EX-10.3






Exhibit 10.3









LEASE ADDENDUM




     THE LEASE dated October 5, 1998 made by and between Gallina Development Corporation, 84
Humboldt Street, Rochester, New York 14609, (LESSOR), and Transcat, Inc., formerly known as,
Transmation, Inc., 35 Vantage Point Drive, Rochester, New York 14624, (LESSEE), effective April 1,
1999, amended March 5, 1999 and expiring on March 31, 2009 covering premises known and designated
as


Being a parcel of land, with improvements, located on the south side of Vantage Point Drive, Lot
R-1A of the Vantage Point Business Centre Resubdivision (the “Property”), together with the 27,250
square foot office and warehouse building thereon, being identified as 35 Vantage Point Drive.




     Is hereby amended and will continue under the same terms and conditions in said LEASE with the
following exceptions:




	 	1)	 	The term of the Lease shall be extended from April 1, 2009 thru and including
March 31, 2019.
	 
	 	2)	 	Effective on or about September 1, 2008, the Demised Premises shall be expanded
by 10,000 sq. ft. of office/warehouse space (the “Building Addition”), to total 37,250
sq. ft., as shown on the attached Site Plan (Exhibit A). The Building Addition shall be
built out in accordance with the attached Building Specifications (Exhibit B) and Floor
Plan (Exhibit C). The Building Addition shall be constructed by LESSOR, at LESSOR’S sole
cost.
	 
	 	3)	 	Effective on or about December 1, 2008, LESSOR shall complete renovations to
the original Demised Premises (the “Building Renovations”), in accordance with the
attached Renovation Specifications (Exhibit D) and Floor Plan (Exhibit E). The Building
Renovations shall be constructed by LESSOR, at LESSOR’S sole cost.
	 
	 	4)	 	The annual rental rate for the period September 1, 2008 (or actual occupancy
date of Building Addition, if later than September 1, 2008), thru and including March
31, 2010 shall be Three Hundred Eight Thousand Eight Hundred Twenty Seven and 54/100
Dollars ($308,827.54), per annum, payable in equal monthly installments of Twenty Five
Thousand Seven Hundred Thirty Five and 63/100 Dollars ($25,735.63).
	 
	 	5)	 	The annual rental rate for the period April 1, 2010 thru and including March
31, 2014 shall be Three Hundred Thirty-One Thousand Five Hundred Twenty Five and 00/100
Dollars ($331,525.00), per annum, payable in equal monthly




84
HUMBOLDT STREET ROCHESTER, NEW YORK 14609    (585) 654-6650     FAX (585) 288-7646



WEBSITE: www.gallinadev.com E-MAIL: gallina@gallinadev.com





 









 









	 	 	 	installments of Twenty Seven Thousand Six Hundred Twenty Seven and 08/100 Dollars
($27,627.08).
	 
	 	6)	 	The annual rental rate for the period April 1, 2014 thru and including March
31, 2019 shall be Three Hundred Forty Eight Thousand Two Hundred Eighty Seven and
50/100 Dollars ($348,287.50), per annum, payable in equal monthly installments of
Twenty Nine Thousand Twenty Three and 96/100 Dollars ($29,023.96).
	 
	 	7)	 	Section Five (5) of the Lease shall be deleted in its entirety and replaced
with the following:
	 
	 	 	 	The LESSEE may, with the approval of LESSOR, which approval shall not be
unreasonably withheld, extend this Lease, and all the terms and conditions, subject
to Section 8 of this Lease Addendum, for two (2) successive period(s) of five (5)
year(s), upon written notice to the LESSOR at no later than one hundred eighty (180)
days prior to the expiration of the term or extension hereof. If any option as
herein before provided, is not exercised by LESSEE, as herein before provided, this
Lease shall terminate absolutely at the expiration date of the term, or the then
current option period, without further notice by either party to the other.
	 
	 	 	 	Notwithstanding anything to the contrary, LESSEE may only exercise its right to
extend the Lease, one (1) option period at a time.
	 
	 	8)	 	Section 8 of the Lease shall be modified as follows: All notices to LESSEE
shall be sent to: 35 Vantage Point Drive, Rochester, New York 14624.
	 
	 	9)	 	Section Twenty Nine (29) of the Lease shall be deleted in its entirety and
replaced with the following:
	 
	 	 	 	In the event that the LESSEE shall exercise its right of renewal option(s) as
contained in Section 7 of this Lease Addendum, the new annual rental rate for each
renewal term shall be calculated as follows: the annual rental rate for the then
current lease term, shall be multiplied by the change in the United States Consumer
Price Index, during the sixty (60) month period immediately preceding the
notification date of LESSEE intent to exercise its option to extend the term of the
Lease, the product of which will be added to the annual rental rate for the then
current lease term. Each increase in the annual rental rate for an option period,
shall have a floor of eight percent (8%) and a cap of sixteen percent (16%).
	 
	 	10)	 	LESSOR agrees to allocate on behalf of LESSEE with a Tenant Improvement
Allowance of up to One Hundred Thousand and 00/100 Dollars ($100,000.00), to be used to
cover a portion of the cost of additional renovations to the existing Building (the
“Additional Renovations”). The Scope of Work for the Additional Renovations will be
developed, jointly between LESSEE and LESSOR, with final cost approvals, agreed upon by
both parties by July 1, 2008.




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	 	 	 	The Tenant Improvement Allowance for Additional Renovations will be allocated by
LESSOR on a monthly basis, as cost are incurred for Additional Renovations and
reported to LESSEE on a monthly basis.
	 
	 	 	 	Should the cost of the Additional Renovations exceed the Tenant Improvement
Allowance, LESSEE agrees to reimburse LESSOR for actual renovation costs incurred in
excess of the agreed Tenant Improvement Allowance, immediately (net 15 days) and in
full, on a monthly basis, upon receipt of a invoice from LESSOR.
	 
	 	 	 	LESSOR and LESSEE will enter into a separate construction contract related to the
Additional Renovations.
	 
	 	 	 	Renovation costs will include LESSOR’S reasonable project management fees.
	 
	 	11) (a)	 	LESSEE acknowledges that it is receiving an enhanced real property tax
abatement program commonly described as the “Jobs Plus Initiative” whereby it pays
property taxes on the Property pursuant to a Payment-in-Lieu-of-Tax Agreement
(“PILOT”), executed by LESSOR and the County of Monroe Industrial Development Agency
(the “Agency”). In consideration for this enhanced PILOT, the LESSOR has leased the
Demised Premises to the LESSEE who has agreed to create eleven (11) additional
full-time jobs within a three (3) year period as defined in the PILOT and maintain
those jobs throughout the term of the PILOT. The LESSEE agrees and understands that the
Agency or its duly appointed agent may examine the LESSEE’S books and records during
normal business hours and upon reasonable notice (a minimum of 48 hours) to determine
the LESSEE’S compliance with the Jobs Plus Initiative
	 
	 	 	 	As long as the Property and Building is owned by the LESSOR and leased to the
LESSEE, the LESSOR agrees to pay annually to the Taxing Jurisdictions as a payment
in lieu of taxes, an amount equal to 100% of the taxes, service charges, special ad
valorem levies, special assessments and improvements district charges or similar tax
equivalents, less the percentages of exemption set forth on the schedule below, with
respect to taxes and special ad valorem levies on the Building Addition within the
description contained in paragraph 5 of Section 485-b (notwithstanding that the
procedural steps to obtain an exemption may not have been complied with) levied upon
or with respect to the Building Addition by the Taxing Jurisdictions, following next
applicable tax status date:





	 	 	 	 	 
	YEARS OF EXEMPTION	 	PERCENTAGE OF EXEMPTION
	1

	 	 	90	%
	2

	 	 	80	%
	3

	 	 	70	%
	4

	 	 	60	%
	5

	 	 	50	%
	6

	 	 	40	%






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	YEARS OF EXEMPTION	 	PERCENTAGE OF EXEMPTION
	7

	 	 	30	%
	8

	 	 	20	%
	9

	 	 	10	%
	10

	 	 	0	%







	 	 	 	Provided however, that the LESSOR need not comply with procedures to obtain such
exemption as provided in the New York Real Property Tax Law, and provided further
that the LESSOR, shall do all things necessary and shall make application and follow
such procedures to obtain such exemption to the extent that the LESSOR shall
determine necessary.
	 
	 	 	 	Further, provided that:






	 	(i)	 	The LESSEE maintain its present job level as stated in the
Application dated May 20, 2008 by LESSOR to Agency and creates eleven (11) new
jobs in three (3) years and maintains those eleven (11) new jobs for the term
of the PILOT . The three-year period commences when the earliest of the
following occurs; (i) the Building Addition is completely constructed; (ii) the
LESSOR receives a Certificate of Occupancy for the Building Addition; and (iii)
the Building Addition is reassessed by Town of Ogden Assessor; and
	 
	 	(ii)	 	Monroe County residents be given preference for created jobs;
and
	 
	 	(iii)	 	The LESSEE shall report its compliance with these provisions
as requested by the LESSOR and the Agency; and
	 
	 	(iv)	 	If the eleven (11) new jobs are not created by the end of the
three (3) year period or not continuously maintained for the term of the PILOT,
the exemption schedule will revert back to Section 485-b of the New York Real
Property Tax Law and the LESSEE agrees to pay in any year for which the job
creation requirements are not met (the “Disqualifying Year”), as an additional
payment in lieu of taxes, an amount equal to the difference between the tax
benefits received in years one through the Disqualifying Year under the PILOT
and the tax benefits which would have been received in years one through the
Disqualifying Year under Section 485-b of the New York Real Property Tax Law.
In the event the LESSEE abandons or otherwise vacates the County of Monroe,
then the LESSEE shall pay back all benefits for all years as if the Building
Addition was owned by it outright and absolutely with no tax abatement.
	 
	 	(v)	 	The payments required hereunder for any non-compliance shall be
paid by the LESSEE to any and all affected taxing jurisdictions whether or not
billed. However, if the LESSEE has made a good faith effort to achieve the job
creation standard, it may apply in writing for relief from the obligation for
repayment of taxes abated, based on a showing of unforeseen economic
circumstances, fiscal hardship, or other good cause.




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	 	 	 	Application for relief from the repayment obligation shall be made to the
Agency, which shall examine the application and make recommendations to the
Legislature regarding the requested relief; the recommendations may include,
but not be limited to, relief in whole or in part from the repayment
obligation, or an alternate schedule for attaining the job creation
standard.
	 
	 	(vi)	 	The tax benefits provided for herein shall be deemed to
commence in the first year in which the LESSEE receives any tax benefits
relative to the Building Addition, whether under this Lease, or any statutory
exemption. In no event shall the LESSEE be entitled to receive tax benefits
relative to the Building Addition for more than ten (10) consecutive years. The
LESSEE agrees that it will not seek any tax exemption for the Building Addition
which would provide benefits for more than ten (10) consecutive years.






	 	11 (b)	 	 Special district charges, unless otherwise exempt, and Monroe County Pure
Waters charges are to be paid in full in by LESSOR in accordance with normal billing
practices and charged back to LESSEE as Additional Rent, per Sections 20 and 27 of the
Lease.
	 
	 	11 (c)	 	 The LESSOR shall pay, within the applicable grace period and without
penalty, the amounts set forth in Sections 10(a) and 10(b) hereof applicable to taxes,
special ad valorem levies, special assessments or similar tax equivalents, less the
percentages of exemption on similar property subject to taxation by the Taxing
Jurisdictions, as appropriate.
	 
	 	11 (d)	 	 Notwithstanding anything contained herein to the contrary, upon the
occurrence of (i) the closure of the Demised Premises, (ii) a significant unapproved
change in use of the Demised Premises, (iii) a significant reduction in employment at
the Demised Premises or (iv) a significant Event of Default under the PILOT, the Agency
shall have the right to recapture all real property tax abatements provided hereunder
pursuant to the following schedule:





	 	 	 	 	 
	Year of Recapture	 	Percent of Recapture
	1

	 	 	100	%
	2

	 	 	100	%
	3

	 	 	50	%
	4

	 	 	50	%
	5

	 	 	25	%
	6

	 	 	25	%
	After year 6

	 	At Agency’s Discretion








	 	 	 	The above-reference periods begin on the effective date of this Lease. Any such
recapture is at the sole and exclusive discretion of the Agency. The Agency shall
notify the LESSEE in writing within ninety (90) days of such Event of Default under
the PILOT of its intent to recapture the PILOT benefits (or any portion




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	 	 	 	thereof); provided, however, that such period shall not commence to run until the
Agency has been properly notified or ascertains any such Event of Default under the
PILOT. For purposes of this Section only, a “significant reduction” shall mean more
than twenty percent (20%) of the employment as stated in the application.
	 
	 	11 (e)	 	 In the event that the Demised Premises is transferred from the Agency to
the LESSOR, and the LESSEE is ineligible for a continued tax exemption under some other
tax incentive program, or the exemption is less than that described in Paragraph 10(a)
herein, the LESSOR agrees to pay no later than the next tax lien date, (plus any
applicable grace period) to each of the Taxing Jurisdictions, an amount equal to the
taxes and assessments which would have been levied on the Building Addition if the
Building Addition had been classified as fully taxable as of the date of transfer or
loss of eligibility of all or a portion of the exemption described herein and the
LESSEE agrees to reimburse LESSOR for the aforementioned payments, as Additional Rent.
	 
	 	11 (f)	 	LESSEE agrees to execute any documents required by Agency to memorialize
the aforementioned agreement, in association with the Jobs Plus Initiative.
	 
	 	12)	 	In the event of a conflict in terms between the Lease, as amended and this
Lease Addendum, the terms and conditions of the Lease Addendum shall prevail.
	 
	 	13)	 	LESSOR and LESSEE agree to enter into a Demised Premises Acceptance And Lease
Commencement Date Agreement, which will specify: the completion date of the Building
Addition, the commencement date of the rent payment for the Building Addition and any
other required amendments to the terms of the Lease.
	 
	 	14)	 	Unless defined otherwise in this Lease Addendum, all capitalized terms used in
this Lease Addendum shall have the same meaning and definition given them in the Lease.





IN WITNESS WHEREOF, the parties hereto have executed this Lease Addendum on the 2nd day of June,
2008.



	 	 	 	 	 
	WITNESS:

	 	Gallina Development Corporation
	 	 
	 
	 	 	 	 
	/s/
Anna Marie Finnegan

	 	/s/ Andrew R. Gallina	 	 
	 

	 	 	 	 
	 

	 	Andrew R. Gallina, President	 	 
	 
	 	 	 	 
	WITNESS:

	 	Transcat, Inc.	 	 
	 
	 	 	 	 
	 

	 	/s/ John J. Zimmer	 	 
	 

	 	 	 	 
	 

	 	Name: John J. Zimmer	 	 
	 

	 	Title: VP Finance & CFO	 	 







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