Exhibit 10.17
AGREEMENT made the 20th day of January 1999 BETWEEN the INDUSTRIAL DEVELOPMENT
--------- -------
AGENCY (IRELAND) having its principal office at Xxxxxx Xxxx Xxxxx, Xxxxxx
Xxxxx, Xxxxxx 0 ("XXX") of the first part MODUS MEDIA INTERNATIONAL
KILDARE having its registered office at..................("the Company")
of the second part and MODUS MEDIA INTERNATIONAL HOLDINGS, INCORPORATED
having its registered office at..................("the Promoters") of
the third part.
WHEREAS:
-------
A. The Company which is controlled by the Promoters has been carrying on at
Kildare an industrial undertaking for the production of software/hardware
assembly, on demand printing and technology services in accordance with
proposals furnished to XXX by the Promoters has applied to XXX for
financial assistance towards the cost of expanding its operation which is
intended to give employment to 200 persons over a revised base level of 494
jobs ("the Undertaking");
B. The Company and the Promoters having made the necessary enquiries
are satisfied and represent to XXX that to the best of their belief there
will be available to the Undertaking the relevant resources required for
its proper commercial expansion and efficient operation;
C. The Promoters have represented to XXX that the Undertaking will
contribute to the development of the Irish economy.
NOW IT IS HEREBY WITNESSED that in consideration of the Company implementing
------------------------
the said proposals and carrying on the Undertaking in accordance with
this Agreement, XXX agrees to grant to the Company the sum of 1,800,000
Irish Pounds or the aggregate of 9,000 Irish Pounds for each job created
over a base level of 494 in the Undertaking in accordance with Paragraph 7
of the Second Schedule hereto whichever is the lesser ("the grant")
subject to the following terms and conditions including those contained
in the Schedules hereto:
-1-
1. DEVELOPMENT OF THE UNDERTAKING:
------------------------------
The development of the Undertaking and in particular the provision of
employment shall be substantially in accordance with the particulars given
in the said proposals.
2. CONTROL OF THE COMPANY:
----------------------
The controlling interest in the Company shall be held directly or indirectly
by the Promoters unless otherwise agreed to in writing by XXX.
3. PROVISION OF ELIGIBLE ASSETS:
----------------------------
The provision of the fixed assets shall be as set forth in the First Schedule.
4. PROMOTERS INVESTMENT:
--------------------
The Company shall procure or provide for the purposes of the Undertaking:-
4.1 Additional Equity Equivalent of IR(pounds) 1,800,000;
For the purposes of this Agreement "Equity Equivalent" shall mean the
total monies obtained by the Company as follows:-
4.1.1 cash received by the Company from the Promoters in consideration
for the issue at par of fully paid-up Ordinary Shares in the
Company; and/or
4.1.2 retained earnings of the Company capitalised at par as fully
paid-up Ordinary Shares in the Company; and/or
4.1.3 retained earnings of the Company transferred to a special non-
distributable reserve account which shall be maintained at the
appropriate level for the duration of this Agreement; and/or
4.1.4 loans from the Promoters on the following terms and conditions
("Subordinated Loans"):-
4.1.4.1 that no interest on such loans shall be payable by the
Company except out of profits which would otherwise
be available for dividend;
4.1.4.2 that no such loans shall be repaid except out of
profits of the Company which would otherwise be
available for dividend or out of a new loan obtained
on the same terms for this purpose, or out of the proceeds
of a new issue at par of fully paid-up Ordinary
Shares of the Company made for this purpose;
4.1.4.3 that where any such loans are repaid out of profits,
there shall be transferred out of profits which
would otherwise
-2-
have been available for dividend to a special non-distributable
reserve account a sum equal to the amount of the loan repaid,
and that there shall be no reduction in the amount of such
special non-distributable reserve account during the term of
this Agreement;
4.1.4.4 that where any such loans are repaid out of a new loan obtained
for this purpose, the new loan shall be subject to these
conditions as if it were the original loan;
4.1.4.5 that in the event of the winding up of the Company the amount
of any such loans still outstanding shall be subordinated to
the claims of the unsecured creditors of the Company;
PROVIDED ALWAYS that not less than 25% of the Equity Equivalent shall be
---------------
Ordinary Shares in the Company as specified at Clauses 4.1.1 and/or 4.1.2
above and PROVIDED FURTHER that retained earnings utilised as Equity
-----------------
Equivalent as aforesaid shall not include any sum received in respect of
the grant or derived from a revaluation of the fixed assets of the Company.
4.2 Such further sums, including working capital, as may be required for
the Undertaking.
4.3 The total amount paid from the grant shall at no time exceed the total
amount of Equity Equivalent of which at all times not less than 25% shall
comprise an amount for issued Ordinary Shares in the Company as aforesaid.
5. PLANNING PERMISSION AN PREVENTION OF POLLUTION:
----------------------------------------------
The Company shall:-
5.1 obtain all relevant permissions prescribed by Local and/or National
Authorities and shall comply with all requirements of such permissions and
with all Building Regulations and Statutory requirements (if any)
required for the Undertaking;
5.2 comply with all statutory requirements and other requirements which XXX
reasonably considers to be necessary in relation to environmental
controls and the prevention of pollution.
-3-
6. GUARANTEES:
-----------
The Company shall not give a guarantee in respect of any borrowings other
than borrowings for the purpose of the Undertaking.
7. INSURANCE:
----------
The Company shall:-
7.1 keep all the assets insured to their full cost of reinstatement against
loss or damage by fire and explosion;
7.2 obtain on commencement of production and in accordance with good
commercial practice Consequential Loss Insurance to adequately indemnify
the Company against losses and costs resulting from fire and explosion, and
7.3 make arrangements to ensure that XXX will be notified of any failure
to renew the insurance specified at Clauses 7.1 and 7.2 hereof and also of
any change in such insurance.
8. RESTORATION OF FIXED ASSETS:
-----------------------------
If there should be damage to or loss of fixed assets including buildings
under construction through fire or explosion or any other cause the insurance
or other compensation received by the Company shall be used forthwith to
restore to the reasonable satisfaction of XXX the property so damaged or
lost and in the event of such compensation being insufficient for that
purpose the Company shall make good the deficiency out of its own funds.
9. NON-DISTRIBUTION OF THE GRANT:
------------------------------
The Company shall not distribute by way of dividend on the share capital
of the Company or otherwise any sum received in respect of the grant.
10. ROYALTIES OR SIMILAR PAYMENTS:
------------------------------
The Company may only make royalty or similar payments on the following
terms and conditions:-
10.1 that to the extent that the said royalty and/or similar payments
exceed 5% of the Company's net annual sales, such excess shall not be
payable except out of profits of the Company which would otherwise be
available for dividend; and
10.2 that in the event of winding up of the Company the amount of any
such excess accrued or accruing for payment but unpaid shall be
-4-
subordinated to the claims of the unsecured creditors, including
XXX, of the Company;
PROVIDED ALWAYS that the provisions of this Clause shall not apply to
---------------
bona fide third party arms length transactions.
11. PAYMENT OF THE GRANT:
---------------------
11.1 The grant shall be paid subject to the following terms and conditions
and the Company shall provide evidence satisfactory to XXX:-
11.1.1 that the Company has been properly incorporated and that its
Memorandum and Articles of Association empower the Company to
implement this Agreement;
11.1.2 that the Company has obtained suitable premises for the Undertaking
and has title acceptable to XXX to all land and buildings required
for the Undertaking;
11.1.3 that the Company is in compliance with all the terms and
conditions of its property agreements, if any, with XXX;
11.1.4 that the necessary arrangements have been made for the provision of
all capital required for the Undertaking as specified at Clause 4
hereof;
11.1.5 that all Planning Permissions as aforesaid have been obtained and
complied with;
11.1.6 that all requirements for the control of the environment
and prevention of pollution as aforesaid have been obtained and
complied with;
11.1.7 that insurance arrangements as aforesaid have been made;
11.1.8 that the Company has obtained a tax number in the relevant tax
district; that it is up to date in its tax affairs with the Revenue
Commissioners and prior to payment from the grant it shall submit
an up-to-date tax clearance certificate from the Revenue
Commissioners;
11.1.9 that the Company has complied up-to-date with all the provisions of
this Agreement;
11.2 Subject to compliance with all the relevant terms of this Agreement
the grant shall be paid to the Company in accordance with the arrangements
set forth in the Second Schedule hereto
-5-
12. ACHIEVEMENT OF PROJECTED PERFORMANCE:
------------------------------------
Schedule of Grant Drawdown for the Undertaking
----------------------------------------------
Base Year Year 1 Year 2 Year 3
--------- ------ ------ ------
Period Ending Ending Ending Ending
------ ------ ------ ------ ------
31.12.1998 31.12.1999 31.12.2000 31.12.2001
---------- ---------- ---------- ----------
Cumulative Jobs to be 494 609 694 694
created
Maximum Cumulative - 517,000 1,417,000 1,800,000
Grant Drawdown IR(pounds)
Unless otherwise agreed to by XXX and notwithstanding any other provision in
this Agreement:
12.1 The aggregate amount payable from the grant in each period set out above
shall not exceed the maximum amount specified for that period.
12.2 The maximum grant drawdown in the period to the end of Year 1 shall be
available subject to compliance with the provisions of this Agreement.
12.3 Subject to compliance as aforesaid, payment from the maximum cumulative
grant drawdowns in the periods to the end of Years 2 and 3 respectively,
shall be conditional upon the cumulative number of Jobs (as set out above)
being created by the immediately preceding end of year; in the event of
such number of Jobs not having been created by the relevant date no part
of the grant drawdown for the following year will be paid to the Company
until such number of Relevant Jobs has been created.
12.4 On or after 31 December 2001 the Company and XXX shall review the
development of the Undertaking to that date with particular reference to
the creation of Jobs in the Company. Should the total number of jobs
existing in the Company at the date of review be less than 694, unless
otherwise agreed to by XXX and notwithstanding any other provision in this
Agreement, all monies paid from the grant on foot of this Agreement in
excess of IR(pounds) 9,000 per Job multiplied by the number of Jobs (in
excess of 494 Jobs) existing in the Company at the date of review shall
be repayable on demand to XXX by the Company (and in the event of default
-6-
by the Company in making repayment shall be repayable on demand by the
Promoters) within one month from date of demand.
For the purposes of this Clause "Jobs" shall mean full-time permanent
Jobs existing in the Company at the relevant date.
13. FURNISHING OF INFORMATION:
-------------------------
13.1 The Company shall permit the officers and agents of XXX to inspect the
fixed assets at all reasonable times during the term of this Agreement and
shall furnish to XXX promptly whenever required to do so by XXX all such
information and documentary evidence as XXX may from time to time
reasonably require to vouch compliance by the Company with any of the
terms and conditions of this Agreement.
13.2 The Company acknowledges the right of XXX to consult with relevant third
parties to obtain any information it requires relating to the affairs of
the Company and/or the Promoters prior to any payment from the grant and
to withhold grant payments in the event of such information being
unsatisfactory to XXX. The Company and/or the Promoters hereby undertake
to instruct such third parties to furnish any such information to XXX, on
request.
13.3 The Company and/or the Promoters shall submit Annual Audited Accounts
satisfactory to XXX for the duration of this Agreement within six months
from the end of the relevant financial year.
14. NOTICES:
-------
14.1 The Certificate of an Officer of XXX certifying any decision of XXX taken
or made hereunder shall be conclusive evidence of any such decision.
14.2 Any notice by XXX to the Company or the Promoters or vice-versa under this
Agreement shall be sent by registered post to the Registered Office of the
party for whom it is intended.
15. CONSENTS:
--------
15.1 Circumstances requiring the consent, approval or permission of any party
hereto shall be interpreted to mean that such consents, approvals or
permissions shall not be unreasonably withheld. This provision shall not
apply to the provisions of Clause 2 hereof.
15.2 Any variation or modification of any of the terms or conditions herein
made at the request of or with the agreement of the Company and with the
consent of XXX shall not in any way determine or prejudice the
- 7 -
Promoters' liability hereunder PROVIDED that the financial amount of the
Promoters' said liability shall not be increased without its express
agreement in writing.
16. TERMINATION OF AGREEMENT:
------------------------
This Agreement shall terminate five years from the date of the last
payment from the grant.
17. CANCELLATION AND REVOCATION OF THE GRANT:
----------------------------------------
XXX may stop payment of the grant and/or revoke and cancel or reduce the
grant or so much thereof as shall not then have been actually paid to the
Company if any one or more of the following events occur:-
17.1 if there be any breach of the terms or conditions of Clause 2 hereof
and/or Paragraph 2 of the Third Schedule hereto;
17.2 if the Company should to a material extent be in breach of any of the
terms and conditions of this Agreement other than those specified in
Clause 17.1 and having failed to establish to the reasonable satisfaction
of XXX that such breach was due to force majeure shall not have rectified
such breach within 30 days after written notice thereof has been served on
the Company;
17.3 if an order is made or an effective resolution is passed
for the winding up of the Company;
17.4 if a Receiver or an Examiner is appointed over any of the property of the
Company or if a distress or execution is levied or served upon any of the
property of the Company and is not paid off within 30 days;
17.5 if the Company should cease to carry on the Undertaking.
If the grant be revoked the Company and/or the Promoters shall repay to XXX on
demand all sums received in respect of the grant, and if the grant be reduced
the Company and/or the Promoters shall repay to XXX on demand all sums received
in excess of the amount of the reduced grant and in either case in default of
such repayment such sums shall be recoverable by XXX from the Company and/or the
Promoters as a joint and several simple contract debt.
18. GOVERNING LAW:
-------------
This Agreement shall be governed by and be construed in accordance with the Laws
of Ireland and the parties hereto expressly and irrevocably submit to the
jurisdiction of the Irish Courts and the Promoters hereby irrevocably appoint
the
- 8 -
Company to be its attorney for the purpose of accepting service on its behalf of
any notice, document or legal process with respect to the Promoters' obligations
pursuant to the provisions of Clause 17 (and/or Clause 12) hereof and service of
any such document on such attorney shall be deemed for all purposes to be good
service.
- 9 -
FIRST SCHEDULE
--------------
PROVISIONS OF FIXED ASSETS FOR THE UNDERTAKING
----------------------------------------------
1. FIXED ASSETS ESTIMATED COSTS
IR(pounds)
1.1 Buildings and Modifications 3,360,000
1.3 New Machinery and 9,337,000
Equipment
Total 12,697,000
2. The Company shall:-
2.1 have the construction of the said proposed factory buildings and building
modifications for the Undertaking commenced to the satisfaction of XXX not
later than 1 April 1999 and completed in a proper and satisfactory manner
not later than 31 December 2000;
2.2 Purchase and have installed in a proper and workmanlike manner ready for
operation in the said factory buildings all machinery and equipment
suitable in all respects required for the Undertaking by 31 December 2000;
2.3 have commenced production in the Undertaking by 31 December 1998.
- 10 -
SECOND SCHEDULE
---------------
ADDITIONAL TERMS AND CONDITIONS RELATING TO THE
-----------------------------------------------
EMPLOYMENT GRANT
----------------
1. The grant shall be payable in respect of the total number of such jobs
as are created in the Company (in accordance with paragraph 7 of this
Schedule) provided such jobs are occupied by EU citizens who are subject to
Irish taxation.
2. A job for the purposes of grant shall be a permanent full time position
in the Undertaking and shall be deemed to be created when a contract of
employment has been signed and payment has been made to an employee in
respect of work done in the job.
3. The grant in respect of each job created shall be paid in two moieties.
The first moiety shall be payable when the job has been created and the
second moiety shall be payable when permanent full-time employment in the
job for a twelve month period has been completed.
4. Claims for payment of an instalment from the grant may be submitted
monthly and shall be certified by the Company's Auditors in an agreed
format.
5. The Company shall also submit details of the Company's employment history
to date; this shall give such particulars as XXX may require in a format
satisfactory to XXX.
6. XXX may at any time within five years from the date of payment of the
first moiety of the grant in respect of any job revoke the grant paid in
respect of that job if the job should become vacant and remain vacant for
a period in excess of six calendar months.
- 11 -
7.
Job Description Base Year Year 1 Year 2
1998 1999 2000
Administration and 156 189 218
Support 338 420 476
Operations 494 609 694
Total --- --- ---
- 12 -
IN WITNESS WHEREOF the parties hereto have affixed their respective seals the
day and year first herein written.
PRESENT when the Seal of the
INDUSTRIAL DEVELOPMENT AGENCY (IRELAND)
was affixed hereto:-
/s/ illegible signature
------------------------
AUTHORISED OFFICER
/s/ illegible signature
------------------------
AUTHORISED OFFICER
PRESENT when the Seal of
MODUS MEDIA INTERNATIONAL KILDARE
was affixed hereto:-
/s/ illegible signature
------------------------
Director
/s/ illegible signature
------------------------
Director
PRESENT when the Seal of
MODUS MEDIA INTERNATIONAL HOLDINGS, INCORPORATED
was affixed hereto:-
/s/ Xxxxxxx X. Xxxxx
------------------------
Director
/s/ illegible signature
------------------------
Sr Vice President and
Chief Financial Officer
- 13 -
