SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: January 23, 1999
----------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15046
-------
Westerbeke Corporation
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-1925880
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
Avon Industrial Park, Avon, Massachusetts 02322
- ----------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (508) 588-7700
--------------
No Change
- ----------------------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
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 to file such reports.) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding at
Class March 1, 1999
----- --------------
<S> <C>
Common Stock, $.01 par value 1,917,812
</TABLE>
WESTERBEKE CORPORATION AND SUBSIDIARY
INDEX
Page
Part I - Financial Information
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets as of January 23 1999
And October 24, 1998 3
Consolidated Statements of Operations for the three
months ended January 23, 1999 and January 24, 1998 4
Consolidated Statements of Cash Flows for the three
months ended January 23, 1999 and January 24, 1998 5
Notes to Consolidated Financial Statements 6-8
Item 2 -
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Item 3 -
Quantitative and Qualitative Disclosures
About Market Risk 13
Part II - Other Information 14
Signatures 15
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 23, October 24,
1999 1998
----------- -----------
(Unaudited) Audited
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 37,700 $ 101,900
Accounts receivable, net of allowance for doubtful accounts
of $59,200 at January 23, 1999 and October 24, 1998 2,342,800 2,292,900
Inventories (Note 2) 6,360,700 5,391,600
Prepaid expenses and other assets 382,700 343,000
Prepaid income taxes 91,300 -
Deferred income taxes 578,600 578,600
--------------------------
Total current assets 9,793,800 8,708,000
Property, plant and equipment, net 2,133,000 2,161,500
Other assets, net 2,020,400 2,002,100
Investments in marketable securities 1,896,700 1,690,700
Note receivable - related party 105,400 108,000
--------------------------
$15,949,300 $14,670,300
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 190,500 $ 189,700
Revolving demand note payable 1,250,000 200,000
Accounts payable 2,044,800 1,905,900
Accrued income taxes - 93,900
Accrued expenses and other liabilities 830,700 668,900
--------------------------
Total current liabilities 4,316,000 3,058,400
--------------------------
Deferred income taxes 220,800 154,900
Deferred compensation 338,200 320,700
Long-term debt, net of current portion 368,200 417,400
--------------------------
927,200 893,000
--------------------------
Stockholders' equity:
Common stock, $.01 par value; authorized 5,000,000 shares;
issued 2,185,950 shares at January 23, 1999 and
October 24, 1998 21,900 21,900
Additional paid-in-capital 6,025,300 6,025,300
Accumulated other comprehensive income (Note 3) 248,900 151,200
Retained earnings 5,166,000 5,276,500
--------------------------
11,462,100 11,474,900
Less - Treasury shares 268,138 at cost 756,000 756,000
--------------------------
Total stockholders' equity 10,706,100 10,718,900
--------------------------
$15,949,300 $14,670,300
==========================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
January 23, January 24,
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
Net sales $5,446,800 $4,959,500
Cost of sales 4,490,800 4,074,300
--------------------------
Gross profit 956,000 885,200
Selling, general and administrative expense 818,300 768,900
Research and development expense 327,400 258,500
--------------------------
Loss from operations (189,700) (142,200)
Interest income, net 36,200 51,300
Other expenses, net 30,700 -
--------------------------
Loss before income taxes (184,200) (90,900)
Income tax benefit (73,700) (36,600)
--------------------------
Net loss $ (110,500) $ (54,300)
==========================
Loss per common share, basic and diluted $ (.06) $ (.03)
==========================
Weighted average common shares - basic
and diluted 1,917,812 1,904,746
==========================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
January 23, January 24,
1999 1998
---------------------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (110,500) $ (54,300)
Reconciliation of net loss to net cash
used by operating activities:
Depreciation and amortization 114,800 107,400
Deferred income taxes 65,900 (42,700)
Changes in operating assets and liabilities:
Accounts receivable (49,900) (525,600)
Inventories (969,100) (329,600)
Prepaid expenses and other assets (39,700) (35,000)
Other assets (23,700) (172,100)
Accounts payable 138,900 (539,100)
Accrued expenses and other liabilities 161,800 61,900
Deferred compensation 17,500 108,100
Income taxes payable (185,200) (37,000)
---------------------------
Net cash used by operating activities (879,200) (1,458,000)
---------------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (80,900) (67,200)
Proceeds from payment of note receivable - related party 2,600 3,600
Investment in marketable securities (108,300) (136,500)
---------------------------
Net cash used in investing activities (186,600) (200,100)
---------------------------
Cash flows from financing activities:
Net borrowings under revolving demand note 1,050,000 1,600,000
Proceeds from exercise of employee stock options - 29,000
Principal payments on long-term debt and
capital lease obligations (48,400) (53,700)
---------------------------
Net cash provided in financing activities 1,001,600 1,575,300
---------------------------
Decrease in cash and cash equivalents (64,200) (82,800)
Cash and cash equivalents, beginning of period 101,900 156,900
---------------------------
Cash and cash equivalents, end of period $ 37,700 $ 74,100
===========================
Supplemental cash flow disclosures:
Interest paid $ 25,500 $ 31,500
Income taxes paid $ 111,500 -
Supplemental disclosures of non-cash items:
Increase (decrease) in unrealized gains on
marketable securities, net of income taxes $ 97,700 $ (58,300)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies:
-------------------------------------------
A. Financial Statements
--------------------
The condensed consolidated financial statements included herein have
been prepared by Westerbeke Corporation (the "Company"), without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. While certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, the
Company believes that the disclosures made herein are adequate to make
the information presented not misleading. It is recommended that
these condensed statements are read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended October
24, 1998.
In the opinion of the Company, all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the
financial position of Westerbeke Corporation and Subsidiary as of
January 23, 1999, the results of their operations for the three months
ended January 23, 1999 and January 24, 1998, and the cash flows for
the three months then ended, have been included.
B. Basis of Presentation
---------------------
The condensed consolidated financial statements include the accounts
of the Company and its wholly owned subsidiary, Westerbeke
International, Inc. (a Foreign Sales Corporation). All significant
intercompany transactions and accounts have been eliminated.
Westerbeke International, Inc. has been inactive since fiscal year
1987.
On October 25, 1998, the Company adopted Financial Accounting
Standards No. 131, "Disclosure about Segments of an Enterprise and
Related Information" (FAS 131). The Company operates in one market
segment, marine engine and air-conditioning products. The adoption of
this standard had no material effect on the Company's reporting and
disclosure requirements.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1 (SOP 98-1), "Accounting for the
Costs of Computer Software Developed and Obtained for Internal Use".
The statement is effective for fiscal years beginning after December
15, 1998. Earlier application is encouraged in fiscal years for which
annual financial statements have not been issued. The statement
defines which costs of computer software developed or obtained for
internal use are capitalized and which costs are expensed. The
Company does not believe the adoption of SOP 98-1 will have a material
impact on the financial statements.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs
of Start-Up Activities". The statement is effective for fiscal years
beginning after December 15, 1998. The statement requires costs of
start-up activities and organization costs to be expenses as incurred.
The Company does not believe the adoption of SOP 98-5 will have a
material impact on the financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities"
(SFAS 133). The statement requires companies to recognize all
derivatives as either assets or liabilities with the instruments
measured at fair value. The accounting for changes in fair value gains
and losses depends on the intended use of the derivative and its
resulting designation. The statement is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. The Company
does not believe the adoption of SFAS 133 will have a material impact
on the financial statements.
C. Earnings per Share
------------------
Basic loss per common share is computed by dividing loss available to
common stockholders by the weighted average number of shares
outstanding for the period. Diluted loss per share reflects the
maximum dilution that would have resulted from the exercise of stock
options. Diluted loss per share is computed by dividing net loss by
the weighted average number of common shares and all dilutive
securities, except when the effect would be antidilutive. For the
quarter ending January 23, 1999, basic loss per common share and
dilutive loss per common share were equal.
2. Inventories
-----------
The Company uses the last-in, first-out (LIFO) method to value
inventory.
Inventories are comprised of the following:
<TABLE>
<CAPTION>
January 23, October 24,
1999 1998
----------- -----------
<S> <C> <C>
Raw materials $5,244,800 $4,416,300
Work-in-process 591,800 530,300
Finished goods 524,100 445,000
--------------------------
$6,360,700 $5,391,600
==========================
</TABLE>
The Company has estimated both the year-end inventory levels and the
inflation/deflation that will occur during the fiscal year.
The Company anticipates an increase in its LIFO valuation account as
of October 23, 1999. Accordingly, the Company has recorded an
increase of $22,500, on a pro rata basis, in the LIFO reserve during
the first three months of fiscal 1999. During the first three months
of 1998, the Company recorded, on a pro rata basis, an increase of
$15,000 in the LIFO reserve. Inventories would have been $915,000
higher at January 23, 1999 and $892,500 higher as of October 24, 1998,
if the first-in, first-out (FIFO) method had been used. Inventory
cost determination on the FIFO method approximates replacement or
current cost.
3. Comprehensive Income
--------------------
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income during
the quarter ended January 23, 1999. Comprehensive income is defined
as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources.
It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners. This
pronouncement requires that the accumulated total of other
comprehensive income be shown as a separate component of stockholders'
equity with additional disclosure of accumulated balances for each
classification within other comprehensive income in addition to the
reporting of total comprehensive income. Accumulated other
comprehensive income, a component of stockholders' equity was
previously titled "unrealized gain on marketable securities". The
components of total comprehensive loss for the three months ended
January 23, 1999 and January 24, 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net loss $(110,500) $ (54,300)
Other comprehensive income (loss) 97,700 (58,300)
-----------------------
Comprehensive loss $ (12,800) $(112,600)
=======================
</TABLE>
Item 2 - Management's Discussion and Analysis
---------------------------------------------
Of Financial Condition and Results Of Operations
------------------------------------------------
Results of Operations -
- -----------------------
Net sales increased by $487,300 or 10%, during the first quarter of fiscal
1999 as compared to the same period in fiscal 1998. The increase in net
sales is primarily attributable to higher unit volume of the Company's
marine generator products.
Gross profit increased $70,800 or 8% during the first quarter of fiscal 1999
as compared to the same period in fiscal 1998. As a percentage of net
sales, gross profit remained unchanged at 18% during the first quarter of
fiscal 1999 as compared to the first quarter of fiscal 1998.
Operating expenses increased $118,300 or 12% for the first quarter of fiscal
1999 as compared to the same period in fiscal 1998. Selling and
administrative expenses have increased primarily due to higher advertising,
marketing, legal and personnel costs.
Net interest income decreased $15,100 during the first quarter of fiscal
1999 as compared to the same period in fiscal 1998. The decrease in
interest is primarily due to a decrease in dividends earned on marketable
securities.
Other expense is comprised of the realized loss from the sale of certain
marketable securities during the quarter ended January 23, 1999.
For the first quarter ended January 23, 1999, the Company reported a net
loss of $110,500, compared to a net loss of $54,300 for the same period in
fiscal 1998. The increase in the net loss is primarily attributable to the
increase in operating expenses during the quarter ended January 23, 1999 as
compared to the same period in fiscal 1998.
The Company is currently renegotiating its exclusive sales agreement with
its largest customer. The existing agreement will expire on June 30, 1999.
The Company cannot predict the results of these negotiations. The loss of
the revenues associated with this agreement would have a material effect on
the Company's operating results and financial condition if the Company were
unable to replace the business and or reduce operating expenses.
Liquidity and Capital Resources
- -------------------------------
During the first three months of fiscal 1999, net cash used by operations
was $879,200, compared to $1,458,000 for the first three months in fiscal
1998.
During the three months ended January 23, 1999, the Company purchased
property, plant and equipment of $80,900. The Company plans to spend
approximately $400,000 more on equipment during the remainder of the year.
The Company has a $4,000,000 Credit Agreement with State Street Bank and
Trust Company, collateralized by inventory, accounts receivable and general
intangibles. The Credit Agreement was renewed on March 31, 1998, and will
expire on March 31, 1999. At January 23, 1999, the Company had $1,250,000
in outstanding borrowings under the Credit Agreement and approximately
$348,500 committed to cover the Company's reimbursement obligations under
certain letters of credit. Management is in the process of renewing the
Credit Agreement and anticipates bank approval, although there can be no
assurance that the facility will be renewed.
On January 23, 1996, the Company entered into a $500,000 revolving line of
credit agreement (the "Revolving Line of Credit") and term loan facility
with State Street Bank and Trust Company, collateralized by various items of
emission testing and product development equipment and subject to working
capital and equity covenants. On July 31, 1996, the Revolving Line of
Credit terminated and automatically converted into a five-year term loan in
the principal amount of $491,600 bearing a fixed interest rate of 8.08%. At
January 23, 1999, the outstanding principal amount was $250,900.
On April 25, 1997, the Company entered into a $300,000 revolving line of
credit agreement (the "1997 Revolving Line of Credit") and term loan
facility with State Street Bank and Trust Company, collateralized by various
items of emission testing and product development equipment and subject to
working capital and equity covenants. On June 30, 1997, the 1997 Revolving
Line of Credit terminated and automatically converted into a five-year term
loan bearing a fixed interest rate of 8.11%. At January 23, 1999, the
outstanding principal amount was $205,800.
Management believes cash flow from operations and borrowings available under
the Credit Agreement will provide for working capital needs, principal
payments on long-term debt, and capital and operating leases through fiscal
1999.
Domestic inflation is not expected to have a material impact on the
Company's operations.
The cost of engine blocks and other components is subject to foreign
currency fluctuations (primarily the Japanese yen). Exchange rate
fluctuations have had a minimal impact on the Company during the first
fiscal quarter of 1999.
Year 2000 Compliance
- --------------------
The Company is aware of the potential for industry wide business disruption
which could occur due to problems related to the "Year 2000 Issue." It is
the belief of the Company's management that it has a prudent plan to address
these issues within the Company and with its suppliers. The components of
the Company's plan include an assessment of internal systems for
modification and/or replacement, communication with vendors to determine
their state of readiness to maintain an uninterrupted supply of goods and
services to the Company; an evaluation of the Company's production equipment
as to its ability to function properly after the turn of the century; an
evaluation of facility related issues; and the development of a contingency
plan.
State of Readiness
The Company has developed a plan to reduce the probability of operational
difficulties due to Year 2000 related failures. While there is still a
significant amount of work to do, the Company believes that it is on track
towards a timely completion. Overall the Company estimates that it has
completed approximately 90% of the Year 2000 issue identification process
and approximately 75% of the process of remediating Year 2000 issues that
have been identified to date.
Internal Systems (Information Technology)
The Company is in the process of completing its assessment of all
information technology systems that could be significantly affected by the
Year 2000 issue. The assessment has indicated that certain systems are
already Year 2000 compliant while others are still in the process of being
remediated. The Company has received from its software vendor the updated
software necessary to make its operating system Year 2000 compliant, which
the Company has installed and is currently testing. Testing will be ongoing
throughout 1999.
Suppliers
The Company is in the process of communicating with its external vendors to
gain an understanding of their readiness to maintain an uninterrupted supply
of goods and services to the Company. The Company has identified vendors it
views as critical to its business. The Company is defining a critical
vendor as one whose inability to continue to provide goods and services
would have a serious adverse impact on the Company's ability to produce,
deliver and collect payment. To date, the Company is not aware of any
supplier with a Year 2000 issue that would materially impact the results of
operations, liquidity or capital resources. However, the Company has no
means of ensuring that suppliers will be Year 2000 ready. The inability of
suppliers to complete their Year 2000 resolution process in a timely fashion
could materially impact the Company.
Production Equipment
The Company has completed an inventory of production equipment currently
used at the Company. The Company has determined the Year 2000 readiness of
its equipment through communication with the equipment manufacturers and
testing where appropriate. The Company is not aware of any production
equipment that is affected by the Year 2000 issue.
Facility Related Issues
The Company has evaluated facilities related equipment with the potential
for Year 2000 related failures. The Company has determined the Year 2000
readiness of its equipment through communication with the equipment
manufacturers and testing where appropriate. This assessment has determined
that to the Company's knowledge the Year 2000 issue will not affect
facilities related equipment. The Company believes that it has a prudent
approach towards evaluating facilities equipment, however, it may be
impracticable or impossible to test certain items of equipment for Year 2000
readiness. To the extent such untested equipment is not Year 2000 ready, it
may fail to operate on January 1, 2000, resulting in possible interruption
of security, heating, telephone and other services.
Costs
The Company is evaluating the total cost of Year 2000 compliance. At this
time, the Company estimates the total cost of Year 2000 related activities
to be approximately $75,000, of which approximately $10,000 has been spent
to date. This amount is not incremental spending and has been budgeted
within the normal magnitude of Information Technology spending. This amount
includes the replacement of hardware and applications that are outdated and
were due for replacement regardless of Year 2000 issues.
Contingency Plan
Although the Company believes that it is taking prudent action related to
the identification and resolution of issues related to the Year 2000, its
remediation is still in progress. The Company may never be able to know
with certainty whether certain key vendors are compliant. Failure of key
vendors to make their computer systems Year 2000 compliant could result in
delayed deliveries of products to the Company. If such delays are extended
they could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company continues to evaluate the risks associated with potential Year
2000 related failures. As it better understands the risks within its unique
set of business partners, production processes, and internal systems, it
will develop a formal contingency plan outline by April 1999. Until the
contingency plan is completed, the Company does not possess the information
necessary to estimate the potential impact of Year 2000 compliance issues
relating to its Information Technology systems, non-Information Technology
systems, its vendors, its customers, and other parties.
This Quarterly Report on Form 10-Q may contain forward-looking information
about the Company. The Company is hereby setting forth statements
identifying important factors that may cause the Company's actual results to
differ materially from those set forth in any forward-looking statements
made by the Company. Some of the most significant factors include: an
unanticipated down-turn in the recreational boating industry resulting in
lower demand for the Company's products; the inability of the Company to
renegotiate its exclusive sales agreement with its largest customer and/or
the unanticipated loss of, or decline in sales to, other major customers;
the unanticipated loss of a major supplier; the inability of the Company to
effect required modifications of its products to meet governmental
regulations with respect to emission standards; the unanticipated inability
of the Company to be Year 2000 Compliant; market risks in the changes in
value of short term investments and financial instruments; and foreign
currency fluctuations resulting in cost increases to the Company for its
foreign supplied components. Accordingly, there can be no assurances that
any anticipated future results will be achieved.
Item 3 - Quantitative and Qualitative Disclosures
-------------------------------------------------
About Market Risk
-----------------
Market risk represents the risk of changes in the value of short-term
investments and financial instruments caused by fluctuations in investment
prices and interest rates.
The Company addresses market risks in accordance with established policies.
The Company's risk-management activities involve risk and uncertainties and
accordingly, results could differ materially from those projected.
Investment Price Risk
- ---------------------
The value of the Company's investment portfolio at January 23, 1999 is
stated at market value. A hypothetical 10% decrease in investment prices
would result in a $189,700 reduction in the Company's investment portfolio
balance.
Interest Rate Risk
- ------------------
Due to the fact that the long-term debt will mature within three years,
management has determined that the fair value would not be materially
different from the carrying value at January 23, 1999.
Part II. Other Information
Item 1 Legal Proceedings
------ -----------------
The Company has initiated arbitration with the American
Arbitration Association in New York against Daihatsu Motor
Company, Ltd. ("Daihatsu") for breach of contract and other
claims. The Company is seeking damages based on Daihatsu's
breach of a Component Sales Agreement which also granted the
Company rights to certain engines including an engine Daihatsu
began marketing in 1993 through a joint venture with Briggs &
Stratton Corporation. In a separate but related case pending in
the Federal District Court for the District of Massachusetts, the
Company is seeking damages from Briggs & Stratton Corporation for
tortious interference with the Company's Agreement with Daihatsu
and other related claims.
Item 2 Changes in Securities
------ ---------------------
None to report
Item 3 Default Upon Senior Securities
------ ------------------------------
None to report
Item 4 Submissions of Matters to a Vote of Security Holders
------ ----------------------------------------------------
None to report
Item 5 Other Information
------ -----------------
None to report
Item 6 Exhibits and Reports on Form 8-K
------ --------------------------------
(a) Exhibits
10 (a) Lease dated February 3, 1999 by and between Urban
Equities and the Company
27 Financial Data Schedule for the three months ended
January 23, 1999
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERBEKE CORPORATION
(Registrant)
Dated March 8, 1999 /s/ John H. Westerbeke, Jr.
------------- --------------------------------
John H. Westerbeke, Jr.
Chairman of the Board,
President and Principal
Executive Officer
Dated March 8, 1999 /s/ Carleton F. Bryant III
--------------------------------
Carleton F. Bryant III
Executive Vice President,
Chief Operating Officer
and Principal Financial
and Accounting Officer
LEASE INFORMATION PAGE Exhibit 10 (a)
Date of Lease: February 3, 1999
Landlord: New Avon Limited Partnership
Landlord Notice Address: c/o Urban Equities
21A Highland Circle
Needham, MA 02494
Tenant: Westerbeke Corporation
41 Ledin Drive
Avon, MA 02322
Attn: Carleton F. Bryant, III
Executive Vice President
Tenants Notice Address: 41 Ledin Drive
Avon, MA 02322
Building: The building commonly known as The Odyssey
Building located at 40 Robbie Road, Avon
Massachusetts, containing approximately
152,545 square feet of space, appurtenant
common areas, parking areas and access ways.
Demised Premises: Approximately 25,880 square feet, as
specifically shown on Exhibit A, annexed
hereto.
Lease Term: Three years, unless sooner terminated as
hereinafter provided.
Commencement Date: July 1, 1999
Expiration Date: June 30, 2002
Rent: Rent is due and payable on the first day of
the month.
A. Annual Rent for the first year of the
Lease Term of One Hundred Nine Thousand nine
hundred and ninety ($109,990) dollars
commencing on July 1, 1999, payable in monthly
installments of Nine Thousand one hundred and
sixty-five and 83/100 ($9,165.83) dollars on
the first of each month; and
B. Annual Rent for the second and third years
of the Lease Term of One Hundred Sixteen
Thousand four hundred and sixty ($116,460)
dollars commencing on July 1, 2000, payable in
monthly installments of Nine Thousand seven
hundred and five ($9,705.00) dollars on the
first of each month.
Security Deposit: $6,206.67
Permitted Use: Warehouse and storage and associated offices
Listed Broker: None
Tenant Share of the
Real Estate Taxes
and Operation
Cost: 16.96%
Tenant's Initial
Estimated Monthly
Payment on Account: Real Estate Taxes $1,130.66
Operating Cost $1,544.66
Total Monthly Payment: $2,675.32
1. PARTIES. The Landlord named in the Lease Information Page of this
lease (hereinafter called "Landlord", which expression shall include
Landlord's heirs, legal representatives, successors and assigns where the
context so admits) does hereby lease to the Tenant named in said Lease
Information Page (hereinafter called "Tenant", which expression shall
include Tenant's heirs, legal representatives, successors and assigns where
the context so admits), and Tenant hereby leases the following described
premises:
2. PREMISES. The Demised Premises described in said Lease Information
Page, said premises being within the Building described in said Lease
Information Page.
There is appurtenant to the Demised Premises the right to use, in common
with others entitled thereto, any and all common facilities, improvements
or services serving the building in which the Demised Premises are situated
(the "Building").
Landlord reserves the right from time to time to install, repair, replace,
use, maintain and relocate for service to the Demised Premises and to other
parts of the building, or either, building service fixtures and equipment
wherever located in the Building. Landlord expressly reserves the right to
install and maintain in the Demised Premises pipes, conduits, electric
lines and other facilities serving other portions of the building,
provided, however, that such installation and maintenance shall not
unreasonably interfere with Tenant's use and enjoyment of the Demised
Premises.
3. TERM. The term of this lease (the "term") shall be for the period
set forth in said Lease Information Page. The commencement date of the
term (the "Commencement Date") of this lease shall be the first day of the
term. Upon the request of Landlord, Tenant shall execute a written
instrument, confirming the commencement date.
4. RENT. Tenant shall pay to Landlord during the term annual rent at
the rate set forth in said Lease Information Page, payable in monthly
installments of one-twelfth (1/12th) thereof. The first payment of annual
rent shall be due and payable on the date specified in the Lease
Information page for the commencement of annual rent. Annual rent shall be
paid monthly in advance on the first day of each and every calendar month
thereafter during the term. Rent for any fraction of a month at the
commencement or expiration of Tenant's obligation to pay annual rent shall
be pro rated. All payments of rent (annual and additional) shall be made
payable to the Landlord named in said Lease Information Page and shall be
sent to said Landlord at the address set forth herein, or to such other
person or to such other address as Landlord shall from time to time
designate by notice to Tenant.
5. REAL ESTATE TAXES. For the purpose of this Article 5, the following
terms shall have the following meanings:
A. Real Estate Taxes - real estate taxes levied against the land
and building of which the Demised Premises are a part, including
betterment assessments and other governmental charges which may be
charged, assessed or imposed upon the land, building and other
improvements of which the Demised Premises are a part, but
specifically excluding any income, franchise or estate taxes.
B. Operation Cost - all reasonable costs and expenses incurred by
Landlord in connection with the maintenance and operation of the land
and building of which the Demised Premises are a part. Operation
Cost shall include, without limitation, all reasonable costs and
expenses incurred by Landlord (a) in making repairs to the building
and its appurtenances and the exterior signs thereon, (b) in carrying
fire, casualty, plate glass, rent and liability insurance upon the
building (including, without limitation, insurance carried under so-
called "blanket" and/or "umbrella" policies), (c) in providing
services including but not limited to lighting, plowing, cleaning,
maintaining and beautifying the exterior of the building and the land
appurtenant to the building and the landscaping and gardening (if
any) thereof, (d) in paying wages, unemployment taxes and benefits of
personnel engaged in the management and operation of the building
(appropriately prorated where a person's duties are not limited
solely to the building), (e) in paying for electricity, water and
sewerage and other utilities charges imposed by the entity providing
such services, to the extent not separately metered to the Demised
Premises as hereinafter provided, and servicing only the common
areas, and the cost of maintaining any utility systems outside the
Demised Premises (including, without limitation, any roof top HVAC
equipment), and (f) a management fee equal to five percent (5%) of
gross receipts from the operation of the building. Operation Cost
shall not include Landlord's leasing costs, attorneys fees and the
cost of and depreciation of capital expenditures (unless such capital
expenditure is intended to substantially reduce one or more items
within Operation Cost, in which event such capital expenditure shall
be treated as an amortized Operation Cost based upon the generally
accepted "pay-back" period for the capital expenditure).
C. Tenant's Tax and Operation Cost Obligation - for any calendar
year (or partial calendar year) occurring during the term, the sum of
Real Estate Taxes and Operation Cost, multiplied by Tenant's Share of
Operation Cost (as specified on the Lease Information Page). For the
partial calendar years at the beginning and end of the term, Tenant's
Tax and Operation Cost Obligation shall be equal to Tenant's Tax and
Operation Cost Obligation as determined pursuant to the immediately
preceding sentence, multiplied by that fraction of the relevant
calendar year during which this lease was in effect.
Tenant shall pay to Landlord, as additional rent, Tenant's Tax and
Operation Cost Obligation for each calendar year (or prorated portion for
any partial calendar year) during the term.
Tenant shall pay to Landlord on the first day of every month during the
term, in advance, payments on account of Tenant's obligations under this
Article. Tenant's initial monthly payment on account of Tenant's
obligations under this Article is the amount specified on the Lease
Information Page as Tenant's Initial Monthly Payment on Account of Tenant's
Tax and Operation Cost Obligation. From time to time, Landlord shall have
the right to adjust the amount of Tenant's monthly payments. Following the
end of each calendar year, Landlord shall determine the exact amount of
Tenant's Tax and Operation Cost Obligation with respect to the calendar
year then ended, and appropriate adjustments shall be made (either by
additional payment by Tenant or crediting/refund by Landlord toward
subsequent obligations of Tenant under this Article 5), so that the amount
of such adjustment, when aggregated with the amount of Tenant's monthly
payments during the preceding calendar year, will equal Tenant's Tax and
Operation Cost Obligation for such calendar year. Tenant shall receive an
annual statement from Landlord detailing the previous twelve months
operating expenses for the building, and the estimated monthly Operation
Cost Obligation for the subsequent period.
In addition to the foregoing, Tenant shall pay all taxes upon its property
in or upon the Demised Premises.
With respect to the pro-ration of annual water usage by all Tenants in the
building, in the event that a Tenant occupying a portion of the building
uses a greater amount of water than is customarily used by other tenants'
in the building or discharges any water due to its use of the premises
(unrelated to kitchen/utility sink and bathroom discharges), the
water/discharge usage for that Tenant shall be separately metered (at that
tenant's expense) and billed to that Tenant, exclusive of the other Tenants
in the building.
6. LANDLORD'S WORK AND TENANT'S WORK. Landlord is delivering the
Demised Premises and the building "as is". Tenant shall equip the Demised
Premises with all trade fixtures and personal property suitable or
appropriate to the regular and normal operation of the type of business in
which Tenant is engaged. All of Tenant's trade fixtures and personal
property shall be of quality consistent with trade fixtures and personal
property in the remainder of the building, and shall be subject to
Landlord's reasonable approval. Tenant shall not permit any mechanics'
liens, or similar liens, to remain upon the Demised Premises for labor and
material furnished to Tenant or claimed to have been furnished to Tenant in
connection with work of any character performed or claimed to have been
furnished at the direction of Tenant and shall cause any such lien to be
released of record forthwith without cost to Landlord.
From and after the first entry by Tenant or its agents Tenant shall comply
with all of the provisions of this lease.
7. ALTERATIONS -- ADDITIONS -- SIGNS. Tenant shall not make structural
or exterior alterations or additions to the Demised Premises, but may make
non-structural interior alterations provided Landlord consents thereto in
writing, which consent shall not be unreasonably withheld or delayed. All
such allowed alterations shall be at Tenant's expense and shall be in
quality at least equal to the construction of the Demised Premises as of
the commencement date. Tenant shall not permit any mechanics' liens, or
similar liens, to remain upon the Demised Premises for labor and material
furnished to Tenant or claimed to have been furnished to Tenant in
connection with work of any character performed or claimed to have been
furnished at the direction of Tenant and shall cause any such lien to be
released of record forthwith without cost to Landlord. Any alterations or
improvement made by Tenant, shall be Landlord's property upon expiration of
the lease term, unless Landlord notifies Tenant to the contrary
contemporaneously with Landlord's consent therefor. In such event, at or
about the time of expiration or termination hereof, Tenant shall remove any
or all of such alterations, and Tenant shall repair all damage caused to
the Demised Premises or the building in so removing the same. Any
alterations and additions shall be done in a good workman manner using
first class materials, and in accordance with (and only after having
received appropriate permitting) all local, state and federal laws, codes
and regulations.
Any sign installed by Tenant from time to time shall be subject to the
prior written approval of Landlord (in all respects; i.e. size, content,
location, materials, etc.), which consent shall not be unreasonably
withheld or delayed, and shall be in conformity with all governing codes.
Tenant shall maintain any such sign, at its sole cost and expense, in good
condition, working order and appearance. Upon the expiration or earlier
termination of this lease, Tenant shall remove all of its signs, and shall
repair any damage to the Demised Premises or the building resulting from
such removal. Moreover, Landlord shall have the right, upon ten (10) days
notice to Tenant, to remove any sign installed by Tenant in violation of
the first sentence of this paragraph, and Tenant shall reimburse Landlord,
promptly upon demand thereof, for all costs incurred in removing any such
sign and restoring any damage to the Demised Premises or the building
resulting from such removal.
8. USE OF DEMISED PREMISES. Subject to the provisions of this Article 8
and the provisions of Articles 9 and 15, below, Tenant shall have the right
to utilize the Demised Premises for its business purposes at any time.
Tenant shall comply with the reasonable Rules and Regulations annexed
hereto, as well as such other reasonable rules and regulations as may be
established by Landlord from time to time, and which are applicable to all
tenants, in order to assure the safety and security of persons and property
in and about the building, as well as the efficient and harmonious
activities of the occupants of the building. In the event of any breach of
any rules and regulations by tenant (including any amendments or additions
thereto), Landlord shall have all of the remedies in this lease provided
for default of Tenant. Landlord shall use reasonable efforts to cause all
occupants of the building to comply with Landlord's rules and regulations.
However, no failure of any other occupant of the building to comply with
any rules and regulations shall result in any liability by Landlord, or
justify any failure of Tenant to comply with all rules and regulations. In
addition to the Rule and Regulations, Tenant shall have the following
additional obligations due to the nature of Tenant's use and occupancy:
a. proper maintenance, storage and disposal of all flammables and
inflammables and other hazardous products, (I) in conformity with all
local, state and federal rules and regulations and requirements, and
(ii) in a safe and proper manner so as not to risk any health hazard
to the occupants of the premises or the Building.
In the event that Tenant violates any provision of this Section, or
any other section of this lease which relates to the cleanliness, safety,
orderliness, or operation and occupancy of the Building for the quiet use
and enjoyment by other tenants of the Building, then in addition to all
other remedies available to Landlord hereunder, Landlord shall have the
right to:
(I) levy fines on Tenant equal to the daily rental rate of Tenant's
annual rent then in effect, until the violation is remedied; and
(ii) if Landlord has levied fines (or otherwise given Tenant notice
of default under this section) twice in any one calendar year,
Landlord shall immediately upon further default hereunder be able to
terminate this Lease, effective thirty (30) days after notice of such
termination, and as liquidated damages for such termination, Tenant
shall on such termination date owe to Landlord a sum equal to twenty
four months rent (as then being charged hereunder) plus the
equivalent of twenty-four months of Tenant's Share of the Real Estate
Taxes and Operating Cost (CAM).
9. COMPLIANCE WITH LAWS. Tenant agrees that no trade or occupation
shall be conducted in the Demised Premises or use made thereof which will
be unlawful, improper, noisy or offensive or contrary to any law or any
municipal by-law or ordinance in force in the city or town in which the
building is situated. Tenant and those claiming under Tenant shall not
use, handle, store, release or discharge oil, hazardous materials or
hazardous waste in or about the Demised Premises.
Tenant shall not use any portion of the Demised Premises for the use,
generation, treatment, storage or disposal of "oil", "hazardous material,"
"hazardous waste", or "hazardous substances" (collectively, the
"Materials"), as such terms are defined under any applicable federal, state
and local laws, rules and regulations now or hereafter in effect, without
the express written prior consent of Landlord and, if required, its
mortgagees, and then only to the extent that the presence of the Materials
is (I) properly licensed and approved by all appropriate governmental
officials and in accordance with all applicable laws and regulations and
(ii) in compliance with any terms and conditions stated in said prior
written approvals by Landlord or its mortgagees. In the event of any
release of Materials upon the Demised Premises, Building or property, or
upon adjacent lands, if caused by Tenant or its agents, representatives or
those claiming under Tenant, Tenant shall promptly remedy the problem in
accordance with all applicable laws and requirements and shall indemnify,
defend and hold Landlord and its mortgagee(s) harmless from and against all
loss, costs, liability and damage, including attorneys' fees and the cost
of litigation, arising from the presence or release of any Materials caused
by Tenant or its agents, representative, and those claiming under Tenant in
or on the Demised Premises, building or property, or upon adjacent lands.
10. UTILITIES. Landlord shall, in the first instance, furnish and
install electrical service and other utilities, to standards comparable
with buildings similar to the Building. (Electrical and gas service to the
Demised Premises shall be separately metered). In the event that
additional services are required for Tenant's activities the Tenant shall
be solely responsible for metering and installation of such services,
subject to prior written approval of Landlord which may not be unreasonably
withheld or delayed. Thereafter, Tenant shall connect to and through such
services and be responsible for payment for its usage and consumption of
all utilities or services at the Demised Premises and also promptly pay all
bills and other charges, as to the same as and when the same become due or
payable, including, but not limited to, heat, hot water, gas, electricity,
air conditioning, telephone, garbage disposal, and any all other services
or utilities supplied to or consumed at or in the Demised Premises
throughout the term, whether or not measured by meter. Tenant shall heat
and maintain the interior of the Demised Premises, at all times, at a
reasonable temperature (but in no event less than sixty degrees). Landlord
shall not be liable to Tenant for any compensation or reduction of rent by
reason of inconvenience or annoyance, or for loss of business, arising from
power losses or shortages, or the interruption of any utilities services to
the Demised Premises, unless such interruption results from the negligence
of Landlord. Landlord reserves the right to stop any service or utility
system when necessary in Landlord's opinion by reason of accident or
emergency or until necessary repairs have been completed.
11. REPAIRS. Landlord agrees to make all necessary repairs or
alterations to the property which Landlord is required to maintain, as
hereinafter set forth. The property which Landlord is required to maintain
is the foundation, roof, exterior walls, structural columns, and structural
beams of the building; all HVAC equipment and utility pipes, lines and
conduits located outside the Demised Premises but within the building and
which do not serve exclusively the Demised Premises; and the landscaped
areas on the lot on which the building is situated. Notwithstanding the
foregoing, if any of the repairs or alterations to be made by Landlord
pursuant to the provisions of this lease shall be made necessary by reason
of repairs, installations, additions or improvements made by Tenant or
anyone claiming under Tenant, by reason of the fault or negligence of
Tenant or anyone claiming under Tenant, by reason of the failure of
performance or observance of any agreements, conditions or other provisions
on the part of Tenant to be performed or observed, or by reason of any
special use (other than the Permitted Uses) to which the Demised Premises
may be put, Tenant shall make all such repairs or alterations as may be
necessary (or, at Landlord's option, shall reimburse Landlord, as
additional rent hereunder, for all reasonable costs and expenses incurred
by Landlord in effecting such repairs or alterations). Landlord shall not
be deemed to have committed a breach of any obligation to make repairs or
alterations or perform any other act unless it shall have received notice
from Tenant designating the particular repairs or alterations or other act
and shall fail to undertake such repairs or alterations or perform such
other act within a reasonable time after the receipt of such notice; and
Landlord's liability shall be limited to the cost of making such repairs or
alterations or performing such other act. As used in this lease, the
expression "exterior walls" does not include doors, window sashes or
frames, or door frames of the Demised Premises.
Tenant agrees that it will during the term of this lease make all repairs
and alterations to the Demised Premises which Tenant is required to
maintain, as hereinafter set forth, which may be necessary to maintain the
same in good repair and condition or which may be required by this lease,
and if due solely to Tenants use of the Demised Premises, by any laws,
ordinances, regulations or requirements of any public authorities having
jurisdiction, subject only to the provisions of Article 15, eminent domain
and reasonable wear and tear excepted. The property which Tenant is
required to repair and maintain in good order and condition is the Demised
Premises and every part thereof including, but without limitation, all
utility pipes, lines and conduits located within the Demised Premises, and
all utility fixtures and equipment whether located within the Demised
Premises or within the building which contains the Demised Premises
(including, without limitation, the heating and air conditioning system)
which exclusively serve the Demised Premises, all walls, ceilings, floors
and doors, window sashes and frames, and door frames of the Demised
Premises. Notwithstanding the foregoing, Tenant shall not be under any
obligation to make any repairs or alterations to the property which
Landlord is required to maintain, except to the extent provided in the
first paragraph of this Article. Tenant specifically agrees to replace all
glass damaged with glass of the same kind and quality. Tenant also agrees
to keep the Demised Premises attractive in appearance. Tenant agrees that
it shall give Landlord reasonable advance notice of any occasion when
Tenant or its agents, employees or contractors propose to go upon the roof
of the building for the purpose of making any repairs or alterations or for
any other purpose whatsoever. In order to assure the proper maintenance of
the HVAC system serving the Demised Premises, Tenant, at it's sole cost and
expense, shall maintain (and shall provide Landlord with evidence of the
existence of) a contract with a reputable HVAC maintenance company,
providing for the regular inspection, maintenance and repair of such
equipment. Landlord agrees to cooperate with Tenant or Tenant's agents
with respect to any warranties which may or may not exist for any equipment
serving exclusively the Demised Premises.
12. LANDLORD'S ACCESS. Upon advance notice from Landlord to Tenant of
not less than 24 hours and with the consent of Tenant (which consent may
not be unreasonably withheld or delayed) (except in the event of an
emergency, in which event no notice or consent shall be required), Landlord
or agents of Landlord may, at reasonable times, enter to view the Demised
Premises or for the purpose of repairing or altering the Demised Premises
or any portion of the building or for bringing materials into or through
the Demised Premises in connection with the making of repairs or
alterations, and may remove placards and signs not approved and affixed as
herein provided, and may show the Demised Premises to agents, employees,
contractors, architects, prospective mortgagees and purchasers, and, at any
time within six (6) months before the expiration of the term, may affix to
any suitable part of the Demised Premises a notice for letting affixed
without hindrance or molestation and may show the Demised Premises to
prospective tenants. Without limiting the generality of the foregoing,
Landlord, its agents and other tenants of the building shall have
continuing access (at reasonable times and upon reasonable notice, unless
in an emergency) to the roof hatch, the main electrical panels, telephone
switch boards and interface equipment ans water main within the Demised
Premises which is the only interior access to said utilities and the roof
of the building. Tenant agrees to keep such areas and access thereto
reasonably free of Tenant's fixtures and possessions to allow unimpeded
access to said areas of the building and Demised Premises. Landlord shall
not be liable to Tenant for any compensation or reduction of rent by reason
of Landlord's entering the Demised Premises for any of the purposes
authorized herein.
13. FORCE MAJEURE. In any case where either party hereto is required to
do any act (other than make a payment of money), delays caused by or
resulting from Acts of God, war, civil commotion, fire or other casualty,
labor difficulties, shortages of labor, materials or equipment, government
regulations or other causes beyond such party's reasonable control (other
than such party's financial condition) shall not be counted in determining
the time during which such act shall be completed, whether such time be
designated by a fixed date, a fixed time or "a reasonable time". In case
Landlord is prevented or delayed from making any repairs, alterations, or
improvements or furnishing any service or performing any other covenant or
duty to be performed on Landlord's part by reason of any cause beyond
Landlord's reasonable control, Landlord shall not be liable to Tenant
therefor, nor shall Tenant be entitled to any abatement or reduction of
rent by reason thereof, nor shall the same give rise to a claim in Tenant's
favor that such failure constitutes actual or constructive, total or
partial, eviction from the Demised Premises, unless the same prevents
Tenant's use and occupation of the Demised Premises for a continuous period
of six months or more. In any case where work is to be paid for out of
insurance proceeds or condemnation awards, due allowance shall be made,
both to the party required to perform such work and to the party required
to make such payment, for delays in the collection of such proceeds and
awards.
14. ASSIGNMENT -- SUBLEASING. Tenant shall not assign this lease or
sublet (or otherwise permit anyone to lease or occupy) the whole or any
part of the Demised Premises.
15. FIRE, CASUALTY -- EMINENT DOMAIN. In case, after the execution
hereof and before the expiration of the term, the Demised Premises or more
than fifteen (15%) percent thereof or more than fifteen (15%) percent of
the building or the property of which the Demised Premises are a part shall
be taken by any exercise of the right of eminent domain or by action of any
public or other authority, or in case, after the execution hereof and
before the expiration of the term, the Demised Premises or more than
fifteen (15%) percent thereof or more than fifteen (15%) percent of the
building or the property of which the Demised Premises are a part shall be
destroyed or damaged by fire or casualty, then this lease and the term of
this lease shall terminate at the election of Landlord, which election must
be exercised by written notice to tenant within sixty (60) days after such
taking, destruction, damage or action, and such election may be made in
case of any such taking notwithstanding the entire interest of Landlord may
have been divested by such taking. In any such event, if Landlord shall
not elect to terminate this lease, the annual rent, or a just and
proportionate part thereof, according to the nature, extent and duration of
the injuries sustained, shall be abated until the Demised Premises or the
building or the property of which the Demised Premises are a part, as the
case may be, shall have been restored as provided herein. If Landlord
shall not elect to terminate this lease, Landlord shall with reasonable
promptness restore the Demised Premises to a single contiguous unit in
substantially the same condition as the Demised Premises were in. However,
in connection with such restoration, Landlord shall not be required to
expend amounts in excess of Landlord's insurance proceeds or damages or
awards resulting from such taking, destruction, damage or action allocable
to the Demised Premises, as the case may be, after deducting Landlord's
reasonable costs and expenses of collecting same and amounts retained by
Landlord's mortgagee(s). If the Demised Premises are not so restored (or
if, at any time following the taking, destruction, damage or action, Tenant
and Landlord agree, in the exercise or good faith judgement, that it is not
reasonably likely that the Demised Premises will be restored) within five
(5) months after such taking, destruction, damage or action, Tenant may
elect to terminate this lease by written notice to Landlord (such right
shall be exercised, if at all, by notice to Landlord not later than the
date of substantial completion of restoration). If the Demised Premises or
the building or the property of which the Demised Premises are a part or
any part thereof shall be taken by eminent domain, all damages from such
taking, other than that which relates solely to Tenant's fixtures and
equipment, shall vest in Landlord and Tenant covenants and agrees to
execute such assignments or other document and to take any steps which may
be necessary to vest such damages in Landlord, Tenant hereby irrevocably
appointing Landlord as its agent and attorney-in-fact to execute and
deliver any such assignments and documents which Landlord deems necessary
or appropriate to carry out the intent and purpose of this sentence such
appointment being a power coupled with an interest.
16. FIRE INSURANCE. Tenant shall not permit any use of the Demised
Premises which will make voidable any insurance on the property of which
the Demised Premises are a part, or on the contents of said property, or
which shall be contrary to any regulation from time to time established by
any insurance inspection board having jurisdiction. Tenant shall promptly
comply with all reasonable respects and requirements of the insurance
company providing fire insurance coverage to the building. Tenant shall on
demand reimburse Landlord, and all other tenants of the building, for all
extra insurance premiums caused by Tenant's use of the Demised Premises.
Any such demand shall be accompanied by a written statement executed by a
reputable insurance company or insurance broker, setting forth (I) the
nature of Tenant's use of the Demised Premises which resulted in extra
insurance premiums, (ii) the insurance premiums which would have been
charged to the demanding party if Tenant had not engaged in such use, and
(iii) the insurance premiums charged to the demanding party as a result of
tenant's continued engagement in such use. At Tenant's request (and at
Tenant's sole cost and expense), Landlord will also use reasonable efforts
(including arbitration if the same is available) to cause its insurer to
reconsider its determination that extra insurance premiums are chargeable,
and to suggest modifications in Tenant's activities which would result in
reduction or elimination of extra insurance premiums. Tenant agrees that
it will at all times keep all furniture and personal property within the
Demised Premises insured against all loss and damage by reason of fire or
any of the casualties covered under the standard Massachusetts extended
coverage policy. Such insurance shall be carried with responsible
insurance companies authorized to do business in Massachusetts and having a
"Best's" rating of A- or higher, and shall be in an amount equal to the
full replacement cost of the insured property. Tenant shall deposit with
Landlord certificates for such insurance at or prior to the commencement
date, and thereafter at least twenty (20) days prior to the expiration of
any such policy. At the request of the local fire department, or other
state or municipal safety authority, Tenant shall provide such requesting
authority with a key to the premises.
17. TENANT'S LIABILITY INSURANCE. Tenant shall maintain, with respect to
the Demised Premises and the property of which the Demised Premises are a
part, comprehensive public liability insurance in amounts not less Two
Million Dollars ($2,000,000) with respect to injuries or death suffered by
one or more persons and not less than Two Million Dollars ($2,000,000) with
respect to property damage. Said insurance shall be issued by responsible
insurance companies authorized to do business in the state in which the
Demised Premises are situated and having a "Best's" rating of A- or higher,
and shall insure as named insureds Tenant, Landlord and any mortgagee of
the Building. Tenant shall deposit with Landlord certificates for such
insurance at or prior to the commencement date, and thereafter at least
twenty (20) days prior to the expiration of any such policies. All such
insurance certificates shall provide that such policies (as well as the
policies of Tenant's insurance required pursuant to Article 16, above)
shall not be canceled or modified without at least twenty (20) days prior
written notice to each insured named therein. Tenant also agrees that upon
Landlord's request from time to time Tenant shall increase the limits of
the public liability insurance described above to such limits as are
customarily carried with respect to premises similar to the Demised
Premises within the metropolitan area in which the Demised Premises are
situated.
18. INDEMNIFICATION OF LIABILITY. Tenant agrees to indemnify and save
harmless Landlord from and against all claims of whatever nature arising
from any act, omission or negligence of Tenant or Tenant's contractors,
licensees, agents, servants, invitees or employees, arising from any
accident, injury or damage whatsoever caused to any person, or to the
property of any person, occurring after the commencement of construction
work by Tenant, and until the end of the term of this lease and thereafter,
so long as Tenant is in occupancy of any part of the Demised Premises, in
or about the Demised Premises; or arising from any accident, injury or
damage occurring outside of the Demised Premises, where such accident,
damage or injury outside of the Demised Premises results or is claimed to
have resulted from any act or omission on the part or Tenant or Tenant's
agents, invitees, employees or independent contractors. This indemnity and
hold harmless agreement shall include indemnity against all cost, expenses
and liabilities incurred in or in connection with any such claim or
proceeding brought thereon, and the defense thereof with counsel reasonably
acceptable to Landlord. So long as the act, omission or negligence as to
which Tenant is required to indemnify Landlord is covered by insurance
maintained by Tenant, Tenant's liability under this paragraph, in
connection with any specific occurrence, shall be limited to the greater of
(I) the amount of insurance which Tenant is required to maintain pursuant
to Article 17, above (including any deductible thereunder) and (ii) the
amount of insurance actually maintained by Tenant (but excluding any
deductible thereunder).
To the maximum extent permitted by law, if Tenant or anyone claiming under
Tenant or the whole or any part of the property of Tenant or anyone
claiming under Tenant shall be injured, lost or damaged by theft, failure
to remove snow or ice, fire, water or steam or in any other way or manner,
whether similar or dissimilar to the foregoing, no part of said injury,
loss or damage is to be borne by Landlord or its agents, unless such
injury, loss or damage results from the negligence of Landlord. To the
maximum extent permitted by law, all of Tenant's property shall be in the
Demised Premises at Tenant's sole risk and hazard. Tenant agrees that
Landlord shall not be liable to Tenant or anyone claiming under Tenant for
any injury, loss or damage that may be caused by or result from the fault
or negligence of any persons occupying (or claiming under any persons
occupying) other premises in the building.)
19. WAIVER OF SUBROGATION. Each of Landlord and Tenant hereby releases
the other from any and all liability or responsibility to the other (or
anyone claiming through or under them by way of subrogation or otherwise)
for any loss or damage to property caused by fire or any of the extended
coverage or supplementary contract casualties, even if such fire or other
casualty shall have been caused by the fault or negligence of the released
party, or anyone for whom such party may be responsible, provided, however,
that this release shall be applicable and in force and effect only with
respect to loss or damage occurring during such time as the releasor's
insurance policies shall contain a clause or endorsement to the effect that
any such release shall not adversely affect or impair said policies or
prejudice the right of the releasor to recover thereunder. Each of
Landlord and Tenant agrees that its policies will include such a clause or
endorsement so long as the same shall be obtainable without extra cost, or
if extra cost shall be charged therefor, so long as the first party shall
advise the other thereof of the amount of the extra cost, and the other
party, at is election, may pay the same, but shall not be obliged to do so.
20. SURRENDER. Tenant shall at the expiration or other termination of
this lease remove all of Tenant's goods and effects from the Demised
Premises, including, without hereby limiting the generality of the
foregoing, all signs and lettering affixed or painted by Tenant, either
inside or outside the Demised Premises. Tenant shall deliver to Landlord
the Demised Premises, broom clean and in the same condition as they were in
at the commencement of the term, reasonable wear and tear and damage by
fire or other casualty only excepted, which shall include the removal of
any changes and improvements made to the Demised Premises by Tenant during
the term hereof, and the return of the Demised Premises to their original
configuration and design. In the event of Tenant's failure to remove any
of Tenant's property from the Demised Premises, Landlord is hereby
authorized, without liability to Tenant for loss or damage thereto, and at
the sole risk of Tenant, to remove and store any of the property at
Tenant's expense, or to retain the same under Landlord's control or to sell
at public sale, without notice, any or all of the property not so removed
without obligation to account to Tenant therefor, or Landlord may, if it so
desires, destroy such property.
21. DEFAULT AND BANKRUPTCY. In the event that:
(a) Tenant shall default in the payment of any installment of rent or other
sum herein specified and such default shall continue for five (5) days; or
(b) Tenant shall default in the observance or performance of any other of
Tenant's covenants, agreements, or obligations hereunder and such default
shall not be corrected within thirty (30) days after notice thereof, or if
not susceptible to cure within said thirty (30) days, for a reasonable
period to cure so long as Tenant commences to cure within said thirty (30)
days, and diligently prosecutes said cure; or
(c) Tenant shall be declared bankrupt or insolvent according to law, of if
any bankruptcy or insolvency proceedings shall be commenced by or against
Tenant, or if any assignment shall be made of Tenant's property for the
benefit of creditors, or if a receiver, trustee or assignee shall be
appointed for the whole or any part of Tenant's property (provided that, in
the case of an involuntary bankruptcy petition or involuntary appointment
of a receiver or trustee, such occurrence shall constitute a default only
if the same is not dismissed within sixty (60) days) then
Landlord shall have the right thereafter to re-enter and take possession of
the Demised Premises, to declare the term ended and remove Tenant's effects
without prejudice to any remedies which might otherwise be used for arrears
of rent or other default. If Tenant shall default, after thirty (30) days'
notice thereof (or, in the case of emergency, after such notice thereof as
may be reasonable under the circumstances), in the observance or
performance of any conditions or covenants on Tenant's part to be observed
or performed under or by virtue of any of the provisions in any Article of
this lease, Landlord without being under any obligation to do so and
without thereby waiving such default, may remedy such default for the
account and at the expense of Tenant. If Landlord makes any expenditures
or incurs any obligations for the payment of money in connection therewith,
including, but not limited to, reasonable attorneys' fees in instituting,
prosecuting or defending any action or proceeding plus all court costs,
such sums paid or obligations incurred, with interest at an annual rate
(the "Default Rate") equal to the lesser of (I) 4% above the "Prime Rate"
most recently announced by The First National Bank of Boston and (ii) the
highest rate of interest which may lawfully be charged by Landlord, shall
be paid to Landlord by Tenant as additional rent. If Tenant shall consist
of more than one person, or if there shall be any guarantor of Tenant's
obligations, then the liability of all such persons, including any such
guarantor, shall be joint and several, and the word "Tenant", as used in
clause (c) above, shall be deemed to mean any one of such persons.
In the event (I) any payment of rent (annual or additional) is not post-
marked within three (3) days of the due date, or (ii) a check received by
Landlord from Tenant shall be dishonored, then because actual damages for a
late payment or for a dishonored check are extremely difficult to fix or
ascertain, but recognizing that damage and injury result therefrom, Tenant
agrees to pay $200.00 as liquidated damages for each late payment and
$35.00 as liquidated damages for each time a check is dishonored. (The
grace period herein provided is strictly related to the liquidated damages
for a late payment and shall in no way modify or stay Tenant's obligation
to pay rent when it is due, nor shall the same preclude Landlord from
pursuing its remedies under this Article 21, or as otherwise allowed by
law.) In the event that two (2) or more Tenant's checks are dishonored,
Landlord shall have the right, in addition to all other rights under this
lease, to demand all future payments by certified check or money order.
Furthermore, if any payment of rent (annual or additional) or any other
payment payable hereunder by the Tenant to Landlord shall not be paid when
due, the same shall bear interest, from the date when the same was due
until the date paid, at the Default Rate. Such interest shall constitute
additional rent payable hereunder.
If Landlord shall have the right to re-enter the Demised Premises as
aforesaid, then in lieu thereof, Landlord may send written notice to Tenant
of the termination of this lease, and in such event the term shall end on
the fifth (5th) day next following the date of the sending of the notice.
Notwithstanding the provisions of clause (a) of the first sentence of this
Article, if Landlord shall have rightfully given Tenant notice of default
pursuant to said clause twice during any twelve-month period, and if Tenant
shall thereafter default in the payment of rent or other payments, then
Landlord shall have no further obligation to provide notice of such
default, and the grace period provided above shall commence immediately on
the date of Tenant's failure to perform the relevant obligation. Tenant
hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event Landlord terminates this lease
as provided for in this Article.
In case this lease shall be so terminated, Tenant will indemnify Landlord
each month against all loss of rent and all obligations which Landlord may
incur by reason of any such termination between the time of termination and
the expiration of the term; or at the election of Landlord, exercised at
the time of the termination or at any time thereafter, Tenant will
indemnify Landlord each month until the exercise of the election against
all loss of rent and other obligations which Landlord may incur by reason
of such termination during the period between the time of the termination
and the exercise of the election, and upon the exercise of the election
Tenant will pay Landlord as damages such amount as at the time of the
exercise of the election represents the amount by which the rental value of
the Demised Premises for the period from the exercise of the election until
the expiration of the term shall be less than the amount of rent and other
payments provided herein to be paid by Tenant to Landlord during said
period. It is understood and agreed that at the time of the termination or
at any time thereafter Landlord may rent the Demised Premises (and agrees
to use reasonable efforts in attempting to do so), for a term which may
expire before or after the expiration of the term, without releasing Tenant
from any liability whatsoever, and that Tenant shall be liable for any
expenses incurred by Landlord in connection with obtaining possession of
the Demised Premises, with removing from the Demised Premises property of
Tenant and persons claiming under it (including warehouse charges), with
putting the Demised Premises into good condition for reletting, and with
any reletting, including, but without limitation, reasonable attorneys'
fees and brokers' fees, and that any monies collected from any reletting
shall be applied first to the foregoing expenses and then to the payment of
rent and all other payments due from Tenant to Landlord for the period to
which such monies collected relate, and any remaining monies shall be and
remain the sole property of Landlord.
22. HOLDING OVER. If Tenant shall continue to occupy the Demised
Premises following the expiration or earlier termination of this lease,
Tenant shall be deemed to be occupying the Demised Premises as a tenant at
sufferance. Such tenancy at sufferance shall be upon all of the terms and
conditions set forth in this lease with the exception of rent payments,
which shall be in the form of use and occupancy, and at a rate equal to two
hundred (200%) percent of the amount of rent last provided for hereunder.
23. SECURITY DEPOSIT. Landlord acknowledge that it has received from
Tenant the security deposit set forth in said Lease Information Page, said
sum to serve as security for the payment of rents and the performance and
observance of the agreements and conditions in this lease contained on the
part of Tenant to be performed and observed. In the event of any default
or defaults in such payment, performance or observance, Landlord may apply
said sum or any part thereof toward curing of any such default or defaults
and/or toward compensating Landlord for any loss or damage arising from any
such default or defaults. Upon the expiration or earlier termination of
this lease, said sum (or so much thereof as may remain after application in
satisfaction of any existing defaults or liabilities of Tenant hereunder)
shall be returned to Tenant, without interest. It is understood and agreed
that Landlord shall always have the right to apply said sum, or any other
remedy or remedies in the event of any such default or defaults, without
prejudice to any other remedy or remedies which Landlord may have or
Landlord may pursue any other such remedy or remedies in lieu of (and in
addition to) applying said sum or part thereof. If Landlord shall apply
said sum or any part thereof as aforesaid, Tenant shall upon demand pay to
Landlord the amount so applied by Landlord, to restore the security to its
original amount.
24. WAIVER. Failure of Landlord to complain of any act or omission on
the part of Tenant, no matter how long the same may continue, shall not be
deemed to be a waiver by Landlord of any of its rights hereunder. No
waiver by Landlord at any time, express or implied, of any breach of any
provision of this lease shall be deemed a waiver of a breach of any other
provision of this lease or a consent to or approval of any other action on
the same or any subsequent occasion. No payment by tenant or acceptance by
Landlord shall be deemed to be anything but payment on account, and the
acceptance by Landlord of a check for a lesser amount with an endorsement
or statement thereon or upon a letter accompanying said check that said
lesser amount is payment if full shall not be deemed an accord and
satisfaction, and Landlord may accept said check without prejudice to its
right to recover the balance due or pursue any other remedy. Any and all
rights and remedies which Landlord may have under this lease or by
operation of law, either at law or in equity, upon any breach, shall be
distinct, separate and cumulative and shall not be deemed inconsistent with
each other; and no one of them, whether exercised by Landlord or not, shall
be deemed to be in exclusion of any other; and any two or more of all of
such rights and remedies may be exercised at the same time.
25. LANDLORD'S LIABILITY. The word "Landlord", as used herein, means
only the owner for the time being of Landlord's interest in this lease.
That is, in the event of any transfer of Landlord's interest in this lease,
the transferor shall cease to be liable, and shall be released from all
liability for the performance or observance of any agreements or conditions
on the part of Landlord to be performed or observed subsequent to the time
of said transfer, and the transferee shall be liable for the performance
and observance of said agreements and conditions. If all or any part of
Landlord's interest in this lease shall be held by a trust, corporation or
any other form of business entity, no trustee, shareholder or beneficiary
of said trust, corporation or business entity shall be personally liable
for any of the covenants or agreements, expressed or implied, hereunder.
Landlord's covenants or agreements shall be binding upon the trustees of
said trust, as trustees as aforesaid, or upon the corporation or business
entity, as the case may be, but not individually, and upon the trust,
corporate or business entity's estate. Without limiting the generality of
the foregoing, and whether or not all or any part of Landlord's interest in
this lease shall be held by a trust, corporation or business entity, Tenant
specifically agrees to look solely to Landlord's interest in the building
(and Landlords liability insurance coverage) for recovery of any judgment
from Landlord: it being specifically agreed that Landlord's shall never
otherwise be personally liable for any such judgment. However, each
succeeding holder of the Landlord's interest hereunder shall be liable for
the defaults of the Landlord hereunder occurring during or prior to the
period during which such person holds the Landlord's interest hereunder.
In no event shall Landlord be liable to Tenant for any incidental or
consequential damages sustained by Tenant from whatever cause.
26. NOTICE. Any notice from Landlord to Tenant shall be deemed duly
served if hand delivered, mailed by registered or certified mail, return
receipt requested, postage prepaid, or if sent by prepaid Federal Express
or other similar overnight delivery service, addressed to Tenant at
Tenant's Notice Address. Any notice from Tenant to Landlord shall be
deemed duly served if mailed to Landlord by registered or certified mail,
return receipt requested, postage prepaid, or if sent by prepaid Federal
Express or other similar overnight delivery service, addressed to Landlord
at Landlord's Notice Address, as specified on the Lease Information Page,
or at such other address or addresses as may be designated by Landlord from
time to time.
27. SUBORDINATION. This lease shall be subject and subordinate to any
and all mortgages, deeds of trust and other instruments in the nature of a
mortgage now or at any time hereafter a lien or liens on the property of
which the Demised Premises are a part, and Tenant shall, when requested,
promptly execute and deliver such written instruments as shall be necessary
to show the subordination of this lease to said mortgages, deeds of trust
or other such instruments in the nature of a mortgage. Landlord agrees to
obtain a "non-disturbance agreement" on behalf of Tenant from the holder of
any mortgage, deed of trust or other instruments in the nature of a
mortgage to which this Lease is to be subordinate. Any mortgagees may, at
its election, make its mortgage subordinate to this lease. In any event,
Tenant expressly agrees to attorn to any mortgagee (and to the successor in
interest to any mortgagee) which succeeds to the interest of Landlord
hereunder. At any time or times during the term of this lease and within
fifteen (15) days after written request therefor by Landlord, Tenant agrees
to deliver to Landlord or to any mortgagee a certificate stating that
Tenant has entered into occupancy of the Demised Premises in accordance
with the provisions of this lease, that this lease is in full force and
effect, and any other information reasonably requested.
28. BROKERS. Tenant hereby represents and warrants to Landlord that,
except for the broker listed on said Lease Information Page, if any, it has
dealt with no broker in connection with this lease. Tenant hereby agrees
to hold Landlord harmless from, and indemnified against, all loss or damage
(including, but without limitation, the cost of defending the same) arising
from any claim by any broker or other person (other then said listed
broker, if any, whose compensation shall be paid by Landlord) claiming to
have dealt with Tenant.
29. RECORDING. Tenant shall not record this lease, but, at the request
of either party hereto, Landlord and Tenant shall execute and record a
"Notice of Lease", in the form (and containing the information) provided by
law.
30. SUCCESSORS AND ASSIGNS. This lease shall be binding upon, and inure
to the benefit of any permitted successors and assigns of Tenant and any
successors and assigns of Landlord.
31. MARGINAL NOTES. The marginal notes used as headings for the various
Articles of this lease are used only as a matter of convenience for
reference, and are not to be considered a part of this lease or to be used
in determining the intent of the parties to this lease.
32. DEFINITIONS AND INTERPRETATION. This lease shall be governed in all
respects by the laws of the Commonwealth of Massachusetts as the same may
be in effect from time to time. It is agreed that if any provisions of
this lease shall be determined to be void by any court of competent
jurisdiction, then such determination shall not affect any other provisions
of this lease, all of which other provisions shall remain in full force and
effect; and it is the intention of the parties hereto that if any provision
of this lease is capable of two constructions, one of which would render
the provision void and the other of which would render the provision valid,
then the provision shall have the meaning which renders it valid.
This instrument contains the entire and only agreement between the parties,
and no oral statements or representations or prior written matter not
contained or referred to in this instrument shall have any force or effect.
This lease shall not be modified in any way except by writing subscribed by
both parties.
The submission of this lease for examination does not constitute a
reservation of, or option for, the Demised Premises, and this lease becomes
effective as a lease only upon execution and unconditional delivery thereof
by both Landlord and Tenant.
IN WITNESS WHEREOF, this lease has been executed as a sealed instrument as
of the Date of Lease set forth on said Lease Information Page.
LANDLORD: TENANT:
New Avon Limited Partnership Westerbeke Corporation
by its general partner
New Avon Development Corp.
By: /s/ Lawrence J. Rothschild By: /s/ Carleton F. Bryant III
-------------------------- --------------------------
Carleton F. Bryant, III,
Executive Vice President
Hereunto duly authorized
RULES AND REGULATIONS
(A) The holder of the interest of Tenant under the lease shall always
conduct it's operations in the Demised Premises under it's present trade
name (Tenant representing that it has the right to use such trade name) or
any subsequent trade name which Tenant has the right to use, subject to
Tenant providing Landlord with (30) days prior written notice of a change
in Tenant's trade name.
(B) Tenant shall at all times appropriately light, heat and air
condition the Demised Premises. Tenant shall cooperate with Landlord in all
reasonable respects, in order to assure the efficient and effective use of
the heating and air conditioning system and the electric and other
utilities systems serving the Demised Premises;
(C) The plumbing and utilities systems serving the Demised Premises
shall not be used for any purpose other than that for which they were
constructed, and no foreign substance of any kind shall be thrown therein.
Tenant will not overload the utilities systems serving the Demised Premises
or the floor, ceiling or walls of the Demised Premises. Tenant shall not
permit the Demised Premises to be damaged, stripped or defaced, nor suffer
any waste.
(D) No awning or other projections shall be attached by Tenant to the
exterior walls of the Demised Premises;
(E) All loading and unloading of goods shall be done only in the areas
and through the entrances designated for such purpose by Landlord;
(F) All garbage and refuse shall be kept in containers specified by
Landlord, shall be placed in the areas specified by landlord;
(G) No radio or television or other similar device shall be installed,
and no aerial shall be erected on the roof, or on exterior walls of the
Demised Premises or the building, without in each instance having obtained
Landlord's prior written consent. Any such device or aerial so installed
without such prior written consent shall be subject to Landlord's right to
require removal of the device or aerial at any time, without notice, at
Tenant's sole cost and expense;
(H) No loudspeakers, television sets, phonographs, radios or other
devices shall be used in a manner so as to be heard or seen outside of the
Demised Premises without the prior written consent of Landlord;
(I) Sales using the auction method of selling, fire sales and closing
out or going out of business sales shall not be conducted on or about the
Demised Premises without the prior written consent of Landlord;
(J) Tenant shall not place or permit any obstructions or merchandise in
(or otherwise use in a way which interferes with the use thereof by others
entitled thereto) any service corridors, sidewalks, entrances, passages,
courts, corridors, elevators or stairways;
(K) Tenant shall use, at Tenant's cost, such pest extermination
contractor as Landlord may reasonably direct and at such intervals as
Landlord may reasonably require, provided the cost thereof is competitive
to any similar reputable service available to Tenant;
(L) Except for those exclusively for use by employees of Tenant which
are not visible from the sales area of the Demised Premises or the exterior
of the Demised Premises, Tenant shall not operate any coin-or token-
operated vending machine or similar device for the sale of any goods,
wares, merchandise, food, beverages or services, including, but not limited
to, pay telephones, pay lockers, pay toilets, scales, amusement devices and
machines for the sale of beverages, food, candy, cigarettes or other
commodities, without the prior written consent of the Landlord;
(M) Tenant shall keep the Demised Premises in a clean and neat
condition. Tenant shall not make unreasonable noises, cause disturbances
or vibrations or use or operate any electrical devices or other devices
that emit sound or other waves or disturbances, or create odors, or
otherwise create or permit to exist in and about the Demised Premises any
nuisance which may be offensive to other tenants and occupants of the
building or that would interfere substantially with the operation of any
device or equipment or radio or television broadcasting or reception from
or within the building or elsewhere;
(N) No additional or different locks or bolts shall be affixed by Tenant
to the doors of the Demised Premises except by prior written notice to
Landlord. Not later than the date on which Tenant assumes exclusive
possession of the Demised Premises, Tenant will provide Landlord with the
name and home telephone number of persons who will be available on a
twenty-four hour basis, in order to assure Landlord of the ability to gain
access to the Demised Premises whenever permitted to do so pursuant to the
terms of the lease;
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-23-1999
<PERIOD-END> JAN-23-1999
<CASH> 37,700
<SECURITIES> 0
<RECEIVABLES> 2,342,800
<ALLOWANCES> 59,200
<INVENTORY> 6,360,700
<CURRENT-ASSETS> 9,793,800
<PP&E> 5,861,500
<DEPRECIATION> 3,728,500
<TOTAL-ASSETS> 15,949,300
<CURRENT-LIABILITIES> 4,316,000
<BONDS> 0
0
0
<COMMON> 21,900
<OTHER-SE> 10,684,200
<TOTAL-LIABILITY-AND-EQUITY> 15,949,300
<SALES> 5,446,800
<TOTAL-REVENUES> 5,446,800
<CGS> 4,490,800
<TOTAL-COSTS> 4,490,800
<OTHER-EXPENSES> 1,176,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (36,200)
<INCOME-PRETAX> (184,200)
<INCOME-TAX> (73,700)
<INCOME-CONTINUING> (110,500)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (110,500)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
