UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 30, 1996
------------
MORGAN PRODUCTS LTD.
(Exact name of registrant as specified in its charter)
Delaware 06-1095650
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
Commission File Number 1-9843
469 McLaws Circle, Williamsburg, Virginia 23185
(Address of principal executive offices) (Zip Code)
(757) 564-1700
(Registrant's telephone number, including area code)
------------
<PAGE>
ITEM 5. OTHER ASSETS
The Registrant hereby files herewith the material contracts set forth
as Exhibits in Item 7 below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
1. Amendment #5, dated June 30, 1996, to the Loan and Security
Agreement among the Company, certain banks and Barclay's Business
Credit, Inc. (succeeded by Fleet Capital), dated July 14, 1994.
2. Amendment #6, dated August 30, 1996, to the Loan and Security
Agreement among the Company, certain banks and Barclay's Business
Credit, Inc. (succeeded by Fleet Capital), dated July 14, 1994.
3. Employment agreement between the Company and Dawn Neuman dated May
30, 1995.
4. Amendment dated February 8, 1996 to the Employment Agreement of
Dawn Neuman.
5. Severance Agreement between the Company and David A. Braun dated
October 1, 1995.
6. Agreement between United Paperworkers International Union, Region
IX, AFL-CIO, Local No. 7828, Decatur, Illinois dated January 2,
1996.
7. Non-Competition Agreement by and among the Company, Tennessee
Building Products, Inc., Titan Building Products, Inc., James
Fishel, James Schulman and John Whipple dated August 30, 1996.
8. Lease Agreement by and between Titan and Sunbelt Properties for
property located at 37-A Freedom Court, Greer, South Carolina,
dated February 15, 1995.
9. Lease Agreement by and between Titan and SCI NC Limited
Partnership for property located at 1407-A Westinghouse Blvd.,
Charlotte, North Carolina, dated February 15, 1995.
10. Lease Agreement by and between the Company and F&S Properties for
property located at Foster and Glenrose Avenue, Nashville,
Tennessee, dated August 30, 1996.
11. Lease Agreement by and between the Company and F&S Properties for
property located at 651 Thompson Lane, Nashville, Tennessee, dated
August 30, 1996.
12. Lease Agreement by and between the Company and F&S Properties for
property located at 2131 Polymar Drive, Chattanooga, Tennessee,
dated August 30, 1996.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MORGAN PRODUCTS LTD.
By: /s/ Douglas H. MacMillan
----------------------------
Douglas H. MacMillan
Vice President and Chief Financial
Officer and Secretary
DATE: September 26, 1996
-3-
<PAGE>
Exhibit 1
06/21/96
FIFTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THE FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ("fifth
Amendment") is made as of the 30th day of June, 1996 by and among Morgan
Products Ltd., a Delaware corporation having its chief executive office at 469
McLaws Circle, Williamsburg, Virginia 23185 ("Borrower"), the lenders who are or
who may from time to time become signatories hereto ("Lenders") and Fleet
Capital Corporation, a Connecticut corporation having an office at 200 West
Madison Street, Chicago, Illinois 60606 ("FCC") which is the
successor-in-interest to Barclays Business Credit, Inc. and Shawmut Capital
Corporation, as agent for the Lenders ("FCC," in such capacity being "Agent").
W I T N E S S E T H:
WHEREAS, Agent (or its predecessor-in-interest), Lenders, and
Borrower entered into a certain Loan and Security Agreement dated as of July 14,
1994 as amended by (i) a certain First Amendment to Loan and Security Agreement
("First Amendment") dated as of September 30, 1994 by and among Agent (or its
predecessor-in-interest), Borrower and lender signatories thereto, (ii) a
certain Second Amendment to Loan and Security Agreement ("Second Amendment")
dated as of October 20, 1994 by and among Agent (or its
predecessor-in-interest), Borrower and the lender signatories thereto, (iii) a
certain First (sic) Amendment to Loan and Security Agreement dated as of march
29, 1995 by and among Agent (or its predecessor-in-interest), Borrower and the
lender signatories thereto, and (iv) a certain Fourth Amendment to Loan and
Security Agreement dated as of October 30, 1995 by and among Agent (or its
predecessor-in-interest), Borrower and the lender signatories thereto. Said Loan
and Security Agreement, as amended from time to time, is hereinafter referred to
as the "Loan Agreement"; and
WHEREAS, Borrower, Lenders and Agent desire to amend and
modify certain provisions of the Loan Agreement.
NOW THEREFORE, in consideration of the premises, the mutual
covenants and agreements herein contained, and any extension of credit
heretofore, now or hereafter made by Lenders and Agent to Borrower, the parties
hereto hereby agree as follows:
1. Definitions. Except as otherwise specifically provided
for herein, all capitalized terms used herein without definition shall have the
meanings given to them in the Loan Agreement.
2. Additional and Amended Definitions. The following
definition of "Interest Rate Coverage Ratio" is hereby inserted into Section 1.1
of the Loan Agreement. The definitions of "Commitment termination Date," "LIBOR
Revolver Added Rate," "Permitted Purchase Money Indebtedness" and Prime Revolver
Added Rate" contained in Section 1.1 of the Loan Agreement are hereby deleted
and the following are inserted in their stead:
* * *
<PAGE>
"Commitment Termination Date - the earliest of (i)
July 13, 1998, (ii) the date of termination of the commitment
to make further Revolving Credit Loans pursuant to Section 3.3
or 3.4 hereof, and (iii) the date of termination of the
commitment to make further Revolving Credit Loans pursuant to
Section 11.2 hereof.
* * *
Interest Rate Coverage Ratio - with respect to any
fiscal period, the ratio of Borrower's (a) net income before
interest, income tax expense, any extraordinary gain or loss
from the sale of assets outside the ordinary course of
business (including, without limitation, the sale of Borrower
facility located in Lexington, North Carolina) and any charge
or expense to net income (in an amount not to exceed
$1,500,000) in respect to the restructuring of Morgan
Manufacturing for or taken within such period to (b)
Borrower's interest expense for such period."
* * *
"LIBOR Revolver Added Rate and Prime Revolver Added
Rate" - a percent determined by Borrower's Interest Rate
Coverage Ratio for the most recently ended annual fiscal
period (as determined by Borrower's annual audited financial
statements delivered pursuant to Section 9.1(J)(i) of the
Agreement) pursuant to the following schedule:
Interest Rate Prime Revolver LIBOR
Coverage Ratio Added Rate Revolver Added Rate
-------------- -------------- -------------------
<1.50 to 1 1.25% 3.00%
- -
>1.50 to 1 but <1.75 to 1 1.00% 2.75%
- -
>1.75 to 1 but <2.20 to 1 .75% 2.50%
- -
>2.20 to 1 but <2.50 to 1 .50% 2.25%
- -
>2.50 to 1 .25% 2.00%
- -
As of July 1, 1996, the LIBOR Added Rate and the Prime Added
Rate shall be two and one half percent (2.50%) and three quarters of one percent
(.75%), respectively. Changes in the LIBOR Revolver Added Rate and the Prime
Revolver Added Rate shall be effective as of the first day of the month in which
Borrower delivers to Agent its annual audited financial statements in accordance
with Section 9.1(J)(i) hereof.
* * *
Permitted Purchase Money Indebtedness - Purchase
Money Indebtedness of Borrower incurred after July 14, 1994
which is secured by a Purchase Money Lien and which when
aggregated with the principal amount of all other such
Purchase Money Indebtedness and Capitalized Lease Obligations
of Borrower at the time outstanding, does not exceed
$10,000,000. For the purposes of this definition, the
principal amount of any Purchase Money Indebtedness consisting
of capitalized leases shall be computed as a Capitalized Lease
Obligation."
-2-
<PAGE>
* * *
3. Capital Expenditures. Section 9.2(L) of the Loan and
Security Agreement is hereby deleted and the following is inserted in its stead:
"9.2 Negative Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless Required Lenders have first consented thereto in
writing, it will not:
* * *
(L) Capital Expenditures. Make Capital Expenditures
which, in the aggregate, as to Borrower and its Subsidiaries, exceed during any
fiscal year of Borrower within the Term hereof the amount set forth opposite
such fiscal year in the following schedule:
Fiscal Year Amount
----------- ------
1995 $8,500,000
1996 $8,500,000
1997 and each succeeding fiscal year $5,000,000"
* * *
4. Continuing Effect. Except as otherwise specifically set
out herein, the provisions of the Loan Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, this Fourth Amendment has been duly
executed as of the day and year specified at the beginning hereof.
MORGAN PRODUCTS LTD., ("Borrower")
By: /s/ Douglas H. MacMillan
------------------------
Name: Douglas H. MacMillan
----------------------
Title: VP, CFO and Secretary
---------------------
FLEET CAPITAL CORPORATION
("Agent" and "Lender")
By: /s/ Sandra Evans
------------------------
Name: Sandra Evans
---------------------
Title: Vice President
---------------------
-3-
<PAGE>
HARRIS TRUST AND SAVINGS BANK ("Lender")
By: /s/ Lee A. Vandermyde
------------------------
Name: Lee A. Vandermyde
---------------------
Title: Vice President
---------------------
BANK OF AMERICA ILLINOIS ("Lender")
By:-------------------------
Name:-----------------------
Title:----------------------
-4-
<PAGE>
Exhibit 2
08/14/96
SIXTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THE SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Sixth Amendment") is made
as of the 30th day of August, 1996 by and among Morgan Products Ltd., a Delaware
corporation having its chief executive office at 469 McLaws Circle,
Williamsburg, Virginia 23185 ("Borrower"), the lenders who are or who may from
time to time become signatories hereto ("Lenders") and Fleet Capital
Corporation, a Connecticut corporation having an office at 200 West Madison
Street, Chicago, Illinois 60606 ("FCC") which is the successor-in-interest to
Barclays Business Credit, Inc., as agent for the Lenders ("FCC," in such
capacity being "Agent").
W I T N E S S E T H:
WHEREAS, FCC, as Agent and Lender, and Borrower entered into a certain Loan and
Security Agreement dated as of July 14, 1994 as amended by (i) a certain First
Amendment to Loan and Security Agreement ("First Amendment") dated as of
September 30, 1994 by and among Agent, Borrower and the lender signatories
thereto, (ii) a certain Second Amendment to Loan and Security Agreement ("Second
Amendment") dated as of October 20, 1994 by and among Agent, Borrower and the
lender signatories thereto, (iii) a certain First (sic) Amendment to Loan and
Security Agreement dated as of March 29, 1995 by and among Agent, Borrower and
the lender signatories thereto, (iv) a certain Fourth Amendment to Loan and
Security Agreement dated as of October 30, 1995 by and among Agent, Borrower and
the lender signatories thereto (v) and a certain Fifth Amendment to Loan and
Security Agreement dated as of June 30, 1996 by and among Agent, Borrower and
the lender signatories thereto. Said Loan and Security Agreement, as amended
from time to time, is hereinafter referred to as the "Loan Agreement"; and
WHEREAS, Borrower, Lenders and Agent desire to amend and modify certain
provisions of the Loan Agreement.
NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained, and any extension of credit heretofore, now or
hereafter made by Lenders and Agent to Borrower, the parties hereto hereby agree
as follows:
1. Definitions. Except as otherwise specifically provided for herein, all
capitalized terms used herein without definition shall have the meanings given
to them in the Loan Agreement.
2. Amended Definition. The definition of "Bank" contained in Section 1.1
of the Loan Agreement is hereby deleted and the following is inserted in its
stead:
<PAGE>
"1.1 Defined Terms. When used herein, the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
* * *
Bank - Fleet National Bank."
* * *
3. Leases. Section 9.2(W) of the Loan Agreement is hereby deleted and the
following is inserted in its stead:
"9.2. Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Agent or any Lender, Borrower
covenants that, unless Required Lenders have first consented thereto in writing,
it will not:
* * *
(W) Leases. Become a lessee under any operating lease of Property if the
aggregate Rentals payable during any current or future period of twelve (12)
consecutive months during the Term hereof under the lease in question and all
other leases under which Borrower is then lessee would exceed Nine Million
Dollars ($9,000,000). The term "Rentals" means, as of the date of determination,
all payments which the lessee is required to make by the terms of any lease,
exclusive of payments for taxes, insurance, common area maintenance and the
like."
* * *
4. Specific Financial Covenants. Section 9.3(B) of the Loan Agreement is
hereby deleted and the following is inserted in its stead:
"9.3.Specific Financial Covenants. During the Term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless otherwise consented to by Required Lenders in
writing, it shall:
* * *
(B) Total Liabilities to Tangible Net Worth Ratio. Have at the end of each month
within the Term hereof, a ratio of Indebtedness (computed in accordance with
GAAP) to Tangible Net Worth equal to or less than the ratio set forth opposite
such month in the following schedule:
-2-
<PAGE>
Month Ratio
----- -----
Each Month within 1.85 to 1
Fiscal Year 1994
Each Month within 1.50 to 1
Fiscal Year 1995
January, February and 1.50 to 1
March, 1996
April, May, June and July, 1996 1.60 to 1
August, September, October 1.90 to 1
and November, 1996
December, 1996 and January, 1.80 to 1
February, March, April, May,
June, July and August, 1997
September, October and 1.70 to 1
November, 1997
December, 1997 and each 1.60 to 1
month thereafter
* * *
5. TBP Acquisition. Subject to (i) the execution and delivery by Borrower
to Agent and Lenders of this Sixth Amendment and (ii) the execution and delivery
by Borrower and Tennessee Building Products, Inc., Titan Building Products,
Inc., James Fishel and James Schulman of the Assignment in the form attached
hereto and incorporated herein as Exhibit A, Agent and Lenders shall be deemed
to have consented to the acquisition by Borrower of the assets and businesses of
Tennessee Building Products, Inc. and Titan Building Products, Inc. pursuant to
the terms and conditions of that certain Asset Purchase Agreement between
Borrower and Tennessee Building Products, Inc., Titan Building Products, Inc.,
James Fishel and James Schulman dated as of July 22, 1996. Borrower hereby
represents and warrants that it has delivered to Agent a true and correct copy
of said Acquisition Agreement together with all amendments, exhibits, schedules
and related documents thereto.
6. Exhibits. Exhibits B, D, E, F, J, Q, and R are hereby deleted and
Exhibits B, D, E, F, J, Q and R in the form attached hereto and incorporated
herein are inserted in their stead:
7. Patent Assignment and Trademark Assignment. Borrower agrees to execute
any amendment to the Patent Assignment and/or the Trademark Assignment requested
by Agent or its counsel to reflect any patent, trademark, tradenames, copyright
or license acquired
-3-
<PAGE>
from Tennessee Buildings Products, Inc. or Titan Building Products, Inc.
8. Continuing Effect. Except as otherwise specifically set out herein, the
provisions of the Loan Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, this Sixth Amendment has been duly executed as of the day
and year specified at the beginning hereof.
MORGAN PRODUCTS LTD. ("Borrower")
By: /s/ Douglas H. MacMillan
-------------------------
Name: Douglas H. MacMillan
Title: Vice President and Chief Financial Officer
FLEET CAPITAL CORPORATION
("Agent" and "Lender")
By: /s/ Sandra Evans
------------------
Name: Sandra Evans
Title: Vice President
HARRIS TRUST AND SAVINGS BANK ("Lender")
By: /s/ Lee A. Vandermyde
-----------------------
Name: Lee A. Vandermyde
Title: Vice President
BANK OF AMERICA ILLINOIS ("Lender")
By: /s/ Daniel Lange
-----------------
Name: Daniel Lange
Title: Vice President
-4-
<PAGE>
ASSIGNMENT
WHEREAS, Morgan Products Ltd., a Delaware corporation ("Borrower"), and
Tennessee Building Products, Inc. ("TBP"), a Tennessee corporation, Titan
Building Products, Inc., ("Titan"), a North Carolina corporation, James Fishel
("Fishel") and James Schulman ("Schulman" and together with TBP, Titan and
Fishel, "Seller"), have entered into a certain Asset Purchase Agreement (such
Asset Purchase Agreement, together with all amendments and modifications
thereto, being collectively referred to herein as the "Purchase Agreement"),
dated as of July 22, 1996, pursuant to which Seller has made certain
representations, warranties and covenants ("Seller Representations, Warranties
and Covenants");
WHEREAS, Borrower, has entered into a certain Loan Agreement dated July 14, 1994
by and among Borrower, "Lenders" (as such term is defined in said Loan and
Security Agreement), and the predecessor-in-interest to Fleet Capital
Corporation ("FCC"), as agent for such Lenders (FCC, in such capacity, being
"Agent"). Said Loan and Security Agreement as amended from time to time, is
hereinafter referred to as the "Loan Agreement";
WHEREAS, pursuant to the Loan Agreement, Agent, for its benefit and the ratable
benefit of Lenders, has been granted a security interest in all of Borrower's
assets; and
WHEREAS, Agent and Lenders have required, as a condition to their consent to
Borrower entering into and consummating the Purchase Agreement, that Borrower
assign to Agent, for its benefit and the ratable benefit of Lenders, as
additional security for the repayment of the "Obligations" (as defined in the
Loan Agreement), all of its rights and remedies with respect to the Seller
Representations, Warranties and Covenants.
NOW, THEREFORE, in consideration of the premises set forth herein and for other
good and valuable consideration, Borrower agrees as follows:
1. Borrower hereby assigns and transfers to Agent, for its benefit and the
ratable benefit of Lenders, as additional security for the repayment in full of
the Obligations, all of Borrower's rights and remedies with respect to any and
all of the Seller Representations, Warranties and Covenants.
2. Borrower hereby irrevocably authorizes and empowers Agent or its agent, in
Agent's sole discretion, to assert, either directly or on behalf of Borrower,
any claims Borrower may, from time to time, have against Seller with respect to
the Seller Representations, Warranties and Covenants, as Agent may deem proper,
and to receive and collect any and all damages, awards and other monies
resulting therefrom and to apply the same on account of any of the Obligations.
Borrower hereby irrevocably makes, constitutes and appoints Agent (and all
<PAGE>
officers, employees or agents designated by Agent) as Borrower's true and lawful
attorney (and agent-in-fact) for the purpose of enabling Agent or its agent to
assert and collect such claims and to apply such monies in the manner set forth
hereinabove. Notwithstanding the foregoing, Agent agrees that until an "Event of
Default" (as defined in the Loan Agreement) shall occur, Borrower may assert
claims against Seller in connection with the Seller Representations, Warranties
and Covenants, provided that Borrower gives Agent notice of Borrower's intention
to assert any such claims which are material and keeps Agent informed of the
status of any proceedings concerning such claims.
3. Borrower shall keep Agent informed of all material circumstances bearing upon
the Seller Representations, Warranties and Covenants and Borrower shall not
waive any of its material rights or material remedies under the Purchase
Agreement with respect to the Seller Representations, Warranties and Covenants
without the prior written consent of Agent.
4. This Assignment shall be construed as an "Other Agreement" (as defined in the
Loan Agreement) and shall continue effective until the Obligations have been
paid in full and the Loan Agreement has been terminated, at which time Agent
shall release to Borrower Agent's interest in the Seller Representations,
Warranties and Covenants.
5. This Assignment shall be construed in accordance with the laws and decisions
of the State of Illinois and shall be immediately binding upon Borrower.
IN WITNESS WHEREOF, this Agreement has been signed and sealed as of this __ day
of August, 1996.
MORGAN PRODUCTS LTD.
By: /s/ Douglas H. MacMillan
- ----------------------------
Name: Douglas H. MacMillan
Title: Vice President
Acknowledged and Accepted as of this
30th day of August, 1996.
FLEET CAPITAL CORPORATION,
as Agent and Lender
By: /s/ Sandra J. Evans
- ------------------------
Name: Sandra J. Evans
Title: Vice President
-2-
<PAGE>
CONSENT TO ASSIGNMENT
The undersigned hereby acknowledges receipt of a copy of the foregoing
Assignment and irrevocably consents to the terms thereof. The foregoing
notwithstanding, said Assignment and the undersigned's consent thereto shall not
affect or prejudice in any way the undersigned's rights to assert any defense or
counterclaim they may have in respect to any Seller Representations, Warranties
and Covenants (as defined in the foregoing Assignment).
DATED: As of August 30, 1996
TENNESSEE BUILDING PRODUCTS, INC.
By: /s/ James Fishel
- --------------------
Name: James Fishel
Title: President
TITAN BUILDING PRODUCTS, INC.
By: /s/ James Schulman
- ------------------------
Name: James Schulman
Title: Executive Vice President
- --------------------------
James Fishel
- -------------------------
James Schulman
-3-
<PAGE>
Exhibit 3
TO: Dawn Neuman
CC: Doug MacMillan
Larry Robinette
FROM: Dennis Hood
DATE: May 30, 1995
SUBJECT: Williamsburg Relocation
This will confirm our various discussions regarding the Williamsburg move and
how it will affect you.
You will be promoted to Treasurer and Corporate Tax Manager for Morgan Products
Ltd. In conjunction with this promotion, your base salary will be increased to
$80,000 annually effective May 23, 1995.
You will be eligible for a car allowance of $300 per month which will be
effective on May 23, 1995. As you know, such an allowance must be treated as
income and will be taxed accordingly.
You will have an enhanced relocation package as follows:
Prudential Home Relocation Program.
Interest Rate differential for up to three years on the increase in interest
expense on a new mortgage over the interest expense on your old mortgage
(applies only to mortgage principal on new residence equal to mortgage principal
on old residence).
One time relocation payment of $8,000 rather than the typical $4,000.
Full Morgan Relocation Program; that is lawyers fees, points, moving expenses,
etc.
Covered costs associated with buying a home and the mortgage differential
program will be available for 24 months after you move rather than 12 months
under existing policies.
The company will provide you with up to one business trip to Oshkosh per quarter
at which time your spouse and child will be able to travel with you at company
expense. This special arrangement will continue for up to three years.
In the event you are terminated for other than cause at anytime over the next
three year period, the company will reimburse you for out of pocket expenses you
might incur in relocating back to the Mid-West. Such relocation costs (moving
expenses, realtor fees, etc.) will be capped at $15,000.
<PAGE>
Also, if you are terminated for other than cause the company will provide you
with no less than six months of severance pay following your termination date at
your biweekly rate then in effect. If you become employed during the period you
are receiving severance payments, such payments will be discontinued effective
with the date of new employment. Your medical and dental insurance coverage
would also be continued upon termination at the levels and co-pay arrangements
then in effect for a period of six months or until you become eligible for
coverage with another employer, whichever occurs first.
Other items we discussed are as follows:
From a staffing perspective, it is our intent to provide two people one of whom
would do tax support and one who would provide benefits guidance and support.
As we discussed, we will provide whatever assistance we can to help Al find a
suitable position. We already have a number of contacts who could be helpful in
that respect.
We are aware of your closeness to your Aunt in Milwaukee, and would be flexible
if you needed to spend some time with her following her anticipated surgery.
I believe these are all the items we discussed. Larry, Doug, and I feel you do
an excellent job and we are looking forward to working with you in our new
Williamsburg surroundings.
/s/ Dennis C. Hood
- -------------------
Dennis C. Hood
Senior Vice President
Human Resources & Administration
Received & Acknowledged
/s/ Dawn E. Neuman 5/30/95
- ------------------- -------
Dawn E. Neuman Date
-2-
<PAGE>
Exhibit 4
DATE: February 8, 1996
TO: Dawn Neuman
FROM: Dennis C. Hood
CC: Doug Mac Millan
SUBJECT: Amended Severance in the event of termination
As we discussed, we are amending our letter to you of May 30, 1995 to provide
for an unqualified six months of severance pay in the event you are terminated
for other than cause. Thus, the language of the second bullet on page two of the
May 30, 1995 letter is changed to read as follows:
Also, if you are terminated for other than cause the company will provide you
with no less than six months of severance pay following your termination date at
your biweekly rate then in effect. Your medical and dental insurance coverage
would also be continued upon termination at levels and co-pay arrangements then
in effect for a period of six months or until you become eligible for coverage
with another employer, whichever occurs first.
Please acknowledge receipt of this amendment to the May 30, 1995 letter by
signing and dating below.
Sincerely,
/s/ Dennis C. Hood
- -------------------
Dennis C. Hood
Senior Vice President
Human Resources & Administration
Received and Acknowledged
/s/ Dawn E. Neuman 2/8/96
- ------------------- ------
Dawn E. Neuman Date
-3-
<PAGE>
Exhibit 5
October 1, 1995
Mr. David A. Braun
1803 Signal Hill Drive
Mechanicsburg, PA 17055
Dear Dave:
In keeping with our understanding and in conjunction with your appointment as
Vice President and General Manager of Morgan Distribution, we are providing you
with the following severance arrangement.
If you are terminated at any time following the twenty-four (24) month period
following your date of employment, you will be eligible for severance pay equal
to you bi-weekly base pay then in effect payable over the balance of the
twenty-four (24) month period or for twelve (12) months, whichever is greater.
After twenty-four (24) months from your date of hire, you will be eligible for
twelve (12) months of bi-weekly pay in the event of termination. This severance
arrangement will not be applicable if your employment is terminated for cause,
or because of death, disability, voluntary retirement, or resignation.
Please acknowledge receipt of this agreement by signing below and returning a
signed copy to the attention of Dennis Hood.
Best regards,
/s/ Larry R. Robinette
- ----------------------
Larry R. Robinette
President
Chief Executive Officer
RECEIVED AND ACKNOWLEDGED:
/s/ David A. Braun 10/ /95
- ------------------ ---------
David A. Braun (Date)
<PAGE>
Exhibit 6
UNITED PAPERWORKERS INTERNATIONAL UNION
REGION IX, AFL-CIO, LOCAL NO. 7828, DECATUR, ILLINOIS
AND
MORGAN DISTRIBUTION, A DIVISION OF
MORGAN PRODUCTS LTD.
DECATUR, ILLINOIS
UNION CONTRACT
PREAMBLE
This Agreement is made and entered into this 2nd day of January, 1996, by and
between the Morgan Products Ltd., for its plant at Decatur, Illinois,
hereinafter called the "Company" and the United Paperworkers International
Union, Region IX, AFL-CIO, Local No. 7828, hereinafter called the "Union."
<PAGE>
LABOR AGREEMENT
TABLE OF CONTENTS
ARTICLE PAGE NUMBER
I PURPOSE 3
II RECOGNITION 3
III CHECK OFF 3
IV UNION SECURITY 4
V MANAGEMENT 4
VI SENIORITY 4
VII HOURS OF WORK 8
VIII VACATIONS 10
IX HOLIDAYS 11
X REPORT AND CALL-IN 12
XI LEAVE OF ABSENCE 12
XII FUNERAL LEAVE 13
XIII JURY DUTY 14
XIV WAGES 14
XV GRIEVANCE PROCEDURE 15
XVI INSURANCE 16
XVII PENSIONS 17
XVIII SAFETY 18
XIX GENERAL 19
XX NON-DISCRIMINATION 20
XXI NO STRIKE AND NO LOCK-OUT 20
XXII DURATIONS AND SCOPE 21
APPENDIX "A"
APPENDIX "B"
APPENDIX "C"
APPENDIX "D"
APPENDIX "E"
APPENDIX "F"
-2-
<PAGE>
ARTICLE I - PURPOSE
The general purpose of this Agreement is to promote the mutual interest of the
Union and the Company; to provide for the operation of the plant of the Company,
under methods which will further, to the fullest extent, the safety and welfare
of the employees; orderly collectively bargaining relations; prompt and
equitable disposition of grievances; economy of operation; quantity and quality
of production; and elimination of waste. It is recognized by this Agreement to
be the duty of the Union and its members and the Company to cooperate fully,
individually, and collectively for the advancement of these conditions.
ARTICLE II - RECOGNITION
1. The Company recognizes the United Paperworkers International Union, Region
IX, AFL-CIO, Local 7828, as the exclusive collective bargaining agency for all
its employees at the Company's Decatur, Illinois establishment, including shop
departments, and warehouse department, per job classifications attached hereto
as Appendix "A," but excluding all other employees, guards and supervisors.
Omission of a specific job classification does not preclude Union
representation.
2. The term "Employee" as used herein includes only those persons for which the
Union is the exclusive collective bargaining agency as set forth above.
3. Temporary employees, including summer work personnel, shall not be entitled
to pay in excess of the lowest pay scale accorded Union employees in the same
work category and shall not be entitled to benefits of overtime pay where Union
personnel are available to perform the same, except as provided under Article
VII - Hours of Work, Section 6.
ARTICLE III - CHECK OFF
1. The company agrees to deduct each month from the pay checks of all employees
who are members of the Union, and who are covered by this Agreement, all dues
and initiation fees owed to the United Paperworkers International Union, Region
IX, AFL-CIO, Local No. 7828 or its successors; provided, however, that the
employee shall have signed and submitted a notice authorizing such action.
All dues and initiation fees deducted by the Company shall be forwarded to the
Recording Secretary of the Local Union No. 7828.
2. It is understood and agreed that any monies collected by the Company for the
Union will be taken out of the first pay period of each month for the following
month, and remitted to the Union within five (5) days.
-3-
<PAGE>
3. The Union shall indemnify and save the Company harmless against any and all
claims, demands, suits or other forms of liability that shall arise out of or by
reason of action taken or not taken by the Company in reliance upon written
assignments furnished to the Company by the Union or for purpose of complying
with any of the provisions of this Article.
ARTICLE IV - UNION SECURITY
1. The Union agrees that neither its agents nor its members shall solicit Union
membership or engage in Union activity during working hours upon Company
property.
2. All of the Company's present employees as set forth in Article II, Section 1,
who are now or may hereafter be eligible for and become members of the Union as
a condition of employment and shall remain members in good standing for the
duration of this Agreement. All new employees hired by the Company shall after a
period of forty-five (45) days worked (probationary period) become and remain
members in good standing of the Union as a condition of continued employment for
the duration of this Agreement.
For the purpose of collective bargaining, the employees shall be represented as
follows:
a. By one (1) department steward warehouse and one (1) each for the shops and
second shift, if applicable.
b. By a bargaining committee of three (3) members of the Union representing all
employees, one of whom will be the President of the Union, one who will act as
Chairman.
c. By International Representative(s) or International Officers who may be
called in at any time by the local Union Representative.
d. The Union will notify the Company within five (5) working days of any changes
in Stewards.
ARTICLE V - MANAGEMENT
1. Except as expressly limited by other Articles of this Agreement, the
management of the plant and the direction of the working force, including the
right to transfer, hire, suspend or discharge for proper cause, and the right to
relieve employees because of lack of work or for other legitimate reasons, to
determine the products to be produced or manufactured, and the right to
introduce new or improved production methods or facilities is vested exclusively
in the Company.
-4-
<PAGE>
ARTICLE VI - SENIORITY
1. In all cases of promotion, layoff and recall from layoff, the
following factors shall govern:
A. Length of continuous service with the Company, and
B. Ability, basic skill and efficiency. (Ability is defined as the capacity to
perform the job subject to demonstration).
2. New employees shall be on probation for forty-five (45) days worked, and
during such forty-five period, shall not acquire seniority status. During the
probationary period, the Company may, at its option, transfer, layoff or dismiss
a probationary employee. The Company shall have no obligation to re-employ
probationary employees laid off during the forty-five day period.
Employees retained at the expiration of their probationary period shall become
regular employees and shall be credited with forty-five (45) work days of
seniority.
If a summer employee(s) requests full-time employment and the Company agrees,
said employee's seniority date will be the employee's last date of hire and his
rate of pay will fall in the respective wage scale time frame in effect at the
time the employee becomes permanent.
3. An employee's continuous service will be considered terminated and his name
removed from the seniority roster for any of the following reasons:
(a) If an employee quits;
(b) If an employee is discharged for just cause; and not reinstated under the
grievance procedure;
(c) If an employee is absent without leave for two (2) consecutive plant working
days without notifying the Company or without proper cause;
(d) If continuous absence because of non-occupational disability or illness
extends beyond the length of the employee's seniority at the time of such
absence, or beyond two (2) years, whichever is less:
(e) If an employee is on continuous layoff due to lack of work for a period in
excess of eighteen (18) months, or his length of service, whichever is less;
(f) If an employee, while on leave of absence, accepts another job without
written consent of the Company.
4a. When a permanent vacancy occurs in a department, any employee, having made
previous application for transfer, will be given consideration for such vacancy
-5-
<PAGE>
on the basis of his plant seniority and ability. When an employee desires to
transfer from one job classification to another, he must complete a Request For
Transfer Form. When an employee accepts a transfer to another job
classification, he shall remain in that classification for not less than six (6)
months duration. When a permanent vacancy is filled, the transfer request will
be signed and dated by the Plant Superintendent with a copy to the transferring
employee.
4b. Employees who are permanently transferred into any department shall, after
such transfer, have their seniority apply only in that department. If it later
develops that an employee is unable to utilize his abilities to the best
advantage in the department to which he has been transferred, he shall, within
fifteen (15) work days, be allowed to return or be returned to the department
from which he was transferred. Such employees may not request another transfer
for a period of six (6) months.
5a. Layoffs up to and including five (5) working days are considered temporary
and will be made by inverse order of seniority within the department in which
the layoff occurs, provided the remaining employees have the ability to perform
the available work. Employees laid off in accordance with the foregoing shall
have the right to exercise their plant seniority and displace the least senior
employee in the plant for the duration of the temporary layoff.
For purposes of this Section, department(s) are defined as (1) Andersen Shop,
(2) Steel Door Shop, (3) Pre-hung Shop, and (4) Warehouse Department.
5b. Layoffs in excess of five (5) working days will be made by inverse order of
plant-wide seniority, except as follows:
(1) Deviations from layoff by inverse order of plant-wide seniority can be made
by the Company only where an employee's ability is needed on available work and
no employee with more seniority has the necessary abilities and can be replaced
on his job.
5c. Employees will be recalled to work in order of seniority except as follows:
(1) Deviations from recall by seniority can be made by the Company only where a
laid-off employee's abilities are needed on available work and no employee(s) on
layoff with more seniority has the necessary ability or abilities.
5d. Employees may be recalled from layoff by telephone if mutually agreed to
between the Company and the Union. If an employee is recalled by telephone, a
certified letter will also be sent on that day and if a question arises about
the recall by telephone, the certified letter time limits will be determinative.
-6-
<PAGE>
If an employee is not recalled by telephone, a certified letter will be sent to
the last known address furnished the Company by said employee. It is understood
and agreed delivery will be limited to the addressee. Employees must respond to
the Company's notice within three (3) working days from the date of receipt
unless they are unable to, for reasons beyond their control. It being understood
that laid off employees shall keep themselves available for recall by the
Company.
(1) Employee must report for work within ten (10) calendar days of mailing
unless otherwise mutually agreed to or beyond the control of the employee.
(2) In the event the employee fails to comply with the above listed steps, the
employee shall lose all seniority rights under this Agreement.
(3) The Company has the right to utilize the next senior laid-off employee
during the time period between notifying (phone or mailing) the senior laid-off
employee of recall and their actual reporting date.
(4) The employee shall be required to furnish the Employer with a current phone
number (if employee has a phone) and a current address.
5e. If any layoff under Paragraph 5 extends beyond five (5) working days, it
shall be deemed a layoff under Paragraph 5a retroactive to the first day of
layoff.
6. In determining the qualifications of employees when required under this
Agreement, the Company shall exercise judgment as to differences in
qualifications based on the employee's abilities, their demonstrated skills in
their work, as well as their training and experience, including evidence of
training and experience gained outside the Company, and their personal fitness
and reliability. In exercising this judgment, the Company will act fairly and
not in an arbitrary and unreasonable manner. Any controversy regarding the
foregoing shall be submitted to the grievance procedure, Article XIII.
7. An employee who is transferred to a job outside the bargaining unit may be
returned by the Company to the bargaining unit in accordance with their
seniority level at the time they left the unit for a period of (1) six (6)
months for management positions, and (2) three (3) months for non-management
positions. After the foregoing designated times, individuals will lose all
seniority rights within the bargaining unit.
No employee will be required to transfer to a job outside the bargaining unit.
8. Recognizing the Company's right to determine the number of persons to be
actively employed by the Company at any time, it is hereby agreed that if
-7-
<PAGE>
business conditions warrant a reduction in the amount of production, the
reductions shall be dealt with by a layoff in accordance with the provisions of
the Agreement rather than a reduction of hours worked by those employees not
subject to layoff. However, a work week may be reduced to less than forty (40)
hours, for individuals or collectively, by mutual agreement between the Company
and the Union.
ARTICLE VII - HOURS OF WORK
1. This Article defines the normal hours of work and shall not be construed as a
guarantee of hours of work per day.
2. The word "day" means a 24-hour period beginning at 7:00 a.m., or at the
regular hour a shift begins nearest to 7:00 a.m., in a particular department or
for a particular employee.
3. The word "week" means a period of seven (7) consecutive days beginning at
7:00 a.m., or at the regular hour of beginning a shift nearest to 7:00 a.m.
Monday.
4a. Employees will receive a rest period of ten (10) minutes during the first
half of the regularly scheduled shift and ten (10) minutes during the second
half of the shift. When an employee is scheduled to work two (2) hours or more
of weekday overtime, such employee will be entitled to an additional ten (10)
minute paid break that will commence at the end of his regular shift. (A signal
shall indicate the start and termination of the rest period.)
4b. The second shift, if applicable, may start at any time after 12:00 noon.
5a. Eight (8) hours shall constitute a day's work and forty (40) hours shall
constitute a week's work. Time and one-half (1 1/2) shall be paid for all
overtime in excess of eight (8) hours per day or forty (40) hours per week,
whichever is the greater, but not both. There shall be no pyramiding.
5b. Required overtime shall be limited to no more than two (2) hours of overtime
in any one workday or fourteen (14) hours of overtime during any five (5)
consecutive regular Monday through Friday workdays.
6a. When overtime is required, it shall be offered initially to employees within
the job classification on the basis of their seniority. If required overtime is
not accepted on a voluntary basis within the job classification, the junior
employees within that job classification will be required to accept reasonable
overtime. If additional overtime is required, it will be offered to employees
holding other job classifications on the basis of seniority and their ability to
perform the job. The foregoing notwithstanding, no employee will be required to
work more than twelve (12) hours in any one workday or fourteen (14) hours of
-8-
<PAGE>
overtime during any five (5) consecutive regular Monday through Friday workdays.
When overtime is required and seasonal/temporary employees are working within
the department in which the overtime is required, it will be offered in
accordance with the following:
(1) Overtime scheduled Monday through Friday
1st - permanent department employees
2nd - temporary department employees
3rd - permanent qualified employees outside the department
4th - permanent employees outside the department (not qualified)
5th - other seasonal/temporary employees outside the department
(2) Overtime scheduled Saturday and Sunday
1st - permanent department employees
2nd - permanent qualified employees outside the department
3rd - permanent department seasonal/temporary employees
4th - permanent employees outside the department (not qualified)
5th - other temporary employees outside the department
6b. The Company will advise employees of any daily overtime requirement not
later than 11:30 a.m. on the day the overtime is required. Overtime requirements
determined after 11:30 a.m., if any, will be voluntary.
6c. The Company will advise the day shift employees of Saturday or Sunday
overtime no later than 3:00 p.m. on the Thursday preceding the weekend on which
the overtime is required. The second shift shall receive such notification by
1:00 a.m. on the Thursday preceding the weekend.
(1) Weekend overtime requirements determined after 3:00 p.m., if any, will be
voluntary.
6d. The foregoing notwithstanding, voluntary overtime will be offered in
accordance with 6a(l) and 6a(2) as applicable.
6e. It is understood and agreed that, if at the conclusion of a regularly
scheduled shift, overtime is required to complete a task, job, or order, the
overtime will be worked by the employee performing the function requiring the
overtime. Such overtime shall be classified as casual overtime.
6f. For purposes of this section and by way of example, completing a task is
defined as the completion of the order an employee is working on, including all
tickets associated with that order; or completing a job such as completing the
loading of a truck.
6g. It is understood and agreed that bargaining unit employees may be scheduled
to work during the time the Company is taking inventory. If there is not enough
-9-
<PAGE>
work for all employees, preference for inventory assignments will be given to
senior qualified employees. If there are not enough qualified senior employees
willing to work, the least junior employee(s) qualified to perform the inventory
work will be required to work.
If a second inventory day is required, second shift employees will be grouped
with first shift employees and be offered such work in accordance with their
qualifications and relative seniority.
It is further understood and agreed that, if eligible, bargaining unit
employees, with Company approval, may opt for vacation days in lieu of unpaid
days off during inventory.
7. If there are not enough volunteers to complete the assigned overtime work,
the least senior employees must perform such overtime work.
8. Double the regular hourly rate shall be paid for all work performed on
Sundays or Holidays, except for the regularly scheduled night loading shift
whose work begins or extends into a Sunday or Holiday.
ARTICLE VIII - VACATIONS
1. Full-time employees, who have been employed continuously by the Company for
one (1) year, but less than three (3) years, shall be entitled to one (1) week
of vacation with pay computed at forty (40) times the individual base rate.
2. Full-time employees, who have been employed continuously by the Company for
three (3) years or more, shall be entitled to two (2) weeks of vacation with pay
computed at eighty (80) times the individual base rate.
3. Full-time employees who have been employed continuously by the Company for
ten (10) years, but less than eighteen (18) years, shall be entitled to a third
week's vacation with pay computed at the same rate as first week's vacation. The
time that such third week of vacation can be taken shall be determined at the
option of the Company, in the period of time between December 1 and May 1 of the
following year. The three weeks vacation herein provided can be taken in three
consecutive weeks within the period of time between December 1 and May 1 of the
following year.
4. Employees who have been continuously employed by the Company for eighteen
(18) years or more shall be entitled to a fourth week of vacation. The four
weeks vacations herein provided can be taken in four consecutive weeks within
the period of time between December 1 and May 1 of the following year. Or, the
employee may schedule two (2) consecutive weeks between and one (1) single week
within the period May 1 and December 1 of the vacation year. The fourth week
-10-
<PAGE>
will be scheduled and taken between December 1 and May 1 as provided above.
5. Vacations must be taken or paid for within the twelve (12) month period
immediately following the employee's individual anniversary date. Layoff will
not be considered as vacation time taken.
6. An employee out because of a physical disability or illness must work 65% of
their anniversary year in order to be eligible for vacation pay as provided in
this Article.
7. Vacations shall be scheduled by mutual agreement between the Company and the
employees. A schedule for showing vacation preference shall be posted by the
Company by March 1. Employees who have expressed their preference for vacation
weeks by April 1 shall receive first consideration; in the event of conflict of
preferences, the desires of the senior employee or employees shall prevail. In
all cases, scheduling of vacations is subject to the requirements for efficiency
of operation.
8. Each employee will receive his vacation pay on the Friday immediately
preceding the first day of the employee's scheduled vacation. Employee's
vacation pay will be figured on the same basis as the deduction on the regular
weekly pay checks.
9. If a holiday occurs during an employee's vacation time, his/her vacation will
be extended into the following week.
10. Vacation Scheduling - Single Day
a. Single day vacation may be scheduled with advance approval up to a maximum of
five (5) days.
b. Single day of vacation may be taken on a sick day with approval of the Plant
Superintendent or his designee.
c. The Company agrees to approve a total of two (2) employees from the Shop
Departments and one (1) from the Warehouse to be on vacation any given week
provided the vacation is scheduled between March 1 and April 1 as provided for
under the Agreement.
ARTICLE IX - HOLIDAYS
Holidays. The following shall be observed as holidays:
1. Employee's Birthday
2. New Year's Day
3. Good Friday
4. Memorial Day
5. Fourth of July
6. Labor Day
7. Thanksgiving Day
8. Day after Thanksgiving
-11-
<PAGE>
9. Day before Christmas
10. Christmas Day
All full-time employees who have acquired seniority shall receive eight (8)
hours of pay at their respective rates for each of such holidays observed on a
regularly scheduled work day, provided such employees:
a) Work during the week in which the holiday is observed.
b) Work their full scheduled work day preceding and following the holiday,
unless excused by the Company.
c) If an employee's birthday falls on a holiday or weekend, the day off will be
mutually determined by the Company and the Union.
d) If a holiday (other than the employee's birthday) falls on a Saturday, the
day off for the holiday shall be the preceding Friday, and if the holiday falls
on a Sunday, the day off for the holiday shall be the following Monday.
ARTICLE X - REPORT AND CALL-IN
1. If an employee reports for work and no work is available through no fault of
the employee and the employee has not received notice not to report to work,
such employee shall receive at least four (4) hours work. If the employee is
sent home without work, he shall receive four (4) hours pay at his regular base
rate. If any work is offered and is refused, the employee forfeits four (4)
hours pay.
2. If the Company knows there will be no work available for an employee on his
next following shift and the employee did not work his preceding shift, the
Company shall not be liable for payment of four (4) hours reporting pay.
3. The Company shall not be responsible for notification if notice was sent to
the last known address as shown on the Company's record and such address is
incorrect. The Company shall not be liable for reporting pay when the lack of
work is due to any acts of God or situations beyond the control of management,
such as labor disputes, fire, tornado, storms, floods, or failure of outside
utilities.
4. If an employee is called in by the Company at hours other than his regular
shift, he shall be guaranteed four (4) hours work at his basic hourly rate of
time and one-half, except if he is called in where double time hours apply, he
shall receive double time pay. If he is sent home without work, he shall be paid
four (4) hours pay for time and one-half or double time as the case may be. If
work other than the normal job is refused, the employee shall receive pay only
for hours actually worked at the applicable rate.
-12-
<PAGE>
ARTICLE XI - LEAVE OF ABSENCE
1. Leave of Absence is defined as eight (8) or more consecutive work days away
from work.
2. Any employee, upon notifying the Company in writing, shall be entitled to a
leave of absence up to two (2) years length of service, whichever is less,
without pay, in the event of a non-occupational injury or illness, providing the
disability will not allow him to perform his assigned work. Such leave of
absence must be supported by medical certification indicating the employee is
temporarily totally disabled.
3. When the requirements of the plant permit, employees with satisfactory cause
may, at the discretion of the management, be granted a leave of absence of a
limited time, but not to exceed thirty (30) calendar days. All leaves of absence
must be granted in writing. In the event the employee accepts other employment
while on leave of absence, without the written consent of the Company, his
employment with the Company shall be considered terminated.
4. The Employer agrees to grant necessary and reasonable time off without
discrimination or loss of seniority rights and without pay to a minimum of one
(1) employee designated by the Union to attend a labor convention or serve in
any capacity on other official Union business, provided a minimum of two (2)
weeks written notice is given to the Employer by the Union, specifying length of
time off. The Union agrees that in making its request for time off for Union
activities, due considerations shall be given to the number of men affected in
order that there shall be no disruption of the Employer's operations due to lack
of available employees.
5. In addition to the above, an employee who has been elected or appointed as a
regional representative of the International Union shall be given a leave of
absence for the duration of his employment as such. An employee on such leave of
absence shall not accumulate any pension credits.
ARTICLE XII - FUNERAL LEAVE
1. In the event of the death of a spouse, child, parent, grandparent, brother or
sister, mother or father-in-law, the employee shall be granted a leave of
absence with pay of not more than three (3) consecutive work days, including the
day of the funeral.
2. Employee must attend the funeral in order to be eligible for funeral pay.
3. The compensable days must fall within the employee's scheduled normal work
week.
-13-
<PAGE>
4. An employee shall produce proof of death and relationship upon request by the
Company and funeral pay shall not duplicate pay for the time not worked for
another reason.
5. An employee funeral leave may be extended without pay for up to an additional
three (3) days provided it is requested by the employee and approved by the
Plant Superintendent or his designee.
ARTICLE XIII - JURY DUTY
1. An employee who is called for jury service shall be excused from work for the
days on which he serves and he shall receive for each day of such jury service
on which he otherwise would have worked, the difference between eight (8) times
his straight time hourly earnings and the payment he receives (excluding
mileage) for jury service. To be eligible for jury service pay, the employee
shall notify the Employer as to when he will be absent because of being on the
jury panel, and must present proof of service and the amount of pay received
therefore.
2. The maximum amount of time the Company will make up the difference in pay
will be three (3) weeks. This three (3) week period may be extended an
additional thirty (30) calendar days by agreement with the Company.
ARTICLE XIV - WAGES
1. Wages shall be paid to employees in accordance with Appendix "C" of this
Agreement.
2. Employees working any shift starting after 12:00 noon shall be entitled to a
bonus of thirty cents ($0.30) per hour.
3. It is understood and agreed that the Company may at its discretion assign up
to a maximum of three (3) lead persons on the day shift among the various
departments and one (1) lead person on the night shift. Lead persons so assigned
will be paid fifty cents ($0.50) per hour above their straight time hourly rate.
4. There shall be no unilateral increases in wages by the Company other than a
uniform amount for all employees affected by the rate schedule shown in Appendix
"B" and "C."
5. An employee promoted to a higher rated classification shall not be reduced
below his previous rate but shall enter the pay progression of his new job at
the rate closest to his previous rate.
6. The beginning date for determining the pay scale in any new job
classification shall be the date the employee commenced the work covered by such
-14-
<PAGE>
classification whether or not such classification was then recognized as a
separate job classification.
7. In the event an individual employee is required to fill a position in a
higher pay classification because of the absence of the employee regularly
filling that position for five (5) consecutive work days or more, the individual
employee so filling such position shall be entitled to the higher pay of that
classification, retroactive to the first day he commenced filling such position.
8. All employees, including temporary employees, are eligible for lump sum
bonuses at the end of the 1996, 1997, and 1998 calendar years which are tied
exclusively to safety performance. Such payments are earned at the rate of fifty
(50) dollars per employee for each medical case (as defined by OSHA) that is
below an annual base number of 11. Employees must be on the payroll at the end
of each year to be eligible for the bonus, and they will be prorated if worked
less than the full year. Each employee is guaranteed a minimum less any
proration of $100 in each of the three calendar years.
ARTICLE XV - GRIEVANCE PROCEDURE
For the purpose of this Agreement, a grievance is defined as any dispute or
disagreement between the employee or employees and the Company or the Union and
The Company as to interpretation of this Agreement. All grievances shall be
resolved in an orderly manner solely as provided in this Article.
STEP 1. An employee with a complaint shall first discuss the matter with the
employee's immediate supervisor and may request the area's shop committee person
to be present, within five (5) scheduled working days from the time the employee
involved first knew, or could have known, of the facts giving rise to the
complaint in this manner. Every effort shall be made to settle the complaint in
this manner.
STEP 2. If the grievance is not resolved in Step 1, the employee shall reduce it
to writing and may submit it to his/her supervisor within five (5) scheduled
working days. Representatives of the Company and the Union Grievance Committee
will attempt to resolve the grievance. The Company will give to the Union a
written reply to the grievance within five (5) scheduled working days.
STEP 3. If the grievance is not resolved in Step 2, the grievance shall be
referred to Step 3 within five (5) working days. The General Manager and/or his
designee will meet with the appropriate International and/or Regional
Representative to attempt to resolve the dispute. Such meeting will be held
within fifteen (15) working days of the appeal of the grievance for Step 2. The
company will provide a written response to the Union within five (5) scheduled
working days of the meeting.
-15-
<PAGE>
STEP 4. If the grievance is not resolved in Step 3, the Federal Mediation and
the Conciliation Service may be requested to supply a panel of seven (7)
arbitrators by either party within two (2) weeks. The parties will thereafter
meet or otherwise confer to select the arbitrator within forty-five (45) days
after the panel has been received by the parties. The Union and the Company
shall each have the right to strike three (3) names and the last remaining named
person shall be the arbitrator.
Time limits set forth above may be extended by mutual written agreement of the
parties.
The arbitrator so selected shall schedule a prompt hearing at which time he
shall have the power to make determinations of facts on the questions submitted
to him and apply them to the provisions of the Agreement alleged to have been
violated.
No arbitrator shall have the jurisdiction or authority to add to, take from,
nullify or modify any terms of the Agreement or to impair any of the rights
reserved to the parties under the terms thereof.
The decision of the arbitrator shall be in writing and shall be final and
binding upon the Company, Union and the affected employee(s).
Company and Union shall be responsible for one-half of the expenses and fees of
an arbitrator designated under this Article.
ARTICLE XVI - INSURANCE
1. It is agreed that the schedule of benefits as set forth in the booklet
furnished by the Company outlining such plan and furnished to all employees,
shall continue in effect during the life of this Agreement.
2. It is further understood and agreed by the parties that the foregoing Medical
and Dental Insurance plans include the benefits as set forth in the booklet or
Appendix "D" and "E."
3. It is further understood and agreed by the parties that the Company may
select insurance carriers, but the Company shall maintain benefits equal to, or
better than those benefits outlined in the booklet.
4. The Life and Accidental Death and Dismemberment Insurance will be $15,000 and
increased to $16,000, effective January 6, 1997, and $17,000, effective January
5, 1998. Employees have the option of purchasing a like amount of additional
life insurance with AD&D at a cost of $0.19 per thousand. Purchases must be in
the amount in effect and will be increased to the full amount whenever an
increase is provided by the Agreement.
-16-
<PAGE>
5. The Company shall furnish Accident and Health Insurance which shall pay to
the employee, the eighth (8th) day of sickness and from the first (1st) day of
off-the-premises accident or hospitalization, the sum of one hundred eighty
dollars ($180.00) per week for a period of twenty-six (26) weeks. Effective
January 5, 1998, the rate will be one hundred ninety ($190.00) per week for a
period of twenty-six (26) weeks.
If an employee has scheduled in-hospital surgery conducted as an outpatient,
sickness and accident coverage will start from the first day of disability.
6. Medical costs and associated premiums will be reviewed and, when appropriate,
adjusted the beginning of each calendar year. Employees will be required to pay
50% of all cost increases in each option in each year. The Medical and Dental
plan highlights are shown in Appendix D.
7. Effective January 2, 1996, employee costs for the three
medical options are:
Single Family
Option 1 - $0.73/week $4.06/week
Option 2 - $1.67/week $4.89/week
Option 3 - $6.07/week $15.89/week
Employee premiums will be paid with pre-tax dollars.
8. Beginning January 1, 1996 a Health Care Spending Account will be made
available to all employees covered by this contract. Employees can set aside up
to $1,200.00 annually (deducted weekly) before taxes are taken out. These funds
are then available for reimbursement of certain expenses not covered by Company
insurance.
ARTICLE XVII - PENSIONS
1. The Company and the Union have agreed to a program of pension benefits for
the employees in the bargaining unit represented by the Union and covered by
this Agreement. Said program is set forth in the document entitled "Morgan
Products Ltd., Hourly Employees' Pension Plan, Effective January 1, 1967," a
copy of which has been given to the Union. Said Plan and all terms and
conditions thereof shall be deemed to be a part of this Agreement as if fully
set forth herein. Subject to approval by the Board of Directors of the Company
and by the Internal Revenue Service, the Company will amend Section 3.01 of said
Plan:
a. Effective January 2, 1996, to increase the monthly pension payable thereunder
to employees who retire on or after that date, from $13.00 to $13.50 multiplied
by the employee's years of service credit.
-17-
<PAGE>
b. Effective January 6, 1997, to increase the monthly pension payable thereunder
to employees who retire on or after that date, from $13.50 to $14.00 multiplied
by the employee's years of service credit.
c. Same language as b, but with a date of January 5, 1998, and the dollar
amounts of $14.00 to $15.00.
2. The Company has amended said Plan to provide:
a. Pre-retirement spouse coverage at no cost to employees.
b. Improve early retirement to age 55 with ten (10) years of service.
c. Vesting after five (5) years of credited service.
3. Retiree Health Insurance - Effective January 4, 1993, employees retiring who
are eligible for a retirement benefit under the Morgan Products Ltd. Hourly
Employees' Pension Plan may purchase health insurance for themselves and their
dependents at a group rate. The actual cost of the medical coverage is based
upon the cost of such coverage and is therefore subject to change.
This coverage will include a Medicare supplement for any individual over age 65
and the premium charged for this supplemental coverage will reflect the lower
level of benefit provided for the covered person(s).
ARTICLE XVIII - SAFETY
1. The Company shall continue to make reasonable provisions for the safety and
health of its employees at the plant during the hours of employment. Protective
devices necessary to properly protect employees from injury shall be provided by
the Company. The foregoing notwithstanding, personal protective equipment will
continue to be provided in keeping with local policy.
2. It is understood and agreed the Company will pay each full-time employee a
safety shoe allowance of one hundred fifty dollars ($150) during the term of
this Agreement. It is further understood and agreed that all employees will be
required to wear safety shoes as a condition of employment.
3. Employees requiring prescription safety glasses will be paid, for one pair of
lenses and frames over the terms of the contract to be purchased through the
Company (Employee pays for the exam and prescription).
4. The Company and the Union agree that both parties shall be bound by
provisions of the formal Safety Program placed in effect in calendar 1996.
-18-
<PAGE>
ARTICLE XIX - GENERAL
1. The Company agrees to furnish two (2) bulletin boards, one each to be located
at the time clock and the front break room. These bulletin boards will be used
for posting official Union bulletins. Such postings shall be subject to
Management approval and limited to notices of Union elections and results
thereof, committee appointments, seniority lists, Union meetings, social affairs
and recognized charity drives. All such notices shall be signed by an authorized
Union official.
2. The Union shall inform the Company of the names of its officers and Grievance
Committeemen, and the Company shall recognize such persons as representatives of
the Union in their respective capacities.
3. Employees will receive their pay checks on Friday during a normal work week
or on Thursday if Friday is a holiday, unless the pay checks are not available
for reasons beyond the control of the Company.
4. The Company agrees that the Division Human Resources Director, or in his
absence the Corporate Vice President of Human Resources, will be available by
telephone in the event Union Officials feel members of the bargaining unit are
being treated in a manner other than that required by normal employee relations
practices.
5. Establishment of Night Shift - Should the Company decide to establish a night
shift operation, they will staff such a shift by first asking for volunteers who
have the necessary qualifications and who are working on the day shift in the
same department. If there are insufficient volunteers, the Company will transfer
the required number of experienced employees to that shift in inverse order of
seniority among the qualified employees within that department.
It is understood and agreed that the employees so transferred to the second
shift shall remain there for a period not to exceed thirty (30) calendar days
during which time junior replacements will be trained on the day shift for
subsequent transfer to the second shift when training is complete.
6. At any time any employee is permanently transferred to a lower rated job,
suspended or discharged by the Company, he shall be given a written statement by
the Company, in the presence of a Shop Steward, signed by the Plant
Superintendent or his designee, stating the reason or reasons for such a
transfer, suspension or discharge.
7. A permanent employee shall be given five (5) days notice before he shall be
laid off because of curtailment of work due to business conditions, except in
cases where work is not available because of acts of God, civil disorder, power
-19-
<PAGE>
failure, strikes, floods, or other conditions beyond the reasonable control of
the Company. Whenever possible, notice shall be given on a Monday.
8. As a statement of our position relative to temporary help, it is not our
intention to use this classification to diminish the permanent work force. The
classification is used primarily for vacation relief, temporary manpower source
during seasonal peaks, and temporary replacement for personnel on approved
leaves of absence.
As a further declaration of our position, temporary employees are defined as
those individuals who are employed for a period of up to six (6) consecutive
months duration. Individuals retained beyond this period will be considered full
time hourly employees. Service as a temporary employee will count for fulfilling
probationary periods and will count toward time in the hourly hiring scale.
ARTICLE XX - NON-DISCRIMINATION
The Union and the Company separately and jointly agree that all terms and
conditions of this Agreement will be applied equally to all employees regardless
of age, race, creed, color, sex, national origin, handicap, or Vietnam veterans.
Wherein the text of this Agreement words of masculine gender are used, they
shall be interpreted to denote either masculine or female gender.
ARTICLE XXI - NO STRIKE AND NO LOCKOUT
1. For the term of this Agreement, the Union agrees not to call or authorize any
strike or slow down at the Company's plant covered by this Agreement, and agrees
not to authorize picketing of the Company's property.
2. The Company agrees that there shall be no lockout and further agrees to
cooperate with the Union in its attempts to maintain good working relations.
3. In the event that any employee or employees violate the no strike agreement
above, such employee or employees may be disciplined. The Company agrees that
suit will not be instituted against the International Union, its representative,
officers of the Local Union, or the Local Union collectively because of an
unauthorized strike, or work stoppage which interferes with the operation of the
Company or the manufacturer of its products, if the International Representative
and Officers of the Local Union do all in their power by letter to the Company
and through news media, as well as personal contact with the offenders, to get
the offenders back on the job. The above does in no way protect the offenders
from suit and/or disciplinary action and such guilty offenders shall have no
recourse where there is a dispute as to whether such strikers have or have not
participated in such unauthorized action.
-20-
<PAGE>
ARTICLE XXII - DURATION AND SCOPE
1. This Agreement shall be effective 12:01 a.m., January 2, 1996, through 11:59
p.m., January 8, 1999, inclusive, and shall remain in effect unless either party
hereto shall make written request for alterations on or before sixty (60) days
prior to the above mentioned date of January 8, 1999, or any subsequent
anniversary date. However, if such written request is made by the expiration
date, this Agreement shall be at an end unless extended by mutual agreement of
the parties.
2. It is understood that this Agreement contains all understandings between the
Company and the Union, and that it cannot be modified or amended except in
writing, signed by the Company and the Union. No individual shall have any right
to modify, amend or revoke this Agreement.
LOCAL NO. 7828, UNITED PAPERWORKERS
INTERNATIONAL UNION, REGION IX, AFL-CIO
(Union)
/s/ Robert D. Bryers
/s/ __________ 5/29/96
/s/ John R. Cox 5/29/96
/s/ Terry McIntyre 5/29/96
MORGAN DISTRIBUTION
(Company)
/s/Dennis Hood
____________
2/26/96
-21-
<PAGE>
Exhibit 7
NON-COMPETITION AGREEMENT
This Non-Competition Agreement ("Agreement") is made as of
August 30, 1996 by and among MORGAN PRODUCTS LTD., a Delaware corporation (the
"Buyer"), TENNESSEE BUILDING PRODUCTS, INC., a Tennessee corporation ("TBP") and
TITAN BUILDING PRODUCTS, INC., a North Carolina corporation (collectively, the
"Sellers") and JAMES FISHEL, JAMES SCHULMAN and JOHN WHIPPLE (collectively, the
"Shareholders").
This Agreement is entered into based on the following facts,
intentions, and understandings:
A. Pursuant to that certain Asset Purchase Agreement (the
"Asset Purchase Agreement") dated as of the date hereof among the Buyer, the
Sellers and the Shareholders, prior to or contemporaneously herewith the Buyer
has acquired from the Sellers substantially all of the business and assets of
the Sellers, and any and all of their divisions and affiliates.
B. In conjunction with the Buyer's purchase of substantially
all of the business and assets of the Sellers, the Sellers and the Shareholders
are granting the Buyer a covenant not to compete as set forth in this Agreement,
which covenant is an essential element of Buyer's purchase from the Sellers and
is given in partial consideration of the purchase price paid by the Buyer to the
Sellers under the Asset Purchase Agreement.
<PAGE>
C. The Buyer and the Sellers are engaged in the business (the
"Business") of manufacturing, assembling, and distributing a broad line of
windows, doors, millwork and related building products. Such building products
include but are not limited to, assembled shop windows, pre-hung doors, kitchen
and bathroom cabinets and vanities, specialty millwork, trim and lineal
moldings, aluminum prime windows and doors, builder's hardware, locksets,
skylights, columns, stair parts, blinds, mirrors, shower and tub enclosures,
auto glass, store front glass, frame mirrors and other glass products.
D. The Asset Purchase Agreement requires the execution and
delivery of this Agreement by each of the Sellers and the Shareholders at the
Closing (as defined in the Asset Purchase Agreement).
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual agreements and covenants contained in this Agreement, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
1. Covenant Not to Compete. Each of the Sellers and each of
the Shareholders hereby grants to the Buyer a covenant not to compete (the
"Covenant") on the terms and conditions set forth in this Article I.
1.1 No Competition with Buyer. Each of the Sellers and each of
the Shareholders covenants and agrees that, for and during the term of the
-2-
<PAGE>
term of the Covenant (as set forth in Section 2), neither of the Sellers nor any
Shareholder shall directly or indirectly engage in or carry on in the Territory
(as determined under Section 1.4) any business or activity that competes with or
is substantially similar to the Business, whether individually or in partnership
or association with any one or more persons or entities, as a principal,
proprietor, partner, shareholder, employee, officer, director, agent, consultant
of or to any such business or activity, or in any other capacity.
1.2 No Interference with the Buyer. Each Seller and each of
the Shareholders covenant and agree that, for and during the term of the
Covenant, neither of the Sellers nor any Shareholder shall directly or
indirectly interfere with any customer or supplier relationship between the
Buyer and any other person or business entity or solicit any sales to or other
business of any person or entity that is a customer or an active prospect of the
Buyer, except where the sales to or business of such person or entity being
sought by the Sellers or any of the Shareholders are not, in the reasonable
judgment of the Buyer, competitive with the Buyer's business. Each Seller and
each of the Shareholders further covenants and agrees that, for and during the
term of the Covenant, neither of the Sellers nor any Shareholder shall hire or
attempt to hire (or assist anyone else in hiring or attempting to hire) for
employment any person who is, or during the immediately preceding twelve (12)
month period was, an employee of the Buyer or any of the Buyer's affiliates or
induce or assist anyone in inducing in any way any employee of the Buyer or any
-3-
<PAGE>
of the Buyer's affiliates to resign or sever employment or to breach an
employment contract with the Buyer or any of the Buyer's affiliates.
1.3 No Financing of a Competing Business. Each
of the Sellers and each of the Shareholders further covenants and agrees that,
for and during the term of the Covenant, neither of the Sellers nor any
Shareholder shall lend money to, guarantee the lending of money to, or otherwise
arrange for or promote the financing of any business or other activity conducted
in the Territory that competes with or is substantially similar to the Business.
1.4 Geographic Coverage. Subject to the
provisions of Section 1.5, the geographic coverage of the Covenant shall include
the geographic areas located within a 150 mile radius of the following cities
where the Sellers maintained facilities through the date hereof: Greenville,
South Carolina; Greensboro, North Carolina; Chattanooga, Tennessee; Huntsville,
Alabama; Nashville, Tennessee; Charlotte, North Carolina; Winston-Salem, North
Carolina; Columbia, South Carolina; and Raleigh Durham, North Carolina
(collectively the "Territory"); provided, however, that with respect to each of
the fifteen (15) largest customers of the Buyer, the Territory shall be any and
all areas within the United States in which such customer does business.
1.5 No Violation of Public Policy. Each party
hereto expressly agrees and acknowledges that it is not the intention of the
-4-
<PAGE>
parties that the Covenant violate any public policy or statutory or common law.
If a court of competent jurisdiction renders a ruling (sustained on appeal, if
any) holding that any one or more of the provisions of the Covenant, including
the stated term and geographic coverage of the Covenant, constitute an
unreasonable restriction on either of the Sellers or any Shareholder, then the
parties specifically agree that the Covenant shall not be rendered void but
shall apply to such extent and as to such time period and geographic areas as
the court may determine constitutes a reasonable restriction under the
circumstances.
1.6 Series of Separate Covenants. Without
limiting the generality of Section 1.5, the parties specifically intend that the
Covenant shall be construed as a series of separate covenants for each distinct
geographic area contained within the Territory. Except for its respective
geographic coverage, each and every such separate covenant shall be deemed
identical in terms to the Covenant and if any one or more of such separate
covenants are held by a court of competent jurisdiction (sustained on appeal, if
any) to be unenforceable, then each such unenforceable covenant shall be deemed
eliminated from the Covenant to the extent necessary to permit the remaining
separate covenants to be enforced.
ARTICLE II
2. Term. The term of the Covenant shall commence as
of the date of the closing under the Asset Purchase Agreement and
shall continue through the fifth (5th) anniversary of such
-5-
<PAGE>
closing; except that, with respect to Mr. Whipple, the term of the Covenant
shall continue only through the third (3rd) anniversary of such closing.
ARTICLE III
3. No Disclosure of Confidential Information. Each
of the Sellers and each of the Shareholders agree and covenant that neither the
Sellers nor any Shareholder shall divulge, communicate, or use to the
disadvantage of the Buyer, or for the benefit of any other person or entity, or
misuse in any way, any confidential or proprietary information related to the
Buyer's or the Sellers' business, including, without limitation, financial
information, personnel records, trade secrets, know-how, technical data,
customer lists, licensing and sublicensing arrangements, and business
relationships utilized in the Buyer's or the Sellers' business. Notwithstanding
anything to the contrary contained in this Section 3, neither of the Sellers nor
any Shareholder shall be under any obligation to maintain the confidentiality of
any information which (i) is or becomes part of the public domain through no act
or omission attributable to either Seller or any Shareholder; (ii) is required
by law to be disclosed; provided, that, if required to be disclosed by law, the
Sellers or the Shareholders shall provide the Buyer with prompt notice of such
requirement so that the Buyer may seek an appropriate protective order; or (iii)
the Sellers or any Shareholder may receive from any third party who is unrelated
to either Seller, the Shareholders or the Buyer and
-6-
<PAGE>
who is not under an obligation to maintain the confidentiality of any such
information.
ARTICLE IV
4. Consideration. The consideration for each of the
Sellers and each of the Shareholders entering into and performing their
respective obligations under this Agreement shall be the Buyer's entering into
and performing its obligations under the Asset Purchase Agreement and related
agreements.
ARTICLE V
5. Equitable Remedies. Each of the Sellers and each of the
Shareholders expressly agrees and acknowledges that (a) a remedy at law in the
event of an actual or threatened breach of this Agreement by either Seller or
any Shareholder is not adequate and the Buyer shall be entitled in the event of
such a breach to an injunction and other equitable remedies as a matter of
right, and (b) recourse to any remedy whether at law or in equity shall not
constitute an exclusive election of remedies by the Buyer that precludes the
Buyer from seeking other remedies or any combination of remedies as the Buyer
may determine to be appropriate under the circumstances surrounding this actual
or threatened breach. The Buyer shall be entitled to seek immediate injunctive
relief against each of the Sellers and each of the Shareholders for a breach of
Article I or III hereof, and the Sellers and the Shareholders waive, to the
-7-
<PAGE>
extent permitted, the requirement that a bond be posted to secure any
injunctive relief obtained.
ARTICLE VI
6. General Provisions. The following provisions
shall apply to this Agreement:
6.1 Successors and Assigns; No Assignment. This
Agreement shall be binding on and inure to the benefit of the Buyer, each
Seller, each Shareholder and their respective successors, assigns, and legal
representatives of every kind, character, or nature. Neither this Agreement nor
any right or obligation hereunder may be assigned or transferred by the Buyer
(except to a Buyer Affiliate (as defined below)) or by either of the Sellers or
any Shareholder. For purposes of this Agreement, the term "Buyer Affiliate"
shall mean any entity directly or indirectly controlling, controlled by or under
common control with the Buyer, whether by stock ownership, agreement or
otherwise.
6.2 Governing Law. This Agreement and the rights
and obligations of the parties shall be interpreted under and governed by
Tennessee.
6.3 Entire Agreement. This Agreement constitutes
all of the understandings and agreements existing between the Sellers, the
Shareholders and the Buyer concerning the specific subject matter of this
Agreement and the rights and obligations created under it as of its date.
-8-
<PAGE>
6.4 Number and Gender. Whenever appropriate in
this Agreement, terms in the singular number shall include the plural number
(and vice versa) and each gender form shall include all others.
6.5 Attorneys' Fees and Costs. In the event that
any legal proceeding concerning the enforcement and interpretation of the
provisions of this Agreement is instituted, the prevailing party in such
proceeding shall be entitled to recover its reasonable attorneys' fees and other
expenses related to such proceeding, in addition to any other relief to which it
may be entitled.
6.6 Severability. If any provision or portion of
this Agreement is for any reason held to be invalid, illegal, or unenforceable
in any respect, the invalidity, illegality, or unenforceability shall not affect
any other provision, and this Agreement shall be equitably construed as if it
did not contain the invalid, illegal, or unenforceable provision. This Agreement
shall be construed equitably in accordance with its terms, without regard to the
degree to which the Sellers, the Shareholders or the Buyer have participated in
drafting this Agreement.
6.7 Captions. Titles and headings in this
Agreement are for reference purposes only and shall in no way limit, define, or
otherwise affect the construction of this Agreement.
6.8 No Continuing Waiver. No waiver of any
breach of this Agreement shall be effective unless in writing,
-9-
<PAGE>
and no waiver shall constitute a waiver of any subsequent breach or any other
provision of this Agreement.
6.9 Amendment. This Agreement may not be
amended, altered, modified, or otherwise changed in any respect except by the
prior written agreement of the parties.
6.10 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original and all
of which shall constitute one and the same instrument.
6.11 Notices. The parties hereto agree that the
notice provision contained in Section 13.4 of the Asset Purchase Agreement shall
be incorporated in its entirety herein except that the following shall be added:
If to John Whipple, to:
Mr. John Whipple
[insert address]
Telecopier No.: [insert fax number]
with a copy to:
Boult, Cummings, Conners & Berry
414 Union Street
Suite 1600
Nashville, TN 37219
Telecopier No.: (615) 252-2380
Attention: Davis H. Carr, Esq.
6.12 Consultation with Independent Counsel. The
parties to this Agreement acknowledge that they have (i) read this Agreement and
consulted with legal counsel of their independent choice concerning the Covenant
and each of the other provisions of this Agreement, (ii) discussed and reviewed
-10-
<PAGE>
the Covenant and the other provisions of this Agreement with their counsel and
(iii) been fully advised of the legal significance of the Covenant and the other
provisions of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement as of the date first stated above.
MORGAN PRODUCTS LTD.
By:/s/ Douglas H. MacMillan
-----------------------------
Name: Douglas H. MacMillan
Title: Vice President and CFO
TENNESSEE BUILDING PRODUCTS, INC.
By:/s/ James L. Fishel
-----------------------------
Name: James L. Fishel
Title: President
TITAN BUILDING PRODUCTS, INC.
By:/s/ James Schulman
-----------------------------
Name: James Schulman
Title: Executive Vice President
/s/ James Fishel
-----------------------------
James Fishel
/s/ James Schulman
-----------------------------
James Schulman
/s/ John Whipple
-----------------------------
John Whipple
<PAGE>
Exhibit 8
Property Lease Agreement V
Titan Building Products, Inc.
37-A Freedom Court
Greer, SC 29765
(Greenville, SC)
<PAGE>
July 6, 1995
President
Titan Building Products, Inc.
Post Office Box 100926
Nashville, Tennessee 37224
RE: Lease on 37-A Freedom Court
Greer, South Carolina 29650
Dear Sir:
Enclosed is the lease executed for your occupancy. There is one clarification we
want to make and that is paragraph 16 is meant to include cutting the vegetation
on the 50% of the property you will be occupying.
Since this lease has been in process so long, it is impossible to complete by
August 1, 1995, however, we will "hit the ground running" to up fit this
facility for your use. Rent will begin on the completion date of the office
space.
Sincerely,
/s/
- ------------------
Arnold E. Mullinax
Vice President
AEM:lmb
-2-
<PAGE>
LEASE AGREEMENT
STATE OF SOUTH CAROLINA )
)
COUNTY OF GREENVILLE )
THIS AGREEMENT, made this 7th day of July 1995, between Sunbelt Properties,
Inc., 403 Woods Lake Road, Suite 204, Greenville, S.C. 29607, (hereinafter
called Lessor), and Titan Bldg. Products, Inc., P.O. Box 7306, 1407 Westinghouse
Boulevard, Charlotte, N.C. 28241, (hereinafter called Lessee).
PREMISES
1. Lessor agrees to Lease to Lessee and Lessee agrees to Lease the Premises
situated in the County of Greenville, and State of South Carolina, and more
specifically described as follows:
All that certain parcel designated as Lot 5, Freedom Court, Greer, South
Carolina, improved with a 30,000 square foot metal building divided into two
15,000 square feet. Lessee to Lease 15,000 square feet with 1,200 square feet of
office to be built.
(see attachment 1 highlighted in yellow).
TERM
For a term of three years and five months beginning on August 1, 1995 and ending
on January 31, 1999.
OPTION
Tenant will have two three-year options with the same terms and conditions as
the original lease. Lessee to notify Lessor in writing, sixty (60) days prior to
lease expiration to exercise lease renewal option.
RENTAL
2. Rent for the Premises, which Lessee agrees to pay, shall be at the year rate
of Forty-Three Thousand Twenty Dollars ($43,020.00). An annual adjustment of
rental payment will begin January 31, 1997 and will be made on each January 31
thereafter. The payment will be adjusted for an annual increase of 3%. Rent is
payable in advance on the first day of each month to the 5th in equally monthly
installments of Three-Thousand Five-Hundred Eighty-Five Dollars ($3,585.00) for
first year. Send payments to Sunbelt Properties, Inc., 403 Woods Lake Road,
Greenville, South Carolina 29607.
USE
3. Premises shall be used for the purpose of storage and light assembly work
including cutting and nailing wooden parts. Lessee agrees not to use the
Premises for any illegal purposes or to violate any regulation of any
governmental body or to create any nuisance or trespass to others.
-3-
<PAGE>
ADDITIONAL
4. The Lessee shall pay in addition to the above rent, 50% of the property taxes
for Lot 5, Freedom Court to Sunbelt Properties, Inc. who will pay the taxes in
full and provide paid receipt to Lessee. Tax for 1994 will be pro-rated as of
effective date of Lease. Taxes are due October 1, late after January 10th.
INSURANCE
5. (A) The Lessee shall pay, in addition to the above rent, 50% of the annual
property and liability insurance coverage in favor of Sunbelt Properties, Inc.
on the building Lot 5, Freedom Court. Owens Insurance Company will provide a
$500,000.00 property and liability insurance policy, which will include
liability, fire and property damage. The first years premium of $2,350.00 will
be pro-rated for the first day of rental. The statement will be sent directly to
the tenant(s).
(B) Lessee will be responsible for insurance to cover its personal property,
trade fixtures and merchandise contained within the structure.
UTILITIES
6. The Lessee agrees to pay all charges for electricity, gas, heating, fuel,
water, rentals or charges and any other utility charges used in their portion of
the premises. Landlord to provide separate gas and electric meters to tenants.
SUBLETTING AND ASSIGNMENTS
7. It is understood and agreed that if Lessee does so assign or sublet (only
after having received written permission from the Lessor, which will not be
unreasonably withheld) all or any portion of the Leased Premises, Lessee,
nevertheless, shall remain responsible to Lessor under all terms and conditions
of this Lease, including, among other responsibilities and without limiting such
responsibilities, the obligation to pay to the Lessor the difference between the
rent due under the terms of this Lease and any lesser amount due under the
provisions of any sub-Lease or assignment.
EXAMINATION OF PREMISES
8. Lessee agrees that it will examine the Premises and will notify the owner
within 10 days after occupancy of any discrepancy in the buildout per attachment
1.
POSSESSION
9. If this Lease is signed by all the parties before the Premises become ready
for occupancy and the Lessor cannot acquire or deliver possession of the
Premises by the time the term of this Lease is anticipated to begin, the Lessee
agrees to waive any claim for damages, including, but not limited to any
incidental or consequential damages due to such delay and Lessor WAIVES ANY
RENTALS DUE until possession is delivered to Lessee. If Lessee is to finish the
-4-
<PAGE>
Leased Premises itself and the Premises are not ready for occupancy at the time
designated for this Lease to begin, the Lessee will, nevertheless, pay rent
according to the Lease dates set forth in this Agreement.
ALTERATIONS
10. The Lessee, after receiving written permission from Lessor's Agent, may make
certain alterations, additions and improvements to the Premises.
REPAIRS BY LESSOR
11. The Lessor agrees to maintain the structural components of the building to
include roof, exterior walls (exclusive of glass, plate glass doors, and door
mountings) and foundations. Lessor is under no obligation to inspect the
Premises to find defects.
REPAIRS BY LESSEE
12. After one year has lapsed, the Lessee agrees to keep and maintain the
Premises at its sole expense in a good state of condition and repair except
those items referred to in Paragraph 11. The Lessee also agrees to keep all
fixtures pertaining to the heating, air conditioning, ventilating, electrical,
plumbing, and sprinkler system (if any) in good order and repair at its sole
expense.
The Lessee also agrees to re-decorate, paint, and renovate the Premises as may
be necessary to keep them in proper condition and good appearance. If any
portion of the Leased Premises is on the ground level, the Lessee agrees to keep
the sidewalks in front of the ground level portion clean and free of
obstruction.
The Lessee agrees to return the Premises at the end of the Lease term in at
least as good condition as Premises were when first Leased, normal wear and tear
excepted.
SIGNS
13. The Lessee may place or attach to the Premises signs or other such
identification as needed after receiving written permission from the Lessor. Any
signs or other form of identification allowed must conform to City or County
Ordinances governing at the time. Any damage caused to the Premises by the
Lessee's erecting or removing such signs will be repaired promptly by the Lessee
at the Lessee's expense.
The Lessee also agrees to have any window or glass identification completely
removed and cleaned at its expense promptly upon vacating the Premises.
KEYS
14. The Lessor will give Lessee at least one key to the Premises at the
beginning of this Lease. The Lessee agrees to account for all keys provided or
duplicated and to return all keys to Lessor at once at the end of the Lease
period.
-5-
<PAGE>
PERSONAL PROPERTY
15. All personal property moved into the Premises by the Lessee shall be at the
risk of the Lessee or the owners of the personal property. The Lessee agrees
that the Lessor shall not be liable for any damage, loss or theft of personal
property from any cause.
TRASH REMOVAL
16. The Lessee agrees to keep the entire leased Premises clean at all times,
both inside and out (to include parking areas) at its sole expense.
DEFAULT
17. The Lessee agrees to pay rent at the time, in the amount, and in the manner
as agreed upon in Paragraph 2 of this Lease. The Lessee also agrees that rent
shall be due at the specified time without any notice, bill, reminder, or demand
from the Lessor or the Lessor's Agent.
It is mutually agreed that any one or more of the following enumerated events
shall constitute and be referred to as a "Default":
(A) If the Lessee fails to pay rent at the time, in the amount, and in the
manner agreed upon and remains in default for ten (10) days after receipt of
written notification;
(B) If the Lessee fails to perform any of the material terms or provisions of
this Lease other than paying rents when due, and fails to cure such default
within ten (10) days after receiving written notice of default from the Lessor
or the Lessor's Agent; or
(C) If the Lessee is declared bankrupt or insolvent by judicial decree; or
(D) If the Lessee takes the benefit of any federal reorganization or composition
proceedings; or
(E) If the Lessee makes a general assignment for benefit of creditors; or
(F) If the Lessee's Leasehold interest in this Lease is sold under any process
of law; or
(G) If a trustee in bankruptcy or a receiver is appointed or elected for the
Lessee; or
(H) If any materialman's, mechanic's or other lien is filed against the Leased
Premises in connection with any improvements, alterations, or additions made by
Lessee pursuant to Paragraph 10 of this Lease and the Lessee is responsible for
the cost of the improvements, alterations, or additions, but allows the lien or
liens to stand against the Leased Premises and does not secure
-6-
<PAGE>
the discharge of the Property from such liens by filing an appropriate bond
pursuant to applicable law. If Lessee does not file a bond and elects to contest
the liens, there shall be no default pending final determination of such
disputed matter; then, and in any of the above events, the Lessor at its option,
may at once terminate this Lease by giving written notice to the Lessee. (Notice
to terminate in any of the above events may also be given by the Lessor's
attorney or Agent.)
Upon such termination by the Lessor, the Lessor or its Agents shall have the
right to enter the Premises, by force, if necessary without being liable for
trespass, forcible entry or other tort, to re-take possession of the Premises,
remove all persons and personal property of the Lessee if the Lessor so desires,
and to place a "For Rent" or "For Lease" sign in a place where the sign would be
most likely seen by the public.
The Lessee also agrees to pay all attorney's fees and all other expenses
incurred by the Lessor while enforcing any of the obligations of this Lease.
RIGHT OF RE-ENTRY OR TO DECLARE FULL RENTAL DUE
18. In the event of a material default that is not reasonably cured as described
in Paragraph 18, above, then Lessor, besides any other rights or remedies it may
have, may at Lessor's option (a) to declare the full rental due and payable
without prejudice to any other remedies in law or equity available to Lessor, or
(b) have the immediate right of re-entry and take possession of the Demised
Premises immediately and to hold the Premises with the full right to recover
from the Lessee all past due rents and any and all damages, including attorney's
fees, as result of default. Lessor on re-entry may remove all persons and
property in a public warehouse or elsewhere at the cost and for the account of
the Lessee. Additionally, the Lessor shall be able to utilize all other rights
and remedies available to Lessor under the Laws of the State of South Carolina.
RIGHT TO RE-LET
19. Should Lessee default as set out in Paragraph 18, Lessor may elect to
re-enter the Leased Premises and attempt to re-let the Premises. Lessor's only
responsibility shall be to offer the Premises for rent and make the usual and
normal efforts to re-let the Premises. Lessee shall be liable for any deficiency
between the amount of rental received, if any, and the amount which the Lessee
is obligated to pay under this Lease and for any other damages, including
attorney's fees, suffered by Lessor.
RIGHT TO TERMINATE
20. In addition to Lessor's right to re-enter and re-let the Premises, Lessor
may elect, upon a default, to terminate this Lease Agreement immediately. In
such event, this Lease shall be regarded as cancelled as of the date the Lessor
serves notice of Lessor's election to terminate to Lessee. Lessee shall be
-7-
<PAGE>
liable to Lessor for all rentals, charges and payments accrued to the time of
such termination.
The Lessor's right to terminate this Lease is in lieu of and not in addition to
any other rights or causes of action that Lessor may have against the Lessee
because of a default by the Lessee. If Lessor does not elect to terminate the
Lease as above provided, then Lessor shall utilize and pursue such other rights
as it may have against the Lessee under the other terms of this Lease, the Laws
of the United States or the City, County and State in which the Leased Premises
are located.
DAMAGE TO OR DESTRUCTION OF PREMISES
21. The Lessee shall notify the Lessor or its Agent at once in the event of any
fire or other casualty to the Leased Premises.
If the Leased Premises should be destroyed by fire or other casualty or damaged
to such an extent that they become wholly unfit for occupancy under the existing
Building Codes or Regulations, then this Lease may be terminated by either party
by giving written notice within thirty (30) days after the occurrence of such
fire or other casualty.
If the Leased Premises, however, are damaged by fire or other casualty, but may
be repaired within ninety (90) days from the date of the damage, then the Lessor
may notify the Lessee within thirty (30) days of the date of the fire or other
casualty of its intention to rebuild or make such repairs and may enter and
repair the Premises as quickly as reasonably possible. In this event, rent shall
not be due while such rebuilding or repair work is being performed, but shall
resume again as soon as the rebuilding or repairs are completed.
It is agreed that if the Premises are damaged only slightly due to fire or other
casualty and still fit for occupancy, the Lessor shall repair the damage as
quickly as reasonably possible and the Lessee shall continue to pay rent and
uphold all other Lease provisions.
The Lessee agrees not to claim any compensation from the Lessor or the Lessor's
insurance company because of any inconvenience, annoyance or business
interruption arising from the damage, repair, rebuilding, or alteration of any
portion of the building, except for willful misconduct.
CONDEMNATION
22. If the whole or any part of the property of which the Leased Premises are a
part shall be condemned, taken by court decree or taken by any other lawful
authority (including power of eminent domain). If the Lessor or Lessee in his
sole discretion determines that such taking shall render the Premises unfit for
the purposes of this Lease, the Lease shall terminate on the date that
possession is taken by public authorities and rent shall be paid through that
date.
-8-
<PAGE>
GOVERNMENTAL ORDERS
23. The Lessee, at its sole expense, agrees to observe and comply with all laws,
ordinances, rules and regulations of the Federal, State, County and Municipal
authorities as may apply to the business conducted by the Lessee on the
Premises.
ENTRY FOR CARDING REPAIRS, ETC.
24. The Lessee agrees that the Lessor may card the Premises "For Sale" any time
and "For Rent" or "For Lease" sixty (60) days prior to the end of this Lease.
The Lessor may enter the Premises at reasonable hours to show same to
prospective purchasers or Lessees and to make repairs required of Lessor under
the terms of this Lease, or to make repairs to Lessor's adjoining property, if
any.
RIGHT TO MORTGAGE OR
25. The Lessee agrees that its rights are subordinate and subject to any bona
fide mortgage which may be placed on the Premises any time in the future Lease
by the Lessor and will sign any Lease Subordination Agreement or Estoppel
Agreement at the Lessor's request.
WAIVER OF RIGHTS
26. The Lessee agrees that no waiver of any condition of this Lease by the
Lessor, whether implied or in writing, shall constitute any further waiver by
the Lessor of any other condition of this Lease. The rights and remedies created
by this Lease are cumulative and the use of one remedy does not exclude or waive
the right to the use of another.
ZONING
27. It is agreed that the use of the Leased Premises is subject to any
applicable Zoning Ordinances, Regulations and Setback Lines of any governmental
authority. Lessor agrees that tenants occupancy will not be in violation of any
current zoning laws.
TIME
28. Time is of the essence of this Agreement.
NOTICES
29. It is agreed that all notices regarding this Lease shall be sent by
Certified or Registered Mail to:
(A) Notice to Lessor
Sunbelt Properties, Inc.
403 Woods Lake Road
Corporate Plaza, Suite 204
Greenville, South Carolina 29607
(B) Notice to Lessee
Titan Building Products, Inc.
Post Office Box 100926
Nashville, Tennessee 37224
-9-
<PAGE>
LIENS
30. The Lessee agrees that Lessee will pay all liens of contractors,
subcontractors, mechanics, laborers, materialman, and other like items and will
indemnify Lessor against all legal costs and charges, bond premiums for release
of liens, including legal counsel fees reasonably incurred in and bout the
defense of any suit in discharging the said Premises or any part from liens,
judgments, or encumbrances caused by Lessee.
QUIET ENJOYMENT
31. Subject to the conditions of this Lease, the Lessor agrees that the Lessee
may peaceably have, hold and enjoy the Premises, without hindrance by Lessor or
Lessor's Agent.
WRITTEN AGREEMENT
32. This Lease contains the entire Agreement between the parties. It may be
modified only by an Agreement in writing signed by Lessor and Lessee.
CAPTIONS
33. The marginal captions contained here are for convenience and reference only
and are not a part of this Lease or to be construed as in any manner limiting or
amplifying the terms and provisions of this Lease.
AGENT CONDITIONS
34. Lessor agrees to pay to Covington Commercial Realty, Greenville, South
Carolina, Agent, as compensation for its service rendered in procuring this
Lease, three and one half percent (3.5%) of the total rental for 3 years (less
CPI increase).
Agent is named as a party to this Contract solely for the purpose of enforcing
its rights under this paragraph and it is understood by all parties that Agent
is acting solely in the capacity as Agent for Lessee to whom Lessor must look in
regard to all covenants, agreements and warranties contained in this Lease and
that Agent shall not be liable to Lessee in regard to any matter which may arise
by virtue of this Lease.
HAZARDOUS
35. Lessee shall not use or permit to be brought into the Demised Premises or
the real estate any inflammatory or explosive substance or other article deemed
hazardous to person or property, nor shall Lessee do or permit to be done any
act or thing which will invalidate or be in conflict with fire or other
insurance policies covering Lot 5 Freedom Court Building, its appurtenances or
contents. If by reason of the failure of Lessee to comply with the provisions of
this paragraph or of other provisions of this Lease, or by reason of Lessee's
use or occupancy of the Demised Premises, any insurance premium shall at any
time be increased, Lessee shall reimburse Lessor for all such increases in
premium.
-10-
<PAGE>
HEIRS AND ASSIGNS
36. This Lease shall bind and have affect to the benefit of the parties named
and their respective heirs, executors, administrators, successors and assigns.
HOLD OVER
37. If the Lessee holds over and continues in possession at the conclusion of
the Lease term, without any written agreement as to such possession, Lessor
shall acquire in such possession by acceptance of additional monthly payments
and Lessee shall be considered a Lessee from month to month at a rental amount
equal to last payment made under the terms of the written Lease and shall be
subject to A other terms and conditions of this Lease. Such tenancy may be
terminated by either party upon the giving of thirty (30) days notice in writing
to the other party.
SAVING CLAUSE
38. In the event any provision of this Lease is declared or determined to be
invalid under the laws governing this Lease, the remaining terms and conditions
shall remain in full force and effect and shall be binding on the parties
hereto.
SECURITY DEPOSIT
39. Lessor hereby acknowledges receipt from Lessee for the sum of Three Thousand
Five-Hundred Eighty-Five Dollars ($3585.00) to be held as collateral security
for the payment of any rentals and any other sums of money for which Lessee
shall become liable to Lessor under this Lease, and for the faithful performance
by Lessee of another covenants and. agreements made herein; said deposit to be
returned to Lessee after the termination of this Lease, provided Lessee shall
have made all such payments and performed all such covenants and agreements.
Lessor shall not be required to keep said deposit separate from its general
accounts. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease, Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies
all or any portion of said deposit, Lessor shall within ten (10) days after
written demand therefore deposit cash with Lessor in any amount sufficient to
restore said deposit to the full amount hereinabove stated and Lessee's failure
to do so shall be a material breach of this Lease. If the monthly rent shall,
from time to time, increase during the term of this Lease, deposit shall at all
times bear the same proportion to current rent as the original monthly rent.
If Lessor assigns its interest in the Premises during the Lease term, Lessor may
assign the Security Deposit to the assignee and thereafter Lessor shall have no
further liability for the return of such Security Deposit and Lessee agrees to
look solely to the new Lessor for the return of such Security Deposit.
-11-
<PAGE>
LATE CHARGES
40. In the event any monthly installment of rent is not received by Lessor on or
before the tenth (10th) day of the month from which said rent is due, Lessee
agrees to pay to Lessor, as a penalty each month during which the installment
remains unpaid, an additional sum equal to five (5%) percent of the amount due
and not received.
ADDITIONAL PROVISIONS
41. The pump station electric bill will be paid by Sunbelt Properties, Inc. who
will be reimbursed by the tenants. Electrical service to the pump station is on
an individual meter. The monthly charges will be paid by the tenant/owners of
Lots 6, 5 and 13 based on their percentage of water used. Lessee to furnish copy
of quarterly water bill to Lessor. Lessee will be responsible for their portion
of the sewer fines and includes piping up to the pump station.
Lessor to install 8 X 8 overhead door. Change drive-in door to 18' wide X 10'
high drive in.
OUTSIDE STORAGE
42. No outside storage of any kind.
IN WITNESS WHEREOF, the parties named herein have set their hands and seals the
year and day first above written.
LESSOR: SUNBELT PROPERTIES
By: /s/ Arnold E. Mullinax
Vice President
/s/ Lisa Michelle Bonen
Witness to Lessor
/s/ William B. _______
Witness to Lessor
LESSEE: TITAN BUILDING PRODUCTS, INC.
By: /s/ James Fishel
President
6/28/95
/s/ _____________
Witness to Lessee
/s/ Jan M. ______
Witness to Lessor
THIS IS A LEGALLY BINDING CONTRACT; IF NOT COMPLETELY UNDERSTOOD, WE RECOMMEND
YOU SEEK ADVICE FROM YOUR ATTORNEY.
-12-
<PAGE>
Exhibt 9
1407 Westinghouse Boulevard
Charlotte, North Carolina
Lease Agreement
THIS LEASE AGREEMENT, made and entered into by and between
CROW-CHILDRESS-KLEIN, a Texas Limited Partnership hereinafter referred to as
"Landlord", and TENNESSEE BUILDING PRODUCTS, INC. hereinafter referred to as
"Tenant";
W I T N E S S E T H:
1. Premises and Term. In consideration of the obligation of
Tenant to pay rent as herein provided, and in consideration of the other terms,
provisions and covenants hereof, Landlord hereby demises and leases to Tenant
and Tenant hereby takes from Landlord certain premises situated within the
County of Mecklenburg, State of North Carolina, more particularly described on
Exhibit "A" attached hereto and incorporated herein by reference, together with
all rights, privileges, easements, appurtenances, and immunities belonging to or
in any way pertaining to the premises and together with the buildings and other
improvements situated or to be situated upon said premises said real property,
building and improvements being hereinafter referred to as the "premises").
TO HAVE AND TO HOLD the same for a term commencing on the
"commencement date", as hereinafter defined, and ending 120 months thereafter,
provided, however, that, in the event the "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
"commencement date".
The "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 "B" attached hereto and incorporated herein
by reference. Landlord shall notify Tenant in writing as soon as Landlord deems
said buildings and other improvements to be completed and ready for occupancy as
aforesaid. In the event that said buildings and other improvements have not in
fact been substantially completed as aforesaid, Tenant shall notify Landlord in
writing of its objections. Landlord shall have a reasonable time after delivery
of such notice in which to take such corrective action as may be necessary, and
shall notify Tenant in writing as soon as it deems such corrective action has
been completed so that said buildings and other improvements are completed and
ready for occupancy. Taking of possession by Tenant shall be deemed conclusively
to establish that said buildings and other improvements have been
<PAGE>
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 this lease.
After such "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 or work performed or required to be
performed by Landlord, the certificate of Landlord's architect or general
contractor shall be conclusive.
2. Base Rent and Security Deposit.
-------------------------------
A. 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 NINE THOUSAND THREE HUNDRED NINETY Dollars ($9,390.00) 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 commencement date recited above during
the hereby demised term, except that the rental payment for any fractional
calendar month at the commencement or end of the lease period shall be prorated.
B. In addition, Tenant agrees to deposit with
Landlord on the date hereof the sum of NINE THOUSAND THREE HUNDRED NINETY
Dollars ($9,390.00), which sum shall be held by Landlord, without obligation for
interest, as security for the performance of Tenant's covenants and obligations
under this lease, it being expressly understood and agreed that such deposit is
not an advance rental deposit or a measure of Landlord's damages in case of
Tenant's default. Upon the occurrence of any event of default by Tenant,
Landlord may, from time to time, without prejudice to any other remedy provided
herein or provided by law, use such fund 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 such event of 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 to Tenant at such time after termination of this lease that
all of Tenant's obligations under this lease have been fulfilled.
3. Use. The demised premises shall be used only for the
purpose of receiving, storing, shipping and selling (other than retail)
products, materials and merchandise made and/or distributed by Tenant and for
such other lawful purposes as may be incidental thereto. Outside storage,
including without limitation, trucks and other vehicles, is prohibited without
Landlord's prior written consent. Tenant shall at its own cost and expense
obtain any and all licenses and permits necessary for
-2-
<PAGE>
any such use. Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the premises, and shall promptly comply
with all governmental orders and directives for the correction, prevention and
abatement of nuisances in or upon, or connected with, the premises, all at
Tenant's sole expense. 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 the building in which the premises are situated or
unreasonably interfere with their use of their respective premises. Without
Landlord's prior written consent, Tenant shall not receive, store or otherwise
handle any product, material or merchandise which is explosive or highly
inflammable. Tenant will not permit the premises to be used for any purpose or
in any manner (including without limitation any method of storage) which would
render the insurance thereon void or the insurance risk more hazardous or cause
the State Board of Insurance or other insurance authority to disallow any
sprinkler credits.
4. Taxes.
A. Landlord agrees to pay before they become
delinquent all taxes, assessments and governmental charges of any kind and
nature whatsoever (hereinafter collectively referred to as "taxes") lawfully
levied or assessed against the building and the grounds, parking areas,
driveways and alleys around the building; provided, however, that the maximum
amount of taxes to be paid by Landlord hereunder during any one real estate tax
year shall be THREE THOUSAND FIVE HUNDRED SEVENTY DOLLARS. If in any real estate
tax year during the term hereof or any renewal or extension the taxes levied or
assessed against the building and the grounds, parking areas, driveways and
alleys around the building during such tax year shall exceed the sum set forth
in the preceding sentence, Tenant shall pay to Landlord as additional rental,
upon demand, the amount of such excess. In the event any such amount is not paid
within twenty (20) days after the date of Landlord's invoice to Tenant, the
unpaid amount shall bear interest at the rate of ten percent (10%) per annum
from the date of such invoice until payment by Tenant.
B. In the event the premises constitute a portion of
a multiple occupancy building, Tenant agrees to pay to Landlord, as additional
rental, upon demand, the amount of Tenant's "proportionate share" of the excess
taxes referred to in Paragraph A above. Tenant's "proportionate share", as used
in this lease, shall mean a fraction, the numerator of which is the space
contained in the premises and the denominator of which is the entire space
contained in the building.
C. 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
-3-
<PAGE>
imposed on real estate and the improvements therein, 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 all purposes hereof.
D. The Landlord shall have the right to employ a tax
consulting firm to attempt to assure a fair tax burden on the building and
grounds within the applicable taxing jurisdiction. Tenant shall pay to Landlord
upon demand from time to time, as additional rent, the amount of Tenant's
"proportionate share" (as defined in subparagraph 4(B) above) of the cost of
such service.
E. Any payment to be made pursuant to this Paragraph
4 with respect to the real estate tax year in which this lease commences or
terminates shall be prorated.
5. Landlord's Repairs. Landlord shall at his expense maintain
only the roof, foundation and structural soundness of the exterior walls of the
building in good repair, reasonable wear and tear excepted. Tenant shall repair
and pay for any damage caused by the negligence of Tenant, or Tenant's
employees, agents or invitees, or caused by Tenant's default hereunder. The term
"walls" as used herein shall not include windows, glass or plate glass, doors,
special storm fronts or office entries. Tenant shall immediately give Landlord
written notice of defect or need for repairs, after which Landlord shall have
reasonable opportunity to repair same or cure such defect. Landlord's liability
with respect to any defects, repairs or maintenance for which Landlord is
responsible under any provisions of this lease shall be limited to the cost of
such repairs or maintenance or the curing of such defect.
6. Tenant's Repairs.
A. Tenant shall at its own cost and expense keep and
maintain all parts of the premises (except those for which Landlord is expressly
responsible under the terms of this lease) in good condition, promptly making
all necessary repairs and replacements, including but not limited to, windows,
glass and plate glass, doors, any special office entry, interior walls and
finish work, floors and floor covering, downspouts, gutters, heating and air
conditioning systems, dock boards, truck doors, dock bumpers, paving, plumbing
work and fixtures, termite and pest extermination, regular removal of trash and
debris, regular mowing of any grass, trimming, weed removal and general
landscape maintenance, including rail spur areas, keeping the parking areas,
driveways, alleys and the whole of the premises in a clean and sanitary
condition, and maintaining any spur track serving the premises (Tenant agrees to
sign a joint maintenance agreement with the railroad company servicing the
-4-
<PAGE>
premises, if requested by the railroad company). Tenant shall not be obligated
to repair any damage caused by fire, tornado or other casualty covered by the
insurance to be maintained by Landlord pursuant to subparagraph 12(A) below,
except that Tenant shall be obligated to repair all wind damage to glass except
with respect to tornado or hurricane damage.
B. Tenant shall not damage any demising wall or
disturb the integrity and support provided by any demising wall and shall, at
its sole cost and expense, promptly repair any damage or injury to any demising
wall caused by Tenant or its employees, agents or invitees.
C. In the event the premises constitute a portion of
a multiple occupancy building, Tenant and its employees, customers and licensees
shall have the exclusive right to use the parking areas, if any, as may be
designated by the Landlord in writing, subject to such reasonable rules and
regulations as Landlord may from time to time prescribe and subject to rights of
ingress and egress of other tenants. Landlord shall not be responsible for
enforcing Tenant's exclusive parking rights against any third parties. Further,
in multiple occupancy buildings, Landlord reserves the right to perform the
paving and landscape maintenance, exterior painting and common sewage line
plumbing which are otherwise Tenant's obligations under subparagraph A above,
and Tenant shall, in lieu of the obligations set forth under subparagraph A
above with respect to such items, be liable for its proportionate share (as
defined in subparagraph 4(B) above) of the cost and expense of the care for the
grounds around the building, including but not limited to, the mowing of grass,
care of shrubs, general landscaping, maintenance of parking areas, driveways and
alleys, exterior repainting and common sewage line plumbing; provided, however,
that Landlord shall have the right to require Tenant to pay such other
reasonable proportion of said mowing, shrub care and general landscaping costs
as may be determined by Landlord in its sole discretion; and further provided
that if Tenant or any other particular tenant of the building can be clearly
identified as being responsible for obstructions or stoppage of the common
sanitary sewage line, then Tenant, if Tenant is responsible, or such other
responsible tenant, shall pay the entire cost thereof, upon demand, as
additional rent. Tenant shall pay when due its share, determined as aforesaid,
of such costs and expenses along with the other tenants of the building to
Landlord upon demand, as additional rent, for the amount of its share as
aforesaid of such costs and expenses in the event Landlord elects to perform or
cause to be performed such work.
D. In the event the premises constitute a portion of
a multiple occupancy building, Landlord shall have the right to coordinate any
repairs and other maintenance of any rail tracks serving or to serve the
building, and if Tenant uses such rail tracks, Tenant shall reimburse Landlord
from time to time upon demand, as additional rent, for a share of the costs of
-5-
<PAGE>
such repairs and maintenance and any other sums specified in any agreement to
which Landlord is a party respecting such tracks, such share to be a fraction,
the numerator of which is the space contained in the premises, and the
denominator of which is the entire space occupied by rail users in the building.
E. Tenant shall, at its own cost and expense, enter
into a regularly scheduled preventive maintenance/service contract with a
maintenance contractor of servicing all hot water, heating and air conditioning
systems and equipment within the premises. The maintenance contractor and the
contract must be approved by Landlord. The services contract must include all
services suggested by the equipment manufacturer within the
operation/maintenance manual and must become effective (and a copy thereof
delivered to Landlord) within thirty (30) days of the date Tenant takes
possession of the premises.
7. Alterations. Tenant shall not make any alterations,
additions or improvements to the premises (including but not limited to roof and
wall penetrations) without the prior written consent of Landlord. Tenant may,
without the consent of Landlord, but at its own cost and expense and in a good
and workmanlike manner erect such shelves, bins, machinery and trade fixtures as
it may deem advisable, without altering the basis character of the building or
improvements and without overloading or damaging such building or improvements,
and in each case complying with all applicable governmental laws, ordinances,
regulations and other requirements. All alterations, additions, improvements and
partitions erected by Tenant shall be and remain the property of Tenant during
the term of this lease and Tenant shall, unless Landlord otherwise elects as
hereinafter provided, remove all alterations, additions, improvements and
partitions erected by Tenant and restore the premises to their original
condition by the date of termination of this lease or upon earlier vacating of
the premises; provided, however, that if Landlord so elects prior to termination
of this lease or upon earlier vacating of the premises, such alterations,
additions, improvements and partitions shall become the property of Landlord as
of the date of termination of this lease or upon earlier vacating of the
premises and shall be delivered up to the Landlord with the premises. 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 workmanlike manner so as not to damage the
primary structure or structural qualities of the buildings and other
improvements situated on the premises.
8. Signs. Tenant shall have the right to install signs upon
the premises only when first approved in writing by Landlord and subject to any
-6-
<PAGE>
applicable governmental laws, ordinances, regulations and other requirements.
Tenant shall remove all such signs by the termination of this lease. Such
installations and removals shall be made in such manner as to avoid injury or
defacement of the building and other improvements, and Tenant shall repair any
injury or defacement, including without limitation discoloration, caused by such
installation and/or removal.
9. Inspection. 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 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.
10. Utilities. Landlord agrees to provide at its cost water,
electricity and telephone service connections into the premises; but Tenant
shall pay for all water, gas, heat, light, power, telephone, sewer, sprinkler
charges and other utilities and services used on or from the premises, together
with any taxes, penalties, surcharges or the like pertaining thereto and any
maintenance charges for utilities and shall furnish all electric light bulbs and
tubes. If any such services are not separately metered to Tenant, Tenant shall
pay a reasonable proportion as determined by Landlord of all charges jointly
metered with other premises. Landlord shall in no event be liable for any
interruption or failure of utility services on the premises.
11. Assignment and Subletting. Tenant shall not have the right
to assign this lease or to sublet the whole or any part of the premises without
the prior written consent of Landlord. Notwithstanding any permitted assignment
or subletting, Tenant shall at all times remain directly, primarily and fully
responsible and liable for the payment of the rent herein specified and for
compliance with all of its other obligations under the terms, provisions and
covenants of this lease. Upon the occurrence of any "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, or provided
by law, may at its option collect directly from such assignee or subtenant all
-7-
<PAGE>
rents become due to Tenant under such assignment or sublease and apply such rent
against any sums due to Landlord from 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.
12. Fire and Casualty Damage.
A. Landlord agrees to maintain standard fire and
extended coverage insurance covering the building of which the premises are a
part in an amount not less then 80% (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 as such term is defined in the
Replacement Cost Endorsement to be attached thereto, insuring against the perils
of Fire, Lightning and Extended Coverage, 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
sub-paragraphs 12(C), 12(D) and 12(E) below, such insurance shall be for the
sole benefit of Landlord and under its sole control. If during the second full
lease year after the commencement date of this lease, or during any subsequent
year of the primary term or any renewal or extension, Landlord's cost of
maintaining such insurance shall exceed Landlord's cost of maintaining such
insurance for the first full lease year of the term hereof, Tenant agrees to pay
to Landlord, as additional rental, the amount of such excess (or in the event
the premises constitute a portion of a multiple occupancy building, Tenant's
full proportionate share (as defined in subparagraph 4(B) above) of such
excess). Said payments shall be made to Landlord within ten (10) days after
presentation to Tenant of Landlord's statement setting forth the amount due. Any
payment to be made pursuant to this subparagraph A with respect to the year in
which this lease commences or terminates shall bear the same ratio to the
payment which would be required to be made for the full year as the part of such
year covered by the term of this lease bears to a full year.
B. If the buildings situated upon the premises
should be damaged or destroyed by fire, tornado or other casualty, Tenant shall
give immediate 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 rest shall be abated during the unexpired portion of this lease, effective
upon the date of the occurrence of such damage.
-8-
<PAGE>
D. If the buildings situated upon the premises
should be damaged by any peril covered by the insurance to be provided by
Landlord under subparagraph 12(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 building
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 hay
have been placed in, on or about the premises by Tenant. 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 shall 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 obligations hereunder shall cease and terminate.
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 requirement is made by any such holder, whereupon all rights and
obligations hereunder shall cease and terminate.
F. Each of Landlord and Tenant hereby releases the
other from any loss or damage to property caused by fire or any other perils
insured through or under them by way of subrogation or otherwise for any loss or
damage to property caused by fire or any other 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 is 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 it will request its insurance carriers to
include in its policies such a clause or endorsement. If extra cost shall be
charged therefor, each party shall advise the other thereof and of the amount of
-9-
<PAGE>
the extra cost, and the other party, at its election, may pay the same, but
shall not be obligated to do so.
13. 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, or 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 in 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 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 this 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 $300,000 per occurrence in respect of injury to persons (including
death), and in the amount of not less than $50,000 per occurrence in respect of
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 therefor, shall be delivered to Landlord prior to the
commencement date of this lease. Not less than fifteen (15) days prior to the
expiation date of such policies, certified copies of the renewals 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.
14. Condemnation.
A. If the whole or any substantial part of the
premises 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
-10-
<PAGE>
purchase in lieu thereof and the taking would prevent or materially interfere
with the use of the premises for the purpose for which they are being used, this
lease shall terminate and the rent shall be abated during the unexpired portion
of this lease, effective when the physical taking of said premises shall occur.
B. If part of the premises shall be taken for any
public or quasi-public use under any 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 in the subparagraph 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.
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 proceedings.
15. Holding Over. Tenant will, at the termination of this
lease by lapse of time or otherwise, yield up immediate possession to Landlord.
If Landlord agrees in writing that Tenant may hold over after the 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 give (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 one and one-half (1-1/2) the rent in effect on the termination
date, computed on a daily basis for each day of the hold over period. 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 15 shall not be construed as Landlord's consent for
Tenant to hold over.
16. Quiet Enjoyment. Landlord covenants that it now has, or
will acquire before Tenant takes possession of the premises, good title to the
premises, free and clear of all liens and encumbrances, excepting only the lien
for current taxes not yet due, such mortgage or mortgages as are permitted by
the terms of this lease, zoning ordinances and other building and fire
ordinances and governmental regulations relating to the use of such property,
and easements, restrictions and other conditions of record. In the event this
lease is a sublease, then Tenant agrees to take the premises subject to the
provisions of the prior leases. Landlord represents and warrants that it has
full right and authority to enter into this lease and that Tenant, upon paying
-11-
<PAGE>
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 hereof without hindrance or molestation from Landlord, subject to
the terms and provisions of this lease.
17. 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 payment with respect to
taxes hereunder 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 shall become insolvent, or shall make a
transfer in fraud of creditors, or shall make an assignment
for the benefit of creditors.
(c) Tenant shall file a petition under any section or
chapter of the National Bankruptcy Act, as amended, or under
any similar law or statute of the United States or any State
thereof; or Tenant shall be adjudged bankrupt or insolvent in
proceedings filed against Tenant thereunder.
(d) A receiver or trustee shall be appointed for
all or substantially all of the assets of Tenant.
(e) Tenant shall depart or vacate any substantial
portion of the premises.
(f) Tenant shall fail to comply with any term,
provision or covenant of this lease (other than the foregoing
in this Paragraph 17), and shall not cure such failure within
twenty (20) days after written notice thereof to Tenant.
18. Remedies. Upon the occurrence of any of such events of
default described in Paragraph 17 hereof, Landlord shall have the option to
pursue any one or more of the following remedies without any notice or demand
whatsoever:
(a) 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 therefor;
and Tenant agrees to pay to Landlord on demand the amount of
all loss and damage which Landlord may suffer by reason of
-12-
<PAGE>
such termination, whether through inability to relet the
premises on satisfactory terms or otherwise.
(b) 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; and Tenant agrees to pay to the Landlord on
demand any deficiency that may arise by reason of such
reletting. In the event Landlord is successful in reletting
the premises at a rental in excess of that agreed to be paid
by Tenant pursuant to the terms of this lease, Landlord and
Tenant each mutually agree that Tenant shall no be entitled,
under any circumstances, to such excess rental, and Tenant
does hereby specifically waive any claim to such excess
rental.
(c) Enter upon the premises, by force if necessary,
without being liable for prosecution or any claim for damages
therefor, 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.
In the event Tenant fails to pay any installment of rent hereunder as and 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 percent (5%) of such installment; and the
failure to pay such amount within ten (10) days after demand therefor 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.
Pursuit of any of the foregoing remedies shall not preclude
pursuit of any of the other remedies herein provided or any other remedies
provided by law, nor shall pursuit of any remedy herein provided constitute a
forfeiture or waiver of any rent due to Landlord hereunder or of any damages
accruing to Landlord by reason of the violation of any of the terms, provisions
and covenants herein contained. No act or thing done by the Landlord or its
agents during the term hereby granted shall be deemed a termination of this
lease or an acceptance of the surrender of the premises, and no agreement to
-13-
<PAGE>
terminate this lease or accept a surrender of said premises shall be valid
unless in writing signed by Landlord. No waiver by Landlord of any violation or
breach of any of the terms, provisions and covenants herein contained shall be
deemed or construed to constitute a waiver of any other violation or breach of
any of the terms, provisions and covenants herein contained. Landlord's
acceptance of the payment of rental or other payments hereunder after the
occurrence of an event of default shall not be construed as a waiver of such
default, unless Landlord so notifies Tenant in writing. Forbearance by Landlord
to enforce one or more of the remedies herein provided upon an event of default
shall not be deemed or construed to constitute a waiver of such default or of
Landlord's right to enforce any such remedies with respect to such default or
any subsequent default. If, on account of any breach or default by Tenant in
Tenant's obligations under the terms and conditions of this lease, it shall
become necessary or appropriate for Landlord to employ or consult with an
attorney concerning or to enforce or defend any of Landlord's rights or remedies
hereunder, Tenant agrees to pay any reasonable attorney's fees so incurred.
19. Landlord's Lien. In addition to any statutory lien for
rent in landlord's favor, Landlord shall have and Tenant hereby grants to
Landlord a continuing security interest for all rentals and other sums of money
becoming due hereunder from Tenant, upon all goods, wares, equipment, fixtures,
furniture, inventory, accounts, contract rights, chattel paper and other
personal property of Tenant situated on the premises, and such property shall
not be removed therefrom without the consent of Landlord until all arrearages in
rent as well as any and all other sums of money then due to Landlord hereunder
shall first have been paid and discharged. In the event of a default under this
lease, Landlord shall have, in addition to any other remedies provided herein or
by law, all rights and remedies under the Uniform Commercial Code, including
without limitation the right to sell the property described in this Paragraph 19
at public or private sale upon five (5) days notice to Tenant. Tenant hereby
agrees to execute such financing statements and other instruments necessary or
desirable in Landlord's discretion to perfect the security interest hereby
created. Any statutory lien for rent is not hereby waived, the express
contractual lien herein granted being in addition and supplementary thereto.
20. Mortgages. Tenant accepts this lease subject and
subordinate to any mortgage(s) and/or deed(s) of trust now or at any time
hereafter constituting a lien or charge upon the premises or the improvements
situated thereon, 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
-14-
<PAGE>
or other documents which may be required by any mortgagee for the purpose of
subjecting and subordinating this lease to the lien of any such mortgage.
21. Landlord's Default. In the event Landlord should become in
default in the payment of taxes or any other items which might become a lien
upon the premises and which Tenant is not obligated to pay under the terms and
provisions of this lease, Tenant is authorized and empowered after giving
Landlord five (5) days prior written notice of such default and Landlord's
failure to cure such default, to pay any such items for and on behalf of
Landlord, and the amount of any item so paid by Tenant for or on behalf of
Landlord, together with any interest or penalty required to be paid in
connection therewith, shall be payable on demand by Landlord to Tenant;
provided, however, that Tenant shall not be authorized and empowered to make any
payment under the terms of this Paragraph 21 unless the item paid shall be
superior to Tenant's interest hereunder.
22. Mechanic's Liens. 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 interest 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.
23. 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 by Landlord to Tenant or with reference to the sending, mailing
or delivery of any notice or the making of any payment by Tenant to Landlord
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 hereunder shall be payable to Landlord
at the address hereinbelow set forth or at such other address
as Landlord may specify from time to time by written notice
delivered in accordance herewith. Tenant's obligation to pay
-15-
<PAGE>
rent and any other amounts to Landlord under the terms of this
lease shall not deemed satisfied until such rent and other
amounts have been actually received by Landlord.
(b) All payments required to be made by Landlord to
Tenant hereunder shall be payable to Tenant at the address
hereinbelow set forth, or at such other address within the
continental United States as Tenant may specify from time to
time by written notice delivered in accordance herewith.
(c) 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:
LANDLORD: TENANT:
CROW-CHILDRESS-KLEIN TENNESSEE BUILDING PRODUCTS, INC.
C/O Trammell Crow Company Glenrose at Foster Avenue
One Fairview Plaza, Nashville, Tennessee
Suite 211
5950 Fairview Road
Charlotte, North Carolina 28210
If and when included within the term "Landlord", as used in this instrument,
there are 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 to
Landlord; if and when included within the term "Tenant", as used in this
instrument, there are 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 within the continental
United States for the receipt of notices and payments to Tenant. 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.
24. Miscellaneous.
A. Words of any gender used in this lease shall be
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, unless the content 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
-16-
<PAGE>
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. 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.
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 thereof, or in any way affect the
interpretation of this lease.
D. Tenant agrees from time to time within ten (10)
days after request of Landlord, to deliver to Landlord, or Landlord's designee,
an estoppel certificate stating that this lease is in full force and affect, the
date to which rent has been paid, the unexpired term of this lease and such
other matters pertaining to this lease as may be requested by Landlord. It is
understood and agreed that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Landlord's
execution of this lease.
E. 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 hereunder 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 hereof,
including without limitation all payment obligations with respect to taxes and
insurance and all obligations concerning the condition of the premises. Upon the
expiration or earlier termination of the term hereof, and prior to Tenant
vacating the premises, Tenant shall pay to Landlord any amount reasonably
estimated by Landlord as necessary to put the premises, including without
limitation all heating and air conditioning systems and equipment therein, in
good condition and repair. Tenant shall also, prior to vacating the premises,
pay to Landlord the amount, as estimated by Landlord, of Tenant's obligation
hereunder for real estate taxes and insurance premiums for the year in which the
lease expires or terminates. All such amounts shall be used and held by Landlord
for payment of such 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 Paragraph 24(F).
G. If any clause or provision of this lease is
illegal, invalid or unenforceable under present or future laws effective during
the term of this lease, then and in that event, it is the intention of the
-17-
<PAGE>
parties hereto that the remainder of this lease shall not be affected thereby,
and it is also the intention of the parties to this lease that in lieu of each
clause or provision of this lease that is illegal, invalid or unenforceable,
there be added as a part of this lease contract a clause or provision as similar
in terms to such illegal, invalid or unenforceable clause or provision as may be
possible and be legal, valid and enforceable.
H. Because the premises are on the open market and
are presently being shown, this lease shall be treated as an offer with the
premises being subject to prior lease and such offer subject to withdrawal or
non-acceptance by Landlord or to other use of the premises without notice, and
this lease shall not be valid or binding unless and until accepted by Landlord
in writing and a fully executed copy delivered to both parties hereto.
I. 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.
25. Additional Provisions. Paragraphs 26 - 31.
EXECUTED BY LANDLORD, this ____ day of _______, 19__
Attest/Witness CROW-CHILDRESS-KLEIN
___________________________ By:___________________________
Title:_____________________ Title:________________________
EXECUTED BY TENANT, this ____ day of _______, 19__
Attest/Witness TENNESSEE BUILDING PRODUCTS, INC.
___________________________ By:___________________________
Title:_____________________ Title:________________________
-18-
<PAGE>
ADDITIONAL PROVISIONS
26. The duties and obligations of Tenant herein shall be binding upon all or any
of them. The duties and obligations of Tenant shall run and extend not only to
the benefit of the Landlord, as named herein, but to the following, at the
option of the following, or any of them (i) any person, by, through or under
which Landlord derives the right to lease the premises, (ii) the owner of the
premises, and (iii) holders of mortgage or rent assignment interests in the
premises, as their respective interests may appear; provided, however, nothing
contained herein shall be construed to obligate Tenant to pay rent to any person
other than the Landlord until such time as Tenant has been given written notice
of either an exercise of a rent assignment or the succession of some other party
to the interests of Landlord.
27. Tenant shall not install drapes, curtains, blinds or any window treatment
without Landlord's prior written approval.
28. While this Lease is in full force and effect, provided that Tenant is not in
default of any of the terms, covenants and conditions thereof, Tenant shall have
the right or option to extend the original term of this lease for one further
term of Sixty (60) months. Such extension or renewal of the original term shall
be on the same terms, covenants and conditions as provided for in the original
term except that the rental during the extended term shall be at Eighty (80%)
percent of the fair market rental then in effect on equivalent properties, of
equivalent size, in equivalent areas. In no event shall such rental during the
extended term be less than One Hundred Thirty-Five Thousand Seven Hundred Eighty
Dollars ($135,780.00). Notice of Tenant's intention to exercise the option must
be given to Landlord in writing at least one hundred eighty (180) days prior to
the expiration of the original term of this lease.
29. Landlord is the owner of the herein demised premises, outlined in blue on
Exhibit "C" attached hereto, as well as the adjacent space outlined in green on
said Exhibit "C". It is agreed that, for a term of sixty months from the date
hereof, Tenant shall have the right of first refusal to lease the adjacent space
or a portion thereof from the Landlord, which Lease shall be at the same price
and on the same terms as contained in any bona fide offer for the lease of the
adjacent space or a portion thereof received by Landlord, which Landlord desires
to accept. Upon receipt of such an offer, Landlord shall notify Tenant thereof,
in the manner provided herein for notice, whereupon Tenant shall have three (3)
days after receipt of such notice in which to elect to exercise Tenant's right
of first refusal. In the event Tenant fails to give Landlord written notice of
Tenant's election to lease the adjacent property or a portion thereof within
said three (3) day period, Tenant shall have no further right, title or interest
in the adjacent space and this right of first refusal shall terminate and be of
no further force and effect. If, on the other hand, Tenant exercises its right
<PAGE>
of first refusal in the manner provided above, then the Lease of the adjacent
property or a portion thereof shall be consummated, in accordance with the terms
set forth in said bona fide offer.
30. Landlord hereby grants Tenant the right and option to cancel this Lease
agreement at the end of the sixtieth (60th) month of the Primary Lease Term by
giving Landlord written notice during the forty-eighth (48th) month of the
Primary Lease Term and by simultaneously depositing with Landlord the sum of
Ninety-Six Thousand Three Hundred Dollars ($96,300.00), said sum representing
additional compensation for the privilege of so terminating.
31. The amount of "Three Thousand Five Hundred Seventy Dollars", contained in
Section 4, Paragraph A, of this lease, is eliminated therefrom, and the
following is substituted therefor:
"An amount equal to the total amount of taxes levied against the
property which is the subject of this lease, by the proper taxing authorities of
the City of Charlotte, North Carolina, and of Mecklenburg County, North
Carolina, during the first full real estate tax year after
1. The building shown in Exhibit "C" has been completed and Tennessee
Building Products, Inc. has occupied it as a tenant
and
2. The property has been recognized by the proper taxing authorities of
the City of Charlotte, North Carolina, and of Mecklenburg County, North
Carolina, as including both land and the completed building shown in Exhibit
"C", and this fact has been used as the basis of the tax assessment for such
real estate tax year."
-2-
<PAGE>
ARROWOOD II
EXHIBIT "A"
Approximately 51,010 square feet as outlined in red on Exhibit "C" attached
hereto out of a larger building situated on a tract of land the legal
description of which is:
BEGINNING at an iron located on the northerly margin of Cordage Street (said
street having a total right-of-way of 60 feet), said iron being located S.
66-59-36 W. 30.0 feet form the point of intersection of the northerly margin of
Cordage Street with the westerly margin of Westinghouse Boulevard; and running
thence with the northerly margin of Cordage Street, S. 66-59-36 W. 920.0 feet to
an iron; thence N. 23-00-24 W. 477.82 feet to an iron on the line of Southern
Railway Company's property as described in deed from Arrowood-Southern Company
filed or to be filed of record; thence with the property of Southern Railway
Company in four courses and distances as follows: (91) N. 59-40-30 E. 344.25
feet to an iron, (2) N. 66-59-36 E. 159.37 feet to an iron, (3) thence
southeasterly along the arc of a curve to the right for a distance of 658.45
feet to a point of tangency, said arc having a radius of 419.18 feet, a cord of
592.81 feet and a cord bearing of S. 68-00-25 E., to an iron and (4) S. 23-00-24
E. 102.49 feet to the point and place of Beginning and containing 434,740.78
square feet for 9.980 acres according to survey of R. B. Pharr & Associates
dated August 30, 1979, as revised September 11, 1979.
-3-
<PAGE>
EXHIBIT "B"
I. OFFICE AREA
A. Layout - Per attached plan.
B. Doors, Hardware and Door Jambs - Doors to be solid core prefinished doors
with conventional hardware (Schlage). All office doors to have key locks.
Restroom doors to have convenience locks. All door jambs to be hollow metal.
C. Ceiling, Lighting and Insulation - Suspended lay in ceiling nine feet above
finished floor complete with recessed 2' by 4' lighting fixtures to provide
seventy-five foot candles at desk level. Four inches of fiberglass batt
insulation to be installed above suspended ceiling.
D. Heating, Ventilation and Air Conditioning - To be provided by gas fired
heating (when available) and electric air conditioning system sufficient to
maintain seventy degrees fahrenheit inside when 15 degrees fahrenheit outside
and cool to seventy-five degrees fahrenheit inside when 95 degrees fahrenheit
outside. Air conditioning returns are to be ducted with an individual return air
duct at each private office.
E. Floor Covering - Allow $9.00 per square yard carpeting allowance installed.
F. Partitions and Wall Covering - Partitions to be prefinished vinyl clad
sheetrock on wood or metal studs. Partitions separating office from warehouse to
be block. All block walls in office area are to be firred and sheetrocked. Brick
walls to be exposed.
G. Vinyl Base - Four inch vinyl base to be installed in all office areas.
H. Sprinkler System - Pendant type sprinklers to be installed in office area to
meet local code.
I. Electric - Normal number of 110 volt duplex convenience outlets to be
installed in accordance with National Electric Code.
II. RESTROOMS
A. Floor Covering - Floor to be 1/8 inch vinyl asbestos tile complete with vinyl
base.
B. Fixtures - Provide standard white restroom fixtures as shown on the plan.
C. Wallcoverings - Walls to be painted with two coats of enamel wall paint.
-4-
<PAGE>
D. Ventilation - Ventilation to meet local code.
E. Restroom Accessories - Mirror with shelf over each lavatory, toilet paper
dispenser within restrooms.
F. Lighting - One 36" fluorescent, strip light with cover above lavatory. If
restroom of sufficient size, include 2' x 4' layin fixture.
G. General - Specifications concerning doors, hardware, ceiling, insulation,
HVAC to be the same as office area.
III. WAREHOUSE AND MANUFACTURING AREA
A. Light - To be provided by double tube 96 inch fluorescent industrial type
fixtures (with reflectors) mounted to the bottom of the joist. Allow one fixture
per 400 square feet of warehouse area.
B. Heat - To be provided by ten (10) 150,000 BTU gas-fired suspended unit
heaters.
C. Wood Base - 4" wood base and 4" wood cap mold to be installed on warehouse
side of partition separating office from warehouse.
D. Fully sprinklered.
IV. MISCELLANEOUS
A. Party Wall - To be a 8 inch block or as required by local code.
B. Exterior soffit light is to be controlled by photocell.
C. Electrical service to be 400 Amp, 3 phase, 120 volt - 208 volt.
D. Warehouse Doors:
1. Six - 8' x 10' Dock high doors
2. One - 12' x 14' Drive-in door with concrete ramp
3. Two - 8' x 10' Rail doors
4. Personnel doors as required by code.
-5-
<PAGE>
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (the "Amendment") made this _____ day of January, 1995
by and between SCI North Carolina Limited Partnership ("Landlord"), as successor
in interest to Crow-Childress-Klein Limited Partnership successor in title to
Crow-Childress-Klein, and Titan Building Products ("Tenant").
RECITALS:
A. WHEREAS, Landlord and Tenant entered into a lease dated December 19, 1979 and
subsequently entered into a Lease Extension and Expansion Agreement dated April
14, 1989, a Lease Renewal Agreement dated July, 1993 and a Lease Renewal
Agreement dated March 9, 1994, with respect to certain premises containing
approximately 91,737 square feet in the Building (herein so called) known for
street numbering purposes as 1407 Westinghouse Boulevard, Charlotte, North
Carolina (the "premises"). The Lease as heretofore and hereafter modified being
hereinafter referred to as the "Lease".
B. WHEREAS, Landlord and Tenant hereby desire to amend the Lease
upon the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. As of February 15, 1995 the premises shall be expanded by approximately
23,273 square feet to a total of approximately 115,010 square feet. As of
February 15, 1995 said 115,010 approximate square foot space shall constitute
the "premises" as provided under paragraph 1 of the Lease. Rent will be
readjusted if Tenant is not in possession of Premises at 2/15/95.
2. The expiration date of the Lease remains February 28, 2000, though as of
February 1, 1995, Tenant's monthly base rent shall be increased to the following
amounts:
Months Rate Per Month
2/15/95 to 7/31/95 $25,474.52 per month
8/1/95 to 7/31/96 $25,808.47 per month
8/1/96 to 7/31/97 $26,142.23 per month
8/1/97 to 7/31/98 $26,475.98 per month
8/1/98 to 2/28/2000 $26,809.74 per month
3. (a) Landlord agrees to furnish or perform those items of construction and
those improvements ("Landlord's Improvements") specified and shown on Exhibit
"B" attached hereto and incorporated herein by reference. Landlord shall pay for
the Landlord's Improvements, and in no event shall Landlord have any
-6-
<PAGE>
obligation to pay for any costs of changes, requested by Tenant, to the
Landlord's Improvements.
(b) If Tenant shall desire any changes, Tenant shall so advise Landlord in
writing and Landlord shall determine whether such changes can be made in a
reasonable and feasible manner. Any and all costs of making any changes to
Landlord's Improvements which Tenant may request and which Landlord may agree to
shall be at Tenant's sole cost and expense and shall be paid to Landlord upon
demand and before execution of the change order.
(c) Landlord shall proceed with and complete the construction of Landlord's
Improvements. As soon as such improvements have been substantially completed,
Landlord shall notify Tenant in writing that Landlord's Improvements are
substantially completed.
Subject to applicable ordinances and building codes governing Tenant's right to
occupy or perform in the premises, Tenant shall be allowed to install its
machinery, equipment, fixtures, or other personal property on the premises
during the final stages of completion of construction provided that Tenant does
not thereby interfere with the completion of construction or cause any labor
dispute as a result of such installations, and provided further that Tenant does
hereby agree to assume all risk of loss or damage to such machinery, equipment,
fixtures, and other personal property and to indemnify, defend, and hold
Landlord harmless from any loss or damage to such property, and all liability,
loss, or damage arising from any injury to the Building or the property of
Landlord, its contractors, subcontractors, or materialmen, and any death or
personal injury to any person or persons arising out of such installations.
Delay in putting Tenant in possession of the premises shall not serve to extend
the term of this Lease or to make Landlord liable for any damages arising
therefrom.
4. Tenant shall not permit or cause any party to bring any Hazardous Material
upon the premises or store or use any Hazardous Material in or about the
premises without Landlord's prior written consent. Tenant, at its sole cost and
expense, shall operate its business in the premises in compliance with all
Environmental Requirements, and shall immediately remediate any Hazardous
Materials released on or from the Building by Tenant, its agents, employees,
contractors, subtenants or invitees. The term "Environmental Requirements" means
all applicable present and future statutes, regulations, ordinances, rules,
codes, judgments, orders or other similar enactments or any governmental
authority or agency regulating or relating to health, safety, or environmental
conditions on, under, or about the premises or the environment, including
without limitation, the following: the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"); the Resource Conservation and
Recovery Act; and all state and local counterparts thereto, and any regulations
or policies promulgated or issued thereunder. The term "Hazardous Materials"
means and includes petroleum (as defined in CERCLA) and any substance, material
-7-
<PAGE>
waste, pollutant, or contaminant listed or defined as hazardous or toxic, under
any Environmental Requirements.
Tenant shall indemnify, defend, and hold Landlord harmless from and against any
and all losses (including, without limitation, diminution in value of the
premises or loss of rental income from the Building, claims, demands, actions,
suits, damages (including, without limitation, punitive damages), expenses
(including, without limitation, remediation, corrective action, or cleanup
expenses), and costs (including, without limitation, actual attorneys' fees,
consultant fees or expert fees) which are brought or recoverable against, or
suffered or incurred by Landlord as a result of any breach of the obligations
under this paragraph 4 by Tenant, its agents, employees, contractors,
subtenants, or invitee, regardless of whether Tenant had knowledge of such
noncompliance. The indemnification and hold harmless obligations of Tenant shall
survive any termination of this Lease.
Landlord shall have access to, and a right to perform inspections and tests of,
the premises as it may require to determine Tenant's compliance with
Environmental Requirements and Tenant's obligations under this Paragraph 4.
Access shall be granted to Landlord upon Landlord's prior notice to Tenant at
such times so as to minimize, so far as may be reasonable under the
circumstances, any disturbance to Tenant's operations.
5. Any liability of Landlord for a default by Landlord under the Lease, or a
breach by Landlord of any of its obligations under the Lease, shall be limited
solely to its interest in the Premises, and in no event shall pay personal
liability be asserted against Landlord in connection with the Lease nor shall
any recourse be had to any other property or assets of Landlord. Landlord's
interest in the property shall be deemed to include (i) the rents or other
income from the property received by Landlord after Tenant obtains a final
judgment against Landlord (and Tenant shall have the right to offset the amount
of any final judgment obtained by Tenant against Landlord as the result of a
default by Landlord under the Lease against the next maturing installment or
installments of rent payable under the Lease until the full amount of such final
judgment and any interest thereon has been satisfied), (ii) the net proceeds
received by Landlord from the sale or other disposition of all or any part of
Landlord's right, title and interest in the property after Tenant obtains a
final judgment against Landlord, (iii) the net proceeds received by Landlord
from any condemnation or conveyance in lieu of condemnation of all or any
portion of the property after Tenant obtains a final judgment against Landlord,
and (iv) the net proceeds of insurance received by landlord from any casualty
loss of all or any portion of the property after Tenant obtains a final judgment
against Landlord.
-8-
<PAGE>
Notwithstanding the foregoing, the Landlord (but not its mortgagees or any
purchasers or grantee at a foreclosure a conveyance in lieu of a foreclosure
mortgage covering the property) shall be liable to Tenant for any deficiency
remaining after application of all or any portion of the proceeds described in
(i), (ii), (iii), (iv) above (as the case may be), to the settlement or judgment
which tenant has obtained against Landlord, provided that such deficiency shall
not exceed $2.5 million dollars less the sum of such proceeds. Any obligation or
liability whatsoever of SCI North Carolina Limited Partnership, which may arise
at any time under the Lease or this Agreement or any obligation or liability
which may be incurred by it pursuant to any other instrument, transaction or
undertaking contemplated hereby, shall not be personally binding upon, nor shall
resort for the enforcement thereof be had to the property of, its trustees,
directors, shareholders, officers, employees, or agents regardless of whether
such obligation or liability is in the nature of contract, tort or otherwise. It
is understood and agreed that modifications agreed upon shall be applicable as
of this date and shall not be applicable to events or occurrences prior to the
date hereof.
6. Landlord covenants and agrees to indemnify and save Tenant, its employees and
agents harmless of and from any and all claims, costs, expenses and liabilities,
including, without limitation, attorneys' fees, arising on account of or by
reason of claims by third parties for injuries or death to persons or damages to
property resulting from the negligence or willful misconduct of Landlord or its
agents, employees, or contractors, to the extent not attributable to any
negligence of Tenant, any assignee or subtenant of Tenant, or their respective
employees, agents, or contractors.
7. Except as modified herein, the Lease, and all of the terms and conditions
thereof not otherwise inconsistent herewith, shall remain in full force and
effect.
LANDLORD:
SCI NORTH CAROLINA LIMITED PARTNERSHIP
By: /s/ John _____________
Name: John _______________
Title: Senior Vice President
TENANT:
TITAN BUILDING PRODUCTS
By: /s/ James L. Fishel
Name: James L. Fishel
Title: President
-9-
<PAGE>
Exhibit 10
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between F & S INVESTMENTS,
L.L.C., a Tennessee limited liability company ("Landlord"), and MORGAN PRODUCTS
LTD., a Delaware corporation ("Tenant");
W I T N E S S E T H:
1. Premises and Term. In consideration of the obligation of
Tenant to pay rent herein provided, and in consideration of the other terms,
provisions and covenants hereof, Landlord hereby demises and leases to Tenant,
and Tenant hereby takes from Landlord certain premises consisting of the real
property including the building located at the corner of Foster and Glenrose
Avenues, in Nashville, Davidson County, Tennessee, as more particularly
described on Exhibit A attached hereto and incorporated herein by reference,
together with all rights, privileges, easements, appurtenances, and immunities
belonging to or in any way pertaining to the premises (said real property,
buildings and improvements being collectively referred to as the "Premises").
TO HAVE AND TO HOLD the same for a term commencing on the
Commencement Date, as hereinafter defined, and ending one hundred eighty (180)
months thereafter provided, however, that, in the event the 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 Commencement Date. The Commencement Date shall be
August 30, 1996. Except for its rights under the Asset Purchase
Agreement dated July 22, 1996 between certain of Landlord's affiliates, namely,
Tennessee Building Products, Inc., its shareholders, and Titan Building
Products, Inc., as Sellers, and Tenant, as Purchaser (the "Purchase Agreement"),
Tenant acknowledges that it has inspected and accepts the Premises on an "as is,
where is" basis, and specifically the buildings and improvements comprising the
same, in their present condition as suitable for the purpose for which the
Premises are leased. Except for Tenant's rights under the Purchase Agreement,
taking of possession by Tenant shall be deemed conclusively to establish that
said buildings and other improvements are in good and satisfactory condition as
of when possession was taken. Tenant further acknowledges that no
representations as to the repair of the Premises, including but not limited to
the presence or absence or hazardous or toxic materials, nor prom ises to alter,
remodel or improve the Premises have been made by Landlord, unless such are
expressly set forth in this Lease. Nothing herein shall limit, supersede or
alter any covenants, agreements, representations, warranties or indemnities set
forth in the Purchase Agreement, nor any remedies for breach thereof. After the
Commencement Date Tenant shall, upon demand, execute and deliver to Landlord a
letter of acceptance of delivery of the Premises.
2. Base Rent. Tenant agrees to pay to Landlord rent for the
Premises on a monthly basis in advance, without demand, deduction or setoff,
except as expressly provided herein, for the entire term hereof at the rates set
-1-
<PAGE>
forth on Exhibit B, attached hereto and incorporated herein by reference. One
monthly installment shall be due and payable on the Commencement Date and a like
monthly installment shall be due and payable, without demand, on or before the
first day of each calendar month following the Commencement Date, except that
the rental payment for any fractional calendar month at the commencement or
expiration of the Lease term shall be prorated. It is understood and agreed that
the rent payable under this Lease shall be net to the Landlord, Tenant shall
bear all expenses relating to the Premises, including but not limited to taxes,
insurance maintenance and utilities, except as otherwise set forth herein.
3. Use.
(a) During the Lease term, the Premises shall be used for any
lawful use, but as of the date hereof, Tenant intends to use the Premises for
the purpose of receiving, assembling, manufacturing, storing, shipping and
selling products, materials and merchandise made and/or distributed by Tenant,
and for such other lawful purposes as may be incidental thereto. Tenant shall,
at its own cost and expense, obtain any and all licenses and permits necessary
for any such use. Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises, and shall promptly comply
with all governmental orders and directives for the correction, prevention and
abatement of nuisances in or upon, or in connection with the Premises, all at
Tenant's sole expense. 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 that would constitute a nuisance. Without Landlord's prior
written consent, Tenant shall not receive, store or otherwise handle any
product, material or merchandise that is explosive, highly inflammable,
hazardous or toxic, other than the types of products, materials or merchandise
(i) received, stored or otherwise handled on the Premises prior to the execution
of this Lease; (ii) nominal amounts used in the ordinary course of business; or
(iii) used in the normal course of manufacturing building products; provided
uses (ii) and (iii) shall be in compliance with all applicable laws. Tenant will
not permit the Premises to be used for any purpose or in any manner (including
without limitation any method of storage) that would render the insurance
thereon void or the insurance risk more hazardous or cause the State Board of
Insurance or other insurance authority to disallow any sprinkler credits.
(b) Notwithstanding anything to the contrary herein, Tenant
shall in no event be obligated to take any actions, including without
limitation, any removal, containment or remedial actions or comply with any laws
arising out of or resulting from the presence of hazardous substances in or on
the Premises prior to or subsequent to the lease term, caused by Landlord or any
prior tenant or occupant or resulting from the migration of hazardous substances
onto or under the Premises from another property. Landlord shall indemnify and
hold Tenant harmless from and against any and all costs, claims, expenses,
damages, losses, liabilities and judgments arising out of the presence of
hazardous substances located on or under the Premises prior to or subsequent to
the commencement of this Lease; if (i) caused by Landlord, or any prior tenant,
owner or occupant of the Premises, or (ii) resulting from the migration of
hazardous substances onto or under the Premises from another property.
4. Taxes.
-2-
<PAGE>
a. Tenant agrees to pay before they become delinquent
all taxes assessments, and governmental charges of any kind
and nature whatsoever (hereinafter collectively referred to as
the "Taxes") lawfully levied or assessed against the land
described in Exhibit A and improvements located thereon and
applicable to periods during the term hereof (pro-rated for
partial tax years included within the term hereof). Tenant
shall furnish to Landlord, not later than twenty (20) days
before the date any Taxes become delinquent, official receipts
of the appropriate taxing authority or other evidence
satisfactory to Landlord evidencing payment thereof. If Tenant
should fail to pay any Taxes, required to be paid by Tenant
hereunder, in addition to any other remedies provided herein,
Landlord may, if it so elects, pay such Taxes. Any sums so
paid by Landlord shall be deemed to be so much additional
rental owing by Tenant to Landlord and due and payable, on
demand, by Landlord, together with interest thereon, at the
lesser of two and one-half percent (2 1/2%) in excess the
prime rate published from time to time in The Wall Street
Journal, or the maximum rate permitted by law (the "Default
Rate"), from date paid by Landlord to date of repayment by
Tenant.
b. 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, 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.
c. Tenant may, at its sole cost and expense, in its
own name and/or in the name of Landlord, dispute and contest
any Taxes by appropriate proceedings diligently conducted in
good faith, but only after Tenant has deposited with the
taxing authority, as necessary, the amount so contested and
unpaid. Landlord agrees to cooperate with Tenant in any such
appeal. Tenant hereby indemnifies and agrees to hold harmless
the Landlord from and against any cost, damage, or expense
(including reasonable attorney's fees) in connection with any
such proceedings brought by Tenant in its own name or the name
of the Landlord.
d. Any payment to be made pursuant to this Section 4,
with respect to the real estate tax year in which this Lease
commences or terminates shall be prorated.
5. Repairs and Maintenance.
a. Except for those items specifically allocated to
Landlord pursuant to subsection (b), below, and damage or
-3-
<PAGE>
disrepair attributable to the negligence or wilful misconduct
of Landlord, Tenant shall, at its own cost and expense, keep
and maintain all parts of the Premises in good condition,
promptly making all necessary repairs and replacements,
ordinary and extraordinary, foreseen or unforeseen, including
but not limited to, windows, glass and plate glass, doors and
any special office entry, walls and finish work, floor
covering, downspouts, gutters, heating, and air conditioning
systems, dock boards, truck doors, dock bumpers, paving,
plumbing work and fixtures, termite and pest extermination,
regular removal of trash and debris, regular mowing of any
grass, trimming, weed removal and general landscape
maintenance, including rail spur areas, keeping the parking
areas, driveways, alleys and the whole of the Premises in a
clean and sanitary condition. Tenant shall at its own cost and
expense repaint exterior overhead doors, canopies, entries,
handrails, gutters, and other exposed parts of the building
that reasonably require periodic repainting to prevent
deterioration and to maintain aesthetic standards.
b. Tenant shall be responsible for any necessary
replacement during the term of any heating, air conditioning
and ventilation systems serving the Premises; however, if such
replacement first becomes necessary during the last two (2)
years of the then current term of this Lease, which, during
the last seven (7) years of the term hereof, shall be
determined from the earlier to occur of the expiration date of
the Lease or the effective date of Tenant's termination of the
Lease as set forth in Section 26, provided Tenant is not then
in default hereunder, Landlord shall reimburse Tenant at the
expiration of this Lease for the unamortized cost of such
replacement. For the purpose of such reimbursement, the cost
of the replacement shall be amortized on a straight-line basis
over ten (10) years.
c. Landlord shall be responsible for maintaining the
roof, exterior walls, foundation and structural portions of
the Premises; provided, however, if any extraordinary repairs
are necessitated due to the acts or omissions of Tenant,
Tenant shall reimburse Landlord for the cost thereof upon
demand.
6. Alterations. Tenant shall not make any exterior or
structural alterations, additions, or improvements to the Premises without the
prior written consent of Landlord, which shall not be unreasonably withheld or
delayed. Tenant may, without the consent of Landlord, but at its own cost and
expense and in a good workmanlike manner make such other alterations, additions
or improvements or erect, remove or alter such partitions, or erect such
shelves, bins, machinery and trade fixtures as it may deem advisable, without
altering the basic character of the building or improvements and without
overloading or damaging such building or improvements, and in each case
complying with all applicable governmental laws, ordinances, regulations and
other requirements. All alterations, additions, improvements and partitions
erected by Tenant shall be and remain the property of Tenant during the term of
this Lease and Tenant shall unless Landlord otherwise elects as hereinafter
provided, remove all alterations, additions, improvements and partitions erected
-4-
<PAGE>
by Tenant and restore the Premises to their original condition by the date of
termination of this Lease; provided, however, that if Landlord so elects prior
to termination of this Lease, such alterations, additions, improvements and
partitions shall become the property of Landlord as of the date of termination
of this Lease and shall be delivered up to the Landlord with the Premises. All
shelves, bins, machinery and trade fixtures and equipment installed by Tenant
may be removed by Tenant prior to the termination of this Lease if Tenant so
elects, and shall be removed if required by Landlord; and upon any such removal
Tenant shall restore the Premises to their original condition, ordinary wear and
tear excepted. All such removals and restoration shall be accomplished in a good
workmanlike manner so as not to damage the primary structure or structural
qualities of the buildings and other improvements situated on the Premises. Any
property not removed by Tenant within thirty (30) days of the expiration of this
Lease shall be deemed abandoned.
7. Signs. Tenant shall have the right to install signs upon
the Premises subject to any applicable governmental laws, ordinances,
regulations and other requirements. Tenant shall remove all such signs within
ten (10) days of the termination of this Lease. Such installations and removals
shall be made in such manner as to avoid injury to or defacement of the building
and other improvements, and Tenant shall repair any injury or defacement
including without limitation discoloration, caused by such installation or
removal.
8. Inspection. Upon reasonable prior notice, 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 nine (9) month period 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 that the Premises are available. The parties shall
arrange to meet for a joint inspection of the Premises at the time of vacating.
9. Utilities. Tenant shall be responsible for all water, gas,
heat, light, power, telephone, sewer, sprinkler charges and other utilities and
services used on or from the Premises, together with any taxes, penalties,
maintenance charges, surcharges or the like pertaining thereto, and Tenant shall
furnish all electric light bulbs and tubes. Landlord shall in no event be liable
for any interruption or failure of utility services on the Premises not shall
Tenant be entitled to an abatement of rent on account thereof; it being
understood that Landlord shall have no obligation whatsoever to ensure that
utilities are supplied to the Premises.
10. Assignment and Subletting. Tenant shall not have the right
to assign this Lease or to sublet the whole or any part of the Premises without
the prior written consent of Landlord, such consent not to be unreasonably
withheld. Notwithstanding any permitted assignment or subletting, Tenant shall
at all times remain directly, primarily and fully responsible and liable for the
payment of the rent herein specified and for compliance with all of Tenant's
other obligations under the terms, provisions and covenants of this Lease. Upon
the occurrence of a Default, as hereinafter defined, if the Premises or any part
thereof are then assigned or sublet, Landlord, in addition to any other remedies
-5-
<PAGE>
herein provided or 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 from 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. Notwithstanding, the foregoing, Tenant shall have the right to assign
this Lease to any entity that controls, is controlled by or is under common
control with Tenant without the consent of Landlord, provided (a) Tenant submits
to Landlord prior written notice of such assignment; and (b) Tenant shall not be
released from any liability under this Lease on account of such assignment.
11. Insurance.
a. Tenant shall procure and maintain throughout the
term of this Lease a policy or policies of insurance, at its
sole cost and expense, covering the improvements on the
Premises in an amount not less than eighty percent (80%) of
the Replacement Cost thereof, on an all-risk basis with a
"Building Ordinance and Law" endorsement.
b. Tenant shall procure and maintain throughout the
term of this Lease a policy or policies of insurance, at its
sole cost and expense, insuring 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 $1,000,000 combined single limit per occurrence, plus a
$1,000,000 umbrella in respect of injury to persons (including
death) and in respect of property damage or destruction,
including loss of use thereof.
c. All insurance to be carried by Tenant hereunder
shall show Landlord as an additional insured and shall provide
that all insurance proceeds thereunder shall be paid to
Landlord and Tenant, as their interests may appear. All
insurance required to be carried by Tenant hereunder shall be
procured from responsible insurance companies licensed to do
business in Tennessee with an A.M. Best rating of A IX or
better. Landlord shall have the right to increase the amount
of insurance required hereunder from time to time, in
Landlord's reasonable discretion according to industry
standards for the type of use to which the Premises are then
being put. A certificate of insurance for such policies,
together with receipt evidencing payment of premiums therefor,
shall be delivered to Landlord prior to the Commencement Date.
Not less than fifteen (15) days prior to the expiration date
of any such policies, renewal certificates therefor (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 canceled or
changed to reduce insurance provided thereby. In the event
Tenant does not carry the insurance required hereunder, in
-6-
<PAGE>
addition to any other remedies Landlord may have on account of
such default, Landlord may, but shall not be obligated to,
obtain the same on behalf of Tenant in which event Tenant
shall reimburse Landlord for the cost thereof immediately upon
demand.
d. Each of Landlord and Tenant hereby releases the
other from any and all liability or responsibility to the
other or any claiming through or under them by way of
subrogation or otherwise for any loss or damage to property
caused by fire or any other 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 Landlord and Tenant agrees that
it will request its insurance carriers to include in its
policies such a clause or endorsement. If extra cost shall be
charged therefor, each party shall advise the other thereof
and of the amount of the extra cost, and the other party, at
its election, may pay the same, but shall not be obligated to
do so.
12. Fire and Casualty Damage. If the Premises should be
damaged or destroyed, Tenant shall, at its sole cost and expense proceed with
reasonable diligence to rebuild and repair the Premises to substantially the
condition in which they existed prior to such damage or destruction. The rent
payable hereunder shall in no event abate by reason of any damage or
destruction. To the extent Tenant is required to restore the Premises, and
provided no Default or event that with the giving of notice or passage of time
would become a Default has occurred, Landlord shall make the insurance proceeds
paid to Landlord available for restoration of the Premises. Notwithstanding the
foregoing, Tenant shall have the right to terminate this Lease in the event the
Premises are damaged by more than forty percent (40%) of the replacement cost
thereof, in which case all insurance proceeds payable on account of the casualty
shall be paid to Landlord.
13. Liability and Indemnity.
a. 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 any person or damage to property
on or about the Premises, resulting from and/or caused in part
or whole by Tenant, its agents, servants or employees, or 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, except
injury to persons or damage to property the cause of which was
the negligence or willful misconduct of Landlord or Landlord's
failure to perform its obligations hereunder. Tenant hereby
-7-
<PAGE>
covenants and agrees that it will at all times indemnify and
hold safe and harmless 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
reasonable attorney's fees and court costs, both real and
alleged, arising out of any such damage or injury or Tenant's
failure to perform its obligations hereunder; except injury to
persons or damage to property the cause of which is the
negligence or willful misconduct of Landlord, and except for
those environmental matters described in Section 3(b).
b. Landlord hereby covenants and agrees that it will
at all times indemnify and hold safe and harmless Tenant
(including without limitation the trustee and beneficiaries if
Tenant is a trust), Tenant's agents and employees from any
loss, liability, claims, suits, costs, expenses, including
without limitation reasonable attorney's fees and court costs,
both real and alleged, with respect to any injury to any
person or damage to property the sole cause of which was the
negligence or willful misconduct of the Landlord or Landlord's
failure to perform its obligations hereunder.
14. Condemnation.
a. If the whole or more than fifty percent (50%) of
the Premises 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 for the purpose for which they
are then being used, this Lease shall terminate and the rent
shall be abated during the unexpired portion of this Lease,
effective when the physical taking of said Premises shall
occur.
b. If part of the Premises shall be taken for any
public or quasi-public use under any 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 in the subparagraph above, this Lease
shall not terminate, but the minimum rent payable hereunder
during the unexpired portion of the Lease shall be reduced on
an equitable basis.
c. In the event of any such taking or private
purchase in lieu thereof, Landlord shall be entitled to
receive and retain the entire award allocable to this
leasehold interest in any condemnation proceeding.
15. Holding Over. Tenant will, at the termination of this
Lease by lapse of time or otherwise, yield up immediate possession to Landlord.
In the event of any holding over by Tenant or any of its successors in interest
after the expiration or termination of this Lease, unless the parties hereto
otherwise agree in writing, the hold over tenancy shall be subject to
termination by Landlord at any time upon not less than thirty (30) days advance
written notice, or by Tenant at any time upon not less than thirty (30) days
-8-
<PAGE>
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 one hundred fifty percent (150%) of the rent in effect on the
termination date, computed on a daily basis for each day of the holdover period.
No holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease except as otherwise expressly provided.
16. Events of Default. The following events shall be deemed to
be a "Default" under this Lease:
a. Tenant shall fail to pay any installment of the
rent hereby reserved when due, or any payment with respect to
Taxes hereunder when due, or any other payment or
reimbursement to Landlord required herein when due, and such
failure shall continue for a period of ten (10) days from
written notice that such payment was past due; provided
however, Landlord shall not be obligated to provide Tenant
notice and opportunity to cure past due payments more than two
(2) times in any twelve (12) month period.
b. Tenant shall be adjudicated insolvent, or shall
make a transfer in fraud of creditors, or shall make a general
assignment for the benefit of creditors.
c. Tenant shall file a petition under any chapter of
the United States Bankruptcy Code, as amended, or under any
similar law or statute of the United States or any State
thereof; or Tenant shall be adjudged bankrupt or insolvent in
proceedings filed against Tenant thereunder.
d. A receiver or trustee shall be appointed for all
or substantially all of the assets of Tenant.
e. Tenant shall desert or abandon any substantial
portion of the Premises, it being understood that merely
vacating the Premises shall not constitute a Default
hereunder.
f. Tenant shall fail to comply with any term,
provision, or covenant of this Lease (other than the foregoing
in subsections (a) through (e)), and shall not cure such
failure within thirty (30) days after written notice thereof
to Tenant, or such additional time as is reasonably necessary
to effect cure provided Tenant commences cure within such
thirty (30) day period and diligently pursues the same to
completion.
(g) Landlord shall have obtained a final,
non-appealable judgment against Tenant for a monetary default
under the terms of either of those certain leases of even date
herewith between Landlord and Tenant respecting certain
premises located on Polymer Drive, in Chattanooga, Hamilton
County, Tennessee, and at 651 Thompson Lane, Nashville,
Davidson County, Tennessee, respectively.
-9-
<PAGE>
17. Remedies. Upon the occurrence of any Default, Landlord
shall have the option to pursue any one or more of the following remedies
without any notice or demand whatsoever:
a. 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, and Tenant agrees to pay to
Landlord on demand the amount of any loss and damage which
Landlord may suffer by reason of such termination, whether
through inability to relet the Premises on satisfactory terms
or otherwise.
b. Enter upon and take possession of the Premises
without terminating this Lease and expel or remove Tenant and
any other person who may be occupying such Premises or any
part thereof, and relet the Premises and receive the rent
therefor; and Tenant agrees to pay to the Landlord on demand
any deficiency that may arise by reason of such reletting. In
the event Landlord is successful in reletting the Premises at
a rental in excess of that agreed to be paid by Tenant
pursuant to the terms of this Agreement, Landlord and Tenant
each mutually agree that Tenant shall not be entitled, under
any circumstances, to receive such excess rental, and Tenant
does hereby specifically waive any claim to receive such
excess rental; however, such excess rental shall be applied to
reduce the obligations of Tenant under this Lease.
c. Enter upon the Premises, by force if necessary,
without being liable for prosecution or any claim for damages
therefor, and do whatever Tenant is obligated to do under the
terms of this Lease; and Tenant agrees to reimburse Landlord,
on demand, for any reasonable expenses that Landlord may incur
in thus effecting compliance with Tenant's obligations under
this Lease. Landlord and Tenant agree that the prevailing
party in any action relating to this Lease shall be entitled
to collect its reasonable attorneys fees and costs from the
other party.
d. In the event Tenant fails to pay any installment
of rent or other sum within five (5) days of 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
percent (5%) of such installment; and the failure to pay such
late charge within ten (10) days after demand therefor shall
be a Default. 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.
-10-
<PAGE>
Pursuit of any of the foregoing remedies shall not preclude
pursuit of any of the other remedies herein provided or any other remedies
provided by law, nor shall pursuit of any remedy herein provided constitute a
forfeiture or waiver of any rent due to Landlord hereunder or of any damages
accruing to Landlord by reason of the violation of any of the terms, provi sions
and covenants herein contained. No act or thing done by the Landlord or its
agents during the term hereby granted shall be deemed a termination of this
Lease or an acceptance of the surrender of the Premises, and no agreement to
terminate this Lease or to accept a surrender of said Premises shall be valid
unless in writing signed by Landlord. No waiver by Landlord or any violation or
breach of any of the terms, provisions and covenants herein contained shall be
deemed or construed to constitute a waiver of any other violation or breach of
any of the terms, provisions and covenants herein contained shall be deemed or
construed to constitute a waiver of any other violation or breach of any of the
terms, provisions and covenants herein contained. Landlord's acceptance of the
payment of rent or other payments hereunder after the occurrence of a Default
shall not be construed as a waiver of such Default, unless Landlord so notifies
Tenant in writing. Forbearance by Landlord to enforce one or more of the
remedies herein provided upon a Default shall not be deemed or construed to
constitute a waiver of such Default or of Landlord's right to enforce any such
remedies with respect to such Default or any subsequent Default. If, on account
of any Default by Tenant, it shall become necessary or appropriate for Landlord
to employ or consult with an attorney concerning or to enforce or defend any of
Landlord's rights or remedies hereunder, Tenant agrees to pay any reasonable
attorney's fees so incurred. Notwithstanding anything herein to the contrary,
Landlord shall use reasonable efforts to mitigate its damages in the event of a
default by Tenant.
18. Landlord Waiver. Upon execution hereof and from time to
time thereafter, as Tenant shall reasonably request, Landlord hereby agrees to
execute and deliver to Tenant a Landlord Waiver in substantially the form of
that attached hereto as Exhibit C.
19. Quiet Enjoyment. In consideration of the covenants and
agreements herein contained, Landlord warrants that Tenant shall have quiet and
peaceful possession of the Premises during the term of this Lease, subject to
the terms hereof.
20. Mortgages. Tenant accepts this Lease subject and
subordinate to any mortgage(s) and/or deed(s) of trust now or at any time
hereafter constituting a lien or charge upon the Premises or the improvements
situated thereon; 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
subjecting and subordinating this Lease to the lien of any such mortgage and
provided further that so long as Tenant is not in default of its obligations
hereunder beyond applicable notice and cure periods, Tenant's occupancy of the
Premises and its interest hereunder shall not be disturbed. The foregoing
agreement by Tenant to subordinate shall be conditioned upon such mortgagee,
trustee or holder agreeing not to disturb Tenant's quiet possession of the
-11-
<PAGE>
Premises as long as Tenant is not in Default. Landlord shall use its best
efforts to deliver to Tenant non-disturbance agreements from the holders of any
deeds of trust on the Premises.
21. Mechanic's Liens. 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 interest 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 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 claims or liens asserted by any party claiming by, through or
under Tenant against the leasehold estate or against the right, title and
interest of the Landlord in the Premises or under the terms of this Lease.
22. Notices. Each provision of this instrument 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 hereunder shall be payable to Landlord at
the address hereinbelow set forth or at such other address as
Landlord may specify from time to time by written notice
delivered in accordance herewith. Tenant's obligation to pay
rent and any other amounts to Landlord under the terms of this
Lease shall not be deemed satisfied until such rent and other
amounts have been actually received by Landlord.
b. Any notice, request, instrument or other document
to be given hereunder shall be in writing and shall be
delivered (1) on the date of delivery when delivered
personally, (ii) one day after dispatch when sent by a
reputable overnight delivery, service maintaining records or
receipt; (iii) three (3) days after dispatch when sent by
certified or registered mail, return receipt requested,
postage prepaid:
If to the Tenant:
Morgan Products Ltd.
469 McLaws Circle
Williamsburg, Virginia 23185
Attention: Chief Financial Officer
Telecopy: 804-564-1714
-12-
<PAGE>
with a copy to:
Edward B. Mueller
Nisen & Elliott
200 W. Adams, Suite 2500
Chicago, Illinois 60606
Telecopy: 312-346-9316
If to the Landlord:
F & S Investments, L.L.C.
5420 East Calley Ct.
Nashville, TN 37205
Attn:
Telecopy:
with a copy to:
Boult, Cummings, Conners & Berry, PLC
414 Union Street, Suite 1600
P.O. Box 198062
Nashville, TN 37219
Attention: Davis H. Carr, Esq.
Telecopy: 615-252-2380
23. Miscellaneous.
--------------
a. Words of any gender used in this Lease shall be
held and 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, 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. Each party agrees to furnish 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.
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. Tenant agrees from time to time within ten (10)
business days after request of Landlord, to deliver to
Landlord, or Landlord's designee, an estoppel certificate
-13-
<PAGE>
stating, if true, that Lease is in full force and effect, the
date to which rent has been paid, the unexpired term of this
Lease and such other matters pertaining to this Lease as may
be reasonably requested by Landlord. It is understood and
agreed that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for
Landlord's execution of this Lease.
e. This Lease may not be altered, charged or amended
except by an instrument in writing signed by both parties
hereto.
f. All obligations of Tenant hereunder 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 hereof, including without limitation
all payment obligations with respect to Taxes and all
obligations concerning the condition of the Premises. Upon the
expiration or earlier termination of the term hereof, and
prior to Tenant vacating the Premises, Tenant shall pay to
Landlord any amount reasonably estimated by Landlord as
necessary to put the Premises, including without limitation
all heating and air conditioning systems and equipment
therein, in good condition and repair (reasonable wear and
tear excepted, and subject to the provisions of Section 12).
Tenant shall also, prior to vacating the Premises, pay to
Landlord the amount, as estimated by Landlord, of Tenant's
obligation hereunder for Taxes for the year in which this
Lease expires or terminates. All such amounts shall be used
and held by Landlord for payment of such obligations of Tenant
hereunder, with Tenant being liable for any additional costs
therefor upon demand by Landlord, or with any excess to be
promptly returned to Tenant after all such obligations have
been determined and satisfied, as the case may be.
g. If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws
effective during the term of this Lease, then and in that
event, it is the intention of the parties hereto that the
remainder of this Lease shall not be affected thereby, and it
is also the intention of the parties of this Lease that in
lieu of each clause or provision of this Lease that is
illegal, invalid or unenforceable, there be added as a part of
this Lease contract a clause or provision as similar in terms
to such illegal, invalid or unenforceable clause or provisions
as may be possible and be legal, valid and enforceable.
h. 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.
24. Brokerage; Mutual Indemnities.
a. Tenant warrants that it has had no dealings with
any broker or agent in connection with the negotiation or
execution of this Lease. Tenant shall indemnify, defend and
-14-
<PAGE>
hold Landlord harmless against all costs, expenses, reasonable
attorneys' fees or other liability for commissions or other
compensation or charges claimed by any broker or agent
claiming by, through or under Tenant with respect to this
Lease or any renewal or extension of this Lease.
b. Landlord warrants that it has had no dealings with
any broker or agent in connection with the negotiation or
execution of this Lease. Landlord shall indemnify, defend and
hold Tenant harmless against all costs, expenses, reasonable
attorneys' fees or other liability for commissions or other
compensation or charges claimed by any broker or agent
claiming by, through or under Landlord with respect to this
Lease or any renewal or extension of this Lease.
25. Time is of the Essence. Time is of the essence in the
performance of each and every obligation set forth in this Lease.
26. Notice of Landlord's Default. If any act or omission by
Landlord occurs that would give Tenant the right to damages from Landlord or the
right to terminate the Lease due to constructive or actual eviction from all or
part of the Premises or otherwise, Tenant may not sue for damages or exercise
any right to terminate this Lease until (a) it gives notice of the act or
omission to Landlord; and (b) a reasonable period of time for remedying the act
or omission elapses following the giving of notice, during which time Landlord,
its agents, employees and contractors are entitled to enter the Premises and
cure the act or omission. During the period after the giving of the notice and
during the curing of the act or omission, the rent payable by Tenant shall abate
only to the extent the Premises is rendered untenantable on account of such act
or omission by Landlord. In the event Landlord fails to cure any such breach
within the period set forth herein, Tenant shall also have the right, but not
the obligation, to cure such breach, and Landlord shall reimburse Tenant for the
reasonable cost thereof. If Landlord fails to reimburse Tenant for the cost
thereof, and if Tenant obtains a final, non-appealable judgment against Landlord
therefor, Tenant may offset such costs, together with interest at the Default
Rate from the date originally due, against the rent and other sums due Landlord
under this Lease.
27. Memorandum of Lease. Upon Tenant's request, Landlord
shall execute a Memorandum of Lease in recordable form. Tenant shall be
responsible for all recording charges.
28. Termination Right. Provided Tenant is not then in default
of any of its obligations under this Lease, if Tenant permanently closes the
business operated on the Premises or relocates the same more than one hundred
(100) miles away from the Premises, Tenant shall have the right to terminate
this Lease effective at any time after the tenth (10th) lease year. Notice of
the exercise of such termination option must be delivered to Landlord at least
one (1) year prior to the proposed effective date of termination.
-15-
<PAGE>
EXECUTED BY LANDLORD, this 30th day of August, 1996.
LANDLORD:
---------
Attest/Witness: F & S INVESTMENTS, L.L.C.
- --------------
/s/ Davis Carr
- -------------------------- By:/s/James L. Fishel
------------------------------
Name: James L. Fishel
-------------------------
Title: Manager
------------------------
Title: Attorney
--------------------
EXECUTED BY TENANT, this 30th day of August, 1996.
TENANT:
-------
Attest/Witness: MORGAN PRODUCTS LTD.
- --------------
/s/Victoria L. Miller
- -------------------------- By:/s/Douglas H. MacMillan
------------------------------
Attorney Name: Douglas H. MacMillan
- ------------------------- --------------------------
Title Title: Vice President
-------------------------
-16-
<PAGE>
EXHIBIT A
Legal Description of Nashville Warehouse - Foster and Glenrose
PARCEL ONE - Map 119-1, pars. 12 & 13
Being lot Nos. 10 and 11, of Section A, on the Plat showing subdivision of part
of the land belonging to John Thoni, deceased, as the same appears of record in
Book 547, page 198, Register's Office for Davidson County, Tennessee.
Said lot No. 10 fronts 60 feet on the northerly side of Glenrose Avenue and runs
back 233.5 feet on the east line and 242 feet on the west line to the southerly
line of lot No. 12 on said plan and shows 60.6 feet on said lot line.
Said lot No. ll fronts 87.25 feet on the northerly side of Glenrose Avenue and
runs back 242 feet on the east line and 254.5 feet on the west line with the
easterly margin of Dayton Avenue to the southerly line of lot No. 12 on said
plan and shows 37 1/4 feet on said lot line.
PARCEL TWO -- Map 119-1, par.16
Being the west 10 feet of lot No. 6, the east 10 feet of lot No. 8, and all of
lot No. 7 of Section "A" on the plat showing Subdivision of part of the land
belonging to John Thoni, deceased, of record in Book 547, page 198, Register's
Office for said County.
Said lot and part of lots adjoin and front together 80 feet on the northerly
side of Glenrose Avenue and run back 208 feet, mere or less on the easterly line
and 216.5 feet, more or less, on the westerly line to a dead line in the rear
measuring 80.6 feet thereon.
PARCEL THREE - Map 119-1, pars. 21 & 22; Map 106-13, par. 216
Tract 1
Land in Davidson County, Tennessee, being Lots Nos. 1 to 10 inclusive, the
southerly parts of Lots Nos. 11 to 16 inclusive of Block 12, the northerly 7
feet of Lot No. 1, and all of Lot No. 2 of Block 13 and that part of Leafland
Avenue, now abandoned, adjacent to and south of Lots Nos. 11 to 16 inclusive on
the map showing subdivision of Blocks Nos. 12 and 13 in Section "A" and certain
property in Section "B", on the Plan of the John Thoni Lands, as of record in
Book 974, page 17, Register's Office for said County, described according to a
survey made by Parrish Engineers, Inc., August 11, 1966 as follows:
Beginning on the westerly margin of Foster Avenue at a point 150 feet north of
the northerly margin of Glenrose Avenue, the northeast corner of the property
-17-
<PAGE>
conveyed to W. E. Gentry and wife, by deed from E. M. Patterson, Jr., and wife,
of record in Book 1472, page 270, said Register's Office; thence with the
northerly line of said Gentry property north 88 degrees 37' west 111.70 feet;
thence north 3 degrees 15' east 7 feet; thence north 80 degrees 48' west 645.97
feet to the easterly margin of Dayton Avenue; thence with said Avenue north 13
degrees 58' east 512.55 feet to the southerly margin of the L & N R.R.
right-of-way; thence with said right-of-way on a curve with a radius of 1135.7
feet southeastwardly 479.69 feet and continuing with said right-of-way south 57
degrees 47' east 232.4 feet to the westerly margin of Foster Avenue; thence with
said Avenue south 3 degrees 18' west 54.65 feet to the northeast corner of the
Thoni property; thence with the line of the Thoni property north 87 degrees 07'
west 110.5 feet, south 3 degrees 51' west 143.25 feet and south 86 degrees 34'
east 111.8 feet to the westerly margin of Foster Avenue; thence with said
Avenue, south 3 degrees 15' west 124 feet to the beginning, containing 7.03
acres, more or less.
Tract 2
A tract of land in the 6th, formerly the 9th, Civil District of Davidson County,
Tennessee, being an unnumbered lot on the plan showing Lot No. 8 and subdivision
of lots Nos. 12 and 13 in Section "A" and subdivision of a 1.73 acre tract in
Section "B" on the plan of the John Thoni Lands, recorded in Book 547, page 198,
Register's Office for said County, as of record in Book 974, page 17, Register's
Office for said County, described as follows:
Beginning at the southwest corner of Leafland Avenue and Foster Avenue; thence
westwardly with the southerly margin of said Leafland Avenue 110.5 feet to the
northeast corner of lot No. 10 on said plan; thence southwardly, with the
eastern boundary line of said lot No. 10, 143.25 feet to the northwest corner of
Lot No. 2 on said plan; thence eastwardly, with the northern boundary line of
said lot No. 2, 111.7 feet to a point in the westerly margin of said Foster
Avenue, being the northeast corner of said Lot No. 2; thence northwardly with
the westerly margin of said Foster Avenue, 144.25 feet to the beginning.
Tract 3
Being Lot No. 1, Section A, on the Plan showing the Subdivision of part of the
land belonging to John Thoni, deceased, as of record in Book 547, page 198,
Register's Office for said County.
Said Lot fronts 60 feet on the northerly side of Glenrose Avenue and runs back
on the east line, with the west line of Lot No. 13 on said Plan, 157 feet and on
the west line 165.5 feet, to the southerly line of Lot No. 12 on said plan,
measuring 60.6 feet thereon.
Tract 4
Being Lot No. 2, Section A, on the Plan showing subdivision of part of the land
-18-
<PAGE>
belonging to John Thoni, deceased, as the same appears of record in Book 547,
page 198, Register's Office for said County.
Said Lot No. 2 fronts 60 feet on the northerly side of Glenrose Avenue, and runs
back 165.5 feet on the East line and 174 feet on the west line, to the southerly
line of Lot No. 12 on said plan, and shows 60.6 feet on said line.
PARCEL FOUR - Map 119-1, pars. 14 & 15
Tract 1
Being Lot No. 8 of Section "A" on the map showing the subdivision of the John
Thoni Home Place, of record in Book 547, Page 198, Register's Office for said
County.
Said Lot No. 8 fronts 60 feet on the northerly side of Glenrose Avenue and runs
back between lines, 225 feet on the westerly line and 216.5 feet on the easterly
line to a dead line in the rear on which it measures 60.6 feet.
INCLUDED but EXCLUDED from the original property description is a part of Lot 8
Section A on the map showing the subdivision of John Thoni Home Place Plat 547,
page 198, said Register's Office, conveyed to C. P. Wavrin and wife, Betha
Wavrin by deed from Nancy B. Ray and husband, E. H. Ray of record in Book 1290,
page 162, Register's Office for Davidson County, Tennessee, and described as
follows to wit:
A certain tract or parcel of land in Davidson County, State of Tennessee,
described as follows, to wit:
Being the easterly 10 feet of Lot No. 8 of Section "A" on the map showing the
subdivision of The John Thoni's Home Place, as of record in Book 547, Page 198,
Register's Office for said county.
Said part of Lot No. 8 fronts 10 feet on the northerly side of Glenrose Avenue
and runs back between lines 216.5 feet on the easterly line and 216.5 feet more
or less, on the westerly line to a dead line on which it measures 10 feet.
Tract 2
A tract of land lying in Davidson County, State of Tennessee, and described as
follows:
Being Lot No. 9 of Section "A" on the Plat showing subdivision of part of the
land belonging to John Thoni, Deceased, as the same appears of record in Book
547, Page 198, R.O.D.C. Tennessee. Said Lot No. 9 fronts 60 feet on the
northerly side of Glenrose Avenue and runs back 225 feet on the east line and
233.5 feet on the west line to the southerly line of Lot 12 on said plan.
-19-
<PAGE>
<PAGE>
EXHIBIT B
Rent Schedule
Initial Base Rent:
Four Hundred Twenty-seven Thousand Ninety-eight and No/100
Dollars ($427,098.00), payable in monthly installments of
Thirty-five Thousand Five Hundred Ninety-one and 50/100
Dollars ($35,591.50).
After Year 1, the Base Rent shall be calculated as follows:
Base Rent shall be adjusted by multiplying the Base Rent for
the immediately preceding year by eighty percent (80%) of the
percentage increase or decrease in the "All Items" Consumer
Price Index for Urban Consumers 1982-84 = 100, compiled by the
United States Department of Labor, Bureau of Labor Statistics
(the "CPI"). The Base Rent for Year 2 shall be calculated by
dividing the CPI for June, 1997 by the CPI for June, 1996.
Additional adjustments in Base Rent shall continue to be made
for each year thereafter based on the CPI for the June
immediately preceding the last adjustment and the CPI for the
June immediately preceding the lease year in question.
In no event shall the Base Rent as adjusted ever be less than
the Base Rent for the preceding year. Further, in no event
shall the Base Rent increase by more than five percent (5%) in
any year over the immediately preceding year.
-20-
<PAGE>
EXHIBIT C
LANDLORD WAIVER
TO:_________________________, a ___________________________ with an office at
_______________________________________ ("Lender").
Morgan Products Ltd. A Delaware corporation ("Borrower") is
the lessee under a lease (the "Lease") by and between Borrower and the
undersigned covering the premises located at
_________________________________________________, more fully described in the
lease attached hereto as Exhibit A (the "Premises").
Borrower intends to enter certain financing arrangements with
Lender, and as a condition to such financing arrangements, Lender has required,
among other things, a lien on all of Borrower's inventory ("Collateral") located
on the Premises.
The undersigned agrees that:
a. it will not assert against the Collateral any statutory or
possessory liens, including, without limitation, any rights of levy or distraint
for rent, all of which it hereby waives;
b. none of the Borrower's Collateral located on the Premises
shall be deemed to be fixtures; and
c. if Borrower defaults on its obligations to Lender, and, as
a result, Lender looks to the Collateral, the undersigned will not hinder
Lender's actions in assembling all of the Collateral located on the Premises,
will permit Lender to remove said Collateral from the Premises without charge
and will not hinder Lender's actions in enforcing its lien against the
Collateral.
The agreement of the undersigned set forth herein shall be
contingent upon the following:
(a) the Collateral shall be located on the Premises at the
risk of Borrower and/or Lender, as their interests may appear, it being
understood that the undersigned shall not be liable for any damage thereto,
unless occasioned solely by the gross negligence or willful misconduct of the
undersigned; and
(b) if Borrower is in default under the Lease, Lender agrees
to remove the Collateral from the Premises within thirty (30) days of demand by
the undersigned, and if the Collateral is not removed within said period, the
same shall be deemed abandoned.
-21-
<PAGE>
The undersigned hereby acknowledges that, as of the date of
this agreement, to the actual knowledge of the undersigned, Borrower is not in
default in any respect under its Lease obligations to the undersigned.
Any notices(s) required or desired to be given hereunder shall
be directed to the party to be notified at the address stated herein.
The agreements contained herein shall continue in full force
and effect until all of Borrower's obligations to Lender are paid and satisfied
in full and all financing arrangements between Lender and Borrower have been
terminated.
The agreements contained herein may not be modified or
terminated orally and shall be binding upon the successors, assigns and personal
representatives of the undersigned, upon any successor, owner or transferee of
the Premises and upon any purchaser, including any mortgagee from the
undersigned.
Executed and delivered this ___ day of ______, 19__, at
- ------------------------
F & S INVESTMENTS, L.L.C.
By:-------------------------------
Name:--------------------------
Title:-------------------------
----------------------------------
-----------------------------------
Address
-22-
<PAGE>
Exhibit 11
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between F & S INVESTMENTS,
L.L.C., a Tennessee limited liability company ("Landlord"), and MORGAN PRODUCTS
LTD., a Delaware corporation ("Tenant");
W I T N E S S E T H:
1. Premises and Term. In consideration of the obligation of
Tenant to pay rent herein provided, and in consideration of the other terms,
provisions and covenants hereof, Landlord hereby demises and leases to Tenant,
and Tenant hereby takes from Landlord certain premises consisting of Tennessee
Glass: the real property including the building located at 651 Thompson Lane,
Nashville, Davidson County, Tennessee, as more particularly described on Exhibit
A attached hereto and incorporated herein by reference, together with all
rights, privileges, easements, appurtenances, and immunities belonging to or in
any way pertaining to the premises (said real property, buildings and
improvements being collectively referred to as the "Premises").
TO HAVE AND TO HOLD the same for a term commencing on the
Commencement Date, as hereinafter defined, and ending forty-eight (48) months
thereafter provided, however, that, in the event the 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 Commencement Date. The Commencement Date shall be August 20, 1996.
Except for its rights under the Asset Purchase Agreement dated July 22, 1996
between certain of Landlord's affiliates, namely, Tennessee Building Products,
Inc., its shareholders, and Titan Building Products, Inc., as Sellers, and
Tenant, as Purchaser (the "Purchase Agreement"), Tenant acknowledges that it has
inspected and accepts the Premises on an "as is, where is" basis, and
specifically the buildings and improvements comprising the same, in their
present condition as suitable for the purpose for which the Premises are leased.
Except for Tenant's rights under the Purchase Agreement, taking of possession by
Tenant shall be deemed conclusively to establish that said buildings and other
improvements are in good and satisfactory condition as of when possession was
taken. Tenant further acknowledges that no representations as to the repair of
the Premises, including but not limited to the presence or absence or hazardous
or toxic materials, nor promises to alter, remodel or improve the Premises have
been made by Landlord, unless such are expressly set forth in this Lease.
Nothing herein shall limit, supersede or alter any covenants, agreements,
representations, warranties or indemnities set forth in the Purchase Agreement,
nor any remedies for breach thereof. After the Commencement Date Tenant shall,
upon demand, execute and deliver to Landlord a letter of acceptance of delivery
of the Premises.
2. Base Rent. Tenant agrees to pay to Landlord rent for the
Premises on a monthly basis in advance, without demand, deduction or setoff,
except as expressly provided herein, for the entire term hereof at the rates set
-1-
<PAGE>
forth on Exhibit B, attached hereto and incorporated herein by reference. One
monthly installment shall be due and payable on the Commencement Date and a like
monthly installment shall be due and payable, without demand, on or before the
first day of each calendar month following the Commencement Date, except that
the rental payment for any fractional calendar month at the commencement or
expiration of the Lease term shall be prorated. It is understood and agreed that
the rent payable under this Lease shall be net to the Landlord, Tenant shall
bear all expenses relating to the Premises, including but not limited to taxes,
insurance maintenance and utilities, except as otherwise set forth herein.
3. Use.
(a) During the Lease term, the Premises shall be used for any
lawful use, but as of the date hereof, Tenant intends to use the Premises for
the purpose of receiving, assembling, manufacturing, storing, shipping and
selling products, materials and merchandise made and/or distributed by Tenant,
and for such other lawful purposes as may be incidental thereto. Tenant shall,
at its own cost and expense, obtain any and all licenses and permits necessary
for any such use. Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises, and shall promptly comply
with all governmental orders and directives for the correction, prevention and
abatement of nuisances in or upon, or in connection with the Premises, all at
Tenant's sole expense. 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 that would constitute a nuisance. Without Landlord's prior
written consent, Tenant shall not receive, store or otherwise handle any
product, material or merchandise that is explosive, highly inflammable,
hazardous or toxic, other than the types of products, materials or merchandise
(i) received, stored or otherwise handled on the Premises prior to the execution
of this Lease; (ii) nominal amounts used in the ordinary course of business; or
(iii) used in the normal course of manufacturing building products; provided
uses (ii) and (iii) shall be in compliance with all applicable laws. Tenant will
not permit the Premises to be used for any purpose or in any manner (including
without limitation any method of storage) that would render the insurance
thereon void or the insurance risk more hazardous or cause the State Board of
Insurance or other insurance authority to disallow any sprinkler credits.
(b) Notwithstanding anything to the contrary herein, Tenant
shall in no event be obligated to take any actions, including without
limitation, any removal, containment or remedial actions or comply with any laws
arising out of or resulting from the presence of hazardous substances in or on
the Premises prior to or subsequent to the lease term, caused by Landlord or any
prior tenant or occupant or resulting from the migration of hazardous substances
onto or under the Premises from another property. Landlord shall indemnify and
hold Tenant harmless from and against any and all costs, claims, expenses,
damages, losses, liabilities and judgments arising out of the presence of
hazardous substances located on or under the Premises prior to or subsequent to
the commencement of this Lease; if (i) caused by Landlord, or any prior tenant,
owner or occupant of the Premises, or (ii) resulting from the migration of
hazardous substances onto or under the Premises from another property.
4. Taxes.
-2-
<PAGE>
a. Tenant agrees to pay before they become delinquent
all taxes assessments, and governmental charges of any kind
and nature whatsoever (hereinafter collectively referred to as
the "Taxes") lawfully levied or assessed against the land
described in Exhibit A and improvements located thereon and
applicable to periods during the term hereof (pro-rated for
partial tax years included within the term hereof). Tenant
shall furnish to Landlord, not later than twenty (20) days
before the date any Taxes become delinquent, official receipts
of the appropriate taxing authority or other evidence
satisfactory to Landlord evidencing payment thereof. If Tenant
should fail to pay any Taxes, required to be paid by Tenant
hereunder, in addition to any other remedies provided herein,
Landlord may, if it so elects, pay such Taxes. Any sums so
paid by Landlord shall be deemed to be so much additional
rental owing by Tenant to Landlord and due and payable, on
demand, by Landlord, together with interest thereon, at the
lesser of two and one-half percent (2 1/2%) in excess the
prime rate published from time to time in The Wall Street
Journal, or the maximum rate permitted by law (the "Default
Rate"), from date paid by Landlord to date of repayment by
Tenant.
b. 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, 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.
c. Tenant may, at its sole cost and expense, in its
own name and/or in the name of Landlord, dispute and contest
any Taxes by appropriate proceedings diligently conducted in
good faith, but only after Tenant has deposited with the
taxing authority, as necessary, the amount so contested and
unpaid. Landlord agrees to cooperate with Tenant in any such
appeal. Tenant hereby indemnifies and agrees to hold harmless
the Landlord from and against any cost, damage, or expense
(including reasonable attorney's fees) in connection with any
such proceedings brought by Tenant in its own name or the name
of the Landlord.
d. Any payment to be made pursuant to this Section 4,
with respect to the real estate tax year in which this Lease
commences or terminates shall be prorated.
5. Repairs and Maintenance.
a. Except for those items specifically allocated to
Landlord pursuant to subsection (b), below, and damage or
-3-
<PAGE>
disrepair attributable to the negligence or wilful
misconduct of Landlord, Tenant shall, at its own cost and
expense, keep and maintain all parts of the Premises in good
condition, promptly making all necessary repairs and
replacements, ordinary and extraordinary, foreseen or
unforeseen, including but not limited to, windows, glass and
plate glass, doors and any special office entry, walls and
finish work, floor covering, downspouts, gutters, heating, and
air conditioning systems, dock boards, truck doors, dock
bumpers, paving, plumbing work and fixtures, termite and pest
extermination, regular removal of trash and debris, regular
mowing of any grass, trimming, weed removal and general
landscape maintenance, including rail spur areas, keeping the
parking areas, driveways, alleys and the whole of the Premises
in a clean and sanitary condition. Tenant shall at its own
cost and expense repaint exterior overhead doors, canopies,
entries, handrails, gutters, and other exposed parts of the
building that reasonably require periodic repainting to
prevent deterioration and to maintain aesthetic standards.
b. Tenant shall be responsible for any necessary
replacement during the term of any heating, air conditioning
and ventilation systems serving the Premises; however, if such
replacement first becomes necessary during the last two (2)
years of the then current term of this Lease, provided Tenant
is not then in default hereunder, Landlord shall reimburse
Tenant at the expiration of this Lease for the unamortized
cost of such replacement. For the purpose of such
reimbursement, the cost of the replacement shall be amortized
on a straight-line basis over ten (10) years.
c. Landlord shall be responsible for maintaining the
roof, exterior walls, foundation and structural portions of
the Premises; provided, however, if any extraordinary repairs
are necessitated due to the acts or omissions of Tenant,
Tenant shall reimburse Landlord for the cost thereof upon
demand.
6. Alterations. Tenant shall not make any exterior or
structural alterations, additions, or improvements to the Premises without the
prior written consent of Landlord, which shall not be unreasonably withheld or
delayed. Tenant may, without the consent of Landlord, but at its own cost and
expense and in a good workmanlike manner make such other alterations, additions
or improvements or erect, remove or alter such partitions, or erect such
shelves, bins, machinery and trade fixtures as it may deem advisable, without
altering the basic character of the building or improvements and without
overloading or damaging such building or improvements, and in each case
complying with all applicable governmental laws, ordinances, regulations and
other requirements. All alterations, additions, improvements and partitions
erected by Tenant shall be and remain the property of Tenant during the term of
this Lease and Tenant shall unless Landlord otherwise elects as hereinafter
provided, remove all alterations, additions, improvements and partitions erected
by Tenant and restore the Premises to their original condition by the date of
termination of this Lease; provided, however, that if Landlord so elects prior
to termination of this Lease, such alterations, additions, improvements and
partitions shall become the property of Landlord as of the date of termination
-4-
<PAGE>
of this Lease and shall be delivered up to the Landlord with the Premises. All
shelves, bins, machinery and trade fixtures and equipment installed by Tenant
may be removed by Tenant prior to the termination of this Lease if Tenant so
elects, and shall be removed if required by Landlord; and upon any such removal
Tenant shall restore the Premises to their original condition, ordinary wear and
tear excepted. All such removals and restoration shall be accomplished in a good
workmanlike manner so as not to damage the primary structure or structural
qualities of the buildings and other improvements situated on the Premises. Any
property not removed by Tenant within thirty (30) days of the expiration of this
Lease shall be deemed abandoned.
7. Signs. Tenant shall have the right to install signs upon
the Premises subject to any applicable governmental laws, ordinances,
regulations and other requirements. Tenant shall remove all such signs within
ten (10) days of the termination of this Lease. Such installations and removals
shall be made in such manner as to avoid injury to or defacement of the building
and other improvements, and Tenant shall repair any injury or defacement
including without limitation discoloration, caused by such installation or
removal.
8. Inspection. Upon reasonable prior notice, 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 nine (9) month period 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 that the Premises are available. The parties shall
arrange to meet for a joint inspection of the Premises at the time of vacating.
9. Utilities. Tenant shall be responsible for all water, gas,
heat, light, power, telephone, sewer, sprinkler charges and other utilities and
services used on or from the Premises, together with any taxes, penalties,
maintenance charges, surcharges or the like pertaining thereto, and Tenant shall
furnish all electric light bulbs and tubes. Landlord shall in no event be liable
for any interruption or failure of utility services on the Premises not shall
Tenant be entitled to an abatement of rent on account thereof; it being
understood that Landlord shall have no obligation whatsoever to ensure that
utilities are supplied to the Premises.
10. Assignment and Subletting. Tenant shall not have the right
to assign this Lease or to sublet the whole or any part of the Premises without
the prior written consent of Landlord, such consent not to be unreasonably
withheld. Notwithstanding any permitted assignment or subletting, Tenant shall
at all times remain directly, primarily and fully responsible and liable for the
payment of the rent herein specified and for compliance with all of Tenant's
other obligations under the terms, provisions and covenants of this Lease. Upon
the occurrence of a 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 or 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 from Tenant
hereunder, and no such collection shall be construed to constitute a
-5-
<PAGE>
novation or a release of Tenant from the further performance of Tenant's
obligations hereunder. Notwithstanding, the foregoing, Tenant shall have the
right to assign this Lease to any entity that controls, is controlled by or is
under common control with Tenant without the consent of Landlord, provided (a)
Tenant submits to Landlord prior written notice of such assignment; and (b)
Tenant shall not be released from any liability under this Lease on account of
such assignment.
11. Insurance.
a. Tenant shall procure and maintain throughout the
term of this Lease a policy or policies of insurance, at its
sole cost and expense, covering the improvements on the
Premises in an amount not less than eighty percent (80%) of
the Replacement Cost thereof, on an all-risk basis with a
"Building Ordinance and Law" endorsement.
b. Tenant shall procure and maintain throughout the
term of this Lease a policy or policies of insurance, at its
sole cost and expense, insuring 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 $1,000,000 combined single limit per occurrence, plus a
$1,000,000 umbrella in respect of injury to persons (including
death) and in respect of property damage or destruction,
including loss of use thereof.
c. All insurance to be carried by Tenant hereunder
shall show Landlord as an additional insured and shall provide
that all insurance proceeds thereunder shall be paid to
Landlord and Tenant, as their interests may appear. All
insurance required to be carried by Tenant hereunder shall be
procured from responsible insurance companies licensed to do
business in Tennessee with an A.M. Best rating of A IX or
better. Landlord shall have the right to increase the amount
of insurance required hereunder from time to time, in
Landlord's reasonable discretion according to industry
standards for the type of use to which the Premises are then
being put. A certificate of insurance for such policies,
together with receipt evidencing payment of premiums therefor,
shall be delivered to Landlord prior to the Commencement Date.
Not less than fifteen (15) days prior to the expiration date
of any such policies, renewal certificates therefor (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 canceled or
changed to reduce insurance provided thereby. In the event
Tenant does not carry the insurance required hereunder, in
addition to any other remedies Landlord may have on account of
such default, Landlord may, but shall not be obligated to,
obtain the same on behalf of Tenant in which event Tenant
shall reimburse Landlord for the cost thereof immediately upon
demand.
-6-
<PAGE>
d. Each of Landlord and Tenant hereby releases the
other from any and all liability or responsibility to the
other or any claiming through or under them by way of
subrogation or otherwise for any loss or damage to property
caused by fire or any other 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 Landlord and Tenant agrees that
it will request its insurance carriers to include in its
policies such a clause or endorsement. If extra cost shall be
charged therefor, each party shall advise the other thereof
and of the amount of the extra cost, and the other party, at
its election, may pay the same, but shall not be obligated to
do so.
12. Fire and Casualty Damage. If the Premises should be
damaged or destroyed, Tenant shall, at its sole cost and expense proceed with
reasonable diligence to rebuild and repair the Premises to substantially the
condition in which they existed prior to such damage or destruction. The rent
payable hereunder shall in no event abate by reason of any damage or
destruction. To the extent Tenant is required to restore the Premises, and
provided no Default or event that with the giving of notice or passage of time
would become a Default has occurred, Landlord shall make the insurance proceeds
paid to Landlord available for restoration of the Premises. Notwithstanding the
foregoing, Tenant shall have the right to terminate this Lease in the event the
Premises are damaged by more than forty percent (40%) of the replacement cost
thereof, in which case all insurance proceeds payable on account of the casualty
shall be paid to Landlord.
13. Liability and Indemnity.
a. 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 any person or damage to property
on or about the Premises, resulting from and/or caused in part
or whole by Tenant, its agents, servants or employees, or 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, except
injury to persons or damage to property the cause of which was
the negligence or willful misconduct of Landlord or Landlord's
failure to perform its obligations hereunder. Tenant hereby
covenants and agrees that it will at all times indemnify and
hold safe and harmless 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
reasonable attorney's fees and court costs, both real and
-7-
<PAGE>
alleged, arising out of any such damage or injury or Tenant's
failure to perform its obligations hereunder; except injury to
persons or damage to property the cause of which is the
negligence or willful misconduct of Landlord, and except for
those environmental matters described in Section 3(b).
b. Landlord hereby covenants and agrees that it will
at all times indemnify and hold safe and harmless Tenant
(including without limitation the trustee and beneficiaries if
Tenant is a trust), Tenant's agents and employees from any
loss, liability, claims, suits, costs, expenses, including
without limitation reasonable attorney's fees and court costs,
both real and alleged, with respect to any injury to any
person or damage to property the sole cause of which was the
negligence or willful misconduct of the Landlord or Landlord's
failure to perform its obligations hereunder.
14. Condemnation.
a. If the whole or more than fifty percent (50%) of
the Premises 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 for the purpose for which they
are then being used, this Lease shall terminate and the rent
shall be abated during the unexpired portion of this Lease,
effective when the physical taking of said Premises shall
occur.
b. If part of the Premises shall be taken for any
public or quasi-public use under any 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 in the subparagraph above, this Lease
shall not terminate, but the minimum rent payable hereunder
during the unexpired portion of the Lease shall be reduced on
an equitable basis.
c. In the event of any such taking or private
purchase in lieu thereof, Landlord shall be entitled to
receive and retain the entire award allocable to this
leasehold interest in any condemnation proceeding.
15. Holding Over. Tenant will, at the termination of this
Lease by lapse of time or otherwise, yield up immediate possession to Landlord.
In the event of any holding over by Tenant or any of its successors in interest
after the expiration or termination of this Lease, unless the parties hereto
otherwise agree in writing, the hold over tenancy shall be subject to
termination by Landlord at any time upon not less than thirty (30) 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 one hundred fifty percent (150%) of the rent in effect on the
termination date, computed on a daily basis for each day of the holdover period.
-8-
<PAGE>
No holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease except as otherwise expressly provided.
16. Events of Default. The following events shall be deemed to
be a "Default" under this Lease:
a. Tenant shall fail to pay any installment of the
rent hereby reserved when due, or any payment with respect to
Taxes hereunder when due, or any other payment or
reimbursement to Landlord required herein when due, and such
failure shall continue for a period of ten (10) days from
written notice that such payment was past due; provided
however, Landlord shall not be obligated to provide Tenant
notice and opportunity to cure past due payments more than two
(2) times in any twelve (12) month period.
b. Tenant shall be adjudicated insolvent, or shall
make a transfer in fraud of creditors, or shall make a general
assignment for the benefit of creditors.
c. Tenant shall file a petition under any chapter of
the United States Bankruptcy Code, as amended, or under any
similar law or statute of the United States or any State
thereof; or Tenant shall be adjudged bankrupt or insolvent in
proceedings filed against Tenant thereunder.
d. A receiver or trustee shall be appointed for all
or substantially all of the assets of Tenant.
e. Tenant shall desert or abandon any substantial
portion of the Premises, it being understood that merely
vacating the Premises shall not constitute a Default
hereunder.
f. Tenant shall fail to comply with any term,
provision, or covenant of this Lease (other than the foregoing
in subsections (a) through (e)), and shall not cure such
failure within thirty (30) days after written notice thereof
to Tenant, or such additional time as is reasonably necessary
to effect cure provided Tenant commences cure within such
thirty (30) day period and diligently pursues the same to
completion.
(g) Landlord shall have obtained a final,
non-appealable judgment against Tenant for a monetary default
under the terms of either of those certain leases of even date
herewith between Landlord and Tenant respecting certain
premises located at the corner of Foster and Glenrose Avenues,
in Nashville, Davidson County, Tennessee, and on Polymer
Drive, in Chattanooga, Hamilton County, Tennessee,
respectively.
17. Remedies. Upon the occurrence of any Default, Landlord
shall have the option to pursue any one or more of the following remedies
without any notice or demand whatsoever:
-9-
<PAGE>
a. 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, and Tenant agrees to pay to
Landlord on demand the amount of any loss and damage which
Landlord may suffer by reason of such termination, whether
through inability to relet the Premises on satisfactory terms
or otherwise.
b. Enter upon and take possession of the Premises
without terminating this Lease and expel or remove Tenant and
any other person who may be occupying such Premises or any
part thereof, and relet the Premises and receive the rent
therefor; and Tenant agrees to pay to the Landlord on demand
any deficiency that may arise by reason of such reletting. In
the event Landlord is successful in reletting the Premises at
a rental in excess of that agreed to be paid by Tenant
pursuant to the terms of this Agreement, Landlord and Tenant
each mutually agree that Tenant shall not be entitled, under
any circumstances, to receive such excess rental, and Tenant
does hereby specifically waive any claim to receive such
excess rental; however, such excess rental shall be applied to
reduce the obligations of Tenant under this Lease.
c. Enter upon the Premises, by force if necessary,
without being liable for prosecution or any claim for damages
therefor, and do whatever Tenant is obligated to do under the
terms of this Lease; and Tenant agrees to reimburse Landlord,
on demand, for any reasonable expenses that Landlord may incur
in thus effecting compliance with Tenant's obligations under
this Lease. Landlord and Tenant agree that the prevailing
party in any action relating to this Lease shall be entitled
to collect its reasonable attorneys fees and costs from the
other party.
d. In the event Tenant fails to pay any installment
of rent or other sum within five (5) days of 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
percent (5%) of such installment; and the failure to pay such
late charge within ten (10) days after demand therefor shall
be a Default. 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.
Pursuit of any of the foregoing remedies shall not preclude
pursuit of any of the other remedies herein provided or any other remedies
provided by law, nor shall pursuit of any remedy herein provided constitute a
forfeiture or waiver of any rent due to Landlord hereunder
-10-
<PAGE>
or of any damages accruing to Landlord by reason of the violation of any of the
terms, provi sions and covenants herein contained. No act or thing done by the
Landlord or its agents during the term hereby granted shall be deemed a
termination of this Lease or an acceptance of the surrender of the Premises, and
no agreement to terminate this Lease or to accept a surrender of said Premises
shall be valid unless in writing signed by Landlord. No waiver by Landlord or
any violation or breach of any of the terms, provisions and covenants herein
contained shall be deemed or construed to constitute a waiver of any other
violation or breach of any of the terms, provisions and covenants herein
contained shall be deemed or construed to constitute a waiver of any other
violation or breach of any of the terms, provisions and covenants herein
contained. Landlord's acceptance of the payment of rent or other payments
hereunder after the occurrence of a Default shall not be construed as a waiver
of such Default, unless Landlord so notifies Tenant in writing. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon a Default
shall not be deemed or construed to constitute a waiver of such Default or of
Landlord's right to enforce any such remedies with respect to such Default or
any subsequent Default. If, on account of any Default by Tenant, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney
concerning or to enforce or defend any of Landlord's rights or remedies
hereunder, Tenant agrees to pay any reasonable attorney's fees so incurred.
Notwithstanding anything herein to the contrary, Landlord shall use reasonable
efforts to mitigate its damages in the event of a default by Tenant.
18. Landlord Waiver. Upon execution hereof and from time to
time thereafter, as Tenant shall reasonably request, Landlord hereby agrees to
execute and deliver to Tenant a Landlord Waiver in substantially the form of
that attached hereto as Exhibit C.
19. Quiet Enjoyment. In consideration of the covenants and
agreements herein contained, Landlord warrants that Tenant shall have quiet and
peaceful possession of the Premises during the term of this Lease, subject to
the terms hereof.
20. Mortgages. Tenant accepts this Lease subject and
subordinate to any mortgage(s) and/or deed(s) of trust now or at any time
hereafter constituting a lien or charge upon the Premises or the improvements
situated thereon; 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
subjecting and subordinating this Lease to the lien of any such mortgage and
provided further that so long as Tenant is not in default of its obligations
hereunder beyond applicable notice and cure periods, Tenant's occupancy of the
Premises and its interest hereunder shall not be disturbed. The foregoing
agreement by Tenant to subordinate shall be conditioned upon such mortgagee,
trustee or holder agreeing not to disturb Tenant's quiet possession of the
Premises as long as Tenant is not in Default. Landlord shall use its best
efforts to deliver to Tenant non-disturbance agreements from the holders of any
deeds of trust on the Premises.
-11-
<PAGE>
21. Mechanic's Liens. 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 interest 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 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 claims or liens asserted by any party claiming by, through or
under Tenant against the leasehold estate or against the right, title and
interest of the Landlord in the Premises or under the terms of this Lease.
22. Notices. Each provision of this instrument 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 hereunder shall be payable to Landlord at
the address hereinbelow set forth or at such other address as
Landlord may specify from time to time by written notice
delivered in accordance herewith. Tenant's obligation to pay
rent and any other amounts to Landlord under the terms of this
Lease shall not be deemed satisfied until such rent and other
amounts have been actually received by Landlord.
b. Any notice, request, instrument or other document
to be given hereunder shall be in writing and shall be
delivered (1) on the date of delivery when delivered
personally, (ii) one day after dispatch when sent by a
reputable overnight delivery, service maintaining records or
receipt; (iii) three (3) days after dispatch when sent by
certified or registered mail, return receipt requested,
postage prepaid:
If to the Tenant:
Morgan Products Ltd.
469 McLaws Circle
Williamsburg, Virginia 23185
Attention: Chief Financial Officer
Telecopy: 804-564-1714
with a copy to:
Edward B. Mueller
-12-
<PAGE>
Nisen & Elliott
200 W. Adams, Suite 2500
Chicago, Illinois 60606
Telecopy: 312-346-9316
If to the Landlord:
F & S Investments, L.L.C.
5420 East Valley Ct.
Nashville, Tn 37205
Attn:
Telecopy:
with a copy to:
Boult, Cummings, Conners & Berry, PLC
414 Union Street, Suite 1600
P.O. Box 198062
Nashville, TN 37219
Attention: Davis H. Carr, Esq.
Telecopy: 615-252-2380
23. Miscellaneous.
--------------
a. Words of any gender used in this Lease shall be
held and 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, 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. Each party agrees to furnish 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.
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. Tenant agrees from time to time within ten (10)
business days after request of Landlord, to deliver to
Landlord, or Landlord's designee, an estoppel certificate
stating, if true, that Lease is in full force and effect, the
date to which rent has been paid, the unexpired term of this
Lease and such other matters pertaining to this Lease as may
be reasonably requested by Landlord. It is understood and
-13-
<PAGE>
agreed that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for
Landlord's execution of this Lease.
e. 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 hereunder 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 hereof, including without limitation
all payment obligations with respect to Taxes and all
obligations concerning the condition of the Premises. Upon the
expiration or earlier termination of the term hereof, and
prior to Tenant vacating the Premises, Tenant shall pay to
Landlord any amount reasonably estimated by Landlord as
necessary to put the Premises, including without limitation
all heating and air conditioning systems and equipment
therein, in good condition and repair (reasonable wear and
tear excepted, and subject to the provisions of Section 12).
Tenant shall also, prior to vacating the Premises, pay to
Landlord the amount, as estimated by Landlord, of Tenant's
obligation hereunder for Taxes for the year in which this
Lease expires or terminates. All such amounts shall be used
and held by Landlord for payment of such obligations of Tenant
hereunder, with Tenant being liable for any additional costs
therefor upon demand by Landlord, or with any excess to be
promptly returned to Tenant after all such obligations have
been determined and satisfied, as the case may be.
g. If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws
effective during the term of this Lease, then and in that
event, it is the intention of the parties hereto that the
remainder of this Lease shall not be affected thereby, and it
is also the intention of the parties of this Lease that in
lieu of each clause or provision of this Lease that is
illegal, invalid or unenforceable, there be added as a part of
this Lease contract a clause or provision as similar in terms
to such illegal, invalid or unenforceable clause or provisions
as may be possible and be legal, valid and enforceable.
h. 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.
24. Brokerage; Mutual Indemnities.
------------------------------
a. Tenant warrants that it has had no dealings with
any broker or agent in connection with the negotiation or
execution of this Lease. Tenant shall indemnify, defend and
hold Landlord harmless against all costs, expenses, reasonable
attorneys' fees or other liability for commissions or other
compensation or charges claimed by any broker or agent
-14-
<PAGE>
claiming by, through or under Tenant with respect to this
Lease or any renewal or extension of this Lease.
b. Landlord warrants that it has had no dealings with
any broker or agent in connection with the negotiation or
execution of this Lease. Landlord shall indemnify, defend and
hold Tenant harmless against all costs, expenses, reasonable
attorneys' fees or other liability for commissions or other
compensation or charges claimed by any broker or agent
claiming by, through or under Landlord with respect to this
Lease or any renewal or extension of this Lease.
25. Time is of the Essence. Time is of the essence in the
performance of each and every obligation set forth in this Lease.
26. Notice of Landlord's Default. If any act or omission by
Landlord occurs that would give Tenant the right to damages from Landlord or the
right to terminate the Lease due to constructive or actual eviction from all or
part of the Premises or otherwise, Tenant may not sue for damages or exercise
any right to terminate this Lease until (a) it gives notice of the act or
omission to Landlord; and (b) a reasonable period of time for remedying the act
or omission elapses following the giving of notice, during which time Landlord,
its agents, employees and contractors are entitled to enter the Premises and
cure the act or omission. During the period after the giving of the notice and
during the curing of the act or omission, the rent payable by Tenant shall abate
only to the extent the Premises is rendered untenantable on account of such act
or omission by Landlord. In the event Landlord fails to cure any such breach
within the period set forth herein, Tenant shall also have the right, but not
the obligation, to cure such breach, and Landlord shall reimburse Tenant for the
reasonable cost thereof. If Landlord fails to reimburse Tenant for the cost
thereof, and if Tenant obtains a final, non-appealable judgment against Landlord
therefor, Tenant may offset such costs, together with interest at the Default
Rate from the date originally due, against the rent and other sums due Landlord
under this Lease.
27. Memorandum of Lease. Upon Tenant's request, Landlord shall
execute a Memorandum of Lease in recordable form. Tenant shall be responsible
for all recording charges.
EXECUTED BY LANDLORD, this 30th day of August, 1996.
LANDLORD:
---------
Attest/Witness: F & S INVESTMENTS, L.L.C.
- --------------
/s/ Davis Carr By:/s/James L. Fishel
- -------------------------- -----------------------------
Name: James L. Fishel
Title: Attorney -----------------------------
- -------------------------- Title: Manager
-----------------------
-15-
<PAGE>
EXECUTED BY TENANT, this 30th day of August, 1996.
TENANT:
-------
Attest/Witness: MORGAN PRODUCTS LTD.
- --------------
/s/ Victoria L. Miller By:/s/ Douglas H. MacMillan
- ----------------------------- -----------------------------
Name: Douglas H. MacMillan
------------------------
Title: Attorney Title: Vice President
- ----------------------- ------------------------
-16-
<PAGE>
EXHIBIT A
Legal Description - Tennessee Glass, Thompson Lane
Land in Davidson County, Tennessee being the westerly portion of Lots Nos. 3 and
4 on the Plan of SIDCO Subdivision as of record in Book 2133, page 115,
Register's Office for Davidson County, Tennessee, and more particularly
described as follows:
Beginning at a monument in the southerly margin of Thompson Lane, said monument
being the common corner of Lots 1 and 3 on said Plan; thence south 85 deg. 37
min. East 226.40 feet to a point in the southerly margin of Thompson Lane;
Horrell's northwest corner; thence southerly along Horrell's westerly line,
272.09 feet to a point in the northerly margin of Lot No. 5; Horrell's southwest
corner; thence North 87 deg. 20 min. West 226.18 feet to a point in the center
line of the L & N Railroad lead track right of way; thence north 2 deg. 40 min.
east along said center line 278.84 feet to the point of beginning.
<PAGE>
EXHIBIT B
Rent Schedule
Initial Base Rent:
Seventy-four Thousand Four Hundred Fifty-nine and No/100
Dollars ($74,459.00), payable in monthly installments of Six
Thousand Two Hundred Four and 92/100 Dollars ($6,204.92).
After Year 1, the Base Rent shall be calculated as follows:
Base Rent shall be adjusted by multiplying the Base Rent for
the immediately preceding year by eighty percent (80%) of the
percentage increase or decrease in the "All Items" Consumer
Price Index for Urban Consumers 1982-84 = 100, compiled by the
United States Department of Labor, Bureau of Labor Statistics
(the "CPI"). The Base Rent for Year 2 shall be calculated by
dividing the CPI for June, 1997 by the CPI for June, 1996.
Additional adjustments in Base Rent shall continue to be made
for each year thereafter based on the CPI for the June
immediately preceding the last adjustment and the CPI for the
June immediately preceding the lease year in question.
In no event shall the Base Rent as adjusted ever be less than
the Base Rent for the preceding year. Further, in no event
shall the Base Rent increase by more than five percent (5%) in
any year over the immediately preceding year.
<PAGE>
EXHIBIT C
LANDLORD WAIVER
TO:_________________________, a ___________________________ with an office at
_______________________________________ ("Lender").
Morgan Products Ltd. A Delaware corporation ("Borrower") is
the lessee under a lease (the "Lease") by and between Borrower and the
undersigned covering the premises located at
_________________________________________________, more fully described in the
lease attached hereto as Exhibit A (the "Premises").
Borrower intends to enter certain financing arrangements with
Lender, and as a condition to such financing arrangements, Lender has required,
among other things, a lien on all of Borrower's inventory ("Collateral") located
on the Premises.
The undersigned agrees that:
a. it will not assert against the Collateral any statutory or
possessory liens, including, without limitation, any rights of levy or distraint
for rent, all of which it hereby waives;
b. none of the Borrower's Collateral located on the Premises
shall be deemed to be fixtures; and
c. if Borrower defaults on its obligations to Lender, and, as
a result, Lender looks to the Collateral, the undersigned will not hinder
Lender's actions in assembling all of the Collateral located on the Premises,
will permit Lender to remove said Collateral from the Premises without charge
and will not hinder Lender's actions in enforcing its lien against the
Collateral.
The agreement of the undersigned set forth herein shall be
contingent upon the following:
(a) the Collateral shall be located on the Premises at the
risk of Borrower and/or Lender, as their interests may appear, it being
understood that the undersigned shall not be liable for any damage thereto,
unless occasioned solely by the gross negligence or willful misconduct of the
undersigned; and
(b) if Borrower is in default under the Lease, Lender agrees
to remove the Collateral from the Premises within thirty (30) days of demand by
the undersigned, and if the Collateral is not removed within said period, the
same shall be deemed abandoned.
<PAGE>
The undersigned hereby acknowledges that, as of the date of
this agreement, to the actual knowledge of the undersigned, Borrower is not in
default in any respect under its Lease obligations to the undersigned.
Any notices(s) required or desired to be given hereunder shall
be directed to the party to be notified at the address stated herein.
The agreements contained herein shall continue in full force
and effect until all of Borrower's obligations to Lender are paid and satisfied
in full and all financing arrangements between Lender and Borrower have been
terminated.
The agreements contained herein may not be modified or
terminated orally and shall be binding upon the successors, assigns and personal
representatives of the undersigned, upon any successor, owner or transferee of
the Premises and upon any purchaser, including any mortgagee from the
undersigned.
Executed and delivered this ___ day of ______, 19__, at
- ------------------------
F & S INVESTMENTS, L.L.C.
By:-----------------------------
Name:------------------------
Title:-----------------------
--------------------------------
---------------------------------
Address
<PAGE>
Exhibit 12
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between F & S INVESTMENTS,
L.L.C., a Tennessee limited liability company ("Landlord"), and MORGAN PRODUCTS
LTD., a Delaware corporation ("Tenant");
W I T N E S S E T H:
1. Premises and Term. In consideration of the obligation of
Tenant to pay rent herein provided, and in consideration of the other terms,
provisions and covenants hereof, Landlord hereby demises and leases to Tenant,
and Tenant hereby takes from Landlord certain premises consisting of
approximately 20,000 square feet of the building located on Polymer Drive, in
Chattanooga, Hamilton County, Tennessee, as more particularly described on
Exhibit A attached hereto and incorporated herein by reference, together with a
non-exclusive right to all rights, privileges, easements, appurtenances, and
immunities belonging to or in any way pertaining to the premises (said real
property, buildings and improvements being collectively referred to as the
"Premises").
TO HAVE AND TO HOLD the same for a term commencing on the
Commencement Date, as hereinafter defined, and ending one hundred twenty (120)
months thereafter provided, however, that, in the event the 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 Commencement Date. The Commencement Date shall be
August 30, 1996. Except for its rights under the Asset Purchase
Agreement dated July 22, 1996 between certain of Landlord's affiliates, namely,
Tennessee Building Products, Inc., its shareholders, and Titan Building
Products, Inc., as Sellers, and Tenant, as Purchaser (the "Purchase Agreement"),
Tenant acknowledges that it has inspected and accepts the Premises on an "as is,
where is" basis, and specifically the buildings and improvements comprising the
same, in their present condition as suitable for the purpose for which the
Premises are leased. Except for Tenant's rights under the Purchase Agreement,
taking of possession by Tenant shall be deemed conclusively to establish that
said buildings and other improvements are in good and satisfactory condition as
of when possession was taken. Tenant further acknowledges that no
representations as to the repair of the Premises, including but not limited to
the presence or absence or hazardous or toxic materials, nor prom ises to alter,
remodel or improve the Premises have been made by Landlord, unless such are
expressly set forth in this Lease. Nothing herein shall limit, supersede or
alter any covenants, agreements, representations, warranties or indemnities set
forth in the Purchase Agreement, nor any remedies for breach thereof. After the
Commencement Date Tenant shall, upon demand, execute and deliver to Landlord a
letter of acceptance of delivery of the Premises.
2. Base Rent. Tenant agrees to pay to Landlord rent for the
Premises on a monthly basis in advance, without demand, deduction or setoff,
except as expressly provided herein, for the entire term hereof at the rates set
-1-
<PAGE>
forth on Exhibit B, attached hereto and incorporated herein by reference. One
monthly installment shall be due and payable on the Commencement Date and a like
monthly installment shall be due and payable, without demand, on or before the
first day of each calendar month following the Commencement Date, except that
the rental payment for any fractional calendar month at the commencement or
expiration of the Lease term shall be prorated. It is understood and agreed that
the rent payable under this Lease shall be net to the Landlord, Tenant shall
bear all expenses relating to the Premises, including but not limited to taxes,
insurance maintenance and utilities, except as otherwise set forth herein.
3. Use.
(a) During the Lease term, the Premises shall be used for any
lawful use, but as of the date hereof, Tenant intends to use the Premises for
the purpose of receiving, assembling, manufacturing, storing, shipping and
selling products, materials and merchandise made and/or distributed by Tenant,
and for such other lawful purposes as may be incidental thereto. Tenant shall,
at its own cost and expense, obtain any and all licenses and permits necessary
for any such use. Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises, and shall promptly comply
with all governmental orders and directives for the correction, prevention and
abatement of nuisances in or upon, or in connection with the Premises, all at
Tenant's sole expense. 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 that would constitute a nuisance. Without Landlord's prior
written consent, Tenant shall not receive, store or otherwise handle any
product, material or merchandise that is explosive, highly inflammable,
hazardous or toxic, other than the types of products, materials or merchandise
(i) received, stored or otherwise handled on the Premises prior to the execution
of this Lease; (ii) nominal amounts used in the ordinary course of business; or
(iii) used in the normal course of manufacturing building products; provided
uses (ii) and (iii) shall be in compliance with all applicable laws. Tenant will
not permit the Premises to be used for any purpose or in any manner (including
without limitation any method of storage) that would render the insurance
thereon void or the insurance risk more hazardous or cause the State Board of
Insurance or other insurance authority to disallow any sprinkler credits.
(b) Notwithstanding anything to the contrary herein, Tenant
shall in no event be obligated to take any actions, including without
limitation, any removal, containment or remedial actions or comply with any laws
arising out of or resulting from the presence of hazardous substances in or on
the Premises prior to or subsequent to the lease term, caused by Landlord or any
prior tenant or occupant or resulting from the migration of hazardous substances
onto or under the Premises from another property. Landlord shall indemnify and
hold Tenant harmless from and against any and all costs, claims, expenses,
damages, losses, liabilities and judgments arising out of the presence of
hazardous substances located on or under the Premises prior to or subsequent to
the commencement of this Lease; if (i) caused by Landlord, or any prior tenant,
owner or occupant of the Premises, or (ii) resulting from the migration of
hazardous substances onto or under the Premises from another property.
4. Taxes.
-2-
<PAGE>
a. Tenant agrees to pay within fifteen (15) days of
demand from Landlord fifty percent (50%) of all taxes
assessments, and governmental charges of any kind and nature
whatsoever (hereinafter collectively referred to as the
"Taxes") lawfully levied or assessed against the land
described in Exhibit A and improvements located thereon and
applicable to periods during the term hereof (pro-rated for
partial tax years included within the term hereof). If Tenant
should fail to pay any Taxes required to be paid by Tenant
hereunder, in addition to any other remedies provided herein,
such sum shall be deemed to be so much additional rental owing
and shall bear interest at the Default Rate, from date when
originally due.
b. 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, 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.
c. If Landlord does not elect to contest the Taxes,
Tenant may, at its sole cost and expense, in its own name
and/or in the name of Landlord, dispute and contest any Taxes
by appropriate proceedings diligently conducted in good faith,
but only after Tenant has deposited with Landlord one-half
(1/2) of the amount so contested and unpaid (the "Contested
Tax Deposit"), which shall be held by Landlord until the
termination of the proceedings. Upon request of Tenant,
Landlord agrees to deposit the Contested Tax Deposit in an
interest bearing account. Landlord agrees to cooperate with
Tenant in any such appeal. Upon termination of the
proceedings, the Contested Tax Deposit (and any interest
earned thereon) shall be applied by Landlord toward the
payment of the items held valid (plus any court costs,
interest, penalties, and other liabilities associated with the
proceedings), and any excess shall be returned to Tenant.
Tenant further agrees to pay to Landlord, upon demand, all
court costs, interest, penalties, and other liabilities
relating to such proceedings actually incurred by Landlord.
Tenant hereby indemnifies and agrees to hold harmless the
Landlord from and against any cost, damage, or expense
(including reasonable attorney's fees) in connection with any
such proceedings brought by Tenant in its own name or the name
of the Landlord.
d. Any payment to be made pursuant to this Section 4,
with respect to the real estate tax year in which this Lease
commences or terminates shall be prorated.
5. Repairs and Maintenance.
-3-
<PAGE>
a. Except (i) those items specifically allocated to
Landlord pursuant to subsection (b), below, (ii) damage or
disrepair attributable to the negligence or wilful misconduct
of Landlord, and (iii) as otherwise provided in this
paragraph, Tenant shall, at its own cost and expense, keep and
maintain all parts of the Premises in good condition, promptly
making all necessary repairs and replacements, ordinary and
extraordinary, foreseen or unforeseen, including but not
limited to, windows, glass and plate glass, doors and any
special office entry, walls and finish work, floor covering,
downspouts, gutters, heating, and air conditioning systems,
dock boards, truck doors, dock bumpers, plumbing work and
fixtures, termite and pest extermination, and regular removal
of trash and debris. Further, upon demand, Tenant shall
reimburse Landlord for one-half (1/2) the cost of repairing,
maintaining and replacing, as necessary, the paving, and the
costs of repainting exterior overhead doors, canopies,
entries, handrails, gutters, and other exposed parts of the
building that reasonably require periodic repainting to
prevent deterioration and to maintain aesthetic standards,
regular mowing of any grass, trimming, weed removal and
general landscape maintenance, including rail spur areas,
maintaining the parking areas, driveways, alleys and otherwise
keeping the whole of the property of which the Premises are a
part in a clean and sanitary condition.
b. Tenant shall be responsible for any necessary
replacement during the term of any heating, air conditioning
and ventilation systems serving the Premises; however, if such
replacement first becomes necessary during the last two (2)
years of the then current term of this Lease, provided Tenant
is not then in default hereunder, Landlord shall reimburse
Tenant at the expiration of this Lease for the unamortized
cost of such replacement. For the purpose of such
reimbursement, the cost of the replacement shall be amortized
on a straight-line basis over ten (10) years.
c. Landlord shall be responsible for maintaining the
roof, exterior walls, foundation and structural portions of
the Premises; provided, however, if any extraordinary repairs
are necessitated due to the acts or omissions of Tenant,
Tenant shall reimburse Landlord for the cost thereof upon
demand.
6. Alterations. Tenant shall not make any exterior or
structural alterations, additions, or improvements to the Premises without the
prior written consent of Landlord, which shall not be unreasonably withheld or
delayed. Tenant may, without the consent of Landlord, but at its own cost and
expense and in a good workmanlike manner make such other alterations, additions
or improvements or erect, remove or alter such partitions, or erect such
shelves, bins, machinery and trade fixtures as it may deem advisable, without
altering the basic character of the building or improvements and without
overloading or damaging such building or improvements, and in each case
complying with all applicable governmental laws, ordinances, regulations and
other requirements. All alterations, additions, improvements and partitions
erected by Tenant shall be and remain the property of Tenant during the term of
-4-
<PAGE>
this Lease and Tenant shall unless Landlord otherwise elects as hereinafter
provided, remove all alterations, additions, improvements and partitions erected
by Tenant and restore the Premises to their original condition by the date of
termination of this Lease; provided, however, that if Landlord so elects prior
to termination of this Lease, such alterations, additions, improvements and
partitions shall become the property of Landlord as of the date of termination
of this Lease and shall be delivered up to the Landlord with the Premises. All
shelves, bins, machinery and trade fixtures and equipment installed by Tenant
may be removed by Tenant prior to the termination of this Lease if Tenant so
elects, and shall be removed if required by Landlord; and upon any such removal
Tenant shall restore the Premises to their original condition, ordinary wear and
tear excepted. All such removals and restoration shall be accomplished in a good
workmanlike manner so as not to damage the primary structure or structural
qualities of the buildings and other improvements situated on the Premises. Any
property not removed by Tenant within thirty (30) days of the expiration of this
Lease shall be deemed abandoned.
7. Signs. Tenant shall have the right to install signs upon
the Premises subject to any applicable governmental laws, ordinances,
regulations and other requirements. Tenant shall remove all such signs within
ten (10) days of the termination of this Lease. Such installations and removals
shall be made in such manner as to avoid injury to or defacement of the building
and other improvements, and Tenant shall repair any injury or defacement
including without limitation discoloration, caused by such installation or
removal.
8. Inspection. Upon reasonable prior notice, 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 nine (9) month period 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 that the Premises are available. The parties shall
arrange to meet for a joint inspection of the Premises at the time of vacating.
9. Utilities. Tenant shall be responsible for all water, gas,
heat, light, power, telephone, sewer, sprinkler charges and other utilities and
services used on or from the Premises, together with any taxes, penalties,
maintenance charges, surcharges or the like pertaining thereto, and Tenant shall
furnish all electric light bulbs and tubes. Water is not currently separately
metered, and upon demand, Tenant shall reimburse Landlord for one-half (1/2) of
the monthly water bill for the building of which the Premises are a part. If, in
the future, either the Premises or the other portion of the building of which
the Premises are a part is used for a purpose that results in a material
increase in water consumption, the occupant causing the increase shall be
responsible for installing a separate water meter for its premises, at its
expense. Landlord shall in no event be liable for any interruption or failure of
utility services on the Premises not shall Tenant be entitled to an abatement of
rent on account thereof; it being understood that Landlord shall have no
obligation whatsoever to ensure that utilities are supplied to the Premises.
-5-
<PAGE>
10. Assignment and Subletting. Tenant shall not have the right
to assign this Lease or to sublet the whole or any part of the Premises without
the prior written consent of Landlord, such consent not to be unreasonably
withheld. Notwithstanding any permitted assignment or subletting, Tenant shall
at all times remain directly, primarily and fully responsible and liable for the
payment of the rent herein specified and for compliance with all of Tenant's
other obligations under the terms, provisions and covenants of this Lease. Upon
the occurrence of a 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 or 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 from 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. Notwithstanding, the foregoing, Tenant shall have the right to assign
this Lease to any entity that controls, is controlled by or is under common
control with Tenant without the consent of Landlord, provided (a) Tenant submits
to Landlord prior written notice of such assignment; and (b) Tenant shall not be
released from any liability under this Lease on account of such assignment.
11. Insurance.
a. Landlord shall procure and maintain throughout the
term of this Lease a policy or policies of insurance, covering
the building in which the Premises are located and other
improvements associated therewith in an amount of not less
than eighty percent (80%) of the Replacement Cost thereof, on
an all-risk basis with a "Building Ordinance and Law"
endorsement. Within fifteen (15) days of demand, Tenant shall
reimburse Landlord for fifty percent (50%) of the premium for
the foregoing coverage.
b. Tenant shall procure and maintain throughout the
term of this Lease a policy or policies of insurance, at its
sole cost and expense, insuring 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 $1,000,000 combined single limit per occurrence, plus a
$1,000,000 umbrella in respect of injury to persons (including
death) and in respect of property damage or destruction,
including loss of use thereof.
c. All insurance to be carried by Tenant hereunder
shall show Landlord as an additional insured and shall provide
that all insurance proceeds thereunder shall be paid to
Landlord and Tenant, as their interests may appear. All
insurance required to be carried by Tenant hereunder shall be
procured from responsible insurance companies licensed to do
business in Tennessee with an A.M. Best rating of A IX or
better. Landlord shall have the right to increase the amount
of insurance required hereunder from time to time, in
-6-
<PAGE>
Landlord's reasonable discretion according to industry
standards for the type of use to which the Premises are then
being put. A certificate of insurance for such policies,
together with receipt evidencing payment of premiums therefor,
shall be delivered to Landlord prior to the Commencement Date.
Not less than fifteen (15) days prior to the expiration date
of any such policies, renewal certificates therefor (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 canceled or
changed to reduce insurance provided thereby. In the event
Tenant does not carry the insurance required hereunder, in
addition to any other remedies Landlord may have on account of
such default, Landlord may, but shall not be obligated to,
obtain the same on behalf of Tenant in which event Tenant
shall reimburse Landlord for the cost thereof immediately upon
demand.
d. Each of Landlord and Tenant hereby releases the
other from any and all liability or responsibility to the
other or any claiming through or under them by way of
subrogation or otherwise for any loss or damage to property
caused by fire or any other 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 Landlord and Tenant agrees that
it will request its insurance carriers to include in its
policies such a clause or endorsement. If extra cost shall be
charged therefor, each party shall advise the other thereof
and of the amount of the extra cost, and the other party, at
its election, may pay the same, but shall not be obligated to
do so.
12. Fire and Casualty Damage. If the Premises should be
damaged or destroyed, Landlord, at its option may either (a) terminate this
Lease; or (b) at its sole cost and expense, proceed with reasonable diligence to
rebuild and repair the Premises to substantially the condition in which they
existed prior to such damage or destruction. The rent payable hereunder shall in
no event abate by reason of any damage or destruction. Notwithstanding the
foregoing, Tenant shall have the right to terminate this Lease in the event the
Premises cannot be or are not substantially restored within one hundred fifty
(150) days from the date of the casualty.
13. Liability and Indemnity.
a. 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 any person or damage to property
-7-
<PAGE>
on or about the Premises, resulting from and/or caused in part
or whole by Tenant, its agents, servants or employees, or 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, except
injury to persons or damage to property the cause of which was
the negligence or willful misconduct of Landlord or Landlord's
failure to perform its obligations hereunder. Tenant hereby
covenants and agrees that it will at all times indemnify and
hold safe and harmless 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
reasonable attorney's fees and court costs, both real and
alleged, arising out of any such damage or injury or Tenant's
failure to perform its obligations hereunder; except injury to
persons or damage to property the cause of which is the
negligence or willful misconduct of Landlord, and except for
those environmental matters described in Section 3(b).
b. Landlord hereby covenants and agrees that it will
at all times indemnify and hold safe and harmless Tenant
(including without limitation the trustee and beneficiaries if
Tenant is a trust), Tenant's agents and employees from any
loss, liability, claims, suits, costs, expenses, including
without limitation reasonable attorney's fees and court costs,
both real and alleged, with respect to any injury to any
person or damage to property the sole cause of which was the
negligence or willful misconduct of the Landlord or Landlord's
failure to perform its obligations hereunder.
14. Condemnation.
a. If the whole or more than fifty percent (50%) of
the Premises 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 for the purpose for which they
are then being used, or if more than twenty-five percent (25%)
the building in which the Premises are located should be so
taken, then, at the option of Landlord, this Lease shall
terminate and the rent shall be abated during the unexpired
portion of this Lease, effective when the physical taking of
said Premises shall occur.
b. If part of the Premises shall be taken for any
public or quasi-public use under any 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 in the subparagraph above, this Lease
shall not terminate, but the minimum rent payable hereunder
during the unexpired portion of the Lease shall be reduced on
an equitable basis.
c. In the event of any such taking or private
purchase in lieu thereof, Landlord shall be entitled to
-8-
<PAGE>
receive and retain the entire award allocable to this
leasehold interest in any condemnation proceeding.
15. Holding Over. Tenant will, at the termination of this
Lease by lapse of time or otherwise, yield up immediate possession to Landlord.
In the event of any holding over by Tenant or any of its successors in interest
after the expiration or termination of this Lease, unless the parties hereto
otherwise agree in writing, the hold over tenancy shall be subject to
termination by Landlord at any time upon not less than thirty (30) 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 one hundred fifty percent (150%) of the rent in effect on the
termination date, computed on a daily basis for each day of the holdover period.
No holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease except as otherwise expressly provided.
16. Events of Default. The following events shall be deemed to
be a "Default" under this Lease:
a. Tenant shall fail to pay any installment of the
rent hereby reserved when due, or any payment with respect to
Taxes hereunder when due, or any other payment or
reimbursement to Landlord required herein when due, and such
failure shall continue for a period of ten (10) days from
written notice that such payment was past due; provided
however, Landlord shall not be obligated to provide Tenant
notice and opportunity to cure past due payments more than two
(2) times in any twelve (12) month period.
b. Tenant shall be adjudicated insolvent, or shall
make a transfer in fraud of creditors, or shall make a general
assignment for the benefit of creditors.
c. Tenant shall file a petition under any chapter of
the United States Bankruptcy Code, as amended, or under any
similar law or statute of the United States or any State
thereof; or Tenant shall be adjudged bankrupt or insolvent in
proceedings filed against Tenant thereunder.
d. A receiver or trustee shall be appointed for all
or substantially all of the assets of Tenant.
e. Tenant shall desert or abandon any substantial
portion of the Premises, it being understood that merely
vacating the Premises shall not constitute a Default
hereunder.
f. Tenant shall fail to comply with any term,
provision, or covenant of this Lease (other than the foregoing
in subsections (a) through (e)), and shall not cure such
failure within thirty (30) days after written notice thereof
-9-
<PAGE>
to Tenant, or such additional time as is reasonably necessary
to effect cure provided Tenant commences cure within such
thirty (30) day period and diligently pursues the same to
completion.
(g) Landlord shall have obtained a final,
non-appealable judgment against Tenant for a monetary default
under the terms of either of those certain leases of even date
herewith between Landlord and Tenant respecting certain
premises located at the corner of Foster and Glenrose Avenues,
in Nashville, Davidson County, Tennessee, and located at 651
Thompson Lane, Nashville, Davidson County, Tennessee,
respectively.
17. Remedies. Upon the occurrence of any Default, Landlord
shall have the option to pursue any one or more of the following remedies
without any notice or demand whatsoever:
a. 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, and Tenant agrees to pay to
Landlord on demand the amount of any loss and damage which
Landlord may suffer by reason of such termination, whether
through inability to relet the Premises on satisfactory terms
or otherwise.
b. Enter upon and take possession of the Premises
without terminating this Lease and expel or remove Tenant and
any other person who may be occupying such Premises or any
part thereof, and relet the Premises and receive the rent
therefor; and Tenant agrees to pay to the Landlord on demand
any deficiency that may arise by reason of such reletting. In
the event Landlord is successful in reletting the Premises at
a rental in excess of that agreed to be paid by Tenant
pursuant to the terms of this Agreement, Landlord and Tenant
each mutually agree that Tenant shall not be entitled, under
any circumstances, to receive such excess rental, and Tenant
does hereby specifically waive any claim to receive such
excess rental; however, such excess rental shall be applied to
reduce the obligations of Tenant under this Lease.
c. Enter upon the Premises, by force if necessary,
without being liable for prosecution or any claim for damages
therefor, and do whatever Tenant is obligated to do under the
terms of this Lease; and Tenant agrees to reimburse Landlord,
on demand, for any reasonable expenses that Landlord may incur
in thus effecting compliance with Tenant's obligations under
this Lease. Landlord and Tenant agree that the prevailing
party in any action relating to this Lease shall be entitled
to collect its reasonable attorneys fees and costs from the
other party.
-10-
<PAGE>
d. In the event Tenant fails to pay any installment
of rent or other sum within five (5) days of 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
percent (5%) of such installment; and the failure to pay such
late charge within ten (10) days after demand therefor shall
be a Default. 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.
Pursuit of any of the foregoing remedies shall not preclude
pursuit of any of the other remedies herein provided or any other remedies
provided by law, nor shall pursuit of any remedy herein provided constitute a
forfeiture or waiver of any rent due to Landlord hereunder or of any damages
accruing to Landlord by reason of the violation of any of the terms, provi sions
and covenants herein contained. No act or thing done by the Landlord or its
agents during the term hereby granted shall be deemed a termination of this
Lease or an acceptance of the surrender of the Premises, and no agreement to
terminate this Lease or to accept a surrender of said Premises shall be valid
unless in writing signed by Landlord. No waiver by Landlord or any violation or
breach of any of the terms, provisions and covenants herein contained shall be
deemed or construed to constitute a waiver of any other violation or breach of
any of the terms, provisions and covenants herein contained shall be deemed or
construed to constitute a waiver of any other violation or breach of any of the
terms, provisions and covenants herein contained. Landlord's acceptance of the
payment of rent or other payments hereunder after the occurrence of a Default
shall not be construed as a waiver of such Default, unless Landlord so notifies
Tenant in writing. Forbearance by Landlord to enforce one or more of the
remedies herein provided upon a Default shall not be deemed or construed to
constitute a waiver of such Default or of Landlord's right to enforce any such
remedies with respect to such Default or any subsequent Default. If, on account
of any Default by Tenant, it shall become necessary or appropriate for Landlord
to employ or consult with an attorney concerning or to enforce or defend any of
Landlord's rights or remedies hereunder, Tenant agrees to pay any reasonable
attorney's fees so incurred. Notwithstanding anything herein to the contrary,
Landlord shall use reasonable efforts to mitigate its damages in the event of a
default by Tenant.
18. Landlord Waiver. Upon execution hereof and from time to
time thereafter, as Tenant shall reasonably request, Landlord hereby agrees to
execute and deliver to Tenant a Landlord Waiver in substantially the form of
that attached hereto as Exhibit C.
19. Quiet Enjoyment. In consideration of the covenants and
agreements herein contained, Landlord warrants that Tenant shall have quiet and
peaceful possession of the Premises during the term of this Lease, subject to
the terms hereof.
20. Mortgages. Tenant accepts this Lease subject and
subordinate to any mortgage(s) and/or deed(s) of trust now or at any time
hereafter constituting a lien or charge upon the Premises or the improvements
situated thereon; 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
-11-
<PAGE>
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
subjecting and subordinating this Lease to the lien of any such mortgage and
provided further that so long as Tenant is not in default of its obligations
hereunder beyond applicable notice and cure periods, Tenant's occupancy of the
Premises and its interest hereunder shall not be disturbed. The foregoing
agreement by Tenant to subordinate shall be conditioned upon such mortgagee,
trustee or holder agreeing not to disturb Tenant's quiet possession of the
Premises as long as Tenant is not in Default. Landlord shall use its best
efforts to deliver to Tenant non-disturbance agreements from the holders of any
deeds of trust on the Premises.
21. Mechanic's Liens. 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 interest 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 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 claims or liens asserted by any party claiming by, through or
under Tenant against the leasehold estate or against the right, title and
interest of the Landlord in the Premises or under the terms of this Lease.
22. Notices. Each provision of this instrument 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 hereunder shall be payable to Landlord at
the address hereinbelow set forth or at such other address as
Landlord may specify from time to time by written notice
delivered in accordance herewith. Tenant's obligation to pay
rent and any other amounts to Landlord under the terms of this
Lease shall not be deemed satisfied until such rent and other
amounts have been actually received by Landlord.
b. Any notice, request, instrument or other document
to be given hereunder shall be in writing and shall be
delivered (1) on the date of delivery when delivered
personally, (ii) one day after dispatch when sent by a
reputable overnight delivery, service maintaining records or
receipt; (iii) three (3) days after dispatch when sent by
certified or registered mail, return receipt requested,
postage prepaid:
-12-
<PAGE>
If to the Tenant:
Morgan Products Ltd.
469 McLaws Circle
Williamsburg, Virginia 23185
Attention: Chief Financial Officer
Telecopy: 804-564-1714
with a copy to:
Edward B. Mueller
Nisen & Elliott
200 W. Adams, Suite 2500
Chicago, Illinois 60606
Telecopy: 312-346-9316
If to the Landlord:
F & S Investments, L.L.C.
5420 East Valley Ct.
Nashville, TN 37205
Attn:
Telecopy:
with a copy to:
Boult, Cummings, Conners & Berry, PLC
414 Union Street, Suite 1600
P.O. Box 198062
Nashville, TN 37219
Attention: Davis H. Carr, Esq.
Telecopy: 615-252-2380
23. Miscellaneous.
---------------
a. Words of any gender used in this Lease shall be
held and 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, 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
-13-
<PAGE>
provided. Each party agrees to furnish 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.
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. Tenant agrees from time to time within ten (10)
business days after request of Landlord, to deliver to
Landlord, or Landlord's designee, an estoppel certificate
stating, if true, that Lease is in full force and effect, the
date to which rent has been paid, the unexpired term of this
Lease and such other matters pertaining to this Lease as may
be reasonably requested by Landlord. It is understood and
agreed that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for
Landlord's execution of this Lease.
e. 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 hereunder 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 hereof, including without limitation
all payment obligations with respect to Taxes and all
obligations concerning the condition of the Premises. Upon the
expiration or earlier termination of the term hereof, and
prior to Tenant vacating the Premises, Tenant shall pay to
Landlord any amount reasonably estimated by Landlord as
necessary to put the Premises, including without limitation
all heating and air conditioning systems and equipment
therein, in good condition and repair (reasonable wear and
tear excepted, and subject to the provisions of Section 12).
Tenant shall also, prior to vacating the Premises, pay to
Landlord the amount, as estimated by Landlord, of Tenant's
obligation hereunder for Taxes for the year in which this
Lease expires or terminates. All such amounts shall be used
and held by Landlord for payment of such obligations of Tenant
hereunder, with Tenant being liable for any additional costs
therefor upon demand by Landlord, or with any excess to be
promptly returned to Tenant after all such obligations have
been determined and satisfied, as the case may be.
g. If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws
effective during the term of this Lease, then and in that
event, it is the intention of the parties hereto that the
remainder of this Lease shall not be affected thereby, and it
is also the intention of the parties of this Lease that in
lieu of each clause or provision of this Lease that is
illegal, invalid or unenforceable, there be added as a part of
this Lease contract a clause or provision as similar in terms
-14-
<PAGE>
to such illegal, invalid or unenforceable clause or provisions
as may be possible and be legal, valid and enforceable.
h. 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.
24. Brokerage; Mutual Indemnities.
a. Tenant warrants that it has had no dealings with
any broker or agent in connection with the negotiation or
execution of this Lease. Tenant shall indemnify, defend and
hold Landlord harmless against all costs, expenses, reasonable
attorneys' fees or other liability for commissions or other
compensation or charges claimed by any broker or agent
claiming by, through or under Tenant with respect to this
Lease or any renewal or extension of this Lease.
b. Landlord warrants that it has had no dealings with
any broker or agent in connection with the negotiation or
execution of this Lease. Landlord shall indemnify, defend and
hold Tenant harmless against all costs, expenses, reasonable
attorneys' fees or other liability for commissions or other
compensation or charges claimed by any broker or agent
claiming by, through or under Landlord with respect to this
Lease or any renewal or extension of this Lease.
25. Time is of the Essence. Time is of the essence in the
performance of each and every obligation set forth in this Lease.
26. Notice of Landlord's Default. If any act or omission by
Landlord occurs that would give Tenant the right to damages from Landlord or the
right to terminate the Lease due to constructive or actual eviction from all or
part of the Premises or otherwise, Tenant may not sue for damages or exercise
any right to terminate this Lease until (a) it gives notice of the act or
omission to Landlord; and (b) a reasonable period of time for remedying the act
or omission elapses following the giving of notice, during which time Landlord,
its agents, employees and contractors are entitled to enter the Premises and
cure the act or omission. During the period after the giving of the notice and
during the curing of the act or omission, the rent payable by Tenant shall abate
only to the extent the Premises is rendered untenantable on account of such act
or omission by Landlord. In the event Landlord fails to cure any such breach
within the period set forth herein, Tenant shall also have the right, but not
the obligation, to cure such breach, and Landlord shall reimburse Tenant for the
reasonable cost thereof. If Landlord fails to reimburse Tenant for the cost
thereof, and if Tenant obtains a final, non-appealable judgment against Landlord
therefor, Tenant may offset such costs, together with interest at the Default
Rate from the date originally due, against the rent and other sums due Landlord
under this Lease.
27. Memorandum of Lease. Upon Tenant's request, Landlord shall
execute a Memorandum of Lease in recordable form. Tenant shall be responsible
for all recording charges.
-15-
<PAGE>
EXECUTED BY LANDLORD, this 30th day of August, 1996.
LANDLORD:
---------
Attest/Witness: F & S INVESTMENTS, L.L.C.
/s/ Davis Carr
- ----------------------- By:/s/ James L. Fishel
-----------------------------
Name: James L. Fishel
Title: Attorney ------------------------
----------------- Title: Manager
-----------------------
EXECUTED BY TENANT, this 30th day of August, 1996.
TENANT:
-------
Attest/Witness: MORGAN PRODUCTS LTD.
- --------------
/s/ Victoria L. Miller By:/s/ Douglas H. MacMillan
- ----------------------------- -----------------------------
Name: Dougas H. MacMillan
------------------------
Title: Attorney Title: Vice President
- ----------------------------- ------------------------
-16-
<PAGE>
EXHIBIT A
Legal Description - Chattanooga
Being a part of Section Eight (8), Township Two (2), North, Range Three (3),
West of the Basis Line, Ocoee District and described as:
BEGINNING at a point in the West line of Polymer Drive at the center line of
Friar Branch 450 feet, more or less, 55 feet, 190 feet and 350 feet to the East
line of the City of Chattanooga property; thence along the East line of the City
of Chattanooga property, North 16 degrees 14 minutes East 906 feet, more or
less, to the Northeast corner of the City of Chattanooga property; thence along
the North line of the City of Chattanooga property, North 73 degrees 46 minutes
West 440 feet; thence North 16 degrees 14 minutes East 425 feet to the center
line of a 50-foot Rail Road Spur Tract Easement; thence East along the center
line of said easement 1140 feet, more or less, to the West line of Polymer
Drive; thence along the West line of Polymer Drive, South 5 degrees 58 minutes
East 793.50 feet to the beginning.
<PAGE>
EXHIBIT B
Rent Schedule
Initial Base Rent:
Forty Thousand Five Hundred Forty-seven and No/100 Dollars
($40,547.00), payable in monthly installments of Three
Thousand Three Hundred Seventy-eight and 92/100 Dollars
($3,378.92).
After Year 1, the Base Rent shall be calculated as follows:
Base Rent shall be adjusted by multiplying the Base Rent for
the immediately preceding year by eighty percent (80%) of the
percentage increase or decrease in the "All Items" Consumer
Price Index for Urban Consumers 1982-84 = 100, compiled by the
United States Department of Labor, Bureau of Labor Statistics
(the "CPI"). The Base Rent for Year 2 shall be calculated by
dividing the CPI for June, 1997 by the CPI for June, 1996.
Additional adjustments in Base Rent shall continue to be made
for each year thereafter based on the CPI for the June
immediately preceding the last adjustment and the CPI for the
June immediately preceding the lease year in question.
In no event shall the Base Rent as adjusted ever be less than
the Base Rent for the preceding year. Further, in no event
shall the Base Rent increase by more than five percent (5%) in
any year over the immediately preceding year.
<PAGE>
EXHIBIT C
LANDLORD WAIVER
TO:_________________________, a ___________________________ with an office at
_______________________________________ ("Lender").
Morgan Products Ltd. A Delaware corporation ("Borrower") is
the lessee under a lease (the "Lease") by and between Borrower and the
undersigned covering the premises located at
_________________________________________________, more fully described in the
lease attached hereto as Exhibit A (the "Premises").
Borrower intends to enter certain financing arrangements with
Lender, and as a condition to such financing arrangements, Lender has required,
among other things, a lien on all of Borrower's inventory ("Collateral") located
on the Premises.
The undersigned agrees that:
a. it will not assert against the Collateral any statutory
or possessory liens, including, without limitation, any rights of levy or
distraint for rent, all of which it hereby waives;
b. none of the Borrower's Collateral located on the Premises
shall be deemed to be fixtures; and
c. if Borrower defaults on its obligations to Lender, and, as
a result, Lender looks to the Collateral, the undersigned will not hinder
Lender's actions in assembling all of the Collateral located on the Premises,
will permit Lender to remove said Collateral from the Premises without charge
and will not hinder Lender's actions in enforcing its lien against the
Collateral.
The agreement of the undersigned set forth herein shall be
contingent upon the following:
(a) the Collateral shall be located on the Premises at the
risk of Borrower and/or Lender, as their interests may appear, it being
understood that the undersigned shall not be liable for any damage thereto,
unless occasioned solely by the gross negligence or willful misconduct of the
undersigned; and
(b) if Borrower is in default under the Lease, Lender agrees
to remove the Collateral from the Premises within thirty (30) days of demand by
the undersigned, and if the Collateral is not removed within said period, the
same shall be deemed abandoned.
<PAGE>
The undersigned hereby acknowledges that, as of the date of
this agreement, to the actual knowledge of the undersigned, Borrower is not in
default in any respect under its Lease obligations to the undersigned.
Any notices(s) required or desired to be given hereunder shall
be directed to the party to be notified at the address stated herein.
The agreements contained herein shall continue in full force
and effect until all of Borrower's obligations to Lender are paid and satisfied
in full and all financing arrangements between Lender and Borrower have been
terminated.
The agreements contained herein may not be modified or
terminated orally and shall be binding upon the successors, assigns and personal
representatives of the undersigned, upon any successor, owner or transferee of
the Premises and upon any purchaser, including any mortgagee from the
undersigned.
Executed and delivered this ___ day of ______, 19__, at
- ------------------------
F & S INVESTMENTS, L.L.C.
By:-----------------------------
Name:------------------------
Title:-----------------------
--------------------------------
--------------------------------
Address
<PAGE>
