10K.02-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 3, 2002
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 number 1-4415
Park Electrochemical Corp.
(Exact Name of Registrant as Specified in Its Charter)
New York 11-1734643
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification
No.)
5 Dakota Drive, Lake Success, New 11042
York (Zip Code)
(Address of Principal Executive
Offices)
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Registrant's telephone number, including area code
(516) 354-4100
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
on Which Registered
Common Stock, par value $.10 per New York Stock
share Exchange
Preferred Stock Purchase Rights New York Stock
Exchange
|
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
[cover page 1 of 2 pages]
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 to this
Form 10-K. [X}
State the aggregate market value of the voting and non- voting common equity held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within 60 days prior to the date of filing.
As of Close of
Title of Class Aggregate Market Business On
Value
Common Stock,
|
par value $.10 per $577,617,597* May 24, 2002 share
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Shares As of Close of
Title of Class Outstanding Business On
Common Stock,
par value $.10 per 19,514,108 May 24, 2002
share
|
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for Annual Meeting of Shareholders to be held July 17, 2002 incorporated by reference into Part III of this Report.
*Included in such amount are 1,442,298 shares of common stock valued at $29.60 per share and held by Jerry Shore, the Registrant's Chairman of the Board and a member of the Registrant's Board of Directors.
[cover page 2 of 2 pages]
TABLE OF CONTENTS
Page
PART I
Item 1. Business 4
Item 2. Properties 15
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security
Holders 16
Executive Officers of the Registrant 16
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 18
Item 6. Selected Financial Data 18
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 20
Factors That May Affect Future Results 30
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk 32
Item 8. Financial Statements and Supplementary Data 33
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 58
PART III
Item 10. Directors and Executive Officers of the
Registrant 58
Item 11. Executive Compensation 58
Item 12. Security Ownership of Certain Beneficial
Owners and Management 58
Item 13. Certain Relationships and Related Transactions 58
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 59
SIGNATURES 60
FINANCIAL STATEMENT SCHEDULES
Schedule II - Valuation and Qualifying Accounts 61
EXHIBIT INDEX 62
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PART I
Item 1. Business.
General
Park Electrochemical Corp. ("Park"), through its subsidiaries (unless the context otherwise requires, Park and its subsidiaries are hereinafter called the "Company"), is primarily engaged in the design, production and marketing of advanced electronic materials used to fabricate complex multilayer printed circuit boards and other electronic interconnection systems. Park specializes in advanced materials for high layer count circuit boards and high-speed digital broadband telecommunications, internet and networking applications. Park's electronic materials business operates under the "Nelco" name through fully integrated business units in Asia, Europe and North America. The Company's electronic materials manufacturing facilities are located in Singapore, China, Germany, France, England, New York, Arizona and California.
The Company is also engaged in the design, production and marketing of advanced composite materials through its FiberCote Industries subsidiary in Waterbury, Connecticut and specialty adhesive tapes and films through its Dielectric Polymers subsidiary in Holyoke, Massachusetts for the electronics, aerospace and industrial markets.
Park was founded in 1954 by Jerry Shore, the Company's Chairman of the Board and largest shareholder.
Unless otherwise indicated, all information in this Report has been adjusted to give effect to the Company's three-for-two stock split in the form of a stock dividend, which was distributed November 8, 2000 to shareholders of record at the close of business on October 20, 2000.
In the fiscal year ended February 27, 2000, the Company's business was divided into two industry segments: (1) electronic materials and (2) engineered materials and plumbing hardware. However, during the fourth quarter of the 2000 fiscal year, the Company decided to close and liquidate the plumbing hardware portion of its engineered materials and plumbing hardware business segment. See Note 16 of the Notes to Consolidated Financial Statements in Item 8 of this Report for information concerning the closure of the plumbing hardware business. In addition, in the fiscal years ended February 25, 2001 and March 3, 2002, the engineered materials and plumbing hardware businesses comprised less than 10% of the Company's consolidated revenues, earnings and assets, and the Company considered itself to operate in one business segment. See Note 14 of the Notes to Consolidated Financial Statements in Item 8 of this Report for information concerning the Company's business segments.
The sales and long-lived assets of the Company's operations by geographic area for the last three fiscal years are set forth in Note 14 of the Notes to Consolidated Financial Statements in Item 8 of this Report. The Company's foreign operations are conducted principally by the Company's subsidiaries in Singapore, China, Germany, France and England. The Company's foreign operations are subject to the impact of foreign currency fluctuations. See Note 1 of the Notes to Consolidated Financial Statements in Item 8 of this Report.
Electronic Materials Operations
The Company is a leading global designer and producer of advanced electronic materials used to fabricate complex multilayer printed circuit boards and other electronic interconnect systems, such as multilayer back-planes, wireless packages, high-speed/low-loss multilayers and high density interconnects ("HDIs"). The Company's multilayer printed circuit materials include copper-clad laminates and prepregs. The Company has long-term relationships with its major customers, which include leading independent printed circuit board fabricators, electronic manufacturing service companies, electronic contract manufacturers and major electronic original equipment manufacturers ("OEMs"). Multilayer printed circuit boards and interconnect systems are used in virtually all advanced electronic equipment to direct, sequence and control electronic signals between semiconductor devices (such as microprocessors and memory and logic devices), passive components (such as resistors and capacitors) and connection devices (such as infra- red couplings, fiber optics and surface mount connectors). Examples of end uses of the Company's printed circuit materials include high speed routers and servers, supercomputers, laptops, satellite switching equipment, cellular telephones and transceivers and wireless personal digital assistants ("PDAs"). The Company has developed long-term relationships with major customers as a result of its leading edge products, extensive technical and engineering service support and responsive manufacturing capabilities.
Park believes it founded the modern day printed circuit industry in 1957 by inventing a composite material consisting of an epoxy resin substrate reinforced with fiberglass cloth which was laminated together with sheets of thin copper foil. This epoxy-glass copper-clad laminate system is still used to construct the large majority of today's advanced printed circuit products. The Company also believes that in 1962 it invented the first multilayer printed circuit materials system used to construct multilayer printed circuit boards. The Company also pioneered vacuum lamination and many other manufacturing technologies used in the industry today. In addition, the Company's subsidiary, Dielektra GmbH in Germany, which the Company acquired in 1997, owns a patented process for con tinuously producing thin copper-clad laminates for printed circuit board applications. The Company believes it is one of the industry's technological leaders.
As a result of its leading edge products, extensive technical and engineering service support and responsive manufacturing capabilities, the Company expects to continue to take advantage of several industry trends. These trends include the increasing global demand for electronic products and technology, the increasingly advanced electronic materials required for interconnect performance and manufacturability, the increasing miniaturization and portability of advanced electronic equipment, the consolidation of the printed circuit board fabrication industry and the time-to-market and time-to-volume pressures requiring closer collaboration with materials suppliers.
The Company believes that it is one of the world's largest manufacturers of multilayer printed circuit materials and the market leader in North America and Southeast Asia. It also believes that it is the only significant independent manufacturer of multilayer printed circuit materials in the world. The Company was the first manufacturer in the printed circuit materials industry to establish manufacturing presences in the three major global markets of North America, Europe and Asia, with facilities established in Europe in 1969 and Asia in 1986.
Industry Background
The electronic materials manufactured by the Company and its competitors are used to construct and fabricate complex multilayer printed circuit boards and other advanced electronic interconnect systems. Multilayer printed circuit materials consist of prepregs and copper-clad laminates, as well as semi- finished multilayer printed circuit board panels. Prepregs are chemically and electrically engineered plastic resin systems which are impregnated into and reinforced by a specially manufactured fiberglass cloth product or other woven or non-woven reinforcing fiber. This insulating dielectric substrate is .030 inch to .002 inch in thickness or less in some cases. These resin systems are usually based upon an epoxy chemistry. One or more plies of prepreg are laminated together to form an insulating dielectric substrate to support the copper circuitry patterns of a multilayer printed circuit board. Copper-clad laminates consist of one or more plies of prepreg laminated together with specialty thin copper foil laminated on the top and bottom. Copper foil is specially formed in thin sheets which may vary from .0030 inch to .0002 inch in thickness and normally have a thickness of .0014 inch or .0007 inch. The Company supplies both copper-clad laminates and prepregs to its customers, which use these products as a system to construct multilayer printed circuit boards.
The printed circuit board fabricator processes copper-clad laminates to form the inner layers of a multilayer printed circuit board. The fabricator photoimages these laminates with a dry film or liquid photoresist. After development of the photoresist, the copper surfaces of the laminate are etched to form the circuit pattern. The fabricator then assembles these etched laminates by inserting one or more plies of dielectric prepreg between each of the inner layer etched laminates and also between an inner layer etched laminate and the outer layer copper plane, and then laminating the entire assembly in a press. Prepreg serves as the insulator between the multiple layers of copper circuitry patterns found in the multilayer circuit board. When the multilayer configuration is laminated, these plies of prepreg form an insulating dielectric substrate supporting and separating the multiple inner and outer planes of copper circuitry. The fabricator drills vertical through-holes or vias in the multilayer assembly and then plates the through-holes or vias to form vertical conductors between the multiple layers of circuitry patterns. These through holes or vias combine with the conductor paths on the horizontal circuitry planes to create a three-dimensional electronic interconnect system. In specialized applications, an additional set of microvia layers (2 or 4, typically) may be added through a secondary lamination process to provide increased density and functionality to the design. The outer two layers of copper foil are then imaged and etched to form the finished multilayer printed circuit board. The completed multilayer board is a three-dimensional interconnect system with electronic signals traveling in the horizontal planes of multiple layers of copper circuitry patterns, as well as the vertical plane through the plated holes or vias.
The global market for advanced electronic products has grown in recent years as a result of technological change and frequent new product introductions. This growth is principally attributable to increased sales and more complex electronic content of newer products, such as cellular telephones, pagers, personal computers and portable computing devices, and greater use of electronics in other products, such as automobiles. Further, large, almost completely untapped markets for advanced electronic equipment have emerged in such areas as India and China and other areas of the Pacific Rim. During its 2002 fiscal year, the Company established a business center in Wuxi, China, in the Shanghai-Nanjing corridor, which is an emerging region for advanced multilayer printed circuit fabrication in China.
Semiconductor manufacturers have introduced successive generations of more powerful microprocessors and memory and logic devices. Electronic equipment manufacturers have designed these advanced semiconductors into more compact and often portable products. High performance computing devices in these smaller portable platforms require greater reliability, closer tolerances, higher component and circuit density and increased overall complexity. As a result, the interconnect industry has developed smaller, lighter, faster and more cost-effective interconnect systems, including advanced multilayer printed circuit boards
Advanced interconnect systems require higher technology printed circuit materials to insure the performance of the electronic system and to improve the manufacturability of the interconnect platform. The growth of the market for more advanced printed circuit materials has outpaced the market growth for standard printed circuit materials in recent years. Printed circuit board fabricators and electronic equipment manufacturers require advanced printed circuit materials that have increasingly higher temperature tolerances and more advanced electrical properties in order to support high-speed computing in a miniaturized and often portable environment.
With the very high density circuit demands of miniaturized high performance interconnect systems, the uniformity, purity, consistency, performance predictability, dimensional stability and production tolerances of printed circuit materials have become successively more critical. High density printed circuit boards and interconnect systems often involve higher layer count multilayer circuit boards where the multiple planes of circuitry and dielectric insulating substrates are very thin (dielectric insulating substrate layers may be .002 inch or less) and the circuit line and space geometries in the circuitry plane are very narrow (.002 inch or less). In addition, advanced surface mount interconnect systems are typically designed with very small pad sizes and very narrow plated through holes or vias which electrically connect the multiple layers of circuitry planes. High density interconnect systems must utilize printed circuit materials whose dimensional characteristics and purity are consistently manufactured to very high tolerance levels in order for the printed circuit board fabricator to attain and sustain acceptable product yields.
Shorter product life cycles and competitive pressures have induced electronic equipment manufacturers to bring new products to market and increase production volume to commercial levels more quickly. These trends have highlighted the importance of front-end engineering of electronic products and have increased the level of collaboration among system designers, fabricators and printed circuit materials suppliers. As the complexity of electronic products increases, materials suppliers must provide greater technical support to interconnect systems fabricators on a timely basis regarding manufacturability and performance of new materials systems.
Products and Services
The Company produces a broad line of advanced printed circuit materials used to fabricate complex multilayer printed circuit boards and other electronic interconnect systems, including backplanes, wireless packages, high speed/low loss multilayers and high density interconnects ("HDIs"). The Company's subsidiary, Dielektra GmbH in Germany, also manufactures semi-finished multilayer printed circuit board panels. The Company's diverse advanced printed circuit materials product line is designed to address a wide array of end-use applications and performance requirements.
The Company's electronic materials products have been developed internally and through long-term development projects with its principal suppliers and, to a lesser extent, through licensing arrangements. The Company focuses its research and development efforts on developing industry leading product technology to meet the most demanding product requirements and has designed its product line with a focus on the higher performance, higher technology end of the materials spectrum. All of the Company's existing electronic materials products have been introduced since 1990.
Most of the Company's research and development expenditures are attributable to the efforts of its electronic materials operations. In response to the rapid technological changes in the electronic materials business, these expenditures on research and product development have increased over the past several years.
The Company's products include high-speed, low-loss, digital broadband engineered formulations, high-temperature modified epoxies, bismaleimide triazine epoxies ("BT epoxy"), non-MDA polyimides, enhanced polyimides, high performance epoxy Thermountr materials ("Thermount" is a registered trademark of E.I. duPont de Nemours & Co.), APPE resin technology (a licensed product of Asahi Chemical Industry Co., Ltd.), SIT (Signal Integrity) products, cyanate esters and polytetrafluoroethylene ("PTFE") formulations for RF/microwave applications.
The Company has developed long-term relationships with select customers through broad-based technical support and service, as well as manufacturing proximity and responsiveness at multiple levels of the customer's organization. The Company focuses on developing a thorough understanding of its customer's business, product lines, processes and technological challenges. The Company seeks customers which are industry leaders committed to maintaining and improving their industry leadership positions and which are committed to long-term relationships with their suppliers. The Company also seeks business opportunities with the more advanced printed circuit fabricators and electronic equipment manufacturers which are interested in the full value of products and services provided by their suppliers. The Company believes its proactive and timely support in assisting its customers with the integration of advanced materials technology into new product designs further strengthens its relationships with its customers.
The Company's emphasis on service and close relationships with its customers is reflected in its short lead times. The Company has developed its manufacturing processes and customer service organizations to provide its customers with printed circuit materials products on a just-in-time basis. The Company believes that its ability to meet its customers quick-turn-around ("QTA") requirements is one of its unique strengths.
The Company has located its advanced printed circuit materials manufacturing operations in strategic locations intended to serve specific regional markets. By situating its facilities in close geographical proximity to its customers, the Company is able to rapidly adjust its manufacturing processes to meet customers' new requirements and respond quickly to customers' technical needs. The Company has technical staffs based at each of its manufacturing locations, which allows the rapid dispatch of technical personnel to a customer's facility to assist the customer in quickly solving design, process, production or manufacturing problems.
During the 2002 fiscal year, the Company established a business center in Wuxi, China to support the rapidly growing customer demand for advanced multilayer printed circuitry materials in China.
Customers and End Markets
The Company's customers for its advanced electronic materials include the leading independent printed circuit board fabricators, electronic manufacturing service companies, electronic contract manufacturers and major electronic original equipment manufacturers ("OEMs") in the computer, networking, telecommunications, transportation, aerospace and instrumentation industries located throughout North America, Europe and Asia. The Company seeks to align itself with the larger, more technologically-advanced and better capitalized independent printed circuit board fabricators and major electronic equipment manufacturers which are industry leaders committed to maintaining and improving their industry leadership positions and to building long-term relationships with their suppliers. The Company's selling effort typically involves several stages and relies on the talents of Company personnel at different levels, from management to sales personnel and quality engineers. In recent years, the Company has augmented its traditional sales personnel with an OEM marketing team and product technology specialists. The Company's strategy emphasizes the use of multiple facilities established in market areas in close proximity to its customers.
During the Company's 2002 fiscal year, approximately 18.1% of the Company's total worldwide sales were to Sanmina Corporation, a leading electronics contract manufacturer and manufacturer of printed circuit boards and approximately 11.3% of the Company's total worldwide sales were to Tyco Printed Circuit Group L.P., a leading manufacturer of printed circuit boards. During the Company's 2001 fiscal year, approximately 25.1% of the Company's total worldwide sales were to Sanmina Corporation.
During the Company's 1998 fiscal year and for several years prior thereto, more than 10% of the Company's total worldwide sales were to Delco Electronics Corporation, a subsidiary of General Motors Corp. However, in March 1998 the Company was informed by Delco that Delco planned to close its printed circuit board fabrication plant and exit the printed circuit board manufacturing business. After the plant closure, Delco purchased all of its printed circuit boards from outside suppliers and Delco was no longer a customer of the Company's. After that time, the Company marketed its semi-finished multilayer circuit board material manufacturing capability to leading printed circuit board fabricators, contract assemblers and electronic original equipment manufacturers in North America. The Company had not previously marketed this capability as its semi-finished multilayer capacity had been largely committed to supplying Delco Electronics. Although the Company's electronic materials business was not dependent on this single customer, the loss of this customer had a material adverse effect on the business in the fiscal years ended February 27, 2000, February 25, 2001 and March 3, 2002. In the first quarter of the fiscal year ended March 3, 2002, the Company sold the assets and business of its subsidiary in Arizona that conducted the mass lamination business and recorded non-recurring, pre-tax charges of approximately $15.7 million in its 2002 fiscal year first quarter ended May 27, 2001 in connection with the sale and the closure of a related support facility to the mass lamination business also located in Arizona. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this Report for a discussion of the significant pre-tax losses incurred during the 2000 fiscal year by the Company's Arizona based business unit which formerly supplied Delco Electronics Corporation with semi- finished circuit boards; and see Item 3 of this Report for a discussion of legal proceedings initiated by the Company against Delco Electronics Corporation.
Although the electronic materials business is not dependent on any single customer, the loss of a major customer or of a group of customers could have a material adverse effect on the electronic materials business.
The Company's electronic materials products are marketed by sales personnel in industrial centers in North America, Europe and Asia. Such personnel include both salaried employees and independent sales representatives who work on a commission basis.
Manufacturing
The process for manufacturing multilayer printed circuit materials is capital intensive and requires sophisticated equipment as well as clean-room environments. The key steps in the Company's manufacturing process include: the impregnation of specially designed fiberglass cloth with a resin system and the partial curing of that resin system; the assembling of laminates consisting of single or multiple plies of prepreg and copper foil in a clean-room environment; the vacuum lamination of the copper- clad assemblies under simultaneous exposure to heat, pressure and vacuum; and the finishing of the laminates to customer specifications.
Prepreg is manufactured in a treater. A treater is a roll-to- roll continuous machine which sequences specially designed fiberglass cloth or other reinforcement fabric into a resin tank and then sequences the resin-coated cloth through a series of ovens which partially cure the resin system into the cloth. This partially cured product or prepreg is then sheeted or paneled and packaged by the Company for sale to customers, or used by the Company to construct its copper-clad laminates.
The Company manufacturers copper-clad laminates by first setting up in a clean room an assembly of one or more plies of prepreg stacked together with a sheet of specially manufactured copper foil on the top and bottom of the assembly. This assembly, together with a large quantity of other laminate assemblies, is then inserted into a large, multiple opening vacuum lamination press. The laminate assemblies are then laminated under simultaneous exposure to heat, pressure and vacuum. After the press cycle is complete, the laminates are removed from the press and sheeted, paneled and finished to customer specifications. The product is then inspected and packaged for shipment to the customer. In addition, the Company manufactures very thin copper- clad laminates utilizing Dielektra's unique, patented continuous lamination technology.
The Company manufactures multilayer printed circuit materials at eight fully integrated facilities located in the United States, Europe and Southeast Asia. The Company opened its California facility in 1965, its England facility in 1969, its first Arizona and France facilities in 1984, its Singapore facility in 1986 and its second France facility in 1992, and in 1997, the Company acquired Dielektra GmbH with a fully integrated facility in Cologne, Germany. The Company services the North America market principally through its United States manufacturing facilities, the European market principally through its manufacturing facilities in England, France and Germany, and the Asian market principally through its Singapore manufacturing facility. During its 2002 fiscal year, the Company established a business center in China to supply the demand for advanced multilayer printed circuitry materials in China. The Company has located its manufacturing facilities in its important markets. By maintaining technical and engineering staffs at each of its manufacturing facilities, the Company is able to deliver fully- integrated products and services on a timely basis.
The Company has been expanding the manufacturing capacity of its electronic materials facilities in recent years. During the 2000 fiscal year, the Company completed expansions of its electronic materials operations in Singapore and France, acquired additional manufacturing capacity in California, and commenced significant additional expansions of its electronic materials operations in California and New York, which it completed in its 2002 fiscal year. During the 2001 fiscal year, the Company commenced a significant expansion of its higher technology product line manufacturing facility in Arizona, which the Company completed during the first quarter of its 2002 fiscal year. During the 2002 fiscal year, the Company established a business center in China, redesigned its German electronic materials business to focus its efforts and capabilities on its unique DatlamT automated continuous lamination and paneling technology and on the marketing and manufacturing of high technology, higher layer count mass lamination product, and established the capability to manufacture PTFE materials for RF/microwave applications at its Neltec high performance materials facility in Tempe, Arizona, augmenting the Company's PTFE manufacturing capability in Lannemezan, France.
Materials and Sources of Supply
The principal materials used in the manufacture of the Company's electronic products are specially manufactured copper foil, fiberglass cloth and synthetic reinforcements, and specially formulated resins and chemicals. The Company attempts to develop and maintain close working relationships with suppliers of those materials who have dedicated themselves to complying with the Company's stringent specifications and technical requirements. While the Company's philosophy is to work with a limited number of suppliers, the Company has identified alternate sources of supply for each of these materials. However, there are a limited number of qualified suppliers of these materials, substitutes for these materials are not readily available, and, in the recent past, the industry has experienced shortages in the market for certain of these materials. While the Company has not experienced significant problems in the delivery of these materials and considers its relationships with its suppliers to be strong, a disruption of the supply of materials could materially adversely affect the business, financial condition and results of operations of the Company. Significant increases in the cost of materials purchased by the Company could also have a material adverse effect on the Company's business, financial condition and results of operations if the Company were unable to pass such price increases through to its customers.
Competition
The multilayer printed circuit materials industry is characterized by intense competition and ongoing consolidation. The Company's competitors are primarily divisions of subsidiaries of very large, diversified multinational manufacturers which are substantially larger and have greater financial resources than the Company and, to a lesser degree, smaller regional producers. Because the Company focuses on the higher technology segment of the electronic materials market, technological innovation, quality and service, as well as price, are significant competitive factors.
The Company believes that there are approximately ten significant multilayer printed circuit materials manufacturers in the world and many of these competitors have or are developing significant presences in the three major global markets of North America, Europe and Asia. The Company believes that the multilayer printed circuit materials industry is rapidly becoming more global and that the remaining smaller regional manufacturers will find it increasingly difficult to remain competitive. The Company believes that it is currently one of the world's largest multilayer printed circuit materials manufacturers. The Company further believes it is the only significant independent manufacturer of multilayer printed circuit materials in the world today.
The markets in which the Company's electronic materials operations compete are characterized by rapid technological advances, and the Company's position in these markets depends largely on its continued ability to develop technologically advanced and highly specialized products. Although the Company believes it is an industry technology leader and directs a significant amount of its time and resources toward maintaining its technological competitive advantage, there is no assurance that the Company will be technologically competitive in the future, or that the Company will continue to develop new products that are technologically competitive.
Advanced Composites and Specialty Tape Operations
For many years, the Company was also engaged in the advanced composite materials and specialty adhesive tape businesses and the plumbing hardware business. However, during the fourth quarter of the 2000 fiscal year, the Company decided to close and liquidate its plumbing hardware business. See Notes 14 and 16 of the Notes to Consolidated Financial Statements in Item 8 of this Report for information concerning the Company's business segments and the closure of the plumbing hardware business.
FiberCote Industries, Inc., the Company's composite materials business, develops and produces engineered composite materials for the aerospace, rocket motor, electronics, radio frequency ("RF") and specialty industrial markets. Dielectric Polymers, Inc., the Company's specialty adhesive tape and film business, produces tapes and bonding films for a variety of applications including joining industrial components together.
Marketing and Customers
The Company's advanced composite materials and specialty adhesive tape customers, substantially all of which are located in the United States, include manufacturers in the automotive, graphic arts, aerospace, rocket motor, electronics, RF and specialty industrial industries. Such materials are marketed by sales personnel including both salaried employees and independent sales representatives who work on a commission basis.
While no single advanced composite materials or specialty adhesive tape customer accounted for 10% or more of the Company's total sales during the last fiscal year, the loss of a major customer or of a group of some of the largest customers of the advanced composite materials and specialty adhesive tape business could have a material adverse effect upon the business.
Manufacturing and Sources of Supply
The Company's advanced composite materials manufacturing facility is located in Waterbury, Connecticut, and its specialty adhesive tape and film business is located in Holyoke, Massachusetts.
The Company designs and manufactures its advanced composite materials and industrial tapes and films to its own specifications and to the specifications of its customers. Product development efforts are devoted toward the conforming of the Company's advanced composites to the specifications of, and the obtaining of approvals from, the Company's customers. The materials used in the manufacture of these engineered materials include graphite and carbon fibers and fabrics, Kevlarr ("Kevlar" is a registered trademark of E.I. du Pont de Nemours & Co.), quartz, fiberglass, polyester, chemicals, resins, films, plastics, adhesives and certain other synthetic materials. The Company purchases these materials from several suppliers. Although satisfactory substitutes for many of these materials are not readily available, the Company has experienced no difficulties in obtaining such materials.
Competition
The Company has many competitors in the advanced composite materials and specialty adhesive tape businesses, including some major corporations which have substantially greater financial resources than the Company. The Company competes for business on the basis of product performance and development, product qualification and approval, the ability to manufacture and deliver products in accordance with customers' needs and requirements, and price.
Backlog
The Company records an item as backlog when it receives a purchase order specifying the number of units to be purchased, the purchase price, specifications and other customary terms and conditions. At May 5, 2002, the unfilled portion of all purchase orders received by the Company and believed by it to be firm was approximately $4,807,000, compared to $9,696,000 at April 29, 2001. The decline in backlog at May 5, 2002 compared to April 29, 2001 was due primarily to the continuing slump in the Company's business that began during the first two months of its 2002 fiscal year resulting from the severe downturn and correction in the global electronics industry.
Various factors contribute to the size of the Company's backlog. Accordingly, the foregoing information may not be indicative of the Company's results of operations for any period subsequent to the fiscal year ended March 3, 2002.
Patents and Trademarks
The Company holds several patents and trademarks or licenses thereto. In the Company's opinion, some of these patents and trademarks are important to its products. Generally, however, the Company does not believe that an inability to obtain new, or to defend existing, patents and trademarks would have a material adverse effect on the Company.
Employees
At March 3, 2002, the Company had approximately 1,700 employees. Of these employees, 1,525 were engaged in the Company's electronic materials operations, 120 in its specialty adhesive tape and advanced composite materials operations and 55 consisted of executive personnel and general administrative staff. As a result of a severe correction and downturn in the global electronics industry and, consequently, in the Company's electronic materials business, the Company reduced its total number of employees during the first two months of its 2002 fiscal year from approximately 2,850 total employees to approximately 2,330 total employees at April 30, 2001, and during the remainder of the 2002 fiscal year the Company's total number of employee`s declined to approximately 1,700. None of the Company's employees are subject to a collective bargaining agreement. Management considers its employee relations to be good.
Environmental Matters
The Company is subject to stringent environmental regulation of its use, storage, treatment and disposal of hazardous materials and the release of emissions into the environment. The Company believes that it currently is in substantial compliance with the applicable federal, state and local environmental laws and regulations to which it is subject and that continuing compliance therewith will not have a material effect on its capital expenditures, earnings or competitive position. The Company does not currently anticipate making material capital expenditures for environmental control facilities for its existing manufacturing operations during the remainder of its current fiscal year or its succeeding fiscal year. However, developments, such as the enactment or adoption of even more stringent environmental laws and regulations, could conceivably result in substantial additional costs to the Company.
The Company and certain of its subsidiaries have been named by the Environmental protection Agency (the "EPA") or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the "Superfund Act") or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at nine sites. In addition, a subsidiary of the Company has received cost recovery claims under the Superfund Act from other private parties involving two other sites and has received requests from the EPA under the Superfund Act for information with respect to its involvement at three other sites. Under the Superfund Act and similar state laws, all parties who may have contributed any waste to a hazardous waste disposal site or contaminated area identified by the EPA or comparable state agency may be jointly and severally liable for the cost of cleanup. Generally, these sites are locations at which numerous persons disposed of hazardous waste. In the case of the Company's subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at the waste sites by various companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its subsidiaries have been accused of or charged with any wrongdoing or illegal acts in connection with any such sites. The Company believes it maintains an effective and comprehensive environmental compliance program. Management believes the ultimate disposition of known environmental matters will not have a material adverse effect upon the Company.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Environmental Matters" included in Item 7 of this Report and Note 13 of the Notes to Consolidated Financial Statements included in Item 8 of this Report.
Item 2. Properties.
Set forth below are the locations of the significant properties owned and leased by the Company, the businesses which use the properties, and the size of each such property. All of such properties, except for the Lake Success, New York property, are used principally as manufacturing, warehouse and assembly facilities.
Owned Size
Location or Use (Square
Leased Footage)
Lake Success, NY Leased Administrative 7,000
Offices
Walden, NY Owned Electronic 51,000
Materials
Newburgh, NY Leased Electronic 171,000
Materials
Fullerton, CA Leased Electronic 95,000
Materials
Anaheim, CA Leased Electronic 26,000
Materials
Anaheim, CA Leased Electronic 41,000
Materials
Tempe, AZ Leased Electronic 14,000
Materials
Tempe, AZ Leased Electronic 81,000
Materials
Tempe, AZ Leased Electronic 6,000
Materials
Mirebeau, France Owned Electronic 81,000
Materials
Lannemezan, Owned Electronic 29,000
France Materials
Cologne, Germany Owned Electronic 193,000
Materials
Skelmersdale, Owned Electronic 54,000
England Materials
Singapore Leased Electronic 53,000
Materials
Singapore Leased Electronic 15,000
Materials
Singapore Leased Electronic 10,000
Materials
Wuxi, China Leased Electronic 12,000
Materials
Holyoke, MA Leased Specialty
Adhesive
Tapes and Films 46,000
Waterbury, CT Leased Advanced
Composites 100,000
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The Company believes its facilities and equipment to be in good condition and reasonably suited and adequate for its current needs. During the 2002 fiscal year, certain of the Company's electronic manufacturing facilities were utilized at less than 50% of their capacity.
Item 3. Legal Proceedings.
In May 1998, the Company and its Nelco Technology, Inc. ("NTI") subsidiary in Arizona filed a complaint against Delco Electronics Corporation and the Delphi Automotive Systems unit of General Motors Corp. in the United States District Court for the District of Arizona. The complaint alleged, among other things, that Delco breached its contract to purchase semi-finished multilayer printed circuit boards from NTI and that Delphi interfered with NTI's contract with Delco, that Delco breached the covenant of good faith and fair dealing implied in the contract, that Delco engaged in negligent misrepresentation and that Delco fraudulently induced NTI to enter into the contract. The Company and NTI sought substantial compensatory and punitive damages.
On November 29, 2000, after a five day trial in Phoenix, Arizona, a jury awarded damages to NTI in the amount of $32,280,000, and on December 12, 2000 the judge in the United States District Court entered judgment for NTI on its claim of breach of the implied covenant of good faith and fair dealing with damages in the amount of $32,280,000. Both parties filed motions for post-judgment relief and a new trial, all of which the judge denied, and both parties have appealed the decision to the United States Court of Appeals for the Ninth Circuit in San Francisco. The appeal has been fully briefed and the parties await oral argument, which the Ninth Circuit has not yet scheduled.
Park announced in March 1998 that it had been informed by Delco Electronics that Delco planned to close its printed circuit board fabrication plant and exit the printed circuit board manufacturing business. After the plant closure, Delco purchased all of its printed circuit boards from outside suppliers and Delco was no longer a customer of the Company's. As a result, the Company's sales to Delco declined significantly during the three- month period ended May 31, 1998, were negligible during the three- month period ended August 30, 1998 and have been nil since that time. During the Company's 1999 fiscal year first quarter and during its 1998 fiscal year and for several years prior thereto, more than 10% of the Company's total worldwide sales were to Delco Electronics Corporation; and the Company had been Delco's principal supplier of semi-finished multilayer printed circuit board materials for more than ten years. These materials were used by Delco to produce finished multilayer printed circuit boards. See "Business-Electronic Materials Operations-Customers and End Markets" in Item 1 of this Report, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this Report and "Factors That May Affect Future Results" after Item 7 of this Report.
In the first quarter of the fiscal year ended March 3, 2002, the Company sold the assets and business of NTI and recorded non- recurring, pre-tax charges of approximately $15.7 million in its 2002 fiscal year first quarter ended May 27, 2001 in connection with the sale of NTI and the closure of a related support facility also located in Arizona. See Notes 10 and 11 of the Notes to Consolidated Financial Statements in Item 8 of this Report.
Item 4. Submission of Matters to a Vote of Security Holders.
None
Executive Officers of the Registrant.
Name Title Age
Brian E. Shore Chief Executive Officer,
President and a Director 50
Stephen E. Senior Vice President,
Gilhuley Secretary and General Counsel 57
Emily J. Groehl Senior Vice President, Sales
and Marketing 55
John Jongebloed Senior Vice President, Global 45
Logistics
Thomas T. Spooner Senior Vice President,
Corporate and Technology 65
Development
Murray O. Stamer Senior Vice President, 44
Finance
Gary M. Watson Senior Vice President,
Engineering and Technology 54
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Brian Shore has served as a Director of the Company for more than the past five years. Brian Shore was elected a Vice President of the Company in January 1993, Executive Vice President in May 1994, President effective March 4, 1996, the first day of the Company's 1997 fiscal year, and Chief Executive Officer in November 1996. Brian Shore also served as General Counsel of the Company from April 1988 until April 1994.
Mr. Gilhuley has been General Counsel of the Company since April 1994 and Secretary since July 1996. He was elected a Senior Vice President in March 2001.
Ms. Groehl has been with one of Park's "Nelco" business units for more than the past five years. She was elected Vice President of New England Laminates Co., Inc. in 1988 and was Vice President, Marketing and Sales of Nelco International Corporation from 1993 until June 1999, when Nelco International Corporation merged into Park Electrochemical Corp. She was elected Senior Vice President of Park in May 1999.
Mr. Jongebloed has been employed by one of Park's "Nelco" business units for more than the past ten years. He was Vice President and General Manager of New England Laminates Co., Inc. from January 1992 to May 1999, and he has been President and General Manager of New England Laminates Co., Inc. since May 4, 1999. He was elected Senior Vice President of Park in July 2001.
Mr. Spooner has been employed by one of Park's "Nelco" business units for more than the past five years. He was Vice President, Technology of Nelco International Corporation from 1993 until June 1999, when Nelco International Corporation merged into Park Electrochemical Corp. He was elected Senior Vice President, Technology of Park in May 1999. His title was changed to Senior Vice President, Corporate and Technology Development in May 2001.
Mr. Stamer has been employed by the Company since 1989 and served as the Company's Corporate Controller from 1993 to May 1999, when he was elected Treasurer. He was elected Senior Vice President, Finance in March 2001.
Mr. Watson was elected Senior Vice President, Engineering in June 2000. His title was changed to Senior Vice President, Engineering and Technology in May 2001. Prior to June 2000, Mr. Watson was Senior Director, Manufacturing Process Technology of Fort James Corporation since March 1999; Vice President, Research and Development of Boise Cascade Corporation from 1992 to March 1999; and Business Division Technology Manager of Weyerhauser Company from 1986 to 1992.
There are no family relationships between the directors or executive officers of the Company, except that Brian Shore is the son of Jerry Shore, who is the Chairman of the Board and a Director of the Company and who also served as President of the Company for more than five years until March 4, 1996 and as Chief Executive Officer of the Company for more than five years until November 19, 1996.
The term of office of each executive officer of the Company expires upon the election and qualification of his successor.
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters.
The Company's Common Stock is listed and trades on the New York Stock Exchange (trading symbol PKE). (The Common Stock also trades on the Midwest Stock Exchange.) The following table sets forth, for each of the quarterly periods indicated, the high and low sales prices for the Common Stock as reported on the New York Stock Exchange Composite Tape and dividends declared on the Common Stock, all as adjusted for the three-for-two stock split in the form of a stock dividend distributed November 8, 2000 to stockholders of record at the close of business on October 20, 2000.
For the Fiscal Year Stock Price Dividends Ended March 3, 2002 High Low Declared First Quarter $35.45 $20.03 $.060 Second Quarter 26.73 21.22 $.060 Third Quarter 26.50 19.06 $.060 Fourth Quarter 27.97 24.30 $.060 For the Fiscal Year Stock Price Dividends Ended February 25, 2001 High Low Declared First Quarter $17.89 $14.87 $.053 Second Quarter 27.53 15.69 $.053 Third Quarter 49.72 26.45 $.060 Fourth Quarter 43.10 20.50 $.060 |
As of May 21, 2002, there were approximately 1,520 holders of record of Common Stock.
The Company expects, for the immediate future, to continue to pay regular cash dividends.
Item 6. Selected Financial Data.
The following selected consolidated financial data of Park and its subsidiaries is qualified by reference to, and should be read in conjunction with, the consolidated financial statements, related notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations contained elsewhere herein. Insofar as such consolidated financial information relates to the five fiscal years ended March 3, 2002 and is as of the end of such periods, it is derived from the consolidated financial statements for such periods and as of such dates audited by Ernst & Young LLP, independent auditors. The Consolidated financial statements as of March 3, 2002 and February 25, 2001 and for the three years ended March 3, 2002, together with the independent auditors' report for the three years ended March 3, 2002, appear in Item 8 of this Report.
Fiscal Year Ended
(In thousands, except per share amounts)
Mar. 3, Feb. 25, Feb. 27, Feb. 28, Mar. 1,
2002 2001 2000 1999 1998
STATEMENTS OF EARNINGS
INFORMATION:
Net sales $230,060 $522,197 $425,261 $387,634 $376,158
Cost of sales 218,265 404,527 351,841 328,884 301,968
Gross profit 11,795 117,670 73,420 58,750 74,190
Selling, general and
administrative expenses 34,360 49,897 45,508 41,279 39,418
Loss on sale of NTI and
closure of related support
facility (Note 10) 15,707 - - - -
Restructuring and
severance charges (Note 11) 3,727 - - - -
Closure of plumbing
hardware business(Note 16) - - 4,464 - -
(Loss)/profit from
operations (41,999) 67,773 23,448 17,471 34,772
Other income:
Interest and other
income, net 5,543 8,419 6,654 7,642 8,382
Interest expense - 5,593 5,720 5,400 5,468
Total other income 5,543 2,826 934 2,242 2,914
(Loss)/earnings before
income taxes (36,456) 70,599 24,382 19,713 37,686
Income tax
(benefit)/provision (10,937) 21,180 6,085 4,337 12,436
Net (loss)/earnings $(25,519) $ 49,419 $ 18,297 $ 15,376 $ 25,250
(Loss)/earnings per
share:
Basic $ (1.31) $ 3.10 $ 1.16 $ .93 $ 1.48
Diluted $ (1.31) $ 2.65 $ 1.12 $ .92 $ 1.38
Weighted average number
of common Shares
outstanding:
Basic 19,535 15,932 15,761 16,470 17,030
Diluted 19,535 20,002 19,643 16,707 20,922
Cash dividends per
common share $ .24 $ .23 $ .21 $ .21 $ .21
BALANCE SHEET
INFORMATION:
Working capital $167,000 $188,511 $176,113 $166,840 $176,553
Total assets 360,644 430,581 365,252 351,698 359,329
Long-term debt - 97,672 100,000 100,000 100,000
Stockholders' equity 292,546 228,906 179,118 164,646 166,404
See Notes 10,11 and 16 of the Notes to Consolidated Financial Statements in
Item 8 of this Report.
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Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
General:
Park is a leading global designer and producer of advanced electronic materials used to fabricate complex multilayer printed circuit boards and other electronic interconnect systems. The Company's customers include leading independent printed circuit board fabricators, electronic manufacturing service companies, electronic contract manufacturers and major electronic original equipment manufacturers in the computer, telecommunications, transportation, aerospace and instrumentation industries.
The sales and earnings growth that the Company achieved during its 2001 and 2000 fiscal years halted in the 2002 fiscal year as a result of a severe correction and downturn in the global electronics industry. The Company's sales declined dramatically in the fiscal year ended March 3, 2002, with steep declines in sales by the Company's North American, European and Asian operations. The Company's sales volumes during the 2002 fiscal year were less than one half of the sales levels during the 2001 fiscal year, and the Company reported a substantial loss in the 2002 fiscal year.
The Company's sales growth during the 2001 and 2000 fiscal years was attributable to increased sales of electronic materials in North America, excluding the loss of sales to Delco Electronics, discussed below, and in Europe and Asia. The Company's ongoing efforts to expand its higher technology, higher margin product lines were significant factors in the growth of the Company's sales of electronic materials.
The Company's earnings increased during each of the 2001 and 2000 fiscal years, despite the significant losses in the 2000 fiscal year incurred by the Company's mass lamination business in Arizona which formerly supplied Delco Electronics and despite the significant charges related to the closure and the write-down of the assets of the plumbing hardware business and the 2000 fiscal year operating loss of that business. In the 2001 fiscal year, the Company's earnings reached record levels as a result of the surge in demand for the Company's electronic materials products throughout the global electronics markets served by the Company and the Company's continuing emphasis on its higher technology product lines.
Growth of the Company's electronic materials business was constrained during the 2001 and 2000 fiscal years by the Company's available manufacturing capacity, although the Company has been expanding the manufacturing capacity of its electronic materials facilities in recent years. Nevertheless, all the Company's electronic materials facilities were operating at full capacity during the 2001 fiscal year. During the 2000 fiscal year, the Company completed expansions of its electronic materials operations in Singapore and France, acquired additional manufacturing capacity in California, and commenced significant additional expansions of its electronic materials operations in California and New York, which it completed in its 2002 fiscal year. During the 2001 fiscal year, the Company commenced a significant expansion of its higher technology product line manufacturing facility in Arizona, which it completed in the 2002 fiscal year first quarter.
During the Company's 1998 fiscal year and for several years prior thereto, more than 10% of the Company's total worldwide sales were to Delco Electronics Corporation, a subsidiary of General Motors Corp., and the Company's wholly owned subsidiary, Nelco Technology, Inc. ("NTI") located in Tempe, Arizona, had been Delco's principal supplier of semi-finished multilayer printed circuit board materials, commonly known as mass lamination, which were used by Delco to produce finished multilayer printed circuit boards. However, in March 1998, the Company was informed by Delco that Delco planned to close its printed circuit board fabrication plant and exit the printed circuit board manufacturing business. As a result, the Company's sales to Delco declined during the three-month period ended May 31, 1998, were negligible during the remainder of the 1999 fiscal year and have been nil since that time.
In May 1998, the Company and NTI filed a complaint against Delco Electronics Corporation and the Delphi Automotive Systems unit of General Motors Corp. in the United States District Court for the District of Arizona. The complaint alleged, among other things, that Delco breached its contract to purchase semi- finished multilayer printed circuit boards from NTI and that Delphi interfered with NTI's contract with Delco, that Delco breached the covenant of good faith and fair dealing implied in the contract, that Delco engaged in negligent misrepresentation and that Delco fraudulently induced NTI to enter into the contract. The Company and NTI sought substantial compensatory and punitive damages. In November 2000, a jury awarded damages to NTI in the amount of $32,280,000, and in December 2000 the judge in the United States District Court for the District of Arizona entered judgment for NTI on its claim of breach of the implied covenant of good faith and fair dealing with damages in the amount of $32,280,000. Both parties filed motions for post- judgment relief and a new trial, all of which the judge denied, and both parties have appealed the decision to the United States Court of Appeals for the Ninth Circuit in San Francisco.
After March 1998, the business of NTI languished and its performance was unsatisfactory due primarily to the absence of the unique, high-volume, high-quality business that had been provided by Delco Electronics and the absence of any other customer in the North American electronic materials industry with a similar demand for the large volumes of semi-finished multilayer printed circuit board materials that Delco purchased from NTI. Although NTI's business experienced a resurgence in the 2001 fiscal year as the North American market for printed circuit materials became extremely strong and demand exceeded supply for the electronic materials manufactured by the Company, the Company's internal expectations and projections for the NTI business were for continuing volatility in the business' performance over the foreseeable future. Consequently, the Company commenced efforts to sell the business in the second half of its 2001 fiscal year; and in April 2001, the Company sold the assets and business of NTI and closed a related support facility, also located in Tempe, Arizona. In connection with the sale and closure, the Company recorded non-recurring, pre-tax charges of $15.7 million in its 2002 fiscal year first quarter ended May 27, 2001. As a result of this sale, the Company exited the mass lamination business in North America.
Although the Company's electronic materials business was not dependent on this single customer, the loss of this customer had a material adverse effect on this business in the last three fiscal years.
The Company is not engaged in any related party transactions involving relationships or transactions with persons or entities that derive benefits from their non-independent relationship with the Company or the Company's related parties, or in any transactions with parties with whom the Company or its related parties have a relationship that enables the parties to negotiate terms of material transactions that may or would not be available from other, more clearly independent parties on an arm's-length basis, or in any trading activities involving non-exchange traded commodity or other contracts that are accounted for at fair value or otherwise or in any energy trading or risk management activities, other than certain limited foreign currency contracts intended to hedge the Company's contractual commitments to pay certain obligations or to realize certain receipts in foreign currencies.
Fiscal Year 2002 Compared with Fiscal Year 2001:
The Company experienced a sharp decline in its results of operations for the fiscal year ended March 3, 2002 as the North American, European and Asian markets for sophisticated printed circuit materials experienced severe downturns during such periods.
In addition to its severely depressed results of operations, during the 2002 fiscal year first quarter, the Company incurred non-recurring, pre-tax charges of $15.7 million in connection with the sale of the assets and business of NTI and the closure of a related support facility in Arizona and $0.7 million in connection with workforce reductions at the Company's continuing operations. The Company also incurred pre-tax charges during the 2002 fiscal year third quarter totaling $2.9 million in connection with the realignment of the operations of its German subsidiary, Dielektra GmbH, the Company's electronic materials business located in Cologne, Germany. The realignment included the closure of Dielektra's conventional lamination line to enable it to better focus its efforts and capabilities on its unique DatlamT automated continuous lamination and paneling manufacturing technology and the reduction of the size of its mass lamination operations in order to focus on the marketing and manufacturing of high technology, higher layer count mass lamination product. The Company incurred an additional $125,000 in pre-tax charges during the third quarter for a workforce reduction at another business unit.
The significant reduction in the Company's sales of electronic materials was largely responsible for the severe decline in the Company's results of operations for the fiscal year ended March 3, 2002. The North American, European and Asian markets for sophisticated printed circuit materials collapsed during the 2002 fiscal year, and the Company's electronic materials operations located in each region suffered as a result, although the Company believes it gained market share with certain of its electronic materials customers.
The Company's results of operations and margins declined in the 2002 fiscal year principally as a result of the electronic material business' decrease in sales of all products and the concomitant operation of the Company's facilities at levels far below their designed manufacturing capacity.
Operating results of the Company's specialty adhesive tape and advanced composite materials businesses also declined during the 2002 fiscal year. This decline was attributable to lower volumes of products sold.
While the Company's sales volumes during the 2002 fiscal year were only about 44% of the robust sales volumes achieved by the Company during the 2001 fiscal year, the Company has experienced a small improvement in its sales levels during the months of January through April 2002 compared to the preceding seven months. The Company believes this improvement is attributable to market share gains and to improvements in the business of the Company's customers. However, the Company cannot predict whether this small improvement is sustainable or to ascertain whether the global electronics industry is in fact beginning to recover.
Results of Operations
Net sales for the fiscal year ended March 3, 2002 declined 56% to $230.1 million from $522.2 million for the fiscal year ended February 25, 2001. This decline in sales was the result of lower unit volumes of materials shipped and the absence of sales by NTI, which, as described above, the Company sold in the 2002 fiscal year first quarter.
Although the net sales of NTI during the 2001 fiscal year were material relative to the Company's consolidated net sales during such year, the operations of NTI were not material to the Company's consolidated financial position, results of operations, capital resources or liquidity, and the sale of NTI is not expected to have any material effect on the Company's future operating results, financial position, capital resources, liquidity or continuing operations.
The Company's foreign operations accounted for $97.5 million of sales, or 42% of the Company's total sales worldwide, during the 2002 fiscal year, compared with $209.3 million of sales, or 40% of total sales worldwide, during the 2001 fiscal year. Sales by the Company's foreign operations during the 2002 fiscal year decreased 54% from the 2001 fiscal year. The decrease in sales by the Company's foreign operations in the 2002 fiscal year was due to decreases in sales in both Asia and Europe.
The overall gross margin as a percentage of net sales for the Company's worldwide operations was 5.1% during the 2002 fiscal year compared with 22.5% during the 2001 fiscal year. The deterioration in the gross margin was attributable to the significant declines in sales volumes from the 2001 fiscal year, the absence of growth in sales of higher technology, higher margin products, which was only slightly offset by increases in market share with certain key electronic materials customers and inefficiencies caused by operating certain facilities at levels below their designed manufacturing capacity. Although the Company's cost of sales decreased significantly as a result of lower production volumes and cost reduction measures implemented by the Company, including significant workforce reductions, the reduction of overtime and the decision to not implement annual salary increases, the declines in sales and production volumes resulted in lower volumes to absorb fixed overhead costs and, consequently, an increase in the cost of sales as a percentage of net sales in the 2002 fiscal year.
Although selling, general and administrative expenses declined by $15.5 million, or by 31%, during the 2002 fiscal year compared with the 2001 fiscal year, these expenses, measured as a percentage of sales, were 14.9% during the 2002 fiscal year compared with 9.5% during the 2001 fiscal year. The increase in selling, general and administrative expenses as a percentage of sales in the 2002 fiscal year resulted from proportionately lower sales compared to the 2001 fiscal year.
For the reasons set forth above, for the 2002 fiscal year, income from operations, including the non-recurring, pre-tax charges, described above, related to the realignment of the operations of the Company's German business unit, the sale of NTI and the closure of a related support facility and severance for workforce reductions at the Company's continuing operations, declined to a loss of $42.0 million, and income from operations, before the non-recurring, pre-tax charges, declined to a loss of $22.6 million, in both cases compared to a profit of $67.8 million for the 2001 fiscal year.
Interest and other income, net, principally investment income, declined 34% to $5.5 million for the 2002 fiscal year from $8.4 million for the 2001 fiscal year. The decrease in investment income was attributable to the reduction in cash available for investment and lower prevailing interest rates during the 2002 fiscal year. The Company's investments were primarily short-term taxable instruments. The Company incurred no interest expense during the 2002 fiscal year compared with $5.6 million during the 2001 fiscal year. The Company's interest expense was related primarily to its $100 million principal amount of 5.5% Convertible Subordinated Notes due 2006, issued in 1996, $2,328,000 principal amount of which was converted into 82,750 shares of the Company's common stock prior to February 25,2001, the end of the Company's 2001 fiscal year, $95,934,000 of which was converted into 3,410,908 shares of the Company's common stock on March 1, 2001, and $1,738,000 of which was redeemed by the Company for cash on March 2, 2001. See "Liquidity and Capital Resources" elsewhere in this Item 7.
The Company's effective income tax rate was 30.0% for the 2002 fiscal year and the 2001 fiscal year.
Net earnings for the 2002 fiscal year, including the non- recurring, pre-tax charges, described above, related to the realignment of the operations of the Company's German business unit, the sale of NTI and the closure of a related support facility and severance for workforce reductions at the Company's continuing operations, declined to a net loss of $25.5 million, and net earnings, before the non-recurring, pre-tax charges, declined to a net loss of $11.9 million, in both cases from net earnings of $49.4 million for the 2001 fiscal year.
Basic and diluted earnings per share decreased from $3.10 and $2.65, respectively, for the 2001 fiscal year to a loss per share of $1.31 including the non-recurring, pre-tax charges and to a loss per share of $0.61 before the non-recurring, pre-tax charges for the 2002 fiscal year.
The declines in net earnings and earnings per share were primarily attributable to the decline in the profit from operations and the charge for the closure of the business unit in Arizona which formerly supplied Delco Electronics Corporation with semi-finished multilayer circuit boards.
Fiscal Year 2001 Compared with Fiscal Year 2000:
The Company's electronic materials business was largely responsible for the dramatic improvement in the Company's results of operations for the fiscal year ended February 25, 2001. The North American, Asian and European markets for sophisticated printed circuit materials were extremely strong during the 2001 fiscal year, and the Company's electronic materials operations located in all three geographic areas performed well as a result.
The Company's results of operations and margins improved in the 2001 fiscal year principally as a result of the optimal utilization of the electronic materials business' manufacturing resources and the business' increase in its market share with certain key customers and increase in its sales of higher technology, higher margin products.
Results of Operations
Net sales for the fiscal year ended February 25, 2001 increased 23% to $522.2 million from $425.3 million for the fiscal year ended February 27, 2000. This increase in sales was principally the result of higher volume of materials shipped and an increase in sales of higher technology products.
The Company's foreign operations accounted for $209.3 million of sales, or 40% of the Company's total sales worldwide, during the 2001 fiscal year compared with $159.1 million of sales, or 37% of total sales worldwide, during the 2000 fiscal year. Sales by the Company's foreign operations during the 2001 fiscal year increased 32% from the 2000 fiscal year. The increase in sales by the Company's foreign operations in the 2001 fiscal year was due to increases in sales by both the Asian and European operations of the Company.
The gross margin for the Company's continuing worldwide operations was 22.5% during the 2001 fiscal year compared with 17.3% for the 2000 fiscal year. The increase in the gross margin was attributable to efficiencies achieved by operating facilities at levels close to their designed capacity in the 2001 fiscal year, the continuing growth in sales of higher technology, higher margin products as a percentage of total sales and increases in market share with certain key electronic materials customers.
Selling, general and administrative expenses, measured as a percentage of sales, were 9.5% during the 2001 fiscal year compared with 10.7% during the 2000 fiscal year. This decrease was a result of the partially fixed nature of these expenses and the Company's increased sales in the 2001 fiscal year.
For the reasons set forth above, profit from operations for the 2001 fiscal year increased 190% to $67.8 million from $23.4 million for the 2000 fiscal year.
Interest and other income, principally investment income, increased 25% to $8.4 million for the 2001 fiscal year from $6.7 million for the 2000 fiscal year. The increase in investment income was attributable to increased cash available for investment and higher prevailing interest rates during the 2001 fiscal year. The Company's investments were primarily short-term taxable instruments and government securities. Interest expense for the 2001 fiscal year was $5.6 million compared with $5.7 million during the 2000 fiscal year. The Company's interest expense was related primarily to its $100 million principal amount of 5.5% Convertible Subordinated Notes due 2006 issued in February 1996. See "Liquidity and Capital Resources" elsewhere in this Item 7.
The Company's effective income tax rate for the 2001 fiscal year was 30.0% compared with 25.0% for the 2000 fiscal year. This increase in the effective tax rate was primarily the result of a change in the Company's income mix among the tax jurisdictions in which the Company does business.
Net earnings for the 2001 fiscal year increased 170% to $49.4 million from $18.3 million for the 2000 fiscal year. Basic and diluted earnings per share increased to $3.10 and $2.65, respectively, for the 2001 fiscal year from $1.16 and $1.12, respectively, for the 2000 fiscal year. This increase in net earnings and earnings per share was primarily attributable to the increase in the profit from operations offset, in part, by the higher effective tax rate.
Liquidity and Capital Resources:
At March 3, 2002, the Company's cash and temporary investments were $151.4 million compared with $155.7 million at February 25, 2001, the end of the Company's 2001 fiscal year. The decrease in the Company's cash and investment position at March 3, 2002 was attributable to reduced cash provided from operating activities and cash used for the purchase of fixed assets, as discussed below. The Company's working capital (which includes cash and temporary investments) was $167.0 million at March 3, 2002 compared with $188.5 million at February 25, 2001. The decrease at March 3, 2002 compared with February 25, 2001 was due principally to lower cash and temporary investments, accounts receivable and inventories, offset in part by lower current liabilities. The decrease in accounts receivable, inventories and current liabilities at March 3, 2002 compared with February 25, 2001 was a result principally of reduced operating activity in support of lower sales volumes. The Company's current ratio (the ratio of current assets to current liabilities) was 4.9 to 1 at March 3, 2002 compared with 3.4 to 1 at February 25, 2001.
During the 2002 fiscal year, cash provided by the Company's operations, before depreciation and amortization and before non- cash losses related to the sale and impairment of fixed assets, of $4.3 million was enhanced by a significant net reduction in working capital items, resulting in $23.4 million of cash provided from operating activities. A major portion of the 2002 fiscal year's capital expenditures related to the expansions of the Company's electronic materials facilities in Arizona, California and New York. These expansions increased the Company's capacity and capability for the production of sophisticated printed circuit materials. Net expenditures for property, plant and equipment were $22.8 million, $51.8 million and $27.7 million in the 2002, 2001 and 2000 fiscal years, respectively. The Company expects the capital expenditures in the 2003 fiscal year to be less than the expenditures in the 2002 fiscal year and in the 2001 fiscal year.
At March 3, 2002, the Company had no long-term debt. During the Company's 2001 fiscal year, $2,328,000 principal amount of Notes was converted into 82,750 shares of the Company's common stock, and immediately after the end of the 2001 fiscal year, $95,934,000 principal amount of Notes was converted into 3,410,908 shares of the Company's common stock, all at a conversion price of $28.125 per share. On March 2, 2001, the Company redeemed $1,738,000 principal amount of Notes for a redemption price of $1,000.15 (including accrued interest) for each $1,000 principal amount Note pursuant to a previous announcement that on March 2, 2001 it would redeem all of the outstanding Notes that were not converted on or before March 1, 2001. See Note 6 of the Notes to Consolidated Financial Statements in Item 8 of this Report.
The Company believes its financial resources will be sufficient, for the foreseeable future, to provide for continued investment in working capital and property, plant and equipment and for general corporate purposes. Such resources would also be available for appropriate acquisitions and other expansions of the Company's business.
The Company is not aware of any circumstances or events that are reasonably likely to occur that could materially affect its liquidity.
The Company's liquidity is not dependent on the use of, and the Company is not engaged in, any off-balance sheet financing arrangements, such as securitization of receivables or obtaining access to assets through special purpose entities.
The Company's contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of the operating lease commitments described in Note 13 of the Notes to Consolidated Financial Statements included elsewhere in this Report. The Company has no long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than a standby letter of credit in the amount of $1,042,000 to secure the Company's obligations under its workers' compensation insurance program.
Environmental Matters:
The Company is subject to various federal, state and local government requirements relating to the protection of the environment. The Company believes that, as a general matter, its policies, practices and procedures are properly designed to prevent unreasonable risk of environmental damage and that its handling, manufacture, use and disposal of hazardous or toxic substances are in accord with environmental laws and regulations. However, mainly because of past operations and operations of predecessor companies, which were generally in compliance with applicable laws at the time of the operations in question, the Company, like other companies engaged in similar businesses, is a party to claims by government agencies and third parties and has incurred remedial response and voluntary cleanup costs associated with environmental matters. Additional claims and costs involving past environmental matters may continue to arise in the future. It is the Company's policy to record appropriate liabilities for such matters when remedial efforts are probable and the costs can be reasonably estimated.
In the 2002, 2001 and 2000 fiscal years, the Company charged approximately $0.2 million, $0.3 million and $0.2 million, respectively, against pre-tax income for remedial response and voluntary cleanup costs (including legal fees). While annual expenditures have generally been constant from year to year, and may increase over time, the Company expects it will be able to fund such expenditures from cash flow from operations. The timing of expenditures depends on a number of factors, including regulatory approval of cleanup projects, remedial techniques to be utilized and agreements with other parties. At March 3, 2002, the recorded liability in accrued liabilities for environmental matters was $4.0 million compared with $4.4 million at February 25, 2001.
Management does not expect that environmental matters will have a material adverse effect on the liquidity, capital resources, business or consolidated financial position of the Company. See Note 13 of the Notes to Consolidated Financial Statements included in Item 8 of this Report for a discussion of the Company's commitments and contingencies, including those related to environmental matters.
Critical Accounting Policies and Estimates:
In response to financial reporting release, FR- 60,"Cautionary Advice Regarding Disclosure About Critical Accounting Policies", issued by the Securities and Exchange Commission in December 2001, the following information is provided regarding critical accounting policies that are important to the Consolidated Financial Statements and that entail, to a significant extent, the use of estimates, assumptions and the application of management's judgment.
General
The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent liabilities. On an on-going basis, the Company evaluates its estimates, including those related to sales allowances, bad debts, inventories, valuation of long-lived assets, income taxes, restructuring, pensions and other employee benefit programs, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
Sales Allowances
The Company provides for the estimated costs of sales allowances at the time such costs can be reasonably estimated. The Company is focused on manufacturing the highest quality electronic materials and other products possible and employs stringent manufacturing process controls and works with raw material suppliers who have dedicated themselves to complying with the Company's specifications and technical requirements. However, if the quality of the Company's products declined, the Company may incur higher sales allowances.
Bad Debt
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
Inventory
The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company's products and market conditions. If actual demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required.
Valuation of Long-lived Assets
The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Important factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends and significant changes in the use of the Company's assets or strategy of the overall business.
Income Taxes
Carrying value of the Company's net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets resulting in additional income tax expense in the Company's consolidated statement of operations. Management evaluates the realizability of the deferred tax assets quarterly and assesses the need for additional valuation allowances quarterly.
Restructuring
During the fiscal year ended March 3, 2002, the Company recorded significant reserves in connection with the restructuring relating to the sale of Nelco Technology, Inc., the closure of a related support facility and the realignment of Dielektra, GmbH. These reserves include estimates pertaining to employee separation costs and the settlements of contractual obligations resulting from the Company's actions. Although the Company does not anticipate significant changes, the actual costs incurred by the Company may differ from these estimates.
Contingencies and Litigation
The Company is subject to a small number of proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters.
Pension and Other Employee Benefit Programs
The Company's subsidiary in Europe has significant pension costs that are developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates and wage inflation rates. The Company is required to consider current market conditions, including changes in interest rates and wage costs, in selecting these assumptions. Changes in the related pension costs may occur in the future in addition to changes resulting from fluctuations in the Company's related headcount due to changes in the assumptions.
The Company's obligations for workers' compensation claims and employee-health care benefits are effectively self-insured. The Company uses an insurance company administrator to process all such claims and benefits. The Company accrues its workers' compensation liability based upon the claim reserves established by the third-party administrator and historical experience. The Company's employee health insurance benefit liability is based on its historical claims experience.
The Company and certain of its subsidiaries have a non- contributory profit sharing retirement plan covering their regular full-time employees. In addition, the Company's subsidiaries have various bonus and incentive compensation programs, most of which are determined at management's discretion.
The Company's reserves associated with these self-insured liabilities and benefit programs are reviewed by management for adequacy at the end of each reporting period.
Factors That May Affect Future Results.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their companies without fear of litigation so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the statement. Certain portions of this Report which do not relate to historical financial information may be deemed to constitute forward-looking statements that are subject to various factors which could cause actual results to differ materially from Park's expectations or from results which might be projected, forecasted, estimated or budgeted by the Company in forward-looking statements. Accordingly, the Company hereby identifies the following important factors which could cause the Company's actual results to differ materially from any such results which might be projected, forecast, estimated or budgeted by the Company in forward-looking statements.
. The Company's customer base is concentrated, in part, because the Company's business strategy has been to develop long-term relationships with a select group of customers. During the Company's fiscal year ended March 3, 2002, the Company's ten largest customers accounted for approximately 59% of net sales. The Company expects that sales to a relatively small number of customers will continue to account for a significant portion of its net sales for the foreseeable future. A loss of one or more of such key customers could affect the Company's profitability. See "Business-Electronic Materials Operations-Customers and End Markets" in Item 1 of this Report, "Legal Proceedings" in Item 3 of this Report and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this Report for discussions of the loss of a key cus tomer early in the 1999 fiscal year.
. The Company's business is dependent on certain aspects of the electronics industry, which is a cyclical industry and which has experienced recurring downturns. The downturns, such as occurred in the first quarter of the Company's fiscal year ended March 2, 1997 and in the first quarter of the Company's fiscal year ended March 3, 2002, can be unexpected and have often reduced demand for, and prices of, electronic materials.
. The Company's operating results are affected by a number of factors, including various factors beyond the Company's control. Such factors include economic conditions in the electronics industry, the timing of customer orders, product prices, process yields, the mix of products sold and maintenance-related shutdowns of facilities. Operating results also can be influenced by development and introduction of new products and the costs associated with the start-up of new facilities.
. The Company's production processes require the use of substantial amounts of gas and electricity, the cost and available supply of which are beyond the control of the Company. Changes in the cost or availability of gas or electricity could materially increase the Company's cost of operations.
. Rapid technological advances in semiconductors and electronic equipment have placed rigorous demands on the electronic materials manufactured by the Company and used in printed circuit board production. The Company's operating results will be affected by the Company's ability to maintain and increase its technological and manufacturing capability and expertise in this rapidly changing industry.
. The electronic materials industry is intensely competitive and the Company competes worldwide in the market for materials used in the production of complex multilayer printed circuit boards. The Company's principal competitors are substantially larger and have greater financial resources than the Company, and the Company's operating results will be affected by its ability to maintain its competitive position in the industry.
. There are a limited number of qualified suppliers of the principal materials used by the Company in its manufacture of electronic materials products. Substitutes for these products are not readily available, and in the recent past there have been shortages in the market for certain of these materials.
. The Company typically does not obtain long-term purchase orders or commitments. Instead, it relies primarily on continual communication with its customers to anticipate the future volume of purchase orders. A variety of conditions, both specific to the individual customer and generally affecting the customer's industry, can cause a customer to reduce or delay orders previously anticipated by the Company.
. The Company, from time to time, is engaged in the expansion of certain of its manufacturing facilities for electronic materials. The anticipated costs of such expansions cannot be determined with precision and may vary materially from those budgeted. In addition, such expansions will increase the Company's fixed costs. The Company's future profitability depends upon its ability to utilize its manufacturing capacity in an effective manner.
. The Company's business is capital intensive and, in addition, the introduction of new technologies could substantially increase the Company's capital expenditures. In order to remain competitive the Company must continue to make significant investments in capital equipment and expansion of operations. This may require that the Company continue to be able to access capital on terms acceptable to the Company.
. The Company may acquire businesses, product lines or technologies that expand or complement those of the Company. The integration and management of an acquired company or business may strain the Company's management resources and technical, financial and operating systems. In addition, implementation of acquisitions can result in large one-time charges and costs. A given acquisition, if consummated, may materially affect the Company's business, financial condition and results of operations.
. The Company's international operations are subject to risks, including unexpected changes in regulatory requirements, exchange rates, tariffs and other barriers, political and economic instability and potentially adverse tax consequences.
. A portion of the sales and costs of the Company's international operations are denominated in currencies other than the U.S. dollar and may be affected by fluctuations in currency exchange rates.
. The Company's success is dependent upon its relationship with key management and technical personnel.
. The Company's future success depends in part upon its intellectual property which the Company seeks to protect through a combination of contract provisions, trade secret protections, copyrights and patents.
. The Company's production processes require the use, storage, treatment and disposal of certain materials which are considered hazardous under applicable environmental laws and the Company is subject to a variety of regulatory requirements relating to the handling of such materials and the release of emissions and effluents into the environment. Other possible developments, such as the enactment or adoption of additional environmental laws, could result in substantial costs to the Company.
. The market price of the Company's securities can be subject to fluctuations in response to quarter to quarter variations in operating results, changes in analysts' earnings estimates, market conditions in the electronic materials industry, as well as general economic conditions and other factors external to the Company.
. The Company's results could be affected by changes in the Company's accounting policies and practices or changes in the Company's organization, compensation and benefit plans, or changes in the Company's material agreements or understandings with third parties.
Item 7A.Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risks for changes in foreign currency exchange rates and interest rates. The Company's primary foreign currency exchange exposure relates to the translation of the financial statements of foreign subsidiaries using currencies other than the U.S. dollar as their functional currency. The Company does not believe that a 10% fluctuation in foreign exchange rates would have had a material impact on its consolidated results of operations or financial position. The exposure to market risks for changes in interest rates relates to the Company's short-term investment portfolio. This investment portfolio is managed by outside professional managers in accordance with guidelines issued by the Company. These guidelines are designed to establish a high quality fixed income portfolio of government and highly rated corporate debt securities with a maximum weighted maturity of less than one year. The Company does not use derivative financial instruments in its investment portfolio. Based on the average maturity of the investment portfolio at the end of the 2002 fiscal year a 10% increase in short term interest rates would not have had a material impact on the consolidated results of operations or financial position of the Company.
Item 8. Financial Statements and Supplementary Data.
The Company's Financial Statements begin on the next page.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Park Electrochemical Corp.
Lake Success, New York
We have audited the accompanying consolidated balance sheets of Park Electrochemical Corp. and subsidiaries as of March 3, 2002 and February 25, 2001 and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended March 3, 2002. Our audits also included the financial statement schedule listed in the Index at Item 14(a)(2). These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Park Electrochemical Corp. and subsidiaries as of March 3, 2002 and February 25, 2001 and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 3, 2002, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
April 22, 2002
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
March 3, February 25,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $99,492 $123,726
Marketable securities (Note 2) 51,917 32,017
Accounts receivable, less
allowance for doubtful accounts
of $1,817 and $2,074, respectively 33,628 71,105
Inventories (Note 3) 13,242 32,307
Prepaid expenses and other
(Note 7) 12,082 9,456
--------- ---------
Total current assets 210,361 268,611
Property, plant and equipment,
net of accumulated depreciation
and amortization (Notes 4, 10
and 11) 149,810 159,309
Other assets (Note 7) 473 2,661
Total $360,644 $430,581
========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 14,098 $ 29,481
Accrued liabilities (Notes 5
and 13) 27,862 39,052
Income taxes payable 1,401 11,567
-------- --------
Total current liabilities 43,361 80,100
Long-term debt (Note 6) - 97,672
Deferred income taxes (Note 7) 13,054 12,679
Deferred pension liability and
other (Note 12) 11,683 11,224
Commitments and contingencies
(Notes 12 and 13)
Stockholders' equity (Notes 6,
8, 9 and 12):
Preferred stock, $1 par value
per share-authorized, 500,000
shares; issued, none - -
Common stock, $.10 par value
per share-authorized, 60,000,000
shares; issued, 20,369,986 shares 2,037 2,037
Additional paid-in capital 131,138 57,318
Retained earnings 172,953 203,150
Accumulated other non-owner changes (7,890) (5,764)
-------- --------
298,238 256,741
Less treasury stock, at cost,
877,163 and 4,441,359
shares, respectively (5,692) (27,835)
-------- ---------
Total stockholders' equity 292,546 228,906
--------- ---------
Total $360,644 $430,581
========= =========
See notes to consolidated financial statements.
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PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Fiscal Year Ended
March 3, February 25, February 27,
2002 2001 2000
Net sales $230,060 $522,197 $425,261
Cost of sales 218,265 404,527 351,841
--------- --------- --------
Gross profit 11,795 117,670 73,420
Selling, general and
administrative expenses 34,360 49,897 45,508
Loss on sale of NTI and
closure of related
support facility (Note 10) 15,707 - -
Restructuring and
severance charges (Note 11) 3,727 - -
Closure of plumbing
hardware business (Note 16) - - 4,464
-------- -------- --------
(Loss)/profit from
operations (41,999) 67,773 23,448
-------- -------- --------
Other income:
Interest and other
income, net 5,543 8,419 6,654
Interest expense (Note 6) - 5,593 5,720
-------- -------- --------
Total other income 5,543 2,826 934
-------- -------- --------
(Loss)/earnings before
income taxes (36,456) 70,599 24,382
Income taxes (Note 7) (10,937) 21,180 6,085
--------- --------- --------
Net (loss)/earnings $(25,519) $ 49,419 $ 18,297
========= ========= =========
(Loss)/earnings per share
(Note 9):
Basic $(1.31) $3.10 $1.16
Diluted $(1.31) $2.65 $1.12
See notes to consolidated financial statements.
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PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share and per share amounts)
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings
Balance, February 28, 1999 20,369,986 $2,037 $52,429 $142,336
Net earnings 18,297
Exchange rate changes
Change in pension
liability adjustment
Market revaluation
Stock options exeercised 1,686
Cash dividends ($.21
per share) (3,325)
Comprehensive income __________ ______ _______ _________
Balance, February 27, 2000 20,369,986 2,037 54,115 157,308
Net earnings 49,419
Exchange rate changes
Change in pension
liability adjustment
Market revaluation
Conversion of long-term debt 1,810
Stock options exercised 1,393
Purchase of treasury stock
Cash dividends ($.23
per share) (3,577)
Comprehensive income __________ ______ _______ _________
Balance, February 25, 2001 20,369,986 2,037 57,318 203,150
Net loss (25,519)
Exchange rate changes
Change in pension
liability adjustment
Market revaluation
Conversion of long-term debt 72,634
Stock options exercised 1,186
Purchase of treasury stock
Cash dividends ($.24
per share) (4,678)
Comprehensive loss
__________ ______ ________ _________
Balance, March 3, 2002 20,369,986 $2,037 $131,138 $172,953
See notes to consolidated financial
statements.
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PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share and per share amounts)
Accumulated
Other Non- Comprehen-
Owner Treasury Stock sive
Changes Shares Amount Income
Balance, February 28, 1999 $(1,802) 4,887,569 $(30,354)
Net earnings $ 18,297
Exchange rate changes (3,407) (3,407)
Change in pension
liability adjustment 149 149
Market revaluation (231) (231)
Stock options exercised (215,339) 1,303
Cash dividends ($.21 _________
per share)
Comprehensive income ________ _________ ________ $ 14,808
Balance, February 27, 2000 (5,291) 4,672,230 (29,051) =========
Net earnings $49,419
Exchange rate changes (2,255) (2,255)
Change in pension
liability adjustment 1,481 1,481
Market revaluation 301 301
Conversion of long-term debt (82,750) 519
Stock options exercised (156,666) 978
Purchase of treasury stock 8,545 (281)
Cash dividends ($.23 _________
per share)
Comprehensive income ________ _________ _______ $ 48,946
Balance, February 25, 2001 (5,764) 4,441,359 (27,835) =========
Net loss $(25,519)
Exchange rate changes (1,257) (1,257)
Change in pension
liability adjustment (802) (802)
Market revaluation (67) (67)
Conversion of long-term debt (3,411,204) 21,381
Stock options exercised (162,830) 1,027
Purchase of treasury stock 9,838 (265)
Cash dividends ($.24 _________
per share)
Comprehensive loss $(27,645)
________ __________ __________ =========
Balance, March 3, 2002 $(7,890) 877,163 $ (5,692)
See notes to consolidated financial
statements.
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PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Fiscal Year Ended
March 3, February 25, February 27.
2002 2001 2000
Cash flows from operating
activities:
Net (loss)/earnings $(25,519) $ 49,419 $ 18,297
Adjustments to reconcile net
(loss)/earnings to net cash
provided by operating activities:
Depreciation and amortization 16,257 16,724 16,264
Loss on sale of fixed assets 10,636 - -
Provision for plumbing business closure - - 3,230
Provision for impairment of fixed assets 2,959 1,146 1,234
Provision for doubtful accounts
receivable 123 228 725
Provision for deferred income taxes (4,690) 2,781 600
Other, net (63) (1,026) 107
Changes in operating assets and
liabilities:
Accounts receivable 36,907 (4,324) (13,722)
Inventories 18,793 (5,410) (2,831)
Prepaid expenses and other current assets 4,511 (3,404) 292
Other assets and liabilities 29 (476) 1,281
Accounts payable (13,617) 5,004 (5,140)
Accrued liabilities (9,744) 10,599 3,922
Income taxes payable (13,176) 6,141 (2,777)
Net cash provided by operating
activities 23,406 77,402 21,482
Cash flows from investing activities:
Purchases of property, plant and
equipment (25,786) (55,011) (27,846)
Proceeds from sales of property,
plant and equipment 2,986 3,250 117
Purchases of marketable securities (47,355) (70,144) (127,677)
Proceeds from sales and maturities
of marketable securities 27,036 117,245 152,388
Net cash used in investing activities (43,119) (4,660) (3,018)
Cash flows from financing activities:
Redemption of long term debt (1,738) - -
Dividends paid (4,678) (3,577) (3,325)
Proceeds from exercise of stock options 1,959 1,722 2,478
Net cash used in financing activities (4,457) (1,855) (847)
(Decrease)/increase in cash and cash
equivalents before effect of
exchange rate changes (24,170) 70,887 17,617
Effect of exchange rate changes on
cash and cash equivalents (64) (314) (1,146)
(Decrease)/increase in cash and cash
equivalents (24,234) 70,573 16,471
Cash and cash equivalents, beginning
of year 123,726 53,153 36,682
Cash and cash equivalents, end of year $ 99,492 $123,726 $ 53,153
See notes to consolidated financial
statements.
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PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Three years ended March 3, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Park Electrochemical Corp. ("Park"), through its subsidiaries (collectively, the "Company"), is a leading global designer and producer of advanced electronic materials used to fabricate complex multilayer printed circuit boards and other electronic interconnection systems. The Company's multilayer printed circuit board materials include copper-clad laminates and prepregs. Multilayer printed circuit boards and interconnection systems are used in virtually all advanced electronic equipment to direct, sequence and control electronic signals between semiconductor devices and passive components. The Company also designs and manufactures specialty adhesive tapes and advanced composite materials for the electronics, aerospace and industrial markets.
a. Principles of Consolidation - The consolidated
financial statements include the accounts of Park and
its subsidiaries. All significant intercompany balances
and transactions have been eliminated.
b. Use of Estimates - The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the amounts
reported in the financial statements and accompanying
notes. Actual results may differ from those estimates.
See "Critical Accounting Policies and Estimates" under
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Item 8 of this
Report.
c. Accounting Period - The Company's fiscal year is the 52
or 53 week period ending the Sunday nearest to the last
day of February. The 2002, 2001 and 2000 fiscal years
ended on March 3, 2002 February 25, 2001 and February
27, 2000, respectively. Fiscal year 2002 consisted of
53 weeks and fiscal years 2001 and 2000 consisted of 52
weeks.
d. Marketable Securities - All marketable securities are
classified as available-for-sale and are carried at
fair value, with the unrealized gains and losses, net
of tax, included in comprehensive income. Realized
gains and losses, amortization of premiums and
discounts, and interest and dividend income are
included in other income. The cost of securities sold
is based on the specific identification method.
e. Inventories - Inventories are stated at the lower of
cost (first-in, first-out method) or market.
f. Revenue Recognition - Revenues are recognized at the time
product is shipped to the customer.
g. Product Warranties - The Company accrues for defective
products at the time the existence of the defect is known
and the amount is reasonably determinable. The Company's
products are made to specific customer order specifications,
and there are no future performance requirements for the
Company's products other than the products' meeting the
agreed specifications. The amounts of returns and
allowances resulting from defective or damaged products
have been approximately 0.5% of sales for each of the
Company's last three fiscal years.
h. Shipping Costs - The amounts paid to third-party shippers
for transporting products to customers are classified as
selling expenses. The amounts included in selling, general
and administrative expenses were approximately $4,034,000,
$6,485,000 and $6,483,000 for fiscal years 2002, 2001
and 2000, respectively.
i. Depreciation and Amortization - Depreciation and
amortization are computed principally by the straight-
line method over the estimated useful lives of the
related assets or, with respect to leasehold
improvements, the terms of the leases, if shorter.
j. Deferred Charges - Costs incurred in connection with
the issuance of debt are deferred and included in other
assets and amortized, using the effective interest
method, over the debt repayment period.
k. Income Taxes - Deferred income taxes are provided for
temporary differences in the reporting of certain
items, primarily depreciation, for income tax purposes
as compared with financial accounting purposes.
United States ("U.S.") Federal income taxes have not
been provided on the undistributed earnings
(approximately $95,300,000 at March 3, 2002) of the
Company's foreign subsidiaries, because it is
management's practice and intent to reinvest such
earnings in the operations of such subsidiaries.
l. Foreign Currency Translation - Assets and liabilities
of foreign subsidiaries using currencies other than the
U.S. dollar as their functional currency are translated
into U.S. dollars at fiscal year-end exchange rates,
and income and expense items are translated at average
exchange rates for the period. Gains and losses
resulting from translation are recorded as currency
translation adjustments in comprehensive income.
m. Consolidated Statements of Cash Flows - The Company
considers all money market securities and investments
with maturities at the date of purchase of 90 days or
less to be cash equivalents.
Supplemental cash flow information:
Fiscal Year
2002 2001 2000
Cash paid during the year for:
Interest $2,700,000 $5,593,000 $5,524,000
Income taxes 6,847,000 12,281,000 7,976,000
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2. MARKETABLE SECURITIES
The following is a summary of available-for-sale securities:
Gross Gross
Unrealized Unrealized Estimated
Amortized Gains Losses Fair Value
Cost
March 3, 2002:
U.S. Treasury and
other government securities $29,956,000 $ 76,000 $ 72,000 $29,960,000
U.S. corporate debt
securities 21,853,000 80,000 49,000 21,884,000
Total debt securities 51,809,000 156,000 121,000 51,844,000
Equity securities 5,000 68,000 - 73,000
$51,814,000 $224,000 $121,000 $51,917,000
February 25, 2001:
U.S. Treasury and
other government securities $ 1,007,000 $ 11,000 $ - $ 1,018,000
U.S. corporate debt
securities 30,800,000 231,000 102,000 30,929,000
Total debt securities 31,807,000 242,000 102,000 31,947,000
Equity securities 5,000 65,000 - 70,000
$31,812,000 $307,000 $102,000 $32,017,000
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The gross realized gains on the sales of securities were $0, $26,000 and $9,000 for fiscal years 2002, 2001 and 2000, respectively, and the gross realized losses were $60,000, $0, and $11,000 for fiscal years 2002, 2001 and 2000, respectively.
The amortized cost and estimated fair value of the debt and marketable equity securities at March 3, 2002, by contractual maturity, are shown below:
Estimated
Fair
Cost Value
Due in one year or less $ 9,123,000 $ 9,208,000
Due after one year through
five years 42,686,000 42,636,000
51,809,000 51,844,000
Equity securities 5,000 73,000
$51,814,000 $51,917,000
|
3. INVENTORIES
March 3, February 25,
2002 2001
Raw materials $ 4,996,000 $14,988,000
Work-in-process 2,916,000 5,075,000
Finished goods 4,784,000 11,319,000
Manufacturing supplies 546,000 925,000
$13,242,000 $32,307,000
|
4. PROPERTY, PLANT AND EQUIPMENT
March 3, February 25,
2002 2001
Land, buildings and improvements $ 60,689,000 $ 48,501,000
Machinery, equipment, furniture
and fixtures 203,476,000 233,078,000
------------ ------------
264,165,000 281,579,000
Less accumulated depreciation
and amortizationn 114,355,000 122,270,000
------------ ------------
$149,810,000 $159,309,000
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Depreciation and amortization expense relating to property, plant and equipment was $16,257,000, $16,724,000 and $16,200,000 for fiscal years 2002, 2001 and 2000, respectively. Pretax charges of $2,959,000, $1,146,000 and $1,234,000 were recorded in fiscal years 2002, 2001 and 2000, respectively, for the write-down of impaired operating equipment to its estimated net realizable value (see Notes 10, 11 and 16 below). Interest expense capitalized to property, plant and equipment was $0, $239,000 and $93,000 for fiscal years 2002, 2001 and 2000, respectively.
5. ACCRUED LIABILITIES
March 3, February 25,
2002 2001
Payroll and payroll related $ 9,000,000 $12,067,000
Taxes, other than income taxes 471,000 1,139,000
Interest - 2,700,000
Employee benefits 5,525,000 7,275,000
Environmental reserve 3,975,000 4,431,000
Other 8,891,000 11,440,000
----------- -----------
$27,862,000 $39,052,000
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6. LONG-TERM DEBT
On February 28, 1996, the Company issued $100,000,000 principal amount of 5.5% Convertible Subordinated Notes due 2006 (the "Notes") with interest payable semiannually on March 1 and September 1 of each year, commencing September 1, 1996. The Notes were unsecured and subordinated to other long-term debt and were convertible at the option of the holder at any time prior to maturity, unless previously redeemed or repurchased, into shares of the Company's common stock at $28.125 per share, subject to adjustment under certain conditions. The Notes were not redeemable at the option of the Company prior to March 1, 1999; at any time on or after such date, the Notes were redeemable at the option of the Company, in whole or in part, initially at 102.75% of the principal amount of such Notes redeemed and thereafter at prices declining to 100% on March 1, 2001, together with accrued interest. On March 1, 2001, $95,934,000 principal amount of the Notes was converted into 3,410,908 shares of the Company's common stock, and the remaining $1,738,000 principal amount of the Notes was redeemed by the Company for cash. Prior to February 25, 2001, $2,328,000 principal amount of the Notes was converted into 82,750 shares of the Company's common stock. At February 25, 2001, the fair value of the Notes approximated $109,220,000.
Foreign lines of credit totaled $2,228,000 at March 3, 2002, all of which is available to the Company's foreign subsidiaries.
7. INCOME TAXES
The income tax (benefit)/provision includes the following:
Fiscal Year
2002 2001 2000
Current:
Federal $(5,901,000) $ 8,367,000 $2,445,000
State and local 18,000 1,509,000 339,000
Foreign (364,000) 8,523,000 2,587,000
(6,247,000) 18,399,000 5,371,000
Deferred:
Federal (4,345,000) 1,722,000 (869,000)
State and local (729,000) 259,000 (46,000)
Foreign 384,000 800,000 1,629,000
(4,690,000) 2,781,000 714,000
$(10,937,000) $21,180,000 $6,085,000
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The Company's effective income tax rate differs from the statutory U.S. Federal income tax rate as a result of the following:
Fiscal Year
2002 2001 2000
Statutory U.S. Federal tax rate 35.0% 35.0% 35.0%
State and local taxes, net
of Federal benefit 1.3 1.6 0.8
Foreign tax rate differentials (5.5) (8.3) (9.3)
Reversal of reserves no
longer required - - (3.1)
Other, net (0.8) 1.7 1.6
------ ------ ------
30.0% 30.0% 25.0%
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The Company had foreign net operating loss carryforwards of approximately $58,500,000 and $31,600,000 in fiscal years 2002 and 2001, respectively. Most of the net operating loss carryforwards were acquired in fiscal year 1998 when the Company purchased the capital stock of Dielektra GmbH ("Dielektra"), a German corporation located in Cologne, Germany. During fiscal year 2002, an audit of Dielektra's tax filings relating to tax periods prior to its acquisition by the Company was completed. The audit resulted in an increase in pre-acquisition net operating losses of approximately $25.0 million. Long-term deferred tax assets arising from these net operating loss carryforwards were valued at $0 at both March 3, 2002 and February 25, 2001, net of valuation reserves of approximately $22,217,000 and $11,400,000, respectively. None of the acquired net operating loss carryforwards relate to goodwill or other intangible assets.
Approximately $1,600,000 of the foreign net operating loss carryforwards expire in varying amounts from fiscal year 2003 through fiscal year 2005, and the remainder have an indefinite expiration.
At March 3, 2002 and February 25, 2001, current deferred tax assets of $7,006,000 and $1,844,000, respectively, which were primarily attributable to expenses not currently deductible, were included in other current assets. The long- term deferred tax liabilities consisted primarily of timing differences relating to depreciation.
8. STOCKHOLDERS' EQUITY
a. Stock Split and Number of Authorized Shares - On October 10, 2000, the Company's Board of Directors approved a three-for-two stock split in the form of a stock dividend. The stock dividend was distributed November 8, 2000 to stockholders of record on October 20, 2000. All share and per share data for prior periods has been retroactively restated to reflect the stock split. In addition, on October 10, 2000, the Company's stockholders approved an increase in the number of authorized shares of common stock from 30,000,000 to 60,000,000 shares.
b. Stock Options - Under the 1992 Stock Option Plan (the "Plan") approved by the Company's stockholders, directors and key employees may be granted options to purchase shares of common stock of the Company exercisable at prices not less than the fair market value at the date of grant. Options become exercisable 25% one year from the date of grant, with an additional 25% exercisable each succeeding anniversary of the date of grant. On July 12, 2000, the Company's stockholders approved an amendment to the Plan to increase the aggregate number of shares of Common Stock authorized for issuance under the Plan by 450,000 shares. Options to purchase a total of 2,625,000 shares of common stock were authorized for grant under such Plan. The authority to grant additional options under the Plan expired on March 24, 2002.
The Company has elected the disclosure provisions of Statement of Financial Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), and continues to apply Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related interpretations in accounting for the Plan. Under APB 25, because the exercise price of the granted options is not less than the market price at the date of the grant, no compensation expense is recognized.
The weighted averaged fair value for options was
estimated at the date of grant using the Black-Scholes
option-pricing model to be $8.09 for fiscal year 2002,
$8.40 for fiscal year 2001 and $5.77 for fiscal year
2000, with the following weighted average assumptions:
risk free interest rate of 4.0% for fiscal year 2002,
5.0% for fiscal year 2001 and 5.5% for fiscal year 2000;
expected volatility factors of 41%, 39% and 40% for
fiscal years 2002, 2001 and 2000, respectively; expected
dividend yield of 1.0% for fiscal year 2002, 1.5% for
fiscal year 2001 and 2% for fiscal year 2000; and
estimated option lives of 4.0 years for fiscal years 2002
and 2001 and 3.6 years for fiscal year 2000. For the
purpose of pro forma disclosures, the effect of applying
SFAS 123 on net (loss)/income and (loss)/earnings per
share for fiscal years 2002, 2001 and 2000 would
approximate the amounts shown below (in thousands, except
EPS data):
2002 2001 2000
As Pro As Pro As Pro
Reported forma Reported forma Reported forma
Net (loss)/income $(25,519) $(26,923) $49,419 $47,935 $18,297 $17,303
(loss)/income
EPS-basic $ (1.31) $ (1.38) $ 3.10 $ 3.01 $ 1.16 $ 1.10
EPS-diluted $ (1.31) $ (1.38) $ 2.65 $ 2.58 $ 1.12 $ 1.07
|
Information with respect to the Plan follows:
Weighted
Range of Average
Exercise Outstanding Exercise
Prices Options Price
Balance, February 28, 1999 $ 3.67 - $18.42 1,141,238 $12.67
Granted 16.37 - 23.96 346,350 16.71
Exercised 3.67 - 16.42 (217,589) 11.61
Cancelled 8.75 - 16.54 (54,205) 15.91
Balance, February 27, 2000 $ 3.67 - $23.96 1,215,794 $13.87
Granted 15.92 - 43.63 360,075 23.71
Exercised 3.67 - 18.42 (156,667) 12.79
Cancelled 4.54 - 16.54 (61,050) 16.16
Balance, February 25, 2001 $ 3.67 - $43.63 1,358,152 $16.50
Granted 22.62 - 26.77 275,725 23.62
Exercised 3.67 - 23.96 (162,831) 13.06
Cancelled 3.67 - 43.63 (227,339) 21.92
Balance, March 3, 2002 $ 4.67 - $43.63 1,243,707 $17.53
Exercisable, March 3, 2002 $ 4.67 - $43.63 645,645 $ 9.56
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The following table summarizes information concerning currently outstanding and exercisable options.
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Number of Remaining Average Number of Average
Range of Options Contractual Exercise Options Exercise
Exercise Prices Outstanding Life Price Exercisable Price
(Years)
$ 4.67 -$ 9.99 166,725 1.62 $ 6.56 166,725 $ 6.56
10.00 - 19.99 731,932 6.48 15.76 454,920 15.56
20.00 - 43.63 345,050 9.19 26.61 24,000 34.38
--------- -------
1,243,707 645,645
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Stock options available for future grant under the Plan at March 3, 2002 and February 25, 2001 were 688,710 and 737,096, respectively.
c. Stockholders' Rights Plan - On February 2, 1989, the Company adopted a stockholders' rights plan designed to protect stockholder interests in the event the Company is confronted with coercive or unfair takeover tactics. Under the terms of the plan, as amended on July 12, 1995, each share of the Company's common stock held of record on February 15, 1989 or issued thereafter received one right. In the event that a person has acquired, or has the right to acquire, 15% (25% in certain cases) or more of the then outstanding common stock of the Company (an "Acquiring Person") or tenders for 15% or more of the then outstanding common stock of the Company, such rights will become exercisable, unless the Board of Directors otherwise determines. Upon becoming exercisable as aforesaid, each right will entitle the holder thereof to purchase one one-hundredth of a share of Series A Preferred Stock for $75, subject to adjustment (the "Purchase Price"). In the event that any person becomes an Acquiring Person, each holder of an unexercised exercisable right, other than an Acquiring Person, shall have the right to purchase, at a price equal to the then current Purchase Price, such number of shares of the Company's common stock as shall equal the then current Purchase Price divided by 50% of the then market price per share of the Company's common stock. In addition, if after a person becomes an Acquiring Person, the Company engages in any of certain business combination transactions as specified in the plan, the Company will take all action to ensure that, and will not consummate any such business combination unless, each holder of an unexercised exercisable right, other than an Acquiring Person, shall have the right to purchase, at a price equal to the then current Purchase Price, such number of shares of common stock of the other party to the transaction for each right held by such holder as shall equal the then current Purchase Price divided by 50% of the then market price per share of such other party's common stock. The Company may redeem the rights for a nominal consideration at any time, and after any person becomes an Acquiring Person, but before any person becomes the beneficial owner of 50% or more of the outstanding common stock of the Company, the Company may exchange all or part of the rights for shares of the Company's common stock at a one-for-one exchange ratio. Unless redeemed, exchanged or exercised earlier, all rights expire on July 12, 2005.
d. Reserved Common Shares - At March 3, 2002, 1,932,417 shares of common stock were reserved for issuance upon exercise of stock options.
e. Accumulated Other Non-Owner Changes - Accumulated balances related to each component of other comprehensive income (loss) were as follows:
March 3, February 25,
2002 2001
Currency translation adjustment $(7,112) $(5,855)
Pension liability adjustment (845) (43)
Unrealized gains on investment 67 134
Accumulated balance $(7,890) $(5,764)
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9. (LOSS)/EARNINGS PER SHARE
The following table sets forth the calculation of basic and diluted (loss)/earnings per share for the fiscal years:
2002 2001 2000
Net (loss)/income for basic EPS $(25,519,000) $49,419,000 $18,297,000
Add interest on 5.5%
Convertible Subordinated Notes,
net of taxes - 3,585,000 3,702,000
Net (loss)/income for dilted EPS $(25,519,000) $53,004,000 $21,999,000
Weighted average common shares
outstanding for basic EPS 19,535,000 15,932,000 15,761,000
Net effect of dilutive options * 548,000 327,000
Assumed conversion of 5.5%
Convertible Subordinated Notes - 3,522,000 3,555,000
Weighted average shares
outstanding for diluted EPS 19,535,000 20,002,000 19,643,000
Basic (loss)/earnings per share $(1.31) $3.10 $1.16
Diluted (loss)/earnings per share $(1.31) $2.65 $1.12
*For the fiscal year ended March 3, 2002, the effect of employee
stock options was not considered because it was antidilutive.
|
The net loss for fiscal year 2002, in the above table, includes a $15,707,000 loss on the sale of Nelco Technology, Inc.(see Note 10 below) and a related support facility and a $3,727,000 charge for restructuring and severance costs (see Note 11 below).
During the first half of the 2001 fiscal year, the Company closed and liquidated its plumbing hardware business. The net income shown above includes losses of $25,000 and $5,022,000 for the 2001 and 2000 fiscal years, respectively, for the discontinued plumbing hardware business. The weighted average number of shares outstanding and the earnings per share for each year have been adjusted to give retroactive effect to the three-for-two split of the Company's common stock declared October 10, 2000 payable November 8, 2000 to stockholders of record on October 20, 2000.
10. SALE OF NELCO TECHNOLOGY, INC.
During the Company's 1998 fiscal year and for several years prior thereto, more than 10% of the Company's total worldwide sales were to Delco Electronics Corporation, a subsidiary of General Motors Corp., and the Company's wholly owned subsidiary, Nelco Technology, Inc. ("NTI") located in Tempe, Arizona, had been Delco's principal supplier of semi-finished multilayer printed circuit board materials, commonly known as mass lamination, which were used by Delco to produce finished multilayer printed circuit boards. However, in March 1998, the Company was informed by Delco that Delco planned to close its printed circuit board fabrication plant and exit the printed circuit board manufacturing business. As a result, the Company's sales to Delco declined during the three-month period ended May 31, 1998, were negligible during the remainder of the 1999 fiscal year and were nil during the 2000, 2001 and 2002 fiscal years.
After March 1998, the business of NTI languished and its performance was unsatisfactory due primarily to the absence of the unique, high-volume, high-quality business that had been provided by Delco Electronics and the absence of any other customer in the North American electronic materials industry with a similar demand for the large volumes of semi-finished multilayer printed circuit board materials that Delco purchased from NTI. Although NTI's business experienced a resurgence in the 2001 fiscal year as the North American market for printed circuit materials became extremely strong and demand exceeded supply for the electronic materials manufactured by the Company, the Company's internal expectations and projections for the NTI business were for continuing volatility in the business' performance over the foreseeable future. Consequently, the Company commenced efforts to sell the business in the second half of its 2001 fiscal year; and in April 2001, the Company sold the assets and business of NTI and closed a related support facility, also located in Tempe, Arizona. As a result of this sale, the Company exited the mass lamination business in North America.
In connection with the sale of NTI and the closure of the related support facility, the Company recorded non-recurring, pre-tax charges of $15,707,000 in its fiscal year 2002 first quarter ended May 27, 2001. The components of these charges and the related liability balances and activity from the May 27, 2001 balance sheet date to the March 3, 2002 balance sheet date are set forth below.
Charges 3/3/02
Closure Incurred or Remaining
Charges Paid Reversals Liabilities
NTI charges:
Loss on sale of assets
and business $10,580,000 $10,580,000 $ - $ -
Severance payments 387,000 387,000 - -
Medical and other
costs 95,000 95,000 - -
Support facility
charges:
Impairment of long
lived assets 2,058,000 2,058,000 - -
Write down accounts
receivable 350,000 304,000 31,000 15,000
Write down inventory 590,000 590,000 - -
Severance payments 688,000 688,000 - -
Medical and other
costs 133,000 123,000 - 10,000
Lease payments, taxes,
utilities, maint. 781,000 202,000 - 579,000
utilities, maint.
Other 45,000 45,000 - -
----------- ----------- ------- --------
$15,707,000 $15,072,000 $31,000 $604,000
=========== =========== ======= ========
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The severance payments and medical and other costs incurred in connection with the sale of NTI and the closure of the related support facility were for the termination of hourly and salaried, administrative, manufacturing and support employees, all of whom were terminated during the first and second fiscal quarters ended May 27, 2001 and August 26, 2001, respectively, and substantially all of the severance payments and related costs for such terminated employees (totaling $1,303,000) were paid during such quarters. The lease obligations will be paid through August 2004 pursuant to the related lease agreements.
NTI did not have a material effect on Park's consolidated financial position, results of operations, capital resources, liquidity or continuing operations, and the sale of NTI is not expected to have a material effect on the Company's future operating results.
11. RESTRUCTURING AND SEVERANCE CHARGES
The Company recorded non-recurring, pre-tax charges of $2,921,000 in its fiscal year 2002 third quarter ended November 25, 2001 in connection with the closure of the conventional lamination line of Dielektra GmbH ("Dielektra"), its electronic materials business located in Cologne, Germany, and the reduction of the size of Dielektra's mass lamination operations to enable Dielektra to focus on its DatlamT automated continuous lamination and paneling technology and on the marketing and manufacturing of high technology, higher layer count mass lamination product. The charges included $2,020,000 for severance payments and related costs for terminated employees. In addition, the Company recorded non- recurring, pre-tax severance charges of $681,000 in its fiscal 2002 first quarter ended May 27, 2001 and $125,000 in its third quarter ended November 25, 2001 for severance payments and related costs for terminated employees at the Company's continuing operations. The components of these charges and the related liability balances and activity from the November 25, 2001 and May 27, 2001 balance sheet dates to the March 3, 2002 balance sheet date are set forth below.
Charges 3/3/02
Closure Incurred or Remaining
Charges Paid Reversals Liabilities
Dielektra GmbH
charges:
Impairment of long
lived assets $ 378,000 $ 378,000 $ - $ -
Write down of assets 523,000 523,000 - -
Severance payments 2,020,000 808,000 - 1,212,000
and related costs ---------- ---------- --------- ----------
2,921,000 1,709,000 1,212,000
Other severance
payments and related
costs 806,000 806,000 - -
---------- ---------- -------- ----------
$3,727,000 $2,515,000 $ - $1,212,000
========== ========== ======== ==========
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The charge for fixed asset impairments was comprised of $378,000 to write off the net book value of machinery and equipment and $523,000 to write down related land and building that are no longer used as a result of the close-down of the conventional lamination line of Dielektra. The machinery and equipment have no residual value. The land and building that previously housed the closed operations are being held for sale and have been written down to their estimated net realizable value of $2,050,000.
As stated above in this Note and in the preceding Note 10, the Company incurred charges (totaling $4,129,000) for severance payments and related costs for employees whose employment was terminated by the Company as follows: $2,020,000 for employees terminated in Germany during the third quarter ended November 25, 2001; $681,000 and $125,000 for employees terminated at its continuing operations in Asia, Europe and North America during the first quarter ended May 27, 2001 and third quarter ended August 26, 2001, respectively; and $1,303,000 for employees terminated in connection with the sale of NTI and the closure of a related support facility in Arizona during the first fiscal quarter ended May 27, 2001.
All the terminated employees were hourly and salaried, administrative, manufacturing and support employees, all such employees were terminated during the first, second and third fiscal quarters ended May 27, 2001, August 26, 2001 and November 25, 2001, respectively, and substantially all the severance payments and related costs for such terminated employees (totaling $4,129,000) were paid during such quarters, except payments and costs of $1,212,000 in Germany all of which are expected to be paid in installments to terminated employees in Germany during the Company's 2003 fiscal year first and second quarters ending June 2, 2002 and September 1, 2002, respectively. All the severance payments and related costs for the employees terminated in connection with the sale of NTI and the closure of the related support facility (totaling $1,303,000) were included in the $15,707,000 of charges in connection with the sale of NTI and the closure of the related support facility.
As a result of the foregoing employee terminations and other less significant employee terminations in connection with business contractions and in the ordinary course of business and substantial numbers of employee resignations and retirements in the ordinary course of business, the total number of employees employed by the Company declined to approximately 1,700 as of March 3, 2002 from approximately 3,000 as of February 25, 2001, the end of the Company's 2001 fiscal year.
12. EMPLOYEE BENEFIT PLANS
a. Profit Sharing Plan - Park and certain of its subsidiaries have a non-contributory profit sharing retirement plan covering their regular full-time employees. The plan may be modified or terminated at any time, but in no event may any portion of the contributions revert back to the Company. The Company's contribu tions under the plan amounted to $791,000, $4,597,000 and $2,269,000 for fiscal years 2002, 2001 and 2000, respectively. Contributions are discretionary and may not exceed the amount allowable as a tax deduction under the Internal Revenue Code. In addition, the Company sponsors a 401(k) savings plan, pursuant to which the contributions of employees of certain subsidiaries were partially matched by the Company in the amounts of $527,000, $751,000 and $848,000 in fiscal years 2002, 2001 and 2000, respectively.
b. Pension Plans - The domestic subsidiary of the Company which conducted the plumbing hardware business had two pension plans, neither of which are active, covering its union employees. On February 27, 2000, the two plans were merged in order to simplify the administration of the plans. The Company's funding policy was to contribute annually the amounts necessary to satisfy applicable funding standards. There were no changes made to funding levels or retiree benefits as a result of the merger of the two plans. However, in connection with the closure of the plumbing hardware business, the Company terminated the combined plan and purchased annuity contracts to fund the pension liability.
A subsidiary of the Company in Europe has a non-contributory defined benefit pension plan which covers certain employees. Under the terms of this plan, participants may not accrue additional service time after December 31, 1987. The Company's policy with respect to this plan is to contribute annually the amounts necessary to meet current payment obligations of the plan. The Company recorded deferred pension liabilities relating to this plan in the amounts of $8,908,000 and $8,678,000 at March 3, 2002 and February 25, 2001, respectively, in accordance with SFAS 87. The effect on the Company's consolidated financial statements in recording the liability was to record a corresponding reduction to accumulated non-owner changes of $845,000 and $43,000 at those same dates.
Net pension costs included the following components:
Fiscal Year
Changes in Benefit Obligations 2002 2001
Benefit obligation at beginning of year $ 9,408,000 $14,130,000
Service cost 82,000 96,000
Interest cost 533,000 839,000
Actuarial loss 108,000 148,000
Currency translation (gain)/loss (439,000) (633,000)
Benefits paid (542,000) (871,000)
Payment for annuities - (4,301,000)
------------ ------------
Benefit obligation at end of Year $ 9,150,000 $ 9,408,000
Changes in Plan Assets
Fair value of plan assets at
beginning of year $ - $ 3,213,000
Actual return on plan assets - 169,000
Employer contributions 542,000 1,831,000
Benefits paid (542,000) (871,000)
Payment for annuities - (4,301,000)
Administrative expenses paid - (41,000)
------------ ------------
Fair value of plan assets $ - $ -
Underfunded status $(9,150,000) $(9,408,000)
Unrecognized net loss 1,317,000 1,000,000
------------ ------------
Net accrued pension cost $(7,833,000) $(8,408,000)
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Fiscal Year
Components of Net Periodic 2002 2001 2000
Benefit Cost
Service cost - benefits earned
during the period $ 82,000 $ 96,000 $ 97,000
Interest cost on projected 533,000 839,000 953,000
benefit obligation
Expected return on plan assets - (252,000) (262,000)
Amortization of unrecognized
transition obligation - - 17,000
Amortization of prior service cost - - 14,000
Recognized net actuarial loss - 38,000 58,000
Effect of curtailment - 1,761,000 144,000
-------- ---------- ----------
Net periodic pension cost $615,000 $2,482,000 $1,021,000
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The projected benefit obligation for the terminated domestic plan was determined using an assumed discount rate of 7.50% for fiscal year 2000 and the assumed long-term rate of return on plan assets was 8%. Projected wage increases are not applicable as benefits pursuant to the plan are based upon years of service without regard to levels of compensation.
The projected benefit obligation for the foreign plan was determined using an assumed discount rate of 6% for fiscal years 2002 and 2001. Projected wage increases of 3.5% and 2.1% and inflation factors of 2.0% and 1.5% were also assumed for fiscal years 2002 and 2001, respectively. As previously stated, the Company's funding policy with respect to this plan is to contribute annually the amounts necessary to meet current payment obligations of the plan.
13. COMMITMENTS AND CONTINGENCIES
a.Lease Commitments - The Company conducts certain of its operations in leased facilities, which include several manufacturing plants, warehouses and offices, and land leases. The leases on facilities are for terms of up to 10 years, the latest of which expires in 2006. Many of the leases contain renewal options for periods ranging from one to ten years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is 2013 and this land lease contains renewal options of up to 35 years.
These non-cancelable operating leases have the following payment schedule.
Fiscal Year Amount
2003 $2,794,000
2004 1,799,000
2005 1,102,000
2006 557,000
2007 180,000
Thereafter 819,000
----------
$7,251,000
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Rental expense, inclusive of real estate taxes and other costs, amounted to $3,933,000, $3,711,000 and $3,424,000 for fiscal years 2002, 2001 and 2000, respectively
b. Environmental Contingencies - The Company and certain of its subsidiaries have been named by the Environmental Protection Agency (the "EPA") or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the "Superfund Act") or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at nine sites. In addition, a subsidiary of the Company has received cost recovery claims under the Superfund Act from other private parties involving two other sites and has received requests from the EPA under the Superfund Act for information with respect to its involvement at three other sites.
Under the Superfund Act and similar state laws, all parties who may have contributed any waste to a hazardous waste disposal site or contaminated area identified by the EPA or comparable state agency may be jointly and severally liable for the cost of cleanup. Generally, these sites are locations at which numerous persons disposed of hazardous waste. In the case of the Company's subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at waste sites by various companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its subsidiaries have been accused of or charged with any wrongdoing or illegal acts in connection with any such sites. The Company believes it maintains an effective and comprehensive environ mental compliance program.
The insurance carriers that provided general liability insurance coverage to the Company and its subsidiaries for the years during which the Company's subsidiaries' waste was disposed at these sites have agreed to pay, or reimburse the Company and its subsidiaries for, 100% of their legal defense and remediation costs associated with three of these sites and 25% of such costs associated with another three of these sites.
The total costs incurred by the Company and its subsidiaries in connection with these sites, including legal fees incurred by the Company and its subsidiaries and their assessed share of remediation costs and excluding amounts paid or reimbursed by insurance carriers, were approximately $200,000, $300,000 and $200,000 in fiscal years 2002, 2001 and 2000, respectively. The recorded liabilities included in accrued liabilities for environmental matters were $3,975,000, $4,431,000 and $4,350,000 for fiscal years 2002, 2001 and 2000, respectively.
Included in cost of sales are charges for actual expenditures and accruals, based on estimates, for certain environmental matters described above. The Company accrues estimated costs associated with known environmental matters, when such costs can be reasonably estimated and when the outcome appears probable. The Company believes that the ultimate disposition of known environmental matters will not have a material adverse effect on the liquidity, capital resources, business or consolidated financial position of the Company. However, one or more of such environmental mat ters could have a significant negative impact on the Company's consolidated financial results for a particular reporting period.
14. BUSINESS SEGMENTS
The Company's specialty adhesive tape and film business, advanced composite business and plumbing hardware business were previously aggregated into the engineered materials and plumbing hardware segment. During fiscal year 2001, the Company closed and liquidated its plumbing hardware business (see Note 16 below). In fiscal years 2001, 2000 and 1999, the specialty adhesive tape, advanced composite and plumbing hardware businesses comprised less than 10% of the Company's consolidated revenues and assets, and the Company considered itself to operate in one business segment. The Company's electronic materials products are marketed primarily to leading independent printed circuit board fabricators, electronic manufacturing service companies, electronic contract manufacturers and major electronic original equipment manufacturers ("OEMs") located throughout North America, Europe and Asia. The Company's specialty adhesive tape and advanced composite customers, the majority of which are located in the United States, include OEMs, independent firms and distributors in the electronics, aerospace and industrial industries.
Sales are attributed to geographic region based upon the region from which the materials were shipped to the customer. Intersegment sales and sales between geographic areas were not significant.
Financial information regarding the Company's operations by geographic area follows (in thousands):
Fiscal Year
2002 2001 2000
United States $132,520 $312,851 $266,158
Europe 55,507 121,329 95,812
Asia 42,033 88,017 63,291
-------- -------- --------
Total sales $230,060 $522,197 $425,261
United States $104,386 $108,804 $ 74,846
Europe 22,954 24,657 27,484
Asia 22,943 26,596 24,092
-------- -------- --------
Total long-lived assets $150,283 $160,057 $126,422
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15. CUSTOMER AND SUPPLIER CONCENTRATIONS
a. Customers - Sales to Sanmina Corporation were 18.1% and 25.1% of the Company's total worldwide sales for fiscal years 2002 and 2001, respectively. Sales to Tyco Printed Circuit Group L.P. were 11.3% of the Company's total worldwide sales for fiscal year 2002.
While no other customer accounted for 10% or more of the Company's total worldwide sales in fiscal year 2002, and the Company is not dependent on any single customer, the loss of a major electronic materials customer or of a group of customers could have a material adverse effect on the Company's business and results of operations.
b.Sources of Supply - The principal materials used in the manufacture of the Company's electronic materials products are specially manufactured copper foil, fiberglass cloth and synthetic reinforcements, and specially formulated resins and chemicals. Although there are a limited number of qualified suppliers of these materials, the Company has nevertheless identified alternate sources of supply for each of such materials. While the Company has not experienced significant problems in the delivery of these materials and considers its relationships with its suppliers to be strong, a disruption of the supply of material from a principal supplier could adversely affect the Company's electronic materials business. Furthermore, substitutes for these materials are not readily available and an inability to obtain essential materials, if prolonged, could materially adversely affect the Company's electronic materials business.
16.CLOSURE OF PLUMBING HARDWARE BUSINESS
In the fourth quarter of the 2000 fiscal year, the Company decided to close and liquidate its plumbing hardware business. The pre-tax charges to earnings for the 2000 fiscal year related to the closure of the plumbing hardware business totaled $4,464,000, including $1,234,000 for the impairment of long-lived assets, $1,111,000 for other asset write-offs, and $2,119,000 for facility and other costs related to the closure.
During the 2001 fiscal year, the Company closed and liquidated its plumbing hardware business. In the fourth quarter of the 2001 fiscal year, the Company realized $1,262,000 in gains from the sale of real estate and other plumbing hardware business assets, collected $290,000 more of accounts receivable than originally anticipated, and reversed $600,000 of liabilities accrued in fiscal year 2000 for other costs to close the business, which were no longer required. In the fourth quarter of the 2001 fiscal year, an expense of $1,149,000 was incurred for the purchase of annuity contracts to fund the liability of the pension plan that was terminated.
At March 3, 2002, the remaining accrued liability relating to the closure and liquidation of the plumbing hardware business consisted of $669,000 for environmental issues and $150,000 for workers' compensation claims. At February 25, 2001, these amounts were $675,000 and $200,000, respectively. Although the plan for the closure and liquidation of the Company's plumbing hardware business was implemented during the Company's 2001 fiscal year, the Company cannot reasonably estimate when the environmental issues and workers' compensation claims will be resolved.
The operating results of the plumbing hardware business included in the Consolidated Statement of Operations are as follows (in thousands):
Fiscal Year Ended
February 25, February 27,
2001 2000
Net sales $1,883 $13,491
Cost of sales 1,001 11,486
Gross profit 882 2,005
Selling, general and
administrative expenses 907 2,563
(Loss) profit from
operations $ (25) $ (558)
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17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter
First Second Third Fourth
(In thousands, except per share
amounts)
Fiscal 2002:
Net sales $ 69,102 $ 51,743 $ 52,625 $ 56,590
Gross profit 3,266 1,422 1,539 5,568
Net loss (14,612) (3,779) (6,117) (1,011)
Loss per share:
Basic $(.75) $(.19) $(.31) $(.05)
Diluted $(.75) $(.19) $(.31) $(.05)
Weighted average
common shares outstanding:
Basic 19,420 19,545 19,559 19,612
Diluted 19,420 19,545 19,559 19,612
Fiscal 2001:
Net sales $120,159 $129,902 $142,608 $129,528
Gross profit 23,695 28,393 34,116 31,466
Net earnings 8,829 11,655 14,827 14,108
Earnings per share:
Basic $.56 $.73 $.93 $.88
Diluted $.50 $.63 $.78 $.74
Weighted average
common shares outstanding:
Basic 15,858 15,882 15,940 16,047
Diluted 19,602 19,939 20,217 20,249
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(Loss)/earnings per share is computed separately for each quarter. Therefore, the sum of such quarterly per share amounts may differ from the total for the years. The weighted average number of shares outstanding and the (loss)/earnings per share for each period, have been adjusted to give retroactive effect to the three-for-two split of the Company's common stock declared October 10, 2000 payable November 8, 2000 to stockholders of record on October 20, 2000.
18.RECENTLY ISSUED ACCOUNTING PROUNOUNCEMENTS
In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations", and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets", effective for fiscal years beginning after December 15, 2001. Under the new rules set forth in these Statements, goodwill and other intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. In addition, Statement 141 eliminates the pooling-of-interests method of accounting for business combinations, except for qualifying business combinations that were initiated prior to July 1, 2001. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of its fiscal year ending March 2, 2003. The Company does not have any goodwill on its balance sheet, has virtually no intangible assets, and is not engaged in any transactions that are affected by the Statements; and, therefore, the Company believes that application of the non-amortization provisions of the Statements will not have a material adverse effect on the Company's consolidated results of operations or financial position.
In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143") effective for fiscal years beginning after June 15, 2002. SFAS 143 requires the fair value of liabilities for asset retirement obligations to be recognized in the period in which the obligations are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Company has not yet determined what effect SFAS 143 will have on the Company's consolidated results of operations or financial position.
In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which supercedes Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). Although it retains the basic requirements of SFAS 121 regarding when and how to measure an impairment loss, SFAS 144 provides additional implementation guidance. SFAS 144 is effective for all fiscal years beginning after December 15, 2001. The Company has not yet determined what effect SFAS 144 will have on the Company's consolidated results of operations or financial position.
*******
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information called for by this item (except for information as to the Company's executive officers, which information appears elsewhere in this Report) is incorporated by reference to the Company's definitive proxy statement for the 2002 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.
Item 11. Executive Compensation.
The information called for by this Item is incorporated by reference to the Company's definitive proxy statement for the 2002 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information called for by this Item is incorporated by reference to the Company's definitive proxy statement for the 2002 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions.
The information called for by this Item is incorporated by reference to the Company's definitive proxy statement for the 2002 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Page
Reports on Form 8-K.
(a) Documents filed as a part of this Report
(1)Financial Statements:
The following Consolidated Financial
Statement of the Company are included in
Part II, Item 8:
Report of Ernst & Young LLP, independent 34
auditors
Balance Sheets 35
Statements of Operations 36
Statements of Stockholders' Equity 37
Statements of Cash Flows 38
Notes to Consolidated Financial Statement 39
(1-18)
(2)Financial Statement Schedules:
The following additional information should
be read in conjunction with the
Consolidated Financial Statements of the
Registrant described in item 14(a)(1)
above:
Schedule II - Valuation and Qualifying 61
Accounts
|
All other schedules have been omitted because they are not applicable or not required, or the information is included elsewhere in the financial statements or notes thereto.
(3)Exhibits:
The information required by this Item relating to Exhibits to this Report is included in the Exhibit Index on pages 62 to 66 hereof.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the fiscal quarter ended March 3, 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 29, 2002 PARK ELECTROCHEMICAL CORP.
By:/s/Brian E. Shore
Brian E. Shore,
President and Chief Executive
Officer
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
President and Chief
/s/Brian E. Shore Executive Officer and
Brian E. Shore Director May 29, 2002
(principal executive
officer)
Senior Vice President,
/s/Murray O. Stamer Finance
Murray O. Stamer (principal financial and May 29, 2002
accounting officer)
/s/Jerry Shore Chairman of the Board and
Jerry Shore Director May 29, 2002
/s/Mark S. Ain
Mark S. Ain Director May 29, 2002
/s/Anthony Chiesa
Anthony Chiesa Director May 29, 2002
/s/Lloyd Frank
Lloyd Frank Director May 29, 2002
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Schedule II
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C
Balance at Charged to
Beginning Cost and
Description of Period Expenses
ALLOWANCE FOR
DOUBTFUL ACCOUNTS:
53 weeks ended March 3 2002 $2,074,000 $ 123,000
52 weeks ended February 25, 2001 $2,388,000 $ 228,000
52 weeks ended February 27, 2000 $2,030,000 $ 725,000
(A) Uncollectable accounts, net of recoveries.
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Schedule II (continued)
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column D Column E
Other
Accounts Balance at
Written Translation End of
Description Off Adjustment Period
(A)
ALLOWANCE FOR
DOUBTFUL ACCOUNTS:
53 weeks ended March 3 2002 $(366,000) $ (14,000 $1,817,000
52 weeks ended February 25, 2001 $(477,000) $ (65,000) $2,074,000
52 weeks ended February 27, 2000 $(332,000) $ (35,000) $2,388,000
(A) Uncollectable accounts, net of recoveries.
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EXHIBIT INDEX
Exhibit
Numbers Description Page
3.01 Restated Certificate of Incorporation, dated
March 28, 1989, filed with the Secretary of State
of the State of New York on April 10, 1989, as
amended by Certificate of Amendment of the
Certificate of Incorporation, increasing the
number of authorized shares of Common stock from
15,000,000 to 30,000,000 shares, dated July 12,
1995, filed with the Secretary of State of the
State of New York on July 17, 1995, and by
Certificate of Amendment of the Certificate of
Incorporation, amending certain provisions
relating to the rights, preferences and
limitations of the shares of a series of
Preferred Stock, date August 7, 1995, filed with
the Secretary of State of the State of New York
on August 16, 1995
........................................
3.02 Certificate of Amendment of the Certificate of
Incorporation, increasing the number of
authorized shares of Common Stock from 30,000,000
to 60,000,000 shares, dated October 10, 2000,
filed with the Secretary of State of the State of -
New York on October 11,
2000......................
3.03 By-Laws, as amended May 21,
2002...........................
4.01 Amended and Restated Rights Agreement, dated as
of July 12, 1995, between the Company and
Registrar and Transfer Company, as Rights Agent,
relating to the Company's Preferred Stock
Purchase Rights. (Reference is made to Exhibit 1
to Amendment No. 1 on Form 8-A/A filed on August
10, 1995, Commission File No. 1-4415, which is -
incorporated herein by
reference.)......................................
10.01 Lease dated December 12, 1989 between Nelco
Products, Inc. and James Emmi regarding real
property located at 1100 East Kimberly Avenue,
Anaheim, California and letter dated December 29,
1994 from Nelco Products, Inc. to James Emmi exer
cising its option to extend such
Lease................
10.02 Lease dated December 12, 1989 between Nelco
Products, Inc. and James Emmi regarding real
property located at 1107 East Kimberly Avenue,
Anaheim, California and letter dated December 29,
1994 from Nelco Products, Inc. to James Emmi exer
cising its option to extend such
Lease................
10.03 Lease Agreement dated August 16, 1983 and Exhibit
C, First Addendum to Lease, between Nelco
Products, Inc. and TCLW/Fullerton regarding real
property located at 1411 E. Orangethorpe Avenue,
Fullerton, California.................
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10.03(a)Second Addendum to Lease dated January 26, 1987
to Lease Agreement dated August 16, 1983 (see
Exhibit 10.03 hereto) between Nelco Products,
Inc. and TCLW/Fullerton regarding real property
located at 1421 E. Orangethorpe Avenue,
Fullerton,
California......................................
10.03(b)Third Addendum to Lease dated January 7, 1991 and
Fourth Addendum to Lease dated January 7, 1991 to
Lease Agreement dated August 16, 1983 (see
Exhibit 10.03 hereto) between Nelco Products,
Inc. and TCLW/Fullerton regarding real property
located at 1411, 1421 and 1431 E. Orangethorpe
Avenue, Fullerton, California. (Reference is made
to Exhibit 10.03(b) of the Company's Annual
Report on Form 10-K for the fiscal year ended -
March 2, 1997, Commission File No. 1-4415, which
is incorporated herein by reference.)....
10.03(c)Fifth Addendum to Lease dated July 5, 1995 to
Lease dated August 16, 1983 (see Exhibit 10.03
hereto) between Nelco Products, Inc. and
TCLW/Fullerton regarding real property located at
1411 E. Orangethorpe Avenue, Fullerton,
California.......................................
..........
10.04 Lease Agreement dated May 26, 1982 between Nelco
Products Pte. Ltd. (lease was originally entered
into by Kiln Technique (Private) Limited, which
subsequently assigned this lease to Nelco
Products Pte. Ltd.) and the Jurong Town Cor
poration regarding real property located at 4 Gul
Crescent, Jurong,
Singapore........................................
..
10.04(a)Deed of Assignment, dated April 17, 1986 between
Nelco Products Pte. Ltd., Kiln Technique
(Private) Limited and Paul Ma, Richard Law, and
Michael Ng, all of Peat Marwick & Co., of the
Lease Agreement dated May 26, 1982 (see Exhibit
10.04 hereto) between Kiln Technique (Private)
Limited and the Jurong Town Corporation regarding
real property located at 4 Gul Crescent, Jurong,
Singapore.......................
10.05(b)1992 Stock Option Plan of the Company, as amended
by First Amendment thereto. (Reference is made to
Exhibit 10.06(b) of the Company's Annual Report
on Form 10-K for the fiscal year ended March 1,
1998, Commission File No. 1-4415, which is
incorporated herein by reference. This exhibit is
a management contract or compensatory plan or -
arrangement.)....................................
..........
10.06 Amended and Restated Employment Agreement dated
February 28, 1994 between the Company and Jerry
Shore. (This exhibit is a management contract or
compensatory plan or
arrangement.)....................................
..........
10.06(a) Amendment No. 1 dated March 1, 1995 to the
Amended and Restated Employment Agreement dated
February 28, 1994 (see Exhibit 10.06 hereto)
between the Company and Jerry Shore. (This
exhibit is a management contract or compensatory
plan or arrangement.)............................
10.06(b)Amendment No. 2 dated December 5, 1996 to the
Amended and Restated Employment Agreement dated -
February 28, 1994 (see Exhibit 10.06 hereto)
between the Company and Jerry Shore. (Reference
is made to Exhibit 10.07(b) of the Company's
Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415,
which is incorporated herein by reference. This
exhibit is a management contract or compensatory
plan or arrangement.)......................
10.06(c)Amendment No. 3 dated October 14, 1997 to the
Amended and Restated Employment Agreement dated
February 28, 1994 (see Exhibit 10.06 hereto)
between the Company and Jerry Shore. (Reference
is made to Exhibit 10.07(c) of the Company's
Annual Report on Form 10-K for the fiscal year
ended March 1, 1998, Commission File No. 1-4415,
which is incorporated herein by reference. This -
exhibit is a management contract or compensatory
plan or arrangement.)......................
10.07 Lease dated April 15, 1988 between FiberCote
Industries, Inc. (lease was initially entered
into by USP Composites, Inc., which subsequently
changed its name to FiberCote Industries, Inc.)
and Geoffrey Etherington, II regarding real
property located at 172 East Aurora Street,
Waterbury, Connecticut..................
10.07(a)Amendment to Lease dated December 21, 1992 to
Lease dated April 15, 1988 (see Exhibit 10.07
hereto) between FiberCote Industries, Inc. and
Geoffrey Etherington II regarding real property
located at 172 East Aurora Street, Waterbury, Con
necticut.........................................
..........
10.07(b)Letter dated June 30, 1997 from FiberCote
Industries, Inc. to Geoffrey Etherington II
extending the Lease dated April 15, 1988 (see
Exhibit 10.07 hereto) between FiberCote
Industries, Inc. and Geoffrey Etherington II
regarding real property located at 172 East
Aurora Street, Waterbury Connecticut. (Reference
is made to Exhibit 10.08(b) of the Company's
Annual Report on Form 10-K for the fiscal year -
ended March 1, 1998, Commission File No. 1-4415,
which is incorporated herein by
reference.).........................
10.08 Lease dated August 31, 1989 between Nelco
Technology, Inc. and Cemanudi Associates
regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona.....................
10.08(a)First Amendment to Lease dated October 21, 1994
to Lease dated August 31, 1989 (see Exhibit 10.08
hereto) between Nelco Technology, Inc. and
Cemanudi Associates regarding real property
located at 1104 West Geneva Drive, Tempe,
Arizona..........................................
10.10 Lease dated December 12, 1990 between Neltec,
Inc. and NZ Properties, Inc. regarding real -
property located at 1420 W. 12th Place, Tempe,
Arizona. (Reference is made to Exhibit 10.13 of
the Company's Annual Report on Form 10-K for the
fiscal year ended March 2, 1997, Commission File
No. 1-4415, which is incorporated herein by
reference.)..........
10.10(a)Letter dated January 8, 1996 from Neltec, Inc. to
NZ Properties, Inc. exercising its option to
extend the Lease dated December 12, 1990 (see
Exhibit 10.10 hereto) between Neltec, Inc. and NZ
Properties, Inc. regarding real property located
at 1420 W. 12th Place, Tempe, Arizona. (Reference
is made to Exhibit 10.13(a) of the Company's
Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415, -
which is incorporated herein by
reference.)......................................
10.12 Tenancy Agreement dated October 8, 1992 between
Nelco Products Pte. Ltd. and Jurong Town
Corporation regarding real property located at 36
Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual
Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, -
which is incorporated herein by
reference.)......................................
10.12(a)Tenancy Agreement dated November 3, 1995 between
Nelco Products Pte. Ltd. and Jurong Town
Corporation regarding real property located at 36
Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.16(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended
March 2, 1997, Commission File No. 1-4415, which -
is incorporated herein by
reference.).........................
10.13 Lease Contract dated February 26, 1988 between
the New York State Department of Transportation
and the Edgewater Stewart Company regarding real
property located at 15 Governor Drive in the
Stewart International Airport Industrial Park,
New Windsor, New York.....................
10.13(a)Assignment and Assumption of Lease dated February
16, 1995 between New England Laminates Co., Inc.
and the Edgewater Stewart Company regarding the
assignment of the Lease Contract (see Exhibit
10.13 hereto) for the real property located at 15
Governor Drive in the Stewart International
Airport Industrial Park, New Windsor, New
York.............
10.13(b)Lease Amendment No. 1 dated February 17, 1995
between New England Laminates Co., Inc. and the
New York State Department of Transportation to
Lease Contract dated February 26, 1988 (see
Exhibit 10.13 hereto) regarding the real property
located at 15 Governor Drive in the Stewart
International Airport Industrial Park, New
Windsor, New York.............
10.14 Sale and Purchase Agreement dated 29 October 1997
between Dieter G. Weiss, Lothar Hubert Reinartz,
Nelco International Corporation and Park
Electrochemical Corp. relating to the sale and
purchase of shares of capital in Dielektra GmbH.
(Reference is made to Exhibit 10.01 of the
Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended November 30, 1997, -
Commission File No. 1-4415, which is incorporated
herein by reference.)..........
21.01 Subsidiaries of the
Company................................
23.01 Consent of Ernst & Young
LLP...............................
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Exhibit 3.03
BY-LAWS
OF
PARK ELECTROCHEMICAL CORP.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the Corporation shall be in the City and State of New York.
Section 2. Other Offices. The Corporation may also have offices at such other place or places within and without the State of New York as the Board of Directors may from time to time determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 1. Annual Meetings. The annual meeting of shareholders of the Corporation shall be held on the fourth Wednesday in June of each year (or if said day be a legal holi day, then on the next succeeding day not a legal holiday), at ten o'clock A.M., at the principal office of the Corporation in the State of New York, or at such other place within or without the State of New York and at such other time and on such other date as may be determined by the Board of Directors and as shall be designated in the notice of said meeting, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting.
Section 2. Special-Meetings. Special Meetings of the stockholders shall be held at the principal office of the Corporation in the State of New York, or at such other place within the State of New York as may be designated in the notice of said meeting, by resolution of the Board of Directors, and shall be called by the Chairman of the Board, the President or the Secretary at the request in writing of stockholders owning of record at least eighty percent (80%) of the issued and outstanding shares of stock of the Corporation entitled to vote thereat.
Section 3. Notice of Purpose of Meetings. Written notice of the purpose or purposes and of the time and place of every meeting of shareholders shall be given by the Chairman of the Board, the President, the Secretary or an Assistant Secretary either personally or by mail or by any other lawful means of communication not less than ten nor more than fifty days before the meeting to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be directed to each shareholder at his address as it appears on the stock book unless he shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, in which case it shall be mailed or transmitted to the address designated in such request. Except where otherwise required by law, notice of any adjourned meeting of the share holders of the Corporation shall not be required to be given.
Section 4. Quorum. A quorum at all meetings of stock holders shall consist of the holders of record of a majority of the shares of stock of the Corporation, issued and outstanding, entitled to vote at the meeting, present in person or by proxy, except as otherwise provided by law or by the Certificate of Incorporation. In the absence of a quorum at any meeting or any adjournment thereof, a majority of those present in person or by proxy and entitled to vote may adjourn such meeting from time to time. At any such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally called.
Section 5. Organization. Meetings of the stockholders shall be presided over by the Chairman of the Board, or if he is not present, by the President, or if neither the Chairman of the Board nor the President is present, by any Vice President, or in the absence of such officers, by a chairman to be chosen by a majority of the stockholders entitled to vote who are present in person or by proxy at the meeting. The Secretary of the Corpora tion, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the meeting shall choose any person present to act as secretary of the meeting.
Section 6. Voting. Except as otherwise provided in the Certificate of Incorporation or by law, at every meeting of the stockholders each stockholder of record entitled to vote at such meeting shall have one vote in person or by proxy for each share- of stock having voting rights held by him and registered in his name on the books of the Corporation. Any vote on shares of stock of the Corporation may be given by the stockholder entitled thereto in person or by his proxy appointed by an instrument in, writing, subscribed by such stockholder or by his attorney thereunto authorized and delivered to the secretary of the meeting. Except as otherwise required by law, by the Certificate of Incorporation or these By-Laws, all matters coming before any meeting of the stockholders shall be decided by the vote of the holders of a majority of the shares of stock present in person or by proxy at such meeting, a quorum being present. At all elec tions of directors the voting may but need not be by ballot.
Section 7. Inspectors of Election. At all elections of directors, or in any other case in which inspectors may act, two inspectors of election shall be appointed by the chairman of the meeting, except as otherwise provided by law. The inspectors of election shall take and subscribe an oath faithfully to execute the duties of inspectors at such meeting with strict impartiali ty, and according to the best of their ability, and shall take charge of the polls and after the vote shall have been taken shall make a certificate of the result thereof, but no director or candidate for the office of director shall be appointed as such inspector. If there be a failure to appoint inspectors or if any inspector appointed be absent or refuse to act, or if his office become vacant, the stockholders present at the meeting may choose the required number of temporary inspectors.
Section 8. Fixing Record Date. For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meet ing, or for the purpose of determining the shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than sixty nor less than ten days before the date of such meet ing, nor more than sixty days prior to any other action.
Section 9. Notice of Stockholder Nominees. Only persons who are nominated in accordance with the following procedures set forth in these By-Laws shall be eligible for election as direc tors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stock holders (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 9 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 9.
In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary
must be delivered to or mailed and received at the principal
executive offices of the Corporation not less than ninety (90)
days nor more than one hundred twenty (120) days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the
annual meeting is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the
stockholder in order to be timely must be so received not later
than the close of business on the tenth (10th) day following the
day on which notice of the date of the annual meeting was mailed
or public disclosure of the date of the annual meeting was made,
whichever first occurs.
To be in proper written form, a stockholder's notice to
the Secretary must set forth (a) as to each person whom the
stockholder proposes to nominate for election as a director (i)
the name, age, business address and residence address of the per
son, (ii) the principal occupation or employment of the person,
(iii) the class or series and number of shares of capital stock
of the Corporation which are owned beneficially or of record by
the person and (iv) any other information relating to the person
that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations promulgated
thereunder; and (b) as to the stockholder giving the notice (i)
the name and record address of such stockholder, (ii) the class
or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such
stockholder, (iii) a description of all arrangements or under
standings between such stockholder and each proposed nominee and
any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv)
a representation that such stockholder intends to appear in
person or by proxy at the annual meeting to nominate the persons
named in its notice and (v) any other information relating to
such stockholder that would be required to be disclosed in a
proxy statement or other filings required to be made in
connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder. Such notice must
be accompanied by a written consent of each proposed nominee to
be named as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 9. If the Chairman of the annual meeting determines that a nomination was not made in accor dance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
Section 10. Notice of Stockholder Business. No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corpo ration (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 10 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 10.
In addition to any other applicable requirement, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corpora tion.
To be timely, a stockholder's notice to the Secretary
must be delivered to or mailed and received at the principal
executive offices of the Corporation not less than ninety (90)
days nor more than one hundred twenty (120) days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the
annual meeting is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the
stockholder in order to be timely must be so received not later
than the close of business on the tenth (10th) day following the
day on which notice of the date of the annual meeting was mailed
or public disclosure of the date of the annual meeting was made,
whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrange ments or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 10, provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 10 shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
ARTICLE III
DIRECTORS
Section 1. Powers, Number, Qualification, Term, Quorum, Vacancies. The property, affairs and business of the Corporation shall be managed by its Board of Directors, consisting of not less than five nor more than fifteen persons. The exact number of directors within the maximum and minimum limitations specified shall be fixed from time to time by resolution of the Board of Directors. Directors need not be stockholders of the Corpora tion. All directors shall be of full age and at least one shall be a citizen of the United States and a resident of the State of New York. Directors shall be elected at the annual meeting and until their successors, shall be elected and shall qualify.
Section 2. Quorum. A majority of the members of the Board of Directors then in office, acting at a meeting duly assembled, shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting without further notice from time to time until a quorum shall have been obtained. Any act of a majority of directors present at a meeting at which there is a quorum shall be the act of the Board of Directors, except as otherwise specifically provided in the By-Laws.
Section 3. Vacancies. In case one or more vacancies shall occur on the Board of Directors by reason of death, resig nation, increase in the number of directors or otherwise, except insofar as otherwise provided in these By-Laws, the remaining directors, although less than a quorum, may, by a majority vote, elect successor or additional directors. A person so elected shall serve only until the next annual meeting of stockholders and until his successor shall be elected and shall qualify.
Section 4. Meetings. Meetings of the Board of Directors shall be held at the principal office of the Corporation or at such other place or places within or outside the State of New York as may be specified in the notice of the meeting. Regular meetings of the Board of Directors shall be held at such times as may from time to time be fixed by resolution of the Board of Directors, and special meetings may be held at any time upon the call of the Chairman of the Board or the President or any two directors by oral, telegraphic or written notice duly served on or sent or mailed to each director not less than two days before such meeting. A meeting of the Board of Directors may be held without notice immediately after the annual meeting of stock holders. Notice need not be given of regular meetings of the Board of Directors when fixed by resolution as above set forth. Meetings may be held at any time without notice if all the directors are present, or if at any time before or after the meeting those not present waive notice of the meeting in writing.
Section 5. Removal of Directors. At any special meeting of the stockholders, duly called as provided in these By-Laws, any director or directors may, by the affirmative vote of the holders of a majority of the shares of stock issued and outstanding and entitled to vote for the election of directors, be removed from office for cause, and his successor or their successors may be elected at such meeting; or the remaining direc tors may, to the extent vacancies are not filled by such election, fill any vacancy or vacancies created by such removal. Stockholders may not remove directors without cause.
Section 6. Executive Committee. An Executive Committee of three or more directors may be designated by resolution passed by a majority of the whole Board of Directors. The act of a majority of the members of said Committee shall be the act of the Committee, and said Committee may meet at stated times or on notice. Whenever the Board of Directors is not in session or whenever a quorum of the Board of Directors fails to attend any regular or special meeting of the Board, said Committee shall advise with and aid the officers of the Corporation in all mat ters concerning its interests and the management of its business and affairs, and generally perform such duties and exercise such powers as may be performed and exercised by the Board of Direc tors from time to time, and the Executive Committee shall have the power to authorize the seal of the Corporation to be affixed to all papers which may require it and, insofar as may be per mitted by law, exercise the powers and perform the obligations of the Board of Directors. The Board of Directors may also des ignate one or more committees in addition to the Executive Com mittee by resolution or resolutions passed by a majority of the whole Board of Directors; such committee or committees to consist of three or more directors of the Corporation, and, to the extent provided in the resolution or resolutions designating them, shall have or may exercise the specific powers of the Board of Direc tors in the management of the business and affairs of the Corpo ration. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.
Section 7. Compensation of Directors. Directors may by resolution-of the Board of Directors, be allowed a fixed sum and expenses for attendance at regular or special meetings of the Board of Directors; provided that nothing herein contained shall be construed to preclude any director from serving the Corpora tion in any other capacity and receiving compensation therefor. Members of special or standing committees, and others who attend pursuant to direction, may, by vote of the Board of Directors be allowed a like fixed sum and expenses for attending committee meetings.
Section 8. Action by Written Consent in lieu of Meeting. Any action required or permitted to be taken by the Board of Directors of the Corporation or of any committee thereof may be taken without a meeting if all members of the Board of Directors or of any committee thereof consent in writing to the adoption of a resolution authorizing the action.
Section 9. Action by Conference Call. Any one or more members of the Board of Directors of the Corporation or of any committee thereof may participate in a meeting of said Board or of any such committee by means of a conference telephone or similar communications equipment allowing all persons participat ing in the meeting to hear each other at the same time.
ARTICLE IV
OFFICERS
Section 1. Election. The Board of Directors at its meeting held immediately after the annual meeting of stockholders shall elect a Chairman of the Board, a President, one or more Vice Presidents, a Secretary and a Treasurer. From time to time the Board of Directors may appoint such Assistant Vice Presi dents, Assistant Secretaries, Assistant Treasurers and such other officers, agents and employees as it may deem proper. Any two offices may be held by the same person. The Chairman of the Board and the President shall be chosen from among the directors.
Section 2. Term and Removal. The term of office of all officers shall be one year and until their respective successors are elected and qualify but any officer may be removed from office either with or without cause at any time by the affirma tive vote of a majority of the members of the Board of Directors then in office. A vacancy in any office arising from any cause may be filled by the Board of Directors.
Section 3. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors and stockholders.
Section 4. President. The President shall, in the absence of the Chairman of the Board, preside at all meetings of the Board of Directors and stockholders. He shall have such other duties and powers as may be assigned to him from time to time by the Board of Directors.
Section 5. Vice Presidents. The Vice Presidents shall have such powers and discharge such duties as may be assigned to them from time to time by the Board of Directors.
Section 6. Treasurer. The Treasurer shall have the custody of all the funds and securities of the Corporation. When necessary or proper he shall endorse on behalf of the Corpora tion, for collection, checks, notes and other obligations and shall deposit the same to the credit of the Corporation in such bank or banks, or depositories as may be designated by the Board of Directors, or by any officer acting under authority conferred by the Board of Directors. Whenever required by the Board of Directors, he shall render an account of all his transactions as Treasurer and of the financial condition of the Corporation. He shall give bond for the faithful discharge of his duties if the Board of Directors so requires. He shall do and perform such other duties as may be assigned to him from time to time by the Board of Directors.
Section 7. Secretary. The Secretary shall attend all meetings of the stockholders and all meetings of the Board of Directors, and record all votes and the minutes of all proceed ings in a book to be kept for that purpose; and shall perform like duties for other committees when so required. He shall give, or cause to be given, notice of all meetings of stockhold ers and of the Board of Directors and of committees and shall perform such other duties as may be prescribed by the Board of Directors. He shall keep in safe custody the seal of the Corpo ration and affix the same to any instrument whose execution has been authorized. He shall do and perform such other duties as may be assigned to him from time to time by the Board of Direc tors.
Section 8. Assistant Officers. The Assistant Vice Presidents, the Assistant Secretaries and the Assistant Trea surers shall, in the order of their respective seniorities, in the absence or disability of the Vice Presidents, Secretary or Treasurer, respectively, perform the duties of such officer and shall perform such other duties as the Board of Directors may from time to time prescribe.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form and Transfers. The interest of each stockholder of the Corporation shall be evidenced by certificates for shares of stock certifying the number of shares represented thereby and in such form, not inconsistent with the Certificate of Incorporation, as the Board of Directors may from time to time prescribe.
The certificates of stock shall be signed by the Chairman of the Board or the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation. Such seal may be a facsimile, engraved or printed. Where any such certificate is signed by a transfer agent, or by a transfer clerk and registrar, the signature of the Chairman of the Board, President, Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer upon such certificate may be facsimiles, engraved or printed. In case any such officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such before such certificate is issued, it may be issued by the Corporation with the same effect as if such officer had not ceased to be such at the time of its issue.
Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, or with a transfer clerk or a transfer agent appointed as in section 4 of this Article provided, and on sur render of the certificate or certificates for such shares prop erly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corpora tion shall be deemed the owner thereof for all purposes as regards the Corporation. The Board of Directors may, from time to time, make such additional rules and regulations as it may deem expedient, not inconsistent with these By-Laws, concerning the issue, transfer and registration of certificates for shares of stock of the Corporation.
Section 2. Lost, Stolen, Destroyed, or Mutilated Certificates. No certificate for shares of stock of the Corpo ration shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, except on production of such evidence of such loss, destruction or theft as the Board of Directors may require and on delivery to the Corporation, if the Board of Directors shall so require, of a bond of indemnity in such amount, containing such terms and secured by such surety as the Board of Directors may in its discretion require. The Board of Directors shall have the right from time to time to prescribe such rules and procedures as it shall deem advisable with regard to lost, stolen, destroyed or mutilated certificates and the issuance of new shares of this Corporation in place thereof.
Section 3. Transfer Agent and Registrar. The Board of Directors may appoint one or more registrars, and may require all certificates for shares of stock to bear the signature or signatures of any of them.
ARTICLE VI
CORPORATE SEAL
The corporate seal of the Corporation shall consist of two concentric circles, between which shall be the name of the Corporation, and in the center shall be inscribed the year of its incorporation and the words, "Corporate Seal, New York."
ARTICLE VII
AMENDMENTS
These By-Laws may be amended, altered or repealed or additional By-Laws adopted at any meeting of the Board of Direc tors by the vote of a majority of the directors then in office. These By-Laws, and any amendments thereto and new By-Laws added by the directors may be amended, altered or repealed by the stockholders at any annual or special meeting of the stockholders provided notice of such action shall have been contained in the notice of meeting.
ARTICLE VIII
INDEMNIFICATION
Section 1. Definitions. "Action"' shall mean any threatened, pending or completed legal action, lawsuit or pro ceeding, whether civil, criminal, administrative or inves tigative, including without limitation any action by or in the right of the Corporation to procure a judgment in its favor.
"Indemnitee" shall mean a person who was or is a party, or is threatened to be made a party, to an Action by reason of the fact that such person (or such person's testator or intestate, in which case both such person and his testator or intestate shall be deemed the Indemnitee) is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer or trustee of or in a similar capacity with another corporation, partnership, joint venture, trust, plan or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity.
"Costs" shall mean all amounts actually paid by or on behalf of an Indemnitee (i) on account of judgments, fines and penalties incurred in connection with an Action, or (ii) in settlement of an Action.
"Expenses" shall mean all expenses actually and reasonably incurred by or on behalf of an Indemnitee in connection with an Action, whether or not the Indemnitee is successful on the merits, including without limitation, expenses of investigation, judicial or administrative proceedings and appeals, attorneys' fees and disbursements, and expenses of establishing or defending a right to indemnification under this Article.
"Act" shall mean Sections 721 through 726 of the Business Corporation Law of the State of New York or any comparable provisions of New York law hereafter enacted applicable to the Corporation.
Section 2. Indemnification and Advances of Expenses. The Corporation shall indemnify each Indemnitee against all Costs and Expenses of each Action, unless such indemnification shall be expressly prohibited by Section 721 of the Act, or unless the Action (other than an Action instituted pursuant to Section 3 of this Article VIII) shall have been initiated by the Indemnitee without the authorization of the Board of Directors of the Corporation. Expenses for which indemnification is sought under this Article shall be paid by the Corporation in advance of any final disposition of the Action at the written request of an Indemnitee, provided that the Indemnitee shall undertake to repay amounts advanced to the extent that a court of competent jurisdiction ultimately determines that the Indemnitee was not entitled to such indemnification. Except to the extent prohibited by law, advances of Expenses shall be paid without reference to the Indemnitee's financial ability to make repayment, no security shall be required therefor, and such advances shall not under any circumstances be claimable against the Indemnitee's spouse, children, estate, heirs, executors or administrators. The Board of Directors may, by a majority vote of a quorum consisting of directors who are not parties to an Action, and upon approval of an Indemnitee, authorize the Corpo ration's counsel to represent the Indemnitee in an Action.
Section 3. Procedure for Indemnification. Any indem
nification or advance of Expenses under Section 2 of this Article
shall be made promptly, and in any event within 45 days following
the written request of the Indemnitee, unless a determination
that the Indemnitee is not entitled to indemnification because he
has not met the applicable standard of conduct expressly required
by Section 721 of the Act is made (1) by the Board of Directors
by a majority vote of a quorum consisting of directors who are
not parties to such Action, or (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
directors so directs, by independent legal counsel in a written
opinion, or (3) by the shareholders. The right to
indemnification and advances of Expenses under this Article shall
be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or
in part, or if no disposition thereof is made within 45 days. It
shall be a defense to any such action (other than an action
brought to enforce a claim for the advance of Expenses where the
required undertaking, if any, has been received by the Corpora
tion) that the Indemnitee has not met the applicable standard of
conduct expressly required by the Act, but the burden of proving
such defense shall be on the Corporation and neither (i) the
termination of any Action by judgment, order, settlement, con
viction, or upon a plea of nolo contendere or its equivalent, nor
(ii) any determination pursuant to the first sentence of this
Section 2, shall, of itself, create a presumption that the
Indemnitee did not act in accordance with such standard of
conduct.
Section 4. Other Rights and Continuation of Right to Indemnification. The indemnification provided by this Article shall not be exclusive of all other rights to which an Indemnitee seeking indemnification is entitled under any law (common or statutory), agreement, resolution of shareholders or directors or otherwise, and nothing contained in this Article shall limit the right to indemnification or advancement of expenses to which any person would be entitled from the Corporation in lieu of, in addition to or in the absence of this Article. The Corporation is hereby expressly authorized to grant other rights of indemni fication or advancement of expenses by resolution of shareholders or directors, agreement or otherwise. The indemnification provided by this Article shall continue as to an Indemnitee who has ceased to be a director, officer, trustee, committee member, employee or agent, and shall inure to the benefit of the estate, heirs, executors and administrators of each Indemnitee.
Section 5. Insurance. The Corporation shall purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer or trustee of or in a similar capacity with another corporation, partnership, joint venture, trust, plan or other enterprise against any liability asserted against such person and incurred by such person or on such person's behalf in any such capacity, or arising out of such persons's status as such, whether or not the Corporation would have the power to indemnify such person under the provisions of this Article VIII, provided that such insurance is available on terms acceptable to a majority of the entire Board of Directors of the Corporation.
Section 6. Contractual Rights; Conflicts. The provisions of this Article VIII shall constitute a contract between the Corporation and each Indemnitee, pursuant to which the Corporation and each such Indemnitee intend to be legally bound. No repeal or modification of this Article VIII shall affect any rights or obligations then existing or thereafter arising with respect to any state of facts then or theretofore existing. In the event any rights under this Article VIII are expressly prohibited by any provision of Article XIV of the Corporation's Certificate of Incorporation as in effect on the date this Arti cle VIII is adopted, such provision of the Corporation's Certif icate of Incorporation shall be controlling unless subsequently amended to eliminate such prohibition.
Section 7. Severability. If this Article VIII or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to Costs and Expenses and make advancements thereof to the fullest extent permitted by any applicable portion of this Article VIII that shall not have been invalidated and to the fullest extent permitted by the Act.
[exhibits-02-3.03]bd
Exhibit 3.01
RESTATED
CERTIFICATE OF INCORPORATION
OF
PARK ELECTROCHEMICAL CORP.
Under Section 807 of the Business Corporation Law,
The undersigned, being respectively a Vice President and the Secretary of Park Electrochemical Corp., for the purposes of changing and restating the Certificate of Incorporation of Park Electrochemical Corp., pursuant to Section 807 of the Business Corporation Law of the State of New York, do hereby certify as follows:
1. (a) The name of the corporation is "PARK ELECTROCHEMICAL CORP.,
(b) The corporation was originally formed under the name of "Park Name Plate Inc.".
2. The Certificate of Incorporation of the corporation was filed by the Department of State on the 31st day of March, 1954.
3. The Certificate of Incorporation of the corporation is hereby changed to effect the following changes authorized by paragraph (b) of Section 803 of the Business Corporation Laws.
(a) to change the location of the office of the Corpora tion from the City of New York, County of New York and State of New York, to: the County of Nassau and State of New York.
(b) to change the address to which the Secretary of State of the State of New York in directed to mail a copy of process in any action or proceeding against the corporation which may be served upon him from: Parker, Chapin and Flattau, Esqs., 530 Fifth Avenue, New York 10036 New York, to: Park Electrochemical Corp., 5 Dakota Drive, Lake Success, New York 11042, Attention: General Counsel.
The text of the Certificate of Incorporation of the corpora- ion is hereby restated as heretofore amended and as changed hereby to read in full as set forth in Paragraph 4 hereof.
4. CERTIFICATE OF INCORPORATION OF PARK ELECTROCHEMICAL CORP.
I. The name of the corporation shall be PARK ELECTROCHEMICAL CORP.
II. The purposes for which the corporation is formed are,
A. To carry on the general business of manufacturing and distributing metal nameplates and decorative trim and other components and/or products and generally to do all acts and things which may be necessary or convenient to the further ance of the aforementioned purposes.
B. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the goodwill, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation.
C. To manufacture, purchase, or otherwise acquire in any lawful manner, and to hold, own, mortgage, pledge, sell, transfer, convert, store, import, export or deal in any other manner, dispose of and to invest, trade, deal in and deal with all goods, wares, merchandise and property of every class and description.
D. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country patent rights inventions, improvements and processes, copy rights, trademarks and trade names, relating to or useful in connection with any business of this corporation.
E. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, partnerships, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof, to possess and exercise all the rights do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof.
F. To borrow, or raise moneys for any of the purposes of the corporation, and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts,bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon, pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its Corporate purposes.
To make any guarantee respecting dividends, shares of stock, bonds, debentures, contracts or other obligations to the extent that such power may be exercised by corporations organized under the Stock Corporation Law.
G. To loan to any person, firm, partnership or corporation any of its surplus funds, either with or without security.
H. To purchase, hold, sell and transfer the shares of its capital stock; provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law, and provided further that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly.
I. To have one or more offices, to carry on all or any of its operations and business and without restriction or limit as to amount to purchase or otherwise acquire, hold, own, mortgage, sell, convey or otherwise dispose of, real and personal property of every class and description in any of the states, districts, territories or colonies of the United states, and in any and all foreign countries, subject to the laws of such state, district, territory, colony or country.
J. To enter into, make, perform and carry out contracts of every kind, which may be necessary for or incidental to the business of the corporation with any person, firm, corpora tion, private, public or municipal, body politic, under the government of the United States, or any territory district, protectorate, dependency or insular or other possession or acquisition of the United States, or any foreign governments so far as, and to the extent that, the same may be done and performed by a corporation organized under the Stock Corpora tion Law.
K. To do any and all things necessary, suitable, convenient or proper for, or in connection with, or incidental to, the accomplishment of any of the purposes or the attainment of any one or more of the objects herein enumerated, or designed directly or indirectly to promote the interests of the corporation, or to enhance the value of any of its properties and in general to do any and all things and exercise any and all powers which it may now or hereafter be lawful for the corporation to do or to exercise under any of the laws of the State of New York that may now or hereafter be applicable to the corporation.
L. The purposes and powers specified in the foregoing clauses are to be construed both as purposes and powers and shall, except where otherwise expressed be in no way limited or restricted by reference to or inference from, the terms of any other clause in this certificate of incorporation, but the purposes and powers specified in each of the foregoing clauses of this article shall be regarded as independent purposes and powers.
III. The aggregate number of shares which the Corporation shall have authority to issue shall consist of 15,000,000 shares of Common Stock of the par value of $.10 per share, And 500,000 shares of Preferred stock of the par value of $1 per share. The Preferred stock shall be issuable in series with such designations relative rights, preferences and limitations as may be fixed from time to time by the Board of Directors.
The designations, relative voting, dividend, liquidation and other right, preferences and limitations of the Preferred Stock (unless otherwise fixed by the Board of Directors) and the Common Stock are as follows:
1. The shares of Preferred Stock may be divided into and issued in one or more series, and each series shall be so designated so as to distinguish the shares thereof from the shares of all other series. All shares of Preferred Stock shall be identical except in respect of particulars which may be fixed by the Board of Directors as hereinafter provided pursuant to authority which is hereby expressly vested in the Board of Directors. Each share of a series shall be identical in all respects with all other shares of such series, except as to the date from which dividends thereon shall be cumulative on any series as to which dividends are cumulative. Shares of Preferred Stock of any series which have been cancelled in any manner, including shares redeemed or reacquired by the Corporation and shares which have been converted into or exchanged for shares of any other class, or any series of the same or any other class, shall have the status of authorized but unissued shares of Preferred Stock and may be reissued as shares of the series of which they were originally a part or may be issued as shares of a new series or any other series of the same class.
2. Before any shares of Preferred Stock of any series shall be issued, the Board of Directors, pursuant to authority hereby expressly vested in it, shall fix by resolution or resolutions the following provisions in respect of the shares of each such series so far as the same are not inconsistent with the provisions of this Article III applicable to all series of Preferred Stock.
(a) the distinctive designations of such series and the number of shares which shall constitute such Series which number may be increased (except where otherwise provided by the Board of Directors in creating such series) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors.
(b) the annual rate or amount of dividends payable on shares of such series, whether such dividends shall be cumulative or noncumulative, the conditions upon which and/or the dates when such dividends shall be payable and the date from which dividends on cumulative series shall accrue and be cumulative on all shares of such series issued prior to the payment date for the first dividend of such series;
(c) whether such series shall be redeemable and, if so, the terms and conditions of such redemption, including the time or times when and the price or prices at which shares of such series shall be redeemed;
(d) the rights of the shares of such series in the event of liquidation, dissolution or winding up of the affairs of the Corporation;
(e) whether such series shall be convertible into or exchangeable for shares of any other class, or any series of the same or any other class, and, if so, the terms and conditions thereof, including the date or dates when such shares shall be convertible into or exchangeable for shares of any other class, or any series of the same or any other class, the price or prices or the rate or rates at which shares of such series shall be so convertible or exchangeable, and any adjustments which shall be made, and the circumstances in which any such adjustments shall be made, in such conversion or exchange prices or rates;
(f) whether such series shall have any voting rights in addition to those prescribed by law and, if so, the terms and conditions of exercise of such voting rights; and
(g) any other designations, relative rights, preferences or limitations.
3. (a) So long as any shares of Preferred Stock of any series shall be outstanding, the Corporation will not declare or pay any dividends on the Common Stock (other than dividends payable solely in shares of Common Stock) or make any distributions of any kind, either directly or indirectly, in respect of shares of Common stock, or make any payment on account of the purchase, redemption or other acquisition of Common Stock, unless on the payment, distribution or redemption date, as the case may be, all dividends on the then outstanding shares of Preferred Stock of all series for all past dividend periods shall have been paid to the full extent of the preference, if any, to which each series of Preferred Stock is entitled.
(b) In case the Corporation shall not pay in full all stated dividends required to be paid on all shares of all series of Preferred Stock at the time outstanding to the full extent of the preference, if any, to which each such series is entitled, the shares of all series of Preferred Stock shall share ratably in the payment of dividends, including accumulations, if any, in accordance with the sums which would be payable on such shares if all dividends were declared and aid in full. Accumulations of dividends shall not bear interest.
(c) In case the Corporation shall not pay in full all amounts required to be paid on all shares of all series of Preferred Stock at the time outstanding in the event of the liquidation, dissolution or winding up of the affairs of the Corporation, the shares of all series of Preferred Stock shall share ratably in the payment of all amounts payable in the event of such liquidation, dissolution or winding up in accordance with the sums which would be payable on such shares if all amounts payable on such liquidation, dissolution or winding up were paid in full.
(d) When dividends shall have been paid (or declared and set aside for payment) on the Preferred Stock to the full extent of the preference, if any, to which the Preferred Stock is entitled, dividends on the remaining class or classes of stock may then be paid out of the funds of the Corporation which are legally available therefor.
(e) Subject to the limitations prescribed in this Article III and any further limitations which may f rom time to time be prescribed by the Board of Directors in accordance herewith the holders of Common Stock shall be entitled to receive dividends on the Common Stock, when, as and if declared by the Board of Directors out of the funds of the Corporation which are legally available therefor.
4. The authorized but unissued shares of Common Stock and the authorized but unissued shares of Preferred stock may be issued for such consideration, not less than the par value thereof, as may be fixed from time to time by the Board of Directors.
5. (a) Except as otherwise determined pursuant to authority of the Board of Directors an hereinbefore provided, or by the Business Corporation Law of the State of New York, all voting rights shall be vested exclusively in the holders of the outstanding shares of Common Stock and each such holder shall be entitled to one vote per share for all purposes for each share of Common Stock held of record by him.
(b) Except as otherwise determined pursuant to authority of the Board of Directors as hereinbefore provided, or by the Business Corporation Law of the State of New York, the holders of Preferred Stock shall not be entitled to vote for any purpose nor shall they be entitled to notice of meetings of shareholders.
6. The Board of Directors has authorized a series of Preferred Stock which series shall be designated as Series A Preferred Stock (the "Series A Preferred Stock") and this number of shares constituting such series shall be 150,000.
(a) The holders of record of shares of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors or a duly authorized committee thereof out of funds legally available for the purpose, dividends in cash at the rate per share of 5% per annum (calculated an a percentage of the liquidation value per share of $100). Dividends shall be payable quarterly, on the dates on which a quarterly dividend or distribution on the Common Stock, $.10 par value per share ("Common Stock") of the Corporation is payable (other than a dividend payable in Common Stock) (each such date being referred to herein as a "Dividend Payment Date"), commencing on the first Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, or, if no such dividends on the Common Stock are payable then on such quarterly dates designated by the Board of Directors or a duly authorized committee thereof. To the extent the Board of Directors or a duly authorized committee thereof does not declare the full 5% dividend or, if so declared, such dividend is not fully paid in cash the amount not so declared or paid shall accumulate as provided in paragraph (b) of this Section 6. The Board of Directors or a duly authorized committee thereof may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend declared thereon, which record data shall be not less than 10 days nor more that 50 days prior to the date fixed for the payment thereof.
(b) Dividends on the outstanding shares of Series A Preferred Stock shall be cumulative from the date of issue of such shares. Accrued dividends, whether or not declared, that are not paid shall compound quarterly at 5% per annum until the date of payment of such dividends. The amounts with respect to such compounding shall also constitute accrued dividends. Accumulated but unpaid dividends may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, not less than 10 days nor more than 50 days preceding the payment date thereof, as may be fixed by the Board of Directors of the Corporation or a duly authorized committee thereof.
(c) So long as any of the shares of Series A Preferred Stock are outstanding, no dividends shall be paid or declared, nor any distribution be made, on the Common Stock, or any other security junior to the Series A Preferred Stock, other than a dividend payable in common stock or such other junior security, nor shall any shares of Common Stock, or any other security junior to the Series A Preferred Stock, be acquired for consideration by the Corporation, unless all dividends on the Series A Preferred Stock for all past dividend dates shall have been paid and the full dividends thereon for the most recent dividend date shall have been paid or declared and a sum sufficient for the payment thereof set apart. Subject to the foregoing provisions, dividends on the Common stock (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid from time to time out of the remaining funds legally available for the payment of dividends, and the Series A Preferred Stock shall not be entitled to participate in any such dividends, whether payable in cash, stock or otherwise.
(d) The holders of record of shares of Series A Preferred Stock shall not be entitled to any voting rights, except as otherwise provided by law.
(e) The Corporation may at the discrimination of a majority of the Continuing Directors (as hereinafter defined) redeem, at any time, in whole but not in part, all of the shares and fractional shares of Series A Preferred stock at a redemption price of $6,060 per whole share, reduced pro rata for redemptions of fractional shares, plus accrued and unpaid dividends thereon (as provided in paragraphs (a), (b) and (c) of this Section 6 above) to the date fixed for optional redemption, and adjusted if, and to the extent that, the price at which the Series A Preferred Stock is issued is more or less than $6,000 per share.
(f) In the event the Corporation shall redeem the shares of Series A Preferred Stock, notice of such redemption shall be given by first class mail, postage prepaid, mailed not less than 15 days nor more than 60 days prior to the redemption date, to each holder of record of such shares at such holder's address as the same appears on the stock register of the Corporation, provided however, that no failure to mail such notice nor any defect therein shall affect the validity of the redemption of the shares of Series A Preferred Stock to be redeemed. Each such notice shall state: (i) the redemption date; (ii) the place or places where certificates for shares are to be surrendered for payment of the redemption price and (iii) that dividends on the shares will cease to accrue on such redemption date.
(g) Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing money for the payment of the redemption price) dividends on the share of Series A Preferred stock shall cease to accrue and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the corporation the redemption price and any accrued and unpaid dividends) shall cease. Upon surrender in accordance with said notice of the certificates for shares (properly endorsed or assigned for transfer, if the Continuing Directors of the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid.
(h) "Continuing Director" shall mean a member of the Corporation's Board of Directors who was a member of the Corporation's Board of Directors prior to the time an Acquiring Person (as hereinafter defined) became an Acquiring Person, and any successor of a Continuing Director who is recommended in writing to succeed a Continuing Director by a majority of Continuing Directors then on the Corporation's Board of Directors.
(i) "Acquiring Person" shall mean any person who or which, together with all affiliates and associates of such person, is the Beneficial Owner (as hereinafter defined) of 30% or more of the shares of Common Stock then outstanding but shall not include the Corporation, any employee benefit plan of the Corporation or any person holding shares of Common Stock and which was organized appointed or established by the Corporation for or pursuant to the terms of any such plan.
(j) A person shall be deemed the "Beneficial owner" of, and shall be deemed to "beneficially own" any securities: (i) which such person or any of such person's affiliates or associates beneficially owns, direct or indirectly; (ii) which such person or any of such person's affiliates or associates has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights,exchange rights, rights, warrants or options,or otherwise Provided however. that a person shall not be deemed the "Beneficial owner" of, or to "beneficially own", securities tendered pursuant to a tender or exchange of or made by such person or any of such person's affiliates or associates until such tendered securities are accepted for purchase or exchanger or (B) the right to vote pursuant to any agreement, arrangement or understanding (whether or not in writing), provided, however, that a person shall not be deemed the "Beneficial Owner" of, or to "beneficially own", any security under this clause (3) if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Securities Exchange Act of 1934, as amended, and (2) is not also then reportable by such person on Schedule 13D under said Securities Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other person with which such person or any of such person's affiliates or associates has or has had any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (B) of subparagraph (ii) of this paragraph (j)) or disposing of any securities of the Corporation.
(k) Any shares of Series A Preferred Stock which shall have been redeemed shall, after such redemption, have the status of authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series by the Board of Directors.
(l) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the CorporatIon, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to the greater of (i) $100 for each whole share outstanding, or (ii) an aggregate amount for each whole share outstanding equal to 100 times the aggregate amount distributable per share with respect to the Common Stock; such amount in either case to be reduced pro rata for any fractional shares outstanding, plus an amount in cash equal to all accrued but unpaid dividends thereon (as provided in paragraphs (a), (b) and (c) of this Section 6 above) to the date fixed for liquidation, dissolution or winding up before any payment shall be made or any assets distributed to the holders of any shares of Common Stock or to the holders of any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of series A Preferred Stock, than the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series A Preferred Stock are entitled were paid in full.
(m) For the purposes of this Section 6 neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all the property or assets of the Corporation nor the consolidation or merger of the Corporation with one or more other corporations shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a dissolution or winding up the business of the Corporation.
(n) The Series A Preferred Stock shall be pari passu to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, except to the extent a series is made junior or subordinate to the Series A Preferred Stock.
(o) Each fractional share of the Series A Preferred Stock outstanding shall be entitled to a ratably proportionate amount of all rights relating to the shares of the Series A Preferred Stock, including dividend and voting rights. The liquidation payment or redemption payment with respect to each fractional share of Series A Preferred Stock shall be equal to a ratably proportionate amount of the liquidation payment or redemption payment with respect to each outstanding share of Series A Preferred Stock.
IV. The office of the corporation in to be located in the County of Nassau and State of New York.
V. Its duration in to be perpetual.
VI. The Board of Directors is expressly authorized and empowered from time to time (a) to fix, by resolution adopted by a majority of the entire Board, the number of directors which shall constitute the entire Board of Directors, such number to be not less than three (3), and (b) to amend or repeal any By-Laws or adopt any new By-Laws, but any By-Law adopted by the Board of Directors may be amended or repealed by the shareholders at any Annual Meeting or at any Special Meeting.
VII. Shares of stock in other corporations held by this corporation, shall be voted by such officer or officers of this corporation as the board of directors, by a majority vote shall designate for this purpose, or by a proxy thereunto duly authorized by a like vote of said board.
VIII. It is hereby provided, pursuant to section 74 of the Stock Corporation Law, that this corporation shall have power to issue the whole or any part of the shares of its capital stock as partly paid stock, subject to calls thereon until the whole thereof shall have been paid in.
IX. No contract or other transaction between the corporation and any other corporation shall be affected, or invalidated by the fact that any one or more of the directors of this corporation is or are interested in, or is a director or officer, or are directors or officers of such other corporation and any director or directors, individually or jointly, may be a party or parties to, or may be interested in, any contract or transaction of this corporation or in which this corporation is interested) and no contract, act or transaction of this corporation with any person or persons, firm, or corporations, shall be affected, or invalidated by the fact that any director or directors of this corporation is a party, or are parties to or interested in such contract, act or transaction, or in any way connected with such person or persons, firm, association or corporation, and each and every person who may become a director of this corporation is hereby relieved from any liability that might otherwise exist from contracting with the corporation for the benefit of himself or any firm or association or corporation in which he may be anywise interested.
X. No holder of either class of stock shall be entitled an of right, to purchase or subscribe for any part of unissued stock of either class, or any additional stock to be issued by reason of any increase of the authorized capital stock of the company, or any bonds, certificates of indebtedness, debentures or other securities convertible into stock of the corporation, but any such unissued stock or such additional authorized issue of now stock, or of other securities convertible into stock may be issued and disposed of pursuant to resolution of the board of directors to such persons, firms, corporations or associations and upon such terms as may be deemed advisable by the board of directors in the exercise of their discretion.
XI. The corporation shall indemnify any person made a party to any action, suit or proceeding, by reason of the fact that he, his testator or intestate, is or was a directors officer or employee of the corporation, or of any firm, corporation, or association which he served an such at the request of the corpora tion, against the reasonable expenses (including attorney's fees and, to the extent permitted by law, any amount paid in a court approved settlement) actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties.
XII. The Secretary of State is designated as agent of the
corporation for the service of process, and directed to mail a
copy of such process to the corporation at the following address:
Park Electrochemical Corp., 5 Dakota Drive, Lake Success, New
York 11042, Attention: General Counsel.
5. The changes set forth in paragraph 3 hereof, and the restatement of the Certificate Of Incorporation set forth in Paragraph 4 hereof, were duly authorized by the affirmative vote of the Board of Directors of the corporation at a duly convened meeting thereof held the 28th day of March, 1989.
IN WITNESS WHEREOF, we, the undersigned have executed and subscribed this certificate and do affirm the foregoing as true under the penalties of perjury this 28th day of March, 1989.
of the
CERTIFICATE OF INCORPORATION
of
PARK ELECTROCHEMICAL CORP.
Under Section 805 of the Business Corporation Law
The undersigned, being respectively an Executive Vice President and the Secretary of Park Electrochemical Corp. (a corporation organized under the laws of the State of New York), Do Hereby Certify as follows:
(1) The name of the Corporation is Park Electrochemical Corp. The name under which it was originally incorporated is Park Name Plate Inc.
(2) The Certificate of Incorporation of the Corporation was filed by the Department of State of the State of New York on March 31, 1954. The Restated Certificate of Incorporation of the Corporation was filed by the Department of State of the State of New York on April 10, 1989.
(3) The provisions of the Certificate of Incorporation are hereby amended to increase the aggregate number of the class of shares designated Common Stock, $.10 par value per share, which the Corporation shall have authority to issue from 15,000,000 shares to 30,000,000 shares. To effect the foregoing, the first sentence of the first paragraph of Article III of the Certificate of Incorporation which states the aggregate number of shares the Corporation shall have authority to issue is hereby amended to read as follows:
"The aggregate number of shares which the Corporation shall have authority to issue shall consist of 30,000,000 shares of Common Stock of the par value of $.10 per share, and 500,000 shares of Preferred Stock of the par value of $1 per share."
(4) The foregoing amendment to the Certificate of Incorporation was authorized by a majority vote of the Board of Directors of the Corporation followed by the required vote of the holders of a majority of all outstanding shares of Common Stock entitled to vote thereon at a meeting of shareholders of the Corporation duly called and held for such purpose on July 12, 1995.
In Witness Whereof, the undersigned have signed this certificate this 12th day of July, 1995, and affirm the foregoing statements as true under the penalties of perjury.
/s/ Brian E. Shore
Brian E. Shore
Executive Vice President
/s/ Allen Levine
Allen Levine
Secretary
|
CERTIFICATE OF AMENDMENT
of the
CERTIFICATE OF INCORPORATION
of
PARK ELECTROCHEMICAL CORP.
(Under Section 805 of the Business Corporation Law)
It is hereby certified that:
FIRST: The name of the Corporation is PARK ELECTRO
CHEMICAL CORP. and the name under which the Corporation was
formed was PARK NAME PLATE INC.
SECOND: The Certificate of Incorporation of the
Corporation was filed with the Department of State of the State
of New York on March 31, 1954. The Restated Certificate of
Incorporation of the Corporation was filed by the Department of
State of the State of New York on April 10, 1989.
THIRD: The amendment of the Certificate of Incorporation
effected by this Certificate of Amendment is to amend certain
provisions in the Certificate of Incorporation relating to the
relative rights, preferences and limitations of the shares of a
series of Preferred Stock, as fixed by the Board of Directors
pursuant to authority expressly vested in them in the Certificate
of Incorporation.
FOURTH: To accomplish the foregoing amendment, Section 6
of Article IV of the Certificate of Incorporation shall be
deleted and a new Section 6 shall be added to Article IV of the
Certificate of Incorporation which shall read as follows:
"The Board of Directors has authorized a series of Preferred Stock which series shall be designated as Series A Preferred Stock (the "Series A Preferred Stock") and the number of shares constituting such series shall be 300,000.
(a) The holders of record of shares of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors or a duly authorized committee thereof out of funds legally available for the purpose, dividends in cash at the rate per share of 5% per annum (calculated as a percentage of the liquidation value per share of $100). Dividends shall be payable quarterly, on the dates on which a quarterly dividend or distribution on the Common Stock, $.10 par value per share ("Common Stock") of the Corporation is payable (other than a dividend payable in Common Stock) (each such date being referred to herein as a "Dividend Payment Date"), commencing on the first Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, or, if no such dividends on the Common Stock are payable, then on such quarterly dates designated by the Board of Directors or a duly authorized committee thereof. To the extent the Board of Directors or a duly authorized committee thereof does not declare the full 5% dividend or, if so declared, such dividend is not fully paid in cash, the amount not so declared or paid shall accumulate as provided in paragraph (b) of this Section 6. The Board of Directors or a duly authorized committee thereof may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend declared thereon, which record date shall be not less than 10 days nor more than 50 days prior to the date fixed for the payment thereof.
(b) Dividends on the outstanding share of Series A Preferred Stock shall be cumulative from the date of issue of such shares. Accrued dividends, whether or not declared, that are not paid shall compound quarterly at 5% per annum until the date of payment of such dividends. The amounts with respect to such compounding shall also constitute accrued dividends. Accumulated but unpaid dividends may be declared and paid at any time, without reference to any regular Divided Payment Date, to holders of record on such date, not less than 10 days nor more that 50 days preceding the payment date thereof, as may be fixed by the Board of Directors of the Corporation of a duly authorized committee thereof.
(c) So long as any of the shares of Series A Preferred Stock are outstanding, no dividends shall be paid or declared, nor any distribution be made, on the Common Stock, or any other security junior to the Series A Preferred Stock, other than a dividend payable in Common Stock or such other junior security, nor shall any shares of Common Stock, or any other security junior to the Series A Preferred Stock, be acquired for consideration by the Corporation, unless all dividends on the Series A Preferred Stock for all past dividend dates shall have been paid and the full dividends thereon for the most recent dividend date shall have been paid, or declared and a sum sufficient for the payment thereof set apart. Subject to the foregoing provisions, dividends on the Common Stock (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid from time to time out of the remaining funds legally available for the payment of dividends, and the Series A Preferred Stock shall not be entitled to participate in any such dividends, whether payable; in cash, stock or otherwise.
(d) The holders of record of shares of Series A Preferred Stock shall not be entitled to any voting rights, except as otherwise provided by law.
(e) The shares of Series A Preferred Stock shall not be redeemable.
(f) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series A Preferred
Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to
its stockholders an amount in cash equal to the greater of
(i) $100 for each whole share outstanding or (ii) an
aggregate amount for each whole share outstanding equal to
100 times the aggregate amount distributable per share with
respect to the Common Stock; such amount in either case to
be reduced pro rata for any fractional shares outstanding,
plus an amount in cash equal to all accrued by unpaid
dividends thereon (as provided in paragraphs (a), (b) and
(c) of this Section 6 above) to the date fixed for
liquidation, dissolution or winding up before any payment
shall be made or any assets distributed to the holders of
any shares of Common Stock or to the holders of any shares
of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock. If the assets of the Corporation are not
sufficient to pay in full the liquidation payments payable
to the holders of outstanding shares of Series A Preferred
Stock, then the holders of all such shares shall share
ratably in such distribution of assets in accordance with
the amount which would be payable on such distribution if
the amounts to which the holders of outstanding shares of
Series A Preferred Stock are entitled were paid in full.
(g) For the purposes of this Section 6, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all the property or assets of the Corporation nor the consolidation or merger of the Corporation with one or more other corporations shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a dissolution or winding up the business of the Corporation.
(h) The Series A Preferred Stock shall be pari passu to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, except to the extent a series is made junior or subordinate to the Series A Preferred Stock.
(i) Each fractional share of the Series A Preferred Stock outstanding shall be entitled to a ratably propor tionate amount of all rights relating to the shares of the Series A Preferred Stock, including dividend and voting rights. The liquidation payment or redemption payment with respect to each fractional share of Series A Preferred Stock shall be equal to a ratably proportionate amount of the liquidation payment or redemption payment with respect to each outstanding share of Series A Preferred Stock.
FIFTH: The foregoing amendment of the Certificate of
Incorporation of the Corporation was authorized by the vote
at a meeting of the Board of Directors of the Corporation.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the
penalties of perjury as of the 7th day of August, 1995.
/s/ Brian E. Shore Brian E. Shore Executive Vice President /s/ Allen Levine Allen Levine Secretary |
[exhibits-02-3.01]bd
EXHIBIT 10.01
STANDARD INDUSTRIAL LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Parties. This Lease, dated, for reference purposes only, December 12, 1989, is made by and between James Emmi (herein called "Lessor") and Nelco Products Inc. (herein called "Lessee").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor for the term, at the rental, and upon all of the conditions set forth herein, that certain real property situated in the County of Orange, State of California, commonly known as 1100 East Kimberly Avenue, Anaheim, CA 92801 and described as approximately 12,800 square foot industrial building on approximately 30,000 square fee of land. Said real property including the land and all improvements therein, is herein called the "Premises".
3. Term.
3.1 Term. The term of this Lease shall be for 60 months commencing on June 21, 1990 and ending on June 20, 1995 unless sooner terminated pursuant to any provision hereof.
3.2 Delay in Possession. Notwithstanding said commencement date, if for any reason Lessor cannot deliver possession of the Premises to Lessee on said date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Lessee hereunder or extend the term hereof, but in such case, Lessee shall not be obligated to pay rent until possession of the Premises is tendered to Lessee; provided, however, that if Lessor shall not have delivered possession of the Premises within sixty (60) days from said commencement date, Lessee may, at Lessee's option, by notice in writing to Lessor within ten (10) days thereafter, cancel this Lease, in which event the parties shall be discharged from all obligations hereunder, provided further, however, that if such written notice of lessee is not received by Lessor within said ten (10) day period, Lessee's right to cancel this Lease hereunder shall terminated and be of no further force or effect.
3.3 Early Possession. If Lessee occupies the Premises prior to said commencement date, such occupancy shall be subject to all provisions hereof, such occupancy shall not advance the termination date, and Lessee shall pay rent for such period at the initial monthly rates set forth below.
4. Rent. Lessee shall pay to Lessor as rent for the Premises, monthly payments of $4400.00, in advance, on the 21 day of each month of the term hereof, as rent for monthly rental rate shall increase or decrease as per C.P.I. adjustment as defined in addendum (A-1) as well as tax and insurance adjustments.
Rent for any period during the term hereof which is for less than one month shall be a pro rata portion of the monthly installment. Rent shall be payable in lawful money of the United States to Lessor at the address stated herein or to such other person or at such other places as Lessor may designate in writing.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof $ N/A as security for Lessee's faithful performance of Lessee's obligations hereunder. If Lessee fails to pay rent or other charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Lessor may use, apply or retain all or any portion of said deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Lessor may become obligated by reason of Lessee's default, or to compensate Lessor for any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies all of any portion of said deposit, Lessee shall within ten (10) days after written demand therefor deposit cash with Lessor in an amount sufficient to restore said deposit to the full amount hereinabove stated and Lessee's failure to do so shall be a material breach of this Lease. If the monthly rent shall, from time to time, increase during the term of this Lease, Lessee shall thereupon deposit with Lessor additional security deposit so that the amount of security deposit held by Lessor shall at all times bear the same proportion to current rent as the original security deposit bears to the original monthly rent set forth in paragraph 4 hereof. Lessor shall not be required to keep said deposit separate from its general accounts. If Lessee performs all of Lessee's obligations hereunder, said deposit, or so much thereof as has not theretofore been applied by Lessor shall be returned, without payment of interest or other increment for its use, to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's interest hereunder) at the expiration of the term hereof, and after Lessee has vacated the Premises. No trust relationship is created herein between Lessor and Lessee with respect to said Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for manufacturing, warehousing and related services or any other use which is reasonably comparable and for no other purpose.
6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in its state existing on the date that the Lease term commences, but without regard to the use for which Lessee will use the Premises, does not violate any covenants or restrictions of record, or any applicable building code, regulation or ordinance in effect on such Lease term commencement date. In the event it is determined that this warranty has been violated, then it shall be the obligation of the Lessor, after written notice from Lessee, to promptly, at Lessor's sole cost and expense, rectify any such violation. In the event Lessee does not given to Lessor written notice of the violation of this warranty within six months from the date that the Lease term commences, the correction of same shall be the obligation of the Lessee or Lessee's sole cost. The warranty contained in this paragraph 6.2(a) shall be of no force or effect if, prior to the date of this Lease, Lessee was the owner or occupant of the Premises, and, in such event, Lessee shall correct any such violation effect if, prior to the date of this Lease, Lessee was the owner or occupant of the Premises, and, in such event, Lessee shall correct any such violation at Lessee's sole cost.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at Lessee's expense, comply promptly with all applicable statutes, ordinances, rules, regulations, orders, covenants and restrictions of record, and requirements in effect during the term or any part of the term hereof, regulating the use by Lessee of the Premises. Lessee shall not use nor permit the use of the Premises in any manner that will tend to create waste or a nuisance or, if there shall be more than one tenant in the building containing the Premises, shall tend to disturb such other tenants.
6.3 Condition of Premises.
(a) Lessor shall deliver the Premises to Lessee clean and free of debris on Lease commencement date (unless Lessee is already in possession) and Lessor further warrants to Lessee that the plumbing, lighting, air-conditioning, heating, and leading doors in the Premises shall be in good operating condition on the Lease commencement date. In the event that it is determined that this warranty has been violated, then it shall be the obligation of Lessor, after receipt of written notice from Lessee setting forth with specificity the nature of the violation, to promptly, at Lessor's sale cost, rectify such violation. Lessee's failure to give such written notice to Lessor within thirty (30) days after the Lease commencement date shall cause the conclusive presumption that Lessor has complied with all of Lessor's obligations hereunder. The warranty contained in this paragraph 6.3(a) shall be of no force or effect if prior to the date of this Lease, Lessee was the owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby accepts the Premises in their condition existing as of the Lease commencement date or the date that Lessee takes possession of the Premises, whichever is earlier, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any covenants or restrictions of record, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Lessee acknowledges that neither Lessor nor Lessor's agent has made any representation or warranty as to the present or future suitability of the Premises for the conduct of Lessee's business.
7. Maintenance, Repairs and Alterations.
7.1 Lessor's Obligations. Subject to the provisions of Paragraphs 6, 7.2 and 9 and except for damage caused by any negligent or intentional act or omission of Lessee, Lessee's agents, employees, or invitees in which event Lessee shall repair the damage, Lessor, at Lessor's expense, shall keep in good order, condition and repair the foundations, exterior walls and the exterior roof of the Premises. Lessor shall not, however, be obligated to paint such exterior, nor shall Lessor be required to maintain the interior surface of exterior walls, windows, doors or plate glass. Lessor shall have no obligation to make repairs under this Paragraph 7.1 until a reasonable time after receipt of written notice of the need for such repairs, Lessee expressly waives the benefits of any statute now or hereafter in effect which would otherwise afford Lessee the right to make repairs at Lessor's expense or to terminate this Lease because of Lessor's failure to keep the Premises in good order, condition and repair.
7.2 Lessee's Obligations.
(a) Subject to the provisions of Paragraph 6, 7.1 and 9, Lessee, at Lessee's expense, shall keep in good order, condition and repair the Premises and every part thereof (whether or not the damaged portion of the Premises or the means of repairing the same are reasonably or readily accessible to Lessee) including, without limiting the generality of the foregoing, all plumbing, heating, air conditioning, (Lessee shall procure and maintain, at Lessee's expense, an air conditioning system maintenance contract) ventilating, electrical and lighting facilities and equipment within the Premises, fixtures, interior walls and interior surface of exterior walls, ceilings, windows, doors, plate glass, and skylights, located within the Premises, and all landscaping, driveways, parking lots, fences and signs located in the Premises and all sidewalks and parkways adjacent to the Premises.
(b) If Lessee fails to perform Lessee's obligations under this Paragraph 7.2 or under any other paragraph of this Lease, Lessor may at Lessor's option enter upon the Premises after 10 days' prior written notice to Lessee (except in the case of emergency, in which case no notice shall be required), perform such obligations on Lessee's behalf and put the Premises in good order, condition and repair, and the cost thereof together with interest thereon at the maximum rate then allowable by law shall be due and payable as additional rent to Lessor together with Lessee's next rental installment.
(c) On the last day of the term hereof, or on any sooner termination, Lessee shall surrender the Premises to Lessor in the same condition as received, ordinary wear and tear excepted, clean and free of debris. Lessee shall repair any damage to the Premises occasioned by the installation or removal of its trade fixtures, furnishings and equipment. Notwithstanding anything to the contrary otherwise stated in this Lease, Lessee shall leave the air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing and fencing on the premises in good operating condition.
7.3 Alterations and Additions.
(a) Lessee shall not, without Lessor's prior written consent make any alterations, improvements, additions, or Utility Installations in, on or about the Premises, except for nonstructural alterations not exceeding $2,500 in cumulative costs during the term of this Lease. In any event, whether or not in excess of $2,500 in cumulative cost, Lessee shall make no change or alteration to the exterior of the Premises nor the exterior of the building(s) on the Premises without Lessor's prior written consent. As used in this Paragraph 7.3 the term "Utility Installation" shall mean carpeting, window coverings, air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing and fencing. Lessor may require that Lessee remove any or all of said alterations, improvements, additions or Utility Installations at the expiration of the term, and restore the Premises to their prior condition. Lessor may require Lessee to provide Lessor, at Lessee's sole cost and expense, a lien and completion bond in an amount equal to one and one-half times the estimated cost of such improvements, to insure Lessor against any liability for mechanic's and materialmen's liens and to insure completion of the work. Should Lessee make any alterations, improvements, additions or Utility Installations without the prior approval of Lessor, Lessor may require that Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility Installations in, or about the Premises that Lessee shall desire to make and which requires the consent of the Lessor shall be presented to Lessor in written form, with proposed detailed plans. If Lessor shall give its consent, the consent shall be deemed conditioned upon Lessee acquiring a permit to do so, from appropriate governmental agencies, the furnishing of a copy thereof to Lessor prior to the commencement of the work and the compliance by Lessee of all conditions of said permit in a prompt and expeditious manner.
(c) (#1) Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use in the Premises, which claims are or may be secured by any mechanics' or materialmen's lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days notice prior to the commencement of any work in the Premises, and Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law. If Lessee shall, in good faith, contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend itself and Lessor against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises, upon the condition that if Lessor shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to such contested lien claim or demand indemnifying Lessor against liability for the same and holding the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor's attorneys fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so.
(d) (#2) Unless Lessor requires their removal, as set forth in Paragraph 7.3(a), all alterations, improvements, additions and Utility Installations (whether or not such Utility Installations constitute trade fixtures of Lessee), which may be made on the Premises, shall become the property of Lessor and remain upon and be surrendered with the Premises at the expiration of the term. Notwithstanding the provisions of this Paragraph 7.3(d), Lessee's machinery and equipment, other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises, shall remain the property of Lessee and may be removed by Lessee subject to the provisions of Paragraph 7.2(c).
8. Insurance; Indemnity.
8.1 Liability Insurance - Lessee. Lessee shall, at Lessee's expense, obtain and keep in force during the term of this Lease a policy of Combined Single Limit Bodily Injury and Property Damage insurance insuring Lessee and Lessor against any liability arising out of the use, occupancy or maintenance of the Premises and all other areas appurtenant thereto. Such insurance shall be in an amount not less than $500,000 per occurrence. The policy shall insure performance by Lessee of the indemnity provisions of this Paragraph 8. The limits of said insurance shall not, however, limit the liability of Lessee hereunder.
8.2 Liability Insurance - Lessor. Lessor shall obtain and keep in force during the term of this Lease a policy of Combined Single Limit Bodily Injury and Property Damage Insurance, insuring Lessor, but not Lessee, against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto in an amount not less than $500,000 per occurrence.
8.3 Property Insurance. Lessor shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Premises, but not Lessee's fixtures, equipment or tenant improvements in an amount not to exceed the full replacement value thereof, as the same may exist from time to time, providing protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood (in the event same is required by a lender having a lien on the Premises) special extended perils ("all risk", as such term is used in the insurance industry) but not plate glass insurance. In addition, the Lessor shall obtain and keep in force, during the term of this Lease, a policy or rental value insurance covering a period of one year, with loss payable to Lessor, which insurance shall also cover all real estate taxes and insurance costs for said period.
8.4 Payment of Premium Increase.
(a) Lessee shall pay to Lessor, during the term hereof, in addition to the rent, the amount of any increase in premiums for the insurance required under Paragraphs 8.2 and 8.3 over and above such premiums paid during the Base Period, as hereinafter defined, whether such premium increase shall be the result of the nature of Lessee's occupancy, any act or omission of Lessee, requirements of the holder of a mortgage or deed of trust covering the Premises, increased valuation of the Premises, or general rate increases. IN the event that the Premises have been occupied previously, the words "Base Period" shall mean the last twelve months of the prior occupancy. In the event that the Premises have never been previously occupied, the premiums during the "Base Period" shall be deemed to be the lowest premiums reasonably obtainable for said insurance assuming the most nominal use of the Premises. Provided, however, in lieu of the Base Period, the parties may insert a dollar amount at the end of this sentence which figure shall be considered as the insurance premium for the Base Period: $1703.00. In no event, however, shall Lessee be responsible for any portion of the premium cost attributable to liability insurance coverage in excess of $1,000,000 procured under paragraph 8.2.
(b) Lessee shall pay any such premium increases to Lessor within 30 days after receipt by Lessee of a copy of the premium statement or other satisfactory evidence of the amount due. If the insurance policies maintained hereunder cover other improvements in addition to the Premises, Lessor shall also deliver to Lessee a statement of the amount of such increase attributable to the Premises and showing in reasonable detail, the manner in which such amount was computed. If the term of this Lease shall not expire concurrently with the expiration of the period covered by such insurance, Lessee's liability for premium increases shall be prorated on an annual basis.
(c) If the Premises are part of a larger building, then Lessee shall not be responsible for paying any increase in the property insurance premium caused by the acts or omissions of any other tenant of the building of which the Premises are a part.
8.5. Insurance Policies. Insurance required hereunder shall be in companies holding a "General Policyholders Rating" of at least B plus, or such other rating as may be required by a lender having a lien on the Premises, as set forth in the most current issue of "Best's Insurance Guide". Lessee shall deliver to Lessor copies of policies of liability insurance required under Paragraph 8.1 or certificates evidencing the existence and amounts of such insurance. No such policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to the expiration of such policies, furnish Lessor with renewals or "binders" thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee upon demand. Lessee shall not do or permit to be done anything which shall invalidate the insurance policies referred to in Paragraph 8.3.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall herein mean damage or destruction to the Premises to the extent that the cost of repair is less than 50% of the fair market value of the Premises immediately prior to such damage or destruction. "Premises Building Partial Damage" shall herein mean damage or destruction to the building of which the Premises are a part to the extent that the cost of repair, is less than 50% of the fair market value of such building as a whole immediately prior to such damage or destruction.
(b) "Premises Total Destruction" shall herein mean damage or destruction to the Premises to the extent that the cost of repair is 50% or more of the fair market value of the Premises immediately prior to such damage or destruction. "Premises Building Total Destruction" shall herein mean damage or destruction to the building of which the Premises are a part to the extent that the cost of repair is 50% or more of the fair market value of such building as a whole immediately prior to such damage or destruction.
(c) "Insured Loss" shall herein mean damage or destruction which was caused by an event required to be covered by the insurance described in paragraph 8.
9.2 Partial Damage - Insured Loss. Subject to the provisions of paragraph 9.4, 9.5 and 9.6, if at any time during the term of this Lease there is damage which is an Insured Loss and which falls into the classification of Premises Partial Damage or Premises Building Partial Damage, then Lessor shall, at Lessor's sole cost, repair such damage, but not Lessee's fixtures, equipment or tenant improvements, as soon as reasonably possible and this Lease shall continue in full force and effect.
9.3 (#3) Partial Damage - Uninsured Loss. Subject to the provisions of Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease there is damage which is not an Insured Loss and which falls within the classification of Premises Partial Damage or Premises Building Partial Damage, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessor may at Lessor's option either (i) repair such damage as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Lessee within thirty (30) days after the date of the occurrence of such damage of Lessor's intention to cancel and terminate this Lease, as of the date of the occurrence of such damage. In the event Lessor elects to give such notice of Lessor's intention to cancel and terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee's intention to repair such damage at Lessee's expense, without reimbursement from Lessor, in which event this Lease shall continue in full force and effect, and Lessee shall proceed to make such repairs as soon as reasonably possible. If Lessee does not give such notice within such 10-day period this Lease shall be cancelled and terminated as of the date of the occurrence of such damage.
9.4 Total Destruction. If at any time during the term of this Lease there is damage, whether or not an Insured Loss, (including destruction required by any authorized public authority), which falls into the classification of Premises Total Destruction or Premises Building Total Destruction, this Lease shall automatically terminate as of the date of such total destruction.
9.5 Damage Near End of Term.
(a) If at any time during the last six months of the term of this Lease there is damage, whether or not an Insured Loss, which falls within the classification of Premises Partial Damage, Lessor may at Lessor's option cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Lessee of Lessor's election to do so within 30 days after the date of occurrence of such damage.
(b) Notwithstanding paragraph 9.59(a), in the event that Lessee has an option to extend or renew this Lease, and the time within which said option may be exercised has not yet expired, Lessee shall exercise such option, if it is to be exercised at all, no later than 20 days after the occurrence of an Insured Loss falling within the classification of Premises Partial Damage during the last six months of the term of this Lease. If Lessee duly exercises such option during said 20 day period, Lessor shall, at Lessor's expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option during said 20 day period, then Lessor may at Lessor's option terminate and cancel this Lease as of the expiration of said 20 day period by giving written notice to Lessee of Lessor's election to do so within 10 days after the expiration of said 20 day period, notwithstanding any term or provision in the grant of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in paragraphs 9.2 or 9.3, and Lessor or Lessee repairs or restores the Premises pursuant to the provisions of this Paragraph 9, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Lessee's use of the Premises is impaired. Except for abatement of rent, if any, Lessee shall have no claim against Lessor for any damage suffered by reason of any such damage, destruction, repair or restoration.
(b) (#4) If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not commence such repair or restoration within 90 days after such obligations shall accrue, Lessee may at Lessee's option cancel and terminate this Lease by giving Lessor written notice of Lessee's election to do so at any time prior to the commencement of such repair or restoration. In such event this Lease shall terminate as of the date of such notice.
9.7 Termination - Advance Payments. Upon termination of this Lease pursuant to this Paragraph 9, an equitable adjustment shall be made concerning advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's security deposit as has not theretofore been applied by Lessor.
9.8 Waiver. Lessor and Lessee waive the provisions of any statutes which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease.
10. Real Property Taxes.
10.1 Payment of Tax Increase. Lessor shall pay the real property tax, as defined in paragraph 10.3, applicable to the Premises; provided, however, that Lessee shall pay, in addition to rent, the amount, if any, by which real property taxes applicable to the Premises increase over the fiscal real estate tax year 1990-1991. Such payment shall be made by Lessee within thirty (30) days after receipt of Lessor's written statement setting forth the amount of such increase and the computation thereof. If the term of this Lease shall not expire concurrently with the expiration of the tax fiscal year, Lessee's liability for increased taxes for the last partial lease year shall be prorated on an annual basis.
10.2 Additional Improvements. Notwithstanding paragraph 10.1 hereof, Lessee shall pay to Lessor upon demand therefor the entirety of any increase in real property tax if assessed solely by reason of additional improvements placed upon the Premises by Lessee or at Lessee's request.
10.3 Definition of "Real Property Tax". As used herein,
the term "real property tax" shall include any form of real
estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than
inheritance, personal income or estate taxes) imposed on the
Premises by any authority having the direct or indirect power
to tax, including any city, state or federal government, or
any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, as against any legal or
equitable interest of Lessor in the Premises or in the real
property of which the Premises are a part, as against
Lessor's right to rent or other income therefrom, and as
against Lessor's business of leasing the Premises. The term
"real property tax" shall also include any tax, fee levy,
assessment or charge (i) in substitution of, partially or
totally, any tax, fee levy, assessment or charge hereinabove
included within the definition of "real property tax," or
(ii) the nature of which was hereinbefore included within the
definition of "real property tax", or (iii) which is imposed
for a service or right not charged prior to June 1, 1978, or,
if previously charged, has been increased since June 1, 1978,
or (iv) which is imposed as a result of a transfer, either
partial or total, of Lessor's interest in the Premises or
which is added to a tax or charge hereinbefore included
within the definition of real property tax by reason of such
transfer, or (v) which is imposed by reason of this
transaction, any modifications or changes hereto, or any
transfers hereof.
10.4 Joint Assessment. If the Premises are not separately assessed, Lessee's liability shall be an equitable proportion of the real property taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Lessor's reasonable determination thereof, in good faith, shall be conclusive.
10.5 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Lessee contained in the Premises or elsewhere. When possible, Lessee shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Lessee, lessee shall pay a reasonable proportion to be determined by Lessor or all charges jointed metered with other premises.
12. Assignment and Subletting.
12.1 Lessors's Consent Required. Lessee shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Lessee's interest in this Lease or in the Premises, without Lessor's prior written consent, which Lessor shall not unreasonably withhold. Lessor shall respond to Lessee's request for consent hereunder in a timely manner and any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void, and shall constitute a breach of this Lease.
12.2 Lessee Affiliate. Notwithstanding the provisions of paragraph 12.1 hereof, Lessee may assign or sublet the Premises, or any portion thereof, without Lessor's consent, to any corporation which controls, is controlled by or is under common control with Lessee, or to any corporation resulting from the merger or consolidation with Lessee, or to any person or entity which acquires all the assets of Lessee as a going concern of the business that is being conducted on the Premises, provided that said assignee assumes, in full, the obligations of Lessee under this Lease. Any such assignment shall not, in any way, affect or limit the liability of Lessee under the terms of this Lease even if after such assignment or subletting the terms of this Lease are materially changed or altered without the consent of Lessee, the consent of whom shall not be necessary.
12.3 No Release of Lessee. Regardless of Lessor's consent, no subletting or assignment shall release Lessee of Lessee's obligation or alter the primary liability of Lessee to pay the rent and to perform all other obligations to be performed by Lessee hereunder. The acceptance of rent by Lessor from any other person shall not be deemed to be a waiver by Lessor of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. In the event of default by any assignee of Lessee or any successor of Lessee, in the performance of any of the terms hereof, Lessor may proceed directly against Lessee without the necessity of exhausting remedies against said assignee. Lessor may consent to subsequent assignments or subletting of this Lease or amendments or modifications to this Lease with assignees of Lessee, without notifying Lessee, or any successor of Lessee, and without obtaining its or their consent thereto and such action shall not relieve Lessee of liability under this Lease.
12.4 Attorney's Fees. In the event Lessee shall assign or sublet the Premises or request the consent of Lessor to any assignment or subletting or if Lessee shall request the consent of Lessor for any act Lessee proposes to do then Lessee shall pay Lessor's reasonable attorneys fees incurred in connection therewith, such attorneys fees not to exceed $350.00 for each such request.
13. Defaults; Remedies.
13.1 Defaults. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) (#5) The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of three days after written notice thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statues such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph.
(c) The failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Lessee, other than described in paragraph (b) above, where such failure shall continue for a period of 30 days after written notice thereof from Lessor to Lessee; provided, however, that if the nature of Lessee's default is such that more than 30 days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said 30-day period and thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Lessee of any general
arrangement or assignment for the benefit of creditors; (ii)
Lessee becomes a "debtor" as defined in 11 U.S.C. 101 or any
successor statue thereto (unless, in the case of a petition
filed against Lessee, the same is dismissed within 60 days);
(iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where
possession is not restored to Lessee within 30 days; or (iv)
the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where such seizure is
not discharged within 30 days. Provided, however, in the
event that any provision of this paragraph 13.1(d) is
contrary to any applicable law, such provision shall be of no
force or effect.
(e) The discovery by Lessor that any financial statement given to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor in interest of Lessee or any guarantor of Lessee's obligation hereunder, and any of them, was materially false.
13.2 Remedies. In the event of any such material default or breach by Lessee, Lessor may at any time thereafter, with or without notice or demand and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee all damages incurred by Lessor by reason of Lessee's default including, but not limited to, the cost of recovering possession of the Premises; expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorney's fees, and any real estate commission actually paid; the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided; that portion of the leasing commission paid by Lessor pursuant to Paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises. In such event Lessor shall be entitled to enforce all of Lessor's rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located. Unpaid installments of rent and other unpaid monetary obligations of Lessee under the terms of this Lease shall bear interest from the date due at the maximum rate then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default
unless Lessor fails to perform obligations required of Lessor
within a reasonable time, but in no event later than thirty
(30) days after written notice by Lessee to Lessor and to the
holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been
furnished to Lessee in writing, specifying wherein Lessor has
failed to perform such obligation; provided, however, that if
the nature of Lessor's obligation is such that more than
thirty (30) days are required for performance then Lessor
shall not be in default if Lessor commences performance
within such 30-day period and thereafter diligently
prosecutes the same to completion.
13.4 Late Charges. (#6) Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Lessor by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Lessee shall not be received by Lessor or Lessor's designee within ten (10) days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a late charge equal to 6% of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance or such late charge by Lessor shall in no event constitute a waiver of Lessee's default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of rent, then rent shall automatically become due and payable quarterly in advance, rather than monthly, notwithstanding paragraph 4 or any other provision of this Lease to the contrary.
13.5 Impounds. In the event that a late charge is payable hereunder, whether or not collected, for three (3) installments of rent or any other monetary obligation of Lessee under the terms of this Lease, Lessee shall pay to Lessor, if Lessor shall so request, in addition to any other payments required under this Lease, a monthly advance installment, payable at the same time as the monthly rent, as estimated by Lessor, for real property tax and insurance expenses on the Premises which are payable by Lessee under the terms of this Lease. Such fund shall be established to insure payment when due before delinquency of any or all such real property taxes and insurance premiums. If the amounts paid to Lessor by Lessee under the provisions of this paragraph are insufficient to discharge the obligations of Lessee to pay such real property taxes and insurance premiums as the same become due, Lessee shall pay to Lessor, upon Lessor's demand, such additional sums necessary to pay such obligations. All moneys paid to Lessor under this paragraph may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a default in the obligations of Lessee to perform under this Lease, then any balance remaining from funds paid to Lessor under the provisions of this paragraph may, at the option of Lessor, be applied to the payment of any monetary default of Lessee in lieu of being applied to the payment of real property tax and insurance premiums.
14. Condemnation. (#7) If the Premises or any portion thereof are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the floor area of the building on the Premises, or more than 25% of the land area of the Premises which is not occupied by any building, is taken by condemnation, Lessee may, at Lessee's option, to be exercised in writing only within ten 910) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the rent shall be reduced in the proportion that the floor area of the building taken bears to the total floor area of the building situation on the Premises. (#8) Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under the threat of the exercise of such power shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any award for loss of or damage to Lessee's trade fixtures and removable personal property. In the event that this Lease is not terminated by reason of such condemnation, Lessor shall to the extent of severance damages received by Lessor in connection with such condemnation, repair any damage to the Premises caused by such condemnation except to the extent that Lessee has been reimbursed therefor by the condemning authority. Lessee shall pay any amount in excess of such severance damages required to complete such repair.
15. Broker's Fee.
(a) Upon execution of this Lease by both parties, Lessor shall pay to N/A Licensed real estate broker(s), a fee as set forth in a separate agreement between lessor and said broker(s), or in the event there is no separate agreement between Lessor and said broker(s), the sum of $____, for brokerage services rendered by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option as defined in paragraph 39.1 of this Lease, which is granted to Lessee under this Lease, or any subsequently granted option which is substantially similar to an Option granted to Lessee under this Lease, or if Lessee acquires any rights to the Premises or other premises described in this Lease which are substantially similar to what Lessee would have acquired had an Option herein granted to Lessee been exercised, or if Lessee remains in possession of the Premises after the expiration of the term of this Lease after having failed to exercise an Option, or if said broker(s) are the procuring cause of any other lease or safe entered into between the parties pertaining to the Premises and/or any adjacent property in which Lessor has an interest, then as to any of said transactions, Lessor shall pay said broker(s) a fee in accordance with the schedule of said broker(s) in effect at the time of execution of this Lease.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but also on behalf of any person, corporation, association, or other entity having an ownership interest in said real property or any part thereof, when such fee is due hereunder. Any transferee of Lessor's interest in this Lease, whether such transfer is by agreement or by operation of law, shall be deemed to have assumed Lessor's obligation under this Paragraph 15. Said broker shall be a third party beneficiary of the provisions of this Paragraph 15.
16. Estoppel Certificate.
(a) Lessee shall at any time upon not less than ten (10) days' prior written notice from Lessor execute, acknowledge and deliver to Lessor a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the rent and other charges are paid in advance if any, and (ii) acknowledging that there are not, to Lessee's knowledge, any uncured defaults on the part of Lessor hereunder, or specifying such defaults if any are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises.
(b) At Lessor's option, Lessee's failure to
deliver such statement within such time shall be a material
breach of this Lease or shall be conclusive upon Lessee (i)
that this Lease is in full force and effect, without
modification, except as may be presented by Lessor, (ii) that
there are no uncured defaults in Lessor's performance, and
(iii) that not more than one month's rent has been paid in
advance or such failure may be considered by Lessor as a
default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee hereby agrees to deliver to any lender or purchaser designated by Lessor such financial statements of lessee as may be reasonably required by such lender or purchaser. Such statements shall include the past three years' financial statements of Lessee. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.
17. Lessor's Liability. (#9) The term "Lessor" as used herein shall mean only the owner or owners at the time in question of the fee title or a lessee's interest in a ground lease of the Premises, and except as expressly provided in Paragraph 15, in the event of any transfer of such title or interest. Lessor herein named (and in cases of any subsequent transfers then the grantor) shall be relieved from and after the date of such transfer of all liability as respects Lessor's obligations thereafter to be performed, provided that any funds in the hands of Lessor or the then grantor at the time of such transfer, in which Lessee has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Lessor shall, subject as aforesaid, be binding on Lessor's successors and assigns, only during their respective periods of ownership.
18. Severability. The invalidity of any provision of this Lease as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein provided, any amount due to Lessor not paid when due shall bear interest at the maximum rate then allowable by law from the date due. Payment of such interest shall not excuse or cure any default by Lessee under this Lease, provided, however, that interest shall not be payable on late charges incurred by Lessee nor on any amounts upon which late charges are paid by Lessee.
20. Time of Essence. Time is of the essence.
21. Additional Rent. Any monetary obligations of Lessee to Lessor under the terms of this Lease shall be deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains all agreements of the parties with respect to any matter mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification. Except as otherwise stated in this Lease, Lessee hereby acknowledges that neither the real estate broker listed in Paragraph 15 hereof nor any cooperating broker on this transaction nor the Lessor or any employees or agents of any of said persons has made any oral or written warranties or representations to Lessee relative to the condition or use by Lessee of said Premises and Lessee acknowledges that Lessee assumes all responsibility regarding the Occupational Safety Health Act, the legal use and adaptability of the Premises and the compliance thereof with all applicable laws and regulations in effect during the term of this Lease except as otherwise specifically stated in this Lease.
23. Notices. Any notice required or permitted to be given hereunder shall be in writing and may be given by personal delivery or by certified mail, and if given personally or by mail, shall be deemed sufficiently given if addressed to Lessee or to Lessor at the address noted below the signature of the respective parties, as the case may be. Either party may by notice to the other specify a different address for notice purposes except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice purposes. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor or any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Lessee of the same or any other provision. Lessor's consent to, or approval of any act, shall not be deemed to render unnecessary the obtaining of Lessor's consent to or approval of any subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such rent.
25. Holding Over. If Lessee, with Lessor's consent, remains in possession of the Premises or any part thereof after the expiration of the term hereof, such occupancy shall be a tenancy from month to month upon all the provisions of this Lease pertaining to the obligations of Lessee, but all options and rights of first refusal, if any granted under the terms of this Lease shall be deemed terminated and be of no further effect during said month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable by Lessee shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof restricting assignment or subletting by Lessee and subject to the provisions of Paragraph 17, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the State wherein the Premises are located.
30. Subordination. (#10)
(a) This Lease, at Lessor's option, shall be
subordinate to any ground lease, mortgage, deed of trust, or
any other hypothecation or security now or hereafter placed
upon the real property of which the Premises are a part and
to any and all advances made on the security thereof and to
all renewals, modifications, consolidations, replacements and
extensions thereof. Notwithstanding such subordination,
Lessee's right to quiet possession of the Premises shall not
be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the
provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgages, trustee
or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and
shall given written notice thereof to Lessee, this Lease
shall be deemed prior to such mortgage, deed of trust, or
ground lease, whether this Lease is dated prior or subsequent
to the date of said mortgage, deed of trust or ground lease
or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an attornment, a subordination or to make this Lease prior to the lien or any mortgage, deed of trust or ground lease, as the case may be. Lessee's failure to execute such documents within 10 days after written demand shall constitute a material default by Lessee hereunder, or, at Lessor's option, Lessor shall execute such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does hereby make, constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and in Lessee's name, place and stead, to execute such documents in accordance with this paragraph 30(b).
31. Attorney's Fees. If either party or the broker named herein brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney's fees to be paid by the losing party as fixed by the court. The provisions of this paragraph shall inure to the benefit of the broker named herein who seeks to enforce a right hereunder.
32. Lessor's Access. (#11) Lessor and Lessor's agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting the same, showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part as Lessor may deem necessary or desirable. Lessor may at any time place on or about the Premises and ordinary "For Sale" signs and Lessor may at any time during the last 120 days of the term hereof place on or about the Premises any ordinary "For Lease" signs, all without rebate of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises without first having obtained Lessor's prior written consent. Notwithstanding anything to the contrary in this Lease, Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent.
34. Signs. (#12) Lessee shall not pace any sign upon the Premises without Lessor's prior written consent except that Lessee shall have the right, without the prior permission of Lessor to place ordinary and usual for rent or sublet signs thereon.
35. Merger. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, or a termination by Lessor, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing subtenancies or may, at the option of Lessor, operate as an assignment to Lessor of any or all of such subtenancies.
36. Consents. Except for paragraph 33 hereof, wherever in this Lease the consent of one party is required to an act of the other party, such consent shall not be unreasonably withheld.
37. Guarantor. In the event that there is a guarantor of this Lease, said guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and observing and performing all of the covenants and provisions on Lessee's part to be observed and performed hereunder, Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease. The individuals executing this Lease on behalf of Lessor represent and warrant to Lessee that they are fully authorized and legally capable of executing this Lease on behalf of Lessor and that such execution is binding upon all parties holding an ownership interest in the Premises.
39. Options.
39.1 Definition. As used in this paragraph the word "Options" has the following meaning: (1) the right or option to extend the term of this Lease or to renew this Lease or to extend or renew any lease that Lessee has on other property of Lessor; (2) the option or right of first refusal to lease the Premises or the right of first offer to lease the Premises or the right of first refusal to lease other property of Lessor or the right of first offer to lease other property of Lessor; (3) the right or option to purchase the Premises, or the right of first refusal to purchase the Premises, or the right of first offer to purchase the Premises or the right or option to purchase other property of Lessor, or the right of first refusal to purchase other property of Lessor or the right of first offer to purchase other property of Lessor.
39.2 Options Personal. Options granted to Lessee in this Lease are personal to Lessee and may not be exercised or be assigned, voluntarily or involuntarily, by or to any person or entity other than Lessee, provided, however, the Option may be exercised by or assigned to any Lessee Affiliate as defined in paragraph 12.2 of this Lease. The options herein granted to Lessee are not assignable separate and apart from this Lease.
39.3 Multiple Options. In the event that Lessee has any multiple options to extend or renew this Lease a later option cannot be exercised unless the prior option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an
Option, notwithstanding any provision in the grant of Option
to the contrary, (i) during the time commencing from the date
Lessor gives to Lessee a notice of default pursuant to
paragraph 13.1(b) or 13.1(c) and continuing until the default
alleged in said notice of default is cured, or (ii) during
the period of time commencing on the day after a monetary
obligation to Lessor is due from Lessee and unpaid (without
any necessity for notice thereof to Lessee) continuing until
the obligation is paid, or (iii) at any time after an event
of default described in paragraphs 13.1(a), 13.1(d), or
13.1(e) (without any necessity of Lessor to give notice of
such default to Lessee), or (iv) in the event that Lessor has
given to Lessee three or more notices of default under
paragraph 13.1(b), where a late charge becomes payable under
paragraph 13.4 for each of such defaults, or paragraph
13.1(c), whether or not the defaults are cured, during the 12
month period prior to the time that Lessee intends to
exercise the subject option.
(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of
an Option shall terminate and be of no further force or
effect, notwithstanding Lessee's due and timely exercise of
the Option, if after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary
obligation of Lessee for a period of 30 days after such
obligation becomes due (without any necessity of Lessor to
give notice thereof to Lessee), or (ii) Lessee fails to
commence to cure a default specified in paragraph 13.1(c)
within 30 days after the date that Lessor gives notice to
Lessee of such default and/or Lessee fails thereafter to
diligently prosecute said cure to completion, or (iii) Lessee
commits a default described in paragraph 13.1(a), 13.1(d) or
13.1(e) (without any necessity of Lessor to give notice of
such default to Lessee), or (iv) Lessor gives to Lessee three
or more notices of default under paragraph 13.1(b), where a
late charge becomes payable under paragraph 13.4 for each
such default, or paragraph 13.1(c), whether or not the
defaults are cured.
40. Multiple Tenant Building. In the event that the Premises are part of a larger building or group of buildings ten Lessee agrees that it will abide by, keep and observe all reasonable rules and regulations which Lessor may make from time to time for the management, safety, care and cleanliness of the building and grounds, the parking of vehicles and the preservation of good order therein as well as for the convenience of other occupants and tenants of the building. The violations of any such rules and regulations shall be deemed a material breach of this Lease by Lessee.
41. Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of Lessee, its agents and invitees from acts of third parties.
42. Easements. Lessor reserves to itself the right, from time to time, to grant such easements, rights and dedications that Lessor deems necessary or desirable, and to cause the recordation of Parcel Maps and restrictions, so long as such easements, rights, dedications, Maps and restrictions do not unreasonably interfere with the Use of the Premises by Lessee. Lessee shall sign any of the aforementioned documents upon request of Lessor and failure to do so shall constitute a material breach of this Lease.
43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protect" and such payment shall not be regarded as a voluntary payment, and there shall survive the right on the part of said party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part thereof, said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease.
44. Authority. If Lessee is a corporation, trust, or general or limited partnership, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of said entity. If Lessee is a corporation, trust or partnership, Lessee shall, within thirty (30) days after execution of this Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
45. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.
46. Addendum. Attached hereto is an addendum or addenda containing paragraphs A-1 through A-3 which constitutes a part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
The parties hereto have executed this Lease on the dates specified immediately adjacent to their respective signatures.
Executed at 1411 E. Orangethorpe Ave., Fullerton, CA 92631, by Ron Hart - President, Nelco Products, Inc.
Address 1009 Dolphin Terrace, Corona del Mar, CA 92625, by
James Emmi - Owner
Modification To Lease
Building Lease between James Emmi, Lessor and Nelco, Lessee Dated December 12, 1989
1100 E. Kimberly Avenue, Anaheim, CA
#1 - 7.3 (c) Last sentence to read:
In addition, Lessor may require Lessee to pay Lessor's reasonable attorneys fees and costs in participating in such action if Lessor shall decide it is to Its best interest to do so.
#2 - 7.3 (d) Last sentence to read:
Notwithstanding the provisions of this Paragraph 7.3(d), Lessee's machinery and equipment, including that which is affixed to the Premises shall remain the property of Lessee and may be removed by Lessee subject to the provisions of Paragraph 7.2(c).
#3 - 9.3 First sentence to read:
Subject to the provisions of Paragraphs 9.4. 9.5, and 9.6, if at any time during the term of this Lease there is damage which is not an Insured Loss and which falls within the classification of Premises Partial Damage or Premises Building Partial Damage, unless caused by negligent or willful act of Lessee (in which event Lessee shall make the repair at Lessee's expense to the extent caused by the negligence or willful act of Lessee......
#4 - 9.6 M First sentence to read:
If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not complete such repairs within 90 days of written notice of such occurrence of damage, then Lessee may terminate or cancel this lease by written notice to Lessor.
#5 - 13.1 (b) First sentence to read:
The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of three business days after written notice thereof from Lessor to Lessee.
#6 - 13.4 Add to end of paragraph:
To the extent Lesser is entitled to any other recovery
for damages, and late coverage payment which has already
been made shall be
credited against the amount of such damages.
#7 - 14 Second sentence to read:
Any of the floor area of the building on the Premises.....
#8 - 14 Delete the sentence:
Delete: No reduction of rent shall occur if the only area taken is that which does not have a building located thereon.
#9 - 17 Add to end of first sentence:
shall be delivered to grantee conditioned upon the
acceptance of the new owners of the terms and provisions
of this lease.
#10 - 30 Change second sentence to read:
Notwithstanding such subordination, Lessee's right to
quiet possession of the Premises shall not be disturbed
if Lessee is not in material default so long as Lessee
shall pay the rent and be in substantial compliance with
all provisions of this Lease.......
#11 - 32 Add to first sentence:
Lessor and Lessor's agents shall have the right to enter
the Premises at reasonable times after providing Lessee
with 24 hour prior notice for the purpose of inspecting
the same, showing .....
#12 - 34 Add the sentence:
All signs currently in place are deemed to have Lessor's
prior consent.
|
Ron Hart - Nelco Products, Inc.
James Emmi - Owner
ADDENDUM TO
BUILDING LEASE BETWEEN JAMES EMMI, LESSOR
AND NELCO LESSEE DATED DECEMBER 12, 1989
1100 E. KIMBERLY AVENUE, ANAHEIM, CA
A1. CONSUMER PRICE INDEX ADJUSTMENT:
The monthly rental will be increased in the same proportion as the percentage of increase of the Los Angeles/Long Beach/Anaheim area C.P.I. as determined by the U.S. Department of Labor Statistics. The starting base for the C.P.I. index will be the index for the month of April 1990 which will be stipulated at 133.25. The C.P.I. adjustment will be made effective on each of the 2nd, 4th, 6th, 8th and 10th anniversary of the effective starting date of the lease (June 21, 1990). The bi-annual adjustment will be made every two years thereafter through the lease option periods if exercised. The C.P.I. index used for each period will be the published index for the month of April preceding the effective adjustment date. In no case will the rate increase be more than 10% per annum.
A2. ALTERATIONS
As provided for in Item 7.3, the building's original configuration and improvements shall be deemed to be the condition of the building when first occupied by the Lessee under previous leases. Any changes or modifications having been done subsequent to the original occupancy shall be subject to change back to original condition before any termination of lease at the option of Lessor. Normal wear and tear is excepted.
This building is presently occupied by Lessee and is acceptable as is.
The Lessee is hereby given approval to install a "Treater" similar to the one in the 1107 E. Kimberly building under the terms and conditions as specified in the lease.
A3. OPTIONS TO EXTEND LEASE PERIOD.
The Lessee is hereby granted the option to extend this lease for an additional 5 years, June 21, 1995 to June 20, 2000 under the same terms and conditions as the first 5 years, providing that the Lessee has substantially complied with all the obligations of said lease for the first 5 years. Rental rate will continue to be adjusted as stipulated by C.P.I. adjustment, and tax and insurance adjustments as provided for in lease.
The Lessee is hereby granted the option to renew this lease for an additional 5 year period, June 21, 2000 to June 20, 2005. The rental rate for this period will be determined by agreement between the Lessor and Lessee and shall be equal to 90% of the average rental rates in effect at the time of Lessee's notice of intention to renew. Average rental rates will be determined by prevailing and available rental rates in the Fullerton/Anaheim area for a minimum of 6 or more buildings of comparable size and location.
In order to exercise the option to extend or renew this lease, the Lessee must notify Lessor of his intention to exercise his option before January 1, of the year of the start of option period.
Ron Hart - Nelco Products, Inc.
James Emmi - Owner
December 29, 1994
Mr. James Emmi
1009 Dolphin Terrace
Corona del Mar, CA 92625
VIA CERTIFIED MAIL
Dear Mr. Emmi,
Writing to you in my dual capacity as Vice President of Nelco Products, Inc., this letter serves as formal notice on behalf of Nelco Products, Inc., of their intention to exercise the June 12, 1995, options to extend the leases of both 1100 and 1107 E. Kimberly Avenue, Anaheim, CA, in accord with paragraphs A3 in the Addendums dated December 12 1989, to the Leases also dated December 12, 1989. The options thus exercised will run until June 20, 2000.
We extend our best wishes for the New Year.
Sincerely,
NELCO, INTERNATIONAL CORPORATION
Lee H. Newton
Vice President Finance
copy: Ron Hart, Nelco Products Inc.
Phil Smoot, Nelco International Corporation
Allen Levine, Park Electrochemical Corp.
EXHIBIT 10.02
STANDARD INDUSTRIAL LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Parties. This Lease, dated, for reference purposes only, December 12, 1989, is made by and between James Emmi (herein called "Lessor") and Nelco Products Inc. (herein called "Lessee").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor for the term, at the rental, and upon all of the conditions set forth herein, that certain real property situated in the County of Orange, State of California, commonly known as 1107 East Kimberly Avenue, Anaheim, CA 92801 and described as approximately 13,200 square foot industrial building on approximately 30,000 square fee of land. Said real property including the land and all improvements therein, is herein called the "Premises".
3. Term.
3.1 Term. The term of this Lease shall be for 60 months commencing on June 21, 1990 and ending on June 20, 1995 unless sooner terminated pursuant to any provision hereof.
3.2 Delay in Possession. Notwithstanding said commencement date, if for any reason Lessor cannot deliver possession of the Premises to Lessee on said date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Lessee hereunder or extend the term hereof, but in such case, Lessee shall not be obligated to pay rent until possession of the Premises is tendered to Lessee; provided, however, that if Lessor shall not have delivered possession of the Premises within sixty (60) days from said commencement date, Lessee may, at Lessee's option, by notice in writing to Lessor within ten (10) days thereafter, cancel this Lease, in which event the parties shall be discharged from all obligations hereunder, provided further, however, that if such written notice of lessee is not received by Lessor within said ten (10) day period, Lessee's right to cancel this Lease hereunder shall terminated and be of no further force or effect.
3.3 Early Possession. If Lessee occupies the Premises prior to said commencement date, such occupancy shall be subject to all provisions hereof, such occupancy shall not advance the termination date, and Lessee shall pay rent for such period at the initial monthly rates set forth below.
4. Rent. Lessee shall pay to Lessor as rent for the Premises, monthly payments of $5600.00, in advance, on the 21 day of each month of the term hereof, as rent for monthly rental rate shall increase or decrease as per C.P.I. adjustment as defined in addendum (A-1) as well as tax and insurance adjustments.
Rent for any period during the term hereof which is for less than one month shall be a pro rata portion of the monthly installment. Rent shall be payable in lawful money of the United States to Lessor at the address stated herein or to such other person or at such other places as Lessor may designate in writing.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof $ N/A as security for Lessee's faithful performance of Lessee's obligations hereunder. If Lessee fails to pay rent or other charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Lessor may use, apply or retain all or any portion of said deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Lessor may become obligated by reason of Lessee's default, or to compensate Lessor for any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies all of any portion of said deposit, Lessee shall within ten (10) days after written demand therefor deposit cash with Lessor in an amount sufficient to restore said deposit to the full amount hereinabove stated and Lessee's failure to do so shall be a material breach of this Lease. If the monthly rent shall, from time to time, increase during the term of this Lease, Lessee shall thereupon deposit with Lessor additional security deposit so that the amount of security deposit held by Lessor shall at all times bear the same proportion to current rent as the original security deposit bears to the original monthly rent set forth in paragraph 4 hereof. Lessor shall not be required to keep said deposit separate from its general accounts. If Lessee performs all of Lessee's obligations hereunder, said deposit, or so much thereof as has not theretofore been applied by Lessor shall be returned, without payment of interest or other increment for its use, to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's interest hereunder) at the expiration of the term hereof, and after Lessee has vacated the Premises. No trust relationship is created herein between Lessor and Lessee with respect to said Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for manufacturing, warehousing and related services or any other use which is reasonably comparable and for no other purpose.
6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in its state existing on the date that the Lease term commences, but without regard to the use for which Lessee will use the Premises, does not violate any covenants or restrictions of record, or any applicable building code, regulation or ordinance in effect on such Lease term commencement date. In the event it is determined that this warranty has been violated, then it shall be the obligation of the Lessor, after written notice from Lessee, to promptly, at Lessor's sole cost and expense, rectify any such violation. In the event Lessee does not given to Lessor written notice of the violation of this warranty within six months from the date that the Lease term commences, the correction of same shall be the obligation of the Lessee or Lessee's sole cost. The warranty contained in this paragraph 6.2(a) shall be of no force or effect if, prior to the date of this Lease, Lessee was the owner or occupant of the Premises, and, in such event, Lessee shall correct any such violation effect if, prior to the date of this Lease, Lessee was the owner or occupant of the Premises, and, in such event, Lessee shall correct any such violation at Lessee's sole cost.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at Lessee's expense, comply promptly with all applicable statutes, ordinances, rules, regulations, orders, covenants and restrictions of record, and requirements in effect during the term or any part of the term hereof, regulating the use by Lessee of the Premises. Lessee shall not use nor permit the use of the Premises in any manner that will tend to create waste or a nuisance or, if there shall be more than one tenant in the building containing the Premises, shall tend to disturb such other tenants.
6.3 Condition of Premises.
(a) Lessor shall deliver the Premises to Lessee
clean and free of debris on Lease commencement date (unless
Lessee is already in possession) and Lessor further warrants
to Lessee that the plumbing, lighting, air-conditioning,
heating, and leading doors in the Premises shall be in good
operating condition on the Lease commencement date. In the
event that it is determined that this warranty has been
violated, then it shall be the obligation of Lessor, after
receipt of written notice from Lessee setting forth with
specificity the nature of the violation, to promptly, at
Lessor's sale cost, rectify such violation. Lessee's
failure to give such written notice to Lessor within thirty
(30) days after the Lease commencement date shall cause the
conclusive presumption that Lessor has complied with all of
Lessor's obligations hereunder. The warranty contained in
this paragraph 6.3(a) shall be of no force or effect if
prior to the date of this Lease, Lessee was the owner or
occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby accepts the Premises in their condition existing as of the Lease commencement date or the date that Lessee takes possession of the Premises, whichever is earlier, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any covenants or restrictions of record, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Lessee acknowledges that neither Lessor nor Lessor's agent has made any representation or warranty as to the present or future suitability of the Premises for the conduct of Lessee's business.
7. Maintenance, Repairs and Alterations.
7.1 Lessor's Obligations. Subject to the provisions of Paragraphs 6, 7.2 and 9 and except for damage caused by any negligent or intentional act or omission of Lessee, Lessee's agents, employees, or invitees in which event Lessee shall repair the damage, Lessor, at Lessor's expense, shall keep in good order, condition and repair the foundations, exterior walls and the exterior roof of the Premises. Lessor shall not, however, be obligated to paint such exterior, nor shall Lessor be required to maintain the interior surface of exterior walls, windows, doors or plate glass. Lessor shall have no obligation to make repairs under this Paragraph 7.1 until a reasonable time after receipt of written notice of the need for such repairs, Lessee expressly waives the benefits of any statute now or hereafter in effect which would otherwise afford Lessee the right to make repairs at Lessor's expense or to terminate this Lease because of Lessor's failure to keep the Premises in good order, condition and repair.
7.2 Lessee's Obligations.
(a) Subject to the provisions of Paragraph 6, 7.1 and 9, Lessee, at Lessee's expense, shall keep in good order, condition and repair the Premises and every part thereof (whether or not the damaged portion of the Premises or the means of repairing the same are reasonably or readily accessible to Lessee) including, without limiting the generality of the foregoing, all plumbing, heating, air conditioning, (Lessee shall procure and maintain, at Lessee's expense, an air conditioning system maintenance contract) ventilating, electrical and lighting facilities and equipment within the Premises, fixtures, interior walls and interior surface of exterior walls, ceilings, windows, doors, plate glass, and skylights, located within the Premises, and all landscaping, driveways, parking lots, fences and signs located in the Premises and all sidewalks and parkways adjacent to the Premises.
(b) If Lessee fails to perform Lessee's obligations under this Paragraph 7.2 or under any other paragraph of this Lease, Lessor may at Lessor's option enter upon the Premises after 10 days' prior written notice to Lessee (except in the case of emergency, in which case no notice shall be required), perform such obligations on Lessee's behalf and put the Premises in good order, condition and repair, and the cost thereof together with interest thereon at the maximum rate then allowable by law shall be due and payable as additional rent to Lessor together with Lessee's next rental installment.
(c) On the last day of the term hereof, or on any sooner termination, Lessee shall surrender the Premises to Lessor in the same condition as received, ordinary wear and tear excepted, clean and free of debris. Lessee shall repair any damage to the Premises occasioned by the installation or removal of its trade fixtures, furnishings and equipment. Notwithstanding anything to the contrary otherwise stated in this Lease, Lessee shall leave the air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing and fencing on the premises in good operating condition.
7.3 Alterations and Additions.
(a) Lessee shall not, without Lessor's prior written consent make any alterations, improvements, additions, or Utility Installations in, on or about the Premises, except for nonstructural alterations not exceeding $2,500 in cumulative costs during the term of this Lease. In any event, whether or not in excess of $2,500 in cumulative cost, Lessee shall make no change or alteration to the exterior of the Premises nor the exterior of the building(s) on the Premises without Lessor's prior written consent. As used in this Paragraph 7.3 the term "Utility Installation" shall mean carpeting, window coverings, air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing and fencing. Lessor may require that Lessee remove any or all of said alterations, improvements, additions or Utility Installations at the expiration of the term, and restore the Premises to their prior condition. Lessor may require Lessee to provide Lessor, at Lessee's sole cost and expense, a lien and completion bond in an amount equal to one and one- half times the estimated cost of such improvements, to insure Lessor against any liability for mechanic's and materialmen's liens and to insure completion of the work. Should Lessee make any alterations, improvements, additions or Utility Installations without the prior approval of Lessor, Lessor may require that Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility Installations in, or about the Premises that Lessee shall desire to make and which requires the consent of the Lessor shall be presented to Lessor in written form, with proposed detailed plans. If Lessor shall give its consent, the consent shall be deemed conditioned upon Lessee acquiring a permit to do so, from appropriate governmental agencies, the furnishing of a copy thereof to Lessor prior to the commencement of the work and the compliance by Lessee of all conditions of said permit in a prompt and expeditious manner.
(c) (#1) Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use in the Premises, which claims are or may be secured by any mechanics' or materialmen's lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days notice prior to the commencement of any work in the Premises, and Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law. If Lessee shall, in good faith, contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend itself and Lessor against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises, upon the condition that if Lessor shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to such contested lien claim or demand indemnifying Lessor against liability for the same and holding the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor's attorneys fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so.
(d) (#2) Unless Lessor requires their removal, as set forth in Paragraph 7.3(a), all alterations, improvements, additions and Utility Installations (whether or not such Utility Installations constitute trade fixtures of Lessee), which may be made on the Premises, shall become the property of Lessor and remain upon and be surrendered with the Premises at the expiration of the term. Notwithstanding the provisions of this Paragraph 7.3(d), Lessee's machinery and equipment, other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises, shall remain the property of Lessee and may be removed by Lessee subject to the provisions of Paragraph 7.2(c).
8. Insurance; Indemnity.
8.1 Liability Insurance - Lessee. Lessee shall, at Lessee's expense, obtain and keep in force during the term of this Lease a policy of Combined Single Limit Bodily Injury and Property Damage insurance insuring Lessee and Lessor against any liability arising out of the use, occupancy or maintenance of the Premises and all other areas appurtenant thereto. Such insurance shall be in an amount not less than $500,000 per occurrence. The policy shall insure performance by Lessee of the indemnity provisions of this Paragraph 8. The limits of said insurance shall not, however, limit the liability of Lessee hereunder.
8.2 Liability Insurance - Lessor. Lessor shall obtain and keep in force during the term of this Lease a policy of Combined Single Limit Bodily Injury and Property Damage Insurance, insuring Lessor, but not Lessee, against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto in an amount not less than $500,000 per occurrence.
8.3 Property Insurance. Lessor shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Premises, but not Lessee's fixtures, equipment or tenant improvements in an amount not to exceed the full replacement value thereof, as the same may exist from time to time, providing protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood (in the event same is required by a lender having a lien on the Premises) special extended perils ("all risk", as such term is used in the insurance industry) but not plate glass insurance. In addition, the Lessor shall obtain and keep in force, during the term of this Lease, a policy or rental value insurance covering a period of one year, with loss payable to Lessor, which insurance shall also cover all real estate taxes and insurance costs for said period.
8.4 Payment of Premium Increase.
(a) Lessee shall pay to Lessor, during the term hereof, in addition to the rent, the amount of any increase in premiums for the insurance required under Paragraphs 8.2 and 8.3 over and above such premiums paid during the Base Period, as hereinafter defined, whether such premium increase shall be the result of the nature of Lessee's occupancy, any act or omission of Lessee, requirements of the holder of a mortgage or deed of trust covering the Premises, increased valuation of the Premises, or general rate increases. IN the event that the Premises have been occupied previously, the words "Base Period" shall mean the last twelve months of the prior occupancy. In the event that the Premises have never been previously occupied, the premiums during the "Base Period" shall be deemed to be the lowest premiums reasonably obtainable for said insurance assuming the most nominal use of the Premises. Provided, however, in lieu of the Base Period, the parties may insert a dollar amount at the end of this sentence which figure shall be considered as the insurance premium for the Base Period: $2227.00. In no event, however, shall Lessee be responsible for any portion of the premium cost attributable to liability insurance coverage in excess of $1,000,000 procured under paragraph 8.2.
(b) Lessee shall pay any such premium increases to Lessor within 30 days after receipt by Lessee of a copy of the premium statement or other satisfactory evidence of the amount due. If the insurance policies maintained hereunder cover other improvements in addition to the Premises, Lessor shall also deliver to Lessee a statement of the amount of such increase attributable to the Premises and showing in reasonable detail, the manner in which such amount was computed. If the term of this Lease shall not expire concurrently with the expiration of the period covered by such insurance, Lessee's liability for premium increases shall be prorated on an annual basis.
(c) If the Premises are part of a larger building, then Lessee shall not be responsible for paying any increase in the property insurance premium caused by the acts or omissions of any other tenant of the building of which the Premises are a part.
8.5. Insurance Policies. Insurance required hereunder shall be in companies holding a "General Policyholders Rating" of at least B plus, or such other rating as may be required by a lender having a lien on the Premises, as set forth in the most current issue of "Best's Insurance Guide". Lessee shall deliver to Lessor copies of policies of liability insurance required under Paragraph 8.1 or certificates evidencing the existence and amounts of such insurance. No such policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to the expiration of such policies, furnish Lessor with renewals or "binders" thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee upon demand. Lessee shall not do or permit to be done anything which shall invalidate the insurance policies referred to in Paragraph 8.3.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall herein mean damage or destruction to the Premises to the extent that the cost of repair is less than 50% of the fair market value of the Premises immediately prior to such damage or destruction. "Premises Building Partial Damage" shall herein mean damage or destruction to the building of which the Premises are a part to the extent that the cost of repair, is less than 50% of the fair market value of such building as a whole immediately prior to such damage or destruction.
(b) "Premises Total Destruction" shall herein mean damage or destruction to the Premises to the extent that the cost of repair is 50% or more of the fair market value of the Premises immediately prior to such damage or destruction. "Premises Building Total Destruction" shall herein mean damage or destruction to the building of which the Premises are a part to the extent that the cost of repair is 50% or more of the fair market value of such building as a whole immediately prior to such damage or destruction.
(c) "Insured Loss" shall herein mean damage or destruction which was caused by an event required to be covered by the insurance described in paragraph 8.
9.2 Partial Damage - Insured Loss. Subject to the provisions of paragraph 9.4, 9.5 and 9.6, if at any time during the term of this Lease there is damage which is an Insured Loss and which falls into the classification of Premises Partial Damage or Premises Building Partial Damage, then Lessor shall, at Lessor's sole cost, repair such damage, but not Lessee's fixtures, equipment or tenant improvements, as soon as reasonably possible and this Lease shall continue in full force and effect.
9.3 (#3) Partial Damage - Uninsured Loss. Subject
to the provisions of Paragraphs 9.4, 9.5 and 9.6, if at any
time during the term of this Lease there is damage which is
not an Insured Loss and which falls within the
classification of Premises Partial Damage or Premises
Building Partial Damage, unless caused by a negligent or
willful act of Lessee (in which event Lessee shall make the
repairs at Lessee's expense), Lessor may at Lessor's option
either (i) repair such damage as soon as reasonably possible
at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written
notice to Lessee within thirty (30) days after the date of
the occurrence of such damage of Lessor's intention to
cancel and terminate this Lease, as of the date of the
occurrence of such damage. In the event Lessor elects to
give such notice of Lessor's intention to cancel and
terminate this Lease, Lessee shall have the right within ten
(10) days after the receipt of such notice to give written
notice to Lessor of Lessee's intention to repair such damage
at Lessee's expense, without reimbursement from Lessor, in
which event this Lease shall continue in full force and
effect, and Lessee shall proceed to make such repairs as
soon as reasonably possible. If Lessee does not give such
notice within such 10-day period this Lease shall be
cancelled and terminated as of the date of the occurrence of
such damage.
9.4 Total Destruction. If at any time during the term of this Lease there is damage, whether or not an Insured Loss, (including destruction required by any authorized public authority), which falls into the classification of Premises Total Destruction or Premises Building Total Destruction, this Lease shall automatically terminate as of the date of such total destruction.
9.5 Damage Near End of Term.
(a) If at any time during the last six months of the term of this Lease there is damage, whether or not an Insured Loss, which falls within the classification of Premises Partial Damage, Lessor may at Lessor's option cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Lessee of Lessor's election to do so within 30 days after the date of occurrence of such damage.
(b) Notwithstanding paragraph 9.59(a), in the event that Lessee has an option to extend or renew this Lease, and the time within which said option may be exercised has not yet expired, Lessee shall exercise such option, if it is to be exercised at all, no later than 20 days after the occurrence of an Insured Loss falling within the classification of Premises Partial Damage during the last six months of the term of this Lease. If Lessee duly exercises such option during said 20 day period, Lessor shall, at Lessor's expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option during said 20 day period, then Lessor may at Lessor's option terminate and cancel this Lease as of the expiration of said 20 day period by giving written notice to Lessee of Lessor's election to do so within 10 days after the expiration of said 20 day period, notwithstanding any term or provision in the grant of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in paragraphs 9.2 or 9.3, and Lessor or Lessee repairs or restores the Premises pursuant to the provisions of this Paragraph 9, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Lessee's use of the Premises is impaired. Except for abatement of rent, if any, Lessee shall have no claim against Lessor for any damage suffered by reason of any such damage, destruction, repair or restoration.
(b) (#4) If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not commence such repair or restoration within 90 days after such obligations shall accrue, Lessee may at Lessee's option cancel and terminate this Lease by giving Lessor written notice of Lessee's election to do so at any time prior to the commencement of such repair or restoration. In such event this Lease shall terminate as of the date of such notice.
9.7 Termination - Advance Payments. Upon termination of this Lease pursuant to this Paragraph 9, an equitable adjustment shall be made concerning advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's security deposit as has not theretofore been applied by Lessor.
9.8 Waiver. Lessor and Lessee waive the provisions of any statutes which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease.
10. Real Property Taxes.
10.1 Payment of Tax Increase. Lessor shall pay the real property tax, as defined in paragraph 10.3, applicable to the Premises; provided, however, that Lessee shall pay, in addition to rent, the amount, if any, by which real property taxes applicable to the Premises increase over the fiscal real estate tax year 1990-1991. Such payment shall be made by Lessee within thirty (30) days after receipt of Lessor's written statement setting forth the amount of such increase and the computation thereof. If the term of this Lease shall not expire concurrently with the expiration of the tax fiscal year, Lessee's liability for increased taxes for the last partial lease year shall be prorated on an annual basis.
10.2 Additional Improvements. Notwithstanding paragraph 10.1 hereof, Lessee shall pay to Lessor upon demand therefor the entirety of any increase in real property tax if assessed solely by reason of additional improvements placed upon the Premises by Lessee or at Lessee's request.
10.3 Definition of "Real Property Tax". As used
herein, the term "real property tax" shall include any form
of real estate tax or assessment, general, special, ordinary
or extraordinary, and any license fee, commercial rental
tax, improvement bond or bonds, levy or tax (other than
inheritance, personal income or estate taxes) imposed on the
Premises by any authority having the direct or indirect
power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire,
street, drainage or other improvement district thereof, as
against any legal or equitable interest of Lessor in the
Premises or in the real property of which the Premises are a
part, as against Lessor's right to rent or other income
therefrom, and as against Lessor's business of leasing the
Premises. The term "real property tax" shall also include
any tax, fee levy, assessment or charge (i) in substitution
of, partially or totally, any tax, fee levy, assessment or
charge hereinabove included within the definition of "real
property tax," or (ii) the nature of which was hereinbefore
included within the definition of "real property tax", or
(iii) which is imposed for a service or right not charged
prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978, or (iv) which is imposed as a
result of a transfer, either partial or total, of Lessor's
interest in the Premises or which is added to a tax or
charge hereinbefore included within the definition of real
property tax by reason of such transfer, or (v) which is
imposed by reason of this transaction, any modifications or
changes hereto, or any transfers hereof.
10.4 Joint Assessment. If the Premises are not separately assessed, Lessee's liability shall be an equitable proportion of the real property taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Lessor's reasonable determination thereof, in good faith, shall be conclusive.
10.5 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Lessee contained in the Premises or elsewhere. When possible, Lessee shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Lessee, lessee shall pay a reasonable proportion to be determined by Lessor or all charges jointed metered with other premises.
12. Assignment and Subletting.
12.1 Lessors's Consent Required. Lessee shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Lessee's interest in this Lease or in the Premises, without Lessor's prior written consent, which Lessor shall not unreasonably withhold. Lessor shall respond to Lessee's request for consent hereunder in a timely manner and any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void, and shall constitute a breach of this Lease.
12.2 Lessee Affiliate. Notwithstanding the provisions of paragraph 12.1 hereof, Lessee may assign or sublet the Premises, or any portion thereof, without Lessor's consent, to any corporation which controls, is controlled by or is under common control with Lessee, or to any corporation resulting from the merger or consolidation with Lessee, or to any person or entity which acquires all the assets of Lessee as a going concern of the business that is being conducted on the Premises, provided that said assignee assumes, in full, the obligations of Lessee under this Lease. Any such assignment shall not, in any way, affect or limit the liability of Lessee under the terms of this Lease even if after such assignment or subletting the terms of this Lease are materially changed or altered without the consent of Lessee, the consent of whom shall not be necessary.
12.3 No Release of Lessee. Regardless of Lessor's consent, no subletting or assignment shall release Lessee of Lessee's obligation or alter the primary liability of Lessee to pay the rent and to perform all other obligations to be performed by Lessee hereunder. The acceptance of rent by Lessor from any other person shall not be deemed to be a waiver by Lessor of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. In the event of default by any assignee of Lessee or any successor of Lessee, in the performance of any of the terms hereof, Lessor may proceed directly against Lessee without the necessity of exhausting remedies against said assignee. Lessor may consent to subsequent assignments or subletting of this Lease or amendments or modifications to this Lease with assignees of Lessee, without notifying Lessee, or any successor of Lessee, and without obtaining its or their consent thereto and such action shall not relieve Lessee of liability under this Lease.
12.4 Attorney's Fees. In the event Lessee shall assign or sublet the Premises or request the consent of Lessor to any assignment or subletting or if Lessee shall request the consent of Lessor for any act Lessee proposes to do then Lessee shall pay Lessor's reasonable attorneys fees incurred in connection therewith, such attorneys fees not to exceed $350.00 for each such request.
13. Defaults; Remedies.
13.1 Defaults. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) (#5) The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of three days after written notice thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statues such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph.
(c) The failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Lessee, other than described in paragraph (b) above, where such failure shall continue for a period of 30 days after written notice thereof from Lessor to Lessee; provided, however, that if the nature of Lessee's default is such that more than 30 days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said 30-day period and thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Lessee of any general
arrangement or assignment for the benefit of creditors; (ii)
Lessee becomes a "debtor" as defined in 11 U.S.C. 101 or any
successor statue thereto (unless, in the case of a petition
filed against Lessee, the same is dismissed within 60 days);
(iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located
at the Premises or of Lessee's interest in this Lease, where
possession is not restored to Lessee within 30 days; or (iv)
the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where such seizure is
not discharged within 30 days. Provided, however, in the
event that any provision of this paragraph 13.1(d) is
contrary to any applicable law, such provision shall be of
no force or effect.
(e) The discovery by Lessor that any financial statement given to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor in interest of Lessee or any guarantor of Lessee's obligation hereunder, and any of them, was materially false.
13.2 Remedies. In the event of any such material default or breach by Lessee, Lessor may at any time thereafter, with or without notice or demand and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee all damages incurred by Lessor by reason of Lessee's default including, but not limited to, the cost of recovering possession of the Premises; expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorney's fees, and any real estate commission actually paid; the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided; that portion of the leasing commission paid by Lessor pursuant to Paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises. In such event Lessor shall be entitled to enforce all of Lessor's rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located. Unpaid installments of rent and other unpaid monetary obligations of Lessee under the terms of this Lease shall bear interest from the date due at the maximum rate then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Lessee in writing, specifying wherein Lessor has failed to perform such obligation; provided, however, that if the nature of Lessor's obligation is such that more than thirty (30) days are required for performance then Lessor shall not be in default if Lessor commences performance within such 30-day period and thereafter diligently prosecutes the same to completion.
13.4 Late Charges. (#6) Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Lessor by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Lessee shall not be received by Lessor or Lessor's designee within ten (10) days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a late charge equal to 6% of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance or such late charge by Lessor shall in no event constitute a waiver of Lessee's default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of rent, then rent shall automatically become due and payable quarterly in advance, rather than monthly, notwithstanding paragraph 4 or any other provision of this Lease to the contrary.
13.5 Impounds. In the event that a late charge is payable hereunder, whether or not collected, for three (3) installments of rent or any other monetary obligation of Lessee under the terms of this Lease, Lessee shall pay to Lessor, if Lessor shall so request, in addition to any other payments required under this Lease, a monthly advance installment, payable at the same time as the monthly rent, as estimated by Lessor, for real property tax and insurance expenses on the Premises which are payable by Lessee under the terms of this Lease. Such fund shall be established to insure payment when due before delinquency of any or all such real property taxes and insurance premiums. If the amounts paid to Lessor by Lessee under the provisions of this paragraph are insufficient to discharge the obligations of Lessee to pay such real property taxes and insurance premiums as the same become due, Lessee shall pay to Lessor, upon Lessor's demand, such additional sums necessary to pay such obligations. All moneys paid to Lessor under this paragraph may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a default in the obligations of Lessee to perform under this Lease, then any balance remaining from funds paid to Lessor under the provisions of this paragraph may, at the option of Lessor, be applied to the payment of any monetary default of Lessee in lieu of being applied to the payment of real property tax and insurance premiums.
14. Condemnation. (#7) If the Premises or any portion thereof are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the floor area of the building on the Premises, or more than 25% of the land area of the Premises which is not occupied by any building, is taken by condemnation, Lessee may, at Lessee's option, to be exercised in writing only within ten 910) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the rent shall be reduced in the proportion that the floor area of the building taken bears to the total floor area of the building situation on the Premises. (#8) Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under the threat of the exercise of such power shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any award for loss of or damage to Lessee's trade fixtures and removable personal property. In the event that this Lease is not terminated by reason of such condemnation, Lessor shall to the extent of severance damages received by Lessor in connection with such condemnation, repair any damage to the Premises caused by such condemnation except to the extent that Lessee has been reimbursed therefor by the condemning authority. Lessee shall pay any amount in excess of such severance damages required to complete such repair.
15. Broker's Fee.
(a) Upon execution of this Lease by both parties, Lessor shall pay to N/A Licensed real estate broker(s), a fee as set forth in a separate agreement between lessor and said broker(s), or in the event there is no separate agreement between Lessor and said broker(s), the sum of $____, for brokerage services rendered by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option as defined in paragraph 39.1 of this Lease, which is granted to Lessee under this Lease, or any subsequently granted option which is substantially similar to an Option granted to Lessee under this Lease, or if Lessee acquires any rights to the Premises or other premises described in this Lease which are substantially similar to what Lessee would have acquired had an Option herein granted to Lessee been exercised, or if Lessee remains in possession of the Premises after the expiration of the term of this Lease after having failed to exercise an Option, or if said broker(s) are the procuring cause of any other lease or safe entered into between the parties pertaining to the Premises and/or any adjacent property in which Lessor has an interest, then as to any of said transactions, Lessor shall pay said broker(s) a fee in accordance with the schedule of said broker(s) in effect at the time of execution of this Lease.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but also on behalf of any person, corporation, association, or other entity having an ownership interest in said real property or any part thereof, when such fee is due hereunder. Any transferee of Lessor's interest in this Lease, whether such transfer is by agreement or by operation of law, shall be deemed to have assumed Lessor's obligation under this Paragraph 15. Said broker shall be a third party beneficiary of the provisions of this Paragraph 15.
16. Estoppel Certificate.
(a) Lessee shall at any time upon not less than ten
(10) days' prior written notice from Lessor execute,
acknowledge and deliver to Lessor a statement in writing (i)
certifying that this Lease is unmodified and in full force
and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified,
is in full force and effect) and the date to which the rent
and other charges are paid in advance if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, any
uncured defaults on the part of Lessor hereunder, or
specifying such defaults if any are claimed. Any such
statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises.
(b) At Lessor's option, Lessee's failure to deliver such statement within such time shall be a material breach of this Lease or shall be conclusive upon Lessee (i) that this Lease is in full force and effect, without modification, except as may be presented by Lessor, (ii) that there are no uncured defaults in Lessor's performance, and (iii) that not more than one month's rent has been paid in advance or such failure may be considered by Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee hereby agrees to deliver to any lender or purchaser designated by Lessor such financial statements of lessee as may be reasonably required by such lender or purchaser. Such statements shall include the past three years' financial statements of Lessee. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.
17. Lessor's Liability. (#9) The term "Lessor" as used herein shall mean only the owner or owners at the time in question of the fee title or a lessee's interest in a ground lease of the Premises, and except as expressly provided in Paragraph 15, in the event of any transfer of such title or interest. Lessor herein named (and in cases of any subsequent transfers then the grantor) shall be relieved from and after the date of such transfer of all liability as respects Lessor's obligations thereafter to be performed, provided that any funds in the hands of Lessor or the then grantor at the time of such transfer, in which Lessee has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Lessor shall, subject as aforesaid, be binding on Lessor's successors and assigns, only during their respective periods of ownership.
18. Severability. The invalidity of any provision of this Lease as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein provided, any amount due to Lessor not paid when due shall bear interest at the maximum rate then allowable by law from the date due. Payment of such interest shall not excuse or cure any default by Lessee under this Lease, provided, however, that interest shall not be payable on late charges incurred by Lessee nor on any amounts upon which late charges are paid by Lessee.
20. Time of Essence. Time is of the essence.
21. Additional Rent. Any monetary obligations of Lessee to Lessor under the terms of this Lease shall be deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains all agreements of the parties with respect to any matter mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification. Except as otherwise stated in this Lease, Lessee hereby acknowledges that neither the real estate broker listed in Paragraph 15 hereof nor any cooperating broker on this transaction nor the Lessor or any employees or agents of any of said persons has made any oral or written warranties or representations to Lessee relative to the condition or use by Lessee of said Premises and Lessee acknowledges that Lessee assumes all responsibility regarding the Occupational Safety Health Act, the legal use and adaptability of the Premises and the compliance thereof with all applicable laws and regulations in effect during the term of this Lease except as otherwise specifically stated in this Lease.
23. Notices. Any notice required or permitted to be given hereunder shall be in writing and may be given by personal delivery or by certified mail, and if given personally or by mail, shall be deemed sufficiently given if addressed to Lessee or to Lessor at the address noted below the signature of the respective parties, as the case may be. Either party may by notice to the other specify a different address for notice purposes except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice purposes. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor or any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Lessee of the same or any other provision. Lessor's consent to, or approval of any act, shall not be deemed to render unnecessary the obtaining of Lessor's consent to or approval of any subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such rent.
25. Holding Over. If Lessee, with Lessor's consent, remains in possession of the Premises or any part thereof after the expiration of the term hereof, such occupancy shall be a tenancy from month to month upon all the provisions of this Lease pertaining to the obligations of Lessee, but all options and rights of first refusal, if any granted under the terms of this Lease shall be deemed terminated and be of no further effect during said month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable by Lessee shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof restricting assignment or subletting by Lessee and subject to the provisions of Paragraph 17, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the State wherein the Premises are located.
30. Subordination. (#10)
(a) This Lease, at Lessor's option, shall be
subordinate to any ground lease, mortgage, deed of trust, or
any other hypothecation or security now or hereafter placed
upon the real property of which the Premises are a part and
to any and all advances made on the security thereof and to
all renewals, modifications, consolidations, replacements
and extensions thereof. Notwithstanding such subordination,
Lessee's right to quiet possession of the Premises shall not
be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the
provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgages, trustee
or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and
shall given written notice thereof to Lessee, this Lease
shall be deemed prior to such mortgage, deed of trust, or
ground lease, whether this Lease is dated prior or
subsequent to the date of said mortgage, deed of trust or
ground lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an attornment, a subordination or to make this Lease prior to the lien or any mortgage, deed of trust or ground lease, as the case may be. Lessee's failure to execute such documents within 10 days after written demand shall constitute a material default by Lessee hereunder, or, at Lessor's option, Lessor shall execute such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does hereby make, constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and in Lessee's name, place and stead, to execute such documents in accordance with this paragraph 30(b).
31. Attorney's Fees. If either party or the broker named herein brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney's fees to be paid by the losing party as fixed by the court. The provisions of this paragraph shall inure to the benefit of the broker named herein who seeks to enforce a right hereunder.
32. Lessor's Access. (#11) Lessor and Lessor's agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting the same, showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part as Lessor may deem necessary or desirable. Lessor may at any time place on or about the Premises and ordinary "For Sale" signs and Lessor may at any time during the last 120 days of the term hereof place on or about the Premises any ordinary "For Lease" signs, all without rebate of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises without first having obtained Lessor's prior written consent. Notwithstanding anything to the contrary in this Lease, Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent.
34. Signs. (#12) Lessee shall not pace any sign upon the Premises without Lessor's prior written consent except that Lessee shall have the right, without the prior permission of Lessor to place ordinary and usual for rent or sublet signs thereon.
35. Merger. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, or a termination by Lessor, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing subtenancies or may, at the option of Lessor, operate as an assignment to Lessor of any or all of such subtenancies.
36. Consents. Except for paragraph 33 hereof, wherever in this Lease the consent of one party is required to an act of the other party, such consent shall not be unreasonably withheld.
37. Guarantor. In the event that there is a guarantor of this Lease, said guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and observing and performing all of the covenants and provisions on Lessee's part to be observed and performed hereunder, Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease. The individuals executing this Lease on behalf of Lessor represent and warrant to Lessee that they are fully authorized and legally capable of executing this Lease on behalf of Lessor and that such execution is binding upon all parties holding an ownership interest in the Premises.
39. Options.
39.1 Definition. As used in this paragraph the word "Options" has the following meaning: (1) the right or option to extend the term of this Lease or to renew this Lease or to extend or renew any lease that Lessee has on other property of Lessor; (2) the option or right of first refusal to lease the Premises or the right of first offer to lease the Premises or the right of first refusal to lease other property of Lessor or the right of first offer to lease other property of Lessor; (3) the right or option to purchase the Premises, or the right of first refusal to purchase the Premises, or the right of first offer to purchase the Premises or the right or option to purchase other property of Lessor, or the right of first refusal to purchase other property of Lessor or the right of first offer to purchase other property of Lessor.
39.2 Options Personal. Options granted to Lessee in this Lease are personal to Lessee and may not be exercised or be assigned, voluntarily or involuntarily, by or to any person or entity other than Lessee, provided, however, the Option may be exercised by or assigned to any Lessee Affiliate as defined in paragraph 12.2 of this Lease. The options herein granted to Lessee are not assignable separate and apart from this Lease.
39.3 Multiple Options. In the event that Lessee has any multiple options to extend or renew this Lease a later option cannot be exercised unless the prior option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an
Option, notwithstanding any provision in the grant of Option
to the contrary, (i) during the time commencing from the
date Lessor gives to Lessee a notice of default pursuant to
paragraph 13.1(b) or 13.1(c) and continuing until the
default alleged in said notice of default is cured, or (ii)
during the period of time commencing on the day after a
monetary obligation to Lessor is due from Lessee and unpaid
(without any necessity for notice thereof to Lessee)
continuing until the obligation is paid, or (iii) at any
time after an event of default described in paragraphs
13.1(a), 13.1(d), or 13.1(e) (without any necessity of
Lessor to give notice of such default to Lessee), or (iv) in
the event that Lessor has given to Lessee three or more
notices of default under paragraph 13.1(b), where a late
charge becomes payable under paragraph 13.4 for each of such
defaults, or paragraph 13.1(c), whether or not the defaults
are cured, during the 12 month period prior to the time that
Lessee intends to exercise the subject option.
(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall terminate and be of no further force or effect, notwithstanding Lessee's due and timely exercise of the Option, if after such exercise and during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a period of 30 days after such obligation becomes due (without any necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to commence to cure a default specified in paragraph 13.1(c) within 30 days after the date that Lessor gives notice to Lessee of such default and/or Lessee fails thereafter to diligently prosecute said cure to completion, or (iii) Lessee commits a default described in paragraph 13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to give notice of such default to Lessee), or (iv) Lessor gives to Lessee three or more notices of default under paragraph 13.1(b), where a late charge becomes payable under paragraph 13.4 for each such default, or paragraph 13.1(c), whether or not the defaults are cured.
40. Multiple Tenant Building. In the event that the Premises are part of a larger building or group of buildings ten Lessee agrees that it will abide by, keep and observe all reasonable rules and regulations which Lessor may make from time to time for the management, safety, care and cleanliness of the building and grounds, the parking of vehicles and the preservation of good order therein as well as for the convenience of other occupants and tenants of the building. The violations of any such rules and regulations shall be deemed a material breach of this Lease by Lessee.
41. Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of Lessee, its agents and invitees from acts of third parties.
42. Easements. Lessor reserves to itself the right, from time to time, to grant such easements, rights and dedications that Lessor deems necessary or desirable, and to cause the recordation of Parcel Maps and restrictions, so long as such easements, rights, dedications, Maps and restrictions do not unreasonably interfere with the Use of the Premises by Lessee. Lessee shall sign any of the aforementioned documents upon request of Lessor and failure to do so shall constitute a material breach of this Lease.
43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protect" and such payment shall not be regarded as a voluntary payment, and there shall survive the right on the part of said party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part thereof, said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease.
44. Authority. If Lessee is a corporation, trust, or general or limited partnership, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of said entity. If Lessee is a corporation, trust or partnership, Lessee shall, within thirty (30) days after execution of this Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
45. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.
46. Addendum. Attached hereto is an addendum or addenda containing paragraphs A-1 through A-3 which constitutes a part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
The parties hereto have executed this Lease on the dates specified immediately adjacent to their respective signatures.
Executed at 1411 E. Orangethorpe Ave., Fullerton, CA 92631, by Ron Hart - President, Nelco Products, Inc.
Address 1009 Dolphin Terrace, Corona del Mar, CA 92625, by James Emmi - Owner
Modification To Lease
Building Lease between James Emmi, Lessor and
Nelco, Lessee Dated December 12, 1989
1100 E. Kimberly Avenue, Anaheim, CA
#1 - 7.3 (c) Last sentence to read:
In addition, Lessor may require Lessee to pay Lessor's reasonable attorneys fees and costs in participating in such action if Lessor shall decide it is to Its best interest to do so.
#2 - 7.3 (d) Last sentence to read:
Notwithstanding the provisions of this Paragraph 7.3(d), Lessee's machinery and equipment, including that which is affixed to the Premises shall remain the property of Lessee and may be removed by Lessee subject to the provisions of Paragraph 7.2(c).
#3 - 9.3 First sentence to read:
Subject to the provisions of Paragraphs 9.4. 9.5, and 9.6, if at any time during the term of this Lease there is damage which is not an Insured Loss and which falls within the classification of Premises Partial Damage or Premises Building Partial Damage, unless caused by negligent or willful act of Lessee (in which event Lessee shall make the repair at Lessee's expense to the extent caused by the negligence or willful act of Lessee......
#4 - 9.6 M First sentence to read:
If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not complete such repairs within 90 days of written notice of such occurrence of damage, then Lessee may terminate or cancel this lease by written notice to Lessor.
#5 - 13.1 (b) First sentence to read:
The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of three business days after written notice thereof from Lessor to Lessee.
#6 - 13.4 Add to end of paragraph:
To the extent Lesser is entitled to any other recovery
for damages, and late coverage payment which has
already been made shall be
credited against the amount of such damages.
#7 - 14 Second sentence to read:
Any of the floor area of the building on the Premises.....
#8 - 14 Delete the sentence:
Delete: No reduction of rent shall occur if the only area taken is that which does not have a building located thereon.
#9 - 17 Add to end of first sentence:
shall be delivered to grantee conditioned upon the
acceptance of the new owners of the terms and
provisions of this lease.
#10 - 30 Change second sentence to read:
Notwithstanding such subordination, Lessee's right to
quiet possession of the Premises shall not be
disturbed if Lessee is not in material default so long
as Lessee shall pay the rent and be in substantial
compliance with all provisions of this Lease.......
#11 - 32 Add to first sentence:
Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times after providing
Lessee with 24 hour prior notice for the purpose of
inspecting the same, showing .....
#12 - 34 Add the sentence:
All signs currently in place are deemed to have
Lessor's prior consent.
|
Ron Hart - Nelco Products, Inc.
James Emmi - Owner
ADDENDUM TO
BUILDING LEASE BETWEEN JAMES EMMI, LESSOR
AND NELCO LESSEE DATED DECEMBER 12, 1989
1100 E. KIMBERLY AVENUE, ANAHEIM, CA
A1. CONSUMER PRICE INDEX ADJUSTMENT:
The monthly rental will be increased in the same proportion as the percentage of increase of the Los Angeles/Long Beach/Anaheim area C.P.I. as determined by the U.S. Department of Labor Statistics. The starting base for the C.P.I. index will be the index for the month of April 1990 which will be stipulated at 133.25. The C.P.I. adjustment will be made effective on each of the 2nd, 4th, 6th, 8th and 10th anniversary of the effective starting date of the lease (June 21, 1990). The bi-annual adjustment will be made every two years thereafter through the lease option periods if exercised. The C.P.I. index used for each period will be the published index for the month of April preceding the effective adjustment date. In no case will the rate increase be more than 10% per annum.
A2. ALTERATIONS
As provided for in Item 7.3, the building's original configuration and improvements shall be deemed to be the condition of the building when first occupied by the Lessee under previous leases. Any changes or modifications having been done subsequent to the original occupancy shall be subject to change back to original condition before any termination of lease at the option of Lessor. Normal wear and tear is excepted.
This building is presently occupied by Lessee and is acceptable as is.
A3. OPTIONS TO EXTEND LEASE PERIOD.
The Lessee is hereby granted the option to extend this lease for an additional 5 years, June 21, 1995 to June 20, 2000 under the same terms and conditions as the first 5 years, providing that the Lessee has substantially complied with all the obligations of said lease for the first 5 years. Rental rate will continue to be adjusted as stipulated by C.P.I. adjustment, and tax and insurance adjustments as provided for in lease.
The Lessee is hereby granted the option to renew this lease for an additional 5 year period, June 21, 2000 to June 20, 2005. The rental rate for this period will be determined by agreement between the Lessor and Lessee and shall be equal to 90% of the average rental rates in effect at the time of Lessee's notice of intention to renew. Average rental rates will be determined by prevailing and available rental rates in the Fullerton/Anaheim area for a minimum of 6 or more buildings of comparable size and location.
In order to exercise the option to extend or renew this lease, the Lessee must notify Lessor of his intention to exercise his option before January 1, of the year of the start of option period.
Ron Hart - Nelco Products, Inc.
James Emmi - Owner
December 29, 1994
Mr. James Emmi
1009 Dolphin Terrace
Corona del Mar, CA 92625
VIA CERTIFIED MAIL
Dear Mr. Emmi,
Writing to you in my dual capacity as Vice President of Nelco Products, Inc., this letter serves as formal notice on behalf of Nelco Products, Inc., of their intention to exercise the June 12, 1995, options to extend the leases of both 1100 and 1107 E. Kimberly Avenue, Anaheim, CA, in accord with paragraphs A3 in the Addendums dated December 12 1989, to the Leases also dated December 12, 1989. The options thus exercised will run until June 20, 2000.
We extend our best wishes for the New Year.
Sincerely,
NELCO, INTERNATIONAL CORPORATION
Lee H. Newton
Vice President Finance
copy: Ron Hart, Nelco Products Inc.
Phil Smoot, Nelco International Corporation
Allen Levine, Park Electrochemical Corp.
Exhibit 10.03
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between TCLW/Fullerton, a general partnership, hereinafter referred to as "Landlord," and Nelco Products, Inc., a Delaware Corporation, hereinafter referred to as "Tenant":
WITNESSETH:
1. Premises and Term. In consideration of the obligation of Tenant to pay rent as herein provided, and in consideration of the other terms, provisions and covenants hereof, Landlord hereby demises and leases to Tenant, and Tenant hereby takes from Landlord, certain premises consisting of space within a building described as follows:
Approximately 36,462 square feet at 1411 Orangethorpe, Fullerton, California within the County of Orange, State of California, and more particularly described on Exhibit "A" attached hereto and incorporated herein by this reference (hereinafter referred to as the "premises").
TO HAVE AND TO HOLD the same for a term commencing on the "commencement date" (as hereinafter defined) and ending 59 months thereafter (provided, however, that in the event the commencement date other than the first day of a calendar month, said term shall extend for said number of months in addition to the remainder of the calendar month following the commencement date), unless earlier terminated in accordance with the provisions of this lease.
A. The "commencement date" shall be November 1, 1993. Tenant acknowledges that it has inspected and accepts the premises, and specifically the buildings and improvements comprising the same, in their present condition as suitable for the purpose for which the premises are leased. Taking of possession by Tenant shall be deemed conclusively to establish that said buildings and other improvements are in good and satisfactory condition as of when possession was taken. Tenant hereby waives the benefit of California Civil Code 1941. Tenant further acknowledges that no representations as to the repair of the premises, nor premises to alter, remodel or improve the premises have been made by Landlord, unless such are expressly set forth in this lease.
2. Base Rent and Security Deposit.
A. Tenant agrees to pay as rental for the premises
to Landlord or order, without deduction or set off, for the
entire term hereof, Twelve Thousand Three Hundred Ninety
Seven and 00/100 dollars ($12,397.00) per month. One such
monthly installment shall be due and payable on the date
hereof and a like monthly installment shall be due and
payable without demand on or before the first day of each
calendar month succeeding the commencement date recited
above during the hereby demised term, except that the rental
payment for any fractional calendar month at the
commencement or end of the lease term shall be prorated.
All costs and expenses which are the responsibility of
Tenant also constitute "rent." In the event Tenant fails to
pay any installment of rent hereunder (1), to help defray
the additional cost to Landlord for processing such late
payments. Tenant shall pay to Landlord on demand a late
charge in an amount equal to (2) of such installment. The
provision for such late charge shall be in addition to all
of Landlord's other rights and remedies hereunder or at law
and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any manner.
B. In addition, Tenant agrees to deposit with
Landlord on the date hereof the sum of Twenty Four Thousand
Seven Hundred Ninety Four and 00/100 dollars ($24,794.00),
which sum shall be held by Landlord, (3) for interest, as
security for the performance of Tenant's covenants and
obligations under this lease, it being expressly understood
and agreed that such deposit is not an advance rental
deposit or a measure of Landlord's damages in case of
Tenant's default. Upon the occurrence of any event of
default by Tenant, Landlord may, from time to time, without
prejudice to any other remedy provided herein or provided by
law, use such funds to the extent necessary to make good any
arrears of rent or other payments due Landlord hereunder,
and any other damage, injury, expense or liability caused by
such event of default; and Tenant shall pay to Landlord on
demand the amount so applied in order to restore the
security deposit to its original amount. Although the
security deposit shall be deemed the property of Landlord,
any remaining balance of such deposit shall be returned by
Landlord to Tenant at such time after termination or
expiration of this lease that all of Tenant's obligations
under this lease have been fulfilled (4).
3. Use. The demised premises shall be used only for
the purpose of (5) receiving, storing, shipping and selling
(other than retail) for interest, materials and merchandise
made and/or distributed by Tenant and for such other lawful
purposes as may be incidental thereto. Under no
circumstances shall the premises be used for gambling or the
retail sale of alcoholic beverages, whether or not those
uses may be lawful. Outside storage is prohibited without
Landlord's prior written consent. Tenant shall at its own
cost and expense obtain any and all licenses and permits
necessary for any such use. Tenant shall comply with all
governmental laws, ordinances and regulations applicable to
the premises or use thereof, and shall promptly comply with
all governmental orders and directives for the correction,
prevention and abatement of nuisances in or upon, or
connected with, the premises, all at (6). Without limiting
the generality of the foregoing, and subject to paragraph 6,
Tenant shall at its own cost and expense install and
construct all physical improvements to the premises,
interior and exterior, required by any Federal, State or
local building code or other law or regulation enacted after
the date on which this lease is executed by Tenant, or after
said date determined retroactively to apply to the premises,
(7) made necessary by the nature of Tenant's use of the
premises. Tenant shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise or vibrations to
emanate from the premises, nor take any other action which
would constitute a nuisance or would disturb or endanger any
other tenants of the building in which the premises are
situated or unreasonably interfere with their use of their
respective premises. Tenant shall not place a load upon the
floor of the premises which exceeds the load per square foot
which such floor was designed to carry and which is allowed
by law. Without Landlord's prior written consent, Tenant
shall not receive, store or otherwise handle any product,
material or merchandise which is explosive or highly
inflammable. Tenant will not permit the premises to be used
for any purpose which would render the insurance thereon
void or the insurance risk more hazardous. If at any time
during the term of this lease the State Board of Insurance
or other insurance authority disallows any of Landlord's
sprinkler credits or imposes an additional penalty or
surcharge in Landlord's insurance premiums because of
Tenant's original or subsequent placement or use of storage
racks or binds, Tenant's method of storage, the nature of
Tenant's inventory or any other act of Tenant, Tenant agrees
to pay, as additional rental, the increase (between fire
walls) in Landlords insurance premiums, and, upon demand by
Landlord, to correct at Tenant's expense the cause of such
disallowance, penalty or surcharge to the satisfaction of
the particular insurance authority. Additionally, Tenant
shall pay to any other tenants in the building in which the
premises are situated, upon demand, any increases in such
other tenant's insurance premiums or charges caused by the
acts of Tenant.
4. Taxes.
A. Tenant agrees to pay before they become
delinquent all general and special, ad valorem and specific
taxes, excises, assessments, and governmental charges of any
kind and nature whatsoever (hereinafter collectively
referred to as the "taxes") lawfully levied or assessed
against the land, building, grounds, parking areas,
driveways, sidewalks and/or alleys on or around the
premises. Tenant shall furnish to Landlord, not later than
twenty (20) days before the date any such taxes becoming
delinquent, official receipts of the appropriate taxing
authority or other evidence satisfactory to Landlord
evidencing payment thereof. If Tenant should fail to pay
any taxes, assessments, or governmental charges required to
be paid by Tenant hereunder, in addition to any other
remedies provided herein, Landlord may, if it so elects, pay
such taxes, assessments, and governmental charges. Any sums
so paid by Landlord shall be deemed to be additional rent
due and payable on demand by Landlord.
B. In the event the premises constitute a portion
of a multiple occupancy building, Tenant agrees to pay to
Landlord, as additional rent, (8), the amount of Tenant's
"proportionate share" of the "taxes" referred to in
subparagraph A, above. Tenant's "proportionate share," as
used in this lease, shall mean a fraction, the numerator of
which is the square footage of the premises and the
denominator or which is the square footage of the building
containing the premises.
C. If at any time during the term of this lease
there shall be levied, assessed or imposed on Landlord, by
any governmental entity, any general or special, ad valorem
or specific, capital levy, excise or other tax, assessment,
levy or charge directly on the rental received under this
lease, and/or any license fee, excise or franchise tax,
assessment, levy or charge measured by or based, in whole or
in part, upon such rentals, and/or any transfer,
transaction, or similar tax, assessment, levy or charge
based directly or indirectly upon the transaction
represented by this lease, and/or any occupancy, use, per
capita or other tax, assessment, levy or charge based
directly or indirectly upon the use or occupancy of the
premises, then all such taxes, assessments, levies and
charges shall be deemed to be included within the term
"taxes" for the purposes of this paragraph 4 (9).
D. Tenant may, alone or along with any other
tenants of said building, at its or their sole cost and
expense, in its or their own name(s) and/or in the name of
Landlord, dispute and contest and "taxes" by appropriate
proceedings diligently conducted in good faith, but only
after Tenant and all other tenants, if any, joining with
Tenant in such contest, have deposited with Landlord the
amount so contested and unpaid, or their proportionate
shares thereof, as the case may be, which shall be held by
Landlord without obligation for interest until the
termination of the proceedings, at which time the amount(s)
deposited shall be applied by Landlord toward the payment of
the items held valid (plus any court costs, interest,
penalties and other liabilities associated with the
proceedings), and Tenant's share of any excess shall be
returned to Tenant. Tenant further agrees to pay to
Landlord, upon demand, Tenant's share (as among all tenants
who participated in the contest) of all court costs,
interest, penalties, and other liabilities relating to such
proceedings. Tenant hereby indemnifies and agrees to hold
Landlord harmless from and against any cost, damage or
expense (including attorneys' fees) in connection with any
such proceedings.
E. Any payment to be made pursuant to this
paragraph 4 with respect to the tax year in which this lease
commences or terminates shall bear the same ratio to the
payment which would be required to be made for the full tax
year as that part of such tax year covered by the term of
this lease bears to a full tax year. (10)
5. Repairs and Maintenance.
A. Tenant shall, at its own cost and expense keep
and maintain the premises in good condition, promptly making
all necessary repairs and replacements, interior and
exterior, non-structural, ordinary and extraordinary,
including but not limited to, windows, glass and plate
glass, doors, any special office entry, walls and finish
work, floors and floor covering, roof, foundation,
downspouts, gutters heating and air conditioning systems,
dock boards, truck doors, dock bumpers, ramps, paving,
plumbing work and fixtures, termite and pst extermination,
regular removal of trash and debris, regular mowing of any
grass, caring for shrubs, trimming, weed removal and general
landscape maintenance, including rail spur areas,
maintaining the parking areas, driveways, alleys, sidewalks,
and the whole of the premises in a clean and sanitary
condition, maintaining any spur track serving the premises
(Tenant agrees to sign a joint maintenance agreement with
the railroad company servicing the premises, if requested by
the railroad company), and providing guard and alarm
service. Tenant shall, at its own cost and expense, repaint
the exterior walls, overhead doors, canopies, entries,
headrails, gutters and other exposed parts of the building
which reasonably require periodic repainting to prevent
deterioration or to maintain aesthetic standards. Tenant
shall maintain trash receptacles within the building on the
premises.
B. The cost of maintenance and repair or any common
party wall (any wall, divider, partition or any other
structure separating the premises from any adjacent premises
occupied by other tenants) shall be shared equally by Tenant
and the tenant occupying adjacent premises. Tenant shall
not damage any party wall or disturb the integrity and
support provided by any party wall and shall, at its sole
cost and expense, promptly repair any damage or injury to
any party wall caused by Tenant or its employees, agents or
invitees.
C. In the event the premises constitute a portion
of a multiple occupancy building, Tenant and its employees,
customers and invitees shall have the nonexclusive right to
use, in common with the other parties occupying said
building, the parking areas, driveways and alleys adjacent
to said building, subject to such reasonable rules and
regulations as Landlord may from time to time prescribe.
Further, in such event, Landlord (11) to perform the paving
and landscape maintenance, exterior painting and common
sewage line plumbing and any other responsibilities which
are otherwise Tenant's obligations under subparagraph A
above, and Tenant shall, in lieu of the obligations set
forth under subparagraph A above with respect to such items,
be liable for its proportionate share (as defined in
subparagraph 4B, above) of the cost and expense of the care
for the grounds around the building, including but not
limited to, exterior repainting and common sewage line
plumbing; provided, however, that Landlord shall have the
right to require Tenant to pay such other reasonable
proportion of said costs as may be determined by Landlord in
its sole discretion; and further provided that if Tenant or
any other particular tenant of the building can be clearly
identified as being responsible for obstruction or stoppage
of the common sanitary sewage line, then Tenant, if Tenant
is responsible, or such other responsible tenant, shall pay
the entire cost thereof, upon demand, as additional rent.
Tenant shall at Landlord's option either (i) pay when due
(but not more frequently than monthly) its share, determined
as aforesaid, of such costs and expenses along with the
other tenants of the building directly to the persons
performing such work, or (ii) reimburse Landlord upon demand
(but not more frequently than monthly), as additional rent,
for the amounts of its share as aforesaid of such costs and
expenses in the event Landlord elects to perform or cause to
be performed such work.
D. N/A.
E. Tenant shall, at its own cost and expense, enter
into a regularly scheduled preventive maintenance/service
contract with a maintenance contractor for servicing all
heating and air conditioning systems and equipment within
the premises. The maintenance contractor must be approved
by Landlord. The service contract must include all services
suggested by the equipment manufacturer within the
operation/maintenance manual and must become effective
within thirty (30) days of the date Tenant takes possessio
of the premises. All guarantees/warranties provided with
the heating and air conditioning systems will be recognized
within this program.
6. Alterations.
A. Tenant shall not make any alterations, additions or improvements to the premises including but not limited to roof and wall penetrations without the prior written consent of Landlord (13). Tenant may, without the consent of Landlord, but at its own cost and expense and in a good workmanlike manner make such minor alterations, additions or improvements or erect, remove or alter such partitions, or erect such shelves, bins, machinery and trade fixtures as it may deem advisable, without altering the basic character of the building or improvements and without overloading or damaging such building or improvements, and in each case complying with all applicable governmental laws, ordinances, regulations and other requirements. All alterations, additions, improvements and partitions erected by Tenant shall be and remain the property of Tenant during the term of this lease and Tenant shall, unless Landlord otherwise elects as hereinafter provided, remove all alterations, additions, improvements and partitions erected by Tenant and restore the premises to their original condition by the date of termination or expiration of this lease; provided, however, that if Landlord so elects prior to termination or expiration of this lease, such alterations, additions, improvements and partitions shall become the property of Landlord as of the date of termination or expiration of this lease and shall be delivered up to the Landlord with the premises. All shelves bins, machinery and trade fixtures installed by Tenant may be removed by Tenant prior to the termination or expiration of this lease if Tenant so elects, and shall be removed if required by Landlord; upon any such removal Tenant shall restore the premises to their original condition. All such removals and restoration shall be accomplished in a good and workmanlike manner so as not to damage the primary structure or structural qualities of the buildings and other improvements situated on the premises.
B. Before commencing any work relating to alterations, additions and improvements affecting the premises, Tenant shall notify Landlord in writing of the expected date of commencement thereof. Landlord shall then have the right at any time and rom time to time to post and maintain on the premises such notices as Landlord deems necessary to protect the premises and Landlord from mechanics' liens, materialmen's liens or any other liens. At any time Tenant either desires or is required to make any repairs, alterations, additions, improvements or utility installations pertaining to the premises, Landlord may require Tenant, at Tenant's sole cost and expense, to obtain and provide to Landlord a lien and completion bond in a form and by a surety acceptable to Landlord in an amount equal to the estimate cost of (15) such improvements, to insure Landlord against liability for mechanics' and materialmen's liens and to insure completion of the work.
7. Signs. (16) Tenant shall have the right to install signs upon the exterior of said buildings (17) and subject to any applicable governmental laws, ordinances, regulations and other requirements. Tenant shall remove all such signs by the termination or expiration of this lease. Such installations and removals shall be made in such manner as to avoid injury or defacement of the building and other improvements, and Tenant shall repair any injury or defacement, including without limitation discoloration, caused by such installation and/or removal.
8. Inspection. Landlord and Landlord's agents and
representatives shall have the right to enter and inspect
the premises at any reasonably time during business hours,
for the purpose of ascertaining the condition of the
premises or in order to make such repairs as may be required
or permitted to be made by Landlord under the terms of this
lease. During the period that is six (6) months prior to
the end of the term hereof, Landlord and Landlord's agents
and representatives shall have the right to enter the
premises at any reasonable time during business hours for
the purpose of showing the premises and shall have the right
to erect on the premises a suitable sign indicating the
premises are available. (18) shall arrange to meet with
(19) for a joint inspection of the premises at the time of
vacating.
9. Utilities. Tenant shall pay for all water, gas, heat, light, telephone, sewer, sprinkler charges and other utilities and services used on or from the premises, together with any taxes, penalties, surcharges or the like pertaining thereto and any maintenance charges for utilities and shall furnish all electric light bulbs and tubes. If any such services are not separately metered to Tenant, Tenant shall pay a reasonable proportion as determined by Landlord of all charges jointly metered with other premises. Landlord shall in no event be liable for any interruption or failure of utility services on the premises.
10. Assignment and Subletting.
A. Tenant shall not have the right to assign this
lease or to sublet the whole or any part of the premises, or
allow, for valuable consideration, the occupancy of all or
any part of the premises by another, without the prior
written consent of Landlord (20). Notwithstanding any
permitted assignment or subletting, Tenant shall at all
times remain directly, primarily and fully responsible and
liable for the payment of the rent herein specified and for
compliance with all of its other obligations under the
terms, provisions and covenants of this lease. Upon the
occurrence of an "event of default" as hereinafter defined,
if the premises or any part thereof are then assigned or
sublet, Landlord, in addition to any other remedies herein
provided, or provided by law, may at its option collect
directly from such assignee or subtenant all rents becoming
due to Tenant under such assignment or sublease and apply
such rent against any sums due to Landlord from Tenant
hereunder, and no such collection shall be construed to
constitute a novation or release of Tenant from the further
performance of Tenant's obligations hereunder.
B. In the event Tenant desires to sublet the
premises, or any portion thereof, or assign this lease,
Tenant shall give written notice thereof to Landlord setting
forth the name of the proposed subtenant or assignee, the
term, use, rental rate and other particulars of the proposed
subletting or assignment, including without limitation (21)
satisfactory to Landlord that the proposed subtenant or
assignee will immediately occupy and thereafter use the
entire premises (or any sublet portion thereof) for the
remaining term of this lease (or for the entire term of the
sublease, if shorter). In addition to Landlord's approval
right pursuant to subparagraph 10A above, Landlord shall
have the option, i the event of any proposed assignment or
subletting (22) to cancel this lease as of the date the
subletting or assignment described in Tenant's notice is to
be effective. The option shall be exercised, if at all, by
Landlord giving Tenant written notice thereof within sixty
(60) days following Landlord's receipt of Tenant's written
request. Upon any such cancellation Tenant shall pay to
Landlord all amounts, as estimated by Landlord, payable by
Tenant to such termination date, with respect to taxes,
insurance, repairs, maintenance, restoration and other
obligations, costs or charges which are the responsibility
of Tenant hereunder. Further, upon any such cancellation
Landlord and Tenant shall have no further obligations or
liabilities to each other under this lease, except with
respect to obligations or liabilities which accrue hereunder
as of such cancellation date (in the same manner as if such
cancellation date were the date originally fixed for the
expiration of the term hereof). Without limitation,
Landlord may lease the premises to the prospective subtenant
or assignee, without liability to the Tenant. Landlord's
failure to exercise said cancellation right as herein
provided shall not be construed as Landlord's consent to the
proposed subletting or assignment.
C. Landlord shall have the right to assign any of
its rights and obligations under this lease. (23)
11. Fire and Casualty Damage.
A. Landlord agrees to maintain standard fire and
extended coverage insurance covering the building of which
the premises are a part in an amount not less than 80% (or
such greater percentage as may be necessary to comply with
the provisions of any co-insurance clauses of the policy) of
the "replacement cost" thereof as such term is defined in
the Replacement Cost Endorsement to be attached thereto,
insuring against the perils of Fire, (24), Lightning,
Extended Coverage, Vandalism and Malicious Mischief,
extended by Special Extended Coverage Endorsements to insure
against all other Risks of Direct Physical Loss, and
Earthquake and Flood, such coverages and endorsements to be
as defined, provided and limited in the standard bureau
forms prescribed by the insurance regulatory authority for
the state in which the premises are situated for use by
insurance companies admitted in such state for the writing
of such insurance on risks located within such state.
Subject to the provisions of subparagraphs 11B and 11E,
below, such insurance shall be for the sole benefit of
Landlord and under its sole control. Tenant agrees to pay
to Landlord, as additional rent, Landlord's cost of
maintaining such insurance on said building (or in the event
the premises constitute a portion of a multiple occupancy
building, Tenant's full proportionate share [as defined in
subparagraph 4B above] of such cost). Said payments shall
be made to Landlord within ten (10) days after presentation
to Tenant of Landlord's statement setting forth the amount
due. Any payment to be made pursuant to this subparagraph A
with respect to the year in which this lease commences or
terminates shall bear the same ratio to the payment which
would be required to be made for the full year as the part
of such year covered by the term of this lease bears to a
full year. (25)
B. If the buildings situated upon the premises
should be damaged or destroyed by any peril covered by the
insurance to be provided by Landlord under subparagraph 11A
above, Tenant shall give immediate notice thereof to
Landlord and Landlord shall at its sole cost and expense
thereupon proceed with reasonable diligence to rebuild and
repair such buildings to substantially the condition in
which they existed prior to such damage or destruction,
except that Landlord shall not be required to rebuild,
repair or replace any part of the partitions, fixtures,
additional and other improvements which may have been placed
in, on or about the premises by Tenant and except that
Tenant shall pay to Landlord, upon demand, any applicable
deductible amount specified under Landlord's insurance. The
rent payable hereunder shall in no event abate by reason of
any damage or destruction. (26)
C. (27)
D. Tenant covenants and agrees to maintain
insurance on all alterations, additions, partitions and
improvements erected by or on behalf of Tenant in, on or
about the premises in an amount not less than 80% (or such
greater percentage as may be necessary to comply with the
provisions of any co-insurance clause of the policy) of the
"replacement cost" thereof, as such term is defined in the
Replacement cost Endorsement to be attached thereto. Such
insurance shall insure against the perils and be in form,
including stipulated endorsements, as provided in
subparagraph 11A hereof. Such insurance shall be for the
sole benefit of Tenant and under its sole control. All such
policies shall b procured by Tenant from responsible
insurance companies satisfactory to Landlord. Certified
copies of policies of such insurance, together with receipt
evidencing payment of the premiums therefor, shall be
delivered to Landlord prior to the commencement date of this
lease. Not less than fifteen (15) days prior to the
expiration date of any such policies, certified copies of
renewals thereof (bearing notations evidencing the payment
of renewal premiums) shall be delivered to Landlord. Such
policies shall further provide that no less than thirty (30)
days written notice shall be given to Landlord before such
policy may be cancelled or changed to reduce insurance
provided thereby.
E. Notwithstanding anything herein to the contrary,
in the event the holder of any indebtedness secured by a
mortgage or deed of trust covering the Landlord's interest
in the premises requires that the insurance proceeds be
applied to such indebtedness, then Landlord shall have the
right to terminate this lease by delivering written notice
of termination to Tenant within fifteen (15) days after such
requirement is made by any such holder, whereupon all rights
and obligations hereunder shall cease and terminate. (28)
F. Landlord and Tenant hereby each release the
other from any and all liability or responsibility to the
other or anyone claiming through or under them by way of
subrogation or otherwise for any loss or damage to property
caused by fire or any other perils insured in policies of
insurance covering such property, even if such loss or
damage shall have been caused by the fault or negligence of
the other party, or anyone for whom such party may be
responsible; provided, however, that this release shall be
applicable and in force and effect only with respect to loss
or damage occurring during such times as the releasor's
policies shall contain a clause or endorsement to the effect
that any such release shall not adversely affect or impair
said policies or prejudice the right of the releasor to
recover thereunder and then only to the extent of the
insurance proceeds payable under such policies. Each of
Landlord and Tenant agrees that it will request its
insurance carriers to include in its policies such a clause
or endorsement. If extra cost shall be charged therefor,
each party shall advise the other thereof and of the amount
of the extra cost, and the other party, at its election, may
pay the same, but shall not be obligated to do so.
12. Liability. Tenant does hereby indemnify and agree to forever save and hold harmless Landlord from and against any and all damages, claims, losses, demands, costs, expenses (including reasonable attorneys' fees and costs), obligations, liens, liabilities, actions and causes of action, threatened or actual, which Landlord may suffer or incur arising out of or in connection with Tenant's obligations under this lease, including without limitation, Tenant's use of the premises, the conduct of Tenant's business, any activity, work or things done, permitted or suffered by Tenant in or about the premises. Tenant's nonobservance or nonperformance of any law, ordinance or regulations, or any negligence of the Tenant or any of Tenant's agents, contractors employees, guests licensees and invitees. Tenant further agrees that in case of any claim, demand, action or proceeding against Landlord, Tenant, upon notice from Landlord shall defend Landlord at Tenant's expense. In the event Tenant does not provide a defense against any and all such claims, demands, liens, liabilities, actions or causes of action, threatened or actual, then Tenant will, in addition to the above, pay Landlord the attorneys' fees, legal expenses and costs incurred by Landlord in providing or preparing such defense and Tenant agrees to cooperate with Landlord in such defense, including, but not limited to, the providing of affidavits and testimony upon request of Landlord.
Tenant shall obtain at its cost and keep in full force during the term of the lease a policy of Combined Single Limit Bodily Injury and Property Damage Insurance insuring Landlord and Tenant against any liability arising out of the use, occupancy or maintenance of the premises and all areas appurtenant thereto by Tenant. Such insurance shall be in an amount not less than (29). The policy shall contain cross liability endorsements and shall insure performance by Tenant of the foregoing indemnity provisions of this lease. The limits of said insurance shall not, however, limit the liability of Tenant hereunder.
13. Condemnation.
A. If the whole or any substantial part of the
premises should be taken for any public or quasi-public use
under governmental law, ordinance or regulation, or by right
of eminent domain, or by private purchase in lieu thereof,
and the taking would prevent or materially interfere with
the use of the premises for the purpose for which they are
then being used, this lease shall terminate (30) and the
rent shall be abated during the unexpired portion of this
lease, effective when the physical taking of such premises
shall occur (31).
B. If part of the premises shall be taken for any
public or quasi-public use under any governmental law,
ordinance or regulation, or by right of eminent domain, or
by private purchase in lieu thereof, and this lease is not
terminated as provided in subparagraph A, above, this lease
shall not terminate but the rent payable hereunder during
the unexpired portion of this lease shall be reduced in the
same ratio as the square footage of the premises taken bears
to the total square footage of the premises.
C. This paragraph 13 shall be Tenant's sole and
exclusive remedy in the event of any such taking or purchase
in lieu thereof. Landlord shall be entitled to any and all
compensation, damages, income, rents, awards (except for an
award specified by the condemning authority for Tenant's
unamortized portion of its improvements (32) if any) or any
interest therein whatsoever which may be paid or made in
connection therewith, and Tenant shall have no claim against
Landlord for the value of any unexpired term of this lease.
Tenant hereby waives the benefits of California Code of
Civil Procedure 1265.130.
14. Holding Over. Tenant will, at the termination or expiration of this lease by lapse of time or otherwise, yield up immediate possession to Landlord. In the event of any holding over by Tenant after the expiration or termination of this lease, unless the parties hereto otherwise agree in writing, the hold over tenancy shall be subject to termination by Landlord at any time upon not less than seven (7) days advance written notice, and all of the other terms and provisions of this lease shall be applicable during that period, except that Tenant shall pay Landlord from time to time upon demand, as rental for the period of any hold over, an amount equal to one and one-half (1 1/2) the rental which would have been payable by Tenant had the hold over period been a part of the original term of this lease, computed on a daily basis for each day during which such possession is withheld. In the event of any such hold over, Tenant agrees to vacate and deliver the premises to Landlord within seven (7) days after Tenant's receipt of notice from Landlord to vacate. No holder over by Tenant whether with or without consent of Landlord, shall operate to extend this lease except as otherwise expressly provided.
15. Quiet Enjoyment. Landlord covenants that it now has, or will acquire before Tenant takes possession of the premises, good title to the premises, excepting the lien for current taxes not yet due, such mortgages or deeds of trust as are permitted by the terms of this lease, zoning ordinances and other building and fire ordinances and governmental regulations relating to the use of such property, and easements, restrictions and other matters of record. Landlord represents and warrants that it has full right and authority to enter into this lease and that Tenant, upon paying the rental herein set forth and performing its other covenants and agreements herein set forth, shall peaceable and quietly have, hold and enjoy the premises for the term hereof without hindrance or molestation from Landlord, subject to the terms and provisions of this lease. Landlord agrees to make reasonable efforts to protect Tenant from interference or disturbance by other tenants or third persons, however, Landlord shall not be liable for any such interference or disturbance, nor shall Tenant be released from any of the obligations of this lease because of such interference or disturbance.
16. Events of Default. The following events shall be deemed to be "events of default" by Tenant under this lease:
(a) Tenant shall fail to pay any installment of the
rent herein reserved when due, or any payment with respect
to taxes hereunder when due, or any other payment or
reimbursement to Landlord required herein when due, and such
failure shall continue for a period of (33) from the date
such payment was due.
(b) Tenant shall become insolvent, or shall make a
transfer in fraud of creditors, or shall make an assignment
for the benefit of creditors.
(c) Tenant shall file a petition under any section
or chapter of the National Bankruptcy Act, as amended or
under any similar law or statute of the United State or any
state thereof; or Tenant shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant thereunder.
(d) A receiver or trustee shall be appointed for
all or substantially all of the assets of Tenant.
(e) Tenant shall desert any substantial portion of
the premises.
(f) Tenant shall fail to comply with any term,
provision or covenant of this lease (other than the
foregoing in this paragraph 16), and shall not cure such
failure within (34).
17. Remedies. If any event of default occurs, Landlord may at any time thereafter, with or without notice or demand, except as stated hereafter, and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such event of default;
(a) Enter upon and take possession of the premises.
IN such event, Landlord shall have the right to remove all
persons and property from the premises and store such
property in a public warehouse or elsewhere at the cost and
risk of and for the account of Tenant, and all such persons
shall quit and surrender possession of the premises to
Landlord, Tenant hereby waives all claims for damages which
may be caused by the entry of Landlord and taking possession
of the premises or removing and storing the furniture and
property and hereby agrees to indemnify and save Landlord
harmless from any loss, costs, damages or liability
occasioned thereby, and no such entry shall be considered or
construed to be a forcible entry. Should Landlord elect to
enter, as herein provided, or should Landlord take
possession pursuant to legal proceedings or pursuant to any
notice provided by law, Landlord may terminate this lease
pursuant to paragraph (b) hereof.
(b) Terminate Tenant's right to possession of the
premises at any time. Acts of maintenance, efforts to relet
the premises, or the appointment of a receiver on Landlord's
initiative to protect Landlord's interest under this lease
shall not constitute a termination of Tenant's right to
possession. On termination, Landlord may recover from
Tenant (i) the worth at the time of the award of the unpaid
rent that had been earned at the time of termination of
Tenant's right to possession of the premises; (ii) the worth
at the time of the award of the amount by which the unpaid
rent that would have been earned after the date of
termination of Tenant's right to possession until the time
of award exceeds the amount of the loss of rent for the same
period that Tenant proves could have been reasonably
avoided; (iii) the worth at the time of the award of the
amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of the loss of
rent for the same period that Tenant proves could have been
reasonably avoided; and (iv) any other amount, and court
costs, necessary to compensate Landlord for all detriment
proximately caused by Tenant's default. "The worth at the
time of the award," as used in (i) and (ii) of this
paragraph, is to be computed by allowing interest at the
rate of ten percent (10%) per annum. "The worth at the time
of the award" as referred to in (iii) of this paragraph is
to be computed by discounting the amount at the discount
rate of the Federal Reserve Bank of San Francisco at the
time of the award, plus 1%.
(c) Continue this lease in full force and effect,
and this lease will continue in effect as long as Landlord
does not terminate Tenant's right to possession, and
Landlord shall have the right to collect rent when due.
(d) Cure the default at Tenant's cost. If Landlord
at any time, by any reason of Tenant's default, pays any sum
or does any act that requires the payment of any sum, the
sum paid by Landlord shall be due immediately from Tenant to
Landlord upon demand by Landlord. The sum, together with
late charges, as provided in paragraph 2, above, of this
lease, shall be additional rent.
(e) Pursue any other remedy now or hereafter
available to Landlord under the laws or judicial decisions
of the State of California.
19. Mortgages. (35)
20. Landlord's Default.
A. In the event Landlord should become in default in any payments due and payable on any such mortgage described in paragraph 19 hereof, Tenant is authorized and empowered after giving Landlord five (5) days prior written notice of such default and Landlord's failure to cure such default, to pay any such delinquent items for and on behalf of Landlord, and the amount of any item so paid by Tenant for or on behalf of Landlord, together with any interest or penalty required to be paid in connection therewith, shall be payable on demand by Landlord to Tenant; provided, however, that Tenant shall not be authorized and empowered to make any payment under the terms of this paragraph 20 unless the item paid shall be superior to Tenant's interest hereunder, in the event Tenant pays any mortgage debt in full, in accordance with this paragraph, it shall, at its election, be entitled to the mortgage security by assignment or subrogation.
21. Tenant's Remedies. Except as otherwise specifically provided in this lease, Tenant hereby waives and relinquishes any right which Tenant may have to terminate this lease or withhold rent on account of any damage, condemnation, destruction or state of disrepair of the premises (including, without limiting the generality of the foregoing, those rights under California Civil Code 1932(2), 1933(4), 1941 and 1942).
22. Mechanic's Liens. Tenant shall have no authority, express or implied, to create or place any lien or encumbrance of any kind or nature whatsoever upon, or in any manner to bind, the interest of Landlord in the premises, or to charge the rentals payable hereunder for any claim in favor of any person dealing with Tenant, including those who may furnish materials or perform labor for any construction or repairs, and each such claim shall affect and each such lien shall attach to, if at all, only the leasehold interest granted to Tenant by this instrument. Tenant covenants and agrees that it will pay or cause to be paid all sums legally due and payable by it on account of any labor performed or materials furnished in connection with any work performed on the premises on which any lien is or can be validly and legally asserted against its leasehold interest in the premises or the improvements thereon and that it will save and hold Landlord harmless from any and all loss, cost or expense based on or arising out of asserted claims or liens against the leasehold estate or against the right, title and interest of the Landlord in the premises or under the terms of this lease. Tenant will not permit any mechanics' lien or liens to be placed upon the premises or any building or improvement thereon during the term hereof, and in case of the filing of any such lien Tenant will promptly pay same. If any such lien shall remain in force and effect for twenty (20) days after written notice thereof from Landlord to Tenant, Landlord shall have the right and privilege at Landlord's option of paying and discharging the same or any portion thereof without inquiry as to the validity thereof, and any amounts so paid, including expenses and applicable late charge, shall be so additional rent hereunder due from Tenant to Landlord and shall be repaid to Landlord immediately on rendition of bill therefor. Notwithstanding the foregoing, Tenant shall have the right to contest any such lien in good faith and with all due diligence so long as any such contest, or action taken in connection therewith, protects the interest of Landlord and Landlord's mortgagee in the premises and Landlord and any such mortgagee are, by the expiration of said twenty (20) days period, furnished proof of such protection, and indemnification by Tenant against any loss, cost or expense related to any such lien and the contest thereof, satisfactory to Landlord and any such mortgagee.
23. Sale by Landlord. In the event the original Landlord hereunder, or any successor owner of the premises, shall sell or convey the premises, Tenant agrees to attorn to such new owner. In the event of such sale, Landlord shall transfer to the new owner the balance of any security deposit remaining after lawful deductions and, after notice to Tenant (36) shall be relieved of all future liability with respect to such security deposit.
24. Attorneys' Fees. If either Landlord or Tenant commences or engages in, or threatens to commence or engage in, an action by or against the other party arising out of or in connection with this lease or the premises, including but not limited to any action for recovered of rental due and unpaid (37) to recover possession or for damages for breach of this lease, the prevailing party shall be entitled to have and recover from the losing party reasonable attorneys' fees and other costs incurred in connection with the action and in preparation for said action. (38)
25. Further Documents. Upon Landlord's request,
Tenant agrees to modify this lease to meet the requirements
of a lender selected by Landlord who demands such
modification as a condition precedent to granting a loan and
placing a deed of trust upon the building or land of which
the premises is a part, provided such modification does not
(1) increase the minimum rent or percentage rent; (2) alter
the term of lease or any extended term; or (3) materially
adversely affect Tenant's estate or right under this lease.
26. Waiver. The waiver by (39) of any term, covenant, agreement or condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, agreement or condition herein contained, nor shall any custom or practice which may grow up between the parties in the administration of this lease be construed to waive or to lessen the right of (40) to insist upon the performance by (41) in strict accordance with all of the provisions of this lease. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver or any preceding breach by Tenant of any provisions, covenant, agreement or condition of this lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent.
27. Notices. Each provision of this instrument or of any applicable governmental laws, ordinances, regulations and other requirements with reference to the sending, mailing or delivery of any notice or the making of any payment by Landlord to Tenant or with reference to the sending, mailing or delivery of any notice or the making of any payment by Tenant to Landlord shall be deemed to be complied with when and if the following steps are taken:
(a) All payments required to be made by Landlord to
Tenant hereunder shall be payable to Tenant at the address
hereinbelow set forth or at such other address as Landlord
may specify from time to time by written notice delivered in
accordance herewith.
(b) All payments required to be made by Landlord to
Tenant hereunder shall be payable to Tenant at the address
hereinbelow set forth, or at such other address within the
continental United States as Tenant may specify from time to
time by written notice delivered in accordance herewith.
(c) Any notice or document required or permitted to
be delivered hereunder shall be deemed to be delivered
whether actually received or not (42) deposited in the
United States Mail, postage prepaid, Certified or Registered
Mail, addressed to the parties hereto at the respective
addresses set out below, or at such other address as they
have theretofore specified by written notice delivered in
accordance herewith:
LANDLORD: TENANT:
TCLW/Fullerton Nelco Products, Inc.
a general partnership a Delaware Corporation
17941 Fitch 1411 Orangethorpe
Irvine, California Fullerton, California
(43)
|
If and when included within the term "Landlord," as used in this instrument, there are more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of such a notice specifying some individual at some specific address (44) for the receipt of notices and payments to Landlord; if and when included within the term "Tenant," as used in this instrument, there are more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of such a notice specifying some individual at some specific address within the continental United States for the receipt of notices and payments to Tenant. All parties included within the terms "Landlord" and "Tenant," respectively, shall be bound by notices given in accordance with the provisions of this paragraph to the same effect as if each had received such notice.
28. Entire Agreement. This lease contains the entire agreement between the parties respecting the lease of the premises to Tenant.
29. Time of the Essence. Time is of the essence of this lease.
30. Miscellaneous.
A. Words of any gender used in this lease shall be
held and construed to include any other gender, and words in
the singular number shall be held to include the plural,
unless the context otherwise requires.
B. The terms, provisions and covenants and
conditions contained in this lease shall apply to, inure to
the benefit of, and be binding upon, the parties hereto and
upon their respective heirs, legal representatives,
successors and permitted assigns, except as otherwise herein
expressly provided. Each party agrees to furnish to the
other, promptly upon demand, a corporate resolution, proof
of due authorization by partners, or other appropriate
documentation evidencing the due amortization of such party
to enter into this lease.
C. The captions inserted in this lease are for
convenience only and in no way define, limit or otherwise
describe the scope or intent of this lease, or any provision
hereof, or in any way affect the interpretation of this
lease.
D. (45)
E. This lease may not be altered, changed or
amended except by an instrument in writing signed by both
parties hereto.
F. All obligations of Tenant (46) hereunder not
fully performed as of the expiration or earlier termination
of the term of this lease shall survive the expiration or
earlier termination of the term hereof, including without
limitation all payment obligations with respect to taxes and
insurance and all obligations concerning the condition of
the premises. Upon the expiration or earlier termination of
the term hereof, and prior to Tenant vacating the premises.
Landlord and Tenant shall jointly inspect the premises and
Tenant shall pay to Landlord any amount estimated by
Landlord as necessary to put the premises, including without
limitation all heating and air conditioning systems and
equipment therein, in good (47). Tenant shall also, prior
to vacating the premises, pay to Landlord the amount, as
estimated by Landlord, of Tenant's obligation hereunder for
real estate taxes and insurance premiums for the year in
which the lease expires or terminates. All such amounts
shall be used and held by Landlord for payment of such
obligations of Tenant hereunder, with Tenant being liable
for any additional costs therefor upon demand by Landlord,
or with any excess to be returned to Tenant after all such
obligations have been determined and satisfied, as the case
may be (48). Any security deposit held by Landlord shall be
credited against the amount payable by Tenant under this
paragraph 30F.
G. If any clause or provision of this lease is
illegal, invalid or unenforceable under present or future
laws effective during the term of this lease, then and in
that event, it is the intention of the parties hereto that
the remainder of this lease shall not be affected thereby,
and it is also the intention of the parties to this lease
that in lieu of each clause of provision of this lease that
is illegal, invalid or unenforceable, there be added as a
part of this lease contract a clause or provision as similar
in terms to such illegal, invalid or unenforceable clause or
provisions as may be possible and be legal, valid and
enforceable.
H. Because the premises are on the open market and
are presently being shown, this lease shall be treated as an
offer with the premises being subject to prior lease and
such offer subject to withdrawal or non-acceptance by
Landlord or to other use of the premises without notice, and
this lease shall not be valid or binding unless and until
the lease is accepted by Landlord in writing and a fully
executed copy is delivered to both parties hereto.
I. Paragraph I and Exhibit "A" of this lease
notwithstanding, the "premises," and Tenant's estate under
this lease, do not include any right, title or interest in
water, oil, gas or other hydrocarbons, or other mineral
rights, all of which are excepted and reserved to Landlord
with the sole and exclusive right in Landlord to sell,
lease, assign or otherwise transfer the same, but without
any right of Landlord or any such transferee to enter upon
the surface of the property described in said Exhibit "A"
during the term of this lease except as otherwise expressly
provided elsewhere in this lease.
J. All references in this lease to "the date
hereof" or similar references shall be deemed to refer to
the last date, i point of time, on which all parties hereto
have executed this lease.
31. Additional Provisions.
Those additional provisions set forth in Exhibit "C" attached hereto are hereby incorporated by this reference as if fully set forth herein. (49-54)
IN WITNESS WHEREOF, this lease is, EXECUTED BY
LANDLORD, this 16th day of August, 1983.
TCLW/Fullerton
Crow Fullerton
By: Clifton K. Chang
General Partner
Executed by Tenant, this 22nd day of August, 1983.
NELCO PRODUCTS, INC.
By: E.P. Smoot
President
EXHIBIT "C" TO LEASE-DATED AUGUST 16, 1983 BETWEEN NELCO
PRODUCTS, INC., AS
("TENANT") AND TCLW/FULLERTON, AS("LANDLORD"):
1.before the end of the ten (10) day grace period in paragraph 16 (a) of the Lease.
2.five percent (5%)
3.in an interest bearing account
4.Provided Tenant is not in default of the Lease, $12,397.00 of the security deposit plus interest thereon shall be released to Tenant on September,30, 1984
5.manufacturing,
6.Provided that such required improvements are not necessary by nature of Tenant's use of the premises, then:
1) If the costs are less than $10,000.00, Landlord and Tenant shall each bear one-half the cost of such improvements.
2) If the costs exceed $10,000.00, then Landlord shall have the option of paying the cost or terminating the Lease.
3) If the Landlord elects to terminate the Lease, Tenant shall have the choice of paying the cost of improvements or terminating the Lease.
4) In the event neither Landlord or Tenant elects to pay the cost, then Lease shall terminate when the appropriate government authority forces Tenant to move out of the facility.
5) In the event Tenant and Landlord mutually agree to contest the installation of such improvements, then the cost of contesting the governmental regulation shall be split up to $10,000.00.
7. provided such improvements are 8. not earlier than fifteen (15) nor later than five (5) days before each semi-annual delinquency date. 9. Notwithstanding the foregoing, Tenant shall not be |
liable for the payment of any federal, state, county or municipal income or franchise taxes or an taxes or license fees imposed on the collection of rent or measured by the amount of rent, unless such taxes or fees are a substitution in whole or in part for real estate taxes.
10.Tenant shall bear the cost of tax increases due to improvements within its space, and Tenant shall not bear the cost of tax increases from improvements for other tenants in the building. To the extent taxes increase due to ownership changes, then Landlord shall bear the cost of such tax increases to the end of the current least term or option period, after which the increases shall be Tenant's responsibility in the next lease option period.
11.assumes the duty
12.Notwithstanding anything to the contrary contained in subparagraph 1A and this paragraph 5, Landlord shall repair or cause to be repaired all structural portions of the building during the lease term, and during the first two years of the lease term (a) the common sewage line and the common water line and, (b) the roof of the building, unless the need for any of the foregoing repairs is caused by Tenant, in which event Tenant shall be solely responsible for such repairs.
13., Landlord's consent not to be unreasonably withheld,
and such consent or dissent to be provided within five
(5) working days of delivery of plans and specifications
for such improvements.
14.Landlord shall elect in writing at time of approval tenant improvements need to be removed by Tenant upon expiration or termination of the lease.
15.labor and materials of
16.Landlord shall establish and enforce a uniform sign criteria for all occupants of the building.
17.in accordance with Landlord's uniform sign criteria.
18.Landlord
19.Tenant
20.Such consent is not to be unreasonably withheld and shall be given or denied fifteen (15) days after receipt of all documentation relating to such consent. Tenant shall have the right, without Landlord's consent, to assign this lease a ("Permitted Assignment") to a corporation with which it may merge, to any parent of Tenant or any subsidiary of Tenant's parent, or to a purchaser of substantially all of Tenant's assets or stock, provided that such parent or purchaser has a net worth at the effective date of the assignment that is equal to or greater than the net worth of Park Electrochemical Corporation on the date hereof, and provided that Tenant notifies Landlord of the assignment before the effective date thereof, and the assignee assumes in writing Tenant's obligations hereunder."
21.evidence.
22.other than to a "Permitted Assignee" or subletting of seventy percent (70%) or more of the premises
23.but Landlord shall remain liable for all obligations to be performed by Landlord before the effective date of the assignment.
24.Rental Insurance
25.Landlord's policy shall name Tenant and the holder of any indebtedness secured by Landlord's interest in the building, as their interests may appear, as additional insureds, but all losses shall be adjusted by and proceeds payable to Landlord. In addition to a statement for the amount due, Landlord shall deliver to Tenant for photocopies of the insurance policy or certificate of insurance and premium notice covered by the statement.
26.except that the rent shall be abated by the prorata portion of the premises destroyed.
27.If the buildings situated upon the premises should be damaged or destroyed by a casualty other than a peril covered by the insurance to be provided by Landlord under subparagraph 11A above, either party ("terminating party") may elect to terminate this Lease by so notifying the other party ("non-terminating party") within sixty (60) days after the date of damage or destruction, and this Lease shall be terminated on the date that Tenant vacates the premises which shall be within thirty (30) days after notice, unless the non- terminating party notifies terminating party within thirty (30) days after delivery of the notice of termination that the non-terminating party elects to rebuild, repair and replace the buildings. Should the non-terminating party so elect, it shall proceed in accordance with the requirements of subparagraph 11B.
28.Landlord shall not exercise any right to apply the insurance proceeds to the indebtedness unless required to do so by the Lender or agreed to by Tenant.
29.$3,000,000.00
30.at the option of either party
31."Substantial part" shall be deemed to be twenty five percent (25%) or more of the premises.
32.trade fixtures, removal and location costs, and goodwill,
33.ten (10)
34.thirty (30) days after written notice thereof to Tenant of such longer period as may be reasonably required to cure such default so long as Tenant proceeds at all times with due diligence to complete the cure
35.Tenant agrees upon the request of Landlord to subordinate this Lease and its rights hereunder to any first or second mortgage or first or second deed of trust (hereinafter for convenience called "loan") and to execute at any time and from time to time such documents as may be required to effectuate such subordination; provided that (i) such documents do not require Tenant to waive or modify any of its material rights under this Lease and (ii) contain provisions that reasonably assure Tenant that Tenant's possession will not be disturbed so long as Tenant is not in default under this Lease, including a provision that the owner, holder or beneficiary of the loan and its successors and assigns, including a purchaser at foreclosure sale or sale in lieu of foreclosure, and Tenant's successors and assigns, each will accept the attornment of Tenant and recognize this Lease, and that Tenant's quiet enjoyment and peaceful possession of the premises and rights and privileges appertaining thereto shall not be disturbed.
36.and the written assumption of Landlord's obligations by the new owner.
37.for declaratory relief,
38.If either party ('secondary party') becomes involved in any action, threatened or actual, by or against anyone not a party to this Lease but arising by reason or related to any act or omission of the other party ('primary party') or its representatives, agents, employees, licensees or invitees, the primary party agrees to pay the secondary party's reasonable attorney's fees and other costs incurred in connection with the action and in preparation for the action.
39.either Landlord or Tenant ("Waiver")
40.Waiver
41.the other party
42.seventy two hours after
43.(d) Copies of notices to Tenant shall be sent
concurrently to Park Electrochemical, 475 Northern
Boulevard, Great Neck, New York 11021, Attention:
President.
44.within the continental United States.
45.At any time and from time to time within fifteen (15) days after request by either party, the other party shall execute and deliver to the requesting party, or to such other recipient as the notice shall direct, a statement certifying that this Lease is unmodified and in full force and effect, or, if there have been modifications, that it is in full force and effect as modified in the manner specified in the statement, that there are no defenses or offsets claimed by the party making such statement other than those specified therein, and any other such matters reasonable requested. The statement shall also state the dates to which the rent and any other charges have been paid in advance. The statement shall also state the dates to which the rent and any other charges have been paid in advance. The statement shall be such that it can be relied on by any person specified in the request.
46.and Landlord
47.good, clean and leasable condition
48.Provided that Tenant is not then in default hereunder, Landlord shall refund to Tenant at the expiration or earlier termination of this lease all sums received by Landlord from Tenant which are allocable to the period following the expiration or termination date.
49. Tenant Improvements
Landlord shall provide:
a)800 Amp 480/277 Volt Power with 110 Volt transformer.
b)One (1) grade level door sufficiently wide to accommodate two (2) trucks.
c)One (1) truck well sufficiently wide enough to accommodate two (2) trucks.
d)$95,731 tenant improvement allowance to be used for 4,000 square feet of build-to-suit offices. Tenant improvement reimbursement shall be made thirty (30) days after delivery of paid invoice for approved tenant improvements. Tenant may take possession of the premises rent free for purposes of installing tenant improvements, subject to all provisions of this lease except paragraphs 2 and 4.
e)Two (2") waterline
f) Four (4") sewerline
50.Rental Adjustments
a)Each option period shall be subject to an adjustment based upon a Consumer Price Index with a ceiling factor:
Base Adjustment Ceiling Base Date Date Factor Rent(NNN) 10-1-83 10-1-88 1.40 $12,178.00 10-1-83 4-1-91 1.60 $12,178.00 10-1-93 4-1-96 1.20 10-1-93 Rent 10-1-93 10-1-98 1.40 10-1-93 Rent 10-1-93 4-1-03 1.60 10-1-93 Rent |
The ceiling factor multiplied by the base rent shall be the maximum adjusted rent for that period.
b) The adjusted rent shall be calculated as follows:
i) At the Adjustment date. the base rent shall be multiplied by a fraction, the numerator of which is the "Index" on the Adjustment Date and the denominator of which is the "Basic Index". The sum so derived shall be the monthly rental payable during the following thirty (30) month period unless the Lease terminates earlier.
ii) As used in the foregoing, "Index" shall mean the average of the following two indexes published by the Bureau of Labor Statistics, United States Department of Labor (1967:100): (i) the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Los Angeles-Long Beach-Anaheim Metropolitan Area (known as "CPI-W" and (ii) the Consumer Price Index for all Urban Consumers for the Los Angeles-Long Beach-Anaheim Metropolitan Area (known as "CPI-U"). "Basic Index" shall mean the Index most recently published prior to the Base Date. If the Index as now constituted, compiled, and published, shall be revised or cease to be compiled and published during the term hereof, then the Bureau of Labor Statistics shall be requested to furnish a statement converting the Basic Index to a figure that would be comparable in another Index published by the Bureau of Labor Statistics and such other Index shall be used in computing the adjustment in Rent provided herein. Should the parties not be able to secure such appropriate conversion or adjustment, they shall agree on some other Index serving the same purpose to adjust the Rent as provided herein.
51.Option to Extend
While this lease is in full force and effect provided that Tenant is not in default of any of the terms, covenants and conditions thereof, Tenant shall have the right or option to extend the original term of this Lease for three (3) further terms of sixty (60) months. Such extension or renewal of the original term shall be on the same terms, covenants and conditions as provided for in the original term except that:
a) The initial monthly rental during the first option period shall be based upon the Index as described in Paragraph 50 of the Exhibit C with a ceiling.
b) The initial monthly rental during the second option period shall be based upon the fair market rental value of equivalent properties, of equivalent size, in equivalent areas.
c) The initial monthly rental during the third option period shall be based upon the Index described in paragraph 2 of the Addendum.
d) No further renewal options shall apply.
e) A rental escalation shall apply in the period beginning month thirty one (31) of each option period. The escalation shall be described in paragraph 50 of Exhibit C.
Notice of Tenant's intention to exercise the option must be given to Landlord in writing at least one hundred eighty (180) days prior to the expiration of the original or then existing term of this Lease. This option is not assignable except to a permitted assignee as defined in paragraph 10 A of the Lease.
In the event Landlord and Tenant do not agree in writing on a fair market rate within fifteen (15) days after exercise of the option for the second option period or do not agree in writing on a single appraiser within twenty five (25) days after such exercise, then:
a) Each shall appoint an Appraiser within thirty five (35) days after the exercise of option.
b) In the event the two Appraisers are unable to agree on a fair market rate within forty five (45) days after exercise of the option, then the two Appraisers, shall jointly appoint a third Appraiser by the forty fifth (45th) day after the exercise of option.
c) The average of the two closest appraisals shall be deemed to be the fair market rental value which shall be determined by the seventieth (70th) day after the exercise of option.
d) Subject to paragraph (g), Landlord and Tenant shall each pay the costs of its selected Appraiser and one-half the cost of the third rental appraiser.
e) Tenant shall either:
(i) Accept the fair market determination and execute and deliver a lease amendment within ninety (90) days after the exercise of option or,
(ii) Decline the determination of fair market and cancel the option to lease, in which case Tenant shall pay all fees of Appraisal, including Landlord's and that of the neutral Appraiser. Failure to deliver an executed lease amendment shall mean Tenant has elected alternative (ii) herein.
In no event, however, will the monthly rent payable under this Lease as adjusted in the above described method ever be less than the monthly rent payable in the period prior to the adjustment.
52. Consent
Except when provided to the contrary in this Lease, whenever one party's consent, approval or permission is required or desired by the other party in connection with this Lease, such consent, approval or permission shall not be unreasonably withheld or delayed.
53.Parking
Landlord shall designate sixty one (61) parking spaces for Tenant's exclusive use in that portion of the common area that is marked in yellow on Exhibit A.
54.Adjacent Space
If Landlord decides to offer space contiguous to Tenant's premises for lease during the lease term, Landlord shall first offer such space to Tenant for lease, and Tenant shall have the right to lease such space on rental rates and terms that are mutually sat isfactory within ten days next following Tenant's receipt of such offer.
If terms that are mutually satisfactory cannot be agreed upon within such ten day period, Landlord shall then be free to offer for lease or lease such space to any other party on terms acceptable to Landlord.
Exhibit 10.03a
SECOND ADDENDUM TO LEASE
This Second Addendum to Lease by and between
TCLW/Fullerton, a
California general partnership ("Landlord") and Nelco
Products,
Inc. , a Delaware corporation ("Tenant") shall amend
that certain
Lease Agreement dated August 16, 1983 and shall amend
the First
Addendum to Lease known as Exhibit "C" dated August 16,
1983 by
and between Landlord and Tenant relating to certain real
property
located in Orange County, California, as follows:
For purposes of this Addendum the existing leased
premises at 1411
E. Orangethorpe Avenue shall be called "1411" and the
additional
leased premises at 1421 E. Orangethorpe Avenue shall be
called
111421".
55. Demised Premises. Commencing January 1, 1987 Tenant shall increase its current space of 36,462 square feet "1411" to include the adjacent space of 21,240 square feet "142111, as further outlined in Exhibit "D" attached.
56. Extension of 1411 E. Orangethorpe Avenue Lease. In consideration for the terms and conditions of the leasing of "1421", tenant shall execute the attached Exhibit "E" thereby exercising its option to extend the existing lease at 1411 E.Orangethorpe Avenue.
57. Lease Term. The lease term with respect to "1421" shall be for six (6) years and nine (9) months commencing on January 1, 1987 and ending on September 30, 1993.
58. Rent Schedule. The rent with respect to "1421" shall be on a net basis and structured as follows:
January 1, 1987 - $6,372.00 per month.
September 30, 1988:
October 1, 1988 - The rent on October 1,
1988 shall
September 30, 1993: be adjusted upwards in
accordance
with the percentage
increases
that occur in the
Consumer Price
Index from the December
1, 1986
commencement date, with
a ceiling
factor, as further
outlined in
Paragraph 50 of Exhibit
The adjusted rent shall
remain
constant for the
following thirty
(30) month period and
on April
1, 1991 be adjusted
once more
in accordance with the
adjustment
formula outlined in
Paragraph
50 of Exhibit "C".
|
59. Option to Extend. While this Lease is in full force and effect and provided that Tenant is not in default of any of the terms, covenants, and conditions thereof, Tenant shall have the option to extend the term of the "1421" lease for two further terms of sixty (60) months. Such extension(s) of the "1421" lease term shall be on the same terms, covenants, and conditions as those provided for in the "1411" lease except that the rent shall be equal to the rent being paid on the "1411" leased premises. Addition ally, the provisions outlined in subparagraph b, c, d and e of paragraph 51 shall apply.
60. Tenant's Proportionate Share. Tenant's Proportionate Share as referenced in Paragraph 4 & 5 of the lease shall be increased to 60.93%: (Total building area = 94,702 square feet; leased premises "1421" and "1411" equal 57,702 square feet).
61. Tenant Improvements. Tenant shall be leasing the premises at "1421" in an "as is" condition with the following exceptions:
1. Landlord shall provide an opening in the demizing wall separating "1411" from "1421".
2. Landlord shall provide a two-inch water line in a manner which does not substantially exceed the cost for that previously installed in "1421".
The lease term shall commence and all Tenant's
obligations
under this lease, including payment of rent,
shall commence
on January 1, 1987, regardless of the status
of the above
work to be performed by Landlord. Landlord
agrees to
diligently pursue and complete such work.
62. Prior Claims. Tenant hereby waives any pending claims on Landlord as of the date of this Second Addendum.
63. Landlord shall designate, with no obligation to enforce, thirty-five (35) parking spaces with respect to "1421' for Tenant's exclusive use, in that portion of the common area that is marked in yellow on Exhibit A of the original lease.
All other terms and conditions of the lease shall remain
in full
force and effect for the leased premises at "1421".
LANDLORD:
TCLW/FULLERTON,
a California general partnership
By:
Its:General Partner
TENANT:
NELCO PRODUCTS, INC.,
a Delaware corporation
By: /s/ E.Philip Smoot Its: President |
EXHIBIT "E"
This Extension Agreement is to be attached to and form a
part of
the lease (which together with any amendments,
modifications and
extensions thereof is hereinafter called the Lease),
made the 16th
day of August, 1983, by and between TCLW/Fullerton, a
California
general partnership ("Landlord") and Nelco Products,
Inc., a Delaware
corporation ("Tenant") covering the premises known as
1411 E.
Orangethorpe Avenue, Fullerton, California.
The Lease is hereby renewed and extended for a further
term of
sixty (60) months to commence on the 1st day of October,
1988,
and to end on the 30th day of September, 1993, on
condition that
Landlord and Tenant comply with all the provisions of
the covenants
and agreements contained in the Lease.
The parties hereto have signed this extension agreement
this 26th
day of January, 1987.
LANDLORD:
TCLW/FULLERTON,
California general partnership
By:__________________________
Its: General Partner
By: /s/E.Philip Smoot Its: President |
[exhibits-02-10.03a]bd
EXHIBIT 10.03(c)
FIFTH ADDENDUM TO LEASE
This Fifth Addendum to Lease is to be attached to and forms a part of the lease (which together with any amendments, modifications and extensions thereof is hereinafter called the Lease), made on the 16th day of August, 1983, by and between TCLW/Fullerton, a California general partnership ("Landlord") and Nelco Products, Inc., a Delaware corporation ("Tenant") covering the premises known as 141 1 (including 1421, 143 1, and the Appleton Space as later defined in this Addendum) E. Orangethorpe Avenue, Fullerton, California. Where provisions of this Fifth Addendum conflict with those of the Lease or prior Addenda, those of this Fifth Addendum shall supersede:
1. Extension Term: The Lease is hereby extended for a further term of nine (9) years to commence on the I st day of October, 1994 and to end on the 30th day of September, 2003, on the condition that Landlord and Tenant comply with all the provisions of the covenants and agreements contained in the Lease.
2. Expansion: Tenant presently occupies a 71,862 square foot portion of the Premises under the existing lease dated August 16, 1983, as amended. Adjacent to the space presently occupied by Tenant under the existing lease is a space of 22,840 square feet occupied by Appleton Electric Company (the Appleton Space). Appleton's lease is scheduled to expire on October 31, 1994, but may hold over for a limited period of time. The Appleton Space together with the space presently occupied by Tenant shall comprise the Premises covered by the Lease as amended, with a total of 94,702 square feet (the entire building). Landlord will begin construction of the tenant improvements as soon as possible, and will use its best efforts to deliver the Appleton space to Tenant not later than July 15, 1995. Landlord will at Landlord's expense install the tenant improvements described in Exhibit A. The work shall be done in a diligent manner.
3. Rent: Base Rent for the period from October 1, 1994 until the delivery of the Appleton Space to Tenant shall be $31,835 per month. On the later of August 1, 1995 or the date on which the Appleton Space is delivered to Tenant, the Base Rent shall increase to $41,952 per month, except that Base Rent with respect to the Appleton Space ($10,118.12 per month) shall be abated for the first 60 days beginning on the later of August 1, 1995 or the date on which the Appleton Space is delivered to Tenant. Base Rent shall increase to $45,741 per month on October 1, 1998. On October 1, 2001, Base Rent shall increase (but not decrease) to 95% of "Market Rental Value", calculated in accordance with the following:
(a) On October 1, 2001 the Base Rent shall be adjusted to 95% of the "Market Rental Value" of the property as follows:
1) Four months prior to the Market Rental Value (MRV) Adjustment Date described above, Landlord and Tenant shall meet to establish an agreed upon new MRV for the specified term. If agreement cannot be reached, then:
I) Landlord and Tenant shall immediately appoint a mutually acceptable appraiser or broker to establish the new MRV within the next 30 days. Any associated costs will be split equally between the parties, or
ii) Both Landlord and Tenant shall each immediately select and pay the appraiser or broker of their choice to establish a MRV within the next 30 days. If, for any reason, either one of the appraisals is not completed within the next 30 days, as stipulated, then the appraisal that is completed at that time shall automatically become the new MRV. If both appraisals are completed and the two appraisers/brokers cannot agree on a reasonable average MRV then they shall immediately select a third mutually acceptable appraiser/broker to establish a third MRV within the next 30 days. The average of the two appraisals closest in value shall then become the new MRV. The costs of the third appraisal will be split equally between the parties.
2) In any event, the new MRV shall not be less than $45,741.00, the rent payable for September, 2001.
(b) Upon the establishment of each New Market Rental Value as described in paragraph 3 (a) :
1) the monthly rental sum so calculated for each term as specified in paragraph 3 (a) will become the new Base Rent for the purpose of calculating any further Market Rental Value Adjustment or Cost of Living Adjustments, pursuant to paragraph 4 below.
4. Option To Extend: Landlord hereby grants to Tenant the option to extend the term of this Lease for one additional 60 month period commencing when the prior term expires upon each and all of the following terms and conditions:
(a) Tenant gives to Landlord, and Landlord actually receives on a date which is prior to the date that the option period would commence (if exercised) by at least 6 and not more than 9 months, a written notice of the exercise of the option to extend this Lease for said additional term, time being of essence. If said notification of the exercise of said option is not so given and received, the option shall automatically expire; said option may only be exercised if:
(1) There is no default by Tenant of any provision in the Lease:
(2) All of the terms and conditions of this Lease except where specifically modified by this option shall apply;
(b) Market Rental Value Adjustment (MRV)
(1) If the option to extend is exercised and becomes effective, then on October 1, 2003 the Base Rent shall be adjusted to 95% of the "Market Rental Value" in accordance with the format set forth in Paragraph 3 of this Fifth Addendum to Lease but not less than the rent payable during September of 2003. This "Market Rental Value" shall become the new base rent for purposes of Paragraph 4 (c) (1) below.
The Base Rent during the option period shall be adjusted using the method indicated below:
(1) Cost of Living Adjustment (COL)
(I) On April 1, 2006 the Base Rent shall be adjusted by the change, if any, from the Base Month specified below, in the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for CPIU (All Urban Consumers), for Los Angeles, Anaheim and Riverside. All items (1982-1984 = 100), herein referred to as C.P.I."
(ii) The Base Rent payable shall be calculated as follows: the Base Rent payable on March 1, 2006, shall be multiplied by a fraction the numerator of which shall be the C.P.I. of the calendar month 2 (two) months prior to the month (s) specified in this paragraph 4 during which the adjustment is to take effect, and the denominator of which shall be the C.P.I. of the calendar month which is two (2) months prior to October 1, 2003. The sum so calculated shall constitute the new Base Rent hereunder, but in no event, shall any such new Base Rent be less than 103% or more than 107% of the rent payable for the month immediately preceding the date for rent adjustment.
(iii) In the event the compilation and/or publication of the C.P.I. shall be transferred to any other governmental department or bureau or agency or shall be discontinued, then the index most nearly the same as the C.P.I, shall be used to make such calculation. In the event that Landlord and Tenant cannot agree on such alternative index, then the matter shall be submitted for decision to the American Arbitration Association in accordance with the then rules transferred to any other governmental department or bureau or agency or shall be discontinued, then the index most nearly the same as the C.P.I., shall be used to make such calculation. In the event that Landlord and Tenant cannot agree on such alternative index, then the matter shall be submitted for decision to the American Arbitration Association in accordance with the then rules of said association and the decision of the arbitrators shall be binding upon the parties. The cost of said Arbitrators shall be paid equally by Landlord and Tenant.
(d) All other options provided for in previous lease documents are superseded.
5. Security Deposit: The Security Deposit shall continue unchanged as set forth in the Lease and prior addenda.
6. Parking. Tenant shall have the use of 152 parking spaces.
7. Tenant's Proportionate Share: Tenant's Proportionate Share as referenced in Paragraph 60 of the Lease shall be increased to 100%.
8. Hazardous Substances: The following excerpt from the
American Industrial Real Estate Association Standard
Industrial/Commercial Single-Tenant Lease-Net form
(1990)("AIR Lease Form") shall become part of the lease
documents; the term "Lessor" shall mean Landlord and
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term *by
Lessee "Hazardous Substance" as used in this Lease shall
mean any product, substance, chemical, material or waste
whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation,
spill, release or effect, either by itself or in combination
with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health,
safety or welfare the environment or the Premises, (ii)
regulated or monitored by any governmental authority, or
(iii) a basis for liability of Lessor to any governmental
agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be
limited to, hydrocarbons, petroleum, gasoline, crude oil or
any products, by-products or fractions thereof. Lessee
shall not engage in any activity in, on or about the
Premises which constitutes a Reportable Use (as hereinafter
defined) of Hazardous Substances without the express prior
written consent of Lessor and compliance in a timely manner
(at Lessee's sole cost and expense) with all Applicable Law
(as defined in Paragraph 6.3). "Reportable Use" shall mean
(i) the installation or use of any above or below ground
storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that
requires a permit from, or with respect to which a report,
notice, registration or business plan is required to be
filed with, any governmental authority. Reportable Use
shall also include Lessee's being responsible for the
presence in, on or about the Premises of a Hazardous
Substance with respect to which any Applicable Law requires
that a notice be given to persons entering or occupying the
Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may, without Lessor's prior consent, but
in compliance with all Applicable Law, use any ordinary and
customary materials reasonably required to be used by Lessee
in the normal course of Lessee's business permitted on the
Premises, so long as such use is not a Reportable Use and
does not expose the Premises or neighboring properties to
any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may
(but without any obligation to do so) condition its consent
to the use or presence of any Hazardous Substance, activity
or storage tank by Lessee upon Lessee's giving Lessor such
additional assurances as Lessor, in its reasonable
discretion, deems necessary to protect itself, the public,
the Premises and the environment against damage,
contamination or injury and/or liability therefrom or
therefor, including, but not limited to, the installation
(and removal on or before Lease expiration or earlier
termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements)
and/or the deposit of an additional Security Deposit under
Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance, or a condition involving or resulting from same has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor. Lessee shall also immediately give Lessor a copy of any statement, report, notice, registration, application, permit, business plan, license, claim, action or proceeding give * to, or received * from, any governmental authority or private party, or persons entering or occupying the Premises, concerning the presence, spill, release, discharge of, or exposure to, any Hazardous Substance or contamination in, on, or about the Premises, including but not limited to all such documents as may be involved in any Reportable Uses involving the Premises.
(c) Indemnification. Lessee shall indemnify, protect, defend and hold Lessor, its agents, employees and lenders and ground lessor, if any, and the Premises, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, costs, claims, liens, expenses, penalties, permits and attorney's and consultant's fees arising out of or involving any Hazardous Substance or storage tank brought onto the Premises by or for Lessee or under Lessee's control. Lessee's obligations under this Paragraph 6 shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation (including consultant's and attorney's fees and testing), removal, remediation, restoration and/or abatement thereof, or of any contamination therein involved, and shall survive the expiration or earlier termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances or storage tanks, unless specifically so agreed by Lessor in writing at the time of such agreement.
6.3 Lessee's Compliance with Law. Except as otherwise provided in this Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and in a timely manner, comply with all "Applicable Law," which term is used in this Lease to include all laws, rules, regulations, ordinances, directives, covenants, easements and restrictions or record, permits, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor's engineers and/or consultants, relating in any manner to the Premises (including but not limited to matters pertaining to (i) industrial hygiene, (ii) environmental conditions on, in, under or about the Premises, including soil and groundwater conditions, and (iii) the use, generation, manufacture, production, installation, maintenance, removal, transportation, storage, spill or release of any Hazardous Substance or storage tank), now in effect or which may hereafter come into effect, and whether or not reflecting a change in policy from any previously existing policy. Lessee shall, within five (5) days after receipt of Lessor's written request, provide Lessor with copies of all documents and information, including, but not limited to, permits, registrations, manifests, applications, reports and certificates, evidencing Lessee's compliance with any Applicable Law specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving failure by Lessee or the Premises to comply with any Applicable Law.
6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined in the Lease(a)) shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease and all Applicable Laws (as defined in Paragraph 6.3), and to employ experts and/or consultants in connection therewith and/or to advise Lessor with respect to Lessee's activities, including but not limited to the installation, operation, use, monitoring, maintenance, or removal of any Hazardous Substance or storage tank on or from the Premises. The costs and expenses of any such inspections shall be paid by the party requesting same, unless a Default or Breach of this Lease, violation of Applicable Law, or a contamination, caused or materially contributed to by Lessee is found to exist or be imminent, or unless the inspection is requested or ordered by a governmental authority as the result of any such existing or imminent violation or contamination. In any such case, Lessee shall upon request reimburse Lessor or Lessor's Lender, as the case may be, for the costs and expenses of such inspections.
9. Maintenance and Repairs: The following excerpt from the AIR Lease Form shall become part of the lease documents; the term "Lessor" shall mean Landlord and "Lessee" shall mean Tenant.
7. Maintenance; Repairs.
7.1 Lessee's Obligations. **Lessee shall, at Lessee's sole cost and expenses and at all times, keep the Premises and every part thereof in good order, condition and repair, and non-structural (whether or not such portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, without limiting the generality of the foregoing, all equipment or facilities serving the Premises, such as plumbing, heating, air conditioning, ventilating, electrical, lighting facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or standpipe and hose or other automatic fire extinguishing system, including fire alarm and/or smoke detection systems and equipment, fire hydrants, fixtures, walls (interior and exterior), foundations, ceilings, roofs, floors, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways located in, on, about, or adjacent to the Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee's expense, take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises, the elements surrounding same, or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance and/or storage tank brought onto the Premises by or for Lessee or under its control. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices. Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. If Lessee occupies the Premises for seven (7) years or more Lessor may require Lessee to repaint the exterior of the buildings on the Premises as reasonably required, but not more frequently than once every seven (7) years.
(b) Lessee shall, at Lessee's sole cost and expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in, the inspection, maintenance and service of the following equipment and improvements, if any, located on the Premises: (i) heating, air conditioning and ventilation equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler and/or standpipe and hose or other automatic fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof covering and drain maintenance and (vi) asphalt and parking lot maintenance.***
**(a) Subject to the provisions of Paragraph 12 of Exhibit C to Lease dated 8-16-83 and paragraphs 11 (fire and casualty damage) and 13 (condemnation),
*** Notwithstanding the preceding, Lessor shall continue providing the same services that it has provided prior to this Fifth Addendum, such services to be handled in accordance with the same billing procedure.
The Parties hereto have signed this extension agreement this 5th day of July 1995.
LANDLORD:
TCLW/Fullerton, a
By: Fullerton Industrial Properties, II
California general partnership
Managing General Partner
By: Laskey-Weil II, general partner
By: Laskey-Weil Co., general Partner
By: Martin H. Weil
Trustee of Weil Family Trust
Its: General Partner
Date: 7/5/95
TENANT:
NELCO PRODUCTS, INC.
a Delaware corporation
By: Ron Hart
Its: President
Date: 6/30/95
Exhibit 10.04
AGREEMENT FOR LEASE
This Agreement is made the 26th day of May 1982 between The Jurong Town Corporation a body corporated incorporated under the Jurong Town Corporation Act having its head office at Jurong Town Hall, Jurong Town Hall Road, Singapore (hereinafter called "the Lessor") of the one part and Kiln Technique (Pte) Ltd. a company incorporated in Singapore and having its registered office at 4 Gul Crescent, Jurong, Singapore.
(hereinafter called "the Lessee" which expression shall where the context so admits include its successors in title) of the other part.
Whereby it is agreed as follows:
1. In consideration of the sum of $920,000 paid to the Lessor the Lessor shall grant and the Lessee shall accept a lease or sub-lease of the piece of land and the building erected thereon described in the First Schedule hereto and shown edged in red on the plan annexed hereto for the term of thirty (30) years from the 1st day of September 1981 at the yearly rent of Dollars Thirty-Nine Thousand Seven Hundred and Ninety-Seven and Cents Forty-Six Only ($39,797.46 cts) subject to revision in accordance with the second schedule hereto and payable without demand on the first day of January in each and every year of the said term at the office of the Lessor in Singapore.
2. Such lease shall be issued after completion of a title survey and shall be in the form containing the reservations exceptions covenants and conditions set forth in the Second Schedule hereto with such modifications as circumstances may render necessary or as the Lessor and Lessee may mutually agree.
3. Until such a lease is granted in accordance with the stipulations and conditions of this Agreement the Lessee shall be deemed to be a Lessee of the said piece of land hereby agreed to be leased to him at the same rent and subject to the same covenants and stipulations so far as the same are applicable as it a lease thereof had been actually granted.
4. The Lessee covenants with the Lessor as follows:
(a) to pay all costs disbursements fees and charges legal
or otherwise including, stamp and/or registration fees in
connection with the preparation stamping and issue of this
Agreement and any prior accompanying or future documents or
deeds supplementary collateral or in any way relating to
this Agreement.
(b) To pay all costs and fees legal or otherwise including
costs as between solicitor and client in connection with the
enforcement of the covenants and conditions herein.
(c) To pay to the Lessor all survey fees and other charges
including those payable to and claimed by the relevant
Government Planning Authorities for the survey of the
demised premises for the purpose of sub-division of the land
of which the demised premises forms part and issue of this
lease and a Certificate of Title __________, the Lessor
shall have the right to employ his own surveyor to carry out
the said survey in which event the Lessee shall bear all
costs thereby incurred.
(d) To pay interest at the rate of ___ per annum or such
higher rates as may be determined from time to time by the
Lessor for any outstanding amount payable under this
Agreement from the due date thereof until payment in full is
received by the Lessor.
(e) To pay to the Lessor an amount equivalent to the sum if
any payable by the Lessee as property tax in respect of the
demised premises during the term prior to the issue of the
Lease by the Lessor.
5. The Lessor covenants with the Lessee that he will be responsible for making good only major defects to the building which appear within six months from the term hereby created (time in this respect all be of the essence) and he shall not be liable for any loss or damage that may be suffered by the Lessee resulting from the aforesaid defects.
IN WITNESS WHEREOF the parties hereto have set their hands or seals the day and year first above written.
SIGNED on behalf of
THE JURONG TOWN CORPORATION
By: Francis Mak
General Manager
in the presence of:
Clos............Choo
The Common Seal of:
KILN TECHNIQUE (PTE) LTD.
was hereunto affixed
in the presence of:
/s/Neuendorff Klaus Gunther Director /s/Tan Mee Choo Secretary I, Edna Lim Mei Ling an Advocate and Solicitor of the Supreme Court of Singapore hereby certify that on the 26th day of May 1983 the Common Seal of KILN TECHNIQUE (PTE) LTD. was duly affixed to the written instrument at Singapore in my presence in accordance with the regulations of the said Company which regulations have been produced and shown to me. |
Witness my hand this 2th day of May 1983.
/s/Edna Lim Mei Ling |
THE FIRST SCHEDULE ABOVE REFERENCED TO
All that piece of land knows as Private Lot A7163 also known as Government Survey Lot 603 Mukim VII Tuas are situated in the Republic of Singapore as shown edged red on the plan annexed hereto and estimated to contain an area of 7,369.9 square metres more or less subject to survey together with the buildings erected thereon.
(xiv) Not without the consent in writing of the Lessor
to affix or exhibit or erect or paint or permit or suffer to
be affixed or exhibited or erected or painted on or upon any
part of the exterior of the demised premises or of the
external walls or rails or fences thereof any nameplate
signboard placard poster or other advertisement or boarding.
(xv) Not to use or permit or suffer the demised premies or
any part thereof to be used otherwise than for the
manufacture of kiln drying plants, energy plants, turbine
accessories and wood working machineries and the operation
of an electrically operated kiln plant (to dry sawn timber)
strictly for training/educational purposes only, except with
the consent in writing of the Lessor.
(xvi) To make reasonable provision against and be
responsible for all loss injury or damage to any person or
property including that of the Lessor for which the Lessee
may be held liable arising out of or in connection with the
occupation and use of the demised premises and to indemnify
the Lessor against all proceedings claims costs and expenses
which he may incur or for which he may be held liable as a
result of any act neglect or default of the Lessee his
servants contractors or agents.
(xvii) To pay interest at the rate of 10% per annum or
such higher rate as may be determined from time to time by
the Lessor in respect of any arrears of rent or other
outstanding sums due and payable under this Lease from the
due dates thereof until payment in full is received by the
Lessor.
(xviii) At the termination of the said term or at the
earlier determination thereof to yield up to the Lessor the
land hereby demised together with all buildings structures
and fixtures therein in tenantable repair in accordance with
the Lessee's covenants herein contained.
(xix) To make good and sufficient provision for the safe
and efficient disposal of all waste including but not
limited to pollutants to the requirements and satisfaction
of the Lessor PROVIDED THAT in the event of default by the
Lessee under this covenant the Lessor may carry out such
remedial measures as he thinks necessary and all costs and
expenses incurred thereby shall forthwith be recoverable
from the Lessee as a debt.
(xx) Not to do or omit or suffer to be done or omitted any
act matter or thing in or on the demised premises in respect
of the business trade or industry carried out or conducted
therein which shall contravene the provisions of any laws
rules or regulations now or hereafter affecting the same and
at all times hereafter to indemnify and keep indemnified the
Lessor against all actions proceedings costs expenses claims
and demands in respect of any act matter or thing done or
omitted to be done in contravention of the said provisions.
(xxi) To pay all costs disbursements fees and charges
legal or otherwise including stamp and or registration fees
in connection with the preparation stamping and issue of
this Lease and any prior accompanying or future documents or
deeds supplementary collateral or in any way relating to
this Lease.
(xxii) To pay all costs and fees legal or otherwise
including costs as between solicitor and client in
connection with the enforcement of the covenants and
conditions herein.
(xxiii) To pay to the Lessor all survey fees and other
charges including those payable to and claimed by the
relevant Government Planning Authorities for the survey of
the demised premises for the purpose of the sub-division of
the land of which the demised premises forms part and issue
of this Lease and a Certificate of Title PROVIDED THAT the
Lessor shall have the right to employ his own surveyor to
carry out the said survey in which event the Lessee shall
bear all costs thereby incurred.
(xxiv) At his own cost to take such steps and execute
such works upon the demised premises as may be necessary for
the protection of shores and embankments if any and for the
prevention of earthslip erosion of soil and failure of
slopes expeditiously in a workmanlike manner and to the
satisfaction of the Lessor.
(xxv) To construct an internal drainage system within
the demised premises to the satisfaction of the Lessor to
ensure that all surface water collected thereon is
discharged into the public drains.
(xxvi) Not to effect a change of name without the prior
consent in writing of the Lessor PROVIDED THAT on every
change of name the Lessee shall pay the Lessor a fee to be
specified by the Lessor in relation to such consent.
(xxvii) To perform and observe the covenants on the
Lessor's part contained in the head lease made between the
President of the Republic of Singapore and the Lessor so far
as they are not varied herein and to keep the Lessor
indemnified against all claims damages costs and expenses in
any way relating thereto.
(xxviii) At the Lessee's own cost to shift the screen wall
back by two and a half metres (2.3m) within the demised
premises from the roan boundary line as and when required by
the Lessor and/or relevant authorities.
(xxix) At the Lessee's own cost to demolish and
reconstruct the bin centre/guard house to set the same back
within the boundary line as and when required by the Lessor
and/or relevant authorities.
(xxx) To maintain the demised premises and/or any part
thereof in a neat and tidy condition and forthwith to comply
with the Lessor's direction to remove and clear any
materials, goods or articles of whatever nature and
description from the demised premises or such part thereof.
2. The Lessor hereby covenants with the Lessee that the Lessee paying the rent hereinbefore reserved and performing and observing the covenants conditions and agreements on the part of the Lessee hereinbefore contained shall peaceably hold and enjoy the demised premises during the term hereby granted without any interruption of or by the Lessor or any person lawfully claiming throught under or in trust for him.
2A. The Lessor further covenants with the Lessee that he shall at the request of the Lessee made in writing not less than six (6) months prior to the expiry of the term herein created grant to the Lessee a lease of the demised premises for a further term of thirty (30) years (hereinafter referred to as "the further term") from the expiry of the said term upon the same terms and conditins and containing like covenants as are contained in this lease with the EXCEPTION of the present covenant for renewal PROVIDED THAT:
(i) the Lessee's fixed investment on the demised premises
exceeds the sum of $1.8 million per 0.4 hectare of the
demised premises (out of which at least $750,000 per 0.4
hectare shall be on building and civil works and the rest
can be on plant and machinery) within ten (10) years from
the 1st day of September 1981 and due proof of such
investment is produced to the satisfaction of the Lessor;
(ii) there be no existing breach(s) or non-observance(s) of
any of the covenants and conditions herein contained on the
part of the Lessee to be observed or performed;
(iii) the rental payable for the further term shall be
as set out hereunder:
a) the yearly rent for the further term shall be at the
rate of 6% of the market value of the commencement of the
further term (hereinafter referred to as "the Second Initial
Rent") which rate shall however be subject to a revision on
the 1st day of January 2013 to a rate of six per cent (6%)
of the market value on the date of such revision determined
in the manner following but so that the increase shall not
exceed fifty per cent (50%) of the Second Initial Rent.
b) the yearly rent so revised shall be subject to revision
every period of five years thereafter and shall be at the
rate of six per cent (6%) of the market value on the
respective dates determined in the manner following but so
that the increase shall not exceed fifty per cent (50%) of
the annual rent for each immediately preceding period of
five years.
c) the market value and the time of payment of the yearly
rent shall be as aforesaid.
3. PROVIDED ALWAYS and it is hereby agreed between the parties as follows:
(a) That no estate or interest in the soil of the road and
footpath adjacent to the demised premises is or shall be
deemed to be included in the demise hereinbefore contained.
(b) That the Lessee shall not be entitled to any right of
access of light or air to any buildings erected on the
demised premises which would restrict or interfere with the
user of any adjoining or neighboring land for building or
any other purpose.
(c) That is the said rent hereby reserved or any part
thereof shall be unpaid for fourteen days after becoming
payable (whether the same shall have been formally demanded
or not) or if any of the covenants on the part of the Lessee
herein contained shall not be performed or observed then and
in any such case it shall be lawful for the Lessor or any
person or persons authorised by him in that behalf at any
time thereafter to re-enter upon the demised premises or any
part thereof in the name of the whole and thereupon the term
hereby created shall absolutely determine but without
prejudice to any right of action or remedy of the Lessor in
respect of any breach of any of the covenants by the Lessee
hereinbefore contained PROVIDED THAT if the demised premises
have been assigned by way of mortgage the provisions of this
clause shall not take effect until the Lessor has served
upon the mortgagee a notice in writing, that such breach has
occurred and the mortgagee has failed to remedy such breach.
(d) That the Lessor shall not be liable for any loss or
damage that may be suffered by the Lessee resulting from any
subsidence or cracking of the ground floor slabs and aprons.
In this Lease where the context so requires words
importing the singular number or the masculine gender
include the plural number or the feminine gender and
words importing persons include corporation and vice
versa and where there are two or more persons included
in the expression "the Lessee" covenants expressed to
be made by "the Lessee" shall be deemed to be made by
such persons jointly and severally.
[Exhibits-02-10.04]
Exhibit 10.04(a)
THIS DEED OF ASSIGNMENT is made the 17th day of April one
thousand nine hundred and eighty-six (1986) between KILN
TECHNIQUE (PRIVATE) LIMITED a company incorporated in the
Republic of Singapore and having its registered office at 4
Gul Crescent, Jurong, Singapore (hereinafter called "the
Company") of the first part, PAUL MA KAH WHO, RICHARD LAW
WAY YING AND MICHAEL NG WEI TECK ALL OF m/S Peat Marwick &
Co of 16 Raffles Quay, #22-00, Hong Leong Building,
Singapore 0104 (hereinafter called "the Receivers") of the
second part and NELCO PRODUCTS PTE. LTD. a company
incorporated in the Republic of Singapore and having its
registered office at 24, Raffles Place, #23-01, Clifford
Centre, Singapore (hereinafter called "the Assignee") of the
third part.
WHEREAS by an Agreement for Lease dated the 26th day of May 1982 (hereinafter referred to as "the Principal Agreement") made between THE JURONG TOWN CORPORATION a body corporate incorporated under the Jurong Town Corporation Act (hereinafter called "the JTC") of the one part and the Company of the other part the JTC granted to the Company a lease of the land and premises described in the Schedule hereto (hereinafter referred to as "the said land and premises") for the term of 30 years from the 1st day of September 1981 at the yearly rent and upon the terms and conditions set out therein.
AND WHEREAS the Receivers were on the 12th day of March 1985 appointed the Receivers and Managers of the Company by the European Asian Bank Aktiengesellschaft pursuant to two Debentures dated the 2nd day of December 1980 and the 29th day of March 1982 respectively issued by the Company in favour of the said Bank.
AND WHEREAS the Receivers have agreed to sell the said land and premises and all its right title interest and benefit in the Principal Agreement to the Assignee at the price of Dollars Five hundred and twenty thousand ($520,000.00).
AND WHEREAS the JTC has consented to the said sale and purchase of the said land and premises and the Company's right title interest and benefit in the Principal Agreement between the parties hereto subject to the terms and conditions contained in their letter of consent dated the 22nd day of March 1986 to M/s Shook Lin & Bok, solicitors for the Receivers.
NOW THIS DEED WITNESSETH as follows:
1. In pursuance of the said agreement and in consideration of the sum of Dollars Five hundred and twenty thousand ($520,000.00) paid by the Assignee to the Receivers with the consent of the Company on or before the execution of these presents (the receipt whereof the Receivers and the Company hereby respectively acknowledge) the Company as beneficial owner by the direction of the Receivers HEREBY ASSIGNS unto the Assignee ALL that the Principal Agreement and the full benefit and burden thereof and all remedies for enforcing the same together with all estate and interest of the Company in the said land and premises and together with the benefit of all payments made to the JTC under and/or pursuant to the Principal Agreement by the Company TO HOLD the same unto the Assignee absolutely subject to the terms and conditions and covenants contained in the Principal Agreement.
2. With the object of affording to the Company a full indemnity in respect of any future breach of any of the covenants and conditions contained in the Principal Agreement but not further or otherwise the Assignee hereby covenants with the Company that the Assignee its successors and assigns will henceforth observe and perform all the said covenants and conditions and will indemnify the Company from and against all claims and demands in respect thereof so far as the same affect the said land and premises and are still subsisting and capable of taking effect.
3. The Company hereby agrees and undertakes at the cost and expense of the Assignee to do and execute all such acts and deeds and if necessary to procure such other parties to join and/or direct the JTC to execute the Lease or other assurance of the said land and premises to the Assignee.
4. (a) For the purpose of giving effect to the aforesaid the Company HEREBY IRREVOCABLY APPOINTS the Assignee to be its attorney and in the name of the Company to do all or any of the following acts or things:
(1) to take and accept delivery of the Lease and such other
documents of title relating to the said land and premises
from the JTC subject to such stipulations provisions and
conditions as contained in the Principal Agreement;
(2) to execute deliver and otherwise perfect the said Lease
of the said land and premises in favour of the Assignee and
if necessary to join in to the said Lease of the said land
and premises and to register the same with the proper
authority;
(3) to authorize and direct the JTC and such other
necessary parties to execute the said Lease of the said land
and premises in favour of the Assignee;
(4) for all or any of the purposes aforesaid to execute
sign seal deliver and otherwise perfect the said Lease and
all other deed instruments and documents whatsoever relating
to the said land and premises;
(5) to institute commence and take whatever action legal or
otherwise that the Assignee may deem necessary under the
terms of the Principal Agreement against the JTC or any
other necessary parties thereto;
(6) to appoint substitute Attorney or Attorneys under or in
place of the Attorney hereby appointed with the same or with
more limited powers as the Assignee shall in its absolute
discretion deem proper; and
(7) to engage the services of accountants solicitors
valuers and such other professional required for the said
land and premises or pertaining to the enforcement of the
rights under the Principal Agreement.
And the Company hereby declares that the said lease and all other deeds instruments and documents executed by the Assignee of any substituted Attorney appointed by virtue of the provisions hereof on behalf of the Company or any servant or agent nominated by the Assignee aforesaid shall be as good valid and effectual to all intents and purposes whatsoever as if the same had been duly and properly executed by the Company and the Company hereby undertake to ratify and confirm the said Lease and all other deeds instruments and documents lawfully executed by virtue of the authority and power hereby conferred.
(b) The Company hereby further declares that the powers and authority hereby conferred are given for valuable consideration and shall remain irrevocable for a period expiring only on the issuance of the lease by JTC in favour of the Assignee.
IN WITNESS whereof the Receivers and Managers of the Company have hereunto set their hands and seals and the Company and the Assignee has hereunto caused their respective Common Seals to be affixed the day and year first above written.
THE SCHEDULE ABOVE REFERRED TO
ALL that piece of land known as Lot 603 of Mukim 7 at Jalan Burob, Jurone (also known as Private Lot A7163) and situate in the Republic of Singapore as shown edged red on the plan annexed to the Principal Agreement containing an area of 7,169.9 square metres.
TOGETHER with the buildings and all installations erected or to be erected thereon.
The Common Seal of KILN ) TECHNIQUE (PRIVATE) LIMITED ) was hereunto affixed in the ) presence of: ) /s/ Wang Wang Chew Official Receiver and Liquidator SIGNED SEALED and DELIVERED ) /s/Paul Ma Kah Woh by PAUL MA, RICHARD LAW and ) /s/Richard Law Way Ying MICHAEL NG as the Receivers ) /s/Michael NG Wei Teck and Managers of KILN ) TECHNIQUE (PRIVATE) LIMITED ) in the presence of /s/---------------- The Common Seal of NELCO ) PRODUCTS PTE. LTD. was ) hereunto affixed in the ) presence of: /s/ Director /s/ Secretary |
On this 10th day of April A.D. 1986 before me, Wan Fook Fang an Advocate and Solicitor of the Supreme Court of the Republic of Singapore practising in Singapore personally appeared PAUL MA, RICHARD LAW and MICHAEL NG as Receivers and Managers of KILN TECHNIQUE (PRIVATE) LIMITED, who of my own personal knowledge I know to be the identical persons whose names "PAUL MA KAH WOH", "RICHARD LAW WAY YING" and "MICHAEL NG WEi TECK" are subscribed to the above written instrument and acknowledge that they had voluntarily executed this instrument at Singapore.
Witness my hand
/s/Wan Fook Fang
I, MARGARET CHEW POH KWAN an Advocate and Solicitor of
the Supreme Court of the Republic of Singapore practising in
Singapore hereby certify that on the 17th day of April A.D.
1986 the Common Seal of NELCO PRODUCTS PTE. LTD. was duly
affixed to the above written instrument at Singapore in my
presence in accordance with the regulations of the Company
(which regulations have been produced and shown to me).
|
Witness my hand this 17th day of April 1986
/s/Margaret Chew Poh Kwan |
[exhibits-02-10.04a]bd
Exhibit 10.06
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, made and entered into as of the 28th day of February, 1994, by and between PARK ELECTROCHEMICAL CORP., a New York corporation (hereinafter called the "Company"), having an office at 5 Dakota Drive, Lake Success, New York 11042, and JERRY SHORE (hereinafter called "Shore") , residing at Lighthouse Road, Sands Point, Long Island, New York.
W I T N E S S E T H
WHEREAS, Shore has been an employee of the company since 1954 and has served in one or more of the capacities of Chairman of the Board, President and Chief Executive Officer of the Company since 1954;
WHEREAS, the Company and Shore have previously executed and delivered an Agreement, dated December 12, 1984 (the "Original Agreement"), relating to the employment of Shore by the Company; and
WHEREAS, the Company and Shore wish to modify certain of the terms and conditions of the Original Agreement by amending and restating the original Agreement;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Position; Term. The Company hereby employs Shore and Shore hereby accepts employment and agrees to serve the Company as its chief executive officer for a term commencing on the date hereof and ending on February 28, 1999, which period shall be automatically extended on February 29, 1995 and on each subsequent February 28 or February 29, as the case may be, by an additional one year unless, on or before the preceding March 1 the Board of Directors of the Company (the "Board of Directors") shall determine otherwise and shall so notify Shore. If the Board of Directors shall so determine and shall so notify Shore, then the term of this Agreement shall end four years from the February 28 or February 29, as the case may be, subsequent to such determination and notification. As used in this Agreement, the term employment term" shall mean, as of any date, the then current term of Shore's employment determined in accordance with this paragraph 1.
2. Duties; Location. Shore shall have the titles of Chairman of the Board, President and Chief Executive officer of the Company during the employment term and such offices shall have the responsibilities as provided in the By-laws of the Company as in effect on the date hereof and Shore shall perform the duties and services incident to his positions. Shore shall be entitled to relinquish one or more of such titles, so long as he retains at least one of such titles and performs the duties and services incident to the positions) for which he retains the title(s) . Shore's primary place of employment will be located within the Village of Lake Success, New York or such other location in Nassau County, New York as may be acceptable to Shore.
3. Principal Occupation; Competition. (a) Shore shall devote his full time, effort and attention during regular business hours to the business and affairs of the Company.
(b) During the employment term, Shore shall not, without the prior permission of the Board of Directors, directly or indirectly engage or be interested in any other business enterprise which is competitive with the Company; provided, however, that nothing in this Agreement shall restrict Shore from owning or dealing in investments or securities except for those relating to any business which has any business relations with the Company or which is competitive with the Company, unless the securities of such business are listed on a national securities exchange or traded in the over-the-counter market and the interest of Shore does not exceed one (1%) percent of the outstanding securities of that business or unless, in each instance, prior written permission of the Board of Directors has been obtained.
4. Compensation; Benefits. In consideration of the duties and services to be rendered hereunder, the Company shall pay to Shore and Shore shall accept the compensation and benefits hereinafter provided.
(a) The Company shall pay Shore a base salary at the rate of $350,000 per year or such other greater amount as shall be determined from time to time by the Board of Directors or the CEO Compensation Committee of the Board of Directors (the "base salary"), payable in as nearly equal weekly installments as is practicable, or in such other manner as shall be mutually agreeable to Shore and the Company. The CEO Compensation Committee of the Board of Directors shall review Shore's base salary at least annually during the employment term not later than July 31 of each year subsequent to 1994 and shall take any action such Committee considers appropriate to increase the base salary.
(b) As additional compensation, the Company shall pay Shore an amount ("additional compensation") equal to two and one-half percent (2-1/2%) of the After-Tax Net Earnings (as defined below) of the Company for any Fiscal Year in excess of an amount equal to ten (10%) percent of Stockholder's Equity (as defined below) of the Company for such Fiscal Year, which additional compensation shall not, in any event, exceed $250,000 per year.
(c) For purposes of this Agreement, the following shall apply:
(i) The term "After-Tax Net Earnings" shall mean the consolidated net earnings of the Company and its subsidiaries after all taxes, for the applicable period, determined by Ernst & Young or any other firm of indepen dent certified public accountants of recognized national standing selected by the Company (the "Accountants"), in accordance with generally accepted accounting principles consistently applied. Without limiting the generality of the foregoing, all base salary (but not additional compensation) and the benefits and expenses paid to or accrued for the benefit of Shore with respect to such period by the Company pursuant to this Agreement shall be deducted in determining After-Tax Net Earnings.
(ii) The term "Stockholders' Equity" for a Fiscal Year shall mean the stockholders, equity of the Company as at the beginning of each such Fiscal Year, as determined by the Accountants by reference to the audited consolidated balance sheet of the Company and its subsidiaries as at the end of the immediately preceding Fiscal Year as included in the Annual Report on Form 10-K of the Company and, in each case, determined in accordance with generally accepted accounting principles consistently applied.
(iii) The term "Fiscal Year" shall mean the fiscal year of the Company, commencing with the fiscal year starting March 1, 1993. Should the employment term terminate on any date other than the last day of a Fiscal Year, then the additional compensation shall be based upon the full Fiscal Year in which termination of the employment term shall have occurred, but shall be prorated in the proportion that the number of calendar months of such Fiscal Year which shall have elapsed at the time of termination of the employment term (including the month of termination of the employment term) bears to 12.
(iv) Computations of After-Tax Net
Earnings and Stockholders' Equity shall be
determined by the Accountants within ninety
(90) days after the end of each Fiscal Year.
The Company shall furnish to Shore a
reasonably detailed computation of the amount
of additional compensation to which Shore is
entitled. Such additional compensation shall
be payable on or before twenty (20) days
after the computations of After-Tax Net
Earnings and Stockholders' Equity. The
Company's audited financial statements for
each Fiscal Year prepared by the Accountants
shall be conclusive and binding on the
Company and Shore with respect to
computations of After-Tax Net Earnings.
(d) It is contemplated that, during the employment term and the consulting period (as hereinafter defined), Shore may be required to incur out-of-pocket expenses in connection with the performance of his duties hereunder and in promoting the business of the Company and its subsidiaries, including expenses incurred for travel and business entertainment. Accordingly, the Company shall pay, or reimburse Shore for, all reasonable out-of-pocket expenses incurred by Shore in connection with the performance of his duties hereunder.
(e) In recognition that Shore will be required to do a considerable amount of local driving in connection with his duties hereunder, the Company shall, during the employment term and the consulting period (as hereinafter defined), provide Shore with the full-time use of one (1) new or late-model automobile comparable to that provided by the Company to Shore as of the date of this Agreement. In addition, the Company shall pay, or reimburse Shore for, all expenses incident to Shore's operation of such automobile, including, without limitation, gasoline, oil, repairs, maintenance, parking expenses and such insurance as Shore reasonably deems appropriate.
(f) During the employment term and the consulting period (as hereinafter defined), Shore shall be entitled to participate in all life insurance, medical insurance, disability insurance, retirement, pension, profit-sharing, stock option or other benefits presently or during the employment term and the consulting period (as hereinafter defined) made available by the Company to its senior executive officers. without limiting the generality of the foregoing, the Company shall maintain in effect during the employment term and the consulting period (as hereinafter defined) life insurance and medical insurance coverage for the benefit of Shore and his family, at least equal to the coverage provided as of the date of execution of this Agreement. Notwithstanding any other provisions of this Agreement, the Company shall continue to provide medical insurance coverage, including, without limitation, major medical, hospitalization and dental coverage, to Shore and his family, at least equal to the coverage provided as of the date of this Agreement, subsequent to the employment term hereunder at all time during Shore's lifetime including, without limitation, during the consulting period contemplated by paragraph 5 hereof and subsequent to Shore's retirement as a consultant, and if Shore's wife shall survive him, the Company shall continue to provide such insurance coverage for Shore's wife during her lifetime.
(g) Shore shall be entitled, during the employment term, to four (4) weeks vacation during each twelve (12) month period, such vacation to be taken at such time or times as shall be mutually agreeable to Shore and to the Company. Such vacation shall be forfeited to the extent not utilized during the applicable twelve (12) month period.
(h) Pursuant to the original Agreement, the Company previously issued to Shore a non-qualified stock option to purchase an aggregate of 50,000 shares of the Company's Common Stock exercisable in whole at any time or in part from time to time commencing upon the date a stock option plan and agreement was approved by the holders of a majority of the Company's outstanding Common Stock entitled to vote and in accordance with such plan and agreement. This Agreement shall not in any respect modify Shore's rights in respect of such option.
(i) Each year during the employment term and the consulting period (as hereinafter defined), an amount equal to the excess of (i) the sum of (x) the amount contributed by the Company to the Park Electrochemical Corp. Employees, Profit-Sharing Plan, as amended (the 'Plan"), for such year plus (y) any amounts forfeited by other participants in the Plan during such year, which sum, but for the limitations imposed by section 415 of the Internal Revenue Code of 1986, as amended, and by Section 4.14 of the Plan, would have been allocated to Shore's account under the Plan, over (ii) the amount of contributions and forfeitures actually credited to Shore's account for such year, shall be credited by the Company to the separate account previously established and currently maintained by the Company for shore pursuant to the Original Agreement (the "Account"). In addition, interest shall be credited annually to the Account at the same rate as net income, gains or profits are earned on the Plan assets. Payments to Shore from the Account shall be made as and when distributions are made to Shore from the Plan and in the same proportion of the Account which the Plan distribution bears to Shore's account balance under the Plan. The parties recognize and agree that the payments to be made by the Company to Shore from the Account are unsecured obligations of the Company, that Shore is only a general creditor of the Company in that respect and that the amounts in the Account are assets of the Company which are available to satisfy the claims of the Company's creditors generally.
5. Consultancy. At any time after the date hereof Shore shall have the right, to be exercised as herein provided, to retire from full-time employment with the Company and become a consultant. Upon the effective date of such retirement and for a period of five years thereafter (the "consulting period"), Shore shall make himself available to advise and consult with officers and other employees of the Company so that the Company may continue to have the benefit of his experience and knowledge of the affairs of the Company and of his reputation and contacts in the industries in which the Company is engaged in business. During the consulting period, Shore shall be available to officers and other employees of the Company from time to time and at reasonable times by telephone, mail or in person; provided, however, that his failure to give advice and counsel by reason of illness or absence due to travel or any other reasons, except continuous willful refusal, shall not affect his right to receive compensation during the consulting period. Shore shall be free, during the consulting period, to devote the balance of his time and attention to such other business enterprises or activities as he may see fit, subject to the restrictive covenant hereinafter contained. During the consulting period, Shore's compensation shall be equal to sixty (60%) percent of the base salary in effect at the time of Shore's retirement from full-time employment and, except as otherwise specifically provided herein, he shall not be entitled to additional compensation with respect to any period after the date of his retirement from full-time employment. Commencing on the first anniversary of Shore's retirement from full-time employment and on each subsequent anniversary of Shore's retirement from full-time employment during the consulting period, Shore's compensation pursuant to this paragraph 5 shall be adjusted to take account of increases in the cost of living during the consulting period by increasing Shore's compensation during the consulting period by that percentage which shall equal the percentage by which the Consumer Price Index-All Urban Consumers published by the United States Department of Labor (or any successor or similar index if such Consumer Price Index shall no longer be published) most recently available on such anniversary of Shore's retirement shall exceed the Consumer Price Index-All Urban Consumers most recently available one year prior to such anniversary. All of the other provisions of this Agreement, including the benefits pursuant to paragraph 4(d) and (e) and the insurance benefits pursuant to paragraph 4(f), shall be applicable during the consulting period; provided, however, that, if Shore shall die during the consulting period, the provisions of paragraph 6 hereof shall become applicable and shall replace all of the terms and provisions of this paragraph 5 and in the event of the disability (as defined in paragraph 7 hereof) of Shore for a period of 12 consecutive months during the consulting period, the provisions of paragraph 7 hereof shall become applicable and shall replace all of the terms and provisions of this paragraph 5.
Shore's right to retire from full-time employment shall be invoked by a written notice to the Company to that effect, specifying an effective date (on the first day of a month), not less than ninety days from the date such notice is given, as of which he desires to retire from full-time employment with the Company. on such effective date, Shore's duties as a consultant and advisor shall commence on the terms and conditions herein provided.
6. Death. In the event of the death of Shore during the employment term or the consulting period, the employment or consultancy, as the case may be, of Shore hereunder shall terminate without any further liability of the Company to Shore except (a) as provided in paragraph 4(f) hereof with respect to health insurance coverage for Shore's wife, (b) payment of unreimbursed expenses incurred by Shore prior to his death, (c) payment of base salary and additional compensation, if any, or consultant compensation, as the case may be, computed up to the end of the month following the month in which Shore's death occurs, (d) if Shore's death occurs during the employment term, the Company shall pay Shore's wife, or such other beneficiary as he may designate in writing (or failing such designation, to his estate), an amount equal to sixty percent (60%) of the base salary that otherwise would have been payable to Shore for the remainder of the employment term in effect on the date of his death, such amount to be payable in equal monthly installments over the remainder of such employment term, (e) if Shore's death occurs during the consulting period, the Company shall pay Shore's wife, or such other beneficiary as he may designate in writing (or failing such designation, to his estate), an amount equal to sixty percent (60%) of the base salary as in effect immediately prior to the commencement of the consulting period for the remainder of the consulting period in effect on the date of his death, such amount to be payable in equal monthly installments over the remainder of such consulting period, and (f) if Shore's wife shall be living on the last day of the employment term in effect on the date of his death or the consulting period in effect on the date of his death, as the case may be, then the Company shall make payments to Shore's wife, in as nearly equal weekly installments as is practicable, or in such other manner as shall be mutually agreeable to Shore's wife and the Company, at a rate equal to sixty percent (60%) of Shore's base salary (as in effect at the date of Shore's death, if he dies during the employment term, or as in effect immediately prior to commencement of the consulting period, if he dies during the consulting period), for the remainder of her life.
7. Disability. (a) In the event of the disability (as defined below) of Shore for a period of twelve (12) consecu tive months during the employment term or consulting period, the employment or consulting, as the case may be, of Shore hereunder shall terminate without further liability of the Company to Shore, except that (i) the Company shall pay Shore an amount equal to sixty (60%) percent of the base salary for the balance of the employment term or the consulting period, as the case may be, (ii) the Company shall pay Shore his additional compensation, if any, computed up to the end of the month following the month in which Shore became disabled, (iii) the provisions regarding benefits pursuant to paragraph 4(d) and (e) and regarding the insurance benefits pursuant to paragraph 4(f) shall remain applicable for the balance of the employment term or the consulting period, as the case may be, and thereafter as provided in paragraph 4(f) hereof, and (iv) in the event Shore shall remain disabled beyond the employment term or the consulting period, as the case may be, the Company shall pay Shore $10,000 per month until the earlier of the (x) the death of Shore, or (y) the termination of Shore's disability.
(b) For purposes of this Agreement, the term disability shall mean Shore's inability, because of illness or incapacity, physical or mental, to perform substantially all of the duties and services to be performed by him hereunder. The determination of a physician jointly appointed by the Company and Shore or any member of his immediate family as to whether or not Shore has become disabled shall be conclusive and finding on the Company and Shore.
(c) Nothing herein contained shall prevent the Company from satisfying its obligations to Shore or his wife hereunder by means of the purchase of insurance upon terms and conditions acceptable to Shore or, if Shore is deceased, acceptable to his wife, provided that the Company shall remain liable to Shore or his wife, as the case may be, for the benefits herein provided to the extent that any insurer fails to pay the full amounts required under this Agreement.
8. Non-Exclusive. The benefits provided in this Agreement hall not be exclusive and shall not prejudice or limit any plan or policy of the Company which may hereafter be granted by action of the Board of Directors.
9. Certain Computations. In the event of the termination of the employment term, the consulting period, Shore's employment hereunder or Shore's consultancy hereunder on any date other than the last day of a Fiscal Year, including, without limitation, by reason of the death or disability of Shore, the additional compensation, if any, required to be paid need not be paid by the Company until thirty (30) days after the computation of the amount in accordance with paragraph 4(c)(iv). The Company shall not be required to make any computation with respect to After- Tax Net Earnings or stockholder's Equity except after the end of any Fiscal Year. If a computation with respect to After-Tax Net Earnings shall be required for a period of less than a Fiscal Year, such computation may be made by taking a proportionate part of that particular Fiscal Year.
10. Trade Secrets; Confidentiality. Shore recognizes and acknowledges that confidential information of various kinds, including lists of the Company's customers and vendors, as they may exist, from time to time, and other trade secrets, are valuable, special and unique assets of the Company's business. Shore shall not, during or after his employment, except in accordance with his employment, disclose or cause or permit to be disclosed any list or similar means of identification of the Company's customers or vendors or other trade secrets to any person, firm, corporation, association or other entity for any reason or purpose whatsoever. The provisions of this paragraph 10 shall not apply to information generally known to the public or the trade or information available in trade or other publications.
11. Non-Competition. Shore shall not, for a period of one (1) year after the termination of his employment, directly or indirectly: (a) induce any person connected with or employed by the Company or any subsidiary of the Company to leave the employ of the Company or such subsidiary; or (b) solicit the employment of any such person on his own behalf or on behalf of any other person firm, corporation, association or other entity.
12. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof, and may not be modified or amended except by an instrument in writing signed by the parties hereto.
13. Successors and Assigns. This Agreement and all of its terms and conditions shall be binding upon, and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives and successors. This Agreement is personal and shall not be assignable by Shore or the Company except that, in the event of any consolidation with or merger into any other corporation by the Company or the sale or distribution of all or a substantial part of the assets of the Company to another corporation, the surviving or acquiring corporation shall assume this Agreement and become obligated to perform all of the terms and conditions hereof and Shore's obligations hereunder shall continue in favor of such corporation.
14. Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been given when delivered personally against receipt or three (3) days after being mailed, by registered or certified mail, return receipt requested, addressed to the party to whom directed at the address first above written or to such other address as any party may hereafter designate to the other by notice similarly given.
15. No Waiver. No waiver of any breach or default hereunder shall be considered valid unless in writing and signed by the party giving such waiver, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.
16. Governing Law. This Agreement shall in all respects be construed and enforced in accordance with, and governed by, the laws of the State of New York which would be applica ble to contracts made and to be performed in New York.
IN WITNESS WHEREOF, the parties hereunto have duly
executed this Agreement as of the date first above written.
PARK ELECTROCHEMICAL CORP.
By: /s/ Brian E. Shore
Title: Executive Vice
President
/s/ Jerry Shore
Jerry Shore
APPROVED by the CEO Compensation Committee of the Board of
Directors of Park Electrochemical Corp. as of April 1, 1994.
/s/ Anthony Chiesa
Anthony Chiesa
/s/ Lloyd Frank
Lloyd Frank
/s/ Norman M. Schneider
Norman M. Schneider
[exhibit-02-10.06]bd
|
Exhibit 10.06(a)
THIS AMENDMENT NO. 1, made and entered into as of the
day of
March, 1995, by and between PARK ELECTROCHEMICAL CORP., a
New
York corporation (hereinafter called the "Company"), having
an office at 5 Dakota Drive, Lake Success, New York 11042,
and JERRY SHORE (hereinafter called "Shore"), residing at
Lighthouse Road, Sands Point, Long Island, New York (this
"Amendment").
WITNESSETH:
WHEREAS, the Company and Shore have previously executed and delivered an Amended and Restated Employment Agreement, dated as of February 28, 1994 (the "Original Agreement"), relating to the employment of Shore by the Company; and
WHEREAS, the Company and Shore wish to modify certain of the terms and conditions of the Original Agreement as hereinafter set forth;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Additional Payment. In addition to all other amounts payable by the Company to Shore (or his legal representative or the executor or administrator of Shore's estate) pursuant to the Original Agreement, the Company shall pay to Shore on the Payment Date (as hereinafter defined) an amount equal to $264,289, plus an amount equal to interest accruing thereon at the Prime Rate (as hereinafter defined) from time to time, compounded monthly, from September 1, 1994 to the Payment Date. The Company and Shore acknowledge and agree that the payment to be made by the Company to Shore pursuant to this Section is an unsecured obligation of the Company, that Shore is only a general creditor of the Company in that respect and that the amounts due from the Company are assets of the Company until paid to Shore which are available to satisfy the claims of the Company's creditors generally.
As used in this Amendment, the following terms shall have the following meanings:
(a) "Payment Date" shall mean the earliest of (1) the date which is 30 days after the effective date of Shore's retirement from full-time employment with the Company, (2) the date which is 30 days after the date of Shore's death or (3) the date which is 30 days after the date of Shore's "disability" (as defined in the Original Agreement).
(b) "Prime Rate" shall mean the rate of interest announced from time to time by Bankers Trust Company as its "prime rate", with each change therein to be effective hereunder at the time such change is effective for Bankers Trust Company.
2. Additional Compensation.
(a) Section 4(b) of the Original Agreement shall be amended to read as follows:
11(b) As additional compensation, the Company shall pay Shore an amount ("additional compensation") equal to four percent (4%) of the amount by which After-Tax Net Earnings (as defined below) of the Company for any Fiscal Year (commencing with the Fiscal Year beginning February 28, 1994) exceeds $7,500,000; provided, however, that in no event shall the additional compensation in respect of any Fiscal Year exceed $350,000.11
(b) Section 4(c) of the Original Agreement shall be amended by deleting Section 4(c)(ii) and redesignating Sections 4(c)(iii) and 4(c)(iv) as Sections 4(c)(ii) and 4(c)(iii), respectively.
3. Additional Amendment. Section 4(i) of the Original Agreement is hereby amended to change the reference therein to section 415 of the Internal Revenue Code of 1986, as amended (the "Code"), to be a reference to sections 401 and 415 of the Code.
4. Entire Agreement. This Amendment and the Original Agreement together constitute the entire agreement between the parties with respect to the subject matter hereof, and may not be modified or amended except by an instrument in writing signed by the parties hereto.
5. Successors and Assigns. This Amendment and all of its terms and conditions shall be binding upon, and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives and successors. This Amendment is personal and shall not be assignable by Shore or the Company except that, in the event of any consolidation with or merger into any other corporation by the Company or the sale or distribution of all or a substantial part of the assets of the Company to another corporation, the surviving or acquiring corporation shall assume this Amendment and become obligated to perform all of the terms and conditions hereof and Shore's obligations hereunder shall continue in favor of such corporation.
6. Notices. All notices and other communications required or permitted to be given hereunder shall be given in accordance with Section 14 of the Original Agreement.
7. No Waiver. No waiver of any breach or default hereunder shall be considered valid unless in writing and signed by the party giving such waiver, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.
8. Governing Law. This Amendment shall in all respects be construed and enforced in accordance with, and governed by, the laws of the State of New York which would be applicable to contracts made and to be performed in New York.
IN WITNESS WHEREOF, the parties hereunto have duly executed this Amendment as of the date first above written.
PARK ELECTROCHEMICAL CORP.
By: /s/Brian E. Shore
Title: Executive Vice President
By: /s/Jerry Shore
Title: President
|
APPROVED:
EXECUTIVE COMPENSATION COMMITTEE
[Exhibi-02-10.06a]bd
Exhibit 10.07
LEASE
THIS INDENTURE, made this 15th day of April, 1988,between GEOFFREY ETHERINGTON, II, of Jupiter, Florida, (herein-after called "Landlord") and USP COMPOSITES, INC. whose address is 172 East Aurora Street, Waterbury, Connecticut, (hereinafter called "Tenant").
W I T N E S S E T H
That for and in consideration of the payment by Tenantof the rent hereinafter reserved and the performance by Tenant of the covenants and agreements hereinafter agreed to be performed by Tenant in accordance with the provisions hereinafter set forth, Landlord does hereby let and demise unto Tenant and Tenant does hereby take and hire from Landlord, that certain real property (hereinafter referred to as the 'leased premises"), described in Exhibit "A" attached hereto and made a part hereof by reference, for the term commencing on April 15, 1988 and ending on December 31, 1992 at a rent of $175,380.00 per annum, payable to Landlord in equal monthly installments of $14,615.00 in advance, without notice, on the first day of each month during the term of this Lease. Tenant shall have the one time right to extend the term of this Lease for a period of up to five (5) years by written notice given not later than June 30, 1992. During such extended term all of the terms and conditions of the Lease shall remain in full force and effect except that the rent during such extended term shall be fixed at one time and shall be the fair market rent for the leased premises for such extended term (but in no event less than $175,380.00 per annum).
If Tenant, not later than June 30, 1992, shall have given written notice as aforesaid of the exercise of its right to extend the term of this Lease, then, for the purposes of the foregoing, "fair market rent' shall be determined as follows: Landlord shall make the initial determination of fair market rent. Landlord shall give notice to Tenant of Landlord's determination of fair market rent prior to July 15, 1992. If Tenant shall dispute Landlord's determination, Tenant shall give notice of such dispute within fifteen (15) days after receipt of Landlord's determination. Within fifteen (15) days thereafter, if both parties fail to agree as to fair market rent then both parties shall agree to the appointment of a disinterested person of recognized competence in the field as an appraiser. The appraiser thus appointed shall as promptly as possible determine fair market rent. If Tenant shall dispute any determination by the appraiser, or if both parties cannot agree as to an appraiser prior to September 1, 1992, fair market rent shall be determined by arbitration before the American Arbitration Association of Hartford, Connecticut, in accordance with its rules then obtaining. All costs of any arbitration pursuant to the foregoing shall be borne by Landlord and Tenant equally. In the event of any arbitration pursuant to the foregoing, or in the event that Landlord and Tenant for any reason fail to agree as to fair market rent prior to September 1, 1992, then notwithstanding anything to the contrary contained herein, the last date upon which Tenant shall have the right to give notice of exercise of the option to purchase provided for in Paragraph 20(A)(iii) hereof shall be extended from December 31, 1992 until a date which is 45 days after fair market rent has been determined by such arbitration or Landlord and Tenant have agreed as to fair market rent. In the event that the Closing (as defined in Paragraph 20(A)) shall be scheduled to occur after December 31, 1992, Tenant shall be entitled to remain in occupancy of the leased premises until the Closing (but not beyond June 30, 1993 unless this Lease shall have been extended for the extended term as provided above), during which pre-Closing period all provisions of this Lease shall continue in effect as if this Lease had been so extended and Tenant shall pay the fair market rent. Notwithstanding anything in this Lease to the contrary, if Tenant shall give notice of its exercise of its option to purchase the leased premises on or after June 30, 1992 and Tenant shall have given written notice of the exercise of its right to extend the term of this Lease not later than June 30, 1992, Tenant may (a) delay the Closing to a date not more than 45 days after the fair market rent shall have been determined or agreed upon as aforesaid and (b) rescind such purchase option exercise at any time during such 45-day period.
In the event during the initial term or any renewal term hereof, any monthly installment of rental reserved herein shall not be paid within ten (10) days after the same shall become due, Tenant shall pay to Landlord a late charge which shall be equal to two percent (2%) of the rental payment due.
If, however, the date on which Tenant is given possession begins on a date other than the first day of any month, then the rental payment for the period from the date of possession to the beginning of the term shall cover the pro rata rent for a fractional part of the month from the date possession begins through the last day of that calendar month.
This Lease is made upon the foregoing and the following agreements, covenants, and conditions, all and every one of which Landlord and Tenant agree to keep and perform during the initial term of this Lease and any renewal thereof:
1. USE OF PREMISES Tenant may use and occupy the leased premises for any lawful business purposes. Tenant will comply with any and all laws, ordinances, orders, and regulations of any governmental authority which are applicable to his use of the leased premises.
2. TAXES, ASSESSMENTS, AND UTILITY CHARGES Tenant shall pay all real estate taxes, assessments, licenses, permits and charges of any nature which are levied, imposed or assessed upon or against the leased premises by any governmental body.
Tenant shall pay all charges for sewage disposal, janitorial services, electricity, water and gas or other fuel or other utilities consumed by it upon the leased premises.
It is the intent of the parties hereto that this Lease shall be a pure net lease and that Landlord receive all rents hereunder free of any and all impositions, charges or expenses relating to the leased premises in any part or aspect thereof (excepting only mortgages, liens or encumbrances placed (or suffered to be placed) on the leased premises by Landlord) all of which shall be paid by Tenant.
3. INSURANCE Tenant shall procure and maintain a standard fire insurance policy with extended coverage and additional extended coverage in an amount equal to the full replacement value from time to time of building and improvements on the leased premises naming Landlord as an additional insured and the loss payee with respect to the leased premises and covering all mortgagees on the leased premises under standard Connecticut mortgagee endorsements. "Full replacement value" for the purpose of this Lease shall.be deemed to be $3,250,000 (subject to a deductible not exceeding $100,000), which full replacement value will be adjusted annually based upon the recommendation of the insurer as to the then full replacement value of the leased premises.
Tenant shall also procure and maintain in force during
the period of time this Lease is in effect general liability
insurance insuring the Landlord and Tenant (naming them both
in the policy) against any liability whatsoever occasioned
by accident on or about the leased premises, or any
appurtenances thereto, such policy to be in an amount of not
less than Five Million ($5,000,000.00) Dollars in respect to
injury, including death, of any one person, and in amount of
not less than Five
Million ($5,000,000.00) Dollars in respect to any one
accident and not less than Five Hundred Thousand
($500,000.00) Dollars for property damage.
The original policies of fire insurance and general liability insurance referred to above or certificates thereof shall be furnished by Tenant to the Landlord prior to the commencement of the term of this Lease, with a copy thereof to be provided to the Connecticut Development Authority as promptly thereafter as practicable, and said policies shall be renewed from time to time not less than ten (10) days prior to the expiration date of the policies, certificates of renewals to be promptly furnished to the Landlord, and the Connecticut Development Authority.
4. MAINTENANCE AND REPAIRS Tenant at its sole cost and expense shall at all times maintain and keep in good repair and condition and make all necessary repairs to and replacements of all or any part of the leased premises, including, but not limited to, all glass, all electrical, heating, air conditioning and plumbing systems and, during the initial term of this Lease, all structural members, exterior walls and roof; provided, however, that, during the renewal term of this Lease, Tenant shall provide ordinary maintenance for all structural members, exterior walls and roof, and Landlord shall be responsible for all necessary repairs to and replacements of said structural members, exterior walls and roof unless the same is necessitated by Tenant's act or omission (other than ordinary wear and tear) or those or its agents, employees or contractors. Tenant shall commit no waste nor suffer the same to be committed on the leased premises.
Tenant shall bear all risk of loss from the use and occupation of the leased premises, except as provided in the preceding paragraph and except loss for which Tenant has obtained fire and extended coverage insurance protection but only to the extent that Landlord receives sums from such insurance carriers on account of any such loss. Landlord shall assign to Tenant all manufacturers' warranties upon the roof and the heat@ing and cooling equipment if any. Upon the commencement of the renewal term Tenant shall reassign to Landlord such warranties as relate to the roof.
Landlord shall have the right to enter upon the leased premises from time to time in order to inspect the same, but this right shall be exercised in such manner as not to interfere with Tenant's use and enjoyment of the leased premises and shall be subject to any and all laws, orders, or regulations of the United States Government or any department or agency thereof, relating to information affecting the national security which may at any time apply to Tenant's use of the leased premises.
Tenant shall comply with the requirements, with
respect to the use, occupancy and/or maintenance of the
leased premises, of the Connecticut Development Authority as
contained in the Mortgage Deed between the Connecticut
Development Authority and Landlord dated June 19, 1981,
provided, however, that Tenant, unless otherwise provided
herein, shall not be obligated in any way with respect to
the note secured by such Mortgage Deed, any tax obligations
contained in such Mortgage Deed, any insurance obligations
contained in such Mortgage Deed including, without
limitation, any insurance for the loan secured by such
Mortgage Deed, any insurance on the leased premises or
improvements thereto and any insurance on the life or well
being of any person) and any other obligations contained in
such Mortgage Deed which do not relate directly to the use,
occupancy and/or maintenance of the leased premises by a
tenant thereof, and further provided that the foregoing
shall not in
any way be deemed to be an assumption by Tenant of any of
Landlord's obligations under such Mortgage Deed.
5. ACTION OF PUBLIC AUTHORITIES In the event that any exercise of the power of eminent domain by any governmental authority, Federal, State, County, or Municipal, or by any other party vested by law with such power shall at any time prevent the full use and enjoyment of the leased premises Tenant for the purposes set forth in Section 1, Tenant shall have the right thereupon to terminate this Lease. In the event of any such action both Landlord and Tenant shall have the right to claim, recover, and retain from the governmental authority or other party taking such action the damages suffered by them respectively as a result of such action.
6. IMPROVEMENTS BY TENANT Tenant, upon receipt of approval from or failure to object after a reasonable time by the Connecticut Development Authority after due notice thereto, shall have the right to make such structural and non-structural alterations, additions, or improvements in or to the leased premises as it shall consider necessary or desirable for the conduct-of its business, provided that all such work shall be done in a good and workmanlike manner, and the structural integrity of the building shall not be impaired, and that no liens shall attach to Landlord's interest in the leased premises by reason thereof. Upon the termination of this lease, Tenant's alterations, additions, or improvements shall at the option of the Landlord (1) become the property of Landlord, or (2) be removed by the Tenant at Tenant's expense and Tenant shall restore to its original condition any part of the leased premises damaged by the removal of such alterations, additions, or improvements, reasonable wear and tear being excepted. Tenant may, at Tenant's expense, raise the height of the roof of the treater room approximately 25 feet over an area of approximately 1,000 square feet. If Tenant raises said roof then upon the termination of this Lease Tenant shall not be required to lower said roof to its original height.
7. FIXTURES AND SIGNS Tenant shall have the right to install in or place on the leased premises such fixtures, machines, tools, or other equipment (including but not limited to trade fixtures, lighting fixtures, water coolers, or other equipment) as it may choose. Such fixtures, machines, tools or other equipment shall at all times remain the personal property of Tenant regardless of the manner or degree of attachment thereof-to the leased premises and may be removed at any time by Tenant whether at the termination of this Lease or otherwise; provided, however, that Tenant shall make proper restoration of the leased premises in the event that any damage is done thereto in the removal of any such property.
Tenant shall have the right to install or erect on the leased premises or to affix to the building which is a part of the leased premises, such signs as it may deem necessary or appropriate to advertise its name and business; provided that such signs comply with all appropriate governmental regulations and provided that upon the termination of this Lease, Tenant shall remove all signs placed upon the leased premises and restore any part of the leased premises affected by the removal of Tenant's sign to its original condition.
8. DEFAULT If Tenant shall fail to pay any rent to Landlord
when the same is due and payable under the terms of this
Lease and such default shall continue for a period of ten
(10) days after written notice thereof has been given to
Tenant by Landlord, or if the Tenant shall fail to perform
any other duty or obligation imposed upon it by this Lease
and such default shall continue for a period of thirty (30)
days after written notice thereof has been given to Tenant
by Landlord except that if such default cannot be cured
within thirty (30) days Tenant shall not be deemed in
default by reason thereof unless Tenant fails to commence to
cure such default within said thirty (30) day period and
thereafter diligently prosecute the curing of such default,
or if the Tenant shall be adjudged bankrupt, or shall make a
general assignment for the benefit of its creditors, or if a
receiver of any property of Tenant in or upon the leased
premises be appointed in any action, suit, or proceeding by
or against Tenant and such appointment shall not be vacated
or annulled within sixty (60) days, or if the interest of
Tenant in the leased premises shall be sold under execution
or other legal process, then and in any such event upon ten
(10) days written notice by Landlord to Tenant and Tenant's
failure to cure such default within said ten (10) day period
the balance of all rentals then due and/or provided for
under the terms
hereof shall become immediately due and payable and Landlord
shall have the right to enter upon the leased premises and
again have, possess, and enjoy the same as if this Lease had
not been made, and thereupon this Lease shall terminate,
without prejudice, however, to the right of Landlord to
recover from Tenant all rent due under this Lease together
with all costs of collection and legal expenses including a
reasonable attorney's fee. In the event of any such default
and re-entry, Landlord shall attempt in good faith to relet
the leased premises for the remainder of the then existing
term whether such term be the initial term of this Lease or
any renewed or extended term for the highest rent then
obtainable and permitted by Connecticut Development
Authority, and to recover from Tenant the difference between
the rent reserved by this Lease and the amount obtained
through such reletting less the costs and expenses
reasonably incurred by Landlord.
9. ASSIGNMENT: SUBLETTING Tenant shall have the right to assign this Lease or to sublet the leased premises or any part thereof subject to the written consent of Landlord and of the Connecticut Development Authority which consent shall not unreasonably be withheld; provided, however, that no such assignment or subletting shall relieve Tenant from its duty to perform all of the agreements, covenants, and conditions set forth in this Lease, and Tenant shall remain primarily liable hereunder provided that if Tenant's assignee defaults hereunder Tenant shall have the right to be reinstated as the Tenant under this Lease.
10. TITLE Landlord covenants and warrants that Landlord has lawful title and right to make this Lease, that Landlord will maintain Tenant in full and exclusive possession of the leased premises, and that, if Tenant shall pay the rent and perform all the agreements, covenants, and conditions required by this Lease to be performed by it, Tenant may freely, peaceably, and quietly occupy and enjoy the leased premises without molestation or hindrance, lawful or unlawful, of any person or entity whomsover.
11. SURRENDER When this Lease shall terminate in accordance with the terms hereof, Tenant shall quietly and peaceably deliver up possession to Landlord without notice from Landlord. Tenant expressly waives the benefits of all laws now or hereafter in force requiring notice from Landlord with respect to termination. Tenant shall deliver up possession of the leased premises in as good order, repair, and condition as the same are in at the beginning of the term of this Lease except for reasonable wear and tear, and subject to such damage or destruction or condition as Tenant is not required to restore or remedy under other terms and conditions of this Lease.
12. NOTICE Any notice or demand required by the provision of the Lease to be given to Landlord shall be deemed to have been given adequately if sent by Certified mail to Landlord at the following address:
Geoffrey Etherington, II
P.O. Box 706
New Haven, Connecticut 06503
With a copy to:
Arthur S. Sachs, Esq.
Sachs, Berman, Rashba & Shure, P.C.
One Church Street
New Haven, Connecticut 06510
Any notice or demand required by the provisions of this Lease to be given to Tenant shall be deemed to have been given adequately if sent by Certified Mail to Tenant at the following address:
President
USP Composites, Inc.
172 East Aurora Street
Waterbury, Connecticut
With a copy to:
Park Electrochemical Corp.
5 Dakota Drive
Lake Success, New York 10042
Attn: Harry Linzer
Any notice or demand required by the provisions of this Lease to be given to the Connecticut Development Authority shall be deemed to have been given adequately if sent by Certified Mail to the Connecticut Development Authority at the following address:
Stanley Piorkowski, Esq.
Connecticut Development Authority
217 Washington Street
Hartford, Connecticut
Any party shall have the right to change its address as above designated by giving to the other parties fifteen (15) days' notice of his or its intention to make such change and of the substituted address at which any notice or demand may be directed.
13. SUBORDINATION Tenant agrees to subordinate and does hereby subordinate this Lease to the lien of any mortgage or mortgages (the only one of which, as of the date hereof, is granted to the Connecticut Development Authority) now on the leased premises or hereafter placed on the leased premises provided that Tenant shall enjoy all of its rights under the Lease regardless of any inconsistent provision in such mortgage and provided further that the holder of such mortgage shall enter into a written agreement, in recordable form, with Tenant to the effect that as long as Tenant is not in default in the payment of rental or any other material convenants or conditions of this Lease, the rights of Tenant under this Lease shall not be terminated and the possession of Tenant shall not be disturbed by the holder of any such mortgage or by any proceedings on the debt which any such mortgage secures, or by any person, firm or corporation whose rights were acquired as a result of such proceedings or by virtue of a right or power contained in any such mortgage or the bond or note secured thereby.
14. ESTOPPEL CERTIFICATE Tenant agrees to execute at such times as Landlord may request, estoppel statements certifying, among other things and if such be the case, that Tenant is in possession of the leased premises, that all rental payments and other charges required hereunder to be paid by Tenant have been paid, that this Lease has not been amended or modified, that Landlord is not in default hereunder and that Tenant has no defense or set-offs against Landlord hereunder.
15. ATTORNEYS' FEES In the event either party to this Lease shall default in any of the terms and conditions hereof and the other party shall be required to obtain the services of an attorney to enforce the provision hereof, whether or not such enforcement shall result in a court proceeding, then the defaulting party agrees to pay to the non-defaulting party all reasonable costs of such enforcement, including attorneys' fees and attorneys' fees on appeal or for services rendered in any bankruptcy proceeding.
16. CONSTRUCTION It is distinctly understood, covenanted and agreed that the terms "Landlord" and "Tenant" herein employed shall be construed to include all individuals, corporations and any and all other person or entities, and the respective heirs, executors, administrators, legal representatives, successors in assigns of the parties hereto, and all those holding under either of them, whenever and wherever the context so admits or requires; and the pronouns used herein shall include, when appropriate, either gender and both singular and plural.
17. COVENANTS TO BIND RESPECTIVE PARTIES This Lease and all of the agreements, covenants, and conditions contained herein shall be binding upon Landlord and Tenant and upon their respective heirs, personal representatives, successors and assigns.
18. LIMITATION OF LIABILITY Except as specifically provided to the contrary in Paragraph 20(C) hereof, Tenant agrees that it shall look solely to the estate and property of the Landlord in the land and buildings comprising the leased premises and subject to the prior rights of any mortgagee of the Premises for the collection of any judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default or breach by Landlord with respect to any of the terms, covenants, and conditions of this Lease to be observed and/or performed by Landlord, and no other assets of the Landlord shall be subject to levy, execution or other procedures for the satisfaction of Tenant's remedies and no action shall be brought by Tenant respecting this Lease against Landlord.
19. PREJUDGMENT REMEDY, REDEMPTION, COUNTERCLAIM, AND JURY TRIAL The Tenant, for itself and for all persons claiming through or under it, hereby acknowledges that this Lease constitutes a commercial transaction as such term is used and defined in Chapter 903a of the Connecticut General Statutes (the 'Act") and hereby expressly waives any and all rights which are or may be conferred upon the Tenant by the Act to any notice or hearing prior to a prejudgment remedy. Tenant further waives any and all rights which are or may be conferred by any present or future law to redeem the said leased premises, or to any new trial in any action of ejectment under any provision of law, after re-entry thereupon, or upon any part thereof, by the Landlord, or after any warrant to dispossess or final judgment in ejectment. If the Landlord shall acquire possession of the said leased premises by summary proceedings, or in any other lawful manner without judicial proceedings, it shall be deemed a re-entry within the meaning of that word as used in this Lease.
In the event that Landlord commences any summary proceedings or action for non-payment of rent or other charges provided for in this Lease, the Tenant shall not interpose any counterclaim of any nature or description in any proceeding or action. The Tenant and the Landlord both waive a trial by jury of any or all issues arising in any action or proceeding between the parties hereto. or their successors, under or connected with this Lease, or any of its provisions.
20. TENANT'S OPTION TO PURCHASE
(A) Tenant shall have an option to purchase the leased
premises at the applicable option price set forth
below, which option shall be exercisable by written
notice given to Landlord in the manner provided in
paragraph 12 at any time on or prior to December 31,
1992. Such notice shall be given not later than six (6)
months prior to the proposed date of purchase of the
leased premises. The option price shall be: M
$2,800,000 if Tenant exercises said option on or before
December 31, 1990; Hi) $3,000,000 if Tenant exercises
said
option between January 1, 1991 and December 31, 1991,
and Hii) $3,200,000 if Tenant exercises said option
between January 1, 1992 and December 31, 1992; payable
in each case all in current funds at the closing of
such purchase (the "Closing").
(B) Prior to the execution of this Lease, Landlord has provided Tenant with a Commitment for Title Insurance (the "Commitment'), issued by Connecticut Attorneys Title Insurance Company (the "Title Insurance Company") respecting the leased premises, which Tenant acknowledges to be in all respects satisfactory to Tenant. If Landlord conveys the leased premises to Tenant at the Closing by Connecticut form of warranty deed showing the leased premises to be subject only to the encumbrances described in the Schedule A annexed hereto as 'Permitted Encumbrances" and provides Tenant, at Tenant's cost, with a Policy of Title Insurance (issued by the Title Insurance Company) insuring title to the leased premises in compliance with said Commitment (subject only to the Permitted Encumbrances), then Landlord shall have fulfilled all of Landlord's obligations hereunder with respect to such conveyance. If Landlord shall H) not be able to convey the leased premises to Tenant at the Closing by such deed showing the leased premises to be subject only to the Permitted Encumbrances or Hi) not be able to provide Tenant, at Tenant's cost, with such Policy of Title Insurance, Tenant may waive the foregoing non-compliance and all related warranties and representations and consummate the Closing hereunder notwithstanding such non-compliance. If Landlord shall fail to consummate the Closing when obligated to do so hereunder, then, notwithstanding the provision of Paragraph 18 above, Tenant shall be entitled to specific performance of conveyance hereunder, but not to any action for personal liability against Landlord. Landlord shall pay for the cost of Landlord's title search and the cost, if any, of said Commitment and Tenant shall pay for said Policy of Title Insurance.
(C) On or before six months (but not before six months, unless Tenant shall so consent) after receipt of Tenant's notice that it has elected to purchase the leased premises, Landlord shall convey the leased premises to Tenant by Connecticut form of warranty deed bearing sufficient federal, state or local documentary stamps and with payment by Landlord of any other tax or imposition charged by any jurisdictional authority upon the transfer of real property and as provided in Paragraph 20(B). During the term of this Lease, Landlord covenants and agrees that no mortgage will be placed upon the leased premises unless (a) same is with a bank or insurance company, (b)such mortgage provides that same is prepayable at any time, (c)the holder of such mortgage executes a non-disturbance agreement in substantially the form provided for in Paragraph 13 of this Lease, and W the aggregate principal indebtedness under any such mortgage or mortgages, taken together with all other mortgages, liens and encumbrances upon the leased premises, will not exceed the minimum option price set forth in Paragraph 20(A) above. The foregoing covenant and agreement in this Paragraph 20(C) and the agreement of Landlord not to encumber the leased premises in any other way that will frustrate Tenant's consummation of the Closing following Tenant's exercise of its option to purchase, shall be a personal liability and obligation of Landlord notwithstanding the limitation upon such liability set forth above in Paragraph 18. Landlord agrees that, at the Closing, Tenant may apply its payment of the option price to the discharge of the indebtedness secured by such mortgages, liens and other encumbrances.
(D) Tenant shall have sixty (60) days, after receipt
by Landlord of Tenant's notice that it has elected to
purchase the leased premises, to engage Goldman
Environmental Consultants, Inc. ("Goldman") or another
reputable environmental consultant reasonably
satisfactory to Landlord (such consultant so engaged
being hereinafter referred as the 'Tenant's Engineer")
to perform certain environmental studies of the leased
premises of such scope and degree as are satisfactory
to Tenant and to report the results thereof to Tenant
(the "Environmental Report").Tenant shall deliver a
copy of the Environmental Report to Landlord within ten
(10) days of Tenant's receipt thereof.If Tenant is not
satisfied, in its sole discretion, with the condition
of the leased premises as shown in the Environmental
Report, Tenant may, by sending Notice to Landlord,
received by Landlord within thirty (30) days after the
Environmental Report is received by both parties,
rescind the option to purchase. In addition, if Tenant
has not elected to rescind such option to purchase,
Landlord shall have the right, by sending notice to
Tenant within 30 days after the Environmental Report
is. received by both parties, to cancel Tenant's
exercise of such purchase option if the Environmental
Report shall indicate the presence of environmental
contamination, the cost of investigation and
remediation of which may reasonably exceed $250,000 in
additional costs not theretofore spent by Landlord,
provided, however, that Landlord shall not have such
right if Tenant shall agree to pay the excess of such
costs above $250,000.
If Tenant shall not rescind this option to purchase as aforesaid, it shall be irrefutably presumed that Tenant and Park Electrochemical Corp. are satisfied with the condition of the leased premises from an environmental standpoint and therefore, except as to those liabilities and obligations allocated to Etherington Industries, Inc. ("EI") pursuant to Paragraphs 25(A) and 25(B) hereof, Tenant and Park Electrochemical Corp. shall, upon the Closing and without any further action by either of them: M assume, jointly and severally, effective as of the Closing, all liability and obligations relating to the following (the 'Environmental Conditions"): Any Spill, Release, Hazardous Waste (as defined in Conn. Gen. Stat. Sec 22a-115), Hazardous Substance (as defined in 42 U.S. Code Sec. 9601 et seq.) and/or environmental contamination of any sort at or emanating from the leased premises; and the presence of any underground storage tanks (or the contents thereof) on the leased premises; and (ii) agree, effective as of the Closing, to indemnify, jointly and severally, Landlord against and hold Landlord harmless of and from all loss, costs, claims, damages, charges, fines, liens, liability and expense (including, but not limited to, consultant's fees and attorneys' fees) arising from or in connection with any of the Environmental Conditions.
21. CASUALTY
(A) In case of casualty to the leased premises resulting in damage or destruction, Tenant shall promptly give written notice thereof to Landlord. Tenant shall, to the extent of the insurance proceeds received by it from Landlord, restore, repair, rebuild or alter the same as nearly as possible to the value, condition and character of the same as it was immediately prior to such damage or destruction. Such restorations, repairs, replacements, rebuilding or alternations shall be commenced promptly and prosecuted with reasonable diligence, unavoidable delays excepted.
(B) All insurance money paid to Landlord on account of such damage or destruction, less the actual cost, fees and expenses, if any, incurred in connection with adjustment of the loss, shall be applied by Landlord (or reimbursed to Tenant if Tenant has advanced moneys pursuant to Paragraph 21(A) hereof) to the payment of the cost of the aforesaid demolition, restoration, repairs, replacement, rebuilding or alterations, including the cost to Landlord of those repairs for which, under the terms of Paragraph 4, Landlord may be liable ("Structural Repairs"), the cost of temporary repairs or for the protection of property pending the completion of permanent restoration, repairs, replacements rebuilding or alterations (all of which Structural Repairs, temporary repairs, protection of property and permanent restoration, repairs, replacement, rebuilding or alterations are hereinafter collectively referred to as the "Restoration"), and shall be paid out from time to time as such Restoration progresses pursuant to the terms of the Mortgage, if applicable.
22. ADDITIONAL RENT In addition to the foregoing minimum rent, all other payments to be made by Tenant pursuant to the terms of this Lease shall be deemed to be and shall become additional rent hereunder whether or not the same be designated as such; and shall be due and payable on demand or together with the next succeeding installment of rent; whichever shall first occur together with interest thereon at the then prevailing legal rate; and Landlord shall have the same remedies for failure to pay the same as for a nonpayment of rent. Landlord, at its election, shall have the right to pay or do any act which requires the expenditure of any sums of money by reason of the failure or neglect of Tenant to perform any of the provisions of this Lease, and in the event Landlord shall at its election pay such sums or do such acts requiring the expenditures of moneys, Tenant agrees to pay Landlord, upon demand, all such sums, and the sum so paid by Landlord, together with interest thereon, shall be deemed additional rent and be payable as such.
23. LIENS Should any mechanic's or other lien be filed against the leased premises or any part thereof for any reason whatsoever by reason of Tenant's acts or omissions or because of a claim against Tenant, Tenant shall cause the same to be cancelled and discharged of record by bond or otherwise within thirty (30) days after notice by Landlord.
24. LIABILITY In addition to any other indemnity by Tenant of Landlord herein, Tenant shall indemnify Landlord and save it harmless from suits, actions, damages, liability and expense in connection with the loss of life, bodily or personal injury or property damage arising from or out of the use or occupancy of the leased premises or any part thereof, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, invitees, licensees, or concessionaires.
25. INVESTIGATION AND REMEDIATION OF PRIOR ENVIRONMENTAL CONDITIONS
(A) EI, without cost or expense to Tenant, shall present, either prior to or within sixty (60) days after the date of execution of this Lease by Landlord and Tenant, to the Attorney General of the State of Connecticut (the "Attorney General"), with copies to Tenant and the Connecticut Department of Environmental Protection Hazardous Waste Management Unit (the "DEP"), a study (the "EI Study') regarding the environmental condition of the leased premises prepared by HRP Associates, Inc. ("HRP"), or other reputable environmental engineer (the "Other Engineer').The February 1988 report on such premises prepared by Goldman(the "Goldman Report'), which has been furnished by EI to HRP or the Other Engineer, shall be furnished by EI to the Attorney General and the DEP as an appendix to the EI Study. EI shall furnish Tenant with copies of the receipts issued by the Attorney General and the DEP acknowledging the furnishing of the EI Study, including the Goldman Report, to them, which copies shall be furnished promptly following the receipt of the EI Study by the Attorney General and the DEP. EI shall, without cost or expense to or obligation of Tenant (except as provided in Paragraph 25(C) hereof), perform such further investigation and/or remedial actions (including without limitation, the remediation of environmental contamination of any sort-) as may be ordered or directed judicially or administratively (after right to appeal shall have lapsed) or agreed to by EI with the DEP and any other governmental authority concerning environmental contamination of the leased premises present thereon at the time of execution of this Lease; provided that the degree, extent and composition of such environmental contamination shall have been reported in writing to EI by HRP, the Other Engineer, the Goldman Report, or is reported by Tenant's Engineer in the Environmental Report. A compliance letter from the DEP or other governmental authority shall be compliance hereunder.
(B) EI further agrees that, upon the execution of this Lease by Landlord, without any further action on the part of EI, and except as provided in Paragraph 25(C) hereof, EI shall indemnify Tenant against and hold Tenant harmless from all loss, costs, claims, damages, charges, fines, liens, liability and expense (including, but not limited to, consultant's fees and attorneys' fees) that may arise from (i) any of the environmental conditions as to which EI is obligated to investigate or remediate pursuant to Paragraph 25(A) hereof and (ii) any breach by EI of its obligations under Paragraph 25(A) hereof.
(C) Tenant acknowledges that investigation and/or remediation of environmental contamination may require physical- disturbance of the leased premises. Consequently, and notwithstanding anything to the contrary in this Lease or elsewhere, Tenant agrees to release and discharge Landlord, EI and their employees, agents, contractors, consultants, officers, heirs, successors and assigns from any and all claims and liabilities (other than arising from their negligence or willful misconduct) resulting from temporary disruption to Tenant's normal use of the leased premises or from physical disturbance of the leased premises arising from or in connection with investigation and/or remediation of environmental contamination of the leased premises; provided, however, that Landlord and EI shall use their best efforts to cause the leased premises to be restored, as expeditiously as practicable, to a condition which will permit the resumption of Tenant's normal use of the leased premises and provided, further, that if investigation and/or remediation of environmental contamination shall require a suspension of all of Tenant's operations at the leased premises, the rent under this Lease shall be abated and forgiven for the period of such suspension.
26. ACCESS TO PREMISES
(A) Landlord and its authorized representatives shall be entitled to enter the leased premises for inspection, repair, compliance with laws and with Tenant's obligations hereunder, and (to the extent otherwise permitted by this Lease) improvement of the leased premises, and for the exhibition of said leased premises to prospective mortgagees and to existing or prospective tenants or purchasers. Any inspection by or on behalf of prospective tenants and prospective purchasers, and to existing and prospective tenants or prospective purchasers, as the case may be, shall occur only during the six (6) months preceding the expiration of this Lease or the expiration of Tenant's option to purchase the leased premises, as the case may be.
(B) Tenant shall permit inspection of the leased premises by any federal, state, county or municipal officer or representative of Landlord to determine if the leased premises shall comply with any relevant law or are in need of repair, correction, addition, or improvement.
27. LANDLORD SIGNS Landlord shall be permitted to affix to any outer wall or walls of the leased premises one or more "For Rent' or "For Sale" signs (or be fastened to a door or window), but only during the six (6) months preceding the expiration of this Lease or the expiration of Tenant's option to purchase the leased premises. Tenant agrees that such signs shall remain unmolested.
28. RIGHT TO REPAIR OR REMEDIATE AND TO STORE EQUIPMENT
(A) Landlord shall be entitled to make any repairs or perform any work or construction mentioned in Paragraph 26 or 27, whether such repairs or performance are required of Landlord or Tenant by law or this Lease; provided, however, that Landlord shall not unreasonably interfere with Tenant's use of the leased premises. Landlord and EI shall also have the right to enter the leased premises to perform investigation and/or remedial actions with respect to any environmental contamination related to the leased premises, including but not limited to that investigation and/or remedial actions, if any, required of Tenant or Park Electrochemical Corp. pursuant to Paragraph 29, (if Tenant or Park Electrochemical Corp. shall have failed to perform its obligations thereunder). Such repairs or other performance, if made by Landlord or EI, shall not constitute a waiver by Landlord or EI of M Tenant's default in failing to perform the same or (ii) Landlord's or EI's right to payment therefor, as such event of default or right of payment may be set forth elsewhere in this Lease.
(B) During the course of any repair, investigation, remediation, work or construction which the Landlord or EI is other-wise entitled to perform in the leased premises, Landlord or EI may store therein all necessary materials, tools, supplies and equipment. No inconvenience, annoyance, disturbance, loss of business, or other damage suffered by Tenant or any subtenant by reason of such repairs, remediation, work, or construction, or storage of materials, shall, unless constituting negligence or willful misconduct, constitute an element of an actual or constructive eviction of Tenant, or result in any liability of Landlord or EI, and the obligations of the Tenant under this Lease shall not be affected thereby.
(C) Any right given Landlord or EI by this paragraph to enter the leased premises shall be exercised, to the extent practicable and permitted by law, only during ordinary business hours, and subject to reasonable advance notification and the Tenant's reasonable security precautions; except that if there is reasonable ground to believe an emergency exists or is threatened, Landlord or EI shall be entitled to take such actions and to proceed at such times that Landlord or EI shall deem appropriate.
(D) Except as otherwise provided herein, the rights of Landlord or EI given or mentioned in this paragraph do not impose, nor does Landlord or EI assume by reason thereof, any responsibility for the care, maintenance or supervision of the leased premises, or any part thereof.
29. MAINTENANCE OF LEASED PREMISES IN ENVIRONMENTALLY CLEAN CONDITION
(A) Subject to the provisions of Paragraph 29(C), below: (i) Tenant and Park Electrochemical Corp. will, at their cost and expense, promptly comply with any and all state, federal or local laws, regulations, rules, standards, guidelines, ordinances, orders, agreements, or any such authority, (all, the "Regulations'), which regulate or protect or in any way pertain to the environment or to human health or to human safety, or, without limiting the foregoing, to underground storage tanks, hazardous wastes, or hazardous substances (all, the "Environmental matters"), and which relate to or affect the leased premises after the date of execution of this Lease. Without limiting the foregoing, Tenant agrees to (and Park Electrochemical Corp. agrees to cause Tenant to) comply with any and all applicable Regulations which in any way pertain to Tenant's generation, recycling, reclaiming, reusing, storage, handling, treatment, transportation, or disposal of "Hazardous Substances" (as defined in 42 U.S.C. Sec. 9602 et seg.), "Hazardous Wastes' (as defined in Conn. Gen. Stat. (Sec. 22a-115), or oil or petroleum products after the date of execution of this Lease; (ii) Tenant agrees to (and Park Electrochemical Corp. agrees to cause Tenant to) timely deliver to the appropriate persons and authorities, at Tenant's sole cost and expense, such declaration, certification, and/or other representation as may be required pursuant to Connecticut General Statutes Section 22a-134 et seg., as may be hereafter amended, in connection with any transfer of ownership of the Tenant's operations or of the leased premises during the Term of this Lease as the same may be extended, as well as at the end of said Term or at any other time that the Tenant vacates the leased premises for any reason; (iii)Tenant agrees to (and Park Electrochemical Corp. agrees to cause Tenant to) install, (subject to the Landlord's approval, which shall not be unreasonably withheld), any and all under- ground storage tanks and/or underground storage tank systems (both 'USTs') on the leased premises in accordance and compliance with any and all applicable Regulations, and to use, maintain and remove any and all USTs on the leased premises in accordance and compliance with any and all applicable Regulations; (iv) Tenant agrees to (and Park Electrochemical Corp. agrees to cause Tenant to) take any and all steps necessary whenever required to do so pursuant to the foregoing (or at the Landlord's written request) to promptly respond, remove, remedy, mitigate, or otherwise abate the existence or threatened existence of any Hazardous Waste, Hazardous Substance, or oil or petroleum Spill or Release, or any other environmental contamination (all, 'Contamination") of or from the leased premises after the date of execution of this Lease; and (v) Tenant agrees to (and Park Electrochemical Corp. agrees to cause Tenant to) send to Landlord copies of any and all materials received and/or sent by Tenant to or from any governmental authority which pertain in any way to any environmental matter or any Hazardous Substance, Hazardous Waste, Spill, or Release affecting the leased premises.
(B) Subject to the provisions of Paragraph 29(C), below, Tenant and Park Electrochemical Corp., jointly and severally, agree to indemnify against and hold harmless the Landlord from any and all obligations, losses, costs, claims, damages, charges, fines liens, liabilities and expenses (including environmental consultant's fees and/or attorneys' fees) under the Federal Resource Conservation and Recovery Act, 42 U.S. Code Section 6901 et seg., the Federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S. Code Section 9601 et seq., Chapter 446K of the Connecticut General Statutes, or other applicable federal, state or local laws, regulations, ordinances, orders or regulations either related to waste disposal, and/or related to environmental protection with respect to hazardous, toxic, or other wastes generated or produced at- and/or transported from the leased premises during the term of this Lease, and/or related to environmental protection with respect to conditions created, events occurring or discharges made during the term of this Lease.
(C) Notwithstanding anything contained in Paragraphs 29(A) or (B), above, the Tenant shall not be liable or otherwise responsible for the liabilities and obligations allocated to EI pursuant to Paragraphs 25(A) and/or 25(B) of this Lease.
30. APPROVAL OF LANDLORD FOR STOCKPILING OF CERTAIN MATERIALS
The Tenant further agrees that Tenant will not (and Park Electrochemical Corp. will cause Tenant not to) generate, handle, transport, use recycle or store materials that constitute or contain Hazardous Substances or Hazardous Wastes, oil or petroleum products, or other chemical liquids, solids or gases except in accordance with all applicable management and other regulations, laws,.standards, ordinances, orders and agreements, including but not limited to Chapters 445 and 446K of the Conn. Gen. Statutes or other performance standards for management of Hazardous Waste on or after the effective date of this Lease that may be required pursuant to Leslie Carothers, Commissioner v. U.S, Prolam, Cv 88-03400946.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day and year above written.
Signed, Sealed and Delivered
in the presence of
By:/s/Andrew M. Esposito President |
The undersigned does hereby accept
and confirm the obligation of
the undersigned as provided in
Paragraphs 25(A), @5(B), 25(C)
and 28 of this Lease:
ETHERINGTON INDUSTRIES, INC.
By:/s/-----------------------
President
|
The undersigned does hereby
accept and confirm the ob-
ligation of the undersigned
as provided in Paragraphs
20(D), 28(A), 29 and 30:
PARK ELECTROCHEMICAL CORP.
By:/s/Harry Linzer
Vice President & Secretary
|
SCHEDULE A
PERMITTED ENCUMBRANCES
Permitted Encumbrances are those matters described in pages 2-3 of Schedule A of the attached Commitment for Title Insurance No. CN15505 issued by First American Title Insurance Company, with an effective date of April 7, 1988, (the "Commitment"), and the following matters listed on Schedule B of the Commitment: Items 1, 2, (but only as to an accurate survey made as of April 15, 1988), 7, 12, 13, 14, 17, 18, 19, 20, 21, 22, 23, and 24; and
Taxes due to the City of Waterbury; and
Water and sewer use charges; and
Fire service charges.
Form 548 (9/73) Commitment Policy CN-15505
COMMITMENT FOR TITLE INSURANCE
ISSUED BY
First American Title Insurance Company
FIRST AMERICAN TITLE INSURANCE COMPANY, herein called the Company, for valuable consideration, hereby commits to issue its Policy or policies of title insurance. as identified in Schedule A, in favor of the proposed Insured named in Schedule A, as owner or mortgagee of the ovate or interest covered hereby In the land described or referred to in Schedule A. upon payment of the premiums and charges therefor; all subject to the provisions of Schedules A and B and to the Conditions and Stipulations hereof.
This Commitment shall be off active only when the identity of the proposed Insured and the amount of the policy or policies committed for haw been inserted in Schedule A hereof by the Company, either at the time of the issuance of this Commitment or by subsequent endorsement.
This Commitment is preliminary to the issuance of such policy or policies of title insurance and all liability and obligations hereunder shall cease and terminate six (6) months after the effective date hereof or when the policy or policies committed for shall issue, whichever first occurs, provided that the failure to issue such policy or policies is not the fault of the Company. This Commitment shall not be valid or binding until countersigned by an authorized officer or agent.
IN WITNESS WHEREOF, the Company has caused this Commitment to be signed and sealed, to become valid when countersigned by an authorized officer or agent of the Company. all in accordance with its By-Laws. This Commitment Is effective as of the date shown in Schedule A as "Effective Date."
First American Title Insurance Company
By_________________________ President
By_________________________ Secretary
By_________________________ Countersigned
SCHEDULE A
Commitment No. CN-15505
1. Effective Date: April 7, 1988 at 9;00 A.M.
2. Policy or Policies to be issued:
ALTA Owner's Policy
Proposed Insured:USP Composites, Inc.
Amount: $3,200,000.00
ALTA Loan Policy
Proposed Insured:
Amount:$
Proposed Insured:
Amount:$
3. The estate or interest in the land described or referred to in this Commitment and covered herein is fee simple and title thereto is at the effective date hereof vested in:
Geoffrey Etherington, II
4. The land referred to in this Commitment is located at:
Address:
City/Town: Waterbury
County: Now Haven
State of Connecticut
and is further described in SCHEDULE A attached.
NOTE: UNLESS A SPECIFIC AMOUNT OF INSURANCE IS STATED ON THIS SCHEDULE A, OR SET FORTH IN AN ENDORSEMENT TO THIS COMMITMENT THE LIABILITY OF THE COMPANY SHALL NOT EXCEED $1..000.
THIS COMMITMENT IS ISSUED SOLELY FOR THE PURPOSE OF FACILITATING THE ISSUANCE OF A POLICY OR POLICIES OF TITLE INSURANCE BY FIRST AMERICAN TITLE INSURANCE COMPANY#J AND THE COMPANY'S LIABILITY SHALL BE LIMITED TO THE TERMS OF ITS POLICY OR POLICIES.
SCHEDULE A
A certain place or parcel of land situated on the northwesterly aide of East Aurora Street and the easterly side of land now or formerly of the Penn Central Co. (Watertown Branch), in the City of Waterbury, County of New Haven and State of Connecticut, bounded and described as follows:
Beginning at a point in the northwesterly line of Cast Aurora Street and the easterly line of land now or formerly of the Penn Central Co., being the southwesterly corner of the within described land, thence running northeasterly in the northwesterly line of East Aurora Street 481.59 felt thence. running-northerly at right angles to the last described line 12.46 feet to a point of curve, thence running northerly in a line curving to the right having a radius of 375.00 feet and a central angle of 350 001 a distance of 229.07 feet to the point of tangency, thence, running northerly and tangent to the curve 92.47 feet, thence making an interior angle of 894 541 with the last described line and running westerly 321.00 foot to land now or formerly of the Penn Central Cor,; thence making an interior angle of 899 57' 30' with the I&at described line and running southerly in the easterly line of land now or formerly of the Penn Central Co., 593.44 feet to East Aurora Street and the point of beginning the last described line making an interior angle, of 55' 08' 30' with the first described line. Bounded;
Northerly by land now or formerly of The Bristol Flowed Casket Company;
EASTERLY by land now or formerly of Harold Stein, Trustee;
SOUTHEASTERLY by East Aurora Street: and
WESTERLY by land now or formerly of the Penn Central Co. (Watertown Branch).
Said promises are more particularly shown on a map entitled:
'Map of Land of Geoffrey Etheringtons XI Waterbury, Conn.
The A.J. Patton Co. Surveyor, Waterbury, Conn, Nov. 51 1980
scaler 11&201 Rev. May 12, 1961' which map was filed on
June 22, 1981 with the, Town Clerk of Waterbury, Drawer XI,
Page 53.
Together with and subject to rights and agreements with respect to a 20 foot right of way running north from East Aurora Street an net forth in deeds from Peter Marcuse Trustee to Cellular Industries Incorporated dated June 1, 1967 recorded in Volume 911, Page 605 of the Waterbury Land Records; Harold Stein Trustee dated June 1, 1967 recorded In Volume 911, Page 629 of the Waterbury Land Records, and The Bristol Flowed Gasket Company dated June l, 1967 recorded in Volume 911, Page 629 of the Waterbury Land Records.
Together also with the rights, if any, In and to the agreements set forth in the aforementioned deeds recorded in Volume 911, pages 605, 621 and 629 of the Waterbury Land Records, and in deeds recorded in Volume 911, Pages 608 and 627 of the Waterbury land Records.
Being the same premises described in a warranty deed from
The Fairmont Corporation of Connecticut to Geoffrey
Etherington II dated July 24, 1980 recorded in Volume 1456,
page 284 of the Waterbury Land Records.4
SCHEDULE B
EXCEPTIONS
Commitment No. CN-15505
PROVIDED THE PROPER INSTRUMENT(S) CREATING THE ESTATE(S) OR INTEREST($) TO BE INSURED MUST BE EXECUTED AND DULY FILED FOR RECORD;
The policy or policies to be issued will contain exception to the following unless the same are disposed of to the satisfaction of the Company:
1. Rights of tenants and parties in possession.
2. Any state of facts which an accurate survey or personal inspection of the premises would disclose.
3. Any lien, or. right to lien, for services, labor or materials theretofore or hereafter furnished, imposed by law and not shown by the public record.
4. Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the public record or attaching subsequent to the effective date hereof but prior to the date the proposed insured acquires of record, for value, the estate or interest or mortgage thereon covered by this commitment.
5. Taxes on the List of October 1, 1987, not yet due and payable, and taxes for prior list years as may be due the City of Waterbury.
6. Water and sewer use charges, now or hereafter due and payable.
7. Such Assessments as may be due the City of Waterbury.
8. Open End Mortgage, $5,000,000.00, Geoffrey Etherington, II to Connecticut Development Authority dated April 30, 1985, recorded in Volume 1766,Page 131. Assigned to Colonial Bank by instrument dated April 29,1985 and recorded in Volume 1767,Page 1 of the Waterbury Land Records.
9. Open End Mortgage, $5,277,397.00, Geoffrey Etherington, II to the First National Bank of Boston dated April 30, 1985, recorded in Volume 1767, Page 2 of the Waterbury Land Records.
10. UCC-1 Financing Statement, U.S. Prolam, Inc. to Connecticut Development Authority recorded April 30, 1985 in Volume 1767, Page 92. Assigned by UCC-2 to Colonial Bank on April 30, 1985 in Volume 1767 at Page 95 of the Waterbury Land Records.
11. UCC-1 Financing Statement, U.S. Prolam, Inc. to The First National Bank of Boston recorded April 30, 1985 in Volume 1767, Page 98 of the Waterbury Land Records.
12. UCC-1 Financing Statement and Assignment, U.S.Prolan, Inc. to Air Compressor Engineering Co., Inc., assigned to Ingersoll-Rand Financial Corp. recorded July 22, 1987 in Volume 2124, Page 121 of the Waterbury Land Records.
13. Notice of Air Compliance Order, U.S. Prolam, Inc. to Connecticut Department of Environmental Protection dated August 25, 1987, recorded in Volume 2150, Page 315 of the Waterbury Land Records.
14. Notice of Air Compliance Order, U.S. Prolam, Inc. to Connecticut Department of Environmental Protection dated August 25, 1987, recorded in Volume 2150, Page 316 of the Waterbury Land Records.
15. Attachment, $6,500.00, U.S.Prolam, Inc., et al to Carmine and Theresa Capozzi d/b/a The Floor Store dated and recorded September 25, 1987 in Volume 2161, Page 316 of the Waterbury Land Records.
16. The lien for current fire service charges, not yet due and payable.
17. Building lines: 5 foot setback from street established. Volume 1, Page 460 of the Waterbury Building Lines and Assessments.
18. Slope rights established - benefits and damage equal Volume 2 Page 268 of the Waterbury Land Records.
19. A pole license from the Waterbury Tool Company to The Connecticut Light and Power Company dated May 31, 1940 recorded in Volume 504 Page 263 of the Waterbury Land Records.
20. An easement from Cellular Industries, Incorporated to The Connecticut Light and Power Company dated August 29, 1967 and recorded in Volume 917 Page 211 of the Waterbury Land Records.
21. A right of way over a ten foot strip of the subject premises along the easterly boundary, being part of a twenty foot right of way, as granted in deeds from Peter Marcuse Trustee to Harold Stein, Trustee dated June 1, 1967 recorded in Volume 911 at Page 621 of said Land Records and to The Bristol Flowed Gasket Company dated June 1,1967 recorded in Volume 911 Page 629 of said Land Records, which right of way is to be kept open and unobstructed. Said Right of way is reserved in a deed from Peter Marcuse, Trustee to Cellular Industries, incorporated dated June 1, 1967 and recorded in Volume 911 at Page 605 of the said Land Records.
22. The obligation of a joint maintenance of a twenty foot right of way as described in deeds from Peter Marcuse, Trustee to Harold Stein,, Trustee (dated June 1,1967 recorded in Volume 911.
Page 621 of said Land Records), from Peter Marcuse Trustee to The Bristol Flowed Gasket Company dated June 1, 1967 recorded in Volume 911 Page 629 of the said Land Records, and from Peter Marcuse, Trustee to Cellular Industries Incorporated (the instant premises) dated June 1,1967 recorded in Volume 911 at Page 605 of the said Land Records in the ratio of 4:4:3 as to the owners of plants 1, 2 and 3 respectively.
23. A possible encroachment of a building of plant no. 2 on the twenty foot right of way described above.
24. Agreements contained in deeds above described recorded in Volume 911 Pages 605, 608, 621, 627 and 629 of the said Land Records.
25. Mortgage from Geoffrey Etherington IT to Connecticut Development Authority in the principal amount of $850,000.00 dated June 19, 1981 recorded in Volume 1509 Page 199 of the said Land Records.
26. Collateral Assignment of Leases and Rentals from Geoffrey Etherington. II to Connecticut Development Authority ' dated June 19, 1981 recorded in Volume 1509 at Page 219 of the said Land Records.
27. Financing statement from U.S. Prolam. to Colonial Bank recorded n April 26, 1985, Doc. No. 680572.
NOTE: A mortgage from Geoffrey Etherington 11 to The First National Bank of Boston in the principal amount of $5,277,397 dated April 30, 1985 was recorded in said Land Records. Under the terms of Section l(b) of said mortgage (exception #9), and Section l(B) of the mortgage in Exception #8, both mortgages are deemed to have equal priority of lien with the other, and shall be in pari passu.
COMMITMENT
Conditions and Stipulations
1. The term "mortgage." when used herein, shall include deed of trust, trust deed, or other security instrument.
2. If the proposed Insured has or acquires actual knowledge of any defect, lien, encumbrance, adverse claim or other matter affecting the estate or interest or mortgage thereon covered by this Commitment other than those shown in Schedule 8 hereof, and shall fail to disclose such knowledge to the Company in writing, the Company shall be relieved from liability for any less or damage resulting from any act of reliance hereunto the extent the Company Is prejudiced by failure to so disclose such knowledge, If the proposed Insured shall disclose such knowledge to the Company, or if the Company otherwise acquires actual knowledge of any such defect, lien, encumbrance, adverse claim or other matter, the Company at its option may amend Schedule 8 of this Commitment accordingly, but such amendment shall not relieve the Company from liability previously incurred pursuant to paragraph 3 of than Conditions and Stipulations.
3. Liability of the Company under this Commitment "II be only to the named proposed Insured and such parties included under the definition of Insured in the form of policy or policies committed for and only for actual loss incurred In reliance hereon in undertaking in good faith (a) to comply with the requirements hereof, or (b) to eliminate exceptions shown in Schedule 8, or (c) to acquire or create the estate of interest or mortgage thereon covered by this Commitment. In no event shall such liability exceed the amount stated in Schedule A for the policy or policies committed for and such liability is subject to the Insuring provisions, exclusion from coverage, and the Conditions and Stipulations of the form of policy or policies committed for in favor of the proposed Insured which are hereby incorporated by reference and are made a part of this Commitment except as expressly modified herein.
4. Any claim of loss or damage, whether or not based on negligence, and which arises out of the status of the title to the estate or interest or the lien of the insured mortgage covered hereby or any action asserting such claim, shall be restricted to the provisions and conditions and stipulations of this Commitment.
[Exhibits-02-10.07]bd
Exhibit 10.07(a)
Amendment to Lease
(5-Year Term & Option)
AMENDMENT to Indenture dated as of April 15, 1988 (the "Lease") between GEOFFREY ETHERINGTON II, of Tequesta, Florida (the "Landlord"), and FIBERCOTE INDUSTRIES, INC. (formerly known as USP Composites, Inc. (the "Tenant").
WHEREAS, the Landlord and the Tenant desire to provide for the extension of the term of the Lease for up to ten years as hereinafter set forth;
NOW THEREFORE, the parties hereto agree to amend the Lease as follows:
1. Extension of Term. The Term of the Lease (the "Term") shall be extended for a five year period from January 1, 1993 through December 31, 1997. In addition the Tenant shall have the right to extend the Term for one additional five year term through December 21, 2002 by written notice to the Landlord no later than June 30, 1997. The provisions of the Lease providing for a five year extension of the Term shall be deemed superseded and replaced by this Section 1.
2. Rent.
(a) The rent for the "leased premises" (as defined in the
Lease) from January 1, 1993 through December 31, 1995 shall
be $175,380.00 per annum, payable to the Landlord in equal
monthly installments of $14,615.00, in advance, without
notice, on the first day of each month.
(b) The rent for the "leased premises" from January 1, 1996 through December 31, 1997 for the periods indicated below shall be an amount equal to the rent payable during the prior year increased by a percentage equal to the percentage increase, if any, in the "consumer price index" for the United States during such prior year; provided that in no event shall the rent be increased for any such period by more than the percentage indicated below over the rent payable in the prior year:
Period Max. % Increase 1/1-12/31/96 3% 1/1-12/31/97 4% |
(c) In the event that the Tenant shall exercise its right to extend the Term for five years from January 1, 1998 through December 31, 2002, the rent payable during each year of any such extension shall be an amount equal to the rent payable during the prior year increased by a percentage equal to the percentage increase, if any, in the "consumer price index" for the United States during such prior year.
(d) For the purposes hereof the "consumer price index" shall be the "consumer price index" as published in the Wall Street Journal. During any period that the rent hereunder shall be determined by the "consumer price index" (subject to any applicabble maximum increase), the rent shall be payable in twelve equal monthly installments, in advance, on the first of each month; provided that if the "consumer price index" for the end of the prior year is not available as of the commencement of any such period the Tenant shall make monthly payments of rent equal to those made in the prior year until such "consumer price index" is available and the increased rent is determined. Following such determination, the Tenant shall immediately pay to the Landlord the difference between the rent actually paid during such period and the increased rent payable from the commencement of such period through the date of the determination of such increased rent.
3. Option to Purchase.
(a) The provisions of Section 20(A) of the Lease shall be amended by deleting the date "December 31, 1992" from the first sentence thereof and substituting in place thereof the following:
December 31, 1995
(b) The provisions of Section 20(A) of the Lease shall be further amended by deleting in its entirety the third sentence thereof and substituting in its place the following:
The option price shall be $2,250,000 if Tenant exercises said option on or before December 31, 1995.
4. Obligations of EI and Park.
(a) By their consent hereto, Etherington Industries, Inc. and Park Electrochemical Corp. ("Park") agree to remain bound under the Lease, as amended hereby to the extend provided in the Lease.
(b) Notwithstanding anything to the contrary herein or in the Lease, a certain Asset Purchase Agreement between U.S. Prolam, Inc. and the Tenant dated as of April 15, 1988, as amended (the "Asset Purchase Agreement"), or Park's guaranty of Tenant's obligations under the Asset Purchase Agreement, Park shall not be deemed to have guaranteed Tenant's obligations under the Lease, as amended hereby, although Park shall remain obligated under Sections 20(D), 28 (A), 29 and 30 of the Lease to the extent provided therein.
5. Miscennaneous.
(a) Except as specifically amended hereby all other terms and provisions of the Lease shall remain in full force and effect without modification, change or amendment and the Lease shall be deemed amended, renewed and extended hereby.
(b) The extension of the term of the Lease effected hereby, and any additional extension subsequently obtained in accordance herewith, shall for the purposes hereof and the Lease be deemed a "renewal term" a "renewal term" and an "extended term".
(c) This instrument and the Lease shall be governed by and construed under the laws of the State of Connecticut. The parties hereto and the persons consenting hereto hereby consent to the jurisdiction of and service of process by the courts of the State of Connecticut in any action brought in connection with this instrument of the Lease.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of this 21st day of December 1992.
FIBERCOTE INDUSTRIES, INC.
By:/s/Allen Levine Its: Treasurer /s/Geoffrey Etherington II (GEOFFREY ETHERINGTON II) |
Consent to as of this 21st day
of December 1992
ETHERINGTON INDUSTRIES, INC.
By:/s/ G. Etherington Its: President U.S. PROLAM, INC. By:/s/Andrew M. Esposito, Jr. Its: CEO PARK ELECTROCHEMICAL CORP. By:/s/Allen Levine Its: Vice President |
[Exhibits-02-10.07a]bd
Exhibit 10.08
LEASE
THIS INDENTURE, made this 31 day of August, A.D. 1989, by and between Cemanudi Associates, an Illinois Limited Partnership, (hereinafter, for convenience, referred to as the "Lessor"), and Nelco Technology, Inc., a corporation organized and existing by and pursuant to the laws of the state of Arizona, (hereinafter, for convenience, referred to as the "Lessee").
WITNESSETH:
ARTICLE I
THE LEASED PREMISES,
FIXTURES AND EQUIPMENT:
SEC. 101. THE LEASED PREMISES. That the Lessor, for and in consideration of TEN DOLLARS ($10.00), to it in hand paid by the Lessee, the receipt whereof is hereby acknowledged; and in consideration of the agreements, conditions, covenants and obligations to be kept, fulfilled, observed or performed by the Lessee, does hereby demise and lease, and the Lessee does hereby take and rent from the Lessor, in "As Is" condition and upon the terms herein set forth, approximately 38,311 square feet of land, more specifically described on Exhibit "A" attached hereto, which Exhibit is by this reference expressly made a part hereof, together with a building located thereon containing approximately 13,995 square feet (the "Building") and including all easements, improvements, tenements, appurtenances, hereditaments, fixtures, rights and privileges thereto belonging, or in any way appertaining and subject to any restrictions, easements and encroachments and to any zoning ordinances, laws, rules or regulations of any Public Authority, now or hereafter in effect, relating to or affecting the Demised Premises; including, without limitation, all those indicated on Exhibit "A".
The Demised Premises are commonly known as 1104 West Geneva Drive, Tempe, Arizona 85282.
SEC. 102:1. BUILDING FIXTURES AND EQUIPMENT. All fixtures, machinery and equipment which are necessary to the general operation and maintenance of the Demised Premises and which are now in the Demised Premises, shall be the property of the Lessor, whether owned by Lessor at the commencement of the term, subsequently purchased by Lessor, or purchased by Lessee in accordance with the provisions of this Lease. Without in any way limiting the generality of the aforegoing, all electric power panels, lighting fixtures, plumbing, heating and air-conditioning equipment presently located in the Demised Premises shall be considered necessary to the general operation and maintenance of the Demised Premises.
SEC. 102:2. TRADE FIXTURES. Only those trade fixtures, machinery, non-structural partitions and other equipment and items which are supplied, installed and used by Lessee in the conduct of its business, including process machinery and equipment, process piping and process electric switch gear (other than replacement of building equipment referred to above), which may hereafter be installed therein, shall be the property of Lessee and may be removed by Lessee at any time prior to or upon termination of the Lease, whether by lapse of time or otherwise; provided the Lessee is not, at any such time, in default of any of the terms or conditions of this Lease. Lessee shall remove, on demand by Lessor and at Lessee's expense, any and all such items at the termination of the Lease term, whether by lapse of time or otherwise, and repair any damage caused by such removal, restoring the Demised Premises to their condition prior to the installation of all such items or any of them.
SEC. 103. "DEMISED PREMISES" and 'IMPROVEMENTS" DEFINED. "Demised Premises" shall mean the real estate described in Exhibit "A" and shall include any and all Improvements, now or hereafter, located or constructed thereon.
"Improvements" shall mean all buildings and all other improvements, (except for Lessee's trade fixtures) now or hereafter located or constructed on the Demised Premises, including, without limitation, the Building, fixtures, other structures and equipment on such premises which are the property of Lessor as above described in Sec. 102:1.
ARTICLE 2
TERM POSSESSION:
SEC. 201. TERM. The term of this Lease shall be for a period of Five (5) years commencing upon September 1, 1989 and ending at midnight August 31, 1994 subject to the further provisions of this Lease.
SEC. 202. HOLD-OVER TENANCY. In the event the Lessee remains in possession of the Demised Premises after the expiration of the term of this Lease, or any extension hereof, without written consent of Lessor, the Lessee shall then be obligated to pay double the rate of the then current annual rent as set forth herein, in equal installments on the first day of each calendar month, for so long as the Lessor is willfully kept out of possession of the Demised Premises. No such payment, nor the acceptance thereof, shall in any way constitute a waiver of the rights of Lessor to dispossess the Lessee and recover possession of the Demised Premises and the just and former estate of the Lessor and to bring any action for damages suffered by Lessor on account of Lessee's failure to vacate the Premises.
Notwithstanding the foregoing, in the event there is a
dispute as to the "Market Rental", as such term is
hereinafter defined, or if such "Market Rental" has not been
determined prior to the time within which Lessee must
exercise its second option to extend, as provided in
Schedule 3, Lessee may elect to extend the then term of this
Lease one (1) additional month on the same terms and
conditions and at the same rental as Lessee is then paying,
by notifying Lessor of such election not less than sixty
(60) days prior to the expiration of the Lease.
ARTICLE 3
RENTAL:
SEC. 301. RENTAL. The Lessee hereby covenants and agrees with the Lessor, as follows:
The following terms shall have the following respective meanings for the purpose of this lease:
(a) Consumer Price Index. The term "Consumer Price Index means the United States All Items Consumer Price Index (1982-1984=100), All Urban Consumer Section, as published by the United States Department of Labor, Bureau of Labor Statistics. If the manner in which the Consumer Price Index is determined by the Bureau of Labor Statistics shall be substantially revised, including without limitation, a change in the base index year, an adjustment shall be made by Lessor in such revised index which would produce results equivalent, as nearly as possible, to those which would have been obtained if such Consumer Price Index had not been so revised. If the Consumer Price Index shall become unavailable to the public because publication is discontinued, or otherwise, or if equivalent data is not readily available to enable Lessor to make the adjustment referred to in the preceding sentence, then Lessor will substitute therefor a comparable index based upon changes in the cost of living or purchasing power of the consumer dollar published by any other governmental agency or, if no such index shall be available, then a comparable index published by a major bank or other financial institution or by a university or a recognized financial publication.
(b) CPI Adjustment. The term "CPI Adjustment" means the percentage increase, if any, in the Consumer Price Index for the calendar month of July, 1991 over the Consumer Price Index for the calendar month of August, 1989.
The Lessee hereby covenants and agrees with the Lessor, as follows:
To take and accept said demise and lease of the Demised Premises on the terms as herein set forth and to pay as Annual Net Basic Rent for said Demised Premises at the following annual rates applicable during the following respective periods:
(a) During the period beginning on and including September 1, 1989 ("Commencement Date") and ending on and including August 13, 1991, Sixty-three Thousand Eight Hundred Seventeen and 20/100 Dollars ($63,817.20); and
(b) During the period beginning on and including August
14, 1991 and ending on and including the last day of the
term of this lease, an amount equal to the greater of
(i) Sixty-three Thousand Eight Hundred Seventeen and
20/100 Dollars ($63,817.20) multiplied by the CPI
Adjustment, and (ii) Sixty-three Thousand Eight Hundred
Seventeen and 20/100 Dollars ($63,817.20).
Such rental shall be paid in then lawful money of the United States of America in equal monthly installments each in an amount equal to one-twelfth (1/12) of the amount of the Annual Net Basic Rent applicable during such month, to be paid in advance upon the Commencement Date and on the first day of each and every calendar month thereafter during the term hereof to the Lessor at such place as may, from time to time, be designated by them; and in the absence of such designation, at the last known office of the Lessor in Tempe, Arizona. Notwithstanding anything herein to the contrary, (a) if the Commencement Date occurs on a date other than the first day of a calendar month, the amount of the monthly installment of Annual Net Basic Rent payable on the Commencement Date shall be prorated based on the number of days from and including the Commencement Date through and including the last day of such calendar month and a calendar month consisting of thirty (30) days, and (b) if the last day of the term of this Lease occurs on a day other than the last day of a calendar month, the amount of the monthly installment of Annual Net Basic Rent payable on the first day of such calendar month shall be prorated based on the number of days of such month which fall within the term and a calendar month consisting of thirty (30) days.
It is intended that the rent provided for in this Lease shall be an absolutely net return to Lessor for the term of this Lease, and any renewals or extensions thereof, free of any and all expenses or charges with respect to the Demised Premises including, without limitation, any Taxes and assessments, now or hereafter imposed upon or related to the Demised Premises, commonly known as real estate taxes, general or special or improvement assessments, and any taxes and assessments, whether by way of an income tax or otherwise which may be levied, assessed or imposed by the State in which the Demised Premises are located, or by any political or taxing subdivision thereof, upon the income arising from the rents provided herein in lieu of or as a substitute for taxes or assessments imposed upon or related to the Demised Premises and commonly known as real estate taxes; and that Lessee, and not Lessor, shall be required to, and shall pay, such taxes and assessments, but not to pay any other income tax or gift, estate or fee title transfer tax payable upon transfer of fee title to the Demised Premises which may be levied against the Lessor, or any of Lessor's interest or Mortgage payments, Lessor's expenses in negotiating this Lease, or management fees, if any, paid by Lessor to third parties.
Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include but are not limited to; processing and accounting charges and late charges which may be imposed on Lessor by the terms of any mortgage or trust deed covering the Demised Premises. Accordingly, if any installment of rent or any other payment due from Lessee shall not be received by Lessor within Ten (10) days after such amount shall be due, Lessee shall pay to Lessor in addition to the amount due, a late charge equal to Ten Percent (10%) of such overdue amount. The parties hereto hereby agree that such late charge by Lessor is a fair and reasonable estimate of the costs Lessor will incur by reason of any such late payment. Such late charge is deemed to be only one of several cumulative remedies available to Lessor hereunder and acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's default with respect to such overdue amount nor prevent Lessor from exercising any of the other rights and remedies granted hereunder.
ARTICLE 4
TAXES, ASSESSMENTS, UTILITY CHARGES,
INSPECTION FEES AND LIENS:
SEC. 401. TAXES, ASSESSMENTS. The Lessee shall pay as additional rent, during the full term hereof, all taxes; including, without limitation, ad valorem general real estate taxes, installments of assessments, general and special, and all other public charges levied upon or assessed against and properly attributable to the Demised Premises, or any part thereof, or arising by reason of the existence, occupancy, use or possession of the Demised Premises, or the business carried on therein, including, without limitation, the Arizona Rental Income Tax, all of which are hereinafter, collectively referred to as "Taxes", but not to pay any other income tax, or gift, estate or fee title transfer tax payable upon transfer of fee title to the Demised Premises which may be levied against the Lessor.
The Lessee shall pay to Lessor, contemporaneously with the monthly rent payments One Twelfth (1-12th) of the estimated annual Taxes, such estimate to be made by Lessor. Upon receipt of the real estate tax bills each year the Lessor will make payment thereof prior to delinquency and promptly provide Lessee with a copy of the receipted tax bill.
Adjustments of amounts (credit or debit) shall be made between the parties within thirty (30) days of the receipt by Lessor, of any such bill. All Taxes shall be prorated for the first and last years of the term hereof and any extension or renewal thereof. Proration with respect to the Taxes for the last year of the term shall be made on the basis of the last available tax bill, provided, however, that upon receipt of the tax bill an appropriate adjustment shall be made.
SEC. 402. UTILITY CHARGES. Lessee shall secure service and pay all charges for water, electricity, gas, telephone and any and all other utility services furnished to the Demised Premises.
The Lessor, the Public Authorities and the.Utilities servicing or located on the Demised Premises shall, at all reasonable hours, by its or their agents or employees, have the right to install, repair and replace the utility conduits, meters and other facilities located on the Demised Premises; it being understood and agreed, however, that the Lessor shall not be liable for the care, upkeep or maintenance of such facilities.
SEC. 403. LICENSES, PERMITS AND FEES. All licenses, permits and fees of any kind or character whatsoever, imposed on the Demised Premises or the use and operation thereof by the City, County, State or Federal Government, or any other governmental unit or Public Authority or for inspection of the Demised Premises, or any part thereof during the term hereof, shall be paid promptly by Lessee prior to delinquency.
SEC. 404. MECHANIC'S LIENS. Lessee shall not permit any liens to stand against the Demised Premises for any labor or material in connection with work of any character' performed or claimed to have been performed on the Demised Premises at the direction or sufferance of Lessee (except work done by Lessor), whether such work was performed or furnished prior to, or subsequent to the commencement of the term of this Lease.
In the event of any such lien attaching to the Demised Premises, Lessee will promptly notify Lessor of such event and Lessee will pay off the same and have such lien released of record within Thirty (30) days of the filing of such lien of record.
SEC. 405. PAYMENT BY LESSOR. If at any time, any tax, assessment, charge, rate, fee or inspection fee, generally or specifically charged or assessed against and properly attributable to said Demised Premises shall become due or payable and the Lessee shall not pay the same, or have paid same to Lessor or, in the event any lien for labor or material shall not be released of record by Lessee within Thirty (30) days of the filing of such lien of record, the Lessor may, at its option, pay the same at any time thereafter without inquiring into the validity thereof whether or not Lessee has failed to pay such amount or Lessee has paid such amount to Lessor, and the amount of any and all such payments so made by the Lessor (with interest thereon at Eighteen Percent (18%) per annum from and after the date any such payment was paid by Lessor) shall be and hereby is declared to be so much additional and further rent for the Demised Premises, due from and payable by the Lessee with the next installment of rent and may be collected in the same manner as other rents due hereunder; provided, however, that subject to the further provisions hereinafter set forth, Lessee shall have the right, at Lessee's expense, to contest in good faith the validity of any Taxes, assessments, charges, liens, rates or fees so specifically charged or assessed against the Demised Premises; provided, however, that Lessee notifies Lessor in writing of Lessee's intention to so contest within Thirty (30) days in advance of the date such Taxes, assessments, charges, liens, rates or fees charged or assessed against the Demised Premises were due and payable; and further provided that such contest is commenced within Thirty (30) days of the date of such notice.
SEC. 406. CONTEST. In the event Lessee desires to contest any Taxes, assessments, charges, liens, rates or fees herein provided, it shall do so by paying the amounts under protest, or shall provide for the payment thereof, together with all penalties, interest, costs and expenses, by the deposit of a sufficient sum of money to be held in escrow by Lessor or, at the option of Lessor, by a good and sufficient undertaking as may be required or permitted by law, all to the end that no delinquency or proceedings based upon delinquency shall in anywise affect the title or interest of Lessor in the Demised Premises.
Lessee agrees that it will prosecute any such contest with due diligence and in the event any such contest be adjudicated adversely to Lessee, that Lessee will, within Thirty (30) days after final determination, or within the time provided for in such adjudication, whichever is sooner thereof, pay the full amount of any such Taxes, assessments, charges, liens, rates or fees, or other obligations not paid by Lessee to Lessor which may have been the subject of such contest as so determined, together with all interest and penalties, costs and charges which may be payable in connection therewith and satisfy and cause the release of the same of record.
Lessee shall keep the Lessor notified, from time to time throughout the period of its pendency, as to the progress and status of any such contest. If a final determination is not had within Three (3) years from the date of instituting any such contest, or in the event of any default of the Lessee, pursuant to the terms of this Lease, Lessor at its option, may pay out of any funds held in escrow for any such Taxes, assessments, charges, liens, rates or fees which may be under contest, together with all penalties, interest charges and other expenses whatever in connection with such contest and Lessee shall immediately upon written demand from Lessor, terminate any such contest.
In the event the funds so held are insufficient to pay and satisfy the same, Lessor, at its option, may pay any deficiency and any amount so paid will be reimbursed by Lessee as additional rent due hereunder, promptly upon demand, notwithstanding any previous termination of the term of this Lease by lapse of time or otherwise, with interest at Eighteen Percent (18%) per annum from the date of expenditure by Lessor.
Nothing contained in this agreement shall be construed to authorize Lessee to create or incur on behalf of Lessor any liability, indebtedness or obligation whatsoever. Anything herein to the contrary, notwithstanding, Lessee shall defend, completely indemnify and hold Lessor forever harmless from any and all consequences of any such Taxes, assessments, charges, liens, rates or fees, or any contest thereof which were the obligations of Lessee to pay hereunder.
ARTICLE 5
INSURANCE:
SEC. 501. PROPERTY INSURANCE. The Lessee covenants and agrees that immediately upon the commencement of the term hereof, Lessee will cause, at Lessee's expense, the Building and, Improvements placed on the Demised Premises by the Lessor, including any and all additions thereto, to be insured for full replacement cost against loss or damage by fire, lightning and other casualty covered by the provisions of endorsements for Extended Coverage and Special Extended Coverage, to include the peril of collapse, vandalism and malicious mischief, replacement cost, and will keep insurance to the full replacement value, from time to time, of the Building and Improvements placed on said Demised Premises by Lessor, including any and all additions thereto, in full force and effect during the term hereof so long as this Lease is in effect, including all extensions hereof.
No such policy of insurance shall include either the contents of the Building located on the Demised Premises or any other property of the Lessee or any third party except as a separate stated item of insurance, separate and in addition to the coverage which shall apply exclusively to Lessor's Building and other Improvements owned by Lessor. All such policies shall provide that Lessor and any Mortgagee(s) shall be the insureds as their interests appear, and shall further provide that any loss shall be payable to Lessor and any Mortgagee(s) notwithstanding any act or omission of Lessee which might otherwise result in a forfeiture or reduction of said insurance.
In addition, Lessee shall maintain steam boiler insurance in such amounts as Lessor may from time to time reasonably require on all steam boilers, pressure boilers or such apparatus as Lessor may deem necessary to be covered by such insurance, if any.
The Lessee will not place, nor permit to be placed, any other policies of insurance upon the Building or other Improvements placed upon Demised Premises by Lessor without advance written permission of Lessor and without Lessor and Lessor's Mortgagee(s) as a named insured, provided, however, that nothing herein shall be construed as limiting in any way the manner in which Lessee insures its personal property and trade fixtures placed within the Demised Premises.
SEC. 502. PUBLIC LIABILITY INSURANCE. Lessee, at
Lessee's expense, and for mutual benefit of the Lessor any
Mortgagee(s) and the Lessee, shall maintain Comprehensive
Public Liability Insurance, covering the Demised Premises in
an amount not less than ONE MILLION DOLLARS ($1,000,000).
Such insurance shall include the following coverages:
premises/operations, independent contractors, personal
injury, broad form property damage and contractual
liability.
SEC. 503. INSURANCE GENERALLY. All insurance policies shall be with companies reasonably satisfactory to Lessor and shall provide for at least Thirty (30) days mandatory advance written notice to Lessor before cancellation, reduction or other amendment and the property policies shall contain a standard mortgage clause. Certificates evidencing such insurance shall be delivered by Lessee to Lessor at the commencement of the term of this Lease and all subsequent amendments and endorsements shall be promptly delivered to Lessor. Statements for premiums on such policies shall be sent to and paid by Lessee.
In the event Lessee shall refuse or fail to provide the insurance coverage herein required or to provide evidence of such coverage as herein described, the Lessor may, at its election, but with no obligation so to do, procure and, from time to time, renew such insurance and all amounts expended therefor with interest thereon at Eighteen Percent (18%) per annum from the respective dates of such expenditures shall be so much additional rent hereunder due from the Lessee on demand.
Lessee agrees to indemnify the Lessor for any loss suffered as the result of the exercise of any deductible feature that may be incorporated in the insurance contract and Lessor hereby reserves the right to disapprove the amount and provisions of any such deductible feature. Lessee agrees to be a self insurer as to such deductible amounts and further agrees to pay such amounts to Lessor in the same manner as though such insurance policies did not contain deductible provisions.
ARTICLE 6
USE MAINTENANCE AND CONDITION OF
THE DEMISED PREMISES:
SEC. 601. DEMISED PREMISES. Lessee shall not breach or suffer the breach of any of the conditions, agreements and restrictions of record affecting the Demised Premises and shall defend, completely indemnify and hold Lessor forever harmless from all consequences of any such breach.
Lessee may use and occupy the Demised Premises for light manufacturing (including mass lamination, manufacturing of copper clad boards, printing and etching of copper clad laminated boards and the manufacturing of prepreg), storage, assembly, distribution and for offices in connection therewith; provided, however, that Lessee shall strictly comply with all present and future laws, ordinances and regulations of public authorities, as well as all insurance underwriting and inspection and rating requirements, now or hereafter in any manner affecting the use of the Demised Premises, the sidewalks, alleys, driveways and parkways adjacent thereto, if any, or any Building thereon, or the use thereof. Lessee shall not permit any unlawful occupation, business, trade or nuisance to be conducted on the Demised Premises, or any use to be made thereof contrary to any law, ordinance or regulation. Without in any way limiting the generality of the aforegoing, Lessee will not, at any time, store any material or equipment of any kind or character outside the Building(s) located on the Demised Premises except in strict compliance with all applicable ordinances, laws or regulations of any governmental unit or other public authority having jurisdiction.
Lessee, at the sole cost and expense of Lessee, shall have the right to contest the validity of any such rules, laws, ordinances or regulations affecting the use of the Demised Premises; provided, however, in any event, that Lessee shall defend, completely indemnify and hold the Lessor forever harmless from all consequences of any such contest and the violation of any such rule, law, ordinance or regulation.
Lessee will not use or permit to be used upon or in said Demised Premises or any Building thereon anything that will invalidate any policy of insurance at any time insuring the Demised Premises, or any Building(s) or Improvements thereon, nor shall Lessee permit any dangerous condition to exist on the Demised Premises for which appropriate and sufficient safeguards in compliance with all applicable laws have not been taken.
Lessee shall not cause or suffer any signs to be erected upon the Demised Premises, nor upon any Building(s) or Improvements located thereon without the prior written approval of Lessor, which shall not be unreasonably withheld.
Anything herein to the contrary, notwithstanding, Lessee shall not at any time overload any structural member (including, by way of illustration and not limitation, all roofs, columns, walls, beams, trusses and floors) of the Building located on the Demised Premises; nor shall Lessee cause or suffer the demolition of the Building(s) or Improvements, or any part(s) thereof (except as provided in Sec. 603) without the prior written approval of Lessor.
The Lessee further covenants and agrees that the entry into occupancy of the Demised Premises by the Lessee shall constitute an acknowledgment that the same and the Building(s) and Improvements thereon have been received by the Lessee in good condition and repair, subject to the warranties set forth herein.
SEC 602. ENVIRONMENTAL PROVISIONS. As used herein, the term "Environmental Laws" includes all statutes, regulations, ordinances and orders, federal, state and local, including, but not limited to, Title 49 of the Arizona Revised Statutes, which concern the regulation or protection of the human health or the environment, including the ambient air, surface water, groundwater, and surface and subsurface land use, and any regulations promulgated thereto. The term "Regulated Substance" includes, but is not limited to, any and all hazardous substances, hazardous wastes, toxic substances or hazardous materials defined or regulated by the Environmental Laws including but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.) and the Arizona Environmental Quality Act (A.R.S. 49-201, et seq.) and any rules, regulations and guidelines adopted thereto.
Lessee shall immediately notify Lessor in writing of any
(a) correspondence or communication from any entity,
governmental or private, regarding an actual, potential, or
alleged violation of Environmental Laws, and (b) any event
or change mi Lessee's operation of the Demised Premises that
will change Lessee's or Lessor's obligations or liabilities
under the Environmental Laws.
Lessee shall, at Lessee's own expense, comply with all existing and hereinafter enacted Environmental Laws, and any amendments thereto, affecting Lessee's operation and use of the Demised Premises and Lessee's use, storage and disposal of Regulated Substances. Lessee shall obtain, prior to the commencement of the Lease, all permits, licenses and other authorizations required under the Environmental Laws.
Lessor or Lessor's duly-authorized representative shall
have the right to enter the premises at all reasonable times
to determine whether Lessee is in compliance with this
Section. Lessee's failure to abide by the terms of this
Section shall be restrainable by injunction and may result
in termination of the Lease, at Lessor's sole discretion.
Lessee shall defend, indemnify and hold harmless Lessor,
its agents, successors and assigns, from and against any
claims demands, penalties, fines, liabilities (whether
governmental or private), settlements, damages, costs, or
expenses (including, without limitation, attorney's and
consultants' fees, court costs, and litigation expenses),
arising out of or in any way related to (a) the presence,
use, generation, storage, treatment, disposal, release or
threatened release of any Regulated Substance that is on,
from, or affecting the human health or environment, whether
or not previously disclosed to Lessor; (b) any personal
injury (including wrongful death) or property damage of any
kind arising out of or related to a Regulated Substance: or
(c) any violation of any Environmental Law; provided,
however, that such events described in clauses (a), (b) or
(c) of this sentence are directly caused by or directly
attributable to the acts or omissions of Lessee, its agents,
and contractors. The provisions of this Section and this
indemnification shall be in addition to any other
obligations and liabilities Lessee shall have to Lessor at
law or in equity and shall survive the termination of this
Lease.
SEC. 603. MAINTENANCE. The Lessor warrants that the foundation, exterior bearing walls, and wood roof structure shall be free from defects in material and workmanship until such times as any of these structural systems have been altered or modified by Lessee. In the event, of the occurrence of any such defect during the warranty period and upon receipt of written notice from Lessee, Lessor shall promptly commence and diligently prosecute to completion such repairs as are necessary to correct such defect. Except for the aforegoing Lessor warranties, Lessee shall maintain and preserve the Demised Premises, including, without limitation, the interior and exterior of the Building thereon in good and clean condition making all repairs, replacements and restorations necessary for such maintenance and preservation: including, without limitation, tuckpointing, painting, glass replacement, glazing, caulking and the repair, replacement and restoration of the roof covering, docks, landscaping and, parking areas. All repairs, replacements and restorations shall be in quality at least equal to the original construction.
Notwithstanding anything herein to the contrary, on or before each anniversary date of this Lease or extension thereof, Lessee shall deliver to Lessor written evidence satisfactory to Lessor that the roof of the building on the Demised Premises has been serviced by a roofing contractor licensed by the State of Arizona and satisfactory to Lessor.
At the termination of this Lease, by lapse of time or otherwise, Lessee shall deliver the Demised Premises to the Lessor in good condition and repair as obtained therein at the commencement of the term of this Lease subject, however, to the loss or damage due to any casualty to the extent actually recovered by Lessor under insurance policies to be obtained and maintained by Lessee as herein set forth and normal wear and tear. Anything herein to the contrary, notwithstanding, Lessee will not suffer any waste t@-occur on the Demised Premises and will make every reasonable effort to prevent the Demised Premises from falling into disrepair; including, without limitation, the prompt performance of all repair, replacement and restoration obligations of Lessee as herein set forth.
SEC. 604. ALTERATIONS. Lessee shall make no alterations to the Demised Premises without prior written approval of Lessor which shall not be unreasonably withheld provided, however, Lessee shall make no material alterations to the Demised Premises (including roof, floor, and structural wall penetration). Lessee shall remove, on demand by Lessor and at Lessee's expense, any and all alterations at the termination of this Lease, whether by lapse of time or otherwise, and shall repair any damage caused by such removal, restoring the Demised Premises to their condition prior to the making of any such alteration(s), or any of them.
Any and all alterations, additions and improvements made to or placed upon the Demised Premises by the Lessee, or suffered by Lessee to be made to or placed upon the Demised Premises, as well as all fixtures and articles of personal property attached to or made a part of the Demised Premises, which Lessee has not removed or been required to remove by Lessor, shall immediately become the property of the Lessor at the termination of this Lease and shall be surrendered to the Lessor.
Subject to the provisions hereinabove set forth, the Lessee may expend such additional sums of money upon the Demised Premises, the Building and Improvements on said Demised Premises as the Lessee may desire, with the full understanding that such additional sums so paid shall not be deducted from or set off against any rents or other payments due hereunder.,
SEC. 605. LESSORS RIGHT TO INSPECT AND REPAIR. Lessor, its agents and employees shall have the right, at any reasonable time after notice to Lessee, to enter upon the Demised Premises to inspect the same in the presence of an agent of Lessee and Lessee agrees to make such agent available. In the event Lessee fails to commence such repairs, replacements or restorations as are necessary to maintain the Demised Premises in good condition, within Thirty (30) days after notice from Lessor or fails to diligently prosecute the same to completion, the Lessor, at its option, but without any obligation so to do, may make such repairs, replacements, or restorations, and amounts expended for such work by the Lessor shall be reimbursed by the Lessee as additional rent due hereunder, promptly on demand, together with interest at Eighteen Percent (18%) per annum from date of expenditure.
Anything herein to the contrary, notwithstanding, Lessor shall have the right, at any time, to enter upon the Demised Premises, but without any obligation so to do, in order to effect any repair, replacement or restoration of an emergency nature and Lessee shall reimburse Lessor as additional rent due hereunder, promptly upon demand, for expenditures incurred for such work and if Lessee denies Lessor such access, Lessee agrees to defend, indemnify and hold forever harmless the Lessor from and against any and all liability, fines, suits, claims, demands, actions, causes of action, losses, costs, damages, judgments and expenses of any kind or character, name or nature due to or arising directly or indirectly out of such emergency.
ARTICLE 7
INDEMNIFICATION AND HOLDING
HARMLESS OF LESSOR:
SEC. 701. INDEMNIFICATION. To the extent permitted by law, Lessee shall defend, completely indemnify and hold forever harmless the Lessor from and against any and all liability, fines, suits, claims, demands, actions, causes of action, losses, costs, damages, judgments and expenses of any kind or character, name or nature, due to or arising out of:
(a) Any breach, violation or non-performance of any covenant, obligation, condition or agreement in this Lease set forth and contained on the part of the Lessee to be fulfilled, kept, observed or performed; and/or
(b) any damage to, loss or destruction of any property arising directly or indirectly out of Lessee's use and occupancy of the Demised Premises, except for any such damages, losses or destruction resulting from or attributable to the breach of the warranty contained in the first sentence of Section 603 hereof; and/or
(c) any injury to any person(s), including death, resulting at any time therefrom, occurring in or about the Demised Premises and/or the sidewalks, drive and alleyways, pkways, if any, and any and all other appurtenances thereunto appertaining arising directly or indirectly out of
Lessee's use and occupancy of the Demised Premises, except for any such injuries or deaths resulting from or attributable to the breach of the warranty contained in the first sentence of Section 603 hereof.
In the event the Lessor is made a party to any action or proceeding which Lessee is required to defend pursuant to the provisions of this Lease, the Lessor shall have the right to appear and to take part in any such action or proceeding by legal counsel of Lessor's choice at Lessor's cost and expense.
Lessee and Lessor hereby agree to completely indemnify the prevailing party as to an costs and expenses incurred to enforce any of the terms, provisions, conditions or covenants of this Lease; including, but not limited to, reasonable attorney's fees.
Nothing herein shall be construed as obligating the Lessee to indemnify or hold harmless any party, from and against the consequences of willful or negligent acts or omissions of the party to be indemnified.
SEC. 702. LOSS OF PROPERTY. Anything in this Lease to the contrary notwithstanding Lessee agrees that under no circumstances shall Lessor be liable to Lessee or to any third party for any loss of, destruction of, damage to or shortage of any property other than that directly or indirectly caused by defects, latent or otherwise, warranted herein by Lessor; including, by way of illustration and not limitation, equipment or inventory placed on the Demised Premises or suffered to be placed thereon by Lessee, it being the intention of the parties hereto that the risk of any and all such loss, destruction, damage or shortage shall be borne by Lessee and Lessee agrees to defend, completely indemnify and hold Lessor forever harmless from and against any and all liability, suits, claims, demands, actions causes of action, losses, costs, damages, judgments and expenses if any arising out of such loss, destruction, damage or shortage.
ARTICLE 8
DAMAGE OR DESTRUCTION
OF BUILDINGS:
SEC. 801. DAMAGE OR DESTRUCTION OF BUILDINGS. If any Building or Improvements placed by the Lessor on the Demised Premises shall be injured or destroyed by fire or other casualty insured against pursuant to the terms of this Lease, the Lessor will, with due diligence and dispatch, proceed to collect the insurance thereon and if the Lessor elects to repair or restore such Building, the Lessor will apply the insurance monies derived from said policies to such repair and restoration.
In the event that the monies realized from the insurance policies shall not be sufficient to restore such Building and/or Improvements to their condition immediately prior to such fire or other such casualty, the Lessor may, at the option of Lessor, advance the additional funds necessary therefor, and to the extent that the insufficiency of the insurance proceeds was due to the failure of Lessee to comply with the provisions of this Lease and to the extent of any deductible feature in the insurance coverage to be provided by the Lessee, the Lessee covenants and agrees to repay any such advance to the Lessor as additional rent due hereunder, promptly upon demand, with interest at the rate of Eighteen Percent (18%) per annum from the date of such expenditure.
In the event Lessor does not elect to repair or restore
such Building and/or Improvements within Thirty (30) days
after such a casualty, such election to be evidenced by
written notice to Lessee within said time period, or if the
repair or restoration cannot reasonably be accomplished
within a period of one hundred twenty (120) days after such
casualty, then in either of such events this Lease and the
term hereof, may be terminated
and cancelled at the election of either party hereto,
provided written notice is given to the other party within
Ten (10) days after the expiration of the last
aforementioned such Thirty (30) day period. Absent such
timely notice this Lease shall remain in full force and
effect.
ARTICLE 9
RENT ABATEMENT
BECAUSE OF DAMAGE:
SEC. 901. RENT ABATEMENT BECAUSE OF DAMAGE. In the event the Building and/or Improvements on the Demised Premises shall be damaged by fire or other casualty covered by the provisions of the insurance policies then in effect as provided for herein, the Lessee shall not be required to pay rent on any untenantable portion of said Building and the rental reserved hereunder shall be reduced to the proportion that the square foot area of the Building remaining tenantable bears to the total square foot area of the original Building. Such rental shall be increased pro rata, from time to time, if and when additional areas of the Building are returned to tenantable condition.
ARTICLE 10
CONDEMNATION:
SEC. 1001. AWARD. In the event the Demised Premises, or any part thereof, shall be condemned or taken for a public or a quasi-public use, or is sold by Lessor under threat of condemnation, any award made or sales price paid to compensate for the value of the Demised Premises, Building(s) and Improvements thereon, or for damages to the remainder thereof shall be paid to the Lessor and Lessee shall have no claim thereto and the Lessee hereby irrevocably assigns and transfers to the Lessor any right to any such compensation or damage awards, providing, however, that Lessee shall have the right to prove in the proceeding and to receive any award which may be made for damages for or condemnation of Lessee's personal property, including movable trade fixtures and equipment and relocation costs.
In the event any or all of the Demised Premises shall be so condemned or taken, the Lessee shall execute and deliver to Lessor, promptly on demand, all documents necessary and proper to evidence the termination of the interest of the Lessee in and to the Demised Premises and this Lease, including, without limitation, a recordable release and cancellation of this Lease and a quit claim deed. The failure of the Lessee to so execute and deliver such documents shall in no way affect such termination of this Lease and the interest of the Lessee in and to the Demised Premises.
SEC. 1002. REMAINDER SUSCEPTIBLE OF OCCUPANCY. In the event a part of the Demised Premises remains which is susceptible of occupation for the uses set forth herein, this Lease shall, as to the part so taken, terminate as of the date title shall vest in the condemning authority and the rent payable hereunder shall be adjusted so that the Lessee shall be required to pay for the remainder of the term only such fractional portion of such rent as the area of the part of the building located on the Demised Premises remaining after condemnation bears to the area of said Building as of the date of condemnation: and in such event, this Lease shall remain in full force and effect and the Lessor shall promptly commence and diligently prosecute to complete the restoration of the Building so that it shall again constitute a complete architectural unit but the Lessee shall be required to pay only that fractional portion of the rent as is provided for hereinabove in this Sec. 1002.
In the event the Lessor does not so terminate this Lease, this Lease shall remain in full force and effect and the Lessor shall promptly commence and diligently prosecute to completion the restoration of the Building so that it shall again constitute a complete architectural unit but the Lessee shall be required to pay only that fractional portion of the rent as is provided for hereinabove in this SEC. 1002.
SEC. 1003. REMAINDER NOT SUSCEPTIBLE OF OCCUPANCY. In the event all of the Demised Premises, or such part thereof be taken or condemned so that there does not remain a portion susceptible for occupancy for the uses set forth herein, this Lease shall terminate upon the date the title to the part taken vests in the condemning authority and Lessee's obligation to pay rent or to discharge any other obligation hereunder, other than the payment of money then due and damages arising out of any breach of the covenants, conditions or terms hereof by the Lessee, shall cease.
Notwithstanding anything herein to the contrary, the Demised Premises shall not be deemed tenantable in the event more than twenty-rive percent (25%) of the area of the Building located on the Demised Premises is taken or condemned.
ARTICLE 11
DEFAULT, BANKRUPTCY
SEC. 1101. DEFAULT, BANKRUPTCY. It is mutually agreed and understood by and between the parties hereto that in the event during the term of this Lease, regardless of the pendency of any bankruptcy, insolvency, receivership or reorganization proceedings, in law, equity or before any administrative tribunal, or any other governmental entity which has been prevented or which might prevent compliance by Lessee with the terms or provisions of this Lease:
(1) Lessee shall default in the payment of any installment of rent or other payment required to be made by Lessee pursuant to the provisions of this lease and such default shall continue for Ten (10) days after notice of such default from Lessor provided however that in the event Lessor has had to give Lessee notices of such default more than twice in any twelve (12) consecutive month period, this notice requirement shall thereupon terminate and Lessee shall be in default after the expiration of any such ten (10) day period regardless of lack of notice from Lessor; or
(2) Lessee shall make default in the provisions of any of the agreements, conditions, covenants or obligations hereunder. to be kept, fulfilled, observed or performed by the Lessee and such default shall not be cured within Thirty (30) days after notice of such default from Lessor to Lessee;
Anything hereinabove to the contrary, notwithstanding, as to any such default except the payment of any rent or other monies reserved herein, in the event the Lessee shall, within said Thirty (30) day period, commence the cure of such default and diligently pursue to completion any such cure as soon as reasonably practicable, the Lessor may not declare the term ended and this Lease terminated and cancelled; or
(3) if any voluntary petition or similar pleading under any bankruptcy act or any federal or state law seeking reorganization or arrangement with creditors or adjustment of debts is filed by or against Lessee, or if any such petition or pleadings is involuntary and Lessee is not discharged thereof within Thirty (30) days after the date of its filing; or
(4) if Lessee admits its inability to pay its debts or if a receiver, trustee or other appointee of a court, administrative tribunal or other public authority is appointed for all or a substantial part of Lessee's property and if such appointment is not vacated within Thirty (30) days after being made; or
(5) if the leasehold interest of Lessee is levied upon or attached by process of law, and such levy or attachment is not released of record within Thirty (30) days; or
(6) if Lessee makes an assignment for the benefit of creditors, or if any proceedings are filed by or against Lessee to declare Lessee insolvent or unable to meet its debts and such proceedings are not discharged within Thirty (30) days after the date of their filing; or
(7) if a receiver or similar type of appointment or court appointee or nominee of any name or character is made for all or a substantial part of Lessee's property and if such receiver is not discharged within Thirty (30) days after appointment;
then, in any such event, Lessor shall have the right, at any
time thereafter (but prior to any timely cure as hereinabove
provided), with or without notice to avail itself to any or
all of the following remedies, (a) to lock the doors of the
Demised Premises and exclude Lessee therefrom; (b) to retain
or re-enter and take complete possession of the Demised
Premises pursuant to Landlord's statutory lien; (c) to
remove all persons and all of Lessee's property therefrom;
(d) to terminate this Lease forthwith; (e) to@sue for the
rent due and to become due under this Lease; (f) to sue for-
any damages sustained by Lessor and/or (g) to keep this
Lease in full force and effect reletting the Demised
Premises on such terms and conditions as Lessor may deem
appropriate without prejudicing Lessor's rights to recover
past and future rents or other obligations of Lessee
hereunder.
Anything herein to the contrary, notwithstanding any payment of rent or any other payment to be made by the Lessee to Lessor, pursuant to the provisions of this Lease, shall bear interest at the rate of Eighteen Percent (18%) per annum from the date payment was due.
In the event the right, title and interest of Lessee in
and to the Demised Premises and this Lease is terminated,
whether by lapse of time or otherwise, the Lessee shall
execute and deliver to Lessor, promptly on demand, all
documents reasonably requested by Lessor to evidence such
termination: including, without limitation, a recordable
release and cancellation of this Lease and a quit claim
deed. The failure of Lessee to so execute and deliver such
documents shall in no way affect the termination of this
Lease and the interest of the Lessee in and to the Demised
Premises.
SEC. 1102. NO WAIVER. No waiver by Lessor of any
default by the Lessee of any of the obligations, agreements,
conditions or covenants on the part of the Lessee to be
fulfilled, kept, observed or performed hereunder shall be a
waiver of any subsequent default or of any other obligation,
agreement, condition or covenant, nor shall any forbearance
by Lessor to seek a remedy for any default by Lessee be a
waiver by Lessor of any of the rights and remedies available
to Lessor hereunder or by law granted or permitted, with
respect to such or any subsequent default.
ARTICLE 12
TRANSFER, ASSIGNMENT, SUBLEASE
SEC. 1201. TRANSFER, ASSIGNMENT, SUBLEASE. The
Lessee may not assign, transfer, mortgage or pledge this
Lease or the interest of the Lessee herein or hereunder or
sublet Demised Premises or any portion thereof, without, in
each case, the prior written consent of the Lessor which
shall not be unreasonably withheld. Any purported
assignment, mortgage, transfer, pledge or sublease without
the prior written consent
of the Lessor which shall not be unreasonably withheld. Any
purported assignment, mortgage, transfer, pledge or sublease
without the prior written consent of Lessor shall be
absolutely null and void and of no legal force or effect.
SEC. 1202. INCREASED RENT TO LESSOR. As a condition precedent to the approval of any sublease, assignment or any other type of transfer by the Lessee to any third party of all or a portion of its interest in and to the Demised Premises pursuant to the provisions of this Lease, Lessee agrees that it will pay to the Lessor, contemporaneously with the rental payments due hereunder, Fifty Percent (50%) of any increased economic benefit received by Lessee, including, without limitation, rent in excess of the rent reserved herein and in the event less than all of the Demised Premises are so subleased, assigned or transferred in any way, the Lessee shall pay to the Lessor Fifty Percent (50%) of any increase in the square foot rate of rent paid to Lessee by any third party. Lessee shall also increase any security deposit required hereunder to the amount of a full month's rent.
The rent that Lessee pays to the Lessor for the purpose of this, Section 1202. shall be calculated by dividing the monthly rent reserved herein by the square foot area of the building located on the Demised Premises as stated hereinabove.
SEC. 1203. MAINTENANCE, REPAIR, AND RESTORATION UPON ASSIGNMENT OR SUBLETTING. As a condition precedent to Lessor's consent to any assignment or subletting of this Lease or all or any part of the Demised Premises Lessor may at it's sole discretion require Lessee to undertake any deferred maintenance and to make all repairs and restorations which are the obligations of Lessee under this Lease prior to the effective date of any such assignment or sublease in the same fashion as could be required at the expiration of this Lease Term.
SEC. 1204. LESSOR MAY SELL, MORTGAGE, TRANSFER OR ASSIGN. Lessor shall have the right to sell, mortgage, pledge, hypothecate or in any other manner transfer or assign the interest of the Lessor in the Demised Premises and/or in the Lease, subject to all of the covenants and conditions of and Lessee's rights under this Lease. The term "Lessor", as used in this Lease, means only the owner for the time being of the Demised Premises and in the event of any sale, conveyance or other transfer of the Demised Premises, or the interest of Lessor in the Demised Premises, the Lessor shall upon purchaser's assumption, be and hereby is entirely freed of all covenants and obligations of Lessor hereunder arising after the date of such sale, transfer assignment or conveyance. This Lease shall not be affected by any such sale and Lessee agrees to attorn to the purchaser or assignee.
SEC. 1205. SUBORDINATION. This Lease shall be subject and subordinate to the lien of any mortgage or mortgages which at any time may be placed upon the Demised Premises by Lessor, its successors or assigns, and to any replacements, renewals or extensions thereof, provided that the holder of the encumbrance agrees to recognize for itself and its successors, and assigns, Lessee's rights hereunder notwithstanding any foreclosure. Lessee agrees, at any time hereafter, on demand, to execute and deliver any instruments, releases or other documents that may be required for the purpose of subjecting and subordinating this Lease to the lien of any such mortgage or mortgages subject to the provisions set forth above.
SEC. 1204. LESSOR MAY SELL, MORTGAGE, TRANSFER OR ASSIGN. Lessor shall have the right to sell, mortgage, pledge, hypothecate or in any other manner transfer or assign the interest of the Lessor in the Demised Premises and/or in the Lease, subject to all of the covenants and conditions of and Lessee's rights under this Lease. The term "Lessor", as used in this Lease, means only the owner for the time being of the Demised Premises and in the event of any sale, conveyance or other transfer of the Demised Premises, or the interest of Lessor in the Demised Premises, the Lessor shall upon purchaser's assumption, be and hereby is entirely freed of all covenants and obligations of Lessor hereunder arising after the date of such sale, transfer assignment or conveyance. This Lease shall not be affected by any such sale and Lessee agrees to attorn to the purchaser or assignee.
SEC. 1205. SUBORDINATION. This Lease shall be subject and subordinate to the lien of any mortgage which at any time may be placed upon the Demised premises by Lessor, its successors or assigns, and to any replacements, renewals or extensions thereof, provided that the holder of the emcumbrance agrees to recognize for itself and its successors, and assigns, Lessee's rights hereunder notwithstanding any foreclosure. Lessee agrees, at any time hereafter, on demand, to execute and deliver any instruments, releases or other documents that may be required for the purpose of subjecting and subordinating this Lease to the lien of any such mortgage or mortgages subject to the provisions set forth above.
SEC. 1206. LESSEE'S ESTOPPEL LETTER. Lessee agrees
at any time and from time to time upon not less than Ten
(10) days prior written request by Lessor to execute,
acknowledge and deliver to Lessor a statement in writing
certifying that this Lease is unmodified and in full force
and effect (or if there have been modifications that the
same is in full force and effect as modified and stating the
modifications), and the dates to which the basic rent and
other charges have been paid in advance, if any, and all of
the defaults of Lessor hereunder, if any, it being intended
that any such statement delivered pursuant to this Section
may be relied upon by any prospective purchaser of the fee
or mortgagee or assignee of any mortgage upon the fee of the
Demised Premises.
ARTICLE 13
MISCELLANEOUS:
SEC. 1301. NOTICES. Any notice provided for herein shall be given by registered or certified mail addressed, if to Lessor, as follows:
Cemanudi Associates
3225 S. Hardy Drive, Suite 105
Tempe, Arizona 85282
with a copy to:
Cemanudi Associates
One First National Plaza
Chicago, Illinois 60603
Attention: Law Department
and if to Lessee, as follows:
Nelco Technology, Inc.
1130 West Geneva Drive
Tempe, Arizona 85282
Attention: President
with a copy to:
Park Electrochemical Corporation
5 Dakota Drive
Lake Success, New York 11042
Attention: General Counsel
SEC. 1302. CHANGE OF ADDRESS. The person and places to which notices or payments are to be mailed may be changed, from time to time, by Lessor or Lessee upon written notice to the other.
SEC. 1303. MODIFICATION. This Lease may be modified only by written agreement signed by Lessor and Lessee.
SEC. 1304. DESCRIPTIVE HEADINGS. The descriptive headings and index of this Agreement are inserted for convenience in reference only and do not constitute a part of this Agreement.
SEC. 1305. SUCCESSORS AND ASSIGNS. This Lease and the covenants, terms, conditions and Provisions hereof, shall be binding upon the respective parties hereto and upon their respective successors, assigns and personal representatives and shall inure to the benefit of said respective parties hereto and their said respective successors, assigns and personal representatives.
Wherever in this Lease a reference to any of the parties hereto is made, such reference shall be deemed to include, wherever applicable and even though not expressly stated, also a reference to the successors, assigns and personal representatives of such party, as the case may be, the same as if in every case expressly stated.
The phrase "successors and assigns" is used in this Lease in its broadest possible meaning and includes, in addition to administrators, trustees and conservators; every person, firm, corporation or other entity succeeding to the interest in or to this Lease, or any part thereof, or in or to any real estate, or any part or portion thereof, described or referred to herein or any part hereto, or of any of the successors or assigns of any such party, whether such succession results from the act of a party in interest, occurs by operation of law or is the effect of the operation of law together with any act(s) of any such party or parties.
SEC. 1306. ENTRY TO SHOW PREMISES. Lessor, its agents or assigns may, from time to time, during the term of this Lease, and each and every extension hereof after notice to and in the company of Lessee, enter the Demised Premises at reasonable times to show the same to prospective buyers or tenants.
During the last Six (6) months of the term of this Lease or after the occurrence of any default on the part of the Lessee hereunder, after notice to and in the company of Lessee, the Lessor hereby reserves the right to enter the Demised Premises (and prior to the curing of such default) and to place, on the outer walls or roof of any building(s) located thereon and upon any part of the Demised Premises, outside such building(s), "For Sale" and/or "For Rent" signs of a type similar to those used in the area. Lessee agrees not to remove, interfere with, or obstruct the view of any such sign(s).
SEC. 1307. TIME OF ESSENCE. Time is of the essence of this Lease and in all of the conditions, obligations, agreements, provisions, terms and covenants hereof.
SEC. 1308. RESOLUTION. Lessee shall, contemporaneously with the execution and,delivery of this Lease, also deliver to Lessor a copy of a Resolution of the Board of Directors of Lessee, or other evidence satisfactory to Lessor, specifically authorizing those of Lessee's officers whose names are subscribed hereto to enter into this Lease Agreement with the Lessor named herein. Such Resolution shall make reference to this Lease of the Demised Premises, lease term and rental reserved, shall be duly certified to by the Secretary of said Board of Directors and shall be appended hereto as Schedule 2. Lessor shall, contemporaneously with the execution and delivery of this Lease, also deliver to Lessee evidence of Lessor's general partner's authority to bind Lessor of the officer of Lessor's general partner who executes this Lease Agreement.
SEC. 1309. UNENFORCEABILITY. In the event any covenant, term, provision, obligation, agreement or condition of this Lease is held to be unenforceable at law it is mutually agreed and understood, by and between the parties hereto, that the other covenants, terms, provisions, obligations, agreements and conditions herein contained shall remain in full force and effect.
SEC. 1310. WAIVER OF TRIAL BY JURY. The Lessee waives a trial by jury of any or all issues arising in any action, or proceeding between the parties hereto, or their successors arising out of, or in any way connected with this Lease, or any of its provisions the Lessee's use, or occupancy of the Demised Premises and/or any claim of injury or damage.
SEC. 1311. GOVERNING LAW. This Lease and the rights of the parties hereto shall be interpreted and determined in accordance with the laws of Arizona.
SEC. 1312. ENTIRE AGREEMENT. This Lease contains the Entire Agreement between the parties respecting the matters herein set forth and supersedes, all prior agreements between the parties hereto about such matters.
SEC. 1313. ADDITIONAL TERMS. The Lessor hereby covenants, represents and warrants as follows:
(a) The Demised Premises consists of approximately 38,311 square feet of land together with a building located thereon containing approximately 13,995 square feet.
(b) Lessor has not received any notice of any violation of any zoning ordinances, building codes or other local, state and federal statutes, codes, ordinances, laws and regulations and has no knowledge of the existence of any such violation.
(c) At Lessee's request, Lessor shall promptly execute and acknowledge and deliver to Lessee Memorandum of this Lease summarizing the material terms of this Lease.
(d) Lessor's covenants, representations and warranties shall be true on and as of the date hereof, on and as of August 31, 1989.
SEC. 1314. EXHIBITS AND SCHEDULES. The following Exhibits and Schedules are attached hereto and expressly made a part hereof, to wit:
Exhibit A- Legal Description
Schedule 1- Security Deposit
Schedule 2- Lessee's Board Resolution
Schedule 3- First and Second-Option to Extend Term
IN WITNESS WHEREOF, said Lessor and Lessee have caused this instrument to be executed by their respective duly authorized officers, all as of the day and year first above written.
Cemanudi Associates, Lessor By CMD Corporation, its General Partner
By /s/ President
ATTEST:
/s/Secretary
NELCO TECHNOLOGY, INC.
By: /s/Robert A. Forcier, President
ATTEST:
/s/Ron Fleming, Secretary
|
EASEMENT
R/W# 2381 AGT. PRL
COUNTY Maricopa
Parcel MCR 228-38
CMD SOUTHWEST INCORPORATED, an Arizona corporation, for an in consideration of the sum of One Dollar, and other valuable consideration, receipt of which is hereby acknowledged, do hereby grant to the Salt River Project Agricultural Improvement and Power District, a political subdivision of the State of Arizona, its successors and assigns, the non-exclusive right, easement and privilege to construct, operate and maintain underground electrical conduits, together with its manholes, transformer pads and vaults and other appurtenances through, over, under and across the following described property:
The East 162 feet of Lot 9 of BROADWAY INDUSTRIAL PARK UNIT 4-A, as recorded in Book 228 of Maps, page 38, Maricopa County, Arizona.
Said easement being 7.0 feet in width, 3.5 feet on each side of the following described centerline:
Commencing at the Southeast corner of said Lot 9; thence North 89 degrees 53', 53" West (assumed bearing) along the South line thereof, a distance of 70.5 feet; thence North 16 degrees 13' 47" East a distance of 8.0 feet to the TRUE POINT OF BEGINNING of the easement herein described; thence continue North 16 degrees 13' 47" East a distance of 103.7 feet; thence North 03 degrees 41' 27" East a distance of 103.3 feet; thence South 88 degrees 37' 07" West a distance of 13.0 feet to a terminus:
Caution: The above described easement contains high voltage electrical equipment and notice is hereby given that the location of underground electrical conduits may vary from the locations indicated in the above description, therefore all persons who may excavate in the area must accordingly proceed with caution.
The GRANTEE shall at all times have the right of full and free ingress and egress to said easement for the purpose heretofore specified, and the right to permit other utility companies to use the right of way jointly with the Grantee for their utility purposes.
In the event the right, privilege and easement herein granted shall be abandoned and permanently cease to be used for the purpose herein granted, all rights herein granted shall cease and revert to the grantors, their heirs or assigns.
The covenants and agreements herein set forth shall extend and inure in favor and to the benefit of and shall be binding on the heirs, successors in ownership and estate, assigns and lessees of the respective parties hereto.
IN WITNESS WHEREOF, CMD SOUTHWEST INCORPORATED, an Arizona
corporation
has caused its corporate name to be signed and its corporate
seal to be affixed by the undersigned officers thereunto
duly authorized, this 24th day of August, 1981.
/s/ President
State of Arizona
County of Maricopa
|
CERTIFICATE OF RESOLUTION
OF
NELCO TECHNOLOGY, INC.
The undersigned, Harry Linzer, Secretary of NELCO TECHNOLOGY, INC., an Arizona corporation (hereinafter referred to as the "Corporation"), hereby certifies that the following resolutions were duly and regularly passed and adopted in all respects as required by law and the Bylaws of the Corporation, and that such resolutions are still in full force and effect and have not been revoked:
RESOLVED, that the Corporation should, and it hereby does, approve that certain Lease by and between Cemanudi Associates, an Illinois limited partnership, as Lessor, and the Corporation, as Lessee, for approximately 38,311 square feet of land, together with a building located thereon containing approximately 13,995 square feet, commonly known as 1104 West Geneva Drive, Tempe, Arizona 85282; and
FURTHER RESOLVED, that Robert A. Forcier, President of the Corporation, should be acting alone hereby is, authorized to execute said Lease on behalf of the Corporation.
IN WITNESS WHEREOF, the undersigned has signed his name as Secretary of the Corporation on this 1st day of September, 1989.
Harry Linzer
Secretary
SCHEDULE 1
SECURITY DEPOSIT:
Lessee has deposited the sum of Five Thousand Dollars ($5,000) with the Lessor as security for the full and faithful performance by the Lessee of the terms of this Lease. It is agreed that in the event Lessee defaults in respect of any of the terms, provisions and conditions of this Lease, including, but not limited to, the payment of rent and additional rent, Lessor may use, apply or retain the whole or any part of the security so deposited to the extent required for the payment of any rent and additional rent or any other sum as to which Lessee is in default or for any sum which Lessor may reasonably expend or may be reasonably required to expend by reason of Lessee's default in respect of any of the terms, covenants and conditions of this Lease, including, but not limited to, any damages or deficiency accrued before or after summary proceedings or other re-entry by Lessor.
In the event that Lessee shall fully and faithfully comply with the terms, provisions, covenants and conditions of the Lease, the security shall be returned to Lessee promptly after the date fixed as the end of the Lease Term and after delivery of the entire possession of the Demised Premises to Lessor.
In the event of a sale of the demised premises, Lessor then has the right to transfer the security to the purchaser, and upon the purchaser's assumption Lessor shall thereupon be released by Lessee from all liability for return of such security and Lessee agrees to look to the new Lessor solely for return of said security.
SCHEDULE 2
LESSEE'S BOARD RESOLUTION
[To be inserted by Lessee]
SCHEDULE 3
FIRST OPTION TO EXTEND TERM
Lessee, at its option, may extend the term of this Lease for an additional Five (5) years by delivering irrevocable written notice thereof upon the Lessor at lease Six (6) Months prior to the expiration of the then existing Lease Term, and upon delivery of said notice, the term of this Lease shall be extended for said additional period upon the same terms without further action of the parties; subject, however, to the further provisions of this schedule.
RENTAL DURING FIRST EXTENSION OF TERM:
In the event the original term of this Lease is extended as hereinabove provided, the Annual Net Basic Rent during the first three (3) years of the extended term will be the greater of the following:
(a) The Annual Net Basic Rent during the last two
(2) years of the original Lease term; or
(b) An amount equal to the product of Sixty-three Thousand Eight Hundred Seventeen and 20/100 Dollars ($63,817.20) multiplied by a fraction which has as its denominator the United States All Item Consumer Price Index (1982-1984 = 100), All Urban Consumer Section, issued by the Bureau of Labor Statistics, U.S. Department of Labor (hereinafter the "CPI-U") published for the month immediately prior to the beginning of the original term of this Lease and, as its numerator said Index published for the month immediately prior to the commencement date of said extension;
In the event the original term of this Lease is extended as herein provided, the Annual Net Basic Rent during the last two (2) years of the extended term will be the greater of the following:
(c) The Annual Net Basic Rent during the first three (3) years of the extended term; or
(d) An amount calculated by the following formula:
(A)x(.50)x{(B/C)-1.00}+(A) = Annual Basic Rent during the last two (2) year of extended term of Lease.
where A =The amount described in preceding subparagraphs (a) or (b) whichever is greater;
where B =The CPI-U published for the period immediately prior to the commencement date of the last two year period of the extended term.
where C =The CPI-U published for the period immediately prior to the commencement date of the Five year extended term.
All such Annual Net Basic Rent due to be paid during any and all extensions of the original Lease Term shall be paid in equal monthly installments, in advance, in the same manner as the rent paid during the original Term of this Lease.
In the event that the Index hereinabove referred to ceases to incorporate a significant number of items contained therein in the Index last published prior to the commencement date of the original term of this Lease, or if a substantial change is made in the method of establishing such Index, then the Index shall be adjusted to the figure that would have resulted had no change occurred in the manner of computing such Index. In the event that such Index (or a successor or substitute Index) is not available, a reliable governmental or other non-partisan publication evaluating the information theretofore used in determining the Index, shall be used in lieu of such Index.
SECOND OPTION TO EXTEND TERM:
Provided Lessee has validly exercised the First Option to
Extend Term hereinabove described, Lessee at its option, may
extend the term of this Lease for a second, additional Five
(5) years by delivering irrevocable written notice thereof
upon the Lessor at lease Six (6) months prior to the
expiration of the first Five year extension of the Lease
Term, and upon delivery of said notice, the term of this
Lease shall be extended for said additional period upon the
same terms without further action of the parties, subject,
however to the further provisions of this Schedule.
RENTAL DURING SECOND EXTENSION OF TERM:
The Annual Net Basic Rent due to be paid to Lessor for said Demised Premises during the first Three (3) years of the second option to extend shall be the "Market Rental, as that term is hereinafter defined. The Market Rental will be equal to the product of 13,995 multiplied by the market rate of rent per square foot for comparable warehouse/office space for a comparable lease term on the commencement date of the option term (hereinafter referred to as "Market Rate"). The Market Rate will be determined as hereinafter set forth without regard to (a) the rate of rent Lessee is then paying for the Demised Premises, and (b) the value of Lessee's improvements and trade fixtures. In the event Lessee desires to consider exercising its second option to extend as set forth in this Schedule, Lessee shall submit to Lessor nine (9) months prior to the expiration of the then existing lease term, a written statement setting forth the Lessee's proposed Market Rate, which statement shall include the method used and assumptions made in arriving at such a rate. Lessor shall within twenty (20) days of receipt of the statement accept or reject the same or submit a revised statement of Market Rate which statement shall include the method used and assumptions made in arriving at such a rate. If Lessor accepts Lessee's statement of Market Rate, Market Rate shall be determined as set forth therein and Lessee shall, in the event it exercises its option to extend, pay to Lessor during the first Three (3) years of the second option to extend, Annual Net Basic Rent equal to the product of Market Rate times 13,995 square feet. If Lessor elects to submit a revised statement, Lessee shall within ten (10) days of receipt thereof either accept or reject the same. If Lessee accepts Lessor's revised statement of Market Rate, Market Rate shall be determined as set forth therein and Lessee shall, in the event it exercises its option to extend, pay to Lessor Annual Net Basic Rent determined as set forth above in this paragraph. If, however, Lessor rejects Lessee's statement of Market Rate or Lessee rejects Lessor's revised statement of Market Rate, the rejecting party shall name and appoint an independent M.A.I. appraiser and give written notice thereof to the non-rejecting party within five (5) days of the date of such rejection. The non- rejecting party shall, within five (5) days of the receipt of said notice of rejection, name and appoint another appraiser and give the rejecting party written notice thereof. Thereafter, said appraisers shall select a third appraiser. If said appraisers are unable to agree on the selection of a third appraiser within five (5) days, they shall jointly petition the Superior Court of the County of Maricopa, Arizona, for the appointment of a third appraiser. Thereupon, the said appraisers shall independently determine the market rate for leasing the Demised Premises. Their respective written reports of Market Rate shall be submitted to Lessor and Lessee not later than seven (7) months prior to the expiration of the then term or on such later date as Lessor and Lessee may mutually agree. Upon delivery of the aforesaid written reports of value, and Market Rate shall be computed as follows: (a) average the three appraisals and disregard the appraisal which deviates the greatest from the average; and (b) average the two remaining appraisals. The average of the two remaining appraisals shall constitute the Market Rate and shall be binding upon the Lessor and Lessee. In the event Lessee then exercises its option to extend, the exercise of which shall take place, if at all, at lease six (6) months prior to the expiration of the then existing lease term, Lessee shall pay to Lessor during the first three (3) years of the second option to extend Annual Net Basic Rent equal to the product of Market Rate times 13,995 square feet. The Lessor and Lessee shall each bear the fees, costs and expenses of the appraiser selected by it, and the fees, costs and expenses of the appraiser appointed by the parties' appraisers shall be shared equally by Lessor and Lessee. Either party's failure to fully comply in a timely fashion with the provisions regarding determination of Market Rate shall be deemed an abandonment of this method of determining rental, and the Market Rate shall be determined solely by the non- defaulting party's appraiser. Thereafter, the Annual Net Basic Rent to be paid for the Demised Premises during the fourth and fifth years of the second option to extend shall be the greater of the following:
(a) The Market Rental (as determined hereinabove); or
(b) An amount calculated by the following formula:
(A)x(.50)x{(B/C)-1.00}+(A) = Annual Basic Rent during the
last two
(2) year of second extended term of
Lease.
where A =The Annual Net Basic Rent during the first three (3) years of the second extended term.
where B =The CPI-U published for the period immediately prior to the commencement date of the last two year period of the second extended term.
where C =The CPI-U published for the period immediately prior to the commencement date of the second Five year extended term.
In the event that the Price Index hereinabove referred to ceases to incorporate a significant number of items contained in the Index last published prior, or if a substantial change is made in the method of establishing such Index, then the Index shall be adjusted to the figure that would have resulted had no change occurred in the manner of computing such Index. In the event that such Index (or a successor or substitute Index) is not available, a reliable governmental or other non-partisan publication evaluating the information theretofore used in determining the Index, shall be used in lieu of such Index.
All such rental required herein shall be paid in then lawful money of the United States of America in equal monthly installments; one installment to be paid upon the first day of each and every calendar month during the term hereof to the Lessor at such place as may, from time to time, be designated by them; and in the absence of such designation, at the last known office of the Lessor in Tempe, Arizona.
RESTRICTIONS ON OPTION:
Lessee may not exercise an Option if Lessee is in any way in default of any of the terms, conditions or covenants contained in this Lease beyond an applicable cure period, and the occurrence of any default by Lessee from and after the date of notice of exercise of an Option and Lessee's subsequent failure to cure said default within the applicable period, shall result in the immediate termination forever of the Options, and all rights of Lessee as set forth in this Schedule without further action of the parties and all without prejudice to the other rights of Lessor.
The Options are for the sole benefit of the above named Lessee and shall automatically terminate upon any assignment of this Lease, sublease of the Demised Premises, or other transfer of this Lease and/or the rights of Lessee, provided, however, that Lessee shall have the right to exercise only the next available option to extend the term an additional five (5) years in the event Lessee assigns or subleases this Lease, pursuant to the provisions of SEC. 1201, subject however, to the following terms and conditions:
1) This right to exercise one (1) option to extend the term in the event of an assignment or sublease is a one time right, and shall not be applicable in the event of any subsequent assignments or subleases;
2) Notwithstanding the provisions of Article 3 with regard to determining the Annual Net Basic Rent, the Annual Net Basic Rent during the extended term if this option is exercised following an assignment or sublease, shall be the "Market Rental", and shall be determined substantially in accordance with the procedures set forth in this Schedule 3 for determining Market Rental.
3) Notwithstanding the provisions of SEC.1202, as a condition precedent to the approval of any sublease, assignment of any other type of transfer by the Lessee to any third party of all or a portion of its interest in and to the Demised Premises pursuant to the provisions of this Lease, Lessee agrees that it will pay to the Lessor, contemporaneously with the rental payments due during the five (5) year option period, any amounts Lessee may receive in excess of the Market Rental as determined aforesaid, and in the event less than all of the Demised Premises are so subleased, assigned or transferred in any way, the Lessee shall pay to the Lessor any increase in the square foot rate of rent paid to Lessee during this option period by any third party.
[Exhibis-02-10.08]bd
Exhibit 10.08(a)
FIRST AMENDMENT TO LEASE
This FIRST AMENDMENT is made on this 21st day of October, 1994 between CEMANUDI ASSOCIATES, an Illinois Limited Partnership ("Lessor") and NELCO TECHNOLOGY, INC., an Arizona corporation ("Lessee").
A. Lessor and Lessee previously entered into that certain Lease dated August 31, 1989 for the lease of the premises commonly known as II 04 West Geneva Drive, Tempe, Arizona ("Lease").
B. Lessor and Lessee now desire to extend the term of the Lease, subject to the terms and conditions set forth in this First Amendment.
Lessor and Lessee agree as follows:
1. Definitions. All of the terms used in this First
Amendment shall have the same meanings set forth therefor
in the Lease, except to the extent expressly set forth
otherwise herein.
2. First Extension Term. The term of the Lease is
hereby extended for the period ("First Extension Term")
commencing on and including September 1, 1994 and ending at
11:59 P.M. (local time at the Demised Premises) on August
31, 1999.
3. First Extension Term Annual Net Basic Rent. Lessee
agrees to pay to Lessor Annual Net Basic Rent during the
First Extension Term as follows:
(a) During the period commencing on and includ
ing September 1, 1994 and ending August 31, 1997, Lessee
shall pay to Lessor as Annual Net Basic Rent the greater of
(i) Sixty-Nine Thousand Seven Hundred Fifty-Eight and 40/1
00 Dollars ($69,758.40), or (ii) an amount equal to the
product of Sixty-Three Thousand Eight Hundred Seventeen and
20/100 Dollars ($63,817.20) multiplied by a fraction which
has as its denominator the United States All Item Consumer
Price Index (I 982-1984 = I 00), All Urban Consumer
Section, issued by the Bureau of Labor Statistics, U.S.
Department of Labor ("CPI-U") published for August, 1989
and as its numerator the CPI-U published for August, 1994
("Initial Rent").
(b) During the period commencing on and includ
ing September 1, 1997 and ending August 31, 1999, Lessee
shall pay to Lessor as Annual Net Basic Rent the greater of
(i) the Initial Rent, or (ii) an amount calculated by the
following formula:
(A)x (.50) x {(B/C - 1.00} + A = Annual Basic
Rent during the last two (2) years of extended term of
lease.
where A = Initial Rent
where B = The CPI-U published for August 1997,
the period immediately prior to the commencment date of the
last two year period of the extended term.
where C = The CPI-U published for August 1994, the period immediately prior to the commencment date of the five year extended term.
Such Annual Net Basic Rent shall be paid to Lessor in equal monthly installments on or before the first day of the First Extension Term and on or before the first day of each successive calendar month throughout the First Extension Term.
4. Full Force and Effect. Except to the extent expressly provided otherwise in this First Amendment, all of the terms and conditions set forth in the Lease shall remain in full force and effect.
5. Conflicts. In the event that any of the provisions of the Lease conflict with any of the terms and provisions of this First Amendment, the terms and provisions of this First Amendment shall prevail.
6. Time of Essence. Time is of the essence of each and every term of this First Amendment.
IN WITNESS WHEREOF, said Lessor and Lessee have caused this instrument to be executed by their respective duly authorized officers, all as of the day and year first written above.
LESSOR
CEMANUDI ASSOCIATES, an Illinois
Limited Partnership
By CMD CORPORATION
By:___________________
Its: Vice President
LESSEE
NELCO TECHNOLOGY, INC., an Arizona
corporation
By:___________________
Its: Vice President and General
Manager
[Exhibis-02-10.08a]bd
Exhibit 10.13
LEASE CONTRACT
BETWEEN
THE NEW YORK STATE
DEPARTMENT OF TRANSPORTATION
AND
THE EDGEWATER STEWART COMPANY
February 26, 1988
C 0 N T E N T S
Article Page
Introduction 1
1 Term 3
2 Leased Premises 4
3 Use of Leased Premises 6
4 Rental 8
5 Acceptance, Care, Maintenance,
Improvements and Repair 11
6 Additional Obligations of Lessee 17
7 Ingress and Egress 21
8 Insurance, Damage or Destruction 23
9 Liabilities and Indemnities 29
10 Leasehold Mortgages 32
11 Assignment and Sublease 49
12 Condemnation 54
13 Non-Discrimination 59
14 Governmental Requirements 61 15 Rights of Entry Reserved 63 16 Additional Rents and Charges 66 |
17 Termination by the Department 68
18 Surrender and Right of Re-Entry 71
19 Services to Lessee 72
20 Survival of the Obligations of the Lessee 74
21 Use Subsequent to Cancellation or Termination 76
22 Notices 77
Article
Page
23 Holding Over
79
24 Invalid Provisions
80
25 Miscellaneous Provisions:
Remedies to be Nonexclusive 81
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Non-Waiver of Rights 81
Force Majeure 81
Non-liability of Individuals 82
Quiet Enjoyment 82 Estoppel Certificate 82 Short Form of Lease 83 General Provisions 83 |
26 Supplementary Provisions 85
27 Entire Agreement 87
AA Disbursement of Deposited Moneys AA-1
LEASE AGREEMENT
This Agreement of Lease, made and entered into this, day of February, 1988, by and between: THE STATE OF NEW YORK ACTING BY AND THROUGH its DEPARTMENT OF TRANSPORTATION, having offices at 1220 Washington Avenue, Albany, New York 12232, hereinafter referred to as the "Department and THE EDGEWATER STEWART COMPANY, a New York general partnership, having an office at The Hilton Tower, 465 South Salina Street, Syracuse, New York 13202-24-87, hereinafter referred to as the "Lessee". Lessee's Employer Identification Number is 16-1314192.
WITNESSETH THAT:
WHEREAS, the Department is the fee owner of the premises known as Stewart International Airport Industrial Park located in the Town of New Windsor, New York and presently comprising approximately 8,000 acres, and wherever "Park" is used in this Lease it shall be construed to mean the Industrial Park as it may be expanded from time to time; and
WHEREAS, Lockheed Air Terminal Inc. is the current Park Manager for the Department under an agreement dated April 1, 1983, and wherever "Department" is used herein it shall be construed to mean the New York State Department of Transportation or its Park Manager acting on its behalf; and
WHEREAS, the Department and the Lessee are mutually desirous of entering into a Lease for the development of a certain area in the Park; and
WHEREAS, the Department desires to further promote, accommodate and enhance the economic development of the Mid Hudson Valley area through development at the Park and the Lessee desires to construct and lease a light industrial fabrication and distribution facility in the Park area; and
WHEREAS, the Department and the Lessee have reached an understanding in principle which envisions the Lessee's construction and use of an approximately 57,200 square foot light industrial fabrication and distribution facility, hereinafter the "Facility", and associated site improvements without cost to the Department on the Leased Premises.
NOW, THEREFORE, in consideration of the premises and of the rents, covenants and conditions herein contained, the Department does hereby lease to the Lessee the area of the Park described in Article 2 hereof (hereinafter referred to as "the Leased Premises"), during the term hereof for the term and pursuant to the conditions hereinafter set forth.
ARTICLE 1
TERM
1.1 The Initial Term of this Agreement shall be for a period
of twenty-five (25) years and eight (8) months commencing on
February 1, 1988, and expiring on September 30, 2013, unless
sooner terminated in accordance with the provisions hereof.
1.2 The Lessee shall have an option to extend the term of
this Agreement for seven (7) additional periods of five (5)
years each, (the "Extended Terms") provided Lessee is not, at
the time of its exercise of such option, in default of its
obligations hereunder. In the event Lessee exercises said
options it shall do so no later than one year prior to the
expiration of the Initial Term or the then current Extended
Term. The terms and conditions during the Extended Terms
shall be the same. The rent escalation shall continue
throughout the Initial Term and Extended Terms as set forth
in Article 4 hereof.
1.3 The Initial Term of this Agreement is subject to
Lessee's right of termination as set forth in Section 5.1.3
hereof.
ARTICLE 2
LEASED PREMISES
2.1 The Leased Premises consist of:
2.1.1 A six and eight tenths (6.8) acre parcel of land on
the Westerly portion of Lot 6 of the Park more particularly
described and shown on Exhibit A attached hereto and made a
part hereof.
2.1.2 All improvements now or hereafter constructed on
the aforementioned land.
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2.2. The Department warrants and represents that it has obtained by eminent domain or otherwise, fee title to the Leased Premises, free of any restriction or encumbrance which would prevent the construction of the improvements which Lessee is required hereunder to construct or which would prevent the use of such improvements as a light industrial fabrication and distribution facility.
2.3 The Department represents and warrants to Lessee that it has unencumbered title to the Leased Premises by virtue of the acquisition of certain parcels of land now a part of the Airport through the 1967 New York State Transportation Bond Issue and the provisions of Section 400 of the Transportation Law of the State of New York.
2.4 The Department agrees to provide Lessee immediate access to the Leased Premises and the surrounding environs during normal business hours for the purpose of site testing to determine its suitability for the proposed construction.
2.5 The Leased Premises is subject to the Department's perpetual easement, fifty feet in width, running in a Northerly direction along the Easterly boundary of the Leased Premises from Governor Drive to Lot-6-B.
2.6 Lessee shall have an option for the development of Lot 6-B, consisting of approximately three acres between the Leased Premises and the Park boundary along Interstate 84, for the sole purpose of expanding the Facility for a period of three years commencing August 1, 1988 and expiring July 31, 1991. To exercise its option, the Lessee shall be in compliance with all the terms and conditions of this Agreement and shall pay the Department a fee of $1,000 annually in advance therefor.
2.6.1. At the time Lessee exercises the option: (a) Lot
6-B shall merge into the Leased Premises and become a
part thereof; (b) the perpetual easement set forth in
Section 2.5 shall be extinguished, and; (c) the rent for
Lot 6-B shall be at the same rate as for the Leased
Premises at that time and shall escalate thereafter at
the times and amounts as set forth in Article 4 hereof.
ARTICLE 3
USE OF LEASED PREMISES
3.1 The Lessee shall occupy and use the Leased Premises for the construction and leasing of light industrial fabrication and distribution facilities. Nothing herein shall be construed to prevent Lessee from using these Premises for any other lawful purposes consistent with the provisions of this Agreement and the Park's current Performance and Development Standards.
3.2 Lessee shall not use or allow the Leased Premises to be used for any unlawful purpose or in violation of any certificate of occupancy covering or affecting the use of the Leased Premises, or any part thereof, or for any use which, in law, constitutes a nuisance, public or private, or which voids or makes voidable any insurance then in force with respect thereto.
3.3 There is hereby reserved to the State of New York, its successors and assigns, for the use and benefit of the public, the right of flight of aircraft in the airspace above the surface of the Leased Premises herein conveyed. This public right of flight shall include the right to cause in said airspace, any noise inherent in the operation of any aircraft used in navigation enroute to or from, or taking off or landing at, or operating at Stewart International Airport, Newburgh, New York.
3.4 Nothing contained in this Agreement shall be construed to grant to the Lessee any additional rights in the airspace above the Leased Premises which would be in violation of Federal Aviation Administration rules, regulations or orders currently in force as subsequently promulgated.
3.5 Lessee's use of the Leased Premises is subject to the Department's easement described in Sections 2.5 and 2.6.1 hereof.
3.6 Except for the exclusive right of the Lessee to possession of the Leased Premises, no exclusive rights in the Park are granted by this Agreement and no greater rights or privileges with respect to the use of the Leased Premises or any part thereof are granted or intended to be granted to the Lessee by this Agreement, or by any provision thereof, than the rights and privileges expressly and specifically granted hereby.
3.7 Lessee agrees that all water, mineral and any other subsurface rights are the sole property of the Department and Lessee shall not have any rights or rights of access thereto.
ARTICLE 4
RENTAL
4.1 For use and occupancy of the Leased Premises and
privileges herein granted, the Lessee agrees to pay to
the Department during the period commencing on October
1, 1988, and ending on September 30, 1993, an annual
rental of thirty-four thousand six dollars, eighty cents
($34,006.80).
4.1.1 The annual rental payable hereunder shall be paid
in equal monthly installments on the first day of each
month in advance at the Office of the Park Manager or at
such other office as may be directed in writing by the
Department. The monthly installment for the first five
years of the lease term through September 30, 1993 shall
be two thousand eight hundred thirty-three dollars,
ninety cents ($2,833.90).
4.1.2 Commencing October 1, 1993 and ending September 30,
1998, Lessee shall pay an annual rent of thirty-seven
thousand three hundred ninety-three dollars, twenty
cents ($37,393.20) plus a rent escalation on the Rent
amount in Section 4.1 above as calculated in accordance
with the provisions of Section 4.2 hereof.
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4.2 Commencing on October 1, 1993 and on each fifth anniversary thereof during the remainder of the Initial Term, the annual rent payable hereunder shall be adjusted (subject to the provisions of 4.2.1 hereof) by multiplying the annual rent payable in the next
preceding year of the Leased Term by a fraction, the
numerator of which shall be the C.P.I. (as such term is
hereinafter defined) published for the month of October
of the year in which such adjustment is made and the
denominator of which shall be the C.P.I. published for
the month of September of the calendar year in which the
last preceding such adjustment was made; provided,
however that the denominator for first adjustment shall
be the C.P.I. for the month of September, 1988. In no
event shall the annual rental payable under this Section
4.2 be less than the amount payable for the last
adjusted period.
4.2.1 The term "C.P.I." as used herein shall mean the
Consumer Price Index for all Urban Consumers, all items,
Selected Large Cities, for the New York/Northeastern New
Jersey Area as published by the Bureau of Labor
Statistics of the United States Department of Labor,
1982-84 base equals 100, provided, however, that for the
purpose of this Agreement, the escalation of the C.P.I.
shall not exceed twenty-five percent (25%) in any five
years during the Initial Term. In the event that the
base year is changed, the C.P.I. shall be converted to
the equivalent of the base year 1982-84 equals 100.
4.2.2 If the option for any Extended Term is exercised by
the Lessee, then the Department shall, six months prior
to the commencement of each of the Extended Terms,
complete an appraisal of the land value of the Leased
Premises. The appraisal will be performed by an
appraiser selected by the Department. The appraiser
shall be certified by the American Institute of Real
Estate Appraisers (M.A.I.) and licensed to do business
in the State of New York. The annual rent during the
first Extended Term shall be ten percent (10%) of the
appraised fair market value of the land, exclusive of
the Facility and without regard to the fair market value
of the Facility, but in no event less than the annual
rental rate paid during the last five years of the
Initial Term or during the then current Extended Term.
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4.3 Promptly upon the execution of this Agreement, Lessee shall submit plans and specifications to the Department in accordance with the provisions of the Department's Construction Application and Appendix B hereof.
4.4 As additional rent, the Lessee shall construct, or cause to be constructed, the Facility at the Leased Premises generally in accordance with the Lessee's site plans SP-1 dated November 10, 1987 and revised February 3, 1988 and SP-2 dated November 10, 1987 and revised February 9, 1988 as modified, supplemented or amended pursuant to the Department's review and approval process as set forth in Section 5.4 and Appendix B hereof (the "Initial Improvements"). A copy of that site plans are attached hereto as Exhibits B-1 and B-2, respectively, and made a part hereof.
4.5 The Facility shall be substantially completed on or before December 31, 1988. Construction of the facility must begin within ninety (90) days after approval of the Lessee's plans and specifications by the Department. If Lessee delays construction beyond that date, the Department may, in its sole discretion, terminate this Agreement by prompt written notice to Lessee.
ARTICLE 5
ACCEPTANCE, CARE, MAINTENANCE,IMPROVEMENTS AND REPAIR
5.1 Subject to the provisions of 2.4 hereof, and in reliance
upon the representations of the Department set forth in this
Section 5.1, Lessee warrants that it has inspected the Leased
Premises and accepts possession of the Leased Premises "as
is" in its present condition and.acknowledges its
suitableness and sufficiency for the uses permitted
hereunder. The Department represents to the Lessee that, to
its knowledge, the Leased Premises is free of any adverse
environmental conditions and no part of the Leased Premises
lies in a flood hazard area or constitutes a fresh water
wetland, nor is any part of the Leased Premises within 100
feet of a fresh water wetland. Except as may otherwise be
provided for herein, the Department shall not be required to
maintain nor to make any improvements, repairs or restoration
upon or to the Leased Premises or to any of the improvements
presently located thereon. The Department shall not have any
obligation to repair, maintain or restore, during the term of
this Agreement, any improvements placed upon the Leased
Premises by the Lessee, its successors and assigns.
5.1.1 In the event the representations made in Section
5.1 above are not accurate and hazardous material is
found on or under the Leased Premises and such hazardous
material existed prior to the date of Agreement, the
Department accepts responsibility for performing, or
causing to be performed by the Lessee and reimbursable
to the Lessee by the Department, any and all clean-up
efforts required by law.
5.1.2Alternatively, the Department agrees to offer to Lessee
an alternate comparable site for the Facility, if one is
available.
5.1.3 In the event the clean-up efforts cannot be
performed, or it an alternate site is not available in a
timely manner to meet Lessee's timetable for construction for
Johnson Controls, then this Agreement shall be terminable
upon written notice by either party to the other.
5.1.4 In the event Lessee discovers any hazardous
material on the Leased Premises, it will promptly notify
the Department in writing and comply with all directives
by the Department.
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5.1.5 The Department will facilitate environmental approvals as necessary or appropriate for the
construction and operation of the project described
herein. Lessee agrees to cooperate fully and promptly
with the Department in providing it with any data, forms
or other information required by the Department.
5.1.6 The Lessee's obligation under this Agreement is
contingent upon the Leased Premises being free of any
adverse environmental condition and Lessee's ability to
obtain all necessary permits and approvals for the
Facility and other improvements to be used by Johnson
Controls, provided that Lessee pursues the obtaining of
said permits and approvals with all due diligence.
5.1.7 Lessee shall be responsible for permits issued by
involved agencies relative to industrial processes and
operations.
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5.2 The Lessee shall throughout the term of this Agreement assume the entire responsibility, cost and expense for all cleaning, repair and maintenance whatsoever on the Leased Premises and all improvements thereon in a good and workmanlike manner, whether such repair or
maintenance be ordinary or extraordinary, structural or
otherwise. Additionally, the Lessee, without limiting
the generality hereof, shall:
5.2.1 Provide and maintain on the Leased Premises all
obstruction lights and similar devices, and safety
equipment required by law.
5.2.2 Take measures to prevent erosion, including but not
limited to the planting and replanting of grasses with
respect to all portions of the Leased Premises not paved
or built upon, and in particular shall plant, maintain
and replant any landscaped areas.
5.2.3 Be responsible for the maintenance and repair of
all utility service lines placed on the Leased Premises
and used by the Lessee exclusively, including, but not
limited to, water lines, gas lines, electrical power and
telephone conduits and lines, sanitary sewers and storm
sewers provided however, that the Department shall be
responsible for assuring the maintenance and repair of
the road and utilities which it is obligated to install
hereunder up to the boundary lines of the Leased
Premises.
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5.3 In the event the Lessee fails: (a) to commence to maintain, clean, repair, replace, rebuild or repaint within a period of thirty (30) days after written notice from the Department to do any maintenance or repair work required to be done under the provisions of this Agreement, including preventive maintenance within a period of ninety (90) days of the said written notice specifying that the work to be accomplished by the Lessee involves preventive maintenance only; (b) or to diligently continue to completion any repairs, replacement, rebuilding, painting or repainting as required under this Agreement; then, the Department may, at its option, and in addition to any other remedies which may be available to it, enter the premises involved, without such entering causing or constituting a cancellation of this Agreement or an interference with the possession of the Leased Premises, and repair, replace, rebuild or paint all or any part of the Leased Premises or the improvements thereon, and do all things reasonably necessary to accomplish the work required, and the cost and expense thereof shall be payable to the Department by the Lessee on demand. The Department's costs and expenses shall include all direct costs and expenses of the Department, its agents, contractors, and employees and all allocations of fringe benefits, overhead, legal and administration charges actually incurred. Furthermore, should the Department, its officers, employees or agents undertake any work hereunder, the Lessee hereby waives any claim for damages, consequential or otherwise, as a result therefrom except for claims for damages arising from the negligence of the Department, its agents and contractors. The foregoing shall in no way affect or alter the primary obligations of Lessee as set forth in this Agreement, and shall not impose or be construed to impose upon the Department any obligations to maintain the Leased Premises, unless specifically stated otherwise herein.
5.4 Plans and specifications for all major repairs,
construction, alterations, modifications, additions or
replacements costing in excess of fifty thousand dollars
($50,000), which amount shall be escalated by the C.P.I.
over the Term and Extended Term of the Agreement in the
same manner as the rent is escalated in Article 4
hereof, (hereinafter referred to as "Improvements')
including, without limitation the Facility to be
constructed by the Lessee pursuant to Section 4.4.1
above and Appendix B hereto and the Park's Performance
and Development Standards, shall be submitted to and
receive the written approval of the Department, and no
such work shall be commenced until such written
approvals are obtained from the Department which
approval shall not be unreasonably withheld or delayed.
The Department shall advise the Lessee within thirty
(30) days after receipt of the written request, together
with copies of the plans and specifications for the
proposed improvements in sufficient detail to make a
proper review thereof, of its approval or disapproval of
the proposed work, and in the event it disapproves,
stating its reasons therefore. In determining whether to
approve a major repair, construction, alteration,
modification, addition or replacement, the Department
shall be guided by the criteria set forth in Section 3
of Appendix B and the Park's Performance and Development
Standards.
5.5 If the Lessee makes any Improvements without Departmental approval or that are disapproved by the Department, then, upon notice to do so, the Lessee shall remove the same or at the option of the Department cause the same to be changed to the reasonable satisfaction of the Department. If the Lessee fails to comply with such notice within thirty (30) days or to commence to comply and pursue diligently to completion, the Department may effect the removal or change and the Lessee shall pay the cost (as defined in Section 5.3) thereof to the Department.
5.6 The complete and unencumbered title to Improvements shall vest in the Department at the expiration of the Initial Term or the expiration of the Extended Term, if exercised, of this Agreement or upon the earlier termination of this Agreement.
ARTICLE 6
ADDITIONAL OBLIGATIONS OF LESSEE
6.1 The Lessee shall conduct its operations hereunder so as not to unreasonably annoy, disturb, or endanger others.
6.2 The Lessee shall take all reasonable measures not to produce or cause to be produced any electrical, electronic or other disturbance that interferes with the operation by the Department or the Federal Aviation Administration of air navigational, communication or flight equipment on Stewart International Airport (hereinafter "Airport") or on aircraft using the Airport, or with ground transportation communications.
6.3 The Lessee shall control the conduct and demeanor of its officers, agents, employees, invitees and, upon reasonable objection from the Department concerning the conduct, demeanor of any such person, the Lessee shall immediately take all lawful steps necessary to remove the cause of the objection.
6.4 The Lessee shall comply with all health and safety laws and any other federal, state or municipal laws, rules, regulations and building codes applicable to the Leased Premises and the improvements thereon and its operations at the Park hereunder.
6.5 The Lessee shall be responsible for removal from the Park of all garbage, debris and other waste materials (whether solid or liquid) arising out of its occupancy of the Leased Premises or out of its operations. The Lessee shall dispose of its sewage through the sewerage system operated by the Town of Newburgh. The Lessee shall provide and use suitable covered metal or other rigidly and sturdily constructed receptacles, suitably screened from public view, for all garbage, trash and other refuse created on or arising in connection with the activities conducted on the Leased Premises. Piling of boxes, cartons, barrels or other similar items, in an unsightly or unsafe manner, on or about the Leased Premises is forbidden. The manner of handling and disposing of trash, garbage and other refuse and the frequency of removal thereof from the Park premises shall at all times be subject to the lawful and reasonable rules, regulations and approval of the Department.
6.6 The Lessee shall commit no nuisance or waste on the Leased Premises,and shall not do, or permit to be done, anything which may result in the creation, commission or maintenance of such nuisance, waste on the Leased Premises.
6.7 The Lessee shall not do, nor permit to be done, anything which may nterfere with the effectiveness or accessibility of the drainage system, sewerage system, fire protection system, sprinkler system, alarm system and fire hydrants and hoses, if any, installed or located on the Leased Premises.
6.8 The Lessee shall not overload any floor, structure, structural member or paved area on the Leased Premises and shall repair at the Lessee's expense any floor, structure, structural member, or any paved area damaged by overloading without limiting the Lessee's obligations pursuant to Article 5 hereof.
6.9 The Lessee shall not do, nor permit to be done, any act or thing upon the Leased Premises which will cause a default in, or invalidate, any fire insurance policies applicable to the Leased Premises or any part thereof.
6.10 From time to time, the Department may conduct pressure, water flow, and other appropriate tests of the fire extinguishing system and apparatus which constitutes a part of the Leased Premises, if installed, and the Lessee's proportionate share of the cost of which tests shall be paid to the Department by the Lessee upon demand.
6.11 Except for the accommodation of its employees and guests, the Lessee shall not install, maintain, operate or permit the installation, maintenance or operation of any restaurant, kitchen, stand or other establishment of any type for the sale of food or of any vending machines or device designed to dispense or sell merchandise or services of any kind to the general public.
6.12 It is the intent of the parties hereto that noise shall be held to a reasonable minimum. To this end the Lessee will conduct its operations in such a manner as to keep the noise produced by trucks and other mechanical and electrical equipment thereof or any other noise to a minimum by such methods as are practicable, considering the extent and type of the operations of the Lessee.
ARTICLE 7
INGRESS AND EGRESS
7.1 The Lessee shall have the right of ingress and egress between the Leased Premises and the public roadways by means of connecting paved roads. Such rights of ingress and egress shall be in common with others having rights of passage thereon.
7.2 The use of any such roadway shall be subject to the lawful Rules and Regulations of the Park which are now in effect or which may hereafter be promulgated. The Department may, at any time, temporarily close or consent to or request the closing of, any such roadway and any other way at, in or near the Leased Premises presently or hereafter used as such, so long as a reasonable means of ingress and egress as provided above remains available to the Lessee. The Lessee hereby releases and discharges the Department, its officers, employees and agents, and all municipalities and other governmental authorities and their respective successors and assigns, of and from any and all claims, demands, or causes of action which the Lessee may now or at any time hereafter have against any of the foregoing, arising or alleged to arise out of the closing of any street, roadway or other area, provided that a reasonable means of access to the Leased Premises remains available to the Lessee whether within the Leased Premises or outside the Leased Premises at the Park unless-otherwise mandated by safety considerations or lawful exercise of the police power. The Lessee shall not do or permit anything to be done which will interfere with the free access and passage of others up to the boundary of the Leased Premises or in any streets or roadways near the Leased Premises.
ARTICLE 8
INSURANCE, DAMAGE OR DESTRUCTION OF LEASED PREMISES AND IMPROVEMENTS
8.1 The Lessee at its sole cost and expense shall procure and maintain throughout the term of this lease insurance protection for all risk coverage on the structure and improvements of which the Leased Premises is a part, to the extent of one hundred percent (100%) of the actual replacement cost thereof. Such insurance shall be written by insurers of recognized financial standing authorized to conduct business in the State of New York. If said insurers become financially incapable of performing under the terms of said policy, the Lessee shall promptly obtain a new policy issued by a financially responsible carrier and shall submit such new policy as previously provided. In the event Lessee elects to insure itself for the required coverage, it shall request the prior written approval of the Department and it shall document its capability to self insure to the satisfaction of the Department every two years on the anniversary of the effective date of this Agreement.
8.1.1 The above stated property insurance shall be for the benefit of the New York State Department of
Transportation and Lessee as their interests may appear
and provide thirty (30) days notice of cancellation or
material change, by registered mail, to the Department,
Attention: Department Counsel, and the Park Manager.
8.1.2 The Lessee shall provide certificates of insurance
evidencing existence of all insurance required to be
maintained prior to the commencement of the lease term.
Upon the failure of the Lessee to maintain such
insurance as above provided, the Department, at its
option, may take out such insurance and charge the cost
thereof to the Lessee with the next installment of the
monthly fee due hereunder or may give notice of a
default hereunder pursuant to Article 19 herein.
8.2 In the event any improvements, insurable or uninsurable,
on the Leased Premises are damaged or destroyed to the
extent that they are unusable by the Lessee for the
purposes for which they were used prior to such damage,
or same are destroyed, the Lessee shall repair and
reconstruct the improvements substantially as they were
immediately prior to such casualty or in a new or
modified design subject to applicable existing building
codes at the time of repairing or rebuilding. Provided,
however that if the aforesaid damage or destruction
occurs in the last five years of the Term of this
Agreement or during any Extended Term, the Lessee may
elect not to repair and reconstruct the improvements
subject to the following terms and conditions:
8.2.1 The Lessee shall give the Department written notice
of its election not to repair and reconstruct the
improvements within forty-five (45) days of the date
upon which the improvements were damaged or destroyed.
8.2.2 The Lessee shall clear the site, remove all debris,
stub up all utilities, and generally restore the site to
it's cleared condition prior to commencement of
construction.
8.2.3 The Lessee shall permit the Department to retain
all insurance coverage and proceeds as described in
Section 8.1 hereof, subject to the provisions of Section
8.7 hereof.
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8.2 upon the occurrence of 8.2.1, 8.2.2 and 8.2.3 above, the Department shall terminate this Agreement and relieve Lessee of all future rental obligations hereunder.
8.3 In the event of damage or destruction to any of the improvements upon the Leased Premises, the Department shall have no obligation to repair or rebuild the improvements or any fixtures, equipment or other personal property installed by the Lessee pursuant to this Agreement.
8.4 In the event the Lessee repairs or reconstructs as aforesaid, Lessee, shall, at its expense, replace and repair any and all fixtures, equipment and other personal property necessary to properly and adequately continue its business at the Park, but in no event shall Lessee be obligated to provide equipment and fixtures in excess of those existing prior to such damage or destruction except for requirements of construction codes existing at the time of repair or replacement. The Lessee agrees that such work will be promptly commenced and prosecuted to completion with due diligence subject to delays beyond the Lessee's control.
8.5 The insurance policies required under this Lease to be furnished by Lessee to the Department may, at the election of Lessee, be furnished and/or paid for by any subtenant or other person having an insurable interest in the Leased Premises, and the Department shall accept such policies as though they had been supplied and paid for by Lessee provided such policies shall comply otherwise with the requirements of this Lease.
8.6 All policies of insurance required herein shall name the
Department as an additional insured. Subject to be
provisions and limitations hereinafter set forth in this
Section 8.6 and in Sections 8.7 and 8.8, all such
policies of insurance shall also provide, if required by
either party hereto, for the loss thereunder to be
payable to the holder of any Leasehold Mortgage, as the
interests of such holder may appear, pursuant to a
standard mortgage clause or endorsement. Notwithstanding
anything to the contrary contained in this lease, the
Lessee, in consultation with the Department, shall have
the right to adjust or otherwise settle any claim for
insurance proceeds under any insurance policy maintained
pursuant hereto.
8.7 The loss, if any, under all policies of the character referred to in Section 8.1, shall be payable (i) to Lessee in the case of any particular casualty resulting in a loss payment not exceeding one hundred fifty thousand dollars ($150,000) (adjusted for C.P.I. in the same manner as rent), or (ii) in case of any particular casualty resulting in a loss payment in excess of one hundred fifty thousand ($150,000) dollars (adjusted for C.P.I. in the same manner.as rent), to the first Leasehold Mortgagee, or if there is none, to a bank or trust company, as insurance trustee, to be designated by Lessee in a notice given to the insurance companies and to the Department promptly following the occurrence of the casualty, which bank or trust company shall have an office in the County of Orange, and shall disburse the loss proceeds in accordance with the provisions of Article AA hereof. All policies of the character aforesaid shall expressly provide that loss thereunder shall be adjusted and paid as provided in Section 8.8 and this Section 8.7. Any agreement which the Department or Lessee shall enter into with any bank or trust company acting as trustee hereunder may include as a party thereto the holder of any mortgage on this Lease, when so requested, provided such mortgage shall provide or the holder thereof shall agree in writing for application of insurance proceeds in the same manner as provided in this Lease.
8.8 Any loss paid under any insurance policy to Lessee shall be held by Lessee in trust for application to the cost of restoring,- repairing, replacing or rebuilding the Building-g and any loss so paid to the first Leasehold Mortgagee or the insurance trustee shall be disbursed by it in accordance with the provisions of Article AA.
8.9 Whenever in this Agreement, provision is made for the carrying of any insurance, it shall be deemed that such provision is complied with if such insurance otherwise complying with such provision is carried under a blanket policy or policies covering the Leased Premises as well as other properties.
8.10 Lessee shall not violate, or permit to be violated, any of the conditions of any of the said policies; any Lessee shall perform and satisfy, or cause to be satisfied, the requirements of the companies writing such policies.
ARTICLE 9
LIABILITIES AND INDEMNITIES
9.1 The Department shall not in any way be liable for any cost, liability, damage or injury including cost of suit and reasonable expenses of legal services, claimed or recovered by any person whomsoever, or occurring on the Leased Premises or as a result of any operations, works, acts or omissions performed on the Leased Premises by-the Lessee, its sublessees or tenants, or their guests or invitees.
9.2 The Lessee agrees to indemnify, save and hold harmless, the Department (its officers, agents, servants and employees) of and from any and all costs, liability, damage and expense (including costs of suit and reasonable expenses of legal services) claimed or recovered, justly or unjustly, falsely, fraudulently or frivolously, by any person, firm or corporation by reason of injury to, or death of, any person or persons, including Department personnel and damage to, destruction or loss of use of any and all property, including Department property, arising from, or resulting from, any operations, works, acts or omissions of Lessee, its agents, servants, employees, contractors, sublessees or tenants. In any case in which such indemnification would violate Sections 5-321.1 or 5-322.1 of the New York General Obligations Law, or any other applicable legal prohibition, the foregoing provisions concerning indemnification shall not be construed to indemnify the Department, its officers, employees or agents for damage arising out of bodily injury to persons or damage to property caused by or resulting from the negligence of the Department, its officers, employees or agents. Upon the filing with the Department by anyone of a claim for damages arising out of incidents for which the Lessee herein agrees to indemnify and hold the Department harmless, the Department shall notify the Lessee of such claim and in the event that the Lessee does not settle or compromise such claim, then the Lessee shall undertake the legal defense of such claim both on behalf of the Lessee and behalf of the Department. It is specifically agreed, however, that the Department at its own cost and expense, may participate in the legal defense of any such claim. Any judgment, final beyond all possibility of appeal, rendered against the Department for any cause for which the Lessee is liable hereunder shall be conclusive against the Lessee as to liability and amount upon the expiration of the time for appeal.
9.3 In addition to the Lessee's undertaking, as stated in this Article, and as a means of further protecting the Department, its officers, employees and agents, the Lessee shall at all times during the term of this Agreement obtain and maintain in effect Public Liability Insurance coverage as set forth in Schedule A attached hereto and made a part hereof. In this connection, the Lessee agrees to require its contractors doing work in the Park, and the Lessee's tenants and sublessees, to carry adequate insurance coverage, and if the Lessee so desires, it may accomplish same by an endorsement to the Lessee's policies to include such persons or parties as additional named insureds.
9.3.1 The Lessee shall review its coverage annually and
increase the minimum liability insurance set forth in
Schedule A to a reasonable threshold when, in the
Lessee's opinion, the risks attendant to the Lessee's
operations hereunder have increased. The Department
shall never be liable for any shortfall in Lessee's
coverage.
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9.4 The Lessee represents that it is the owner of or fully authorized to use any and all services, processes, machines, articles, marks, names or slogans used by it in its operations under or in anywise connected with this Agreement. The Lessee agrees to save and hold the Department, its officers, employees, agents and representatives free and harmless of and from any loss, liability, expense, suit or claim for damages in connection with any actual or alleged infringement of any patent, trademark or copyright, or arising from any alleged or actual unfair competition or other similar claim arising out of the operations of the Lessee under or in anywise connected with this Agreement.
9.5 The Lessee represents and warrants that no broker has been concerned on its behalf in the negotiation of this Agreement and shall indemnify and save harmless the Department from all liability, damage, cost and expense, including reasonable attorneys' fees, resulting from any breach of this representation and warranty.
ARTICLE 10
LEASEHOLD MORTGAGES
10.1 On one or more occasions, with the Department's prior written consent, not to be unreasonably withheld, Lessee may take back a Leasehold Mortgage upon a sale and assignment of the leasehold estate created by this Agreement or may mortgage or otherwise encumber Lessee's leasehold estate to an Institutional Investor (as hereinafter defined), under one or more Leasehold Mortgages and assign this Agreement as security for such Mortgage or Mortgages; subject, however, to the limitations of this Article. At no time shall the Department permit subordination of the fee interest in the Leased Premises. The Department hereby consents to Lessee's use of Chemical Bank as a Leasehold Mortgagee.
10.2 (a)(i) Leasehold Mortgage upon a sale and assignment of the leasehold estate or shall mortgage Lessee's leasehold estate to an Institutional Investor, and if the holder of such Leasehold Mortgage shall provide the Department with notice of such Leasehold Mortgage together with a true copy of such Leasehold Mortgage and the name and address of the Mortgagee, the Department and Lessee agree that, following receipt of such notice by the Department, the provisions of this Article 10 shall apply in respect to each such Leasehold Mortgage; provided that the provisions o-f this Article shall not be binding on the Department, unless and until such notice shall have been given and such copy delivered to the Department, notwithstanding any other form of notice, actual or constructive. (ii) In the event of any assignment of a Leasehold Mortgage or in the event of a change of address of a Leasehold Mortgagee or of an assignee of such Mortgage, notice of the new name and address shall be promptly provided to the Department; provided that the provisions of this Article as to such mortgagee or assignee shall not be binding on the Department, unless and until such notice shall have been given and such copy delivered to the Department, notwithstanding any other form of notice, actual or constructive.
(b) the Department shall upon receipt of notice provided for by Section 10.2(a) promptly acknowledge the receipt of such communication, as constituting the notice provided for by Section 10.2(a) or in the alternative, notify the Lessee and Leasehold Mortgagee of the rejection of such communication as not conforming with the provisions of Section 10.2(a) and specify the specific basis of such rejection.
10.3 (a) The terms 'Institutional Investor' or 'Institution' as used in this Agreement shall refer to a savings bank, savings and loan association, commercial bank or trust company (whether for its own account or as fiduciary), credit union, insurance company, college, university, real estate investment trust, a pension fund, welfare or retirement fund, an eleemosynary institution, or any combination of the foregoing.
(b) The term "Leasehold Mortgage" as used in this Agreement shall include a mortgage, a deed of trust, a deed to secure debt, or other security instrument by which Lessee's leasehold estate is mortgaged, conveyed, assigned, or otherwise transferred, to secure a debt or other obligation under the provisions of this Agreement.
(c) The term "Leasehold Mortgagee" as used in this
Agreement shall refer to a holder of a Leasehold
Mortgage in respect to which the notice provided for by
Section 10.1(a) has been given and received and as to
which the provisions of this Agreement are applicable.
10.4 The Department, upon providing Lessee any notice of (a) default under this Agreement; or (b) a termination of this Agreement or (c) a matter on which the Department may predicate or claim a default, shall at the same time provide a copy of such notice to every Leasehold Mortgagee. No such notice by the Department to Lessee shall be deemed to have been duly given unless and until a copy thereof has been so provided to every Leasehold Mortgagee by certified mail at the address specified in the notice given pursuant to Section 10.2(a). From and after the date such notice has been given to a Leasehold Mortgagee, such Leasehold Mortgagee shall have the additional periods of time specified in Sections 10.6 and 10.7 hereof to remedy, commence remedying, or cause to be remedied the defaults or acts or omissions which are specified in any such notice. The Department shall accept such performance by or at the instigation of such Leasehold Mortgagee as if the same had been done by Lessee. Lessee authorizes such Leasehold Mortgagee to take any such action at such Leasehold Mortgagee's option and does hereby authorize entry upon the Leased Premises by Leasehold Mortgagee for such purposes consistent with the provisions of this Agreement.
10.5 (a) Anything contained in this Agreement to the
contrary, notwithstanding, if any default shall occur which
entitles the Department to terminate this Agreement, the
Department shall have no right to terminate this Agreement
unless, following the expiration of the - period of time
given Lessee to cure such default or the act or omission
which gave rise to such default, the Department shall notify
every Leasehold Mortgagee of the Department's intent to so
terminate ("Termination Notice") at least thirty (30) days in
advance of the proposed effective date of such termination if
such default is capable of being cured by the payment of
money, and at least forty-five (45) days in advance of the
proposed effective date of such termination if such default
is not capable of being cured by the payment of money. The
provisions of Section 10.6 below shall apply if, during such
thirty (30) or forty-five (45) day Termination Notice period,
any Leasehold Mortgagee shall (i) notify the Department of
such Leasehold Mortgagee's desire to defeat such Termination
Notice, and (ii) pay or cause to be paid all rent, additional
rent, and other payments then due and in arrears as specified
in the Termination Notice to such Leasehold Mortgagee and
which may become due during such thirty (30) day period; and
(iii) comply or in good faith, with due diligence and
continuity, commence to comply with all non-monetary
requirements of this Agreement then in default pursuant to a
written schedule mutually agreed upon by the Department and
the Leasehold Mortgagee.
(b) Any notice to be given by the Department to a Leasehold Mortgagee pursuant to any provision of this Article shall be deemed properly addressed if sent to the Leasehold Mortgagee who served the notice referred to in Section 10.2(a)(i) or Section 10.2(a)(ii) as the case may be.
10.6 (a) If the Department shall elect to terminate this
Agreement by reason of any default of Lessee, and a Leasehold
Mortgagee shall have proceeded in the manner provided for by
Section 10.5, the specified date for termination of this
Agreement as fixed by the Department in its Termination
Notice shall be deemed extended and this Agreement shall not
be terminated without the consent of such Leasehold Mortgagee
provided that such Leasehold Mortgagee shall, during such
extended period: (i) Pay or cause to be paid the rent,
additional rent, and other monetary obligations of Lessee
under this Agreement as the same become due, and continue
with due diligence to perform all of Lessee's other
obligations under this Agreement, which Leasehold Mortgagee
can perform without having first obtained possession of the
Lessee's interest in this Agreement; and (ii) Within three
(3) months from receipt of the Termination Notice, take steps
to acquire or sell Lessee's interest in this Agreement by
foreclosure of the Leasehold Mortgage or other appropriate
means and prosecute the same to completion with due
diligence; provided, however, that if the Leasehold Mortgagee
is otherwise complying with this Section 10.6(a) and is
enjoined or stayed from taking steps to acquire or sell
Lessee's interest in this Agreement, this Agreement shall not
terminate and the time for completion by such Leasehold
Mortgagee of its proceedings shall continue so long as such
Leasehold Mortgagee is enjoined or stayed and thereafter for
so long as such Leasehold Mortgagee proceeds to complete
steps to acquire or sell Lessee's interest in this Agreement
by foreclosure of the Leasehold Mortgage or by other
appropriate means with reasonable diligence and continuity.
Nothing in this Section 10.6, however, shall be construed to
extend this Agreement beyond the original term thereof, as
extended by any options to extend the term of this Agreement
properly exercised by Lessee or a Leasehold Mortgagee within
the time limits set forth in Article 1, nor to require a
Leasehold Mortgagee to continue such foreclosure proceedings
after the default has been cured. If the default shall be
cured and the Leasehold Mortgagee shall discontinue such
foreclosure proceedings, this Agreement shall continue in
full force and effect as if Lessee had not defaulted under
this Agreement. (iii) If the Leasehold Mortgagee is
complying with Section 10.6(a)(1) and is enjoined or stayed
from taking steps to acquire or sell Lessees interest in this
Agreement, this Agreement shall not then terminate and the
time for completion by such Leasehold Mortgagee of its
proceedings shall continue so long as such Leasehold
Mortgagee is enjoined or stayed and thereafter for so long as
such Leasehold Mortgagee proceeds to complete steps to
acquire or sell Lessee's interest in this Agreement by
foreclosure of the Leasehold Mortgagee or by other
appropriate means with due diligence and continuity. Nothing
in this Section 10.6, however, shall be construed to extend
this Agreement beyond the original term thereof as extended
by any options to extend the term of this Agreement properly
exercised by Lessee or a Leasehold Mortgagee within the time
limits set forth in Article 1, nor to require a Leasehold
Mortgagee to continue such foreclosure proceedings after the
default has been cured. If the default shall be cured and the
Leasehold Mortgagee shall discontinue such foreclosure
proceedings, this Agreement shall continue in full force and
effect as if Lessee had not defaulted under this Agreement.
(b) If a Leasehold Mortgagee is complying with Section 10.6(a)(i), upon the acquisition of Lessee's estate herein by such Leasehold Mortgagee or its designee or any other purchaser at a foreclosure sale or otherwise and the discharge by foreclosure or otherwise of any lien, charge or encumbrance against the Lessee's interest in this Agreement or the Leased Premises which is junior in priority to the lien of the Leasehold Mortgagee held by such Leasehold Mortgagee and which Lessee is obligated to satisfy and discharge by the terms of this Agreement, this Agreement shall continue in full force and effect as if Lessee had not defaulted under this Agreement.
(c) The making of a Leasehold Mortgage shall not be deemed to constitute an assignment or transfer of this Agreement or of the leasehold estate hereby created, nor shall any Leasehold Mortgagee, as such, be deemed to be an assignee or transferee of this Agreement or-of the leasehold estate hereby created so as to require such Leasehold Mortgagee, as such, to assume the performance of any of the terms, covenants or conditions on the part of the Lessee to be performed hereunder, but the purchaser at any sale of this Agreement of the leasehold estate hereby created in any proceedings for the foreclosure of any Leasehold Mortgage, or the assignee or transferee of this Agreement and of the leasehold estate hereby created under any instrument of assignment or transfer in lieu of the foreclosure of any Leasehold Mortgagee shall be deemed to be a permitted assignee or transferee, subject to the provisions of Section 10.19 hereof, and shall be deemed to have agreed to perform all of the terms, covenants and conditions on the part of the Lessee to be performed hereunder from and after the date of such purchase and assignment, but only for so long as such purchaser or assignee is the owner of the leasehold estate. If the Leasehold Mortgagee or its designee shall become holder of the leasehold estate and if the buildings and improvements on the Leased Premises shall have been or become materially damaged on, before, or after the date of such purchase and assignment, the Leasehold Mortgagee or its designee shall be obligated to repair, replace or reconstruct the building or other improvements.
(d) Any Leasehold Mortgagee or other acquirer of the leasehold estate of Lessee pursuant to foreclosure, assignment in lieu of foreclosure or other proceedings may, upon acquiring Lessee's leasehold estate, without further consent of the Department, sell and assign the leasehold estate on such terms and to such person and organizations as are acceptable to such Mortgagee or acquirer and the Department, and thereafter be relieved of all obligations under this Agreement; provided that such assignee has delivered to the Department its written agreement to be bound thereafter by all of the provisions of this Agreement.
(e) Notwithstanding any other provisions of this Agreement, any sale of this Agreement and of the leasehold estate hereby created in any proceedings for the foreclosure of any Leasehold Mortgage, or the assignment or transfer of this Agreement and of the leasehold estate hereby created in lieu of the foreclosure of any Leasehold Mortgage shall be deemed to be a permitted sale, transfer, or assignment of this Agreement and of the leasehold estate hereby created, subject to the provisions of Section 10.19 hereof.
10.7 In the event of the termination of this Agreement as a result of Lessee's default, the Department shall, in addition to providing the notices of default and termination as required by Sections 10.5 and 10.6, provide each Leasehold Mortgagee with written notice that the Agreement has been terminated, together with a statement of all sums which would at that time be due under this Agreement but for such termination, and of all other defaults, if any, then known to the Department ("the Department's Notice of Termination"). The Department agrees to enter into a new Agreement("New Agreement") of the Leased Premises with the first Leasehold Mortgagee or its designee for the remainder of the Term of this Agreement, effective as of the date of termination, at the rent and additional rent, and upon the terms, covenants, and conditions (including all options to renew but excluding requirements which are not applicable or which have already been fulfilled) of this Agreement provided:
(a) Such Leasehold Mortgagee shall make written request
upon the Department for such New Agreement within
forty-five (45) days after the date such Leasehold
Mortgagee receives the Department's Notice of
Termination of this Agreement given pursuant to this
Section 10.7.
(b) Such Leasehold Mortgagee or its designee shall pay or cause to be paid to the Department at the time of execution and delivery of such New Agreement, any and all sums which would at the time of execution and delivery thereof be due pursuant to this Agreement but for such termination and, in addition thereto, all reasonable expenses, including reasonable attorney's fees, which the Department shall have incurred by reason of such termination and the execution and delivery of the New Agreement and which have not otherwise. been received by the Department from Lessee or other party in interest under Lessee. Upon the execution of such new Agreement, the Department shall allow to the Lessee named therein as an offset against the sums otherwise due under this Section 10.7(b) or under the New Agreement, an amount equal to the net income derived by the Department from the Leased Premises during the period from the date of termination of this Agreement to the date of the beginning of the lease term of such New Agreement. In the event of a controversy as to the amount to be paid to the Department pursuant to this Section 10.7(b), the payment obligation shall be satisfied if the Department shall be paid the amount not in controversy, and the Leasehold Mortgagee or its designee shall agree to pay any additional sum ultimately determined to be due plus interest at the existing prime rate as established by Citibank, N.A. (or its successor or other major New York Metropolitan Area lending institution of comparable stature) plus two (2) percentage points.
(c) Such Leasehold Mortgagee or its designee shall agree to
remedy any of Lessee's defaults of which said Leasehold
Mortgagee was notified by the Department's Notice of
Termination. (d) Any New Agreement made pursuant to this
Section 10.7 shall be prior in lien to any mortgage or other
lien, charge, or encumbrance on the fee of the Leased
Premises and the Lessee under such New Agreement shall have
the same right, title and interest in and to the Leased
Premises and the building and improvements thereon as Lessee
had under this Agreement.
(d) The Lessee under any such New Agreement shall be liable to perform the obligations imposed on the Lessee by such New Agreement.
(e) Effective upon the commencement of the term of any New Agreement pursuant to this Section 10.7, all subleases shall be assigned and transferred without recourse by the Department to the Lessee under the New Agreement and all moneys on deposit with the Department pursuant to such subleases, if any, shall be similarly assigned to the tenant under the New Agreement.
10.8 If more than one Leasehold Mortgagee shall request a New Agreement pursuant to Section 10.7, the Department shall enter into such New Agreement with the Leasehold Mortgagee whose mortgage is prior in lien, or with the designee of such Leasehold Mortgagee and thereupon the requests for a New Agreement of each holder of a Leasehold Mortgage junior in lien shall be and be deemed to be void and of no force or effect. The Department, without liability to Lessee or any Leasehold Mortgagee with an adverse claim, may rely upon a mortgage title insurance policy issued by a title insurance company licensed to do business within the State of New York and selected by the Department as a basis for determining the appropriate Leasehold Mortgagee who is entitled to such New Agreement.
10.9 (a) Nothing herein contained shall require any Leasehold Mortgagee or its designee as a condition to its exercise of right hereunder to cure any default of Lessee not reasonably susceptible of being cured by such Leasehold Mortgagee or its designee such as referred to in Sections 17.1.2, 17.1.3 and 17.1.4, hereof, in order to comply with the provisions of Section 10.5 and 10.6, or as a condition of entering into the New Agreement provided for by Section 10.7.
(b) If the Department shall elect to terminate this Agreement by reason of any default of Lessee not reasonably susceptible of being cured by a Leasehold Mortgagee, and a Leasehold Mortgagee shall have proceeded in the manner provided for by Section 10.5(a), the specified date for the termination of this Agreement as fixed by the Department in its termination notice shall be extended as provided for in Section 10.6,
provided that such Leasehold Mortgagee shall proceed in
the manner provided for in Section 10.6.
10.10 Lessee's share, as provided by Article 12 of this
Agreement of the proceeds arising from an exercise of
the power of eminent domain shall, subject to the
provisions of such Article, be disposed of as provided
for by any Leasehold Mortgage.
10.11 A standard mortgagee clause naming each Leasehold
Mortgagee may be added to any and all insurance policies
required to be carried by Lessee hereunder on condition
that the insurance proceeds are to be applied in the
manner specified in this Agreement and the Leasehold
Mortgagee may provide a manner for the disposition of
such proceeds, if any, payable jointly to the Department
and Lessee pursuant to the provisions of this Agreement.
10.12 The Department shall give each Leasehold Mortgagee
prompt written notice of any legal proceedings between
the Department and Lessee involving obligations under
this Agreement. Each Leasehold Mortgagee shall have the
right to intervene in any such proceedings and be made a
party to such proceedings, and the parties hereto do
hereby consent to such intervention. In the event that
any Leasehold Mortgagee shall not elect to intervene or
become a party to any such proceedings, the Department
shall give the Leasehold Mortgagee notice of, and a copy
of any award of decision made in any such proceedings,
which shall be binding on all Leasehold Mortgagees not
intervening after receipt of notice thereof.
10.13 So long as any Leasehold Mortgage is in existence,
unless all Leasehold Mortgagees shall otherwise
expressly consent in writing, the fee title to the
Leased Premises and the leasehold estate of Lessee
therein created by this Agreement shall not merge but
shall remain separate and distinct, notwithstanding the
acquisition of said fee title and said leasehold estate
by the Department or by Lessee or by a third party, by
purchase or otherwise.
10.14 In the event on any occasion hereafter Lessee seeks
to mortgage its leasehold estate under this Agreement or
any portion hereof under any subsequent individual
lease, the Department agrees to amend this Agreement
from time to time to the extent reasonably requested by
an Leasehold Mortgagee proposing to make Lessee a loan
secured by a first lien upon Lessee's leasehold estate,
provided that such proposed amendments do not materially
and adversely affect the rights of the Department or its
interest in the Leased Premises. All reasonable expenses
incurred by the Department in connection with any such
amendment shall be paid by Lessee.
10.15 The Department shall, without charge, at any time
and from time to time hereafter, but not more frequently then
twice in any one year period (or more frequently if such
request is made in connection with any sale or mortgaging of
Lessee's leasehold interest or permitted subletting by
Lessee), within thirty (30) days after written request of
Lessee to do so, certify by written instrument duly executed
and acknowledged to any Leasehold Mortgagee or purchaser, or
proposed Leasehold Mortgagee or proposed purchaser, or any
other person, firm or corporation specified in such request:
(a) As to whether this Agreement has been supplemented
or amended and, if so, the substance and manner of such
supplement or amendment;
(b) as to the validity and force and effect of this
Agreement, in accordance with its tenor;
(c) as to the existence of any default hereunder;
(d) as to the existence of any offsets, counterclaims,
or defenses hereto on the part of the Lessee;
(e) as to the commencement and expiration dates of the
term of this Agreement; and
(f) as to any other matters as may be reasonably so
requested.
Any such certificate may be relied upon by the Lessee
and any other person, firm or corporation to whom the
same may be exhibited or. delivered, and the contents of
such certificate shall be binding on the Department.
10.16 Notices from the Department to each Leasehold
Mortgagee shall be mailed to the address furnished the
Department pursuant to Section 10.2, and those from the
Leasehold Mortgagee to the Department shall be mailed to
the address designated pursuant to the provisions of
Article 22 hereof. Such notices, demands, and requests
shall be given in the matter described in Article 22 and
shall in all respects be governed by the provisions of
that Article.
10.17 No payment made to the Department by a Leasehold
Mortgagee shall constitute agreement that such payment
was, in fact, due under the terms of this Agreement; and
a Leasehold Mortgagee having made any payment to the
Department pursuant to the Department's wrongful,
improper or mistaken notice or demand shall be entitled
to the return of any such payment of portion thereof.
10.18 An Institutional Leasehold Mortgagee shall have the
right to act as depositary pursuant to Article AA.
10.19 The prior written consent of the Department shall
be required for any sale, transfer, or assignment of
this Agreement and of the Leasehold estate hereby
created. If such sale, transfer or assignment is to the
immediate transferee of such Leasehold Mortgagee or to a
purchaser at a foreclosure sale or the grantee of a deed
in lieu thereof, the Department shall have fourteen (14)
calendar days within which to provide its consent after
receipt of request therefor, which consent shall not be
unreasonably withheld.
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ARTICLE 11
ASSIGNMENT AND SUBLEASE
11.1 Assignment of the Agreement and subletting under it are permitted by the Department with it's prior written consent, which consent shall not be unreasonably withheld. For the purpose of such assignment and subletting the Department agrees it shall respond to a written request for assignment or subletting within thirty (30) calendar days of-receipt of request for same.
11.2 Except as provided in Section 11.1 hereof Lessee shall not assign this Lease without the prior written consent of the Department, which shall not be unreasonably withheld, provided, that any such assignment and transfer shall include the entire interest in this Agreement and all obligations attendant thereto, provided also that no such assignment and transfer shall be effective for any purpose unless and until there shall be delivered to the Department (i) a duplicate original of the instrument or instruments of assignment and transfer in recordable form containing the name and address of the transferee thereof and (ii) an instrument of assumption by said assignee or transferee of all Lessee's obligations under this Agreement; provided, however, any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code (11 U.S.C. 101, et seq.) shall be deemed without further act or deed to have assumed all of the obligations arising under this lease on and after the date of such assignment. Any such assignee shall, upon demand, execute and deliver to the Department an instrument confirming such assignment.
11.3 Except as provided in Section 11.1 hereof Lessee shall not have the right to sublet and subtenants shall not have the right to re-sublet, the Leased Premises, or any part thereof and any improvement constructed thereon, in whole or in part. All such subleases shall be expressly subordinate to this Agreement. No such sublease shall release Lessee from performance of or compliance with any term, condition, covenant or obligation imposed upon Lessee hereunder and no such sublease shall extend for a term beyond the Term and the Extended Term (as hereinabove defined) for which an option has been exercised.
11.4 The Department and Lessee agree that this Agreement shall not be rescinded, surrendered, modified or amended without the prior written consent of the holder or holders (who shall have given the Department written notice of its or their identity and address) of any Leasehold Mortgage.
11.5 Provided (i) that the first Institutional Leasehold Mortgagee shall have entered into a Non-Disturbance Agreement with any of the Lessee's subtenants; or that each such subtenant shall have leased at lease five (5%) percent of the floor area in the new building to be constructed by Lessee hereunder; and (ii) that such subtenants shall, at the option of the Department agree to attorn to the Department, and (iii) such subtenant shall be subject to the service of legal process in the State of New York, the Department shall enter into a Non-Disturbance Agreement with each such subtenant in the form annexed hereto as Exhibit "C" and made a part hereof. The term of any such sublease including renewal options shall not extend beyond the later of the original Term of this Agreement or the Extended Term of any extension for which an option has been exercised and the rental reserved under any such sublease shall not be less than the then prevailing rate for comparable space and shall include an escalation clause requiring such subtenant to pay, as additional rental, the subtenant's proportionate share of the increase, from and after the beginning of the term of the sublease, in the real estate taxes, in the cost of insurance, labor and all operation costs affecting the subleased premises.
11.6 Lessee shall not modify any sublease, which shall have been the subject of a Non-Disturbance Agreement, as mentioned in Section 11.4 hereof, so as to reduce the rent, shorten the term, or adversely affect in any other respect to any material extent the rights of the lessor thereunder, or permit cancellation or accept the surrender of any such sublease without prior written consent of the Department in each instance, which consent shall not be required for the institution or prosecution of any action or proceedings against such sublessee by reason of a default on the part of such sublessee under the terms of such sublease. Such consent of the Department shall not be required to (i) move any such subtenant to another part of the Leased Premises, provided that thereafter such subtenant shall be obliged to pay a rent which shall be no less than either the going rate of its new space or that payable by it for the vacated space; or (ii) to cancel any such sublease, or portion thereof provided that it be replaced by another sublease which shall qualify for and become subject to a non-disturbance agreement and provided, further, that such new sublease shall require a rental which shall be no less than either the going rate for the sublet space or that payable under the canceled lease. In addition to being subject and subordinate to the rights of the Department hereunder, as required by the provision of Section 11.4 hereof, each sublease that is subject to a Non-Disturbance Agreement shall contain a specific provision to the effect that except in those instances in which Lessee and/or sublessees are complying with the provisions of the immediately preceding sentence, such sublease may not be modified or amended so as to reduce the rent, shorten the term, or adversely affect in any other respect to any material extent the rights of the lessor thereunder, or be canceled or surrendered without the prior written consent of the Department in each instance.
11.7 Each sublease shall provide that in the event of a termination of this Agreement and the execution and delivery of a New Agreement pursuant to Section 10.8 hereof, the sublessee shall attorn to and recognize the Lessee thereunder as its Lessor.
11.8 Any act required to be performed by Lessee pursuant to the terms of this Lease may be performed by any sublessee of Lessee occupying all or any part of the Leased Premises and the performance of such act shall be deemed to be performance by Lessee and shall be acceptable as Lessee's act by the Department.
11.9 The Department hereby consents to the Lessee subletting the Leased Premises to Johnson Controls, Incorporated.
ARTICLE 12
CONDEMNATION
12.1 If, at any time during the Term of this Agreement, there shall be a total taking or a constructive total taking (as hereinafter defined) of the Leased Premises in condemnation proceedings or by any right of eminent domain or by agreement between the Department and Lessee and those authorized to exercise such rights (any such matters being hereinafter referred to as a "taking"), this Agreement shall terminate and expire on the date of such taking and the fixed annual rental, and other charges payable by Lessee hereunder shall be apportioned and paid to the date of such taking. For the purposes of this Article the term a "constructive total taking" shall mean a taking of such scope that the untaken portion of the Leased Premises cannot, in the reasonable opinion of Lessee, be developed, repaired or reconstructed.
12.2 Rentals for that portion of the Leased Premises condemned shall be abated from the date that the Lessee is dispossessed therefrom; provided, however, if all of the Leased Premises are condemned or if a portion of the Leased Premises are condemned and in the Lessee's judgment, the remaining portion of the Leased Premises is insufficient for the Lessee's operations authorized hereunder, the Lessee may terminate this Agreement and all of its rights and unaccrued obligations-hereunder effective as of the date it is thereafter and within 90 days of the date of such dispossession by giving the Department 30 days written notice of such termination.
12.3 The Lessee shall be entitled to the award made for a temporary taking of possession of all or part of the Leased Premises for any period of time within the term of this Agreement. Such award shall be full compensation to the Lessee for such temporary taking and no claims for damages arising out of the temporary taking shall be made against the Department.
12.4 Lessee and the holder of any Leasehold Mortgage, as well as the Department shall have the right to participate in any condemnation proceeding or agreement for the purpose of protecting their interests in the Leased Premises and their rights hereunder. In this connection, specifically and without limitation, each of such parties may introduce evidence independently of each other to establish the value of or damage to the Land and/or the Facility. Each party so participating shall pay its own expenses therein.
12.5 Except as provided in Section 12.6 below, in the event of any taking and the consequent termination of this Agreement, the total aggregate award for said taking ("Condemnation Proceeds') shall be apportioned and paid to the extent available in the following order of priority: (i) The holder of the first Leasehold Mortgage, if any shall be entitled to receive and retain from the Condemnation Proceeds the sum required to pay the unpaid principal balance of the first Leasehold Mortgage, plus interest accrued thereon from the date of taking to the date of payment to the institutional first Leasehold Mortgagee at the rate specified in said Leasehold Mortgage and other sums secured by the Leasehold Mortgage. (ii) Then, the Department shall be entitled to retain from the balance of the Condemnation Proceeds the sum equal to the then present value of the leasehold reversion as if the Lessee's Renewal option had been exercised plus the then present value of the future rentals payable to the Department under this Agreement, if this Agreement had not terminated pursuant to Section 12.1 above, with interest thereon, from the date of taking and at the rate paid by the condemning authority. If the condemnation award specifies the amount allocable to the land taken as if vacant, unimproved and free of this Agreement, such amount shall be deemed conclusive for all purposes as to the value thereof. (iii) Then, the Lessee shall be entitled to receive and retain the balance of the Condemnation Proceeds.
12.6 Notwithstanding Section 12.5 above, if prior to the time when Lessee shall have obtained all governmental permits and authorizations for the new construction required to be performed by Lessee hereunder, this Agreement shall terminate, pursuant to the provisions of Section 12.1 hereof, the Condemnation Proceeds shall be apportioned and paid, to the extent available, the following order of priority:
(a) The Department shall be entitled to an amount equal to the fair market value of the Land (immediately prior to the taking) considered as vacant, unimproved and free of this Agreement and without any of the permits and approvals previously obtained by Lessee, with interest thereon from the date of taking at the rate paid by the condemning authority. If the condenmation award separately specifies the amount allocable to the Land taken as if vacant and unimproved without this Agreement, such amount shall be deemed conclusive as to the value thereof.
(b) The Lessee next shall be entitled to an amount equal to its aggregate costs and expenses, if any, of every kind and nature (not compensated for by insurance) incurred and paid in connection with and for the acquisition of all governmental permits and licenses and the development of plans and specifications for any improvements at the Leased Premises.
(c) The Department shall be entitled to the balance of the award.
(d) Notwithstanding the foregoing, prior to the application of the Condemnation Proceeds as set forth in subsections (a) through (c) of this Section, the holder of the Leasehold Mortgage, if any, shall be entitled to receive and retain from the Condemnation Proceeds the sum required to pay the unpaid principal balance of the first Leasehold Mortgage, plus interest accrued thereon from the date of taking to the date of payment to said holder, at the rate specified in the Leasehold Mortgage and other sums secured by the Leasehold Mortgage. The balance, if any, shall then be applied as hereinabove provided.
12.7 If the Lessee shall assign to any Leasehold Mortgagee any condemnation Proceeds to which it shall be entitled under the pro visions of this Article, the Department shall recognize such assignment and shall consent to the payment of said Condenmation Proceeds to said assignee as its interest may appear.
ARTICLE 13
NON-DISCRIMINATION
13.1 Lessee agrees to comply with Section 296 of the New York State Human Rights Law.
13.2 Specifically, Lessee agrees not to:
13.2.1 Refuse to rent, lease or otherwise deny to or withhold from any person or group of persons such commercial space because of the age of such person or persons; or such land or commercial space because of the race, creed, color, national origin, sex, or disability or marital status of such person or persons.
13.2 Discriminate against any person because of his race, creed, color, national origin, sex, or disability or marital status in the terms, conditions or privileges of the sale, rental or lease of any such land or commercial space or because of his age in relation to such commercial space; or in the furnishing of facilities or services in connection therewith.
13.2. Print or circulate or cause to be printed or circulated any statement, advertisement or publication, or to use any form of application for the purchase, rental or lease of such land or commercial space or to make any record or inquiry in connection with the prospective purchase, rental or lease of such land or commercial space which expresses, directly or indirectly, any limitation, specification or discrimination as to race, creed, color, national origin, sex, or disability or marital status, or in relation to commercial space as to age; or any intent to make any such limitation, specification or discrimination.
ARTICLE 14
GOVERNMENTAL REQUIREMENTS
14.1 The Lessee agrees to observe and obey any and all applicable Federal, State and municipal rules, regulations, laws and building codes and to require its officers, agents, employees, contractors, and suppliers, to observe and obey the same. This provision requires. compliance with the Park's Performance and Development Standards as issued by the Department and Appendix A to this Agreement.
14.2 The Lessee shall procure all licenses, certificates, permits or other authorization from all governmental authorities, if any, having jurisdiction over the Lessee's operations at the Leased Premises which may be necessary for the Lessee's operations thereat.
14.3 The Lessee shall pay all taxes, license, certification,
permit and examination fees and excise taxes which may
be assessed, levied, exacted or imposed on the Leased
Premises or operation hereunder or on the gross receipts
or gross income to the Lessee therefrom, and shall make
all applications, reports and returns required in
connection therewith.
14.4 Lessee agrees to remit Payments in Lieu of Taxes,
hereinafter P.I.L.O.T. to the local taxing
jurisdictions, hereinafter "Communities" participating
in the P.I.L.O.T. program using their normal payment and
billing cycle. All evaluations, payments and schedules
for P.I.L.O.T. shall be governed by the P.I.L.O.T.
Program as adopted by the Department in consultation
with the Stewart Airport Commission from time to time
during the term of this Agreement. Provided, however,
that in no event shall the P.I.L.O.T. payments be more
than taxes which would otherwise be payable by the
Lessee if the Leased Premises were taxable in the
Communities.
14.5 The P.I.L.O.T. Program recognizes that there may be tax abatements and tax exemptions negotiated between the Lessee and the Communities. Non-payment of P.I.L.O.T. within the applicable periods of notice and grace shall be a default under this Agreement.
14.6 Lessee shall establish an escrow account and maintain on deposit adequate funds to pay the P.I.L.O.T. and water and sewer charges, as applicable, to the Town of Newburgh (the "Town"), provided, however, that Lessee shall not be precluded from making any such payment directly to the Town outside of escrow by mutual agreement between the Lessee and the Town, a copy of which agreement shall be given to the Department; in which event, no escrow account need be established.
ARTICLE 15
RIGHTS OF ENTRY RESERVED
15.1 On prior reasonable notice, the Department, by its officers, employees, agents, representatives and contractors shall have the right at all reasonable times to enter upon the Leased Premises for any and all purposes not inconsistent with this Agreement, provided, such action by the Department, its officers, employees, agents, representatives and contractors does not unreasonably interfere with the Lessee's use, occupancy, or security requirements of the Leased Premises.
15.2 Without limiting the generality of the foregoing, the Department, by its officers, employees, agents, representatives, contractors and furnishers of utilities and other services, shall have the right, at its own cost and expense, whether for its own benefit, or for the benefit of others than the Lessee at the Park, to maintain existing utility, mechanical, electrical and other utility systems and on prior/reasonable notice to enter upon the Leased Premises at all reasonable times to make such repairs, replacements or alterations thereto, as may, be necessary or advisable, and from time to time to construct or install over, in or under the Leased Premises such systems or parts thereof and in connection with such maintenance, use the Leased Premises for access to other parts of the Park otherwise not conveniently accessible, provided, however, that in the exercise of such right of access, repair, alteration or new construction, the Department shall not install a utility under or through any building or parking area or effect any existing improvement on the Leased Premises or interfere with the actual use and occupancy of the Leased Premises by the Lessee. It is specifically understood and agreed that the reservation of the aforesaid right by the Department shall not impose or be construed to impose upon the Department any obligation to repair, replace or alter any utility service lines now or hereafter located on the Leased Premises for the purpose of providing utility services only to the Leased Premises.
15.3 In the event that any personal property of the Lessee
shall obstruct the access of the Department, its
officers, employees, agents or contractors, or the
utility company furnishing utility service to any of the
existing utility, mechanical, electrical and other
systems, and thus shall interfere with the inspection,
maintenance or repair of any such system pursuant to
Section 15.2, the Lessee shall move such property, as
reasonably directed by the Department or said utility
company, in order that access may be had to the system
or part thereof for inspection, maintenance or repair.
If the Lessee shall fail to so move such property after
direction from the Department or said utility company to
do so, the Department or the utility company may move
it, and the Lessee hereby agrees to pay the cost of such
moving upon demand, and further the Lessee hereby waives
any claim against the Department for damages as a result
therefrom, except for claims for damages arising from
the Department's negligence.
15.4 Exercise of any or all of the foregoing rights in this Article, by the Department, or others under right of the Department, shall not be, nor be construed to be, an eviction of the Lessee, nor be made the grounds for any abatement of rental nor any claim or demand for damages against the Department, consequential or otherwise, except claims for damage to person or property caused by the negligence of the Department.
ARTICLE 16
ADDITIONAL RENTS AND CHARGES
16.1 Except as provided in Section 5.3 (a), in the event the Lessee fails within thirty (30) days after receipt of written notice from the Department to perform or commence to perform with due diligence any obligation required herein to be performed by the Lessee, the Department may enter the Leased Premises (without such entering causing or constituting a cancellation of this Agreement or an interference with the possession of such Leased Premises by the Lessee) and do all things reasonably necessary to perform such obligation, charging to the Lessee the cost and expense thereof, and the Lessee agrees to pay to the Department upon demand such charge in addition to any other amounts payable by the Lessee hereunder, provided, however, that if the Lessee's failure to perform any such obligation endangers the safety of the public or employees or property of the Department, or other tenants of the Park, and the Department so states in its notice to the Lessee, the Department as its sole remedy may perform such obligation of the Lessee at any time after the giving of such notice, and charge to the Lessee the reasonable cost and expense thereof which the Lessee shall pay upon demand.
16.2 If the Department elects to pay any sum or sums or incur any obligation or expense by reason of the failure, neglect or refusal of the Lessee to perform or fulfill any one or more of the conditions, covenants or agreements contained in this Agreement, or as the result of any act or omission of the Lessee contrary to said conditions, covenants or agreements, the Lessee hereby agrees to pay the sum or sums so paid or expense so incurred by the Department as the result of such failure, neglect or refusal of the Lessee, including interest, at the existing prime rate as established by Citibank, N.A. or other major New York Metropolitan Area lending institution of comparable stature together with all reasonable costs, and damages. In such event, the total of such amounts may be added to any installment of rent thereafter due hereunder, and each and every part of the same shall be and become additional rent recoverable by the Department in the same manner and with like remedies as if it were originally a part of the rent provided for in this Agreement.
ARTICLE 17
TERMINATION BY THE DEPARTMENT
17.1 Each of the following shall be deemed a default of the Lessee and a breach of this Agreement.
17.1.1 If any rental or additional rental required by this Agreement to be paid to the Department shall not be paid when due, and such default shall continue for a period of ten (10) days after written notice by the Department to the Lessee specifying the items in default, and shall continue thereafter for a further period of five (5) days after a second notice from the Department to the Lessee which shall specify the items in default, and, in addition, shall state the Department's intention to terminate this Lease by reason of such default or;
17.1.2 The institution of proceedings in bankruptcy against the Lessee; provided, however, that the Lessee may avoid such termination if the petition is dismissed or stayed by appeal within ninety (90) days after the institution thereof; or,
17.1.3 The filing of a petition requesting a court to take jurisdiction of the Lessee or its assets under the provisions of any Federal reorganization act which, if it is an involuntary petition, is not dismissed within ninety (90) days after the institution thereof; or,
17.1.4 The filing of a request for the appointment of a receiver or trustee of the Lessee's assets by a court of competent jurisdiction, which if the request is not made by the Lessee, is not rejected within ninety (90) days after being made, or the request for the appointment of a receiver or trustee of the Lessee's asset by a voluntary agreement with the Lessee's creditors.
17.1.5 The default by the Lessee in the performance of any covenant or conditions required to be performed by the Lessee, and the failure of the Lessee to remedy such default for a period of thirty (30) days after receipt from the Department of written notice (except as otherwise provided in Section 5.3(a) above) which shall specify the items in default and, in addition, shall state the Department's intention to terminate this Agreement by reason of such default, or in the case of a default which cannot with due diligence be cured within said thirty (30) day period and Lessee fails to proceed within said thirty (30) day period to cure the same and thereafter to prosecute the curing of such default with due diligence pursuant to a written schedule mutually agreed upon by the Department and Lessee.
17.2 If the Department shall exercise its option to terminate this Agreement upon the Lessee's failure to cure or remedy any default hereunder prior to the expiration of the applicable grace periods, this Agreement shall expire and all of Lessee's rights and interest hereunder shall terminate upon the expiration of the time specified in the Department's notice as if such date were the last date of the leased term, and the Lessee shall then immediately quit and surrender the Leased Premises to the Department, including any and all building erected thereon, and all other improvements, and the Department may enter into or repossess the Leased Premises and the Lessee hereby waives the service of notice of intention to reenter or to institute legal proceedings to that end.
17.3 Notwithstanding the provisions of this Article, the rights of the Department hereunder are subject to the rights of Leasehold Mortgagees to cure pursuant to Article 10 hereof.
17.4 Failure by the Department to take any authorized action upon default by the Lessee of any of the terms, covenants or conditions required to be performed, kept and observed by the Lessee shall not be construed to be, nor act as, a waiver of said default nor of any subsequent default of any of the terms, covenants and conditions contained herein to be performed, kept and observed by the Lessee. Acceptance of rentals by the Department from the Lessee, or performance by the Department under the terms hereof, for any period or periods after a default by the Lessee of any of the terms,_ covenants and conditions herein required to be performed, kept and observed by the Lessee shall not be deemed a waiver or estoppel of any right on the part of the Department to cancel this Agreement for any subsequent failure by the Lessee to so perform, keep or observe any of said terms, covenants or conditions.
ARTICLE 18
SURRENDER AND RIGHT OF RE-ENTRY
18.1 Upon the cancellation or termination of this Agreement pursuant to the terms hereof, the Lessee agrees peaceably to surrender up the Leased Premises to the Department in the same condition as they are at the time of the commencement of the term hereof, and as they may hereafter be repaired and improved by the Lessee; save and except, (a) such normal wear and tear thereof as could not have been prevented by ordinary and usual repairs and maintenance, (b) obsolescence in spite of repair, and (c) damage to or destruction of the leasehold improvements for which insurance proceeds are received by the Department. Upon such cancellation or termination, the Department may re-enter and repossess the Leased Premises together with all improvements and additions thereto, or pursue any remedy permitted by law for the enforcement of any of the provisions of this Agreement, at the Department's election. Furthermore, upon such cancellation or termination, and for a reasonable time thereafter (not exceeding thirty (30) days after such cancellation or termination, and for which period the Lessee will pay to the Department current lease rentals), or during the term of this Agreement, if the Lessee is not in default in rentals or any other charges or obligations due the Department, the Lessee shall have the right to remove its personal property, fixtures and trade equipment which it may have on the Leased Premises, provided that the Lessee repairs all-damages that might be occasioned by such removal, and restore the building and site to the condition above required.
ARTICLE 19
SERVICES TO LESSEE
19.1 The Department covenants and agrees that during the term of this Agreement it will operate the Park as such for the use and benefit of the public, including Lessee, provided, however, that subject to the rights of Lessee, the Department may prohibit or limit any given type, kind, or class of use in the Park if such action is necessary to serve the needs of the public. The Department also agrees to provide and maintain, or cause to be provided and maintained, water and sanitary sewer services in areas designated for utilities or easements adjacent to the Leased Premises for access thereto by the Lessee. The Department reserves the right to transfer the responsibility for maintenance of water to the Town of Newburgh and sanitary sewer services to the Crossroads Sewer District. Any charges related to the Leased Premises shall be paid by the Lessee.
19.2 The Department agrees to provide utilities (water, natural gas, and electric) to a boundary line of the Leased Premises and a finished road as required by law. The water supply will be operated by the Town of Newburgh which has set its design criteria at 2,500 gallons per minute at 20 p.s.i. residual pressure.
19.3 The Lessee will contract with and obtain all required permits from the appropriate departments for any utility services provided by the Department, paying any required connection fees, including those to be paid by owners, and all such services will be provided at rates and on terms and conditions established by the Department for similar users in the Park.
19.4 The Lessee will also contract with the furnishers of all other utilities for the furnishing of such services to the Leased Premises and shall pay for all water, gas, electricity, sanitary sewer service, other utilities, telephone, burglary and fire protection services furnished to the Leased Premises. The Department shall allow the providers of such utilities reasonable access to the boundaries of the Leased Premises for the installation of their utility systems.
19.5 The Department will provide, repair, maintain and replace, or cause to be provided, repaired, maintained or replaced, a paved access road, as required by law, of at least two lanes by extending Governor Drive to the Leased Premises.
19.6 The Department will plow all roads within the Park to the Leased Premises and shall maintain all retention basins and landscaped areas in the Park but outside any leased premises.
ARTICLE 20
SURVIVAL OF THE OBLIGATIONS OF THE LESSEE
20.1 In the event that the Agreement shall have been terminated in accordance with a notice of termination as provided in Article 17 hereof, all the obligations of the Lessee under this Agreement shall survive such termination, re-entry, regaining or resumption of possession and shall remain in full force and effect for the full term of this Agreement, and the amount or amounts of damages or deficiency shall become due and payable to the Department to the same extent, at the same time or times, and in the same manner as if no termination, re-entry, regaining or resumption of possession had taken place. The Department may maintain separate actions each month to recover the damage or deficiency then due or at its option and at any time may sue to recover the full deficiency less the proper discount, for the entire unexpired term of this Agreement.
20.2 The amount of damages for the period of time subsequent to termination (or re-entry, regaining or resumption of possession) on account of the Lessee's rental obligations, shall be the sum of the following:
20.2.1 The amount of the total of all installments of rents as they would have become due had the term of this Agreement not been terminated, less the installments thereof payable prior to the effective date of termination except that the credit to be allowed for the installment payable on the first (1st) day of the month in which the termination is effective shall be prorated for the part of the month the Agreement remains in effect on the basis of the total days in the month;
20.2.2 An amount equal to all reasonable expenses incurred by the Department and not reimbursed in connection with regaining possession, restoring the Leased Premises, acquiring a new lease for the Leased Premises, legal expenses (including but not limited to attorney's fees), putting the Leased Premises in order.
20.3 There shall be credited to the account of the Lessee against its survived obligations hereunder the amount actually received from any lessee, licensee, permittee or other occupier in connection with the use of the said Leased Premises or portion thereof during the balance of the term of use and occupancy as the same is originally stated in this Agreement, the market value of the occupancy of such portion of the Leased Premises as the Department may itself during such period actually use and occupy. No such use and occupancy shall be or be construed to be an acceptance of a surrender of the Leased Premises, nor shall such use and occupancy constitute a waiver of any rights of the Department hereunder. The Department will use its best efforts to mitigate damages to Lessee under this Article.
ARTICLE 21
USE SUBSEQUENT TO CANCELLATION OR TERMINATION
21.1 The Department, upon termination or cancellation pursuant to Article 19 hereof, may occupy the Leased Premises or may enter into an agreement with another lessee and shall have the right to permit any person, firm or corporation to enter upon the Leased Premises and use the same. Such use may be of part only of the Leased Premises or of the entire Leased Premises, together with other premises, and for a period of time the same as or different from the balance of the term hereunder remaining, and on terms and conditions the same as or different from those set forth in this Agreement.
21.2 The Department shall also, upon said termination or cancellation, or upon said re-entry, regaining or resumption of possession, have the right to repair and to make structural or other changes in the Leased Premises, including changes which alter its character and the suitability thereof for the purposes of the Lessee under this Agreement, without affecting, altering or diminishing the obligations of the Lessee hereunder, provided, that any structural changes shall not be at Lessee's expense.
ARTICLE 22
NOTICES
22.1 All notices, consents and approvals required or desired to be given by the parties hereto shall be given in writing by certified mail, postage prepaid, return receipt requested, and shall be deemed given when received at the recipient's notice address. Notice that starts the running of a time period and is delivered on a non-business day shall be deemed delivered on the next business day, if left at the notice address, or the next business day on which it is redelivered if it is not left at the notice address.
22.2 The notice addresses of the parties are as follows:
To the Department: N.Y.State Department of Transportation
Building 138
Stewart International Airport
Newburgh, NY 12550
and
Manager
Industrial Park Building
138 Stewart International Airport
Newburgh, NY 12550
The Lessee: The Edgewater Stewart Company
c/o The Hilton Tower
465 South Salina Street
Syracuse, NY 13202-2487
Attention: Thomas R. Kennedy
With a copy to: Bond, Schoeneck & King
One Lincoln Center
Syracuse, NY 13202-1355
Attention: Stephen L. Johnson, Esq.
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Such addresses shall be subject to change from time to time to such other addresses as may have been specified in written notice given by the intended recipient to the sender.
ARTICLE 23
HOLDING OVER
23.1 No holding over by the Lessee after the termination of this lease shall operate to extend or renew this lease for any further term whatsoever; but the Lessee will by such holding over become the tenant at will of the Department and after written notice by the Department to vacate such premises, continued occupancy thereof by the Lessee shall constitute the Lessee a trespasser.
23.2 Any holding over by the Lessee beyond the thirty (30) day period permitted for removal of fixtures without the written consent of the Department shall make the Lessee liable to the Department for damages equal to double the rentals provided for herein and which were in effect at the termination of the Agreement.
23.3 All insurance coverage that the Lessee is required under the provisions hereof to maintain in effect shall continue in effect for so long as the Lessee, or any of the Lessee's subleases or tenants occupy the Leased Premises or any part thereof.
ARTICLE 24
INVALID PROVISIONS
24.1 The invalidity of any provisions, articles, paragraphs, portions, or clauses of this agreement shall have no effect upon the validity of any other part or portion hereof, so long as the remainder shall constitute an enforceable agreement.
ARTICLE 25
MISCELLANEOUS PROVISIONS
Remedies to be Nonexclusive.
25.1 All remedies provided in this Agreement shall be deemed cumulative and additional and not in lieu of, or exclusive of, each other, or of any other remedy available to the Department, or the Lessee, at law or in equity, and the exercise of any remedy, or the existence herein of any remedies or indemnities shall not prevent the exercise of any other remedy. Non-Waiver of Rights.
25.2 The failure by either party to exercise any right, or rights accruing to it by virtue of the breach of any covenant, condition or agreement herein by the other party shall not operate as a waiver of the exercise of such right or rights in the event of any subsequent breach by such other party, nor shall such other party be relieved thereby from its obligations under the terms hereof.
Force Majeure.
25.3 Neither party shall be deemed in violation of this Agreement if it is prevented from performing any of its obligations hereunder by reason of labor disputes, acts of God, acts of the public enemy or superior governmental authority, provided, however, that this section shall not excuse Lessee from paying the rentals herein specified provided further however, that if the right of the Lessee to receive rental payments pursuant to any approved sublease has been abated as a result thereof, the rental otherwise payable hereunder shall be reduced by an amount the Department determines is reasonable in proportion to the abatement of the rentals otherwise payable under said subleases.
Non-liability of Individuals.
25.4 No agent or employee of either party hereto shall be charged personally or held contractually liable by or to the other party under any term or provision of this Agreement or of any supplement, modification or amendment to this Agreement because of any breach thereof.
Quiet Enjoyment.
25.5 The Department covenants that as long as the Lessee is not in default of any provision of this Agreement, the Lessee shall and may peaceably and quietly have, hold and enjoy the Leased Premises exclusively to it and the rights appurt enant to the Leased Premises granted in this Agreement during the term hereof unless sooner canceled as provided in this Agreement.
Estoppel Certificate.
25.6 At the request of the Lessee, the Department shall from time to time execute and deliver a written statement identifying it as the lessor under this Lease and certifying: (i) the documents that then comprise this Lease, (ii) that this Lease is in full force and effect, (iii) the then current annual amount of rent and the date through which it has been paid, (iv) the expiration date of this Lease, (v) that no amounts are then owed by the Lessee to the Department (or, if amounts are owed, specifying the same) and (vi) to the knowledge of the Department, there are not defaults by the Lessee under this Lease or any facts which but for the passage of time, the giving of notice or both would constitute such a default. The party acquiring the lessee's interest in the Lease shall be entitled to rely conclusively upon such written statement.
Short Form of Lease.
25.7 This Lease shall not be recorded, but at the request of either party, the other shall execute a memorandum or short form of lease for recording.
General Provisions.
25.8 Lessee shall not use, or permit the use of, the Leased Premises, or any part thereof, for any purpose or use other than those authorized by this Agreement.
25.9 This Agreement shall be performable and enforceable in Orange County, New York, and shall be construed in accordance with the laws of the State of New York.
25.10 This Agreement is made for the sole and exclusive benefit of the Department and the Lessee, their
successors and assigns, and is not made for the benefit
of any third party.
25.11 In the event of any ambiguity in any of the terms
of this Agreement, it shall not be construed for or
against any party hereto on the basis that such party
did or did not author the same.
25.12 All covenants, stipulations and agreements in this
Agreement shall extend to and bind each party hereto,
its legal representatives, successors and assigns.
25.13 The titles of the several articles of this
Agreement are inserted herein for convenience only, and
are not intended and shall not be construed to affect in
any manner the terms and provisions hereof, or the
interpretation or construction thereof.
25.14 Nothing herein contained shall create or be
construed to creating a co-partnership or joint venture
between the Department and the Lessee or to constitute
the Lessee an agent of the Department. The Department
and the Lessee each expressly disclaim the existence of
such a relationship between them.
25.15 The Department, or any successor in interest to the
Department, shall look solely to the Lessee's interest
in the leasehold estate and Lessee's improvements
thereon for the satisfaction of the remedies of the
Department in the event of a breach by the Lessee of any
of the covenants or conditions of this Agreement except
for the covenants and conditions of Article 9, hereof,
which are not to be so limited.
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ARTICLE 26
SUPPLEMENTARY PROVISIONS
26.1 This Agreement is subject and subordinate to the following:
26.1.1 The Department reserves the right to develop and improve the Park without interference or hindrance by or on behalf of the Lessee. Accordingly nothing contained in this Agreement shall be construed to obligate the Department to relocate the Lessee.
26.1.2 The Department reserves the right to take such action it considers necessary to protect the aerial approaches to the Airport against obstruction, together with the right to prevent Lessee from erecting or permitting to be erected any building or other structure in the Park which, in the opinion of the Department, would limit the usefulness of the Airport or constitute a hazard to aircraft.
26.1.3 During the time of war or national emergency, the Department shall have the right to lease all or any part of the landing area or of the Park to the United States for military use, and if any such lease is executed, the provisions of this Agreement insofar as they may be inconsistent with the provisions of such lease to the Government, shall be suspended, but such suspension shall not extend the term of this Agreement. Abatement of rentals shall be reasonably determined by the Department and Lessee in proportion to the degree of interference with the Lessee's use of the Leased Premises.
26.1.4 Except to the extent required for the performance of any obligations of the Lessee hereunder, nothing contained in this Agreement shall grant to the Lessee any rights whatsoever in the airspace above the Leased Premises other than those rights which are subject to Federal Aviation Administration rules, regulations and orders currently or subsequently effective.
ARTICLE 27
ENTIRE AGREEMENT
27.1 This Agreement consists of Articles 1 to 27 inclusive, and Article AA, Appendices A and B, and Exhibits A, B-1, B-2 and C and Schedule A.
27.2 It constitutes the entire agreement of the parties hereto and may not be changed, modified, discharged or extended except by written instrument duly executed by the Department and the Lessee. The parties agree that no representations or warranties shall be binding upon the Department or the Lessee unless expressed in writing in this Agreement of Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year written above.
THE NEW YORK STATE DEPARTMENT OF
TRANSPORTATION
Attest:/S/Diane M Gorman By:/s/
THE EDGEWATER STEWART COMPANY
Attest:/s/Stephen L. Johnson By:/s/ Thomas R. Kennedy
TENANT'S ACKNOWLEDGEMENT
|
STATE OF NEW YORK )
) SS.:
COUNTY OF ONANDAGA )
|
On this 26th day of February, 1988, before me personally came Thomas R. Kennedy to me known, and known to me to be a member of the firm of The Edgewater Stewart Company, a general partnership duly established and existing under the laws of the State of New York, the person described in and who executed the within instrument on behalf of said firm, and he acknowledged to me that he executed the same in behalf of said firm for the purposes herein mentioned.
/s/Stephen L. Johnson Notary Public, County of Onandaga |
CERTIFICATE OF AUTHORITY
I, Thomas R. Kennedy certify that I am a general partner of the firm of The Edgewater Stewart Company, a general partnership duly established and existing in the State of New York, named in the foregoing agreement; that Thomas R. Kennedy who signed said agreement was, at the time of execution, general partner of the firm.
/s/Thomas R. Kennedy |
STATE OF NEW YORK )
) SS.:
COUNTY OF ONONDAGA )
|
On this 26th day of February, 1988, before me personally came Thomas R. Kennedy to me known, and known to me to be a member of the firm of The Edgewater Stewart Company, a general partnership duly established and existing under the laws of the State of New York, the person described in and who executed the within instrument on behalf of said firm, and he acknowledged to me that he executed the same in behalf of said firm for the purposes herein mentioned.
/s/Stephen L. Johnson Notary Public, County of Onondaga |
ARTICLE AA
Disbursement of Deposited Moneys
AA.1 All sums of the character referred to in Article 8 and
12 (hereinafter referred to as 'Deposited Sums") paid
to or deposited with a bank or trust company or paid to
the first Leasehold Mortgagee (herein called the
"Depositary"), shall be promptly disbursed in the
manner hereinafter provided.
AA.2 From time to time as any restoration, repair, replacement or rebuilding of any buildings or any portion thereof damaged or destroyed by fire or any other cause, or not taken in a proceeding of the character described in Article 8, progresses (hereinafter collectively referred to as the "Work"), disbursement of any moneys of the character referred to in the Article shall be made upon receipt by the Depositary of the following:
(a) A certificate signed by an architect or engineer licensed in the State of New York selected by Lessee who shall be reasonably satisfactory to the Department and also signed by Lessee, dated not more than thirty (30) days prior to the application for such disbursement, setting forth in substance the following:
(i) That the sum then requested to be disbursed either has been paid by Lessee or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons (whose names and addresses shall be stated) who have rendered and furnished certain labor and materials for the Work; giving a brief description of such services and materials and the principal subdivisions or categories thereof and the amounts so paid or due to each of said persons in respect thereof, and stating the progress of the Work up to the date of said certificate.
(ii) That the sum then requested to be disbursed, plus all sums previously disbursed, does not exceed the cost of the Work as actually accomplished up to the date of such certificate and that the balance of the Deposited Sums will be sufficient to pay in full for the completion of the Work, or the Department shall have received other assurances reasonably satisfactory to it of payment in full for completion thereof.
(iii) That no part of the cost of their services and material described in the foregoing clause (i) of this paragraph (a), in any previous or then pending application, has been or is being made the basis for the disbursement of any part of the Deposited Sums or has been paid out of insurance moneys not required to be paid to the Depositary; and
iv) That except for the amounts, if any, stated in said certificate pursuant to the foregoing clause (i) of this paragraph to be due for services or materials, there is no outstanding indebtedness known to the person signing the certificate, after due inquiry, which is then due and payable for work, labor, services and materials in connection with the Work, which, if unpaid, might become the basis for a vendor's, mechanics, laborer's or materialman's statutory or similar lien upon Lessee's leasehold estate or Lessee's or the Department's interest in the leased premises or any part thereof.
(b) A certificate signed by Lessee, dated not more than thirty (30) days prior to the application for such disbursement, setting forth in substance that, to the best knowledge of Lessee, after due inquiry,
(i) All materials and all property described in the certificate furnished pursuant to clause (i) of the foregoing paragraph (a) and every part thereof, are free and clear of all liens and encumbrances, except such as may secure indebtedness due to persons (whose names and addresses and the several amounts due them shall be stated) specified in said certificate, which liens and encumbrances will be discharged upon payment of such indebtedness and encumbrances to which this Lease is subject; and
(ii) That no event of default has occurred which has not been remedied.
(c) An official search, a certificate of title company or other evidence reasonably satisfactory to the Department showing that there has not been filed with respect to Lessee's leasehold estate of Lessee's or the Department's interest in the leased premises or any part thereof any vendor's, mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record, except such as will be discharged upon payment of the amount then requested to be disbursed. Upon compliance with the foregoing pro-visions of this Section AA.2 the Depositary shall, out of the Deposited Sums, disburse to the persons named in the certificate pursuant to the foregoing clause (i) of paragraph (a) the respective amounts stated in said certificate to be due to them and/or shall disburse to Lessee the amount stated in said certificate to have been paid by Lessee.
At any time after the completion, in full, of the Work,
the whole balance of Deposited Sums not theretofore
disbursed pursuant to the foregoing provisions of this
Section AA.2 shall be disbursed to Lessee, upon receipt
by the Depositary of (a) a certificate signed by Lessee,
dated not more that thirty (30) days prior to the
application for such disbursement, setting forth in
substance the following to the best knowledge of Lessee,
after due inquiry, (i) that the Work has been completed
in full; (ii) that all amounts which Lessee is or may be
entitled to have disbursed under the foregoing
provisions of this Section AM on account of services
rendered or materials furnished in connection with the
Work have been disbursed under said provisions; (iii)
that all amounts for whose payment Lessee is or may
become liable in respect of the Work have been paid in
full except to the extent, if any, of any retainage
shall be applied to the final payments of the amounts
due and (iv) that no event of default has occurred which
has not been remedied and (b) an official search or a
certificate of a title company reasonably satisfactory
to the Department showing that there has not been filed
with respect to Lessee's leasehold estate or Lessee's or
the Department's interest in the leased premises or any
part thereof, any vendor's, mechanic's, laborer's or
materialman's statutory or similar lien which has not
been discharged of record.
AA.3 If an event of default shall have occurred and be continuing beyond any applicable grace periods, prior to the disbursement of the Deposited Sums or any part thereof, the Department may notify the Depositary thereof, and thereupon the Depositary shall have no further right or obligation to disburse any of the deposited Sums to Lessee, but shall disburse the same in accordance with the requirements of Section AA.2 to or for the account of the Leasehold Mortgagee in accordance with the provisions of Article 10 hereof.
AA.4 The Department and Lessee agree that the Depositary shall have the right to deduct from the Deposited Sums, prior to any disbursement thereof pursuant to Section AA.2, its reasonable charges for acting as Depositary hereunder.
AA.5 The balance remaining of Deposited Funds, if any, after disbursement in accordance with this Article shall be paid to the first leasehold mortgagee to be applied to the mortgage debt, or if there is no leasehold mortgagee, to the Department, to be applied to the rent payable hereunder.
AA.6 The depositary shall pay a penalty of Chase Manhattan Bank's prime rate on all sums not disbursed in accordance with this Article to the party entitled thereto within ten (10) days after said depositary's receipt of all documents required to be submitted to it hereunder.
AA.7 In the event Lessee shall elect, under the provisions of
Section 8.2.2 of the Agreement, not to repair or
reconstruct the improvements the Depositary shall
disburse the Deposited Funds in accordance with the
provisions of Section 8.6 of the Agreement.
APPENDIX A
STANDARD CLAUSES FOR ALL NEW YORK STATE CONTRACTS
Addendum to Contract Between
The New York State Department of Transportation (The "State")
and
The Edgewater Stewart Company (The 'Contractor")
Contract No.
The parties to the attached contract, license, lease, or other agreement of any kind(hereinafter, the "contract") agree to be bound by the following clauses which are hereby made a part of said contract:
1. EXECUTORY CLAUSE. In accordance with Section 41 of the State Finance Law, this contract shall be deemed executory only to the extent of money available to the State for the performance of this contract and no liability shall be incurred by the State of New York beyond moneys available for this contract.
2. NON-ASSIGNMENT CLAUSE. In accordance with Section 138 of the State Finance Law, this contract may not be assigned by the contractor or its right, title or interest therein assigned, transferred, conveyed, sublet or disposed of without the previous consent, in writing, of the State.
3. COMPTROLLER'S APPROVAL. In accordance with Section 112 of the State Finance Law, no contract at or above the statutory amount or amendment thereto shall be valid, effective or binding upon the State until it has been approved by the State Comptroller and filed in his office. Contractors commencing performance of any such contract or amendment before it has been approved by the State Comptroller do so at their own risk.
4. WORKERS' COMPENSATION BENEFITS. In accordance with
Section 142 of the State Finance Law, this contract shall be
void and of no force and effect unless the contractor shall
provide and maintain coverage for the benefit of such
employees as are required to be covered by the provisions of
the Workers' Compensation Law.
5. NON-DISCRIMINATION REQUIREMENTS. The contractor will not
discriminate against any employee or applicant for employment
because of race, creed, color, sex, national origin, age,
disability or marital status. Furthermore, in accordance with
Section 220-e of the Labor Law, if this is a contract for the
construction, alteration or repair of any public building or
public work or for the manufacture, sale or distribution of
materials, equipment or supplies, and to the extent that this
contract shall be performed within the State of New York,
contractor agrees that neither it nor its subcontractors
shall, by reason of race, creed, color, disability, sex or
national origin: (a) discriminate in hiring against any New
York State citizen who is qualified and available to perform
the work; or (b) discriminate against or intimidate any
employee hired for the performance of work under this
contract. Contractor is subject to the sanctions of Section
220-e for any violation thereof, including possible
termination of this contract and forfeiture of all moneys due
hereunder for a second or subsequent violation.
6. WAGE AND HOURS PROVISIONS. If this is a public work contract covered by Article 8 of the Labor Law or a building service contract covered by Article 9 thereof, neither contractor's employees nor the employees of its subcontractors may be required or permitted to work more than the number of hours or days stated therein, except as otherwise provided in the Labor Law. Furthermore, contractor and its subcontractors must pay at least the prevailing wage rate, as determined by the State Labor Department in accordance with the Labor Law.
7. NON-COLLUSIVE BIDDING REQUIREMENT. In accordance with
Section 139-d of the State Finance Law, if this contract was
awarded based upon the submission of bids, contractor
warrants, under penalty of perjury, that its bid was arrived
at independently and without collusion aimed at restricting
competition. Contractor further warrants that an authorized
and responsible person has executed and delivered to the
State a non-collusive bidding certification on contractor's
behalf.
8. INTERNATIONAL BOYCOTT PROHIBITION. In accordance with
Section 220-f of the Labor Law and Section 139-h of the State
Finance Law, if this contract exceeds the statutory amount
in Section 139-h of the State Finance Law, the contractor
agrees, as a material condition of the contract, that neither
the contractor nor any substantially owned or affiliated
person, firm, partnership or corporation has participated, is
participating, or shall participate in an international
boycott in violation of federal laws or regulations
thereunder. If such contractor, or any of the aforesaid
affiliates or contractor, is convicted or is otherwise found
to have violated A-3 said laws or regulations upon the final
determination of the United States Commerce Department or any
other appropriate agency of the United States subsequent to
the contract's execution, such contract, amendment or
modification thereto shall be rendered forfeit and void. The
contractor shall so notify the State Comptroller within five
(5) business days of such conviction, determination or
disposition of appeal (2 NYCRR 105.4).
9. SET-OFF RIGHTS. The State shall have all of its common law rights of set-off. These rights and powers shall include, but not be limited to, the State's option to withhold for the purposes of set-off any moneys due to the contractor under this contract up to any amounts due and owing to the State with regard to this contract, any other contract with any State department or agency, including any contract for a term commencing prior to the term of this contract, or amounts due and owing to the State for any other reason.
10. RECORD-KEEPING REQUIREMENT. The contractor shall maintain accurate books, records, documents, accounts and other evidence directly pertinent to performance under this contract for a period of six (6) years following the termination of this contract and any extensions thereto. The State Comptroller and Attorney General or any other person or entity authorized to conduct an examination, as well as the agency or agencies involved in this contract, shall have access to such records during the contract term, extensions thereof and said six (6) year period thereafter for the purposes of inspection, auditing and copying.
11. CONFLICTING TERMS. In the event of a conflict between the terms of the contract and the terms of this Appendix A, the terms of this Appendix A shall control.
12. GOVERNING LAW. This contract shall be governed by the laws of the State of New York.
13. LATE PAYMENT. Timeliness of payment and any interest to be paid to contractor for late payment shall be governed by Article XI-A of the State Finance Law.
14. NO ARBITRATION. Disputes involving the breach or alleged breach of this contract may not be submitted to binding arbitration (except where statutorily authorized) but must, instead, be heard in a court of competent jurisdiction of the State of New York.
/s/thomas R. Kennedy Signature of Contractor or Contractor's Authorized Representative |
Printed or Typed Name
Partner
Title
26 February 88
Date
APPENDIX B
Construction by Lessee
1. The Lessee agrees to construct on the space shown on Exhibits B-1 and B-2 the following facilities;
1.1 approximately 57,200 square feet of light industrial space; and
1.2 paving to accommodate auto and over the road truck parking spaces,
1.3 together with the grading of the ground area contained within the Space and the installation on or in the Space of such utilities as may be appropriate or necessary for the utilization of the Space for the purposes the Lessee is permitted to use the same.
2. Prior to the commencement of construction of the facilities set forth in Section 1 above, or any part thereof, Lessee shall submit to the Department complete plans and specifications for such proposed construction within 90 days of the effective date of this Agreement. Such plans and specifications shall be signed and sealed by a registered architect or a professional engineer licensed to practice in the State of New York.
3. The Department may refuse to grant approval if, in its reasonable opinion, the proposed facilities as laid out and indicated by the Lessee on such plans or constructed according to such plans and specifications:
3.1 will be structurally unsound or unsafe or hazardous for human occupancy or improper for the use and occupancy for which it is designed;
3.2 will not comply with all the requirements of this Agreement;
3.3 will be in violation of any State code, OSHA-70, the National Electric Code or any other law, ordinance of regulation of any governmental authority having jurisdiction over the Airport;
3.4 will not be at locations or not be oriented in accordance with the approved comprehensive plans for the Park.
4. Upon approval of such plans and specifications by the Department the Lessee shall proceed expeditiously and with all reasonable diligence to construct, at its own cost and expense, the facilities in accordance with such approved plans and specifications and complete the facilities in accordance with the time limit set forth above.
4.1 The Lessee or the Lessee's construction contractor shall furnish the Department Letters of Credit in a sum equal to the estimated cost of construction, in a form and with sureties satisfactory to the Department, for the faithful performance by the Lessee of its construction obligations contained in this Agreement and for the guarantee of payment of all claims of materialmen, workmen and subcontractors. The Lessee shall deliver such Letters of Credit to the Department prior to commencement of construction or within (30) days after the award by Lessee of construction contract or contracts, which ever occurs first. 5. All construction work shall be done in accordance with the following terms and conditions:
5.1 The Lessee hereby assumes the risk of loss or damage to all of the construction work prior to the completion thereof and the risk of loss or damage to all property of the Department arising out of or in connection with the performance of the construction work. In the event of such loss or damage, the Lessee shall forthwith repair, replace and made good the construction work and the property of the Department without cost or expense to the Department.
5.2 The Lessee shall itself and shall also require its contractors to indemnify and hold harmless the Department, the Park Manager, and their officers, agents and employees from and against all claims and demands, just or unjust, of third persons (including employees, officers, and agents of the Department) arising or alleged to arise out of the performance of the construction work and for all expenses, (whether or not such claims, demands, causes of action, liabilities etc, are made or asserted before or after termination or expiration of this agreement) incurred by it and by them in the defense, settlement or satisfaction thereof, including without limitation thereto, claims and demands for death, for personal injury or for property damage, direct or consequential, (to include reasonable attorneys and other professional fees) whether they arise out of or from the acts or omissions of the Lessee, of any contractors of the Lessee, of the Department or of third person, or from acts of God or of the public enemy, or otherwise excepting only claims and demands which result solely from negligent acts done by the Department, its subsidiaries, its officers, agents and employees subsequent to the commencement of the construction work.
5.3 The Lessee shall furnish a project manager during the construction period with whom the Department may communicate at all times.
5.4 The Department shall have the right, through its duly designated representatives, to inspect the construction work and the plans and specifications thereof, at any and all reasonable times during the progress thereof and from time to time, in its discretion, to take samples and perform testing on any part of the construction work, but the taking of samples and testing shall be conducted so as to minimize interference with the construction work. If such minimization of impact can be accomplished without diminishing the effectiveness of accuracy of the samples and or tests.
5.5 The Lessee agrees that it shall deliver to the Department "as-built" drawings (capable of being reproduced) of the construction work and shall during the term of this Agreement keep said drawings current showing thereon any changes or modifications which may be made. (No changes or modifications to be made without the Department's consent not to be unreasonably withheld or delayed.)
5.6 The Lessee shall pay or cause to be paid all claims lawfully made against it by its contractors, subcontractors, materialmen and workmen, and all claims lawfully made against it by other third persons arising out of or in connection with or because of the performance of the construction work, and shall cause its contractors and subcontractors to pay all such claims lawfully made against them, provided, however, that nothing herein contained shall be construed to limit the right of the Lessee to contest any claim of a contractor, subcontractor, materialman, workman and/or other person and no such claim shall be considered to be an obligation of the Lessee within the meaning of this Section unless and until the same shall have been finally adjudicated. The Lessee shall use its best efforts to resolve any such claims and shall keep the Department fully informed of its actions with respect thereto.
5.7 The Lessee shall procure and maintain comprehensive general liability insurance, including automotive, with a contractual liability endorsement covering the obligations assumed by the Lessee in Section 5.2 of this Appendix, which shall be in addition to all policies of insurance otherwise required under this Agreement or the Lessee may provide such insurance by requiring each contractor engaged by it for the construction work to procure and maintain such insurance including such contractual liability endorsement, said insurance not to contain any care, custody or control exclusions, any exclusion for explosions, collapses or damage to bodily injury to or sickness, disease, or death of any employee of the Lessee or of any of its contractors which would conflict with or in anyway impair coverage under the contractual liability endorsement. Said insurance shall name the Department, the Park Manager and their agents as an additional insureds and be in not less than the following amounts:
(i) Bodily Injury Liability:
For injury to or wrongful death
to one person $1,000,000
For injury or wrongful death or
more than one person for any
one occurrence $5,000,000
Aggregate Products Completed
Operations $39000,000
(ii) Property Damage Liability:
|
For all damages arising out of injury to or destruction of property
in any one occurrence $3,000,000 Aggregate Products Completed Operations $3,000,000 Aggregate Operations $3,000,000 Aggregate Productive $3,000,000 Aggregate Contractual $3,000,000 |
The insurance required hereunder shall be maintained in
effect during the performance of the construction work.
A certified copy of each of the policies or a
certificate or certificates evidencing the existence
thereof, or binders, shall be delivered to the
Department at least fifteen (15) days prior to the
commencement of any work. In the event any binder is
delivered, it shall be replaced within thirty (30) days
by a certified copy of the policy or a certificate. Each
such copy or certificate shall contain a valid provision
or endorsement that the policy certificate shall contain
a valid provision or endorsement that the policy may not
be canceled, terminated, changed or modified without
giving thirty (30) days' written advance notice thereof
to the Department.
5.8 The Lessee shall procure and maintain or cause to be procured and maintained Builder's Risk Completed Value Insurance covering the construction work during the performance thereof including material delivered to the construction site but not attached to the realty in an amount and form satisfactory to the Department. Such insurance shall name the Department, the Lessee and its contractors and subcontractors as additional assureds and such policy shall provide that the loss shall be adjusted with and payable to the Lessee. Such proceeds shall be used by the Lessee for the repair, replacement or rebuilding of the construction work. The policies or certificates representing this insurance shall be delivered by the Lessee to the Department prior to the commencement of construction and each policy or certificate delivered shall bear the endorsement of or be accompanied by evidence of payment of the premium thereon and, also, a valid provision obligating the insurance company to furnish the Department fifteen (15) days' advance notice of the cancellation, termination, change or modification of the insurance evidenced by said policy or certificate.
5.9 Nothing contained herein shall grant or be deemed to grant to any contractor, architect, supplier, subcontractor or any other person engaged by the Lessee of any of its contractors in the performance of any part of the construction work any right of action or claim against the Department, its officers, agents and employees with respect to any work any of them may do in connection with the construction work.
5.10 Nothing contained herein shall create or be deemed to create any relationship between the Department and any such contractor, architect, supplier, subcontractor or any other person engaged by the Lessee or any of its contractors in the performance of any part of the construction work and the Department shall not be responsible to any of the foregoing for any payments due or alleged to be due thereto for any work performed or materials purchased on connection with the construction work.
5.11 When the construction work is substantially completed and is ready for use by the Lessee, the Lessee shall advise the Department to such effect and shall deliver to the Department a certificate of completion by a registered architect or professional engineer licensed to practice in the State of New York certifying that such construction work has been constructed in accordance with the approved plans and specifications and the provisions of this Agreement and in compliance with all applicable laws, ordinances and governmental rules, regulations and orders. All risks thereafter with respect to the construction and installation of the same and any liability therefor for negligence or other reason shall be borne by the Lessee. The Lessee shall not use or permit the use of the construction work for the purposes set forth in this Agreement until such certificate is received by the Department. The date of delivery of the certificate to the Department shall constitute the Completion Date for the purposes of this Agreement.
Exhibits B-I And B-2
LESSEE'S SITE PLANS
Annexed hereto as separate documents are Lessee's site plans SP-1, dated November 10, 1987 and revised February 3, 1988, and SP-2 dated November 10, 1987 and revised February 9, 1988, both of which are initialed by the Department and Lessee.
Exhibit C
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of the _____ day of ___________, _____ by and among THE STATE OF NEW YORK acting by and through it's Department of Transportation (hereinafter called _____________"Department"),___________ a New York corporation (hereinafter called ("Tenant") and __________ (hereinafter called "Subtenant")
WITNESSETH:
WHEREAS, Department and Tenant have entered into a certain land lease agreement dated March _____,____ (the "Agreement") covering premises located in The Industrial Park at Stewart International Airport, Newburgh, New York 12550 ("the Premises') as more particularly described in Exhibit "A" attached hereto and made a part hereof; and
WHEREAS, Tenant and Subtenant have entered into a certain sublease agreement (the "Sublease") dated ______, ____ for a portion of the lands and premises described in Exhibit "A" hereinbefore referred to, said portion being more particularly described in Schedule 8 attached hereto and made a part hereof; and
WHEREAS, the parties hereto desire to assure Subtenant of continued occupancy of the Premises under the terms of the Sublease, in the event of default in or termination of the Agreement.
NOW, THEREFORE, in consideration of the sum of one dollar ($1.00) by each party in hand paid to the other, the receipt of which is hereby acknowledged and in consideration of the mutual promises and covenants and agreements herein contained, the parties hereto, intending to be legally bound hereby, promise, covenant and agree as follows:
1. In the event the Department takes possession of the Premises as a result of summary eviction, foreclosure or otherwise, Department agrees not to affect or disturb Subtenant's right to possession of the Premises under the Sublease in the exercise of Department's rights under the Lease so long as Subtenant is not in default under any of the terms, covenants, or conditions of the Sublease.
2. In the event that Department takes possession of the Premises as result of any action or proceeding as set forth above, or otherwise succeeds to the interest of Tenant under the Sublease, Department and Subtenant, after ten (10) days written notice by Department of Subtenant, hereby agree to be bound to one another under all of the terms, covenants and conditions of the Sublease; accordingly; from and after such event, the Department and Subtenant shall have the same remedies against one another for the breach of any agreement contained in the Sublease as Tenant and Subtenant had before the Department succeeded to the interest of Tenant.
3. All notices given under any of the provisions of this Agreement shall be deemed to have been duly given if mailed by certified mail, return receipt requested, as follows:
TO DEPARTMENT:
TO TENANT:
TO SUBTENANT:
4. This Agreement represents the entire agreement of the parties hereto. Neither this Agreement nor any term or provision hereof may be changed, waived, discharged, or terminated orally, or in any manner other than by an instrument in writing signed by the party against which the enforcement of the change, waiver, discharge, or termination is sought.
5. This Agreement shall inure to the benefit of any be binding upon the heirs, personal representatives, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers the day and year first above written.
ATTEST: THE STATE OF NEW YORK
By:
ATTEST:
ATTEST: TEMAMT
By:
SCHEDULE A
The Lessee agrees to indemnify, save and hold harmless, the Department (its officers, agents, servants and employees) of and from any and all costs, liability, damage and expense (including costs of suit and reasonable expenses of legal services) claimed or recovered, justly or unjustly, falsely, fraudulently or frivolously, by any person, firm or corporation by reason of injury to, or death of, any person or persons, including Department personnel and damage to, destruction or loss of use of any and all property, including Department property, arising from, or resulting from, any operations, works, acts or omissions of Lessee, its agents, servants, employees, contractors, sublessees or tenants. In any case in which such indemnification would violate Sections 5-321.1 or 5-322.1 of the New York General Obligations Law, or any other applicable legal prohibition, the foregoing provisions concerning indemnification shall not be construed to indemnify the Department, its officers, employees or agents for damage arising out of bodily injury to persons or damage to property caused by or resulting from the negligence of the Department, its officer, employees or agents. Upon the filing with the Department by anyone of a claim for damages arising out of incidents for which the Lessee herein agrees to indemnify and hold the Department harmless, the Department shall notify the Lessee of such claim and in the event that the Lessee does not settle or compromise such claim, then the Lessee shall undertake the legal defense of such claim both on behalf of the Lessee and behalf of the Department. It is specifically agreed, however, that the Department at its own cost and expense, may participate in the legal defense of any such claim. Any judgment, final beyond all possibility of appeal, rendered against the Department for any cause for which the Lessee is liable hereunder shall be conclusive against the Lessee as to liability and amount upon the expiration of the time for appeal.
Lessee shall, at its own cost and expense, take out and maintain such insurance for the term of this Agreement as the Lessee is required under the Workers' Compensation Act; and also take out and maintain such public liability as will protect the Lessee, the Department and its Park Manager from any claims for damage to persons, property, etc., arising out of, occurring or caused by operations under this Agreement by the Lessee or otherwise arising out of this Agreement. The policy will provide the amounts of insurance specified in this Schedule A. Upon execution of this Agreement, certificates of insurance in form acceptable to the Department should be submitted to the Department. Each certificate shall have endorsed thereon:
- A clause naming New York State and it's Department of Transportation and the Park Manager (currently Lockheed Air Terminal of New York) as additional insureds under the policies.
- "No cancellation or change in the policy shall become effective until after thirty (30) days notice by registered mail to the Park Manager, 1035 First Street, Stewart International Airport, Newburgh New York 12550.
"Upon failure of Lessee to furnish, deliver and maintain such insurance as above provided, the Department may obtain such insurance and charge Lessee as additional rental, the cost of the insurance plus all appropriate administrative charges and incidental expenses associated with the transaction. Failure of Lessee to take out and/or maintain, or the taking out and/or maintenance or any required insurance shall not relieve Lessee from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with the obligations on Lessee concerning indemnification.
All required insurance must be in effect and so continue during the life of this Agreement in not less than the following amounts:
A. Workers' Compensation Unlimited - Statutory - in compliance with the Compensation Law of the State of New York.
B. General Liability Insurance with a maximum combined single limit of $15,000,000 per occurrence. This insurance shall indicate on the Certificate of Insurance the following coverages:
1. Premises - Operations
2. Independent Contractor and Subcontractors
3. Products and Completed Operations
4. Broad Form Contractual
C. Disability Benefits: The Contractor shall provide proof of compliance with the Disability Benefits Law.
Location of operation shall be "All locations in Orange County, New York".
Nothing herein contained shall prevent the Lessee from taking out any other insurance for protection of its interest which it deems advisable or necessary.
Exhibit 10.13(b)
LEASE AMENDMENT #1
BETWEEN
THE NEW YORK STATE
DEPARTMENT OF TRANSPORTATION
AND
NEW ENGLAND LAMINATES CO., INC.
LEASE AMENDMENT #1
This Amendment #1, dated February 17, 1995 ("Lease Amendment #1), to Lease Contract #17000 L10046R (the "Agreement") entered into the 26th day of February, 1988 by and between:
THE STATE OF NEW YORK ACTING BY AND THROUGH ITS DEPARTMENT OF TRANSPORTATION, having offices at 1220 Washington Avenue, Albany, New York 12232, hereinafter referred to as the "Department", and NEW ENGLAND LAMINATES CO., INC., a New York corporation, having its office at 3 Elm Street, Walden, New York 12586-1805, hereinafter referred to as the "Lessee". Lessee's Employer Identification Number is 06-0697511.
WITNESSETH THAT:
WHEREAS, the Department is the owner of the Premises Known as Stewart International Airport Industrial Park located in the Town of New Windsor, New York and presently comprising approximately 8,000 acres, and wherever "Park" is used in this Lease it shall be construed to mean the Industrial Park as it may be expanded from time to time; and
WHEREAS, the Department and The Edgewater Stewart Company ("Original Lessee") mutually entered into the Agreement in February 1988; and
WHEREAS, pursuant to a Consent Agreement of even date herewith, attached as "Exhibit B", the Department has approved an assignment by Original Lessee to NEW ENGLAND LAMINATES CO., INC., Lessee, of all of the obligations, right, title and interest in the Agreement; and
WHEREAS, the Department and Lessee in consideration of this assignment and other mutually beneficial consideration desire to amend the Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and conditions herein contained, the Agreement is amended as follows:
1. ARTICLE 2, LEASED PREMISES
Delete Sections 2.4, 2.6 and 2.6.1.
2. ARTICLE 3, USE OF LEASED PREMISES Replace Section 3.1 in its entirety with the following language:
3.1 The Lessee shall occupy and use the Leased Premises for the purpose of manufacturing and distribution of electronic components. Nothing herein shall be construed to prevent Lessee from using these Leased Premises for any other lawful purposes consistent with the provisions of this Agreement and the Park's current Performance and Development Standards, with the prior approval of the Department, which approval shall not be unreasonably withheld.
3. ARTICLE 4, RENTAL
a) Replace Section 4.1.2 in its entirety with the following language:
4.1.2 Commencing on the date of assignment of the Agreement pursuant to the Consent Agreement and ending September 30, 1998, Lessee shall pay an annual rent of forty-five thousand three hundred fifty dollars and seventy-nine cents ($45,350.79). Notwithstanding the foregoing, during the first eight months after New York State execution of this Lease Amendment #1, the Department will abate the Rent amount each month by $3779.23, which amount over an eight month period will equal $30,233.84 in consideration of an upgrade by Assignee of the Facility.
b) Replace Section 4.3 in its entirety with the following language:
4.3 Assignee shall submit to the Department plans and specifications for any construction, alterations or changes in accordance with the Department's Tenant Alteration Application.
c).Replace Section 4.4 in its entirety with the following language:
4.4 In accordance with the provisions of Chapter 55 of
the New York State Laws of 1992, Section 18 of the State
Finance Law, if any payments shall not be made within thirty
(30) days of the due date thereof pursuant to this
Agreement, Lessee shall pay a late payment charge equivalent
to interest on the outstanding balance accruing from the due
date and calculated at the underpayment rate set by the New
York State Commissioner of Taxation and Finance, or ten
dollars ($10), whichever is greater. Should Department need
to prosecute collection of rent or additional rent due under
this Agreement by reason of any such amount, or interest
thereon, unpaid in excess of 90 days from the due date
thereof, Lessee shall pay Department collection costs
(inclusive of allocable personnel and/or contractor costs)
for collection of such arrears up to 22 percent of the
amount owed together with interest thereon, as additional
rent.
c) Replace Sections 4.5 in its entirety with the following language:
4.5 In addition to any other damage provisions herein, if Lessee defaults under this Agreement and Lease Amendment #l prior to March 1, 1997 with respect to the payment of Rent, Lessee shall owe the Department the full amount of the rent abatement ($30,233.84) set forth in Article 4.1.2 above.
4. ARTICLE 5, ACCEPTANCE, CARE, MAINTENANCE, IMPROVEMENTS AND REPAIR
a)Replace Section 5.1 in its entirety with the following language:
5.1 Lessee warrants that it has inspected and studied the Leased Premises and takes the Leased Premises as documented in the First Study.
b) Replace Section 5.1.2 in its entirety with the following language:
5.1.2 Except as may otherwise be provided for herein, the Department shall not be required to maintain nor to make any improvements, repairs or restoration upon or to the Leased Premises or to any of the Leased Premises. The Department shall not have any obligation to repair, maintain or restore any improvements upon the Leased Premises.
c) Delete the following sections in their entirety:
5.1.1, 5.1.2, 5.1.3 and 5.1.6.
d) Delete the following first sentence in Section 5.1.5: "The Department will facilitate environmental approvals as necessary or appropriate for the construction and operation of the project described herein."
5. ARTICLE 6, ADDITIONAL OBLIGATIONS OF LESSEE
a) Add a new Section 6.12 as follows:
6.12 The Lessee will comply with all of the following Environmental Provisions:
6.12.1 Definitions. - For the purposes of this section, the following terms shall have the following meanings:
Environmental Condition - Environmental Condition means any pollutants, contaminants, petroleum, crude oil, hazardous wastes, radioactive materials or any other substances, the use and/or the removal of which is required or the use of which is restricted, prohibited or unlawful by any "Environmental Law".
Environmental Law - Environmental Law means any Federal, State or local statute, ordinance, regulation or other law of a governmental authority relating to pollution or protection of the environment or the regulation of the storage facilities or handling of contaminants or other materials which may be harmful to the environment.
Hazardous Material - Hazardous Material means hazardous materials defined by 40 CFR Part 300.5.
Person - Person means person defined by 40 CFR 300-5.
Responsible Party - Responsible Party means responsible party defined by 6 NYCRR 375.
6.12.2 The Lessee accepts possession of the Leased Premises "as is" in its present condition. Such condition having been inspected, documented and certified by the Lessee in an environmental baseline study attached as Exhibit D (hereinafter "First Study"), prior to assuming occupancy of the Leased Premises. The scope of services for the First Study has been agreed to by both the Lessee and Department.
6.12.3 Upon the expiration or earlier termination of the Lease, Department will conduct an environmental baseline study (the "Second Study") at its sole expense. The same scope of services as used in the First Study shall serve for the purposes of the initial scope of services for the Second Study.
6.12.4 If the findings of the Second Study do not match the findings of the First Study conducted and these differences are attributable to activity or operations of Lessee, then the Lessee shall be liable for, and be required to undertake, at its sole cost and expense, all remedial actions necessary to assure that the results of the Second Study meet and come up to the standards of the results of the First Study. Lessee shall return the Leased Premises to Department in the same Environmental Condition, or better, as when Department provided it to the Lessee, unless differences in the Environmental Condition are not attributable to activity or operations of Lessee. In the event that hazardous material is found on or under the Leased Premises and it is determined that such hazardous material existed prior to Lessee's assumption of the Agreement, the Department accepts responsibility for such hazardous material to the extent that it is determined to be the responsibility of the Department and not the responsibility of other third parties, as determined by law.
6.12.5 Both the First Study and Second Study shall, at a minimum, address the presence, or lack thereof, of any adverse Environmental Conditions on or under the Leased Premises including the presence of any Hazardous Material.
6.12.6 In the event the Lessee creates or discovers at any time whatsoever, any adverse Environmental Condition, or Hazardous Material, on the Leased Premises or uses any hazardous material, it will promptly notify the Department in writing and comply with all directives of the Department not otherwise inconsistent with other provisions of this Agreement.
6.12.7 The Lessee shall be considered the "generator" of all adverse Environmental Conditions or Hazardous Waste upon the Leased Premises (as well as any premises to which the contamination has migrated) determined to be present at the completion of the Second Study that were not identified upon completion of the First Study that are attributable to activity or operations of Lessee. Lessee shall be responsible for removing all such contamination on the Leased Premises and on any premises to which it has migrated. Throughout the term of this Agreement, the Lessee shall perform the duties and responsibilities of the "generator" in compliance with all applicable laws and regulations, including (without limitation) identifying, packaging, manifesting, reporting, recordkeeping, handling, transporting and disposing of all hazardous and non-hazardous liquid or solid wastes generated by the Lessee, its tenant(s), successors) , assignee(s) , guest(s) or patron(s) , within the Leased Premises. Lessee shall provide Department with copies of all documentation in support of actions taken in compliance with this Section.
6.12.8 As generator" of any environmental contamination, accidental or otherwise, the Lessee shall undertake immediate containment efforts to minimize damage to the environment. In addition, the Lessee will immediately notify the Department of such spill or contamination and remove all contamination from both the Leased Premises as well as any property the contamination may migrate to. Lessee shall provide a written report to the Department explaining the cause, location, time and extent of such spill(s) or contamination.
6.12.9 In addition to compliance with Article 14, Lessee shall conduct its operations and operate, use and maintain the Leased Premises in such manner that there will be at all times a practicable minimum of air pollution, water pollution, or any other type of pollution arising out of, relating to, or resulting from the operation, use or maintenance of the Leased Premises.
6.12.10 Lessee shall not perform any repair or alterations to the Leased Premises that might disturb any existing environmental condition prior to obtaining the written approval of the Department, which approval shall not be unreasonably withheld.
6.12.11 Lessee shall provide the Department with a copy of any and all reports on Environmental Conditions on the Leased Premises, including the results of any laboratory analysis that may be performed.
6.12.12 The Lessee shall be responsible to obtain all certificates, permits, licenses, approvals, or authorizations required by any Environmental Law for the construction, installation, or operation of all facilities on the Leased Premises. A copy of all such certificates, approvals or authorizations shall be provided to Department.
6.12.13 Lessee shall become a "co-permittee" upon the Department's request for any environmental permit required by Lessee's use of the Leased Premises.
6.12.14 Lessee acknowledges it is in possession of the Stewart Industrial Park Final Environmental Impact Statement and, in addition to any other obligations herein, agrees to conduct its activities in a manner consistent therein.
b) Add a new Section 6.13 as follows:
Lessee shall, at Department's request, provide Department or any of its duly authorized representatives, at any reasonable time and at its own expense, access to and the right to examine any books, documents, papers and records of Lessee pertinent to this Agreement.
c) Add a new section 6.14 as follows:
Lessee shall obtain the Department's prior written approval before modifying or installing any floor or shop drain systems, which approval shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties hereto have signed this Lease Amendment #1, as of the day and year first written above.
THE NEW YORK STATE DEPARTMENT OF TRANSPORTATION
Attest: By
Authorized Official
NYSDOT Certification - L10046R
In addition to the acceptance of
this contract, I also certify that
original copies of this signature
will be attached to all other exact
copies of this contract.
Original signed by Rex Grathwol
NEW ENGLAND LAMINATES CO., INC.
Attest:/s/Stephen E. Gilhuley By
Authorized Official
Allen Levine
Vice President
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Corporate Seal
NEW YORK STATE COMPTROLLER'S NEW YORK STATE
ATTORNEY GENERAL'S
APPROVAL APPROVAL
APPROVED AS TO FORM
NEW YORK STATE ATTORNEY
GENERAL
Date: April 21, 1995 April 1995
Peter Favretto
Associate Attorney
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d) Add a new section 6.15 as follows:
For purposes of Section 6.12, "Lessee" shall mean New England Laminates Co., Inc.
6. ARTICLE 11, ASSIGNMENT AND SUBLEASE
a) Delete Section 11.9.
7. ARTICLE 18, SURRENDER AND RIGHT OF RE-ENTRY
a) Add a new section 18.2 as follows:
18.2 In addition to the obligations of 18.1, Lessee shall restore the floor to its original condition as it was as of December 1, 1994 and prior to the placement of its machinery and restore any other changes made on or after December 1, 1994 and prior to the expiration of the Agreement, at the Department's option.
9. ARTICLE 22, NOTICES
Substitute a new address for Lessee in Section 22.2 in lieu of the address for Lessee as follows:
New England Laminates Co., Inc.
3 Elm Street
Walden, New York 14402
Attention: General Manager
Park Electrochemical Corp.
5 Dakota Drive
Lake Success, New York 11042
Attention: General Counsel
10. ARTICLE 27, ENTIRE AGREEMENT
a) Delete Section 27.1 and substitute the following:
27.1 This Agreement consists of Articles 1 to 27 inclusive, and Article AA, Appendix A and Exhibits A, B, B-1, B-2, C and D and Schedule A.
CERTIFICATE OF AUTHORITY
I, Alan R. Lesh, certify that I am the Secretary of New England Laminates Co., Inc. ("NELCO"), a corporation duly organized and in good standing under the New York Business Corporation Law named in the foregoing agreement; that Allen Levine who signed said agreement on behalf Of NELCO was, at the time of execution, a Vice President of NELCO, that said agreement was duly signed for and in behalf of said NELCO by authority of its Board of Directors, thereunto duly authorized, and that such authority is in full force and effect at the date hereof.
(CORPORATE SEAL)
/s/ Alan R. Lesh |
STATE OF New York )
)ss.:
Nassau COUNTY )
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On this 16thday of February, 1995 before me personally came Alan R. Lesh to me known, and known to me to be the Secretary of New England Laminates, the corporation described in and which executed the above certificate, who being by me duly sworn did depose and say that he, the said Alan R. Lesh resides at 2578 East 2nd Street, Brooklyn, New York 11223 that he is the Secretary of said corporation and knows the corporate seal of the said corporation; that the seal affixed to the above certificate in such corporate seal and that it was so affixed by order of the Board of Directors of said corporation, and that he signed his/her name thereto by like order.
[exhibits-02-10.13b]bd
Exhibit 10.13(a)
ASSIGNMENT AND ASSUMPTION OF LEASE
FOR VALUE RECEIVED, THE EDGEWATER STEWART COMPANY, a New York General Partnership, having an office at Nettleton Commons, 323 East Willow Street, Syracuse, New York 13203 (the "Assignor") hereby assigns to NEW ENGLAND LAMINATES CO., INC., a New York corporation, with general offices at 3 Elm Street, Walden, New York 12586-1805 (the "Assignee,,) all of Assignor's right, title and interest as Lessee, including all of Assignor's interest in the building and improvements, under a Lease Agreement (the "Lease"), dated February 26, 1988, between THE STATE OF NEW YORK, ACTING BY AND THROUGH ITS DEPARTMENT OF TRANSPORTATION and Assignor, a memorandum of which was recorded in the Orange County Clerk's Office on December 19, 1988 in Liber 3056 of Deeds at page 166.
Assignee hereby accepts this assignment and assumes all of Assignor's obligations under the Lease.
IN WITNESS WHEREOF, Assignor and Assignee have executed this instrument as of February 6, 1995.
THE EDGEWATER STEWART COMPANY
By:/s/Donald F. Moore
General Partner
NEW ENGLAND LAMINATES CO., INC.
By:/s/John Jongebloed
Vice President
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RECORD AND RETURN TO:
David Gubits, Esq.
Jacobowitz and Gubits
168 Orange Avenue
Post Office Box 367
Walden, New York 12586-0367
STATE OF NEW YORK )
)SS.:
COUNTY OF ONONDAGA )
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On the 16th day of February, 1995, before me personally came Donald F. Moore, to me known, who, being by me duly sworn, did depose and say that he is a general partner in the firm of THE EDGEWATER STEWART COMPANY, that he had the authority to sign this instrument and that he did duly acknowledge to me that he executed the same as the act and deed of THE EDGEWATER STEWART COMPANY, for the uses and purposes mentioned therein.
Notary Public
GAIL D. GRYGIEL
Notary Public, State of New York
Qualified in Onondaga County
No. 4914538
Commission Expires Dec. 21, 1995
STATE OF NEW YORK )
) SS.:
COUNTY OF ORANGE )
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On the 17th day of February, 1995, before me personally came John Jongebloed, to me known, who, being by me duly sworn, did depose and say that he resides in 12 Walnut Court, New City, NY 10950 that he is the Vice President of NEW ENGLAND LAMINATES CO., INC., the corporation described in and which executed the above instrument; and that he signed his name thereby by order of the Board of Directors of said corporation.
Notary Public
DAVID B. GUBITS 1596925
Notary Public. State of New York
Qualified in Rockland County
Commission Expires November 30, 1995
10K.02-1
EXHIBIT 21.01
SUBSIDIARIES OF PARK ELECTROCHEMICAL CORP.
The following table lists Park's subsidiaries and the jurisdiction in which each such subsidiary is organized.
Name Jurisdiction of
Incorporation
Dielectric Polymers, Inc. Massachusetts
Dielektra GmbH Germany
FiberCote Industries, Inc. Connecticut
Nelco GmbH West Germany
Nelco Products, Inc. Delaware
Nelco Products Pte. Ltd. Singapore
Nelco Products Snd. Bhd. Malaysia
Nelco Products (Wuxi) Co., Ltd. China
Nelco S.A.S. France
Nelco STS, Inc. Delaware
Nelco Technology, Inc. Delaware
Neltec, Inc. Delaware
Neltec S.A. France
Neluk, Inc. Delaware
New England Laminates Co., Inc. New York
New England Laminates (U.K.) Ltd. England
Park Advanced Product Development Delaware
Corp.
ParkNelco SNC France
Technocharge Limited England
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10K.02-1
Exhibit 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statements Nos. 33-3777, 33-16650, 33-55383, 33-63956 and 333- 12463 on Form S-8 of our report, dated April 22, 2002, with respect to the consolidated financial statements and schedule of Park Electrochemical Corp. included in the Annual Report on Form 10-K of Park Electrochemical Corp. for the fiscal year ended March 3, 2002.
ERNST & YOUNG LLP
New York, New York
May 30, 2002