-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cgtn0p+Qpt9EavcmAgnoAcCklPItL9fHGeMHDh3uEJgVlXTQ0SCUr/45fmgSizoO WVpIjEqsHJh//w8WCduPUw== 0000950168-96-001812.txt : 19960930 0000950168-96-001812.hdr.sgml : 19960930 ACCESSION NUMBER: 0000950168-96-001812 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19960629 FILED AS OF DATE: 19960927 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPEIZMAN INDUSTRIES INC CENTRAL INDEX KEY: 0000092827 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-INDUSTRIAL MACHINERY & EQUIPMENT [5084] IRS NUMBER: 560901212 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-08544 FILM NUMBER: 96635915 BUSINESS ADDRESS: STREET 1: P O BOX 31215 CITY: CHARLOTTE STATE: NC ZIP: 28231 BUSINESS PHONE: 7043723751 MAIL ADDRESS: STREET 1: P O BOX 31215 CITY: CHARLOTTE STATE: NC ZIP: 28231 10-K 1 SPEIZMAN INDUSTRIES 10-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------------------------------------ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required] For the fiscal year ended June 29, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from __________________ to _____________________ COMMISSION FILE NO. 0-8544 SPEIZMAN INDUSTRIES, INC. ================================================================================ (Exact name of registrant as specified in its charter)
DELAWARE 56-0901212 - -------------------------------------------------------- ------------------------------------------- (State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.) organization) 508 West Fifth Street, Charlotte, North Carolina 28202 - -------------------------------------------------------- ------------------------------------------- (Address of principal executives offices) (Zip Code)
Registrant's telephone number, including area code: (704) 372-3751 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.10 Par Value (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing such requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the registrant as of September 12, 1996, was $12,431,085 based on the last sale price of $5.00 per share reported by the NASDAQ National Market System on that date. As of September 12, 1996, there were 3,208,599 shares of the registrant's Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement for its Annual Meeting of Stockholders to be held on November 14, 1996, are incorporated herein by reference into Part III. PART I ITEM 1. BUSINESS. GENERAL Speizman Industries, Inc. (the "Company") is the leading distributor of new sock knitting machines in the United States. It distributes technologically advanced sock knitting machines manufactured by Lonati, S.p.A., Brescia, Italy ("Lonati"), which the Company believes is the world's largest manufacturer of hosiery knitting equipment. It also distributes Lonati sock and sheer hosiery knitting machines in Canada. In addition, through sales arrangements with other European textile machinery manufacturers, the Company distributes other sock knitting machines, knitting machines for underwear, sweaters, collars and trim, and other knitted fabrics and other equipment related to the manufacture of socks, sheer hosiery and other textile products, principally in the United States and Canada. The Company also sells dyeing and finishing equipment for the textile industry. The Company sells textile machine parts and used textile equipment in the United States and in a number of foreign countries. ALL REFERENCES HEREIN ARE TO THE COMPANY'S 52-OR-53 WEEK FISCAL YEAR ENDING ON THE SATURDAY CLOSEST TO JUNE 30. FISCAL 1996, 1995, 1994, AND 1992, EACH CONTAINED 52 WEEKS AND ENDED ON JUNE 29, 1996, JULY, 1, 1995, JULY 2, 1994 AND JUNE 27, 1992. FISCAL 1993 CONTAINED 53 WEEKS AND ENDED ON JULY 3, 1993. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM THE "COMPANY" AS USED HEREIN INCLUDES SPEIZMAN INDUSTRIES, INC. AND ITS SUBSIDIARIES. The Company and Lonati entered into their present agreement for the sale of Lonati machines in the United States in January 1992 (the "Lonati Agreement"). The Company and Lonati also entered into a similar agreement in January 1992 relating to the Company's distribution of Lonati sock and sheer hosiery knitting machines in Canada. The company has distributed Lonati double cylinder machines in the United States continuously since 1982. The Company began distributing Lonati single cylinder machines in 1989. Pursuant to the Lonati Agreement, Lonati has appointed the Company as Lonati's exclusive agent in the United States for the sale of its range of single and double cylinder sock knitting machines and related spare parts as of the date of the Lonati Agreement. Under the Lonati Agreement, the Company also serves as the distributor of such equipment in the United States. Although the Lonati Agreement does not establish the Company as the exclusive distributor of Lonati sock machines in the United States, the Company in fact has exclusively distributed Lonati double cylinder sock machines continuously since 1982 and Lonati single cylinder sock knitting machines since 1989. The Lonati Agreement extended to December 31, 1995 and continues from year to year thereafter, although it may be terminated on 90 days written notice at any year end or without notice in the event of a breach. The Company and Lonati also entered into a similar agreement in January 1992 relating to the Company's distribution of Lonati sock and sheer hosiery knitting machines in Canada. The Lonati Agreement contains certain covenants and conditions relating to the Company's sale of Lonati machines, including, among others, requirements that the Company, at its own expense, promote the sale of Lonati machines and assist Lonati in maintaining its competitive position, maintain an efficient sales staff, provide for the proper installation and servicing of the machines, maintain an adequate inventory of parts and pay for all costs of advertising the machines. The Company is prohibited during the term of the Lonati Agreement from distributing any machines or parts that compete with Lonati machines and parts. The Company believes that it is and will remain in compliance in all material respects with such covenants. The cost to the Company of Lonati machines, as well as the delivery schedule of these machines, are totally at the discretion of Lonati. The Lonati Agreement allows Lonati to sell machines directly to the sock manufacturer with any resulting commission paid to the Company determined on a case by case basis. The Lonati single cylinder machines distributed by the Company are for the knitting of athletic socks. The Lonati double cylinder machines are for the knitting of dress and casual socks. The Lonati machines are electronic, high-speed, and have computerized controls. Lonati single cylinder machines are capable of knitting pouch heel and toe, reciprocated heel and toe and tube socks. These and other features allow the rapid change of sock design, style and size, result in increased production volume and efficiency and simplify the servicing of the machines. The Company 1 distributes these sock knitting machines as well as Lonati sheer hosiery knitting machines in Canada. In addition, the Company distributes the knitting machines, described below, manufactured by Santoni, S.r.l. Brescia, Italy ("Santoni"), one of Lonati's subsidiaries, in the United States and Canada. Sales by the Company in the United States and Canada of machines manufactured by Lonati, S.p.A., generated the following percentages of the Company's net revenues: 46.2% in 1996, 44.4% in 1995 and 65.6% in 1994. In addition, sales of Santoni machines in the United States and Canada generated 4.8%, 9.3% and 4.4% of the Company's net revenues in fiscal 1996, 1995 and 1994, respectively. In addition to the Lonati machines, the Company distributes new knitting and other machines and equipment under written agreements and other arrangements with the manufacturers. The following table sets forth certain information concerning certain of these additional distribution arrangements:
Manufacturer Machine Territory Santoni, S.r.l., Circular knitting machines for underwear, United States and Brescia, Italy men's socks and women's sheer hosiery and Canada surgical support hose Conti Complett, S.p.A., Sock toe closing machines and sock United States and Milan, Italy turning devices Canada Sperotto Rimar, S.p.A., Fabric processing and finishing machines United States Malo, Italy Corino Macchine, S.r.l., Fabric handling equipment United States and Canada Alba, Italy Fimatex, Turning devices for sock machines United States Scandicci, Italy Orizio Paolo, S.p.A., Fabric knitting machines United States Brescia, Italy Tonello, S.r.l., Garment wet processing equipment United States, Canada and Mexico Sarcedo, Italy Solis, S.r.l., Flat parts for knitting machines United States Florence, Italy Mec-Mor, S.p.A., Circular knitting machines for sweaters United States and Canada Varese, Italy Zamark, S.p.A.. Flat knitting machines for collars and United States, Canada, the United Somma Lombardo, Italy trim and sweaters Kingdom and Ireland Jumberca, S.A., Sweater knitting machines United States, Canada, the United Badalona, Spain Kingdom and Ireland
Sales of machines manufactured by Zamark (an affiliate of Lonati) generated 1.0%, 1.0% and 1.1% of the Company's net revenues in fiscal 1996, 1995 and 1994, respectively. In August 1996, this distribution agreement was canceled effective December 31, 1996. Sales of machines manufactured by Jumberca generated 2.9%, 9.8% and 9.8% of the Company's net revenues in fiscal 1996, 1995 and 1994, respectively. In August 1995, this distribution agreement was canceled effective December 31, 1995. 2 There can be no assurance that the Company will not encounter significant difficulties in any attempt to enforce any provision of the Lonati Agreement (or any other agreement with a foreign manufacturer), or any agreement that may arise in connection with the placement and confirmation of orders for the machines manufactured by Lonati (or any other foreign manufacturer) or obtain an adequate remedy for a breach of any such provision, due principally to the fact that Lonati (or any other foreign manufacturer) is a foreign company. USED MACHINES, PARTS AND LIQUIDATIONS The Company sells used machinery and parts to the textile industry. The Company carries significant amounts of machinery and parts inventories to meet customers' requirements and to assure itself of an adequate supply of used machinery. The Company acts as a liquidator of textile mills and as a broker in the purchase and sale of such mills. MARKETING AND SALES The Company markets and sells knitting machines and related equipment primarily by maintaining frequent contacts with customers and understanding of its customers' individual business needs. Salespersons will set up competitive trials in a customer's plant and allow the customer to use the Company's machine in its own work environment alongside competing machines for two weeks to three months. The Company also offers customers the opportunity to send their employees to the Company for training courses on the operation and service of the machines and, depending on the number of machines purchased and the number of employees to train, may offer such training courses at the customer's facility. In addition, the Company exhibits its equipment at trade shows and uses its private showroom to demonstrate new machines. These marketing strategies are complemented by the Company's commitment to service and continuing education. The Company also produces, at its own expense, training videos for its major lines of equipment. At August 20, 1996, the Company employed approximately 18 salespersons and 28 technical representatives. In addition to its sales staff, the Company uses over 40 commission sales agents in a number of foreign countries in connection with its sales of used machines. The terms of new machine sales generally are individually negotiated including both the purchase price, payment terms and delivery schedule. The Company is usually required to purchase imported machines with a letter of credit in favor of the manufacturer delivered not less than 15 days prior to the machine's shipment to the customer's plant. Generally, the letter of credit must be payable 60 days or longer from the date of the on-board bill of lading and upon presentation of the bill of lading. The period from shipment by the manufacturer to installation in the customer's plant is generally 30-60 days. The Company encourages trade-ins of older equipment, which reduces the customer's initial capital outlay. The Company believes that its trade-in policy has increased sales of certain of the Company's new equipment lines. Substantially all of the machines sold by the Company are drop-shipped from the foreign manufacturer by container or air freight directly to the customer's plant using the Company's freight forwarder to coordinate shipment. Title is taken at the European port, and the Company insures the machines for 110% of cost. Because a substantial portion of the Company's revenues are derived from sales of machines and equipment imported from abroad, these sales may be subject to import controls, duty and currency fluctuations. The majority of the Company's purchases of Italian machines for sale in the United States are denominated in Italian lira. Generally, the Company has been able to adjust sales prices or purchase lira hedging contracts to compensate for anticipated dollar fluctuations. However, international currency fluctuations that result in substantial price level changes could impede import sales and substantially impact profits. The Company is not able to assess the quantitative effect such international price level changes could have upon the Company's operations. All of the Company's export sales originating from the United States are made in U.S. dollars. Substantially all of the sales of the Company's United Kingdom subsidiary are denominated in pounds sterling. The Company also markets used machines through its employees and outside commission salespersons. The Company markets its used machines in the United States and in a number of foreign countries. The Company uses 3 trade advertising extensively and at least once every two months distributes lists throughout the industry of used machines that the Company has for sale. The Company exports certain new and used machines and parts for sale in Canada and a number of other foreign countries. See Note 1 of Notes to Consolidated Financial Statements for certain financial information concerning the Company's foreign sales in fiscal 1996, 1995 and 1994. CUSTOMERS The Company's customers consist primarily of the major sock manufacturers in the United States and Canada. In fiscal 1996, the Company's two largest customers, Renfro Corporation and Manufacturier De Bas Iris Hosiery, Inc. (Canada), accounted for 8.8% and 5.8%, respectively, of the Company's revenues. In fiscal 1995, the Company's two largest customers, Renfro Corporation and Kayser-Roth Corporation, accounted for 7.3% and 5.2%, respectively, of the Company's net revenues. In fiscal 1994, the Company's two largest customers, Fruit of the Loom, Inc., and Renfro Corporation, accounted for 13.8% and 13.4% of the Company's net revenues. Generally, the customers contributing the most to the Company's net revenues vary from year to year. The Company believes that the loss of any principal customer could have a material adverse effect on the Company. BACKLOG The Company's backlog of unfilled orders for new and used machines was $19.3 million at June 29, 1996 as compared to $4.1 million at July 1, 1995 and $15.1 million at July 2, 1994. Management believes that all the company's unfilled orders at June 29, 1996 will be filled by the end of fiscal 1997. The period of time required to fill orders varies depending on the machine ordered. The increase in backlog is attributed essentially to increased demand for sock machines. COMPETITION The sock knitting machine industry is competitive. Lonati single cylinder machines compete primarily with machines manufactured by an Italian and a Czech company and Lonati double cylinder machines compete primarily with machines manufactured by an Italian company acquired in 1993 by Lonati but not represented by the Company. Lonati machines compete, to a lesser extent, with machines manufactured by a number of other foreign companies of varying sizes and a small domestic company, and with companies selling used machines. The principal competitive factors in the distribution of sock knitting machines are technology, price, service, allowance of trade-ins and delivery. Management believes that its competitive advantages are the technological advantages of the Lonati machines, the Company's commitment to customer service and the Company's allowance of trade-ins of used machines on new Lonati machines. Management believes that it is at a short term competitive disadvantage if a potential customer's decision will be based primarily on price since, generally, the purchase price of Lonati machines is higher than that of competing machines. In its sale of new equipment in addition to Lonati machines, the Company competes with a number of foreign and domestic manufacturers and distributors of new and used machines. In its sale of such other machines and equipment, certain of the Company's competitors may have substantially greater resources than the Company. Domestic and foreign sales of used sock and sheer hosiery knitting machines is fragmented and highly competitive. The Company competes with a number of domestic and foreign companies that sell used machines as well as domestic and foreign manufacturers that have used machines for sale as a result of trade-ins. In the United States, the Company has one primary competitor in its sale of used sock knitting machines. The principal competitive factors in the Company's domestic and foreign sales of used machines are price and availability of machines that are in demand. Although the Company is the exclusive distributor of parts for a number of the machines it distributes, it competes with firms that manufacture and distribute duplicates of such parts. In addition, the Company competes with a number of distributors and manufacturers in its other parts sales. 4 DISCONTINUED OPERATION During fiscal 1996, management decided to discontinue the operations of the Company's CopyGuard Division, which was in the development stage. CopyGuard was developing a computer-generated matrix to invisibly mark garments to prevent counterfeiting. However, its continuing cash funding requirements were diverting funds from the Company's core business while prospects of bringing the system to market, successfully, were diminishing. Although the system developed by CopyGuard functioned successfully from a technical point of view, the system had not proven to be commercially feasible for the prospective users. Consequently, in the third fiscal quarter of fiscal 1996, management elected to cease all CopyGuard operations, write off all assets of the CopyGuard Division and provide for any remaining expenses. The loss on disposal of CopyGuard was $333,000, after income tax benefits, or approximately $0.10 per share of outstanding common stock. Costs incurred during fiscal year ended 1995 related to software development and were deferred. REGULATORY MATTERS The Company is subject to various federal, state and local statutes and regulations relating to the protection of the environment and safety in the work place. The failure by the Company to comply with any of such statutes or regulations could result in significant monetary penalties, the cessation of certain of its operations, or both. Management believes that the Company's current operations are in compliance with applicable environmental and work place safety statutes and regulations in all material respects. The Company's compliance with these statutes and regulations has not materially affected its business; however, the Company cannot predict the future effects of compliance with such statutes or regulations. EMPLOYEES As of August 20, 1996, the Company had 87 full-time employees. The Company's employees are not represented by a labor union, and the Company has never suffered an interruption of business as a result of a labor dispute. The Company considers its relations with its employees to be good. ITEM 2. PROPERTIES. The Company's headquarters, in which its administrative offices, machinery rebuilding facilities and a substantial portion of its warehouse space are located, is in Charlotte, North Carolina in an approximately 89,000 square foot building that is leased from a partnership owned by Robert S. Speizman and his brother. The City of Charlotte has designated this building an "historic landmark," and, as a result, modifications to the building require prior approval of the Charlotte-Mecklenburg Historic Landmark Commission. The term of the lease extends to March 31, 1998. The annual rent thereunder was $168,400 from January 1, 1993 to March 31, 1995 and $311,500 from April 1995 through March 1996. Annual rent is $356,000 from April 1996 through March 1998. The Company also leases approximately 41,000 square feet of additional warehouse space for approximately $113,800 per year under a lease agreement that expires December 1997, approximately 20,000 square feet of additional warehouse space under a lease that expires September 1996 for an annual rental of $48,000, 45,000 square feet of additional warehouse space under a lease that expires in March 1998 for an annual rental of $112,000, and approximately 10,000 square feet of additional warehouse space on a month-to-month basis for $100 per month, all in Charlotte, North Carolina. The Company leases approximately 5,000 square feet of office and warehouse space in Hicksville, New York, for approximately $30,000 per year, under a lease expiring June 1997. The Company leases approximately 250 square feet of office space, in which the headquarters of its Canadian subsidiary are located, in Montreal, Canada, for approximately $315 per month. The Company leases approximately 2,500 square feet of office and warehouse space, in which the headquarters of its United Kingdom subsidiary are located, in Leicester, U.K., for approximately $1,700 per month under a lease that expires in 1998. ITEM 3. LEGAL PROCEEDINGS. None. 5 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of the Company's security holders during the fourth quarter of fiscal 1996. EXECUTIVE OFFICERS OF REGISTRANt The following table sets forth certain information regarding the executive officers of the Company:
NAME AGE POSITIONS WITH THE COMPANY Robert S. Speizman... 56 Chairman of the Board, President and Director Josef Sklut.......... 67 Vice President-Finance, Secretary, Treasurer and Director
Robert S. Speizman has served as President of the Company since November 1976. From 1969 to October 1976, Mr. Speizman served as Executive Vice President of the Company. Mr. Speizman has been a director of the Company since 1967 and Chairman of the Board of Directors since July 1987. Josef Sklut has served as Vice President-Finance of the Company since 1978, as Secretary of the Company since 1977, as Treasurer of the Company since 1969 and as a director of the Company since 1977. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock has been included for quotation on the NASDAQ National Market System under the NASDAQ symbol "SPZN" since October 1993. The following table sets forth, for the periods indicated, the high and low sale prices as reported by the NASDAQ National Market System. FISCAL 1995 HIGH LOW ---- --- First Quarter (ended October 1, 1994)...........$ 8.75 $ 6.00 Second Quarter (ended December 31, 1994)........ 6.50 3.22 Third Quarter (ended April 1, 1995)............. 5.38 3.38 Fourth Quarter (ended July 1, 1995)............. 6.75 4.25 FISCAL 1996 First Quarter (ended September 30, 1995) ....... 5.12 3.50 Second Quarter (ended December 30, 1995)........ 3.88 2.62 Third Quarter (ended March 30, 1996)............ 4.50 2.50 Fourth Quarter (ended June 29, 1996)............ 5.62 3.50 As of June 29, 1996, there were approximately 419 stockholders of record of the Common Stock. The Company has never declared or paid any dividends on its Common Stock. On November 29, 1993, the Company purchased all of the 8,147 outstanding shares of its 5% noncumulative nonvoting preferred stock, par value $100 per share (the "5% Preferred Stock"), for $100.00 per share. Under the terms of the 5% Preferred Stock, the Company was obligated to pay a cash dividend of $5.00 per share in connection with this purchase. Consequently, on November 29, 1993, a dividend of $40,735 was paid to the former holders of the 5% Preferred Stock. Future cash dividends, if any, will be at the discretion of the Company's Board of Directors and will depend upon, among other things, future earnings, operations, capital requirements, surplus, restrictive covenants in agreements to which the Company may be subject, general business conditions and such other factors as the Board of Directors may deem relevant. The Company's present credit facility contains certain financial and other covenants that could limit the Company's ability to pay cash dividends on its capital stock. 6 ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.
Fiscal Year Ended ------------------------------------------------------------------- June 29, July 1, July 2, July 3, June 27, 1996 1995 1994 1993 1992 (IN THOUSANDS, EXCEPT NET INCOME PER SHARE DATA) STATEMENT OF INCOME DATA: Net revenues ........................................... $ 46,280 $ 61,597 $ 69,526 $ 39,552 $ 26,564 Cost of sales .......................................... 40,547 53,986 60,004 32,635 22,997 -------- -------- -------- -------- -------- Gross profit ........................................... 5,733 7,611 9,522 6,917 3,567 Selling, general and administrative expenses ........... 6,045 5,478 4,350 3,651 2,546 -------- -------- -------- -------- -------- Operating income (loss) ................................ (312) 2,133 5,172 3,266 1,021 Interest (income) expense, net ......................... (43) (15) 6 186 196 -------- -------- -------- -------- -------- Income (loss) before taxes on income ................... (269) 2,148 5,166 3,080 825 Taxes (benefit) on income (1) .......................... (29) 854 1,869 661 82 -------- -------- -------- -------- -------- Income (loss) from continuing operations ............... (240) 1,294 3,297 2,419 743 (Loss) from discontinued operation ..................... (333) -- -- -- -- -------- -------- -------- -------- ------- Net income (loss) ...................................... (573) -- -- -- -- -------- -------- -------- -------- ------- Preferred stock dividends .............................. -- -- 41 -- -- -------- -------- -------- -------- -------- Net income (loss) applicable to common stock ........... $ (573) $ 1,294 $ 3,256 $ 2,419 $ 743 ======== ======== ======== ======== ======== PER SHARE DATA: Income (loss) from continuing operations ............... $ (.07) $ .40 $ 1.12 $ 1.03 $ .32 Loss from discontinued operation ....................... $ (.10) -- -- -- -- -------- -------- -------- -------- -------- Net income (loss) ...................................... $ (.17) $ .40 $ 1.12 $ 1.03 $ .32 ======== ======== ======== ======== ======== Weighted average number of shares ...................... 3,284 3,271 2,905 2,360 2,297 BALANCE SHEET DATA: Working capital ........................................ $ 16,313 $ 17,613 $ 16,579 $ 4,553 $ 2,792 Total assets ........................................... 36,149 35,704 30,160 18,145 13,519 Short-term debt ........................................ -- -- -- 175 401 Long-term debt, including current maturity ............. 148 147 293 1,060 1,374 Stockholders' equity ................................... 18,203 18,782 17,483 5,137 2,714
(1) Reflects the utilization of prior net operating losses to completely offset federal income taxes in 1992 and to partially offset federal income taxes in 1993. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL The Company's revenues are generated primarily from its distribution of textile equipment, principally knitting machines and dyeing and finishing equipment, to manufacturers of textile products and, to a lesser extent, from the sale of parts used in such equipment and the sale of used textile equipment. RESULTS OF OPERATIONS YEAR ENDED JUNE 29, 1996 COMPARED TO YEAR ENDED JULY 1, 1995 NET REVENUES. Net revenues in fiscal 1996 were $46.3 million as compared to $61.6 million in fiscal 1995, a decrease of $15.3 million, or 24.9%. This decrease reflects a $11.3 million decline in sales of hosiery equipment, a $7.3 million decline in sales of sweater manufacturing and related equipment, a $0.5 million decline in parts and other sales activities partially offset by a $3.8 million increase in sales of knitted fabric machines. The Company's backlog of unfilled orders for new and used machines at June 29, 1996, was $19.3 million as compared to $4.1 million at July 1, 1995. The improved level of backlog in 1996 results from substantially increased demand for sock knitting machines. COST OF SALES. In fiscal 1996, cost of sales was $40.5 million as compared to $54.0 million in fiscal 1995, a decrease of $13.5 million, or 24.9%, matching the relative decline in revenues. Cost of sales as a percent of revenues was 87.6% in fiscal 1996, unchanged from fiscal 1995. 7 SELLING EXPENSES. Selling expenses increased to $4.2 million in fiscal 1996 from $3.6 million in fiscal 1995, an increase of 16.3%. Major elements in the increase were salespersons' salaries and commissions, warehouse and office space costs, travel, insurance, telecommunications, and insurance, partially offset by a decrease in letter of credit expenses. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses totaled $1,878,000, down by $17,000 from $1,895,000 in fiscal 1995. This small decrease resulted from declines in salaries and bonuses and bad debt provisions, partially offset by increases in professional fees and in life insurance expenses. INTEREST EXPENSE. Interest expense is expressed net of interest income. In fiscal 1996, interest income exceeded interest expense by $43,000. Net interest income was $15,000 in fiscal 1995. TAXES (BENEFIT) ON INCOME (LOSS) FROM CONTINUING OPERATIONS. The provision for income taxes in fiscal 1996 is a tax benefit of $29,000 on the $269,000 loss from continuing operations, or 10.8% of the loss. In the prior year, the tax provision was 39.8% of income before taxes. The current year effective rate reflects the combined effects of non-deductible entertainment and life insurance expenses and U.S. profits taxed at higher rates as compared to U.K. losses taxed at lower rates. NET INCOME (LOSS) FROM CONTINUING OPERATIONS. Net loss from continuing operations was $240,000 in fiscal 1996. This compares to net income of $1,294,000 in fiscal 1995. LOSS FROM DISCONTINUED OPERATION. During the third quarter of fiscal 1996, management decided to discontinue the operations of the Company's CopyGuard Division which was in the development stage. CopyGuard was developing a computer-generated matrix to invisibly mark garments to prevent counterfeiting. However, its continuing cash funding requirements were diverting funds from the Company's core business while prospects of bringing the system to market, successfully, were diminishing. Although the system developed by CopyGuard functioned successfully from a technical point of view, the system had not proven to be commercially feasible for the prospective users. Consequently, in the third fiscal quarter of fiscal 1996, management elected to cease all CopyGuard operations, write off all assets of the CopyGuard Division and provide for any remaining expenses. The loss on CopyGuard operations was $55,000, after tax benefits. The loss on disposal of CopyGuard, after tax benefits, was $278,000. The combined loss on the discontinued operation was $333,000 or approximately $0.10 per share of outstanding common stock. NET INCOME (LOSS). Net income applicable to common stock declined from $1.3 million in fiscal 1995 to a loss of $0.6 million. The 1996 loss is composed of $240,000 in losses from continuing operations and $333,000 in losses from discontinued operations. Net loss per share in fiscal 1996 was $0.17, composed of $0.07 from continuing operations and $0.10 from discontinued operations. These compare to $0.40 per share net income in fiscal 1995. YEAR ENDED JULY 1, 1995 COMPARED TO YEAR ENDED JULY 2, 1994 NET REVENUES. Net Revenues in fiscal 1995 were $61.6 million as compared to $69.5 million in fiscal 1994, a decrease of $7.9 million, or 11.4%. This decrease reflects a $14.3 million decline in sales of hosiery equipment, partially offset by increases of $3.4 million in the sales of sweater machines and related equipment, $1.8 million in the sales of dyeing and finishing equipment, and $1.2 million in the sales of spare parts. The Company's backlog of unfilled orders for new and used machines at July 1, 1995, was $4.1 million as compared to $15.1 million at July 2, 1994. The decline in backlog is attributed to weakened demand for sock and sweater machines. COST OF SALES. In fiscal 1995, cost of sales was $54.0 million as compared to $60.0 million for fiscal 1994, a decrease of $6.0 million, or 10.0%. Cost of sales as a percent of net revenues increased to 87.6% in fiscal 1995 as compared to 86.3% in fiscal 1994. Approximately 85% of this increase is attributable to increased field service expenses associated with new machines. The remainder is related to leveling of demand. SELLING EXPENSES. Selling expenses increased to $3.6 million in fiscal 1995 from $2.4 million in fiscal 1994, an increase of 48.8%. This increase resulted from the start-up of the U.K. knitting machine division, as well as increased 8 selling activities, overall. Major components of the increase were salespersons' salaries and commissions, advertising and exhibitions, travel, warehouse and office space cost, letter of credit expense and insurance expense. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses, at $1,895,000 in fiscal 1995, were down slightly from $1,942,000 in fiscal 1994. The decrease reflects declines in salaries and bonuses, partially offset by increases in payroll and other taxes and in provisions for losses on accounts receivable. As a percent of net revenues, general and administrative expenses were 3.1% in 1995 as compared to 2.8% in fiscal 1994, reflecting the 11.4% decrease in net revenues between the two fiscal years. INTEREST EXPENSE. Interest expense is expressed net of interest income. In fiscal 1995, interest income exceeded interest expense by $15,000. Net interest expense was $6,000 in fiscal 1994. TAXES ON INCOME. The provision for taxes on income in fiscal 1995 was 39.8% of income before taxes. The provision for taxes on income in fiscal 1994 was 36.2%. NET INCOME. Net income applicable to common stock decreased to $1.3 million in fiscal 1995 from $3.3 million in fiscal 1994. Net income per share decreased to $0.40 as compared to $1.12 per share in fiscal 1994 on a 12.6% increase in the equivalent number of common shares outstanding. JUMBERCA AGREEMENT Prior to its amendment in March 1995, the Jumberca Agreement contained certain minimum purchase requirements for the Jumberca sweater and fabric knitting machines. The Company did not meet the minimum purchase requirements under the Jumberca Agreement with regard to either type of machine in fiscal 1995 due principally to weakened demand for such machines. Due, in part , to the weakened demand, at the Company's request, in March 1995, the parties amended the Jumberca Agreement to eliminate the minimum purchase requirements thereunder and to allow for the termination of the agreement prior to its original termination date in January 1997. In accordance with the terms of the Jumberca Agreements, as amended in March 1995, the Company terminated the agreement with regard to the Jumberca fabric knitting machines in August 1995 and with regard to the Jumberca sweater knitting machines in December 1995. Although the weakened demand for the machines and the termination of the Jumberca Agreement had an adverse effect on net revenues in fiscal 1996, it did not have a significant effect on net income for the year. See Item 1, "Business--General." LIQUIDITY AND CAPITAL RESOURCES The Company's operations require a substantial line of letters of credit to cover its customers' orders. The Company's credit facility provides for an overall facility of $18.0 million for letters of credit, including up to $2.0 million in revolving funds. This facility expires October 31, 1996. Management believes that this facility will be extended for several additional years and will be revised appropriately to meet current financial requirements. Working capital at June 29, 1996 was $16.3 million as compared to $17.6 million at July 1, 1995, a decline of $1.3 million. Operating activities in fiscal 1996 provided $6.4 million in funds. In fiscal 1995, such activities 7required $2.4 million. This improvement in cash flow from operations resulted essentially from substantial decreases in accounts receivable and inventories and an increase in accrued expenses and customers' deposits. In the current fiscal year, investing activities used $812,000 as compared to usage of $461,000 in the prior year. As a result, cash and cash equivalents increased by $5.5 million to total $8.0 million at June 29, 1996 as compared to $2.4 million at July 1, 1995. SEASONALITY AND OTHER FACTORS There are certain seasonal factors that may affect the Company's business. Traditionally, manufacturing businesses in Italy close for the month of August, and the Company's customers close for one week in July. Consequently, no shipments or deliveries, as the case may be, of machines distributed by the Company that are manufactured in Italy are made during these periods which fall in the Company's first quarter. In addition, manufacturing businesses in Italy generally close for two weeks in December, during the Company's second quarter. Fluctuations of customer orders or other factors may result in quarterly variations in net revenues from year to year. 9 EFFECTS OF INFLATION AND CHANGING PRICES Management believes that inflation has not had a material effect on the Company's operations. A substantial portion of the Company's machine and spare part purchases are denominated and payable in Italian lira. Currency fluctuations of the lira could result in substantial price level changes and therefore impede or promote import/export sales and substantially impact profits. However, to reduce exposure to adverse foreign currency fluctuations during the period from customer orders to payment for goods sold, the Company enters into forward exchange contracts. The Company is not able to assess the quantitative effect that such currency fluctuations could have upon the Company's operations. There can be no assurance that fluctuations in foreign currency exchange rates will not have a significant adverse effect on future operations. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The financial statements and supplementary data required by this Item 8 appear on Pages F-1 through F-13 and S-1 through S-2 of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The response to this Item 10 is set forth in part under the caption "Executive Officers of the Registrant" in Part I of this Annual Report on Form 10-K and the remainder is set forth in the Company's Proxy Statement for the Annual Meeting of Stockholders to be held November 14, 1996 (the "1996 Proxy Statement") under the sections captioned "Election of Directors," "Certain Information Regarding the Board of Directors" and "Compliance with Section 16(a) of the Securities Exchange Act of 1934," which sections are incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. The response to this Item 11 is set forth in the 1996 Proxy Statement under the section captioned "Executive Compensation and Related Information," which section, other than the subsections captioned "Report of the Compensation Committee and the Stock Option Committee on Executive Compensation" and "Comparative Performance Graph," is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The response to this Item 12 is set forth in the 1996 Proxy Statement under the section captioned "Stock Ownership of Certain Beneficial Owners and Management," which section is incorporated by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The response to this Item 13 is set forth in the 1996 Proxy Statement under the section captioned "Certain Transactions," which section is incorporated herein by reference. 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) The following documents are included as part of the Annual Report on Form 10-K:
Page 1. FINANCIAL STATEMENTS: Report of Independent Certified Public Accountants................................................ F-1 Consolidated Balance Sheets - June 29, 1996 and July 1, 1995...................................... F-2 Consolidated Financial Statements for each of the three years in the periods ended June 29, 1996, July 1, 1995 and July 2, 1994: Consolidated Statements of Operations............................................................. F-3 Consolidated Statements of Stockholders' Equity................................................... F-4 Consolidated Statements of Cash Flows............................................................. F-5 Summary of Accounting Policies.................................................................... F-6 Notes to Consolidated Financial Statements........................................................ F-8 2. FINANCIAL STATEMENT SCHEDULES: Report of Independent Certified Public Accountants................................................ S-1 Schedule II - Valuation and Qualifying Accounts................................................... S-2
3. EXHIBITS: The Exhibits filed as part of this Annual Report on Form 10-K are listed on the Exhibit Index immediately preceding such Exhibits, and are incorporated herein by reference. (b) Reports on Form 8-K The Company filed no Forms 8-K in any of the months included in the fourth quarter of the Company's current fiscal year. 11 SIGNATURES Pursuant to the requirements of Section 131 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. SPEIZMAN INDUSTRIES, INC. Date: September 25, 1996 By: /s/ Robert S. Speizman ---------------------- Robert S. Speizman, President Pursuant to the requirements of the Securities Act of 1933, this has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signatures Title Date /s/ Robert S. Speizman President and Director September 25, 1996 - ------------------------------------ (Principal Executive Officer) Robert S. Speizman /s/ Josef Sklut Vice President-Finance, Secretary, September 25, 1996 - ------------------------------------ Treasurer and Director Josef Sklut (Principal Financial Officer and Principal Accounting Officer) /s/ Steven P. Berkowitz Director September 25, 1996 - ------------------------------------ Steven P. Berkowitz /s/ William Gorelick Director September 25, 1996 - ------------------------------------ William Gorelick /s/ Scott Lea Director September 25, 1996 - ------------------------------------ Scott Lea
12 (BDO Seidman LLP Letterhead) REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders Speizman Industries, Inc. We have audited the accompanying consolidated balance sheets of Speizman Industries, Inc. and subsidiaries as of June 29, 1996 and July 1, 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended June 29, 1996. 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 audits 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Speizman Industries, Inc. and subsidiaries at June 29, 1996 and July 1, 1995, and the results of their operations and their cash flows for each of the three years in the period ended June 29, 1996, in conformity with generally accepted accounting principles. /s/ BDO Seidman, LLP BDO Seidman, LLP Charlotte, North Carolina September 10, 1996 F-1 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 29, July 1, 1996 1995 ----------- ----------- ASSETS Current: Cash and cash equivalents ...................................................... $ 7,981,723 $ 2,436,859 Accounts receivable (Notes 2 and 6) ............................................ 12,160,449 16,078,683 Inventories (Notes 3 and 6) .................................................... 11,639,552 13,428,014 Prepaid expenses and other current assets ...................................... 2,340,111 2,458,355 ------------ ------------ TOTAL CURRENT ASSETS .......................................................... 34,121,835 34,401,911 ------------ ------------ Property and Equipment : (Notes 4 and 7) Leasehold improvements ......................................................... 550,684 543,874 Machinery and equipment ........................................................ 1,208,508 876,565 Furniture, fixtures and transportation equipment ............................... 1,218,570 834,187 ------------ ------------ 2,977,762 2,254,626 Less accumulated depreciation and amortization ................................. (1,525,058) (1,440,688) ------------ ------------ NET PROPERTY AND EQUIPMENT .................................................... 1,452,704 813,938 ------------ ------------ Other .............................................................................. 574,685 488,609 ------------ ------------ $ 36,149,224 $ 35,704,458 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current: Accounts payable ............................................................... $ 14,864,567 $ 15,056,927 Customers' deposits ............................................................ 2,723,466 884,881 Accrued expenses ............................................................... 209,881 833,886 Current maturities of long-term debt (Note 7) .................................. 11,051 13,190 ------------ ------------ TOTAL CURRENT LIABILITIES ..................................................... 17,808,965 16,788,884 Long-Term Debt (Note 7) ............................................................ 137,334 133,629 ------------ ------------ TOTAL LIABILITIES ............................................................. 17,946,299 16,922,513 ------------ ------------ Commitments (Notes 4, 9, 11, 12 and 14) Stockholders' Equity (Notes 8, 9 and 10): Common Stock - par value $.10; authorized 6,000,000 shares; issued 3,236,199 shares ..................................................... 323,620 323,620 Additional paid-in capital ..................................................... 12,459,965 12,459,965 Retained earnings .............................................................. 5,524,360 6,097,426 Foreign currency translation adjustment ........................................ (5,223) 731 ------------ ------------ Total ......................................................................... 18,302,722 18,881,742 Treasury stock, at cost, 27,600 common shares .................................. (99,797) (99,797) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY .................................................... 18,202,925 18,781,945 ------------ ------------ $ 36,149,224 $ 35,704,458 ============ ============
See accompanying summary of accounting policies and notes to consolidated financial statements. F-2 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended -------------------------------------------------------- June 29, July 1, July 2, 1996 1995 1994 NET REVENUES (Note 1) ................................................ $ 46,279,969 $ 61,596,833 $ 69,525,581 ------------ ------------ ------------ COSTS AND EXPENSES: Cost of sales .................................................... 40,546,962 53,986,242 60,003,901 ------------ ------------ ------------ Selling expenses ................................................. 4,167,490 3,582,719 2,407,086 ------------ ------------ ------------ General and administrative expenses .............................. 1,878,193 1,894,915 1,942,375 ------------ ------------ ------------ Total costs and expenses ........................................ 46,592,645 59,463,876 64,353,362 ------------ ------------ ------------ (312,676) 2,132,957 5,172,219 INTEREST (INCOME) EXPENSE, net of interest income of $126,522, $101,562 and $128,675 ........................ (43,400) (14,858) 6,393 ------------ ------------ ------------ Income (loss) from continuing operations before taxes ............ (269,276) 2,147,815 5,165,826 ------------ ------------ ------------ TAXES (BENEFIT) ON INCOME from continuing operations (Note 5) .............................................. (29,000) 854,000 1,869,000 ------------ ------------ ------------ INCOME (LOSS) from continuing operations ............................. (240,276) 1,293,815 3,296,826 DISCONTINUED OPERATION (Note 13): Loss from operations of CopyGuard, net of $33,000 tax .................................................. (55,115) -- -- Loss from disposal of CopyGuard, net of $166,000 tax ................................................. (277,675) -- -- ------------ ------------ ------------ (332,790) -- -- ------------ ------------ ------------ NET INCOME (LOSS) .................................................... (573,066) -- -- ------------ ------------ ------------ Preferred stock dividends ........................................ -- -- 40,735 ------------ ------------ ------------ NET INCOME (LOSS) APPLICABLE TO COMMON STOCK ............................................................ $ (573,066) $ 1,293,815 $ 3,256,091 ============ ============ ============ PER SHARE DATA: Income (loss) from continuing operations ............................. $ (.07) $ 0.40 $ 1.12 ------------ ------------ ------------ Loss from discontinued operation ..................................... $ (.10) -- -- ------------ ------------ ------------ NET INCOME (LOSS) .................................................... $ (.17) $ 0.40 $ 1.12 ------------ ------------ ------------ Weighted average number of common and equivalent shares ........................................................... 3,283,828 3,271,464 2,904,525 ------------ ------------ ------------
See accompanying summary of accounting policies and notes to consolidated financial statements. F-3 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOREIGN ADDITIONAL CURRENCY PREFERRED COMMON COMMON PAID-IN RETAINED TRANSLATION TREASURY STOCKHOLDERS' STOCK SHARES STOCK CAPITAL EARNINGS ADJUSTMENT STOCK EQUITY ----- ------ ----- ------- -------- ---------- ----- ------ BALANCE, JULY 3, 1993 ....... $ 894,152 1,998,841 $ 199,884 $ 2,595,488 $ 1,547,520 -- $ (99,797) $ 5,137,247 NET INCOME BEFORE PREFERRED STOCK DIVIDEND .......... -- -- -- -- 3,296,826 -- -- 3,296,826 PREFERRED STOCK DIVIDEND .... -- -- -- -- (40,735) -- -- (40,735) REDEMPTION OF PREFERRED STOCK (894,152) -- -- -- -- -- -- (894,152) CONVERSION OF PREFERRED STOCK TO COMMON STOCK ........ -- 240,770 24,077 55,376 -- -- -- 79,453 NET PROCEEDS OF COMMON STOCK OFFERING .......... -- 864,609 86,461 9,163,885 -- -- -- 9,250,346 EXERCISE OF STOCK OPTIONS ... -- 130,729 13,073 174,841 -- -- -- 187,914 TAX EFFECT OF EXERCISE OF STOCK OPTIONS ........... -- -- -- 466,000 -- -- -- 466,000 ------------ ---------- ---------- ----------- ---------- ----------- --------- ------------ BALANCE, JULY 2, 1994 ....... -- 3,234,949 323,495 12,455,590 4,803,611 -- (99,797) 17,482,899 NET INCOME ................. -- -- -- -- 1,293,815 -- -- 1,293,815 EXERCISE OF STOCK OPTIONS ... -- 1,250 125 4,375 -- -- -- 4,500 FOREIGN CURRENCY TRANSLATION ADJUSTMENT .............. -- -- -- -- -- 731 -- 731 ------------ ---------- ---------- ------------ ------------ -------- --------- ------------ BALANCE, JULY 1, 1995 ....... -- 3,236,199 323,620 12,459,965 6,097,426 731 (99,797) 18,781,945 NET LOSS .................... -- -- -- -- (573,066) -- -- (573,066) FOREIGN CURRENCY TRANSLATION ADJUSTMENT .............. -- -- -- -- -- (5,954) -- (5,954) ------------ ---------- ---------- ------------ ------------ -------- --------- ------------ BALANCE, JUNE 29, 1996 ...... $ -- 3,236,199 $ 323,620 $ 12,459,965 $ 5,524,360 $ (5,223) $ (99,797) $ 18,202,925 ============ ========== ========== ============ ============ =========== ========= ===========
See accompanying summary of accounting policies and notes to consolidated financial statements. F-4 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED ------------------------------------------------------------ JUNE 29, JULY 1, JULY 2, 1996 1995 1994 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME (LOSS) ................................................ $ (573,066) $ 1,293,815 $ 3,296,826 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION .................................... 173,336 166,965 193,133 PROVISION FOR LOSSES ON ACCOUNTS RECEIVABLE ...................... 113,500 171,477 17,850 PROVISION FOR INVENTORY OBSOLESCENCE ............................. 139,436 200,000 200,000 PROVISION FOR DEFERRED INCOME TAXES .............................. (58,000) (75,000) 109,000 PROVISION FOR DEFERRED COMPENSATION .............................. 6,782 (6) 28,788 FOREIGN CURRENCY TRANSLATION ADJUSTMENT .......................... (5,954) 731 -- (INCREASE) DECREASE IN: ACCOUNTS RECEIVABLE ........................................... 3,804,734 (1,079,970) (4,322,948) INVENTORIES ................................................... 1,649,026 (6,331,178) (2,741,376) PREPAID EXPENSES .............................................. 159,244 (1,176,461) (554,615) OTHER ASSETS .................................................. (69,076) 43,662 (168,226) INCREASE (DECREASE) IN: ACCOUNTS PAYABLE .............................................. (192,360) 5,015,062 2,237,330 ACCRUED EXPENSES AND CUSTOMERS' DEPOSITS ...................... 1,214,580 (623,547) (1,159,937) ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES .............. 6,362,182 (2,394,450) (2,864,175) ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: CAPITAL EXPENDITURES - OTHER EQUIPMENT ........................... (511,039) (520,274) (102,723) CAPITAL EXPENDITURES - EQUIPMENT LEASED TO CUSTOMERS ............. (648,620) -- -- PROCEEDS FROM PROPERTY AND EQUIPMENT DISPOSALS ................... 347,557 59,377 3,501 ----------- ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES ......................... (812,102) (460,897) (99,222) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: NET PAYMENTS ON NOTES PAYABLE .................................... -- -- (174,785) PRINCIPAL PAYMENTS ON LONG TERM DEBT ............................. (5,216) (145,958) (734,800) NET PROCEEDS OF COMMON STOCK OFFERING ............................ -- -- 9,250,346 DIVIDENDS ON PREFERRED STOCK ..................................... -- -- (40,735) REDEMPTION OF PREFERRED STOCK .................................... -- -- (814,699) ISSUANCE OF COMMON STOCK UPON EXERCISE OF STOCK OPTIONS .......... -- 4,500 187,914 ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ........... (5,216) (141,458) 7,673,241 ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................................................ 5,544,864 (2,996,805) 4,709,844 CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR .................... 2,436,859 5,433,664 723,820 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, AT END OF YEAR .......................... $ 7,981,723 $ 2,436,859 $ 5,433,664 =========== =========== ===========
See accompanying summary of accounting policies and notes to consolidated financial statements. F-5 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements of Speizman Industries, Inc. (the "Company") include all of its subsidiaries, all of which are majority owned. All material intercompany transactions (domestic and foreign) have been eliminated. The financial statements of the Company's United Kingdom subsidiary are translated from pounds sterling to U.S. dollars in accordance with generally accepted accounting principles. REVENUE RECOGNITION The major portion of the Company's revenues consists of sales and commissions on sales of machinery and equipment. The profit derived therefrom is recognized in full at the time of shipment, except that commissions receivable over more than one year are recognized at their discounted present value. Total sales commissions included in net revenues approximated $56,000, $286,000 and $142,000 for the years ended June 29, 1996, July 1, 1995 and July 2, 1994, respectively. CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments with a maturity of three months or less to be cash equivalents. The carrying amount of cash and cash equivalents approximates fair value because of the short term maturity of these instruments. INVENTORIES Inventories are carried at the lower of cost or market. Cost is computed, in the case of machines, on an identified cost basis and, in the case of other inventories, on an average cost basis. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the assets by the straight-line method for financial reporting purposes and by accelerated methods for income tax purposes. FOREIGN EXCHANGE CONTRACTS The Company enters into foreign currency contracts to reduce the foreign currency exchange risks. Foreign currency hedging contracts obligate the Company to buy a specified amount of a foreign currency at a fixed price in specific future periods. Realized and unrealized gains and losses are recognized in net income in the period of the underlying transaction. As of June 29, 1996, the Company had contracts maturing through June 1997 to purchase approximately 17.7 billion Lira for approximately $11.5 million which approximates the spot rate on that date. TAXES ON INCOME For fiscal years ended 1996, 1995 and 1994, the Company adopted the FAS Statement No. 109, "Accounting for Income Taxes", which changes the liability approach to calculating deferred income taxes set forth in Statement No. 96. The impact of adopting the rules on the Company's financial statements was not material. INCOME PER SHARE Income per share is computed on the weighted average number of common and equivalent shares outstanding during the period. Common equivalent shares include those common shares which would be issued upon the full conversion of the outstanding convertible preferred stock and those common shares issuable upon the exercise of the stock options, when dilutive, net of shares assumed to have been repurchased with the proceeds. FISCAL YEAR The Company maintains its accounting records on a 52-53 week fiscal year. The fiscal year ends on the Saturday closest to June 30. Years ending June 29, 1996, July 1, 1995 and July 2, 1994 included 52 weeks. USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. F-6 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF ACCOUNTING POLICIES - (CONTINUED) NEW ACCOUNTING PRONOUNCEMENTS Statements of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," issued by the Financial Accounting Standards Board (FASB), encourages the accounting for stock-based employee compensation programs to be reported within the financial statements on a fair value based method; however, it allows an entity to continue to measure compensation cost under Accounting Principles Board Opinion ("APB") No. 25. If the Company elects to retain the accounting under APB No. 25, then the standard requires pro forma disclosure of the effect on net income and earnings per share as if the fair value based method had been adopted. This pronouncement is effective for fiscal years beginning after December 15, 1995. Implementation of this pronouncement should have no material effect on the Company's financial statements. F-7 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- BUSINESS AND CREDIT RISK CONCENTRATION The Company is engaged in the distribution of machinery for the textile industry. With operations in the United States, Canada and the United Kingdom, the Company primarily sells to customers located within the United States. Export sales from the United States were approximately $7,196,000, $8,547,000 and $5,439,000 during fiscal 1996, 1995 and 1994, respectively. There were no export sales by the Canadian operations. Sales of the Company's United Kingdom subsidiary amounted to approximately $2,286,000 in 1996, essentially all of which were to customers in the United Kingdom. Financial instruments which potentially subject the Company to credit risk consist principally of temporary cash investments and trade receivables. The Company places its temporary cash investments with high credit quality financial institutions and, by policy, limits the amount of credit exposure to any one financial institution. The Company reviews a customer's credit history before extending credit. An allowance for doubtful accounts is established based upon factors surrounding the credit risk of specific customers, historical trends and other information. To reduce credit risk the Company generally requires a down payment on large equipment orders. A substantial amount of the Company's revenues are generated from the sale of sock knitting and other machines manufactured by Lonati, S.p.A. and one of its wholly owned subsidiaries (Santoni). Sales by the Company in the United States and Canada of machines manufactured by Lonati, S.p.A., generated the following percentages of the Company's net revenues: 46.2% in 1996, 44.4% in 1995 and 65.6% in 1994. In addition, sales of Santoni machines in the United States and Canada generated 4.8%, 9.3% and 4.4% of the Company's net revenues in fiscal 1996, 1995 and 1994, respectively. In 1996, approximately 9% and 6% of revenues consisted of sales to the Company's two largest customers. In 1995, approximately 7% and 5% of revenues consisted of sales to the Company's two largest customers. In 1994, approximately 14% and 13% of revenues consisted of sales to the Company's two largest customers. Generally, the customers contributing the most to the Company's net revenues vary from year to year. NOTE 2 -- ACCOUNTS RECEIVABLE Accounts receivable are summarized as follows: June 29, 1996 July 1, 1995 ------------- ------------ Trade receivables $12,420,405 $16,285,841 Less allowance for doubtful accounts.... ( 259,956) (207,158) ----------- -------- Net accounts receivable................. $12,160,449 $16,078,683 =========== =========== NOTE 3 -- INVENTORIES Inventories are summarized as follows: June 29, 1996 July 1, 1995 ------------- ------------ Machines New.................... $ 1,645,825 $ 4,786,811 Used................... 6,565,417 5,319,489 Parts and supplies.......... 3,428,310 3,321,714 --------- ------------- Total....................... $11,639,552 $13,428,014 =========== =========== NOTE 4 -- LEASES The Company conducts its operations from leased facilities which include both offices and warehouses. Its primary operating facility is leased from a partnership in which Mr. Robert S. Speizman, the Company's president, has a 50% interest. The lease extends through March 1998. Lease payments to the partnership approximated $323,000, $204,000 and $168,000 in fiscal years 1996, 1995 and 1994, respectively. The Company leases furniture and fixtures under noncancelable capital lease agreements which expire at various dates through 1998. F-8 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Capitalized leases included in property and equipment are summarized as follows: June 29, 1996 July 1, 1995 ------------- ------------ Furniture, fixtures and transportation equipment $ 105,264 $ 145,006 Less accumulated amortization...................... (89,037) (100,440) ------- -------- Net leased property................................ $ 16,227 $ 44,566 ====== ====== As of June 29, 1996, future net minimum lease payments under capital leases and future minimum rental payments required under operating leases that have initial or remaining noncancelable terms in excess of one year are as follows: Capital Operating Leases Leases -------- ---------- 1997 ................................................ $ 12,006 $ 499,894 1998 ................................................ 2,181 127,964 1999 ................................................ -- 63,158 2000 ............................................... -- 17,139 2001 ................................................ -- 4,936 Beyond .............................................. -- 14,809 -------- -------- Total minimum lease payments ................... $ 14,187 $727,900 ======== Less amount representing interest .............. (1,366) -------- Present value of net minimum lease payments .... 12,821 ======== Total rent expense for operating leases approximated $791,400, $515,800 and $311,600 for fiscal years 1996, 1995 and 1994, respectively. NOTE 5 -- TAXES ON INCOME Provisions for federal and state income taxes applicable to continuing operations are made up of the following components: 1996 1995 1994 ---- ---- ----- Current: Federal ........................ $ 114,000 $ 673,000 $ 1,556,000 Foreign ........................ (85,000) 74,000 -- State .......................... -- 182,000 204,000 ----------- ----------- ----------- 29,000 929,000 1,760,000 ----------- ----------- ----------- Deferred: Federal ........................ (58,000) $ (54,000) $ 71,000 State .......................... -- (21,000) 38,000 ----------- ----------- ----------- (58,000) (75,000) 109,000 ----------- ----------- ----------- Total taxes (benefit) on income.... $ (29,000) $ 854,000 $ 1,869,000 =========== =========== =========== Deferred tax benefits and liabilities are provided for the temporary differences between the book and tax bases of assets and liabilities. Deferred tax assets (liabilities) are reflected in the consolidated balance sheets as follows: June 29, 1996 July 1, 1995 ------------- ------------ Net current assets............... $ 436,000 $ 395,000 Net noncurrent liabilities....... (22,000) (39,000) ----------- --------- $ 414,000 $ 356,000 ======= ========= F-9 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Principal items making up the deferred income tax (assets) liabilities are as follows: Year Ended --------------------------- June 29, July 1, 1996 1995 --------- --------- Inventory valuation reserves ......................... $(191,000) $(225,000) Depreciation ......................................... 78,000 98,000 Deferred charges ..................................... (69,000) (54,000) Capitalized leases ................................... (4,000) (5,000) Inventory capitalization ............................. (130,000) (91,000) Accounts receivable reserves ......................... (97,000) (78,000) Other ................................................ (1,000) (1,000) --------- --------- Net deferred tax asset ........................... $(414,000) $(356,000) ========= ========= The Company's effective income tax rates were different than the U.S. Federal statutory tax rate for the following reasons: 1996 1995 1994 ---- ---- ---- U.S. Federal statutory tax rate......................... 34.0% 34.0% 34.0% State income taxes, net of Federal income tax benefit - 3.5 3.7 Non-deductible expenses.................................(15.8) 1.7 0.7 Foreign tax rates....................................... (14.5) 1.2 - Net tax effect of prior year adjustments................ 7.4 - - Other................................................... (0.3) (0.6) (2.2) ----- ------- ----- Effective tax rate...................................... 10.8% 39.8% 36.2% ==== ==== ==== NOTE 6 -- LINE OF CREDIT The Company has a credit facility with NationsBank, expiring October 31, 1996. This facility provides $18.0 million including up to a maximum of $2.0 million for direct borrowings, with the balance available for the issuance of documentary letters of credit. Amounts outstanding under the line of credit bear interest at the greater of prime plus 1% or the Federal Funds Effective Rate plus 1.5% for base rate loans and the 30, 60 or 90 day LIBOR rate plus 2.0% for LIBOR loans. In connection with this line of credit, the Company granted a security interest in accounts receivable and inventory, as defined in the loan agreement. (See Note 14) F-10 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) This credit facility contains certain covenants that require, among other things, the Company to maintain levels of current assets to current liabilities, total liabilities to net worth, working capital, tangible net worth of $13,841,000, restrictions on dividends and certain fixed charge coverage. As of June 29, 1996, the Company was in compliance with such covenants. NOTE 7 -- LONG-TERM DEBT Long-term debt consists of:
June 29, 1996 July 1, 1995 ------------- ------------ Total Current Total Current -------- --------- --------- -------- Capital lease obligations (Note 4) .. $ 12,821 $ 11,051 $ 16,037 $ 13,190 Other ............................... 135,564 -- 130,782 -- ------- --------- -------- --------- Total ............................... 148,385 $ 11,051 146,819 $ 13,190 ========= ========= Current maturities .................. (11,051) (13,190) --------- --------- $ 137,334 $ 133,629 ========= =========
Annual maturities of long-term debt are 1997, $11,051; 1998, $1,770; 1999, $0; 2000, $0; 2001, $0; thereafter, $135,564. NOTE 8 -- STOCK OPTIONS The Company has reserved 125,000, 250,000 and 145,000 shares of Common Stock under three employee stock plans, adopted in 1981, 1991 and 1995, respectively. As of June 29, 1996, options to purchase 11,522 shares under the 1981 Plan, 192,070 shares under the 1991 Plan, and 130,500 shares under the 1995 Plan were outstanding. Each option granted under the Plans becomes exercisable in cumulative increments of 20%, 50%, 80% and 100% on the first, second, third and fourth anniversaries of the date of grant, respectively, and subject to certain exceptions with regard to termination of employment and the percentage of outstanding shares of Common Stock owned, must be exercised within ten (10) years from the date of the grant. The option price under the 1981 and 1991 Plans, subject to certain exceptions, may not be less than 100% of the fair market value per share of Common Stock on the date of the grant of the option or 110% of such value for persons who control 10% or more of the voting power of the Company's stock on the date of the grant. The option price under the 1995 Plan is not limited and may be less than 100% of the fair market value on the date of the grant. A summary of employee stock option transactions and other information for 1996, 1995 and 1994 follows: YEAR ENDED ---------------------------------------- JUNE 29, JULY 1, JULY 2, 1996 1995 1994 ---- ---- ---- SHARES UNDER OPTION, BEGINNING OF YEAR ... 150,429 124,957 255,686 OPTIONS GRANTED .......................... 183,663 29,722 -- OPTIONS EXERCISED ........................ -- (1,250) (130,729) OPTIONS EXPIRED .......................... -- (3,000) -- -------- -------- -------- SHARES UNDER OPTION, END OF YEAR ......... 334,092 150,429 124,957 ======== ======== ======== OPTIONS EXERCISABLE ...................... 117,086 78,521 16,464 ======== ======== ======== PRICES OF OPTIONS EXERCISED .............. -- $.75 TO $.75 TO -- $ 1.875 $ 3.1625 PRICES OF OPTIONS OUTSTANDING, END OF YEAR $.75 TO $.75 TO $.75 TO $ 5.50 $ 5.50 $ 5.50 The Company has reserved 15,000 shares of Common Stock under a non-employee directors stock option plan adopted in 1995. Each option granted under the Plan becomes exercisable in cumulative increments of 50% and 100% on the first and second anniversaries of the date of the grant, respectively, and subject to certain exceptions must be exercised within ten (10) years from the date of the grant. The option price equals the fair market value per share of Common Stock on the date of the grant. Options to purchase 3,000 shares were granted and outstanding at the end of the year at a price of $2.875. F-11 SPEIZMAN INDUSTRIES INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 9 -- STOCK REDEMPTION AGREEMENTS The Company has an agreement with its principal holder whereby, upon his death, the Company is obligated to redeem a portion of the stock in the Company held by the estate. The redemption price for common stock is to be the fair market value of common stock, less 5%, plus any accrued dividends. In no case will the Company pay out more than the amount of life insurance proceeds received by the Company as a result of the death of the stockholder. At June 29, 1996, there were 584,932 common shares covered by the above agreement. The face value of life insurance carried by the Company under this agreement amounts to $1,150,000. NOTE 10 -- PREFERRED STOCK During the fiscal year ended July 2, 1994, all of the Company's 5% Non-Voting Preferred Stock was redeemed and all of the Company's 5% Non-Voting Senior Convertible Preferred was converted into common stock. NOTE 11 -- DEFERRED COMPENSATION PLANS The Company has deferred compensation agreements with two employees providing for payments amounting to $2,056,680 upon retirement and from $1,546,740 to $2,181,600 upon death prior to retirement. One agreement, as modified, has been in effect since 1972 and the second agreement was effective October 1989. Both agreements provide for monthly payments on retirement or death benefits over fifteen year periods. Both agreements are funded under trust agreements whereby the Company pays to the trust amounts necessary to pay premiums on life insurance policies carried to meet the obligations under the deferred compensation agreements. Charges to operations applicable to those agreements were approximately $53,885, $43,885 and $72,673 for the fiscal years 1996, 1995 and 1994, respectively. NOTE 12 -- EMPLOYEES' RETIREMENT PLAN The Company adopted a 401(k) retirement plan, effective October 1, 1989, for all qualified employees of the Company to participate in the plan. Employees may contribute a percentage of their pretax eligible compensation to the plan, and the Company matches 25% of each employee's contribution up to 4% of pretax eligible compensation. The Company's matching contributions totaled approximately $21,000, $17,000 and $13,000 in fiscal years 1996, 1995 and 1994, respectively. NOTE 13 --DISCONTINUED OPERATION During fiscal 1996, management decided to discontinue the operations of the Company's CopyGuard Division, which was in the development stage. CopyGuard was developing a computer-generated matrix to invisibly mark garments to prevent counterfeiting. However, its continuing cash funding requirements were diverting funds from the Company's core business while prospects of bringing the system to market, successfully, were diminishing. Although the system developed by CopyGuard functioned successfully from a technical point of view, the system had not proven to be commercially feasible for the prospective users. Consequently, in the third fiscal quarter of fiscal 1996, management elected to cease all CopyGuard operations, write off all assets of the CopyGuard Division and provide for any remaining expenses. The loss on disposal of CopyGuard was $333,000, after income tax benefits, or approximately $0.10 per share of outstanding common stock. Costs incurred during fiscal year ended 1995 related to software development and were deferred. F-12 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE 14 -- COMMITMENTS AND CONTINGENCIES The Company had outstanding commitments backed by letters of credit of approximately $13,244,000 and $8,916,000 at June 29, 1996 and July 1, 1995, respectively, relating to the purchase of machine inventory for delivery to customers. The Company has not obtained product liability insurance to date due to the prohibitive cost of such insurance. The nature and extent of distributor liability for product defects is uncertain. The Company has not engaged in manufacturing activities since 1990, and management presently believes that there is no material risk of loss to the Company from product liability claims against the Company as a distributor. NOTE 15 -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Year Ended ------------------------------------------------- June 29, July 1, July 2, 1996 1995 1994 ----------- --------- ---------- Cash paid during year for: Interest.................... $ 81,578 $ 86,704 $ 135,068 Income taxes................ 120,086 524,464 2,079,097 F-13 (BDO Seidman LLP letterhead appears here) REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SPEIZMAN INDUSTRIES, INC. The audits referred to in our report dated September 10, 1996, relating to the consolidated financial statements of Speizman Industries, Inc. and subsidiaries which is contained in Item 8 of this Form 10-K included the audit of the financial statement schedule listed in the accompanying index. This financial schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based upon our audits. In our opinion, such consolidated financial statement schedule presents fairly, in all material respects, the information set forth therein. /s/ BDO Seidman, LLP BDO Seidman, LLP Charlotte, North Carolina September 10, 1996 S-1 SPEIZMAN INDUSTRIES, INC. AND SUBSIDIARIES SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------- -------- -------- -------- -------- -------- BALANCE AT CHARGED TO CHARGED TO DEDUCTIONS BALANCE BEGINNING COSTS AND OTHER FROM AT END DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RESERVES OF PERIOD - ----------- --------- -------- -------- -------- --------- Fiscal year ended July 2, 1994: Reserve for doubtful accounts......... $127,561 $ 17,580 $ - $ 75,440 $ 69,701 ---------- ---------- ---------- --------- ------- Reserve for inventory obsolescence.... $623,145 $200,000 $ - $212,114 $611,031 ---------- ---------- ---------- --------- --------- Fiscal year ended July 1, 1995: Reserve for doubtful accounts......... $ 69,701 $171,477 $ - $ 34,020 $207,158 ---------- ---------- ---------- --------- --------- Reserve for inventory obsolescence.... $611,031 $200,000 $ - $215,041 $595,990 ---------- ---------- ---------- --------- --------- Fiscal year ended June 29, 1996: Reserve for doubtful accounts......... $207,158 $113,500 $ - $ 60,702 $259,956 ------------ ------------ ---------- ------------ ------------ Reserve for inventory obsolescence.... $595,990 $139,436 $ - $226,456 $508,970 ------------ ------------ ---------- ------------ -------------
S-2 SPEIZMAN INDUSTRIES, INC. INDEX TO EXHIBITS
EXHIBIT SEQUENTIAL NUMBER DESCRIPTION OF EXHIBIT PAGE NO. 3.1 Certificate of Incorporation of Speizman Industries, Inc. (the "Company"). (Incorporated by reference to Exhibit 3.1 contained in the Company's Registration Statement on Form S-1 (the "1993 Form S-1"), registration number 33-69748, filed with the Securities and Exchange Commission on September 30, 1993, and amendments thereto.) 3.2 Certificate of Amendment to Certificate of Incorporation of the Company, dated December 4, 1978. (Incorporated by reference to Exhibit 3.2 contained in the 1993 Form S-1.) 3.3 Certificate of Amendment to Certificate of Incorporation of the Company, dated February 8, 1993. (Incorporated by reference to Exhibit 3.3 contained in the 1993 Form S-1.) 3.4 Certificate of Stock Designation of the Company, dated October 23, 1973. (Incorporated by reference to Exhibit 3.4 contained in the 1993 Form S-1.) 3.5 Certificate of Stock Designation of the Company, dated June 27, 1978, as modified by Certificate of Increasing Stock Designated, dated January 11, 1979. (Incorporated by reference to Exhibit 3.5 contained in the 1993 Form S-1.) 3.6 Bylaws of the Company, as amended November 7, 1978. (Incorporated by reference to Exhibit 3.6 contained in the 1993 Form S-1.) 4.1 Certificate of Incorporation of the Company as currently in effect (included as Exhibits 3.1 through 3.5). (Incorporated by reference to Exhibit 4.1 contained in the 1993 Form S-1.) 4.2 Bylaws of the Company, as amended November 7, 1978. (Incorporated by reference to Exhibit 4.2 contained in the 1993 Form S-1.) 4.3 Specimen Common Stock Certificate. (Incorporated by reference to Exhibit 4.3 contained in the 1993 Form S-1.) 10.1 Agency Agreement between the Company and Lonati, S.r.l., Brescia, Italy ("Lonati"), dated January 2, 1992, relating to the Company's distribution of machines in the United States. (Incorporated by reference to Exhibit 10.1 contained in the 1993 Form S-1.) 10.2 Agency Agreement between the Company and Lonati, dated January 2, 1992, relating to the Company's distribution of machines in Canada. (Incorporated by reference to Exhibit 10.2 contained in the 1993 Form S-1.) 10.3 Agency Agreement between the Company and Santoni, S.r.l., Brescia, Italy ("Santoni"), dated January 2, 1992 ("Santoni Agreement"). (Incorporated by reference to Exhibit 10.3 contained in the 1993 Form S-1.) 10.4 Letter from Santoni relating to the Santoni Agreement, dated June 8, 1992. (Incorporated by reference to Exhibit 10.4 contained in the 1993 Form S-1.) 10.5 Letter Agreement between the Company and Santoni relating to the Santoni Agreement, dated July 21, 1993. (Incorporated by reference to Exhibit 10.5 contained in the 1993 Form S-1.) 10.6 Agreement between the Company and Jumberca, S.A. Badalona, Spain ("Jumberca") dated October 20, 1992, in original Spanish and an uncertified English translation. (Incorporated by reference to Exhibit 10.6 contained in the 1993 Form S-1.) 10.7 Agreement between the Company and Jumberca, dated July 13, 1993. (Incorporated by reference to Exhibit 10.6.1 contained in the Company's Annual Report on Form 10-K (the "1994 Form 10-K") for the fiscal year ended July 2, 1994, File No. 0-8544, filed on September 30, 1994.) 10.8 Agreement between the Company and Jumberca dated February 1, 1994, in original Spanish and an uncertified English translation. (Portions of Exhibit 10.8) were omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission ("Commission"). The omitted portions were filed separately with the Commission.) (Incorporated by reference to Exhibit 10.6.2 contained in the Company's Annual Report on Form 10-K/A Amendment No. 1 for the fiscal year ended July 2, 1994, File No. 0-8544, filed on December 12, 1994.) 10.9 Collaboration Agreement between the Company and Jumberca dated May 10, 1994. (Incorporated by reference to Exhibit 10.6.3 contained in the Company's 1994 Form 10-K). 10.10 Agreement between the Company and Jumberca, dated March 16, 1995. (Incorporated by reference to Exhibit 10.10 contained in the Company's Annual Report on Form 10-K (the "1995 Form 10-K") for the fiscal year ended July 1, 1995, File No. 0-8544, filed on September 29, 1995.) 10.11 Fax to Jumberca dated July 28, 1995, canceling fabric portion of agreement effective July 31, 1995. (Incorporated by reference to Exhibit 10.11 contained in the Company's 1995 Form 10-K). 10.12 Fax to Jumberca dated August 22, 1995, canceling sweater portion of agreement effective December 31, 1995. (Incorporated by reference to Exhibit 10.12 contained in the Company's 1995 Form 10-K). 10.13 Agency Agreement between the Company and Zamark, S.p.A., Somma Lombardo, Italy, dated August 3, 1992. (Incorporated by reference to Exhibit 10.7 contained in the Company's 1994 Form 10-K.) 10.13.1 Fax to Zamark dated August 8, 1996, canceling the agreement effective December 31, 1996. 24 10.14 Distributorship Agreement between the Company and Conti Complett, S.p.A., Milan, Italy, dated October 2, 1989. (Incorporated by reference to Exhibit 10.8 contained in the Company's 1994 Form 10-K.) 10.15 Letter from Orizio Paolo, S.p.A., Brescia, Italy, dated July 18, 1995, appointing Company as its exclusive distributor. (Incorporated by reference to Exhibit 10.15 contained in the Company's 1995 Form 10-K). 10.15.1 Independent Distributor Agreement between the Company and Orizio Paolo, S.p.A., dated August 1, 1995. 25 10.16 Split Dollar Insurance Agreement, dated January 15, 1992, between the Company and Richard A. Bigger, Jr., Successor Trustee of the Robert S. Speizman Irrevocable Insurance Trust. (Incorporated by reference to Exhibit 10.13 contained in the 1993 Form S-1.) 10.16.1 First Amendment to Split Dollar Insurance Agreement, dated September 4, 1996, between the Company and Richard A. Bigger, Jr., Successor Trustee of the Robert S. Speizman Irrevocable Insurance Trust. 31 10.17 Lease Agreement between the Company and Speizman Brothers Partnership, dated as of December 12, 1990. (Incorporated by reference to Exhibit 10.14 contained in the 1993 Form S-1.) 10.18 Lease Amendment and Extension Agreement between the Company and Speizman Brothers Partnership dated April 1, 1995. (Incorporated by reference to Exhibit 10.18 contained in the Company's 1995 Form 10-K). 10.18.1 Second Lease Amendment and Extension Agreement between the Company and Speizman Brothers Fifth Street Partnership (formerly Speizman Brothers Partnership), dated April 1, 1996. 33 10.19 Deed of Lease between Speizman Canada, Inc., and Metro II & III, undated, as renewed by letter agreement, dated February 17, 1992. (Incorporated by reference to Exhibit 10.19 contained in the 1993 Form S-1.) 10.20 Letter Agreement extending lease between Speizman Canada, Inc., and Metro II & III, dated October 21, 1994. (Incorporated by reference to Exhibit 10.20 contained in the Company's 1995 Form 10-K). 10.20.1 Memorandum of Agreement of Extension of Lease between Speizman Canada, Inc., and Metro II & III, dated November 21, 1995. 35 10.21 Agreement of Lease between the Company and LBA Properties, Inc., dated June 2, 1994. (Incorporated by reference to Exhibit 10.17.1 contained in the Company's 1994 Form 10-K.) 10.22 Lease Agreement between the Company and B.F. Knott, dated May 12, 1993. (Incorporated by reference to Exhibit 10.18 contained in the Company's 1994 Form 10-K.) 10.23 Modification and Extension of Lease between the Company and B.F. Knott, dated March 29, 1994. (Incorporated by reference to Exhibit 10.18.1 contained in the Company's 1994 Form 10-K.) 10.24 Modification and Extension of Lease between the Company and B.F. Knott, dated October 17, 1994. (Incorporated by reference to Exhibit 10.24 contained in the Company's 1995 Form 10-K). 10.25 Modification and Extension of Lease between the Company and B.F. Knott, dated February 13, 1995. (Incorporated by reference to Exhibit 10.25 contained in the Company's 1995 Form 10-K). 10.25.1 Modification and Extension of Lease between the Company and Berryhill Investment Company, LLC, dated September 27, 1995. 36 10.26 Lease Agreement between the Company and Daniel H. Porter, dated August 17, 1995. (Incorporated by reference to Exhibit 10.26 contained in the Company's 1995 Form 10-K). 10.27 Lease Agreement between the Company and Kathryn B. Godley, dated March 5, 1996. 37 10.28 Lease Agreement between the Company and Hans L. Lengers, LLC, dated February 15, 1996. 45 10.29* 1981 Incentive Stock Option Plan of the Company. (Incorporated by reference to Exhibit 10.19 contained in the 1993 Form S-1.) 10.30* 1991 Incentive Stock Option Plan and Amendment to 1981 Incentive Stock Option Plan of the Company. (Incorporated by reference to Exhibit 10.20 contained in the 1993 Form S-1.) 10.31* 1991 Incentive Stock Option Plan, as Amended and Restated Effective September 20, 1993, of the Company. (Incorporated by reference to Exhibit 10.21 contained in the 1993 Form S-1.) 10.32* 1995 Nonqualified Stock Option Plan of the Company. (Incorporated by reference to the Company's Form S-8 for the Speizman Industries, Inc. Nonqualified Stock Option Plan, File No. 0-8544, filed on June 19, 1996). 10.33* 1995 Stock Option Plan for Non-Employee Directors of the Company. (Incorporated by reference to the Company's Form S-8 for the Speizman Industries, Inc. Stock Option Plan for Non-Employee Directors, File No. 08-544, filed on June 19, 1996). 10.34* Restated Deferred Compensation Agreement, dated May 22, 1989, between the Company and Josef Sklut, as amended by Amendment to Deferred Compensation Agreement, dated December 30, 1992 (the "Deferred Compensation Agreement"). (Incorporated by reference to Exhibit 10.27 contained in the 1993 Form S-1.) 10.35* Restated Trust Agreement, dated May 22, 1989, between the Company and First Citizens Bank and Trust Company, as amended by First Amendment to Trust Agreement dated December 30, 1992, relating to the Deferred Compensation Agreement. (Incorporated by reference to Exhibit 10.28 contained in the 1993 Form S-1.) 10.36* Executive Bonus Plan of the Company, adopted February 2, 1990, as amended March 5, 1990. (Incorporated by reference to Exhibit 10.29 contained in the 1993 Form S-1.) 10.37* Executive Bonus Plan of the Company, adopted July 20, 1993. (Incorporated by reference to Exhibit 10.30 contained in the 1993 Form S-1.) 10.38* Resolutions of the Company's Board of Directors dated November 15, 1995, extending Executive Bonus Plan adopted July 20, 1993. (Incorporated by reference to Exhibit 10.34 contained in the Company's 1995 Form 10-K). 10.39 Redemption Agreement between the Company and Robert S. Speizman, dated May 31, 1974, as amended by Modified Redemption Agreement, dated April 14, 1987, Second Modified Redemption Agreement, dated September 30, 1991, and Third Modified Redemption Agreement, dated as of July 14, 1993. (Incorporated by reference to Exhibit 10.34 contained in the 1993 Form S-1.) 10.40 Fourth Modified Redemption Agreement between the Company and Robert S. Speizman, dated September 14, 1994. (Incorporated by reference to Exhibit 10.36 contained in the Company's 1995 Form 10-K). 10.41 NationsBank of North Carolina, National Association $12,000,000 Credit Facility for Speizman Industries, Inc., dated April 19, 1994. (Incorporated by reference to Exhibit 10.45 contained in the 1994 Form 10-K.) 10.42 1995 Consolidated Amendment Agreement to Loan Agreement and Related Documents dated May, 1995. (Incorporated by reference to Exhibit 10.38 contained in the Company's 1995 Form 10-K). 10.43 1995 Second Consolidated Amendment Agreement to Loan Agreement and Related Documents, dated September 1, 1995. 52 10.44 1995 Third Consolidated Amendment Agreement to Loan Agreement and Related Documents, dated October 31, 1995. 56 10.45 1996 First Consolidated Amendment Agreement to Loan Agreement and Related Documents, dated May 15, 1996. 59 10.46 1996 Second Consolidated Amendment Agreement to Loan Agreement and Related Documents, dated June 26, 1996. 63 10.47 1996 Third Consolidated Amendment Agreement to Loan Agreement and Related Documents, dated August 26, 1996. 65 11 Statement re: Computation of Net Income per Share 68 23 Consent of BDO Seidman 69
* Represents a management contract or compensatory plan or arrangement of the Registrant. EX-10 2 EXHIBIT 10.13.1 *** F A X *** SPEIZMAN INDUSTRIES, INC. P. O. Box 31215, Charlotte, NC 28231 Phone: 704/372-3751 Fax: 704/376-3153 COMPANY: Zamark TOTAL NO. PAGES 1 -------------------------------- ---------- -------------------------- If you do not receive the indicated number of pages, please contact us at 704/372-3751. -------------------------- ATTN: Mr. Gianni Zamarco --------------------------------------------------- FROM: Bob Speizman --------------------------------------------------- DATE: August 8, 1996 --------------------------------------------------- SUBJECT: FAX: 3020/96 --------------------------------------------------- ******************************************************************************** Dear Gianni: Dan Cardoza has been talking to Paisley concerning which additional equipment we want to order from Steiger and Zamark. I have been thinking about our situation for quite some time and have concluded that it would be best for Steiger, Zamark and Speizman to terminate our relationship in a friendly manner. We will continue to service and sell your equipment between now and December 31, 1996. After that time, I feel that we should both be free to pursue our own interests. We have enjoyed our personal relationship with you but feel that our ability to market your equipment in the future would not meet either your expectations or ours. Under these circumstances, we think that it is best for both of us to conclude our relationship. Again, we have enjoyed our relationship and certainly hope that our friendship will continue for many years to come. Sincerely, /s/ Bob Speizman Bob Speizman RSS:dr cc: Mr. Paisley Gordon Mr. Sheldon Ritter P.S. Mr. Ritter will fax you further details tomorrow. EX-10 3 EXHIBIT 10.15.1 INDEPENDENT DISTRIBUTOR AGREEMENT THIS AGREEMENT, made as of the 1st day of August, 1995, by and between ORIZIO PAOLO, S.P.A. ("Orizio"), an Italian corporation with a principal business address of Via Stacca #3, Rodengo Saiano, 25050 Italy and SPEIZMAN INDUSTRIES, INC. ("Distributor"), a Delaware corporation having an office at 508 West 5th Street, Charlotte, North Carolina 28231. WITNESSETH: WHEREAS, Orizio is engaged in the manufacture, production and sale of circular knitting machines and related products; and WHEREAS, Orizio desires to retain Distributor as its sole and exclusive, promoter and distributor of its circular knitting machines and related products that it currently manufactures, as listed and described in Exhibit A attached hereto and incorporated herein by reference, and that it manufactures from time to time during the term hereof (collectively, the "Products"), to apparel manufacturers in the United States of American and the District of Columbia, exclusive of Hawaii and Alaska (the "Territory"); and WHEREAS, Distributor represents that it has the ability to effectively promote, sell and distribute the Products to commercial users in the Territory; and WHEREAS, Distributor agrees not to sell any other brand of new circular knitting machine in consideration of this Agreement; and WHEREAS, the parties, for their mutual benefit, wish to work, together to realize the market potential of the Products in the Territory by enhancing the reputation of the Products and increasing their sales and customers; NOW, THEREFORE, in consideration of the foregoing and of the mutual promises, covenants, terms and agreements hereinafter set forth in this Agreement, the parties hereto do mutually agree as follows: 1. APPOINTMENT 1.1 GRANT OF EXCLUSIVE RIGHT TO PROMOTE AND DISTRIBUTE PRODUCTS IN THE TERRITORY AND ACCEPTANCE: PURCHASING. (a) Orizio hereby grants to Distributor as its independent distributor the exclusive rights to promote, sell and distribute the Products within the Territory. Orizio will assist Distributor in whatever manner it deems proper in the promotion, selling and distribution of the Products. (b) Distributor hereby accepts and acknowledges such a grant, and accepts and acknowledges the sole and exclusive responsibility to distribute the Products within the Territory under the terms and conditions set forth herein. Distribution of the Products by Distributor will begin on or about August 1, 1995. Distributor shall use its best efforts to develop business in, and promote the use of, and sell the Products within the Territory. Distributor shall employ or contract with sufficient sales representatives to develop business in, and promote the use of, and sell the Products within the Territory. (c) Subject to the terms and conditions hereof, Orizio agrees to sell and Distributor agrees to purchase the Products at the prices as set by Orizio at the time of placement of a purchase order for the sale (the "Prices"). Orizio reserves the right to increase the Prices at any time, and from time to time, without prior notice to Distributor. Orizio will use reasonable efforts to provide Distributor with updated Prices after the same are amended. Orizio shall invoice Distributor for sales of Products upon shipment of the same. To secure payment of all invoices hereunder, Distributor shall provide to Orizio an irrevocable letter of credit issued by a financing agency of good international repute. Payment shall be made by such irrevocable letter of credit payable against standard shipping documents ninety (90) days from F.O.B. Brescia, Italy bill of lading. The issuer of such letter of credit, and the form and terms thereof, shall be in all respects acceptable to Orizio. The parties acknowledge that Distributor is in possession of those certain Products listed on Exhibit B attached hereto and incorporated by reference herein. As and when such Products are sold, Distributor shall pay Orizio the price specified for each product as set forth on Exhibit B on a net ninety (90) days basis from the date of delivery of such Products to the third party purchaser. (d) Distributor agrees to purchase and resell the Products under the terms and conditions set forth herein. Distributor shall purchase the Products from Orizio in order to fulfill orders Distributor has solicited from apparel manufacturers in the Territory. 1.2. DISTRIBUTOR IS AN INDEPENDENT CONTRACTOR. It is the intent of the parties that Distributor be and is an independent contractor and shall for all purposes, including tax purposes, have and represent itself as having the status vis-a-vis Orizio of an independent contractor, and nothing in this Agreement shall be construed as constituting Distributor or any member of Distributor's staff as an agent or employee of Orizio, or a partner or joint venturer of or with Orizio, or otherwise authorized to act for or on behalf of Orizio. Distributor is free to engage in any other activities it desires, including the provision of services to others so long as these activities do not interfere with fulfillment of its obligations hereunder. It is expressly understood and agreed between the parties that Distributor will not be treated by Orizio as an employee for federal, state or local tax purposes; that Distributor is solely responsible for such tax liability, and that Distributor is an independent contractor for purposes of the Internal Revenue Code and all other purposes. Without limitation, Distributor shall: (a) be solely responsible for the conduct, direction and operation of its activities, including but not limited to the conduct, sequence of delivery, direction and operation of the activities of its employees, licensees and 2 subcontractors in connection with its business and the performance of its obligations under this Agreement; (b) make no contract, nor incur any obligation for or in the name of or binding upon Orizio and shall not list its place of business as Orizio's office, but only may identify itself as Orizio's independent distributor for the distribution of the Products; (c) provide and maintain at its own expense adequate equipment for the delivery of the products; (d) not pledge Orizio's credit or extend credit in Orizio's name; (e) indemnify and defend Orizio against and save it harmless from any claims which may arise as a result of any representation by Distributor that it has authority to act on behalf of Orizio or to bind Orizio to any obligations whatsoever; and, (f) comply with any and all applicable laws and regulations, including tax laws and regulations, in a manner consistent with Distributor's status as an independent contractor. 2. OBLIGATIONS OF DISTRIBUTOR 2.1. PROMOTIONAL ACTIVITIES. Distributor shall undertake promotional activities on its own account and at its own expense throughout the Territory. In connection with the development and implementation of its promotional and marketing activities for the Products, Distributor shall consult with and solicit suggestions and comments from Orizio. The overriding theme in Distributor's promotional and marketing activities for the products will be to protect and enhance the image of Orizio and the Products. Distributor may participate in trade shows in connection with the promotion of the Products provided that in the event Distributor desires any financial support in connection with such participation, Distributor shall provide ninety (90) days prior written notice to Orizio of such anticipated participation. In the event Orizio in its sole discretion consents to such participation, Orizio agrees to share equally with Distributor the cost of renting space and furniture at the trade show. Distributor will be responsible for all other costs, fees and expenses related to such participation, including, but not limited to, freight costs associated with transporting Products and any other promotional materials to and from the trade show. Orizio, independent of Distributor, has arranged for the promotion of Products at the "ATME-I 1996" trade show. In connection therewith, Distributor agrees to pay for fifty percent (50%) of all costs, fees and expenses, including freight charges, related to such participation. (a) Maintain Adequate Inventory Of The Products. Distributor shall maintain an inventory of the Products and spare parts for the Products at all times during the term hereof in an amount sufficient to adequately service its customers in the Territory. (b) Sales Programs. Distributor and its marketing staff shall formulate and execute sales programs for the Territory and diligently and actively promote and market the Products in the Territory so as to maximize sales of the Products. (c) Maintain Customer Lists. Distributor shall maintain a list of all customers to which it has delivered Products and shall make such list available to Orizio upon request. (d) Warranty Service. Subject to the limitations contained in Article 6 hereof, during the period of any warranty made by Orizio warranting the performance of the Products, and subject to prior authorization from Orizio, Distributor shall perform and deliver 3 all services, parts, and labor in connection with warranty related repairs. Distributor shall make such repairs promptly and in a workmanlike manner. Distributor shall invoice Orizio for the reasonable value of such repairs. (e) After Sales Service. Distributor shall continue to provide customer service and support, in addition to Distributor's other obligations provided herein, after delivery of Products and after the termination of the warranty period on any Products sold by Distributor. 2.3. DISTRIBUTOR'S DEVELOPMENT, TRAINING AND SUPERVISION OF PERSONNEL. Distributor shall at its own cost and expense hire, develop, train and supervise its own personnel, under such terms and conditions as Distributor may deem appropriate. Under no circumstances shall any such personnel be or be considered as employees of Orizio. 2.4. PROVISION OF EQUIPMENT AND EXPENSES BY DISTRIBUTOR. Distributor shall at its own expense provide all equipment necessary to discharge its obligations under this Agreement. All expenses and disbursements in connection with the distribution of the Products hereunder shall be the responsibility of Distributor. 2.5. MAINTAIN TRADE INFORMATION IN CONFIDENCE. Without the prior written consent of Orizio, the Distributor shall not at any time during the term of this Agreement or thereafter communicate or disclose to any unauthorized person or use except as contemplated by this Agreement: (a) any information, data, written materials, records or documents disclosed by Orizio and relating to Orizio customers or operations, (b) any processes related to the manufacture of the Products, and (c) any other confidential information concerning Orizio's business or affairs. Upon termination or expiration of this Agreement, Distributor shall promptly return to Orizio any and all of the written information or material described above. 2.6. DISTRIBUTOR'S COMPLIANCE WITH LAWS AND REGULATIONS. Distributor shall at its cost and expense comply with all applicable federal, state and local laws and regulations in connection with its performance hereunder and shall secure any and all licenses, permits and other authorizations which may be required in connection with furnishing the services and operating the facilities and equipment required by this Agreement. 2.7. TRIALS AND DEMONSTRATIONS. Distributor, upon the prior consent of Orizio, may from time to time sell Products to customers on a trial or demonstration basis; provided, however, that such trial period may never exceed a maximum of ninety (90) days from the date of installation of the Product at the customer's facility and provided further that Distributor may not allow more than six (6) trial Products to be on trial concurrently with one or more customers. All sales on a trial basis must be evidenced by written sales orders, containing the period of the trial, and with the customer's understanding that the sale will be final subject to the successful operation and functioning of the Product. All risk of loss, rejection and/or other liability for the cost, freight and duty for Products sold by Distributor on a trial basis shall be determined by agreement between the parties on a case by case basis. 4 3. RIGHTS AND OBLIGATIONS OF ORIZIO. 3.1. DELIVERY OF PRODUCTS TO DISTRIBUTOR. During the term of this Agreement, Orizio shall deliver first quality Products to Distributor for distribution to its customers. No order from Distributor for the Products shall be binding upon Orizio until accepted by Orizio. Orizio, in its sole discretion, may accept or reject any order placed by distributor, in whole or in part. Orizio will promptly, but in any event within ten (10) business days of receipt of such order, notify Distributor of its acceptance or rejection of such order. If within ten (10) business days of receipt of any order from Distributor Orizio fails to notify Distributor of its acceptance or rejection of such order, then such order shall be deemed rejected by Orizio. All shipments hereunder shall be F.O.B. Brescia, Italy. 4. TRADEMARK RIGHTS. 4.1. LICENSE, OWNERSHIP AND USE OF ORIZIO TRADEMARKS. Orizio hereby grants to Distributor, and Distributor accepts, a limited non-transferable non-exclusive license to use Orizio's names and marks (the "Orizio Marks"), whether now or hereafter registered with appropriate regulatory agencies, solely for the Products and during the term of and in accordance with this Agreement. Distributor expressly understands and acknowledges that Orizio has developed significant goodwill in connection with the Orizio Marks and that Distributor shall not by virtue of this Agreement or performance under it acquire any interest in the Orizio Marks. All right, title and interest in and to the Orizio Marks used in connection with the sale of the Products shall be and remain in Orizio subject to the license granted herein. All packaging of the Products by Distributor shall include Orizio Marks, which shall be used in association and combination with Distributor's names, marks and logos. Distributor shall identify all of the Products sold under this Agreement as those of Orizio, and Distributor shall not use the Orizio Marks in connection with the sale or distribution of products other than those manufactured by Orizio. Upon and after termination of this Agreement, Distributor shall not use said Orizio Marks or similar names or marks in any way. 4.2. NOTICE OF POSSIBLE INFRINGEMENT. Distributor shall immediately bring to the attention of Orizio any improper or wrongful or confusing use of the Orizio Marks, emblems, designs or packages, or confusingly similar names, marks, emblems, designs or packages or other similarly industrial or commercial rights on products which come to its notice or attention, together with such information as will enable Orizio to identify the sources of such improper or wrongful or confusing use. Distributor will also use every effort to safeguard the property rights and interests of Orizio in its name, marks, emblems, designs and packages and other similar commercial and industrial rights, and assist Orizio at its request in taking all steps necessary to defend its rights in connection with the Orizio Marks. 5. AGREEMENT TERM AND TERMINATION. 5.1. INITIAL TERM; RENEWAL. This Agreement shall have an initial term of two (2) years from the date first written above, subject to earlier termination as set forth herein. The term of this Agreement will be extended and renewed for successive additional one (1) year terms unless one 5 party provides sixty (60) days prior written notice of termination prior to the expiration of the initial two (2) year term or any renewal term. 5.2. TERMINATION BY ORIZIO. Orizio may terminate this Agreement immediately upon written notice to Distributor: (a) If Distributor fails to perform or comply with any of the provisions hereunder which are material to this Agreement, and such failure is not cured within thirty (30) days after the giving of written notice of such failure to Distributor; (b) If Distributor liquidates or dissolves; (c) If Distributor files a voluntary petition in bankruptcy or is adjudicated bankrupt or insolvent, or files any petition or answer seeking any arrangement, composition, readjustment or similar relief for itself under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law relative to bankruptcy, insolvency or other relief for debtors; (d) If a court of competent jurisdiction issues an order, judgment or decree approving a petition filed against Distributor seeking any arrangement, composition, readjustment or similar relief under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law relating to bankruptcy, insolvency or other relief for debtors, and Distributor acquiesces in the entry of such order, judgment or decree; or (e) If Distributor, during the initial term, or any renewal term hereunder, directly or indirectly, either individually or as an independent contractor, agent, partner, shareholder, investor, owner or distributor or in any other capacity participates or engages in, or assists others in participating or engaging in the business of manufacturing, promoting, packaging, selling or distributing any other brand, make or model of new circular knitting machines, other than those produced by Orizio, engages in any practice or activity that competes with the interests of Orizio, or engages in any practice or activity that interferes with Distributor's obligations hereunder. 5.3. TERMINATION BY DISTRIBUTOR. Distributor may terminate this Agreement immediately upon written notice to Orizio: (a) If Orizio fails to perform or comply with any of the provisions hereunder which are material to this Agreement, and such failure is not cured within thirty (30) days after the giving of written notice of such failure to Orizio; (b) If Orizio liquidates or dissolves; (c) If Orizio fails a voluntary petition in bankruptcy or is adjudicated bankrupt or insolvent, or files any petition or answer seeking any arrangement, composition, readjustment 6 or similar relief for itself under the present or future federal bankruptcy act or any other present or future applicable federal, state or other statute or law relative to bankruptcy, insolvency or other relief for debtors; (d) If a court of competent jurisdiction issues an order, judgment or decree approving a petition filed against Orizio seeking any arrangement, composition, readjustment or similar relief under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law relating to bankruptcy, insolvency or other relief for debtors, and Orizio acquiesces in the entry of such order, judgment or decree. 5.4. EFFECT OF TERMINATION OR EXPIRATION. On the effective date of termination or expiration of this Agreement, each party to this Agreement shall be released from all of its rights and obligations under this Agreement without compensation except the following which shall survive termination. (a) The right to receive any favorable balance and the obligation to pay any unfavorable balances remaining due and unpaid to the other party from whatever source, on that date; and (b) Distributor's obligation not to use the Orizio Marks or similar names or marks as set forth in Paragraph 4. Notwithstanding anything states to the contrary herein, either party shall remain liable to the other for damages which arise from a material breach of this Agreement. 6. ORIZIO'S REPRESENTATIONS AND WARRANTIES. (a) Orizio hereby represents and warrants to Distributor that: (i) Limited Express Warranty. Except as otherwise specified in writing by Orizio, the Products will be free from defects in material and workmanship under normal use and maintenance for a period of six (6) months from the time of shipment to Distributor. Needles and sinkers are expressly excluded from this limited warranty. If a Product covered by this limited express warranty fails to conform to this limited express warranty, Distributor's sole remedy shall be limited to replacement of the non-conforming or defective part. Distributor shall be bound by and limited to Orizio's limited express warranty as the same may be amended any time and from time to time. (ii) Orizio Marks. Orizio is the owner of the Orizio Marks and has the right to license the use of the Orizio Marks. (b) THE LIMITED EXPRESS WARRANTY CONTAINED IN SECTION 6 (A) (I) ABOVE IS IN LIEU OF ALL OTHER WARRANTIES, AND ORIZIO EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. SUCH LIMITED 7 EXPRESS WARRANTY SETS FORTH DISTRIBUTOR'S SOLE REMEDY IN CONNECTION WITH THE SALE AND USE OF THE PRODUCTS. IN NO EVENT SHALL ORIZIO BE RESPONSIBLE FOR LOSS, DAMAGE OR LIABILITY RESULTING FROM PRODUCTS WHICH ARE NOT INSTALLED, OPERATED OR MAINTAINED IN CONFORMITY WITH ORIZIO'S WRITTEN SPECIFICATIONS. LIKEWISE, ORIZIO IS NOT RESPONSIBLE FOR INDIRECT, SPECIAL OR CONSEQUENTIAL LOSSES OR DAMAGES, INCLUDING BUT NOT LIMITED TO INTERRUPTION OF PRODUCTION OR DEFECTIVE FABRIC RESULTING FROM THE USE OF THE PRODUCTS, OR LOST PROFITS, ANTICIPATED SALES, OR BUSINESS INTERRUPTION. IN NO EVENT SHALL ORIZIO BE LIABLE FOR ANY LOSS, DAMAGE OR INJURY OF ANY NATURE ARISING OUT OF THE SALE OR USE OF THE PRODUCTS, WHETHER FOR NEGLIGENCE, BREACH OF CONTRACT OR UNDER ANY LEGAL THEORY. (c) Distributor shall not in any promotion, sales agreement, purchase order, invoice or other document, represent, either in writing or orally to any customer, potential customer or third party, that Distributor's warranties or guaranties related to the Products are broader in scope or coverage than those warranties or guaranties provided by Orizio related to the Products as the same may be amended at any time and from time to time. 7. NOTICES. Any notice required or authorized to be given by either party to the other shall be in writing in the English language, and shall be served by hand delivering or mailing it addressed to such other parts as follows: In the case or Orizio: Orizio Paolo, S.p.A. Via Stacca #3 Rodengo Saiano 25050 Italy Attention: Alberto Orizio In the case of Distributor: Speizman Industries, Inc. 508 West 5th Street Charlotte, North Carolina 28202 U.S.A. Attention: Bob Speizman Any notice proved to be hand delivered shall be deemed to have been served on the date delivered. Any notice proved to have been mailed as described above shall be deemed to have been served the day it was deposited in the United States mails, postage prepaid. 8. RESOLUTION OF DISPUTES. In order to resolve disputes between the parties efficiently, all disputes between the parties relating to or arising out of this Agreement or the subject matter hereof, which include without limitation those disputes involving termination for cause, 8 statutory claims and any other claims related thereto or arising therefrom shall be settled in the following manner: 8.1. MEETING OF PARTIES. Notice of a demand for a meeting of the parties ("Notice of Meeting") may be given by any party. Such notice must be in writing and must be sent to all of the parties hereto. The Notice of Meeting shall set a date at least ten (10) business days, but no more than twenty (20) business days from the date of the Notice of Meeting on which the parties shall meet during normal business hours at a mutually agreed location to discuss and settle their dispute(s). The day of the meeting shall be a normal business day unless otherwise mutually agreed. If within five (5) days after the date of the meeting held pursuant to the Notice of Meeting, the parties have not resolved their dispute(s), then the parties may proceed pursuant to Paragraph 8.2. 8.2. JURISDICTION AND VENUE. Any controversy or claim arising out of or relating to this contract, or the breach thereof, not resolved between the parties by a meeting pursuant to paragraph 8.1 shall be subject to the jurisdiction and heard before the Court of Law of Brescia (Italy). The parties hereto hereby consent to the jurisdiction and venue of such court and hereby waive any objection to such jurisdiction and venue. 8.3. FEES. All fees and expenses associated with the arbitration shall be divided equally between the parties provided, however, that each party shall be responsible for its own attorney's fees and disbursements. 9. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of Italy. 10. BENEFIT. Except as otherwise provided, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. Except as specifically noted in this paragraph, Orizio and Distributor do not intend, and have not, created any benefit in this Agreement to any third party. 11. MODIFICATION; WAIVER. No modification, amendment or waiver of the provisions of this Agreement shall be effective unless in writing specifically referring to this Agreement and signed by the parties to this Agreement. Any waiver of any provision of this Agreement shall be valid only for a given instance and shall not be deemed continuing, nor shall any such waiver be construed as a waiver of any other provision of this Agreement. Failure of Orizio or Distributor, as the case may be, in any instance to insist upon a strict performance of the terms of this Agreement by the other party shall not be construed as a waiver or relinquishment of such provisions for the future or to affect either the validity of this Agreement or any part of it, but this Agreement shall continue in full force and effect in accordance with its terms. 12. SEVERABILITY. The validity or unenforceability of any particular provision of this Agreement shall not affect other provisions of it, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted. 9 13. FORCE MAJEURE. In the event performance by Orizio or Distributor of any obligations hereunder is delayed or prevented by a "force majeure," the obligation of the parts so affected shall be suspended, except with respect to the obligation for the payment of money, during the continuance of the force majeure. Force majeure shall mean any cause whatsoever beyond the control of either party, including, but not limited to, acts of God, flood, fire, war, riot, strike or other labor disputes, and failure or inability to obtain raw materials or transportation facilities. Any party claiming to be affected by force majeure shall promptly give written notice to the other party of the start of the force majeure cause, with details of the cause, and of the end of the force majeure cause. 14. HEADINGS/PRONOUNS. The Paragraph headings of this Agreement are for the convenience of the parties and shall not be construed as having any legal or binding meaning or effect. All references made and all nouns and pronouns used herein shall be construed in the singular or plural and in such gender as the sense and circumstances require. 15. FURTHER ASSURANCES. The parties will perform all other acts and execute and deliver all other documents necessary or appropriate to carry out the intent and purposes of this Agreement. 16. ENTIRE AGREEMENT. All prior agreements and understanding between the parties or their predecessors relating to the subject matter of this Agreement are hereby terminated, and this Agreement constitutes the entire understanding and agreement between the parties to it with respect to its subject matter, and cancels and supersedes any prior negotiations, understandings and agreements, whether oral or written, with respect to the subject matter of this Agreement. 17. COUNTERPARTS. This Agreement may be executed by the parties hereto in any number of counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a copy hereof containing multiple signature pages, each signed by less than all, but together signed by all of the parties hereto. 18. EXHIBITS. The Exhibits are a part of this Agreement as if fully set forth herein. All references herein to articles, sections, subsections, clauses and Exhibits shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. [Signatures on following page] 10 IN WITNESS WHEREOF, the parties have set their hands and the corporate parties their seals to this Agreement as of the date first above written. ORIZIO: Orizio Paolo, S.p.A. ATTEST: By: /s/ Alberto Orizio ------------------ Secretary Title: (Corporate Seal) DISTRIBUTOR: Speizman Industries, Inc. ATTEST: By: /s/ Robert S. Speizman ---------------------- Secretary Title: President (Corporate Seal) 11 EX-10 4 EXHIBIT 10.16.1 FIRST AMENDMENT TO SPLIT DOLLAR INSURANCE AGREEMENT This Agreement is made this 4th day of September, 1996 between SPEIZMAN INDUSTRIES, INC. ("Employer") and RICHARD A. BIGGER, JR., Successor Trustee of the Robert S. Speizman Irrevocable Insurance Trust dated January 16, 1976 ("Trustee"). W I T N E S S E T H: WHEREAS, the parties made an Agreement dated January 15, 1992, relating to an insurance policy held by the Trustee insuring the life of Robert S. Speizman ("Employee"); and WHEREAS, the insurance policy covered by the original Split Dollar Agreement has been surrendered by the Trustee, and replaced by Phoenix Home Life Insurance Company Policy #U015277; and WHEREAS, the parties desire to subject this new policy to the original Split Dollar Insurance Contract, in place of the insurance policy described in the original Split Dollar Insurance Agreement; NOW THEREFORE, in consideration of the premises, the parties agree that paragraph 1 of the Agreement dated January 15, 1992 is hereby changed to refer to Phoenix Home Life Insurance Company Policy #U015277 on the life of the Employee in the face amount of Two Million Dollars ($2,000,000.00), which policy is described on the attached Schedule A. Except as modified herein, the original Split Dollar Insurance Agreement dated January 15, 1992 remains in full force and effect. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written, pursuant to authority duly given. SPEIZMAN INDUSTRIES, INC. (CORPORATE SEAL) By: (Signature of Robert S. Speizman) -------------------------------- President ATTEST: (Signature of: Josef Sklut) - ------------------------------ Secretary (Signature of Richard A. Bigger, Jr.) ------------------------------------ Richard A. Bigger, Jr., Trustee I consent to this Agreement and insurance covering my life owned by Trustee. (Signature of Robert S. Speizman) --------------------------------- Robert S. Speizman -2- SCHEDULE A It is agreed, pursuant to the foregoing Split Dollar Life Insurance Agreement dated January 15, 1992, as amended 4 Sep., 1996, that the following described policy of life insurance will be subject to the provisions of said Agreement: Policy #U015277 issued by Phoenix Home Life Insurance Company on June 15, 1996, insuring the life of Robert S. Speizman. -3- COLLATERAL ASSIGNMENT ASSIGNMENT made 4 Sep., 1996 by RICHARD A. BIGGER, JR., Successor Trustee under Agreement of ROBERT S. SPEIZMAN dated January 16, 1976, ("Assignor"), to SPEIZMAN INDUSTRIES, INC. ("Assignee"). FOR VALUE RECEIVED, the Assignor hereby assigns to the Assignee Insurance Policy #U015277 issued by Phoenix Home Life Insurance Company on the life of Robert S. Speizman, as collateral security to the extent of the indebtedness of the Assignor to the Assignee. The Assignee shall have the right to reassign its interest but only to the Assignor. The Assignee will not have the right to surrender the policy for its cash value. Except as specifically herein granted to the Assignee, the Assignor will retain all incidents of ownership in the policy. (Signature of Richard A. Bigger, Jr.) ------------------------------------- Richard A. Bigger, Jr. Successor Trustee under Agreement of Robert S. Speizman, dated January 16, 1976. ASSIGNOR Dated: 4 Sep. 96 SPEIZMAN INDUSTRIES, INC. By: (Signature of: Josef Sklut) Title: VP Finance ASSIGNEE Dated: 4 Sep. 96 -4- EX-10 5 EXHIBIT 10.18.1 STATE OF NORTH CAROLINA SECOND LEASE AMENDMENT COUNTY OF MECKLENBURG AND EXTENSION AGREEMENT This SECOND LEASE AMENDMENT AND EXTENSION AGREEMENT (the "Agreement"), is made effective the first day of April, 1996, by and between SPEIZMAN BROTHERS FIFTH STREET PARTNERSHIP (formerly SPEIZMAN BROTHERS PARTNERSHIP) ("Lessor") and SPEIZMAN INDUSTRIES, INC. ("Tenant"). STATEMENT OF PURPOSE A. Lessor entered into a written Lease Agreement with Tenant dated December 12, 1990 (the "Lease"), pursuant to which Lessor leased to Tenant and the Tenant leased from Lessor the Leased Premises described therein which are located at 508 West Fifth Street, Charlotte, North Carolina. B. The parties entered into a First Lease Amendment and Extension Agreement effective April 1, 1995, and the parties now wish to further amend the Lease to extend the lease term and modify the rents payable thereunder. NOW, THEREFORE, in consideration of the Statement of Purpose (which by this reference is made a substantive part of this Lease Amendment and Extension Agreement) and other valuable consideration exchanged, the adequacy, sufficiency and delivery of which are acknowledged by the parties, Lessor and Tenant mutually agree: 1. INCORPORATION OF STATEMENT OF PURPOSE. The parties hereto ratify and incorporate by reference the Statement of Purpose set forth above. 2. ADDITIONAL TERM. Lessor hereby leases and demises to Tenant and Tenant hereby rents and takes from Lessor the Leased Premises for an additional term of two years commencing at midnight on the first day of April, 1996 and ending on March 31, 1998, upon the same terms and conditions as set forth in the Lease, except as herein modified. 3. RENTAL DURING ADDITIONAL TERM. The rent amount during each year of the Additional Term will be the sum of Three Hundred Fifty-six Thousand Twenty-two and 86/100 Dollars ($356,022.86), payable in equal monthly installments of Twenty-nine Thousand Six Hundred Sixty-eight and 57/100 Dollars ($29,668.57), payable on the first business day of each month during the term hereof, commencing on the first day of April, 1996. 4. RATIFICATION OF LEASE. Except as herein amended and extended, the parties ratify and confirm the Lease. Further, as of the date of this Agreement, Tenant hereby certifies to Lessor that: (a) the Lease, as amended, is in full force and effect; (b) Lessor has performed all of its obligations and satisfied all of its conditions arising under the Lease; and (c) Tenant has not assigned, sublet or encumbered its interest in the Lease. 5. BINDING EFFECT. This Agreement shall be binding upon and shall inure to the benefit of Lessor and the parties constituting the Tenant, jointly and severally, and their respective personal representatives, heirs, successors and permitted assigns. 6. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties hereto, and no change, qualification or cancellation hereof shall be effective unless set forth in a writing signed by the parties hereto. 7. NOTICES. All notices, requests, consents and other communications in connection with this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed in the United States Mail, First Class, postage prepaid and addressed as follows: As to Seller: Speizman Brothers Fifth Street Partnership c/o Robert S. Speizman 508 West 5th Street P.O. Box 31215 Charlotte, North Carolina 28231 As to Tenant: Speizman Industries, Inc. 508 West 5th Street P.O. Box 31215 Charlotte, North Carolina 28231 8. SEVERABILITY. In the event that any portion of this Agreement is found to be in violation of or conflict with any federal or state law, the parties agree that the invalidity or unenforceability of such provision shall in no way render invalid or unenforceable any other part or provision hereof. 9. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the applicable provisions of North Carolina law, and the parties hereto do further agree and stipulate that any dispute hereunder shall be brought in the court of proper jurisdiction (State or Federal) in Charlotte, Mecklenburg County, North Carolina. -2- IN WITNESS WHEREOF, the Lessor and Tenant have each executed this Agreement as of the day and year set forth above. SPEIZMAN BROTHERS FIFTH STREET PARTNERSHIP (Signature of Robert S. Speizman) (SEAL) --------------------------------- Robert S. Speizman, Partner (Signature of Lawrence J. Speizman) (SEAL) ----------------------------------- Lawrence J. Speizman, Partner SPEIZMAN INDUSTRIES, INC. (Signature of Robert S. Speizman) --------------------------------- Robert S. Speizman, President ATTEST: (Signature of: Josef Sklut) - ------------------------------ Secretary [CORPORATE SEAL] -3- STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG I, Dana Gail Russell a Notary Public in and for said County and State do hereby certify that ROBERT S. SPEIZMAN, as a General Partner of SPEIZMAN BROTHERS FIFTH STREET PARTNERSHIP, personally appeared before me this day and acknowledged the due execution of the foregoing instrument. Witness my hand and notarial seal, this the 16th day of November, 1995. (Signature of Dana Gail Russell) -------------------------------- Notary Public My Commission Expires: June 25, 1996 [SEAL] STATE OF FLORIDA COUNTY OF PALM BEACH I, Lisa Lott Grasso a Notary Public in and for said County and State do hereby certify that LAWRENCE J. SPEIZMAN, as a General Partner of SPEIZMAN BROTHERS FIFTH STREET PARTNERSHIP, personally appeared before me this day and acknowledged the due execution of the foregoing instrument. Witness my hand and notarial seal, this the 21st day of November, 1995. (Signature of Lisa Lott Grasso) ------------------------------- Notary Public My Commission Expires: Dec. 28, 1998 [SEAL] -4- STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG I, Dana Gail Russell, a Notary Public of the County and State aforesaid, certify that ROBERT S. SPEIZMAN personally came before me this day and acknowledged that he is the President of SPEIZMAN INDUSTRIES, INC. and that by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name, sealed with its corporate seal and attested by its Corporate Secretary. Witness my hand and official stamp or seal, this the 16th day of November, 1995. (Signature of Dana Gail Russell) -------------------------------- Notary Public My Commission Expires: June 25, 1996 [SEAL] -5- EX-10 6 EXHIBIT 10.20.1 MEMORANDUM OF AGREEMENT OF EXTENSION OF LEASE MADE AND ENTERED INTO THE CITY OF AND DISTRICT OF MONTREAL, ON THIS 21ST DAY OF NOVEMBER 1995. BY AND BETWEEN: METRO II & III (G.P.), general partnership, having its head office and principal place of business at 8300 Pie IX, Montreal, Province of Quebec, H1Z 4E8, herein acting and represented by Mr. Jordan Aberman, duly authorized for these purposes, (hereinafter referred to as "Lessor") AND: SPEIZMAN CANADA INC., body politic duly incorporated having its head office and principal place of business at 5205-B Metropolitain East, St-Leonard, Province of Quebec, H1R 1Z7, herein acting and represented by Josef Sklut, its V.P. duly authorized by virtue of a resolution of its Board of Directors, a certified extract of which is annexed to these present; (hereinafter referred to as "Lessee") WHEREAS the Lessor is the owner of that certain building bearing civic address 5205 Metropolitan East, St-Leonard, Province of Quebec ("Building"); WHEREAS in virtue of a lease ("Lease") the Lessee leased those certain premises bearing civic address 5205 Metropolitain East, Suite "3", St-Leonard, Province of Quebec, ("Leased Premises"), for the period commencing on the first day of March 1989 and terminating on the last day of February 1992, as morefully described in the said Lease; WHEREAS the Lessee and Lessor did extend the Lease for a further period of THREE (3) years from the first day of March 1992 to the last day of February 1995 by agreement dated February 3, 1992 ("Renewal"); and the parties did extend the Renewal for a further period of ONE (1) year from the first day of March, 1995 to the last day of February 1996 by agreement dated October 21, 1994; WHEREAS both the Lessor and the Lessee wish to extend the Lease for a further term of ONE (1) year under the following terms and conditions: THEREFORE THE PARTIES AGREE AS FOLLOWS: 1 1. This Memorandum of Agreement is made upon and subject to the same terms and conditions as set forth in the Lease including the rental rate which shall be THREE HUNDRED AND FIFTEEN DOLLARS ($315.00), plus G.S.T. and Q.S.T. and any applicable taxes, gross per month, save and except for its proportion of the non-residential municipal surtax. 2. The term of the Lease which presently expires on the last day of February 1996 and shall be extended from the first day of March 1996 and shall expire on the last day of February, 1997, unless sooner terminated in the manner set forth in the Lease; 3. Effective the first day of March 1, 1996 until the last day of February 1997, the limit of the Insurance stipulated in Clause 9 of the Lease shall not be less than TWO MILLIONS DOLLARS ($2,000,000.00) during the term of this Memorandum of Agreement. 4. The Lessee accepts the Leased Premises in its present state and condition. 5. The Lessee, as security for the performance of its obligations under the Lease, grants to the Lessor a moveable hypothec for the sum of FOUR THOUSAND DOLLARS ($4,000.00) with interest at the rate of twenty-five per cent (25%) per annum, calculated semi-annually, not in advance, on all of the movable, corporeal or incorporeal, present and future, located at 5205 Metropolitain East, St-Leonard, Province of Quebec, H1R 1Z7; 6. Except as hereinbefore specifically modified, supplemented and amended, and as so modified, supplemented and amended, the Lease shall remain in full force and effect. 7. The Parties have requested that this Memorandum of Agreement be prepared in the English language. Les parties ont demande que la presente convention soit redigee en anglais. IN WITNESS WHEREOF, THE LESSEE AND THE LESSOR HAVE DULY SIGNED AND EXECUTED THESE PRESENTS ON THE DATE HEREINABOVE MENTIONED. METRO II & III (G.P.) Per: (Signature of Jordan Aberman) (Signature of Helene Mallette) ----------------------------- ------------------------------ Jordan Aberman Witness SPEIZMAN CANADA INC. Per: (Signature of Josef Sklut) (Signature of Dana Russell) ----------------------------- ------------------------------- VP Finance Witness 2 EX-10 7 EXHIBIT 10.25.1 STATE OF NORTH CAROLINA MODIFICATION AND EXTENSION OF LEASE COUNTY OF MECKLENBURG THIS MODIFICATION AND EXTENSION OF LEASE made this 27 day of September, 1995, by and between Berryhill Investment Company, LLC, hereinafter "Landlord" and Speizman Industries, Inc., hereinafter "Tenant": WITNESSETH WHEREAS, B.F. Knott, as landlord, entered into a lease dated May 10, 1993 with Tenant, hereinafter the "Lease Agreement", regarding the lease of approximately 25,000 square feet of space in a building at 1306 Berryhill Road, Charlotte, North Carolina, hereinafter the "Premises"; and WHEREAS, B.F. Knott and Tenant have modified and extended the Lease Agreement through April 30, 1996; and WHEREAS, B.F. Knott has transferred to Landlord his interest in the Premises; and WHEREAS, Landlord desires to confirm the Lease Agreement as modified and extended, and Landlord and Tenant desire to further modify and extend the Lease Agreement; NOW, THEREFORE, the parties hereto do hereby ratify and affirm the provisions of the Lease Agreement, dated May 10, 1993, as modified and extended, and further modify and extend the Lease Agreement as follows: 1. The parties extend the Lease Agreement as modified for the twenty-six (26) months beginning November 1, 1995 and ending December 31, 1997. 2. The parties agree that the Premises shall include, in addition to the original premises of approximately 25,000 square feet, an additional space of approximately 15,650 square feet located adjacent to the original premises, for a total of approximately 40,650 square feet. 3. Tenant shall pay to Landlord rental in the amount of $9,315.63 per month for the fourteen (14) months from November, 1995 through December, 1996; and $9,654.38 per month for the twelve (12) months of 1997, totalling $246,271.38 for the extension period. 4. During the last six (6) months of this extension period, Landlord may place signs on the property and Landlord may show the Premises to prospective purchasers and/or tenants during all reasonable hours upon reasonable notice to Tenant. 5. Upon departure from the Premises, Tenant will clean all warehouse floors and leave them free of grease, oil, dirt and other foreign material and Tenant will clean all carpeting in the offices. 6. All other terms and conditions of the Lease Agreement dated May 10, 1993 shall remain the same. IN WITNESS WHEREOF, this Modification and Extension of Lease has been duly executed by the new Landlord and the Tenant as of the day and year first above written. LESSOR: Berryhill Investment Company, LLC By: (Signature of Susan K. Floyd) ------------------------------------ Member/Manager LESSEE: SPEIZMAN INDUSTRIES, INC. By: (Signature of Josef Sklut) ----------------------------------- Vice President, Finance EX-10 8 EXHIBIT 10.27 STATE OF NORTH CAROLINA LEASE COUNTY OF MECKLENBURG THIS LEASE, made and entered into as of the 5th day of March, 1996 by and between KATHRYN B. GODLEY, a North Carolina resident with her principal office in Charlotte, North Carolina (hereinafter called the "Lessor"), party of the first part, and SPEIZMAN INDUSTRIES, INC., a Delaware corporation with its principal office in Charlotte, North Carolina (hereinafter called the "Lessee"), party of the second part: W I T N E S S E T H: WHEREAS, the parties desire to enter into a lease (the "Lease") pursuant to which the Lessee shall lease from the Lessor a one story building located at 4112 Joe Street, Charlotte, North Carolina containing approximately 45,000 square feet; NOW THEREFORE, in consideration of the rental to be paid to the Lessor by the Lessee, as hereinafter provided, and of the covenants and agreements upon the part of the Lessor and the Lessee to be kept and performed, the parties hereto do hereby agree as follows: The Lessor hereby demises and leases to the Lessee, and the Lessee leases from the Lessor, those premises including approximately 45,000 square feet located at 4112 Joe Street, Charlotte, North Carolina, all structures thereon and appurtenances thereto more particularly described as Mecklenburg County Tax Parcel 077-133-07, to be occupied and used as a warehouse facility (hereinafter called the "Premises"). 1. TERM OF THIS LEASE. The term of this Lease shall be for twenty four (24) months and shall begin on March 15, 1996 and terminate on March 14, 1998. 2. (A) RENTAL. The Lessee hereby agrees to pay to Lessor as rental for the Premises for the term hereof the sum of Two Hundred Twenty Five Thousand Dollars ($225,000) payable in monthly installments of Nine Thousand Three Hundred Seventy Five Dollars ($9,375). Each monthly payment is due and payable on the first day of each month for that month's rent. All payments are to made to Lessor at Post Office Box 1208, Davidson, North Carolina 28036 until notice to contrary is given by Lessor. (B) SECURITY DEPOSIT. Lessor acknowledges receipt of Lessee's security deposit in the amount of $9,375.00 for the faithful performance of all terms, covenants and conditions of this Lease. Lessee agrees that Lessor may apply said security deposit to remedy any failure by Lessee to repair or maintain the Premises or to perform any other terms, covenants or conditions contained herein, provided Lessee is given written notice of such failure and thirty (30) days to cure same. If Lessee has kept and performed all terms, covenants, and conditions of this Lease during the term and any extensions thereof, Lessor will on the termination hereof promptly return the sum to Lessee at the expiration of the Lease term. Should Lessor use any portion of the sum to cure any default hereunder, Lessee shall replenish said sum to such original amount. Lessor shall not be required to keep any security deposit separate from its general funds, and Lessee shall not be entitled to interest on any such deposit. Upon the occurrence of any events of default described in paragraph (20) of this Lease, the security deposit shall be used toward curing such default, provided notice is given as required by this subparagraph 2(b). Subject to other terms and conditions contained in this Lease, if the Premises are conveyed by Lessor, the security deposit may be turned over to Lessor's grantee, and if so, Lessee hereby releases Lessor from any and all liability with respect to said deposit and its application or return, provided that Lessor's grantee agrees to accept attornment from Lessee and agrees in writing to be bound by the terms hereof. (C) EXISTING LEASE WITH FERGUSON BOX. Lessor and Lessee acknowledge that there presently exists a lease for a portion of the premises in favor of Ferguson Supply and Box Mfg. ("Ferguson") dated March 7, 1995, which said lease provides that it is a thirty (30) day lease which automatically renews until thirty (30) days advance notice is given to terminate by either party. It is understood and agreed between the parties hereto that it is Lessor's intention to give notice of the termination of the Ferguson lease upon the execution of this Lease, provided that Lessee accommodates such termination and Lessor does not suffer any rental loss on account thereof. Accordingly, Lessor hereby agrees to give notice of termination to Ferguson immediately upon execution of this Lease and Lessee agrees to accommodate Lessor as to said termination in that Lessee will not assert its rights to the Ferguson space until such time as the soonest notice possible would be effective. Should Ferguson not vacate the Premises at the end of the earliest possible notice period as provided herein, Lessee shall have the option of terminating this Lease and all of its rights and obligations hereunder or of proceeding with this Lease subject to the removal of Ferguson by legal process. In such event, Lessee shall give written notice to Lessor of its election within fifteen (15) days of the date upon which Ferguson was required to vacate the Premises. 3. UPFITTING AND ACCEPTANCE OF PREMISES. Lessee accepts the Premises in their current condition with the exception that Lessor shall provide at Lessor's expense alteration to the dock doors to provide two 10' wide and 12' tall dock openings from the existing dock doors as depicted and located on Exhibit "A" attached hereto and incorporated herein by reference. 4. UTILITIES AND SERVICES. During the term of this Lease and any extensions thereof, Lessee shall provide and pay for all utilities upon the Premises, including but not limited to lights, heat, water, gas, electricity, storm water assessment, and security system. 5. ALTERATIONS. (a) The Lessee, may, at its own expense, make such alterations, additions, improvements and changes to the Premises as it may deem necessary or -2- expedient in the operation of its business, provided the Lessee obtains the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Any alteration, addition, or improvement or change shall be subject to the following conditions: (i) No change or alteration shall at any time be made which shall impair the structural soundness of the Premises. (ii) No change or alteration shall be undertaken until the Lessee shall have procured and paid for all required building permits and authorizations. (iii) All work done in connection with any change or alteration shall be done in a good and workmanlike manner and in compliance with the building and zoning laws of the City of Charlotte, County of Mecklenburg and State of North Carolina, and with all other applicable laws, ordinances, orders, rules and regulations. Any improvement to the Premises or any part thereof during the term of this Lease shall at once become the absolute property of the Lessor without payment of any kind therefor. (b) Notwithstanding the foregoing subparagraph 5(a), all machinery, fixtures, furniture, equipment (including, but not necessarily limited to, all machinery and equipment which may be attached to the floor or walls of the Premises), and other personal property installed in the Premises at Lessee's expense, regardless of the manner of attachment to the realty, shall be and remain personal property and the property of Lessee, removable by it at its option at the expiration or sooner termination of this Lease, provided such removal is completed by the expiration of this Lease. Lessee shall, however, repair, any damage caused by said removal or by the manner in which said property is affixed to the realty, and shall restore the Premises to its original condition, reasonable wear and tear, and loss by fire or other casualty excepted. If Lessee fails to remove such property within the period herein specified, such property not removed by Lessee shall be deemed abandoned by Lessee and become, at Lessor's option, the property of the Lessor. Lessee agrees to save Lessor harmless on account of any claim or lien of mechanics, materialmen or others in connection with any alterations, additions or improvements of or to the Premises made at the request and direction of the Lessee. 6. RESTRICTIONS ON USE. Lessee shall not use or knowingly allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose or for any business, use or purpose deemed to be disreputable or inconsistent with the operation of a warehouse facility, nor shall Lessee cause or maintain or permit any nuisance in, on, or about the Premises. Lessee shall not commit or suffer the commission of any waste in, on, or about the Premises. 7. COMPLIANCE WITH LAWS. Lessee shall not use the Premises or knowingly permit anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance, or governmental rule or regulation now in force or which -3- may hereafter be enacted or promulgated. Except as provided in Paragraph 34, Lessee shall at its sole cost and expense promptly comply with all applicable laws, statutes, ordinances, and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar body now or hereafter constituted relating to or affecting the condition, use, or occupancy of the Premises, excluding structural changes not related to or affected by alterations or improvements made by or for Lessee or Lessee's acts. The judgment of any court of competent jurisdiction or the admission of Lessee in an action against Lessee, whether Lessor be a party thereto or not, that Lessee has so violated any such applicable law, statute, ordinance, rule, regulation, or requirement, shall be conclusive of such violation as between Lessor and Lessee. 8. RIGHT OF ENTRY. The Lessee agrees that the Lessor shall have the right to enter and to grant licenses to enter the Premises at any time for any purpose which the Lessor may deem necessary during business hours after the giving of reasonable notice to Lessee (such notice not being required in emergencies). Except as to acts of gross negligence by Lessor, its agents, employees or licensees, no such entry shall render the Lessor liable to any claim or cause of action for loss of or damage to the business or property of the Lessee, by reason thereof, nor in any manner affect the obligations and covenants of this Lease. Included within this privilege shall be the right of Lessor to exhibit the Premises for rent and to put upon the Premises the usual rental notices no earlier than ninety (90) days preceding the termination of this Lease. 9. USE AND OCCUPANCY. Lessee agrees that the Premises will be used only as a warehouse facility and for no other purpose, without the prior written consent of Lessor, which consent shall not be unreasonably withheld. Upon the termination of this Lease, Lessee will vacate and surrender possession of the Premises to the Lessor in good and operable condition with all Lessee leasehold improvements remaining as property of the Lessor, subject to Paragraph 5 hereof. 10. INDEMNIFICATION; INSURANCE. (a) Lessor shall not be liable to Lessee and Lessee hereby waives all claims against Lessor for any injury or damage to any person or property in or about the Premises by or from any cause whatsoever, and, without limiting the generality of the foregoing, whether caused by water leakage of any character from the roof, walls, basement, or other portion of the Premises or caused by gas, fire, or explosion of the Premises, except as such claims may be caused by Lessor's gross negligence or willful acts or omissions. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and defend Lessor against any and all claims or liability for any injury or damage to any person or property whatsoever: (i) occurring in, on or about the Premises or, (ii) occurring in, on or about any facilities; when such injury or damage shall be caused in part or in whole by the neglect or omission of any duty with respect to the same by Lessee, its agents, contractors, servants, employees, licensees, or invitees. Lessee -4- further agrees to indemnity Lessor and hold Lessor harmless from and defend Lessor against any and all claims or liability by or on behalf of any person, firm, or corporation, arising from the conduct or management of Lessee's work done by the Lessee in or about the Premises or from transactions of the Lessee concerning the Premises, and will further indemnity and save the Lessor harmless against and from any and all claims arising from any breach or default on the part of the Lessee in the performance of any covenant or agreement on the part of the Lessee to be performed pursuant to the terms of this Lease, or arising from any act or negligence of the Lessee, or any of its agents, contractors, servants, employees, licensees, or invitees, and from and against all costs, counsel fees, expenses and liabilities incurred in connection with any such claim or action or proceeding brought thereon. Furthermore, in case any action or proceeding be brought against Lessor by reason of any such claims or liability, Lessee agrees to defend such action or proceeding at Lessee's sole expense by counsel reasonably satisfactory to Lessor. The provisions of this paragraph (10) shall survive the expiration or termination of this Lease with respect to any claims or liability occurring prior to such expiration or termination. (c) Lessee agrees to purchase at its own expense and to keep in force during the term of this Lease a policy or policies of general liability insurance, including personal injury and property damage, with contractual liability endorsement, in the amount of One Million Dollars ($1,000,000) for property damage and One Million Dollars ($1,000,000) per occurrence for personal injuries or deaths of persons occurring in or about the Premises. Said policies shall: (i) name Lessor as an additional insured and insure Lessor's interest under this Lease, (ii) be issued by an insurance company which is acceptable to Lessor and licensed to do business in the State of North Carolina, and (iii) provide that such insurance shall not be cancelled unless thirty (30) days prior written notice shall have been given to Lessor. Said policy or policies or certificates thereof shall be delivered to Lessor or its agent by Lessee upon commencement of the term of the Lease and upon each renewal of said insurance. (d) Any provisions herein to the contrary notwithstanding, Lessor and Lessee mutually agree that, in respect to any loss which is covered by insurance then being carried by them respectively, the one carrying such insurance and suffering claims with respect to such loss hereby releases the other of and from any and all claims with respect to such loss, and waives any rights of subrogation which might accrue to the carrier of such insurance. Lessor and Lessee shall insure that their respective policies contain provisions effectuating this subparagraph. (e) Lessee shall not do or permit anything to be done on or about the Premises which will in any way increase the rate of any insurance upon the Premises or cause a cancellation of said insurance. If, because of anything done, caused to be done, permitted or omitted by Lessee, the premium rate for any kind of insurance affecting the Premises shall be raised, the Lessee agrees that the amount of the increase in premium which the Lessor shall thereby be obligated to pay for such insurance shall be paid by the Lessee to the Lessor, on demand, and that if the Lessor shall demand that the Lessee remedy the condition which caused the increase in the -5- insurance premium rate, the Lessee will remedy such condition within thirty (30) days after such demand. (f) Lessee shall keep its personal property and trade fixtures in the Premises insured with "all risks" insurance in an amount to cover one hundred percent (100%) of the replacement cost of said property and fixtures. Lessee agrees that all personal property in the Premises shall be and remain at Lessee's sole risk, and Lessor shall not be liable for any damage to, or loss of such personal property arising from any acts of negligence of any persons or from fire or from the leaking of the roof or from the bursting, leaking, or overflowing of water, sewer or sprinkler pipes or from any other cause whatsoever. 11. TAXES. The Lessee shall pay when due all personal property taxes and assessments of any kind or nature imposed or assessed upon fixtures, equipment, merchandise or other property installed in or brought onto the Premises by Lessee. Lessor shall pay all real estate taxes on the Premises when due. 12. TAX CLAUSE. Lessee agrees to pay any and all ad valorem taxes assessed or levied against or upon the Premises which are in excess of the amount of such taxes imposed upon the Premises for the year 1996, whether the increase results from a higher tax rate or an increase in the assessed valuation of the Premises or both. The increase shall be deemed additional rent and shall be paid by Lessee within thirty (30) days after Lessor exhibits to the Lessee the tax bill evidencing such increase. It is understood and agreed that Lessee shall have the right, in its name or in the name of Lessor, to protest by review or legal proceeding or in any such other manner as it may deem suitable any tax or assessment with respect to the Premises. Lessor will, on request, furnish Lessee with the tax receipts, bills, or other data which Lessee may deem necessary or proper for the purpose of such protest or review and such authorizations as may be necessary therefor. 13. RIGHTS OF PAYMENT UPON DEFAULT. The Lessor agrees that if it shall at any time fail to pay any real property taxes, then Lessee may at its option without liability for forfeiture pay such taxes and deduct the actual cost thereof from the rent next thereafter falling due. 14. LIABILITY FOR DAMAGE TO PERSON OR PROPERTY. In the absence of gross negligence, willful acts or omissions or misconduct of Lessor, its agents and employees (a breach of the obligations of Lessor under this Lease being deemed a willful act or omission), Lessor shall not be liable for any damage sustained, either to person or property, due to any portion of the Premises becoming out of repair, or due to the occurrence of any accidents in or about the Premises, or due to any act or neglect of any other person. If such damage to the Premises, or to any other person shall be caused by the negligence or misconduct of the Lessee, the Lessor may, at is option, after notifying Lessee of its intent and affording Lessee reasonable time in which to make such repairs or reimburse such person for such damage, repair such damage caused to the Premises or reimburse such person for his injuries, and the Lessee shall -6- thereupon reimburse the Lessor the total cost of such repair or reimbursement, unless otherwise covered by insurance, in which case Lessor shall seek to recover such costs out of the proceeds of insurance. 15. FIRE OR OTHER CASUALTY. Lessee shall use every reasonable precaution against fire damaging the Premises, and shall in the event of fire or other casualty give immediate notice thereof to Lessor who may in its sole discretion repair the damage to the Premises. However, should Lessor, in its sole discretion, determine that the Premises be so materially damaged, Lessor may elect in its sole discretion to not repair or reconstruct same, whereupon this Lease shall terminate, and the accrued rent shall be paid up to the time of the fire or other casualty. In the event Lessor elects not to rebuild or in the event Lessor shall elect to rebuild, notice to the Lessee shall be given on or before thirty (30) days after the occurrence of the damage. If Lessor shall rebuild, rent during the restoration of the Premises shall be abated to correspond to the amount of usable space available to the Lessee. If Lessor repairs and restores the Premises as provided above, Lessor shall not be required to repair or restore any improvements, furnished and installed at Lessee's sole expense, any decorations, alterations or improvements to the Premises made by Lessee prior to the damage or destruction or any trade fixtures, furnishings, furniture, inventory, equipment or personal property belonging to Lessee or any of its invitees or guests. It shall be Lessee's sole responsibility to repair and restore all such items. Lessor will make a reasonable effort to obtain (i) a prompt decision from its insurance carrier as to the availability and amount of insurance proceeds payable to Lessor as a result of such casualty, and (ii) a decision from any of its lenders holding mortgages on the Premises as to the availability of such proceeds for reconstruction, in an effort to communicate with Lessee as soon as reasonably possible as to whether or not Lessor will elect to rebuild. 16. CONDEMNATION. If any substantial part of the Premises shall be taken under the power of eminent domain, or shall be conveyed to a governmental agency to avoid such taking, and such taking would prevent or materially interfere with the use of the Premises for the purpose for which it is then being used, either Lessor or Lessee shall have the option to terminate this Lease as of the date Lessee is required to yield possession, in which case any unearned rent shall be refunded to Lessee. In any such condemnation proceeding, whereby all or a part of the Premises are taken, whether or not Lessee elects to terminate this Lease, each party shall be free to make a claim against, and receive proceeds from, the condemning party for the amount of the actual provable damage sustained by each of them as a result of such condemnation. Neither party hereto shall be obligated to share its award with the other. 17. MAINTENANCE AND REPAIRS. (a) Lessee Maintenance. Lessee covenants that it will at its own expense keep and maintain in good order and repair the interior of the improvements on the Premises excluding principal structural portions, but including all window glass, -7- plumbing, wiring, electrical systems, overhead doors, sprinkler system, locks, exterior locks, loading doors, dock levelers and entrance doors. Lessee shall be responsible at its expense to have the sprinkler system inspected each year according to local regulations. Lessee further covenants that it will at its own expense repair any damage to the exterior of said improvements and to the parking area, driveway and footways occasioned or necessitated by the negligence or willfulness of its agents or employees. It shall be the Lessee's responsibility to keep the area immediately in front of and adjacent to the Premises free and clear from trash and debris. Lessee shall be responsible for grass mowing, trimming, and maintenance to the landscaping of the Premises. (b) Lessor Maintenance. Lessor covenants that it will at its own expense keep and maintain the exterior and principal interior structural portions of the improvements upon the Premises, the heating ventilation and air conditioning systems serving the office area and the parking areas, driveways, and footways in good working order and repair during said term; provided, however, that Lessor shall not be responsible for or required to make any repairs which may have been occasioned or necessitated by the negligence or willfulness of Lessee, its agents or employees. 18. LIENS. Lessee shall keep the Premises free from any liens arising out of any work performed, material furnished, or obligations incurred by Lessee. In the event that Lessee shall not, within ten (10) days following the imposition of any such lien, cause the same to be released of record by payment or posting of a proper bond (Bonding cost to be paid by Lessor), Lessor shall have, in addition to all other remedies provided herein and by law the right, but not the obligation, to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Lessor and all expenses incurred by it in connection therewith including the payment of reasonable attorney fees shall be considered additional rent and shall be payable to it by Lessee on demand and with interest at the prime lending rate from time to time announced to be the prime rate of NationsBank of North Carolina. The interest rate so determined is hereinafter called the "Agreed Interest Rate". Lessor shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law for the protection of Lessor, the Premises, and any other party having an interest therein, from mechanics' and materialmen's liens, and Lessee shall give Lessor at least five (5) business days' prior notice of commencement of any construction on the Premises. 19. ASSIGNING AND SUBLETTING. (a) Lessee shall not sell, assign, encumber or otherwise transfer by operation of law or otherwise this Lease or any interest herein, sublet the Premises or any portion thereof, or suffer any other person to occupy or use the Premises or any portion thereof, without the prior written consent of Lessor which shall not be unreasonably withheld. -8- (b) Any assignment or subletting hereunder by Lessee shall not result in Lessee being released or discharged from any liability under this Lease. As a condition to Lessor's prior written consent as provided for in this paragraph the assignee or subtenant shall agree in writing to comply with and be bound by all of the terms, covenants, conditions, provisions and agreements of this Lease, and Lessee shall deliver to Lessor promptly after execution, an executed copy of such assignment or sublease and an agreement of said compliance by the assignee or sublessee. (c) Lessor's consent to any sale, assignment, encumbrance, subletting, occupation, or other transfer shall not release Lessee from any of Lessee's obligations hereunder or be deemed to be a consent to any subsequent occurrence. Any sale, assignment, encumbrance, subletting, occupation, or other transfer of this Lease which does not comply with the provisions of this paragraph (19) shall be void. 20. DEFAULT. In the event of (i) failure of Lessee to pay any installment of rent due hereunder, or (ii) failure of Lessee to comply with any other term, covenant or condition of this Lease for a period of ten (10) days after written notice from Lessor to Lessee of such default (provided, however, that if the default complained of is a default other than one which may be cured by the payment of money, no default on the part of the Lessee in the performance of any acts to be done or conditions to be met shall be deemed to exist if steps shall have been commenced in good faith by the Lessee to rectify the same and shall be prosecuted to completion with diligence and continuity), or (iii) abandonment by Lessee of the Premises before the end of said term, or (iv) adjudication of Lessee as bankrupt or insolvent according to law or any assignment by Lessee or either of them for the benefit of creditors and the same is not dismissed within ninety (90) days of the filing thereof, or (v) involuntary assignment or attachment of or levy on Lessee's interest herein, and the same is not dismissed within ninety (90) days of the filing thereof, then Lessor, at its option, may pursue any one or more of the following remedies: (a) Terminate this Lease by written notice to Lessee, whereupon this Lease shall end. Upon such termination by Lessor, Lessee will at once surrender possession of the Premises to Lessor and remove all of Lessee's effects therefrom, and Lessor may forthwith re-enter the Premises and repossess itself thereof, and remove all persons and effects therefrom. (b) With reasonable application of the law and fairness, continue this Lease in full force and effect and enter upon and take possession of the Premises and peaceably expel or remove any person, including the Lessee, who may be occupying the Premises or any part thereof, without being liable for prosecution of any claim for damages therefor, and diligently relet the Premises as agent of the Lessee and receive the rent therefor. Lessee shall remain liable for payment of all rentals and other reasonable charges and costs imposed on Lessee herein, in the amounts, at the times and upon the conditions as herein provided, but Lessor shall credit against such liability of the Lessee all amounts received by Lessor from such reletting after first reimbursing -9- itself for all reasonable costs incurred in re-entering, preparing and refinishing the Premises for reletting, less normal wear and tear. (c) Pursuit of any of the foregoing remedies shall not preclude Lessor from pursuing any other remedies provided at law or in equity, nor shall pursuit of any remedy by Lessor constitute a forfeiture or waiver of any rent due to Lessor hereunder or of any damages accruing to Lessor by reason of Lessee's violation of any of the covenants and provisions of this Lease. If, as a result of Lessee's default, Lessor shall institute legal proceedings or otherwise employ an attorney for the enforcement of Lessee's obligations, Lessee shall pay all costs incurred by Lessor, including reasonable attorney fees. 21. SUCCESSORS AND ASSIGNS. This Lease shall be binding upon and inure to the benefit of the parties hereto and their heirs, legal representatives, successors, and such permitted assigns and sublessees as are not prohibited hereunder. 22. PERSONAL OR PROPERTY RISK. All personal property in the Premises shall be at the Lessee's sole risk and the Lessor shall not be liable to the Lessee for any injuries or damages to Lessee, Lessee's property, or any person or property on the Premises by express or implied invitation of Lessee. The Lessee agrees to indemnity and hold the Lessor harmless from any and all damages or claims which the Lessor may be compelled to pay on account of injuries to the Lessee, Lessee's property, or any person or property on the Premises by express or implied invitation of Lessee, where the aforesaid injuries are caused by the negligence or omission of Lessee, its agents, servants or employees, or by any other person entering upon the Premises under express or implied invitation of the Lessee. 23. QUIET ENJOYMENT. The Lessor covenants and warrants that as long as Lessee is not in default under the terms and conditions of this Lease, it will defend the right of possession to the Premises in Lessee against all parties whomsoever for the entire term hereof, without let or hindrance by Lessor. 24. WAIVER. The waiver by Lessor of any breach of any covenant or agreement herein contained shall not be deemed to be a waiver of such covenant or agreement or any subsequent breach of the same or any other covenant or agreement herein contained. The subsequent acceptance of rent hereunder by Lessor shall not be deemed to be a waiver of any preceding breach of Lessee of any covenant or agreement of this Lease, other than the failure of the Lessee to pay the particular rental so accepted, regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such rent. 25. POSSESSION AFTER TERMINATION. If Lessee shall fail to vacate and surrender the possession of the Premises at the termination of this Lease, whether by expiration of the term hereof, default or any other basis herein provided, after written demand by Lessor, the Lessor shall, in addition to any and all other rights provided herein and provided by law and without waiving any such rights or extending the term of this -10- Lease, be entitled to recover from the Lessee as liquidated damages an amount equal to two times the amount of rental Lessee would have paid for a period prior to termination equal in time to the period from the termination of this Lease until the date the Premises are vacated and surrendered. 26. NOTICES. All notices required herein to be given by the Lessee to the Lessor or by the Lessor to the Lessee shall be in writing and shall be given by certified or registered mail, return receipt requested, and sent to the Lessor at Post Office Box 1208, Davidson, North Carolina 28036; and to the Lessee at c/o Josef Sklut, 508 West 5th Street, Charlotte, N.C. 28231 and to such other person or place as shall be designated in writing by the Lessor or the Lessee. 27. SHORT FORM OR MEMORANDUM OF LEASE. The parties hereto will simultaneously with the execution and delivery of this Lease, execute and deliver a short form or memorandum of Lease, and both parties agree that only the short form or memorandum of lease shall be recorded. 28. GOVERNING LAW. This Lease shall be construed and enforced in accordance with the laws of the State of North Carolina. 29. INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision of this Lease shall to any extent be invalid or unenforceable, the remainder of this Lease shall not be affected thereby and each other term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law. 30. LESSOR'S ASSIGNMENT, MORTGAGE OR FORECLOSURE. Upon the written request of the Lessor, Lessee will subordinate Lessee's rights hereunder to the lien of any deed of trust or deeds of trust, or to the lien resulting from any other method of financing or refinancing, now or hereafter in force against the land or the Premises, provided that the beneficiary of such deed of trust or other lienholder shall agree in writing, that, so long as the Lessee is not in default under the terms hereof, such beneficiary or lienholder shall not disturb Lessee's rights under this Lease. Lessee, in case of foreclosure or sale pursuant to the terms of any such security instrument, agrees to attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. Lessee agrees to execute any documents which may be required to effectuate the subordination and otherwise carry out Lessee's obligations under this paragraph, and failing to do so within thirty (30) days after written demand, does make, constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and in Lessee's name, place and stead so to do. In any case Lessee shall be provided a non disturbance agreement if not in default. 31. SALE BY LESSOR. In the event of a sale or conveyance by Lessor of the Premises, the same shall operate to release Lessor from any future liability upon any of the covenants or conditions, express or implied, herein contained in favor of Lessee, and in such event Lessee agrees to look solely to the responsibility of the successor in interest of Lessor in and to this Lease. Lessee agrees to attorn to the purchaser or -11- assignee in any such sale. All rights of Lessee stated herein shall remain in full force and effect in the event of a sale or conveyance by Lessor, provided that grantee of Lessor shall agree in writing that, so long as Lessee is not in default under the terms hereof, such grantee shall not disturb Lessee's rights under this Lease. 32. ESTOPPEL CERTIFICATE. Within ten (10) days after written request therefor by Lessor or any beneficiary under a deed of trust covering the Premises, or if, upon any contract of sale, sale, assignment or other transfer of the Premises by Lessor, an estoppel certificate shall be requested of Lessee, Lessee shall execute and deliver in recordable form a statement to any beneficiary or other transferee, or to Lessor, certifying any facts that are then true with respect to this Lease, including without limitation, if true, that this Lease is in full force and effect, that Lessee has accepted and is presently occupying said Premises, that Lessee has commenced the payment of rent, that such payments are current, that no default exists under the terms and provisions of the Lease, and that there are no defenses or offsets to the Lease claimed by Lessee. 33. GENERAL PROVISIONS. (a) Lessee acknowledges that neither Lessor nor any broker, agent or employee of Lessor has made any representations or promises with respect to the Premises except as herein expressly set forth, and no rights, privileges, easements or licenses are being acquired by Lessee except as herein expressly set forth. (b) Lessor and Lessee each represents and warrants to the other that neither of them has employed or dealt with any broker, agent or finder in carrying on the negotiations relating to this Lease other than Beacon Development Company, d/b/a Beacon Partners. Lessor and Lessee shall indemnity and hold the other harmless from and against any claim or claims for brokerage or other commission asserted by any broker, agent, or finder engaged by Lessor/Lessee or with whom either has dealt. (c) Lessor and Lessee each waives trial by jury in any action, proceeding, claim or counterclaim brought by either of them against the other in connection with any matter arising out of or in any way connected with this Lease, the relationship of Lessor and Lessee hereunder, Lessee's use or occupancy of the Premises, and/or any claim of injury or damage. (d) Lessor represents and warrants that it is the owner of the Premises and has the right and authority to demise same to Lessee and execute this Lease. Lessor covenants that so long as Lessee shall not be in default under any of the terms and conditions of this Lease, that Lessee shall peaceably and quietly hold and enjoy the Premises for the term hereof. 34. HAZARDOUS SUBSTANCES. Lessee shall not cause or permit any Hazardous Substance to be used, stored, generated, or disposed of on or in the Premises by Lessee, Lessee's agents, employees, contractors, or invitees, without first obtaining -12- Lessor's written consent. if Lessee directly causes the presence of any Hazardous Substance on the Premises and such results in contamination, Lessee shall promptly, at its sole expense, take any and all necessary actions to return the Premises to the condition existing prior to the presence of any such Hazardous Substance on the Premises. Lessee shall first obtain Lessor's approval for any such remedial action. Lessee shall indemnify and hold harmless the Lessor from any and all claims, damages, fines, judgments, penalties, costs, liabilities or losses (including, without limitation, reasonable attorneys' fees, consultant and expert fees) arising during or after the Lease Term and arising as a result of such contamination by Lessee. This indemnification includes, without limitation, any and all costs incurred due to any investigation of the site or any cleanup, removal or restoration mandated by a federal, state or local agency or political subdivision. It is expressly understood and agreed that excluded from this indemnity are: 1) any contamination by Hazardous Substance or otherwise which may exist at the commencement of the term of this Lease; 2) any contamination by Hazardous Substance which may arise as a result of seepage, leeching, migration or otherwise from adjacent properties; 3) any contamination by Hazardous Substance or otherwise which does not arise on account of the actions of Lessee, its agents, employees or licensees and; 4) any claim for indemnity as to Hazardous Substances pursuant to Paragraph 10 hereof. As used herein, "Hazardous Substance" includes any and all material or substances which are during the term of this Lease defined as "hazardous waste", "extremely hazardous waste", or a "hazardous substance" pursuant to state, federal or local governmental law and include but are not restricted to asbestos, polychlorobiphenyls ("PCB's") and petroleum. IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as of the day and year first above written. LESSOR: KATHRYN B. GODLEY (Signature of: Will Miller) (Signature of Kathryn B. Godley) - ----------------------------- -------------------------------- Witness Owner -13- FRED D. GODLEY (Signature of Fred D. Godley) ----------------------------- Husband Fred D. Godley joins in this Lease solely to demise his marital interest in the property and not for the purpose of joining in or being bound by the warranties, obligations or covenants herein. LESSEE: SPEIZMAN INDUSTRIES, INC. (Signature of: R. A. Bigger) (Signature of Robert S. Speizman) - ------------------------------ --------------------------------- Asst. Secretary President [Corporate Seal] -14- EX-10 9 EXHIBIT 10.28 LEASE AGREEMENT THIS LEASE is made and entered into this 15th of February, 1996, by and between HANS L. LENGERS LLC of Fort Mill, South Carolina ("Landlord"), and SPEIZMAN INDUSTRIES, INC. of Charlotte, North Carolina ("Tenants"). STATEMENT OF PURPOSE Landlord is the owner of certain real property and the buildings and other improvements thereon located in Rock Hill, South Carolina; which real property is more particularly described as Aragon Mills (the "Property"), including the building complex containing approximately 208,000 square feet located on the Property (the "Building"). Tenant desires to lease, and Landlord has agreed to lease to Tenant certain premises (hereinafter more particularly described) within the Building, and the parties are entering into this Lease Agreement in order to document their respective understanding and obligations in respect to such Lease. NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto stipulate, covenant and agree as follows: 1. Demised Premises. Subject to the conditions hereinafter set forth, Landlord hereby leases and demises unto Tenant, and Tenant hereby takes and hires from Landlord 42,550 square feet in the Building, (hereinafter the "Demised Premises"). (Space formerly occupied by Winthrop Trading.) 2. Term. The initial Lease term shall be one (1) years and commence on February 15th, 1996 ("Commencement Date"). The Lease term shall then revert to a month to month basis. 3. Use of Demised Premises. Tenant shall be entitled to use the Demised Premises only for warehousing and storage and for no other purpose without the consent of Landlord, which shall not be unreasonably withheld. Tenant shall not permit the use of the Demised Premises in any manner which shall be unlawful; or shall constitute a nuisance; or shall constitute a hazard which endangers any person or property, Building or the Property; or shall violate any deed restrictions on the Property. Tenant shall comply with all applicable laws, ordinances, orders and regulations prescribed by lawful authority relating to the Property, the Building, the Demised Premises or Tenant's business including, but not limited to, those concerning cleanliness, safety, occupancy and use thereof. 4. Rental and Taxes. 4.01 Base Rental. First month's rent will be prorated for 1/2 month and due effective February 15th, 1996 based upon $3300.00 per month and thereafter for the balance of first year, until lease expires. Rent will be paid in advance or on the first day of each and every calendar month. Rent to include taxes, insurance and CAM. 4.02 Method of Payment. The rental payments due hereunder shall be paid by Tenant to Landlord in lawful money of the United States at the address stipulated in Section 19 below, or at such other place as Landlord may, from time to time designate in writing. 5. Tenant's Taxes and Fees. 5.01 In General. Tenant shall pay before delinquency all taxes, assessments, license fees, and other charges that are levied or assessed against Tenant's personal property or trade fixtures installed or located in or on the Demised Premises (or elsewhere in the Building). On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments. 5.02 Increased Taxes. Tenant agrees to pay Landlord, as additional rent, Tenant's proportionate share of any and all increases in the real property taxes, assessments or other charges levied against or upon the Property and improvements, of which the Demised Premises are a part, which are over and above the base year (which is the amount of taxes and assessments, levied against the Land and the improvements of which the Demised Premises are a part which are assessable for the calendar year 1995), whether such increase results from a higher tax rate or an increase in the assessed valuation of Property or Building of which the Demised Premises are a part, or both. For purposes of this Lease, Tenant's proportionate share of any such tax increase shall bear the same ratio to the total tax increase that the square feet are of the Demised Premises (i.e., 42,500 square feet) bears to the total leasable square foot area of the Building (i.e., 208,000 square feet). Such additional rent shall be paid by Tenant to Landlord within thirty (30) days after Landlord furnishes Tenant with evidence of such tax increase and of Landlord's payment thereof, calculation of increased taxes to exclude any prior abatement that applied to 1995 taxes. 6. Utilities. 6.01 Heat and Air Conditioning. Tenant shall be responsible, at its sole cost and expense, for the installation and/or maintenance of any heating and/or air conditioning units (and any related ductwork, wiring, etc.) which it may desire, and for the payment of any charges related to its use of such units (including, without limitation, electricity or gas). No heating or air conditioning units (or any ductwork, wiring, etc.) may be installed, removed, or in any way altered without Landlord's prior written approval. It specifically is understood that Landlord shall have no responsibility to provide, maintain, operate, or repair any heating or air conditioning system. 6.02 Telephone. Tenant shall pay for all costs associated with the installation and use of telephones and similar equipment in or from the Demised Premises. 6.03 Tenant's Commercial Water and Sewer. Tenant shall pay for all water and sewer charges and costs incurred in connection with Tenant's own commercial operations (including any water or sewer usage attributable to any air conditioning equipment installed by Tenant.) 6.04 Electricity. A totally separate meter is installed for Tenant so that Tenant is billed directly for all its electricity, and Tenant shall pay and be responsible for all charges in connection with its use of electricity in the Demised Premises or elsewhere on the Property. 6.05 Guard Service and Security. It is understood that Landlord does not intend to provide any guard service or other security service for the Building or Property. If Landlord (in its reasonable discretion) and a majority of the Tenants occupying the entire premises deem such guard service or other security measures to be necessary at any time, Tenant agrees to pay, as additional rental to Landlord, its proportionate share of the cost of any such guard service or other security measure. Such proportionate share to be determined based on the ratio that the square foot area of the Demised Premises bears to the total leasable square foot area of the Building. 6.06 Licensing. Tenant shall be responsible to obtain its occupancy permits and/or business licenses from the City of Rock Hill. 7. Common Areas. 7.01 Common Areas Controlled by Landlord. The term "Common Areas", as used in this Lease, shall mean all facilities furnished in the Building and on the Property which are designated by Landlord for the general use, in common, of occupants of the Building, including Tenant, which facilities shall include, but are not limited to, the parking areas, streets, sidewalks, walkways, roadways, elevators, stairways, common halls, ramps, landscaped areas and other similar facilities. All Common Areas shall at all times be subject to the exclusive control and management of Landlord, and Landlord shall have the right, from time-to-time, to change the area, level, location and arrangement of Common Areas; to restrict parking by tenants and their employees to employee parking area; to do such things as, in Landlord's reasonable discretion, may be necessary regarding such facilities; and to make all rules and regulations pertaining to the operation and maintenance of the Common Areas. Except as herewith specifically provided, Tenant shall have no right or interest in the Common Areas and related facilities. 7.02 Loading Dock and Elevators. Tenant shall have access to the loading dock located adjacent to the Building (or to a portion thereof, as designated by Landlord), subject to all rules and regulations of the Landlord pertaining thereto. 8. Maintenance, Repairs, and Alterations. The following provisions shall govern the responsibilities and obligations of Landlord and Tenant in respect to the repair, maintenance and alteration of the Demised Premises and the Building. 8.01 Landlord's Obligations. Landlord shall be responsible for maintaining the roof, exterior walls and structural components of the Building and all Common Areas in as good condition as at the Commencement Date, normal wear and tear excepted; provided that Tenant shall be responsible for any damage to the foregoing items which are caused by the negligence of the Tenant or Tenant's agents, employees, licensees or invitees. 8.02 Tenant's Obligations. Tenant shall be responsible for all maintenance and repair of the Demised Premises, except as is specifically made the responsibility of the Landlord in this Lease. 8.03 Alterations or Other Structural Changes. Tenant shall not make any alterations, improvements, or structural changes to the Demised Premises without first submitting to Landlord, for Landlord's approval, plans and specifications relating to any such improvements, alterations and structural changes. Landlord's consent to such changes, improvements and alterations will not be unreasonably withheld. Upon the expiration of the term of this Lease, all such Tenant improvements, structural changes and alterations shall become the property of Landlord. Notwithstanding the foregoing, during the term of this Lease, Tenant shall be entitled, without the prior written consent of Landlord, to install trade fixtures, and upon the expiration of the term of this Lease and any renewals hereof, provided that Tenant is not then in default, Tenant may remove any trade fixture so installed at its own expense, provided that Tenant shall pay Landlord for any damage to the Demised premises or the Building resulting from such removal. 8.04 Cleanliness. Tenant shall be solely responsible for keeping the Demised Premises and Common related Areas within the Building in a clean, neat and orderly condition. Landlord reserves the right to inspect the condition of the Common Areas within the Building from time-to-time, and if Landlord (in its sole discretion) deems the condition of such Common Areas to be other than clean, neat and orderly then Landlord shall have the power to engage a janitorial or related type of service and in such event Tenant shall reimburse Landlord (as additional rental) its proportionate share of all costs thereof. Outside trash from Tenant's activities needs to be removed by Tenant. 8.05 Condition of Demised Premises. Tenant acknowledges that Landlord has made no warranties or representations as to the condition of the Demised Premises or Building, or as to their suitability for Tenant's intended use. 9. Insurance. 9.01 In General. During the term of this Lease, Landlord shall insure the Building against loss or damage resulting from fire or other casualty; provided that Tenant shall be responsible for insuring its own trade fixtures, equipment and personal property, which is located on or in the Demised Premises or Building or elsewhere on the Property. 9.02 Rate Increase Due to Tenant. Tenant agrees to pay, as additional rent, the amount of any increase in the standard insurance rates on the Building occasioned by the occupancy and use of the Demised Premises or Building by Tenant and/or any proportionate increase in the basic premiums, within 30 days of notice. 9.03 Liability Insurance. During the term of this Lease and all renewal terms, Tenant shall maintain, at its own expense, insurance covering claims for public liability, personal injury, death and property damage under a policy of general liability insurance, with limits of not less than Three Hundred Thousand Dollars per person and One Million Dollars per occurrence and property damage insurance of not less than One Hundred Thousand Dollars; provided that Landlord reserves the right to require Tenant to increase the foregoing insurance coverage from time-to-time during the term of this Lease, as may be reasonable under the circumstances. Such insurance shall insure against all liability of Tenant arising out of, or in connection with Tenant's use or occupancy of the Demised Premises, Building, Common Areas and the Property. Landlord shall be named an additional insured under all such policies. Tenant shall provide Landlord, on the Commencement Date, with a certificate from Tenant's insurance carrier indicating that such insurance is in full force and effect and agreeing to give Landlord ten (10) days written notice prior to the cancellations or reduction in coverage of such insurance. 10. Subrogation. 10.01 In General. All insurance policies required hereunder shall, if possible, contain a waiver of subrogation provision under the terms of which the insurance carrier waives all of its rights to proceed against Landlord. 10.02 Mutual Releases. Landlord and Tenant each release the other and their respective representatives from any claims by them or any one claiming through or under them by way of subrogation or otherwise for damage to any person or to the Demised Premises (or to the Building, Common Areas or the Property) and to the fixtures, personal property, improvements and alterations in or on the Demised Premises (or the Building, Common Areas or the Property) that is caused by or results from risks insured against under any insurance policy carried by them and required by this Lease; provided, however, that such releases shall be effective only if and to the extent that the same do not diminish or adversely affect the coverage under such insurance policies. 11. Indemnity. Tenant and Landlord shall hold each other harmless and indemnify each other for any and all liability, claim, damage, expenses including attorney fees and loss sustained or claimed to have been sustained by and person or persons in, upon, or about the Demised Premises, Building, Common Areas or the Property caused by or claimed to be caused by any negligent, unlawful or willful act or omission of the Other Party, their employees, representatives, agents, invitees or licensees, or from their failure to perform any obligation imposed on it by law or by the provisions of this Lease. 12. Fire and Other Casualty. 12.01 In General. Except as otherwise specifically provided in this Section, Landlord shall not be required to replace or rebuild the Demised Premises or Building in the event of destruction or damage thereto resulting from fire or other casualty; provided, however, that if during the term of this Lease the Demised Premises are partially damaged by fire or other casualty and, if (in Landlord's opinion), as a result of such fire or other casualty the Demised Premises are not rendered materially unsuitable for Tenant's intended use, Landlord shall have the following options: (a) To repair the damage to the Demised Premises at its own expense as quickly as is reasonably possible after the occurrence of such damage, in which event there shall be an equitable abatement of rent proportionate to that part of the Demised Premises which is fairly and equitably deemed by the Parties to be materially unsuitable for Tenant's intended use. (b) To terminate this Lease as of the date of the damage or destruction; provided, however, that Landlord shall not be entitled to terminate this Lease and shall repair or restore the Demised Premises if the cost of restoration or repair is less than Twenty Five Thousand Dollars. Landlord shall notify Tenant within thirty (30) days from the date of such damage of Landlord's election to repair the Demised Premises or to terminate this Lease. 12.02 Total or Extensive Destruction. In the event that Landlord deems that the Demised Premises or Building is totally destroyed by fire or other casualty, or that such damage or destruction is so extensive as to render the Demised Premises or Building unfit for occupancy or for the conduct of Tenant's business, Landlord shall have the following options, exercisable within thirty (30) days from the date of such damage or destruction: (a) To terminate this Lease, if the cost of repairing and restoring the damage exceeds Twenty Five Thousand Dollars; or (b) To give Tenant notice of its election to repair and restore the Demised Premises and the time period during which such restoration shall take place. In the event Landlord gives Tenant notice of its election to restore or rebuild the Demised Premises and, if the time period required for such rebuilding or restoration shall exceed ninety (90) days from the date of such notice, Tenant shall be entitled, for a period of ten (10) days from the date of Landlord's notice, to either terminate this Lease or to continue the same upon the restoration and rebuilding of the property as set forth in Landlord's notice. In the event the Lease is continued during the restoration and rebuilding of the Demised Premises, there shall be an equitable abatement of rent. 13. Eminent Domain. In the event the whole of the Demised Premises or Building (or such a material part thereof that the Demised Premises, or any other comparable space in the Building, which Landlord then makes available to Tenant, are rendered materially unsuitable for Tenant's intended use) shall be taken by any public authority under the power of eminent domain or like power, this Lease shall terminate as of the date the possession thereof shall be required to be delivered to the appropriate authority. In the event of only a partial taking under such power, which does not materially render the Demised Premises unsuitable for Tenant's use thereof, this Lease shall not terminate, but there shall be an equitable abatement of rent proportionate to the square footage of space lost by virtue of such partial taking. Tenant shall not be entitled to receive any portion of any award or awards made in connection with any total or partial taking under such power, and Tenant hereby assigns to Landlord all its right, title and interest in any damages or award or awards obtained from any condemning or like authority. Notwithstanding the foregoing, if any condemnation proceeding or deed in lieu thereof results in a termination of this Lease, Tenant shall be entitled to seek an independent award from the condemning or like authority for relocation expenses and damages resulting from business interruption, provided that such separate award is not in reduction of any award or damages to Landlord. 14. Assignment and Subletting. Tenant shall not assign, sublet or otherwise transfer any right or interest in the Demised Premises or building (the foregoing hereinafter collectively referred to as an "Assignment") without the prior written permission of Landlord, which permission shall not be unreasonably withheld. In the event Landlord consents to an Assignment, Tenant shall remain liable to Landlord for payment of all rent and for the performance of all of the covenants and conditions of this Lease by any assignee, subleasee or other transferee to the same extent as if no Assignment had been made. Notwithstanding the foregoing, in lieu of granting permission to Tenant for an Assignment, Landlord may enter into an independent relationship with such potential assignee, sublease, or transferee without any remaining obligation to Tenant. 15. Entry by Landlord. Landlord and Landlord's duly authorized agent or agents shall have the right to enter the Demised Premises, Common Areas, Building, and the Property at any reasonable time for any legitimate purpose, including, but not limited to, any of the following: a) To inspect or protect the Demised Premises, Common Areas, Building and the Property; b) To effect compliance with any law, order or regulation of any lawful authority, or with any provisions of this Lease; c) To make or supervise repairs, alterations or additions to the Demised Premises, Common Areas, Building, or the Property; and, d) To exhibit the Demised Premises, Common Areas, Building or the Property to prospective tenants, prospective purchasers or other interested persons, or to alter or otherwise prepare the Demised Premises, Common Areas, Building or the Property for re occupancy at any time after Tenant has vacated the Demised Premises or given notice of its intention to do so. It is hereby stipulated that no entry by Landlord or Landlord's agents, which is authorized by this Lease, shall constitute eviction of Tenant, nor shall it be deemed to deprive Tenant of its right or otherwise to alter or affect the terms of the Lease. 16. Holding Over By Tenant. Tenant shall not acquire any right or interest in the Demised Premises, Common Areas, Building, or the Property by remaining in possession after termination of this Lease. During any such period of holding over, Tenant shall be a Tenant At Will, subject to all the obligations imposed it by this Lease. 17. Default By Tenant. 17.01 Events of Default. The happening of any one or more of the following listed events (hereinafter referred to singularly as "Event of Default" and plurality as "Events of Default") subsequent to applicable notices by Landlord (if notice is required in such an Event,) shall constitute a breach of this Lease on the part of Tenant: (a) The filing by, on behalf of, or against Tenant of any petition or pleading to declare Tenant bankrupt, voluntary or involuntary, under any bankruptcy law or act, including the filing of any petition on behalf of or against Tenant under the reorganization provisions of Bankruptcy Act (Including any amendment or modification made thereto), and same is not dismissed within 90 days. (b) The commencement in any court or tribunal of any proceeding, voluntary or involuntary, to declare Tenant insolvent or unable to pay its debts, and same is not dismissed within 90 days. (c) The failure of Tenant to pay any rent (or other payment considered to be additional rent) payable under this Lease when due, and same is not cured within 10 days. (d) The failure of Tenant fully and promptly to perform any act required of it in the performance of this Lease or otherwise to comply with any term or provision of this Lease, and same is not cured within 30 days. (e) The appointment by any court or under any law of a receiver, trustee or other custodian of the property, assets or business of Tenant, and same is not dismissed within 90 days. (f) The assignment by Tenant of all or any part of its property or assets for the benefit of creditors, and same is not dismissed within 90 days. (g) The levy of execution, attachment or other taking of property, assets or the leasehold interest of Tenant by process of law or otherwise in satisfaction of any judgment, debt or claim, and same is not dismissed within 90 days. (h) Any other default as same is defined under the terms of this Lease. 17.02 Landlord's Elections Upon Default. Upon the happening of any Event of Default, and any appropriate Cure Period has passed, in no event more than thirty (30) days, Landlord, if it shall so elect, (a) may terminate this Lease, and if Landlord shall exercise such right of election, the same shall be effective as of the date of the Event of Default upon written notice of Landlord's election given to Tenant at any time after the date such Event of Default, or Landlord, if it shall so elect, (b) may terminate Tenant's right to possession or occupancy, terminating the term of the Lease. 17.03 Tenant to Surrender Possession. Upon any termination of the term hereof, whether by lapse of time or otherwise, or upon any termination of Tenant's right to possession or occupancy of the Demised Premises, Tenant promptly shall surrender possession and vacate the Demised Premises, Building and the Property, and deliver possession thereof to Landlord, and Tenant hereby grants to Landlord full and free license to enter into and upon the Demised Premises, Common Areas, Building and the Property in such event and with or without process of law, to repossess the Demised Premises and Building as of Landlord's former estate and to expel or remove there from any and all property, using for such purposes such force as may be necessary without being guilty of or liable for trespass, eviction or forcible entry or detainer and without relinquishing Landlord's right to rent or any other right given to Landlord hereunder or by operation of law. 17.04 Termination by Landlord Without Terminating Term. If Landlord shall elect to terminate Tenant's right to possession only as above provided in Section 17.02, without terminating the term hereof Landlord, at its option, may enter into the Demised Premises and Building, remove Tenant's property and other evidences of tenancy and take and hold possession thereof without such entry and possession terminating the term hereof or otherwise releasing Tenant, in whole or in part, from its obligation to pay the rent and other sums herein reserved for the full term hereof. Upon and after entry into possession without termination of the term hereof, Landlord may, but need not, relet the Demised Premises or any part for the account of Tenant to any person, firm or corporation other than Tenant for such rent, at such time, and upon such terms as Landlord, in its sole discretion, shall determine. If any rent collected by Landlord upon such reletting for Tenant's account is not sufficient to pay monthly the full amount of the rent costs of any repairs, alterations or redecoration necessary upon demand, Tenant shall pay Landlord the amount of each monthly deficiency upon demand, and if the rent so collected from such reletting is more than the aforementioned costs, Landlord, at the end of the stated term hereof, shall apply any surplus to the extent thereof to the discharge of any obligation of Tenant to Landlord under the terms of this Lease. Landlord will use best efforts to secure a suitable Tenant for the Demised Premises. 18. Termination in General. 18.01 Surrender of Demised Premises. Upon the termination of the Lease, Tenant covenants that it will promptly surrender the Demised Premises and other areas of the Building which it has use in as good order and condition as it was at the beginning of the term hereof, ordinary wear and tear expected. 18.02 Survival of Obligations. Tenant's obligation to reimburse Landlord for Tenant's prorated share of increased taxes, sewer and water charges, electricity charges and other charges considered to be additional rent, for the period of its occupancy shall survive the expiration of this Lease. 19. Notices and Reports. Any notice, report, statement, approval, consent, designation, demand, or request to be given by a party under the provisions of the Lease shall be effective only when made in writing and delivered personally or mailed, certified mail, return receipt required with postage prepaid to the other party at the applicable address set forth herein. However, either party may designate a different address by giving the other party written notice of the change. LANDLORD: Hans L. Lengers 8893 Collins Road Fort Mill, SC 29715 TENANT: Speizman Industries, Inc. 508 West 5th Street Charlotte, NC 28231 20. Quiet Enjoyment. Subject to Section 23, Landlord covenants that so long as Tenant shall not be in default under any of the terms and conditions of this Lease, that the Tenant shall peaceably and quietly hold and enjoy the Demised Premises for the term hereof and that Tenant shall have reasonable access to and from the Demised Premises. 21. Memorandum of Lease. This Lease shall not be recorded provided, however, that subsequent to the Commencement Date, the parties agree to execute a memorandum of this Lease setting forth the essential terms hereof suitable for recording. 22. Subordination and Non-Disturbance. This Lease is subject and subordinate to and may be assigned as security for any existing or future mortgage or deed of trust covering the Demised Premises, the Building or the Property, and all modifications, renewals, extensions, consolidations or replacements of any such mortgage or deed of trust. If requested, Tenant agrees to execute written documents evidencing the subordination of this Lease to any such mortgage or deed of trust or the assignment of this Lease as additional security for any such mortgage or deed of trust. 23. Estoppel Certificate. At any time during the term of this Lease, Tenant shall, within five business days of the date Landlord gives Tenant written notice, execute, acknowledge and deliver to Landlord, prospective purchasers of Landlord or Landlord's mortgagees a written statement certifying (a) Whether or not this Lease is in full force and effect, (b) Whether or not Landlord is in default in the performance of any covenant, agreement or condition contained in this Lease, and, if Landlord is in such default, specifying each such default. Such estoppel certificates shall contain such additional information as may, from time-to-time, be reasonably required by any of Landlord's mortgages. Landlord and Landlord's mortgages shall be entitled to rely upon any such estoppel certificates for the truth of the matters stated therein. 24. Waiver. No Waiver by Landlord of any term or condition hereof shall be effective unless in a signed writing and ten days shall not constitute a waiver of any succeeding breach of the same or other terms and conditions of this Lease. 25. Signs. Tenant shall not install or erect any signs on the Demised Premises without the prior written approval of Landlord, which approval shall not be unreasonably withheld. 26. Construction of Lease. This Lease shall be construed according to the laws of South Carolina. Paragraph headings relating to the contents of particular paragraphs are inserted only for the purpose of convenience and are not to be construed as parts of the particular paragraphs to which they refer. This Lease contains all of the understandings between the parties and may not be added to or modified except by written instrument signed by the parties hereto. 27. Binding Effect of Lease. All rights and liabilities given to or imposed upon either of the parties by this Lease shall benefit and bind their respective heirs, personal representatives, successors and assigns. IN WITNESS WHEREOF, Landlord and Tenant have properly executed this Lease Agreement as of the day and year first above writing. /s/ Hans L. Lengers (SEAL) HANS L. LENGERS, LLC (LANDLORD) SPEIZMAN INDUSTRIES, INC. (TENANT) BY: /s/ Josef Sklut TITLE: VP Finance EX-10 10 EXHIBIT 10.43 1995 SECOND CONSOLIDATED AMENDMENT AGREEMENT TO LOAN AGREEMENT AND RELATED DOCUMENTS THIS AMENDMENT AGREEMENT, made and entered into as of this 1 day of September, 1995, by and between SPEIZMAN INDUSTRIES, INC., a Delaware corporation (the "Borrower") and NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS), a national banking association (the "Lender"); W I T N E S S E T H: WHEREAS, pursuant to a Loan Agreement dated as of April 19, 1994, as amended by 1995 Consolidated Amendment Agreement to Loan Agreement and Related Documents dated May 31, 1995, between the Borrower and the Lender (collectively the "Loan Agreement"), arrangements were made for the extension by the Lender to the Borrower of credit on the terms and conditions thereof; WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender its Revolving Credit Note dated April 19, 1994 in the principal amount of $2,000,000 (the "Note"); WHEREAS, under the Loan Agreement, the Borrower has obtained a letter of credit facility of up to $14,000,000 for the issuance of documentary letters of credit for the purposes set forth in the Loan Agreement (the "Letter of Credit Facility"); WHEREAS, collateral for the indebtedness and obligations of the Borrower in respect of the Loan Agreement, Note and Letter of Credit Facility is provided under a Security Agreement dated April 19, 1994 (the "Security Agreement") between the Borrower and the Lender; WHEREAS, the Borrower has requested that the Lender increase the Line of Credit Loan (as defined in the Loan Agreement), on a temporary basis, from $2,000,000 to $2,700,000, all as provided herein; NOW, THEREFORE, in consideration of the premises and mutual covenants and conditions herein set forth, it is hereby agreed as follows: 1. Terms. All terms used herein without definition, unless the context clearly requires otherwise, shall have the meanings provided therefor in the Loan Agreement. 2. Amendment to Loan Agreement; Confirmation of Liens. (i) The following paragraph is added to Section 2.1 of the Loan Agreement: "The Borrower and Lender agree that, for the period September 1, 1995 to September 25, 1995, the Committed Amount shall be increased from $2,000,000 to $2,700,000. Effective September 26, 1995, the Committed Amount shall be automatically reduced back to $2,000,000 and, on such date, an amount of principal shall be due on the Note equal to the amount necessary to reduce the outstanding principal balance to $2,000,000. To evidence the increase in the Committed Amount, the Borrower will execute the Note Modification Agreement in the form of Exhibit A attached hereto. All references to Note in the Loan Agreement shall mean the Note as modified by the Note Modification Agreement." (ii) The Borrower hereby agrees and confirms that all liens and security interests securing the indebtedness evidenced by the Note shall cover all additional indebtedness created under the Note and that the liens and security interests created under the Loan Documents, including the Security Agreement and the Cash Collateral Documents, shall cover all indebtedness evidenced by the Note as modified by the Note Modification Agreement. 3. Representations and Warranties. The Borrower hereby represents and warrants that: (A) The representations and warranties contained in Article V of the Loan Agreement are hereby made by the Borrower on and as of the date hereof except the representations of Sections 5.3 and 5.4 shall refer to the most recent financial statements delivered under Section 7.1 of the Loan Agreement. (B) There has been no change, and there exists no prospective change, in the condition, financial or otherwise, of the Borrower since the date of the most recent financial reports received by the Lender, other than changes in the ordinary course of business, none of which has been a materially adverse change; (C) The business and properties of the Borrower are not, and since the date of the most recent financial reports thereof received by Lender have not, been materially adversely affected as the result of any fire, explosion, earthquake, chemical spill, accident, strike, lockout, combination of workmen, flood, embargo, riot, or cancellation or loss of any major contracts; 2 (D) No event has occurred and no condition exists which, either prior to or upon the consummation of the transactions contemplated hereby, constitutes an Event of Default under the Loan Agreement, either immediately or with the lapse of time or the giving of notice, or both; (E) The property which is collateral for the indebtedness of the Borrower to the Lender under the Security Agreement and other collateral documents of the Borrower in favor of the Lender are subject to no liens or encumbrances except Permitted Liens; (F) The execution, delivery and performance by the Borrower of its obligations under this Amendment Agreement will not cause a violation or default under any indenture, loan agreement, or other agreement of, or applicable to, the Borrower; and (G) The Borrower has the requisite corporate power and authority to execute, deliver and perform this Amendment Agreement; each of such documents has been duly authorized, executed and delivered; and each of such documents constitutes a valid, binding and enforceable instrument, obligation or agreement of the Borrower, in accordance with its respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors' rights generally. 4. Effectiveness of Documents. The terms and conditions hereof shall not be effective until each of the following are delivered to the Lender: (A) Amendment Agreement and Note Modification Agreement. Two fully executed originals of this Amendment Agreement and an executed copy of the Note Modification Agreement. (B) Resolutions of Borrower. Resolutions of the Borrower certified by its secretary or assistant secretary as of the date hereof, approving and adopting this Amendment Agreement and the other documents to be executed by the Borrower. (C) Opinions. An opinion of counsel to the Borrower covering the matters covered by its prior opinion on the Loan Agreement. (D) Charter Documents. Copy of a Good Standing Certificate of the State of Delaware concerning Borrower and the Articles of Incorporation of Borrower certified by the Secretary of State of Delaware to be a true and correct copy 3 as currently in effect and a copy of the Bylaws certified by the Secretary of the Borrower to be a true and correct copy as currently in effect. (E) Certificate of Authority. Certificate of a recent date of the Secretary of State of North Carolina as to the authority of the Borrower to do business in North Carolina and the good standing of the Borrower. (F) No Litigation Certificate. Certificate of the chief financial officer of the Borrower to the effect that no litigation or proceedings are pending or threatened which might reasonably be expected to adversely affect the Borrower's ability to perform its obligations under this Agreement or operation of the Borrower's business. (G) Other Documents, Etc. Such other documents, instruments and certificates as the Lender may reasonably request. 5. Miscellaneous. (A) This Amendment Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. No promise, condition, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and none of them has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as in this Amendment Agreement otherwise expressly stated, no representations, warranties, or commitments, express or implied, have been made by any other party to the other regarding the subject matter hereof. None of the terms or conditions of this Amendment Agreement may be changed, modified, waived or canceled, orally or otherwise, except in a writing, signed by the party to be charged therewith, specifying such change, modification, waiver or cancellation of such terms or conditions, or of any preceding or succeeding breach thereof, unless expressly so stated. (B) Except as hereby specifically amended, modified, or supplemented, the Loan Agreement, the Loan Documents and all other agreements, documents, and instruments related thereto are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. (C) This Amendment Agreement may be executed in any number of counterparts, each of which shall be deemed to be 4 an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. (D) This Amendment Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of North Carolina. (E) Upon request of the Lender, each of the parties hereto will duly execute and deliver or cause to be duly executed and delivered to the Lender such further instruments and do and cause to be done such further acts that may be reasonably necessary or proper in the opinion of the Lender to carry out more effectively the provisions and purposes hereof, including documents deemed necessary by the Lender to more fully evidence the obligations of Borrower to Lender and protect and perfect the collateral therefor. (F) The Borrower agrees to pay all reasonable costs and expenses of the Lender in connection with the preparation, execution and delivery of the documents executed in connection with this Amendment Agreement, including without limitation, the reasonable fees and out-of-pocket expenses of special counsel to the Lender. [Signatures appear on following page] 5 IN WITNESS WHEREOF, this Agreement has been duly executed as of the date hereof by the Company and the Lender. ATTEST: SPEIZMAN INDUSTRIES, INC. (Signature of: Josef Sklut) By: (Signature of Robert S. Speizman) - ----------------------------- ------------------------------- - ---------- Secretary Name: Robert S. Speizman ------------------------------ Title: President ----------------------------- NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS) By: (Signature of J. Timothy Martin) ------------------------------- Name: J. Timothy Martin ----------------------------- Title: Sr. Vice President ---------------------------- 6 NOTE MODIFICATION AGREEMENT THIS NOTE MODIFICATION AGREEMENT, made and entered into as of this 1 day of September, 1995, by and between SPEIZMAN INDUSTRIES, INC., a Delaware corporation ("Borrower"), and NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS), a national banking corporation (the "Lender"); W I T N E S S E T H: WHEREAS, pursuant to a Loan Agreement dated as of April 19, 1994, as amended by 1995 Consolidated Amendment Agreement to Loan Agreement and Related Documents dated May 31, 1995, between the Borrower and the Lender (collectively the "Loan Agreement"), arrangements were made for the extension by the Lender to the Borrower of credit on the terms and conditions thereof; WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender its Revolving Credit Note dated April 19, 1994 in the principal amount of $2,000,000 (the "Note"); WHEREAS, the Borrower has requested that the Lender increase the Line of Credit Loan (as defined in the Loan Agreement), on a temporary basis, from $2,000,000 to $2,700,000, all as provided herein; NOW, THEREFORE, in consideration of the premises and mutual covenants and conditions herein set forth, it is hereby agreed by the parties as follows: 1. Amendment of Note. The Lender and Borrower hereby agree that the Note is hereby amended as follows: (a) All references to "$2,000,000" shall be changed to "$2,700,000" and the reference to "Two Million and No/100 Dollars ($2,000,000)" in the first paragraph on page one of the Note is changed to "Two Million Seven Hundred Thousand and No/100 Dollars ($2,700,000)". (b) The following sentence is added to the end of the first paragraph on page one: "After September 26, 1995, the maximum principal amount which may be outstanding under this Note is $2,000,000. On September 26, 1995, the Borrower shall repay a principal amount on this Note equal to the amount necessary to reduce the principal balance hereof to $2,000,000." The Borrower hereby ratifies and confirms its obligations under the Loan Agreement, the Note and all related documents securing or evidencing the Note. 2. Counterparts. This Modification Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 3. No Novation. The Modification Agreement is not a novation or refinancing of the indebtedness evidenced by the Note, but merely an amendment to the terms thereof. IN WITNESS WHEREOF, this Modification Agreement has been duly executed as of the date hereof by the undersigned parties. BORROWER: ATTEST: SPEIZMAN INDUSTRIES, INC. (Signature of: Josef Sklut) By: (Signature of Robert S. Speizman) - ----------------------------- ------------------------------- - ---------- Secretary Title: President ----------------------------- (SEAL) LENDER: NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS) By: (Signature of J. Timothy Martin) ------------------------------- Sr. Vice President ------------------------------- 2 EX-10 11 EXHIBIT 10.44 1995 THIRD CONSOLIDATED AMENDMENT AGREEMENT TO LOAN AGREEMENT AND RELATED DOCUMENTS THIS AMENDMENT AGREEMENT, made and entered into as of this 31 day of October, 1995, by and between SPEIZMAN INDUSTRIES, INC., a Delaware corporation (the "Borrower") and NATIONSBANK, N.A., a national banking association (the "Lender"); W I T N E S S E T H: WHEREAS, pursuant to a Loan Agreement dated as of April 19, 1994, as amended by 1995 Consolidated Amendment Agreement to Loan Agreement and Related Documents dated May 31, 1995 and a 1995 Second Consolidated Amendment Agreement to Loan Agreement and Related Documents dated September 1, 1995, between the Borrower and the Lender (collectively the "Loan Agreement"), arrangements were made for the extension by the Lender to the Borrower of credit on the terms and conditions thereof; WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender its Revolving Credit Note dated April 19, 1994 in the principal amount of $2,000,000 (the "Note"); WHEREAS, under the Loan Agreement, the Borrower has obtained a letter of credit facility of up to $14,000,000 for the issuance of documentary letters of credit for the purposes set forth in the Loan Agreement (the "Letter of Credit Facility"); WHEREAS, collateral for the indebtedness and obligations of the Borrower in respect of the Loan Agreement, Note and Letter of Credit Facility is provided under a Security Agreement dated April 19, 1994 (the "Security Agreement") between the Borrower and the Lender; WHEREAS, the Borrower has requested that the Lender provide, as a part of the existing Letter of Credit Facility, a facility of up to $500,000 in standby letters of credit, all as provided herein; NOW, THEREFORE, in consideration of the premises and mutual covenants and conditions herein set forth, it is hereby agreed as follows: 1. Terms. All terms used herein without definition, unless the context clearly requires otherwise, shall have the meanings provided therefor in the Loan Agreement. 2. Amendment to Loan Agreement; Confirmation of Liens. (i) The following sentence shall be added to Section 3.1 of the Loan Agreement after the second sentence thereof: "In addition, the Borrower may request the issuance of Standby Letters of Credit to facilitate the purchase by the Borrower of machine parts to support the Borrower's sale of sock knitting machinery; provided the maximum aggregate face amount of such Standby Letters of Credit which may be outstanding may not exceed $500,000." (ii) This amendment is not an increase in the maximum amount of letters of credit which can be issued under the Letter of Credit Facility and the amount of such standby letters of credit shall reduce on a dollar for dollar basis the aggregate amount of Letters of Credit which may be issued under the Letter of Credit Facility. (iii) The Borrowing Base Certificate attached as Exhibit A to the Loan Agreement is deleted and a new Borrowing Base Certificate, in the form of Exhibit 1-A attached hereto, is placed in its stead. (iv) The Borrower hereby agrees and confirms that all liens and security interests securing the indebtedness evidenced by the Letter of Credit Facility shall cover all indebtedness created under the standby letters of credit and that the liens and security interests created under the Loan Documents, including the Security Agreement and the Cash Collateral Documents, shall cover all indebtedness created under the standby letters of credit. 3. Representations and Warranties. The Borrower hereby represents and warrants that: (A) The representations and warranties contained in Article V of the Loan Agreement are hereby made by the Borrower on and as of the date hereof except the representations of Sections 5.3 and 5.4 shall refer to the most recent financial statements delivered under Section 7.1 of the Loan Agreement. (B) There has been no change, and there exists no prospective change, in the condition, financial or otherwise, of the Borrower since the date of the most recent financial reports received by the Lender, other than changes in the ordinary course of business, none of which has been a materially adverse change; (C) The business and properties of the Borrower are not, and since the date of the most recent financial reports 2 thereof received by Lender have not, been materially adversely affected as the result of any fire, explosion, earthquake, chemical spill, accident, strike, lockout, combination of workmen, flood, embargo, riot, or cancellation or loss of any major contracts; (D) No event has occurred and no condition exists which, either prior to or upon the consummation of the transactions contemplated hereby, constitutes an Event of Default under the Loan Agreement, either immediately or with the lapse of time or the giving of notice, or both; (E) The property which is collateral for the indebtedness of the Borrower to the Lender under the Security Agreement and other collateral documents of the Borrower in favor of the Lender are subject to no liens or encumbrances except Permitted Liens; (F) The execution, delivery and performance by the Borrower of its obligations under this Amendment Agreement will not cause a violation or default under any indenture, loan agreement, or other agreement of, or applicable to, the Borrower; and (G) The Borrower has the requisite corporate power and authority to execute, deliver and perform this Amendment Agreement; each of such documents has been duly authorized, executed and delivered; and each of such documents constitutes a valid, binding and enforceable instrument, obligation or agreement of the Borrower, in accordance with its respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors' rights generally. 4. Effectiveness of Documents. The terms and conditions hereof shall not be effective until each of the following are delivered to the Lender: (A) Amendment Agreement and Note Modification Agreement. Two fully executed originals of this Amendment Agreement. (B) Other Documents, Etc. Such other documents, instruments and certificates as the Lender may reasonably request. 3 5. Miscellaneous. (A) This Amendment Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. No promise, condition, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and none of them has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as in this Amendment Agreement otherwise expressly stated, no representations, warranties, or commitments, express or implied, have been made by any other party to the other regarding the subject matter hereof. None of the terms or conditions of this Amendment Agreement may be changed, modified, waived or canceled, orally or otherwise, except in a writing, signed by the party to be charged therewith, specifying such change, modification, waiver or cancellation of such terms or conditions, or of any preceding or succeeding breach thereof, unless expressly so stated. (B) Except as hereby specifically amended, modified, or supplemented, the Loan Agreement, the Loan Documents and all other agreements, documents, and instruments related thereto are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. (C) This Amendment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. (D) This Amendment Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of North Carolina. (E) Upon request of the Lender, each of the parties hereto will duly execute and deliver or cause to be duly executed and delivered to the Lender such further instruments and do and cause to be done such further acts that may be reasonably necessary or proper in the opinion of the Lender to carry out more effectively the provisions and purposes hereof, including documents deemed necessary by the Lender to more fully evidence the obligations of Borrower to Lender and protect and perfect the collateral therefor. (F) The Borrower agrees to pay all reasonable costs and expenses of the Lender in connection with the 4 preparation, execution and delivery of the documents executed in connection with this Amendment Agreement, including without limitation, the reasonable fees and out-of-pocket expenses of special counsel to the Lender. [Signatures appear on following page] 5 IN WITNESS WHEREOF, this Agreement has been duly executed as of the date hereof by the Company and the Lender. ATTEST: SPEIZMAN INDUSTRIES, INC. (Signature of: Josef Sklut) By: (Signature of Robert S. Speizman) - ------------------------------ --------------------------------- - ---------- Secretary Name: Robert S. Speizman ------------------------------- Title: President ------------------------------ NATIONSBANK, N.A. By: (Signature of Joseph R. Netzel) ------------------------------ Name: Joseph R. Netzel --------------------------- Title: Vice President -------------------------- 6 EXHIBIT 1-A BORROWING BASE CERTIFICATE
Speizman Industries, Inc. Borrowing Base Certificate For the Week Ended I. Accounts Receivable Gross Receivables $0 Less: Amounts over 90 days $0 from invoice Less: Commissions and expenses $0 receivable Less: Foreign accounts receivable $0 Less: Accounts receivable of an $0 account debtor for which more than 25% of its total balance is more than 90 days past due Less: Other ineligible accounts $0 receivable including "consigned inventories" Net Eligible Receivables $0 A/R Availability (A) 80.00% $0 II. Documentary L/C (B) 50.00% $0 Availability (Limit $7,000,000) III. Cash Collateral (C) Certificates of Deposit Pledged $0 to Lender IV. Calculation of A/R Availability (A) $0 Total Borrowing L/C Availability (B) $0 Base Availability Cash Collateral (C) $0 (D) Total Borrowing Base Availability $0 Credit Facility Usage: Direct Borrowings $0 Standby Letters of Credit ($500,000 Limit) $0 O/S Documentary L/C's $0 (E) Total Usage $0 Net Excess (D-E) $0
The aggregate face amount of letters of credit outstanding in respect of textile machinery held as inventory for sale does not exceed $3,500,000. 7 EX-10 12 EXHIBIT 10.45 1996 FIRST CONSOLIDATED AMENDMENT AGREEMENT TO LOAN AGREEMENT AND RELATED DOCUMENTS THIS AMENDMENT AGREEMENT, made and entered into as of this 15 day of May, 1996, by and between SPEIZMAN INDUSTRIES, INC., a Delaware corporation (the "Borrower") and NATIONSBANK, N.A., a national banking association (the "Lender"); W I T N E S S E T H: WHEREAS, pursuant to a Loan Agreement dated as of April 19, 1994, as amended by 1995 Consolidated Amendment Agreement to Loan Agreement and Related Documents dated May 31, 1995 and a 1995 Second Consolidated Amendment Agreement to Loan Agreement and Related Documents dated September 1, 1995 and 1995 Third Consolidated Amendment Agreement to Loan Agreement and Related Documents dated October 31, 1995, between the Borrower and the Lender (collectively the "Loan Agreement"), arrangements were made for the extension by the Lender to the Borrower of credit on the terms and conditions thereof; WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender its Revolving Credit Note dated April 19, 1994 in the principal amount of $2,000,000 (the "Note"); WHEREAS, under the Loan Agreement, the Borrower has obtained a letter of credit facility of up to $14,000,000 for the issuance of documentary letters of credit for the purposes set forth in the Loan Agreement (the "Letter of Credit Facility"); WHEREAS, collateral for the indebtedness and obligations of the Borrower in respect of the Loan Agreement, Note and Letter of Credit Facility is provided under a Security Agreement dated April 19, 1994 (the "Security Agreement") between the Borrower and the Lender; WHEREAS, the Borrower has requested that the Lender modify certain of the covenants of the Loan Agreement, all as provided herein; NOW, THEREFORE, in consideration of the premises and mutual covenants and conditions herein set forth, it is hereby agreed as follows: 1. Terms. All terms used herein without definition, unless the context clearly requires otherwise, shall have the meanings provided therefor in the Loan Agreement. 2. Amendment to Loan Agreement; Confirmation of Liens. (i) The following Sections of the Loan Agreement are hereby amended in their entirety to read as follows: (A) "Section 8.3. Consolidated Working Capital. Cause, suffer or permit Consolidated Working Capital to be less than $12,000,000 at any time." (B) "Section 8.4. Consolidated Tangible Net Worth. Cause, suffer or permit Consolidated Tangible Net Worth at any time to be less than (i) $15,000,000 at March 30, 1996 (the "Initial Date") and until (but excluding) the last day of the fiscal quarter immediately following the fiscal quarter in which the Initial Date occurs, and (ii) as at the last day of the fiscal quarter immediately following the fiscal quarter in which the Initial Date occurs and with each succeeding fiscal quarter of the Borrower (each such fiscal quarter in which such last day occurs being a "Prior Period") and until (but excluding) the last day of the fiscal quarter of the Borrower immediately following the Prior Period, the sum of (A) the amount of Consolidated Tangible Net Worth required to be maintained pursuant to this Section 8.4 during the Prior Period plus (B) an amount equal to fifty percent (50%) of Consolidated Net Income the Borrower and its Subsidiaries (without deduction for any negative Consolidated Net Income) during the Prior Period." (C) "Section 8.5. Consolidated Fixed Charge Ratio. Cause, suffer or permit at any time during the fiscal period of the Borrower indicated below, the Consolidated Fixed Charge Ratio for such fiscal period to be less than the ratio indicated. Fiscal Period Ratio Second Fiscal Quarter of .50 to 1.0(1) 1996 Fiscal Year Third Fiscal Quarter of 1.0 to 1.0(2) 1996 Fiscal Year Fourth Fiscal Quarter of 1.0 to 1.0(3) 1996 Fiscal Year First Fiscal Quarter of 1.15 to 1.0 1997 Fiscal Year All Fiscal Quarters Thereafter 1.25 to 1.0 (1) For purposes of determining the Consolidated Fixed Charge Ratio for this quarter, all elements of the 2 Consolidated Fixed Charge Ratio shall be determined based on the second fiscal quarter of 1996. (2) For purposes of determining the Consolidated Fixed Charge Ratio for this quarter, all elements of the Consolidated Fixed Charge Ratio shall be determined based on the second and third fiscal quarters of 1996. (3) For purposes of determining the Consolidated Fixed Charge Ratio for this quarter, all elements of the Consolidated Fixed Charge Ratio shall be determined based on the second, third and fourth fiscal quarters of 1996. For purposes of computing the Fixed Charge Coverage Ratio for all periods during the 1996 Fiscal Year, (i) up to $1,000,000 in inventory to operating lease conversions shall be excluded and (ii) for all periods after March 30, 1996, any new machinery purchases converted to leases will be included as capital expenditures." 3. Representations and Warranties. The Borrower hereby represents and warrants that: (A) The representations and warranties contained in Article V of the Loan Agreement are hereby made by the Borrower on and as of the date hereof except the representations of Sections 5.3 and 5.4 shall refer to the most recent financial statements delivered under Section 7.1 of the Loan Agreement. (B) There has been no change, and there exists no prospective change, in the condition, financial or otherwise, of the Borrower since the date of the most recent financial reports received by the Lender, other than changes in the ordinary course of business, none of which has been a materially adverse change; (C) The business and properties of the Borrower are not, and since the date of the most recent financial reports thereof received by Lender have not, been materially adversely affected as the result of any fire, explosion, earthquake, chemical spill, accident, strike, lockout, combination of workmen, flood, embargo, riot, or cancellation or loss of any major contracts; (D) No event has occurred and no condition exists which, either prior to or upon the consummation of the transactions contemplated hereby, constitutes an Event of Default under the Loan Agreement, either immediately or with the lapse of time or the giving of notice, or both; 3 (E) The property which is collateral for the indebtedness of the Borrower to the Lender under the Security Agreement and other collateral documents of the Borrower in favor of the Lender are subject to no liens or encumbrances except Permitted Liens; (F) The execution, delivery and performance by the Borrower of its obligations under this Amendment Agreement will not cause a violation or default under any indenture, loan agreement, or other agreement of, or applicable to, the Borrower; and (G) The Borrower has the requisite corporate power and authority to execute, deliver and perform this Amendment Agreement; each of such documents has been duly authorized, executed and delivered; and each of such documents constitutes a valid, binding and enforceable instrument, obligation or agreement of the Borrower, in accordance with its respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors' rights generally. 4. Effectiveness of Documents. The terms and conditions hereof shall not be effective until each of the following are delivered to the Lender: (A) Amendment Agreement. Two fully executed originals of this Amendment Agreement. (B) Other Documents, Etc. Such other documents, instruments and certificates as the Lender may reasonably request. (C) Amendment Fee. Receipt by the Lender of an Amendment Fee of $2,500. 5. Miscellaneous. (A) This Amendment Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. No promise, condition, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and none of them has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as in this Amendment Agreement otherwise expressly stated, no representations, warranties, or commitments, express or implied, have been made by any other party to the other regarding the subject matter hereof. None of the terms or conditions of this Amendment Agreement may be 4 changed, modified, waived or canceled, orally or otherwise, except in a writing, signed by the party to be charged therewith, specifying such change, modification, waiver or cancellation of such terms or conditions, or of any preceding or succeeding breach thereof, unless expressly so stated. (B) Except as hereby specifically amended, modified, or supplemented, the Loan Agreement, the Loan Documents and all other agreements, documents, and instruments related thereto are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. (C) This Amendment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. (D) This Amendment Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of North Carolina. (E) Upon request of the Lender, each of the parties hereto will duly execute and deliver or cause to be duly executed and delivered to the Lender such further instruments and do and cause to be done such further acts that may be reasonably necessary or proper in the opinion of the Lender to carry out more effectively the provisions and purposes hereof, including documents deemed necessary by the Lender to more fully evidence the obligations of Borrower to Lender and protect and perfect the collateral therefor. (F) The Borrower agrees to pay all reasonable costs and expenses of the Lender in connection with the preparation, execution and delivery of the documents executed in connection with this Amendment Agreement, including without limitation, the reasonable fees and out-of-pocket expenses of special counsel to the Lender. [Signatures appear on following page] 5 IN WITNESS WHEREOF, this Agreement has been duly executed as of the date hereof by the Company and the Lender. ATTEST: SPEIZMAN INDUSTRIES, INC. (Signature of: Josef Sklut) By: (Signature of Robert S. Speizman) - ------------------------------ --------------------------------- - ---------- Secretary Name: Robert S. Speizman ------------------------------- Title: President ------------------------------ NATIONSBANK, N.A. By: (Signature of Joseph R. Netzel) ------------------------------- Name: Joseph R. Netzel ----------------------------- Title: Vice President ---------------------------- 6 EX-10 13 EXHIBIT 10.46 1996 SECOND CONSOLIDATED AMENDMENT AGREEMENT TO LOAN AGREEMENT AND RELATED DOCUMENTS THIS AMENDMENT AGREEMENT, made and entered into as of this 26th day of June, 1996, by and between SPEIZMAN INDUSTRIES, INC., a Delaware corporation (the "Borrower") and NATIONSBANK, N.A., a national banking association (the "Lender"); W I T N E S S E T H: WHEREAS, pursuant to a Loan Agreement dated as of April 19, 1994, as amended by 1995 Consolidated Amendment Agreement to Loan Agreement and Related Documents dated May 31, 1995, a 1995 Second Consolidated Amendment Agreement to Loan Agreement and Related Documents dated September 1, 1995, 1995 Third Consolidated Amendment Agreement to Loan Agreement and Related Documents dated October 31, 1995 and 1996 First Consolidated Amendment Agreement to Loan Agreement and Related Documents dated May 15, 1996, between the Borrower and the Lender (collectively the "Loan Agreement"), arrangements were made for the extension by the Lender to the Borrower of credit on the terms and conditions thereof; WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender its Revolving Credit Note dated April 19, 1994 in the principal amount of $2,000,000 (the "Note"); WHEREAS, under the Loan Agreement, the Borrower has obtained a letter of credit facility of up to $14,000,000 for the issuance of documentary letters of credit for the purposes set forth in the Loan Agreement (the "Letter of Credit Facility"); WHEREAS, collateral for the indebtedness and obligations of the Borrower in respect of the Loan Agreement, Note and Letter of Credit Facility is provided under a Security Agreement dated April 19, 1994 (the "Security Agreement") between the Borrower and the Lender; WHEREAS, the Borrower has requested that the Lender modify certain of the covenants of the Loan Agreement, all as provided herein; NOW, THEREFORE, in consideration of the premises and mutual covenants and conditions herein set forth, it is hereby agreed as follows: 1. Terms. All terms used herein without definition, unless the context clearly requires otherwise, shall have the meanings provided therefor in the Loan Agreement. 2. Amendment to Loan Agreement. (i) The following Section of the Loan Agreement is hereby amended in its entirety to read as follows: (A) "Section 8.5. Consolidated Fixed Charge Ratio. Cause, suffer or permit at any time during the fiscal period of the Borrower indicated below, the Consolidated Fixed Charge Ratio for such fiscal period to be less than the ratio indicated. Fiscal Period Ratio Fourth Fiscal Quarter of 0.85 to 1.00 (1) 1996 Fiscal Year First Fiscal Quarter of 1.00 to 1.00 (2) 1997 Fiscal Year All Fiscal Quarters Thereafter 1.25 to 1.0 In calculating compliance with this Section, there shall be excluded from the calculation the charge incurred during the third fiscal quarter of 1996 of $531,790, before income tax provision of $199,000, from the write off of the Copyguard technology. (1) For purposes of determining the Consolidated Fixed Charge Ratio for this quarter, all elements of the Consolidated Fixed Charge Ratio shall be determined based on the third and fourth fiscal quarters of 1996. (2) For purposes of determining the Consolidated Fixed Charge Ratio for this quarter, all elements of the Consolidated Fixed Charge Ratio shall be determined based on the third and fourth fiscal quarters of 1996 and the first fiscal quarter of 1997. For purposes of computing the Fixed Charge Coverage Ratio for all periods during the 1996 Fiscal Year, (i) up to $1,000,000 in inventory to operating lease conversions shall be excluded and (ii) for all periods after March 1, 1996, any new machinery purchases converted to leases will be included as capital expenditures." 3. Waiver of Violation. The Borrower has requested that the Lender waive the violation of Section 8.5 which occurred for the third Fiscal Quarter of the 1996 Fiscal Year. The Lender hereby waives any Event of Default caused by such a violation. 4. Representations and Warranties. The Borrower hereby represents and warrants that: 2 (A) The representations and warranties contained in Article V of the Loan Agreement are hereby made by the Borrower on and as of the date hereof except the representations of Sections 5.3 and 5.4 shall refer to the most recent financial statements delivered under Section 7.1 of the Loan Agreement. (B) There has been no change, and there exists no prospective change, in the condition, financial or otherwise, of the Borrower since the date of the most recent financial reports received by the Lender, other than changes in the ordinary course of business, none of which has been a materially adverse change; (C) The business and properties of the Borrower are not, and since the date of the most recent financial reports thereof received by Lender have not, been materially adversely affected as the result of any fire, explosion, earthquake, chemical spill, accident, strike, lockout, combination of workmen, flood, embargo, riot, or cancellation or loss of any major contracts; (D) No event has occurred and no condition exists which, either prior to or upon the consummation of the transactions contemplated hereby, constitutes an Event of Default under the Loan Agreement, either immediately or with the lapse of time or the giving of notice, or both; (E) The property which is collateral for the indebtedness of the Borrower to the Lender under the Security Agreement and other collateral documents of the Borrower in favor of the Lender are subject to no liens or encumbrances except Permitted Liens; (F) The execution, delivery and performance by the Borrower of its obligations under this Amendment Agreement will not cause a violation or default under any indenture, loan agreement, or other agreement of, or applicable to, the Borrower; and (G) The Borrower has the requisite corporate power and authority to execute, deliver and perform this Amendment Agreement; each of such documents has been duly authorized, executed and delivered; and each of such documents constitutes a valid, binding and enforceable instrument, obligation or agreement of the Borrower, in accordance with its respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors' rights generally. 3 5. Effectiveness of Documents. The terms and conditions hereof shall not be effective until each of the following are delivered to the Lender: (A) Amendment Agreement. Two fully executed originals of this Amendment Agreement. (B) Other Documents, Etc. Such other documents, instruments and certificates as the Lender may reasonably request. 6. Miscellaneous. (A) This Amendment Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. No promise, condition, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and none of them has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as in this Amendment Agreement otherwise expressly stated, no representations, warranties, or commitments, express or implied, have been made by any other party to the other regarding the subject matter hereof. None of the terms or conditions of this Amendment Agreement may be changed, modified, waived or canceled, orally or otherwise, except in a writing, signed by the party to be charged therewith, specifying such change, modification, waiver or cancellation of such terms or conditions, or of any preceding or succeeding breach thereof, unless expressly so stated. (B) Except as hereby specifically amended, modified, or supplemented, the Loan Agreement, the Loan Documents and all other agreements, documents, and instruments related thereto are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. (C) This Amendment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. (D) This Amendment Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of North Carolina. (E) Upon request of the Lender, each of the parties hereto will duly execute and deliver or cause to be duly 4 executed and delivered to the Lender such further instruments and do and cause to be done such further acts that may be reasonably necessary or proper in the opinion of the Lender to carry out more effectively the provisions and purposes hereof, including documents deemed necessary by the Lender to more fully evidence the obligations of Borrower to Lender and protect and perfect the collateral therefor. (F) The Borrower agrees to pay all reasonable costs and expenses of the Lender in connection with the preparation, execution and delivery of the documents executed in connection with this Amendment Agreement, including without limitation, the reasonable fees and out-of-pocket expenses of special counsel to the Lender. [Signatures appear on following page] 5 IN WITNESS WHEREOF, this Agreement has been duly executed as of the date hereof by the Company and the Lender. ATTEST: SPEIZMAN INDUSTRIES, INC. (Signature of: Josef Sklut) By: (Signature of Robert S. Speizman) - ------------------------------ --------------------------------- - ---------- Secretary Name: Robert S. Speizman ------------------------------- Title: President ------------------------------ NATIONSBANK, N.A. By: (Signature of Joseph R. Netzel) ------------------------------- Name: Joseph R. Netzel ----------------------------- Title: Vice President ---------------------------- 6 EX-10 14 EXHIBIT 10.47 1996 THIRD CONSOLIDATED AMENDMENT AGREEMENT TO LOAN AGREEMENT AND RELATED DOCUMENTS THIS AMENDMENT AGREEMENT, made and entered into as of this 26th day of August, 1996, by and between SPEIZMAN INDUSTRIES, INC., a Delaware corporation (the "Borrower") and NATIONSBANK, N.A., a national banking association (the "Lender"); W I T N E S S E T H: WHEREAS, pursuant to a Loan Agreement dated as of April 19, 1994, as amended by 1995 Consolidated Amendment Agreement to Loan Agreement and Related Documents dated May 31, 1995, a 1995 Second Consolidated Amendment Agreement to Loan Agreement and Related Documents dated September 1, 1995, 1995 Third Consolidated Amendment Agreement to Loan Agreement and Related Documents dated October 31, 1995 and 1996 First Consolidated Amendment Agreement to Loan Agreement and Related Documents dated May 15, 1996, and a 1996 Second Consolidated Amendment Agreement to Loan Agreement and Related Documents dated as of June 26, 1996 between the Borrower and the Lender (collectively the "Loan Agreement"), arrangements were made for the extension by the Lender to the Borrower of credit on the terms and conditions thereof; WHEREAS, under the Loan Agreement, the Borrower has issued to the Lender its Revolving Credit Note dated April 19, 1994 in the principal amount of $2,000,000 (the "Note"); WHEREAS, under the Loan Agreement, the Borrower has obtained a letter of credit facility of up to $14,000,000 for the issuance of documentary letters of credit for the purposes set forth in the Loan Agreement (the "Letter of Credit Facility"); WHEREAS, collateral for the indebtedness and obligations of the Borrower in respect of the Loan Agreement, Note and Letter of Credit Facility is provided under a Security Agreement dated April 19, 1994 (the "Security Agreement") between the Borrower and the Lender and the Cash Collateral Documents (as defined in the Loan Agreement); WHEREAS, the Borrower has requested that the Lender temporarily increase the Letter of Credit Facility from $14,000,000 to $18,000,000, all as provided herein; NOW, THEREFORE, in consideration of the premises and mutual covenants and conditions herein set forth, it is hereby agreed as follows: 1. Terms. All terms used herein without definition, unless the context clearly requires otherwise, shall have the meanings provided therefor in the Loan Agreement. 2. Amendment to Loan Agreement. (i) Section 1.0 is hereby amended to read as follows: "1.10. "Borrowing Base" means the sum as of the date of determination of (i) Eligible Accounts multiplied by 80%, (ii) L/C Credit multiplied by 50% and (iii) Cash Collateral multiplied by 100%, all determined pursuant to the Borrowing Base Certificate; provided that the calculation in (ii) shall be subject to a maximum of $9,000,000." (ii) The following sentence shall be added to Section 3.1: "Notwithstanding the foregoing, during the period July 1, 1996 to October 31, 1996, the aggregate maximum principal face amount of Letters of Credit which may be outstanding at any one time shall not exceed $18,000,000, less the principal amount outstanding under the Line of Credit Loan at the time of issuance of a Letter of Credit." (iii) The Borrower hereby agrees and confirms that all liens and security interests securing the indebtedness evidenced by the Letter of Credit Facility shall cover all additional indebtedness created under the Letter of Credit Facility as increased hereby, and that the liens and security interests created under the Loan Documents, including the Security Agreement and the Cash Collateral Documents, shall cover all indebtedness created under the Letter of Credit Facility, as increased. 3. Representations and Warranties. The Borrower hereby represents and warrants that: (A) The representations and warranties contained in Article V of the Loan Agreement are hereby made by the Borrower on and as of the date hereof except the representations of Sections 5.3 and 5.4 shall refer to the most recent financial statements delivered under Section 7.1 of the Loan Agreement. (B) There has been no change, and there exists no prospective change, in the condition, financial or otherwise, of the Borrower since the date of the most recent financial reports received by the Lender, other than changes in the ordinary course of business, none of which has been a materially adverse change; (C) The business and properties of the Borrower are not, and since the date of the most recent financial reports 2 thereof received by Lender have not, been materially adversely affected as the result of any fire, explosion, earthquake, chemical spill, accident, strike, lockout, combination of workmen, flood, embargo, riot, or cancellation or loss of any major contracts; (D) No event has occurred and no condition exists which, either prior to or upon the consummation of the transactions contemplated hereby, constitutes an Event of Default under the Loan Agreement, either immediately or with the lapse of time or the giving of notice, or both; (E) The property which is collateral for the indebtedness of the Borrower to the Lender under the Security Agreement and other collateral documents of the Borrower in favor of the Lender are subject to no liens or encumbrances except Permitted Liens; (F) The execution, delivery and performance by the Borrower of its obligations under this Amendment Agreement will not cause a violation or default under any indenture, loan agreement, or other agreement of, or applicable to, the Borrower; and (G) The Borrower has the requisite corporate power and authority to execute, deliver and perform this Amendment Agreement; each of such documents has been duly authorized, executed and delivered; and each of such documents constitutes a valid, binding and enforceable instrument, obligation or agreement of the Borrower, in accordance with its respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors' rights generally. 4. Effectiveness of Documents. The terms and conditions hereof shall not be effective until each of the following are delivered to the Lender: (A) Amendment Agreement. Two fully executed originals of this Amendment Agreement. (B) Resolutions of Borrower. Resolutions of the Borrower certified by its secretary or assistant secretary as of the date hereof, approving and adopting this Amendment Agreement and the other documents to be executed by the Borrower. (C) Opinions. An opinion of counsel to the Borrower covering the matters covered by its prior opinion on the Loan Agreement. 3 (D) Charter Documents. Copy of a Good Standing Certificate of the State of Delaware concerning Borrower and the Articles of Incorporation of Borrower certified by the Secretary of State of Delaware to be a true correct copy as currently in effect and a copy of the Bylaws certified by the Secretary of the Borrower to be a true and correct copy as currently in effect. (E) Certificate of Authority. Certificate of a recent date of the Secretary of State of North Carolina as to the authority of the Borrower to do business in North Carolina and the good standing of the Borrower. (F) No Litigation Certificate. Certificate of the chief financial officer of the Borrower to the effect that no litigation or proceedings are pending or threatened which might reasonably be expected to adversely affect the Borrower's ability to perform its obligations under this Agreement or operation of the Borrower's business. (G) Other Documents, Etc. Such other documents, instruments and certificates as the Lender may reasonably request. 5. Miscellaneous. (A) This Amendment Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. No promise, condition, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and none of them has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as in this Amendment Agreement otherwise expressly stated, no representations, warranties, or commitments, express or implied, have been made by any other party to the other regarding the subject matter hereof. None of the terms or conditions of this Amendment Agreement may be changed, modified, waived or canceled, orally or otherwise, except in a writing, signed by the party to be charged therewith, specifying such change, modification, waiver or cancellation of such terms or conditions, or of any preceding or succeeding breach thereof, unless expressly so stated. (B) Except as hereby specifically amended, modified, or supplemented, the Loan Agreement, the Loan Documents and all other agreements, documents, and instruments related thereto are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. 4 (C) This Amendment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. (D) This Amendment Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of North Carolina. (E) Upon request of the Lender, each of the parties hereto will duly execute and deliver or cause to be duly executed and delivered to the Lender such further instruments and do and cause to be done such further acts that may be reasonably necessary or proper in the opinion of the Lender to carry out more effectively the provisions and purposes hereof, including documents deemed necessary by the Lender to more fully evidence the obligations of Borrower to Lender and protect and perfect the collateral therefor. (F) The Borrower agrees to pay all reasonable costs and expenses of the Lender in connection with the preparation, execution and delivery of the documents executed in connection with this Amendment Agreement, including without limitation, the reasonable fees and out-of-pocket expenses of special counsel to the Lender. [Signatures appear on following page] 5 IN WITNESS WHEREOF, this Agreement has been duly executed as of the date hereof by the Company and the Lender. ATTEST: SPEIZMAN INDUSTRIES, INC. (Signature of: Josef Sklut) By: (Signature of Robert S. Speizman) - ------------------------------ --------------------------------- - ---------- Secretary Name: Robert S. Speizman ------------------------------- Title: President ------------------------------ NATIONSBANK, N.A. By: (Signature of Joseph R. Netzel) --------------------------------- Name: Joseph R. Netzel ------------------------------- Title: Vice President ------------------------------ 6 EX-11 15 EXHIBIT 11 Exhibit 11 NET INCOME PER SHARE The following table presents the information needed to compute primary income per common share:
Year Ended June 29, July 1, July 2, 1996 1995 1994 --------------- ------------ ------------- Net income (loss) applicable to common stock $ (573,066) $1,293,815 $3,256,091 ========== ========== =========== Weighted average shares outstanding 3,236,199 3,236,199 2,826,279 Less: Treasury shares (27,600) (27,600) (27,600) Add: Exercise of options reduced by the number of shares purchased with proceeds 75,229 62,865 105,846 ------ ------------ ----------- Adjusted weighted average shares outstanding 3,283,828 3,271,464 2,904,525 ========= ========== ========= Net income (loss) per share $(0.17) $ 0.40 $ 1.12 ========== ============ ===========
EX-23 16 EXHIBIT 23 Exhibit 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 2-77747 and No. 33-43042 of Speizman Industries, Inc. on Form S-8 of our report dated September 10, 1996, appearing in this Annual Report on Form 10-K of Speizman Industries, Inc. for the year ended June 29, 1996. /s/ BDO Seidman, LLP Charlotte, North Carolina BDO Seidman, LLP September 10, 1996 EX-27 17 EXHIBIT 27
5 YEAR JUN-29-1996 JUL-02-1995 JUN-29-1996 7,981,723 0 12,076,832 259,956 11,639,552 34,121,835 2,977,762 1,525,058 36,149,224 17,808,965 0 323,620 0 0 17,879,305 36,149,224 46,279,969 46,279,969 40,546,962 46,592,645 0 0 (43,400) (269,276) (29,000) (240,276) (332,790) 0 0 (573,066) (0.17) (0.17)
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