, Alabama, said point also
being the Northwest corner of Section 7, Township 4 South, Range
2 West, run North 89 degrees 45 minutes East 30 feet to the East
line of Schillinger Road for the point of beginning of the
property herein described; thence North 00 degrees 10 minutes 46
seconds West along the East line of Schillinger Road 829.9 feet
to a point; thence North 89 degrees 42 minutes 31 seconds East,
1372.67 feet, more or less, to the East line of the West Half of
the Southwest Quarter of Section 6; thence South 00 degrees 26
minutes 43 seconds West along said East line and along a common
boundary established by an instrument recorded in Real Property
Book 2943, Page 967 Probate Court records, Mobile County,
Alabama, a distance of 830.96 feet to the South line of Section
6, said point also being on the North line of Section 7; thence
North 89 degrees 45 minutes East along said North line 697.07
feet to a point; thence South 00 degrees 17 minutes 10 seconds
East, 662.78 feet to a point; thence South 89 degrees 42 minutes
55 seconds West, 697.78 feet to a point; thence South 00 degrees
14 minutes 05 seconds East, 607.67 feet to a point on the North
right-of-way line of Howells Ferry Road; thence North 71 degrees
39 minutes 50 seconds West along said North right-of-way line,
1217.03 feet to a point; thence North 00 degrees 17 minutes 19
seconds West 250 feet to a point; thence North 82 degrees 32
minutes 35 seconds West, 190.75 feet to a point on the East right-
of-way line of Schillinger Road; thence North 00 degrees 17
minutes 19 seconds West along said East right-of-way line 187.33
feet to a point; thence North 89 degrees 42 minutes 41 seconds
East, 240 feet to a point; thence North 00 degrees 17 minutes 19
seconds West 160 feet to a point; thence South 89 degrees 42
minutes 41 seconds West 240 feet to a point on the East right-of-
way line of Schillinger Road; thence North 00 degrees 17 minutes
19 seconds West along said East right-of-way line 218.00 feet;
thence continue along said right-of-way line as follows: South 89
degrees 42 minutes 41 seconds West 10.0 feet; thence North 00
degrees 17 minutes 19 seconds West, 42.07 feet to a point on the
North line of Section 7; thence South 89 degrees 45 minutes West
along said North line 10 feet to the point of beginning.
PARCEL B: Commencing at the Northwest corner of Section 7,
Township 4 South, Range 2 West, Mobile County, Alabama, run North
89 degrees 45 minutes East along the North line of said Section
7, a distance of 2090.68 feet to a point; thence run South 00
degrees 09 minutes 21 seconds East 662.78 feet to the point of
beginning of the property herein described; thence continuing
South 00 degrees 09 minutes 21 seconds East run 545.71 feet to a
point; thence run North 89 degrees 35 minutes 55 seconds West 80
feet to a point; thence run South 00 degrees 09 minutes 21
seconds East 120.0 feet to a point; thence run North 89 degrees
35 minutes 55 seconds West 305.63 feet to a point; thence run
South 00 degrees 27 minutes 10 seconds East 50.92 feet to a point
on the North right-of-way line of Howells Ferry Road; thence
along said North right-of-way line of Howells Ferry Road run
North 71 degrees 39 minutes 50 seconds West 326.78 feet to a
point; thence run North 00 degrees 14 minutes 05 seconds West
607.67 feet to a point; thence run North 89 degrees 42 minutes 55
seconds East along the South boundary of property described in
Real Property Book 2297, Page 0442, Probate Court records, Mobile
County, Alabama, a distance of 696.17 feet to the point of
beginning.
Exhibit B
Former Drum Area
1. Decommission monitor wells.
2. Soil excavation, disposal and backfill.
3. Coordination/oversight, inspection/testing and report.
4. If hazardous waste disposal is required, transportation and
disposal.
UST Pipeline Area
1. Decommission monitor wells.
Exhibit C
CERTIFICATE
QMS, Inc., a Delaware corporation ("QMS"), hereby
requests INK (AL) QRS 12-21, Inc., an Alabama corporation
("QRS:12-21"), pursuant to that certain Escrow Agreement (the
"Escrow Agreement"), dated as of February 18, 1997, to disburse
the amount of $ ___________ from the Escrowed Funds (as defined
in the Escrow Agreement) to QMS as payment for the completion of
certain of the Obligations (as defined in the Escrow Agreement),
described as follows:
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
QMS certifies that the Obligations for which payment of
the above stated amount has been requested by QMS has been
completed to the satisfaction of both QRS:12-21 and QMS and that
the conditions set forth in the Escrow Agreement for disbursement
of the above stated amount of Escrowed Funds have been fully
satisfied.
QMS, INC.
By:
Its:
EXHIBIT 3
SUBORDINATION, NON-DISTURBANCE
AND ATTORNNENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made and entered into as of the 18th day of
February, 1997, by and among INK (AL) QRS 12-21, INC., an Alabama
corporation (hereinafter called "Landlord"), QMS, INC., a
Delaware corporation (hereinafter called "Tenant"), and
CREDITANSTALT-BANKVEREIN, an Austrian banking corporation acting
through its Connecticut Branch (hereinafter called "Lender").
W I T N E S S E T H:
WHEREAS, Lender is the owner and holder of that certain
Real Estate Note of even date herewith (hereinafter called the
"Note"), and made by Landlord to the order of Lender, secured, in
part, by that certain Mortgage and Security Agreement dated of
even date herewith, between Landlord and Lender, recorded or to
be recorded in the Mobile County, Alabama records (hereinafter
called the "Security Instrument"), constituting a first lien and
encumbrance upon property described therein; and
WHEREAS, Landlord, as landlord, and Tenant, as tenant,
entered into that certain Lease Agreement dated of even date
herewith (the "Lease"), with respect to certain premises
(hereinafter called the "Leased Premises") which constitute all
or part of the real property conveyed by the Security Instrument,
and which is more particularly described in Exhibit "A" attached
hereto and by reference made a part hereof (the "Property"); and
WHEREAS, Tenant wishes to obtain from Lender certain
assurances that Tenant's rights under the Lease and Tenant's
possession of the Leased Premises will not, subject to the terms
and conditions of this Agreement, be affected or disturbed by
Lender by reason of Lender's exercise of its rights under the
Security Instrument or by reason of a foreclosure of the lien of
the Security Instrument on the Property or a deed in lieu
thereof; and
WHEREAS, Lender is willing to provide such assurance to
Tenant upon and subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants of the parties hereto, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do mutually covenant and agree
as follows:
1. Landlord and Tenant hereby subordinate the Lease and all
right, title, and interest of Tenant thereunder to the Security
Instrument and agree with Lender that the Lease shall at all
times be subject and subordinate in all respects to the Security
Instrument and to all renewals, modifications, and extensions
thereof, subject to the terms and conditions of this Agreement.
2. Tenant shall give prompt written notice to Lender of (i)
all defaults by Landlord under the Lease, including without
limitation those defaults, if any, which are of such a nature as
to give Tenant a right to terminate the Lease, to reduce rent, or
to credit or offset any amounts against future rents; (ii) the
exercise of any expansion, purchase or termination rights
pursuant to the terms of the Lease; and (iii) the encumbrance of
the Lease by a leasehold mortgage. Landlord will provide Lender
with all information provided to Landlord under the terms of the
Lease, including but not limited to evidence of payment of taxes
and insurance (for which payments Tenant is obligated under the
Lease). Tenant will give Lender the same right to cure any
defaults or take any action to which the Landlord may be entitled
under the Lease, without the obligation to cure such defaults or
take such action.
3. So long as an "Event of Default" (as defined in the
Lease) has not occurred under the Lease, Lender agrees for itself
and its successors in interest that:
a. Tenant shall not be disturbed by Lender in Tenant's
possession, enjoyment, use, and occupancy of the Leased Premises
or in the exercise of the other rights of Tenant under the Lease
during the initial or any renewal term of the Lease or any
extension or modification thereof, nor shall Lender make Tenant a
party defendant in or otherwise join Tenant in any foreclosure
proceeding concerning the Property for the purpose of terminating
Tenant's interest and estate under the Lease; and
b. Any sale or disposition of the Property pursuant to the
exercise of any rights and remedies under the Security Instrument
shall be subject to all the terms and conditions of, and the
Tenant's right of possession under, the Lease, except as
otherwise set forth in this Agreement.
4. Tenant hereby acknowledges that Tenant shall not,
without the prior written consent of Lender which consent shall
not be unreasonably withheld (and Lender may consider those
matters identified in Paragraph 21(a) of the Lease in making such
determination as to subsection 4.b. hereinbelow):
a. Make any Alterations (as defined in the Lease) pursuant
to Paragraph 13 of the Lease other than Alterations required by
Paragraphs 12 and 17 of the Lease or permitted under Paragraph 13
of the Lease; or
b. make any assignment or enter into any sublease agreement
pursuant to Paragraph 21 of the Lease, other than any assignment
or sublease permitted therein, without the consent of Landlord.
Lender acknowledges and agrees to comply with the time
limitations applicable to it in Paragraph 21(a)(ii) respecting
response to Tenant's requests for consents to proposed
assignments.
5. Landlord and Tenant acknowledge and agree that neither
Landlord nor Tenant will agree to any modification, amendment or
supplement of the Lease or any provision thereof without the
prior written consent of Lender. Without limiting the generality
of the foregoing, except as expressly permitted under the terms
of the Lease, Tenant and Landlord agree that neither of them will
cause or enter into any agreement providing for any termination
of the Lease before the end of the "Expiration Date," as such
term is defined in the Lease, or withhold or reduce the rent or
any installment of rent below the amounts stated therein without
the prior written consent of Lender. Subject to the rights of
Lender contained herein, nothing in this paragraph shall
constitute a waiver by the Tenant of its rights against the
Landlord under the Lease or limit the rights of the Tenant to
maintain any action at law or equity against the Landlord
provided that, except as otherwise expressly permitted under the
Lease, such action does not reduce the term thereof or the rental
obligations referred to therein.
6. Tenant hereby acknowledges that Landlord and Lender have
entered into that certain Assignment of Rentals and Leases of
even date herewith, recorded or to be recorded in the Mobile
County, Alabama records (the "Assignment"). Lender and Landlord
have represented to Tenant, and Tenant therefore acknowledges,
that pursuant to the Assignment, Lender is presently entitled to
collect and receive all rents to be paid under the Lease directly
from Tenant. Based upon such representations, Tenant agrees to
pay all rents and installments of rent as they become due
directly to Lender in the manner and at such address as Lender
may hereafter direct by written notice to Tenant. Until such
notice is given by Lender to Tenant as provided in Paragraph 10
hereinbelow, Tenant shall pay all rent and installments of rent
in accordance with the provisions of the Lease.
7. No person or entity who exercises a right arising under
the Security Instrument or the Assignment to receive the rents
payable by Tenant under the Lease but who does not succeed to
Landlord's interests under the Lease shall thereby become
obligated to Tenant for the performance of any of the terms,
covenants, conditions, and agreements of Landlord under the
Lease. Landlord and Tenant agree that Tenant shall make all
payments to be made by Tenant under the Lease to any such person
or entity who exercises a right arising under the Security
Instrument or the Assignment to receive the rents payable by
Tenant under the Lease upon receipt of written notice of the
exercise of such rights, and Tenant agrees not to prepay any sums
payable by Tenant under the Lease. The receipt of rent by any
other party without such party having succeeded to the interests
of Landlord under the Lease shall not relieve Landlord of its
obligations under the Lease, and Tenant shall continue to look
only to Landlord for performance thereof.
8. If the interest of Landlord shall be acquired by Lender
by reason of foreclosure of the Security Instrument or other
proceedings brought to enforce the rights of the holder thereof,
by deed in lieu of foreclosure or by any other method, and if
Lender succeeds to the interest of Landlord under the Lease, then
the Lease and the rights of Tenant thereunder shall continue in
full force and effect and shall not be terminated or disturbed
except in accordance with the terms of the Lease; and Tenant
shall be bound to Lender and, except as otherwise set forth in
Paragraph 9 hereinbelow, Lender shall be bound to Tenant, under
all of the terms, covenants, and conditions of the Lease for the
balance of the term thereof remaining and for any extensions or
renewals therefor contained in the Lease, with the same force and
effect as if Lender were the landlord under the Lease; and Tenant
does hereby attorn to Lender as its landlord, said attornment to
be effective and self-operative without the execution of any
other instruments on the part of either party hereto immediately
upon Lender's succeeding to the interest of Landlord under the
Lease; and Tenant hereby agrees that Lender shall not be
responsible or liable in any way for any default under the Lease
occurring prior to the time Lender obtains title to the Property
and is entitled to actual, unrestricted possession of the
Premises subject to the possessory rights of Tenant under the
Lease; provided, however, that in the event Tenant notifies
Lender in writing of a curable default and Lender fails to cure
such default and such failure to cure continues for fifteen (15)
days after Lender takes title to the Leased Premises, Lender
shall be responsible for any actual damages caused by the
continuation of such default (notwithstanding the provisions of
Paragraph 9 herein), but in no event shall Lender be responsible
or liable for consequential damages.
9. In addition to and not in lieu of all of the other
provisions of this Agreement, Lender shall not in any way or to
any extent be:
a. Liable for any act or omission of any prior landlord
(including Landlord); or
b. subject to any offsets or defenses which Tenant might
have against any prior landlord (including Landlord); or
c. bound by any rent or additional rent which Tenant might
have paid for more than thirty (30) days in advance to any prior
landlord (including Landlord); or
d. bound by any agreement or modification of the Lease made
after the date hereof without Lender's consent; or
e. in any way responsible for any deposit or security which
was delivered to Landlord but which was not subsequently
delivered to Lender.
Nothing in this paragraph shall constitute a waiver by Tenant of
its rights against any such prior landlord (including Landlord)
under the Lease or limit the rights of the Tenant to maintain any
action at law or in equity against such prior landlord (including
Landlord).
10. If requested by Lender, Tenant hereby agrees that so
long as the indebtedness secured by the Security Instrument is
outstanding, Tenant will pay directly to Lender, at the address
set forth in Paragraph 11 hereinbelow, the rent payable under
Paragraphs 6 and 7 of the Lease.
11. All notices, demands, or requests, and responses
thereto required or permitted to be given pursuant to this
Agreement shall be in writing and shall be deemed to have been
properly given or served and shall be effective upon being
deposited in the United States Mail, postpaid and registered or
certified with return receipt requested or by national overnight
delivery service; provided, however, the time period in which a
response to any notice, demand, or request must be given shall
commence on the date of the receipt of the notice, demand, or
request by the addressee thereof. Rejection or other refusal to
accept or inability to deliver because of changed address of
which no notice has been given shall constitute receipt of the
notice, demand, or request sent. Any such notice if given to
Landlord shall be addressed as follows:
c/o W.P. Carey & Co., Inc.
50 Rockefeller Plaza, Second Floor
New York, New York 10020
Attn: Property Management
with a copy to:
Reed Smith Shaw & McClay
2500 One Liberty Place
Philadelphia, Pennsylvania 19103
Attn: Chairman, Real Estate Department
if given to Lender shall be addressed as follows:
Creditanstalt-Bankverein
Two Greenwich Plaza
Greenwich, Connecticut 06830
with a copy to:
Troutman Sanders LLP
NationsBank Plaza
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
Attn: Chairman, Real Estate Section
if given to Tenant shall be addressed as follows:
One Magnum Pass
Mobile, Alabama 36618
with a copy to:
Hand Arendall, L.L.C.
300 First National Bank Building
Mobile, Alabama 36602
Attn: Gregory R. Jones, Esq.
or at such other address in the United States of America as
Landlord, Lender, or Tenant may by notice in writing designate
for notice.
12. This Agreement shall be binding upon and inure to the
benefit of the parties, their respective heirs, successors, and
assigns.
13. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York from time to
time in effect, except to the extent (a) of procedural and
substantive matters relating only to the enforcement of rights
and remedies against the Leased Premises, which matters shall be
governed by the laws of the State of Alabama and (b) that the
laws of the United States of America and any rules, regulations,
or orders issued or promulgated thereunder, applicable to the
affairs and transactions entered into by the parties hereto,
otherwise pre-empt New York or Alabama law, in which event such
federal law shall control.
14. If Lender or its designee receives any condemnation
award or insurance proceeds in accordance with the provisions of
the Security Instrument, Tenant shall comply with all the terms
and conditions for disbursement of such proceeds provided in the
Security Instrument. In the event of any conflict between the
terms of the Security Instrument and the Lease with regard to
casualty or condemnation proceeds, Tenant agrees that the terms
of the Security Interest shall control.
15. From time to time, upon the request of Lender, Landlord
and Tenant will execute such instruments of further assurance as
Lender may reasonably request in order to effectuate the purposes
of the Security Instrument and this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement under seal as of the date first above written.
"LANDLORD"
INK (AL) QRS:12-21, INC.,
an Alabama corporation
By: /s/ W. Sean Sovak
Name: W. Sean Sovak
Title: Second Vice President
Attest: /s/ Ted R. Heuston
Name: Ted R. Heuston
Title: Assistant Secretary
[CORPORATE SEAL]
ACKNOWLEDGEMENT
STATE OF New York )
) SS
COUNTY OF New York )
I, the undersigned notary public in and for said County,
hereby certify that W. Sean Sovak and Ted R. Heuston, who
acknowledged themselves to be the Second Vice President and
Assistant Secretary, respectively, of INK (AL) QRS:12-21, INC.,
an Alabama corporation, whose names are signed to the foregoing
instrument, and who are known to me, acknowledged before me on
this day that, being informed of the contents of the instrument,
they, as such officers and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and official seal, this 18th day of
February, 1997.
/S/ Kathy L. Aufman
NOTARY PUBLIC
My Commission Expires: 7/29/98
KATHY L. AUFMAN
Notary Public, State of New York
No. 01 AU5063903
Qualified in New York County
Commission Expires 7-29-98
"TENANT"
QMS, INC., a Delaware corporation
By: /s/ Gerald G. Roenker
Name: Gerald G. Roenker
Title: Executive Vice President
Attest: /s/ R A Wiggins
Name: Richard A. Wiggins
Title: Secretary
[CORPORATE SEAL]
ACKNOWLEDGEMENT
STATE OF New York )
) SS
COUNTY OF New York )
I, the undersigned notary public in and for said County,
hereby certify that Gerald G. Roenker, and Richard A. Wiggins, who
acknowledged themselves to be the Executive Vice President and
Secretary, respectively, of QMS, INC., a Delaware corporation,
whose names are signed to the foregoing instrument, and who are
known to me, acknowledged before me on this day that, being
informed of the contents of the instrument, they, as such
officers and with full authority, executed the same voluntarily
for and as the act of and on behalf of said corporation.
Given under my hand and official seal, this 18th day of
February, 1997.
/S/ Kathy L. Kaufman
NOTARY PUBLIC
My Commission Expires: 7/29/98
KATHY L. KAUFMAN
Notary Public, State of New York
No. 01 AU5063903
Qualified in New York County
Commission Expires 7-29-98
"LENDER"
CREDITANSTALT-BANKVEREIN, an
Austrian banking corporation,
acting through its Connecticut
Branch
By: /s/ Joseph P. Longosz
Name: Joseph P. Longosz
Title: Vice President
Attest: /s/ Craig Stamm
Name: Craig Stamm
Title: Senior Associate
[CORPORATE SEAL]
ACKNOWLEDGEMENT
STATE OF Georgia )
) SS
COUNTY OF Dekalb )
I, the undersigned notary public in and for said County,
hereby certify that Joseph P. Longosz and Craig Stamm, personally
Appeared before me this day and acknowledged that they are the
Vice President and Senior Associate, respectively, of
CREDITANSTALT-BANKVEREIN, an Austrian banking corporation acting
through its Connecticut Branch, whose names are signed to the
foregoing instrument, and who are known to me, acknowledged
before me on this day that, being informed of the contents of the
instrument, they, as such officers and with full authority,
executed the same voluntarily for and as the act of and on behalf
of said corporation.
Given under my hand and official seal, this 14th day of
February, 1997.
/S/ Marie Campbell
NOTARY PUBLIC
My Commission Expires:
Notary Public, Fulton County,
Georgia
My Commission Expires May 7, 1999
EXHIBIT A
PARCEL A: From the Southwest corner of Section 6, Township 4
South, Range 2 West, Mobile County, Alabama, said point also
being the Northwest corner of Section 7, Township 4 South, Range
2 West, run North 89 degrees 45 minutes East 30 feet to the East
line of Schillinger Road for the point of beginning of the
property herein described; thence North 00 degrees 10 minutes 46
seconds West along the East line of Schillinger Road 829.9 feet
to a point; thence North 89 degrees 42 minutes 31 seconds East,
1372.67 feet, more or less, to the East line of the West Half of
the Southwest Quarter of Section 6; thence South 00 degrees 26
minutes 43 seconds West along said East line and along a common
boundary established by an instrument recorded in Real Property
Book 2943, Page 967 Probate Court records, Mobile County,
Alabama, a distance of 830.96 feet to the South line of Section
6, said point also being on the North line of Section 7; thence
North 89 degrees 45 minutes East along said North line 697.07
feet to a point; thence South 00 degrees 17 minutes 10 seconds
East, 662.78 feet to a point; thence South 89 degrees 42 minutes
55 seconds West, 697.78 feet to a point; thence South 00 degrees
14 minutes 05 seconds East, 607.67 feet to a point on the North
right-of-way line of Howells Ferry Road; thence North 71 degrees
39 minutes 50 seconds West along said North right-of-way line,
1217.03 feet to a point; thence North 00 degrees 17 minutes 19
seconds West 250 feet to a point; thence North 82 degrees 32
minutes 35 seconds West, 190.75 feet to a point on the East right-
of-way line of Schillinger Road; thence North 00 degrees 17
minutes 19 seconds West along said East right-of-way line 187.33
feet to a point; thence North 89 degrees 42 minutes 41 seconds
East, 240 feet to a point; thence North 00 degrees 17 minutes 19
seconds West 160 feet to a point; thence South 89 degrees 42
minutes 41 seconds West 240 feet to a point on the East right-of-
way line of Schillinger Road; thence North 00 degrees 17 minutes
19 seconds West along said East right-of-way line 218.00 feet;
thence continue along said right-of-way line as follows: South 89
degrees 42 minutes 41 seconds West 10.0 feet; thence North 00
degrees 17 minutes 19 seconds West, 42.07 feet to a point on the
North line of Section 7; thence South 89 degrees 45 minutes West
along said North line 10 feet to the point of beginning.
PARCEL B: Commencing at the Northwest corner of Section 7,
Township 4 South, Range 2 West, Mobile County, Alabama, run North
89 degrees 45 minutes East along the North line of said Section
7, a distance of 2090.68 feet to a point; thence run South 00
degrees 09 minutes 21 seconds East 662.78 feet to the point of
beginning of the property herein described; thence continuing
South 00 degrees 09 minutes 21 seconds East run 545.71 feet to a
point; thence run North 89 degrees 35 minutes 55 seconds West 80
feet to a point; thence run South 00 degrees 09 minutes 21
seconds East 120.0 feet to a point; thence run North 89 degrees
35 minutes 55 seconds West 305.63 feet to a point; thence run
South 00 degrees 27 minutes 10 seconds East 50.92 feet to a point
on the North right-of-way line of Howells Ferry Road; thence
along said North right-of-way line of Howells Ferry Road run
North 71 degrees 39 minutes 50 seconds West 326.78 feet to a
point; thence run North 00 degrees 14 minutes 05 seconds West
607.67 feet to a point; thence run North 89 degrees 42 minutes 55
seconds East along the South boundary of property described in
Real Property Book 2297, Page 0442, Probate Court records, Mobile
County, Alabama, a distance of 696.17 feet to the point of
beginning.
EXHIBIT 4
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND NEITHER THIS WARRANT NOR
ANY SUCH SHARES MAY BE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
WARRANT
To Purchase Common Stock of
QMS, INC.
THIS IS TO CERTIFY that INK (AL) QRS 12-21, Inc. ("QRS:12-21") or
registered assigns, is entitled upon the due exercise hereof at
any time during the Exercise Period (as hereinafter defined) to
purchase 100,000 shares of Common Stock (subject to adjustment as
provided herein) of QMS, Inc., a Delaware corporation, at the
Exercise Price (as hereinafter defined) (such Exercise Price and
the number of shares of Common Stock purchasable hereunder being
subject to adjustment as provided herein), and to exercise the
other rights, powers and privileges hereinafter provided, all on
the terms and subject to the conditions hereinafter set forth.
ARTICLE I
DEFINITIONS
The terms defined in this ARTICLE I, whenever used in this
Warrant, shall have the respective meanings hereinafter
specified.
"Affiliate" of any Person means a Person which directly or
indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company. The
term "control," as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by
contract or otherwise.
"Assignment" means the form of Assignment appearing at the end of
this Warrant.
"Cashless Exercise Ratio" means a fraction, the numerator of
which is the difference between the Current Market Price per
share of Common Stock on the date of the exercise of this Warrant
and the Exercise Price and the denominator of which is the
Current Market Price per share of Common Stock on the date of the
exercise of this Warrant.
"Closing Date" means February 18, 1997.
"Commission" means the Securities and Exchange Commission or any
other Federal agency from time to time administering the
Securities Act.
"Common Stock" means shares of the Company's Common Stock, $0.01
par value, any stock into which such stock shall have been
changed or any stock resulting from any reclassification of such
stock and any class of capital stock of the Company now or
hereafter authorized having the right to share in distributions
either of earnings or assets of the Company without limit as to
amount or percentage.
"Company" means QMS, Inc., a Delaware corporation, and any
successor corporation.
"Convertible Securities" means evidences of indebtedness, shares
of stock or other securities (other than Stock Purchase Rights)
which are convertible into or exchangeable for, with or without
payment of additional consideration, additional shares of Common
Stock, either immediately or upon the arrival of a specified date
or the happening of a specified event.
"Current Market Price" as of any date herein specified as to any
security means (i) if the security is traded on any national
securities exchange or is reported by NASDAQ on a basis which
lists closing prices, the closing price per share of such
security for the business day immediately preceding the date for
which such value is being determined; (ii) if the security is
otherwise traded over the counter, the arithmetic mean of the bid
and asked prices for the security as reported by NASDAQ for the
business day immediately preceding the date for which such value
is being determined; or (iii) if the security is not traded, the
value determined in good faith by the board of directors of the
Company.
"Default Rate" shall mean the rate of interest specified in
Paragraph 7(a)(iv) of the Lease.
"Event of Default" means (a) the breach of any warranty, or the
inaccuracy of any representation, made by the Company herein,
(b) the failure by the Company to comply with any covenant
contained herein or (c) an Event of Default (as such term is
defined in the Lease).
"Exercise Period" means (subject to the provisions of
Section 8.12 below) the period commencing on the Closing Date and
ending on December 31, 2001.
"Exercise Price" means $6.50, as such price may be adjusted
pursuant to ARTICLE IV.
"Initial Holder" means QRS:12-21.
"Issuable Warrant Shares" means the number of shares of Common
Stock issuable from time to time upon exercise of this Warrant.
"Issued Warrant Shares" means any shares of Common Stock issued
pursuant to this Warrant.
"Lease" means the Lease Agreement, dated as of the Closing Date,
between the Initial Holder and the Company, as the same may be
amended from time to time in accordance with the terms thereof.
"Notice of Exercise" means the form of Notice of Exercise
appearing at the end of this Warrant.
"Opinion of Counsel" means the opinion of counsel experienced in
Securities Act or bank regulatory matters, as the case may be,
chosen by the holder of this Warrant or the holder of Issued
Warrant Shares, which counsel may be counsel to such holder and
which counsel shall be reasonably acceptable to the Company.
"Other Securities" means any stock and other securities of the
Company (other than Common Stock, Convertible Securities or Stock
Purchase Rights) or any other Person which shall become subject
to issue or sale upon the conversion or exchange of any stock or
other securities of the Company.
"Person" means any unincorporated organization, association,
corporation, individual, sole proprietorship, partnership, joint
venture, trust institution, entity, party or government
(including any instrumentality, division, agency, body or
department thereof).
"Piggy-Back Shares" has the meaning set forth in Section 5.3.
"Preferred Stock" means shares of the Company's Preferred Stock,
no par value.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor Federal statute and the rules and regulations of
the Commission promulgated thereunder, all as the same shall be
in effect from time to time.
"Stock Purchase Rights" means any warrants, options or other
rights to subscribe for, purchase or otherwise acquire any shares
of Common Stock or any Convertible Securities.
"Subsidiary" means any corporation or association (a) more than
fifty percent (50%) (by number of votes) of the Voting Stock of
which is at the time owned by the Company or by one or more
Subsidiaries or by the Company and one or more Subsidiaries, or
any other business entity in which the Company or one or more
Subsidiaries or the Company and one or more Subsidiaries owns
more than a fifty percent (50%) interest either in the profits or
capital of such business entity or (b) whose net earnings, or
portions thereof, are consolidated with the net earnings of the
Company and are recorded on the books of the Company for
financial reporting purposes in accordance with generally
accepted accounting principles.
"Voting Stock" means securities of any class or series of a
corporation or association the holders of which are ordinarily,
in the absence of contingencies, entitled to participate in the
election of a majority of the directors or persons performing
similar functions of such corporation or association.
"Warrant" means the warrant dated as of Closing Date issued to
the Initial Holder and all warrants issued upon the partial
exercise, transfer or division of or in substitution for any
Warrant.
"Warrant Shares" means the Issuable Warrant Shares plus the
Issued Warrant Shares, but only during such time as certificates
representing such shares of this Warrant are required to bear the
legend contained in section 5.8 hereof.
Whenever used in this Warrant, any noun or pronoun shall be
deemed to include both the singular and plural and to cover all
genders, and the words "herein", "hereof", and "hereunder" and
words of similar import shall refer to this instrument as a
whole, including any amendments hereto.
ARTICLE II
EXERCISE OF WARRANT
2.1 Right to Exercise; Notice. On the terms and
subject to the conditions of this ARTICLE II, the holder hereof
shall have the right, at its option, to exercise this Warrant in
whole or in part at any time during the Exercise Period by
delivery to the Company of a Notice of Exercise duly executed by
such holder specifying the number of shares of Common Stock to be
purchased.
2.2 Manner of Exercise; Issuance of Common Stock. To
exercise this Warrant, the holder hereof shall (i) deliver to the
Company (a) a Notice of Exercise duly executed by the holder
hereof specifying the number of shares of Common Stock to be
purchased, (b) an amount equal to the aggregate Exercise Price
for all shares of Common Stock as to which this Warrant is then
being exercised and (c) this Warrant or (ii) in connection with
the exercise of this Warrant without the payment of the Exercise
Price, deliver to the Company (a) a Notice of Exercise duly
executed by the holder hereof specifying the number of shares of
Common Stock for which this Warrant is being exercised and the
number of shares of Common Stock deliverable upon such exercise,
which shall equal the product of (x) the number of shares of
Common Stock for which this Warrant is being exercised and (y)
the Cashless Exercise Ratio. At the option of the holder hereof,
if this Warrant is being exercised in the manner described in
clause (i) of the immediately preceding sentence, payment of the
Exercise Price shall be made by wire transfer of funds to an
account in a bank located in the United States designated by the
Company for such purpose or such other reasonable method
acceptable to the Company.
Upon receipt of the required deliveries, the
Company shall, as promptly as practicable, and in any event
within five (5) days thereafter, cause to be issued and delivered
to the holder hereof (or its nominee) or, subject to ARTICLE V,
the transferee designated in the Notice of Exercise, a
certificate or certificates representing shares of Common Stock
equal in the aggregate to the number of shares of Common Stock
specified in the Notice of Exercise (but not exceeding the
maximum number of shares issuable upon exercise of this Warrant).
Such certificates shall be registered in the name of the holder
hereof (or its nominee) or in the name of such transferee, as the
case may be.
If this Warrant is exercised in part, the Company
shall, at the time of delivery of such certificate or
certificates, unless the Exercise Period has expired, issue and
deliver to the holder hereof or, subject to ARTICLE V, the
transferee so designated in the Notice of Exercise a new warrant
evidencing the right of the holder hereof or such transferee to
purchase the aggregate number of shares of Common Stock for which
this Warrant shall not have been exercised, and this Warrant
shall be canceled.
2.3 Effectiveness of Exercise. Unless otherwise
requested by the holder hereof, this Warrant shall be deemed to
have been exercised and such certificate or certificates shall be
deemed to have been issued, and the holder or transferee so
designated in the Notice of Exercise shall be deemed to have
become a holder of record of such shares for all purposes, as of
the close of business on the date the Notice of Exercise,
together with payment of the Exercise Price and this Warrant, is
received by the Company.
2.4 Fractional Shares. The Company shall not issue
fractional shares of Common Stock or scrip representing
fractional shares of Common Stock upon any exercise of this
Warrant. As to any fractional share of Common Stock which the
holder hereof would otherwise be entitled to purchase from the
Company upon such exercise, the Company shall purchase from the
holder such fractional share at a price equal to an amount
calculated by multiplying such fractional share (calculated to
the nearest .001 of a share) by the Current Market Price
calculated as of the date of the Notice of Exercise. Payment of
such amount shall be made at the time of delivery of any
certificate or certificates deliverable upon such exercise in
cash or by check payable to the order of the holder hereof or,
subject to ARTICLE V, the transferee designated in the Notice of
Exercise, as the case may be.
2.5 Continued Validity. A holder of shares of Common
Stock issued upon the exercise of this Warrant, in whole or in
part, shall continue to be entitled to all rights to which a
holder of this Warrant is entitled pursuant to the provisions of
this Warrant, except such rights as their terms apply solely to
the holder of a Warrant. The Company will, at the time of any
exercise of this Warrant, upon the request of the holder of the
shares of Common Stock issued upon the exercise hereof,
acknowledge in writing, in a form reasonably satisfactory to such
holder, its continuing obligation to afford to such holder all
rights to which such holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant;
provided, however, that if such holder shall fail to make any
such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder all such
rights.
ARTICLE III
REGISTRATION, TRANSFER AND EXCHANGE
3.1 Maintenance of Registration Books. The Company
shall keep at its principal office in Mobile, Alabama, a register
in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration,
transfer and exchange of this Warrant. The Company shall not at
any time except upon the dissolution, liquidation or winding up
of the Company, close such register so as to result in preventing
or delaying the exercise or transfer of this Warrant.
3.2 Transfer and Exchange. Upon surrender for
registration or transfer of this Warrant at such office, the
Company shall execute and deliver, subject to ARTICLE V, in the
name of the designated transferee or transferees, one or more new
Warrants representing the right to purchase a like aggregate
number of shares of Common Stock. At the option of the holder
hereof, this Warrant may be exchanged for other Warrants
representing the right to purchase a like aggregate number of
shares of Common Stock upon surrender of this Warrant at such
office. Whenever this Warrant is so surrendered for exchange,
the Company shall execute and deliver the Warrants which the
holder making the exchange is entitled to receive.
Every Warrant presented or surrendered for
registration of transfer or exchange shall be accompanied by an
Assignment duly executed by the holder thereof or its attorney
duly authorized in writing.
All Warrants issued upon any registration of
transfer or exchange of Warrants shall be the valid obligations
of the Company, evidencing the same rights, and entitled to the
same benefits, as the Warrants surrendered upon such registration
of transfer or exchange.
3.3 Replacement. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and (a) in the case of any such loss,
theft or destruction upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or (b) in the case
of any such mutilation, upon surrender of such Warrant for
cancellation at the principal office of the Company, the Company,
at its expense, will execute and deliver, in lieu thereof, a new
Warrant.
3.4 Ownership. The Company and any agent of the
Company may treat the Person in whose name this Warrant is
registered on the register kept at the principal office of the
Company as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary. This Warrant, if
properly assigned, may be exercised by a new holder without first
having a new Warrant issued.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustment of Number of Shares Purchasable. Upon
any adjustment of the Exercise Price as provided in Section 4.2,
the holder hereof shall thereafter be entitled to purchase, at
the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest 1/1OOth of a
share) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of
Common Stock purchasable hereunder immediately prior to such
adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
4.2 Adjustment of Exercise Price. The Exercise Price
shall be subject to adjustment from time to time as hereinafter
set forth.
(a) Stock Dividends, Subdivisions and Combinations. In
the event that the Company subsequent to the Closing Date shall:
(i) declare a dividend upon, or make any
distribution in respect of, any of its stock, payable in Common
Stock, Convertible Securities or Stock Purchase Rights, or
(ii) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock, or
(iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock,
then the Exercise Price shall be adjusted to that price
determined by multiplying the Exercise Price per share of Common
Stock immediately prior to such event by a fraction (A) the
numerator of which shall be the total number of outstanding
shares of Common Stock of the Company immediately prior to such
event, and (B) the denominator of which shall be the total number
of outstanding shares of Common Stock of the Company immediately
after such event, treating as outstanding all shares of Common
Stock issuable upon conversions or exchanges of such Convertible
Securities and exercises of such Stock Purchase Rights.
(b) Issuance of Additional Shares of Common Stock. In
case the Company shall issue or sell any shares of Common Stock
after the Closing Date for a consideration less than the then
Current Market Price per share, the Exercise Price upon each such
issuance or sale shall be adjusted to the price calculated by
multiplying the then existing Exercise Price by a fraction the
numerator of which is (A) the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issue or sale
multiplied by the Current Market Price per share of Common Stock
immediately prior to such issue or sale plus (2) the
consideration received by the Company upon such issue or sale,
divided by (B) the total number of shares of Common Stock
outstanding immediately after such issue or sale, and the
denominator of which shall be the Current Market Price per share
of Common Stock immediately prior to such issue or sale.
The provisions of this Subsection (b) shall not apply
to any additional shares of Common Stock which are distributed to
holders of Common Stock pursuant to a stock dividend or
subdivision for which an adjustment is provided for under
Subsection (a) of this Section 4.2. No adjustment of the
Exercise Price shall be made under this Subsection upon the
issuance of any additional shares of Common Stock which are
issued pursuant to the exercise of any Stock Purchase Rights or
pursuant to the conversion or exchange of any Convertible
Securities to the extent that such adjustment shall previously
have been made upon the issuance of such Stock Purchase Rights or
Convertible Securities pursuant to Subsection (a), (c) or (d) of
this Section 4.2 (or as to which no adjustment was required).
(c) Issuance of Stock Purchase Rights. In case the
Company shall issue or sell any Stock Purchase Rights and the
consideration per share at which additional shares of Common
Stock may at any time thereafter be issuable upon exercise
thereof (or, in the case of Stock Purchase Rights exercisable for
the purchase of Convertible Securities, upon the subsequent
conversion or exchange of such Convertible Securities) shall be
less than the then Current Market Price per share (that is, the
Current Market Price at the time of issuance or sale of the Stock
Purchase Right), the Exercise Price shall be adjusted as provided
in subsection (b) of this Section 4.2 on the basis that (1) the
maximum number of additional shares of Common Stock issuable upon
exercise of such Stock Purchase Rights (or upon conversion or
exchange of such Convertible Securities following such exercise)
shall be deemed to have been issued as of the date of the
determination of the Current Market Price, as hereinafter
provided, and (2) the aggregate consideration received for such
additional shares of Common Stock shall be deemed to be the
minimum consideration received and receivable by the Company in
connection with the issuance and exercise of such Stock Purchase
Rights (or upon conversion or exchange of such Convertible
Securities). For the purposes of this Subsection, (i) the date
as of which the Exercise Price shall be computed shall be the
earlier of (A) the date on which the Company shall enter into a
firm contract for the issuance of such Stock Purchase Rights
(which shall include the grant of an option under a stock option
plan), or (B) the date of actual issuance of such Stock Purchase
Rights, and (ii) the date as of which the Current Market Price
per share of Common Stock shall be computed shall be the last day
of the most recently completed fiscal period of the Company for
which financial statements have been delivered pursuant to the
terms of the Lease prior to the earlier of the dates determined
pursuant to (A) and (B) above.
(d) Issuance of Convertible Securities. In case the
Company shall issue or sell any Convertible Securities and the
consideration per share for which additional shares of Common
Stock may at any time thereafter be issuable pursuant to the
terms of such Convertible Securities shall be less than the
Current Market Price per share (that is, the Current Market Price
at the time of the issuance or sale of the Convertible
Securities), the Exercise Price shall be adjusted as provided in
Subsection (b) of this Section 4.2 on the basis that (1) the
maximum number of additional shares of Common Stock necessary to
effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the date for
the determination of the Current Market Price, as hereinafter
provided, and (2) the aggregate consideration received for such
additional shares of Common Stock shall be deemed to be equal to
the minimum consideration received and receivable by the Company
in connection with the issuance and exercise of such Convertible
Securities. For the purposes of this Subsection, (i) the date as
of which the Exercise Price per share shall be computed shall be
the earlier of (A) the date on which the Company shall enter into
a firm contract for the issuance of such Convertible Securities,
or (B) the date of actual issuance of such Convertible
Securities, and (ii) the date as of which the Current Market
Price per share of Common Stock shall be computed shall be the
last day of the most recently completed fiscal period of the
Company for which financial statements have been delivered
pursuant to the terms of the Lease prior to the earlier of the
dates determined pursuant to (A) and (B) above. No adjustment of
the Exercise Price shall be made under this Subsection upon the
issuance of any Convertible Securities which are issued pursuant
to the exercise of any Stock Purchase Rights, if an adjustment
shall previously have been made upon the issuance of such Stock
Purchase Rights pursuant to Subsection (c) of this Section 4.2.
(e) Minimum Adjustment. In the event any adjustment of
the Exercise Price pursuant to this Section 4.2 shall result in
an adjustment of less than one cent ($.01) per share of Common
Stock, no such adjustment shall be made, but any such lesser
adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which together
with any adjustments so carried forward, shall amount to one cent
($.01) or more per share of Common Stock; provided, however, that
upon any adjustment of the Exercise Price resulting from (i) the
declaration of a dividend upon, or the making of any distribution
in respect of, any stock of the Company payable in Common Stock
or Convertible Securities or (ii) the reclassification by
subdivision, combination or otherwise, of the Common Stock into a
greater or smaller number of shares, the foregoing figure of one
cent ($.01) per share (or such figure last adjusted) shall be
proportionately adjusted; provided, further, upon the exercise of
this Warrant, the Company shall make all necessary adjustments
(to the nearest .001 of a cent) not theretofore made to the
Exercise Price up to and including the date upon which this
Warrant is exercised.
(f) Readjustment of Exercise Price. In the event
(i) the purchase price payable for any Stock Purchase Rights or
Convertible Securities referred to in Subsection (c) or (d)
above, (ii) the additional consideration, if any, payable upon
exercise of such Stock Purchase Rights or upon the conversion or
exchange of such Convertible Securities or (iii) the rate at
which any Convertible Securities above are convertible into or
exchangeable for additional shares of Common Stock shall change,
the Exercise Price in effect at the time of such event shall
forthwith be readjusted to the Exercise Price which would have
been in effect at such time had such Stock Purchase Rights or
Convertible Securities provided for such changed purchase price,
additional consideration or conversion rate, as the case may be,
at the time initially granted, issued or sold. On the expiration
of any such Stock Purchase Rights not exercised or of any such
right to convert or exchange under such Convertible Securities
not exercised, the Exercise Price then in effect hereunder shall
forthwith be increased to the Exercise Price which would have
been in effect at the time of such expiration or termination had
such Stock Purchase Rights or Convertible Securities never been
issued. No readjustment of the Exercise Price pursuant to this
Subsection (f) shall have the effect of increasing the Exercise
Price by an amount in excess of the adjustment originally made to
the Exercise Price in respect of the issue, sale or grant of the
applicable Stock Purchase Rights or Convertible Securities.
(g) Reorganization, Reclassification or
Recapitalization of Company. In case of any capital
reorganization or reclassification or recapitalization of the
capital stock of the Company (other than in the cases referred to
in Subsection (a) of this Section 4.2), or in case of the
consolidation or merger of the Company with or into another
corporation, or in case of the sale or transfer of the property
of the Company as an entirety or substantially as an entirety,
there shall thereafter be deliverable upon the exercise of this
Warrant or any portion thereof (in lieu of or in addition to the
number of shares of Common Stock theretofore deliverable, as
appropriate) the number of shares of stock or other securities or
property to which the holder of the number of shares of Common
Stock which would otherwise have been deliverable upon the
exercise of this Warrant or any portion thereof at the time would
have been entitled upon such capital reorganization or
reclassification of capital stock, consolidation, merger or sale,
at the Exercise Price determined pursuant to 4.2(i)(7).
Prior to and as a condition of the consummation of
any transaction described in the preceding sentence, the Company
shall make equitable, written adjustments in the application of
the provisions herein set forth. Any such adjustment shall be
made by and set forth in a supplemental agreement between the
Company and/or the successor entity as applicable, which
agreement shall bind each such entity, shall be accompanied by an
Opinion of Counsel as to the enforceability of such agreement,
and shall be approved by the holders of Warrants entitled to
purchase not less than sixty-six and two-thirds percent (66.67%)
of the shares of Common Stock issuable upon the exercise thereof.
(h) Other Dilutive Events. In case any event shall
occur as to which the other provisions of this ARTICLE IV are not
strictly applicable but the failure to make any adjustment would
not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles
hereof, then, in each such case, the Company shall appoint a firm
of independent public accountants of recognized national standing
(which may be the regular auditors of the Company), which shall
give their opinion as to the adjustment, if any, on a basis
consistent with the essential intent and principles established
in this ARTICLE IV, necessary to preserve, without dilution, the
purchase rights represented by this Warrant. Upon receipt of
such opinion, the Company will promptly mail a copy thereof to
the holder of this Warrant and shall make the adjustments
described therein.
(i) Determination of Consideration. For purposes of
this ARTICLE IV, the consideration received or receivable by the
Company for the issuance, sale, grant or assumption of additional
shares of Common Stock, Stock Purchase Rights or Convertible
Securities, irrespective of the accounting treatment of such
consideration, shall be valued as follows:
(1) Cash Payment. In the case of cash, the net
amount received by the Company after deduction of any accrued
interest, dividends or any expenses paid or incurred or any
underwriting commissions or concessions paid or allowed by the
Company.
(2) Securities or Other Property. In the case of
securities or other property, at the Current Market Price of the
security for which such consideration was received.
(3) Allocation Related to Common Stock. In the
event additional shares of Common Stock are issued or sold
together with other securities or other assets of the Company for
a consideration which covers both, the consideration received
(computed as provided in (1) and (2) above) shall be allocable to
such additional shares of Common Stock as determined in good
faith by the Board of Directors of the Company.
(4) Allocation Related to Stock Purchase Rights
and Convertible Securities. In case any Stock Purchase Rights or
Convertible Securities shall be issued or sold together with
other securities or other assets of the Company, together
comprising one integral transaction in which no specific
consideration is allocated to the Stock Purchase Rights or
Convertible Securities, such Stock Purchase Rights or Convertible
Securities shall be deemed to have been issued without
consideration.
(5) Dividends in Securities. In case the Company
shall declare a dividend or make any other distribution upon any
stock of the Company (other than Common Stock) payable in either
case in Common Stock, Convertible Securities or Stock Purchase
Rights, such Common Stock, Convertible Securities or Stock
Purchase Rights, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued or
sold without consideration.
(6) Stock Purchase Rights and Convertible
Securities. The consideration for which shares of Common Stock
shall be deemed to be issued upon the issuance of any Stock
Purchase Rights or Convertible Securities shall be determined by
dividing (i) the total consideration, if any, received or
receivable by the Company as consideration for the granting of
such Stock Purchase Rights or the issuance of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such
Stock Purchase Rights, or, in the case of such Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange
thereof, in each case after deducting any accrued interest,
dividends, or any expenses paid or incurred or any underwriting
commissions or concessions paid or allowed by the Company by
(ii) the maximum number of shares of Common Stock issuable upon
the exercise of such Stock Purchase Rights or upon the conversion
or exchange of all such Convertible Securities.
(7) Merger, Consolidation or Sale of Assets. In
case any shares of Common Stock or Convertible Securities or any
Stock Purchase Rights shall be issued in connection with any
merger or consolidation in which the Company is the surviving
corporation, the amount of consideration therefor shall be deemed
to be the Current Market Price of such portion of the assets and
business of the non-surviving corporation as shall be
attributable to such Common Stock, Convertible Securities or
Stock Purchase Rights, as the case may be. In the event of any
merger or consolidation of the Company in which the Company is
not the surviving corporation or in the event of any sale of all
or substantially all of the assets of the Company for stock or
other securities of any corporation, the Company shall be deemed
to have issued a number of shares of its Common Stock for stock
or securities of the other corporation computed on the basis of
the actual exchange ratio on which the transaction was predicated
and for a consideration equal to the Current Market Price on the
date of such transaction of such stock or securities of the other
corporation, and if any such calculation results in adjustment of
the Exercise Price, the determination of this number of shares of
Common Stock issuable upon exercise of this Warrant immediately
prior to such merger, consolidation or sale, for the purposes of
Subsection (g) above, shall be made after giving effect to such
adjustment of the Exercise Price.
(j) Record Date. In case the Company shall take a
record of the holders of the Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution
payable in Common Stock or in Convertible Securities or (ii) to
subscribe for or purchase Common Stock or Convertible Securities,
then all references in this ARTICLE IV to the date of the issue
or sale of the shares of Common Stock deemed to have been issued
or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be, shall be deemed
to be references to such record date.
(k) Shares Outstanding. The number of shares of Common
Stock deemed to be outstanding at any given time shall not
include (i) shares of Common Stock in the treasury of the Company
or any wholly-owned Subsidiary and (ii) any of the Issuable
Warrant Shares or the Issued Warrant Shares.
(l) Maximum Exercise Price. At no time shall the
Exercise Price per share of Common Stock exceed the amount set
forth in the first paragraph of the Preamble of this Warrant
except as provided in Subsection (a) or (g) of this Section 4.2.
(m) Application. Except as otherwise provided herein,
all Subsections of this Section 4.2 are intended to operate
independently of one another. If an event occurs that requires
the application of more than one Subsection, all applicable
Subsections shall be given independent effect.
(n) No Adjustments under Certain Circumstances.
Anything herein to the contrary notwithstanding, the Company
shall not be required to make any adjustment of the Exercise
Price in the case of the issuance of shares of Common Stock upon
the exercise in whole or part of this Warrant or any other
outstanding warrants or options as of the date hereof.
4.3 Certificates and Notices.
(a) Adjustments to Exercise Price. Upon any
adjustment under this ARTICLE IV of the number of shares of
Common Stock purchasable upon exercise of this Warrant or of the
Exercise Price, a certificate, signed (i) by the President or a
Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company, or
(ii) by any independent firm of certified public accountants of
recognized national standing selected by, and at the expense of,
the Company, setting forth in reasonable detail the events
requiring the adjustment and the method by which such adjustment
was calculated, shall be mailed to the holder of this Warrant
specifying the adjusted Exercise Price and the number of shares
of Common Stock purchasable upon exercise of such holder's
Warrant after giving effect to such adjustment.
The certificate of any independent firm of certified
public accountants of recognized national standing selected by
the Board of Directors of the Company shall be conclusive
evidence of the correctness of any computation made under
ARTICLE IV, absent manifest error.
(b) Extraordinary Corporate Events. In case the
Company after the date hereof shall propose to (i) pay any
dividend payable in stock to the holders of shares of Common
Stock or to make any other distribution to the holders of shares
of Common Stock, (ii) offer to the holders of shares of Common
Stock rights to subscribe for or purchase any additional shares
of any class of stock or any other rights or options or
(iii) effect any reclassification of the Common Stock (other than
a reclassification involving merely the subdivision or
combination of outstanding shares of Common Stock), or any
capital reorganization or any consolidation or merger (other than
a merger in which no distribution of securities or other property
is to be made to holders of shares of Common Stock), or any sale,
transfer or other disposition of its property, assets and
business as an entirety or substantially as an entirety, or the
liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall mail to the holder of this
Warrant notice of such proposed action, which shall specify the
date on which the stock transfer books of the Company shall
close, or a record shall be taken, for determining the holders of
Common Stock entitled to receive such stock dividends or other
distribution or such rights or options, or the date on which such
reclassification, reorganization, consolidation, merger, sale,
transfer, other disposition, liquidation, dissolution or winding
up shall take place or commence, as the case may be, and the date
as of which it is expected that holders of Common Stock of record
shall be entitled to receive securities or other property
deliverable upon such action, if any such date is to be fixed.
Such notice shall be mailed in the case of any action covered by
clause (i) or (ii) above at least ten (10) days prior to the
record date for determining holders of Common Stock for purposes
of receiving such payment or offer, or in the case of any action
covered by clause (iii) above at least thirty (30) days prior to
the date upon which such action takes place and twenty (20) days
prior to any record date to determine holders of Common Stock
entitled to receive such securities or other property.
(c) Effect of Failure. Failure to file any certificate
or notice or to mail any notice, or any defect in any certificate
or notice pursuant to this Section 4.4 shall not affect the
legality or validity of the adjustment of the Exercise Price or
the number of shares purchasable upon exercise of this Warrant,
or any transaction giving rise thereto.
ARTICLE V
RESTRICTIONS ON TRANSFER
Neither this Warrant nor any Issued Warrant Shares
shall be transferable except (a) to an Affiliate of the holder
hereof, (b) to a successor corporation to the holder hereof as a
result of a merger or consolidation with, or sale of all or
substantially all of the assets of, the holder hereof, (c) as is
or may be required by the holder hereof to comply with any
Federal or state law or any rule or regulation of any
governmental or public body or authority, or (d) on thirty (30)
days prior written notice to the Company for a period of ninety
(90) days immediately following the date of such notice, to any
other Person.
Any notice given by the holder hereof or of any
Issued Warrant Shares pursuant to Subsection (d) of the first
paragraph of this ARTICLE V shall contain (i) the name and
address of the proposed bona fide purchaser, (ii) the proposed
purchase price for this Warrant or portion hereof or Issued
Warrant Shares proposed to be sold, (iii) the portion of this
Warrant or the number of Issued Warrant Shares proposed to be
sold and (iv) a brief description of such proposed transfer and
shall be accompanied by an Opinion of Counsel that such transfer
is being made in compliance with the Securities Act or an
exemption therefrom.
The conditions contained in the following sections
of this ARTICLE V are intended to ensure compliance with the
Securities Act in respect of the transfer of this Warrant or
Issued Warrant Shares. Reference in this ARTICLE V to Issued
Warrant Shares includes Issued Warrant Shares theretofore issued
upon the exercise of this Warrant or otherwise which are then
evidenced by certificates required to bear the legend set forth
in Section 5.8.
In addition, in connection with the issuance of
this Warrant, the holder specifically represents to the Company
by acceptance of this Warrant as follows:
(1) The holder is aware of the Company's business
affairs and financial condition, and has acquired information
about the Company sufficient to reach an informed and
knowledgeable decision to acquire this Warrant. The holder is
acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for the resale in
connection with, any "distribution" thereof for purposes of the
Act.
(2) The holder understands that this Warrant and
the Shares have not been registered under the Act in reliance
upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the holder's
investment intent as expressed herein. In this connection, the
holder understands that, in the view of the Securities and
Exchange Commission (the "SEC"), the statutory basis for such
exemption may be unavailable if the holder's representation was
predicated solely upon a present intention to hold the Warrant
and the Shares for the minimum capital gains period specified
under applicable tax laws, for a declared sale, for or until an
increase or decrease in the market price of the Warrant and the
Shares, or for a period of one (1) year or any other fixed period
in the future.
(3) The holder further understands that this
Warrant and the Shares must be held indefinitely unless
subsequently registered under the Act and any applicable state
securities laws, or unless exemptions from registration are
otherwise available.
(4) The holder is aware of the provisions of Rule
144 and 144A, promulgated under the Act, which, in substance,
permit limited public resale of "restricted securities" acquired,
directly or indirectly, from the issuer thereof (or from an
affiliate of such issuer), in a non-public offering subject to
the satisfaction of certain conditions, if applicable, including,
among other things: The availability of certain public
information about the Company, the resale occurring not less than
two (2) years after the party has purchased and paid for the
securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities
Exchange Act of 1934, as amended) and the amount of securities
being sold during any three-month period not exceeding the
specified limitations stated therein.
(5) The holder further understands that at the
time it wishes to sell this Warrant and the Shares there may be
public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule
144 and 144A, and that, in such event, the holder may be
precluded from selling this Warrant and the Shares under Rule 144
and 144A even if the two-year minimum holding period had been
satisfied.
(6) The holder further understands that in the
event all of the requirements of Rule 144 and 144A are not
satisfied, registration under the Act, compliance with Regulation
A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 and 144A is not
exclusive, the Staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144
and 144A will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers
or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
5.1 Notice of Proposed Transfer; Registration Not
Required. The holder hereof or the holder of any Issued Warrant
Shares bearing the legend set forth in Section 5.8, by acceptance
hereof or thereof, agrees to give written notice to the Company,
prior to any transfer of this Warrant (other than transfers
referred to in Subsection (d) of the first paragraph of this
ARTICLE V), such Issued Warrant Shares or any portion hereof or
thereof, of its intention to make such transfer as required by
the preamble of this ARTICLE V.
Such holder shall request an Opinion of Counsel
that the proposed transfer may be effected without registration
or qualification under any Federal or state securities or blue
sky law. Counsel shall, as promptly as practicable, notify the
Company and the holder of such opinion and of the terms and
conditions, if any, to be observed in such transfer, whereupon
the holder shall be entitled to transfer this Warrant or such
Issued Warrant Shares (or portion thereof) in accordance with the
terms of the notice delivered to the Company and upon acceptance
of such terms and conditions. In the event this Warrant shall be
exercised as an incident to such transfer, such exercise shall
relate back and for all purposes of this Warrant be deemed to
have occurred as of the date of such notice regardless of delays
incurred by reason of the provisions of this ARTICLE V which may
result in the actual exercise on any later date.
5.2 Required Registration and Qualification. If (i) the
Opinion of Counsel determines that the proposed transfer
described in the notice given pursuant to Section 5.1 may not be
effected without registration or qualification under the
Securities Act and the securities or blue sky laws of any
jurisdiction where the proposed transfer occurs or may be deemed
to occur, or (ii) the holder hereof or holder of Issued Warrant
Shares so elects, such Person shall have the right to request the
Company to use its best efforts to effect any such registration
or qualification of the applicable Warrant Shares; provided,
however, the Company shall not be required to use its best
efforts (i) on more than two (2) occasions for all Issued Warrant
Shares pursuant to this Section 5.2 or (ii) for a period not to
exceed nine (9) months immediately following the date a public
offering of the Common Stock (pursuant to an effective
registration statement under the Securities Act) is commenced;
provided, further, if in the opinion of an independent investment
banking firm such registration or qualification would, if not
deferred, materially and adversely affect a proposed business or
financial transaction of substantial importance to the Company's
financial condition (other than an underwritten public offering
of its securities), the Company may defer such registration or
qualification for a single period (specified in such notice) of
not more than ninety (90) days. Such request by a holder hereof
or a holder of Issued Warrant Shares shall be in writing and
shall specify the number of shares to be registered or qualified
and the jurisdictions in which such registration or qualification
is desired. In no event shall a registration of less than
twenty-five percent (25%) of the then remaining Warrant Shares be
effected pursuant to this subsection 5.2. In lieu of such
registration, the Company may purchase the Issued Warrant Shares
at a price equal to the Current Market Price on the date such
Issued Warrant Shares are purchased.
Upon such request, the Company shall promptly
(a) take such steps as are necessary or appropriate to prepare
for a registration or qualification of shares of Common Stock and
(b) give written notice to the holders hereof and holders of
Issued Warrant Shares bearing the legend required by Section 5.8
hereof of a proposed registration or qualification by the Company
under the Securities Act and under the securities or blue sky
laws of the requested jurisdictions and shall, as expeditiously
as possible, in good faith, use its best efforts to effect any
such registration or qualification of the aggregate number of
Warrant Shares designated in such request and the requests of any
other holders so notified, all to the extent requisite to permit
the disposition (in accordance with the intended methods thereof)
by the prospective sellers of Warrant Shares to be registered or
qualified, with notification to or approval of any governmental
authority under any Federal or state law, or any listing with any
securities exchange, which may be required to permit the sale or
disposition of any Warrant Shares which the holders of such
shares propose to make, and the Company will keep effective and
current such registration or qualification for a period of one
hundred twenty (120) days.
If the managing underwriter, who shall be selected
by the person originally requesting such registration to manage
the distribution of the Warrant Shares being registered, advises
the prospective sellers in writing that the aggregate number of
Warrant Shares and shares of Common Stock proposed to be sold in
the proposed distribution by the Company or by other security
holders should be less than the number of such shares requested
to be registered by all prospective sellers (including the
Company), the number of such shares and such other shares of
Common Stock proposed to be sold by each prospective seller
(including the Company) shall be reduced, so that each
prospective seller may sell that proportion of such shares
(including Warrant Shares) to be sold in the proposed
distribution which number of such shares proposed to be sold by
such prospective seller bears to the aggregate number of such
shares proposed to be sold by all prospective sellers (including
the Company). If such underwriter determines that the number of
shares of Common Stock (including all Warrant Shares) proposed to
be sold is insufficient to proceed with such registration or
qualification, the Company shall immediately recapitalize its
Common Stock to enable such registration and qualification to be
completed as such underwriter advises.
5.3 Incidental Registration and Qualification. If the
Company proposes to register any of its securities under the
Securities Act on its behalf or on behalf of any of its security
holders on any registration form (otherwise than for the
registration of securities to be offered and sold pursuant to
(a) an employee benefit plan, (b) a dividend or interest
reinvestment plan, (c) other similar plans or
(d) reclassifications of securities, mergers, consolidations and
acquisitions of assets) permitting a secondary offering or
distribution of Issued Warrant Shares, not less than ninety (90)
days prior to each such registration the Company shall give to
the holder hereof and the holders of Issued Warrant Shares
bearing the legend required by Section 5.8 hereof written notice
of such proposal which shall describe in detail the proposed
registration and distribution (including those jurisdictions
where registration or qualification under the securities or blue
sky laws is intended) and, upon the written request of the holder
hereof or a holder of such Issued Warrant Shares furnished within
thirty (30) days after the date of any such notice, proceed to
include in such registration such Warrant Shares ("Piggy-Back
Shares") as have been requested by any such holder to be included
in such registration. The holder hereof or any holder of such
Issued Warrant Shares shall in its request describe briefly the
proposed disposition of such shares of Common Stock. The Company
will in each instance use its best efforts to cause all such
Piggy-Back Shares to be registered under the Securities Act and
qualified under the securities or blue sky laws of any
jurisdiction requested by a prospective seller, all to the extent
necessary to permit the sale or other disposition thereof in the
manner stated in such request by a prospective seller of the
securities so registered.
If the managing underwriter selected by the
Company (if such distribution is a primary offering) or the
security holders (if such security holders are exercising demand
registration rights) to manage the distribution of the shares of
Common Stock being registered advises the Company in writing
that, in its opinion, the inclusion of the Piggy-Back Shares with
the securities being registered by the Company and/or other
prospective sellers would materially adversely affect the
distribution of all such securities, then (a) if such
distribution is a primary offering on behalf of the Company, the
Company shall first be entitled to have all of the shares
proposed to be sold by it included in such distribution before
any shares (including Piggy-Back Shares) proposed to be sold by
any other prospective sellers are included in such distribution
and any shares in excess of such numbers of shares proposed to be
sold by the Company which are permitted by such managing
underwriter to be included in such distribution shall be
allocated among such other prospective sellers in such proportion
as the number of shares proposed to be sold by each such
prospective seller bears to the aggregate number of shares of
Common Stock proposed to be sold by all such other prospective
sellers; and (b) if such distribution is initiated pursuant to
the exercise of demand registration rights granted by the Company
to any of its security holders, the Company and each prospective
seller may sell that proportion of the shares of Common Stock to
be sold in the proposed distribution which the number of shares
of Common Stock proposed to be sold by such prospective seller
bears to the aggregate number of shares of Common Stock proposed
to be sold by all prospective sellers (including the Company).
In the event that some or all of the Piggy-Back Shares proposed
to be sold by prospective sellers are not included in such
distribution, the Company shall use its best efforts to effect
and maintain any such registration or qualification under the
Securities Act and the securities or blue sky laws of any
jurisdiction as may be necessary to permit such prospective
seller to make its proposed offering and sale following the end
of a period not to exceed ninety (90) days after the effective
date of such registration and shall pay all expenses related
thereto in accordance with Section 5.6.
The holder hereof and any holder of Issued Warrant
Shares who has requested shares of Common Stock to be included in
a registration pursuant to this Section 5.3, by acceptance hereof
or thereof, agrees to (a) the selection by the Company or such
other security holders of an underwriter to manage such
registration and (b) execute an underwriting agreement with such
underwriter that is (i) reasonably satisfactory to such holder
and (ii) in customary form.
Nothing in this Section 5.3 shall be deemed to
require the Company to proceed with any primary registration of
its securities after giving the notice as provided herein,
provided however, that the Company shall pay all expenses
incurred pursuant to such notice (in accordance with
Section 5.6.)
5.4 Registration and Qualification Procedures.
Whenever the Company is required by the provisions of Section 5.2
or 5.3 to use its best efforts to effect the registration of any
of its securities under the Securities Act, the Company will, as
expeditiously as is reasonably possible:
(a) prepare and file with the Commission a registration
statement with respect to such securities in connection with
which the Company will give the sellers, their underwriters, if
any, their respective counsel and accountants the opportunity to
participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission,
and each amendment thereof or supplement thereto, and will give
each of them access to its books and records and such
opportunities to discuss the business of the Company with its
officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the
opinion of such sellers' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning
of the Securities Act;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective and the prospectus
current and to comply with the provisions of the Securities Act
with respect to the sale of all securities covered by such
registration statement whenever the seller of such securities
shall desire to sell the same; provided, however, that the
Company shall have no obligation to file an amendment or
supplement at its own expense more than one hundred twenty (120)
days after the effective date of such registration statement;
(c) furnish to each seller such numbers of copies of
preliminary prospectuses and prospectuses and each supplement or
amendment thereto and any other documents as each seller may
reasonably request in order to facilitate the sale or other dispo
sition of the securities owned by such seller in conformity with
(i) the requirements of the Securities Act and (ii) the seller's
proposed method of distribution;
(d) register or qualify the securities covered by such
registration statement under the securities or blue sky laws of
such jurisdictions within the United States as each seller shall
request, and do such other reasonable acts and things as may be
required of it to enable each seller to consummate the sale or
other disposition in such jurisdictions of the securities owned
by such seller; provided, however, that the Company shall not be
required to (i) qualify as a foreign corporation or consent to a
general and unlimited service of process in any such
jurisdiction, or (ii) qualify as a dealer in securities;
(e) furnish, at the request of any seller on the date
such securities are delivered to the underwriters for sale
pursuant to such registration or, if such securities are not
being sold through underwriters, on the date the registration
statement with respect to such securities becomes effective,
(i) an opinion, dated such date, of counsel representing the
Company for the purposes of such registration, addressed to the
underwriters, if any, and to the seller making such request,
covering such legal matters with respect to the registration in
respect of which such opinion is being given as the seller of
such securities may reasonably request and are customarily
included in such opinions and (ii) letters, dated, respectively,
(1) the effective date of the registration statement and (2) the
date such securities are delivered to the underwriters, if any,
for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized national
standing selected by the Company, addressed to the underwriters,
if any, and to the seller making such request, covering such
financial, statistical and accounting matters with respect to the
registration in respect of which such letters are being given as
the seller of such securities may reasonably request and are
customarily included in such letters;
(f) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders as soon as reasonably
practicable, but not later than sixteen (16) months after the
effective date of the registration statement, an earnings
statement covering a period of at least twelve (12) months
beginning after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(g) enter into and perform an underwriting agreement
with the managing underwriter, if any, selected as provided in
Section 5.2 or 5.3, containing customary (i) terms of offer and
sale of the securities, payment provisions, underwriting
discounts and commissions, and (ii) representations, warranties,
covenants, indemnities, terms and conditions; the sellers may, at
their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such sellers and that any or all
of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions
precedent to the obligations of such sellers; such sellers shall
not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such seller
and such seller's intended method of distribution and any other
representation required by law;
(h) notify each seller at any time when a prospectus
relating to the registration is required to be delivered under
the Securities Act, upon discovery that, or upon the happening of
any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under
which they were made, at the request of any such seller promptly
prepare and furnish to such seller a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of
such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under
which they were made; and
(i) keep each seller advised in writing as to the
initiation and progress of any registration under Section 5.2 or
5.3.
5.5 Holdback Agreement. The Company agrees not to
effect any public sale or distribution of its equity securities
or securities convertible into or exchangeable or exercisable for
any of such securities during the seven (7) days prior to or
ninety (90) days after any underwritten registration pursuant to
Section 5.2 or 5.3 has become effective, except as part of such
underwritten registration and except pursuant to registrations on
Form S-8 or S-4 or any successor or similar forms thereto, and to
cause each Person who purchases its equity securities or any
securities convertible into or exchangeable or exercisable for
any of such securities at any time after the date of this Warrant
(other than in a public offering) to agree not to effect any such
public sale or distribution of such securities, during such
period.
5.6 Allocation of Expenses. If the Company is
required by the provisions of Section 5.2 or 5.3 to use its best
efforts to effect the registration or qualification under the
Securities Act or any state securities or blue sky laws of any of
the Warrant Shares, the Company shall pay all expenses (i) in
connection therewith, other than the fees and expenses referred
to in clauses (1), (2) and (3) of the proviso set forth below, if
such registration is a primary registration on behalf of the
Company and Piggy-Back Shares are included therein; and
(ii) other than the fees and expenses set forth in clauses (1)
and (2) of the proviso set forth below, if such registration is
the first required registration pursuant to Section 5.2 hereof,
including the expenses referred to in such proviso, which
expenses shall include, without limitation, (a) all expenses
incident to filing with the National Association of Securities
Dealers, Inc., (b) registration fees, (c) printing expenses,
(d) accounting and legal fees and expenses, (e) expenses of any
special audits incident to or required by any such registration
or qualification, (f) premiums for insurance in such amount, if
any, deemed appropriate by the managing underwriter and
(g) expenses of complying with the securities or blue sky laws of
any jurisdictions in connection with registration or
qualification; provided, however, that the following fees and
expenses shall be treated as set forth in clauses (i) and (ii)
above and (x) and (y) below: (1) any discounts or commissions to
any underwriter attributable to securities being sold by or on
behalf of Persons other than the Company; (2) any stock transfer
taxes incurred in respect of the Warrant Shares sold by the
sellers; (3) the legal fees of any holder of this Warrant or
shares issued or issuable hereunder; provided further, that
(x) in any required registration pursuant to Section 5.2 hereof
other than the first such registration, the expenses of the
nature set forth in clauses (ii)(a) through (g) above (including
those set forth in clauses (1), (2) and (3) above) other than
those incremental expenses attributable to the inclusion of
shares other than Warrant Shares in such registration, shall be
borne pro rata by the holders of Warrant Shares whose Warrant
Shares are included therein in proportion to their respective
numbers of Warrant Shares included therein; and (y) in any
required registration pursuant to Section 5.3 hereof (other than
as referred to in clause (i) above), the incremental expenses of
the nature set forth in clauses (ii)(a) through (g) above
(including those set forth in clauses (1), (2) and (3) above)
attributable to the inclusion of Piggy-Back Shares shall be borne
pro rata by the holders of Warrant Shares whose Warrant Shares
are included therein in proportion to their respective numbers of
Warrant Shares included therein.
5.7 Indemnification. In connection with any
registration or qualification of securities under Section 5.2 or
5.3, the Company agrees to indemnify the holder hereof and the
holders of any Issued Warrant Shares and each underwriter
thereof, including each person, if any, who controls the holder
or such stockholder or underwriter within the meaning of
Section 15 of the Securities Act, against all losses, claims,
damages, liabilities and expenses (including reasonable costs of
investigation) caused by any untrue, or alleged untrue, statement
of a material fact contained in any registration statement,
preliminary prospectus, prospectus or notification or offering
circular (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or caused by any
omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any untrue
statement or alleged untrue statement or omission or alleged
omission based upon information furnished in writing to the
Company by the holder or any such stockholder or underwriter
expressly for use therein.
The Company may require, as a condition to including any
Securities in any registration statement filed pursuant to
Section 5.2, that the Company shall have received an undertaking
satisfactory to it from the prospective Seller, to indemnify and
hold harmless the Company, each director, officer and employee of
the Company, and each other person, if any, who controls the
Company within the meaning of the Act, with respect to any
statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus,
final prospectus, or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Seller
specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment, or supplement. Such
indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such
director, officer, or controlling person and shall survive the
transfer of such Securities by such Seller. In no event shall
the liability of any Seller hereunder be greater in amount than
the dollar amount of the proceeds received by such Securityholder
upon the sale of the Securities giving rise to such
indemnification obligation.
Promptly upon receipt by a party indemnified under
this Section 5.7 of notice of the commencement of any action
against such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under
this Section 5.7, such indemnified party shall notify the
indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may have to any indemnified
party otherwise than under this Section 5.7 unless such failure
shall materially adversely affect the defense of such action. In
case notice of commencement of any such action shall be given to
the indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own
expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other
than reasonable costs of investigation) shall be paid by the
indemnified party unless (a) the indemnifying party agrees to pay
the same, (b) the indemnifying party fails to assume the defense
of such action with counsel reasonably satisfactory to the
indemnified party or (c) the named parties to any such action
(including any impleaded parties) have been advised by such
counsel that representation of such indemnified party and the
indemnifying party by the same counsel would be inappropriate
under applicable standards of professional conduct (in which case
the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party). No
indemnifying party shall be liable for any settlement entered
into without its consent.
If the indemnification provided for in this
Section is unavailable or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages,
liabilities, expenses or actions in respect thereof referred to
herein, then each indemnifying party shall in lieu of
indemnifying such indemnified party as a result of such losses,
claims, damages, liabilities, expenses or actions the Company on
the one hand and the sellers of such Common Stock, on the other,
shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities, expenses or actions in such proportion as is
appropriate to reflect the relative fault of the Company, on the
one hand, and the sellers of such Common Stock, on the other, in
connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities, expenses or actions as
well as any other relevant equitable considerations, including
the failure to give the notice required hereunder. The relative
fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the Company, on the one hand,
or the sellers of such Common Stock, on the other hand, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the holder hereof agree that it would not be just
and equitable if contribution pursuant to this Section were
determined by pro rata allocation (even if all of the sellers of
such Common Stock were treated as one entity for such purpose) or
by any other method of allocation which did not take account of
the equitable considerations referred to above. The amount paid
or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or actions in respect thereof
referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the contribution provisions of this
Section 5.7, in no event shall the amount contributed by any
seller of Common Stock exceed the aggregate gross offering
proceeds received by such seller from the sale of Common Stock to
which such contribution claim relates. No person guilty of
fraudulent misrepresentations (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
Each holder of this Warrant and each holder of
Issued Warrant Shares bearing the legend required by Section 5.8,
by acceptance hereof or thereof, as the case may be, agrees to
the indemnification and contribution provisions of this
Section 5.7.
5.8 Legend on Warrants and Certificates. Each Warrant
shall bear a legend in substantially the following form:
"This Warrant and any shares of Common Stock
issuable upon the exercise of this Warrant have not
been registered under the Securities Act of 1933, as
amended, and neither this Warrant nor any such shares
may be transferred in the absence of such registration
or any exemption therefrom under such Act."
Warrant Shares which are issued upon the exercise
in whole or in part of this Warrant or otherwise, or are
thereafter transferred, in either case under such circumstances
that no registration under the Securities Act is required, shall
bear on the face thereof the following legend:
"The shares represented by this certificate have
not been registered under the Securities Act of 1933,
as amended, and any transfer thereof is subject to the
conditions specified in the Warrant dated as of
February , 1997, originally issued by QMS, Inc. (the
"Company") to INK (AL) QRS 12-21, Inc. to purchase
shares of Common Stock, $.01 par value, of the Company.
A copy of the form of such Warrant is on file with the
Secretary of the Company at One Magnum Pass, Mobile,
Alabama 36618, and will be furnished without charge by
the Company to the holder of this certificate upon
written request to the Secretary of the Company at such
address."
5.9 Termination of Restrictions. The restrictions
imposed under this ARTICLE V upon the transferability of this
Warrant, or of Issuable Warrant Shares or Issued Warrant Shares,
shall cease (a) during the period a registration statement
covering such Issued Warrant Shares is effective under the
Securities Act or (b) when the Company receives an Opinion of
Counsel that such restrictions are no longer required in order to
ensure compliance with the Securities Act. When such
restrictions terminate, the Company shall, or shall instruct its
transfer agent and registrar to, issue new certificates in the
name of the holder not bearing the legends required under
Section 5.8.
5.10 Supplying Information. The Company, the holder
hereof and each holder of Issued Warrant Shares shall cooperate
with each other in supplying such information as may be necessary
for any of such parties to complete and file any information
reporting forms presently or hereafter required by the Commission
or any commissioner or other authority administering the blue sky
or securities laws of any jurisdiction where shares of Common
Stock are proposed to be sold pursuant to Section 5.2 or 5.3.
5.11 Liquidated Damages. In the event the Company
fails to comply with any provision of Section 5.2, 5.3 or 5.4,
upon written request of the holder of this Warrant or any holder
of Issued Warrant Shares entitled to the benefits of this
ARTICLE V, the Company shall promptly obtain an opinion of an
independent investment banking firm reasonably satisfactory to
such holder estimating the net proceeds which such Person would
have received (after deducting underwriting commissions and
discounts and any other expenses that would have been solely
attributable to the registration or qualification of such shares
of Common Stock) upon the sale of shares of Common Stock proposed
to be sold pursuant to such registration or qualification. Such
opinion of an independent investment banking firm shall be
(a) delivered in writing to the Company, with a copy to such
person, within seven (7) days after the date of the request of
such person to the Company and (b) conclusive and binding on the
Company and such Person.
Within thirty (30) days of receipt by the Company
of such estimate, the Company shall pay to such Person an amount
equal to (a) such estimated net proceeds minus (b) in the case of
Warrants or portions thereof that have not been exercised, the
aggregate Exercise Price payable upon the exercise of such
Warrants. Payment of such amount shall be made by a certified or
official bank check payable to the order of such person and drawn
on a member of the New York Clearing House. Upon payment to such
Person of such liquidated damages, such Person shall assign to
the Company this Warrant and the Issued Warrant Shares proposed
to be sold pursuant to the registration or qualification in
question without any representation or warranty (other than that
the holder has not taken any action which would impair its
ownership of or right to transfer to the Company the Warrant or
such shares of Common Stock). If less than all of the Issued
Warrant Shares were proposed to be sold pursuant to the
registration or qualification in question, the Company shall
cancel this Warrant and issue in the name of, and deliver to, the
holder, pursuant to Section 2.2, a new Warrant for the shares of
Issuable Warrant Shares not required to be assigned to the
Company pursuant to the provisions of the preceding sentence.
The Company agrees that the amount of actual damages that would
be sustained by the holder as a result of the failure of the
Company to comply with any provisions of Section 5.2, 5.3 or 5.4
is not capable of ascertainment on any other basis.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to the
Initial Holder and each subsequent holder of this Warrant that as
of the Closing Date:
6.1 Organization and Capitalization of the Company.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The
authorized capital of the Company consists of fifty million
(50,000,000) shares of Common Stock and five hundred thousand
(500,000) shares of Preferred Stock. As of January 24, 1997,
there were 10,697,065 shares of Common Stock issued and
outstanding and no shares of Preferred Stock issued and
outstanding, and no shares of the Company's capital stock are
held in its treasury. No unissued shares of Common Stock are
reserved for any purpose other than for issuance upon the
exercise of this Warrant and issuance of up to 1,695,404 shares
pursuant to options and warrants currently outstanding (the
"Outstanding Options") and 547,536 shares available under option
plans currently in effect. The Company has not issued or agreed
to issue any Stock Purchase Rights, other than (i) pursuant to
this Warrant, (ii) the Outstanding Options, or (iii) Convertible
Securities, and there are no preemptive rights in effect with
respect to the issuance of any shares of Common Stock. All the
outstanding shares of the Company's capital stock have been
validly issued without violation of any preemptive or similar
rights and are fully paid and nonassessable.
6.2 Authority. The Company has full corporate power
and authority to execute and deliver this Warrant and to perform
all of its obligations hereunder, and the execution, delivery and
performance hereof have been duly authorized by all necessary
corporate action on its part. This Warrant has been duly
executed on behalf of the Company and constitutes the legal,
valid and binding obligation of the Company enforceable in
accordance with its terms.
6.3 No Legal Bar. Neither the execution, delivery or
performance of this Warrant will (a) conflict with or result in a
violation of the certificate of incorporation or By-Laws of the
Company, (b) conflict with or result in a violation of any law,
statute, regulation, order or decree applicable to the Company or
any Affiliate, (c) require any consent or authorization or filing
with, or other act by or in respect of, any governmental
authority, or (d) result in a breach of, constitute a default
under or constitute an event creating rights of acceleration,
termination or cancellation under any mortgage, lease, contract,
franchise, instrument or other agreement to which the Company is
a party or by which it is bound, other than applicable
restrictions contained in any of such documents relating to
indebtedness of the Company.
ARTICLE VII
VARIOUS COVENANTS OF THE COMPANY
7.1 No Impairment or Amendment. The Company shall not
by any action including, without limitation, amending its
certificate of incorporation, any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate to protect the rights
of the holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase
the par value of any shares of Common Stock issuable upon the
exercise of this Warrant above the amount payable therefor upon
such exercise, (b) take all such action as may be necessary or
appropriate in order that the Company may validly issue fully
paid and nonassessable shares of Common Stock upon the exercise
of this Warrant, (c) obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its
obligations under this Warrant, and (d) not undertake any reverse
stock split, combination, reorganization or other
reclassification of the capital stock which would have the effect
of making this Warrant exercisable for less than 933/10,000
percent (0.9330%) of the outstanding shares of Common Stock.
Upon the request of the holder hereof the Company
will at any time during the period this Warrant is outstanding
acknowledge in writing, in form satisfactory to such holder, the
continued validity of this Warrant and the Company's obligations
hereunder.
7.2 Reservation of Common Stock. The Company will at
all times reserve and keep available, solely for issuance, sale
and delivery upon the exercise of this Warrant a number of shares
of Common Stock equal to the number of shares of Common Stock
issuable upon the exercise of this Warrant. All such shares of
Common Stock shall be duly authorized and, when issued upon
exercise of this Warrant, shall be validly issued and fully paid
and non-assessable with no liability on the part of the holders
thereof.
7.3 Listing on Securities Exchange. If the Company
shall list any shares of Common Stock on any securities exchange
it will, at its expense, list thereon, maintain and increase when
necessary such listing of, all Issued Warrant Shares so long as
any shares of Common Stock shall be so listed. The Company will
also so list on each securities exchange, and will maintain such
listing of, any other securities which the holder of this Warrant
shall be entitled to receive upon the exercise thereof if at the
time any securities of the same class shall be listed on such
securities exchange by the Company.
7.4 Availability of Information. The Company will
cooperate with the holder hereof and of Issued Warrant Shares in
supplying such information as may be necessary for such holder to
complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale
of this Warrant or such Issued Warrant Shares.
7.5 Indemnification. If the Company fails to make when
due any payments provided for in this Warrant, the Company shall
pay to the holder hereof (a) interest at the Default Rate on any
amounts due and owing to such holder and (b) such further amounts
as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys' fees and expenses
incurred by such holder in collecting any amounts due hereunder.
The Company shall indemnify, save and hold
harmless the holder hereof from and against any and all
liability, loss, cost, damage, reasonable attorneys' and
accountants' fees and expenses, court costs and all other
out-of-pocket expenses (excluding consequential damages) incurred
in connection with or arising from an Event of Default.
7.6 Certain Expenses. The Company shall pay all
expenses in connection with, and all taxes (other than stock
transfer taxes) and other governmental charges that may be
imposed in respect of, the issue, sale and delivery of (a) this
Warrant, (b) the Issuable Warrant Shares, or (c) the Issued
Warrant Shares.
ARTICLE VIII
MISCELLANEOUS
8.1 Nonwaiver. No course of dealing or any delay or
failure to exercise any right, power or remedy hereunder on the
part of the holder hereof shall operate as a waiver of or
otherwise prejudice such holder's rights, powers or remedies.
8.2 Holder Not a Stockholder. Prior to the exercise of
this Warrant as hereinbefore provided, the holder hereof shall
not be entitled to any of the rights of a stockholder of the
Company including, without limitation, the right as a stockholder
to (a) vote on or consent to any proposed action of the Company
or (b) receive (i) dividends or any other distributions made to
stockholders, (ii) notice of or attend any meetings of
stockholders of the Company (except as provided in ARTICLE IV) or
(iii) notice of any other proceedings of the Company (except as
provided in ARTICLE IV).
8.3 Notices. Any notice, demand or delivery to be made
pursuant to the provisions of this Warrant shall be sufficiently
given or made if sent by first class mail, postage prepaid,
addressed to (a) the holder of this Warrant or Issued Warrant
Shares at its last known address appearing on the books of the
Company maintained for such purpose or (b) the Company at its
principal office at One Magnum Pass, Mobile, Alabama 36618. The
holder of this Warrant and the Company may each designate a
different address by notice to the other pursuant to this
Section 8.3.
8.4 Like Tenor. All Warrants shall at all times be
identical, except as to the Preamble.
8.5 Remedies. The Company stipulates that the remedies
at law of the holder of this Warrant or of Issued Warrant Shares
in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest
extent permitted by law, such terms may be specifically enforced
by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
8.6 Successors and Assigns. This Warrant and the
rights evidenced hereby shall inure to the benefit of and be
binding upon the successors and assigns of the Company, the
holder hereof and the holders of Issued Warrant Shares, to the
extent provided herein, and shall be enforceable by any such
holder.
8.7 Modification and Severability. If, in any action
before any court or agency legally empowered to enforce any
provision contained herein, any provision hereof is found to be
unenforceable, then such provision shall be deemed modified to
the extent necessary to make it enforceable by such court or
agency. If any such provision is not durable as set forth in the
preceding sentence, the unenforceability of such provision shall
not affect the other provisions of this Agreement, but this
Agreement shall be construed as if such unenforceable provision
had never been contained herein.
8.8 Integration. This Warrant replaces all prior
agreements, supersedes all prior negotiations and constitutes the
entire agreement of the parties with respect to the transactions
contemplated herein.
8.9 Amendment. This Warrant may not be modified or
amended except by written agreement of the Company and the holder
hereof.
8.10 Headings. The headings of the Articles and
Sections of this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this
Warrant.
8.11 Governing Law. This Warrant shall be governed by
the laws of the State of New York.
8.12 Notice of Expiration. The Company will give the
holder of this Warrant no less than six (6) months nor more than
nine (9) months notice of the expiration of the right to exercise
this Warrant. The right to exercise this Warrant shall expire at
the termination of the Exercise Period, unless the Company shall
fail to give such notice as aforesaid, in which event the right
to exercise this Warrant shall not expire until 5 P.M., New York
City time, on a date six (6) months after the date on which the
Company shall give the holder hereof notice of the expiration of
the right to exercise this Warrant.
Dated as of February 18, 1997.
ATTEST: QMS, INC.
By: R A Wiggins By: Gerald G. Roenker
Title: Secretary Title: Executive Vice President
NOTICE OF EXERCISE FORM
(To be executed only upon partial or full
exercise of the within Warrant)
The undersigned registered holder of the within Warrant
irrevocably exercises the within Warrant for and purchases ____
shares of Common Stock of QMS, Inc. and herewith makes payment
therefor in the amount of $ , all at the price and on the
terms and conditions specified in the within Warrant, and
requests that a certificate (or _____ certificates in
denominations of shares) for the shares of Common Stock
of QMS, Inc. hereby purchased be issued in the name of and
delivered to (choose one) (a) the undersigned or
(b) , whose address is
and, if such shares of Common Stock shall not include all the
shares of Common Stock issuable as provided in the within
Warrant, that a new Warrant of like tenor for the number of
shares of Common Stock of QMS, Inc. not being purchased hereunder
be issued in the name of and delivered to (choose one) (a) the
undersigned or (b)________________________, whose address is
___________________________________________________.
Dated:
Signature Guaranteed: By:
(Signature of Registered
Holder)
- ------------------------------
By:
[Title:]
NOTICE: The signature to this Notice of Exercise must
correspond with the name as written upon the face of
the within Warrant in every particular, without
alteration or enlargement or any change whatever.
The signature to this Notice of Exercise must be
guaranteed by a commercial bank or trust company in the
United States or a member firm of the New York Stock
Exchange.
ASSIGNMENT FORM
(To be executed only upon the assignment
of the within Warrant)
FOR VALUE RECEIVED, the undersigned registered holder of the
within Warrant hereby sells, assigns and transfers unto
, whose address is
________________________________ all of the rights of the
undersigned under the within Warrant, with respect to
shares of Common Stock of QMS, Inc. (the "Company") and, if such
shares of Common Stock shall not include all the shares of Common
Stock issuable as provided in the within Warrant, that a new
Warrant of like tenor for the number of shares of Common Stock of
QMS, Inc. not being transferred hereunder be issued in the name
of and delivered to the undersigned, and does hereby irrevocably
constitute and appoint Attorney to register such
transfer on the books of the Company maintained for the purpose,
with full power of substitution in the premises.
Dated:
Signature Guaranteed: By:
(Signature of Registered
Holder)
- -----------------------------
By:
[Title:]
NOTICE: The signature to this Assignment must correspond with
the name as written upon the face of the within Warrant
in every particular, without alteration or enlargement
or any change whatever.
The signature to this Assignment must be
guaranteed by a commercial bank or trust company in the
United States or a member firm of the New York Stock
Exchange.