<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 28, 1995
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 0-12102
HADCO CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2393279
- ------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation organization) Identification No.)
12A Manor Parkway, Salem, New Hampshire 03079
-----
(Address of principal executive offices) (Zip Code)
Telephone: (603) 898-8000
---------------------------
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Registrant had 9,712,756 shares of Common Stock, $.05 Par Value, outstanding at
February 22, 1995.
<PAGE> 2
<TABLE>
HADCO CORPORATION AND SUBSIDIARIES
INDEX
<CAPTION>
Part I. Page
<S> <C> <C>
Financial Information:
Consolidated Condensed Balance Sheets as of
January 28, 1995 and October 29, 1994........... 3
Consolidated Condensed Statements of Income
for the Quarters ended January 28, 1995 and
January 29, 1994, respectively...................
4
Consolidated Condensed Statements of Cash Flows
for the Quarters ended January 28, 1995
and January 29, 1994, respectively ............. 5
Notes to Consolidated Condensed Financial
Statements...................................... 6
Management's Discussion and Analysis of Results
of Operations and Financial Condition........... 11
Part II.
Other Information................................ 13
Signatures ...................................... 14
</TABLE>
2
<PAGE> 3
<TABLE>
HADCO CORPORATION AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(In thousands, except share data)
<CAPTION>
ASSETS
------
January 28, October 29,
1995 1994
---------- ----------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 15,603 $ 19,064
Short-term investments 12,557 12,499
Accounts receivable, net of allowance for
doubtful accounts of $801,000 in 1995 and
$725,000 in 1994 26,138 25,312
Inventories 10,491 10,295
Prepaid expenses 5,313 4,419
-------- --------
Total Current Assets 70,102 71,589
-------- --------
Property, Plant and Equipment, at cost 158,999 156,663
Less - Accumulated depreciation and amortization 106,070 102,910
-------- --------
52,929 53,753
-------- --------
Other Assets 772 984
-------- --------
$123,803 $126,326
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities:
Current maturities of long-term debt
and capital lease obligations $ 2,678 $ 4,678
Accounts payable and accrued expenses 25,197 29,915
Other accrued expenses 7,461 5,167
-------- --------
Total Current Liabilities 35,336 39,760
-------- --------
Long-Term Debt and Capital Lease Obligations 3,842 4,526
-------- --------
Long-Term Liabilities (Note 5) 4,900 4,600
-------- --------
Stockholders' Investment:
Common stock, $.05 par value -
Authorized 25,000,000 shares
Issued and outstanding 9,669,742
in 1995 and 9,738,117 in 1994 484 487
Paid-in Capital 22,663 22,763
Deferred Compensation Resulting from the
Granting of Non-qualified Stock Options (659) (731)
Retained Earnings 57,237 54,921
-------- --------
Total Stockholders' Investment 79,725 77,440
-------- --------
$123,803 $126,326
======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed financial statements
3
<PAGE> 4
<TABLE>
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
-------------------------------------------
unaudited
---------
(In thousands, except share data)
<CAPTION>
Quarter Ended
-------------------------------
January 28, January 29,
1995 1994
---------- ----------
<S> <C> <C>
Net Sales $56,825 $46,464
Cost of Sales 45,533 39,169
---------- ---------
Gross Profit 11,292 7,295
Selling, General and
Administrative Expenses 6,522 5,457
---------- ---------
Income from Operations 4,770 1,838
Interest Income 333 182
Interest Expense (139) (293)
---------- ---------
Income Before Provision for Income Taxes 4,964 1,727
Provision for Income Taxes 1,961 669
---------- ---------
Net Income $ 3,003 $ 1,058
========== =========
Net Income Per Common and
Common Equivalent Share $ .29 $ .10
========== =========
Weighted Average Common and Common
Equivalent Shares Outstanding 10,445,516 10,810,738
========== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed financial statements.
4
<PAGE> 5
<TABLE>
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------------------------------------
unaudited
---------
(In thousands)
<CAPTION>
Quarter Ended
--------------------------------
January 28, January 29,
1995 1994
---------- ------------
<S> <C> <C>
Total Cash Provided From Operations $ 2,797 $ 3,999
--------- ---------
Cash Flows From Investing Activities:
Net purchases of short-term investments (58) (2,008)
Purchases of property, plant and equipment (2,844) (4,739)
Proceeds from sale of property, plant and
equipment 119 39
--------- ---------
Cash Used For Investing Activities ( 2,783) (6,708)
--------- ---------
Cash Flows From Financing Activities:
Principal payments under capital lease obligations (682) (2,187)
Principal payments of long-term debt (2,003) -
Proceeds from issuance of common stock 228 124
Purchase and retirement of common stock (1,018) -
--------- ---------
Cash Used for Financing Activities (3,475) (2,063)
--------- ---------
Decrease in Cash and Cash Equivalents (3,461) (4,772)
Cash and Cash Equivalents Beginning of Period 19,064 19,041
--------- ---------
Cash and Cash Equivalents End of Period $ 15,603 $ 14,269
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the respective periods for:
Interest $ 406 $ 307
========= ========
Income tax payment $ 360 $ 790
========= ========
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed financial statements.
5
<PAGE> 6
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
1. Basis of Presentation
---------------------
In the opinion of management, these consolidated condensed financial
statements contain all normal recurring adjustments for fair presentation. The
results of operations for the quarter ended January 28, 1995, are not
necessarily an indication of the results expected for the full year.
The accompanying consolidated condensed financial statements include
the accounts of Hadco Corporation (the Company) and its wholly-owned
subsidiaries. All material intercompany balances and transactions have been
eliminated in consolidation.
For information as to the significant accounting policies followed by
the Company and other financial and operating information, see the Company's
Form 10-K as filed with the Securities and Exchange Commission on January 11,
1995. These financial statements should be read in conjunction with the
financial statements included in that Form 10-K.
2. Inventories
-----------
<TABLE>
Inventories are stated at the lower of cost, first-in, first-out (FIFO) or market and consist of the following:
<CAPTION>
January 28, October 29,
1995 1994
----------- -----------
(In thousands)
<S> <C> <C>
Raw Materials $ 3,950 $ 3,556
Work-in-process 6,541 6,739
------- ------
Total $10,491 $10,295
======= =======
</TABLE>
6
<PAGE> 7
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
-----------
3. Long-Term Debt and Capital Lease Obligations
<TABLE>
The long-term debt and capital lease obligations of the Company consisted of the following:
<CAPTION>
January 28, October 29,
1995 1994
-------- -----------
(in thousands)
<S> <C> <C>
Capital lease obligations $ 5,424 $ 6,105
Term-loan agreements 1,096 3,099
------- -------
6,520 9,204
Less - Current maturities 2,678 4,678
------- -------
$ 3,842 $ 4,526
======= =======
</TABLE>
4. Stock Options
-------------
<TABLE>
As of January 28, 1995, options to purchase shares of common stock were outstanding under the following plans:
<CAPTION>
Options Average Exercise Options
Plan Outstanding Price Exercisable
---------------------- ----------- ----------------- ------------
<S> <C> <C> <C>
December 1985 197,875 $2.12 197,875
(non-qualified plan)
December 1986 414,320 $2.95 414,320
(non-qualified plan)
December 1987 226,746 $3.00 198,746
(non-qualified plan)
September 1990 897,853 $7.42 205,118
(non-qualified plan)
December 1991 75,000 $5.09 60,000
(non-qualified plan)
</TABLE>
Options outstanding under the December 1985 and December 1986 plans are
exercisable immediately. These options have various vesting periods up to ten
years. Upon termination of employment under certain circumstances, the Company
may at its option repurchase the exercised but unvested shares at the original
purchase price.
7
<PAGE> 8
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
-----------
5. Environmental Matters
---------------------
The Company is proceeding with investigative studies regarding soil and ground
water contamination at its Owego, New York facility. The Company has signed a
Consent Order with the New York State Department of Environmental
Conservation (NYSDEC) under which the Company conducted a Remedial
Investigation and Feasibility Study (RIFS) for apparent on-site contamination
at the Owego, New York facility. Under the terms of the Consent Order, the
study was to develop a proposed remedial program and proposed implementation of
that program. Investigative work has already been undertaken and the Company
continues to cooperate with the NYSDEC to resolve the matter. The RIFS was
completed at a cost of approximately $640,000. The Company received approval
from the NYSDEC to proceed with the implementation of an Interim Remedial
Measure Work Plan (IRM Work Plan). The implementation of the IRM Work Plan was
completed during the fourth quarter of 1993 at a cost of approximately
$250,000. In July 1994, the Company filed with NYSDEC a Focused Feasibility
Study (FFS) prepared by the Company's environmental consultants enumerating
several remediation alternatives. The range of costs associated with the
remediation alternatives was estimated therein as being (without reference to
the no action alternative therein) between $3.8 million and $5.3 million.
Based upon the RIFS and FFS, in January 1995 the NYSDEC proposed a remediation
program of groundwater withdrawal and treatment and iterative soil flushing.
The cost, based on the FFS, to implement this alternative is estimated to be
$4.6 million, and is expected to be expended as follows: $300,000 capital
equipment, $4.3 million for operation and maintenance costs which will be
incurred and expended over the estimated life of the program of 30 years.
NYSDEC has requested that the Company take additional samples from a wetland
area near the Company's Owego facility. Analytical reports of earlier sediment
samples indicated the presence of certain inorganics. There can be no
assurance that the Company will not be required to conduct additional
investigations and remediation at that location, the costs of which are
currently indeterminable due to the numerous variables described in the second
sentence of the penultimate paragraph of this "Environmental Matters" section.
From 1974 to 1980, the Company operated a printed circuit manufacturing
facility as a lessee of property that is now the subject of a pending lawsuit
and investigation by the Florida Department of Environmental Protection (FDEP).
On June 9, 1992, the Company entered into a Cooperating Parties Agreement in
which it and another prior lessee of the site have agreed to fund certain
assessment and feasibility study activities at the site, and an
8
<PAGE> 9
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
-----------
5. Environmental Matters (Continued)
---------------------------------
environmental consultant has been retained to perform such activities. The
cost of such activities is not expected to be material to the Company. In
addition to the Cooperating Parties Agreement, and in the absence of pending
litigation against the Company, HADCO and others are participating in
alternative dispute resolution regarding the site with an independent mediator.
In connection with the mediation, in February 1992 the FDEP presented
computer-generated estimates of remedial costs, for activities expected to be
spread over a number of years, that ranged from approximately $3.3 million to
$9.7 million. Mediation sessions were conducted in March 1992 but have been
suspended during the ongoing assessment and feasibility activities.
Management believes it is likely that it will participate in implementing a
continuing remedial program for the site, the costs of which are currently
unknown. However, based on information currently known by the Company,
management does not expect these costs to have a material adverse effect on the
Company.
The Company accrues estimated costs associated with known environmental
matters, when such costs can be estimated. The cost estimates relating to
future environmental clean-up are subject to numerous variables, the effects of
which can be difficult to measure, including the stage of the environmental
investigations, the nature of potential remedies, possible joint and several
liability, the magnitude of possible contamination, the difficulty of
determining future liability, the time over which remediation might occur, and
the possible effects of changing laws and regulations. The total reserve for
environmental matters currently identified by the Company amounted to $5.8
million and $5.5 million at January 28, 1995 and October 29, 1994,
respectively. The current portion of these costs as of January 28, 1995 and
October 29, 1994, amounted to approximately $873,000, and is included in "Other
accrued expenses." The long-term portion of these costs amounted to
approximately $4.9 million and $4.6 million as of January 28, 1995 and October
29, 1994, respectively, and is reported under the caption "Long-term
Liabilities." Management believes the ultimate disposition of the above known
environmental matters will not have a material adverse effect upon 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.
9
<PAGE> 10
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
-----------
5. Environmental Matters (Continued)
---------------------------------
The Company is one of thirty-three entities which have been named as
potentially responsible parties in a lawsuit pending in the federal district
court of New Hampshire concerning environmental conditions at the Auburn Road,
Londonderry, New Hampshire landfill site. Local, state and federal entities
and certain other parties to the litigation seek contribution for past costs,
totaling approximately $20 million, allegedly incurred to assess and remediate
the Auburn Road site. These parties also allege that future monitoring will be
required. In addition, the EPA contends that future remediation actions may be
required. The Company is contesting liability. The future costs in connection
with the lawsuit are currently indeterminable due to such factors as the
unknown timing and extent of any future remedial actions which may be required,
the extent of any liability of the Company and of other potentially responsible
parties, and the financial resources of the other potentially responsible
parties.
10
<PAGE> 11
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
------------------------------------------------
Results of Operations
- ---------------------
First Quarter
- ------------
Net sales for the first quarter of 1995 increased 22.3% over the same
period in 1994. The change was due to increases in the volume of production
and shipments, and a shift in product mix to higher layer, higher density
products, as compared to the first quarter last year. Pricing per unit
increased 1.0% for the first quarter of 1995 over the first quarter of 1994.
The Company believes that the potential exists for excess capacity in the
industry, which could have an adverse impact on future pricing.
The gross profit margin increased from 15.7% in the first quarter of
1994 to 19.9% in the first quarter of 1995. The increase is a direct result of
higher volume of shipments, an increase in the technology level of product mix
and improvements in operating efficiencies. Continued productivity
improvements have lead to increased unit volume and lower unit costs.
Selling, general and administrative (SG&A) expenses, as a percent of net
sales, decreased to 11.5% in the first quarter of 1995 as compared to 11.7% in
the first quarter of 1994 due to increased revenue. SG&A expenses increased
from $5.5 million in the first quarter of 1994 to $6.5 million in the first
quarter of 1995, as a result of increased variable costs directly attributable
to increased net sales and charges for environmental related matters. Included
in SG&A expenses are charges for actual expenditures and accruals, based on
estimates, for environmental matters. During the first quarter of 1995 and
1994, the Company made, and charged to SG&A expenses, actual payments of
approximately $347,000 and $54,000, respectively, for environmental matters.
In the first quarter of 1995 and 1994, the Company also accrued and charged to
SG&A expenses approximately $305,000 and $307,000, respectively, as cost
estimates relating to known environmental matters. To the extent and in
amounts Hadco believes circumstances warrant, it will continue to accrue and
charge to SG&A expenses cost estimates relating to environmental matters.
Management believes the ultimate disposition of known environmental matters
will not have a material adverse effect upon 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.
11
<PAGE> 12
Interest income increased in the first quarter of 1995 as compared to
the first quarter of 1994 due to higher yields on investments, and higher
average cash balances available for investing.
Interest expense decreased in the first quarter of 1995 as compared to
the first quarter of 1994 due to a decrease in outstanding debt.
Income Taxes
- ------------
In accordance with generally accepted accounting principles, the
Company has provided for income taxes in the first quarter at its estimated
annual effective rate. The Company presently anticipates that the effective
annual rate of income taxes for 1995 will be 39.50%, which is less than the
current combined federal and state statutory rates. This difference is caused
by tax-exempt interest income, the tax benefit of a Foreign Sales Corporation
(FSC), and various state investment tax credits. The effective tax rate for
1995 is based on current tax laws.
Liquidity and Capital Resources
- -------------------------------
At January 28, 1995, the Company's working capital was $34.8 million,
including cash, cash equivalents and short-term investments of $28.2 million,
as compared to working capital of $31.8 million, including cash, cash
equivalents and short-term investments of $31.6 million, at October 29, 1994.
<TABLE>
At January 28, 1995, the following lines of credit were available to the Company:
<CAPTION>
(in thousands)
-------------
<S> <C>
Leasing Line of Credit $ 3,816
Revolving/Term Lines of Credit 25,000
-------
Total Credit Available $28,816
=======
</TABLE>
The Company believes that the available cash balances, together with
cash flow from operations, will be sufficient to meet the Company's cash
requirements through its fiscal year ending October 28, 1995.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
10.01 Amendment dated January 15, 1995 to Lease between Registrant
and Nash Family Investment Properties and Tamposi Family
Investment Properties and CIII.
10.02 Lease dated January 13, 1995 between Registrant and Nash
Family Investment Properties and Ballinger Properties
d/b/a Sagamore Industrial Properties.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the
quarter ended January 28, 1995.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
Hadco Corporation
Date: March 7, 1995 By: /s/ Timothy P. Losik
-----------------------
Timothy P. Losik
Chief Financial Officer,
Vice President
14
<PAGE> 1
EXHIBIT 10.1
SECOND SUPPLEMENTAL AGREEMENT
Second Supplemental Agreement dated as of the 15th day of January, 1995, to the
Lease dated September 15, 1980, as previously amended by the First Supplemental
Agreement dated January 31, 1983, by and between Nash Family Investment
Properties, of Nashua, New Hampshire and Tamposi Family Investment Properties,
of Nashua, New Hampshire (Lessor) and Circuit Image Industries, Inc. of 21
Flagstone Drive, Hudson, New Hampshire (CIII).
The Lessor acknowledges and agrees that Hadco Corporation, a Massachusetts
corporation with an office and place of business at 12A Manor Parkway, Salem,
New Hampshire, is the Lessee under the above-described Lease, as assignee of
CIII.
Whereas, the Lessor and Lessee desire to further amend the Lease, effective as
of January 1, 1995, as follows:
1. The Lessor and Lessee agree to terminate the present renewal term of
the Lease effective midnight December 31, 1994, and to begin a new three (3)
year renewal term at 12:01 a.m. on January 1, 1995.
2. The Lessor and Lessee acknowledge that the annual base rent which
has been paid during the present renewal term is Ninety Eight Thousand Four
Hundred Ninety Dollars and Eighty-four cents ($98,490.84), and the monthly base
rent which has been paid during the present renewal term is Eight Thousand Two
Hundred Seven Dollars and Fifty-seven cents ($8,207.57). The parties agree
that base rent shall be adjusted effective January 1, 1995, pursuant to the
provisions of Section 27 of the Lease based on the difference between the CPI
as of December 1990 and the CPI as of December 1994.
3. There shall be one more option to renew the Lease for an additional
three (3) year term. Any exercise of the option to renew, and the base rent
upon any such exercise, shall be governed by Sections 25 and 27, respectively,
of the Lease, based on the difference between the CPI as of December 1994 and
the CPI as of December 1997.
4. Except as specifically set forth herein, all provisions of the Lease
and the First Supplemental Agreement are hereby ratified and confirmed and
shall remain in full force and effect.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Agreement to be executed as of the date first above written.
Nash Family Investment Properties
/s/ BARBARA J. BECKMAN /s/ Q. PETER NASH
- ----------------------------- ----------------------------------
Witness Q. Peter Nash, Managing Partner
Ballinger Properties L.L.C.
(Successor of Tamposi Family
Investment Properties)
/s/ JEANINE SUDAL /s/ SAMUEL A. TAMPOSI, JR. Manager
- ----------------------------- ----------------------------------
Witness Samuel A. Tamposi, Jr., Manager
Hadco Corporation
/s/ CHARLES G. HALL By: /s/ DON TORRISI
- ----------------------------- ------------------------------
Witness Its , duly authorized
0471S
- 2 -
<PAGE> 1
EXHIBIT 10.2
LEASE
THIS INDENTURE OF LEASE dated as of the 13th day of January 1995,
by and between Nash Family Investment Properties and Ballinger
Properties d/b/a SAGAMORE INDUSTRIAL PROPERTIES of 40 Temple Street,
Nashua, New Hampshire (hereinafter called Lessor), and HADCO
CORPORATION, a Massachusetts corporation with an office and place of
business at 10 Manor Parkway, Salem, Rockingham County, New Hampshire,
(hereinafter called Lessee).
WITNESSETH THAT, in consideration of the mutual covenants and
agreements herein contained, the Lessor has demised and leased, and by
these presents does demise and lease, to the Lessee, for the rental,
for the term and upon the other conditions hereinafter set forth, that
portion marked on the plan designated Exhibit A hereto attached and
made a part hereof, containing twelve thousand seven hundred (12,700)
square feet and being the northerly half of the building delineated by
such plan, which building has been constructed on Lot 4343-020 at 2-4
Hampshire Drive in the Sagamore Industrial Park, Town of Hudson,
Hillsborough County, New Hampshire, together with the adjacent walks,
ways and parking areas which are enclosed within the line marked on
such Exhibit A.
SUBJECT TO a mortgage to Prudential Insurance Company of
record in the Registry of Deeds for said Hillsborough County.
TO HAVE AND TO HOLD the premises hereby leased as above described
(hereinafter called the Leased Premises) to the Lessee, its successors
and assigns, to and for its and their proper use and benefit.
SECTION 1 - TERM. Notwithstanding the date of execution of this
Lease, the term of this Lease shall be for a period of three (3)
years, *beginning on November 1, 1994, and ending on December 31, 1997.
Occupancy of the premises may begin at any time after the execution of
this Lease.
* and two months
SECTION 2 - RENT. The Lessee shall pay to the Lessor as base rent
the sum of Forty Seven Thousand Six Hundred Twenty-Five Dollars
($47,625.00) per year payable in equal monthly installments of Three
Thousand Nine Hundred Sixty-Eight Dollars and Seventy-Five Cents
($3,968.75), the first such installment to be due and payable on
November 1, 1994 and on the 1st day of each succeeding month for the
balance of the term hereof;** Unless and until otherwise directed in
writing by the Lessor, all payments of rent shall be made to the
Lessor, Sagamore Industrial Properties, 40 Temple Street, Nashua, NH
03060.
SECTION 3 - QUIET ENJOYMENT. The Lessor shall put the Lessee in
possession of the Leased Premises at the beginning of the term hereof,
and the Lessee, upon paying the rent and observing the other covenants
and conditions herein upon its part to be observed, shall peaceably
and quietly hold and enjoy the Leased Premises.
SECTION 4 - REPAIRS BY LESSOR. The Lessor's responsibility for
maintenance or repair of the Leased Premises is limited to
responsibility for repair or replacement necessitated by defective
design or construction of the building of which the Leased Premises
are a part. The Lessee represents that it has examined the Leased
Premises and found them to be in satisfactory condition and the
Lessee accordingly accepts the Leased Premises in "as is" condition
except as to those matters listed on Exhibit B attached hereto.
SECTION 5 - REPAIRS BY LESSEE. (a) The Lessee shall, at its cost
and expense, maintain the Leased Premises and all mechanical and
non-mechanical installations therein and the exterior (including the
roof) of that portion which houses the Leased Premises of the
building of which the Leased Premises are a part, in good condition
and repair, and at the expiration of this lease
**Provided, however, that the base rent for the month of November 1994
shall be $3,575.00.
<PAGE> 2
or earlier termination hereof for any cause herein provided for
shall deliver up the Leased Premises to the Lessor in the same
condition and state of repair as at the beginning of the term
hereof, reasonable wear and tear, taking by eminent domain and
damage insurable under the standard New Hampshire fire insurance
policy with extended coverage excepted provided, however, that in
the event it is determined by Lessee that there is a need of
replacement (as opposed to mere repair) of the roof of the building
of which the Leased Premises are a part during the term of the
Lease, then the Lessor shall replace the roof using a qualified
roofer acceptable to Lessee or chosen by Lessee and acceptable to
Lessor, and the Lessee shall pay its proportionate share of the
cost thereof which is hereby agreed as being an adjustment in the
base rent described in Section 2 hereinabove, which adjustment
shall be an increase of $0.35 per square foot per annum, to be paid
on a monthly basis, beginning with the monthly payment next
following the completion of the roof replacement, for the balance
of the lease term; provided, however, that the $0.35 per square
foot per annum shall be adjusted up or down, in direct proportion
by percentage to the amount by which the actual cost of replacement
exceeds or is less than $32,766.00, if for the entire roof or
$16,383.00, if for one-half of the roof.
(b) The Lessee shall make normal repairs to, and perform
normal maintenance of, the Leased Premises as needed, including,
without limitation, the replacement of broken glass, interior
repainting, the repair of floors, the keeping of windows and doors
water-tight and the maintenance in good operating condition of all
plumbing, electrical, heating, sprinkling and other utility systems
serving the Leased Premises exclusively, it being understood that
the Lessee may make any further repairs and replacements which the
Lessee may desire although neither party shall be under obligation
to do so provided, however, that as to any maintenance (whether
repair or replacement) of utility systems serving the building of
which the Leased Premises are a part, the Lessee shall be
responsible for fifty percent (50%) of the maintenance costs and
shall coordinate with the other tenant in the building of which the
Leased Premises are a part and the Lessor during the maintenance.
(c) The Lessee shall keep in good repair and free from
obstructions or encumbrances all surfaced roadways, walks, loading
and parking areas which are part of the Leased Premises; shall keep
clear of dirt, snow and ice all such roadways, walks, and areas;
and shall keep the exterior of the Leased Premises clean and neat,
including cutting and proper care of lawns and shrubbery.
(d) The Lessee shall at its expense make any alterations or
changes in the Leased Premises which may be necessary to meet the
regulations and standards promulgated and established under the
Occupational Safety and Health Act of 1970.
(e) During the term of this lease, the Lessee shall be
responsible for any repairs or alterations to the leased premises
deemed necessary by local, state or federal officials, in order to
meet compliance with any changes in local, state or federal
regulations during the term of this lease.
(f) During the term of this lease, in the event of a claim
brought under the Americans with Disabilities Act, Lessee shall be
responsible for ensuring satisfaction therewith.
In the event Lessee shall fail to perform its obligations
hereunder (a through f above) after ten (10) days written notice by
Lessor, or in the event of an emergency after an attempt by Lessor to
give telephone notice to Lessee, the Lessor may, at its option, perform
the same and charge the Lessee the reasonable expense of said obligation.
SECTION 6 - IMPROVEMENTS BY LESSEE. The Lessee may make
alterations, additions or improvements to the Leased Premises as it
shall deem necessary or desirable, but the Lessee shall not, without
first obtaining the written consent of the Lessor, make any alteration
or improvement which would affect or change the structural character
of the Leased Premises, and the Lessee shall not, in any event,
commit, suffer or permit waste upon the Leased Premises. All alterations
and improvements shall be performed in
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a good and workmanlike manner. Lessee shall be responsible for
obtaining all necessary local, state and federal government permits as
may be necessary.
SECTION 7 - REMOVAL OF IMPROVEMENTS. At the expiration of this
lease, or at its earlier termination for any cause herein provided for,
the Lessee may, and, provided the Lessor shall so direct in writing not
less than thirty (30) days prior to such termination or ten (10) days
following such earlier termination, the Lessee shall, remove any
alterations, additions and improvements to the Leased Premises made by
it during the term hereof, and shall restore the Leased Premises to
their condition as at the beginning of the term hereof, reasonable wear
and tear, taking by eminent domain and damage insurable under the
standard New Hampshire fire insurance policy with extended coverage
excepted. If the Lessee shall not exercise its option of removal, and if
the Lessor shall not give such written direction to the Lessee, all such
alterations, additions and improvements shall become and remain the
property of the Lessor. If the Lessee shall fail to remove the
alterations, additions and improvements, which are required hereunder to
be removed, then the reasonable cost of removal of such alterations,
additions and improvements, if necessary, shall be the responsibility
and obligation of the Lessee.
SECTION 8 - MACHINERY AND EQUIPMENT - TRADE FIXTURES. The Lessee
agrees that all machinery and equipment, and appurtenances thereto,
installed in the Leased Premises by it or by any employee, agent or
subcontractor of the Lessee, or by any subtenant of the Lessee, which
cannot be removed from the Leased Premises shall be and become part of
the realty and shall be and become the property of the Lessor and shall
not be removed from the Leased Premises without the written consent of
the Lessor. The Lessor agrees that (a) all machinery and equipment, and
appurtenances thereto, installed in the Leased Premises by the Lessee,
or by any employee, agent or subcontractor of the Lessee, or by any
subtenant of the Lessee, which may be removed from the Leased Premises
without permanent and substantial damage to the Leased Premises and (b)
all furniture, furnishings and movable trade fixtures installed in the
Leased Premises shall be deemed to remain personal property and that all
such machinery, equipment, appurtenances, furniture, furnishings and
movable trade fixtures of the Lessee or of any employee, agent or
subcontractor or subtenant of the Lessee, may be removed prior to the
expiration of this lease or its earlier termination for any cause herein
provided for; but the Lessee shall repair any damage occasioned by such
removal and shall restore the facilities on the Leased Premises to their
condition as at the beginning of the term hereof, reasonable wear and
tear, taking by eminent domain, and damage insurable under the standard
New Hampshire fire insurance policy with extended coverage excepted. Any
such property which may be removed pursuant to the preceding sentence
and which is not so removed prior to the expiration or earlier
termination of this lease may be removed from the Leased Premises by the
Lessor and stored for the account of the Lessee; and if the Lessee shall
fail to reclaim such property within sixty (60) days following such
expiration or earlier termination of this lease such property shall be
deemed to have been abandoned by the Lessee, and may be appropriated,
sold, destroyed, or otherwise disposed of by the Lessor without notice
to the Lessee and without obligation to account therefor. The Lessee
shall pay to the Lessor the cost incurred by the Lessor in removing,
storing, selling, destroying or otherwise disposing of any such
property.
SECTION 9 - UTILITIES. The Lessee shall provide, and shall pay when
due all charges for, water, sprinkler, gas, electricity, sewerage, heat,
power and any other services supplied to it at the Leased Premises.
SECTION 10 - USE OF PREMISES. (a) In its use of the Leased
Premises, the Lessee shall comply with all statutes, ordinances and
regulations applicable to the use thereof, including, without
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limiting the generality of the foregoing, the Zoning Ordinances of the
Town of Hudson, New Hampshire, the Resource Conservation and Recovery
Act of 1976, and the Hazardous Waste Management Program of the State of
New Hampshire (RSA 147:48 et seq).
(b) The Lessee shall not injure or deface the Leased Premises nor
occupy or use, or permit or suffer the Leased Premises or any part
thereof to be occupied or used, for any unlawful or illegal business,
use or purpose, nor for any business, use or purpose which is
disreputable or extra-hazardous, nor in such manner as to constitute a
nuisance of any kind nor for any purpose nor in any manner which would
increase the premiums for fire insurance with extended coverage for the
Leased Premises. The Lessee shall, immediately upon discovery of any
such unlawful, illegal, disreputable or extra-hazardous use, take all
necessary steps, legal and equitable, to compel the discontinuance of
such use and to oust and remove any sublessee, occupants or other
persons guilty of such unlawful, illegal, disreputable or
extra-hazardous use.
(c) The Lessee shall procure any licenses or permits required by any
use of the Leased Premises by the Lessee.
(d) Lessee shall not generate, store, dispose of or otherwise handle
any hazardous substance or waste or toxic waste on the premises in any
fashion contrary to any federal, state or local statutes, laws,
ordinances, rules and regulations, as the same may be described by
federal, state or local laws. Lessee shall indemnify and save the Lessor
harmless from and against any and all claims, demands, liabilities,
costs and expenses including reasonable counsel fees resulting from
Lessee's improper disposal or storage of hazardous materials or toxic
wastes used or generated at the Leased Premises.
(e) The Lessee shall indemnify and save the Lessor harmless from and
against any and all claims, demand, liabilities, costs and expenses,
including reasonable counsel fees, asserted by third parties and arising
out of or by reason of any breach or violation by the Lessee of the
provisions of this Section.
SECTION 11 - ASSIGNMENT - SUBLEASE. The Lessee shall not, without
written consent of the Lessor, assign this lease or sublease the Leased
Premises, in whole or in part. Such consent shall not be unreasonably
withheld, provided Lessor shall be convinced that subtenant or assignee
shall have financial capacity to pay the rent hereunder. Notwithstanding
any such sublet or assignments, the obligations of Lessee hereunder
shall not be released by assignment or sublease and Lessee shall assign
such assignment or sublease as additional security for the performance
of this lease.
Notwithstanding anything provided herein, in the event of subtenancy
or assignment, Lessee shall provide Lessor with the correct and updated
name and mailing address of every assignee or subtenant and the
requirements if any of all Notices to Lessee in this lease shall be
sufficiently satisfied if forwarded in writing to the subtenant or
assignee at the address given. In the event of Lessee's default
hereunder, should subtenant or assignee, at its option, cure such defect
or default, the Lessee shall not be relieved of future obligations
hereunder.
SECTION 12 - TAXES AND ASSESSMENTS. (a) In addition to the rent
heretofore reserved, the Lessee shall pay to the Lessor, upon
presentation of invoices therefor and as additional rent during the term
hereof, the Lessee's pro rata share of (i) the real property taxes upon
the land and building of which the Leased Premises are a part, and (ii)
any betterment charges, assessment or other special levy against or upon
such land and building. By pro rata share is meant the portion of such
taxes or the portion of such assessment or levy equivalent to the ratio
of the number of square feet of floor space in the Leased Premises to
the total number of square feet of floor space in the building of which
the Leased Premises are a part and shall also mean the portion of such
taxes or such assessment or levy which is due and required to be paid
during the period of the Lease term. Any such additional rent shall
be payable by the Lessee upon written demand therefor by the
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Lessor. It is not the intention of this Section that the Lessee shall
pay any portion of any increase in taxes which is caused by substantial
improvements to the land and buildings of which the Leased Premises are
a part which do not directly or indirectly benefit the Leased Premises.
(b) The Lessee shall have the right to contest or review by legal
proceedings or in such other manner as may be legal (which if instituted
shall be conducted promptly at the Lessee's own expense free of all
expenses to the Lessor) any tax, assessment or levy aforementioned upon
condition that before instituting any such proceeding the Lessee shall
pay (under protest) such tax, assessment or levy aforementioned, or
furnish to the Lessor a surety company performance bond in a company
acceptable to the Lessor or other security satisfactory to the Lessor
sufficient to cover the amount of the contested item or items with
interest for the period which such proceedings may reasonably be
expected to take and costs securing the payment of such contested item
or items and all interest and costs in connection therewith when finally
determined. Notwithstanding the furnishing of any such bond or security,
the Lessee shall pay all such items at ninety (90) days before the date
when the Leased Premises or any part thereof might be forfeited.
SECTION 13 - MECHANIC'S LIEN. In the event of the filing in
Hillsborough County Registry of Deeds of any notice of a builder's,
supplier's or mechanic's lien on the Leased Premises arising out of any
work performed by or on behalf of the Lessee, the Lessee shall either
cause such lien to be discharged or released or shall initiate legal
proceedings to test the validity of the lien claimed; and if the Lessee
shall initiate legal proceedings to test the validity of the lien, the
Lessee shall cause such lien to be discharged or released by the posting
of bond or otherwise and shall completely indemnify the Lessor against
any such claim or lien and all costs of such proceedings wherein the
validity of such lien is contested by the Lessee.
SECTION 14 - EMINENT DOMAIN. In the event that the Leased Premises
shall be lawfully condemned or taken by any public authority either in
their entirety or in such proportion that they are no longer suitable
for the intended use by the Lessee, this lease shall automatically
terminate without further act of either party hereto on the date when
possession of the Leased Premises shall be taken by such public
authority, and each party shall be relieved of any further obligation to
the other except that the Lessee shall be liable for and shall promptly
pay to the Lessor any rent then in arrears or the Lessor shall promptly
rebate to the Lessee a pro rata portion of any rent paid in advance. In
the event the proportion of the Leased Premises so condemned or taken is
such that they are still suitable for the intended use by the Lessee,
this lease shall continue in effect in accordance with its terms and a
portion of the rent shall abate equal to the proportion of the rental
value of the Leased Premises so condemned or taken. In either of the
above events, the award for the property so condemned or taken shall be
apportioned between the Lessor and the Lessee so that the Lessor shall
receive the then value of his reversionary interest in the Leased
Premises plus the then value of the future rents due under the terms of
this lease if such taking had not occurred, and the Lessee shall receive
the then value of its leasehold interest including the then value of any
mechanical installations, equipment and appurtenances, if any,
constructed or installed by the Lessee after the beginning of the term
hereof.
SECTION 15 - LIABILITY. The Lessor shall not be liable to the Lessee
for any injury or harm to any person occurring on or about the Leased
Premises or for injury or damage to the Leased Premises or to any
property of the Lessee or to any property of any third person, firm,
association or corporation on or about the Leased Premises except such
as may be caused by the willful or negligent act of the Lessor, his
servants or agents, and the Lessee shall indemnify and save the Lessor
harmless from and against any and all
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suits, claims and demands of any kind or nature, by and on behalf of any
person, firm, association or corporation, arising out of or based upon
any incident, occurrence, injury or damage which shall or may happen on
or about the Leased Premises and from and against any matter or thing
growing out of the condition, maintenance, repair, alteration, use,
occupation or operation of the Leased Premises or the installation
of any property therein or the removal of any property therefrom except
such as may be caused by the willful or negligent act of the Lessor, his
servants or agents.
SECTION 16 - LIABILITY INSURANCE. The Lessee shall throughout the
term hereof procure and carry at its expense comprehensive liability
insurance on the Leased Premises with an insurance company authorized to
do business in New Hampshire and acceptable to the Lessor. Such
insurance shall be carried in the name of and for the benefit of the
Lessee and the Lessor, shall be written on an "occurrence" basis; and
shall provide coverage of at least $2,000,000 in case of death of or
injury to one person; at least $3,000,000 in case of death of or injury
to more than one person in the same occurrence; and at least $100,000 in
case of loss, destruction or damage to property. A single limit policy
or policies in the total amount of $3,000,000 shall be deemed compliance
with the preceding sentence. The Lessee shall comply with requirements
of the Boilers Unfired Pressured Vessels Law (RSA 157-a), if applicable
and in such event the policies referred to above shall contain an
endorsement providing pressure vessels insurance coverage and naming the
Lessor as an additional insured. The Lessee shall furnish to the Lessor
a certificate of such insurance which shall provide that the insurance
indicated therein shall not be cancelled without at least ten (10) days
written notice to the Lessor. At the date of each adjustment to the base
rent as provided for in Section 27 hereof, Lessee agrees to increase the
insurance coverages provided for herein, if requested to do so by the
Lessor, to an amount mutually agreeable to Lessor and Lessee which is
then adequate to protect against increases in insurance awards whether
caused by inflation or otherwise. Should the parties be unable to agree
on an amount, the matter shall be the subject of arbitration in
accordance with Section 24 hereof.
SECTION 17 - FIRE AND EXTENDED COVERAGE INSURANCE. (a) The Lessor
shall procure and continue in force during the term hereof such amount
of fire and extended coverage insurance upon the Leased Premises as in
his judgment is adequate. The Lessee shall pay to the Lessor, upon
presentation of invoices therefor and as additional rent during the term
hereof, the Lessee's pro rate share of the premiums for such fire and
extended coverage insurance. For this purpose, pro rata share shall have
the meaning set forth in Section 12 hereof. Contents insurance shall be
the responsibility of the Lessee, and the Lessor shall not be liable to
the Lessee for loss or damage from any cause whatsoever to production
machinery and equipment, furniture, furnishings, movable trade fixtures,
inventory, work-in-process and other personal property of the Lessee or
of others in the Leased Premises.
(b) If and to the extent permitted without prejudice to any rights of
the Lessor under the applicable insurance policies, the Lessee shall be
held free and harmless from liability for loss or damage to the Leased
Premises by fire, the extended coverage perils, sprinkler leakage,
vandalism and malicious mischief if and to the extent actually insured
against, whether or not such loss or damage be the result of the
negligence of the Lessee, its employees or agents. This subsection does
not impose any added obligation or expense upon the Lessor nor require
that he carry any insurance of any kind and is to be construed only as a
limitation upon the rights of the insurance carriers to subrogation.
(c) If and to the extent permitted without prejudice to any rights of
the Lessee under the applicable insurance policies, the Lessor shall be
held free and harmless from liability for loss or damage to the Leased
Premises by fire, the extended coverage perils, water leakage, sewer
problems, sprinkler leakage, vandalism
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and malicious mischief if and to the extent actually insured against,
whether or not such loss or damage be the result of the negligence of
the Lessor, his employees or agents. This subsection does not impose
any added obligation or expense upon the Lessee nor require that it
carry any insurance of any kind and is to be construed only as a
limitation upon the rights of the insurance carriers to subrogation.
SECTION 18 - DESTRUCTION OF PREMISES. In the event that the Leased
Premises shall be totally destroyed by fire or other casualty insured
against, or shall be so damaged that repairs and restoration cannot be
accomplished both (a) within a period of one hundred twenty (120) days,
and (b) more than ninety (90) days prior to the expiration of the term
hereof, including any renewal term for which the option therefor shall
have been exercised, or (c) without cost to Lessor in excess of the
insurance proceeds available, if any, this lease shall automatically
terminate without further act of either party hereto, and each party
shall be relieved of any further obligation to the other except that the
Lessee shall be liable for and shall promptly pay the Lessor any rent
then in arrears or the Lessor shall promptly rebate to the Lessee a pro
rata portion of any rent paid in advance. In the event the Leased
Premises shall be so damaged that repairs and restoration can be
accomplished both (a) within a period of one hundred twenty (120) days,
and (b) more than ninety (90) days prior to the expiration of the term
hereof, including the renewal term if the option therefor shall have
been exercised, this lease shall continue in effect in accordance with
its terms; the Lessor shall accomplish such repairs and restoration as
promptly as practicable (utilizing therefor the proceeds of the
insurance applicable thereto without any apportionment therefore for
damages to the leasehold interest created by this Indenture); and until
such repairs and restoration have been accomplished a portion of the
rent shall abate equal to the proportion of the Leased Premises rendered
unusable by the damage in the mutual opinions of the Lessee and Lessor.
In no event shall the obligation of the Lessor to repair and restore
exceed in amount the sum of the insurance proceeds paid to him and/or
released to him by any mortgagee with which settlement was made, and the
Lessee agrees to execute and deliver to the Lessor all instruments and
documents necessary to evidence the fact that the right to such
insurance proceeds is vested in the Lessor. The Lessor shall notify the
Lessee within thirty (30) days following the date of any such damage or
destruction whether or not repairs and restoration can be accomplished
both (a) within a period of one hundred twenty (120) days and (b) more
than ninety (90) days prior to the expiration of the term hereof,
including any renewal term for which the option therefor shall have been
exercised.
SECTION 19 - REPOSSESSION BY LESSOR. At the expiration of this lease
or upon the earlier termination of this lease for any cause herein
provided for, the Lessee shall peaceably and quietly quit the Leased
Premises and deliver possession of the same to the Lessor, together
with all alterations, additions, improvements, mechanical installations,
equipment and appurtenances thereto not removed from the Leased Premises
pursuant to Sections 7 and 8 hereof. The Lessee covenants and agrees
that at the time of delivery of possession to the Lessor at the
expiration of this lease, any and all alterations, additions,
improvements, mechanical installations, equipment and appurtenances
constructed or installed on or in the Leased Premises at its expense
after the beginning of the term hereof and which have become the
property of the Lessor pursuant to Sections 7 and 8 hereof shall be free
and clear of any mortgage, lien, pledge or other encumbrance or charge.
SECTION 20 - SUBORDINATION. The Lessee agrees that this lease and
all rights of the Lessee hereunder are and shall be subject and
subordinate to the lien of (a) any mortgage or deed of trust
constituting a first lien on the Leased Premises, or any part thereof,
at the date hereof, and (b) the lien of any mortgage or
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deed of trust hereafter executed to provide permanent financing or
refinancing of the building of which the Leased Premises are a part, and
(c) any renewal, modification, consolidation or extension of any
mortgage or deed of trust referred to in clause (a) or clause (b). The
Lessee shall, upon demand at any time or times, execute, acknowledge and
deliver to the Lessor without any expense to the Lessor, any and all
instruments that may be necessary or proper to subordinate this lease
and all rights of the Lessee hereunder to the lien of any mortgage, deed
of trust or other instrument referred to in clause (b) or clause (c) of
the preceding sentence; PROVIDED, HOWEVER, that such subordination of
this lease may at the option of the Lessee be conditioned upon the
mortgagee or trustee executing an agreement (i) that so long as the
Lessee is not in default under the terms of this Indenture, the
mortgagee or trustee, or any person succeeding to the rights of the
mortgagee or trustee, or any purchaser at a foreclosure sale under said
mortgage or deed of trust, shall not disturb the peaceful possession
of the Lessee hereunder, and (ii) that the proceeds of insurance
policies held by it will be applied to the cost of repairs and
restoration in those instances in which the Lessor is obligated to
repair and restore pursuant to the provisions hereof.
SECTION 21 - DEFAULT. In the event (i) any installment of rent shall
not be paid within ten (10) days after the same is due and payable; or
(ii) the Lessee defaults in the performance or observance of any other
covenant or condition in this Indenture and such default remains
unremedied for twenty (20) days after written notice thereof has been
given to the Lessee by the Lessor, or (iii) the holder of a security
interest in all or substantially all of the personal property utilized
by the Lessee in, or generated by the operations of the Lessee in the
Leased Premises forecloses the same; or (iv) the Lessee makes an
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies
to any tribunal for any receiver or any trustee of or for the Lessee or
any substantial part of its property, commences any proceeding relating
to the Lessee or any substantial part of its property under any
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter
in effect, or there is commenced against the Lessee any such proceeding
which remains undismissed for a period of sixty (60) days, or any order
approving the petition in any such proceeding is entered, or the Lessee
by any act indicates its consent to, or acquiescence in, any such
proceeding or the appointment of any receiver of or trustee for the
Lessee or any substantial part of its property, or suffers any such
receivership or trusteeship to continue undischarged for a period of
sixty (60) days - then, in any such events, the Lessor may immediately
or at any time thereafter and without demand or notice enter upon the
Leased Premises or any part thereof in the name of the whole and
repossess the same as of the Lessor's former estate and expel the Lessee
and those claiming through or under the Lessee and remove their effects
forcibly if necessary, without being deemed guilty of any manner of
trespass and without prejudice to any remedies which might otherwise be
used for arrears of rent or preceding breach of covenant, and upon such
entry this lease shall terminate; and the Lessee covenants that, in case
of such termination or in case of termination under the provisions of
statute by reason of the default of the Lessee, the Lessee shall remain
and continue liable to the Lessor in an amount equal to the total rent
reserved for the balance of the term plus all additional rent reserved
for the balance of the term hereof less the net amounts (after deducting
the expenses of repair, renovation or demolition) which the Lessor
realizes, or with due diligence should have realized, from the reletting
of the Leased Premises. As used in this Section, the term "additional
rent" means the value of all considerations other than rent agreed to be
paid or performed by the Lessee hereunder, including, without limiting
the generality of the foregoing, taxes, assessments and insurance
premiums. The Lessor shall have the right from time to time to relet
the Leased Premises upon such
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terms as he may deem fit, and if a sufficient sum shall not be thus
realized to yield the net rent required under this lease, the Lessee
agrees to satisfy and pay all deficiencies as they may become due during
each month of the remaining term of this lease, or the Lessor may
require the Lessee to pay to him as damages such lump sum as will
suffice to make the Lessor whole for the balance of the then term of
this lease which shall be a sum based upon a calculation of present
value of such balance using standard accounting practices and formulae
for the determination of present value discount rules as the same may
apply to the balance due hereunder. Nothing herein contained shall be
deemed to require the Lessor to await the date whereon this lease, or
the term hereof, would have expired had there been no default by the
Lessee, or no such termination or cancellation. The Lessee expressly
waives service of any notice of intention to reenter and waives any and
all right to recover or regain possession of the Leased Premises, or to
reinstate or redeem this lease as may be permitted or provided for by or
under any statute or law now or hereafter in force and effect. The
rights and remedies given to the Lessor in this lease are distinct,
separate and cumulative remedies, and no one of them, whether or not
exercised by the Lessor, shall be deemed to be in exclusion of any of
the others herein or by law or equity provided. Nothing contained in
this Section shall limit or prejudice the right of the Lessor to prove
and obtain, in proceedings involving the bankruptcy or insolvency of, or
a composition with creditors by, the Lessee the maximum allowed by any
statute or rule of law at the time in effect.
SECTION 22 - ACCESS TO PREMISES. The Lessor or its representatives
shall have free access to the Leased Premises at reasonable intervals
during normal business hours for the purpose of inspection, or for the
purpose of showing the premises to prospective purchasers or tenants, or
for the purpose of making repairs, which the Lessee is obligated to make
hereunder but has failed or refused to make. The preceding sentence does
not impose upon the Lessor any obligation to make repairs. During the
six (6) months next preceding the expiration of this lease, the Lessor
may keep affixed to any suitable part of the outside of the building of
which the Leased Premises are a part a notice that the Leased Premises
are for sale or rent.
SECTION 23 - HOLDING OVER. In the event the Lessee shall hold over
after the expiration of the term hereof, such holding over shall not
extend the term of this lease but shall create a month-to-month tenancy
upon all the terms and conditions of this Indenture.
SECTION 24 - ARBITRATION. (a) In the event of any dispute to the
meaning or interpretation of any provision of this lease, either party
may, upon ten (10) days' written notice to the other party, require that
the dispute be determined by arbitration under the rules, then
obtaining, of the Commercial Panel of the American Arbitration
Association to be held at its offices in Boston, Massachusetts, unless
otherwise mutually agreed upon.
(b) A decision of an arbitrator made in accordance with the
provisions of this Section shall be final and binding upon both parties
hereto and enforceable in a court of law.
SECTION 25 - BROKERAGE. Each of the parties represents and warrants
that there are no claims for brokerage commissions or finder's fees with
respect to this lease or the negotiation hereof except as set forth in
this Section. The parties further agree to indemnify the other against,
hold it harmless from, all liabilities arising from any such claim
(including without limitation, the cost of counsel fees in connection
therewith) except; the broker for this lease is TAMPOSI-NASH REAL ESTATE
GROUP, whose fee will be paid by Lessor.
SECTION 26 - OPTION TO RENEW. Provided it be not at the time in
default in the payment of the rent or in the performance of any
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of its other obligations hereunder, the Lessee, upon not less than six
(6) months' written notice to the Lessor, may renew this lease for (1)
additional term of three (3) years. Such renewal term shall be upon all
of the terms and conditions of this lease except that the rent shall be
as provided in Section 27 hereof and except that there shall be no
further option of renewal upon expiration of the renewal term.
SECTION 27 - BASE RENT FOR RENEWAL TERM. (a) If any option to renew
shall be exercised, the base monthly rent during the renewal term shall
be an amount determined by multiplying the base monthly rent of Three
Thousand Nine Hundred Sixty-Eight Dollars and Seventy-Five Cents
($3,968.75) by a fraction the numerator of which shall be the Price
Index for the last complete month prior to the expiration of the
original or expiring renewal term hereof, and the denominator of which
shall be the Price Index for the month prior to the month in which the
original term hereof began; PROVIDED, HOWEVER, that is such fraction is
one or less, the base monthly rent shall remain at Three Thousand Nine
Hundred Sixty-Eight Dollars and Seventy-Five Cents ($3,968.75).
(b) As used in this Section the term "Price Index" means (i) the
"Consumers' Price Index - Boston area, (1982-84 = 100)" (referred to as
CPI-U) published by the Bureau of Labor Statistics of the United States
Department of Labor, or (ii) if the publication of such Consumers' Price
Index shall be discontinued, the comparable index most clearly
reflecting diminution of the real value of the base rent herein provided
for. In the event of a change in the base for the Price Index, the
numerator and denominator of the fraction referred to above shall be
appropriately adjusted to reflect continued use of the 1982-84 base in
the case of the Consumers' Price Index or in the case of such comparable
index, the continued use of the base period in effect at the time of its
adoption for use hereunder. At the request of either party hereto, the
other from time to time shall execute an appropriate instrument
supplemental to this Indenture evidencing the then current monthly rent
payable by the Lessee hereunder.
SECTION 28 - NOTICES. Any written notice, request or demand required
or permitted by this Indenture shall, until either party shall notify the
other in writing of a different address, by properly given if sent by
certified or registered first class mail, postage prepaid, and addressed
as follows:
If to the Lessor: Nash Family Investment Properties
Ballinger Properties
40 Temple Street
Nashua, NH 03060
If to the Lessee: Hadco Corporation
10 Manor Parkway
Salem, NH 03079
SECTION 29 - SUCCESSION. This Indenture shall be binding upon and
inure to the benefit of the heirs, executors, administrators,
successors and assigns of the parties hereto.
SECTION 30 - WAIVER. Any consent, express or implied, by the Lessor
to any breach by the Lessee of any covenant or condition of this lease
shall not constitute a waiver by the Lessor of any prior or succeeding
breach by the Lessee of the same or any other covenant or condition of
this lease. Acceptance by the Lessor of rent or other payment with
knowledge of a breach of or default under any term hereof by the Lessee
shall not constitute a waiver by the Lessor of such breach or default.
SECTION 31 - GOVERNING LAW. This Indenture shall be construed and
interpreted in accordance with the laws of the State of New Hampshire
and questions or disputes concerning interpretation shall be determined
in the court of appropriate jurisdiction.
10
<PAGE> 11
SECTION 32 - FORCE MAJEURE. Except as expressly provided herein,
there shall be no abatement, diminution or reduction of the rent or
other charges payable by the Lessee hereunder based upon, or claimed as
a result of, any act of God, act of the public enemy, governmental
action, or other casualty, cause or happening beyond the control of the
parties hereto.
SECTION 33 - COUNTERPARTS. This Indenture may be executed in two (2)
or more counterparts, each of which shall be deemed to be an original,
and all collectively but one and the same instrument.
SECTION 34 - ENVIRONMENTAL SITE ASSESSMENTS. Lessor agrees that
Lessee may conduct an environmental site assessment performed, at its
sole cost and expense, at the Leased Premises and on the land of which
the Leased Premises are a part prior to the commencement of the lease
term. The site assessment will be performed by a firm selected by the
Lessee and the full report shall be delivered to the Lessee. Lessee
shall have the right to cancel by written notice to Lessor given within
ten (10) business days after receipt of the complete environmental site
assessment if, in the opinion of Lessee, such assessment reveals the
presence or existence of any contaminant, hazardous materials, toxic
waste or similar item at the Leased Premises or upon the property of
which the Leased Premises are a part.
Lessee shall have the right to have an environmental site assessment
performed, at its sole cost and expense, at the Leased Premises and on
the land of which the Leased Premises are a part at the conclusion of
the lease term. Lessee shall be entitled to select the firm to perform
such assessment and the full report of the assessment shall be delivered
directly to Lessee.
Notwithstanding anything elsewhere in this Indenture of Lease, Lessee
shall have no liability for any claim, demand, cost or expense resulting
from the presence or existence of any contaminant, hazardous materials,
toxic waste or similar item at the Leased Premises or on the land of
which the Leased Premises are a part if such contaminant, hazardous
material, toxic waste or similar item was revealed in the environmental
site assessment performed prior to commencement of the lease term.
Lessor shall indemnify and hold Lessee harmless from and against any
claim, demand, cost or expense which may be made or assessed against, or
incurred by, Lessee resulting from the toxic waste or similar item at
the Leased Premises or on the land of which the Leased Premises are a
part if such contaminant, hazardous materials, toxic waste or similar
item was revealed in the environmental site assessment performed prior
to commencement of the lease term.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be executed and delivered as of the day and year first above written.
NASH FAMILY INVESTMENT PROPERTIES
By: /s/ Q. PETER NASH
-----------------------------------
Q. Peter Nash, Managing Partner
BALLINGER PROPERTIES L.L.C.
By: /s/ SAMUEL A. TAMPOSI, JR., Manager
-----------------------------------
Samuel A. Tamposi, Jr., Manager
HADCO CORPORATION
By: /s/ DON TORRISI, Materials Mgr.
-----------------------------------
Don Torrisi, Materials Manager
11
<PAGE> 12
[MAP]
<PAGE> 13
EXHIBIT B
---------
TO NASH FAMILY INVESTMENT PROPERTIES AND
BALLINGER PROPERTIES, L.L.C., LEASE DATED
JANUARY 13TH, 1995, HAMPSHIRE DRIVE
AND FLAGSTONE DRIVE, HUDSON, NEW HAMPSHIRE
LESSOR'S RESPONSIBILITIES
-------------------------
1. Lessor shall paint the exterior of the building of which the Leased
Premises are a part, to be completed by Lessor within fourteen (14)
days of the date of execution of the Lease.
2. Lessor shall connect the sanitary sewer system servicing the Leased
Premises to the municipal sewer system of the Town of Hudson, New
Hampshire, within forty-five (45) days of the date of execution of the
Lease; provided, however, that upon completion of said connection and
tender by Lessor of an invoice to Lessee, Lessee agrees to immediately
pay the sum of Two Thousand Five Hundred and 00/100 Dollars ($2,500.00)
to Lessor, representing its full and complete share of the cost of the
construction and the connection fee assessed by the Town of Hudson to
the Lessor.
Lessee acknowledges that the repairs described hereinabove are reasonable and
necessary and grants Lessor reasonable access to the Leased Premises during the
term of the Lease in order to complete the same.
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<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-28-1995
<PERIOD-START> OCT-30-1994
<PERIOD-END> JAN-28-1995
<EXCHANGE-RATE> 1
<CASH> 15,603
<SECURITIES> 12,557
<RECEIVABLES> 26,939
<ALLOWANCES> 801
<INVENTORY> 10,491
<CURRENT-ASSETS> 70,102
<PP&E> 158,999
<DEPRECIATION> 106,070
<TOTAL-ASSETS> 123,803
<CURRENT-LIABILITIES> 35,336
<BONDS> 0
<COMMON> 484
0
0
<OTHER-SE> 79,241
<TOTAL-LIABILITY-AND-EQUITY> 123,803
<SALES> 56,825
<TOTAL-REVENUES> 56,825
<CGS> 45,533
<TOTAL-COSTS> 52,055
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (194)
<INCOME-PRETAX> 4,964
<INCOME-TAX> 1,961
<INCOME-CONTINUING> 3,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 3,003
<EPS-PRIMARY> .29
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