EXHIBIT 10.36
Confidential portions of this Exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to Rule 406 of the
Securities Act of 1933, as amended. Such portions are indicated herein by the
symbol "*".
AMENDMENT TO INK SUPPLY REOUIREMENTS AGREEMENT
This Amendment (the "Amendment") to the Ink Supply Requirements Agreement
between the parties dated July 31, 1993 (the "Original Agreement") is made
between TREASURE CHEST ADVERTISING COMPANY, INC., a Delaware corporation
("TCA"), as buyer, and MARPAX, Inc. a Nevada corporation doing business as The
Ink Company ("Ink Co."), as seller, as of July 1, 1997. The term "Agreement" as
used in this Amendment and the Original Agreement shall refer to the Original
Agreement as modified by this Amendment.
RECITAL
Ink Co. and TCA desire to amend the Original Agreement in certain limited
aspects as specified in this Amendment, and to have the Agreement continue in
effect as amended.
TERMS
A. REQUIREMENTS. Section 4.1 of the Agreement shall be amended to provide in
full as follows:
4.1 SALE AND PURCHASE: SUPPORT SERVICES
(a) Ink Co., within the limitations contained in this Agreement, shall
sell to TCA such quantities of Product as TCA may require. In addition, Ink
Co. shall provide support services to TCA consistent with the current
practices of the parties as described in Exhibit B attached to the Original
Agreement.
(b) Subject to the provisions of this Agreement. TCA shall purchase from
Ink Co. the following quantities of Product for each calendar year beginning
with 1997: (i) COLD BLACK INK: The lesser of pounds* or %* of the
cold black ink purchased by TCA; and (ii) PRODUCT OTHER THAN COLD BLACK INK:
The greater of pounds* or %* OF PRODUCT OTHER THAN COLD BLACK INK
purchased by TCA. Notwithstanding this requirement, during any calendar
year, TCA may, at its option, buy up to %* of Product other than cold
black ink from companies other than Ink Co. For the period from January 1,
2007 through January 31, 2008, which shall be treated as one calendar year,
the ink purchases required by this Subsection 4. 1 (b) shall be increased to
pounds* and pounds*, respectively.
(c) TCA and Ink Co. will work together to avoid wide quarterly
variations in the amount of Product purchased by TCA from Ink Co. TCA will
use its best efforts to purchase not less than the lesser of pounds*
of Product other than cold black ink or %* of its annual contractual
commitment to Ink Co. in any calendar quarter.
(d) Notwithstanding the foregoing, TCA's obligations with respect to
purchases of Product from Ink Co. by an Affiliate of TCA acquired by TCA
after the date of this Agreement shall be subject to any agreement or
contract existing at the time of (but not entered into in anticipation of)
such acquisition obligating such Affiliate to purchase product from other
sources.
(e) It is understood that Ink Co. shall have the right to contract with
respect to the manufacture of Product with such third parties as Ink Co.
shall deem advisable; provided, however, that Ink Co. shall remain fully
responsible hereunder.
B. PURCHASE PRICES AND PAYMENTS.- Section 5.6 to the Agreement shall be added,
and Sections 5.1 and 5.2 of the Agreement shall be amended to provide in
full as follows:
5.1 PURCHASE PRICES.
(a) The prices (the "Purchase Prices") for all Product delivered under
this Agreement shall be mutually agreed to by Ink Co. and TCA., and shall be
competitive with the prices quoted in writing by Qualified Suppliers for
Specified Product of a comparable quantity, for so long as such prices
remain
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in effect. TCA shall promptly notify Ink Co. in writing when such price
quotation is no longer effective. The current Purchase Prices are set out in
Exhibit A to the Amendment. TCA will not disclose to any supplier of ink the
prices charged TCA by Ink Co.
(b) Ink Co. will supply TCA monthly with information concerning the per
set prices charged and quantities sold for Specified Product by each Ink Co.
facility to its other customers without identifying the names of such
customers, where prices then being charged to TCA for the same Specified
Product, net of the discount provided in Subsection 5.1 (f), are greater
than %* of the prices to other customers. The completeness and accuracy of
such information shall be certified in writing to TCA by an appropriate
officer of ink Co.
(c) Notwithstanding any other provision of this Agreement; (i) if at any
time any Ink Co. facility sells any Specified Product to a customer,
exclusive of agents for resale for consumption outside of the United States,
at prices per set equal to or lower than the prices charged TCA for such
Specified Product, net of the base volume discount provided in Subsection 5.
l(f)(i), then Ink Co. shall, for as long as such sales at such prices
continue sell such Specified Product to TCA at %* less than the lowest
prices per set then being charged by Ink Co.
(d) Within 10 days after the end of each month, Ink Co. will advise TCA
of all ink products that are available to TCA Competitors, along with a list
of prices for such products (as available to TCA) and will indicate to TCA
which of such products were purchased frequently during such month.
(e) "Competitor" means any business or division of any business which
produces a product which directly competes with a like product produced by
TCA in the printing of advertising circulars, coupon books, newspaper
supplements, comics, television guides and other products printed for
newspapers or in any other printing activity in which TCA is engaged during
the term of this Agreement.
(f) Discounts
(i) Ink Co. shall pay TCA a base volume discount, which shall be
deducted from each invoice at time of payment, for all Product purchased.
For all cold black ink purchases and for the first pounds* of Product
other than cold black ink during each calendar year, the base volume
discount shall be, % * of the price of such ink. Beginning January 1,
2001, this base volume discount shall increase to %* of the price of such
ink.
(ii) Ink Co. shall pay TCA an additional %* discount for purchases of
all Product other than cold black ink greater than pounds*, to and
including pounds* during any calendar year for the period July 1,
1997 thru December 31, 2000. Ink Co. shall pay TCA an additional %*
discount for purchases of all Product other than cold black ink greater than
pounds*, to and including pounds* during any calendar year for
the period January 1, 2001 through January 31, 2008. For purposes of
calculation January 1, 2008 through January 31, 2008 will be included in the
calendar year 2007. This discount will be rebated by credit memo by Ink Co.
within thirty days of the end of the quarter in which the discount is
earned.
(iii) For purchases of Product other than cold black ink over
pounds*, the parties shall determine a mutually-acceptable discount based on
the volume commitments made by TCA. The parties shall not be obligated to
purchase or sell over pounds* of Product other than cold black ink
unless they both agree to acceptable prices and terms.
5.2 PURCHASE PRICE ADJUSTMENTS
(a) The initial Purchase Prices are set forth in Exhibit A of this
Amendment attached hereto and incorporated herein by reference. The initial
Purchase Prices, are subject to adjustment up or down for market conditions
or pursuant to Section 5.1 at the request of either party hereto. The party
seeking adjustment to the Purchase Prices then in effect shall notify the
other party in writing of its
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proposed adjustments in the Purchase Prices and the reasons therefor (the
"Notice") ten (10) days in advance of the date the adjusted Purchase Prices
are to take effect.
(b) Purchase Prices shall be competitive with the prices quoted in
writing by Qualified Suppliers for Specified Product of a comparable
quantity, and shall also be discounted as provided in Subsection 5. 1 (f) of
this Amendment, for so long as such quoted prices remain in effect.
(c) *
(d) Where TCA intends to accept a Competitive Offer, it shall notify Ink
Co. in writing of the terms and quantities of the Competitive Offer and
shall provide samples of the products subject to the offer. TCA shall
provide a copy of the Competitive Offer, with identification of the offeror
redacted, together with a certificate of TCA's independent public
accountants that the copy is accurate and that the offeror company is
publicly recognized as a Qualified Supplier.
(e) If Ink Co. elects to meet the Competitive Offer in its entirety, it
shall notify TCA of its election within thirty (30) days, and Ink Co. shall
sell to TCA, and TCA shall buy from Ink Co., Product on the pricing and
terms and conditions provided in the Competitive Offer, less the discount
provided in Subsection 5. l(f). Where the Competitive Offer includes
products that are identified by TCA as functionally superior to Specified
Products, Ink Co., shall have sixty (60) days to notify TCA of its election.
If Ink Co. elects to meet the Competitive Offer, the pricing and terms and
conditions provided in the Competitive Offer for functionally equivalent
products shall be effective ten (10) days after the date of notice by TCA as
provided in Subsection 5.2(d).
(f) If Ink Co., does not provide TCA with notice within thirty (30) days
(or sixty (60) days in the case of functionally superior products), that it
elects to meet a Competitive Offer, TCA may accept the Competitive Offer *
(g) *
5.6 TRANSITION PROVISIONS
(a) The Purchase Prices set out in Exhibit A to the Amendment and the
discounts provided in Subsection 5.1(f) shall be effective July 1, 1997. For
the purpose of calculation of said discounts, purchases made from January 1,
1997 will be counted in determining volume discount levels for the 1997
calendar year,
(b) Upon execution of this Amendment, Ink Co. shall credit TCA with the
difference between (i) the amount paid to Ink Co. by TCA beginning July 1,
1997 and (ii) the amount which would have been payable pursuant to Exhibit
A, less applicable discounts.
(c) During the period from July 1, 1997 through December 31, 1998, the
Purchase Prices shall be subject to the volume discount provided in
Subsection 5. 1 (f), and shall be subject to the competitive reductions
provided in Section 5.2; provided the Purchase Prices shall not be reduced
below the Purchase Prices set forth in Exhibit A or in effect on July 1,
1997. In exchange for this provision, upon execution of this Amendment, for
the period from July 1, 1997 through September 30, 1997, Ink Co. shall make
a one-time payment of $ * to TCA.
C. TERM OF AGREEMENT Section 6.1 and 6.3 of the Agreement shall be amended to
provide in full as follows:
6.1 TERM: TERMINATION DATE: The term of Agreement shall commence on July l,
1997 and, unless terminated by either party upon the occurrence of an
Event of Default (as defined in Article VIII) of the other party, shall
continue in effect until January 31, 2008, (the "Termination Date"), and
thereafter the Termination Date shall be extended for successive one (1)
year periods unless either party shall give written notice to the other
party, not less than six (6) months prior to the then Termination Date,
of its intention to terminate this Agreement on such Termination Date.
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6.3 ASSIGNMENT AND TERMINATION UPON SALE, This Agreement may be assigned by
either party only to a successor to the party either through sale of
stock or substantially all of the party's assets or through corporate
reorganization. Notwithstanding any other provisions of this Agreement,
TCA shall have the right, upon no less than six (6) months' prior written
notice to Ink Co., to terminate this Agreement after any acquisition of
control of Ink Co. or of all or any substantial part of Ink Co.'s assets
or business, by a third party, other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ or any present affiliate controlled by them, which is not an
Affiliate of Ink Co. and which competes with TCA or Big Flower Press
Holdings, Inc. or an affiliate of either of them in providing printing or
advertising products or services other than the manufacture or sale of
ink.
D. EQUIPMENT. A new Section 7.5 has been added to the Agreement.
7.5 SHARED DEPRECIATION. Beginning January 1, 1998, TCA shall pay quarterly
to Ink Co. a proportion of Ink Co.'s depreciation on the Equipment equal
to (i) the net cost of Product purchased by TCA from sources other than
Ink Co., divided by (ii) the net cost of Product purchased by TCA from
all sources including Ink. Co..
E. NOTICES. Section IX of the Agreement shall be amended to provide in full as
follows:
All notices, requests, demands, and all other communications required or
permitted to be given under the terms of this Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally,
mailed first class, registered or certified mail, postage prepaid; with a
copy sent by facsimile as follows:
If to TCA: Treasure Chest Advertising Company, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President & CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: Big Flower Press Holdings, Inc.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Ink Co.; Marpax
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
F. ARBITRATION. Section 11.1 of the Agreement shall be amended to provide in
full as follows:
11.1 ARBITRATION. Except as otherwise provided in Section 5.2, in the event
of a claim or controversy arising out of or relating to this Agreement,
or the breach hereof, the matter involved in the disagreement shall, upon
demand of any party hereto involved in such dispute (herein a "disputing
party") be submitted to binding arbitration in Los Angeles, California
pursuant to the commercial rules of the American Arbitration Association.
Neither party shall institute proceedings at law or in equity concerning
such matter, except for proceedings challenging the lawfulness
of the award, seeking enforcement of the award or seeking injunctive or
other provisional relief pending the arbitration.
G. MISCELLANEOUS. Section 12.13 RIGHT OF FIRST OFFER shall be deleted from the
Agreement.
H. EFFECT OF AMENDMENT
All provisions of the Original Agreement not expressly amended by this
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
set forth.
TREASURE CHEST ADVERTISING
COMPANY, INC., A DELAWARE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ITS PRESIDENT AND CEO
MARPAX, a Nevada Corporation doing
business as "The Ink Company"
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
ITS PRESIDENT
EXHIBIT A
TO THE
AMENDMENT TO INK SUPPLY REQUIREMENTS AGREEMENT
HEATSET INKS
LS(D) Process Yellow................................................................. $ *
LS(D) Process Red.................................................................... $ *
LS(D) Process Blue................................................................... $ *
LS(D) Process Black.................................................................. $ *
LS1LT Process Black.................................................................. $ *
LSEMT Process Yellow................................................................. $ *
LSEMT Process Red.................................................................... $ *
LSEMT Process Blue................................................................... $ *
LSEMT Process Black.................................................................. $ *
Brilliant Red........................................................................ $ *
COLDSET INKS
CC Process Yellow.................................................................... $ *
CC Process Red....................................................................... $ *
CC Process Blue...................................................................... $ *
TC Black (Ultra LV).................................................................. $ *
Brilliant Red........................................................................ $ *
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* Confidential treatment has been requested for this redaction
