02-95-09 -- AS FILED WITH THE S.E.C.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For Fiscal Year Ended February 26, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition Period from to
Commission File Number: 0-14394
TOWN & COUNTRY CORPORATION
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2384321
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) I.D. Number)
25 Union Street, Chelsea, Massachusetts 02150
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 884-8500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Class A Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock, based on the actual price at
which the Class A common stock sold, held by non-affiliates of the
Registrant was $16,302,093 as of May 15, 1995. On May 15, 1995, the
Registrant had outstanding 21,324,495 shares of Class A Common Stock, $.01
par value and 2,664,941 shares of Class B Common Stock, $.01 par value.
<PAGE>
PART I PAGE
Item 1. Business 1
General Business Developments 1
Narrative Description of Business 3
Financial Information about Foreign and
and Domestic Operations and Export Sales 9
Item 2. Properties 9
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of
Security-Holders 11
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters 12
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 14
Item 8. Financial Statements and Supplementary
Data 21
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure 21
<PAGE>
PART III
Item 10. Directors and Executive Officers of
the Registrant 22
Item 11. Executive Compensation 22
Item 12. Security Ownership of Certain Beneficial
Owners and Management 22
Item 13. Certain Relationships and Related
Transactions 22
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 23
<PAGE>
PART I
Item 1. Business
General Business Developments
General
Town & Country Corporation, a Massachusetts corporation incorporated in
1965, (collectively with its consolidated subsidiaries unless the context
otherwise requires, the "Company") designs, manufactures, and markets an
extensive collection of fine jewelry, scholastic and sports specialty products
in the United States and internationally. Prior to May 14, 1993, the Company
consisted of seven operating entities: the parent company, Town & Country
Corporation ("Town & Country"), headquartered in Chelsea, Massachusetts; its
wholly owned subsidiaries, Anju Jewelry Limited, a Hong Kong company and its
subsidiaries ("Anju"); Gold Lance, Inc. ("Gold Lance"), located in Houston,
Texas; Verilyte Gold, Inc. ("Verilyte"), located in Chelsea, Massachusetts and
Dallas, Texas; L.G. Balfour Company, Inc. ("Balfour"), headquartered in North
Attleboro, Massachusetts; and Feature Enterprises, Inc. ("Feature"), located in
New York City, New York; and its majority-owned subsidiary Essex International
Public Company Limited and its affiliates ("Essex"), a Thailand company. As of
May 14, 1993, Verilyte and Feature were merged into a new operating entity, Town
& Country Fine Jewelry Group, Inc. ("Fine Jewelry Group").
Capitalization
The Company completed a recapitalization on May 14, 1993. The
recapitalization revised the Company's consolidated capitalization, including
debt structure. The amount of debt outstanding was reduced and a significant
portion of old subordinated debt was exchanged for new debt and shares of Class
A Common Stock and Exchangeable Preferred Stock.
The Company obtained a revolving credit agreement from Foothill Capital
Corporation to provide secured financing in an aggregate amount of up to $30
million, which currently has a seasonal increase up to $35 million, and new gold
consignment agreements from the Company's existing gold suppliers which
currently provide an aggregate gold consignment availability of up to
approximately 73,000 troy ounces. As a result of ongoing discussions with its
gold suppliers, the Company has agreed in principle to reduce its domestic gold
facilities by 6,000 troy ounces, from 73,000 troy ounces to 67,000 troy ounces.
The Company sold $30 million of its 11 1/2% Senior Secured Notes due
September 15, 1997. At February 26, 1995, approximately $14 million was
outstanding.
<PAGE>
Agreements were reached with Chemical Bank, to change the terms of the IRB
financing for the Company's facility located in New York, New York. The new
terms include, among other things, an accelerated payment schedule relative to
that which had previously been in place and the release of certain collateral by
Chemical Bank. At February 26, 1995, approximately $500,000 principal balance
remains outstanding.
The Company issued approximately $61.5 million, including unamortized
premium of approximately $8 million, of 13% Senior Subordinated Notes, due May
31, 1998, approximately $34.3 million of Exchangeable Preferred Stock, par value
$1.00, and approximately 10 million shares of Class A Common stock valued at
approximately $26.9 million. These securities were issued in exchange for
approximately 93% of the Company's 13% Senior Subordinated Notes due December
15, 1998, and approximately 98% of the Company's 10 1/4% Subordinated Noes due
July 1, 1995. The total carrying value retired, including deferred financing
costs, was approximately $122.7 million.
The 13% Senior Subordinated Notes, due May 31, 1998, were issued with terms
providing for the Company's right to issue additional notes in lieu of the first
four semiannual interest payments ("PIK"). As of February 26, 1995, the Company
had exercised this right and had paid by the issuance of new notes approximately
$3.5 million, $3.7 million, and $3.9 million related to the first three required
semiannual interest payments. Therefore, the carrying value of the notes,
including unamortized premium of approximately $5.6 million, is approximately
$70.2 million. Subsequent to year-end, the Company used its final PIK to make
the fourth semiannual interest payment due May 13, 1995, with approximately $4.2
million of additional notes. The Company will be required to make the $4.5
million interest payment due November 13, 1995, in cash.
On November 23, 1994, holders of approximately 94% of the Company's
Exchangeable Preferred Stock exchanged their shares for shares of Little
Switzerland, Inc. Common Stock on a share-for-share basis. Such an exchange was
provided for by the terms of the Exchangeable Preferred Stock. In addition, the
Company issued to each participant one share of new Convertible Preferred Stock
with each share of Little Switzerland, Inc. Common Stock. The Company retains an
investment in Little Switzerland, Inc. equal to approximately 4% of the
outstanding shares.
Since the carrying value of the Company's investment in Little Switzerland,
Inc. was substantially less than the recorded value of the Exchangeable
Preferred Stock, the transaction resulted in a nonrecurring, noncash gain of
approximately $17 million, net of the estimated fair value of the Convertible
Preferred Stock issued.
Each share of Convertible Preferred Stock is initially convertible, at the
option of the holder, into two shares of Class A Common Stock, subject to
adjustment in certain circumstances. The Convertible Preferred Stock has a
liquidation value of $6.50 per share and accrues cumulative dividends at the
rate of 6% of the liquidation value per annum. The Company may pay such
dividends in cash or in additional shares of Convertible Preferred Stock, as
defined by the agreement.
(See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Financial Condition" and Note 2 of Notes to Consolidated
Financial Statements).
Narrative Description of Business
General
The Company designs and manufactures an extensive line of fine jewelry
which it markets on a wholesale basis throughout the U.S., and to a lesser
extent, in the international jewelry market. Its products include 10, 14, and
18-karat gold rings, earrings, pendants, and bracelets, many of which are set
with precious and semi-precious stones. The Company also manufactures scholastic
and sports specialty products.
Town & Country Corporation (Headquartered in Chelsea, Massachusetts)
|
-----------------------------------------------------------------------
| | | | |
Town & Country Gold Lance, L.G. Balfour Anju Jewelry Essex
Fine Jewelry Inc. Company, Inc. Limited International
Group, Inc. (Houston, TX) (North Attleboro, (Hong Kong) Public Company
(Chelsea, MA) MA) Limited
(Bangkok,
Thailand)
The Company has manufacturing facilities located in Massachusetts, New
York, Texas, Kentucky, and in Thailand. These facilities are located close to
available labor forces and suppliers of necessary raw materials.
Production Methods
The Company utilizes a variety of production methods to produce jewelry.
Principal among these is the "lost wax" method of investment casting. This
manufacturing operation originates with a hand designed original which is then
taken through a reverse molding procedure to create a mold. The mold is infused
with wax, and a series of such wax pieces are then surrounded with plaster of
Paris. The plaster of Paris is placed in a furnace where the wax is eliminated
by subjecting the plaster to high temperatures. Molten gold is then poured into
the areas from which the wax has been eliminated and a rough gold piece is
removed after cooling. The piece produced through the investment casting method
may then be ground, polished, and set with stones.
One of the other production methods used is die striking. This process
begins by tooling a master hub (male impression) from an original design. The
hub is used to create dies (female impression) for machine stamping. Additional
tools are created to trim and shape the final product. Gold or base metal is
struck in hydraulic presses or with pneumatic drop hammers in multiple steps
with alternating annealing steps. The product is then trimmed and rounded.
Stamping dies are custom produced by computer-aided tool cutting machines or are
hand crafted. The rough, stamped pieces are polished and finished. Precious,
semi-precious, or synthetic stones may be set in the individual pieces.
In addition, the Company utilizes the carbide, or swiss-cutting,
manufacturing operation. This method uses ring blanks of various widths and
dimensions which have been cut from tubes of karat gold in a lathing process.
The blanks are then placed on a cutting machine which is set up to cut designs
into the ring using diamond tipped or carbide tipped tools.
Photo-etching technology is used to manufacture precious metal charms and
earrings. The process consists of several stages. First, a graphic image of a
charm or earring is transferred to a photographic tool and is replicated by
computer control in an optimum layout. The tool is then placed on a thin metal
plate and passed through an exposure unit which photographically transfers the
images from the tool onto that plate. Next, the metal plate passes by conveyer
through an etching solution where a chemical milling of the exposed surfaces
takes place. Finally, the etched pieces from the plate are cleaned, shaped, and
polished.
The Company uses foil stamping and embossing, offset printing, die stamp
and engraving presses, and laser technology in the manufacture of graduation
announcements, diplomas, certificates, and other printed products.
Marketing
There are numerous channels of distribution for fine jewelry, including
jewelry stores (ranging from the independent store with one location to the
large national chains), department stores, catalogue showrooms, warehouse clubs,
and home shopping networks. The Company distributes its products through all of
these channels.
As part of its marketing program, the Company provides a variety of
customer support services designed to meet the varying needs of customers. For
some customers, the Company designs product lines and develops total
merchandising programs including displays and advertising to market these lines.
The Company's sales staff provides quick reaction to customer pricing and design
requirements. The Company utilizes computerized data bases and electronic data
interfaces which assist these customers by providing information that may be
used in marketing, merchandising, and inventory management. For the independent
retail jewelers, the Company has designed promotional flyer programs through
which marketing and merchandising support pertaining to a select group of
products at specific price ranges is provided.
An increasing portion of retail sales in the fine jewelry industry is being
made through discount department stores, warehouse clubs and television shopping
networks. These customers are particularly interested in unique designs, volume
production, price and credit terms.
<PAGE>
The Fine Jewelry Group has a single product development organization built
around product category specialists. Each product category is analyzed so that
each category is limited to items providing the maximum return to the Company
and its customers. Utilizing this structure, the Company believes it is able to
be more responsive to trends in the marketplace.
Gold Lance and Balfour are engaged in the production and distribution of
high school and college class rings on a made-to-order basis. Gold Lance
distributes through retail jewelry stores, while Balfour markets directly to
students on campus and at campus book stores. Each customer may choose from a
wide variety of options. These selling methods enable Gold Lance and Balfour to
maintain low levels of inventory in these product lines. Gold Lance and Balfour
have libraries of reusable tools and dies, allowing them to offer a large
selection of styles, including fashion-oriented class rings with intricate
designs.
In conjunction with its school ring sales, Balfour also offers a variety of
graphics products, including graduation announcements, diplomas, and memory
books, and novelty items, such as T-shirts, key chains, and pendants.
Balfour markets licensed products, particularly rings and jewelry licensed
by the major professional sports organizations. Customized rings, insignia pins,
and novelty items are also marketed to associations and organizations.
The Company also markets directly from its Bangkok facility where wholesale
buyers are able to select and direct order jewelry from the Company. The
Company's products are also sold internationally by the Company's marketing
groups and are exhibited at the major international jewelry trade fairs.
As of April 8, 1995, the Company had approximately $30 million of orders
believed to be firm, as compared to approximately $26 million at a corresponding
date last year. The Company believes that all of these orders will be filled
during fiscal 1996. The Company believes that comparative open order information
is not necessarily indicative of comparative results due to the high level of
timing sensitivity in the fine jewelry business which depends significantly on
orders from large retailers.
Competition
The Company competes with both domestic and foreign jewelry suppliers,
ranging in size from small regional suppliers to those which have national
distribution capabilities. The principal competitive factors are price, quality,
design, and customer service. Management believes that the Company has a
reputation for providing extensive customer services and delivering a quality
product line with broad customer appeal. The Company tries to achieve relative
cost savings as a result of the large volume of its purchases of diamonds and
stones.
<PAGE>
The Company historically has competed in all of the channels of
distribution across its price range and is therefore competing directly with the
specialists in each distribution category. It has been most successful with
retail jewelry stores and the department and discount store chains which are
also buying the numerous marketing and credit related support services of the
Company.
The Company also competes in the class ring industry which is dominated by
a small number of companies. The industry is made up of two components, the
"in-school" component in which ring orders are taken at the school by the
suppliers, and the "retail" component in which local jewelry stores display
samples and take orders. Historically, the "in-school" component of this
industry has been heavily influenced by the school representative/sales person
relationship. Factors which affect the strength of this relationship include
delivery time, price, quality, design, and customer service. Class ring sales
are affected by student demographics and economic conditions. Management
believes that the Company currently is competitive with other distributors with
regard to the factors listed above. Management believes that Jostens and CJC
Holdings, Inc. combined currently represent a majority market share of this
industry.
Management believes that Balfour's name recognition and association with
the class ring business and championship team rings gives it a competitive
advantage in the direct marketing of graphics products, such as diplomas,
graduation announcements, and accessories, and also, general sports insignia
products including those with professional team logos.
Seasonality
The Company is impacted by the seasonal demands of its customers. A
significant portion of sales in the fine jewelry industry is concentrated in the
fall in anticipation of the holiday season. Balfour is also impacted by
fluctuations in connection with the scholastic year. Accordingly, the Company's
operating results, and working capital requirements fluctuate considerably
during the year.
<PAGE>
The following chart sets forth unaudited quarterly data for fiscal 1995 and
fiscal 1994.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
Ended Ended Ended Ended
Fiscal 1995 May 29, August 28, November 27, February 26,
<S> <C> <C> <C> <C>
Net sales $ 70,568,460 $ 54,799,928 $ 96,719,682 $ 66,026,538
Gross profit 24,619,290 14,736,513 28,831,858 19,393,057
Net income (loss) (2,477,963) (7,169,427) 16,424,043 (6,204,735)
Income (loss)
attributable to
common stock-
holders (2,945,159) (7,648,979) 15,944,492 (6,466,455)
Net income (loss)
per common share $ (0.13) $ (0.33) $ 0.68 $ (0.28)
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
Ended Ended Ended Ended
Fiscal 1994 May 30, August 29, November 28, February 27,
<S> <C> <C> <C> <C>
Net sales $ 64,125,732 $ 51,063,035 $ 94,346,432 $ 68,214,963
Gross profit 24,650,765 16,370,841 31,632,391 24,739,873
Net income (loss) (498,954) (3,090,822) 5,906,260 821,072
Income (loss)
attributable to
common stock-
holders (574,958) (3,545,972) 5,451,106 353,869
Net income (loss)
per common share $ (0.04) $ (0.15) $ 0.23 $ 0.02
</TABLE>
Significant Customer
The Company's largest customer for a number of years has been the Zale
Corporation and its affiliated companies. Sales to Zale were approximately $29
million or 10% of consolidated sales in fiscal 1995 compared to $33 million or
12% of consolidated sales in fiscal 1994 and $38 million or 14% of consolidated
sales in fiscal 1993. The loss of Zale as a customer of the Company or a
substantial reduction in the amount of sales to Zale would have a material
adverse effect on the Company.
<PAGE>
Raw Materials
The principal raw materials purchased by the Company are gold and precious
and semi-precious stones. The Company currently takes delivery of most of its
gold through consignment programs. As the gold selling price for orders is
confirmed, the Company purchases the gold requirements at the then current
market prices. This technique enables the Company to match the price it pays for
gold with the price it charges its customers. The Company's gold agreements
require that the Company own gold under certain circumstances and it is possible
for this required ownership to exceed the Company's hedging requirements and
expose the Company to gold fluctuations. The Company pays a fee, which is
subject to periodic change, for the value of the gold held by it as a consignee
during the period prior to sale. The Company has consignment arrangements in
place with a group of suppliers of gold which provide for carrying on
consignment up to approximately 73,000 troy ounces.
Colored precious and semi-precious stones are purchased by the Company
mainly in Asia and Europe. Diamonds are purchased principally at major diamond
markets throughout the world, including Bombay, Tel Aviv, Antwerp, and New York.
The Company is not dependent on one supplier or a small number of suppliers for
the purchases of these raw materials. Availability and cost of these materials
are affected by market conditions and, when there is a period of volatility in
the market, operating results may be affected.
Employees
The Company employs, on average, 2,400 persons, with approximately 24% of
these persons located in the Far East. The number of employees from quarter to
quarter may vary significantly because of the seasonality of the Company's
business. See "Narrative Description of Business--Seasonality." Of these 2,400
employees, approximately 700 are involved with selling and administrative
functions of the Company, and the remainder are involved in the manufacturing
functions of the Company.
The Feature division has had collective bargaining contracts covering its
manufacturing employees, who are represented by the Service Employees
International Union, Jewelry Workers Division. As a result of the restructuring
of the Fine Jewelry Group, most manufacturing functions of Feature were moved to
the Company's headquarters in Massachusetts. As a consequence of this
restructuring, the number of Feature employees has been reduced to approximately
39, of which 21 are covered by collective bargaining contracts. As a result of
the merger, the union contracts were assumed by Fine Jewelry Group.
The Company considers relations with its employees to be satisfactory.
Management does not believe the Company would experience any significant
difficulties in hiring or training additional employees at any of its
facilities.
<PAGE>
Industry Practices
In the jewelry industry, traditionally the wholesaler has provided
considerable working capital in the form of credit terms, inventory stocking,
consignment transactions, and transactions with a right of return. The Company
has historically provided this working capital, but in today's retail and
banking environment, has become more selective in its commitment of resources.
The Company is scrutinizing customer credit- worthiness more closely and, as a
result, is restricting customer credit and requires security before providing
consignment inventory. The Company also is restricting the availability of
consigned merchandise to items that are actively promoted by the customer.
Trademarks and Copyrights
While the Company maintains certain trademarks and copyrights on product
styles and business names and enforces its rights relative to those trademarks
and copyrights, these are not economically material to the Company and while the
Company has licensing agreements with certain major professional sports
organizations, the Company believes that it has no franchises or licenses which
are of a material nature to the Company.
Financial Information about Foreign and Domestic Operations and Export Sales
For information on foreign and domestic operations, see Note 16,
"Consolidating Financial Information and Segment Information," in Notes to
Consolidated Financial Statements.
Item 2. Properties
The Company occupies facilities in the United States and the Far East as
described below. (1)
<TABLE>
<CAPTION>
Square
Location Use Footage Ownership
<S> <C> <C> <C>
Chelsea, Massachusetts Executive and administrative
offices, manufacturing, marketing,
and distribution facility. 94,000 Leased/Owned
Dallas, Texas Administrative offices, marketing,
and distribution facility. 23,000 Leased
New York, New York (2) Administrative offices, product
development, marketing, and
distribution facility. 91,000 Owned
Attleboro, Massachusetts Manufacturing and distribution
facility. 56,350 Owned
North Attleboro, Massachusetts Administrative offices, manufacturing,
marketing, and distribution facility. 105,000 Leased
Louisville, Kentucky Manufacturing and distribution facility. 42,000 Owned
Dallas, Texas Manufacturing and distribution facility. 55,000 Leased/Owned
Houston, Texas Administrative offices, manufacturing,
marketing, and distribution facility. 31,000 Owned
Hong Kong Administrative offices, product
development, purchasing, and quality
control facility. 9,000 Leased
Bangkok, Thailand Administrative offices, manufacturing,
marketing, and distribution facility. 36,000 Leased/Owned
Chiang Mai, Thailand Manufacturing facility. 7,000 Leased
</TABLE>
(1) The Company's interests in these properties are security for loans made
by the Company's lenders. See Note 2 of Notes to Consolidated Financial
Statements.
(2) The New York City Industrial Development agency has the first security
position in this property. See Note 2 of Notes to Consolidated Financial
Statements.
The fine jewelry manufacturing and distribution business is seasonal.
Historically, the Company's facilities operate in excess of full capacity during
the peak demand part of the season and are underutilized during the slower
portions of the season (See "Narrative Description of Business--Seasonality").
Additional capacity requirements are satisfied utilizing outside contractors and
seasonal staffing is adjusted accordingly. The school ring business is also
seasonal and its factories are impacted similarly, but the total and peak
demands on the school ring business are not sufficient to stress the capacity
constraints at any time. The Company has recently consolidated manufacturing
facilities to achieve higher average utilization rates and will increase the
amount of its outsourcing as necessary.
During fiscal 1995, the Company leased a portion of its Chelsea,
Massachusetts facility (approximately 44,000 square feet of combined
manufacturing and administrative space) from Carey Realty Trust, a Massachusetts
business trust, which is wholly owned by C. William Carey, the Chairman,
President, and a major stockholder of the Company. The lease expires on August
31, 1998, and the Company has four five-year options to renew. The current lease
provides for an annual rental payment (subject to a Consumer Price Index
adjustment) on a net lease basis of $475,000. The Company obtained comparison
information from a third party when negotiating the current lease and believes
that these lease arrangements are on terms no less favorable to the Company than
could be obtained from unaffiliated third parties.
Management believes that all its facilities are well maintained, in good
condition and adequate for its present business.
Item 3. Legal Proceedings
The Company is not party to any pending legal proceedings, other than
ordinary routine litigation incidental to the business. In the opinion of
management, adverse decisions on those legal proceedings, in the aggregate,
would not have a materially adverse impact on the Company's business or
financial condition.
It is the Company's current understanding that companies which may be
considered predecessors to Balfour have been designated potentially responsible
parties by the Environmental Protection Agency ("EPA") under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 with respect to
cleanup of hazardous waste in four cases. One of the parties that may be
considered such a predecessor (the "1983 Owner") has, to date, assumed
responsibility for all of these cases in accordance with understandings the 1983
Owner has reached with the party who bought the assets of the predecessor
Balfour Company in 1983 (the "1988 Owner"). In the first of these cases, it is
the Company's understanding that the predecessor 1983 Owner is participating in
the cleanup and has provided financial assurance that it will pay its expected
share of the cleanup expenses (which are currently estimated to be under
$200,000). In the other three cases, it is the Company's understanding that the
1983 Owner has settled its liability as a de minimis waste contributor in each
case and has been given comprehensive releases from further liability for
cleanup costs. The Company acquired the stock of Balfour from the 1988 Owner and
believes that it did not assume responsibility for these cases as a result of
this acquisition. Since its acquisition of Balfour in 1988, the Company has
never paid any amounts with respect to any of these matters and there are no
outstanding claims against the Company or Balfour with respect to any of these
matters. While it is possible that a person or agency could claim that Balfour
as a successor to the 1983 Owner is jointly and severally liable for the cost of
the entire cleanup in these cases, the Company believes that such a claim would
have no merit and would vigorously defend and contest any such claim. Because of
the assumption of responsibility for these cases by the 1983 Owner and the small
waste shares attributed to the 1983 Owner, Management believes that it is
unlikely that the Company will suffer material liability in connection with
these cases.
Item 4. Submission of Matters to a Vote of Security-Holders
There were no matters submitted to a vote of security-holders during the
fourth quarter of fiscal 1995.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company's Class A Common Stock is traded on the American Stock Exchange
(the "AMEX") under the symbol TNC. Set forth below are the high and low sales
prices for the shares of Class A Common Stock as reported by the AMEX.
Class A Common
Stock Price Range
Fiscal Year Ended High Low
February 27, 1994:
First Quarter 3 7/8 2 3/16
Second Quarter 3 3/8 2 1/2
Third Quarter 3 1/8 2 1/2
Fourth Quarter 3 9/16 2 1/2
February 26, 1995:
First Quarter 3 3/8 2 3/8
Second Quarter 2 7/8 2
Third Quarter 2 7/16 7/8
Fourth Quarter 1 9/16
There is no established public trading market in effect at this time for
the Class B Common Stock. Shares of Class B Common Stock, however, are
convertible on a share for share basis into shares of Class A Common Stock.
On May 15, 1995, there were 1,006 holders of record of Class A Common Stock
and 29 holders of record of the Class B Common Stock. The Company's present
policy is to reinvest its earnings in the business. No cash dividends have been
paid during the last two fiscal years, and the Company has no intention to pay
cash dividends in the foreseeable future.
The Company's ability to pay cash dividends is limited by its financing
agreements and other outstanding indebtedness. As a result of these
restrictions, the Company currently may not pay cash dividends.
Item 6. Selected Financial Data
The following table presents certain selected consolidated financial data
of the Company. The information for each of the five years in the period ended
February 26, 1995, has been derived from consolidated financial statements
audited by Arthur Andersen LLP, independent public accountants.
Statement of Operations Data:
<TABLE>
Fiscal Year Ended
(In thousands, except per share data)
<CAPTION>
Feb. 26, Feb. 27, Feb. 28, Feb. 29, Feb. 28,
1995 1994 1993 (1) 1992 (2) 1991
<S> <C> <C> <C> <C> <C>
Net sales $ 288,115 $ 277,750 $ 270,364 $ 272,194 $ 410,402
Net income (loss) 572 3,138 (47,296) (19,018) 1,249
Earnings (loss)
per common
share: (0.05) 0.08 (3.80) (1.58) 0.10
</TABLE>
<TABLE>
Balance Sheet Data:
Fiscal Year Ended
(In thousands)
<CAPTION>
Feb. 26, Feb. 27, Feb. 28, Feb. 29, Feb. 28,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Total assets $ 206,623 $ 223,921 $ 246,858 $ 262,288 $ 397,804
Senior debt 15,128 22,022 35,688 6,424 87,676
Subordinated debt 77,545 71,285 120,285 119,496 121,277
Exchangeable
preferred stock 2,266 35,785 - - -
Stockholders' equity 59,835 55,334 24,744 70,709 89,456
</TABLE>
(1) In fiscal 1993, the Company recorded a restructuring charge related to
its New York facility of $5 million, a charge related to the disposal of certain
Balfour assets of approximately $14.5 million, and expenses associated with
recapitalizing the Company of approximately $14.4 million. See Notes 2 and 7 of
Notes to Consolidated Financial Statements.
(2) In fiscal 1992, the Company recorded restructuring and Zale bankruptcy
charges of $44 million and net gains from nonrecurring items of $51 million. See
Note 8 of Notes to Consolidated Financial Statements.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Fiscal 1995 Compared to Fiscal 1994
On November 23, 1994, holders of approximately 94% of the Company's
Exchangeable Preferred Stock exchanged on a share-for-share basis their shares
for shares of Little Switzerland, Inc. Common Stock held by the Company. Such an
exchange was provided for by the terms of the Exchangeable Preferred Stock. In
addition, the Company issued to each participant one share of new Convertible
Preferred Stock with each share of Little Switzerland, Inc. Common Stock.
Since the carrying value of the Company's investment in Little Switzerland,
Inc. was substantially less than the recorded value of the Exchangeable
Preferred Stock, the transaction resulted in a nonrecurring, noncash gain of
approximately $17 million, net of the estimated fair value of the Convertible
Preferred Stock issued.
Net sales for the fiscal year ended February 26, 1995, increased
approximately $10 million, or 4%, from approximately $278 million in fiscal 1994
to approximately $288 million in fiscal 1995. Sales of fine jewelry increased
approximately $19 million, or 11%, from approximately $177 million in fiscal
1994 to approximately $196 million in fiscal 1995. This increase was achieved
despite a decline in sales to Zale of approximately $4 million, or 12%, from $33
million in fiscal 1994 to $29 million in fiscal 1995. The sales increase is
generally attributable to increased volume rather than increased prices. Sales
for the Company's direct response distribution business of licensed sports and
other specialty products have decreased approximately $10 million, or 37%, from
$27 million in fiscal 1994 to $17 million in fiscal 1995. The Company expects to
further scale back its direct response distribution business in fiscal 1996.
<PAGE>
Gross profit for the fiscal year ended February 26, 1995, decreased
approximately $10 million, or 10%, from $97 million in fiscal 1994 to $87
million in fiscal 1995. Gross profit margin declined from 35% for the fiscal
year ended February 27, 1994, to 30% for the fiscal year ended February 26,
1995. The Company's sales increase has been primarily in the lower margin fine
jewelry product categories. In order to better manage and control inventory, the
Company has also sold, or made provisions to sell, inventory in excess of
current requirements, at less than normal margins. This product mix change and
these sales and provisions negatively impacted margin by approximately 3%.
Production requirements for direct response and other specialty products were
lower this year than last year, resulting in under absorbed fixed overhead which
impacted margin by approximately 2%.
Selling, general and administrative expenses ("SG&A") for fiscal 1995
increased approximately $10 million, or 13%, from $80 million in fiscal 1994 to
$90 million in fiscal 1995. As a percentage of net sales, SG&A expenses
increased from 29% in fiscal 1994 to 31% in fiscal 1995. This increase relates,
primarily, to higher costs, particularly for advertising, associated with the
Company's marketing, through direct response, of merchandise manufactured under
licenses from professional sports organizations. This accelerated advertising
effort did not generate sales of these products at the rate anticipated.
Provision for higher than anticipated uncollectible accounts also contributed to
the increase in SG&A as a percentage of sales. The Company anticipates that SG&A
expenses associated with its direct response business of licensed sports and
other specialty products will decline in fiscal 1996 due to the Company's
intentions to scale back its direct response distribution business.
Interest expense for the fiscal year ended February 26, 1995, declined
approximately $2 million from $14 million in fiscal 1994 to $12 million in
fiscal 1995. The weighted average interest rate on overall borrowings was
approximately 11.08% for fiscal 1995 versus 11.24% for fiscal 1994. Average
borrowings for the fiscal year ended February 26, 1995, declined approximately
$15 million from approximately $125 million in fiscal 1994 to approximately $110
million in fiscal 1995. See Note 2 of Notes to Consolidated Financial
Statements.
The Company has recorded a tax provision for fiscal 1995 of approximately
$1.7 million compared with a provision of $1.5 million in fiscal 1994. These tax
provisions are primarily due to state and foreign income taxes.
Fiscal 1994 Compared to Fiscal 1993
Net sales for the fiscal year ended February 27, 1994, increased
approximately $8 million or 3% from approximately $270 million in fiscal 1993 to
approximately $278 million in fiscal 1994. Sales of fine jewelry increased
approximately $8 million or 5%, from approximately $169 million in fiscal 1993
to approximately $177 million in fiscal 1994. This increase was achieved despite
a decline in sales to Zale of approximately $5 million or 13% from $38 million
in fiscal 1993 to $33 million in fiscal 1994. The sales increase is attributable
to increased volume rather than increased prices. Product costs have remained
relatively stable while competitive pressure on margin has continued to
intensify.
<PAGE>
Gross profit for the fiscal year ended February 27, 1994, increased
approximately $6 million, or 7%, from $91 million in fiscal 1993 to $97 million
in fiscal 1994. Gross profit margin improved from 33% for the fiscal year ended
February 28, 1993, to 35% for the fiscal year ended February 27, 1994. Benefits
from elimination of low-margin recognition products and entry into higher-margin
sports specialty marketing were offset to some extent by continuing margin
pressure in the fine jewelry business. Gross profit also benefited from the $1.3
million liquidation of the Company's remaining LIFO based inventory.
Selling, general and administrative expenses for fiscal 1994 declined
approximately $5 million, or 6%, from $85 million in fiscal 1993 to $80 million
in fiscal 1994. As a percentage of net sales, selling, general and
administrative expenses declined from 32% in fiscal 1993 to 29% in fiscal 1994.
This decline results from consolidations related to the restructuring of the
fine jewelry business.
Interest expense for the fiscal year ended February 27, 1994, declined
approximately $6 million from $20 million in fiscal 1993 to $14 million in
fiscal 1994. The weighted average interest rate was approximately 11.24% for
fiscal 1994 versus 12.3% for fiscal 1993. Average borrowings for the fiscal year
ended February 27, 1994, declined approximately $38 million from approximately
$163 million in fiscal 1993 to approximately $125 million in fiscal 1994 due to
the recapitalization completed on May 14, 1993. See Note 2 of Notes to
Consolidated Financial Statements.
During the fiscal year ended February 27, 1994, the Company had equity
income of approximately $1.1 million from its ownership of Little Switzerland,
Inc. stock and approximately $156,000 from its ownership of Solomon Brothers,
Limited stock. This compares to approximately $1.9 million and approximately
$800,000, respectively, for the same period in fiscal 1993. Both companies are
dependent, to different extents, on tourist travel and spending patterns. The
general level of tourist activity has not met expectations, and the commitments
for inventory and overhead have negatively impacted Little Switzerland, Inc.'s
and Solomon Brothers, Limited's results of operations.
The Company has recorded a tax provision for fiscal 1994 of approximately
$1 million. The tax provision was primarily due to state and foreign income
taxes.
Fiscal 1993 Compared to Fiscal 1992
Net sales for the fiscal year ended February 28, 1993, declined
approximately $2 million or .7% from approximately $272 million in fiscal 1992
to approximately $270 million in fiscal 1993. Sales of fine jewelry increased
approximately $6 million, or 4%, from approximately $163 million in fiscal 1992
to approximately $169 million in fiscal 1993. This increase was achieved despite
a decline in sales to Zale of approximately $6 million, or 14%, from $44 million
in fiscal 1992 to $38 million in fiscal 1993. The increase in sales in fine
jewelry reflects the results of the reorganization that merged the sales and
marketing areas of Town & Country, Feature, and Verilyte and provided the
framework for more focused and creative product development and aggressive sales
activity. Sales of education and recognition products were down approximately $8
million, or 7%, from $109 million in fiscal 1992 to $101
<PAGE>
million in fiscal 1993. As a result of the economic climate, many of the
Company's corporate customers were forced to reduce work forces through cutbacks
and attrition, thereby lowering the number of employee award recipients.
Gross profit for the fiscal year ended February 28, 1993, increased
approximately $4 million or 5% from $87 million in fiscal 1992 to $91 million in
fiscal 1993. Gross profit margin improved from 32% for the fiscal year ended
February 29, 1992 to 33% for the fiscal year ended February 28, 1993. This
improvement was primarily the result of efficiencies and cost reductions in the
fine jewelry business produced by the operational restructuring.
Selling, general and administrative expenses for fiscal 1993 declined
approximately $7 million or 8% from $92 million in fiscal 1992 to $85 million in
fiscal 1993. As a percentage of net sales, selling, general and administrative
expenses declined from 34% in fiscal 1992 to 32% in fiscal 1993. This decline
was primarily a result of reductions relating to the restructuring of the fine
jewelry business.
Interest expense for the fiscal year ended February 28, 1993, declined
approximately $5 million from $25 million in fiscal 1992 to $20 million in
fiscal 1993. The weighted average interest rate was approximately 12.3% for the
fiscal year ended February 28, 1993, as compared to approximately 11.7% for the
same period in fiscal 1992. Average borrowings for the fiscal year ended
February 28, 1993, declined approximately $52 million from approximately $215
million in fiscal 1992 to approximately $163 million in fiscal 1993.
Interest income for the fiscal year ended February 28, 1993, declined from
approximately $3.3 million in fiscal 1992 to approximately $680,000 in fiscal
1993 as a result of lower amounts of funds being held in interest bearing
accounts.
During the fiscal year ended February 28, 1993, the Company had equity
income of approximately $1.9 million from its ownership of Little Switzerland,
Inc. stock and approximately $800,000 from its ownership of Solomon Brothers,
Limited stock. This compares to approximately $3.4 million and approximately
$1.0 million, respectively, for the same period in fiscal 1992. The reduction in
equity income from Little Switzerland, Inc. was the result of the Company owning
100% of Little Switzerland, Inc. for the first five months of fiscal 1992
compared with approximately 32% for all of fiscal 1993.
During fiscal 1993, the Company recorded approximately $34 million of
nonrecurring charges related to recapitalizing and restructuring the business.
Approximately $5 million of this charge related to the Company's New York
facility, approximately $14.5 million related to the disposal of certain assets
at Balfour, and $14.4 million related to expenses associated with the Company's
recapitalization. (See Notes 2 and 7 of Notes to Consolidated Financial
Statements.)
Although the Company had a pretax loss of approximately $46 million for the
fiscal year ended February 28, 1993, the Company recorded a tax provision of
approximately $1 million. The tax provision was primarily due to the Company's
inability to fully recognize the tax benefits of operating losses in certain
jurisdictions as well as state and foreign income taxes.
<PAGE>
Zale Bankruptcy
The Company's largest customer for a number of years has been the Zale
Corporation and its affiliated companies.
The Company's Consolidated Financial Statements at February 28, 1992,
originally reflected a net valuation, related to Zale Corporation's bankruptcy
filing under Chapter 11 of the United States Bankruptcy Code, of approximately
$13 million, which was classified as Other Assets in the Consolidated Balance
Sheets, due to the uncertainty of the timing of a final settlement. The Company
has subsequently received proceeds from Zale and from liquidation of claim
assets of approximately $13 million and will recognize the benefit of any
additional liquidation of assets as that benefit is realized.
The Company continues to conduct business with Zale.
Liquidity
Cash used in operations during fiscal 1995 was approximately $1 million
compared with cash provided of approximately $18 million in fiscal 1994. This
change is essentially equivalent to the change in operating performance from
year to year. This use also reflects an $8 million interest benefit as a result
of making interest payments with the issuance of additional debt.
Cash flow from operations included proceeds from the Zale bankruptcy claim
of approximately $6 million. The Company is required to escrow net proceeds from
the Zale bankruptcy claim and Solomon investment for repayment of Senior Secured
Notes. During fiscal 1995, approximately $6 million of Senior Secured Notes were
redeemed with such proceeds.
Cash used for fixed asset acquisitions resulted in a use of investing cash
of approximately $3 million.
The Company's operations are primarily funded through its revolving credit
facility which was a net source of cash of approximately $11 million in fiscal
1995. These funds were used to make required debt payments of $2 million as well
as to meet the Company's operating and investing cash requirements.
On March 29, 1994, and March 20, 1995, as required by the covenants of its
Senior Secured Notes, the Company gave written notice to Solomon Brothers,
Limited of the Company's intention to redeem 70,000 and 55,000 of its shares of
nonvoting redeemable cumulative participating preferred Class B stock,
respectively. Solomon Brothers, Limited informed the Company that it would not
be able to redeem the 70,000 share request when due as a result of constraints
imposed by its banking facilities. It is doubtful that Solomon Brothers, Limited
will be able to make the 55,000 share redemption payment in a timely manner. The
Company currently believes that Solomon Brothers, Limited will be able to meet
its obligation and that the Company's investment is realizable, but it is unable
to estimate the
<PAGE>
timing of future redemption payments. The Company is monitoring Solomon
Brothers, Limited's operations and financial position and if it determines in
the future that carrying value is no longer reflective of fair value,
appropriate adjustments will be made.
Financial Condition
The Company completed a recapitalization on May 14, 1993. The
recapitalization revised the Company's consolidated capitalization, including
debt structure. The amount of debt outstanding was reduced and a significant
portion of old subordinated debt was exchanged for new debt and shares of Class
A Common Stock and Exchangeable Preferred Stock.
The Company obtained a revolving credit agreement from Foothill Capital
Corporation to provide secured financing in an aggregate amount of up to $30
million, which currently has a seasonal increase up to $35 million,
(approximately $11 million outstanding at February 26, 1995), and gold
consignment agreements from the Company's existing gold suppliers which
currently provide an aggregate gold consignment availability of up to
approximately 73,000 troy ounces (approximately 67,000 troy ounces outstanding
at February 26, 1995). As a result of ongoing discussions with its gold
suppliers, the Company has agreed in principle to reduce its domestic gold
facilities by 6,000 troy ounces, from 73,000 troy ounces to 67,000 troy ounces.
It is currently anticipated that these reductions will be made in several steps
throughout fiscal 1996 and will be primarily as a result of reduced operational
requirements. In connection with these anticipated reductions, the Company also
expects some modifications to be made to the financial covenants in the gold
consignment agreements with its gold suppliers. The Company believes that it can
meet its working capital needs over the next year through cash flow from
operations and the use of these facilities. (See Note 2 of Notes to Consolidated
Financial Statements.)
The Company sold $30 million of its 11 1/2% Senior Secured Notes due
September 15, 1997. At February 26, 1995, approximately $14 million was
outstanding.
Agreements were reached with Chemical Bank, to change the terms of the IRB
financing for the Company's facility located in New York, New York. The new
terms include, among other things, an accelerated payment schedule relative to
that which had previously been in place and the release of certain collateral by
Chemical Bank. At February 26, 1995, approximately $500,000 principal balance
remains outstanding. On April 3, 1995, approximately $181,000 of this obligation
was repaid and the remainder was purchased by Foothill Capital Corporation and
will be repaid over the next five years.
The Company issued approximately $61.5 million, including unamortized
premium of approximately $8 million, of 13% Senior Subordinated Notes, due May
31, 1998, approximately $34.3 million of Exchangeable Preferred Stock, par value
$1.00, and approximately 10 million shares of Class A Common stock valued at
approximately $26.9 million. These securities were issued in exchange for
approximately 93% of the Company's 13% Senior Subordinated Notes due December
15, 1998, and approximately 98% of the Company's 10 1/4% Subordinated Noes due
July 1, 1995. The total carrying value retired, including deferred financing
costs, was approximately $122.7 million.
The 13% Senior Subordinated Notes, due May 31, 1998, were issued with terms
providing for the Company's right to issue additional notes in lieu of the first
four semiannual interest payments. As of February 26, 1995, the Company had
exercised this right and had paid by the issuance of new notes approximately
$3.5 million, $3.7 million, and $3.9 million related to the first three required
semiannual interest payments. Therefore, the carrying value of the notes,
including unamortized premium of approximately $5.6 million, is approximately
$70.2 million. Subsequent to year-end, the Company used its final PIK to make
the fourth semiannual interest payment due May 13, 1995, with approximately $4.2
million of additional notes. The Company will be required to make the $4.5
million interest payment due November 13, 1995, in cash. The Company believes
that it will have availability under its working capital facilities to make this
payment when it becomes due.
On November 23, 1994, holders of approximately 94% of the Company's
Exchangeable Preferred Stock exchanged their shares for shares of Little
Switzerland, Inc. Common Stock held by the Company on a share-for-share basis.
Such an exchange was provided for by the terms of the Exchangeable Preferred
Stock. In addition, the Company issued to each participant one share of new
Convertible Preferred Stock with each share of Little Switzerland, Inc. Common
Stock. The Company retains an investment in Little Switzerland, Inc. equal to
approximately 4% of the outstanding shares.
Since the carrying value of the Company's investment in Little Switzerland,
Inc. (approximately $12.2 million) was substantially less than the recorded
value of the Exchangeable Preferred Stock (approximately $35.0 million), the
transaction resulted in a nonrecurring, noncash gain of approximately $17.3
million, net of the estimated fair value of the Convertible Preferred Stock
issued (approximately $5.5 million).
Each share of Convertible Preferred Stock is initially convertible, at the
option of the holder, into two shares of Class A Common Stock, subject to
adjustment in certain circumstances. The Convertible Preferred Stock has a
liquidation value of $6.50 per share and accrues cumulative dividends at the
rate of 6% of the liquidation value per annum. The Company may pay such
dividends in cash or in additional shares of Convertible Preferred Stock, as
defined by the agreement.
(See Note 2 of Notes to Consolidated Financial Statements).
Inflation
The Company's operating expenses are directly affected by inflation,
resulting in an increased cost of doing business. Because the cost of sales
depends on the price of raw materials bought in markets located throughout the
world, the Company is influenced by inflation on an international basis. In
addition, gold prices are affected by political factors, by changing perceptions
of the value of gold relative to currencies and by inflationary pressures.
<PAGE>
The Company believes that inflation does not currently have a material
effect on the Company's operating expenses, although current rates of inflation
are not necessarily indicative of future effects of inflation on the Company,
and thus, inflation could have a material effect on the Company's operating
expenses in the future.
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements of Town & Country
Corporation and subsidiaries are included as part of this Form 10-K:
Report of Independent Public Accountants F-3
Consolidated Balance Sheets - February 26, 1995
and February 27, 1994 F-4
Consolidated Statements of Operations - Years
Ended February 26, 1995, February 27, 1994,
and February 28, 1993 F-6
Consolidated Statements of Stockholders' Equity -
Years Ended February 26, 1995, February 27, 1994,
and February 28, 1993 F-7
Consolidated Statements of Cash Flows - Years
Ended February 26, 1995, February 27, 1994,
and February 28, 1993 F-9
Notes to Consolidated Financial Statements F-11
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning the age and principal occupation of each director
and executive officer is set forth under the captions "Election of Directors,"
"Executive Officers," and "Executive Compensation" in the Proxy Statement and is
incorporated herein by reference.
Item 11. Executive Compensation
Information concerning compensation of directors and executive officers of
the Registrant is set forth under the captions "Board Meetings, Committees,
Attendance and Fees," "Executive Officers," and "Executive Compensation" in the
Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security ownership of executive officers and directors is set forth under
the caption "Election of Directors" and "Security Ownership of Principal
Stockholders and Management" in the Proxy Statement and is incorporated herein
by reference.
Solely for the purpose of calculating the aggregate market value of the
voting stock held by non-affiliates of the Registrant as set forth on the cover
of this report, it has been assumed that directors and executive officers of the
Registrant are affiliates.
Item 13. Certain Relationships and Related Transactions
The information related to certain transactions with directors of the
Registrant is set forth under the caption "Certain Transactions and Business
Relationships" in the Proxy Statement and is incorporated herein by reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(A) DOCUMENT LIST
1. Financial Statements
The following consolidated financial statements of Town & Country
Corporation and Subsidiaries are included in Item 8:
Page
Report of Independent Public Accountants F-3
Consolidated Balance Sheets - February 26, 1995 F-4
and February 27, 1994
Consolidated Statements of Operations - Years F-6
Ended February 26, 1995, February 27, 1994, and
February 28, 1993
Consolidated Statements of Stockholders' Equity - F-7
Years Ended February 26, 1995, February 27, 1994,
and February 28, 1993
Consolidated Statements of Cash Flows - Years F-9
Ended February 26, 1995, February 27, 1994, and
February 28, 1993
Notes to Consolidated Financial Statements F-11
2. Financial Statement Schedules
Report of Independent Public Accountants F-47
Schedules:
II Valuation Accounts F-48
Schedules other than those listed above are omitted because of the absence
of the condition under which they are required or because the required
information is reflected in the financial statements or notes thereto.
3. Exhibits
Page
3.1 Restated Articles of Organization, as amended. *6*(3.1)
3.2 By-Laws, as amended. *2*(3.2)
4.1 Amended and Restated Indenture governing 10 1/4% *6*(4.1)
Subordinated Notes due 1995 (the "Old 10 1/4%
Notes"), dated as of 5/14/93, from Town & Country
Corporation to The Bank of New York, as Trustee.
4.2 Amended and Restated Indenture governing 13% *6*(4.2)
Senior Subordinated Notes due 12/15/98, (the "Old
13% Notes), dated as of 5/14/93, from Town &
Country Corporation to State Street Bank and
Trust Company, as Trustee.
4.3 Supplemental Indenture relating to the Old 10 1/4% *6*(4.3)
Notes, dated as of 5/14/93, from Town & Country
Corporation to The Bank of New York, as Trustee.
4.4 Supplemental Indenture relating to the Old 13% *6*(4.4)
Notes, dated as of 5/14/93, from Town & Country
Corporation to State Street Bank and Trust
Company, as Trustee.
4.5 Indenture governing 11 1/2% Senior Secured Notes *6*(4.5)
due 9/15/97, dated as of 5/14/93, from Town &
Country Corporation to Shawmut Bank, N.A., as
Trustee.
4.6 Indenture governing 13% Senior Subordinated Notes *6*(4.6)
due 5/31/98, dated as of 5/14/93, from Town &
Country Corporation to Bankers Trust Company,
as Trustee.
4.7 Certificate of Vote of Directors Establishing the *6*(4.7)
Exchangeable Preferred Stock, par value $1.00
per share, dated as of 5/14/93.
4.8 Certificate of Vote of Directors Establishing the Filed Herewith
Convertible Preferred Stock, par value $1.00 per
share, dated as of November 23, 1994.
Material Contracts:
10.1 1989 Employee Stock Purchase Plan of the #1#(10.21)
Registrant.
10.3 1985 Amended and Restated Stock Option Plan of *2*(10.1)
the Registrant.
10.4 Amendment dated 7/27/89, to the Lease Agreement *4*(10.8)
between Carey Realty Trust and Town & Country
Corporation.
10.5 Amendment dated 7/1/87, to the Lease Agreement *3*(10.3)
between the Registrant and Carey Realty Trust
dated 9/1/84.
10.6 Lease Agreement between the Registrant and Carey *1*(10.2)
Realty Trust dated 9/1/84.
10.7 Lease dated 9/1/85, between the New York City #2#(10.30)
Industrial Development Agency and Feature
Enterprises, Inc.
10.8 First Amendment to Lease Agreement dated as of *6*(10.8)
5/1/93, between the New York City Industrial
Development Agency and Town & Country Fine
Jewelry Group, Inc.
10.9 Lease Agreement between L.G. Balfour Company, Filed Herewith
Inc. and C.L.C. North Attleboro Trust dated
March 14, 1994.
10.10 Letter-Agreement dated April 4, 1994, to Lease Filed Herewith
between L. G. Balfour Company, Inc. and C.L.C.
North Attleboro Trust dated March 14, 1994.
<PAGE>
10.11 Amended and Restated Consignment Agreement by *6*(10.9)
and between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Fleet Precious Metals, Inc. dated as of
5/14/93.
10.12 First Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated 10/20/93 by
and between Town & Country Corporation,
L.G. Balfour Company, Inc., Gold Lance, Inc.,
and Town & Country Fine Jewelry Group, Inc.
and Fleet Precious Metals, Inc. dated as of
5/14/93.
10.13 Second Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated 12/1/93 by and
between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Fleet Precious Metals, Inc. dated as of
5/14/93.
10.14 Third Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated July 1994 by
and between Town & Country Corporation,
L.G. Balfour Company, Inc., Gold Lance, Inc.,
and Town & Country Fine Jewelry Group, Inc.
and Fleet Precious Metals, Inc. dated as of
5/14/93.
10.15 Fourth Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated 8/31/94 by and
between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Fleet Precious Metals, Inc. dated as of
5/14/93.
10.16 Fifth Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated 11/17/94 by and
between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Fleet Precious Metals, Inc. dated as of
5/14/93.
10.17 Amended and Restated Consignment Agreement by *6*(10.10)
and between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Rhode Island Hospital Trust National Bank
dated as of 5/14/93.
10.18 First Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated 12/1/93 by and
between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Rhode Island Hospital Trust National Bank
dated as of 5/14/93.
10.19 Second Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated 7/13/94 by and
between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Rhode Island Hospital Trust National Bank
dated as of 5/14/93.
10.20 Third Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated 11/15/94 by
and between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Rhode Island Hospital Trust National Bank
dated as of 5/14/93.
10.21 Amended and Restated Consignment Agreement by *6*(10.11)
and between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
ABN Amro Bank, N.V. dated as of 5/14/93.
10.22 First Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated 12/1/93 by and
between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
ABN Amro Bank, N.V. dated as of 5/14/93.
<PAGE>
10.23 Second Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated August 1994 by
and between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
ABN Amro Bank, N.V. dated as of 5/14/93.
10.24 Amended and Restated Consignment Agreement by *6*(10.12)
and between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Republic National Bank of New York dated as
of 5/14/93.
10.25 First Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated 12/1/93 by and
between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Republic National Bank of New York dated as
of 5/14/93.
10.26 Second Amendment to Amended and Restated Filed Herewith
Consignment Agreement dated July 1994 by and
between Town & Country Corporation, L.G.
Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Republic National Bank of New York dated as
of 5/14/93.
10.27 Letter Agreement to Amended and Restated Collateral Filed Herewith
Sharing Agreement dated November 1994 by
and among Fleet Precious Metals Inc. and various
consignors and the Consignment Agreements as of
May 14, 1993.
10.28 Registration Rights Agreement between Little *5*(10.13)
Switzerland, Inc. and Switzerland Holding, Inc.
dated as of 7/17/91.
10.29 Letter Agreement dated as of 4/6/93, between *6*(10.14)
Little Switzerland, Inc. and Town & Country
Corporation relating to the Switzerland
Holding, Inc. Registration Rights Agreement.
<PAGE>
10.30 Loan Agreement dated as of 5/14/93, by and among *6*(10.15)
Town & Country Corporation, L.G. Balfour Company,
Inc., Gold Lance, Inc., and Town & Country Fine
Jewelry Group, Inc. and Foothill Capital
Corporation.
10.31 First Amendment to Loan Agreement dated 9/28/93 Filed Herewith
by and among Town & Country Corporation,
L.G. Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Foothill Capital Corporation dated as of 5/14/93.
10.32 Amendment Number Two to Loan Agreement dated Filed Herewith
6/24/94 by and among Town & Country Corporation,
L.G. Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Foothill Capital Corporation dated as of 5/14/93.
10.33 Amendment Number Three to Loan Agreement dated Filed Herewith
7/11/94 by and among Town & Country Corporation,
L.G. Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Foothill Capital Corporation dated as of 5/14/93.
10.34 Amendment Number Four to Loan Agreement dated Filed Herewith
7/25/94 by and among Town & Country Corporation,
L.G. Balfour Company, Inc., Gold Lance, Inc., and
Town & Country Fine Jewelry Group, Inc. and
Foothill Capital Corporation dated as of 5/14/93.
10.35 Collateral Agency and Intercreditor Agreement *6*(10.16)
dated as of 5/14/93, by and among Town & Country
Corporation, L.G. Balfour Company, Inc.,
Gold Lance, Inc., and Town & Country Fine
Jewelry Group, Inc. and Foothill Capital
Corporation, Fleet Precious Metals, Inc.,
Rhode Island Hospital Trust National Bank,
Republic National Bank, ABN Amro Bank N.V.,
Bankers Trust Company, Shawmut Bank, N.A.,
and Chemical Bank.
10.36 Form of 1993 Management Stock Option. #3#(10.23)
10.37 Form of Executive Employment Agreement between #4#(10.20)
Town & Country Corporation and C. William Carey
effective as of February 28, 1994.
10.38 Form of Executive Employment Agreement between #4#(10.21)
Town & Country Corporation and Francis X. Correra
effective as of February 28, 1994.
10.39 Trust Agreement dated as of 5/14/93, between *6*(10.22)
Town & Country Corporation and Baybank, as
Trustee.
10.40 Registration Effectiveness Agreement dated *6*(10.23)
as of 5/14/93, between Town & Country Corporation
and Certain Funds managed by Fidelity Management &
Research Company.
10.41 Form of letter dated as of November 4, 1994, to #5#(10.21)
Certain Holders of Town & Country Exchangeable
Preferred Stock from Town & Country relating
to the offer by Town & Country to issue shares
of Convertible Preferred Stock.
10.42 Form of Registration Rights Agreement dated #5#(10.22)
as of November 23, 1994, between Town &
Country Corporation and the holders of
Town & Country Convertible Preferred
Stock signatory thereto.
10.43 Letter Agreement dated as of November 15, #5#(10.23)
1994, by and among Town & Country
Corporation, L.G. Balfour Company, Inc.
Gold Lance, Inc., and Town & Country
Fine Jewelry Group, Inc. and Fleet Precious
Metals, Inc., Rhode Island Hospital Trust
National Bank, ABN-AMRO Bank, N.V., and
Republic National Bank of New York.
10.44 1994 Non-Employee Directors' Nonqualified Filed Herewith
Stock Option Plan
<PAGE>
11 Earnings per Share Computations Filed Herewith
22 Subsidiaries of the Registrant Filed Herewith
24.1 Consent of Arthur Andersen LLP Filed Herewith
27 Financial Data Schedule Filed Herewith
*1* Incorporated by reference to the designated exhibit of the Registration
Statement on Form S-1 No. 2-97557 filed June 21, 1985.
*2* Incorporated by reference to the designated exhibit in the Annual Report on
Form 10-K, Commission File number 0-14394 filed May 26, 1987.
*3* Incorporated by reference to the designated exhibit in the Annual Report on
Form 10-K, Commission File number 0-14394 filed May 18, 1988.
*4* Incorporated by reference to the designated exhibit in the Annual Report on
Form 10-K, Commission File number 0-14394 filed May 25, 1990.
*5* Incorporated by reference to the designated exhibit in the Annual Report on
Form 10-K, Commission File number 0-14394 filed July 6, 1992.
*6* Incorporated by reference to the designated exhibit in the Annual Report on
Form 10-K, Commission File number 0-14394 filed May 27, 1993.
#1# Incorporated by reference to the designated exhibit of the Registration
Statement on Form S-2 No. 33-25092 filed October 20, 1988.
#2# Incorporated by reference to the designated exhibit of Amendment No. 2
to the Registration Statement on Form S-2 No. 33-25437 filed December 12, 1988.
#3# Incorporated by reference to the designated exhibit of Amendment No. 6
to the Registration Statement on Form S-4 No. 33-49028 filed March 12, 1993.
#4# Incorporated by reference to the designated exhibit of Post-Effective
Amendment No. 2 to the Registration Statement on Form S-2 No. 33-49028 filed
July 26, 1994.
#5# Incorporated by reference to the designated exhibit of the Registration
Statement on Form S-2 No. 33-57407 filed January 23, 1995.
(B) REPORTS ON FORM 8-K
No Form 8-K was issued by the Registrant during the quarter ended
February 26, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TOWN & COUNTRY CORPORATION
(Registrant)
Date: May 24, 1995 By: /s/ C. William Carey
C. William Carey, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been duly signed below by the following persons on behalf of the
Registrant and in the capacities and on the date set forth above.
Signature Title
Principal Executive Officer:
/s/ C. William Carey President, Treasurer, and
C. William Carey Director
Principal Financial and Accounting Officer:
/s/ Francis X. Correra Senior Vice President and
Francis X. Correra Chief Financial Officer
/s/ Richard E. Floor Director
Richard E. Floor
/s/ William Schawbel Director
William Schawbel
/s/ Charles Hill Director
Charles Hill
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
TOWN & COUNTRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
TOGETHER WITH AUDITORS' REPORT
<PAGE>
Report of Independent Public Accountants
To Town & Country Corporation:
We have audited the accompanying consolidated balance sheets of TOWN &
COUNTRY CORPORATION (a Massachusetts corporation) and subsidiaries as of
February 26, 1995, and February 27, 1994, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended February 26, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Town & Country Corporation
and subsidiaries as of February 26, 1995, and February 27, 1994, and the results
of their operations and their cash flows for each of the three years in the
period ended February 26, 1995, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Boston, Massachusetts
April 27, 1995
<PAGE>
<TABLE>
TOWN & COUNTRY CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
February 26, February 27,
1995 1994
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents (Note 1) $ 3,336,921 $ 3,273,876
Restricted cash (Note 1) 1,889 37,971
Accounts receivable, less allowances for
doubtful accounts of $7,780,000 and
$5,510,000 at February 26, 1995 and
February 27, 1994, respectively 57,472,122 55,623,418
Inventories (Note 1) 80,349,412 75,029,397
Prepaid expenses and other current assets 573,611 3,991,883
Total current assets 141,733,955 137,956,545
PROPERTY, PLANT & EQUIPMENT, at cost
(Note 1) 82,254,863 79,340,723
Less-Accumulated depreciation 39,018,645 33,636,099
43,236,218 45,704,624
INVESTMENT IN LITTLE SWITZERLAND, INC.
(Note 4) 1,651,482 13,304,089
INVESTMENT IN SOLOMON BROTHERS,
LIMITED (Note 5) 13,734,000 13,734,000
OTHER ASSETS (Notes 1 and 8) 6,267,801 13,221,467
$ 206,623,456 $ 223,920,725
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
TOWN & COUNTRY CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
<CAPTION>
February 26, February 27,
1995 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Notes payable to banks (Note 2) $ 11,117,827 $ -
Current portion of long-term debt
(Note 2) 1,235,477 1,479,590
Accounts payable 17,809,025 12,727,357
Accrued expenses (Note 1) 15,458,912 19,956,332
Accrued taxes (Notes 1 and 6) 1,352,523 874,253
Total current liabilities 46,973,764 35,037,532
LONG-TERM DEBT, less current portion
(Note 2) 91,437,975 91,827,239
OTHER LONG-TERM LIABILITIES 1,494,524 2,093,755
COMMITMENTS AND CONTINGENCIES (Note 12)
MINORITY INTEREST 4,617,018 3,843,117
EXCHANGEABLE PREFERRED STOCK,
$1.00 par value, $14.59 preference value-
Authorized--200,000 and 2,700,000 shares,
respectively
Issued and outstanding--152,217
and 2,533,255 shares,
respectively (Notes 2 and 3) 2,265,522 35,785,399
STOCKHOLDERS' EQUITY (Notes 2, 3, 11, 13, and 14):
Preferred stock, $1.00 par value-
Authorized and unissued--2,266,745 and
2,300,000 shares, respectively - -
Convertible Preferred Stock, $1.00 par value,
$6.50 preference value-
Authorized--2,533,255
Issued and outstanding--2,381,038 2,381,038 -
Class A Common Stock, $ .01 par value-
Authorized--40,000,000 shares
Issued and outstanding--20,784,768 and
20,755,901 shares, respectively 207,848 207,559
Class B Common Stock, $.01 par value-
Authorized--8,000,000 shares
Issued and outstanding--2,664,941 and
2,670,693 shares, respectively 26,649 26,707
Additional paid-in capital 73,145,286 69,909,485
Retained deficit (15,926,168) (14,810,068)
Total stockholders' equity 59,834,653 55,333,683
$ 206,623,456 $ 223,920,725
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
TOWN & COUNTRY CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
For the Year Ended
February 26, February 27, February 28,
1995 1994 1993
<S> <C> <C> <C>
NET SALES $ 288,114,608 $ 277,750,162 $ 270,364,051
COST OF SALES 200,533,890 180,356,292 179,833,372
Gross profit $ 87,580,718 $ 97,393,870 $ 90,530,679
SELLING, GENERAL, ADMINISTRATIVE
EXPENSES 90,407,855 80,221,216 85,250,214
RESTRUCTURING CHARGE - - 5,000,000
Income (loss) from operations $ (2,827,137)$ 17,172,654 $ 280,465
INTEREST EXPENSE (12,169,615) (14,044,933) (20,092,759)
INTEREST AND OTHER INCOME, net 234,933 698,829 680,540
NET LOSS ON NONRECURRING
ITEMS (Note 7) - - (14,500,000)
RECAPITALIZATION EXPENSES (Note 2) - - (14,440,000)
GAIN ON LITTLE SWITZERLAND, INC.
EXCHANGE (Note 3) 17,277,988 - -
INCOME FROM AFFILIATES (Notes 4 and 5) 587,814 1,262,347 2,721,630
MINORITY INTEREST (Note 1) (773,901) (941,341) (989,336)
Income (loss) before provision for
income taxes $ 2,330,082 $ 4,147,556 $ (46,339,460)
PROVISION FOR INCOME TAXES
(Notes 1 and 6) 1,758,164 1,010,000 956,132
Net income (loss) $ 571,918 $ 3,137,556 $ (47,295,592)
ACCRETION OF DISCOUNT AND DIVIDENDS
ON PREFERRED STOCKS (Notes 2 and 3) 1,688,019 1,453,511 -
Income (loss) attributable to common
stockholders $ (1,116,101)$ 1,684,045 $ (47,295,592)
INCOME (LOSS) PER COMMON SHARE
(Note 1) $ (0.05)$ 0.08 $ (3.80)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (Note 1) 23,433,173 21,205,949 12,450,290
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
TOWN & COUNTRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED FEBRUARY 26, 1995, FEBRUARY 27, 1994, AND FEBRUARY 28, 1993
<CAPTION>
Class A
Convertible Preferred Stock Common Stock
--------------------------- ------------------------
Number of Number of Par Value
Shares Par Value $1 Shares $.01
<S> <C> <C> <C> <C>
BALANCE, February 29, 1992 - $ - 9,374,022 $ 93,740
Share issuance related to Forbearance
Agreements - - 602,224 6,022
Net proceeds from the exercise of
options to purchase common stock
(Notes 13 and 14) - - 24,292 243
Conversion of Class B Common Stock
into Class A Common Stock - - (229) (2)
Net loss - - - -
BALANCE, February 28, 1993 - $ - 10,000,309 $ 100,003
Share issuance related to
exchange offer - - 9,992,648 99,927
Share issuance related to purchase
commitment on senior secured notes - - 750,000 7,500
Accretion of discount on
exchangeable preferred stock
(Note 2) - - - -
Net proceeds from the exercise of
options to purchase common stock
(Notes 13 and 14) - - 12,944 129
Net income - - - -
BALANCE, February 27, 1994 - $ - 20,755,901 $ 207,559
Share issuance related to Little
Switzerland, Inc. exchange 2,381,038 2,381,038 - -
Conversion of Class B Common Stock
into Class A Common Stock - - 5,752 58
Net proceeds from the exercise of
options to purchase common stock
(Notes 13 and 14) - - 23,115 231
Accretion of discount and dividends on
preferred stocks (Notes 2 and 3) - - - -
Net income - - - -
BALANCE, February 26, 1995 2,381,038 $ 2,381,038 20,784,768 $ 207,848
</TABLE>
(Continued on Next Page)
<PAGE>
<TABLE>
<CAPTION>
Class B
Common Stock
Additional Retained Total
Number of Par Value Paid-in Earnings Stockholders'
Shares $.01 Capital (Deficit) Equity
<S> <C> <C> <C> <C> <C>
2,670,464 $ 26,705 $ 39,786,684 $ 30,801,479 $ 70,708,608
- - 1,273,704 - 1,279,726
- - 50,871 - 51,114
229 2 - - -
- - - (47,295,592) (47,295,592)
2,670,693 $ 26,707 $ 41,111,259 $ (16,494,113)$ 24,743,856
- - 26,755,361 - 26,855,288
- - 2,008,125 - 2,015,625
- - - (1,453,511) (1,453,511)
- - 34,740 - 34,869
- - - 3,137,556 3,137,556
2,670,693 $ 26,707 $ 69,909,485 $ (14,810,068)$ 55,333,683
- - 2,976,297 - 5,357,335
(5,752) (58) - - -
- - 27,352 - 27,583
- - 232,152 (1,688,018) (1,455,866)
- - - 571,918 571,918
2,664,941 $ 26,649 $ 73,145,286 $ (15,926,168)$ 59,834,653
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
TOWN & COUNTRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Year Ended
-------------------------------------------------
February 26, February 27, February 28,
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $ 571,918 $ 3,137,556 $ (47,295,592)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities--
Depreciation and amortization 4,846,300 5,628,451 8,667,787
Loss (gain) on disposal of fixed
assets 73,773 (113,162) (2,583,573)
Restructuring charge - - 5,000,000
Gain on Little Switzerland, Inc.
exchange (17,277,988) - -
Loss on assets held for sale or
disposal (Note 7) - - 14,500,000
Bank fees paid by issuance of stock - - 1,273,704
Undistributed earnings of affiliates,
net of minority interest 186,087 (227,894) (1,453,506)
Interest paid with issuance of debt
(Note 2) 7,647,666 3,495,571 -
Ordinary dividends received from
affiliate - 2,045,532 -
Change in assets and liabilities--
(Increase) decrease in accounts
receivable (1,848,704) (4,004,014) (9,166,453)
(Increase) decrease in inventories (5,320,015) (1,595,015) (1,623,039)
(Increase) decrease in prepaid
expenses and other current assets 3,418,272 2,467,636 2,657,448
(Increase) decrease in other assets 6,542,404 3,722,423 3,163,549
Increase (decrease) in accounts
payable 5,081,668 1,904,443 950,586
Increase (decrease) in accrued
expenses (4,597,420) 2,190,050 11,042,155
Increase (decrease) in accrued and
deferred taxes 478,270 488,181 (1,022,665)
Increase (decrease) in other
liabilities (599,231) (1,162,891) (307,250)
Net cash provided by (used in)
operating activities $ (797,000)$ 17,976,867 $ (16,196,849)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
TOWN & COUNTRY CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
<CAPTION>
For the Year Ended
--------------------------------------------
February 26, February 27, February 28,
1995 1994 1993
CASH FLOWS FROM INVESTING ACTIVITIES:
<S> <C> <C> <C>
Proceeds from sale of fixed assets $ 45,331 $ 222,746 $ 3,889,387
Capital expenditures (2,759,204) (4,056,307) (3,519,205)
Proceeds from sale of investments - 3,486,000 -
Net cash provided by (used in)
investing activities $ (2,713,873)$ (347,561)$ 370,182
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on revolving credit
facilities $ (279,990,373)$ (206,869,004)$ -
Proceeds from borrowings under
revolving credit facilities 291,108,200 206,869,004 -
Decrease (increase) in restricted cash 36,082 (37,971) -
Payments to retire credit facility - (37,250,000) -
Proceeds from senior secured notes - 30,000,000 -
Payments on other debt (7,607,575) (13,666,180) (11,486,285)
Payment of dividend by Essex to minority
interests - (534,617) (1,419,431)
Proceeds from the issuance of debt - - 31,000,000
Proceeds from the issuance of common
stock 27,584 34,869 57,136
Payments for recapitalization expenses - (8,254,790) -
Net cash provided by (used in)
financing activities $ 3,573,918 $ (29,708,689)$ 18,151,420
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 63,045 $ (12,079,383)$ 2,324,753
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 3,273,876 15,353,259 13,028,506
CASH AND CASH EQUIVALENTS AT END
OF YEAR $ 3,336,921 $ 3,273,876 $ 15,353,259
SUPPLEMENTAL CASH FLOW DATA:
CASH PAID DURING THE YEAR FOR:
Interest $ 4,908,642 $ 6,104,397 $ 10,693,175
Income taxes $ 1,119,864 $ 589,730 $ 712,606
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES (Note 1)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
TOWN & COUNTRY CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 26, 1995
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its controlled domestic and foreign subsidiaries. All
significant intercompany transactions have been eliminated.
Reclassifications
Certain reclassifications have been made to the prior years' financial
statements to conform with the presentation of the fiscal 1995 financial
statements.
Cash and Cash Equivalents
Cash equivalents include highly liquid investments with original maturities
of three months or less.
Investments
On March 1, 1994, the Company adopted the Financial Accounting Standard
Board's Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." SFAS No. 115 addresses
the accounting and reporting for investments in equity securities that have
readily determinable fair market values and for all investments in debt
securities. The Company's financial condition and results of operations were not
materially impacted in fiscal 1995 as a result of adopting SFAS No. 115.
Restricted Cash
Restricted cash includes cash payments from the Company's investment in
Solomon Brothers, Limited and cash proceeds with respect to the Zale bankruptcy
claim. These funds are escrowed for the benefit of the holders of the Senior
Secured Notes. During fiscal 1995 and fiscal 1994, approximately $6 million and
$10 million, respectively, of Senior Secured Notes were redeemed with such
proceeds.
<PAGE>
Foreign Currency
The Company is subject to fluctuating foreign currency exchange rates which
are reflected currently in the consolidated statements of operations.
Transaction and exchange gains and losses have not been material to the
consolidated financial position or operations for the three years ended February
26, 1995.
Inventories
Inventories, which include materials, labor and manufacturing overhead, are
stated at the lower of cost or market using the first-in, first-out (FIFO)
method.
Inventories consisted of the following at February 26, 1995, and February
27, 1994:
1995 1994
Raw materials $ 16,932,724 $ 16,753,865
Work-in-process 8,266,255 7,154,300
Finished goods 55,150,433 51,121,232
$ 80,349,412 $ 75,029,397
In prior years, certain of the material content, primarily diamond, had
been valued using the last-in, first-out (LIFO) method. During fiscal 1994, the
Company liquidated its remaining inventory valued on the LIFO method, resulting
in a decrease in cost of sales of approximately $1.3 million in the accompanying
consolidated statement of operations for the year ended February 27, 1994. The
Company now uses the FIFO method exclusively.
The effects of gold price fluctuations are mitigated by the use of a
consignment program with bullion dealers. As the gold selling price for orders
is confirmed, the Company purchases the gold requirements at the then current
market prices; any additional requirements for gold are held as consignee. This
technique enables the Company to match the price it pays for gold with the price
it charges its customers. The Company pays a fee, which is subject to periodic
change, for the value of the gold it holds on consignment during the period
prior to sale. For the years ended February 26, 1995, February 27, 1994, and
February 28, 1993, these fees totaled approximately $1.4 million, approximately
$1.5 million, and approximately $1.4 million, respectively.
The Company does not include the value of consigned gold in inventory or
the corresponding liability in borrowings for financial statement purposes. As
of February 26, 1995, and February 27, 1994, the Company held approximately
67,000 ounces, valued at $25.4 million, and 64,000 ounces, valued at $24.4
million, respectively, of gold on consignment
<PAGE>
under its domestic gold agreements. A foreign subsidiary of the Company
held an additional 5,000 ounces, valued at $1.8 million, and 5,200 ounces,
valued at $2.0 million, outstanding at February 26, 1995, and February 27, 1994,
respectively, under a separate consignment agreement (Note 2).
Advertising
The Company expenses the costs of advertising as incurred, except for
certain direct-response advertising costs, which are capitalized and amortized
over their expected period of future benefits.
At February 26, 1995, February 27, 1994, and February 28, 1993, advertising
expense was $14,200,625, $11,023,850, and $9,292,461, respectively. At February
26, 1995, and February 27, 1994, $0 and $2,680,852, respectively, of advertising
was capitalized and included in other current assets.
Property, Plant and Equipment
The Company provides for depreciation, principally on the straight-line
method, at rates adequate to depreciate the applicable assets over their
estimated useful lives which range from 3 to 30 years. Certain equipment is
depreciated using the declining balance method.
Property and equipment consisted of the following at February 26, 1995, and
February 27, 1994:
<TABLE>
<CAPTION>
Useful Life
Ranges 1995 1994
<S> <C> <C> <C>
Real estate 10 - 30 Years $ 29,746,327 $ 29,694,070
Furniture and fixtures 3 - 7 Years 2,850,978 2,989,365
Equipment 3 - 20 Years 45,072,052 42,584,500
Leasehold improvements 4 - 20 Years 4,450,876 3,681,385
Construction-in-progress 134,630 391,403
$ 82,254,863 $ 79,340,723
</TABLE>
<PAGE>
Accrued Expenses
The principal components of accrued expenses at February 26, 1995, and
February 27, 1994, are as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Compensation and related costs $ 5,458,037 $ 8,877,284
Customer deposits 4,130,663 4,242,529
Interest 2,940,499 2,621,644
Commissions 545,659 1,271,281
Other 2,384,054 2,943,594
$15,458,912 $19,956,332
</TABLE>
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Income (Loss) Per Common Share
Earnings (loss) per common share is computed based on the weighted average
number of common and common equivalent shares, where dilutive, outstanding
during each period. Common equivalent shares result from the assumed exercise of
stock options and warrants.
Long-term Intangible Assets
The excess ($7,172,000) of purchase price over the values assigned to net
assets acquired is being amortized using the straight-line method over periods
ranging from 30 to 40 years. The Company continually evaluates whether events
and circumstances have occurred that indicate that the remaining estimated
useful life of goodwill may warrant revision or that the remaining balance of
goodwill may not be recoverable. When factors indicate that goodwill should be
evaluated for possible impairment, the Company uses an estimate of the related
business segments' undiscounted operating income over the remaining life of the
goodwill in measuring whether the goodwill is recoverable. In fiscal 1993, the
Company recorded a write-down of approximately $1.6 million of goodwill
<PAGE>
associated with changes made to part of its business and the disposal of
certain related assets (See Note 7). Accumulated amortization was approximately
$3,103,000 and $2,920,000 at February 26, 1995, and February 27, 1994,
respectively.
Minority Interest
Minority interest is determined based on the percent ownership of the
equity by other investors of the related consolidated subsidiary.
Subsidiary Sale of Stock
At the time a subsidiary sells its stock to unrelated parties at a price in
excess of its book value, the Company's net investment in that subsidiary
increases. The Company records the increase as a gain in the consolidated
statement of operations.
Supplemental Disclosures of noncash Investing and Financing Activities
In fiscal 1994, as payment for the commitment to purchase up to 100% of the
Company's senior secured notes, an investor received 750,000 shares of the
Company's Class A common stock with a value of $2,015,625 at the time of
issuance.
The Company completed a recapitalization on May 14, 1993 (See Note 2).
During fiscal 1995, the Company had fixed asset additions of approximately
$.7 million funded by increases in capital lease obligations.
On November 23, 1994, holders of approximately 94% of the Company's
Exchangeable Preferred Stock exchanged their shares for shares of Little
Switzerland, Inc. common stock held by the Company and shares of the Company's
Convertible Preferred Stock (See Note 3).
Financial Instruments
Cash and Cash Equivalents
The carrying amount approximates fair value because of the short maturity
of the instruments.
Restricted Cash
The Company's restricted cash is invested in short-term, highly-liquid
investments. The carrying amount approximates fair value because of the
short-term maturity of these investments.
Investment in Solomon Brothers, Limited
The fair value of the Company's investment in Solomon Brothers, Limited is
considered to be equal to its carrying value as of February 26, 1995, based on
the valuation method agreed upon for the redemption of shares as discussed in
Note 5 and the estimated fair value of the underlying net assets.
Long-Term Subordinated Debt and exchangeable preferred stock
The Company believes that the fair value of the Company's long-term
subordinated debt and Exchangeable Preferred Stock approximates its carrying
value as of February 26, 1995, based on the valuation methodology required for
the recapitalization.
Long-Term Secured Debt
The fair value of the Company's various long-term secured debt, which are
secured by various assets, are considered to approximate their carrying value as
of February 26, 1995. This conclusion is based on the relationship of carrying
value to the value of the related security and the relatively short maturities
of the related debt.
(2) Long-term Debt and Credit Arrangements
Long-term debt at February 26, 1995, and February 27, 1994, consists of the
following:
<TABLE>
<CAPTION>
Town & Country Corporation 1995 1994
<S> <C> <C>
Senior Subordinated Notes due 1998 with
interest payable semiannually at 13%,
including unamortized premium of $5.6
million and $7.0 million in 1995 and 1994,
respectively. The first four interest
payments are expected to be made with
issuance of additional notes up to $15.3
million. The first three such required
payments due November 1993, May 1994,
and November 1994 were paid by the
issuance of approximately $3.5 million,
$3.7 million, and $3.9 million, respectively,
of new notes. $ 70,185,718 $ 63,947,814
Senior Secured Notes due 1997 with interest
payable monthly at 11.5%. Payments
required prior to maturity for proceeds
received by the Company related to the
Company's investment in Solomon Brothers,
Limited and/or settlement of the Zale
bankruptcy claim and certain other
limited conditions. 13,947,000 19,980,300
Senior Subordinated Notes due 1998 with
interest payable semiannually at 13%,
net of unamortized discount of $47,868 and
$57,210 in 1995 and 1994, respectively. $ 6,912,132 $ 6,902,790
Subordinated Notes due 1995 with interest
payable semiannually at 10 1/4%, net
of unamortized original issue discount of $3,519
and $16,698 in 1995 and 1994, respectively. 447,481 434,302
Subsidiaries
Obligation under New York City Industrial
Development Agency industrial revenue bond.
The note calls for a final payment of $383,358
due April 1, 1995. Quarterly interest is
determined at 75% of Chemical Bank's "reference"
rate (9% at February 26, 1995), with a minimum of 6%. 383,358 450,022
Obligation under New York City Industrial
Development Agency industrial revenue bond.
The note calls for a final payment of $164,682
due April 1, 1995. Quarterly interest is determined
at 1.25% above Chemical Bank's "reference" rate
(9% at February 26, 1995). 164,682 1,566,018
Lease obligation for office furniture and
equipment payable in monthly installments with
interest at 9.67% 621,524 -
Other notes 11,557 25,583
$ 92,673,452 $ 93,306,829
Less-Current portion 1,235,477 1,479,590
$ 91,437,975 $ 91,827,239
</TABLE>
On May 14, 1993, the Company completed a recapitalization. The
recapitalization was accounted for as a "troubled debt restructuring" under
Statement of Financial Accounting Standards No. 15, "Accounting by Debtors and
Creditors for Troubled Debt Restructurings," whereby the net carrying value of
the old debt was allocated to the new securities, issued in the
recapitalization, based on their estimated, relative, fair market values, and no
gain or loss was recognized. Recapitalization costs were expensed as incurred.
As a result of this transaction, long-term debt with a carrying value of
$122,673,945, including deferred financing costs, was retired. New debt with a
carrying value of $61,486,762, exchangeable preferred stock valued at
$34,331,895, and common stock valued at $26,855,288 were issued in exchange for
these redemptions.
On May 14, 1993, the Company entered into a revolving credit facility with
Foothill Capital Corporation ("Foothill") providing senior secured financing in
an aggregate amount of up to $30 million. The line of credit will mature on May
14, 1996, and will automatically renew for two year periods unless terminated.
The loans will bear interest at a rate per annum equal to the greater of (a) two
percent above the reference rate (the highest "prime rate" or "reference rate"
announced by an identified group of major banks) selected by Foothill or (b) 8%.
The agreement contains the standard covenants for facilities of this type
including, without limitation, financial covenants relating to interest
coverage, minimum net worth, minimum working capital, debt to net worth and
current ratios, and limitations on dividends and distributions, dispositions of
assets and capital expenditures. Advances under the credit facility will be
based on eligible receivables and inventory. Foothill has a first priority
security interest in receivables, certain inventory, primarily stones and
diamonds, and substantially all real estate and fixed assets owned by the
Company and its domestic subsidiaries. The Company had $11 million outstanding
under the new credit agreement, at an effective interest rate of 12.6% at
February 26, 1995. The Company had $17.9 million of additional borrowings
available under its revolving credit agreement as of February 26, 1995.
On May 14, 1993, the Company entered into gold agreements with its gold
suppliers providing secured gold consignment availability of up to approximately
100,000 troy ounces. The agreements are terminable upon thirty days' written
notice and contain the standard covenants for facilities of this type including,
without limitation, financial covenants relating to interest coverage, minimum
net worth, minimum working capital, debt to net worth and current ratios, and
limitations on dividends and distributions and first priority security interest
in the precious metal content of inventory. During fiscal 1995, the Company
agreed to reduce its gold consignment facilities to approximately 73,000 ounces.
The Company had approximately 67,000 troy ounces on consignment at February 26,
1995. As a result of ongoing discussions with its gold suppliers, the Company
has agreed in principle to reduce its domestic gold facilities by 6,000 troy
ounces, from 73,000 troy ounces to 67,000 troy ounces. It is currently
anticipated that these reductions will be made in several steps throughout
fiscal 1996 and will be primarily as a result of reduced operational
requirements. In connection with these anticipated reductions, the Company also
expects some modifications to be made to the financial covenants in the gold
consignment agreements with its gold suppliers.
During the second quarter of fiscal 1995, modifications to the consolidated
tangible net worth covenant were made in the revolving credit and gold
agreements. The covenant previously provided that the Company was required to
maintain consolidated tangible net worth of $38,000,000 through February 27,
1994, and $43,000,000 thereafter. As amended, the covenant provides that the
Company maintain consolidated tangible net worth of $40,000,000 from July 1,
1994, through November 26, 1994, and $43,000,000 thereafter.
<PAGE>
On May 14, 1993, the Company issued $30 million of Senior Secured Notes due
September 15, 1997. Following receipt, by the Company, of cash payments from the
Company's investment in Solomon Brothers, Limited and/or cash or other payments
from the Zale Companies with respect to the Zale bankruptcy claim, the Company
is required to redeem an amount of the notes equal to the amount of such cash
payments at a redemption price equal to 100% of the principal amount thereof
plus accrued interest, if any. During fiscal 1995 and fiscal 1994, the Company
redeemed $6 million and $10 million, respectively, of Senior Secured notes with
such proceeds. In the event that the Company's consolidated net worth declines
below a defined minimum (75% of net worth at May 31, 1993, plus 37.5% of net
income for each fiscal year thereafter) for two consecutive quarters, the
Company is required to make an offer to redeem 7.5% of the outstanding notes
semiannually and to continue to do so as long as the condition persists.
On May 14, 1993, the Company issued approximately 2,533,000 shares of
Exchangeable Preferred Stock, the outstanding shares of which will be redeemed
by the Company on December 31, 2000, for $14.59 per share plus accrued and
unpaid dividends payable in cash or shares of Little Switzerland, Inc. common
stock. No dividends will be paid until after the second anniversary of the date
of issuance of the stock. Thereafter, holders will be entitled to receive
cumulative cash dividends at a rate of 6% per annum based on $14.59 per share.
Dividends will be payable semiannually on each six-month and twelve-month
anniversary of the issuance date. At any time after March 1, 1994, each share of
Exchangeable Preferred Stock may be exchanged by the holder for a share of
Little Switzerland, Inc. common stock held by the Company or redeemed by the
Company, for cash, at a declining premium through 1998. For the years ending
February 26, 1995, and February 27, 1994, accretion of discount on Exchangeable
Preferred Stock amounted to $1,455,866 and $1,453,511, respectively (Note 3).
A subsidiary of the Company has available credit line facilities with two
banks in Thailand to provide aggregate commercial financing of up to
approximately $13.3 million. The subsidiary had no outstanding balance under
these lines at February 26, 1995, or February 27, 1994. This subsidiary also has
an agreement with a gold supplier to provide secured gold consignment
availability of up to approximately 11,000 troy ounces. This agreement runs
through December 10, 1995, and is secured by a standby letter of credit for $3.4
million under one of the subsidiary's credit facilities. There were
approximately 5,000 ounces on consignment under this gold agreement at
February 26, 1995.
On April 3, 1995, the Company repaid approximately $181,000 of its
obligation under the New York City Industrial Revenue Development Agency
industrial revenue bonds ("IRB"). On April 3, 1995, the remaining obligation,
approximately $367,000, was purchased by Foothill. As a result of this
transaction, the Company is required to make quarterly payments on the IRB to
Foothill over the next five years in accordance with the repayment schedule that
was in effect prior to the recapitalization on May 14, 1993. Additionally, the
interest rate for the outstanding bonds has been modified to be the same as that
on the Company's revolving line of credit. The debt is secured by the Company's
New York real estate and fixtures attached thereto. The loan agreement places
restrictions upon the subsidiary, including certain assumptions of term debt,
liens, or encumbrances.
Aggregate maturities of long-term debt for each of the next five years are
approximately $1,235,000, $245,000, $14,101,000, $71,584,000, and $0,
respectively.
(3) EXCHANGE OF STOCK
On November 23, 1994, holders of approximately 94% of the Company's
Exchangeable Preferred Stock exchanged their shares for shares of Little
Switzerland, Inc. Common Stock held by the Company on a share-for-share basis.
Such an exchange was provided for by the terms of the Exchangeable Preferred
Stock. In addition, the Company issued to each participant one share of new
Convertible Preferred Stock with each share of Little Switzerland, Inc. Common
Stock.
Since the carrying value of the Company's investment in Little Switzerland,
Inc. was substantially less than the recorded value of the Exchangeable
Preferred Stock, the transaction resulted in a nonrecurring, noncash gain of
approximately $17 million, net of the estimated fair value of the Convertible
Preferred Stock issued.
Convertible Preferred Stock
Each share of Convertible Preferred Stock is initially convertible, at the
option of the holder, into two shares of Class A Common Stock, subject to
adjustment in certain circumstances. In the event the market price of a share of
Class A Common Stock equals or exceeds $3.25 for 30 consecutive trading days,
the Company may require the holders of Convertible Preferred Stock to convert
such stock into shares of Class A Common Stock at the then-applicable conversion
rate. Beginning on November 23, 1995, the Company may redeem, in whole or in
part, shares of Convertible Preferred Stock at a price equal to 104% of the
liquidation value and thereafter at prices declining annually to 100% of the
liquidation value on or after November 23, 1997. The Convertible Preferred Stock
has a liquidation value of $6.50 per share and accrues cumulative dividends at
the rate of 6% of the liquidation value per annum. Dividends are payable in cash
or in additional shares of Convertible Preferred Stock as defined by the
agreement. At February 26, 1995, cumulative unpaid dividends amounted to
$232,152.
The Convertible Preferred Stock is subordinate on liquidation and with
respect to dividend payments to the outstanding shares of Exchangeable Preferred
Stock but senior to the Class A Common Stock and the Class B Common Stock.
Holders of shares of Convertible Preferred Stock are entitled to vote on all
matters on which the holders of Class A Common Stock are entitled to vote. Each
share of Convertible Preferred Stock entitles the holder to the number of votes
per share equal to the number of shares of Class A Common Stock into which each
share of Convertible Preferred Stock is then convertible.
The Company has agreed with the holders of the Convertible Preferred Stock
to register such stock (and the Class A Common Stock into which it is
convertible) under the Securities Act and to keep such registration effective
until the earlier of (i) the date on which such holders no longer own any of
such securities or (ii) the date on which each of the holders
<PAGE>
has notified the Company that such holder may dispose of all of its
securities pursuant to Rule 144(k) under the Securities Act. A registration
statement covering these shares was declared effective by the Securities and
Exchange Commission on April 12, 1995.
(4) Investment in Little Switzerland, Inc.
The sale of approximately 68% of Little Switzerland, Inc.'s common stock by
a subsidiary of the Company resulted in the deconsolidation of Little
Switzerland, Inc. in the fiscal 1992 consolidated financial statements of the
Company. The continuing investment in Little Switzerland, Inc. is now classified
as a long-term asset in the accompanying consolidated balance sheets. Income was
recognized using the equity method of accounting through November 23, 1994.
Presented below is summarized financial information for Little Switzerland,
Inc. as of and for the nine months ended November 30, 1994, and as of and for
the year ended February 27, 1994, and for the year ended February 28, 1993:
1995 1994 1993
Current assets $42,010,000 $36,228,000 $
Noncurrent assets 18,113,000 14,761,000
Current liabilities 16,009,000 7,884,000
Noncurrent liabilities 356,000 794,000
Total equity 43,758,000 42,311,000
Sales $43,364,000 $63,727,000 $62,550,000
Gross profit 19,326,000 28,282,000 29,232,000
Net income 1,434,000 3,900,000 5,980,000
As a result of the exchange discussed in Note 3, the Company's investment
in Little Switzerland, Inc., as of November 23, 1994, was reduced to 318,962
shares or approximately 4%. Due to the decrease in ownership, the Company has
changed its method of accounting for this investment from the equity method to
the cost method.
(5) Investment in Solomon Brothers, Limited
On May 27, 1988, the Company purchased 410,000 shares of nonvoting,
redeemable, cumulative, Participating Preferred Class B Stock of Solomon
Brothers, Limited ("Solomon Brothers"), a Bahamian company, for a total purchase
price of $17,220,020.
The Company is entitled, as holder, to a fixed, cumulative, preferred
dividend equal to 1% of the purchase price annually. The Company is also
entitled to a cumulative, ordinary dividend equal to the change in net book
value per ordinary share of Solomon Brothers, calculated as if the Company was a
holder of ordinary shares, less the preferred dividend and to a fee determined
as a percent of cumulative, accrued, unpaid ordinary dividends. The combined
dividend rate for the periods ended February 26, 1995, February 27, 1994, and
February 28, 1993, was approximately 0%, 1.1%, and 4.7%, respectively. The
Company received distributions of $2,045,532 of previously accrued but unpaid
ordinary dividends during fiscal 1994. On May 31, 1993, the Company redeemed
83,000 of the Company's shares for approximately $3.5 million. On March 29,
1994, and March 20, 1995, as required by the covenants of its Senior Secured
Notes, the Company gave written notice to Solomon Brothers of the Company's
intention to redeem 70,000 and 55,000 additional shares, respectively. Solomon
Brothers informed the Company that it would not be able to redeem the 70,000
share request when due, as a result of constraints imposed by its banking
facilities. It is doubtful that Solomon Brothers will be able to make the 55,000
share redemption payment when it becomes due. The Company believes its
investment is realizable, but it is unable to estimate the timing of future
redemption payments. The Company is monitoring Solomon Brothers' operations and
financial position and if it determines in the future that carrying value is no
longer reflective of fair value, appropriate adjustments will be made.
Presented below is summarized financial information for Solomon Brothers as
of and for the years ended October 28, 1994, October 29, 1993, and October 30,
1992, prepared on a basis substantially in accordance with generally accepted
accounting principles (GAAP) (Bahamian Dollars, $000s):
1994 1993 1992
Working capital $ 15,094 $ 13,175
Total assets 72,013 70,820
Total shareholders' equity 27,828 27,770
Sales $ 84,815 $ 87,709 $ 87,144
Net income (loss) 54 (15,539) 3,747
(6) Income Taxes
The domestic and foreign components of income (loss) before provision for
income taxes for the years ended February 26, 1995, February 27, 1994, and
February 28, 1993, are as follows:
1995 1994 1993
Domestic $ (1,014,997) $ 221,748 $(50,196,999)
Foreign 3,345,079 3,925,808 3,857,539
$ 2,330,082 $ 4,147,556 $(46,339,460)
The components of the provision for income taxes for the years ended
February 26, 1995, February 27, 1994, and February 28, 1993, are as follows:
1995 1994 1993
Current--
Federal $ -- $ -- $ --
State 700,000 636,449 875,399
Foreign 1,058,164 373,551 80,733
Total provision $1,758,164 $1,010,000 $ 956,132
The Company's effective tax rate differs from the federal statutory rate of
35% in fiscal 1995 and 1994 and 34% in fiscal 1993 due to the following:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Computed tax provision
(benefit) at statutory rate $ 815,529 $ 1,451,645 $(15,755,416)
Increases (reductions)
resulting from--
Difference between U.S.
and foreign tax rates 1,061,886 378,940 80,733
Repatriation of foreign earnings -- -- 3,310,405
State taxes 700,000 636,449 654,871
Tax basis differences related to
Little Switzerland, Inc.
common stock exchange (2,110,946) -- --
Loss on assets held for sale
or disposal not deductible
for income tax purposes -- -- 1,734,000
Items not deductible for
income tax purposes 92,488 65,378 1,092,476
(Utilization) deferral of net
operating losses 1,199,207 (1,522,412) 9,618,535
Other -- -- 220,528
$ 1,758,164 $ 1,010,000 $ 956,132
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DEFERRED TAX ASSETS (in 000's) February 26, February 27,
1995 1994
<S> <C> <C>
Restructuring and recapitalization cost accruals $ 4,227 $ 6,108
Accounts receivable reserves 4,120 4,861
Accrual for loss on assets held for sale or disposal 742 1,873
Inventories 1,265 1,413
Other 1,640 1,899
Net operating loss carryforwards 14,810 10,944
Total gross deferred tax assets 26,804 27,098
Less--valuation allowance (14,782) (8,742)
Net deferred tax assets $ 12,022 $ 18,356
</TABLE>
<TABLE>
<CAPTION>
DEFERRED TAX LIABILITIES (in 000's) February 26, February 27,
1995 1994
<S> <C> <C>
Property, plant and equipment, principally due to
differences in depreciation $ 6,121 $ 6,888
Investments in affiliated companies, principally
due to undistributed income 5,479 9,815
Other 422 1,653
Total deferred tax liabilities 12,022 18,356
Net deferred tax asset (liability) $ -- $ --
</TABLE>
The valuation allowance relates to uncertainty surrounding the
realizability of the deferred tax assets in excess of the deferred tax
liabilities, principally the net operating loss carryforwards.
For tax reporting purposes, the Company has a U.S. net operating loss
carryforward of approximately $34 million, subject to Internal Revenue Service
review and approval. In addition, net operating loss carryforwards of
approximately $2,500,000 were generated by a U.S. subsidiary prior to its
acquisition by the Company. Utilization of the subsidiary's net operating loss
carryforward is contingent on the subsidiary's ability to generate income in
future years. The net operating loss carryforwards will expire from 2009 to 2010
if not utilized.
(7) LOSS ON Assets Held for Sale or Disposal
In fiscal 1993, the Company's management decided to make changes with
respect to certain of the operations of its Balfour subsidiary. As a result of
this decision, the Company recognized a pretax charge of $14.5 million in the
fourth quarter of fiscal 1993 to reserve for the losses associated with the
disposal of certain inventory and fixed assets, including property, plant, and
equipment of approximately $12.9 million and intangible assets of approximately
$1.6 million, no longer considered necessary to its modified business. At
February 26, 1995, the disposals have been substantially completed and the
remaining reserve, of approximately $1.8 million, is intended to cover the
expected losses associated with the disposition of the plant, which is currently
for sale.
(8) Zale Corporation and Affiliates
The Company's largest customer for a number of years has been the Zale
Corporation and its affiliated companies. Sales to the Zale Companies were
approximately $29 million or 10% of consolidated sales in fiscal 1995 compared
to $33 million or 12% of consolidated sales in fiscal 1994 and $38 million or
14% of consolidated sales in fiscal 1993.
The Company's Consolidated Financial Statements at February 28, 1992,
originally reflected a net valuation, related to Zale Corporation's bankruptcy
filing under Chapter 11 of the United States Bankruptcy Code, of approximately
$13 million, which was classified as Other Assets in the Consolidated Balance
Sheets, due to the uncertainty of the timing of a final settlement. The Company
has subsequently received proceeds from Zale and from liquidation of claim
assets of approximately $13 million, approximately $6 million and $4 million of
which were received in fiscal 1995 and 1994, respectively, and will recognize
the benefit of any additional liquidation of assets as that benefit is realized.
The Company continues to conduct business with Zale.
(9) Concentration of Credit Risk
A significant portion of the Company's business activity is with large
jewelry retailers and department store chains, many of which are not only
subject to the risks associated with economic impacts on retailers of
discretionary, consumer goods but also are companies with high debt-to-equity
ratios.
(10) Nonrecurring Events
Based on the success of its operational restructuring during fiscal 1993,
the Company concluded that the Feature facility in New York will not be required
as a long-term manufacturing site. The Company expects to maintain a continuing
presence in New York in the form of sales and marketing functions, product
development, and manufacturing support services, including a repair function and
subcontractor control operations. These functions will remain in the Feature
facility until the Company is able to sell the facility at a price which it
considers acceptable. As a result of its decision to dispose of the facility,
the Company adjusted the carrying value of the Feature facility by approximately
$5 million, which was recorded as a restructuring charge during the fourth
quarter of fiscal 1993. As of February 26, 1995, the Company has not sold this
facility (See Note 2).
<PAGE>
(11) Capitalization
Each share of Class B Common Stock entitles the holder to ten votes, each
share of Class A Common Stock entitles the holder to one vote, and each share of
Convertible Preferred Stock entitles the holder to the number of votes per share
equal to the number of shares of Class A Common Stock into which each share of
Convertible Preferred Stock is then convertible, on matters submitted to
stockholders. The Class B Common Stock is convertible at any time, at the option
of the holder, into Class A Common Stock on a share-for-share basis. The
Convertible Preferred Stock is initially convertible, at the option of the
holder, into two shares of Class A Common Stock, subject to adjustment in
certain circumstances. As part of the recapitalization, the Company issued to
its financial advisors warrants to purchase 125,000 shares of Class A Common
Stock, with an exercise price of $2.685 per share and a final maturity of five
years from the date of issuance of the warrants.
The Company's ability to pay cash dividends is limited by its financing and
other outstanding indebtedness. As a result of these restrictions, the Company
currently may not pay cash dividends.
(12) Commitments and Contingencies
The Company leases a portion of its Chelsea, Massachusetts, facility
comprised of approximately 44,000 square feet of combined manufacturing and
administrative space from Carey Realty Trust, a Massachusetts business trust
(the "Trust"), which is wholly owned by C. William Carey, the President and a
major stockholder of the Company. The lease expires on August 31, 1998, and the
Company has four five-year options to renew. The current lease provides for an
annual rental (subject to a Consumer Price Index adjustment) on a net lease
basis of $475,000. The Company obtained comparison information from a third
party when negotiating the current lease and believes that these lease
arrangements are on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.
Certain other Company facilities and equipment are leased under agreements
expiring at various dates through 2009. The Company's commitments under the
noncancelable portion of all operating leases for the next five years and in
total thereafter at February 26, 1995, are approximately as follows:
<PAGE>
Year Total Commitment
1996 $ 1,344,000
1997 1,204,000
1998 1,152,000
1999 871,000
2000 642,000
Thereafter 6,326,000
Lease and rental expense included in the accompanying consolidated
statements of operations amounted to approximately $1,414,000, $1,090,000, and
$1,290,000 for the years ended February 26, 1995, February 27, 1994, and
February 28, 1993, respectively.
A subsidiary of the Company is a party to certain contracts with some of
its sales representatives whereby the representative has purchased the right to
sell the subsidiary's products, in a territory, from his predecessor. The
contracts generally provide that the value of these rights is primarily
determined by the amount of business achieved by a successor sales
representative and is therefore not determinable in advance of performance by
the successor sales representative.
The Company is not party to any pending legal proceedings, other than
ordinary routine litigation incidental to the business. In management's opinion,
adverse decisions on those legal proceedings, in the aggregate, would not have a
materially adverse impact on the Company's consolidated results of operations or
financial position.
(13) Stock Option Plan
An aggregate of 1,500,000 shares of Class A Common Stock were registered
for issuance under the Company's 1985 Amended and Restated Stock Option Plan
(the Plan). The Plan is administered by a committee of the Board of Directors.
Both incentive stock options and nonstatutory stock options may be granted under
the Plan. All options outstanding were issued at the fair market value at the
date of grant.
The following table summarizes the stock option transactions for the three
years ended February 26, 1995:
<PAGE>
Number of Options Price Range Per Share
Options outstanding at
February 29, 1992 803,300 $ 2.38 - $ 8.00
Options granted -
Options canceled (44,800) 3.00 - 6.75
Options exercised -
Options outstanding at
February 28, 1993 758,500 $ 2.38 - $ 8.00
Options granted 50,000 2.63
Options canceled (70,100) 3.00 - 5.63
Options exercised -
Options outstanding at
February 27, 1994 738,400 $ 2.38 - $ 8.00
Options granted 598,500 2.31 - 2.38
Options canceled (482,750) 2.38 - 8.00
Options exercised -
Options outstanding at
February 26, 1995 854,150 $ 2.31 - $ 6.88
Options exercisable at
February 26, 1995 242,800
At February 26, 1995, there were 511,400 shares reserved for future grants
under the Plan.
The Company has granted stock options not under the Plan to consultants and
various individuals to purchase up to 1,580,000 shares of Class A Common Stock
at prices ranging from $1.75 to $6.75 per share (fair market value at the date
of grant). The Company has also created a stock option plan for non-employee
directors and the Board of Directors has approved the reservation of 200,000
shares of authorized Class A Common Stock for issuance under this plan. On
October 1, 1994, options for 60,000 shares were granted, contingent on an
affirmative stockholder vote approving the plan, at a price of $1.875 per share,
the fair market value at the date of grant.
(14) Employee Stock Purchase Plan
On January 25, 1988, the Board of Directors adopted the 1988 Employee Stock
Purchase Plan (the "Stock Purchase Plan") for 500,000 shares of the Class A
Common Stock. Under the Stock Purchase Plan, each eligible participating
employee is deemed to have been granted an option to purchase shares of the
Company's Class A Common Stock on a semiannual basis at a price equal to 90% of
the market value on the last day of the period. During the year ended February
26, 1995, 5,855 shares were issued at $2.50 per share and 17,260 shares were
issued at $0.75 per share. During the year ended February 27, 1994, 7,926 shares
were issued at $2.50 per share and 5,018 shares were issued at $3.00 per share.
During the year ended February 28, 1993, 14,171 shares were issued at $2.00 per
share and 10,121 shares were issued at $2.25 per share. At February 26, 1995,
there were 306,537 shares reserved for issuance under the Stock Purchase Plan.
(15) Employee Benefit Plans
(a) Postemployment Medical Benefits
In December 1990, the Financial Accounting Standards Board issued SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions,"
which requires that the accrual method of accounting for certain postretirement
benefits be adopted. Adoption is required for fiscal years beginning after
December 1992. A subsidiary of the Company provides certain health care and life
insurance benefits for employees who retired prior to December 31, 1990. The
Company adopted this statement in fiscal 1994 and is recognizing the actuarial
present value of the accumulated postretirement benefit obligation (APBO) of
approximately $6.1 million on the delayed recognition method over a period of 20
years. Prior to adopting SFAS No. 106, the cost of providing these benefits was
expensed as incurred and amounted to approximately $508,000 for the year ended
February 28, 1993.
The following table sets forth the plan status as of February 26, 1995, and
February 27, 1994.
February 26, February 27,
1995 1994
Accumulated postretirement benefit
obligation (in 000's)
Retired employees $(6,088) $(6,477)
Active employees -- --
Total (6,088) (6,477)
Plan assets at fair value -- --
Unfunded accumulated benefit
obligation in excess of plan assets (6,088) (6,477)
Unrecognized net gain (73) --
Unrecognized prior service cost -- --
Unrecognized transition obligation 5,810 6,162
Accrued postretirement medical
benefit cost $ (351) $ (315)
The net periodic postretirement benefit costs for fiscal 1995 and fiscal
1994 included the following components:
1995 1994
Service cost -- benefits attributed to
service during the period (in 000's) $ -- $ --
Interest cost 474 494
Actual return on assets -- --
Amortization of unrecognized transition
obligation 323 324
Net periodic postretirement benefit cost $797 $818
For measurement purposes, a 14% annual rate of increase in the per-capita
cost of covered health care benefits is assumed for fiscal 1995 (10% for
Medicare eligible retirees); the rate was assumed to decrease gradually down to
6% for fiscal 2000 and remain at that level thereafter. The health care cost
trend rate assumption has a significant effect on the amounts reported. To
illustrate, increasing the assumed health care cost trend rate one percentage
point in each year would increase the accumulated postretirement benefit
obligation as of February 26, 1995, by $426,000 or by 7%, and the aggregate of
the service and interest cost components of the net periodic postretirement
benefit cost for fiscal 1995 by $28,000 or by 6%.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.0% in fiscal 1995 and 1994.
<PAGE>
(b) Pension Plans
Certain subsidiaries of the Company participate in multiemployer pension
plans. The plans provide for defined benefits for substantially all unionized
employees. The amounts charged for pension contributions were approximately
$20,000, $62,000, and $96,000 for the years ended February 26, 1995, February
27, 1994, and February 28, 1993, respectively.
(c) Deferred Compensation
A subsidiary of the Company has deferred compensation agreements with
certain sales representatives and executives which provide for payments upon
retirement or death based on the value of life insurance policies or mutual fund
shares at the retirement date. The cost of the subsidiary's liability under
these compensation agreements has been charged to selling, general and
administrative expense. The deferred compensation expense for the years ended
February 26, 1995, February 27, 1994, and February 28, 1993, was approximately
$156,000, $156,000, and $220,000, respectively.
(16) Consolidating Financial Information and Segment Information
The securities issued by the Company in connection with the Company's
recapitalization, discussed in Note 2, are guaranteed by its domestic
subsidiaries. These guarantees are full, unconditional, and joint and several.
As a result, the Company has included condensed consolidating financial
statements on a domestic and foreign basis for the Company, the domestic
subsidiaries, and the foreign subsidiaries for the years ended February 26,
1995, February 27, 1994, and February 28, 1993 (in 000's). Foreign gross profit
includes gross profit attributable to sales from foreign subsidiaries to
domestic subsidiaries, which is not included in the eliminations column as the
impact is included in cost of sales of the domestic subsidiaries.
<PAGE>
<TABLE>
<CAPTION>
February 26, 1995 (000's)
ASSETS Parent Domestic Foreign
Company Subsidiaries Subsidiaries Eliminations Consolidated
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 41 $ - $ 4,758 $ (1,462)$ 3,337
Restricted cash 2 - - - 2
Accounts receivable, net 74 55,453 4,031 (2,086) 57,472
Inventories (2,109) 78,076 4,382 - 80,349
Prepaid expenses and other
current assets (361) 532 403 - 574
Total current assets (2,353) 134,061 13,574 (3,548) 141,734
PROPERTY, PLANT AND
EQUIPMENT, at cost 296 74,210 7,749 - 82,255
Less--Accumulated
depreciation 255 35,444 3,320 - 39,019
41 38,766 4,429 - 43,236
INTERCOMPANY LOANS 13,728 2,008 3,463 (19,199) -
INVESTMENT IN SUBSIDIARIES 148,501 - - (148,501) -
INVESTMENT IN LITTLE
SWITZERLAND, INC. 1,651 - - - 1,651
INVESTMENT IN SOLOMON
BROTHERS, LIMITED 13,734 - - - 13,734
OTHER ASSETS 211 5,687 370 - 6,268
$ 175,513 $ 180,522 $ 21,836 $ (171,248)$ 206,623
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 26, 1995 (000's)
LIABILITIES AND STOCKHOLDERS' Parent Domestic Foreign
EQUITY Company Subsidiaries Subsidiaries Eliminations Consolidated
CURRENT LIABILITIES:
<S> <C> <C> <C> <C> <C>
Notes payable $ 15,201 $ (4,083)$ - $ - $ 11,118
Current portion of long-
term debt 447 788 - - 1,235
Accounts payable 1,581 16,670 1,644 (2,086) 17,809
Accrued expenses 994 14,186 279 - 15,459
Accrued and currently
deferred income taxes 824 - 529 - 1,353
Total current liabilities 19,047 27,561 2,452 (2,086) 46,974
LONG-TERM DEBT, less
current portion 91,045 21,054 - (20,661) 91,438
LONG-TERM DEFERRED
INCOME TAXES AND
OTHER LIABILITIES - 1,494 1 - 1,495
MINORITY INTEREST - - - 4,617 4,617
EXCHANGEABLE PREFERRED
STOCK 2,266 - - - 2,266
STOCKHOLDERS' EQUITY:
Convertible preferred stock 2,381 - - - 2,381
Common stock 234 5 2,109 (2,114) 234
Additional paid-in capital 73,145 232,774 8,515 (241,289) 73,145
Retained earnings (deficit) (12,605) (102,366) 8,759 90,285 (15,927)
Total stockholders' equity 63,155 130,413 19,383 (153,118) 59,833
$ 175,513 $ 180,522 $ 21,836 $ (171,248)$ 206,623
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 26, 1995 (000's)
CONSOLIDATING STATEMENT Parent Domestic Foreign
OF OPERATIONS Company Subsidiaries Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
NET SALES $ - $ 271,294 $ 37,822 $ (21,001)$ 288,115
COST OF SALES (1,050) 192,766 30,178 (21,360) 200,534
Gross profit $ 1,050 $ 78,528 $ 7,644 $ 359 $ 87,581
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 1,058 85,391 3,959 - 90,408
Income (loss) from operations $ (8)$ (6,863)$ 3,685 $ 359 $ (2,827)
INTEREST EXPENSE, net (1,288) (10,730) 83 - (11,935)
INCOME FROM AFFILIATES 588 - - - 588
GAIN ON LITTLE SWITZERLAND,
INC. EXCHANGE 17,278 - - - 17,278
MINORITY INTEREST - - - (774) (774)
Income (loss) before income
taxes $ 16,570 $ (17,593)$ 3,768 $ (415)$ 2,330
PROVISION FOR INCOME TAXES 195 435 1,058 70 1,758
Net income (loss) $ 16,375 $ (18,028)$ 2,710 $ (485)$ 572
ACCRETION OF DISCOUNT AND
DIVIDENDS ON PREFERRED 1,688 - - - 1,688
STOCKS
Income (loss) attributable
to common stockholders $ 14,687 $ (18,028)$ 2,710 $ (485)$ (1,116)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 26, 1995 (000's)
CONSOLIDATING STATEMENT Parent Domestic Foreign
OF CASH FLOWS Company Subsidiaries Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Net income (loss) $ 16,375 $ (18,028)$ 2,710 $ (485)$ 572
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities--
Depreciation and amortization (1,302) 5,513 635 - 4,846
Loss on disposal of fixed asset - 70 4 - 74
Gain on Little Switzerland, Inc.
exchange (17,278) - - - (17,278)
Interest paid by debt issuance 7,648 - - - 7,648
Undistributed earnings of
affiliates net of minority
interest (588) - - 774 186
Change in assets and liabilities--
(Increase) decrease in accounts
receivable 1,522 (339) (1,449) (1,583) (1,849)
(Increase) decrease in
inventories 210 (5,003) (168) (359) (5,320)
(Increase) decrease in prepaid
expenses and other current
assets 594 2,798 (55) 81 3,418
(Increase) decrease in other
assets 56 6,340 146 - 6,542
Increase (decrease) in accounts
payable (248) 3,157 590 1,583 5,082
Increase (decrease) in accrued
expenses (3,830) (191) (576) - (4,597)
Increase (decrease) in accrued
and deferred taxes 498 (275) 266 (11) 478
Increase (decrease) in other
liabilities - (599) - - (599)
Net cash provided by
(used in) operating
activities $ 3,657 $ (6,557)$ 2,103 $ - $ (797)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF February 26, 1995 (000's)
CASH FLOWS (Continued) Parent Domestic Foreign
Company Subsidiaries Subsidiaries Eliminations Consolidated
CASH FLOWS FROM INVESTING
ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Proceeds from sale of fixed
assets $ - $ 43 $ 2 $ - $ 45
Capital expenditures (7) (2,210) (542) - (2,759)
Net cash used in
investing activities $ (7)$ (2,167)$ (540)$ - $ (2,714)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on revolving credit
facility $ (277,887)$ (2,103)$ - $ - $ (279,990)
Proceeds from borrowings under
revolving credit facility 291,108 - - - 291,108
(Increase) decrease in
restricted cash 36 - - - 36
Change in intercompany notes
payable (11,005) 12,343 (1,930) 592 -
Payments on debt (6,034) (1,574) - - (7,608)
Proceeds from the issuance of
common stock 28 - - - 28
Net cash provided by
(used in) financing
activities $ (3,754)$ 8,666 $ (1,930)$ 592 $ 3,574
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ (104)$ (58)$ (367)$ 592 $ 63
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 145 58 5,125 (2,054) 3,274
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 41 $ - $ 4,758 $ (1,462)$ 3,337
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 27, 1994 (000's)
ASSETS Parent Domestic Foreign
Company Subsidiaries Subsidiaries Eliminations Consolidated
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 145 $ 58 $ 5,125 $ (2,054)$ 3,274
Restricted cash 38 - - - 38
Accounts receivable, net 1,596 54,678 2,684 (3,334) 55,624
Inventories (1,899) 73,073 4,214 (359) 75,029
Prepaid expenses and other
current assets 233 3,329 349 81 3,992
Total current assets 113 131,138 12,372 (5,666) 137,957
PROPERTY, PLANT AND
EQUIPMENT, at cost 290 71,832 7,219 - 79,341
Less--Accumulated
depreciation 208 30,666 2,762 - 33,636
82 41,166 4,457 - 45,705
INTERCOMPANY LOANS 1,098 957 1,534 (3,589) -
INVESTMENT IN SUBSIDIARIES 163,819 - - (163,819) -
INVESTMENT IN LITTLE
SWITZERLAND, INC. 13,304 - - - 13,304
INVESTMENT IN SOLOMON
BROTHERS, LIMITED 13,734 - - - 13,734
OTHER ASSETS 303 12,331 587 - 13,221
$ 192,453 $ 185,592 $ 18,950 $ (173,074)$ 223,921
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 27, 1994 (000's)
LIABILITIES AND STOCKHOLDERS' Parent Domestic Foreign
EQUITY Company Subsidiaries Subsidiaries Eliminations Consolidated
CURRENT LIABILITIES:
<S> <C> <C> <C> <C> <C>
Notes payable $ 1,980 $ (1,980)$ - $ - $ -
Current portion of long-
term debt - 1,480 - - 1,480
Accounts payable 205 14,702 1,155 (3,334) 12,728
Accrued expenses 4,725 14,377 854 - 19,956
Accrued and currently
deferred income taxes 324 275 264 11 874
Total current liabilities 7,234 28,854 2,273 (3,323) 35,038
LONG-TERM DEBT, less
current portion 91,265 6,205 - (5,643) 91,827
LONG-TERM DEFERRED
INCOME TAXES AND
OTHER LIABILITIES - 2,093 1 - 2,094
MINORITY INTEREST - - - 3,843 3,843
EXCHANGEABLE PREFERRED
STOCK 35,785 - - - 35,785
STOCKHOLDERS' EQUITY:
Common stock 234 37,175 2,109 (39,284) 234
Additional paid-in capital 69,909 200,599 8,515 (209,114) 69,909
Retained earnings (deficit) (11,974) (89,334) 6,052 80,447 (14,809)
Total stockholders' equity 58,169 148,440 16,676 (167,951) 55,334
$ 192,453 $ 185,592 $ 18,950 $ (173,074)$ 223,921
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 27, 1994 (000's)
CONSOLIDATING STATEMENT Parent Domestic Foreign
OF OPERATIONS Company Subsidiaries Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
NET SALES $ 200 $ 258,898 $ 38,406 $ (19,754)$ 277,750
COST OF SALES (925) 170,785 30,250 (19,754) 180,356
Gross profit $ 1,125 $ 88,113 $ 8,156 $ - $ 97,394
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 960 75,824 3,437 - 80,221
Income from operations $ 165 $ 12,289 $ 4,719 $ - $ 17,173
INTEREST EXPENSE, net (3,589) (9,918) 161 - (13,346)
INCOME FROM AFFILIATES 1,262 - - - 1,262
MINORITY INTEREST - - - (941) (941)
Income (loss) before income
taxes $ (2,162)$ 2,371 $ 4,880 $ (941)$ 4,148
PROVISION FOR INCOME TAXES (1,218) 1,946 282 - 1,010
Net income (loss) $ (944)$ 425 $ 4,598 $ (941)$ 3,138
ACCRETION OF DISCOUNT ON
EXCHANGEABLE PREFERRED 1,454 - - - 1,454
STOCK
Income (loss) attributable
to common stockholders $ (2,398)$ 425 $ 4,598 $ (941)$ 1,684
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 27, 1994 (000's)
CONSOLIDATING STATEMENT Parent Domestic Foreign
OF CASH FLOWS Company Subsidiaries Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Net income (loss) $ (944)$ 425 $ 4,598 $ (941)$ 3,138
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities--
Depreciation and amortization (613) 5,646 595 - 5,628
Loss (gain) on disposal of
fixed assets - 25 (138) - (113)
Ordinary dividends received
from affiliate 3,274 - - (1,228) 2,046
Interest paid by debt issuance 3,496 - - - 3,496
Undistributed earnings of
affiliates net of minority
interest (1,169) - - 941 (228)
Change in assets and liabilities--
(Increase) decrease in accounts
receivable (1,380) (3,766) 887 255 (4,004)
(Increase) decrease in
inventories (925) (3,137) 2,467 - (1,595)
(Increase) decrease in prepaid
expenses and other current
assets 225 1,446 (86) 883 2,468
(Increase) decrease in other
assets (79) 3,557 244 - 3,722
Increase (decrease) in accounts
payable (1,471) 4,402 (772) (255) 1,904
Increase (decrease) in accrued
expenses 6,375 (3,557) (628) - 2,190
Increase (decrease) in accrued
and deferred taxes (776) 1,947 201 (883) 489
Increase (decrease) in other
liabilities - (1,086) (77) - (1,163)
Net cash provided by
(used in) operating
activities $ 6,013 $ 5,902 $ 7,291 $ (1,228)$ 17,978
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF February 27, 1994 (000's)
CASH FLOWS (Continued) Parent Domestic Foreign
Company Subsidiaries Subsidiaries Eliminations Consolidated
CASH FLOWS FROM INVESTING
ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Proceeds from sale of fixed
assets $ - $ 13 $ 210 $ - $ 223
Proceeds from sale of investments 3,486 - - - 3,486
Capital expenditures (207) (1,721) (2,129) - (4,057)
Net cash provided by
(used in) investing
activities $ 3,279 $ (1,708)$ (1,919)$ - $ (348)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on revolving credit
facility $ (204,889)$ (1,980)$ - $ - $ (206,869)
Proceeds from borrowings under
revolving credit facility 206,869 - - - 206,869
(Increase) decrease in restricted
cash (38) - - - (38)
Payments to retire credit facility (37,250) - - - (37,250)
Proceeds from senior secured notes 30,000 - - - 30,000
Change in intercompany notes
payable (701) 4,686 (1,931) (2,054) -
Payments for recapitalization
expenses (8,255) - - - (8,255)
Payments on debt (10,020) (3,646) - - (13,666)
Payment of dividends 6,800 - (8,563) 1,228 (535)
Proceeds from the issuance of
common stock 35 - - - 35
Net cash used in
financing activities $ (17,449)$ (940)$ (10,494)$ (826)$ (29,709)
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ (8,157)$ 3,254 $ (5,122)$ (2,054)$ (12,079)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 8,302 (3,196) 10,247 - 15,353
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 145 $ 58 $ 5,125 $ (2,054)$ 3,274
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 28, 1993 (000's)
ASSETS Parent Domestic Foreign
Company Subsidiaries Subsidiaries Eliminations Consolidated
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 8,302 $ (3,196)$ 10,247 $ - $ 15,353
Accounts receivable, net 216 51,254 3,411 (3,262) 51,619
Inventories (2,825) 70,833 6,681 (359) 74,330
Prepaid expenses and other
current assets 458 5,739 263 - 6,460
Total current assets 6,151 124,630 20,602 (3,621) 147,762
PROPERTY, PLANT AND
EQUIPMENT, at cost 1,181 70,391 5,398 - 76,970
Less--Accumulated
depreciation 347 27,563 2,452 - 30,362
834 42,828 2,946 - 46,608
INTERCOMPANY LOANS 397 - - (397) -
INVESTMENT IN SUBSIDIARIES 166,825 - - (166,825) -
INVESTMENT IN LITTLE
SWITZERLAND, INC. 12,198 - - - 12,198
INVESTMENT IN SOLOMON
BROTHERS, LIMITED 19,202 - - - 19,202
OTHER ASSETS 3,801 16,405 882 - 21,088
$ 209,408 $ 183,863 $ 24,430 $ (170,843)$ 246,858
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 28, 1993 (000's)
LIABILITIES AND STOCKHOLDERS' Parent Domestic Foreign
EQUITY Company Subsidiaries Subsidiaries Eliminations Consolidated
CURRENT LIABILITIES:
<S> <C> <C> <C> <C> <C>
Notes payable $ 7,250 $ - $ - $ - $ 7,250
Current portion of long-
term debt - 3,668 - - 3,668
Accounts payable 1,675 10,643 1,767 (3,262) 10,823
Accrued expenses 21,573 17,932 1,484 - 40,989
Accrued and currently
deferred income taxes 817 (307) (54) (70) 386
Total current liabilities 31,315 31,936 3,197 (3,332) 63,116
LONG-TERM DEBT, less
current portion 151,173 1,133 397 (397) 152,306
LONG-TERM DEFERRED
INCOME TAXES AND
OTHER LIABILITIES 283 2,778 195 - 3,256
MINORITY INTEREST - - - 3,436 3,436
STOCKHOLDERS' EQUITY:
Common stock 127 33,284 2,109 (35,393) 127
Additional paid-in capital 41,111 199,495 8,515 (208,010) 41,111
Retained earnings (deficit) (14,601) (84,763) 10,017 72,853 (16,494)
Total stockholders' equity 26,637 148,016 20,641 (170,550) 24,744
$ 209,408 $ 183,863 $ 24,430 $ (170,843)$ 246,858
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 28, 1993 (000's)
CONSOLIDATING STATEMENT Parent Domestic Foreign
OF OPERATIONS Company Subsidiaries Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
NET SALES $ - $ 255,243 $ 38,149 $ (23,028)$ 270,364
COST OF SALES - 173,275 29,587 (23,028) 179,834
Gross profit $ - $ 81,968 $ 8,562 $ - $ 90,530
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES &
RESTRUCTURING CHARGE 4,396 81,181 4,673 - 90,250
Income (loss) from operations $ (4,396)$ 787 $ 3,889 $ - $ 280
INTEREST EXPENSE, net 5,818 (26,185) 955 - (19,412)
NET LOSS ON NONRECURRING
ITEMS - (14,500) - - (14,500)
RECAPITALIZATION EXPENSES (14,440) - - - (14,440)
INCOME FROM AFFILIATES 2,722 - - - 2,722
MINORITY INTEREST - - - (989) (989)
Income (loss) before income
taxes $ (10,296)$ (39,898)$ 4,844 $ (989)$ (46,339)
PROVISION FOR INCOME TAXES 317 558 81 - 956
Net income (loss) $ (10,613)$ (40,456)$ 4,763 $ (989)$ (47,295)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
February 28, 1993 (000's)
CONSOLIDATING STATEMENT Parent Domestic Foreign
OF CASH FLOWS Company Subsidiaries Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Net income (loss) $ (10,613)$ (40,456)$ 4,763 $ (989)$ (47,295)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities--
Depreciation and amortization 1,527 6,468 673 - 8,668
Loss (gain) on disposal of
fixed assets (28) 3 (2,559) - (2,584)
Restructuring provision - 5,000 - - 5,000
Loss on assets held for sale or
disposal - 14,500 - - 14,500
Bank fees paid by issuance of
common stock 1,274 - - - 1,274
Undistributed earnings of
affiliates net of minority
interest (2,443) - - 989 (1,454)
Change in assets and liabilities--
(Increase) decrease in accounts
receivable 91 (10,568) 1,292 19 (9,166)
(Increase) decrease in
inventories 2,824 (8,621) 4,174 - (1,623)
(Increase) decrease in prepaid
expenses and other current
assets (26) 2,065 618 - 2,657
(Increase) decrease in other
assets - 2,632 532 - 3,164
Increase (decrease) in accounts
payable (2,970) 3,308 632 (19) 951
Increase (decrease) in accrued
expenses 5,921 4,738 383 - 11,042
Increase (decrease) in accrued
and deferred taxes 428 (1,400) (51) - (1,023)
Increase (decrease) in other
liabilities - (301) (6) - (307)
Net cash provided by
(used in) operating
activities $ (4,015)$ (22,632)$ 10,451 $ - $ (16,196)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATING STATEMENT OF February 28, 1993 (000's)
CASH FLOWS (Continued) Parent Domestic Foreign
Company Subsidiaries Subsidiaries Eliminations Consolidated
CASH FLOWS FROM INVESTING
ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Proceeds from sale of fixed
assets $ 61 $ (80)$ 3,908 $ - $ 3,889
Capital expenditures (690) (1,794) (1,035) - (3,519)
Net cash provided by
(used in) investing
activities $ (629)$ (1,874)$ 2,873 $ - $ 370
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of debt $ 31,000 $ - $ - $ - $ 31,000
Change in intercompany notes
payable (16,392) 21,727 (5,335) - -
Payments on debt (10,750) (736) - - (11,486)
Payment of dividends 3,275 - (4,694) - (1,419)
Proceeds from the issuance of
common stock 136 - (80) - 56
Net cash provided by
(used in) financing
activities $ 7,269 $ 20,991 $ (10,109)$ - $ 18,151
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ 2,625 $ (3,515)$ 3,215 $ - $ 2,325
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 5,677 319 7,032 - 13,028
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 8,302 $ (3,196)$ 10,247 $ - $ 15,353
</TABLE>
<PAGE>
Report of Independent Public Accountants
On Schedules
To Town & Country Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Town & Country Corporation and
subsidiaries included in this Form 10-K and have issued our report thereon dated
April 27, 1995. Our audit was made for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. The schedules listed
in Item 14 (a) (2) are the responsibility of the Company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic consolidated financial
statements. These schedules have been subjected to the auditing procedures
applied in the audit of the basic consolidated financial statements and, in our
opinion, fairly state, in all material respects, the financial data required to
be set forth therein, in relation to the basic consolidated financial statements
taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
April 27, 1995
<PAGE>
<TABLE>
SCHEDULE II
Valuation Accounts
<CAPTION>
Balance Write-offs, Balance
Beginning Net of End of
Description of year Provision Recoveries Year
Allowance for Doubtful
Accounts:
For the Year Ended:
<S> <C> <C> <C> <C>
February 26, 1995 $ 5,510,000 $ 5,473,000 $ (3,203,000)$ 7,780,000
February 27, 1994 4,910,000 2,550,000 (1,950,000) 5,510,000
February 28, 1993 6,392,000 1,746,000 (3,228,000) 4,910,000
</TABLE>
<PAGE>
EXHIBITS
TOWN & COUNTRY CORPORATION AND SUBSIDIARIES
Exhibits, other than Exhibits 11, 22, 24.1, and 27, have been omitted.
The Company will supply, upon written request, copies of any exhibit from the
Document list.
EXHIBIT 4.8
Form CD-26-5M-8-83
The Commonwealth of Massachusetts
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2384321
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING
A SERIES OF A CLASS OF STOCK
General Laws, Chapter 156B, Section 26
---------
We, C. William Carey , President / and
Richard E. Floor , Clerk of
TOWN & COUNTRY CORPORATION
(Name of Corporation)
located at 25 Union Street, Chelsea, MA 02150 do hereby certify that pursuant to
a consent in lieu of special meeting of the directors of the corporation dated
November 18, 1994, the following vote establishing and designating a series of a
class of stock and determining the relative rights and preferences thereof was
duly adopted: -
See attached pages 2A to 17A.
Note: Votes for which the space provided above is not sufficient should be set
out on continuation sheets to be numbered 2A, 2B, etc. Continuation sheets must
have a left-hand margin 1 inch wide for binding and shall be 8 1/2" x 11". Only
one side should be used.
<PAGE>
VOTE OF DIRECTORS
ESTABLISHING SERIES OF
CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
TOWN & COUNTRY CORPORATION
Pursuant to Section 26 of Chapter 156B of the General Laws of the Commonwealth
of Massachusetts:
VOTED, that as a result of the reacquisition by Town & Country Corporation
(the "Corporation") of shares of the Corporation's exchangeable preferred stock,
par value $1.00 per share (the "Exchangeable Preferred Stock"), the Board of
Directors of the Corporation, pursuant to Section 21A of Chapter 156B of the
General Laws of the Commonwealth of Massachusetts and pursuant to the
Certificate of Vote of Directors Establishing a Series of a Class of Stock dated
May 14, 1993 establishing the Exchangeable Preferred Stock, hereby restores such
reacquired shares of Exchangeable Preferred Stock to the status of authorized
but unissued shares of Preferred Stock of the Corporation and reduces the number
of shares of Exchangeable Preferred Stock authorized for issuance by the
Corporation from 2,700,000 shares to 200,000 shares.
VOTED, that pursuant to authority conferred upon the Board of Directors by
the Corporation's Articles of Organization, as amended as of the date hereof
(the "Articles"), the Board of Directors hereby establishes and designates a
series of Preferred Stock of the Corporation, and hereby fixes and determines
the relative rights and preferences of the shares of such series, in addition to
those set forth in the Articles of Organization, as follows:
Section 1. Designation, Amount and Liquidation Value.
The shares of the series of Preferred Stock shall be designated as
"Convertible Redeemable Preferred Stock," and the number of shares constituting
such series initially shall be 2,533,255; provided that pursuant to the terms of
this Certificate of Designation, the Corporation shall be authorized to issue
from time to time additional shares of Convertible Redeemable Preferred Stock
solely as payment in lieu of cash dividends payable on the Convertible
Redeemable Preferred Stock. Each share of Convertible Redeemable Preferred Stock
shall have a liquidation value equal to the sum of $6.50 (as adjusted to reflect
any stock dividend, subdivision, reclassification,
<PAGE>
distribution or similar event relating to the Convertible Redeemable Preferred
Stock) plus the amount of accrued and unpaid dividends thereon (the "Liquidation
Value").
Section 2. Definitions.
"AMEX" means the American Stock Exchange.
"Board of Directors" means the Board of Directors of the
Corporation.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of Boston or the Commonwealth of
Massachusetts or the State of New York are authorized or obligated by law or
executive order to close.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated and whether voting or nonvoting) corporate stock.
"Certificate of Designation" means the Certificate of Vote of
Directors Establishing a Series of a Class of Stock of the Corporation pursuant
to Section 26 of Chapter 156B of the General Laws of the Commonwealth of
Massachusetts, of which these votes form a part, creating the Convertible
Redeemable Preferred Stock and setting forth the terms, rights and preferences
thereof.
"Class A Common Stock" means the Class A Common Stock of the
Corporation, $.01 par value per share.
"Class B Common Stock" means the Class B Common Stock of the
Corporation, $.01 par value per share.
"Closing Date" means the date on which the shares of Convertible
Redeemable Preferred Stock are first issued.
"Conversion Notice" shall have the meaning set forth in
Section 5(c) hereof.
"Conversion Rate" shall have the meaning set forth in Section 5(a)
hereof, as adjusted from time to time pursuant to the provisions of Section 5(d)
hereof.
"Convertible Redeemable Preferred Stock" means the convertible
redeemable preferred stock of the Corporation, $1.00 par value per share,
established pursuant to this Certificate of Designation.
"Corporation Optional Conversion" shall have the meaning set forth in
Section 5(b) hereof.
"Corporation Optional Conversion Date" shall have the meaning set
forth in Section 5(c)(ii) hereof.
"Corporation Optional Conversion Notice" shall have the meaning set
forth in Section 5(c)(ii) hereof.
"Corporation Optional Redemption" shall have the meaning set forth in
Section 4(a) hereof.
"Dividend Period" shall mean the semi-annual periods commencing on
March 1 and September 1 of each year after the Closing Date and ending on and
including the day preceding the first day of the next succeeding Dividend
Period, provided that the Dividend Period for March 1, 1995 shall include the
period from the Closing Date up to March 1, 1995.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchangeable Preferred Stock" means the exchangeable preferred stock
of the Corporation, $1.00 par value per share.
"Fair Market Value" means the average of the Sale Price of a share of
Class A Common Stock for the 30 Trading Days immediately preceding the date on
which the Transfer Agent received a Conversion Notice or written notice of a
redemption, as the case may be.
"Holder" means the person in whose name shares of Convertible
Redeemable Preferred Stock are registered on the books of the Corporation.
"Junior Stock" means Class A Common Stock, Class B Common Stock, and
any other class or series of Capital Stock of the Corporation now or hereafter
issued and outstanding that ranks junior as to dividends and/or liquidation to
the Convertible Redeemable Preferred Stock.
"Lien" means any interest in property securing an obligation owed to,
or a claim by, a person other than the owner of the property, whether such
interest is based on the common law, statute or contract and including, without
limitation, any lien, security interest, mortgage, encumbrance, pledge, charge,
claim, hypothecation, assignment for security, deposit arrangement, conditional
sale or trust receipt, a lease, consignment or bailment for security purposes or
other security agreement of any kind or nature whatsoever. The term "Lien" shall
include stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements.
"Liquidation Value" shall have the meaning set forth in
Section 1 hereof.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"New Senior Secured Notes" means the Corporation's 11 1/2%
Senior Secured Notes due September 15, 1997.
"New Senior Subordinated Notes" means the Corporation's 13%
Senior Subordinated Notes due May 31, 1998.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Chief Financial Officer, the Treasurer or
the Clerk of the Corporation.
"Officers' Certificate" means a certificate signed by two Officers,
one of whom must be the Chairman of the Board, the President, the Chief
Financial Officer, the Treasurer or a Vice President of the Corporation.
"Optional Conversion Date" shall have the meaning set forth in Section
5(c)(i) hereof.
"Person" means an individual, a corporation, a partnership, a joint
venture, an association, a joint-stock company, a trust, a business trust, a
government or any agency or any political subdivision, any unincorporated
organization, or any other entity.
"Redemption Date" means the date on which shares of Convertible
Redeemable Preferred Stock are to be redeemed pursuant to Section 4.
"Revised Debt Agreements" means, collectively, the Credit Agreement
dated as of May 14, 1993 by and among the Corporation and certain of its
subsidiaries and Foothill Capital Corporation, and each of the amended and
restated consignment agreements dated as of May 14, 1993 by and between the
Corporation and each of its gold suppliers in each such case, as the same may be
amended, modified or supplemented in accordance with their respective terms from
time to time, and any credit, consignment or other agreement pursuant to which
the Corporation or any of its subsidiaries replaces, renews, refunds, refinances
or extends borrowings under such credit agreement or any of such consignment
agreements.
"Sale Price" means, with respect to Class A Common Stock, for any
given day, the closing sale price (or, if no closing sale price is reported, the
average of the bid and ask prices or if more than one in either case, the
average of the average bid and ask prices on such day) of a share of such
security as reported by AMEX or, in the event that such security is not traded
on AMEX, such other national or regional securities exchange or automated
quotations system upon which such security is listed and principally traded or,
if no such price is available, the per share market value of such security as
determined by a nationally recognized investment banking firm or other
nationally recognized financial adviser retained by the Corporation for such
purpose; provided, however, that if any such date shall not be a Trading Day,
the Sale Price shall be based on the specified price on the Trading Day
preceding such date.
"First Anniversary Date" means the first anniversary of the
Closing Date.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" of any Person means any subsidiary or group
of subsidiaries which would, individually or in the aggregate, be a "Significant
Subsidiary" as defined in Rule 1.02 of Regulation S-X under the Securities Act.
"subsidiary" means, as to any particular parent corporation, any
corporation, association, partnership or other business entity of which more
than 50% of the Voting Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such parent corporation.
"Trading Day" means each day on which AMEX or such other securities
exchange or automated quotations system on which shares of Class A Common Stock
are traded is open for the transaction of business or, if such securities are
not listed or admitted for trading on AMEX, any other securities exchange or
NASDAQ, a Business Day.
"Transfer Agent" means State Street Bank & Trust Company as transfer
agent for the Convertible Redeemable Preferred Stock until a successor replaces
it in accordance with the terms of the Transfer Agent Agreement and, thereafter,
means such successor.
"Voting Stock" with respect to any Person means all classes of Capital
Stock of such Person then outstanding and normally entitled to vote for the
election of directors of such Person. Any reference to a percentage of Voting
Stock shall refer to the percentage of votes eligible to be cast for the
election of directors which are attributable to the applicable shares of Voting
Stock.
Section 3. Dividends.
(a) Payment of Dividends. After the Closing Date, the Holders of
Convertible Redeemable Preferred Stock shall be entitled to receive, when and as
declared by the Board of Directors, cash dividends at the rate per annum of 6%
of the Liquidation Value. Notwithstanding anything to the contrary set forth
herein, the Corporation shall not be obligated to declare or pay cash dividends
on the Convertible Redeemable Preferred Stock if (i) the Corporation does not
have sufficient funds legally available to pay such dividends; (ii) directors of
the Corporation could be held jointly and severally liable for the payment of
such dividends under Massachusetts law; or (iii) the payment of such dividends
is prohibited by the certificate of designation for the Exchangeable Preferred
Stock, the indenture for the New Senior Secured Notes, the indenture for the New
Senior Subordinated Notes or the Revised Debt Agreements (provided that, in the
case of any credit, gold consignment or other agreement pursuant to which the
Corporation or any of its subsidiaries replaces, renews, refinances or extends
borrowings under any of the Revised Debt Agreements, such dividend restriction
is no more restrictive than the dividend restriction set forth in such Revised
Debt Agreement entered into on May 14, 1993); provided, however, that dividends
on the Convertible Redeemable Preferred Stock shall accrue (whether or not
declared) from and including the Closing Date to and including the date on which
the Liquidation Value is paid on such shares or on which such shares are
converted or redeemed and, to the extent not paid for any Dividend Period, will
be cumulative. If the Corporation is prohibited from paying cash dividends on
the Convertible Redeemable Preferred Stock, then in lieu of any cash payment due
to the Holders in respect of such dividends, the Corporation shall issue
additional shares of Convertible Redeemable Preferred Stock having an aggregate
Liquidation Value equal to the amount of such dividend payments. Notwithstanding
anything to the contrary set forth herein, the issuance of additional shares of
Convertible Redeemable Preferred Stock (and the issuance of shares of Class A
Common Stock upon the automatic conversion of such shares of Convertible
Redeemable Preferred Stock as set forth in Section 5(c)(i) and Section 5(c)(ii)
hereof) in lieu of cash dividends for any Dividend Period shall be deemed to
have satisfied for all purposes the Corporation's requirement to pay such
dividends for such Dividend Period and such dividends shall cease to accrue upon
such issuance. If at any time the Corporation pays a portion of any dividends in
cash and a portion in additional shares of Convertible Redeemable Preferred
Stock, the cash portion and the share portion of such dividend payment shall be
distributed ratably among the Holders of Convertible Redeemable Preferred Stock
based upon the aggregate dividends payable on the shares of Convertible
Redeemable Preferred Stock held by such Holders. Dividends on the Convertible
Redeemable Preferred Stock, whether paid in cash or in shares of Convertible
Redeemable Preferred Stock, shall be payable semiannually, when and as declared
by the Board of Directors, on each March 1 and September 1 after the Closing
Date. Each such dividend shall be payable to Holders of Convertible Redeemable
Preferred Stock at the close of business on the record date, which record date
shall be not more than 60 days prior to the date fixed for payment thereof.
Dividends payable on the Convertible Redeemable Preferred Stock shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
(b) Distribution of Partial Dividend Payments. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Convertible Redeemable Preferred
Stock, such payment shall be distributed ratably among the Holders of
Convertible Redeemable Preferred Stock based upon the aggregate accrued but
unpaid dividends on the shares of Convertible Redeemable Preferred Stock held by
such Holders.
(c) Certain Restrictions. So long as any shares of Convertible
Redeemable Preferred Stock are outstanding, no dividends or other distributions
shall be declared or paid or set apart for payment on any class or series of
Junior Stock unless the Corporation shall have deposited with the Transfer Agent
cash sufficient to pay the then-applicable redemption price for all shares of
Convertible Redeemable Preferred Stock then outstanding plus cash sufficient to
pay all accrued but unpaid dividends thereon; provided, however, that
notwithstanding the foregoing, the Corporation shall be able to make any
required payments under (i) the Registration Effectiveness Agreement, dated as
of May 14, 1993, by and between the Corporation and certain funds managed by
Fidelity Research & Management Company and Fidelity Management Trust Company and
(ii) the Registration Rights Agreement, dated as of the Closing Date, by and
between the Corporation and the Holders.
(d) Exceptions. As used in this Section 3, the term "dividend" shall
not include dividends payable solely in shares of Junior Stock, or options,
warrants or rights to subscribe for or purchase shares of any Junior Stock.
Section 4. Redemption.
(a) Optional Redemption. Shares of Convertible Redeemable Preferred
Stock may not be redeemed by the Corporation prior to the First Anniversary
Date. On and after the First Anniversary Date, to the extent permitted by law,
by the Revised Debt Agreements, by the indentures for the New Senior Secured
Notes and the New Senior Subordinated Notes, and by the certificate of
designation for the Exchangeable Preferred Stock, the Corporation may redeem
shares of Convertible Redeemable Preferred Stock in whole at any time or in part
from time to time at a redemption price per share set forth below (expressed as
a percentage of the Liquidation Value) if redeemed during the twelve-month
period beginning November 23 of the year indicated below (a "Corporation
Optional Redemption"):
Year Percentage
1995 104%
1996 102
1997 and thereafter 100
(b) Procedures for Redemption.
(i) If fewer than all the shares of Convertible Redeemable
Preferred Stock are to be redeemed, the number of shares of Convertible
Redeemable Preferred Stock to be redeemed from each Holder thereof in
redemptions hereunder shall be the number of shares determined by multiplying
the total number of shares of Convertible Redeemable Preferred Stock to be
redeemed by a fraction, the numerator of which shall be the total number of
shares of Convertible Redeemable Preferred Stock held by such Holder and the
denominator of which shall be the total number of shares of Convertible
Redeemable Preferred Stock then outstanding. Upon surrender of a stock
certificate of Convertible Redeemable Preferred Stock that is redeemed in part,
the Corporation shall execute and deliver or have delivered to a Holder (at the
Corporation's expense) a new stock certificate representing an amount equal to
the unredeemed portion of the stock certificate surrendered.
(ii) At least 45 days but not more than 60 days before the
Redemption Date, the Corporation or, at the Corporation's request, the Transfer
Agent shall mail a notice of redemption by first-class mail to each Holder. This
notice shall identify the shares of Convertible Redeemable Preferred Stock to be
redeemed and shall, among other things, state:
(A) the Redemption Date;
(B) the redemption price and the amount and type of
consideration being paid in connection with the redemption;
(C) the name and address of the Transfer Agent;
(D) that the shares of Convertible Redeemable
Preferred Stock called for redemption must be surrendered to the Transfer
Agent to collect the redemption price;
(E) if fewer than all of the outstanding shares of
Convertible Redeemable Preferred Stock are to be redeemed, the identification
and amounts of the shares of Convertible Redeemable Preferred Stock to be
redeemed, and that after the applicable Redemption Date, upon surrender of such
shares of Convertible Redeemable Preferred Stock, a new stock certificate equal
to the unredeemed portion will be issued; and
(F) the Conversion Rate and the date established
pursuant to Section 5(c)(iv) on which the right to convert the shares of
Convertible Redeemable Preferred Stock into Class A Common Stock shall expire
and instructions for converting the Convertible Redeemable Preferred Stock,
including the requirement that the shares of Convertible Redeemable Preferred
Stock to be converted must be delivered to the Transfer Agent to receive the
Class A Common Stock.
In the event that the Corporation shall mail the redemption notice to
Holders, a copy of such notice shall also be simultaneously mailed to the
Transfer Agent. Failure to give notice or any defect in the notice to any Holder
shall not affect the validity of the notice given to any other Holder.
(iii) In the case of a Corporation Optional Redemption made
pursuant to Section 4(a), the Corporation shall pay such redemption price in
cash. Not later than two (2) Business Days prior to the Redemption Date, the
Corporation shall deposit with the Transfer Agent cash sufficient to pay the
redemption price for all shares of Convertible Redeemable Preferred Stock to be
redeemed and any accrued and unpaid dividends thereon, whether or not declared;
provided that in lieu of paying cash in respect of such accrued and unpaid
dividends, the Corporation may pay such dividends in shares of Convertible
Redeemable Preferred Common Stock having an aggregate Liquidation Value equal to
the amount of such accrued but unpaid dividends. In the event that the
Corporation elects to pay such accrued but unpaid dividends with shares of
Convertible Redeemable Preferred Stock, immediately upon issuance such shares of
Convertible Redeemable Preferred Stock shall automatically and without further
action by the Corporation or the Holder be converted into shares of Class A
Common Stock at the then-applicable Conversion Rate.
(iv) As long as the Corporation has complied with the
requirements set forth in this Section 4(b), from and after the Redemption Date,
dividends on the shares of Convertible Redeemable Preferred Stock so called for
redemption shall cease to accrue, such shares shall be cancelled and shall no
longer be deemed to be outstanding, and all rights of the Holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price and payment of all accrued but unpaid
dividends) shall cease.
Section 5. Conversion of Convertible Redeemable Preferred Stock.
(a) Conversion at Option of the Holder. At any time and from time to
time after the Closing Date, a Holder of Convertible Redeemable Preferred Stock
may surrender such stock, in whole or in part, for shares of Class A Common
Stock during the time periods set forth in Section 5(c)(iv). Initially a Holder
of Convertible Redeemable Preferred Stock shall receive two shares of Class A
Common Stock for each share of Convertible Redeemable Preferred Stock
surrendered for conversion subject to adjustment as set forth in Section 5(d)
(the "Conversion Rate").
(b) Conversion at Option of the Corporation. In the event that at any
time after the Closing Date, the Sale Price of Class A Common Stock shall equal
or exceed $3.25 per share (as adjusted to reflect any stock dividend,
subdivision, combination, reclassification, distribution or similar event
relating to the shares of Class A Common Stock) for 30 consecutive Trading Days,
the Corporation may require the Holders of the Convertible Redeemable Preferred
Stock in whole but not in part to convert their shares of
<PAGE>
Convertible Redeemable Preferred Stock into shares of Class A
Common Stock at the then-applicable Conversion Rate (a
"Corporation Optional Conversion").
(c) Procedures and Method of Conversion.
(i) In order to convert shares of Convertible Redeemable
Preferred Stock, a Holder must surrender such shares of Convertible Redeemable
Preferred Stock to the Transfer Agent by physical delivery to the office of the
Transfer Agent maintained for that purpose, duly assigned or endorsed for
transfer to the Corporation (or accompanied by duly executed stock powers
relating thereto), accompanied by written notice of conversion (the "Conversion
Notice") and, to the extent required by Section 5(g) hereof, payment for all
transfer and similar taxes. Such Conversion Notice shall specify (i) the number
of shares of Convertible Redeemable Preferred Stock to be converted, (ii) the
name or names in which such Holder wishes the certificate or certificates for
Class A Common Stock and for any Convertible Redeemable Preferred Stock not to
be so converted to be issued and (iii) the address to which such Holder wishes
delivery to be made of such new certificates to be issued upon such conversion.
Any conversion shall be deemed to have been effected on the date on which all
such requirements set forth in the preceding sentence have been satisfied (the
"Optional Conversion Date"). Once received by the Transfer Agent, a Conversion
Notice shall be irrevocable and may not be withdrawn by a Holder for any reason.
The Transfer Agent shall promptly notify the Corporation of receipt by it of any
Conversion Notice. No later than five (5) Business Days following the Optional
Conversion Date, the Corporation shall deliver to the Transfer Agent (for
redelivery to the Holder) accrued and unpaid dividends on the Convertible
Redeemable Preferred Stock through and including the Optional Conversion Date
which such dividends may be paid in cash or in shares of Convertible Redeemable
Preferred Common Stock having an aggregate Liquidation Value equal to the amount
of such accrued but unpaid dividends. In the event that the Corporation elects
to pay such accrued but unpaid dividends with shares of Convertible Redeemable
Preferred Stock, immediately upon issuance such shares of Convertible Redeemable
Preferred Stock shall automatically and without further action by the
Corporation or the Holder be converted into shares of Class A Common Stock at
the then-applicable Conversion Rate. In addition, the Transfer Agent shall
deliver to the Holder the Class A Common Stock (at the Conversion Rate then in
effect) which such Holder is entitled to receive in accordance with the
provisions of this Certificate of Designation. Such conversion shall be deemed
to have been effected on the close of business on the Optional Conversion Date,
and at such time all rights of the Holder of such Convertible Redeemable
Preferred Stock as a Holder of Convertible Redeemable Preferred Stock (other
than the right to receive Class A Common Stock and accrued and unpaid dividends
on the Convertible Redeemable Preferred Stock) shall cease and the Holder shall,
as between such Holder and the Transfer Agent and the Corporation, be deemed to
have become the holder of record of the Class A Common Stock represented
thereby. Delivery of such certificate or certificates or execution of such
transfer, as the case may be, and delivery of immediately available funds for
any cash in payment of accrued and unpaid dividends on the shares of Convertible
Redeemable Preferred Stock being converted (subject to the Corporation's right
to pay such accrued and unpaid dividends in shares of Convertible Redeemable
Preferred Stock) as aforesaid may be delayed for a reasonable time at the
request of the Corporation in order to effectuate the calculation of adjustments
of the Conversion Rate pursuant to Section 5(d) or to make any governmental
filings or obtain any necessary governmental approvals required to be made or
obtained by the Corporation or the Holder converting its shares of Convertible
Redeemable Preferred Stock. If, between any Optional Conversion Date and the
related date of delivery of applicable Class A Common Stock, a record date or
effective date of a transaction described in Section 5(d) or 5(e) shall occur,
the Holder entitled to receive such Class A Common Stock shall be entitled only
to receive such Class A Common Stock as so modified on the date of the delivery,
and the Corporation and the Transfer Agent shall not be otherwise liable with
respect to the modification of such Class A Common Stock from such Optional
Conversion Date to the date of such delivery.
(ii) In the event of a Corporation Optional Conversion, the
Corporation shall provide written notice (the "Corporation Optional Conversion
Notice") to the Holders that the requirements of Section 5(b) have been met and
that the Corporation is requiring the conversion of all outstanding shares of
Convertible Redeemable Preferred Stock. For purposes of this Section 5(c)(ii),
the date of the Corporation Optional Conversion Notice shall be the "Corporation
Optional Conversion Date." The Corporation Optional Conversion Notice shall be
accompanied by a letter of transmittal describing the procedures by which the
Holders shall deliver all of their shares of Convertible Redeemable Preferred
Stock for conversion into Class A Common Stock. As of the Corporation Optional
Conversion Date and without any further action by the Corporation and without
any further notice, (i) all outstanding shares of Convertible Redeemable
Preferred Stock shall be deemed to have been converted into shares of Class A
Common Stock at the then-applicable Conversion Rate and such shares shall be
cancelled and shall no longer be deemed to be outstanding, (ii) dividends on the
Convertible Redeemable Preferred Stock shall cease to accrue, and (iii) all
rights of the Holders of the Convertible Redeemable Preferred Stock (except the
right to receive from the Corporation the shares of Class A Common Stock) shall
cease. In the event of a Corporation Optional Conversion, the Corporation shall
pay the amount of accrued but unpaid dividends on such shares of Convertible
Redeemable Preferred Stock in shares of Convertible Redeemable Preferred Stock
having an aggregate Liquidation Value equal to the amount of such accrued but
unpaid dividends, which such shares of Convertible Redeemable Preferred Stock
shall automatically and without further action by the Corporation or the Holder
be converted into shares of Class A Common Stock at the then-applicable
Conversion Rate.
(iii) If any Holder converts less than all of its shares of
Convertible Redeemable Preferred Stock, upon such conversion the Corporation
shall execute and deliver or have delivered to the Holder thereof, at the
expense of the Corporation, a new stock certificate or certificates representing
an amount equal to the unconverted shares of Convertible Redeemable Preferred
Stock.
(iv) With respect to any shares of Convertible Redeemable
Preferred Stock called for redemption, the right to convert such shares for
Class A Common Stock shall expire on the close of business on the day preceding
the Redemption Date if such shares have been called for redemption pursuant to
Section 4(a) and the Corporation shall have deposited with the Transfer Agent
cash sufficient to pay the redemption price for the shares to be redeemed in
accordance with the provisions of Section 4(b)(iii) hereof.
(d) Adjustment of Conversion Rate.
The Conversion Rate shall be subject to adjustment as follows:
(i) If at any time any shares of Convertible Redeemable
Preferred Stock are outstanding, the Corporation shall (A) pay a dividend or
make a distribution on Class A Common Stock in shares of such stock, (B)
subdivide outstanding shares of Class A Common Stock into a greater number of
shares of such stock, (C) combine outstanding shares of Class A Common Stock
into a smaller number of shares of such stock, or (D) issue, by reclassification
of shares of Class A Common Stock, any shares of any series of the Corporation's
Capital Stock, the Conversion Rate in effect immediately prior thereto shall be
proportionately adjusted so that the Holder of any Convertible Redeemable
Preferred Stock thereafter converted shall be entitled to receive upon such
conversion the number of shares of Class A Common Stock or other Capital Stock
as such Holder would have owned or would have been entitled to receive
immediately after the happening of any of the events described above, had such
Convertible Redeemable Preferred Stock been converted immediately prior to the
record date (or if there is no record date, the effective date) of such event.
Such adjustments shall be made whenever any of the events listed above shall
occur and shall become effective as of immediately after the close of business
on the record date in the case of a stock dividend and on the effective date in
the case of a subdivision or combination or reclassification. Any Holder
converting any Convertible Redeemable Preferred Stock after such record date or
such effective date, as the case may be, shall be entitled to receive shares of
Class A Common Stock or other Capital Stock at the Conversion Rate as so
adjusted pursuant to this Section 5(d)(i).
(ii) All calculations under this Section 5(d) shall be made
to the nearest one-one-thousandth (.001) of a share.
(iii) Whenever the Conversion Rate is adjusted as herein
provided, the Corporation shall determine the adjusted Conversion Rate in
accordance with the provisions of this Section 5(d) and shall prepare a
certificate setting forth such adjusted Conversion Rate and showing in detail
the facts upon which such adjustment is based, and such certificate shall
forthwith be filed with the Transfer Agent. A notice stating that the Conversion
Rate has been adjusted and setting forth the adjusted Conversion Rate shall as
soon as practicable be mailed by the Corporation or, at the Corporation's
request, the Transfer Agent to the Holders at their last addresses as they shall
appear upon the books of the Corporation.
(e) Distributions by Corporation. If at any time any shares of
Convertible Redeemable Preferred Stock are outstanding, the Corporation shall
distribute to all holders of its Class A Common Stock any of its assets or debt
securities, or rights, including purchase rights, options, warrants or
convertible or exchangeable securities of the Corporation (including securities
for cash, but excluding distributions of Capital Stock referred to in subsection
5(d)(i) above), then in each such case, the Holders of Convertible Redeemable
Preferred Stock shall be entitled to receive such rights, options, warrants or
convertible or exchangeable securities as such Holders would have been entitled
to receive had they converted their shares of Convertible Redeemable Preferred
Stock for shares of Class A Common Stock prior to the record date of any such
distribution.
(f) Fractional Interest. At its option, the Corporation may deliver
fractional shares of Class A Common Stock upon conversion of Convertible
Redeemable Preferred Stock or may instruct the Transfer Agent, on behalf of the
Corporation, to pay a cash adjustment in respect of such fractional interest in
an amount equal to the same fraction of the Fair Market Value per share of Class
A Common Stock. If more than one certificate representing shares of Convertible
Redeemable Preferred Stock shall be surrendered for conversion at one time by
the same Holder, the number of full shares of Class A Common Stock that shall be
delivered upon conversion shall be computed on the basis of the aggregate number
of shares of Convertible Redeemable Preferred Stock (or specified portion
thereof to the extent permitted hereby) so surrendered. In the event that the
Corporation shall elect to pay cash in lieu of any fractional interest, the
Corporation shall, upon conversion of any shares of Convertible Redeemable
Preferred Stock, provide cash to the Transfer Agent in an amount equal to the
cash adjustment payable with respect to any fractional shares of Class A Common
Stock deliverable upon conversion of such shares of Convertible Redeemable
Preferred Stock, and receive in consideration therefor such fractional shares.
(g) Taxes. The Corporation will pay any and all documentary, stamp,
transfer or similar taxes that may be payable in respect of the transfer and
delivery of Class A Common Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any such tax that may be payable in
respect of any transfer involved in the delivery of Class A Common Stock in a
name other than that in which the shares of Convertible Redeemable Preferred
Stock so converted were registered, and no such transfer or delivery shall be
made unless and until the Person requesting such transfer has paid to the
Corporation the amount of any such tax, or has established, to the satisfaction
of the Corporation, that such tax has been paid.
(h) Shares Free and Clear. The Corporation hereby warrants that, upon
conversion of Convertible Redeemable Preferred Stock pursuant to this
Certificate of Designation, including upon conversion of shares of Convertible
Preferred Stock issued in lieu of payment of cash dividends, the Holders of
Convertible Redeemable Preferred Stock shall receive fully paid and
nonassessable shares of Class A Common Stock free and clear of any and all
Liens.
(i) Status upon Conversion. From and after the Optional Conversion
Date or the Corporation Optional Conversion Date, as the case may be, dividends
on the shares of Convertible Redeemable Preferred Stock so converted shall cease
to accrue, such shares shall be cancelled and shall no longer be deemed to be
outstanding, and all rights of the Holders thereof as stockholders of the
Corporation (except the right to receive the Class A Common Stock) shall cease.
(j) Assistance by Corporation. The Corporation shall assist and
cooperate with any Holder in making any governmental filings or obtaining
governmental approval required to be made or obtained by such Holder in
connection with any conversion of shares of Convertible Redeemable Preferred
Stock hereunder (including, without limitation, making any filings required to
be made by the Corporation).
(k) Reservation of Shares. The Corporation shall reserve, free from
any preemptive rights, out of its authorized but unissued Class A Common Stock
sufficient shares of Class A Common Stock to provide for the conversion of all
shares of Convertible Redeemable Preferred Stock from time to time outstanding,
including shares of Convertible Redeemable Preferred Stock issued in lieu of
cash dividend payments.
Section 6. Consolidation, Merger and Sale of Assets, etc.
The Corporation shall not consolidate with or merge into, or transfer all
or substantially all of its assets to, another Person unless (i) the Corporation
is the surviving entity and the Convertible Redeemable Preferred Stock is
unchanged or (ii) (A) the surviving, resulting or acquiring Person is a Person
organized under the laws of the United States, any state thereof or the District
of Columbia, or a Person organized under the laws of a foreign jurisdiction
whose equity securities are listed on a national securities exchange in the
United States or authorized for quotation on NASDAQ, and (B) the Corporation
shall make effective provision such that, upon consummation of such transaction,
the Holders of Convertible Redeemable Preferred Stock shall receive stock of the
surviving entity having substantially identical terms (including the conversion
rights for the Class A Common Stock set forth in Section 5) as the Convertible
Redeemable Preferred Stock.
Section 7. Voting Rights of Convertible Redeemable Preferred
Stock.
(a) General. Except as otherwise expressly provided herein or as
required by law, the Holder of each share of Convertible Redeemable Preferred
Stock shall be entitled to vote on all matters on which the holders of Class A
Common Stock are entitled to vote. Each share of Convertible Redeemable
Preferred Stock shall entitle the Holder thereof to such number of votes per
share as shall equal the number of shares of Class A Common Stock into which
each share of Convertible Redeemable Preferred Stock is then convertible. Except
as provided in Section 7(b) hereof or as required by law, the holders of shares
of the Convertible Redeemable Preferred Stock and the Class A Common Stock shall
vote together as a single class on all matters.
(b) Certain Amendments. So long as any shares of Convertible
Redeemable Preferred Stock remain outstanding:
(i) the affirmative vote of the Holders of 100% of the
outstanding shares of Convertible Redeemable Preferred Stock, voting together as
a separate class, shall be required in order to change (A) the amount of the
Liquidation Value or the dividend rate of, or any provision of Section 3 hereof
relating to the calculation of the dividend on, the Convertible Redeemable
Preferred Stock or (B) subsection 4(a), any provision of Section 5 hereof
relating to the conversion rights of Holders of Convertible Redeemable Preferred
Stock, or this Section 7; and
(ii) the affirmative vote of the Holders of at least 75% of the
outstanding shares of Convertible Redeemable Preferred Stock, voting together as
a separate class, shall be required in order to (A) amend, alter or repeal any
of the provisions of the Articles or this Certificate of Designation so as to
adversely affect any right, preference or voting power of the Convertible
Redeemable Preferred Stock or (B) authorize, create or issue any class or series
of stock of the Corporation that is senior to or pari passu with the Convertible
Redeemable Preferred Stock with respect to dividends or the distribution of
assets upon dissolution, liquidation or winding up of the Corporation.
The foregoing voting provisions shall not apply if, at or prior to the
time when the action with respect to which such vote would otherwise be required
to be effected, all outstanding shares of Convertible Redeemable Preferred Stock
(i) shall have been redeemed or notice of redemption shall have been provided
and sufficient funds shall have been delivered to the Transfer Agent to effect
such redemption and/or (ii) shall have been converted into shares of Class A
Common Stock.
<PAGE>
Section 8. Certain Restrictions.
So long as any shares of Convertible Redeemable Preferred Stock are
outstanding, the Corporation shall not redeem, retire, purchase or otherwise
acquire any shares of Junior Stock.
Section 9. Transfer Agent.
Simultaneously with the creation and issuance of the Convertible Redeemable
Preferred Stock in accordance with the terms of this Certificate of Designation,
the Corporation is amending its existing agreement with the Transfer Agent to
provide that the Transfer Agent shall also act as the Transfer Agent for the
Convertible Redeemable Preferred Stock. The duties of the Transfer Agent and
certain rights of the Corporation and the Holders of Convertible Redeemable
Preferred Stock with respect to the transfer of shares of Convertible Redeemable
Preferred Stock and the redemption of shares of Convertible Redeemable Preferred
Stock for cash by the Corporation are set forth in the transfer agent agreement,
as so amended.
Section 10. Transfers; Replacement of Certificates.
(a) Transfers. Subject to any restrictions on transfer under
applicable securities or other laws, shares of Convertible Redeemable Preferred
Stock may be transferred on the books of the Corporation by the surrender to the
Transfer Agent of the certificate therefor properly endorsed or accompanied by a
written assignment and power of attorney properly executed, with transfer stamps
(if necessary) affixed, and such proof of the authenticity of signature as the
Corporation or the Transfer Agent may reasonably require.
(b) Replacement of Certificates. If any mutilated certificate
representing shares of Convertible Redeemable Preferred Stock is surrendered to
the Transfer Agent, or if a Holder claims the certificate representing shares of
Convertible Redeemable Preferred Stock has been lost, destroyed or willfully
taken, the Corporation shall issue and the Transfer Agent shall countersign a
replacement certificate of like tenor and date if (i) the Holder provides an
indemnity bond or other security sufficient, in the judgment of the Transfer
Agent, to protect the Corporation, the Transfer Agent, and any authenticating
agent and any of their officers, directors, employees or representatives from
any loss which any of them may suffer if a certificate representing shares of
Convertible Redeemable Preferred Stock is replaced and (ii) the Holder satisfies
any other reasonable requirements of the Transfer Agent.
<PAGE>
Section 11. Liquidation.
Upon any liquidation, dissolution or winding up of the Corporation, the
Holders of shares of Convertible Redeemable Preferred Stock shall be entitled to
receive, out of the assets or surplus funds of the Corporation available for
distribution, cash equal to the Liquidation Value per share of each outstanding
share of Convertible Redeemable Preferred Stock. No distribution in respect of
any such liquidation, dissolution or winding up shall be made (A) to the holders
of shares of Junior Stock unless, prior thereto, the Holders of shares of
Convertible Redeemable Preferred Stock shall have been paid in cash the
Liquidation Value for each outstanding share of Convertible Redeemable Preferred
Stock or (B) to the holders of any other class or series of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Convertible Redeemable Preferred Stock, except distributions made
ratably on the Convertible Redeemable Preferred Stock and all other such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. If the assets or
surplus funds to be distributed to the Holders of Convertible Redeemable
Preferred Stock upon any such liquidation, dissolution or winding up are
insufficient to permit the payment to such Holders of their full preferential
amount, the assets and surplus funds legally available for distribution shall be
distributed ratably among the Holders of Convertible Redeemable Preferred Stock
in proportion to the full preferential amount each such Holder is otherwise
entitled to receive.
Neither the consolidation of nor merging of the Corporation with or into
any other Person, nor the sale or other transfer of all or substantially all of
the assets of the Corporation to another Person, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 11.
Section 12. Rank.
All shares of Convertible Redeemable Preferred Stock shall rank junior,
both as to payment of dividends and as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, to all shares of Exchangeable Preferred Stock.
124471.c7
<PAGE>
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have
hereto signed our names this
23rd day of November in the year 1994.
/s/ C. William Carey, President/
/s/ Richard E. Floor, Clerk/
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
Certificate of Vote of Directors Establishing
A Series of a Class of Stock
(General Laws, Chapter 156B, Section 26)
I hereby approve the within certificate and, the
filing fee in the amount of $
having been paid, said certificate is hereby filed this
day of ,1994.
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF CERTIFICATE TO BE SENT
TO: Elliot J. Mark, Esq.
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Telephone: (617) 570-1452
Copy Mailed
EXHIBIT 10.9
GSHAMMER:5996
NORTHATTGL BALFOUR LSE
(3/11/94)
John L. Dietsch Boulevard
North Attleborough, MA
BALFOUR LEASE
FROM THE OFFICE OF:
Goulston & Storrs, P.C.
400 Atlantic Avenue
Boston, Massachusetts 02110-3333
<PAGE>
JOHN L. DIETSCH BOULEVARD
NORTH ATTLEBOROUGH, MA
OFFICE LEASE
ARTICLE SECTION CAPTION PAGE
I. Basic Lease Provisions 1
1.1 Introduction 1
1.2 Basic Data 1
II. Description and Demise of Premises 3
2.1 Description and Demise of Premises 3
III. Rent 3
3.1 Fixed Rent 3
3.2 Completely Net Lease 3
IV. Use of Premises 4
4.1 Permitted Use 4
4.2 Alterations 5
V. Assignment and Subletting 6
5.1 Prohibition, Etc. 6
5.2 Exceptions 9
VI. Delivery of Premises and Responsibility
for Repairs and Condition of Premises 11
6.1 Delivery of Possession of Premises 11
6.2 Repairs and Condition of Premises 12
6.3 Surrender 13
VII. Utilities and Services 14
7.1 Payment of Utility Charges 14
7.2 Services 14
VIII. Real Estate Taxes and Other Expenses 15
8.1 Tenant to Pay All Taxes 15
8.2 Tenant to Pay All Operating Expenses 17
IX. Indemnity and Waiver; Insurance 18
9.1 Indemnity and Waiver 18
9.2 Insurance 18
X. Landlord's Access to Premises 21
10.1 Landlord's Right of Access 21
XI. Fire, Eminent Domain, Etc. 21
11.1 Fire and Other Casualty 21
11.2 Condemnation 24
11.3 Restoration after Fire or Condemnation 27
11.4 Depository 30
XII. Landlord's Remedies 31
12.1 Events of Default 31
12.2 Remedies 32
12.3 Landlord's Default 34
<PAGE>
ARTICLE SECTION CAPTION PAGE
XIII. Miscellaneous Provisions 34
13.1 Extra Hazardous Use 34
13.2 Waiver 34
13.3 Covenant of Quiet Enjoyment 35
13.4 Notice to Mortgagee and Ground Lessor 35
13.5 Assignment of Rents 36
13.6 Mechanics' Liens 37
13.7 No Brokerage 37
13.8 Invalidity of Particular Provisions 37
13.9 Provisions Binding, Etc. 37
13.10 Recording 37
13.11 Notices 38
13.12 When Lease Becomes Binding 38
13.13 Paragraph Headings 38
13.14 Rights of Mortgagee 38
13.15 Status Report 39
13.16 Tenant's Financial Condition 39
13.17 Additional Remedies of Landlord 40
13.18 Holding Over 40
13.19 Non-Subrogation 40
13.20 Unavoidable Delay 40
13.21 Governing Law 41
13.22 Definition of Additional Rent 41
13.23 Fees and Expenses 41
13.24 Certificate 41
13.25 1993 Dollars Defined 41
13.26 Landlord's Inducement Payment 42
13.27 Initial Rent Abatement 43
13.28 Environmental Matters 43
Guarantee of Lease
EXHIBITS A Site Plan Showing Premises and Buildings
B Landlord's Work and Tenant's Work
<PAGE>
THIS INSTRUMENT IS AN INDENTURE OF LEASE in which the Landlord and the
Tenant are the parties hereinafter named, and which relates to those certain
parcels of land (collectively, the "Lot") located in the Town of North
Attleborough, Bristol County, Massachusetts, together with the two (2)
single-story buildings (each, a "Building", and collectively, the "Buildings")
thereon which contain approximately 70,000 square feet and 35,000 square feet of
leasable floor area, respectively, as well as any and all other structures,
parking facilities, roadways and other areas and facilities (together with the
Buildings collectively sometimes hereinafter referred to as "improvements")
thereon and thereof; all of which collectively shall be referred to hereinafter
as the "Premises".
The Lot is more particularly bounded and described as set forth in the Legal
Description of the parcels comprising the Lot annexed hereto as part of Exhibit
A which is hereby incorporated herein and made a part hereof; and the Lot and
Buildings are shown (diagrammatically rather than precisely) on the Plan
likewise annexed hereto as part of said Exhibit A.
The parties to this instrument hereby agree with each other as follows:
ARTICLE I
BASIC LEASE PROVISIONS
1.1 INTRODUCTION. As further supplemented in the balance of this instrument and
its Exhibits, the following sets forth the basic terms of this Lease and, where
appropriate, constitutes definitions of certain terms used in this Lease.
1.2 BASIC DATA.
Date: March 14, 1994
Landlord: C.L.C. North Attleboro Trust under DECLARATION OF
TRUST dated October 1, 1981 (as amended of record from time to
time), recorded with Bristol County No. District Deeds in Book
2230, Page 213.
Present Mailing c/o Leatherbee & Co., 1330 Boylston
Address of Landlord: Street, Chestnut Hill, MA 02167
<PAGE>
Tenant: L.G. Balfour Company, Inc., a
Delaware corporation.
Present Mailing 25 County Street, Attleboro,
Address of Tenant: Massachusetts 02703
Lease Term or Term: The period from the date of this Lease up to the
Commencement Date (as herein defined) plus the one hundred eighty (180) calendar
months (plus the partial month, if any) immediately from and after the
Commencement Date, unless sooner terminated as provided hereinbelow.
Commencement Date: The earlier to occur of: (i) June 1, 1994, or, if later,
the date on which Landlord delivers possession of the Buildings to Tenant with
Landlord's Work therein substantially completed (as set forth in Section 6.1 of
Article VI hereof); or (ii) the date when Tenant first commences to use one or
both of the Buildings for its permitted business purposes hereunder. The
Commencement Date shall be memorialized by a supplemental agreement signed by
the parties hereto. (See Section 13.27.)
Fixed Rent: From the commencement of the Term of this Lease up to the
Commencement Date (as herein defined), the Tenant shall not be required to pay
any Fixed Rent hereunder. From and after said Commencement Date and continuing
for the balance of the Term of this Lease, the Fixed Rent to be paid by Tenant
to Landlord shall be at the following annual and monthly rates during the
following periods of time (subject to the provisions of Section 13.27 below):
<PAGE>
Period Annual Monthly
First five (5)
years of the
Term plus any
partial calendar
month) from
and after the
Commencement Date $605,000 $50,416.67
6th through 10th
full years
following the
Commencement Date $652,000 $54,333.33
11th through 15th
full years $699,000 $58,250.00
(being the balance
of the Term)
Use: The Buildings shall contain manufacturing and office facilities
devoted to the Tenant's manufacturing, distribution and sales of its products,
and the roadways and parking and loading areas and facilities on the Lot shall
be used for employee loading and transportation purposes and for employee and
business invitee access and parking purposes such as are normally and
customarily incidental to the aforesaid manufacturing and office uses; and, the
Premises shall be used for no other purpose or purposes. Tenant will not use or
allow the Premises or any appurtenances thereto to be used or occupied for any
unlawful purpose or in violation of any applicable certificate of occupancy.
Tenant assumes the risk of any law, ordinance, rule or regulation either now in
effect or hereafter enacted which may prohibit or limit Tenant's contemplated
use or enjoyment of the Premises (but the foregoing
<PAGE>
shall be subject to the provisions of this Lease specifically applicable to any
governmental taking or condemnation).
Guarantor of Tenant's None.
Obligations:
Brokers: Lynch, Murphy, Walsh & Partners,
Inc. One Financial Center, Boston,
MA 02111
ARTICLE II
DESCRIPTION AND DEMISE OF PREMISES
2.1 DESCRIPTION AND DEMISE OF PREMISES. Landlord hereby demises and leases to
Tenant, and Tenant hereby accepts from Landlord, the Premises identified in the
foregoing portions of this Lease. Landlord hereby represents to Tenant that
Landlord is the record owner of fee simple title to the Premises and that the
same currently are not subject to any prior lease thereof from Landlord to a
third party.
Tenant acknowledges that, in all events, Tenant is responsible for
providing security to the Premises and its own personnel, and Tenant shall
indemnify, defend with counsel of Landlord's selection or with counsel of
Tenant's selection which first shall have been approved in writing by Landlord
(such approval not unreasonably to be withheld or delayed), and save Landlord
harmless from any claim for injury to person or damage to property asserted by
any personnel, employee, guest, invitee or agent of Tenant which is suffered or
occurs in or about the Premises by reason of the act of an intruder or any other
person in or about the Premises.
ARTICLE III
RENT
3.1 FIXED RENT. Tenant agrees to pay to Landlord at the Present Mailing Address
of Landlord, or as directed by Landlord, without notice, demand, off-set or
deduction, on the Commencement Date and thereafter, monthly, in advance, on the
first day of each and every calendar month during the Lease Term, a sum equal to
the monthly Fixed Rent specified in Section 1.2 hereof. (See, however, Section
13.27 below.)
Fixed Rent for any partial month shall be paid by Tenant at such rate on a
pro rata basis, and if the Lease Term commences on a day other than the first
day of a calendar month, the first payment which Tenant shall make shall be a
payment equal to a proportionate part of such monthly Fixed Rent for the partial
month from the Commencement Date to the first day of the succeeding calendar
month, and the monthly Fixed Rent for such succeeding calendar month.
3.2 COMPLETELY NET LEASE. Throughout the entire Lease Term, this Lease shall be
deemed and construed to be a "net net net" (sometimes referred to as a
"completely net") lease, and Tenant shall pay to Landlord the Fixed Rent and all
other payments and charges herein set forth, free of any charges, assessments,
or impositions of any kind and without abatement, deduction, counterclaim,
defense or set-off (except for those, if any, which may become applicable and
are made under the express provisions therefor set forth in Sections 13.26 and
13.27 below); and Tenant shall save Landlord harmless from and against all
costs, impositions, insurance premiums, and expenses and obligations of every
kind, name and nature whatsoever relating to the Premises which may arise or
become due during or with respect to periods within the Lease Term. Without
limitation, except as expressly provided in Article XI hereof as a result of a
fire or other casualty, or eminent domain condemnation, Tenant shall not be
entitled to quit, terminate or surrender this Lease, and shall not be relieved
from its obligations to pay the Fixed Rent and all other charges and amounts
payable, or from any of its other obligations pursuant to the provisions of this
Lease, by or for any reason whatsoever.
ARTICLE IV
USE OF PREMISES
4.1 PERMITTED USE. Tenant agrees that the Premises shall be used and occupied by
Tenant only for the purpose specified as the use thereof in Section 1.2 of this
Lease, and for no other purpose or purposes.
Tenant further agrees to conform to the following provisions during the
entire Lease Term:
(a) Tenant shall not place on the exterior of exterior walls of the
Buildings or outside on the Premises, any sign, symbol, advertisement or the
like visible to public view outside of the Premises except with the prior
approval of Landlord (but only as to location and overall professional
appearance generally, and not unreasonably to be withheld or delayed).
(b) Tenant shall not perform any act or any practice which may injure the
Premises, or any part thereof, or cause any offensive odors or loud noise, or
constitute a nuisance or a menace to any persons, or be detrimental to the
reputation or appearance of the Premises.
(c) Tenant shall comply and shall cause all employees to comply with all
reasonable rules and regulations from time to time established by Landlord by
suitable notice.
(d) The Tenant shall not violate or cause or permit any violation of the
provisions of Article 4 of the Master Lease of the nearby Tri-Boro Plaza, dated
as of December 6, 1991, between Landlord and Adrian Realty Trust (an affiliate
of Shaw's Supermarkets, Inc.), which Article sets forth a restrictive covenant
more particularly described therein and in the instrument entitled "Notice of
Restrictive Covenant", dated as of December 6, 1991, and recorded with Bristol
County North District Registry of Deeds in Book 5252, Page 134. In accordance
with the provisions of said restrictive covenant, Tenant covenants and agrees
not to sell or permit the sale on, in or from the Premises during the Lease Term
of fresh dairy, fresh meats, fresh fish, fresh produce or fresh fruit for
consumption off-premises other than for the sale of delicatessen-type restaurant
foods and so-called "take-out" orders by a delicatessen-type restaurant
containing no more than 1500 square feet of floor area (and intended primarily
for consumption on-premises or for individual contemporaneous consumption, as
opposed to home consumption); provided, however, that Tenant shall be permitted,
incidentally to its permitted use of the Premises set forth in this Lease, to
sell such food items individually in single pieces (such as, for example only,
one or more apples or oranges, or one or more candy bars or one or more
containers of milk holding no more than one pint or liter, as customary from
time to time) which, as aforesaid, are intended <PAGE>
primarily for consumption on-premises or for individual contemporaneous
consumption, as opposed to home consumption.
4.2 ALTERATIONS. After completion of the initial work to be done by Tenant, for
which provision is made herein in Exhibit B attached hereto, Tenant shall not
alter or add to the Premises, except in accordance with the prior written
approval of Landlord (not unreasonably to be withheld or delayed) or as
permitted without such approval as set forth below. Moreover, any structural
alteration or addition (and, for the purposes hereof, any and all installations
and/or replacements or relocations of exterior facilities, including parking and
roadway facilities and utility facilities, shall be considered structural
alterations) and any alteration or addition involving an estimated cost of more
than $50,000.00: (i) shall be conducted under the supervision of a licensed
architect or licensed professional engineer, or both (as may be required in the
context); (ii) shall be conducted in accordance with plans and specifications
submitted as aforesaid to Landlord and requiring Landlord's prior written
approval (not unreasonably to be withheld or delayed); and (iii) shall not be
conducted unless and until Tenant shall have furnished such bond, security or
other assurances of completion and payment as may reasonably be required by
Landlord. However, so long as Tenant complies with the following provisions of
this Section and all other applicable provisions of this Lease, the Tenant shall
be permitted (upon giving to Landlord notice thereof, but without the need to
secure the Landlord's prior written approval thereof) to make non-structural
alterations and additions within the Buildings or to other improvements located
on the Premises costing no more than $50,000.00 in any calendar year.
In any event, any and all alterations or additions shall be consistent
with, and shall not change, the general character of the Buildings or other
improvements on the Premises in any material respect; and, no alteration or
addition shall be undertaken until Tenant shall have procured and paid for, so
far as the same may be required from time to time, any and all permits and
authorizations of any governmental agency or department or subdivision having
jurisdiction. Any alteration or addition shall, when completed, be of such a
character as not to reduce the value or usefulness of the Premises or of
Landlord's interest therein below its value and usefulness immediately before
such alteration or addition, and also so as not to violate or cause the
violation of any code or any restriction, agreement or covenant applicable to
the Premises. No alteration or addition shall be made if the same would require
any application for any zoning or like permit during any period close to the end
of the Lease Term and which, if receiving "unfavorable action", would prejudice
Landlord's intended development or re-development activities, consistent with
then applicable standards and practices of sophisticated developers of
comparable real estate, for the Premises upon the expiration of the Lease Term
(it being acknowledged by the parties, without limitation, that the
Massachusetts Zoning Enabling Act, Ch. 40A, currently prohibits a party from
seeking a zoning adjustment if any such unfavorable action has been taken on a
prior application therefore within the then preceding two (2) years). Tenant,
promptly upon completion of any and all alterations, non-structural or
structural, shall deliver "as-built" plans reflecting such alterations and
additions in reasonable detail to Landlord.
Tenant hereby agrees to hold Landlord harmless from and against any and all
liability of every kind and description which may arise out of or be connected
in any way with any such alterations or additions, and to pay and discharge
promptly any contractor's, subcontractor's, mechanic's and/or materialmen's lien
which may be recorded against the Lot or improvements comprising the Premises or
the Landlord's interest therein. Tenant's Work as described in Exhibit B and all
other alterations made by Tenant shall be made in accordance with all applicable
laws, in a good and first-class workmanlike manner and in accordance with the
requirements of Landlord's insurers and Tenant's insurers. Without limitation,
Tenant's Work as described in Exhibit B and all other alterations made by Tenant
shall be performed in accordance with the conditions set forth in Exhibit B (to
the full extent applicable). Any contractor or other person undertaking any
alterations of the Premises on behalf of Tenant shall be covered by
Comprehensive General Liability and Workmen's Compensation insurance with
coverage limits satisfying the requirements of this Lease and of applicable law
and evidence thereof shall be furnished to Landlord prior to the performance by
such contractor or person of any work in respect of the Premises.
All building components, systems, etc., including all leasehold improvement
work performed by Tenant in the Premises, shall remain therein at termination,
and shall be surrendered as a part thereof, except for Tenant's usual trade
fixtures, furniture and equipment, if movable, installed prior to or during the
Lease Term at Tenant's cost, which trade fixtures, furniture and equipment
Tenant shall remove upon the termination of this Lease. Tenant agrees to repair
any and all damage to the Premises resulting from such removal or, if Landlord
so elects, to pay Landlord for the cost of any such repairs forthwith after
billing therefor.
ARTICLE V
ASSIGNMENT AND SUBLETTING
5.1 PROHIBITION, ETC. Notwithstanding any other provisions of this Lease, Tenant
covenants and agrees that it will not assign this Lease or sublet (which term,
without limitation, shall include the granting of concessions, licenses,
management arrangements and the like) the whole or any part of the Premises
without, in each instance, having first received the express consent of
Landlord. Notwithstanding anything to the contrary in this Lease, Tenant
understands and specifically agrees that, subject only to the express provisions
of Section 5.2 below, Landlord may in its sole discretion withhold its consent
to any proposed assignment or subletting. Any assignment of this Lease (which
term shall include the sale or transfer of forty-nine percent (49%) or more, or
such smaller percentage as would result in a change in voting control, of the
stock in Tenant as set forth below), or subletting of the whole or any part of
the Premises (other than as permitted to a subsidiary or a controlling
corporation as set forth below) by Tenant, without Landlord's express consent,
shall be invalid, void and of no force or effect. In any case (whether or not
Landlord shall consent to such assignment or subletting), the Tenant named
herein shall remain fully liable for the obligations of Tenant hereunder,
including, without limitation, the obligation to pay the Fixed Rent and other
amounts provided under this Lease. Any such request shall set forth, in detail
reasonably satisfactory to Landlord, the identification of the proposed assignee
or sublessee, its financial condition and the terms on which the proposed
assignment or subletting is to be made, including, without limitation, the rent
and any other consideration to be paid in respect thereto and such request shall
be treated as Tenant's warranty in respect of the information submitted
therewith.
It shall be a condition of the validity of any such assignment or
subletting that the assignee or sublessee first shall have agreed directly with
Landlord, in form reasonably satisfactory to Landlord, to be bound by all the
obligations of Tenant hereunder, including, without limitation, the obligation
to pay Fixed Rent and other amounts provided for under this Lease and the
covenant against further assignment and subletting; but as aforesaid such
assignment or subletting shall not relieve the Tenant named herein of any of the
obligations of Tenant hereunder, and Tenant shall remain fully liable therefor.
In no event, however, shall Tenant assign this Lease or sublet the whole or any
part of the Premises to a proposed assignee or sublessee which has been
judicially declared bankrupt or insolvent according to law, or with respect to
which an assignment has been made of property for the benefit of creditors, or
with respect to which a receiver, guardian, conservator, trustee in involuntary
bankruptcy or similar officer has been appointed to take charge of all or any
substantial part of the proposed assignee's or sublessee's property by a court
of competent jurisdiction, or with respect to which a petition has been filed
for reorganization under any provisions of the Bankruptcy Code now or hereafter
enacted, or if a proposed assignee or sublessee has filed a petition for such
reorganization, or for arrangements under any provisions of the Bankruptcy Code
now or hereafter enacted and providing a plan for a debtor to settle, satisfy or
extend the time for the payment of debts. Tenant shall, upon demand, reimburse
Landlord for the reasonable legal fees and expenses (it being understood and
agreed that the Landlord shall be permitted for all purposes, including for the
purposes of such reimbursement, to use the services of its "usual" counsel or
any "downtown" or other lawfirm with expertise in commercial real estate
transactions and that the then and normal customary fees and expenses of such
counsel shall be considered to be reasonable for such purposes) incurred by
Landlord in processing any request from Tenant to assign this Lease or to sublet
all or any portion of the Premises.
Without limiting Landlord's discretion to grant or withhold its consent to
any proposed assignment or subletting, if Tenant requests Landlord's consent to
assign this Lease or sublet all or any portion of the Premises in any case where
the Landlord's consent is required pursuant to the provisions hereof, or if
Tenant in any such case shall proceed to assign or sublet without having first
obtained the Landlord's aforesaid, required consent thereto, Landlord shall have
the option, exercisable by written notice to Tenant given within thirty (30)
days after Landlord's receipt of such request or until thirty (30) days after
Landlord is notified of any such assignment or subletting, as the case may be,
to terminate this Lease as of the date specified in such notice which shall be
not less than thirty (30) nor more than sixty (60) days after the date of such
notice for the entire Premises, in the case of an assignment or subletting of
the whole, and for the portion of the Premises, in the case of a subletting of a
portion, (or, at Landlord's option, for the entire Premises if such portion
includes more than half of the floor area within the Buildings). In the event of
termination in respect of a portion of the Premises, the portion so eliminated
shall be delivered to Landlord on the date specified in good order and condition
in the manner provided in Section 4.2 at the end of the Lease Term and Tenant
shall construct demising walls and perform the necessary work so as to separate
and render independent and accessible such portion and the utilities serving
such portion in accordance with Landlord's reasonable directions and
specifications; and to the extent necessary in Landlord's judgment, Landlord (at
its own cost and expense as to any items other than the aforesaid separation of
space and utilities), may have access to and may make modification to the
Premises; all so as to make such portion a self-contained rental unit with
access to common areas, elevators and the like (to be made available and
provided by Tenant as aforesaid, as reasonably requested by Landlord). Fixed
Rent shall be adjusted according to the extent of the Premises for which the
Lease is terminated (and a fair allocation of resulting common area expenses, if
and to the extent reasonably determined by Landlord to be allocable thereto,
shall be made and provided for). Without limitation of the rights of Landlord
hereunder in respect thereto, if there is any assignment of this Lease by Tenant
for consideration or a subletting of the whole of the Premises by Tenant at a
rent which exceeds the rent payable hereunder by Tenant, or if there is a
subletting of a portion of the Buildings by Tenant at a rent in excess of the
subleased portion's pro rata share of the rent payable hereunder by Tenant, then
Tenant shall pay to Landlord, as additional rent, forthwith upon Tenant's
receipt of the consideration therefor (or the cash equivalent thereof), in the
case of an assignment, and in the case of a subletting, ninety percent (90%) of
the full amount of any such excess rent.
The provisions of this paragraph shall apply to each and every assignment of
the Lease and each and every subletting of all or a portion of the Premises,
whether to a subsidiary or controlling corporation of the Tenant or any other
person, firm or entity, in each case on the terms and conditions set forth
herein; provided, however, that the Landlord shall not be permitted to elect to
terminate in accordance with the foregoing provisions of this paragraph nor
shall the foregoing provisions of this paragraph providing for payment to
Landlord of any excess rent upon an assignment or subletting be applicable, upon
and with respect to an assignment of this lease or subletting by the Tenant
herein named to a subsidiary or its controlling corporation (as to which, and
only for so long as, such corporations continue so to be affiliated, it being
agreed that upon the cessation of such affiliation the provisions of this
paragraph shall immediately become applicable with respect to the theretofore
exempt transaction) as to which the provisions of this Section 5.1 expressly are
not applicable as set forth in the first grammatical paragraph of the following
Section 5.2. For the purposes of this Section 5.1, the term "rent" shall mean
all Fixed Rent, additional rent or other payments and/or consideration payable
by one party to another for the use and occupancy of all or a portion of the
Premises.
5.2 EXCEPTIONS. The provisions of Section 5.1 restricting assignment and
subletting shall not, however, be applicable to an assignment of this Lease by
Tenant to a subsidiary (for such period of time as the stock of such subsidiary
continues to be owned by Tenant, it being agreed that the subsequent sale or
transfer of forty-nine percent (49%) or more, or such smaller percentage as
would result in a change in voting control, of the stock of such subsidiary
shall be treated as if such sale or transfer were, for all purposes, an
assignment of this Lease governed by the provisions of Section 5.1) or Tenant's
controlling corporation, Town & Country Manufacturing Co., for such period of
time as said controlling corporation continues to be the controlling corporation
of the Tenant herein named (it being agreed that the subsequent sale or transfer
of such portion of the capital stock of the original Tenant as would result in a
change in voting control thereof shall be treated as if such sale or transfer
were, for all purposes, an assignment of this Lease governed by the provisions
of Section 5.1, as aforesaid), provided (and it shall be a condition of the
validity of any such assignment) that such subsidiary or controlling corporation
is not a debtor under the Bankruptcy Code (or otherwise insolvent as aforesaid)
and that it first shall have agreed directly with Landlord to be bound by all of
the obligations of Tenant hereunder, including, without limitation, the
obligation to pay the rent and other amounts provided for under this Lease, the
covenant to use the Premises only for the purposes specifically permitted under
this Lease and the covenant against further assignment; but such assignment
shall not relieve Tenant herein named of any of its obligations hereunder, and
Tenant shall remain fully liable therefor. For purposes of this Lease, if Tenant
is a corporation, the sale or transfer of forty-nine percent (49%) or more, or
such smaller percentage as would result in a change of voting control, of the
stock of Tenant or of its controlling corporation (whether such sale or transfer
occurs at one time or at intervals so that, in the aggregate, over the term of
this Lease, such a transfer shall have occurred), or any other transaction(s)
overall having the effect of a change in control or substantially the same
effect as a change in control if the entity in question is not a corporation
(such as, without limitation, a change in the number or identity of partners of
a partnership or beneficiaries of a nominee trust), shall be treated as if such
sale or transfer were, for all purposes, an assignment of this Lease and shall
be governed by the provisions of Section 5.1. To enable Landlord to determine
ownership of Tenant, Tenant agrees to furnish to Landlord, from time to time and
promptly after Landlord's request therefor, an accurate listing of the holders
of its stock, the holders of the stock of its controlling corporation and/or the
holders of the stock of any subsidiary/assignee or subsidiary/sublessee as of
the date of the execution of this Lease and/or as of the date of Landlord's
request.
Notwithstanding the foregoing or anything to the contrary contained in
Section 5.1 of this Article:
(1) In the event that all property and operations of the Tenant herein
named (L.G. Balfour Company, Inc.) and its subsidiaries are being transferred to
another entity by way of merger, consolidation or sale of substantially all of
the stock therein or assets thereof, Landlord shall consent to an assignment of
this Lease to said resulting or acquiring entity, provided (and it shall be a
condition of the validity of any such assignment), without limitation, that: (i)
such entity shall first agree directly with Landlord to be bound by all of the
obligations of Tenant hereunder, including, without limitation, the obligations
to pay the rent and other charges provided for under this Lease, and the
covenant against further assignment; (ii) such assignment shall not relieve the
Tenant herein named of any of its obligations hereunder, and the Tenant shall
remain fully liable therefor; and (iii) Tenant shall furnish Landlord with such
information regarding such entity as Landlord may reasonably require, including,
without limitation, information regarding good reputation, financial ability and
business experience relating to the business and uses permitted hereunder,
evidencing and confirming that such entity (a) has the financial strength and
capacity to fulfill its obligations and pay all charges hereunder for the
balance of the Term and, without limitation, is of good creditworthiness and has
a net worth (determined in accordance with generally accepted accounting
principles consistently applied) at least equal to Ten Million and 00/100
Dollars ($10,000,000.00) (1993 Dollars), (b) is acquiring such operations as a
combined and going business, and (c) has an ownership and management team with a
good reputation and a proven history of successful manufacturing business
experience comparable in all material respects with the operations being
conducted at the Premises subject to and in accordance with the provisions of
this Lease; and
(2) In the event that the Tenant desires, after the expiration of the first
five (5) full years of the Lease Term, to assign its interest under this Lease
in a bona fide transaction at arm's-length to a completely unaffiliated entity
(other than as part of a sale and transfer of the Tenant's operations covered by
the preceding paragraph 1), and if the Landlord does not exercise its option to
terminate this Lease (which the Landlord shall be permitted to do) in accordance
with the provisions of Section 5.1 above, then, subject to all applicable
provisions of said Section 5.1, the Landlord will not unreasonably withhold
consent to such assignment, provided (and it shall be a condition of the
validity of any such assignment), without limitation, that: (i) such entity
shall first agree directly with Landlord to be bound by all of the obligations
of Tenant hereunder, including, without limitation, the obligations to pay the
rent and other charges provided for under this Lease and the covenant against
further assignment; (ii) such assignment shall not relieve the Tenant herein
named of any of its obligations hereunder, and the Tenant shall remain fully
liable therefor; and (iii) the Landlord determines in its reasonable judgment
that the conditions of clause (iii) of the preceding paragraph 1 are satisfied
with respect to such proposed assignee entity; and
(3) The foregoing provisions treating a transfer of a controlling interest
of the voting stock as an assignment shall not apply to the trading of the
capital voting stock of the Tenant or its controlling corporation, respectively,
with respect to the transaction by which such corporation becomes or otherwise
if and whenever such corporation is a so-called reporting public corporation
pursuant to the provisions of the Securities Exchange Act of 1934 (as amended)
the outstanding voting stock of which is registered in accordance with the
provisions of the Securities Act of 1933 (as amended) and "listed" and publicly
traded on a recognized national or international stock exchange (such as, for
example only, the New York Stock Exchange); and
(4) Tenant may, subject to and in accordance with all other applicable
provisions of this Lease, grant a Leasehold Mortgage on its interest hereunder
to a reputable trust company, bank or similar financial institution, and the
foreclosure (or deed or assignment in lieu thereof) of such a Leasehold Mortgage
shall not in itself constitute an impermissible assignment or transfer or an
event of default by Tenant under this Lease, but any such institution, if it
shall become a successor Tenant hereunder, shall hereby assume the Tenant's
rights and obligations as the successor Tenant and shall continue timely to pay
all rent and charges to be paid hereunder and fully to comply with all other
terms and provisions of this Lease without any default continuing beyond
applicable notice and grace periods; but, as aforesaid, such successor shall be
required to assume in writing with Landlord all obligations of Tenant hereunder,
and Tenant shall not be released from any of its obligations but shall remain
fully liable hereunder.
Without limiting any of the other provisions of this Lease, in the event
that Tenant (or any guarantor of this Lease) consolidates or merges into any
other firm or corporation, or sells or otherwise transfers a controlling
interest in its stock or other beneficial ownership or a majority of its assets
or the division (e.g. subsidiary, company or entity) holding the interest of
Tenant hereunder to any person, firm or corporation, then and in such event
Tenant (and any such guarantor of this Lease) hereby agree timely to deliver to
Landlord copies of the merger, consolidation or purchase agreements and, at
Landlord's election, an assumption agreement or guaranty (or both, as the case
may be) duly executed by each of the merged or consolidated or acquiring
successor or purchasing parties, agreeing to assume performance of Tenant's (and
any such guarantor's) terms, obligations, conditions and covenants under and
otherwise relating to the provisions of this Lease (together with appropriate
corporate or like certificates confirming the authority and incumbency of the
signatories thereto). As set forth hereinabove,
<PAGE>
notwithstanding any such assumption, Tenant (and any guarantor of this Lease)
shall continue and remain liable hereunder.
ARTICLE VI
DELIVERY OF PREMISES AND
RESPONSIBILITY FOR REPAIRS AND
CONDITION OF PREMISES
6.1 DELIVERY OF POSSESSION OF PREMISES. The Premises shall be treated as
delivered hereunder as of the date of this Lease; however, possession of the
Buildings themselves shall be treated as delivered upon (and only upon) the date
on which Landlord or its architect or engineer shall give Tenant notice that the
work of the Landlord ("Landlord's Work") to be performed in the Buildings, as
described in Exhibit B to this Lease, has been substantially completed. For
purposes of determining the Commencement Date only, the Premises (including the
Buildings) shall be treated as delivered upon the first to occur of:
(i) the date on which Landlord or Landlord's architect or
engineer gives notice of the substantial completion of
Landlord's Work as aforesaid; or
(ii) the date on which Tenant takes occupancy of the Buildings.
The Tenant is fully aware of the present condition of the Premises and,
except as may be otherwise expressly set forth herein, agrees to take the same
on a strictly "as is" basis.
"Tenant's Plans" shall consist of the plans and specifications, prepared at
Tenant's sole cost and expense, as approved by Landlord, for the initial
alterations and improvements to be constructed in the Premises by Tenant in
accordance with Exhibit B ("Tenant's Work"). Without limiting Landlord's rights
to refuse to approve Tenant's Plans, Landlord shall have the right to disapprove
Tenant's Plans if the same disclose work, materials or equipment which will
unduly delay completion of Landlord's Work. Consistent with the foregoing and
all applicable provisions of this Lease, Landlord shall not unreasonably
withhold or delay its approval of Tenant's Plans.
<PAGE>
Landlord shall permit Tenant access (at Tenant's sole risk) for purposes of
performing Tenant's Work and installing equipment and furnishings in the
Buildings prior to Tenant's taking possession of the Buildings if it can be done
without interference with Landlord's Work in the Buildings and in harmony with
Landlord's contractors and subcontractors, including, without limitation, in
accordance with any labor agreements Landlord's contractors or subcontractors
may be parties to.
If despite Landlord's good faith, reasonable efforts to substantially
complete Landlord's Work, Landlord's Work shall not have been substantially
completed on or before June 1, 1995, and the Commencement Date has not then
occurred, then, at the election of either party by notice thereof to the other
given before such substantial completion, this Lease shall thereupon terminate
without further recourse to the parties hereto and such shall be Tenant's sole
remedy at law or in equity for Landlord's failure to deliver the Premises.
In any event, Tenant shall complete Tenant's Work, including installation
of all leasehold improvements and other initial alterations and personal
property necessary or proper for the Tenant's operations in the Premises as soon
as reasonably possible (subject only to force majeure delays beyond the
reasonable control of Tenant) following the Delivery Date.
6.2 REPAIRS AND CONDITION OF PREMISES. Subject to temporary conditions beyond
Tenant's control resulting from casualty or taking (provision for which is made
elsewhere in this Lease), Tenant will keep the Premises (and every part thereof)
and the sidewalks, curbs, roadways, parking areas, landscaped areas and all
facilities and areas comprising the Premises in safe and good order and
first-class tenantable condition, in compliance with applicable law and the
terms of the insurance policies required under Article IX, and will make all
necessary or appropriate repairs, replacements, renewals and betterments
thereof, interior and exterior, structural and non-structural, ordinary and
extraordinary, and foreseen and unforeseen, all in accordance with then
applicable standards and practices of sophisticated real estate owners and
operators, and shall surrender the Premises at the end of the term, in such
condition. Without limitation, Tenant shall comply (and cause the Premises to
comply) and maintain and use the Premises in accordance with all applicable
laws, ordinances, governmental rules and regulations, now or hereafter enacted,
directions and orders of officers of governmental agencies having jurisdiction
and in accordance with the requirements of Landlord's and Tenant's insurers, and
shall, at Tenant's own expense, obtain and maintain in effect all permits,
licenses and the like required by applicable law. Tenant shall so comply (and
cause the Premises so to comply) whether or not such laws, ordinances,
regulations or requirements shall necessitate structural changes, improvements,
interference with use and enjoyment of the land or the improvements,
replacements, or repairs, extraordinary as well as ordinary. However, Tenant
may, so long as there is no resulting adverse effect upon Landlord or its
interests in the Premises, defer compliance with any particular such law,
ordinance, regulation or requirement to the extent other operators of similar
commercial properties in Eastern Massachusetts generally then are deferring
compliance therewith and as long as Tenant in good faith contests the lawfulness
and/or the applicability of the same to the Premises. Tenant shall not permit or
commit any waste. All repairs, replacements and renewals shall be at least equal
in quality and class to the improvements as they exist as of the commencement of
the Term (and as improved as of the Commencement Date). The Tenant waives any
right created by any law now or hereafter in force to make repairs to the
Premises at Landlord's expense. Tenant shall keep (or cause to be kept) the
improvements fully and adequately furnished with all equipment, fixtures and
articles of personal property necessary for the operation of the Premises for
the purposes herein permitted. Tenant will keep all sidewalks and areas safe and
free and clear from rubbish, ice and snow and free from any encumbrance or
obstruction.
It is specifically understood and agreed that Landlord shall have no
obligation whatsoever to maintain or repair any portion of the Premises at any
time throughout the term of this Lease.
If repairs are required to be made by Tenant pursuant to the terms hereof,
Landlord may demand that Tenant make the same forthwith, and if Tenant refuses
or neglects to commence such repairs and complete the same with reasonable
dispatch after such demand, Landlord may (but shall not be required to do so)
make or cause such repairs to be made and shall not be responsible to Tenant for
any loss or damage that may accrue to Tenant's stock or business by reason
thereof. If Landlord makes or causes such repairs to be made or endeavors so to
do, Tenant agrees that Tenant will forthwith, on demand, pay to Landlord the
cost thereof, and if Tenant shall default in such payment, Landlord shall have
the remedies provided for the nonpayment of rent or other charges payable
hereunder.
6.3 SURRENDER. On the last day of the Term of this Lease or upon any termination
of this Lease for default or for any other reason, Tenant shall surrender the
Lot and the improvements comprising the Premises to the possession and use of
Landlord, without delay and in first class, tenantable order, condition and
repair (subject only to reasonable wear and tear, and to any casualty or taking
for which provision is made in Article XI hereof, with respect to the
improvements), free and clear of all tenancies and occupancies, and free and
clear of all liens and encumbrances other than those existing on the date of
this Lease and those, if any, created by Landlord, or with Landlord's consent,
without any payment or allowance whatever by Landlord. All equipment, trade
fixtures, or personal property of Tenant or of any subtenant left on the
Premises at the time of such surrender shall be deemed to have been abandoned by
Tenant or by such subtenant. There shall be a prompt monetary adjustment between
Landlord and Tenant with respect to real estate taxes to be accomplished in the
usual and established manner.
Although Tenant shall, during the term of this Lease, but no longer, have a
leasehold interest in the Lot and improvements comprising the Premises, it is
agreed that upon any termination of this Lease, whether by expiration of the
term hereof or by reason of casualty, condemnation, or default, or for all of
Tenant's right, title and interest in the Lot and improvements shall cease and
terminate and title thereto shall automatically vest in Landlord absolutely free
of any leasehold and any liens permitted or suffered by Tenant. No further deed
or other instrument shall be necessary to confirm such vesting in Landlord.
However, upon any termination of this Lease, Tenant, upon request of Landlord,
shall execute, acknowledge and deliver to Landlord, an appropriate instrument(s)
confirming that all of Tenant's right, title and interest in the Lot and
improvements has expired and that title to the improvements has vested in
Landlord free of any leasehold and any liens permitted or suffered by Tenant.
Title to all personal property comprising improvements on the Lot (other
than the Tenant's aforesaid equipment, trade fixtures, furniture and other
personal property which is removable by Tenant pursuant to the provisions of
Section 4.2 above and which has been removed by the date of the expiration or
any earlier termination of this Lease) shall automatically vest in Landlord upon
any termination of this Lease and possession thereof shall be surrendered by
Tenant to Landlord free of any leasehold and any liens permitted or suffered by
Tenant. No further bill of sale shall be necessary to confirm vesting in
Landlord of title to such personal property. However, promptly after any
termination of this Lease, Tenant, upon request of Landlord, shall execute,
acknowledge and deliver to Landlord a bill of sale confirming that all of
Tenant's right, title and interest in such personal property has vested in
Landlord.
ARTICLE VII
UTILITIES AND SERVICES
7.1 PAYMENT OF UTILITY CHARGES. With respect to electricity for lighting and
equipment in the Premises, Tenant agrees to pay all bills therefor promptly to
the utility company furnishing the same and, if requested by Landlord, provide
Landlord with evidence of such payment. Moreover, Tenant agrees to pay or cause
to be paid all charges not only for electricity but also for gas, water, sewer,
heat, power, steam, air-conditioning, telephone or other communication service
or other utility or service used, rendered or supplied to, upon or in connection
with the Premises (land or improvements) throughout the Term, and to indemnify
Landlord and save it harmless against any liability or damages on such account.
Tenant shall also, at its sole cost and expense, procure or cause to be procured
any and all necessary permits, licenses or other authorizations required for the
lawful and proper installation and maintenance thereon and therein of wires,
pipes, conduits, tubes and other equipment and appliances for use in supplying
any such service thereto.
7.2 SERVICES. Tenant expressly agrees that Landlord is not, nor shall it be,
required to furnish to Tenant or any occupant of the Premises during the Term,
any water, sewer, gas, heat, electricity, light, power, steam, air-conditioning,
or any other facilities, equipment, labor, materials or services of any kind
whatsoever.
<PAGE>
ARTICLE VIII
REAL ESTATE TAXES AND OTHER EXPENSES
8.1 TENANT TO PAY ALL TAXES. For and with respect to the entire Term of this
Lease, Tenant will, at its sole cost and expense, pay and discharge, on or
before the last day upon which the same may be paid without interest or penalty
for the late payment thereof, all taxes, assessments, sewer rents, water rents
and charges, duties, impositions, license and permit fees, charges for public
utilities of any kind, payments and other charges of every kind and nature
whatsoever, ordinary or extraordinary, foreseen or unforeseen, general or
special (all of which are hereinafter sometimes collectively referred to as
"Taxes" or "Impositions"), which shall, pursuant to present or future law or
otherwise, prior to or during the Term hereby granted have been or be levied or
assessed upon the Premises or any part thereof, or the rents and sums received
by Landlord hereunder (in lieu of the aforesaid Impositions or additions
thereto). The parties agree that the rents reserved herein shall be received and
enjoyed by Landlord as a net sum, free from all of such Impositions, except
income taxes assessed against Landlord, transfer stamp tax, or estate,
succession, or similar taxes; provided, however, that if at any time during the
term of the Lease the then prevailing method of taxation or assessment shall be
changed so that the whole or any part of the Impositions theretofore payable by
Tenant, as above provided, shall instead be levied or assessed upon the rents
received by Landlord from the Premises, or shall otherwise be imposed against
Landlord in the form of a franchise tax or otherwise, then Tenant shall pay all
such levies and assessments or substituted charges on or before the last day
upon which the same may be paid without interest or penalty for the late payment
thereof.
Landlord agrees to notify the taxing authorities that bills for real estate
taxes and other Impositions are to be sent directly to Tenant (or, if required,
to Landlord but in care of Tenant) at Tenant's notice address set forth in this
Lease. Tenant shall promptly remit a copy of each such bill sent to it to
Landlord upon receipt thereof by Tenant and, together therewith (or promptly
thereafter, but no later than the date on which such bill, if not paid, would be
delinquent), Tenant shall remit evidence of payment of such bill to Landlord.
If, with respect to any particular bills for Impositions, it is not possible to
arrange for the same to be furnished directly to Tenant, Landlord shall remit a
copy of each such bill to Tenant on or before ten (10) business days following
the receipt thereof by Landlord such that there shall be no interest or penalty
for late payment imposed on account of Landlord's delay in so remitting such
bill to Tenant.
If any such assessments for road, sewer, utility or other local
improvements are payable as so-called betterments or the like, in installments,
Landlord agrees that Tenant may elect to pay the same over the longest
appropriate period available by law for the payment of the same without thereby
incurring any penalties, it being understood that Tenant shall only be required
to pay such installments or the portions thereof payable during or otherwise
allocable to periods within the Term of this Lease. However, with respect to any
such assessment resulting from any improvement made or consented to by Tenant,
Tenant shall first obtain Landlord's prior approval thereof (which approval
shall not unreasonably be withheld or delayed) if one or more of such
installments are to be paid or allocable to periods following the expiration or
earlier termination of the Term of this Lease, failing which, notwithstanding
the provisions of the preceding sentence, Tenant shall be responsible to pay for
the entire such assessment, including any then outstanding such installments,
even if and to the extent the same would be payable or allocable to a period
after the expiration or earlier termination of the Term of this Lease. Landlord
agrees not unreasonably to withhold its approval to any such improvement and
resulting assessment if such improvement shall reasonably be expected to benefit
the Premises and Landlord subsequent to the expiration of the Term of this
Lease; and Landlord further agrees reasonably to cooperate with Tenant, subject
to the foregoing and without thereby being required to incur any cost or any
liability, in any permit application relative to improvements which have been
approved by Landlord as aforesaid if such application requires Landlord's
signature.
Tenant shall pay all interest and penalties imposed upon the late payment
of any Impositions which it is obligated to pay hereunder; provided, however,
with respect to any particular bills for Impositions which, as aforesaid, cannot
be directed to Tenant but must be remitted by Landlord to Tenant, if Landlord
does not so remit a copy of such bill to Tenant on or before ten (10) business
days following the receipt thereof by Landlord and on account of Landlord's
delay in so remitting such bill to Tenant any interest or penalty for late
payment of such bill is imposed and paid by Tenant, then Tenant promptly shall
notify Landlord thereof and Landlord promptly shall reimburse Tenant the amount
of such resulting interest or penalty so paid by Tenant (and moreover, although
Landlord is not hereby accepting any further responsibility beyond the
foregoing, Landlord shall endeavor so to remit a copy of any such bill to Tenant
as soon as Landlord is aware of its receipt thereof, especially if the authority
to which such Imposition is payable has remitted its billing tardily).
Impositions shall be apportioned between Tenant and Landlord as of the dates of
the commencement and expiration or earlier termination of the Term of this Lease
(except to the extent that the Tenant is responsible with respect to any period
following the expiration of the Term in accordance with the provisions of the
preceding paragraph).
If Tenant shall fail to pay any Imposition on or before the last day upon
which the same may be paid without interest or penalties, then Landlord may
notify Tenant thereof and if such failure continues for ten (10) business days
thereafter then Landlord may pay the same, together with all interest and
penalties lawfully imposed upon the late payment thereof, and the amounts so
paid shall thereupon become immediately due and payable by Tenant to Landlord
hereunder.
Tenant at Tenant's own cost and expense may, in good faith, contest the
validity or amount of any Imposition, in which event Tenant may if and to the
extent permitted by applicable law defer the payment thereof for such period
(except as set forth below) as such contest shall be actively and diligently
prosecuted and shall be pending undetermined, upon the conditions, however, that
in the event of each such deferment of payment by Tenant:
(a) no provision of this Lease shall be construed so as to permit Tenant or
require Landlord to allow any such items so contested or intended to be
contested to remain unpaid for such length of time as shall permit the land or
the improvements, or the lien thereon created by such item to be contested, to
be sold by federal, state, county or municipal authority for the nonpayment
thereof;
(b) deferral of payment and the contesting of the Imposition
will not subject Landlord to any criminal prosecution; and
<PAGE>
(c) Tenant shall indemnify and hold Landlord harmless from and against any
loss, cost, damage, liability, interest, attorneys' fees and other expenses
arising out of such deferral of payment and contesting of the Imposition.
In connection with any such contest of the validity or amount of an
Imposition, as aforesaid, Landlord agrees reasonably to cooperate with Tenant,
subject to and in accordance with all of the foregoing and all other applicable
provisions of this Lease and further subject to the condition that Landlord
shall not thereby incur any liability or any cost or expense, with respect to
the filing of any applications or like papers which are required to be signed by
Landlord and cannot otherwise be properly processed.
8.2 TENANT TO PAY ALL OPERATING EXPENSES. For and with respect to the entire
Term of this Lease, Tenant will, at its sole cost and expense, pay and discharge
as and when the same become due and payable all costs and expenses relating to
operating the Premises including, without limitation, operating Tenant's
business therein. As set forth elsewhere in this Lease, without limitation,
Tenant shall pay all impositions, all charges for utilities and services, all
insurance premiums and related costs, and all costs and expenses incurred in
connection with repair, replacement, restoration and maintenance of the Premises
and each and every part thereof. The foregoing obligations shall apply
throughout the entire Lease Term from and after the Commencement Date (as herein
defined); and, for and with respect to the period from the commencement of the
Term hereof upon the execution and delivery of this Lease and up to the said
Commencement Date, while Tenant shall not be required to pay any Fixed Rent or
Impositions, during said period Tenant shall procure and maintain the insurance
required pursuant to the provisions of this Lease and be responsible to pay for
all utilities consumed and make and pay for all required repairs and maintenance
work performed except for those items comprising Landlord's Work to be performed
prior to the Commencement Date in accordance with the provisions of this Lease,
including Exhibit "B", and without derogating from the obligation of the
Landlord to make the Landlord's Inducement Payment to the Tenant subject to and
in accordance with the provisions of Section 13.26 of this Lease.
Notwithstanding the foregoing, however, if Tenant otherwise reasonably
would be required in accordance with the foregoing and all other applicable
provisions of this Lease, to obtain the Landlord's approval of and to make a
particular, large capital replacement (i.e., costing more than $50,000) (1993
Dollars), during the last one and one half (1-1/2) years of the Term of this
Lease set forth in Section 1.2 above (and which replacement was not reasonably
required to be made theretofore), and if in accordance with good and accepted
maintenance and repair standards in the U.S. commercial real estate industry for
the item in question there is an appropriate and adequate, non-capital repair
that can be made by the Tenant in lieu of such replacement, then and in such
event the Tenant shall not be required to make such capital replacement but in
lieu thereof Landlord shall approve that Tenant may make such repair.
ARTICLE IX
INDEMNITY AND WAIVER; INSURANCE
9.1 TENANT'S INDEMNITY AND WAIVER. Except if and to the extent otherwise
required by applicable statutory provisions (i.e., M.G.L. Chapter 186, Section
15) or the express provisions of this Lease, Tenant agrees that Landlord shall
not be liable for any injury or damage to any property or to any person
happening on, in or about the Premises, or for any injury or damage to the
Premises, or to any property by reason of any defect in the Premises, or which
may result from steam, gas, electricity, water, rain or sewer, or any defect in
any engines, boilers, elevators, escalators, machinery, electric wiring or
fixtures, or for any failure or defect of water, heat, electric light or power
supply or for any kind of injury or damage which may arise from any other cause
whatsoever on the Premises, including defects in construction, latent or
otherwise.
Except if and to the extent otherwise required by applicable statutory
provisions (as aforesaid) or the express provisions of this Lease, from and
after the commencement of the Term of this Lease the Tenant agrees to indemnify
and save Landlord harmless from and against any and all liability, loss, damages
or expense, (including reasonable attorneys' fees, as aforesaid), arising from
claims of any kind and nature in connection with possession, use or operation of
the Lot, the Buildings and other improvements, and all of the appurtenances to
the Premises by the Tenant or any other person, or arising out of Tenant's
failure timely to perform each term, covenant, condition and agreement provided
in this Lease to be performed by Tenant. Tenant at Tenant's sole cost and
expense will defend by counsel selected or approved by Landlord (such approval
not unreasonably to be withheld with respect to counsel proposed by Tenant's
institutional liability insurance carrier), any and all suits that may be
brought, and claims which may be made, against Landlord upon any such liability
or claim.
All indemnities given either by Tenant or by Landlord under this Lease to
the other (the "Indemnified Party") shall exclude indemnification for the
Indemnified Party's negligence or willful misconduct. Further, where an
indemnity requires defense with attorneys acceptable to the Indemnified Party,
the Indemnified Party shall endeavor to use common counsel except where attorney
conflict rules prohibit the same.
All of the foregoing provisions of this Section shall survive for a period
of six (6) years following the expiration or other termination of the Term of
this Lease.
9.2 INSURANCE. Tenant shall, at Tenant's own cost and expense,
provide and keep in force throughout the Lease Term:
(a) broad form comprehensive general liability insurance (without any
so-called employee exclusion or the like, and, without limitation, including
insurance against liability contractually assumed under the provisions of this
Lease) insuring against elevator and escalator (if there be any in the Premises)
as well as boiler risks and any and all liability occasioned by negligence,
occurrence, accident or disaster in or about the Lot or the improvements
comprising the Premises or the streets or sidewalks adjacent thereto or the
appurtenances thereto. The limits of such coverage shall be at least $3,000,000
(1993 Dollars) combined single limit per occurrence in or about the Premises, or
such higher limits as may be requested by Landlord (or its mortgagee) consistent
with then applicable standards and practices of sophisticated owners and
operators of comparable commercial real estate developments;
(b) All Risk Insurance with Differences in Conditions Endorsement, Agreed
Amount Endorsement and Replacement Cost Endorsement, insuring the Buildings and
other improvements comprising the Premises against loss or damage from all
insurable risks, casualties and hazards as Landlord may from time to time
specify consistent with then applicable standards and practices of sophisticated
owners and operators of comparable real estate developments, including, if so
consistent (and if applicable), boiler and machinery peril insurance, flood
insurance (if the property is in an area which is considered a flood risk area
by the U. S. Department of Housing and Urban Development) and war risk insurance
(when available). Full replacement cost, for the purposes hereof, shall be
determined, at Landlord's request not more frequently than at three (3) year
intervals, by one or more of the insurers, or by an architect, contractor,
appraiser or appraisal company selected by Tenant and acceptable to Landlord;
(c) business interruption and rental value insurance; and
(d) workers' compensation and employers' liability insurance.
Such insurance shall cover such insurable risks as Landlord may from time
to time specify and which are insured against by owners of comparable
improvements in an amount to be designated by Landlord from time to time during
the term of this Lease, consistent with then applicable standards and practices
of sophisticated owners and operators of comparable real estate developments.
The amount of such rental insurance to be carried hereunder shall include an
agreed amount endorsement on an All Risk basis for an amount not less than 100%
of the anticipated annual rental including Fixed Rent and all other charges
payable hereunder. The amount of the rent insurance shall be adjusted annually
with an Agreed Amount Endorsement.
All such policies must be written by a company or companies having a Best's
rating of at least AX, licensed in the Commonwealth of Massachusetts.
Certificates of insurance for all such policies of insurance, together with
a receipt and certified statement from an executive officer of Tenant that the
premiums thereon have been paid, shall be delivered to, and left in the
possession of, Landlord. Such insurance shall be noncancellable without thirty
(30) days written notice to Landlord, and shall provide that the same may not be
amended or terminated without Landlord's written consent not unreasonably to be
withheld. Certified copies of such insurance policies shall be furnished to
Landlord upon Landlord's written request therefor. Tenant shall be permitted, in
place of separate policies, to procure blanket policies of insurance also
covering other property of Tenant provided that: (i) any and all such blanket
policies expressly shall allocate to the Premises not less than the amount of
insurance required under the provisions of this Lease to be maintained by Tenant
(and separately state the amount of such coverage); (ii) any and all such
blanket policies shall afford the same scope and limits of coverage as if Tenant
had carried a separate insurance policy or policies meeting the requirements of
this Lease for such coverage, so that Landlord and its mortgagees (if any) shall
be given no less protection than that which would be afforded by such separate
policy or policies; and (iii) any and all such blanket policies shall not affect
any of the other terms or provisions of this Lease with respect to the rights
and obligations of Landlord and Tenant (and their mortgagees, if any, as their
interests may appear), all of which shall be enforced and applicable as though
Tenant had carried a separate policy or policies meeting the requirements of
this Lease and had not carried such blanket insurance.
All such policies of insurance shall waive any rights of subrogation or
otherwise against Landlord and against Tenant, notwithstanding any negligent act
or failure to act by Landlord or Tenant or their respective agents and
employees. Tenant shall pay the expense of any additional premium which the
insurer may charge for such waiver (which may be effected, if possible, by
naming such parties as insureds as required hereinbelow).
All such policies shall name as insured Landlord, Tenant and any mortgagee
(of which Landlord has notified Tenant) or leasehold mortgagee, as their
interests may appear, shall include a mortgagee clause in standard form if and
whenever there is such a mortgage, and shall provide that the loss, if any,
shall be payable to the Depositary referred to hereinbelow.
Provided that no default by Tenant under this Lease has occurred and is
continuing, all hazard insurance proceeds received by the Depositary (other than
rent insurance proceeds for which provision is made in Article XI, as well as
any additional business interruption insurance being carried by Tenant) shall be
made available by the
<PAGE>
Depositary, for application to the cost of demolition, restoration, repair,
replacement and rebuilding of the damage which occasioned the payment of such
proceeds.
If Tenant shall fail to provide the insurance or evidence of insurance
required herein, Landlord may notify Tenant that Landlord intends to obtain such
policies and Landlord may immediately then obtain such policies as the agent of
Tenant (in which case Landlord shall promptly notify Tenant if and when it has,
in fact, so obtained any such policies), running for a period not exceeding
three (3) years under any one policy; and the amount of the premium or premiums
paid for such insurance by Landlord shall be paid by Tenant to Landlord upon
demand; and Landlord shall not be limited in the proof of any damages which
Landlord may claim against Tenant arising out of or by reason of Tenant's
failure to provide and keep in force general liability policies as aforesaid, to
the amount of the insurance premium or premiums not paid or incurred by Tenant
which would have been payable upon such insurance, but shall also be entitled to
recover as damages for such breach, the uninsured amount of any loss, liability,
damage, claims, costs and expenses of suit (including attorneys' fees),
judgments and interest, and reasonable attorneys' fees suffered or incurred by
Landlord.
Tenant shall comply with the terms of all insurance policies required to be
provided by it under this Lease.
Upon any termination of this Lease all right, title and interest of Tenant
in any insurance policies required hereunder, including any premiums for such
policies, are hereby assigned to Landlord; but the foregoing shall not preclude
Tenant from recovering any casualty insurance proceeds to which Tenant is
entitled hereunder for any repair and restoration work theretofore done and paid
for by Tenant. Regarding any such casualty insurance, however: (i) Tenant will
give Landlord advance notice (reminding it that Tenant was carrying such
insurance but will no longer be doing so upon termination of this Lease) and
reasonable opportunity to place its own primary casualty insurance policy
coverage in force and effect covering the Premises for the period following the
termination of this Lease; and (ii) any casualty insurance premiums relating to
the policy which Tenant had been carrying hereunder with respect to the
Premises, if agreed to be assigned to Landlord by Tenant, Landlord and the
insurance carrier, shall be appropriately prorated.
Tenant shall, promptly upon learning thereof, notify Landlord of any and
all liability claims affecting or relating to the Premises which claims are
predicated upon occurrences prior to the commencement of the Term of this Lease;
and Tenant shall keep Landlord fully and timely informed and promptly when
available send Landlord all relevant data and materials relating to any and all
such claims affecting or relating to the Premises.
ARTICLE X
LANDLORD'S ACCESS TO PREMISES
10.1 LANDLORD'S RIGHT OF ACCESS. Landlord shall have the right to enter the
Premises at all reasonable business hours (and, in emergencies, after normal
business hours) for the purpose of inspecting or making repairs to the same, and
Landlord shall also have the right to make access available at all reasonable
hours to prospective or existing mortgagees or purchasers of any part of the
Building. For a period of one (1) year prior to the expiration of the Lease
Term, Landlord may have reasonable access to the Premises at all reasonable
hours for the purpose of exhibiting the same to prospective tenants, and may
post suitable notice on the Premises advertising the same for rent.
ARTICLE XI
FIRE, EMINENT DOMAIN, ETC.
11.1 FIRE AND OTHER CASUALTY.
A. Restoration Following Destruction. If any portion of the improvements on
the Premises or any appurtenance thereto shall be damaged or destroyed by fire
or other casualty, then, whether or not such damage or destruction shall have
been insured, Tenant shall give prompt written notice thereof to Landlord and
shall proceed with reasonable diligence to repair or rebuild such improvements
at its sole cost and expense to substantially the condition in which such
improvements were in at the time of such damage or destruction (consistent,
however, with zoning laws and building codes then in existence). Tenant shall
not be required to commence restoration until such time as it shall have
received insurance proceeds for such fire or other casualty, except that if such
proceeds shall not have been received within ninety (90) days of the date of
such fire or other casualty then Tenant agrees promptly to commence and
diligently pursue such restoration. However, if Tenant requests a further
extension of such 90-day period to commence such restoration for a period not to
exceed an additional ninety (90) days, Landlord agrees not unreasonably to
withhold its consent provided Tenant is proceeding with due diligence to recover
such insurance proceeds as soon as possible during such extension period.
Any repair or rebuilding following either a total or a partial destruction
shall be performed pursuant to the provisions of Section 11.3 below, and, if
there are insurance proceeds resulting from such damage or destruction, Tenant
shall be entitled to such proceeds in the manner provided in said Section 11.3.
If at any time Tenant shall fail to prosecute such work of repair or rebuilding
with diligence and promptness, then Landlord may give to Tenant written notice
of such failure and if such failure continues for thirty (30) days thereafter,
then Landlord, in addition to all other rights which it may have, may enter upon
the Premises, provide labor and/or materials, cause the performance of any
contract and/or take such other action as it may reasonably deem advisable to
prosecute such work. Landlord shall be entitled to reimbursement for its
reasonable costs and expenses from any insurance proceeds and any other moneys
held by the Depositary for application to the cost of such work, subject to and
in accordance with the provisions of Section 11.3.B hereof. All reasonable costs
and expenses incurred by Landlord in carrying out such work for which it is not
reimbursed by the Depositary, shall be paid by Tenant within ten (10) days
following demand therefor, which demand may be made by Landlord periodically as
such costs and expenses are incurred, in addition to any damages to which
Landlord may be entitled hereunder.
All insurance proceeds shall be paid to the Depositary provided for in
Section 11.4 below.
B. Tenant Obligations Following Destruction. Rent shall not
abate because of any damage to or destruction of the
improvements on the Premises, or to the appurtenances thereto.
Tenant shall continue to perform all of its obligations
hereunder, notwithstanding any such damage or destruction.
Any rent insurance proceeds received by the Depositary by reason of such
damage or destruction shall be applied by it to the payment of the rent and all
other charges provided in this Lease and to premiums for any insurance required
to be maintained by Tenant under this Lease. However, such payment shall not
relieve Tenant of its obligations to pay punctually all such rent and other
charges should rent insurance proceeds held by the Depositary be insufficient to
pay the same or if for any reason such rent insurance proceeds are not actually
applied by a Depositary to the payment of such amounts. In the event that there
shall be excess insurance proceeds after the repair and restoration of all
improvements is completed in accordance with the provisions hereof to
substantially their condition at the time of the damage or destruction in
question, then unless this Lease is terminated pursuant to the following
provisions of this Section 11.1, after the repair and restoration of all
improvements is completed in accordance with the provisions hereof to
substantially their condition at the time of the damage or destruction in
question, any such excess insurance proceeds shall be paid promptly to Tenant;
provided, however, that in the event there shall be any such excess insurance
proceeds by reason of the fact that Tenant is precluded from making repairs
and/or rebuilding any such improvements to substantially their prior condition
by operation of law (such as zoning changes, etc.), then repair and restoration
shall be completed in accordance with all applicable provisions of this Lease
and thereupon any remaining such excess insurance proceeds, to the extent of any
diminution in the value of the improvements or the Premises as so repaired and
restored from the value thereof prior to such casualty, promptly shall be paid
to Landlord, and any balance of such excess insurance proceeds promptly shall be
paid to Tenant.
C. Tenant's Option to Terminate. Notwithstanding anything to the contrary
contained herein, if during the last two (2) years of the Term of this Lease,
provided (i) more than 50% of the improvements shall be destroyed by fire or
other casualty (it being agreed that if, for the purposes hereof, a
determination is required to be made of the percentage value to repair and
restore the improvements so destroyed, such appraisal shall be made by an
experienced insurance appraiser selected by the company insuring the casualty in
question, and reasonably satisfactory to Landlord and Tenant), (ii) Tenant has
provided insurance coverage as required in this Lease, (iii) the proceeds
thereof are made available by the applicable insurance carrier; and (iv) Tenant
notifies Landlord of its election within 30 days of such destruction; Tenant
shall have the option: (a) to repair and restore the improvements as provided
above, or (b) to terminate this Lease effective and further conditioned as
follows:
1. All proceeds of property damage insurance and any
self-insured amounts (including, without limitation, any
applicable deductible amount) shall be paid to Landlord (or the
holder(s) of Landlord's mortgage(s) as applicable);
2. Tenant shall, at its expense, confirm and deliver possession and
title back to Landlord within 60 days after the destruction occurs, free and
clear of any and all liens and encumbrances except (i) those liens and
encumbrances in effect on the commencement of the Term; (ii) this Lease; (iii)
any easement, right of way or other agreement not constituting a lien which
Landlord shall have approved and entered into during the Term of this Lease;
(iv) any encumbrances (excluding, in any event, any leasehold mortgage placed on
Tenant's leasehold interest hereunder) which Landlord shall have expressly in
writing approved and authorized to continue beyond the Term of this Lease; and
(v) the lien of taxes and betterments (if any) on the Premises which are not yet
due and payable;
3. Within said 60-day period, Tenant shall surrender to Landlord
possession of the Premises and shall pay (i) to Landlord, any unpaid rent
accruing to the date of said surrender, and (ii) all other amounts required of
Tenant under this Lease, whether paid to Landlord or otherwise, adjusted through
the date of surrender; and
4. Thereupon, but not before, this Lease shall terminate.
D. Landlord's Option to Terminate. Notwithstanding the provisions of
Section 11.1.C. above, in the event that: (i) Tenant would have the right to
terminate this Lease in accordance with the provisions of Section 11.1.C. above
but elects not to do so, and (ii) there would then be remaining less than two
(2) years of the Term of this Lease - then and in that event, Landlord shall
have the right to terminate this Lease by giving written notice to Tenant of its
election so to do within thirty (30) days after Landlord has received Tenant's
notice that Tenant elects to rebuild and restore. If this Lease is so
terminated, all proceeds of property damage insurance not previously paid for
any partial repair and restoration theretofore completed (including proceeds
specifically allocable to any building components and systems, but excluding the
same as specifically allocable to any of
<PAGE>
Tenant's trade fixtures and other personal property) shall be paid to Landlord
as set forth in paragraph 1 of said Section 11.1.C.
11.2 CONDEMNATION.
A. Entire Condemnation. If during the term of this lease all or
substantially all of the Lot and the improvements thereon shall be taken in the
exercise of the power of eminent domain or by private purchase in lieu thereof,
then this Lease shall terminate on the date of vesting of title in the taking
authority and any prepaid rent shall be apportioned as of said date.
Landlord shall have and hereby reserves and accepts, and Tenant hereby
grants and assigns to Landlord, all rights to recover for damages to the
Building, the Lot, and this Leasehold interest hereby created, and to
compensation accrued or hereafter to accrue by reason of such taking, as
aforesaid, and by way of confirming the foregoing, Tenant hereby grants and
assigns, and covenants with Landlord to grant and assign to Landlord all rights
to all awards for such damages or compensation. Nothing contained herein shall
be construed to prevent Tenant from prosecuting in any condemnation proceedings
a claim for the value of any Tenant's usual trade fixtures installed in the
Premises by Tenant at Tenant's expense and for relocation expenses, provided
that such action shall not affect the amount of compensation otherwise
recoverable by Landlord from the taking authority.
B. Partial Condemnation. If less than all or substantially all of the Lot
and the improvements shall be taken in the exercise of the power of eminent
domain or by private purchase in lieu thereof, then this Lease shall continue in
full force and effect and Tenant shall proceed with reasonable diligence to
carry out any necessary repair and restoration, so that the remaining
improvements and appurtenances shall constitute complete structural units which
can be operated on an economically feasible basis under the provisions of this
Lease. Tenant shall not be required to commence restoration until such time as
it shall have received the condemnation award for such taking, except that if
such award shall not have been received within ninety (90) days of the date of
such taking then Tenant agrees to commence and diligently pursue such
restoration. If Tenant requests a further extension of said 90-day period not to
exceed an additional ninety (90) days Landlord agrees not unreasonably to
withhold its consent provided Tenant is proceeding with due diligence to recover
such award as soon as possible during such extension period. All of such repair
and restoration shall be carried out by Tenant in accordance with the provisions
of Section 11.3 hereof, and if the Depositary shall hold any condemnation
award(s) which are to be applied to the cost of such repair or restoration, then
Tenant shall be entitled to said award(s) to the extent and at the time(s)
provided in said Section 11.3. If Tenant shall fail to prosecute such repair or
restoration with diligence and promptness, then Landlord may give to Tenant
written notice of such failure. If such failure continues for thirty (30) days
after such notice, then Landlord, in addition to all other rights which it may
have, may enter upon the land and/or the improvements, provide labor and/or
materials, cause the performance of any contract and/or take such other action
as it may reasonably deem advisable to complete such work. Landlord shall be
entitled to reimbursement for its reasonable costs and expenses from any
condemnation award(s) and any other monies held by the Depositary for
application to the cost of such work, subject to and in accordance with the
provisions of Section 11.3.B. hereof. All reasonable costs and expenses incurred
by Landlord in carrying out such work for which it is not reimbursed by the
Depositary, shall be paid by Tenant within ten (10) days following demand
therefor, which demand may be made by Landlord periodically as such costs and
expenses are incurred, in addition to any damages to which Landlord may be
entitled hereunder.
The entire award or awards for any such partial taking shall be paid to the
Depositary, and the Depositary shall advance funds for the restoration in
accordance with the provisions of Section 11.3 hereof. If, after all of the work
has been completed in accordance with said Section 11.3, the Depositary shall
hold any additional funds, such funds shall belong to the Landlord and the
Depositary shall pay out such funds promptly to the Landlord.
C. Arbitration. As used in this Lease, a taking of less than substantially
all of the Premises shall mean a taking of such portion as leaves remaining a
balance which may be economically operated for the purpose for which the
Premises was operated prior to such taking. If there shall be a taking, Landlord
and Tenant will attempt in good faith (through their own efforts and resources,
or with the guidance of a single professional appraiser or other qualified
"neutral" hired by them both for such purpose and whose fee shall be split
equally between them) to reach agreement whether or not the particular taking
constitutes the taking of all or substantially all of the Premises. However, in
the event the parties are unable so to agree as to whether any particular taking
constitutes a taking of all or substantially all, or a taking of less than
substantially all, of the Premises, either party may submit the matter to
binding arbitration in Boston, Massachusetts, by giving written notice to that
effect to the other party and shall in such notice appoint an arbitrator on its
behalf. Within twenty (20) days thereafter, the other party shall by written
notice to the first party appoint a second arbitrator on its behalf, and the two
arbitrators so appointed shall appoint a third arbitrator, and the three
arbitrators shall determine the matter in dispute by majority action and in
accordance with The Center for Public Resources ("CPR") Rules for
Non-Administered Arbitration of Business Disputes. If the second party shall
fail to appoint the second arbitrator or if the two arbitrators fail within
thirty (30) days after the appointment of the second arbitrator to appoint a
third arbitrator, then either party to this Lease, upon written notice to the
other party, may request such appointment by the CPR (or any organization
successor thereto), or on its failure, refusal or inability to act, may apply
for such appointment to a court of competent jurisdiction in the Commonwealth of
Massachusetts. Any third arbitrator shall be immediately confirmed in writing to
be acceptable to both the Landlord and Tenant or otherwise shall be selected
from the CPR Panels of Distinguished Neutrals. The determination made as above
provided shall be conclusive upon the parties and judgment upon the same may be
entered in any court having jurisdiction thereof. The arbitrators chosen by the
parties shall give written notice to the parties stating their determination,
and shall furnish to each party a signed copy of such determination. The
decision of the arbitrators shall be a condition precedent to any right of legal
action that either party may have against the other with respect to the subject
matter of the arbitration. Each party shall pay the fees and expenses of the
arbitrator appointed by such party and one-half of the other expenses of the
arbitration properly incurred hereunder.
D. Temporary Taking. If the temporary ("temporary", for the purposes of
this Section, meaning a taking having a duration not in excess of two (2) years)
use of the whole or any part of the Lot or the improvements thereon or the
appurtenances thereto shall be taken, the term of this Lease shall not be
affected in any way and Tenant shall continue to pay in full the Fixed Rent and
all other sum or sums of money and charges provided in this Lease to be paid by
Tenant, and the entire award for such taking shall be paid to the Depositary, to
be applied and disposed of as hereafter provided in this Section. Provided there
is then no uncurred default by Tenant hereunder, the Depositary shall pay to
Tenant that portion of said award paid for use and occupancy of the Premises
during any period prior to the expiration of the Term of this Lease and shall
pay to Landlord any portion of said award paid for use and occupancy of the
Premises following expiration of this Lease Term. If there is any uncurred
default by Tenant hereunder, the entire amount of such award shall be paid by
the Depositary to Landlord. That portion of such award which represents physical
damage to the Premises or the improvements or appurtenances thereto occasioned
by such taking shall be held by the Depositary in trust, and used to reimburse
Tenant for costs of restoration and repair of the improvements and appurtenances
so damaged. Any award paid as compensation for the taking of personal property
owned by Tenant, or for moving expenses of Tenant, shall be payable directly to
Tenant. Tenant shall perform all of such restoration and repair in accordance
with the provisions of Section 11.3 hereof. The foregoing provisions likewise
shall be applicable to any temporary appropriation of the use and enjoyment of
the Premises having the same effect as such a temporary taking, made by a
governmental entity other than the municipal authorities having condemnation
powers, and for which an award or other compensation is to be paid. E. Interest.
Interest upon any award paid for a taking shall be paid to the Depositary, and
shall be remitted by it to those persons entitled to the award upon which such
interest shall have been paid in proportion to the respective amounts received
by, or applied for the account of, such persons.
F. Notice of Action. In the event any action is filed to take the Lot or
the improvements or Tenant's leasehold estate or any part thereof by any public
or quasi-public authority in the exercise of the power of eminent domain or by
private purchase in lieu thereof, or in the event that any action is filed to
acquire the temporary use of the Lot or the improvements or Tenant's leasehold
estate or any part thereof, or in the event that any such action is threatened
or any public or quasi-public authority communicates to Landlord or Tenant its
desire to acquire the Lot or the improvements or Tenant's leasehold estate or
any part thereof, or the temporary use thereof, by a voluntary conveyance or
transfer in lieu of condemnation, the Tenant shall give prompt notice thereof to
the Landlord. Landlord and Tenant (and the holder(s) of their mortgage(s), as
their interests may appear) shall each have the right, at its own cost and
expense, to represent its respective interest in each proceeding, negotiation or
settlement with respect to any taking or threatened taking and to make all proof
of its claims (the parties agreeing to endeavor to maximize the total awards).
No agreement, settlement, conveyance or transfer to or with the condemning
authority shall be made without the consent of Landlord.
11.3 RESTORATION AFTER FIRE OR CONDEMNATION
A. Initial Requirements. Whenever Tenant shall be required to
carry out any restoration or repair, Tenant, prior to the
commencement of such work, and thereafter, shall comply with the
following requirements.
1. Tenant shall furnish to Landlord complete plans and specifications
for such work which shall be prepared by a registered architect and/or
registered professional engineer chosen by Tenant and approved in advance by
Landlord, such approval not unreasonably to be withheld or delayed (and such
architect and/or engineer being referred to sometimes hereinafter, for
convenience, as the "Architect").
2. Tenant shall furnish to Landlord a budget for such work setting
forth Tenant's good faith estimate of the cost of completion of such work. Such
budget shall be updated periodically upon request of Landlord.
3. Tenant, at its sole cost, shall at Landlord's request furnish to
Landlord certified or photostatic copies of all permits and approvals required
by law, regulation or ordinance in connection with the commencement and conduct
of such work.
4. If the amount of fire insurance proceeds or condemnation award or
awards held by the Depositary to be applied to pay for the cost of such work
pursuant to this Section shall be less than the Architect's estimate from time
to time of the cost of completion of such work, then Tenant shall deposit from
time to time, as aforesaid, with the Depositary an additional sum so that the
Depositary shall have at all times an amount equal to the estimate of cost of
completion of such work.
5. The Depositary shall not be required to make disbursements to
Tenant more often than at thirty (30) day intervals or in interim amounts of
less than One Hundred Thousand Dollars ($100,000.00), except for the final
disbursement. Tenant shall make written request for each disbursement at least
seven (7) days in advance, and shall comply with the following requirements in
connection with each such disbursement:
(a) Tenant shall deliver to the Depositary, at the time of
request for a disbursement, a certificate (the "Certificate") of the Architect,
dated not more than ten (10) days prior to the application for withdrawal of
funds and accompanied by such invoices, receipts, contracts or other evidence of
the amount requested, setting forth the following:
(i) That the sum then requested to be withdrawn either has
been paid by Tenant, or is justly due to persons (whose names and addresses
shall be stated) who have furnished services or materials for the work and
giving a brief description of such services and materials and stating the
progress of the work up to the date of said Certificate;
(ii) That the sum then requested to be withdrawn, plus all
sums previously withdrawn, does not exceed the cost of the work insofar as
actually accomplished up to the date of such Certificate, less any contractor
holdbacks;
(iii) That all prior disbursements under this Section have
been expended solely in payment of costs for the work actually incurred;
(iv) That the remainder of the moneys held by the Depositary
will be sufficient to pay for the completion of the work in accordance with the
estimate thereof;
(v) That no part of the cost of the services and materials
described in the foregoing paragraph (i) is being made on the basis of the
withdrawal of any funds in any pending application; and
(vi) That, except for the amount requested, there is no
outstanding indebtedness known, after due inquiry, in connection with the work
which, if unpaid, might become the basis of a mechanic's or other similar lien
upon the Premises, unless Tenant is contesting such indebtedness in good faith
and agrees to discharge (by bonding or otherwise) any lien once filed.
(b) Tenant shall deliver to the Depositary satisfactory evidence
that the land and the improvements and all materials and all property described
in the Certificate are free and clear of all liens, or encumbrances, except (a)
liens or encumbrances, if any, encumbering the land and improvements as of the
commencement of the Term of this Lease, (b) this Lease, (c) the Landlord's
mortgage(s), (d) any easement, right of way or other agreement not constituting
a lien which Landlord shall have approved and entered into during the Term of
this Lease, (e) any encumbrance, easement or lien (excluding, in any event, any
leasehold mortgage placed upon Tenant's leasehold interest hereunder) which
Landlord shall have expressly approved and authorized in writing to continue
beyond the Term of this Lease, and (f) liens for taxes and other charges payable
by Tenant under this Lease which are not delinquent or the payment of which has
been deferred by Tenant in full compliance with the terms of this Lease. The
Depositary shall receive a certificate of title from an attorney acceptable to
Landlord or a certificate of a title insurance company acceptable to Landlord,
dated as of the date of the disbursement confirming the foregoing.
(c) Tenant shall deliver to the Depositary a survey of the land
dated as of a date within ten (10) days prior to the advance) showing no
encroachments or extensions over set-back lines. Surveys need not be so updated,
however, if a foundation survey is provided and the work being performed does
not touch or extend beyond the perimeter of any Building on the Lot and would
not affect any facts shown on an existing survey thereof. Notwithstanding the
foregoing, if a survey is not available, then Tenant instead may deliver the
certificate of a surveyor acceptable to Landlord that there are no encroachments
or extensions over set-back lines or that the work being performed does not
touch or extend beyond the perimeter of any Building, as aforesaid.
(d) There shall be no uncurred default by Tenant under the terms
of this Lease. At the time of each disbursement, Tenant shall deliver to the
Depositary a certificate signed by Tenant, certifying to the fulfillment of the
conditions of this clause. The Depositary may rely on said certificate as being
accurate unless, prior to the disbursement then being made, the Depositary
(where other than Landlord) shall have received a written notice from Landlord,
referring to this clause, containing statements contrary to those set forth in
said certificate.
6. Landlord shall receive a copy of each item required to be delivered
to the Depositary hereunder which items will be delivered concurrently to
Landlord and the Depositary.
Upon compliance with the foregoing, the Depositary shall pay to the
persons named in the Certificate, the respective amounts stated in said
Certificate to have been paid by it. Landlord shall have the right, from time to
time, to inspect the restoration work. If, after all of said work shall be
completed in accordance with the terms of this Lease, there shall be no uncurred
default by Tenant under the terms of this Lease and all governmental approvals
required shall have been obtained, there are funds held by the Depositary for
application to the cost of such work in excess of the amounts withdrawn, then
such funds shall be paid out by the Depositary in accordance with the provisions
of the Section 11.1 hereof if such funds resulted from fire or other casualty
and in accordance with the provisions relating to partial condemnation found in
Section 11.2 hereof if such funds resulted from a condemnation.
B. Completion by Landlord. If, during the continuation of a default by
Tenant of which Tenant has been notified (or otherwise is aware), Landlord shall
perform (or enter into a contract for the performance of) any of such work, in
accordance with the provisions of Section 11.1 or 11.2 hereof (as the case may
be), then Landlord may withdraw funds held by the Depositary for application to
the cost thereof. In withdrawing such funds Landlord need not comply with any of
the preceding requirements of this Article, but must only comply with the
requirements hereafter set forth. Such withdrawals shall be made not more often
than at thirty (30) day intervals. At the time of each withdrawal request
Landlord shall deliver to the Depositary a certificate from either the Architect
or other architect selected by Landlord stating that the sum then requested to
be withdrawn either has been paid by Landlord and/or is justly due, to
contractors, subcontractors, materialmen, engineers, architects or to other
persons (whose names and addresses shall be stated) who have rendered or
furnished services or materials for the work, and giving a brief description of
such services and materials and the respective amounts so paid or due to each of
said persons in respect thereof. Such certificate shall also state that no part
of the cost of the services or materials described therein has been or is the
basis of a withdrawal of funds in any pending application.
C. Work of "Minor Nature". If the above-mentioned work shall be of a "minor
nature" (as defined below), then the requirements set forth in this Article
shall not be applicable, except that Tenant shall provide all permits and
approvals required by law or regulation in connection with the commencement and
performance of such work. For work of a minor nature Tenant shall be the
Depositary and (notwithstanding anything to the contrary contained in the
provisions of this Lease) upon the completion of such work and approval thereof
by all governmental authorities having jurisdiction, the Depositary (that is, as
aforesaid, Tenant, acting in its capacity as such) shall remit to Tenant (or
Landlord, if Landlord performed such work), the insurance proceeds and/or
condemnation award(s) held by it for application to the cost of such work. If
there are funds held for application to the cost of such work in excess of the
amounts required, then such funds shall be paid out in accordance with the
provisions of Section 11.1 if such funds resulted from fire or other casualty
and in accordance with the provisions relating to partial condemnation found in
Section 11.2 hereof if such funds resulted from a condemnation. Such work shall
be deemed to be of a minor nature only if in one continuous project the
aggregate cost of which is less than One Hundred Thousand Dollars ($100,000)
(1993 Dollars).
D. Survival. As with all other such provisions contained in
this Lease (including the Exhibits thereto), to the extent any
of the foregoing may be applicable to any time period after the
expiration or earlier termination of the Term of this Lease, the
provisions in question shall survive.
11.4 Depositary. In any instance when a Depositary is to serve pursuant to the
foregoing provisions of this Article XI (or other provisions of this Lease),
such Depositary shall be selected by Landlord. The Depositary so selected shall
be a bank(s), trust company(ies), insurance company(ies) and/or national title
insurance company authorized to do business in the Commonwealth of Massachusetts
and have a net worth of $250,000,000 (1993 Dollars) or more. Upon the selection
of such Depositary, and acceptance by the Depositary of the provisions of
Section 11.3 and this Section 11.4, Landlord shall give to Tenant written notice
thereof.
Before paying out any moneys pursuant to this Lease, the Depositary may
retain free of trust its reasonable fees and expenses for acting as Depositary.
In the event there are not sufficient funds held by the Depositary to pay its
fees and expenses, Tenant shall pay all such fees and expenses.
The Depositary shall be obligated to pay interest at competitive rates on
any funds held by it. Any interest paid or received on the funds held in trust
by it shall be accumulated with such funds. The Depositary shall have no
affirmative obligation to ascertain a determination of the amount of, or to
effect the collection of, any insurance proceeds or condemnation awards(s),
unless it shall have given an express undertaking to do so.
No contractor or any other person whatsoever, other than Landlord and
Tenant (and their respective mortgagees, if any) shall have any interest in or
rights to any funds held by the Depositary.
The Depositary shall not commingle its own funds with funds received
pursuant to any of the provisions of this Lease but shall hold such funds in
trust for the purposes provided in this Lease. The Depositary shall not be
liable or accountable for any action taken or suffered by it or for any
disbursement of funds made in good faith. If Landlord and Tenant shall jointly
instruct the Depositary with regard to the disbursement of any funds held by it,
then it shall disburse said funds in accordance with such instructions, and
shall not be liable to anyone for having so disbursed said funds in accordance
with such instructions.
If this Lease is terminated by reason of a default by Tenant hereunder,
then, after the expiration of thirty (30) days following the date of such
termination, subject to the provisions of the following sentence, the Depositary
shall pay over to Landlord free of trust all sums then held by the Depositary
pursuant to any of the provisions of this lease. If, however: (i) there shall be
a fire or other casualty or a "taking" resulting in the payment to a Depository
(other than the Tenant) of the resulting insurance proceeds or condemnation
award (as the case may be); (ii) Tenant has expended theretofore in rebuilding
and restoring an amount in excess of the amounts reimbursed theretofore to
Tenant by the Depositary; and (iii) this Lease is terminated by reason of a
default of Tenant prior to such reimbursement - then and in such event, but not
otherwise, Tenant shall be entitled to a credit with respect to Landlord's claim
for default damages (apart from the Tenant's unfulfilled obligations of
rebuilding, which shall not be diminished or otherwise affected) in the amount
of the excess as set forth in item (ii) above.
ARTICLE XII
LANDLORD'S REMEDIES
12.1 EVENTS OF DEFAULT. Any one of the following shall be
deemed to be an "Event of Default":
A. Failure on the part of Tenant to pay Fixed Rent, additional rent or
other charges for which provision is made herein on or before the date on which
the same become due and payable and such failure continues for five (5) days
after Landlord has sent to Tenant notice of such default.
However, if: (i) Landlord shall have sent to Tenant two (2) notices of such
default, even though the same shall have been cured and this Lease not
terminated; and (ii) during the twelve (12) month period in which said two
notices of default have been sent by Landlord to Tenant, Tenant thereafter shall
default in any monetary payment - the same shall be deemed to be an Event of
Default upon Landlord giving Tenant written notice thereof, without the five (5)
day grace period set forth above.
B. With respect to a non-monetary default under this Lease, failure of
Tenant to cure the same within thirty (30) days following notice from Landlord
to Tenant of such default (or, if such default shall be of such a nature that
the same cannot be cured within said 30-day period but the Tenant shall within
said period commence and shall thereafter pursue such cure with due diligence
and continuous reasonable efforts, then for such extended period, up to an
additional sixty (60) days, as is required in order so to cure such default).
Notwithstanding the thirty (30) day (or extended) cure period provided in the
preceding sentence, Tenant shall be obligated to commence forthwith and to
complete as soon as possible the curing of such default; and if Tenant fails so
to do, the same shall be deemed to be an Event of Default.
C. The commencement of any of the following proceedings, with such
proceeding not being dismissed within sixty (60) days after it has begun: (i)
the estate hereby created being taken on execution or by other process of law;
(ii) Tenant being judicially declared bankrupt or insolvent according to law;
(iii) an assignment being made of the property of Tenant for the benefit of
creditors; (iv) a receiver, guardian, conservator, trustee in involuntary
bankruptcy or other similar officer being appointed to take charge of all or any
substantial part of Tenant's property by a court of competent jurisdiction; or
(v) a petition being filed for the reorganization of Tenant under any provisions
of the Bankruptcy Code now or hereafter enacted.
D. Tenant filing a petition for reorganization or for rearrangements under
any provisions of the Bankruptcy Code now or hereafter enacted, and providing a
plan for a debtor to settle, satisfy or to extend the time for the payment of
debts.
E. Execution by Tenant of an instrument purporting to assign Tenant's
interest under this Lease or sublet the whole or a portion of the Premises to a
third party without Tenant having first obtained Landlord's prior express
consent to said assignment or subletting or as otherwise expressly permitted
under the provisions of Section 5.2 above.
F. The Tenant ceasing its manufacturing operations at the Premises (other
than for a temporary period-for remodelling or the like, or as a result of a
casualty or similar force majeure reason beyond Tenant's control), or the Tenant
vacating or abandoning the Premises.
12.2 REMEDIES. Should any Event of Default occur then, notwithstanding any
license of any former breach of covenant or waiver of the benefit hereof or
consent in a former instance, Landlord lawfully may, in addition to any remedies
otherwise available to Landlord, immediately or at any time thereafter, and
without demand or notice, enter into and upon the Premises or any part thereof
in the name of the whole and repossess the same as of Landlord's former estate,
and expel Tenant and those claiming by, through or under it and remove its or
their effects (forcibly if necessary) without being deemed guilty of any manner
of trespass, and without prejudice to any remedies which might otherwise be used
for arrears of rent or preceding breach of covenant and/or Landlord may send
notice to Tenant terminating the Term of this Lease; and upon the first to occur
of: (i) entry as aforesaid; or (ii) the fifth (5th) day following the mailing of
such notice of termination, the Term of this Lease shall terminate, but Tenant
shall remain liable for all damages as provided for herein.
Tenant covenants and agrees, notwithstanding any termination of this Lease
as aforesaid or any entry or re-entry by Landlord, whether by summary
proceedings, termination, or otherwise, to pay and be liable for on the days
originally fixed herein for the payment thereof, amounts equal to the several
installments of Fixed Rent and other charges reserved as they would become due
under the terms of this Lease if this Lease had not been terminated or if
Landlord had not entered or re-entered, as aforesaid, and whether the Premises
be relet or remain vacant, in whole or in part, or for a period less than the
remainder of the Term, or for the whole thereof; but in the event the Premises
be relet by Landlord, Tenant shall be entitled to a credit in the net amount of
rent received by Landlord in reletting, after deduction of all expenses incurred
in reletting the Premises (including, without limitation, remodelling costs,
brokerage fees, and the like), and in collecting the rent in connection
therewith. It is specifically understood and agreed that Landlord shall be
entitled to take into account in connection with any reletting of the Premises
all relevant factors which would be taken into account by a sophisticated
developer in securing a replacement tenant for the Premises, such as, but not
limited to, the financial responsibility of any such replacement tenant; and
Tenant hereby waives, to the extent permitted by applicable law, any obligation
Landlord may have to mitigate Tenant's damages. As an alternative, at the
election of Landlord, Tenant will upon such termination pay to Landlord, as
damages, such a sum as at the time of such termination represents the amount of
the excess, if any, of the then value of the total rent and other benefits which
would have accrued to Landlord under this Lease for the remainder of the Lease
Term if the Lease terms had been fully complied with by Tenant over and above
the then cash rental value of the Premises for the balance of the Term. For
purposes of this Article, if Landlord elects to require Tenant to pay damages in
accordance with immediately preceding sentence, the total rent shall be computed
by assuming that Tenant's payments on account of real estate taxes and operating
expenses (including insurance, maintenance and utility charges) would be, for
the balance of the unexpired Term, the amount thereof, respectively, for the
immediately preceding year, payable by Tenant. Moreover, the term "then value"
and then "cash rental value", as used herein, shall be construed to be
references to the total amount or amounts to be valued and by so valuing the
same by "discounting" the same over the period and from the times when the
amounts in question would be received by the Landlord at the federal discount
rate, so-called, back to the date of the settlement payment hereunder.
If this Lease shall be guaranteed on behalf of Tenant, all of the foregoing
provisions of this Article with respect to bankruptcy, insolvency, etc., of
Tenant, shall be deemed to read "Tenant or the guarantor hereof".
In the event of any breach or threatened breach by Tenant of any of the
agreements, terms, covenants or conditions contained in this Lease, Landlord
shall be entitled to enjoin such breach or threatened breach and shall have the
right to invoke any right or remedy allowed at law or in equity or by statute or
otherwise as though reentry, summary proceedings, and other remedies were not
provided for in this Lease.
Each right and remedy of Landlord provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease not now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by Landlord of any one
or more of the rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise. If Landlord shall
obtain possession of the Lot and the improvements under legal proceedings or
pursuant to the terms and conditions of this Lease because of uncurred default
by Tenant continuing beyond any applicable grace period, then all rights of
redemption provided by any law, statute or ordinance now in force or hereafter
enacted shall be and are hereby waived by Tenant.
If any payment of rent or any other payment payable hereunder by Tenant to
Landlord shall not be paid within five (5) days after the date when due, the
same shall bear interest from the date when the same was payable until the date
paid at the lesser of (a) eighteen percent (18%) per annum, compounded monthly,
or (b) the highest lawful rate of interest which Landlord may charge to Tenant
without violating any applicable law. Such interest shall constitute additional
rent payable hereunder and be payable upon demand therefor by Landlord.
Without limiting any of Landlord's rights and remedies hereunder, and in
addition to all other amounts Tenant is otherwise obligated to pay, it is
expressly agreed that Landlord shall be entitled to recover from Tenant all
costs and expenses, including reasonable attorneys' fees incurred by Landlord in
enforcing this Lease from and after Tenant's default.
12.3 LANDLORD'S DEFAULT. Landlord shall in no event be in default in the
performance of any of Landlord's obligations hereunder unless and until Landlord
shall have failed to perform such obligations within thirty (30) days, or such
additional time as is reasonably required to correct any such default, after
notice by Tenant to Landlord properly specifying wherein Landlord has failed to
perform any such obligation.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 EXTRA HAZARDOUS USE. Tenant covenants and agrees that Tenant will not do or
permit anything to be done in or upon the Premises, or bring in anything or keep
anything therein which shall increase the rate of insurance on the Premises or
on the Buildings above the standard rate applicable to premises being occupied
for the use to which Tenant has agreed to devote the Premises; but, as long as
Tenant complies with all applicable codes and with all applicable provisions of
this Lease at all times (and, without limitation, in no event shall Tenant be
permitted to handle, store, discharge or release, any hazardous or toxic wastes
or materials, or otherwise conduct any activities which would violate or cause
any violation of any applicable laws, codes or governmental regulations), the
only result of any such insurance rate increase shall be that Tenant shall pay
all costs and expenses relating thereto.
13.2 WAIVER. Failure on the part of Landlord or Tenant to complain of any action
or nonaction on the part of the other, no matter how long the same may continue,
shall never be a waiver by Tenant or Landlord, respectively, of any of the
other's rights hereunder. Further, no waiver at any time of any of the
provisions hereof by Landlord or Tenant shall be construed as a waiver of any of
the other provisions hereof, and a waiver at any time of any of the provisions
hereof shall not be construed as a waiver at any subsequent time of the same
provisions. The consent or approval of Landlord or Tenant to or of any action by
the other requiring such consent or approval shall not be construed to waive or
render unnecessary Landlord's or Tenant's consent or approval to or of any
subsequent similar act by the other.
No payment by Tenant or acceptance by Landlord of a lesser amount than
shall be due from Tenant to Landlord shall be treated otherwise than as a
payment on account. The acceptance by Landlord of a check for a lesser amount
with an endorsement or statement thereon, or upon any letter accompanying such
check that such lesser amount is payment in full, shall be given no effect, and
Landlord may accept such check without prejudice to any other rights or remedies
which Landlord may have against Tenant. In no event shall Tenant ever be
entitled to receive interest upon, or any payments on account of earnings or
profits derived from any payments hereunder by Tenant to Landlord.
13.3 COVENANT OF QUIET ENJOYMENT. Tenant, subject to the terms and provisions of
this Lease, upon payment of the Fixed Rent and other charges due hereunder and
the observing, keeping and performing of all of the terms and provisions of this
Lease on Tenant's part to be observed, kept and performed, shall lawfully,
peaceably and quietly have, hold, occupy and enjoy the Premises during the Term
hereof, without hindrance or ejection by any persons lawfully claiming under
Landlord to have title to the Premises superior to Tenant; the foregoing
covenant of quiet enjoyment is in lieu of any other covenant, expressed or
implied; and it is understood and agreed that this covenant and any and all
other covenants of Landlord contained in this Lease shall be binding upon
Landlord and Landlord's successors only with respect to breaches occurring
during Landlord's and Landlord's successors' respective ownership of Landlord's
interest hereunder. Further, Tenant specifically agrees to look solely to
Landlord's then equity interest in the Buildings and Lot at the time owned, or
in which Landlord holds an interest as ground lessee, for recovery of any
judgment from Landlord; it being specifically agreed that Landlord (original or
successor) shall never be personally liable for any such judgment, or for the
payment of any monetary obligation to Tenant and that, without limitation,
notwithstanding anything contained herein to the contrary, none of the
covenants, agreements, representations, warranties and other obligations of
Landlord shall be binding on or enforceable personally against the
repesentative(s) of Landlord executing this Lease or any trustee, director,
officer, employee, beneficiary or shareholder of Landlord, all such personal
liability being expressly waived by Tenant. The provision contained in the
foregoing sentence is not intended to limit any right that Tenant might
otherwise have to obtain injunctive relief against Landlord (original or
successor). In no event shall Landlord ever be liable for any indirect, special
or consequential damages suffered from whatever cause.
13.4 NOTICE TO MORTGAGEE AND GROUND LESSOR. After receiving notice from any
person, firm or other entity that it holds a mortgage which includes the
Premises as part of the mortgaged premises, or that it is the ground lessor
under a lease with Landlord, as ground lessee, which includes the Premises as
part of the demised premises, no default (or other complaint) notice from Tenant
to Landlord shall be effective unless and until a copy of the same is given to
such holder or ground lessor, and the curing of any of Landlord's defaults by
such holder or ground lessor shall be treated as performance by Landlord. For
the purposes of this Section 13.4, Section 13.5 or Section 13.14, the term
"mortgage" includes a mortgage on a leasehold interest of Landlord (but not one
on Tenant's leasehold interest). Landlord hereby represents that as of the date
of this Lease there is no outstanding mortgage against the Premises and that the
same are not subject to any such ground lease.
13.5 ASSIGNMENT OF RENTS. With reference to any assignment by Landlord of
Landlord's interest in this Lease, or the rents payable hereunder, conditional
in nature or otherwise, which assignment is made to the holder of a mortgage or
ground lease on property which includes the Premises, Tenant agrees:
(a) that the execution thereof by Landlord, and the acceptance thereof by
the holder of such mortgage, or the ground lessor, shall never be treated as an
assumption by such holder or ground lessor of any of the obligations of Landlord
hereunder, unless such holder or ground lessor shall, by notice sent to Tenant,
specifically otherwise elect; and
(b) that, except as aforesaid, such holder or ground lessor shall be
treated as having assumed Landlord's obligations hereunder only upon foreclosure
of such holder's mortgage and the taking of possession of the Premises, or in
the case of a ground lessor, the assumption of Landlord's position hereunder by
such ground lessor. In no event shall the acquisition of title to the Buildings
and the land on which the same are located by a purchaser which, simultaneously
therewith, leases the Buildings and such land back to the seller thereof, be
treated as an assumption by operation of law or otherwise of Landlord's
obligations hereunder, but Tenant shall look soley to such seller-lessee, and
its successors from time to time in title, for performance of Landlord's
obligations hereunder. In any such event, this Lease shall be subject and
subordinate to this Lease to such seller. For all purposes such seller-lessee,
and its successors in title, shall be the landlord hereunder unless and until
Landlord's position shall have been assumed by such purchaser-lessor.
In the event of foreclosure of any such mortgage or ground lease to which
this Lease becomes subordinate (or deed or assignment in lieu thereof), at the
election of the holder or ground lessor, as the case may be, Tenant shall attorn
to such holder or ground lessor (and its successors and assigns) as the
successor holder of Landlord's interest hereunder in which case, subject to the
provisions of any applicable agreement between Tenant and such holder or ground
lessor, as the case may be, this Lease shall continue in effect directly between
Tenant and such holder or ground lessor (as if this Lease had been executed and
delivered, and notice thereof properly recorded, prior to the execution of such
mortgage or ground lease). The foregoing shall be self-operative; however,
Tenant agrees, upon receipt of written request so to do, to execute such
instruments, if any, as may reasonably be required in order to give effect to
the foregoing.
13.6 MECHANICS' LIENS. Tenant agrees immediately to discharge (either by payment
or by the filing of the necessary bond, or otherwise) any mechanics',
materialmen's or other lien against the Premises and/or Landlord's interest
therein, which liens may arise out of any payment due for, or purported to be
due for, any labor, services, materials, supplies or equipment alleged to have
been furnished in, upon or about the Premises. However, the Landlord (and not
the Tenant) shall be responsible to pay for the Landlord's Work and to discharge
any such liens relating solely thereto.
13.7 NO BROKERAGE. Tenant warrants and represents that Tenant has not dealt with
any broker other than the broker named in Section 1.2 hereof (who shall be paid
by Landlord in accordance with the separate agreement between them), in
connection with the consummation of this Lease, and in the event any claim is
made against the Landlord relative to dealings with brokers other than said
broker named in Section 1.2 (and any other broker, if any, making a claim
predicated solely upon an exclusive agreement or otherwise solely upon dealings
with Landlord and not upon any dealings with Tenant, as to which Tenant shall
have no responsibility hereunder and Landlord would be fully responsible),
Tenant shall defend the claim against Landlord with counsel of Landlord's
selection and save harmless and indemnify Landlord on account of loss, cost or
damage which may arise by reason of any such claim.
13.8 INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision of this Lease
or the application thereof to any person or circumstance shall, to any extent,
be invalid or uneforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and enforceable to the fullest
extent permitted by law.
13.9 PROVISIONS BINDING, ETC. Except as herein otherwise provided, the terms
hereof shall be binding upon and shall inure to the benefit of the successors
and assigns, respectively, of Landlord and Tenant and, if Tenant shall be an
individual, upon and to his heirs, executors, administrators, successors and
assigns. If two or more parties are named as Tenant herein, each of such parties
shall be jointly and severally liable for the obligations of the Tenant
hereunder, and Landlord may proceed against any one without first having
commenced proceedings against any other of them. Each term and each provision of
this Lease to be performed by Tenant shall be construed to be both a covenant
and a condition. The reference contained to successors and assigns of Tenant is
not intended to constitute a consent to assignment by Tenant (assignment being
governed by the provisions of Article V hereof).
The word "Tenant," as used in this Lease, shall be deemed to mean the
Tenant named herein and any other person(s) or other entity(ies), including,
without limitation, any assignee succeeding to the interest of the Tenant named
<PAGE>
herein in accordance with the provisions of Article V hereof, or otherwise, who
shall be obligated to perform the obligations of Tenant hereunder.
13.10 RECORDING. Tenant agrees not to record the within Lease, but each party
hereto agrees, on the request of the other, to execute a so-called memorandum of
lease or short form lease in form recordable and complying with applicable law
and reasonably satisfactory to Landlord's attorneys. In no event shall such
document set forth the rent or other charges payable by Tenant under this Lease;
and any such document shall expressly state that it is executed pursuant to the
provisions contained in this Lease and is not intended to vary the terms and
conditions of this Lease.
13.11 NOTICES. Whenever, by the terms of this Lease, notice shall or may be
given either to Landlord or to Tenant, such notice shall be in writing and shall
be delivered in hand or sent by registered or certified mail, postage prepaid:
If intended for Landlord, addressed to Landlord at the address set forth in
Section 1.2 of this Lease (or to such other address or addresses as may from
time to time hereafter be designated by Landlord by like notice) and a copy to
Landlord, c/o Goulston & Storrs, P.C., 400 Atlantic Avenue, Boston,
Massachusetts 02110.
If intended for Tenant, addressed to Tenant at the address set forth in
Section 1.2 of this Lease (or to such other address or addresses as may from
time to time hereafter be designated by Tenant by like notice) and a copy to
Tenant c/o Goodwin, Procter and Hoar, Exchange Place, 53 State Street, Boston,
Massachusetts 02109 (Attention: Kevin M. Dennis, Esq.).
All such notices shall be effective when delivered in hand, or when
deposited in the United States mail within the continental United States
provided that the same are received in the ordinary course at the address to
which the same were sent. Any such notice or other communication from an
attorney acting or purporting to act on behalf of a party shall be deemed to be
notice from such party provided that such attorney is authorized to act on
behalf of such party.
13.12 WHEN LEASE BECOMES BINDING. Employees or agents of Landlord have no
authority to make or agree to make a lease or any other agreement or undertaking
in connection herewith. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a reservation of, or
option for, the Premises, and this document shall become effective and binding
only upon the execution and delivery hereof by both Landlord and Tenant. All
negotiations, considerations, representations and understandings between
Landlord and Tenant are incorporated herein and may be modified or altered only
by written agreement between Landlord and Tenant, and no act or omission of any
employee or agent of Landlord shall alter, change or modify any of the
provisions hereof.
13.13 PARAGRAPH HEADINGS. The paragraph headings throughout this instrument are
for convenience and reference only, and the words contained therein shall in no
way be held to explain, modify, amplify or aid in the interpretation,
construction or meaning of the provisions of this Lease.
13.14 RIGHTS OF MORTGAGEE. It is understood and agreed that the rights and
interests of Tenant under this Lease shall be subject and subordinate to any
mortgages or deeds of trust that may hereafter be placed upon the Buildings
and/or the Lot, and to any and all advances to be made thereunder, and to the
interest thereon, and all renewals, modifications, replacements and extensions
thereof, if the mortgagee or trustee named in said mortgages or deeds of trust
shall elect by notice delivered to Tenant to subject and subordinate the rights
and interest of Tenant under this Lease to the lien of its mortgage or deed of
trust; it is further agreed that any mortgagee or trustee may elect to give the
rights and interest of Tenant under this Lease priority over the lien of its
mortgage or deed of trust. In the event of either such election, and upon
notification by such mortgagee or trustee to Tenant to that effect, the rights
and interest of Tenant under this Lease shall be deemed to be subordinate to, or
to have priority over, as the case may be, the lien of said mortgage or deed of
trust, whether this Lease is dated prior to or subsequent to the date of said
mortgage or deed of trust; provided, however, if the holder elects to have
priority that Tenant shall receive, as a condition to the effectiveness of such
priority, a commercially reasonable nondisturbance agreement, duly executed on
behalf of such holder and pursuant to which it agrees that following foreclosure
(or the exercise of any of its other remedies with the result that it succeeds
to the interest of the Landlord hereunder) that the Tenant's possession and all
other rights under this Lease shall not be disturbed unless and until there
occurs an Event of Default (as defined in this Lease). The foregoing provisions
of this Section likewise shall be applicable, with such changes as are required
in the context thereof, to a ground lease as part of a sale-leaseback (or
similar financing) transaction hereafter entered into by Landlord with respect
to the Premises. Tenant shall execute and deliver whatever instruments may be
reasonably required for such purposes within ten (10) days after written request
therefor.
13.15 STATUS REPORT. Recognizing that both parties may find it necessary to
establish to third parties, such as accountants, banks, mortgagees or the like,
the then current status of performance hereunder, either party, on the request
of the other made from time to time, will promptly furnish to Landlord, or the
holder of any mortgage encumbering the Premises, or to Tenant, as the case may
be, a statement of the status of any matter pertaining to this Lease, including,
without limitation, acknowledgments that (or the extent to which) each party is
in compliance with its obligations under the terms of this Lease.
13.16 TENANT'S FINANCIAL CONDITION. Tenant warrants and represents that all
information and data furnished to Landlord or Landlord's representatives in
connection with this Lease are true and correct and in respect of the financial
condition of Tenant, properly reflect the same without material adverse change,
as of the date hereof. Annually within ninety (90) days after the end of each
fiscal year of Tenant, and at interim periods within thirty (30) days after
Landlord's demand, which may be made no more often than quarterly and which
Landlord shall make only for good cause (such as in connection with obtaining
financing or a proposed sale), Tenant shall furnish to Landlord, at Tenant's
sole cost and expense, then current financial statements (including, without
limitation, the then most current balance sheet and operations statement) of
Tenant, audited (if audited statements have been recently prepared on behalf of
Tenant, or otherwise certified as being true and correct by the chief financial
officer of Tenant). If any such financial statements or other statements
prepared in respect of Tenant's financial condition shall disclose any material
adverse change from the financial condition of Tenant as of the date hereof,
then Tenant shall promptly furnish to Landlord such adequate assurances of
future performance (such as one or more guaranties and/or a security deposit) as
Landlord may reasonably request, and, the failure so to do shall, upon notice
from Landlord to Tenant, constitute a default by Tenant to which the provisions
of Article XII hereof shall be applicable. In any event, however, no such
security deposit shall be required as long as the Tenant or a suitable guarantor
is an "investment grade" credit under good and accepted credit underwriting
standards at the time in question for commercial real estate developments and
transactions similar in sophistication and nature such that so-called permanent
financing would then customarily be made available to Landlord by pension funds,
insurance companies or other institutional lenders then customarily providing
such financing (and, as long as L.G. Balfour Company, the Tenant herein named,
continues to have its current creditworthy financial strength and capacity, as
reflected in its current financials recently furnished to Landlord, no security
deposit will be required hereunder from said Company); and, in any event, the
Landlord shall not be permitted to require any such security deposit in an
amount greater than the aggregate amount of the Fixed Rent and other charges
reasonably anticipated to be payable for the then ensuing two (2) year period.
13.17 ADDITIONAL REMEDIES OF LANDLORD. Landlord shall have the right, but shall
not be required to do so, to pay such sums or do any act which requires the
expenditure of monies which may be necessary or appropriate by reason of the
failure or neglect of Tenant to perform any of the provisions of this Lease, and
in the event of the exercise of such right by Landlord, Tenant agrees to pay to
Landlord forthwith upon demand all such sums; and if Tenant shall default in
such payment, Landlord shall have the same rights and remedies as Landlord has
hereunder for the failure of Tenant to pay the Fixed Rent. In any event, the
Landlord agrees to exercise the foregoing self-help right only after such notice
as is reasonably practicable in the circumstances, and otherwise in a
commercially reasonable manner.
Except as otherwise set forth herein, any obligations of Tenant as set
forth herein (including, without limitation, rental and other monetary
obligations, repair obligations and obligations to indemnify Landlord), shall
survive the expiration or earlier termination of this Lease, and Tenant shall
immediately reimburse Landlord for any expense incurred by Landlord in curing
Tenant's failure to satisfy any such obligation (notwithstanding the fact that
such cure might be effected by Landlord following the expiration or earlier
termination of this Lease).
13.18 HOLDING OVER. Any holding over by Tenant after the expiration of this
Lease Term shall be treated as a tenancy at sufferance at twice the Fixed Rent
and additional rent herein provided to be paid during the last twelve (12)
months of this Lease Term (prorated on a daily basis) and shall otherwise be on
the terms and conditions set forth in this Lease, as far as applicable.
13.19 NON-SUBROGATION. Insofar as, and to the extent that, the following
provision may be effective without invalidating or making it impossible to
secure insurance coverage obtainable from responsible insurance companies doing
business in the locality in which the Premises are located (even though extra
premium may result therefrom): Landlord and Tenant mutually agree that, with
respect to any hazard which is covered by insurance then being and/or required
by the provisions hereof to be carried by them, respectively, the one carrying
or required to carry such insurance and suffering such loss releases the other
of and from any and all claims with respect to such loss; and they further
mutually agree that their respective insurance companies shall have no right of
subrogation against the other on account thereof. Nothing contained in this
Section 13.19 shall derogate from or otherwise affect releases elsewhere herein
contained of either party for claims.
13.20 UNAVOIDABLE DELAY. It is understood and agreed that with respect to any
term, covenant, or condition or agreement of this Lease to be performed by
Landlord or Tenant (the payment of rent or any other monetary amount due under
this Lease being expressly excluded from the provisions of this Section), the
time for performance of the same shall be extended for such period as Landlord
or Tenant is prevented from performing the same by strike, lockout, breakdown,
accident, order, or regulation of or by any governmental authority, or failure
of supply, or inability by the exercise of reasonable diligence to obtain
supplies, parts, or employees necessary to furnish such services, or because of
war or other emergency, or for any other force majeure cause beyond the
reasonable control of Landlord or Tenant (but financial inability shall never be
considered beyond the control of a party). The foregoing shall not excuse Tenant
from complying with the provisions contained in this Lease restricting the uses
to be made of the Premises and assignment and subletting by Tenant nor shall the
foregoing postpone or affect the commencement or running of this Lease Term.
13.21 GOVERNING LAW. This Lease shall be governed exclusively
by the provisions hereof and by the laws of the Commonwealth of
Massachusetts as the same may from time to time exist.
13.22 DEFINITION OF ADDITIONAL RENT. Without limiting any other provision of
this Lease, it is expressly understood and agreed that Tenant's payment of real
estate taxes, operating expenses including insurance and utilities, and all
other charges and amounts (whether the same are payable to third parties or to
Landlord) which Tenant is required to pay hereunder, together with all interest
and penalties that may accrue thereon, shall be deemed to be additional rent,
and in the event of non-payment thereof by Tenant, Landlord shall have all of
the rights and remedies with respect thereto as would accrue to Landlord for
non-payment of Fixed Rent.
13.23 FEES AND EXPENSES; NO JURY TRIAL. Tenant shall reimburse Landlord promptly
after demand for all reasonable expenses, including attorneys' fees, incurred by
it in connection with the enforcement of Tenant's obligations under this Lease
or otherwise incurred by Landlord on Tenant's behalf. In the event that Landlord
and Tenant are involved in any litigation regarding the performance of any of
their obligations under this Lease, the unsuccessful party by final order,
decree or judgment in such litigation by a court of competent jurisdiction shall
reimburse the successful party for all reasonable legal fees and expenses
incurred by such successful party in connection with obtaining such final order,
decree or judgment. To the extent permitted by law, Landlord and Tenant hereby
waive trial by jury in any litigation brought by either of the parties hereto
against the other on any matter in any way connected with this Lease.
13.24 CERTIFICATE. In the event the Tenant and/or the Guarantor of the Tenant's
obligations hereunder is a corporation, the Tenant and/or the Guarantor shall
deliver to the Landlord, upon the execution of this Lease, a Clerk's Certificate
or Secretary's Certificate in form reasonably satisfactory to the Landlord,
confirming that the execution of this Lease and/or the Guarantee, as applicable,
have been duly authorized. Furthermore, If Tenant is a corporation, Tenant
hereby represents that Tenant is a duly incorporated and duly qualified (if
foreign) corporation and is authorized to conduct business.
13.25 1993 DOLLARS DEFINED. Whenever in this Lease the term "1993 Dollars" is
used, such term shall be construed to refer to the dollar figure actually set
forth in the pertinent provision of this Lease, increased to the same extent
proportionately as the increase, if any, in the level of the Price Index
(hereinafter defined) as of the time of applying such provision above the level
of the Price Index as of December 31, 1993. The term "Price Index", as used in
this Lease, means the Consumer Price Index for all Urban Consumers (CPI-U): U.S.
City Average, All Items (unadjusted) (1982-84=100), published monthly by the
Bureau of Labor Statistics, U.S. Department of Labor, and first so published in
its present form (with said "base") in 1988. If any expenditure groups, items,
or components used to compute the Price Index are added, deleted, or otherwise
changed, or if the weights assigned to any spending categories are altered, or
if the Index population is changed, or if the Bureau of Labor Statistics should
otherwise cease to publish such Index in its present form and calculated on the
present basis, a comparable index or an index reflecting changes in the cost of
living determined in a similar manner or by substitution, combination or
weighting of available indices, expenditure groups, items, components or
population, published by the Bureau of Labor Statistics or by a responsible
financial periodical or recognized authority shall be designated by Landlord to
be the Price Index thereafter. The Price Index for any date relevant to the
application of any provision hereof shall be that published by the Bureau of
Labor Statistics for the month containing such date, if computed for that month,
or otherwise for the most recent month immediately preceding the month for which
the application is to be made. Since a Price Index relevant to the application
of any provision may not be available as of the date on which a determination
using the Price Index is to be made, necessary applications shall be made as
soon as reasonably possible in the context in question and any necessary
financial adjustments between Landlord and Tenant shall be made retroactively,
within a reasonable time after required computations can be readily completed.
13.26 LANDLORD'S INDUCEMENT PAYMENT. As soon as the following conditions have
been met: (i) the Tenant's Work described in Exhibit "B" shall have been
completed in all respects in accordance with all applicable provisions of this
Lease including said Exhibit "B"; (ii) Tenant shall have furnished evidence
reasonably satisfactory to Landlord that all of Tenant's Work has been completed
as aforesaid, has been paid for in full (or that the inducement payment
hereunder is being paid to the Tenant's contractor and, with such payment, such
work will be paid in full), and that any and all liens therefor that have been
or may be filed have been satisfied or waived of record; (iii) Tenant shall have
taken occupancy of the Premises in order to commence its business operations
therein and there shall not be any uncurred default by Tenant of any of its
obligations under the provisions of this Lease of which Tenant has been
notified; and (iv) Tenant shall have executed and delivered an instrument
confirming that it is not in default of any of its obligations under this Lease
and setting forth the Commencement Date and the expiration date of the Term of
this Lease - Landlord shall immediately pay over to Tenant the sum of One
Million Three Hundred Ten Thousand and 00/100 Dollars ($1,310,000.00) as an
inducement to Tenant. If the foregoing conditions have been satisfied but for
any reason said sum which is due and payable remains unpaid for more than thirty
(30) days after notice to such effect from Tenant to Landlord, thereafter,
notwithstanding the provisions of Sections 3.1 and 3.2 (or anything else
contained in this Lease to the contrary) to the contrary: Tenant shall be
entitled to deduct and setoff from all rent and other charges thereafter due and
payable to the provisions of this Lease until the earlier of (i) when Tenant
thus has recaptured said sum or so much thereof as Landlord shall have failed to
pay, or (ii) when Landlord has in fact paid said sum or any unpaid portion
thereof. Upon Landlord's request, Tenant shall confirm in writing its receipt of
said inducement payment (or the portion thereof, as the case may be) which then
has been paid to Tenant; and interest shall accrue on the then unpaid portion
thereof until paid at the same rate as is applicable to late payments by Tenant
of Fixed Rent under the provisions of Section 21.2 of this Lease.
13.27 INITIAL RENT ABATEMENT. It is understood and agreed that the Tenant will
be performing more substantial leasehold improvements in the larger of the two
Buildings (the "Larger Building") in order to prepare the Larger Building for
the Tenant's use and occupancy thereof after delivery of possession thereof by
Landlord to Tenant. Accordingly, notwithstanding the provisions of Sections 3.1
and 3.2 (or anything else contained in this Lease) to the contrary, it is agreed
that the monthly Fixed Rent payable hereunder shall be abated and reduced to
$14,700.00 per calendar month, and proportionately at such rate for any partial
calendar month, from and after the Commencement Date (as defined in Section 1.1
hereof) up to the Larger Building Commencement Date (as defined hereinbelow).
For the purposes hereof, the "Larger Building Commencement Date" shall be the
earlier to occur of: (i) August 1, 1994, or, if later, the expiration of sixty
(60) days after delivery of possession to the Tenant of the Larger Building with
the Landlord's Work therein substantially completed (as set forth in Section 6.1
of Article VI hereof); or (ii) the date when the Tenant first commences to use
the Larger Building for its business purposes permitted under the provisions of
this Lease. From and after the Larger Building Commencement Date, the full Fixed
Rent shall accrue and be payable under this Lease. As soon as the Larger
Building Commencement Date has been determined in accordance with the foregoing,
the parties shall execute and deliver to each other a writing in confirming such
date, and any additional Fixed Rent for and with respect to the balance of the
calendar month in which the Larger Building Commencement Date occurs shall be
paid by the Tenant to the Landlord together with the full installment of Fixed
Rent which is due and payable on the first day of the next following calendar
month. Nothing contained in this Section shall diminish or otherwise affect the
other provisions of this Lease or the obligations of the Tenant thereunder
including, without limitation, the obligations of the Tenant to pay the unabated
balance of the Fixed Rent from and after the Commencement Date to the Larger
Building Commencement Date and all other charges in accordance with all other
terms and conditions contained in this Lease.
13.28 ENVIRONMENTAL MATTERS. Notwithstanding the provisions of Section 6.2 (or
anything else contained in this Lease) to the contrary: if any hazardous or
toxic materials, including petroleum or its derivitives, are present in the soil
comprising the Premises or if there is any groundwater contamination caused by
any activity being conducted on the Premises, on or after the date of this
Lease, and if required (by so-called response action, or the like) pursuant to
applicable laws and/or governmental regulations to be removed, contained or
otherwise remediated, then Tenant shall cause such remediation of the Premises'
soils and/or groundwater (as the case may be) to be effected in accordance with
said requirements, and the foregoing shall be done at Tenant's cost and expense;
provided, however, that, if and to the extent any such hazardous or toxic
materials so removed and/or any such remediation of groundwater contamination
shall be established by Tenant to have been present in the soils and/or
groundwater comprising the Premises prior to the date of this Lease then, upon
receipt by Landlord of evidence (with such backup as Landlord may reasonably
request) of the foregoing, including such removal and/or remediation in
accordance with said requirements and the payment by the Tenant of the
reasonable costs thereof (pursuant to a competitive contract with a reputable
hazardous materials removal firm reasonably acceptable to Landlord) within
thirty (30) days after the completion of such removal and/or remediation, but
not otherwise, Landlord shall promptly reimburse Tenant an amount equal to such
reasonable removal and/or remediation costs. Such reimbursable removal and/or
remediation costs shall mean and include, if and to the extent reasonably
required to be incurred, all such costs of cleaning up the Premises' soil and/or
contaminated ground water as well as all such costs of containment and/or other
such governmentally required response action.
Landlord's foregoing obligations to reimburse Tenant as aforesaid for such
removal and/or remediation costs shall be conditioned in each instance upon
Landlord first receiving notice in reasonable detail and a reasonable
opportunity to consult relative to all pertinent facts, details and removal
and/or remediation procedures; and in no event shall Landlord's foregoing
reimbursement obligations apply to the removal and/or remediation of any one of
more of the following: any materials not falling strictly within the categories
set forth above with respect to which Landlord shall be responsible for
reimbursement; or any materials disclosed by the provisions of the two (2) site
assessment report of GZA Geoenvironmental, Inc., dated February 11, 1994, and
March , 1994, relating to the Premises (collectively, the "GZA Report"), a copy
of which GZA Report has been furnished to Tenant heretofore (only to such
extent, however, as is consistent with such disclosure as is contained in the
GZA Report).
If the aforesaid conditions precedent to the Landlord's obligation to
reimburse the Tenant for a particular sum pursuant to the foregoing provisions
of this Section 13.28 have been satisfied but for any reason such sum which is
then due and payable in reimbursement remains unpaid for more than thirty (30)
days after notice to such effect from Tenant to Landlord, thereafter Tenant
shall be entitled, subject to the limitation that in no event shall Tenant
deduct or set-off from rent and other charges hereunder an amount greater than
$50,000.00 in any calendar year or more than $100,000.00 in the aggregate, to
deduct and set off from all rent and other charges thereafter due and payable
pursaunt to the provisions of this Lease until the earlier of: (i) when Tenant
thus has recaptured said sum or so much thereof as Landlord shall have failed to
pay; or (ii) when Landlord has in fact paid such sum or any unpaid portion
thereof. Moreover, any unpaid amounts which Tenant is entitled to receive from
Landlord as reimbursement hereunder shall bear interest after the expiration of
such 30-day notice
<PAGE>
period until paid at the same rate as interest accrues on late payments of Fixed
Rent under the provisions of Section 12.2 of this Lease.
WITNESS the execution hereof, under seal, in any number of counterparts,
each of which counterparts shall be an original for all purposes, as of the day
and year first above written.
/s/ William R. Leatherbee
/s/ Sandra K. Cummings
Trustees of C.L.C. North Attleboro Trust,
for themselves and their co-Trustee, but
in their fiduciary capacity only, and
without personal liability
[LANDLORD]
Attest: L.G. BALFOUR COMPANY, INC.
/s/ Richard E. Floor By: /s/ Francis X. Correra
Secretary Its E.V.P. & Treasurer
Hereunto duly authorized
[TENANT]
<PAGE>
ACKNOWLEDGMENT PAGE
COMMONWEALTH OF MASSACHUSETTS)
) ss.
COUNTY OF )
On this 14th day of March, 1994, personally appeared before me /s/ William
B. Leatherbee and /s/ Sandra K. Cummings who, being by me duly sworn, did
acknowledge the foregoing instrument to be their free act and deed as Trustees
of C.L.C. North Attleboro Trust u/d/t as aforesaid.
/s/ Michael A. Hammer
Notary Public
My Commission Expires: 7/1/94
COMMONWEALTH OF MASSACHUSETTS)
) ss
COUNTY OF )
On this 1st day of April, 1994, before me, personally
appeared Francis X. Correra , who being by me duly sworn, did
say that he is Exec. V.P. & Treasurer of L.G. Balfour Company,
Inc. a Delaware corporation; that said instrument was signed
and sealed on behalf of said corporation by authority of its
Board of Directors; and said officer acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Bette Williams
Notary Public
My Commission Expires: 4/25/97
<PAGE>
EXHIBIT "B"
CONSTRUCTION
I. DESCRIPTION OF THE LANDLORD'S WORK
The following work shall be performed in compliance with all applicable
building and zoning laws, by the Landlord:
The Landlord will: (a) install a new roof on, resurface the adjacent
parking lot of and install a new facade and windows on, and demolish the
existing build-out within, the larger Building; and (b) install a new roof on,
and resurface the adjacent parking lot of, the smaller Building. Said Landlord's
Work is more particularly described and specified in the "Project Manual
Including Specifications for L.G. Balfour Company, Inc., 15 John L. Dietsch
Boulevard, North Attleborough, MA, Landlord Work", dated February 28, 1994,
prepared by Roth & Seelen, Inc. Architects, Hingham, MA (and identifying as the
Client Leatherbee & Company, Brookline, MA), as supplemented by the blueprints
and any other plans and exhibits specifically incorporated therein and by the
terms of said Project Manual made a part of said plans and specifications for
Landlord Work, as all of the same may be amended by change order, addendum or
other writing(s) signed after said February 28, 1994, by both Landlord and
Tenant (or their respective, duly authorized agents). The Landlord will not be
required to perform any other work. Without limitation, in any event
(notwithstanding anything to the contrary contained in said plans and/or
specifications or elsewhere in this Lease), the Landlord shall not be
responsible (and the Tenant, at its cost, shall be responsible) for all costs
and expenses of and relating to (i) the installation of any new HVAC units and
equipment and (ii) all electrical service and related work, including the
installation and bringing in of electrical service, above or below ground
(whether required by code or performed at Tenant's election).
With respect to the aforesaid Landlord's Work, the Landlord agrees to, and
hereby does effective from and after the Commencement Date, assign to the Tenant
(to the full extent assignable, but without any recourse against Landlord with
respect thereto) any and all warranties and guaranties obtained by Landlord from
contractors, subcontractors or the like; and, to the extent any of the same are
not so assignable, Landlord agrees to cooperate with Tenant reasonably (but,
consistent with the other applicable terms and provisions of this Lease, without
the Landlord thereby being required to incur any costs or liability) in seeking
to enforce and otherwise obtain the benefit of any such warranties and
guaranties in order to defray the costs and expenses incurred by Tenant for
repair or replacement of those items covered by such warranties or guaranties.
II. DESCRIPTION OF THE TENANT'S WORK
The Tenant will complete all other work, including fixturing, equipping and
finishing of the Premises, and signage, at the Tenant's cost and expense, in
accordance with Tenant's complete and detailed plans and specifications and by
Tenant's contractors, all of which first shall have been submitted to and
approved in writing by the Landlord (such approval not unreasonably to be
withheld or delayed), in a good and workmanlike manner and in accordance with
all applicable code and insurance requirements and provisions of this Lease. The
Tenant's Work shall be coordinated with any work being performed in or about the
Buildings by the Landlord (and shall be performed in a manner so as to cause no
interference with any such work). The Tenant shall not commence its work until
furnishing the Landlord with insurance certificates evidencing insurance as
required by the provisions of this Lease (including, if appropriate, and whether
or not otherwise required, so-called builder's risk and workers' compensation
insurance) relating to the performance by the Tenant and its contractors of the
Tenant's Work. The Tenant shall use (and require any contractors to use) every
reasonable legal effort to prevent work stoppages attributable to work being
performed by or on behalf of the Tenant. Unless otherwise specifically agreed in
writing by Landlord, any Tenant Work requiring access to or affecting the roof
of either Building shall be done by Landlord's approved contractor (but still at
Tenant's cost and otherwise as set forth herein). The Tenant shall make
arrangements reasonably satisfactory to the Landlord for the prompt and proper
collection and disposal of rubbish, debris and any other construction- related
materials not intended to be incorporated or installed in the Premises, and
otherwise shall comply with the Landlord's reasonable rules, regulations and
directions regarding construction and the related activities of the Tenant and
its workmen.
*************
EXHIBIT A
[A Compiled Plan of Land Diagram Follows]
EXHIBIT 10.10
GSHAMMER: 6290
C.L.C. NORTH ATTLEBORO TRUST
c/o Leatherbee & Co.
1330 Boylston Street
Chestnut Hill, Massachusetts 02167
April 4, 1994
L.G. Balfour Company, Inc.
25 County Street
Attleboro, Massachusetts 02703
Re: John L. Dietsch Boulevard, North Attleboro, MA
(Balfour Company Lease dated March 14, 1994)
Ladies and Gentlemen:
Reference is made to the above-captioned lease (the "Lease"), dated as of
March 14, 1994, in which you are named as Tenant and the undersigned is named as
Landlord. Terms which are defined in the Lease shall have the same respective
meanings when used herein.
The purpose of this letter-agreement is to memorialize certain additional
agreements between us as Landlord and Tenant under the Lease, supplementing the
terms and provisions thereof.
Reference is also made to the Landlord's inducement payment (the
"Inducement Payment") referred to in Section 13.26 of the Lease. Pursuant to the
provisions of said Section 13.26, the Inducement Payment is required to be paid
upon satisfaction of the requirements and conditions more particularly set forth
therein, including the completion and payment in full for the Tenant's Work
referred to in the Lease. In order to facilitate the initial remodelling and
other construction to be performed pursuant to the terms and provisions of the
Lease, and the "progress payments" required therefor, Tenant has requested and
the parties hereby agree as follows:
1. Both the Landlord's Work and the Tenant's Work referred to in the Lease
to be performed promptly following the execution and delivery thereof
(collectively, the "Work") shall be performed pursuant to a construction
contract (the "Construction Contract") to be entered into by and between Tenant
(as "Owner") on the one hand, and the contractor
<PAGE>
selected by Landlord and Tenant to perform said work, Dacon Corporation of
Natick, MA (herein referred to as the "General Contractor"). The Construction
Contract will be finalized by Tenant and the General Contractor with the
assistance of the Project Architect (referred to below); and the Construction
Contract (including any amendments thereto) will be subject to the Landlord's
prior written approval with respect to the Landlord's Work-related provisions
(which approval shall not unreasonably be withheld or delayed).
2. Landlord hereby confirms and agrees that Tenant is authorized, subject
to and in accordance with all applicable provisions of the Lease (including the
provisions contained in this letter-agreement), to cause the Work to be
performed and, in that regard, to enter into the Construction Contract with the
General Contractor and to be named therein and have the rights and obligations
thereunder of the Owner referred to therein (said Construction Contract
contemplated to be in the form of the Abbreviated Form of Agreement Between
Owner and Contractor known as AIA Document A107, with such changes as may be
agreed upon between the Tenant and the General Contractor, and approved to the
extent required hereunder by the Landlord). Conversely, Tenant agrees to cause
the Work to be performed and, in that regard, to enter into the Construction
Contract, as aforesaid, and to act prudently in performing the role of the
"Owner" under the Construction Contract in order reasonably to protect the
Landlord's interests as well as those of the Tenant itself.
Any and all warranties and guarantees running to or benefitting the Tenant
with respect to materials or labor, or both, comprising the Work, shall run to
and for the benefit of Landlord (as its interests may appear) as well as Tenant;
and, either the Construction Contract expressly shall so provide, or the
Construction Contract shall permit the Tenant to assign the benefit thereof to
Landlord and, in such event, the Tenant does hereby so assign (to benefit
Landlord jointly with Tenant) any and all such warranties and guarantees to
Landlord, and agrees reasonably to cooperate, to the extent (if any) required in
any proceeding by Landlord to enforce any of the same. The Construction Contract
shall provide for at least the normal and customary warranties and guarantees
(in scope and duration) now consistent with good and accepted commercial
construction industry standards and practices, including, without limitation,
those contained in Article 18 of the Construction Contract with respect to
Correction of Work and the usual fifteen (15) year complete roofing system
warranty
<PAGE>
(as specified in the Final Plans and Specifications referred to below). As long
as Landlord shall make its payment advances to the Tenant hereunder in
accordance with the requirements of the provisions of this letter-agreement with
respect to the Landlord's Work and Tenant's Work, respectively, the Tenant shall
be responsible, in turn, to pay the General Contractor therefor and, as set
forth in the Lease, to discharge and to indemnify Landlord against any liens
that may arise with respect to the Work, including the Landlord's Work
(notwithstanding the last sentence of Section 13.6 of the Lease) (but nonpayment
hereunder by Landlord pending satisfaction of the conditions to advances
hereunder shall not diminish or otherwise affect Tenant's obligations under said
Section 13.6; and nothing herein shall derogate from the provisions of the
Construction Contract).
3. All of the Work shall be performed subject to and in accordance with the
plans and specifications (the "Final Plans and Specifications") for the
Landlord's Work and the Tenant's Work, all as prepared by the Project Architect
(referred to below) and set forth in or determined with the approval of Landlord
and Tenant in accordance with the provisions of the Lease (and, in particular,
which were used in order to obtain the General Contractor's bid for the
performance of all such Work, which bid was accepted by the parties in awarding
the Construction Contract to the General Contractor).
4. The architect responsible for this project, Dennis L. Roth, of Roth &
Seelen, Inc., Hingham, MA (hereinafter referred to as the "Project Architect")
will be responsible for monitoring and administering the Work (and, to the
extent deemed by the parties to be necessary or appropriate, supplementary
agreements have been, or will be, entered into between one or both of Landlord
and Tenant, on the one hand, and the Project Architect, on the other hand, with
respect to its architectural and related services relative to the Project).
Because the Work includes both the Landlord's Work and the Tenant's Work
referred to in the Lease, in the event of any cost overruns, if there shall be
any question whether a particular cost overrun relates (in whole or in part) to
the Landlord's Work for which the Landlord is responsible to pay, the Project
Architect shall determine the extent to which the same would relate to
Landlord's Work as aforesaid, and the Landlord shall be consulted and have a
reasonable approval right over any change orders or the like resulting
<PAGE>
in any increased costs to the Landlord. Likewise, any change orders or the like
resulting in a credit/cost savings shall be passed on to the appropriate party
and the Project Architect shall, if and to the extent there is any question
relative thereto, determine which party is entitled to any particular such
credit/savings. Moreover, for each requisition for payment and each payment to
be made pursuant to the following provisions hereof with respect to the Work,
the Project Architect shall determine to what extent each such payment is
attributable to Work which is Landlord's Work and Tenant's Work, respectively;
and, likewise, the Project Architect shall determine the dates of substantial
completion of the Landlord's Work and Tenant's Work for the purposes of (and in
accordance with the provisions relating thereto set forth in) the Lease.
5. The Landlord shall make advances in order to make the payments to be
made under the terms and provisions of the Construction Contract; but, subject
to and in accordance with the provisions of this letter-agreement. In
particular, the Landlord shall fund or cause to be funded an aggregate amount
which shall not exceed the sum of (i) all amounts to be paid pursuant to the
terms of the Construction Contract on account of the Landlord's Work; plus (ii)
the lesser of: all amounts to be paid pursuant to the terms of the Construction
Contract on account of the Tenant's Work; or, the $1,310,000 total amount of
the Inducement Payment set forth in said Section 13.26. Any and all excess
costs and expenses whatsoever with respect to the Tenant's Work shall be paid
for by Tenant.
6. All amounts which are advanced by the Landlord pursuant to the
provisions hereof which relate to the Tenant's Work (but not any funds advanced
which relate to the Landlord's Work) shall bear interest payable by the Tenant
to the Landlord from the time advanced until the date (the "Inducement Payment
Date") on which the Landlord's Inducement Payment becomes due and payable in
full pursuant to the terms and provisions of said Section 13.26 of the Lease or
the earlier repayment of such funds by Tenant to Landlord. Such interest shall
accrue at an annual rate equal to nine percent (9%), shall be calculated on a
daily basis and shall accrue and be payable on the actual number of days in the
period from the time of advance until repaid (actually, or as imputed as of the
Inducement Payment Date, as the case may be, as aforesaid). Such accrued
interest only shall be paid by the Tenant to the Landlord monthly, in arrears,
on the first day of each calendar month commencing June 1, 1994; and any and all
such accrued interest, if not
<PAGE>
sooner paid, shall be so paid no later than together with the first payment of
Fixed Rent which shall become due and payable under the provisions of the Lease
after the Inducement Payment Date (or the date of any earlier termination of the
Lease).
All such advances hereunder relating to the Tenant's Work and which bear
interest as aforesaid are being treated for the purposes hereof as advances on
account of the Landlord's Inducement Payment (and, thus, are referred to
collectively and in the aggregate sometimes hereinafter as the "Inducement
Payment Advance"), which Inducement Payment Advance the Tenant hereby promises
to pay, in accordance with the provisions hereof, to the order of Landlord, on
or before the Inducement Payment Date (or the date of any earlier termination of
the Lease). To the extent of all advances on account of the Inducement Payment
Advance which remain outstanding on the Inducement Payment Date, upon the
occurrence of said date, the full amount of the Inducement Payment (or the
portion thereof equal to the aggregate amount of Landlord's said Inducement
Payment Advance, as the case may be) shall be imputed and otherwise considered
for all purposes to have been paid to Tenant (on account of the Landlord's
obligations under said Section 13.26) by virtue of repayment to Landlord of the
Inducement Payment Advance; and, correspondingly, shall be imputed and
considered for all purposes to have been applied to repayment of the Inducement
Payment Advance as of said Inducement Payment Date. In the unlikely event of a
net savings under the Construction Contract such that the total amount to be
paid thereunder with respect to the Tenant's Work ultimately is less than the
amount of the Inducement Payment specified in the Lease, then, notwithstanding
the amount of the Inducement Payment set forth in said Section 13.26 of the
Lease, the Landlord shall be relieved of its obligation to pay such portion of
the Inducement Payment as is equal to the excess of the total amount thereof
above the amount actually required in order to pay in full all amounts under the
Construction Contract payable on account of the Tenant's Work. In the event any
amounts payable under the Construction Contract on account of the Work are not
advanced by Landlord when due in accordance with the provisions hereof, then
Tenant may notify Landlord thereof (and, if applicable, that Tenant intends to
make such advance on Landlord's behalf) and, if Landlord's failure to make such
advance continues for ten (10) days after its receipt of such notice, same shall
constitute a default by Landlord hereunder for which Tenant shall have the right
to make such advance (and recoup same from Landlord, with
<PAGE>
interest at the rate provided in the Lease to accrue on late Fixed Rent
payments) and shall have all other remedies for recoupment thereof available
under the Lease and at law.
7. Notwithstanding the provisions of Section 9.2 of the Lease requiring at
least thirty (30) days advance notice of cancellations in insurance coverages,
with respect to notices of cancellation for non-payment the insurer shall be
required to give to the Landlord the maximum notice period generally available
and given in accordance with good and accepted commercial real estate industry
insurance practices and standards from time to time; but, in no event shall the
insurer be required to give more than thirty (30) days notice and, in any event,
the insurer shall never be permitted to give the Landlord less than ten (10)
days advance notice of any such cancellation for non-payment. Moreover, the
requirements of said Section 9.2 that the Tenant carry rental loss insurance
shall be considered satisfied if and to the extent the Landlord actually is
protected against rental loss under the Lease by virtue of the Tenant's
so-called business interruption coverage all as if the Tenant had maintained
independent so-called rental loss coverage as otherwise required under and in
accordance with the provisions of said Section 9.2.
8. While the Lease itself actually was executed and delivered, and bears
the date, as of March 14, 1994, and will continue for identification purposes so
to do, nonetheless the term of the Lease for all purposes (including the
commencement of Tenant's responsibilities relative to the Property) shall not be
considered to have commenced until, and shall commence on, the date of this
letter-agreement.
9. Attached hereto, incorporated herein and made a part hereof are the
"Terms and Conditions Applicable to Advances", which set forth the conditions
precedent to and procedure for obtaining advances of the funds required in order
to pay for the Work being performed under the Construction Contract (including
the portions thereof attributable to the Tenant's Work and, thus, comprising
part of the aforesaid Inducement Payment Advance, as well as the portions
thereof attributable to the Landlord's Work).
10. The provisions hereof shall for all purposes be considered to be part
of and included in the Lease. The Lease is hereby ratified and, as modified and
affected hereby, remains in full force and effect.
<PAGE>
11. The Project Architect, by its signature hereto, hereby joins in this
letter-agreement for the purposes of confirming its agreement to be bound by
such obligations set forth hereinabove as are applicable to the Project
Architect (but not to any other obligations).
12. Julian Cohen, of Palm Beach, Florida, one of the beneficial owners of
the Landlord, by his signature hereto, hereby joins in this letter-agreement,
and thus does hereby confirm and agree to be bound by, and unconditionally and
directly (without the need first to resort to the Landlord or its property) to
guarantee and does hereby guarantee the performance by the Landlord of, such
obligations set forth hereinabove as are applicable to the Landlord (but not to
any other obligations) including, without limitation, the obligation to make
advances to be made by the Landlord as set forth in Paragraph 5 of this
letter-agreement.
If there is anything amiss in the foregoing, please let us know. If, on the
other hand, everything appears to be in order, kindly arrange for this
letter-agreement and the four (4) enclosed photocopies to be signed on behalf of
the Tenant and joined in by the Project Architect (where indicated below), and
then for two (2) of those countersigned copies to be returned to the undersigned
and the third to be forwarded to the Project Architect, whereupon this
letter-agreement shall take effect under seal and the Lease shall be treated as
having been amended hereby.
Yours truly,
/s/William B. Leatherbee
/s/ Sandra K. Cummings
Trustees of C.L.C. North Attleboro Trust, for
them- selves and their co-Trustee, but in
their fiduciary capacity only, and without
personal liability
[LANDLORD]
<PAGE>
CONFIRMED AND AGREED AS AFORESAID:
L.G. BALFOUR COMPANY, INC.
By: /s/ Francis X. Correra
Its Executive Vice President
Hereunto duly authorized
[TENANT]
JOINED IN UNDER SEAL FOR THE PURPOSES SET FORTH HEREINABOVE:
ROTH & SEELEN, INC.
By: /s/ Dennis L. Roth
Dennis L. Roth, President
Hereunto duly authorized
[Project Architect]
/s/ Julian Cohen
Julian Cohen, individually
GSHAMMER: 6290
<PAGE>
TERMS AND CONDITIONS APPLICABLE TO ADVANCES
The following set forth the conditions precedent to and procedure for
obtaining the advances being made by the Landlord to the Tenant in accordance
with the provisions of the Lease (and, in particular, the foregoing
letter-agreement, which is part thereof):
I. Conditions on Advances.
Prior to the first advance, and as a condition to the Tenant's right
to receive the first and any subsequent advances hereunder for application to
the payments under the Construction Contract, there shall be furnished to the
Landlord:
a. Such evidence as the Landlord may reasonably require that the Work
complies with all applicable federal, state, and local laws, rules, regulations,
codes, requirements and ordinances applicable thereto. A building permit(s), as
required therefor, prior to commencement of the Work, and a final certificate(s)
of occupancy for the Buildings for their intended use, upon completion of the
Work, shall satisfy the foregoing, unless the Project Architect notifies
Landlord and Tenant of additional legal requirements which need to be met.
b. A Certificate from the Project Architect in the form of the
Architect's Certificate attached hereto, and acceptance thereof by the Landlord
such acceptance not unreasonably to be withheld or delayed.
c. A Certificate from the General Contractor in the form of the
"Contractor's Certificate" attached hereto, acceptance thereof by the Project
Architect, and acceptance thereof by Landlord such acceptance not unreasonably
to be withheld or delayed.
d. A Certificate from the Tenant in the form of the "Tenant's
Certificate" attached hereto, and acceptance thereof by the Landlord such
acceptance not unreasonably to be withheld or delayed.
e. A requisition from the General Contractor, and acceptance thereof
by the Project Architect, which requisition shall, subject to the following, be
in normal and customary AIA form reasonably acceptable to the Landlord.
<PAGE>
f. A recordable lien waiver in normal and customary AIA form
reasonably acceptable to the Landlord from the General Contractor and each
subcontractor (and/or other party) performing labor or furnishing materials with
respect to the Work, waiving any and all liens attributable to labor and
materials furnished by the General Contractor and such subcontractors (and any
other such parties) in connection with the Work through the requisition date
(partial or full and final, as the case may be, and which may be conditional
upon receipt of a specified amount corresponding to such labor and/or materials
furnished through the applicable requisition date). Said lien waivers shall
likewise contain the normal and customary indemnity agreement of the General
Contractor (or the subcontractor, as the case may be) as to any labor and/or
materials furnished through the requisition date by such party or any of its
subcontractors (and any other parties) furnishing labor or materials to or for
it with respect to the Work through the requisition date. Notwithstanding the
foregoing lien waiver requirement, the Landlord shall not require that lien
waivers be provided by any subcontractor which is providing labor or materials
the total value of which does not exceed $10,000.00 with respect to the Work, as
certified to the Landlord by the General Contractor and the Architect; provided,
however, that the requirement for lien waivers shall not hereby be waived with
respect to subcontracts totalling more than $50,000.00 in aggregate value.
g. Such evidence as may reasonably be required by the Landlord
confirming that there is then in full force and effect all insurance required to
be carried by or on behalf of the Tenant, the General Contractor and
sub-contractors, relating to the performance of the Work, and that the Landlord
(and its identified mortgagee, if any) is named as additional insured on all
such policies (except for workers' compensation policies).
h. A letter from the General Contractor and addressed to the Landlord,
stating that the General Contractor will give written notice to the Landlord of
and will give the Landlord ten (10) days in which to remedy any default by the
Tenant under the Construction Contract and that if the Landlord agrees with the
General Contractor to assume the obligations of the Tenant under the
Construction Contract, and the Construction Contract is assigned by the Tenant
to the Landlord or the Lease is terminated, the General Contractor will
recognize such assumption and will perform its obligations under the
Construction Contract for the benefit of the Landlord provided that the Landlord
shall
<PAGE>
perform all obligations of the Tenant thereunder and requests that the General
Contractor complete the work thereunder for the Landlord.
It is understood and agreed that if the Lease shall be terminated
then, at the Landlord's option, the Landlord may proceed as contemplated in the
preceding paragraph to elect to assume the Tenant's position under the
Construction Contract (but Landlord shall not be obligated so to do).
In addition, each such advance hereunder shall be conditioned upon the
Tenant having paid all charges, if any, then to have been paid pursuant to
applicable provisions of the Lease and there then being no uncured default in
any of the obligations of the Tenant thereunder.
II. Procedure for Making Advances.
Advances hereunder are to be made by the Landlord under the following
additional conditions and in accordance with the following procedure:
a. Advances may be requested no more often than monthly. Five
(5) business days at least before the date upon which an advance
is requested, the Tenant or Project Architect will give notice
to the Landlord specifying the approximate amount of the advance
which will be desired. Each such request for an advance
hereunder shall be made in writing to the Landlord and shall be
considered to have been made upon the satisfaction of all of the
applicable conditions, including receipt by the Landlord of the
certificates, etc. expressly required, as set forth in the
foregoing Part I of these Terms and Conditions. Each such
requested advance shall be made by the Landlord promptly upon
the satisfaction of said conditions applicable to the advance in
question (or the waiver by Landlord of any then unsatisfied
conditions), and in no event more than five (5) business days
after the satisfaction (or waiver) thereof.
The final advance hereunder shall also be conditioned upon the
furnishing to Landlord of a final copy of the "as-built" plans reflecting the
physical condition of the Buildings with the Work having been completed.
b. In no event shall any advance allocable to a payment on account of
the Construction Contract exceed an amount equal to ninety percent (90%) of the
total value of work and materials theretofore completed, approved and installed
in the Premises less the sum of all payments
<PAGE>
theretofore made against construction. However, an advance may be made hereunder
for the purpose of making final payment of any balance to any subcontractor
after full and final completion of the Work or the portion thereof being
performed by such subcontractor and delivery to the Landlord of such evidence as
may be reasonably required to assure the Landlord that no claim may thereafter
arise with respect to such subcontractor's work which might result in the filing
or attachment of a lien affecting the Premises or the Landlord. Further, an
advance may be made for the purpose of making final payment of any balance due
to the General Contractor after full and final completion of the Work within the
scope of the Construction Contract and delivery to the Landlord of such evidence
as may be reasonably required to assure the Landlord that no claim may
thereafter arise on account of the General Contractor's work or any
subcontractor's work as a result of which any lien may arise affecting the
Premises or the Landlord.
III. Miscellaneous.
a. Without at any time waiving any of the Landlord's rights hereunder,
the Landlord shall have the right to make any advance without satisfaction of
each and every condition thereto; and the Landlord shall have the right,
notwithstanding a waiver relative to the first or any other prior advance, to
refuse to make any and all subsequent advances until each and every condition
hereof (and any other applicable provisions of the Lease) have been satisfied.
b. Advances shall be applied only to the Construction Contract costs
and expenses incurred by the Tenant in connection with the Work which are
required to be paid out-of-pocket by the Tenant.
* * * * * * *
<PAGE>
ARCHITECT'S CERTIFICATE
TO: (The "Landlord")
RE: (The "Tenant")
CONSTRUCTION OF
(The "Project")
The undersigned, acting as the Project Architect supervising the
above-mentioned Project, does hereby certify to the Landlord as follows:
1. I have examined the Requisition being submitted herewith to the Landlord
by the Tenant, which Requisition includes a request for payment from (the
"General Contractor") constructing the above-referenced Project in the amount of
$ .
I find that the amount of the payment so requested by the General
Contractor does not exceed (when added to the Requisitions heretofore paid to
the General Contractor) ninety percent (90%) of the value of labor and materials
incorporated at the Site of the Project (and of the value of materials suitably
stored therein for which, in my opinion, reasonable security measures are in
effect). Accordingly, in my opinion, the General Contractor is entitled to
payment under its Construction Contract dated .
2. I hereby further certify that, to the best of my knowledge, information
and belief (based upon normal and customary inquiries and periodic
observations), all construction work in place conforms with the requirements of
the most recently applicable edition of plans and specifications prepared by me
for such construction and heretofore submitted to and approved by the Landlord
and the Tenant, and that all such work also complies with applicable laws and
regulations and Lease requirements of which I have any knowledge.
3. I hereby further certify that, to the best of my knowledge, information
and belief (based upon normal and customary inquiries and periodic
observations), the lien waivers for the period through the date of the
Requisition being submitted herewith, which lien waivers also are being
submitted herewith to the Landlord by the General Contractor, include lien
<PAGE>
waivers from the General Contractor and from all subcontractors (and any other
parties) furnishing labor or materials in connection with the Work through the
date of said Requisition (excepting those, if any, which are not required under
the Lease and Construction Contract terms) and waiving any and all liens
attributable thereto.
This Certificate is given to induce the Landlord to authorize an advance
relative to the Project, and it is intended that the Landlord shall rely upon
the same.
IN WITNESS WHEREOF, has
caused this Certificate to be signed in its corporate name by
, its
, being thereunto duly authorized.
By:
Its
Hereunto duly authorized
ARCHITECT
Dated:
<PAGE>
CONTRACTOR'S CERTIFICATE
TO: (The "Landlord")
RE: (The "Tenant")
CONSTRUCTION OF
(The "Project")
The undersigned, General Contractor for the Project, does
hereby certify to the Landlord as follows: --
1. Under date of , we entered into a Construction Contract (the "Construction
Contract") with the Tenant for the construction of the Project. The Construction
Contract is still in full force and effect. To the best knowledge and belief of
the undersigned, the undersigned is not in default of any of its obligations
legally due to the Tenant under the Construction Contract or of any of its
obligations to any subcontractors, workmen or materialmen, for and with respect
to work and materials supplied through and including the date of our Requisition
dated , and submitted to the Landlord herewith.
2. That full payment has been made (or will from the proceeds of the requested
advance be made) of all obligations incurred and which are legally due by the
undersigned to subcontractors, workmen and materialmen for and with respect to
all work and materials supplied through and including the date of our said
Requisition, except, as to subcontractors, for customary retainage not exceeding
ten percent (10%) of amounts earned by such subcontractors. Our said Requisition
submitted herewith includes the Application and Certificate of Payment,
completed and signed on behalf of the undersigned with respect to the
Application and on behalf of the Project Architect with respect to the
Certificate; and the information therein contained is true, complete and
accurate.
3. Our said Requisition submitted herewith includes lien waivers (partial or
full, as the case may be) which include the Landlord as a named releasee,
executed and acknowledged by the undersigned General Contractor and, to the
extent required under the provisions of the Construction Contract, by each and
every subcontractor (and any other party) furnishing labor or materials through
the date of our said Requisition with respect to the Project Work being
performed
<PAGE>
under the Construction Contract, and waiving any and all liens attributable to
labor and materials furnished through the date of our said Requisition by all
such parties. This Certificate is given to induce the Landlord to authorize an
advance relative to the Project, and it is intended that the Landlord shall rely
upon the same. However, nothing herein shall be construed to amend or otherwise
change or enlarge the terms and provisions of the Construction Contract itself
or any rights and obligations of the General Contractor and the Tenant
thereunder.
IN WITNESS WHEREOF, has
caused this Certificate to be signed in its corporate name by
, its , being
thereunto duly authorized.
By:
Its
Hereunto duly authorized
GENERAL CONTRACTOR
Dated:
<PAGE>
TENANT'S CERTIFICATE
TO: (the "Landlord")
RE: CONSTRUCTION OF (the "Project")
The undersigned, Tenant under the lease (the "Lease") dated as of March 14,
1994, between the Landlord and the undersigned Tenant, covering the property on
which the above-noted construction Project is being conducted under the
Construction Contract (the "Construction Contract") between the undersigned and
(the "General Contractor"), does hereby certify to the Landlord as follows: --
1. The undersigned hereby requests an advance under the terms and provisions of
the Lease relating to the Project and the Work (as that term is used in the
Lease) in an amount equal to the amount of the General Contractor's Requisition
dated and being submitted to the Landlord together herewith.
2. The Tenant is not in default of any of its obligations under the provisions
of the Lease and asserts no default on the part of the Landlord of any of its
obligations under the provisions of the Lease.
3. The balance requested hereinabove to be advanced hereunder on account of the
Tenant's Work, together with funds otherwise currently available to the Tenant
(including, without limitation, Landlord's Inducement Payment under Section
13.26 of the Lease), are sufficient for the payment of all related direct and
indirect costs for the completion of the portion of the Work constituting
Tenant's Work in accordance with all of the terms and provisions of the
Construction Contract and the Lease; all funds advanced heretofore have been
used and all funds to be advanced in accordance with this request shall be used
to make payments due under the Construction Contract.
4. The Construction Contract is still in full force and effect and, to the best
of the undersigned's knowledge, information and belief (based upon normal and
customary inquiries and observations), the General Contractor is not in default
of any of its obligations to the undersigned thereunder or to any subcontractor,
workman or materialman for and with respect to work and materials supplied
through and including the date of the General Contractor's Requisition being
submitted to the Landlord herewith. Further, the
<PAGE>
Construction Contract has not been modified or amended in any respect whatever,
including, without limitation, the contract price, and there has been no change
order except as disclosed in the Contractor's Certificate being submitted to the
Landlord herewith (if any).
5. In all other respects, to the best of our knowledge, information and belief
(based upon normal and customary inquiries and observation): all of the
certifications contained in the Contractor's Certificate and the Architect's
Certificate being submitted herewith and relating to the within request for
advance, are true, complete and accurate; and all of the conditions on advances
set forth in the applicable provisions of the letter-agreement comprising part
of the Lease have been satisfied with respect to the advance being requested
herein.
This Certificate is given to induce the Landlord to make an advance
relative to the Project, and it is intended that the Landlord shall rely upon
the same.
IN WITNESS WHEREOF, has
caused this Certificate to be signed in its corporate name by
, its , being hereunto
duly authorized.
By:
Its
Hereunto duly authorized
TENANT
Dated:
EXHIBIT 10.12
FIRST AMENDMENT TO AMENDED AND RESTATED
CONSIGNMENT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the 20th day of October, 1993, by and between
FLEET PRECIOUS METALS INC., a Rhode Island corporation
("Consignor"); and
TOWN & COUNTRY CORPORATION, a Massachusetts corporation ("T&C"), TOWN &
COUNTRY FINE JEWELRY GROUP, INC., a Massachusetts corporation ("Group"), L.G.
BALFOUR COMPANY, INC., a Delaware corporation ("Balfour") and GOLD LANCE, INC.,
a Massachusetts corporation ("GLI") (T&C, Group, Balfour and GLI are herein
referred to, jointly and severally, as "Buyer").
W I T N E S S E T H T H A T:
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. The definition of "Consignment Limit" set forth in Section 1 of the
Agreement is hereby amended to read in its entirety as follows:
""Consignment Limit" shall mean that amount calculated from time to
time as (1) the least of (a) forty-two thousand seven hundred ninety-seven
(42,797) troy ounces of fine gold, (b) subject to the provisions of Section 5
hereof, Consigned Precious Metal with a Fair Market Value (or unpaid Purchase
Price in the case of Consigned Precious Metal for which the Purchase Price has
been agreed but as to which payment has not been received by Consignor) equal to
Eighteen Million One Hundred Eighty-eight Thousand Seven Hundred Twenty-five
Dollars ($18,188,725), or (c) eighty-three percent (83%) (provided, however,
that for a period of 90 consecutive days during the period from December 1, 1993
<PAGE>
through February 28, 1994, such percentage shall be eighty-five percent (85%))
of Buyer's inventory of Precious Metal (including, for such purpose, Consigned
Precious Metal and, for the purposes of paragraph 1 of Section 2 hereof, the
Precious Metal requested by Buyer but excluding (i) Precious Metal owned, leased
or consigned by any other party (Precious Metal purchased by Buyer pursuant to
term receivable or other financing arrangements which remain unpaid shall be
included as consigned Precious Metal), (ii) the amount of Precious Metal
necessary to satisfy the aggregate Precious Metal equity requirements of other
consignors, (iii) Precious Metal included in Balfour Purchased Inventory or the
Zale Consigned Inventory (as each such term is defined in the Intercreditor
Agreement)), and (iv) the amount of Buyer's Precious Metal, if any, outstanding
in the possession of foreign Subsidiaries or foreign sales representatives in
excess of the amount permitted by Section 12(h) hereof, minus (2) twenty percent
(20%) of the aggregate face amount of all outstanding Forward Contracts."
2. Section 1 of the Agreement is hereby further amended by adding after the
definition of "Foothill Loan Agreement" appearing on page 6 of the Agreement,
the following new definition:
""Forward Contracts" shall mean the Forward Contracts entered into
from time to time by Buyer and Consignor as contemplated by and in accordance
with Section 5 hereof."
3. Section 5 of the Agreement (entitled "Purchase Price; Payments.") is
hereby amended by inserting the following between the second and third
paragraphs of Section 5:
"In addition to the foregoing, Consignor agrees that, until further
notice from Consignor, Buyer may from time to time purchase Consigned Precious
Metal from Consignor and fix the Purchase Price therefor pursuant to forward
contracts in form and substance, and on terms, satisfactory to Consignor
("Forward Contracts"), so long as the aggregate unpaid balance of all
obligations outstanding thereunder does not exceed at any time Five Million
Dollars ($5,000,000). Unless otherwise agreed by Consignor, no Forward Contract
shall have a maturity in excess of ninety (90) days. Until further notice from
Consignor, the unpaid principal balance of all Forward Contracts will bear
interest at an annual rate of interest equal to one percent (1%) above the
floating Prime Rate, as in
<PAGE>
effect from time to time, calculated on the basis of a 360-day year counting the
actual number of days elapsed, with each change in the rate charged being
effective upon each date the Prime Rate changes. All Precious Metal subject to a
Forward Contract shall remain Consigned Precious Metal hereunder until Consignor
has received payment in full of the Purchase Price of such Precious Metal and
all interest charges in respect thereof."
4. (a) Buyer and Consignor hereby acknowledge and agree that all
obligations, indebtedness and liabilities of Buyer to Consignor under any and
all Forward Contracts, whether now existing or hereafter arising, are secured by
and entitled to the benefits of the Security Documents as defined in the
Agreement.
(b) Section 16(m)(i) of the Agreement is hereby amended by
inserting in the fourth line thereof after the words "arising
under or pursuant to" the words: "...Forward Contracts or ...".
5. Exhibit A to the Agreement is hereby amended to correspond in its
entirety with Exhibit A attached hereto and made a part hereof.
6. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenant set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference, the term "this
Agreement" shall be amended to refer to "this Amendment".
7. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
8. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including the reasonable fees and
disbursements of its counsel) in connection with the preparation and
implementation of this Amendment.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
FLEET PRECIOUS METALS INC.
By:__/s/ Anthony J. Capuano_______
Title: Vice President
By:__/s/ _______ _______ _______
Title: A.V.P.
TOWN & COUNTRY CORPORATION
By:__/s/ Francis X. Correra_______
Title: Sr. Vice President & CFO
TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By:__/s/ Francis X. Correra_______
Title: Vice President
L.G. BALFOUR COMPANY, INC.
By:__/s/ Francis X. Correra_______
Title: Executive Vice President
GOLD LANCE, INC.
By:__/s/ Francis X. Correra_______
Title: Treasurer
WPPAJC-2388
<PAGE>
EXHIBIT A
PERMITTED LOCATIONS
Buyer Locations
Vendors Name Address Address
L.G. Balfour Company, Inc. 10610 Bluegrass Parkway Louisville, KY
L.G. Balfour Company, Inc. 2621 Lone Star Drive Dallas, TX
L.G. Balfour Company, Inc. 30 Frank Mossberg Dr. Attleboro, MA
L.G. Balfour Company, Inc. 25 County Street Attleboro, MA
Feature Enterprises, Inc. 130 West 46th Street New York, NY
Gold Lance, Inc. 1920 North Memorial Dr. Houston, TX
Town & Country Fine
Jewelry Group, Inc. 25 Union Street Chelsea, MA 02150
L.G. Balfour Company, Inc. 100 Messina Dr. Braintree, MA
Town & Country Fine
Jewelry Group, Inc. 14812 Venture Dr. Dallas, TX
Anju Jewelry Limited Block B2, 1/F Hungham, Kowloon,
Kaiser Estate Hong Kong
SUBCONTRACTORS, FABRICATORS, REFINERS
Vendors Name Address Address
ASA Manufacturing 1350 39th Street Brooklyn, NY 11223
Advanced Chemical 105 Bellows Street Warwick, RI 02888
Almond Jewelers 16 West 46th Street New York, NY 10036
AmGold Products 15 West 37th Street New York, NY 10018
Angel Manufacturing 712 S. Olive Street Los Angeles, CA 90014
Anzor 48 W. 48th Street New York, NY 10036
Artamer Co. 205 West 2nd Street Bethlehem, PA 18015
Astro Lite, Inc. P.O. Box 385 Morton Grove, IL 60053
Atamian 910 Plainfield St. Providence, RI 02909
Ben-gee Industries Ltd. 48 West 48th St., New York, NY 10036
Suite 705
Boliden Metech, Inc. P.O. Box 500 Mapleville, RI 02839
Champion Chains, Inc. 2115 Lake Avenue Scotch Plains, NJ 07076
Charms Unlimited 227 West 29th Street New York, NY 10001
Engelhard 101 Wood Avenue Iselin, NJ 08830-0770
Eurospark P.O. Box 8369 Long Island City, NJ
11101
Foreway Products 102 Ocean Avenue Bellmore, NY 11710
General Findings 57 John Dietsch Sq. North Attleboro, MA
02761-0200
Glines and Rhodes 189 East Street Attleboro, MA 02703
Goldring 200 Eighth Street Brooklyn, NY 11215
Grassant (Heraeus) 48-50 Main Street Newark, NJ 071030
Grassmen Blake Inc. 44 Brown Avenue Springfield, NJ 07081
<PAGE>
Hallmark Healy Group 50 Colorado Avenue Warwick, RI 02888
Handy & Harmon 850 Third Avenue New York, NY 10022
Heraeus, Inc. 24 Union Hill Road West Conshohocken, PA
19428
Hereaus Precious Metals 111 Albert Ave. Newark, NJ 07105
Kemp Metal Products, Inc. 2300 Shames Drive Westbury, NY 11590
L.S. Plate & Wire Corp. 70-17 51st Avenue Woodside, NY 11377
Lee's Manufacturing 1700 Smith Street No. Providence, RI
02911
Liberty Plate & Wire 2478 MacDonald Ave. Brooklyn, NY 11223
Loren Castings 2801 Greene Street Hollywood, FL 33020
Marsella Findings 26 Lockhard Ave. Warwick, RI 02886
Metalor 225 John Dietsch Blvd. N. Attleboro, MA
02761
Mid State Recycling 5561 Milton Parkway Rosemont, IL 60018
National Plumb Jewelry Co. 625 S. Hill St. Los Angeles, CA
90014
J.C. Nordt P.O. Box 25549 Richmond, VA 23278
Olef Creations Inc. 75 Varik Street, 7th Flr New York, NY 10014
Omega Casting Corporation 129 West 29th Street New York, NY 10001
PM Refining 505 Pearl Street Buffalo, NY 14202
PPM Industries, Ltd. P.O. Box 5 Albion, RI 02802
Pease & Curran 75 Pennsylvania Ave. Warwick, RI 02888
RFE Industries Foot of Jersey Ave. Jersey City, NJ 07302
Robert Baxter & Associates 200 Jefferson Blvd. Warwick, RI 02888
Ronald Litoff 49 West 45th Street New York, NY 10036
Samuel Moore Company, Inc. 4 Edward Street Providence, RI 02904
SO Metals Refining Co. 245 West 29th Street New York, NY 10001
Stamprite 620 West 39th Street New York, NY 10018
Stern Metal/Stern Leach 320 Washington Street Mt. Vernon, NY 10553
Stern Leach 49 Pearl Street Attleboro, MA 02703
Stuller Settings P.O. Box 52583 Lafayette, LA
70505-2583
Suraj Diamond Ind. Ltd. 1212 Avenue of the New York, NY 10036
Americas
Taylor Stamping 250 West Broadway New York, NY 10013
Volk 55 Access Road Warwick, RI 02886
EXHIBIT 10.13
SECOND AMENDMENT TO AMENDED AND RESTATED
CONSIGNMENT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the 1st day of December , 1993, by and between
FLEET PRECIOUS METALS INC., a Rhode Island corporation
("Consignor"); and
TOWN & COUNTRY CORPORATION, a Massachusetts corporation ("T&C"), TOWN &
COUNTRY FINE JEWELRY GROUP, INC., a Massachusetts corporation ("Group"), L.G.
BALFOUR COMPANY, INC., a Delaware corporation ("Balfour") and GOLD LANCE, INC.,
a Massachusetts corporation ("GLI") (T&C, Group, Balfour and GLI are herein
referred to, jointly and severally, as "Buyer").
W I T N E S S E T H T H A T:
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993, as heretofore amended by a
certain First Amendment to Amended and Restated Consignment Agreement dated as
of October 20, 1993 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 12(k) of the Agreement is hereby amended to read in
its entirety as follows:
"(k) Consign or deliver on memo or any similar arrangement Precious
Metal to its customers which, in the aggregate, at any one time exceeds (i)
during the period October 1, 1993, through February 28, 1994, twenty-three
thousand five hundred (23,500) troy ounces of Precious Metal, and (ii) at all
other times, twenty thousand (20,000) troy ounces of Precious Metal (for the
purposes of this subsection (k), Balfour sales representatives' sample lines
will be treated as consignments to customers); ...."
<PAGE>
2. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenant set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference, the term "this
Agreement" shall be amended to refer to "this Amendment".
3. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
4. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including the reasonable fees and
disbursements of its counsel) in connection with the preparation and
implementation of this Amendment.
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
FLEET PRECIOUS METALS INC.
By:__/s/ Anthony J. Capuano__
Title: Vice President
By:__/s/ _______ _______ __
Title: Vice President
L.G. BALFOUR COMPANY, INC. TOWN & COUNTRY CORPORATION
By:__/s/ Francis X. Correra__ By:__/s/ Francis X. Correra__
Title: Exec. V.P. & Title: Sr. Vice President
Treasurer & Dir. & CFO
GOLD LANCE, INC. TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By:__/s/ Francis X. Correra__ By:__/s/ Francis X. Correra__
Title: Treasurer Title: V.P. Finance
& Director
WPPAJC-2459
EXHIBIT 10.14
THIRD AMENDMENT TO AMENDED AND RESTATED
CONSIGNMENT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the day of July, 1994, by and between FLEET PRECIOUS METALS INC., a Rhode
Island corporation ("Consignor"), and TOWN & COUNTRY CORPORATION, a
Massachusetts corporation ("T&C"), TOWN & COUNTRY FINE JEWELRY GROUP, INC., a
Massachusetts corporation ("Group"), L.G. BALFOUR COMPANY, INC., a Delaware
corporation ("Balfour") and GOLD LANCE, INC., a Massachusetts corporation
("GLI") (T&C, Group, Balfour and GLI are herein referred to, jointly and
severally, as "Buyer").
W I T N E S S E T H T H A T
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (as amended from time to time,
the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as hereinafter
set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 11(p) of the Agreement is hereby amended to read in
its entirety as follows:
"(p) Maintain at all times Equity Precious Metal (i) in an aggregate
amount equal to or greater than the aggregate quantity of Precious Metal of
Buyer outstanding (A) on consignment to foreign Subsidiaries, (B) in the
possession of foreign sales representatives or otherwise outside of the United
States, (C) on memo or consignment to customers of Buyer, plus (D) in the
possession of fabricators, refiners and subcontractors not identified on Exhibit
A attached hereto, and (ii) with respect to other Precious Metal consignors,
lenders or the like (including, without limitation, the Metal Consignors) in
amounts which would be required by such parties (as may or may not be the case)
as if the advance rates in their consignment or lease agreements were the same
as the rates included in, and computed and defined in the same manner as set
forth in, the
<PAGE>
definition of "Consignment Limit" herein. For the purpose of
computing compliance with this Section, any Precious Metal
purchased by Buyer pursuant to any term receivable or other
financing arrangements which remain unpaid will be treated as
consigned Precious Metal;. . . ."
2. Section 12(n) of the Agreement is hereby amended to read in
its entirety as follows:
"(n) Permit at any time its Consolidated Tangible Net Worth to
be less than (i) Forty-three Million Dollars through June 30,
1994, or (ii) Forty Million Dollars ($40,000,000) from July 1,
1994 through November 26, 1994, or (iii) Forty-three Million
Dollars ($43,000,000) thereafter; . . . ."
3. Section 12 of the Agreement is hereby further amended by
adding thereto the following new subsection:
"(x) Deliver Precious Metal to any fabricator, refiner or
subcontractor not identified on Exhibit A attached hereto in an amount at any
time in excess of one hundred (100) troy ounces."
4. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenant set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference, the term "this
Agreement" shall be amended to refer to "this Amendment".
5. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
6. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including the reasonable fees and
disbursements of its counsel) in connection with the preparation and
implementation of this Amendment.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
FLEET PRECIOUS METALS INC.
By:__/s/ A. J. Capuano __
Title: V.P.
By:__/s/ Karen M. McGrath
Title: A.V.P.
L.G. BALFOUR COMPANY, INC. TOWN & COUNTRY CORPORATION
By:__/s/ C. William Carey__ By:__/s/ C. William Carey__
Title: President & Chairman Title: President, CEO,
Chairman
GOLD LANCE, INC. TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By:__/s/ C. William Carey__ By:__/s/ C. William Carey__
Title: Chairman & CEO Title: President
WPPAJC-2862
EXHIBIT 10.15
FOURTH AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the 31st day of August, 1994, by and between FLEET PRECIOUS METALS INC., a
Rhode Island corporation ("Consignor"); and TOWN & COUNTRY CORPORATION, a
Massachusetts corporation ("T&C"), TOWN & COUNTRY FINE JEWELRY GROUP, INC.,
Massachusetts corporation ("Group"), L.G. BALFOUR COMPANY, INC., a Delaware
corporation ("Balfour") and GOLD LANCE, INC., a Massachusetts corporation
("GLI") (T&C, Group, Balfour and GLI are hereinafter referred to, jointly and
severally, as "Buyer").
W I T N E S S T H T H A T:
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. The definition of "Consignment Limit" set forth in the
Section one of the Agreement is hereby amended to read in its
entirety as follows:
""Consignment Limit" shall mean that amount calculated from time to time as
(1) the least of (a) Forty-five Thousand (45,000) troy ounces of fine gold, (b)
subject to the provisions of Section 5 hereof, Consigned Precious Metal with a
Fair Market Value (or unpaid Purchase Price in the case of Consigned Precious
Metals for which the Purchase Price has been agreed but as to which payment has
not been received by Consignor) equal to Twenty Million Dollars ($20,000,000),
or (c) eighty- three percent (83%) of Buyer's inventory of Precious Metals
(including for such purpose, Consigned Precious
<PAGE>
Metal and, for the purposes of paragraph 1 of Section 2 hereof, the Precious
Metal requested by Buyer but excluding (i) Precious Metals owned, leased or
consigned by any other party (Precious Metal purchased by Buyer pursuant to term
receivable or other financing arrangement which remain unpaid shall be included
as Consigned Precious Metal), (ii) the amount of Precious Metal necessary to
satisfy the aggregate Precious Metal equity requirements of other Consignors,
(iii) Precious Metal included in Balfour Purchased Inventory or the Zale
Consigned Inventory (as defined in the Intercreditor Agreement), and (iv) the
amount of Buyer's Precious Metal, if any, outstanding in the possession of
foreign Subsidiaries or foreign sales representatives in excess of the amount
permitted by Section 12(h) hereof), minus (2) twenty percent (20%) of the
aggregate face amount of all outstanding Forward Contracts."
2. Section 12(m) of the Agreement is hereby amended to read in
its entirety as follows:
"(m) Have more than thirteen thousand (13,000) troy ounces of Precious Metal in
the aggregate at any one time at, or in transit to or from, fabricators and
refiners;..."
3. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenants set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof, and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference the term "this
Agreement" shall be amended to refer to "this Amendment".
4. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
5. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including reasonable fees and
disbursements of its counsel) in connection with the preparation and
implementation of this Amendment.
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by the duly authorized officers as of the date first above written.
L.G. BALFOUR COMPANY, INC.
By:__/s/ Francis X. Correra_______
Title: Executive Vice President
TOWN & COUNTRY CORPORATION
By:__/s/ Francis X. Correra_______
Title: Sr. Vice President & CFO
GOLD LANCE, INC.
By:__/s/ Francis X. Correra_______
Title: Treasurer
TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By:__/s/ Francis X. Correra_______
Title: Vice President
FLEET PRECIOUS METALS INC.
By:__/s/ Anthony J. Capuano_______
Title: Vice President
U:\MPH\TOWN\4AACONAG.WPD
EXHIBIT 10.16
FIFTH AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the _17th_ day of November, 1994, by and between FLEET PRECIOUS METALS
INC., a Rhode Island corporation ("Consignor"); and TOWN & COUNTRY CORPORATION,
a Massachusetts corporation ("T&C"), TOWN & COUNTRY FINE JEWELRY GROUP, INC.,
Massachusetts corporation ("Group"), L.G. BALFOUR COMPANY, INC., a Delaware
corporation ("Balfour") and GOLD LANCE, INC., a Massachusetts corporation
("GLI") (T&C, Group, Balfour and GLI are hereinafter referred to, jointly and
severally, as "Buyer").
W I T N E S S T H T H A T:
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993, as previously amended by a
certain First Amendment to Amended and Restated Consignment Agreement dated as
of October 20, 1993, a certain Second Amendment to Amended and Restated
Consignment Agreement dated as of December 1, 1993, a certain Third Amendment to
Amended and Restated Consignment Agreement dated as of July 20, 1994, a certain
Fourth Amendment to Amended and Restated Consignment Agreement dated August 31,
1994, (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. The definition of "Consignment Limit" set forth in the
Section one of the Agreement is hereby amended to read in its
entirety as follows:
""Consignment Limit" shall mean that amount calculated from time to time as
(1) the least of :
(a) (i) prior to December 1, 1994, Forty-five Thousand (45,000) troy
ounces of fine gold, (ii) from December 1, 1994, through and including December
31, 1994, thirty-eight thousand four hundred two (38,402) troy ounces of fine
gold,
<PAGE>
(iii) from January 1, 1995 through and including January 31, 1995, thirty-seven
thousand two hundred twenty-seven (37,227) troy ounces of fine gold, and (iv)
after January 31, 1995, thirty-six thousand fifty-one (36,051) troy ounces of
fine gold;
(b) subject to the provisions of Section 5 hereof, Consigned Precious
Metal with a Fair Market Value (or unpaid Purchase Price in the case of
Consigned Precious Metals for which the Purchase Price has been agreed but as to
which payment has not been received by Consignor) equal to (i) prior to December
1, 1994, Twenty Million Dollars ($20,000,000); (ii) from December 1, 1994
through and including December 31, 1994, Sixteen Million Three Hundred Twenty
Thousand Eight Hundred Fifty Dollars ($16,320,850); (iii) from January 1, 1995
through and including January 31, 1995, Fifteen Million Eight Hundred Twenty-One
Thousand Four Hundred Seventy-Five Dollars ($15,821,475), and after January 31,
1995, Fifteen Million Three Hundred Twenty-One Thousand Six Hundred Seventy-Five
Dollars ($15,321,675); or
(c) eighty-three percent (83%) of Buyer's inventory of Precious Metals
(including for such purpose, Consigned Precious Metal and, for the purposes of
paragraph 1 of Section 2 hereof, the Precious Metal requested by Buyer but
excluding (i) Precious Metals owned, leased or consigned by any other party
(Precious Metal purchased by Buyer pursuant to term receivable or other
financing arrangement which remain unpaid shall be included as Consigned
Precious Metal), (ii) the amount of Precious Metal necessary to satisfy the
aggregate Precious Metal equity requirements of other Consignors, (iii) Precious
Metal included in Balfour Purchased Inventory or the Zale
<PAGE>
Consigned Inventory (as defined in the Intercreditor Agreement), and (iv) the
amount of Buyer's Precious Metal, if any, outstanding in the possession of
foreign Subsidiaries or foreign sales representatives in excess of the amount
permitted by Section 12(h) hereof),
minus:
(2) twenty percent (20%) of the aggregate face amount of all
outstanding Forward Contracts."
2. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenants set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof, and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference the term "this
Agreement" shall be amended to refer to "this Amendment".
3. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
4. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including reasonable fees and
disbursements of its counsel) in connection with the preparation and
implementation of this Amendment.
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by the duly authorized officers as of the date first above written.
L.G. BALFOUR COMPANY, INC.
By:__/s/ Francis X. Correra_______
Title: Exec. V.P. & Director
TOWN & COUNTRY CORPORATION
By:__/s/ Francis X. Correra_______
Title: Sr. Vice President & CFO
<PAGE>
GOLD LANCE, INC.
By:__/s/ Francis X. Correra_______
Title: Treasurer & Director
TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By:__/s/ Francis X. Correra_______
Title: V.P., Treasurer & Director
FLEET PRECIOUS METALS INC.
By:__/s/ Anthony J. Capuano_______
Title: Vice President
U:\MPH\DOCS\TOWN\5AACONAG.WPD
EXHIBIT 10.18
FIRST AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the 1st day of December , 1993, by and between
RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, a national banking
association ("Consignor"); and
TOWN & COUNTRY CORPORATION, a Massachusetts corporation ("T&C"), TOWN &
COUNTRY FINE JEWELRY GROUP, INC., a Massachusetts corporation ("Group"), L.G.
BALFOUR COMPANY, INC., a Delaware corporation ("Balfour") and GOLD LANCE, INC.,
a Massachusetts corporation ("GLI") (T&C, Group, Balfour and GLI are herein
referred to, jointly and severally, as "Buyer").
W I T N E S S E T H T H A T:
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 12(k) of the Agreement is hereby amended to read in
its entirety as follows:
"(k) Consign or deliver on memo or any similar arrangement Precious
Metal to its customers which, in the aggregate, at any one time exceeds (i)
during the period October 1, 1993, through February 28, 1994, twenty-three
thousand five hundred (23,500) troy ounces of Precious Metal, and (ii) at all
other times, twenty thousand (20,000) troy ounces of Precious Metal (for the
purposes of this subsection (k), Balfour sales representatives' sample lines
will be treated as consignments to customers); ...."
2. Exhibit A to the Agreement is hereby amended to correspond in its
entirety with Exhibit A attached hereto and made a part hereof.
3. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenant set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference, the term "this
Agreement" shall be amended to refer to "this Amendment".
4. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
5. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including the reasonable fees and
disbursements of its counsel) in connection with the preparation and
implementation of this Amendment.
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK
By:__/s/ Ronald A Ferguson__
Title: First Vice President
L.G. BALFOUR COMPANY, INC. TOWN & COUNTRY CORPORATION
By:__/s/ Francis X. Correra__ By:__/s/ Francis X. Correra__
Title: Exec. V.P. & Title: Sr. Vice President
Treasurer & Dir. & CFO
GOLD LANCE, INC. TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By:__/s/ Francis X. Correra__ By:__/s/ Francis X. Correra__
Title: Treasurer Title: V.P. Finance
& Director
WPPAJC-2460
<PAGE>
EXHIBIT A
PERMITTED LOCATIONS
Buyer Locations
Vendors Name Address Address
L.G. Balfour Company, Inc. 10610 Bluegrass Parkway Louisville, KY
L.G. Balfour Company, Inc. 2621 Lone Star Drive Dallas, TX
L.G. Balfour Company, Inc. 30 Frank Mossberg Dr. Attleboro, MA
L.G. Balfour Company, Inc. 25 County Street Attleboro, MA
Feature Enterprises, Inc. 130 West 46th Street New York, NY
Gold Lance, Inc. 1920 North Memorial Dr. Houston, TX
Town & Country Fine
Jewelry Group, Inc. 25 Union Street Chelsea, MA 02150
L.G. Balfour Company, Inc. 100 Messina Dr. Braintree, MA
Town & Country Fine
Jewelry Group, Inc. 14812 Venture Dr. Dallas, TX
Anju Jewelry Limited Block B2, 1/F Hungham, Kowloon,
Kaiser Estate Hong Kong
SUBCONTRACTORS, FABRICATORS, REFINERS
Vendors Name Address Address
ASA Manufacturing 1350 39th Street Brooklyn, NY 11223
Advanced Chemical 105 Bellows Street Warwick, RI 02888
Almond Jewelers 16 West 46th Street New York, NY 10036
AmGold Products 15 West 37th Street New York, NY 10018
Angel Manufacturing 712 S. Olive Street Los Angeles, CA 90014
Anzor 48 W. 48th Street New York, NY 10036
Artamer Co. 205 West 2nd Street Bethlehem, PA 18015
Astro Lite, Inc. P.O. Box 385 Morton Grove, IL 60053
Atamian 910 Plainfield St. Providence, RI 02909
Ben-gee Industries Ltd. 48 West 48th St., New York, NY 10036
Suite 705
Boliden Metech, Inc. P.O. Box 500 Mapleville, RI 02839
Champion Chains, Inc. 2115 Lake Avenue Scotch Plains, NJ 07076
Charms Unlimited 227 West 29th Street New York, NY 10001
Engelhard 101 Wood Avenue Iselin, NJ 08830-0770
Eurospark P.O. Box 8369 Long Island City, NJ
11101
Foreway Products 102 Ocean Avenue Bellmore, NY 11710
General Findings 57 John Dietsch Sq. North Attleboro, MA
02761-0200
Glines and Rhodes 189 East Street Attleboro, MA 02703
Goldring 200 Eighth Street Brooklyn, NY 11215
Grassant (Heraeus) 48-50 Main Street Newark, NJ 071030
Grassmen Blake Inc. 44 Brown Avenue Springfield, NJ 07081
<PAGE>
Hallmark Healy Group 50 Colorado Avenue Warwick, RI 02888
Handy & Harmon 850 Third Avenue New York, NY 10022
Heraeus, Inc. 24 Union Hill Road West Conshohocken, PA
19428
Hereaus Precious Metals 111 Albert Ave. Newark, NJ 07105
Kemp Metal Products, Inc. 2300 Shames Drive Westbury, NY 11590
L.S. Plate & Wire Corp. 70-17 51st Avenue Woodside, NY 11377
Lee's Manufacturing 1700 Smith Street No. Providence, RI 02911
Liberty Plate & Wire 2478 MacDonald Ave. Brooklyn, NY 11223
Loren Castings 2801 Greene Street Hollywood, FL 33020
Marsella Findings 26 Lockhard Ave. Warwick, RI 02886
Metalor 225 John Dietsch Blvd. N. Attleboro, MA 02761
Mid State Recycling 5561 Milton Parkway Rosemont, IL 60018
National Plumb Jewelry Co. 625 S. Hill St. Los Angeles, CA 90014
J.C. Nordt P.O. Box 25549 Richmond, VA 23278
Olef Creations Inc. 75 Varik Street, 7th Flr New York, NY 10014
Omega Casting Corporation 129 West 29th Street New York, NY 10001
PM Refining 505 Pearl Street Buffalo, NY 14202
PPM Industries, Ltd. P.O. Box 5 Albion, RI 02802
Pease & Curran 75 Pennsylvania Ave. Warwick, RI 02888
RFE Industries Foot of Jersey Ave. Jersey City, NJ 07302
Robert Baxter & Associates 200 Jefferson Blvd. Warwick, RI 02888
Ronald Litoff 49 West 45th Street New York, NY 10036
Samuel Moore Company, Inc. 4 Edward Street Providence, RI 02904
SO Metals Refining Co. 245 West 29th Street New York, NY 10001
Stamprite 620 West 39th Street New York, NY 10018
Stern Metal/Stern Leach 320 Washington Street Mt. Vernon, NY 10553
Stern Leach 49 Pearl Street Attleboro, MA 02703
Stuller Settings P.O. Box 52583 Lafayette, LA
70505-2583
Suraj Diamond Ind. Ltd. 1212 Avenue of the New York, NY 10036
Americas
Taylor Stamping 250 West Broadway New York, NY 10013
Volk 55 Access Road Warwick, RI 02886
EXHIBIT 10.19
SECOND AMENDMENT TO
AMENDED AND RESTATED CONSIGNMENT AGREEMENT
This SECOND AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT
("Second Amendment") is made and entered into this thirteenth day of July 1994
(the "Closing Date") by and between RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, a
national banking association with its principal office at One Hospital Trust
Plaza, Providence, Rhode Island 02903 ("Consignor") and TOWN & COUNTRY
CORPORATION, a Massachusetts corporation ("T&C"), TOWN & COUNTRY FINE JEWELRY
GROUP, INC., a Massachusetts corporation ("Group"), L.G. BALFOUR COMPANY, INC.,
a Delaware corporation ("Balfour"), and GOLD LANCE, INC., a Massachusetts
corporation ("GLI") (T&C, Group, Balfour and GLI are herein referred to, jointly
and severally, as "Buyer").
BACKGROUND
A. Buyer and Consignor are parties to that certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (as it has been amended from time
to time, the "Existing Consignment Agreement") and certain related security and
other documents (the "Consignment Documents") pursuant to which Consignor has
provided Buyer with a gold consignment facility.
B. Buyer and Consignor desire to amend and modify the terms of
the Existing Consignment Agreement in certain respects.
C. In order to document these amendments and modifications,
Consignor and Buyer have agreed to enter into this Second
Amendment.
NOW, THEREFORE, incorporating the foregoing Background by reference, for
good and valuable consideration, the receipt and legal sufficiency of which is
hereby acknowledged, Consignor and Buyer agree as follows:
AMENDMENTS TO EXISTING AGREEMENT
1. The definition of "Consignment Limit" contained in Section 1 of the
Existing Consignment Agreement is hereby deleted in its entirety and a new
definition is hereby added as follows:
<PAGE>
"Consignment Limit" shall mean the least of (a) thirty-one thousand
(31,000) troy ounces of fine gold, (b) subject to the provisions of Section 5
hereof, Consigned Precious Metal with a Fair Market Value (or unpaid Purchase
Price in the case of Consigned Precious Metal for which the Purchase Price has
been agreed but as to which payment has not been received by Consignor) equal to
Thirteen Million One Hundred Seventy-five Thousand Dollars ($13,175,000), or (c)
eighty-three percent (83%) (provided, however, that for a period of 90
consecutive days during the period from December 1, 1993 through February 28,
1994, such percentage shall be eighty-five percent (85%)) of Buyer's inventory
of Precious Metal (including, for such purpose, Consigned Precious Metal and,
for the purposes of paragraph 1 of Section 2 hereof, the Precious Metal
requested by Buyer but excluding (i) Precious Metal owned, leased or consigned
by any other party (Precious Metal purchased by Buyer pursuant to term
receivable or other financing arrangements which remain unpaid shall be included
as Consigned Precious Metal), (ii) the amount of Precious Metal necessary to
satisfy the aggregate Precious Metal equity requirements of other consignors,
(iii) Precious Metal included in Balfour Purchased Inventory or the Zale
Consigned Inventory (as each such term is defined in the Intercreditor
Agreement), and (iv) the amount of Buyer's Precious Metal, if any, outstanding
in the possession of foreign Subsidiaries or foreign sales representatives in
excess of the amount permitted by Section 12(h) hereof.
2. Section 12(m) of the Agreement is hereby amended to read in
its entirety as follows:
(m) Have more than thirteen thousand (13,000) troy ounces of Precious
Metal in the aggregate at any one time at, or in transit to or from, fabricators
and refiners;
3. Section 12(n) of the Agreement is hereby amended to read in
its entirety as follows:
(n) Permit at any time its Consolidated Tangible Net Worth to be less
than (i) Forty-three Million Dollars ($43,000,000) through June 30, 1994, or
(ii) Forty Million Dollars ($40,000,000) from July 1, 1994 through November 26,
1994, or (iii) Forty-three Million Dollars ($43,000,000) thereafter;
4. Section 12 of the Agreement is hereby further amended by
adding thereto the following new subsection:
(x) Deliver Precious Metal to fabricators, refiners and subcontractors
not identified on Exhibit A attached hereto in an amount at any time: (i) in the
case of any individual fabricator, refiner or subcontractor, not to exceed one
hundred (100) troy ounces; and (ii) in the aggregate, not to exceed the
difference (if any) between (x) Equity Precious Metal of the Buyer, and (y)
Equity Precious Metal required to be maintained pursuant to Section 11(p)
hereof.
ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
5. Within one week of submission to the Buyer from Consignor of an invoice
therefore, Buyer covenants and agrees, to deliver to Consignor a check made
payable to Consignor in an amount equal to the attorneys fees and costs incurred
by Consignor in connection with the negotiation and preparation of this Second
Amendment.
6. To induce Consignor to enter into this Second Amendment, Buyer hereby
(a) represents and warrants to Consignor that on and as of the date hereof,
Buyer is not in material default of any covenants set forth in the Existing
Consignment Agreement, and (b) except as disclosed in writing to Consignor
contemporaneously with Buyer's execution hereof, restates as of the date hereof
and incorporates herein by reference all representations and warranties set
forth in the Existing Consignment Agreement.
MISCELLANEOUS
7. Except as expressly amended herein, the Existing Consignment Agreement
shall remain in full force and effect and Buyer and Consignor hereby ratify and
confirm their rights, duties, obligations, representations and warranties under
the Existing Consignment Agreement.
<PAGE>
8. Buyer agrees to take such further action to execute and deliver to
Consignor such additional agreements, instruments and documents as may
reasonably be required to carry out the purposes of this Second Amendment.
9. This Second Amendment shall be governed and construed in accordance with
the substantive laws, and not the law of conflicts, of the State of Rhode
Island.
10. The Second Amendment contains the entire agreement among the parties
hereto with respect to the subject matter hereof and may not be modified or
changed in any way except in writing signed by all parties.
<PAGE>
IN WITNESS WHEREOF, Consignor and Buyer have caused this Second
Amendment to be duly executed by their duly authorized officers, all as of the
day and year first above written.
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK
By:_/s/ Jerry Zimmerman________
Name: Jerry Zimmerman
Title: Vice President
TOWN & COUNTRY CORPORATION
By:_/s/ Francis X. Correra ____
Name: Francis X. Correra
Title: SVP & CFO
TOWN & COUNTRY FINE JEWELRY GROUP, INC.
By:_/s/ Francis X. Correra ____
Name: Francis X. Correra
Title: V.P.
L.G. BALFOUR COMPANY, INC.
By:_/s/ Francis X. Correra ____
Name: Francis X. Correra
Title: Executive V.P.
GOLD LANCE, INC.
By:_/s/ Francis X. Correra ____
Name: Francis X. Correra
Title: Treasurer
65455.2
EXHIBIT 10.20
THIRD AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT
This THIRD AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT ("Third
Amendment") is made and entered into this 15
day of November 1994 (the "Closing Date"), by and between RHODE ISLAND
HOSPITAL TRUST NATIONAL BANK, a national banking association with its principal
office at One Hospital Trust Plaza, Providence, Rhode Island 02903 ("Consignor")
and TOWN & COUNTRY CORPORATION, a Massachusetts corporation ("T&C"), TOWN &
COUNTRY FINE JEWELRY GROUP, INC., a Massachusetts corporation ("Group"), L.G.
BALFOUR COMPANY, INC., a Delaware corporation ("Balfour"), and GOLD LANCE, INC.,
a Massachusetts corporation ("GLI") (T&C, Group, Balfour and GLI are herein
referred to, jointly and severally, as "BUYER").
BACKGROUND
A. Buyer and Consignor are parties to that certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (as it has been amended from time
to time, the "Existing Consignment Agreement") and certain related security and
other documents (collectively, the "Consignment Documents") pursuant to which
Consignor has provided Buyer with a gold consignment facility.
B. Buyer and Consignor desire to amend and modify the terms of
the Existing Consignment Agreement in certain respects.
C. In order to document these amendments and modifications,
Consignor and Buyer have agreed to enter into this Third
Amendment.
NOW, THEREFORE, incorporating the foregoing Background by reference, for
good and valuable consideration, the receipt and legal sufficiency of which is
hereby acknowledged, Consignor and Buyer agree as follows:
AMENDMENTS TO EXISTING AGREEMENT
1. The definition of "Consignment Limit" contained in Section 1 of the
Existing Consignment Agreement is hereby deleted in its entirety and a new
definition is hereby added as follows:
<PAGE>
"Consignment Limit" shall mean the least of:
(a) (i) prior to December 1, 1994, thirty-one thousand (31,000) troy
ounces of fine gold; (ii) as of December 1, 1994, twenty-four thousand five
hundred (24,500) troy ounces of fine gold; (iii) as of January 1, 1995,
twenty-three thousand seven hundred and fifty (23,750) troy ounces of fine gold;
and (iv) as of February 1, 1995 and at all times thereafter, twenty-three
thousand (23,000) troy ounces of find [sic] gold;
(b) subject to provisions of Section 5 hereof, Consigned Precious
Metal with a Fair Market Value (or unpaid Purchase Price in the case of
Consigned Precious Metal for which the Purchase Price has been agreed but as to
which payment has not been received by Consignor) equal to (i) prior to December
1, 1994, Thirteen Million One Hundred Seventy-five Thousand Dollars
($13,175,000); (ii) as of December 1, 1994, Ten Million Four Hundred Twelve
Thousand Five Hundred Dollars ($10,412,500); (iii) as of January 1, 1995, Ten
Million Ninety-three Thousand Seven Hundred Fifty Dollars ($10,093,750); and
(iv) as of February 1, 1995, Nine Million Seven Hundred Seventy-Five Thousand
Dollars ($9,775,000); or
(c) eighty-three percent (83%) (provided, however, that for a period
of 90 consecutive days during the period from December 1, 1994 through February
28, 1995, such percentage shall be eighty five percent (85%)) of Buyer's
inventory of Precious Metal (including, for such purpose, Consigned Precious
Metal and, for the purposes of paragraph 1 of Section 2 hereof, the Precious
Metal requested by Buyer but excluding (i) Precious Metal owned, leased or
consigned by any other party (Precious Metal purchased by Buyer pursuant to term
receivable or other financing arrangements which remain unpaid shall be included
as Consigned Precious Metal), (ii) the amount of Precious Metal necessary to
satisfy the aggregate Precious Metal equity requirements of other consignors,
(iii) Precious Metal included in Balfour Purchased Inventory or the Zale
Consigned Inventory (as each such term is defined in the Intercreditor
Agreement), and (iv) the amount of Buyer's Precious Metal, if any, outstanding
in the possession of foreign Subsidiaries or foreign sales representatives in
excess of the amount permitted by Section 12(h) hereof.
ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
2. Within one week of submission to the Buyer from Consignor of an invoice
therefore, Buyer covenants and agrees to deliver to Consignor a check made
payable to Consignor in an amount equal to the attorneys fees and costs incurred
by Consignor in connection with the negotiation and preparation of this Third
Amendment.
3. To induce Consignor to enter into this Third Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenant set forth in the Existing Consignment
Agreement, and (b) except as disclosed in writing to Consignor contemporaneously
with Buyer's execution hereof, restates as of the date hereof and incorporates
herein by reference all representations and warranties set forth in the Existing
Consignment Agreement.
MISCELLANEOUS
4. Except as expressly amended herein, the Existing Consignment Agreement
shall remain in full force and effect and Buyer and Consignor hereby ratify and
confirm their rights, duties, obligations, representations and warranties under
the Existing Consignment Agreement.
5. Buyer agrees to take such further action to execute and deliver to
Consignor such additional agreements, instruments and documents as may
reasonably be required to carry out the purposes of this Third Amendment.
6. This Third Amendment shall be governed and construed in accordance with
the substantive laws, and not the law of conflicts, of the State of Rhode
Island.
<PAGE>
7. The Third Amendment contains the entire agreement among the parties
hereto with respect to the subject matter hereof and may not be modified or
changed in any way except in writing signed by all parties.
IN WITNESS WHEREOF, Consignor and Buyer have caused this Third Amendment to
be duly executed by their duly authorized officers, all as of the day and year
first above written.
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK
By:_/s/ Jerry Zimmerman________
Name: Jerry Zimmerman
Title: Vice President
TOWN & COUNTRY CORPORATION
By:_/s/ Francis X. Correra ____
Name: Francis X. Correra
Title: SVP & CFO
TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By:_/s/ Francis X. Correra ____
Name: Francis X. Correra
Title: VP & Treasurer
L.G. BALFOUR COMPANY, INC.
By:_/s/ Francis X. Correra ____
Name: Francis X. Correra
Title: Executive VP & Treasurer
GOLD LANCE, INC.
By:_/s/ Francis X. Correra ____
Name: Francis X. Correra
Title: Treasurer
PH1\96674.1
EXHIBIT 10.22
FIRST AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the 1st day of December , 1993, by and between
ABN AMRO BANK N.V., a bank organized under the laws of The Netherlands
acting through its New York Branch ("Consignor"); and
TOWN & COUNTRY CORPORATION, a Massachusetts corporation ("T&C"), TOWN &
COUNTRY FINE JEWELRY GROUP, INC., a Massachusetts corporation ("Group"), L.G.
BALFOUR COMPANY, INC., a Delaware corporation ("Balfour") and GOLD LANCE, INC.,
a Massachusetts corporation ("GLI") (T&C, Group, Balfour and GLI are herein
referred to, jointly and severally, as "Buyer").
W I T N E S S E T H T H A T:
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 12(k) of the Agreement is hereby amended to read in
its entirety as follows:
"(k) Consign or deliver on memo or any similar arrangement Precious
Metal to its customers which, in the aggregate, at any one time exceeds (i)
during the period October 1, 1993, through February 28, 1994, twenty-three
thousand five hundred (23,500) troy ounces of Precious Metal, and (ii) at all
other times, twenty thousand (20,000) troy ounces of Precious Metal (for the
purposes of this subsection (k), Balfour sales representatives' sample lines
will be treated as consignments to customers); ...."
2. Exhibit A to the Agreement is hereby amended to correspond in its
entirety with Exhibit A attached hereto and made a part hereof.
3. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenant set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference, the term "this
Agreement" shall be amended to refer to "this Amendment".
4. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
5. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including the reasonable fees and
disbursements of its counsel) in connection with the preparation and
implementation of this Amendment.
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
ABN AMRO BANK N.V.
By:__/s/ __
Title:
L.G. BALFOUR COMPANY, INC. TOWN & COUNTRY CORPORATION
By:__/s/ Francis X. Correra__ By:__/s/ Francis X. Correra__
Title: Exec. V.P. & Title: Sr. Vice President
Treasurer & Dir. & CFO
GOLD LANCE, INC. TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By:__/s/ Francis X. Correra__ By:__/s/ Francis X. Correra__
Title: Treasurer Title: V.P. Finance
& Director
WPPAJC-2460
<PAGE>
EXHIBIT A
PERMITTED LOCATIONS
Buyer Locations
Vendors Name Address Address
L.G. Balfour Company, Inc. 10610 Bluegrass Parkway Louisville, KY
L.G. Balfour Company, Inc. 2621 Lone Star Drive Dallas, TX
L.G. Balfour Company, Inc. 30 Frank Mossberg Dr. Attleboro, MA
L.G. Balfour Company, Inc. 25 County Street Attleboro, MA
Feature Enterprises, Inc. 130 West 46th Street New York, NY
Gold Lance, Inc. 1920 North Memorial Dr. Houston, TX
Town & Country Fine
Jewelry Group, Inc. 25 Union Street Chelsea, MA 02150
L.G. Balfour Company, Inc. 100 Messina Dr. Braintree, MA
Town & Country Fine
Jewelry Group, Inc. 14812 Venture Dr. Dallas, TX
Anju Jewelry Limited Block B2, 1/F Hungham, Kowloon,
Kaiser Estate Hong Kong
SUBCONTRACTORS, FABRICATORS, REFINERS
Vendors Name Address Address
ASA Manufacturing 1350 39th Street Brooklyn, NY 11223
Advanced Chemical 105 Bellows Street Warwick, RI 02888
Almond Jewelers 16 West 46th Street New York, NY 10036
AmGold Products 15 West 37th Street New York, NY 10018
Angel Manufacturing 712 S. Olive Street Los Angeles, CA 90014
Anzor 48 W. 48th Street New York, NY 10036
Artamer Co. 205 West 2nd Street Bethlehem, PA 18015
Astro Lite, Inc. P.O. Box 385 Morton Grove, IL 60053
Atamian 910 Plainfield St. Providence, RI 02909
Ben-gee Industries Ltd. 48 West 48th St., New York, NY 10036
Suite 705
Boliden Metech, Inc. P.O. Box 500 Mapleville, RI 02839
Champion Chains, Inc. 2115 Lake Avenue Scotch Plains, NJ 07076
Charms Unlimited 227 West 29th Street New York, NY 10001
Engelhard 101 Wood Avenue Iselin, NJ 08830-0770
Eurospark P.O. Box 8369 Long Island City, NJ
11101
Foreway Products 102 Ocean Avenue Bellmore, NY 11710
General Findings 57 John Dietsch Sq. North Attleboro, MA
02761-0200
Glines and Rhodes 189 East Street Attleboro, MA 02703
Goldring 200 Eighth Street Brooklyn, NY 11215
Grassant (Heraeus) 48-50 Main Street Newark, NJ 071030
Grassmen Blake Inc. 44 Brown Avenue Springfield, NJ 07081
<PAGE>
Hallmark Healy Group 50 Colorado Avenue Warwick, RI 02888
Handy & Harmon 850 Third Avenue New York, NY 10022
Heraeus, Inc. 24 Union Hill Road West Conshohocken, PA
19428
Hereaus Precious Metals 111 Albert Ave. Newark, NJ 07105
Kemp Metal Products, Inc. 2300 Shames Drive Westbury, NY 11590
L.S. Plate & Wire Corp. 70-17 51st Avenue Woodside, NY 11377
Lee's Manufacturing 1700 Smith Street No. Providence, RI 02911
Liberty Plate & Wire 2478 MacDonald Ave. Brooklyn, NY 11223
Loren Castings 2801 Greene Street Hollywood, FL 33020
Marsella Findings 26 Lockhard Ave. Warwick, RI 02886
Metalor 225 John Dietsch Blvd. N. Attleboro, MA 02761
Mid State Recycling 5561 Milton Parkway Rosemont, IL 60018
National Plumb Jewelry Co. 625 S. Hill St. Los Angeles, CA 90014
J.C. Nordt P.O. Box 25549 Richmond, VA 23278
Olef Creations Inc. 75 Varik Street, 7th Flr New York, NY 10014
Omega Casting Corporation 129 West 29th Street New York, NY 10001
PM Refining 505 Pearl Street Buffalo, NY 14202
PPM Industries, Ltd. P.O. Box 5 Albion, RI 02802
Pease & Curran 75 Pennsylvania Ave. Warwick, RI 02888
RFE Industries Foot of Jersey Ave. Jersey City, NJ 07302
Robert Baxter & Associates 200 Jefferson Blvd. Warwick, RI 02888
Ronald Litoff 49 West 45th Street New York, NY 10036
Samuel Moore Company, Inc. 4 Edward Street Providence, RI 02904
SO Metals Refining Co. 245 West 29th Street New York, NY 10001
Stamprite 620 West 39th Street New York, NY 10018
Stern Metal/Stern Leach 320 Washington Street Mt. Vernon, NY 10553
Stern Leach 49 Pearl Street Attleboro, MA 02703
Stuller Settings P.O. Box 52583 Lafayette, LA 70505-2583
Suraj Diamond Ind. Ltd. 1212 Avenue of the New York, NY 10036
Americas
Taylor Stamping 250 West Broadway New York, NY 10013
Volk 55 Access Road Warwick, RI 02886
EXHIBIT 10.23
SECOND AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the day of August, 1994, by and between ABN AMRO BANK N.V., a bank
organized under the laws of The Netherlands acting through its New York Branch
("Consignor") and TOWN & COUNTRY CORPORATION, a Massachusetts corporation
("T&C"), TOWN & COUNTRY FINE JEWELRY GROUP, INC., a Massachusetts corporation
("Group"), L.G. BALFOUR COMPANY, INC., a Delaware corporation ("Balfour") and
GOLD LANCE, INC., a Massachusetts corporation ("GLI") (T&C, Group, Balfour and
GLI are herein referred to, jointly and severally, as "Buyer").
W I T N E S S E T H T H A T
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (as amended from time to time,
the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as hereinafter
set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 1 of the Agreement is hereby amended by deleting the definition
"Consignment Limit" appearing therein in its entirety and substituting therefor
the following:
"`Consignment Limit' shall mean the least of (a) Twenty Five Thousand
(25,000) troy ounces of fine gold, (b) subject to the provisions of Section 5
hereof, Consigned Precious Metal with a Fair Market Value (or unpaid Purchase
Price in the case of Consigned Precious Metal for which the Purchase Price has
been agreed but as to which payment has not been received by Consignor) equal to
Ten Million Six Hundred Twenty-Five Thousand Dollars ($10,625,000), or (c)
eighty- three percent (83%) of Buyer's inventory of Precious Metal (including,
for such purpose, Consigned Precious Metal and, for the purposes of paragraph 1
of Section 2 hereof, the Precious Metal requested by Buyer but excluding (i)
Precious Metal owned, leased or consigned by any other party (Precious Metal
purchased by Buyer pursuant to term receivable or other financing arrangements
which remain unpaid shall be included as Consigned Precious Metal), (ii) the
amount of Precious Metal necessary to satisfy the aggregate Precious Metal
equity requirements of other consignors, (iii) Precious Metal included in
Balfour Purchased Inventory or the Zale Consigned Inventory (as each such term
is defined in the Intercreditor Agreement), and (iv) the amount of Buyer's
Precious Metal, if any, outstanding in the possession of foreign Subsidiaries or
foreign sales representatives in excess of the amount permitted by Section 12(h)
hereof."
2. Section 12(m) of the Agreement is hereby amended to read in
its entirety as follows:
"(m) Have more than thirteen thousand (13,000) troy ounces of Precious
Metal in the aggregate at any one time at, or in transit to or from, fabricators
and refiners;"
3. Section 11(p) of the Agreement is hereby amended to read in
its entirety as follows:
"(p) Maintain at all times Equity Precious Metal (i) in an aggregate
amount equal to or greater than the aggregate quantity of Precious Metal of
Buyer outstanding (A) on consignment to foreign Subsidiaries, (B) in possession
of foreign sales representatives or otherwise outside of the United States, (C)
on memo or consignment to customers of Buyer, plus (D) in the possession of
fabricators, refiners and subcontractors not identified on Exhibit A attached
hereto, and (ii) with respect to other Precious Metal consignors, lenders or the
like (including, without limitation, the Metal Consignors) in amounts which
would be required by such parties (as may or may not be the case) as if the
advance rates in their consignment or lease agreements were the same as the
rates included in, and computed and defined in the same manner as set forth in,
the definition of "Consignment Limit" herein. For the purpose of computing
compliance with this Section, any Precious Metal purchased by Buyer pursuant to
any term receivable or other financing arrangements which remain unpaid will be
treated as consigned Precious Metal;"
4. Section 12 of the Agreement is hereby further amended by
adding thereto the following new subsection:
"(x) Deliver Precious Metal to any fabricator, refiner or
subcontractor not identified on Exhibit A attached hereto in an amount at any
time in excess of one hundred (100) troy ounces."
5. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenant set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference, the term "this
Agreement" shall be amended to refer to "this Amendment".
6. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
7. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including the reasonable fees and
disbursements of its counsel) in connection with the preparation and implements
of this Amendment.
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
ABN AMRO BANK N.V.
By: /s/
Title:
By: /s/
Title:
L.G. BALFOUR COMPANY, INC. TOWN & COUNTRY CORPORATION
By: /s/ Francis X. Correra By: /s/ Francis X. Correra
Title: Executive V.P., Title: Senior V.P. & CFO
Treasurer & Director
GOLD LANCE, INC. TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By: /s/ Francis X. Correra By: /s/ Francis X. Correra
Title: Treasurer & Director Title: V.P., Treasurer,
& Director
101255.c1
8/8/94 11:51 am
EXHIBIT 10.25
FIRST AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the 1st day of December , 1993, by and between
REPUBLIC NATIONAL BANK OF NEW YORK, a national banking
association ("Consignor"); and
TOWN & COUNTRY CORPORATION, a Massachusetts corporation ("T&C"), TOWN &
COUNTRY FINE JEWELRY GROUP, INC., a Massachusetts corporation ("Group"), L.G.
BALFOUR COMPANY, INC., a Delaware corporation ("Balfour") and GOLD LANCE, INC.,
a Massachusetts corporation ("GLI") (T&C, Group, Balfour and GLI are herein
referred to, jointly and severally, as "Buyer").
W I T N E S S E T H T H A T:
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 12(k) of the Agreement is hereby amended to read in
its entirety as follows:
"(k) Consign or deliver on memo or any similar arrangement Precious
Metal to its customers which, in the aggregate, at any one time exceeds (i)
during the period October 1, 1993, through February 28, 1994, twenty-three
thousand five hundred (23,500) troy ounces of Precious Metal, and (ii) at all
other times, twenty thousand (20,000) troy ounces of Precious Metal (for the
purposes of this subsection (k), Balfour sales representatives' sample lines
will be treated as consignments to customers); ...."
2. Exhibit A to the Agreement is hereby amended to correspond in its
entirety with Exhibit A attached hereto and made a part hereof.
3. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenant set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference, the term "this
Agreement" shall be amended to refer to "this Amendment".
4. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
5. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including the reasonable fees and
disbursements of its counsel) in connection with the preparation and
implementation of this Amendment.
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
REPUBLIC NATIONAL BANK OF
NEW YORK
By:__/s/ Daniel E. Mahni_ _
Title: First Vice President
L.G. BALFOUR COMPANY, INC. TOWN & COUNTRY CORPORATION
By:__/s/ Francis X. Correra__ By:__/s/ Francis X. Correra__
Title: Exec. V.P. & Title: Sr. Vice President
Treasurer & Dir. & CFO
GOLD LANCE, INC. TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By:__/s/ Francis X. Correra__ By:__/s/ Francis X. Correra__
Title: Treasurer Title: V.P. Finance
& Director
WPPAJC-2460
EXHIBIT A
PERMITTED LOCATIONS
Buyer Locations
Vendors Name Address Address
L.G. Balfour Company, Inc. 10610 Bluegrass Parkway Louisville, KY
L.G. Balfour Company, Inc. 2621 Lone Star Drive Dallas, TX
L.G. Balfour Company, Inc. 30 Frank Mossberg Dr. Attleboro, MA
L.G. Balfour Company, Inc. 25 County Street Attleboro, MA
Feature Enterprises, Inc. 130 West 46th Street New York, NY
Gold Lance, Inc. 1920 North Memorial Dr. Houston, TX
Town & Country Fine
Jewelry Group, Inc. 25 Union Street Chelsea, MA 02150
L.G. Balfour Company, Inc. 100 Messina Dr. Braintree, MA
Town & Country Fine
Jewelry Group, Inc. 14812 Venture Dr. Dallas, TX
Anju Jewelry Limited Block B2, 1/F Hungham, Kowloon,
Kaiser Estate Hong Kong
SUBCONTRACTORS, FABRICATORS, REFINERS
Vendors Name Address Address
ASA Manufacturing 1350 39th Street Brooklyn, NY 11223
Advanced Chemical 105 Bellows Street Warwick, RI 02888
Almond Jewelers 16 West 46th Street New York, NY 10036
AmGold Products 15 West 37th Street New York, NY 10018
Angel Manufacturing 712 S. Olive Street Los Angeles, CA 90014
Anzor 48 W. 48th Street New York, NY 10036
Artamer Co. 205 West 2nd Street Bethlehem, PA 18015
Astro Lite, Inc. P.O. Box 385 Morton Grove, IL 60053
Atamian 910 Plainfield St. Providence, RI 02909
Ben-gee Industries Ltd. 48 West 48th St., New York, NY 10036
Suite 705
Boliden Metech, Inc. P.O. Box 500 Mapleville, RI 02839
Champion Chains, Inc. 2115 Lake Avenue Scotch Plains, NJ 07076
Charms Unlimited 227 West 29th Street New York, NY 10001
Engelhard 101 Wood Avenue Iselin, NJ 08830-0770
Eurospark P.O. Box 8369 Long Island City, NJ
11101
Foreway Products 102 Ocean Avenue Bellmore, NY 11710
General Findings 57 John Dietsch Sq. North Attleboro, MA
02761-0200
Glines and Rhodes 189 East Street Attleboro, MA 02703
Goldring 200 Eighth Street Brooklyn, NY 11215
Grassant (Heraeus) 48-50 Main Street Newark, NJ 071030
Grassmen Blake Inc. 44 Brown Avenue Springfield, NJ 07081
<PAGE>
Hallmark Healy Group 50 Colorado Avenue Warwick, RI 02888
Handy & Harmon 850 Third Avenue New York, NY 10022
Heraeus, Inc. 24 Union Hill Road West Conshohocken, PA
19428
Hereaus Precious Metals 111 Albert Ave. Newark, NJ 07105
Kemp Metal Products, Inc. 2300 Shames Drive Westbury, NY 11590
L.S. Plate & Wire Corp. 70-17 51st Avenue Woodside, NY 11377
Lee's Manufacturing 1700 Smith Street No. Providence, RI 02911
Liberty Plate & Wire 2478 MacDonald Ave. Brooklyn, NY 11223
Loren Castings 2801 Greene Street Hollywood, FL 33020
Marsella Findings 26 Lockhard Ave. Warwick, RI 02886
Metalor 225 John Dietsch Blvd. N. Attleboro, MA 02761
Mid State Recycling 5561 Milton Parkway Rosemont, IL 60018
National Plumb Jewelry Co. 625 S. Hill St. Los Angeles, CA 90014
J.C. Nordt P.O. Box 25549 Richmond, VA 23278
Olef Creations Inc. 75 Varik Street, 7th Flr New York, NY 10014
Omega Casting Corporation 129 West 29th Street New York, NY 10001
PM Refining 505 Pearl Street Buffalo, NY 14202
PPM Industries, Ltd. P.O. Box 5 Albion, RI 02802
Pease & Curran 75 Pennsylvania Ave. Warwick, RI 02888
RFE Industries Foot of Jersey Ave. Jersey City, NJ 07302
Robert Baxter & Associates 200 Jefferson Blvd. Warwick, RI 02888
Ronald Litoff 49 West 45th Street New York, NY 10036
Samuel Moore Company, Inc. 4 Edward Street Providence, RI 02904
SO Metals Refining Co. 245 West 29th Street New York, NY 10001
Stamprite 620 West 39th Street New York, NY 10018
Stern Metal/Stern Leach 320 Washington Street Mt. Vernon, NY 10553
Stern Leach 49 Pearl Street Attleboro, MA 02703
Stuller Settings P.O. Box 52583 Lafayette, LA 70505-2583
Suraj Diamond Ind. Ltd. 1212 Avenue of the New York, NY 10036
Americas
Taylor Stamping 250 West Broadway New York, NY 10013
Volk 55 Access Road Warwick, RI 02886
EXHIBIT 10.26
SECOND AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CONSIGNMENT AGREEMENT is made
as of the day of July, 1994, by and between REPUBLIC NATIONAL BANK OF NEW YORK,
a national banking association ("Consignor") and TOWN & COUNTRY REPUBLIC
NATIONAL BANK OF NEW YORK CORPORATION, a Massachusetts corporation ("T&C"), TOWN
& COUNTRY FINE JEWELRY GROUP, INC., a Massachusetts corporation ("Group"), L.G.
BALFOUR COMPANY, INC., a Delaware corporation ("Balfour") and GOLD LANCE, INC.,
a Massachusetts corporation ("GLI") (T&C, Group, Balfour and GLI are herein
referred to, jointly and severally, as "Buyer").
W I T N E S S E T H T H A T
WHEREAS, Consignor and Buyer are parties to a certain Amended and Restated
Consignment Agreement dated as of May 14, 1993 (as amended from time to time,
the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as hereinafter
set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 12(m) of the Agreement is hereby amended to read in
its entirety as follows:
"(m) Have more than thirteen thousand (13,000) troy ounces of Precious
Metal in the aggregate at any one time at, or in transit to or from, fabricators
and refiners;"
2. Section 12(n) of the Agreement is hereby amended to read in
its entirety as follows:
"(n) Permit at any time its Consolidated Tangible Net Worth to be less
than (i) Forty-three Million Dollars through June 30, 1994, or (ii) Forty
Million Dollars ($40,000,000) from July 1, 1994 through November 26, 1994, or
(iii) Forty-three Million Dollars ($43,000,000) thereafter;"
3. Section 12 of the Agreement is hereby further amended by
adding thereto the following new subsection:
"(x) Deliver Precious Metal to fabricators, refiners and
subcontractors not identified on Exhibit A attached hereto in an amount at any
time: (i) in the case of any individual fabricator, refiner or subcontractor,
not to exceed one hundred (100) troy ounces; and (ii) in the aggregate, not to
exceed the difference (if any) between (x) Equity Precious Metal of the Buyer,
and (y) Equity Precious Metal required to be maintained pursuant to Section
11(p) hereof."
4. To induce Consignor to enter into this Amendment, Buyer hereby (a)
represents and warrants to Consignor that on and as of the date hereof, Buyer is
not in material default of any covenant set forth in the Agreement, and (b)
except as disclosed in writing to Consignor contemporaneously with Buyer's
execution hereof, restates as of the date hereof and incorporates herein by
reference all representations and warranties set forth in the Agreement, except
that for the purposes of such incorporation by reference, the term "this
Agreement" shall be amended to refer to "this Amendment".
5. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
6. Buyer hereby covenants and agrees to pay all out-of-pocket expenses,
costs and charges incurred by Consignor (including the reasonable fees and
disbursements of its counsel) in connection with the preparation and implements
of this Amendment.
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
REPUBLIC NATIONAL BANK
OF NEW YORK
By: /s/ Robert Castro
Title: Asst. Vice President
<PAGE>
L.G. BALFOUR COMPANY, INC. TOWN & COUNTRY CORPORATION
By: /s/ C. William Carey By: /s/ C. William Carey
Title: President and Title: President, CEO,
Chairman and Chairman
GOLD LANCE, INC. TOWN & COUNTRY FINE JEWELRY
GROUP, INC.
By: /s/ C. William Carey By: /s/ C. William Carey
Title: Chairman & CEO Title: President
92437.c1
7/1/94 1:18 pm
EXHIBIT 10.27
November , 1994
Town & Country Corporation
Town & Country Fine Jewelry Group, Inc.
L.G. Balfour Company, Inc.
Gold Lance, Inc.
25 Union Street
Chelsea, Massachusetts 02150
Attention: Mr. Robert Hannon
Chief Financial Officer
Re: Amended and Restated Collateral Sharing Agreement
dated as of May 14, 1983, by and among Fleet Precious
Metals Inc. ("Fleet") and various consignors (the
"Collateral Sharing Agreement") and the Consignment
Agreements (as defined in the Collateral Sharing
Agreement).
Gentlemen:
Reference is made herein to the Consignment Agreements and to a certain
letter dated October 18, 1994 (the "Termination Notice") sent by Rhode Island
Hospital Trust National Bank ("RIHT") to Town & Country Corporation, Town &
Country Fine Jewelry Group, Inc., L.G. Balfour Company, Inc. and Gold Lance,
Inc. (collectively, the "Company") whereby RIHT indicated that it intended to
terminate the Consignment Agreement between RIHT and the Company (the "RIHT
Consignment Agreement"). This letter will confirm our understanding that RIHT
has advised the Company and Fleet, as Agent under the Collateral Sharing
Agreement that it intends to rescind said Termination Notice and that RIHT and
the other Consignors hereby agree that in the absence of the occurrence of an
Event of Default (as defined in the Consignment Agreements), the Consignors
shall not terminate the Consignment Agreements on or before February 1, 1995,
provided the following terms and conditions are met:
1. The Company shall reduce the outstanding balance of gold on consignment
under each of the Consignment Agreements to the amounts specified as the of the
dates specified:
Fleet RIHT ABN Republic
December 1, 1994 38,402 fto 24,500 fto 9,013 fto 6,215 fto
January 1, 1995 37,227 fto 23,750 fto 8,692 fto 6,105 fto
February 1, 1995 36,051 fto 23,000 fto 8,461 fto 5,835 fto
2. On or before February 1, 1995, the Company shall supply to
the Consignors a business plan for L.G. Balfour Company, Inc.
which is reasonably satisfactory in all respects to the
Consignors.
3. On or before February 1, 1995, the Company agrees to meet with the
Consignors to discuss terms of their consignment arrangements for the future
year.
Except as expressly provided herein, this letter agreement is entered into
by the parties without prejudice to all rights and remedies Consignors have
under their respective Consignment Agreements, any documents securing the
obligations and indebtedness of the Company to Consignors or at law and nothing
contained in this letter nor in any other communication between or among the
Company and any one or more of the Consignors shall constitute a waiver of any
such rights and remedies.
To evidence your consent to the foregoing, please execute this letter in
the spaces provided below. This letter is effective if signed in counterparts.
Very truly yours,
FLEET PRECIOUS METALS INC.,
individually and as Agent
for the Consignors
By:_____/s/ A. J. Capuano______
Title:__Vice President_________
Accepted and Agreed:
TOWN & COUNTRY CORPORATION RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK
By: /s/Francis X. Correra_ By:____/s/Jerry Zimmerman______
Title:_Sr.V.P. & CFO______ Title:_Vice President__________
TOWN & COUNTRY FINE JEWELRY ABN-AMRO BANK, N.V.
GROUP, INC.
By: /s/Francis X. Correra_ By:____/s/Jeffrey Sarfaty______
Title:_V.P., Treasurer____ Title:_Vice President__________
L.G. BALFOUR COMPANY, INC. REPUBLIC NATIONAL BANK OF NEW YORK
By: /s/Francis X. Correra_ By:____/s/ Daniel E. Mahni_____
Title:_Exec. V.P., Treas._ Title:_Senior Vice President___
GOLD LANCE, INC.
By: /s/Francis X. Correra_
Title:_Treasurer/Director_
EXHIBIT 10.31
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement ("Amendment") dated as of September
28, 1993, is entered into among the parties signatory hereto with reference to
that certain Loan Agreement dated as of May 14, 1993 (the "Agreement"), among
the same parties.
For good and valuable consideration, the undersigned agree that clause (i)
contained within the proviso to the first sentence of Section 7.8 of the
Agreement is amended and restated in its entirety to read as follows: "(i) the
performance by T&C of its mandatory redemption obligations set forth in Sections
3.02, 4.05, 4.08, 4.11, or 4.13 of the Senior Notes Indenture, and/or the
redemption by T&C of Senior Notes pursuant to Section 3.09 of the Senior Notes
Indenture (as added by the First Supplemental Indenture thereto dated as of
August 31, 1993) from "Collateral Proceeds" (as such term is defined in the
Senior Notes Indenture);".
To induce Foothill Capital Corporation ("FCC") to enter into this
Amendment, the undersigned, other than FCC, jointly and severally represent and
warrant to FCC (a) that they have the power and authority to enter into this
Amendment and bind themselves hereto, and (b) that they have obtained all
necessary authorizations and consents to enter into this Amendment such that the
execution, delivery, and performance hereof by them does not and will not
breach, violate, or contravene any law, regulation, agreement, or contract to
which any of them is a party or by which any of them is bound.
This Amendment is a "Loan Document" as such term is defined in the
Agreement.
Except as expressly amended hereby, the Agreement remains in full force and
effect.
This Amendment may be executed and delivered in counterparts in the same
manner as is provided for in Section 15.7 of the Agreement.
[Balance of page intentionally omitted]
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Amendment as of the
date first set forth above.
TOWN & COUNTRY CORPORATION,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Sr. V.P. & CFO_ ___________________
TOWN & COUNTRY FINE JEWELRY GROUP, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Vice President_____________________
GOLD LANCE, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Treasurer__________________________
L.G. BALFOUR COMPANY, INC.,
a Delaware corporation
By__/s/ Francis X. Correra_____________
Its_Exec. V.P._________________________
FOOTHILL CAPITAL CORPORATION,
a California corporation
By__/s/ Lisa M.________________________
Its_A.N._______________________________
H:\bphla\jst\0220256.wp
EXHIBIT 10.32
AMENDMENT NUMBER TWO TO LOAN AGREEMENT
(TOWN & COUNTRY CORPORATION AND SUBSIDIARIES)
THIS AMENDMENT NUMBER TWO TO LOAN AGREEMENT (this "Amendment"), dated as of
June 24, 1994, is entered into between Town & Country Corporation, a
Massachusetts corporation, Town & Country Fine Jewelry Group, Inc., a
Massachusetts corporation, Gold Lance, Inc., a Massachusetts corporation, L.G.
Balfour Company, Inc., a Delaware corporation (which aforesaid corporations,
individually and collectively, jointly and severally, and together with their
successors and assigns, are herein referred to as "Borrower"), and Foothill
Capital Corporation, a California corporation ("Foothill"), in light of the
following:
WHEREAS, Borrower and Foothill are parties to that certain Loan Agreement
dated as of May 14, 1993 (as from time to time amended, modified, supplemented,
renewed, extended, or restated, the "Loan Agreement"); and
WHEREAS, Borrower has requested that certain provisions of the Loan
Agreement be amended, and Foothill has agreed to amend such provisions in
accordance with the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
conditions, and provisions as hereinafter set forth, the parties hereto agree as
follows:
1. Initially capitalized terms used herein have the meanings defined in the
Loan Agreement unless otherwise defined herein.
2. The following definitions contained in Section 1.1 of the Loan Agreement
hereby are amended and restated in their entirety as follows:
"Eligible Accounts" means those Accounts created by a Debtor in the
ordinary course of business that arise out of such Debtor's sale of goods or
rendition of services, that strictly comply with all of Borrower's
representations and warranties to Foothill, and that are and at all times shall
continue to be acceptable to Foothill in all respects (in the reasonable
exercise of its discretion); provided, however, that standards of eligibility
may be fixed and revised from time to time by Foothill (in the reasonable
exercise of its discretion). Eligible Accounts shall not include the following:
(a) Accounts that are more than thirty one (31), but less than
sixty (60) days past due from the due date of the applicable invoices, to the
extent that the aggregate amount of all such Accounts of all of the Debtors
exceeds Five Million Dollars ($5,000,000);
(b) Accounts that the Account Debtor has failed to pay
within sixty (60) days, or more, of the due date of the
applicable invoice;
(c) Accounts originated by Feature or by the EPG division of
Balfour;
(d) Accounts owing by Ames Department Stores, Inc., or Best
Products Co., Inc.; provided, however, that if any of such Persons shall confirm
a plan of reorganization in their respective cases filed under the Bankruptcy
Code, Foothill will, in the reasonable exercise of its discretion, analyze
whether Accounts owed from such Account Debtors should continue to be excluded
under this clause;
(e) Accounts with selling terms of more than ninety (90) days
from the date of the applicable invoice, with the exception of Accounts as to
which Montgomery Ward is the Account Debtor in which case the Accounts will be
ineligible if they contain selling terms of more than one hundred twenty (120)
days from the date of the applicable invoice;
(f) Accounts with respect to which the Account Debtor is an
officer, employee, Affiliate, or agent of any Debtor;
(g) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, bill and hold,
so-called 'special event sales', or other terms by reason of which the payment
by the Account Debtor may be conditional;
(h) Accounts with respect to which the Account Debtor is not a
resident of the United States or Canada, and that are not either (1) covered by
credit insurance in form and amount, and by an insurer, satisfactory to
Foothill, or (2) supported by one or more letters of credit that are assignable
and have been delivered to Foothill in an amount and of a tenor, and issued by a
financial institution, acceptable to Foothill;
(i) Accounts with respect to which the Account Debtor is the
United States or any department, agency, or instrumentality of the United States
and with respect to which Borrower has not complied with the provisions of the
Federal Assignment of Claims Act to assign the right to payment to Foothill, or
Accounts with respect to which the Account Debtor is any state of the United
States or any city, town, municipality, or division thereof;
(j) Accounts with respect to which such Debtor is or is
reasonably likely to become liable to the Account Debtor for goods sold or
services rendered by the Account Debtor to such Debtor; provided, however, that
such Accounts only shall be deemed ineligible under this clause to the extent of
the actual or likely offsetting amount as reasonably determined by Foothill;
(k) Accounts with respect to an Account Debtor whose total
obligations to Borrower exceed ten percent (10%) of all Eligible Accounts owed
to Borrower, to the extent of the obligations of such Account Debtor in excess
of such percentage; provided, however, that, (1) in the case of K-Mart
Corporation, HSN Broadcasting of Illinois, Inc., Wal-Mart Stores, Inc., Sears
Roebuck & Company, and Montgomery Ward, and such other highly creditworthy
Account Debtors as to which Foothill has agreed to in writing, the foregoing
percentage may, in Foothill's reasonable discretion, be increased to up to
twenty percent (20%) before the excess would be deemed ineligible, and (2) in
the case of Zale Corporation and Gordon Jewelry Corporation (collectively with
their respective successors hereinafter "Zale/Gordon"), the foregoing percentage
for Zale/Gordon, on a combined basis, may, in Foothill's reasonable discretion,
be increased to up to fifteen percent (15%) before the excess would be deemed
ineligible;
(l) Accounts with respect to which the Account Debtor disputes
liability or makes any claim with respect thereto, or is subject to any
Insolvency Proceeding, or become insolvent, or goes out of business; provided,
however, that disputed Accounts or Accounts subject to claims only shall be
deemed ineligible under this clause to the extent of the actual or likely
offsetting amount as reasonably determined by Foothill unless Foothill, in the
exercise of its reasonable judgment, believes that the dispute or claim will
jeopardize the repayment of all or substantially all of the Account in a timely
manner;
(m) Accounts which are payable in other than United States
Dollars;
(n) Accounts the collection of which Foothill, in the reasonable
exercise of its judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;
(o) Accounts owed by an Account Debtor that has failed to pay
fifty percent (50%), or more, of its Accounts owed to such Debtor within sixty
(60) days of the due date of the applicable invoices; and
(p) Accounts arising from the sale of Inventory that is proceeds
of the Zale Bankruptcy Claim.
"Eligible Inventory Availability Component means, as of the date any
determination thereof is to be made, and for each individual Debtor, an amount
equal to the lesser of:
(i) seventy-five percent (75%) of the amount of
credit availability created by such Debtor's Net Eligible
Accounts; and
(ii) the sum of:
(y) forty percent (40%) of such Debtor's Eligible Finished
Goods Inventory, plus
(z) forty percent (40%) of such Debtor's Raw Materials
Inventory.
"Maximum Amount" means Thirty Million Dollars ($30,000,000) during
December, January, February, March, April, May, June, and July of any year, and
Thirty Five Million Dollars ($35,000,000) during August, September, October, and
November of any year.
"Maximum Foothill Amount" means that portion of the Maximum Amount for
which Foothill is responsible, exclusive of any participations with
Participants, which amount is Seventeen Million Five Hundred Thousand Dollars
($17,500,000) during December, January, February, March, April, May, June, and
July of any year, and Twenty Million Four Hundred Sixteen Thousand Six Hundred
Sixty Seven Dollars ($20,416,667) during August, September, October, and
November of any year; provided, however, that each time the Maximum Aount [sic]
is reduced pursuant to Section 2.3 hereof, the Maximum Foothill Amount shall be
reduced proportionately.
3. Section 2.1 of the Loan Agreement hereby is amended and
restated in its entirety to read as follows:
"2.1 Revolving Advances. Subject to the terms and conditions of
this Agreement, and so long as no Event of Default has occurred and is
continuing, Foothill agrees to make revolving advances to Borrower in an amount
not to exceed the Borrowing Base.
Anything to the contrary in the definition of Borrowing Base, the
definition of Net Eligible Accounts Availability Component, or the definition of
Eligible Inventory Availability Component notwithstanding, Foothill may reduce
its advance rates based upon Net Eligible Accounts and Eligible Inventory
without declaring an Event of Default if it determines, in its reasonable
discretion, that there is a material impairment of the prospect of repayment of
all or any portion of the Obligations or a material impairment of the value or
priority of the security interests held by, or for the benefit of, Foothill in
and to the Collateral.
Foothill shall have no obligation to make advances hereunder to the
extent they would cause the outstanding Obligations to exceed the lesser of: (i)
the Maximum Amount, or (ii) the Maximum Foothill Amount plus the Syndicated
Amount.
Foothill is authorized to make advances under this Agreement based
upon telephonic or other instructions received from anyone purporting to be an
Authorized Officer of Borrower or, without instructions, if in Foothill's
discretion such advances are necessary to meet Obligations. Borrower agrees to
establish and maintain a single designated deposit account for the purpose of
receiving the proceeds of the advances requested by Borrower and made by
Foothill hereunder. Unless otherwise agreed by Foothill and Borrower, any
advance requested by Borrower and made by Foothill hereunder shall be made to
such designated deposit account. Amounts borrowed pursuant to this Section 2.1
may be repaid and, so long as no Event of Default has occurred and is
continuing, reborrowed at any time during the term of this Agreement."
4. Foothill immediately shall charge Borrower's account a facility fee in
the amount of $30,000. This facility fee shall be in addition to any other fees,
expenses, or compensation payable to Foothill under any Loan Document, shall be
compensation to Foothill for entering into this Amendment, shall be fully earned
at the time it is so charged, and shall be nonrefundable.
5. Borrower hereby represents and warrants to Foothill as
follows:
(a) The execution, delivery, and performance by Borrower of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of,
or notice to or action by, any Person in order to be effective and enforceable.
(b) The Loan Agreement, as amended by this Amendment, constitutes the
legal, valid, and binding obligation of Borrower, enforceable against Borrower
in accordance with its terms, without defense, counterclaim, or offset.
6. Foothill and Borrower also agree that:
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Loan Agreement are and shall remain in full force and effect
and all references therein to the Loan Agreement shall henceforth refer to the
Loan Agreement as amended by this Amendment. This Amendment shall be deemed
incorporated into, and a part of, the Loan Agreement.
(b) This Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.
(c) This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, and all such counterparts together shall
constitute but one and the same instrument. This Amendment shall become
effective when each party has executed and delivered a counterpart hereof. Upon
this Amendment becoming effective, the changes to the provisions of the Loan
Agreement provided for in this Amendment shall operate prospectively and not
retroactively.
(d) This Amendment, together with the Loan Agreement and the other
Loan Documents, contains the entire and exclusive agreement of the parties
hereto with reference to the matters discussed herein and therein. This
Amendment supersedes all prior drafts and communications with respect thereto.
This Amendment may not be amended except in writing executed by both of the
parties hereto.
(e) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or the
Loan Agreement, respectively.
IN WITNESS HEREOF, this Amendment has been executed and delivered as of the
date first set forth of above.
TOWN & COUNTRY CORPORATION,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Sr. Vice President & CFO_ _________
<PAGE>
TOWN & COUNTRY FINE JEWELRY GROUP, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Treasurer, Director & V.P._________
GOLD LANCE, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Treasurer/Director_________________
L.G. BALFOUR COMPANY, INC.,
a Delaware corporation
By__/s/ Francis X. Correra_____________
Its_Exec. V.P., & Treasurer, Director__
FOOTHILL CAPITAL CORPORATION,
a California corporation
By__/s/ Beth A. Pease__________________
Its_Assistant Vice President___________
BPHLA\JST\0258751.02
EXHIBIT 10.33
AMENDMENT NUMBER THREE TO LOAN AGREEMENT
(TOWN & COUNTRY CORPORATION AND SUBSIDIARIES)
THIS AMENDMENT NUMBER THREE TO LOAN AGREEMENT (this "Amendment"), dated as
of July 11, 1994, is entered into between Town & Country Corporation, a
Massachusetts corporation, Town & Country Fine Jewelry Group, Inc., a
Massachusetts corporation, Gold Lance, Inc., a Massachusetts corporation, L.G.
Balfour Company, Inc., a Delaware corporation (which aforesaid corporations,
individually and collectively, jointly and severally, and together with their
successors and assigns, are herein referred to as "Borrower"), and Foothill
Capital Corporation, a California corporation ("Foothill"), in light of the
following:
WHEREAS, Borrower and Foothill are parties to that certain Loan Agreement
dated as of May 14, 1993 (as from time to time amended, modified, supplemented,
renewed, extended, or restated, the "Loan Agreement"); and
WHEREAS, Borrower has requested that certain provisions of the Loan
Agreement be amended, and Foothill has agreed to amend such provisions in
accordance with the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
conditions, and provisions as hereinafter set forth, the parties hereto agree as
follows:
1. Initially capitalized terms used herein have the meanings defined in the
Loan Agreement unless otherwise defined herein.
2. The following definitions contained in Section 1.1 of the Loan Agreement
hereby are amended and restated in their entirety as follows:
"Maximum Amount" means Thirty Million Dollars ($30,000,000) during
January, February, March, April, May, June, July, and August of any year, and
Thirty Five Million Dollars ($35,000,000) during September, October, November,
and December of any year.
<PAGE>
"Maximum Foothill Amount" means that portion of the Maximum Amount for
which Foothill is responsible, exclusive of any participations with
Participants, which amount is Seventeen Million Five Hundred Thousand Dollars
($17,500,000) during January, February, March, April, May, June, July, and
August of any year, and Twenty Million Four Hundred Sixteen Thousand Six Hundred
Sixty Seven Dollars ($20,416,667) during September, October, November, and
December of any year; provided, however, that each time the Maximum Amount is
reduced pursuant to Section 2.3 hereof, the Maximum Foothill Amount shall be
reduced proportionately.
3. Section 6.13(b) of the Loan Agreement hereby is amended and
restated in its entirety to read as follows:
"(b) Consolidated Tangible Net Worth. Consolidated Tangible Net
Worth at all times up to and including February 27, 1994, of at least Thirty
Eight Million Dollars ($38,000,000), at all times from and after February 28,
1994, up to and including June 30, 1994, of at least Forty Three Million Dollars
($43,000,000), at all times from and after July 1, 1994, up to and including
November 26, 1994, of at least Forty Million Dollars ($40,000,000), and, at all
times thereafter, of at least Forty Three Million Dollars ($43,000,000)."
4. Borrower hereby represents and warrants to Foothill as
follows:
(a) The execution, delivery, and performance by Borrower of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of,
or notice to or action by, any Person in order to be effective and enforceable.
(b) The Loan Agreement, as amended by this Amendment, constitutes the
legal, valid, and binding obligation of Borrower, enforceable against Borrower
in accordance with its terms, without defense, counterclaim, or offset.
5. Foothill and Borrower also agree that:
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Loan Agreement are and shall remain in full force and effect
and all references therein to the Loan Agreement shall henceforth refer to the
Loan Agreement as amended by this Amendment. This Amendment shall be deemed
incorporated into, and a part of, the Loan Agreement.
(b) This Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.
(c) This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, and all such counterparts together shall
constitute but one and the same instrument. This Amendment shall become
effective when each party has executed and delivered a counterpart hereof. Upon
this Amendment becoming effective, the changes to the provisions of Section 1.1
of the Loan Agreement provided for in this Amendment shall operate prospectively
and not retroactively.
(d) This Amendment, together with the Loan Agreement and the other
Loan Documents, contains the entire and exclusive agreement of the parties
hereto with reference to the matters discussed herein and therein. This
Amendment supersedes all prior drafts and communications with respect thereto.
This Amendment may not be amended except in writing executed by both of the
parties hereto.
(e) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or the
Loan Agreement, respectively.
IN WITNESS HEREOF, this Amendment has been executed and delivered as of the
date first set forth of above.
TOWN & COUNTRY CORPORATION,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Sr. Vice President & CFO_ _________
TOWN & COUNTRY FINE JEWELRY GROUP, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Treasurer/Director & V.P._________
GOLD LANCE, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Treasurer & Director_______________
<PAGE>
L.G. BALFOUR COMPANY, INC.,
a Delaware corporation
By__/s/ Francis X. Correra_____________
Its_Exec. V.P., & Treasurer & Director_
FOOTHILL CAPITAL CORPORATION,
a California corporation
By__/s/ Beth A. Pease__________________
Its_Assistant Vice President___________
BPHLA\JST\0266324.01
EXHIBIT 10.34
AMENDMENT NUMBER FOUR TO LOAN AGREEMENT
(TOWN & COUNTRY CORPORATION AND SUBSIDIARIES)
THIS AMENDMENT NUMBER FOUR TO LOAN AGREEMENT (this "Amendment"), dated as
of July 25, 1994, is entered into between Town & Country Corporation, a
Massachusetts corporation, Town & Country Fine Jewelry Group, Inc., a
Massachusetts corporation, Gold Lance, Inc., a Massachusetts corporation, L.G.
Balfour Company, Inc., a Delaware corporation (which aforesaid corporations,
individually and collectively, jointly and severally, and together with their
successors and assigns, are herein referred to as "Borrower"), and Foothill
Capital Corporation, a California corporation ("Foothill"), in light of the
following:
WHEREAS, Borrower and Foothill are parties to that certain Loan Agreement
dated as of May 14, 1993 (as from time to time amended, modified, supplemented,
renewed, extended, or restated, the "Loan Agreement"); and
WHEREAS, Borrower has requested that certain provisions of the Loan
Agreement be amended, and Foothill has agreed to amend such provisions in
accordance with the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
conditions, and provisions as hereinafter set forth, the parties hereto agree as
follows:
1. Initially capitalized terms used herein have the meanings defined in the
Loan Agreement unless otherwise defined herein.
2. Effective August 19, 1994, the address of the chief executive office of
Balfour in the preamble to the Loan Agreement is amended to read as follows:
"15 John Dietsch Boulevard, P.O. Box 1999, North Attleborough,
MA 02763"
The foregoing address is hereinafter referred to as the "New
Balfour Address."
3. Schedule E-1 to the Loan Agreement hereby is amended to add
the New Balfour Address as an additional location of Eligible
Inventory of Balfour. Schedule 6.15A to the Loan Agreement
<PAGE>
hereby is amended to add the New Balfour Address as an additional location of
Inventory and Equipment of Balfour. Schedule 6.15B to the Loan Agreement hereby
is amended to add the New Balfour Address as an additional location of Balfour
as to which a landlord's waiver is required.
4. To the extent that Balfour's relocation to the New Balfour Address
without prior written notice to Foothill, and without prior delivery to Foothill
of additional financing statements and an additional landlord's waiver, breached
or may breach provisions of the Loan Documents (including, without limitation,
Sections 5.4, 5.6, and 6.15 of the Loan Agreement, and comparable provisions of
the Balfour Security Agreement), Foothill waives any such breaches, provided
that Foothill does not waive the right to receive additional financing
statements with respect to the personal property and fixtures located at the New
Balfour Address, and a landlord's waiver from the landlord of the New Balfour
Address, and Borrower hereby agrees to provide same, or cause same to be
provided, to Foothill, in form satisfactory to Foothill, promptly and in any
event no later than August 31, 1994.
5. Borrower hereby represents and warrants to Foothill as
follows:
(a) The execution, delivery, and performance by Borrower of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of,
or notice to or action by, any Person in order to be effective and enforceable.
(b) The Loan Agreement, as amended by this Amendment, constitutes the
legal, valid, and binding obligation of Borrower, enforceable against Borrower
in accordance with its terms, without defense, counterclaim, or offset.
6. Foothill and Borrower also agree that:
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Loan Agreement are and shall remain in full force and effect
and all references therein to the Loan Agreement shall henceforth refer to the
Loan Agreement as amended by this Amendment. This Amendment shall be deemed
incorporated into, and a part of, the Loan Agreement.
(b) This Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.
(c) This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, and all such counterparts together shall
constitute but one and the same instrument. This Amendment shall become
effective when each party has executed and delivered a counterpart hereof.
(d) This Amendment, together with the Loan Agreement and the other
Loan Documents, contains the entire and exclusive agreement of the parties
hereto with reference to the matters discussed herein and therein. This
Amendment supersedes all prior drafts and communications with respect thereto.
This Amendment may not be amended except in writing executed by both of the
parties hereto.
(e) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or the
Loan Agreement, respectively.
IN WITNESS HEREOF, this Amendment has been executed and delivered as of the
date first set forth of above.
TOWN & COUNTRY CORPORATION,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Sr. Vice President & CFO_ _________
TOWN & COUNTRY FINE JEWELRY GROUP, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Treasurer, Director & V.P._________
GOLD LANCE, INC.,
a Massachusetts corporation
By__/s/ Francis X. Correra_____________
Its_Treasurer & Director_______________
L.G. BALFOUR COMPANY, INC.,
a Delaware corporation
By__/s/ Francis X. Correra_____________
Its_Exec. V.P., & Treasurer, Director__
<PAGE>
FOOTHILL CAPITAL CORPORATION,
a California corporation
By__/s/ __________________
Its_ ___________
BPHLA\JST\0266888.02
EXHIBIT 10.44
TOWN & COUNTRY CORPORATION
1994 NON-EMPLOYEE DIRECTORS' NONQUALIFIED STOCK OPTION PLAN
The purpose of this 1994 Non-Employee Directors' Nonqualified Stock
Option Plan(the "Plan") is to promote the interests of Town & Country
Corporation (the "Company") by providing an incentive to obtain and retain the
services of highly qualified persons who are not employees of the Company to
serve as members of the Board of Directors of the Company through the granting
of options, as herein provided, to acquire shares of its Class A Common Stock,
$.01 par value ("Common Stock"). The effective date of the Plan shall be October
1, 1994 (the "Effective Date"). Options granted under the Plan are not intended
to qualify and shall not be treated as "incentive stock options" under Internal
Revenue Code Section 422.
1. Shares of Stock Subject to the Plan
The stock that may be issued and sold pursuant to options granted under
the Plan shall not exceed, in the aggregate, 200,000 shares of the Common Stock
of the Company, which may be (i) authorized but unissued shares, (ii) treasury
shares or (iii) shares previously reserved for issuance upon the exercise of
options under the Plan, which options have expired or been terminated; provided,
however, that the number of shares subject to the Plan shall be subject to
adjustment as provided in Section 6.
2. Eligibility
Options will be granted only to persons who are Directors of the Company
on the date of grant of options hereunder and who are not also employees of the
Company or any majority-owned subsidiary (as such term is defined in Rule 1-02
of Regulation S-X) of the Company ("non-employee Directors").
3. Grant of Options - Purchase Price
a. Grant of Options. Each non-employee Director who is a
Director on the Effective Date shall automatically be granted (an "Initial
Grant") on such date an option to purchase 20,000 shares of Common Stock. Each
non-employee Director who becomes a Director subsequent to the Effective Date
shall automatically be granted as an Initial Grant an option to purchase 20,000
shares of Common Stock on the date of his or her election to the Board of
Directors. Each Director who is a Director on the last day of the Company's
fiscal year which is more than four full years following his or her Initial
Grant shall automatically be granted on such date and annually thereafter an
option to purchase 4,000 shares of Common Stock. All options granted under this
Plan shall be immediately vested upon grant; provided, however, that all options
granted under this Plan prior to stockholder approval of this Plan shall be
contingent upon and shall vest immediately upon such approval.
b. Purchase Price. The purchase price of shares which may be
purchased under each option shall be equal to the Fair Market Value of the
Common Stock on the date the option is granted. Fair Market Value shall mean (a)
the closing sale price of the Common Stock as reported by The American Stock
Exchange, if the Common Stock is then quoted on such an exchange, on the date
the option is granted, or the last preceding date on which a sale was reported,
(b) the closing sale price of the Common Stock on a national marketing system,
if the Common Stock is then listed on such a system, on the date the option is
granted, or the last preceding date on which a sale was reported, or (c) the
closing bid price (or average of such bid prices) of the Common Stock as quoted
by an established quotation service if the Common Stock is then traded on the
over-the-counter market, on the date the option is granted, or the last
preceding date on which a sale was reported.
c. Limitations. All grants of options hereunder shall be subject
to the availability of shares hereunder, and no option shall be granted under
this Plan except as provided in this Section 3. No options shall be granted
hereunder to the extent necessary to prevent non-employee Directors serving as
the administrators of any of the Company's other stock option or other employee
benefit plans from failing to qualify as "disinterested persons" under Rule
16b-3 under the Securities Exchange Act of 1934, as amended ("Rule 16b-3").
4. Period of Option and Certain Limitations on Right to
Exercise.
a. Period. Each option shall become exercisable as provided in
Section 3 hereof, but in no event shall any such option be exercisable after the
earlier of (a) the date ten years after the date such option is granted or (b)
the date on which the Director to whom such option was granted ceases for any
reason to serve as a Director of the Company; provided, however, that in the
event of termination as a result of disability, death or mandatory retirement
due to age, the Director or his or her personal representative may exercise any
outstanding options not theretofore exercised, to the extent exercisable on the
date of such disability, death or retirement, during the one-year period
following such disability, death or retirement.
b. Exercise. The delivery of certificates representing shares
under any option will be contingent upon receipt by the Company from the
optionee (or a purchaser acting in his or her stead in accordance with the
provisions of the option) of the full purchase price for such shares by one or
more of the methods specified below and the fulfillment of any other
requirements provided in the option or under applicable provisions of law; and
until such receipt of the purchase price and fulfillment of such other
requirements and delivery of such certificates no optionee or person entitled to
exercise the option shall be, or shall be deemed to be, a holder of any shares
subject to the option for any purpose.
Options may be exercised in whole or in part, by giving written notice
of exercise to the Company, specifying the number of shares to be purchased.
Payment of the purchase price may be made by one or more of the following
methods:
(A) In cash, by certified or bank check or other instrument acceptable to
the Board of Directors or its authorized committee;
(B) In the form of shares of Common Stock that are not then subject to
restrictions under any Company plan, if permitted by the Board or its authorized
committee, in its discretion. Such surrendered shares shall be valued at Fair
Market Value on the exercise date; or
(C) By the optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay the
purchase price; provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements
as the Company shall prescribe as a condition of such payment procedure. Payment
instruments will be received subject to collection.
5. Non-Transferability of Option
Each option granted under the Plan shall provide that it is personal to
the optionee, is not transferable by the optionee in any manner otherwise than
by will or the laws of descent and distribution and is exercisable, during the
optionee's lifetime, only by the optionee. However, the rights and obligations
of the Company under the Plan and any option may be assigned by the Company to a
successor to the whole or any substantial part of its business provided that
such successor assumes in writing all of such rights and obligations.
6. Dilution or Other Adjustment
The terms of the options and the number of shares subject to this Plan
shall be equitably adjusted in such manner as to prevent dilution or enlargement
of option rights in the following instances:
(a) The declaration of a dividend payable to the holders of
Common Stock in stock of the same class;
(b) A split-up of the Common Stock or a reverse split thereof;
(c) A recapitalization of the Company under which shares of one
or more different classes of stock are distributed in exchange for or upon the
Common Stock without payment of any valuable consideration by the holders
thereof.
The terms of any such adjustment shall be conclusively determined by the
Board.
7. Effect of Certain Transactions
In the case of (a) the dissolution or liquidation of the Company, (b) a
merger, reorganization or consolidation in which the Company is acquired by
another person or in which the Company is not the surviving corporation, or (c)
the sale of all or substantially all of the outstanding Common Stock or assets
of the Company to another entity, the Plan and options issued thereunder shall
terminate on the effective date of such dissolution, liquidation, merger,
reorganization, consolidation or sale, unless provision is made in such
transaction for the assumption of options theretofore granted under the Plan or
the substitution for such options of a new stock option of the successor
corporation or a parent or subsidiary thereof, with appropriate adjustment as to
the number and kind of shares and the per share exercise price, as provided in
Section 6 of the Plan. In the event of any transaction which will trigger such
termination, the Company shall give written notice thereof to the Optionees at
least twenty days prior to the effective date of such transaction or the record
date on which shareholders of the Company entitled to participate in such
transaction shall be determined, whichever comes first. In the event of such
termination, any unexercised portion of outstanding options, which is vested and
exercisable at that time, shall be exercisable for at least 15 days prior to the
date of such termination; provided, however, that in no event shall options be
exercisable after the applicable expiration date for an option.
<PAGE>
8. Administration and Amendment of the Plan
The Plan shall be administered in accordance with Rule 16b-3 under the
Securities Exchange Act of 1934 by the Board or an authorized committee thereof
(in which case all references to the Board shall refer to such committee while
such committee administers this Plan), which shall make any determination under
or interpretation of any provision of the Plan and any option. Any of the
foregoing actions taken by the Board shall be final and conclusive. The Board
may amend and make such changes in and additions to the Plan (and, with the
consent of the applicable optionee, any outstanding option) as it may deem
proper and in the best interest of the Company; provided, however, that no such
action shall adversely affect or impair any options theretofore granted under
the Plan without the consent of the applicable optionee; and provided further,
however, that no amendment (i) increasing the maximum number of shares which may
be issued under the Plan, except as provided in Section 6, (ii) extending the
term of the Plan or any option, (iii) changing the requirements as to
eligibility for participation in the Plan, or (iv) otherwise requiring approval
of stockholders under Rule 16b-3, shall be adopted without the approval of
stockholders. Notwithstanding anything to the contrary herein, the provisions of
Section 3.a. shall not be amended more than once in every six month period,
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.
9. Expiration and Termination of the Plan
Options shall be granted under the Plan as provided herein during the
ten years from the Effective Date, as long as the total number of shares
purchased under the Plan and subject to outstanding options under the Plan does
not exceed 200,000 shares of the Common Stock of the Company, subject to
adjustment as provided in Section 6. The Plan may be abandoned or terminated at
any time by the Board, except with respect to any options then outstanding under
the Plan.
106290.c2
<TABLE>
EXHIBIT 11
Earnings Per Share Computations
Five Years Ended
(Unaudited)
<CAPTION>
February 26, February 27, February 28, February 29, February 28,
1995 1994 1993 1992 1991
PRIMARY EPS:
<S> <C> <C> <C> <C> <C>
Net income (loss) $ 571,918 $ 3,137,556 $ (47,295,592)$ (19,018,207)$ 1,249,092
Accretion of discount and
dividends on preferred
stocks (1,688,019) (1,453,511) - - -
Net income (loss)
attributable to
common stock $ (1,116,101)$ 1,684,045 $ (47,295,592)$ (19,018,207)$ 1,249,092
Weighted average common
shares outstanding 23,433,173 21,205,949 12,450,290 12,005,752 11,908,913
Weighted shares issued
from exercise and
assumed exercise of:
warrants - - - - -
options - - - - -
Shares for EPS
calculation 23,433,173 21,205,949 12,450,290 12,005,752 11,908,913
Reported EPS:
Income (loss) before
extraordinary gain
and accretion of
discount and dividends
on preferred stocks $ 0.02 $ 0.15 $ (3.80)$ (1.64)$ (0.05)
Extraordinary gain - - - 0.06 0.15
Accretion of discount
and dividends on
preferred stocks (0.07) (0.07) - - -
Net income (loss)
per common share $ (0.05)$ 0.08 $ (3.80)$ (1.58)$ 0.10
Fully Diluted EPS:
For the five years presented in this exhibit, there is no dilution from Primary
EPS.
</TABLE>
This exhibit should be reviewed in conjunction with Note 1 of Notes to
Consolidated Financial Statements.
EXHIBIT 22
TOWN & COUNTRY CORPORATION AND SUBSIDIARIES
Subsidiaries of the Registrant
Set forth below is a list of the Registrant's subsidiaries (1) as of February
26, 1995, with their state or other jurisdiction of incorporation, names under
which they do business, and the percentage of their voting securities owned by
the Registrant as of such date:
Percent
Name Incorporation and Date Ownership
Essex International Public Company Limited Thailand, 1984 70%
Gold Lance, Inc. Massachusetts, 1986 100%
L.G. Balfour company, Inc. Delaware, 1992 100%
Anju Jewelry Limited Hong Kong, 1973 100%
Town & Country Fine Jewelry Group, Inc. (2) Massachusetts, 1991 100%
-----------------------
(1) Excluded are the names of particular subsidiaries, which, when
considered in the aggregate as a single subsidiary, would not constitute a
significant subsidiary as of February 26, 1995.
(2) Verilyte Gold, Inc. and Feature Enterprises, Inc. were merged into Town
& Country Fine Jewelry Group, Inc. as of May 14, 1993.
EXHIBIT 24.1
TOWN & COUNTRY CORPORATION AND SUBSIDIARIES
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included in this Form 10-K, into the Company's previously filed
Registration Statements on Form S-2, File No. 33-49028, on Form S-8, File No.
33-23860, and Form S-2, File No. 33-57407.
Arthur Andersen LLP
Boston, Massachusetts
May 24, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 000768608
<NAME> TOWN & COUNTRY CORPORATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-26-1995
<PERIOD-END> FEB-26-1995
<CASH> 3,336,921
<SECURITIES> 0
<RECEIVABLES> 65,252,122
<ALLOWANCES> 7,780,000
<INVENTORY> 80,349,412
<CURRENT-ASSETS> 141,733,955
<PP&E> 82,254,863
<DEPRECIATION> 39,018,645
<TOTAL-ASSETS> 206,623,456
<CURRENT-LIABILITIES> 46,973,764
<BONDS> 91,437,975
<COMMON> 234,497
2,265,522
2,381,038
<OTHER-SE> 57,219,118
<TOTAL-LIABILITY-AND-EQUITY> 206,623,456
<SALES> 288,114,608
<TOTAL-REVENUES> 288,114,608
<CGS> 200,533,890
<TOTAL-COSTS> 200,533,890
<OTHER-EXPENSES> 90,407,855
<LOSS-PROVISION> 5,476,622
<INTEREST-EXPENSE> 12,169,615
<INCOME-PRETAX> 2,330,082
<INCOME-TAX> 1,758,164
<INCOME-CONTINUING> 571,918
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,116,101)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
