FORM 10-Q
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 2, 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 No. 0-8544
SPEIZMAN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-0901212
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
508 West Fifth St. 28202
Charlotte, North Carolina (Zip Code)
(Address of principal executive offices)
(704) 372-3751
(Registrant's telephone number, including area code)
Not Applicable
(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, and (2) has been subject to such filing requirements
for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Outstanding at
Class of Common Stock February 8, 1999
Par value $.10 per share 3,271,206
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets.................. 3 - 4
Consolidated Condensed Statements of Operations........ 5
Consolidated Condensed Statements of Cash Flows........ 6
Notes to Consolidated Condensed Financial Statements... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 8 - 12
PART II. OTHER INFORMATION:
Item 6. Exhibits and reports on Form 8-K................ 13
Page 2
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
January 2 June 27,
1999 1998
---- ----
(Unaudited) (Unaudited)
ASSETS
CURRENT:
Cash and cash equivalents $ 364,550 $ 2,193,329
Accounts receivable, less allowances of
$559,862 and $655,656 23,796,802 19,817,834
Inventories 17,377,555 15,934,745
Prepaid expenses and other current assets 3,987,743 3,372,266
---------- ----------
TOTAL CURRENT ASSETS 45,526,650 41,318,174
---------- ----------
PROPERTY AND EQUIPMENT:
Leasehold improvements 585,458 552,655
Machinery and equipment 1,986,174 1,825,959
Furniture, fixtures and transportation
equipment 1,275,867 1,341,728
---------- ----------
Total 3,847,499 3,720,342
Less accumulated depreciation and amortization (1,962,651) (1,632,367)
----------- ----------
NET PROPERTY AND EQUIPMENT 1,884,848 2,087,975
---------- ----------
OTHER LONG-TERM ASSETS 1,148,117 517,352
INTANGIBLES, NET OF ACCUMULATED AMORTIZATION 5,890,410 6,110,410
---------- ----------
$ 54,450,025 $ 50,033,911
=========== ===========
See accompanying notes to consolidated condensed financial statements.
Page 3
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
January 2, June 27,
1999 1998
---- ----
(Unaudited) (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - bank line of credit $ 5,350,000 $ 4,000,000
Accounts payable 15,297,877 10,809,976
Customers' deposits 3,911,190 2,158,512
Accrued expenses 1,211,044 2,188,557
Current maturities of long-term debt 1,520,000 1,945,000
----------- -----------
TOTAL CURRENT LIABILITIES 27,290,111 21,102,045
LONG-TERM DEBT 4,560,000 5,725,000
----------- -----------
TOTAL LIABILITIES 31,850,111 26,827,045
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock - par value $.10; authorized
20,000,000 shares, issued 3,357,406, outstanding
3,273,606; and issued 3,357,406, outstanding
3,319,806, respectively. 335,741 335,741
Additional paid-in capital 12,889,546 12,889,546
Retained earnings 9,724,864 10,143,226
----------- -----------
Total 22,950,151 23,368,513
Treasury stock, at cost, 83,800 and 37,600
common shares (350,237) (161,647)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 22,599,914 23,206,866
----------- -----------
$54,450,025 $50,033,911
=========== ===========
See accompanying notes to consolidated condensed financial statements.
Page 4
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
For the Three Months Ended For the Six Months Ended
-------------------------- ------------------------
01-02-99 12-27-97 01-02-99 12-27-97
(13 Weeks) (13 Weeks) (27 Weeks) (26 Weeks)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES $ 28,211,079 $ 24,331,395 $ 48,676,720 $ 45,801,025
------------- ------------- ------------- -------------
COSTS AND EXPENSES:
Cost of sales 24,449,934 19,561,270 41,438,836 37,462,825
Selling expenses 1,849,365 1,785,633 3,656,720 3,442,256
General and administrative
expenses 2,039,395 1,599,540 3,769,780 2,689,995
------------- ------------- ------------- -------------
Total costs and expenses 28,338,694 22,946,443 48,865,336 43,595,076
------------- ------------- ------------- -------------
(127,615) 1,384,952 (188,616) 2,205,949
NET INTEREST EXPENSE 266,901 170,816 497,746 331,734
------------- ------------- ------------- -------------
INCOME (LOSS) BEFORE
TAXES ON INCOME (394,516) 1,214,136 (686,362) 1,874,215
TAXES (BENEFIT) ON INCOME (158,000) 476,000 (268,000) 727,000
------------- ------------ ------------- -------------
NET INCOME (LOSS) $ (236,516) $ 738,136 $ (418,362) $ 1,147,215
============= ============ ============= ============
Basic earnings (loss) per
share $ ( 0.07) $ 0.23 $ ( 0.12) $ 0.35
Diluted earnings (loss) per
share ( 0.07) 0.21 ( 0.12) 0.34
Weighted average shares
Outstanding:
Basic 3,274,381 3,275,875 3,293,369 3,255,900
Diluted 3,274,381 3,450,912 3,293,369 3,423,820
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Page 5
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
------------------------
For the Six Months Ended
------------------------
01-02-99 12-27-97
(27 Weeks) (26 Weeks)
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (418,362) $ 1,147,215
Adjustments to reconcile net income (loss) to cash
used by operating activities:
Depreciation and amortization 623,960 533,646
Provision for inventory obsolescence 150,000 125,000
Gain on disposal of assets ( 321) (1,390)
Foreign currency translation adjustment - 11,000
(Increase) decrease in:
Accounts receivable (3,978,968) 2,145,022
Inventories (1,592,810) 325,583
Prepaid expenses and other current assets (615,477) (50,878)
Other assets (630,765) 703,161
Increase (decrease) in:
Accounts payable 4,487,901 (4,342,982)
Customers' deposits 1,752,678 (177,819)
Accrued expenses (977,513) (663,474)
----------- ------------
Net cash used in operating activities (1,199,677) (245,916)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Wink Davis Equipment Company - (9,500,000)
Capital expenditures (211,012) (177,682)
Proceeds on sale of assets 10,500 3,500
----------- ------------
Net cash used in investing activities (200,512) (9,674,182)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on line of credit agreement 1,350,000 850,000
Payment on line of credit agreement of Wink
Davis Equipment
Company - (201,977)
Proceeds from issuance of term note due to bank - 7,000,000
Principal payments on long-term debt (1,590,000) (12,707)
Issuance of common stock for stock options - 110,875
Purchase of treasury stock (188,590) -
----------- ------------
Net cash provided by (used in) financing activities (428,590) 7,746,191
----------- ------------
NET DECREASE IN CASH (1,828,779) (2,173,907)
CASH AND CASH EQUIVALENTS at beginning of period 2,193,329 3,832,534
----------- ------------
CASH AND CASH EQUIVALENTS at end of period $ 364,550 $ 1,658,627
=========== ============
Supplemental Disclosures:
Cash paid during period for:
Interest $ 548,902 $ 179,796
Income taxes 313,850 791,149
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Page 6
<PAGE>
SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1. Management Statement re Adjustments
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present the
Registrant's financial position, the results of operations and changes
in cash flow for the periods indicated.
The accounting policies followed by the Registrant are set forth on page
F-6 of the Registrant's Form 10-K for the fiscal year ended June 27,
1998, which is incorporated by reference.
Note 2. Inventories
Inventories consisted of the following:
January 2 June 27,
1999 1998
---- ----
(Unaudited) (Unaudited)
Machines $ 11,711,651 $ 9,466,125
Parts and supplies 5,665,904 6,468,620
------------ -----------
Total $ 17,377,555 $15,934,745
============ ===========
Note 3. Taxes on Income
Taxes on income are allocated to interim periods on the basis of an
estimated annual effective tax rate.
Note 4. Net Income (Loss) Per Share
Basic net income per share includes no dilution and is calculated by
dividing net income by the weighted average number of common shares
outstanding for the period. Diluted net income per share reflects the
potential dilution of securities that could share in the net income of
the Company which consists of stock options (using the treasury stock
method). In a period with a net loss, the weighted average shares
outstanding will be the same.
Note 5. Intangibles
Goodwill is calculated as the excess cost of purchased businesses over
the value of their underlying net assets and is being amortized on a
straight-line basis over fifteen years.
Page 7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Speizman Industries, Inc. and subsidiaries (collectively the "Company") is a
major distributor operating through four companies: Speizman Industries, Inc.
("Speizman" or "Speizman Industries"), Wink Davis Equipment Co., Inc. ("Wink
Davis"), Todd Motion Controls, Inc. ("TMC"), and Speizman Yarn Equipment, Inc.
("Speizman Yarn"). Speizman distributes sock knitting machines, other knitting
equipment and related parts. Wink Davis sells commercial and industrial laundry
equipment, including the distribution of machines and parts as well as
installation and after sales service. TMC manufactures automated boarding,
finishing and packaging equipment used in the sock knitting industry. TMC's
products are sold through Speizman's distribution network. Speizman Yarn
distributes equipment used in the yarn processing industry.
NOTE: Wink Davis was acquired on August 1, 1997; TMC was acquired on February 6,
1998; Speizman Yarn began operations on August 1, 1998. Accordingly, these
subsidiaries may contain different lengths of operations between periods of
fiscal 1998 compared to the same periods of fiscal 1999.
RESULTS OF OPERATIONS
Revenues increased by about $3.9 million in the Company's second fiscal quarter
to $28.2 million. The increase is primarily due to the revenues of yarn
processing equipment (which began operations in the current fiscal year) of $5.0
million and increased revenues of knitted fabric equipment of $4.3 million
offset by decreased hosiery revenues of $6.9 million.
Year-to-date revenues were approximately $48.7, an increase of $2.9 million over
the previous fiscal year. The increase is attributable to knitted fabric
(increased revenues of $5.3 million) and the recently acquired subsidiaries,
Speizman Yarn, Wink Davis and TMC, with increased revenues of approximately $5.1
million, $1.8 million and $1.7 million, respectively. The gains are offset by
decreased hosiery revenues of $10.6 million in the current fiscal year as
compared to the same period last year.
Cost of sales in the current second quarter were 86.7% of revenues as compared
to 80.4% in the same period of last year. Similarly, cost of sales for the
current six-month period were 85.1% of revenues as compared to 81.9% in the same
period of last year. These unfavorable shifts in both periods result from
decreased volume in hosiery manufacturing equipment, increased production costs
of boarding and finishing equipment, and lower margins on yarn processing
equipment. Orders for this yarn processing equipment were on back order at the
time Speizman assumed operations. These decreases were offset by higher margins
on knitted fabric equipment.
Page 8
<PAGE>
Selling expenses in the second quarter of fiscal 1999 were approximately
$1,849,000, an increase of approximately $63,000 over the same quarter of last
year. Approximately $252,000 of additional selling expenses was incurred by TMC
and Speizman Yarn.
Selling expenses in the six-month period ending January 2, 1999 increased by
about $215,000 to $3,657,000. Approximately $266,000 of additional expenses is
attributable to the new operations of Speizman Yarn.
In the quarter ended January 2, 1999, general and administrative expenses
increased by approximately $439,000. $271,000 of those additional expenses are
attributable to TMC and Speizman Yarn, neither of which had operations in the
second quarter of the prior fiscal year.
In the current fiscal year, general and administrative costs increased by about
$1,090,000. General and administrative expenses related to Speizman Yarn and
TMC, neither of which was included in the same quarter of the prior fiscal year,
were approximately $539,000. Other increases resulted primarily from increased
rental expenses offset partially by decreases in bonuses.
Interest expense is shown net of interest income. Net interest expense increased
to approximately $267,000 and $498,000 in the current quarter and current fiscal
year, respectively. The increase is due primarily to increased use of bank line
of credit.
Net loss for the second quarter was $237,000 or $0.07 per share, as compared to
net income in the same quarter last year of $738,000 or $.23 per share basic and
$0.21 per share diluted. Net loss in the six months year-to-date was $418,000 or
$0.12 per share. Net income for the same period of the prior fiscal year was
$1,147,000 or $0.35 per share basic and $0.34 per share diluted.
OUTLOOK
The outlook for sock machinery is substantially unchanged from the prior
quarter. Many athletic sock producers are still assessing if new technology for
closing the toe of the sock on the knitting machine will meet their customers'
needs. Accordingly, the Company's customers are delaying many capital
expenditures on new sock knitting equipment. Demand remains strong for large
diameter circular knitting machinery utilizing new technology used in the
production of seamless undergarments, actionwear and swimsuits. The yarn
processing industry is also in a state of transition. One of the industries
major trade shows will be in June 1999, at which time customers will evaluate
new technologies offered by both the Company's suppliers and its competitors.
Wink Davis' backlog is moderately higher than previous quarters.
Page 9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of January 2, 1999, the Company's working capital was approximately $18.2
million, a decrease of $1,980,000 from the Company's working capital at the end
of fiscal 1998. The Company's current ratio at January 2, 1999 was 1.67 to 1.00.
This ratio was 1.96 to 1.00 at June 27, 1998.
Operating activities used $1,200,000 in the six-month period ended January 2,
1999, as compared to usage of $246,000 in the same period of the prior fiscal
year. In the current fiscal year this usage resulted primarily from increases in
accounts receivable and inventories, offset partially by increases in accounts
payable and customers' deposits. This usage of cash in the prior fiscal period
is generated by decreases in accounts payable, offset by decreases in accounts
receivable, net of receivable purchased with the Wink Davis acquisition.
In the current six-month period, investing activities used approximately
$201,000. In the prior six-month period, investing activities used $9.7 million
in cash, substantially all related to the acquisition of Wink Davis.
For the current six-month fiscal period, financing activities used $429,000. In
the prior six-month period, financing activities provided $7.7 million in cash,
primarily related to borrowing from a term loan and advances on the line of
credit to fund the acquisition of Wink Davis.
Overall, net cash decreased by $1,829,000 in the current year as compared to a
decrease of $2,174,000 for the same period of the prior fiscal year.
The Company is currently consolidating several machinery warehouses and the
administrative offices of Speizman Industries into a new location in the spring
of 1999. The Company expects to incur approximately $1.2 million to $1.4 million
in leasehold upfitting costs through the remainder of fiscal 1999.
SEASONALITY AND OTHER FACTORS
There are certain seasonal factors that may affect the Company's business.
Traditionally, manufacturing businesses in Italy close for the month of August,
and the Company's hosiery customers close for one week in July. Consequently, no
shipments or deliveries, as the case may be, of machines distributed by the
Company that are manufactured in Italy are made during these periods which fall
in the Company's first quarter. In addition, manufacturing businesses in Italy
generally close for two weeks in December, during the Company's second quarter.
Fluctuations of customer orders or other factors may result in quarterly
variations in net revenues from year to year.
EFFECTS OF INFLATION AND CHANGING PRICES
Management believes that inflation has not had a material effect on the
Company's operations.
Page 10
<PAGE>
DISCLOSURE ABOUT FOREIGN CURRENCY RISK
Generally, the Company's purchases of foreign manufactured machinery for resale
are denominated in Italian lira. In the ordinary course of business, the Company
enters into foreign exchange forward contracts to mitigate the effect of foreign
currency movements between the Italian lira and the U.S. dollar from the time of
placing the Company's purchase order until final payment for the purchase is
made. The contracts have maturity dates that do not generally exceed 12 months.
Substantially all of the increase or decrease of the lira denominated purchase
price is offset by the gains and losses of the foreign exchange contract. The
unrealized gains and losses on these contracts are deferred and recognized in
the results of operations in the period in which the hedged transaction is
consummated.
A substantial portion of the Company's textile machine and spare part purchases
are denominated and payable in Italian lira. Currency fluctuations of the lira
could result in substantial price level changes and therefore impede or promote
import/export sales and substantially impact profits. However, to reduce
exposure to adverse foreign currency fluctuations during the period from
customer orders to payment for goods sold, the Company enters into forward
exchange contracts. The Company is not able to assess the quantitative effect
that such currency fluctuations could have upon the Company's operations. There
can be no assurance that fluctuations in foreign currency exchange rates will
not have a significant adverse effect on future operations.
NOTE REGARDING PRIVATE SECURITIES LITIGATION REFORM ACT
Statements made by the Company which are not historical facts are forward
looking statements that involve risks and uncertainties. Actual results could
differ materially from those expressed or implied in forward-looking statements.
All such forward-looking statements are subject to the safe harbor created by
the Private Securities Litigation Reform Act of 1995. Important factors that
could cause financial performance to differ materially from past results and
from those expressed and implied in this document include, without limitation,
the risks of acquisition of businesses (including limited knowledge of the
businesses acquired and misrepresentations by sellers) availability of
financing, competition, management's ability to manage growth, loss of
customers, and a variety of other factors.
YEAR 2000 COMPLIANCE
The Company has reviewed its computer and business systems to identify those
areas that could be adversely affected by Year 2000 software failures. The
primary information system used by Speizman Industries, TMC, and Speizman Yarn
has been reviewed and all known issues related to the Year 2000 issues have been
resolved. Costs incurred were not significant. The primary information system
used by Wink Davis is not Year 2000 compliant. In conjunction with the purchase
of Wink Davis on August 1, 1997, management planned to integrate Wink Davis'
information into the existing system used by Speizman Industries. The
integration project, which was not accelerated due to the Year 2000 issue, is
scheduled to be completed in April 1999. The estimated project cost of
integrating Wink Davis' information system is approximately $100,000.
Page 11
<PAGE>
A substantial portion of the equipment distributed by the Company has
computerized controls and features. However, to the Company's knowledge, no
operating features of the equipment are dependent on any time or date
information, such as the Year 2000 issue.
The Company is aware of one subsidiary's voice mail system and there may be
other computer-based systems which may require upgrading to ensure operational
continuity beyond December 31, 1999. The Company has substantially completed
identification of all such systems and believes that all significant systems
will be compliant in time to ensure no disruption to the Company's operations.
The cost of bringing these minor systems into compliance is not anticipated to
be material.
Currently, the Company cannot predict the effect of the Year 2000 problem on
entities with which it transacts business and there can be no assurance it will
not have a material adverse effect on the Company's business, financial
condition, results of operations or cash flows. The Company will be formulating
a contingency plan to address the possible effects of any of its customers
experiencing Year 2000 problems.
Page 12
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
10(a). 1998 First Amendment Agreement to $37,000,000 Amended and
Restated Loan Agreement and Term Note dated as of
February 6, 1998
10(b). 1998 Second Amendment Agreement to $37,000,000 Amended and
Restated Loan Agreement and Term Note dated as of
December 30, 1998
10(c). New York Lease between The Hemmerdinger Corporation and
Speizman Industries, Inc. dated July 17, 1998
10(d). Lease Renewal Agreement between Metro II & III, dated
January 11, 1999
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
Page 13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPEIZMAN INDUSTRIES, INC.
(Registrant)
Date: February 16, 1999 /s/ Robert S. Speizman
--------------------- ---------------------------
Robert S. Speizman
President
Date: February 16, 1999 /s/ James H. McCorkle, III
--------------------- ---------------------------
James H. McCorkle, III
Secretary-Treasurer
(Chief Financial Officer)
Page 14
1998 FIRST AMENDMENT AGREEMENT TO
$37,000,000 AMENDED AND RESTATED LOAN AGREEMENT AND TERM NOTE
THIS AMENDMENT AGREEMENT, made and entered into as of this 6th day of
February, 1998, by and between SPEIZMAN INDUSTRIES, INC., a Delaware corporation
(the "Borrower") and NATIONSBANK, N.A., a national banking association (the
"Lender");
W I T N E S S E T H:
WHEREAS, pursuant to the $37,000,000 Amended and Restated Loan Agreement,
dated as of July 31, 1997, between the Borrower and the Lender (the "Loan
Agreement"), arrangements were made for the extension by the Lender to the
Borrower of credit on the terms and conditions set forth in such Loan Agreement;
WHEREAS, under the Loan Agreement, the Borrower obtained a Credit Facility
in the maximum aggregate principal amount at any time outstanding of up to
$37,000,000, of which (i) up to $30,000,000 may be allocated under a "Letter of
Credit Facility" for the issuance of documentary Letters of Credit to support
the Borrower's purchase and importing of (x) presold textile machinery in the
ordinary course of its business and (y) in certain cases, equipment to be held
as inventory for sale and, within such $30,000,000, up to $8,500,000 may be
allocated to borrowings for the Borrower's short term operating needs under a
Revolving Line of Credit, and up to $500,000 may be allocated for the issuance
of Standby Letters of Credit, as provided in such Loan Agreement, and (ii) up to
$7,000,000 may be allocated as a term loan, all upon the terms and conditions
provided in the Loan Agreement;
WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender
its Amended and Restated Revolving Credit Note dated July 31, 1997 in the
principal amount of $8,500,000 (the "Revolving Credit Note");
WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender
its Term Note dated July 31, 1997 in the principal amount of $7,000,000 (the
"Term Note");
WHEREAS, collateral for the indebtedness and obligations of the Borrower
in respect of the Loan Agreement, the Revolving Credit Note and the Letter of
Credit Facility is provided under the Amended and Restated Security Agreement
dated July 31, 1997 between the Borrower and Wink Davis Equipment Co., Inc.
("WD") and the Lender;
WHEREAS, the Borrower has entered into a Stock Purchase Agreement (the
"Purchase Agreement") dated as of the date hereof with the holders of all of the
capital stock of Todd Motion Controls, Inc. ("TMC") to acquire all of the
outstanding capital stock of TMC;
<PAGE>
WHEREAS, the Borrower has requested that the Lender, to facilitate the
Borrower's performance of its obligations under the Purchase Agreement, make a
$1,300,000 advance under the Term Loan, which would have the effects of
increasing the outstanding principal balance of the Term Loan to $8,050,000;
WHEREAS, the Bank is willing to extend such additional credit subject to
certain terms and conditions, including, but not limited to, the Bank's receipt
of a Security Agreement and Guaranty Agreement from TMC, and the Bank's receipt
of a Stock Pledge Agreement from the Borrower relating to the TMC stock;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
conditions herein set forth, it is hereby agreed as follows:
1. Terms. All terms used herein without definition, unless the context
clearly requires otherwise, shall have the meanings provided therefor in the
Loan Agreement.
2. Amendment to Loan Agreement; Confirmation of Liens.
(1) Effective the date hereof, the term "the Borrower, WD or TMC"
shall replace the term "the Borrower or WD" whenever it appears in the
Loan Agreement.
(2) Effective the date hereof, the term "the Borrower's, WD's or
TMC's" shall replace the term "the Borrower's or WD's" whenever it appears
in the Loan Agreement.
(3) Effective the date hereof, the term "including WD and TMC" shall
replace the term "including WD" whenever it appears in the Loan Agreement.
(4) Effective the date hereof, Section 1.84 of the Loan Agreement is
rewritten in its entirety to read as follows:
1.84 "Security Agreement" means, collectively, the
Amended and Restated Security Agreement dated as of July 31,
1997, between the Borrower and WD and the Lender, and the
Security Agreement dated as of February 6, 1998 between TMC
and the Lender, and all amendments and supplements thereto.
(5) Effective the date hereof, Section 1.86 of the Loan Agreement is
rewritten in its entirety to read as follows:
1.86 "Stock Pledge Agreement" means, collectively, the
Stock Pledge Agreement dated as of July 31, 1997, between the
Borrower and the Lender, and the Stock Pledge Agreement dated
as of February 6, 1998 between the Borrower and the Lender,
and all amendments and supplements thereto.
2
<PAGE>
(6) Effective the date hereof, Section 1.89 of the Loan Agreement is
rewritten in its entirety to read as follows:
"1.89 "Term Note" means the promissory note of the
Borrower in the original principal amount of $7,000,000
evidencing the Term Loan, and as such promissory note may be
amended or modified from time to time."
(7) Effective the date hereof, Section 2.1(b) of the Loan Agreement is
rewritten in its entirety to read as follows:
"Subject to the terms and conditions of this Agreement,
the Lender agrees to make a Term Loan to the Borrower, such
loan to be evidenced by the Term Note. On July 31, 1997, the
date of the Loan Agreement, the Lender made an advance on the
Term Loan of $7,000,000. As of February 6, 1998, the
outstanding principal balance of the Term Loan is $6,750,000.
The Lender agrees to make, on February 6, 1998, an advance on
the Term Loan of $1,300,000, thereby increasing the
outstanding principal balance of the Term Loan to $8,050,000.
The $1,300,000 advance shall be used to acquire the
outstanding capital stock of TMC. The principal balance
outstanding under the Term Note shall bear interest at the
Eurodollar Rate or Base Rate as provided herein.
The principal indebtedness evidenced by the Term Note
shall be repayable in ten consecutive quarterly payments on
the last business day of each of the months of March, June,
September and December commencing March 31, 1998. The first
ten quarterly payments shall be in the amount of $380,000. One
final payment shall be due on July 31, 2000 in an amount equal
to the unpaid principal balance and all accrued interest on
the Term Loan.
The principal indebtedness evidenced by the Term Note
shall also be prepaid annually on June 30 of each year,
commencing June 30, 1998, in an amount equal to 25% of Excess
Cash Flow determined for the immediate preceding Fiscal Year.
All such prepayments shall be applied to principal
installments due under the Term Note in inverse order of their
maturities.
The Borrower agrees that if at any time the outstanding
balance under the Term Note shall exceed the excess of the
Borrowing Base over the sum of (x) the face amount of Letters
of Credit outstanding, (y) the Reimbursement Obligations and
(z) the Committed Amount, the Borrower shall immediately
reduce such outstanding balance to the extent of such excess."
3
<PAGE>
(8) The Borrower hereby agrees and confirms that all liens and security
interests securing the indebtedness evidenced by the Term Note shall cover all
additional indebtedness created under the Term Note and that the liens and
security interests created under the Loan Documents, including the Security
Agreement and the Cash Collateral Documents, shall cover all indebtedness
evidenced by the Term Note as modified by this Amendment Agreement and the Note
Modification Agreement. The Borrower further agrees and confirms that this
Amendment Agreement and the Note Modification Agreement shall constitute a
modification to the Term Loan and the Term Note and not a novation thereof.
3. Representations and Warranties. The Borrower hereby represents and warrants
that:
(1) The representations and warranties contained in Article V of the Loan
Agreement are hereby made by the Borrower on and as of the date hereof except
the representations of Sections 5.3 and 5.4 shall refer to the most recent
financial statements delivered under Section 7.1 of the Loan Agreement.
(2) There has been no material change, and there exists no prospective
change, in the condition, financial or otherwise, of the Borrower since the date
of the most recent financial reports received by the Lender, other than changes
in the ordinary course of business and the Borrower's purchase of TMC, none of
which has been a materially adverse change;
(3) The business and properties of the Borrower are not, and since the
date of the most recent financial reports thereof received by Lender have not,
been materially adversely affected as the result of any fire, explosion,
earthquake, chemical spill, accident, strike, lockout, combination of workmen,
flood, embargo, riot, or cancellation or loss of any major contracts;
(4) No event has occurred and no condition exists which, either prior to
or upon the consummation of the transactions contemplated hereby, constitutes an
Event of Default under the Loan Agreement, either immediately or with the lapse
of time or the giving of notice, or both;
(5) The property which is collateral for the indebtedness of the Borrower
to the Lender under the Security Agreement and other collateral documents of the
Borrower in favor of the Lender are subject to no liens or encumbrances except
Permitted Liens;
(6) The execution, delivery and performance by the Borrower of its
obligations under this Amendment Agreement will not cause a violation or default
under any indenture, loan agreement, or other agreement of, or applicable to,
the Borrower; and
(7) The Borrower has the requisite corporate power and authority to
execute, deliver and perform this Amendment Agreement; each of such documents
has been duly authorized, executed and delivered; and each of such documents
constitutes a valid, binding
4
<PAGE>
and enforceable instrument, obligation or agreement of the Borrower, in
accordance with its respective terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally.
4. Effectiveness of Documents. The terms and conditions hereof shall not
be effective until each of the following are delivered to the Lender:
(1) Amendment Agreement. Two fully executed originals of this
Amendment Agreement and an executed copy of the Note Modification
Agreement in substantially the form attached hereto as Exhibit A.
(2) Resolutions of Borrower. Resolutions of the Borrower certified
by its secretary or assistant secretary as of the date hereof, approving
and adopting this Amendment Agreement and the other documents to be
executed by the Borrower.
(3) Opinions. An opinion of counsel to the Borrower covering the
matters covered by its prior opinion on the Loan Agreement.
(4) Certificate of Authority. Certificate of a recent date of the
Secretary of State of North Carolina as to the authority of the Borrower
to do business in North Carolina and the good standing of the Borrower.
(5) No Litigation Certificate. Certificate of the chief financial
officer of the Borrower to the effect that no litigation or proceedings
are pending or threatened which might reasonably be expected to materially
adversely affect the Borrower's ability to perform its obligations under
this Agreement or operation of the Borrower's business.
(6) Other Documents, Etc. Such other documents, instruments and
certificates as the Lender may reasonably request.
5
<PAGE>
5. Miscellaneous.
(1) This Amendment Agreement sets forth the entire understanding and
agreement of the parties hereto in relation to the subject matter hereof
and supersedes any prior negotiations and agreements among the parties
relative to such subject matter. No promise, condition, representation or
warranty, express or implied, not herein set forth shall bind any party
hereto, and none of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that,
except as in this Amendment Agreement otherwise expressly stated, no
representations, warranties, or commitments, express or implied, have been
made by any other party to the other regarding the subject matter hereof.
None of the terms or conditions of this Amendment Agreement may be
changed, modified, waived or canceled, orally or otherwise, except in a
writing, signed by the party to be charged therewith, specifying such
change, modification, waiver or cancellation of such terms or conditions,
or of any preceding or succeeding breach thereof, unless expressly so
stated.
(2) Except as hereby specifically amended, modified, or
supplemented, the Loan Agreement, the Loan Documents and all other
agreements, documents, and instruments related thereto are hereby
confirmed and ratified in all respects and shall remain in full force and
effect according to their respective terms.
(3) This Amendment Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of which together shall
constitute one and the same instrument.
(4) This Amendment Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of North Carolina.
(5) Upon request of the Lender, each of the parties hereto will duly
execute and deliver or cause to be duly executed and delivered to the
Lender such further instruments and do and cause to be done such further
acts that may be reasonably necessary or proper in the opinion of the
Lender to carry out more effectively the provisions and purposes hereof,
including documents deemed necessary by the Lender to more fully evidence
the obligations of Borrower to Lender and protect and perfect the
collateral therefor.
(6) The Borrower agrees to pay all reasonable costs and expenses of
the Lender in connection with the preparation, execution and delivery of
the documents executed in connection with this Amendment Agreement,
including without limitation, the reasonable fees and out-of-pocket
expenses of special counsel to the Lender.
(7) Wink Davis Equipment Co., Inc. (the "Guarantor") as guarantor
under a Guaranty Agreement dated July 31, 1997 from the Guarantor in favor
of the Lender hereby joins in this Amendment Agreement to evidence its
consent to the terms and conditions
6
<PAGE>
hereof and agrees that the additional indebtedness of $1,300,000 under the
Term Loan is covered by such Guaranty Agreement.
[Signatures appear on following page]
7
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
hereof by the Company and the Lender.
ATTEST: SPEIZMAN INDUSTRIES, INC.
/s/ Josef Sklut By: /s/ Robert S. Speizman
__________ Secretary Name: Robert S. Speizman
Title: President
WINK DAVIS EQUIPMENT CO., INC.
By: /s/ Josef Sklut
Name: Josef Sklut
Title: Vice President
NATIONSBANK, N.A.
By: /s/ J. Timothy Martin
Name: J. Timothy Martin
Title: Senior Vice President
8
1998 SECOND AMENDMENT AGREEMENT TO
$37,000,000 AMENDED AND RESTATED LOAN AGREEMENT AND TERM NOTE
THIS AMENDMENT AGREEMENT, made and entered into as of this 30th day of
December, 1998, by and between SPEIZMAN INDUSTRIES, INC., a Delaware corporation
(the "Borrower"), WINK DAVIS EQUIPMENT CO., INC., a Georgia corporation ("WD"),
TODD MOTION CONTROLS, INC., a North Carolina corporation ("TMC") and
NATIONSBANK, N.A., a national banking association (the "Lender");
W I T N E S S E T H:
WHEREAS, pursuant to the $37,000,000 Amended and Restated Loan Agreement,
dated as of July 31, 1997, as amended by 1998 First Amendment Agreement thereto
dated as of February 6, 1998, between the Borrower and the Lender (collectively
the "Loan Agreement"), arrangements were made for the extension by the Lender to
the Borrower of credit on the terms and conditions set forth in such Loan
Agreement;
WHEREAS, under the Loan Agreement, the Borrower obtained a Credit Facility
in the maximum aggregate principal amount at any time outstanding of up to
$37,000,000, of which (i) up to $30,000,000 may be allocated under a "Letter of
Credit Facility" for the issuance of documentary Letters of Credit to support
the Borrower's purchase and importing of (x) presold textile machinery in the
ordinary course of its business and (y) in certain cases, equipment to be held
as inventory for sale and, within such $30,000,000, up to $8,500,000 may be
allocated to borrowings for the Borrower's short term operating needs under a
Revolving Line of Credit, and up to $500,000 may be allocated for the issuance
of Standby Letters of Credit, as provided in such Loan Agreement, and (ii) up to
$7,000,000, as subsequently increased to $8,050,000 by Note Modification
Agreement dated February 6, 1998, may be allocated as a term loan, all upon the
terms and conditions provided in the Loan Agreement;
WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender
its Amended and Restated Revolving Credit Note dated July 31, 1997 in the
principal amount of $8,500,000 (the "Revolving Credit Note");
WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender
its Term Note dated July 31, 1997 in the original principal amount of
$7,000,000, as subsequently increased to $8,050,000 by Note Modification
Agreement dated February 6, 1998 (the "Term Note");
WHEREAS, collateral for the indebtedness and obligations of the Borrower
in respect of the Loan Agreement, the Revolving Credit Note and the Letter of
Credit Facility is provided under the Amended and Restated Security Agreement
dated July 31, 1997 between the Borrower, WD and
<PAGE>
the Lender and a Security Agreement dated as of February 6, 1998 between TMC and
the Lender (collectively, the "Security Agreement");
WHEREAS, the Borrower has requested that the Lender agree to certain
modifications to the Loan Agreement, including a temporary modification to the
Borrowing Base (as defined in the Loan Agreement);
NOW, THEREFORE, in consideration of the premises and mutual covenants and
conditions herein set forth, it is hereby agreed as follows:
1. Terms. All terms used herein without definition, unless the context
clearly requires otherwise, shall have the meanings provided therefor in the
Loan Agreement.
2. Amendment to Loan Agreement.
(1) Section 1.12 of the Loan Agreement (entitled "Borrowing Base")
is rewritten in its entirety to read as follows:
"1.12. "Borrowing Base" means the sum as of the date of
determination of (i) Eligible Accounts multiplied by 80% and (ii)
Eligible Inventory multiplied by 30%, and (iii) L/C Credit
multiplied by 50%, and (iv) Cash Collateral multiplied by 100%, all
determined pursuant to the Borrowing Base Certificate, plus the
following amounts for the following periods:
Period Amount
Prior to 12/15/98 $0
12/15/98 to 3/30/99 $3,500,000
3/31/99 to 4/29/99 $3,000,000
4/30/99 to 5/30/99 $2,500,000
5/31/99 to 6/29/99 $2,000,000
Thereafter $0"
(2) The third full paragraph of Section 2.1(b) is rewritten in its
entirety to read as follows:
"The principal indebtedness evidenced by the Term Note shall
also be prepaid annually on the date ninety (90) days following each
Fiscal Year End of each year, commencing with the Fiscal Year ending
June 27, 1998, in an amount equal to 25% of Excess Cash Flow
determined for the immediately preceding Fiscal Year. All such
prepayments shall be applied to principal installments due under the
Term Note in inverse order of their maturities."
(3) Section 8.2 is hereby amended to add the following sentence
immediately following the table contained therein:
<PAGE>
"Notwithstanding the foregoing, the ratio of (x) Indebtedness
for Money Borrowed of the Borrower and Subsidiaries, all determined
on a consolidated basis to (y) EBITDA shall not exceed the following
at the measuring dates listed below:
Measuring Dates Ratio
Fiscal Quarter Ending In:
October 1998 3.00 to 1.00
December 1998 3.40 to 1.00
March 1999 2.50 to 1.00
June 1999 2.00 to 1.00"
3. Representations and Warranties. Each of the Borrower, WD and TMC hereby
jointly and severally represents and warrants that:
(1) The representations and warranties contained in Article V of the
Loan Agreement are hereby made by the Borrower on and as of the date
hereof except the representations of Sections 5.3 and 5.4 shall refer to
the most recent financial statements delivered under Section 7.1 of the
Loan Agreement.
(2) There has been no material change, and there exists no known
prospective change, in the condition, financial or otherwise, of the
Borrower, WD or TMC since the date of the most recent financial reports
received by the Lender, other than changes in the ordinary course of
business, none of which has been a materially adverse change;
(3) The business and properties of the Borrower, WD or TMC are not,
and since the date of the most recent financial reports thereof received
by Lender have not, been materially adversely affected as the result of
any fire, explosion, earthquake, chemical spill, accident, strike,
lockout, combination of workmen, flood, embargo, riot, or cancellation or
loss of any major contracts;
(4) No event has occurred and no condition exists which, either
prior to or upon the consummation of the transactions contemplated hereby,
constitutes an Event of Default under the Loan Agreement, either
immediately or with the lapse of time or the giving of notice, or both;
(5) The property which is collateral for the indebtedness of the
Borrower, WD or TMC to the Lender under the Security Agreement and other
collateral documents of the Borrower, WD or TMC in favor of the Lender are
subject to no liens or encumbrances except Permitted Liens;
(6) The execution, delivery and performance by the Borrower, WD or
TMC of its obligations under this Amendment Agreement will not cause a
violation or default under
3
<PAGE>
any indenture, loan agreement, or other agreement of, or applicable to,
the Borrower, WD or TMC; and (1)
(7) Each of the Borrower, WD and TMC has the requisite corporate
power and authority to execute, deliver and perform this Amendment
Agreement; each of such documents has been duly authorized, executed and
delivered; and each of such documents constitutes a valid, binding and
enforceable instrument, obligation or agreement of the Borrower, WD or
TMC, in accordance with its respective terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally.
4. Effectiveness of Documents. The terms and conditions hereof shall not
be effective until each of the following are delivered to the Lender:
(1) Amendment Agreement. Two fully executed originals of this
Amendment Agreement.
(2) No Litigation Certificate. Certificate of the chief financial
officer of the Borrower to the effect that no litigation or proceedings
are pending or threatened which might reasonably be expected to materially
adversely affect the Borrower's, TMC's or WD's ability to perform its
obligations under this Amendment Agreement or any Loan Document or
operation of the Borrower's, TMC's or WD's business.
(3) Other Documents, Etc. Such other documents, instruments and
certificates as the Lender may reasonably request.
5. Miscellaneous.
(1) This Amendment Agreement sets forth the entire understanding and
agreement of the parties hereto in relation to the subject matter hereof
and supersedes any prior negotiations and agreements among the parties
relative to such subject matter. No promise, condition, representation or
warranty, express or implied, not herein set forth shall bind any party
hereto, and none of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that,
except as in this Amendment Agreement otherwise expressly stated, no
representations, warranties, or commitments, express or implied, have been
made by any other party to the other regarding the subject matter hereof.
None of the terms or conditions of this Amendment Agreement may be
changed, modified, waived or canceled, orally or otherwise, except in a
writing, signed by the party to be charged therewith, specifying such
change, modification, waiver or cancellation of such terms or conditions,
or of any preceding or succeeding breach thereof, unless expressly so
stated.
(2) Except as hereby specifically amended, modified, or
supplemented, the Loan Agreement, the Loan Documents and all other
agreements, documents, and instruments
4
<PAGE>
related thereto are hereby confirmed and ratified in all respects and
shall remain in full force and effect according to their respective terms.
(3) This Amendment Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of which together shall
constitute one and the same instrument.
(4) This Amendment Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of North Carolina.
(5) Upon request of the Lender, each of the parties hereto will duly
execute and deliver or cause to be duly executed and delivered to the
Lender such further instruments and do and cause to be done such further
acts that may be reasonably necessary or proper in the opinion of the
Lender to carry out more effectively the provisions and purposes hereof,
including documents deemed necessary by the Lender to more fully evidence
the obligations of Borrower, TMC or WD to Lender and protect and perfect
the collateral therefor.
(6) The Borrower agrees to pay all reasonable costs and expenses of
the Lender in connection with the preparation, execution and delivery of
the documents executed in connection with this Amendment Agreement,
including without limitation, the reasonable fees and out-of-pocket
expenses of special counsel to the Lender.
(7) Each of WD and TMC (collectively the "Guarantors") as guarantors
under, in the case of WD, a Guaranty Agreement dated July 31, 1997 from
the WD in favor of the Lender and, in the case of TMC, a Guaranty
Agreement dated February 6, 1998, of TMC in favor of the Lender, hereby
joins in this Amendment Agreement to join in the terms hereof and evidence
its consent to the terms and conditions hereof.
[Signatures appear on following page]
5
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
hereof by the Company and the Lender.
ATTEST: SPEIZMAN INDUSTRIES, INC.
/s/ James H. McCorkle, III By: /s/ Robert S. Speizman
- -------------------------- ----------------------
Secretary Name: Robert S. Speizman
Title: President
ATTEST: WINK DAVIS EQUIPMENT CO., INC.
/s/ James H. McCorkle, III By: /s/ C. Alexander Davis
- -------------------------- ----------------------
Assistant Secretary Name: C. Alexander Davis
Title: President
ATTEST: TODD MOTION CONTROLS, INC.
/s/ James H. McCorkle, III By: /s/ Robert S. Speizman
- -------------------------- -----------------------
Assistant Secretary Name: Robert S. Speizman
Title: President
NATIONSBANK, N.A.
By: /s/ Leesa C. Sluder
-----------------------
Name: Leesa C. Sluder
Title: Senior Vice President
6
EXHIBIT 10(c)
New York Lease
AGREEMENT OF LEASE, made this 17th day of July, 1998, between THE HEMMERDINGER
CORPORATION, a New York corporation, having an office at 8000 Cooper Avenue,
Glendale, New York 11385 ("Landlord") and SPEIZMAN INDUSTRIES, INC., a Delaware
corporation with offices at 508 West Fifth Street, Charlotte, NC 28231
("Tenant"),
Witnesseth: Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord the premises in the area known as Atlas Terminals, in the Borough of
Queens, City and State of New York ("Atlas Terminals"), being Building No. 20
("Demised Premises") for the period of one (1) year ("Term") (or until such Tern
shall sooner cease and expire as hereinafter provided) to commence on August 1,
1998, ("Commencement Date") and to end on July 31, 1999, ("Expiration Date"),
both dates inclusive, at a fixed annual rental rate of Twenty Seven Thousand
Five Hundred Ninety Eight Dollars and 78/100ths ($27,598.78) ("Fixed Rent")
which Tenant agrees to pay in lawful money of the United States, by check drawn
on a member of the New York Clearing House Association, which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment, in equal monthly installments in advance on the first day of each month
during the Term at the office of Landlord may designate, without any set off or
deduction whatsoever, except that Tenant shall pay the first monthly installment
on the execution hereof (unless this lease be a renewal).
Together with a sufficient right of way over the lands of the Landlord for
ingress and egress of trucks to and from the Demised Premises, which right of
way shall be located, bounded and defined by Landlord and may be changed by
Landlord at any time during the Term, provided that at all times a sufficient
and suitable right of way for the purposes herein set forth shall be allowed to
the Tenant.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent:
1. Tenant shall pay the rent as above and as hereinafter provided. All payments
other than Fixed Rent to be made by Tenant pursuant to this lease shall be
deemed additional rent and, in the event of any non-payment thereof, Landlord
shall have all rights and remedies provided for herein or by law for non-payment
of rent.
Occupancy:
2. Tenant shall use and occupy the Demised Premises for general offices,
showroom and storage of machines and for no other purpose. Tenant shall at all
times conduct its business in a high
1
<PAGE>
grade and reputable manner and shall keep show windows, if any, and signs in a
neat and clean condition.
Repairs and Alterations:
3. (A) Landlord shall maintain and repair the structure of the building or
buildings in which the Demised Premises are located (collectively, "Building")
and any public portion thereof if the same is rented to more than one tenant.
Tenant shall at its sole cost and expense take good care of the Demised Premises
(including, without limitation, the glass, pipes, fixtures, appliances and
appurtenances and any independent air conditioning, heating or ventilating
equipment therein) and any elevators exclusively servicing the Demised Premises
and shall, at Tenant's sole cost and expense, by contractors or mechanics
approved by Landlord, make as and when needed all non-structural repairs in or
about the Demised Premises necessary to keep the same in good order and
condition. Notwithstanding the foregoing, all damage or injury to the Demised
Premises or to any other part of the Building, or to its fixtures, equipment and
appurtenances, whether requiring structural or non-structural repairs, caused by
or resulting from the carelessness, omission, neglect or improper conduct of
Tenant or Tenant's assignees, subtenants, contractors, servants, employees,
invitees or licensees (collectively, "Tenant's Entities"), shall be repaired by
Tenant at its sole cost and expense to the satisfaction of Landlord reasonably
exercised. Tenant shall also repair all damage to the Building caused by the
moving of Tenant's fixtures, furniture or equipment. All the aforesaid repairs
shall be in quality and class at least equal to the original work or
construction and shall be done at such times and in such manner as Landlord may
designate. If Tenant fails to make such repairs Landlord may make such repairs
for Tenant's account and charge Tenant therefor and Tenant shall have no claim
for inconvenience on account thereof. Except as specifically provided in Article
9 or elsewhere in this lease, there shall be no allowance to Tenant for a
diminution of rental value and no liability on the part of Landlord by reason of
inconvenience, annoyance or injury to business arising from Landlord, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the Building or the Demised Premises or in
and to the fixtures, appurtenances or equipment thereof. The provisions of this
Article 3 with respect to the making of repairs shall not apply in the case of
fire or other casualty which are dealt with in Article 9 hereof.
(B) Tenant shall not (i) cut or drill or in any way mar or deface any part of
the Demised Premises or the Building; (ii) use or permit the use of the roof
except as shall be expressly permitted in writing by Landlord, including,
without limitation, for the installation thereon of any ducts, ventilators,
radio or television equipment; (iii) place or permit any awning, sign,
advertisement, illumination or projection either on the outside or inside of the
Building or in or upon any window of the Demised Premises, including the sills
or ledges thereof, unless the same shall first have been approved in writing by
Landlord; (iv) obstruct or permit the obstruction of any light or skylight in or
upon the Building, or the adjoining sidewalk or street, or entrance, or any
other part of the Building to which Tenant is not entitled to exclusive use
thereof; and (v) install or place any additional locks or bolts of any kind upon
any of the doors or windows.
(C) Tenant shall not, without Landlord's prior written consent first obtained in
each instance, make any alteration, decoration, addition or improvement in or
upon the Demised Premises. All alterations or improvements shall be made and
installed in a good and workmanlike manner and
2
<PAGE>
shall comply with all requirements of law, regulation or rule of all federal,
state, county and municipal authorities and all subdivisions and agencies
thereof, with the requirements of the New York Board of Fire Underwriters or any
other body exercising similar functions and Landlord's insurance carrier and
shall conform to any particular requirements of the Landlord expressed in its
consent for the making of any such alterations or improvements. Any such work
when begun shall be completed with all reasonable dispatch, but shall be done at
such time and in such manner as not to interfere with the occupancy of any other
tenant or the progress of any work being performed by or on account of Landlord.
Tenant shall within ten days discharge by payment, deposit or by bond fixed in a
proper proceeding according to law, any mechanic's lien filed against the
Building because of any work or material done or furnished to Tenant or Tenant's
Entities. Tenant shall not, without Landlord's prior written consent first
obtained in each instance, make any alteration or addition to the electric
wiring, equipment or appliances, including, without limitation, any heating, air
conditioning or ventilating system, water system or gas pipe system, or tap any
mains or pipes to supply water for refrigeration or air conditioning or
ventilating apparatus. Tenant covenants and agrees that at all times its use of
electric current shall not exceed the capacity of existing feeders to the
Building or the risers or wiring installation and Tenant shall not, without
Landlord's prior written consent first obtained in each instance, install or use
in the Demised Premises any air conditioning, heating or ventilating equipment
or any electrical appliances which, in Landlord's sole judgment, may overload
the electrical wiring or equipment in the Demised Premises or in the Building or
interfere with the use thereof by any other tenant of the Building. All
alterations, additions or improvements made to the Demised Premises by either
Landlord or Tenant, including, but not limited to, all paneling, decorations,
partitions, railings, galleries, piping, electrical work, air conditioning,
heating or ventilating system, lighting fixtures and the like, shall, unless
Landlord shall elect otherwise (which election shall be made by giving a notice
pursuant to the provisions of Article 26 not less than thirty days after the end
of this lease), become the property of Landlord and shall remain upon and be
surrendered with the Demised Premises as a part thereof at the end of the Term
or any renewal term, as the case may be. In the event Landlord shall elect
otherwise, then such alterations, installations, additions or improvements made
by Tenant upon the Demised Premises, as the Landlord may select, shall be
removed by Tenant and Tenant shall restore the Demised Premises to the original
condition at its own cost and expense. Tenant's obligations under this Article
shall survive the end of this lease.
Services: [Section 4(A) was stricken out]
4. (B) Landlord shall furnish New York City water to Tenant through the existing
water meter and Tenant shall pay for such water furnished at the prevailing New
York City rate together with sewer rents or charges measured by such
consumption. There shall be a minimum monthly charge of $10.00.
(C) In order to compensate Landlord for the cost of installing and maintaining
water and sewer pipes throughout Atlas Terminals, Tenant shall pay Landlord a
monthly rental charge for use of such pipes, such charge to be computed at 15
cents for every 100 cubic feet of water consumed by Tenant.
3
<PAGE>
(D) Landlord shall furnish to Tenant 200 amperes, 3-phase, low tension electric
current service for the use of Tenant and Tenant shall pay Landlord for such
service in accordance with the rate schedule or service classification
applicable to Landlord (including, without limitation, charges resulting from
time of day billing or other charges now or hereafter applicable to Atlas
Terminals and a minimum demand charge of 10 kilowatts), charged for at the rates
within such schedule or classification applicable to Tenant's usage, plus a
service charge of $.0l5 per kilowatt hour for current consumed by Tenant, whose
electrical consumption and demand shall be determined by a meter to be installed
by Landlord at Tenant's expense. Landlord may, upon thirty (30) days notice,
discontinue furnishing electric current service to Tenant without being liable
to Tenant therefor, or without in any way affecting this lease or liability of
Tenant hereunder, or causing a diminution of rent, and the same shall not be
deemed to be a lessening or diminution of the services within the meaning of any
law, rule or regulation now or hereafter enacted, promulgated or issued. In the
event Landlord gives notice of such discontinuance, Landlord shall permit Tenant
to receive electric current service from the public service company serving the
part of New York City where the Building is located and shall permit Tenant to
utilize Landlord's wires and conduits but only to the extent available, suitable
and safely capable to be used for such purpose.
(E) [Section E was stricken out]
(F) If any tax be imposed by a governmental agency upon Landlord's receipts from
Tenant for electricity or water, Tenant shall also pay Landlord the amount of
such tax.
(G) The charges payable by Tenant pursuant to this Article 4 shall be paid by
Tenant upon its receipt of Landlord's bill therefor.
(H) Landlord may, if Tenant is in default of performance of any of the terms,
provisions and conditions of this lease on Tenant's part to be performed,
including, but not limited to, payment of any Fixed Rent or additional rent due
hereunder, and without releasing the Tenant from liability or constituting an
eviction, and without any liability on the Landlord's part, after five days
notice of such default to Tenant, terminate the furnishing of any or all
services agreed to be furnished by Landlord hereunder, provided, however, that
such default shall not have been cured within said five days.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window in the
Demised Premises to be cleaned from the outside in violation of Section 202 of
the New York State Labor Law or any other applicable law or of the Rules of the
Board of Standards and Appeals, or of any other board or body having or
asserting jurisdiction. Subject to the foregoing, such windows shall be cleaned
by Tenant at least once each calendar year.
Requirements of Law, Fire Insurance:
6. Prior to the commencement of the Term, if Tenant is then in possession, and
at all times thereafter, Tenant at Tenant's sole cost and expense, shall
promptly comply with all present and
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future laws, orders and regulations of all state, federal, municipal and local
governments, departments, commissions and boards and any direction of any public
officer pursuant to law, and all orders, rules and regulations of the New York
Board of Fire Underwriters or the Insurance Services Office, or any similar
body, or Landlord's insurance carrier which shall impose any violation, order or
duty upon Landlord or Tenant with respect to the Demised Premises, and with
respect to the portion of the sidewalk adjacent to the Demised Premises, if the
Demised Premises are on the street level, whether or not arising out of Tenant's
use or manner of use thereof, or with respect to the Building if arising out of
Tenant's use or manner of use of the Demised Premises or the Building (including
the use permitted under this lease). Except as provided in Article 27 hereof,
nothing herein shall require Tenant to make structural repairs or alterations
unless Tenant has by its manner of use of the Demised Premises or method of
operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant shall not do or permit
any act or thing to be done in or to the Demised Premises which is contrary to
law or which will invalidate or be in conflict with public liability, fire or
other policies of insurance at any time carried by or for the benefit of
Landlord. Tenant shall pay all costs, expenses, fines, penalties or damages
which may be imposed upon Landlord by reason of Tenant's failure to comply with
the provisions of this Article. If the fire insurance rate shall, at the
beginning of the lease or at any time thereafter, be higher than it otherwise
would be, then Tenant shall reimburse Landlord, as additional rent hereunder,
for that portion of all fire insurance premiums thereafter paid by Landlord
which shall have been charged because of such failure by Tenant to comply with
the terms of this Article. In any action or proceeding wherein Landlord and
Tenant are parties, a schedule or "make-up" of rate for the Building or Demised
Premises issued by a body making fire insurance rates applicable to said
premises shall be conclusive evidence of the facts therein stated and of the
several items and charges in the fire insurance rate then applicable to said
premises.
Subordination:
7. (A) This lease is subject and subordinate to all ground or underlying leases
and to all mortgages which may now or hereafter affect such leases or the real
property of which the Demised Premises are a part and to all renewals,
modifications, consolidations, replacements, and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lease or by any mortgage affecting any lease or the real property of
which the Demised Premises are a part. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Landlord may request.
(B) If any prospective mortgagee of the Building, the land upon which it is
erected ("Land") or any leasehold interest therein requires, as a condition
precedent to issuing its loan, the modification of this lease in such manner as
does not materially lessen Tenant's rights or increase its obligations
hereunder, Tenant shall not delay or withhold its consent to such modification
and shall execute and deliver such confirming documents therefor as such
mortgagee requires.
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Tenant's Liability, Insurance, Property Loss, Damage, Indemnity:
8. (A) Landlord or its agents shall not be liable for any damage to property of
Tenant or of others entrusted to employees of Atlas Terminals nor for loss of or
damage to any property of Tenant by theft or otherwise, nor for any injury or
damage to persons or property resulting from any cause of whatsoever nature,
unless caused by or due to the negligence of Landlord, its agents, servants or
employees. Landlord or its agents will not be liable for any such damage caused
by other tenants or persons in, upon or about Atlas Terminals or caused by
operations in construction of any private, public or quasi public work. Tenant
shall indemnify and save harmless Landlord against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Landlord
shall not be reimbursed by insurance, including reasonable attorneys' fees and
disbursements, paid, suffered or incurred as a result of any breach by Tenant or
Tenant's Entities of any covenant on condition of this lease, or the
carelessness, negligence or improper conduct of Tenant or Tenant's Entities.
Tenant's liability under this lease extends to the acts and omissions of any
assignee or subtenant and in case any action or proceeding is brought against
Landlord by reason of any such claim, Tenant, upon written notice from Landlord,
will, at Tenant's expense, resist or defend such action or proceeding by counsel
approved by Landlord in writing, such approval not to be unreasonably withheld.
(B) During the Term, Tenant shall pay for and keep in force general liability
policies, including elevator liability, in standard form protecting against any
and all liability occasioned by accident or occurrence, subject to customary
exclusions, such policies to be written by recognized and well-rated insurance
companies authorized to transact business in the State of New York, in the
amount of $500,000 in respect to injuries to any one person, $1,000,000 in
respect to two or more persons in any one accident or occurrence and $100,000
for property damage. If at any time during the Term it appears that public
liability or property damage limits in the City of New York for premises
similarly situated, due regard being given to the use and occupancy thereof, are
higher than the foregoing limits, then Tenant shall increase the foregoing
limits accordingly. Landlord shall be named as an additional insured in the
aforesaid insurance policies and the policies shall provide that Landlord shall
be afforded thirty (30) days prior notice of cancellation of said insurance.
Tenant shall deliver certificates of insurance evidencing such policies. All
premiums and charges for the aforesaid insurance shall be paid by Tenant and, if
Tenant shall fail to make such payment when due, Landlord may make it and the
amount thereof shall be repaid to Landlord by Tenant on demand and the amount
thereof may, at the option of Landlord, be added to and become a part of the
additional rent payable hereunder. Tenant shall not violate or permit to be
violated any condition of any of said policies and Tenant shall perform and
satisfy the requirements of the companies writing such policies.
(C) Simultaneously with the execution of this lease, Tenant shall furnish
Landlord with a certificate of insurance coverage substantially similar to (and
having substantially the same substantive effect as) the certificate of
insurance annexed hereto.
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Destruction, Fire and Other Casualty:
9. (A) If the Demised Premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Landlord and this
lease shall continue in full force and effect except as hereinafter set forth.
(B) If the Demised Premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Landlord and the rent, until such repair shall be substantially
completed, shall be apportioned from the day following the casualty according to
the part of the Demised Premises which is usable.
(C) If the Demised Premises are totally damaged or rendered wholly unusable by
fire or other casualty, then the rent shall be proportionately paid up to the
time of the casualty and thenceforth shall cease until the date when the Demised
Premises shall have been repaired and restored by Landlord, subject to
Landlord's right to elect not to restore the same as hereinafter provided.
(D) If the Demised Premises are rendered wholly unusable or (whether or not the
Demised Premises are damaged in whole or in part) if the Building shall be so
damaged that Landlord shall decide to demolish it or to rebuild it, then, in any
of such events, Landlord may elect to terminate this lease by written notice to
Tenant given within ninety (90) days after such fire or casualty specifying a
date for the expiration of the lease, which date shall not be more than sixty
(60) days after the giving of such notice, and upon the date specified in such
notice the term of this lease shall expire as fully and completely as if such
date were the date set forth above for the termination of this lease and Tenant
shall forthwith quit, surrender and vacate the Demised Premises without
prejudice, however, to Landlord's rights and remedies against Tenant under the
lease provisions in effect prior to such termination and any rent owing shall be
paid up to such date and any payments of rent made by Tenant which were on
account of any period subsequent to such date shall be returned to Tenant.
Unless Landlord shall serve a termination notice as provided for herein,
Landlord shall make the repairs and restorations under the conditions of
subdivisions (B) and (C) hereof with all reasonable expedition subject to delays
due to adjustment of insurance claims, labor troubles and causes beyond
Landlord's control. After any such casualty, Tenant shall cooperate with
Landlord's restoration by removing from the Demised Premises, as promptly as
reasonably possible, all of Tenant's salvageable inventory and movable
equipment, furniture, and other property. Tenant's liability for rent shall
resume five (5) days after written notice from Landlord that the Demised
Premises are substantially ready for Tenant's occupancy.
(E) Nothing contained hereinabove shall relieve Tenant from liability that may
exist as a result of damage from fire or other casualty. Notwithstanding the
foregoing, each party shall look first to any insurance in its favor before
making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty and, to the extent that such insurance is
in force and collectible and to the extent permitted by law, Landlord and Tenant
each hereby releases and waives all right of recovery against the other or any
one claiming through or under each of them by way of subrogation or otherwise.
The foregoing release and waiver shall be in force only if both releasors'
insurance policies contain a clause providing that such a release or waiver
shall
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not invalidate the insurance and also provided that such a policy can be
obtained without additional premiums. Tenant acknowledges that Landlord will not
carry insurance on Tenant's furniture and/or furnishings or any fixtures or
equipment, improvements, or appurtenances removable by Tenant and agrees that
Landlord will not be obligated to repair any damage thereto or replace the same.
(F) Tenant hereby waives the provisions of Section 227 of the Real Property Law
and agrees that the provisions of this Article shall govern and control in lieu
thereof.
Eminent Domain:
10. If the whole or any material part of the Demised Premises shall be acquired
or condemned by eminent domain for any public or quasi public use or purpose,
then and in that event, the Term shall cease and terminate from the date of
title vesting in such proceeding and Tenant shall have no claim for the value of
any unexpired term of said lease.
Assignment, Mortgage, Etc.:
11. (A) Tenant shall not without having first obtained Landlord's written
consent thereof (i) use or permit the Demised Premises or any part of the same
to be used for any purpose other than to that specified in this lease, (ii)
assign or transfer, by operation of law or otherwise, this lease or any interest
therein, (iii) mortgage or encumber the same, (iv) sublet or underlet the
Demised Premises or any part thereof, or (v) permit the same to be occupied by
anyone other than Tenant or Tenant's officers and employees. A transfer of
control or ownership of more than twenty (20%) per cent of the shares of Tenant,
if Tenant is a corporation, or of more than twenty (20%) per cent of the total
partnership interests in Tenant, if Tenant is a partnership, shall be deemed an
assignment of this lease requiring the consent of Landlord pursuant to this
Article. In the event that Tenant shall desire to assign this lease, sublet the
whole or any part of the Demised Premises or permit the same to be occupied by
any person other than Tenant, its officers or employees, Tenant shall submit in
writing to Landlord the name of the proposed assignee, subtenant, or occupant,
the nature of and character of its business, the terms and conditions of the
proposed assignment or subletting, information as to the financial
responsibility and standing of the proposed subtenant or assignee and such other
information as Landlord may reasonably request, and, simultaneously, with such
submission, Tenant shall deliver to the Landlord a written agreement, in a form
satisfactory to Landlord, fully executed and acknowledged by Tenant surrendering
to Landlord the entire Demised Premises, if an assignment is proposed, or if a
subletting is proposed, then the portion of the Demised Premises proposed to be
sublet or to be occupied by a person other than Tenant. Such surrender agreement
shall also provide that if a portion of the Demised Premises is to be
surrendered, Tenant, at its expense, will erect the partitions required to
separate the portion of the Demised Premises to be surrendered from the
remainder of the Demised Premises and shall install any doors required to
provide an independent means of access to the portion of the Demised Premises to
be surrendered from the elevators and/or staircase on the floor and shall
install all other equipment or facilities which may be required either by law or
otherwise in order to permit the portion of the Demised Premises to be
surrendered to be used as a unit separate from the balance of the Demised
Premises. If Landlord shall not execute the surrender agreement within sixty
(60) days after
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receipt thereof, then Landlord shall not unreasonably withhold its consent to
the proposed assignment or subleasing.
(B) No consent given by Landlord shall be deemed to permit any act except the
act to which it specifically refers, or to render unnecessary any subsequent
consent, and any assignment or subletting of the Demised Premises shall not
relieve Tenant or any mesne assignee from any obligations, duty or covenant
under this lease, and in all cases a violation of any of the covenants or duties
or obligations under this lease by a subtenant or assignee shall in addition be
deemed to be the act of Tenant herein. No assignment, transfer, mortgage,
encumbrance, subletting or arrangement in respect of the occupancy of the
Demised Premises shall create any right in the assignee, transferee, mortgagee,
subtenant or occupant, unless the consent of Landlord shall first have been
obtained. Any assignee, by accepting an assignment, shall be conclusively deemed
to have assumed this lease and all obligations already accrued or to accrue
thereunder and further to have agreed to fully and duly perform all Tenant's
covenants herein contained. If Tenant shall, at any time, be in default in the
payment of rent, Landlord shall have the right to collect rent from any
assignee, undertenant, or occupant and credit the same to the account of the
Tenant, and no such collection shall constitute a waiver of the foregoing
covenant or the acceptance of anyone other than Tenant as tenant or shall
otherwise release, impair or otherwise affect any obligation of Tenant under
this lease.
Blockage of Thoroughfares:
12. Tenant shall not block, nor permit the blockage of, the thoroughfares of
Atlas Terminals with its vehicles, or the vehicles of Tenant's Entities, nor
permit any other vehicle making deliveries to the Demised Premises or picking up
material therefrom to block such thoroughfares. Any vehicles blocking such
thoroughfares may be removed by Landlord, without notice, at Tenant's expense.
Access to Premises:
13. Landlord or Landlord's agents shall have the right (but shall not be
obligated) to enter the Demised Premises in any emergency at any time, and, at
other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Landlord may deem necessary and reasonably
desirable to any portion of the Building or which Landlord may elect to perform
in the Demised Premises following Tenant's failure to make repairs or perform
any work which Tenant is obligated to perform under this lease, or for the
purpose of complying with laws, regulations and other directions of governmental
authorities. Tenant shall permit Landlord to use and maintain and replace pipes
and conduits in and through the Demised Premises and to erect new pipes and
conduits therein. Landlord may, during the progress of any work in the Demised
Premises, take all necessary materials and equipment into the Demised Premises
without the same constituting an eviction nor shall the Tenant be entitled to
any abatement or rent white such work is in progress nor to any damages by
reason of loss or interruption of business or otherwise. Throughout the Term
Landlord shall have the right to enter the Demised Premises at reasonable hours
for the purpose of showing the same to prospective purchasers of mortgagees of
the Building and during the last six months of the Term for the purpose of
showing the same to prospective tenants and may, during said six months period,
place upon the
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Demised Premises the usual notice "To Let" and "For Sale" which notices Tenant
shall permit to remain thereon without molestation. If Tenant is not present to
open and permit an entry into the Demised Premises, Landlord or Landlord's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly and provided reasonable care is exercised to safeguard
Tenant's property and such entry shall not render Landlord or its agents liable
therefor nor in any event shall the obligations of Tenant hereunder be affected.
If during the last month of the Term Tenant shall have removed all or
substantially all of Tenant's property therefrom, Landlord may immediately
enter, alter, renovate or redecorate the Demised Premises without limitation or
abatement of rent or incurring liability to Tenant for any compensation and such
act shall have no effect on this lease or Tenant's obligations hereunder.
Landlord shall have the right at any time, without the same constituting an
eviction and without incurring liability to Tenant therefor, to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the Building and
to change the name, number or designation by which the Building may be known.
Floor Load:
14. Tenant shall not place a load on any floor of the Demised Premises exceeding
the floor load per square foot of area which is was designed to carry and which
is allowed by law. Landlord reserves the right to prescribe the weight and
position of all safes, business machines and mechanical equipment. Such
installations shall be placed and maintained by Tenant at Tenant's expense in a
setting sufficient in Landlord's judgment to absorb and prevent vibration, noise
and annoyance. Landlord may take such action as it deems appropriate to prevent
or abate any damage to the Building or disturbance caused to other tenants of
Atlas Terminals by reason of Tenant's violation of the provisions hereof.
Bankruptcy:
15. (A) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be canceled by Landlord by the sending of a written notice to Tenant
within a reasonable time after the happening of any one or more of the following
events: (i) the commencement of a case in bankruptcy or under the laws of any
state naming Tenant as the debtor; or (ii) the making by Tenant of an assignment
or any other arrangement for the benefit of creditors under any state statute.
Neither Tenant or any person claiming through or under Tenant, or by reason of
any statute or order of court, shall thereafter be entitled to possession of the
Demised Premises but shall forthwith quit and surrender the Demised Premises. If
this lease shall be assigned in accordance with its terms, the provisions of
this Article 15 shall be applicable only to the party then owning Tenant's
interest in this lease.
(B) It is stipulated and agreed that in the event of the termination of this
lease pursuant to subdivision (A) hereof, Landlord shall forthwith,
notwithstanding any other provisions of this lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rent reserved hereunder for the unexpired portion of the
Term and the fair and reasonable rental value of the Demised
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Premises for the same period. In the computation of such damages the difference
between any installment of rent becoming due hereunder after the date of
termination and the fair and reasonable rental value of the Demised Premises for
the period for which such installment was payable shall be discounted to the
date of termination at the rate of four per cent (4%) per annum. If the Demised
Premises or any part thereof be re-let by the Landlord for the unexpired portion
of the Term, or any part thereof, before presentation of proof of such
liquidated damages to any court, commission or tribunal, the amount of rent
reserved upon such reletting shall be deemed to be the fair and reasonable
rental value for the part or the whole of the Demised Premises so re-let during
the term of the re-letting. Nothing herein contained shall limit or prejudice
the right of Landlord to prove for and obtain as liquidated damages by reason of
such termination an amount equal to the maximum allowed by any statute or rule
of law in effect at the time when, and governing the proceedings in which, such
damages are to be proved, whether or not such amount be greater, equal to or
less than the amount of the difference referred to above.
Default:
16. (A) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of Fixed Rent or additional rent; or if
the Demised Premises become vacant or deserted; or if any execution or
attachment shall be issued against Tenant or any of Tenant's property whereupon
the Demised Premises shall be taken or occupied by someone other than Tenant; or
if this lease be terminated under any applicable bankruptcy or insolvency
statute; or if Tenant shall fail to move into or take possession of the Demised
Premises within fifteen (15) days after the commencement of the Term, of which
fact Landlord shall be the sole judge; then, in any one or more of such events,
upon Landlord serving a written five (5) days notice upon Tenant specifying the
nature of said default and upon the expiration of said five (5) days, if Tenant
shall have failed to comply with or remedy such default, or if the said default
or omission complained of shall be of a nature that the same cannot be
completely cured or remedied within said five (5) day period and if Tenant shall
not have diligently commenced curing such default within such five (5) day
period and shall not thereafter with reasonable diligence and in good faith
proceed to remedy or cure such default, then Landlord may serve a written three
(3) days notice of cancellation of this lease upon Tenant, and upon the
expiration of said three (3) days, this lease and the Term shall end and expire
as fully and completely as if the expiration of such three (3) day period were
the day herein definitely fixed for the end of and expiration of this lease and
the Term and Tenant shall then quit and surrender the Demised Premises to
Landlord but Tenant shall remain liable as hereinafter provided.
(B) If (i) the notice provided for in subdivision (A) hereof shall have been
given and the Term shall expire as aforesaid or (ii) if Tenant shall make
default in the payment of the Fixed Rent reserved herein or any item of
additional rent herein mentioned or any part of either or in making any other
payment herein required, then and in any of such events Landlord may, without
notice, re-enter the Demised Premises either by force or otherwise and
dispossess Tenant by summary proceedings or otherwise, and the legal
representative of Tenant or other occupant of Demised Premises, and remove their
effects and hold the Demised Premises as if this lease had not been made and
Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end.
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Remedies of Landlord and Waiver of Redemption:
17. (A) In case of any such default, re-entry expiration and/or dispossess by
summary proceedings or otherwise, (i) the Fixed Rent and additional rent shall
become due thereupon and be paid up to the time of such re-entry, dispossess
and/or expiration, (ii) Landlord may re-let the Demised Premises or any part or
parts thereof, either in the name of Landlord or otherwise, for a term or terms,
which may at Landlord's option be less than or exceed the period which would
other-wise have constituted the balance of the Term, and may grant concessions
or free rent or charge a higher rental than that in this lease, and/or (iii)
Tenant or the legal representative of Tenant shall also pay Landlord as
liquidated damages for the failure of Tenant to observe and perform said
Tenant's covenants herein contained any deficiency between the rent hereby
reserved and/or covenanted to be paid and the net amount, if any, of the rents
collected on account of the subsequent lease or leases of the Demised Premises
for each month of the period which would otherwise have constituted the balance
of the Term. The failure of Landlord to re-let the Demised Premises or any part
or parts thereof shall not release or affect Tenant's liability for damages. In
computing such liquidated damages there shall be added to the said deficiency
such expenses as Landlord may incur in connection with re-letting, such as legal
expenses, attorneys' fees, brokerage, advertising and for keeping the Demised
Premises in good order or for preparing the same for re-letting. Any such
liquidated damages shall be paid in monthly installments by Tenant on the rent
day specified in this lease. Landlord, in putting the Demised Premises in good
order or preparing the same for re-rental may, at Landlord's option, make such
alterations, repairs, replacements, and/or decorations in the Demised Premises
as Landlord, in Landlord's sole judgement, considers advisable and necessary for
the purpose of reletting the Demised Premises and the making of such
alterations, repairs, replacements and/or decorations shall not operate or be
construed to release Tenant from liability. Landlord shall in no event be liable
in any way whatsoever for failure to re-let the Demised Premises or, in the
event that the Demised Premises are re-let, for failure to collect the rent
thereof under such re-letting and in no event shall Tenant be entitled to
receive any excess, if any, of such net rent collected over the sums payable by
Tenant to Landlord hereunder. In the event of a breach or threatened breach by
Tenant of any of the covenants or provisions hereof, Landlord shall have the
right of injunction and the right to invoke any remedy allowed at law or in
equity as if re-entry, summary proceedings and other remedies were not herein
provided for. Mention in this lease of any particular remedy shall not preclude
Landlord from any other remedy, in law or in equity. Tenant hereby expressly
waives any and all rights of redemption granted by or under any present or
future laws.
(B) If Landlord commences any action or proceeding against Tenant in connection
with this lease and such action or proceeding is disposed of, by settlement,
judgment or otherwise, favorably to Landlord, Landlord shall be entitled to
recover from Tenant in such action or proceeding, or a subsequently commenced
action or proceeding, Landlord's reasonable attorneys' fees and disbursements
incurred in connection with such action or proceeding and all prior and
subsequent discussions and negotiations and correspondence relating thereto.
(C) If any monies owing by Tenant under this lease are paid more than fifteen
(15) days after the date such monies are payable pursuant to the provisions of
this lease, Tenant shall pay Landlord
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interest thereon for the period from the date such monies were payable to the
date such monies are paid.
(D) Whenever this lease provides for interest to be paid by Tenant to Landlord,
the applicable rate of interest shall be the maximum legal rate of interest then
in effect pursuant to applicable law.
Fees and Expenses:
18. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, then, unless otherwise
provided elsewhere in this lease, Landlord may immediately or at any time
thereafter and without notice perform the obligation of Tenant thereunder and if
Landlord, in connection therewith or in connection with any default by Tenant in
the covenant to pay rent hereunder, makes any expenditures or incurs any
obligations for the payment of money, including but not limited to attorneys'
fees, in instituting, prosecuting or defending any actions or proceeding, such
sums so paid or obligations incurred with interest and costs shall be deemed to
be additional rent hereunder and shall be paid by Tenant to Landlord within five
(5) days of the rendition of any bill or statement to Tenant therefor and, if
the term shall have expired at the time of making of such expenditures or
incurring of such obligations, such sums shall be recoverable by Landlord as
damages.
"As Is", Property Loss, Etc.:
19. (A) Tenant acknowledges that it has examined the Demised Premises, is
familiar with its condition and agrees to accept the same "as is", except as
otherwise herein provided. Tenant will not at any time use or occupy the Demised
Premises in violation of Article 2 hereof or the certificate(s) of occupancy
issued for the Building. This lease contains the entire agreement between the
parties and all prior negotiations and agreements are merged in this lease.
Neither Landlord nor Landlord's agents have made any representations or
warranties with respect to the Demised Premises, the Building or this lease,
except as expressly set forth in this lease, and no rights, easements or
licenses are or shall be acquired by Tenant by implication or otherwise unless
expressly set forth in this lease. This lease may not be changed, modified or
discharged, in whole or in part, orally and no executory agreement shall be
effective to change, modify or discharge, in whole or in part, this lease or any
obligations under this lease, unless such agreement is set forth in a written
instrument executed by the party against whom enforcement of the change,
modification or discharge is sought.
(B) Except as expressly otherwise provided in this lease, Landlord shall not be
responsible at any time or in any event for any latent defect, deterioration or
change in the condition of the Demised Premises nor for damage to the same and
Landlord shall be exempt from all liability for or on account of any annoyances,
inconvenience, interference with business or injury or damage to persons or
property whether caused by (i) any interruption, malfunction or curtailment of
the operation of any elevator service, heating plants, sprinkler system, gas,
water, sewer or plumbing, machinery, electric equipment or other appurtenances,
facilities, equipment and conveniences in Atlas Terminals, whether such
interruption, malfunction or curtailment be due to
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breakdowns, repairs, strikes or inability to obtain electricity, fuel or water
or any other cause beyond Landlord's control, (ii) any water, rain, snow, steam,
gas, electricity or other element which may enter, flow from or into the Demised
Premises, or any noise or vibration audible in or transmitted to the Demised
Premises, (iii) any vermin, (iv) any falling paint or plaster, (v) any
interference with light or with other easements or incorporeal hereditaments,
(vi) any latent defect or deterioration in the Building or the appurtenances
thereof, whether or not the Landlord shall have been notified of any condition
allegedly causing the same, (vii) any act or omission of any other occupant of
the Building or other person temporarily therein, or (viii) any other reason or
cause, unless the said damage, loss or injury shall be caused by or due to the
negligence of Landlord. Landlord shall not be liable or responsible for injury
or damage to persons or property, including injury to any of the employees of
Tenant, in connection with the use of any right of way which Tenant is hereby
granted or may hereafter be granted from the Demised Premises to the public
highways adjoining the lands of the Landlord, including any injury or damage
which may arise in connection with the use or operation, either by Tenant or any
other person or corporation, of the said sidings or sidetracks or other sidings
or sidetracks upon any part of the property of Landlord. If at any time any
windows of the Demised Premises are temporarily or permanently closed, darkened
or bricked up for any reason whatsoever including, but not limited to,
Landlord's own acts, Landlord shall not be liable for any damage Tenant may
sustain thereby and Tenant shall not be entitled to any compensation therefor
nor abatement of rent nor shall the same release Tenant from its obligations
hereunder. In the event that the Demised Premises or any part thereof are
rendered untenantable, or Tenant is deprived of the use of the Demised Premises
by any cause whatever, or Tenant claims that there is any defect in the Demised
Premises or in any of the fixtures or any article of equipment therein or in the
Building caused by the negligence of the Landlord or otherwise, Tenant shall
give prompt written notice to Landlord and a reasonable opportunity shall be
given to Landlord to remedy the condition set forth in said notice. Failure to
give such notice shall be construed as a waiver of such condition or defect and
of any and all claims to the effect that Tenant has been evicted, wholly, partly
or constructively, from the Demised Premises. The provisions contained in this
Article 19 are not to be construed so as to increase Landlord's obligations
hereunder.
End of Term:
20. Upon the Expiration Date or any sooner termination of this lease, Tenant
shall quit and surrender the Demised Premises to Landlord broom clean, in good
order and condition, ordinary wear excepted, and Tenant shall remove all its
property. Tenant's obligation to observe or perform this covenant shall survive
the expiration or other termination of this lease. If the last day of the Term
or any renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.
Quite Enjoyment:
21. Landlord covenants and agrees with Tenant that upon Tenant paying the Fixed
Rent and additional rent and observing and performing all the terms, covenants
and conditions on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the Demised Premises, subject, nevertheless, to the
terms and conditions of this lease, including, but not
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limited to, Article 31 hereof, and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
Failure to Give Possession:
22. If Landlord is unable to give possession of the Demised Premises on the
Commencement Date because of the holding-over or retention of possession of any
tenant, undertenant or occupants, or, if the Demised Premises are located in a
building being constructed, because such building has not been sufficiently
completed to make the Demised Premises ready for occupancy, or because of the
fact that a certificate of occupancy has not been procured or for any other
reason, Landlord shall not be subject to any liability for failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances nor shall the same be construed in any wise to extend
the Term, but the rent payable hereunder shall be abated (provided Tenant is not
responsible for the inability to obtain possession) until after Landlord shall
have given Tenant written notice that the Demised Premises are substantially
ready for Tenant's occupancy. If permission is given to Tenant to enter into the
possession of the Demised Premises or to occupy premises other than the Demised
Premises prior to the Commencement Date, Tenant covenants and agrees that such
occupancy shall be deemed to be under all the terms, covenants, conditions and
provisions of this lease, except as to the covenant to pay Fixed Rent. The
provisions of this article are intended to constitute "an express provision to
the contrary" within the meaning of Section 223-a of the New York Real Property
Law.
No Waiver:
23. The failure of Landlord to seek redress for violation of or to insist upon
the strict performance of any covenant or condition of this lease or of any of
the Rules or Regulations herein set forth or hereafter adopted by Landlord shall
not prevent a subsequent act which would have originally constituted a violation
from having all the force and effect of any original violation. The receipt by
Landlord of rent with knowledge of the breach of any covenant of this lease
shall not be deemed a waiver of such breach and no provision of this lease shall
be deemed to have been waived by Landlord unless such waiver be in writing
signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly rent herein stipulated shall be deemed to be other than
on account of the earliest stipulated rent nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy in this lease provided. No act or thing done by
Landlord or Landlord's agents during the Term shall be deemed an acceptance of a
surrender of the Demised Premises and no agreement to accept such surrender
shall be valid unless in writing signed by Landlord. No employee of Landlord or
Landlord's agent shall have any power to accept the keys of the Demised Premises
prior to the termination of the lease and the delivery of keys to any such agent
or employee shall not operate as a termination of this lease or a surrender of
the Demised Premises.
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Waiver of Trial by Jury:
24. It is mutually agreed by and between Landlord and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other (except for personal injury or property damage) on any matters whatsoever
arising out of or in any way connected with this lease, the relationship of
Landlord and Tenant, Tenant's use of or occupancy of the Demised Premises, and
any emergency statutory or any other statutory remedy. It is further mutually
agreed that in the event Landlord commences any summary proceeding for
possession of the Demised Premises, Tenant will not interpose any counterclaim
of whatever nature or description on any such proceeding.
Inability to Perform:
25. This lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on the part of Tenant to be
performed shall in no wise be affected, impaired or excused because Landlord is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make or is delayed in making any repair, additions, alterations, or
decorations or is unable to supply or is delayed in supplying any equipment or
fixtures if, in the judgment of Landlord, temporary interruption of such
services is necessary by reason of accident or mechanical breakdown, or to make
repairs, alterations or improvements, or when Landlord is prevented or delayed
from so doing by reason of (i) strike or labor troubles, (ii) government
preemption in connection with a national emergency, (iii) any rule, order or
regulation of any department or subdivision thereof of any government agency,
(iv) the conditions of supply and demand which have been or are affected by war
or other emergency, or (v) any other cause beyond Landlord's control.
Bills and Notices:
26. Except as otherwise in this lease provided, a bill, statement, notice or
communication which Landlord may desire or be required to give to Tenant shall
be deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
Building or at the last known residence address or business address of Tenant or
left at the Demised Premises addressed to Tenant and the time of the rendition
of such bill or statement and the giving of such notice or communication shall
be deemed to be the time when the same is delivered to Tenant, mailed, or left
at the Demised Premises as herein provided. Any notice by Tenant to Landlord
must be served by registered or certified mail addressed to Landlord at the
address first hereinabove given or at such other address as Landlord shall
designate by written notice.
Sprinklers:
27. Anything elsewhere in this lease to the contrary notwithstanding, if the New
York Board of Fire Underwriters, Landlord's insurance carrier or the Insurance
Services Office (or any other entity exercising similar functions) or any
bureau, department or official of the federal, state or city government or any
quasi-governmental authority or other entity requires or recommends the
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installation of a sprinkler system or that any changes, modifications,
alterations, or additional or replacement sprinkler heads or other equipment be
made or supplied in an existing sprinkler system for any reason whatsoever,
including, without limitation, by reason of Tenant's business or the location of
partitions, trade fixtures, or other contents of the Demised Premises, or if any
such sprinkler system installations, changes, modifications, alterations,
additional or replacement sprinkler heads or other such equipment become
necessary to prevent the imposition of a penalty or charge against the full
allowance for a sprinkler system in the fire insurance rate set by any said
entity or by any fire insurance company, Tenant shall, at Tenant's expense,
promptly make such sprinkler installations, changes, modifications, alterations
and supply additional or replacement sprinkler heads or other equipment as
required whether the work involved shall be structural or non-structural in
nature. Tenant shall pay to Landlord as additional rent the sum of $15.00 on the
first day of each month during the Term as Tenant's portion of the contract
price for sprinkler supervisory service.
Cleaning:
28. Tenant shall, at Tenant's expense, keep the Demised Premises clean and in
order, to the satisfaction of Landlord, and if the Demised Premises are situated
on the street floor, Tenant shall, at Tenant's expense, make all repairs and
replacements to the sidewalks and curbs adjacent thereto and keep said sidewalks
and curbs free from snow, ice, dirt and rubbish. Tenant shall, at Tenant's
expense, independently contract for the removal of its rubbish and refuse from
Atlas Terminals which removal shall be subject to such rules and regulations as,
in the judgment of Landlord, are necessary for the proper operation of Atlas
Terminals.
Security:
29. (A) Tenant has deposited with Landlord the sum of $4,600.00 ("Security
Deposit") as security for the faithful performance and observance by Tenant of
the terms, provisions and conditions of this lease. It is agreed that in the
event Tenant defaults in respect of any of the terms, provisions and conditions
of this lease, including, but not limited to, the payment of Fixed Rent and
additional rent, Landlord may use, apply or retain the whole or any part of the
Security Deposit to the extent required for the payment of any Fixed Rent and
additional rent or any other sum as to which Tenant is in default or for any sum
which Landlord may expend or may be required to expend by reason of Tenant's
default in respect of any of the terms, covenants and conditions of this lease,
including, but not limited to, any damages or deficiency in the re-letting of
the Demised Premises, whether such damages or deficiency accrued before or after
summary proceedings or other re-entry by Landlord. In the event that Tenant
shall fully and faithfully comply with all of the terms, provisions, covenants
and conditions of this lease, the Security Deposit shall be returned to Tenant
after the Termination Date and after delivery of entire possession of the
Demised Premises to Landlord. In the event of a sale of the Building and the
Land or the leasing of the Building, Landlord shall have the right to transfer
the Security Deposit to the vendee or lessee and Landlord shall thereupon be
released by Tenant from all liability for the return of such security and Tenant
agrees to look solely to the new landlord for the return of the Security
Deposit. It is agreed that the provisions hereof shall apply to every transfer
or assignment made of the Security Deposit to a new landlord. Tenant further
covenants that it will not assign or encumber or attempt to assign or encumber
the monies deposited herein as the
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Security Deposit and that neither Landlord nor its successors or assigns shall
be bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
(B) The Security Deposit shall be placed in an interest-bearing account and the
interest thereon (less the statutory administrative fee, which shall be retained
by Landlord) shall be remitted to Tenant annually, provided Tenant has not
theretofore defaulted in the performance of its obligations under this lease.
Captions:
30. The captions are inserted only as a matter of convenience and for reference
and in no way define, limit or describe the scope of this lease nor the intent
of any provision thereof
Definitions:
31. The term "Landlord" as used in this lease means only the owner or the
mortgagee in possession for the time being of the Building and the Land (or the
tenant under a lease of the Building or of the Land and Building) so that in the
event of any sale or sales of the Land and Building or of said lease, or in the
event of a lease of said Building, or of the Land and Building, the said
Landlord shall be and hereby is entirely freed and relieved of all covenants and
obligations of Landlord hereunder and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser at any such sale, or the said lessee of
the Building, or of the Land and Building, that the purchaser or the lessee of
the Building has assumed and agreed to carry out any and all covenants and
obligations of Landlord hereunder. The words "re-enter" and "re-entry" as used
in this lease are not restricted to their technical legal meaning. The term
"business days" as used in this lease shall exclude Saturdays, Sundays and all
days designated as holidays under any employment agreement with Landlord's
employees.
Adjacent Excavation-Shoring:
32. If an excavation shall be made upon land adjacent to the Demised Premises or
shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the Demised Premises
for the purpose of doing such work as said person shall deem necessary to
preserve the wall or the Building from injury or damage and to support the same
by proper foundations without any claim for damages or indemnity against
Landlord or diminution or abatement of rent.
Rules and Regulations:
33. Tenant and Tenant's servants, employees, agents, visitors, and licensees
shall observe faithfully and comply strictly with the Rules and Regulations set
forth herein and such other and further reasonable rules and regulations as
Landlord or Landlord's agents may from time to time adopt. Notice of any
additional rules or regulations shall be given in such manner as Landlord may
elect. In case Tenant disputes the reasonableness of any additional rule or
regulation hereafter made or adopted by Landlord or Landlord's agents, the
parties hereto agree to submit
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the question of the reasonableness of such Rule or Regulation for decision to
the New York office of the American Arbitration Association, whose determination
shall be final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional rule or regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice in
writing upon Landlord within ten (10) days after the giving of notice thereof.
Nothing in this lease contained shall be construed to impose upon Landlord any
duty or obligation to enforce the rules and regulations or terms, covenants or
conditions in any other lease as against any other tenant and Landlord shall not
be liable to Tenant for violation of the same by any other tenant, its servants,
employees, agents, visitors or licensees.
Estoppel Certificate:
34. Tenant, at any time, and from time to time upon at least ten (10) days'
prior notice by Landlord, shall execute, acknowledge and deliver to Landlord,
and/or to any other person, firm or corporation specified by Landlord, a
statement certifying that this lease is unmodified and in full force and effect
(or, if there have been modifications, that the same is in full force and effect
as modified and stating the modifications), stating the dates which the Fixed
Rent and additional rent have been paid and stating whether or not there exists
any defaults by Landlord under this lease and, if so, specifying each such
default.
Successors and Assigns:
35. The covenants, conditions and agreements contained in this lease shall bind
and inure to the benefit of Landlord and Tenant and their respective heirs,
distributees, executors, administrators, successors and, except as otherwise
provided in this lease, their assigns.
Tax Escalation:
36. (A) For purposes hereof:
(1) "Real Estate Taxes" shall mean all the real estate taxes and
assessments imposed by any governmental authority having jurisdiction upon the
land and/or buildings comprising the tax lot of which the Demised Premises are a
part ("Tax Lot") or any tax or assessment hereafter imposed in whole or in part
in substitution for such real estate taxes and/or assessments.
(2) "Base Year Taxes" shall mean the Real Estate Taxes as finally
determined for the tax fiscal year July 1, 1998 - June 30, 1999 ("Base Year").
(3) "Subsequent Year" shall mean any tax fiscal year commencing after the
expiration of the Base Year.
(4) "Tenant's Proportionate Share" shall mean .49%.
(B) If the Real Estate Taxes for any Subsequent Year during the Term exceed the
Base Year Taxes (as initially imposed, if not finally determined when a payment
is due pursuant to subdivision (C)), Tenant shall pay Landlord Tenant's
Proportionate Share of such excess.
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(C) Such payment shall be due within fifteen (15) days after the Real Estate
Taxes for any Subsequent Year become due, or, if Real Estate Taxes are payable
in installments, the appropriate portion of such payment (based on the number of
such installments) shall be due within fifteen (15) days after the date each
such installment is due. If the Base Year Taxes ultimately are less than the
Real Estate Taxes initially imposed upon the Tax Lot for the Base Year, Tenant
shall pay Landlord, promptly upon demand, any additional amount thereby payable
pursuant to subdivision (B) for all applicable Subsequent Years.
(D) If Landlord receives any refund of Real Estate Taxes for any Subsequent Year
for which Tenant has made a payment pursuant hereto, Landlord shall (after
deducting from such refund all expenses incurred in connection therewith) pay
Tenant, if not in default hereunder, Tenant's Proportionate Share of the net
refund. If Landlord succeeds in reducing any assessed valuation for the Tax Lot
prior to the initial billing of Real Estate Taxes for any Subsequent Year,
Tenant also shall pay Landlord Tenant's Proportionate Share of the expenses so
incurred by Landlord.
(E) If any Subsequent Year is only partially within the Term, all payments
pursuant hereto shall be appropriately prorated based on the portion of the
Subsequent Year which is within the Term. Except as limited by Articles 9 and
10, (i) Tenant's obligation to make the payments required by subdivisions (B),
(C) and (D) shall survive the Expiration Date or any sooner termination of this
lease and (ii) Landlord's obligation to make the payments required by
subdivision (D) shall survive the Expiration Date or any sooner termination of
this lease pursuant to Articles 9 and 10.
Expense Escalation:
37. (A) For purposes of the formula and other provisions set forth in this
Article and elsewhere in this lease:
(1) "Rate" shall mean (a) the minimum regular hourly wage rate prescribed
for "Watch Engineers" (as hereinafter defined) pursuant to the then effective
agreement between Landlord and Local Union No. 30 and 30-A of the International
Union of Operating Engineers, AFL-CIO (or any successor thereto) covering the
wage rates for Watch Engineers at Atlas Terminals ("Agreement"); provided,
however, if, at any time during the Term, regular employment of Watch Engineers
occurs on days or during hours when overtime or other premium pay rates are or
in effect pursuant to the Agreement, Rate shall mean the average hourly wage
rate for the hours in a calendar week during which Watch Engineers are regularly
employed (e.g., if pursuant to the Agreement, the regular weekly employment of
Watch Engineers is for forty hours at a regular hourly wage rate of $9.00 for
the first thirty hours and an overtime hourly wage rate of $12.00 for the
remaining ten hours, the regular wage rate for the applicable period shall be
the weekly wage rate of $390.00 divided by the number of regular hours of
employment, to wit, forty, or $9.75), or (b), if there is no Agreement in
effect, the minimum hourly wage rate actually payable to Watch Engineers
employed at Atlas Terminals by Landlord, or (c) if, at any time during the Term,
Landlord does not employ Watch Engineers at Atlas Terminals, the minimum regular
hourly wage rate payable to Engineers pursuant to the then effective Engineer
Agreement between Realty Advisory Board on Labor Relations Incorporated and
Local 94-94A International Union of Operating Engineers AFL-CIO ("Substitute
Agreement"), or (d) if, at any
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time during the Term, there is no Substitute Agreement in effect, the minimum
hourly wage rate actually payable by Landlord's managing agent to Watch
Engineers employed in New York City office buildings.
(2) "Base Rate" shall mean the Rate in effect on June 1998.
(3) "Multiplication Factor" shall mean 3,641.
(4) "Watch Engineers" shall mean those employees engaged in activities
substantially similar to the activities presently engaged in by the employees of
Atlas Terminals paid as Watch Engineers pursuant to the current Agreement.
(B) If in any period during the Term, the Rate exceeds the Base Rate, Tenant
shall pay Landlord an amount equal to the product of the Multiplication Factor
multiplied by one third of the amount by which the Rate exceeds the Base Rate
("Expense Escalation"), appropriately adjusted for any such period which is,
only partially within the Term. The Expense Escalation shall be payable in equal
monthly installments commencing with the first installment of Fixed Rent due on
or alter the effective date of any increase in the Rate and continuing
thereafter until the effective date of any subsequent increase, whereupon such
installments shall be appropriately adjusted. Landlord shall furnish Tenant with
a statement itemizing Tenant's liability pursuant to this subdivision whenever
such liability arises or changes. Except as limited by Articles 9 and 10,
Tenant's obligation to make such payments shall survive the Expiration Date or
any sooner termination of this lease. Notwithstanding the foregoing, if by
reason of any law, or any rule, order, regulation or requirement of any
governmental or quasi governmental authority having or asserting jurisdiction
(collectively, "Law"), an increase in the Rate is reduced or does not take
effect, or increases in the Rate are limited or prohibited, then, for the period
covered by the Law ("Law Period") the applicable increase ("Increase") in the
Rate for purposes of this Article shall be the increase in the Rate ("Prior
Increase") immediately preceding the effective date of the Law. The Increase
shall take effect on the date following the expiration of the period for the
Prior Increase and an equivalent Increase shall take effect on each anniversary
of such effective date during the Law Period.
(C) Each notice given by Landlord pursuant to subdivision (B) shall be binding
upon Tenant unless, within thirty (30) days after its receipt of such notice,
Tenant notifies Landlord of its disagreement therewith, specifying the portion
thereof with which Tenant disagrees. If any such dispute is not settled within
sixty (60) days of Tenant's receipt of such notice, Tenant shall, without
prejudice to its rights, pay all amounts determined by Landlord to be due,
subject to prompt refund by Landlord (without interest) upon any contrary
determination.
(D) In the event that at any time during the Term Landlord ceases employing
Watch Engineers at Atlas Terminals and, accordingly, the Rate is to be computed
in accordance with the provisions of clauses (c) or (d) of Subdivision (A)(l) of
this Article 37, then commencing with the calendar month in which Landlord
ceases employing such Watch Engineers (i) the Fixed Rent shall be increased by
the amount of the last succeeding Expense Escalation which was or is to be
computed by utilizing the Rate determined in accordance with clauses (a) or (b)
of Subdivision (A)(l) of this Article 37 and (ii) the Base Rate shall be the
Rate in effect (computed
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in accordance with the provisions of clauses (c) or (d) of Subdivision (A)(l) of
this Article 37) for such calendar month.
(E) In the event that at any time during the Term an Agreement shall be entered
into providing for retroactive payments to Watch Engineers with respect to a
period prior to the date of the execution of such Agreement, the Expense
Escalation for such period shall be calculated on the basis of such retroactive
payments.
Heat Escalation:
38. [Section 38 was stricken out].
Brokerage:
39. Tenant represents that it dealt only with Atco Properties & Management, Inc.
as broker ("Broker") in connection with this lease and Landlord shall pay the
Broker's commission therefor pursuant to separate agreement. Tenant shall
indemnify Landlord against any liability and expense (including reasonable
attorney's fees and disbursements) for any other brokerage commission or
finder's fee based on alleged actions of Tenant or its agents or
representatives. Tenant's liability hereunder shall survive the Expiration Date
or any sooner termination of this lease.
Landlord's Liability:
40. Anything herein to the contrary notwithstanding, Landlord's liability for
its negligence or failure to perform its obligations hereunder shall be limited
to its interest in the Building and the Land. Tenant shall neither seek to
enforce nor enforce any judgment or other remedy against any other asset of
Landlord or any individual who holds any interest in Landlord.
Submission to Jurisdiction:
41. (A) This lease shall be deemed to have been made in New York City, New York
and shall be construed in accordance with the laws of the State of New York. All
actions or proceedings relating, directly or indirectly, to this lease shall be
litigated only in a court located within the County of New York or Queens.
Tenant, any guarantor of the performance of its obligations hereunder
("Guarantor") and their successors and assigns hereby subject themselves to the
jurisdiction of any state or federal court located within such counties, waive
the personal service of any process upon them in any action or proceeding
therein and consent that such process be served by certified or registered mail,
return receipt requested, directed to the Tenant and any successor at Tenant's
address hereinabove set forth, to Guarantor and any successor at the address set
forth in the instrument of guaranty and to any assignee at the address set forth
in the instrument of assignment. Such service shall be deemed made two days
after such process is so mailed.
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(B) The submission of this lease to Tenant shall not constitute an offer by
Landlord to execute and exchange a lease with Tenant and is made subject to
Landlord's acceptance, execution and delivery thereof.
RIDER ANNEXED TO AND FORMING A PART OF THE LEASE BETWEEN
THE HEMMERDINGER CORPORATION, AS LANDLORD, AND
SPEIZMAN INDUSTRIES, INC., AS TENANT
42. "AS IS"
Tenant acknowledges that it has examined the demised premises and agrees to
accept the same in its current "As Is" condition and that Landlord will have no
obligation to do any work whatsoever in order to prepare same for Tenant's
occupancy other than to build one exterior loading platform.
43. TENANT'S WORK
Supplementing Article 3, subject to Tenant's prior compliance, with all the
applicable requirements of this Lease (including without limitation, the prior
submission to Landlord of plans and specifications for Landlord's prior written
approval, which shall not be unreasonably withheld or delayed) and the Atlas
Terminals Rules and Regulations Governing Tenant Alterations (a copy of which is
annexed hereto as Exhibit B), Landlord hereby consents to Tenant's performance
of nonstructural alterations, improvements, additions, installations and
decorations in and to the Demised Premises which have no adverse effect on the
Building's operating systems and facilities (collectively, "Tenant's Work"),
provided Tenant's Work is of a standard of quality and quantity at least equal
to Atlas Terminals Building Standard Installations.
44. TENANT' S REPRESENTATIVE
Tenant hereby constitutes and appoints Jack Koehler as its representative, to
deal with Landlord in connection with Tenant's or Landlord's Work. Any notices
and/or approvals given to or by such representative shall be binding upon
Tenant. Tenant may change such designation by notice in writing to Landlord.
45. PARKING
Landlord will designate for Tenant's exclusive use two (2) parking spaces.
46. HOT WATER HEATER
Tenant agrees that it will be responsible for maintaining and keeping the
existing hot water heater located in the demised premises in good order and
repair.
47. HEAT
Tenant acknowledges that Landlord has advised it that Building No. 20 is
presently heated by three (3) independent heating systems, which run on natural
gas. Tenant shall be responsible for maintaining and keeping said systems in
good order and repair including but not limited to properly filing for all
inspections, permits and certificates of operation as required by governmental
authorities having jurisdiction for the operation of such equipment. At the end
of the term, Tenant shall surrender the heating system in good working order and
condition.
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Tenant shall make the necessary arrangements to become a direct customer of a
duly authorized supplier of natural gas and shall order, pay for and receive gas
directly from said supplier.
Tenant acknowledges that Landlord has advised it that it will be necessary for
Tenant to heat the demised premises during non-business hours, during certain
periods of the year, in order to prevent a freeze-up of the sprinkler system
and/or prevent other damages to the building of which the demised premises form
a part, and Tenant agrees to provide the necessary heat to prevent freeze-up.
IN WITNESS WHEREOF, Landlord and Tenant have executed this lease as of the day
and year first above written.
Witness for Landlord: THE HEMMERDINGER CORPORATION
By: George (illegible last name)
- ----------------------------------- -----------------------------------
Witness for Tenant: SPEIZMAN INDUSTRIES, INC.
/s/ Jerry Steinberg By: /s/ Josef Sklut
- ---------------------------------- -----------------------------------
Jerry Steinberg Josef Sklut, Vice President-Finance
24
LEASE RENEWAL AGREEMENT MADE AND ENTERED INTO THE CITY OF AND DISTRICT OF
MONTREAL, ON THIS 11TH DAY OF JANUARY 1999.
- --------------------------------------------------------------------------------
BETWEEN: METRO II & III (G.P.), general partnership, duly authorized to
act on behalf of the owners of the building herein below
described, having its placed of business at 8300 Pie IX,
Montreal, Province of Quebec, H1Z 4E8, herein acting and
represented by Mr. Jordan Aberman, duly authorized for these
purposes,
(hereinafter referred to as "Lessor")
AND: SPEIZMAN CANADA INC., legal person duly incorporated under the
Quebec companies Act, having its head office at 800 Place
Victoria, Suite 4702, in the City of Montreal, Province of
Quebec, H4Z 1H6, and a place of business at 5205 Metropolitan
East, Suite 3, in the City of St-Leonard, Province of Quebec, H1R
1Z7, herein acting and represented by Robert S. Speizman, its
President, duly authorized by virtue of a resolution of its Board
of Directors, a certified extract of which is annexed to these
present;
(hereinafter referred to as "Lessee")
WHEREAS the Lessor is acting on behalf of the owners of that certain building
bearing civic address 5205 Metropolitan East, St-Leonard, Province of Quebec;
WHEREAS in virtue of a lease starting March 1, 1989 ("Lease") the Lessee leased
those certain premises bearing civic address 5205 Metropolitan East, Suite "3",
St-Leonard, Province of Quebec, having approximately Two Hundred and Fifty
square feet (250 sq. ft.) ("Leased Premises"), for the period of THREE (3)
years;
WHERAS by a renewal agreement dated February 17, 1992 (the "First Renewal"), the
term has been extended for an additional period of THREE (3) years commencing on
March 1st, 1992 and terminating February 28, 1995, upon the terms and conditions
set forth in the First Renewal;
WHEREAS by a renewal agreement dated October 24, 1994 (the "Second Renewal"),
the term has been extended for an additional period of ONE (1) year commencing
on March 1st, 1995 and terminating on February 28, 1996, upon the terms and
conditions set forth in the Second Renewal;
WHEREAS by a renewal agreement dated November 21st, 1995 (the "Third Renewal"),
the term has been extended for an additional period of ONE (1) year commencing
on March 1st, 1996 and terminating on February 28, 1997, upon the terms and
conditions set forth in the Third Renewal;
1
<PAGE>
WHEREAS by a renewal agreement dated January 29, 1997 (the "Fourth Renewal"),
the term has been extended for an additional period of ONE (1) year commencing
on March 1st, 1997 and terminating on February 28, 1998, upon the terms and
conditions set forth in the Fourth Renewal.
WHEREAS by a renewal agreement dated September 23rd, 1997 (the "Fifth Renewal"),
the term has been extended for an additional period of ONE (1) year commencing
on March 1st, 1998 and terminating on February 28, 1999, upon the terms and
conditions set forth in the Fifth Renewal;
WHEREAS the Lease as modified by the First Renewal, the Second Renewal, the
Third Renewal, the Fourth Renewal and the Fifth Renewal are hereinafter
collectively referred to as the "Lease" and the Term as extended by the First
Renewal, the Second Renewal, the Third Renewal, the Fourth Renewal and the Fifth
Renewal are hereinafter collectively referred to as the "Term";
WHEREAS both the Lessor and the Lessee wish to extend the Lease for a further
term of ONE (1) year under the following terms and conditions:
THEREFORE THE PARTIES AGREE AS FOLLOWS:
1. The preamble hereinabove shall form an integral part of the present Lease
Renewal Agreement, as if herein recited at length.
2. The Lease Renewal Agreement is made upon and subject to the same terms and
conditions as set forth in the Lease save, only as modified by the terms
hereof.
3. The Term of the Lease as specified in Clause 2 of the Lease shall be
renewed and extended for an additional period of ONE (1) year which shall
commence on March 1st, 1999 and shall terminate on February 28, 2000.
4. This Lease Renewal Agreement is made upon and subject to the same terms
and conditions as set forth in the Lease, save and except that the rental
rate shall be at THREE HUNDRED THIRTY FIVE DOLLARS ($335.00), plus G.S.T.
and Q.S.T. and any applicable taxes, gross per month, save and except for
Lessee's proportion of the nonresidential municipal surtax.
5. In the event that during the renewed Term of the Lease, the mode of
collecting said nonresidential municipal surtax and/or municipal business
taxes be altered to make the Lessor liable of them, then such
nonresidential municipal surtax and/or municipal business taxes shall be
paid by the Lessee to the Lessor.
6. The Lessee represents that is has examined and viewed the Leased Premises
and accepts same in their present condition. The present Lease Renewal
Agreement is not subject to the Sections applicable to the leasehold
improvements of the Lease which condition has already been satisfied.
7. There shall be no further option to renew the Lease.
2
<PAGE>
8. No alteration, amendment, change or addition to this Lease Renewal
Agreement is binding upon the Lessor unless it is in writing and signed by
the Lessee and an authorized representative of the Lessor. The Lessor and
the Lessee acknowledge and covenant to have read, examined, understood and
approved all the provisions of this Lease Renewal Agreement, including
without restriction, all schedules attached hereto and forming part
hereof.
9. The parties confirm that in all other respects, the terms, covenants and
conditions of the Lease remain unchanged, and in full force and effect,
except as modified by this Lease Renewal Agreement. It is understood and
agreed that all terms and expressions when used in this Lease Renewal
Agreement, unless a contrary intention is expressed herein, have the same
meaning as they have in the Lease.
10. The parties confirm that it is their wish that this Lease Renewal
Agreement be drawn up in English. Les parties aux presentes confirment
leur volonte que cette convention soit redigee en anglais.
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, THE PARTIES HAVE SIGNED AT THE PLACE AND ON THE DATE
HEREINBEFORE FIRST INDICATED.
METRO II & III (G.P.)
/s/ Helene Mallette /s/ Jordan Aberman
- -------------------------------- -----------------------------------
Witness Per: Mr. Jordan Aberman
- --------------------------------
Witness
SPEIZMAN CANADA INC.
/s/ James H. McCorkle, III /s/ Robert S. Speizman
- --------------------------------- -----------------------------------
Witness Per: Robert S. Speizman, President
/s/ L. Gail Gormly
- ----------------------------------
Witness
3
<PAGE>
EXTRACT FROM THE MINUTES OF THE BOARD
OF DIRECTORS OF THE COMPANY
SPEIZMAN CANADA INC.
HELD on the 30 day of the month of December, 1998.
BE IT RESOLVED,
1. THAT the Company enter into a Lease Renewal Agreement with Metro II & III
(G.P.), for the Leased Premises bearing civic number 5205 Metropolitain East,
Suite 3, in the City of St-Leonard, Province of Quebec and that Mr. Robert S.
Speizman, its President, be and is hereby authorized to execute the said Lease
Renewal Agreement on behalf of the Company.
Certified to be a true copy of a Resolution passed at a meeting of the directors
of Speizman Canada Inc. duly called and held on the 30 day of the month of
December, 1998, as set forth in the minutes of the said meeting.
SIGNED AND DATED this 30 day of the month of December, 1998.
SPEIZMAN CANADA INC.
(Lessee)
/s/ Robert S. Speizman
Name: Robert S. Speizman
Function: President
Affix the corporate seal
4
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