<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 3, 1996
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MANCHESTER EQUIPMENT CO., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
5045
NEW YORK 7379 11-2312854
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBERS) IDENTIFICATION NO.)
</TABLE>
160 OSER AVENUE
HAUPPAUGE, NEW YORK 11788
(516) 435-1199
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
BARRY R. STEINBERG
MANCHESTER EQUIPMENT CO., INC.
160 OSER AVENUE
HAUPPAUGE, NEW YORK 11788
(516) 435-1199
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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<S> <C> <C>
SETH I. TRUWIT, ESQ. BERNARD STEBEL, ESQ. RICHARD H. GILDEN, ESQ.
EPSTEIN BECKER & GREEN, P.C. STEBEL & PASELTINER, P.C. FULBRIGHT & JAWORSKI L.L.P.
250 PARK AVENUE 7600 JERICHO TURNPIKE 666 FIFTH AVENUE
NEW YORK, NEW YORK 10177 WOODBURY, NEW YORK 11797 NEW YORK, NEW YORK 10103
(212) 351-4500 (516) 496-8117 (212) 318-3000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement
becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- ------------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ------------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT BEING OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITIES BEING REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value................ 2,875,000 $12.00 $34,500,000 $11,897
================================================================================================================
</TABLE>
(1) Includes 375,000 shares that the Underwriters have the option to purchase to
cover over-allotments, if any.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 3, 1996
PROSPECTUS
2,500,000 SHARES
MANCHESTER EQUIPMENT CO., INC.
COMMON STOCK
------------------------
All of the 2,500,000 shares of Common Stock offered hereby are being sold
by Manchester Equipment Co., Inc. ("Manchester" or the "Company").
Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that a trading market will develop after
the sale of shares offered hereby. It is currently estimated that the initial
public offering price will be between $10.00 and $12.00 per share. See
"Underwriting" with respect to the method of determining the initial public
offering price. The Company has applied for quotation of the Common Stock on The
Nasdaq National Market under the symbol "MANC."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
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=====================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share......................................... $ $ $
Total(3).......................................... $ $ $
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</TABLE>
(1) For information regarding indemnification of the Underwriters and certain
compensation payable to the Representative of the Underwriters, see
"Underwriting."
(2) Before deducting expenses of this offering payable by the Company estimated
at $825,000.
(3) The Company has granted to the Underwriters an option, exercisable within 30
days of the date hereof, to purchase up to 375,000 additional shares of
Common Stock solely to cover over-allotments, if any, on the same terms and
conditions as the shares offered hereby. If such option is exercised in
full, the total "Price to Public," "Underwriting Discounts and Commissions"
and "Proceeds to Company" will be $ , $ and $ ,
respectively. See "Underwriting."
------------------------
The shares of Common Stock are offered by the several Underwriters when, as
and if delivered to and accepted by the several Underwriters, subject to their
right to reject any order in whole or in part and to certain other conditions.
It is expected that delivery of the certificates representing the shares of
Common Stock will be made on or about , 1996 at the offices of
Ladenburg, Thalmann & Co. Inc., New York, New York.
------------------------
LADENBURG, THALMANN & CO. INC.
The date of this Prospectus is , 1996
<PAGE> 3
OFFERING CUSTOMERS SINGLE-SOURCE SOLUTIONS
TO THEIR INFORMATION SYSTEMS NEEDS
[INTERLOCKING JIGSAW PUZZLE PIECES DESCRIBING
THE COMPANY'S PRODUCT AND SERVICE OFFERINGS.]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
------------------------
The Company intends to furnish its shareholders with annual reports
containing audited financial statements reported on by independent auditors and
quarterly reports containing unaudited financial information for the first three
quarters of each fiscal year.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information and the Consolidated Financial
Statements and the Notes thereto appearing elsewhere in this Prospectus. Unless
otherwise indicated, all references to the Company's authorized, issued and
outstanding securities assume no exercise of the Underwriters' over-allotment
option. This Prospectus contains forward-looking statements that involve risks
and uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements as a result of the factors
set forth under "Risk Factors" and elsewhere in this Prospectus.
THE COMPANY
Manchester Equipment Co., Inc. is a systems integrator of computer
hardware, software and networking products, primarily for commercial customers.
The Company offers its customers single-source solutions customized to their
information systems needs by combining value-added services with hardware,
software, networking products and peripherals from leading vendors. Over the
past 20 years, the Company has forged long-standing relationships with both
customers and suppliers and has capitalized on the rapid developments in the
computer industry, including the shift toward client/server-based platforms.
Each year during this period, the Company has been profitable and has generated
growth in revenues.
Manchester's marketing focus is on mid- to large-sized companies, which
have become increasingly dependent upon complex information systems in an effort
to gain competitive advantages. While many of these companies have the financial
resources to make the required capital investments in information systems, often
they do not have the necessary information technology personnel to design,
install or maintain complex systems or to incorporate continuously evolving
technologies. As a result, these companies are turning to independent third
parties to procure, design, install, maintain and upgrade their information
systems.
The Company offers its customers a variety of value-added services, such as
consulting, integration and support services, together with a broad range of
computer and networking products from leading vendors. Consulting and
integration services include systems design, performance analysis, security
analysis, migration planning, product procurement, configuration, testing and
systems installation and implementation. Support services include network
management, "help-desk" support, and enhancement, maintenance and repair of
computer systems. The Company's customers include Barnes & Noble Inc., Cabletron
Systems Inc., Conde Nast Publications Inc., J&R Music World, National
Broadcasting Company Inc., Pfizer Inc., Reuters America Inc., Sotheby's Inc.,
Time Warner Inc., The Toronto Dominion Bank, United Parcel Service of America
Inc. and the United States Merchant Marine Academy. The Company offers services
and products from its headquarters in Long Island, New York, and its regional
offices in New York City, Needham (Boston), Massachusetts and Boca Raton and
Tampa, Florida.
The Company believes that a number of factors enable it to compete in a
highly competitive and rapidly changing market. Among other things, the Company
benefits from long-standing relationships with many of its customers, providing
opportunities for continued sales of products and services. The Company's long-
standing relationships with suppliers and its large volume purchases contribute
to the Company's ability to obtain significant purchase discounts and inventory
as needed. Manchester further believes that its name is widely recognized for
high quality, competitively priced products and value-added services. Manchester
also has developed efficient inventory and credit extension controls which have
historically resulted in rapid inventory turnover and minimal bad debt expense.
The Company's expansion to regional offices in the Northeast and Florida has
further contributed to the continued increase in its revenues.
Key elements of Manchester's strategy include (i) increasing its focus on
providing value-added services, such as consulting, integration and support,
(ii) expanding its marketing focus on companies outside the Fortune 500, (iii)
introducing an electronic sales ordering system (linked to automated inventory
and credit control systems) for its customers, (iv) increasing sales force
productivity through enhanced electronic access to product information,
increased training of sales representatives and use of telemarketing, (v)
expanding its presence in the New York Metropolitan area by enlarging both its
New York City and Long Island offices
3
<PAGE> 5
and (vi) expanding geographically into growing business centers in the eastern
half of the United States. In support of its strategy, during the past fiscal
year, the Company hired additional technical and administrative staff and
increased its investment in its management information systems.
The Company's executive offices are located at 160 Oser Avenue, Hauppauge,
New York 11788; its telephone number is (516) 435-1199.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company................... 2,500,000 shares
Common Stock to be outstanding after the
offering(1)......................................... 8,700,000 shares
Use of proceeds....................................... To repay short-term debt, to expand
its New York Metropolitan area
operations, to upgrade its
telecommunications system and for
working capital
Proposed Nasdaq National Market symbol................ MANC
</TABLE>
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(1) Excluding 1,250,000 shares of Common Stock reserved for issuance under the
Company's stock option plan and 250,000 shares of Common Stock reserved for
issuance upon the exercise of warrants to be issued to the Representative of
the Underwriters and its designees exercisable at 120% of the public
offering price (the "Representative's Warrants"). See "Capitalization,"
"Management -- Stock Option Plan" and "Underwriting."
4
<PAGE> 6
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
The following table sets forth summary financial data of the Company and
should be read in conjunction with the Consolidated Financial Statements and the
Notes thereto and other financial information included herein.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JULY 31,
--------------------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues......................... $111,835 $118,898 $137,361 $170,818 $ 189,659
Gross profit..................... 19,101 18,452 20,684 24,948 27,003
Income from operations........... 1,285 1,787 2,604 3,215 3,933
Net income....................... 628 1,132 1,776(1) 1,663 2,138
PRO FORMA INCOME STATEMENT DATA
(UNAUDITED)(2):
Income from operations........... $ 1,285 $ 1,787 $ 2,604 $ 3,215 $ 3,933
Reduction in officers'
compensation.................. 2,415 372 463 3,465 2,809
Reduction in rent to related
parties....................... 39 57 75 93 304
Pro forma income from
operations.................... 3,739 2,216 3,142 6,773 7,046
Pro forma net income............. 2,100 1,389 2,099(1) 3,798 4,006
Pro forma net income per share... .64
Shares used in pro forma net
income
per share calculation............ 6,246,970
</TABLE>
<TABLE>
<CAPTION>
JULY 31, 1996
--------------------------
ACTUAL AS ADJUSTED(3)
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<S> <C> <C>
BALANCE SHEET DATA:
Working capital................................................... $ 9,841 $ 32,183
Total assets...................................................... 37,761 55,873
Short-term debt, including current maturities of capital lease
obligation..................................................... 6,952 452
Shareholders' equity.............................................. 12,914 37,526
</TABLE>
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(1) Includes a cumulative effect of a change in accounting for income taxes of
$386. See Notes 1 and 8 of Notes to Consolidated Financial Statements.
(2) Pro forma to reflect the assumed reduction in (i) officers' compensation to
amounts stipulated in agreements with the Company's Chief Executive Officer
and Executive Vice President without any diminished duties or
responsibilities, (ii) compensation from that paid to the former Chief
Financial Officer during each of the years in the five-year period ended
July 31, 1996 to the annual compensation currently payable to the present
Chief Financial Officer, and (iii) rent paid to related parties to amounts
stipulated in current leases for the respective portions of the five-year
period ended July 31, 1996 during which these leases (or their predecessors)
were in effect. See "Management" and "Certain Transactions."
(3) As adjusted to reflect the sale of 2,500,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $11.00 per share and
the application of the estimated net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."
5
<PAGE> 7
RISK FACTORS
In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of Common Stock offered hereby. This
Prospectus contains certain forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of certain
of the factors set forth in the following risk factors and elsewhere in this
Prospectus.
ADVERSE INDUSTRY CONDITIONS; DECREASING OPERATING MARGINS IN SALES OF PRODUCTS
The computer industry is characterized by a number of potentially adverse
business conditions, including pricing pressures, evolving distribution
channels, market consolidation and a potential decline in the rate of growth in
sales of personal computers. Heightened price competition among various hardware
manufacturers has resulted in reduced per unit revenue and declining gross
profit margins. As a result of the intense price competition within the
industry, the Company has experienced increasing pressure on its gross profit
and operating margins with respect to the sale of products. The Company's
inability to compete successfully on the pricing of products sold, or the
continuing decline in its gross margins of products sold due to adverse industry
conditions or competition, could have a material adverse effect on the Company's
business, results of operations and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
RISKS ASSOCIATED WITH THE COMPANY'S STRATEGY
An integral part of the Company's strategy is to increase its value-added
services revenue. These services generally provide higher operating margins than
those associated with the sale of products. This strategy requires the Company,
among other things, to attract and retain highly skilled technical employees in
a competitive labor market, provide additional training to its sales
representatives and enhance its existing service management system. There can be
no assurance that the Company will be successful in increasing its focus on
providing value-added services, and the failure to do so could have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Strategy -- Emphasizing Value-added
Services."
Manchester's strategy also includes expanding its presence in the New York
Metropolitan area by increasing its sales and service capabilities in its New
York City office and enlarging its sales, service and training capabilities at
its Long Island headquarters as well as expanding geographically into growing
business centers in the eastern half of the United States. There can be no
assurance that the Company's expansion of its New York Metropolitan area
operations will increase profits generated by such operations, that the opening
of new offices will prove profitable, or that these expansion plans will not
substantially increase future capital or other expenditures. The failure of this
component of the Company's strategy could materially adversely affect its
business, results of operations and financial condition. See
"Business -- Strategy -- Expanding New York Metropolitan Area Presence" and
"-- Strategy -- Expanding into Additional Business Centers."
To date, Manchester's success has been based primarily upon sales in the
New York Metropolitan area. The Company's strategy, encompassing the expansion
of service offerings, the expansion of existing offices and the establishment of
new regional offices, is expected to challenge the Company's senior management
and infrastructure. There can be no assurance as to the Company's ability to
respond to these challenges. The failure of the Company to effectively manage
its planned growth could have a material adverse effect on the Company's
business, results of operations and financial condition. See
"Business -- Strategy."
In addition, the success of the Company's strategy will depend in large
part upon the Company's ability to attract and retain highly skilled technical
and sales personnel in a competitive labor market. There can be no assurance
that the Company will be able to attract and retain such skilled personnel. The
loss of a significant number of the Company's existing technical or sales
personnel or difficulty in hiring or retaining additional
6
<PAGE> 8
technical or sales personnel could have a material adverse effect on the
Company's business, results of operations and financial condition. See
"Business -- Services and Products" and "-- Employees."
COMPETITION
The computer industry is characterized by intense competition. The Company
directly competes with local, regional and national systems integrators,
value-added resellers ("VARs") and distributors as well as with certain computer
manufacturers that market through direct sales forces. While the Company's
competitors vary depending upon the particular market, some of the national and
regional competitors of the Company include AmeriData Technologies, Inc.,
CompuCom Systems, Inc., Dataflex Corporation, Entex Information Services, Inc.,
Vanstar Corporation and Electronic Data Systems Corporation. The computer
industry has recently experienced a significant amount of consolidation through
mergers and acquisitions, and manufacturers of personal computers may increase
competition by offering a range of services in addition to their current product
and service offerings. In the future, the Company may face further competition
from new market entrants and possible alliances between existing competitors.
Some of the Company's competitors have, or may have, greater financial,
marketing and other resources, and may offer a broader range of products and
services, than the Company. As a result, they may be able to respond more
quickly to new or emerging technologies or changes in customer requirements,
benefit from greater purchasing economies, offer more aggressive hardware and
service pricing or devote greater resources to the promotion of their products
and services. There can be no assurance that the Company will be able to compete
successfully in the future with these or other competitors. See
"Business -- Competition."
DEPENDENCE ON KEY EXECUTIVES
The success of the Company is dependent on the services of Barry R.
Steinberg, the Company's founder, Chairman of the Board, President and Chief
Executive Officer, and Joel G. Stemple, Ph.D., the Company's Executive Vice
President. Mr. Steinberg, who has served the Company for in excess of 23 years,
has long-standing relationships with many manufacturers, which the Company
believes assists it in procuring desired products on a timely basis and on
desirable financial terms. In addition, Mr. Steinberg has long-standing
relationships with many of the Company's customers, providing opportunities for
continued sales of products and services. Dr. Stemple has served the Company for
in excess of 14 years and his management responsibilities include marketing and
advertising programs, review of contracts, monitoring the sales force and
inventory control. The loss of the services of either of Mr. Steinberg or Dr.
Stemple could have a material adverse effect on the Company's business, results
of operations and financial condition. See "Management."
DEPENDENCE UPON MAJOR CUSTOMER
The Company's largest customer accounted for approximately 14%, 22% and 16%
of the Company's revenues for the fiscal years ended July 31, 1994, 1995 and
1996, respectively, substantially all of such revenues being derived from the
sale of hardware products. The presence of this customer contributes to the
Company's ability to obtain volume discounts on the purchase of computer
hardware from certain of its vendors. Although this customer has been a customer
of the Company for approximately ten years, the Company has no long-term supply
contract with it, but rather ships products against purchase orders to meet the
customer's needs. The loss of this customer could have a material adverse effect
on the Company's revenues as well as its ability to obtain volume discounts from
certain vendors, either of which could have a material adverse effect on the
Company's business, results of operations and financial condition. See
"Business -- Services and Products" and "-- Customers."
DEPENDENCE ON SALES TO COMPUTER RESELLERS AND VARS
The Company's profitability has been affected by its ability to obtain
volume discounts from certain manufacturers which has been dependent, in part,
upon the Company's ability to sell large quantities of products to computer
resellers, including VARs. Sales to resellers have been made at profit margins
generally less favorable than sales directly to commercial customers. For the
fiscal years ended July 31, 1994, 1995 and 1996, approximately 25%, 24% and 23%
of the Company's revenues, respectively, were derived from sales to
7
<PAGE> 9
computer resellers, including VARs. The Company's inability to continue to sell
products to computer resellers and thereby obtain the desired volume discounts
from manufacturers or to expand its sales to commercial customers sufficiently
to offset the need to rely on sales to computer resellers could have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Management's Discussion of Financial Condition and Results of
Operations."
DEPENDENCE ON MAJOR MANUFACTURERS
The Company's business is dependent upon its relationships with major
manufacturers in the computer industry. Combined sales of products manufactured
by Toshiba America Information Systems, Inc. ("Toshiba"), Hewlett-Packard
Company ("Hewlett-Packard"), NEC Technologies, Inc. ("NEC") and Compaq Computer
Corporation ("Compaq") during the fiscal years ended July 31, 1994, 1995 and
1996 comprised approximately 51%, 52% and 53%, respectively, of the Company's
revenues. Sales of products manufactured by Toshiba accounted for approximately
23%, 25% and 23%, respectively, of the Company's revenues, substantially all of
which sales were of notebook computers and related accessories. Many aspects of
the Company's business are affected by its relationships with major
manufacturers, including product availability, pricing and related terms, and
reseller authorizations. The increasing demand for personal computers and
ancillary equipment has resulted in significant product shortages from time to
time, because manufacturers have been unable to produce sufficient quantities of
certain products to meet demand. There can be no assurance that manufacturers
will maintain an adequate supply of these products to satisfy all the orders of
the Company's customers or that, during periods of increased demand,
manufacturers will provide products to the Company, even if available, or at
discounts previously offered to the Company. In addition, there can be no
assurance that the pricing and related terms offered by major manufacturers will
not adversely change in the future. The failure to obtain an adequate supply of
products, the loss of a major manufacturer, the deterioration of the Company's
relationship with a major manufacturer or the Company's inability in the future
to develop new relationships with other manufacturers could have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Business -- Services and Products."
Certain manufacturers offer market development funds, cooperative
advertising and other promotional programs to systems integrators, distributors
and computer resellers. The Company relies on these funds for many of its
advertising and promotional campaigns. The dollar amounts of funds received by
the Company for the fiscal years ended July 31, 1994, 1995 and 1996 were $1.4
million, $863,000 and $943,000, respectively, representing 1.0%, .5% and .5% of
revenues, respectively. In recent years, manufacturers have generally reduced
their level of support with respect to these programs. The discontinuance or
material reduction of these programs would result in the Company having to spend
its own funds to obtain the same level of advertising and promotion, which could
have a material adverse effect on the Company's business, results of operations
and financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- General" and "Business -- Sales and
Marketing."
INVENTORY MANAGEMENT
The computer industry is characterized by rapid product improvement and
technological change resulting in relatively short product life cycles and rapid
product obsolescence, which can place inventory at considerable valuation risk.
Certain of Manchester's suppliers provide price protection to the Company, which
is intended to reduce the risk of inventory devaluation due to price reductions
on current products. Certain of the Company's suppliers also provide stock
balancing to the Company pursuant to which the Company is able to return unsold
inventory to a supplier as a partial credit against payment for new products.
There are often restrictions on the dollar amount of inventory that can be
returned at any one time. There can be no assurance that such price protection
or stock balancing will be available to the Company in the future, or that these
measures will provide complete protection against the risk of excess or obsolete
inventories. Although the Company maintains a sophisticated proprietary
inventory management system, there can be no assurance that the Company will
continue to successfully manage its existing and future inventory. Failure to
successfully manage its current or future inventory could have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Business -- Management Information Systems."
8
<PAGE> 10
RAPID TECHNOLOGICAL CHANGE
The markets for the Company's products and services are characterized by
rapidly changing technology and frequent introduction of new hardware and
software products and services, which may render many existing products
noncompetitive, less profitable or obsolete. The Company's continued success
will depend on its ability to keep pace with the technological developments of
new products and services and to address increasingly sophisticated customer
requirements. The Company's success will also depend upon its abilities to
address the technical requirements of its customers arising from new generations
of computer technologies, to obtain these new products from present or future
suppliers and vendors at reasonable costs, to educate and train its employees as
well as its customers with respect to these new products or services and to
integrate effectively and efficiently these new products into both the Company's
internal systems and systems developed for the Company's customers. There can be
no assurance that the Company will be successful in identifying, developing and
marketing product and service developments or enhancements in response to these
technological changes. The failure of the Company to respond effectively to
these technological changes could have a material adverse effect on the
Company's business, results of operations and financial condition.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company's quarterly revenues and operating results have varied
significantly in the past and are expected to continue to do so in the future.
Quarterly revenues and operating results generally fluctuate as a result of the
demand for the Company's products and services, the introduction of new hardware
and software technologies with improved features, the introduction of new
services by the Company and its competitors, changes in the level of the
Company's operating expenses, competitive conditions and economic conditions. In
particular, the Company currently is increasing its fixed operating expenses,
including a significant increase in personnel, as part of its strategy to
increase its focus on providing systems integration and other higher margin and
value-added services. Accordingly, the Company believes that period-to-period
comparisons of its operating results should not be relied upon as an indication
of future performance. In addition, the results of any quarterly period are not
indicative of results to be expected for a full fiscal year.
CONCENTRATION OF OWNERSHIP AND CONTROL AND ANTI-TAKEOVER PROVISIONS
Based on the number of shares of Common Stock that will be outstanding upon
completion of this offering, Barry R. Steinberg, the Company's Chairman of the
Board, President and Chief Executive Officer, will beneficially own 57.6% of the
outstanding shares of Common Stock (approximately 55.2% if the Underwriters'
over-allotment option is exercised in full). As a result, Mr. Steinberg will
have sufficient voting power to elect all of the Company's directors. Mr.
Steinberg also will be able to veto any proposed sale of the Company, which
under New York law requires the affirmative vote of the holders of two-thirds of
the outstanding shares of Common Stock. See "Principal Shareholders."
The Company's principal shareholders and their families and affiliated
entities own a substantial portion of the real estate leased by the Company. The
Company believes that each of these leases, as amended to be effective with the
closing of this offering, is on terms comparable to those that the Company could
have obtained from independent third parties. However, there can be no assurance
that conflicts of interest may not arise out of such relationships. See
"Principal Shareholders" and "Certain Transactions."
The Company's Certificate of Incorporation provides that up to 5,000,000
shares of Preferred Stock may be issued by the Company from time to time in one
or more series. The Board of Directors is authorized to determine the rights,
preferences, privileges and restrictions granted to and imposed upon any wholly
unissued series of Preferred Stock and to fix the number of shares of any series
of Preferred Stock and the designation of any such series, without any vote or
action by the Company's shareholders. The Board of Directors may authorize and
issue Preferred Stock with voting or conversion rights that could adversely
affect the voting power or other rights of the holders of Common Stock. In
addition, the potential issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change in control of the Company, may
discourage bids of the Common Stock at a premium over the market price of the
Common Stock and may adversely affect the market price of the Common Stock. In
addition, the Company is subject to Section 912 of the
9
<PAGE> 11
New York Business Corporation Law which imposes certain restrictions and
requirements on a company's ability to engage in a "business combination" with
an "interested shareholder." See "Description of Capital Stock."
DISCRETIONARY USE OF PROCEEDS
Assuming an initial public offering price of $11.00 per share,
approximately $15.8 million of the net proceeds of this offering will be
utilized for general corporate purposes, including working capital. Accordingly,
the Board of Directors will have broad discretion as to the allocation of a
substantial portion of the net proceeds from this offering. See "Use of
Proceeds."
SUBSTANTIAL DILUTION
Purchasers of the Common Stock offered hereby will incur an immediate and
substantial dilution of approximately $6.77 per share in net tangible book value
from the assumed $11.00 per share initial public offering price. See "Dilution."
NO PRIOR MARKET; STOCK PRICE VOLATILITY
Prior to this offering, there has been no public market for the Company's
Common Stock. Consequently, the initial public offering price will be determined
by negotiations between the Company and the Representative. There can be no
assurance that an active public market for the Common Stock will develop or be
sustained after this offering or that the market price of the Common Stock will
not decline below the initial public offering price. The trading price of the
Common Stock could be subject to wide fluctuations in response to quarter to
quarter variations in operating results, announcements of technological
innovations or new products or services by the Company or its competitors,
general conditions in the industry, changes in earnings estimates by securities
analysts, or other events or factors, many of which are beyond the Company's
control. In addition, the stock market has experienced extreme price and volume
fluctuations, which have particularly affected the market prices of many
technology-related companies and which have often been unrelated to the
operating performance of such companies. The Company's revenue or operating
results in future quarters may be below the expectations of securities analysts
and investors. In such event, the price of the Company's Common Stock would
likely decline, perhaps substantially. These Company-specific factors or broad
market fluctuations may materially adversely affect the market price of the
Company's Common Stock. See "Underwriting."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market after
this offering or the prospect of such sales could adversely affect the market
price of the Common Stock and the Company's ability to raise capital necessary
to fund its future operations. In addition to the 2,500,000 shares of Common
Stock offered hereby, as of the date of this Prospectus (the "Effective Date"),
there will be approximately 6,200,000 shares of Common Stock outstanding, all of
which are deemed "restricted securities" under Rule 144 under the Securities Act
of 1933, as amended (the "Securities Act"), and may be eligible for sale in the
public market in accordance with certain volume and other restrictions under
Rule 144 under the Securities Act beginning 90 days after the effective date of
this offering. Notwithstanding the ability to resell their shares under Rule
144, the current shareholders have agreed with the Representative not to offer,
sell or otherwise dispose of any shares of Common Stock without the prior
written consent of the Representative for a period of 180 days after the date of
this Prospectus. Sales of a substantial number of shares of Common Stock in the
public market following this offering, pursuant to Rule 144 or otherwise, could
materially adversely affect the market price of the Common Stock. In addition,
the Company intends to register under the Securities Act, following the closing
of this offering, 1,250,000 shares of Common Stock reserved for issuance under
the Company's stock option plan. See "Shares Eligible for Future Sale."
10
<PAGE> 12
Upon completion of this offering, the Company has agreed to issue to the
Representative and its designees warrants covering an aggregate of 250,000
shares of Common Stock exercisable for a four-year period commencing one year
from the date of this offering, at an exercise price equal to 120% of the
initial public offering price. The Company has agreed to grant certain demand
and piggyback registration rights to the holders of these warrants. The
existence or exercise of these warrants could materially adversely affect the
Company's ability to raise additional financing at a time when it may be
advantageous to do so. See "Underwriting."
ABSENCE OF DIVIDENDS
To date, the Company has not paid any cash dividends and does not presently
intend to pay cash dividends in the foreseeable future. See "Dividend Policy."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be approximately $24,612,500 ($28,428,125 if the
Underwriters' over-allotment option is exercised in full), assuming an initial
public offering price of $11.00 per share, and deducting underwriting discounts
and commissions and estimated offering expenses. The Company intends to repay
the entire balance outstanding under its line of credit with the net proceeds of
this offering. At July 31, 1996, approximately $6.5 million was outstanding
under the line of credit, of which $3.5 million bore interest at 7.69% per annum
and the balance bore interest at 8.25% per annum. Of the remaining net proceeds,
approximately $1.0 million will be used to relocate or expand the Company's New
York City office, approximately $770,000 will be used to expand training and
sales facilities in Long Island, and approximately $500,000 will be used to
upgrade the Company's internal telecommunications system. The approximately
$15.8 million balance (assuming $6.5 million is outstanding under the line of
credit as of the closing of this offering) will be added to working capital for
general corporate purposes. The retiring of indebtedness under the bank line of
credit will increase the availability of bank credit for general corporate
purposes. Exact allocation of the proceeds for working capital purposes, the
increased funds available under the bank line of credit and the timing of such
expenditures will depend upon various factors, including the availability of
strategic expansion opportunities. Although it is possible that the Company
might acquire businesses complementary to the current or future business of the
Company, the Company's ability to effect such an acquisition will depend upon a
number of factors, including the availability of acquisition candidates or other
business opportunities. The Company has no current plans for any acquisitions,
and no such acquisitions are being negotiated as of the date of this Prospectus.
There can be no assurance that any acquisition will be consummated or that, if
consummated, any acquisition will be successful.
Pending the use of the net proceeds of this offering, the Company will
invest the funds in short-term, interest-bearing, investment-grade securities.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its capital
stock. The Board of Directors currently intends to retain all future earnings,
if any, to fund the growth and development of the Company's business and,
accordingly, does not anticipate paying any cash dividends in the foreseeable
future.
11
<PAGE> 13
DILUTION
The net tangible book value of the Company at July 31, 1996, was
approximately $12,185,000, or $1.97 per share. Net tangible book value per share
is equal to the Company's total tangible assets less its total liabilities,
divided by the number of shares of Common Stock outstanding. After giving effect
to the sale by the Company of the 2,500,000 shares of Common Stock offered
hereby (at an assumed initial public offering price of $11.00 per share) and the
application of the estimated net proceeds therefrom, the pro forma net tangible
book value of the Company at July 31, 1996, would have been approximately
$36,797,000, or $4.23 per share. This represents an immediate increase in net
tangible book value of $2.26 per share to existing shareholders and an immediate
dilution in net tangible book value of $6.77 per share to purchasers of Common
Stock in this offering, as illustrated in the following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share..................... $11.00
Net tangible book value per share as of July 31, 1996............. $1.97
Increase per share attributable to new investors in this 2.26
offering....................................................... -----
Pro forma net tangible book value per share after this offering..... 4.23
------
Dilution per share to new investors in this offering................ $ 6.77
======
</TABLE>
The following table sets forth, as of the date of this Prospectus, the
number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by the existing
shareholders and the new investors (assuming an initial public offering price of
$11.00 per share and before deducting the underwriting discounts and commissions
and estimated offering expenses):
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders......... 6,200,000 71.26% $ 4,600 .02% $ .00
New investors................. 2,500,000 28.74% $27,500,000 99.98% $ 11.00
--------- ------ ----------- ------
Total............... 8,700,000 100.00% $27,504,600 100.00%
========= ====== =========== ======
</TABLE>
12
<PAGE> 14
CAPITALIZATION
The following table sets forth, as of July 31, 1996, the capitalization of
the Company and the as adjusted capitalization of the Company after giving
effect to the sale of the 2,500,000 shares of Common Stock offered hereby at an
assumed offering price of $11.00 per share and the application of the estimated
net proceeds therefrom after deducting underwriting discounts and commissions
and estimated offering expenses. The information should be read in conjunction
with the Consolidated Financial Statements and Notes thereto appearing elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
JULY 31, 1996
---------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Short-term debt, including current maturities of capital lease
obligation...................................................... $ 6,952,000 $ 452,000
=========== ===========
Capital lease obligation, excluding current maturities............ $ 175,000 $ 175,000
Shareholders' equity:
Preferred Stock, $.01 par value; 5,000,000 shares authorized,
none issued and outstanding actual and as adjusted.............. -- --
Common Stock, $.01 par value; 25,000,000 shares authorized,
6,200,000 shares issued and outstanding, and 8,700,000 shares
issued and outstanding as adjusted(1)........................... 62,000 87,000
Additional paid-in capital........................................ -- 24,587,000
Retained earnings................................................. 12,852,000 12,852,000
----------- -----------
Total shareholders' equity........................................ 12,914,000 37,526,000
----------- -----------
Total capitalization.............................................. $13,089,000 $37,701,000
=========== ===========
</TABLE>
- ---------------
(1) Excludes 1,250,000 shares of Common Stock reserved for issuance under the
Company's stock option plan and 250,000 shares of Common Stock reserved for
issuance upon exercise of the Representative's Warrants. See
"Management -- Stock Option Plan" and "Underwriting."
13
<PAGE> 15
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
The selected consolidated financial data presented below are derived from
the audited consolidated financial statements of the Company. The Consolidated
Financial Statements as of July 31, 1995 and 1996 and for each of the years in
the three-year period ended July 31, 1996 and the report thereon of KPMG Peat
Marwick LLP, independent auditors, are included elsewhere in this Prospectus.
The consolidated financial data presented below as of July 31, 1992, 1993 and
1994 and for the years ended July 31, 1992 and 1993 are derived from
consolidated financial statements of the Company not appearing herein which were
audited by another independent auditor. The data should be read in conjunction
with the Consolidated Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JULY 31,
--------------------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................................ $111,835 $118,898 $137,361 $170,818 $ 189,659
Cost of revenues........................ 92,734 100,446 116,677 145,870 162,656
-------- -------- -------- -------- --------
Gross profit............................ 19,101 18,452 20,684 24,948 27,003
Selling, general and administrative
expenses............................. 17,816 16,665 18,080 21,733 23,070
-------- -------- -------- -------- --------
Income from operations.................. 1,285 1,787 2,604 3,215 3,933
Interest and other expenses, net........ (47) 34 (172) (392) (365)
Provision for income taxes.............. 610 689 1,042 1,160 1,430
Cumulative effect of change in
accounting for income taxes.......... -- -- 386 -- --
-------- -------- -------- -------- --------
Net income.............................. $ 628 $ 1,132 $ 1,776 $ 1,663 $ 2,138
======== ======== ======== ======== ========
PRO FORMA INCOME STATEMENT DATA
(UNAUDITED):(1)
Reduction in officers'
compensation(2)...................... $ 2,415 $ 372 $ 463 $ 3,465 $ 2,809
Reduction in rents to related
parties(2)........................... 39 57 75 93 304
Pro forma income from operations........ 3,739 2,216 3,142 6,773 7,046
Pro forma provision for income taxes.... 1,592 861 1,257 2,583 2,675
Pro forma net income.................... 2,100 1,389 2,099 3,798 4,006
Pro forma net income per share.......... .64
Shares used in pro forma net income per
share calculation.................... 6,246,970
</TABLE>
<TABLE>
<CAPTION>
JULY 31,
-------------------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................... $ 4,695 $ 6,274 $ 7,701 $ 9,189 $ 9,841
Total assets.................................. 21,662 22,002 25,879 31,635 37,761
Short-term debt, including current maturities
of capital lease obligation................ 3,500 2,200 5,400 5,600 6,952
Capital lease obligation, excluding current
maturities................................. -- -- -- -- 175
Shareholders' equity.......................... 6,676 7,808 9,584 11,247 12,914
</TABLE>
- ---------------
(1) Pro forma to reflect the assumed reduction in (i) officers' compensation to
amounts stipulated in agreements with the Company's Chief Executive Officer
and Executive Vice President without any diminished duties or
responsibilities, (ii) compensation from that paid to the former Chief
Financial Officer during each of the years in the five-year period ended
July 31, 1996 to the annual compensation currently payable to the present
Chief Financial Officer, and (iii) rent paid to related parties to amounts
stipulated in current leases for the respective portions of the five-year
period ended July 31, 1996 during which these leases (or their predecessors)
were in effect. See "Management" and "Certain Transactions."
(2) After giving effect to these reductions, the pro forma selling, general and
administrative expenses were $15,362, $16,236, $17,542, $18,175 and $19,957
for the fiscal years ended July 31, 1992, 1993, 1994, 1995 and 1996,
respectively.
14
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations of the Company should be read in conjunction with the Consolidated
Financial Statements of the Company and Notes thereto appearing elsewhere in
this Prospectus. The following discussion contains certain forward-looking
statements which involve risks and uncertainties. The Company's actual results
could differ materially from the results anticipated in those forward-looking
statements as a result of certain of the factors set forth in the section of
this Prospectus entitled "Risk Factors" as well as elsewhere herein.
GENERAL
Manchester is a systems integrator of computer hardware, software and
networking products, primarily for commercial customers. The Company offers its
customers single-source solutions customized to their information systems needs
by combining value-added services with hardware, software, networking products
and peripherals from leading vendors. To date, most of the Company's revenues
have been derived from product sales.
As a result of intense price competition within the computer industry as
well as other industry conditions, the Company has experienced increasing
pressure on its gross profit and operating margins with respect to the sale of
products. Manchester's strategy includes increasing its focus on providing
value-added services with operating margins that are higher than those obtained
with respect to the sale of products. The Company's future performance will
depend in part on its ability to manage successfully a continuing shift in its
operations towards value-added services.
The Company's largest customer accounted for approximately 14%, 22% and 16%
of the Company's revenues for the fiscal years ended July 31, 1994, 1995 and
1996, respectively, substantially all of which revenues were derived from the
sale of hardware products. There can be no assurance that the Company will
continue to derive substantial revenues from this customer.
The Company's profitability has been enhanced by its ability to obtain
volume discounts from certain manufacturers, which has been dependent, in part,
upon Manchester's ability to sell large quantities of products to computer
resellers, including VARs. There can be no assurance that the Company will be
able to continue to sell products to resellers and thereby obtain the desired
discounts from manufacturers or that the Company will be able to increase sales
to end-users to offset the need to rely upon sales to resellers.
The markets for the Company's products and services are characterized by
rapidly changing technology and frequent introductions of new hardware and
software products and services, which render many existing products
noncompetitive, less profitable or obsolete. The Company believes that its
inventory controls have contributed to its ability to respond effectively to
these technological changes. As of July 31, 1994, 1995 and 1996, inventories
represented 28%, 30% and 24% of total assets, respectively. During these same
fiscal years, the Company's average inventory turnover was 17, 16 and 18 times,
respectively. The failure of the Company to anticipate technology trends or to
continue to effectively manage its inventory could have a material adverse
effect on the Company's business, results of operations and financial condition.
The Company believes its controls on accounts receivable have contributed
to its profitability. The Company's bad debt expense represented .3%, .1% and
.1% of total revenues for the years ended July 31, 1994, 1995 and 1996,
respectively.
The Company's quarterly revenues and operating results have varied
significantly in the past and are expected to continue to do so in the future.
Quarterly revenues and operating results generally fluctuate as a result of the
demand for the Company's products and services, the introduction of new hardware
and software technologies with improved features, the introduction of new
services by the Company and its competitors, changes in the level of the
Company's operating expenses, competitive conditions and economic conditions. In
particular, the Company currently is increasing its fixed operating expenses,
including a significant increase in personnel, as part of its strategy to
increase its focus on providing higher margin, value-added services.
Accordingly, the Company believes that period-to-period comparisons of its
operating results should not be
15
<PAGE> 17
relied upon as an indication of future performance. In addition, the results of
any quarterly period are not indicative of results to be expected for a full
fiscal year.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information
derived from the Company's Consolidated Statements of Income expressed as a
percentage of revenues. The percentages in the table, as well as the amounts and
percentages in the discussions presented below, are presented assuming the
reduction in (i) officers' compensation to amounts stipulated in agreements with
the Company's Chief Executive Officer and Executive Vice President without any
diminished duties or responsibilities, (ii) compensation from that paid to the
former Chief Financial Officer during each of the years in the three-year period
ended July 31, 1996 to the annual compensation currently payable to the present
Chief Financial Officer, and (iii) rent paid to related parties to amounts
stipulated in current leases for the respective portions of the five-year period
ended July 31, 1996 during which these leases (or their predecessors) were in
effect. See "Management," "Certain Transactions" and Note 12 of the Consolidated
Financial Statements.
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
FOR
THE YEAR ENDED JULY 31,
-------------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Revenues.................................................. 100.0% 100.0% 100.0%
Cost of revenues.......................................... 84.9 85.4 85.8
----- ----- -----
Gross profit.............................................. 15.1 14.6 14.2
Pro forma selling, general and administrative expenses.... 12.8 10.7 10.5
----- ----- -----
Pro forma income from operations.......................... 2.3 3.9 3.7
Interest and other expenses, net.......................... 0.1 0.2 0.2
----- ----- -----
Pro forma income before income taxes and cumulative effect
of change in accounting................................. 2.2 3.7 3.5
Pro forma provision for income taxes...................... 1.0 1.5 1.4
Cumulative effect of change in accounting for income
taxes................................................... .3 -- --
----- ----- -----
Pro forma net income...................................... 1.5% 2.2% 2.1%
===== ===== =====
</TABLE>
YEAR ENDED JULY 31, 1996 COMPARED TO YEAR ENDED JULY 31, 1995
Revenues. The Company's revenues increased $18.8 million or 11.0% from
$170.8 million in fiscal 1995 to $189.7 million in fiscal 1996 due to increased
revenues from both new and existing customers. Many factors contributed to this
increase, including new product introductions, special product purchases and
volume and price changes with no one factor having any material effect on this
increase.
Gross Profit. Cost of revenues includes the direct costs of products sold,
freight and the personnel costs associated with providing technical services,
offset in part by manufacturers' market development funds. All other operating
costs are included in selling, general and administrative expenses. Gross profit
increased $2.1 million or 8.2% from $24.9 million in fiscal 1995 to $27.0
million in fiscal 1996 primarily as a result of the increase in revenues. Gross
profit as a percentage of revenues decreased from 14.6% to 14.2%. The decrease
in the gross profit percentage was due to changes in product mix as well as
increased pricing pressures prevalent within the industry. Competitive
pressures, changes in the types of products or services sold and product
availability result in fluctuations in gross profit from period to period.
Pro Forma Selling, General and Administrative Expenses. Pro forma selling,
general and administrative expenses increased $1.8 million or 9.8% from $18.2
million in fiscal 1995 to $20.0 million in fiscal 1996. Approximately $917,000
of this increase related to higher payroll and related costs due primarily to
the hiring of additional technical and administrative staff in support of the
Company's strategy to increase its value-added services revenue. Rent and
occupancy costs also increased by approximately $197,000 due primarily to
16
<PAGE> 18
the leasing of an additional facility to meet the Company's current and future
needs. In addition, commissions paid to the Company's sales force increased
approximately $328,000 due to the increase in revenues in fiscal 1996.
Interest Expense, Net. Interest expense, net increased from $346,000 in
fiscal 1995 to $374,000 in fiscal 1996 primarily due to increased borrowings.
Pro Forma Provision for Income Taxes. The pro forma effective income tax
rate for fiscal 1995 and 1996 remained relatively constant at approximately 40%.
YEAR ENDED JULY 31, 1995 COMPARED TO YEAR ENDED JULY 31, 1994
Revenues. Revenues increased $33.5 million or 24.4% from $137.4 million in
fiscal 1994 to $170.8 million in fiscal 1995. This increase was due primarily to
the increased demand for pentium-based personal computers and notebook computers
and increased sales to the Company's largest customer.
Gross Profit. Gross profit increased $4.3 million or 20.6% from $20.7
million in fiscal 1994 to $24.9 million in fiscal 1995 principally as a result
of increased revenues. Gross profit as a percentage of revenues decreased from
15.1% in fiscal 1994 to 14.6% in fiscal 1995 as a result of changes in the mix
of products sold by the Company during the periods and increasing pricing
pressures prevalent in the industry.
Pro Forma Selling, General and Administrative Expenses. Pro forma selling,
general and administrative expenses increased $633,000 or 3.6% from $17.5
million in fiscal 1994 to $18.2 million in fiscal 1995. Such costs declined as a
percentage of revenues from 12.8% to 10.7% as a result of the 24.4% increase in
revenues and the relatively small increase in pro forma selling, general and
administrative expenses. The dollar increase was principally due to higher sales
commissions due to the increase in revenues in fiscal 1995 as well as higher
payroll and related costs partially offset by lower bad debt expense.
Interest Expense, Net. Interest expense, net increased from $236,000 in
fiscal 1994 to $346,000 in fiscal 1995, principally due to increased borrowings.
Pro Forma Provision for Income Taxes. The pro forma effective income tax
rate decreased from 42% in fiscal 1994 to 40% in fiscal 1995. This decrease was
primarily due to lower state income taxes in fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of financing have been the internally
generated working capital from profitable operations and a line of credit from a
financial institution.
For the year ended July 31, 1996, cash provided by operations increased to
$4.2 million as compared to cash provided by operations of $1.6 million in
fiscal 1995 and cash used in operations of $4.1 million in fiscal 1994. The
increase in cash provided by operations in fiscal 1996 as compared to fiscal
1995 was primarily due to higher net income and reduced inventory levels. The
increase in cash provided by operations in fiscal 1995 as compared to fiscal
1994 was primarily due to increased balances in accounts payable and accrued
expenses. The Company's accounts receivable and accounts payable and accrued
expenses balances as well as its investment in inventory can fluctuate
significantly from one year end to the next due to the receipt of large customer
orders or payments or variations in product availability and vendor shipping
patterns at any particular date. Generally, the Company's experience is that
increases in accounts receivable, inventory and accounts payable and accrued
expenses will coincide with growth in revenue and increased operating levels.
Cash used in investing activities increased from approximately $448,000 in
fiscal 1994 and $440,000 in fiscal 1995 to $1.0 million in fiscal 1996. In
addition, during fiscal 1996, the Company acquired $305,000 of computer
equipment through a capital lease obligation resulting in total fixed asset
additions for fiscal 1996 of $1.3 million. This increased level of spending
reflects the initial expenditures related to the Company's plans to expand its
operations and facilities to accommodate current and anticipated increases in
revenues.
Cash provided by financing activities in fiscal 1996 was approximately
$751,000 compared to $200,000 in fiscal 1995 and $3.2 million in fiscal 1994.
The change in cash provided by financing activities is primarily
17
<PAGE> 19
reflective of increases in borrowing by the Company under its line of credit
with a financial institution. Similar to the items discussed above, the
Company's level of borrowing will fluctuate significantly in order to provide
cash for operations and capital expenditures.
The Company's line of credit agreement with a financial institution
provides for a maximum of $9.5 million of borrowings and is due on demand.
Interest on borrowings is computed at the Company's option based on the
financial institution's prime rate (8.25% at July 31, 1996) or at LIBOR plus 2%
(7.69% at July 31, 1996). The line provides for a general security interest
first lien on all of the Company's assets, to the extent a first lien is
available. The line is guaranteed by Barry M. Steinberg, the Company's
President, Chief Executive Officer and majority shareholder. At July 31, 1996,
borrowings of $6.5 million were outstanding under the line of credit. A portion
of the net proceeds of this offering will be applied to repay the outstanding
indebtedness under the line. Following this offering, the Company expects to
maintain the line, may utilize it to fund operations and intends to eliminate
Mr. Steinberg's guarantee.
The Company believes that the net proceeds of this offering together with
current working capital, expected cash flows from operations and available
borrowings under the line of credit will be adequate to support current
operating levels for the foreseeable future, specifically through at least the
end of fiscal 1998. The Company currently has no major commitments for capital
expenditures. Future capital requirements of the Company include those for the
growth of working capital items such as accounts receivable and inventory and
the purchase of equipment and expansion of facilities as well as the possible
opening of new offices. The Company's ability to implement its expansion
strategy is dependent upon its ability to generate sufficient cash flow to meet
its obligations on a timely basis and to obtain additional funds through equity
or debt financings or from other sources, as may be required.
INFLATION
The Company does not believe that inflation has had a material effect on
the Company's operations.
NEW ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("Statement 123"). Statement 123 establishes financial accounting
and reporting standards for stock-based compensation plans. Statement 123 also
applies to transactions in which an entity issues its equity instruments to
acquire goods or services from nonemployees. Statement 123 encourages a fair
value based method of accounting for employee stock options or other similar
equity instruments. Entities electing not to adopt a fair value method must make
pro forma disclosures of net income and earnings per share as if a fair value
based method had been applied. Statement 123 is effective for fiscal year 1997.
The Company has elected not to adopt a fair value based accounting method for
employee stock options and therefore does not expect that the adoption of
Statement 123 will have a material impact on its financial position or results
of operations. The Company will disclose, commencing in fiscal 1997, the pro
forma net income and earnings per share as if such method had been used to
account for stock-based compensation cost.
18
<PAGE> 20
BUSINESS
GENERAL
Manchester Equipment Co., Inc. is a systems integrator of computer
hardware, software and networking products, primarily for commercial customers.
The Company offers its customers single-source solutions customized to their
information systems needs by combining value-added services with hardware,
software, networking products and peripherals from leading vendors. Over the
past 20 years, the Company has forged long-standing relationships with both
customers and suppliers and capitalized on the rapid developments in the
computer industry, including the shift toward client/server-based platforms.
Each year during this period, the Company has been profitable and has generated
growth in revenues.
Manchester's marketing focus is on mid- to large-sized companies, which
have become increasingly dependent upon complex information systems in an effort
to gain competitive advantages. While many of these companies have the financial
resources to make the required capital investments in information systems, often
they do not have the necessary information technology personnel to design,
install or maintain complex systems or to incorporate the continuously evolving
technologies. As a result, these companies are turning to independent third
parties to procure, design, install, maintain and upgrade their information
systems.
The Company offers its customers a variety of value-added services, such as
consulting, integration and support services, together with a broad range of
computer and networking products from leading vendors. Consulting and
integration services include systems design, performance analysis, security
analysis, migration planning, product procurement, configuration, testing and
systems installation and implementation. Support services include network
management, "help-desk" support, and enhancement, maintenance and repair of
computer systems. The Company's customers include Barnes & Noble Inc., Cabletron
Systems Inc., Conde Nast Publications Inc., J&R Music World, National
Broadcasting Company Inc., Pfizer Inc., Reuters America Inc., Sotheby's Inc.,
Time Warner Inc., The Toronto Dominion Bank, United Parcel Service of America
Inc. and the United States Merchant Marine Academy. The Company offers these
services and products from its headquarters in Long Island, New York, and its
regional offices in New York City, Needham, Massachusetts and Boca Raton and
Tampa, Florida.
The Company was incorporated in New York in 1973 and has one active
wholly-owned subsidiary, Manchester International, Ltd., a New York corporation
which sells computer hardware, software and networking products to resellers
domestically and internationally.
INDUSTRY
Businesses have become increasingly dependent upon complex information
systems in an effort to gain competitive advantages or to maintain competitive
positions. Computer technology and related products are continuously evolving,
making predecessor technologies or products obsolete within a few years or, in
some cases, within months. The constant changes in hardware and software and the
competitive pressure to upgrade existing products create significant challenges
to companies.
Over the last several years, the increase in performance of personal
computers, the development of a variety of effective business productivity
software programs and the ability to interconnect personal computers in high
speed networks have led to an industry shift away from mainframe computer
systems to client/server systems based on personal computer technology. In such
systems, the client computer, in addition to its stand-alone capabilities, is
able to obtain resources from a central server or servers. Accordingly, personal
computers may share everything from data files to printers. Recently, networked
applications such as electronic mail and work group productivity software,
coupled with widespread acceptance of Internet technologies, have led companies
to implement corporate intranets (networks that enable end-users (e.g.,
employees) to share information). The use of a corporate intranet allows a
company to warehouse valuable information, which may be "mined" or accessed by
employees or other authorized users through readily available Internet tools
such as Web browsers and other graphical user interfaces.
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<PAGE> 21
With these advances in information systems and networking, many companies
are reengineering their businesses using these technologies to enhance their
revenues and productivity. However, as the design of information systems has
become more complex to accommodate the proliferating network applications, the
configuration, selection and integration of the necessary hardware and software
products have become increasingly more difficult and complicated. While many
companies have the financial resources to make the required capital investments,
they often do not have the necessary information technology personnel to design,
install or maintain complex systems and may not be able to provide appropriate
or sufficient funding or internal management for the maintenance of their
information systems. As a result, such companies are increasingly turning to
independent third parties to procure, design, install, maintain and upgrade
their information systems. By utilizing the services of such third parties,
companies are able to acquire state-of-the-art equipment and expertise on a
cost-effective basis.
THE MANCHESTER SOLUTION
Manchester offers its customers single-source solutions customized to their
information systems needs. The Manchester solution includes a variety of
value-added services, including consulting, integration, network management,
"help-desk" support, and enhancement, maintenance and repair of computer
systems, together with a broad range of computer and networking products from
leading vendors. Manchester believes it provides state-of-the-art,
cost-effective information systems designed to meet its customers' particular
needs.
As a result of the Company's long-standing relationships with certain
suppliers and its large volume purchases, the Company is often able to obtain
significant purchase discounts which can result in cost-savings for its
customers. Manchester's relationships with its suppliers, its inventory
management system and industry knowledge generally enable it to procure desired
products on a timely basis and therefore to offer its customers timely product
delivery.
STRATEGY
The key elements of the Company's strategy include:
EMPHASIZING VALUE-ADDED SERVICES. Value-added services, such as
consulting, integration and support services, generally provide higher profit
margins than computer hardware sales. The Company intends to increase its focus
on providing these services through a number of key strategies. The Company
plans to recruit additional technical personnel with broad-based knowledge in
systems design and specialized knowledge in different areas of systems
integration, including application software, inter-networking (including
bridges, routers and switches), database design and management and security. The
Company plans to actively promote the benefits of corporate intranets and
intends to introduce additional services, including remote network management
services and fee-based "help desk" services. The remote network management
system is expected to consist of dedicated servers and software located at the
Company's Long Island headquarters. This system is intended to allow the
Company's specially trained engineers to solve their customers' network systems
problems from the Company's facilities. The fee-based "help desk" services are
anticipated to be available for end-users, regardless of whether they purchase
products or other services from the Company.
INCREASING MARKETING FOCUS ON COMPANIES OUTSIDE THE FORTUNE
500. Manchester has decided to increase its marketing focus on those companies
outside the Fortune 500 in order to increase its value-added services revenue.
Manchester's experience is that these companies are increasingly looking to
third parties to provide a complete solution to their information systems needs
from both a service and product standpoint. These companies often do not have
the necessary information technology personnel to procure, design, install or
maintain complex systems or to incorporate continuously evolving technologies.
Manchester believes that it can provide these companies with solutions to their
information systems requirements by providing a variety of value-added services
together with a broad range of computer and networking products.
INTRODUCING AN ELECTRONIC ORDERING SYSTEM. Manchester is in the process of
implementing an electronic ordering system. This ordering system will enable
customers to access the Company via the Internet, review
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<PAGE> 22
various products, systems and services offered by the Company and place their
orders on-line. Customers will also be able to obtain immediate customized
information regarding products, systems and services that meet their specific
requirements. The ordering system will produce a matrix of alternative fully
compatible packages, together with their availability and related costs, based
on parameters indicated by the customer. Customers will not be granted access to
this system without prior credit clearance.
INCREASING SALES FORCE PRODUCTIVITY. Manchester is addressing a variety of
strategies to increase sales force productivity. The Company is in the process
of implementing an electronic sales information system utilizing similar
technology to the electronic ordering system described above. The electronic
sales information system will allow the Company's sales representatives to
obtain immediate customized information regarding products and services that
meet the specific system requirements of customers and the availability and
related costs of such products and services. The Company believes that this
system will increase the productivity of its sales representatives by enabling
them to offer rapid and comprehensive solutions to their customers' needs while
reducing the possibility of returns based on incompatible products.
Manchester also is upgrading its internal telecommunications system.
Through its enhanced system, anticipated to be implemented during the first
calendar quarter of 1997, telephone calls can be automatically placed to a
targeted list of existing or potential customers and, upon connection, will be
routed automatically to available sales representatives with on-screen
information containing product and service data for current customers and market
demographic data for potential customers. The system also will have the
capability to route automatically in-coming calls to available sales
representatives in response to a caller's answers to automated queries.
The Company also intends to provide increased training of its sales
representatives in matters relating to value-added services, such as consulting
and integration services. To facilitate such training, the Company plans to
construct a dedicated training facility to be located in one of its existing
offices in Long Island.
EXPANDING NEW YORK METROPOLITAN AREA PRESENCE. The Company believes that
it has a strong presence and wide name recognition in the New York Metropolitan
area, where there is a growing corporate demand for computer products and
services. Manchester is seeking to expand its presence in this area by enlarging
its New York City office and increasing the sales and service capabilities of
such office, and expanding its sales, service and training capabilities at its
Long Island headquarters. The Company believes that these steps will enable it
to capture a greater percentage of the New York Metropolitan area market.
EXPANDING INTO ADDITIONAL BUSINESS CENTERS. The Company has regional
offices in Needham, Massachusetts and Boca Raton and Tampa, Florida, from which
it derived approximately 10% of its revenues for the fiscal year ended July 31,
1996. The Company intends to continue to expand geographically into growing
business centers in the eastern half of the United States. It is anticipated
that each office would have the capability to perform a broad array of services
as well as engage in product sales.
SERVICES AND PRODUCTS
The Company offers customized single-source solutions to its customers'
information systems requirements, including consulting, integration and support
services, together with a broad range of computer and networking products from a
variety of leading vendors. The Company provides its services through a skilled
staff of engineers who are trained and certified in leading products and
technology, including Microsoft Windows NT, Novell NetWare and Cisco Systems
routers and switches.
SERVICES. The Company's services include consulting, integration and
support services.
CONSULTING. The Company's staff of senior systems engineers provides
consulting services consisting of systems design, performance and security
analysis and migration planning services.
Systems design services include network, communications, applications
and custom solutions design. Network design services involve analysis of a
customer's overall network needs, including access to the Internet;
communications design services involve analysis and creation of enterprise-wide
networks, including corporate intranets; applications design services include
creation of relational databases meeting customers'
21
<PAGE> 23
specific business requirements; and custom solutions design services include
design of storage systems, remote access systems and document retention through
scanning technology.
Performance analysis involves analyzing a customer's information
systems to assess potential points of failure, to determine where performance
could be increased and to prepare for change and growth. This service includes
the evaluation of applications and their interaction with the network in order
to maximize existing computer resources. Through this evaluation process, which
includes a detailed report to the end-user, a plan for the optimization of the
customer's existing system is created, as well as recommendations for
enhancements and future systems.
Security analysis involves working with customers to develop security
policies covering network and data security, as well as risk analysis. After a
policy is developed, a security strategy is planned and deployed using a variety
of tools, including physical firewalls, packet filtering, encryption and user
authentication.
Migration planning involves the performance of a detailed assessment of
existing mission critical systems, followed by an analysis of the end-user's
future requirements. Working closely with the customer, Manchester's consultants
develop a migration strategy using a defined project plan that encompasses
skills transfer and training, checking for data integrity, project management
and consolidation and reallocation of resources. The primary objective of this
service is to rapidly move the customer from a slow or expensive system to a
newer, more efficient and cost-effective solution.
INTEGRATION. Integration services include product procurement,
configuration, testing, installation and implementation.
The Company maintains a sophisticated systems build and test area,
adjacent to its warehousing facilities, where computer systems are configured
and tested through the use of automated systems. Manchester manages the
installation and implementation of its customers' information systems, and
provides critical path analysis, vendor management and facility management
services. Critical path analysis involves the management and coordination of the
various hardware and software networking components of a systems design project.
The Company's engineers prepare reports setting forth coordinated timetables
with respect to installing and integrating the customer's information systems.
Vendor management includes interfacing with the suppliers of computer products
in installing a project; facility management involves management of the labor
aspects of a project, including supervision of electricians and other tradesmen.
SUPPORT. The Company offers support services for its customers'
existing information systems, including network management, "help-desk"
services, and enhancement, maintenance and repair.
Network management consists of managing the compatibility of, and
communication between, the various components comprising a customer's
information system. The increased expense associated with the ownership of
information systems has encouraged customers to outsource the management of
computer networks, including local area networks ("LANs") and wide area networks
("WANs"). Currently, the Company's engineers provide network management services
on site at customers' facilities. The Company plans to expand these services by
enabling its specially trained engineers to solve many of their customers'
network systems problems on a remote basis from the Company's facilities.
"Help-desk" services consist of providing customers with telephone
support. The Company is in the process of expanding its "help-desk" capabilities
and intends to develop a fee-based "help-desk." In addition, the Company's
service call management system, which the Company is in the process of
enhancing, will enable the Company's "help-desk" technicians to access an
archive of prior service calls concerning similar problems and their solutions,
resulting in a more efficient response to customers' calls.
Enhancement, maintenance and repair services range from broad on-site
coverage to less expensive, basic maintenance and repair of itemized hardware or
software, as well as enhancements such as upgrades of existing systems. Field
representatives are equipped with notebook computers to facilitate the exchange
of information with both the information systems at the Company's headquarters
and with technical databases available on the Internet. The Company maintains a
laboratory at its Long Island facilities where the Company prototypes customer
problems for quicker solutions without jeopardizing customers' information
systems.
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<PAGE> 24
PRODUCTS. Manchester offers a wide variety of personal computer and
networking products and peripherals, including:
<TABLE>
<S> <C>
Bridges and Routers Servers
Desktop Computers Software
Internet Access Products Storage Subsystems
Modems Switches
Monitors Supplies and Accessories
Network Equipment Teleconferencing Equipment
Notebook Computers Terminals
Printers Wireless Products
Scanners Workstations
</TABLE>
The Company has long-standing relationships with many manufacturers, which
the Company believes assists it in procuring desired products on a timely basis
and on desirable financial terms. The Company sells products from most major
manufacturers, including:
<TABLE>
<S> <C>
AST Research, Inc. NEC Technologies, Inc.
Bay Networks, Inc. Novell, Inc.
Cisco Systems, Inc. Philips Electronics N.V.
Compaq Computer Corporation Seagate Technology, Inc.
Epson America, Inc. Standard Microsystems Corporation
Hayes Microcomputer Products, Inc. Texas Instruments Inc.
Hewlett-Packard Company 3Com Corp.
Intel Corporation Toshiba America Information Systems, Inc.
Microsoft Corporation U.S. Robotics Corporation
Motorola, Inc.
</TABLE>
For the fiscal years ended July 31, 1994, 1995 and 1996, sales by the
Company of products manufactured by Toshiba, Hewlett-Packard, NEC and Compaq
collectively comprised approximately 51%, 52% and 53%, respectively, of the
Company's revenues. In these fiscal years, sales of products manufactured by
Toshiba accounted for approximately 23%, 25% and 23%, respectively, of the
Company's revenues, substantially all of which were sales of notebook computers
and related accessories. The total dollar volume of products purchased directly
from manufacturers, as opposed to distributors or resellers, was approximately
$96 million, $124 million and $130 million for the fiscal years ended July 31,
1994, 1995 and 1996, respectively, and as a percentage of total cost of products
sold was approximately 83%, 86% and 81%, respectively.
The Company seeks to obtain volume discounts for large customer orders
directly from manufacturers and through aggregators and distributors.
CUSTOMERS
The Company believes that it benefits from its long-standing relationships
with many of its customers, providing opportunities for continued sales and
services. Manchester believes that its broad range of capabilities with respect
to both products and services is attractive to companies of all sizes. Although
Manchester is planning to target companies outside the Fortune 500 as one part
of its strategy, it has sold, and anticipates that it will continue to sell, to
some of the largest companies in the United States. For the fiscal years ended
July 31, 1994, 1995 and 1996, approximately 14%, 22% and 16% of the Company's
total revenues, respectively, were derived from United Parcel Service of
America, Inc. Some of the Company's other commercial customers include Barnes &
Noble Inc., Cabletron Systems Inc., Cablevision Systems Corp., Conde Nast
Publications Inc., J&R Music World, National Broadcasting Company Inc., Pfizer
Inc., Reuters America Inc., SONY Theaters, Sotheby's Inc., Time Warner Inc., The
Toronto Dominion Bank, United Nations International Children's Emergency Fund
and the United States Merchant Marine Academy.
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<PAGE> 25
The Company's return policy generally allows customers to return hardware
and unopened software, without restocking charges, within 30 days of the
original invoice date, subject to advance approval and certain other conditions.
The Company grants credit to customers meeting specified criteria and
maintains a centralized credit department that reviews credit applications.
Accounts are regularly monitored for collectibility and appropriate action is
taken upon indication of risk.
SALES AND MARKETING
The Company's sales are generated primarily by its 59 person sales force.
These sales representatives generally are responsible for meeting all of their
customers' product and service needs and are supervised by sales managers with
significant industry experience. The sales managers are responsible for
overseeing sales representative training, establishing sales objectives and
monitoring account management principles and procedures. Sales representatives
attend seminars conducted by manufacturers' representatives at the Company's
facilities, at which the Company's new and existing product and service
offerings are discussed.
The Company's sales representatives are assisted by technical personnel who
support and supplement the sales efforts. The responsibilities of technical
support personnel include answering preliminary inquiries from customers
regarding systems design, and on-site visits to customers' facilities. At
customers' facilities, the technical personnel gather information necessary to
assist customers in making informed decisions regarding their information
systems. Such data include the nature of the customer's current information
systems, the existing hardware and networking environment, the customer's level
of expertise and its applications needs.
Manchester believes that its name is widely recognized for high quality,
competitively priced products and services. The Company promotes name
recognition and the sale of its products and services through regional business
directories, trade magazine advertisements, radio advertisements, direct
mailings to customers and participation in computer trade shows and special
events. The Company advertises at numerous sporting events in the New York
metropolitan region, including full page four-color advertisements in yearbooks
and/or program guides for sports teams such as the New York Mets, the New York
Knicks and the New York Rangers, and has advertised on New York Mets and New
York Yankees tickets. The Company also promotes interest in its products and
services through its website on the Internet, and intends to expand its website
information to provide an electronic catalog of its products and services.
Several manufacturers offer market development funds, cooperative advertising
and other promotional programs, on which the Company relies for many of its
advertising and promotional campaigns. See "Risk Factors -- Dependence on Major
Manufacturers."
Sales force training is an integral part of the Company's strategy to
increase its focus on providing value-added services. As client/server-based
systems, applications and network capabilities grow in complexity, the need for
technically knowledgeable sales personnel becomes critical to the sale of
value-added services. Accordingly, the Company anticipates expanding its
training capabilities at one of its Long Island facilities to conduct seminars
for sales representatives. The seminars will address such topics as general
developments in the computer industry, systems integration services and the
Company's management information systems. The Company intends to utilize its
technical personnel to conduct such seminars and may hire additional dedicated
trainers as needed.
MANAGEMENT INFORMATION SYSTEMS
The Company currently uses an IBM AS/400 integrated management information
system, which is a real-time, on-line system enabling instantaneous access and
processing. The Company maintains a proprietary inventory management system on
its computer system pursuant to which product purchases and sales are
continually tracked and analyzed. The Company's computer system is also used for
accounting, billing and invoicing.
The Company's information system assists management in maintaining controls
over the Company's inventory and receivables. Manchester's average inventory
turnover was 17, 16 and 18 times for the fiscal years
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<PAGE> 26
ended July 31, 1994, 1995 and 1996, respectively, and Manchester experienced bad
debt expense of less than .3% of revenues in each of these years.
During the fiscal year ended July 31, 1996, the Company invested in its
management information systems, including upgrading and expanding the IBM AS/400
system, implementing a client/server-based management system to track services
rendered for customers, and upgrading servers and network infrastructures for
its headquarters. The Company utilizes experienced in-house technical personnel,
assisted by the Company's senior engineers, to upgrade and integrate additional
functions into the Company's management information systems.
COMPETITION
The computer industry is characterized by intense competition. The Company
directly competes with local, regional and national systems integrators,
value-added resellers and distributors as well as with certain computer
manufacturers that market through direct sales forces. While the Company's
competitors vary depending upon the particular market, some of the national and
regional competitors of the Company include AmeriData Technologies, Inc.,
CompuCom Systems, Inc., Dataflex Corporation, Entex Information Services, Inc.,
Vanstar Corporation and Electronic Data Systems Corporation. The computer
industry has recently experienced a significant amount of consolidation through
mergers and acquisitions, and manufacturers of personal computers may increase
competition by offering a range of services in addition to their current product
and service offerings. In the future, the Company may face further competition
from new market entrants and possible alliances between existing competitors.
Some of the Company's competitors have, or may have, greater financial,
marketing and other resources, and may offer a broader range of products and
services, than the Company. As a result, they may be able to respond more
quickly to new or emerging technologies or changes in customer requirements,
benefit from greater purchasing economies, offer more aggressive hardware and
service pricing or devote greater resources to the promotion of their products
and services.
The Company's ability to compete successfully depends on a number of
factors such as breadth of product and service offerings, sales and marketing
efforts, product and service pricing, and quality and reliability of services.
EMPLOYEES
At August 31, 1996, the Company had 222 full-time employees consisting of
23 sales representatives, 26 management personnel, 50 technical personnel and
123 distribution and clerical personnel. In addition, at August 31, 1996, the
Company had 36 independent sales representatives. The Company is not a party to
any collective bargaining agreements and believes its relations with its
employees are good.
INTELLECTUAL PROPERTY
The Company owns one federally registered service mark with respect to its
name and logo. Most of the Company's various dealer agreements permit the
Company to refer to itself as an "authorized dealer" of the products of those
manufacturers and to use their trademarks and trade names for marketing
purposes. The Company considers the use of these trademarks and trade names in
its marketing to be important to its business.
PROPERTIES
The Company's main offices and warehouses are located in four buildings in
Hauppauge, New York, consisting of approximately 40,000 and 60,000 square feet
of office and warehouse space, respectively, under leases expiring between
January 1998 and October 2005, for aggregate annual lease payments of
approximately $1,040,000 in fiscal 1996. Three of these buildings are leased
from entities controlled by, or affiliated with, certain of the Company's
executive officers and principal shareholders. Effective with the closing of
this offering, the leases with related parties have been amended to provide
terms comparable to those that could be obtained from independent third parties.
Giving effect to these amended leases, the aggregate annual lease
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<PAGE> 27
payments for all four buildings in Hauppauge, New York will be approximately
$778,000 in fiscal 1997. The Company leases an additional office in Massapequa,
Long Island for $10,572 per annum on a month-to-month basis from an entity of
which Messrs. Rothlein and Bivona own 25% and 50%, respectively. See "Certain
Transactions." The Company leases additional offices in New York City, Needham,
Massachusetts and Boca Raton and Tampa, Florida, under leases expiring in
January 1999, April 1997, July 1998 and December 1996, respectively, for
aggregate rental payments of approximately $146,000 and $148,000 in fiscal 1996
and fiscal 1997, respectively, with options to renew in Needham and Tampa. The
Company believes that its Hauppauge and regional offices and warehouse space are
well maintained and are adequate for present requirements. The Company intends
to relocate or expand its New York City office as part of its strategy. See
"Strategy -- Expanding New York Metropolitan Area Presence."
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<PAGE> 28
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
----------------------------------- --- ----------------------------------------------------
<S> <C> <C>
Barry R. Steinberg................. 54 Chairman of the Board, President, Chief Executive
Officer and Director
Joel G. Stemple, Ph.D.............. 54 Executive Vice President, Secretary and Director
Joseph Looney...................... 39 Chief Financial Officer
William F. Scheibel, Jr............ 41 Chief Technology Officer
Joel Rothlein, Esq................. 67 Director
</TABLE>
Barry R. Steinberg, the founder of the Company, has served as its Chairman
of the Board, President and Chief Executive Officer and as a director since
Manchester's formation in 1973. Mr. Steinberg previously served as a systems
analyst for Sleepwater, Inc. and Henry Glass and Co.
Joel G. Stemple, Ph.D. has served as Executive Vice President since
September 1996 and as Vice President and as a director since August 1982. Dr.
Stemple previously performed consulting services for the Company and, from 1966
to 1982, served as Assistant and Associate Professor of Mathematics at Queens
College, City University of New York.
Joseph Looney has served as the Company's Chief Financial Officer since May
1996. Prior to joining the Company, from 1984 to 1996, Mr. Looney served in
various positions with KPMG Peat Marwick LLP, including Senior Audit Manager at
the end of his tenure at such firm. Mr. Looney is a Certified Public Accountant,
a member of the AICPA, the New York State Society of Certified Public
Accountants and the Institute of Internal Auditors.
William F. Scheibel, Jr. has served as the Company's Chief Technology
Officer since September 1996 and served as Manager of Technical Services and
Support from September 1995 through August 1996. Before joining the Company,
from 1990 to 1995, Mr. Scheibel served in various positions with Bay Networks,
Inc., a manufacturer of computer networking equipment, including Director of
Field Support for North and South America at the end of his tenure at such firm.
Joel Rothlein, Esq. has been a director of the Company since October 1996.
Mr. Rothlein is a partner in the law firm of Kressel Rothlein & Roth, Esqs.,
Massapequa, New York, where he has practiced law since 1955. Kressel, Rothlein &
Roth, Esqs. and its predecessor firms have acted as outside general counsel to
the Company since the Company's inception.
As a result of his managerial position, stock ownership and activities
relating to the organization of the Company, Barry R. Steinberg may be deemed a
"promoter" as that term is defined in the Securities Act.
Officers are elected annually and serve at the pleasure of the Board of
Directors, subject to rights, if any, under contracts of employment.
BOARD OF DIRECTORS
Independent Directors. No later than 90 days after the closing of this
offering, the Company will appoint two directors who are independent directors
within the meaning of the rules of the Nasdaq National Market. The failure of
the Company to appoint these directors could result in the delisting of the
Common Stock from the Nasdaq National Market.
Committees of the Board of Directors. No later than 90 days after the
closing of this offering, the Board of Directors will establish an Audit
Committee, a majority of whose members will be independent directors. It is
anticipated that the Audit Committee will be responsible for reviewing the
Company's internal accounting practices as well as the scope of the work
performed by the Company's independent auditors.
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<PAGE> 29
No later than 90 days after the closing of this offering, the Board of
Directors also will establish a Compensation Committee comprised of three or
more non-employee directors. The Compensation Committee will review the
compensation paid by the Company, make recommendations on compensation matters
to the Board of Directors, and administer the Company's stock option plan.
Director Compensation. Directors do not currently receive a fee for
attending Board of Directors' meetings, but are reimbursed for expenses incurred
in connection with the performance of their respective duties as directors of
the Company. However, the Board of Directors may in the future establish a
policy of compensating non-employee directors for attending Board of Directors'
or committee meetings. Additionally, directors may be granted options under the
Company's stock option plan. See "Stock Option Plan" below.
EXECUTIVE COMPENSATION
Summary Compensation. The following table sets forth a summary of the
compensation paid or accrued by the Company during the fiscal year ended July
31, 1996 to the Company's Chief Executive Officer and the other executive
officers whose compensation exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
FISCAL 1996 ANNUAL COMPENSATION
----------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
- -------------------------------------------------------- -------- ---------- ------------
<S> <C> <C> <C>
Barry R. Steinberg, Chief Executive Officer............. $271,800 $1,816,439 $ 54,210(1)
Joel G. Stemple, Executive Vice President............... $251,800 $1,669,193 $ 29,000(2)
Michael Bivona, Chief Financial Officer(3).............. $ 77,312 $ 216,463 $ 28,417(2)
</TABLE>
- ---------------
(1) Includes $50,000 of premiums paid by the Company for a whole life insurance
policy in the name of Mr. Steinberg.
(2) Includes $25,000 of premiums paid by the Company for a whole life insurance
policy in the name of the executive officer.
(3) Resigned as Chief Financial Officer effective June 30, 1996 upon his
retirement.
The executive officers named in the Summary Compensation Table have not
been granted, and do not hold, options to purchase shares of Common Stock, nor
have they received any other long-term incentive compensation during the 1996
fiscal year.
Barry M. Steinberg has agreed with the Company that his annual salary for
services rendered to the Company in his current positions as President and Chief
Executive Officer shall be $950,000 in each of the fiscal years ending July 31,
1997 and 1998. Mr. Steinberg has agreed that he will not be eligible to receive
any bonuses in either fiscal 1997 or 1998. The Company will continue to make
available to him the car allowance and deferred compensation benefits that he is
currently receiving. See Note 5 of Notes to Consolidated Financial Statements.
Mr. Steinberg will also be able to participate in other benefits that the
Company makes generally available to its employees, such as medical and other
insurance, and Mr. Steinberg will be able to participate under the Company's
stock option plan.
The Company has an employment agreement with Joel G. Stemple, Ph.D., under
which Dr. Stemple receives a base salary of $450,000 in each of the fiscal years
ending July 31, 1997 and 1998. Under the employment agreement, Dr. Stemple is
not eligible to receive any bonuses in either fiscal 1997 or 1998. Under the
employment agreement, the Company provides Dr. Stemple with an automobile and
certain deferred compensation benefits and provides Dr. Stemple with medical and
other benefits generally offered by the Company to its employees. Dr. Stemple
also is able to participate in the Company's stock option plan. The employment
agreement is terminable by either party on 90 days' prior notice. In the event
the Company so terminates Dr. Stemple's employment, or the Company elects not to
renew his employment agreement, he is entitled to severance equal to 12 months
of his then current base salary. This severance will be payable in accordance
with the Company's customary payroll practices. Under the employment agreement,
if
28
<PAGE> 30
Dr. Stemple terminates his employment, or the Company terminates his employment
for cause, Dr. Stemple is prohibited, for a two-year period from such
termination, from competing with the Company in the eastern half of the United
States.
STOCK OPTION PLAN
Under the Company's 1996 Incentive and Non-Incentive Stock Option Plan (the
"Plan"), which was approved by the Company's shareholders in October 1996, an
aggregate of 1,250,000 shares of Common Stock are reserved for issuance upon
exercise of options thereunder. The Plan will be administered by the
Compensation Committee of the Board of Directors (the "Committee"). Under the
Plan, incentive stock options, as defined in section 422 of the Internal Revenue
Code of 1986, as amended, may be granted to employees, and non-incentive stock
options may be granted to employees, directors and such other persons as the
Committee may determine. The Committee will also determine (i) the exercise
price of each option which must be equal to at least 100% (with respect to
incentive stock options) and at least 85% (with respect to non-incentive stock
options) of the fair market value of the Common Stock on the date of grant, (ii)
the number of shares of Common Stock subject to each option, (iii) the term of
each stock option up to a maximum of 10 years (or, in the case of incentive
options, five years for certain employees) and (iv) the time or times when the
stock option becomes exercisable. Incentive stock options expire three months
from the date of the holder's termination of employment with the Company other
than by reason of death or disability, in which event the option may be
exercised during the 12-month period following the date of termination of
employment to the extent such option was exercisable on the date of termination
of employment but in no event beyond the term of such option. The maximum number
of shares of Common Stock underlying options which may be granted to any person
in any calendar year is 200,000. Options may be exercised in cash, Common Stock,
or any combination thereof. No options have been granted to date under the Plan.
In the event of a Change in Control (as defined below), all outstanding
options under the Plan shall accelerate and become immediately fully
exercisable. Under the Plan, a Change in Control means (i) the sale or other
disposition to a person, entity or group of 50% or more of the Company's
consolidated assets, (ii) the acquisition of 50% or more of the outstanding
shares by a person or group or (iii) if the majority of the Company's Board of
Directors consists of persons other than the Continuing Directors (as defined
below). The term "Continuing Director" shall mean any member of the Company's
Board of Directors on the effective date of the Plan and any other member of the
Board of Directors who shall be recommended or elected to succeed or become a
Continuing Director by a majority of the Continuing Directors who are then
members of the Board of Directors.
29
<PAGE> 31
PRINCIPAL SHAREHOLDERS
The following table sets forth as of the date of this Prospectus,
information with respect to the beneficial ownership of the Common Stock by (i)
each person known by the Company to own beneficially five percent or more of
such Common Stock, (ii) each director of the Company, (iii) each person named in
the Summary Compensation Table and (iv) all executive officers and directors as
a group, together with their respective percentage ownership of such shares
before this offering and as adjusted to reflect the sale of the Common Stock
offered hereby:
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
SHARES OWNED
---------------------
SHARES BENEFICIALLY BEFORE AFTER
NAME AND ADDRESS OWNED OFFERING OFFERING
-------------------------------------------------- ------------------- -------- --------
<S> <C> <C> <C>
Barry R. Steinberg(1)............................. 5,010,101 80.8% 57.6%
Joel G. Stemple(1)................................ 626,263 10.1 7.2
Michael Bivona(2)(3).............................. 563,636 9.1 6.5
Joel Rothlein..................................... -- -- --
All executive officers and directors as a group (5
persons)........................................ 5,636,364 90.9 64.8
</TABLE>
- ---------------
(1) Address is 160 Oser Avenue, Hauppauge, New York 11788.
(2) Resigned as Chief Financial Officer and a director effective June 30, 1996
upon his retirement. See "Certain Transactions."
(3) Address is 9 Broadley Court, Dix Hills, New York 11747.
30
<PAGE> 32
CERTAIN TRANSACTIONS
Until August 1994, the Company was affiliated with Electrograph Systems,
Inc. ("Electrograph"), a value-added distributor of microcomputer peripherals,
components and accessories. Barry R. Steinberg, the Company's President and
Chief Executive Officer and its majority shareholder, served as Electrograph's
Chairman of the Board and Chief Financial Officer and had beneficial ownership
(directly and through shares held by his spouse and certain trusts, of which his
children are beneficiaries) of 35.5% of the outstanding shares of common stock
of Electrograph. During the fiscal years ended July 31, 1993 and 1994, the
Company paid approximately $322,000 and $385,000, respectively, to Electrograph
for the purchase of products. In August 1994, Bitwise Designs, Inc. ("Bitwise"),
a publicly-traded company engaged in the manufacture and distribution of
document imaging systems, personal and industrial computers and related
peripherals, acquired Electrograph through a stock-for-stock merger; Mr.
Steinberg acquired beneficial ownership of less than 1% of the outstanding
capital stock of Bitwise for the common stock of Electrograph in which he had a
direct or indirect beneficial interest. Mr. Steinberg served as a director of,
and provided consulting services to, Bitwise from August 1994 through September
17, 1996.
Three of the Company's four Hauppauge, New York facilities are leased from
entities affiliated with certain of the Company's executive officers, directors
or principal shareholders. The property located at 40 Marcus Boulevard,
Hauppauge, New York is leased from a limited liability company owned 70% by Mr.
Steinberg and his relatives, 20% by Joel G. Stemple, Ph.D., the Company's
Executive Vice President and a principal shareholder, and 10% by Michael Bivona,
a principal shareholder of the Company. For the fiscal year ended July 31, 1996,
the Company made lease payments of $216,000 to such entity. The Company's
offices at 160 Oser Avenue, Hauppauge, New York are leased from a limited
liability company owned 65% by Mr. Steinberg, 17.5% by Dr. Stemple and 17.5% by
Mr. Bivona. For the fiscal years ended July 31, 1994, 1995 and 1996, the Company
made lease payments of $244,000, $255,000 and $360,000, respectively, to such
entity. The property located at 50 Marcus Boulevard, Hauppauge, New York is
leased from Mr. Steinberg doing business in the name of Marcus Realty. For the
fiscal years ended July 31, 1994, 1995 and 1996, the Company made lease payments
of $399,000, $417,000 and $435,000, respectively, to such entity. Effective with
the closing of this offering, the leases with the affiliated parties with
respect to the leases of the Hauppauge, New York facilities have been amended to
provide terms comparable to those that could be obtained from independent third
parties. Giving effect to these amended leases, the rent for the properties
located at 40 Marcus Boulevard, 160 Oser Boulevard and 50 Marcus Boulevard will
be $170,375, $255,000 and $324,225, respectively, for fiscal 1997. The Company
leases an additional office in Massapequa, New York at $10,572 per annum on a
month-to-month basis from an entity of which Messrs. Rothlein and Bivona own 25%
and 50%, respectively. See "Business -- Properties."
Mr. Steinberg personally guarantees the Company's obligations under its
bank line of credit for which he receives no compensation. Following this
offering, the Company intends to eliminate Mr. Steinberg's guarantee. See Note 7
of Notes to Consolidated Financial Statements.
On May 7, 1996, following his retirement as the Company's Chief Financial
Officer which became effective June 30, 1996, Mr. Bivona elected, under an
agreement with the Company, to require the Company to purchase 62,626 shares of
Common Stock held by him for $471,000 payable in four equal quarterly
installments, without interest, commencing May 7, 1996. In September 1996, Mr.
Bivona agreed with the Company to terminate transfer restrictions previously
applicable to the balance of the shares of Common Stock owned by Mr. Bivona. In
connection therewith, Mr. Bivona terminated certain put rights he had with
respect to such shares, agreed to the 180-day lock-up required by the
Representative of the Underwriters and agreed to the volume and manner of sale
limitations applicable to an affiliate under Rule 144 under the Securities Act
with respect to the resale of shares of Common Stock owned by him. Pursuant to
the agreement, Mr. Bivona has certain piggyback registration rights in the event
of a subsequent registration of Common Stock in which Mr. Steinberg is a selling
shareholder. See "Shares Eligible For Future Sale."
Joel Rothlein, Esq., a director of the Company, is a partner of Kressel,
Rothlein & Roth, Esqs., which, with its predecessor firms, has acted as outside
general counsel to the Company since the Company's inception. Kressel, Rothlein
& Roth, Esqs. was paid $50,000 from the Company for legal services rendered to
the Company in the fiscal year ended July 31, 1996 and anticipates receiving
fees of approximately $350,000 from the Company for services to be rendered to
the Company in the fiscal year ending July 31, 1997.
31
<PAGE> 33
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 8,700,000 shares of
Common Stock outstanding. Of these shares, the 2,500,000 shares sold in this
offering will be freely tradeable without restriction or further registration
under the Securities Act, except that any shares purchased by "affiliates" of
the Company, as that term is defined in Rule 144 ("Rule 144") under the
Securities Act ("Affiliates"), may generally only be sold in compliance with the
limitations of Rule 144 described below.
Prior to this offering, there has been no public market for the Common
Stock of the Company, and no assurance can be given that a significant public
market for the Common Stock can be developed or sustained after this offering.
Future sales of substantial amounts of Common Stock in the public market could
have a material adverse effect on the market price of the Common Stock from time
to time.
SALE OF RESTRICTED SHARES
The 6,200,000 shares of Common Stock not being sold in this offering are
deemed "restricted securities" under Rule 144 and may be eligible for sale in
the public market in accordance with certain volume and other restrictions under
Rule 144 beginning 90 days after the date of this Prospectus. Notwithstanding
the ability to resell their shares under Rule 144, the current shareholders have
executed lock-up agreements ("Lock-up Agreements") with the Representative
providing that such shareholders will not offer, sell or otherwise dispose of
any of their shares of Common Stock without the prior written consent of the
Representative, for a period of 180 days after the date of this Prospectus.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an Affiliate, who has beneficially owned
restricted securities for at least two years is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of (i)
one percent of the then outstanding shares of Common Stock (approximately 87,000
shares immediately after this offering) and (ii) the average weekly trading
volume in the Common Stock in the over-the-counter market during the four
calendar weeks preceding the date on which notice of such sale is filed,
provided certain requirements concerning the availability of public information,
manner of sale and notice of sale are satisfied. In addition, Affiliates must
comply with the restrictions and requirements of Rule 144, other than the
two-year holding period requirement, in order to sell shares of Common Stock
which are not restricted securities. Also, under Rule 144(k), a person who is
not an Affiliate and has not been an Affiliate for at least three months prior
to the sale and who has beneficially owned restricted securities for at least
three years may resell such shares without compliance with the foregoing
requirements. In meeting the two and three year holding periods described above,
a holder of restricted securities can include the holding periods of a prior
owner who was not an Affiliate. The Securities and Exchange Commission has
proposed an amendment to Rule 144 which would reduce the holding period required
for shares subject to Rule 144 to become eligible for sale in the public market
from two years to one year, and from three years to two years in the case of
Rule 144(k).
SHARES RESERVED FOR ISSUANCE
Options. The Company has reserved 1,250,000 shares of Common Stock for
issuance upon exercise of stock options granted under its stock option plan. No
options have been granted to date under the Plan. See "Management -- Stock
Option Plan."
The Company intends to file a Registration Statement on Form S-8 under the
Securities Act to register all shares of Common Stock issuable pursuant to the
Company's stock option plan. The Company expects to file such Registration
Statement 90 days following the closing of this offering, and such Registration
Statement is expected to become effective upon filing. Shares covered by such
Registration Statement will thereupon be eligible for sale in the public
markets, subject to Rule 144 limitations with respect to Affiliates.
Warrants. The Company has reserved 250,000 shares of Common Stock for
issuance upon exercise of the Representative's Warrants. The holders of the
Representative's Warrants have certain demand and piggyback registration rights.
See "Underwriting."
32
<PAGE> 34
LOCK-UP AGREEMENTS
The Company and all of its officers, directors and current shareholders
have agreed, pursuant to the Lock-up Agreements, not to directly or indirectly,
without the prior written consent of the Representative, offer, sell, or
otherwise dispose of any shares of Common Stock beneficially owned by them for a
period of 180 days after the date of this Prospectus.
No predictions can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the
prevailing market price of the Common Stock. Sales of substantial amounts of
Common Stock, or the perception that such sales could occur, could materially
adversely affect the prevailing market prices for the Common Stock and could
impair the Company's future ability to obtain capital through an offering of
equity securities.
33
<PAGE> 35
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 5,000,000 shares of Preferred Stock,
$.01 par value, none of which is outstanding, and 25,000,000 shares of Common
Stock, $.01 par value, 6,200,000 of which are issued and outstanding and held by
three shareholders.
PREFERRED STOCK
The Preferred Stock may be issued from time to time by the Board of
Directors in one or more series and classes and with such dividend rights,
conversion rights, voting rights, redemption provisions, liquidation preferences
and other rights and restrictions as the Board of Directors may determine. The
issuance of the Preferred Stock permits the Board of Directors, without
shareholder approval, to utilize the Preferred Stock as an anti-takeover device
which could have an adverse effect on the market price of the Common Stock. The
Company has no present intention to issue any shares of Preferred Stock.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share held of
record. Subject to the rights of any holders of Preferred Stock which may be
issued in the future, the holders of outstanding shares of Common Stock are
entitled to share ratably on a share-for-share basis with respect to any
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor. Upon liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in the assets
remaining after payment of all liabilities and liquidation preferences, if any.
Shares of Common Stock are not redeemable and have no preemptive or similar
rights to subscribe for additional shares. All outstanding shares of Common
Stock are, and the shares of Common Stock offered hereby will upon issuance and
payment be, fully paid and nonassessable.
LIMITED LIABILITY AND INDEMNIFICATION
As permitted by the New York Business Corporation Law ("BCL"), the
Company's Restated Certificate of Incorporation provides that, to the fullest
extent permitted by the BCL, no director of the Company shall be liable to the
Company or its shareholders for monetary damages for the breach of fiduciary
duty in such capacity. Such provision does not eliminate or limit the liability
of any director (i) if a judgment or other final adjudication adverse to such
director establishes that his acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or that he personally
gained in fact a material profit or other advantage to which he was not legally
entitled or that his acts violated Section 719 of the BCL, or (ii) for any act
or omission prior to the adoption of this provision. As a result of this
provision, the Company and its shareholders may be unable to obtain monetary
damages from a director for breach of his duty of care. Although shareholders
may continue to seek injunctive or other equitable relief for an alleged breach
of fiduciary duty by a director, shareholders may not have any effective remedy
against the challenged conduct if equitable remedies are unavailable. In
addition, under the Restated Certificate of Incorporation, the Company has
agreed to indemnify its officers, directors, employees and agents to the fullest
extent permitted by the BCL against actions that may arise against them in such
capacities, and to advance expenses in connection with any such actions.
NEW YORK BUSINESS COMBINATION STATUTE
Section 912 of the BCL prohibits a company from entering into a business
combination (e.g., a merger, consolidation, sale of 10% or more of a company's
assets, or issuance of securities with an aggregate market value of 5% or more
of the aggregate market value of all of the company's outstanding capital stock)
with a beneficial owner of 20% or more of a company's securities (a "20%
shareholder") for a period of five years following the date such beneficial
owner became a 20% shareholder (the "stock acquisition date"), unless, among
other things, such business combination or the purchase of stock resulting in
the 20% shareholder's beneficial ownership was approved by the company's board
of directors prior to the stock acquisition date or the business combination is
approved by the affirmative vote of the holders of a majority of the outstanding
34
<PAGE> 36
voting stock exclusive of the stock beneficially owned by the 20% shareholder.
The applicability of this provision to the Company may discourage unsolicited
takeover bids by third parties.
TRANSFER AGENT
American Stock Transfer & Trust Company, 40 Wall Street, New York, New York
10005 is the transfer agent and registrar for the Common Stock.
35
<PAGE> 37
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, a copy
of which has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part, the Underwriters named below have, severally and not
jointly, agreed, through Ladenburg, Thalmann & Co. Inc. (the "Representative"),
the representative of the Underwriters, to purchase from the Company, and the
Company has agreed to sell to the Underwriters, the aggregate number of shares
set forth opposite their respective names:
<TABLE>
<CAPTION>
NAME OF UNDERWRITER NUMBER OF SHARES
--------------------------------------------------------------------- ----------------
<S> <C>
Ladenburg, Thalmann & Co. Inc. ......................................
---------
Total...................................................... 2,500,000
=========
</TABLE>
The Underwriters are committed to take and to pay for all of the shares of
Common Stock offered hereby, if any are purchased.
The Underwriters have advised the Company that they propose to offer all or
part of the Common Stock offered hereby directly to the public initially at the
price set forth on the cover page of this Prospectus, that they may offer shares
to certain dealers at a price that represents a concession of not more than
$ per share, and that the Underwriters may allow, and such dealers may
reallow, a concession of not more than $ per share to certain other
dealers. After the commencement of this offering, the price to the public and
the concessions may be changed.
The Company has granted to the Underwriters an option, exercisable within
30 days after the date of this Prospectus, to purchase up to an additional
375,000 shares of Common Stock at the same price per share as the initial
2,500,000 shares to be purchased by the Underwriters. The Underwriters may
exercise this option only to cover over-allotments, if any. To the extent the
Underwriters exercise this option, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase the same percentage
thereof as the percentage of the initial 2,500,000 shares to be purchased by
that Underwriter.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act, and to
contribute to payments the Underwriters may be required to make in respect
thereof.
The Company has agreed to issue to the Representative, for its own account,
warrants (the "Representative's Warrants") to purchase an aggregate of 250,000
shares of Common Stock, exercisable for a period of four years commencing one
year after the date hereof, at a price equal to 120% of the public offering
price, subject to adjustment in certain events. The Representative's Warrants
contain certain registration rights relating to the shares issuable thereunder.
For the life of the Representative's Warrants, the Representative will have the
opportunity to profit from a rise in the market price for the Common Stock.
The Company, its officers, directors and present shareholders have agreed
not to sell or otherwise dispose of any equity securities of the Company or any
securities convertible into or exchangeable for, or any rights to purchase or
acquire, equity securities of the Company for a period of 180 days after the
date of this Prospectus without the prior written consent of the Representative.
The Representative has informed the Company that the Underwriters do not
expect sales to discretionary accounts to exceed 5% of the total number of
shares offered hereby and that the Underwriters do not intend to confirm sales
of shares to any account over which they exercise discretionary authority.
The Underwriters have reserved for sale, at the initial public offering
price, up to 5% of the Common Stock offered hereby for employees and directors
of the Company and certain other individuals who have
36
<PAGE> 38
expressed an interest in purchasing such shares of Common Stock in this
offering. The number of shares available for sale to the general public will be
reduced to the extent such persons purchase such reserved shares. Any reserved
shares not so purchased will be offered by the Underwriters to the general
public on the same basis as other shares offered hereby.
Prior to this offering, there has been no public market for the Common
Stock. The proposed initial offering price has been determined by negotiations
between the Representative and the Company. Among the factors considered in such
negotiations were the Company's results of operations and financial condition,
the prospects for the Company and for the industry in which the Company
operates, the Company's capital structure, and the general condition of the
securities market. The estimated offering price set forth on the cover of this
Prospectus is subject to change as a result of market conditions and other
factors.
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby will be passed upon for the Company by Epstein Becker &
Green, P.C., New York, New York. Certain legal matters will be passed upon for
the Underwriters by Fulbright & Jaworski L.L.P., New York, New York.
EXPERTS
The consolidated financial statements of Manchester Equipment Co., Inc., as
of July 31, 1995 and 1996 and for each of the years in the three-year period
ended July 31, 1996, have been included herein and in the Registration Statement
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of such
firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission (the "Commission"), Washington, D.C., in
accordance with the provisions of the Securities Act with respect to the Common
Stock offered hereby, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement and the exhibits filed as a part thereof. Statements
made in this Prospectus concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The Registration
Statement and the exhibits may be inspected, without charge at, or copies
thereof obtained at prescribed rates from, the Public Reference Section of the
Commission at Room 1024 at its principal office, located at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and also will be available for
inspection and copying at the regional offices of the Commission located at 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and at 7 World
Trade Center, Suite 1300, New York, New York 10048. The Registration Statement
and the exhibits and schedules thereto can also be accessed through EDGAR
terminals located in the Commission's public reference rooms in Washington,
D.C., Chicago and New York or through the World Wide Web at http://www.sec.gov.
The Company has not previously been subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Upon
completion of this offering, the Company will become subject to the
informational requirements of the Exchange Act and, in accordance therewith,
will file reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information filed by the Company with
the Commission can be inspected, without charge, and copies may be obtained at
prescribed rates, at the offices of the Commission referenced above.
37
<PAGE> 39
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.......................................................... F-2
Consolidated Financial Statements:
Balance Sheets as of July 31, 1995 and 1996......................................... F-3
Statements of Income for the years ended July 31, 1994, 1995 and 1996............... F-4
Statements of Shareholders' Equity for the years ended July 31, 1994, 1995 and F-5
1996.............................................................................
Statements of Cash Flows for the years ended July 31, 1994, 1995 and 1996........... F-6
Notes to Consolidated Financial Statements.......................................... F-7
</TABLE>
F-1
<PAGE> 40
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Manchester Equipment Co., Inc.:
We have audited the accompanying consolidated balance sheets of Manchester
Equipment Co., Inc. and subsidiaries as of July 31, 1996 and 1995 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the years in the three-year period ended July 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Manchester Equipment
Co., Inc. and subsidiaries at July 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended July 31, 1996, in conformity with generally accepted accounting
principles.
As discussed in note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in fiscal 1994.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
September 13, 1996, except as
to note 10, which is as of
October 1, 1996
F-2
<PAGE> 41
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31, 1995 AND 1996
<TABLE>
<CAPTION>
JULY 31,
-------------------
1995 1996
------- -------
(IN THOUSANDS,
EXCEPT SHARE
AMOUNTS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................................. $ 1,834 $ 5,774
Accounts receivable, net of allowance for doubtful accounts of $718 and
$800, respectively.................................................. 17,500 19,068
Inventory.............................................................. 9,505 8,957
Deferred income taxes.................................................. 302 334
Prepaid expenses and other current assets.............................. 238 197
------ ------
Total current assets........................................... 29,379 34,330
Property and equipment, net.............................................. 1,430 2,244
Deferred income taxes.................................................... 341 395
Other assets............................................................. 485 792
------ ------
$31,635 $37,761
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities under capital lease obligation...................... $ -- $ 99
Notes payable -- bank.................................................. 5,600 6,500
Notes payable -- shareholder........................................... -- 353
Accounts payable and accrued expenses.................................. 14,398 17,113
Deferred service contract revenue...................................... 102 129
Income taxes payable................................................... 90 295
------ ------
Total current liabilities...................................... 20,190 24,489
Capital lease obligation, less current maturities........................ -- 175
Deferred compensation payable............................................ 198 183
Commitments and contingencies (note 6)
Shareholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized, none
issued.............................................................. -- --
Common stock, $.01 par value; 25,000,000 shares authorized, 6,262,626
and 6,200,000 shares issued and outstanding in 1995 and 1996........ 63 62
Retained earnings...................................................... 11,184 12,852
------ ------
Total shareholders' equity..................................... 11,247 12,914
------ ------
$31,635 $37,761
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 42
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED JULY 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
YEARS ENDED JULY 31,
--------------------------------------
1994 1995 1996
-------- -------- --------
(IN THOUSANDS EXCEPT SHARE AND
PER SHARE AMOUNTS)
<S> <C> <C> <C>
HISTORICAL:
Revenues............................................. $137,361 $170,818 $189,659
Cost of revenues..................................... 116,677 145,870 162,656
-------- -------- --------
Gross profit.................................... 20,684 24,948 27,003
Selling, general and administrative expenses......... 18,080 21,733 23,070
-------- -------- --------
Income from operations............................. 2,604 3,215 3,933
Other income (expense):
Interest, net...................................... (236) (346) (374)
Other.............................................. 64 (46) 9
-------- -------- --------
Income before provision for income taxes and
cumulative effect of change in accounting for
income taxes.................................... 2,432 2,823 3,568
Provision for income taxes........................... 1,042 1,160 1,430
-------- -------- --------
Income before cumulative effect of change in
accounting for income taxes........................ 1,390 1,663 2,138
Cumulative effect of change in accounting for income
taxes (Notes 1 and 8).............................. 386 -- --
-------- -------- --------
Net income................................. $ 1,776 $ 1,663 $ 2,138
======== ======== ========
PRO FORMA (UNAUDITED) (NOTE 12):
Income before income taxes and cumulative effect of
change in accounting, as reported.................. $ 2,432 $ 2,823 $ 3,568
Reduction in officers' compensation.................. 463 3,465 2,809
Reduction in rent to related parties................. 75 93 304
-------- -------- --------
Pro forma income before income taxes and cumulative
effect of change in accounting..................... 2,970 6,381 6,681
Pro forma provision for income taxes................. 1,257 2,583 2,675
Cumulative effect of change in accounting............ 386 -- --
-------- -------- --------
Pro forma net income................................. $ 2,099 $ 3,798 $ 4,006
======== ======== ========
Pro forma net income per share....................... $ .64
========
Shares used in pro forma net income per share........ 6,246,970
========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 43
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED COMMON RETAINED
STOCK STOCK EARNINGS TOTAL
--------- ------ -------- -------
<S> <C> <C> <C> <C>
Balance July 31, 1993............................... $ -- $ 63 $ 7,745 $ 7,808
Net income.......................................... -- -- 1,776 1,776
--------- ------ -------- -------
Balance July 31, 1994............................... -- 63 9,521 9,584
Net income.......................................... -- -- 1,663 1,663
--------- ------ -------- -------
Balance July 31, 1995............................... -- 63 11,184 11,247
Net income.......................................... -- -- 2,138 2,138
Purchase and retirement of stock.................... -- (1) (470) (471)
--------- ------ -------- -------
Balance July 31, 1996............................... $ -- $ 62 $ 12,852 $12,914
======= ====== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 44
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED JULY 31,
-------------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.................................................... $ 1,776 $ 1,663 $ 2,138
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization............................ 360 395 473
Bad debt expense......................................... 398 161 132
Cumulative effect of change in accounting................ (386) -- --
Deferred income taxes.................................... (118) (71) (86)
Loss (gain) on disposition of assets..................... -- 71 (9)
Change in assets and liabilities:
Increase in accounts receivable........................ (3,817) (1,954) (1,700)
(Increase) decrease in inventory....................... (1,362) (2,382) 548
(Increase) decrease in prepaid expenses and
other current assets................................ 182 (24) 41
Increase in other assets............................... (9) (113) (307)
Increase (decrease) in accounts payable and accrued
expenses............................................ (1,486) 4,371 2,715
(Decrease) increase in deferred service contract
revenue............................................. (52) (79) 27
Increase (decrease) in income taxes payable............ 440 (468) 205
Decrease in deferred compensation payable.............. -- -- (15)
------- ------- -------
Net cash (used in) provided by operating
activities........................................ (4,074) 1,570 4,162
------- ------- -------
Cash flows from investing activities:
Capital expenditures........................................ (448) (545) (1,028)
Proceeds from the sale of assets............................ -- 105 55
------- ------- -------
Net cash used in investing activities............... (448) (440) (973)
------- ------- -------
Cash flows from financing activities:
Net proceeds from borrowings................................ 3,200 200 900
Payments on note payable -- shareholder..................... -- -- (118)
Payments on capital lease obligation........................ -- -- (31)
------- ------- -------
Net cash provided by financing activities........... 3,200 200 751
------- ------- -------
Net (decrease) increase in cash and cash equivalents.......... (1,322) 1,330 3,940
Cash and cash equivalents at beginning of year.............. 1,826 504 1,834
------- ------- -------
Cash and cash equivalents at end of year...................... $ 504 $ 1,834 $ 5,774
======= ======= =======
Cash paid during the year for:
Interest.................................................... $ 189 $ 378 $ 399
======= ======= =======
Income taxes................................................ $ 494 $ 1,729 $ 1,290
======= ======= =======
Other noncash transactions:
Capital lease obligation for purchase of equipment.......... $ -- $ -- $ 305
======= ======= =======
Purchase of stock with note payable -- shareholder.......... $ -- $ -- $ 471
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 45
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(1) BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Business
Manchester Equipment Co., Inc. (the "Company") is a systems integrator of
computer hardware, software and networking products, primarily for commercial
customers. The Company offers its customers single-source solutions customized
to their information systems needs by combining value-added services with
hardware, software, networking products and peripherals from leading vendors.
Sales of hardware, software and networking products comprise most of the
Company's revenues. The Company has entered into agreements with certain
suppliers and manufacturers which provide the Company favorable pricing and
price protection in the event the vendor reduces its prices.
In July 1996, the Company executed a letter of intent with an investment
banking firm for a proposed initial public offering ("IPO"). The terms of the
proposed IPO include the sale of 2,500,000 shares of Common Stock, plus an
option in favor of the underwriters for an additional 375,000 shares to provide
for potential over-allotments and warrants in favor of the representative of the
underwriters to purchase 250,000 shares of Common Stock. The net proceeds of the
IPO will be used to retire indebtedness under the bank line of credit, to
relocate or expand the Company's New York City office, for training and expanded
sales facilities in Long Island, to upgrade the Company's internal
telecommunications system and for working capital.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All material intercompany transactions and
balances have been eliminated in consolidation.
(c) Cash Equivalents
The Company considers all highly liquid investments with original
maturities at the date of purchase of three months or less to be cash
equivalents.
(d) Revenue Recognition
Revenues from product sales are recognized at the time of shipment to the
customer. Revenues for services are recognized when the related services are
performed. Service contract fees are recognized as revenue ratably over the
period of the applicable contract or as the services are provided. Deferred
service contract revenue represents the unearned portion of service contract
fees.
(e) Market Development Funds
The Company receives various market development funds including cooperative
advertising funds from certain vendors, principally based on volume purchases of
products or pre-approved market development activities (i.e., training,
advertising, etc.). The Company records such amounts as a reduction of cost of
revenues.
(f) Inventory
Inventory, consisting of computer hardware and peripherals, software and
related supplies, is valued at the lower of cost (first-in, first-out) or market
value.
F-7
<PAGE> 46
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(g) Property and Equipment
Property and equipment are stated at cost. Depreciation is provided using
the straight-line and accelerated methods over the economic lives of the assets,
generally from five to seven years. Leasehold improvements are amortized over
the shorter of the underlying lease term or asset life.
(h) Income Taxes
Effective August 1, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes" ("Statement
109"). Statement 109 requires the use of the asset and liability approach for
financial accounting and reporting of income taxes. Under this method, deferred
taxes are recognized for the future tax consequences attributable to temporary
differences between the carrying amounts of assets and liabilities for financial
statement purposes and income tax purposes using enacted tax rates expected to
be in effect when such amounts are realized or settled. The effect on deferred
taxes of a change in tax rates is recognized in income in the period that
includes the enactment date. The Company previously accounted for income taxes
in conformity with APB No. 11. The adoption of Statement 109 resulted in a
cumulative effect adjustment in the Company's 1994 financial statements of $386
and prior years' financial statements were not restated.
(i) Net Income Per Share
Net income per share is based on the weighted average number of shares of
Common Stock and dilutive common stock equivalents (stock options and warrants)
outstanding during the period.
(j) Impairment of Long Lived Assets
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121
("Statement 121") that establishes accounting standards for the impairment of
long lived assets, certain intangibles, and goodwill related to those assets to
be held and used, and for long-lived assets and certain identifiable intangibles
to be disposed of. In conformity with Statement 121, it is the Company's policy
to evaluate and recognize an impairment if it is probable that the recorded
amounts are in excess of anticipated undiscounted future cash flows.
(k) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period to
prepare these financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.
(l) Fair Value of Financial Instruments
The fair values of cash and cash equivalents, accounts receivable, prepaid
expenses, accounts payable and accrued expenses, capital lease obligation and
notes payable -- shareholder are estimated to be their carrying values at July
31, 1996 due to the short maturity of such instruments. The book value of notes
payable -- bank approximated fair value since those instruments carry prime or
LIBOR based interest rates that are adjusted for market rate fluctuations.
F-8
<PAGE> 47
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(m) Reclassifications
Certain reclassifications were made to prior year amounts to conform with
the fiscal 1996 presentation format.
(2) PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
JULY 31,
-----------------
1995 1996
------ ------
<S> <C> <C>
Furniture and fixtures........................................... $1,539 $1,824
Machinery and equipment.......................................... 1,358 1,668
Transportation equipment......................................... 382 361
Leasehold improvements........................................... 1,405 1,656
------ ------
4,684 5,509
Less accumulated depreciation and amortization................... 3,254 3,265
------ ------
$1,430 $2,244
====== ======
</TABLE>
Depreciation and amortization expense amounted to $360, $395 and $473 for
the years ended July 31, 1994, 1995 and 1996, respectively.
(3) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
<TABLE>
<CAPTION>
JULY 31,
-------------------
1995 1996
------- -------
<S> <C> <C>
Accounts payable, trade.......................................... $10,791 $12,973
Accrued salaries and wages....................................... 2,140 2,552
Customer deposits................................................ 502 629
Other accrued expenses........................................... 965 959
------- -------
$14,398 $17,113
======= =======
</TABLE>
The Company has entered into financing agreements for the purchase of
inventory. These agreements are secured by the related inventory and/or accounts
receivables. In each of the years in the three year period ended July 31, 1996,
the Company has repaid all balances outstanding under these agreements within a
provided 30 day non-interest bearing payment period. Accordingly, amounts
outstanding under such agreements of $650 and $1,450 at July 31, 1995 and 1996,
respectively, are included within accounts payable and accrued expenses.
Pursuant to certain intercreditor agreements, these financing agreements are
subordinated to the Company's line of credit agreement except as to specific
inventory purchased under these financing agreements.
F-9
<PAGE> 48
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(4) CAPITAL LEASE OBLIGATION
In January 1996, the Company entered into a capital lease obligation for
certain computer equipment. Future minimum payments required under such lease
are as follows:
<TABLE>
<S> <C>
Year ending July 31,
1997........................................................................ $109
1998........................................................................ 109
1999........................................................................ 74
----
Total minimum lease payments.................................................. 292
Less: Amount representing interest............................................ 18
----
Present value of minimum lease payments....................................... 274
Less: Current portion......................................................... 99
----
$175
====
</TABLE>
(5) EMPLOYEE BENEFIT PLANS
The Company maintains a qualified defined contribution plan with a salary
deferral provision, commonly referred to as a 401(k) plan. The Company matches
50% of employee contributions up to three percent of each employee's
compensation. The Company's contribution amounted to $130, $125 and $124 for the
years ended July 31, 1994, 1995 and 1996, respectively.
The Company also has a deferred compensation plan which is available to
certain eligible key employees. The plan consists of life insurance policies
purchased by the Company for the participants. Upon vesting, which occurs after
ten years in the plan (three years for certain key executives), the participant
becomes entitled to have ownership of the policy transferred to him or her at
termination of employment with the Company. As of July 31, 1995 and 1996, the
Company has recorded an asset (included in other assets) of $198 and $183,
respectively, representing the cash surrender value of policies owned by the
Company and a liability of the same amount relating to the unvested portion of
benefits due under this plan. For the years ended July 31, 1994, 1995 and 1996,
the Company recorded an expense of $93, $97 and $72, respectively, in connection
with this plan.
(6) COMMITMENTS AND CONTINGENCIES
Leases
The Company leases most of its executive offices and warehouse facilities
from related parties (Note 9). In addition, the Company is obligated under lease
agreements for sales offices and additional warehouse space. Aggregate rent
expense under these leases amounted to $827, $849 and $1,212 for the years ended
July 31, 1994, 1995 and 1996, respectively.
F-10
<PAGE> 49
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
The following represents the Company's commitment under all operating
leases for the years ending July 31:
<TABLE>
<S> <C>
1997........................................................................ $1,307
1998........................................................................ 1,100
1999........................................................................ 800
2000........................................................................ 783
2001........................................................................ 363
Thereafter.................................................................. 1,755
------
$6,108
======
</TABLE>
Litigation
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, based on advice from
its legal counsel, the ultimate disposition of these matters will not have a
material adverse effect on the Company's business, results of operations or
financial condition.
(7) LINE OF CREDIT
The Company has a line of credit agreement with a bank that provides for a
maximum of $9,500 of borrowings and is due on demand. Interest on borrowings is
computed at the Company's option based on the bank's prime rate (8.25% at July
31, 1996) or at LIBOR plus 2% (7.69% at July 31, 1996). The credit facility
provides for a general security interest first lien on all of the Company's
assets, to the extent one can be obtained. The line is personally guaranteed by
the Company's president and majority shareholder. At July 31, 1995 and 1996
amounts outstanding under the agreement totaled $5,600 and $6,500, respectively.
(8) INCOME TAXES
The provision (benefit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED JULY 31,
----------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Current
Federal................................................ $ 873 $ 997 $1,166
State.................................................. 287 302 350
------ ------ ------
1,160 1,299 1,516
------ ------ ------
Deferred
Federal................................................ (101) (113) (73)
State.................................................. (17) (26) (13)
------ ------ ------
(118) (139) (86)
------ ------ ------
$1,042 $1,160 $1,430
====== ====== ======
</TABLE>
F-11
<PAGE> 50
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
The difference between the provision for income taxes at the Company's
effective income tax rate and the Federal statutory rate of 34% is as follows:
<TABLE>
<CAPTION>
YEARS ENDED JULY 31,
----------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Income taxes at statutory rate........................... $ 827 $ 960 $1,213
State taxes, net of Federal benefit...................... 178 182 222
Other.................................................... 37 18 (5)
------ ------ ------
Provision for income taxes............................... $1,042 $1,160 $1,430
====== ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax asset at July 31, 1995 and 1996 were as follows:
<TABLE>
<CAPTION>
JULY 31,
---------------
1995 1996
---- ----
<S> <C> <C>
Allowance for doubtful accounts receivable.......................... $288 $321
Deferred compensation............................................... 288 317
Other............................................................... 67 91
---- ----
Deferred tax asset............................................. $643 $729
==== ====
</TABLE>
A valuation allowance has not been provided in connection with the
Company's deferred tax assets since, based on historical pre-tax earnings and
expected taxable income in the future, the Company believes that it is more
likely than not that such deferred tax assets will be recovered.
As discussed in Note 1, the Company adopted Statement 109 as of August 1,
1993. The cumulative effect of the change in accounting for income taxes of $386
was determined as of August 1, 1993 and is reported separately in the
consolidated statement of income for the year ended July 31, 1994. The
cumulative effect adjustment related principally to the establishment under
Statement 109 of deferred tax assets arising due to the nondeductability of the
allowance for doubtful accounts and deferred compensation expenses.
(9) RELATED PARTY TRANSACTIONS
The Company leases executive offices and warehouse space as well as its
corporate offices and sales facilities from entities owned or controlled by
shareholders or officers of the Company. The leases generally cover a period of
ten years and expire at various times from 1998 through 2005. Lease terms
generally include annual increases of five percent. Rent expense for these
facilities aggregated $654, $683 and $1,022 for the years ended July 31, 1994,
1995 and 1996, respectively.
During the year ended July 31, 1994, the Company was related, through
common ownership and control, to Electrograph Systems, Inc. ("Electrograph"), a
value-added distributor of microcomputer peripherals, components and
accessories. Purchases from Electrograph during this period were $385,
substantially all of which was paid by July 31, 1994. In August 1994,
Electrograph was acquired by an unrelated company.
(10) SHAREHOLDERS' EQUITY
Recapitalization
In connection with the planned IPO, on October 1, 1996, the Company
effected a recapitalization, which increased the authorized number of shares of
Common Stock from 5,000 to 25,000,000, authorized 5,000,000 shares of Preferred
Stock, effected a 6262.63 for one stock split for all outstanding shares of
Common Stock
F-12
<PAGE> 51
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
on that date and established a $.01 per share par value for Common Stock. All
references in the accompanying consolidated financial statements and notes
thereto relating to per share and share data have been retroactively adjusted to
reflect the recapitalization.
Shareholders' Agreement
The Company is a party to an agreement among its shareholders whereby upon
termination, retirement, or death of either of the Company's two minority
shareholders, the Company is required to redeem his interest at differing values
stated in the agreement. The Company maintains term life insurance with a face
value of $1,500 to be used towards the purchase of the shares in the event of
the death of each shareholder. One of the minority shareholders retired in
fiscal 1996 and based upon the terms of agreements, payment for the
shareholder's interest in the Company (626,263 shares at that time) was fixed at
$4,710. One of these agreements provided this shareholder an annual option to
redeem one-tenth of his shares commencing in fiscal 1996, at an annual price of
$471 to be paid in equal quarterly installments over the following year. In
connection with these agreements, in May 1996 the Company purchased 62,626
shares of Common Stock from the retired shareholder. The purchase price was
$471, to be paid in four non-interest bearing equal quarterly installments
beginning on May 1, 1996. Such shares were subsequently retired.
In September 1996, among other provisions, the retired shareholder agreed
to terminate his option to sell his remaining shares to the Company, subject to
successful completion of the IPO. In addition, the Company's shareholders
entered into an agreement to terminate the shareholders' agreement upon the
effective date of the IPO.
New Accounting Standard
In October 1995, the Financial Accounting Standards Board issued SFAS 123,
"Accounting for Stock-Based Compensation" ("Statement 123"). Statement 123
establishes financial accounting and reporting standards for stock-based
employee compensation plans. The Statement also applies to transactions in which
an entity issues its equity instruments to acquire goods or services from
nonemployees. Statement 123 encourages a fair value based method of accounting
for employee stock options or similar equity instruments. Entities electing not
to adopt a fair value method must make pro forma disclosures of net income and
earnings per share as if a fair value based method had been applied. The
Statement is effective for fiscal year 1997. The Company has elected not to
adopt a fair value based accounting method for employee stock options and
therefore does not expect that the adoption of Statement 123 will have a
material impact on its financial position or results of operations. The Company
will disclose, commencing in fiscal 1997, the pro forma net income and income
per share as if such method had been used to account for stock-based
compensation costs.
Stock Option Plan
Under the Company's 1996 Incentive and Non-Incentive Stock Option Plan (the
"Plan"), which was approved by the Company's shareholders in October 1996, an
aggregate of 1,250,000 shares of Common Stock are reserved for issuance upon
exercise of options thereunder. Under the Plan, incentive stock options may be
granted to employees and non-incentive stock options may be granted to
employees, directors and such other persons as the Compensation Committee of the
Board of Directors (the "Committee") may determine, at exercise prices equal to
at least 100% (with respect to incentive stock options) and at least 85% (with
respect to non-incentive stock options ) of the fair market value of the Common
Stock on the date of grant. In addition to selecting the optionees, the
Committee will determine the number of shares of Common Stock subject to each
option, the term of each stock option up to a maximum of ten years (five years
for certain employees for incentive stock options), the time or times when the
stock option becomes exercisable, and
F-13
<PAGE> 52
MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
otherwise administer the Plan. Incentive stock options expire three months from
the date of the holder's termination of employment with the Company other than
by reason of death or disability. Options may be exercised with cash or Common
Stock previously owned for in excess of six months. No options have been granted
through October 1, 1996 under the Plan.
(11) MAJOR CUSTOMER AND VENDORS
The Company sells products and services to customers that are located
primarily in the eastern United States. One customer accounted for approximately
14%, 22% and 16% of total revenues for the years ended July 31, 1994, 1995 and
1996, respectively.
The Company's top four vendors accounted for 20%, 12%, 11% and 10% of total
product purchases for the year ended July 31, 1996. The Company's top two
vendors accounted for 22% and 16% of total product purchases for the year ended
July 31, 1995. The Company's top two vendors accounted for 22% and 15% of total
product purchases for the year ended July 31, 1994.
(12) PRO FORMA INFORMATION (UNAUDITED)
The pro forma adjustment discussed below has been made to the historical
results of operations to make the presentations more comparable with respect to
future officer compensation expense and rent expense to related parties.
In connection with the planned IPO, certain officers of the Company have
entered into agreements for the fiscal years ending July 31, 1997 and 1998. The
agreements provide for aggregate compensation of $1,400, exclusive of benefits,
in each year. Pro forma net income includes adjustments to increase net income
for the amounts by which aggregate officers' compensation, which includes the
former Chief Financial Officer's compensation, during each year in the three
years ended July 31, 1996 exceeded the total of the amounts to be paid under the
agreements plus the current annual salary of the Company's present Chief
Financial Officer as well as rents paid to related parties in excess of rents
that will be payable under current leases, as amended, net of applicable income
taxes. The weighted average number of shares outstanding used to determine pro
forma net income per share for the year ended July 31, 1996 was computed as
follows:
<TABLE>
<S> <C>
Shares of Common Stock outstanding during the entire year ended
July 31, 1996................................................... 6,200,000
Weighted average shares repurchased during fiscal 1996............ 46,970
---------
Weighted average shares outstanding for the year ended July 31,
1996............................................................ 6,246,970
=========
</TABLE>
F-14
<PAGE> 53
HELPING CUSTOMERS THROUGH THE USE OF TECHNOLOGY
[Diagram of a corporate intranet]
Manchester provides its customers with client/server solutions such as this
corporate intranet.
The use of intranets allows employees and other authorized users to access
information using readily
available Internet tools.
<PAGE> 54
===============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH
DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 11
Dividend Policy....................... 11
Dilution.............................. 12
Capitalization........................ 13
Selected Consolidated Financial
Data................................ 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 15
Business.............................. 19
Management............................ 27
Principal Shareholders................ 30
Certain Transactions.................. 31
Shares Eligible for Future Sale....... 32
Description of Capital Stock.......... 34
Underwriting.......................... 36
Legal Matters......................... 37
Experts............................... 37
Available Information................. 37
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
------------------------
Until , 1996 (25 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligations of dealers to deliver a Prospectus when
acting as Underwriters and with respect to their unsold allotments or
subscriptions.
===============================================================================
===============================================================================
2,500,000 SHARES
MANCHESTER EQUIPMENT CO., INC.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
LADENBURG, THALMANN & CO. INC.
, 1996
===============================================================================
<PAGE> 55
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of this offering are as follows:
<TABLE>
<S> <C>
S.E.C. Registration Fee................................................... $ 11,897
N.A.S.D. Filing Fee....................................................... 3,950
Nasdaq National Market Qualification Fee.................................. 39,250
Accounting Fees........................................................... 120,000
Legal Fees and Expenses................................................... 500,000
Blue Sky Qualification Fees and Expenses.................................. 25,000
Printing and Engraving.................................................... 80,000
Transfer Agent's Fees and Expenses........................................ 10,000
Miscellaneous Expenses.................................................... 34,903
--------
Total........................................................... $ 825,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 722 of the New York Business Corporation Law grants corporations
the power to indemnify their directors, officers, employees and agents in
accordance with the provisions thereof. Article Ninth of Registrant's Restated
Certificate of Incorporation provides for indemnification of Registrant's
directors, officers, agents and employees to the full extent permissible under
Section 722 of the New York Business Corporation Law.
See also Section 10 of the Underwriting Agreement.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 16. EXHIBITS
(a) Exhibits:
<TABLE>
<C> <S> <C>
*1 -- Form of Underwriting Agreement.
3.1.a -- Certificate of Incorporation of Registrant, filed August 21, 1973.
3.1.b -- Certificate of Amendment of Certificate of Incorporation filed January 29, 1985.
3.1.c -- Restated Certificate of Incorporation filed October 1, 1996.
3.2 -- Form of By-Laws of Registrant.
*4.1 -- Form of Specimen Common Stock Certificate of Registrant.
*4.2 -- Form of Representative's Warrants.
5 -- Opinion by Epstein Becker & Green, P.C., as to legality.
10.1 -- 1996 Incentive and Non-Incentive Stock Option Plan of Registrant.
10.2 -- Agreement dated September 24, 1996 between Registrant and Michael Bivona.
10.3 -- Compensation Agreement dated October 1, 1996 between Registrant and Barry
Steinberg.
10.4 -- Agreement of Employment dated September 30, 1996 between Registrant and Joel G.
Stemple.
10.5.a -- Lease dated October 1995 between Registrant and 40 Marcus Realty, LLC -- f/k/a 40
Marcus Realty Associates, as amended.
</TABLE>
II-1
<PAGE> 56
<TABLE>
<C> <S> <C>
10.5.b -- Lease dated January 1988 between Registrant and Marcus Realty, as amended.
10.5.c -- Lease dated June 1995 between Registrant and Facilities Management.
10.5.d -- Lease dated July 31, 1995 between Registrant and Boatman's Equities, LLC -- f/k/a
160 Oser Avenue Associates, as amended.
10.5.e -- Lease dated January 15, 1992 between Registrant and 352 Seventh Avenue Associates.
10.5.f -- Lease dated April 16, 1990 between Registrant and Regent Holding Corporation, as
successor to Crow-Childress-Donner, Limited, as amended.
10.5.g -- Business Lease dated December 4, 1992 between Registrant and TRA Limited, as
amended.
10.5.h -- Lease dated February 26, 1992 between Registrant and E&S Associates.
10.6.a -- Promissory Note dated December 11, 1995 by Registrant to The Bank of New York.
10.6.b -- General Loan and Security Agreement dated December 2, 1993 by Registrant to The
Bank of New York.
10.6.c -- General Guarantee dated December 1, 1993 by Barry Steinberg to The Bank of New
York.
10.7.a -- Letter Agreement Regarding Inventory Financing dated December 7, 1993 between ITT
Commercial Finance Corp. and Registrant.
10.7.b -- Agreement for Wholesale Financing dated November 11, 1993 between ITT Commercial
Finance Corp. and Registrant.
10.7.c -- Intercreditor Agreement dated January 7, 1994 between The Bank of New York and ITT
Commercial Finance Corp.
10.8.a -- Letter Agreement Regarding Inventory Financing dated April 22, 1996 between AT&T
Capital Corporation and Registrant.
10.8.b -- Intercreditor Agreement dated May 18, 1994 between AT&T Commercial Finance
Corporation and The Bank of New York.
10.9 -- Reseller Agreement dated May 1, 1990 between Toshiba America Information Systems,
Inc. and Registrant.
23.1 -- Consent of KPMG Peat Marwick LLP (contained on page II-5).
23.2 -- Consent of Epstein Becker & Green, P.C. (included in Exhibit 5).
24 -- Power of Attorney (included as part of signature page).
27 -- Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
(b) Financial Statement Schedules:
Schedule II -- Valuation and Qualifying Accounts
All other schedules have been omitted for the reason that they are not
required or are not applicable or because the required information is included
in the Consolidated Financial Statements or the Notes thereto.
ITEM 17. UNDERTAKINGS.
Registrant hereby undertakes to provide to the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of Registrant pursuant to the provisions of its Restated
Certificate of Incorporation, its By-Laws, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities
II-2
<PAGE> 57
(other than the payment by Registrant for expenses incurred or paid by a
director, officer or controlling person of Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-3
<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant has
duly caused this Registration Statement or amendment thereto to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Town of Hauppauge,
State of New York, on the 30th day of September, 1996.
MANCHESTER EQUIPMENT CO., INC.
By: /s/ Barry R. Steinberg
------------------------------------
Barry R. Steinberg
President and Chief Executive
Officer
POWER OF ATTORNEY TO SIGN AMENDMENTS
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below does hereby constitute and appoint BARRY R. STEINBERG and JOEL G. STEMPLE,
and each of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent for him and in his name, place and stead, in any and
all capacities, to sign any or all amendments to this Registration Statement and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same, as fully, for all
intents and purposes, as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ -------------------
<S> <C> <C>
/s/ Barry R. Steinberg President, Chief Executive September 30, 1996
- ------------------------------------------ Officer, Chairman of the Board
Barry R. Steinberg and Director (Principal
Executive Officer)
/s/ Joel G. Stemple Director September 30, 1996
- ------------------------------------------
Joel G. Stemple
/s/ Joseph Looney Chief Financial Officer September 30, 1996
- ------------------------------------------ (Principal Financial and
Joseph Looney Accounting Officer)
/s/ Joel Rothlein Director September 30, 1996
- ------------------------------------------
Joel Rothlein
</TABLE>
II-4
<PAGE> 59
INDEPENDENT AUDITORS' REPORT ON SCHEDULE AND CONSENT
The Board of Directors
Manchester Equipment Co., Inc.
The audits referred to in our report dated September 13, 1996, except as to
note 10 which is as of October 1, 1996, included the related financial statement
schedule for each of the years in the three-year period ended July 31, 1996,
included in the registration statement. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits. In our
opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
Our report dated September 13, 1996, except as to note 10 which is as of
October 1, 1996, refers to a change, in 1994, in the Company's method of
accounting for income taxes.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Jericho, New York
October 1, 1996
II-5
<PAGE> 60
MANCHESTER EQUIPMENT CO., INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN C -- ADDITIONS
COLUMN B -------------------------
------------ (1) (2) COLUMN D COLUMN E
COLUMN A BALANCE AT CHARGED TO CHARGED TO ------------ -------------
- -------------------------------- BEGINNING OF COSTS AND OTHER DEDUCTIONS- BALANCE AT
DESCRIPTION PERIOD EXPENSES ACCOUNTS (a) END OF PERIOD
- -------------------------------- ------------ ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Year ended:
July 31, 1994................. $366 $398 $166 $ 598
July 31, 1995................. $598 $161 $ 41 $ 718
July 31, 1996................. $718 $132 $ 50 $ 800
</TABLE>
- ---------------
(a) Write-offs of amounts against allowance provided.
S-1
<PAGE> 61
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- -------- ----------------------------------------------------------------------- ------------
<C> <S> <C> <C>
*1 -- Form of Underwriting Agreement.........................................
3.1.a -- Certificate of Incorporation of Registrant, filed August 21, 1973......
3.1.b -- Certificate of Amendment of Certificate of Incorporation filed January
29, 1985...............................................................
3.1.c -- Restated Certificate of Incorporation filed October 1, 1996............
3.2 -- Form of By-Laws of Registrant..........................................
*4.1 -- Form of Specimen Common Stock Certificate of Registrant................
*4.2 -- Form of Representative's Warrants......................................
5 -- Opinion by Epstein Becker & Green, P.C., as to legality................
10.1 -- 1996 Incentive and Non-Incentive Stock Option Plan of Registrant.......
10.2 -- Agreement dated September 24, 1996 between Registrant and Michael
Bivona.................................................................
10.3 -- Compensation Agreement dated October 1, 1996 between Registrant and
Barry Steinberg........................................................
10.4 -- Agreement of Employment dated September 30, 1996 between Registrant and
Joel G. Stemple........................................................
10.5.a -- Lease dated October 1995 between Registrant and 40 Marcus Realty,
LLC -- f/k/a 40 Marcus Realty Associates, as amended...................
10.5.b -- Lease dated January 1988 between Registrant and Marcus Realty, as
amended................................................................
10.5.c -- Lease dated June 1995 between Registrant and Facilities Management.....
10.5.d -- Lease dated July 31, 1995 between Registrant and Boatman's Equities,
LLC -- f/k/a 160 Oser Avenue Associates, as amended....................
10.5.e -- Lease dated January 15, 1992 between Registrant and 352 Seventh Avenue
Associates.............................................................
10.5.f -- Lease dated April 16, 1990 between Registrant and Regent Holding
Corporation, as successor to Crow-Childress-Donner, Limited, as
amended................................................................
10.5.g -- Business Lease dated December 4, 1992 between Registrant and TRA
Limited, as amended....................................................
10.5.h -- Lease dated February 26, 1992 between Registrant and E&S Associates....
10.6.a -- Promissory Note dated December 11, 1995 by Registrant to The Bank of
New York...............................................................
10.6.b -- General Loan and Security Agreement dated December 2, 1993 by
Registrant to The Bank of New York.....................................
10.6.c -- General Guarantee dated December 1, 1993 by Barry Steinberg to The Bank
of New York............................................................
10.7.a -- Letter Agreement Regarding Inventory Financing dated December 7, 1993
between ITT Commercial Finance Corp. and Registrant....................
10.7.b -- Agreement for Wholesale Financing dated November 11, 1993 between ITT
Commercial Finance Corp. and Registrant................................
10.7.c -- Intercreditor Agreement dated January 7, 1994 between The Bank of New
York and ITT Commercial Finance Corp...................................
10.8.a -- Letter Agreement Regarding Inventory Financing dated April 22, 1996
between AT&T Capital Corporation and Registrant........................
</TABLE>
<PAGE> 62
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- -------- ----------------------------------------------------------------------- ------------
<C> <S> <C> <C>
10.8.b -- Intercreditor Agreement dated May 18, 1994 between AT&T Commercial
Finance Corporation and The Bank of New York...........................
10.9 -- Reseller Agreement dated May 1, 1990 between Toshiba America
Information Systems, Inc. and Registrant...............................
23.1 -- Consent of KPMG Peat Marwick LLP (contained on page II-5)..............
23.2 -- Consent of Epstein Becker & Green, P.C. (included in Exhibit 5)........
24 -- Power of Attorney (included as part of signature page).................
27 -- Financial Data Schedule................................................
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1.a
CERTIFICATE OF INCORPORATION
OF
MANCHESTER EQUIPMENT CO., INC.
UNDER SECTION 402 OF THE
BUSINESS CORPORATION LAW
THE undersigned, being over the age of twenty-one years, desiring to form a
corporation pursuant to Article Four of the Business Corporation Law of the
State of New York, does hereby make subscribe and acknowledge this certificate
for that purpose as follows:
FIRST: The name of the proposed corporation is MANCHESTER EQUIPMENT CO.,
INC.
SECOND: To purposes for which this corporation is formed are follows, to
with
To manufacture, buy, sell, lease and deal in and with typewriting machines,
parts and machines of all types and natures and all other articles incident to,
or desirable in connection therewith;
To buy, lease and otherwise acquire lands and interest in lands of any kind
and description of wheresoever situated; to buy, lease and otherwise acquire and
to construct and erect buildings and structures in and on such lands for any use
and purposes to hold, own, improve, develop, maintain, operate, let, lease,
mortgage, sell or otherwise dispose of such property or any part thereof; to
equip and operate buildings and structures of whatsoever kind.
To own, lease, operate, maintain, build, manage and control real estate
necessary to conduct the business.
To borrow money, to execute notes, pledges, and negotiable papers of every
type and description for the purpose of the business. To purchase or otherwise
acquire the control, right and interest, real of personal, from any person firm
or corporation engaged in the same general line of business, or to hold in any
manner to dispose of the whole or any part of the property so acquired, and to
exercise all the powers necessary or convenient to conduct and manage said
business.
To enter into, make, perform and carry out contracts, of every sort and
kind; which may be necessary or convenient for the business of the corporation,
or business of any similar nature, with any person, firm, corporation, private
or public, or municipal body politic under the Government of the United States,
or any state, territory or colony thereof, or any foreign government so far as,
to the extent that, the same may be done or performed by Corporations under the
Business Corporation Law.
To do all and everything necessary suitable and proper for the
accomplishment of any of the purposes of the attainment of any of the objects
or, the furtherance of any of the powers hereinbefore act forth, either alone or
assisted with other corporations, firms or individuals, and to do any other acts
incidental or pertaining to, or growing out of, or connected with the aforesaid
business or power, or any part or parts thereof, provided the same be not
inconsistent with the Law under which this Corporation is organized.
The foregoing enumeration of specific powers shall not restrict in any
manner the general power of the corporation as conferred by the laws of the
State of New York upon corporations organized under the Business Corporation
Law.
THIRD: The aggregate number of shares which the corporation shall have
authority to issue is two hundred shares of common stock without par value.
FOURTH: The office of the corporation is to be located in Massapequa, Town
of Oyster Bay, County of Nassau and State of New York.
FIFTH: The Secretary of State of the State of New York is hereby designated
as the agent of the corporation upon whom any process in any action or
proceeding may be served. The address to which the
<PAGE> 2
Secretary of State shall mail a copy of process any action or proceeding against
the corporation which may be served upon him is:
684 Broadway
Massapequa, New York
SIXTH: All powers vested by Law in the Board of Directors shall be
exercised by the stockholders and the officers of the corporation shall be
elected by the stockholders.
IN WITNESS WHEREOF, I have made and subscribed this Certificate of
Incorporation this 16th day of August, 1973, and affirm that statements made
herein are true under the penalties of perjury.
/s/ RUTH LIKE
--------------------------------------
Ruth Like
52 Division Avenue
Massapequa, New York
STATE OF NEW YORK
COUNTY OF NASSAU
On the 16th day of August, 1973, before me personally came Ruth Like to me
known and known to me to be the person described in, and who executed the
foregoing certificate of incorporation, and she duly acknowledge to me that she
executed the same.
/s/ STUART E. DAVIS
--------------------------------------
Stuart E. Davis
Notary Public
:
<PAGE> 1
EXHIBIT 3.1.b
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
MANCHESTER EQUIPMENT CO., INC.
UNDER SECTION 805 OF THE
BUSINESS CORPORATION LAW
We the undersigned, BARRY R. STEINBERG, the President of MANCHESTER
EQUIPMENT CO., INC., and JOEL ROTHLEIN, the Assistant Secretary thereof, hereby
certify:
FIRST: The name of the Corporation is MANCHESTER EQUIPMENT CO., INC.
SECOND: The Certificate of Incorporation was filed by the Department of
State on August 21, 1973.
THIRD: The Certificate of Incorporation is amended as authorized by
Section 801- of the Business Corporation Law to increase the number of shares
from 200 without par value, all of one class, to 5,000 shares without par value
all of one class. Paragraph 3 of the Certificate of Incorporation which refers
to the authorized shares is amended to read as follows:
"The aggregate number of shares which the Corporation shall have
authority to issue is 5,000 shares of common stock without par value."
FOURTH: The changes included in the Certificate of Change were authorized
and approved by the Board of Directors and thereafter by vote of a majority of
shareholders.
<PAGE> 2
IN WITNESS WHEREOF the President and Assistant Secretary, respectfully
hereunder set their hands and seals this 29th day of November 1984.
MANCHESTER EQUIPMENT CO., INC.
By: /s/ BARRY R. STEINBERG
------------------------------------
BARRY R. STEINBERG - President
By: /s/ JOEL ROTHLEIN
------------------------------------
JOEL ROTHLEIN - Assistant Secretary
<PAGE> 3
STATE OF NEW YORK )
)
COUNTY OF NASSAU )
BARRY R. STEINBERG and JOEL ROTHLEIN, being duly sworn, depose and say that
deponents are the President and Assistant Secretary respectively of MANCHESTER
EQUIPMENT CO., INC., the corporation named within; that deponents have read the
foregoing Certificate of Amendment of Certificate of Incorporation and know the
contents thereof; and that the same is true to deponents own knowledge.
--------------------------------------
BARRY R. STEINBERG - President
--------------------------------------
JOEL ROTHLEIN - Assistant Secretary
<PAGE> 1
Exhibit 3.1.c
RESTATED CERTIFICATE OF INCORPORATION
OF
MANCHESTER EQUIPMENT CO., INC.
(Under Section 807 of the Business Corporation Law)
We, Barry R. Steinberg and Joel G. Stemple, being respectively the
President and Secretary of Manchester Equipment Co., Inc., hereby certify:
FIRST: The name of the corporation is Manchester Equipment Co., Inc.
(the "Corporation").
SECOND: The certificate of incorporation of the Corporation was filed
with the Department of State of the State of New York on August 21, 1973.
THIRD: The certificate of incorporation of the Corporation is hereby
amended or changed to effect one or more of the amendments or changes authorized
by the Business Corporation Law, as follows:
1. To change the stated purposes of the Corporation.
2. To change (i) the five thousand (5,000) authorized
shares of Common Stock, no par value, to twenty-five million
(25,000,000) authorized shares of a new class of Common Stock,
$.01 par value, (ii) the nine hundred ninety (990) issued and
outstanding shares of Common Stock, no par value, into an
1
<PAGE> 2
aggregate of six million two hundred thousand (6,200,000)
issued and outstanding shares of the new class of Common
Stock, $.01 par value, at the rate of 6,262.63 new shares of
Common Stock, $.01 par value, for each presently outstanding
share of Common Stock, no par value, rounded up to the next
whole share with respect to the aggregate number of newly
converted shares to be issued to each holder of record of
shares of Common Stock, no par value, and (iii) the four
thousand and ten (4,010) authorized but unissued shares of
Common Stock, no par value, into an aggregate of eighteen
million eight hundred thousand (18,800,000) at the rate of
4,688.28 new shares of Common Stock, $.01 par value, rounded
up to the next whole share, with respect to the aggregate
number of authorized but unissued shares.
3. To authorize 5,000,000 shares of Preferred Stock,
par value $.01 per share.
4. To change the county in which the office of the
Corporation is located.
5. To delete a provision authorizing the conferment
of management powers to shareholders and explicitly permitting
shareholders to elect the officers of the Corporation.
6. To add a provision denying preemptive rights to
the shareholders of the Corporation.
2
<PAGE> 3
7. To add a provision specifying the number of
directors and providing that directors may be removed only
with cause either by action of the Board of Directors or by
vote of the shareholders.
8. To add a provision limiting directors' and
officers' liability.
9. To add a provision indemnifying directors,
officers, employees and agents of the Corporation and
providing for advancement of expenses in connection therewith.
FOURTH: To accomplish the foregoing amendments, Articles SECOND, THIRD,
and FOURTH of the certificate of incorporation of the Corporation, relating to
(i) the purposes of the Corporation, (ii) the aggregate number of shares which
the Corporation is authorized to issue and the par value thereof, and (iii) the
county in which the office of the Corporation is located, respectively, are
hereby amended to read as set forth in the same numbered articles of the
certificate of incorporation of the Corporation as hereinafter restated; Article
SIXTH, conferring management powers to shareholders, is eliminated without
substituting or adding any provisions in lieu thereof; and new articles SIXTH,
SEVENTH, EIGHTH and NINTH, relating to (i) preemptive rights, (ii) the Board of
Directors, (iii) the limitation of directors' and officers' liability, and (iv)
indemnification of directors, officers, employees and agents, respectively, are
hereby added as set forth in the same numbered articles of the certificate of
incorporation as hereinafter restated.
3
<PAGE> 4
FIFTH: The restatement of the certificate of incorporation of the
Corporation herein provided was authorized by the vote of the holders of at
least two-thirds of all of the outstanding shares of the Corporation entitled to
vote thereon on the restatement of the certificate of incorporation in
accordance with Section 620(d) of the Business Corporation Law, no approval of
the Board of Directors being required as, prior to the filing of this Restated
Certificate of Incorporation, management power was vested solely in the
shareholders of the Corporation.
SIXTH: The text of the certificate of incorporation of the Corporation
is hereby restated as further amended or changed herein to read as follows:
"FIRST: The name of the corporation is Manchester Equipment
Co., Inc. (the "Corporation").
SECOND: The purpose or purposes for which the Corporation is
formed is to engage in any lawful act or activity for which corporations may be
organized pursuant to the Business Corporation Law provided that the Corporation
is not formed to engage in any act or activity requiring the consent or approval
of any state official, department, board, agency or other body without such
consent or approval first being obtained.
THIRD: The aggregate number of shares of all classes of
capital stock which the Corporation shall have the authority to issue is thirty
million (30,000,000) shares, of which twenty-five million (25,000,000) shares
are to be shares of Common Stock, par value $.01 per share ("Common Stock"), and
five million (5,000,000) shares are to be shares of Preferred Stock, par value
$.01 per share ("Preferred Stock").
(a) Preferred Stock.
(1) The Preferred Stock may be
issued from time to time in one or more series of any number of shares provided
that the aggregate number of shares issued and not cancelled of any and all such
series shall not exceed the total number of shares of Preferred Stock
hereinabove authorized. Each series of Preferred Stock shall be distinctively
designated by letter or descriptive words. All series of Preferred Stock shall
rank equally and be identical in all respects except as permitted by the
provisions of this Article Third.
4
<PAGE> 5
(2) Authority is hereby expressly
vested in the Board of Directors from time to time to issue the Preferred Stock
as Preferred Stock of any series and in connection with the creation of each
such series to fix by the resolution or resolutions providing for the issue of
shares thereof the designations, relative rights, preferences and limitations
thereof, to the full extent now or hereafter permitted by this Restated
Certificate of Incorporation and the laws of the State of New York, including,
without limitation:
i) the distinctive designation
of such series and the number of shares which shall constitute such series,
which number may be increased (but not above the total number of authorized
shares of the series) or decreased (but not below the number of shares thereof
then outstanding) from time to time by a resolution or resolutions of the Board
of Directors, all subject to the conditions or restrictions set forth in the
resolution or resolutions adopted by the Board of Directors providing for the
issuance of any series of Preferred Stock;
ii) the dividend rate payable
on shares of such series, the conditions and dates upon which such dividends
shall be payable, the preferences or relation which such dividend shall bear to
the dividends payable on any other class or classes or any other series of
capital stock (except as otherwise expressly provided in this Restated
Certificate of Incorporation), and whether such dividends shall be cumulative or
non-cumulative and, if cumulative, the date or dates from which dividends shall
accumulate;
iii) whether the shares of such
series shall be subject to redemption by the Corporation and, if made subject to
redemption, the price or prices at which, and the terms and conditions on which,
the shares of such series may be redeemed by the Corporation;
iv) the amount or amounts
payable upon the shares of such series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation and the
preferences or relation which such payments shall bear to such payments made on
any other class or classes or any other series of capital stock (except as
otherwise expressly provided in this Restated Certificate of Incorporation);
v) whether or not the shares of
such series shall be made convertible into, or exchangeable for, shares of any
other class or classes of capital stock of the Corporation, or any series
thereof, or for any other series of the same class of capital stock of the
Corporation or for debt of the Corporation evidenced by an instrument of
indebtedness, and, if so convertible or exchangeable, the conversion price or
prices, or the rate or rates of exchange, and the adjustments thereof, if any,
at which such conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
vi) whether the holders of
shares of such series shall have any right or power to vote or to receive notice
of any meeting of shareholders, either generally or as a condition to specified
corporate action; and
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vii) any other preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions thereof as may be permitted by the laws of the State
of New York and as shall not be inconsistent with this Article Third.
(3) Shares of Preferred Stock which
have been issued and reacquired in any manner by the Corporation (excluding,
until the Corporation elects to retire them, shares which are held as treasury
shares, but including shares redeemed, shares purchased and retired and shares
which have been converted into shares of Common Stock) shall have the status of
authorized but unissued shares of Preferred Stock and may be reissued as a part
of the series of which they were originally a part or may be reissued as a part
of another series of Preferred Stock, all subject to the conditions or
restrictions on issuance set forth in the resolution or resolutions adopted by
the Board of Directors providing for the issuance of any series of Preferred
Stock.
(4) Except as otherwise provided by
the resolution or resolutions providing for the issuance of any series of
Preferred Stock, after payment shall have been made to the holders of Preferred
Stock of the full amount of dividends to which they shall be entitled pursuant
to the resolution or resolutions providing for the issuance of any series of
Preferred Stock, the holders of Common Stock shall be entitled, to the exclusion
of the holders of Preferred Stock of any and all series, to receive such
dividends as from time to time may be declared by the Board of Directors.
(5) Except as otherwise provided by
the resolution or resolutions providing for the issuance of any series of
Preferred Stock, in the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of Preferred Stock of the full amounts to which they shall
be entitled pursuant to the resolution or resolutions providing for the issuance
of any series of Preferred Stock, the holders of Common Stock shall be entitled,
to the exclusion of the holders of Preferred Stock of any and all series, to
share, ratably according to the number of shares of Common Stock held by them,
in all remaining assets of the Corporation available for distribution to its
stockholders.
FOURTH: The office of the Corporation is to be located in the County of
Suffolk, State of New York.
FIFTH: The Secretary of State of the State of New York is hereby
designated as the agent of the Corporation upon whom process in any action or
proceeding may be served. The address to which the Secretary of State shall mail
a copy of any process in any action or proceeding against the Corporation which
may be served upon him is:
684 Broadway
Massapequa, New York 11758
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SIXTH: Except to the extent that such rights shall be specifically
provided for in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of any series of Preferred Stock, no holder of any of
the shares of any class of the Corporation shall be entitled as of right to
subscribe for, purchase, or otherwise acquire any shares of any class of the
Corporation which the Corporation proposes to issue or any rights or options
which the Corporation proposes to grant for the purchase of shares of any class
of the Corporation or for the purchase of any shares, bonds, securities, or
obligations of the Corporation which are convertible into or exchangeable for,
or which carry any rights to subscribe for, purchase or otherwise acquire shares
of any class of the Corporation; and any and all of such shares, bonds,
securities, or obligations of the Corporation, whether now or hereafter
authorized or created, may be issued, or may be reissued or transferred if the
same have been reacquired and have treasury status, and any and all such rights
and options may be granted by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its discretion may determine, without first
offering the same, or any thereof, to any said holder. Without limiting the
generality of the foregoing stated denial of any and all preemptive rights, no
holder of shares of any class of the Corporation shall have any preemptive
rights in respect of the matters, proceedings, or transactions specified in
subparagraphs (1) to (6), inclusive, of paragraph (e) of Section 622 of the
Business Corporation Law of the State of New York.
SEVENTH: The number of Directors of the Corporation constituting the
entire Board of Directors shall be not less than three nor more than fifteen.
The Board of Directors shall determine from time to time the number of Directors
who shall constitute the entire Board of Directors. Any such determination made
by the Board of Directors shall continue in effect unless and until changed by
the Board of Directors, but no such changes shall affect the term of any
directors then in office. Directors need not be shareholders of the Corporation.
Any vacancy on the Board of Directors that results from an
increase in the number of directors and any other vacancy on the Board may be
filled by vote of the shareholders or by the Board provided that a quorum is
then in office and present, or by a majority of the Directors then in office, if
less than a quorum is then in office, or by a sole remaining director. A
director elected to fill a newly created directorship or other vacancy, unless
elected by the shareholders, shall hold office until the next meeting of
shareholders at which the election of directors is in the regular course of
business, and until his successor has been elected and qualified.
The directors of the Corporation may not be removed prior to
the expiration date of their terms of office except for cause, either by action
of the Board of Directors or by vote of the shareholders at the Annual Meeting
of Shareholders or at any Special Meeting of Shareholders called by the Board of
Directors or by the Chairman of the Board or by the President for this purpose.
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EIGHTH: To the fullest extent now or hereafter permitted under the New
York Business Corporation Law, no person serving as a director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for monetary damages for any breach of fiduciary duty in such capacity. No
amendment or repeal of this Article Eighth shall adversely affect any right or
protection of any director or officer of the Corporation existing at the time of
such amendment or repeal with respect to acts or omissions occurring prior to
such amendment or repeal.
NINTH: The Corporation shall, to the fullest extent permitted by
Article 7 of the Business Corporation Law of the State of New York, as the same
may be amended and supplemented, or by any successor thereto, indemnify all
persons whom it shall have power to indemnify under said Article from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by said Article. The Corporation shall advance expenses to the
fullest extent permitted by said Article. Such right of indemnification and
advancement or expenses provided for herein shall continue as to a person who
has ceased to be a director, officer, employee or agent of the Corporation and
shall inure to the benefit of the heirs, executors and administrators of such a
person. The indemnification and advancement of expenses provided for herein
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of shareholders, vote of disinterested directors, or otherwise,
as permitted by said Article. Neither the amendment or repeal of this Article
Ninth, nor the adoption of any provision of this Certificate of Incorporation
inconsistent with this Article Ninth shall adversely affect any right or
protection existing under this Article Ninth at the time of such amendment or
repeal."
IN WITNESS WHEREOF, the undersigned have subscribed this document on
the date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained therein have been examined by them and are true
and correct.
Dated: September 30, 1996
/s/ BARRY R. STEINBERG
_____________________________
Barry R. Steinberg, President
/S/ JOEL G. STEMPLE
_____________________________
Joel G. Stemple, Secretary
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Exhibit 3.2
BY-LAWS
OF
MANCHESTER EQUIPMENT CO., INC.
ARTICLE I - OFFICES
The principal office of the Corporation shall be in the County of
Suffolk, State of New York. The Corporation may also have offices at such other
places within or without the State of New York as the Board may from time to
time determine or the business of the Corporation may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETING. Meetings of shareholders may be held at
the Corporation's office in the State of New York or elsewhere within or without
the State of New York as the Board of Directors from time to time may determine.
2. ANNUAL MEETING. The annual meeting of shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on such date and at such time as
shall be designated by the Board of Directors and stated in the notice of such
meeting.
3. PROPOSED BUSINESS AT ANNUAL MEETING. No business may be
transacted at any annual meeting of shareholders, other than business that is
either (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors (or any duly authorized
committee thereof), which shall include shareholder proposals contained in the
Corporation's proxy statement made in accordance with Rule 14a-8 of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor thereto, or (b) otherwise properly brought before the annual meeting
by or at the direction of the Board of Directors (or any duly authorized
committee thereof).
4. SPECIAL MEETINGS. Special Meetings of the Shareholders, for
any purpose or purposes, may be called at any time by resolution of the Board of
Directors or by the President, and shall be called by the President or by the
Secretary upon the written request of the holders of record of the issued and
outstanding shares entitled to cast at least thirty percent (30%) of the total
number of votes entitled to be cast by shareholders at such meeting, at such
times and at such place either within or without the State of New York as may be
stated in the call or in the waiver of notice thereof. Business transacted at
any special meeting shall be limited to the purposes stated in the notice.
5. NOTICE OF MEETING. Notice of the time, place, and purpose
of every meeting of shareholders, and if a special meeting, at whose direction
such meeting is being called, shall be
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personally delivered to each shareholder of record entitled to vote at such
meeting or delivered by first class mail, not less than ten (10) days nor more
than fifty (50) days before the meeting, or by third class mail, not less than
twenty-four (24) days nor more than fifty (50) days before the meeting, at the
address of such shareholder as it appears on the records of the Corporation, or
at such other address as shall be furnished by shareholder in writing to the
Corporation for such purpose. Such further notice shall be given as may be
required by law or by these By-laws. Any meeting may be held without notice if
all shareholders entitled to vote are present in person or by proxy or if notice
is waived in writing, either before, at, or after the meeting, by those not
present. The attendance of any shareholder at a meeting, in person or by proxy,
without protesting prior to the conclusion of the meeting lack of notice of such
meeting, shall constitute a waiver of notice by such shareholder.
6. ORGANIZATION OF MEETINGS. Meetings of the shareholders
shall be presided over by the Chairman of the Board, if there be one, or if
there is no Chairman or he is not present, by the President, or if he is not
present, by a chairman to be chosen at the meeting. The Secretary of the
Corporation, or in his absence, an Assistant Secretary, shall act as Secretary
of the meeting, if present.
7. QUORUM. Except as otherwise provided by law or in the
Certificate of Incorporation of the Corporation, at all meetings of shareholders
the holders of record of a majority of the issued and outstanding shares of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business. In the absence of a
quorum, a majority in interest of those present or represented may adjourn the
meeting by resolution to a date fixed therein, and no further notice thereof
shall be required, except as may be required by the provisions of Section 605(b)
of the Business Corporation Law. At any such adjourned meeting at which a quorum
may be present, any business may be transacted which might have been transacted
at the meeting as originally called, but only those shareholders who would have
been entitled to vote at the meeting as originally called shall be entitled to
vote at such adjourned meeting.
8. VOTING. At each meeting of shareholders, except as
otherwise provided by statute, every holder of record of stock entitled to vote
shall be entitled to cast the number of votes to which shares of such class or
series are entitled as set forth in the Certificate of Incorporation or any
Certificate of Amendment with respect to any preferred stock, in person or by
proxy for each share of such stock standing in his name on the records of the
Corporation. Elections of directors shall be determined by a plurality of the
votes cast at such meeting and, except as otherwise provided by statute, the
Certificate of Incorporation, or these By-laws, all other action shall be
determined by a majority of the votes cast at such meeting.
At all elections of directors, the voting shall be by ballot
or in such other manner as may be determined by the shareholders present in
person or by proxy entitled to vote at such election. With respect to any other
matter presented to the shareholders for their consideration at a meeting, any
shareholder entitled to vote may, on any question, demand a vote by ballot.
A complete list of the shareholders as of the record date,
certified by the Secretary or Transfer Agent of the Corporation, shall be
produced at any meeting of shareholders upon the request of any shareholder made
at or prior to such meeting.
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9. ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of shareholders may be taken without a meeting, if, prior
to such action, a written consent or consents thereto setting forth such action,
is signed by the holders of record of all of the stock of the Corporation,
issued and outstanding and entitled to vote.
10. PROXIES. Every shareholder entitled to vote at any meeting
of shareholders may vote by proxy. Every proxy must be executed in writing by
the shareholder or by his duly authorized attorney. No proxy shall be voted
after the expiration of eleven months from the date of its execution unless the
shareholder executing it shall have specified a longer duration. Every proxy
shall be revocable at the pleasure of the person executing it or of his personal
representatives or assigns except as otherwise provided by law.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed by the Board of Directors.
2. NUMBER. The number of directors of the Corporation shall be
fixed in the manner provided in the Certificate of Incorporation.
3. QUALIFICATIONS; TERM OF OFFICE. Directors need not be
shareholders. Directors shall be elected to hold office until the next annual
election of directors and shall hold office until their successors have been
elected and shall have qualified.
4. NOMINATION OF DIRECTORS. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors of the Corporation, except as may otherwise be provided in any
Certificate of Amendment of the Corporation with respect to the right of holders
of certain specified classes of preferred stock of the Corporation to nominate
and elect a specified number of directors in certain circumstances. Nominations
of persons for election to the Board of Directors may be made at any annual
meeting of shareholders, or at any special meeting of shareholders called for
that purpose, (a) by or at the direction of the Board (or any duly authorized
committee thereof) or (b) by any shareholder of the Corporation who is a
shareholder of record on the record date for determination of shareholders
entitled to vote at such meeting.
5. CHAIRMAN OF THE BOARD. The Board of Directors may elect a
Chairman of the Board from among its members to serve at its pleasure, who shall
preside at all meetings of the Board of Directors and shareholders shall have
such other duties as from time to time may be assigned to him by the Board of
Directors.
6. VACANCIES. Any vacancy on the Board of Directors that
results from an increase in the number of directors and any other vacancy on the
Board may be filled by vote of the shareholders or by the Board provided that a
quorum is then in office and present, or by a majority of the Directors then in
office, if less than a quorum is then in office, or by a sole remaining
director. A director elected
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to fill a newly created directorship or other vacancy, unless elected by the
shareholders, shall hold office until the next meeting of shareholders at which
the election of directors is in the regular course of business, and until his
successor has been elected and qualified. Where a vacancy is created as a result
of the resignation of a director from the Board of Directors, which resignation
is not effective until a future date, such director shall not have the power to
vote to fill such vacancy.
7. PLACE OF MEETING. The Board of Directors shall hold its
meetings at such places within or without the State of New York as it may
decide.
8. REGULAR MEETINGS; NOTICE. Regular meetings of the Board of
Directors shall be held at such time and place as may be fixed from time to time
by the Board of Directors. Notice need not be given of regular meetings of the
Board.
9. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time upon the call of two directors, the Chairman
of the Board, if one be elected, or the President, by oral, facsimile,
telegraphic or written notice, duly served on or sent or mailed to each director
not less than two (2) days before such meeting. A meeting of the Board may be
held, without notice, immediately after the annual meeting of shareholders at
the same place at which such meeting was held. Notice of a meeting need not be
given to any director who submits a signed waiver of notice whether before, at,
or after the meeting or who attends the meeting, without protesting prior
thereto or at its commencement, the lack of notice.
10. QUORUM; ADJOURNMENTS. Except as otherwise provided by law
or in the Certificate of Incorporation of the Corporation, a majority of the
members of the Board of Directors then holding office shall be present at any
meeting of directors to constitute a quorum for the transaction of any business
or any specified item of business and the vote of a majority of the members of
the Board of Directors present at a meeting, at which a quorum is present shall
be necessary for the transaction of any business or specified item of business
at any meeting of directors. In the absence of a quorum of the Board of
Directors, a majority of the members present may adjourn the meeting from time
to time until a quorum be had. Notice of the time and place of such adjourned
meeting shall be given to all the directors.
11. REMOVAL. The directors of the Corporation may be removed
for cause by action of the Board of Directors or by vote of the shareholders at
the Annual Meeting of Shareholders or at any special meeting of Shareholders
called by the Board of Directors or by the Chairman of the Board or by the
President for this purpose. No director may be removed without cause.
12. COMPENSATION. The Board of Directors may determine, from
time to time, the amount of compensation which shall be paid to its members. The
Board of Directors shall also have the power, in its discretion, to allow a
fixed sum and expenses for attendance at each regular or special meeting of the
Board, or any committee of the Board; the Board of Directors shall also have
power, in its discretion, to provide for any pay to directors rendering services
to the Corporation, not ordinarily rendered by directors, as such, special
compensation appropriate to the value of such services, as determined by the
Board from time to time. Nothing herein contained shall be construed to preclude
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any director from serving the Corporation in any other capacity as an officer,
agent or otherwise, and receiving compensation therefor.
13. ACTION BY CONSENT. Any action required or permitted to be
taken by the Board of Directors or any committee thereof may be taken without a
meeting if all members of the Board of Directors or committee consent in writing
to the due adoption of a resolution authorizing the action. The resolutions and
the written consents thereto by the members of the Board of Directors or
committee thereof shall be filed with the minutes of the proceedings of the
Board of Directors or such committee.
14. ACTION BY TELEPHONE COMMUNICATION. Any one or more members of
the Board of Directors or any committee thereof may participate in a meeting of
the Board of Directors or such committee by means of a conference telephone or
similar communications equipment, allowing all persons participating in the
meeting to hear each other at the same time, and participation by such means
shall constitute presence in person at such meeting.
ARTICLE IV - INTERESTED TRANSACTIONS
1. CONTRACTS OR TRANSACTIONS. (a) No contract or other
transaction between the Corporation and one or more of its directors, or between
the Corporation and any other corporation, firm, association or other entity in
which one or more of its directors are directors or officers, or have a
substantial financial interest, shall be either void or voidable for this reason
alone or by reason that such director or directors are present at the meeting of
the Board, or of a committee thereof, which approves such contract or
transaction, or that the votes of such director or directors are counted for
such purposes:
(i) If the material facts as to such director's
interest in such contract or transaction and as to
any common directorship, officership or financial
interest are disclosed in good faith or known to the
Board or committee, and the Board or committee
approves such contract or transaction by a vote
sufficient for such purpose without counting the vote
or votes of such interested director or directors or,
if the votes of the disinterested directors are
insufficient to constitute an act of the Board, by
unanimous vote of disinterested directors; or
(ii) If the material facts as to such director's
interest in such contract or transaction and as to
any common directorship, officership or financial
interest are disclosed in good faith or known to the
shareholders entitled to vote thereto, and such
contract or transaction is approved by vote of the
shareholders.
(b) If such good faith disclosure of the material facts as
to the director's interest in the contract or transaction and as to any common
directorship, officership or financial interest is made to the directors or
shareholders, or known to the Board or committee or shareholders entitled to
vote thereon, the contract or transaction may not be avoided by the Corporation
for the reason set forth in Section 1(a) of this Article IV. If there was no
such disclosure or knowledge, or if the vote of such
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interested director or directors was necessary for approval of a contract or
transaction at a meeting of the Board or committee at which it was approved, the
Corporation may avoid the contract or transaction unless the parties thereto
shall establish affirmatively that the contract or transaction was fair and
reasonable as to the Corporation at the time it was approved by the Board or
committee or the shareholders.
ARTICLE V - COMMITTEES
1. HOW CONSTITUTED AND THE POWERS THEREOF. The Board of
Directors, by the vote of the entire Board, may designate three or more
directors to constitute one or more executive or other committees, who shall
serve during the pleasure of the Board of Directors. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Except as otherwise provided by law, by the Certificate of Incorporation of the
Corporation, by these By-laws, or by resolution adopted by a majority of the
same Board of Directors, and excepting the powers enumerated in Section 712 (1)
- - (5) of the Business Corporation Law, the committees shall possess and may
exercise such powers as shall be conferred or authorized by the resolution
appointing them.
2. QUORUM AND MANNER OF ACTING. A majority of the members of any
such committee shall constitute a quorum for the transaction of any business or
any specified item of business, and the vote of a majority of the members of the
committee present at a meeting at which a quorum is present shall be necessary
for the transaction of any business or any specified item of business at any
meeting of such committee.
3. MEETINGS. A majority of any such committee shall fix the time
and place of its meetings, unless the Board of Directors shall otherwise
provide. Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when requested. Notice of each committee
meeting shall be sent to each committee member by mail at least two (2) days
before the meeting is to be held, or, if given by the Chairman, may be given
personally or by telegraph or telephone at least one (1) day before the day on
which the meeting is to be held. Notice of a meeting need not be given to any
committee member who submits a signed waiver of notice whether before, at, or
after the meeting or who attends the meeting, without protesting prior thereto
or at its commencement, the lack of notice.
4. REMOVAL. The Board shall have the power, at any time, to
change the membership of any committee, to fill vacancies in it, or to dissolve
it.
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ARTICLE VI - OFFICERS
1. OFFICERS; NUMBERS. The officers of the Corporation shall be
the President, one or more Vice Presidents (if the Board of Directors so
determines), a Treasurer (if the Board of Directors so determines) and a
Secretary. The Board of Directors may from time to time appoint one or more
Assistant Secretaries and Assistant Treasurers, and such other officers and
agents as it shall deem necessary, and may define their powers and duties. The
same person may hold any two or more offices except those of President and
Secretary.
2. SALARIES. The Board of Directors shall from time to time fix
the salary of the President, as well as the salaries of other officers of the
Corporation.
3. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. All officers of
the Corporation shall be elected or appointed annually (unless otherwise
specified at the time of election) by the Board of Directors and each officer
shall hold office until the meeting of the Board of Directors following the next
annual meeting of shareholders and until his successor shall have been duly
chosen and shall have qualified, or until he shall resign or shall have been
removed in the manner hereinafter provided.
4. VACANCIES. If any vacancy shall occur in any office of the
Corporation, such vacancy shall be filled by the Board of Directors, and such
successor officer shall hold office for the unexpired term in respect of which
such vacancy occurred.
5. REMOVAL. Any officer of the Corporation may be removed, with
or without cause, by the Board of Directors.
6. PRESIDENT. The President shall be the chief executive of the
Corporation and, subject to the control of the Board of Directors, shall have
general direction of its business, affairs and property and over its several
officers. He shall be entitled to preside at all meetings of the shareholders
and directors in the absence of the Chairman of the Board or if there is no
Chairman of the Board. He shall appoint and discharge employees and agents of
the Corporation (other than officers elected by the Board of Directors) and fix
their compensation; and shall see that all orders and resolutions of the Board
of Directors are carried into effect. The President shall have the power to
execute, in the name and on behalf of the Corporation, all authorized deeds,
bonds, mortgages and other contracts, agreements and instruments, except in
cases in which the signing and execution thereof shall have been expressly
delegated to some other officer or agent of the Corporation; and in general, he
shall perform all duties incident to the office of a president of a corporation,
and such other duties as from time to time may be assigned to him by the Board
of Directors.
7. VICE PRESIDENTS. The Vice President or Vice Presidents of the
Corporation, under the direction of the President, shall have such powers and
perform such duties as the Board of Directors or President may from time to time
prescribe, and shall perform such other duties as may be prescribed in these
By-laws. In each case of the absence or inability of the President to act, the
Vice Presidents, in the order of seniority, shall have the powers and discharge
the duties of the President.
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8. TREASURER. The Treasurer, under the direction of the
President, shall have charge of the funds, securities, receipts and
disbursements of the Corporation. He shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such banks or trust
companies or with such other depositories as the Board of Directors may from
time to time designate. He shall supervise and have charge of keeping correct
books of account of all the Corporation's business and transactions. If required
by the Board of Directors, he shall give a bond in such sum as the Board of
Directors may designate, conditioned upon the faithful performance of the duties
of his office and the restoration to the Corporation, at the expiration of his
term of office, or upon his death, resignation or removal from office, of all
books, papers, vouchers, money or other property of whatever kind in his
possession belonging to the Corporation. He shall render to the President, the
Board of Directors and any committee or committees, if any, at its regular
meetings, or when the Board of Directors so requires, an account of all of the
Treasurer's transactions and of the financial condition of the Corporation. The
Treasurer shall also have such other powers and perform such other duties as
pertain to his office, or as the Board of Directors or the President may from
time to time prescribe.
9. ASSISTANT TREASURER. In the absence or disability of the
Treasurer, the Assistant Treasurers, in the order designated by the Board of
Directors, shall perform the duties of the Treasurer, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Treasurer.
They shall also perform such other duties as from time to time may be assigned
to them by the Board of Directors or the President.
10. SECRETARY. The Secretary shall attend all meetings of the
shareholders of the Corporation and of its Board of Directors, shall keep the
minutes of all such meetings in a book or books kept by him for that purpose,
and shall give, or cause to be given, notice of all meetings of the shareholders
and of the Board of Directors. He shall keep in safe custody the seal of the
Corporation, and, when authorized by the Board of Directors, he shall affix such
seal to any instrument requiring it. When the seal is so affixed, it shall be
attested by the signature of the Secretary or Assistant Secretary or the
Treasurer or an Assistant Treasurer who may affix the seal to any such
instrument in the event of the absence or disability of the Secretary. In the
absence of a Transfer Agent or a Registrar, the Secretary shall have charge of
the stock certificate books, and the Secretary shall have charge of such other
books and papers as the Board of Directors may direct. He shall also have such
other powers and perform such other duties as pertain to his office, or as the
Board of Directors or the President may from time to time prescribe.
11. ASSISTANT SECRETARIES. In the absence or disability of the
Secretary, the Assistant Secretaries, in the order designated by the Board of
Directors, shall perform the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Secretary. They shall also perform such other duties as from time to time may be
assigned to them by the Board of Directors or the President.
12. DUTIES OF OFFICERS MAY BE DELEGATED. In case of the absence
or disability of any officer of the Corporation, or for any other reason that
the Board may deem sufficient, the Board may delegate, for the time being, the
powers or duties, or any of them, of such officer to any other officers, or to
any other director.
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ARTICLE VII - DRAFTS, CHECKS, ETC.
All checks, drafts or other orders for the payment of money out of
the funds of the Corporation and all notes or other evidences of indebtedness
issued in the name of the Corporation shall be signed by such officer or
officers, agent or agents, or person or persons to whom the Board of Directors
shall have delegated the power, but under such conditions and restrictions as in
said resolutions may be imposed. The signature of any officer upon any of the
foregoing instruments may be a facsimile whenever authorized by the Board of
Directors.
ARTICLE VIII - SHARES AND THEIR TRANSFER
1. ISSUES OF CERTIFICATES OF STOCK. The Board of Directors shall
provide for the issue and transfer of the certificates of stock of the
Corporation and prescribe the form of such certificates. Every owner of shares
of the Corporation shall be entitled to a certificate of stock, which shall be
under the seal of the Corporation (which seal may be a facsimile, engraved or
printed), specifying the number of shares owned by him, and which certificate
shall be signed by the President or a Vice President, or by the Chairman of the
Board of Directors, and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer of the Corporation. Where any such
certificate is countersigned by a transfer agent other than the Corporation or
its employee, or registered by a registrar other than the Corporation or its
employee, or where the shares are listed on a registered national security
exchange, the signature of any officer or officers upon the certificates may be
facsimiles. In case any officer or officers who shall have signed, or whose
facsimile signatures shall have been used on, any such certificate or
certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed such certificate or certificates or whose facsimile signature
or signatures shall have been used thereon had not ceased to be such officer or
officers of the Corporation.
2. TRANSFER AGENTS AND REGISTRARS. The Board of Directors shall
have power to appoint a Transfer Agent and/or Registrar of its stock; to
prescribe their respective duties; and to require the countersignature of such
Transfer Agent and/or Registrar upon stock certificates. The duties of the
Transfer Agent and Registrar may be combined.
3. TRANSFER OF SHARES. Subject to any restrictions on transfer of
shares of stock of the Corporation of any class, series or designation contained
in the Certificate of Incorporation, the shares of stock of the Corporation
shall be transferred only upon the books of the Corporation by the holder
thereof in person or by such person's attorney, upon surrender for cancellation
of certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, with such proof of
the authenticity of the signature as the Corporation or its agents may
reasonably require.
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<PAGE> 10
4. ADDRESSES OF SHAREHOLDERS. Every shareholder shall furnish the
Transfer Agent, or in the absence of a Transfer Agent, the Registrar, or in the
absence of a Transfer Agent and a Registrar, the Secretary, with an address at
or to which notices of meetings and all other notices may be served him or
mailed to him, and in default thereof, notices may be addressed to him at the
office of the Corporation.
5. RECORD DATE. The Board of Directors may set a date not
exceeding fifty (50) days and not less than ten (10) days prior to the date of
any meetings of shareholders nor more than fifty (50) days prior to any other
action as the time as of which shareholders entitled to notice of and to vote at
such meeting or whose consent or dissent is required or may be expressed for any
purpose, as the case may be, shall be determined, and all persons who were then
holders of record of such shares and no others shall be entitled to notice of or
to vote at such meeting or to express their consent or dissent, as the case may
be.
The Board of Directors shall also have power to fix a date not
exceeding fifty (50) days preceding the date fixed for the payment of any
dividend or the making of any distribution or for the allotment of any evidence
of right or interest, or the date when any change, conversion or exchange of
capital stock shall go into effect, or for any other purpose, as a record time
for the determination of the shareholders entitled to receive any such dividend,
distribution, right or interest, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, or to participate in any
such other action, and in such case only shareholders of record at the time so
fixed shall be entitled to receive such dividend, distribution, right or
interest, or to exercise such rights, or to participate in such other action.
6. LOST AND DESTROYED CERTIFICATES. The Board of Directors may
direct a new certificate or certificates of stock to be issued in the place of
any certificate or certificates theretofore issued and alleged to have been lost
or destroyed; but the Board of Directors when authorizing such issue of a new
certificate or certificates, may in its discretion require the owner of the
shares represented by the certificate so lost or destroyed or his legal
representative to furnish proof by affidavit or otherwise to the satisfaction of
the Board of Directors of the ownership of the shares represented by such
certificate alleged to have been lost or destroyed and the facts which tend to
prove its loss or destruction. The Board of Directors may also require such
person to execute and deliver to the Corporation a bond, with or without
sureties, in such sum as the Board of Directors may direct, indemnifying the
Corporation, its Transfer Agents and Registrars, if any, against any claim that
may be made against them, or any of them, by reason of the issue of such
certificate. The Board of Directors, however, may in its discretion refuse to
issue any such new certificate, except pursuant to court order.
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ARTICLE IX - SEAL
The corporate seal of the Corporation shall be circular in form
and shall contain the name of the Corporation, the year of its creation and the
words "Corporate Seal New York", or words of similar import. Said seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
manner reproduced, and said seal may be altered from time to time at the
discretion of the Board of Directors.
ARTICLE X - MISCELLANEOUS
1. EXAMINATION OF BOOKS AND RECORDS. There shall be kept at such
office of the Corporation as the Board of Directors shall determine, within or
without the State of New York, correct books and records of account of all its
business and transactions, minutes of the proceedings of its shareholders, Board
of Directors and committees, and the stock book, containing the names and
addresses of the shareholders, the number of shares held by them and the class
or series thereof, respectively, and the dates when they respectively became the
owners of record thereof, and in which the transfer of stock shall be
registered, and such other books and records as the Board of Directors may from
time to time determine. The Board of Directors may determine from time to time
whether, and to what extent, and at what times and places and under what
conditions and regulations, the accounts and books of the Corporation, or any of
them, shall be open to the inspection of the shareholders, and no shareholder
shall have any right to inspect any account or book or document of the
Corporation, except as provided by the statutes of the State of New York or
authorized by the Board of Directors.
2. VOTING OF STOCK IN OTHER CORPORATIONS. Any shares in any other
corporations, which may from time to time be held by the Corporation, may be
represented and voted on at any of the shareholders' meetings thereof by the
President or one of the Vice Presidents of the Corporation, or by proxy or
proxies appointed by the President or one of the Vice Presidents of the
Corporation. The Board of Directors, however, may, by resolution, appoint any
other person or persons to vote such shares, in which case such other person or
persons shall be entitled to vote such shares upon the production of a certified
copy of such resolution.
3. FISCAL YEAR. The fiscal year of the Corporation shall end on
July 31st in each year unless otherwise fixed by resolution of the Board of
Directors.
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ARTICLE XI - AMENDMENTS
1. BY SHAREHOLDERS. The vote of the holders of at least a
majority of the shares that are issued and outstanding and entitled to vote,
shall be necessary at any meeting of shareholders to amend or repeal the By-laws
or to adopt new By-laws.
2. BY DIRECTORS. The Board of Directors shall have the power to
alter, amend or repeal any of these By-laws by the vote of at least a majority
of the entire Board at any meeting of the Board of Directors, provided that any
By-law adopted by the Board may be amended or repealed by the shareholders.
3. NOTICE. Any proposal to amend or repeal these By-laws or to
adopt new By-laws shall be stated in the notice of the meeting of the Board of
Directors or shareholders, or in the waiver of notice thereof, as the case may
be, unless all of the directors or the holders of all of the shares of the
Corporation, issued and outstanding and entitled to vote, are present at such
meeting.
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<PAGE> 1
EXHIBIT 5
[EPSTEIN BECKER & GREEN, P.C. LETTERHEAD]
351-4500
October 2, 1996
Manchester Equipment Co., Inc.
160 Oser Avenue
Hauppauge, New York 11788
Ladies and Gentlemen:
We have acted as counsel to Manchester Equipment Co., Inc. (the
"Company") in connection with its filing of a registration statement on Form S-1
(such registration statement, as amended at the time of its effectiveness,
hereinafter the "Registration Statement") covering shares of the Company's
authorized and unissued shares of Common Stock, $.01 par value, including shares
subject to an over-allotment option (all such shares together with all shares
covered by any related registration statement filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, being collectively referred to as
the "Shares").
As such counsel, we have examined original copies, or copies
certified to our satisfaction, of the corporate records of the Company,
agreements and other instruments, certificates of public officials and such
other documents as we deemed necessary as a basis for the opinion hereinafter
set forth.
<PAGE> 2
Manchester Equipment Co., Inc.
October 2, 1996
Page 2
On the basis of the foregoing, we are of the opinion that the Shares
have been validly authorized and, when sold as contemplated by the Registration
Statement, will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference made to us under the caption "Legal
Matters" in the prospectus constituting part of the Registration Statement. We
hereby further consent to the incorporation by reference of this opinion in any
related registration statement filed by the Company pursuant to Rule 462(b)
under the Securities Act of 1933, as amended.
Very truly yours,
EPSTEIN BECKER & GREEN, P.C.
By: /s/ Seth I. Truwit
___________________________
Seth I. Truwit, Esq.
<PAGE> 1
Exhibit 10.1
MANCHESTER EQUIPMENT CO., INC.
1996 INCENTIVE AND NON-INCENTIVE
STOCK OPTION PLAN
1. Purpose of Plan.
The purpose of this 1996 Incentive and Non-Incentive Stock Option Plan
("Plan") is to further the growth and development of Manchester Equipment Co.,
Inc. ("Company") and any direct and indirect subsidiaries thereof (collectively,
"Subsidiaries" and each, singly, a "Subsidiary") by encouraging selected
employees, directors and other persons who contribute and are expected to
contribute materially to the Company's success to obtain a proprietary interest
in the Company through the ownership of stock, thereby providing such persons
with an added incentive to promote the best interests of the Company and
affording the Company a means of attracting to its service persons of
outstanding ability.
2. Stock Subject to this Plan.
An aggregate of 1,250,000 shares of the Company's Common Stock, par
value $.01 per share ("Common Stock"), subject, however, to adjustment or change
pursuant to Article 10 hereof, shall be reserved for issuance upon the exercise
of options which may be granted from time to time in accordance with this Plan
("Options"). Such shares may be, in whole or in part, authorized but unissued
shares or issued shares which have been reacquired by the Company. If, for any
reason, an Option shall lapse, expire or terminate without having been exercised
in full, the unpurchased shares covered thereby shall again be available for
purposes of this Plan.
3. Administration.
(a) The Board of Directors has appointed a Compensation Committee
of the Board of Directors ("Committee") from among its members
to administer and help set policy for this Plan. The Committee
shall at all times be comprised only of three or more
Non-Employee Directors (as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended). Such Committee
shall have and may exercise any and all of the powers relating
to the administration of this Plan and the grant of Options
hereunder as are set forth herein. The Board of Directors
shall have the power at any time to fill vacancies in, to
change the membership of, or to discharge such Committee. The
Committee shall select one of its members as its chairman and
shall hold its meetings at such time and at such places as it
shall deem advisable. A majority of such Committee shall
constitute a quorum and such majority shall determine its
action. Any action may be taken without a meeting by written
consent of all the members of the Committee. The Committee
shall keep minutes
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<PAGE> 2
of its proceedings and shall report the same to the Board of
Directors at the next meeting of the Board.
(b) The Committee shall administer this Plan and, subject to the
provisions of this Plan, shall have sole authority in its
discretion to determine the persons to whom, and the time or
times at which, Options shall be granted, the number of shares
to be subject to each such Option and whether all or any
portion of such Options shall be incentive stock options
("Incentive Options") qualifying under Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), or stock
options which do not so qualify ("Non-Incentive Options").
Both Incentive Options and Non- Incentive Options may be
granted to the same person at the same time provided each type
of Option is clearly designated. In making such
determinations, the Committee may take into account the nature
of the services rendered by such persons, their present and
potential contributions to the Company's success and such
other factors as the Committee in its sole discretion may deem
relevant. Subject to the express provisions of this Plan, the
Committee shall also have the authority to interpret this
Plan, to prescribe, amend and rescind rules and regulations
relating thereto, to determine the terms and provisions of the
respective Option Agreements, which shall be, subject to the
rights granted to the Company and the Committee hereunder,
substantially in the forms attached hereto as Exhibit A and
Exhibit B, with such changes thereto as may be necessary to
reflect the - terms and conditions of the grant in question,
and to make all other determinations necessary or advisable
for the administration of this Plan, all of which
determinations shall be conclusive and not subject to review.
4. Eligibility for Receipt of Options.
(a) Incentive Options.
Incentive Options may be granted only to employees (including
officers) of the Company and/or any of its Subsidiaries.
The aggregate Fair Market Value (as defined in Article 5 of
this Plan), determined as of the time the Incentive Option is
granted, of the shares of the Company's Common Stock
purchasable hereunder exercisable for the first time by an
employee during any calendar year may not exceed $100,000.
A director of the Company or any Subsidiary who is not an
employee of the Company or of one of its Subsidiaries is not
eligible to receive Incentive Options under this Plan.
Further, Incentive Options may not be granted to any person
who, at the time the Incentive Option is granted, owns (or is
considered as owning within the meaning of Section 424(d) of
the Code) stock possessing more than 10% of the total combined
voting powers of all classes of stock of the Company or any
Subsidiary (a "10% Owner"), unless at the time the Incentive
Option is granted to a 10% Owner, the option price is at least
110% of the fair market value of the
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<PAGE> 3
Common Stock subject thereto and such Incentive Option by its
terms is not exercisable subsequent to five years from the
date of grant.
(b) Non-Incentive Options.
Non-Incentive Options may be granted to any employees
(including employees who have been granted Incentive Options),
directors, consultants, agents, independent contractors and
other persons whom the Committee determines will contribute to
the Company's success.
(c) Notwithstanding the forgoing, the maximum aggregate number of
shares with respect to which Options, whether Incentive or
Non-Incentive, may be granted to any person eligible therefor
under this Plan within any one calendar year is 200,000
shares.
5. Option Price.
The purchase price of the shares of Common Stock under each Option
shall be determined by the Committee, which determination shall be conclusive
and not subject to review, but in no event shall such purchase price be less
than (i) 100% of the fair market value of the Common Stock on the date of grant
of Incentive Options (110% of the fair market value of Common Stock on the date
of grant where the grant of Incentive Options is made to a 10% Owner), and (ii)
85% of the fair market value of the Common Stock on the date of grant for
Non-Incentive Options.
In determining the fair market value of the Common Stock as of a
specified date ("Fair Market Value"), the Committee shall consider, if the
Common Stock is: (a) publicly traded and listed on the New York Stock Exchange
or another national securities exchange or The Nasdaq Stock Market, the closing
sale price of the Common Stock on the business day immediately preceding the
date as of which the Fair Market Value is being determined, or on the next
preceding date on which such Common Stock is traded if no Common Stock was
traded on such immediately preceding business day, or, if the Common Stock is
not so listed on a national securities exchange or The Nasdaq Stock Market, but
publicly traded, the representative closing sale price in the over-the-counter
market as quoted by the National Quotation Bureau or a recognized dealer in the
Common Stock, on the date immediately preceding the date as of which the Fair
Market Value is being determined, or on the next preceding date on which such
Common Stock is traded if no Common Stock was traded on such immediately
preceding business day; or (b) not publicly traded, the fair market value as
determined by the Committee in good faith based on such factors as it shall deem
appropriate. The Committee may also consider such other factors as it shall deem
appropriate.
For purposes of this Plan, the date of grant of an Option shall be the
date on which the Committee shall by resolution duly authorize such Option.
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<PAGE> 4
6. Term of Options; Termination.
(a) The term of each Option shall be such number of years as the
Committee shall determine, subject to earlier termination as
provided herein and in the Option Agreement (and each
Incentive Option being subject to the limitations set forth in
Section 4(a) of this Plan with respect to grants to 10%
Owners), but in no event shall the term of any Option be more
than ten years from the date of grant. No Option may be
exercised following termination thereof.
(b) If an Incentive Option holder's employment with the Company or
a Subsidiary is terminated for any reason other than by reason
of death or disability (within the meaning of Section 22(e)(3)
of the Code), such holder's Incentive Option shall terminate
on the earlier of (i) three (3) months from the date of such
termination of employment, or (ii) the expiration date of the
term of such Option. Absence on leave approved by the employer
corporation shall not be considered an interruption of
employment for any purpose under this Plan.
(C) If an Incentive Option holder's employment with the Company or
a Subsidiary is terminated by reason of such holder's
disability within the meaning of Section 22(e)(3) of the Code,
subject to paragraph 6(d) hereof, such holder's Incentive
Option shall terminate on the earlier of (i) one (1) year from
the date of such termination, or (ii) the expiration date of
the term of such Option.
(d) If an Incentive Option holder dies while in the employ of the
Company or a Subsidiary (or within one (1) year following
termination of employment due to disability within the meaning
of Section 22(e)(3) of the Code), such holder's Incentive
Option shall terminate on the earlier of (i) one (1) year from
the date of death, or (ii) the expiration date of the term of
the Option. To the extent such Incentive Option was
exercisable by such holder at the date of death (or the date
of termination of employment due to disability within the
meaning of Section 22(e)(3) of the Code), such Option may be
exercised by the legatee or legatees of such person under such
person's Last Will, or by such person's personal
representative or distributees, within one (1) year from the
date of death but in no event subsequent to the expiration
date of the Incentive Option.
7. Exercise of Options.
(a) Incentive and Non-Incentive Options shall be exercisable
within the times or upon the events determined by the
Committee as set forth in the Option Agreements.
(b) An Option may not be exercised for fractional shares of the
Company's Common Stock.
(c) In the event of a Change in Control (as defined herein), all
outstanding Options shall accelerate and become immediately
fully exercisable. For purposes of this
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<PAGE> 5
Plan, a "Change In Control" shall mean (i) the sale or other
disposition to a person, entity or group (as such term is
defined in Rule 13d-5 under the Securities Exchange Act of
1934, as amended) of 50% or more of the Company's consolidated
assets, (ii) the acquisition of 50% or more of the outstanding
shares by a person or group (as such term is defined in Rule
13d-5) or (iii) if the majority of the Company's Board of
Directors consists of persons other than the Continuing
Directors (as defined herein). The term "Continuing Director"
shall mean any member of the Company's Board of Directors on
the effective date of this Plan and any other member of the
Board of Directors who shall be recommended or elected to
succeed or become a Continuing Director by a majority of the
Continuing Directors who are then members of the Board of
Directors. The aggregate Fair Market Value (determined at the
time an Option is granted) of Incentive Options which first
become exercisable in the year of such Change in Control
cannot exceed $100,000. Any remaining accelerated Options
shall be Non-Incentive Options.
(d) If an Option holder ceases to be an employee, director,
consultant, agent, independent contractor or other person
employed by or engaged in performing services for the Company
and/or a Subsidiary, the Option held by such person shall be
exercisable after the date of termination of employment or
engagement only to the extent such Option was exercisable by
such holder at the date of termination. In no event shall such
option be exercisable following the expiration of its term or
earlier termination.
(e) The exercise of an Option shall be contingent upon receipt by
the Company from the holder of such Option of a written
representation that at the time of such exercise it is the
Optionholder's then present intention to acquire the Option
shares for investment and not with a view to the distribution
or resale thereof (unless a Registration Statement covering
the shares purchasable upon exercise of the Options shall have
been declared effective by the Securities and Exchange
Commission) and upon receipt by the Company of cash, or a
check to its order, for the full purchase price of such
shares. In addition, the holder of such Option must agree to
refrain from selling or offering to sell any securities of the
Company for such reasonable period of time after the effective
date of any registration statement relating to an underwritten
offering of securities of the Company, as may be requested by
the managing underwriter of such underwritten offering, and
approved by the Board of Directors. The Company shall be under
no obligation to register the Shares with the Securities and
Exchange Commission or to effect compliance with the
Securities Act of 1933 or with the registration or
qualification requirement of any state securities laws or
stock exchange.
(f) Payment for the shares of Common Stock may be made (i) in cash
or by check to the order of the Company; (ii) by surrender of
shares of Common Stock having a Fair Market Value equal to the
exercise price of the Option; or (iii) by any combination of
the foregoing
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<PAGE> 6
where approved by the Committee in its sole discretion;
provided, however, in the event of payment for the shares of
Common Stock by method (ii) above, the shares of Common Stock
so surrendered, if originally issued to the Optionholder upon
exercise of an Option(s) granted by the Company, shall have
been held by the Optionholder for more than six months.
(g) The holder of an Option shall have none of the rights of a
shareholder with respect to the shares purchasable upon
exercise of the Option until a certificate for such shares
shall have been issued to the holder upon due exercise of the
Option.
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<PAGE> 7
(h) The proceeds received by the Company upon exercise of an
Option shall be added to the Company's working capital and be
available for general corporate purposes.
8. Non-Transferability of Incentive Options.
No Incentive Option granted pursuant to this Plan shall be transferable
otherwise than by will or the laws of descent or distribution and an Incentive
Option may be exercised during the lifetime of the Option holder only by such
Option holder.
9. No Right of Employment.
Nothing in this Plan or in any Option Agreement granted hereunder
shall: (a) confer upon any Option holder any right to continue in the employ of
the Company or any Subsidiary or obligate the Company or any Subsidiary to
continue the engagement of any Option holder; or (b) interfere in any way with
the right of the Company or any such Subsidiary to terminate such Option
holder's employment or engagement at any time.
10. Adjustments Upon Changes in Capitalization.
If at any time after the date of grant of an Option, the Company shall
by stock dividend, split-up, combination, reclassification or exchange, or
through merger or consolidation or otherwise, change its shares of Common Stock
into a different number or kind or class of shares or other securities or
property, then the number of shares covered by such Option and the price per
share thereof shall be proportionately adjusted for any such change by the
Committee, whose determination thereon shall be conclusive. In the event that a
fraction of a share results from the foregoing adjustment, said fraction shall
be eliminated and the price per share of the remaining shares subject to the
Option adjusted accordingly.
11. Vesting of Rights Under Options.
Nothing contained in this Plan or in any resolution adopted or to be
adopted by the Committee or the shareholders of the Company shall constitute the
vesting of any rights under any Option. The vesting of such rights shall take
place only when a written Option Agreement, substantially in the form of the
Incentive Stock Option Agreement attached hereto as Exhibit A or the
Non-Incentive Stock Option Agreement attached hereto as Exhibit B (with such
changes to such Exhibits as may be necessary to reflect the terms and conditions
of the grant in question), shall be duly executed and delivered by and on behalf
of the Company and the person to whom the Option shall be granted, subject,
however, in either event, to the rights granted to the Company and the Committee
hereunder and to the terms and conditions of the Option Agreement.
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<PAGE> 8
12. Withholding Taxes.
Whenever under this Plan shares are to be issued in satisfaction of the
exercise of Options granted hereunder, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such shares.
13. Restrictions on Shares.
At the discretion of the Committee, the Company may reserve to itself
or its assignee(s) in the Option Agreement (a) a right of first refusal to
purchase any shares that an Optionholder (or a subsequent transferee) may
propose to transfer to a third party and (b) a right to repurchase any or all
shares held by an Optionholder upon the Optionee's termination of employment or
service with the Company or a subsidiary for any reason within a specified time
as determined by the Committee at the time of grant at (i) the Optionholder's
original purchase price, (ii) the Fair Market Value of such shares as determined
by the Committee in good faith, or (iii) a price determined by a provision set
forth in the Option Agreement.
14. Termination and Amendment.
The Committee may at any time terminate, amend or modify this Plan in
any respect (including, but not limited to, any form of grant, agreement or
instrument to be executed pursuant to this Plan); provided, however, that
shareholder approval shall be required to be obtained by the Company if required
to comply with the Incentive Option provisions or Section 162(m) of the Code, or
the listed company requirements of The Nasdaq Stock Market or of a national
securities exchange on which the shares of Common Stock are traded, or other
applicable provisions of state or federal law or self-regulatory agencies;
provided, further, that no termination, amendment or modification of this Plan
may materially adversely affect the rights of a holder of an Option previously
granted under this Plan without the written consent of such Optionholder.
15. Term of Plan.
This Plan was originally adopted by the Board of Directors on October
1, 1996 and approved by the shareholders of the Company on October 1, 1996. No
Option shall be granted pursuant to this Plan on or after September 30, 2006,
but Options theretofore granted may extend beyond that date and the terms of
this Plan shall continue to apply to such Options and to any shares of Common
Stock acquired upon exercise thereof.
16. Applicable Law.
The validity, interpretation and enforcement of this Plan shall be
governed in all respects by the laws of the State of New York and the United
States of America.
17. Issuance of Shares.
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The Shares, when issued and paid for pursuant to the Options granted
hereunder, shall be fully paid and non-assessable Shares.
18. Partial Invalidity.
The invalidity or illegality of any provision herein shall not be
deemed to affect the validity of any other provision.
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<PAGE> 10
EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
To:
We are pleased to notify you that by the determination of the
Compensation Committee (hereinafter called the "Committee") an incentive stock
option to purchase ________ shares of the Common Stock of Manchester Equipment
Co., Inc. (herein called the "Company") at a price of $______ per share has this
____ day of _______________, been granted to you under the Company's 1996
Incentive and Non-Incentive Stock Option Plan, as amended (herein called the
"Plan"). This option may be exercised only upon the terms and conditions set
forth below.
A. Purpose of Option.
The purpose of this Plan under which this incentive stock
option has been granted is to further the growth and development of the Company
and its direct and indirect subsidiaries by encouraging key employees,
directors, consultants, agents, independent contractors and other persons who
contribute and are expected to contribute materially to the Company's success to
obtain a proprietary interest in the Company through the ownership of stock,
thereby providing such persons with an added incentive to promote the best
interests of the Company, and affording the Company a means of attracting to its
service persons of outstanding ability.
1. Acceptance of Option Agreement.
Your execution of this incentive stock option
agreement will indicate your acceptance of and your willingness to be bound by
its terms; it imposes no obligation upon you to purchase any of the shares
subject to the option. Your obligation to purchase shares can arise only upon
your exercise of the option in the manner set forth in Article 3 hereof.
2. When Option May Be Exercised.
The option granted you hereunder may not be exercised
for a period of [one year] from the date of its grant by the Committee as set
forth above. Thereafter, this option shall be exercisable as follows:
(i) at the end of [one year] from the date of
grant, up to [25%] of the total shares
subject to the option;
(ii) at the end of the [second year] from the
date of grant, up to [50%] of such shares;
(iii) at the end of the [third year] from the date
of grant, up to [75%] of such shares;
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(iv) at the end of the fourth year from the date
of grant, up to [100%] of such shares.
This option may not be exercised for less than ten shares at any one time (or
the remaining shares then purchasable if less than ten) and expires at the end
of ten years from the date of grant whether or not it has been duly exercised,
unless sooner terminated as provided in Articles 5, 6 and 7 hereof.
3. How Option May Be Exercised.
This option is exercisable by a written notice signed
by you and delivered to the Company at its executive offices, signifying your
election to exercise the option. The notice must state the number of shares of
Common Stock as to which your option is being exercised, must contain a
statement by you (in a form acceptable to the Company) that such shares are
being acquired by you for investment and not with a view to their distribution
or resale (unless a registration statement covering the shares purchasable has
been declared effective by the Securities and Exchange Commission) and must be
accompanied by payment as set forth in Article 4 hereof for the full purchase
price of the share being purchased. No share shall be issued until full payment
therefor has been made.
If notice of the exercise of this option is given by
a person or persons other than you, the Company may require, as a condition to
the exercise of this option, the submission to the Company of appropriate proof
of the right of such person or persons to exercise this option.
Certificates for shares of the Common Stock so
purchased will be issued as soon as practicable. The Company, however, shall not
be required to issue or deliver a certificate for any shares until it has
complied with all requirements of the Securities Act of 1933, the Securities
Exchange Act of 1934, any stock exchange on which the Company's Common Stock may
then be listed and all applicable state laws in connection with the issuance or
sale of such shares or the listing of such shares on said exchange. Until the
issuance of the certificate for such shares, you or such other person as may be
entitled to exercise this option, shall have none of the rights of a shareholder
with respect to shares subject to this option.
You shall promptly advise the Company of any sale of
shares of Common Stock issued upon exercise of this option which occurs within
one (1) year from the date of the exercise of this option relating to the
issuance of such shares.
4. Payment of Options.
Payment for the shares of Common Stock may be made
(i) in cash or by check to the order of the Company, (ii) by surrender of
shares of Common Stock having a Fair Market Value equal to the exercise price
of the Option; or (iii) by any combination of the foregoing where approved by
the Committee in its sole discretion; provided, however, in the event of
payment for the shares of Common Stock by method (ii) above, the shares of
Common Stock so surrendered, if originally issued to you upon exercise of an
option(s) granted by the Company, shall have been held by you for more than
six months.
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<PAGE> 12
5. Termination of Employment.
If your employment with the Company (or a subsidiary
thereof) is terminated for any reason other than by death or disability, this
option shall terminate three (3) months from the date of such termination of
employment (but in no event shall you be able to exercise this option after ten
years from the date this option was granted to you), provided, however, you
shall only be entitled to exercise that portion of this option which was
exercisable by you at the date of such termination of employment.
6. Disability.
If your employment with the Company (or a subsidiary
thereof) is terminated by reason of your disability, you may exercise, within
one (1) year from the date of such termination, that portion of this option
which was exercisable by you at the date of such termination, provided, however,
that such exercise occurs within ten years from the date this option was granted
to you.
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<PAGE> 13
7. Death.
If you die while employed by the Company (or a
subsidiary thereof) or within one (1) year after termination of your employment
due to disability, that portion of this option which was exercisable by you at
the date of your death may be exercised by your legatee or legatees under your
Last Will, or by your personal representatives or distributees, within one (1)
year from the date of your death, provided, however, that such exercise occurs
within ten years from the date this option was granted to you.
8. Non-Transferability of Option.
This option shall not be transferable except by Last
Will or the laws of descent and distribution, and may be exercised during your
lifetime only by you.
9. Adjustments upon Changes in Capitalization.
If at any time after the date of grant of this
option, the Company shall, by stock dividend, split-up, combination,
reclassification or exchange, or through merger or consolidation, or otherwise,
change its shares of Common Stock into a different number or kind or class of
shares or other securities or property, then the number of shares covered by
this option and the price of each such share shall be proportionately adjusted
for any such change by the Committee whose determination shall be conclusive.
Any fraction of a share resulting from any adjustment shall be eliminated and
the price per share of the remaining shares subject to this options adjusted
accordingly.
10. Subject to Terms of this Plan.
This incentive stock option agreement shall be
subject in all respects to the terms and conditions of this Plan and in the
event of any question or controversy relating to the terms of this Plan, the
decision of the Committee shall be conclusive.
Sincerely yours,
MANCHESTER EQUIPMENT CO., INC.
By:______________________________________
Barry R. Steinberg, President
Agreed to and accepted this
______day of__________________, 199__.
_____________________________________
Signature of Optionholder
4
<PAGE> 14
EXHIBIT B
NON-INCENTIVE STOCK OPTION AGREEMENT
_______________
To:
We are pleased to notify you that by the determination of the
Compensation Committee (hereinafter called the "Committee") a non-incentive
stock option to purchase _______ shares of the Common Stock of Manchester
Equipment Co., Inc. (herein called the "Company") at a price of $_______ per
share has this ___ day of ______________, been granted to you under the
Company's 1996 Incentive and Non-Incentive Stock Option Plan, as amended (herein
called the "Plan"). This option may be exercised only upon the terms and
conditions set forth below.
1. Purpose of Option.
The purpose of this Plan under which this
non-incentive stock option has been granted is to further the growth and
development of the Company and its direct and indirect subsidiaries by
encouraging key employees, directors, consultants, agents, independent
contractors and other persons who contribute and are expected to contribute
materially to the Company's success to obtain a proprietary interest in the
Company through the ownership of stock, thereby providing such persons with an
added incentive to promote the best interests of the Company, and affording the
Company a means of attracting to its service persons of outstanding ability.
2. Acceptance of Option Agreement.
Your execution of this non-incentive stock option
agreement will indicate your acceptance of and your willingness to be bound by
its terms; it imposes no obligation upon you to purchase any of the shares
subject to the option. Your obligation to purchase shares can arise only upon
your exercise of the option in the manner set forth in Article 4 hereof.
3. When Option May Be Exercised.
THE OPTION GRANTED YOU HEREUNDER SHALL BE EXERCISABLE
AS FOLLOWS:
This option may not be exercised for less than ten
shares at any one time (or the remaining shares then purchasable if less than
ten) and expires at the end of [INDICATE TERM OF OPTION, NOT TO EXCEED TEN
YEARS] years from the date of grant whether or not it has been duly exercised,
unless sooner terminated as provided in Article 6 hereof.
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<PAGE> 15
4. How Option May Be Exercised.
This option is exercisable by a written notice signed
by you and delivered to the Company at its executive offices, signifying your
election to exercise the option. The notice must state the number of shares of
Common Stock as to which your option is being exercised, must contain a
statement by you (in a form acceptable to the Company) that such shares are
being acquired by you for investment and not with a view to their distribution
or resale (unless a registration statement covering the shares purchasable has
been declared effective by the Securities and Exchange Commission) and must be
accompanied by payment as set forth in Article 5 hereof for the full purchase
price of the shares being purchased, plus such amount, if any, as is required
for withholding taxes. No share shall be issued until full payment therefor has
been made.
If notice of the exercise of this option is given by
a person or persons other than you, the Company may require, as a condition to
the exercise of this option, the submission to the Company of appropriate proof
of the right of such person or persons to exercise this option.
Certificates for shares of the Common Stock so
purchased will be issued as soon as practicable. The Company, however, shall not
be required to issue or deliver a certificate for any shares until it has
complied with all requirements of the Securities Act of 1933, the Securities
Exchange Act of 1934, any stock exchange on which the Company's Common Stock may
then be listed and all applicable state laws in connection with the issuance or
sale of such shares or the listing of such shares on said exchange. Until the
issuance of the certificate for such shares, you or such other person as may be
entitled to exercise this option, shall have none of the rights of a shareholder
with respect to shares subject to this option.
5. Payment of Options.
Payment for the shares of Common Stock may be made
(i) in cash or by check to the order of the Company, (ii) by surrender of shares
of Common Stock having a Fair Market Value equal to the exercise price of the
Option; or (iii) by any combination of the foregoing where approved by the
Committee in its sole discretion; provided, however, in the event of payment for
the shares of Common Stock by method (ii) above, the shares of Common Stock so
surrendered, if originally issued to you upon exercise of an option(s) granted
by the Company, shall have been held by you for more than six months.
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<PAGE> 16
6. Termination of Employment or Engagement.
If your employment or engagement with the Company (or
a subsidiary thereof) is terminated for any reason, [INSERT TERMS UPON WHICH
NON-INCENTIVE OPTION HOLDER'S OPTIONS SHALL LAPSE AND EXPIRE.] [INSERT TERMS
UPON WHICH NON-INCENTIVE OPTIONS SHALL SURVIVE THE TERMINATION OF A HOLDER'S
EMPLOYMENT OR ENGAGEMENT, BUT IN SUCH EVENT THE OPTION SHALL BE EXERCISABLE ONLY
TO THE EXTENT EXERCISABLE ON THE DATE OF SUCH TERMINATION AND IN NO EVENT SHALL
THE OPTION BE EXERCISABLE AFTER THE EXPIRATION DATE OF THIS OPTION.] [IF THE
OPTION SURVIVES THE DEATH OF THE OPTION HOLDER, ADD LANGUAGE THAT IT MAY BE
EXERCISED BY THE HOLDER'S LEGATEE OR LEGATEES UNDER HIS LAST WILL, OR BY HIS
PERSONAL REPRESENTATIVES OR DISTRIBUTEES.]
7. Adjustments upon Changes in Capitalization.
If at any time after the date of grant of this
option, the Company shall, by stock dividend, split-up, combination,
reclassification or exchange, or through merger or consolidation, or otherwise,
change its shares of Common Stock into a different number or kind or class of
shares or other securities or property, then the number of shares covered by
this option and the price of each such share shall be proportionately adjusted
for any such change by the Committee whose determination shall be conclusive.
Any fraction of a share resulting from any adjustment shall be eliminated and
the price per share of the remaining shares subject to this option adjusted
accordingly.
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<PAGE> 17
8. Subject to Terms of this Plan.
This non-incentive stock option agreement shall be
subject in all respects to the terms and conditions of this Plan and in the
event of any question or controversy relating to the terms of this Plan, the
decision of the Committee shall be conclusive.
9. Tax Status.
This option does not qualify as an "incentive stock
option" under the provisions of Section 422 of the Internal Revenue Code of
1986, as amended, and the income tax implications of your receipt of a
non-incentive stock option and your exercise of such an option should be
discussed with your tax counsel.
Sincerely yours,
MANCHESTER EQUIPMENT CO., INC.
By:______________________________________
Barry R. Steinberg, President
Agreed to and accepted this
_________day of________________, 199__
_________________________
Signature of Optionholder
4
<PAGE> 1
EXHIBIT 10.2
This Agreement made this 24th day of September 1996 by and between
Manchester Equipment Co., Inc., a domestic corporation having its principal
offices at 160 Oser Avenue, Hauppauge, New York 11788, hereinafter known as
(MANCHESTER), and Michael Bivona, 684 Broadway, Massapequa, New York 11758,
hereinafter known as (BIVONA).
WHEREAS, BIVONA, prior to May 7, 1996, was an officer, director,
employee and shareholder of Manchester, and
WHEREAS, on May 7, 1996, BIVONA resigned as such officer and director
of MANCHESTER, and terminated his employment by MANCHESTER, all of the
foregoing to be effective June 30, 1996, and
WHEREAS, pursuant to a written Agreement therefor, dated May 7, 1996,
(the Agreement), BIVONA sold and transferred to Manchester ten shares of
MANCHESTER stock, for a consideration and upon terms and conditions as set
forth in said Agreement, and
WHEREAS, the Agreement contains certain "Rights of Election" to BIVONA
pertaining to the future sale by BIVONA to MANCHESTER of the remainder of the
MANCHESTER shares owned by BIVONA, (the BIVONA shares), namely ninety (90)
shares in number, and
WHEREAS, the said Agreement further contains certain other provisions
as to the said BIVONA shares in the event MANCHESTER subsequently entered into
an Underwriting Agreement for an "Initial Public Offering" (IPO), and
WHEREAS, MANCHESTER has entered into a Letter of Intent with Ladenburg,
Thalmann & Co. Inc. as the Underwriter for the commencement of such Initial
Public Offering, and
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<PAGE> 2
WHEREAS, for various reasons, the Underwriter has requested that BIVONA
enter into an Agreement with MANCHESTER, at this time, pertaining to the BIVONA
shares. NOW, THEREFORE, IN CONSIDERATION OF THE SUM OF $10.00 EACH TO THE OTHER
IN HAND PAID, AND IN FURTHER CONSIDERATION OF THE TERMS AND CONDITIONS OF THE
WITHIN AGREEMENT, IT IS AGREED AS FOLLOWS:
First: MANCHESTER and BIVONA herein agree that the Agreement and Addendum
to Agreement of May 7, 1996 (the Agreement) as between them is herein
incorporated by reference, with the same force and effect as if same were fully
set forth herein.
SECOND: Reference is herein made to the provisions of Paragraph Fifth
"Mandatory Election by Bivona" of the Agreement, as hereinafter set forth:
"FIFTH: MANDATORY ELECTION BY BIVONA -- At all times subsequent to the
execution of the within Agreement, in the event the Company enters into an
Underwriting Agreement for IPO purposes, Bivona, shall have thirty (30)
days after the mailing to him, Certified Mail, Return Receipt, of a written
notice of the execution of such Underwriting Agreement, to make an election
as to the following:
A. To continue the terms of the within Agreement, i.e., the Rights of
Election Rights herein granted to Bivona (PARAGRAPH FOURTH:) shall continue
and remain in effect; the result of which is that the total of the then
remaining Bivona shares shall BE "restricted" from sale or any other
disposition by Bivona, other than the "Rights of Election" herein granted
to him as set forth in PARAGRAPH FOURTH: of the within Agreement.
OR
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<PAGE> 3
B. To avoid the "Rights of Election" provisions of the
PARAGRAPH FOURTH: i.e. The Bivona shares will no longer be
restricted in any manner as Agreement as to the Election Rights
herein granted to Bivona (PARAGRAPH FOURTH;) i.e., the Bivona
stock would no longer be restricted in any manner as to sale or
other disposition; PROVIDED, HOWEVER, the said Bivona shares
will then be subject to any "LOCK-UP" Agreements as may be
required by either the Underwriter representing the Company as
to the IPO, or the restrictions placed on said stock by all
applicable SEC Rules and Regulations.
1) Bivona shall exercise the Election granted to
him by the terms of the within Paragraph, pursuant to a written
notice thereof forwarded to the Company, Certified Mail, Return
Receipt. The failure of Bivona to make such Election in the time
and manner as aforesaid, shall be deemed as an automatic
Election by Bivona to continue the "Rights of Election" granted
to Bivona as per PARAGRAPH FOURTH; of the within Agreement, and
as to A. OF THE WITHIN PARAGRAPH."
THIRD: BIVONA herein exercises the "Right of Election" as set forth in
Paragraph FIFTH B. of the Agreement and waives the Right of Election as set
forth in Paragraph FIFTH A. of the Agreement, and further agrees to be subject
to the following terms and conditions:
A. the BIVONA shares will be subject to:
1. The six {6} month initial "Lock-Up" period as
required by the Underwriter, and
2. Any and all sales of the BIVONA shares in the
"After-Market", following the initial Lock-Up period, will be as follows:
The right to sell {in brokerage transactions}, in any three month
period, such
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number of shares not exceeding the greater of {i} One {1%} percent of the then
outstanding shares of common stock of Manchester, and {ii} The average weekly
trading volume in the Manchester common stock, in the over-the-counter market,
during the preceding four calendar weeks.
B. In the event of a secondary public offering by Manchester, at such
time as Bivona should still be the owner of any of the original Manchester
shares presently owned by him, Bivona is herein granted so-called "Piggyback"
registration rights as to such remaining shares; provided, however, that such
registration rights will be in a direct proportion to the percentage of shares
being registered by Barry R. Steinberg, the principal shareholder of
Manchester.
EXAMPLE: Steinberg proposes to register ten {10%} percent of his
remaining Manchester shares in a secondary offering - Bivona shall have the
right to have included in such offering no more than ten {10%} percent of his
then remaining original Manchester shares.
The provisions of the within sub-paragraph B. shall further apply to any
tertiary or later public offering by Manchester, in the event Bivona should
still be the owner of any of the original shares presently owned by him.
C. Reference is herein made to the provisions of Paragraph Ninth of
the Agreement, pertaining to the Life Insurance Programs {policies} presently
maintained by Manchester as to the life of Bivona.
The provisions of said Paragraph Ninth of the Agreement will be deemed
deleted from the Agreement in their entirety, and of no further force and
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<PAGE> 5
effect; provided however, that prior to the cancellation by Manchester of said
Life Insurance policies, or either of them, Manchester shall offer to assign
said policy or policies to BIVONA or his nominees for a consideration of Ten
($10.00) Dollars.
D. Reference is herein made to the provisions of Paragraph
THIRD of the Agreement pertaining to the Stockholders' Agreement of September
18, 1990, as between Manchester, and Messrs. Steinberg, Stemple and Bivona, as
the then sole Stockholders of Manchester.
All of the terms, covenant and conditions of the said
Stockholders' Agreement are herein deemed to be of no further force and effect,
and is to be deemed terminated as to the effective date of the closing of the
Initial Public Offering.
E. Reference is herein made to the provisions of Paragraph
TWELFTH of the Agreement pertaining to the BIVONA medical and hospital benefits
to be maintained by MANCHESTER. MANCHESTER herein agrees that it will maintain
the presently existing medical and hospital insurance for the benefit of BIVONA
until June 1, 1999, at which time the obligation of MANCHESTER to maintain such
coverage shall automatically cease and terminate.
FOURTH: BIVONA and MANCHESTER herein acknowledge that the execution of
the within Agreement by BIVONA shall be deemed to be the exercise of the
"Rights of Election" granted to him by Paragraph FIFTH of the Agreement, and as
cited in Paragraph SECOND of the within Agreement.
FIFTH: It is specifically understood and agreed that the provisions
of the
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<PAGE> 6
within Agreement are expressly conditioned upon the successful conclusion of
the Initial Public Offering as contemplated by the Letter of Intent between
Ladenburg, Thalmann & Co., Inc., as the Underwriter and MANCHESTER. In the
event the said Initial Public Offering is not concluded for any reason
whatsoever, the terms and conditions of the within Agreement shall be deemed
null and void, of no further force and effect, AND the provisions of Paragraph
FIFTH (all parts) of the Agreement shall remain in full force and effect.
SIXTH: This Agreement shall be binding upon the parties hereto, and
their respective heirs, successors and/or assigns.
SEVENTH: This Agreement may be altered, modified, or amended, solely by
a written Agreement therefor duly executed by the parties hereto.
In the Presence of:
/s/ LAURIE PACELLA
- ------------------------------------- Manchester Equipment Co., Inc.
By: /s/ BARRY STEINBERG
/s/ JOSEPHINE RENNA ----------------------------------
- ------------------------------------- Barry R. Steinberg, President
/s/ MICHAEL BIVONA
----------------------------------
Michael Bivona, Stockholder
6
<PAGE> 1
Exhibit 10.3
MANCHESTER EQUIPMENT CO., INC.
160 Oser Avenue
Hauppauge, New York 11788
October 1, 1996
Mr. Barry R. Steinberg
13 Harbor Point
Northport, New York 11768
Re: Employment Compensation
-----------------------
Dear Mr. Steinberg:
This letter will confirm your agreement with Manchester Equipment Co.,
Inc. (the "Company") to continue to serve as the Company's Chief Executive
Officer, Chairman of the Board and President, in the manner in which you
heretofore have acted, for an annual base salary of $950,000 with respect to
each of the Company's fiscal years ended July 31, 1997 and July 31, 1998. You
have further agreed that you will not be eligible for any bonuses in either the
1997 or 1998 fiscal years. The Company will continue to make available to you
the car allowance and deferred compensation benefits that you are currently
receiving and you will also be able to participate in other benefits that the
Company makes generally available to its employees, such as medical and other
insurance, and you will be able to participate under the Company's stock option
plan.
If this accurately sets forth our agreement, please sign where set
forth below.
Sincerely,
MANCHESTER EQUIPMENT CO., INC.
By: /s/ JOEL G. STEMPLE
-----------------------------------
Joel G. Stemple, Executive Vice President
ACCEPTED AND AGREED
/s/ BARRY STEINBERG
- -------------------------------
Barry R. Steinberg
<PAGE> 1
Exhibit 10.4
AGREEMENT OF EMPLOYMENT
AGREEMENT made this 30th day of SEPTEMBER 1996, by and between
MANCHESTER EQUIPMENT CO., INC., a domestic Corporation maintaining its
principal place of business at 160 OSER AVENUE, HAUPPAUGE, NEW YORK, 11788,
[hereinafter called the "EMPLOYER"], and JOEL STEMPLE, residing at 46 OLD BROOK
ROAD, DIX HILLS, NEW YORK 11746, [hereinafter called the "EMPLOYEE"].
WHEREAS, the EMPLOYEE has been, prior hereto, associated with the
EMPLOYER, and they are mutually desirous of continuing as EMPLOYEE and EMPLOYER
in various accounting areas, and
WHEREAS, the EMPLOYER and EMPLOYEE are desirous of more particularly
defining the rights and obligations each to the other.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, and of the sum of TEN and 00/100 ($10.00) DOLLARS,
to each in hand paid by the other, it is agreed as follows:
1. EMPLOYMENT.
The EMPLOYER hereby hires the EMPLOYEE to perform such services as
hereinafter set forth in PARAGRAPH "2", and the EMPLOYEE does hereby accept
such employment and agrees to perform the duties required of him to the best of
his ability.
2. DUTIES.
The duties of the EMPLOYEE, pursuant to the within AGREEMENT, shall
consist of the following: Executive Vice President - Supervisor of Sales Staff
- - Supervisor of Product Purchasing and Inventory - Supervisor of Marketing and
Advertising.
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<PAGE> 2
[a] In addition to the foregoing duties, the EMPLOYEE shall
do such other work as may be required of him from time to time by the EMPLOYER,
on, under and subject to the instructions, directions and control of the
EMPLOYER. It is specifically understood and agreed that no additional
compensation shall be paid to the EMPLOYEE in the event of such change or
amendment of the duties to be performed by the EMPLOYEE.
3. PLACE OF EMPLOYMENT
At the commencement of this Contract, the EMPLOYEE shall perform his
duties at the main office of the EMPLOYER, 160 Oser Avenue, Hauppauge, New
York. However, at any time that the EMPLOYER regards it as necessary for the
purposes of its business, the EMPLOYEE shall work at such a place or places as
he may be directed by the EMPLOYER; PROVIDED, HOWEVER, that in the event such
other place of employment is located outside of the Counties of Nassau, Suffolk
and Queens, such employment shall be on a temporary basis only. In the event
that such employment is deemed on a permanent basis, same shall be pursuant to
a written agreement mutually acknowledged by the EMPLOYER and EMPLOYEE.
4. TERM
The EMPLOYER hereby engages the EMPLOYEE to perform the duties as set
forth in the within Agreement for a period commencing as of August 1, 1996 and
ending July 31, 2001.
5. BEST EFFORTS AND SOLE EMPLOYMENT
That during the term of this Agreement, the EMPLOYEE shall devote his
entire time and energy, and give his best endeavors to the discharge of his
duties hereunder, and he shall not, during the term hereof, enter into the
services of, or be employed in any capacity, or for any purpose whatsoever, by
any person, partnership, firm or corporation, other than the EMPLOYER,
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<PAGE> 3
and that he will not, during the said period of time, be engaged in any
business, enterprises or undertaking, other than his employment hereunder.
[a] The EMPLOYEE specifically acknowledges that he will receive no
overtime or other additional compensation, at such time or times during the
term hereof, as his duties hereunder may require additional work time beyond
the so-called normal work day or days.
[b] Specifically exempted from the restrictions of the within
Paragraph are:
1] the present or future ownership by the EMPLOYEE of certain
real estate or interests in various other business entities, on an investment
basis only;
2] and to certain endeavors of the EMPLOYEE in the areas of
lecturing, teaching, and the writing of articles, texts, etc.; PROVIDED,
HOWEVER, that such investments do not require any time or efforts by the
EMPLOYEE that will detract from the requirements of the EMPLOYER pursuant to
the within Agreement.
6. Compensation.
As compensation for his services as aforesaid, and as salary in
connection with the duties to be performed by him, the EMPLOYER shall pay to
the EMPLOYEE the salaries as hereinafter set forth, such sums to be paid in
equal weekly installments each:
August 1, 1996 - July 31, 1998 - $450,000.00 per annum payable
$8,653.84 per week.
Subsequent to July 31, 1998, the EMPLOYEE shall receive such salary
that is negotiated as between the EMPLOYEE and the Board of Directors of the
EMPLOYER.
It is specifically understood and agreed that the EMPLOYEE will not be
eligible for any so-called "BONUS" during either the 1997 or 1998 Fiscal Years
of the EMPLOYER.
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<PAGE> 4
[a] As additional compensation to be paid to the EMPLOYEE, the
EMPLOYER shall provide an automobile for the use of the EMPLOYEE, which said
automobile shall be provided and maintained, including insurance, at the
expense of the EMPLOYER.
[b] The EMPLOYER shall pay the EMPLOYEE, on the last day of each
month, all expenses actually incurred by him for the entertainment of
customers, traveling expenses and other necessary expenses of the business. The
EMPLOYEE shall furnish to the EMPLOYER an itemized list of all expenses of the
business. The EMPLOYEE shall furnish to the EMPLOYER an itemized list of all
expenses so incurred by him during that month, setting forth the dates, the
purpose for which incurred, and the amounts thereof, together with such
receipts showing such payments as the EMPLOYEE has reasonably been able to
obtain.
[c] As additional compensation for the performance of his duties
hereunder, the EMPLOYEE and his family shall be included in the existing
medical and hospital insurance plans presently maintained by the EMPLOYER, or
any substitutions or additions thereto. Such coverage shall be at no charge or
cost to the EMPLOYEE.
[d] As additional compensation for the performance of his duties
hereunder, the EMPLOYEE shall be entitled to 30 days sick days with salary,
during each year of the within Agreement.
[e] As additional compensation for the performance of his duties
hereunder, the EMPLOYER shall deposit, on behalf of the EMPLOYEE, $4,500.00 per
annum (or the maximum amount allowed by pertinent laws), whichever is greater,
in a fund which shall be one hundred (100%) percent vested in the EMPLOYEE,
each year of such employment. This compensation shall be in the form of a
"Pension Plan" pursuant to Section 401K of the Internal Revenue Code.
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<PAGE> 5
(f) As further additional compensation for the performance of
his duties hereunder, the EMPLOYER shall obtain and institute a policy or
policies of life insurance on the life of the EMPLOYEE, the beneficiaries of
which shall be as designated by the EMPLOYEE. Said policy or policies shall be
in the total amount of $1,500,000.00. The premiums therefor shall be paid by the
EMPLOYER and chargeable to the EMPLOYEE as additional income to the EMPLOYEE.
In the event such policy or policies are either not obtainable, or once
obtained, become non-renewable or cancelled due to health conditions of the
EMPLOYEE, this additional compensation to the EMPLOYEE shall be deemed
cancelled, and the premium cost for such policies shall not be payable to the
EMPLOYEE as additional compensation.
7. DISABILITY PROVISIONS.
As additional compensation for the performance of his duties hereunder,
the EMPLOYER, at its own cost and expense, shall obtain and maintain a
disability insurance policy as to the EMPLOYEE, such disability policy to
contain no less than the following policy limits:
Commencement of payments to be no more than ninety (90)
days from the first day of total disability --
disability payments to be fifty (50%) percent of salary
for life, provided that the cause of disability is
"accidental"; disability payments to be fifty (50%)
percent of salary to the age of sixty-five (65) years,
provided that the cause of disability is "illness".
(i) Said disability policy shall be owned by the EMPLOYER, with
the benefits thereof payable to the EMPLOYER, except as hereinafter set forth.
(ii) In the event the EMPLOYER elects to terminate the within
Agreement pursuant to the provisions of the within Paragraph, the EMPLOYER
shall assign all of the
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proceeds of said disability policy, or the policy itself, to the EMPLOYEE, to
the end that the EMPLOYEE shall receive all of such disability insurance
benefits commencing the week subsequent to such termination by the EMPLOYER,
and upon such assignment the EMPLOYEE shall assume the premium payments
thereof, if any.
[a] During the first one hundred eighty (180) days of such total
disability, the EMPLOYEE shall receive his full salary at the rate set forth in
the within Agreement, together with all other consideration and benefits
accruing to the EMPLOYEE, pursuant to the within Agreement; it being understood
and agreed that the proceeds of any disability policy or policies provided by
the EMPLOYER shall be deemed the sole property of the EMPLOYER.
[b] In the event such total disability shall continue for a period
longer than one hundred eighty (180) days, the EMPLOYEE shall receive
seventy-five (75%) percent of his salary at the rate set forth in the within
Agreement from the one hundred eight-first (181st) day of such disability
through the three hundred sixty-fifth (365th) day of such disability, together
with all other consideration and benefits accruing to the EMPLOYEE, pursuant to
the within Agreement; it being understood and agreed that the proceeds of any
disability policy or policies provided by the EMPLOYER shall be deemed the sole
property of the EMPLOYER.
[c] In the event that the EMPLOYEE shall become ill, or be injured,
and such illness or injury shall be so serious as to prevent the EMPLOYEE from
performing the services required of him pursuant to this Agreement, and such
non-performance by the EMPLOYEE shall be for a period of fifty-two (52) weeks
in any given sixty-two (62) week period, then, at the option of the EMPLOYER,
and upon fifteen (15) days notice, in writing, to the EMPLOYEE by the EMPLOYER,
this Agreement shall cease and terminate, and the EMPLOYER
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shall be under no obligation or liability to the EMPLOYEE, other than the
payments as hereinafter set forth. Such termination of the within Agreement by
the EMPLOYER is herein deemed to be a "NO CAUSE" termination.
8. TERMINATION OF AGREEMENT.
This Agreement may be cancelled by either party hereto, upon ninety
(90) days prior notice in writing, certified mail, return receipt requested,
given to the other party, without any reason whatsoever, and without giving any
reason therefor.
[a] In the event such termination shall be at the request of the
EMPLOYEE, the EMPLOYER shall be under no obligation or liability to the
EMPLOYEE, except to pay him the compensation to which he may be entitled under
this Agreement solely up to the time of such termination date.
[b] In the event such termination shall be at the request of the
EMPLOYER, the EMPLOYEE shall receive such compensation to which he may be
entitled under this Agreement for a period of twelve (12) months after the
effective termination date. Such compensation is herein defined as salary only.
All additional compensation to the EMPLOYEE as set forth herein, such as
automobile, expense account, etc., shall cease and terminate on the effective
date of the termination notice: PROVIDED, HOWEVER, medical and hospital
insurance coverage as to the Employee will continue for a period of twelve (12)
months subsequent to the effective termination date.
9. RENEWAL OF AGREEMENT.
In the event the EMPLOYER and EMPLOYEE shall fail to agree upon
mutually satisfactory terms for the renewal of the within Agreement, same shall
be deemed the equivalent to termination of the within Agreement by the
EMPLOYER. In such event, the EMPLOYEE shall
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receive twelve (12) months salary as more particularly set forth in PARAGRAPH
"8[b]" of the within Agreement.
10. EMPLOYEE RESTRICTIONS.
The EMPLOYEE makes the following agreements as part and parcel of the
consideration required of the EMPLOYEE pursuant to the terms of the within
Agreement, and in exchange for the consideration to be received by the EMPLOYEE
pursuant to the terms of the within Agreement.
[a] The EMPLOYEE agrees that he will not at any time, either
during the term of this Agrement or thereafter, divulge to any person, firm,
partnership or corporation, any information received by the EMPLOYEE during the
course of his employment, with regard to the personal, financial or any other
business affairs of the EMPLOYER, and all such information of any nature shall
be kept confidential, and shall not in any manner be revealed whatsoever,
unless the EMPLOYEE is so directed by an order of a Court of competent
jurisdiction.
[b] The EMPLOYEE further agrees that he will not divulge,
publish or otherwise in any manner reveal, either directly or indirectly, or
through another, to any person, firm or corporation, partnership or business
entity, either during the term of his employment or thereafter, any knowledge
or information whatsoever or any facts concerning any formulas, business
methods, inventions, devices, accounting systems, financial software packages
or systems, or other items of similar nature, used by the EMPLOYER during the
term of this Agreement, which have been disclosed to the EMPLOYEE by the reason
of his employment, and the EMPLOYEE shall retain all such knowledge and
information which he shall acquire during his said employment respecting said
items and the business of the EMPLOYER in trust, in a fiduciary capacity, for
the sole benefit of the EMPLOYER.
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[c] The EMPLOYEE further agrees that he will not, during his
employment or after the end thereof, irrespective of the time, manner or cause
of the termination of his said employment, directly or indirectly, disclose to
any person, firm, partnership, corporation or other business entity, the name,
address or business requirements of any customer of the EMPLOYER, whether same
is a present customer of the EMPLOYER or a future customer acquired during the
term of the within Agreement, and further, the EMPLOYEE will not divulge any
other information that he has, or will have acquired during his period of
employment.
[i] All persons, firms, corporations and partnerships, or
other business entities, and each and every one thereof, for whom the EMPLOYER
performs services, or engages in any transactions of whatsoever nature, in the
course of the EMPLOYER's business, are and shall de deemed the customers of the
EMPLOYER, during the employment of the EMPLOYEE as well as after the
termination of the employment of the EMPLOYEE, notwithstanding that some or all
of said business entities may have been induced to give their patronage and
business to the EMPLOYER by the solicitation of the EMPLOYEE.
[d] The EMPLOYEE further agrees that upon the termination of his
employment, irrespectful of the time, manner or cause of such termination, the
EMPLOYEE will surrender to the EMPLOYER all lists, books and records of any
nature, or in connection with the EMPLOYER'S customers and business, and all
other property belonging to the EMPLOYER.
[e] The EMPLOYEE restrictions set forth in the prior sub-divisions
of the within Paragraph, shall not apply as to matters pertaining to the
EMPLOYER that are either public knowledge, or have been disclosed to the public
by the EMPLOYER.
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<PAGE> 10
11. RESTRICTIVE COVENANTS.
The EMPLOYEE makes the following agreements as part and parcel of the
consideration required of the EMPLOYEE pursuant to the terms of the within
Agreement, and in exchange for the consideration to be received by the EMPLOYEE
pursuant to the terms of the within Agreement.
[a] The EMPLOYEE specifically acknowledges that the
services to be rendered by him pursuant to this Agreement, are special, unique
and of extraordinary character. The EMPLOYEE therefore agrees that for a period
of two (2) years from the date of termination of the employment of the
EMPLOYEE, the EMPLOYEE will not, within the area and territory as hereinafter
designated, directly or indirectly, own, manage, operate, join, control, be
employed or participate in the management, operation or control of, or be
connected in any manner whatsoever, with any business of the type and character
of the business engaged in by the EMPLOYER at the time of such termination.
TERRITORY AND AREA RESTRICTION
All areas of the Continental United States located
East of the Mississippi River.
[i] In the event of termination of the within Agreement, by
the EMPLOYER, pursuant to the terms of the within Agreement, and such
termination by the EMPLOYER is for any reason other than "cause", the
provisions of this PARAGRAPH "11.[a]" shall not apply, and the EMPLOYEE shall
not be restricted thereby; PROVIDED, HOWEVER, that the restrictions of
PARAGRAPH 10 [ALL PARTS] of the within Agreement shall apply and the EMPLOYEE
shall be restricted and bound thereby.
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12. LIFE INSURANCE.
The EMPLOYER shall have the right, from time to time, to apply for a
take out in its name, and at its own expense, life, health, disability or other
types of insurance upon the EMPLOYEE, in the sum or sums which may be deemed
necessary by the EMPLOYER to protect its interest pursuant to this Agreement,
and the EMPLOYEE shall do all such things as may be necessary to assist in the
procuring of such insurance, by making proper applications therefor, as may be
required by the insurance company, and submitting to the usual and customary
medical examinations. The EMPLOYEE shall have no right, title or interest in or
to such insurance, and/or the proceeds thereof, and the same shall be solely
for the benefit of the EMPLOYER, and any amounts payable thereunder shall be
solely payable to such EMPLOYER.
[a] Upon the termination of the within Agreement, the EMPLOYE shall
be entitled to purchase from the EMPLOYER any of the policies owned by it on
the EMPLOYEE's life, upon payment therefor of an amount equal to the
interpolated terminal reserve under the policy or policies as of the date of
the assignment thereof, less any indebtedness to which any such policy is
subject, and increased by a proportion of the premium which has been paid in
advance of such date.
13. VACATION.
The EMPLOYEE shall be entitled to a vacation of four weeks [4] duration
at full pay, during each year of the within Agreement. The time or times for
such vacation shall be such as are agreed to by the EMPLOYER and the EMPLOYEE.
14. NON-ASSIGNMENT.
The EMPLOYEE herein agrees that he will not assign, transfer, convey,
pledge or encumber in any manner, the within Contract or his right, title and
interest therein, or his power
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to execute the same or any renewals thereof, or any monies or other
consideration due, or to become due hereunder, without the specific consent in
writing of the EMPLOYER; it being understood and agreed that the within
Agreement is intended to secure the personal services of the EMPLOYEE.
15. INJUNCTION.
The EMPLOYEE agrees that a violation on his part of any covenant,
condition or provision of the within Agreement, will cause such damage to the
EMPLOYER as will be irreparable and the exact amount of which will be
impossible to ascertain and for that reason further agrees that the EMPLOYER
shall be entitled, as a matter of right, to an injunction in any Court of
competent jurisdiction, restraining any further violation of the said covenants
and conditions and provisions of the within Agreement by the EMPLOYEE. This
right to injunctive relief shall be cumulative, and in addition to whatever
other remedies the EMPLOYER may have, including actions for damages.
16. [DELETED]
17. ENTIRE AGREEMENT.
The foregoing contains the entire Agreement of the parties hereto, and
no modification thereof shall be binding upon the parties unless the same is in
writing, duly executed by the respective parties hereto.
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18. This Agreement shall bind, inure and benefit the parties hereto, and their
respective legal representatives, executives, administrators, successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first above written.
IN THE PRESENCE OF: MANCHESTER EQUIPMENT CO., INC.
/s/ JOSEPH LOONEY BY: /s/ BARRY R. STEINBERG
- -------------------------- ---------------------------------
BARRY R. STEINBERG, PRESIDENT
/s/ ELAINE STOCK /s/ JOEL STEMPLE
- -------------------------- ---------------------------------
JOEL STEMPLE
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EMPLOYMENT AGREEMENT RIDER
RIDER as to "AGREEMENT OF EMPLOYMENT" between MANCHESTER EQUIPMENT CO.,
INC., as the EMPLOYER and JOEL STEMPLE, as the EMPLOYEE.
FIRST: The Employer and the Employee herein acknowledge that Manchester
Equipment Co., Inc. is presently contemplating an "Initial Public Offering".
SECOND: It is specifically understood and agreed that provisions of the said
"EMPLOYMENT AGREEMENT" of SEPTEMBER 30, 1996 are expressly conditioned upon the
successful conclusion of the "Initial Public Offering" as contemplated by the
Letter of Intent between Ladenburg, Thalmann & Co., Inc. as the Underwriter,
and Manchester Equipment Co., Inc. In the event the said "Initial Public
Offering" is not concluded for any reason whatsoever, the terms and conditions
of the said Employment Agreement of September 30, 1996 shall be deemed null and
void, and of no further force and effect.
DARED: SEPTEMBER 30, 1996
IN THE PRESENCE OF: MANCHESTER EQUIPMENT CO., INC.,
/s/ Joseph Looney By: /s/ B. Steinberg
- ------------------------- -------------------------------
Barry R. Steinberg, President
/s/ Elaine Stock /s/ Joel Stemple
- ------------------------- -------------------------------
Joel Stemple
<PAGE> 1
EXHIBIT 10.5.a
THIS LEASE made the day of October 1995, between 40
MARCUS REALTY ASSOCIATES, hereinafter referred to as LANDLORD,
and MANCHESTER EQUIPMENT CO., INC., herein jointly, severally and
collectively referred to as TENANT.
WITNESSETH, that the Landlord hereby leases to the
Tenant, and the Tenant hereby hires and takes from the Landlord
the building and property known as 40 Marcus Boulevard,
Happauge, New York, (as more particularly set forth on survey
annexed hereby as Schedule "A") to be used and occupied by the
Tenant for all uses permitted by the Building Code and Zoning
Regulations of the Town of Smithtown, and for no other purpose,
for a term to commence on November 1, 1995, and to end on
October 31, 2005, unless sooner terminated as hereinafter
provided, at the ANNUAL RENT as set forth in Paragraph 34 of the
Rider to this Lease, all payable in equal monthly instalments in
advance on the first day of each and every calendar month during
said term, except the first instalment, which shall be paid upon
the execution hereof.
THE TENANT JOINTLY AND SEVERALLY COVENANTS:
FIRST.--That the Tenant will pay the rent as above provided.
REPAIRS SECOND.--That, throughout said term the Tenant
will take good care of the demised premises, fixtures and
appurtenances, and all alterations, additions and improvements
to either; make all repairs in and about the same necessary to
preserve them in good order and condition, which repairs shall
be, in quality and class, equal to the original work; promptly
pay the expense of such repairs; suffer no waste or injury; give
ORDINANCES prompt notice to the Landlord of any fire that may occur;
AND execute and comply with all laws, rules, orders, ordinances and
VIOLATIONS regulations at any time issued or in force (except those
requiring structural alterations), applicable to the demised
premises or to the Tenant's occupation thereof, of the Federal,
State and Local Governments, and of each and every department,
bureau and official thereof, and of the New York Board of Fire
ENTRY Underwriters; permit at all times during usual business hours,
the Landlord and representatives of the Landlord to enter the
demised premises for the purpose of inspection, and to exhibit
them for purposes of sale or rental; suffer the Landlord to make
repairs and improvements to all parts of the building, and to
comply with all orders and requirements of governmental
authority applicable to said building or to any occupation
thereof; suffer the Landlord to erect, use, maintain, repair and
replace pipes and conduits in the demised premises and to the
floors above and below; forever indemnify and save harmless the
INDEMNIFY Landlord for and against any and all liability, penalties,
LANDLORD damages, expenses and judgments arising from injury during said
term to person or property of any nature, occasioned wholly or
in part by any act or acts, omission or omissions of the Tenant,
or of the employees, guests, agents, assigns or undertenants of
the Tenant and also for any matter or thing growing out of the
occupation of the demised premised premises or of the streets,
sidewalks or vaults adjacent thereto; permit, during the six
months next prior to the expiration of the term the usual notice
"To Let" to be placed and to remain unmolested in a conspicuous
place upon the exterior of the demised premises; repair, at or
before the end of the term, all injury done by the installation
or removal of furniture and property; and at the end of the
term, to quit and surrender the demised premises with all
alterations, additions and improvements in good order and
condition.
MOVING THIRD.--That the Tenant will not disfigure or deface any
INJURY part of the building, or suffer the same to be done, except so
SURRENDER far as may be necessary to affix such trade fixtures as are
herein consented to by the Landlord; the Tenant will not
obstruct, or permit the obstruction of the street or the
sidewalk adjacent thereto; will not do anything, or suffer
anything to be done upon the demised premises which will
increase the rate of fire insurance upon the building
or any of its contents, or be liable to cause structural
injury to said building; will not permit the
NEGATIVE accumulation of waste or refuse matter, and will not, without
COVENANTS the written consent of the Landlord first obtained in each case,
either sell, assign, mortgage or transfer this lease, underlet
the demised premises or any part thereof, permit the same or any
part thereof to be occupied by anybody other than the Tenant and
OBSTRUCTION the Tenant's employees, make any alterations in the demised
SIGNS premises, use the demised premises or any part thereof for any
purpose other than the one first above stipulated, or for any
purpose deemed extra hazardous on account of fire risk, nor in
AIR violation of any law or ordinance. That the Tenant will not
CONDITIONING obstruct or permit the obstruction of the light, halls, stairway
or entrances to the building, and will not erect or inscribe any
sign, signals or advertisements unless and until the style and
location thereof have been approved by the Landlord; and if any
be erected or inscribed without such approval, the Landlord may
remove the same. No water cooler, air conditioning unit or
system or other apparatus shall be installed or used without
the prior consent of Landlord.
IT IS MUTUALLY COVENANTED AND AGREED, THAT
FOURTH.--If the demised premises shall be partially
damaged by fire or other cause without the fault or neglect of
Tenant, Tenant's servants, employees, agents, visitors or
licensees, the damages shall be repaired by and at the expense
of Landlord and the rent until such repairs shall be made shall
be apportioned according to the part of the demised premises
which is usable by Tenant. But if such partial damage is due to
the fault or neglect of Tenant, Tenant's servants, employees,
agents, visitors or licensees, without prejudice to any other
rights and remedies of Landlord and without prejudice to the
rights of subrogation of Landlord's insurer, the damages shall
be repaired by Landlord but there shall be no apportionment or
abatement of rent. No penalty shall accrue for reasonable delay
which may arise reason of adjustment of insurance on the part of
FIRE CAUSE Landlord and/or Tenant, and for reasonable delay on account of
"labor troubles", or any other cause beyond Landlord's control.
If the demised premises are totally damaged or are rendered
wholly untenantable by fire or other cause, and if Landlord
shall decide not to restore or not to rebuild the same, or if
the building shall be so damaged that Landlord shall decide to
demolish it or to rebuild it, then or in any of such events
Landlord may, within ninety (90) days after such fire or other
cause, give Tenant a notice in writing of such decision, which
notice shall be given as in Paragraph Twelve hereof provided,
and thereupon the term of this lease shall expire by lapse of
time upon the third day after such notice is given, and Tenant
shall vacate the demised premises and surrender the same to
Landlord. If Tenant shall not be in default under this lease
then, upon the termination of this lease under this lease then,
upon the termination of this lease under the conditions provided
for in the sentence immediately preceding, Tenant's liability
for rent shall cease as of the day following the casualty.
Tenant hereby expressly waives the provisions of Section 227 of
the Real Property Law and agrees that the foregoing provisions
of this Article shall govern and control in lieu thereof. If the
damage or destruction be due to the fault or neglect or Tenant
the debris shall be removed by, and at the expense of, Tenant.
EMINENT FIFTH.--If the whole or any part of the premises heeby
DOMAIN demised shall be taken or condemned by any competent authority
for any public use of purpose then the term hereby granted shall
cease from the time when possession of the part so taken shall
be required for such public purpose and without apportionment of
award, the Tenant hereby assigning to the Landlord all right and
claim to any such award, the current rent, however, in such
case to be apportioned.
LEASE NOT SIXTH.--If, before the commencement of the term, the Tenant
IN EFFECT be adjudicated a bankrupt, or make a "general assignment," or
take the benefit of any insolvent act, or if a Receiver or
Trustee be appointed for the Tenant's property, or if this lease
or the estate of the Tenant hereunder be transferred or pass to
or devolve upon any other person or corporation, or if the
Tenant shall default in the performance of any agreement by the
Tenant contained in any other lease to the Tenant by the
Landlord or by any corporation of which an officer of the
Landlord is a Director, this lease shall thereby, at the option
of the Landlord, be terminated and in that case, neither the
Tenant nor anybody claiming under the Tenant shall be entitled
to go in possession of the demised premises. If after the
commencement of the term, any of the events mentioned above in
this subdivision shall occur, or if Tenant shall make default in
fulfilling any of the covenants of this lease, other than the
DEFAULTS covenants for the payment of rent or "additional rent" or if the
demised premises become vacant or deserted, the Landlord may
give to the Tenant ten days' notice of intention to end the term
of this lease, and thereupon at the expiration of said ten days'
(if said condition which was the basis of said notice shall
continue to exist) the term under this lease shall expire as
full and completely as if that day were the date herein
definitely fixed for the expiration of the term and the Tenant
will then quit and surrender the surrender the demised premises
TEN DAY to the Landlord, but the Tenant shall remain liable as
NOTICE hereinafter provided.
<PAGE> 2
REPOSSESSION If the Tenant shall make default in the payment of
the rent hereunder, or any item of "additional rent"
herein mentioned or any part of either or in making any
other payment herein provided for, or if the notice last
above provided for shall have been given and if the
condition which was the basis of said notice shall exist
at the expiration of said ten days' period, the Landlord
may immediately, or at any time thereafter, re-enter the
demised premises and remove all persons and all or any
property therefrom, either by summary disposses
proceedings, or by any suitable action or proceeding law,
RE-LETTING or by force or otherwise, without being liable to
indictment, prosecution or damages therefor, and
re-possess and enjoy said premises together with all
additions, alterations and improvements. In any such
case or in the event that this lease be "terminated"
before the commencement of the term, as above provided,
the Landlord may either re-let the demised premises or
any part or parts thereof for the Landlord's own account,
or may, at the Landlord's option, re-let the demised
premises or any part or parts thereof as the agent of
the Tenant, and receive the rents thereof, applying the
same first to the payment of such expenses as the
Landlord may have incurred, and then to the fulfillment
of the covenants of the Tenant herein, and the balance,
if any, at the expiration of the term first above
provided for, shall be paid to the Tenant. Landlord may
rent the premises for a term extending beyond the term
WAIVER hereby granted without releasing Tenant from any
BY TENANT liability. In the event that the term of this lease
shall expire as above in this subdivision "Sixth"
provided, or terminate by summary proceedings or
otherwise, and if the Landlord shall not re-let the
demised premises for the Landlord's own account, then,
whether or not the premises be re-let, the Tenant shall
remain liable for, and the Tenant hereby agrees to pay
to the Landlord, until the time when this lease would
have expired but for such termination or expiration, the
equivalent of the amount of all of the rent and
"additional rent" reserved herein, less the avails of
reletting, if any, and the same shall be due and payable
by the Tenant to the Landlord on the several rent days
above specified, that is, upon each of such rent days
the Tenant shall pay to the Landlord the amount of
deficiency then existing. The Tenant hereby expressly
waives any and all right of redemption in case the
Tenant shall be dispossessed by judgment or warrant
of any court or judge, and the Tenant waives and will
waive all right to trial by jury in any summary
proceedings hereafter instituted by the Landlord against
the Tenant in respect to the demised premises. The words
"re-enter" and "re-entry" as used in this lease are not
restricted to their technical legal meaning.
In the event of a breach or threatened breach by the
Tenant of any of the covenants or provisions hereof, the
Landlord shall have the right of injunction and the right
REMEDIES ARE to invoke any remedy allowed at law or in equity, as if
CUMULATIVE re-entry, summary proceedings and other remedies were not
herein provided for.
SEVENTH.--If the tenant shall make default in the
performance of any covenant herein contained, the Landlord
may immediately, or at any time thereafter, without
notice, perform the same for the account of the Tenant. If
LANDLORD a notice of mechanic's lien be filed against the demised
MAY premises or against premises of which the demised premises
PERFORM are part, for, or purporting to be for, labor or material
alleged to have been furnished, or to be furnished to or
for the Tenant at the demised premises, and if the Tenant
shall fail to take such action as shall cause such lien to
be discharged within fifteen days after the filing of such
notice, the Landlord may pay the amount of such lien or
discharge the same by deposit or by bonding proceedings,
and in the event of such deposit or bonding proceedings,
the Landlord may require the lienor to prosecute an
appropriate action to enforce the lienor's claim. In such
case, the Landlord may pay any judgment recovered on such
claim. Any amount paid or expense incurred by the Landlord
as in this subdivision of this lease provided, and any
amount as to which the Tenant shall at any time be in
default for or in respect to the use of water, electric
current or sprinkler supervisory service, and any expense
incurred or sum of money paid by the Landlord by reason of
the failure of the Tenant to comply with any provision
hereof, or in defending any such action, shall be deemed
ADDITIONAL to be "additional rent" for the demised premises, and
RENT shall be due and payable by the Tenant to the Landlord on
the first day of the next following month, or, at the
option of the Landlord, on the first day of any succeeding
month. The receipt by the Landlord of any instalment of
the regular stipulated rent hereunder or any of said
"additional rent" shall not be a waiver of any other
"additional rent" then due.
EIGHT.--The failure of the Landlord to insist, in
any one or more instances upon a strict performance of
AS TO any of the covenants of this lease, or to exercise any
WAIVERS option herein contained, shall not be construed as a
waiver or a relinquishment for the future of such covenant
or option, but the same shall continue and remain in
full force and effect. The receipt by the Landlord of
rent, with knowledge of the breach of any covenant
hereof, shall not be deemed a waiver of such breach and
no waiver by the Landlord of any provision hereof shall
be deemed to have been made unless expressed in writing
and signed by the Landlord. Even though the Landlord
shall consent to an assignment hereof no further
assignment shall be made without express consent in
writing by the Landlord.
NINTH.--If this lease be assigned, or if the demised
premises or any part thereof be underlet or occupied by
anybody other than the Tenant the Landlord may collect
rent from the assignee, under-tenant or occupant, and
COLLECTION apply the net amount collected to the rent herein
OF RENT reserved, and no such collection shall be deemed a waiver
FROM OTHERS of the covenant herein against assignment and
underletting, or the acceptance of the assignee,
under-tenant or occupant as a tenant, or a release of the
Tenant from the further performance by the Tenant of the
covenants herein contained on the part of the Tenant.
TENTH.--This lease shall be subject and subordinate
at all times, to the lien of the mortgages now on the
demised premises, and to all advances made or hereafter
to be made upon the security thereof, and subject and
MORTGAGES subordinate to the lien of any mortgage or mortgages which
at any time may be made a lien upon the premises. The
Tenant will execute and deliver such further instrument or
instruments subordinating this lease to the lien of any
such mortgage or mortgages as shall be desired by any
mortgage or proposed mortgagee. The Tenant hereby
appoints the Landlord the attorney-in-fact of the
Tenant, irrevocable, to execute and deliver any such
instrument or instruments for the Tenant.
ELEVENTH.--All improvements made by the Tenant to or
upon the demised premises, except said trade fixtures,
shall when made, at once be deemed to be attached to the
freehold, and become the property of the Landlord, and at
IMPROVEMENTS the end or other expiration of the term, shall be
surrendered to the Landlord in as good order and condition
as they were when installed, reasonable wear and damages
by the elements excepted.
TWELFTH.--Any notice or demand which under the
terms of this lease or under any statute must or may be
NOTICES given or made by the parties hereto shall be in writing
and shall be given or made by mailing the same by
certified or registered mail addressed to the respective
parties at the addresses set forth in this lease.
THIRTEENTH.--The landlord shall not be liable for any
failure of water supply or electrical current, sprinkler
damage, or failure of sprinkler service, nor for injury or
damage to person or property caused by the elements or by
NO LIABILITY other tenants or persons in said building, or resulting
from steam, gas, electricity, water, rain or snow, which
may leak or flow from any part of said buildings, or from
the pipes, appliances or plumbing works of the same, or
from the street or sub-surface, or from any other place,
nor for interference with light or other incorporeal
hereditaments by anybody other than the Landlord, or
caused by operations by or for a governmental authority in
construction of any public or quasi-public work, neither
shall the Landlord be liable for any latent defect in the
building.
FOURTEENTH.--No diminution or abatement of rent, or other
compensation shall be claimed or allowed for inconvenience
or discomfort arising from the making of repairs or
NO improvements to the building or to its appliances, nor for
ABATEMENT any space taken to comply with any law, ordinance or order
of a governmental authority. In respect to the various
"services," if any, herein expressly or impliedly agreed
to be furnished by the Landlord to the Tenant, it is
agreed that there shall be diminution or abatement of the
rent, or any other compensation, for interruption or
curtailment of such "service" when such interruption or
curtailment shall be due to accident, alterations or
repairs desirable or necessary to be made or to
inability or difficulty in securing supplies or labor
for the maintenance of such "service" or to some other
cause, not gross negligence on the part of the Landlord.
No such interruption or curtailment of any such "service"
shall be deemed a constructive eviction. The Landlord
shall not be required to furnish, and the Tenant shall
not be entitled to receive, any of such "services" during
any period wherein the Tenant shall be in default in
respect to the payment of rent. Neither shall there be any
abatement or diminution of rent because of making of
repairs, improvements or decorations to the demised
premises after the date above fixed for the commencement
of the term, it being understood that rent shall, in any
event, commence to run at such date so above fixed.
FIFTEENTH.--The Landlord may prescribe and regulate
the placing of safes, machinery, quantities of merchandise
and other things. The Landlord may also prescribe and
RULES, ETC. regulate which elevator and entrances shall be used by
the Tenant's employees, and for the Tenant's shipping.
The Landlord may make such other and further rules and
regulations as, in the Landlord's judgment, may from time
to time, be needful for the safety, care or cleanliness of
the building, and for the preservation of good order
therein. The Tenant and the employees and agents of the
Tenant will observe and conform to all such rules and
regulations.
SIXTEENTH.--In the event that an excavation shall be
made for building or other purposes upon land adjacent to
the demised premises or shall be contemplated to be made,
the Tenant shall afford to the person or persons causing
or to cause such excavation, license to enter upon the
SHORING OF demised premises for the purpose of doing such work as
WALLS said person or persons shall deem to be necessary to
preserve the wall or walls, structure or structures upon
the demised premises from injury and to support the same
by proper foundations.
SEVENTEENTH.--No vaults or space not within the
property line of the building are leased hereunder.
Landlord makes no representation as to the location of
VAULT SPACE the property line of the building. Such vaults or space
as Tenant may be permitted to use or occupy are to be
used or occupied under a revocable license and if such
license be revoked by the Landlord as to the use of part
or all of the vaults or space Landlord shall not be
subject to any liability; Tenant shall not be entitled
to any compensation or reduction in rent nor shall this
be deemed constructive or actual eviction. Any tax, fee
or charge of municipal or other authorities for such
vaults or space shall be paid by the Tenant for the
period of the Tenant's use or occupancy thereof.
EIGHTEENTH.--That during seven months prior to the
expiration of the term hereby granted, applicants shall be
admitted at all reasonable hours of the day to view the
premises until rented; and the Landlord and the
Landlord's agents shall be permitted at any time during
the term to visit and examine them at any reasonable
ENTRY hour of the day, and workmen may enter at any time, when
authorized by the Landlord or the Landlord's agents, to
make or facilitate repairs in any part of the building;
and if the said Tenant shall not be personally present
to open and permit an entry into said premises, at any
time, when for any reason an entry therein shall be
necessary or permissible hereunder, the Landlord or the
Landlord's agents may forcibly enter the same without
rendering the Landlord or such agents liable to any
claim or cause of action for damages by reason thereof
(if during such entry the Landlord shall accord reasonable
care to the Tenant's property) and without in any manner
affecting the obligations and covenants of this lease;
it is, however, expressly understood that the right and
authority hereby reserved, does not impose, nor does the
Landlord assume, by reason thereof, any responsiblity or
liability whatsoever for the care or supervision of said
premises, or any of the pipes, fixtures, appliances or
appurtenances therein contained or therewith in any
manner connected.
NINETEENTH.--The Landlord has made no representations or
NO REPRE- promises in respect to said building or to the demised
SENTATIONS premises except those contained herein, and those, if any,
contained in some written communication to the Tenant,
signed by the Landlord. This instrument may not be
changed, modified, discharged or terminated orally.
TWENTIETH.--If the Tenant shall at any time be in
ATTORNEY'S default hereunder, and if the Landlord shall institute
FEES an action or summary proceeding against the Tenant based
upon such default, then the Tenant will reimburse the
Landlord for the expense of attorneys' fees and
disbursements thereby incurred by the Landlord, so far
as the same are reasonable in amount. Also so long as
the Tenant shall be a tenant hereunder the amount of such
expenses shall be deemed to be "additional rent" hereunder
and shall be due from the Tenant to the Landlord on the
first day of the month following the incurring of such
respective expenses.
TWENTY-FIRST.--Landlord shall not be liable for failure to
give possession of the premises upon commencement date by
POSSESSION reason of the fact that premises are not ready for
occupancy, or due to a prior Tenant wrongfully holding
over or any other person wrongfully in possession
or for any other reason: in such event the rent shall
not commence until possession is given or is available,
but the term herein shall not be extended.
<PAGE> 3
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THE TENANT FURTHER COVENANTS:
IF A FIRST TWENTY-SECOND. -- If the demised premises or any part thereof consist of a store, or of a first floor, or
FLOOR of any part thereof, the Tenant will keep the sidewalk and curb in front thereof clean at all times and free from
snow and ice, and will keep insured in favor of the Landlord, all plate glass therein and furnish the Landlord
with policies of insurance covering the same.
TWENTY-THIRD. -- If by reason of the conduct upon the demised premises of a business not herein permitted,
INCREASED or if by reason of the improper or careless conduct of any business upon or use of the demised premises, the fire
FIRE insurance rate shall at any time be higher than it otherwise would be, then the Tenant will reimburse the Landlord,
INSURANCE as additional rent hereunder, for that part of all fire insurance premiums hereafter paid out by the Landlord which
RATE shall have been charged because of the conduct of such business not so permitted, or because of the improper or
careless conduct of any business upon or use of the demised premises, and will make such reimbursement upon the
first day of the month following such outlay by the Landlord; but this covenant shall not apply to a premium for
any period beyond the expiration date of this lease, first above specified. In any action or proceeding wherein
the Landlord and Tenant are parties, a schedule or "make up" of rate for the building on the demised premises,
purporting to have been issued by New York Fire Insurance Exchange, or other body making fire insurance rates for
the demised premises, shall be prima facie evidence of the facts therein stated and of the several items and
charges included in the fire insurance rate then applicable to the demised premises.
TWENTY-FOURTH. -- If a separate water meter be installed for the demised premises, or any part thereof, the
WATER RENT Tenant will keep the same in repair and pay the charges made by the municipality or water supply company for or in
respect to the consumption of water, as and when bills therefor are rendered. If the demised premises, or any part
thereof, be supplied with water through a meter which supplies other premises, the Tenant will pay to the Landlord,
as and when bills are rendered therefor, the Tenant's proportionate part of all charges which the municipality or
water supply company shall make for all water consumed through said meter, as indicated by said meter. Such
proportionate part shall be fixed by apportioning the respective charge according to floor area against all of the
rentable floor area in the building (exclusive of the basement) which shall have been occupied during the period
of the respective charges, taking into account the period that each part of such area was occupied. Tenant agrees
SEWER of pay as additional rent the Tenant's proportionate part, determined as aforesaid, of the sewer rent or charge
imposed or assessed upon the building of which the premises are a part.
ELECTRIC TWENTY-FIFTH. -- That the Tenant will purchase from the Landlord, if the Landlord shall so desire, all
CURRENT electric current that the Tenant requires at the demised premises, and will pay the Landlord for the same, as the
amount of consumption shall be indicated by the meter furnished therefor. The price for said current shall be the
same as that charged for consumption similar to that of the Tenant by the company supplying electricity in the same
community. Payments shall be due as and when bills shall be rendered. The Tenant shall comply with like rules,
regulations and contract provisions as those prescribed by said company for a consumption similar to that of the
Tenant.
TWENTY-SIXTH. -- If there now is or shall be installed in said building a "sprinkler system" the Tenant
agrees to keep the appliances thereto in the demised premises in repair and good working condition, and if the
SPRINKLER New York Board of Fire Underwriters or the New York Fire Insurance Exchange or any bureau, department or official
SYSTEM of the State or local government requires or recommends that any changes, modifications, alterations or additional
sprinkler heads or other equipment be made or supplied by reason of the Tenant's business, or the location of
partitions, trade fixtures, or other contents of the demised premises, or if such changes, modifications,
alterations, additional sprinkler heads or other equipment in the demised premises are necessary to prevent the
imposition of a penalty or charge against the full allowance for a sprinkler system in the fire insurance rate as
fixed by said Exchange, or by any Fire Insurance Company, the Tenant will at the Tenant's own expense, promptly
make and supply such changes, modifications, alterations, additional sprinkler heads or other equipment. As
additional rent hereunder the Tenant will pay to the Landlord, annually in advance, throughout the term
$ ....................... toward the contract price for sprinkler supervisory service.
$00
TWENTY-SEVENTH. -- The sum of ........................................................... Dollars is
SECURITY deposited by the Tenant herein with the Landlord herein as security for the faithful performance of all the
covenants and conditions of the lease by the said Tenant. If the Tenant faithfully performs all the covenants and
conditions on his part to be performed, then the sum deposited shall be returned to said Tenant.
TWENTY-EIGHTH. -- This lease is granted and accepted on the especially understood and agreed condition
NUISANCE that the Tenant will conduct his business in such a manner, both as regards noise and kindred nuisances, as
will in no wise interfere with, annoy, or disturb any other tenants, in the conduct of their several businesses,
or the landlord in the management of the building; under penalty of forfeiture of this lease and consequential
damages.
TWENTY-NINTH. -- The Landlord hereby recognizes as the broker
BROKERS who negotiated and consummated this lease with the Tenant herein, and agrees that if, as, and when the Tenant
COMMISSIONS exercises the option, if any, contained herein to renew this lease, or fails to exercise the option, if any,
contained therein to cancel this lease, the Landlord will pay to said broker a further commission in accordance
with the rules and commission rates of the Real Estate Board in the community. A sale, transfer, or other
disposition of the Landlord's interest in said lease shall not operate to defeat the Landlord's obligation to
pay the said commission to the said broker. The Tenant herein hereby represents to the Landlord that the said
broker is the sole and only broker who negotiated and consummated this lease with the Tenant.
THIRTIETH. -- The Tenant agrees that it will not require, permit, suffer, nor allow the cleaning of any
WINDOW window, or windows, in the demised premises from the outside (within the meaning of Section 202 of the Labor Law)
CLEANING unless the equipment and safety devices required by law, ordinance, regulation or rule, including, without
limitation, Section 202 of the New York Labor Law, are provided and used, and unless the rules, or any
supplemental rules of the Industrial Board of the State of New York are fully compiled with; and the Tenant
hereby agrees to indemnify the Landlord, Owner, Agent, Manager and/or Superintendent, as a result of the
Tenant's requiring, permitting, suffering, or allowing any window, or windows in the demised premises to be
cleaned from the outside in violation of the requirements of the aforesaid laws, ordinances, regulations
and/or rules.
VALIDITY THIRTY-FIRST. -- The invalidity or unenforceability of any provision of this lease shall in no way
affect the validity or enforceability of any other provision hereof.
EXECUTION THIRTY-SECOND. -- In order to avoid delay, this lease has been prepared and submitted to the Tenant for
& DELIVERY signature with the understanding that it shall not bind the Landlord unless and until it is executed and delivered
OF LEASE by the Landlord.
THIRTY-THIRD. -- The Tenant will keep clean and polished all metal, trim, marble and stonework which are a
EXTERIOR OF part of the exterior of the premises, using such materials and methods as the Landlord may direct, and if the
PREMISES Tenant shall fail to comply with the provisions of this paragraph, the Landlord may cause such work to be done at
the expense of the Tenant.
THIRTY-FOURTH. -- The Landlord shall replace at the expense of the Tenant any and all broken glass in the
PLATE GLASS skylights, doors and walls in and about the demised premises. The Landlord may insure and keep insured all plate
glass in the skylights, doors and walls in the demised premises, for and in the name of the Landlord and bills
for the premiums therefor shall be rendered by the Landlord to the Tenant at such times as the Landlord may elect,
and shall be due from and payable by the Tenant when rendered, and the amount thereof shall be deemed to be,
and shall be paid as, additional rent.
THIRTY-FIFTH. -- This lease and the obligation of Tenant to pay rent hereunder and perform all of the other
WAR covenants and agreements hereunder on part of Tenant to be performed shall in nowise be affected, impaired or
EMERGENCY excused because Landlord is unable to supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repairs, additions, alterations or decorations or is
unable to supply or is delayed in supplying any equipment or fixtures if Landlord is prevented or delayed from so
doing by reason of governmental preemption in connection with a National Emergency declared by the President of
the United States or in connection with any rule, order or regulation of any department or subdivision thereof of
any government agency or by reason of the conditions of supply and demand which have been or are affected by
war or other emergency.
THE LANDLORD COVENANTS
QUIET FIRST. -- That if and so long as the Tenant pays the rent and "additional rent" reserved hereby, and
POSSESSION performs and observes the covenants and provisions hereof, the Tenant shall quietly enjoy the demised premises,
subject, however, to the terms of this lease, and to the mortgages above mentioned, provided however, that this
covenant shall be conditioned upon the retention of title to the premises by Landlord.
ELEVATOR
HEAT
AND IT IS MUTUALLY UNDERSTOOD AND AGREED that the covenants and agreements contained in the within
lease shall be binding upon the parties hereto and upon their respective successors, heirs, executors and
administrators.
IN WITNESS WHEREOF, the Landlord and Tenant have respectively signed and sealed these presents the
day and year first above written.
</TABLE>
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40 Marcus Realty Associates
By: /s/ Michael Bivona [L. S.]
------------------------------------------ Landlord
IN PRESENCE OF:
/s/ VERONICA T. LASKOWSKI
- ------------------------------------------------------- Manchester Equipment Co., Inc.
By: /s/ BARRY STEINBERG [L. S.]
- ------------------------------------------------------- ------------------------------------------- Tenant
Barry Steinberg, President
</TABLE>
<PAGE> 4
State of New York, County of _____________________ ss:_____________________
On the ______ day of ________________ 19__, before me personally came
___________________________________________________________________________,
to me known, who, being by me duly sworn, did depose and say that he resides
at ________________________________________________________________________;
that he is __________________________________ of __________________________,
the corporation described in and which executed the within instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto
by like order.
State of New York, County of _____________________ ss:_____________________
On the ______ day of ________________ 19__, before me personally came
___________________________________________________________________________,
to me known, who, being by me duly sworn, did depose and say that he resides
at ________________________________________________________________________;
that he is __________________________________ of __________________________,
the corporation described in and which executed the within instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto
by like order.
State of New York, County of _____________________ ss:_____________________
On the ______ day of ________________ 19__, before me personally came
___________________________________________________________________________,
to me known and known to me to be the individual described in and who executed
the foregoing instrument, and duly acknowledged that he executed the same.
State of New York, County of _____________________ ss:_____________________
On the ______ day of ________________ 19__, before me personally came
___________________________________________________________________________,
subscribing witness to the foregoing instrument, with whom I am personally
acquainted, who, being by me duly sworn, did depose and say, that he resided,
at the time of the execution of said instrument, and still resides, in
________________________________________________________________________;
that he is and then was acquainted with __________________________________,
and knew _________________________ to be ___________________________ the
individual described in and who executed the foregoing instrument; and that he,
said subscribing witness, was present and saw _______________________________
execute the same; and that he, said witness, thereupon at the same time
subscribed his name as witness thereto.
BUILDING_________________________________________
PREMISES_________________________________________
Landlord
to
Tenant
__________________________________________________
LEASE
__________________________________________________
GUARANTY
In consideration of the letting of the premises within mentioned to the
Tenant within named, and of the sum of One Dollar, to the undersigned in hand
paid by the Landlord within named, the undersigned hereby guarantees to the
Landlord and to the heirs, successors and/or assigns of the Landlord, the
payment by the Tenant of the rent, within provided for, and the performance by
the Tenant of all of the provisions of the within lease, Notice of all defaults
is waived, and consent is hereby given to all extensions of time that any
Landlord may grant.
Dated, _______________________________ 19__
__________________________ L.S.
STATE OF ____________________ COUNTY OF______________ ss:_____________________
On this ________________________ day of _____________________, 19__,
before me personally appeared ______________________________________________
to me known and known to me to be the individual described in and who executed
the foregoing instrument, and duly acknowledged to me that he executed the same.
<PAGE> 5
RIDER TO LEASE dated ,1995 between 40 MARCUS REALTY
ASSOCIATES, as Landlord, and MANCHESTER EQUIPMENT CO., INC., as Tenant.
1. Anything herein, to the contrary notwithstanding, Tenants shall, at
Tenants' own cost and expense, secure and pay for all interior repairs,
replacements, utilities, maintenance and services required by Tenants or for
preservation of the demised premises, including, but not limited to: gas,
electricity, telephone, light, janitorial services, plumbing, wiring, carpentry,
mechanical, plate glass, electrical, air-conditioning, store front, painting,
decorating and maintenance services, heat, fuel, garbage and waste disposal,
snow removal, water, hot water and sewer rent. Any fees or deposits for permits
or licenses for machinery, meters, signs or any other equipment or usage, shall
be made, secured, and/or paid for by Tenants at Tenants' own cost and expense.
Except as expressly provided in this Lease, Landlord shall have no obligation to
furnish or perform interior repairs, maintenance or services; provided however,
that Landlord shall be responsible for so-called "structural" repairs, defined
as exterior walls, structural members and foundation. As designated in the
within paragraph, "utilities" refers solely to those utilities consumed by the
within Tenant; i.e. the within Tenant shall have no responsibility for the
utilities consumed by other Tenants in the building in which the demised
premises are located.
2. Anything herein to the contrary notwithstanding, Tenants are hereby
given permission to erect any sign or signs in and about the demised premises at
Tenant's own cost and expense, provided: (a) Any such sign shall comply with all
rules and regulations of any governmental authority having jurisdiction thereof;
(b) Said sign or signs shall be installed without damage to Landlord's building
including signs on each exterior wall; (c) Upon the removal of any such signs,
all damage occasioned thereby shall be repaired by Tenants at Tenants' own cost
and expense.
3. Tenants shall secure, pay for and maintain during the term of this
Lease, a policy of general liability insurance, (having limits:
$1,000,000/2,000,000 for bodily injury; $100,000 for property damage) from a
financially responsible insurer licensed to do business in the State of New
York; which said policy shall name as protected, the Tenants and Landlord as the
fee owner, as their respective interests shall appear, and any other parties
designated by Tenants, and shall contain a waiver of subrogation as against the
Landlord as fee owner. Tenants shall deliver to the Landlord a certificate of
such insurance policy on or before the beginning of the term of this Lease. In
any such policy, the bodily injury coverage shall be written on an "Occurrence"
basis and shall include personal injury coverage; and shall also provide that no
modification, termination or cancellation thereof shall be effective until after
ten (10) days prior written notice has been given to Landlord by the insurance
carrier, to be forwarded by Certified or Registered Mail, Return Receipt
Requested. In the event of the failure of the Tenant
{1}
<PAGE> 6
to secure, maintain and pay for such policy and to provide a certificate thereof
to Landlord, Landlord may, in Landlord's sole discretion, order such policy and
the premium cost thereof shall be due from Tenant as additional rent hereunder
or Landlord may elect to treat such failure as a default hereunder, in which
case, Tenant agrees such default is a material default of the Lease.
4. Tenant, at its cost, shall maintain a policy of standard fire and
extended coverage insurance with vandalism and malicious mischief endorsements
to the extent of at least eighty [80%] percent of full replacement value as to
the demised structure and its environs, defined as follows: $850,000.00. The
insurance policy shall be issued in the name of Landlord, Tenant and Landlord's
lender, if any, now or in the future, as their interests appear. The insurance
policy shall provide that any proceeds shall be made payable to the Landlord or
Landlord's lender, as Landlord may designate. The Tenant agrees to assign and
deliver at the commencement of this Lease said insurance policy to the Landlord
and the said policy and renewal thereof shall be held by said Landlord. In the
event the Tenants do not pay the premiums as they fall due on said policy,
Landlord shall have the option of paying said premiums on behalf of Tenants, and
adding the cost thereof to the next month's rent due Landlord under the terms of
this Lease as additional rent and to collect same as "additional rent".
The foregoing insurance policy shall provide that no modification,
termination or cancellation thereof shall be effective until after thirty [30]
days prior written notice has been given to the Landlord by the insurance
carrier, certified mail, return receipt.
If any extraordinary or excessive insurance premium cost is charged to
Landlord as the result of the nature of Tenant's business, or its use and
occupancy of the demised premises or an installation, condition or alteration
made or maintained by Tenant therein, the full cost of such excess premium or
extraordinary charge shall be borne by and paid by Tenant. The finding or
"make-up" of rate established by the New York Fire Rating Organization [or such
other agency having jurisdiction and responsibility for rating the building for
insurance purposes] shall be admissible as evidence in any action and proceeding
and shall be deemed conclusive evidence of the facts therein stated and of the
items and charges then applicable to the building and the demised premises
located therein. The total costs of insurance and the totality of coverage shall
not exceed that which is reasonable and customary.
5. The Tenants agree to indemnify the Landlord, as fee owner, and the
respective officers, directors, agents, servants and employees thereof against
and to defend, save and hold them harmless of and from, any and all liability,
cost and damage for or arising by reason of any and all claims, suits or causes
of action for bodily injury, personal injury, death or property damage to any
and all persons in any manner caused
{2}
<PAGE> 7
by acts, negligence or omissions of, or any condition created, caused, permitted
or suffered by, the Tenants, its officers, directors, agents, servants, and
employees.
6. Except for injury, loss or damage occasioned directly and
specifically as the result of the Landlord's negligence, the Landlord shall not
be liable or responsible to the Tenants for the safekeeping of any goods or
other property of the Tenant, nor for injury to any person or persons or any
damage to or loss of merchandise or other property of the Tenants occasioned by
theft, fire, water, power failure, accident or the bursting, leaking or running
in the demised premises of any plumbing, heating, electrical apparatus, gas,
steam or pipes of any nature, or from any other cause whatsoever; and except for
injury, loss or damage due to Landlord's negligence, anything herein to the
contrary notwithstanding, the Tenant, for itself and its insurers, releases
Landlord of and from any and all such liability and responsibility.
7. It is understood and agreed that under any and all circumstances, the
liability of the Landlord shall not be personal and whenever Tenants, their
agents, servants or employees seek or recover any money judgment or other award
of damages against the Landlord from any Court, administrative body or tribunal
of competent jurisdiction, that satisfaction thereof shall be solely and
expressly limited to levy of execution against and collection out of the
interest of the Landlord in and to the demised premises and/or the land and
building of which the demised premises forms a part, and the Tenants for
themselves, their agents, servant and employees, heirs, successors and assigns,
expressly and specifically relinquishes, waives and releases any and all rights
to seek, secure, recover or collect any portion of such judgment, damages or
award against or from the Landlord personally or from any other property, assets
or estate of the Landlord, its heirs, successors, officers, directors,
shareholders, legal representatives, agents, servant, employees or assigns.
8. In lieu of the Landlord not requiring the Tenant to maintain a policy
of plate glass insurance, it is specifically agreed that the Tenant shall be
solely responsible for the replacement of any and all plate glass damage at the
Tenant's cost and expense. In the event the Tenant fails to replace and or
repair plate glass within a reasonable time after damage thereto, the Landlord
shall have the right to repair said plate glass damage, and in such event, the
landlord is hereby authorized to add the cost of such repair to any regular
installment of rent thereafter becoming due, as additional rent.
9. Tenants shall bear and pay to the Landlord as additional rent during
each Lease year, the cost to Landlord of the following:
A. Commencing with the rental due November 1, 1995, the fixed
annual rent hereinbefore set forth for each fiscal year of this Lease
(hereinafter a "lease year") shall be increased by additional rental in an
amount equal to one hundred [100%] percent of the amount expended for taxes, [as
hereinafter defined], in such Lease year.
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<PAGE> 8
FOR INFORMATION PURPOSES ONLY: The 1994/95
tax bill for the demised premises is in the
amount of $31,515.48.
Such additional rental shall be paid by the Tenants within fifteen (15)
days after the Landlord shall have served upon Tenants a written statement
thereof. The Tenants or their authorized representative shall have the right to
inspect the books of the Landlord during its regular business hours for the
purpose of verifying the information set forth in the statement submitted by the
Landlord pursuant to this paragraph provided that written request for such
inspection shall be made by the Tenants within ten (10) days after the receipt
of such statement. For purposes of this paragraph, the term "Taxes" means real
estate taxes, transfer taxes, vault charges and other governmental taxes or
charges, special, ordinary or extraordinary, foreseen or unforeseen (but not
income, franchise, inheritance or capital stock taxes) which may now or
hereafter be levied or assessed against the lands and buildings of which the
demised premises form a part thereof. In the event the tax year does not
correspond with a Lease year, equitable proration shall be made in determining
the amount expended in respect of such period.
(a) Every "lease year" during the term hereof shall be for a period of
twelve (12) full calendar months, except that the last Lease year shall
terminate on the date this Lease expires or is otherwise terminated.
(b) In the event that as the result of changes in the laws, enabling
statutes or other code, rules or regulations, including but not limited to the
Internal Revenue Code, taxes or other levies or assessments against gross rental
income shall be substituted in whole or in part for any real property taxes or
assessments presently applicable to real property, then and to the extent that
such taxes shall be and constitute a substitute for the real property taxes
against the premises of which the demised premises forms a part, such substitute
tax or assessment shall be included in and considered part of the real property
taxes for the purposes of calculating the portion thereof to be paid by Tenants
as additional rent hereunder.
10. A. The amount of all such additional rent shall be due and payable
with the next regular monthly installment of rent following the submission to
Tenants of a bill, together with the calculation of additional rent due,
therefor by Landlord.
B. A copy of the official tax bill, insurance premium bill or other
statement or invoice for a charge or expense to Landlord shall be deemed
sufficient and
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<PAGE> 9
conclusive evidence of the amount of such charge or expense, a percentage of
which is payable by Tenant to Landlord as additional rent.
C. If any extraordinary or excessive insurance premium cost is charged
to Landlord as the result of the nature of Tenant's business, or its use and
occupancy of the demised premises or an installation, condition or alteration
made or maintained by Tenant therein, the full cost of such excess premium or
extraordinary charge shall be borne by and paid by Tenants. The finding or
"make-up" of rate established by the New York Fire Rating Organization (or such
other agency having jurisdiction and responsibility for rating the building for
insurance purposes) shall be admissible as evidence in any action and proceeding
and shall be deemed conclusive evidence of the facts therein stated and of the
items and charges then applicable to the building and the demised premises
located therein. The total costs of insurance and the totality of coverage shall
not exceed that which is reasonable and customary.
D. The portion of the Landlord's costs or charges payable as additional
rent by Tenants shall be apportioned on the basis that the first Lease year, the
last Lease year or any Lease year does not coincide with the fiscal year to
which any such charge is applicable.
11. It is specifically agreed that in the event of the default by
Tenants in the performance of this Lease or the payment when due of any
installment of rent or additional rent or any other sum due under this Lease,
the Landlord is expressly authorized, empowered, directed and entitled to use,
apply or retain as Landlord's sole property that portion or all of the security
deposited by Tenants on the signing of this Lease to the extent necessary to
cure such default or to reimburse Landlord for any sum which he may expend or be
required to expend by reason of Tenant's default. All or any portion of the said
security deposit thus used or applied by Landlord shall be made up and
redeposited by Tenants forthwith on demand to the original amount of the
security deposit required under this Lease. The security deposit to be made
hereunder and any additions thereto, shall be deposited by the Landlord in a
separate interest bearing savings account, and all interest accruing thereon
shall be deemed as additional security, and held by the Landlord pursuant to the
security provisions of the within Lease.
12. Tenants agree that if Landlord shall pay or be compelled to pay a
sum of money or to perform any act that requires the payment of money, by reason
of the failure of the Tenant to keep, observe, or perform any of the terms,
covenants and provisions herein contained to be kept, observed or performed by
the Tenants, other than the payment of rent, then and in such event, the sum or
sums so paid by the Landlord shall, upon Landlord's demand, be paid by Tenants
to Landlord as additional rent, with interest thereon at the maximum rate of
interest allowable on the date of such
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<PAGE> 10
demand, together with the installment of the monthly base rent next due from
date of said demand.
13. Any and all notices, consents and other communications which either
party may desire or be required to give to the other shall be in writing and,
except as otherwise herein specifically provided, shall be sent by Certified
Mail, Return Receipt Requested, addressed to the party for whom intended at the
address first herein above set forth or at such other address as such party may
designate for such purpose by notice duly given to the other. All such notices
shall be deemed to have been duly given on the third business day following the
date of the deposit thereof, securely enclosed in a postpaid wrapper addressed
as above, in an official depository maintained for mailing purposes by the U. S.
Post Office Department (or its successor postal agency).
14. If any term, condition or provision of the printed portion of this
Lease shall be inconsistent with a provision of this Rider, then the
inconsistent portions of the printed Lease form shall be deemed superseded by
the provisions set forth in this Rider. Wherever appropriate for good usage or
meaningful interpretation, terms expressed in the neuter, masculine or feminine
gender shall be deemed interchangeable, as shall terms expressed in the singular
or plural be deemed interchangeable.
15. In the event that any payment provided to be made hereunder shall
become overdue in excess of ten (10) days as additional rent, Tenant shall pay
to the Landlord a late charge of five (.05) cents for each dollar so overdue to
compensate Landlord for expenses incurred in handling such delinquent payment or
payments. The charges hereunder shall be due and owing regardless of application
of security pursuant to paragraph "10".
16. On the written request of either party, the Landlord and the Tenants
each covenant and agree to execute, seal, acknowledge and deliver unto the
other, within ten (10) days of written request, a certificate attesting: (a)
Whether this Lease is current and in full and continuing force and effect; (b)
Whether there are any defaults, arrears, set-offs, claims, counter-claims or
defenses to or against the full enforcement of any of the terms, covenants and
conditions to be paid and performed hereunder; (c) To the amount of the rent
then being paid and the dates of the commencement and expiration of the term
hereof; (d) To the period for which and the amount of the rent which has then
been prepaid; and (e) Whether the other party has fully performed all
obligations on its part to be performed.
17. It is specifically understood and agreed that any item required to
be paid by Tenants, including additional rent or payments for defaults, shall be
deemed rent, and upon the failure of Tenants to pay the same when due, it shall
be deemed equivalent
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<PAGE> 11
to a default in the payment of rent and shall entitle Landlord to invoke any and
all remedies as in the case of non-payment of rent.
18. In any case where Landlord brings any action or summary proceeding
for any default of the Tenants hereunder, whether for the non-payment of rent or
additional rent or any other default, Landlord shall be entitled to reasonable
attorney's fees if successful; plus filing fees, sheriff's fees, if any, for any
one action or proceeding. Parties each waive trial by jury in any summary
proceeding.
19. The Tenants shall have the right to contest any real estate tax,
special assessments or other governmental charges levied against the real
property of which the demised premises are a part, by writ of certiorari, or
otherwise, in the same manner as provided by law for the owner of the property
to contest the same upon condition that the Tenants shall pay, immediately upon
billing, such real estate taxes, special assessments or other government charges
(looking to the taxing authorities for a refund thereafter), and upon the
further condition that the cost of such proceeding shall be borne solely by the
Tenants and the Tenants shall hold the Landlord free and harmless from any cost,
penalties, interest, damages or other liability otherwise incurred as the result
thereof. Landlord shall, at Tenant's request, execute such documents as are
reasonably necessary to carry out the foregoing. in the event the Tenant should
be successful in contesting as aforesaid, the result of which creates a refund
to the landlord, the following shall apply:
Upon receipt by the Landlord of such refund, the Landlord shall return
to the Tenant the costs and expenses incurred by the Tenant in obtaining such
refund. The Tenants shall have a similar right to contest insurance costs and
any other costs charged pursuant to paragraphs "8" and "9".
20. Ceiling lighting fixtures shall not be deemed trade fixtures, and
upon installation, the same shall become, be and remain Landlord's sole
property. All light bulbs, tubes, ballasts, starters, switches, lenses and
grills for such ceiling fixtures, and the servicing and maintenance thereof
shall at all times be solely the obligation of Tenant.
21. A. Tenant covenants and agrees that it will occupy the entire
demised premises, and will conduct its business in the regular and usual manner,
throughout the term of this Lease. Tenants acknowledge that Landlord is
executing this Lease in reliance upon these covenants, and that these covenants
are a material element of consideration inducing the Landlord to execute this
Lease. Tenant further agrees that if it vacates the demised premises or fails to
so conduct its business therein, at any time during the term of this Lease,
without the prior written consent of the Landlord, then all
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<PAGE> 12
rent and additional rent reserved in this Lease from the date of such breach to
the expiration date of this Lease. shall become immediately due and payable to
Landlord.
B. The parties recognize and agree that the damage to Landlord resulting
from any breach of the covenants in subdivision (a) hereof will be substantial
and will be greater than the rent payable for the balance of the term of this
Lease, and will be impossible of ascertainment. The parties, therefore, agree as
follows;
1. In the event of a breach or threatened breach of the said
covenants, in addition to all of Landlord's other rights and remedies, at law or
in equity or otherwise, Landlord shall have the right of injunction to preserve
Tenant's occupancy and use. The words "become vacant or deserted" as used
elsewhere in this Lease shall include Tenant's failure to occupy or use as by
this Article required.
2. If Tenants breach either of the covenants in subdivision (a)
above, and this Lease be terminated because of such default, then, anything in
this Lease as to the contrary notwithstanding:
(a) Landlord shall have the right to re-enter the
demised premises, and to alter, reconstruct and rent all or any part of the
premises, at any rental to which Landlord shall agree, for any portion of or
beyond the original term of this Lease.
(b) Any income received by Landlord on any such
re-rental shall be the property of the Landlord alone, as compensation for the
expenses in connection with the preparation and re-renting of the demised space,
and, together with the rents and additional rents payable as aforesaid, as
liquidated damages for the breach of Tenants, which damages cannot be computed,
as aforesaid. Tenants shall have no right to any portion of such income.
22. In any action or summary proceeding brought by Landlord against
Tenants under this Lease (or any renewal, extension, holdover or modification
thereof), for non-payment of rent or additional rent, the Tenant hereby waives
the right to interpose, and expressly covenants and agrees not to interpose, any
counterclaim or set-off of whatever nature or description. The foregoing,
however, shall not be deemed or constitute a waiver of the Tenant's right to
commence and prosecute a separate action against Landlord on a bona-fide claim.
23. Every "Lease Year" during the term hereof shall be for a period of
twelve (12) full calendar months, except that the last Lease year shall
terminate on the date this Lease expires or is otherwise terminated.
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<PAGE> 13
24. The fixed annual rent hereinafter provided is intended to be and
shall be absolutely net to Landlord. It is the intention of the parties hereto
that all expenses, costs and obligations of the parties hereto, all expenses,
costs and obligations of every kind and nature whatsoever relating to the
demised premises, (with the exception of the base real estate taxes and
structural repairs as defined herein), shall be paid by Tenants either directly
or as additional rent so that this Lease shall yield to Landlord the net fixed
annual rent specified during the term of this Lease.
25. If any term or provision of this Lease or the application thereof to
any person or circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
26. Tenants agree not to allow or permit during the demised term, any
mechanic's or other lien for work, labor and services and/or materials furnished
or otherwise to attach to and become a lien upon the premises as a result of any
work done by or on behalf of Tenants. If such lien shall so attach, Tenants
shall within thirty (30) days after notice thereof, either pay or satisfy the
same or procure the discharge thereof of record in such manner as may be
permitted or provided by law. Should Tenants fail or refuse to discharge any
such lien within the period herein provided, then Landlord is hereby authorized
to add the amount of the said lien to any regular installment of rent thereafter
becoming due as additional rent.
27. During the entire term of this Lease, the Tenants shall be required
to keep in full force and effect all necessary Certificates of Occupancy for the
purposes for which the demised premises are rented, permits and other approvals
or consents required by any governmental authority having jurisdiction over the
business conducted by the Tenants as set forth in the purpose clause of this
Lease. The Landlord represents that the present zoning of the demised premises
is "C8".
28. Should any conflict in language or interpretation occur between the
printed provisions of this Lease, the parties agree that the provisions in the
Rider shall prevail. All reference to paragraphs as set forth in the Rider shall
refer to paragraphs so indicated in the Rider and not to paragraphs in the
printed portion of this Lease, unless so designated or unless the context of the
Rider is intended to designate the printed portion of this Lease.
29. This Lease contains all of the agreements and understandings of the
parties and cannot be amended or modified except by a written agreement.
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<PAGE> 14
30. The unenforceability, invalidity or illegality of any provision of
the Lease shall not render the other provisions unenforceable, invalid or
illegal.
31. This Lease shall not be recorded. No Memorandum shall be recorded
without the express written consent of the Landlord.
32. Tenants covenant that the demised premises will not be used so as
to interfere with other Tenants in the same building.
33. In the event the Tenants do not vacate the premises upon the
expiration date of this Lease, then and in that event, the Tenants shall remain
as month to month Tenants at a monthly rental 100% greater than the last monthly
rental paid during the term of the Lease. Nothing herein shall grant the Tenants
a right to holdover after the expiration of the Lease term.
34. The annual base rent for the years of the term of the within Lease
shall be as follows:
Annual
Nov. 1, 1995 to Oct. 31, 1996 $288,000.00 - monthly $24,000.00,
Nov. 1, 1996 to Oct. 31, 1997 $302,400.00 - monthly $25,200.00,
Nov. 1, 1997 to Oct. 31, 1998 $317,520.00 - monthly $26,460.00,
Nov. 1, 1998 to Oct. 31, 1999 $333,396.00 - monthly $27,783.00,
Nov. 1, 1999 to Oct. 31, 2000 $350,065.80 - monthly $29,172.83,
Nov. 1, 2000 to Oct. 31, 2001 $367,569.09 - monthly $30,630.76,
Nov. 1, 2001 to Oct. 31, 2002 $385,947.54 - monthly $32,162.29,
Nov. 1, 2002 to Oct. 31, 2003 $405,244.91 - monthly $33,770.41,
Nov. 1, 2003 to Oct. 31, 2004 $425,507.15 - monthly $35,458.93,
Nov. 1, 2004 to Oct. 31, 2005 $446,782.50 - monthly $37,231.87.
35. Notwithstanding any provision of the within Lease to the contrary,
written consent of the Landlord to an assignment of the within Lease, and/or
sub-Lease of a portion of the demised premises, shall be required. The Landlord
shall not unreasonably withhold its consent to such assignment or sub-Lease
provided the then Tenant has complied with the following terms and conditions:
(a) The within Tenants shall not be in default as to any of
the terms and conditions of the within Lease, and the Lease shall be in full
force and effect.
(b) The within Tenants shall notify the Landlord of the
proposed assignment, or sub-Lease, which notice shall be forwarded to the
Landlord by Certified
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<PAGE> 15
Mail, Return Receipt. Said notice shall be mailed to the Landlord no less than
thirty (30) days prior to the proposed assignment or sub-Lease. Said notice
shall contain the name and address of the proposed assignee or sub-lessee, and
if said assignee or sub-lessee is a corporation, the name of the principal of
said corporation, the date of the proposed assignment or sub-Lease, and the
proposed use of the premises by the assignee.
(c) The use of the demised premises by the proposed assignee or sub-
lessee shall be substantially similar to the Tenant's use and purpose provided
for in the within Lease.
(d) The assignment of Lease or sub-Lease shall be delivered to the
Landlord accompanied by an Assumption Agreement, if an assignment, both in
proper form for recording, said delivery to the Landlord to be mailed Certified
mail, Return Receipt, within one (1) week of such assignment.
(e) Such assignment or sub-Lease shall in no manner discharge the Tenant
or any subsequent Tenants herein from any liability or obligation whatsoever
created by the within Lease, and such liability and obligation shall continue
for the remainder of the within Lease.
(f) If Tenants are a corporation, any dissolution, merger, consolidation
or reorganization of Tenant or the sale or other transfer of fifty (50%) percent
or more of the capital stock of the Tenant shall be deemed an assignment under
the terms of this paragraph subject to all of the terms and conditions specified
herein; provided, however, that transfers of capital stock of the Tenant between
presently existing shareholders of the Tenant, or transfers of capital stock to
members of the immediate family of the present shareholders of the Tenant, shall
not be deemed an assignment pursuant to the terms of the within paragraph.
(g) If the Tenants are a corporation, or this Lease is subsequently
assigned to a corporation, the Tenant shall furnish the Landlord with a true
copy of a resolution duly adopted by the board of directors of such corporation
authorizing the corporation to enter into this Lease.
(h) The Tenants shall be responsible for the payment of reasonable
attorney's fees to the Landlord's attorney for review of all documents and the
preparation of any additional documents, if necessary, which attorney's fees
will not exceed $750.00, plus any and all disbursements incurred.
(i) That simultaneously with said assignment there shall be paid to the
Landlord, as additional security, a sum equal to two (2) months of the then
applicable rent, and same shall be held by the Landlord pursuant to the same
terms as the security
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<PAGE> 16
recited herein in Lease paragraph "27". This provision shall apply to each and
every assignment or sub-Lease of the within Lease.
36. Defaults and remedies. A. If (1) Tenants default in the payment of
any rent or any additional rent and such default continues for five (5) days
after written notice from Landlord or its agent or (2) Tenant defaults in
fulfilling any of the covenant or agreements or any rules or regulations of this
Lease on its part to be kept or performed and such default is not made good
within ten (10) days after written notice from Landlord or its agent, or within
such additional time as Tenant may be prevented from making good the default as
is caused by delays attributable to strikes, labor troubles, acts of God,
governmental prohibitions and similar causes beyond Tenant's control, or (3) If
this Lease is transferred to or devolve upon any person or corporation other
than Tenant, except as may be specifically permitted by this Lease, or if this
Lease is mortgaged or assigned without the written consent of the Landlord, then
and in any of such events mentioned in this subparagraph "A" the term thereof,
shall thereupon ipso facto expire and come to an end as if such expiration was
so fixed by the terms of this Lease on the fifth (5th) or tenth (10th) day of
such default as mentioned in (1) and (2) above and upon the occurrence mentioned
in (3) above and Landlord may re-enter upon the demised premises either with or
without process of law and remove all persons therefrom and Tenant shall quit
and surrender the same to Landlord and Tenants shall remain liable as
hereinafter provided. In the event Tenants shall fail, neglect or refuse to quit
and surrender the demised premises upon receipt of notice from Landlord
declaring the term hereof at an end, then Landlord may commence a summary
proceeding to remove Tenant from the premises as a holdover. If pursuant to (2)
the default is of such a nature that it cannot be cured within ten (10) days, if
Tenant commences to cure such default within ten (10) days and proceeds
diligently to remedy such default, the Landlord shall not have the right to
terminate this Lease.
B. If Tenants shall abandon the demised premises or if the premises
become and remain vacant or deserted for a period of fifteen (15) days, or if
the term of this Lease shall expire as hereinabove provided, or if Tenant fails
to take possession of the demised premises within forty-five (45) days after
commencement of the term of this Lease, Landlord may re-enter the demised
premises and remove Tenant or its legal representatives or other occupant by
summary proceedings or otherwise and Tenant hereby waives the service of notice
of intention or to institute legal proceedings to that end.
C. In case of any re-entry, expiration and/or dispossess by summary
proceedings or otherwise, the rent shall become due thereupon and be paid up to
the time of such re-entry, dispossess and/or expiration, together with such
expenses as Landlord may incur for legal expenses, attorneys fees, brokerage
and/or putting the demised premises in good order, or for preparing the same for
re-rental; Landlord may relet the premises or any part or parts thereof either
in the name of Landlord or
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<PAGE> 17
otherwise, for a term or terms which may at the Landlord's option be less than
or exceed the period which may otherwise have constituted the balance of the
term of this Lease and may grant reasonable concessions, or free rent; and
Tenant or the legal representatives of Tenant shall also pay Landlord as
liquidated damages for the failure of Tenant to observe and perform said
Tenant's covenants herein contained, and deficiency between all rent or
additional rent hereby reserved and/or covenanted to be paid, with percentage
rental computed for the balance of the term for the purpose of this article at
the average annual percentage rent for the two (2) full Lease years preceding
the default or re-entry and the net amount, if any, of the rents collected on
account of the Lease of the demised premises, for each month of the period which
would otherwise have constituted the balance of the terms of this Lease. In
computing such liquidated damages there shall be added to the said deficiency
such expenses as Landlord may incur in connection with reletting, such as
reasonable legal expenses, attorneys fees, brokerage and for keeping the demised
premises in good order or for preparing the same for reletting. Any such
liquidated damages shall be paid in monthly installments by Tenant on the rent
days specified in this Lease. Any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Landlord
to collect the deficiency for any subsequent month by a similar proceeding.
Landlord at Landlord's option may make such alterations, repairs, replacements
and/or decorations in the demised premises; and the making of such alterations,
repairs, replacement and/or decorations shall not operate or be construed to
release Tenant from liability hereunder as aforesaid. Landlord shall not be
liable for failure to relet the demised premises. The words "re-enter" or
"re-entry" as used in this Lease shall not be restricted to their technical
legal meaning. Any rents or other income received by Landlord on any such
re-rental shall be the property of Landlord alone and Tenant shall have no right
to any portion of such income. In the event that the Tenant is successful in any
proceeding brought pursuant to the provisions hereof, it shall be entitled to
its reasonable legal fees.
D. In the event of a breach or threatened breach by Tenants of any of
the covenants or provisions of this Lease, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or equity as if
re-entry, summary proceedings and other remedies were not herein provided for.
Mention in this Lease of any particular remedy shall not preclude Landlord from
any other remedy, in law or in equity. Tenants hereby expressly waive any and
all rights of redemption granted by order or any present or future laws in the
event of Tenants being evicted or dispossessed, or in the event of Landlord
obtaining possession of the demised premises by reason of Tenant's violation of
the provisions of this Lease. Tenants further waive the provisions of Section
749, Subparagraph 3 of the Real Property Actions and Proceedings Law and any
successor statute thereto.
E. In the event Tenants shall default in the payment of any rent or
additional rent as above provided, and such default shall continue for ten (10)
days after written
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<PAGE> 18
notice from Landlord, or its agent and not be made good within said ten (10) day
period, then and in such event, Landlord may, at its election, and in addition
to any other remedy herein afforded, declare this term at an end and accelerate
the rent due for the entire Lease period. In such event, the balance of the
minimum rent reserved from the date of such default until the last day of the
Lease period, shall thereupon be forthwith due and payable. Failure by Landlord
to relet the premises shall not be deemed an offset or defense to recovery of
the aforesaid minimum rent due for the balance of the term accelerated by reason
of Tenant's default above mentioned. Landlord shall be required to give the
notice provisions contained in paragraph "12" hereof.
F. If Tenants shall default in the performance of any provision,
covenant or condition on its part to be performed under this Lease, Landlord
may, at its option, perform the same for the account and at the expense of
Tenants. If Landlord at any time shall be compelled to pay or elected to pay any
sum of money by reason of the failure of the Tenant to comply with any provision
of this Lease, or if Landlord incurs any expense, including reasonable
attorney's fees in prosecuting or defending any action or proceeding by reason
of any default of Tenant under this Lease, the sums so paid by Landlord with
legal interest, costs, and damages shall be due from and be paid by Tenant to
Landlord on demand. All such sums, including all payments required to be made by
Tenants of any kind under this Lease, shall be deemed additional rent and
Landlord shall have all remedies for the collection thereof that Landlord may
have for non-payment of minimum rent. In the event that the Tenants are
successful in any proceedings brought pursuant to the provisions hereof, it
shall be entitled to its reasonable legal fees and costs.
37. The Tenants represent, warrant and declare that they have been
afforded the opportunity to make exterior and interior inspection of the
premises which are the subject of this Lease, that they have either made such
inspection of the said premises, or has caused such inspection of the said
premises to be made, and the Tenants distinctly understand that the premises are
being leased in their present condition and state of repair, and tenants agree
that at the time of closing Tenants will accept the premises in their present
condition and state of repair.
38. Prior to the commencement of any alterations contemplated by the
Tenants during the term of this Lease, the Tenants shall furnish written plans
and specifications therefor to the Landlord and obtain the Landlord's written
consent thereto, which consent will not be unreasonably withheld.
(a) The Tenants will apply for and obtain any and all permits
therefor as same may be required by any municipal agency or authority having
jurisdiction, prior to the commencement of such alterations, and will apply for
and secure any and all requisite certificates of occupancy or certificates of
completion therefor.
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<PAGE> 19
(b) The Landlord and Tenant acknowledge that the Tenant
contemplates causing extensive alterations and renovations to the demised
premises, at the Tenants' sole cost and expense.
The Tenant shall notify the Landlord upon the completion of
the foregoing alterations and renovations. Upon inspection by the Landlord that
same have been performed in a workmanlike and satisfactory manner, and of all
requisite permits, completion certificates and/or Certificates of Occupancy, are
to be furnished to the Landlord.
39. Tenant represents and warrants that Tenant did not consult with any
broker with regard to this transaction, and the Tenant agrees to indemnify and
save harmless the Landlord of any and all liability, expense, loss, cost or
damage that may arise by reason of any brokerage claims or demands by reason of
Tenant's acts, and makes this covenant as an express inducement to the Landlord,
intending that Landlord shall rely thereon entering into this Lease. This
covenant and representation is irrevocable, and shall survive the execution of
the within Lease.
40. If any provision of this Rider shall be in conflict with any
provision of the printed form of this lease, the provisions of this Rider shall
control.
In the Presence of: 40 Marcus Realty Associates,
BY: /s/ MICHAEL BIVONA
---------------------------------------
/s/ Veronica T. Boskowski , Landlord
- -------------------------
Manchester Equipment Co., Inc.
BY: /s/ BARRY STEINBERG
---------------------------------------
Barry Steinberg, Tenant
{15}
<PAGE> 20
Modification of Lease dated October 1995, between 40 Marcus Realty
Associates, as Landlord, and Manchester Equipment Co., Inc., as Tenant.
Re: Premises at 40 Marcus Boulevard, Hauppauge, New York 11788.
- -------------------------------------------------------------------------------
The Landlord and Tenant hereby agree to modify the terms and conditions
of the Lease as follows:
1. Anything to the contrary notwithstanding commencing October
1, 1996, the rents shall be adjusted and modified in accordance with the
following provisions:
Rider Paragraph 34 of the original Lease shall be deleted
and in place and stead thereof the following provisions shall apply:
34. The base rent for the described periods of the term of the within
Lease shall be as follows:
<TABLE>
<CAPTION>
Period Monthly
------ -------
<S> <C> <C>
Nov. 1, 1995 to July 31, 1996 $218,000.00 $24,000.00
Aug. 1, 1996 to Oct. 31, 1996 $ 42,583.76 $14,197.92
Nov. 1, 1996 to Oct. 31, 1997 $175,486.23 $14,623.85
Nov. 1, 1997 to Oct. 31, 1998 $180,750.81 $15,062.54
Nov. 1, 1998 to Oct. 31, 1999 $186,173.92 $15,514.44
Nov. 1, 1999 to Oct. 31, 2000 $191,758.51 $15,970.87
Nov. 1, 2000 to Oct. 31, 2001 $197,511.25 $16,459.27
Nov. 1, 2001 to Oct. 31, 2002 $203,436.48 $16,353.04
Nov. 1, 2002 to Oct. 31, 2003 $209,539.66 $17,461.63
Nov. 1, 2003 to Oct. 31, 2004 $215,825.84 $17,985.48
Nov. 1, 2004 to Oct. 31, 2005 $222,300.50 $18,525.00
</TABLE>
<PAGE> 21
2. This Modification is conditional and shall take effect only upon
the Tenant successfully completing the Public Offering of its shares now
contemplated. In the event the Public Offering of shares now contemplated is
not concluded on or before January 1, 1997, then, unless said date is extended
by written agreement of the parties, this Modification shall be null and void,
and the Lease shall be enforceable as originally written.
DATED: OCT. 2, 1996
40 Marcus Realty Associates
by: /s/ BARRY STEINBERG
------------------------------
Landlord
Manchester Equipment Co., Inc.
by: /s/ JOEL STEMPLE - V.P.
-------------------------------
Tenant
<PAGE> 1
EXHIBIT 10.5.b
35--Lease, Business Premises. JULIUS BLUMBERG, INC.
Loft, Office or Store. LAW BLANK PUBLISHERS
THIS LEASE made the day of January 1988, between MARCUS
REALTY, with offices at 684 Broadway, Massapequa, New York 11758
hereinafter referred to as LANDLORD, and MANCHESTER EQUIPMENT
CO., INC., a domestic corporation with offices at 50 Marcus
Blvd., Hauppauge, New York 11788 hereinafter jointly, severally
and collectively referred to as TENANT.
WITNESSETH, that the Landlord hereby leases to the Tenant, and
the Tenant hereby hires and takes from the Landlord the building
and parcel of land located at 50 Marcus Blvd., Hauppauge, New
York, as more particularly shown on the survey annexed hereto
and made a part hereof to be used and occupied by the Tenant for
any and all purposes permitted by the zoning laws and other
ordinances, rules and regulations of the municipalities having
jurisdiction thereover and for no other purpose, for a term of
ten (10) years to commence on February 1, 1988, and to end on
January 31, 1998, unless sooner terminated as hereinafter
provided, at the total rental of $3,810,000.00, as per Paragraph
36th of Rider, payable as follows: 2/1/88 - 1/31/89 - $300,000.
($25,000. per mo.); 2/1/89 - 1/31/90 - $318,000. ($26,500. per
mo.); 2/1/90 - 1/31/91 - $336,000. ($28,000. per mo.); 2/1/91 -
1/31/92 - $354,000. ($29,500. per mo.); 2/1/92 - 1/31/93 -
$372,000. ($31,000. per mo.); 2/1/93 - 1/31/94 - $390,000.
($32,500. per mo.); 2/1/94 - 1/31/95 - $408,000. ($34,000. per
mo.); 2/1/95 - 1/31/96 - $426,000. ($35,500. per mo.); 2/1/96 -
1/31/97 - $444,000. ($37,000. per mo.); 2/1/97 - 1/31/98 -
$462,000. ($38,500. per mo.).
THE TENANT JOINTLY AND SEVERALLY COVENANTS:
FIRST.--That the Tenant will pay the rent as above
provided.
REPAIRS SECOND.--That, throughout said term the Tenant will take
good care of the demised premises, fixtures and appurtenances,
and all alterations, additions and improvements to either; make
all repairs in and about the same necessary to preserve them in
good order and condition, which repairs shall be, in quality and
class, equal to the original work; promptly pay the expense of
ORDINANCES such repairs; suffer no waste or injury; give prompt notice to
AND the Landlord of any fire that may occur; execute and comply with
VIOLATIONS all laws, rules, orders, ordinances and regulations at any time
issued or in force (except those requiring structural
alterations), applicable to the demised premises or to the
Tenant's occupation thereof, of the Federal, State and Local
Governments, and of each and every department, bureau and
ENTRY official thereof, and of the New York Board of Fire
Underwriters; permit at all times during usual business hours,
the Landlord and representatives of the Landlord to enter the
demised premises for the purpose of inspection, and to exhibit
them for purposes of sale or rental; suffer the Landlord to make
repairs and improvements to all parts of the building, and to
comply with all orders and requirements of governmental
authority applicable to said building or to any occupation
thereof; suffer the Landlord to erect, use, maintain, repair and
replace pipes and conduits in the demised premises and to the
INDEMNIFY floors above and below; forever indemnify and save harmless the
LANDLORD Landlord for and against any and all liability, penalties,
damages, expenses and judgments arising from injury during said
term to person or property of any nature, occasioned wholly or
in part by any act or acts, omission or omissions of the Tenant,
or of the employees, guests, agents, assigns or undertenants of
the Tenant and also for any matter or thing growing out of the
occupation of the demised premises or of the streets, sidewalks
or vaults adjacent thereto; permit, during the six months next
prior to the expiration of the term the usual notice "To Let" to
be placed and to remain unmolested in a conspicuous place upon
the exterior of the demised premises; repair, at or before the
end of the term, all injury done by the installation or removal
of furniture and property; and at the end of the term, to quit
and surrender the demised premises with all alterations,
additions and improvements in good order and condition.
THIRD.--That the Tenant will not disfigure or deface any
MOVING part of the building, or suffer the same to be done, except so
INJURY far as may be necessary to affix such trade fixtures as are
SURRENDER herein consented to by the Landlord; the Tenant will not
obstruct, or permit the obstruction of the street or the
sidewalk adjacent thereto; will not do anything, or suffer
anything to be done upon the demised premises which will
increase the rate of fire insurance upon the building or any of
its contents, or be liable to cause structural injury to said
building; will not permit the accumulation of waste or refuse
NEGATIVE matter, and will not, without the written consent of the
COVENANTS Landlord first obtained in each case, either sell, assign,
mortgage or transfer this lease, underlet the demised premises
or any part thereof, permit the same or any part thereof to be
occupied by anybody other than the Tenant and the Tenant's
employees, make any alterations in the demised premises, use the
demised premises or any part thereof for any purpose other than
the one first above stipulated, or for any purpose deemed extra
hazardous on account of fire risk, nor in violation of any law
CONSTRUCTION or ordinance. That the Tenant will not obstruct or permit the
SIGNS obstruction of the light, halls, stairway or entrances to the
building, and will not erect or inscribe any sign, signals or
advertisements unless and until the style and location thereof
have been approved by the Landlord; and if any be erected or
inscribed without such approval, the Landlord may remove the
AIR same. No water cooler, air conditioning unit or system or other
CONDITIONING apparatus shall be installed or used without the prior written
consent of Landlord.
IT IS MUTUALLY COVENANTED AND AGREED, THAT
FOURTH.--If the demised premises shall be partially
damaged by fire or other cause without the fault or neglect of
Tenant, Tenant's servants, employees, agents, visitors or
licensees, the damages shall be repaired by and at the expense
of Landlord and the rent until such repairs shall be made shall
be apportioned according to the part of the demised premises
which is usable by Tenant. But if such partial damage is due to
the fault or neglect of Tenant, Tenant's servants, employees,
agents, visitors or licensees, without prejudice to any other
FIRE CLAUSE rights and remedies of Landlord and without prejudice to the
rights of abrogation of Landlord's insurer, the damages shall
be repaired by Landlord but there shall be no apportionment or
abatement of rent. No penalty shall accrue for reasonable delay
which may arise by reason of adjustment of insurance on the part
of Landlord and/or Tenant, and for reasonable delay on account
of "labor troubles", or any other cause beyond Landlord's
control. If the demised premises are totally damaged or are
rendered wholly untenantable by fire or other cause, and if
Landlord shall decide not to restore or not to rebuild the same,
or if the building shall be so damaged that Landlord shall
decide to demolish it or to rebuild it, then or in any of such
events Landlord may, within ninety (90) days after such fire or
other cause, give tenant a notice in writing of such decision,
which notice shall be given as in Paragraph Twelve hereof
provided, and thereupon the term of this lease shall expire by
lapse of time upon the third day after such notice is given, and
Tenant shall vacate the demised premises and surrender the same
to Landlord. If Tenant shall not be in default under this lease
then, upon the termination of this lease under the conditions
provided for in the sentence immediately preceding, Tenant's
liability for rent shall cease as of the day following the
casualty. Tenant hereby expressly waives the provisions of
Section 227 of the Real Property Law and agrees that the
foregoing provisions of this Article shall govern and control in
lieu thereof. If the damage or destruction be due to the fault
or neglect of Tenant the debris shall be removed by, and at the
expense of, Tenant.
FIFTH.--If the whole or any part of the premises hereby
demised shall be taken or condemned by any competent authority
EMINENT for any public use or purpose then the term hereby granted shall
DOMAIN cease from the time when possession of the part so taken shall
be required for such public purpose and without apportionment
of award, the Tenant hereby assigning to the Landlord all right
and claim to any such award, the current rent, however, in such
case to be apportioned.
SIXTH.--If, before the commencement of the term, the
Tenant be adjudicated a bankrupt, or make a "general
LEASE NOT assignment," or take the benefit of any insolvent act, or if a
IN EFFECT Receiver or Trustee be appointed for the Tenant's property, or
if this lease or the estate of the Tenant hereunder be
transferred or pass to or devolve upon any other person or
corporation, or if the Tenant shall default in the performance
of any agreement by the Tenant contained in any other lease to
the Tenant by the Landlord or by any corporation of which an
officer of the Landlord is a Director, this lease shall thereby,
at the option of the Landlord, be terminated and in that case,
neither the Tenant nor anybody claiming under the Tenant shall
be entitled to go into possession of the demised premises, if
after the commencement of the term, any of the events mentioned
above in this subdivision shall occur, or if Tenant shall make
DEFAULTS default in fulfilling any of the covenants of this lease, other
than the covenants for the payment of rent or "additional rent"
or if the demised premises become vacant or deserted, the
Landlord may give to the Tenant ten days' notice of intention to
end the term of this lease, and thereupon at the expiration of
said ten days' (if said condition which was the basis of said
notice shall continue to exist) the term under this lease shall
expire as fully and completely as if that day were the date
herein definitely fixed for the expiration of the term and the
Tenant will then quit and surrender the demised premises to the
TEN DAY Landlord, but the Tenant shall remain liable as hereinafter
NOTICE provided.
<PAGE> 2
POSSESSION If the Tenant shall make default in the payment of the rent
LANDLORD reserved hereunder, or any item of "additional rent" herein
mentioned, or any part of either or in making any other payment
herein provided for, or if the entire last above provided for
shall have been given and if the condition which was the basis of
said notice shall exist at the expiration of said ten days'
period, the Landlord may immediately, or at any time thereafter,
re-enter the demised premises and remove all persons and all or
any otherwise, without being liable to indictment, prosecution or
damages therefor, and re-possess and enjoy said premises together
with all additions, alterations and improvements. In any such
case or in the event that this lease be "terminated" before the
commencement of the term, as above provided, the Landlord may
RE-LETTING either re-let the demised premises or any part or parts thereof
for the Landlord's own account, or may, at the Landlord's option,
re-let the demised premises or any part or parts thereof as the
agent of the Tenant, and receive the rents therefor, applying the
same first to the payment of such expenses as the Landlord may
leave incurred, and then to the fulfillment of the covenants of
the Tenant herein, and the balance, if any, at the expiration of
the term first above provided for, shall be paid to the Tenant.
Landlord may rent the premises for a term extending beyond the
term hereby granted without releasing Tenant from any liability.
In the event that the term of this lease shall expire as above in
WAIVER this sub-division "Sixth" provided, or terminate by summary
BY TENANT proceedings or otherwise, and if the Landlord shall not re-let
the demised premises for the Landlord's own account, then,
whether or not the premises be re-let, the Tenant shall remain
liable for, and the Tenant hereby agrees to pay to the Landlord,
until the time when this lease would have expired but for such
termination or expiration, the equivalent of the amount of all of
the rent and "additional rent" reserved herein, less the avails
of reletting, if any, and the same shall be due and payable by
the Tenant to the Landlord on the several rent days above
specified, that is, upon each of such rent days the Tenant shall
pay to the Landlord the amount of deficiency then existing. The
Tenant hereby expressly waives any and all right of redemption in
case the Tenant shall be dispossessed by judgment or warrant of
any court or judge, and the Tenant waives and will waive all
right to trial by jury in any summary proceedings hereafter
instituted by the Landlord against the Tenant in respect to the
demised premises. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning.
REMEDIES ARE In the event of a breach or threatened breach by the
ACCUMULATIVE Tenant of any of the covenants or provisions hereof, the Landlord
shall have the right of injunction and the right to invoke any
remedy allowed at law or in equity, as if re-entry, summary
proceedings and other remedies were not herein provided for.
SEVENTH. -- If the Tenant shall make default in the
performance of any covenant herein contained, the Landlord may
immediately, or at any time thereafter, without notice, perform
the same for the account of the Tenant. If a notice of mechanic's
lien be filed against the demised premises or against premises of
LANDLORD which the demised premises are part, for, or purporting to be
MAY for, labor or material alleged to have been furnished, or to be
PERFORM furnished to or for the Tenant at the demised premises, and if
the Tenant shall fail to take such action as shall cause such
lien to be discharged within fifteen days after the filing of
such notice, the Landlord may pay the amount of such lien or
discharge the same by deposit or by bonding proceedings, and in
the event of such deposit or bonding proceedings, the Landlord
may require the lienor to prosecute an appropriate action to
ADDITIONAL enforce the lienor's claim. In such case, the Landlord may pay
RENT any judgment recovered on such claim. Any amount paid or expense
incurred by the Landlord as in this subdivision of this lease
provided, and any amount as to which the Tenant shall at any time
be in default for or in respect to the use of water, electric
current or sprinkler supervisory service, and any expense
incurred or sum of money paid by the Landlord by reason of the
failure of the Tenant to comply with any provision hereof, or in
defending any such action, shall be deemed to be "additional
rent" for the demised premises, and shall be due and payable by
the Tenant to the Landlord on the first day of the next following
month, or, at the option of the Landlord, on the first day of any
succeeding month. The receipt by the Landlord of any instalment
of the regular stipulated rent hereunder or any of said
"additional rent" shall not be a waiver of any other "additional
rent" then due.
EIGHTH. -- The failure of the Landlord to insist, in any
one or more instances upon a strict performance of any of the
covenants of this lease, or to exercise any option herein
AS TO contained, shall not be construed as a waiver or a relinquishment
WAIVERS for the future of such covenant or option, but the same shall
continue and remain in full force and effect. The receipt by the
Landlord of rent, with knowledge of the breach of any covenant
hereof, shall not be deemed a waiver of such breach and no
waiver by the Landlord of any provision hereof shall be deemed to
have been made unless expressed in writing and signed by the
Landlord. Even though the Landlord shall consent to an assignment
hereof no further assignment shall be made without express
consent in writing by the Landlord.
NINTH. -- If this lease be assigned, or if the demised
COLLECTION premises or any part thereof be underlet or occupied by anybody
OF RENT other than the Tenant the Landlord may collect rent from the
FROM OTHERS assignee, under-tenant or occupant, and apply the net amount
collected to the rent herein reserved, and no such collection
shall be deemed a waiver of the covenant herein against
assignment and underletting, or the acceptance of the assignee,
under-tenant or occupant as tenant, or a release of the Tenant
from the further performance by the Tenant of the covenants
herein contained on the part of the Tenant.
TENTH. -- This lease shall be subject and subordinate at
MORTGAGES all times, to the lien of the mortgages now on the demised
premises, and to all advances made or hereafter to be made upon
the security thereof, and subject and subordinate to the lien of
any mortgage or mortgages which at any time may be made a lien
upon the premises. The Tenant will execute and deliver such
further instrument or instruments subordinating this lease to the
lien of any such mortgage or mortgages as shall be desired by any
mortgagee or proposed mortgagee. The Tenant hereby appoints the
Landlord the attorney-in-fact of the Tenant, irrevocable, to
execute and deliver any such instrument or instruments for the
Tenant.
ELEVENTH. -- All improvements made by the Tenant to or
IMPROVEMENTS upon the demised premises, except said trade fixtures, shall when
made, at once be deemed to be attached to the freehold, and
become the property of the Landlord, and at the end or other
expiration of the term, shall be surrendered to the Landlord in
as good order and condition as they were when installed,
reasonable wear and damages by the elements excepted.
TWELFTH. -- Any notice or demand when under the terms of
NOTICES this lease or under any statute must or may be given or made by
the parties hereto shall be in writing and shall be given or made
by mailing the same by certified or registered mail addressed to
the respective parties at the addresses set forth in this lease.
THIRTEENTH. -- The Landlord shall not be liable for any
LIABILITY failure of water supply or electrical current, sprinkler damage,
or failure of sprinkler service, nor for injury or damage to
person or property caused by the elements or by other tenants or
persons in said building, or resulting from steam, gas,
electricity, water, rain or snow, which may leak or flow from any
part of said buildings, or from the pipes, appliances or plumbing
works of the same, or from the street or sub-surface, or from
any other place, nor for interference with light or other
incorporeal hereditaments by anybody other than the Landlord, or
caused by operations by or for a governmental authority in
construction of any public or quasi-public work, neither shall
the Landlord be liable for any latent defect in the building.
FOURTEENTH. -- No diminution or abatement of rent, or
NO other compensation shall be claimed or allowed for inconvenience
ABATEMENT or discomfort arising from the making of repairs or improvements
to the building or to its appliances, nor for any space taken to
comply with any law, ordinance or order of a governmental
authority. In respect to the various "services," if any, herein
expressly or impliedly agreed to be furnished by the Landlord to
the Tenant, it is agreed that there shall be no diminution or
abatement of the rent, or any other compensation, for
interruption or curtailment of such "service" when such
interruption or curtailment shall be due to accident, alterations
or repairs desirable or necessary to be made or to inability or
difficulty in securing supplies or labor for the maintenance of
such "service" or to some other cause, not gross negligence on
the part of the Landlord. No such interruption or curtailment of
any such "service" shall be deemed a constructive eviction. The
Landlord shall not be required to furnish, and the Tenant shall
not be entitled to receive, any of such "services" during any
period wherein the Tenant shall be in default in respect to the
payment of rent. Neither shall there be any abatement or
diminution of rent because of making of repairs, improvements or
decorations to the demised premises after the date above fixed
for the commencement of the term, it being understood that rent
shall, in any event, commence to run at such date so above fixed.
FIFTEENTH. -- The Landlord may prescribe and regulate
RULES, ETC. the placing of safes, machinery, quantities of merchandise and
other things. The Landlord may also prescribe and regulate which
elevator and entrances shall be used by the Tenant's employees,
and for the Tenant's shipping. The Landlord may make such other
and further rules and regulations as in the Landlord's judgment,
may from time to time be needful for the safety, care or
cleanliness of the building, and for the preservation of good
order therein. The Tenant and the employees and agents of the
Tenant will observe and conform to all such rules and
regulations.
SIXTEENTH. -- In the event that an excavation shall be
RESTORING OF made for building or other purposes upon land adjacent to the
WALLS demised premises or shall be contemplated to be made, the Tenant
shall afford to the person or persons causing or to cause such
excavation, license to enter upon the demised premises for the
purpose of doing such work as said person or persons shall deem
to be necessary to preserve the wall or walls, structure or
structures upon the demised premises from injury and to support
the same by proper foundations.
SEVENTEENTH. -- No vaults or space not within the
VAULT SPACE property line of the building are leased hereunder. Landlord
makes no representation as to the location of the property line
of the building. Such vaults or space as Tenant may be permitted
to use or occupy are to be used or occupied under a revocable
license and if such license be revoked by the Landlord as to the
use of part or all of the vaults or space Landlord shall not be
subject to any liability; Tenant shall not be entitled to any
compensation or reduction in rent nor shall this be deemed
constructive or actual eviction. Any tax, fee or charge of
municipal or other authorities for such vaults or space shall be
paid by the Tenant for the period of the Tenant's use or
occupancy thereof.
EIGHTEENTH. -- That during seven months prior to the
ENTRY expiration of the term hereby granted, applicants shall be
admitted at all reasonable hours of the day to view the premises
until rented; and the Landlord and the Landlord's agents shall be
permitted at any time during the term to visit and examine them
at any reasonable hour of the day, and workmen may enter at any
time, when authorized by the Landlord or the Landlord's agents,
to make or facilitate repairs in any part of the building: and if
the said Tenant shall not be personally present to open and
permit an entry into said premises, at any time, when for any
reason an entry therein shall be necessary or permissible
hereunder, the Landlord or the Landlord's agents may forcibly
enter the same without rendering the Landlord or such agents
liable to any claim or cause of action for damages by reason
thereof (if during such entry the Landlord shall accord
reasonable care to the Tenant's property) and without in any
manner affecting the obligations and covenants of this lease; it
is, however, expressly understood that the right and authority
hereby reserved, does not impose, nor does the Landlord assume,
by reason thereof, any responsibility or liability whatsoever for
the care or supervision of said premises, or any of the pipes,
fixtures, appliances or appurtenances therein contained or
therewith in any manner connected.
NINETEENTH. -- The Landlord has made no representations
NO REPRE- or promises in respect to said building or to the demised
SENTATIONS premises except those contained herein, and those, if any
contained in some written communication to the Tenant, signed by
the Landlord. This instrument may not be changed, modified,
discharged or terminated orally.
TWENTIETH. -- If the Tenant shall at any time be in
ATORNEY'S default hereunder, and if the Landlord shall institute an action
FEES or summary proceeding against the Tenant based upon such default,
then the Tenant will reimburse the Landlord for the expenses of
attorneys' fees and disbursements thereby incurred by the
Landlord, so far as the same are reasonable in amount. Also so
long as the Tenant shall be a tenant hereunder the amount of such
expenses shall be deemed to be "additional rent" hereunder and
shall be due from the Tenant to the Landlord on the first day of
the month following the incurring of such respective expenses.
TWENTY-FIRST. -- Landlord shall not be liable for
POSSESSION failure to give possession of the premises up on commencement
date by reason of the fact that premises are not ready for
occupancy, or due to a prior Tenant wrongfully holding over or
any other person wrongfully in possession or for any other
reason in such event the rent shall not commence until
possession is given or is available, but the term herein shall
not be extended.
<PAGE> 3
THE TENANT FURTHER COVENANTS:
IF A FIRST TWENTY-SECOND.--If the demised premises or any part
FLOOR thereof consist of a store, or of a first floor, or of any part
thereof, the Tenant will keep the sidewalk and curb in front
thereof clean at all times and free from snow and ice, and will
keep insured in favor of the Landlord, all plate glass therein
and furnish the Landlord with policies of insurance covering
the same.
TWENTY-THIRD.--If by reason of the conduct upon the
INCREASED demised premises of a business not herein permitted, or if by
FIRE reason of the improper or careless conduct of any business upon
INSURANCE or use of the demised premises, the fire insurance rate shall at
RATE any time be higher than it otherwise would be, then the Tenant
will reimburse the Landlord, as additional rent hereunder, for
that part of all fire insurance premiums hereafter paid out by
the Landlord which shall have been charged because of the
conduct of such business not so permitted, or because of the
improper or careless conduct of any business upon or use of the
demised premises, and will make such reimbursement upon the
first day of the month following such outlay by the Landlord;
but this covenant shall not apply to a premium for any period
beyond the expiration date of this lease, first above specified.
In any action or proceeding wherein the Landlord and Tenant are
parties, a schedule or "make up" of rate for the building on the
demised premises, purporting to have been issued by New York
Fire Insurance Exchange, or other body making fire insurance
rates for the demised premises, shall be prima facie evidence of
the facts therein stated and of the several items and charges
included in the fire insurance rate then applicable to the
demised premises.
TWENTY-FOURTH.--If a separate water meter be installed
WATER RENT for the demised premises, or any part thereof, the Tenant will
keep the same in repair and pay the charges made by the
municipality or water supply company for or in respect to the
consumption of water, as and when bills therefor are rendered.
If the demised premises, or any part thereof, be supplied with
water through a meter which supplies other premises, the Tenant
will pay to the Landlord, as and when bills are rendered
therefor, the Tenant's proportionate part of all charges which
the municipality or water supply company shall make for all
water consumed through said meter, as indicated by said meter.
Such proportionate part shall be fixed by apportioning the
respective charge according to floor area against all of the
rentable floor area in the building (exclusive of the basement)
which shall have been occupied during the period of the
respective charges, taking into account the period that each
part of such area was occupied. Tenant agrees to pay as
additional rent the Tenant's proportionate part, determined as
SEWER aforesaid, of the sewer rent or charge imposed or assessed upon
the building of which the premises are a part.
TWENTY-FIFTH.--That the Tenant will purchase from the
ELECTRIC Landlord, if the Landlord shall so desire, all electric current
CURRENT that the Tenant requires at the demised premises, and will pay
the Landlord for the same, as the amount of consumption shall
be indicated by the meter furnished therefor. The price for said
current shall be the same as that charged for consumption
similar to that of the Tenant by the company supplying
electricity in the same community. Payments shall be due as and
when bills shall be rendered. The Tenant shall comply with like
rules, regulations and contract provisions as those prescribed
by said company for a consumption similar to that of the Tenant.
TWENTY-SIXTH.--If there now is or shall be installed in
SPRINKLER said building a "sprinkler system" the Tenant agrees to keep
SYSTEM the appliances thereto in the demised premises in repair and
good working condition, and if the New York Board of Fire
Underwriters or the New York Fire Insurance Exchange or any
bureau, department or official of the State or local government
requires or recommends that any changes, modifications,
alterations or additional sprinkler heads or other equipment be
made or supplied by reason of the Tenant's business, or the
location of partitions, trade fixtures, or other contents of the
demised premises, or if such changes, modifications,
alterations, additional sprinkler heads or other equipment in
the demised premises are necessary to prevent the imposition of
a penalty or charge against the full allowance for a sprinkler
system in the fire insurance rate as fixed by said Exchange, or
by any Fire Insurance Company, the Tenant will at the Tenant's
own expense, promptly make and supply such changes,
modifications, alterations, additional sprinkler heads or other
equipment. As additional rent hereunder the Tenant will pay to
the Landlord, annually in advance, throughout the term
$____________ toward the contract price for sprinkler
supervisory service.
TWENTY-SEVENTH. --The sum of ____NONE_______
SECURITY Dollars is deposited by the Tenant herein with the Landlord
herein as security for the faithful performance of all the
covenants and conditions of the lease by the said Tenant. If
the Tenant faithfully performs all the covenants and conditions
on his part to be performed, then the sum deposited shall be
returned to said Tenant.
TWENTY-EIGHTH.--This lease is granted and accepted on
NUISANCE the especially understood and agreed condition that the Tenant
will conduct his business in such a manner, both as regards
noise and kindred nuisances, as will in no wise interfere with,
annoy, or disturb any other tenants, in the conduct of their
several businesses, or the landlord in the management of the
building; under penalty of forfeiture of this lease and
consequential damages.
TWENTY-NINTH.--The Landlord hereby recognizes
BROKERS as the broker who negotiated and consummated this lease
COMMISSIONS with the Tenant herein, and agrees that if, as, and when the
Tenant exercises the option, if any, contained herein to renew
this lease, or fails to exercise the option, if any, contained
therein to cancel this lease, the Landlord will pay to said
broker a further commission in accordance with the rules and
commission rates of the Real Estate Board in the community. A
sale, transfer, or other disposition of the Landlord's interest
in said lease shall not operate to defeat the Landlord's
obligation to pay the said commission to the said broker. The
Tenant herein hereby represents to the Landlord that the said
broker is the sole and only broker who negotiated and
consummated this lease with the Tenant.
THIRTIETH.--The Tenant agrees that it will not
WINDOW require, permit, suffer, nor allow the cleaning of any window,
CLEANING or windows, in the demised premises from the outside (within the
meaning of Section 202 of the Labor Law) unless the equipment
and safety devices required by law, ordinance, regulation or
rule, including, without limitation, Section 202 of the New York
Labor Law, are provided and used, and unless the rules, or any
supplemental rules of the Industrial Board of the State of New
York are fully complied with; and the Tenant hereby agrees to
indemnify the Landlord, Owner, Agent, Manager and/or
Superintendent, as a result of the Tenant's requiring,
permitting, suffering, or allowing any window, or windows in the
demised premises to be cleaned from the outside in violation of
the requirements of the aforesaid laws, ordinances, regulations
and/or rules.
THIRTY-FIRST.--The invalidity or unenforceability of
VALIDITY any provision of this lease shall in no way affect the validity
or enforceability of any other provision hereof.
THIRTY-SECOND.--In order to avoid delay, this lease
EXECUTION has been prepared and submitted to the Tenant for signature with
& DELIVERY the understanding that it shall not bind the Landlord unless and
OF LEASE until it is executed and delivered by the Landlord.
THIRTY-THIRD.--The Tenant will keep clean and polished
EXTERIOR OF all metal, trim, marble and stonework which are a part of the
PREMISES exterior of the premises, using such materials and method as the
Landlord may direct, and if the Tenant shall fail to comply with
the provisions of this paragraph, the Landlord may cause such
work to be done at the expense of the Tenant.
THIRTY-FOURTH.--The Landlord shall replace at the
PLATE GLASS expense of the Tenant any and all broken glass in the skylights,
doors and walls in and about the demised premises. The Landlord
may insure and keep insured all plate glass in the skylights,
doors and walls in the demised premises, for and in the name of
the Landlord and bills for the premiums therefor shall be
rendered by the Landlord to the Tenant at such times as the
Landlord may elect, and shall be due from and payable by the
Tenant when rendered, and the amount thereof shall be deemed to
be, and shall be paid as, additional rent.
THIRTY-FIFTH. -- This lease and the obligation of Tenant
WAR to pay rent hereunder and perform all of the other covenants and
EMERGENCY agreements hereunder on part of Tenant to be performed shall in
nowise be affected, impaired or excused because Landlord is
unable to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is unable to make, or
is delayed in making any repairs, additions, alterations or
decorations or is unable to supply or is delayed in supplying
any equipment or fixtures if Landlord is prevented or delayed
from so doing by reason of governmental preemption in
connection, with a National Emergency declared by the President
of the United States or in connection with any rule, order or
regulation of any department or subdivision thereof of any
government agency or by reason of the conditions of supply and
demand which have been or are affected by war or other
emergency.
THE LANDLORD COVENANTS
QUIET FIRST.--That if and so long as the Tenant pays the
POSSESSION rent and "additional rent" reserved hereby, and performs and
observes the covenants and provisions hereof, the Tenant shall
quietly enjoy the demised premises, subject, however, to the
terms of this lease, and to the mortgages above mentioned,
provided however, that this covenant shall be conditioned upon
the retention of title to the premises by Landlord.
ELEVATOR
HEAT
And it is mutually understood and agreed that the
covenants and agreements contained in the within lease shall be
binding upon the parties hereto and upon their respective
successors, heirs, executors and administrators.
IN WITNESS WHEREOF, the Landlord and Tenant have
respectively signed and sealed these presents the day and year
first above written.
MARCUS REALTY
By: /s/ BARRY STEINBERG [L.S.]
-------------------------Landlord
IN PRESENCE OF:
MANCHESTER EQUIPMENT CO., INC.
By: /s/ BARRY STEINBERG [L.S.]
--------------------------Tenant
BARRY STEINBERG - PRES.
<PAGE> 4
RIDER TO AND FORMING PART OF LEASE
DATED JANUARY , 1988, by and
between MARCUS REALTY, as Landlord,
and MANCHESTER EQUIPMENT CO., INC.,
as Tenant.
RE: Premises - 50 Marcus Blvd. Hauppauge, NY
36th. RENTAL: That the Tenant shall pay the sum of THREE MILLION EIGHT HUNDRED
TEN THOUSAND ($3,810,000.00) DOLLARS as the rental for the ten (10) year term of
the within Lease, which said total rental shall be payable at the monthly rate
as set forth on page 1 of the within Lease.
37th. INVOLUNTARY ASSIGNMENT: Notwithstanding any provision herein contained to
the contrary, the Landlord shall not be required to consent to any involuntary
assignment of this Lease or of the interest of the Tenant in this Lease by
operation of law. Each of the following acts shall be considered an involuntary
assignment:
(a) If Tenant is or becomes bankrupt or insolvent or is a
debtor-in-possession under any insolvency statute such as "Chapter XI"
proceedings under the Bankruptcy Act, or where Tenant makes an assignment for
the benefit of creditors or institutes a proceeding under the Bankruptcy Act in
which the Tenant is a bankrupt or a debtor or a debtor-in-possession or if any
proceeding is instituted against the Tenant under the Bankruptcy Act; or if
Tenant is a partnership or consists of more than one person or entity, if any
partner of the partnership or other person or entity is or becomes bankrupt or
insolvent or makes an assignment for the benefit of creditors or in the event
any court, court officer, referee, judge, trustee or judicial officer attempts
to assign or offer for sale at auction or otherwise the subject lease; or
(b) If a writ of attachment or execution is levied on this Lease; or
(c) If, in any proceeding or action to which Tenant is a party, a
receiver is appointed with authority to take possession of the premises.
An involuntary assignment shall constitute a default by Tenant and
Landlord shall have the right to elect to terminate this Lease, in which case
this Lease shall not be treated as an asset of Tenant.
38th. WAIVER OF JURY TRIAL AND COUNTERCLAIM: The parties hereto shall and they
hereby do waive trial by jury in any action, proceeding or counterclaim brought
by either of the parties hereto against the other on any matters whatsoever
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Lease premises, and/or any
claim of injury or damage. In the event Landlord commences any proceeding for
non-payment of rent, minimum rent or additional rent, Tenant will not interpose
any counterclaims of whatever nature or description in any such proceeding. This
shall not, however, be construed as a waiver of the Tenant's right to assert
such claims in any separate action or actions brought by the Tenant.
39th. LEGAL EXPENSES: In case suit shall be brought for recovery of possession
of the leased premises, for the recovery of rent or any other amount due under
the provisions of this Lease, or because of the breach of any other covenants
herein contained on the part of the Tenant to be kept or performed, and a breach
shall be established, Tenant shall pay to Landlord all expenses incurred
therefor, including a reasonable attorney's fee.
40th. INDEMNIFICATION OF LANDLORD: Tenant will indemnify the Landlord and save
it harmless from and against any and all claims, actions, damages, liabilities
and expenses in connection with loss of life, personal injury and/or damage to
property arising from or out of any occurrence in, upon or at the leased
premises or any part thereof, or occasioned wholly or in part by any act or
omission of Tenant, its agents, contractors, employees, servants, lessees or
concessionaires. In case Landlord shall , without fault on its part be made a
party to any litigation commenced by or against Tenant, then Tenant shall
protect and hold Landlord harmless and shall pay all costs, expenses and
reasonable attorney's fees incurred or paid by Landlord in connection with such
litigation.
<PAGE> 5
41st. LIENS: Tenant agrees not to suffer or permit during the demised term, any
mechanic's or other lien for work, labor and services and/or materials furnished
or otherwise to attach to and become a lien upon the premises as a result of any
work done by or on behalf of Tenant. If such lien shall so attach, Tenant shall
within 30 days after notice thereof, either pay or satisfy the same or procure
the discharge thereof of record in such manner as may be permitted or provided
by law. Should Tenant fail or refuse to discharge any such lien within the
period herein provided, then Landlord is hereby authorized to add the amount of
the said lien to any regular installment of rent thereafter becoming due as
additional rent.
42nd. ESTOPPEL CERTIFICATE: Within ten (10) days after request therefor by
Landlord, Tenant shall deliver in recordable form a certificate to Landlord or
to any proposed mortgagee or purchaser certifying that this Lease is in full
force and effect and that there are no defenses or offsets to any rent payments,
or stating those defaults or claims claimed by Tenant; such certificate to be
furnished without charge.
43rd. NOTICE: All notices, requests, demands or other communications desired or
required to be given under any of the provisions hereof shall be in writing and
shall be deemed to have been duly given on the date mailed if sent by certified
mail addressed to Tenant at 50 Marcus Blvd., Hauppauge, New York 11788, and to
the Landlord at 684 Broadway, Massapequa, New York 11758, or at such other or
additional address as the parties may furnish by such notice to the other.
44th. NO BROKER: Tenant represents and warrants to the Landlord that Tenant has
dealt with no real estate broker, real estate company or salesman as to give
rise to any claim for brokerage commission or similar compensation and the
Tenant does herewith hold harmless, save and indemnify the Landlord from any
claims of any real estate brokers, real estate companies or real estate
salesmen for brokerage commissions.
45th. UTILITIES: The Tenant agrees to pay for all utilities utilized by it in
connection with its occupancy for the demised premises including, but not by way
of limitation to, fuel, oil, electricity, gas (if any) and water. The Tenant
further agrees to have the aforementioned utilities placed in its name and to
make any requisite deposits therefor before occupying the demised premises. The
Tenant further agrees to pay for the aforesaid utilities within ten (10) days
after bills therefor have been received by it.
46th. CERTIFICATES AND PERMITS: During the entire term of this lease, the Tenant
shall be required to keep in full force and effect all necessary certificates
for the purposes for which the demised premises are rented, permits and other
approvals or consents required by any governmental authority having jurisdiction
over the business conducted by the Tenant as set forth in the purpose clause of
this Lease.
47th. INSURANCE:
(a) Tenant, at its cost, shall maintain a policy of standard fire and
extended coverage insurance with vandalism and malicious mischief endorsements
to the extent of at least 80% of full replacement value, defined as follows:
$2,500,000.00. The insurance policy shall be issued in the names of Landlord,
Tenant and Landlord's lender, if any, now or in the future, as their interests
appear. The insurance policy shall provide that any proceeds shall be made
payable to Landlord or Landlord's lender as Landlord may designate. If
necessary, and at Landlord's request, the Tenant agrees to assign and deliver at
the commencement of this Lease, said insurance policy to the Landlord and the
said policy and renewal thereof shall be held by said Landlord. In the event the
Tenant does not pay the premiums as they fall due on said policy, Landlord shall
have the option of paying said premiums on behalf of Tenant, and adding the cost
thereof to the next month's rent due Landlord under the terms of this Lease as
additional rent and to collect same as "additional rent".
(b) Tenant, at its cost, shall maintain plate glass insurance and
public liability and property damage insurance and products liability insurance
<PAGE> 6
with liability limits of not less than $500,000.00 per person per occurrence and
$1,500,000.00 per occurrence and property damage limits of not less than
$50,000.00, insuring against all liability of Tenant and its authorized
representatives arising out of and in connection with Tenant's use, occupancy
and possession of the premises. All public liability insurance and products
liability insurance and property damage insurance shall insure performance by
Tenant of the indemnity provisions of paragraph "40th" of this Rider. Both
parties shall be named as co-insureds and the policy shall contain
cross-liability endorsements and the original policy shall be delivered to
Landlord at the commencement of this Lease. In the event the Tenant does not pay
the premiums as they fall due on said policies, Landlord shall have the option
of paying said premiums on behalf of Tenant, and adding the cost thereof to the
next month's rent due Landlord under the terms of this Lease as additional rent
and to collect said as "additional rent".
48th. DESTRUCTION:
(a) If, during the term of this Lease, the premises are totally or
partially destroyed from a risk covered by the insurance described in paragraph
"47th" of this Rider, rendering the premises totally or partially inaccessible
or unusable, or partially damaged but still usable, Tenant shall restore the
premises to substantially the same condition as they were in immediately before
destruction, whether or not the insurance proceeds are sufficient to cover the
actual cost of restoration. Such destruction shall not terminate this Lease.
However, if premises are not able to be used by Tenant for its business
operation, rent will abate until premises are restored.
(b) If, during the term of this lease, the premises are destroyed in a
manner described in subparagraph "(a)" of this paragraph "48th", both Tenant and
Landlord shall make the loss adjustment with the insurance company insuring the
loss, and on receipt of the proceeds, same shall be paid to Landlord and
Landlord shall hold same in escrow as follows:
All sums deposited with the Landlord shall be paid in installments by the
Landlord to the contractor retained by Tenant as construction progresses for
payment of the cost of restoration. A 10% retention fund shall be established
that will be paid to the contractor on completion of restoration, payment of all
costs, expiration of all applicable lien periods and proof that the premises are
free of all mechanic's liens and lienable claims, and the furnishing of all
municipal certificates. If the Landlord in its reasonable discretion determines
that a particular installment requested by Tenant or Tenant's contractor is
improper, it shall have the right to appoint its own construction supervisor to
determine the validity of such installment and to make payments on certificates
approved by Landlord's construction supervisor, and the reasonable expenses of
Landlord's construction supervisor shall be paid out of the escrow funds and
charged to Tenant's account.
Both parties agree to promptly execute all documents and perform all
acts reasonable required by either Landlord or any substitute insurance trustee
to perform its obligations under this paragraph.
49th. CONSENT OF PARTIES: Whenever consent or approval of either party is
required, that party shall not unreasonably withhold such consent or approval
except as same may be limited by paragraph "37th" of this Rider.
50th. ADDITIONAL RENT: The Tenant shall pay as additional rent any money
required to be paid pursuant to this Lease and all other sums of money or
charges required to be paid by Tenant under this Lease whether or not the same
be designated as "additional rent". If such amounts or charges are not paid at
the time provided in this Lease or if real estate taxes, increases, water
charges or assessments as well as insurance premiums are not paid within the
grace period allowed by the taxing authorities, water companies or insurance
companies, they shall, nevertheless, if not paid when due, be collectible as
additional rent with any installment of rent thereafter falling due hereunder,
but nothing herein contained shall be deemed to suspend or delay the payment of
any money, charge or amount at the time same becomes due and payable hereunder,
or limit any other remedy of the Landlord.
51st. AS IS: The Tenant does herewith acknowledge and declare that it is fully
familiar with the premises and environs and the buildings and improvements
<PAGE> 7
thereon, and accepts said premises and environs, the buildings and improvements
thereon in an "as is" condition, and Landlord makes no representation or
warranty as to the fitness, feasibility or use of the demised premises, and any
violations placed on the premises either prior to or after the date hereof,
shall be removed by Tenant; PROVIDED, HOWEVER, that at the commencement of the
within Lease, it shall be the Landlord's responsibility to place the electric
oil burner and air-conditioning systems in working order.
52nd. CONFLICT IN LANGUAGE: Should any conflict in language or interpretation
occur between the printed provisions of this Lease and the provisions contained
in the Rider of the Lease, the parties agree that the provisions contained in
the Rider of the Lease, the parties agree that the provisions in the Rider shall
prevail. All reference to paragraph numbers in the Rider shall refer to
paragraphs so numbered in the Rider and not to paragraphs in the printed portion
of this Lease unless so designated or unless the context of the Rider is
intended to designate the printed portion of the Lease.
53rd. AGREEMENTS BETWEEN PARTIES: This Lease contains all of the agreements and
understandings of the parties and cannot be amended or modified except by a
written agreement.
54th. SEVERABILITY: The unenforceability, invalidity or illegality of any
provision of this Lease shall not render the other provisions unenforceable,
invalid or illegal.
55th. SUCCESSORS: This Lease shall be binding on and inure to the benefit of the
parties and their successors, heirs and assigns.
56th. TAXES:
(a) The Tenant shall, and will, during the term herein demised, pay and
discharge all such duties, taxes, charges for water, sewer taxes, assessments
and payments, extraordinary as well as ordinary, whether foreseen or unforeseen,
as shall during the term hereby demised by laid, levied, assessed or imposed
upon, or become due and payable, or liens upon the said demised premises, or any
part thereof, or any appurtenances thereto, the leasehold estate hereby created,
the sidewalks or streets in front of or adjoining the demised premises or any
vault or vaults thereunder, by virtue of any present or future law, order or
ordinance of the United States of America, or of the city, county or local
government, or of any department, office or bureau thereof, or any other
governmental authority. The duties, taxes, charges, assessments and payments
described in the foregoing paragraph are sometimes referred to herein
collectively as "Impositions ".
(b) All impositions mentioned in this paragraph shall be paid by the
Tenant when the same shall become due and payable without interest or penalty to
the department, office or bureau charged with the collection thereof. But
nothing herein contained shall require the Tenant to pay any inheritance,
franchise, income, payroll, excise, privilege, rent, capital stock, estate or
profit tax, or any tax of similar nature, that is or may be imposed upon the
Landlord, unless such taxes shall be levied upon the rent herein reserved in the
place of taxes upon the property herein demised. All taxes, assessments and
water rents that are mentioned above to be paid by Tenant shall be prorated and
adjusted for the fiscal years in which the terms begins and ends.
(c) In the case of assessments for local improvements or betterments
which are assessed or imposed during the term hereof and which may be payable in
installments, Tenant shall only be obligated to pay such installments as fall
due during the term hereof.
(d) In any suit or proceedings of any kind or nature arising or growing
out of the failure of the Tenant to keep any covenant contained in this
paragraph, the certificate or receipt of the department, office or bureau
charged with collection of the imposition, showing that the tax, water rent,
assessment or other charge, affecting the demised premises is due and payable,
or has been paid, shall be prima facie evidence that such tax, water rent,
assessment or other charge was due and payable as a lien or charge against the
demised premises or that
-4-
<PAGE> 8
it has been paid as such by the Landlord.
(e) The Tenant shall have the right to contest or review by legal
proceedings or in such manner as Tenant, in its opinion shall be deemed
advisable (which proceedings or other steps taken by Tenant, if instituted,
shall be conducted diligently at its own expense and free of expense to the
Landlord) any and all impositions levied, assessed or imposed upon or against
the demised premises or the building or improvements thereon, or taxes in lieu
thereof, required to be paid by Tenant hereunder. No such context or review
shall be undertaken in a manner that exposes the premises or Landlord's interest
therein to jeopardy.
(f) Tenant upon request of Landlord will promptly exhibit to Landlord
all paid bills for real estate taxes, water rates and assessments, which bills
after inspection by the Landlord shall be returned to the Tenant.
(g) Notwithstanding the foregoing provisions of this paragraph, Tenant
agrees at the election of Landlord, to pay to Landlord the amount of the
impositions imposed upon the demised premises for each fiscal tax year, in equal
monthly installments on the first day of each month during such fiscal tax year.
Such payments shall in the first instance be based on the impositions for the
prior fiscal tax year, and when the impositions shall be ascertained for the
current tax year, appropriate adjudgments shall be made. No interest shall be
paid by Landlord or Tenant on the monthly payments by Tenant, but the same will
be kept by Landlord in a separate escrow account, the funds whereof shall be
employed by Landlord to pay the impositions for the current tax year as they
mature. It is further agreed that if an imposition is payable in full before the
expiration of the fiscal tax year, whether in installments or by lump sum
payment, the monthly payments by Tenant shall be in amounts such that there
shall be a fund in Landlord's hands sufficient to meet the payment of any
imposition or installment thereof as it falls due. Each monthly payment of
Tenant shall be in an equal amount during the period between impositions payment
dates; in any event, at least ten days in advance of the last date for payment
of any imposition, or installment thereof, before a penalty or interest accrues
thereon, Tenant will deposit with Landlord an amount sufficient to make up any
deficiency for that payment.
57th. TERM OF LEASE:
Unless sooner terminated, this Lease shall terminate on the tenth
anniversary of the last day of the month preceding the month during which the
original term of this Lease commences. Upon request of either the Landlord or
Tenant, the other party shall execute a document in recordable form, setting
forth the exact commencement date of the term hereof.
58th. MORTGAGE: Reference is herein made to a certain mortgage now a lien on the
demised premises presently held by the Union Savings Bank, and to the proposed
mortgage contemplated to become a lien on the demised premises to be held by the
New York State Job Development Authority. In the event that the interest rates
as to either or both of said mortgages should increase during the term of the
within Lease, the Tenant shall pay to the Landlord, as additional rent
hereunder, such sums as shall equal the amount of such increase or increases ,
as same should occur throughout the term of this Lease. Said additional rent
shall be paid on a monthly basis commencing on the first of the month following
each written notification to the Tenant of an interest increase hereunder.
59th. SUBORDINATION: This Lease shall be subject and subordinate to any and all
mortgages which may now or hereafter affect the Landlord's interest in the real
property of which the demised premises form a part, and of all renewals,
modifications, consolidations, replacements and extensions thereof. This clause
shall be self-operative and no further instruments of subordination shall be
required. In confirmation of such subordination Tenant shall execute promptly
any certificate that Landlord may request. Tenant hereby constitutes and
appoints Landlord/Tenant's attorney-in-fact to execute any such certificate or
certificates for and on behalf of the Tenant.
-5-
<PAGE> 9
60th. IMPROVEMENTS: it is understood and agreed that all improvements of
whatsoever nature, any and all additions to the building, together with any and
all fixtures attached to the demised premises shall immediately become the
property of the Landlord, and shall be surrendered at the end of the demised
term, in good condition, reasonable wear and tear excepted.
MARCUS REALTY
By: /s/ BARRY STEINBERG
---------------------------
Landlord
MANCHESTER EQUIPMENT CO., INC.
By: /s/ BARRY STEINBERG
---------------------------
BARRY STEINBERG - Tenant
-6-
<PAGE> 10
STREET MAP
<PAGE> 11
State of New York, County of ss:
On the day of 19 , before me personally came
, to me known, who, being by me duly sworn, did depose
and say that he resides at ; that he is
of , the corporation described in and which
executed the within instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation, and that he
signed his name thereto by like order.
State of New York, County of ss:}
On the day of 19 , before me personally came
, to me known, who, being by me duly sworn, did depose
and say that he resides at ; that he is
of , the corporation described in and which
executed the within instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation, and that he
signed his name thereto by like order.
State of New York, County of ss:
On the day of 19 , before me personally came
to be known and known to me to be the individual described in and who executed
the foreoing instrument, and duly acknowledged that he executed the same.
State of New York, County of ss:
On the day of 19 , before me personally came
, subscribing witness to the foregoing instrument, with
whom I am personally acquainted, who, being by me duly sworn, did depose and
say, that he resided, at the time of the execution of said instrument, and
still resides, in that he is and then
was acquainted with , and knew to
be the individual described in and who executed the foregoing
instrument; and that he, said sbuscribing witness, was present and saw
execute the same; and that he, said witness, thereupon at the
same time subscribed his name as witness thereto.
BUILDING
PREMISES
Landlord
to
Tenant
LEASE
GUARANTY
In consideration of the letting of the premises within mentioned to
the Tenant within named, and of the sum of One Dollar, to the undersigned in
hand paid by the Landlord within named, the undersigned hereby guarantees to
the Landlord and to the heirs, successors and/or assigns of the Landlord, the
payment by the Tenant of the rent, within provided for, and the performance by
the Tenant of all of the provisions of the within lease. Notice of all defaults
is waived, and consent is hereby given to all extensions of time that any
Landlord may grant.
Dated, 19
L.S.
STATE OF COUNTY OF ss:
On this day of 19 , before me personnally appeared
to me known and known to me to be the individual described in and who executed
the foregoing instrument, and duly acknowledged to me that he executed the
same.
<PAGE> 12
Modification of Lease dated January 17, 1996, between Barry Steinberg
d/b/a Marcus Realty, as Landlord, and Manchester Equipment Co., Inc., as
Tenant.
Re: Premises at 50 Marcus Boulevard, Mauppauge, New York 11788.
- --------------------------------------------------------------------------------
The Landlord and Tenant hereby agree to modify the terms and conditions
of the Lease as follows:
1. Anything to the contrary notwithstanding commencing
October 1, 1996, the rents shall be adjusted and modified in accordance with
the following provisions:
Rider Paragraph 34 of the original Lease shall be
deleted and in place and stead thereof the following provisions shall apply:
34. The base rent for the described periods of the term of the
within Lease shall be as follows:
<TABLE>
<CAPTION>
Period Monthly
------ -------
<S> <C> <C>
Feb. 1, 1996 to July 31, 1996 $222,000.00 $37,000.00
Aug. 1, 1996 to Jan. 31, 1997 $162,112.50 $27,018.75
Feb. 1, 1997 to Jan. 31, 1998 $333,851.74 $27,829.31
Feb. 1, 1998 to Jan. 31, 1999 $343,970.29 $28,864.19
Feb. 1, 1999 to Jan. 31, 2000 $364,289.39 $29,524.11
Feb. 1, 2000 to Jan. 31, 2001 $364,918.07 $30,429.83
Feb. 1, 2001 to Jan. 31, 2002 $375,865.61 $31,322.13
Feb. 1, 2002 to Jan. 31, 2003 $387,141.57 $32,261.79
Feb. 1, 2003 to Jan. 31, 2004 $399,755.81 $33,229.64
Feb. 1, 2004 to Jan. 31, 2005 $410,718.48 $34,222.53
Feb. 1, 2005 to Jan. 31, 2006 $423,040.03 $35,283.33
Feb. 1, 2005 to Jan. 31, 2007 $435,731.25 $36,310.83
Feb. 1, 2007 to Jan. 31, 2008 $448,803.14 $37,400.28
</TABLE>
<PAGE> 13
2. This Modification is conditioned and shall take effect only upon the
Tenant successfully completing the Public Offering of its shares now
contemplated. In the event the Public Offering of shares now contemplated is
not concluded, on or before January 1, 1997, then, unless said date is extended
by written agreement of the parties, this Modification shall be null and void,
and the Lease shall be enforceable as originally written.
DATED: OCT. 2, 1996
/s/ BARRY STEINBERG
------------------------------------
Barry Steinberg, d/b/a Marcus Realty,
Landlord
Manchester Equipment Co., Inc.
by: /s/ JOEL STEMPLE V.P.
----------------------------------
Tenant
<PAGE> 1
EXHIBIT 10.5.c
This Lease, dated the day of June 1995
Between FACILITIES MANAGEMENT, 495 West John Street,
Parties Hicksville, NY hereinafter referred to as the Landlord,
and MANCHESTER EQUIPMENT CO. INC., 160 Oser Avenue,
Hauppauge, NY hereinafter referred to as the Tenant,
hereinafter referred to as the Tenant,
WITNESSETH: That the Landlord hereby demises and leases
unto the Tenant, and the Tenant hereby hires and takes
from the Landlord for the term and upon the rentals
hereinafter specified, the premises described as follows,
situated in the Town of Smithtown County of Suffolk and
State of New York
Premises Covering 5000 square feet in premises known as
125 Marcus Boulevard, Hauppauge, New York 11787
Term The term of this demise shall be for a term of
three (3) years beginning July 1, 1995 and ending
June 30, 1998.
Rent The rent for the demised term shall be EIGHTY SIX
THOUSAND TWO HUNDRED AND FIFTY and no/100 ($86,250.00),
which shall accrue at the yearly rate of TWENTY EIGHT
THOUSAND SEVEN HUNDRED AND FIFTY and no/100 ($28,750).
The said rent is to be payable monthly in advance
on the first day of each calendar month for the term
hereof, in instalments as follows:
Payment of TWO THOUSAND THREE HUNDRED AND NINETY FIVE
Rent and 80/100 ($2,395.80)
at the office of Facilities Management, 495 West John
Street, Hicksville, or as may be otherwise directed by
the Landlord in writing.
THE ABOVE LETTING IS UPON THE FOLLOWING CONDITIONS:
Peaceful FIRST.--The Landlord convenants that the Tenant, on
Possession paying the said rental and performing the covenants and
conditions in this Lease: contained, shall and may
peaceably and quietly have; hold and enjoy the demised
premises for the term aforesaid.
Purpose SECOND.--The Tenant covenants and agrees to use the
demised premises as a storage facility, as lawfully
permitted under the approprate ordinances applicable to
the demised premises, and agrees not to use or permit the
premises to be used for any other purpose wihtout the
piror written consent of the Landlord endorsed hereon.
Default in Payment THIRD.--The Tenant shall, without any previous
of Rent demand therefor, pay to the Landord, or its
agent, the said rent at the times and in the manner
Abandonment above provided. In the event of the non
of Premises payment of said rent, or any instalment
thereof, at the times and in the manner above provided,
and if the same shall remain in default for ten days after
Reenty and becoming due, or if the Tenant shall be dispossessed for
Reletting by non payment of rent, or if the leased premises shall be
Landlord deserted or vacated, the Landlord or its agents shall
have the right to and may enter the said premises as the
Tenant Liable agent of the Tenant, either by force or otherwise, without
for Deficiency being liable for any prosecution or damages therefor, and
may relet the premises as the agent of the Tenant, and
Lien of reserve the rent therefor, upon such terms as shall be
Landlord to satisfactory to the Landlord, and all rights of the Tenant
Secure to repossess the premises under this lease; shall be
forfeited. Such re-entry by the Landlord shall not operate
Performance to release the Tenant from any rent to be paid or
Attorney's Fees covenants to be performed hereunder during the full term
of this lease. For the purposes of reletting, the Landlord
shall be authorized to make such repairs or alterations in
or to the leased premises as may be necessary to place the
same in good order and condition. The Tenant shall be
liable to the Landlord for the cost of such repairs or
alterations, and all expenses of such reletting. If the
sum realized or to be realized from the reletting is
insufficient to satisfy the monthly or term rent provided
in this lease, the Landlord, at its option, may require
the Tenant to pay such deficiency month by month, or may
hold the Tenant in advance for the entire delivey to
be realized during the term of the reletting. The Tenant
shall not be entitled to any surplus accruing as a result
of reletting. The Landlord is hereby granted a lien, in
addition to any statutory lien or right to distrain that
may exist, on all individual property of the Tenant to or
under the demised premises, to secure payment of the rent
and performance of the covenants and conditions of this
lease. The Landlord shall have the right, as agent of the
Tenant, for legal possession of any furniture, fixtures or
other personal property of the Tenant found in or about the
premises, and as if the nature of public or private law to
apply the proceeds thereof to the payment of any monies
becoming due under this lease, the Tenant hereby waiving
the benefit of all laws exempting property from execution,
levy and sale on distress or judgment. The Tenant agrees
to pay, as additional rent, all attorney's fees and
other expenses incurred by the Landlord in entering any of
the obligations under this lease.
Subletting and FOURTH.--The Tenant shall not sublet the demised
Assignment premises nor any portion thereof, nor shall this lease be
assigned by the Tenant without the prior written consent
of the Landlord endorsed hereon.
Countdown of FIFTH.--The tenant has examined the demised
Premises premises, and accepts them in their present condition
Repairs (except as otherwise expressly provided herein) and
without any representations on the part of the Landlord or
its agents as to the presents of future condition of the
said premises. The Tenant shall keep the demised premises
in good condition, and shall celebrate, paint and renovate
the said premises as may be necessary to keep them in
repair and good appearance. The Tenant shall quit and
surrender the premises at the end of the demand term in as
good conditiion as the reasonable use thereof will permit.
The Tenant will and make any alterations, additions, or
improvements to said premises without the
<PAGE> 2
Alterations and prior written consent of the Landlord. All erections,
Improvements alterations, additions and improvements, and whether
temporary or permanent in character, which may be made
Sanitation, upon the premises either by the Landlord or the Tenant,
Inflammable except furniture or movable trade fixtures installed at
Materials the expense of the Tenant, shall be the Property of the
Landlord and shall remain upon and be surrendered with the
Sidewalks premises as a part thereof at the termination of this
Lease, without compensation to the Tenant. The Tenant
further agrees to keep said premises and all parts thereof
in a clean and sanitary condition and free from trash,
inflammable material and other objectionable matter. If
this lease covers premises, all or a part of which are on
the ground floor, the Tenant further agrees to keep the
sidewalks in front of such ground floor portion of the
demised premises clean and free of obstructions, snow and
ice.
SIXTH.--In the event that any mechanics' lien is
Mechanics' filed against the premises as a result of alterations,
Liens additions or improvements made by the Tenant, the
Landlord, at its option, after thirty days' notice to the
Tenant, may terminate this lease and may pay the said
lien, without inquiring into the validity thereof, and the
Tenant shall forthwith reimburse the Landlord the total
expense incurred by the Landlord in discharging the said
lien, as additional rent hereunder.
SEVENTH.--The Tenant agrees to replace at the Tenant's
Glass expense any and all glass which may become broken in and
on the demised premises. Plate glass and mirrors, if any,
shall be insured by the Tenant at their full insurable
value in a company satisfactory to the Landlord. Said
policy shall be of the full premium type, and shall be
deposited with the Landlord or its agent.
EIGHTH.--The Landlord shall not be responsible for the
Liability of loss of or damage to property, or injury to persons,
Landlord occurring in or about the demised premises, by reasons of
any existing or future condition, defect, matter or thing
in said demised premises of the property of which the
premises are a part, or for the acts, omissions or
negligence of other tenant or tenants in and about the
said property. The Tenant agrees to Indemnify and save the
Landlord harmless from all claims and liability for losses
of or damage to property), or injuries to persons
occurring in or about the demised premises.
NINTH.--Utilities and services furnished to the
Services and demised premises for the benefit of the Tenant shall be
Utilities provided and paid for as follows: water by the ;
gas by the ; electricity by the ;
heat by the ; refrigeration by the ;
hot water by the .
SEE RIDER ATTACHED
The Landlord shall not be liable for any interruption or
delay in any of the above services for any reason.
TENTH.--The Landlord, or its agents, shall have
Right to Inspect the right to enter the demised premises at reasonable
and Exhibit hours in the day or night to examine the ???????? or to
run telephone or other wires, or to make such repairs,
additions or alterations as it shall deem necessary for
the safety, preservation or restoration of the
improvements, or for the safety or convenience of the
occupants or users thereof (there being no obligation,
however, on the part of the Landlord to make any such
repairs, additions or alterations), or to exhibit the same
to prospective purchasers and put upon the premises a
suitable "For Sale" sign. For three months prior to the
exploration of the demised term, Landlord, or its agents,
may similarly exhibit the premises to prospective tenants,
and any place the usual "To Let" signs thereon.
ELEVENTH.--In the event of the destruction of
Damage by Fire, the demised premises or the building containing the said
Explosion, premises by fire, explosion, the elements or otherwise
The Elements or during the term hereby created, or previous thereto, or
Otherwise such partial destruction thereof as to render the premises
wholly untenantable or unfit for occupancy, or should the
demised premises be so badly injured that the same cannot
be repaired within ninety days from the happening of such
injury, then and in such case the term hereby created
shall, at the option of the Landlord, cease and become
null and void from the date of such damage or destruction,
and the Tenant shall immediately surrender said premises
and all the Tenant's interest therein to the Landlord, and
shall pay rent only to the time of such surrender, in
which event the Landlord may re-enter and re possess the
premises thus discharged from this lease and may remove
all parties therefrom. Should the demised premises be
rendered untenantable and unfit for occupancy, but yet be
repairable within ninety days from the happening of said
injury, the Landlord may enter and repair the same with
reasonable speed, and the rent shall not accrue after said
injury or while reports are being made, but shall
recommence immediately after said repairs shall be
completed. But if the premises shall be so slightly
injured as not to be rendered untenantable and unfit for
occupancy, then the Landlord agrees to repair the same
with reasonable promptness and in that case the rent
accrued and accruing shall not cease or determine. The
Tenant shall immediately notify the Landlord in case of
fire or other damage to the premises.
TWELFTH.--The Tenant agrees to observe and comply
Observation with all laws, ordinances, rules and regulations of the
of Laws, Federal, State, County and Municipal authorities
Ordinances, applicable to the business to be coducted by the Tenant in
Rules and the demised premises. The Tenant Agrees not to do or
Regulations permit anything to be done in said premises, or keep
anything therein, which will increase the rate of fire
insurance premiums on the improvements or any part
thereof, or on property kept therein, or which will
obstruct or interfere with the rights of other tenants, or
conflict with the regulations of the Fire Department or
with any insurance policy upon said improvements or any
part thereof. In the event of any increase in insurance
premiums resulting from the Tenant's occupancy of the
premises, or from any act or omission on the part of the
Tenant, the Tenant agrees to pay said increase to
insurance premiums on the improvements or contents thereof
as additional rent.
THIRTEENTH.--No sign, advertisement or notice shall be
Signs affixed to or placed upon any part of the demised premises
by the Tenant, except to such manner, and of such size,
design and color as shall be approved in advance in
writing by the Landlord.
FOURTEENTH.--This lease is subject and is hereby
Subordination subordinated to all present and future mortgages, deeds of
to Mortgages trust and other encumbrances affecting the demised
and Deeds premises or the property of which said premises are a
of Trust part. The Tenant agrees to execute, at no expense to the
Landlord, any instrument which may be deemed necessary or
desirable by the Landlord to further effect the
subordination of this lease to any such mortgage, deed of
trust or encumbrance.
FIFTEENTH.--In the event of the sale by the Landlord
Sale of of the demised premises, or the property of which said
Premises premises are a part, the Landlord or the purchaser may
terminate this lease on the thirtieth day of April in any
year upon giving the Tenant notice of such termination
prior to the first day of January in the same year.
SIXTEENTH.--The rules and regulations regarding the
Rules and demised premises, affixed to this lease, if any, as well
Regulations of as any other and further reasonable rules and regulations
Landlord which shall be made by the Landlord, shall be observed by
the Tenant and by the Tenant's employees, agents and
customers. The Landlord reserves the right to rescind any
presently existing rules applicable to the demised
premises, and to make such other and further reasonable
rules and regulations as, in its judgment, may from time
to time be desirable for the safety, care and cleanliness
of the premises, and for the preservation of good order
therein, which rules, when so made and notice thereof
given to the Tenant, shall have the same force and effect
as if originally made a part of this lease. Such other and
further rules shall not, however, be inconsistent with the
proper and rightful enjoyment by the Tenant of the demised
premises.
SEVENTEENTH.--In case of violation by the Tenant
Violation of of any of the Covenants, agreements and conditions of this
Covenants, lease, or the rules and regulations now or hereafter to be
Forfeiture of reasonably established by the Landlord, and upon failure
Lease, Re-entry to discontinue such violation within ten days after notice
by Landlord thereof given to the Tenant, this lease shall thenceforth,
at the option of the Landlord, become null and void, and
Non-waiver the Landlord may re-enter without further notice or
of Breach demand. The rent in such ease shall become due, be
apportioned and paid on and up to the day of such
re-entry, and the Tenant shall be liable for all loss or
damage resulting from such violation as aforesaid. No
waiver by the Landlord of any violatoin or breach of
condition by the Tenant shall constitute or be construed
as a waiver of any other violation or breach of condition,
nor shall lapse of time after breach of condition by the
Tenant before the Landlord shall exercise its option under
this paragraph operate to defeat the right of the Landlord
to declare this lease null and void and to re-enter upon
the demised premises after the said breach or violation.
<PAGE> 3
NOTICES EIGHTEENTH.--All notices and demands, legal or
otherwise, incidental to this lease, or the occupation of
the demised premises, shall be in writing. If the Landlord
or its agent desires to give or serve upon the Tenant any
notice or demand, it shall be sufficient to send a copy
thereof by registered mail, addressed to the Tenant at the
demised premises, or to leave a copy thereof with a person
of suitable age found on the premises, or to post a copy
thereof upon the door to said premises. Notices from the
Tenant to the Landlord shall be sent by registered mail or
delivered to the Landlord at the place hereinbefore
designated for the payment of rent, or to such party or
place as the Landlord may from time to time designate
in writing.
BANKRUPTCY, NINETEENTH.--It is further agreed that if at any time
INSOLVENCY, during the term of this lease the Tenant shall make any
ASSIGNMENT FOR assignment for the benefit of creditors, or be
BENEFIT OF decreed insolvent or bankrupt according to law, or if a
CREDITORS receiver shall be appointed for the Tenant, then the
Landlord may, at its option, terminate this lease,
exercise of such option to be evidenced by notice to that
effect served upon the assignee, receiver, trustee or
other person in charge of the liquidation of the property
of the Tenant or the Tenant's estate, but such termination
shall not release or discharge any payment of rent payable
hereunder and then accrued, or any liability then accrued
by reason of any agreement or covenant herein contained on
the part of the Tenant, or the Tenant's legal
representatives.
HOLDING OVER TWENTIETH.--In the event that the Tenant shall remain
BY TENANT in the demised premises after the expiration of the term
of this lease without having executed a new written lease
with the Landlord, such holding over shall not constitute
a renewal or extension of this lease. The Landlord may, at
its option, elect to treat the Tenant as one who has not
removed at the end of his term, and thereupon be entitled
to all the remedies against the Tenant provided by law in
that situation, or the Landlord may elect, at its option,
to construe such holding over as a tenancy from month to
month, subject to all the terms and conditions of this
lease, except as to duration thereof, and in that event
the Tenant shall pay monthly rent in advance at the rate
provided herein as effective during the last month of the
demised term.
EMINENT TWENTY-FIRST.--If the property or any part thereof
DOMAIN, wherein the demised premises are located shall be taken by
CONDEMNATION public or quasi public authority under any power of eminent
domain or condemnation, this lease, at the option of the
Landlord, shall forthwith terminate and the Tenant shall
have no claim or interest in or to any award of damages
for such taking.
SECURITY TWENTY-SECOND.--The Tenant has this day deposited with
the Landlord the sum of $4,791.56 as security for the full
and faithful performance by the Tenant of all the terms,
covenants and contitions of this lease upon the Tenant's
part to be performed, which said sum shall be returned to
the Tenant after the time fixed as the expiration of the
term herein, provided the Tenant has fully and faithfully
carried out all of said terms, covenants and conditions on
Tenant's part to be performed. In the event of a bona fide
sale, subject to this lease, the Landlord shall have the
right to transfer the security to the vendee for the
benefit of the Tenant and the Landlord shall be considered
released by the Tenant from all liability for the return
of such security; and the Tenant agrees to look to the new
Landlord solely for the return of the said security, and
it is agreed that this shall apply to every transfer or
assignment made of the security to a new Landlord. The
security deposited under this lease shall not be
mortgaged, assigned or encumbered by the Tenant without
the written consent of the Landlord.
ARBITRATION TWENTY-THIRD.--Any dispute arising under this lease
shall be settled by arbitration. Then Landlord and Tenant
shall each choose an arbitrator, and the two arbitrators
thus chosen shall select a third arbitrator. The findings
and award of the three arbitrators thus chosen shall be
final and binding on the parties hereto.
DELIVERY OF TWENTY-FOURTH.--No rights are to be conferred upon the
LEASE Tenant until this lease has been signed by the Landlord,
and an executed copy of the lease has been delivered to
the Tenant.
LEASE TWENTY-FIFTH.--The foregoing rights and remedies are
PROVISIONS NOT not intended to be exclusive but as additional to all
EXCLUSIVE rights and remedies the Landlord would otherwise have by
law.
LEASE BINDING TWENTY-SIXTH.--All of the terms, covenants and
ON HEIRS, conditions of this lease shall inure to the benefit of and
SUCCESSORS, ETC. be binding upon the respective heirs, executors,
administrators, successors and assigns of the parties
hereto. However, in the event of the death of the Tenant,
if an individual, the Landlord may, at its option,
terminate this lease by notifying the executor or
administrator of the Tenant at the demised primises.
TWENTY-SEVENTH.--This lease and the obligation of
Tenant to pay rent hereunder and perform all of the other
covenants and agreements hereunder on part of Tenant to be
performed shall in nowise be affected, impaired or excused
because Landlord is unable to supply or is delayed in
supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any
repairs, additions, alterations or decorations or is
unable to supply or is delayed in supplying any equipment
or fixtures if Landlord is prevented or delayed from so
doing by reason of governmental preemption in connection
with the National Emergency declared by the President of
the United States or in connection with any rule, order or
regulation of any department or subdivision thereof of any
governmental agency or by reason of the conditions of
supply and demand which have been or are affected by the
war.
TWENTY-EIGHTH.--This instrument may not be changed
orally.
SEE RIDER ATTACHED
IN WITNESS WHEREOF, the said Parties have hereunto set their hands and
seals the day and year first above written.
FACILITIES MANAGEMENT
Witness: By: /s/
------------------------ (SEAL)
MANCHESTER EQUIPMENT CO. INC.,
By: /s/ BARRY STEINBERG
- ---------------------------------- -------------------------------
- ---------------------------------- ---------------------------- (SEAL)
Tenant
<PAGE> 4
GUARANTY
In consideration of the execution of the within lease by the Landlord, at
the request of the undersigned and in reliance of this guaranty, the
undersigned hereby guarantees unto the Landlord, its successors and assigns,
the prompt payment of all rent and the performance of all of the terms,
covenants and conditions provided in said lease, hereby waiving all notice
of default, and consenting to any extensions of time or changes in the manner
of payment or performance of any of the terms and conditions of the said
lease the landlord may grant the Tenant, and further consenting to the
assignment and the successive assignments of the said lease, and any
modifications thereof, including the sub-letting and changing of the use of
the demised premises, all without notice to the undersigned. The undersigned
agrees to pay the Landlord all expenses incurred in enforcing the obligations
of the Tenant under the within lease and in enforcing this guaranty.
Witness: (SEAL)
(SEAL)
Date:
LEASE
Landlord
to
,
Tenant
Premises leased:
From:
To:
ASSIGNMENT AND ACCEPTANCE OF ASSIGNEMENT
For value received the undersigned Tenant hereby assigns all of said
Tenant's right, title and interest in and to the within lease from and after
unto
heirs, successors, and assigns, the demised premises to be used and occupied for
and for no other purpose, it being expressly agreed
that this assignment shall not in any manner relieve the undersigned assignor
from liability upon any of the covenants of this lease.
Witness: (SEAL)
(SEAL)
Date:
In consideration of the above assignment and the written consent of the
Landlord thereto, the undersigned assignee,
hereby assumes and agrees from and after to make all
payments and to perform all covenants and conditions provided in the within
lease by the Tenant therein to be made and performed.
Witness: (SEAL)
(SEAL)
Date:
CONSENT TO ASSIGNMENT
The undersigned Landlord hereby consents to the assignment of the within
lease to
on the express conditions that the original Tennant
, the assignor, herein, shall
remain liable for the prompt payment of the rent and the performance of the
covenants provided in the said lease by the Tenant to be made and performed,
and that no further assignment of said lease or sub-letting of any part of the
premises thereby demised shall be made without the prior written consent
of the undersigned Landlord.
Landlord
Date: By
<PAGE> 5
A RIDER TO LEASE
BETWEEN FACILITIES MANAGEMENT, LANDLORD
AND
MANCHESTER EQUIPMENT CO. INC, TENANT
29. All rent shall be absolutely net to Landlord so that this Lease
shall yield to Landlord the full amount of the installments thereof throughout
the Lease term without deduction. All rent shall be paid to Landlord without
notice, demand, counterclaim, setoff, deduction or defense and nothing shall
suspend, defer, diminish, abate or reduce any rent, except as otherwise
specifically provided in this Lease.
The obligations and liabilities of Tenant hereunder in no way
shall be released, discharged or otherwise affected (except as expressly
provided herein) by reason of bankruptcy, reorganization, composition,
adjustment or dissolution, liquidation or other like proceedings relating to
Tenant or any action taken with respect to this Lease by any Trustee or Receiver
of Tenant, or by any Court, in any such proceeding; any claim which Tenant has
or might have against Landlord; any failure on the part of Landlord to comply
with or perform any of the terms hereof or of any other agreement with Tenant;
or any occurrence whatsoever, whether similar or dissimilar to the foregoing,
whether or not Tenant shall have notice or knowledge of any of the foregoing.
30. Tenant represents that Tenant has examined and is fully familiar
with the physical condition of the Demised premises and the Improvements
thereon. Tenant accepts the same, without recourse to Landlord, in the condition
and state in which they now are, except for the work to be done by Landlord
pursuant to Exhibit A hereto, except as otherwise stated herein. Landlord makes
no representations or warranties, express or implied, in fact or in law, as to
the nature and condition of the Demised premises, or its fitness or availability
for any particular use except that Landlord agrees that the plumbing, heating
and electric will be in working order on the date Tenant takes possession of the
premises and the roof will be free of leaks. Landlord shall not be liable for
any latent or patent defects therein.
31. This lease is subject to Landlord's acceptance and approval and
Tenant has executed this lease with the understanding that Landlord shall not be
bound hereunder until such time as this lease has been approved and executed by
the Landlord and delivered to Tenant.
32. The Tenant shall pay directly to the utility company for all heat,
electricity, and any other utilities used by the Tenant
<PAGE> 6
in the demised premises during the term of the lease.
33. The Tenant covenants that during the entire term of this lease, it
will provide and keep in force for the benefit of the Landlord the following
policies covering the demised premises, and deliver certificates thereof to the
Landlord:
(a) General accident and public liability insurance fully
protecting and naming the Landlord and Tenant against any and all liability
occasioned by accident or disaster, in the amount of $500,000.00 in respect to
injuries to any one person, and in the amount of $1,000,000.00 in respect to
injuries to any one accident or disaster, and the amount of $50,000.00 in the
event of any damage to property, such insurance to cover the entire demised
premises as well as the sidewalks and streets in front of and adjacent thereto.,
and shall provide for notice to the Landlord prior to cancellation.
(b) The Tenant shall not do or permit to be done any act upon
said premises which will invalidate or be in conflict with fire insurance
policies covering the building of which the demised premises form a part nor do
or permit anything to be done in or upon the demised premises which shall
increase the rate of fire insurance applicable to the completed building at the
time that the Tenant enters into possession thereof and based upon Tenant's
occupancy thereof for the uses hereinabove provided. If by reason of the failure
of the Tenant to comply with the provisions of this section of this lease the
fire insurance rate shall be higher than it otherwise would be, then the Tenant
shall reimburse Landlord as additional rent hereunder for that part of all fire
insurance premiums thereafter paid by the Landlord which shall have been charged
because of such failure or use by the Tenant, and shall make such reimbursement
on the first day of the month following such outlay by the Landlord and the
failure to pay the same shall be deemed to be a failure to pay rent due under
the terms of this lease.
34. The Tenant shall make no alterations, additions, decorations or
improvements in or to the demised premises without the Landlord's express
written consent except as otherwise set forth herein. All alterations,
decorations, installations, additions or improvements upon demised premises,
made by Tenant, including all paneling, decorations, partitions, railings, and
the like shall unless Landlord elects otherwise (which election shall be made by
giving a notice not less than thirty (30) days prior to the expiration or other
termination of this lease or any renewal or extension thereof) become the
property of the Landlord, and shall remain upon, and be surrendered with, said
premises, as a part thereof, at the end of the term or renewal term, as the case
may be. In the event the Landlord shall elect otherwise, then such alternations,
decorations, installations, additions or improvements made by the Tenant upon
the demised premises as the Landlord shall select shall be removed by the Tenant
and the Tenant shall restore premises to the original conditions, at its own
cost and expense,
<PAGE> 7
(d) The aforesaid requirements shall apply to each successive
assignment and/or subletting.
35. The Tenant shall be responsible for cleaning and snow removal from
the surface area used for access to premises for their portion of the parking
area directly in front of the building used by the Tenant.
37. Any deficiency in the amount of monthly rent payment shall, unless
made good by the ten-day-period to the due date of the next such payment, be
considered in default under this lease. In the event that any such payment shall
become overdue for a period in excess of ten (10) days, a "late charge" of five
(5) cents for each dollar so overdue for each 30 days overdue shall become due
to the Landlord as liquidated damages for failure to make prompt payment. Such
charge shall be payable in effect no later than the due date of the next
subsequent rent payment.
38. The Landlord and Tenant represent each to the other that the sole
broker with whom they dealt is ALL INDUSTRIAL REAL ESTATE CORP., 125 Wireless
Boulevard, Haupopauge, New York 11788. Landlord agrees to pay the commission of
the Broker as per separate agreement.
39. On the last day of the term demised or any extension of the term,
or on the sooner termination thereof, the Tenant shall peaceably and quietly
leave, surrender and yield up unto the Landlord, all and singular the demised
premises, broom-clean, in good order and repair, ordinary wear and tear
excepted. The Tenant, on or before such date, shall remove all movable property
from the demised premises and all property not so removed shall be deemed
abandoned by Tenant. If said premises are not surrendered at the end of the term
or any extension of the term, the Tenant shall indemnify the Landlord against
loss or liability resulting from delay by the Tenant in so surrendering the
premises, including, without limitation, any claims made by any succeeding
Tenant founded on such delay. In the case of any holdover, the monthly rent
shall be at the rate of two (2) times the monthly rent payable by Tenant to
Landlord for the final month of the herein Term (including all additions and
escalations provided herein).
40. Irrespective of the place of execution or performance, the Lease
shall be governed by and construed in accordance with the law of the State of
New York. If any provision of the Lease or the application thereof to any person
or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this lease and the application of that provision
to other persons or circumstances shall not be affected but rather shall be
enforced to the extent permitted by law. The Lease shall be construed without
regard to any presumption or other rule requiring construction against the party
causing this lease to be drafted. Each covenant, agreement, obligation or other
provision of this Lease on Tenant's part to be performed, shall be deemed and
<PAGE> 8
at or prior to the expiration of the term. Tenant agrees to obtain, and deliver
to Landlord, written and unconditional waivers of mechanics liens upon the real
property in which the demised premises are located, for all work, labor and
services to be performed and materials to be furnished by them in connection
with such work, signed by all contractors, subcontractors, material men and
laborers to become involved in such work.
Tenant, prior to commencing any such work shall provide to the
Landlord, Comprehensive General Liability insurance including Contractors
Liability coverage and the Tenant herewith agrees to indemnify and save the
Landlord harmless from any and all claims for injuries and/or damage arising out
of the performance of said work at the premises.
The Tenant shall procure all necessary governmental permits
required for any and all work which Tenant shall perform at the demised
premises.
All alterations and decorations, installations and
improvements when completed shall be of such a character as to not reduce or
otherwise adversely affect, the value of the demised premises, immediately
before such alterations, decorations, installations or improvements, nor reduce
the cubic content of the building, nor diminish the general utility of the
building for the uses permitted under the applicable zoning ordinances.
Tenant may reinforce the walls of the office in the demised
premises with plywood and install a secure door with an alarm system without
further consent of the Landlord.
35. Without the previous written consent of the Landlord, which consent
shall not be unreasonably withheld, neither the Tenant nor the Tenant's legal
representative or successor in interest, by operation of law or otherwise, shall
assign or sublet the whole or any part of the demised premises. Any such
assignment or subletting shall be upon, and subject to all of the terms and
conditions of the lease.
(a) In the event of an assignment of this lease, the assignee
shall assume in writing all the terms, conditions and obligations on the part of
the Tenant to be performed and a duplicate original of such assignment and
assumption agreement signed and acknowledged by the parties thereto shall be
delivered to the Landlord within five (5) days thereafter.
(b) In the event of a subletting of a portion of the demised
premises, the name and address of such subtenant, the portion sublet and the
terms and conditions of subleasing shall be furnished to the Landlord in writing
by the tenant within five (5) days thereafter.
(c) Nothing herein contained shall be construed to release the
Tenant from Tenant's obligations under this lease.
<PAGE> 9
construed as a separate and independent covenant of Tenant, not dependent on any
other provision of the Lease. All terms and words used in the Lease, regardless
of the number or gender in which they are used, shall be deemed to include any
other number and any other gender as the context may require.
41. The Tenant agrees not to discharge any contaminated materials
arising from any industrial process or process used in connection with Tenant's
business operation into the ground without first securing the prior written
approval of the Department of Health, Suffolk County, therefor.
42. Landlord agrees that certain alterations shall be made to the
demised premises by the Landlord prior to Tenant's occupancy in accordance with
Exhibit "A" attached hereto.
43. The Tenant, at any reasonable time during the term or any extension
of the term, shall permit inspection of the demised premises during reasonable
hours by the Landlord or Landlord's agents or representatives and by or on
behalf of prospective purchasers, and during the six (6) months next preceding
the expiration of this lease, or extension of the term, shall permit inspection
thereof by or on behalf of prospective Tenants. Tenant shall permit, during the
six (6) months next preceding the expiration of this lease, or extension of the
term, signs or notices indicating that the premises are to let or for sale to be
posted and remain upon the demised premises. Any such inspection shall only be
upon notice to the Tenant and while a representative of the Tenant is present on
the premises.
44. Landlord agrees to furnish Tenant with four (4) reserved parking
spaces at the demised premises, one (1) in the front and three (3) in the rear.
45. This agreement constitutes the entire agreement between the parties
and contains all the agreements, conditions, representations or warranties made
between the parties hereto. No representation other than those herein expressly
contained have been made by either party to the other. This lease may not be
modified, altered, amended, changed or added to except in writing and signed by
both parties.
FACILITIES MANAGEMENT, Landlord
By /s/
-------------------------------------
MANCHESTER EQUIPMENT CO. INC., Tenant
By /s/ BARRY STEINBERG
-------------------------------------
<PAGE> 1
EXHIBIT 10.5.d
THIS LEASE made the 31st day of July
1995, between 160 Oser Avenue Associates, a partnership
maintaining offices at 684 Broadway, Massapequa, New York
11758, hereinafter referred to as LANDLORD, and MANCHESTER
EQUIPMENT CO., INC., 50 Marcus Boulevard, Hauppauge, New
York, hereinafter jointly, severally and collectively
referred to as TENANT.
WITNESSETH, that the Landlord hereby leases to the
Tenant, and the Tenant hereby hires and takes from the
Landlord building and premises known as 160 Oser Avenue,
Happauge, New York as more particularly shown on the
survey annexed hereto and made a part hereof, to be used
and occupied by the Tenant for general office use,
warehouse, sales, service and assembly of computers,
computer hardware and any and all items related thereto,
and for no other purpose, for a term to commence on August
1, 1995, and to end on July 31, 2000 19 , unless
sooner terminated as hereinafter provided, at the ANNUAL
RENT of
(See Rider paragraph 34).
all payable in equal monthly instalments in advance on the
first day of each and every calendar month during said
term, except the first instalment, which shall be paid
upon the execution hereof.
THE TENANT JOINTLY AND SEVERALLY COVENANTS:
FIRST.--That the Tenant will pay the rent as above
provided.
REPAIRS SECOND.--That, throughout said term the
Tenant will take good care of the demised
permises, including structure and environs, fixtures and
appurtenances, and all alterations, additions and
ORDINANCES improvements to either; make all repairs in and about the
AND same necessary to preserve them in good order and
VIOLATIONS condition, which repairs shall be, in quality and class,
equal to the original work; promptly pay the expense of
such repairs; suffer no waste or injury; give primpt
ENTRY notice to the Landlord of any fire that may occur; execute
and comply with all laws, rules, orders, ordinances and
regualtions at any time issued or in force (except those
requiring structural alterations), applicable to the
demised premises or to the Tenant's occupation thereof,
INDEMNIFY any of the Federal, State and Local Governments, and of
LANDLORD each and every department, bureau and official thereof,
and of the New York Board of Fire Underwriters; permit at
all times during usual business hours, the Landlord and
representatives of the Landlord to enter the demised
premises for the purpose of inspection, and to exhibit
them for purposes of sale or rental; suffer the Landlord
to make repairs and improvements to all parts of the
building , and to comply with all orders and requirements
of governamental authority applicable to said building or
to any occupation thereof; suffer the Landlord to erect,
use, maintain, repair and replace pipes and conduits in
the demised premises and to the floors above and below;
forever indemnify and save harmless the Landlord for and
against any and all liability, penalties, damages,
expenses and judments arising from injury during said term
to person or property of any nature, occasioned wholly or
in part by any acts or acts, omission or omissions of the
Tenant, or of the employees, guest, agents, assigns or
undertenants of the Tenant and also for any matter or
thing growing out of the occupation of the demised
permises or of the streets, sidewalks or valuts adjacent
thereto; permit, during the six months next prior to the
expiration of the term the usual notice "To Let" to be
placed and to remain unmolested in a conspicuous place
upon the exterior of the demised permises; repair, at or
before the end of the term, all injury done by the
installation or removal of furniture and property; and at
the end of the term, to quit and surrender the demised
permises with all alterations, additions and improvements
in good order and condition.
THIRD.--That the Tenant will not disfugure or deface
MOVING any part of the building, or suffer to be done, except so
INJURY far as may be necessary to affix such trade fixtures as
SURRENDER are herein consented to by the Landlord; the Tenant will
not obstruct, or permit the obstruction of the street or
the sidewalk adjacent thereto; will not do anything, or
suffer anything to be done upon the demised premises which
will increase the rate of fire insurance upon the building
or any of its contents, or be liable to cause structural
NEGATIVE injury to said building; will not permit the accumulation
COVENANTS of waste or refuse matter, and will not, without the
written consent of the Landlord first obtained in each
case, either sell, assign, mortgage or transfer this
lease, underlet the demised premises or any part thereof,
OBSTRUCTION permit the same or any part thereof to be occupied by
SIGNS anybody other than the Tenant and the Tenant's employees,
make any alterations in the demised premises, use the
demised or any part thereof for any purpose other than the
one first above stipulated, or for any purpose deemed
extra hazardous on account of fire risk, nor in voilation
of any law or ordinance. That the Tenant will not obstruct
or permit the obstruction of the light, halls, stairway or
entrances to the building, and will not erect or inscribe
and sign, signals or advertisements unless and until the
style and location thereof have been approved by the
Landlord; and if any be erected or inscribed without such
approval, the Landlord may remove the same. No water
cooler, air conditioning unit or system or other apparatus
AIR shall be installed or used without the prior written
CONDITIONING consent of Landlord.
IT IS MUTUALLY CONVENANTED AND AGREED, THAT
FOURTH.-If the demised permises shall be partially
damaged by fire or other cause without the fault or
neglect of Tenant, Tenant's servants, employees, agents,
visitors or licensees, the damages shall be repaired by
and at the expenses of Landloard and the rent until such
repairs shall be made shall be apportioned according to
the part of the demised premises which is usable by
Tenant. But if such partial damage is due to the fault or
neglect of Tenant, Tneant's servants, employees, agents,
vistors or licensees, without prejudice to any other
rights and remedies of Landload and without prejudice to
the rights of subrogation of Landload's insurer, the
damages shall be repaired by Landlord but there shall be
no apportionment or abatement of rent. No penalty shall
accrue for reasonable delay which may arise by reason of
adjustment of insurance on the part of Landlord and/or
Tenant, and for reasonable delay on account of "labor
FIRE CLAUSE troubles", or any other cause, beyond Landlord's control.
If the demised premises are totally damaged or are
rendered wholly untenantable by fire or other cause, and
if Landload shall decide not to restore or not to rebuild
the same, or if the building shall be so damaged that
Landlord shall decide to demolish it or to rebuild it,
then or in any of such events Landlord may, within ninety
(90) days after such fire or other cause, give Tenant a
notice in writing of such decision, which notice shall be
given as in Paragraph Twelve hereof provided, and
thereupon the term of this leasse shall expire by lapse of
time upon the third day after such notice is given, and
Tenant shall vacate the demised premises and surrender the
same to Landlord. If Tenant shall not be in default under
this leasse then, upon the termination of this lease under
the conditions provided for in the sentence immediately
preceding, Tenant's liability for rent shall cease as of
the day following the casualty. Tenant hereby expressly
waives the provisions of Section 227 of the Real Property
Law and agrees that the foregoing provisions of this
Article shall govern and control in lieu thereof. If the
damage or destruction be due to the fault or neglect of
Tenant the debris shall be removed by, and at the
expense of, Tenant.
FIFTH.-If the whole or any part of the premises hereby
EMINENT demised shall be taken or condemned by any conmpetent
DOMAIN authority of any public use or purpose then the term
hereby granted shall cease from the time when possession
of the part so taken shall be required for such public
purpose and without apportionment of award, the Tenant
hereby assigning to the Landlord all right and claim to
any such award, the current rent, however, in such case to
be apportioned.
LEASE NOT SIXTH.-If, before the commencement of the term, the
IN EFFECT Tenant be adjudicated a bankrupt, or make a "general
assignment," or take the benefit of any insolvent act, or
if, a Receiver or Trustee be appointed for the Tenant's
property, or if this lease or the estate of the Tenant
hereunder be transferred or pass to or devolve upon any
other person or corporation, or if the Tenant shall
defualt in the performance of any agreement by the Tenant
contained in any other lease to the Tenant by the
Landlord or by any corpooration of which an officer of the
Landlord is a Director, this lease shall thereby, at the
DEFAULTS option of the Landlord, be terminated and in that case,
neither the Tenant nor anybody claiming under the Tenant
shall be entitled to go into possession of demised
permises,. If after the commencement of the term, any of
the events mentioned above in this subsdivision shall
occur, or if Tenant shall make default in fulfilling any
of the covenants of this leases, other than the covenants
for the payment of rent or "additional rent" or if the
demised permises become vacant or deserted, the Landlord
may give to the Tenant ten days' notice of intention to
end the term of this lease, and thereupon at the
expiration of said ten days' (if said condition which was
TEN DAY the basis of said notice shall continue to exit) the term
NOTICE under this lease shall expire as fully and completely as
if that day wrer the date herein definitely fixed for the
expiration of the term and the Tenant will then quit and
surrender the demised premises to the Landlord, but the
Tenant shall remain liable as hereinafter provided.
<PAGE> 2
RE-POSSESSION If the Tenant shall make default in the payment of the
BY LANDLORD rent reserved hereunder, or any item of "additional rent"
herein mentioned, or any part of either or in making any
other payment herein provided for, or if the notice last
above provided for shall have been given and if the
condition which was the basis of said notice shall exist
at the expiration of said ten days' period, the Landlord
may immediately, or at any time thereafter, re-enter the
demised premises and remove all persons and all or any
property thereform, either by summary dispossess
proceedings, or by any suitable action or proceeding at
law, or by force or otherwise, without being liable to
indictment, prosecution or damages therefor, and
RE-LETTING re-possess and enjoy said premises together with all
additions, alterations and improvements. In any such case
or in the event that this lease be "terminated" before the
commencement of the term, as above provided, the Landlord
may either re-let the demised premises or any part or
parts thereof for the Landlord's own account, or may, at
the Landlord's option, re-let the demised premises or any
part or parts thereof as the agent of the Tenant, and
receive the rents therefor, applying the same first to the
payment of such expenses at the Landlord may have
incurred, and then to the fulfillment of the covenants of
the Tenant herein, and the balance, if any, at the
expiration of the term first above provided for, shall be
paid to the Tenant. Landlord may rent the premises for a
term extending beyond the term hereby granted without
releasing Tenant from any liability. In the event that the
term of this lease shall expire as above in this
WAIVER subdivision "Sixth" provided, or terminate by summary
BY TENANT proceedings or otherwise, and if the Landlord shall not
re-let the demised premises for the Landlord's own
account, then, whether or not the premises be re-let, the
Tenant shall remain liable for, and the Tenant hereby
agrees to pay to the Landlord, until the time when this
lease would have expired but for such termination or
expiration, the equivalent of the amount of all of the
rent and "additional rent" reserved herein, less the
avails of reletting, if any, and the same shall be due and
payable by the Tenant to the Landlord on the several rent
days above specified, that is, upon each of such rent days
the Tenant shall pay to the Landlord the amount of
deficiency then existing. The Tenant hereby expressly
waives any and all right of redemption in case the Tenant
shall be dispossessed by judgment or warrant of any court
or judge, and the Tenant waives and will waive all right
to trial by jury in any summary proceedings hereafter
instituted by the Landlord against the Tenant in respect
to the demised premises. The words "re-enter" and
"re-entry" as used in this lease are not restricted to
their technical legal meaning.
In the event of a breach or threatened breach by the
Tenant of any of the covenants or provisions hereof, the
REMEDIES ARE Landlord shall have the right of injunction and the right
CUMULATIVE to invoke any remedy allowed at law or in equity, as if
re-entry, summary proceedings and other remedies were not
herein provided for.
SEVENTH.--If the Tenant shall make default in the
performance of any covenant herein contained, the Landlord
may immediately, or at any time thereafter, without
notice, perform the same for the account of the Tenant. If
a notice of mechanic's lien be filed against the demised
premises or against premises of which the demised premises
are part, for, or purporting to be for, labor or material
alleged to have been furnished, or to be furnished to or
LANDLORD for the Tenant at the demised premises, and if the Tenant
MAY shall fail to take such action as shall cause such lien to
PERFORM be discharged within fifteen days after the filing of such
notice, the Landlord may pay the amount of such lien or
discharge the same by deposit or by bonding proceedings,
and in the event of such deposit or bonding proceedings,
the Landlord may require the lienor to prosecute an
appropriate action to enforce the lienor's claim. In such
case, the Landlord may pay any judgment recovered on such
claim. Any amount paid or expense incurred by the Landlord
as in this subdivision of this lease provided, and any
amount as to which the Tenant shall at any time be in
default for or in respect to the use of water, electric
current or sprinkler supervisory service, and any expense
incurred or sum of money paid by the Landlord by reason of
the failure of the Tenant to comply with any provision
hereof, or in defending any such action, shall be deemed
ADDITIONAL to be "additional rent" for the demised premises, and
RENT shall be due and payable by the Tenant to the Landlord on
the first day of the next following month, or, at the
option of the Landlord, on the first day of any succeeding
month. The receipt by the Landlord of any instalment of
the regular stipulated rent hereunder or any of said
"additional rent" shall not be a waiver of any other
"additional rent" then due.
EIGHT.--The failure of the Landlord to insist, in any
one or more instances upon a strict performance of any of
the covenants of this lease, or to exercise any option
herein contained, shall not be construed as a waiver or a
AS relinquishment for the future of such covenant or option,
WAIVERS but the same shall continue and remain in full force and
effect. The receipt by the Landlord of rent, with
knowledge of the breach of any covenant hereof, shall not
be deemed a waiver of such breach and no waiver by the
Landlord of any provision hereof shall be deemed to have
been made unless expressed in writing and signed by the
Landlord. Even though the Landlord shall consent to an
assignment hereof no further assignment shall be made
without express consent in writing by the Landlord.
NINTH.--If this lease be assigned, or if the demised
premises or any part thereof be underlet or occupied by
anybody other than the Tenant the Landlord may collect
COLLECTION rent from the assignee, under-tenant or occupant, and
OF RENT apply the net amount collected to the rent herein
FROM OTHERS reserved, and no such collection shall be deemed a waiver
of the covenant herein against assignment and
under-letting, or the acceptance of the assignee,
under-tenant or occupant as tenant, or a release of the
Tenant from the further performance by the Tenant of the
covenants herein contained on the part of the Tenant.
TENTH.--This lease shall be subject and subordinate at
all times, to the lien of the mortgages now on the demised
premises, and to all advances made or hereafter to be made
upon the security thereof, and subject and subordinate to
MORTGAGES the lien of any mortgage or mortgages which at any time
may be made a lien upon the premises. The Tenant will
execute and deliver such further instrument or instruments
subordinating this lease to the lien of any such mortgage
or mortgages as shall be desired by any mortgagee or
proposed mortgagee. The Tenant hereby appoints the
Landlord the attorney-in-fact of the Tenant, irrovocable,
to execute and deliver any such instrument or instruments
for the Tenant.
ELEVENTH.--All improvements made by the Tenant to or
upon the demised premises, except said trade fixtures,
shall when made, at once be deemed to be attached to the
freehold, and become the property of the Landlord, and at
IMPROVEMENTS the end or other expiration of the term, shall be
surrendered to the Landlord in as good order and condition
as they were when installed, reasonable wear and damages
by the elements excepted.
TWELFTH.--Any notice or demand which under the terms
of this lease or under any statute must or may be given or
NOTICES made by the parties hereto shall be in writing and shall
be given or made by mailing the same by certified or
registered mail addressed to the respective parties at the
addresses set forth in this lease.
THIRTEENTH.--The Landlord shall not be liable for any
failure of water supply or electrical current, sprinkler
damage, or failure of sprinkler service, nor for injury or
damage to person or property caused by the elements or by
NO LIABILITY other tenants or persons in said building, or resulting
from steam, gas, electricity, water, rain or snow, which
may leak or flow from any part of said buildings, or from
the pipes, appliances or plumbing works of the same, or
from the street or sub-surface, or from any other place,
nor for interference with light or other incorporeal
hereditaments by anybody other than the Landlord, or
caused by operations by or for a governmental authority in
construction of any public or quasi-public work, neither
shall the Landlord be liable for any latent defect
in the building.
FOURTEENTH.--No diminution or abatement of rent, or
other compensation shall be claimed or allowed for
inconvenience or discomfort arising from the making of
repairs or improvements to the building or to its
appliances, nor for any space taken to comply with any
NO law, ordinance or order of a governmental authority. In
ABATEMENT respect to the various "services," if any, herein
expressly or impliedly agreed to be furnished by the
Landlord to the Tenant, it is agreed that there shall be
no diminution or abatement of the rent, or any other
compensation, for interruption of curtailment of such
"service" when such interruption or curtailment shall be
due to accident, alterations or repairs desirable or
necessary to be made or to inability or difficulty in
securing supplies or labor for the maintenance of such
"service" or to some other cause, not gross negligence on
the part of the Landlord. No such interruption or
curtailment of any such "service" shall be deemed a
constructive eviction. The Landlord shall not be required
to furnish, and the Tenant shall not be entitled to
receive, any of such "services" during any period wherein
the Tenant shall be in default in respect to the payment
of rent. Neither shall there be any abatement or
diminution of rent because of making of repairs,
improvements or decorations to the demised premises after
the date above fixed for the commencement of the term, it
being understood that rent shall, in any event,
commence to run at such date so above fixed.
FIFTEENTH.--The Landlord may prescribe and regulate
the placing of safes, machinery, quantities of merchandise
and other things. The Landlord may also prescribe and
regulate which elevator and entrances shall be used by the
Tenant's employees, and for the Tenant's shipping. The
Landlord may make such other and further rules and
RULES, ETC. regulations as, in the Landlord's judgment, may from time
to time be needful for the safety, care or cleanliness of
the building, and for the preservation of good order
therein. The Tenant and the employees and agents of the
Tenant will observe and conform to all such rules and
regulations.
SIXTEENTH.--In the event that an excavation shall be
made for building or other purposes upon land adjacent to
the demised premises or shall be contemplated to be made,
the Tenant shall afford to the person or persons causing
SHORING OF or to cause such excavation, license to enter upon the
WALLS demised premises for the purpose of doing such work as
said person or persons shall deem to be necessary to
preserve the wall or walls, structure or structures upon
the demised premises from injury and to support the same
by proper foundations.
SEVENTEENTH.--No vaults or space not within the
property line of the building are leased hereunder.
Landlord makes no representation as to the location of the
property line of the building. Such vaults or space as
Tenant may be permitted to use or occupy are to be used or
VAULT SPACE occupied under a revocable license and if such license be
revoked by the Landlord as to the use of part or all of
the vaults or space Landlord shall not be subject to any
liability; Tenant shall not be entitled to any
compensation or reduction in rent nor shall this be deemed
constructive or actual eviction. Any tax, fee or charge of
municipal or other authorities for such vaults or space
shall be paid by the Tenenat for the period of the
Tenant's use or occupancy thereof.
EIGHTEENTH.--That during seven months prior to the
expiration of the term hereby granted, applicants shall be
admitted at all reasonable hours of the day to view the
premises until rented; and the Landlord and the Landlord's
agents shall be permitted at any time during the term to
visit and examine them at any reasonable hour of the day,
and workmen may enter at any time, when authorized by the
ENTRY Landlord or the Landlord's agents, to make or facilitate
repairs in any part of the building; and if the said
Tenant shall not be personally present to open and permit
an entry into said premises, at any time, when for any
reason an entry therein shall be necessary or permissible
hereunder, the Landlord or the Landlord's agents may
forcibly enter the same without rendering the Landlord or
such agents liable to any claim or cause of action for
damages by reason thereof (if during such entry the
Landlord shall accord reasonable care to the Tenant's
property) and without in any manner affecting the
obligations and covenants of this lease; it is, however,
expressly understood that the right and authority hereby
reserved, does not impose, nor does the Landlord assume,
by reason thereof, and responsibility or liability
whatsover for the care or supervision of said premises, or
any of the pipes, fixtures, appliances or appurtenances
therein contained or therewith in any manner connected.
NINETEENTH.--The Landlord has made no representations
or promises in respect to said building or to the demised
NO premises except those contained herein, and those, if any,
REPRESENTATIONS contained in some written communication to the Tenant,
signed by the Landlord. This instrument may not be
changed, modified, discharged or terminated orally.
TWENTIETH.--If the Tenant shall at any time be in
default hereunder, and if the Landlord shall institute an
action or summary proceeding against the Tenant based upon
ATTORNEY'S such default, then the tenant will remiburse the Landlord
FEES for the expense of attorneys' fees and disbursements
thereby incurred by the Landlord, so far as the same are
reasonable in amount. Also so long as the Tenant shall be
a tenant hereunder the amount of such expenses shall be
deemed to be "additional rent" hereunder and shall be due
from the Tenant to the Landlord on the first day of the
month following the incurring of such respective
expenses.
TWENTY-FIRST.--Landlord shall not be liable for
failure to give possession of the premises upon
commencement date by reason of the fact that premises are
not ready for occupancy, or due to a prior tenant
POSSESSION wrongfully holding over or any other person wrongfully in
possession or for any other reason: in such event the rent
shall not commence until possession is given or is
available, but the term herein shall not be extended.
<PAGE> 3
THE TENANT FURTHER COVENANTS:
IF A FIRST TWENTY-SECOND.--If the demised premises or any part
FLOOR thereof consist of a store, or of a first floor, or of any
part thereof, the Tenant will keep the sidewalk and curb
in front thereof clean at all times and free from snow and
ice, and will keep insured in favor of the Landlord, all
plate glass therein and furnish the Landlord with policies
of insurance covering the same.
INCREASED TWENTY-THIRD.--If by reason of the conduct upon the
FIRE demised premises of a business not herein permitted, or if
INSURANCE by reason of the improper or careless conduct of any
RATE business upon or use of the demised premises, the fire
insurance rate shall at any time be higher than it
otherwise would be, then the Tenant will reimburse the
Landlord, as additional rent hereunder, for that part of
all fire insurance premiums hereafter paid out by the
Landlord which shall have been charged because of the
conduct of such business not so permitted, or because of
the improper or careless conduct of any business upon or
use of the demised premises, and will make such
reimbursement upon the first day of the month following
such outlay by the Landlord; but this covenant shall not
apply to a premium for any period beyond the expiration
date of this lease, first above specified. In any action
or proceeding wherein the Landlord and Tenant are
parties, a schedule or "make up" of rate for the building
on the demised premises, purporting to have been issued by
New York Fire Insurance Exchange, or other body making
fire insurance rates for the demised premises, shall be
prima facie evidence of the facts therein stated and of
the several items and charges included in the fire
insurance rate then applicable to the demised
premises.
WATER RENT TWENTY-FOURTH.--If a separate water meter be installed
for the demised premises, or any part thereof, the Tenant
will keep the same in repair and pay the charges made by
the municipality or water supply company for or in respect
to the consumption of water, as and when bills therefor are
rendered. If the demised premises, or any part thereof, be
supplied with water through a meter which supplies other
premises, the Tenant will pay to the Landlord, as and when
bills are rendered therefor, the Tenant's proportionate
part of all charges which the municipality or water supply
company shall make for all water consumed through said
meter, as indicated by said meter. Such proportionate part
shall be fixed by apportioning the respective charge
according to floor area against all of the rentable floor
area in the building (exclusive of the basement) which
shall have been occupied during the period of the
respective charges, taking into account the period that
each part of such area was occupied. Tenant agrees to pay
SEWER as additional rent the Tenant's proportionate part,
determined as aforesaid, of the sewer rent or charge
imposed or assessed upon the building of which the
premises are a part.
ELECTRIC TWENTY-FIFTH.--That the Tenant will purchase from the
CURRENT Landlord, if the Landlord shall so desire, all electric
current that the Tenant requires at the demised premises,
and will pay the Landlord for the same, as the amount of
consumption shall be indicated by the meter furnished
therefor. The price for said current shall be the same as
that charged for consumption similar to that of the Tenant
by the company supplying electricity in the same
community. Payments shall be due as and when bills shall
be rendered. The Tenant shall comply with like rules,
regulations and contract provisions as those prescribed by
said company for a consumption similar to that of the
Tenant.
SPRINKLER TWENTY-SIXTH.--If there now is or shall be installed
SYSTEM in said building a "sprinkler system" the Tenant agrees to
keep the appliances thereto in the demised premises in
repair and good working condition, and if the New York
Board of Fire Underwriters or the New York Fire Insurance
Exchange or any bureau, department or official of the
State or local government requires or recommends that any
changes, modifications, alterations or additional
sprinkler heads or other equipment be made or supplied by
reason of the Tenant's business, or the location of
partitions, trade fixtures, or other contents of the
demised premises, or if such changes, modifications,
alterations, additional sprinkler heads or other equipment
in the demised premises are necessary to prevent the
imposition of a penalty or charge against the full
allowance for a sprinkler system in the fire insurance
rate as fixed by said Exchange, or by any Fire Insurance
Company, the Tenant will at the Tenant's own expense,
promptly make and supply such changes, modifications,
alterations, additional sprinkler heads or other
equipment. As additional rent hereunder the Tenant will
pay to the Landlord, annually in advance, throughout the
term $..............., toward the contract price for
sprinkler supervisory service.
SECURITY TWENTY-SEVENTH.--The sum of .....NONE..........Dollars
is deposited by the Tenant herein with the Landlord herein
as security for the faithful performance of all the
covenants and conditions of the lease by the said Tenant.
If the Tenant faithfully performs all the covenants and
conditions on his part to be performed, then the sum
deposited shall be returned to said Tenant.
NUISANCE TWENTY-EIGHTH.--This lease is granted and accepted on
the especially understood and agreed condition that the
Tenant will conduct his business in such a manner, both as
regards noise and kindred nuisances, as will in no wise
interfere with, annoy, or disturb any other tenants, in
the conduct of their several businesses, or the landlord
in the management of the building; under penalty of
forfeiture of this lease and consequential damages.
BROKERS TWENTY-NINTH.--The Landlord hereby recognizes
COMMISSIONS as the broker who negotiated and consummated this lease
with the Tenant herein, and agrees that if, as, and when
the Tenant exercises the option, if any, contained herein
to renew this lease, or fails to exercise the option, if
any, contained therein to cancel this lease, the Landlord
will pay to said broker a further commission in accordance
with the rules and commission rates of the Real Estate
Board in the community. A sale, transfer, or other
disposition of the Landlord's interest in said lease shall
not operate to defeat the Landlord's obligation to pay the
said commission to the said broker. The Tenant herein
hereby represents to the Landlord that the said broker is
the sole and only broker who negotiated and consummated
this lease with the Tenant.
WINDOW THIRTIETH.--The Tenant agrees that it will not
CLEANING require, permit, suffer, nor allow the cleaning of any
window, or windows, in the demised premises from the
outside (within the meaning of Section 202 of the Labor
Law) unless the equipment and safety devices required by
law, ordinance, regulation or rule, including, without
limitation, Section 202 of the New York Labor Law are
provided and used, and unless the rules, or any
supplemental rules of the Industrial Board of the State of
New York are fully complied with; and the Tenant hereby
agrees to indemnify the Landlord, Owner, Agent, Manager
and/or Superintendent as a result of the Tenant's
requiring, permitting suffering, or allowing any window,
or windows in the demised premises to be cleaned from the
outside in violation of the requirements of the aforesaid
laws, ordinances, regulations and/or rules.
VALIDITY THIRTY-FIRST.--The invalidity or unenforceability of
any provision of this lease shall in no way affect the
validity or enforceability of any other provision hereof.
EXECUTION THIRTY-SECOND.--In order to avoid delay, this lease
& DELIVERY has been prepared and submitted to the Tenant for signature
OF LEASE with the understanding that it shall not bind the Landlord
unless and until it is executed and delivered by the
Landlord.
EXTERIOR OF THIRTY-THIRD.--The Tenant will keep clean and
PREMISES polished all metal, trim, marble and stonework which are
a part the exterior of the premises, using such materials
and methods as the Landlord may direct, and if the Tenant
shall fail to comply with the provisions of this
paragraph, the Landlord may cause such work to be done at
the expense of the Tenant.
PLATE GLASS THIRTY-FOURTH.--The Landlord shall replace at the
expense of the Tenant any and all broken glass in the
skylights, doors and walls in and about the demised
premises. The Landlord may insure and keep insured all
plate glass in the skylights, doors and walls in the
demised premises, for and in the name of the Landlord and
bills for the premiums therefor shall be rendered by the
Landlord to the Tenant at such times as the Landlord may
elect, and shall be due from and payable by the Tenant
when rendered, and the amount thereof shall be deemed to
be, and shall be paid as, additional rent.
WAR THIRTY-FIFTH.--This lease and the obligation of
EMERGENCY Tenant to pay rent hereunder and perform all of the other
covenants and agreements hereunder on part of Tenant to
be performed shall in nowise be affected, impaired or
excused because Landlord is unable to supply or is delayed
in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any
repairs, additions, alterations or decorations or is
unable supply or is delayed in supplying any equipment or
fixtures if Landlord is prevented or delayed from so doing
by reason of governmental preemption in connection with a
National Emergency declared by the President of the United
States or in connection with any rule, order or regulation
of any department or subdivision thereof of any government
agency or by reason of the conditions of supply and
demand which have been or are affected by war or other
emergency.
THE LANDLORD COVENANTS
QUIET FIRST.--That if and so long as the Tenant pays the
POSSESSION rent and "additional rent" reserved hereby, and performs
and observes the covenants and provisions hereof, the
Tenant shall quietly enjoy the demised premises, subject,
however, to the terms of this lease, and to the mortgages
above mentioned, provided however, that this covenant
shall be conditioned upon the retention of title to the
premises by Landlord.
AND IT IS MUTUALLY UNDERSTOOD AND AGREED that the
covenants and agreements contained in the within lease
shall be binding upon the parties hereto and upon their
respective successors, heirs, executors and
administrators.
IN WITNESS WHEREOF, the Landlord and Tenant have
respectively signed and sealed these presents the day and
year first above written.
160 OSER AVENUE ASSOCIATES,
By: /s/ MICHAEL BIVONA [L.S.]
-----------------------
Landlord
MANCHESTER EQUIPMENT CO., INC.,
By: /s/ BARRY STEINBERG [L.S.]
-----------------------
Tenant
In presence of:
/s/ Veronica T. Laskowski
<PAGE> 4
State of New York, County of ss:
On the day of 19 , before me personally came
, to me known, who, being by me duly sworn, did depose
and say that he resides at ; that he is
of , the corporation described in and which
executed the within instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation, and that he
signed his name thereto by like order.
State of New York, County of ss:}
On the day of 19 , before me personally came
, to me known, who, being by me duly sworn, did depose
and say that he resides at ; that he is
of , the corporation described in and which
executed the within instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation, and that he
signed his name thereto by like order.
State of New York, County of ss:
On the day of 19 , before me personally came
to be known and known to me to be the individual described in and who executed
the foreoing instrument, and duly acknowledged that he executed the same.
State of New York, County of ss:
On the day of 19 , before me personally came
, subscribing witness to the foregoing instrument, with
whom I am personally acquainted, who, being by me duly sworn, did depose and
say, that he resided, at the time of the execution of said instrument, and
still resides, in that he is and then
was acquainted with , and knew to
be the individual described in and who executed the foregoing
instrument; and that he, said sbuscribing witness, was present and saw
execute the same; and that he, said witness, thereupon at the
same time subscribed his name as witness thereto.
BUILDING
PREMISES
Landlord
to
Tenant
LEASE
GUARANTY
In consideration of the letting of the premises within mentioned to
the Tenant within named, and of the sum of One Dollar, to the undersigned in
hand paid by the Landlord within named, the undersigned hereby guarantees to
the Landlord and to the heirs, successors and/or assigns of the Landlord, the
payment by the Tenant of the rent, within provided for, and the performance by
the Tenant of all of the provisions of the within lease. Notice of all defaults
is waived, and consent is hereby given to all extensions of time that any
Landlord may grant.
Dated, 19
L.S.
STATE OF COUNTY OF ss:
On this day of 19 , before me personnally appeared
to me known and known to me to be the individual described in and who executed
the foregoing instrument, and duly acknowledged to me that he executed the
same.
<PAGE> 5
RIDER TO LEASE dated July 31, 1995 between 160 OSER AVENUE ASSOCIATES,
as Landlord, and MANCHESTER EQUIPMENT CO., INC., as Tenant.
1. Anything herein, to the contrary notwithstanding, Tenants shall, at
Tenants' own cost and expense, secure and pay for all interior repairs,
replacements, utilities, maintenance and services required by Tenants or for
preservation of the demised premises, including, but not limited to: gas,
electricity, telephone, light, janitorial services, plumbing, wiring, carpentry,
mechanical, plate glass, electrical, air-conditioning, store front, painting,
decorating and maintenance services, heat, fuel, garbage and waste disposal,
snow removal, water, hot water and sewer rent. Any fees or deposits for permits
or licenses for machinery, meters, signs or any other equipment or usage, shall
be made, secured, and/or paid for by Tenants at Tenants' own cost and expense.
Except as expressly provided in this Lease, Landlord shall have no obligation to
furnish or perform interior repairs, maintenance or services; provided however,
that Landlord shall be responsible for so-called "structural" repairs, defined
as exterior walls, structural members and foundation. As designated in the
within paragraph, "utilities" refers solely to those utilities consumed by the
within Tenant; i.e. the within Tenant shall have no responsibility for the
utilities consumed by other Tenants in the building in which the demised
premises are located.
2. Anything herein to the contrary notwithstanding, Tenants are hereby
given permission to erect any sign or signs in and about the demised premises at
Tenant's own cost and expense, provided: (a) Any such sign shall comply with all
rules and regulations of any governmental authority having jurisdiction thereof;
(b) Said sign or signs shall be installed without damage to Landlord's building
including signs on each exterior wall; (c) Upon the removal of any such signs,
all damage occasioned thereby shall be repaired by Tenants at Tenants' own cost
and expense.
3. Tenants shall secure, pay for and maintain during the term of this
Lease, a policy of general liability insurance, (having limits:
$1,000,000/2,000,000 for bodily injury; $100,000 for properly damage) from a
financially responsible insurer licensed to do business in the State of New
York; which said policy shall name as protected, the Tenants and Landlord as the
fee owner, as their respective interests shall appear, and any other parties
designated by Tenants, and shall contain a waiver of subrogation as against the
Landlord as fee owner. Tenants shall deliver to the Landlord a certificate of
such insurance policy on or before the beginning of the term of this Lease. In
any such policy, the bodily injury coverage shall be written on an "Occurrence"
basis and shall include personal injury coverage; and shall also provide that no
modification, termination or cancellation thereof shall be effective until after
ten (10) days prior written notice has been given to Landlord by the insurance
carrier, to be forwarded by Certified or Registered Mail, Return Receipt
Requested. In the event of the failure of the Tenant
{1}
<PAGE> 6
to secure, maintain and pay for such policy and to provide a certificate thereof
to Landlord, Landlord may, in Landlord's sole discretion, order such policy and
the premium cost thereof shall be due from Tenant as additional rent hereunder
or Landlord may elect to treat such failure as a default hereunder, in which
case, Tenant agrees such default is a material default of the Lease.
4. Tenant, at its cost, shall maintain a policy of standard fire and
extended coverage insurance with vandalism and malicious mischief endorsements
to the extent of at least eighty [80%] percent of full replacement value as to
the demised structure and its environs, defined as follows: $850,000.00. The
insurance policy shall be issued in the name of Landlord, Tenant and Landlord's
lender, if any, now or in the future, as their interests appear. The insurance
policy shall provide that any proceeds shall be made payable to the Landlord or
Landlord's lender, as Landlord may designate. The Tenant agrees to assign and
deliver at the commencement of this Lease said insurance policy to the Landlord
and the said policy and renewal thereof shall be held by said Landlord. In the
event the Tenants do not pay the premiums as they fall due on said policy,
Landlord shall have the option of paying said premiums on behalf of Tenants, and
adding the cost thereof to the next month's rent due Landlord under the terms of
this Lease as additional rent and to collect same as "additional rent".
The foregoing insurance policy shall provide that no modification,
termination or cancellation thereof shall be effective until after thirty [30]
days prior written notice has been given to the Landlord by the insurance
carrier, certified mail, return receipt.
If any extraordinary or excessive insurance premium cost is charged to
Landlord as the result of the nature of Tenant's business, or its use and
occupancy of the demised premises or an installation, condition or alteration
made or maintained by Tenant therein, the full cost of such excess premium or
extraordinary charge shall be borne by and paid by Tenant. The finding or
"make-up" of rate established by the New York Fire Rating Organization [or such
other agency having jurisdiction and responsibility for rating the building for
insurance purposes] shall be admissible as evidence in any action and proceeding
and shall be deemed conclusive evidence of the facts therein stated and of the
items and charges then applicable to the building and the demised premises
located therein. The total costs of insurance and the totality of coverage shall
not exceed that which is reasonable and customary.
5. The Tenants agree to indemnify the Landlord, as fee owner, and the
respective officers, directors, agents, servants and employees thereof against
and to defend, save and hold them harmless of and from, any and all liability,
cost and damage for or arising by reason of any and all claims, suits or causes
of action for bodily injury, personal injury, death or property damage to any
and all persons in any manner caused
{2}
<PAGE> 7
by acts, negligence or omissions of, or any condition created, caused, permitted
or suffered by, the Tenants, its officers, directors, agents, servants, and
employees.
6. Except for injury, loss or damage occasioned directly and
specifically as the result of the Landlord's negligence, the Landlord shall not
be liable or responsible to the Tenants for the safekeeping of any goods or
other property of the Tenant, nor for injury to any person or persons or any
damage to or loss of merchandise or other property of the Tenants occasioned by
theft, fire, water, power failure, accident or the bursting, leaking or running
in the demised premises of any plumbing, heating, electrical apparatus, gas,
steam or pipes of any nature, or from any other cause whatsoever; and except for
injury, loss or damage due to Landlord's negligence, anything herein to the
contrary notwithstanding, the Tenant, for itself and its insurers, releases
Landlord of and from any and all such liability and responsibility.
7. It is understood and agreed that under any and all circumstances,
the liability of the Landlord shall not be personal and whenever Tenants, their
agents, servants or employees seek or recover any money judgment or other award
of damages against the Landlord from any Court, administrative body or tribunal
of competent jurisdiction, that satisfaction thereof shall be solely and
expressly limited to levy of execution against and collection out of the
interest of the Landlord in and to the demised premises and/or the land and
building of which the demised premises forms a part, and the Tenants for
themselves, their agents, servant and employees, heirs, successors and assigns,
expressly and specifically relinquishes, waives and releases any and all rights
to seek, secure, recover or collect any portion of such judgment, damages or
award against or from the Landlord personally or from any other property, assets
or estate of the Landlord, its heirs, successors, officers, directors,
shareholders, legal representatives, agents, servant, employees or assigns.
8. In lieu of the Landlord not requiring the Tenant to maintain a
policy of plate glass insurance, it is specifically agreed that the Tenant shall
be solely responsible for the replacement of any and all plate glass damage at
the Tenant's cost and expense. In the event the Tenant fails to replace and or
repair plate glass within a reasonable time after damage thereto, the Landlord
shall have the right to repair said plate glass damage, and in such event, the
landlord is hereby authorized to add the cost of such repair to any regular
installment of rent thereafter becoming due, as additional rent.
9. Tenants shall bear and pay to the Landlord as additional rent during
each Lease year, the cost to Landlord of the following:
A. Commencing with the rental due August 1, 1995, the fixed annual
rent hereinbefore set forth for each fiscal year of this Lease (hereinafter a
"lease year") shall be increased by additional rental in an amount equal to one
hundred [100%] percent of the amount expended for taxes, [as hereinafter
defined], in such Lease year.
{3}
<PAGE> 8
Such additional rental shall be paid by the Tenants within fifteen (15)
days after the Landlord shall have served upon Tenants a written statement
thereof. The Tenants or their authorized representative shall have the right to
inspect the books of the Landlord during its regular business hours for the
purpose of verifying the information set forth in the statement submitted by the
Landlord pursuant to this paragraph provided that written request for such
inspection shall be made by the Tenants within ten (10) days after the receipt
of such statement. For purposes of this paragraph, the term "Taxes" means real
estate taxes, transfer taxes, vault charges and other governmental taxes or
charges, special, ordinary or extraordinary, foreseen or unforeseen (but not
income, franchise, inheritance or capital stock taxes) which may now or
hereafter be levied or assessed against the lands and buildings of which the
demised premises form a part thereof. In the event the tax year does not
correspond with a Lease year, equitable proration shall be made in determining
the amount expended in respect of such period.
(a) Every "lease year" during the term hereof shall be for a
period of twelve (12) full calendar months, except that the last Lease year
shall terminate on the date this Lease expires or is otherwise terminated.
(b) In the event that as the result of changes in the laws,
enabling statutes or other code, rules or regulations, including but not limited
to the Internal Revenue Code, taxes or other levies or assessments against gross
rental income shall be substituted in whole or in part for any real property
taxes or assessments presently applicable to real property, then and to the
extent that such taxes shall be and constitute a substitute for the real
property taxes against the premises of which the demised premises forms a part,
such substitute tax or assessment shall be included in and considered part of
the real property taxes for the purposes of calculating the portion thereof to
be paid by Tenants as additional rent hereunder.
<PAGE> 9
10. A. The amount of all such additional rent shall be due and payable
with the next regular monthly installment of rent following the submission to
Tenants of a bill, together with the calculation of additional rent due,
therefor by Landlord.
B. A copy of the official tax bill, insurance premium bill or other
statement or invoice for a charge or expense to Landlord shall be deemed
sufficient and conclusive evidence of the amount of such charge or expense, a
percentage of which is payable by Tenant to Landlord as additional rent.
C. If any extraordinary or excessive insurance premium cost is
charged to Landlord as the result of the nature of Tenant's business, or its use
and occupancy of the demised premises or an installation, condition or
alteration made or maintained
{4}
<PAGE> 10
by Tenant therein, the full cost of such excess premium or extraordinary charge
shall be borne by and paid by Tenants. The finding or "make-up" of rate
established by the New York Fire Rating Organization (or such other agency
having jurisdiction and responsibility for rating the building for insurance
purposes) shall be admissible as evidence in any action and proceeding and shall
be deemed conclusive evidence of the facts therein stated and of the items and
charges then applicable to the building and the demised premises located
therein. The total costs of insurance and the totality of coverage shall not
exceed that which is reasonable and customary.
D. The portion of the Landlord's costs or charges payable as
additional rent by Tenants shall be apportioned on the basis that the first
Lease year, the last Lease year or any Lease year does not coincide with the
fiscal year to which any such charge is applicable.
11. It is specifically agreed that in the event of the default by
Tenants in the performance of this Lease or the payment when due of any
installment of rent or additional rent or any other sum due under this Lease,
the Landlord is expressly authorized, empowered, directed and entitled to use,
apply or retain as Landlord's sole property that portion or all of the security
deposited by Tenants on the signing of this Lease to the extent necessary to
cure such default or to reimburse Landlord for any sum which he may expend or be
required to expend by reason of Tenant's default. All or any portion of the said
security deposit thus used or applied by Landlord shall be made up and
redeposited by Tenants forthwith on demand to the original amount of the
security deposit required under this Lease. The security deposit to be made
hereunder and any additions thereto, shall be deposited by the Landlord in a
separate interest bearing savings account, and all interest accruing thereon
shall be deemed as additional security, and held by the Landlord pursuant to the
security provisions of the within Lease.
12. Tenants agree that if Landlord shall pay or be compelled to pay a
sum of money or to perform any act that requires the payment of money, by reason
of the failure of the Tenant to keep, observe, or perform any of the terms,
covenants and provisions herein contained to be kept, observed or performed by
the Tenants, other than the payment of rent, then and in such event, the sum or
sums so paid by the Landlord shall, upon Landlord's demand, be paid by Tenants
to Landlord as additional rent, with interest thereon at the maximum rate of
interest allowable on the date of such demand, together with the installment of
the monthly base rent next due from date of said demand.
13. Any and all notices, consents and other communications which either
party may desire or be required to give to the other shall be in writing and,
except as otherwise herein specifically provided, shall be sent by Certified
Mail, Return Receipt Requested, addressed to the party for whom intended at the
address first herein above
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<PAGE> 11
set forth or at such other address as such party may designate for such purpose
by notice duly given to the other. All such notices shall be deemed to have been
duly given on the third business day following the date of the deposit thereof,
securely enclosed in a postpaid wrapper addressed as above, in an official
depository maintained for mailing purposes by the U. S. Post Office Department
(or its successor postal agency).
14. If any term, condition or provision of the printed portion of this
Lease shall be inconsistent with a provision of this Rider, then the
inconsistent portions of the printed Lease form shall be deemed superseded by
the provisions set forth in this Rider. Wherever appropriate for good usage or
meaningful interpretation, terms expressed in the neuter, masculine or feminine
gender shall be deemed interchangeable, as shall terms expressed in the singular
or plural be deemed interchangeable.
15. In the event that any payment provided to be made hereunder shall
become overdue in excess of ten (10) days as additional rent, Tenant shall pay
to the Landlord a late charge of five (.05) cents for each dollar so overdue to
compensate Landlord for expenses incurred in handling such delinquent payment or
payments. The charges hereunder shall be due and owing regardless of application
of security pursuant to paragraph "10".
16. On the written request of either party, the Landlord and the
Tenants each covenant and agree to execute, seal, acknowledge and deliver unto
the other, within ten (10) days of written request, a certificate attesting: (a)
Whether this Lease is current and in full and continuing force and effect; (b)
Whether there are any defaults, arrears, set-offs, claims, counter-claims or
defenses to or against the full enforcement of any of the terms, covenants and
conditions to be paid and performed hereunder; (c) To the amount of the rent
then being paid and the dates of the commencement and expiration of the term
hereof; (d) To the period for which and the amount of the rent which has then
been prepaid; and (e) Whether the other party has fully performed all
obligations on its part to be performed.
17. It is specifically understood and agreed that any item required to
be paid by Tenants, including additional rent or payments for defaults, shall be
deemed rent, and upon the failure of Tenants to pay the same when due, it shall
be deemed equivalent to a default in the payment of rent and shall entitle
Landlord to invoke any and all remedies as in the case of non-payment of rent.
18. In any case where Landlord brings any action or summary proceeding
for any default of the Tenants hereunder, whether for the non-payment of rent or
additional rent or any other default, Landlord shall be entitled to reasonable
attorney's fees if successful; plus filing fees, sheriff's fees, if any, for any
one action or proceeding. Parties each waive trial by jury in any summary
proceeding.
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<PAGE> 12
19. The Tenants shall have the right to contest any real estate tax,
special assessments or other governmental charges levied against the real
property of which the demised premises are a part, by writ of certiorari, or
otherwise, in the same manner as provided by law for the owner of the property
to contest the same upon condition that the Tenants shall pay, immediately upon
billing, such real estate taxes, special assessments or other government charges
(looking to the taxing authorities for a refund thereafter), and upon the
further condition that the cost of such proceeding shall be borne solely by the
Tenants and the Tenants shall hold the Landlord free and harmless from any cost,
penalties, interest, damages or other liability otherwise incurred as the result
thereof. Landlord shall, at Tenant's request, execute such documents as are
reasonably necessary to carry out the foregoing. In the event the Tenant should
be successful in contesting as aforesaid, the result of which creates a refund
to the landlord, the following shall apply:
Upon receipt by the Landlord of such refund, the Landlord shall
return to the Tenant the costs and expenses incurred by the Tenant in obtaining
such refund. The Tenants shall have a similar right to contest insurance costs
and any other costs charged pursuant to paragraphs "8" and "9".
20. Ceiling lighting fixtures shall not be deemed trade fixtures, and
upon installation, the same shall become, be and remain Landlord's sole
property. All light bulbs, tubes, ballasts, starters, switches, lenses and
grills for such ceiling fixtures, and the servicing and maintenance thereof
shall at all times be solely the obligation of Tenant.
21. A. Tenant covenants and agrees that it will occupy the entire
demised premises, and will conduct its business in the regular and usual manner,
throughout the term of this Lease. Tenants acknowledge that Landlord is
executing this Lease in reliance upon these covenants, and that these covenants
are a material element of consideration inducing the Landlord to execute this
Lease. Tenant further agrees that if it vacates the demised premises or fails to
so conduct its business therein, at any time during the term of this Lease,
without the prior written consent of the Landlord, then all rent and additional
rent reserved in this Lease from the date of such breach to the expiration date
of this Lease, shall become immediately due and payable to Landlord.
B. The parties recognize and agree that the damage to Landlord
resulting from any breach of the covenants in subdivision (a) hereof will be
substantial and will be greater than the rent payable for the balance of the
term of this Lease, and will be impossible of ascertainment. The parties,
therefore, agree as follows:
1. In the event of a breach or threatened breach of the said
covenants, in addition to all of Landlord's other rights and remedies, at law or
in equity
{7}
<PAGE> 13
or otherwise, Landlord shall have the right of injunction to preserve Tenant's
occupancy and use. The words "become vacant or deserted" as used elsewhere in
this Lease shall include Tenant's failure to occupy or use as by this Article
required.
2. If Tenants breach either of the covenants in subdivision (a)
above, and this Lease be terminated because of such default, then, anything in
this Lease as to the contrary notwithstanding;
(a) Landlord shall have the right to re-enter the demised
premises, and to alter, reconstruct and rent all or any part of the premises, at
any rental to which Landlord shall agree, for any portion of or beyond the
original term of this Lease.
(b) Any income received by Landlord on any such re-rental
shall be the property of the Landlord alone, as compensation for the expenses in
connection with the preparation and re-renting of the demised space, and,
together with the rents and additional rents payable as aforesaid, as liquidated
damages for the breach of Tenants, which damages cannot be computed, as
aforesaid. Tenants shall have no right to any portion of such income.
22. In any action or summary proceeding brought by Landlord against
Tenants under this Lease (or any renewal, extension, holdover or modification
thereof), for non-payment of rent or additional rent, the Tenant hereby waives
the right to interpose, and expressly covenants and agrees not to interpose, any
counterclaim or set-off of whatever nature or description. The foregoing,
however, shall not be deemed or constitute a waiver of the Tenant's right to
commence and prosecute a separate action against Landlord on a bonafide claim.
23. Every "Lease Year" during the term hereof shall be for a period of
twelve (12) full calendar months, except that the last Lease year shall
terminate on the date this Lease expires or is otherwise terminated.
24. The fixed annual rent hereinafter provided is intended to be and
shall be absolutely net to Landlord. It is the intention of the parties hereto
that all expenses, costs and obligations of the parties hereto, all expenses,
costs and obligations of every kind and nature whatsoever relating to the
demised premises, (with the exception of the base real estate taxes and
structural repairs as defined herein), shall be paid by Tenants either directly
or as additional rent so that this Lease shall yield to Landlord the net fixed
annual rent specified during the term of this Lease.
25. If any term or provision of this Lease or the application thereof
to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances
{8}
<PAGE> 14
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Lease shall be valid and
be enforced to the fullest extent permitted by law.
26. Tenants agree not to allow or permit during the demised term, any
mechanic's or other lien for work, labor and services and/or materials furnished
or otherwise to attach to and become a lien upon the premises as a result of any
work done by or on behalf of Tenants. If such lien shall so attach, Tenants
shall within thirty (30) days after notice thereof, either pay or satisfy the
same or procure the discharge thereof of record in such manner as may be
permitted or provided by law. Should Tenants fail or refuse to discharge any
such lien within the period herein provided, then Landlord is hereby authorized
to add the amount of the said lien to any regular installment of rent thereafter
becoming due as additional rent.
27. During the entire term of this Lease, the Tenants shall be required
to keep in full force and effect all necessary Certificates of Occupancy for the
purposes for which the demised premises are rented, permits and other approvals
or consents required by any governmental authority having jurisdiction over the
business conducted by the Tenants as set forth in the purpose clause of this
Lease. The Landlord represents that the present zoning of the demised premises
is "C8".
26. Should any conflict in language or interpretation occur between the
printed provisions of this Lease, the parties agree that the provisions in the
Rider shall prevail. All reference to paragraphs as set forth in the Rider shall
refer to paragraphs so indicated in the Rider and not to paragraphs in the
printed portion of this Lease, unless so designated or unless the context of the
Rider is intended to designate the printed portion of this Lease.
29. This Lease contains all of the agreements and understandings of the
parties and cannot be amended or modified except by a written agreement.
30. The unenforceability, invalidity or illegality of any provision of
the Lease shall not render the other provisions unenforceable, invalid or
illegal.
31. This Lease shall not be recorded. No Memorandum shall be recorded
without the express written consent of the Landlord.
32. Tenants covenant that the demised premises will not be used so as
to interfere with other Tenants in the same building.
33. In the event the Tenants do not vacate the premises upon the
expiration date of this Lease, then and in that event, the Tenants shall remain
as month to month Tenants at a monthly rental 100% greater than the last monthly
rental paid during the
{9}
<PAGE> 15
term of the Lease. Nothing herein shall grant the Tenants a right to holdover
after the expiration of the Lease term.
34. The annual base rent for the years of the term of the within Lease shall
be as follows:
Annual
<TABLE>
<S> <C>
Aug. 1, 1995 to July 31,1996 $360,000.00 - monthly $30,000.00,
Aug. 1, 1996 to July 31, 1997 $378,000.00 - monthly $31,500.00,
Aug. 1, 1997 to July 31, 1998 $396,900.00 - monthly $33,075.00,
Aug. 1, 1998 to July 31, 1999 $416,745.00 - monthly $34,728.75,
Nov. 1, 1999 to Oct. 31, 2000 $437,582.25 - monthly $36,465.19.
</TABLE>
35. Notwithstanding any provision of the within Lease to the contrary,
written consent of the Landlord to an assignment of the within Lease, and/or
sub-Lease of a portion of the demised premises, shall be required. The Landlord
shall not unreasonably withhold its consent to such assignment or sub-Lease
provided the then Tenant has complied with the following terms and conditions:
(a) The within Tenants shall not be in default as to any of the
terms and conditions of the within Lease, and the Lease shall be in full force
and effect.
(b) The within Tenants shall notify the Landlord of the proposed
assignment, or sub-Lease, which notice shall be forwarded to the Landlord by
Certified Mail, Return Receipt. Said notice shall be mailed to the Landlord no
less than thirty (30) days prior to the proposed assignment or sub-Lease. Said
notice shall contain the name and address of the proposed assignee or
sub-lessee, and if said assignee or sub-lessee is a corporation, the name of the
principal of said corporation, the date of the proposed assignment or sub-Lease,
and the proposed use of the premises by the assignee.
(c) The use of the demised premises by the proposed assignee or
sub-lessee shall be substantially similar to the Tenant's use and purpose
provided for in the within Lease.
(d) The assignment of Lease or sub-Lease shall be delivered to the
Landlord accompanied by an Assumption Agreement, if an assignment, both in
proper form for recording, said delivery to the Landlord to be mailed Certified
mail, Return Receipt, within one (1) week of such assignment.
{10}
<PAGE> 16
(e) Such assignment or sub-Lease shall in no manner discharge the
Tenant or any subsequent Tenants herein from any liability or obligation
whatsoever created by the within Lease, and such liability and obligation shall
continue for the remainder of the within Lease.
(f) If Tenants are a corporation, any dissolution, merger,
consolidation or reorganization of Tenant or the sale or other transfer of fifty
(50%) percent or more of the capital stock of the Tenant shall be deemed an
assignment under the terms of this paragraph subject to all of the terms and
conditions specified herein; provided, however, that transfers of capital stock
of the Tenant between presently existing shareholders of the Tenant, or
transfers of capital stock to members of the immediate family of the present
shareholders of the Tenant, shall not be deemed an assignment pursuant to the
terms of the within paragraph.
(g) If the Tenants are a corporation, or this Lease is subsequently
assigned to a corporation, the Tenant shall furnish the Landlord with a true
copy of a resolution duly adopted by the board of directors of such corporation
authorizing the corporation to enter into this Lease.
(h) The Tenants shall be responsible for the payment of reasonable
attorney's fees to the Landlord's attorney for review of all documents and the
preparation of any additional documents, if necessary, which attorney's fees
will not exceed $750.00, plus any and all disbursements incurred.
(i) That simultaneously with said assignment there shall be paid to
the Landlord, as additional security, a sum equal to two (2) months of the then
applicable rent, and same shall be held by the Landlord pursuant to the same
terms as the security recited herein in Lease paragraph "27". This provision
shall apply to each and every assignment or sub-Lease of the within Lease.
36. Defaults and remedies. A. If (1) Tenants default in the payment of
any rent or any additional rent and such default continues for five (5) days
after written notice from Landlord or its agent or (2) Tenant defaults in
fulfilling any of the covenant or agreements or any rules or regulations of this
Lease on its part to be kept or performed and such default is not made good
within ten (10) days after written notice from Landlord or its agent, or within
such additional time as Tenant may be prevented from making good the default as
is caused by delays attributable to strikes, labor troubles, acts of God,
governmental prohibitions and similar causes beyond Tenant's control, or (3) If
this Lease is transferred to or devolve upon any person or corporation other
than Tenant, except as may be specifically permitted by this Lease, or if this
Lease is mortgaged or assigned without the written consent of the Landlord, then
and in any of such events mentioned in this subparagraph "A" the term thereof,
shall thereupon ipso facto expire and come to an end as if such expiration was
so fixed by
{11}
<PAGE> 17
the terms of this Lease on the fifth (5th) or tenth (10th) day of such default
as mentioned in (1) and (2) above and upon the occurrence mentioned in (3) above
and Landlord may re-enter upon the demised premises either with or without
process of law and remove all persons therefrom and Tenant shall quit and
surrender the same to Landlord and Tenants shall remain liable as hereinafter
provided. In the event Tenants shall fail, neglect or refuse to quit and
surrender the demised premises upon receipt of notice from Landlord declaring
the term hereof at an end, then Landlord may commence a summary proceeding to
remove Tenant from the premises as a holdover. If pursuant to (2) the default is
of such a nature that it cannot be cured within ten (10) days, if Tenant
commences to cure such default within ten (10) days and proceeds diligently to
remedy such default, the Landlord shall not have the right to terminate this
Lease.
B. If Tenants shall abandon the demised premises or if the premises
become and remain vacant or deserted for a period of fifteen (15) days, or if
the term of this Lease shall expire as hereinabove provided, or if Tenant fails
to take possession of the demised premises within forty-five (45) days after
commencement of the term of this Lease, Landlord may re-enter the demised
premises and remove Tenant or its legal representatives or other occupant by
summary proceedings or otherwise and Tenant hereby waives the service of notice
of intention or to institute legal proceedings to that end.
C. In case of any re-entry, expiration and/or dispossess by summary
proceedings or otherwise, the rent shall become due thereupon and be paid up to
the time of such re-entry, dispossess and/or expiration, together with such
expenses as Landlord may incur for legal expenses, attorneys fees, brokerage
and/or putting the demised premises in good order, or for preparing the same for
re-rental; Landlord may relet the premises or any part or parts thereof either
in the name of Landlord or otherwise, for a term or terms which may at the
Landlord's option be less than or exceed the period which may otherwise have
constituted the balance of the term of this Lease and may grant reasonable
concessions, or free rent; and Tenant or the legal representatives of Tenant
shall also pay Landlord as liquidated damages for the failure of Tenant to
observe and perform said Tenant's covenants herein contained, and deficiency
between all rent or additional rent hereby reserved and/or covenanted to be
paid, with percentage rental computed for the balance of the term for the
purpose of this article at the average annual percentage rent for the two (2)
full Lease years preceding the default or re-entry and the net amount, if any,
of the rents collected on account of the Lease of the demised premises, for each
month of the period which would otherwise have constituted the balance of the
terms of this Lease. In computing such liquidated damages there shall be added
to the said deficiency such expenses as Landlord may incur in connection with
reletting, such as reasonable legal expenses, attorneys fees, brokerage and for
keeping the demised premises in good order or for preparing the same for
reletting. Any such liquidated damages shall be paid in monthly installments by
Tenant on the rent days specified in this Lease. Any suit brought to collect the
{12}
<PAGE> 18
amount of the deficiency for any month shall not prejudice in any way the rights
of Landlord to collect the deficiency for any subsequent month by a similar
proceeding. Landlord at Landlord's option may make such alterations, repairs,
replacements and/or decorations in the demised premises; and the making of such
alterations, repairs, replacement and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall not be liable for failure to relet the demised premises. The words
"re-enter" or "re-entry" as used in this Lease shall not be restricted to their
technical legal meaning. Any rents or other income received by Landlord on any
such re-rental shall be the property of Landlord alone and Tenant shall have no
right to any portion of such income. In the event that the Tenant is successful
in any proceeding brought pursuant to the provisions hereof, it shall be
entitled to its reasonable legal fees.
D. In the event of a breach or threatened breach by Tenants of any of
the covenants or provisions of this Lease, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or equity as if
re-entry, summary proceedings and other remedies were not herein provided for.
Mention in this Lease of any particular remedy shall not preclude Landlord from
any other remedy, in law or in equity. Tenants hereby expressly waive any and
all rights of redemption granted by order or any present or future laws in the
event of Tenants being evicted or dispossessed, or in the event of Landlord
obtaining possession of the demised premises by reason of Tenant's violation of
the provisions of this Lease. Tenants further waive the provisions of Section
749, Subparagraph 3 of the Real Property Actions and Proceedings Law and any
successor statute thereto.
E. In the event Tenants shall default in the payment of any rent or
additional rent as above provided, and such default shall continue for ten (10)
days after written notice from Landlord, or its agent and not be made good
within said ten (10) day period, then and in such event, Landlord may, at its
election, and in addition to any other remedy herein afforded, declare this term
at an end and accelerate the rent due for the entire Lease period. In such
event, the balance of the minimum rent reserved from the date of such default
until the last day of the Lease period, shall thereupon be forthwith due and
payable. Failure by Landlord to relet the premises shall not be deemed an offset
or defense to recovery of the aforesaid minimum rent due for the balance of the
term accelerated by reason of Tenant's default above mentioned. Landlord shall
be required to give the notice provisions contained in paragraph "12" hereof.
F. If Tenants shall default in the performance of any provision,
covenant or condition on its part to be performed under this Lease, Landlord
may, at its option, perform the same for the account and at the expense of
Tenants. If Landlord at any time shall be compelled to pay or elected to pay any
sum of money by reason of the failure of the Tenant to comply with any provision
of this Lease, or if Landlord incurs any expense, including reasonable
attorney's fees in prosecuting or defending any action or
{13}
<PAGE> 19
proceeding by reason of any default of Tenant under this Lease, the sums so paid
by Landlord with legal interest, costs, and damages shall be due from and be
paid by Tenant to Landlord on demand. All such sums, including all payments
required to be made by Tenants of any kind under this Lease, shall be deemed
additional rent and Landlord shall have all remedies for the collection thereof
that Landlord may have for non-payment of minimum rent. In the event that the
Tenants are successful in any proceedings brought pursuant to the provisions
hereof, it shall be entitled to its reasonable legal fees and costs.
37. The Tenants represent, warrant and declare that they have been
afforded the opportunity to make exterior and interior inspection of the
premises which are the subject of this Lease, that they have either made such
inspection of the said premises, or has caused such inspection of the said
premises to be made, and the Tenants distinctly understand that the premises are
being leased in their present condition and state of repair, and tenants agree
that at the time of closing Tenants will accept the premises in their present
condition and state of repair.
38. Prior to the commencement of any alterations contemplated by the
Tenants during the term of this Lease, the Tenants shall furnish written plans
and specifications therefor to the Landlord and obtain the Landlord's written
consent thereto, which consent will not be unreasonably withheld.
(a) The Tenants will apply for and obtain any and all permits
therefor as same may be required by any municipal agency or authority having
jurisdiction, prior to the commencement of such alterations, and will apply for
and secure any and all requisite certificates of occupancy or certificates of
completion therefor.
(b) The Landlord and Tenant acknowledge that the Tenant
contemplates causing extensive alterations and renovations to the demised
premises, at the Tenants' sole cost and expense.
The Tenant shall notify the Landlord upon the completion of the
foregoing alterations and renovations. Upon inspection by the Landlord that same
have been performed in a workmanlike and satisfactory manner, and of all
requisite permits, completion certificates and/or Certificates of Occupancy, are
to be furnished to the Landlord.
39. Tenant represents and warrants that Tenant did not consult with any
broker with regard to this transaction, and the Tenant agrees to indemnify and
save harmless the Landlord of any and all liability, expense, loss, cost or
damage that may arise by reason of any brokerage claims or demands by reason of
Tenant's acts, and makes this covenant as an express inducement to the Landlord,
intending that Landlord
{14}
<PAGE> 20
shall rely thereon entering into this Lease. This covenant and representation is
irrevocable, and shall survive the execution of the within Lease.
40. If any provision of this Rider shall be in conflict with any
provision of the printed form of this lease, the provisions of this Rider shall
control.
In the Presence of: 160 Oser Avenue Associates,
/s/ VERONICA T. LASKOWSKI BY: /s/ MICHAEL BIVONA
___________________________________ ______________________________________
, Landlord
Manchester Equipment Co., Inc.,
BY: /s/ BARRY STEINBERG
______________________________________
Barry Steinberg, Tenant
15
<PAGE> 21
MODIFICATION OF LEASE dated July 31, 1995, between 160 Oser Avenue
Associates, as Landlord, and Manchester Equipment Co., Inc., as Tenant.
Re: Premises at 160 Oser Avenue, Hauppauge, New York 11788.
- -------------------------------------------------------------------------------
The Landlord and Tenant hereby agree to modify the terms and conditions
of the Lease as follows:
1. Anything to the contrary notwithstanding commencing October
1, 1996, the rents shall be adjusted and modified in accordance with the
following provisions:
Rider Paragraph 34 of the original Lease shall be deleted
and in place and stead thereof the following provisions shall apply:
34. The base rent for the described periods of the term of the within
Lease shall be as follows:
<TABLE>
<CAPTION>
Period Monthly
------ -------
<S> <C> <C>
Aug. 1, 1995 to July 31, 1996 $360,000.00 $30,000.00
Aug. 1, 1996 to July 31, 1997 $255,000.00 $21,250.00
Aug. 1, 1997 to July 31, 1998 $262,650.00 $21,887.50
Aug. 1, 1998 to July 31, 1999 $270,529.50 $22,544.12
Aug. 1, 1999 to Oct. 31, 2000 $278,645.37 $23,220.44
</TABLE>
2. This Modification is conditioned and shall take effect only
upon the Tenant successfully completing the Public Offering of its shares now
contemplated. In the event the Public Offering of shares now contemplated is
not concluded, on or before
<PAGE> 22
January 1, 1997, then, unless said date is extended by written agreement of the
parties, this Modification shall be null and void, and the Lease shall be
enforceable as originally written.
DATED: OCT. 2, 1996
160 Oser Avenue Associates
by: /s/ BARRY STEINBERG
------------------------------
Landlord
Manchester Equipment Co., Inc.
by: /s/ JOEL STEMPLE - V.P.
-------------------------------
Tenant
<PAGE> 1
EXHIBIT 10.5.e
----------------------------------------
STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York, Inc.
-----------------------------------------
AGREEMENT OF LEASE, made as of this 15th day of January, 1992,
betweem 352 Seventh Avenue Associates, a New York Ltd. Partnership of 855
Avenue of the Americas, Borough of Manhattan, City and State of New York, party
of the first part, hereinafter referred to as OWNER, and MANCHESTER EQUIPMENT
CO., INC., a New York Corporation of 353 Seventh Avenue, Borough of Manhattan,
City and State of New York, party of the second part, hereinafter referred to
as TENANT, WITNESSETH: Owner hereby leases to Tenant and Tenant hereby
hires from Owmer Entire floor 12A in
the building known as 352 Seventh Avenue in the Borough of Manhattan, City of
New York, for the term of seven (7) years (or until such term shall sooner
cease and expire as hereinafter provided) to commence on the
1st day of February ninteen hundred and ninety two and to end on the
31st day of January ninteen hundred and ninety nine both dates
inclusive, at an annual rental rate of Ninety three thousand seven hundred
fifty ($93,750.00) Dollars, which Tenant agrees to pay in lawful money of the
United Stated which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, in equal monthly installments in
advance on the first day of each month during said term, at the office of Owner
or such other place as Owner may designate, without any set off or deduction
whatsoever, except that Tenant shall pay the first monthly installment(s)
on the execution hereof (unless this lease be a renewal).
In the event that, at the commencement of the term of this
lease, or thereafter, Tenant shall be in default in the payment of rent to Owner
pursuant to the terms of another lease with Owner or with Owner's predecessor
in interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns,
hereby convenant as follows:
RENT OCCUPANCY. 1. Tenant shall pay the rent as above and as
hereinafter provided.
2. Tenant shall use and occupy demised premises for
general administrative and sales offices, and for other purpose.
3. Tenant shall make no changes in or to the demised premises of
any nature without Owner's prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article. Tenant at Tenant's
expense, may make alterations, installations, additions or improvements which
are non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved by Owner. Tenant shall, before making
any alterations, additions, installations or improvements, at its expense,
obtain all permits, approvals and certificates required by any governmental or
quasi-governmental bodies and (upon completion) certificates of final approval
thereof and shall deliver promptly duplicates of all such permits, approvals
and certificates to Owner and Tenant agrees to carry and will cause Tenant's
contractors and sub-contractors to carry such workman's compensation, general
liability, personal and property damage insurance as Owner may require. If any
mechanic's lien is filed against the demised premises, or the building of which
the same forms a part, for work claimed to have been done for, or materials
furnished to, Tenant, whether or not done pursuant to this article, the same
shall be discharged by Tenant within thirty days thereafter, at Tenant's
expense, by filing the bond required by law. All fixtures and all paneling,
partitions, railings and like installations, installed in the premises at any
time, either by Tenant or by Owner in Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be surrendered with the
demised premises unless Owner, by notice to Tenant no later than twenty days
prior to the date fixed as the termination of this lease, elects to relinquish
Owner's right thereto and to have them removed by Tenant, in which event the
same shall be removed from the premises by Tenant prior to the expiration of the
lease, at Tenant's expense. Nothing in this Article shall be construed to give
Owner title to or to prevent Tenant's removal of trade fixtures, movable office
furniture and equipment, but upon removal of any such from the premises or upon
removal of other installations as may be required by Owner. Tenant shall
immediately and at its expense, repair and restore the premises to the condition
existing prior to installation and repair any damage to the demised premises or
the building due to such removal. All property permitted or required to be
remove, by Tenant at the end of the term remaining in the premises after
Tenant's removal shall be deemed abandoned and may, at the election of Owner,
either be retained as Owner's property or may be removed from the premises by
Owner, at Tenant's expense.
MAINTENANCE AND REPAIRS. 4. Tenant shall, throughout the term of this
lease, take good care of the demised premises and the fixtures and
apportenances therein. Tenant shall be responsible for all damage or injury to
the demised premises or any other part of the building and the systems and
equipment thereof, whether requiring structural or nonstructural repairs caused
by or resulting from carelessness, omission, neglect or improper conduct of
Tenant, Tenant's subtenants, agents, employees, invitees or licensees, or
which arise out of any work, labor, service or equipment done for or supplied
to Tenant or any subtenant or arising out of the installation, use or operation
of the property or equipment of Tenant or any subtenant. Tenant shall also
repair all damage to the building and the demised premises caused by the moving
of Tenant's fixtures, furniture and equipment. Tenant shall promptly make, at
Tenant's expense, all repairs in and to the demised premises for which Tenant
is responsible, using only the contractor for the trade or trades in question,
selected from a list of at least two contractors per trade submitted by Owner.
Any other repairs in or to the building or the facilities and systems thereof
for which Tenant is responsible shall be performed by Owner at the Tenant's
expense. Owner shall maintain in good working order and repair the exterior and
the structural portions of the building, including the structural portions of
its demised premises, and the public portions of the building interior and the
building plumbing, electrical, heating and ventilating systems (to the extent
such systems presently exist) serving the demised premises. Tenant agrees to
give prompt notice of any defective condition in the premises for which Owner
may be responsible hereunder. There shall be no allowance to Tenant for
diminution or rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner or others
making repairs, alterations, additions or improvements in or to any portion of
the building or the demised premises or in and to the fixtures, apportenances
or equipment thereof. It is specifically agreed that Tenant shall not be
entitled to any setoff or reduction of rent by reason of any failure of Owner
to comply with the covenants of this or any other article of this Lease. Tenant
agrees that Tenant's sole remedy at law in such instance will be by way of an
action for damages for breach of contract. The provisions of this Article 4
shall not apply in the case of fire or other casualty which are dealt with in
Article 9 hereof.
WINDOW CLEANING: 5. Tenant will not clean nor require, permit, suffer
or allow any window in the demised premises to be cleaned from the outside in
violation of Section 202 of the Labor Law or any other applicable law or of the
Rules of the Board of Standards and Appeals, or of any other Board or body
having or asserting jurisdiction.
REQUIREMENTS OF LAW, FIRE INSURANCE, FLOOR LOADS: 6. Prior to the
commencement of the lease term, if Tenant is then in possession, and at all
times thereafter, Tenant, at Tenant's sole cost and expense, shall promptly
comply with all present and future laws, orders and regulations of all state,
federal, municipal and local governments, departments, commissions and boards
and any direction of any public officer pursuant to law, and all orders, rules
and regulations of the New York Board of Fire Underwriters, Insurance Services
Office, or any similar body which shall impose any violation, order or duty
upon Owner or Tenant with respect to the demised premises, whether or not
arising out of Tenant's use or manner of use thereof, (including Tenant's
permitted use) or, with respect to the building if arising out of Tenant's
<PAGE> 2
use or manner of use of the premises or the building (including the use
permitted under the lease). Nothing herein shall require Tenant to make
structural repairs or alterations unless Tenant has, by its manner of use of
the demised premises or method of operation therein, violated any such laws,
ordinances, orders, rules, regulations or requirements with respect thereto.
Tenant may, after securing Owner to Owner's satisfaction against all damages,
interest, penalties and expenses, including, but not limited to, reasonable
attorney's fees, by cash deposit or by surety bond in an amount and in a
company satisfactory to Owner, contest and appeal any such laws, ordinances,
orders, rules, regulations or requirements provided same is done with all
reasonable promptness and provided such appeal shall not subject Owner to
prosecution for a criminal offense or constitute a default under any lease or
mortgage under which Owner may be obligated, or cause the demised premises or
any part thereof to be condemned or vacated. Tenant shall not do or permit any
act or thing to be done in or to the demised premises which is contrary to law,
or which will invalidate or be in conflict with public liability, fire or other
policies of insurance at any time carried by or for the benefit of Owner with
respect to the demised premises or the building of which the demised premises
form a part, or which shall or might subject Owner to any liability or
responsibility to any person or for property damage. Tenant shall not keep
anything in the demised premises except as now or hereafter permitted by the
Fire Department, Board of Fire Underwriters, Fire Insurance Rating Organization
or other authority having jurisdiction, and then only in such manner and such
quantity so as not to increase the rate for fire insurance applicable to the
building, nor use the premises in a manner which will increase the insurance
rate for the building or any property located therein over that in effect prior
to the commencement of Tenant's occupancy. Tenant shall pay all costs,
expenses, fines, penalties, or damages, which may be imposed upon Owner by
reason of Tenant's failure to comply with the provisions of this article and if
by reason of such failure the fire insurance rate shall, at the beginning of
this lease or at any time thereafter, be higher than it otherwise would be,
then Tenant shall reimburse Owner, as additional rent hereunder, for that
portion of all fire insurance premiums thereafter paid by Owner which shall
have been charged because of such failure by Tenant. In any action or
proceeding wherein Owner and Tenant are parties, a schedule or "make-up" of
rate for the building or demised premises issued by the New York Fire Insurance
Exchange, or other body making fire insurance rate applicable to said premises
shall be conclusive evidence of the facts therein stated and of the several
items and charges in the fire insurance rates then applicable to said premises.
Tenant shall not place a load upon any floor of the demised premises exceeding
the floor load per square foot area which it was designed to carry and which is
allowed by law. Owner reserves the right to prescribe the weight and position
of all safes, business machines and mechanical equipment. Such installations
shall be placed and maintained by Tenant, at Tenant's expense, in settings
sufficient, in Owner's judgement, to absorb and prevent vibration, noise and
annoyance.
SUBORDINATION: 7. This lease is subject and subordinate to all ground
or underlying leases and to all mortgages which may now or hereafter affect
such leases or the real property of which demised premises are a part and to
all renewals, modifications, consolidations, replacements and extensions of any
such underlying leases and mortgages. This clause shall be self operative and
no further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such
subordination, Tenant shall execute promptly any certificate that Owner may
request.
PROPERTY--LOSS, DAMAGE, REIMBURSEMENT, INDEMNITY: 8. Owner or its
agents shall not be liable for any damage to property of Tenant or of others
entrusted to employees of the building, nor for loss of or damage to any
property of Tenant by theft or otherwide, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless
caused by or due to the negligence of Owner, its agents, servants or employees.
Owner or its agents will not be liable for any such damage caused by other
tenants or persons in, upon or about said building or caused by operations in
construction of any private, public or quasi public work.
If at any time any windows of the demised premises are temporarily
closed, darkened or bricked up (or permanently closed, darkened or bricked up,
if required by law) for any reason whatsoever including, but not limited to
Owner's own acts, Owner shall not be liable for any damage Tenant may sustain
thereby and Tenant shall not be entitled to any compensation therefor nor
abatement or diminution of rent nor shall the same release Tenant from its
obligations hereunder, nor constitute an eviction. Tenant shall indemnify and
save harmless Owner against and from all liabilities, obligations, damages,
penalties, claims, costs and expenses for which Owner shall not be reimbursed
by insurance, including reasonable attorneys fees, paid, suffered or incurred
as a result of any breach by Tenant, Tenant's agents, contractors, employees,
invitees, or licensees, of any covenant or condition of this lease, or the
carelessness, negligence or unproper conduct of the Tenant, Tenant's agents,
contractors, employees, invitees or licensees. Tenant's liability under this
lease extends to the acts and omissions of any sub-tenant, and any agent,
contractor, employee, invitee or licensee of any sub-tenant. In case any action
or proceeding is brought against Owner by reason of any such claim, Tenant,
upon written notice from owner, will, at Tenant's expense, resist or defend such
action or proceeding by counsel approved by Owner in writing, such approval not
be be unreasonably withheld.
DESTRUCTION, FIRE AND OTHER CASUALTY: 9. (a) If the demised premises
or any part thereof shall be damaged by fire or other casualty, Tenant shall
give immediate notice thereof to Owner and this lease shall continue in full
force and effect except as hereinafter set forth. (b) If the demised premises
are partially damaged or rendered partially unusable by fire or other casualty,
the damages thereto shall be repaired by and at the expense of Owner and the
rent, until such repair shall be substantially completed, shall be apportioned
from the day following the casualty according to the part of the premiss which
is usable.(c) If the demised premises are totally damaged or rendered wholly
unusable by fire or other casualty, then the rent shall be proportionately paid
up to the time of the casualty and thenceforth shall cease until the date when
the premises shall have been repaired and restored by Owner, subject to Owner's
right to elect not to restore the same as hereinafter provided. (d) If the
demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, specifying a date for the
expiration of the lease, which date shall not be more than 60 days after the
giving of such notice, and upon the date specified in such notice the term of
this lease shall expire as fully and completely as if such date were the date
set forth above for the termination of this lease and Tenant shall forthwith
quit, surrender and vacate the premises without prejudice however, to
Landlord's rights and remedies against Tenant under the lease provisions in
effect prior to such termination, and any rent owing shall be paid up to such
date and any payments of rent made by Tenant which were on account of any
period subsequent to such date shall be returned to Tenant. Unless Owner shall
serve a termination notice as provided for herein, Owner shall make the repairs
and restorations under the conditions of (b) and (c) hereof, with all
reasonable expedition, subject to delays due to adjustment of insurance claims,
labor troubles, and causes beyond Owner's control. After any such casualty,
Tenant shall cooperate with Owner's restoration by removing from the premises
as promptly as reasonably possible, all of Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from owner that the premises
are substantially ready for Tenant's occupancy. (c) Nothng contained
hereinabove shall relieve Tenant from liability that may exist as a result of
damage from fire or other casualty. Notwithstanding the foregoing, each party
shall look first to any insurance in its favor before making any claim against
the other party for recovery for loss or damage resulting from fire or other
casualty, and to the extent that such insurance is in force and collectible and
to the extent permitted by law. Owner and Tenant each hereby releases and
waives all right of recovery against the other or any one claiming through or
under each of them by way of subrogation or otherwise. The foregoing release
and waiver shall be in force only if both releasors' insurace policies contain
a clause providing that such a release or waiver shall not invalidate the
insurance. If, and to the extent, that such waiver can be obtained only by the
payment of additional premiums, then the party benefitting from the waiver
shall pay such premium within ten days after written demand or shall be deemed
to have agreed that the party obtaining insurance coverage shall be free of any
further obligation under the provisions hereof with respect to waiver of
subrogation. Tenant acknowledges that Owner will not carry insurance on Tenant's
furniture and/or furnishings or any fixtures or equipment, improvements, or
appurtenances removable by Tenant and agrees that Owner will not be obligated
to repair any damage thereto or replace the same. (f) Tenant hereby waives the
provisions of Section 227 of the Real Property law and agrees that the
provisions of this article shall govern and control in lieu thereof.
EMINENT DOMAIN: 10. If the whole or any part of the demised premises
shall be acquired or condemned by Eminent Domain for any public or quasi public
use or purpose, then and in that event, the term of this lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease and assigns to
Owner, Tenant's entire interest in any such award.
ASSIGNMENT, MORTGAGE, ETC.: 11. Tenant, for itself, its heirs,
distributees, executors, administrators, legal representatives, successors and
assigns, expressly covenants that it shall not assign, mortgage or encumber
this agreement, nor underlet, or suffer or permit the demised premises or any
part thereof to be used by others, without the prior writen consent of Owner in
each instance. Transfer of the majority of the stock of a corporate
Tenant shall be deemed an assignment. If this lease be assigned, or if the
demised premises or any part thereof be underlet or occupied by anybody other
than Tenant. Owner may, after defult by Tenant, collect rent from the assignee,
under-tenant or occupant, and apply the net amount collected to the rent herein
reserved, but no such assignment, underletting, occupancy or collection shall
be deemed a waiver of this covenant, or the acceptance of the assignee,
under-tenant or occupant as tenant, or a release of Tenant from the further
performance by Tenant of covenants on the part of Tenant herein contained. The
consent by Owner to an assignment or underletting shall not in any wise be
construed to relieve Tenant from obtaining the express consent in writing of
Owner to any further assignment or underletting.
ELECTRIC CURRENT: 12. Rates and conditions in respect to submetering
or rent inclusion, as the case may be, to be added in RIDER attached hereto.
Tenant covenants and agrees that at all times its use of electric current shall
not exceed the capacity of existing feeders to the building or the risers or
wiring installation and Tenant may not use any electrical equipment which, in
Owner's opinion, reasonably exercised, will overload such installations or
interfere with the use thereof by other tenants of the building. The change at
any time of the character of electric service shall in no wise make Owner
liable or responsible to Tenant, for any loss, damages or expenses which Tenant
may sustain.
ACCESS TO PREMISES: 13. Owner or Owner's agents shall have the right
(but shall not be obligated) to enter the demised premises in any emergency at
any time, and, at other reasonable times, to examine the same and to make such
repairs, replacements and improvements as Owner may deem necessary and
reasonably desirable to the demised premises or to any other portion of the
building or which Owner may elect to perform. Tenant shall permit Owner to use
and maintain and replace pipes and conduits in and through the demised premises
and to erect new pipes and conduits therein privided they ar conealed within the
walls, floor, or ceiling. Owner may, during the progress of any work in the
demised premises, take all necessary materials and equipment into said premises
without the same constituting an eviction nor shall the Tenant be entitled to
any abatement of rent while such work is in progress nor to any damages by
reason of loss or interuption of business or otherwise. Throughout the term
herof Owner shall have the right to enter the demised premises at reasonable
hours for the purpose of showing the
<PAGE> 3
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants. If Tenant is not present to open and permit an entry into the
premises. Owner or Owner's agents may enter the same whenever such entry may be
necessary or permissible by master key or forcibly and provided reasonable care
is exercised to safeguard Tenant's property, such entry shall not render Owner
or its agents liable therefor, nor in any event shall the obligations of Tenant
hereunder be affected. If during the last month of the term Tenant shall have
removed all or substantially all of Tenant's property therefrom. Owner may
immediately enter, alter, renovate or redecorate the demised premises without
limitation or abatement of rent, or incurring liability to Tenant for any
compensation and such act shall have no effect on this lease or Tenant's
obligations hereunder.
VAULT, VAULT SPACE, AREA: 14. No Vaults, vault space or area, whether
or not enclosed or covered, not within the property line of the building is
leased hereunder, anything contained in or indicated on any sketch, blue print
or plan, or anything contained elsewhere in this lease to the contrary
notwithstanding. Owner makes no representation as to the location of the
property line of the building. All vaults and vault space and all such areas
not within the property line of the building, which Tenant may be permitted to
use and/or occupy, is to be used and/or occupied under a revocable license, and
if any such license be revoked, or if the amount of such space or area be
diminished or required by any federal, state or municipal authority or public
utility, Owner shall not be subject to any liability nor shall Tenant be
entitled to any compensation or diminution or abatement of rent, nor shall such
revocation, diminution or requisition be deemed constructive or actual
eviction. Any tax, fee or charge of municipal authorities for such vault or
area shall be paid by Tenant.
OCCUPANCY: 15. Tenant will not at any time use or occupy the demised
premises in violation of the certificate of occupancy issued for the building
of which the demised premises are a part. Tenant has inspected the premises and
accepts them as is, subject to the riders annexed hereto with respect to
Owner's work, if any. In any event, Owner makes no representation as to the
condition of the premises and Tenant agrees to accept the same subject to
violations, whether or not of record.
BANKRUPTCY: 16. (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by the sending of a
written notice to Tenant within a reasonable time after the happening of any
one or more of the following events: (1) the commencement of a case in
bankruptcy or under the laws of any state naming Tenant as the debtor; or (2)
the making by Tenant of an assignment or any other arrangement for the benefit
of creditors under any state statute. Neither Tenant nor any person claiming
through or under Tenant, or by reason of any statute or order of court, shall
thereafter be entitled to possession of the premises demised but shall
forthwith quit and surrender the premises. If this lease shall be assigned in
accordance with its terms, the provisions of this Article 16 shall be
applicable only to the party then owning Tenant's interest in this lease.
(b) it is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and
the fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be relet by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount
equal to the maximum allowed by any statute or rule of law in effect at the
time when, and governing the proceedings in which, such damages are to be
proved, whether or not such amount be greater, equal to, or less than the
amount of the difference referred to above.
DEFAULT: 17. (1) If Tenant defaults in fulfilling any of the
covenants of this lease other than the covenants for the payment of rent or
additional rent; or if the demised premises becomes vacant or deserted; or if
any execution or attachment shall be issued against Tenant or any of Tenant's
property whereupon the demised premises shall be taken or occupied by someone
other than Tenant; or if this lease be rejected under Section 235 of Title 11
of the U.S. Code (bankruptcy code); or if Tenant shall fail to move into or
take possession of the premises within fifteen (15) days after the commencement
of the term of this lease, then, in any one or more of such events, upon Owner
serving a written five (5) days notice upon Tenant specifying the nature of
said default and upon the expiration of said five (5) days, if Tenant shall
have failed to comply with or remedy such default, or if the said default or
omission complained of shall be of a nature that the same cannot be completely
cured or remedied within said five (5) day period, and if Tenant shall not
have dilengently commenced during such default within such five (5) day
period, and shall not thereafter with reasonable diligence and in good faith,
proceed to remedy or cure such default, then Owner may serve a written three (3)
days' notice of cancellation of this lease upon Tenant, and upon the expiration
of said three (3) days this lease and the term thereunder shall end and expire
as fully and completely as if the expiration of such three (3) day period were
the day herein definitely fixed for the end and expiration of this lease and
the term thereof and Tenant shall then quit and surrender the demised premises
to Owner but Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given, and
the term shall expire as aforesaid: or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
REMEDIES OF OWNER AND WAIVER OF REDEMPTION: 18. In case of any such
default, re-entry, expiration and/or dispossess by summary proceedings or
otherwise, (a) the rent shall become due thereupon and be paid up to the time
of such re-entry, dispossess and/or expiration, (b) Owner may re-let the
premises or any part of parts thereof, either in the name of Owner or
otherwise, for a term or terms, which may at Owner's option be less than or
exceed the period which would otherwise have constituted the balance of the
term of this lease and may grant concessions or free rent or charge a higher
rental than that in this lease, and/or (c) Tenant or the legal representatives
of Tenant shall also pay Owner as liquidated damages for the failure of Tenant
to observe and perform said Tenant's covenants herein contained, any
deficiency between the rent hereby reserved and/or covenanted to be paid and
the net amount, if any, of the rents collected on account of the lease or
leases of the demised premises for each month of the period which would
otherwise have constituted the balance of the term of this lease. The failure
of Owner to re-let the premises or any part or parts thereof shall not release
or affect Tenant's liability for damages. In computing such liquidated damages
there shall be added to the said deficiency such expenses as Owner may incur in
connection with re-letting, such as legal expenses, attorneys' fees, brokerage,
advertising and for keeping the demised premises in good order or for preparing
the same for re-letting. Any such liquidated damages shall be paid in monthly
installments by Tenant on the rent day specified in this lease and any suit
brought to collect the amount of the deficiency for any month shall not
prejudice in any was the rights of Owner to collect the deficiency for any
month shall not prejudice in any way the rights of Owner to collect the
dificiency of any subsequent month by a similar proceeding. Owner, in putting
the demised premises in good order or preparing the same for re-rental may, at
Owner's option, make such alterations, repairs, replacements, and/or
decorations in the demised premises as Owner, in Owner's sole judgment,
considers advisable and necessary for the purpose of re-letting the demised
premises, and the making of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Owner shall in no event be liable in any way whatsoever
for failure to re-let the demised premises, or in the event that the demised
premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of
the covenants or provisions hereof, Owner shall have the right of injunction
and the right to invoke any remedy allowed at law or in equity as if re-entry,
summary proceedings and other remedies were not herein provided for. Mention
in this lease of any particular remedy, shall not preclude Owner from any other
remedy, in law or in equity. Tenant hereby expressly waives any and all rights
of redemption granted by or under any present or future laws in the event of
Tenant being evicted or dispossessed for any cause, or in the event of Owner
obtaining possession of demised premises, by reason of the violation by Tenant
of any of the covenants and conditions of this lease, or otherwise.
FEES AND EXPENSES 19. If Tenant shall default in the obvservance or
performance of any term or covenant on Tenant's part to be observed or
performed under or by virtue of any of the terms or provisions in any article
of this lease, then, unless otherwise provided elsewhere in this lease, Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder. If Owner, in connection with the foregoing or
in connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the payment of money,
including but not limited to attorney's fees, in instituting, prosecuting or
defending any action or proceeding, then Tenant will reimburse Owner for such
sums so paid or obligations incurred with interest and costs. The foregoing
expenses incurred by reason of Tenant's default shall be deemed to be
additional rent hereunder and shall be paid by Tenant to Owner within five (5)
days of rendition of any bill or statement to Tenant therefor. If Tenant's
lease term shall have expired at the time of making of such expenditures or
incurring of such obligations, such sums shall be recoverable by Owner as
damages.
BUILDING ALTERATIONS AND MANAGEMENT: 20. Owner shall have the right
at any time without the same constituting an eviction and without incurring
liability to Tenant therefor to change the arrangement and/or location of
public entrances, passageways, doors, doorways, corridors, elevators, stairs,
toilets or other public parts of the building and to change the name, number or
designation by which the building may be known. There shall be no allowance to
Tenant for dimunition of rental value and no liability on the part of Owner by
reason of inconvenience, annoyance or injury to business arising from Owner or
other Tenants making any repairs in the building or any such alterations,
additions and improvements. Furthermore, Tenant shall not have any claim
against Owner by reason of Owner's imposition of such controls of the manner of
access to the building by Tenant's social or business visitors as the Owner may
deem necessary for the security of the building and its occupants.
NO REPRESENTATIONS BY OWNER: 21. Neither Owner nor Owner's agents
have made any representations or promises with respect to the physical
condition of the building, the land upon which
<PAGE> 4
it is erected or the demised premises, the rents, leases, expenses of
operation or any other matter or thing affecting or related to the premises
except as herein expressly set forth and no rights, easements or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
the provisions of this lease. Tenant has inspected the building and the demised
premises and is thoroughly acquainted with their condition and agrees to take
the same "as is" and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of
it in whole or in part, unless such executory agreement is in writing and
signed by the party against whom enforcement of the change, modification,
discharge or abandonment is sought.
END OF TERM: 22. Upon the expiration or other termination of the term
of this lease, Tenant shall quit and surrender to Owner the demised premises,
broom clean, in good order and condition, ordinary wear and damages which
Tenant is not required to repair as provided elsewhere in this lease excepted,
and Tenant shall remove all its property. Tenant's obligation to observe or
perform this covenant shall survive the expiration or other termination of
this lease. If the last day of the term of this Lease or any renewal therof,
falls on Sunday, this lease shall expire at noon on the preceding Saturday
unless it be a legal holiday in which case it shall expire at noon on the
preceding business day.
QUIET ENJOYMENT: 23. Owner covenants and agrees with Tenant that
upon Tenant paying the rent and additional rent and observing and performing
all the terms, covenants and conditions, on Tenant's part to be observed and
performed, Tenant may peaceably and quietly enjoy the premises hereby demised,
subject, nevertheless, to the terms and conditions of this lease including,
but not limited to, Article 30 hereof and to the ground leases, underlying
leases and mortgages hereinbefore mentioned.
FAILURE TO GIVE POSSESSION: 24. If Owner is unable to give
possession of the demised premises on the date of the commencement of the term
hereof, because of the holding-over or retention of possession of any tenant,
undertenant or occupants or if the demised premises are located in a building
being constructed, because such building has not been sufficiently completed
to make the premises ready for occupancy or because of the fact that a
certificate of occupancy has not been procured or for any other reason, Owner
shall not be subject to any liability for failure to give possession on said
date and the validity of the lease shall not be impaired under such
circumstances, nor shall the same be construed in any wise to extend the term
of this lease, but the rent payable hereunder shall be abated (provided Tenant
is not responsible for Owner's inability to obtain possession) until after
Owner shall have given Tenant written notice that the premises are
substantially ready for Tenant's occupancy. If permission is given to Tenant
to enter into the possession of the demised premises or to occupy premises
other than the demised premises prior to the date specified as the
commencement of the term of this lease, Tenant covenants and agrees that such
occupancy shall be deemed to be under all the terms, covenants, conditions
and provisions of this lease, except as to the covenant to pay rent. The
provisions of this article are intended to constitute "an express provision
to the contrary" within the meaning of Section 223-a of the New York
Real Property Law.
NO WAIVER: 25. The failure of Owner to seek redress for violation
of, or to insist upon the strict performance of any covenant or condition of
this lease or of any of the Rules or Regulations, set forth or hereafter
adopted by Owner, shall not prevent a subsequent act which would have
originally constituted a violation from having all the force and effect of an
original violation. The receipt by Owner of rent with knowledge of the breach
of any covenant of this lease shall not be deemed a waiver of such breach and
no provision of this lease shall be deemed to have been waived by Owner unless
such waiver be in writing signed by Owner. No payment by Tenant or receipt by
Owner of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated rent, nor shall
any endorsement or statement of any check or any letter accompanying any check
or payment as rent be deemed an accord and satisfaction, and Owner may accept
such check or payment without prejudice to Owner's right to recover
the balance of such rent or pursue any other remedy in this lease provided.
No act or thing done by Owner or Owner's agents during the term hereby demised
shall be deemed an acceptance of a surrender of said premises, and no
agreement to accept such surrender shall be valid unless in writing signed by
Owner. No employee of Owner or Owner's agent shall have any power to accept
the keys of said premises prior to the termination of the lease and the
delivery of keys to any such agent or employee shall not operate as a
termination of the lease or a surrender of the premises.
WAIVER OF TRIAL BY JURY: 26. It is mutually agreed by and between
Owner and Tenant that the respective parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counter-claim brought by
either of the parties hereto against the other (except for personal injury or
property damage) on any matters whatsoever arising out of or in any way
connected with this lease, the relationship of Owner and Tenant, Tenant's use
of or occupancy of said premises, and any emergency statutory or any other
statutory remedy. It is further mutually agreed that in the event Owner
commences any summary proceeding for possession of the premises, Tenant will
not interpose any counterclaim of whatever nature or description in any such
proceding including a counterclaim under Article 4.
INABILITY TO PERFORM: 27. This Lease and the obligation of Tenant to
pay rent hereunder and perform all of the other covenants and agreements
hereunder on part of Tenant to be performed shall in no wise be affected,
impaired or excused because Owner is unable to fulfill any of its obligations
under this lease or to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is unable to make, or is delayed in
making any repair, additions, alterations or decorations or is unable to
supply or is delayed in supplying any equipment or fixtures if Owner is
prevented or delayed from so doing by reason of strike or labor troubles or
any cause whatsoever including, but not limited to, government preemption in
connection with a National Emergency or by reason of any rule, order or
regulation of any department or subdivision thereof of any government agency
or by reason of the conditions of supply and demand which have been or are
affected by war or other emergency.
BILLS AND NOTICES: 28. Except as otherwise in this lease provided,
a bill, statement, notice or communication which Owner may desire or be
required to give to Tenant, shall be deemed sufficiently given or rendered if,
in writing, delivered to Tenant personally or sent by registered or certified
mail addressed to Tenant at the building of which the demised premises form a
part or at the last known residence address or business address of Tenant or
left at any of the aforesaid premises addressed to Tenant, and the time of the
rendition of such bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same is delivered to
Tenant, mailed, or left at the premises as herein provided. Any notice by
Tenant to Owner must be served by registered or certified mail addressed to
Owner at the address first hereinabove given or at such other address as Owner
shall designate by written notice.
SERVICES PROVIDED BY OWNERS: 29. As long as Tenant is not in default
under any of the covenants of this lease, Owners shall provide: (a) necessary
elevator facilities on business days from 8 a.m. to 6 p.m. and on Saturdays
from 8 a.m. to 1 p.m. and have one elevator subject to call at all other times;
(b) heat to the demised premises when and as required by law, on business days
from 8 a.m. to 6 p.m. and on Saturdays from 8 a.m. to 1 p.m.; (c) water for
ordinary lavatory purposes, but if Tenant uses or consumes water for any other
purposes or in unusual quantities (of which fact Owner shall be the sole
judge), Owner may install a water meter at Tenant's expense which Tenant shall
thereafter maintain at Tenant's expense in good working order and repair to
register such water consumption and Tenant shall pay for water consumed as
shown on said meter as additional rent as and when bills are rendered; (d)
cleaning service for the demised premises on business days at Owner's expense
provided that the same are kept in order by Tenant. If, however, said premises
are to be kept clean by Tenant, it shall be done at Tenant's sole expense, in a
manner satisfactory to Owner and no one other than persons approved by Owner
shall be permitted to enter said premises or the building of which they are a
part for such purpose. Tenant shall pay Owner the cost of removal of any of
Tenant's refuse and rubbish from the building; (e) if the demised premises is
serviced by Owner's air conditioning/cooling and ventilating system, air
conditioning/cooling will be furnished to tenant from May 15th through
September 30th on business days (Mondays through Fridays, holidays excepted)
from 8:00 a.m. to 6:00 p.m., and ventilation will be furnished on business days
during the aforesaid hours except when air conditioning/cooling is being
furnished as aforesaid. If Tenant requires air conditioning/cooling or
ventilation for more extended hours or on Saturdays, Sundays or on holidays, as
defined under Owner's contract with Operating Engineers Local 94-94A, Owner
will furnish the same at Tenant's expense. RIDER to added in respect to rates
and conditions for such additional service; (f) Owner reserves the right to
stop services of the heating, elevators, plumbing, air-conditioning, power
systems or cleaning or other services, if any, when necessary by reason of
accident or for repairs, alterations, replacements or improvements necessary or
desirable in the judgment of Owner for as long as may be reasonably required by
reason thereof. If the building of which the demised premises are a part
supplies manually-operated elevator service, Owner at any time may substitute
automatic-control elevator service and upon ten days' written notice to Tenant,
proceed with alterations necessary therefor without in any wise affecting this
lease or the obligation of Tenant hereunder. The same shall be done with a
minimum of inconvenience to Tenant and Owner shall pursue the alteration with
due diligence.
CAPTIONS: 30. The Captions are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the
scope of this lease nor the intent of any provisions thereof.
DEFINITIONS: 31. The term "office", or "offices", wherever used in
this lease, shall not be construed to mean premises used as a store or stores,
for the sale or display, at any time, of goods, wares or merchandise, of any
kind, or as a restaurant, shop, booth, bootblack or other stand, barber shop,
or for other similar purposes or for manufacturing. The term "Owner" means a
landlord or lessor, and as used in this lease means only the owner, or the
mortgagee in possession, for the time being of the land and building (or the
owner of a lease of the building or of the land and building) of which the
demised premises form a part, so that in the event of any sale or sales of
said land and building or of said lease, or in the event of a lease of said
building, or of the land and building, the said Owner shall be and hereby is
entirely freed and relieved of all covenants and obligations of Owner
hereunder, and it shall be deemed and construed without further agreement
between the parties or their successors in interest, or between the parties
and the purchaser, at any such sale, or the said lessee of the building, or of
the land and building, that the purchaser or the lessee of the building has
assumed and agreed to carry out any and all covenants and obligations of Owner,
hereunder. The words "re-enter" and "re-entry" as used in this lease are not
restricted to their technical legal meaning. The term "business days" as used
in this lease shall exclude Saturdays (except such portion thereof as is
covered by specific hours in Article 29 hereof), Sundays and all days observed
by the State or Federal Government as legal holidays and those designated as
holidays by the applicable building service union employees service contract
or by the applicable Operating Engineers contract with respect to HVAC service.
<PAGE> 5
R1.
To the extent that any provisions of any Rider to this Lease are in any
way inconsistent or conflict with any of the preceding provisions of the Lease,
or of the rules and regulations appended to this Lease, regardless of whether or
not such inconsistency is expressly noted in the Rider, the provisions of the
Rider shall be controlling.
R2.
As used in this Lease and when required by the context, each number
(singular and plural) shall include all numbers, and each gender shall include
all genders. The captions, headings and marginal notes throughout this Lease are
for convenience of reference only and the words contained therein shall in no
way be held or deemed to define, limit, explain, modify, amplify, or add to the
interpretation, construction or meaning of any provision of, or the scope or
intent of, this Lease, nor in any way affect this Lease. Except as otherwise
expressly stated, each payment provided to be made by the Tenant shall be in
addition to, and not in substitution for, all other payments to be made by the
Tenant to the Landlord. The term "PERSON" used herein means person, firm,
association, or corporation, as the case may be.
R3.
The laws of the State of New York shall govern the validity,
performance, and enforcement of this Lease. The invalidity or unenforceability
of any provision of this Lease shall not affect or impair any other provision.
If any provision of this Lease is capable of two constructions, one of which
would render the provision invalid and the other of which would make the
provision valid, then the provision shall have the meaning which renders it
valid. The submission of this Lease for examination does not constitute an offer
to lease and becomes effective only upon execution and delivery thereof by
Landlord and Tenant.
R4.
If electric current is supplied by Landlord, Tenant shall purchase the
same from the Landlord or Landlord's agent at a base rate consisting of the
charges, terms and rates for like quantities and character of service in the
Consolidated Edison service classification in effect at the time said service is
used and under which the Landlord purchases service (plus 15%).
In addition, Tenant shall pay to Landlord 6.25% of each electric bill
received by Landlord from the public utility corporation, as additional rent, to
recompense Landlord for the cost of lighting all of the public and service areas
of the building and in administering and operating all of the electrical service
and mechanical facilities of the building.
At the option of Landlord, Tenant also agrees to purchase from Landlord
or its agent all lamps of bulbs used in the demised premises and to pay for cost
of installation thereof. Landlord shall not be liable to Tenant for any loss or
damage or expense which Tenant may sustain or incur if either the quantity or
character of electric service is changed or is no longer available or suitable
for Tenant's electrical requirements. Any riser or risers to supply Tenant's
electrical requirements, upon written request of Tenant, will be installed by
Landlord, at the sole cost and expense of Tenant, if, in Landlord's sole
judgment, the same will not cause permanent damage or injury to the building or
demised premises or cause or create a dangerous or hazardous condition or entail
excessive or unreasonable alterations, repairs or expense or interfere with or
disturb other tenants or occupants. In addition to the installation of such
riser or risers, Landlord will also at the sole cost and expense of Tenant,
install all other equipment proper and necessary in connection therewith subject
to the aforesaid terms and conditions. Tenant
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covenants and agrees that at all times its use of electric current shall never
exceed the capacity of existing feeders to the building or the risers of wiring
installations.
Bills shall be rendered at such times as Landlord may elect. In the
event that such bills are not paid within ten (10) days after they are rendered,
Landlord may, without further notice, discontinue the service of electric
current to the demised premises. Landlord may also discontinue the service of
electric current to the demised premises without cause upon thirty (30) days
notice to Tenant if Landlord so elects to discontinue submetering service. In
the event of discontinuance of electric service by the Landlord, Tenant shall
not be released from any liability under this Lease, and Landlord shall not
incur any liability for any loss or damage sustained by Tenant by such
discontinuance. Such discontinuance shall not be deemed to be a lessening of
services within the meaning of any law, rule, or regulation now or hereafter
enacted, promulgated or issued. In the event of such discontinuance, Landlord
shall permit Tenant to receive such service directly from said public utility
corporation, in which event, the Tenant will, at its own cost and expense,
furnish and install all risers, service wiring, and switches that may be
necessary for such installation and required by the public utility company, and
will at its own cost and expense, maintain and keep in good repair all such
risers, wiring and switches. Tenant shall make no alteration or additions to the
electric equipment and/or appliances without the prior written consent of
Landlord in each instance. Rigid conduit only will be allowed.
If any tax is imposed upon Landlord's receipt from the sale or resale
of electrical energy to the Tenant by any Federal, State or Municipal Authority,
Tenant covenants and agrees that, where permitted by law, Tenant's pro-rata
share of such taxes shall be passed on to, and included in the bill of, and paid
by, Tenant to Landlord.
R5.
In addition to the paying of rent reserved hereunder the Tenant
covenants and agrees that if the price of #6 fuel oil used in the operation of
the building of which the demised are a part of exceed 50 cents per gallon, then
the annual rental to be paid by the Tenant shall be increased by multiplying
7500 by one (1) cent per gallon of increase. Such increase in cost as to each
year shall be based on the average per gallon cost of the fuel oil delivered to
the premises, including any and all City, State and Federal taxes, surcharges
and adjustments, during the month of February 1992, and each February,
thereafter, during the term of this lease as same is billed to Landlord by the
oil supplier. Such annual additional rent shall be due and payable on the first
day of April in each year. The obligation to make any payment pursuant to this
clause shall survive the expiration or other termination of this lease. In the
event that the buildings heating system is altered or changed to an alternative
fuel supply such as gas, #2 or #4 oil, then it is understood and agreed that the
provisions of the clause shall survive such alteration or conversion. Upon
demand by Tenant, however, the Landlord agrees to submit to Tenant copies of
fuel bills or accountants statement covering same.
R6.
A. Tenant shall pay, as additional rent, six & one quarter percent
(6.25%) of any and all increases in real estate taxes or assessments for public
betterments covering the land and the building of which the demised premises
form a part. Said increases shall be the amount charged during any Tax Year
above the amount charged during the Base Tax Year.
B. Tax Year shall mean each period of twelve (12) months commencing on
the first day of July in which occurs any part of the term of this Lease or such
other period of twelve (12) months occurring during the term of this lease as
hereafter may be adopted as the fiscal year for real estate tax purposes of the
City of New York or any other
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governmental authority.
C. Base Tax Year shall mean the Tax Year 1991/92
D. Tenant shall pay, as additional rent, six & one quarter percent
(6.25%) of any costs and expenses including, without limitation, counsel fees
incurred by Landlord which result in a reduction of the assessed value of the
land and building as proposed by the City of New York or any other governmental
authority for any Tax Year after the Base Tax Year to the extent same do not
exceed the amount of any refund obtained as a result of such reduced valuation.
E. Payment of additional rent pursuant to paragraphs "(A)" and "(D)"
above shall be made within fifteen (15) days after demand based upon a statement
furnished by Landlord to Tenant with each such demand.
F. The term "real estate taxes" shall mean all taxes and assessments
levied, assessed or imposed at any time by the City of New York or by any other
governmental authority upon or against the land and/or building of which the
demised premises form a part, and also any tax or assessment levied, assessed or
imposed at any time by any governmental authority in connection with the receipt
of income or rents from said land and/or building. If, due to a future change in
the method of taxation, or in the taxing authority, a franchise, license,
income, transit, profit or other tax, fee, or governmental imposition, however
designated, shall be levied, assessed or imposed against Landlord in
substitution, in whole or in part, for the said real estate taxes, or in lieu of
additional real estate taxes, then such franchise, license, income, transit,
profit, or other tax, fee, or governmental imposition shall be deemed to be
included within the definition of "real estate taxes" for the purposes hereof.
G. Any delay or failure of Landlord in billing any amount payable under
this Article shall not constitute a waiver or in any way impair the continuing
obligation of Tenant to make all payments hereunder.
R7.
A. Tenant, at its sole cost and expense, shall maintain at all times
during the term of this lease and at all times when Tenant is in possession of
the demised premises, a comprehensive policy of general liability insurance in
which Landlord, Landlord's managing agent, any Superior Lessor (as hereinafter
defined), any mortgagees designated by Landlord, and Tenant, are the named
insureds, for any and all claims arising during the term of this lease for
damages or injuries to goods, wares, merchandise and property and/or for any
personal injury or loss of life, in, upon or about the demised premises;
protecting Landlord, Landlord's managing agent, any Superior Lessor, any
mortgagees designated by Landlord, and Tenant against any liability whatsoever
occasioned by accidents on or about the demised premises or any appurtenances
thereto. Such policy is to be written by a good and solvent insurance company,
satisfactory to Landlord, in the amount of ONE MILLION AND 00/100--
($1,000,000.00)--DOLLARS per occurrence (combined single limit), TWO MILLION AND
00/100 ($2,000,000.00) DOLLARS IN aggregate. Tenant agrees to deliver to
Landlord a certificate of endorsement of the aforesaid insurance policy and upon
Tenant's failure to provide and keep in force the aforementioned insurance, it
shall be regarded as a material default, entitling Landlord to exercise any or
all of the remedies as provided in this Lease.
B. Tenant shall deliver to Landlord such policies or certificates of
such policies prior to the commencement of the term of this lease. Tenant shall
procure and pay for renewals of such insurance from time to time before the
expiration thereof, and Tenant shall deliver to Landlord and any additional
named insureds such renewal policy or certificate at least thirty (30) days
before the expiration of any existing policy. All such policies shall be for a
period of not less than one year and shall contain a provision.
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whereby the same cannot be cancelled or modified unless Landlord and any
additional named insureds are given at least thirty (30) days prior written
notice of such cancellation or modification, including, without limitation, any
such cancellation resulting from the nonpayment of premiums. If Building
Mortgagee or Tenant's insurance carrier so requires, Landlord shall have the
right to require Tenant to increase the amount of the insurance maintained by
Tenant under this Article, so that the amount thereof, adequately protects the
interest of Landlord.
C. Tenant shall secure an appropriate clause in, or an endorsement
upon, each insurance policy obtained by it and covering or applicable to the
demised premises or the personal property, fixtures, and equipment located
therein or thereon, pursuant to which the insurance company waives subrogation
or permits the insured, prior to any loss, to agree with a third party to waive
any claim it might have against said third party without invalidating the
coverage under the insurance policy. The waiver of subrogation or permission for
waiver of any claim shall extend to Landlord and its agents and their respective
employees.
D. Tenant shall also obtain, at its own cost and expense, naming both
Landlord, Landlord's managing agent, any Superior Lessor, any mortgagees
designated by Landlord, and Tenant as named insureds, fire insurance for all
personal property which may be affixed to the realty now located in the lease
premises and including any future installations.
E. Notwithstanding anything herein to the contrary, nothing herein
shall prevent Landlord from recovering in the event of fire or other loss under
Landlord's fire or other insurance coverage for all betterments and improvements
by Tenant so affixed to the demised premises as to be considered part of the
realty under law.
F. Tenant hereby releases Landlord, Landlord's partners or principals,
disclosed or undisclosed, and its agents and their respective employees in
respect to any claim occurring during the term of this lease and normally
covered under a fire insurance policy with extended coverage endorsement in the
form normally used in respect to similar property in New York County. This
waiver shall include any claim which Tenant might otherwise have against
Landlord, Landlord's partners or principals, disclosed or undisclosed, and its
agents and their employees for loss, damage or destruction with respect to
Tenant's property by fire or other casualty (including rental value or business
interest, as the case may be).
R8.
For the purposes of this Article only, the following words and terms
shall have the following meanings:
(i) "RAB Labor Rate" shall mean the minimum regular hourly wage rate
prescribed for Elevator Operators in Class A Loft Buildings in effect on January
1st of the Base Year or any Comparison Year pursuant to an agreement between the
Realty Advisory Board on Labor Relations, Incorporated, hereinafter referred to
as RAB (or any successor thereto) and Local 32B of the Building Service
Employees International Union, AFL-CIO for any successor thereto) provided,
however, that if in any year during the term of this lease regular employment
of Elevator Operators shall occur on days or during hours when overtime or other
premium pay rates are in effect pursuant to such agreement, then the term
"regular hourly wage rate" as used in this Article shall be deemed to mean the
average hourly wage rate for the hours in a calendar week during which Elevator
Operators are regularly employed (e.g., if, as of January 1st, 1975, pursuant to
an agreement between RAB and Local 32B the regular employment of Elevator
Operators for 40 hours during a calendar week is at a regular hourly wage rate
of $3.00 for the first thirty hours, and premium or overtime hourly wage rate of
$4.58 for the remaining 10 hours then the regular hourly wage rate under this
Article, as of January 1st, 1975, shall be the total weekly wage rate of $135
divided by the total number of regular hours of employment forty, or $3.375);
and provided, however, that if there is no such agreement in effect as of any
such January 1st, "RAB Labor Rate" shall mean the minimum regular
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hourly wage rate actually payable to Elevator Operators by landlords of such
buildings and appropriate retroactive adjustment shall thereafter be made when
the minimum regular hourly wage rate pursuant to such agreement is finally
determined.
(ii) "Base Year" shall mean the calendar year 1992.
(iii) "Comparison Year" shall mean each calendar year, subsequent to
the Base Year, in which occurs any part of the term hereof.
(iv) "Wage rate Multiple" shall mean the figure, "7500".
(v) "Elevator Operators" shall mean the classification of employee
engaged in the operation of elevators in Class A Loft Buildings most nearly
comparable to that classification now applicable to elevator operators in the
current agreements between RAB and Local 32B (which classification is presently
termed "others" in said agreements).
If for any Comparison Year, the RAB Labor Rate shall be increased over the RAB
Labor Rate for the Base Year, Tenant shall pay to Landlord as additional annual
rent an amount equal to the product obtained by multiplying the Wage Rate
Multiple by 1 the number of cents of such increase, such payment to be made in
equal monthly installments commencing with the first monthly installment of rent
falling due on or after the effective date of such increase and continuing
thereafter until a new adjustment shall have become effective in accordance with
the provisions of this Article. Landlord shall give Tenant written notice of
each change in the RAB Labor Rate which will be effective to create or change
Tenant's obligation to pay additional rent pursuant to the provisions of this
Article. If said notice be given to Tenant after the commencement of a
Comparison Year then Tenant shall within ten (10) days after the giving thereof
pay to Landlord such additional rent for any months in such Comparison Year
which shall have elapsed prior to the giving of such notice. The additional rent
due pursuant to the provisions of this Article shall be collectible by Landlord
in the same manner as annual rent. The obligation to make any payments pursuant
to this article shall survive the expiration or other termination of this lease.
R9.
Tenant, at its own cost and expense, shall arrange for the removal of
all rubbish from the demised premises and from the Building in accordance with
any and all applicable municipal codes and regulations and in accordance with
any rules and regulations of the Building which, in the judgment of Landlord,
are necessary for the proper operation of the Building.
R10.
Tenant shall look only to Landlord's estate and property in the
Building for the satisfaction of Tenant's remedies for the collection of a
judgment (or other judicial process) requiring the payment of money by Landlord
in the event of any default or breach by Landlord hereunder, and no other
property or assets of Landlord or its partners or principals, disclosed or
undisclosed, shall be subject to lien, levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies under or with respect to
this Lease, the relationship of Landlord and Tenant hereunder or Tenant's use or
occupancy of the demised premises; and if Tenant shall acquire a lien on such
other property or assets by judgment or otherwise, Tenant shall promptly release
such lien by executing and delivering to Landlord an instrument to that effect
prepared by Landlord.
R11.
Tenant shall and hereby does waive its right and agrees not to
interpose any counterclaim or set off, of whatever nature or description, in any
proceedings or action which may be constituted by Landlord against Tenant to
recover rent, additional rent, other charges, or for damages, or for any breach
of this Lease whatsoever, or any renewal,
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extension, holdover, or modification thereof, the relationship of Landlord and
Tenant, or Tenant's use or occupancy of said premises. This clause, as well as
the "waiver of jury trial" provision of this Lease, shall survive the
expiration, early termination, or cancellation of this Lease or the term
thereof. Nothing herein contained, however, shall be construed as a waiver of
Tenant's right to commence a separate action on a bonafide claim against
Landlord.
R12.
If Tenant is in arrears in payment of rent or additional rent, Tenant
waives Tenant's rights, if any, to designate the items against which any
payments made by Tenant are to be credited, and Tenant agrees that Landlord may
apply any payments made by Tenant to any items Landlord sees fit, irrespective
of and notwithstanding any designation or request by Tenant as to the items
against which any such payments shall be credited.
R13.
If, at the request of Tenant and as an accommodation to Tenant,
Landlord shall place upon such directory board, as Landlord may from time to
time maintain in the lobby of the Building, one or more names or persons, firms
or corporations other than Tenant, this shall not be deemed to operate as an
attornment or as a consent by Landlord to an assignment or subletting by Tenant
of all or any portion of the demised premises to such persons, firms or
corporations. Landlord reserves the right at all times to limit the number of
listings which Tenant can have on the building directory.
R14.
A. If, in connection with obtaining financing for the Building, a
bank, insurance company or other lending institution shall request reasonable
modifications in this Lease as a condition to such financing, Tenant will not
unreasonably withhold, delay, or defer it's consent thereto, provided that such
modifications do not increase the obligations of Tenant hereunder or materially
adversely affect the leasehold interest hereby created.
B. Tenant agrees, at any time and from time to time, as requested by
Landlord, upon not less than ten (10) days prior notice, to execute and deliver
a statement certifying that this lease is unmodified and in full force and
effect (or if there have been modifications that the same is in full force as
modified and stating the modifications), certifying the dates to which the rent
and additional rent have been paid, and stating whether or not, to the best
knowledge of Tenant, and, if so, specifying each such default of which Tenant
may have knowledge, and stating whether or not, to the best of knowledge of
Tenant, any event has occurred which with the giving of notice or passage of
time, or both, would constitute such a default, and if so, specifying each such
event, it being intended that any such statement delivered pursuant thereto
shall be deemed a representation and warranty to be relied upon by Landlord and
by other with whom Landlord may be dealing, regardless of independent
investigation.
R15.
A. Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors and assigns, expressly
covenants that it shall not assign, or mortgage or otherwise encumber, all or
any part of its interest in this Lease, sublet the Demised Premises, in whole or
in part, or suffer or permit the Demised Premises or any part thereof to be used
by other, without the prior written consent of Landlord in each instance.
B. If Tenant shall desire to assign its interest in this Lease or to
sublet all or any portion of the Demised Premises, Tenant shall submit to
Landlord a written request for Landlord's consent to such assignment or
subletting, which request shall be accompanied by the following information: (i)
the name and address of the proposed assignee or subtenant; (ii) if Tenant
desires to sublet a portion of the Demised premises, a description of the
portion to be sublet, together with a floor plan thereof; (iii the terms
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and conditions of the proposed assignment or subletting; (iv) the nature and
character of the business of the proposed assignee or subtenant and its proposed
use of the Demised Premises; and (v) current financial information and any other
information Landlord may reasonably request with respect to the proposed
assignee or subtenant.
C. Landlord shall not unreasonably withhold its consent to the proposed
assignment or subletting for the use permitted in this Lease, provided that:
1. The Demised Premises shall not, without Landlord's prior consent,
have been listed or otherwise publicly advertised for assignment or subletting
at a rental rate lower than the higher of (a) the Fixed Annual Rent and all
Additional Rent then payable, or (b) the then prevailing rental rate for other
space in the Building, and Tenant shall not enter into any sublease at a lower
rental rate than the Fixed Annual Rent and all Additional Rent then payable;
2. Tenant shall not then be in default hereunder beyond the
expiration of any applicable grace period.
3. The proposed assignee or subtenant shall have a financial
standing, be of a character, be engaged in a business, and propose to use the
Demised Premises, in a manner consistent with the permitted use(s) and in
keeping with the standards of the Building.
4. The proposed assignee or subtenant shall not then be a tenant,
subtenant or assignee of any space in the Building, nor shall the proposed
assignee or subtenant be a person or entity with whom Landlord is then
negotiating to lease space in the Building.
5. The character of the business to be conducted in the Demised
Premises by the proposed assignee or subtenant shall not substantially increase
Operating Expenses or Building Energy Costs or the burden on existing cleaning
services or elevators in the Building.
6. In case of a subletting, the subtenant shall be expressly subject
to all of the obligations of Tenant under this Lease and the further condition
and restriction that such sublease shall not be assigned, encumbered or
otherwise transferred or the Demised Premises further sublet by the subtenant in
whole or in part, or any part thereof suffered or permitted by the subtenant to
be used or occupied by others, without the prior written consent of Landlord in
each instance.
7. No subletting shall end later than one (1) day before the
Expiration Date nor shall any subletting be for a term of less than two (2)
years unless it commences less than two (2) years before the Expiration Date.
8. At no time shall there be more than two occupants, including
Tenant, in the Demised Premises.
9. Any portion of the Demised Premises proposed to be sublet shall
not comprise less than 25 percent contiguous square feet of area and shall be of
a shape or configuration such that both the area proposed to be sublet and the
remainder of the Demised Premises shall in Landlord's judgment constitute
commercially marketable separate rental units.
10. Tenant shall reimburse Landlord on demand for any reasonable
fees, including attorney's fees and disbursements, that may be incurred by
Landlord in connection with said assignment or sublease.
D. Every subletting hereunder is subject to the express condition, and
by accepting a sublease hereunder each subtenant shall be conclusively deemed to
have agreed, that if this Lease should be terminated prior to the Expiration
Date or if Landlord should
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<PAGE> 12
succeed to Tenant's estate in the Demised Premises, then at Landlord's election
such subtenant shall either surrender the Demised Premises to Landlord within
sixty (60) days of Landlord's request therefore, or shall attorn to and
recognize Landlord as such subtenant's landlord under such sublease, and such
subtenant shall promptly execute and deliver any instrument Landlord may
reasonably request to evidence such attornment.
E. Tenant shall deliver to Landlord a copy of each sublease or
assignment made hereunder within ten (10) days after the date of its execution.
Tenant shall remain fully liable for t performance of all of Tenant's
obligations hereunder notwithstanding any subletting assignment provided for
herein and, without limiting the generality of the foregoing shall remain fully
responsible and liable to Landlord for all acts and omissions of any subtenant,
assignee or anyone claiming by, through or under any subtenant or assignee which
shall be in violation of any of the obligations of this Lease, and any such
violation shall be deemed to be a violation by Tenant. Notwithstanding any
assignment and assumption by the assignee of the obligations of Tenant
hereunder, Tenant herein named, and each immediate or remote successor in
interest of Tenant herein named, shall remain liable jointly and severally (as a
primary obligor) with its assignee and all subsequent assignees for the
performance of Tenant's obligations hereunder, and shall remain fully and
directly responsible and liable to Landlord for all acts and omissions on the
part of any assignee subsequent to it in violation of any of the obligations of
this Lease.
F. Notwithstanding anything to the contrary contained in this Lease, no
assignment of Tenant's interest in this Lease shall be binding upon Landlord
unless the assignee, and, if the assignee is a partnership, the individual
partners thereof, shall execute and deliver to Landlord an agreement, in
recordable form, whereby such assignee agrees to perform all of the obligations
of Tenant hereunder and further expressly agrees that notwithstanding such
assignment the provisions of this Article shall continue to be binding upon such
assignee with respect to all future assignments and transfers.
G. If Tenant shall enter into any assignment, sublease or other
agreement of occupancy permitted under this Lease, of or affecting all or any
portion of the Demised Premises, or if there is any transfer of this Lease by
operation of law or otherwise, and if Tenant shall receive any consideration
from its assignee, subtenant or licensee for or in connection with the
assignment of Tenant's interest in this Lease or the subletting or occupancy of
all or any part of the Denied Premises, as the case may be (including, but not
limited to, sums paid for the sale or rental of Tenant's fixtures, leasehold
improvements, equipment, furniture or other personal property, less, in the case
of a sale thereof, the then net unamortized or undepreciated cost thereof
determined on the basis of Tenant's federal income tax returns) or, if Tenant
shall sublet or otherwise permit occupancy of the Demised Premises at a rental
rate (including additional rent) or other periodic consideration which shall
exceed the Fixed Annual Rent and Additional Rent then payable hereunder, Tenant
shall pay to Landlord, as Additional Rent hereunder, one-half (1/2) of such
consideration or such excess.
H. Any transfer, by operation of law or otherwise of the interest of
Tenant in this Lease (in whole or in part) or of a fifty (50%) percent or
greater interest in Tenant (whether stock, partnership interest or otherwise)
shall be deemed an assignment of this Lease within the meaning of this Article.
(The issuance of shares of stock to other than the existing shareholders shall
be deemed to be a transfer of such stock for the purposes of this Article.) If
there has been a previous transfer of less than a fifty (50%) percent interest
in Tenant, any other transfer of an interest in Tenant which would then result
in an aggregate transfer of greater than fifty (50%) percent interest in Tenant
shall be deemed an assignment of the interest of Tenant in this Lease within the
meaning of this Article. Anything contained herein to the contrary
notwithstanding the provisions of this section H shall not apply to the sale
of shares by persons other than those deemed "insiders" within the meaning of
the Securities Exchange Act of 1934, as amended, where such sale is effected
through any recognized exchange or through the "over-the-counter market", unless
the same to be related to, result in or be the result of any merger,
consolidation, tender offer, takeover or other activity involving the
acquisition of control of Tenant by another unrelated corporation or legal
entity. All references to "Tenant" in this section H shall also
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<PAGE> 13
be deemed to refer to any immediate or remote subtenant or assignee of Tenant.
Any assignment or subletting to a subsidiary or a division of
Manchester shall not be subject to the provisions of this paragraph in its
entirety, and shall not be deemed a violation of the lease provided that
Manchester remains liable under the lease.
Any assignment of lease caused or created by a sale, merger,
consolidation, or transaction of a similar nature as to the whole of Manchester
and any division or subsidiary shall not be subject to the provisions of this
paragraph in its entirety and shall not be deemed in violation of the lease.
I. In the event that Tenant fails to execute and deliver any assignment
or sublease to which Landlord consented under the provisions of this Article
within forty-five (45) days after the giving of such consent, then Tenant shall
again comply with all of the provisions of this Article before assigning its
interest in this lease or subletting the Demised Premises.
J. The consent of Landlord to an assignment or a subletting shall not
relieve Tenant from obtaining the express consent in writing of Landlord to any
further assignment or subletting.
K. If Tenant's interest in this Lease be assigned, or if the Demised
Premises or any part thereof be sublet or occupied by anyone other than Tenant,
Landlord may collect rent from the assignee, subtenant or occupant and apply the
net amount collected to the Fixed Annual Rent and all Additional Rent herein
reserved, but no such assignment, subletting, occupancy or collection shall be
deemed a waiver of the provisions of this Article or of any default hereunder or
the acceptance of the assignee, subtenant or occupant as Tenant, or a release of
Tenant from the further observance or performance by Tenant of all of the
covenants, conditions, terms and provisions on the part of Tenant to be
performed or observed.
L. Tenant shall notify Bernstein Management Corp., or Landlord, of its
desire to assign this lease or sublet the premises. Upon the obtaining the
proposed assignee or sublessee, upon terms satisfactory to tenant, tenant shall
submit to landlord in writing (1) the name or the proposed assignee or
subtenant; (2) the terms and conditions of the proposed assignment or
subletting; (3) the nature or character of the business of the proposed assignee
or subtenant or any other information reasonably requested by landlord.
M. If there is a dispute between Landlord and Tenant as to the
reasonableness of Landlord's refusal to consent to any subletting or assignment,
such dispute shall be determined by arbitration in The City of New York in
accordance with the prevailing rules of the American Arbitration Association.
The arbitrators shall be bound by the provisions of this Lease and shall not add
to, subtract from or otherwise modify such provisions. Notwithstanding any
contrary provisions hereof, Landlord shall not be liable to Tenant for a breach
of Landlord's covenant not unreasonably to withhold such consent and Tenant's
sole remedy in such event shall be to enter into the proposed subletting or
assignment.
R16.
In every case in which Tenant is required by the terms of this Lease to
pay to Landlord a sum of money (including, without limitation, payment of fixed
and additional rent) and payment is not made within ten (10) days after the same
shall become due, Tenant shall pay as additional rent hereunder, interest on
such sum or so much thereof as shall be unpaid from the date it becomes due
until it is paid. Such interest shall be computed at a rate which shall be two
(2%) percent per month; provided, however, in no event shall such interest be in
excess of the highest rate of interest which shall from time to time be
permitted under the laws of the State of New York to be charged on late payments
of sums of money due pursuant to the terms of a lease.
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<PAGE> 14
R17.
Tenant agrees it shall indemnify and save Landlord harmless against all
costs, claims, loss or liability resulting from delay by Tenant in surrendering
the demised premises upon the expiration or earlier termination of this Lease,
including, without limitation, any claims made by any succeeding tenant founded
on such delay.
R18.
If any law, decision, order, rule or regulation (collectively called
"Limiting Law") of any governmental authority shall have the effect of limiting
for any period of time the amount of Rent or other amounts payable by Tenant to
any amount less than the amount required by the Lease, then:
a. Throughout the period of limitation, Tenant shall remain liable
for the maximum amount of rent and other amounts which are legally
payable; and
b. When the period of limitation ends, or if the Limiting Law is
repealed, or following any order or ruling that substantially
restrains or prohibits enforcement of the Limiting Law, Tenant
shall pay to Landlord, on demand (to the extent that payment of such
amounts is not prohibited by law), all amounts that would have been
due from Tenant to Landlord during the period of limitation but
which were not paid because of the Limiting Law; and thereafter
Tenant shall pay to Landlord rent and all other amounts due pursuant
to this Lease, all calculated as though there had been no
intervening period of limitation.
R19.
Any default by Tenant under any other lease of space in the Building
shall be deemed a default of the same nature under this Lease.
R20.
Tenant represents and warrants to Landlord that the only agent or
broker with whom Tenant has dealt in connection with this Lease and/or the
demised premises and/or the building containing the demised premises is
Bernstein Management Corp., and Aegis Realty Corp., and that this lease was not
brought about or procured through the use, negotiation and/or instrumentality of
any other agent or broker. Tenant covenants and agrees to indemnify and hold
Landlord harmless from and against any and all claims for commissions and other
compensation made by any other agent or agents and/or any other broker or
brokers based on any dealings between Tenant and any other agent or agents
and/or any other broker or brokers, together with all costs and expenses
incurred by Landlord in resisting such claims (including, without limitation
attorney's fees). Landlord agrees to pay any commission or fee due Bernstein
Management Corp., and Aegis Realty Corp., for bringing about this lease, and
Landlord represents that it knows of no claims by any other brokers.
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<PAGE> 15
R21.
Tenant understands and agrees that changes in or to the demised
premises that require the hiring by Tenant of independent contractors or
subcontractors, either licensed or unlicensed, may only be made with the prior
written consent of the Landlord. Such consent not to be unreasonably withheld.
R22.
Landlord may at any time request arbitration, and Tenant may at any
time when not in default in the payment of any rent request arbitration, of any
matter in dispute, but only where arbitration is expressly provided for in this
lease. The party requesting arbitration shall do so by giving notice to that
effect to the other party, specifying in said notice the nature of the dispute,
and said dispute shall be determined in New York City, by a single arbitrator,
in accordance with the rules then obtaining of the American Arbitration
Association (or any organization which is the successor thereto). The award in
such arbitration may be enforced on the application of either party by the order
of judgment of a court of competent jurisdiction. The fees and expenses of any
arbitration shall be borne by the parties equally, but each party shall bear the
expense of its own attorneys and experts and the additional expenses of
presenting its own proof. If tenant gives notice requesting arbitration as
provided above, Tenant shall simultaneously serve a duplicate of the notice on
each mortgagee and ground lessor whose name and address shall previously have
been furnished to Tenant, and such mortgagees and ground lessors shall have the
right to participate in such arbitration.
R23.
In the event the Landlord herein is directed by any City, State or
Federal agency to comply with Local Law Legislation, due to Tenants use and
occupancy of the demised premises, which includes Local Laws 5, elevator
inspection, and Local Law 10, facade inspection, but not limited thereto, the
Tenant herein agrees to pay the cost to comply with said directives. These costs
will be deemed to be additional rent and will become due and payable on the
first day of the month succeeding the completion of the work, and will be paid
together with the rent. The Landlord reserves its right to collect said
additional rent in accordance with the terms provided in this lease.
R24.
The square footage and percentage herein set forth in this lease are
approximate only and the Landlord and Tenant hereby agree that same shall not be
deemed a representation of Landlord. Landlord and Tenant hereby agree that the
square footage figure and percentage set forth has been determined solely for
the purpose of computing Tenant's contribution for escalation charges.
R25.
If Tenant shall request Landlord's approval or consent and Landlord
shall fail or refuse to give such approval or consent, Tenant shall not be
entitled to any damages for any withholding or delay of such approval or consent
by Landlord, it being intended that Tenant's sole remedy shall be an action for
injunction or specific performance (the rights to money damages or other
remedies being hereby specifically waived), and that such remedy shall be
available only in those cases where Landlord shall have expressly agreed in
writing not to unreasonably withhold its consent or approval or where as a
matter of law Landlord may not unreasonably withhold its consent or approval.
R26.
Landlord has installed and brought to the floor of the demised premises
a riser for AC electric current, and Tenant is hereby given the right to connect
to and draw AC current from said riser or to continue use of existing
connections to said riser and Tenant shall pay to Landlord as additional rent
hereunder, on the 1st day of each and every month
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shall pay to Landlord as additional rent hereunder, on the 1st day of each and
every month of the term, in advance, the sum of $ None for the right to use and
connect to said AC riser, Tenant shall not connect to nor make any additions or
changes to existing use of said risers without first obtaining Landlord's
written consent therefor, and tenant's connections to said riser and the use
thereof shall be subject to Landlord's rules and regulations for the building in
which the demised premises are located. The quantity of the AC current from said
AC riser allocated to Tenant, and which Tenant may use through its connections
thereto, shall be at the sole determination and discretion of Landlord; and
should Tenant use more AC current drawn from said riser than is allocated by
Landlord for the demised premises of which Landlord shall be the sole judge,
Tenant shall discontinue the excessive use of such current. It is understood
that Tenant shall pay for all electric current consumed by Tenant and including
that drawn from said AC riser.
R27.
Tenant agrees that the value of the demised premises and the reputation
of the Owner will be seriously injured if the premises are used for any obscene
or pornographic purposes or any sort of commercial sex establishment. Tenant
agrees that Tenant will not bring or permit any obscene or pornographic material
on the premises, and shall not permit or conduct any obscene, nude, or semi-nude
live performances on the premises, nor permit use of the premises for nude
modeling, rap sessions, or as a so-called rubber goods Shops, or as a sex club
of any sort, or as a "massage parlor." Tenant agrees further that Tenant will
not permit any of these uses by any sublessee or assignee of the premises. This
Article shall directly bind any successors in interest to the Tenant. Tenant
agrees that if at any time Tenant violates any of the provisions of this
Article, such violation shall be deemed a breach of a substantial obligation of
the terms of this lease and objectionable conduct. Pornographic material is
defined for purposes of this Article as any written or pictorial matter with
prurient appeal or any objects of instrument that are primarily concerned with
lewd or prurient sexual activity. Obscene material is defined here as it is in
Penal Law Section 235.00.
R28.
It is specifically understood and agreed that this lease is offered to
the Tenant for signature by the Managing Agent of the building solely in its
capacity as such Agent and subject to the Landlord's acceptance and approval and
that the Tenant has hereunto affixed its signature with the understanding that
the said lease shall not in any way bind the Landlord or its Agent until such
time as the Landlord has approved said lease and same is executed and delivered
to the Tenant.
R29.
Notwithstanding any thing to the contrary contained in this Lease, any
monies due Landlord other that the annual rental are deemed to be additional
rent, and any default in the payment or additional rent shall give to Landlord
the same remedies as it has with respect to a default in the payment of rent.
R30.
Landlord shall serve written notice to Tenant, giving Tenant 3 days
notice of Landlord's substantial completion of the work as described in R32 and
that Tenant may occupy the demised premises. Upon the expiration of said 3 day
notice, and for the six month period immediately following the expiration of
said 3 day notice, Tenant shall be allowed to occupy the demised premises base
rent free. Tenant shall be liable for all other charges during said period,
included but not limited to electric use.
R31.
Simultaneously with the signing of this lease, the tenant will deliver
to landlord the amount of $23,437.50 in prepaid rent; said amount to be paid by
certified check. Providing the tenant has complied with all of the terms,
covenants and conditions of this lease, and is not in arrears in payment of
rent, then the Landlord does hereby agree to credit the Tenant for the aforesaid
sum of $23437.50 as follows:
a. The sum of $7812.50 to be applied towards the tenant's rent for the
month of November, 1998 and;
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b. The sum of $7812.50 to be applied towards the tenant's rent for the
month of December, 1998 and;
c. The sum of $7812.50 to be applied towards the tenant's rent for the
month of January, 1999.
R32.
Landlord at its own cost and expense shall do the following work:
a. Paint the entire premises in building standard color, tenant to
have choice of paint colors.
b. Furnish and install building standard carpet, tenant to have
sample of carpet and choice of color.
c. Landlord will provide installation of kitchen area and offices as
per attached plan, and all other labor and material necessary to
complete the demised premises pursuant to the attached plan.
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ADDENDUM TO LEASE DATED JANUARY 15, 1992
between 352 Seventh Avenue Associates, as Landlord,
and Manchester Equipment Co. Inc. as Tenant.
- --------------------------------------------------------------------------------
FIRST: As to fourth paragraph of R4 - Said paragraph is herein deemed
deleted in its entirety and the following paragraph is substituted in its place
and stead:
"Bills shall be rendered at such times as Landlord may elect. In
the event that such bills are not paid within ten (10) days after
they are rendered and upon thirty (30) days written notice to cure
directed to the Tenant, certified mail, return receipt, Landlord
may, without further notice discontinue the service of electric
current to the demised premises. Landlord may also discontinue the
service of electric current to the demised premises without cause
upon forty-five (45) days notice to Tenant if Landlord so elects to
discontinue submetering service. In the event of discontinuance of
electric service by the Landlord, Tenant shall not be released from
any liability under this Lease, and Landlord shall not incur any
liability for any loss or damage sustained by Tenant by such
discontinuance. Such discontinuance shall not be deemed to be a
lessening of services within the meaning of any law, rule, or
regulation now or here after enacted, promulgated or issued. In the
event of such discontinuance, Landlord shall permit Tenant to
receive such service directly from said public utility corporation,
in which event, the Tenant will, at its own cost and expense,
furnish and install all risers, service wiring, and switches that
may be necessary for such installation and required by the public
utility company, and will, at its own cost and expense, maintain
and keep in good repair all such risers, wiring and switches.
Tenant shall make no alteration or additions to the electric
equipment and/or appliances without the prior written consent of
Landlord in each instance, which consent shall not be unreasonably
withheld. Rigid
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conduit only will be allowed."
SECOND: As to R5 - The following provision shall be deemed added to the
terms of this sub-paragraph:
"Provided, however, that the liability of the Tenant, pursuant to
the provisions of this paragraph, shall not exceed the sum of $500.
for each year of the term of this lease."
THIRD: As to R6.C - The terms and conditions of R6.C are herein deemed
deleted from the lease in their entirety and the following paragraph is
substituted in its place and stead:
"The Base Tax Year is herein defined as the taxes for the calendar
year 1992, consisting of the total of the taxes for the third and
fourth quarters of the 1991/92 tax year and the first and second
quarters of the 1992/93 tax year, notwithstanding the definition of
"tax year" in Paragraph R6B to the contrary. The liability of the
Tenant for the payment of real estate tax increases pursuant to
this paragraph shall commence January 1, 1993."
FOURTH; As to R6.E - The following provision shall be deemed added to
the terms of this sub-paragraph:
"The non-payment by the Tenant of this additional rent shall not be
deemed a default by the Tenant until subsequent to a ten day
written notice to cure directed to the Tenant."
FIFTH: As to R16. Said paragraph is herein deemed deleted in its
entirety and the following paragraph is substituted in its place and stead:
"In every case in which Tenant is required by the terms of this
Lease to pay to Landlord a sum of money (including, without
limitation, payment of fixed and additional rent) and payment is
not made within ten (10) days after the same shall become due, and
after a ten (10) day written notice to
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cure directed to the Tenant, Tenant shall pay as additional rent
hereunder, interest on such sum or so much thereof as shall be
unpaid from the date it becomes due until it is paid. Such interest
shall be computed at a rate which shall be two (2%) percent per
month; provided, however, in no event shall such interest be in
excess of the highest rate of interest which shall from time to
time be permitted under the laws of the State of New York to be
charged on late payments of sums of money due pursuant to the terms
of a lease."
SIXTH: As to R26 - The following provision shall be deemed added to the
terms of this paragraph:
"Landlord represents the present electric service to the demised
premises is "200 amp service, three phase."
SEVENTH: As to R30 - Said paragraph is herein deemed deleted in its
entirety and the following paragraph is substituted in its place and stead:
"Landlord shall serve written notice to Tenant giving Tenant seven
days written notice of Landlord's substantial completion of the
work as described in R32 and that Tenant may occupy the demised
premises. Upon the expiration of said seven day notice, and for the
six month period immediately following the expiration of said seven
day notice, Tenant shall be allowed to occupy the demised premises,
free of base rent and all items of additional rent. Tenant shall be
liable for charges for electric use during this period.
"Substantial Completion" as used in the within paragraph is herein
defined as follows:
(1) all ceilings and lighting are installed and operable;
(2) all walls and partitions have been erected,
(3) all flooring (carpeting) has been installed,
(4) air conditioning, plumbing and electric systems to be in good
working condition,
(5) all debris caused by the Landlord's trades people has been
removed,
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(6) all painting has been completed with the exception of
touch-ups,
(7) all locks and doors installed and operable."
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ADJACENT 32. If an excavation shall be made upon land adjacent
EXCAVATION -- to the demised premises, or shall be authorized to be
SHORING: made, Tenant shall afford to the person causing or authorized
to cause such excavation, license to enter upon the demised
premises for the purpose of doing such work as said person shall deem necessary
to preserve the wall or the building of which demised premises form a part from
injury or damage and to support the same by proper foundations without any
claim for damages or indemnity against Owner, or diminution or abatement of
rent.
RULES AND 33. Tenant and Tenant's servants, employees, agents,
REGULATIONS visitors, and licensees shall observe faithfully, and comply
strictly with, the Rules and Regulations and such
other and further reasonable Rules and Regulations as Owner or Owner's agents
may from time to time adopt. Notice of any additional rules or regulations
shall be given in such manner as Owner may elect. In case Tenant disputes the
reasonableness of any additional Rule or Regulation hereafter made or adopted
by Owner or Owner's agents, the parties hereto agree to submit the question of
the reasonableness of such Rule or Regulation for decision to the New York
office of the American Arbitration Association, whose determination shall be
final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional Rule or Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice, in
writing upon Owner within ten (10) days after the giving of notice thereof.
Nothing in this lease contained shall be construed to impose upon Owner any
duty or obligation to enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its
servants, employees, agents, visitors or licensees.
SECURITY: 34. Tenant has deposited with Owner the sum of $none as
[hand art] security for the faithful performance and observance by Tenant
of the terms, provisions and conditions of this lease; it is agreed that in the
event Tenant defaults in respect of any of the terms, provisions and conditions
of this lease, including, but not limited to, the payment of rent and additional
rent, Owner may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional
rent or any other sum as to which Tenant is in default or for any sum which
Owner may expend or may be required to expend by reason of Tenant's default in
respect of any of the terms, covenants and conditions of this lease, including
but not limited to, any damages or deficiency in the re-letting of the
premises, whether such damages or deficiency accrued before or after summary
proceedings or other re-entry by Owner. In the event that Tenant shall fully
and faithfully comply with all of the terms, provisions, covenants and
conditions of this lease, the security shall be returned to Tenant after the
date fixed as the end of the Lease and after delivery of entire possession of
the demised premises to Owner. In the event of a sale of the land and building
or leasing of the building, of which the demised premises form a part, Owner
shall have the right to transfer the security to the vendee or lessee and Owner
shall thereupon be released by Tenant from all liability for the return of such
security; and Tenant agrees to look to the new Owner solely for the return of
said security, and it is agreed that the provisions hereof shall apply to every
transfer or assignment made of the security to a new Owner. Tenant further
covenants that it will not assign or encumber or attempt to assign or encumber
the monies deposited herein as security and that neither Owner nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.
ESTOPPEL 35. Tenant, at any time, and from time to time, upon at least
CERTIFICATE 10 days' prior notice by Owner, shall execute, acknowledge and
deliver to Owner, and/or to any other person, firm or
corporation specified by Owner, a statement certifying that this Lease is
unmodified and in full force and effect (or, if there have been modifications,
that the same is in full force and effect as modified and stating the
modifications), stating the dates to which the rent and additional rent have
been paid, and stating whether or not there exists any default by Owner under
this Lease, and, if so, specifying each such default.
SUCCESSORS 36. The covenants, conditions and agreements contained
AND ASSIGNS: in this lease shall bind and inure to the benefit of Owner
and Tenant and their respective heirs, distributees, executors,
administrators, successors, and except as otherwise provided in this lease,
their assigns.
_________________________
[hand art] Space to be filled in or deleted
Riders and addendum attached hereto are made part hereof.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
352 Seventh Avenue Associates, by
Bernstein Management Corp., Agent
Witness for Owner: by: /s/ [CORP.
____________________________ SEAL]
President
__________________________________ Manchester Equipment Co. Inc. [L.S.]
Witness for Tenant: by: /s/ [CORP.
___________________________ SEAL]
__________________________________ ID# 11 231 2854 [L.S.]
________________________
ACKNOWLEDGMENTS
CORPORATE OWNER
STATE OF NEW YORK. ss.:
COUNTY OF
On this day of , 19 , before me
personally came
to me known, who being byme duly sworn, did depose and say that he resides
in
that he is the of
the corporation described in and which executed the foregoing instrument, as
OWNER that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation, and that he signed his name thereto by like
order.
________________________________________________________________________________
INDIVIDUAL OWNER
STATE OF NEW YORK. ss.:
COUNTY OF
On this day of , 19 , before me
personally came
to me known and known to me to be the individual
described in and who, as OWNER, executed the foregoing instrument and
acknowledged to me that he executed the same.
________________________________________________________________________________
CORPORATE TENANT
STATE OF NEW YORK. ss.:
COUNTY OF
On this day of , 19 , before me
personally came
to me known, who being by me duly sworn, did depose and say that he resides
in
that he is the of
the corporation described in and which executed the foregoing instrument, as
TENANT that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation, and that he signed his name thereto by like
order.
_______________________________________________________________________________
INDIVIDUAL TENANT
STATE OF NEW YORK. ss.:
COUNTY OF
On this day of , 19 , before me
personally came
to me known and known to me to be the individual
described in and who, as TENANT, executed the foregoing instrument and
acknowledged to me that he executed the same.
_______________________________________________________________________________
<PAGE> 1
EXHIBIT 10.5.f
Congress Corporate Plaza, Building One
902 Clint Moore Road, Suite 144
Boca Raton, FL 33487
Lease Drafted: February 14, 1990
Lease Revised: March 22, 1990
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between
Crow-Childress-Donner, Limited, a Texas limited partnership____________________
("Landlord"), and Manchester Equipment Company, Inc., a New York corporation___
____________________________________________________________________("Tenant"):
WITNESSETH:
1.01 PREMISES. In consideration of the obligation of Tenant to pay
rent and of the other terms, provisions and covenants hereof, Landlord leases
to Tenant and Tenant leases from Landlord, all that portion of certain real
property situated within the County of Palm Beach, State of Florida, legally
described in Exhibit A, and the buildings and improvements to be constructed
thereon as outlined on the site plan contained in Exhibit B (the "Premises"),
including any truck loading areas specifically marked in red on said Exhibit B
for the exclusive use of Tenant. The Premises and the building within which the
Premises are located (the "Building") are part of a larger development (the
"Development") commonly known as Congress Corporate Plaze, Phase II
2.01 TERM OF LEASE. The term of this lease shall commence on the "Rent
Commencement Date", as hereinafter defined, and ending 60 months thereafter,
provided however, that in the event the rent commencement date is a date other
than the first day of a calendar month, said term shall extend for said number
of months in addition to the remainder of the calendar month following the rent
commencement date.
2.02 RENT COMMENCEMENT DATE. The "Rent Commencement Date" shall be the
date that Tenant first uses the Premises or any portion thereof for any purpose
permitted under this lease. In the event this lease pertains to a building or
building interior finish to be constructed, the "Rent Commencement Date" shall
be the date upon which the buildings and other improvements erected and to be
erected upon the premises shall have been substantially completed in accordance
with the plans and specifications described on Exhibit "C" attached hereto and
incorporated herein by reference, provided however, that if Landlord shall be
delayed in such substantial completion as a result of: (i) Tenant's failure to
agree to plans, specifications, and cost estimates, within a reasonable period
of time; (ii) Tenant's request for materials, finishes or installations other
than Landlord's standard; (iii) Tenant's changes in plans: the commencement
date and the payment of rent hereunder shall be accelerated by the number of
days of such delay, and provided further that if Landlord cannot substantially
complete the premises as a result of any events (i) through (iii) above,
Landlord may as its election complete so much of Landlord's work as may be
practical under the circumstances and, by written notice to Tenant, establish
the commencement date as the date of such partial completion, subject to any
applicable accelerations due to delays resulting from events (i) through (iii)
above. Taking possession by Tenant shall be deemed conclusively to establish
that said buildings and other improvements have been completed in accordance
with the plans and specifications and that the premises are in good and
satisfactory condition, as of when possession was so taken. Tenant acknowledges
that no representations as to the repair of the premises have been made by
Landlord, unless such are expressly set forth in the lease. After such "Rent
Commencement Date" Tenant shall, upon demand, execute and deliver to Landlord a
letter of acceptance of delivery of the premises. In the event of any dispute
as to substantial completion of work performed, execute or required to be
performed by Landlord, the certificate of Landlord's architect or general
contractor shall be conclusive.
3.01 BASE RENT Tenant agrees to pay to Landlord rent for the premises,
in advance, without demand, deduction or set off, for the entire term hereof at
the rate of Two thousand three hundred twenty one and 52/100------------Dollars
($2,321.52) per month. One such monthly installment shall be due and payable on
the date hereof and a like monthly installment shall be due and payable on or
before the first day of each calendar month succeeding the rent commencement
date, except that the rental payment for any fractional calendar month at the
commencement of the lease period shall be prorated. The rental payment is
subject to adjustment as provided below.
3.02 RENT ESCALATION The base rent shall be subject to adjustment on
the first day of January of each year of the Lease term (such date being
hereafter referred to as the "rent adjustment date") in the following manner:
(a) Landlord and Tenant agree that on and as of the adjustment date each year
during the term of this lease, Landlord may increase the base rental for the
premises then due under the lease by a factor of 1.04 beginning January 1,
1991. Notwithstanding anything contained in this paragraph, the additional rent
payable by Tenant in any year pursuant to this paragraph shall in no event be
less than that paid in the prior year.
4.01 SECURITY DEPOSIT. Tenant agrees to deposit with Landlord on the
date hereof the sum of Six thousand-----------------------------------Dollars
($6,000.00), which sum shall be held by Landlord, without obligation for
interest, as security for the full, timely and faithful performance of Tenant's
covenants and obligations under this Lease, it being expressly agreed that such
deposit is not an advance rental deposit or a measure of Landlord's damages.
Upon the occurrence of any event of default by Tenant, Landlord may, from
Landlord:_____________ Tenant:____________
1
<PAGE> 2
time to time, without prejudice to any other remedy, use such funds to the
extent necessary to make good any arrears of rent or other payments due Landlord
hereunder, and any other damage, injury, expense or liability caused by Tenant's
default; and Tenant shall pay to Landlord on demand the amount so applied in
order to restore the security deposit to its original amount. Although the
security deposit shall be deemed the property of Landlord, any remaining balance
of such deposit shall be returned by Landlord at such time after termination of
this Lease when Landlord shall have determined that all Tenant's obligations
under this Lease have been fulfilled.
5.01 PERMITTED USE. The Premises shall be continuously used for the
sole purpose of general business offices and/or for receiving, storing,
shipping and selling (other than the at retail) products, materials and
merchandise made and/or distributed by Tenant and for no other use or purpose.
Tenant shall at its own cost and expense obtain any and all licenses and permits
necessary for any such use. The overnight parking of automobiles, trucks or
other vehicles, and the outside storage of any property including trash or
garbage are prohibited. Tenant agrees that it shall, at its own cost and
expenses keep its employees, agents, customers, invitees, and/or licensees from
parking on any streets running through or contiguous to the buildings or
development of which the premises are part thereof. Tenant agrees that no
washing of any type will take place in the premises including the truck apron
and parking areas. Tenant shall not permit any objectionable or unpleasant
odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, nor
take any other action which would constitute a nuisance or would disturb or
endanger any other tenants of Development or unreasonably interfere with such
tenants' use of their respective premises or permit any use which would
adversely affect the reputation of the Development. Tenant shall not receive,
store or otherwise handle any product, material or merchandise which is
explosive, highly flammable or constitutes a hazardous substance or waste.
Tenant shall not permit the Premises to be used for any purpose (including,
without limitation, the storage of merchandise) in any manner which would
render the insurance thereon void or increase the insurance rate thereof.
Tenant agrees to indemnify and hold Landlord harmless against any and all loss,
costs and claims, including attorney's fees relating to the improper storage,
handling, transportation or disposal of explosive, highly flammable or
hazardous materials or resulting from any other improper use. Tenants shall
comply with all governmental laws, ordinances and regulations applicable to the
Premises, and shall promptly comply with all governmental orders and directives
for the correction, prevention and abatement of any violations or nuisances in
or upon, or connected with, the Premises, all at Tenant's sole expense. If, as a
result of any change in the governmental laws, ordinances and regulations, the
Premises, all at Tenant's sole expense. If, as a result of any change in the
governmental laws, ordinances and regulations, the Premises must be altered to
accommodate lawfully the use and occupancy thereof, such alterations shall be
made only with the consent of Landlord, but the entire cost thereof shall be
borne by Tenant; provided that the necessity of Landlord's consent shall in no
way create any liability against Landlord for failure of Tenant to comply with
such laws, ordinances and regulations. Tenant shall take whatever other actions
are necessary so that the Premises and Tenant's use thereof complies with the
Fire Prevention Code of the National Fire Protection Association and any other
fire prevention laws, ordinances, rules or regulations applicable to the
Premises.
6.01 TENANT'S TAXES. Tenant shall be responsible to pay before
delinquency all assessments, levies or charges measured by or base in whole or
in part upon the rents payable hereunder or the gross receipts of Tenant and
all sales taxes and other taxes imposed upon or assessed by reason of the rents
and other charges payable hereunder. The Florida sales tax imposed on rent and
on other charges payable hereunder shall be paid by Tenant to Landlord with the
payment of Tenant's rental payments and other charges payable hereunder.
7.01 DEFINITION OF OPERATING COSTS. The term "Operating Costs" shall
mean all costs and expenses paid or incurred by Landlord or on Landlord;s
behalf in connection with the ownership, management, repair, replacement,
remodeling, maintenance and operation of the Development (including, without
limitation, all assessed real property taxes, assessments (whether general or
special) and governmental charges of any kind and nature whatsoever including
assessments due to deed restrictions and/or owner's associations, which accrue
against the building and/or development of which the premises are a part, the
costs of maintaining and repairing parking lots parking structures, easements,
and landscaping, property management fees, utility costs to the extent not
separately metered, insurance premiums, depreciation of the costs of
replacement (as defined below) of the building and improvements in the
Development but not including any structural repairs or replacements which are
normally chargeable to capital accounts under sound accounting principles, and
the Building's share of costs of the Development). The term "operating costs"
does not include: (i) costs of alterations of tenants' premises: (ii) costs of
curing construction defects; (iii) interest and principal payments on
mortgages, and other debt cost; (iv) real estate brokers' leasing commissions or
compensation; (v) any cost or expenditure for which Landlord is reimbursed,
whether by insurance proceeds or otherwise; (vi) cost of any service furnished
to any other occupant of the Building which Landlord does not provide to tenant
hereunder. Structural repairs and replacements are repairs and replacement to
the foundations, load-bearing walls, columns and joists and replacement of
roofing and roof deck. Notwithstanding anything contained herein to the
contrary, depreciation of any capital improvements which are intended to reduce
Operating Costs, or are required under any governmental laws, regulations or
ordinances, which were not applicable to the Building or the Development at the
time it was constructed, or are recommended by the N.F.P.A. Lifo Safety Code,
shall be included in Operating Costs. The useful life of any such improvement
as well as all non-structural replacements shall be reasonable determined by
Landlord. In addition, interest on the undepreciated cost of any such
improvement or non-structural replacement (at the prevailing construction loan
rate available to Landlord on the date the cost of such improvement was
incurred) shall also be including in Operating Costs. If Landlord selects the
accrual method of accounting rather than the cash accounting method for
Operating Costs purposes, Operating Costs shall be deemed to have been paid
when such expenses have accrued. Landlord shall have the right at any time and
from time to time to elect, which election shall be subject to revocation, to
exclude that portion of Operating Costs attributable to any separately assessed
part of the Development and any separate building within the Development.
During any period that Operating Costs attributable to any separately assessed
part of the Development and/or separate building are so excluded from Operating
Costs, then for the purposes calculating Tenant's proportionate share of
Operating Costs as provided in Section 7.02, the denominator shall not include
the rentable area of such separately assessed part of the Development and/or
such separate building. Landlord may, in a reasonable manner, allocate
insurance premiums for so-called "blanket" insurance policies which insure
other properties as well as the Development and said allocated amount shall be
deemed to be an Operating Cost.
If at any time during the term of this lease, the present method of
taxation shall be changed so that in lieu of the whole or any part of any taxes,
assessments or governmental charges levied, assessed or imposed on real estate
and the improvements thereon, there shall be levied, assessed or imposed on
Landlord a capital levy or other tax directly on the rents received therefrom
and/or a franchise tax, assessment, levy or charge measured by or based, in
whole or in part, upon such rents for the present or any future building or
buildings on the premises, then all such taxes, assessments, levies or charges,
or the part thereof so measured or based, shall be deemed to be included within
the term "taxes" for the purposes hereof.
7.02 TENANT'S PROPORTIONATE SHARE OF OPERATING COSTS. Tenant shall
pay to Landlord, as additional rent, its proportionate share of operating costs
calculated on the basis of the ratio set forth in Section 8.01. Any payments
with respect to any partial calendar year in which the Term commences or ends
shall be prorated. Tenant agrees to pay $548.76 per month as an escrow amount
for operating costs as defined in Article 7.01. Landlord may, at any time,
deliver to Tenant its estimate (or revised estimate) of such additional amounts
payable under this Section for each calendar year. On or before the first day
of the next month and on or before the first day of each month thereafter.
Tenant shall pay to Landlord as additional rent such amount as Landlord
reasonably determines to be necessary to bring and keep Tenant current. As soon
as practicable after the close of each calendar
Landlord:________ Tenant:________
2
<PAGE> 3
year, Landlord shall deliver to Tenant a statement showing the total amount
payable by Tenant under this Article. If such statement shows an amount due from
Tenant that is less than the estimated payments previously paid by Tenant, it
shall be accompanied by a refund of the excess to Tenant or at Landlord's
option the excess shall be credited against the next monthly installment of
rent. If such statement shows an amount due from Tenant that is more than the
estimated payments paid by Tenant, Tenant shall pay the deficiency to Landlord,
as additional rent. In the event an amount is due and is not paid within thirty
(30) days after the date of Landlord's statement to tenant, the unpaid amount
shall bear interest at the rate of eighteen (18%) percent per annum from the
date of such statement until payment by tenant. Landlord and Tenant acknowledge
that certain of the costs of management, operation and maintenance of the
Development are allocated among all of the buildings in the Development using
methods of allocation that are considered reasonable and appropriate under the
circumstances. Tenant hereby consents to such allocations provided that the
determination of such costs and the allocation of all or part thereof to
Operating Costs hereunder shall be in accordance with generally accepted
accounting principles applied on a consistent basis. Tenant or its
representatives shall have the right after seven (7) days prior written notice
to Landlord to examine Landlord's books and records of Operating Costs during
normal business hours within twenty (20) days following the furnishing of the
statement to Tenant. Unless Tenant takes written exception to any item within
thirty (30) days following the furnishing of the statement to Tenant (which
item shall be paid in any event), such statement shall be considered as final
and accepted by Tenant. The taking of exception to any item shall not excuse
Tenant from the obligation to make timely payment based upon the statement as
delivered by Landlord.
8.01 TENANT'S PROPORTIONATE SHARE. (a) Tenant's "proportionate share"
as used in this Lease with respect to the Building shall mean a fraction the
numerator of which shall be the rentable area contained in the Premises and the
denominator of which shall be the rentable area contained in the Building, as
determined by Landlord. Tenant's "proportionate share" as used in this Lease
with respect to costs relating to more than the Building, shall mean a fraction
the numerator of which shall be the rentable area contained in the Premises and
the denominator of which shall be the rentable area of all buildings, as
determined by Landlord, within the Development. Notwithstanding anything
contained in the Lease to the contrary, Landlord shall have the right, from
time to time, to add to or exclude from the Development real property and any
buildings constructed thereon. In the event Landlord elects to add to or
exclude from the Development, Landlord shall notify Tenant in writing of any
such addition or exclusion which notice shall describe the property added or
excluded.
9.01 TENANT'S OBLIGATIONS. (a) Tenant shall at its own cost and
expense keep and maintain all parts of the Premises and such portion of the
Development within the exclusive control of Tenant in good condition, promptly
making all necessary repairs and replacements, whether ordinary or
extraordinary, with materials and workmanship of the same character, kind and
quality as the original, including but not limited to, windows, glass and plate
glass, doors, skylights, any special office entries, interior walls and finish
work, floors and floor coverings, heating and air conditioning systems,
electrical systems and fixtures, sprinkler systems, water heaters, dock board,
truck doors, dock bumpers, and plumbing work and fixtures. Tenant as part of
its obligation hereunder shall keep the whole of the Premises in a clean and
sanitary condition. Tenant will as far as possible keep all such parts of the
Premises from deteriorating, ordinary wear and tear excepted, and from falling
temporarily out of repair, and upon termination of this Lease in any way.
Tenant will yield up the Premises to Landlord in good condition and repair,
loss by fire or other casualty covered by insurance to be secured pursuant to
Article 15 excepted (but not excepting any damage to glass or loss not
reimbursed by insurance because of the existence of a deductible under the
appropriate policy). Tenant shall not damage any demising wall or disturb the
integrity and supports provided by any demising wall and shall, at its sole
cost and expense, properly repair any damage or injury to any demising wall
caused by Tenant or its employees, agents or invitees. Tenant shall, at its own
cost and expense, as additional rent, pay for the repair of any damage to the
Premises, the Building, or the Development resulting from and/or caused in
whole or in part by the negligence or misconduct of Tenant, its agents,
servants, employees, patrons, customers, or any other person entering upon the
Development as a result of Tenant's business activities or caused by Tenant's
default hereunder.
(b) Tenant at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
approved by Landlord, for servicing all heating and air conditioning systems
and equipment servicing the Premises and an executed copy of such contract
shall be delivered to Landlord. This service contract must include all services
suggested by the equipment manufacturer within the operations/maintenance
manual and must become effective within thirty (30) days of the date Tenant
takes possession of the Premises. Landlord may (but shall not be required to),
upon notice to Tenant, elect to enter into such a maintenance service contract
on behalf of Tenant or perform the work itself and, in either case, charge
Tenant therefore, together with a reasonable charge for overhead.
9.02 LANDLORD'S OBLIGATIONS. Landlord shall maintain in good repair,
reasonable wear and tear and any casualty covered by the provisions of Article
15 excepted, all parts of the Development, other than tenants' demised premises
or portions of the Development within the exclusive control of tenants of the
Development, making all necessary repairs and replacements, whether ordinary or
extraordinary structural or nonstructural, including roof, foundation, walls,
downspouts, gutters, regular mowing of any grass, trimming, weed removal and
general landscape maintenance, including any rail spur areas, exterior painting,
exterior lighting, exterior signs and common sewage plumbing and the
maintenance of all paved areas including driveways and alleys, including, but
not limited to, cleaning, repaving, restripping and resealing. Tenant shall
immediately give Landlord written notice of any defect or need for repairs,
after which Landlord shall have a reasonable opportunity to repair the same or
cure such defect. Landlord's liability with respect to any defects, repairs or
maintenance for which Landlord is responsible under any of the provisions of
this Lease shall be limited to the cost of such repairs or maintenance or the
curing of such defect. The term "walls" as used herein shall not include
windows, glass or plate glass, doors, special store front or office entry.
10.01 ALTERATIONS. Tenant shall not make any alterations, additions
or improvements to the Premises (including, without limitation, the roof and
wall penetrations) without the prior written consent of Landlord. If Landlord
shall, consent to any alterations, additions or improvements proposed by
Tenant, Tenant shall construct the same in accordance with all governmental
laws, ordinances, rules and regulations and all requirements of Landlord's and
Tenant's insurance policies and only in accordance with plans and
specifications approved by Landlord; and any contractor or person selected by
Tenant to make the same, or, at Landlord's option and discretion, the
alterations, additions or improvements shall be made by Landlord for tenant's
account and Tenant shall fully reimburse Landlord for the entire cost thereof.
Tenant may, without the consent of Landlord, but at its own cost and expense
and in good workmanlike manner erect such shelves, bins, machinery and other
trade fixtures as it may deem advisable, without altering the basic character
of the Building or Development and without overloading the floor or damaging
such Building or Development, and in each case after complying with all
applicable governmental laws, ordinances, regulations and other requirements.
All shelves, bins, machinery and trade fixtures installed by Tenant may be
removed by Tenant prior to the termination of this Lease if Tenant so elects,
and shall be removed by the date of termination of this Lease or upon earlier
vacating of the Premises if required by Landlord; upon any such removal Tenant
shall restore the Premises to their original condition. All such removals and
restoration shall be accomplished in a good and workmanlike manner so as not to
damage the primary structure or structural quality of the Building.
11.01 SIGNS AND WINDOW TREATMENT. Tenant shall not install any signs
upon the Building or Development. Landlord will provide, at Tenant's request
and cost, Landlord's standard identification sign, which sign shall be removed
by Tenant upon termination of this Lease at which time Tenant shall restore the
property to the same condition as prior to installation of said sign. Tenant
shall not install drapes, curtains, blinds or any window treatment without
Landlord's prior written consent. Landlord may from time to time require Tenant
to change its signage to conform to a revised standard for the Building,
provided Landlord pays
Landlord:________ Tenant:________
3
<PAGE> 4
the cost of removing and replacing such signs. Landlord shall maintain all
signs and the cost thereof shall be charged to Tenant.
12.01 INSPECTIONS. Landlord and Landlord's agents and representatives
shall have the right to enter and inspect the premises at any reasonable time
during business hours, for the purpose of ascertaining the condition of the
premises or in order to make such repairs as may be required or permitted to be
made by Landlord under the terms of this lease. During the period that is six
(6) months prior to the end of the term hereof. Landlord and Landlord's agents
and representatives shall have the right to enter the premises at any
reasonable time during business hours for the purpose of showing the premises
and shall have the right to erect on the premises a suitable sign indicating
the premises are available. Tenant shall give written notice to Landlord at
least thirty (30) days prior to vacating the premises and shall arrange to meet
with Landlord for a joint inspection of the premises prior to vacating. In the
event of Tenant's failure to give such notice or arrange such joint inspection,
Landlord's inspection at or after Tenant's vacating the premises shall be
conclusively deemed correct for purposes of determining Tenant's responsibility
for repairs and restoration.
13.01 UTILITIES. Tenant shall pay for all gas, heat, light, power,
telephone, and other utilities and services used on or from the Premises,
including without limitation, Tenant's proportionate share as determined by
Landlord for the use of such utilities which are not separately metered and any
central station signaling system installed in the Premises or the Building,
together with any taxes, penalties and surcharges or the like pertaining
thereto and any maintenance charges for utilities. Tenant shall furnish and
install all electric light bulbs, tubes and ballasts, other then those
originally provided to the Premises by Landlord. Landlord shall in no event be
liable for any interruption or failure of utility services on or to the
Premises.
14.01 ASSIGNMENT AND SUBLETTING. (a) Tenant shall not have the right
to assign, sublet, transfer or encumber this lease, or any interest therein,
without the prior written consent of Landlord which will not be unreasonably
withheld. Any attempted assignment, subletting, transfer or encumbrance by
Tenant in violation of the terms and covenants of this Paragraph shall be void.
All cash or other proceeds of any assignment, such proceeds as exceed the
rentals called for hereunder in the case of a subletting and all cash or other
proceeds of any other transfer of Tenant's interest in this lease shall be paid
to Landlord, whether such assignment, subletting or other transfer is consented
to by Landlord or not, unless Landlord agrees to the contrary in writing, and
Tenant hereby assigns all rights it might have or ever acquire in any such
proceeds to Landlord. Any assignment, subletting or other transfer of Tenant's
interest in this lease shall be for an amount equal to the then fair market
value of such interest. Those covenants shall run with the land and shall bind
Tenant and Tenant's heirs, executors, administrators, personal representatives,
representatives in any bankruptcy proceeding, successors and assigns. Any
assignee, sublessee or transferee of Tenant's interest in this lease (all such
assignees, sublessees and transferees being hereinafter referred to as
"successors"), by assuming Tenant's obligations hereunder shall assume
liability to Landlord for all amounts paid to persons other than Landlord by
such successors in contravention of this Paragraph. No assignment, subletting
or other transfer, whether consented to by Landlord or not, shall relieve
Tenant of its liability hereunder. Upon the occurrence of an "event of default"
as hereinafter defined, if the premises or any part thereof are then assigned or
sublet, Landlord, in addition to any other remedies herein provided, as
provided by law, may at its option collect directly from such assignee or
subtenant all rents becoming due to Tenant under such assignment or sublease
and apply such rent against any sums due to Landlord for Tenant hereunder, and
no such collection shall be construed to constitute a novation or a release of
Tenant from the further performance of Tenant's obligations hereunder.
(b) If this lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code 11 U.S.C. 101 et seq., (The "Bankruptcy
Code"), any and all monies or other considerations payable or otherwise to be
delivered in connection with such assignment shall be paid or delivered to
Landlord, shall be and remain the exclusive property of Landlord and shall not
constitute property of Tenant or of the estate of Tenant within the meaning of
the Bankruptcy Code. Any and all monies or other considerations constituting
Landlord's property under the preceding sentence not paid or delivered to
Landlord shall be held in trust for the benefit of the Landlord and be promptly
paid or delivered to landlord.
(c) Any person or entity to which this lease is assigned pursuant to
the provisions of the Bankruptcy Code, shall be deemed, without further act or
deed, to have assumed all of the obligations arising under this lease on and
after the date of such assignment. Any such assignee shall upon demand
execute and deliver to Landlord an instrument confirming such assumption.*
15.01 FIRE AND CASUALTY DAMAGE. (a) Landlord agrees to maintain
insurance covering the building of which the premises are a part in an amount
not less than eighty (80%) percent (or such greater percentage as may be
necessary to comply with the provisions of any co-insurance clauses of the
policy) of the replacement cost thereof, insuring against the perils of Fire,
Lightning, Extended Coverage, Vandalism and Malicious Mischief, extended by
Special Extended Coverage Endorsement to insure against all other Risks of
Direct Physical Loss, such coverages and endorsements to be as defined,
provided and limited in the standard bureau forms prescribed by the insurance
regulatory authority for the state in which the premises are situated for use
by insurance companies admitted in such state for the writing of such insurance
on risks located within such state. Subject to the provisions of subparagraphs
15.01(c), 15.01(d), and 15.01(e) below, such insurance shall be for the sole
benefit of Landlord and under its sole control.
(b) If the building situated upon the premises should be damaged or
destroyed by fire, tornado or other casualty, tenant shall give written notice
thereof to Landlord.
(c) If the buildings situated upon the premises should be totally
destroyed by fire, tornado or other casualty, or if they should be so damaged
thereby that rebuilding or repairs cannot in Landlord's estimation be completed
within two hundred (200) days after the date upon which Landlord is notified by
Tenant of such damage, this lease shall terminate and the rent shall be abated
during the unexpired portion of this lease, effective upon the date of the
occurrence of such damage.*
(d) If the buildings situated upon the premises should be damaged by
any peril covered by insurance to be provided by Landlord under subparagraph
15.01(a) above, but only to such extent that rebuilding or repairs can in
Landlord's estimation be completed within two hundred (200) days after the date
upon which Landlord is notified by Tenant of such damage, this lease shall not
terminate, and Landlord shall at its sole cost and expense thereupon proceed
with reasonable diligence to rebuild and repair such buildings to substantially
the condition in which they existed prior to such damage, except that Landlord
shall not be required to rebuild, repair or replace any part of the partitions,
fixtures, additions and other improvements which may have been placed in, on or
about the premises by Tenant and except that Tenant shall pay to Landlord upon
demand any amount by which Landlord's cost of such rebuilding, repair and/or
replacement exceeds net insurance proceeds paid to Landlord in connection with
such damage and except that Landlord may elect not to rebuild if such damage
occurs during the last year of the term of the lease exclusive of any option
which is unexercised at the time of such damage. If the premises are
untenantable in whole or in part following such damage, the rent payable
hereunder during the period in which they are untenantable shall be reduced to
such extent as may be fair and reasonable under all of the circumstances. In
the event that Landlord should fail to complete such repairs and rebuilding
within two hundred (200) days after the date upon which Landlord is notified by
Tenant of such damage. Tenant may at its option terminate this lease by
delivering written notice of termination to Landlord as Tenant's exclusive
remedy, whereupon all rights and or obligations hereunder shall cease and
terminate. Should construction be delayed because of changes, deletions, or
additions in construction requested by Tenant, strikes, lockouts, casualites,
acts of God, war, material or labor shortages, governmental regulation or
control or other causes beyond the reasonable control of Landlord, the period
of restoration, repair or rebuilding shall be extended for the time Landlord is
so delayed.*
(e) Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
premises requires that the insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this lease by delivering
written notice of termination to Tenant within fifteen (15) days after such
Landlord: _____________ Tenant: _____________
* In the event that the premises are damaged or destroyed by fire, tornado or
other casualty and cannot be repaired within 90 days, the Landlord agrees to
provide temporary quarters to Manchester Equipment until the time when the
original premises are ready to be occupied. In the event temporary quarters
are provided the Tenant understands that the rent abatement described above
will not apply.
4
<PAGE> 5
requirement is made by any such holder, whereupon all rights and obligations
hereunder shall cease and terminate.
(i) Each of Landlord and Tenant hereby releases the other from any loss
or damage to property caused by fire or any perils insured in policies of
insurance covering such property, even if such loss or damage shall have been
caused by the fault or negligence of the other party, or anyone for whom such
party may be responsible; provided, however, that this release shall be
applicable and in force and effect only with respect to loss or damage
occurring during such times as the releasor's policies shall contain a clause
or endorsement to the effect that any such release shall not adversely affect
or impair said policies or prejudice the right of the releasor to recover
thereunder and then only to the extent of the insurance proceeds payable under
such policies. Each of the Landlord and Tenant agrees that will request its
insurance carriers to include in its policies such a clause or endorsement.
16.01 LIABILITY. Landlord shall not be liable to Tenant or Tenant's
employees, agents, patrons or visitors, or to any other person whomsoever, for
any injury to person or damage to property on or about the premises, resulting
from and/or caused in part or whole by the negligence or misconduct of Tenant,
its agents, servants or employees of any other person entering upon the
premises, or caused by the buildings and improvements located on the premises
becoming out of repair, or caused by leakage of gas, oil, water or steam or by
electricity emanating from the premises, or due to any cause whatsoever, and
Tenant hereby covenants and agrees that it will at all times indemnify and hold
safe and harmless the property, the Landlord (including without limitation the
trustee and beneficiaries if Landlord is a trust). Landlord's agents and
employees from any loss, liability, claims, suits, costs, expenses, including
without limitation attorney's fees and damages, both real and alleged, arising
out of any such damage or injury; except injury to persons or damage to
property the sole cause of which is the gross negligence of Landlord or the
failure of Landlord to repair any part of the premises which Landlord is
obligated to repair and maintain hereunder within a reasonable time after the
receipt of written notice from Tenant of needed repairs. Tenant shall procure
and maintain throughout the term of the lease a policy or policies of
insurance, at its sole cost and expense, insuring both Landlord and Tenant
against all claims, demands or actions arising out of or in connection with (i)
the premises; (ii) the condition of the premises; (iii) Tenant's operations in
and maintenance and use of the premises; and (iv) Tenant's liability assumed
under this lease, the limits of such policy or policies to be in the amount of
not less than $2,000,000 per occurrence in respect to injury to persons
(including death), and in the amount of not less than $250,000 per occurrence
in respect to property damage or destruction, including loss of use thereof.
All such policies shall be procured by Tenant from responsible insurance
companies satisfactory to Landlord. Certified copies of such policies, together
with receipt evidencing payment of premiums therefore, shall be delivered to
Landlord prior to the commencement date of this lease. Not less than fifteen
(15)_days prior to the expiration date of any such policies, certified copies
of the renewal thereof (bearing notations evidencing the payment of renewal
premiums) shall be delivered to Landlord. Such policies shall further provide
that not less than thirty (30) days written notice shall be given to Landlord
before such policy may be cancelled or changed to reduce insurance provided
thereby.
17.01 CONDEMNATION. (a) If the whole or any substantial part of the
Premises or Building should be taken for any public or quasi-public use under
governmental law, ordinance or regulation, or by right of eminent domain, or by
private purchase in lieu thereof and the taking would prevent or materially
interfere with the use of the Premises or Building for the purpose for which
they are then being used, this Lease shall terminate effective when the legal
taking shall occur as if the date of such taking were the date originally fixed
in the Lease for the expiration of the Term.
(b) If the part of the Premises or Building shall be taken for any
public or quasi-public use under governmental law, ordinance or regulation, or
by right of eminent domain, or by private purchase in lieu thereof, and this
Lease is not terminated as provided above, this Lease shall not terminate but
the rent payable hereunder during the unexpired portion of this Lease shall be
reduced to such extent as may be fair and reasonable under all of the
circumstances and Landlord shall undertake to restore the Premises to a
condition suitable for Tenant's use, as near to the condition thereof
immediately prior to such taking as is reasonably feasible under all the
circumstances.
(c) In the event of any such taking or private purchase in lieu
thereof, Landlord and Tenant shall each be entitled to receive and retain such
separate awards and/or portion of lump sum awards as may be allocated to their
respective interests in any condemnation precedings; provided that Tenant
shall not be entitled to receive any award for the loss of any improvements
paid for by Landlord or for Tenant's loss of its leasehold interest, the right
to such award as to such items being hereby assigned by Tenant to Landlord.
18.01 HOLDING OVER. Tenant will, at the termination of this lease by
lapse of time or otherwise, yield up immediate possession to Landlord with all
repairs and maintenance required herein to be performed by Tenant completed. If
Landlord agrees in writing that Tenant may hold over after th expiration or
termination of this lease, unless the parties hereto otherwise agree in writing
on the terms of such holding over, the hold over tenancy shall be subject to
termination by Landlord at any time upon not less than (5) days advance written
notice, or by Tenant at any time upon not less than thirty (30) days advance
written notice, and all of the other terms and provisions of this lease shall
be applicable during that period, except that Tenant shall pay Landlord from
time to time upon demand, as rental for the period of any hold over, an amount
equal to double the rent in effect on the termination date, computed on a daily
basis for each day of the hold over period. Tenant shall also pay to Landlord
all damages sustained by Landlord resulting from retention of possession by
Tenant, including the loss of any proposed subsequent tenant for any portion of
the Premises. No holding over by Tenant, whether with or without consent of
Landlord, shall operate to extend this lease except as otherwise expressly
provided. The preceding provisions of this paragraph shall not be construed as
consent for Tenant to hold over.
19.01 QUIET ENJOYMENT. Landlord represents and warrants that is has
full right and authority to enter into this Lease and that Tenant, upon paying
the rental herein set forth and performing its other covenants and agreements
herein set forth, shall peaceably and quietly have, hold and enjoy the Premises
for the Term without hinderance or molestation from Landlord, subject to the
terms and provisions of this Lease. Landlord agrees to make reasonable efforts
to protect Tenant from interference or disturbance by other tenants or third
persons, however, Landlord shall not be liable for any such interference or
disturbance, not shall Tenant be released from any of the obligations of this
Lease because of such interference or disturbance. In the event this Lease is a
sublease, then Tenant agrees to take the Premises subject to the provisions of
the prior lease.
20.01 EVENTS OF DEFAULT. The following events shall be deemed to be
events of default by Tenant under this lease:
(a) Tenant shall fail to pay any installment of the rent herein
reserved when due, or any other payment or reimbursement to Landlord required
herein when due and such failure shall continue for a period of five (5) days
from the date such payment was due.
(b) Tenant or any guarantor of Tenant's obligations hereunder shall
generally not pay its debts as they become due or shall admit in writing its
inability to pay its debts or shall make a general assignment for the benefit
of creditors; or Tenant or any such guarantor shall commence any case,
proceeding or other action seeking to have an order for relief entered on its
behalf as a debtor to adjudicate it as bankrupt or insolvent, or seeking
reorganization or relief of debtors or seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or of any
substantial part of its property; or Tenant or any such guarantor shall take
any action to authorize or in contemplation of any of the actions set forth
above in this paragraph; or
Landlord:________ Tenant:________
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<PAGE> 6
(c) Any case, proceeding or other action against Tenant or any
guarantor of Tenant's obligations hereunder shall be commenced seeking to have
an order for relief entered against it as debtor or to adjudicate it as
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its property.
(d) A receiver or trustee shall be appointed for all or substantially
all of the assets of the Tenant.
(e) Tenant shall desert or vacate any substantial portion of the
premises.
(f) Tenant shall fail to discharge any lien placed upon the premises in
violation of Paragraph 26.01 hereof within twenty (20) days after any such lien
or encumbrance is filed against the premises.
(g) Tenant shall fail to comply with any term, provision or covenant
of this lease (other than the foregoing in this Paragraph 20.01,
and shall not cure such failure within twenty (20) days after
written notice thereof to Tenant.
(h) Tenant shall fail to continuously operate its business at the
premises for the permitted use set forth in Paragraph 5.01 whether
or not Tenant is in default of the rental payment due under
this lease.
20.02 REMEDIES. (a) Upon the occurrence of any of such events of
default described in Paragraph 20.01 hereof. Landlord shall have the option to
pursue any one or more of the following remedies without any notice or demand
whatsoever;
(1) Terminate this lease, in which event Tenant shall immediately
surrender the premises to Landlord, and if Tenant fails so to
do, Landlord may, without prejudice to any other remedy which it
may have for possession or arrearages in rent, enter upon and take
possession of the premises and expel or remove Tenant and any other
person who may be occupying such premises or any part thereof, by
force if necessary, without being liable for prosecution or any
claim of damages therefore.
(2) Enter upon and take possession of the premises and expel or remove
Tenant and any other person who may be occupying such premises or
any part thereof, by force if necessary, without being liable for
prosecution or any claim for damages therefor, and relet the
premises and receive the rent therefor.
(3) Enter upon the premises, by force if necessary, without being
liable for prosecution or any claim for damages therefore, and do
whatever Tenant is obligated to do under the terms of this lease;
and Tenant agrees to reimburse Landlord on demand for any expenses
which Landlord may incur in thus effecting compliance with Tenant's
obligations under this lease, and Tenant further agrees that
Landlord shall not be liable for any damages resulting to the
Tenant from such action, whether caused by the negligence of
landlord or otherwise.
(4) Alter all locks and other security devices at the premises without
terminating this lease.
(b) In the event Landlord may elect to regain possession of the premises
by a forcible detainer proceeding, Tenant hereby specifically waives any
statutory notice which may be required prior to such proceeding, and agrees that
Landlord's execution of this lease is, in part, consideration for this waiver.
(c) In the event Tenant fails to pay any installment of rent hereunder
as when such installment is due, to help defray the additional cost to Landlord
for processing such late payments Tenant shall pay to Landlord on demand a late
charge in an amount equal to five (5%) percent of such installment; and the
failure to pay such amount within five (5) days after demand therefore shall be
an event of default hereunder. The provision for such late charge shall be in
addition to all of Landlord's other rights and remedies hereunder or at law and
shall not be construed as liquidated damages or as limiting Landlord's remedies
in any manner.
(d) In the event Tenant's check, given to Landlord in payment, is
returned by the bank for non-payment, Tenant agrees to pay all expenses incurred
by Landlord as a result thereof.
(e) Exercise by Landlord of any one or more remedies hereunder granted
or otherwise available shall not be deemed to be an acceptance of surrender of
the premises by Tenant, whether by agreement or by operation of law, it being
understood that such surrender can be effected only by the written agreement of
Landlord and Tenant. No such alteration of locks or other security devices and
no removal or other exercise of dominion by Landlord over the property of Tenant
or others at the premises shall be deemed unauthorized or constitute a
conversion, Tenant hereby consenting, after any event of default, to the
aforesaid exercise of dominion over Tenant's property within the premises. All
claims for damages by reason of such re-entry and/or repossession and/or
alteration of locks or other security devices are hereby waived, as are all
claims for damages by reason of any distress warrant, forcible detainer
proceedings, sequestration proceedings or other legal process. Tenant agrees
that any re-entry by Landlord may be pursuant to judgment obtained in forcible
detainer proceedings or other legal proceedings or without the necessity for any
legal proceedings, as the Landlord may elect, and Landlord shall not be liable
for trespass or otherwise.
(f) In the event Landlord elects to terminate the lease by reason of an
event of default, then notwithstanding such termination, Tenant shall be liable
for and shall pay to Landlord, at the address specified for notice to Landlord
herein, the sum of all rental and other indebtedness accrued to date of such
termination, plus, as damages, an amount equal to the greater of (i) the total
rental hereunder for the remaining portion of the lease term (had such term not
been terminated by Landlord prior to the date of expiration and (ii) the then
present value of the then fair rental value of the premises for such period.
(g) In the event that Landlord elects to repossess the premises without
terminating the lease, or in the event Landlord elects to terminate the lease,
then Tenant at Landlord's option, shall be liable for and shall pay to Landlord,
at the address specified for notice to Landlord herein, all rental and other
indebtedness accrued to the date of such repossession, plus rental required to
be paid by Tenant to Landlord during the remainder of the lease term until the
date of expiration of the term as stated in Section 3.01 diminished by any net
sums thereafter received by Landlord through reletting the premises during said
period (after deducting expenses incurred by Landlord as provided in
subparagraph 20.02(h). In no event shall Tenant be entitled to any excess of
any rental obtained by reletting over and above the rental herein reserved.
Actions to collect amounts due by Tenant to Landlord under this subparagraph may
be brought from time to time, on one or more occasions, without the necessity of
Landlord's waiting until expiration of the lease term.
(h) In case of any event of default or breach by Tenant, or threatened
or anticipatory breach or default, Tenant shall also be liable for and shall pay
to Landlord, at the address specified for notice to Landlord herein, in addition
to any sum provided to be paid above, brokers' fees incurred by Landlord in
connection with reletting the whole or any part of the premises; the costs of
removing and storing Tenant's or other occupant's property; the costs of
repairing, altering, remodeling or otherwise putting the premises into condition
acceptable to a new tenant or tenants, and all reasonable expenses incurred by
Landlord in enforcing or defending Landlord's rights and/or remedies including
reasonable attorney's fees.
(i) In the event of termination or repossession of the premises for an
event of default. Landlord shall not have any obligation to relet or to attempt
to relet the premises, or any portion thereof, or to collect rental after
reletting; and in the event of reletting, Landlord may relet the whole or any
portion of the premises for any period to any tenant and for any use and
purpose.
Landlord:_________ Tenant:________
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<PAGE> 7
(j) If Tenant should fail to make any payment or cure any default
hereunder within the time herein permitted, Landlord, without being under any
obligations to do so and without thereby waiving such default, may make such
payment and/or remedy such other default for the account of Tenant (and enter
the premises for such purpose), and thereupon Tenant shall be obligated to, and
hereby agrees, to pay Landlord upon demand, all costs, expenses and
disbursements (including reasonable attorney's fees) incurred by Landlord in
taking such remedial action.
(k) In the event that Landlord shall have taken possession of the
premises pursuant to the authority herein granted then Landlord shall have the
right to keep in place and use all of the furniture, fixtures and equipment at
the premises, including that which is owned or leased to Tenant at all times
prior to any foreclosure thereon by Landlord or repossession thereof by any
lessor thereof or third party having a lien thereon, Landlord shall also have
the right to remove from the premises (without the necessity of obtaining a
distress warrant,writ of sequestration or other legal process) all or any
portion of such furniture, fixtures, equipment and other property located
thereon and to place same in storage at any premises within the County in which
the premises is located; and in such event. Tenant shall be liable to Landlord
for costs incurred by Landlord in connection with such remeoval and storage.
Landlord shall also have the right to relinquish possession of all or any
portion of such furniture, fixtures, equipment and other property to any person
("Claimant") claiming to be entitled to possession thereof who presents to
landlord a copy of any instrument represented to Landlord by Claimant to have
been executed by Tenant (or an predecessor Tenant) granting Claimant the right
under various circumstances to take possession of such furniture, fixtures,
equipment or other property, without the necessity on the part of Landlord to
inquire in to the authenticity of said instrument's copy of Tenant's or Tenant's
predecessor's signature(s) thereon and without the necessity of Landlord making
any nature of investigation or inquiry as to the validity of the factual or
legal basis upon which Claimant purports to act; and Tenant agrees to indemnify
and hold Landlord harmless from all cost, expense, loss, damage and liability
incident to Landlord's relinquishment of possession of all or any portion of
such furniture, fixtures, equipment or other property to Claimant. Any and all
property which may be removed from the Premises by Landlord pursuant to the
authority of this Lease or of Law, to which Tenant is or may be entitled, may be
handled, removed and stored, as the case may be, by or at the direction of
Landlord at the risk, cost and expense of Tenant, and Landlord shall in no event
be responsible for the value, preservation or safekeeping thereof. Tenant shall
pay to Landlord, upon demand any and all expenses incurred in such removal and
all storage charges against such property so long as the same shall be in
Landlord's possession or under Landlord's control. Any such property of Tenant
not retaken by Tenant from storage within thirty (30) days after the removal
from the Premises shall conclusively be presumed to have been conveyed by Tenant
to Landlord under this Lease as a bill of sale without further payment or credit
by Landlord to Tenant. The rights of Landlord herein stated shall be in addition
to any and all other rights which Landlord has or may hereafter have at law or
in equity; and Tenant stipulates and agrees that the rights herein granted
Landlord are commercially reasonable.
21.01 RIGHTS RESERVED TO LANDLORD. Landlord reserves and may exercise
the following rights without affecting Tenant's obligations hereunder:
(a) To change the name of the street address of the Building or
the Development;
(b) To install and maintain a sign or signs on the exterior of the
Building;
(c) To designate all sources furnishing sign painting and lettering,
lamps and bulbs used on the Premises;
(d) To retain at all times pass keys to the Premises;
(e) To grant to anyone the exclusive right to conduct any particular
business or undertaking in the building or the Development;
(f) To change the arrangement and/or location of entrances and
corridors in and to the Building and to add, remove, rename or
modify buildings, roadways, parking areas, walkways, landscaping,
lakes, grading and other improvements in or to the Development.
22.01 RELOCATION OF PREMISES. Landlord reserves the right to relocate
Tenant during the Term to other premises in the Building or in another building
with the Development (the "New Premises"), in which event the New Premises shall
be deemed to be the Premises for all purposes under this Lease, provided: (a)
the New Premises shall be similar to the Premises in area and appropriateness
for the use of Tenant's purposes; (b) if Tenant is then occupying the Premises,
Landlord shall pay the reasonable expense of moving Tenant, its property and
equipment to the New Premises and such moving shall be done at such time and in
such manner so as to cause the least inconvenience to Tenant; (c) Landlord shall
give to Tenant not less than thirty (30) days prior written notice of such
substitution; and (d) Landlord shall, at its sole cost, improve the New Premises
with improvements substantially similar to those located in the Premises.
23.01 LANDLORD'S LIEN*.
24.01 SUBORDINATION. Tenant accepts this Lease subject and
subordinate to any mortgage and/or deed of trust now or at any time hereafter
constituting a lien or charge upon the Development, the Building, or the
Premises, without the necessity of any act or execution of any additional
instrument of subordination; provided, however, that if the mortgagee, trustee,
or holder of any such mortgage or deed of trust elects to have Tenant's
interest in this Lease superior to any such instrument, then by notice to
Tenant from such mortgagee, trustee or holder, this Lease shall be deemed
superior to such lien, whether this Lease was executed before or after said
mortgage or deed of trust. Tenant shall at any time hereafter on demand execute
any instruments, releases or other documents which may be required by any
mortgagee for the purpose of evidencing the subjection and subordination of
this Lease to the lien of any such mortgage or for the purpose of evidencing
the superiority of this Lease to the lien of any such mortgage as may be the
case.
25.01. MECHANICS LIENS AND OTHER TAXES. (a) Tenant shall have no
authority, express or implied, to create or place any lien or encumbrance of
any kind or nature whatsoever, upon, or in any manner to bind the interests of
Landlord in the premises or to charge the rentals payable hereunder for any
claim in favor of any person dealing with Tenant, including those who may
furnish materials or perform labor for any construction or repairs, and each
such claim shall affect and each such lien shall attach to, if at all, only the
leasehold interest granted to Tenant by this instrument. Tenant covenants and
agrees that it will pay or cause to be paid all sums legally due and payable by
it on account of any labor performed or materials furnished in connection with
any work performed on the premises on which any lien is or can be validly and
legally asserted against its leasehold interest in the premises or the
improvements thereon and that it will save and hold Landlord harmless from any
and all loss, cost or expense based on or arising out of asserted claims or
liens against the leasehold estate or against the right, title and interest of
the Landlord in the premises or under the terms of this lease. Tenant agrees to
give Landlord immediate written notice if any lien or encumbrance
Landlord: _______________ Tenant: __________________
*Landlord agrees to delete Paragraph 23.01, Landlord's Lien, but
reserves any statutory lien for rent in Landlord's favor as well as all remedies
provided by law and all rights and remedies under the Uniform Commercial Code.
7
<PAGE> 8
is placed on the premises.
(b) Tenant shall be liable for all taxes levied or assessed against
personal property, furniture or fixtures placed by Tenant in the premises. If
any such taxes for which Tenant is liable are levied or assessed against
Landlord or Landlord's property and if Landlord elects to pay the same or if the
assessed value of Landlord's property is increased by inclusion of personal
property, furniture or fixtures placed by Tenant in the premises, and Landlord
elects to pay the taxes based on such increase, Tenant shall pay to Landlord
upon demand that part of such taxes.
26.01 NOTICES. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivery of any notice or the making of any payment
shall be deemed to be complied with when and if the following steps are taken:
(a) All rent and other payments required to be made by Tenant to Landlord
shall be payable to: Trammell Crow Associated Companies or to such other entity
at the such other address as Landlord may specify from time to time by written
notice delivered in accordance herewith.
(b) Any notice or document required or permitted to be delivered hereunder
shall be deemed to be delivered, whether actually received or not, when
deposited in the United States Mail, postage prepaid, Certified or Registered
Mail, addressed to the parties hereto at the respective addresses set out below,
or at such other address as they have theretofore specified by written notice
delivered in accordance herewith:
<TABLE>
<S> <C>
Landlord: Tenant:
Crow-Childress-Donner, Limited Manchester Equipment Company, Inc.
c/o Trammell Crow Company 902 Clint Moore Road
6400 Congress Avenue Suite 144
Suite 2000 Boca Raton, FL 33487
Boca Raton, FL 33487
</TABLE>
If and when included within the term "Landlord", or "Tenant", as used in
this instrument, there is more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address for the receipt of notices
and payments. All parties included within the terms "Landlord" and "Tenant",
respectively, shall be bound by notices given in accordance with the provisions
of this paragraph to the same effect as if each had received such notice.
27.01 MISCELLANEOUS. (a) Words of any gender used in this Lease shall be
held or construed to include any other gender, and words in the singular number
shall be held to include the plural, unless the context otherwise requires.
(b) The terms, provisions and covenants and conditions contained in this
Lease shall apply to, inure to the benefit of, and be binding upon, the parties
hereto and upon their respective heirs, legal representatives, successors and
permitted assigns, except as otherwise herein expressly provided. Landlord shall
have the right to assign any of its rights and obligations under this Lease and
Landlord's grantee or Landlord's successor, as the case may be, shall upon such
assignment, become Landlord hereunder, thereby freeing and relieving the grantor
or assignor, as the case may be, of all covenants and obligations of Landlord
hereunder. Each party agrees to furnish to the other, promptly upon demand, a
corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the due authorization of such party to
enter into this Lease. Nothing herein contained shall give any other tenant in
the Development or the Building any enforceable rights either against Landlord
or Tenant as a result of the covenants and obligations of either party set forth
herein. If there is more than one Tenant, the obligations of Tenant shall be
joint and several. Any indemnification of, insurance of, or option granted to
Landlord shall also include or be exercisable by Landlord's agents and
employees.
(c) The captions inserted in this Lease are for convenience only and in no
way define, limit or otherwise describe the scope or intent of this Lease, or
any provision hereof, or in any way affect the interpretation of this Lease.
(d) In no event shall Landlord's liability for any breach of this Lease
exceed the amount of rental then remaining unpaid for the then current Term
(exclusive of any renewal periods which have not then actually commenced). This
provision is not intended to be a measure or agreed amount of Landlord's
liability with respect to any particular breach and shall not be utilized by any
court or otherwise for the purpose of determining any liability of Landlord
hereunder, except only as a maximum amount not to be exceeded in any event. In
addition, it is expressly understood and agreed that nothing in this Lease shall
be construed as creating any liability against Landlord, or its successors and
assigns, personally, and in particular without limiting the generality of the
foregoing, there shall be no personal liability to pay any indebtedness accruing
hereunder or to perform any covenant, either express or implied, herein
contained, and that all personal liability of Landlord, or its successors and
assigns, of every sort, if any, is hereby expressly waived by Tenant, and that
so far as Landlord, or its successors and assigns is concerned Tenant shall look
solely to the Building for the payment thereof.
(e) Except as set forth in Section 8.01 above, this Lease may not be
altered, changed or amended except by an instrument in writing signed by both
parties hereto.
(f) All obligations of Tenant not fully performed as of the expiration or
earlier termination of the term of this Lease shall survive the expiration or
earlier termination of the Term, including without limitation, all payment
obligations with respect to Operating Costs and all obligations concerning the
condition of the Premises. Upon the expiration or earlier termination of the
Term, and prior to Tenant vacating the Premises, Landlord and Tenant shall
jointly inspect the Premises and Tenant shall pay to Landlord any amount
estimated by Landlord as necessary to put the Premises, including without
limitation heating and air conditioning systems and equipment therein, in good
condition and repair. Any work required to be done by Tenant prior to its
vacation of the Premises which has not been completed upon such vacation, shall
be completed by Landlord and billed to Tenant at cost plus fifteen percent.
Tenant shall also, prior to vacating the Premises, pay to Landlord the amount,
as estimated by Landlord, of Tenant's obligation hereunder for Operating Costs.
All such amounts shall be used and held by Landlord for payment of such
Landlord: ____________ Tenant: ____________
8
<PAGE> 9
obligations of Tenant hereunder, with Tenant being liable for any additional
costs therefor upon demand by Landlord, or with any excess to be returned to
Tenant after all such obligations have been determined and satisfied, as the
case may be. Any security deposit held by Landlord shall be credited against the
amount payable by Tenant under this Section.
(g) If any clause, provision or portion of this Lease or the application
thereof to any person or circumstance shall be invalid or unenforceable under
applicable law, such event shall not affect, impair or render invalid or
unenforceable the remainder of this Lease nor any other clause, phrase,
provision or portion hereof, nor shall it affect the application of any clause,
phrase, provision or portion hereof to other persons or circumstances, and it is
also the intention of the parties to this Lease that in lieu of each such
clause, phrase, provision or portion of this Lease that is invalid or
unenforceable, there be added as a part of this Lease a clause, phrase,
provision or portion as similar in terms to such invalid or unenforceable
clause, phrase, provision or portion as may be possible and be valid and
enforceable.
(h) Submission of this Lease shall not be deemed to be a reservation of the
Premises. Landlord shall not be bound hereby until its delivery to Tenant of an
executed copy hereof signed by Landlord, already having been signed by Tenant,
and until such delivery Landlord reserves the right to exhibit and lease the
Premises to other prospective tenants. Notwithstanding anything contained herein
to the contrary Landlord may withhold delivery of possession of the Premises
from Tenant until such time as Tenant has paid to Landlord the security deposit
required hereunder and the first month's rent as required hereunder, and any
other sums required hereunder.
(i) Tenant shall at any time and from time to time within ten (10) days
after written request from Landlord, execute and deliver to Landlord an estoppel
certificate, in form reasonable satisfactory to Landlord.
(j) Whenever a time period is prescribed for action to be taken by
Landlord, Landlord shall not be liable or responsible for, and there shall be
excluded from the computations for any such time period, any delays due to
causes beyond the control of Landlord.
(k) Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over a time. Levels of radon that exceed federal
and state guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from your county
public health unit. The above statement is incorporated in the lease as a
requirement in order to comply with Florida Statute 404.056(8).
(l) A Rider is hereby attached which further outlines the terms and
conditions of this Lease.
28.01 Effective Date. All references in this Lease to "the date hereof"
or similar references shall be deemed to refer to the last date in point of
time, on which all parties hereto have executed this Lease.
The parties intending to be bound hereby execute or cause this Lease to be
executed the ______, 19__.
<TABLE>
<S> <C>
WITNESSES: LANDLORD:
CROW-CHILDRESS-DONNER, LIMITED
By:
Leo V. Ghitis
Title: Agent
TENANT:
MANCHESTER EQUIPMENT COMPANY, INC.
- --------------------------------------------- --------------------------------------------
By: /s/
Barry Steinberg
Title: President
Landlord: ______________ Tenant: ____________
</TABLE>
9
<PAGE> 10
RIDER TO THE LEASE AGREEMENT BETWEEN
CROW-CHILDRESS-DONNER, LIMITED, A TEXAS LIMITED
PARTNERSHIP ("LANDLORD") AND
MANCHESTER EQUIPMENT COMPANY, INC. A NEW YORK CORPORATION ("TENANT")
FOR PREMISES LOCATED AT:
902 Clint Moore Road, Suite 144, Boca Raton, FL 33442
_____________________________________________________
29.01 Tenant Improvements - The Landlord agrees to provide leasehold
improvments based on a mutually acceptable floor plan utilizing
building standard materials. These improvements are currently
outlined in Exhibit C-1 and will be at the Landlord's expense up
to a maximum amount of $25.00 per rentable square foot.
EXECUTED the __________ day of ____________________, 19___
ATTEST/WITNESS LANDLORD
______________________________ Crow-Childress-Donner, Limited
Title ________________________
______________________________ By: __________________________
Title ________________________ Title ________________________
ATTEST/WITNESS TENANT
______________________________ Manchester Equipment Company, Inc.
Title ________________________
______________________________ By: __________________________
Title ________________________ Title ________________________
<PAGE> 11
CCP Phase II Building 4
EXHIBIT A
LEGAL DESCRIPTION
Approximately 2,448 square feet of office and/or warehouse space located in a
building containing approximately 53,090 square feet situated on a portion of
approximately 9.49 acres on a parcel of land lying in Section 6, Township 47
South, Range 43 East and being more particularly described as 902 Clint Moore
Road, Suite 144, Boca Raton, Florida 33487, as shown in Exhibit B. Further
described as Congress Corporate Plaza, Phase II situated within a development
known as Congress Corporate Plaza consisting of approximately 106,180 square
feet.
<PAGE> 12
EXHIBIT "B"
INITIALS: Landlord: Tenant:
[CHART]
<PAGE> 13
EXHIBIT "C-1"
[CHART]
<PAGE> 14
EXHIBIT E
ENVIRONMENTAL MATTERS
(1) Tenant's Covenants Regarding Hazardous Materials.
(A) Compliance with Environment Laws. Tenant shall at all times and in
all respects comply with all federal, state and local laws, ordinances and
regulations ("Hazardous Materials Laws") relating to industrial hygiene,
environmental protection or the use, analysis, generation, manufacture,
storage, presence, disposal or transportation of any oil, flammable explosives,
asbestos, urea formaldehyde, radioactive materials or waste, or other
hazardous, toxic, contaminated or polluting materials, substances or wastes,
including, without limitations, any "hazardous substances," "hazardous wastes,"
hazardous materials" or "toxic substances" under any such laws,
ordinances or regulations (collectively, "Hazardous Materials").
(B) Hazardous Materials Handling. Tenant shall at it own expense
procure, maintain in effect and comply with all conditions of any and all
permits, licenses and other governmental and regulatory approvals required for
Tenant's use of the Premises, including, without limitation, discharge of
(appropriately treated) materials or wastes into or through any sanitary sewer
serving the Premises. Except as discharged into the sanitary sewer in strict
accordance and conformity with all applicable Hazardous Materials Laws, Tenant
shall cause any and all Hazardous Materials removed from the Premises to be
removed and transported solely by duly licensed haulers to duly licensed
facilities for final disposal of such materials and wastes. Tenant shall in all
respect handle, treat, deal with and manage any and all Hazardous Materials in
, on under or about the Premises in total conformity will all applicable
Hazardous Materials Laws and prudent industry practices regarding management of
such Hazardous Materials. All reporting obligations imposed by Hazardous
Materials Laws are strictly the responsibility of Tenant. Upon expiration or
earlier termination of the term of the Lease, Tenant shall cause all Hazardous
Materials to be removed from the Premises and transported for use, storage or
disposal in accordance and compliance with all applicable Hazardous Materials
Laws. Tenant shall not take any remedial action in response to the presence of
any Hazardous Materials in or about the Premises or any Building, nor enter
into any settlement agreement, consent decree or other compromise in respect to
any claims relating to any Hazardous Materials in any way connected with the
Premises or Building, without first notifying Landlord of Tenant's intention to
do so and affording Landlord ample opportunity to appear, intervene or
otherwise appropriately assert and protect Landlord's interest with respect
thereto. In addition, at Landlord's request, Tenant shall remove any tanks or
fixtures which contain or contained, or are contaminated with Hazardous
Materials.
(C) Notices. Tenant shall immediately notify Landlord in writing of:
(i) any enforcement, cleanup, removal or other governmental or regulatory
action instituted, completed or threatened pursuant to any Hazardous Materials
Laws; (ii) any claim made or threatened by any person against Tenant, the
Premises or Building relating to damage, contribution, cost recovery
compensation, loss or injury resulting from or claimed to result from any
Hazardous Materials; and (iii) any reports made to any environmental agency
arising out of or in connection with any Hazardous Materials; and (iv) any
reports made to any environmental agency arising out of or in connection with
any Hazardous Materials in, on or removed from the Premises or Building,
including any complaints, notices, warnings, reports or asserted violations in
connection therewith. Tenant shall also supply to Landlord as promptly as
possible, and in any event within five (5) business days after Tenant first
receives or sends the same, with copies of all claims, reports, complaints,
notices, warnings or asserted violations relating in any way to the Premises,
Building or Tenant's use thereof. Tenant shall promptly deliver to Landlord
copies of hazardous waste manifests reflecting the legal and proper disposal of
all Hazardous Materials removed from the Premises.
INITIALS: Landlord: ______ Tenant_________
<PAGE> 15
(2) Indemnification of Landlord. Tenant shall indemnify, defend (by
counsel acceptable to Landlord), protect, and hold Landlord, and each of
Landlord's partners, employees, agents, attorneys, successors and assigns,
penalties, forfeitures, losses or expenses (including attorney's fees) for
death of or injury to any person or damage to any property whatsoever
(including water tables and atmosphere), arising from or caused in whole or in
part, directly or indirectly, by (A) the presence in, on, under or about the
Premises or Building or discharge in or from the Premises or Building of any
Hazardous Materials or Tenant's use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of Hazardous
Materials to, in, on, under, about or from the Premises or Building, or (B)
Tenant's failure to comply with any Hazardous Materials Law whether knowingly
or unknowingly, the standard herein being one of strict liability. Tenant's
obligations hereunder shall include, without limitation, and whether
foreseeable or unforeseeable, all costs of any required or necessary repair,
cleanup or detoxification or decontamination of the Premises or Building, and
the preparation and implementation of any closure, remedial action or other
required plans in connection therewith, and shall survive the expiration or
earlier termination of the term of the Lease. For purposes of the relaese and
indemnity provision hereof, any acts or omissions of Tenant, or by employees,
agents, assignees, contractors or subcontractors of Tenant or others acting
for or on behalf of Tenant (whether or not they are negligent, intentional,
willful or unlawful) shall be strictly attributable to Tenant.
(3) Additional Insurance or Financial Capacity. If at any time it
reasonably appears to Landlord that Tenant is not maintaining sufficient
insurance or other means of financial capacity to enable Tenant to fulfill its
obligation to Landlord hereunder, whether or not then accrued, liquidated,
conditional or contingent, Tenant shall procure and thereafter maintain in full
force and effect such insurance or other form of financial assurance, with or
from companies or persons and in forms reasonably acceptable to Landlord, as
Landlord may from time to time reasonably request. Landlord may procure such
insurance if Tenant fails to meet its obligation hereunder and the cost thereof
shall be passed through to Tenant.
(4) Environmental Audit; Right of Entry. Landlord shall have the right
to require Tenant to undertake and submit to Landlord a periodic environmental
audit from an environmental company approved by Landlord, which audit shall
cover Tenant's compliance with this Section. Tenant shall promptly comply with
all requirements of such audit and cure all matters raised therein at Tenant's
sole cost.
(5) Radon Gas - Radon is a naturally occuring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your county public health unit.
The above statement is incorporated in the lease as a requirement
in order to comply with Florida Statute 404.056(8).
INITIALS: Landlord:________Tenant:________
<PAGE> 16
Trammell Crow Company
6400 Congress Avenue
Suite 2040
Boca Raton, Florida 33487
407-997-9700
407-997-9708 Fax
April 5, 1990
Mr. Barry Steinberg
President
Manchester Equipment Company, Inc.
902 Clint Moore Road
Suite 144
Boca Raton, FL 33434
RE: Rental Concession Ageement for Facility at 902 Clint Moore
Road, Suite 144, Boca Raton, FL 33434
Dear Mr. Steinberg:
Landlord leases the above-referenced facility to Manchester Equipment Company,
Inc., on an initial lease term of sixty (60) months. In consideration of
Manchester Equipment Company, Inc., fulfilling all other terms and obligations
of the sixty (60) month lease, Landlord agrees to abate the base rent of
Manchester Equipment Company, Inc., for the first 12 months from the move-in
date in the monthly amount of $2,321.52. It is agreed that Tenant shall occupy
the above premises base rent free for the aforesaid twelve month
period.
The monthly rental payment is subject to adjustments in accordance with the
lease. Other costs, but not limited to, operating expenses, common area costs,
utilities and security costs, if any, will commence on the "Move-in Date" of
the Lease Agreement. All payments are subject to the applicable state sales
tax.
Please indicate your acceptance of the above by signing one copy of this letter
and returning it to my attention.
Sincerely,
Trammell Crow Company - Commercial AGREED AND ACCEPTED:
South Florida Office Division Manchester Equipment Company,
Inc.
/s/ KEVIN C. O'NEIL /S/
Kevin C. O'Neil By: ____________________________
Project Manager
Date: __________________________
KCO/srk
<PAGE> 17
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE, dated this _____ day of ______________, 1994,
by and between Regent Holding Corporation, c/o Trammell Crow Company whose
address is 6400 Congress Ave., Boca Raton, Florida 33487 (Landlord), and
Manchester Equipment Company, Inc., whose address is 902 Clint Moore Road.
Suite 114, Boca Raton, Florida 33487 (Tenant).
WITNESSETH:
Landlord hereby demises and leases unto Tenant and Tenant hereby hires
and takes from Landlord, upon and subject to the covenants and agreements set
forth in that certain Lease dated August 16, 1990, (the "Lease"), made between
Landlord and Tenant, certain premises (Demised Premises) comprising part of the
commercial real property known as Congress Corporate Plaza, located upon the
tract of land described in Exhibit A attached hereto and made a part thereof,
and consisting of the parcel of land, together with the building(s) erected
thereon.
Landlord and Tenant desire to record this Memorandum of Lease for the
purpose of placing the public on notice of inquiry as to the specific
provisions, terms, covenants and conditions of the Lease, all of which are
incorporated herein by reference with the same force and effect as if herein
set forth in full. Specifically, the Lease contains, among others, the
following covenants and agreements between the parties:
"Neither Tenant nor anyone claiming by, through or under Tenant,
including, without limitation, contractors, subcontractors, materialmen,
mechanics and laborers, shall have any right to file or place mechanic's,
materialmen's or other liens of any kind whatsoever upon the demised premises or
upon the tract of land described on Exhibit A, or any portion thereof; on the
contrary, any such liens are specifically prohibited and shall be null and void
and of no further force or effect."
Notice is hereby given pursuant to Section 713.10, Florida Statutes,
that the Lease contains the following provision:
"Tenant has no power to subject Landlord's interest in the
demised premises to any claim or lien of any kind or character
and any persons dealing with Tenant must look solely to
the credit of the Tenant for payment."
This Memorandum of Lease is being recorded in lieu of recording the
Lease itself for the purpose of placing the public on notice or inquiry as to
the specific provisions, terms, covenants and conditions thereof, and nothing
herein contained is intended to or does change modify or affect any of the
terms or provisions of the Lease or the rights, duties, obligations, easements
and covenants running with the land created hereby, all of which remain in full
force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed and sealed
this Memorandum of Lease as of the day and year first above written.
TENANT:
By: /s/ Barry Steinberg
_________________________________
Signature
Barry Steinberg
______________________________________
Printed Signature
50 Marcus Blvd.
Its: _________________________________
Hauppauge, New York 11788
______________________________________
Post Office Address
PASTU94/Manch.AME
<PAGE> 18
As to Tenant
TENANT
STATE OF NEW YORK
COUNTY OF SUFFOLK
The foregoing instrument was acknowledged before me this 20 day of
July, 1994, by __________________________________, a ______________________
of ___________________________ on behalf of the ___________________________.
The above-named individual / / is personally known to me, or / / has produced
the following identification ________________________________________________
which is current or has been issued within the past five years and bears a
serial or other identifying number and did (did not) take an oath.
[NOTARY SEAL] /s/ Rose Douglass
ROSE DOUGLASS _____________________________________
Notary Public, State of New York Print Name: ROSE DOUGLASS
No. 4979229 NOTARY PUBLIC-STATE OF ______________
Qualified in Suffolk County Commission Number: __________________
Commission Expires March 25, 1995 My Commission Expires:
LANDLORD:
REGENT HOLDING CORPORATION,
A FLORIDA CORPORATION
By: [Signature Illegible]
___________________________________
Title: [Illegible]
________________________________
As to Landlord
LANDLORD
(NOTARIAL SEAL)
STATE OF FLORIDA
COUNTY OF ____________________
The foregoing instrument was acknowledged before me this 15 day of
August, 1994, by [Illegible], a _____________________of ______________________
on behalf of the ____________________________. The above-named individual / /
is personally known to me, or / / has produced the following identification
__________________________________ which is current or has been issued within
the past five years and bears a serial or other identifying number and did (did
not) take an oath.
/s/ Janet Horne
______________________________________
Print Name: JANET HORNE
NOTARY PUBLIC-STATE OF FLORIDA
Commission Number: __________________
My Commission Expires:
JANET HORNE
Notary Public, State of Florida
My Comm. Expires Nov. 1, 1997
No. CC 327293
(NOTARIAL SEAL)
<PAGE> 19
FIRST AMENDMENT TO LEASE AGREEMENT BETWEEN REGENT HOLDING
CORPORATION, A FLORIDA CORPORATION, ("LANDLORD") SUCCESSOR TO
CROW-CHILDRESS-DONNER, LTD., A TEXAS LIMITED PARTNERSHIP AND
MANCHESTER EQUIPMENT COMPANY, INC., A NEW YORK CORPORATION
("TENANT") FOR PREMISES LOCATED AT
902 Clint Moore Road, Suite 144, Boca Raton, Florida 33487
THIS FIRST AMENDMENT TO LEASE is made this 19th day of July, 1994 between REGENT
HOLDING CORPORATION, a FLORIDA CORPORATION, ("Landlord") SUCCESSOR TO CROW-
CHILDRESS-DONNER, LTD., A TEXAS LIMITED PARTNERSHIP AND MANCHESTER EQUIPMENT
COMPANY, INC., A NEW YORK CORPORATION ("Tenant").
BACKGROUND
By the Original Lease dated April 16, 1990 referenced above, Landlord leased to
Tenant approximately 2,448 square feet at 902 Clint Moore Road, Suite 144, Boca
Raton, Florida.
At this time, Landlord and Tenant wish to extend the term of the Lease and
modify the Base Rental.
AGREEMENT
In consideration of the mutual promises of the parties, intending to be legally
bound, hereby agree as follows:
1. The Lease is hereby modified and extended for a period of 36 months,
beginning August 1, 1995 and expiring July 31, 1998 ("the Extended Term").
2. The Base Rent outlined in Paragraph 3.01 and Rent Escalation outlined in
Paragraph 3.02 of the Lease is hereby amended according to the following
schedule:
<TABLE>
<CAPTION>
Month of Extended Term Monthly Base Rent
<S> <C>
July 1, 1994 to July 31, 1995 $1,949.20
August 1, 1995 to July 31, 1996 $2,046.66
August 1, 1996 to July 31, 1997 $2,148.99
August 1, 1997 to July 31, 1998 $2,256.44
</TABLE>
3. Landlord Lien Protection. Neither Tenant nor anyone claiming by, through or
under Tenant, including, without limitation, contractors, subcontractors,
material men, mechanics and laborers, shall have any right to file or place
mechanic's, material men's or other liens of any kind whatsoever upon the
demised premises or upon the tract of land described on Exhibit A, or any
portion thereof; on the contrary, any such liens are specifically prohibited
and shall be null and void and of no further force or effect.
Tenant has no power to subject Landlord's interest in the demised premises
to any claim or lien of any kind or character and any persons dealing with
Tenant must look solely to the credit of the Tenant for payment.
4. Larger Quarters. Provided Tenant is not and has not been in default under
the Lease, and if Tenant desires to expand the premises to a larger space in
property owned by
P:/STU94/Manch.AME
INITIALS: Landlord: /s/ Tenant: /s/
<PAGE> 20
FIRST AMENDMENT TO LEASE AGREEMENT BETWEEN REGENT HOLDING CORPORATION, A FLORIDA
CORPORATION, ("LANDLORD") SUCCESSOR TO CROW-CHILDRESS-DONNER, LTD., A TEXAS
LIMITED PARTNERSHIP AND MANCHESTER EQUIPMENT COMPANY, INC., A NEW YORK
CORPORATION ("TENANT") FOR PREMISES LOCATED AT
902 Clint Moore Road. Suite 144 Boca Raton, Florida 33487
(continued)
Landlord, which space shall be at least 50 percent larger than the
premises, and shall be vacant and available for lease, (the "Larger
Quarters") Tenant shall so notify Landlord in writing (the Notice"),
which notification shall be delivered to Landlord at least 180 days
prior to the date Tenant seeks to effectuate such move. Thereafter, the
parties agree to negotiate with due diligence a new lease for the
Larger Quarters. Upon execution of a new lease, Landlord agrees to
cancel the Lease for the Premises, such cancellation to be effective on
the later to occur of 180 days after delivery of such Notice or the
date Tenant vacates the Premises and commences paying rent on the
Larger Quarters. At the time of the vacation of the Premises, the
parties shall execute an appropriate termination agreement pursuant to
which Tenant shall be responsible for all obligations under this Lease
accruing as of the date of such termination as if such date were the
date originally fixed in this Lease for the expiration of the term
hereof.
5. Except as set forth in this First Amendment, the Lease is not otherwise
modified and where the provisions of this First Amendment conflict with
this Lease, this First Amendment shall override.
WITNESSES: LANDLORD:
Regent Holding Corporation, a Florida
corporation
/s/ Janet Horne By: /s/
- ---------------------------- -------------------------------
/s/ Kathy Orlandi Title:
- ---------------------------- -----------------------------
TENANT:
Manchester Equipment Company, Inc., a
New York corporation
/s/ By: /s/
- ---------------------------- -------------------------------
/s/ Title: President
- ---------------------------- -------------------------------
<PAGE> 1
Exhibit 10.5.g
BUSINESS LEASE
THIS LEASE, entered into this 4th day of Dec. , 1992, between
TRA LIMITED, Lessor, through its agent, THOMPSON-RUBIN ASSOCIATES, and
MANCHESTER EQUIPMENT COMPANY, INC., Lessee:
WITNESSETH: That the Lessor does lease to the Lessee the following
premises located in Hillsborough County, Florida:
Suite 501, Thompson Center, 6304 Benjamin Road, Tampa, Florida 33634,
comprising 1,023 square feet MOL of office space.
TENANT FINISH OUT: Suite shall be remodeled, at Lessors expense,
according to Exhibit "A" (attached).
RENTAL PERIOD: The term of this Lease shall be for Three (3) years;
which term will commence on the 1st day of January, 1993, or when ready for
occupancy (the day following the issuance of the Certificate of Occupancy),
whichever is later, and shall continue until midnight on the 31st day of
December, 1995.
RENTAL: Lessee hereby agrees to pay the following rental during the
term of this Lease:
(A) Monthly rental of $800.00 plus applicable sales tax each and every
month during the initial Two (2) years of the term of this Lease (i.e., the
period from January 1, 1993 through December 31, 1994), payable on the first
day of each month during such period commencing on January 1, 1993. If the
premises are not ready for occupancy on or before January 1, 1993, then the
commencement of the terms of this lease shall be the first day after the
Premises are available and ready for occupancy and the termination date shall
be extended accordingly. Rent for year three (1-1-95 through 12-31-95) shall be
$875.00 monthly, plus applicable sales tax.
In the event the Commencement Date occurs on a day other than the first
day of a calendar month, the first Rental payment shall be in the amount of the
Rental for one (1) full calendar month plus the prorated Rental for the
calendar month in which the term of this Lease commences.
(B) In the event Lessee shall default on the payment of any monthly
rent, pursuant to the default provisions of the Lease, in addition to the
remedies hereinafter provided, Lessor shall have the option of declaring the
entire unpaid balance of the rent, for the remaining term of the Lease to be
immediately due and payable.
(C) Subsequent to such initial year and continuing through the end of
the term of this Lease, the aggregate of the following:
5,6,7
INITIAL INITIAL
/s/ /s/
LESSEE LESSOR
<PAGE> 2
(1) A sum equal to the difference in the total of real estate
taxes, special assessments and building insurance assessed in the lease year
against the real property and the building of which the demised premises is
a part, and the total of these costs assessed in the base year (1993),
multiplied by the percentage which Lessee's demised square footage bears to
all leasable square footage in the improvements upon said parcel of real
property which is 3.43%. Lessor will provide copies of all real estate tax
bills upon request by Lessee; plus
(2) A sum equal to the difference in all operating expenses
incurred by the Lessor in the lease year for furnishing utilities to,
maintaining and otherwise operating the real property and the building of
which the demised premises is a part, and the total of these costs incurred in
the base year (1993), multiplied by the percentage which Lessee's demised
square footage bears to all leasable square footage in the improvements upon
said parcel of real property which is 3.43%. Lessor will provide Lessee with
a statement itemizing such costs upon request by Lessee.
(D) Lessee shall also pay to Lessor any and all rental and sales taxes
imposed by any authority upon the rental hereunder and hereby agrees to
indemnify and save Lessor harmless therefrom.
(E) Lessee shall make all rental payments hereunder on the first day of
each month hereunder. Such rental payments shall be delinquent if not paid by
the seventh day of each month. All such rental payments and any other payments
hereunder shall be paid in lawful money of the United States. Delinquent rent
payments shall be subject to a late charge of 5%.
SECURITY DEPOSIT: The Lessee has deposited with the Lessor the sum of
$1,600.00 as Security for the full and faithful performance by the Lessee of
all the terms, covenants and conditions of this Lease. The Security Deposit
shall be returned to the Lessee at the expiration of this Lease less any sums
required therefrom to enforce the terms of this Lease. Lessor shall have the
right to apply any part of the deposit to cure any default of the Lessee, and
if the Lessor does so, Lessee shall upon demand deposit with Lessor the amount
so applied to restore the Security to the original sum deposited within five
days after receipt of demand therefor.
USE: The premises are leased to Lessee solely for the following use and
no other use can be made of the premises during the term without the prior
written consent of the Lessor:
Office for sales of computer supplies, equipment, related products and any
activities related thereto. No use considered hazardous by Lessor's insurer
shall be allowed.
Lessor represents that the premises will be open and available for Lessor's
use 24 hours per day, 7 days per week.
INITIAL INITIAL
/s/ /s/
LESSEE LESSOR
2
<PAGE> 3
UTILITIES AND TAXES: The Lessor will pay for sewer and for normal water
consumption for wash room facilities. All other costs of water consumption
shall be paid for by Lessee. Lessee agrees to pay the cost of all other
utilities including electricity, gas and trash collection. If these charges are
not paid when due and Lessor is required to pay same, they will be added to the
subsequent month's rent and shall be collectible from Lessee in the same manner
as rent. Lessor shall not be liable for damages to Lessee's business and/or
inventory or for any other claim by Lessee resulting from an interruption in
utility services. Lessee shall pay and hold the Lessor harmless from and on
account of all claims for occupational license, personal property taxes or
other obligations attributable to the operation of the Lessee's business on the
premises. The Lessor will pay all real property taxes and assessments levied by
any lawful authority against the demised premises.
COMPLIANCE WITH LAWS: Lessee covenants that it will not do, suffer or
permit anything to be done in or about the leased premises which will
contravene the policy of any insurance against loss due to fire, theft,
burglary, windstorm and other forms of protective insurance which may be
carried by the Lessor, and that it will abide by all municipal codes and
regulations affecting the leased premises. In addition the Lessee agrees to
abide by the Rules and Regulations established by the Lessor for the demised
premises attached hereto as Exhibit "B" and made a part hereof.
LESSOR'S CONSENT REQUIRED: The Lessee shall not assign this Lease, nor
sub-let the premises, or any part thereof nor use the same, or any part
thereof, nor permit the same, or any part thereof, to be used for any other
purpose than as above stipulated, nor make any alterations therein, and all
additions thereto, without the written consent of the Lessor, such consent
shall not be unreasonably withheld.
LESSOR'S PROPERTY: All alterations, additions, improvements and
fixtures that have become a part of the realty and which has been or will be
installed by either party upon the premises during the term of the Lease and
which, in any manner are attached to the floors, walls or ceilings, shall at
the option of Lessor become the property of the Lessor and at the termination
of this Lease shall be surrendered with the premises as a part thereof, or
shall be removed at Lessee's expense. Computer and electronic equipment which
may be attached to the floors, walls and ceilings, will remain the property of
Lessee.
RISK OF LOSS: All personal property placed or moved in the premises
shall be at the risk of the Lessee or owner thereof. The Lessor shall not be
responsible or liable to the Lessee for any loss or damage that may be
occasioned by or through the act or omissions of persons occupying adjoining
premises or any part of the premises adjacent to or connected with the
premises hereby
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are a part of for any loss or damage resulting to the Lessee or its property
from bursting, stopped up or leaking water, gas, sewer or steam pipes unless
the same is due to the negligence of the Lessor, its agents, servants or
employees.
RIGHT OF ENTRY: Upon reasonable notice to Lessee, and at such times
that a representative of Lessee is present, except in case of emergency,
Lessor, or any of his agents, shall have the right to enter said premises
during all reasonable hours, to examine the same to make such repairs,
additions or alterations as may be deemed necessary for the safety, comfort,
or preservation thereof, or of said building, or to exhibit said premises, and
to put or keep upon the doors or windows thereof a notice "FOR RENT" at any
time within sixty (60) days before the expiration of this Lease. The right of
entry shall likewise exist for the purpose of removing placards, signs,
fixtures, alterations, or additions, which do not conform to this agreement, or
to the rules and regulations of the building.
RESTORING PREMISES TO ORIGINAL CONDITION: Lessee hereby accepts the
premises in the condition they are in at the beginning of this Lease and agrees
to maintain said premises in the same condition, order and repair as they are
at the commencement of said term, and to return at Lessee's expense the
premises to their original condition at the expiration of the term, excepting
only reasonable wear and tear arising from the use thereof under this
agreement. The Lessee agrees to make good to said Lessor immediately upon
demand, any damage to water apparatus, or electric lights or any fixture,
appliances or appurtenances of said premises, or of the walls or the building,
caused by any act or neglect of Lessee or of any person or persons in the
employ or under the control of the Lessee.
MAINTENANCE: Lessor shall keep the foundation, outer walls, roof and
buried conduits of the premises in good repair, except that the Lessor shall
not be called on to make any such repairs occasioned by the negligence of the
Lessee, its agents, express or implied invitees, or employees. Lessee shall
keep the inside of said premises and the exterior doors, windows and window
frames of said premises in good order, condition and repair and shall also keep
the premises in a clean, sanitary and safe condition in accordance with law and
in accordance with Rules and Regulations promulgated by Lessor from time to
time in accordance with all directions, rules and regulations of governmental
agencies having jurisdiction. The Lessee shall be responsible for providing all
light bulbs used on the premises. The plumbing facilities shall not be used for
any other purposes than that for which they are constructed and no foreign
substances of any kind shall be thrown therein and the expense of any breakage,
stoppage or damage resulting from the violation of this provision shall be
borne by the Lessee. The heating and air-conditioning system shall be under the
control of Lessee and Lessee agrees that all operation, upkeep, repairs and
replacements will be at Lessee's expense, except where the repairs or
replacements are covered under a warranty running in favor of Lessor, or are
due to fire or other casualty covered by Lessor's insurance in which latter
event, said repairs or
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replacements shall be done by Lessor at its expense. Lessee shall, at its own
cost and expense, maintain a heating/air-conditioning maintenance agreement with
a third party acceptable to Lessor. Lessee shall provide Lessor with a copy of
said agreement prior to occupancy of the premises. In the event Lessor pays
monies required to be paid by Lessee hereunder, Lessor shall demand repayment
of same from Lessee and Lessee shall make payment within ten (10) days of
receipt of said demand. Lessee's failure to make such repayment within the ten
day period shall constitute a default under the terms of this Lease. Lessor
warrants to Lessee that the air-conditioning and heating in the premises shall
be in good operating condition on the Commencement Date of this Lease.
INSURANCE: Lessor shall insure the building, of which the premises are
a part, against damage by fire, including extended coverage, in any amount
Lessor in its sole discretion shall deem adequate, and shall maintain such
insurance throughout the term hereby demised. Lessee shall insure all of its
property in the premises against damage by fire, including extended coverage,
in any amount as shall be determined by the Lessor in consultation with Lessee,
and Lessee shall maintain such insurance throughout the term hereby demised. In
addition, Lessee shall also maintain with respect to the premises comprehensive
public liability insurance, with minimum limits of $1,000,000, $3,000,000 per
personal injury and $500,000 property damage. The Lessee shall indemnify and
save harmless the Lessor from and against any loss, damage and liability
(except fire loss and losses covered by extended coverage endorsement insured
hereunder) occasioned by, growing out of or arising or resulting from any
default hereunder or any tortuous or negligent act on the part of the Lessee,
its agents, employees or general contractors.
Lessee shall maintain the insurance coverage required herein with a
company or companies acceptable to the Lessor, insuring the Lessor and its
Managing Agent as additional named insureds as well as Lessee, against bodily
injury to or death of persons, and against property damage as herein provided.
Lessee shall deliver certificates of insurance indicating the above specified
coverage to the Lessor upon the commencement of the term of this Lease, and
continuing evidence of such coverage annually. Such insurance policy or
policies shall be in a form reasonaly satisfactory to the Lessor and its
Managing Agent, and shall be placed with a company qualified to do business in
the jurisdiction in which the demised premises are located, and shall provide
that it (they) cannot be canceled without at least ten (10) days prior written
notice to the Lessor.
WAIVER OF SUBROGATION: If either party hereto is paid any proceeds
under any policy of insurance naming such party as an insured on account of any
loss, damage or liability, then such party hereto releases the other party
hereto, to and only to the extent of the amount of such proceeds, from any and
all liability for such loss, damage or liability, notwithstanding that such
loss, damage or liability may arise out of negligent or intentially tortuous
act or omission of the other party, its
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agents or employees, provided that such release shall be effective only with
respect to loss or damage occurring during such time as the appropriate policy
of insurance of the releasing party provides that such release shall not impair
the effectiveness of such policy or the insured's ability to recover
thereunder. Each party hereto shall use reasonable efforts to have a clause to
such effect included in its said policies, and shall promptly notify the other
in writing if such clause cannot be included in any such policy.
DESTRUCTION BY FIRE: If the premises shall be partially damaged by fire
or other casualty, the damages shall be repaired by the Lessor and until such
repairs are made the rent shall be apportioned according to the part of the
premises which is usable by the Lessee. Said repairs shall be made promptly
except that no penalty shall accrue for reasonable delay which may arise by
reason of adjustment of insurance on the part of the Lessor and/or Lessee and
for reasonable delay on account of labor problems or any other cause beyond the
Lessor's and/or Lessee's control. If the premises are totally damaged or
rendered wholly untenable by fire or other casualty, then Lessor shall have the
option of terminating this Lease as of the date of such casualty within thirty
(30) days thereafter by giving written notice of the exercise of such option to
the Lessee and any rents or other payments shall be prorated as of the
effective date of such termination and proportionately refunded to Lessee or
paid to Lessor as the case may be.
FIRE INSURANCE: The Lessee agrees to pay that portion of premiums for
insurance against loss by fire which are in excess of the minimum fire
insurance rating for the type of construction involved in the demised premises
provided that such excess is a direct result of Lessee's use and occupancy.
Lessee agrees that it shall have no interest in any amounts paid by any fire
insurance company to Lessor due to fire or other casualty loss.
EMINENT DOMAIN: If the whole or any part of the premises hereby leased
shall be taken by any public authority under power of eminent domain then the
term of this Lease shall cease on the part so taken from the day the possession
of the part shall be acquired for any public purpose and the rent shall be paid
up to that day and if such portion of the demised premises is so taken as to
destroy the usefulness of the premises for the purpose for which the premises
were leased, then from that day the Lessee shall have the right to either
terminate this Lease or to continue in possession of the remainder of the same
under the terms herein provided, except that the rent shall be reduced in
proportion to the amount of the premises taken. The parties agree that the
Lessee shall not be entitled to any damages by reason of the taking of this
leasehold and shall have no claim against Lessor for the value of any unexpired
term of this Lease, leasehold improvements or goodwill.
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SUBORDINATION: Lessee agrees that this Lease shall be, at Lessor's
option, either prior to or subject and subordinate to the lien of any mortgage
or deed of trust now or hereafter placed upon the premises, and to any
modifications, renewals or extensions thereof. Lessee further agrees to execute
subordination documents as reasonably required by Lessor's mortgagee from time
to time.
DEFAULT: Lessee shall be considered in default of this Lease upon the
happening of any one of the following:
(A) Failure to pay the rent or any other sum required by the terms of
this Lease within fourteen (14) days after Lessee's receipt of written notice
from Lessor.
(B) Failure to perform any term, covenant or condition of this Lease
and the continuance therefore for thirty (30) days after written notice from
Lessor.
(C) The commencement of any action or proceeding for the dissolution or
liquidation of Lessee, or for the appointment of a receiver or trustee of
Lessee's property, and the failure to discharge any such action within thirty
(30) days.
(D) The making of any assignment for the benefit of creditors, or if
Lessee is declared bankrupt.
(E) The abandonment of the premises by the Lessee.
Upon default, as hereinabove defined, Lessor, with notice to Lessee,
may enter upon the premises without terminating the Lease and do any acts which
Lessor may deem necessary to cure such default, and Lessee agrees to pay Lessor
any damage and/or expense incurred thereby.
Furthermore, upon default Lessor may, on ten (10) days advance written
notice to Lessee, terminate this Lease, and with legal process take possession
of the premises, and remove the Lessee or any other occupant. Lessor shall be
entitled to recover as damages from the Lessee an amount equal to the balance
of the rent, together with all legal and other expenses incurred including the
cost of reletting the premises. Lessee shall be credited, however, with any net
amounts received by the Lessor from the reletting of the premises. It is
expressly agreed that Lessor shall not be liable for any failure to relet the
premises. No act of the lessor shall be considered an acceptance of a surrender
of the premises, unless in writing. Lessor may maintain separate actions each
month to recover the damages, without waiting to the end of the term of the
rental of the premises.
ESTOPPEL CERTIFICATES: Lessee agrees, at any time and from time to
time, upon not less than five (5) days prior written notice by Lessor, to
execute, acknowledge and deliver to Lessor or its designee a statement in
writing certifying (1) that this Lease is unmodified and in full force and
effect or if modified, that the Lease as modified is in full force and effect
as stating
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the dates of such modifications, (2) the dates to which rent and other charges
hereunder have been paid by the Lessee, (3) the amount of any prepaid rent or
any credit due to the Lessee hereunder, (4) that Lessee has accepted possession
of the leased premises and the date on which the term commenced, (5) whether,
to the best knowledge of the Lessee, the Lessor is then in default in the
performance of any of its obligations hereunder (and if so specifying the
nature of each such default) and (6) as to any other fact or condition
reasonable requested by the Lessor or its first mortgagee or prospective first
mortgagee or purchaser of any or all of Lessor's interests, or any assignee or
prospective assignee of any interest of Lessor under this Lease.
ENTIRE AGREEMENT: This Lease contains the entire agreement of the
parties in regard to the premises. There are no oral agreements existing
between them.
MECHANIC LIENS: Lessee agrees that Lessee will pay or cause to be paid
all costs for work done by Lessee or caused to be done by Lessee on the
Premises of a character which could, but for the prohibitions hereinafter
contained, result in liens on Lessor's interest therein, and Lessee will keep
the Premises free and clear of all mechanic's liens and other liens on account
of work done for Lessee or persons claiming under Lessee. Lessee agrees to and
shall indemnify and save Lessor free and harmless against liability, loss,
damage, costs or expenses, including attorney's fees and costs of discovery and
suit, on account of claims of liens of laborers or materialmen or others for
work performed for, or materials or supplies furnished to, Lessee or persons
claiming under Lessee.
THE INTEREST OF THE LESSOR SHALL NOT, UNDER ANY CIRCUMSTANCES, BE
SUBJECT TO LIENS FOR IMPROVEMENTS MADE BY THE LESSEE.
A notice concerning this provision of this Lease has been executed by
Lessor and has been recorded with the Clerk of the Court of Hillsborough
County. This Notice reads as follows:
NOTICE REGARDING MECHANIC LIENS
Notice is hereby given of certain lease provisions contained in the
Lease between,
as Lessor, and the Lessee of the Premises on property hereinafter described.
This notice is given pursuant to 713.10, Florida Statutes, (1989). TRA LIMITED
PARTNERSHIP, as Lessor, hereby gives notice as follows:
1. The name of the Lessor is TRA LIMITED PARTNERSHIP.
2. The legal description of the parcel of land to which this notice
applies is described in Exhibit "A" attached hereto and by this reference made
a part hereof.
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3. MECHANIC'S LIEN. Lessee agrees that Lessee will pay or cause to be
paid all costs for work done by Lessee or caused to be done by Lessee on the
Premises of a character which could, but for the prohibitions hereinafter
contained, result in liens on Lessor's interest therein, and Lessee will keep
the Premises free and clear of all mechanic's liens and other liens on account
of work done for Lessee or persons claiming under Lessee. Lessee agrees to and
shall indemnify and save Lessor free and harmless against liability, loss,
damage, costs or expenses, including attorney's fees and costs of discovery and
suit, on account of claims of liens of laborers or materialmen or others for
work performed for, or materials or supplies furnished to, Lessee or persons
claiming under Lessee.
THE INTEREST OF THE LESSOR SHALL NOT, UNDER ANY CIRCUMSTANCES, BE
SUBJECT TO LIENS FOR IMPROVEMENTS MADE BY THE LESSEE.
4. All leases entered into for space in the premises on the parcel of
land described in Exhibit "A" attached hereto contain the language identified
in paragraph 3 above.
LESSOR:
__________________________________
TRA LIMITED PARTNERSHIP
STATE OF FLORIDA :
COUNTY OF HILLSBOROUGH :
The foregoing instrument was acknowledged before me by
___________________________, this ___ day of __________________, 19__.
____________________________________
Notary Public
My Commission Expires:
Lessee agrees that the Public Notice contained above which has been
recorded in the public records of the county where the leased Premises are
located, may be effectively discharged, released, and removed from said public
records by Lesor alone executing and recording in the public records a notice
that the leased Premises are discharged and released from the terms of this
paragraph, as well as all other provisions of this Lease.
MISCELLANEOUS PROVISIONS: The Lessor shall have the unrestricted right
of assigning this Lease at any time, and in the event of such assignment, the
Lessor shall be relieved of all liabilities hereunder after assignment.
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This contract shall bind the Lessor and its assigns or successors, and
the heirs, assigns, administrators, legal representatives, executors or
successors as the case may be of the Lessee.
It is understood and agreed between the parties hereto that the time is
of the essence of this contract and this applies to all terms and conditions
contained herein.
It is understood and agreed between the parties hereto that written
notice mailed or delivered to the premises leased hereunder shall constitute
sufficient notice to the Lessee and written notice mailed or delivered to the
office of the Lessor shall constitute sufficient notice to the Lessor to comply
with the terms of this contract.
The rights of the Lessor under the foregoing shall be cumulative, and
failure on the part of the Lessor to exercise promptly any rights given
hereunder shall not operate to forfeit any of the said rights.
It is hereby understood and agreed that any signs or advertising to be
used, including awnings, in connection with the premises hereunder shall be at
Lessee's expense and shall be first submitted to the Lessor for approval before
installation of same, which approval shall not be unreasonably withheld.
It is hereby understood and agreed that Lessee may have signage
identifying the business and conforming to the park standard, erected over
Lessee's entrance door.
ADDRESSES OF THE PARTIES: All communications or notices required or
permitted under this Lease shall, until notice in writing, be made as follows:
If to Lessor, at: 6302 Benjamin Rd.
Suite 400
Tampa, FL 33634
If to Lessee, at: 6304 Benjamin Rd.
Suite 501
Tampa, FL 33634
and
Manchester Equipment
Company, Inc.
50 Marcus St.
Hauppauge, NY 11788
OTHER: In accordance with Florida Statute 404.056 effective January 1,
1989, the following information is provided:
RADON GAS - Radon is a naturally occurring radioactive gas that when it
has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon
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that exceed federal and state guidelines have been found in buildings in
Florida. Additional information rearding radon and radon testing may be
obtained from your county public health unit.
HAZARDOUS MATERIALS: Lessee shall not (either with or without
negligence) cause or permit the escape, disposal or release of any biologically
or chemically active or other hazardous substances, or materials. Lessee shall
not allow the storage or use of such substances or materials in any manner not
sanctioned by law or by the highest standards prevailing in the industry for
the storage and use of such substances or materials, nor allow to be brought
into the Project any such materials or substances except to use in the ordinary
course of Lessee's business, and then only after written notice is given to
Lessor of the identity of such substances or materials. Without limitation,
hazardous substances and materials shall include those described in the
Comprehensive Environmental Response, Compansation and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section 6901 et seq., any applicable state
or local laws and the regulations adopted under these acts. If any lender or
governmental agency shall ever require testing to ascertain whether or not
there as been any release of hazardous materials, then the reasonable costs
thereof shall be reimbursed by Lessee to Lessor upon demand as additional
charges if such requirement applies to the Premises. In addition, Lessee shall
execute affidavits, representations and the like from time to time at Lessor's
request concerning Lessee's best knowledge and belief regarding the presence of
hazardous substances or materials on the Premises. In all events, Lessee shall
indemnify Lessor in the manner elsewhere provided in this lease from any
release of hazardous materials on the Premises occurring while Lessee is in
possession, or elsewhere if caused by Lessee or persons acting under Lessee.
The within covenants shall survive the expiration or earlier termination of the
lease term.
OPTION TO RENEW: This lease may be renewed for an additional three (3)
years for a fixed rate of $950.00 per month plus applicable taxes. Option to
renew must be exercised by notice given in writing by Lessee to Lessor not less
than 120 days prior to expiration of lease terms.
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IN WITNESS WHEREOF, the parties have executed this Lease Agreement the
day and year first above written.
LESSOR: TRA LIMITED, a Florida
Limited Partnership
Signed in the presence of:
BY: Thompson-Rubin Associates, a
___________________________ Florida general partnership
___________________________ BY: /s/ Donald C. Thompson
As to Lessor ________________________________
DONALD C. THOMPSON
General Partner
LESSEE: MANCHESTER EQUIPMENT
COMPANY, INC.
/s/ BY: /s/
___________________________ ________________________________
Signature
/s/
___________________________ NAME: /s/ BARRY STEINBERG
As to Lessee ______________________________
Print or Type
TITLE: /s/ President
____________________________
DATE: 11/25/92
____________________________
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EXHIBIT A
REMODEL NOTES
MANCHESTER EQUIPMENT COMPANY, INC.
SUITE 501
THOMPSON CENTER I
6304 BENJAMIN ROAD
TAMPA, FL 33634
1. REPAINT SUITE THROUGHOUT - DEVOE #2H4O6 PUSSYWILLOW GRAY, DOOR JAMBS
INCLUDED. REFINISH DOORS WITH CLEAR FINISH.
2. REPLACE VINYL COVE BASE - 4" ROPPE DARK GRAY.
3. INSTALL NEW CARPET - PLATINUM INDUSTRIES DIAMONDBACK 26 OZ.
MOONSHADOW #3005.
4. INSPECT AND REPAIR OR REPLACE LIGHTING, ELECTRICAL AND PLUMBING
FIXTURES IF NEEDED.
5. INSPECT AND REPAIR OR REPLACE HVAC SYSTEM IF NEEDED.
6. CLEAN ALL SURFACES, BLINDS, AND WINDOWS.
7. INSPECT AND REPAIR OR REPLACE WALLS, CEILING TILE AND GRID IF
NEEDED.
8. ALL FINISHES AND CONSTRUCTION TO MATCH EXISTING.
[CHART]
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EXHIBIT "B"
THOMPSON CENTER
RULES AND REGULATIONS FOR PARK OCCUPANTS
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PURPOSE
Thompson Center was established to provide commercial enterprises
requiring office, showroom, warehouse, or light industrial space a desirable
home for their business. Since there will be many types and variations of
businesses included, it becomes necessary to provide rules and regulations so
all occupants will continue to enjoy this environment. It is this objective
that has led to the formulation of these rules for all businesses housed in
Thompson Center. These rules will be kept flexible and may be modified, if
necessary, for the overall benefit of park occupants.
We hope you enjoy our park. If you ever have a problem of any type,
please contact Thompson-Rubin Associates and we will make every effort to
promptly resolve it.
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RULES AND REGULATIONS
1. No land or property within the Center shall be used for any purpose other
than as permitted by the City of Tampa zoning regulation for M-AP zoning or
as stipulated in the lease.
2. No materials or products shall be manufactured or stored that constitute a
nuisance or cause the emission of noxious odors or gases or smoke. No
burning of materials, outside or inside, will be permitted.
3. No fence, wall, loading facility, outside storage facility, or permanent
improvements will be erected or constructed without the prior written
approval of the Lessor.
4. Lessee will keep their premises safe, clean, neat and provide for the
removal of trash from their premises.
5. No materials, supplies or products shall be stored outside without the
prior written approval of the Lessor.
6. Occupants shall not cause or make any excessive noise, odor, harmful sewage
or vibration that could be deemed objectionable to other tenants.
7. No signs are to be erected other than the standard format. Signs are not to
be erected other than on the provided space of the space occupied.
8. Each tenant is to maintain an adequate pest control program for his type of
enterprise.
9. A fifteen (15) mile per hour speed limit is to be observed within the park
complex.
10. No employee parking will be permitted on the streets or in the park other
than in the areas designated by the Lessor.
11. All enterprises are to be conducted in a business-like manner.
12. Only lawful endeavors will be permitted for occupants of Thompson Center.
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AMENDMENT TO LEASE #1
TRA Limited, hereinafter referred to as Lessor, and MANCHESTER
EQUIPMENT COMPANY, INC., hereinafter referred to as Lessee, agree as follows:
1. Lessor and Lessee have entered into a lease (the "Lease" dated the
4th day of December, 1992.
2. The lease relates to the following leasehold premises: Suite 501,
Thompson Center, 6304 Benjamin Road, Tampa, Florida 33634,
comprising 1,023 square feet MOL of office space.
3. This Amendment is issued for the following purposes:
A. To extend the rental period on Suite 501.
B. To adjust the RENTAL RATE.
-----------
C. To correct square footage paragraph.
D. To add a new paragraph JOINT AND SEVERAL LIABILITY.
----------------------------
E. To add a new paragraph CORPORATE TENANCY.
------------------
F. To add a new paragraph LIMITATION ON LESSOR'S LIABILITY.
---------------------------------
G. To add a new paragraph PROHIBITION FROM RECORDING OF LEASE.
------------------------------------
H. To add a new paragraph BROKERAGE COMMISSION.
---------------------
I. To add a new paragraph ATTORNEY'S FEES.
----------------
J. To add a new paragraph INTERPRETATIONS.
----------------
4. Lessor and Lessee agree that the following Amendments will be made
to said Lease, namely:
A. RENTAL PERIOD: The term of this Lease which was to terminate on
--------------
December 31, 1995 shall be extended for one (1) year from
the 1st day of January, 1966 through December 31, 1996.
B. RENTAL: Lessee hereby agrees to pay the following adjusted rental
-------
rate commencing on January 1, 1996 in conjunction with
this Lease extension:
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Amendment to Lease #1 (TRAL)
LESSEE LESSOR
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(1) Monthly rental of $918.75 plus state sales tax and trash disposal
charges each and every month (i.e., the period from January 1, 1996 through
December 31, 1996), payable on the first day of each month during such period.
C. The paragraph describing the leased premises on the first page of the
original lease, dated December 4, 1992 is modified to correct the square
footage leased as follows:
Suite 501, Thompson Center, 6304 Benjamin Road, Tampa, Florida 33634,
comprising 1,048 square feet MOL of office space.
The following paragraphs shall be added to the Lease:
D. JOINT AND SEVERAL LIABILITY: If two or more individuals,
corporations, partnerships, or other business associations (or any combination
of two or more thereof) shall sign this Lease as Lessee, the liability of each
such individual, corporaion, partnership or other business association to pay
rent and perform all other obligations hereunder shall be deemed to be joint
and several. In like manner, if the Lessee named in this Lease shall be a
partnership or other buisness association, the members of which are, by virtue
of statute or general law, subject to personal liability, the liability of each
such member shall be joint and several.
E. CORPORATE TENANCY: If Lessee is a corporation, the undersigned
officer of Lessee hereby warrants and certifies to Lessor that Lessee is a
corporation in good standing and is authorized to do business in the
State of Florida. The undersigned officer of Lessee hereby further warrants and
certifies to Lessor that he or she, as such officer, is authorized and
empowered to bind the corporation to the terms of this Lease by his or her
signature thereto.
F. LIMITATION ON LESSOR'S LIABILITY: The term "Lessor" shall mean only
the ownership entity, for the time being of the building in which the Premises
is located, and in the event of the transfer by such entity of its interest in
said building, such entity shall thereupon be released and discharged from all
covenants and obligations of the Lessor thereafter accruing, but such covenants
and obligations shall be binding during the Lease Term upon each new owner for
the duration of that owner's ownership. Notwithstanding any other provision
hereof, Lessor shall not have any personal liability hereunder. In the event of
any breach or default by Lessor in any term of provision of this Lease, Lessee
agrees, in the pursuit of any remedy, to look solely to Lessor's insurance
coverage and assets then owned by Lessor, and not to the assets of Lessor's
general partners.
INITIAL INITIAL
Manchester Equipment Company, Inc.-
Amendment to #1 (TRAL) /s/ /s/ Page 2 of 4
LESSEE LESSOR
<PAGE> 19
G. PROHIBITION FROM RECORDING OF LEASE: Neither this Lease, nor any
memorandum or other form of this Lease, shall be recorded in the Public
Records by any party, whether or not a signatory to this Lease, except as
provided for in the paragraph entitled "Mechanics Liens".
H. BROKERAGE COMMISSION: Both Lessor and Lessee warrant that there are
no claims for broker's commissions or finder's fees in connection with its
execution of this Lease, except as same pertains to THOMPSON-KIRK
PROPERTIES, INC., and Lessee agrees to indemnify and save Lessor harmless
from any liability that may arise from such claim (other than the broker(s)
mentioned above), including reasonable attorney's fees.
I. ATTORNEY'S FEES: In the event either party commences any action or
proceeding under this Lease to enforce any right or remedy hereunder, the
prevailing party shall be entitled to recover its reasonable costs and
attorney's fees.
J. INTERPRETATIONS: This Agreement shall not be construed more strictly
against one party than against the other merely by virtue of the fact that
it may have been prepared by counsel for one of the parties, it being
recognized that both Lessor and Lessee have contributed substantially and
materially to the preparation of this Agreement.
5. Lessor and Lessee ratify and affirm all other provisions of the
Lease dated the 4th day of December, 1992.
IN WITNESS WHEREOF, the Lessor and Lessee executed the foregoing
Amendment on the 22nd day of January, 1996.
LESSOR: TRA LIMITED,
a Florida Limited Partnership
Signed in the presence of:
BY: Its General Partner,
Thompson-Rubin Associates,
Virginia Winters a Florida General Partnership
- -------------------------
Witness
Ganilet Padron BY: Donald C. Thompson
- ------------------------- -------------------------------
Witness DONALD C. THOMPSON
General Partner
INITIAL INITIAL
Manchester Equipment Company, Inc.- /s/ /s/ Page 3 of 4
Amendment to Lease #1 (TRAL)
LESSEE LESSOR
<PAGE> 20
LESSEE: MANCHESTER EQUIPMENT
COMPANY, INC.
__/s/______________________ BY: __/s/___________________________
Witness Signature
__/s/______________________ NAME:___/s/BARRY STEINBERG__________
Witness Print or Type
TITLE:_President____________________
Print or Type
DATE: __1/8/96______________________
INITIAL INITIAL
Manchester Equipment Company, Inc. -
Amendment to Lease # 1 (TRAL) /s/ /s/ Page 4 of 4
LESSEE LESSOR
<PAGE> 1
Exhibit 10.5.h
FROM THE OFFICE OF
STANDARD FORM COMMERCIAL LEASE
1. PARTIES E & S Associates
(fill in) LESSOR, which expression shall include its heirs,
successors, and assigns where the context so admits,
does hereby lease to Manchester Equipment Company,
Inc., a New York Corporation, doing business at 160
Oser Avenue, Hauppauge, NY 11788
LESSEE, which expression shall include their
successors, executors, administrators, and assigns
where the context so admits, and the LESSEE hereby
leases the following described premises:
2. PREMISES Suite 211 consisting of approximately 2070 rentable
(fill in and include, square feet located on the second floor of the Needham
if applicable, suite Office Building, 161 Highland Avenue, Needham, MA 02194
number, floor
number, and square
feet)
together with the right to use in common, with others
entitled thereto, the hallways, stairways, and
elevators necessary for access to said leased premises,
and lavatories thereto.
3. TERM The term of this lease shall be for not less than five
(fill in) (5) years commencing on April 15, 1992 and ending on
April 30, 1997.
4. RENT The LESSEE shall pay to the LESSOR rent at the rate of
(fill in) dollars per year, payable in advance in
monthly installments of . See Section 23
5. SECURITY Upon the execution of this lease, the LESSEE shall pay
DEPOSIT to the LESSOR the amount of $3450.00 dollars, which
(fill in) shall be held as a security for the LESSEE's
performance as herein provided and refunded to the
LESSEE at the end of this lease subject to the LESSEE's
satisfactory compliance with the conditions hereof.
6. RENT If in any tax year commencing with the fiscal year
ADJUSTMENT 1993, the real estate taxes on the land and buildings,
of which the leased premises are a part, are in excess
of the amount of the real estate taxes thereon for the
A. TAX fiscal year 1992 (hereinafter called the "Base Year"),
ESCALATION LESSEE will pay to LESSOR as additional rent hereunder,
(fill in or when and as designated by notice in writing by LESSOR,
delete) 8 per cent of such excess that may occur in each year
of the term of this lease or any extension or renewal
thereof and proportionately for any part of a fiscal
year. If the LESSOR obtains an abatement of any such
excess real estate tax, a proportionate share of such
abatement, less the reasonable fees and costs incurred
in obtaining the same, if any, shall be refunded to the
LESSEE.
B. OPERATING The LESSEE shall pay to the LESSOR as additional rent
COST hereunder when and as designated by notice in writing
ESCALATION by LESSOR, 8 per cent of any increase in operating
(fill in or expenses over those incurred during the calendar year
delete) 1992. Operating expenses are defined for the purposes
of this agreement as: Heat, Light and Power, Insurance,
Licenses and Fees, Management Fees, Payroll,
Professional Services, Repairs and Maintenance, Water
and all other charges normally incurred in the
operation of said property.
This increase shall be prorated should this lease be
in effect with respect to only a portion of any
calendar year.
C. CONSUMER (1) LESSEE agrees that in the event the "Consumer Price
PRICE Index for Urban Wage Earners and Clerical Workers, U.S.
ESCALATION City Average, All Items (1967 = 100)" (Hereinafter
(fill in or referred to as the "Price Index") published by the
delete) Bureau of Labor Statistics of the United States
Department of Labor, or any comparable successor or
substitute index designated by the LESSOR appropriately
adjusted, reflects an increase in the cost of living
over and above the cost of living as reflected by the
Price Index for the month of , 19 (hereinafter
called the "Base Price Index"), the Basic Rent shall
be adjusted in accordance with sub-paragraph (2) of
this Article.
Not Applicable
COPYRIGHT (C) 1968
GREATER BOSTON REAL ESTATE BOARD
REVISED 1981
All rights reserved. This form may not be copied or reproduced in whole or in
part in any manner whatsoever without the prior ex-
<PAGE> 2
(2) Commencing as of the first anniversary of the Term
Commencement Date, there shall be an adjustment
(hereinafter referred to as "Adjustment") in the Basic
Rent calculated by multiplying the Basic Rent set forth
in Article 4 of the lease by a fraction, the numerator
of which shall be the Price Index for the month of
, 19 and the denominator of which (for each
such fraction) shall be the Base Price Index; PROVIDED,
HOWEVER, no Adjustment shall reduce the Basic Rent as
previously payable in accordance with this Article or
in Article 4 of this lease.
Not Applicable
(3) In the event the Price Index ceases to use the 1967
average of 100 as the basis of calculation, or if a
substantial change is made in the terms or number of
items contained in the Price Index, then the Price
Index shall be adjusted to the figure that would have
been arrived at had the manner of computing the Price
Index in effect at the date of this lease not been
changed.
Not Applicable
7. UTILITIES The LESSEE shall pay, as they become due, all bills for
electricity and other utilities (whether they are used
for furnishing heat or other purposes) that are
delete "air furnished to the leased premises and presently
conditioning" separately metered, and all bills for fuel furnished to
not applicable a separate tank servicing the leased premises
exclusively. The LESSOR agrees to provide all other
utility service and to furnish reasonably hot and cold
water and reasonable heat and air conditioning (except
to the extent that the same are furnished through
separately metered utilities or separate fuel tanks as
set forth above) to the leased premises, the hallways,
stairways, elevators, and lavatories during normal
business hours on regular business days of the heating
and air conditioning seasons of each year, to furnish
elevator service and to light passageways and stairways
during business hours, and to furnish such cleaning
service as is customary in similar buildings in said
city or town, all subject to interruption due to any
accident, to the making of repairs, alterations, or
improvements, to labor difficulties, to trouble in
obtaining fuel, electricity, service, or supplies from
the sources from which they are usually obtained for
said building, or to any cause beyond the LESSOR's
control.
LESSOR shall have no obligation to provide utilities or
equipment other than the utilities and equipment within
the premises as of the commencement date of this lease.
In the event LESSEE requires additional utilities or
equipment, the installation and maintenance thereof
shall be the LESSEE's sole obligation, provided that
such installation shall be subject to the written
consent of the LESSOR.
8. USE OF LEASED The LESSEE shall use the leased premises only for the
PREMISES purpose of Office use
(fill in)
9. COMPLIANCE The LESSEE acknowledges that no trade or occupation
WITH LAWS shall be conducted in the leased premises or use made
thereof which will be unlawful, improper, noisy or
offensive, or contrary to any law or any municipal
by-law or ordinance in force in the city or town in
which the premises are situated.
10. FIRE INSURANCE The LESSEE shall not permit any use of the leased
premises which will make voidable any insurance on the
property of which the leased premises are a part, or on
the contents of said property or which shall be
contrary to any law or regulation from time to time
established by the New England Fire Insurance Rating
Association, or any similar body succeeding to its
powers. The LESSEE shall on demand reimburse the
LESSOR, and all other tenants, all extra insurance
premiums caused by the LESSEE's use of the premises.
11. MAINTENANCE The LESSEE agrees to maintain the leased premises in
good condition, damage by fire and other casualty only
A. LESSEE'S excepted, and whenever necessary. to replace plate
OBLIGATIONS glass and other glass therein, acknowledging that the
leased premises are now in good order and the glass
whole. The LESSEE shall not permit the leased premises
to be overloaded, damaged, stripped, or defaced, nor
suffer any waste. LESSEE shall obtain written consent
of LESSOR before erecting any sign on the premises.
Lessor will supply initial door and building directory
signage.
B. LESSOR'S The LESSOR agrees to maintain the structure of the
OBLIGATIONS building of which the leased premises are a part in the
same condition as it is at the commencement of the term
or as it may be put in during the term of this lease,
reasonable wear and tear, damage by fire and other
casualty only excepted, unless such maintenance is
required because of the LESSEE or those for whose
conduct the LESSEE is legally responsible.
ALTERATIONS - The LESSEE shall not make structural alterations or
ADDITIONS additions to the leased premises, but may make
non-structural alterations provided the LESSOR consents
thereto in writing, which consent shall not be
unreasonably withheld or delayed. All such allowed
alterations shall be at LESSEE's expense and shall be
in quality at least equal to the present construction.
LESSEE shall not permit any mechanics' liens, or
similar liens, to remain upon the leased premises for
labor and material furnished to LESSEE or claimed to
have been furnished to LESSEE in connection with work
of any character performed or claimed to have been
performed at the direction of LESSEE and shall cause
any such lien to be released of record forthwith
without cost to LESSOR. Any alterations or improvements
made by the LESSEE shall become the property of the
LESSOR at the termination of occupancy as provided
herein.
ASSIGNMENT - The LESSEE shall not assign or sublet the whole or any
SUBLEASING part of the leased premises without LESSOR's prior
written consent. Notwithstanding such consent, LESSEE
shall remain liable to LESSOR for the payment of all
rent and for the full performance of the covenants and
conditions of this lease.
such consent shall not be unreasonably withheld
<PAGE> 3
SUBORDINATION This lease shall be subject and subordinate to any and all
mortgages, deeds of trust and other instruments in the
nature of a mortgage, now or at any time hereafter, a lien
or liens on the property of which the leased premises are a
part and the LESSEE shall, when requested, promptly execute
and deliver such written instruments as shall be necessary to
show the subordination of this lease to said mortgages, deeds
of trust or other such instruments in the nature of a mortgage.
LESSOR'S The LESSOR or agents of the LESSOR may, at reasonable times,
ACCESS enter to view the leased premises and may remove placards and
signs not approved and affixed as herein provided, and make
repairs and alterations as LESSOR should elect to do and may
show the leased premises to others, and at any time within
three (3) months before the expiration of the term, may affix
to any suitable part of the leased premises a notice for letting
or selling the leased premises or property of which the leased
premises are a part and keep the same so affixed without
hindrance or molestation. A representative of the Lessee shall
be present at such times excluding emergencies.
INDEMNIFI- The removal of snow and ice from the sidewalks bordering upon
CATION AND the leased premises shall be Lessor's responsibility.
LIABILITY
(fill in)
LESSEE'S The LESSEE shall maintain with respect to the leased premises
LIABILITY and the property of which the leased premises are a part
INSURANCE comprehensive public liability insurance in the amount of
(fill in) $1,000,000.00 with property damage insurance in limits of
single aggregate* in responsible companies qualified to do
business in Massachusetts and in good standing therein insuring
the LESSOR as well as LESSEE against injury to persons or
damage to property as provided. The LESSEE shall deposit with
the LESSOR certificates for such insurance at or prior to the
commencement of the term, and thereafter within thirty (30)
days prior to the expiration of any such policies. All such
insurance certificates shall provide that such policies shall
not be cancelled without at least ten (10) days prior written
notice to each assured named therein.
*limit of liability
FIRE, Should a substantial portion of the leased premises, or of the
CASUALTY - property of which they are a part, be substantially damaged by
EMINENT fire or other casualty, or be taken by eminent domain, the
DOMAIN LESSOR may elect to terminate this lease. When such fire,
casualty, or taking renders the leased premises substantially
unsuitable for their intended use, a just and proportionate
abatement of rent shall be made, and the LESSEE may elect to
terminate this lease if:
(a) The LESSOR fails to give written notice within
thirty (30) days of intention to restore leased
premises, or
(b) The LESSOR fails to restore the leased premises
to a condition substantially suitable for their
intended use within ninety (90) days of said fire,
casualty or taking.
The LESSOR reserves, and the LESSEE grants to the LESSOR, all
rights which the LESSEE may have for damages or injury to the
leased premises for any taking by eminent domain, except for
damage to the LESSEE'S fixtures, property, or equipment.
DEFAULT In the event that:
AND (a) The LESSEE shall default in the payment of any
BANKRUPTCY installment of rent or other sum herein specified
(fill in) and such default shall continue for ten (10) days
after written notice thereof; or
(b) The LESSEE shall default in the observance or
performance of any other of the LESSEE's covenants,
agreements, or obligations hereunder and such
default shall not be corrected within thirty (30)
days after written notice thereof; or
(c) The LESSEE shall be declared bankrupt or insolvent
according to law, or, if any assignment shall be
made of LESSEE's property for the benefit of
creditors,
then the LESSOR shall have the right thereafter, while such
default continues, to re-enter and take complete possession of
the leased premises, to declare the term of this lease ended,
and remove the LESSEE's effects, without prejudice to any
remedies which might be otherwise used for arrears of rent or
other default. The LESSEE shall indemnify the LESSOR against all
loss of rent and other payments which the LESSOR may incur by
reason of such termination during the residue of the term. If
the LESSEE shall default, after reasonable notice thereof, in
the observance or performance of any conditions or covenants on
LESSEE's part to be observed or performed under or by virtue of
any of the provisions in any article of this lease, the LESSOR,
without being under any obligation to do so and without thereby
waiving such default, may remedy such default for the account
and at the expense of the LESSEE. If the LESSOR makes any
expenditures or incurs any obligations for the payment of money
in connection therewith, including but not limited to,
reasonable attorney's fees in instituting, prosecuting or
defending any action or proceeding, such sums paid or
obligations insured, with interest at the rate of 18 percent per
annum and costs, shall be paid to the LESSOR by the LESSEE as
additional rent.
NOTICE Any notice from the LESSOR to the LESSEE relating to the leased
(fill in) premises or to the occupancy thereof, shall be deemed duly
served, if left at the leased premises addressed to the LESSEE,
or if mailed to the leased premises, registered or certified
mail, return receipt requested, postage prepaid, addressed to
the LESSEE. Any notice from the LESSEE to the LESSOR relating to
the leased premises or to the occupancy thereof, shall be deemed
duly served, if mailed to the LESSOR by registered or certified
mail, return receipt requested, postage prepaid, addressed to
the LESSOR at such address as the LESSOR may from time to time
advise in writing. All rent notices shall be paid and sent to
the LESSOR at 161 Highland Avenue, Needham, MA 02194.
<PAGE> 4
21. SURRENDER The LESSEE shall at the expiration or other termination of
this lease remove all LESSEE's goods and effects from the
leased premises, (including, without hereby limiting the
generality of the foregoing, all signs and lettering affixed
or painted by the LESSEE, either inside or outside the leased
premises). LESSEE shall deliver to the LESSOR the leased
premises and all keys, locks thereto, and other fixtures
connected therewith and all alterations and additions made
to or upon the leased premises, in good condition, damage by
fire or other casualty only excepted. In the event of the
LESSEE's failure to remove any of LESSEE's property from the
premises, LESSOR is hereby authorized, without liability to
LESSEE for loss or damage thereto, and at the sole risk of
LESSEE, to remove and store any of the property at LESSEE's
expense, or to retain same under LESSOR's control or to sell
at public or private sale, without notice any or all of the
property not so removed and to apply the net proceeds of such
sale to the payment of any sum due hereunder, or to destroy
such property.
22. BROKERAGE The Broker(s) named herein None
(Fill in or
delete) warrant(s) that he (they) is (are) duly licensed as such by
the Commonwealth of Massachusetts, and join(s) in this
agreement and become(s) a party hereto, insofar as any
provisions of this agreement expressly apply to him (them),
and to any amendments or modifications of such provisions to
which he (they) agree(s) in writing.
LESSOR agrees to pay the above-named Broker upon the term
commencement date a fee for professional services of
or pursuant to Broker's attached commission schedule.
23. OTHER It is also understood and agreed that
PROVISIONS
1. The Lessee shall pay to the Lessor rent at the rate of:
$20,700.00 per year payable in advance in monthly
installments of $ 1725.00 for years 1 through 3, and
$22,770.00 per year payable in advance in monthly
installments of $1897.50 for years 4 and 5.
2. Lessee will have one 5 year option to renew the Lease at
the, then current, market rate rents, not to exceed $18.00
PSF for the first year of said option.
3. Lessor will, at Lessor's sole expense, build-out the
demised premise in accordance with the attached plan.
(Exhibit A), and in accordance with the Standard Tenant
Leasehold Allowances attached. (Exhibit B)
WITNESS WHEREOF, the said parties hereunto set their hands and seals this 26th
day of February, 1992.
/s/ BARRY STEINBERG /s/
_____________________________________ ______________________________________
LESSEE Manchester Equipment Company LESSOR E & S Realty Associates
Inc.
authorized signature
_____________________________________ ______________________________________
LESSEE LESSOR
_____________________________________
<PAGE> 5
EXHIBIT A
[BLUEPRINT]
PLAN -- MANCHESTER EQUIPMENT CO., INC.
FEBRUARY 7, 1992
<PAGE> 6
EXHIBIT B
STANDARD TENANT LEASEHOLD ALLOWANCE
Landlord shall perform the following work and installation in the demised
premises at Landlord's sole cost and expense (except as may expressly be
otherwise provided herein) in the initial preparation for Tenant's occupancy.
I. Partitions
Partitions within a single premises will be metal studs with one layer
of drywall on each side. Partitions will extend from the floor to the
underside of the acoustic tile ceiling. Demising partitions will be
insulated.
II. Doors
All doors within a single premises will be 7 foot by 3 foot, solid core
with natural birch veneer. Door frames will be pressed metal. Hardware
will include 1 1/2 pairs of butts, one standard duty latchset and one
door stop.
III. Ceilings
All ceilings will be mechanically suspended acousticaltile in a grid
system. Tiles shall be mineral fiber.
IV. Floor Coverings
Within demised premises, Tenants will select carpeting from Building
Standard samples.
V. Painting and Wall Coverings
All wall surfaces shall receive two coats of flat paint. Color
selection will be made from Building Standard samples with not more
than two colors per room.
IV. Lighting
Landlord will supply and install 2' x 4' recessed Parabolic fluorescent
lighting fixtures containing three, 40-watt rapid-start tubes at a
ratio of one fixture per 80 square feet of net rentable area, or as
otherwise required.
VII. Electric Outlets
One standard wall base duplex electrical outlet will be provided for
each 150 square feet of net usable area, or as otherwise required, as
noted on Exhibit A.
<PAGE> 1
EXHIBIT 10.6.a
PROMISSORY NOTE
$9,500,000.00 Date: Dec. 11, 1995
For Value Received, MANCHESTER EQUIPMENT CO, INC., a New York
corporation (the "Borrower"), hereby promises to pay to the order of THE BANK OF
NEW YORK (the "Bank") at its 1100 Old Country Road, Plainview, New York 11803
office, the principal sum of Nine Million Five Hundred Thousand Dollars
($9,500,000.00) or the aggregate unpaid principal amount of all advances made by
the Bank to the Borrower (which aggregate unpaid principal amount shall be equal
to the amount duly endorsed and set forth opposite the date last appearing on
the sheet attached to this note), whichever is less.
Advances hereunder shall bear interest at a rate per annum equal to: (1)
the "Alternate Base Rate" (as hereinafter defined), such rate to change on the
effective date of any change in the "Alternate Base Rate", or (2) such rate
(the "Note Rate") as shall be agreed to between the Bank and the Borrower at the
time of each advance, which Note Rate shall remain fixed until the Maturity Date
(as hereinafter defined) of such advance.
As used herein "Alternate Base Rate" shall mean, for any day a rate per
annum equal to the higher of (i) the Prime Rate in effect on such day and (ii)
the Federal Funds Rate in effect on such day plus 1/2 of 1%. For purposes of
this definition: (A) "Prime Rate" shall mean the prime commercial lending rate
of the Bank as publicly announced to be in effect from time to time, such rate
to be adjusted automatically, without notice, on the effective date of any
change in such rate, and (B) "Federal Funds Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published
<PAGE> 2
2
for such day (or if such day is not a business day, for the next preceding
business day) by the Federal Reserve Bank of New York, or if such rate is not so
published for any day which is a business day, the average of quotations for
such day on such transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank. Any advance hereunder which
shall not be paid when due shall bear interest at a rate per annum equal to the
Alternate Base Rate plus two percent (2%), such rate to change on the effective
date of any change in the Alternate Base Rate.
Advances hereunder which bear interest at the Alternate Base Rate shall
be payable on demand and may be prepaid in whole at any time or in part from
time to time. Advances hereunder which bear interest at the Note Rate shall be
payable on a maturity date (the "Maturity Date") as shall be agreed to between
the Bank and the Borrower at the time of each advance. The Borrower shall not
have the right to prepay any advance which bears interest at the Note Rate.
Interest shall be computed on the basis of a 360 day year for the actual
number of days involved. Interest on any advance shall be payable on the last
business day of the month, and at maturity.
The Bank shall endorse the Note Rate and the Maturity Date applicable to
each advance which bears interest at the Note Rate on the sheet attached to this
note. The Bank shall charge the Borrower's deposit account maintained at the
Bank for each payment of principal and interest due hereunder on the due date
thereof. If the Bank shall make a new advance on a day on which the Borrower is
to repay an advance hereunder, the Bank shall apply the proceeds of the new
advance to make such repayment and only the amount by which the amount being
advanced exceeds the amount being repaid shall be made available to the Borrower
<PAGE> 3
3
in accordance with the terms of this note. The Borrower hereby authorizes the
Bank to accept telephonic instructions from a duly authorized representative of
the Borrower to make an advance or receive a repayment hereunder and to endorse
the sheet attached to this note accordingly. All advances made hereunder shall
be credited to the Borrower's deposit account referred to above, which credits
shall be confirmed to the Borrower by standard advice of credit. The Borrower
agrees that the actual crediting of the sum of money so borrowed to the
Borrower's deposit account shall constitute conclusive evidence that the advance
was made, and the failure of the Bank to endorse the amount of any advance on
the sheet attached to this note or to forward to the Borrower an advice of
credit shall not affect the obligation of the Borrower to repay such advance.
All advances made hereunder are secured pursuant to the terms of a
General Loan and Security Agreement executed by the Borrower in favor of the
Bank and this note is entitled to all the benefits thereof.
All advances made hereunder shall become immediately due and payable,
together with all accrued interest, upon the insolvency, general assignment,
receivership, bankruptcy or dissolution of the Borrower. The Borrower does
hereby forever waive presentment, demand, protest, notice of protest and notice
of nonpayment or dishonor of this note.
The Borrower hereby agrees to pay all reasonable expenses incurred by
the Bank incidental to or in any way relating to the Bank's enforcement of the
obligations of the Borrower hereunder, including but not limited to, reasonable
attorney's fees incurred by the Bank.
The Borrower waives the right to trial by jury in any action, proceeding
or counterclaim instituted with respect to this note.
<PAGE> 4
4
The provisions of this note shall be construed and interpreted and all
rights and obligations hereunder determined in accordance with the laws of the
State of New York.
MANCHESTER EQUIPMENT CO., INC.
By: /s/ Barry Steinberg
--------------------------------
Barry Steinberg
Title: President
--------------------------------
<PAGE> 1
Exhibit 10.6.b
GENERAL LOAN AND SECURITY AGREEMENT
Plainview, New York Dec. 2, 1993
- -------------------
(Banking Office)
FOR VALUE RECEIVED, and in order to induce THE BANK OF NEW YORK
(hereinafter referred to as the "Bank"), in its discretion, to make loans or
otherwise extend credit at any time, and from time to time to, or at the
request of, the undersigned (hereinafter referred to as "Borrower"), whether
the loans or credit so extended shall be absolute or contingent. Borrower,
jointly and severally, if more than one, hereby grants to the Bank, as security
for all present or future obligations or liabilities of any and all kinds of
Borrower to it, whether incurred by Borrower as maker, endorser, drawer,
acceptor, guarantor, accommodation party or otherwise, matured or unmatured,
secured or unsecured, absolute or contingent, joint or several, and howsoever
or whensoever acquired by the Bank (all of which are hereinafter referred to as
the "Obligations"), a security interest in and a lien upon all personal
property and fixtures of Borrower now or hereafter existing or acquired and
wherever located which are of the type which may be collateral under the
Uniform Commercial Code as in effect in the State of New York (hereinafter
referred to as the "Code") on the date hereof, now or hereafter owned or
acquired by Borrower, or in which Borrower may have an interest, including all
goods (other than household goods as such term is defined in 12 CFR Part 227
unless the proceeds of the Obligation secured pursuant hereto are used to
purchase such goods or such Obligation is incurred for a business purpose or to
purchase real property), money, instruments, accounts, contract rights,
documents, chattel paper and general intangibles of Borrower, including but not
limited to any property specified in Schedule A hereto and also including all
products and proceeds of, all accessions to, and substitutions for, all of the
foregoing (all of which shall be hereinafter collectively referred to as the
"Collateral").
Borrower hereby agrees to deliver to the Bank whenever called for by it
such additional collateral security of a kind and of a market value
satisfactory to the Bank, so that there will, at all times, be with the Bank a
margin of security for the payment of all Obligations which shall be
satisfactory to it. In addition to the Bank's security interest in the
Collateral, it shall have, and Borrower hereby grants to the Bank, a security
interest and a lien for all the Obligations in and upon any personal property
of Borrower or in which Borrower may have an interest which is now or may at
any time hereafter come into the possession or control of the Bank, or of any
third party acting on its behalf, whether for the express purpose of being used
by the Bank as collateral security or for safekeeping or for any other or
different purpose, including such personal property as may be in transit by
mail or carrier for any purpose, or covered or affected by any documents in the
Bank's possession or control, or in the possession or control of any third
party acting on its behalf. Borrower hereby authorizes the Bank in its
discretion, at any time, whether or not the Collateral is deemed by it
adequate, to appropriate and apply upon any of the Obligations, whether or not
due, any of such property of Borrower and to charge any of the Obligations
against any balance of any account standing to the credit of Borrower on the
books of the Bank (said additional personal property is also hereinafter
referred to as the "Collateral").
If any of the following events shall occur with respect to any Obligor
(which term shall include Borrower and any endorser or guarantor of any of the
Obligations): (1) the failure of Borrower to furnish satisfactory additional
Collateral upon demand; (2) the failure of any Obligor in the performance of
any of such Obligor's covenants herein or in any instrument, document or
agreement delivered in connection with any Obligation; (3) the death of the
insured under any life insurance policy held as Collateral, or the non-payment
of any premiums on any such life insurance policy; (4) default by any Obligor
with respect to the payment of any Obligation; (5) the insolvency, general
assignment, receivership, bankruptcy, or dissolution of any Obligor or the
filing of any petition by or against any Obligor with respect to any of the
foregoing; (6) the death, dissolution or incompetence of any Obligor; (7) the
financial condition or credit standing of any Obligor shall be or become
materially impaired in the sole opinion of the Bank or any of its officers; (8)
non-payment when due of any other liability of any Obligor; (9) the
commencement of any proceeding, procedure or other remedy supplemental to the
enforcement of a judgment against any Obligor; (10) any representation in any
financial or other statement of any Obligor delivered to the Bank by or on
behalf of any Obligor is untrue or incomplete; or (11) any Obligor shall fail,
on request, to furnish any financial information or to permit inspection of
such Obligor's books and records; then all Obligations shall become due and
payable forthwith, upon declaration to that effect by the Bank, without notice
to Borrower or any other Obligor, anything contained herein or in any other
document, instrument or agreement to the contrary notwithstanding.
Upon failure of Borrower to pay any Obligation when becoming or made
due, as aforesaid, the Bank shall have, in addition to all other rights and
remedies allowed by law, the rights and remedies of a secured party under the
Code as in effect at that time and, without limiting the generality of the
foregoing, the Bank may immediately, without demand of performance and without
notice of intention to sell or of time or place of sale or of redemption or
other notice or demand whatsoever to Borrower, all of which are hereby
expressly waived, and without advertisement (a) sell at public or private sale,
grant options to purchase or otherwise realize upon, in the State of New York,
or elsewhere, the whole or from time to time any part of the Collateral upon
which the Bank shall have a security interest or lien as aforesaid, or any
interest which Borrower may have therein, and (b) exercise any and all rights,
options, powers, benefits or privileges given to the Bank upon the life
insurance policies, if any, held as Collateral. After deducting from the
proceeds of any such sale or other disposition of the Collateral all expenses
(including all reasonable expenses for legal services of every kind and other
expenses as set forth below), the Bank shall apply the residue of such proceeds
toward the payment of any of the Obligations, in such order as the Bank shall
elect, Borrower remaining liable for any deficiency, plus interest thereon,
remaining unpaid after such application. If notice of any sale or other
disposition is required by law to be given, Borrower hereby agrees that a
notice sent at least two days before the time of any intended public sale or of
the time after which any private sale or other disposition of the Collateral is
to be made, shall be reasonable notice of such sale or other disposition.
Borrower also agrees to assemble the Collateral at such place or places as the
Bank designates by written notice.
At any such sale or other disposition the Bank or any other person
designated by the Bank may itself purchase the whole or any part of the
Collateral sold, free from any right of redemption on the part of Borrower,
which right is hereby waived and released.
The Bank may, without any notice to Borrower, in its discretion,
whether or not any of the Obligations be due, in its name or in the name of
Borrower, demand, sue for, collect and receive any money or property at any
time due, payable or receivable on or on account of or in exchange for, and may
compromise, settle or extend the time of payment of, any of the demands or
obligations represented by any of the Collateral, and may also exchange any of
the Collateral for other property upon the reorganization, recapitalization or
other readjustment of the issuer, maker or other person who is obligated on or
otherwise has liabilities with respect to the Collateral, and in connection
therewith, may deposit any of the Collateral with any committee or depositary
upon such terms as the Bank may in its discretion deem appropriate, and
Borrower does hereby constitute and appoint the Bank Borrower's true and lawful
attorney to compromise, settle or extend payment of said demands or
obligations and exchange such Collateral as Borrower might or could do
personally; all without liability or responsibility for action herein
authorized and taken or not taken in good faith. The Bank is entitled at any
time in its discretion to notify an account debtor or the obligor on any
instrument to make payment to it, regardless of whether or not Borrower had
been previously making collections on the Collateral, and the Bank may take
control of any proceeds of any of the Collateral.
Borrower agrees that the Collateral secures, and further agrees to pay
on demand, all expenses (including reasonable expenses for legal services of
every kind and cost of any insurance and payment of taxes or other charges) of
or incidental to, the custody, care, sale or collection of, or realization
upon, any of the Collateral or in any way relating to the enforcement or
protection of the rights of the Bank hereunder.
Borrower agrees to mark its books and records as the Bank shall request
in order to reflect the rights of the Bank granted herein, and the Bank may, in
its sole discretion, take possession of the Collateral at any time, either
prior to or subsequent to a default under any of the Obligations. Borrower
agrees to maintain such insurance on the Collateral as the Bank may require.
The Bank may, without any notice to Borrower, in its discretion, and for its
own benefit, lend, use, transfer or repledge with any person, firm or
corporation all or any part of the Collateral by itself or mingled with the
property of others, in bulk or otherwise. The Bank may, without any notice to
Borrower, sell, assign or transfer any of the Obligations and the Bank's rights
and duties hereunder, and may deliver the Collateral, or any part thereof, to
the assignee or transferee of any of the Obligations, who shall become vested
with all the rights, remedies, powers, security interests and liens herein
given to the Bank in respect thereto; and the Bank shall thereafter be relieved
and fully discharged from any liability or responsibility in the premises.
<PAGE> 2
The Bank may, without any notice to Borrower, in its discretion,
transfer, or cause to be transferred, all or any part of the Collateral to its
name, or to the name of its nominee, vote the Collateral so transferred, and
receive income and make or receive collections, including money, thereon and
hold said income and collections as Collateral or apply the said income and
collections to any of the Obligations, the manner and distribution of the
application to be made as the Bank shall elect.
Calls for Collateral, demand for payment or notice to Borrower may be
given by leaving same at the address given below or any other address hereafter
filed with the Bank, or by mailing same to such address with the same effect as
if delivered personally. Such notice given in the manner herein provided shall
be effective whether or not received by Borrower. Borrower agrees not to change
any of its places of business, remove any records of Borrower relating to any
of the Collateral or move any of the Collateral without giving the Bank thirty
days' prior written notice.
With respect to the Collateral, the Bank shall be under no duty to send
notices, perform services, exercise any rights of collection, enforcement,
conversion or exchange, vote, pay for insurance, taxes or other charges or take
any action of any kind in connection with the management thereof and its only
duty with respect thereto shall be to use reasonable care in its custody and
preservation while in its possession, which shall not include any steps
necessary to preserve rights against prior parties.
Borrower hereby authorizes the Bank at Borrower's expense to file one
or more financing statements to perfect the security interests granted herein
without Borrower's signature thereon, and Borrower agrees to do, file, record,
make, execute and deliver all such acts, deeds, things, notices, instruments,
and financing statements as the Bank may request in order to perfect and
enforce the rights of the Bank herein.
If at any time it is necessary in the opinion of counsel to the Bank
that any or all of the securities held as Collateral (the "Pledged Securities")
be registered under the Securities Act of 1933, as amended, or that an
indenture with respect thereto be qualified under the Trust Indenture Act of
1939 in order to permit the sale or other disposition of the Pledged
Securities. Borrower shall at the Bank's request and at the expense of Borrower
use the best efforts of Borrower promptly to cause the registration of the
Pledged Securities and the qualification of such indenture and to continue such
registration and qualification as long as deemed appropriate by the Bank.
Borrower hereby authorizes the Bank to date this agreement as of the
date of the granting of any Obligation secured hereby and to complete any blank
space herein (including any blank space in Schedule A) according to the terms
upon which said Obligation was granted.
No failure on the part of the Bank to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Bank of any right,
remedy or power hereunder preclude any other or future exercise of any other
right, remedy or power.
Each and every right, remedy and power hereby granted to the Bank or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by the Bank from time to time.
Borrower and each endorser or guarantor of any of the Obligations
expressly waives presentment and demand for payment, protest and notice of
protest and of non-payment. Unless the text otherwise requires, all terms used
herein shall have the meanings specified in the Code.
THE BANK AND BORROWER HEREBY WAIVE AND AGREE TO WAIVE THE RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM INSTITUTED WITH RESPECT
TO ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT.
The provisions of this agreement shall be construed and interpreted and
all rights and duties hereunder determined in accordance with the laws of the
State of New York.
Every provision of this agreement is intended to be severable: if any
term or provision of this agreement shall be invalid, illegal or unenforceable
for any reason whatsoever, the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
This agreement restates and amends in its entirety, without a break in
continuity, that certain Security Agreement dated December 12, 1988 between
Manchester Equipment Co., Inc. and Barclays Bank of New York, to whose rights,
the Bank has succeeded.
NAME OF ADDRESS OF
BORROWER Manchester Equipment Co., Inc. BORROWER 50 Marcus Blvd.
------------------------------- -----------------------
SIGNATURE
OF BORROWER /s/ B. Steinberg Hauppauge, New York 11788
---------------------------- ----------------------------------
NAME OF ADDRESS OF
BORROWER BORROWER
------------------------------- -----------------------
SIGNATURE
OF BORROWER
---------------------------- ----------------------------------
SCHEDULE A
Property specifically included as "Collateral" for purposes of the within
General Loan and Security Agreement:
<PAGE> 1
Exhibit 10.6.c
GENERAL GUARANTEE
(Individual or Partnership)
December 1, 1993
FOR VALUE RECEIVED, and in consideration of loans made or to be made or
credit otherwise extended or to be extended by THE BANK OF NEW YORK
(hereinafter referred to as the "Bank") to or for the account of Manchester
Equipment Co., Inc. of 50 Marcus Blvd., Hauppauge, New York 11788 (hereinafter
referred to as the "Borrower") from time to time and at any time and for other
good and valuable consideration and to induce the Bank, in its discretion, to
make such loans or extensions of credit and to make or grant such renewals,
extensions, releases of collateral or relinquishments of legal rights as the
Bank may deem advisable, the undersigned (jointly and severally, if more than
one guarantor, absolutely and unconditionally guarantee to the Bank, its
successors, endorsees and assigns, the prompt payment when due of all present
and future obligations and liabilities of any and all kinds of the Borrower to
the Bank and of all instruments of any nature evidencing or relating to any
such obligations and liabilities upon which the Borrower or one or more parties
and the Borrower is or may become liable to the Bank, whether incurred by the
Borrower as maker, endorser, drawer, acceptor, guarantor, accommodation party
or otherwise, and whether due or to become due, secured or unsecured, absolute
or contingent, joint or several, and howsoever or whenever acquired by the Bank
(all of which are herein collectively referred to as the "Obligations"), and
irrespective of the genuineness, validity, regularity or enforceability of such
Obligations, or of any instrument evidencing any of the Obligations or of any
collateral therefor or of the existence or extent of such collateral.
The undersigned hereby assents that the Bank may at any time and from
time to time, either before or after the maturity thereof, without notice to or
further consent of the undersigned, extend the time of payment of, exchange,
release, substitute or surrender any collateral for, renew or extend any of the
Obligations or increase the interest rate thereon, and may also make any
agreement with the Borrower or with any other party to or person liable on any
of the Obligations, or interested therein, for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any
modification of the terms thereof or of any agreement between the Bank and the
Borrower or any such other party or person, without in any way impairing or
affecting this guarantee.
The undersigned hereby agrees that this guarantee shall not be impaired
or otherwise affected by any failure to call for, take, hold, protect or
perfect, continue the perfection of or enforce any security interest in or
other lien upon, any collateral for the Obligations, or by failure to exercise,
delay in the exercising or waiver of, or forbearance with respect to, any
right or remedy available to the Bank with respect to the Obligations.
The undersigned hereby acknowledges that the undersigned has derived or
expects to derive a financial or other advantage from each and every Obligation
incurred by the Borrower to the Bank.
The undersigned waives notice of the acceptance of this guarantee and
of the making of any such loans or extensions of credit or the incurrence of
any Obligation, presentment to or demand of payment from anyone whomsoever
liable upon any of the Obligations, protest, notice of presentment, non-payment
or protest and notice of any sale of collateral security or any default of any
sort.
To secure the liabilities of the undersigned under this guarantee, the
undersigned hereby grants to the Bank a security interest in and a lien upon
any personal property of the undersigned or in which the undersigned may have
an interest which is now or may at any time hereafter come into the possession
or control of the Bank, or of any third party acting in its behalf, whether for
the express purpose of being used by the Bank as collateral security or for
safekeeping or for any other or different purpose including such personal
property as may be in transit by mail or carrier for any purpose or covered or
affected by any documents in the Bank's possession or control, or in the
possession or control of any third party acting in its behalf. The undersigned
hereby authorizes the Bank in its discretion, at any time, to appropriate and
apply upon any of the liabilities of the undersigned under this guarantee any
such property of the undersigned and to charge any of such liabilities against
any balance of any account standing to the credit of the undersigned on the
books of the Bank. To satisfy the liabilities of the undersigned under this
guarantee, the Bank shall have, in addition to all other rights and remedies
allowed by law, the rights and remedies of a secured party under the Uniform
Commercial Code as in effect in the State of New York at the date hereof and,
without limiting the generality of the foregoing, the Bank may immediately,
without demand of performance and without notice of intention to sell or of
time or place of sale or of redemption or other notice or demand whatsoever to
the undersigned, all of which are hereby expressly waived, and without
advertisement, sell at public or private sale, grant options to purchase or
otherwise realize upon, in the State of New York, or elsewhere, the whole or
from time to time any part of the said collateral upon which the Bank shall
have a security interest and lien as aforesaid, and after deducting from the
proceeds of sale or other disposition of the said collateral all expenses
(including all reasonable expenses for legal services of every kind and other
expenses as set forth below) shall apply the residue of such proceeds toward
the payment of any of the liabilities of the undersigned under this guarantee
in such order as the Bank shall elect, the undersigned remaining liable for any
deficiency remaining unpaid after such application. If notice of any sale or
other disposition is required by law to be given, the undersigned hereby agrees
that a notice sent at least two days before the time of any intended public
sale or of the time after which any private sale or other disposition of the
said collateral is to be made, shall be reasonable notice of such sale or
other disposition.
At any such sale or other disposition the Bank may itself purchase the
whole or any part of the collateral sold, free from any right of redemption on
the part of the undersigned, which right is hereby waived and released.
The undersigned agrees that the aforementioned collateral secures, and
further agrees to pay on demand, all expenses (including reasonable expenses
for legal services of every kind and cost of any insurance and payment of taxes
or other charges) of, or incidental to, the custody, care, sale or collection
of, or realization upon, any of the said collateral or in any way relating to
the enforcement or protection of the rights of the Bank hereunder or with
respect to any of the Obligations.
This is a continuing guarantee and shall remain in full force and effect
and be binding upon the undersigned, and the undersigned's personal
representatives and assigns, until written notice of its revocation shall
actually be received by the Bank at the office of the Bank at which the
Borrower's account is maintained. No such revocation shall release the
undersigned or effect in any manner the rights, remedies, powers, security
interests and liens of the Bank under this guarantee with respect to any of the
Obligations arising prior to actual receipt by the Bank of such written notice
of revocation and any renewals or extensions thereof and any such revocation by
one of the undersigned shall not affect the continuing liabilities hereunder of
such of the undersigned as do not give such notice of revocation. If any of the
present or future Obligations are guaranteed by persons, partnerships or
corporations in addition to the undersigned, the death, release or discharge in
whole or in part, or the bankruptcy, liquidation or dissolution of one or more
of them, shall not discharge or affect the liabilities of the undersigned under
this guarantee.
This guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time payment of all or any part of any of the
Obligations is rescinded or must be restored or returned by the Bank whether
under any reorganization, bankruptcy or insolvency proceeding or otherwise.
<PAGE> 2
This guarantee is a guarantee of payment and not of collection, and the
Bank shall be under no obligation to take any action against the Borrower or
any other person liable with respect to any of the Obligations or resort to any
collateral security held by it to secure any of the Obligations as a condition
precedent to the undersigned being obligated to perform as agreed herein. The
undersigned hereby waives any rights to interpose any defense, counterclaim or
offset of any nature and description which it may have or which may exist
between and among the Bank, the Borrower and/or the undersigned.
(SEE REVERSE SIDE)
<PAGE> 3
The undersigned hereby waives any rights to be subrogated to the rights
of the Bank with respect to the Obligations and the undersigned waives any
right to and agrees that it will not institute or take any action against the
Borrower seeking contribution, reimbursement or indemnification by the
Borrower with respect to any payments made by the undersigned to the Bank
hereunder.
No failure on the part of the Bank to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Bank of any right,
remedy or power hereunder preclude any other or future exercise thereof or
the exercise of any other right, remedy or power.
Each and every right, remedy and power hereby granted to the Bank or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by the Bank at any time and from time to time.
This guarantee embodies the entire agreement among the Bank and the
undersigned with respect to the subject matter hereof and supersedes all prior
agreements and understandings relating to the subject matter hereof.
The undersigned and the Bank waive the right to trial by jury in any
action or proceeding based upon, arising out of or in any way connected to this
guarantee or any of the transactions contemplated hereby.
This guarantee shall be construed and interpreted in accordance with the
laws of the State of New York. Unless the text otherwise requires, all terms
used herein shall have the meanings specified in the Uniform Commercial Code as
in effect in the State of New York at the date hereof. The undersigned submits
to the jurisdiction of state and federal courts located in the City and State of
New York in personam and agrees that all actions and proceedings relating
directly or indirectly to this guarantee shall be litigated only in said courts
or courts located elsewhere as the Bank may select and that such courts are
convenient forums. The undersigned waives personal service upon it and consents
to service of precess out of said courts by mailing a copy thereof to it by
registered or certified mail.
Nothing except cash payment in full of the Obligations shall release
the undersigned or any of them from liability under this guarantee.
If the undersigned is a partnership, the undersigned represents and
warrants that the general partners of the partnership executing this guarantee
are authorized and directed so to do on behalf of the undersigned and that the
execution and delivery of this guarantee does not conflict with the terms of
the undersigned's partnership agreement and all necessary and proper
partnership action has been taken to execute and deliver this guarantee and all
of the provisions hereof are legal, binding and valid obligations of the
undersigned, enforceable against the undersigned in accordance with its terms.
IN WITNESS THEREOF, this guarantee has been executed by the undersigned
on this 1st day of DECEMBER, 1993.
NAME OF GUARANTOR Barry Steinberg ADDRESS OF GUARANTOR 7 W. Dosoris Lane
--------------------- ------------------
SIGNATURE OF GUARANTOR /s/ B. Steinberg Dix Hills, New York
---------------- ---------------------------------------
NAME OF GUARANTOR ADDRESS OF GUARANTOR
--------------------- ------------------
SIGNATURE OF GUARANTOR
---------------- ---------------------------------------
STATE OF NEW YORK
ss.
COUNTY OF SUFFOLK
On this 1st day of DECEMBER , 1993, before me personally appeared
to me known, and known to me to be the individual(s)
described in and who executed the foregoing instrument and that such
individual(s) duly acknowledged to me that such individual(s) executed same.
/s/ Sharon M. Siegel
------------------------------------
NOTARY PUBLIC
SHARON M. SIEGEL
Notary Public, State of New York
Suffolk County -- No. 4926304
Commission Expires April 11, 1994
LIMITATION OF LIABILITY
(The following provisions shall be effective only if executed by a duly
authorized officer of the Bank)
Notwithstanding the aggregate amount of the Obligations which may
become due to the Bank from the Borrower at any time and from time to time, the
liability of the guarantor under this guarantee shall be limited to the sum of
$ (hereinafter referred to as the "Maximum Amount"), plus such
portion of the interest, legal expenses, insurance, taxes and other changes and
expenses as are provided for in this guarantee and the instruments or other
documents (if any) evidencing the Obligations of the Borrower as the Maximum
Amount bears to the aggregate principal amount of all Obligations of the
Borrower to the Bank at the time the Bank demands payment under this guarantee
or resorts to the property of the guarantor in satisfaction of the guarantor's
liabilities hereunder, whichever shall first occur. It is understood, however,
that the Obligations of the Borrower to the Bank may at any time exceed the
Maximum Amount without affecting the liabilities of the guarantor under this
guarantee.
<PAGE> 1
Exhibit 10.7.a
ITT COMMERCIAL FINANCE
[ITT LETTERHEAD]
December 7, 1993
Michael Bivona
Manchester Equipment Company, Inc.
50 Marcus Blvd.
Hauppauge, NY 11788
Dear Mike:
Thank you for providing us the opportunity to handle your inventory
financing needs. We have established a $500,000.00 credit line to finance your
Apple product upon receipt of the following conditions:
1. UCC-ls (received)
2. Agreement for Wholesale Financing (received)
3. Subordination Agreements from all prior broad lien filers on Apple
product
4. Proper insurance coverage with ITTCMP listed as loss payee
In order to avoid any delays in approving orders, please make sure we
receive all the conditions within 30 days from receipt of this letter, as your
file will have to be resubmitted for approval if we receive them after that
time frame. If you sense a serious problem with the conditions or something
that might cause a lengthy delay please call.
In addition we will need the following information from you on a
regular basis:
Quarterly Financial Statements
In this 30 interest free program, inventory is financed by total
amounts with scheduled payments made in installments.
In order to simplify payments, we have established common note dates of the
5th, 15th, and 25th.
If the invoice is dated Common note date
----------------------- ----------------
from the 1st to the 10th 5th
from the 11th to the 20th 15th
from the 21st to the 31st 25th
When making payments use the following address:
Regular Mail Payments Express Mail Payments
---------------------- ---------------------
ITT Commercial Finance Corp. Provident National Bank
P.O. Box 7780-3070 120 S. 17th Street
Philadelphia, PA 19182-3070 Philadelphia, PA 19103
Account # 306-489-1 Attn: Lock Box Department
4th floor
c/o Lockbox #7780-3070
<PAGE> 2
I have included a Policy and Procedure Newsletter which details standard
procedures. Hopefully this will help clarify any questions you might have
regarding what we require.
As with any new relationship it takes a while to get to know each
other. If you have any questions about the terms of your financing program
please feel free to contact Derek Brown, your Account Manager or Mark
Schafer, Branch Manager. All of us at ITT are eager to respond to your needs
quickly and effectively. I have also included an organizational chart of the
office to keep on hand.
At ITT Commercial Finance, we pride ourselves on providing quality
customer service and innovative financing programs. We will do our best to
warrant the confidence you have placed in us, and we look forward to a strong
and mutually beneficial relationship for both our companies. I am available at
your convenience to discuss any additional financing needs. Please feel free to
call me anytime.
Sincerely,
/s/ MaryEllen Janello
- ----------------------
MaryEllen Janello
Sales Support Manager
CONFIRMATION
This is to confirm receipt of this letter. Please sign below and send back to
our office in the enclosed envelope.
-----------------------------------
By:
------------------------------
Its:
------------------------------
<PAGE> 1
Exhibit 10.7.b
AGREEMENT FOR WHOLESALE FINANCING
(SECURITY AGREEMENT - ARBITRATION)
This Agreement for Wholesale Financing ("Agreement") is made as of 11-19, 1993
between ITT Commercial Finance Corp. ("ITT") and Manchester Equipment Co.,
Inc., a / / SOLE PROPRIETORSHIP, / / PARTNERSHIP, /X/ CORPORATION (check
applicable term) ("Dealer"), having a principal place of business located at
50 Marcus Blvd., Hauppauge, NY 11788.
1. Subject to the terms of this Agreement, ITT, in its sole discretion, may
extend credit to Dealer from time to time to purchase inventory from ITT
approved vendors. ITT may combine all of ITT's advances to Dealer or on Dealer's
behalf, whether under this Agreement or any other agreement, to make one debt
owed by Dealer. ITT's decision to advance funds on any inventory will not be
binding until the funds are actually advanced. Dealer agrees that ITT may, at
any time and without notice to Dealer, elect not to finance any inventory sold
by particular vendors who are in default of their obligations to ITT, or with
respect to which ITT reasonably feels insecure.
2. Dealer and ITT agree that certain financial terms of any advance made by ITT
under this Agreement, whether regarding finance charges, other fees, maturities,
curtailments or other financial terms, are not set forth herein because such
terms depend, in part, upon the availability from time to time of vendor
discounts or other incentives, prevailing economic conditions, ITT's
floorplanning volume with Dealer and with Dealer's vendors, and other economic
factors which may vary over time. Dealer and ITT further agree that it is
therefore in their mutual best interest to set forth in this Agreement only
the general terms of Dealer's financing arrangement with ITT. Upon agreeing to
finance a particular item of inventory for Dealer, ITT will send Dealer a
Statement of Transaction identifying such inventory and the applicable
financial terms. Unless Dealer notifies ITT in writing of any objection within
fifteen (15) days after a Statement of Transaction is mailed to Dealer: (a) the
amount shown on such Statement of Transaction will be an account stated; (b)
Dealer will have agreed to all rates, charges and other terms shown on such
Statement of Transaction; (c) Dealer will have agreed that the items of
inventory referenced in such Statement of Transaction are being financed by ITT
at Dealer's request; and (d) such Statement of Transaction will be incorporated
herein by reference, will be made a part hereof as if originally set forth
herein, and will constitute an addendum hereto. If Dealer objects to the terms
of any Statement of Transaction, Dealer agrees to pay ITT for such inventory in
accordance with the most recent terms for similar inventory to which Dealer has
not objected (or, if there are no prior terms, at the lesser of 16% per annum
or at the maximum lawful contract rate of interest permitted under applicable
law), but Dealer acknowledges that ITT may then elect to terminate Dealer's
financing program pursuant to Section 12, and cease making additional advances
to Dealer. Any termination for that reason, however, will not accelerate the
maturities of advances previously made, unless Dealer shall otherwise be in
default of this Agreement.
3. To secure payment of all Dealer's current and future debts to ITT, whether
under this Agreement or any current or future guaranty or other agreement,
Dealer grants ITT a security interest in all Dealer's inventory, equipment,
fixtures, accounts, contract rights, chattel paper, instruments, reserves,
documents and general intangibles, whether now owned or hereafter acquired, all
attachments, accessories, accessions, substitutions and replacements thereto
and all proceeds thereof. All such assets are as defined in the Uniform
Commercial Code and referred to herein as the "Collateral." All Collateral
financed by ITT, and all proceeds thereof, will be held in trust by Dealer for
ITT, with such proceeds being payable in accordance with Section 7.
4. Dealer represents that all Collateral will be kept at Dealer's principal
place of business listed above, and, if any, the following other locations.
- ------------------------------------------------------------------------------
Dealer will give ITT at least 30 days prior written notice of any change in
Dealer's identity, name, form of business organization, ownership, principal
place of business, Collateral locations or other business locations.
5. Dealer will: (a) only exhibit and sell Collateral financed by ITT to buyers
in the ordinary course of business; (b) not rent, lease, demonstrate, transfer
or use any Collateral financed by ITT without ITT's prior written consent; (c)
execute all documents ITT requests to perfect ITT's security interest in the
Collateral; (d) deliver to ITT immediately upon each request, and ITT may
retain, each Certificate of Title or Statement of Origin issued for Collateral
financed by ITT; and (e) immediately provide ITT with copies of Dealer's annual
financial statements upon their completion (which in no event shall exceed 120
days after the end of Dealer's fiscal year), and all other information
regarding Dealer that ITT requests from time to time. All financial information
Dealer delivers to ITT will accurately represent Dealer's financial condition
either as of the date of delivery, or, if different, the date specified
therein, and Dealer acknowledges ITT's reliance thereon.
6. Dealer will: (a) pay all taxes and fees assessed against Dealer or the
Collateral when due; (b) immediately notify ITT of any loss, theft or damage to
any Collateral; (c) keep the Collateral insured for its full insurable value
under a property insurance policy with a company acceptable to ITT, naming ITT
as a loss-payee and containing standard lender's loss payable and termination
provisions; and (d) provide ITT with written evidence of such insurance
coverage and loss-payee and lender's clauses. If Dealer fails to pay any
taxes, fees or other obligations which may impair ITT's interest in the
Collateral, or fails to keep the Collateral insured, ITT may pay such taxes,
fees or obligations and pay the cost to insure the Collateral, and the
amounts paid will be: (i) an additional debt owed by Dealer to ITT; and (ii)
due and payable immediately in full. Dealer grants ITT an irrevocable license
to enter Dealer's business locations during normal business hours without notice
to Dealer to: (A) account for and inspect all Collateral; (B) verify Dealer's
compliance with this Agreement; and (C) examine and copy Dealer's books and
records related to the Collateral.
7. Dealer will immediately pay ITT the principal indebtedness owed ITT on each
item of Collateral financed by ITT (as shown on the Statement of Transaction
identifying such Collateral) on the earliest occurrence of any of the following
events: (a) when such Collateral is lost, stolen or
<PAGE> 2
damaged; (b) for Collateral financed under Pay-As-Sold ("PAS") terms (as shown
on the Statement of Transaction identifying such Collateral), when such
Collateral is sold, transferred, rented, leased, otherwise disposed of or
matured; (c) in strict accordance with any curtailment schedule for such
Collateral (as shown on the Statement of Transaction identifying such
Collateral); (d) for Collateral financed under Scheduled Payment Program ("SPP")
terms (as shown on the Statement of Transaction identifying such Collateral), in
strict accordance with the installment payment schedule and (e) when otherwise
required under the terms of any financing program agreed to in writing by the
parties. Regardless of the SPP term pertaining to any Collateral financed by
ITT, if ITT determines that the current outstanding debt owed by Dealer to ITT
exceeds the aggregate wholesale invoice price of such Collateral in Dealer's
possession, Dealer will immediately upon demand pay ITT the difference between
such outstanding debt and the aggregate wholesale invoice price of such
Collateral. If Dealer from time to time is required to make immediate payment to
ITT of any past due obligation discovered during any Collateral audit, or at any
other time, Dealer agrees that acceptance of such payment by ITT shall not be
construed to have waived or amended the terms of its financing program. Dealer
agrees that the proceeds of any Collateral received by Dealer shall be held by
Dealer in trust for ITT's benefit, for application as provided in this
Agreement. Dealer will send all payments to ITT's branch office(s) responsible
for Dealer's account. ITT may apply: (i) payments to reduce finance charges
first and then principal, regardless of Dealer's instructions; and (ii)
principal payments to the oldest (earliest) invoice for Collateral financed by
ITT, but, in any event, all principal payments will first be applied to such
Collateral which is sold, lost, stolen, damaged, rented, leased, or otherwise
disposed of or unaccounted for. Any third party discount, rebate, bonus or
credit granted to Dealer for any Collateral will not reduce the debt Dealer owes
ITT until ITT has received payment therefor in cash. Dealer will: (i) pay ITT
even if any Collateral is defective or fails to conform to any warranties
extended by any third party; (ii) not assert against ITT any claim or defense
Dealer has against any third party; and (iii) indemnify and hold ITT harmless
against all claims and defenses asserted by any buyer of the Collateral relating
to the condition of, or any representations regarding, any of the Collateral.
Dealer waives all rights of offset Dealer may have against ITT.
8. Dealer will pay ITT finance charges on the outstanding principal debt Dealer
owes ITT for each item of Collateral financed by ITT at the rate(s) shown on the
Statement of Transaction identifying such Collateral, unless Dealer objects
thereto as provided in Section 2. The finance charges attributable to the rate
shown on the Statement of Transaction will: (a) be computed based on a 360 day
year; (b) be calculated by multiplying the Daily Charge (as defined below) by
the actual number of days in the applicable billing period; and (c) accrue from
the invoice date of the Collateral identified on such Statement of Transaction
until ITT receives full payment of the principal debt Dealer owes ITT for each
item of such Collateral. The "Daily Charge" is the product of the Daily Rate (as
defined below) multiplied by the Average Daily Balance (as defined below). The
"Daily Rate" is the quotient of the annual rate shown on the Statement of
Transaction divided by 360, or the monthly rate shown on the Statement of
Transaction divided by 30. The "Average Daily Balance" is the quotient of (i)
the sum of the outstanding principal debt owed ITT on each day of a billing
period for each item of Collateral identified on a Statement of Transaction,
divided by (ii) the actual number of days in such billing period. Dealer will
also pay ITT $100 for each check returned unpaid for insufficient funds (an "NSF
check") (such $100 payment repays ITT's estimated administrative costs; it does
not waive the default caused by the NSF check). Dealer acknowledges that ITT
intends to strictly conform to the applicable usury laws governing this
Agreement and understands that Dealer is not obligated to pay any finance
charges billed to Dealer's account exceeding the amount allowed by such usury
laws, and any such excess finance charges Dealer pays will be applied to reduce
Dealer's principal debt owed to ITT. The annual percentage rate of the finance
charges relating to any item of Collateral financed by ITT shall be calculated
from the invoice date of such Collateral, regardless of any period during which
any finance charge subsidy shall be paid or payable by any third party. ITT will
send Dealer a monthly billing statement identifying all charges due on Dealer's
account with ITT. The charges specified on each billing statement will be: (A)
due and payable in full immediately on receipt, and (B) an account stated,
unless ITT receives Dealer's written objection thereto within 15 days after it
is mailed to Dealer. If ITT does not receive, by the 25th day of any given
month, payment of all charges accrued to Dealer's account with ITT during the
immediately preceding month, Dealer will (to the extent allowed by law) pay ITT
a late fee ("Late Fee") equal to the greater of $5 or 5% of the amount of such
finance charges (such Late Fee repays ITT's estimated administrative costs; it
does not waive the default caused by the late payment). ITT may adjust the
billing statement at any time to conform to applicable law and this Agreement.
9. Dealer will be in default under this Agreement if: (a) Dealer breaches any
terms, warranties or representations contained herein, in any Statement of
Transaction to which Dealer has not objected as provided in Section 2, or in
any other agreement between ITT and Dealer; (b) any guarantor of Dealer's debts
to ITT breaches any terms, warranties or representations contained in any
guaranty or other agreement between the guarantor and ITT; (c) any
representation, statement, report or certificate made or delivered by Dealer or
any guarantor to ITT is not accurate when made; (d) Dealer fails to pay any
portion of Dealer's debts to ITT when due and payable hereunder or under any
other agreement between ITT and Dealer; (e) Dealer abandons any Collateral;
(f) Dealer or any guarantor is or becomes in default in the payment of any debt
owed to any third party; (g) a money judgment issues against Dealer or any
guarantor; (h) an attachment, sale or seizure issues or is executed against any
assets of Dealer or of any guarantor; (i) the undersigned dies while Dealer's
business is operated as a sole proprietorship or any general partner dies while
Dealer's business is operated as a general or limited partnership; (j) any
guarantor dies; (k) Dealer or any guarantor shall cease existence as a
corporation, partnership or trust; (l) Dealer or any guarantor ceases or
suspends business; (m) Dealer or any guarantor makes a general assignment for
the benefit of creditors; (n) Dealer or any guarantor becomes insolvent or
voluntarily or involuntarily becomes subject to the Federal Bankruptcy Code,
any state insolvency law or any similar law; (o) any receiver is appointed for
any of Dealer's or any guarantor's assets; (p) any guaranty of Dealer's debts
to ITT is terminated; (q) Dealer loses any franchise, permission, license or
right to sell or deal in any Collateral which ITT finances; (r) Dealer or any
guarantor misrepresents Dealer's or such guarantor's financial condition or
organizational structure; or (s) any of the Collateral becomes subject to any
lien, claim, encumbrance or security interest prior or superior to ITT's. In the
event of a default:
(i) ITT may at any time at ITT's election, without notice or demand to
Dealer, do any one or more of the following: declare all or any part
of the debt Dealer owes ITT immediately due and payable, together with
all costs and expenses of ITT's collection activity, including, without
limitation, all reasonable attorney's fees; exercise any or all rights
under applicable law (including, without limitation, the right to
possess, transfer and dispose of the Collateral); and/or cease
extending any additional credit to Dealer (ITT's right to cease
extending credit shall not be construed to limit the discretionary
nature of this credit facility).
(ii) Dealer will segregate and keep the Collateral in trust for ITT, and in
good order and repair, and will not exhibit, sell, rent, lease, further
encumber, otherwise dispose of or use any Collateral.
<PAGE> 3
(iii) Upon ITT's oral or written demand, Dealer will immediately deliver the
Collateral to ITT, in good order and repair, at a place specified by
ITT, together with all related documents, as ITT may, in ITT's sole
discretion and without notice or demand to Dealer, take immediate
possession of the Collateral together with all related documents.
(iv) ITT may, without notice, apply a default finance charge to Dealer's
outstanding principal indebtedness equal to the default rate specified
in Dealer's financing program with ITT, if any, or if there is none so
specified, at the lesser of 3% per annum above the rate in effect
immediately prior to the default, or the highest lawful contract rate
of interest permitted under applicable law.
All ITT's rights and remedies are cumulative. ITT's failure to exercise any of
ITT's rights or remedies hereunder will not waive any of ITT's rights or
remedies as to any past, current or future default.
10. Dealer agrees that if ITT conducts a private sale of any Collateral by
requesting bids from 10 or more dealers or distributors in that type of
Collateral, any sale by ITT of such Collateral in bulk or in parcels within 120
days of: (a) ITT's taking possession and control of such Collateral; or (b)
when ITT is otherwise authorized to sell such Collateral; whichever occurs
last, to the bidder submitting the highest cash bid therefor, is a commercially
reasonable sale of such Collateral under the Uniform Commercial Code. Dealer
agrees that the purchase of any Collateral by a vendor, as provided in any
agreement between ITT and the vendor, is a commercially reasonable disposition
and private sale of such Collateral under the Uniform Commercial Code, and no
request for bids shall be required. Dealer further agrees that 7 or more days
prior written notice will be commercially reasonable notice of any public or
private sale (including any sale to a vendor). If ITT disposes of any such
Collateral other than as herein contemplated, the commercial reasonableness of
such disposition will be determined in accordance with the laws of the state
governing this Agreement.
11. Dealer grants ITT an irrevocable power of attorney to: execute or endorse
on Dealer's behalf any checks, financing statements, instruments, Certificates
of Title and Statements of Origin pertaining to the Collateral; supply any
omitted information and correct errors in any documents between ITT and Dealer;
do anything Dealer is obligated to do hereunder; initiate and settle any
insurance claim pertaining to the Collateral; and do anything to preserve and
protect the Collateral and ITT's rights and interest therein. ITT may provide
to any third party any credit, financial or other information on Dealer that
ITT may from time to time possess.
12. Time is of the essence. This Agreement is deemed to have been entered into
at the ITT branch office executing this Agreement. Either party may terminate
this Agreement at any time by written notice received by the other party. If
ITT terminates this Agreement,Dealer agrees that if Dealer: (a) is not in
default hereunder, 30 days prior notice of termination is reasonable and
sufficient (although this provision shall not be construed to mean that shorter
periods may not, in particular circumstances, also be reasonable and
sufficient); or (b) is in default hereunder, no prior notice of termination is
required. Dealer will not be relieved from any obligation to ITT arising out of
ITT's advances or commitments made before the effective termination date of
this Agreement. ITT will retain all of its rights, interests and remedies
hereunder until Dealer has paid all Dealer's debts to ITT. Dealer cannot assign
Dealer's interest in this Agreement without ITT's prior written consent,
although ITT may assign or participate ITT's interest, in whole or in part,
without Dealer's consent. This Agreement will protect and bind ITT's and
Dealer's respective heirs, representatives, successors and assigns. All
agreements or commitments to extend or renew credit or refrain from enforcing
payment of a debt must be in writing. Any oral or other amendment or waiver
claimed to be made to this Agreement that is not evidenced by a written
document executed by ITT and Dealer (except for each Statement of Transaction
that Dealer does not object to in the manner stated in Section 2) will be null,
void and have no force or effect whatsoever. If any provision of this Agreement
or its application is invalid or unenforceable, the remainder of this Agreement
will not be impaired or affected and will remain binding and enforceable. If
Dealer previously executed any security agreement with ITT, this Agreement will
only amend and supplement such agreement. If the terms hereof conflict with the
terms of any such prior security agreement, the terms of this Agreement will
govern. Dealer agrees to pay all of ITT's reasonable attorneys fees and
expenses incurred by ITT in enforcing ITT's rights hereunder.
13. BINDING ARBITRATION. Except as otherwise specified below, all actions,
disputes, claims and controversies under common law, statutory law or in equity
of any type or nature whatsoever (including, without limitation, all torts,
whether regarding negligence, breach of fiduciary duty, restraint of trade,
fraud, conversion, duress, interference, wrongful replevin, wrongful
sequestration, fraud in the inducement, or any other tort, all contract actions,
whether regarding express or implied terms, such as implied covenants of good
faith, fair dealing, and the commercial reasonableness of any Collateral
disposition, or any other contract claim, all claims of deceptive trade
practices or lender liability, and all claims questioning the reasonableness or
lawfulness of any act), whether arising before or after the date of this
Agreement, and whether directly or indirectly relating to: (a) this Agreement
and/or any amendments and addenda hereto, or the breach, invalidity or
termination hereof; (b) any previous or subsequent agreement between ITT and
Dealer; and/or (c) any other relationship, transaction or dealing between ITT
and Dealer (collectively the "Disputes"), will be subject to and resolved by
binding arbitration.
13.1 All arbitration hereunder will be pursuant to either: (a) the Code of
Procedure in effect from time to time ("Code") of the National Arbitration
Forum ("NAF"), currently located at 2124 Dupont Avenue South, Minneapolis,
Minnesota 55405; or (b) the Commercial Arbitration Rules ("Rules") in effect
from time to time of the American Arbitration Association ("AAA"), currently
located at 140 West 51st Street, New York, New York 10020-1203. The party first
filing any claim for arbitration shall designate which arbitration procedures
are to be applied for all Disputes between Dealer and ITT, although if either
the NAF or AAA is dissolved, the procedures of the remaining arbitration body
must be used. A copy of the Code, Rules and any fee schedule of the NAF or AAA
may be obtained by contacting the NAF or AAA, as applicable. The parties agree
that all arbitrators selected shall be attorneys. The arbitrator(s) will decide
if any inconsistency exists between the Code, or Rules, as applicable, and the
arbitration provisions contained herein. If any such inconsistency exists, the
arbitration provisions contained herein will control and supersede the Code, or
Rules, as applicable. The site of all arbitration participatory hearings will
be in the Division of the Federal Judicial District of ITT's branch office
closest to Dealer. The laws of the State of Massachusetts will govern this
Agreement; provided, however, that the Federal Arbitration Act ("FAA"), to the
extent inconsistent, will supersede the laws of such state and govern. This
Agreement concerns transactions involving commerce among the several states. All
arbitration proceedings, including testimony or evidence at hearings, will be
kept confidential.
<PAGE> 4
although any award or order rendered by the arbitrator(s) or director of
arbitration pursuant to the terms of this Agreement may be entered as a
judgment or order and enforced by either party in any state or federal court
having competent jurisdiction.
13.2 Nothing herein will be construed to prevent ITT's or Dealer's use of
bankruptcy, receivership, injunction, repossession, replevin, claim and
delivery, sequestration, seizure, attachment, foreclosure, dation and/or any
other prejudgment or provisional action or remedy relating to any Collateral
for any current or future debt owed by either party to the other. Any such
action or remedy will not waive ITT's or Dealer's right to compel arbitration
of any Dispute. If either Dealer or ITT brings any other action for judicial
relief with respect to any Dispute, the party bringing such action will be
liable for and immediately pay all of the other party's costs and expenses
(including attorneys' fees) incurred to stay or dismiss such action and remove
or refer such Dispute to arbitration. If either Dealer or ITT brings or appeals
an action to vacate or modify an arbitration award and such party does not
prevail, such party will pay all costs and expenses, including attorneys' fees,
incurred by the other party in defending such action.
13.3 Any arbitration proceeding must be instituted: (a) with respect to any
Dispute for the collection of any debt owed by either party to the other,
within two (2) years after the date the last payment was received by the
instituting party; and (b) with respect to any other Dispute, within two (2)
years after the date the incident giving rise thereto occurred, whether or not
any damage was sustained or capable of ascertainment or either party knew of
such incident. Failure to institute an arbitration proceeding within such
period will constitute an absolute bar and waiver to the institution of any
proceeding with respect to such Dispute. Except as otherwise stated herein, all
notices, arbitration claims, responses, requests and documents will be
sufficiently given or served if mailed or delivered: (i) to Dealer at Dealer's
principal place of business specified above; and (ii) to ITT at 8251 Maryland
Avenue, Clayton, Missouri 63105, Attention: General Counsel, or such other
address as the parties may specify from time to time in writing. No arbitration
hereunder will include, by consolidation, joinder or otherwise, any third
party, unless such third party agrees to arbitrate pursuant to the arbitration
provisions contained herein and the Code, or Rules, as applicable.
14. If Section 13 of this Agreement or its application is invalid or
unenforceable, any legal proceeding with respect to any Dispute will be tried
in a court of competent jurisdiction by a judge without a jury. Dealer and ITT
waive any right to a jury trial in any such proceeding.
THIS CONTRACT CONTAINS BINDING ARBITRATION AND JURY WAIVER PROVISIONS.
ITT COMMERCIAL FINANCE CORP. MANCHESTER EQUIPMENT CO. INC.
-----------------------------
Dealer's Name
By: /s/ W. Baptiste By: /s/ Barry S. Steinberg
--------------------------- ---------------------------
Print Name: W. BAPTISTE Print Name: BARRY S. STEINBERG
------------------- -------------------
Title: Regional Vice President Title: Pres.
------------------------ ------------------------
ATTEST
/s/ Joel G. Stemple
-------------------------------
(Assistant) Secretary
Print Name: Joel G. Stemple
--------------------
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth
certain resolutions of the Board of Directors of the corporation adopted at a
special meeting thereof held on due notice (and with shareholder approval, if
required by law), at which meeting there was present a quorum authorized to
transact the business described below, and that the proceedings of the meeting
were in accordance with the certificate of incorporation, charter and by-laws
of the corporation, and that they have not been revoked, annulled or amended in
any manner whatsoever.
Upon motion duly made and seconded, the following resolution was unanimously
adopted after full discussion;
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from ITT Commercial Finance
Corp. ("ITT") in such amounts and on such terms as such officers, directors or
agents deem proper, to enter into financing, security, pledge and other
agreements with ITT relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to ITT as collateral security for any
obligations of this corporation to ITT, whenever and however arising, any
assets of this corporation, whether now owned or hereafter acquired; the Board
of Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation on
the date stated below.
Dated: Nov 19 , 1993 /s/ Joel G. Stemple
--------------- -------------------------------
(Assistant) Secretary
(SEAL) MANCHESTER EQUIPMENT CO. INC.
-------------------------------
Corporate Name
<PAGE> 1
EXHIBIT 10.7.c
[THE BANK OF NEW YORK LETTERHEAD]
January 7, 1994
ITT Commercial Finance Corp.
95 Washington Street
Canton, Ma. 02021
RE: MANCHESTER EQUIPMENT COMPANY, INC. (the "Company")
Gentlemen/Ladies:
We hold available for the Company a line of credit under which we have
made and may take advances to the Company.
As security for its present and future indebtedness to us, the Company
has granted to us a security interest in, among other things, (i) all of its now
existing and hereafter arising or created accounts, contract rights,
instruments, documents, chattel paper and general intangibles (including but not
limited to trademarks), all proceeds thereof and all returned or repossessed
goods, the sale of which gave rise to any of the foregoing (hereinafter,
collectively, the "Receivables"); (ii) all of its now owned and hereafter
acquired inventory, wherever located including all work in process, finished
goods and raw materials, and the proceeds thereof (hereinafter, collectively,
the "Inventory"); and (iii) all equipment, machinery, furniture, fixtures, dies,
tools, and other tangible personal property of the Company, wherever located and
whether now owned or hereafter acquired by the Company, and all proceeds of the
foregoing ("M&E"). Inventory and M&E shall include but not be limited to "ITT
products" (as hereinafter defined) and for purposes of this agreement, Inventory
and M&E excluding ITT Products shall hereinafter be referred to as "Other
Inventory and M&E".
The Company has advised us that, as security for its indebtedness to
you, the Company has granted to you a security interest in all of its now owned
and hereafter acquired inventory and equipment manufactured, distributed or sold
by Apple Computers, Inc. or any of its subsidiaries or affiliated companies
and/or bearing any trademark or tradename of Apple Computers, Inc. or any of its
subsidiaries or affiliated companies, wherever located, including all discounts,
rebates, credits, incentive payments,
<PAGE> 2
returns, repossessions, exchanges, substitutions, replacements, attachments,
parts, accessories, and accessions thereto, and the proceeds thereof
(hereinafter, collectively, the "ITT Products").
You hereby agree that, so long as any of the indebtedness to us remains
outstanding:
1. Any security interest you may now or hereafter have in the
Receivables and Other Inventory and M&E, however, arising, and the
proceeds of ITT Products (including but not limited to Receivables)
other than the insurance proceeds of the ITT products shall be subject
and subordinate in all respects to our security interest, if and to the
extent perfected and non-avoidable, in the Receivables, Other Inventory
and M&E and proceeds of ITT Products (including but not limited to
Receivables) other than the insurance proceeds of the ITT Products,
notwithstanding the provisions of applicable law with respect to the
priority of our respective security interests and irrespective of the
order of attachment or perfection thereof.
2. Any security interest we may now or hereafter have in the ITT
Products and the insurance proceeds of the ITT Products however
arising, excluding Receivables and other proceeds of ITT Products,
shall be subject and subordinate in all respects to your security
interest, if and to the extent perfected and non-avoidable, in the ITT
Products excluding Receivables and other proceeds of ITT Products,
notwithstanding the provisions of applicable law with respect to the
priority of our respective security interests and irrespective of the
order of attachment or perfection thereof.
3. You shall not notify any obligors on the Receivables and other
proceeds of ITT Products of your security interest in the ITT Products.
4. You shall not take any action which will in any way hinder
enforcement of our security interest in the Receivables and other
proceeds of ITT Products.
Our respective rights hereunder shall in no way be altered or affected
by virtue of any action being taken by or against the Company under any state or
federal bankruptcy or insolvency law.
This agreement is intended solely to establish our respective rights as
between ourselves; shall not in any way affect or impair the validity or
enforceability of our respective security interests as against any other person
or entity; and no such other person or entity (whether the Company, a trustee in
bankruptcy or otherwise) shall have any rights or benefits hereunder.
2
<PAGE> 3
This agreement may be terminated by either party upon ninety (90) days
written notice to the other party.
This agreement shall be binding upon our and your successors and
assigns and shall be governed and construed in accordance with the laws of the
State of New York.
Very truly yours,
THE BANK OF NEW YORK
By: /s/ Gerard Waters
------------------------
Title: Vice President
AGREED:
ITT COMMERCIAL FINANCE CORP.
By: /s/ 1/15/94
------------------------
Title:
GW:gd
L-MANCHE.
3
<PAGE> 1
Exhibit 10.8.a
[AT&T CAPITAL CORPORATION LETTERHEAD]
April 22, 1996
Mr. Barry R. Steinberg
Manchester Equipment Co., Inc.
50 Marcus Blvd.
Hauppauge, NY 11788
RE: APPROVAL OF LINE OF CREDIT WITH AT&T COMMERCIAL FINANCE CORPORATION
Dear Mr. Steinberg:
AT&T Commercial Finance Corporation ("AT&T-CFC") is pleased to advise
you of our commitment to offer Manchester Equipment Co., Inc. (the
"Borrower") a line of credit in an amount not to exceed $4,000,000 (the
"Line of Credit"). This commitment is made subject to the following
terms and conditions;
1. Amount of Line of Credit
The Line of Credit shall be in a maximum amount of $4,000,000. AT&T-CFC
may from time to time finance sums above the committed line at its sole
discretion. Further, any such additional advances are not intended to be
and should not be construed as a permanent commitment above the approved
line and are subject to immediate repayment, at our sole option, upon
notice by AT&T-CFC. There shall be no minimum extension of credit
required of AT&T-CFC under this commitment. All extensions of credit
shall be made in the sole and complete discretion of AT&T-CFC. The
outstanding balance under the Line of Credit shall be computed by adding
the principal outstanding amount and the amount of unpurchased
approvals.
2. Duration of Line of Credit
The term of the Line of Credit shall commence on April 1, 1996 and shall
continue through four calendar months after the close of your fiscal
year ending July 31, 1997 ("Expiration") at which time the Line of
Credit shall terminate and expire. AT&T-CFC will annually review the
line from renewal based on our receipt and satisfactory review of your
next fiscal year end, at our sole option. AT&T-CFC may, in its sole and
absolute discretion extend the Line of Credit for such additional
periods of time and under such terms and conditions as AT&T-CFC
determines to be appropriate. No advances will be made by AT&T-CFC until
AT&T-CFC actually receives executed copies of any and all documentation
required by AT&T-CFC.
3. Early Termination
The Line of Credit may be terminated by AT&T-CFC at any time prior to
the Expiration specified above if;
a.) The Borrower fails to execute and/or deliver any and all
financing documents required by AT&T-CFC, which financing
documents shall include, but shall not be limited to, an
Agreement for Wholesale Financing.
b.) The Borrower is in breach of any of the provisions of any
of the financing documents required by AT&T-CFC or is in default
under any such document.
<PAGE> 2
c.) The Borrower fails to provide in form and substance
satisfactory to AT&T-CFC, at its sole discretion, quarterly
interim financial statements within 30 days of closing, and
annual financial statements within 90 days of closing.
d.) There has occurred any adverse change in the financial
condition or business prospects of the Borrower or any guarantor
of the Borrower's indebtedness to AT&T-CFC or if AT&T-CFC shall
learn of any misrepresentation or omission of a fact or
circumstance by the Borrower (or any guarantor of the Borrower's
indebtedness to AT&T-CFC) or if AT&T-CFC shall learn of any
misrepresentation or omission of a fact or circumstance by the
Borrower (or any guarantor) that AT&T-CFC deems to be material.
The Borrower and all guarantors shall be obligated to notify
AT&T-CFC in writing of any change in either of their financial
condition, structure, ownership, or business prospects.
4. No Assignment
This commitment may not be assigned by the Borrower without the prior
written consent of AT&T-CFC, which consent shall be granted or withheld
in the sole and absolute discretion of AT&T-CFC.
Very truly yours,
/s/ Charles A. Flagg
Charles A. Flagg
Director of Credit
AT&T Commercial Finance
cc Lorraine Coleman, Manchester Equipment Co., Inc.
<PAGE> 1
EXHIBIT 10.8.b
INTERCREDITOR AGREEMENT
This Agreement is made this 18th day of May, 1994 by and between AT&T Commercial
Finance Corporation ("AT&T") and The Bank of New York ("Lender")
WITNESSETH:
WHEREAS, AT&T and Lender have extended or intend to extend credit to Manchester
Equipment Co., Inc. having a principal place of business at 50 Marcus Blvd.,
Hauppauge, NY 11788 ("Dealer"); and
WHEREAS, in order to secure the repayment of its indebtedness to AT&T and to
Lender, Dealer has granted or has proposed to grant AT&T and Lender liens,
security interests, or other rights (collectively "Security Interests" or a
"Security Interest") with regard to all or certain of Dealer's personal property
(the "Collateral"); and
WHEREAS, AT&T and Lender desire to establish as between themselves the relative
priorities of their respective Security Interests;
NOW, THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration, receipt of which is hereby acknowledged,
AT&T and Lender hereby agree as follows:
1. Except as provided in Paragraph 2 herein, any Security Interest in any
and all personal property of Dealer which Lender now has or may
hereafter acquire shall be senior in priority to any Security Interest
in such personal property that AT&T now has or may hereafter acquire.
2.a) Any Security Interest that Lender now has or may hereafter acquire in
inventory, goods, or other personal property of Dealer which was at any
time manufactured, sold, and/or distributed by Compaq, Toshiba or any
of its assignees, successors, parents, subsidiaries, or affiliated
entities or which is part of the Compaq, Toshiba product line or which
bears the trade names, brand names, trade styles, marks or logos of
Compaq, Toshiba or any replacements or substitutions thereof (the "AT&T
Product Line Inventory") shall be subordinate and junior in priority to
any Security Interest that AT&T now has or may hereafter acquire in
such property. For purposes of this agreement, the term "inventory"
shall include all inventory as defined in the Uniform Commercial Code
currently in effect in the State of New Jersey, whether now owned or
hereafter acquired by Dealer and i) all parts, accessories,
attachments, additions, replacements, substitutions, and accessions
thereto or therefor (wherever located and whether or not affixed to
realty), and ii) all proceeds payable or to become payable under any
policy of insurance relating thereto.
b) My Security Interest in Dealer's accounts (as that term is defined in
Section 9-106 of the Uniform Commercial Code currently in effect in the
State of New Jersey) which AT&T now has or may hereafter acquire, shall
be subordinate and junior in priority to any Security Interest of
Lender in such accounts. For purposes of this agreement, an account
<PAGE> 2
shall be deemed to have arisen when the goods are shipped or when an
invoice for the goods has been transmitted.
3. AT&T and Lender shall each use reasonable efforts to give the other
prompt written notice of any default by Dealer under any agreement with
AT&T or Lender, any notification of default forwarded to Dealer and any
cure waiver, or resolution of any such default. The failure by either
party to give the other party notice pursuant to this paragraph shall
not affect in any manner the relative rights, priorities, or
subordinations set forth in this Agreement.
4. Lender will not seek to enforce its Security Interest in Collateral in
which AT&T holds a senior Security Interest until Lender has been
advised in writing by AT&T that Dealer's indebtedness to AT&T has been
fully paid and satisfied. AT&T will not seek to enforce its Security
Interest in Collateral in which Lender holds a senior Security Interest
until AT&T has been notified in writing by Lender that Dealer's
indebtedness to Lender has been fully paid and satisfied. This
paragraph shall not be applicable if the forbearance contemplated
herein by AT&T or Lender will have the effect of giving a creditor or
other person not a party to this Agreement rights which are superior to
the rights of AT&T or Lender.
5. The subordinations, relative rights and priorities set forth herein
shall be applicable irrespective of the time, manner or perfection of
the Security Interests of AT&T and Lender. Such subordinations relative
rights and priorities shall not be applicable unless all holders of
Security Interests which are senior to Lender's Security Interest but
junior to AT&T's Security Interest subordinate (by way of intercreditor
agreement or otherwise) their Security Interests to that of lender.
Such subordinations, relative rights and priorities shall not apply to
any item of Collateral as to which a Security Interest is invalid,
unperfected or avoidable. Except as specifically provided herein, the
subordinations and establishment of rights herein shall in no way be
deemed to be a waiver of either party's rights under any agreement or
law.
6. This Agreement may be terminated by either party upon sixty (60) days'
prior written notice to the other party. Any such termination shall be
effective on the date following the date that written notice of the
termination is dispatched. No termination of this Agreement shall
affect or impair any of the rights or priorities existing prior to the
effective date of termination with regard to any Collateral.
7. This Agreement is solely for the benefit of AT&T and Lender and shall
be binding upon those parties and their respective successors and
assigns. AT&T and Lender may rely on this Agreement in extending or
continuing to extend credit to Dealer. This Agreement is not intended
to, nor shall it be construed as, benefitting any other party,
including without limitation, Dealer or any guarantor of Dealer's
obligations.
8. No failure or delay by either party to exercise any right or remedy
under this Agreement shall operate as a waiver of any such right or
remedy. The rights and remedies set forth herein shall be cumulative
and not exclusive of any other rights or remedies that AT&T
<PAGE> 1
EXHIBIT 10.9
TOSHIBA AMERICA INFORMATION SYSTEMS, INC.
RESELLER AGREEMENT
No. 00159
<PAGE> 2
TOSHIBA AMERICA INFORMATION SYSTEMS, INC.
COMPUTER SYSTEMS DIVISION
This Agreement is made on this day of May 1, 1990,
by and between the Computer Systems Division of Toshiba America Information
Systems. Inc., a California Corporation, doing business at
9740 Irvine Boulevard, Irvine, California 92718 ("CSD"),
and Manchester Equipment Co., Inc.
------------------------------------------------------
(Type or Print Full Legal Name of Reseller)
(hereinafter "RESELLER").
CSD is a manufacturer of computer products and accessories. RESELLER
desires to purchase certain CSD products and accessories for resale.
1. APPOINTMENT:
CSD appoints the RESELLER, and the RESELLER accepts the appointment to
be a non-exclusive independent marketer of the Products described in Schedule
"A" ("Authorized Products").
2. TERRITORY:
RESELLER shall market and sell the Authorized Products only in the
geographic territory described in Schedule "B".
3. RESPONSIBILITIES OF RESELLER:
(a) Purchase Authorized Products in accordance with the minimum
purchase commitment described in Schedule "C", which may be amended unilaterally
by CSD from time to time;
(b) Make sufficient purchases of Products to meet market demand in a
timely manner.
(c) Maintain, and prominently display, at each of its sales
offices/stores, a properly functioning current model demonstration unit for each
category of Authorized Products;
(d) Maintain and train a sales force capable of selling the Authorized
Products;
(e) Provide CSD with reports as CSD may request from time to time,
including sales-out-by-location and inventory levels.
(f) Sell only to end-users, not by mail nor telephone order, and only
after there has been at least one (1) face-to-face communication with the
end-user,
(g) Provide or arrange for professional, prompt, and expert
installation, warranty and service support for the Authorized Products sold in
the territory; and,
(h) Comply with all Federal, State, and Local laws, rules and
regulations.
4. RESPONSIBILITIES OF CSD:
(a) Sell Authorized Products to the RESELLER in response to orders,
subject to the terms and conditions of this Agreement;
(b) Provide RESELLER with marketing literature and other technical
information from time to time; and,
(c) Conduct service, sales and marketing training programs;
(d) Maintain the following policies in accordance with Schedule "D":
Price Protection, Return of Detective Products, Stock Balancing.
Charges, if any, for any service or information may be established
periodically by CSD.
5. PURCHASES:
(a) CSD agrees to sell Authorized Products to RESELLER only in
accordance with the terms of this Agreement, and RESELLER agrees that the terms
of this Agreement supersede any inconsistent or different terms contained in any
RESELLER Purchase Order;
(b) All orders shall be shipped F.O.B. CSD's Distribution Facility, and
risk of loss will pass to the RESELLER once the Authorized Products are placed
in the custody of a common carrier;
(c) RESELLER will pay for the Authorized Products in accordance with
such payment and credit terms as CSD may establish from time to time;
(d) Delivery dates shall be deemed to be estimates only; and,
(e) CSD may allocate delivery of the Authorized Products among all CSD
customers in a manner which CSD deems to be fair and reasonable.
6. WARRANTIES AND EXCLUSIONS:
(a) The CSD standard warranty, which is extended only to end-users,
shall apply to the Authorized Products;
(b) Only CSD may amend, modify or change the CSD warranty;
(c) NEITHER CSD NOR ITS PARENT ORGANIZATION MAKE ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND TO THE RESELLER, WITH RESPECT TO THE AUTHORIZED
PRODUCTS;
(d) CSD AND ITS PARENT ORGANIZATION DISCLAIM ALL WARRANTIES TO RESELLER
WITH RESPECT TO THE AUTHORIZED PRODUCTS WHETHER EXPRESSED OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE;
(e) RESELLER shall have sole responsibility for any warranty it extends
to an end-user if the warranty differs from the CSD warranty.
7. DURATION AND TERMINATION:
(a) This Agreement shall originally be for a term ending on the March
31st which follows the date of this Agreement, and shall automatically renew for
successive one year periods, unless CSD gives notice of termination with or
without cause at least sixty (60) days prior to the next March 31st of the then
current Agreement period.
(b) With or Without Cause, CSD or RESELLER may terminate this
Agreement at any time for any reason, with or without cause, upon sixty (60)
days prior written notice.
(c) Upon termination of this Agreement for whatever reason, RESELLER
shall pay CSD any debit balance RESELLER has with CSD.
(d) IN NO EVENT SHALL RESELLER BE ENTITLED TO INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES, INCLUDING LOST PROFITS, IF THIS AGREEMENT IS TERMINATED.
8. [DELETED]
9. LIMITATION OF LIABILITY:
In no event shall the liability of CSD, Toshiba America Information
Systems, Inc., or of Toshiba Corporation, whether based on an action or claim in
contract, tort or otherwise, arising out of or relating to the sale of
particular units of Authorized Products exceed the purchase price charged by
CSD. In no event shall CSD's liability, whether in contract, tort or otherwise,
for any other matter arising out of this Agreement exceed Fifty Thousand
Dollars ($50,000.00).
10. SOFTWARE:
CSD may make available to RESELLER certain rights to use or license
software for use with the Products. No rights are granted to RESELLER with
respect to the use or license of any such software by reason of this Agreement,
except as required by law. The grant of any other rights with respect to any
software is outside of the scope of this Agreement and shall be the subject of a
separate license or sublicense agreement if granted. Any breach of such license
or sublicense agreement shall, however, also be deemed a breach of this
Agreement and a cause for termination.
11. INDEMNITY FOR PATENTS, TRADEMARKS AND PROPRIETARY RIGHTS:
(a) CESSATION OF SALES IN INSTANCES OF INFRINGEMENT AND POSSIBLE
INFRINGEMENT: In the event any Authorized Products or related goods become, or
in CSD's opinion are likely to become the subject of a claim of infringement or
wrongful use of any patent, trademark, copyright or other proprietary right in
the Territory, RESELLER shall cease to distribute such Authorized Products upon
receipt of written instructions from CSD.
(b) INDEMNITY BY CSD: In the event that a claim of infringement is
made, or in CSD's judgment a possible claim of infringement exists, in respect
to any patent, trademark, copyright or other proprietary right affecting
Authorized Products, and if such claim or possible claim is not covered by
subparagraph (c), below, then CSD shall at its option either (i) modify the
infringing Authorized Product so that the selling thereof by RESELLER ceases to
be infringing or wrongful, (ii) procure for RESELLER the right to continue
selling such Authorized Product, or (iii) demand the return to CSD of all such
Authorized Products and upon receipt CSD will grant RESELLER full credit for
the purchase price of the Authorized Products returned in their original
cartons. Subject to RESELLER's fulfillment of all of its obligations, CSD shall
defend any suit or proceeding brought against RESELLER or its customers insofar
as such suit or proceeding is based upon a claim (other than a claim covered by
subparagraph c. below) that any of the Authorized products purchased by
RESELLER infringe or constitute wrongful use of any patent, trademark,
copyright or other proprietary right under the laws within the territory.
RESELLER shall notify CSD in writing of any such suit or proceeding, promptly
upon first learning of such suit or proceeding, and shall provide CSD, at no
cost, with such assistance and cooperation as CSD may request in the defense of
the case. CSD shall have complete control over any such suit or proceeding
including without limitation the right to settle on behalf of RESELLER on any
terms CSD deems desirable in the sole exercise of its discretion, provided that
CSD shall pay all damages and costs finally awarded against RESELLER or payable
by RESELLER pursuant to a settlement agreement.
(c) INFRINGEMENT NOT THE RESPONSIBILITY OF CSD: CSD shall not have
any liability whatsoever to RESELLER or any of RESELLER's customers or
end-users for any loss or damage resulting from a claim of infringement or
wrongful use based upon or arising from (i) CSD's compliance with RESELLER's
instructions, (ii) the use of any equipment, products, software, data or other
work not manufactured, designed, assembled or supplied by CSD, (iii) the use of
any Authorized Product in implementing or practicing a process, (iv)
infringement resulting from a combination, alteration or configuration of
equipment, except as recommended by CSD in writing, or (v) the use of any
non-CSD name or mark or of any work not authorized by CSD.
(d) DISCLAIMER OF LIABILITY: EXCEPT AS EXPRESSLY SET FORTH IN THIS
PARAGRAPH, CSD AND ITS SUPPLIERS DISCLAIM ALL LIABILITY WHATSOEVER TO RESELLER,
OR CUSTOMERS OR END-USERS FOR LOSS OR DAMAGE, INCLUDING, WITHOUT LIMITATION,
CONSEQUENTIAL, INCIDENTAL, SPECIAL OR EXEMPLARY DAMAGES ARISING OUT OF OR
RELATED TO ANY ALLEGATION OR DETERMINATION THAT ANY AUTHORIZED PRODUCT OR ANY
ACTION IN CONNECTION WITH AN AUTHORIZED PRODUCT INFRINGES OR CONSTITUTES
INFRINGEMENT OR WRONGFUL USE OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER
PROPRIETARY RIGHT UNDER THE LAWS OF THE TERRITORY. THE OBLIGATIONS AND RIGHTS
UNDER THIS PARAGRAPH SHALL SURVIVE THE TERM AND TERMINATION OF THIS AGREEMENT
FOR ANY REASON WHATSOEVER.
(e) RESELLER shall not use and is strictly prohibited from using,
any TOSHIBA trademark or trade names as part of RESELLER's trademarks or names
or in any manner which CSD concludes, in its sole judgment, is unfair,
confusing or misleading to the public or which otherwise adversely reflects
upon the good name and reputation of CSD. Toshiba America Information Systems,
Inc., or Toshiba Corporation.
12. ASSIGNMENT AND OWNERSHIP:
RESELLER may not assign this Agreement or enter into any subdealer
or joint venture arrangements concerning the Authorized Products. CSD reserves
the right to terminate this agreement if RESELLER changes its senior
management, control or principal ownership.
13. INDEPENDENT CONTRACTOR:
RESELLER acknowledges that it is an independent Marketer of
Authorized Products and related goods, that RESELLER has not been granted a
franchise by CSD, that RESELLER is not CSD's agent, and that RESELLER shall not
(a) commit CSD to any contractual obligation, (b) make any warranties or
statements ostensibly on behalf of or approved by CSD with respect to
Authorized Products other than those set forth in CSD's advertising and
warranty literature, or (c) engage in any conduct violative of Federal, State,
or local laws or regulations. Unless specifically otherwise provided, RESELLER
shall indemnify and hold CSD harmless from all claims, lawsuits or liability
(including attorneys' fees and costs) arising out of RESELLER's marketing and
related business activities.
14. EXPORT:
This Agreement involves Products and/or technical data that may be
controlled under the U.S. Export Administration Regulations, and may be subject
to the approval of the U.S. Department of Commerce prior to export. Any export,
directly or indirectly, in contravention of the U.S. Export Administration
Regulations is strictly prohibited.
15. ADDITIONAL SCHEDULES:
The following additional schedules are attached hereto and incorporated
herein: none
------------
16. MISCELLANEOUS:
(a) RESELLER agrees to observe complete confidentiality with regard to
any non-public technical, marketing, price or other information which is
disclosed by CSD. These confidentiality requirements shall survive termination
of this Agreement.
(b) CSD shall not be liable for any delay or failure to perform this
Agreement because of any unforeseen circumstances or causes beyond CSD's
reasonable control.
(c) This Agreement may not be modified or amended, except in a writing
signed by RESELLER and CSD's Vice President-General Manager. Either party may
waive a provision in this Agreement which is to its benefit upon written notice
to the other party. A waiver of any provision in any one instance shall not be
deemed a waiver of any provision in any other instance.
(d) This Agreement, and the schedules attached hereto, constitute the
entire understanding of the parties with respect to its subject matter. There
are no other agreements, either oral or written, pertaining to this Agreement.
All prior agreements are cancelled and superseded by this Agreement. Except as
provided in this Agreement, there are no inducements for the RESELLER to enter
into this Agreement.
(e) This Agreement shall be deemed performed in and shall be construed
and governed by the laws of the State of California, excluding its Conflict
of Laws provisions. In the event of any dispute arising under the terms of this
Agreement, such dispute shall be heard by a Judge alone without a jury.
(f) This Agreement shall be executed in duplicate, each copy being
considered an original, but both taken together shall constitute but one
agreement.
(g) This Agreement shall not be binding upon CSD until it has been
executed by CSD's Vice President-General Manager.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Manchester Equipment Co., Inc.
- --------------------------------------------------------------------------------
(Type or Print Full Legal Name of Reseller)
By: /s/ Joel Gilberts
----------------------------------------------------------------------------
(Signature)
Printed Name: Joel Gilberts
------------------------------------------------------------------
Title: Vice President
-------------------------------------------------------------------------
Address of
Principal Place of Business: 50 Marcus Blvd
---------------------------------------------------
Hauppauge, NY 11788
- --------------------------------------------------------------------------------
Legal Status
of Reseller: Corporation
-------------------------------------------------------------------
(Sole Proprietorship, Partnership, Corporation)
State in Which Formed: New York
---------------------------------------------------------
- --------------------------------------------------------------------------------
Accepted by
TOSHIBA AMERICA INFORMATION SYSTEMS, INC.
Computer Systems Division
9740 Irvine Blvd.
Irvine, California 92718
By /s/
---------------------------------------------------
Vice President-General Manager
Computer Systems Division
<PAGE> 3
TOSHIBA AMERICA INFORMATION SYSTEMS, INC.
RESELLER AGREEMENT NO. 00159
SCHEDULE A
AUTHORIZED PRODUCTS LIST
In accordance with paragraph 1 of the CSD RESELLER Agreement, the following is
the list of the AUTHORIZED PRODUCTS in which the RESELLER is authorized to deal:
/ X / Battery Operated Lap Top Computers
/ X / AC Powered Lap Top Computers
/ X / Desk Tops/DOS Machines
/ / Other Products Specified Below:
1.
-------------------------------
2.
-------------------------------
3.
-------------------------------
4.
-------------------------------
5.
-------------------------------
6.
-------------------------------
AGREED TO:
DATE: May 1, 1990
Manchester Equipment Co., Inc.
(Full Legal Name of Reseller)
By: /s/ Joel Gilberts
---------------------------
(Signature)
Joel Gilberts
- -------------------------------------- TOSHIBA AMERICA
(Printed Name of Person Signing INFORMATION SYSTEMS, INC.
for Reseller)
Vice President BY: /s/
- -------------------------------------- ---------------------------
(Title of Person Signing for Reseller) Vice President--General Manager
Computer Systems Division
<PAGE> 4
TOSHIBA AMERICA INFORMATION SYSTEMS, INC.
RESELLER AGREEMENT NO. 00159
SCHEDULE B
TERRITORY
In accordance with paragraph 2 of the CSD Reseller Agreement, the following sets
forth the geographic territory and the specific locations through which RESELLER
may promote, sell, market and service PRODUCTS to end-users. RESELLER will
attach to Schedule "B" a list of all selling locations; said attachment will be
known as "Exhibit A" and will become a part hereof. RESELLER agrees to update
"Exhibit A" once every six months.
GEOGRAPHIC TERRITORY SHALL BE:
NEW YORK, MASSACHUSETTS, FLORIDA
RESELLER agrees to insure that all locations and/or franchises comply with the
terms of the Reseller Agreement.
RESELLER, at the option of CSD, agrees to provide CSD headquarters with
sales-out-by-location reports on or before the fifteenth (15th) day of each
calendar month for sales in the previous calendar month. Sales out are to be
submitted in a machine readable format to be determined by CSD's Director of
Sales Administration. In addition to customer name and location (city, state and
zip code), said report will include quantity and price of product sold. CSD
shall keep such information confidential.
RESELLER, at the option of CSD, further agrees to provide CSD headquarters with
inventory levels by location on or before the fifteenth (15th) day of each
calendar month for inventory at the end of the previous calendar month.
Inventory level reports are to be submitted in a machine readable format to be
determined by CSD's Director of Sales Administration.
AGREED TO:
DATE: May 1, 1990
Manchester Equipment Co., Inc.
(Full Legal Name of Reseller)
By: /s/ Joel Gilberts DATE: May 1, 1990
---------------------------
(Signature)
Joel Gilberts
- -------------------------------------- TOSHIBA AMERICA
(Printed Name of Person Signing INFORMATION SYSTEMS, INC.
for Reseller)
Vice President BY: /s/
- -------------------------------------- ---------------------------
(Title of Person Signing for Reseller) Vice President--General Manager
Computer Systems Division
<PAGE> 5
[LOGO] MANCHESTER EQUIPMENT COMPANY, INC.
"The Computer Supply and Equipment Experts"
"EXHIBIT A"
Manchester Equipment Co., Inc.
Two Penn Plaza; Suite 1995
New York, NY 10121
212-629-6969
FAX: 212-629-6983
Manchester Equipment Co., Inc.
62 Harvard Street; 3rd floor
Brookline, MA 02146
617-739-1555
FAX: 617-739-1191
Manchester Equipment Co., Inc.
1040-D West Prospect Road
Fort Lauderdale, FLA 33309
305-491-7660
FAX: 305-491-7703
Manchester Equipment Co., Inc.
5121 Ehrlich Road; Bldg. 105B
Tampa, FLA 33624
813-962-8088
FAX: 813-961-2122
Corporate Headquarters: 50 Marcus Blvd. - Hauppauge, NY 11788 - 516-434-8700 -
516-435-1199 - FAX 516-435-2113
<PAGE> 6
DIRECT RESELLER QUESTIONNAIRE
COMPUTER SYSTEMS DIVISION TOSHIBA AMERICA INFORMATION SYSTEMS, INC.
(1) Please provide us with the names of the individuals we should contact
concerning the following:
CONTRACTS: MARKETING PROMOTIONS:
Joel Gilberts Joel Gilberts
name name
Vice President Vice President
title title
516-435-1199 516-435-1199
telephone # telephone #
CO-OP FUNDS: CREDIT:
Marla Schmidt Lorraine Coleman
name name
Co-op Coordinator Chief Accountant
title title
516-435-1199 or 516-366-0163 516-435-1199
telephone # telephone #
(2) Does your company develop and/or market vertical application packages that
would be relevant to Toshiba products?
(yes/no)
If yes, please provide us with a brief description of (a) the package, its
function and target markets; and (b) how and where the package was developed.
Use reverse side of paper and attachments it necessary.
Periodic reports are made to the government on the following. Your submission of
this information is optional.
No
(3) Is your business minority-owned? ----------
(yes/no)
(4) Is your business woman-owned? No
----------
(yes no)
<PAGE> 7
TOSHIBA INFORMATION SYSTEMS, INC.
RESELLER AGREEMENT NO. 00159
SCHEDULE C
DISCOUNT SCHEDULE
[No longer applicable]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Manchester Equipment Co., Inc.for the
fiscal year ended July 31, 1996 and is qualified in its entirety by reference
to such registration statement on form S-1 filed October 3, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<CASH> 5,774
<SECURITIES> 0
<RECEIVABLES> 19,868
<ALLOWANCES> 800
<INVENTORY> 8,957
<CURRENT-ASSETS> 34,330
<PP&E> 5,509
<DEPRECIATION> 3,265
<TOTAL-ASSETS> 37,761
<CURRENT-LIABILITIES> 24,489
<BONDS> 0
0
0
<COMMON> 62
<OTHER-SE> 12,852
<TOTAL-LIABILITY-AND-EQUITY> 37,761
<SALES> 189,659
<TOTAL-REVENUES> 189,659
<CGS> 162,656
<TOTAL-COSTS> 162,656
<OTHER-EXPENSES> 23,070
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 374
<INCOME-PRETAX> 3,568
<INCOME-TAX> 1,430
<INCOME-CONTINUING> 2,138
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,138
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
</TABLE>
