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 [NO FEE REQUIRED,EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended March 2, 1997
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 or organization) Identification No.)
5 Dakota Drive, Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (516) 354-4100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $.10 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
5.5% Convertible Subordinated Notes New York Stock Exchange
due 2006
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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 [ ]
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. [ ]
[cover page 1 of 2 pages]
State the aggregate market value of the voting stock held by non- affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within 60 days prior to the date of filing.
As of close
Title of Class Aggregate market value of business on
Common Stock, $256,464,800* May 2, 1997
$.10 par value
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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
Title of Class outstanding of business on
Common Stock, 11,273,178 May 2, 1997
$.10 par value
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DOCUMENTS INCORPORATED BY REFERENCE
*Included in such amount are 1,015,032 shares of common stock valued at $22.75 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]
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, semiconductor packages and other electronic interconnect systems. The Company's electronic materials business operates under the "Nelco" name. The Company is also engaged in the design, production and marketing of specialty adhesive tapes and films, advanced composite materials and microwave circuitry materials for the electronics, aerospace and industrial markets and plumbing hardware. 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 two-for-one stock split in the form of a stock dividend, which was distributed August 15, 1995 to shareholders of record at the close of business on July 24, 1995.
The Company's business is divided into two industry segments: (1) electronic materials and (2) engineered materials and plumbing hardware. See Note 12 of the Notes to Consolidated Financial Statements included in Item 8 of this Report for information concerning the amounts of sales to unaffiliated customers, operating profit, identifiable assets, depreciation and amortization, and capital expenditures attributable to each of the Company's industry segments during its last three fiscal years.
The sales, operating profit and identifiable assets of the Company's operations by geographic area for the last three fiscal years are also set forth in Note 12 of the Notes to Consolidated Financial Statements included in Item 8 of this Report. The Company's foreign operations are conducted principally by the Company's subsidiaries in the United Kingdom, France and Singapore. The Company's foreign operations are subject to the impact of foreign currency fluctuations. See Note 1 of the Notes to Consolidated Financial Statements included 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 backplanes, PC cards and semiconductor packaging systems. The Company's multilayer printed circuit materials include copper-clad laminates, prepregs and semi-finished multilayer printed circuit board panels. The Company has long-term relationships with its major customers, which include leading independent printed circuit board fabricators and major electronic equipment manufac- turers. 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 micropro- cessors and memory and logic devices) and passive components (such as resistors and capacitors). Examples of end uses of the Company's printed circuit materials range from supercomputers to laptops and from satellite switching equipment to cellular telephones. 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 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. In 1962, the Company 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. 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 increasing complexity of electronic products, the increasingly advanced electronic materials required for interconnect performance and manufacturability, 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 estab- lished 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 photo- resist. 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. 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 is growing 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 phones, 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.
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 and new types of semiconductor packaging systems such as ball-grid arrays and multi-chip modules.
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 environ- ment.
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 (.003 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 dimension- al characteristics and purity are consistently manufactured to very high tolerance levels in order for the printed circuit board fabricator to attain and sustain acceptable production 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, PC cards and semiconductor packaging systems. The Company also manufactures semi- finished multilayer printed circuit board panels for a select group of customers. 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 product line has been developed internally and through long-term development projects with its principal suppliers. 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-temperature modified epoxies, bismaleimide triazine epoxies ("BT epoxy"), non-MDA polyimides, enhanced polyimides, high performance epoxy Thermount(R) materials ("Thermount" is a registered trademark of E.I. duPont de Nemours & Co.), cyanate esters and polytetrafluoroethylene ("PTFE") materials.
During the 1996 and 1997 fiscal years, the Company introduced several new high technology electronic materials products, including:
. N4000-13 - Nelco's high-temperature product with advanced electrical properties for high-speed computing and telecommunications applica- tions, which is being marketed;
. N5000-30 and N5000-32 - Nelco's advanced BT-epoxy plastic laminate chip packaging materials for complex microprocessor cavity boards and plastic ball grid arrays and pin grid arrays, which are being sampled and tested by North American and European customers, and are currently entering the market;
. N4000-X-1 - Nelco's advanced new proprietary plastic laminate chip packaging material, which is being tested and sampled by leading customers in North America, Asia and Europe.
. N4500-6T - Nelco's high-temperature, high speed, non-woven Thermount(R) reinforced material suitable for advanced microvia and laservia applications, which is being marketed; and
. Metclad's PTFE - Metclad's woven, metal-backed PTFE laminate substrate for microwave circuitry applications, which is being marketed in Europe.
In addition to prepreg and copper-clad laminate printed circuit materials products, the Company also manufactures semi-finished multilayer printed circuit board panels as a value-added service for a limited number of its key customers. Production of the Company's semi-finished multilayer product involves several additional manufacturing steps beginning with the photoimaging and etching of the copper-clad laminate product into the circuitry patterns specified by the customer. These etched laminates form the inner layers of the multilayer circuit board. The etched inner layers are then laminated into a multilayer assembly with insulating dielectric prepreg inserted between the multiple etched inner layers and outer layer copper planes. The outer planes of copper foil are left in unprocessed "blank" form and the product is delivered to the customer at this stage in the process. The fabricator customer then drills and plates the through holes or vias and finishes the outer layers of circuitry patterns to complete the product.
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 organiza- tion. 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 relationship with its customers is reflected in its relatively short lead times. The Company has designed its manufacturing processes and service organizations to provide the customer with its printed circuit materials products on a just-in-time basis.
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 full 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.
Customers and End Markets
The Company's customers for its advanced electronic materials include the leading independent printed circuit board fabricators and major electronic equipment manufacturers in the computer, 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 manufactur- ers 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. The Company's strategy emphasizes the use of multiple facilities established in market areas in close proximity to its customers.
During the Company's 1997 fiscal year, more than 10% of the Company's sales were made to Delco Electronics Corporation, a subsidiary of General Motors Corp. Delco Electronics has purchased a significant amount of product from the Company for more than three years, and the Company believes its relations with this customer are strong and that this customer will continue to make significant purchases of printed circuit materials product from the Company in the immediate future. Although the Company's electronic materials segment is not dependent on this single customer, the loss of this customer could have a material adverse effect on the business of this segment. Although no other single customer accounted for 10% or more of total sales of the Company for the 1997 fiscal year and the electronic materials segment is not dependent on any other single customer, the loss of a major customer or of a group of this segment's customers could have a material adverse effect on the business of this segment.
The Company's electronic materials segment's 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 manufactures 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.
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 United Kingdom facility in 1969, its first Arizona and France facilities in 1984, its Singapore facility in 1986 and its second Arizona and France facilities in 1992. The Company services the North American market principally through its United States manufacturing facilities, the European market principally through its manufacturing facilities in the United Kingdom and France, and the Asian market principally through its Singapore manufacturing facility. The Company has located its manufacturing facilities in its important markets. By maintaining full 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.
During the 1996 fiscal year, the Company expanded its New York State operations to increase its production capacity for advanced printed circuit materials principally for the North American market and expanded its Tempe, Arizona operations to provide enhanced capability and capacity to produce high density, semi-finished multilayer panels and interconnect systems. It commenced commercial operations at these expanded facilities during the early part of its 1997 fiscal year. The Company added to the manufacturing capacity of its facilities in Arizona and Singapore during the latter part of its 1997 fiscal year and is planning further expansions of its electronic materials operations in one or more additional locations during the 1998 fiscal year, particularly in the United States and Asia.
All of the Company's multilayer printed circuit materials manufacturing facilities are used for manufacturing, engineering and product development, except for the facility located in Lannemezan, France, which is principally a product research and development facility, but which in the 1997 fiscal year introduced a new woven, metal-backed PTFE laminate substrate for microwave circuitry applications in Europe. All of the Company's printed circuit materials manufacturing facilities are ISO 9002 certified.
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 material from one of the Company's principal suppliers or an inability to obtain essential 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 or 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 and the market leader in North America and Southeast Asia. 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.
Engineered Materials and Plumbing Hardware
The Company's engineered materials and plumbing hardware segment is comprised of its specialty adhesive tape and film, advanced composite materials and plumbing hardware businesses. 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. FiberCote Industries, Inc., the Company's composites business, designs and produces engineered advanced composite materials for the electronics, aerospace and industrial markets. Zin-Plas Corporation markets plumbing hardware products, which it designs and manufactures typically from chrome and brass plated zinc and plastic, and markets brass cast and plastic plumbing hardware products and components.
Marketing and Customers
The Company's engineered materials and plumbing hardware customers, substantially all of which are located in the United States, include manufacturers in the electronics, aerospace and industrial industries and original equipment manufacturers, hardware and plumbing wholesalers and home improvement centers. All of such products are marketed by sales personnel including both salaried employees and independent sales representatives who work on a commission basis.
While no single engineered materials and plumbing hardware 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 engineered materials and plumbing hardware segment could have a material adverse effect upon this segment.
Manufacturing and Sources of Supply
The Company's advanced composite materials manufacturing facility is located in Waterbury, Connecticut. Holyoke, Massachusetts is the site of the Company's specialty adhesive tape and film business. Zinc and plastic plumbing hardware products are manufactured and assembled at the Company's facilities in Grand Rapids and Comstock Park, Michigan. The Company's brass cast plumbing hardware products are designed by the Company and manufactured by a prominent Mexican faucet manufacturer under a long-term contract between the Company and this manufacturer.
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 specifica- tions of, and the obtaining of approvals from, the Company's customers. The materials used in the manufacture of these engineered materials include chemicals, films, resins, fiberglass, plastics, and other fabricated materials and adhesives. 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.
The Company designs and manufactures its plumbing hardware to its own specifications and to the specifications of original equipment manufactur- ers, using combinations of materials and product designs that are developed by its personnel. The Company's product development efforts relating to its plumbing hardware business operations are directed toward the development of new decorative plumbing hardware product designs and new materials to be used in the manufacture of plumbing products. This requires market research, industrial design, engineering and testing for ease of installa- tion and durability. The Company usually combines chrome-plated zinc and plastic moldings for its products.
The principal materials used in the manufacture of the Company's plumbing hardware products consist of zinc castings, plastics, plating materials, and other component parts. The Company purchases these materials from several suppliers. Although satisfactory substitutes for these materials are not readily available, the Company has experienced no difficulties in obtaining such materials. The Company purchases brass castings from one supplier and the Company has a long-term contract with this supplier.
Competition
The Company has many competitors in the engineered materials and plumbing hardware segment, 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. The Company's plumbing hardware business can be affected by fluctuations in the housing industry.
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 2, 1997, the unfilled portion of all purchase orders believed to be firm was approximately $21,524,000, compared to $18,917,000 at May 3, 1996. Backlog of the Company's two industry segments at May 2, 1997, compared to May 3, 1996, was as follows:
May 2, 1997 May 3, 1996
Electronic Materials $13,784,000 $ 9,747,000
Engineered Materials and
Plumbing Hardware 7,740,000 9,170,000
Total $21,524,000 $18,917,000
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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 2, 1997.
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 2, 1997, the Company had approximately 2,340 employees. Of these employees, 2,060 were engaged in the Company's electronic materials operations, 260 in its engineered materials and plumbing hardware operations and 20 consisted of executive personnel and general administrative staff. Approximately 2% of the Company's employees, all of whom are engaged in the plumbing hardware operations, are subject to collective bargaining agreements. Management considers its labor relations to be satisfactory.
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 environ- mental 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 three other sites and has received requests from the EPA under the Superfund Act for information with respect to its involvement at two 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 comprehen- sive 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 11 of the Notes to Consolidated Financial Statements included in Item 8 of this Report.
Item 2. Properties.
The following chart indicates the significant properties owned and leased by the Company, the industry segment which uses the properties, and the location and size of each such property. All of such properties, except for the Lake Success, New York property, are used principally as manufactur- ing, warehouse and assembly facilities.
Size
Owned or (Square
Location Leased Use Footage)
Lake Success, NY Leased Executive Offices 7,000
Walden, NY Owned Electronic Materials 51,000
Newburgh, NY Leased Electronic Materials 57,000
Fullerton, CA Leased Electronic Materials 95,000
Anaheim, CA Leased Electronic Materials 26,000
Tempe, AZ Leased Electronic Materials 86,000
Tempe, AZ Leased Electronic Materials 38,000
Tempe, AZ Leased Electronic Materials 15,000
Mirebeau, France Owned Electronic Materials 81,000
Lannemezan, France Owned Electronic Materials 29,000
Skelmersdale, England Owned Electronic Materials 54,000
Singapore Leased Electronic Materials 48,000
Singapore Leased Electronic Materials 10,000
Grand Rapids, MI Owned Plumbing Hardware 165,000
Comstock Park, MI Leased Plumbing Hardware 39,000
Holyoke, MA Leased Engineered Materials- 34,000
Specialty Adhesive
Tapes and Films
Waterbury, CT Leased Engineered Materials- 100,000
Advanced Composites
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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.
Item 3. Legal Proceedings.
(a) There are no material pending legal proceedings to which the Company is a party or to which any of its properties is subject.
(b) No material pending legal proceeding was terminated during the fiscal quarter ended March 2, 1997.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Executive Officers of the Registrant.
Name Title Age
Jerry Shore Chairman of the Board and a 71
Director
Brian E. Shore Chief Executive Officer, President 45
and a Director
E. Phillip Smoot Executive Vice President and a 59
Director
Susan J. Denenholz Vice President-Planning and Analysis 44
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Jerry Shore has served the Company in the capacities stated above for more than the past five years. He 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.
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 last 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. Smoot has served the Company in the capacities stated above for more than the past five years.
Ms. Denenholz became Vice President-Planning and Analysis in December 1996. Prior to December 1996, she was employed by Dun & Bradstreet Corporation, as Assistant Vice President, Acquisitions from 1992, Director, Acquisitions Analysis, from 1982 to 1992 and Manager, Business Analysis from 1979 to 1982. From 1975 to 1979, she was employed by RCA Corporation. Ms. Denenholz is a certified public accountant and a member of the New York State Bar.
There are no family relationships between the directors or executive officers of the Company, except that Brian Shore is the son of Jerry Shore.
The term of office of each executive officer of the Company expires upon the election and qualification of his or her successor.
PART II
Item 5. Market for the Registrant's Common
Stock 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 two-for-one stock split in the form of a stock dividend distributed August 15, 1995 to shareholders of record at the close of business on July 24, 1995.
For the Fiscal Year Stock Price Dividends Ended March 2, 1997 High Low Declared First Quarter $33 3/8 $21 3/4 $.08 Second Quarter 24 5/8 16 3/4 $.08 Third Quarter 24 17 1/2 $.08 Fourth Quarter 26 1/2 20 7/8 $.08 For the Fiscal Year Stock Price Dividends Ended March 3, 1996 High Low Declared First Quarter $20 1/16 $16 7/8 $.06 Second Quarter 31 1/2 17 1/8 $.06 Third Quarter 34 1/8 28 $.08 Fourth Quarter 37 7/8 28 3/8 $.08 |
As of May 2, 1997, there were 2,434 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 2, 1997 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 Certified Public Accountants, for the four fiscal years ended March 2, 1997 and Deloitte & Touche LLP, independent Certified Public Accountants, for the fiscal year ended February 28, 1993. The consolidated financial statements as of March 2, 1997 and March 3, 1996 and for the three years ended March 2, 1997, together with the auditors' reports for the three years ended March 2, 1997, appear elsewhere in this Report.
Item 6
Fiscal Year Ended
Mar. 2, Mar. 3, Feb. 26, Feb. 27, Feb. 28,
1997 1996 1995 1994 1993
(In thousands, except per share amounts)
STATEMENT OF EARNINGS INFORMATION:
Net sales $334,490 $312,966 $253,022 $208,410 $175,176
Cost of sales 275,372 242,655 196,917 168,175 149,145
Gross profit 59,118 70,311 56,105 40,235 26,031
Selling, general and administrative
expenses 34,366 35,236 29,995 25,930 22,865
Profit from operations 24,752 35,075 26,110 14,305 3,166
Other income (expense):
Interest and other income, net 7,653 2,285 1,822 947 1,967
Interest expense (5,508) (96) (431) (2,407) (2,058)
Total other income 2,145 2,189 1,391 (1,460) (91)
Earnings before income taxes 26,897 37,264 27,501 12,845 3,075
Income tax provision 8,338 12,366 10,156 4,783 810
Net earnings $ 18,559 $ 24,898 $ 17,345 $ 8,062 $ 2,265
Earnings per share:
Primary $ 1.61 $ 2.11 $ 1.59 $ 1.01 $ .25
Fully diluted $ 1.59 $ 2.10 $ 1.52 $ .84 $ .25
Weighted average number of common
and common equivalent shares
outstanding:
Primary 11,551 11,794 10,858 7,986 9,068
Fully diluted 13,932 11,860 11,570 11,454 9,068
Cash dividends per common share $ .32 $ .28 $ .20 $ .16 $ .16
BALANCE SHEET INFORMATION:
Working capital $165,004 $160,965 $ 55,035 $ 45,867 $ 45,811
Total assets 307,862 298,975 162,051 140,750 129,009
Long-term debt 100,000 100,000 23 32,861 33,957
Stockholders' equity 143,355 134,427 112,048 61,454 60,700
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Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Park is a leading global designer and producer of advanced electronic materials used to fabricate complex multilayer printed circuit boards, semiconductor packages and other electronic interconnect systems. The Company's customers for its advanced printed circuit materials include leading independent circuit board fabricators and large electronic equipment manufacturers in the computer, telecommunications, transportation, aerospace and instrumentation industries. The Company's electronic materials operations accounted for approximately 86% of net sales worldwide and more than 89% of operating profit in each of the last three fiscal years. The Company's foreign electronic materials operations accounted for approximate- ly 29% of net sales worldwide for each of the last two fiscal years and approximately 24% for the 1995 fiscal year.
Park is also engaged in the engineered materials and plumbing hardware business, which consists of the Company's specialty adhesive tape business, its advanced composite business and its plumbing hardware business, all of which operate as independent business units. This segment accounted for approximately 14% of the Company's total net sales worldwide and less than 11% of operating profit in each of the last three fiscal years.
The Company's sales growth during the last three fiscal years has been led by strong growth in sales by its North American and Asian electronic materials operations. During the last two fiscal years, increased sales by the Company's European operations have also contributed to this growth. The Company's ongoing efforts to expand its higher technology, higher margin product lines have contributed to the growth of the Company's sales of electronic materials during this period. The Company introduced several new electronic materials products during the 1996 and 1997 fiscal years.
Sales volume of the Company's electronic materials segment has increased during each of the last three fiscal years. However, growth of the Company's electronic materials business was interrupted in the first quarter of the 1997 fiscal year by an abrupt and unexpected weakening of the market for the Company's products which continued until the fourth quarter when the market strengthened. In addition, growth of the Company's electronic materials business was constrained during the 1996 fiscal year and the fourth quarter of the 1997 fiscal year by the Company's available manufacturing capacity. During the 1996 fiscal year, the Company expanded its manufacturing capacity in New York and Arizona and commenced commercial operations in both locations during the early part of the 1997 fiscal year. The Company further expanded the manufacturing capacity of its facilities in Arizona and Singapore during the later part of the 1997 fiscal year and is planning additional expansions of its electronic materials operations in the 1998 fiscal year.
Fiscal Year 1997 Compared with Fiscal Year 1996:
The Company's electronic materials business was responsible for the decline in the Company's results of operations for the fiscal year ended March 2, 1997. The North American, European and Asian markets for sophisti- cated printed circuit materials experienced weakness during the first half of the 1997 fiscal year which continued into the third quarter in the North American and European markets. The Company believes this weakness was principally attributable to an industry-wide inventory correction that began in the first quarter.
During the 1997 fiscal year, the Company's electronic materials business experienced inefficiencies caused by operating its facilities at levels significantly lower than their designed manufacturing capacity in the first three quarters and faced price pressure from its customers resulting in an inability to pass along raw material cost increases which it received earlier in the current year. These factors adversely affected the Company's margins. The Company's performance during the 1997 fiscal year was also adversely affected by significant disruptions of the Company's business with its largest customer, Delco Electronics Corporation, caused by the Canadian Auto Workers' and United Auto Workers' strikes against General Motors in the first and third quarters of the fiscal year. The improvement in the Company's margins in the second quarter over the first quarter was achieved from internal operating adjustments in response to the industry downturn that occurred in the first quarter and the return of Delco Electronics to more normal business levels after the aforementioned strikes. The improvement in the Company's margins in the fourth quarter over the third quarter resulted from the return of Delco Electronics to more normal business levels after the aforementioned strikes and the strengthening of the market for the Company's products in the fourth quarter.
Operating results of the Company's engineered materials and plumbing hardware business improved considerably during the 1997 fiscal year and accounted for approximately 11% of the Company's total operating profit.
Results of Operations
Sales for the fiscal year ended March 2, 1997 increased 7% to $334.5 million from $313.0 million for the fiscal year ended March 3, 1996. Sales of the electronic materials business for the 1997 fiscal year were $291.1 million, or 87% of total sales worldwide, compared with $274.9 million, or 88% of total sales worldwide, for the 1996 fiscal year. This 6% increase in sales of electronic materials was principally the result of higher volume of electronic materials shipped and an increase in sales of higher technology products. Sales of the engineered materials and plumbing hardware business for the 1997 fiscal year increased 14% to $43.3 million from $38.1 million for the 1996 fiscal year due primarily to increased sales in the specialty adhesive tape and advanced composite materials businesses resulting from new products and higher volumes in both businesses.
The Company's foreign operations accounted for $99.5 million of sales, or 30% of the Company's total sales worldwide, during the 1997 fiscal year compared with $91.7 million of sales, or 29% of total sales worldwide, during the 1996 fiscal year. Sales by the Company's foreign operations during the 1997 fiscal year increased 9% from the 1996 fiscal year. While sales by each of the Company's foreign operations were higher in the 1997 fiscal year compared with the 1996 fiscal year, the increase in sales by foreign operations was principally due to an increase in sales by the Company's Asian operations. A further expansion of the Company's Singapore manufacturing facility is planned during the Company's 1998 fiscal year.
The gross margin for the Company's worldwide operations was 17.7% during the 1997 fiscal year compared with 22.5% for the 1996 fiscal year. The decline in the gross margin was attributable to inefficiencies resulting from dramatic volume fluctuations during the year, the impact of disruptions to the Company's business with its largest customer, Delco Electronics Corporation, due to strikes against General Motors, selling price pressure and operating certain facilities at levels lower than their designed capacity, which were partially offset by the continuing growth in sales of higher technology, higher margin products.
Selling, general and administrative expenses, measured as a percentage of sales, were 10.3% during the 1997 fiscal year compared with 11.3% during the 1996 fiscal year. This reduction was a function of the partially fixed nature of the selling, general and administrative expenses relative to the increase in sales and lower incentive payments due to lower operating profits.
For the reasons set forth above, profit from operations for the 1997 fiscal year decreased 29% to $24.8 million from $35.1 million for the 1996 fiscal year.
Interest and other income, principally investment income, increased 235% to $7.7 million for the 1997 fiscal year from $2.3 million for the 1996 fiscal year. Interest expense for the 1997 fiscal year was $5.5 million compared with $0.1 million during the 1996 fiscal year. The increases in investment income and interest expense were attributable to the increase in cash available for investment and the additional interest expense resulting from the Company's issuance of $100 million principal amount of 5.5% Convertible Subordinated Notes due 2006 at the end of the 1996 fiscal year. The Company's investments were primarily short-term taxable instruments and government securities.
The Company's effective income tax rate for the 1997 fiscal year was 31.0% compared with 33.2% for the 1996 fiscal year. This decrease in the effective tax rate was primarily the result of favorable foreign tax rate differentials.
Net earnings for the 1997 fiscal year were $18.6 million compared to $24.9 million for the 1996 fiscal year. Primary and fully diluted earnings per share decreased to $1.61 and $1.59, respectively, for the 1997 fiscal year from $2.11 and $2.10, respectively, for the 1996 fiscal year. This decrease in net earnings and earnings per share was primarily attributable to the decrease in the profit from operations.
Fiscal Year 1996 Compared with Fiscal Year 1995:
The Company's electronic materials business was responsible for the improvement in the Company's results of operations for the fiscal year ended March 3, 1996. The North American and Asian markets for sophisticated printed circuit materials were strong during the 1996 fiscal year, and the Company's electronic materials operations located in these regions performed well as a result. While the market in Europe for sophisticated printed circuit materials was not as strong as in North America or Asia, it improved over the prior fiscal year, and the Company's European operations benefitted from this improvement.
During the 1996 fiscal year, the Company's electronic materials business incurred raw material cost increases and additional costs associated with the Company's major expansion projects in Newburgh, New York and Tempe, Arizona. In addition, the electronic materials business experienced temporary inefficiencies caused by operating certain facilities at levels in excess of their designed manufacturing capacity. These cost increases and temporary operating inefficiencies adversely affected the Company's gross margins. However, the Company was able to offset such effects by improving its overall operating efficiencies, in part, by consolidating functions, by continuing to reduce manufacturing waste and improve yields, and by improving the overall productivity of its workforce. In addition, the Company redesigned product in order to reduce material costs. The Company was also able to offset these cost increases and inefficiencies through its ongoing efforts to expand its higher technology, higher margin product lines.
Operating results of the Company's engineered materials and plumbing hardware business improved slightly but were not significant during the 1996 fiscal year.
Results of Operations
Sales for the fiscal year ended March 3, 1996 increased 24% to $313.0 million from $253.0 million for the fiscal year ended February 26, 1995. Sales of the electronic materials business for the 1996 fiscal year were $274.9 million, or 88% of total sales worldwide, compared with $218.3 million, or 86% of total sales worldwide, for the 1995 fiscal year. This 26% increase in sales of electronic materials was principally the result of higher volume of electronic materials shipped and an increase in sales of higher technology products. Sales of the engineered materials and plumbing hardware business for the 1996 fiscal year increased 10% to $38.1 million from $34.7 million for the 1995 fiscal year due primarily to increased sales in the specialty adhesive tape and plumbing hardware businesses resulting from new products and higher volumes.
The Company's foreign operations accounted for $91.7 million of sales, or 29% of the Company's total sales worldwide, during the 1996 fiscal year compared with $61.9 million of sales, or 24% of total sales worldwide, during the 1995 fiscal year. Sales by the Company's foreign operations during the 1996 fiscal year increased 48% from the 1995 fiscal year. While sales by each of the Company's foreign operations were higher in the 1996 fiscal year compared with the 1995 fiscal year, the increase in sales by foreign operations was principally due to an increase in sales by the Company's Asian operations. An expansion of the Company's Singapore manufacturing facility was completed at the end of the Company's 1995 fiscal year.
The gross margin for the Company's worldwide operations was 22.5% during the 1996 fiscal year compared with 22.2% for the 1995 fiscal year. The improvement in the gross margin was attributable to the increase in sales volume over the prior fiscal year, the continuing growth in sales of higher technology, higher margin products and improved operating efficien- cies. This improvement was offset in part by higher raw material costs, costs associated with the start-up of the new facilities in New York and Arizona, and inefficiencies caused by operating certain facilities at levels in excess of designed capacity.
Selling, general and administrative expenses, measured as a percentage of sales, were 11.3% during the 1996 fiscal year compared with 11.9% during the 1995 fiscal year. This reduction was a function of the partially fixed nature of the selling, general and administrative expenses relative to the increase in sales.
For the reasons set forth above, profit from operations for the 1996 fiscal year increased 34% to $35.1 million from $26.1 million for the 1995 fiscal year.
Interest and other income, principally investment income, increased 25% to $2.3 million for the 1996 fiscal year from $1.8 million for the 1995 fiscal year. The increase in investment income was attributable to the increase in the prevailing interest rates during the current year and to the increase in cash available for investment. The Company's investments were primarily short-term taxable instruments and government securities. Interest expense for the 1996 fiscal year was minimal compared with $0.4 million during the 1995 fiscal year. During the first quarter of the prior fiscal year, the Company called its 7.25% Convertible Subordinated Debentures for redemption; as a result, nearly all of such Debentures outstanding at the beginning of the prior fiscal year were converted into Common Stock during that fiscal year's first quarter, which eliminated the Company's long-term debt and the associated interest expense.
The Company's effective income tax rate for the 1996 fiscal year was 33.2% compared with 36.9% for the 1995 fiscal year. This decrease in the effective tax rate was primarily the result of favorable foreign tax rate differentials.
Net earnings for the 1996 fiscal year increased 44% to $24.9 million from $17.3 million for the 1995 fiscal year. Primary and fully diluted earnings per share increased to $2.11 and $2.10, respectively, for the 1996 fiscal year from $1.59 and $1.52, respectively, for the 1995 fiscal year. This increase in net earnings and earnings per share was primarily attributable to the increase in the profit from operations, the effects of the conversion of the Debentures and the lower effective tax rate.
Liquidity and Capital Resources:
At March 2, 1997, the Company's cash and temporary investments were $144.6 million compared with $143.2 million at March 3, 1996, the end of the Company's 1996 fiscal year. The increase in the Company's cash and investment position at March 2, 1997 was attributable to cash provided from operating activities in excess of investments in property, plant and equipment, as discussed below. The Company's working capital was $165.0 million at March 2, 1997 compared with $161.0 million at March 3, 1996. The increase at March 2, 1997 compared with March 3, 1996 was due to the increases in cash and receivables, offset in part by lower inventories. The increase in receivables at March 2, 1997 compared with March 3, 1996 was due principally to increased sales; the decrease in inventories for the same period was due to the utilization of raw materials accumulated in the 1996 fiscal year to ensure adequate supply of such materials. The Company's current ratio (the ratio of current assets to current liabilities) was 4.0 to 1 at March 2, 1997 compared with 3.8 to 1 at March 3, 1996.
During the 1997 fiscal year, the Company generated funds from operations of $29.2 million and expended $18.7 million for the purchase of property, plant and equipment. Cash provided by net earnings before depreciation and amortization of $30.1 million was reduced by a net increase in non-cash working capital items, resulting in $29.2 million of cash provided from operating activities. A significant portion of the 1997 fiscal year's capital expenditures related to installation of additional capacity at the Company's electronic materials facilities in Tempe, Arizona and Singapore. These expansions will increase the Company's capacity and capability for the production of sophisticated printed circuit materials. Expenditures for property, plant and equipment were $18.7 million, $24.5 million and $17.5 million in the 1997, 1996 and 1995 fiscal years, respec- tively. The Company expects the level of capital expenditures in the 1998 fiscal year to be in excess of the expenditures in the 1997 fiscal year. The Company is planning further expansions of its electronic materials operations, particularly in the United States and Asia.
At March 2, 1997, the Company's only long-term debt was the 5.5% Convertible Subordinated Notes due 2006 (the "Notes") issued at the end of the 1996 fiscal year. The Company believes its financial resources will be sufficient, for the foreseeable future, to provide for continued investment in property, plant and equipment and for general corporate purposes. Such resources, including the proceeds from the Notes, would also be available for appropriate acquisitions and other expansions of the Company's business.
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 1997, 1996 and 1995 fiscal years, the Company charged approximately $0.2 million, $0.1 million and $0.2 million, respectively, against pretax 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 2, 1997, the recorded liability in accrued liabilities for environmental matters was $1.2 million.
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 11 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.
Factors That May Affect Future Results.
The Private Securities Litigation Reform Act of 1995 provides a new "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. 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 state- ments.
. 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, 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.
. 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 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's customer base is concentrated, in part, because the Company's business strategy has been to develop long-term relation- ships with a select group of customers. During the Company's fiscal year ended March 2, 1997, the Company's ten largest customers accounted for approximately 46% 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.
. 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 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 2, 1997 and March 3, 1996 and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three years in the period ended March 2, 1997. 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 generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 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 2, 1997 and March 3, 1996 and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 2, 1997, in conformity with generally accepted accounting principles. 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 18, 1997
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share amounts)
March 2, March 3,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents $ 42,321 $ 75,970
Marketable securities (Note 2) 102,232 67,243
Accounts receivable, less allowance for
doubtful accounts of $1,746 and $1,857,
respectively 50,314 42,821
Inventories (Note 3) 20,458 27,712
Prepaid expenses and other current
assets (Note 7) 5,089 4,026
Total current assets 220,414 217,772
Property, plant and equipment, at cost, less
accumulated depreciation and amortization
(Note 4) 83,391 76,439
Other assets (Notes 7 and 10) 4,057 4,764
Total $307,862 $298,975
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,892 $ 35,924
Accrued liabilities (Note 5) 18,565 16,941
Income taxes payable 3,953 3,942
Total current liabilities 55,410 56,807
Long-term debt (Note 6) 100,000 100,000
Deferred income taxes (Note 7) 7,963 6,324
Deferred pension liability (Note 10) 1,134 1,417
Commitments and contingencies (Notes 10 and 11)
Stockholders' equity (Notes 6, 8, 9 and 10):
Preferred stock, $1 par value per share--
authorized, 500,000 shares; issued, none - -
Common stock, $.10 par value per share--
authorized, 30,000,000; issued, 13,580,018
shares 1,358 1,358
Additional paid-in capital 51,290 50,958
Retained earnings 108,804 93,892
Currency translation adjustments 831 1,328
Pension liability adjustment (850) (1,001)
Unrealized losses on investments (11) (30)
161,422 146,505
Less treasury stock, at cost, 2,307,765 and
2,033,704 shares, respectively (18,067) (12,078)
Total stockholders' equity 143,355 134,427
Total $307,862 $298,975
See notes to consolidated financial statements.
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PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
March 2, March 3, February 26,
1997 1996 1995
Net sales $334,490 $312,966 $253,022
Cost of sales 275,372 242,655 196,917
Gross profit 59,118 70,311 56,105
Selling, general and administrative
expenses 34,366 35,236 29,995
Profit from operations 24,752 35,075 26,110
Other income (expense):
Interest and other income, net 7,653 2,285 1,822
Interest expense (Note 6) (5,508) (96) (431)
Total other income 2,145 2,189 1,391
Earnings before income taxes 26,897 37,264 27,501
Income tax provision (Note 7) 8,338 12,366 10,156
Net earnings $ 18,559 $ 24,898 $ 17,345
Earnings per share (Note 9):
Primary $1.61 $2.11 $1.59
Fully diluted $1.59 $2.10 $1.52
See notes to consolidated financial statements.
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PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares and per share amounts)
Additional Currency Pension Unrealized
Common Stock Paid-in Retained Translation Liability Losses on Treasury Stock
Shares Amount Capital Earnings Adjustments Adjustment Investments Shares Amount
Balance, February 27, 1994 10,407,650 $1,041 $17,444 $ 57,098 $ 177 $(1,148) $ - 2,301,284 $(13,158)
Net earnings 17,345
Exchange rate changes 1,368
Change in pension
liability adjustment 176
Market revaluation (139)
Stock options exercised 696 (212,700) 1,220
Conversion of debentures 3,172,368 317 32,588
Cash dividends ($.20 per
share) (2,227)
Purchase of treasury stock 47,832 (750)
Balance, February 26, 1995 13,580,018 1,358 50,728 72,216 1,545 (972) (139) 2,136,416 (12,688)
Net earnings 24,898
Exchange rate changes (217)
Change in pension
liability adjustment (29)
Market revaluation 109
Stock options exercised 230 (102,726) 610
Cash dividends ($.28 per
share) (3,222)
Purchase of treasury stock 14 -
Balance, March 3, 1996 13,580,018 1,358 50,958 93,892 1,328 (1,001) (30) 2,033,704 (12,078)
Net earnings 18,559
Exchange rate changes (497)
Change in pension
liability adjustment 151
Market revaluation 19
Stock options exercised 332 (84,868) 547
Cash dividends ($.32 per
share) (3,647)
Purchase of treasury stock 358,929 (6,536)
Balance, March 2, 1997 13,580,018 $1,358 $51,290 $108,804 $ 831 $ (850) $ (11) 2,307,765 $(18,067)
See notes to consolidated financial statements.
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PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
March 2, March 3, February 26,
1997 1996 1995
Cash flows from operating activities:
Net earnings $ 18,559 $ 24,898 $ 17,345
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 11,584 9,849 8,951
Provision for doubtful accounts receivable (306) (495) (44)
(Gain) loss on sale of marketable securities (16) (38) 17
Provision for deferred income taxes 1,596 1,425 355
Accrued interest in connection with
Debenture conversion - - 389
Other, net 65 64 (89)
Changes in operating assets and liabilities:
(Increase) in accounts receivable (7,612) (9,277) (3,536)
Decrease (increase) in inventories 7,202 (11,671) 249
(Increase) in prepaid expenses and
other current assets (1,456) (1,057) (77)
Decrease (increase) in other assets 122 (42) 25
(Decrease) increase in accounts payable (2,528) 11,409 (620)
Increase in accrued liabilities 1,700 1,108 3,719
Increase in income taxes payable 286 1,260 277
Net cash provided by operating activities 29,196 27,433 26,961
Cash flows from investing activities:
Purchases of property, plant and equipment, net (18,735) (24,510) (17,523)
Purchases of marketable securities (137,897) (74,881) (11,161)
Proceeds from sales of marketable securities 103,330 22,952 19,827
Net cash used in investing activities (53,302) (76,439) (8,857)
Cash flows from financing activities:
Convertible notes offering - 100,000 -
Convertible notes issuance costs - (3,250) -
Repayments of borrowings - - (84)
Dividends paid (3,647) (3,222) (2,227)
Proceeds from exercise of stock options 604 697 1,499
Purchase of treasury stock (6,535) - (750)
Other - 4 (100)
Net cash (used in) provided by
financing activities (9,578) 94,229 (1,662)
(Decrease) increase in cash and cash equivalents
before effect of exchange rate changes (33,684) 45,223 16,442
Effect of exchange rate changes on
cash and cash equivalents 35 (56) 226
(Decrease) increase in cash and cash equivalents (33,649) 45,167 16,668
Cash and cash equivalents, beginning of year 75,970 30,803 14,135
Cash and cash equivalents, end of year $ 42,321 $ 75,970 $ 30,803
See notes to consolidated financial statements.
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PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three years ended March 2, 1997
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, semiconductor packages and other electronic interconnect systems. The Company's multilayer printed circuit board materials include copper-clad laminates, prepregs and semi-finished multilayer printed circuit board panels. 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 and passive components. The Company also designs and manufactures specialty adhesive tapes, advanced composite materials, microwave circuitry materials and plumbing hardware for the electronics, aerospace, industrial and plumbing markets.
a. Principles of Consolidation - The consolidated financial statements include the accounts of Park and its subsidiaries, all of which are wholly-owned. 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 could differ from those estimates.
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 1997, 1996 and 1995 fiscal years ended on March 2, 1997, March 3, 1996 and February 26, 1995, respectively. Fiscal 1997 and 1995 each included 52 weeks; fiscal 1996 included 53 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, reported as a separate component of stockholders' equity. 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. 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 term of the lease, if shorter.
h. Deferred Charges - Costs incurred in connection with the issuance of debt financing are deferred and included in other assets and amortized, using the effective interest method, over the respective debt repayment period.
i. 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 $23,800,000 at March 2, 1997) of the Company's foreign subsidiaries, since it is management's practice and intent to reinvest such earnings in the operations of these subsidiaries.
j. 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 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 stockholders' equity.
k. 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
1997 1996 1995
Cash paid during the year for:
Interest $2,792,000 $ - $ 42,000
Income taxes 6,570,000 9,701,000 9,712,000
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2. MARKETABLE SECURITIES
The following is a summary of available-for-sale securities:
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
March 2, 1997:
U.S. Treasury and other
government securities $ 35,423,000 $19,000 $47,000 $ 35,395,000
U.S. corporate debt
securities 66,822,000 20,000 40,000 66,802,000
Total debt securities 102,245,000 39,000 87,000 102,197,000
Equity securities 4,000 31,000 - 35,000
$102,249,000 $70,000 $87,000 $102,232,000
March 3, 1996:
U.S. Treasury and other
government securities $ 50,602,000 $32,000 $62,000 $ 50,572,000
U.S. corporate debt
securities 16,680,000 7,000 22,000 16,665,000
Total debt securities 67,282,000 39,000 84,000 67,237,000
Equity securities 6,000 - - 6,000
$ 67,288,000 $39,000 $84,000 $ 67,243,000
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The gross realized gains on sales of available-for-sale securities totalled $39,000 for 1997 and $50,000 for 1996, and the gross realized losses totalled $23,000, $12,000 and $17,000 for 1997, 1996 and 1995, respectively.
The amortized cost and estimated fair value of the debt and marketable equity securities at March 2, 1997, by contractual maturity, are shown below:
Estimated
Fair
Cost Value
Due in one year or less $ 82,007,000 $ 81,972,000
Due after one year through five years 20,238,000 20,225,000
102,245,000 102,197,000
Equity securities 4,000 35,000
$102,249,000 $102,232,000
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3. INVENTORIES
March 2, March 3,
1997 1996
Raw materials $ 8,459,000 $13,040,000
Work-in-process 4,037,000 4,280,000
Finished goods 7,173,000 9,674,000
Manufacturing supplies 789,000 718,000
$20,458,000 $27,712,000
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4. PROPERTY, PLANT AND EQUIPMENT
March 2, March 3,
1997 1996
Land, buildings and improvements $ 30,983,000 $ 27,054,000
Machinery, equipment, furniture
and fixtures 134,774,000 121,661,000
165,757,000 148,715,000
Less accumulated depreciation
and amortization 82,366,000 72,276,000
$ 83,391,000 $ 76,439,000
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Depreciation and amortization expense relating to property, plant and equipment amounted to $11,146,000, $9,382,000 and $8,501,000 for fiscal 1997, 1996 and 1995, respectively. Interest expense capitalized to property, plant and equipment amounted to $260,000 for fiscal 1997.
5. ACCRUED LIABILITIES
March 2, March 3,
1997 1996
Payroll and commissions $ 4,239,000 $ 5,040,000
Taxes, other than income taxes 899,000 1,014,000
Interest 2,781,000 -
Other 10,646,000 10,887,000
$18,565,000 $16,941,000
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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 are unsecured and subordinated to other long-term debt and are 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 $42.188 per share, subject to adjustment under certain conditions. The Notes are not redeemable at the option of the Company prior to March 1, 1999; at any time on or after such date, the Notes will be 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. At March 2, 1997 and March 3, 1996, the fair value of the Notes approximated $90,625,000 and $100,000,000, respectively.
Foreign lines of credit totalled $5,400,000 at March 2, 1997, all of which remains available to the subsidiaries.
7. INCOME TAXES
The income tax provision includes the following:
Fiscal Year
1997 1996 1995
Current:
Federal $6,150,000 $ 9,980,000 $ 8,798,000
State and local 592,000 961,000 1,003,000
6,742,000 10,941,000 9,801,000
Deferred:
Federal 863,000 655,000 50,000
State and local 150,000 60,000 40,000
Foreign 583,000 710,000 265,000
1,596,000 1,425,000 355,000
$8,338,000 $12,366,000 $10,156,000
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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
1997 1996 1995
Statutory U.S. Federal tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal benefit 1.8 1.8 2.5
Foreign tax rate differentials (7.8) (4.6) (1.5)
Other, net 2.0 1.0 .9
31.0% 33.2% 36.9%
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The Company has foreign net operating loss carryforwards of approximately $14,400,000, most of which were acquired in fiscal 1993 when the Company purchased 100% of the capital stock of Metclad, S.A. ("Metclad"), a French corporation located in Lannemezan, France. Metclad has recently commenced operation, in commercial volumes, for the production of PTFE laminates used in wireless communication applications. Accordingly, long-term deferred tax assets arising from these net operating loss carryforwards were valued at $0 at both March 2, 1997 and March 3, 1996, net of valuation reserves of approximately $5,000,000 and $5,900,000, respectively. None of the acquired net operating loss carryforwards relate to goodwill or other intangible assets. Approximately $2,700,000 of the foreign net operating loss carryforwards expire in varying amounts from fiscal 1998 through fiscal 2002; the remainder have an indefinite expiration.
At March 2, 1997 and March 3, 1996, current deferred tax assets of $1,135,000 and $1,082,000, respectively, which were primarily attributable to expenses not currently deductible for tax purposes, 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 July 12, 1995, the Company's Board of Directors voted a two-for-one stock split in the form of a 100% common stock dividend. The stock dividend was distributed August 15, 1995, to shareholders of record on July 24, 1995. All share and per share data for prior periods have been retroactively restated to reflect the stock split. In addition, on July 12, 1995, the Company's stockholders approved an increase in the number of authorized shares of common stock from 15,000,000 to 30,000,000 shares.
b. Stock Options - Under the stock option plans approved by the Company's stockholders, key employees may be granted options to purchase shares of common stock 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 year. The options expire 10 years from the date of grant.
On July 14, 1992, the Company's stockholders approved the adoption of a 1992 stock option plan (the "1992 Plan") pursuant to which options to acquire 600,000 shares of the Company's common stock are available for grant to key employees. On July 17, 1996, the Company's stockholders approved an amendment to the 1992 Plan which increased the number of shares of the Company's common stock authorized for issuance under such Plan by 550,000 shares to 1,150,000 shares. The purchase price for common stock to be acquired, upon the exercise of options, will be no less than 100% of the fair market value of such stock at the date the options are granted. The 1992 Plan will expire in March, 2002.
In October 1995, Statement of Financial Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123) was issued and requires companies to either recognize compensation expense for grants of stock options and other equity based instruments, or provide pro forma disclosure of net income and earnings per share in the notes to the financial statements. The Company has elected the disclosure provision of 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 option plans. 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 average fair value for options was estimated at the
date of grant using the Black-Scholes option pricing model to be
$7.78 for fiscal 1997 and $5.40 for fiscal 1996, with the following
weighted average assumptions for fiscal 1997 and 1996, respectively:
risk free interest rate of 6%; expected volatility factors of 34%
and 31%; expected dividend yield of 2%; and estimated option lives
of 4.6 years. For the purpose of pro forma disclosures, the effect
of applying SFAS 123 on net income and earnings per share for fiscal
1997 and 1996 would approximate the amounts shown below (in
thousands, except EPS data):
1997 1996
As Pro As Pro
Reported forma Reported forma
Net income $18,559 $18,330 $24,898 $24,805
EPS-primary $1.61 $1.59 $2.11 $2.11
EPS-fully diluted $1.59 $1.57 $2.10 $2.10
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Information with respect to the Company's stock option plans
follows:
Weighted
Average
Range of Outstanding Exercise
Exercise Prices Options Price
Balance, February 26, 1995 $ 5.50 - $17.00 504,718 $ 8.63
Granted 18.31 - 27.19 124,000 19.03
Exercised 5.50 - 13.13 (102,726) 6.79
Cancelled 5.50 - 18.13 (6,374) 12.80
Balance, March 3, 1996 5.50 - 27.19 519,618 11.43
Granted 23.75 - 24.63 111,675 24.55
Exercised 5.50 - 18.31 (84,868) 7.11
Cancelled 7.38 - 27.19 (26,450) 20.68
Balance, March 2, 1997 $ 5.50 - $24.63 519,975 $14.48
Exercisable, March 2, 1997 $ 5.50 - $18.31 231,950 $ 9.89
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The following table summarizes information concerning currently outstanding
and exercisable options.
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life(Years) Price Exercisable Price
$ 5.50 - $ 9.99 187,900 5.50 $ 7.02 148,925 $ 6.93
10.00 - 19.99 224,250 7.75 15.88 83,025 15.19
20.00 - 25.00 107,825 9.25 24.54 - -
519,975 231,950
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Stock options available for future grant under the 1992 Plan at March 2, 1997 and March 3, 1996 were 603,881 and 136,356, respectively.
c. Treasury Stock - The Company repurchased 349,102, 14 and 24 shares of its common stock under authorizations of the Board of Directors during fiscal 1997, 1996 and 1995, respectively.
d. 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.
e. Reserved Common Shares - At March 2, 1997, 2,370,342 shares of common stock were reserved for issuance upon conversion of the Notes and 1,123,856 shares were reserved for issuance upon exercise of stock options.
9. EARNINGS PER SHARE
Primary earnings per share are computed based on the weighted average number of common and common equivalent shares outstanding during the period.
The weighted average number of common and common equivalent shares used to compute earnings per share are as follows:
Fiscal Year
1997 1996 1995
Primary 11,551,000 11,794,000 10,858,000
Fully diluted 13,932,000 11,860,000 11,570,000
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10. EMPLOYEE BENEFIT PLANS
a. Profit Sharing Plan - Park and certain of its subsidiaries have a noncontributory 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 to the Company. The Company's contributions under the plan amounted to $1,775,000, $2,329,000 and $2,297,000 for fiscal 1997, 1996 and 1995, 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; commencing in fiscal 1996, the contributions of employees of certain subsidiaries were partially matched by the Company, amounting to $554,000 and $499,000 in fiscal 1997 and 1996, respectively.
b. Pension Plans - A subsidiary of the Company has two pension plans, one of which is inactive, covering its union employees. The pension plans are noncontributory defined benefit plans. The Company's funding policy is to contribute annually the amounts necessary to satisfy applicable funding standards.
In accordance with SFAS No. 87, the Company records its deferred pension liability related to its two defined benefit pension plans, which amounted to $1,134,000 and $1,417,000 at March 2, 1997 and March 3, 1996, respectively. The effect on the Company's consolidated financial statements in recording the liability was to recognize an asset (included in other assets) of $284,000 and $416,000 at March 2, 1997 and March 3, 1996, respectively, and to record a corresponding reduction of stockholders' equity of $850,000 and $1,001,000 at those same dates.
Net pension cost includes the following components:
Fiscal Year
1997 1996 1995
Service cost--benefits earned
during the period $ 50,000 $ 51,000 $ 65,000
Interest cost on projected
benefit obligation 289,000 299,000 279,000
Return on plan assets--actual (155,000) (400,000) (24,000)
Net amortization and deferral 35,000 354,000 9,000
Effect of curtailment 75,000 - -
Net periodic pension cost $294,000 $304,000 $329,000
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The funded status of the pension plans follows:
March 2, March 3,
1997 1996
Accumulated benefit obligation
(including vested benefit
obligation of $3,893,000
and $4,028,000, respectively) $3,931,000 $4,043,000
Projected benefit obligation $3,931,000 $4,043,000
Plan assets at fair value 2,937,000 2,616,000
Excess of projected benefit obligation
over plan assets 994,000 1,427,000
Unrecognized net loss (850,000) (1,001,000)
Unrecognized prior service cost (135,000) (237,000)
Unrecognized initial net obligation
being amortized over 15 years (149,000) (179,000)
Accrued pension (asset) liability $ (140,000) $ 10,000
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The projected benefit obligation was determined using an assumed discount rate of 7.75% and 7.5% for fiscal 1997 and 1996, respectively, and the assumed long-term rate of return on plan assets was 8% for both fiscal years. Projected wage increases are not applicable as benefits pursuant to the plans are based upon years of service without regard to levels of compensation.
At March 2, 1997, plan assets were invested in U.S. government securities, corporate debt securities, mutual funds and money market funds.
11. COMMITMENTS AND CONTINGENCIES
a. Lease Commitments - The Company conducts certain of its operations from 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 2005. 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 noncancelable operating leases have the following payment schedule:
Fiscal Year Amount
1998 $2,079,000
1999 1,592,000
2000 1,370,000
2001 1,081,000
2002 905,000
Thereafter 2,817,000
$9,844,000
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Rental expense, inclusive of real estate taxes and other costs, amounted to $2,620,000, $2,259,000 and $2,226,000 for fiscal 1997, 1996 and 1995, respectively.
b. Environmental Contingencies - The Company and certain of its subsid- iaries have been named by the Environmental Protection Agency (the "EPA") or a comparable state agency under the Comprehensive Environ- mental 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 three other sites, and has received requests from the EPA under the Superfund Act for information with respect to its involvement at two 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 environmental 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, 35% of such costs associated with one 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 $0.2 million during each of the 1997, 1996 and 1995 fiscal years. At March 2, 1997, the recorded liability in other liabilities for environmental matters was $1.2 million.
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. Management believes 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 matters could have a significant negative impact on the Company's consolidated financial results for a particular reporting period.
12. BUSINESS SEGMENTS
The Company has two major business segments: electronic materials and engineered materials and plumbing hardware. The Company's electronic materials products are marketed primarily to major independent printed circuit board fabricators and to large electronic original equipment manufacturers ("OEMs") that are located throughout North America, Europe and Asia. The Company's engineered materials and plumbing hardware customers, the majority of which are located in the United States, include OEMs, independent firms and distributors in the electronics, aerospace, industrial and plumbing industries.
Financial information concerning the Company's business segments follows (in thousands):
Fiscal Year
1997 1996 1995
Sales to unaffiliated customers:
Electronic materials $291,146 $274,903 $218,288
Engineered materials and
plumbing hardware 43,344 38,063 34,734
Net sales $334,490 $312,966 $253,022
Operating profit(1):
Electronic materials $ 25,298 $ 37,699 $ 28,710
Engineered materials and
plumbing hardware 3,026 1,466 1,226
Total operating profit 28,324 39,165 29,936
General corporate expense (3,572) (4,090) (3,826)
Interest and other income, net 7,653 2,285 1,822
Interest expense (5,508) (96) (431)
Total other income 2,145 2,189 1,391
Earnings before income taxes $ 26,897 $ 37,264 $ 27,501
Identifiable assets(2):
Electronic materials $153,653 $146,549 $104,478
Engineered materials and
plumbing hardware 14,111 13,260 12,588
167,764 159,809 117,066
Corporate assets 140,098 139,166 44,985
Total assets $307,862 $298,975 $162,051
Depreciation and amortization:
Electronic materials $ 10,789 $ 9,013 $ 8,133
Engineered materials and
plumbing hardware 774 813 793
11,563 9,826 8,926
Corporate depreciation 21 23 25
Total depreciation and
amortization $ 11,584 $ 9,849 $ 8,951
Capital expenditures:
Electronic materials $ 18,030 $ 23,852 $ 16,302
Engineered materials and
plumbing hardware 795 689 1,472
18,825 24,541 17,774
Corporate capital expenditures 26 21 30
Total capital expenditures $ 18,851 $ 24,562 $ 17,804
(1) Operating profit is comprised of total operating revenues, less
costs and expenses other than interest expense, general corporate
expense and income taxes.
(2) Identifiable assets consist of those assets which are used by the
segments. Corporate identifiable assets consist primarily of cash,
cash equivalents and marketable securities.
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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
1997 1996 1995
Sales:
North America $235,773 $221,975 $191,652
Europe 48,421 47,368 34,540
Asia 50,296 43,623 26,830
$334,490 $312,966 $253,022
Operating income:
North America $ 21,550 $ 33,206 $ 28,366
Rest of World 6,774 5,959 1,570
$ 28,324 $ 39,165 $ 29,936
Identifiable assets:
North America $245,596 $241,191 $118,076
Europe 33,751 31,291 24,526
Asia 28,515 26,493 19,449
$307,862 $298,975 $162,051
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13. CUSTOMER AND SUPPLIER CONCENTRATIONS
a. Customers - Sales to Delco Electronics Corporation, a subsidiary of General Motors Corp., were 17.3%, 17.1% and 21.8% of the Company's consolidated sales for fiscal 1997, 1996 and 1995, respectively. The Company believes its relations with Delco Electronics to be very satisfactory and further believes Delco Electronics will continue to make significant purchases in the immediate future. Although the Company's electronic materials segment is not dependent on this single customer, the loss of this customer could have a material adverse effect on the business of this segment.
Furthermore, while no other customer accounts for 10% or more of the total sales of the Company in fiscal 1997 and the Company is not dependent on any other single customer, the loss of a major customer or of a group of customers within each significant business segment could have a material adverse effect on the Company's business.
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 the aforementioned 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 electronic materials segment's business. Furthermore, substitutes for the aforesaid materials are not readily available and an inability to obtain essential materials, if prolonged, could materially adversely affect the business of the electronic materials segment.
14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
[CAPTION]
Quarter
First Second Third Fourth
(In thousands, except per share amounts)
Fiscal 1997:
Net sales $75,406 $81,974 $88,972 $88,138
Gross profit 11,832 14,854 15,385 17,047
Net earnings 3,125 4,681 4,888 5,865
Earnings per share:
Primary $.26 $.40 $.43 $.51
Fully diluted $.26 $.40 $.42 $.49
Weighted average common and
common equivalent shares
outstanding:
Primary 11,829 11,590 11,444 11,477
Fully diluted 11,829 13,960 13,835 13,849
Fiscal 1996:
Net sales $75,412 $69,937 $81,866 $85,751
Gross profit 17,717 15,209 18,397 18,988
Net earnings 6,024 5,366 6,467 7,041
Earnings per share:
Primary $.51 $.45 $.55 $.59
Fully diluted $.51 $.45 $.55 $.59
Weighted average common and
common equivalent shares
outstanding:
Primary 11,708 11,801 11,857 11,881
Fully diluted 11,708 11,829 11,857 12,002
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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.
*******
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 1997 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 1997 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 1997 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 1997 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.
PART IV
Item 14. Exhibits, Financial Statement Page
Schedules, and Reports on Form 8-K.
(a) Documents filed as a part of this report
(1) Financial Statements:
The following Consolidated Financial
Statements of the Company are
included in Part II, Item 8:
Report of Ernst & Young LLP,
independent auditors 24
Balance sheets 25
Statements of earnings 26
Statements of stockholders' equity 27
Statements of cash flows 28
Notes to consolidated financial
statements (1-14) 29
(2) Financial Statement Schedules:
Schedule II - Valuation and qualifying
accounts 51
|
All other schedules have been omitted because they are inapplicable or not required, or the information is included elsewhere in the financial statements or notes thereto.
(3)Exhibits:
Exhibit
Number Description
3.01 Restated Certificate of Incorporation, as amended (Reference is
made to Exhibit 3.01 of the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended August 27, 1995, Commission
File No. 1-4415, which is incorporated herein by reference.)
3.02 By-Laws, as amended (Reference is made to Exhibit 3(i) of the
Company's Current Report on Form 8-K dated January 23, 1996,
Commission File No. 1-4415, which is incorporated herein by
reference.)
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 to the Company's Registration Statement on Form 8-A
filed on August 10, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
4.02 Form of Indenture, dated as of February 1, 1996, between the
Company and The Chase Manhattan Bank, N.A., as Trustee, relating
to the Company's 5.5% Convertible Subordinated Notes due 2006
(Reference is made to Exhibit 1.02 to Amendment No. 1 to the
Company's Form S-3 Registration Statement, Registration No. 333-
00213, as filed with the Securities and Exchange Commission on
February 1, 1996, which is incorporated herein by reference.)
Information concerning Registrant's long-term debt is set forth
in Note 6 of the Notes to Consolidated Financial Statements
included in Item 8 of this Report. Other than the Indenture
filed as Exhibit 4.02 hereto, no instrument defining the rights
of holders of such long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the consoli-
dated assets of Registrant and its subsidiaries; therefore, in
accordance with paragraph (iii) of Item 4 of Item 601(b) of
Regulation S-K, the other instruments defining the rights of
holders of long-term debt are not filed herewith. Registrant
hereby agrees to furnish a copy of any such other instruments to
the Securities and Exchange Commission upon request.
10.01 Lease dated December 12, 1989 regarding real property located at
1100 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease. (Reference is made to Exhibit 10.01 of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.02 Lease dated December 12, 1989 regarding real property located at
1107 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease. (Reference is made to Exhibit 10.02 of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.03 Lease Agreement dated August 16, 1983 and Exhibit C, First
Addendum to Lease, regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California between Nelco
Products, Inc. and TCLW/Fullerton. (Reference is made to
Exhibit 10.03 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.03(a) Second Addendum to Lease dated January 26, 1987 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real prop-
erty located at 1421 E. Orangethorpe Avenue, Fullerton, Califor-
nia. (Reference is made to Exhibit 10.03(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 between Nelco Products,
Inc. and TCLW/Fullerton to Lease Agreement dated August 16, 1983
(see Exhibit 10.03 hereto) regarding real property located at
1411, 1421 and 1431 E. Orangethorpe Avenue, Fullerton,
California.
10.03(c) Fifth Addendum to Lease dated July 5, 1995 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (See Exhibit 10.03 hereto) regarding real
property located at 1411 E. Orangethorpe Avenue, Fullerton,
California. (Reference is made to Exhibit 10.03(c) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.04 Lease dated February 15, 1983 between Nelco Products, Inc. and
CMD Southwest, Inc. regarding real property located at 1130 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.04 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.04(a) First Amendment to Lease dated December 10, 1992 to Lease dated
February 15, 1983 (see Exhibit 10.04 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc., and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.,
regarding real property located at 1130 West Geneva Drive,
Tempe, Arizona. (Reference is made to Exhibit 10.04(a) 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.)
10.05 Lease Agreement, dated May 26, 1982 between Nelco Products Pte.
Ltd. (lease was originally entered into by Kiln Technique (Pri-
vate) Limited, which subsequently assigned this lease to Nelco
Products Pte. Ltd.) and the Jurong Town Corporation regarding
real property located at 4 Gul Crescent, Jurong, Singapore.
(Reference is made to Exhibit 10.05 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.)
Exhibit
Number Description
10.05(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 10.05 hereto) between
Kiln Technique (Private) Limited and the Jurong Town Corporation
regarding real property located at 4 Gul Crescent, Jurong,
Singapore. (Reference is made to Exhibit 10.05(a) of the Com-
pany's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is incorpo-
rated herein by reference.)
10.06(a) Amended and Restated 1982 Stock Option Plan of the Company.
(Reference is made to Exhibit 10.06(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 1, 1992,
Commission File No. 1-4415, which exhibit is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.06(b) 1992 Stock Option Plan of the Company. (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, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.06(c) First Amendment to 1992 Stock Option Plan of the Company (see
Exhibit 10.06(b) hereto). (This exhibit is a management
contract or compensatory plan or arrangement.)
10.07 Amended and Restated Employment Agreement dated February 28,
1994 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 February 27, 1994, Commission File No. 1-
4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Amendment No. 1 dated March 1, 1995 to the Amended and Restated
Employment Agreement dated February 28, 1994 (see Exhibit 10.07
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 February 26, 1995, Commission File No.
1-4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(b) Amendment No. 2 dated December 5, 1996 to the Amended and
Restated Employment Agreement dated February 28, 1994 (see
Exhibit 10.07 hereto) between the Company and Jerry Shore.
(This exhibit is a management contract or compensatory plan or
arrangement.)
10.08 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. (Reference is made
to Exhibit 10.08 of the Company's Annual Report on form 10-K for
the fiscal year ended February 26, 1995, Commission File No. 1-
4415, which is incorporated herein by reference.)
|
Exhibit
Number Description
10.08(a) Amendment to Lease dated December 21, 1992 to Lease dated April
15, 1988 (see Exhibit 10.08 hereto) between FiberCote Indus-
tries, Inc. and Geoffrey Etherington II regarding real property
located at 172 East Aurora Street, Waterbury, Connecticut.
(Reference is made to Exhibit 10.08(a) 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.)
10.09 Lease dated March 14, 1988 between Nelco Products, Inc. and CMD
Southwest One regarding real property located at 1117 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.09
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(a) First Amendment to Lease dated December 10, 1992 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona, and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.
(Reference is made to Exhibit 10.09(a) 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.)
10.09(b) Second Amendment to Lease dated March 24, 1995 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(b) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.09(c) Third Amendment to Lease dated January 18, 1996 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(c) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.10 Lease dated October 1, 1991 between Zin-Plas Corporation and
Philip L. Johnson d/b/a Johnson Development Company regarding
real property located at 25 North Park, N.E., Comstock Park,
Michigan. (Reference is made to Exhibit 10.10 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.) .
10.10(a) Letter dated October 17, 1996 from Zin-Plas Corporation to
Philip L. Johnson extending the Lease dated October 1, 1991 (see
Exhibit 10.10 hereto) between Zin-Plas Corporation and Philip L.
Johnson d/b/a Johnson Development Company regarding real
property located at 25 North Park, N.E., Comstock Park,
Michigan.
10.11 Lease dated August 31, 1989 between Nelco Technology, Inc. and
Cemanudi Associates regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.11 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.11(a) First Amendment to Lease dated October 21, 1994 to Lease dated
August 31, 1989 (see Exhibit 10.11 hereto) between Nelco
Technology, Inc. and Cemanudi Associates regarding real property
located at 1104 West Geneva Drive, Tempe, Arizona. (Reference
is made to Exhibit 10.11(a) of the Company's Annual Report on
Form 10-K for the fiscal year ended February 26, 1995,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.12 Lease dated March 24, 1995 between Nelco Technology, Inc. and
CMD Southwest Inc. regarding real property located at 1131 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.12
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.12(a) First Amendment to Lease dated January 18, 1996 to Lease dated
March 24, 1995 (see Exhibit 10.12 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc. regarding real property
located at 1131 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.12(a) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.13 Lease dated December 12, 1990 between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.13(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 10.13 hereto) between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 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.)
10.14(a) Extension of Lease dated May 30, 1986 to Indenture of Lease
dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(a) 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.)
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(b) 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.)
Exhibit
Number Description
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts. (Reference is made to Exhibit
10.14(c) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 27, 1994, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(d) 1995 Extension to Amendment to Second Extension of Lease dated
October 19, 1995 to Indenture of Lease dated November 1, 1984
(see Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(d) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(e) Letter dated July 31, 1996 from Dielectric Polymers, Inc. to
Holyoke Supply Company, Inc. exercising its option to extend the
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts.
10.14(f) 1997 Extension to Amendment to Second Extension of Lease dated
March 26, 1997 to Indenture of Lease dated November 1, 1984 (see
Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts.
10.15 Lease dated January 8, 1992 between Nelco Technology, Inc. and
CMD Southwest, Inc. regarding real property located at 1135 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.15 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 1, 1992, Commission File No. 1-4415, which
exhibit is incorporated herein by reference.)
10.15(a) First Amendment dated July 8, 1996 to Lease dated January 8,
1992 (see Exhibit 10.15 hereto) between Nelco Technology, Inc.
and CMD Southwest, Inc. regarding real property located at 1135
West Geneva Drive, Tempe, Arizona.
10.16 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.)
10.16(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.
10.17 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. (Reference is made to Exhibit 10.19 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.17(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 10.17 hereto) for the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.17(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 10.17 hereto) regarding the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.18 Employment Agreement, dated March 18, 1996, between the Company
and E. Phillip Smoot. (Reference is made to Exhibit 10.20 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference. This exhibit is a management
contract or compensatory plan or arrangement.)
11.01 Computation of fully-diluted earnings per share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the fiscal quarter
ended March 2, 1997.
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 28, 1997 PARK ELECTROCHEMICAL CORP.
By:/s/Brian E. Shore
Brian E. Shore,
Chief Executive Officer
|
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
/s/Brian E. Shore Chief Executive Officer,
Brian E. Shore President and Director
(principal executive and May 28, 1997
financial officer)
/s/Murray O. Stamer Corporate Controller
Murray O. Stamer (principal accounting
officer) May 28, 1997
/s/E. Phillip Smoot Director
E. Phillip Smoot May 28, 1997
/s/Jerry Shore Chairman of the Board and
Jerry Shore Director May 28, 1997
/s/Anthony Chiesa Director
Anthony Chiesa May 28, 1997
/s/Lloyd Frank Director
Lloyd Frank May 28, 1997
/s/Norman M. Schneider Director
Norman M. Schneider May 28, 1997
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Schedule II
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
Balance at Charged to Other Balance at
Beginning Cost and Accounts Translation End
Description of Period Expenses Written Off Adjustment of Period
(A)
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
52 weeks ended March 2, 1997 $1,857,000 $(306,000) $ 204,000 $ (9,000) $1,746,000
53 weeks ended March 3, 1996 $2,490,000 $(495,000) $(128,000) $(10,000) $1,857,000
52 weeks ended February 26, 1995 $2,673,000 $ (44,000) $(186,000) $ 47,000 $2,490,000
(A) Uncollectible accounts, net of recoveries.
|
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
filed with
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 2, 1997
PARK ELECTROCHEMICAL CORP.
Exhibit
Number Description
3.01 Restated Certificate of Incorporation, as amended (Reference is
made to Exhibit 3.01 of the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended August 27, 1995, Commission
File No. 1-4415, which is incorporated herein by reference.)
3.02 By-Laws, as amended (Reference is made to Exhibit 3(i) of the
Company's Current Report on Form 8-K dated January 23, 1996,
Commission File No. 1-4415, which is incorporated herein by
reference.)
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 to the Company's Registration Statement on Form 8-A
filed on August 10, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
4.02 Form of Indenture, dated as of February 1, 1996, between the
Company and The Chase Manhattan Bank, N.A., as Trustee, relating
to the Company's 5.5% Convertible Subordinated Notes due 2006
(Reference is made to Exhibit 1.02 to Amendment No. 1 to the
Company's Form S-3 Registration Statement, Registration No. 333-
00213, as filed with the Securities and Exchange Commission on
February 1, 1996, which is incorporated herein by reference.)
Information concerning Registrant's long-term debt is set forth
in Note 6 of the Notes to Consolidated Financial Statements
included in Item 8 of this Report. Other than the Indenture
filed as Exhibit 4.02 hereto, no instrument defining the rights
of holders of such long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the consoli-
dated assets of Registrant and its subsidiaries; therefore, in
accordance with paragraph (iii) of Item 4 of Item 601(b) of
Regulation S-K, the other instruments defining the rights of
holders of long-term debt are not filed herewith. Registrant
hereby agrees to furnish a copy of any such other instruments to
the Securities and Exchange Commission upon request.
10.01 Lease dated December 12, 1989 regarding real property located at
1100 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease. (Reference is made to Exhibit 10.01 of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.02 Lease dated December 12, 1989 regarding real property located at
1107 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising its option to
extend such Lease. (Reference is made to Exhibit 10.02 of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
|
Exhibit
Number Description
10.03 Lease Agreement dated August 16, 1983 and Exhibit C, First
Addendum to Lease, regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California between Nelco
Products, Inc. and TCLW/Fullerton. (Reference is made to
Exhibit 10.03 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.03(a) Second Addendum to Lease dated January 26, 1987 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real prop-
erty located at 1421 E. Orangethorpe Avenue, Fullerton, Califor-
nia. (Reference is made to Exhibit 10.03(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 between Nelco Products,
Inc. and TCLW/Fullerton to Lease Agreement dated August 16, 1983
(see Exhibit 10.03 hereto) regarding real property located at
1411, 1421 and 1431 E. Orangethorpe Avenue, Fullerton,
California.
10.03(c) Fifth Addendum to Lease dated July 5, 1995 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (See Exhibit 10.03 hereto) regarding real
property located at 1411 E. Orangethorpe Avenue, Fullerton,
California. (Reference is made to Exhibit 10.03(c) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 3, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.04 Lease dated February 15, 1983 between Nelco Products, Inc. and
CMD Southwest, Inc. regarding real property located at 1130 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.04 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.04(a) First Amendment to Lease dated December 10, 1992 to Lease dated
February 15, 1983 (see Exhibit 10.04 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc., and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.,
regarding real property located at 1130 West Geneva Drive,
Tempe, Arizona. (Reference is made to Exhibit 10.04(a) 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.)
10.05 Lease Agreement, dated May 26, 1982 between Nelco Products Pte.
Ltd. (lease was originally entered into by Kiln Technique (Pri-
vate) Limited, which subsequently assigned this lease to Nelco
Products Pte. Ltd.) and the Jurong Town Corporation regarding
real property located at 4 Gul Crescent, Jurong, Singapore.
(Reference is made to Exhibit 10.05 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.)
Exhibit
Number Description
10.05(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 10.05 hereto) between
Kiln Technique (Private) Limited and the Jurong Town Corporation
regarding real property located at 4 Gul Crescent, Jurong,
Singapore. (Reference is made to Exhibit 10.05(a) of the Com-
pany's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is incorpo-
rated herein by reference.)
10.06(a) Amended and Restated 1982 Stock Option Plan of the Company.
(Reference is made to Exhibit 10.06(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 1, 1992,
Commission File No. 1-4415, which exhibit is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.06(b) 1992 Stock Option Plan of the Company. (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, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.06(c) First Amendment to 1992 Stock Option Plan of the Company (see
Exhibit 10.06(b) hereto). (This exhibit is a management
contract or compensatory plan or arrangement.)
10.07 Amended and Restated Employment Agreement dated February 28,
1994 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 February 27, 1994, Commission File No. 1-
4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Amendment No. 1 dated March 1, 1995 to the Amended and Restated
Employment Agreement dated February 28, 1994 (see Exhibit 10.07
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 February 26, 1995, Commission File No.
1-4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(b) Amendment No. 2 dated December 5, 1996 to the Amended and
Restated Employment Agreement dated February 28, 1994 (see
Exhibit 10.07 hereto) between the Company and Jerry Shore.
(This exhibit is a management contract or compensatory plan or
arrangement.)
10.08 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. (Reference is made
to Exhibit 10.08 of the Company's Annual Report on form 10-K for
the fiscal year ended February 26, 1995, Commission File No. 1-
4415, which is incorporated herein by reference.)
|
Exhibit
Number Description
10.08(a) Amendment to Lease dated December 21, 1992 to Lease dated April
15, 1988 (see Exhibit 10.08 hereto) between FiberCote Indus-
tries, Inc. and Geoffrey Etherington II regarding real property
located at 172 East Aurora Street, Waterbury, Connecticut.
(Reference is made to Exhibit 10.08(a) 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.)
10.09 Lease dated March 14, 1988 between Nelco Products, Inc. and CMD
Southwest One regarding real property located at 1117 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.09
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(a) First Amendment to Lease dated December 10, 1992 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona, and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.
(Reference is made to Exhibit 10.09(a) 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.)
10.09(b) Second Amendment to Lease dated March 24, 1995 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(b) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.09(c) Third Amendment to Lease dated January 18, 1996 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(c) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.10 Lease dated October 1, 1991 between Zin-Plas Corporation and
Philip L. Johnson d/b/a Johnson Development Company regarding
real property located at 25 North Park, N.E., Comstock Park,
Michigan. (Reference is made to Exhibit 10.10 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.) .
10.10(a) Letter dated October 17, 1996 from Zin-Plas Corporation to
Philip L. Johnson extending the Lease dated October 1, 1991 (see
Exhibit 10.10 hereto) between Zin-Plas Corporation and Philip L.
Johnson d/b/a Johnson Development Company regarding real
property located at 25 North Park, N.E., Comstock Park,
Michigan.
10.11 Lease dated August 31, 1989 between Nelco Technology, Inc. and
Cemanudi Associates regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.11 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.11(a) First Amendment to Lease dated October 21, 1994 to Lease dated
August 31, 1989 (see Exhibit 10.11 hereto) between Nelco
Technology, Inc. and Cemanudi Associates regarding real property
located at 1104 West Geneva Drive, Tempe, Arizona. (Reference
is made to Exhibit 10.11(a) of the Company's Annual Report on
Form 10-K for the fiscal year ended February 26, 1995,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.12 Lease dated March 24, 1995 between Nelco Technology, Inc. and
CMD Southwest Inc. regarding real property located at 1131 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.12
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.12(a) First Amendment to Lease dated January 18, 1996 to Lease dated
March 24, 1995 (see Exhibit 10.12 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc. regarding real property
located at 1131 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.12(a) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.13 Lease dated December 12, 1990 between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.13(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 10.13 hereto) between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 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.)
10.14(a) Extension of Lease dated May 30, 1986 to Indenture of Lease
dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(a) 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.)
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(b) 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.)
Exhibit
Number Description
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts. (Reference is made to Exhibit
10.14(c) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 27, 1994, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(d) 1995 Extension to Amendment to Second Extension of Lease dated
October 19, 1995 to Indenture of Lease dated November 1, 1984
(see Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(d) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(e) Letter dated July 31, 1996 from Dielectric Polymers, Inc. to
Holyoke Supply Company, Inc. exercising its option to extend the
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts.
10.14(f) 1997 Extension to Amendment to Second Extension of Lease dated
March 26, 1997 to Indenture of Lease dated November 1, 1984 (see
Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts.
10.15 Lease dated January 8, 1992 between Nelco Technology, Inc. and
CMD Southwest, Inc. regarding real property located at 1135 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.15 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 1, 1992, Commission File No. 1-4415, which
exhibit is incorporated herein by reference.)
10.15(a) First Amendment dated July 8, 1996 to Lease dated January 8,
1992 (see Exhibit 10.15 hereto) between Nelco Technology, Inc.
and CMD Southwest, Inc. regarding real property located at 1135
West Geneva Drive, Tempe, Arizona.
10.16 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.)
10.16(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.
10.17 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. (Reference is made to Exhibit 10.19 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.17(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 10.17 hereto) for the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.17(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 10.17 hereto) regarding the real property located at 15
Governor Drive in the Stewart International Airport Industrial
Park, New Windsor, New York. (Reference is made to Exhibit
10.19(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.18 Employment Agreement, dated March 18, 1996, between the Company
and E. Phillip Smoot. (Reference is made to Exhibit 10.20 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference. This exhibit is a management
contract or compensatory plan or arrangement.)
11.01 Computation of fully-diluted earnings per share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule
|
EXHIBIT 10.03(b)
THIRD ADDENDUM TO LEASE
This Third 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 and shall amend the second Addendum to Lease and the Addendum to Lease known as Exhibit "E" dated January 26, 1987.
For purposes of this Addendum the existing leased premises at 1411 and 1421 E. Orangethorpe Avenue shall be called "1411" and the additional leased premises at 1431 E. Orangethorpe Avenue shall be called !1431". The space at "1411" and "1431", together shall be called "Premises".
64. Demised Premises. Commencing April 1, 1991 Tenant shall increase its current space of 57,702 square feet ("1411") to include the adjacent space of approximately 14,160 square feet ("1431"), as further outlined in Exhibit "G" attached.
65. Extension of 1411 E. Orangethorpe Avenue Lease. In consideration for the terms and conditions of the leasing of "1431", Tenant shall execute the attached Fourth Addendum to Lease thereby exercising its option to extend the existing Lease at 1411 E. Orangethorpe Avenue.
66. Lease Term. The Lease term with respect to "1431" shall be for seven
(7) years and six (6) months commencing on April 1, 1991 and ending on
September 30, 1998.
67. Rent Schedule. The rent with respect to "1431" shall be at the same rate per square feet as is paid on the 57,702 square feet at "1411". For example, if the monthly rent paid at "1411", after the April 1, 1991 (Adjustment Date) increase was increased to $.42 per square feet ($21,776.22 x 1.1125/57,702 square feet) the monthly rent for "1431" would be $5,945.04. The final rental rate will depend on the CPI rate used on the Adjustment Date. This example uses an annual rate of 4.5%.
The rental rate on any Option to Extend will be increased pro rata to recognize the additional square feet leased at "1431".
68. Option to Extend. While this Lease is in full force and effect Tenant shall have the option to extend the term for the Lease on the entire Premises for two further terms of sixty (60) months provided that Tenant is not in default of any of the terms, covenants, and conditions of Lease.
69. Tenant's Proportionate Share. Tenant's Proportionate Share as
referenced in Paragraph 60 of the Lease shall be increased to 75.88%:
(Total building area = 94,702 square feet; leased premises "1431" and
"1411" equal 71,862 square feet).
70. Tenant Improvements. Tenant shall be leasing the premises at "1431" in an "as is" condition with the exception that Landlord shall provide an opening in the demising wall separating "1411" from "1431". As shown on Exhibit G to Third Addendum to Lease.
The Lease term shall commence and all Tenant's obligations under this Lease, including payment of rent, shall commence on April 1, 1991, regardless of the status of the above work to be performed by Landlord. Landlord agrees to diligently pursue and complete such work.
67A. Regardless of anything contained herein to the contrary, the Rent with respect to "1431" for April 1991 and May 1991 shall be abated. The total Rent Concession offered to Tenant is approximately $11,890.00.
71. Parking. Tenant shall be granted an additional eighteen (18) parking spaces, in common.
72. Copies of notices referred to in Paragraph 43(d) of the Lease Agreement shall be sent to:
Park Electrochemical Corporation
5 Dakota Drive
Lake Success, New York 11042
Attention: General Counsel
All other terms and conditions of the Lease shall remain in full force and effect for the leased premises at "1431".
LANDLORD:
TCLW/FULLERTON,
a California general partnership
By:
Its:
Date:
TENANT:
NELCO PRODUCTS, INC.
a Delaware corporation
By:
Its:
Date:
FOURTH ADDENDUM TO LEASE
This Fourth Addendum to Lease 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 (including 1421 and 1431) E.
Orangethorpe Avenue, Fullerton, California.
1. Extension Term: The Lease is hereby renewed and extended for a further term of sixty (60) months to commence on the 1st day of October, 1993 and to end of the 30th day of September, 1998, on the condition that Landlord and Tenant comply with all the provisions of the covenants and agreements contained in the Lease.
2. Monthly Rental: A Consumer Price Index adjustment shall be substituted for the "fair market rental value" rent adjustment in Paragraph 51(b).
2.1 The method for calculating the rent for the option period is described in Paragraphs 2.2 and 2.3.
2.2 The index for computing the rent for the period beginning October 1, 1993 (Adjustment Date) shall be the average of the following two indices published by the United States Department of Labor, Bureau of Labor Statistics (1982-84 - 100): (I) the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Los Angeles-Long Beach-Anaheim Metropolitan Area (hereinafter referred to as "CPI-W"), and (ii) the Consumer Price Index for All Urban Consumers for the Los Angeles-Long Beach-Anaheim Metropolitan Area (hereinafter referred to as "CPI-U"), which are in effect on April 1, 1991 ("Beginning Index"). The average of the CPI-W and CPI-U published most immediately preceding the Adjustment Date ("Extension Index") shall be compared with the Beginning index. 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 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 the Basic Rent provided herein. Should the parties not be able to secure the appropriate conversion or adjustment, they shall agree on some other index serving the same purpose to adjust the Basic Rent as provided herein.
2.3 The Rent payable during the 30 month period following the Adjustment Date shall be the amount equal to the Rent payable during the previous thirty (30) month period of the Term multiplied by a fraction, the numerator of which is the Extension Index and the denominator of which is the Beginning Index, provided however that the percentage increase described above shall average not less than 3% nor more than 8% per year, and further that the rent for the adjusted period shall never be less than the rent for the prior period.
2.4 The monthly rental set on October 1, 1993 shall become the "Base Date" referenced in Paragraph 50 and shall be the basis for future adjustments as described in Paragraphs 50 and 51.
The parties hereto have signed this extension agreement this day of , 1990.
LANDLORD:
TCLW/FULLERTON,
a California general partnership
By:
Its: General Partner
Date:
TENANT:
NELCO PRODUCTS, INC.
a Delaware corporation
By:
Its:
Date:
[exh1003b]
EXHIBIT 10.06(c)
FIRST AMENDMENT TO
PARK ELECTROCHEMICAL CORP.
1992 STOCK OPTION PLAN
The Park Electrochemical Corp. 1992 Stock Option Plan (the "Plan") is hereby amended as follows:
1. The first sentence of Paragraph 2 of the Plan is hereby amended and restated in its entirety to read as follows:
"Options may be granted under the Plan to purchase in the aggregate not more than 1,150,000 shares of Common Stock, par value $.10 per share, of the Company ("Common Stock"), which shares may, in the discretion of the Board of Directors, consist either in whole or in part of authorized but unissued shares of Common Stock or shares of Common Stock held in the treasury of the Company."
2. Paragraph 4 is hereby amended by adding to the end thereof the sentence to read as follows:
"Commencing in the Company's fiscal year ending March 2, 1997, no Participant may, in any such fiscal year, receive Options relating to Shares which in the aggregate exceed the greater of (i) 50% of the total number of Shares granted pursuant to the Plan in any such year or (ii) 100,000 Shares."
3. Ratification. Except as expressly set forth in this First Amendment to the Plan, the Plan is hereby ratified and confirmed without modification.
4. Effective Date. The effective date of this Amendment to the Plan shall be May 14, 1996.
[EXH1006c]
EXHIBIT 10.07(b)
THIS AMENDMENT NO. 2, made and entered into as of the 5th day of December 1996, 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 (the "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"), and an Amendment No. 1 thereto, dated as of March 1, 1995 ("Amendment No. 1"), 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 and Amendment No. 1 as hereinafter set forth;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Paragraph (a) on Page 2 of Amendment No. 1 is hereby deleted in its entirety, and the following is inserted in lieu thereof:
"(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, (3) the date which
is 30 days after the date of Shore's "disability" (as defined in
the Original Agreement) or (4) the date which is 10 days after
the date of the Company's receipt of Shore's written request for
the payment to be made by the Company to Shore pursuant to
Section 1 of Amendment No. 1."
2. Entire Agreement. This Amendment and the Original Agreement and Amendment No. 1 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.
3. 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.
4. 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.
5. 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.
6. 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:
Brian E. Shore
President and Chief Executive Officer
By:
Jerry Shore
APPROVED:
EXECUTIVE COMPENSATION COMMITTEE
Lloyd Frank
Norman Schneider
Anthony Chiesa
[exh1007b]
EXHIBIT 10.10(a)
ZIN-PLAS
P.O. BOX Q GRAND RAPIDS, MICHIGAN 49501 616/784-6100
A Subsidiary of Park Electrochemical Corporation
Gerald W. McGrath
President
October 17, 1996
Mr. Philip L. Johnson
Phil Johnson Sales and Associates
30 North Park Street NW
P.O. Box 216
Comstock Park, Michigan 49321-0216
Dear Phil:
This letter serves as an amendment to our original lease of October 1, 1991. Zin-Plas Corporation, is granted a one year extension commencing on January 1, 1997. The rate shall bear a 7% increase and reflect a monthly rental rate of $6635.00 per month.
All other terms and conditions of that lease shall remain in place.
Gerald W. McGrath Witness Zin-Plas Corporation
Witness
Philip L. Johnson Witness DBA Johnson Development
Witness
[Exh1010a]
EXHIBIT 10.13
STANDARD INDUSTRIAL LEASE - NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Parties. This Lease, dated, for reference purposes only, December 12, 1990, is made by and between NZ Properties, Inc., an Arizona Corporation (herein called "Lessor") and Neltec, Inc., a Delaware Corporation, a wholly owned subsidiary of Park Electrochemical Corporation (herein called "Lessor").
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 Maricopa State of Arizona commonly known as 1420 W. 12th Place, Tempe and described as an approximately 37,908 square foot building situated on approximately 116,310 square feet and as shows on Exhibit A attached hereto.
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 sixty-six (66) months commencing on December 1, 1990 and ending on May 31, 1996 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 terminate 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 $ (see Addendum to Lease, Paragraph 54), in advance, on the first day of each month of the term hereof. Lessee shall pay Lessor upon the execution hereof $8,718.84* as rent for June 1991 beginning June 1, 1991. All rental payments are subject to the additional payment of rental tax currently 6.5% *plus rental tax currently 6.5%.
Rent for any period during the term hereof which is for less than one month shall be a pro rate 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 persons or at such other places as Lessor may designate in writing.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof $11,372.40 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 Lessor may suffer thereby. If Lessor so uses or applies all or 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 General offices and manufacturing of electronic circuitry and materials and related products 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 give 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 at 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 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 loading 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 sole 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 it 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 Lessee's Obligations. Lessee shall keep in good order, condition and repair the Premises and every part thereof, structural and nonstructural, (whether or not such portion of the Premises requiring repair, 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 plumbing, heating, air conditioning, (Lessee shall procure and maintain, at Lessee's expense, an air conditioning system maintenance contract) ventilating, electrical, lighting facilities and equipment within the Premises, fixtues, walls (interior and exterior), foundations, ceiling, roofs (interior or exterior), floors, windows, doors, plate glass and skylights located within the Premises, and all landscaping, driveways, parking lots, fences and signs located on the premises and sidewalks and parkways adjacent to the premises - See Addendum to Lease, paragraph 57.
7.2 Surrender. 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 when 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 Lessee's trade fixtures, furnishings and equipment notwithstanding anything to the contrary other than as 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 Lessor's Rights. If Lessee fails to perform Lessee's obligations under this Paragraph 7, or under any other paragraph of this Lease, Lessor may at its option (but shall not be required to) enter upon the Premises after ten (10) days prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee's behalf and put the same in good order, condition and repair, and the cost thereof together with interest thereon at the maximum rate then allowable by law shall become due and payable as additional rental to Lessor together with Lessee's next rental installment.
7.4 Lessor's Obligations. Except for the obligations of lessor under Paragraph 6.2(a) (relating to Lessor's warranty), Paragraph 9 (relating to destruction of the Premises) and under Paragraph 14 (relating to condemnation of the Premises), it is intended by the parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises not the building located thereon nor the equipment therein, whether structural or non structural, all of which obligations are intended to be that of the Lessee under Paragraph 7.1 hereof. Lessee expressly waives the benefit of any statute now or hereinafter 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.
7.5 Alterations and Additions. See Addendum to Lease, Paragraph 57.
(a) Lessee shall not, without Lessor's prior written consent make any alterations, improvements, additions, or Utility Installations in, on or about the Premises, See Addendum to Lease, Paragraph 59, during the term of this Lease. In any event, whether or not in excess of $2,500 in cumultive 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 7.5 the term "Utility Installation" shall mean carpeting, window coverings, air lines, power panels, electrical distrivbution 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 liabilty 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. See Addendum to Lease, Paragraph 50.
(c) Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lesse at or for use in the Premises, which claims are or may be secured by any mechanics' or materialmen's lien against 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 reasonable attorneys fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so.
(d) Unless Lessor requires their removal, as set forth in Paragraph 7.5(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 7.5(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. See Addendum to Lease, Paragraph 61.
8. Insurance Indemnity. See Addendum to Lease, Paragraph 61.
8.1 Insuring Party. As used in this Paragraph 8, the term "insuring party" shall mean the party who has the obligation to obtain the Property Insurance required hereunder. The insuring party shall be designated in Paragraph 46 hereof. In the event Lessor is the insuring party, Lessor shall also maintain the liability insurance described in paragraph 8.2 hereof, in addition to, and not in lieu of, the insurance required to be maintained by Lessee under said paragraph 8.2, but lessor shall not be required to name Lessee as an additional insured on such policy. Whether the insuring party is the Lessor or the Lessee, Lessee shall, as additional rent for the Premises, pay the cost of all insurance required hereunder, except for that portion of the cost attributable to Lessor's liability insurance coverage in excess of $1,000,000 per occurrence. If lessor is the insuring party Lessee shall, within ten (10) days following demand by Lessor, reimburse Lessor for the cost of the insurance so obtained.
8.2 Liability Insurance. 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 Lessor and lessee against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be a combined single limit policy in an amount not less than $1,000,000 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.
8.3 Property Insurance.
(a) The insuring party 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, in the amount of the full replacement value thereof, as the same may exist from time to time, which replacement value is now $1,000,000.00, but in no event less than the total amount required by lenders having liens on the premises, against all perils included within the 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), and special extended perils ("all risk" as such term is used in the insurance industry). Said insurance shall provde for payment of loss thereunder to Lessor or to the holders of mortgages or deeds of trust on the premises. The insuring party shall, in addition, obtain and keep in force during the term of this lease a policy of 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. A stipulated value or agreed amount endoresement deleting the coinsurance provision of the policy shall be procured with said insurance as well as an automatic increase in insurance endorsement causing the increase in annual property insurance coverage by 2% per quarter. If the insuring party shall fail to procure and maintain said insurqnce the other party may, but shall not be required to, procure and maintain the same, but at the expense of Lessee. If such insurqance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence, and lessee shall be liable for such deductible amount.
(b) If the Premises are part of a larger building, or if the Premises are part of a larger building, or if the Premises are part of a group of buildings owned by Lessor which are adjacent to the Premises, then Lessee shall pay for any increase in the property insurance of such other building or buildings if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises.
(c) If the Lessor is the insuring party the Lessor will not insure Lessee's fixtures, equipment or tenant improvements unless the tenant improvements have become a part of the Premises under paragraph 7, hereof. But if Lessee is the insuring party the Lessee shall insure its fixtures, equipment and tenant improvements.
8.4 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". The insuring party shall deliver to the other party copies of policies of such insurance or certificates evidencing the existence and amounts of such insurnace with loss payable clauses as required by this paragraph 8. No such policy shall be cancellable or subject to reduction of coverage or other modification except after thirty (30) days' prior written notice to Lessor. If Lessee is the insurance party lessee shall, at lest thirty (30) days prior to the expiration of such policies, furnish Lessor with renewals or "binders" thereof, of 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. If Lessee does or permits to be done anything which shall increase the cost of the insurance policies referred to in Paragraph 3, then Lessee shall forthwith upon Lessor's demand reimburse Lessor for any additional premiums attributable to any act or omission or operation of Lessee causing such increase in the cost of insurance. If Lessor is the insuring party, and if the insurance policies maintained hereunder cover other improvements in addition to the Premises, Lessor shall deliver to Lessee a written statement setting forth the amount of any such insurance cost increase and showing in reasonable detail the manner in which it has been computed.
8.6 Indemnity. Lessee shall indemnify and hold harmless lessor from and against any and all claims arising from Lessee's use of the Premises, or from the conduct of lessee's business or from any activity, work or things done, permitted or suffered by Lessee in or about the Premises or elsewhere and shall further indemnify and hold harmless lessor from and against any and all claims arising from any breach or default in the performance of any obligation on Lessee's part to be performed under the terms of this Lease, or arising from any negligence of the Lessee, or any of lessee's agents, contractors, or employees, and from and against all costs, attorney's fees, expenses and liabilities incurred in the defense of any such calim or any action or proceeding brought thereon, and in case any action or proceeding be brought against Lessor by reason of any such consideration to Lessor, hereby assumes all risk of damage to property or injury to person, in, upon or about the Premises arising from any cause and Lessee hereby waives all claims in respect thereof against Lessor. See Addendum to Lease, Paragraph 57.
8.7 Exemption of lessor from Liability. lessee hereby agrees that Lessor shall not be liable for injury to Lessee's business or any loss of income therefrom or for damage to the goods, ware, merchandise or other property of Lessee. Lessee's employees, invitees, customers, or any other person in or about the Premises, nor shall Lessor be liable for injury to the person or Lessee, lessee's employees, agents or contractors, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether the said damage or injury results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to Lessee, Lessor shall not be liable for any damages arising from any act or neglect of any other tenant, if any, of the building in which the Premises are located. See Addendum to Lease, Paragraph 57.
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 then replacement cost of the Premises. "Premises BuildingPartial 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 then replacement cost of such building as a whole.
(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 then replacement cost of the Premises. "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 ten replacement cost of such building as a whole.
(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 Part. Damage-Insured 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 an Insured Loss and which falls into the classification of Premises Partial Damage or Premises Building Partial Damage, then Lessor shall, at Lessor's expense, repair such damage, but not lessee's fixtures, equipment or tenant improvements unless the same have become a part of the Premises pursuant to Paragraph 7.5 hereof as soon as reasonably possible and this Lease shall continue in full force and effect. Notwithstanding the above, if the Lessee is the insuring party, and if the insurance proceeds received by Lessor are not sufficient to effect such repair, Lessor shall give notice to Lessee of the amount required in addition to the insurance proceeds received to effect such repair. Lessee shall contribute the required amount to Lessor within ten days after Lessee has received notice from Lessor of the shortage in the insurance. When Lessee shall contribute such amount to Lessor, Lessor shall make such repairs as soon as reasonably possible and this Lease shall continue in full force and effect. Lessee shall in no event have any right to reimbusement for any such amounts so contributed.
9.3 Partial Damage-Uninsured 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 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) (to the extent caused by the negligent or willful acts of Lessee), 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 9.5(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 lter than 20 days after the occurrence of an Insured Loss falling within the classification of Premises Partical 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, reapir 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. See Addendum to Lease, Paragraph 58.
(b) 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. See Addendum to Lease, Paragraph 58.
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 Taxes. Lessee shall pay the real property tax, as defined in paragraph 10.2, applicable to the Premises during the term of this Lease. All such payments shall be made at least ten (10) days prior to the delinquency date of such payment. Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes have been paid. If any such taxed paid by Lessee shall cover any period of time prior to or after the expiration of the term hereof, Lessee's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to pay any such taxes, Lessor shall have the right to pay the same, in which case Lessee shall repay such amount to Lessor with Lessee's next rent installment together with interest at the maximum rate then allowable by law.
10.2 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.
10.3 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.
10.4 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 theron. If any such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion to be determined by Lessor of all charges jointly metered with other premises.
12. Assignment and Subletting.
12.1 Lessor'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 liabilty 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. This 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 an 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 of 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) The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and wen due, where such failure shall continue for a period of three business 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 statutes 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 statute 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 the
Paragraph 13.1(d) is contrary to any applicable law, such provision shall
be of no force or effect.
(e) The discovery of Lessor that any financial statement given to Lessor by Lessee, or 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 rend 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. Less here by acknowledges that late payment by Lessee
to Lessor of rent and other sums dues 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 last 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 last payment by Lessee. 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. 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 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. 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 (10) 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 situated on the Premises. No reduction of rent shall occur if the only area taken is that which does not have a building located thereon. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under 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 Grubb & Ellis Company Licensed real estate broker(s), a fee as set forth in a separate agreement between Lessor and said broker(s) 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 32.1 of this Lease, which is granted to Lessee under 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 sale 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.
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, 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 represented 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. 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 case 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, provided further that such transferee has accepted in writing this Lease Agreement. 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(s) listed in Paragraph 15 hereof nor any cooperating broker(s) 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 and Lessee or any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Lessor and Lessee of the same or any other provision. Lessor and Lessee consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor's and Lessee's consent to or approval of any subsequent act by Lessor and Lessee. The acceptance of rent hereunder by Lessor and Lessee shall not be a waiver of any preceding breach by Lessor and Lessee of any provision hereof, other than the failure of Lessor and Lessee to pay the particular rent so accepted, regardless of Lessor's and Lessee's knowledge of such preceding breach at the time of acceptance of such rent.
25. Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a "short form" memorandum of this Lease for recording purposes.
26. 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 the 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.
(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 quite possession of the Premises shall not be disturbed if Lessee is not in material default and so long as Lessee shall pay the rent and be in substantial compliance with all of the provisions of the Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgagee, 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 give 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 of 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(s) 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 31 shall inure to the benefit of the broker named herein who seeks to enforce a right hereunder.
32. Lessor's Access. 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. See Addendum to Lease, Paragraph 61. Lessor may at any time place on or about the Premises any 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. Lessee shall be allowed to place signage upon the Premises so long as all such signage is in compliance with all applicable codes and regulations. Lessor shall be provided copies of all sign applications.
35. Merger. The voluntary or other surrender of the 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, conditions and provisions of 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. Each Option 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(1), 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 has
become 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 then 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 unreasonable interfere with the use of the Premises by Lessee. Lessee shall sign any of the aforementioned documents upon request of Lessor and failure to d 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 protest" and such payment shall not be regarded as 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. Insuring Party. The insuring party under this lease shall be the Lessee.
47. Addendum. Attached hereto is an addendum or addenda containing Paragraphs 49 through 62 which constitutes a part of this Lease. Addendum to Lease and Exhibits A and B are attached to and made 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 at the place on the dates specified immediately adjacent to their respective signatures.
Executed at NZ Properties, Inc.
on By
Address By s/E.M. Bedewi, Sr. VP
Treasurer
NZ PROPERTIES, INC. "LESSOR" (Corporate Seal)
Executed at Neltec, Inc., a wholly owned subsidiary of
Park Electrochemical Corp.
on By
Address By
|
NELTEC, INC. a wholly owned subsidiary of Park Electrochemical Corporation.
NOTE: These forms are often modified to meet changing requirements of law and needs of the industry. Always write or call to make sure you are utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION; 345 So. Figueroa St. M-1; Los Angeles CA 90071 (213) 687-8777
ADDENDUM TO LEASE
Between NZ Properties, Inc., an Arizona Corporation, Lessor and Neltec, Inc., a Delaware Corporation, a Wholly Owned Subsidiary of Park Electrochemical Corp., Lessee, dated November 26, 1990.
49. Improvements:
a. Lessor shall provide Lessee with an allowance of $151,632.00 to be used solely for the purpose of performing those improvements to Premises which Lessee determines to be necessary for the operation of Lessee's business. Such allowance shall be disbursed to Lessee upon Lessee's presentation of receipts and lien wavers to Lessor for work performed or goods purchased.
b. Lessee shall be permitted to construct an enclosed, elevated portion of building extending above existing roof by approximately 15 to 20 feet and measuring approximately 40 feet by 40 feet and located in interior portion of building. All structural work shall be performed by a licensed general contractor and shall comply with all applicable codes and regulations.
c. Lessee shall be permitted to bring natural gas service to premises which shall be at Lessee's expense.
d. Lessor shall remove all debris and miscellaneous parts and equipment from rear, fenced yard at Lessor's expense.
50. Phase I Environmental Study: Lessor shall provide, at Lessor's expense, a current Phase I Environmental Audit which shall be completed no later than December 15, 1990, and a copy of which shall be provided Lessee.
51. Contingency: The proposed lease shall be subject to Lessee's obtaining all required licenses and permits required to operate Lessee's business and to modify premises as Lessee requires. Lessee shall have one hundred twenty (120) days from the lease commencement date to obtain such licenses and permits. Lessee's failure to obtain such licenses and permits within the prescribed period shall result in allowing Lessee at Lessee's option, the right to cancel this lease by providing Lessor with thirty (30) days advance written notice. In the event of such cancellation, Lessee shall, at Lessee's expense and Lessor's option: (a) return premises to its original condition; or (b) reimburse Lessor for Lessor's expenses to date associated with the improvement allowance contained in Paragraph 49 of this Addendum to Lease. In addition, in the event Lessee elects to cancel this Lease at any time after the lease has been in effect for sixty (60) days and prior to the prescribed 120 day period, Lessee shall also pay to Lessor rental equal to two months rent based upon the monthly rental of $12,232.67 plus rental tax.
52. First Right of Refusal to Purchase: Lessee shall be provided the first right of refusal to purchase subject property so long as Lessee is not in material default of this lease for a period not to exceed the first ten (10) years of Lessee's occupancy after which time Lessee shall no longer retain such right. During the period such right is in force, in the event Lessor receives a signed bona fide purchase contract for the purchase of premises from a third party which is acceptable to Lessor, prior to Lessor's accepting such purchase contract, Lessor shall first submit a copy of such purchase contract to Lessee for Lessee's approval or disapproval. Lessee shall have three business days from Lessee's receipt to accept such purchase contract and Lessee's failure to accept such purchase contract within the prescribed period shall result in Lessee's losing such right to accept such purchase contract and Lessor shall then have the right to enter into such purchase contract with such third party.
53. Right of First Offer: So long as Lessee is not in material default of this Lease, Lessee shall have the right of first offer throughout the initial term of this lease and the option periods contained herein. Lessor shall notify Lessee at any time or times Lessor elects to make premises available for sale prior to Lessor's making such information public.
54. Rental and Rental Adjustments: The monthly rental shall be as follows:
Period Monthly Rental
12/01/90 thru 05/31/91 None
06/01/91 thru 11/30/91 $ 8,718.84
12/01/91 thru 11/30/93 $11,372.40
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Beginning in the thirty-seventh (37th) month of the initial term and in the first and thirty-first month of each renewal period the monthly rental shall be adjusted by a percentage equal to the percentage of change in the All Urban Consumer Price Index (CPI-U) as compiled and published monthly by the U.S. Department of Labor by using November, 1990 as the base period. The difference in the Index between the base period and the month ending immediately preceding each scheduled adjustment date as a percentage shall be applied toward the then current rental to establish the rental until the next scheduled adjustment date.
No such adjustments, however, shall be greater than an average of 6% per annum increase nor less than that rental for the immediately preceding period. Due to the delay between the scheduled rental adjustment date and the date the Index information is made available, the rental shall remain the same as that rental for the period immediately preceding the scheduled rental adjustment date until such time as Lessor notified Lessee of such change in rental as a result of any change in the Index. Lessor shall notify Lessee within thirty days of such change following the release of such Index information and shall include any back rental due extending back to the scheduled rental adjustment date.
55. Options to Renew: So long as Lessee is not in material default of this Lease and, as consideration of Lessee's payment of rent, Lessee shall have three (3) five (5) year options to renew this Lease which shall commence consecutively with the termination of the Lease term. The terms and conditions for such renewal periods shall be the same as those contained in this Lease except that the rental shall be adjusted as set forth in Paragraph 54 of this Addendum. To exercise each option to renew, Lessee shall provide Lessor with a minimum of 120 days advance written notice prior to the termination date of the then current lease term or extension period.
56. Hazardous Substances:
(a) Reportable Uses Require Consent. The term "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 the 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 substantial compliance in a timely manner (at Lessee's sole cost and expense) with all Applicable Law (as defined in Paragraph 56(c). "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.
(b) Indemnification. Lessee shall indemnify, protect, defend and hold Lessor, its agents, employees, 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 reasonable 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.
(c) Lessee's Compliance with the 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 of record, permits, 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 pertaining to or involving failure by Lessee or the Premises to comply with any Applicable Law.
(d) Inspection; Compliance. Lessor and Lessor's Lender(s) as defined in Paragraph 8.3(a) shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times, and upon reasonable notice, 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 56.3), 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 material 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 maybe, for the reasonable costs and expenses of such inspections.
57. Lessor's Representation: Lessor hereby represents and warrants that, prior to the time Lessee begins its modifications to the building, all structural aspects of the Premises shall be in sound condition and in good repair. Notwithstanding the provisions of paragraph 7.1, Lessee shall not be required to make any repairs to the Premises which are required as a result of the breach, by Lessor, of the foregoing representation and warrantee. Notwithstanding the provisions of Paragraph 7.4, Lessor shall be obligated to effect such repairs and maintenance to the Premises which are required as a result of the breach, by Lessor, of the foregoing representation and warrantee. Notwithstanding the provisions of the last sentence of Paragraph 8.6, Lessee assumes no risk and waives no claim with respect to any damage or injury which results from the breach, by Lessor, of the foregoing representation and warrantee. Notwithstanding the provisions of Paragraph 8.7, Lessor shall not be relieved from any liability relating to the matters described in Paragraph 8.7, provided that such matters or circumstances result from or are attributable to the breach, by Lessor, of the foregoing representation and warrantee. Notwithstanding the last sentence of Paragraph 9.6, lessor shall not be relieved of any claim of Lessee with respect to any such damage, destruction, repair or restoration referred to in such sentence, provided that such matters result from or are attributable to the breach, by Lessor, of the foregoing representation and warrantee.
58. If Lessor shall be obligated to repair or restore the Premises under the provisions of Paragraph 9 and Lessor cannot reasonably assure Lessee that such repair or restoration shall be substantially completed within ninety (90) days after such obligations first accrued, Lessee may at 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. For purposes of this Paragraph, repairs or restorations shall be considered to be substantially completed if and when Lessee can reasonably operate and conduct its business in the portion of the Premises which were damaged.
59. The following shall be made a part of Paragraph 7.5(a) of this Lease to be inserted as shown:
except for the alterations, improvements, additions or utility installations contemplated by Paragraph 49 hereof or as generally contemplated by the schedule of exterior, interior and structural modifications annexed hereto as Exhibit "B" and made a part hereof, and except for non-structural alterations not exceeding $25,000 in cumulative costs per calendar year.
60. The following shall be made a part of Paragraph 7.5(b) of this Lease to be inserted as shown at the end of the paragraph:
In any case, lessor may not unreasonably withhold its consent to any alterations, improvements, additions or utility installations, whether structural or otherwise, proposed by Lessee.
61. The following shall be made a part of Paragraph 7.5(d) to be inserted as shown at the end of the paragraph:
Notwithstanding the foregoing, lessee may in all cases remove any and all machinery and equipment (whether or not affixed to Premises) provided that Lessee repair to Lessor's reasonable satisfaction any and all damage caused by such removal.
62. The following shall be made a part of Paragraph 32 or this Lease as shown:
, provided that except under emergency circumstances, lessor shall provide Lessee with two business days advance notice of any such entry.
LESSOR: LESSEE:
NZ Properties, Inc. Neltec, Inc., a Wholly Owned Subsidiary of
Park Electrochemical Corporation
/s/ E.M. Bedewi /s/ Allen Levine
E.M. Bedewi Vice President
Senior Vice President
and Treasurer
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EXHIBIT B
The following is a description of the current modifications plans for the facility at 1420 W. 12th Place, Tempe, AZ.
EXTERIOR MODIFICATIONS:
1. All exterior glass and the main entrance door is to be replaced with new. All glass and door locations will remain unchanged.
2. The existing landscaping will be upgraded by adding new bushes and gravel. Also some of the mature trees will be replaced with new ones since the existing trees have grown close to the building.
3. Some minor architectural changes may be made to the facade if these changes can be effected without altering the basic structure of the building.
4. The rear yard chain link fence may be replaced with a block wall.
INTERIOR MODIFICATIONS:
1. All existing offices will be demolished. This area will be rebuilt with a second story to allow for future growth.
2. A maintenance shop and lunchroom will be constructed to the east of the offices and will also have a second story for expansion.
3. The balance of the area will be divided into separate manufacturing areas, each having its own function and character. The areas to be included are:
. Glass and copper storage
. Treater Bay
. Treater control room
. Resin mix and storage room
. Hot oil room
. Prepreg storage room
. B-Sales rooms
. Lay-up rooms
. Set-up rooms
. Shear/inspection/Shipping and receiving
. Gowning rooms
STRUCTURAL MODIFICATIONS:
1. The approximately 1,000 square foot resin mix room will require that the floor be removed and re-poured at a level 18" below grade. This will allow for state of the art passive secondary containment of all mixed chemicals.
2. The heavy weight of the treater will require that the approximately 3,000 square foot treater bay floor be removed and re-poured at a thickness of 18" to allow for the heavy load of the machine. The new floor will be at grade level.
3. To accommodate the height of the treater and a room mounted thermal oxidizer, the treat bay will consist of a structural steel base with half of the bay extending 40 feet up, and the other half supporting the thermal oxidizer.
4. The outdoor loading dock may have to be relocated to accommodate product flow.
MECHANICAL, ELECTRICAL, and PLUMBING MODIFICATIONS:
1. Several rooftop air-conditions systems will be required to facilitate the environmental needs of the facility. These system include at lease one 50 ton unit as well as several 10 ton units.
2. The facility will require complete plumbing distribution systems for compressed air, resin transfer, cooling water, hot oil distribution, natural gas, and other minor processes.
3. The facility will require a complete electrical distribution system as would by typical for a facility as described here. The service entrance section will be about 1600 amps at 480 volts A.C., 3 phase.
[EXH1013]
EXHIBIT 10.13(a)
NELCO
HITEC
January 8, 1996
Suzanne Drake
c/o: NZ Properties, Inc-Director of Operations
NEW MEXICO AND ARIZONA LAND COMPANY
3033 North Forty-Fourth Street, Suite 270
Phoenix, Arizona 85018
Dear Suzanne,
Pursuant To Paragraph 55 of the Lease dated December 12, 1990 between NZ Properties, Inc. (as Lessor) and NelTec, Inc. (as Lessee) for the premises commonly known as 1420 West 12th Place, Tempe, Arizona, 85281, NelTec, Inc. hereby notifies NZ Properties, Inc. that it is exercising its option to renew the Lease for a period of five (5) years commencing on June 1, 1996 and ending on May 31, 2001.
Please advise us as to the amount of the rental adjustment applicable to the renewal period once you are able to make that determination following the availability of the appropriate information. Until such time as we receive such notification we will continue to pay monthly rental in the same amount presently in effect.
Please call to discuss any questions pertaining to this renewal, and I look forward to hearing from you soon.
Sincerely,
NELTEC,INC.
Mac Smith
General Manager
cc: Steve Gilhuley, Park Electrochemical Phil Smoot, Nelco International Corporation Tom Spooner, Nelco International Corporation
MS/jam
[exh1013a]
1420 W. 12th Place - Tempe, Arizona 85281
(602) 967-5600 - FAX: (602) 967-6192
EXHIBIT 10.14(e)
DIELECTRIC POLYMERS, INC.
218 RACE STREET, HOLYOKE, MASSACHUSETTS 01040
413-532-3288
FAX 413-533-9316
July 31, 1996
Mr. Daniel C. Moriarity
President
Holyoke Supply Company, Inc.
P.O. Box 789
218 Race Street
Holyoke, MA 01040
Dear Dan,
Pursuant to Article II, Section 2 of the Indenture of Lease dated November 1, 1984, as extended by an Extension of Lease dated May 30, 1986, a Second Extension of Lease dated as of May 30, 1991, an Amendment to Second Extension of Lease dated May 19, 1994, and a 1995 Extension to Amendment to Second Extension of Lease effective May 19, 1995, between Holyoke Supply Company, Inc. ("Landlord") and Dielectric Polymers, Inc. ("Tenant"), the Tenant hereby notifies the Landlord that the Tenant is exercising its right and option to extend said lease Indenture for a term of six (6) months expiring May 31, 1997.
Please acknowledge your receipt of this notice by signing the enclosed copy of this letter and returning it to the undersigned.
Very truly yours,
DIELECTRIC POLYMERS, INC.
Joseph E. Melenkivitz
Controller
Receipt of notice acknowledged
HOLYOKE SUPPLY COMPANY, INC.
Daniel C. Moriarity
President
[exh1014e]
EXHIBIT 10.14(f)
1997 EXTENSION TO AMENDMENT TO SECOND EXTENSION OF LEASE
This 1997 Extension to Amendment to Second Extension of Lease (the "Second Amendment") is made effective on the date of signing by both parties by and between HOLYOKE SUPPLY COMPANY, INC., a Massachusetts corporation with its principal place of business at 200-220 Race Street, Holyoke, Massachusetts 01040 (hereinafter referred to as "Landlord"), of the one part, and DIELECTRIC POLYMERS, INC., a Massachusetts corporation having its principal place of business at 218 Race Street, Holyoke, Massachusetts 01040 (hereinafter referred to as "Tenant"), of the other part.
WHEREAS, the parties hereto are parties under an Indenture of Lease dated November 1, 1984 (the "Indenture") as extended in accordance with its terms by an Extension of Lease dated May 30, 1986 (the "Extension") a Second Extension of Lease dated as of May 30, 1991 (the "Second Extension"); an Amendment to Second Extension of Lease dated May 19, 1994 (the "Amendment"); and a 1995 Extension to Amendment to Second Extension of Lease dated October 19, 1995 (the "1995 Extension"); and
WHEREAS, pursuant to the 1995 Extension, the lease term expires on May 31, 1997, pursuant to Tenant's exercise of its option to extend the lease term for six months from November 30, 1996; and
WHEREAS, the parties have agreed to extend the term of the lease for a period of six (6) months, through November 30, 1997, and to provide a six-month option to extend the lease;
NOW THEREFORE, the Landlord and Tenant hereby agree that all the provisions of the Indenture, Extension, Second Extension, Amendment and the 1995 Extension (collectively the "Lease") are incorporated herein by reference and shall remain in full force and effect through November 30, 1997 except as modified as follows:
1. Article I, Section 1 is amended in part to provide that the premises demised to the Tenant on the Third Floor of building #1 at 200 Race Street shall consist of the 17,000 square feet occupied by the Tenant at the date of this Agreement.
2. Article II, Section 1 is amended in part to provide that the lease shall be extended for a term of six (6) months, beginning June 1, 1997 and ending November 30, 1997.
3. Article II, Section 2 is amended to provide that if the Tenant is not in material default in any respect under the Lease at the time of its giving of the notice described below, it shall have the right and option to extend said lease for a term of six (6) months expiring May 31, 1998, on all the same terms and conditions, including rent as set forth on paragraph 4 below. The Tenant, if it desires to exercise this option, shall do so by giving the Landlord notice in writing of its intention to do so at least ninety (90) days prior to December 1, 1997, such notice to be delivered by certified mail, return receipt requested, at Landlord's principal place of business. Except as otherwise provided, the term of this Lease shall be automatically extended upon Landlord's receipt of Tenant's extension notice. Tenant shall be in material default if there exists an "Event of Default" as defined under Article XII, Section 1 of the Indenture.
4. Article III, Section 1 is amended to provide that rent for Tenant's use of the entire Third Floor of the premises (17,000 square feet) during the extended term shall be ONE DOLLAR and FIFTEEN CENTS ($1.15) per square foot or NINETEEN THOUSAND FIVE HUNDRED FIFTY DOLLARS ($19,550) per year payable in equal monthly installments of $1,629.17 in advance on the first day of each and every month during the extended term and proportionately at said rate for any partial month. The parties acknowledge and confirm that the Tenant also continues to lease the entire Fourth Floor of the premises on the terms described in paragraph 4 of the 1995 Extension.
5. Landlord and Tenant agree that all remaining provisions of said Lease shall remain in full force and effect through the extended term except to the extent that said terms are inconsistent with the provisions of this Agreement.
WITNESS the execution hereof, under seal, in any number of counterpart copies, each of which counterpart copy shall be deemed to be an original for all purposes as of the day and year first written above.
DIELECTRIC POLYMERS, INC., TENANT
Dated: 3/26/97 By: /s/Lawrence G. Kuntz
Its: President
HOLYOKE SUPPLY COMPANY, INC.,
LANDLORD
Dated: 3/24/97 By: /s/Daniel C. Moriarity
President
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[exh1014f]
EXHIBIT 10.15(a)
FIRST AMENDMENT TO LEASE
I. PARTIES THIS FIRST AMENDMENT dated July 8, 1996, is executed by and between Presidio Associates L.P., a California limited Partnership, Successor in the interest to CMD Southwest, Inc. ("Landlord") and Nelco Technology, Inc., a corporation organized and existing by and pursuant to the laws of the state of Arizona ("Tenant") for the Demised Premises located at 1135 West Geneva Drive, Tempe, Arizona.
II. RECITALS
Landlord and Tenant, being parties to that certain Lease dated January
8, 1992, hereby express their mutual desire and intent to extend the
terms of the Lease and amend by this writing those terms, covenants
and conditions contained in Sections 201 TERM, 301 RENTAL, and in
Schedule 3 OPTION FOR ADDITIONAL LAND and Schedule 4 FIRST OPTION TO
EXTEND TERM.
Ill. AMENDMENTS
Section 201 TERM. The Term of this Lease shall hereby be extended for an additional period of five (5) years commencing on January 8, 1997 and ending on January 7, 2002, as set forth in Schedule 4: First Option to Extend Term (attached hereto as Exhibit "A").
Section 301 RENTAL. Rental shall mean the Annual Net Basic Rent Tenant agrees to pay Landlord at such place as Landlord may designate without deduction, offset, prior notice or demand, and Landlord agrees to accept:
Annual Net Basic Rent during the first three (3) years of the
First Option Term the sum of FIFTY THOUSAND SEVEN HUNDRED
NINETY-ONE and 00/100 DOLLARS ($50,791.00); and
Annual Net Basic Rent during the last two (2) years of the First Option Term" as set forth in Schedule 4: Rental During First Extension of Term, of the Lease dated January 8, 1992 (attached hereto as Exhibit "A").
All Rental shall be payable in advance on the first day of each month
during the Term of this Lease as extended, commencing on the first
(1st) day of each month.
Schedule 3 OPTION FOR ADDITIONAL LAND. Landlord and Tenant agree that Tenant's right to purchase or lease Option Land, as set forth in Schedule 3: Option For Additional Land (attached hereto as Exhibit "B") has expired, and is null and void and of no further force and effect.
Schedule 4 FIRST OPTION TO EXTEND TERM. Landlord and Tenant agree that Tenant is hereby exercising it's First Option To Extend Term. Tenant has delivered irrevocable written notice to Landlord at least six (6) months prior to the expiration of the existing Lease Term in the letter dated June 17, 1996, Certified Mail No. P 866 160 516.
IV. INCORPORATION Except as modified herein, all other terms and conditions of the Lease between the parties above described, as attached hereto, shall continue in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment as of the day and year first above written.
LANDLORD: TENANT:
Presidio Associates, L.P., Nelco Technology, Inc.,
a California Limited Partnership,
as Manager for the Tenants in Common
/s/ Malcolm E. Smith
Marc R. Brutten, President Malcolm E. Smith
Phoenix/Metro Investment Corporation, Vice President
its Agent
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[exh1015a]
EXHIBIT 10.16(a)
JTC(L)3995/748 Pt 1/AN/SL
TENANCY AGREEMENT RELATING TO PRIVATE LOT A12839
AT NO.36 GUL LANE
BETWEEN
JURONG TOWN CORPORATION
AND
NELCO PRODUCTS PTE LTD
TENANCY AGREEMENT-FOR A
STANDARD FACTORY
PRIVATE LOT A12839 IN TUAS
(RENEWAL)
THIS AGREEMENT is made the 3rd day of November 1995 Between JURONG TOWN CORPORATION incorporated under the Jurong Town Corporation Act, having its Head Office at Jurong Town Hall, 301 Jurong Town Hall Road, Singapore 609431 (hereinafter called "the Landlord") of the one part and NELCO PRODUCTS PTE LTD a company incorporated in Singapore and having its registered office at
79 Robinson Road
#116-03
CPF Building
Singapore 068897
(hereinafter called "the Tenant" which expression shall where the context so admits include its successors-in-title and permitted assigns) of the other part.
WITNESSETH as follows:
1 The Landlord hereby lets and the Tenant hereby takes ALL that piece of land known as Private Lot A12839 also known as Government Survey Lot 1849 Mukim No. 7 Tuas at No.36 Gul Lane, Singapore 629430 as shown on the plan annexed hereto TOGETHER with the Standard Factory Building Corner "T8" Type erected thereon (hereinafter referred to as the "said premises") TOGETHER also with all the fixtures and fittings therein installed and now belonging to the Landlord for the purposes and upon the terms, covenants and stipulations hereinafter mentioned for the term of three (3) years from the lst day of September 1995 (hereinafter referred to as the "said term") paying therefor during the said term the rent of Dollars twenty- four thousand, six hundred and twenty-five only ($24,625.00) per month to be paid clear of all deductions and in advance without demand on the 1st day of each of the calendar months of the year (i.e., the 1st days of January, February, March, etc.) the first of such payments to made on the 1st day of September 1995.
2 The Tenant hereby covenants with the Landlord as follows:
(1) To pay the said rent on the days and in the manner aforesaid without any deduction whatsoever.
(2) (i) To pay a cash deposit equal to three (3) months' rent on
or before the execution of this Agreement, or
commencement of the said term whichever is the earlier,
as security against the breach by the Tenant of any of
the terms, covenants, and stipulations of this Agreement
which cash deposit shall be maintained at this figure
during the said term and shall be repayable without
interest on the determination of this tenancy subject
however to appropriate deductions as damages, loss,
costs and expenses in respect of any or all such breach
or breaches.
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(ii) In lieu of the aforesaid cash deposit, to provide an acceptable banker's guarantee for the same equivalent amount and increased amount, which guarantee shall be valid and irrevocable for the whole of the said term or the unexpired portion of the said term, as the case may be, plus six months after the date of expiry of the said term and in a form approved by the Landlord, or to provide such other security as the Landlord may in his absolute discretion permit or accept.
(3) At all times to use the said premises for the purpose of the manufacture of laminating materials for printed circuit boards only and for no other purposes whatever.
(4) To make his own arrangements for and pay all existing and future charges and outgoings for the supply of all water, electricity, gas and any water-borne sewerage system charged by the Public Utilities Board or other relevant governmental and statutory authorities and payable in respect of the said premises and, subject to clause 2(7), at his own cost and expense to install such additional plumbing and sanitary works for such additional water supply as may be required by him.
(5) To keep the said premises including but not limited to the drains and sanitary and water apparatus and the Landlord's fixtures and fittings if any therein and the doors and windows thereof in good and tenantable repair and condition throughout the said term (wear due to fair and reasonable use and, subject to clause 2(6), damage by fire excepted) PROVIDED THAT the Tenant shall take all reasonable measures and precautions to ensure that any damage, defect or dilapidation which has been or at any time shall be occasioned by fair wear and tear shall not give rise to or cause or contribute to any substantial damage to the said premises.
(6) To be wholly responsible for all damages and to bear the full costs of repairs and reinstatement of such damaged buildings, equipment, fixtures, fittings, drains, wiring and piping above and below ground level if the cause or causes of such damages can be traced back to the Tenant's activities.
(7) Not to erect any building or structure on the said premises or to extend or add to the Factory Building or to make or cause to be made any alterations in the internal construction or arrangements or in the external appearance or in the present scheme of design or decoration of the said premises or to install or cause to be installed any fixtures or fittings of any kind or description without first obtaining the consent in writing of the Landlord and the relevant governmental and statutory authorities PROVIDED THAT -
(a) on the granting of such consent and without prejudice to other terms and conditions which may be imposed the Tenant shall place with the Landlord an additional deposit equivalent to such additional amount as the Landlord may deem sufficient as security for the reinstatement of the said premises to its original state and condition;
(b) the Tenant shall not use any flammable building materials for internal partitioning; and
(c) the Tenant shall at all times maintain such buildings, structures, extensions or additions to the Factory Building and such fixtures and fittings, including but nct limited to repairing of the external thereof and in the event that the Landlord shall include such buildings, structures, extensions and additions, or any part thereof in the Landlord's five-yearly Re-decoration Scheme, the Tenant shall pay the proportionate cost thereof, such proportion to be calculated by the Landlord.
(8) Not to assign create a trust sublet grant a licence or part with or share the possession or occupation of the said premises or any part thereof or leave the said premises or any part thereof vacant and unoccupied at any time during the said term.
(9) Not to do or suffer to be done upon the said premises or any part thereof anything which is or may, or which in the opinion of the Landlord is or may at any time be or become a danger, nuisance or an annoyance to or interference with the operations, business, enjoyment, quiet or comfort of the occupants of adjoining premises or inhabitants of the neighbourhood, but to indemnify the Landlord in relation thereto PROVIDED THAT the Landlord shall not be responsible to the Tenant for any loss, damage or inconvenience as a result of danger, nuisance, annoyance or any interference whatsoever caused by the occupants of adjoining premises or inhabitants of the neighbourhood.
(10) Not to use or permit to be used the said premises for any illegal or immoral purpose.
(11) At his own cost and expense to construct an internal drainage system to the satisfaction of the Landlord to ensure that all surface water collected on the said premises is discharged into the public drains and sewer and will not flow into adjoining premises, and the tenant shall further ensure that no silt, oil, chemical, debris or any other waste or matter shall be discharged into any public drains, sewers or watercourses.
(12) Not to use, load, unload, keep, or suffer to be loaded, unloaded, used or stored in the said premises or any part thereof any liquids, goods, materials or things of an offensive or explosive or a dangerous, corrosive, toxic or combustible nature without the prior consent in writing of the Landlord and to keep the Landlord indemnified against all loss, damages, claims, costs, expenses, actions and proceedings in connection with the loading, unloading, use or storage of such goods, materials and things whether or not the same is done with the consent of the Landlord.
(13) To permit the Landlord, his agents, servants and surveyors with or without workmen or others with all necessary appliances and tools to enter upon the said premises or any part thereof at all reasonable times for the purpose of viewing the condition or state of repair thereof or of doing such works, repairs, and things in connection therewith as the Landlord may think fit PROVIDED THAT the Landlord may serve upon the Tenant notice in writing specifying any work or repairs necessary to be done which are the responsibility of the Tenant under the terms, covenants or stipulations of this Agreement and require the Tenant forthwith to execute the same and the Tenant shall pay the Landlord's reasonable costs and expenses of survey and attending the preparation of the notice and if the Tenant shall not within ten days after the service of such notice proceed diligently and in workmanlike manner with the execution of such work or repairs then to permit the Landlord (who shall not be under any obligation so to do) to enter upon the said premises and execute such work or repairs and the cost and expenses thereof shall be a debt due from the Tenant to the Landlord and be forthwith recoverable AND PROVIDED ALWAYS THAT the Landlord shall not be liable to the Tenant for any loss, damage or inconvenience caused directly or indirectly by any such work or repairs.
(14) In complying with Clause 2(13) hereof and if so required by the Landlord the Tenant shall remove such installation, machinery or any article as may facilitate or permit the Landlord to execute the said repairs and works and if the Tenant shall fail to observe or perform this covenant the Landlord may remove the same and all costs and expenses incurred thereby shall be recoverable from the Tenant as a debt PROVIDED ALWAYS that the Landlord shall not be liable to the Tenant for any loss, damage or incovenience caused by such removal.
(15) Not without the prior consent in writing of the Landlord 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 said premises or of the windows, external walls or rails or fences thereof any nameplate, signboard, placard, poster or other advertisement or hoarding.
(16) At all times to maintain the land, garden, grounds and drive- way of the said premises in good order and condition to the satisfaction of the Landlord and not to alter the layout thereof without the prior consent in writing of the Landlord.
(17) During the three (3) months immediately preceding the expiry of the said term to permit persons with written authority from the Landlord or the Landlord's agent at reasonable times of the day to enter upon and view the said premises or any part thereof.
(18) Subject always to clause 2(8) hereinbefore appearing, to give to the Landlord written notice of every change of name within one month from the date of each change.
(19) To pay interest at the rate of eight and a half per cent (8.5%) per annum or such higher rate as may be determined from time to time by the Landlord in respect of any outstanding amount payable under this Agreement from the date such amount becomes due until payment in full is received by the Landlord.
(20) Not to dump, leave or burn any waste including but not limited to pollutants in or upon any part of the said premises or the estates of the Landlord but at the Tenant's own cost and expense to make good and sufficient provision for and to ensure the safe and efficient disposal of all such waste to the requirements and satisfaction of the Landlord and the relevant governmental and statutory authorities and if the Tenant shall fail to observe or perform this convenant the Landlord may (but shall not be under any obligation to do so), without prejudice to any other rights or remedies the Landlord may have against the Tenant, carry out or cause to be carried out such remedial measures as he thinks necessary and all costs and expenses and works incurred thereby shall forthwith be recoverable from the Tenant as a debt PROVIDED ALWAYS that the Landlord shall not be liable to the Tenant for any loss, damage or inconvenience caused thereby.
(21) Not to do or omit or suffer to be done or omitted any act, matter or thing in or on the said premises or in respect of the operations, business, trade or industry carried out or conducted therein which shall contravene the provisions of any laws, by-laws, orders, rules or regulations now or hereafter affecting the same but to comply at his own cost and expense with all such provisions and at all times hereafter to indemnify and keep indemnified the Landlord against all actions, proceedings, costs, expenses, claims, fines, losses, damages, penalties and demands in respect of any act, matter or thing done or omitted to be done in contravention of the such provisions.
(22) During the said term thereof to pay any increase of property tax which may be imposed whether by way of an increase in the annual value or an increase in the rate percent.
(23) Not to obstruct, cause or permit any form of obstruction of any fire-fighting installations and equipment but at all times to provide sufficient access and passageways thereto. At his own cost and expense to maintain and keep all fire-fighting installations and equipment at the said premises (including the fire alarm system, hose reels and valves) operational and in good and proper working order at all times and in connection therewith to install a 13 Amp power switch socket outlet immediately adjacent to the charger of the battery of the fire-alarm system, to carry out monthly servicing of such fire-fighting installations and equipment (including the fire alarm system, hose reel and valves), and to connect such system to the nearest Fire Station if required by the Singapore Fire service.
(24) To maintain the said premises in a neat and tidy condition and forthwith to comply with the Landlord's direction to remove and clear any materials, goods or articles of whatever nature and description from the said premises or such part thereof.
(25) Not to install or use any electrical or mechanical installations, machines or apparatus that may cause or causes heavy power surge, high frequency voltage or current, air- borne noise, vibration or any electrical or mechanical interference or disturbance whatsoever which may prevent or prevents in any way the service or use of any communication system or affects the operation of other equipment, installations, machinery, apparatus or plants of occupants of adjoining or neighbouring premises or inhabitants of the neighbourhood and in connection therewith, to allow the Landlord or any authorised persons to inspect at all reasonable times, such installation, machine or apparatus in the said premises to determine the source of the interference or disturbance and thereupon, to take suitable measures, at the Tenant's own cost and expense, to eliminate or reduce such interference or disturbance to the Landlord's satisfaction, if it is found by the Landlord or such authorised person that the Tenant's electrical or mechanical installation, machine or apparatus is causing or contributing to the said interference or disturbance.
(26) To indemnify the Landlord against any claims, proceedings, action, losses, penalties, damages, expenses, costs and demands which may arise in connection with clause 2(25) above.
(27) To take adequate measures to prevent air pollution, and to implement at his own cost measures for minimising air or other forms of pollution when requested by the Landlord or any relevant governmental or statutory authorities.
(28) To perform and observe all the obligations which the Tenant or the Landlord of the said premises may be liable to perform or observe during the said term by any direction, order, notice or requirement of any governmental and statutory authority and if the Tenant shall fail to observe or perform this covenant the Landlord may in its absolute discretion perform the same and all expenses and costs incurred thereby shall be recoverable from the Tenant as a debt PROVIDED ALWAYS that the Landlord shall not be liable to the Tenant for any loss, damage or inconvenience caused thereby.
(29) Not to use or occupy the said premises for the purpose of a commercial office or storage unrelated to his approved activity or usage stated in Clause 2(3) of this Agreement.
(30) Subject to Clause 2(31), to install such protective electrical devices and equipment, and to carry out such modification work on the existing fire alarm wirings, fixtures and fittings in the said premises as shall be necessary to suit the Tenant's factory operation, including the installation of additional wirings, fixtures and fittings to the fire alarm system, to the satisfaction of the Landlord and all at the Tenant's own expense PROVIDED THAT in addition to Clause 2 (23), the Tenant shall at his own cost and expense maintain and keep such protective electrical devices and equipment at all times in good condition.
(31) Not to increase, supplement, decrease, modify, replace or interfere with any existing electrical design load, wirings, apparatus, fixtures or fittings or any fire alarm fixtures or fittings in or about the said premises without the consent in writing of the Landlord and the relevant governmental and statutory authorities having been first obtained PROVIDED THAT all such work shall be carried out by a licensed electrical contractor or competent person as approved by the Landlord to be employed by the Tenant at the cost and expense of the Tenant AND PROVIDED FURTHER THAT prior to the commencement of any such electrical or fire alarm installation, replacement, modification or other work, the Tenant shall submit to the Landlord for their approval such necessary plans as may be specified by the Landlord.
(32) Not to do or suffer to be done on or in the said premises anything whereby the insurances of the same or any part thereof may be rendered void or voidable or whereby the premium thereon may be increased and to repay to the Landlord on demand all sums paid by the Landlord by way of increased premium and all costs and expenses incurred by the Landlord in connection with insurance rendered necessary by a breach or non-observance of this covenant without prejudice to any other rights and remedies available to the Landlord.
(33) Not to keep or allow to be kept livestock or other animals at the said premises.
(34) At the Tenant's own cost to execute such works as may be necessary to divert existing utility services such as pipes, cables and the like (if any) to the requirements and satisfaction of the Landlord and other relevant governmental and statutory authorities.
(35) At the determination of the said term by expiry or otherwise to yield up the said premises and all Landlord's fixtures, fittings, fastenings and other things thereto anywhere belonging or appertaining in such good and substantial repair fair wear and tear excepted as shall be in accordance with the terms, covenants and stipulations contained in this Agreement and with the locks and keys complete.
(36) In addition to Clause 2(35) and immediately prior to the determination of the said term thereof as the case may be to cleanse and to restore the said premises in all respects to its original state and condition and if so required in writing by the Landlord to redecorate including painting the interior thereof to the satisfaction of the Landlord PROVIDED ALWAYS THAT if the Tenant shall fail to observe or perform this covenant the Landlord may in its absolute discretion, and without prejudice to any other rights and remedies the Landlord may have against the Tenant, execute any of such cleansing, restoration and redecoration works and recover the costs and expenses thereof from the Tenant together with all rent, tax and other amounts which the Landlord would have been entitled to receive from the Tenant had the period within which such cleansing, restoration and redecoration were effected by the Landlord been added to the said term.
(37) If the Tenant shall at any time be found to have encroached upon any area beyond the boundaries of the said premises, the Tenant shall at his own cost and expense, but without prejudice to any other right or remedy the Landlord may have against him, immediately or within the time specified (if any) by the Landlord rectify and remove the encroachment to the satisfaction of the Landlord and pay to the Landlord such compensation as may be specified by the Landlord. If, however, the Landlord in his absolute discretion permits the Tenant to regularise and retain the encroached area or any part thereof upon such terms and conditions as may be stipulated by the Landlord and any other relevant government and statutory authorities, the Tenant shall pay land rent, tax and other amounts (if any) on the encroached area with retrospective effect from the date of commencement of the said term, and the Tenant shall also pay all survey fees, amalgamation fees, legal fees (including solicitor and client costs and expense), and all other costs and charges relating thereto.
(38) If any damage of whatsoever nature or description shall at any time occur or be caused to the said premises or any part thereof, to forthwith give to the Landlord written notice of the damage.
(39) Without prejudice to the generality of Clause 2(28) herein, the rent and other taxable sums payable by the Tenant under or in connection with this tenancy shall be exclusive of the goods and services tax (herein called "tax") chargeable by any government, statutory or tax authority calculated by reference to the amount of rent and any other taxable sums received or receivable by the Landlord from the Tenant and which tax is payable by the Tenant. The Tenant shall pay the tax and the Landlord acting as the collecting agent for the government, statutory or tax authority shall collect the tax from the Tenant together with the rent hereinbefore reserved without any deduction and in advance without demand on the 1st day of each of the calendar months of the year and in the manner and within the period prescribed in accordance with the applicable laws and regulations.
(40) Without prejudice to the generality of clause 2(24) hereinbefore appearing, the Tenant shall not at any time use the car park in front of the said premises for storing or stacking any goods, materials, equipment or containers.
(41) At the Tenant's own cost, to properly install and maintain exit lightings and exit signs at stair cases, exit passageways and exits of the said premises in accordance with all requirements of the Building Control Division and other relevant governmental and statutory authorities.
3 The Landlord hereby agrees with the Tenant as follows:
(1) The Tenant paying the rent hereby reserved and tax and observing and performing the terms, covenants and stipulations on the Tenant's part herein contained shall peacefully hold and enjoy the said premises during the term without any interruption by the Landlord or any person rightfully claiming under or in trust for the Landlord.
(2) The Landlord shall, subject to clause 2(7)(c), maintain the structure of the Factory Building PROVIDED THAT any damage to the structure other than fair wear and tear and repair arising therefrom shall be charged to the account of and paid by the Tenant AND FURTHER PROVIDED THAT the Landlord shall not be liable for any loss or damage suffered by the Tenant or any other person by reason directly or indirectly of the state of the Factory Building and the Tenant hereby indemnifies the Landlord against all claims, damages, actions, proceedings, costs and expenses in any way relating thereto or in any way relating to thebuildings, structures, extensions and additions hereinbefore mentioned in clause 2(7).
(3) The Landlord shall at all times throughout the said term keep the structure of the Factory Building insured against loss or damage by fire and in the event of such loss or damage (unless resulting directly or indirectly from some act or default of the Tenant) to rebuild and reinstate the damaged part of the Factory Building PROVIDED THAT it is expressly agreed and understood that the term "loss or damage by fire" as used in this clause do not include any loss or damage caused to the Tenant's fixtures or fittings or loss due to the Factory Building being rendered out of commission and in any such event the Landlord shall not be held liable for any such loss or damage sustained by the Tenant.
(4) The Landlord shall pay the property tax payable in respect of the said premises PROVIDED ALWAYS that if the rate of such property tax shall be increased whether by way of an increase in the annual value or an increase in the rate per cent then the Landlord shall not hereunder be liable to pay the said increase but the Tenant shall pay such increase as provided under clause 2(22) hereof.
4 PROVIDED ALWAYS and it is expressly agreed as follows:
(1) If the rent hereby reserved or interest, tax, or any part thereof or any other sum payable herein, or any part thereof shall at any time remain unpaid for fourteen (14) days after becoming payable (irrespective of whether formal demand has been made) or if any of the terms, covenants or stipulations herein contained on the Tenant's part to be performed or observed shall not be so performed or observed or if the Tenant shall make any assignment for the benefit of its creditors or enter into any arrangement with its creditors by composition or otherwise or commit any act of bankruptcy or have a receiving order made against him or suffer any distress or execution to be levied on its goods or if the Tenant being a Company shall go into liquidation whether voluntary (save for the purpose of amalgamation or reconstruction) or compulsory then and in any of such cases it shall be lawful for the Landlord at any time thereafter to re-enter upon the said premises or any part thereof in the name of the whole and thereupon the tenancy hereby created shall absolutely determine but without prejudice to any right of action or remedy of the Landlord in respect of any breach of any terms, the covenants or stipulations herein contained.
(2) Any notice served under or otherwise in connection with this Agreement or the tenancy hereby created shall be sufficiently served on the Tenant if the same is left addressed to the Tenant upon the said premises or if forwarded to the Tenant at the said premises by registered post and any notice shall be sufficiently served on the Landlord if sent to the Landlord's Head office by registered post. A notice sent by registered post shall be deemed to be given at the time when in due course of post it would be delivered at the address to which it is sent. In the event of any action or proceedings in respect of the tenancy created herein (including any action for the recovery of the rent, tax or other sums herein reserved) the Tenant agrees and accepts that any document which is not required by written law to be served personally shall be sufficiently served on the Tenant if addressed to him at the address specified in this Agreement, or if left posted upon some conspicuous part of the said premises, or forwarded to him by post at the principal or last known place of business of the firm or his registered or principal office if a body corporate or his last known address if an individual.
(3) The Tenant shall pay all costs, disbursements, fees and charges, legal or otherwise, including stamp and 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.
(4) The Tenant shall pay all costs, disbursements and fees, legal or otherwise, including costs as between Solicitor and Client in connection with the enforcement of the terms, covenants and stipulation of this Agreement.
(5) The Tenant accepts the said premises with full knowledge that the ground/production floor slab, drains, aprons and driveway are laid directly on the ground with services laid in the ground and may settle, subside and crack in the event that the ground in, on or around the said premises consolidates in the course of time, and the Tenant covenants that he shall at his own cost and expense and subject to the prior approval in writing of the Landlord and the relevant governmental and statutory authorities provide suitable and proper foundation for all machinery, equipment and installations at the said premises. The Landlord shall not be liable for any loss, damage or inconvenience that may be suffered by the Tenant or any other person in connection with any subsidence or cracking of the ground/production floor slabs, aprons, drains and driveways of the said premises.
(6) No waiver expressed or implied by the Landlord of any breach of any term, covenant or stipulation of the Tenant shall be construed nor be deemed to operate as a waiver of any other breach of the same or any other term, covenant or stipulation and shall not prejudice in any way the rights, powers and remedies of the Landlord herein contained. Any acceptance of rent or other moneys shall not be deemed to operate as a waiver by the Landlord of any right to proceed against the Tenant of any of his obligations hereunder.
(7) The Landlord shall be under no liability either to the Tenant or to others who may be permitted to enter or use the said premises or any part thereof for accidents happening or injuries sustained or for loss of or damage to property in the said premises or any part thereof.
(8) Subjact to clause 2(3), the Tenant shall use at least sixty per centum (60%) of the total floor area of the said premises for purely industrial activities, and may use the remaining floor area for ancillary stores and offices, neutral areas, communal facilities and such other uses as may be approved in writing by the Landlord and the relevant public and local authorities PROVIDED THAT the said ancillary offices shall not exceed twenty-five per centum (25%) of the total floor area.
(9) At any time during but at least three (3) months before the expiry of the said term or of its extensions, if any, as aforesaid the Tenant may, by notice in writing, exercise the option to request the Landlord to grant him a lease (the term of which shall be determined by the Landlord) of the said premises including all buildings thereon upon the payment by the Tenant to the Landlord of such purchase price and annual land rentals as may be determined by the Landlord at the time the option is exercised and upon such investment requirements and terms and conditions as the Landlord may specify which lease shall commence from the date the option is exercised or such other date to be determined by the Landlord PROVIDED THAT the Tenant shall bear and pay all costs, expenses, stamp fees and other charges in connection with or accruing from the issue of the lease AND PROVIDED ALWAYS that there shall be no break between the date of determination of tenancy and the commencement date of the lease and that there shall not at the time of the request be any existing breach or non-observance of any of the terms, stipulations and covenants on the part of the Tenant to be observed or performed in respect of this Agreement.
5 In this Agreement where the context so requires or permits, words importing the singular number or the masculine gender include the plural number or the feminine gender and words importing persons include corporations and vice versa, the expression "the Landlord" shall include its successors-intitle and assigns, the expression "the Tenant" shall include its successors-in-title and permitted assigns (if any), where there are two or more persons included in the expression "the Tenant" covenants expressed to be made by "the Tenant" shall be deemed to be made by such persons jointly and severally.
IN WITNESS WHEREOF the parties hereto have hereunto set their hands and/or seals the day and the year first above written.
SIGNED BY
KOH GEOK TIN
Head (Standard Factories)
Lease Management Department
Buildings Development Group
for and on behalf of the
JURONG TOWN CORPORATION
in the presence of:
ANNIE NG KIN MUI nee AU
SIGNED BY:
Michael A. Hehl
Managing Director
for and on behalf of
NELCO PRODUCTS PTE LTD
in the presence of:
Signature of Witness:.............................. .
Name of Witness: Desmond Ng
Designation: Financial Controller
[exh1016a]
EXHIBIT NO. 11.01
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
COMPUTATION OF FULLY-DILUTED EARNINGS PER SHARE
(In thousands, except per share data)
Fiscal year ended
1997 1996 1995
ADJUSTMENT OF NET EARNINGS:
Net earnings $18,559 $24,898 $17,345
Adjustments resulting from assumed
conversion of 5.5% Convertible
|
Subordinated Notes ("Notes") in fiscal
1997 and 1996 and 7.25% Convertible
Subordinated Debentures ("Debentures")
in fiscal 1995: Reduction of interest expense and amortization of deferred debt financing costs 5,420 81 389 Related tax effect on above (1,897) (28) (136) Net earnings, as adjusted $22,082 $24,951 $17,598 |
ADJUSTMENT OF WEIGHTED AVERAGE
NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
Weighted average number of common and common equivalent shares outstanding 11,551 11,794 10,858 Add weighted average shares assumed to be issued upon: Conversion of Notes and Debentures 2,370 32 504 Exercise of stock options at period-end market price if higher than average market price for fiscal year 11 34 208 Weighted average number of common and common equivalent shares outstanding, as adjusted 13,932 11,860 11,570 FULLY-DILUTED EARNINGS PER SHARE $ 1.59 $ 2.10 $ 1.52 |
[exh1101]
EXHIBIT 22.01
SUBSIDIARIES OF PARK ELECTROCHEMICAL CORP.
The following table lists Park's subsidiaries and the jurisdiction in which each such subsidiary is organized.
Jurisdiction of
Name Incorporation
Dielectric Polymers, Inc. Massachusetts
FiberCote Industries, Inc. Connecticut
Grand Rapids Die Casting Corp. Michigan
Metclad S.A. France
Nelco International Corporation Delaware
Nelco GmbH West Germany
Nelco Products, Inc. Delaware
Nelco Products Pte. Ltd. Singapore
Nelco S.A. France
Nelco Technology, Inc. Arizona
Neltec, Inc. Delaware
Neluk, Inc. Delaware
New England Laminates Co., Inc. New York
New England Laminates (U.K.) Ltd. England
Park Advanced Product Development Corp. New York
Technocharge Limited England
Zin-Plas Corporation Michigan
Zin-Plas of Canada, Inc. Canada
Zin-Plas Marketing and Business
Development Corporation Michigan
|
[exh2201]
EXHIBIT 24.01
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 of our report dated April 18, 1997, 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 2, 1997.
ERNST & YOUNG LLP
New York, New York
May 29, 1997
[exh2401]
| ARTICLE 5 |
| This schedule contains summary financial information extracted from the financial statements of Park Electrochemical Corp. and is qualified in its entirety by reference to such financial statements. |
| MULTIPLIER: 1000 |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | MAR 02 1997 |
| PERIOD END | MAR 02 1997 |
| CASH | 42,321 |
| SECURITIES | 102,232 |
| RECEIVABLES | 52,060 |
| ALLOWANCES | 1,746 |
| INVENTORY | 20,458 |
| CURRENT ASSETS | 220,414 |
| PP&E | 165,757 |
| DEPRECIATION | 82,366 |
| TOTAL ASSETS | 307,862 |
| CURRENT LIABILITIES | 55,410 |
| BONDS | 100,000 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 1,358 |
| OTHER SE | 141,997 |
| TOTAL LIABILITY AND EQUITY | 307,862 |
| SALES | 334,490 |
| TOTAL REVENUES | 342,143 |
| CGS | 275,372 |
| TOTAL COSTS | 309,738 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 5,508 |
| INCOME PRETAX | 26,897 |
| INCOME TAX | 8,338 |
| INCOME CONTINUING | 18,559 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 18,559 |
| EPS PRIMARY | 1.61 |
| EPS DILUTED | 1.59 |