U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from __________________ to
_________________
Commission file number 1-4142
TENNEY ENGINEERING, INC.
(Name of small business issuer in its charter)
NEW JERSEY 22-1323920
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1090 Springfield Road, Union, New Jersey 07083-8197
(Address of principal executive offices) (Zip Code)
Issuer's telephone number 908-686-7870
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Title of each class
Common Stock, $0.10 par
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X ; No
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B is not contained in this
form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [X]
Revenues for the fiscal year ended December 31, 1995
$9,564,000
At March 28, 1996, the registrant had outstanding 3,685,592
shares of Common Stock, par value $.10 per share, and the aggregate
market value of the common shares (based upon the closing price of
these shares on the Over-The-Counter Bulletin Board) held by
nonaffiliates was approximately $1,894,938.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Annual Proxy Statement dated March 29,
1996, in connection with its Annual Meeting to be held on May 24,
1996, are incorporated by reference into Part III.
PART I
ITEM 1. BUSINESS
(a) Business Development
Tenney Engineering, Inc. (the "Company") was
incorporated in 1932.
In December 1992, the Company announced that it
would continue a corporate restructuring whereby it would
discontinue the manufacturing of environmental test equipment at
its Union, New Jersey facility (the "Union Facility"). In February
1993, the Company discontinued the manufacturing of environmental
test equipment at its Union, New Jersey facility and listed such
facility for sale. In December 1992, the Company entered into a
six-year License Agreement with a privately owned manufacturer of
environmental conditioning equipment ("Licensee"), authorizing
Licensee to manufacture and sell environmental test chambers and
other equipment under the "Tenney" name with the Company retaining
the right to manufacture such products. (See Notes 3, 4 and 5 of
the Notes to Consolidated Financial Statements and Management's
Discussion and Analysis.)
In 1992 the Company sold all of its outstanding
stock of its wholly owned subsidiary, Gloekler Refrigerator Co.
("Gloekler"), to the then current manager of the Gloekler
operation. Gloekler manufactures insulated enclosures used in the
refrigeration and drug industries. (See Note 6 of the Notes to
Consolidated Financial Statements.)
(b) Business of Issuer
Principal Products or Services and their Markets:
The Company is engaged in one industry segment: The
engineering and manufacturing of diversified vacuum systems for
space simulation, optic coating and plasma treatment for medical
labware and servicing, refurbishing, upgrading and installing
environmental equipment and earning license and technology fees and
rental income.
Vacuum Equipment
The Company's wholly-owned subsidiary DynaTenn, Inc. (d/b/a
"DynaVac") is a custom manufacturer of industrial vacuum equipment.
The company provides equipment and services to a wide range of
industries where quality and reliability are primary elements to
profitability. Primary market concentration is in optical coating
equipment, space simulation systems and components for the
aerospace industry, and medical labware processing equipment.
Key personnel represent a highly diversified engineering and
manufacturing team offering expertise in the field of vacuum
technology, mechanical and electrical engineering, advanced control
system design, and thermal vacuum system design. This commitment
and experience enable unprecedented control over product quality
and product reliability.
DynaVac's coating systems are installed in numerous facilities
across the nation and have a reputation for their reliability. All
systems can be designed to meet the specific requirements of the
customer's coating application. DynaVac also offers retrofitting
services to refurbish an existing system or upgrade it with
proprietary supervisory control systems.
Considerable experience resides both in the company and
amongst its personnel, in the design and construction of vacuum
systems for space simulation. DynaVac systems are designed to meet
a wide range of testing requirements and are in installations in
the U.S. and overseas.
Service
The service operation consists of the service of environmental
equipment and technical support in addition to the sale of
replacement parts, service contracts, upgrades of older equipment,
instrument calibration and used equipment sales.
License and Technology Fees
As at December 31, 1995, the Company completed three years of
a six-year licensing agreement with a privately owned manufacturer
of environmental conditioning equipment (see "License Agreement"
below and Note 4 of the Notes to Consolidated Financial
Statements.) The Company completed one year on its renewed License
Agreement with a company in India that expires in September 1998
whereby the "Tenney" name will be utilized for manufacturing
environmental equipment in India which it is expected would be
exported to other areas as well. In addition, the Company has
three more years of a Technology Transfer Agreement with an entity
in the Peoples Republic of China. The technology fees are based
on an agreement which runs for a period of eight years ending in
1999. This agreement calls for the sale of expertise as well as
parts and training to enable the Chinese company to manufacture
environmental test equipment (see Note 14 of the Notes to
Consolidated Financial Statements).
Backlog:
As of December 31, 1995, the Company had a total firm backlog
of unfilled orders of approximately $3,870,000, as compared with
a backlog of approximately $5,300,000 as of December 31, 1994.
Competition:
The number and level of competitors for DynaVac is different
depending on the areas of equipment to be designed and fabricated.
The major competition for optical box coaters and other coating
systems is centered on one major and several minor U.S. suppliers
and two strong European companies. In this field, most of the
coating equipment purchases in the last few years has shifted to
the Pacific Rim countries. The U.S. coating industry is witnessing
a resurgence in some areas, which should require additional
purchases of new capital equipment.
The competition for the space simulation equipment is
primarily confined to a relatively few companies, all of which are
significantly larger than DynaVac. With this size difference,
DynaVac has been able to take advantage of lower overheads to more
than maintain a major share of the new contracts. Most of these
contracts are government contracts or government related.
The Company's service operation is supported by a nationwide
field service force. Some competitive manufacturers also have
direct field service. Additionally, there are many spin-offs,
former employees and general service companies who also compete.
The Company has the advantage of technical support, documentation
and experience.
Raw Materials:
The Company purchases its raw materials from various sources
and believes that such purchases may be made in the open market
with no difficulty in obtaining adequate supplies.
Major Customers and Government Contracts:
There was no customer who accounted for net revenue in excess
of 10% during the year ended December 31, 1995. In 1994, one major
customer accounted for more than 10% of the Company's sales. Prime
Government contracts did not exceed 10% of the Company's backlog
of unfilled orders as of December 31, 1995 (see "Backlog" above).
All such contracts are subject to cancellation at the convenience
of the Government with appropriate cancellation charges payable by
the Government.
License Agreement:
In December 1992, the Company entered into a six-year
licensing agreement with a privately owned manufacturer (the
"Licensee") of environmental conditioning equipment. The terms of
the agreement, among others, provide for the Licensee to:
manufacture and sell environmental test chambers and other
equipment under the "Tenney" name with the Company also retaining
the right to manufacture such products; the Company to receive
license fees (up to a maximum of $1,900,000) equal to 5% of
qualifying sales during the term of the agreement with specified
minimum amounts payable annually; and an option for the Licensee
to purchase the Company's rights, title and interest in the
"Tenney" trademark for $100,000 at the end of the license term in
the event the Company is no longer manufacturing such products.
The Company has earned license fees of $387,000 and $275,000 in
1995 and 1994, respectively, and $981,000 since inception. In
conjunction with the license agreement, the Company and Licensee
entered into an agreement to make available to the Licensee the
part-time services of the president for a four-year period ending
December 31, 1996, at a fee of $120,000 per year.
Patents, Trade Name and Trademarks:
The Company currently does not have any patents. However, the
Company has several trademarks relating to products, some of which
are currently in use.
The Company has granted its Licensees (see above and Note 4
of the Notes to Consolidated Financial Statements) a license and
right to use the trade name "Tenney" in the conduct of their
businesses as it relates to the sale of licensed products during
the terms of the License Agreements. The Licensees can also use
the Company's trademarks, on a non-exclusive, non-transferrable
basis for the term of the agreements.
Labor Contract:
The Company had no collective bargaining contracts in force
during 1995.
Product Research and Development:
The Company's research activities relating to the development
of new products or services or improvement of existing products or
services are carried on by Company operating personnel and costs
thereof are charged to operations as incurred. (See Note 1 of the
Notes to Consolidated Financial Statements.)
Environmental Expenditures:
The Company, during 1995, did not have any environmental
expenditures. During 1994, the cost of environmental compliance
was capitalized and when title of the real estate was conveyed, the
remaining unamortized capitalized costs were included in the net
book value of the real estate and closed. (See Note 9 of the Notes
to Consolidated Financial Statements and Management's Discussion
and Analysis.)
Employees:
At December 31, 1995, the Company had 68 employees.
Executive Officers:
The following table sets forth the names and ages and the
business experience of the registrant's executive officers.
BUSINESS EXPERIENCE
NAME AND AGE PRESENT POSITION DURING PAST FIVE YEARS
Robert S. Schiffman Chairman of the Board, President of the
Company;
52 (1)(2) President and Chief Chief Executive Officer;
Executive Officer Chairman of the Board
since May 1990.
Saul S. Schiffman Vice Chairman of the Vice Chairman of the
Board
82 (1)(2) Board and Secretary since May 1990; and prior
thereto, Chairman of the
Board of the Company.
Martin Pelman Vice President and Vice President and
Treasurer of the
49 Treasurer Company since August
1994; Certified Public
Accountant; 1990-1993 Group
Controller - Carlson Health
Care Communications, Inc.
(1) Member of Executive Committee. The Company has no standing
audit, nominating or compensation committee or committees
performing similar functions.
(2) Saul S. Schiffman is the father of Robert S. Schiffman.
All Officers, except Robert S. Schiffman, who has an
employment contract expiring in 1996 (see Note 13 of the Notes to
Consolidated Financial Statements) serve at the pleasure of the
Board of Directors.
ITEM 2. PROPERTIES
The Company owned the Union Facility on which is located
its general offices and the former environmental equipment
manufacturing plant. This facility was secured by a mortgage loan.
On December 12, 1994, the Company, as part of a Settlement
Agreement, conveyed to the Bank in lieu of foreclosure the title
to the Union Facility and concurrently entered into a Use and
Occupancy Agreement. On December 14, 1995, the building was sold
by the Bank to an outside company and the Company entered into a
three-year lease for approximately 18,500 square feet of space; the
remaining portion of the building is being developed by the new
owner. The Company will pay an annual rent of $90,000. (See Notes
8, 9 and 13 of the Notes to Consolidated Financial Statements.)
DynaVac leases its facility in Weymouth, Massachusetts under
a lease which expires in April 1996. (See Note 13 of the Notes to
Consolidated Financial Statements.)
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to a material pending legal
proceeding. (See Notes 3, 12 and 13 of the Notes to Consolidated
Financial Statements.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company had no meeting of security holders during the
fourth quarter of the year ended December 31, 1995.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
In June 1994, the Company received a final confirmation
from the American Stock Exchange that the application with the
Securities and Exchange Commission to strike the Company's Common
Stock from listing and registration on the Exchange due to
noncompliance with listing requirements was approved. The Company
has secured a listing on the Nasdaq Stock Market OTC Bulletin Board
under the symbol "TNGI". The approximate number of holders of
record of the Company's Common Stock at December 31, 1995 was
1,079. In addition, approximately 50% of the outstanding shares are
held for shareholders' account at brokerage firms and financial
institutions. The following table sets forth the range of high and
low closing prices for transactions on the American Stock Exchange
during the first and second quarters of 1994 and on the OTC
Bulletin Board during the third and fourth quarters of 1994 and all
four quarters of 1995.
PRICE RANGE OF COMMON STOCK
1995 1994
High Low High Low
First Quarter 3/8 3/32 3/8 1/4
Second Quarter 1/4 5/32 5/16 1/8
Third Quarter 5/8 5/32 3/8 1/16
Fourth Quarter 7/8 1/4 1/4 3/64
It has been the Company's policy not to pay cash
dividends.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
During 1995, the restructuring that was started in 1992 was
concluded. The Company and the Bank entered into a Settlement
Agreement as at December 12, 1994, in which the Company conveyed
the title to the real estate located in Union, New Jersey, for a
credit of $1,800,000 against the total indebtedness of $3,758,663.
The remaining balance of $1,958,663 was converted to a non-
interest Note due September 30, 1995 in the amount of $800,000,
payable $200,000 in December 1994 and the balance of $600,000 due
in nine monthly non-interest-bearing amounts of $66,667, and
forgiveness of debt of $1,158,663. The Bank's security interest
in substantially all the Company's assets remained in effect, until
93 days after the date of the last payment. The forgiveness of
$1,158,663 was recognized quarterly upon the Company's paying the
monthly amounts when due. The Company made all payments to the
Bank when due, and on August 29, 1995, paid the final balance. The
forgiveness of $1,158,663 was recognized, $289,666 during the
fourth quarter 1994 and the balance of approximately $869,000 was
recognized during the first three quarters of 1995. (See Note 9
of the Notes to Consolidated Financial Statements.)
During 1995, the Company has been able to generate a positive cash
flow from operations.
At December 31, 1995, the Company's cash and cash equivalents
totaled $223,000 as compared to $842,000 at December 31, 1994.
Contributing to the change in cash between years was cash provided
by operating activities of $217,000 in 1995 and $940,000 in 1994.
The principal reason for cash being provided by operating
activities in 1995 was the obtaining of longer terms from vendors.
The two principal reasons for the cash provided by operating
activities in 1994 were $428,000 realization of inventory and
$667,000 progress payments received in advance of billings on work-
in-process projects. The primary use of cash was the paying off
of the Company's note payable bank (see Note 9 of the Notes to
Consolidated Financial Statements). At December 31, 1995, the
Company had working capital of $509,000 as compared to a
(deficiency) of $(1,371,000) at December 31, 1994.
At December 31, 1995, the Company completed three years of the six-
year License Agreement with a privately owned manufacturer of
environmental conditioning equipment ("Licensee"), which authorized
the Licensee to manufacture and sell environmental test chambers
and other equipment under the "Tenney" name with the Company
retaining the right to manufacture such products. (See Note 4 of
the Notes to Consolidated Financial Statements.)
The Company's operations now consist of manufacturing through its
DynaTenn, Inc. subsidiary (d/b/a "DynaVac") diversified vacuum
systems for space simulation, optic coating and plasma treatment
for medical labware and servicing, refurbishing, upgrading and
installing environmental equipment and earning license and
technology fees and rental income.
Prior to the cessation of manufacturing at the Union Facility, the
Company participated in a multi-employer pension plan. Due to the
cessation of manufacturing operations at the Company's Union
Facility (see Note 3 of the Notes to Consolidated Financial
Statements), the Company ceased being a participant in the multi-
employer pension plan in February 1993. Under the Multi-Employer
Pension Plan Amendments Act of 1980, a Company may, under certain
circumstances, become subject to liabilities in excess of
contributions made under its collective bargaining agreement.
During the fourth quarter of 1993, the Company received a demand
from the Sheet Metal Workers' National Pension Fund (the "Fund")
for payment of a withdrawal liability from its union employees'
multi-employer pension plan in the amount of approximately
$530,000, to be paid in quarterly payments starting in January,
1994. The Company engaged counsel to advise it in these matters
and made a provision for this amount in the 1993 Consolidated
Financial Statements. The Company failed to make the first payment
when due in January 1994. In March 1994, the Company received
notice that they were in default. In May 1994, the Company
proposed, through counsel, an amount significantly less than the
original amount. In June 1994, the Company received notification
from the Fund rejecting the Company's offer. In November 1994, the
Company proposed, through counsel, a modified offer significantly
less than the total demanded, along with a significantly less
periodic payment. In December 1994, the Company received from the
Fund a modified calculation of the withdrawal liability in the
amount of approximately $502,000. On May 31, 1995, the Company
received a rejection of all proposals.
On December 7, 1995, the Company was served with a Complaint of
Civil Action filed in the U.S. District Court, Eastern District of
Virginia, by the Fund, demanding payment of past-due installments
of withdrawal liability (aggregating $271,034 at the date of the
Complaint), plus interest on overdue installments, statutory
liquidated damages, attorneys' fees and injunctive relief requiring
payment of future quarterly withdrawal installments and in the
alternative immediate payment of the entire withdrawal liability
plus accrued interest, statutory liquidated damages and attorneys'
fees.
In February 1996, the Company filed an Answer and Affirmative
Defense to the action. The Company and its counsel are having
discussions with representatives of the Fund in an attempt to
reduce the amount of the liability and to work out an installment
payment schedule. At December 31, 1995, the Company had in reserve
$581,000 in respect of the possible liability to the Fund.
In the expectation that an agreement can be arrived at with the
Fund, the amount reserved has been classified as being current and
non-current. (See Note 3 of the Notes to Consolidated Financial
Statements.)
The Company is not in a position to make immediate payment of the
entire amount or a significant portion of the entire amount
demanded by the Fund in the Complaint. If the Company is required
to make immediate payment of the entire amount or of the past-due
installments alleged to be due, it would have a material adverse
effect on the Company.
In April 1991, the Company entered into a Technology Transfer
Agreement with an entity in the People's Republic of China. This
agreement is for a period of eight years and provides for payments
to the Company upon the completion of certain milestones. The
total contract fee is $1,200,000 of which the Company received cash
of approximately $0, $0, $149,000, $165,000 and $360,000 in 1995,
1994, 1993, 1992 and 1991, respectively. The Company is not
dependent upon the entity to fulfill its obligation under this
agreement. (See Note 14 of the Notes to Consolidated Financial
Statements.)
Management believes that during 1996 the Company will be able to
satisfy its cash requirements for normal operations. The Company
has been able to generate a positive cash flow from its normal
business activities. The Company expects the Licensee to perform
under the terms of the License and related agreements.
Additionally, the Company must complete its open order backlog in
a timely manner and then collect on such receivables.
RESULTS OF OPERATIONS
Total net revenue from continuing operations of $9,564,000 for 1995
compares to 1994 net revenue of $7,159,000.
Product and product-related net revenue for 1995 and 1994 was
$7,803,000 and $5,108,000, respectively. The increase in net
revenue within this classification, between years, was due to
vacuum system revenue increasing primarily because several large
orders received during the fourth quarter of 1994 were completed
during 1995. License fees earned of approximately $387,000 and
$275,400 during the years 1995 and 1994, respectively, were
included in this revenue classification. Net revenue for 1995 and
1994 includes revenue of approximately $0 and $20,000,
respectively, related to the Technology Transfer Agreement. (See
Note 14 of the Notes to Consolidated Financial Statements.)
Service-related revenues of $1,020,000 for the year 1995 compares
to 1994 revenues of $1,448,000. The 1995 and 1994 service revenue
included revenue from the Company's Leased Employee Agreement with
the Licensee of $120,000. Service revenue in 1995 was unfavorably
affected when the Company began to use service-related resources
in buying, refurbishing and upgrading used equipment which was sold
and recorded in the product-related sales category.
Revenue related to the sale of parts totaled $741,000 and $603,000
for the years ended December 31, 1995 and 1994, respectively.
The Company's order backlog at December 31, 1995 and 1994 was
approximately $3,870,000 and $5,300,000, respectively. The
decrease in backlog is primarily due to the Company's DynaVac
subsidiary.
The total cost of sales as a percentage of net revenue was 73% for
the year 1995 and compares to 76% for the year 1994.
The 1995 cost of sales related to product and product-related sales
were approximately 77% as compared to 83% for 1994. The decrease
in the cost of sales percentage between years was primarily due to
the Company increasing productive use of resources in this area,
which reduced idle time and lowered overhead charges.
Service cost of sales as a percentage of sales was 65% and 64% for
the years ending December 31, 1995 and 1994, respectively.
Cost of sales as a percentage of sales during 1995 for parts was
41% and compares to 46% for the year 1994. The decrease in the
cost of sales percentage in the 95/94 comparison was due primarily
to a favorable inventory sales mix.
Selling and administrative expenses were $1,910,000 and $1,942,000
for 1995 and 1994, respectively. The decrease in the 1995/94
period was due primarily to continued cost containment programs.
As a percentage of total net revenue, selling and administrative
expenses were 20% and 27% for 1995 and 1994, respectively.
Interest expense was $74,000 in 1995 and reflects a decrease of
$293,000 from the 1994 interest expense of $367,000. The decrease
is due primarily to the Company not having any interest-bearing
bank debt and paying off all bank debt during the year in
accordance with the conditions of the Settlement Agreement reached
with the Bank in December, 1994. (See Note 9 of the Notes to
Consolidated Financial Statements.)
The Company recognized $869,000 of principal debt forgiveness in
1995 and $224,000 forgiveness in 1994 in accordance with the
conditions of the Settlement Agreement. (See Note 9 of the Notes
to Consolidated Financial Statements.)
Other income, net was $61,000 and $66,000 in 1995 and 1994,
respectively. Other income in 1995 was comprised primarily of
interest income related to investment activities of liquid cash
balances during the first and second quarters of the year.
At December 31, 1995, the Company had available for tax reporting
purposes net operating loss carryforwards of approximately
$3,400,000, expiring through 2008. Effective January 1, 1993, the
Company has adopted the Statement of Financial Accounting Standards
("SFAS No. 109"), "Accounting for Income Taxes," which applies a
balance sheet approach to income tax accounting. The new standard
requires the Company to reflect on its balance sheet the
anticipated tax impact of future taxable income or deductions
implicit in the balance sheet in the form of temporary differences.
The Company has reflected future tax benefits on its balance sheet
since the realization of such benefits is dependent on the
Company's profitability. The cumulative effect to January 1, 1993
of the adoption of SFAS No. 109 was immaterial. As permitted by
SFAS No. 109, prior year's financial statements have not been
restated. (See Note 10 of the Notes to Consolidated Financial
Statements.)
The net income for 1995 was $1,743,000 as compared to $1,146,000
in 1994.
During June, 1994, the American Stock Exchange received approval
from the Securities and Exchange Commission to strike the Company's
Common Stock from listing and registration on the Exchange. June
24, 1994, was the last day the Company's Common Stock was traded
on the Exchange. Currently, the Company has its Common Stock
traded on the Nasdaq Stock Market OTC Bulletin Board under the
symbol "TNGI".
ITEM 7. FINANCIAL STATEMENTS
See Index to Financial Statements appearing on page F -
1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required under this item with respect to
directors is contained on page 2 of the registrant's Proxy
Statement dated March 29, 1996, in connection with its Annual
Meeting to be held May 24, 1996, which is incorporated herein by
reference. For executive officers, see Part I, Item 1 of this
report.
ITEM 10. EXECUTIVE COMPENSATION
See page 3 of the registrant's Proxy Statement dated
March 29, 1996, in connection with its Annual Meeting to be held
on May 24, 1996, which page is incorporated herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
See paragraph entitled "Principal Shareholders" on
page 2 of the registrant's Proxy Statement dated March 29, 1996,
in connection with its Annual Meeting to be held on May 24, 1996,
which paragraph is incorporated herein by reference.
(b) Security Ownership of Management
See page 3 of the registrant's Proxy Statement dated
March 29, 1996, in connection with its Annual Meeting to be held
on May 24, 1996, which pages are incorporated herein by reference.
(c) Changes in Control
The Company knows of no contractual arrangement
which may, at a subsequent date, result in a change of control of
the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
None.
Transaction with Promoters
Not applicable.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits and Index of Exhibits
(2) a. (i) Stock Purchase Agreement dated October
2, 1992 between Tenney Engineering,
Inc. and PCE, Inc. Filed as Exhibit
1 to the Company's Current Report on
Form 8-K for the event occurring on
November 2, 1992 and incorporated
herein by reference.
(3) a. (i) Restated Certificate of Incorporation
of Tenney Engineering, Inc. filed in
the office of the Secretary of State
of the State of New Jersey on June 12,
1984.
(ii) Amendment to Certificate of
Incorporation dated May 13, 1988.
b. (i) By-Laws of Tenney Engineering, Inc.
(As restated by order of the Board of
Directors at a meeting held May 11,
1984).
(ii) Amendment to By-Laws adopted January
26, 1988.
(10) a. (i) 1995 Incentive Stock Option Plan.
Filed as Exhibit (10) b. (ii) to the
Company's Annual Report on Form 10-
KSB for 1994 and incorporated herein
by reference.
b. (i) Stock Options dated June 1, 1995
granted pursuant to the Company's 1995
Incentive Stock Option Plan to the
following director and officers:
Robert S. Schiffman (Director and
Officer); Martin Pelman (Officer).
c. (i) Restated Retirement Plan for Salaried
Employees of Tenney Engineering dated
June 8, 1987. Filed as Exhibit (10)
c. (i) to the Company's Annual Report
on Form 10-KSB for 1994 and
incorporated herein by reference.
(ii) First Amendment to the Restated
Retirement Plan for Salaried Employees
of Tenney Engineering, dated June 22,
1987. Filed as Exhibit (10) c. (ii)
to the Company's Annual Report on Form
10-KSB for 1994 and incorporated
herein by reference.
(iii) Second Amendment to the Restated
Retirement Plan for Salaried Employees
of Tenney Engineering, dated July 25,
1989. Filed as Exhibit (10) c. (iii)
to the Company's Annual Report on Form
10-KSB for 1994 and incorporated
herein by reference.
(iv) Third Amendment to the Restated
Retirement Plan for Salaried Employees
of Tenney Engineering, dated November
12, 1990.
d. (i) Settlement Agreement dated December
12, 1994, by and among Tenney
Engineering, Inc., VacTenn, Inc.,
DynaTenn, Inc., WesTenn Sales, Inc.,
Tenney Environmental Products, Inc.,
and First Fidelity Bank, National
Association. Filed as Exhibit (10)
d. (xviii) to the Company's Annual
Report on Form 10-KSB for 1994 and
incorporated herein by reference.
e. (i) Lease Agreement dated December 14,
1995, by and among Tenney Engineering,
Inc., and Nandan Company, L.L.C.
(ii) First Amendment dated January 12,
1996.
f. (i) Employees Salary Savings Plan dated
November 27, 1984. Filed as Exhibit
(10) e. (i) to the Company's Annual
Report on Form 10-KSB for 1994 and
incorporated herein by reference.
g. (i) License Agreement, dated December 18,
1992 between Tenney Engineering, Inc.
and Lunaire Limited. Filed as Exhibit
1 to the Company's Current Report on
Form 8-K for the event occurring on
December 18, 1992 and incorporated
herein by reference.
(ii) Leased Employee Agreement, dated
December 18, 1992 between Tenney
Engineering, Inc. and Lunaire Limited.
Filed as Exhibit 2 to the Company's
Current Report on Form 8-K for the
event occurring on December 18, 1992
and incorporated herein by reference.
(iii) Employment Agreement, dated December
18, 1992 between Tenney Engineering,
Inc. and Robert S. Schiffman. Filed
as Exhibit 3 to the Company's Current
Report on Form 8-K for the event
occurring on December 18, 1992 and
incorporated herein by reference.
(iv) Consulting Agreement between Lunaire
Limited and Robert S. Schiffman, dated
December 18, 1992. Filed as Exhibit
4 to the Company's Current Report on
Form 8-K for the event occurring on
December 18, 1992 and incorporated
herein by reference.
(22) List of Subsidiaries, all of which are
wholly-owned:
Jurisdiction of Percentage of
Name of Company Incorporation Ownership
Tenney Environmental New Jersey 100%
Products, Inc.
WesTenn Sales, Inc. New Jersey 100%
VacTenn, Inc. California 100%
DynaTenn, Inc. Massachusetts 100%
Tenney, Inc. New Jersey 100%
(24) Consent of Independent Certified Public
Accountants.
(27) Financial Data Schedules
(99) a. (i) Complaint of Civil Action from the
Board of Trustees, Sheet Metal
Workers' National Pension Fund to
enforce delinquent payments due under
the Multi-Employer Pension Plan
Amendments Act of 1980. Filed with
the United States District Court,
Eastern District of Virginia, Case No.
95-1609-A. Filed as Exhibit 1 to the
Company's Current Report on Form 8-
K for the event occurring on December
7, 1995 and incorporated herein by
reference.
(ii) Answer and Affirmative Defense to the
Board of Trustees, Sheet Metal
Workers' National Pension Fund to
enforce delinquent payments due under
the Multi-Employer Pension Plan
Amendments Act of 1980.
(b) Reports on Form 8-K
A Form 8-K has been filed during the last quarter of
the period covered by this report.
Date of Report Item Reported
December 7, 1995 Complaint of Civil Action from
the Board of Trustees, Sheet
Metal Workers' National Pension
Fund to enforce delinquent
payments due under the Multi-
Employer Pension Plan Amendments
Act of 1980. Filed with the
United States District Court,
Eastern District of Virginia,
Case No. 95-1609-A.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TENNEY ENGINEERING, INC.
By s/Robert S. Schiffman
Robert S. Schiffman
President
(Principal Executive
Officer)
By s/Martin Pelman
Martin Pelman
Vice President and
Treasurer
(Principal Financial
Officer)
Date: March 29, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date
indicated.
s/Saul S. Schiffman s/David C. Schiffman
Saul S. Schiffman (Director) David C. Schiffman (Director)
March 29, 1996 March 29, 1996
s/Robert S. Schiffman s/David A. Schuh
Robert S. Schiffman (Director) David A. Schuh (Director)
March 29, 1996 March 29, 1996
<PAGE>
TENNEY ENGINEERING, INC.
AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES (ITEM 7)
PAGE
FINANCIAL STATEMENTS:
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F - 2
CONSOLIDATED BALANCE SHEET DECEMBER 31, 1995 F - 3
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1994 F - 4
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIENCY) YEARS ENDED DECEMBER 31, 1995
AND 1994 F - 5
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994 F - 6
NOTES TO FINANCIAL STATEMENTS F - 7/19
* * *
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Tenney Engineering, Inc.
We have audited the accompanying consolidated balance sheet
of Tenney Engineering, Inc. and Subsidiaries as of December 31,
1995, and the related consolidated statements of operations,
changes in stockholders' equity (deficiency) and cash flows for the
years ended December 31, 1995 and 1994. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Tenney Engineering, Inc. and Subsidiaries as
of December 31, 1995, and the consolidated results of its
operations and its cash flows for the years ended December 31, 1995
and 1994 in conformity with generally accepted accounting
principles.
ZELLER WEISS & KAHN
Mountainside, New Jersey
March 27, 1996<PAGE>
TENNEY ENGINEERING, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(In thousands of dollars)
ASSETS
Current assets:
Cash and cash equivalents $ 223
Accounts receivable, net 1,715
Current portion of installment note receivable
45
Inventories
311
Prepaid expenses and other current assets
97
Deferred tax asset
228
Total current assets
2,619
Equipment, net
311
Installment note receivable, noncurrent portion
323
Other assets
145
Total Assets $
3,398
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities $
1,518
Current portion of long-term capital leases
76
Accrued payroll and payroll taxes
162
Billings in excess of estimated revenue on
long-term contracts
318
Pension obligation, current portion
36
Total current liabilities
2,110
Long-term debt, net of current portion
697
Total liabilities
2,807
Commitments and contingencies
Stockholders' equity:
Preferred stock $1.00 par value:
Authorized 1,000,000 shares
Issued and outstanding - none
Common stock $.10 par value:
Authorized 10,000,000 shares
Issued 3,694,980 shares
369
Additional paid-in capital
1,960
Retained earnings (deficit)
(1,701)
628
Less treasury stock, 9,388 shares, at cost
37
Total stockholders' equity
591
Total liabilities and stockholders' equity $
3,398
See Notes to Consolidated Financial Statements.<PAGE>
TENNEY ENGINEERING, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
(In Thousands of Dollars
Except per Share Amounts)
Net revenue:
Product and product related $ 7,803 $ 5,108
Service 1,020 1,448
Parts 741 603
Totals 9,564 7,159
Cost of sales:
Product and product related 6,011 4,256
Service 663 920
Parts 307 278
Totals 6,981 5,454
Gross profit 2,583 1,705
Other expenses:
Selling and administrative expenses 1,910 1,942
Provision for loss on restructuring - (28)
Totals 1,910 1,914
Income (loss) from operations 673 (209)
Other income (expense):
Interest expense (74) (367)
Gain on exchange of property in lieu of
foreclosure - 1,460
Other income, net 61 66
Totals (13) 1,159
Income before income taxes and
extraordinary items 660 950
Income taxes (benefit) (220) 24
Income before extraordinary items 880 926
Extraordinary item - gain on restructuring
of debt net of income tax of $6 thousand 863 220
in 1995 and $4 thousand in 1994
Net income $ 1,743 $ 1,146
Net income per common share before
extraordinary items $ 0.24 $ 0.25
Extraordinary item per common share 0.24 0.06
Net income per common share (see Note 11) $ 0.48 $ 0.31
Exercise of options would not be dilutative.
See Notes to Consolidated Financial Statements.<PAGE>
TENNEY ENGINEERING, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1995 AND 1994
(In Thousands of Dollars)
Additional Retained Less
Common Stock Paid-in Earnings Treasury Stock
Shares Amount Capital (Deficit) Shares Amount
Totals
Balance January 1,
1994 3,694,980 $ 369 $ 1,960 $ (4,590) 9,388 $ 37
$ (2,298)
Net income 1,146
1,146
Balance December
31, 1994 3,694,980 369 1,960 (3,444) 9,388 37
(1,152)
Net income 1,743
1,743
Balance December
31, 1995 3,694,980 $ 369 $ 1,960 $ (1,701) 9,388 $ 37
$ 591
See Notes to Consolidated Financial Statements.<PAGE>
TENNEY ENGINEERING, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1995
1994
Operating activities: (In Thousands of
Dollars)
Net income $ 1,743
$ 1,146
Adjustments to reconcile income to net cash
provided by (used in) continuing operations:
Depreciation and amortization 72
132
Provision for restructuring -
(89)
Provision for pension withdrawal liability -
(28)
Provision for inventory write-downs -
200
Provision for bad debts -
50
Deferred tax asset (228)
-
Gain on conveyance of property
in lieu of foreclosure -
(1,460)
Gain on debt forgiveness, principal and interest (869)
(289)
Acquisition of capital leases for fixed assets 194
-
Changes in operating assets and liabilities:
Accounts and installment receivables (533)
141
Inventories (27)
428
Prepaid expenses and other current assets (11)
(23)
Other assets (7)
(90)
Accounts payable and other liabilities 170
196
Accrued payroll and payroll taxes 37
(41)
Billings in excess of estimated revenues (403)
667
Pension obligation 79
-
Net cash provided by continuing operations 217
940
Investing activities:
Acquisition of equipment (244)
(42)
Net cash (used in) investing activities (244)
(42)
Financing activities:
Payments of note payable and long-term capital leases (592)
(345)
Net cash used in financing activities (592)
(345)
Net increase (decrease) in cash and cash equivalents (619)
553
Cash and cash equivalents, beginning of year 842
289
Cash and cash equivalents, end of period $ 223
$ 842
Supplemental disclosure of cash flow information:
Interest paid $ 8
$ 37
Income tax paid 28
-
See Notes to Consolidated Financial Statements.<PAGE>
Note 1 - Summary of accounting policies:
Principles of consolidation:
The consolidated financial statements include the accounts of
Tenney
Engineering, Inc. (the "Company") and its wholly-owned
subsidiaries. All material intercompany accounts and
transactions have been eliminated in consolidation.
Net Revenues:
Revenue from product sales and short-term contracts and
services are recognized when the transactions are consummated.
The Company generally recognizes revenue on long-term, large
installation contracts under the percentage of completion
method. Under this method, revenue is recognized
according to the ratio of costs incurred to currently estimated
total contract costs. At the time a loss on a contract becomes
known, the entire amount of the estimated ultimate loss is
recorded.
Product and product-related net revenue includes revenue from
the Company's manufacturing operation, including the
discontinued activities (see Note 3), license and technology
fees and rental income. Service revenue includes revenue from
the servicing and installation of environmental equipment and
from the services provided under the Leased Employee Agreement
with the Licensee (see Note 4). Parts revenue includes revenue
from the sale of replacement and spare parts for equipment
previously manufactured by the Company as well as equipment
now being manufactured by the Licensee.
Cash equivalents:
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
Inventories:
Inventories are valued at the lower of cost (first-in, first-out) or market.
Work-in-process inventories are stated at actual production cost, including
factory overhead.
Machinery and equipment:
Machinery and equipment are carried at cost, less accumulated depreciation.
Depreciation is provided using primarily the straight-line method over the
estimated useful lives of the assets. Estimated useful lives vary from 3 to
10 years.
Research and development costs:
Costs and expenses related to research and product development are expensed
as incurred. There were no research and development costs for 1995 and 1994,
respectively.
Gain per common share:
Gain per common share is computed based on the weighted average number of
common shares outstanding during the year. The assumed exercise of
outstanding stock options would not have a significant effect on the per
share computations. The weighted average number of common shares outstanding
was 3,685,592 in 1995 and 1994, respectively (see Note 11).
Stock-based compensation:
In 1996 the Company will adopt SFAS No. 123, "Accounting for Stock-Based
Compensation." This standard establishes a fair value method of accounting
for stock-based compensation plans either through recognition or disclosure.
We intend to adopt this standard by disclosing the pro forma net income and
earnings per share amounts assuming the fair value method was adopted on
January 1, 1995. The adoption of this standard will not impact our results
of operations, financial position or cash flows.
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the period reported. Actual results could differ
from those estimates. Estimates are used when accounting for long-term
contracts, allowance for doubtful accounts, inventory obsolescence, product
warranty reserves, depreciation and amortization, employee benefit plans,
taxes, restructuring reserves and contingencies.
Note 2 - Financial condition and results of operation:
As shown in the accompanying consolidated financial statements, the Company
has incurred net income for the years ended December 31, 1995 and 1994,
respectively, from operations, which has resulted in an increase in the
Company's consolidated financial condition.
On December 12, 1994, the Bank and the Company signed a Settlement Agreement in
which the Company conveyed to the Bank the title in the real estate located
at Union, New Jersey, and reduced total debt significantly. During 1995, the
Company paid all of the bank debt when due (see Note 9).
As at December 31, 1995, the Company completed three years under the License
Agreement, and the Licensee has performed its obligations, for the most part,
under the various agreements incorporated under the License Agreement
(see Note 4).
Significant obligation:
As discussed in Note 3, with the cessation of its manufacturing operations at
the Union, New Jersey, facility, the Company received a revised notification
for payment of a withdrawal liability from its union employees' multi-employer
pension plan in the amount of approximately $502,000. The Company has
engaged counsel to advise it with respect to this matter. The Company met
with a representative of the pension plan and has made a proposal to the
Fund for extended terms and a reduction of the principal. Failure to reach
an accord will have a material adverse effect on the Company.
Note 3 - Restructuring:
The Company in February, 1993, ceased manufacturing operations at its
Union, New Jersey, facility. The Company's operations now consist of
manufacturing, through
one of its wholly owned subsidiaries, diversified vacuum systems for space
simulation, optic coating and plasma treatment for medical labware, the
servicing and installation of environmental equipment, and earning license
and technology fees.
During the fourth quarter of 1993, the Company received a demand from the
Sheet
Metal Workers' National Pension Fund (the "Fund") for payment of a
withdrawal liability from its union employees' multi-employer pension plan
in the amount
of approximately $530,000, to be paid in quarterly payments starting in
January, 1994. The Company engaged counsel to advise it in these matters
and made a provision for this amount in the 1993 Consolidated Financial
Statements. The
Company failed to make the first payment when due in January 1994. In
March 1994, the Company received notice that they were in default. In May
1994, the Company proposed, through counsel, an amount significantly less
than the original amount. In June 1994, the Company received notification
from the Fund rejecting the Company's offer.
In November 1994, the Company proposed, through counsel, a modified offer
significantly less than the total demanded, along with a significantly less
periodic payment. The Company continued to make periodic payments
significantly less than the requested periodic amounts. In December
1994, the Company received from the Fund a modified calculation of the
withdrawal liability in the amount of approximately $502,000. On May 31,
1995, the Company received a rejection of all proposals along with all
funds tendered.
On December 7, 1995, the Company was served with a Complaint of Civil Action
filed in the U.S. District Court, Eastern District of Virginia, by the Fund,
demanding payment of past-due installments of withdrawal liability
(aggregating $271,034 at the date of the Complaint), plus interest
on overdue installments, statutory liquidated damages, attorneys' fees
and injunctive relief requiring payment of future quarterly withdrawal
installments and in the alternative immediate payment of the entire withdrawal
liability plus accrued interest, statutory liquidated damages and
attorneys' fees.
In February 1996, the Company filed an Answer and Affirmative Defense to the
action. The Company and its counsel are having discussions with
representatives of the Fund in an attempt to reduce the amount of the
liability and to work out an installment payment schedule. At December 31,
1995, the Company had in reserve $581,000 in respect of the possible
liability to the Fund.
In the expectation that an agreement can be arrived at with the Fund,
the amount reserved has been classified as being current and non-current.
The Company is not in a position to make immediate payment of the entire
amount or a significant portion of the entire amount demanded by the
Fund in the Complaint. If the Company is required to make immediate payment
of the entire amount or of the past-due installments alleged to be due, it
would have a material adverse effect on the Company.
The Company reported net income of $1,743,000 and $1,146,000 for the years
ended December 31, 1995 and 1994, respectively. The table below presents the
Company's
consolidated net revenue and gross profit for those periods, and the estimated
portions thereof attributable to its continuing activities and the activities
that have been discontinued. For financial accounting purposes, the
discontinued
activities are considered to be a portion of the same business segment as
those
of the continuing activities and, accordingly, have not been reflected as a
discontinued operation in the Company's consolidated financial statements.
<TABLE>
1995 1994
<CAPTION>
(In Thousands
of Dollars)
<S> <C> <C>
Net revenue:
Continuing activities $ 9,564 $ 6,845
Discontinued activities - 314
Totals $ 9,564 $ 7,159
Gross profit:
Continuing activities $ 2,583 $ 1,746
Discontinued activities - (20)
Totals $ 2,583 $ 1,726
</TABLE>
Note 4 - License agreement:
Concurrent with the Company's announcement to discontinue manufacturing at the
Union Facility, the Company entered into a six-year licensing agreement with a
privately owned manufacturer (the "Licensee") of environmental conditioning
equipment. The terms of the agreement, among others, provide for:
the Licensee to manufacture and sell environmental test chambers and
other equipment under the Tenney name with the Company also retaining the
right to manufacture such products; the Company to receive license fees
(up to a maximum of $1,900,000) equal to 5% of qualifying sales during the
term of the agreement with specified
minimum amounts payable annually; an option for the Licensee to purchase the
Company's rights, title and interest in the Tenney trademark for $100,000 at
the end of the license term in the event the Company is no longer
manufacturing such products; the Company to perform all servicing and
installation of the aforementioned equipment; and perform other Company
obligations related to the Technology Transfer Agreement (see Note 14).
The agreement further requires the Licensee to purchase annually, from a
former subsidiary of the Company, depending on market conditions, certain
minimum amounts of inventory with cash payments thereon being made directly
to the Company (see Note 6).
In addition, the Company entered into a four-year consulting agreement with
the Licensee whereby, for an annual fee of $120,000, the Company will make
the services of the Company's president available to the Licensee for a
specified period of time (see Note 13).
In 1995 and 1994, the Company earned License fees of approximately $387,000
and $275,000, respectively. Net revenue for 1995 and 1994 includes consulting
revenue of $120,000. Purchases by the Licensee from the Company's former
subsidiary in 1995 and 1994 totaled approximately $9,500 and $2,400,
respectively.
Note 5 - Accounts receivable:
Accounts receivable consist of the following:
1995
(In Thousands
of Dollars)
Accounts receivable, billed $1,625
Due from Licensee, net 128
1,753
Allowance for doubtful accounts (38)
Totals $1,715
At December 31, 1995, sales recognized on the percentage of completion method
approximated $5,603,800.
Note 6 - Note receivable:
In December 1992, the Company sold all of the outstanding stock of its wholly-
owned insulated enclosure subsidiary, Gloekler Refrigerator Company
("Gloekler") for aggregate consideration of approximately $858,000, of which
$300,000 was cash. The balance was evidenced by installment receivables
which provide for payments by Gloekler either in cash or by credits issued
for inventory purchases through 2005. The receivables, which have been
discounted to reflect imputed interest are secured by a second lien on all of
Gloekler's assets including the common stock and are personally guaranteed
by the purchaser.
Note 7 - Inventories:
Inventories consist of the following:
1995
(In Thousands
of Dollars)
Raw materials $ 587
Work in process 34
621
Less:
Provision for write-downs to estimated
realizable value 310
Totals $ 311
Accumulated costs on long-term contracts recognized by the percentage of
completion method (see Note 5) were approximately $3,521,000 and $3,514,000
in 1995 and 1994, respectively.
Note 8 - Property and Equipment:
Property and equipment, which is stated at cost, is summarized as follows at
December 31, 1995:
1995
(In Thousands
of Dollars)
Property (see below) $ -
Equipment 1,264
Equipment under capital leases 324
1,588
Accumulated depreciation (1,277)
Total equipment - net $ 311
On December 12, 1994, in accordance with the Settlement Agreement, the Company
conveyed to First Fidelity Bank, N.A. (the "Bank") the title to all
real estate located in Union, New Jersey, with a net book value of
approximately $340,000 net of accumulated depreciation (see Note 9).
In conjunction with the conveyance of the property, the Company entered into
a Use and Occupancy Agreement for approximately 10,500 square feet of space at
an annual rental of $50,000 and 25% of building operating costs
(excluding real estate taxes), which was terminated on December 14, 1995.
On that date the Company entered into a three-year lease with the new owner of
the property for approximately 10,500 square feet at an annual rental
of $70,000. On January 12, 1996, the Company and the new owners entered an
amendment to the lease for an additional 8,000 square feet of space at an
annual rental of $20,000, occupancy not to take effect until July 1996.
In addition, the Company leases certain equipment for use in its operations
under capital leases. Property and equipment at December 31, 1995, included
capita leases of $324,000 and related accumulated depreciation of $106,000.
At December 31, 1995, the aggregate minimum rental commitments under non-
cancellable leases for the period shown are as follows:
<TABLE>
<CAPTION>
Year Capital Leases Operating Leases
(In Thousands of Dollars)
<S> <C> <C> <C>
1996 $ 85 $ 69
1997 51 90
1998 51 90
1999 49 -
2000 30 -
Total $ 266 $ 249
Less imputed interest 38
Present value of net lease payments $ 228
Less current installments 76
Long-term debt obligation at
December 31, 1995 $ 152
</TABLE>
Imputed interest was calculated using rates between 7.06% - 9.76%
Note 9 - Debt:
Debt maturing within one year consists of the following at December 31,
<TABLE>
<CAPTION>
1995 1994
(In Thousands of Dollars)
<S> <C> <C>
Notes payable - bank $ - $ 590
Current portion of capital leases 76 -
Current portion of pension obligation 36 -
Total $ 112 $ 590
</TABLE>
The Company was indebted to the Bank in the amount of $1,020,000 principal at
June 30, 1994, pursuant to a line of credit agreement evidenced by a
promissory note (the "Term Note"), the maturity date of which had been
extended from time to time. The Company was also indebted to the Bank in
the amount of $2,480,474 principal pursuant to a mortgage loan secured by
the Company's real property in Union, New Jersey. The Bank also had a
security interest in substantially all of the Company's other assets.
The Company and the Bank entered into a Settlement Agreement as at December
12, 1994, in which the Company conveyed the title to the real estate located
in Union, for a credit of $1,800,000 against the total indebtedness of
$3,758,663, the remaining balance of $1,958,663 was converted to a
non-interest Note due September 30, 1995, in the amount of $800,000,
payable $200,000 in December, 1994, and the balance of $600,000 due in nine
monthly non-interest-bearing amounts of $66,667, and forgiveness of debt
of $1,158,663. The original Term Note security in substantially all the
Company's assets remained in effect, until 93 days after the date of
the last payment. As at August 30, 1995, the Company paid the balance of
the Term Note. The forgiveness of $1,158,663 has been recognized, $289,666
during the fourth quarter of 1994 and the remaining $868,997 quarterly during
the first three quarters of 1995.
Long-term debt consists of the following at December 31,
1995
(In Thousands
of Dollars)
Capital lease obligations $ 228
Multi-employer pension obligation 581
Total long-term debt including
current maturities 809
Less: current maturities 112
Total long-term debt $ 697
Long-term liabilities consist of capital leases entered into for equipment of
$194,000 in 1995, and the long-term portion of the multi-employer pension fund
liability (see Note 3). The debt to mature under the multi-employer pension
fund liability is $37,000--1996; $37,000--1997; $37,000--1998; $37,000--1999;
$55,000--2000; and $388,300 thereafter.
Note 10 - Income taxes:
Effective January 1, 1993, the Company has adopted the Statement of Financial
Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for Income Taxes."
SFAS 109 requires the use of an asset and liability approach in accounting for
income taxes. Deferred tax assets and liabilities are recorded based on
differences between the financial statement and tax bases of assets and
liabilities at the tax rates in effect when these differences are expected to
reverse.
Deferred tax assets are reduced by a valuation allowance if, based on the
weight of available evidence, it is more likely than not that all or some
portion of the deferred tax assets will not be realized. The ultimate
realization of the deferred tax asset depends on the Company's ability
to generate sufficient taxable income in the future. While management
believes that the total deferred tax asset will eventually be fully realized
by future operations, as a result of the losses experienced prior to 1994,
management recorded a valuation allowance equal to 100% of the deferred tax
asset upon adoption of SFAS 109 on January 1, 1993. As a result, the
initial adoption of SFAS 109 has no impact on the Company's consolidated
financial statements.
At December 31, 1995, it was determined that the valuation allowance should be
reduced by $228,000. This determination was based primarily on the
improvement in the Company's net income during 1995 and 1994.
Accordingly, management believes that it is more likely than not that the
Company will generate sufficient taxable income to realize these
future tax benefits. The changes in the valuation allowance resulted
in the recording at December 31, 1995, of an income tax benefit of $214,000.
If the Company is unable to generate sufficient taxable income in the future,
increases in the valuation allowance will be required through a charge to
expense. If, however, the Company achieves sufficient profitability to
realize all of the deferred tax assets, the valuation allowance
will be further reduced and reflected as an income tax benefit in future
periods.
The components of the net deferred tax asset are as follows at
December 31, 1995:
(In Thousands
of Dollars)
Deferred tax assets:
Inventory reserve $ 105
Accounts receivable reserve 13
Deferred revenue 111
Deferred compensation 41
Deferred pension obligation 197
Tax loss carryforward 1,168
Total deferred tax assets 1,635
Deferred tax liabilities:
Depreciation (3)
Valuation allowance (1,404)
Total net deferred tax assets $ 228
In 1995 and 1994, the Company utilized net operating loss carryforwards of
$1,028,000 and $1,612,000, respectively. The income tax expense results from
the federal alternative tax which was allocated as follows:
1995 1994
(In Thousands
of Dollars)
Income before extraordinary item $ 8 $ 24
Extraordinary item 6 4
Current income tax expense 14 28
Deferred income tax benefit 228 -
Net income tax (benefit) $(214) $ 28
At December 31, 1995, the Company has available, for tax reporting purposes,
net operating loss carryforwards of approximately $3,400,000 which expire
through 2008.
A reconciliation of income tax provision at federal statutory rate to the
income tax provision at the effective tax rate as follows: The
effective rate for 1995 is 39% and for 1994 was 34%.
1995 1994
(In Thousands
of Dollars)
Income taxes computed at the federal
statutory rates $ 350 $ 628
State taxes (net of federal benefit) 60 165
Realization of benefits of tax loss
carryforwards (396) (765)
Reduction of valuation allowance (228) -
Net income tax (benefit) $(214) $ 28
Note 11 - Common stock:
On May 26, 1995, at the annual meeting, a new ten-year incentive stock option
plan for officers and key employees was approved and adopted. The plan
provided that options could be granted from time to time at a price
of not less than 100% of the fair market value of the common stock as of
the date of grant for officers and employees who own less than 10% of the
voting stock of the Company and 110% of fair market value for those officers
and employees who own more than 10% of the voting stock (affiliate employees).
Options granted are exercisable immediately and terminate no later than
ten years from date of grant (five years from date of grant for
affiliate employees). On June 1, 1995, the Board of Directors of the
Company granted and issued, to officers and key employees,
155,000 options under the 1995 ten-year incentive stock option plan for
officers and key employees. Certain employees with the right to
purchase 57,000 shares of stock under the 1991 ten-year incentive stock
option plan surrendered all outstanding options.
A summary of plan transactions follows:
Number of Option Price
Shares per Share
Outstanding and exercisable -
January 1, 1995 57,000 $.31250 - $.34375
Outstanding and exercisable -
June 1, 1995 155,000 $.23437 - $.25781
Cancelled (57,000) $.31250 - $.31250
Outstanding and exercisable -
December 31, 1995 155,000 $.23437 - $.25781
Note 12 - Retirement and pension plans:
The Company maintains a retirement plan for salaried employees (the
"Salaried Plan") which provides for defined benefits. The Company's funding
policy is to contribute annually at least the minimum amount required
by the Employee Retirement Income Security Act of 1974. In June 1989,
the Company amended the Salaried Plan so that benefits would no longer
accrue and subsequent to that date contributions have not been required due
to the overfunded status of the Salaried Plan. The Company accounted for
the curtailment in 1989 pursuant to Statement of Financial Accounting
Standards No. 88, "Employer's Accounting for Settlements
and Curtailments of Defined Benefit Plans and for Termination Benefits."
The following table sets forth the funded status of the Salaried Plan
assuming a discount rate of 7% at December 31, 1995:
1995
(In Thousands
of Dollars)
Actuarial present value of projected benefit obligation
including vested benefits of $587,000 $ 587
Plan assets at fair value, primarily insurance contracts 637
Plan assets in excess of projected benefit obligation
consisting entirely of unrecognized net gain $ 50
The expected long-term rate of return on assets was 7.5%.
Union employees were included in a separate multi-employer pension plan to
which the Company made monthly contributions in accordance with a
contractual union agreement based on monthly hours worked. There was no
related pension expense in 1995 and 1994. Due to the cessation of
manufacturing operations at the Company's Union, New Jersey, facility,
the Company ceased being a participant in the multi-employer pension plan in
February 1993 (see Note 3).
Note 13 - Commitments and contingencies:
Employment agreement:
In connection with the license agreement which provides for the Company to
receive $120,000 annually pursuant to a consulting agreement (see Note 4),
the Company entered into a four-year employment agreement with its president
which requires a minimum annual salary of $200,000 commencing in 1993.
Lease commitment:
DynaTenn, Inc. (d/b/a "DynaVac"), a wholly-owned subsidiary which
manufactures diversified industrial vacuum equipment, leases its facility
in Weymouth, Massachusetts under an operating lease which expires in April
1996. Rent charged to operations under this lease approximated $68,000 and
$60,000 in 1995 and 1994, respectively.
Tenney Engineering, Inc. leases its facility in Union, New Jersey under an
operating lease which expires in December 1998 (see Note 8). Rent charged
to operations under a Use and Occupancy Agreement (see Note 8) was $50,000
in 1995 and $2,083 in 1994.
Contingencies:
The Company is involved in various lawsuits. Other than the one explained
in Note 3, all the others are covered by insurance and subject to deductible
amounts. Management believes that the outcome of these lawsuits will not
have a material adverse effect on the Company's consolidated financial
condition.
Note 14 - Technology Transfer Agreement:
In April 1991, the Company entered into a Technology Transfer Agreement (the
"Technology Agreement") with an entity in the People's Republic of China for
an eight-year period. The Technology Agreement requires the Company to
provide certain technology to assist the purchaser in developing and producing
environmental chambers. Provisions of the Technology Agreement include time
tables during which the technology will be transferred and training will be
provided. In addition, should the purchaser be successful in developing and
producing products, of which there is no guarantee, the Technology Agreement
contains provisions relating to the future purchase of these products by the
Company and places restrictions on the purchaser's sale of products within the
Company's marketplace. In conjunction with the license agreement (see Note 4),
the Licensee agreed to perform certain of the Company's obligations under the
Technology Agreement, including the purchase of products.
The aggregate contract amount under the Technology Agreement is $1,200,000,
which is secured by a letter of guarantee. Payments occur upon the completion
of certain milestones and revenue is recognized as earned. Payments from this
contract totalled approximately $0, $0, $149,000, $165,000 and $360,000 in
1995, 1994, 1993, 1992 and 1991, respectively. During 1995 and 1994, the
Company recognized in net revenue approximately $0 and $20,000,
respectively, under the Technology Agreement. There were nominal expenses in
1995 and 1994.
Note 15 - Other income and (expense):
Other income and (expense) consist of the following:
1995 1994
(In Thousands
of Dollars)
Interest expense $ (74) $ (367)
Gain on:
Exchange of property in lieu
of foreclosure (A) - 1,460
Interest income 21 23
Other, net 40 43
Totals $ (13) $1,159
(A) On December 1, 1994, the Company entered into a Settlement Agreement with
the Bank, which in part required the Company to convey to the Bank the
title to the real estate, with a net book value of approximately
$340,000, for a credit against the total indebtedness of $1,800,000,
which resulted in a net gain of $1,460,000 for the year (see Note 9).
Note 16 - Extraordinary item
Extraordinary item consists of gain on restructuring of debt net of income
taxes. The Settlement Agreement also provided for the forgiveness of debt
to be forgiven quarterly when periodic quarterly payments totaling
$200,000 are made timely. The Company in December of 1994 made the
first required payment of $200,000, and recognized the forgiveness of
$224,000 principal and $65,000 interest forgiveness was netted against
interest expense for the year ended December 31, 1994. During
the first three quarters of 1995, the Company made timely payments of amounts
due under the Settlement Agreement and accordingly recognized approximately
$869,000 forgiveness of debt (see Note 9).
Note 17 - Major customer and concentrations of credit risk:
Major customer:
During the year ended December 31, 1995, the Company did not have any major
customer who contributed more than 10% of net revenue. There was one major
customer who accounted for net revenue in excess of 10% during the year ended
December 31, 1994.
Concentrations of credit risk:
The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash equivalents, accounts receivable and
inventories. The Company places its cash and cash equivalents in highly
liquid instruments with high credit quality financial institutions.
In general, the Company's accounts receivable result from its manufacturing
and servicing operations and reflect a broad customer base to primarily
large-sized companies both nationally and internationally. Also, the Company
routinely assesses the financial strength of its customers. As a
consequence, with the exception of the major customer noted above and amounts
due from the Licensee, concentrations of credit risk are limited.
The Company maintains cash balances at several financial institutions located
in the Northeast. Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $100,000. At December 31, 1995, the
Company's uninsured cash balances total approximately $23,000.
Note 18 - Supplemental schedule of noncash investing and financing activities:
During 1995 the Company recognized $869,000 in forgiveness of debt, in
addition entered into a five-year capital lease in the amount of $144,000
for computer equipment. In 1994, the Company exchanged property with a
book value of approximately $340,000 for a credit against its bank
indebtedness of $1,800,000. In addition, the Bank forgave approximately
$224,000 of principal indebtedness (see Notes 15 and 16).
* * *
Exhibit (3) a.(i)
Restated Certificate of Incorporation
of Tenney Engineering, Inc.
filed in the office of the Secretary of State
of the State of New Jersey
on June 12, 1984
RESTATED CERTIFICATE OF INCORPORATION
OF
TENNEY ENGINEERING, INC.
(Pursuant to Section 14A:9-5 of the
New Jersey Business Corporation Act)
FIRST: The name of the corporation is TENNEY
ENGINEERING, INC.
SECOND: The location of the principal office in this
state is at 1090 Springfield Road, Union, Union County, New Jersey.
The name of the agent therein and in charge thereof, upon whom
process against this corporation may be served is Walter Gottesman.
THIRD: The objects for which and for each of which this
corporation is formed are as follows:
1. To plan, design, buy, sell, construct, manufacture,
repair and install apparatus, appliances, instruments and
machinery of every kind and description necessary or incident
to the business of manufacturing, selling and dealing in
bread, biscuits, crackers, pastries, cakes, pies,
confectionery, ice creams and ices, sherbets, fruit juices,
extracts and beverages.
2. To plan, design, buy, sell, construct, manufacture,
repair and install apparatus, appliances, instruments and
machinery of every kind and systems used in the regulation of
temperature, moisture and other conditions of air, and in the
drying and moistening of materials and in the regulation or
control of the same or allied instruments and systems
pertaining in any manner to the art, science or business of
air conditioning.
3. To carry on any other manufacturing, trading or
selling business of any kind and character whatsoever.
4. To apply for, obtain, register, purchase, lease, or
otherwise to acquire, and to hold, own, use, operate,
introduce and to sell, assign, or otherwise dispose of any and
all inventions, improvements and processes used in connection
with, or secured under, Letters Patent of the United States,
and of any and all foreign countries, and incorporal rights
of all kinds; and to use, exercise, develop, grant licenses
in respect of, or otherwise to turn to account any such trade-
marks, patents, licenses, concessions, processes and the like,
or any such property rights and information so acquired, and
with a view to the working and development of the same, to
carry on any business whether manufacturing or otherwise,
which the corporation may deem proper or convenient, directly
or indirectly, to effectuate these objects.
5. To acquire the good-will, rights and property of any
kind, and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation,
and pay for the same in cash, stock of the corporation, bonds
or otherwise.
6. To issue its shares of stock, bonds and other
obligations in payment or property; to mortgage or pledge any
property which may be owned or acquired by it, or in which it
may be interested.
7. The corporation shall also have power to conduct its
business in all its branches, have one or more offices, and
unlimitedly to hold, purchase, mortgage and convey real and
personal property in any state, territory or colony of the
United States, and in any foreign country or place.
8. To design, create and manufacture means and methods
of simulating conditions of the earth's atmosphere, the
stratosphere and the regions beyond and into Space; to design,
create and manufacture instruments and chambers for the
simulation, testing, measurement and control of temperature,
pressure, weight, humidity and cosmic or other rays, and all
other conditions and objects found or present in the earth's
atmosphere, the stratosphere and in the regions beyond and
into Space; to design, create and manufacture all manner and
means of testing apparatus; to do research, pure and applied,
and to design, create and manufacture products or objects, or
develop discoveries, resulting from research either of this
company or of other persons or firms; to design, create and
manufacture all manner of instruments, stationary or
otherwise, to simulate, study and test all conditions or
objects in air and space, including the reactions of animals,
human or otherwise, and of inanimate objects, to conditions
or objects in air and space; to design, create, and
manufacture methods and means of simulating, studying and
controlling, the physical and chemical characteristics of
elements and other objects present or found in air or Space;
to design, create and manufacture methods and means of
controlling or modifying atmospheric phenomena.
9. The corporation shall have the power to borrow money;
to issue bonds, debentures or other obligations of the
corporation, secured or unsecured, and to include therein such
provisions as to redeemability, convertibility subordination
or otherwise, as the Board of Directors may determine.
10. To indemnify any person made a part to any action,
suit or proceeding, by reason of the fact that he, his
testator or intestate, is or was a director, officer or
employee of the corporation, or of any firm, corporation, or
association which he served as such at the request of the
corporation, against the reasonable expenses (including
attorney's fees and, to the extent permitted by law, any
amount paid in settlement) actually and necessarily incurred
by him in connection with the defense of such action, suit or
proceeding, or in connection with any appeal therein, except
in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such officer, director
or employee is liable for negligence or misconduct in the
performance of his duties, all to the extent and in the manner
permitted by law.
11. To do all and everything necessary, suitable, and
proper for the accomplishment of any of the purposes, or the
attainment of any of the objects, or the furtherance of any
of the powers hereinbefore set forth, either along or in
association with other corporations, firms, or individuals,
and to do every other act or acts, thing or things, incidental
or appurtenant to or growing out of or connected with the
aforesaid business or powers, or any part or parts thereof.
12. The purposes specified herein shall be construed both
as purposes and powers and shall be in no wise limited or
restricted by reference to, or inference from, the terms or
any other clause in this or any other article, but the
purposes and powers specified in each of the clauses herein
shall be regarded as independent purposes and powers and the
enumeration of specific purposes and powers shall not be
construed to limit or restrict in any manner the meaning of
general terms or of the general powers of the corporation; nor
shall the expression of one thing be deemed to exclude
another, although it be of like nature not expressed.
FOURTH: The total authorized capital stock of this
corporation is as follows:
(a) Ten million (10,000,000) shares of common stock
having a par value of .10 per share. The holders
of common stock shall be entitled to one vote for
each share of stock held.
(b) One million shares of preferred stock having
a par value of $1.00 per share. The Board of
Directors may provide for the issuance of such
preferred stock in one or more series, each series
to have such voting powers, full or limited, or no
voting powers, such designations, preferences and
relative participating, optional or other special
rights, and such qualifications, limitations, or
restrictions thereof, and to be subject to such
terms of redemption, if any, as shall be specified
by the Board of Directors when the same is issued.
(c) None of the shares of stock issued by this
Company will have any preemptive rights.
FIFTH: The Board of Directors is presently comprised of
seven Directors. The names and addresses of the present directors
are as follows:
Name Address
Saul S. Schiffman 1090 Springfield Road, Union, New Jersey
Robert S. Schiffman 1090 Springfield Road, Union, New Jersey
David C. Schiffman 1090 Springfield Road, Union, New Jersey
Walter Gottesman 1090 Springfield Road, Union, New Jersey
Robert H. Brown 1090 Springfield Road, Union, New Jersey
Louis Maier 1090 Springfield Road, Union, New Jersey
Seymour B. Sternbach 1090 Springfield Road, Union, New Jersey
SIXTH: The duration of the corporation shall be
perpetual.
SEVENTH: The business and affairs of the corporation
shall be managed by the Board of Directors. The authorized number
of Directors of the corporation shall not be less than three nor
more than eleven. The exact number of Directors shall be as
determined from time to time solely by the Board of Directors and
in the absence of such determination, such number shall be seven.
The Directors shall be classified with respect to the term for
which they shall hold office by being divided into three classes
which shall be as nearly equal in number as possible. The
authorized number of Directors in each class shall be fixed from
time to time by the Board of Directors.
The term of the Directors elected at the annual meeting of the
shareholders held in 1984 of the first class shall expire at the
annual meeting of shareholders to be held in 1985, that of the
second class at the annual meeting of shareholders to be held in
1986, and that of the third class to be held at the annual meeting
of shareholders in 1987. At each annual meeting of shareholders
held after 1984, the Directors elected to succeed those whose terms
have expired at such annual meeting shall be elected to hold office
until the third succeeding annual meeting after their election,
except as hereinafter provided. Notwithstanding the foregoing,
each Director shall hold office until his successor shall have been
duly elected and qualified, unless he shall resign, become
disqualified, disabled, or shall be removed in accordance with this
Article SEVENTH.
If the authorized number of Directors is changed, any newly
created directorships or any decrease in directorships shall be so
apportioned among the classes so as to make all classes as nearly
equal in number as possible. No decrease in the number of
Directors constituting the Board of Directors shall shorten the
term of any incumbent Director.
Any Director may be removed from office, but only for cause
(i) at a meeting of shareholders, by the affirmative vote of the
holders of at least seventy-five percent (75%) of the outstanding
shares of capital stock of the corporation entitled to vote for
the election of Directors or (ii) by the affirmative vote of a
majority of the Directors then in office.
Any vacancy in the Board of Directors resulting from an
increase in the authorized number of Directors, the death,
resignation, retirement, disqualification, removal from office of
any Director, failure of the shareholders to fill a directorship,
or other cause may be filled by the affirmative vote of a majority
of the Directors then in office, even though less than a quorum of
the Directors, or by a sole remaining Director, and any Director
so elected shall hold office until the next succeeding Annual
Meeting of Shareholders and until his successor shall be elected
and qualify; provided, that if any Director is removed by the
shareholders, the shareholders may, at the meeting at which such
removal is effected, fill the resulting vacancy; and provided
further that any other vacancy in the Board of Directors existing
at the time of any meeting of the shareholders (including, without
limitation, any vacancy resulting from expiration at an Annual
Meeting of Shareholders of a term of a Director previously elected
by the Board of Directors to fill a vacancy in a class of Directors
whose term is to expire after such meeting) may be filled by the
shareholders at such meeting. Any Director elected by the
shareholders to fill any vacancy shall continue in office until the
Annual Meeting of the shareholders at which the term of the class
to which such Director was elected expires and until his successor
shall have been elected and qualified.
The Board of Directors shall have power to hold its meetings
and to keep the books of the corporation within or without the
State of New Jersey at such place or places as may be from time to
time designated by the By-Laws or by resolution of the Board of
Directors.
Any director of the corporation shall not, in the absence of
fraud, be disqualified by this office in dealing or contracting
with the corporation either as a vendor, purchaser, or otherwise,
nor in the absence of fraud shall any transaction or contract of
the corporation be voided or voidable by reason of the fact that
any director, or any firm of which any director is a member, or any
other corporation of which any director is a shareholder, officer
or director is in any way interested in such transaction or
contract.
The corporation reserves the right to alter, amend or repeal
any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by statute. All rights
conferred on shareholders herein are granted subject to this
reservation.
Subject always to the By-Laws made by the shareholders, the
Board of Directors may make By-Laws; but any By-Laws made by the
Board of Directors may be altered or repealed by the shareholders
at any annual meeting or at any special meeting, provided notice
of such proposed alteration or repeal be included in the notice of
such meeting.
EIGHTH: (1) Except as provided to the contrary
elsewhere in this Article, any proposed amendment to the
Certificate of Incorporation shall be adopted upon receiving the
affirmative vote of a majority of the votes cast by holders of
shares entitled to vote thereon and, in addition, if any class or
series of shares is entitled to vote thereon as a class, the
affirmative vote of a majority of the votes cast in each class
vote. The affirmative vote of at least seventy-five percent (75%)
of each such class of the stock of the corporation entitled to vote
thereon shall be required for any of the following actions:
(a) any merger or consolidation of the corporation with
one or more other corporations required by law to be approved
by the shareholders (regardless of which is the surviving
corporation);
(b) any sale, lease or exchange of all or substantially
all of the assets of the corporation to or with one or more
other corporations, persons, partnership, or other entities;
(c) any amendment to, repeal of, or adoption of any
provision affecting or inconsistent with Article SEVENTH, this
Paragraph (1), or Paragraph (2) of Article EIGHTH of this
Certificate of Incorporation;
(d) any amendment or repeal of the By-Laws of the
corporation;
except that any such action that has been approved by resolution
adopted by at least a majority of the Directors then in office may
be authorized by at least a majority of the votes cast by the
holders of shares of the corporation entitled to vote thereon, and,
in addition, if any class is entitled to vote thereon as a class,
the affirmative vote of at least a majority of the votes cast by
each such class.
(2) No action required or permitted to be taken at a meeting
of the shareholders by law, this Certificate of Incorporation or
by By-Laws of the corporation may be taken without a meeting except
upon the written consent of all of the shareholders entitled to
vote thereon.
(3) Subject to Paragraph (6) of this Article EIGHTH, the
affirmative vote of the holders of at least eighty-five percent
(85%) of the outstanding shares of the capital stock of the
corporation entitled to vote thereon shall be required for the
adoption or authorization of a "Business Combination" (as
hereinafter defined) with any "Other Entity" (as hereinafter
defined) if, as of the record date for the determination of
shareholders entitled to notice thereof and to vote thereon, such
Other Entity is the beneficial owner, directly or indirectly, of
at least twenty percent (20%) of the outstanding shares of stock
of the corporation entitled to vote for the election of Directors,
considered for the purposes of this Article EIGHTH as one class;
provided that such eighty-five percent (85%) voting requirement
shall not be applicable if:
(a) the cash, or fair market value of other
consideration, to be received per share by common shareholders
of the corporation in such Business Combination bears the same
or a greater percentage relationship to the market price of
the corporation's common stock immediately prior to the
announcement of such Business Combination as the highest per
share price (including brokerage commission and/or soliciting
dealers' fees) which such Other Entity has theretofore paid
for any of the shares of the corporation's common stock
already owned by it bears to the market price of the common
stock of the corporation immediately prior to the time when
the Other Entity began to acquire the corporation's common
stock;
(b) The cash, or fair market value of other
consideration, to be received per share by common shareholders
of the corporation in such Business Combination is not less
than the highest per share price (including brokerage
commissions and/or soliciting dealers' fees) paid by such
Other Entity in acquiring any of its holdings of the
corporation's common stock;
(c) After such Other Entity has acquired at least a
twenty percent (20%) interest and prior to the consummation
of such Business Combination: (i) such Other Entity shall
have taken steps to insure that the corporation's Board of
Directors included at all times representation by "Independent
Directors" (as hereinafter defined) proportionate to the
stockholdings of the corporation's common shareholders not
affiliated with such Other Entity (with an Independent
Director to occupy any resulting fractional Board position);
(ii) there shall have been no reduction in the rate of cash
dividends, if any, payable on the corporation's common stock
except as necessary to insure that a quarterly dividend
payment does not exceed ten percent (10%) of the net income
of the corporation for the four full consecutive fiscal
quarters immediately preceding the declaration date of such
dividend, or except as may have been approved by an unanimous
vote of the Directors; (iii) such Other Entity shall not have
acquired any newly issued shares of stock, directly or
indirectly, from the corporation (except as a result of a pro
rata stock dividend or stock split); and (iv) such Other
Entity shall not have acquired any additional shares of the
corporation's outstanding common stock except as a part of the
transaction which results in such Other Entity acquiring its
interest of at least twenty percent (20%);
(d) Such Other Entity shall not have received a benefit,
directly or indirectly (except proportionately as a
stockholder) of any loans, advances, guarantees, pledges or
other financial assistance or tax credits provided by the
corporation, nor shall any major change in the corporation's
business or equity capital structure have been made, without
the unanimous approval of the Directors prior to the
consummation of such Business Combination; and
(e) Such Other Entity shall have mailed to the
shareholders of the corporation not affiliated with such Other
Entity, for the purpose of soliciting stockholder approval of
such Business Combination, a proxy statement responsive to the
requirements of the Securities Exchange Act of 1934, as
amended, which shall contain prominently therein any
recommendations as to the advisability (or inadvisability) of
the Business Combination which the Directors, or any of them,
may choose to state and, if deemed advisable by a majority of
the Independent Directors, an opinion of a reputable
investment banking firm as to the fairness (or not) of the
terms of such Business Combination, from the point of view of
the shareholders of the corporation not affiliated with such
Other Entity (such investment banking firm to be selected by
a majority of the Independent Directors and to be paid a
reasonable fee for the services by the corporation upon
receipt of such opinion).
The provisions of this Article EIGHTH shall apply also to a
Business Combination with any Other Entity which at any time has
been the beneficial owner, directly or indirectly, of at least
twenty percent (20%) of the outstanding shares of stock of the
corporation entitled to vote in elections of Directors considered
for the purposes of this Article EIGHTH as one class,
notwithstanding the fact that such Other Entity has reduced its
shareholding below twenty percent (20%), if, as of the record date
for the determination of shareholders entitled to notice of and to
vote on or consent to the Business Combination, such Other Entity
is an "Affiliate" (as hereinafter defined) of the corporation.
(4) For purposes of this Article EIGHTH,
(a) the term Other Entity" shall include any
corporation, person or entity and any entity with which it or
its "Affiliate" or "Associate" (as defined below) has any
agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or
disposing of stock of the corporation, or which is its
Affiliate or Associate (as hereinafter defined), together with
the successors and assigns of such persons in any transaction
or series of transactions not involving a public offering of
the corporation's stock within the meaning of the Securities
Act of 1933, as amended;
(b) An Other Entity shall be deemed to be the beneficial
owner of any shares of stock of the corporation which such
Other Entity has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or
options, or otherwise;
(c) The outstanding shares of any class of stock of the
corporation shall include shares deemed owned through
application of clause (b) above but shall not include any
other shares which may be issuable pursuant to any agreement,
or upon exercise of the conversion rights, warrants or options
or otherwise;
(d) The term "Business Combination" shall include any
merger or consolidation of the corporation with or into any
other corporation, or the sale or lease of all or any
substantial part of the assets of the corporation to any other
corporation, or any sale or lease to the corporation or any
subsidiary thereof in exchange for securities of the
corporation of any assets (except assets having an aggregate
fair market value of less than $2,000,000) of any Other
Entity;
(e) The term "Independent Director" shall mean a person
who was a member of the Board of Directors of the corporation
elected by the shareholders prior to the time that such Other
Entity acquired an excess of ten percent (10%) of the stock
of the corporation entitled to vote in the election of
Directors, or a person nominated to succeed an Independent
Director by a majority of Independent Directors then serving
on the Board of Directors;
(f) For the purpose of Subparagraphs 3(a) and (b) of
this Article EIGHTH, the phrase "other consideration to be
received" shall include common stock of the corporation
retained by its shareholders not affiliated with such Other
Entity in the event of a Business Combination with such Other
Entity in which the corporation is the surviving corporation;
and
(g) The terms "Affiliate" and "Associate" shall mean an
"affiliate" or "associate," respectively, as these terms are
defined in Rule 12b-2 of the General Rules and Regulations
promulgated under the Securities Exchange Act of 1934 as in
effect on January 1, 1984.
(5) A majority of the Independent Directors shall have the
power and duty to determine for the purpose of this Article EIGHTH
on the basis of information known to them whether (a) an Other
Entity beneficially owns at least twenty percent (20%) of the
outstanding shares of stock of the corporation entitled to vote in
elections of Directors, (b) an Other Entity is an Affiliate or
Associate of another, (c) an Other Entity has an agreement,
arrangement or understanding with another, or (d) the assets being
acquired by the corporation, or any subsidiary thereof have an
aggregate fair market value of less than $2,000,000.
(6) The eighty-five percent (85%) vote for the adoption or
authorization of a Business Combination with any Other Entity shall
not be required if the Board of Directors, by resolution adopted
by at least a majority of the Directors then in office, including
at least a majority of the Directors who would be eligible to serve
as "Independent Directors" within the meaning of Paragraph (4)(e)
of this Article EIGHTH, recommends such Business Combination. In
such an event, the proposed Business Combination may be adopted or
authorized by the affirmative vote of at least a majority of the
votes cast by the holders of shares entitled to vote thereon, and,
in addition, if any class is entitled to vote thereon as a class,
the affirmative vote of at least a majority of the votes cast by
each such class.
(7) The affirmative vote of the holders of at least eighty-
five percent (85%) of the outstanding shares of capital stock of
the corporation entitled to vote for the election of Directors
shall be required for any amendment to, repeal of or adoption of
any provision affecting or inconsistent with any or all of
Paragraphs (3) through (7), inclusive, of this Article EIGHTH
provided that this Paragraph (7) shall not apply to, and such
eighty-five percent (85%) vote or consent shall not be required
for, any amendment or repeal recommended to the shareholders by
resolution adopted by at least a majority of the Directors then in
office, including at least a majority of the Directors who would
be eligible to serve as "Independent Directors" within the meaning
of Paragraph (4)(e) of this Article EIGHTH. In the event of such
a recommendation to the shareholders, any proposed amendment shall
be adopted upon receiving the affirmative vote of the majority of
the votes cast by the holders of shares entitled to vote thereon
and, in addition, if any class or series of shares is entitled to
vote thereon as a class, the affirmative vote of a majority of the
votes cast by each class.
(8) Nothing contained in this Article EIGHTH shall be
construed to relieve any Other Entity from any fiduciary obligation
imposed by law.
IN WITNESS WHEREOF, we have hereunto set our hands and seals
this 18th day of May, 1984.
s/Robert S. Schiffman
Robert S. Schiffman
President
Corporate Seal
ATTEST:
s/Walter Gottesman
Walter Gottesman
Secretary
CERTIFICATE OF ADOPTION
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
TENNEY ENGINEERING, INC.
TENNEY ENGINEERING, INC., originally incorporated on
October 19, 1932 under "An Act Concerning Corporations (Revision
of 1896)" and subsequently reconstituted as of September 20, 1958
pursuant to the provisions of the New Jersey Business Corporation
Act, desiring to restate and integrate into a single certificate
all of the provisions of its Certificate of Incorporation as
heretofore amended, does hereby certify as follows:
1. The name of the corporation is TENNEY ENGINEERING,
INC.
2. The Restated Certificate of Incorporation of Tenney
Engineering, Inc., attached hereto and filed herewith, was duly
adopted by the Board of Directors at a meeting held on May 11,
1984.
IN WITNESS WHEREOF, TENNEY ENGINEERING, INC. has caused
its corporate seal to be affixed hereto and this instrument to be
signed in its name by its President and attested by its Secretary,
on May 18, 1984.
TENNEY ENGINEERING, INC.
CORPORATE SEAL By: s/Robert S. Schiffman
Robert S. Schiffman
President
ATTEST:
s/Walter Gottesman
Walter Gottesman
Secretary
CERTIFICATE OF ADOPTION
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
TENNEY ENGINEERING, INC.
TENNEY ENGINEERING, INC., originally incorporated on
October 19, 1932 under "An Act Concerning Corporations (Revision
of 1896)" and subsequently reconstituted as of September 20, 1958
pursuant to the provisions of the New Jersey Business Corporation
Act, desiring to restate and integrate into a single certificate
all of the provisions of its Certificate of Incorporation as
heretofore amended, does hereby certify as follows:
1. The name of the corporation is TENNEY ENGINEERING,
INC.
2. The Restated Certificate of Incorporation of Tenney
Engineering, Inc., attached hereto and filed herewith, was duly
adopted by the Board of Directors at a meeting held on May 11,
1984.
IN WITNESS WHEREOF, TENNEY ENGINEERING, INC. has caused
its corporate seal to be affixed hereto and this instrument to be
signed in its name by its President and attested by its Secretary,
on May 18, 1984.
TENNEY ENGINEERING, INC.
CORPORATE SEAL By: s/Robert S. Schiffman
Robert S. Schiffman
President
ATTEST:
s/Walter Gottesman
Walter Gottesman
Secretary
Exhibit (3) a.(ii)
Amendment to Certificate
of Incorporation
dated May 13, 1988
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
TENNEY ENGINEERING, INC.
A. The name of the corporation is:
TENNEY ENGINEERING, INC.
B. The amendment adopted is as follows:
The following new Article NINTH is hereby added to the
Certificate of Incorporation:
"NINTH: (1) A director or officer of the corporation
shall not be personally liable to the corporation or its
shareholders for damages for breach of any duty owed to the
corporation or its shareholders, except to the extent that
such limitation of personal liability is specifically
prohibited by the New Jersey Business Corporation Act (the
"Act"). The limitation of liability granted by this Article
NINTH shall apply to acts or omissions occurring after the
date on which this Article NINTH becomes effective and, to the
extent not prohibited by the Act or otherwise by law,
occurring on or prior to such effective date.
"(2) If the Act is amended hereafter further to
eliminate or limit the circumstances in which directors
and officers are personally liable, then the personal
liability of the Corporation's directors and officers
shall, without further corporate action, be eliminated
or limited to the fullest extent allowed by the Act, as
amended.
"(3) Any repeal or modification of this Article
NINTH shall not adversely affect any right or protection
granted by this Article NINTH to any person who has
served as a director or officer of the Corporation, with
respect to any act or omission occurring prior to such
repeal or modification."
C. The foregoing amendment was adopted by the
Shareholders on May 13, 1988.
D. At the time of the adoption of the aforesaid
amendment, the number of shares entitled to vote was 3,622,413
shares of common stock.
E. The number of shares for and against the amendment
was as follows:
For: 2,690,993
Against: 78,894
IN WITNESS WHEREOF, Tenney Engineering, Inc. has caused
this Certificate to be signed by its President and attested by its
Secretary and its seal to be affixed this 13th day of May, 1988.
TENNEY ENGINEERING, INC.
By: s/Robert S. Schiffman
Robert S. Schiffman,
President
Attest:
s/Walter Gottesman
Walter Gottesman,
Secretary
Exhibit (3) b.(i)
By-Laws of Tenney Engineering, Inc.
(As restated by order of the Board of Directors
at a meeting held May 11, 1984)
TENNEY ENGINEERING, INC.
BY-LAWS
(As restated by order of the Board of Directors
at a meeting held May 11, 1984)
1. OFFICES. The principal office shall be located at
1090 Springfield Road, Union, New Jersey. The corporation may also
have an office or offices at such other place or places within or
without the State of New Jersey as the Board of Directors may from
time to time appoint.
2. ANNUAL MEETING. The annual meeting of the
stockholders for the election of directors and the transaction of
such other business as may come before the shareholders for action
shall be held within or without this state on such day and at such
place and time as may be designated by resolution of the Board of
Directors.
3. SPECIAL MEETINGS. Special meetings of stockholders
for any purpose other than those regulated by statute shall be held
upon the call of the Chairman, President or Board of Directors
within or without this state on such day and at such place and time
as the officer or Board of Directors calling the meeting shall
designate in the call.
4. NOTICE. Notice of annual and special meetings shall
be given by serving a copy thereof, either personally or by mail
upon each stockholder of record entitled to vote thereat, not less
than ten (10) nor more than sixty (60) days before the meeting.
Notice, if mailed, shall be directed to each stockholder at the
address last filed by him in writing with the Secretary for that
purpose, or if no such address shall have been so filed, then
directed to him at his address as it appears on the stock book.
5. QUORUM. The holders of stock entitled to cast a
majority of the votes at a meeting shall constitute a quorum at
such meeting. Less than such a quorum, however, shall have power
to adjourn any meeting from time to time, without further notice.
6. ORGANIZATION. Meetings of stockholders shall be
presided over by the President, or in his absence, the Vice
President, or in the absence of the Vice President, by a chairman
to be elected by a majority of the stockholders present. The
Secretary of the Company shall act as Secretary of all meetings,
or in his absence, the Chairman may appoint any person to act as
such.
7. VOTING. At every meeting of stockholders, each
common stockholder of record shall be entitled to one vote for
every share of stock standing in his name on the books of the
corporation.
8. WAIVER OF NOTICE. Whenever under any provision of
these by-laws or of the corporate laws the corporation is
authorized to take any action at a meeting of stockholders entitled
to vote, after notice to such stockholders or after the lapse of
a prescribed period of time, such action may be taken at the
meeting without notice and without the lapse of any period of time,
if the required notice and lapse of time be waived in writing by
every stockholder entitled to vote at such meeting or by his
attorney thereunto authorized.
DIRECTORS
9. ELECTION AND REMOVAL. The business and affairs of
the corporation shall be managed by the Board of Directors. The
authorized number of directors of the corporation shall not be less
than three (3) nor more than eleven (11). The exact number of
directors shall be as determined from time to time solely by the
Board of Directors and in the absence of such determination, such
number shall be seven. The directors shall be classified with
respect to the term for which they shall hold office by being
divided into three classes which shall be as nearly equal in number
as possible. The authorized number of directors in each class
shall be fixed from time to time by the Board of Directors. The
term of the directors elected at the annual meeting of the
shareholders held in 1984 of the first class shall expire at the
annual meeting of shareholders to be held in 1985, that of the
second class at the annual meeting of shareholders to be held in
1986, and that of the third class at the annual meeting of
shareholders to be held in 1987. At each annual meeting of
shareholders held after 1984, the directors elected to succeed
those whose terms have expired at such annual meeting shall be
elected to hold office until the third succeeding annual meeting
after their election, except as hereinafter provided.
Notwithstanding the foregoing, each director shall hold office
until his successor shall have been duly elected and qualified,
unless he shall resign, become disqualified, disabled, or shall be
removed in accordance with these By-Laws. If the authorized number
of directors is changed, any newly created directorships or any
decrease in directorships shall be so apportioned among the classes
so as to make all classes as nearly equal in number as possible.
No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director. Any
director may be removed from office, but only for cause (i) at a
meeting of stockholders, by the affirmative vote of the holders of
at least a seventy-five percent (75%) of the outstanding shares of
capital stock of the corporation entitled to vote for the election
of directors or (ii) by the affirmative vote of a majority of the
directors then in office.
10. MEETINGS. The directors may hold their meetings and
have one or more offices, and keep the books of the corporation
within or outside of the State of New Jersey at such places as they
may from time to time determine by resolution of the Board.
Meetings of the directors shall be held without notice immediately
after each annual election and whenever called by the Chairman, the
President, or a majority of the Board, upon two days' notice
mailed, telegraphed or delivered to each director. Any meeting of
the Board of Directors at which a quorum is present shall be deemed
a regularly called meeting, if those directors not present thereat
shall waive notice thereof in writing either before or after the
meeting. Any action of the Board of Directors may be taken without
a meeting thereof, by obtaining the unanimous consent thereto of
all the directors, in writing.
11. QUORUM. One-third of the entire Board of Directors
or any committee thereof, but not less than two persons, shall
constitute a quorum, unless any such committee shall consist of one
director, in which case one director shall constitute a quorum.
Less than such a quorum, however, shall have power to adjourn any
meeting from time to time, without notice.
12. VACANCIES. Any vacancy in the Board of Directors
resulting from an increase in the authorized number of directors,
the death, resignation, retirement, disqualification, removal from
office of any director, failure of the shareholders to fill a
directorship, or other cause may be filled by the affirmative vote
of a majority of the directors then in office, even though less
than a quorum of the directors, or by a sole remaining director,
and any director so elected shall hold office until the next
succeeding annual meeting of stockholders and until his successor
shall be elected and qualify; provided, that if any director is
removed by the stockholders, the stockholders may, at the meeting
at which such removal is effected, fill the resulting vacancy; and
provided further that any other vacancy in the Board of Directors
existing at the time of any meeting of the stockholders (including,
without limitation, any vacancy resulting from expiration at an
annual meeting of stockholders of a term of a director previously
elected by the Board of Directors to fill a vacancy in a class of
directors whose term is to expire after such meeting) may be filled
by the stockholders at such meeting. Any director elected by the
stockholders to fill any vacancy shall continue in office until the
annual meeting of the stockholders at which the term of the class
to which such director was elected expires and until his successor
shall have been elected and qualified.
13. COMMITTEES. The Board of Directors, by resolution
adopted by a majority of the entire Board, may appoint from among
its members an executive committee and one or more other
committees, each of which shall have one or more members. To the
extent provided in such resolution, each such committee shall have
and may exercise all the authority of the Board, except that no
such committee shall:
(a) make, alter or repeal any by-law of the
corporation;
(b) elect or appoint any director, or remove any
officer or director;
(c) submit to stockholders any action that requires
stockholders' approval; or
(d) amend or repeal any resolution theretofore
adopted by the Board which by its terms is
amendable or repealable only by the Board.
The Board, by resolution adopted by a majority of the entire board,
may:
(a) fill any vacancy in any such committee;
(b) appoint one or more directors to serve as
alternate members of any such committee, to act
in the absence or disability of members of any
such committee with all the powers of such
absent or disabled members;
(c) abolish any such committee at its pleasure; and
(d) remove any director from membership on such
committee at any time, with or without cause.
Actions taken at a meeting of any such committee shall be reported
to the Board at its next meeting following such committee meeting;
except that, when the meeting of the Board is held within two days
after the committee meeting, such report shall, if not made at the
first meeting, be made to the Board at its second meeting following
such committee meeting. The designation of any such committee and
the delegation thereto of authority shall not operate to relieve
the Board, or any member thereof, of any responsibility imposed by
law.
OFFICERS
14. DESIGNATION AND POWER. The Board of Directors, as
soon as may be after their election each year, shall appoint a
President, one of their number to be Chairman of the Board of
Directors, and shall also appoint a Secretary and a Treasurer. All
officers shall serve for one year, or until the annual election
next succeeding. The Board of Directors may also appoint one or
more Vice Presidents, a Customer Services Manager, and from time
to time such other officers, agents and employees as it may deem
necessary. The directors may require any officer, agent or
employee to give security for the faithful performance of his duty
in such sums and with such surety or sureties as the Board may deem
proper. The Board may designate which one of the Chairman or
President shall act as chief executive officer of the corporation
and which one of them shall act as chief operating officer of the
corporation, and, subject to the control of the Board, the officers
of the corporation shall have such powers and perform such duties
as usually pertain to their respective offices, as well as such
powers and duties as from time to time may be prescribed by the
Board. The same person may be appointed to more than one office.
15. REMOVAL. All officers, agents and employees shall
be subject to removal at any time without cause assigned by Board
of Directors.
16. VACANCIES. If the position of any officer becomes
vacant at any time for any reason, the same may be filled by the
Board of Directors for the remainder of that term.
17. CHECKS. All checks, drafts, notes, contracts and
other documents shall be executed on behalf of the corporation by
such officer or officers, employee or employees thereof as the
Board of Directors shall direct.
CAPITAL STOCK
18. TRANSFER OF STOCK. Transfers of stock shall be made
on the books of the corporation only by the person named in the
certificate or by attorney lawfully constituted in writing, and
upon surrender of the certificate therefor.
19. AMENDMENTS TO BY-LAWS. These By-Laws may be altered
or amended or added to or repealed by the Board of Directors.
20. FISCAL YEAR. The fiscal year of the corporation
shall be the calendar year.
Exhibit (3) b.(ii)
Amendment to By-Laws
adopted January 26, 1988
BOARD MEETING OF 1/26/88
RESOLVED, that the By-Laws of the Corporation be, and the same
hereby are, amended by adding at the end thereof a new caption and
paragraph 21, reading as follows:
"INDEMNIFICATION
"21. INDEMNIFICATION OF OFFICERS AND DIRECTORS. The
corporation shall indemnify the officers and directors with
respect to all matters to which Section 14A:3-5 of the New
Jersey Business Corporation Act may in any way relate, to the
full extent permitted or allowed by the law of New Jersey,
whether or not specifically required, permitted or allowed by
said Section 14A:3-5."
Exhibit (10) b.(i)
Stock Options dated June 1, 1995
granted pursuant to the Company's 1995
Incentive Stock Option Plan to the
following director and officers:
Robert S. Schiffman (Director and Officer)
Martin Pelman (Officer)
June 1, 1995
Mr. Robert S. Schiffman
c/o Tenney Engineering, Inc.
1090 Springfield Road
Union, New Jersey 07083
Dear Mr. Schiffman:
The 1995 Incentive Stock Option Plan (the "Plan") of Tenney
Engineering, Inc. (the "Company") has been adopted by the Board of
Directors and approved by the stockholders of the Company at the
Shareholder's meeting held May 26, 1995. A copy of the Plan is
furnished to you herewith as is a Prospectus dated May 26, 1995,
the 1994 Annual Report to Shareholders, and the report on Form 10-
QSB for the first quarter of 1995 filed with the Securities and
Exchange Commission.
We are pleased to inform you that you are hereby, on the date
hereof, granted a Stock Option pursuant to the Plan to purchase
from the Company 65,000 shares of the Company's Common Stock
pursuant and subject to the terms of the Plan. The option price
per share is $.257812.
Subject to the earlier termination of this option, as provided
in the Plan, you may purchase up to an aggregate of 65,000 shares
of the Company's Common Stock at any time between December 2, 1995,
and May 31, 1998.
Notwithstanding the foregoing, the exercise of your option
shall be subject to the restrictions and limitations set forth in
Sections 6 through 11 of the Plan, which together with all of the
other items, provisions and conditions of the Plan are made a part
of this option with the same effect as if fully set forth herein,
and to the legality of this option and the sale of the securities
offered hereby under applicable state securities laws, if any.
Further, as provided in Section 12 of the Plan, your acceptance of
this option shall constitute your agreement (a) that you will
remain in the employ of the Company, or at the election of the
Company, from time to time, any of its subsidiaries, for a period
of twelve months from the date hereof, and that you will, during
such employment, devote your full time, energy and skill to the
service of the Company or of the subsidiary by which you are
employed and the promotion of its interests, subject to vacations,
sick leave, and other absences in accordance with the Company's or
- 2 -
the subsidiary's regular policies; (b) that in the event of the
exercise of this option, the shares acquired by you will not be
sold or transferred in violation of the Securities Act of 1933, as
amended; (c) as required by Section 8 of the Plan, that you will
notify the Company in writing within 10 days of the event if you
sell any of the shares acquired on exercise of the option within
two years of the date hereof or one year after any exercise of this
option, and advise the Company of the selling price of the shares,
and (d) as provided in Section 8 of the Plan the Company may deduct
any income taxes required by law to be withheld from payments due
to you.
Your signature hereon will constitute your acknowledgment of
receipt of a copy of the Plan, a Prospectus dated May 26, 1995, the
1994 Annual Report to Shareholders, the Quarterly Report on Form
10-QSB for the first quarter of 1995, your acceptance of this
option, and your agreement to the terms and conditions hereof.
If you wish to accept this option, sign and return the
enclosed copy to the Company within fourteen (14) days of the date
hereof.
Sincerely yours,
TENNEY ENGINEERING, INC.
By ________________________________
Martin Pelman
Vice President, Finance
Received, Accepted and
Agreed to:
_____________________________________
Grantee of the above-described option
MP:ca
Enclosures
June 1, 1995
Mr. Martin Pelman
c/o Tenney Engineering, Inc.
1090 Springfield Road
Union, New Jersey 07083
Dear Mr. Pelman:
The 1995 Incentive Stock Option Plan (the "Plan") of Tenney
Engineering, Inc. (the "Company") has been adopted by the Board of
Directors and approved by the stockholders of the Company at the
Shareholder's meeting held May 26, 1995. A copy of the Plan is
furnished to you herewith as is a Prospectus dated May 26, 1995,
the 1994 Annual Report to Shareholders, and the report on Form 10-
QSB for the first quarter of 1995 filed with the Securities and
Exchange Commission.
We are pleased to inform you that you are hereby, on the date
hereof, granted a Stock Option pursuant to the Plan to purchase
from the Company 25,000 shares of the Company's Common Stock
pursuant and subject to the terms of the Plan. The option price
per share is $.234375.
Subject to the earlier termination of this option, as provided
in the Plan, you may purchase up to an aggregate of 25,000 shares
of the Company's Common Stock at any time between December 2, 1995,
and May 31, 1998.
Notwithstanding the foregoing, the exercise of your option
shall be subject to the restrictions and limitations set forth in
Sections 6 through 11 of the Plan, which together with all of the
other items, provisions and conditions of the Plan are made a part
of this option with the same effect as if fully set forth herein,
and to the legality of this option and the sale of the securities
offered hereby under applicable state securities laws, if any.
Further, as provided in Section 12 of the Plan, your acceptance of
this option shall constitute your agreement (a) that you will
remain in the employ of the Company, or at the election of the
Company, from time to time, any of its subsidiaries, for a period
of twelve months from the date hereof, and that you will, during
such employment, devote your full time, energy and skill to the
service of the Company or of the subsidiary by which you are
employed and the promotion of its interests, subject to vacations,
sick leave, and other absences in accordance with the Company's or
- 2 -
the subsidiary's regular policies; (b) that in the event of the
exercise of this option, the shares acquired by you will not be
sold or transferred in violation of the Securities Act of 1933, as
amended; (c) as required by Section 8 of the Plan, that you will
notify the Company in writing within 10 days of the event if you
sell any of the shares acquired on exercise of the option within
two years of the date hereof or one year after any exercise of this
option, and advise the Company of the selling price of the shares,
and (d) as provided in Section 8 of the Plan the Company may deduct
any income taxes required by law to be withheld from payments due
to you.
Your signature hereon will constitute your acknowledgment of
receipt of a copy of the Plan, a Prospectus dated May 26, 1995, the
1994 Annual Report to Shareholders, the Quarterly Report on Form
10-QSB for the first quarter of 1995, your acceptance of this
option, and your agreement to the terms and conditions hereof.
If you wish to accept this option, sign and return the
enclosed copy to the Company within fourteen (14) days of the date
hereof.
Sincerely yours,
TENNEY ENGINEERING, INC.
By ________________________________
Robert S. Schiffman
President
Received, Accepted and
Agreed to:
_____________________________________
Grantee of the above-described option
RSS:ca
Enclosures
Exhibit (10) c.(iv)
Third Amendment to the
Restated Retirement Plan for
Salaried Employees of
Tenney Engineering, Inc.
dated November 12, 1990
RETIREMENT PLAN FOR SALARIED
EMPLOYEES OF TENNEY ENGINEERING
CERTIFICATE OF CORPORATE RESOLUTION
The undersigned, Secretary of Tenney Engineering, Inc. (the
Corporation) hereby certifies that the following resolutions were
duly adopted by the Executive Committee of the Board of Directors
of the Corporation on 11/5/90, and that such resolutions have not
been modified or rescinded as of the date hereof:
RESOLVED, that the Plan shall be amended as detailed in
Amendment #3 as attached to the minutes of this meeting. Amendment
#3 shall be effective December 15, 1989.
RESOLVED, that the President of the Corporation, is hereby
authorized to execute Amendment #3 in the name of the Corporation
and to approve such further amendments thereto as may be required
so that the Plan and the related Trust may continue to qualify
under Section 401(a) of the Internal Revenue Code and the Trust may
continue to be exempt from taxation under Section 501(a) of the
Internal Revenue Code.
The undersigned further certifies that the foregoing is a true
and correct extract from the Minutes of the Executive Committee of
the Board of Directors of Tenney Engineering, Inc. held on 11/5/90.
RETIREMENT PLAN FOR SALARIED
EMPLOYEES OF TENNEY ENGINEERING
Amendment #3
I, Robert S. Schiffman, President of Tenney Engineering, Inc.,
pursuant to the authority granted to me by the Board of Directors
of that Company to amend the Retirement Plan for Salaried Employees
of Tenney Engineering so as to enable the Plan and the Trust which
implements it to continue to qualify under Section 401(a) of the
Internal Revenue Code as a qualified employees' trust and so as to
enable the Trust to continue to be exempt from taxation under
Section 501(a) of the Code, do hereby amend the said Plan as
follows:
1. Section 1.13 shall be amended to read as follows:
"Early Retirement Date" means the first day of the month
(prior to the Normal Retirement Date) coinciding with or following
the date on which a Participant or Former Participant attains age
62 and has completed at least 5 Years of Service as a Participant.
A Former Participant who terminates employment after
satisfying the service requirement for Early Retirement and who
thereafter reaches the age requirement contained herein shall be
entitled to receive his benefits under this plan."
2. Section 5.1(b) shall be amended to read as follows:
"A Participant may elect to retire on an Early Retirement
Date. In the event that a Participant makes such an election, he
shall be entitled to receive an Early Retirement Benefit equal to
his Accrued Benefit payable at his Normal Retirement Date.
However, if a Participant so elects, he may receive payment of an
Early Retirement Benefit commencing on the first day of the month
coinciding with or next following his Early Retirement date which
Early Retirement Benefit shall be the Actuarial Equivalent of his
Present Value of Accrued Benefit."
Amendment #3 shall be effective as of December 15, 1989.
11/12/90 s/Robert S. Schiffman
Date President - Robert S. Schiffman
Exhibit (10) e.(i)
Lease Agreement dated December 14, 1995
by and among Tenney Engineering, Inc. and
Nandan Company, L.L.C.
THIS LEASE AGREEMENT, made the 14th day of December, 1995,
Between NANDAN COMPANY, L.L.C., a New Jersey limited liability
company about to be located at 1090 Springfield Road in the
Township of Union in the County of Union and State of New Jersey,
herein designated as the Landlord,
And TENNEY ENGINEERING, INC., a New Jersey corporation
residing or located at 1090 Springfield Road in the Township of
Union in the County of Union and State of New Jersey, herein
designated as the Tenant;
Witnesseth that, the Landlord does hereby lease to the Tenant
and the Tenant does hereby rent from the Landlord, the following
described premises:
*See Rider
*See Rider
for a term of three (3) years 18 days*
commencing on December 14, 1995, and ending on December 31, 1998,
to be used and occupied only and for no other purpose than office
space, the storage of inventory and other items, and the repair of
equipment, and for packing and shipping, including the receipt and
loading of merchandise on trucks.
Upon the following Conditions and Covenants:
1st: The Tenant covenants and agrees to pay to the
Landlord, as rent for and during the term hereof, the sum of Two
Hundred Ten Thousand ($210,000.00) Dollars* See Rider in the
following manner:
See Rider attached hereto and made a part hereof
*non-structural
2nd: The Tenant has examined the premises and has
entered into this lease without any representation on the part of
the Landlord as to the condition thereof. The Tenant shall take
good care of the premises and shall at the Tenant's own cost and
expense, make all * repairs, including painting and decorating, and
shall maintain the premises in good condition and state of repair,
and at the end or other expiration of the term hereof, shall
deliver up the rented premises in good order and condition, wear
and tear from a reasonable use thereof, and damage by the elements
not resulting from the neglect or fault of the Tenant, excepted.
The Tenant shall neither encumber nor obstruct the sidewalks,
driveways, yards, entrances, hallways and stairs, but shall keep
and maintain the same in a clean condition, free from debris,
trash, refuse, snow and ice.
3rd: In case of the destruction of or any damage to the
glass in the leased premises, or the destruction of or damage of
any kind whatsoever to the said premises, caused by the
carelessness, negligence or improper conduct on the part of the
Tenant or the Tenant's agents, employees, guests, licensees,
invitees, subtenants, assignees or successors, the Tenant shall
repair the said damage or replace or restore any destroyed parts
of the premises, as speedily as possible, at the Tenant's own cost
and expense.
4th: No alterations, additions or improvements shall be
made, and no climate regulating, air conditioning, cooling, heating
or sprinkler systems, television or radio antennas, heavy
equipment, apparatus and fixtures, shall be installed in or
attached to the leased premises, without the written consent of the
Landlord. Unless otherwise provided herein, all such alterations,
additions or improvements and systems, when made, installed in or
attached to the said premises, shall belong to and become the
property of the Landlord and shall be surrendered with the premises
and as part thereof upon the expiration or sooner termination of
this lease, without hindrance, molestation or injury. *See Rider,
Par. 62
5th: The Tenant shall not place nor allow to be placed
any signs of any kind whatsoever, upon, in or about the said
premises or any part thereof, except of a design and structure and
in or at such places as may be indicated and consented to by the
Landlord in writing. In case the Landlord or the Landlord's
agents, employees or representatives shall deem it necessary to
remove any such signs in order to paint or make any repairs,
alterations or improvements in or upon said premises or any part
thereof, they may be so removed, but shall be replaced at the
Landlord's expense when the said repairs, alterations or
improvements shall have been completed. Any signs permitted by the
Landlord shall at all times conform with all municipal ordinances
or other laws and regulations applicable thereto. *See Rider,
Par. 63
7th: The Tenant shall promptly comply with all laws,
ordinances, rules, regulations, requirements and directives of the
Federal, State and Municipal Governments or Public Authorities and
of all their departments, bureaus and subdivisions, applicable to
and affecting the said premises, their use and occupancy, for the
correction, prevention and abatement of nuisances, violations or
other grievances in, upon or connected with the said premises,
during the term hereof; and shall promptly comply with all orders,
regulations, requirements and directives of the Board of Fire
Underwriters or similar authority and of any insurance companies
which have issued or are about to issue policies of insurance
covering the said premises and its contents, for the prevention of
fire or other casualty, damage or injury, at the Tenant's own cost
and expense.
10th: The Tenant shall not occupy or use the leased
premises or any part thereof, nor permit or suffer the same to be
occupied or used for any purposes other than as herein limited, nor
for any purpose deemed unlawful, disreputable, or extra hazardous,
on account of fire or other casualty.
11th: This lease shall not be a lien against the said
premises in respect to any mortgages that may hereafter be placed
upon said premises. The recording of such mortgage or mortgages
shall have preference and precedence and be superior and prior in
lien to this lease, irrespective of the date of recording and the
Tenant agrees to execute any instruments, without cost, which may
be deemed necessary or desirable, to further effect the
subordination of this lease to any such mortgage or mortgages. A
refusal by the Tenant to execute such instruments shall entitle the
Landlord to the option of cancelling this lease, and the term
hereof is hereby expressly limited accordingly.
12th: If the land and premises leased herein, or of
which the leased premises are a part, or any portion thereof, shall
be taken under eminent domain or condemnation proceedings, or if
suit or other action shall be instituted for the taking or
condemnation thereof, or if in lieu of any formal condemnation
proceedings or actions, the Landlord shall grant an option to
purchase and or shall sell and convey the said premises or any
portion thereof, to the governmental or other public authority,
agency, body or public utility, seeking to take said land and
premises or any portion thereof, then this lease, at the option of
the Landlord, shall terminate, and the term hereof shall end as of
such date as the Landlord shall fix by notice in writing; and the
Tenant shall have no claim or right to claim or be entitled to any
portion of any amount which may be awarded as damages or paid as
the result of such condemnation proceedings or paid as the purchase
price for such option, sale or conveyance in lieu of formal
condemnation proceedings; and all rights of the Tenant to damages,
if any, are hereby assigned to the Landlord. The Tenant agrees to
execute and deliver any instruments, at the expense of the
Landlord, as may be deemed necessary or required to expedite any
condemnation proceedings or to effectuate a proper transfer of
title to such governmental or other public authority, agency, body
or public utility seeking to take or acquire the said lands and
premises or any portion thereof. The Tenant covenants and agrees
to vacate the said premises, remove all the Tenant's personal
property therefrom and deliver up peaceable possession thereof to
the Landlord or to such other party designated by the Landlord in
the aforementioned notice. Failure by the Tenant to comply with
any provisions in this clause shall subject the Tenant to such
costs, expenses, damages and losses as the Landlord may incur by
reason of the Tenant's breach hereof.
13th: In case of fire or other casualty, the Tenant
shall give immediate notice to the Landlord. If the premises shall
be partially damaged by fire, the elements or other casualty, the
Landlord shall repair the same as speedily as practicable, but the
Tenant's obligation to pay the rent hereunder shall not cease. If,
in the opinion of the Landlord, the premises be so extensively and
substantially damaged as to render them untenantable, then the rent
shall cease until such time as the premises shall be made
tenantable by the Landlord. However, if, in the opinion of the
Landlord, the premises be totally destroyed or so extensively and
substantially damaged as to require practically a rebuilding
thereof, then the rent shall be paid up to the time of such
destruction and then and from thenceforth this lease shall come to
an end. In no event however, shall the provisions of this clause
become effective or be applicable, if the fire or other casualty
and damage shall be the result of the carelessness, negligence or
improper conduct of the Tenant or the Tenant's agents, employees,
guests, licensees, invitees, subtenants, assignees or successors.
In such case, the Tenant's liability for the payment of the rent
and the performance of all the covenants, conditions and terms
hereof on the Tenant's part to be performed shall continue and the
Tenant shall be liable to the Landlord for the damage and loss
suffered by the Landlord. If the Tenant shall have been insured
against any of the risks herein covered, then the proceeds of such
insurance shall be paid over to the Landlord to the extent of the
Landlord's costs and expenses to make the repairs hereunder, and
such insurance carrier shall have no recourse against the Landlord
for reimbursement. See Rider, Par. 64.
14th: If the Tenant shall fail or refuse to comply with
and perform any conditions and covenants of the within lease, the
Landlord may, if the Landlord so elects, carry out and perform such
conditions and covenants, at the cost and expense of the Tenant,
and the said cost and expense* shall be payable on demand, or at
the option of the Landlord shall be added to the installment of
rent due immediately thereafter but in no case later than one month
after such demand, whichever occurs sooner, and shall be due and
payable as such. This remedy shall be in addition to such other
remedies as the Landlord may have hereunder by reason of the breach
by the Tenant of any of the covenants and conditions in this lease
contained. *shall constitute additional rent and
15th: The Tenant agrees that the Landlord and the
Landlord's agents, employees or other representatives, shall have
the right to enter into and upon the said premises or any part
thereof, at all reasonable hours, for the purpose of examining the
same or making such repairs or alterations therein as may be
necessary for the safety and preservation thereof. This clause
shall not be deemed to be a covenant by the Landlord nor be
construed to create an obligation on the part of the Landlord to
make such inspection or repairs.
16th: The Tenant agrees to permit the Landlord and the
Landlord's agents, employees or other representatives to show the
premises to persons wishing to rent or purchase the same, and
Tenant agrees that on and after nine (9) months next preceding the
expiration of the term hereof, the Landlord or the Landlord's
agents, employees or other representatives shall have the right to
place notices on the front of said premises or any part thereof,
offering the premises for rent or for sale; and the Tenant hereby
agrees to permit the same to remain thereon without hindrance or
molestation.
17th: If for any reason it shall be impossible to obtain
fire and other hazard insurance on the buildings and improvements
on the leased premises, in an amount and in the form and in
insurance companies acceptable to the Landlord, the Landlord may,
if the Landlord so elects at any time thereafter, terminate this
lease and the term hereof, upon giving to the Tenant fifteen days
notice in writing of the Landlord's intention to do so, and upon
the giving of such notice, this lease and the term thereof shall
terminate. If by reason of the use to which the premises are put
by the Tenant or character of or the manner in which the Tenant's
business is carried on, the insurance rates for fire and other
hazards shall be increased, the Tenant shall upon demand, pay to
the Landlord, as rent, the amounts by which the premiums for such
insurance are increased. Such payment shall be paid with the next
installment of rent but in no case later than one month after such
demand, whichever occurs sooner.
18th: Any equipment, fixtures, goods or other property
of the Tenant, not removed by the Tenant upon the termination of
this lease, or upon any quitting, vacating or abandonment of the
premises by the Tenant, or upon the Tenant's eviction, shall be
considered as abandoned and the Landlord shall have the right,
without any notice to the Tenant, to sell or otherwise dispose of
the same, at the expense of the Tenant, and shall not be
accountable to the Tenant for any part of the proceeds of such
sale, if any.
19th: If there should occur any default on the part of
the Tenant in the performance of any conditions and covenants
herein contained, or if during the term hereof the premises or any
part thereof shall be or become abandoned or deserted, vacated or
vacant, or should the Tenant be evicted by summary proceedings or
otherwise, the Landlord, in addition to any other remedies herein
contained or as may be permitted by law, may either by force or
otherwise, without being liable for prosecution therefor, or for
damages, re-enter the said premises and the same have and again
possess and enjoy, and as agent for the Tenant or otherwise, re-
let the premises and receive the rents therefor and apply the same,
first to the payment of such expenses, reasonable attorney fees and
costs, as the Landlord may have been put to in re-entering and
repossessing the same and in making such repairs and alterations
as may be necessary; and second to the payment of the rents due
hereunder. The Tenant shall remain liable for such rents as may
be in arrears and also the rents as may accrue subsequent to the
re-entry by the Landlord, to the extent of the difference between
the rents reserved hereunder and the rents, if any, received by the
Landlord during the remainder of the unexpired term hereof, after
deducting the aforementioned expenses, fees and costs; the same to
be paid as such deficiencies arise and are ascertained each month.
20th: Upon the occurrence of any of the contingencies
set forth in the preceding clause, or should the Tenant be
adjudicated or bankrupt, or placed in receivership, or should
proceedings be instituted by or against the Tenant for bankruptcy,
insolvency, receivership, agreement of composition or assignment
for the benefit of creditors, or if this lease or the estate of the
Tenant hereunder shall pass to another by virtue of any court
proceedings, writ or execution, levy, sale, or by operation of law,
the Landlord may, if the Landlord so elects, at any time
thereafter, terminate this lease and the term hereof, upon giving
to the Tenant or to any trustee, receiver, assignee or other person
in charge of or acting as custodian of the assets or property of
the Tenant, five days notice in writing, of the Landlord's
intention so to do. Upon the giving of such notice, this lease and
the term hereof shall end on the date fixed in such notice as if
the said date was the date originally fixed in this lease for the
expiration hereof; and the Landlord shall have the right to remove
all persons, goods, fixtures and chattels therefrom, by force or
otherwise, without liability for damages.
21st: The Landlord shall not be liable for any damage
or injury which may be sustained by the Tenant or any other person,
as a consequence of the failure, breakage, leakage or obstruction
of the water, plumbing, steam, sewer, waste or soil pipes, roof,
drains, leaders, gutters, valleys, downspouts or the like or of the
electrical, gas, power, conveyor, refrigeration, sprinkler,
airconditioning or heating systems, elevators or hoisting
equipment; or by reason of the elements; or resulting from the
carelessness, negligence or improper conduct on the part of any
other Tenant or of the Landlord or the Landlord's or this or any
other Tenant's agents, employees, guests, licensees, invitees,
subtenants, assignees or successors; or attributable to any
interference with, interruption of or failure, beyond the control
of the landlord, of any services to be furnished or supplied by the
Landlord. See Rider, Par. 65.
22nd: The various rights, remedies, options and
elections of the Landlord, expressed herein, are cumulative, and
the failure of the Landlord to enforce strict performance by the
Tenant of the conditions and covenants of this lease or to exercise
any election or option or to resort or have recourse to any remedy
herein conferred or the acceptance by the Landlord of any
installment of rent after any breach by the Tenant, in any one or
more instances, shall not be construed or deemed to be a waiver or
a relinquishment for the future by the Landlord of any such
conditions and covenants, options, elections or remedies, but the
same shall continue in full force and effect.
23rd: This lease and the obligation of the Tenant to pay
the rent hereunder and to comply with the covenants and conditions
hereof, shall not be affected, curtailed, impaired or excused
because of the Landlord's inability to supply any service or
material called for herein, by reason of any rule, order,
regulation or preemption by any governmental entity, authority,
department, agency or subdivision or for any delay which may arise
by reason of negotiations for the adjustment of any fire or other
casualty loss or because of strikes or other labor trouble or for
any cause beyond the control of the Landlord.
24th: The terms, conditions, covenants and provisions
of this lease shall be deemed to be severable. If any clause or
provision herein contained shall be adjudged to be invalid or
unenforceable by a court of competent jurisdiction or by operation
of any applicable law, it shall not affect the validity of any
other clause or provision herein, but such other clauses or
provisions shall remain in full force and effect.
26th: The Landlord covenants and represents that the
Landlord is the owner of the premises herein leased and has the
right and authority to enter into, execute and deliver this lease;
and does further covenant that the Tenant on paying the rent and
performing the conditions and covenants herein contained, shall and
may peaceably and quietly have, hold and enjoy he leased premises
for the term aforementioned.
*and supercedes all prior agreements, written or oral.
27th: This lease contains the entire contract between
the parties.* No representative, agent or employee of the Landlord
has been authorized to make any representations or promises with
reference to the within letting or to vary, alter or modify the
terms hereof. No additions, changes or modifications, renewals or
extensions hereof, shall be binding unless reduced to writing and
signed by the Landlord and the Tenant.
29th: If any mechanics' or other liens shall be created
or filed against the leased premises by reason of labor performed
or materials furnished for the Tenant in the erection,
construction, completion, alteration, repair or addition to any
building or improvement, the Tenant shall upon demand, at the
Tenant's own cost and expense, cause such lien or liens to be
satisfied and discharged of record together with any Notices of
Intention that may have been filed. Failure so to do, shall
entitle the Landlord to resort to such remedies as are provided
herein in the case of any default of this lease, in addition to
such as are permitted by law.
30th: The Tenant waives all rights of recovery against
the Landlord or Landlord's agents, employees or other
representatives, for any loss, damages or injury of any nature
whatsoever to property or persons for which the Tenant is insured.
The Tenant shall obtain from Tenant's insurance carriers and will
deliver to the Landlord, waivers of the subrogation rights under
the respective policies. See Rider, Par. 66.
31st: The Tenant has this day deposited with the
Landlord the sum of $11,666.66 as security for the payment of the
rent hereunder and the full and faithful performance by the Tenant
of the covenants and conditions on the part of the Tenant to be
performed. Said sum shall be returned to the Tenant, without
interest, after the expiration of the term hereof, provided that
the Tenant has fully and faithfully performed all such covenants
and conditions and is not in arrears in rent. During the term
hereof, the Landlord may, if the Landlord so elects, have recourse
to such security, to make good any default by the Tenant, in which
event the Tenant shall, on demand, promptly restore said security
to its original amount. Liability to repay said security to the
Tenant shall run with the reversion of title to said premises,
whether any change in ownership thereof be by voluntary alienation
or as a result of judicial sale, foreclosure or other proceedings,
or the exercise of a right of taking or entry by any mortgagee.
The Landlord shall assign or transfer said security, for the
benefit of the Tenant, to any subsequent owner or holder of the
reversion or title to said premises, in which case the assignee
shall become liable for the repayment thereof as herein provided,
and the assignor shall be deemed to be released by the Tenant from
all liability to return such security. This provision shall be
applicable to every alienation or change in title and shall in no
wise be deemed to permit the Landlord to retain the security after
termination of the Landlord's ownership of the reversion or title.
The Tenant shall not mortgage, encumber or assign said security
without the written consent of the Landlord.
See Annexed Rider.
The Landlord may pursue the relief or remedy sought in any
invalid clause, by conforming the said clause with the provisions
of the statutes or the regulations of any governmental agency in
such case made and provided as if the particular provisions of the
applicable statutes or regulations were set forth herein at length.
In all references herein to any parties, persons, entities or
corporations the use of any particular gender or the plural or
singular number is intended to include the appropriate gender or
number as the text of the within instrument may require. All the
terms, covenants and conditions herein contained shall be for and
shall inure to the benefit of and shall bind the respective parties
hereto, and their heirs, executors, administrators, personal or
legal representatives, successors and assigns
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals, or caused these presents to be signed by their
proper corporate officers and their proper corporate seal to be
hereto affixed, the day and year first above written.
Signed, Sealed and Delivered NANDAN COMPANY, LLC
in the presence of By: s/Arvind Amin
or Attested by Arvind Amin, Manager, Landlord
TENNEY ENGINEERING, INC.
By: s/Robert S. Schiffman
s/Robert Hak Robert S. Schiffman, President,
Tenant
RIDER TO LEASE AGREEMENT
BETWEEN
NANDAN COMPANY, L.L.C. ("LANDLORD")
AND
TENNEY ENGINEERING, INC. ("TENANT")
DATED: DECEMBER 14, 1995 (THE "LEASE")
32. This Rider supplements or amends the terms of the
printed portion of the Lease between the Landlord and the Tenant.
Except as modified herein, the terms of the printed portion of the
Lease shall remain in full force and effect. Any discrepancy or
conflict between the terms of the Rider and the terms of the Lease
shall be resolved and interpreted in accordance with this Rider.
33. The commencement date of this Lease (the
"Commencement Date") shall be December 14, 1995 and the Lease shall
terminate on December 31, 1998 (the "Term"), unless sooner
terminated as set forth herein.
34. Tenant agrees to pay a base rent of Two Hundred Ten
Thousand ($210,000.00) Dollars during the three (3) year term of
this Lease, payable in equal monthly installments of $5,833.33 per
month. Landlord hereby acknowledges receipt of a payment by Tenant
in the amount of Sixty-Five Thousand ($65,000.00) Dollars, which
shall be allocated $11,666.66 toward the security deposit due
hereunder and $53,333.34 toward the prepayment of rent due
hereunder in order of maturity, as follows:
December 14-31, 1995 $3,387.06
January, 1996 $5,833.33
February, 1996 $5,833.33
March, 1996 $5,833.33
April, 1996 $5,833.33
May, 1996 $5,833.33
June, 1996 $5,833.33
July, 1996 $5,833.33
August, 1996 $5,833.33
September, 1996 $3,279.64
Tenant has prepaid all charges due under the Lease for
the period set forth above except for any charges for gas and
electricity, and charges relating to alterations referred to in
Paragraphs 36(a) and 36(b) hereof. Tenant agrees that the balance
of rent due for September 1996 in the amount of $2,553.69 shall be
paid on September 1, 1996. Thereafter, equal monthly installments
of $5,833.33 per month shall be due beginning October 1, 1996.
Tenant shall be in default of this Lease and Landlord shall be
permitted to pursue all remedies available at law or in equity if
Tenant fails to pay any rent (base rent or additional rent) in
accordance with this Lease. Rent shall be paid to Landlord at the
address set forth above, or at such other place as the Landlord may
from time to time designate upon written notice to Tenant. Rent
is due without previous demand therefor and without counterclaim,
deduction or set-off, in advance of each month on the first day of
each month. If rent is not paid by the tenth (10th) day of any
month the Landlord may, in addition to Landlord's other remedies,
charge the Tenant, as additional rent, a late charge/administrative
fee of ten (10%) percent of the delinquent payment plus reasonable
attorneys fees and costs of collection. If Tenant is habitually
late in the payment of rent or other charges (which shall be
defined as 3 or more times in any 12 month period), Landlord may
declare the Tenant in default under the Lease and move for
eviction, collection of amounts owed, attorneys fees and any other
remedy available to Landlord at law or in equity.
35. Tenant shall have use of the Premises as set forth
on Exhibit "A" attached hereto. The Premises is a portion of the
Property, which Property is described in Exhibit "B" attached
hereto. Tenant shall occupy and use the Premises in the following
manner: the "New Office" area shall be used solely as offices and
the "Old Shop" area or "Weld Shop" area shall be used solely for
the storage of inventory and other items, the repair of equipment
and for packing and shipping, including the receipt and loading of
merchandise and trucks.
36. (a) At the inception of this Lease, the parties
hereto agree that the Premises shall be comprised of approximately
6,000 square feet of space constituting the entire first and second
floors of the building known as the "New Office Building" and
approximately 4,000 square feet of space known as the "Old Shop
Area", all as shown on Exhibit A attached hereto and made a part
hereof. Notwithstanding the foregoing, as soon as reasonably
practical after the Commencement Date, Landlord shall cause the
present tenant of the space known as the "Weld Shop" (as shown on
Exhibit A attached hereto) to vacate such space. Upon the present
tenant vacating such space, the "Weld Shop" area shall be
substituted for the "Old Shop" area and shall become part of the
Premises in place of the "Old Shop" area all without any change in
the rent payable hereunder or any of the other terms of this Lease.
Tenant shall be solely responsible for the cost of any alterations
required by such substitution of the "Weld Shop" for the "Old Shop"
area. Notwithstanding the foregoing, upon the substitution of the
"Weld Shop" for the "Old Shop" area, Tenant will be permitted to
continue use and occupancy of the "Old Shop" for a period of one
(1) month after the date that Tenant is granted the right to occupy
the "Weld Shop".
(b) In the event that it is proposed that any
tenant or occupant shall use or occupy the space adjacent to the
area leased to Tenant in the "Old Shop" area prior to the "Weld
Shop" area being substituted for the "Old Shop" area, Landlord
shall erect such partitions and provide such additional access if
requested by Tenant as may be required in order to assure that such
tenant or occupant shall not have access to the portion of the "Old
Shop" area leased to Tenant. The cost of any such work shall be
shared equally by Landlord and Tenant, and Tenant agrees to pay its
50% share to Landlord as additional rent within 30 days after
receipt of demand from Landlord, provided, however, that in no
event shall Tenant be required to pay more than 50% of the
reasonable cost of such work.
(c) During the term of this Lease Tenant shall have
use of the main gate to the Property and the main entrance to the
office building together with access thereto in common with
Landlord and any other tenants or occupants of the Property.
(d) In the event that Tenant desires to make any
alterations to the Premises, Tenant shall supply Landlord with
stamped final architectural working drawings for the construction
of the Premises, at Tenant's sole cost and expense. Prior to the
commencement of any such alterations, the plans for such
construction shall be approved in advance by the Landlord in
writing, which consent by the Landlord shall not be unreasonably
withheld. Tenant shall apply for all necessary building permits
and Certificate of Occupancy permits at its own cost and expense.
All improvements to the Premises shall be performed by the Tenant
and shall be in accordance with a validly issued building permit.
All of the tenant fit-out and construction work shall be the
responsibility of, and shall be performed by, Tenant at its sole
cost and expense. Tenant shall have such improvements constructed
in a good and workmanlike manner. Tenant shall be responsible for
the maintenance thereof during the time of this Lease. At the
conclusion of the Lease, Tenant shall, at the Landlord's sole
option, remove said improvements. Any improvements not removed by
the Tenant, at the Landlord's option, shall be at the property of
the Landlord or may be removed by the Landlord at the Tenant's
cost. Notwithstanding the foregoing, the provisions of this
Paragraph 36(d) shall not apply to the alterations referred to in
Paragraph 36(a) and Paragraph 36(b) of this Lease.
37. The Tenant shall deposit with the Landlord, at all
times, keys to the Premises.
38. Tenant shall take good care of the Premises and
fixtures and appurtenances therein, and at its own cost and expense
make all non-structural repairs thereto and to the HVAC system
servicing the system as and when needed to preserve them in good
working order and condition. Tenant shall not be required to make
any structural repairs or repairs to the roof, and shall not be
required to make any replacements to any equipment.
Notwithstanding the foregoing, all damage or injury to the Premises
or to any other part of the Property, or to its fixtures or
appurtenances, whether requiring structural or non-structural
repairs caused by the negligence or improper conduct of Tenant, or
its employees, invitees, licensees or agents, shall be repaired
promptly by Tenant at its sole cost and expense.
39. In case of any waste or damage to the Premises
caused by the negligence or willful act of the Tenant or the
Tenant's agents, servants, employees or invitees, the Tenant shall
repair the waste or damage as speedily as possible at Tenant's sole
cost. The Landlord may choose to repair the waste or damage at the
expense of the Tenant, and any amounts so expended by the Landlord
shall be reimbursed by Tenant to Landlord upon demand as additional
rent.
40. (a) Tenant shall keep in effect, at its sole
expense, a comprehensive liability policy of insurance,
satisfactory to Landlord in the exercise of Landlord's reasonable
discretion, covering the Premises and providing maximum limits of
liability of not less than $1,000,000.00 for bodily injury to one
person, $2,000,000.00 for bodily injury to any group of persons as
a result of one accident, and $500,000.00 for property damage. All
such policies shall name Landlord as an additional insured.
Certificates of such insurance shall be delivered to Landlord upon
or prior to the Commencement Date of the Term and not later than
thirty (30) days prior to the expiration date of any policies
expiring from time to time during the Term. Each such certificate
of insurance shall provide that the insurer will neither cancel nor
modify the policy to which the certificate of insurance relates
except upon thirty (30) days prior written notice to Landlord.
Tenant agrees to and shall save, hold and keep harmless and
indemnify the Landlord from and for any and all payments, expenses,
costs, attorneys fees and from and for any and all claims and
liability for losses or damage to property or injuries to persons
occasioned wholly or in part by or resulting from any acts or
omissions by the Tenant or the Tenant's agents, employees, guests,
licensees, invitees, subtenants, assignees or successors, or for
any cause or reason whatsoever, arising out of or by reason of the
occupancy by the Tenant and the conduct of the Tenant's business.
(b) Should Tenant fail to carry such insurance as
hereinabove described, Landlord may at its option (but shall not
be required so to do) cause such insurance as aforesaid to be
issued and in such event, Tenant agrees to pay the premium for such
insurance promptly upon Landlord's demand as Additional Rent.
41. At the expiration or earlier termination of this
Lease, Tenant shall remove all of Tenant's personal property from
the Premises, and repair all injury done by or in connection with
the installation or removal of said property, and surrender the
keys and the Premises to Landlord "broom clean" and "wall clean"
condition and in as good condition as they were at the beginning
of the term, ordinary wear excepted. All property of Tenant
remaining on the Premises after the expiration or earlier
termination of this Lease shall be conclusively deemed abandoned
and, at Landlord's option, may be retained by Landlord, or may be
removed by Landlord, and Tenant shall reimburse Landlord for the
cost of such removal. Landlord may have any such property stored
at Tenant's risk and expense. Except as otherwise set forth
herein, Tenant shall not be required to restore any damage caused
by fire, storm or the elements, or any other damage which the
Landlord is required to repair under the terms of the Lease.
42. Tenant shall not use or permit the use of the
Premises for any purpose other than as specifically set forth
above. Tenant shall use and occupy the same in a careful, safe,
proper and lawful manner, and will not commit or suffer any waste
therein or on the Property. Tenant will comply with the directions
of the proper public officers as to the use, repair and maintenance
of the Premises and Tenant will not allow the Premises to be used
for any purpose or in any way that will increase the rate of
insurance thereon, nor for any purpose other than that herein
specified, nor to be occupied in whole or in part by any other
person; and will not bring nor suffer to be brought into or upon
the Premises any substance or force that will increase the hazard
of fire in or on the Premises.
Tenant will not cause any toxic, inflammable or hazardous
substance, waste, underground storage tanks, or any other
pollutants which could be detrimental to the Premises, the
Property, human health, or the environment, or that would violate
any local, state or federal laws or regulations (collectively,
"Environmental Conditions") to be present on or affect the Premises
or the Property (if same is within Tenant's control). Tenant
agrees to indemnify, defend and save Landlord and their successors
and assigns, harmless, from and against any of the following which
may result from the existence of any Environmental Conditions at
the Premises or the Property (if same is within Tenant's control)
caused by Tenant's use thereof: any liability, loss, cost, damage
or expense (including, without limitation, attorneys' fees and
expenses) arising from the imposition or recording of a lien, the
incurrence of any clean-up and removal costs under any hazardous
waste, environmental protection, spill compensation, clean air and
water, or other ocal, state or federal law or regulation
(collectively, the "Environmental Laws") with respect to the
Premises or the Property, or liability to any third party in
connection with any violation of any Environmental Laws or other
action by Tenant or its agents; any loss of value in the Premises
as a result of any such lien, clean-up and removal costs; and any
liability, loss, cost, damage or expense arising from any failure
or defect in title occasioned by any of the applicable
Environmental Laws. Tenant shall, at all times comply with, and
cause all occupants of the Premises to comply with, all applicable
Environmental Laws.
43. [Intentionally Omitted]
44. This Lease shall not be a lien against the Property
of which the Premises forms a part in relation to any mortgages or
ground leases that are now or may hereafter be placed upon the
Property. Recording of any such present or future mortgage or
ground lease shall have preference and precedence and be superior
and prior in lien to this Lease, and Tenant specifically agrees
that this Lease shall be subordinate to any existing or future
mortgage on the Premises or the Property. The Tenant agrees to
sign any document, without cost, which may be necessary or
desirable to complete the subordination of this Lease to any
mortgage or ground lease now existing or hereinafter created. If
Tenant fails or refuses to sign such document after ten (10) days
following presentation of such document for execution, then the
Landlord may choose to terminate this Lease or may execute such
subordination as attorney in fact for the Tenant. This power is
non-revocable by Tenant and is coupled with an interest.
45. The Tenant assumes all risk of damage or loss to
Tenant's property, equipment and fixtures, no matter what causes
such damage or loss, except for the negligence of the Landlord,
other tenants at the Property, or their agents, servants and
employees. The Landlord shall not be responsible for any damage
or injury to property or person caused by or resulting from steam,
electricity, gas, water, rain, ice or snow, or any leak or flow
from or into any part of the Property or the Premises, or from any
damage or injury from any other cause or happening, except as
specified above. Landlord shall maintain the Property in good
condition including the removal of snow and the maintenance of
landscaping.
46. The Tenant may not assign this Lease or sublet the
Premises or any part thereof, unless Tenant shall first notify the
Landlord of the proposed assignment or subletting together with a
copy of the proposed terms and information concerning the proposes
assignee or sublessee and has obtained Landlord's prior written
consent to the proposed assignment or subletting. The Landlord may
withhold its consent for any reason to the proposed sublease or
assignment. The Landlord may condition its consent to such
assignment or subletting upon the receipt of a personal guaranty
from Tenant or the proposed assignee or subtenant (or a principal
of any of the foregoing), guarantying the full performance of the
Tenant's obligations hereunder and the obligation of the assignee
or sublessee. If any assignment or subletting is permitted, the
Tenant shall remain directly and primarily responsible for payment
and performance of all Lease obligations, and the Landlord reserves
the right, at all times, to require that the Tenant pay the Rent,
other charges and to perform the obligations specified hereunder.
No assignment or subletting shall be made to any proposed Tenant
or sublessee or assignee for any use which competes with the
business of the Landlord, or for any use which interferes with the
business of the Landlord, or for any use which may be deemed
disreputable or extra hazardous or which would in any way violate
laws or regulations. The Landlord may require that any sublessee
or assignee have at least the financial strength of the Tenant
herein.
47. The Tenant shall be considered in default of the
Lease herein in the event that the Tenant shall make any assignment
for the benefit of creditors or any action or proceeding under any
bankruptcy or insolvency law is taken by or against the Tenant
which is not discharged within thirty (30) days after it is
commenced.
48. Tenant shall indemnify, and save harmless Landlord
from and against all liabilities, obligations, damages, penalties,
claims, costs and expenses, including reasonable attorneys fees,
paid, suffered or incurred as a result of any breach by Tenant, its
agents, employees, invitees or licensees, of any provision of this
Lease, or the carelessness, negligence or improper conduct of
Tenant, its agents, employees, invitees or licensees; provided,
however, that Landlord agrees that Tenant shall not be liable to
Landlord to the extent that insurance proceeds are payable or
recoverable with respect to such damage.
49. This Lease and the obligation to pay rent hereunder
and perform all of the other terms to be performed by Tenant
hereunder shall not be affected, impaired or excused because
Landlord is unable to fulfill any of its obligations under this
Lease or to supply or is delayed in supplying any service expressly
or impliedly required to be supplied by Landlord hereunder, or is
unable to make, or is delayed in making any repair, addition or
alteration, or is unable to supply or is delayed in supplying any
equipment or fixtures, if Landlord is prevented or delayed from so
doing by reason of strike, labor troubles, any governmental
regulation or requirement, conditions of supply and demand which
have been or are affected by war or other emergency, mechanical
difficulties, or any other cause whatsoever beyond Landlord's
control, nor shall the same entitle Tenant to any claim against
Landlord.
50. If Tenant defaults in the observance or performance
of any term to be observed or performed by Tenant under this Lease,
Landlord may immediately or at any time thereafter and without
notice to Tenant perform the same for the account of Tenant, and
the expenses occurred with respect to such performance, together
with attorneys' fees and interest thereon, shall be deemed
additional rent hereunder and shall be paid by Tenant to Landlord
on demand thereof.
51. There shall be no personal liability of the Landlord
or any principal of the Landlord in connection with this Lease.
Tenant agrees to look solely to the equity of Landlord in the
Property for the collection of any judgment or other judicial
process requiring the payment of money by Landlord in the event of
any default or breach by Landlord with respect to this Lease or in
any way relating to the Premises or Property, and no other assets
of Landlord or any principal of Landlord shall be subject to levy,
execution or other procedures for the satisfaction of Tenant's
remedies.
52. In the event Tenant remains in possession of the
Premises after the expiration of the tenancy created thereunder,
and without the execution of a new lease, Tenant, at the option of
Landlord, shall be deemed to be occupying said Premises as a tenant
from month to month at a monthly rental equal to 150% of the sum
of the monthly installment of base rent payable during the last
month of the lease term, subject to all the other conditions,
provisions and obligations of this Lease insofar as the same a
applicable to a month-to-month tenancy.
53. Landlord has made no representations or promises
with respect to the Premises or the Property, except as expressly
contained herein. Tenant has inspected the Premises and agrees to
take the same in an "as is" condition, except as otherwise
expressly set forth. Landlord shall have no obligation, except as
herein set forth, to do any work in and the Premises to render them
ready for occupancy and use by Tenant.
54. Tenant represents that it did not deal with or
negotiate with any broker in connection with this Lease, and Tenant
indemnifies and holds Landlord harmless from and against any claim
for a commission or other fee made by any broker with whom it has
dealt or negotiated.
55. If a lending institution shall request modifications
in this Lease as a condition to financing secured by the Property,
Tenant shall not withhold or delay its consent thereto, provided
that such modifications do not increase the obligations of Tenant
hereunder.
56. Tenant shall arrange for the installation of
separate meters for the gas and electrical service to the Premises.
The cost for the installation of such meters shall be at Landlord's
expense. Until such installation has been completed and until the
"Weld Shop" is substituted for the "Old Shop" area, Tenant shall
be responsible for twenty-five (25%) percent of the cost of all gas
and electricity utilized at the Property, at a rate no greater than
$1,250.00 per month. Upon the installation of each separate meter
and the substitution of the "Weld Shop" for the "Old Shop" area,
Tenant shall, at its own expense, separately contract for the
supplying of gas and electric current to the Premises with the gas
and electric utility companies serving the Property. Tenant shall
have the right to use Landlord's wires and conduits servicing the
Premises if and to the extent available, suitable, and safely
capable therefore. Tenant shall not permit its use of electric
current to exceed the capacity of the feeders, risers, or other
electrical installations of the Premises.
57. All notices required or allowed shall be delivered
by personal delivery or shall be mailed by certified mail, return
receipt requested, or by reputable overnight delivery service that
provides a receipt of delivery, addressed to the Landlord or Tenant
at the addresses on the first page of this Lease or such other
places the Landlord or Tenant shall fix in writing. A notice shall
be deemed given when actually received by the addressee or upon
attempted delivery if the notice is refused or is properly
addressed but is returned as undeliverable.
58. If Landlord does not enforce any agreements in this
Lease or does not make any choice contained in this Lease, this
shall not mean that the Landlord has given up the agreements or
choices, which shall remain in effect. If Landlord uses any remedy
allowed by this Lease or by law, Landlord may still use any other
remedy allowed by this Lease or by law.
59. To the extent such waiver is permitted by law, the
parties waive trial by jury in any action or proceedings brought
in connection with this Lease or the Premises.
60. The provisions of the Lease shall apply to, bind and
inure to the benefit of Landlord and Tenant, and their respective
successors, legal representative and assigns, it being understood
that the term "Landlord" as used in this Lease means only the
owner, or the mortgagee in possession, or the ground lessee for the
time being of the Property, so that in the event of any sale or
sales of the Property or of any lease thereof or if the mortgagee
shall take possession of the Property, the Landlord named herein
shall be and hereby is entirely freed and relieved of all covenants
and obligations of Landlord hereunder accruing thereafter.
61. The Tenant shall not record this Lease or a
memorandum hereof.
62. The following shall be added to Paragraph 4:
"All existing installations may remain at the
Premises throughout the term of the Lease.
Tenant shall not be required to make any
replacements of any of the equipment, and
Landlord shall make all such replacements as
needed; provided, however, that equipment that
is nonessential to normal building usage
(e.g., electric hoist, gantry, scales, etc.)
shall not be the responsibility or liability
of the Landlord. The Landlord does not
warrant the usage of such equipment and
Landlord shall have absolutely no
responsibility for the maintenance, repair and
replacement of such equipment if Tenant uses
such equipment."
63. The following shall be added to Paragraph 5:
"Tenant shall be permitted to retain the signs
relating to Tenant now existing at any place
on the Property."
64. The following shall be added to Paragraph 13:
"Tenant shall be permitted to terminate this
Lease upon ten (10) days prior written notice
to Landlord if any casualty loss occurs during
the last eighteen (18) months of this Lease
which renders the Premises untenantable for a
period in excess of sixty (60) days. If
Tenant elects to terminate this Lease pursuant
to the foregoing, Tenant shall deliver such
termination notice no later than twenty (20)
days following the casualty loss.
65. The following shall be added to Paragraph 21:
Landlord's exculpation shall not be applicable
to the extent that insurance proceeds are
payable or recoverable with respect to such
damage. Further, Paragraph 21 shall be
subject to Paragraph 45 of the Lease.
66. The following shall be added to Paragraph 30:
"The Landlord waives all rights of recovery
against the Tenant or Tenants' agents,
employees or other representatives, for any
loss, damages or injury of any nature
whatsoever to property or persons for which
the landlord is insured. The Landlord shall
obtain from Landlord's insurance carriers and
will deliver to the Tenant, waivers of the
subrogation rights under the respective
policies.
IN WITNESS WHEREOF, the parties have set their hands and
seals written on the first page of the Lease Agreement.
LANDLORD:
WITNESS: NANDAN COMPANY, L.L.C.
s/ By: s/Arvind Amin
Arvind Amin, Manager
TENANT
ATTEST: TENNEY ENGINEERING, INC.
s/Robert Hak By: s/Robert S. Schiffman
Robert S. Schiffman, President
Exhibit (10) e.(ii)
First Amendment
dated January 12, 1996
FIRST LEASE AMENDMENT
THIS FIRST LEASE AMENDMENT made as of the 12th day of January,
1996, by and between NANDAN COMPANY, L.L.C., a New Jersey limited
liability company, with an address at 1090 Springfield Road, Union,
New Jersey 07083 (the "Landlord") and TENNEY ENGINEERING, INC., a
New Jersey corporation, with an address at 1090 Springfield Road,
Union, New Jersey 07083 (the "Tenant").
W I T N E S S E T H:
WHEREAS, Landlord is the owner of the property located at 1090
Springfield Road, Union, New Jersey (the "Property"); and
WHEREAS, Landlord and Tenant executed a Lease Agreement dated
December 14, 1995 (the "Lease"); and
WHEREAS, the parties desire to make certain modifications to
the Lease.
NOW, THEREFORE, for and in consideration of the foregoing
premises and the payment of One ($1.00) Dollar and other good and
valuable consideration to Landlord, the receipt of which is hereby
acknowledged, the parties hereto agree to amend and modify the
Lease as follows:
1. Tenant shall lease at the Property approximately 8,000
square feet of additional space currently leased to Bedrooms
Unlimited (the "Additional Space"). The parties acknowledge that
the Additional Space is currently leased to Bedrooms Unlimited, and
the Additional Space shall constitute the area that is cross-
hatched on Exhibit A attached hereto and made a part hereof.
2. (a) The commencement date for Tenant's lease of the
Additional Space shall be the earlier of (i) July 1, 1996 or (ii)
seven (7) days following the date that Bedrooms Unlimited vacates
the Additional Space if such occurs prior to July 1, 1996, but no
earlier than seven (7) days following the giving by Landlord to
Tenant of notice of the date of such vacating (such date shall be
referred to herein as the "Additional Space Commencement Date").
Upon the occurrence of the Additional Space Commencement Date, the
Additional Space shall constitute a part of the Premises, and all
references in the Lease to the "Premises" shall be deemed to
include and incorporate the Additional Space. As such, Tenant's
right to occupy the Additional Space shall expire and terminate on
the same date that the Lease expires and terminates.
(b) Notwithstanding the provisions of Paragraph 2(a) hereof,
in the event that Bedrooms Unlimited fails to vacate the Additional
Space on or before July 1, 1996, then the Additional Space
Commencement Date for the Additional Premises shall be seven (7)
days following the date that Bedrooms Unlimited vacates the
Additional Space, but no earlier than seven (7) days following the
giving by Landlord to Tenant of notice of the date of such
vacating; provided, however, that if Landlord has not delivered
possession of the Additional Space to Tenant by October 1, 1996,
then Tenant may elect to terminate its rental as to the Additional
Space only by providing written notice to Landlord no later than
October 7, 1996, with time being of the essence with respect to
such date. In no event shall Tenant be obligated to pay any rent
or additional rent relating to the Additional Space until the
Additional Space Commencement Date.
3. The Paragraph entitled "Payment of Rent" set forth on Page
1 of the Lease and Paragraph 34 of the Lease shall be modified to
indicate that Tenant covenants and agrees to pay Landlord as rent
for and during the term of the Lease the sum of Two Hundred Seventy
Thousand ($270,000.00) Dollars; provided, however, that in the
event that the Additional Space Commencement Date occurs on a date
other than July 1, 1996, then the foregoing amount shall be
adjusted accordingly on a per diem basis. Tenant shall be
obligated to pay and agrees to pay the sum of Twenty Four Thousand
($24,000.00) Dollars per year as rent for the Additional Space.
Accordingly, Paragraph 34 of the Lease shall be modified to
indicate that if the Additional Space Commencement Date occurs on
July 1, 1996, then Tenant shall pay $2,000.00 to the Landlord as
rent for the Additional Space on July 1, 1996 and $2,000.00 to the
Landlord as rent for the Additional Space on August 1, 1996.
Further, Tenant shall pay the sum of $5,279.64 to the Landlord as
rent for the Premises on September 1, 1996, and thereafter Tenant
shall pay to the Landlord equal monthly installments of $7,833.33
as rent for the Premises beginning October 1, 1996. In no event
shall Tenant be obligated to pay any rent or additional rent
relating to the Additional Space until the Additional Space
Commencement Date, and if such date occurs either prior to or
subsequent to July 1, 1996, then the rent due and owing from Tenant
to Landlord for the Additional Space shall be adjusted accordingly
on a per diem basis.
4. Paragraph 31 and Paragraph 34 of the Lease shall be
modified to indicate that the security deposit shall be $15,666.66,
of which $11,666.66 has previously been paid by Tenant to Landlord.
Upon the execution of this First Lease Amendment, Tenant agrees to
pay an installment in the amount of $2,000.00 toward the security
deposit, which sum shall be payable as additional rent. Further,
upon the Additional Space Commencement Date Tenant shall be
obligated to pay the sum of $2,000.00 toward the security deposit,
which sum shall be payable as additional rent.
5. Tenant shall be permitted to use the Additional Space for
the same purposes as set forth for the Weld Shop in Paragraph 35
of the Lease.
6. The parties hereto agree that notwithstanding the
provisions of Paragraph 46 of the Lease, Landlord shall not
unreasonably withhold its consent with respect to the subleasing,
from time to time, of all or a portion of the Additional Space
and/or the Weld Shop (as defined in the Lease); provided, further,
that Landlord shall be permitted to withhold such consent if, in
the Landlord's sole but reasonable opinion, the proposed subtenant
would conduct a business that is detrimental to Landlord's food
operations.
7. Except as set forth herein, all other terms and provisions
of the Lease shall remain unchanged, unmodified and in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
First Lease Amendment as of the date first written above.
LANDLORD:
WITNESS: NANDAN COMPANY, L.L.C.
s/Frank C. Gosztyla By: s/Arvind Amin
Arvind Amin, Manager
TENANT:
ATTEST: TENNEY ENGINEERING, INC.
s/Frank C. Gosztyla By: s/Robert S. Schiffman
Robert S. Schiffman, President
Exhibit (24)
Consent of Independent
Certified Public Accountants
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the
Registration Statement on Form S-8 (Registration No. 33-59639) of
Tenney Engineering, Inc. of our report dated March 27, 1996 on the
consolidated financial statements and schedules of Tenney
Engineering, Inc. and Subsidiaries appearing in this Annual Report
on Form 10-KSB for the year ended December 31, 1995.
ZELLER WEISS & KAHN
Mountainside, New Jersey
March 27, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000097184
<NAME> TENNEY ENGINEERING, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 223,000
<SECURITIES> 0
<RECEIVABLES> 1,753,000
<ALLOWANCES> 38,000
<INVENTORY> 311,000
<CURRENT-ASSETS> 2,619,000
<PP&E> 1,588,000
<DEPRECIATION> 1,277,000
<TOTAL-ASSETS> 3,398,000
<CURRENT-LIABILITIES> 2,110,000
<BONDS> 0
0
0
<COMMON> 369,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,398,000
<SALES> 9,564,000
<TOTAL-REVENUES> 9,564,000
<CGS> 6,981,000
<TOTAL-COSTS> 1,910,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,000
<INCOME-PRETAX> 660,000
<INCOME-TAX> (220,000)
<INCOME-CONTINUING> 880,000
<DISCONTINUED> 0
<EXTRAORDINARY> 863,000
<CHANGES> 0
<NET-INCOME> 1,743,000
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
Exhibit (99) a.(ii)
Answer and Affirmative Defense
to the Board of Trustees
Sheet Metal Workers' National Pension Fund
to enforce delinquent payments due under the
Multi-Employer Pension Plan Amendments Act of 1980<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION
The Board of Trustees,
SHEET METAL WORKERS' NATIONAL
PENSION FUND,
Edward F. Carlough Plaza
601 North Fairfax Street
Alexandria, Virginia 22314 CIVIL ACTION
NO. 95-1609-A
Plaintiff,
v.
TENNEY ENGINEERING, INC.,
A Corporation ANSWER AND AFFIRMATIVE
1090 Springfield Road DEFENSE
Union, New Jersey 07083
Defendant.
Defendant, Tenney Engineering, Inc., by and through its
attorneys, Dechert Price & Rhoads, by way of answer to the
Complaint herein, states upon information and belief as follows:
1. Defendant neither admits nor denies the allegations
contained in paragraph 1 of the Complaint and leaves Plaintiff to
their proofs.
2. Defendant neither admits nor denies the allegations
contained in paragraph 2 of the Complaint and leaves Plaintiff to
their proofs.
3. Defendant neither admits nor denies the allegations
contained in paragraph 3 of the Complaint and leaves Plaintiff to
their proofs.
4. Defendant admits the allegations contained in paragraph
4 of the Complaint.
5. Defendant neither admits nor denies the allegations
contained in paragraph 5 of the Complaint and leaves Plaintiff to
their proofs, however, Defendant reserves its right to move for a
change of venue.
6. Defendant admits the allegations contained in paragraph
6 of the Complaint.
7. Defendant denies the allegations contained in paragraph
7 of the Complaint.
8. Defendant admits the allegations contained in paragraph
8 of the Complaint but respectfully refers the Court to the letter
described in paragraph 8.
9. Defendant admits the allegations contained in paragraph
9 of the Complaint but respectfully refers the Court to the letter
described in paragraph 9.
10. Defendant neither admits nor denies the allegations
contained in paragraph 10 of the Complaint and leaves Plaintiff to
their proofs.
11. Defendant admits the allegations contained in paragraph
11 of the Complaint.
12. Defendant neither admits nor denies the allegations
contained in paragraph 12 of the Complaint and leaves Plaintiff to
their proofs.
13. Defendant admits the allegations contained in paragraph
13 of the Complaint.
14. Defendant responds to paragraph 14 in the same manner as
it responded to the allegations contained in paragraph 14.
15. Defendant neither admits nor denies the allegations
contained in paragraph 15 of the Complaint and leaves Plaintiff to
their proofs.
16. Defendant neither admits nor denies the allegations
contained in paragraph 16 of the Complaint and leaves Plaintiff to
their proofs.
17. Defendant neither admits nor denies the allegations
contained in paragraph 17 of the Complaint and leaves Plaintiff to
their proofs.
18. Defendant neither admits nor denies the allegations
contained in paragraph 18 of the Complaint and leaves Plaintiff to
their proofs.
19. Defendant neither admits nor denies the allegations
contained in paragraph 19 of the Complaint and leaves Plaintiff to
their proofs.
20. Defendant neither admits nor denies the allegations
contained in paragraph 20 of the Complaint and leaves Plaintiff to
their proofs.
21. Defendant admits the allegations contained in paragraph
21 of the Complaint.
22. Defendant admits the allegations contained in paragraph
22 of the Complaint.
23. Defendant admits the allegations contained in paragraph
23 of the Complaint.
24. Defendant neither admits nor denies the allegations
contained in paragraph 24 of the Complaint and leaves Plaintiff to
their proofs.
25. Re-alleges.
26. Defendant neither admits nor denies the allegations
contained in paragraph 26 of the Complaint and leaves Plaintiff to
their proofs.
27. Defendant denies the allegations contained in paragraph
27 of the Complaint.
28. Defendant responds to paragraph 28 in the same manner as
it responded to the allegations contained in paragraph 28.
29. Defendant denies the allegations contained in paragraph
29 of the Complaint.
30. Defendant neither admits nor denies the allegations
contained in paragraph 30 of the Complaint and leaves Plaintiff to
their proofs.
31. Defendant neither admits nor denies the allegations
contained in paragraph 31 of the Complaint and leaves Plaintiff to
their proofs.
32. Defendant denies the allegations contained in paragraph
32 of the Complaint.
33. Defendant admits the allegations contained in paragraph
33 of the Complaint.
AFFIRMATIVE DEFENSES
1. Defendant has and continues to make good faith efforts
to settle this claim and is awaiting a response to certain
financial information along with an offer presented to plaintiff.
2. Plaintiff has an adequate remedy of law and is not
entitled to an injunction.
3. Defendant is entitled to an adjustment of the amount due
based upon financial information submitted to the Plaintiff.
DECHERT PRICE & RHOADS
477 Madison Avenue
New York, New York 10022
(212) 325-3526
By: s/Robert A. Baime
Robert A. Baime
Attorney for Defendant
Dated: February 9, 1996
New York, New York
