<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- -- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1996
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
Commission File Number 0-24884
CANNONDALE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-0871823
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 BROOKSIDE PLACE, GEORGETOWN, CT 06829-0122
(Address of principal executive offices, including zip code)
(203) 544-9800
(Registrant's telephone number, including area code)
Indicate by check marke whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), Yes X No
--- ---
and (2) has been subject to such filing requirements for the past 90 days
Yes X No .
--- ---
The number of shares outstanding of the issuer's Common Stock, $.01 par value,
as of November 7, 1996 was 8,613,909.
1
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CANNONDALE CORPORATION
INDEX
Page
----
Part I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 28, 1996, June 29, 1996 and
September 30, 1995.................................... 3
Condensed Consolidated Statements of Operations for
the three months ended September 28, 1996 and
September 30, 1995.................................... 4
Condensed Consolidated Statement of Stockholders'
Equity for the three months ended September 28,
1996 and the year ended June 29, 1996................. 5
Condensed Consolidated Statements of Cash Flows for
the three months ended September 28, 1996 and
September 30, 1995.................................... 6
Notes to Condensed Consolidated Financial Statements... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 8
Part II Other Information.............................................. 10
2
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CANNONDALE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 28, 1996 June 29, 1996 September 30, 1995
(UNAUDITED) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash................................................. $ 5,611 $ 4,305 $ 2,847
Trade accounts receivable, less allowances of
$5,834, $5,238, and $4,160 ........................ 44,470 52,027 35,133
Inventory............................................ 36,745 30,526 27,109
Deferred income taxes................................ 2,484 2,041 1,768
Prepaid expenses and other current assets ........... 1,587 1,154 1,850
-------- -------- -------
Total current assets................................... 90,897 90,053 68,707
Property, plant and equipment, net..................... 19,391 18,527 18,046
Other assets........................................... 1,459 1,365 1,544
-------- -------- -------
Total assets........................................... $111,747 $109,945 $88,297
======== ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................... $ 14,027 $ 12,431 $13,274
Revolving credit advances............................ 2,391 4,756 3,813
Income taxes payable................................. 2,150 1,845 -
Warranty and other accrued expenses ................. 4,964 5,043 4,919
Payroll and other employee related benefits ......... 1,292 2,266 1,122
Current installments of long-term debt .............. 1,534 1,680 1,740
-------- -------- -------
Total current liabilities.............................. 26,358 28,021 24,868
Long-term debt, less current installments ............. 16,127 13,114 5,501
Deferred income taxes.................................. 203 235 300
Other noncurrent liabilities........................... 281 281 415
-------- -------- -------
Total liabilities...................................... 42,969 41,651 31,084
-------- -------- -------
Stockholders' equity:
Common stock, $.01 par value:
Authorized shares - 18,000,000
Issued and outstanding shares - 8,612,279,
8,611,715 and 8,461,894 ........................... 86 86 85
Additional paid-in capital........................... 55,972 55,965 54,389
Retained earnings.................................... 13,036 12,547 2,595
Cumulative translation adjustment ................... (316) (304) 144
-------- -------- -------
Total stockholders' equity............................. 68,778 68,294 57,213
-------- -------- -------
Total liabilities and stockholders' equity............. $111,747 $109,945 $88,297
======== ======== =======
</TABLE>
See accompanying notes
3
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CANNONDALE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR PER-SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 28, 1996 SEPTEMBER 30, 1995
------------------ ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales....................................... $30,880 $26,849
Cost of sales................................... 20,652 18,759
------- -------
Gross profit.................................... 10,228 8,090
------- -------
Expenses:
Selling, general and administrative ......... 8,339 6,631
Research and development .................... 757 656
------- -------
9,096 7,287
------- -------
Operating income................................ 1,132 803
------- -------
Other income (expense):
Interest expense............................. (349) (718)
Other income (expense) ...................... (26) 219
------- -------
(375) (499)
------- -------
Income before income taxes....................... 757 304
Income tax expense............................... (268) (110)
------- -------
Net income....................................... $ 489 $ 194
======= =======
Primary income per share:
Net income.................................... $ .05 $ .03
======= =======
Fully-diluted income per share:
Net income.................................... $ .05 $ .03
======= =======
</TABLE>
See accompanying notes
4
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CANNONDALE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE
-------------------- PAID-IN RETAINED TRANSLATION
SHARES VALUE CAPITAL EARNINGS ADJUSTMENT TOTAL
------ ----- ------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1995 ............ 7,127,181 $ 71 $ 33,294 $ 2,401 $ 322 $ 36,088
Net income ...................... -- -- -- 10,146 -- 10,146
Issuance of common stock (Net
of $1,490 offering costs) ..... 1,366,666 14 22,071 -- -- 22,085
Exercise of options ............. 117,868 1 600 -- -- 601
Foreign currency adjustment ..... -- -- -- -- (626) (626)
--------- --------- --------- --------- --------- ---------
Balance at June 29, 1996 ........... 8,611,715 86 55,965 12,547 (304) 68,294
(Unaudited)
Net income ...................... -- -- -- 489 -- 489
Exercise of options ............. 564 0 7 -- -- 7
Foreign currency adjustment ..... -- -- -- -- (12) (12)
-------- --------- --------- --------- --------- ---------
Balance at September 28, 1996 ...... 8,612,279 $ 86 $ 55,972 $ 13,036 $ (316) $ 68,778
========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes
5
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CANNONDALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 28, 1996 SEPTEMBER 30, 1995
------------------ ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ..... $ 2,503 $ (669)
-------- --------
INVESTING ACTIVITIES:
Capital expenditures .................................... (1,647) (554)
-------- --------
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock .............. 7 21,109
Proceeds from issuance of long-term debt ................ 3,026 --
Net repayments of borrowings under short-term
revolving credit agreements ......................... (2,414) (969)
Net repayments of borrowings under long-term
debt and capital lease agreements ................... (130) (18,173)
-------- --------
Net cash provided by financing activities ............... 489 1,967
-------- --------
Effect of exchange rate changes on cash ................. (39) (152)
-------- --------
Net increase in cash .................................... 1,306 592
Cash at beginning of period ............................. 4,305 2,255
-------- --------
Cash at end of period ................................... $ 5,611 $ 2,847
======== ========
</TABLE>
See accompanying notes
6
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CANNONDALE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Cannondale Corporation (the Company) have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended September 28, 1996 are not
necessarily indicative of the results that may be expected for the year ending
June 28, 1997. For further information, refer to the consolidated financial
statements and footnotes thereto for the year ended June 29, 1996 included in
the Company's Annual Report on Form 10-K/A.
Certain prior-period amounts have been reclassified to conform to the
current year's presentation.
2. INVENTORY
The components of inventory are as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 28, SEPTEMBER 30,
1996 JUNE 29, 1996 1995
---- ------------- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Raw materials $18,826 $14,664 $15,580
Work-in process 2,764 1,772 1,849
Finished goods 16,615 15,505 10,808
Less reserve for obsolete inventory (1,460) (1,415) (1,128)
------- ------- -------
$36,745 $30,526 $27,109
======= ======= =======
</TABLE>
3. EARNINGS PER SHARE AMOUNTS
Earnings per share of common stock are computed using the weighted
average number of shares of common stock and common stock equivalents
outstanding for each period. The weighted average number of shares of common
stock and common stock equivalents used in the computation of earnings per share
was 9,052,445 and 7,567,905 for the three-month periods ended September 28, 1996
and September 30, 1995, respectively. Common stock equivalents include options
to purchase common stock.
4. DEBT
In July 1996, Cannondale Europe B.V. amended and restated its existing
credit facility to refinance approximately $3.0 of the credit line on a
long-term basis. The interest rate on the long-term balance is adjusted
quarterly to market rates determined by the bank with a ceiling of 7.6% (the
rate was 5.6% at September 28, 1996).
5. SUBSEQUENT EVENT
On September 29, 1996, the Company sold its domestic headquarters
facility to an entity controlled by the Company's Chairman, President and
Chief Executive Officer and another director of the Company for $1,676,000,
an amount which approximated the net book value of the domestic headquarters
facility at the date of sale. Based on information provided by an independent
third party the Company believes that this amount reflects current market
value. Pending its relocation to a new headquarters facility, the Company
will continue to occupy the current facility on a month-to-month net lease of
$16,000 per month. Based on an area survey of similar properties by an
independent third party, the Company believes this amount reflects current
fair rental value.
7
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Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales. Net sales increased 15.0% from $26.8 million in the first quarter of
fiscal 1996 to $30.9 million in the first quarter of fiscal 1997, an increase
of $4.1 million. The increase in sales was a result of the continued worldwide
demand for Cannondale products, a sales mix that favored international markets
and growth in the Company's non-bike categories.
Gross Profit. Gross profit as a percentage of net sales increased to 33.1% for
the first quarter of fiscal 1997 compared to 30.1% for the first quarter of
fiscal 1996. The gross profit for the quarter was $10.2 million, an increase of
$2.1 million, or 26.4%, over the gross profit of $8.1 million for the first
quarter of fiscal 1996. The improvement in gross profit reflects a mix that
favored international markets, an increase in non-bike sales, cost-reduction
programs, and the Company's continued integration of proprietary technology
through the use of Cannondale bicycle frames, CODA components and HeadShok
suspension systems.
Operation Expenses. Operating expenses were $9.1 million for the first quarter
of fiscal 1997, an increase of approximately $1.8 million, or 24.8%, over the
first quarter operating expenses for fiscal 1996 of $7.3 million. Increases in
selling, general and administrative expenses accounted for a substantial
portion of the increase and are directly associated with increased sales, and
the additional personnel and marketing costs to support the Company's current
and planned growth. As a percentage of net sales, operating expenses
increased to approximately 29.5% for the first three months of fiscal 1997,
compared to 27.1% for the first three months of fiscal 1996.
Interest Expense. Interest expense for the first quarter of fiscal 1997 was
$349,000, a decrease of approximately $369,000 from the first quarter of
fiscal 1996. The decrease was primarily attributed to lower borrowings as a
result of the use of proceeds from the Company's public offering of common
shares in September 1995. The decrease in interest expense also reflects the
lower interest rates negotiated as a result of the Company's improved
performance and capitalization.
8
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LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $2.5 million for the first
quarter of fiscal 1997, compared to $669,000 used in operating activities for
the first quarter of fiscal 1996. The increase in cash provided, compared to
the prior year, was primarily attributed to the relatively larger decrease in
accounts receivable in the first quarter of fiscal 1997 versus the first
quarter of fiscal 1996. Capital expenditures were $1.6 million for the first
quarter of fiscal 1997, compared to $554,000 in the first quarter of fiscal
1996. The increase in spending primarily reflects the Company's investment in
its facilities' expansion, which is required to support the increases in
production volume and future growth.
Net cash provided by financing activities for the first three months of fiscal
1997 was $489,000, compared to $2.0 million for the first three months of
fiscal 1996. During the first three months of fiscal 1997, Cannondale Europe
B.V. amended and restated its credit facility to refinance approximately
$3.0 million on a long-term basis from a short-term basis to take advantage
of favorable interest rates. The net cash provided by financing activities in
fiscal 1996 reflects the net proceeds from the public offering of common
shares in September 1995, which were used to reduce borrowings under the
Company's revolving line of credit.
The Company expects that cash flow generated by its operations and borrowings
under the revolving credit facilities will be sufficient to meet its planned
operating and capital requirements for the foreseeable future.
9
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PART II OTHER INFORMATION
Page
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index 12
(b) Reports on Form 8-K
None
10
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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.
CANNONDALE CORPORATION
Date: November 12, 1996 /s/ William A. Luca
------------------------------
William A. Luca
Vice President of Finance, Treasurer
and Chief Financial Officer
(Principal Financial Officer
and authorized signatory)
11
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.63 Contract of Sale dated September
29, 1996, between Cannondale
Corporation and Sandvick
Associates, Inc., together with
Assignment and Assumption
Agreement dated as of September
30, 1996, between Sandvick
Associates, Inc. and Nantucket
Roost Associates, LLC.
10.64 Agreement of Lease dated as of
October 4, 1996, between
Nantucket Roost Associates, LLC
and Cannondale Corporation
11 Statement re: Computation of
Earnings per Common Share
27 Financial Data Schedule
12
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Exhibit 10.63
CONTRACT OF SALE
THIS CONTRACT OF SALE ("Agreement") dated September 29, 1996, by and
between CANNONDALE CORPORATION, a Delaware corporation with an address at 9
Brookside Place, Redding, Connecticut 06829 ("Seller"), and SANDVICK
ASSOCIATES, INC., a Connecticut corporation with an address at 29 Taylor
Avenue, Bethel, Connecticut 06801 ("Purchaser").
Seller and Purchaser, in consideration of the mutual covenants herein
contained, hereby agree as follows:
SECTION 1. SALE OF PREMISES; ACCEPTABLE TITLE.
1.01 SALE AND PURCHASE. Seller shall sell to Purchaser, and
Purchaser shall purchase from Seller, at the price and upon the terms and
conditions set forth in this Agreement, the following:
(a) the parcels of land more particularly described in Schedule
A attached hereto (collectively, "Land") in the Town of Redding, County of
Fairfield and State of Connecticut;
(b) the buildings and improvements situated on the Land and
Seller's interest in any fixtures and systems therein (collectively,
"Building"); and
(c) all right, title and interest of Seller, if any, in and to
the land lying in the bed of any street or highway in front of or adjoining the
Land, together with all easements, rights of way, licenses, privileges and all
other appurtenances to the Land and Building (collectively, "Appurtenances").
The Land, Building and Appurtenances are hereinafter
collectively referred to as the "Premises".
1.02 ACCEPTABLE TITLE. Seller shall convey and Purchaser shall
accept title to the Premises in accordance with the terms of this Agreement,
subject only to the exceptions specified in Schedule A and to the following:
(a) Any restriction or limitations imposed or to be imposed by
governmental authority, including the zoning and planning rules and regulations
of the Town of Redding, provided same are not in violation as of the date of
the "Closing" (as hereinafter defined).
(b) Taxes of the Town of Redding which become due and payable
after the date of the Closing, which taxes Purchaser will assume and agree to
pay as part of the consideration for the deed to be delivered by Seller
hereunder.
<PAGE> 2
(c) Encroachments of fences, hedges, coping and retaining walls
projecting from the Premises over any street or highway or over any adjoining
property and encroachments of similar elements projecting from adjoining
property over the Premises.
(d) Public improvement assessments, sewer assessments and sewer
use charges, or other assessments and/or any unpaid installments thereof, which
assessments, installments and/or use charges become due and payable after the
date of the Closing, which assessments, installments and/or use charges
Purchaser will assume and agree to pay as part of the consideration for the
deed.
(e) State of facts shown by an accurate survey and physical
inspection of the Premises.
(f) All rights of utility companies for the erection and/or
maintenance of water, gas, electric, telephone, sewer or other utility pipes,
lines, poles, wires, conduits, or other like facilities, and appurtenances
thereto, over, across and under the Premises.
(g) UCC-1 Financing Statements described in Items 5-13 of
Schedule A hereto (the "Financing Statements"). Seller agrees to cause the
Financing Statements to be released of record on or before the date Seller
vacates the Premises and takes occupancy of its new corporate headquarters to be
constructed in the Frances J. Clarke Industrial Park in Bethel, Connecticut, but
in no event later than September 1, 1997. Seller hereby agrees to indemnify
Purchaser against, and hold Purchaser harmless from, all loss, cost, damage,
liability, or expense (including, but not limited to, attorneys' fees and
disbursements) incurred by Purchaser by reason of the existence of the Financing
Statements as encumbrances upon title-to the Premises. This paragraph shall
survive the Closing.
SECTION 2. PURCHASE PRICE; ACCEPTABLE FUNDS; ESCROW OF DOWN PAYMENT.
2.01. PURCHASE PRICE. The purchase price ("Purchase Price") to be paid
by Purchaser to Seller for the Premises is ONE MILLION SIX HUNDRED SEVENTY-SIX
THOUSAND AND NO/100 ($1,676,000) DOLLARS, payable at the Closing by unendorsed
certified check or official bank check, or by wire transfer as set forth in
subsection 2.02(b) below, subject to closing adjustments as set forth in
Section 7 of this Agreement.
2.02. ACCEPTABLE FUNDS. (a) The check or checks, if any, delivered by
Purchaser under Section 2.01 above shall be drawn on a Connecticut bank with a
banking office in Fairfield County, Connecticut, or a New York City bank which
is a member of the New York Clearing House.
2
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(b) By written notice to Purchaser no later than three days
prior to the Closing Date, Seller may require Purchaser to deliver the balance
of the Purchase Price due at the Closing by means of a wire transfer of federal
funds. If Seller so elects, Seller shall designate the account to which such
funds shall be wired.
SECTION 3. THE CLOSING.
The transfer of title to the Premises pursuant to this Agreement
("Closing") shall occur on September 30, 1996. The date of closing is referred
to in this Agreement as the "Closing Date". The Closing shall be held in the
offices of Levett, Rockwood & Sanders Professional Corporation, 33 Riverside
Avenue, Westport, Connecticut, commencing at 10:00 A.M. on the Closing Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
4.01 POWER, AUTHORITY, EXECUTION AND DELIVERY.
Purchaser and Seller each represents and warrants to the other the
following:
(a) Each party has full power and authority respectively, to
acquire and own, or convey, as the case may be, the Premises, and that such
acquisition or conveyance, as the case may be, does not and will not violate
any provision of any law, judgment, writ, decree or order of any court or
agency of government, applicable to Purchaser or Seller, as the case may be, or
any provision of any agreement or other instrument to which Purchaser or
Seller, as the case may be, is subject or bound, or conflict with, result in a
breach of, or constitute a default (with or without due notice or lapse of time
or both) under any such agreement or other instrument.
(b) The execution and delivery of this Agreement by the
persons so acting on Purchaser's or Seller's behalf, respectively, have been
authorized by all necessary formal action of each party, and this Agreement is
the valid and legally binding obligation of each party, respectively,
enforceable in accordance with its terms.
4.02 INSPECTION. Purchaser represents and warrants to Seller that
Purchaser has inspected the Premises, is fully familiar with the physical
condition and state of repair thereof, and, on the Closing Date, shall accept
the Premises "AS IS" and in its condition as of the date of this Agreement,
subject to reasonable wear and tear, without claim against Seller for any
defects therein of any kind, latent or otherwise. Purchaser acknowledges that
neither Seller nor any agent, broker or other party acting on
3
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Seller's behalf has made any warranty or representation, express or implied, as
to any matter or thing relating to the premises and/or the transaction
contemplated by this Agreement, except as otherwise expressly set forth in this
Agreement. Purchaser acknowledges that it has made its decision to buy based on
its own information and is not relying on Seller to furnish Purchaser with any
information, except as specified herein.
SECTION 5. CONDEMNATION AND DAMAGE BY FIRE AND OTHER HAZARD.
5.01. IMMATERIAL DAMAGE OR TAKING. If an immaterial part of the
Premises is damaged by fire or other cause or is taken by eminent domain, this
Agreement shall not be affected thereby and there shall be no reduction in the
Purchase Price. Seller shall assign to Purchaser at the Closing and Purchaser
shall accept an assignment of all of Seller's claims or rights under Seller's
insurance policy or policies on the Premises and/or all of Seller's claims or
rights to receive any condemnation awards. If and to the extent seller shall
have received the proceeds of any such claim or awards prior to the Closing
Date, Seller shall pay over to Purchaser on the Closing Date:
(a) the actual amount of insurance moneys collected by
Seller on account of such loss in case of destruction by fire or other cause; or
(b) the net amount received by Seller, in the case of a
taking by eminent domain.
In any event, the assignment or the proceeds shall be reduced by the
costs incurred by Seller as a result of the damage or condemnation, including
without limitation, counsel fees and costs of interim protection, repair and
restoration reasonably incurred and actually paid by Seller.
5.02. MATERIAL DAMAGE OR TAKING. If all or a material part of the
Premises is damaged by fire or other cause, or is taken by eminent domain,
Seller or Purchaser may cancel this Agreement by notice to the other given not
later than ten days after receipt of notice of such damage or of such taking
(as the case may be) and, in such event, this Agreement shall be canceled and
terminated and neither party shall have any further rights against the other.
If neither party so cancels this Agreement, the Closing shall occur as provided
herein and the provisions of Section 5.01 shall control.
5.03. DEFINITIONS OF MATERIAL AND IMMATERIAL. For the purposes of
Sections 5.01 and 5.02, a material part of the Premises shall be deemed to have
been damaged if the estimated cost to repair the Building shall be greater than
$100,000; otherwise, the damage shall be deemed to be immaterial. For purposes
of this Section, a material part of the Premises shall be deemed to have
4
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been taken by eminent domain if (i) more than 10% of the Land or any portion of
any of the Building shall be taken by eminent domain; or (ii) access to the
Premises or parking therefor shall be materially impaired; otherwise, the
taking shall be deemed to be immaterial.
5.04. MAINTENANCE OF INSURANCE. Seller agrees to maintain through the
Closing Date the insurance policy or policies presently in force with respect to
the Premises or insurance equivalent in amount and coverage. Seller represents
that such insurance provides coverage against fire and other hazards included
within an extended coverage endorsement in an amount not less than the
replacement value of the Building, less foundation and underground utility
costs.
SECTION 6. SELLER'S CLOSING OBLIGATIONS.
At the Closing, Seller shall deliver the following to Purchaser:
6.01. DEED. A full covenant warranty deed executed in proper form for
recording so as to convey the title required by this Agreement.
6.02. TITLE AFFIDAVIT. Such affidavits as Purchaser's title insurance
company shall reasonably require in order to omit from its title insurance
policy all exceptions customarily omitted at a closing and with respect to such
other matters as Purchaser's title insurance company shall reasonably request.
6.03. CONVEYANCE TAXES. Completed real property conveyance tax forms.
6.04. FIRPTA STATEMENT. A "FIRPTA" certification confirming that
Seller is not a foreign person as defined in 26 U.S.C. Section 1445(f) (3).
6.05. PLANS, ETC. All plans, drawings, data and specifications,
relating to the Premises in Seller's possession or in the possession of
Seller's agents or employees.
SECTION 7. APPORTIONMENTS AT CLOSING.
7.01. All items customarily apportioned at a closing of title
including, without limitation, real estate taxes, sewer assessments and sewer
use charges and water charges shall be apportioned as of 11:59 p.m. of the day
immediately preceding the closing Date.
5
<PAGE> 6
SECTION 8. PURCHASER'S CLOSING OBLIGATIONS.
At the Closing, Purchaser shall:
8.01. MONIES. Deliver to Seller the balance of the Purchase Price in
the manner provided in Section 2.02 hereof, and a check or checks, complying
with Section 2.02, in payment of items apportioned pursuant to Section 7.
8.02. RECORDATION AND FILING. Cause the deed to be recorded and cause
all conveyance tax returns and checks in payment of such taxes to be delivered
to the appropriate officers having jurisdiction over the Premises promptly
after the Closing.
8.03. CONVEYANCE TAXES. Checks in the amount of the state and local
conveyance taxes.
8.04. OTHER DOCUMENTS REQUIRED. Execute and deliver all other
documents required by this Agreement to be delivered by Purchaser.
SECTION 9. CLEARING TITLE.
9.01. (a) Seller shall convey and Purchaser shall accept fee simple
marketable title to the Premises in accordance with the terms of this
Agreement, subject only to (i) the exceptions referred to in Section 1 and
Schedule A, and (ii) the standard printed exceptions in the ALTA form of title
insurance policy in use in the State of Connecticut. Nothing shall constitute
an encumbrance, lien or exception to title for the purposes of this Agreement
if the Standards of Title of the Connecticut Bar Association recommends that no
corrective or curative action is necessary in circumstances substantially
similar to those presented in the title to the Premises. Seller shall not be
required to bring any action or proceeding or to incur any expense to cure any
title defect.
(b) If examination of the title of the Premises shall reveal
one or more defects which prevent Seller from conveying title in accordance
with the terms of this Agreement, Purchaser shall, prior to the Closing Date,
give Seller written notice of same. Within the period commencing on the date
of such notice from Purchaser and ending on the Closing Date, Seller shall
either (i) cure such defects, or (ii) notify Purchaser that Seller cannot or
elects not to accomplish such cure. If Seller shall accomplish such cure within
such period and shall be able to convey title in accordance with this Section
9.01, the Closing shall then occur. If Seller shall not accomplish same within
such period, or if Seller gives to Purchaser the notice described in clause
(ii) above, then Purchaser, within three days after the earlier of (1) the
giving of Seller's notice to Purchaser as provided in clause
6
<PAGE> 7
(ii) above, or (2) the expiration of such period, shall elect either (x) to
accept a deed to the Premises conveying such title as Seller can give in
accordance with all of the other provisions of this Agreement upon payment of
the Purchase Price, or (y) to cancel and terminate this Agreement, in which
event Purchaser shall be entitled to receive any expenses actually incurred by
the Purchaser for examination of title to the Premises, not to exceed $300.00 in
the aggregate. Upon such payment being made, this Agreement shall be terminated,
and neither party shall have any further liability to the other hereunder.
SECTION 10. BROKERAGE
10.01. BROKERS. This Agreement is consummated by Seller in reliance on
the representation of Purchaser that no broker or agent brought the premises to
Purchaser's attention or was, in any way, a procuring cause of this sale and
purchase. Seller represents to Purchaser that no broker or agent has any
exclusive sale or exclusive agency listing on the premises.
SECTION 11. PURCHASER'S REMEDIES.
In the event of a default by Seller under this Agreement, Purchaser shall
be limited to the remedy of specific performance plus the recovery of its
actual and reasonable legal fees incurred in enforcing the remedy of specific
performance. However, in such event, in its discretion, Purchaser shall have
the right to declare this Agreement terminated, in which event Seller shall pay
the reasonable cost incurred by Purchaser for examination of title to the
Premises, not to exceed $300.00. Upon such termination and payment, neither
party shall have any further liability to the other hereunder.
SECTION 12. REPAIRS.
12.01. Sellers shall not be obligated to expend in excess of $10,000
for repairs required between the date hereof and the Closing in order to
maintain the Premises in their present condition, subject to ordinary wear and
tear. Seller's failure to make expenditures in excess of such amount shall not
be a default by Seller under this Agreement. If Seller elects not to expend in
excess of such amount, and as a result on the Closing Date the Premises are not
in their condition on the date of this Agreement, subject to ordinary wear and
tear, then Purchaser's sole remedy shall be to terminate this Agreement.
7
<PAGE> 8
Section 13. Default by Purchaser; Indemnification.
13.01. Default. If Purchaser should be in default by reason of its
failure or refusal to comply with any of the terms of this Agreement, Seller
may pursue all remedies available to it at law or in equity.
13.02. Purchaser's Indemnification. From and after the Closing
Seller shall indemnify Purchaser and hold Purchaser harmless from all
liability, cost, damage and expense (including, without limitation, attorneys'
fees and disbursements) with respect to any claim or liability relating to the
Premises accruing prior to the Closing Date. This Section shall survive the
Closing.
13.03. Seller's Indemnification. From and after the Closing Purchaser
shall indemnify Seller and hold Seller harmless from all liability, cost,
damage and expense (including, without limitation, attorneys' fees and
disbursements) with respect to any claim or liability relating to the Premises
accruing after the Closing Date. This Section shall survive the Closing.
Section 14. Notices.
Except as otherwise specifically provided in this Agreement, all
notices, demands, requests, consents, approvals or other communications
(collectively, "Notices") required or permitted to be given hereunder or which
are given with respect to this Agreement shall be in writing and shall either
be delivered by hand or sent by Federal Express or another national overnight
delivery service, addressed to the party to be notified at its address first
above set froth or to such other address as such party shall have specified
most recently by like Notice. Notices given as provided above shall be deemed
given at the time of hand delivery or one business day after dispatch prior to
the deadline of the overnight delivery service for overnight delivery, as the
case may be.
Section 15. Assignment.
Purchaser shall not assign its rights nor delegate its duties under
this Agreement without the prior written consent of Seller, which consent shall
not be unreasonably withheld or delayed. Any such assignment or delegation in
violation of this agreement shall be null and void, and shall be deemed a
default under this Agreement.
8
<PAGE> 9
SECTION 16. SURVIVAL; DELIVERY OF DEED.
16.01. SURVIVAL. Except as otherwise provided in this Agreement, no
representations, warranties, covenants or other obligations of Seller set forth
in this Agreement shall survive the Closing, and no action based thereon shall
be commenced after the Closing.
16.02. DELIVERY OF DEED. The delivery of the deed by Seller, and the
acceptance thereof by Purchaser, shall be deemed the full performance and
discharge of every obligation on the part of Seller to be performed under this
Agreement, except those obligations of Seller, if any, which are expressly
stated in this Agreement to survive the Closing.
SECTION 17. MISCELLANEOUS PROVISIONS.
17.01. ENTIRE UNDERSTANDING. This Agreement embodies and constitutes
the entire understanding between the parties with respect to the transactions
contemplated under this Agreement, and all prior agreements, understanding,
representations and statements, oral or written, are merged into this
Agreement. Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument signed by
the party against whom the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument.
17.02. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of Connecticut.
17.03. CAPTIONS. The captions in this Agreement are inserted for
convenience of reference only and in no way define, describe or limit the scope
or intent of this Agreement or any of the provisions hereof.
17.04. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
17.05. CONSTRUCTION. As used in this Agreement, the singular shall
include the plural and the plural shall include the singular, as the context
may require.
17.06. RECORDING. This Agreement shall not be recorded by Purchaser in
the Redding Land Records. Purchaser's failure to observe this obligation shall
be deemed a material breach of this Agreement.
17.07. EXECUTION AND DELIVERY. Delivery of this Agreement for
inspection or otherwise by Seller to Purchaser and/or its
9
<PAGE> 10
attorneys shall not constitute an offer or create any rights in favor of
Purchaser or others and shall in no way obligate or be binding upon Seller; and
this Agreement shall have no force or effect unless and until the same is fully
executed and delivered by the parties and fully executed copies exchanged by
the parties hereto.
17.08 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all such
counterparts shall together constitute one and the same instrument.
17.09 ASSIGNMENT OF RESIDENTIAL LEASE. At the Closing, Seller shall
assign to Purchaser, and Purchaser shall assume, all Seller's right, title and
interest in and to that certain lease between Seller, as Landlord, and Dana and
John LaMendola, as Tenant, for premises on the second floor at 19 Brookside
Avenue, Georgetown, Connecticut. Seller shall also transfer to Purchaser at
closing the security deposit, if any, under such lease. All rental payments
under such lease shall be apportioned as of the Closing Date.
SECTION 18. LEASE OF THE PREMISES.
At the Closing, Seller and Purchaser shall mutually execute and deliver
an Agreement or Lease with respect to the Premises in the form of Schedule B
attached hereto and incorporated herein.
IN WITNESS WHEREOF, Seller and Purchaser have executed or cause
this Agreement to be executed the day and year first above written.
Seller:
CANNONDALE CORPORATION
By: /s/ Joseph Scott Montgomery
-----------------------------------
Its:
Purchaser:
SANDVICK ASSOCIATES, INC.
By: /s/ Michael J. Stimola
-----------------------------------
Its: President
10
<PAGE> 11
SCHEDULE A
Those three certain pieces of land with the buildings and improvements thereon,
situated in the Town of Redding, County of Fairfield and State of Connecticut
shown on a certain map entitled "Plot Plan Cannondale Corporation Georgetown
District Redding, Connecticut Scale 1"=40' June 14, 1982" certified
"substantially correct" by C. James Osborne, Jr., R.L.S. and recorded January
30, 1987 as Map No. 3371 in the Redding Town Clerk's Office, each such piece
being more particularly bounded and described as follows:
First Piece:
NORTHWESTERLY: By land now or formerly of Monaco in part, in part by land now or
formerly of Maria Nordlund, in part by the Second Piece described herein below,
and in part by land now or formerly of Bryon Scott, Jr. and Lorraine Scott,
378.81 feet, more or less;
NORTHEASTERLY: By land now or formerly of Mary A. Cardiff, and in part by land
now or formerly of Russell L. and Joan P. Seymour, 386.49 feet, more or less;
SOUTHEASTERLY: By Brookside Road, so called, 390.12 feet, more or less; and
SOUTHWESTERLY: By land now or formerly of Joel W. and Sandra K. Cohen and Joseph
and Anne Tannenbaum in part, and in part by land now or formerly of Monaco,
307.72 feet, more or less.
Together with that certain 41 square foot piece of land shown as Parcel "Y" on a
certain map entitled "Equal Area Exchange Map Prepared for Cannondale
Corporation Redding Connecticut Scale 1"=20' March 21, 1986" prepared by John W.
Fuller, Land Surveyor, Reg. No. 4775, Georgetown, Connecticut being Map No. 3306
in the Redding Town Clerk's Office, but excluding therefrom the 41 square foot
piece of land shown as Parcel "X" on said map.
Second Piece:
Being a 25 foot roadway adjoining the above described First Piece on the north
and bounded and described as follows:
NORTHWESTERLY: By land now or formerly of The Bethlehem Evangelical Lutheran
Church, Georgetown, Connecticut, 272.24 feet, more or less;
NORTHERLY: By Passway to Portland Avenue, 25.14 feet, more or less;
<PAGE> 12
NORTHEASTERLY: By land now or formerly of Raymond H. and Harry R. Carlson in
part, in part by land now or formerly of Raymond H. and Hilda H. Carlson, and in
part by land now or formerly of Bryon Scott, Jr., and Lorraine Scott, 386.37
feet, more or less;
SOUTHEASTERLY: By the First Piece hereinabove described, 37.45 feet, more or
less; and
SOUTHWESTERLY: By land now or formerly of Maria Nordlund, 127.06 feet, more or
less.
Third Piece:
WESTERLY: By Brookside Road, so-called, 270.20 feet, more or less;
NORTHERLY: Running to a point;
EASTERLY: By the westerly side of a brook marking the westerly boundary of land
now or formerly of Bernard S. and Marjorie G. Unger, 256.68 feet, more or less;
and
SOUTHERLY: By land now or formerly of Bernard S. and Marjorie G. Unger, 65.19
feet, more or less.
Said First, Second and Third Pieces are conveyed subject to:
1. Any restrictions or limitations imposed or to be imposed by
governmental authority including the planning and zoning rules and
regulations of the Town of Redding.
2. Taxes and assessments of the Town of Redding hereafter becoming due and
payable.
3. Easements in favor of The Connecticut Light and Power Company each
dated March 22, 1982 and recorded in Volume 113 at Pages 355 and 510 of
the Redding Land Records.
4. Easements in favor of The Connecticut Light and Power Company recorded
in Volume 39 at Page 458 and in Volume 41 at Page 440 of said Land
Records.
5. Easement to Bryon Scott, Jr. and Lorraine Scott recorded in Volume 64
at Page 260 of said Land Records.
6. Rights of others, if any, in and to the Brook marking the westerly
boundary of the Third Piece.
<PAGE> 13
7. UCC-1 Financing Statements in favor of General Electric Credit
Corporation recorded October 15, 1987 in Volume 142 at Page 933, and
amended by UCC-3 recorded November 13, 1987 in Volume 143 at Page 196,
and continued by UCC-3 recorded July 15, 1992 in Volume 169 at Page 322
of said Land Records.
8. UCC-1 Financing Statement in favor of General Electric Credit
Corporation recorded March 15, 1988 in Volume 144 at Page 933, and
continued by UCC-3 recorded November 23, 1992 in Volume 172 at Page 400
of said Land Records.
9. UCC-1 Financing Statement in favor of General Electric Credit
Corporation recorded May 16, 1988 in Volume 145 at Page 1007, and
amended by UCC-3 recorded in Volume 146 at Page 425, and continued by
UCC-3 recorded January 11, 1993 in Volume 173 at Page 508 of said Land
Records.
10. UCC-1 Financing Statements in favor of Center Capital Corporation
recorded July 5, 1991 in Volume 162 at Pages 345, 346 and 348 of said
Land Records.
11. UCC-1 Financing Statement in favor of Center Capital Corporation
recorded December 23, 1991 in Volume 165 at Page 202, and assigned to
BLT Leasing Corp. by UCC-3 recorded September 18, 1992 in Volume 170 at
Page 759, and further assigned to The CIT Group/Equipment Financing,
Inc. by UCC-3 recorded February 16, 1993 in Volume 174 at Page 350 of
said Land Records.
12. UCC-1 Financing Statement in favor of Center Capital Corporation
recorded May 22, 1992 in Volume 168 at Page 235, and assigned to BLT
Leasing Corp. by UCC-3 recorded September 18, 1992 in Volume 170 at
Page 759 of said Land Records.
13. UCC-1 Financing Statement in favor of Bell Atlantic Tricon Leasing
Corporation recorded December 31, 1991 in Volume 165 at Page 261 of
said Land Records.
<PAGE> 14
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of September 23, 1996,
between SANDVICK ASSOCIATES, INC., a Connecticut corporation ("Assignor") with
an address at 29 Taylor Avenue, Bethel, Connecticut 06801 and NANTUCKET ROOST
ASSOCIATES, LLC, a Connecticut limited liability company ("Assignee") with an
address at 29 Taylor Avenue, Bethel, Connecticut 06801.
In consideration of the mutual agreements set forth below, the parties
agree as follows:
1. Assignor hereby transfers and assigns to Assignee all of its right,
title and interest in and to that certain Contract of Sale dated as of
September 29, 1996, between Cannondale Corporation, a Delaware corporation, as
the Seller, and Assignor, as the Purchaser (the "Purchase Agreement"), relating
to the purchase of 9 Brookside Place, situated in Redding, Connecticut, as more
particularly described on Schedule A attached hereto and made a part hereof;
and together with all of Assignor's right to any and all other agreements and
instruments delivered and to be delivered pursuant to the transactions
contemplated by the Purchase Agreement.
2. Assignee hereby assumes and agrees to faithfully perform and
discharge all obligations and liabilities of Assignor arising under the
Purchase Agreement and each of the other agreements and instruments to be
delivered in connection therewith. Assignee agrees to indemnify Assignor, and
to hold Assignor harmless, from all liabilities, claims, damages and expenses
which may arise
<PAGE> 15
against Assignor in its capacity as named Purchaser under the Purchase
Agreement or any of the other agreements and instruments to be delivered in
connection therewith.
3. Assignor covenants and agrees to execute, acknowledge and deliver
any and all such other and further assignments, transfers, confirmations and
other instruments and further assurances and consents as Assignee may
reasonably require in order to ensure and perfect the transfer and assignment
to Assignee of the rights being conveyed hereunder.
4. The terms and provisions of this Assignment and Assumption Agreement
shall be governed by and construed under the laws of the State of Connecticut
and shall be binding upon, and inure to the benefit of, each of the parties
hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the date first above written.
WITNESSES: SANDVICK ASSOCIATES, INC.
/s/ Kathy L. Gallaes By: /s/ Michael J. Stimola
- --------------------------- ---------------------------
Its: President
NANTUCKET ROOST
ASSOCIATES, LLC
/s/ Cheryl L. Johnson By: /s/ Joseph S. Montgomery
- --------------------------- ---------------------------
Its: Manager
<PAGE> 16
STATE OF CONNECTICUT )
) ss:
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 30th day of
September, 1996 by Michael J. Stimola, President of Sandvick Associates, Inc.,
a Connecticut corporation, as his free act and deed and the free act and deed
of said corporation.
/s/ Kathy L. Gallaes
--------------------------------
Commissioner of the Superior
Court/Notary Public
STATE OF CONNECTICUT )
) ss:
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 29th day of
September, 1996 by Joseph S. Montgomery, Manager of Nantucket Roost Associates,
LLC, a Connecticut limited liability company, as his free act and deed and the
free act and deed of said limited liability company.
/s/ Cheryl L. Johnson
--------------------------------
Commissioner of the Superior
Court
<PAGE> 17
SCHEDULE A
Those three certain pieces of land with the buildings and improvements thereon,
situated in the Town of Redding, County of Fairfield and State of Connecticut
shown on a certain map entitled "Plot Plan Cannondale Corporation Georgetown
District Redding, Connecticut Scale 1" = 40' June 14, 1982" certified
"substantially correct" by C. James Osborne, Jr., R.L.S. and recorded January
30, 1987 as Map No. 3371 in the Redding Town Clerk's Office, each such piece
being more particularly bounded and described as follows:
First Piece:
NORTHWESTERLY: By land now or formerly of Monaco in part, in part by land now
or formerly of Maria Nordlund, in part by the Second Piece described herein
below, and in part by land now or formerly of Bryon Scott, Jr. and Lorraine
Scott, 378.81 feet, more or less;
NORTHEASTERLY: By land now or formerly of Mary A. Cardiff, and in part by land
now or formerly of Russell L. and Joan P. Seymour, 386.49 feet, more or less;
SOUTHEASTERLY: By Brookside Road, so called, 390.12 feet, more or less; and
SOUTHWESTERLY: By land now or formerly of Joel W. and Sandra K. Cohen and
Joseph and Anne Tannenbaum in part, and in part by land now or formerly of
Monaco, 307.72 feet, more or less.
Together with that certain 41 square foot piece of land shown as Parcel "Y" on
a certain map entitled "Equal Area Exchange Map Prepared for Cannondale
Corporation Redding Connecticut Scale 1" = 20' March 21, 1986" prepared by John
W. Fuller, Land Surveyor, Reg. No. 4775, Georgetown, Connecticut being Map No.
3306 in the Redding Town Clerk's Office, but excluding therefrom the 41 square
foot piece of land shown as Parcel "X" on said map.
Second Piece:
Being a 25 foot roadway adjoining the above described First Piece on the north
and bounded and described as follows:
NORTHWESTERLY: By land now or formerly of The Bethlehem Evangelical Lutheran
Church, Georgetown, Connecticut, 272.24 feet, more or less;
NORTHERLY: By Passway to Portland Avenue, 25.14 feet, more or less;
<PAGE> 18
NORTHEASTERLY: By land now or formerly of Raymond H. and Harry R. Carlson in
part, in part by land now or formerly of Raymond H. and Hilda H. Carlson, and
in part by land now or formerly of Bryon Scott, Jr., and Lorraine Scott, 386.37
feet, more or less;
SOUTHEASTERLY: By the First Piece hereinabove described, 37.45 feet, more or
less; and
SOUTHWESTERLY: By land now or formerly of Maria Norlund, 127.06 feet, more or
less.
Third Piece:
WESTERLY: By Brookside Road, so-called, 270.20 feet, more or
less;
NORTHERLY: Running to a point;
EASTERLY: By the westerly side of a brook marking the westerly boundary of land
now or formerly of Bernard S. and Marjorie G. Unger, 256.68 feet, more or
less; and
SOUTHERLY: By land now or formerly of Bernard S. and Marjorie G. Unger, 65.19
feet, more or less.
<PAGE> 1
Exhibit 10.64
AGREEMENT OF LEASE made as of the 4TH day of October, 1996, between
NANTUCKET ROOST ASSOCIATES, LLC, a Connecticut limited liability company with an
address at 29 Taylor Avenue, Bethel, Connecticut 06801 ("Landlord"), and
CANNONDALE CORPORATION, a Delaware corporation with an address at 9 Brookside
Place, Redding, Connecticut 06829 ("Tenant").
W I T N E S S E T H
Landlord and Tenant, for themselves and their respective successors and
assigns, hereby covenant and agree as follows:
ARTICLE 1
Demise; Premises; Term; Use
1.01 Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord, upon and subject to the covenants, agreements, terms, provisions and
conditions of this Lease, the "Demised Premises" (as hereinafter defined). The
Demised Premises consist of the parcels of land described in Schedule A attached
to this Lease and incorporated herein ("Land"), and the buildings and
improvements on the Land (collectively, "Building").
1.02 The term of this Lease shall commence on the date hereof
("Commencement Date"), and shall terminate on June 30, 1997 ("Expiration Date"),
or shall end on such earlier date upon which said term may expire or be canceled
or terminated pursuant to any of the provisions of this Lease or pursuant to
law.
1.03 Tenant shall use and occupy the Demised Premises solely for
executive and administrative offices and research and development for bicycles
and bicycle products and for no other purpose.
1.04 Tenant shall not suffer or permit the Demised Premises or any part
thereof to be used in any manner, or anything to be done therein, which would in
any way (a) violate any of the provisions of any mortgage to which this Lease is
or shall be subordinate, (b) violate any laws, ordinances or requirements of
public authorities or any covenants or agreement to which the Demised Premises
are subject, (c) make void or voidable any fire or liability insurance policy
then in force with respect to the Demised Premises, (d) make unobtainable from
reputable insurance companies authorized to do business in the State of
Connecticut at standard rates any casualty insurance or liability, boiler or
other insurance that Landlord or Tenant may carry, (e) cause or in Landlord's
reasonable judgment be likely to cause physical damage to the Demised Premises
or any part thereof or to any part of the Building or any of the systems or
equipment therein, (f) constitute a public or private nuisance, or (g) discharge
objectionable fumes, vapors or odors from the Demised Premises.
<PAGE> 2
1.05 Tenant shall not at any time use or occupy, or suffer or permit
anyone to use or occupy the Demised Premises, or do or permit anything to be
done in the Demised Premises, in violation of the Certificate of Occupancy for
the Demised Premises and/or Building.
1.06 Tenant's use of the systems and equipment in the Building
(including, without limitation, the electrical, plumbing and heating systems)
shall not exceed the mechanical or electrical capabilities of such Building
equipment or systems.
1.07 Tenant acknowledges that it has inspected the Demised Premises and
accepts them in their "AS IS" condition on the Commencement Date. Tenant
acknowledges that neither Landlord nor any agent of Landlord has made any
promises or representations regarding the Demised Premises or the use or
occupancy thereof upon which Tenant is relying in entering into this Lease.
ARTICLE 2
Rent
2.01 (a) Throughout the term of this Lease, Tenant shall pay to
Landlord as rent for the Demised Premises ("Net Rent") the amount of One Hundred
Ninety-Two Thousand and no/100 Dollars ($192,000) per annum, in equal monthly
installments of $16,000. If Sandvick Associates, Inc. fails to substantially
complete the construction of Tenant's new corporate headquarters in Bethel,
Connecticut on or before July 1, 1997, then, subject to subsection 2.01(b)
below, as of July 1, 1997 and for each month thereafter until such construction
is substantially complete, the monthly Net Rent under this Lease shall be
reduced by ten percent (10%) per month from the monthly Net Rent for the
immediately preceding month. The Net Rent shall be paid in advance, without
demand, on the first day of each calendar month, and shall be paid without any
setoff, abatement or deduction whatsoever at Landlord's address set forth above
or at such other address as Landlord may designate by notice.
(b) Tenant and Sandvick Associates, Inc. have entered into a
certain Standard Form of Agreement Between Owner and Design/Builder with respect
to the construction of Tenant's new corporate headquarters. If the completion
date under such Design/Build Agreement is extended as a result of authorized
adjustments or delays not caused by Sandvick Associates, Inc., then the July 1,
1997 date set forth above for commencement of a rent penalty shall be extended
by the number of days the completion date under the Design/Build Agreement is
extended.
2.02 In addition to Net Rent, all other amounts which Tenant may become
obligated to pay Landlord hereunder shall be deemed additional rent and, unless
otherwise provided herein, shall be paid within ten days after demand by
Landlord.
2
<PAGE> 3
2.03 If Tenant shall fail to pay any Net Rent or additional rent within
fifteen days after the due date thereof, the late payment shall be subject to a
late charge of five percent (5%) of the overdue amount.
2.04 It is the purpose and intent of Landlord and Tenant that the Net
Rent shall be absolutely net to Landlord so that this Lease shall yield, net to
Landlord, the Net Rent specified herein in each year during the term of this
Lease, and that all costs, expenses and obligations of every kind and nature
whatsoever, relating to the Demised Premises which may arise or become due
during or out of the term of this Lease shall be paid by Tenant, and that
Landlord shall be indemnified and saved harmless by Tenant from and against the
same.
ARTICLE 3
Insurance; Nonliability; Indemnity
3.01 Throughout the term of this Lease, Tenant, at its sole cost and
expense, but for the mutual benefit of Landlord and Tenant and such other party
or parties as may be designated by Landlord as named insureds as their interests
may appear, shall maintain: (a) standard Comprehensive General Liability
Insurance covering the Demised Premises on an occurrence basis with minimum
limits of liability in an amount of not less than $3,000,000 combined single
limit, and with respect to damage to property including water damage and
sprinkler leakage legal liability arising out of any one occurrence, which
insurance shall contain products/completed operations coverage and which
insurance shall be primary; and (b) such other insurance, and in such greater
amounts as may from time to time be reasonably required by Landlord against the
same and/or other insurable hazards which at the time are commonly insured
against in the case of premises similarly situated and utilized.
3.02 Tenant may effect for its own account any insurance not required
under the provisions of this Lease, but any insurance effected by Tenant on the
Demised Premises, whether or not required under this Article, shall be for the
mutual benefit of Landlord and Tenant and shall be subject to all other
provisions of this Article.
3.03 (a) All insurance provided for in this Article shall be effected
under valid and enforceable policies issued by insurers of recognized
responsibility which are licensed to do business in the State of Connecticut,
are well rated by national rating organizations, and have been approved in
writing by Landlord, which approval shall not be unreasonably withheld. On or
before the occupancy of any part of the Demised Premises, and thereafter not
less than 30 days prior to the expiration dates of the expiring policies
theretofore furnished pursuant to this Article, or any other Article of this
Lease, originals of the policies bearing notations evidencing the payment of
premiums or accompanied by
3
<PAGE> 4
other evidence reasonably satisfactory to Landlord of such payments, shall be
delivered by Tenant to Landlord. All such policies shall contain a provision to
the effect that the same will be noncancellable except upon 30 days written
notice to Landlord and the holder of any mortgage on the Demised Premises.
Landlord and Tenant waive their right to recover damages against each other for
any reason whatsoever to the extent the damaged party recovers indemnity from
its insurance carrier. Any insurance policy procured by a party with respect to
the Demised Premises or its property therein which does not name the other party
as an additional insured shall contain a waiver of subrogation or permission to
waive claims. All public liability and property damage policies shall contain a
severability of interest clause.
(b) Landlord releases Tenant and Tenant's agents and employees
from liability for loss or damage to the Building that is covered by Landlord's
casualty insurance with respect to the Building, or, if Landlord fails to
maintain replacement cost "all risk" casualty insurance with respect to the
Building, would have been covered by such insurance. This release shall not be
limited to the liability of Tenant or Tenant's employees or agents to Landlord;
it shall also apply to Tenant's or Tenant's agents' or employees' liability to
any person claiming through or under Landlord pursuant to a right of subrogation
or otherwise. This release shall apply even if the loss or damage shall have
been caused by the fault or negligence of Tenant or Tenant's agents or
employees.
3.04 If at any time during the term of this Lease, Landlord shall
request that the amount of insurance provided by Tenant, as required by this
Article, be increased on the ground that such coverage is inadequate properly to
protect the interest of Landlord, or if Landlord shall require other insurance
pursuant to subsection 3.02(b), and Tenant shall refuse to comply with any such
request or requirement, the dispute shall be submitted to arbitration as
provided in Article 21 hereof. Tenant shall thereafter carry the amount, and
such kind, of insurance as determined by such arbitration to be adequate and
required, but in no event shall the amount of insurance be less than the amount
specified in Section 3.02.
3.05 (a) Landlord shall have the right, at its expense, to maintain any
additional insurance with respect to the Demised Premises not required under
this Article.
(b) Anything in this Lease to the contrary notwithstanding,
in the event of a casualty, Landlord shall have no obligation to repair or
restore Tenant's property in the Demised Premises.
3.06 Landlord or its employees or agents shall not be liable
for any injury or damage to persons or property resulting from
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fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow
or leaks from any part of the Demised Premises, or from the pipes, appliances or
plumbing works or from the roof, street or subsurface or from any other place or
by dampness or by any other cause of any nature whatsoever, unless caused by the
negligence of Landlord or its agents or employees.
3.07 Tenant will indemnify Landlord against, and hold Landlord and
Landlord's employees and agents harmless from, any and all demands, claims,
causes of action, fines, penalties, damages, losses, liabilities, judgments and
expenses (including, without limitation, attorneys' fees and disbursements)
incurred in connection with or arising from: (a) the use or occupancy of the
Demised Premises by Tenant or any person claiming under Tenant; (b) any
activity, work or thing done, or permitted or suffered by Tenant on or about the
Demised Premises; (c) any acts, omissions, or negligence of Tenant or any person
claiming under Tenant, or the contractors, agents, employees, invitees,
customers or visitors of Tenant or any such person; (d) any breach, violation or
nonperformance by Tenant or any person claiming under Tenant or the employees,
agents, contractors, invitees, customers or visitors of Tenant or any such
person of any term, covenant or provision of this Lease or any legal
requirements or requirements of governmental authorities; or (e) (except for
loss of use of all or any portion of the Demised Premises or Tenant's property
located within the Demised Premises which is proximately caused by or results
proximately from the negligence of Landlord or Landlord's employees or agents),
any injury or damage to the person, property or business of Tenant, its
employees, agents, contractors, invitees, customers, visitors or any other
person entering upon the Demised Premises under the express or implied
invitation of Tenant. If any action or proceeding is brought against Landlord or
Landlord's employees or agents by reason of any such claim, Tenant, upon notice
from Landlord, will defend the claim at Tenant's expense with counsel reasonably
satisfactory to Landlord.
3.08 Tenant shall give Landlord notice in case of fire or accidents in
the Demised Premises, which notice shall be given promptly after Tenant becomes
aware of any such event.
3.09 Tenant agrees to look solely to Landlord's estate and interest in
the Demised Premises for the satisfaction of any right or remedy of Tenant or
for the collection of a judgment (or other judicial process) requiring the
payment of money by Landlord, in the event of any liability by Landlord under
this Lease, and no other property or assets of Landlord or any partner,
shareholder or member of Landlord shall be subject to levy, execution,
attachment or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Lease, the relationship of Landlord and
Tenant hereunder, or Tenant's use and occupancy of the Demised Premises, or any
other liability of Landlord to Tenant hereunder.
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3.10 In any litigation between the parties regarding this Lease, the
losing party shall pay to the prevailing party all reasonable expenses and court
costs including attorneys' fees incurred by the prevailing party. A party shall
be considered the prevailing party if:
(a) it initiated the litigation and substantially obtains
the relief it sought, either through a judgment or
the losing party's voluntary action before
arbitration (after it is scheduled), trial, or
judgment;
(b) the other party withdraws its action without sub-
stantially obtaining the relief it sought; or
(c) it did not initiate the litigation and judgment is
entered for either party, but without substantially
granting the relief sought.
ARTICLE 4
Repairs; Services
4.01 Throughout the term of this Lease, Tenant, at its sole cost and
expense, will take good care of the Demised Premises and the sidewalks, curbs
and parking areas adjoining the Demised Premises and will keep the same in good
order and condition, and make all necessary repairs thereto, interior and
exterior, ordinary and extraordinary, unforeseen and foreseen, structural and
non-structural. When used in this Article 4, the term "repairs" shall include
all necessary replacements, renewals, alterations, additions and betterments.
4.02 The necessity for and adequacy of repairs to the Demised Premises
pursuant to Section 4.01 hereof shall be measured by the standard which is
appropriate for buildings of similar construction and class, provided that
Tenant shall in any event make all repairs necessary to avoid any waste or
injury to the Demised Premises and shall make all alterations, additions and
betterments required under governmental laws, ordinances, rules and regulations
applicable to the Demised Premises.
4.03 Tenant shall put, keep and maintain all portions of the Demised
Premises and the sidewalks, curbs, parking areas and passageways adjoining the
same in a clean and orderly condition, free of dirt, rubbish, snow, ice and
unlawful obstructions.
4.04 Landlord shall not be required to furnish any services or
facilities or to make any repairs or alterations in or to the Demised Premises.
Tenant hereby assumes the full and sole responsibility for the condition,
operation, repair, replacement, maintenance and management of the Demised
Premises. Tenant shall pay all charges for electricity, gas, fuel oil, water,
telephones,
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sanitary sewer and any other utilities used by it in connection with the Demised
Premises. Tenant, at its expense, shall supply its own requirements for heat,
hot water, air-conditioning, cleaning, refuse removal and any other services
required with respect to the Demised Premises.
4.05 With respect to the maintenance and operation of the Demised
Premises, Tenant, at its expense, shall comply with all applicable governmental
laws, ordinances, rules and regulations.
4.06 In case any dispute shall arise at any time between Landlord and
Tenant as to the standard of care and maintenance of the Demised Premises, such
dispute shall be determined by arbitration as provided in Article 21 hereof.
4.07 If Tenant shall fail to make repairs in accordance with its
obligations hereunder, Landlord shall have the right, at its option, after
Landlord shall have given to Tenant ten days' notice (except in case of an
emergency), to make such repairs on behalf and for the account of Tenant, to
enter upon the Demised Premises for such purposes, and Tenant shall pay the cost
thereof as additional rent within ten days after demand by Landlord.
ARTICLE 5
Changes and Alterations; Ownership of Improvements
5.01 Tenant shall have the right at any time and from time to time
during the term of this Lease, whether at the commencement of the term hereof or
at any time thereafter, to make, at its sole cost and expense, changes and
alterations in or of the Demised Premises, subject, however, in all cases to the
following:
(a) No change or alteration involving an estimated cost of
more than $3,000 shall be undertaken except after 5 days' prior written notice
to Landlord.
(b) No change or alteration which is (i) structural, (ii)
affects the mechanical, electrical, plumbing or HVAC systems of the Demised
Premises, or (iii) involves an estimated cost of more than $7,500, shall be made
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed.
(c) No change or alteration shall be undertaken until Tenant
shall have procured and paid for, so far as the same may be required from time
to time, all permits and authorizations of all municipal departments and
governmental subdivisions having jurisdiction. Landlord shall join in the
application for such permits or authorizations whenever such action is
necessary.
(d) Any change or alteration requiring Landlord's consent
under subsection (b) above shall be conducted under the
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supervision of an architect and/or engineer selected by Tenant and approved in
writing by Landlord (which approval shall not be unreasonably withheld), and no
such change or alteration shall be made except in accordance with detailed plans
and specifications and cost estimates prepared and approved in writing by
Landlord (which approval shall not be unreasonably withheld).
(e) Any change or alteration shall, when completed, be of such
a character as not to reduce the value of the Demised Premises below its value
immediately before such change or alteration.
(f) Any change or alteration shall be made promptly
(unavoidable delays excepted) and in a good and workmanlike manner and in
compliance with all applicable permits and authorizations and building and
zoning laws and ordinances and with all other laws, ordinances, orders, rules,
regulations and requirements of all federal, state and municipal governments,
departments, commissions, boards and officers, any national or local Board of
Fire Underwriters, or any other body hereafter exercising functions similar to
those of any of the foregoing.
(g) The cost of any such change or alteration shall be paid in
cash or its equivalent, so that the Demised Premises shall at all times be free
of liens for labor and materials supplied or claimed to have been supplied to
Tenant.
(h) Worker's compensation insurance in statutory limits
covering all persons employed in connection with the work and with respect to
whom death or bodily injury claims could be asserted against Landlord, Tenant or
the Demised Premises, and general liability insurance for the mutual benefit of
Tenant and Landlord in such limits as Landlord may reasonably require, shall be
maintained by Tenant at Tenant's sole cost and expense at all times when any
work is in process in connection with any change or alteration. All such
insurance shall be in a company or companies of recognized responsibility, and
all policies or certificates therefor issued by the respective insurers, bearing
notations evidencing the payment of premiums or accompanied by other evidence
satisfactory to Landlord of such payment, shall be delivered to Landlord.
5.02 All alterations, installations, additions or improvements upon the
Demised Premises made by any party prior to or during the term of this Lease
shall, at the expiration of the term hereof, become the property of Landlord and
be surrendered with said premises as part thereof at the end of the term.
5.03 At or before the Expiration Date, or the date of any earlier
termination of this Lease, Tenant at its expense, shall remove from the Demised
Premises all of Tenant's property and shall repair any damage to the Demised
Premises resulting from such
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removal. Any other items of Tenant's property which shall remain in the Demised
Premises after the Expiration Date or after a period of 15 days following an
earlier termination date, may, at the option of Landlord, be deemed to have been
abandoned, and in such case either may be retained as Landlord as its property
or may be disposed of, without accountability, in such manner as Landlord may
see fit at Tenant's expense.
5.04 (a) Tenant, at its expense, shall procure promptly the
cancellation or discharge of all notices of violation arising from or otherwise
connected with Tenant's work which shall be issued by any public authority
having or asserting jurisdiction. Tenant shall defend, indemnify and save
harmless Landlord against any and all mechanic's and other liens in connection
with Tenant's work, repairs or installations, including but not limited to the
liens of any conditional sale of, or chattel mortgages upon, any materials,
fixtures, or articles so installed in and constituting part of the Demised
Premises and against all cost, attorneys' fees, fines, expenses and liabilities
reasonably incurred in connection with any such lien, conditional sale or
chattel mortgage or any action or proceeding brought thereon. Tenant shall pay
in full for all materials, fixtures, equipment and other articles prior to
installation in the Demised Premises.
(b) Tenant, at its expense, shall procure the satisfaction or
discharge, by bonding or otherwise, of all such liens within 30 days of the
filing of such lien against the Demised Premises. If Tenant shall fail to cause
such lien to be discharged within the period aforesaid, then in addition to any
other right or remedy, Landlord may, but shall not be obligated to, discharge
the same either by paying the amount claimed to be due or by procuring the
discharge of such lien, by deposit or by bonding proceedings, and in any such
event Landlord shall be entitled, if Landlord so elects, to compel the
prosecution of an action for the foreclosure of such lien by the lienor and to
pay the amount of the judgment in favor of the lienor with interest, costs and
allowances. Any amount so paid by Landlord and all costs and expenses incurred
by Landlord in connection therewith, together with Interest thereon from the
respective dates of Landlord's making of the payment or incurring the cost and
expenses shall constitute additional rent payable by Tenant under this Lease and
shall be paid by Tenant on demand.
ARTICLE 6
Security Deposit
(Deleted Prior to Execution)
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ARTICLE 7
Assignment and Subletting
7.01 Neither this Lease, nor the term and estate hereby granted, nor
any part hereof or thereof, nor the interest of Tenant in any sublease or the
rentals thereunder, shall be assigned, mortgaged, pledged, encumbered or
otherwise transferred by Tenant, Tenant's legal representative or successors in
interest by operation of law or otherwise, and neither the Demised Premises, nor
any part thereof, shall be encumbered in any manner by reason of any act or
omission on the part of Tenant or anyone claiming under or through Tenant, or
shall be sublet or be used or occupied or permitted to be used or occupied by
anyone other than Tenant, or for any purpose other than as permitted by this
Lease without the prior written consent of Landlord in each case.
ARTICLE 8
Damage and Destruction
8.01 If the Demised Premises shall be partially or totally damaged or
destroyed by fire or other casualty, Landlord shall, subject to Section 8.03
hereof, repair the damage and restore and rebuild the Demised Premises as nearly
as may be reasonably practicable to its condition and character immediately
prior to such damage or destruction, with reasonable diligence, after notice to
it of the damage or destruction; provided that Landlord shall not be obligated
to expend upon such repair or restoration any amount in excess of the net
insurance proceeds received by Landlord pursuant to insurance maintained by
Landlord and provided that Landlord's obligations shall be subject to then
applicable zoning and planning regulations.
8.02 If the Demised Premises and/or access thereto shall be partially
or totally damaged or destroyed by fire or other casualty, the rents payable
hereunder shall be abated to the extent that the Demised Premises shall have
been rendered untenantable, from the date of such damage or destruction to the
date the damage shall be substantially repaired or restored. Should Tenant
reoccupy a portion of the Demised Premises during the period that the repair or
restoration or is in progress and prior to the date that the same are made
completely tenantable, rents allocable to such portion shall be payable by
Tenant from the date of such occupancy to the date the Demised Premises are made
tenantable.
8.03 Landlord shall have the option of terminating this Lease and the
term and estate hereby granted if Landlord estimates that renovation of the
Demised Premises shall exceed the shorter of (a) 180 days from the date of the
damage, or (b) the unexpired term of this Lease. Landlord shall exercise such
termination option by notifying Tenant in writing of such termination within 30
days of the date of the damage. If at any time prior to Landlord giving Tenant
the aforesaid notice of termination or commencing the repair
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and restoration pursuant to Section 8.01, the holder of a superior mortgage or
any person claiming under or through the holder of such superior mortgage takes
possession of the Demised Premises through foreclosure or otherwise, such holder
or person shall have a further period of 20 days from the date of so taking
possession to terminate this Lease by appropriate written notice to Tenant.
8.04 In the event that a notice of termination shall be given pursuant
to Section 8.03, this Lease and the term and estate hereby granted shall expire
as of the date of such termination with the same effect as if that were the date
hereinbefore set for the expiration of the term of this Lease, and the rent due
and to become due hereunder shall be apportioned as of such date if not earlier
abated pursuant to Section 8.01.
8.05 No damages, compensation or claim shall be payable by Landlord for
inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the Demised Premises pursuant to this Article
Landlord shall use diligent efforts to effect any required repair or restoration
promptly and in such manner as not to unreasonably interfere with Tenant's use
and occupancy.
8.06 Landlord shall not carry insurance of any kind on Tenant's
property, and shall not be obligated to repair any damage thereto or replace the
same.
8.07 The provisions of this Article shall be considered an express
agreement governing any case of damage or destruction of the Demised Premises by
fire or other casualty, and any law to the contrary, now or hereafter in force,
shall have no application in such case.
8.08 Notwithstanding any of the foregoing provisions of this Article,
if Landlord or the holder of any superior mortgage shall be unable to collect
all of the insurance proceeds (including rent insurance proceeds) applicable to
damage or destruction of the Demised Premises by fire or other cause, by reason
of some action or inaction on the part of the Tenant or any of its employees,
agents or contractors, then, without prejudice to any other remedies which may
be available against Tenant, the abatement of Tenant's rents provided for in
this Article shall not be effective to the extent of the uncollected insurance
proceeds.
ARTICLE 9
EMINENT DOMAIN
9.01 In the event that the Demised Premises or any part thereof shall
be taken in condemnation proceedings or by the exercise of any right of eminent
domain or by agreement between Landlord on the one hand and any governmental
authority authorized
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to exercise such right on the other hand, Landlord shall be entitled to collect
from any condemnor the entire award or awards that may be made in any such
proceeding without deduction therefrom for any estate hereby vested in or owned
by Tenant, to be paid out as in this Article provided and except as provided in
Section 9.04 hereof. Tenant hereby expressly assigns to Landlord all of its
right, title and interest in or to every such award and also agrees to execute
any and all further documents that may be required in order to facilitate the
collection thereof by Landlord.
9.02 (a) At any time during the term of this Lease if title to such
portion of the Demised Premises as shall render the balance of the Demised
Premises unsuitable for the conduct of Tenant's business shall be taken in
condemnation proceedings or by the exercise of any right to eminent domain or by
agreement between Landlord on the one hand and any governmental authority
authorized to exercise such right on the other hand, Tenant shall have the right
to terminate this Lease by written notice to Landlord within 30 days after the
taking. This Lease shall terminate and expire on the date of such taking, and
the Net Rent and additional rent provided to be paid by Tenant shall be
apportioned and paid to the date of such taking.
(b) At any time during the term of this Lease if title to the
Main Building or 40% or more of the Land shall be taken in condemnation
proceedings or by the exercise of any right to eminent domain or by agreement
between Landlord on the one hand and any governmental authority authorized to
exercise such right on the other hand, this Lease shall terminate and expire on
the date of such taking and the Net Rent and additional rent provided to be paid
by Tenant shall be apportioned and paid to the date of such taking.
9.03 If this Lease does not terminate under Section 9.02, this Lease
shall continue in full force and effect, and the Net Rent apportioned to the
part taken shall be prorated and adjusted as of the date of taking, and from
such date the Net Rent and additional rent shall be reduced to the amount
apportioned to the remainder of the Demised Premises.
9.04 Notwithstanding the foregoing provisions of this Article and
subject to the interest of any mortgagee of Landlord, Tenant shall be entitled
to appear, claim, prove and receive in the proceedings relating to any such
taking such portion of each award made therein as represents the then value of
Tenant's property, if any, and/or the costs of relocating, if any are granted,
provided the same does not reduce Landlord's award.
9.05 In the event of any such taking which does not result in a
termination of this Lease, Landlord, at its expense, shall proceed with
reasonable diligence to repair, alter and restore the remaining part of the
Demised Premises to substantially the same
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condition as it was in immediately prior to such taking to the extent that the
same may be feasible, so as to constitute a tenantable Demised Premises,
provided that Landlord's liability under this Section shall be limited to the
net amount received by Landlord from the award arising out of such taking.
ARTICLE 10
Access to Premises
10.01 Landlord and its authorized representatives shall have the right
to enter upon the Demised Premised during all regular business hours for the
purpose of inspecting the same or exhibiting the same to prospective purchasers,
mortgagees and tenants. Landlord and its authorized representatives shall also
have the right to enter upon the Demised Premises during all regular business
hours (and in emergencies at all times) for the purpose of making any repairs
thereto as Landlord may deem necessary; and in connection therewith, Landlord
shall have the right to bring and store materials, tools and equipment, without
the same constituting an actual or constructive eviction of Tenant from the
Demised Premises or any part thereof. All entries by Landlord and its
representatives (except in case of emergency) shall be upon reasonable prior
notice to Tenant, which notice may be by means of personal or telephonic
communication or by ordinary mail.
ARTICLE 11
Subordination; Estoppel Certificate
11.01 This Lease and all of Tenant's rights hereunder are and shall be
subject and subordinate at all times to all covenants, restrictions, easements
and other encumbrances affecting the fee title of the Demised Premises and to
all mortgages, deeds of trust, ground leases or any other method of financing or
refinancing, in any amount, and all advances thereon, which may now or hereafter
be placed against or affect any or all of the Demised Premises, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
The aforesaid provisions shall be self operative and no further instrument of
subordination shall be necessary unless required by any such mortgagee or other
lender, in which case Tenant shall execute, acknowledge and deliver any
requested subordination agreement within 10 days after request.
11.02 Upon request by Tenant, Landlord shall request that the holder of
any mortgage affecting the Demised Premises enter into a subordination,
non-disturbance and attornment agreement with Tenant.
11.03 Within ten days after request, Tenant shall execute and deliver to
Landlord or to any party designated by Landlord a so-called "estoppel
certificate", in the form submitted by Landlord to Tenant, whereby Tenant
represents and certifies as to various facts and matters relating to this Lease.
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ARTICLE 12
Default
12.01 The following are "Events of Default": (a) Tenant fails to pay
when due any Net Rent, additional rent or other sums or charges reserved
hereunder, and such default continues for ten days after written notice from
Landlord;
(b) If this Lease be assigned or the Demised Premises be sublet
in whole or in part, either voluntarily or by operation of law, except as herein
expressly provided;
(c) Tenant vacates or abandons the Demised Premises;
(d) This Lease or the Demised Premises or any part of the
Demised Premises are taken upon execution or by other process of law directed
against Tenant, or are taken upon or subjected to any attachment by any creditor
of Tenant or claimant against Tenant, and such attachment is not discharged
within 45 days after its levy;
(e) Tenant files a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United States or
under any insolvency act of any state, or is dissolved, or makes an assignment
for the benefit of creditors;
(f) Involuntary proceedings under any such bankruptcy laws or
insolvency act or for the dissolution of Tenant are instituted against Tenant,
or a receiver or trustee is appointed for all or substantially all of Tenant's
property, and such proceeding is not dismissed or such receivership or
trusteeship is not vacated within forty-five (45) days after such institution or
appointment; or
(g) Tenant breaches any of the other agreements, terms,
covenants or conditions which this Lease requires Tenant to observe or perform,
and such breach continues for 30 days after written notice by Landlord to
Tenant; provided, however, if such breach cannot reasonably be cured within such
30 day period, an Event of Default shall not have occurred if Tenant promptly
commences a cure of the default and diligently prosecutes the same to
completion.
12.02 If any one or more of the Events of Default set forth in Section
12.01 above occurs, then Landlord may elect the alternatives set forth in
subsections (a) or (b) below as follows:
(a) Landlord may terminate this Lease by service of a Notice to
Quit and recover all amounts necessary to compensate Landlord for all detriment
proximately caused by Tenant's failure to perform or observe its obligations
under this Lease, or which in the ordinary course would be likely to result from
such failure, including, but not limited to, the following:
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(i) all unpaid Net Rent, Additional Rent and other sums and
charges reserved under this Lease (collectively, "Rent") and allocable to the
period through the date of Lease termination;
(ii) a sum equal to the amount of Rent that would have been
payable by Tenant for the remainder of the term of this Lease had this Lease not
been terminated less the Rent received by Landlord on account of any reletting
of all or any part of the Demised Premises (either by themselves or as part of
larger or different space); provided, however, that if the Demised Premises are
relet for an amount that exceeds the Rent payable by Tenant under this Lease,
Tenant shall not be entitled to payment of, or a credit or set-off for, such
excess amount;
(iii) all reasonable costs incurred by Landlord in performing
any repairs, replacements or demolition and removal work which Tenant was
obligated to perform under the Lease and failed to perform; and
(iv) all reasonable costs incurred by Landlord in reletting
the Demised Premises, including, without limitation, advertising expenses,
brokerage commissions, leasehold demolition and improvements and/or demolition
and improvement allowances, rent concessions and legal fees; or
(b) Landlord may elect not to terminate this Lease, and continue
to hold Tenant liable for the Rent, as it accrues. In such event, Landlord: (i)
shall have no obligation whatsoever to mitigate damages, (ii) may bring one
action or periodic actions to collect the Rent, and (iii) may, at its option,
thereafter elect to terminate the Lease in accordance with subsection (a) above.
12.03 Landlord shall not be deemed to have elected to terminate this
Lease unless Landlord serves a Notice to Quit as set forth in subsection
12.02(a) above.
12.04 In the event of a termination under subsection 12.02(a) above,
real estate taxes (to the extent the same are payable by Tenant as Additional
Rent under this Lease), for the period from the date of termination through the
end of the Lease term, shall be calculated at the rates or amounts in effect on
the date of termination, assuming a five percent (5%) per annum escalation
thereafter.
12.05 In the event suit shall be brought for recovery of possession of
the Demised Premises, for the recovery of Rent, or any other amount due under
the provisions of this Lease, for the recovery of damages following termination
of this Lease, or because of the breach of any other covenant contained in this
Lease on the part of Tenant to be kept and performed, Tenant shall pay the
Landlord all reasonable expenses incurred in connection therewith,
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including, but not limited to, Landlord's attorneys' fees and disbursements.
12.06 (a) The parties waive trial by jury in any action, proceeding or
counterclaim brought by either party against the other on any matter whatsoever
arising out of or in any way connected with this Lease, the relationship of
landlord and tenant created hereby, Tenant's use or occupancy of the Demised
Premises, or any claim for injury or damage.
(b) In the event of any breach or threatened breach by Tenant of
any of the terms and provisions of this Lease, Landlord shall have the right to
injunctive relief and declaratory relief as if no other remedies were provided
herein for such breach.
(c) Suit or suits for the recovery of the Rent and other amounts
and damages set forth in this Article may be brought by Landlord, from time to
time, at Landlord's election, and nothing in this Lease will be deemed to
require Landlord to await the date on which the term of this Lease expires. Each
right and remedy in this Lease will be cumulative and will be in addition to
every other right or remedy in this Lease or existing at law or in equity or by
statute or otherwise, including, without limitation, suits for injunctive relief
and specific performance. The exercise or beginning of the exercise by Landlord
of any such rights or remedies will not preclude the simultaneous or later
exercise by Landlord of any other such rights or remedies. All such rights and
remedies are cumulative and nonexclusive.
(d) Tenant hereby expressly waives any right to assert a defense
based on merger and agrees that neither the commencement of any action or
proceeding, nor the settlement thereof nor the entry of judgment therein shall
bar Landlord from bringing any subsequent actions or proceedings from time to
time.
(e) Any provision of this Lease which requires Landlord not to
unreasonably withhold its consent shall never be the basis for an award of
damages or give rise to a right of setoff on Tenant's behalf, but may be the
basis for a declaratory judgment or specific injunction with respect to the
matter in question.
ARTICLE 13
Quiet Enjoyment
13.01 Tenant, upon performing and observing all of the terms, covenants
and condition of this Lease on Tenant's part to be performed and observed, shall
peaceably and quietly have and enjoy the Demised Premises during the term of
this Lease, subject, nevertheless, to the terms of this Lease and to any
mortgages and encumbrances to which this Lease is or may be subordinate.
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ARTICLE 14
Surrender of Premises
14.01 Upon the expiration or sooner termination of the term of this
Lease, Tenant shall quit and surrender the Demised Premises, broom clean, in as
good condition and repair as Tenant is required to maintain the same throughout
the term of this Lease, together with all keys. If Tenant shall fail to remove
any of Tenant's property at the Demised Premises, such property shall, at the
option of Landlord, either be deemed abandoned and become the exclusive property
of Landlord, or Landlord shall have the right to remove and store such property,
at the expense of Tenant, and hold Tenant responsible for any and all charges
and expenses incurred by Landlord therefor. If the Demised Premises are not
surrendered as and when aforesaid, Tenant shall indemnify Landlord and hold
Landlord harmless against all loss, cost, expense or liability (including,
without limitation, reasonable attorneys' fees and disbursements), resulting
from the delay by Tenant in so surrendering the same including, without
limitation, any claims made by any succeeding occupant founded on such delay.
Tenant's obligations under this Article shall survive the expiration or sooner
termination of this Lease.
ARTICLE 15
Holding Over
Should Tenant remain in possession of the Demised Premises after the
expiration of the term hereof without the execution of a new lease, such holding
over, in the absence of a written agreement to the contrary, shall be deemed to
have created and be construed to be a tenancy from month to month terminable on
thirty days' notice by either party to the other, at a monthly Net Rent of 125%
of the Net Rent in effect upon the expiration of the term, subject to all the
other terms, covenants and conditions of this Lease insofar as the same are
applicable to a month to month tenancy.
ARTICLE 16
Broker
Tenant represents and warrants that no real estate broker or salesman
interested Tenant in the Demised Premises. Tenant shall indemnify Landlord
against and hold Landlord harmless from any loss, cost, damage, expense or
liability incurred by Landlord with respect to any real estate broker or
salesman claiming to have interested or having been responsible for Tenant's
execution of this Lease, including reasonable attorneys' fees and other costs of
defending against any such claims.
17
<PAGE> 18
ARTICLE 17
No Waiver
The failure of Landlord to insist upon the strict performance of any
provision of this Lease, or the failure of Landlord to exercise any right,
option or remedy hereby reserved shall not be construed as a waiver for the
future of any such provision, right, option or remedy or as a waiver of a
subsequent breach thereof. The consent or approval by Landlord of any act by
Tenant requiring Landlord's consent or approval shall not be construed to waive
or render unnecessary the requirement for Landlord's consent or approval of any
subsequent similar act by Tenant. The receipt by Landlord of rent or other
charges or sums with knowledge of a breach of any provision of this Lease shall
not be deemed a waiver of such breach. No provision of this Lease shall be
deemed to have been waived unless such waiver shall be in writing signed by the
party to be charged. No payment by Tenant or receipt by Landlord of a lesser
amount than the rents, charges and other sums hereby reserved shall be deemed to
be other than on account of the earliest rents, charges and other sums then
unpaid, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment by Tenant 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 rents, charges and other sums
due, or Landlord may pursue any other remedy in this Lease provided or by law
permitted.
ARTICLE 18
Notices
Except as otherwise provided in this Lease, every notice, demand,
consent, approval, request or other communication which may be or is required to
be given under this Lease or by law shall be in writing and shall be sent either
by United States Certified Mail, postage prepaid, return receipt requested, or
by Federal Express or another nationally recognized overnight courier service,
and shall be addressed or delivered, as the case may be to the parties at their
respective addresses set forth above, and the same shall be deemed delivered
upon receipt or refusal of delivery. Either party may designate, by similar
written notice to the other party, any other address for notice purposes.
ARTICLE 19
HAZARDOUS SUBSTANCES
19.01 The term "Hazardous Substances," as used in this Lease, shall
include, without limitation, flammables, explosives, radioactive materials,
asbestos, polychlorinated biphenyls (PCBs), chemicals known to cause cancer or
reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
substances or related materials, petroleum and petroleum products, and
substances
18
<PAGE> 19
declared to be hazardous or toxic under any law or regulation now or hereafter
enacted or promulgated by any governmental authority.
19.02 Tenant shall not cause or permit to occur:
(a) Any violation of any federal, state, or local law,
ordinance, or regulation now or hereafter enacted, related to environmental
conditions on, under, or about the Demised Premises, or arising from Tenant's
use or occupancy of the Demised Premises, including, but not limited to, soil
and ground water conditions; or
(b) The use, generation, release, manufacture, refining,
production, processing, storage, or disposal of any Hazardous Substance on,
under, or about the Demised Premises, or the transportation to or from the
Demised Premises of any Hazardous Substance, except as specifically disclosed on
Schedule I to this Lease.
19.03 (a) Tenant shall, at Tenant's sole cost and expense, comply with
all laws regulating use, generation, storage, transportation, or disposal of
Hazardous Substances ("Laws").
(b) Tenant shall, at Tenant's sole cost and expense, make all
submissions to, provide all information required by, and comply with all
requirements of all governmental authorities (the "Authorities") under the Laws.
(c) Should any Authority or any third party demand that a
cleanup plan be prepared and that a clean-up be undertaken because of any
deposit, spill, discharge, or other release of Hazard Substances that occurred
at any time during Tenant's occupancy of the Demised Premises, either prior to
or during the term of this Lease at or from the Demised Premises, or which
arises at any time from Tenant's use or occupancy of the Demised Premises, then
Tenant shall, at Tenant's sole costs and expense, prepare and submit the
required plans and all related bonds and other financial assurances; and Tenant
shall carry out all such cleanup plans.
(d) Tenant shall promptly provide all information regarding
the use, generation, storage, transportation, or disposal of Hazardous
Substances that is required by Landlord. If Tenant fails to fulfill any duty
imposed under this Section within a reasonable time, Landlord may do so; and in
such case, Tenant shall cooperate with Landlord in order to prepare all
documents Landlord deems necessary or appropriate to determine the applicability
of the Laws to the Demised Premises and Tenant's use thereof, and for compliance
therewith, and Tenant shall execute all documents promptly upon Landlord's
request. No such action by Landlord and no attempt made by Landlord to mitigate
damages under any Law shall constitute a waiver of any of Tenant's obligations
under this Section.
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<PAGE> 20
(e) Tenant's obligations and liabilities under this Section
shall survive the expiration of this Lease.
19.04 (a) Tenant shall indemnify, defend, and hold harmless Landlord
and its members, agents, and employees from all fines, suits, procedures,
claims, liability and actions of every kind, and all costs associated therewith
(including attorneys' and consultants' fees) arising out of or in any way
connected with any deposit, spill, discharge, or other release of Hazardous
Substances that occurred or occurs during Tenant's occupancy of the Demised
Premises, either prior to or during the term of this Lease, at or from the
Demised Premises, or which arises at any time from Tenant's use or occupancy of
the Demised Premises, or from Tenant's failure to provide all information, make
all submissions, and take all steps required by all Authorities under the Laws
and all other environmental laws.
(b) Tenant's obligations and liabilities under this Section
shall survive the expiration of this Lease.
ARTICLE 20
ARBITRATION
20.01 Landlord and Tenant shall not have been deemed to have agreed to
determination of any dispute arising out of this Lease by arbitration unless
determination in such manner shall have been specifically and unequivocally
provided for in this Lease and in no other case or cases.
20.02 Every dispute between the parties which is expressly provided in
this Lease to be determined by arbitration shall be resolved in the manner
provided in this Article.
20.03 The party requesting arbitration shall do so by giving notice to
that effect to the other party and shall simultaneously request the appointment
of a single arbitrator by the American Arbitration Association (or any successor
thereto) in accordance with its rules then prevailing, or, if the American
Arbitration Association (or such successor organization) shall fail to appoint
said arbitrator within sixty (60) days after such request is made, then either
party may apply, on notice to the other, to any court having jurisdiction for
the appointment of such arbitrator and the other party shall not raise any
question as to such court's full power to entertain the application and make the
appointment. Each arbitrator appointed pursuant to this Section shall be a
disinterested person having at least ten years experience in the State of
Connecticut in a calling connected with the dispute.
20.04 The arbitrator shall render his or her decision and award within
30 days after the final hearing. Such decision and award shall be in writing and
counterpart copies thereof shall be delivered to each of the parties. In
rendering such decision and
20
<PAGE> 21
award, the arbitrator shall not add to, subtract from or otherwise modify the
provisions of this Lease. Judgment may be entered on the determination and award
made by the arbitrator in any court of competent jurisdiction and may be
enforced in accordance with the Laws of the State of Connecticut.
20.05 If, for any reason whatsoever, the written decision and award of
the arbitrator shall not be rendered within the time limit set forth in Section
20.04, either party may apply to any court having jurisdiction, by action,
proceeding or otherwise (but not by a new arbitration proceeding) as may be
proper to determine the question in dispute consistently with the provisions of
this Lease.
20.06 The arbitrator shall determine the division, if any, between the
parties, of the expenses of the arbitration, including fees to the arbitrators,
counsel and witness fees.
ARTICLE 21
Taxes and Insurance Costs
21.01 The term "Taxes" shall mean the total of all real estate and other
taxes and special, general, extraordinary or other assessments, sewer rents,
water charges, occupancy taxes, school taxes, and other taxes or charges of any
kind or nature levied, assessed, imposed or attributable at any time by any
governmental authority (including, without limitation, any town, city, district,
county, village, school district or public transportation authority) upon or
against the Demised Premises, and also any tax, assessment, or charge, levied,
assessed or imposed at any time by any governmental authority in connection with
the receipt of income or rents from the Demised Premises to the extent that the
same shall be in lieu of all or any portion of any of the aforesaid taxes,
assessments or charges. If, due to a future change in the method of taxation or
in the taxing authority, or for any other reason, a franchise, income, transit,
profit or other tax or governmental imposition, however, designated, shall be
levied against Landlord in substitution in whole or in part for the Taxes, then
such franchise, income, transit, profit or other tax or governmental imposition
shall be deemed to be included within the definition of "Taxes" for the purposes
of this Article. As to special assessments which are payable over a period of
time extending beyond the term of this Lease, only a pro rata portion thereof,
covering the portion of the term of this Lease unexpired at the time of the
imposition of such assessment, shall be included in Taxes.
21.02 Tenant shall pay all Taxes directly to the taxing authority on or
before the due date of the required payments. Any failure to pay any Taxes in a
timely manner shall be deemed a failure to pay rent under this Lease. If Tenant
fails to pay any Taxes on or before the due date thereof, Landlord may, but
shall
21
<PAGE> 22
not be obligated to, pay such Taxes and notify Tenant of the same. Tenant shall
reimburse Landlord for any such payment, as additional rent, within ten (10)
days after receipt of any such statement. Landlord, at its option, may pay all
Taxes and bill Tenant for the same. Any such bills shall be paid by Tenant to
Landlord, as additional rent, within ten (10) days after receipt by Tenant.
21.03 Within ten days after demand, Tenant shall reimburse Landlord for
the cost of all insurance premiums incurred by Landlord to maintain casualty
insurance with respect to the Building, including a rental interruption
endorsement.
ARTICLE 22
Extension of Lease Term
If the construction of Tenant's new corporate headquarters in Bethel,
Connecticut has not been completed, and Tenant has not moved to such new
headquarters on or before June 30, 1997, then Tenant may, by written notice to
Landlord on or before June 30, 1997, extend the term of this Lease on all the
same terms and conditions set forth herein, for a period of one month. For so
long as the construction of Tenant's new corporate headquarters has not been
completed and Tenant has not moved to such headquarters, Tenant shall have the
option of extending the term of this Lease for successive periods of one month
each upon written notice to Landlord on or before the expiration of the then
current month. In no event may Tenant extend the term of this Lease in excess of
one full calendar month following the calendar month in which the construction
of Tenant's new corporate headquarters is completed.
ARTICLE 23
Miscellaneous
23.01 This Lease, including the Exhibits and Schedules attached hereto,
sets forth the entire agreement between the parties with respect to the Demised
Premises. All prior conversations or writings between the parties hereto or
their representatives with respect to the Demised Premised are merged herein and
extinguished.
23.02 This Lease shall not be modified except by a writing signed by the
party to be charged. The Article captions appearing herein are inserted as a
matter of convenience and are not intended to define, construe or describe the
scope or intent of any provision of this Lease.
23.03 If any provision of this Lease or the application thereof to any
person or circumstance shall be held void or unenforceable, then the remainder
of this Lease or the application of such provision to persons or circumstances
other than those as
22
<PAGE> 23
to which it is held void or unenforceable shall not be affected thereby.
23.04 Except as otherwise expressly provided in this Lease, all the
terms, covenants conditions and provisions of this Lease shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
23.05 The person or persons executing this Lease on behalf of Tenant
hereby covenant, represent and warrant that Tenant is a duly incorporated
Delaware corporation authorized to do business in Connecticut; and that the
person or persons executing this Lease on behalf of Tenant is an officer or are
officers of such Tenant, and that he or they as such officers are duly
authorized to execute, acknowledge and deliver this Lease to Landlord.
23.06 This Lease may be executed in several counterparts, each of which
shall be deemed an original, and all such counterparts shall together constitute
one and the same instrument.
23.07 This Lease shall be governed and controlled by the law
of the State of Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed as of the day and year first above written.
Landlord:
NANTUCKET ROOST ASSOCIATES, LLC
By: /s/ Michael J. Stimola
-------------------------------------
Its: Manager
Tenant:
CANNONDALE CORPORATION
By: /s/ Joseph Scott Montgomery
-------------------------------------
Its: Vice President
23
<PAGE> 24
SCHEDULE A
Those three certain pieces of land with the buildings and improvements thereon,
situated in the Town of Redding, County of Fairfield and State of Connecticut
shown on a certain map entitled "Plot Plan Cannondale Corporation Georgetown
District Redding, Connecticut Scale 1"=40' June 14, 1982" certified
"substantially correct" by C. James Osborne, Jr., R.L.S. and recorded January
30, 1987 as Map No. 3371 in the Redding Town Clerk's Office, each such piece
being more particularly bounded and described as follows:
First Piece:
NORTHWESTERLY: By land now or formerly of Monaco in part, in part by land now
or formerly of Maria Nordlund, in part by the Second Piece described herein
below, and in part by land now or formerly of Bryon Scott, Jr. and Lorraine
Scott, 378.81 feet, more or less;
NORTHEASTERLY: By land now or formerly of Mary A. Cardiff, and in part by land
now or formerly of Russell L. and Joan P. Seymour, 386.49 feet, more or less;
SOUTHEASTERLY: By Brookside Road, so called, 390.12 feet, more or less; and
SOUTHWESTERLY: By land now or formerly of Joel W. and Sandra K. Cohen and
Joseph and Anne Tannenbaum in part, and in part by land now or formerly of
Monaco, 307.72 feet, more or less.
Together with that certain 41 square foot piece of land shown as Parcel "Y" on
a certain map entitled "Equal Area Exchange Map Prepared for Cannondale
Corporation Redding Connecticut Scale 1"=20' March 21, 1986" prepared by John
W. Fuller, Land Surveyor, Reg. No. 4775, Georgetown, Connecticut being Map No.
3306 in the Redding Town Clerk's Office, but excluding therefrom the 41 square
foot piece of land shown as Parcel "X" on said map.
Second Piece:
Being a 25 foot roadway adjoining the above described First Piece on the north
and bounded and described as follows:
NORTHWESTERLY: By land now or formerly of The Bethlehem Evangelical Lutheran
Church, Georgetown, Connecticut, 272.24 feet, more or less;
NORTHERLY: By Passway to Portland Avenue, 25.14 feet, more or less;
<PAGE> 25
NORTHEASTERLY: By land now or formerly of Raymond H. and Harry R. Carlson in
part, in part by land now or formerly of Raymond H. and Hilda H. Carlson, and
in part by land now or formerly of Bryon Scott, Jr., and Lorraine Scott, 386.37
feet, more or less;
SOUTHEASTERLY: By the First Piece hereinabove described, 37.45 feet, more or
less; and
SOUTHWESTERLY: By land now or formerly of Maria Nordlund, 127.06 feet, more or
less.
Third Piece:
WESTERLY: By Brookside Road, so-called, 270.20 feet, more or less;
NORTHERLY: Running to a point;
EASTERLY: By the westerly side of a brook marking the westerly boundary of land
now or formerly of Bernard S. and Marjorie G. Unger, 256.68 feet, more or less;
and
SOUTHERLY: By land now or formerly of Bernard S. and Marjorie G. Unger, 65.19
feet, more or less.
EXCLUDING THEREFROM the two-family house located adjacent to Brookside Avenue
in the southwesterly corner of the "First Piece" described above, as well as
the parking area immediately to the south of such two-family house and a right
of ingress and egress over any driveway providing access to such house.
1
<PAGE> 1
EXHIBIT 11
CANNONDALE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS, EXCEPT FOR PER-SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 28, September 30,
1996 1995
---- ----
<S> <C> <C>
PRIMARY EARNINGS PER SHARE COMPUTATION:
Average shares outstanding ............................. 8,612 7,182
Net effect of options-
based on the treasury stock method ..................... 440 386
------ ------
Weighted average number of common shares
and equivalents outstanding during the period .......... 9,052 7,568
------ ------
Income applicable to common shares and
equivalents ........................................ $ 489 $ 194
====== ======
Net income per share ................................... $ .05 $ .03
====== ======
FULLY DILUTED EARNINGS PER SHARE COMPUTATION:
Average shares outstanding ............................. 8,612 7,182
Net effect of options-
based on the treasury stock method ..................... 523 386
------ ------
Weighted average number of common shares
and equivalents outstanding during the period .......... 9,135 7,568
------ ------
Income applicable to common shares and
equivalents ........................................ $ 489 $ 194
====== ======
Net income per share ................................... $ .05 $ .03
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-START> JUN-30-1996
<PERIOD-END> SEP-28-1996
<CASH> 5,611
<SECURITIES> 0
<RECEIVABLES> 50,304
<ALLOWANCES> 5,834
<INVENTORY> 36,745
<CURRENT-ASSETS> 90,897
<PP&E> 35,663
<DEPRECIATION> 16,272
<TOTAL-ASSETS> 111,747
<CURRENT-LIABILITIES> 26,358
<BONDS> 16,127
0
0
<COMMON> 86
<OTHER-SE> 68,692
<TOTAL-LIABILITY-AND-EQUITY> 111,747
<SALES> 30,880
<TOTAL-REVENUES> 30,880
<CGS> 20,652
<TOTAL-COSTS> 20,652
<OTHER-EXPENSES> 9,096
<LOSS-PROVISION> 2,627
<INTEREST-EXPENSE> 349
<INCOME-PRETAX> 757
<INCOME-TAX> 268
<INCOME-CONTINUING> 489
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 489
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
