<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 April 27, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
----------- -----------
Commission File 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 10,358,898 shares of Common Stock, $0.05 Par Value, outstanding
at June 3, 1996.
<PAGE> 2
HADCO CORPORATION AND SUBSIDIARIES
<TABLE>
INDEX
<CAPTION>
Part I. Page
<S> <C>
Financial Information:
Consolidated Condensed Balance Sheets as of
April 27, 1996 and October 28, 1995 ............................. 3
Consolidated Condensed Statements of Income
for the Quarters ended April 27, 1996 and
April 29, 1995, and six months ended April
27, 1996 and April 29, 1995, respectively ....................... 4
Consolidated Condensed Statements of Cash Flows
for the six months ended April 27, 1996
and April 29, 1995, 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 ................................................ 16
Signatures ....................................................... 18
</TABLE>
2
<PAGE> 3
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(In thousands, except share data)
<CAPTION>
ASSETS
------
April 27, October 28,
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 13,815 $ 21,307
Short-term investments 8,170 15,167
Accounts receivable, net of allowance for
doubtful accounts of $900,000 in 1996 and
$850,000 in 1995, respectively 41,070 35,797
Inventories 17,194 13,304
Prepaid expenses 7,937 7,984
-------- --------
Total Current Assets 88,186 93,559
-------- --------
Property, Plant and Equipment, at cost 213,464 183,760
Less - Accumulated depreciation and amortization 122,389 116,068
-------- --------
91,075 67,692
-------- --------
Other Assets 2,227 1,740
-------- --------
$181,488 $162,991
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities:
Current maturities of long-term debt
and capital lease obligations $ 1,587 $ 2,143
Accounts payable and accrued expenses 32,335 40,352
Accrued Payroll and related expenses 15,728 10,021
-------- --------
Total Current Liabilities 49,650 52,516
-------- --------
Long-Term Debt and Capital Lease Obligations 1,670 2,387
-------- --------
Long-Term Liabilities (Note 5) 8,569 7,314
-------- --------
Stockholders' Investment:
Common stock, $.05 par value -
Authorized 25,000,000 shares
Issued and outstanding 10,356,673
in 1996 and 9,763,461 in 1995 519 497
Paid-in Capital 30,704 25,077
Deferred Compensation Resulting from the
Granting of Non-qualified Stock Options (317) (407)
Retained Earnings 90,693 75,607
-------- --------
Total Stockholders' Investment 121,599 100,774
-------- --------
$181,488 $162,991
======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed financial statements
3
<PAGE> 4
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
-------------------------------------------
unaudited
---------
(In thousands, except share data)
<CAPTION>
Quarter Ended Six Months Ended
---------------------------- ----------------------------
April 27, April 29, April 27, April 29,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 88,096 $ 67,637 $ 164,574 $ 124,462
Cost of Sales 66,203 51,376 123,201 96,909
----------- ----------- ----------- -----------
Gross Profit 21,893 16,261 41,373 27,553
Selling, General and
Administrative Expenses 9,190 7,919 17,139 14,441
----------- ----------- ----------- -----------
Income from Operations 12,703 8,342 24,234 13,112
Interest Income 329 372 683 705
Interest Expense (95) (130) (190) (269)
----------- ----------- ----------- -----------
Income Before Provision for
Income Taxes 12,937 8,584 24,727 13,548
Provision for Income Taxes 5,042 3,391 9,642 5,352
----------- ----------- ----------- -----------
Net Income $ 7,895 $ 5,193 $ 15,085 $ 8,196
=========== =========== =========== ===========
Net Income Per Common and
Common Equivalent Share $ .71 $ .49 $ 1.36 $ .78
=========== =========== =========== ===========
Weighted Average Common and Common
Equivalent Shares Outstanding 11,134,610 10,626,412 11,124,599 10,553,048
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed financial statements.
4
<PAGE> 5
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------------------------------------
unaudited
---------
(In thousands)
<CAPTION>
Six Months Ended
----------------------
April 27, April 29,
1996 1995
--------- ---------
<S> <C> <C>
Total Cash Provided From Operations $ 12,761 $ 9,572
-------- -------
Cash Flows From Investing Activities:
Net purchases of short-term investments 6,997 386
Purchases of property, plant and equipment (31,890) (5,512)
Proceeds from sale of property, plant and
equipment 255 279
-------- -------
Cash Used In Investing Activities (24,638) (4,847)
-------- -------
Cash Flows From Financing Activities:
Principal payments under capital lease obligations (1,227) (1,350)
Principal payments of long-term debt (46) (2,046)
Proceeds from issuance of common stock 5,658 749
Purchase and retirement of common stock 0 (1,018)
-------- -------
Cash Provided by (used in) Financing Activities 4,385 (3,665)
-------- -------
Increase (decrease) in Cash and Cash Equivalents (7,492) 1,060
Cash and Cash Equivalents Beginning of Period 21,307 19,064
-------- -------
Cash and Cash Equivalents End of Period $ 13,815 $20,124
======== =======
Supplemental disclosure of cash flow information:
Cash paid during the respective periods for:
Interest $ 155 $ 321
======== =======
Income taxes $ 7,730 $ 4,586
======== =======
</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 April 27, 1996, 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 9, 1996.
These financial statements should be read in conjunction with the financial
statements included in that Form 10-K.
2. Short-term Investments
----------------------
<TABLE>
As of April 27, 1996, the Company held investments in the following
held-to-maturity securities:
<CAPTION>
Fair
Cost Market Value Maturity
---- ------------ --------
(in thousands)
<S> <C> <C> <C>
Debt securities issued
by the US Government $2,000 $1,996 within 1 year
Debt securities issued
by states of the US 1,000 1,000 within 1 year
Corporate debt
securities 5,170 5,151 within 1 year
------ ------
$8,170 $8,147
====== ======
</TABLE>
6
<PAGE> 7
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
-----------
3. Inventories
-----------
<TABLE>
Inventories are stated at the lower of cost, first-in, first-out (FIFO) or
market and consist of the following:
<CAPTION>
April 27, October 28,
1996 1995
-------- -----------
(In thousands)
<S> <C> <C>
Raw Materials $ 8,294 $ 6,318
Work-in-process 8,900 6,986
------- -------
Total $17,194 $13,304
======= =======
</TABLE>
4. Significant Customers
---------------------
One customer accounted for 13% of net sales for the quarter ended April
27, 1996. For the quarter ended April 29, 1995, there were no customers who
accounted for more than 10% of net sales.
5. Environmental Matters
---------------------
During March 1995, the Company received a Record Of Decision (ROD) from the
New York State Department of Environmental Conservation (NYSDEC), regarding soil
and groundwater contamination at its Owego, New York facility. Based on a
Remedial Investigation and Feasibility Study (RIFS) for apparent on-site
contamination at that facility and a Focused Feasibility Study (FFS), each
prepared by environmental consultants of the Company, the NYSDEC had approved a
remediation program of groundwater withdrawal and treatment and iterative soil
flushing. The cost, based upon the FFS, to implement this remediation is
estimated to be $4.6 million, and is expected to be expended as follows:
$300,000 for capital equipment and $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 consider taking 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 and/or other third
parties will not be required to conduct additional investigations and
remediation at that location, the costs of which are currently indeterminable
due
7
<PAGE> 8
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
-----------
5. Environmental Matters (Continued)
---------------------------------
to the numerous variables described in the second sentence of the fourth
paragraph of this "Environmental Matters" section.
From 1974 to 1980, the Company operated a printed circuit manufacturing
facility in Florida as a lessee of property that is now the subject of a pending
lawsuit ("the Florida Lawsuit") and investigation by the Florida Department of
Environmental Regulation (FDER). On June 9, 1992, the Company entered into a
Cooperating Parties Agreement in which it and Gould, Inc., another prior lessee
of the site, have agreed to fund certain assessment and feasibility study
activities at the site, and an 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, 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 FDER 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. Also see the penultimate paragraph of this "Environmental Matters"
section relating to the Company's having been named as a third-party defendant
in the Florida Lawsuit.
The Company is planning the installation of a groundwater extraction system
at its Derry, New Hampshire facility to address certain groundwater
contamination. Because of the uncertainty regarding both the quantity of
contaminants beneath the building at the site and the long-term effectiveness of
the groundwater migration control system the Company proposes to install, it is
not possible to make a reliable estimate of the length of time remedial activity
will have to be performed. However, it is anticipated that the groundwater
extraction system will be operated for at least 30 years. There can be no
assurance that the Company will not be required to conduct additional
investigations and remediation relating to the Derry facility. The total costs
of such groundwater extraction system and of conducting any additional
investigations and remediation relating to the Derry facility are
8
<PAGE> 9
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
-----------
5. Environmental Matters (Continued)
---------------------------------
not fully determinable due to the numerous variables described in the fourth
paragraph of this "Environmental Matters" section.
The Company accrues estimated costs associated with known environmental
matters, when such costs can be reasonably 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 $9.5
million and $8.2 million at April 27, 1996 and October 28, 1995, respectively.
The current portion of these costs as of April 27, 1996 and October 28, 1995,
amounted to approximately $900,000, and is included in "Accounts Payable and
Accrued Expenses." The long-term portion of these costs amounted to
approximately $8.6 million and $7.3 million as of April 27, 1996 and October 28,
1995, respectively, and is reported under the caption "Long-Term Liabilities."
Based upon its assessment at the current time, management estimates the cost of
ultimate disposition of the above known environmental matters to range form
approximately $7.0 million to $12.0 million, and is expected to be spread over
a number of years. 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.
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. In April, 1996, the EPA published for comment, and
recommended for approval, a proposal to change the remedy at the Auburn Road
site from active groundwater remediation to future monitoring. Other parties to
the lawsuit also allege that future monitoring will be required. The Company is
contesting liability, but is participating in mediation with twenty-seven other
parties in an
9
<PAGE> 10
HADCO CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
-----------
5. Environmental Matters (Continued)
---------------------------------
effort to resolve the lawsuit. Management believes that the ultimate disposition
of this lawsuit will not have a material adverse effect upon the liquidity,
capital resources, business or consolidated financial position of the Company.
In connection with the "Florida Lawsuit" (as described in the second
paragraph of this "Environmental Matters" section), pending in the Circuit Court
of Broward County, Florida, Hadco and Gould, Inc., another prior lessee of the
site of the printed circuit manufacturing facility in Florida, each was served
with a third-party complaint in June 1995, as third-party defendants in such
pending Florida lawsuit by a party who had previously been named as a defendant
when the Florida Lawsuit was commenced in 1993 by the FDER. The Florida Lawsuit
seeks damages relating to environmental pollution and FDER costs and expenses,
civil penalties, and declaratory and injunctive relief to require the parties to
complete assessment and remediation of soil and groundwater contamination. The
other parties include alleged owners of the property and Fleet Credit
Corporation, a secured lender to a prior lessee of the property.
The future costs in connection with the lawsuits described in the two
immediately preceding paragraphs 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
------------------------------------------------
Except for the historical information contained herein, the matters
discussed below or elsewhere in this quarterly report including, without
limitation "Environmental Matters" are forward-looking statements that involve
risks and uncertainties. Any forward-looking statements should be considered in
light of the factors described below under "Factors That May Affect Future
Results." Actual results may vary materially from those projected, anticipated
or indicated in any forward-looking statements.
Results of Operations
- ---------------------
Second Quarter
- --------------
Net sales for the second quarter of 1996 increased 30.2% over the same
period in 1995. The change was due to an 11.1% increase in the volume of
production and shipments, and a shift in product mix to higher layer, higher
density printed circuits, as compared to the second quarter last year. Average
pricing per unit increased 5.4% for the second quarter of 1996 over the second
quarter of 1995. Sales of backplane and other electronic assemblies increased to
14% of the Company's net revenues for the quarter ended April 27, 1996, versus
6% for the same period last year. The Company believes that excess capacity may
exist in the printed circuit and electronic assembly industries, as well as
fluctuating growth rates in the electronics industry as a whole. Both factors
could have an adverse impact on future orders and pricing.
The gross profit margin increased from 24.0% in the second quarter of 1995
to 24.8% in the second quarter of 1996. The increase is a direct result of
higher volume of shipments, and an increase in the technology level of product
mix. The Company believes that the potential exists for a shortage of materials
in the industry, which could have an adverse impact on future unit costs.
Selling, general and administrative (SG&A) expenses, as a percent of net
sales, decreased to 10.4% in the second quarter of 1996 as compared to 11.7% in
the second quarter of 1995 due to increased revenue. SG&A expenses increased
from $7.9 million in the second quarter of 1995 to $9.2 million in the second
quarter of 1996, as a result of increased variable costs directly attributable
to increased net sales. Included in SG&A expenses are charges for actual
expenditures and accruals, based on estimates, for environmental matters. During
the second quarter of 1996 and 1995, the Company made, and charged to SG&A
expenses, actual payments of approximately $311,000 and $242,000, respectively,
for environmental matters. In the second quarter of 1996 and 1995, the Company
also accrued and charged to SG&A expenses approximately $569,000 and $922,000,
respectively, as cost estimates relating to known environmental matters. To the
extent and in amounts Hadco
11
<PAGE> 12
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.
Interest income decreased in the second quarter of 1996 as compared to the
second quarter of 1995 due to lower average cash balances available for
investing.
Interest expense decreased in the second quarter of 1996 as compared to the
second quarter of 1995 due to a decrease in outstanding debt.
Year-to-Date
- ------------
Net sales for the first half of 1996 increased 32.2% above the same period
in 1995. The increase is the result of a 13.9% higher volume of production and
shipments and an increase in the technology level of product mix from the same
period last year. The increase in net sales was affected by a 7.9% increase in
average pricing. Sales of backplanes and other electronic assemblies increased
to 12% of the Company's net revenues for the first half of 1996 versus 6% for
the same period last year.
The gross profit margin increased 22.1% to 25.1% for the first half of 1995
and 1996, respectively. 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.
SG&A expenses decreased as a percent of net sales, from 11.6% to 10.4% for
the first half of 1995 and 1996, respectively. This resulted from increased
revenue. The SG&A expenses increased from $14.4 million to $17.1 million for the
first half of 1995 and 1996, respectively, as a result of increased variable
costs directly attributable to increased revenue. Included in SG&A expenses are
charges for actual expenditures and accruals, based on estimates, for
environmental matters. During the first half of 1996 and 1995, the Company made,
and charged to SG&A expenses, actual payments of approximately $525,000 and
$586,000, respectively, for environmental matters. In the first half of 1996 and
1995, the Company also accrued and charged to SG&A cost estimates approximately
$1,255,00 and $1,227,000, respectively, as cost estimates relating to know
environmental matters.
Interest income decreased in the first half of 1996 as compared to the same
period in 1995 due to lower cash balances available for investing.
12
<PAGE> 13
Interest expense decreased in the first half of 1996 as compared to the
second quarter of 1995 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 second quarter at its estimated annual
effective rate. The Company presently anticipates that the effective annual rate
of income taxes for 1996 will be 39.0%, which is less than the current combined
federal and state statutory rates. This difference is caused by tax advantaged
investment income, the tax benefit of a Foreign Sales Corporation (FSC), and
various state investment tax credits. The effective tax rate for 1996 is based
on current tax laws.
Liquidity and Capital Resources
- -------------------------------
At April 27, 1996, the Company's working capital was $38.5 million,
including cash, cash equivalents and held-to-maturity securities of $21.9
million, as compared to working capital of $41.0 million, including cash, cash
equivalents and held-to-maturity securities of $36.5 million, at October 28,
1995.
<TABLE>
At April 27, 1996, the following lines of credit were available to the
Company:
<CAPTION>
(in thousands)
------------
<S> <C>
Leasing Line of Credit $ 4,520
Revolving/Term Lines of Credit 25,000
-------
Total Credit Available $26,020
=======
</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 26, 1996.
Factors That May Affect Future Results
- --------------------------------------
The Company operates in a changing environment that involves a number of
risks, some of which are beyond the Company's control. The following discussion
highlights some of these risks.
Variability of Customer Requirements; Nature and Extent of Customer
Commitments on Orders. The level and timing of orders placed by the Company's
customers vary due to customer attempts to
13
<PAGE> 14
manage inventory, changes in the customers' manufacturing strategies and
variation in demand for customer products due to, among other things,
technological change, introduction of new products, product life cycles,
competitive conditions or general economic conditions. The Company generally
does not obtain long-term purchase orders or commitments. A certain portion of
the Company's backlog may be subject to cancellation or postponement without
significant penalty or without any penalty.
Competition. The domestic market for printed circuits is highly competitive and
fragmented. The Company believes its major competitors are larger independent
producers and captive producers world-wide, which also manufactures multilayer,
high density printed circuits and provide backplane and other electronic
assemblies. During periods of recession in the electronic industry, and other
periods when excess capacity exists, electronic equipment manufacturers become
more price sensitive, which could have a material adverse impact on pricing. In
addition, the Company's competitors may seek orders in the open market to fill
excess capacity, thereby increasing price competition.
Process Technology and Risk of Process Failure. The Company's success
depends in part on its proprietary techniques and manufacturing expertise,
particularly in the area of the multilayer, high density circuit boards. At this
time, the Company has no patents for these proprietary techniques and chooses to
rely on trade secret protection. In addition, the introduction of new
manufacturing processes are subject to failure. The loss of revenue and earnings
to the Company from such a failure could have a material adverse effect on its
results of operations.
Dependence on Electronics Industry. The Company's customers include
OEMs and contract manufacturers of data communications and telecommunications
equipment, instrumentation and industrial equipment, and computers and
peripheral business systems. These industry segments, as well as the
electronics industry as a whole, are subject to rapid technological change and
product obsolescence. Discontinuance or modification of products containing
printed circuit boards manufactured by the Company could have a material
adverse effect on the Company. The electronics industry is subject to economic
cycles and has experienced and is likely in the future to experience
recessionary periods. Pricing pressures, a general recession or any other event
leading to excess capacity or a downturn in the electronics industry likely
would result in intensified price competition, reduced gross margins and a
decrease in unit volume, which could have a material adverse effect on the
Company.
Environmental Compliance. The Company is subject to a variety of
environmental regulations relating to the use, storage, discharge and disposal
of hazardous chemicals used during its manufacturing process. A failure by the
Company to comply with present and
14
<PAGE> 15
future regulations could subject it to future liabilities or the suspension of
production. Such regulations could also restrict the Company's ability to
expand its facilities or could require the Company to acquire costly equipment
or to incur other significant expenses to comply with environmental
regulations. The Company may also from time to time be subject to lawsuits with
respect to environmental matters. The extent of the Company's liability under
any such suit is indeterminable and may, in certain circumstances, have a
material adverse effect on the Company.
Possible Volatility of Market Price of Common Stock. The trading price
of the common stock is subject to significant fluctuations in response to
variations in quarterly operating results, general conditions in the
electronics industry and other factors. In addition, the stock market is
subject to price and volume fluctuations which affect the market price for many
high technology companies in particular, and which often are unrelated to
operating performance.
15
<PAGE> 16
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of stockholders of Hadco Corporation was held on
February 28, 1996.
(b) No information provided due to inapplicability of item.
(c) A vote was proposed to (1) fix the number of directors at nine and to
elect a Board of Directors to serve for the ensuing year or until
their respective successors are duly elected and qualified; (2)
ratify the selection of Arthur Andersen LLP as auditors for the
fiscal year ending October 26, 1996; (3) approve an amendment to the
Corporation's Restated Articles of Organization to increase the
authorized shares from 25,000,000 to 100,000,000 (the requisite
number of votes to pass this proposal was not obtained) and (4)
approve the Hadco Corporation Nonqualified Stock Option Plan of
November 29, 1995.
<TABLE>
The voting results are as follows:
<CAPTION>
Votes Votes Votes Votes Broker
For Against Withheld Abstained Non-Votes
<S> <C> <C> <C> <C> <C>
(1) Horace H. Irvine II 8,081,800 N/A 1,137,265 N/A -
Patrick Sweeney 8,081,250 N/A 1,137,815 N/A -
Andrew E. Lietz 8,081,850 N/A 1,137,215 N/A -
John O. Irvine 8,081,050 N/A 1,138,015 N/A -
J. Stanley Hill 8,078,900 N/A 1,140,165 N/A -
Oliver O. Ward 8,080,850 N/A 1,138,215 N/A -
Lawrence Coolidge 8,081,750 N/A 1,137,315 N/A -
Mikael Salovaara 8,079,950 N/A 1,139,115 N/A -
John F. Smith 8,081,250 N/A 1,137,815 N/A -
(2) Arthur Andersen LLP 8,956,145 28,130 N/A 234,790 -
(3) Restated Articles of
Organization 4,600,668 4,380,792 N/A 237,605 -
(4) Stock Option Plan of
November 29, 1995 4,484,931 3,215,327 N/A 270,824 1,247,983
</TABLE>
16
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(d) No information provided due to inapplicability of item.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
10.1 Amendment to lease dated March 1, 1992 between Registrant and
Equity Property Associates I.
10.2 Lease dated November 1, 1995 between Registrant and Equity
Property Associates I.
10.3 Lease dated November 1, 1995 between Registrant and Equity
Property Associates I.
10.4 Amendment to lease dated March 1, 1992 between Registrant and
Equity Property Associates I.
27 Financial Data Schedule
(b) Reports on Form 8-k
There were no reports on Form 8-k filed for the quarter ended
April 27, 1996.
17
<PAGE> 18
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
/s/ Timothy P. Losik
Date: June 03, 1996 By: Timothy P. Losik
Chief Financial Officer,
Vice President
18
<PAGE> 1
EXHIBIT 10.1
AMENDMENT TO LEASE
The Lease by and between Equity Property Associates I (Landlord) and HADCO
Corporation (Tenant) dated March 1, 1992 is hereby amended as follows:
Amendment No. 1: Tenant Floor Space will be 38,895 square feet
Amendment No. 2: Tenant's Term will be extended to March 31, 2000.
Amendment No. 3: The Annual Fixed Rent will be $234,394.00.
Amendment No. 4: The Included Operating Expense Share will be $19,959.90.
Amendment No. 5: The Included Tax Expense Share will be $39,407.40.
Amendment No. 6: A new Exhibit D - "Renewal Option" will be attached
hereto.
Amendment No. 7: An additional Exhibit E - Right of First Refusal will be
attached hereto.
The effective date of this Amendment will be May 1, 1995.
All other provisions of the Lease are hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties have executed this Amendment to Lease this
day of July, 1995
WITNESS: LANDLORD: Equity Property Associates, I
/s/ Timothy S. Mathews /s/ John W. Merchant
- ------------------------------- ---------------------------------------
TENANT: HADCO Corporation
/s/ Timothy S. Mathews /s/ Timothy P. Losik
- ------------------------------- ---------------------------------------
<PAGE> 1
EXHIBIT 10.2
LEASE
Lease of space in 12B Manor Parkway, Salem, New Hampshire (hereinafter the
"Building").
Dated for reference purposes as of November 1, 1995.
ARTICLE I.
TERMS DEFINED
Each reference in this Lease to any of the following terms shall mean:
1.1 Landlord: Equity Property Associates I
C/O JWM Properties, Inc.
12B Manor Parkway
Salem, NH 03079
1.2 Tenant: HADCO Corporation
12B Manor Parkway
Salem, NH 03079
1.3 Building Floor Space: 30,000 sq. ft.
1.4 Tenant's Floor Space: 5,376 sq. ft.
1.5 Term: 5 years
1.5.1 Schedule Term Commencement Date: November 1, 1995
1.6 Annual Fixed Rent: $35,482.00
1.6.1 Included Operating Expense Share: $2,957.00
1.6.2 Included Tax Expense Share: $5,645.00
1.7 Permitted Uses: Office
1.8 Security Deposit: None
1.9 Exhibits:
Exhibit A - Description of Premises
Exhibit B - Plan
Exhibit C - Renewal Option
<PAGE> 2
ARTICLE II
PREMISES, TERM AND RENT
2.1 PREMISES. Landlord hereby leases to Tenant, subject to and with the
benefit of the provisions of this Lease, the premises described in the
Description (the "Premises"), attached as Exhibit A.
2.2 COMMON AREAS. Tenant shall have, as appurtenant to the premises, rights
to use in common, subject to reasonable rules from time to time made by Landlord
of which Tenant is given notice;
(a) BUILDING COMMON AREA. The common accessways loading docks and platforms
and any passageways thereto, and the common pipes, ducts, conduits, wires and
appurtenant equipment serving the Premises; and
(b) LAND COMMON AREA. Common walkways, sidewalks and driveways necessary
for access to the Building and parking spaces or area from time to time
maintained on the real property upon which the building is situated ("Lot").
2.3 LANDLORD'S RESERVED RIGHTS IN COMMON AREA. Landlord reserves the right
from time to time, without unreasonable interference with Tenant's use:
(a) BUILDING CHANGES. To install, use, maintain, repair and replace pipes,
ducts, conduits, wires and appurtenant meters and equipment for service to other
parts of the building above the ceiling surfaces, below the floor surfaces,
within the walls and in the central core areas, and to relocate any pipes,
ducts, conduits, wires and appurtenant meters and equipment included in the
premises which are so located or located elsewhere outside the premises.
(b) BOUNDARY CHANGES. To change the lines of the lot.
(c) FACILITY CHANGES. To alter or relocate any other common facility;
provided, however, that substitutions are substantially equivalent or better in
quality.
2.4 TERM. The term shall commence on the Scheduled Term Commencement Date
as it may be extended pursuant to Section 3.1, and shall continue until
terminated as herein provided.
2.5 RENT/MONTHLY PAYMENT. Tenant shall pay fixed rent of one-twelfth (1/12)
of the Annual Fixed Rent, in advance on the first day of each calendar month,
for each full calendar month of the term and for the appropriate fraction of a
calendar month at the beginning and end of the term.
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<PAGE> 3
ARTICLE III.
CONSTRUCTION
3.1 COMPLETION OF PREMISES. Tenant agrees to lease the premises "as is".
3.2 ALTERATIONS.
(a) RIGHT TO MAKE ALTERATIONS. Tenant may, from time to time make
non-structural alterations and additions to the interior of premises in
accordance with plans and specifications first approved by Landlord in writing,
the granting of said approval to be in the sole discretion of Landlord. Tenant
shall indemnify and hold harmless Landlord from and against any loss, cost,
damage, injury or expenses suffered by Landlord as a result of said work.
(b) TITLE TO IMPROVEMENTS. All improvements and additions existing as of
the commencement of this Lease shall be part of the building except such items
as, by writing at the time of approval, the parties agree shall be removed by
Tenant on termination of this Lease, or Landlord agrees that Tenant may then
elect to remove or leave.
3.3 NO LIENS. Tenant shall within five (5) days after the attachment of any
lien or claim of lien pay and discharge or secure the release from the building
and/or lot of any lien or claim of lien arising out of or in connection with
construction work by or for the account of Tenant; and Tenant shall promptly
indemnify Landlord from and against all loss, cost, damage, injury or expense in
connection with any such lien or claim of lien, including without limitation,
reasonable attorney's fees.
3.4 QUALITY OF CONSTRUCTION. All work shall be done in a good and
workmanlike manner and in compliance with all applicable laws and lawful
ordinances, by-laws, regulations and orders of governmental authority and of the
insurers of the premises. Landlord assumes no liability for special,
consequential or incidental damages of any kind. There are no representations,
warranties of merchantability or use of the premises, except as are expressly
set forth herein. Tenant hereby waives the benefit of any rule that disclaimers
of warranty shall be construed against Landlord and agrees that the disclaimers
in this Lease shall be construed liberally in favor of Landlord.
3
<PAGE> 4
ARTICLE IV.
SERVICES AND REPAIRS
4.1 LANDLORD'S REPAIRS. Landlord agrees during the term hereof, after
written notice from Tenant, unless occasioned by Tenant's misuse or negligence,
to repair any structural defects in the roof and bearing walls, and to commence
promptly and proceed diligently with any repair or restoration required.
4.2 INTERRUPTION. There shall be no rental abatement for nor shall Landlord
be liable for interruption of any service due to accident, making of repairs,
alterations or improvements, unusually severe weather, unusual difficulty or
inability in obtaining services or supplies from sources usually used for the
Building, labor difficulties, governmental regulations, or other causes beyond
Landlord's reasonable control.
ARTICLE V.
TENANT'S COVENANTS
5.1 UTILITIES PAYMENT. Tenant agrees to pay all charges for utilities,
including but not limited to, electricity, fuel services and service inspections
therefor, which are metered and/or charged directly to the Tenant.
5.2 OPERATING EXPENSE ESCALATION. If Tenant's share of Landlord's Operating
Expenses for the Building and Lot exceeds Tenant's Included Operating Expense
Share for any year or part thereof of the Term, Tenant shall pay to Landlord as
additional rent the amount of such excess upon demand. Tenant's Share of
Landlord's Operating Expenses for the Lot is hereby defined to be that
proportion of such expenses which Floor Space within Tenant's Premises bears to
the Total Floor Space of the Buildings on the Lot. Landlord's Operating Expenses
for the Building and Lot shall be insurance, management, exterior maintenance
costs, including without limitation, exterior repainting and refurbishing,
keeping roofs, exterior windows and doors watertight, snowplowing of drives and
parking lots, maintenance of roadway, walks and parking and 1oading areas,
fertilization, mowing and watering of lawns, care of shrubbery and general
grounds upkeep, rubbish removal, and cost of utilities for providing common
services such as parking lot lighting, security systems, and property
identification signs. Landlord's determination as to whether such expenses are
attributable to the Building or to the Lot shall be conclusive and binding upon
the parties hereto.
5.3 TAX EXPENSE EXCALATION.
(a) If Tenant's Share of Landlord's Tax Expenses for the Building and
Lot exceed Tenant's Included Tax Share for any year or part thereof of the
Term, Tenant shall pay to Landlord as Additional Rent the amount of such
excess upon demand. Tenant's Share of Landlord's Tax Expenses for the
Building is hereby defined to be that proportion of
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<PAGE> 5
such expenses which Floor Space within Tenant's Premises bears to Building
Floor Space. Landlord's Tax Expenses for the Building and Lot shall mean
any form of real estate tax, assessment, license fee, levy, penalty or tax
imposed by any authority or agency having the direct or indirect power to
tax. Landlord's determination as to whether such expenses are attributable
to the Building or to the Lot shall be conclusive and binding upon the
parties hereto."
(b) Tenant shall also pay all personal property taxes for personal
property on the Premises or used in connection therewith.
(c) Tenant shall pay when due taxes levied or assessed against
Landlord by reason of this lease on the rental or any other payment
required to be made hereunder whether said taxes are assessed solely on the
rental payment hereunder or jointly with other rentals collected pursuant
to law or ordinance existing or hereinafter enacted (other than taxes
levied on the net income to Landlord derived herefrom as part of a state or
federal income tax law applicable to Landlord's income generally) and all
costs, expenses and attorney's fees paid as incurred by Landlord in
connection with the imposition, contest, or collection of the foregoing.
5.4 MAINTENANCE AND REPAIR. Except as provided in Sections 4.1 and 6.1,
Tenant shall keep the Premises and all fixtures and equipment thereon and
therein in good repair, operating condition and working order, and shall make
all structural repairs necessitated by Tenant's misuse or negligence, and all
exterior and interior repairs, renewals and replacements necessary to that end,
including without limitation by their inclusion, interior repainting,
replacement of glass damaged or broken and of floor and wall coverings worn or
damaged, and shall keep all plumbing, lighting, heating, air-conditioning,
sprinkler and other utility and mechanical systems in the Premises properly
maintained and operated and in good operating condition.
5.5 NO SUBLEASE OR ASSIGNMENT. Without on each occasion obtaining a prior
written consent of Landlord, Tenant shall not assign this Lease, or make any
sublease (any purported assignment or sublease without such consent shall be
void). Tenant shall reimburse Landlord promptly for reasonable legal and other
expenses incurred by Landlord in connection with any request for such a consent.
Prior to such approval by Landlord, which approval shall not be unreasonably
withheld, Tenant shall provide Landlord with information concerning the proposed
assignee's or subtenant's financial responsibility. Further, if for any proposed
assignment or sublease Tenant receives rent or other consideration either
initially or over the term of the assignment or sublease, in excess of the rent
called for hereunder, or in case of the sublease of a portion of the Premises in
excess of such rent fairly allocable to such portion, after appropriate
adjustments to assure that all other payments called for hereunder are taken
into account, Tenant shall pay to Landlord as additional rent hereunder one-half
of the excess of each such payment of rent or other consideration received by
Tenant promptly after its receipt. Tenant agrees to remain primarily and
directly liable on all Tenant obligations hereunder notwithstanding any
assignment or sublease, or any indulgences, waivers or extensions of time
granted by Landlord to any assignee, or failure to take action against any
assignee, hereby waiving notice of any default by any assignee, and agrees that
Landlord may at its option
5
<PAGE> 6
proceed against Tenant without having taken action against or joined any
assignee, except that Tenant shall have the benefit of indulgences, waivers and
extensions of time granted to any assignee.
5.6 INDEMNITY. Tenant shall indemnify Landlord from and against any
liability for injury, loss, accident, or damage to any person or property, and
from any claims, actions, proceedings and costs in connection therewith,
including reasonable attorney's fees, arising from omission, fault, negligence
or other misconduct of Tenant, or arising from any use made or thing done or
occurring in the Premises, and to keep all Tenant's employees working in the
Premises covered by workmen's compensation insurance, furnishing Landlord with
certificate thereof.
5.7 HAZARDOUS MATERIALS. Tenant shall not (either with or without
negligence) cause or permit the escape, disposal or release of any biologically
or chemically active or other hazardous substances, or materials. Tenant shall
not allow the storage or use of such substances or materials in any manner not
sanctioned by law or by the highest standards prevailing in the industry for the
storage and use of such substances or materials, nor allow to be brought into
the Project any such materials or substances except to use in the ordinary
course of Tenant's business. Without limitation, hazardous substances and
materials shall include those described in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 et seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 6901 et seq., any applicable state or local laws and the regulations
adopted under these acts. If any lender or governmental agency shall ever
require testing to ascertain whether or not there has been any release of
hazardous materials, then the reasonable costs thereof shall be reimbursed by
Tenant to Landlord upon demand as additional charges if such requirement applies
to the Premises. In addition, Tenant shall execute affidavits, representations
and the like from time to time at Landlord's request concerning Tenant's best
knowledge and belief regarding the presence of hazardous substances or materials
on the Premises. In all events, Tenant shall indemnify Landlord in the manner
elsewhere provided in this lease from any release of hazardous materials on the
Premises occurring while Tenant is in possession, or elsewhere if caused by
Tenant or persons acting under Tenant. The within covenants shall survive the
expiration or earlier termination of the lease term.
5.8 COMPREHENSIVE LIABILITY INSURANCE. Tenant shall keep and maintain with
insurance carriers acceptable to Landlord, comprehensive liability insurance
applying to the activities of Tenant in and in connection with the Premises,
with limits or liability of not less than Five Hundred Thousand ($500,000.00)
Dollars for injury to or death of a single person, One Million ($1,000,000)
Dollars per occurrence and One Hundred Thousand ($100,000) Dollars for property
damage. Tenant shall furnish Landlord with a certificate of such insurance which
shall name Landlord and any mortgagee of the Lot and/or Building, as any
additional insureds and shall provide for noncancellation without thirty (30)
days' prior written notice to Landlord and said mortgagee. Failure on the part
of Tenant to renew such insurance at least thirty (30) days prior to the
expiration date thereof, from time to time, shall constitute an event of default
equivalent to a failure to pay an installment of rent due hereunder.
5.9 OTHER INSURANCE. Tenant shall assume the risk of damage to any
fixtures, goods, inventory,
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<PAGE> 7
merchandise, equipment, furniture and leasehold improvements which remain the
property of Tenant or as to which Tenant retains the right of removal from the
Premises, and Tenant shall maintain reasonable insurance coverage with respect
to such items during the Term of this Lease. Landlord shall maintain insurance
on the Building (excluding any fixtures and items installed or paid for by
Tenant which Tenant is entitled to or required to remove) against damage by fire
and the perils now specified in the most current standard extended coverage
endorsement in an amount equal to at least ninety percent (90%) or replacement
cost of the Building as determined by Landlord, exclusive of escavations and
foundations and Landlord's comprehensive liability coverage.
5.10 INSURANCE SUBROGATION. Any insurance carried by either party with
respect to the Premises and property therein or occurrence thereon shall include
a clause or endorsement denying to the insurer right of subrogation against the
other party, its successors or any mortgagee thereof to the extent rights have
been waived by the insured prior to occurrence of injury or loss. Each party,
notwithstanding any provisions of this Lease to the contrary, hereby waives any
rights of recovery against the other, its successors or its mortgagee for injury
or loss due to hazards covered by insurance containing such clause or
endorsement to the extent of the injury or loss covered thereby.
5.11 SIGNS. Tenant shall not, without the prior written consent of Landlord
(a) paint or place any signs on the Premises or anywhere on or in the Building
or (b) place any curtains, blinds, shades, awnings, aerials or flagpoles, or the
like, in the Premises or anywhere on or in the Building visible from outside the
Premises. Landlord reserves the right to disapprove of signs, curtains, blinds,
shades, and awnings on wholly aesthetic grounds. Tenant shall pay the expenses
involved in the erection of any sign and obtaining of a permit therefor. Tenant
warrants that it shall obtain all necessary permits prior to erecting any such
sign and Tenant shall remove said sign on the termination of this lease.
5.12 ENTRY AND INSPECTION. Tenant shall permit Landlord and Landlord's
agents to examine the Premises at reasonable times, and if Landlord shall so
elect, to make any repairs or replacements Landlord may deem necessary. Landlord
may show the Premises to prospective purchasers and tenants during the one
hundred eighty (180) days preceding expiration of the Term.
5.13 PERMITTED USES. Tenant agrees during the Term and so long as Tenant's
occupancy continues: To use the Premises only for the Permitted Uses stated in
Article I above, and to procure any governmental licenses and permits from time
to time required therefor; and to require loading and unloading, and parking of
cars for employees, customers and visitors, in connection with Tenant's
business, to be done so far as practicable in the areas reserved therefor, and
not on adjacent streets;
7
<PAGE> 8
ARTICLE VI.
CASUALTY AND TAKING
6.1 TERMINATION OR RECONSTRUCTION. If during the Term, the Premises,
Building or Lot, or any substantial part thereof are damaged materially by fire
or other casualty or by action of public or other authority in consequence
thereof, or are taken by eminent domain or receive compensable damage by reason
of anything lawfully done under color of public or other authority, this Lease
shall terminate at either Landlord's or Tenant's election by written notice
given thirty (30) days after the casualty or taking has occurred. If in any such
case the Lease is not so terminated, a just portion of the rent according to the
nature and extent of the injury shall be abated until the Premises (or in case
of taking what may remain thereof), excluding any fixtures or items installed or
paid for by Tenant which Tenant is entitled or required to remove pursuant
hereto, shall have been put by Landlord into proper condition. In case of a
taking which permanently reduces the area of the Premises, a just proportion of
the fixed rent shall be abated for the remainder of the term, and Tenant's share
of Operating Expenses and Tenant's Share of Tax Expenses shall be adjusted as
determined by Landlord. Notwithstanding the foregoing provisions, if insurance
is not carried against the damage as above provided or if the insurance
proceeds, in Landlord's sole reasonable judgment would be insufficient to cover
the cost of repair of the Premises or the building, Landlord shall either repair
the damage as above provided or terminate this Lease by giving Tenant, within
thirty (30) days after the damage, at least fifteen (15) days' prior notice
specifying the termination date.
6.2 LANDLORD RESERVES COMPENSATION. Landlord reserves all rights to
compensation for damages to the Premises, the Building, the Lot and the
leasehold hereby created, accruing by reason of exercise of eminent domain or by
reason of anything lawfully done by public authority.
ARTICLE VII.
DEFAULT
7.1 EVENTS OF DEFAULT. If Tenant (i) fails to pay any rent or other sum of
money due Landlord hereunder when due and such failure continues for a period
often (10) days after notice, provided that if Landlord has given two (2) such
notices within the prior twelve (12) months' period, no further notice shall be
required and any failure to pay monies within ten (10) days after due shall
constitute an event of default, (ii) vacates the Premises or permits the same to
be unoccupied, (iii) fails to observe or perform any of the other Tenant's
agreements herein contained, and within thirty (30) days of written notice of
the same from Landlord, Tenant has not cured such default or, in the alternative
where in the normal course such cure would require more than Thirty (30) days,
has undertaken all steps necessary or possible to commence such cure, (iv) makes
any assignment for the benefit of creditors, (v) commits any act of bankruptcy
or files a petition under any bankruptcy or insolvency
8
<PAGE> 9
law, or if such a petition filed against Tenant is not dismissed within ninety
(90) days, or if a receiver or similar officer becomes entitled to this
leasehold and it is not returned to Tenant within ninety (90) days, or if
substantially all of Tenant's assets or Tenant's interest in this Lease is taken
on execution or other process of law in any action against Tenant, then, Tenant
shall be deemed to be in default hereunder; and Landlord may immediately or at
any time while such defaults exists and without further notice, terminate this
Lease by notice to Tenant, specifying a date not less than ten (10) days after
the giving of such notice on which this Lease shall terminate and this Lease
shall come to an end on the date specified therein as fully and completely as if
such date were the date herein originally fixed for the expiration of the Term,
and Tenant will then quit and surrender the Premises to Landlord, but Tenant
shall remain liable as hereinabove provided.
In case of such termination, or termination by legal proceedings for default,
Tenant shall indemnify Landlord during the remaining period before this Lease
would otherwise expire against all loss or damage suffered by reason of the
termination, the loss or damage, if any, for each lease month to be paid at the
end thereof'. Nothing herein contained shall, however, limit or prejudice the
right of Landlord to exercise any or all rights and remedies available to
Landlord or to prove for and obtain in proceedings for bankruptcy or insolvency
by reason of the termination, an amount equal to the maximum allowed by any
statute or rule of law in effect at the time when, and governing the proceedings
in which, the damages are to be proved, whether or not the amount be greater,
equal to, or less than the amount of the loss or damage referred to above.
7.2 RIGHT TO CURE. In addition to the foregoing remedies and so long as
this Lease is not terminated, Landlord shall have the right but not the
obligation to remedy any default of Tenant and to add to the rent payable
hereunder all of Landlord's reasonable costs in so doing, with interest at the
rate of two percentage points over the then prevailing prime rate in Boston (as
determined by Landlord). Landlord's proceeding under the rights reserved to
Landlord under this Section shall not in any way prejudice any rights Landlord
might otherwise have against Tenant by reason of Tenant's default, and whether
or not Tenant shall be in default hereunder shall be determined as if Landlord
had not proceeded.
ARTICLE VIII.
MISCELLANEOUS
8.1 SURRENDER. Upon the expiration of the Term or early termination
thereof, Tenant shall promptly surrender the Premises in good and clean
condition, and remove any signs, fixtures, or equipment.
8.2 NOTICES. Whenever any notice, approval, consent, request or election is
given or made pursuant to this Lease it shall be in writing sent by certified
mail, return receipt requested or
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<PAGE> 10
registered mail, or it shall be delivered personally. Notices and payments shall
be addressed to Landlord's address and Tenant's address or at such other address
as may have been specified by prior notice. Notices properly given by mail shall
be deemed sufficiently served four (4) days after the date of mailing thereof.
Notices given by personal delivery shall be deemed sufficiently served as of the
date of delivery thereof.
8.3 SUCCESSORS AND ASSIGNS. The obligations of this Lease shall run with
the land, and this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that only the
Landlord named herein shall be liable for obligations accruing before the
beginning of the Term, and thereafter each successive owner of the Premises
shall be liable only for obligations accruing during the period of its
ownership, said liability terminating upon termination of such ownership and
passing to the successor in ownership.
8.4 LIMITATION OF LANDLORD'S LIABILITY. The obligations of Landlord under
this lease shall be binding upon Landlord's trust estate, but not upon any
trustee or beneficiary of the trust individually.
8.5 NO WAIVER. The failure of Landlord or of Tenant to seek redress for
violation, or to insist upon the strict performance of any covenant or condition
of this Lease, shall not be deemed a waiver of such violation nor prevent a
subsequent act, which would have originally constituted a violation, from having
all the force and effect of an original violation. The receipt by Landlord of
monthly rent or other monies due hereunder with knowledge of the breach of any
covenant of this Lease shall not be deemed a waiver of such breach.
8.6 SEVERABILITY. If any term of this Lease, or the application thereof, to
any person or circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each term of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
8.7 OFFSET STATEMENTS. Tenant agrees from time to time within fifteen (15)
days of receipt of written request by Landlord, to execute, acknowledge and
deliver to Landlord a statement in writing certifying that (a) this Lease is
unmodified and in full force and effect, (b) Tenant has no defenses, offsets or
counterclaims against its obligations to pay the rent and other monies hereunder
and to perform its other covenants under this Lease, or (c) if there have been
any modifications that the Lease is in full force and effect as modified and
stating the modifications and, if there are any defenses, offsets, counterclaims
or defaults, setting them forth in reasonable detail, and (d) the dates to which
the rent has been paid and the amount of any prepaid rent. Any such statement
delivered pursuant to this Section 8.7 may be relied upon by any prospective
pruchaser, or mortgagee or encumbrancer of the Building or Lot or any
prospective assignee of any mortgage or encumbrance upon the Building or Lot.
8.8 SUBORDINATION. This Lease shall be subject and subordinate to any first
mortgage now or
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hereafter on the Lot or Building or both and to each advance made or to be made
under any first mortgage and to all renewals, modifications, consolidations,
replacements, and extensions thereof, and all substitutions therefor. This
Section shall be self-operative and no further instrument of subordination shall
be required. In confirmation of such subordination, Tenant shall execute and
deliver promptly any certificate that Landlord or any first mortgagee may
request. In the event that any first mortgagee or its respective successor in
title shall succeed to the interest of Landlord, then, at the option of such
first mortgagee or successor, this Lease shall nevertheless continue in full
force and effect and Tenant shall and does hereby agree to attorn to such first
mortgagee or successor and to recognize such first mortgagee or successor as its
Landlord. Any such first mortgagee may subordinate its first mortgage or
encumbrances to this Lease, without Tenant's consent, by notice in writing to
Tenant, and thereupon this Lease shall be deemed prior in lien to such first
mortgage or encumbrance without regard to their respective dates of execution
and delivery, and such first mortgagee shall have the same rights with respect
to this Lease as though it had been executed and delivered prior to the
execution and delivery of the first mortgage and had been assigned to such first
mortgagee.
8.9 EXAMINATION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option to Lease, and
it is not effective as a lease or otherwise until execution and delivery by both
Landlord and Tenant.
8.10 LENDERS REQUIREMENTS. Tenant hereby agrees to make any reasonable
revisions to this Lease which may be required in good faith by a bona fide
construction, interim or permanent lender in connection with the financing of
the Building.
8.11 EASEMENTS AND ACCESS THROUGH PROPERTY. The Landlord shall have the
right to grant easements in areas of the leased property for the installation of
utilities, provided that the use of such easement areas for such purposes does
not interfere with the operation of the Tenant's business. The Tenant shall not
be entitled to any compensation or abatement of rent if the use of such easement
areas does not interfere with the operation of the Tenant's business.
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IN WITNESS WHEREOF, the parties have hereunto executed this lease of the
day and year first above written.
WITNESS: LANDLORD:
EQUITY PROPERTY ASSOCIATES, I
Carol Garabedian BY: /s/ John W. Merchant
- ------------------------- -------------------------------
WITNESS: TENANT: HADCO CORPORATION
/s/ Timothy S. Mathews BY: /s/ Timothy P. Losik
- ------------------------- ----------------------------------
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EXHIBIT C
RENEWAL OPTION
At the end of the initial term, the Tenant may elect to extend the lease for an
additional three years at the Annual Fixed Rental rate adjusted by the increase
of the Consumer Price Index dated November 1, 1995 and the Consumer Price Index
dated October 31, 2000.
At the end of the first three year option, the Tenant may elect to extend the
Lease for an additional three years at the Annual Fixed Rental rate effective
October 31, 2003 adjusted by the increase of the Consumer Price Index dated
November 1, 2000 and the Consumer Price Index dated October 31, 2003.
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EXHIBIT 10.3
LEASE
Lease of space in 12A Manor Parkway, Salem, New Hampshire (hereinafter the
"Building").
Dated for reference purposes as of November 1, 1995.
ARTICLE I.
TERMS DEFINED
Each reference in this Lease to any of the following terms shall mean:
1.1 Landlord: Equity Property Associates I
C/O JWM Properties, Inc.
12B Manor Parkway
Salem, NH 03079
1.2 Tenant: HADCO Corporation
12A Manor Parkway
Salem, NH 03079
1.3 Building Floor Space: 30,000 sq. ft.
1.4 Tenant's Floor Space: 30,000 sq. ft.
1.5 Term: 5 years
1.5.1 Schedule Term Commencement Date: November 1, 1995
1.6 Annual Fixed Rent: $205,500.00
1.6.1 Included Operating Expense Share: $16,500.00
1.6.2 Included Tax Expense Share: $31,500.00
1.7 Permitted Uses: Office
1.8 Security Deposit: None
1.9 Exhibits:
Exhibit A - Description of Premises
Exhibit B - Plan
Exhibit C - Renewal Option
<PAGE> 2
ARTICLE II.
PREMISES, TERM AND RENT
2.1 PREMISES. Landlord hereby leases to Tenant, subject to and with the
benefit of the provisions of this Lease, the premises described in the
Description (the "Premises"), attached as Exhibit A.
2.2 COMMON AREAS. Tenant shall have, as appurtenant to the premises, rights
to use in common, subject to reasonable rules from time to time made by Landlord
of which Tenant is given notice;
(a) BUILDING COMMON AREA. The common accessways loading docks and platforms
and any passageways thereto, and the common pipes, ducts, conduits, wires and
appurtenant equipment serving the Premises; and
(b) LAND COMMON AREA. Common walkways, sidewalks and driveways necessary
for access to the Building and parking spaces or area from time to time
maintained on the real property upon which the building is situated ("Lot").
2.3 LANDLORD'S RESERVED RIGHTS IN COMMON AREA. Landlord reserves the right
from time to time, without unreasonable interference with Tenant's use:
(a) BUILDING CHANGES. To install, use, maintain, repair and replace pipes,
ducts, conduits, wires and appurtenant meters and equipment for service to other
parts of the building above the ceiling surfaces, below the floor surfaces,
within the walls and in the central core areas, and to relocate any pipes,
ducts, conduits, wires and appurtenant meters and equipment included in the
premises which are so located or located elsewhere outside the premises.
(b) BOUNDARY CHANGES. To change the lines of the lot.
(c) FACILITY CHANGES. To alter or relocate any other common facility;
provided, however, that substitutions are substantially equivalent or better in
quality.
2.4 TERM. The term shall commence on the Scheduled Term Commencement Date
as it may be extended pursuant to Section 3.1, and shall continue until
terminated as herein provided.
2.5 RENT/MONTHLY PAYMENT. Tenant shall pay fixed rent of one-twelvth (1/12)
of the Annual Fixed Rent, in advance on the first day of each calendar month,
for each full calendar month of the term and for the appropriate fraction of a
calendar month at the beginning and end of the term.
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ARTICLE III.
CONSTRUCTION
3.1 COMPLETION OF PREMISES. Tenant agrees to lease the premises "as is".
3.2 ALTERATIONS.
(a) RIGHT TO MAKE ALTERATIONS. Tenant may, from time to time make
non-structural alterations and additions to the interior of premises in
accordance with plans and specifications first approved by Landlord in writing,
the granting of said approval to be in the sole discretion of Landlord. Tenant
shall indemnify and hold harmless Landlord from and against any loss, cost,
damage, injury or expenses suffered by Landlord as a result of said work.
(b) TITLE TO IMPROVEMENTS. All improvements and additions existing as of
the commencement of this Lease shall be pan of the building except such items
as, by writing at the time of approval, the parties agree shall be removed by
Tenant on termination of this Lease, or Landlord agrees that Tenant may then
elect to remove or leave.
3.3 NO LIENS. Tenant shall within five (5) days after the attachment of any
lien or claim of lien pay and discharge or secure the release from the building
and/or lot of any lien or claim of lien arising out of or in connection with
construction work by or for the account of Tenant; and Tenant shall promptly
indemnify Landlord from and against all loss, cost, damage, injury or expense in
connection with any such lien or claim of lien, including without limitation,
reasonable attorney's fees.
3.4 QUALITY OF CONSTRUCTION. All work shall be done in a good and
workmanlike manner and in compliance with all applicable laws and lawful
ordinances, by-laws, regulations and orders of governmental authority and of the
insurers of the premises. Landlord assumes no liability for special,
consequential or incidental damages of any kind. There are no representations,
warranties of merchantability or use of the premises, except as are expressly
set forth herein. Tenant hereby waives the benefit of any rule that disclaimers
of warranty shall be construed against Landlord and agrees that the disclaimers
in this Lease shall be construed liberally in favor of Landlord.
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ARTICLE IV.
SERVICES AND REPAIRS
4.1 LANDLORD'S REPAIRS. Landlord agrees during the term hereof, after
written notice from Tenant, unless occasioned by Tenant's misuse or negligence,
to repair any structural defects in the roof and bearing walls, and to commence
promptly and proceed diligently with any repair or restoration required.
4.2 INTERRUPTION. There shall be no rental abatement for nor shall Landlord
be liable for interruption of any service due to accident, making of repairs,
alterations or improvements, unusually severe weather, unusual difficulty or
inability in obtaining services or supplies from sources usually used for the
Building, labor difficulties, governmental regulations, or other causes beyond
Landlord's reasonable control.
ARTICLE V.
TENANT'S COVENANTS
5.1 UTILITIES PAYMENT. Tenant agrees to pay all charges for utilities,
including but not limited to, electricity, fuel services and service inspections
therefor, which are metered and/or charged directly to the Tenant.
5.2 OPERATING EXPENSE ESCALATION. If Tenant's share of Landlord's Operating
Expenses for the Building and Lot exceeds Tenant's Included Operating Expense
Share for any year or part thereof of the Term, Tenant shall pay to Landlord as
additional rent the amount of such excess upon demand. Tenant's Share of
Landlord's Operating Expenses for the Lot is hereby defined to be that
proportion of such expenses which Floor Space within Tenant's Premises bears to
the Total Floor Space of the Buildings on the Lot. Landlord's Operating Expenses
for the Building and Lot shall be insurance, management, exterior maintenance
costs, including without limitation, exterior repainting and refurbishing,
keeping roofs, exterior windows and doors watertight, snowplowing of drives and
parking lots, maintenance of roadway, walks and parking and loading areas,
fertilization, mowing and watering of lawns, care of shrubbery and general
grounds upkeep, rubbish removal, and cost of utilities for providing common
services such as parking lot lighting, security systems, and property
identification signs. Landlord's determination as to whether such expenses are
attributable to the Building or to the Lot shall be conclusive and binding upon
the parties hereto.
5.3 TAX EXPENSE EXCALATION.
(a) If Tenant's Share of Landlord's Tax Expenses for the Building and Lot
exceed Tenant's Included Tax Share for any year or part thereof of the
Term, Tenant shall pay to Landlord as Additional Rent the amount of
such excess upon demand. Tenant's Share of Landlord's Tax Expenses for
the Building is hereby defined to be that proportion of
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such expenses which Floor Space within Tenant's Premises bears to
Building Floor Space. Landlord's Tax Expenses for the Building and Lot
shall mean any form of real estate tax, assessment, license fee, levy,
penalty or tax imposed by any authority or agency having the direct or
indirect power to tax. Landlord's determination as to whether such
expenses are attributable to the Building or to the Lot shall be
conclusive and binding upon the parties hereto.
(b) Tenant shall also pay all personal property taxes for personal
property on the Premises or used in connection therewith.
(c) Tenant shall pay when due taxes levied or assessed against Landlord by
reason of this lease on the rental or any other payment required to be
made hereunder whether said taxes are assessed solely on the rental
payment hereunder or jointly with other rentals collected pursuant to
law or ordinance existing or hereinafter enacted (other than taxes
levied on the net income to Landlord derived herefrom as part of a
state or federal income tax law applicable to Landlord's income
generally) and all costs, expenses and attorney's fees paid as
incurred by Landlord in connection with the imposition, contest, or
collection of the foregoing.
5.4 MAINTENANCE AND REPAIR. Except as provided in Sections 4.1 and 6.1,
Tenant shall keep the Premises and all fixtures and equipment thereon and
therein in good repair, operating condition and working order, and shall make
all structural repairs necessitated by Tenant's misuse or negligence, and all
exterior and interior repairs, renewals and replacements necessary to that end,
including without limitation by their inclusion, interior repainting,
replacement of glass damaged or broken and of floor and wall coverings worn or
damaged, and shall keep all plumbing, lighting, heating, air-conditioning,
sprinkler and other utility and mechanical systems in the Premises properly
maintained and operated and in good operating condition.
5.5 NO SUBLEASE OR ASSIGNMENT. Without on each occasion obtaining a prior
written consent of Landlord, Tenant shall not assign this Lease, or make any
sublease (any purported assignment or sublease without such consent shall be
void). Tenant shall reimburse Landlord promptly for reasonable legal and other
expenses incurred by Landlord in connection with any request for such a consent.
Prior to such approval by Landlord, which approval shall not be unreasonably
withheld, Tenant shall provide Landlord with information concerning the proposed
assignee's or subtenant's financial responsibility. Further, if for any proposed
assignment or sublease Tenant receives rent or other consideration either
initially or over the term of the assignment or sublease, in excess of the rent
called for hereunder, or in case of the sublease of a portion of the Premises in
excess of such rent fairly allocable to such portion, after appropriate
adjustments to assure that all other payments called for hereunder are taken
into account, Tenant shall pay to Landlord as additional rent hereunder one-half
of the excess of each such payment of rent or other consideration received by
Tenant promptly after its receipt. Tenant agrees to remain primarily and
directly liable on all Tenant obligations hereunder notwithstanding any
assignment or sublease, or any indulgences, waivers or extensions of time
granted by Landlord to any assignee, or failure to take action against any
assignee, hereby waiving notice of any default by any assignee, and agrees that
Landlord may at its option
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proceed against Tenant without having taken action against or joined any
assignee, except that Tenant shall have the benefit of indulgences, waivers and
extensions of time granted to any assignee.
5.6 INDEMNITY. Tenant shall indemnify Landlord from and against any
liability for injury, loss, accident, or damage to any person or property, and
from any claims, actions, proceedings and costs in connection therewith,
including reasonable attorney's fees, arising from omission, fault, negligence
or other misconduct of Tenant, or arising from any use made or thing done or
occurring in the Premises, and to keep all Tenant's employees working in the
Premises covered by workmen's compensation insurance, furnishing Landlord with
certificate thereof.
5.7 HAZARDOUS MATERIALS. Tenant shall not (either with or without
negligence) cause or permit the escape, disposal or release of any biologically
or chemically active or other hazardous substances, or materials. Tenant shall
not allow the storage or use of such substances or materials in any manner not
sanctioned by law or by the highest standards prevailing in the industry for the
storage and use of such substances or materials, nor allow to be brought into
the Project any such materials or substances except to use in the ordinary
course of Tenant's business. Without limitation, hazardous substances and
materials shall include those described in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 et seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 6901 et seq., any applicable state or local laws and the regulations
adopted under these acts. If any lender or governmental agency shall ever
require testing to ascertain whether or not there has been any release of
hazardous materials, then the reasonable costs thereof shall be reimbursed by
Tenant to Landlord upon demand as additional charges if such requirement applies
to the Premises. In addition, Tenant shall execute affidavits, representations
and the like from time to time at Landlord's request concerning Tenant's best
knowledge and belief regarding the presence of hazardous substances or materials
on the Premises. In all events, Tenant shall indemnify Landlord in the manner
elsewhere provided in this lease from any release of hazardous materials on the
Premises occurring while Tenant is in possession, or elsewhere if caused by
Tenant or persons acting under Tenant. The within covenants shall survive the
expiration or earlier termination of the lease term.
5.8 COMPREHENSIVE LIABILITY INSURANCE. Tenant shall keep and maintain with
insurance carriers acceptable to Landlord, comprehensive liability insurance
applying to the activities of Tenant in and in connection with the Premises,
with limits or liability of not less than Five Hundred Thousand ($500,000.00)
Dollars for injury to or death of a single person, One Million ($1,000,000)
Dollars per occurrence and One Hundred Thousand ($100,000) Dollars for property
damage. Tenant shall furnish Landlord with a certificate of such insurance which
shall name Landlord and any mortgagee of the Lot and/or Building, as any
additional insureds and shall provide for noncancellation without thirty (30)
days' prior written notice to Landlord and said mortgagee. Failure on the part
of Tenant to renew such insurance at least thirty (30) days prior to the
expiration date thereof, from time to time, shall constitute an event of default
equivalent to a failure to pay an installment of rent due hereunder.
5.9 OTHER INSURANCE. Tenant shall assume the risk of damage to any
fixtures, goods, inventory,
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merchandise, equipment, furniture and leasehold improvements which remain the
property of Tenant or as to which Tenant retains the right of removal from the
Premises, and Tenant shall maintain reasonable insurance coverage with respect
to such items during the Term of this Lease. Landlord shall maintain insurance
on the Building (excluding any fixtures and items installed or paid for by
Tenant which Tenant is entitled to or required to remove) against damage by fire
and the perils now specified in the most current standard extended coverage
endorsement in an amount equal to at least ninety percent (90%) or replacement
cost of the Building as determined by Landlord, exclusive of escavations and
foundations and Landlord's comprehensive liability coverage.
5.10 INSURANCE SUBROGATION. Any insurance carried by either party with
respect to the Premises and property therein or occurrence thereon shall include
a clause or endorsement denying to the insurer right of subrogation against the
other party, its successors or any mortgagee thereof to the extent rights have
been waived by the insured prior to occurrence of injury or loss. Each party,
notwithstanding any provisions of this Lease to the contrary, hereby waives any
rights of recovery against the other, its successors or its mortgagee for injury
or loss due to hazards covered by insurance containing such clause or
endorsement to the extent of the injury or loss covered thereby.
5.11 SIGNS. Tenant shall not, without the prior written consent of Landlord
(a) paint or place any signs on the Premises or anywhere on or in the Building
or (b) place any curtains, blinds, shades, awnings, aerials or flagpoles, or the
like, in the Premises or anywhere on or in the Building visible from outside the
Premises. Landlord reserves the right to disapprove of signs, curtains, blinds,
shades, and awnings on wholly aesthetic grounds. Tenant shall pay the expenses
involved in the erection of any sign and obtaining of a permit therefor. Tenant
warrants that it shall obtain all necessary permits prior to erecting any such
sign and Tenant shall remove said sign on the termination of this lease.
5.12 ENTRY AND INSPECTION. Tenant shall permit Landlord and Landlord's
agents to examine the Premises at reasonable times, and if Landlord shall so
elect, to make any repairs or replacements Landlord may deem necessary. Landlord
may show the Premises to prospective purchasers and tenants during the one
hundred eighty (180) days preceding expiration of the Term.
5.13 PERMITTED USES. Tenant agrees during the Term and so long as Tenant's
occupancy continues: To use the Premises only for the Permitted Uses stated in
Article I above, and to procure any governmental licenses and permits from time
to time required therefor; and to require loading and unloading, and parking of
cars for employees, customers and visitors, in connection with Tenant's
business, to be done so far as practicable in the areas reserved therefor, and
not on adjacent streets;
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ARTICLE VI.
CASUALTY AND TAKING
6.1 TERMINATION OR RECONSTRUCTION. If during the Term, the Premises,
Building or Lot, or any substantial part thereof are damaged materially by fire
or other casualty or by action of public or other authority in consequence
thereof, or are taken by eminent domain or receive compensable damage by reason
of anything lawfully done under color of public or other authority, this Lease
shall terminate at either Landlord's or Tenant's election by written notice
given thirty (30) days after the casualty or taking has occurred. If in any such
case the Lease is not so terminated, a just portion of the rent according to the
nature and extent of the injury shall be abated until the Premises (or in case
of taking what may remain thereof), excluding any fixtures or items installed or
paid for by Tenant which Tenant is entitled or required to remove pursuant
hereto, shall have been put by Landlord into proper condition. In case of a
taking which permanently reduces the area of the Premises, a just proportion of
the fixed rent shall be abated for the remainder of the term, and Tenant's share
of Operating Expenses and Tenant's Share of Tax Expenses shall be adjusted as
determined by Landlord. Notwithstanding the foregoing provisions, if insurance
is not carried against the damage as above provided or if the insurance
proceeds, in Landlord's sole reasonable judgment would be insufficient to cover
the cost of repair of the Premises or the building, Landlord shall either repair
the damage as above provided or terminate this Lease by giving Tenant, within
thirty (30) days apter the damage, at least fifteen (15) days' prior notice
specifying the termination date.
6.2 LANDLORD RESERVES COMPENSATION. Landlord reserves all rights to
compensation for damages to the Premises, the Building, the Lot and the
leasehold hereby created, accruing by reason of exercise of eminent domain or by
reason of anything lawfully done by public authority.
ARTICLE VII.
DEFAULT
7.1 EVENTS OF DEFAULT. If Tenant (i) fails to pay any rent or other sum of
money due Landlord hereunder when due and such failure continues for a period
often (10) days after notice, provided that if Landlord has given two (2) such
notices within the prior twelve (12) months' period, no further notice shall be
required and any failure to pay monies within ten (10) days after due shall
constitute an event of default, (ii) vacates the Premises or permits the same to
be unoccupied, (iii) fails to observe or perform any of the other Tenant's
agreements herein contained, and within thirty (30) days of written notice of
the same from Landlord, Tenant has not cured such default or, in the alternative
where in the normal course such cure would require more than Thirty (30) days,
has undertaken all steps necessary or possible to commence such cure, (iv) makes
any assignment for the benefit of creditors, (v) commits any act of bankruptcy
or files a petition under any bankruptcy or insolvency
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law, or if such a petition filed against Tenant is not dismissed within ninety
(90) days, or if a receiver or similar officer becomes entitled to this
leasehold and it is not returned to Tenant within ninety (90) days, or if
substantially all of Tenant's assets or Tenant's interest in this Lease is taken
on execution or other process of law in any action against Tenant, then, Tenant
shall be deemed to be in default hereunder; and Landlord may immediately or at
any time while such defaults exists and without further notice, terminate this
Lease by notice to Tenant, specifying a date not less than ten (10) days after
the giving of such notice on which this Lease shall terminate and this Lease
shall come to an end on the date specified therein as fully and completely as if
such date were the date herein originally fixed for the expiration of the Term,
and Tenant will then quit and surrender the Premises to Landlord, but Tenant
shall remain liable as hereinabove provided.
In case of such termination, or termination by legal proceedings for default,
Tenant shall indemnify Landlord during the remaining period before this Lease
would otherwise expire against all loss or damage suffered by reason of the
termination, the loss or damage, if any, for each lease month to be paid at the
end thereof. Nothing herein contained shall, however, limit or prejudice the
right of Landlord to exercise any or all rights and remedies available to
Landlord or to prove for and obtain in proceedings for bankruptcy or insolvency
by reason of the termination, an amount equal to the maximum allowed by any
statute or rule of law in effect at the time when, and governing the proceedings
in which, the damages are to be proved, whether or not the amount be greater,
equal to, or less than the amount of the loss or damage referred to above.
7.2 RIGHT TO CURE. In addition to the foregoing remedies and so long as
this Lease is not terminated, Landlord shall have the right but not the
obligation to remedy any default of Tenant and to add to the rent payable
hereunder all of Landlord's reasonable costs in so doing, with interest at the
rate of two percentage points over the then prevailing prime rate in Boston (as
determined by Landlord). Landlord's proceeding under the rf
ights reserved to
Landlord under this Section shall not in any way prejudice any rights Landlord
might otherwise have against Tenant by reason of Tenant's default, and whether
or not Tenant shall be in default hereunder shall be determined as if Landlord
had not proceeded.
ARTICLE VIII.
MISCELLANEOUS
8.1 SURRENDER. Upon the expiration of the Term or early termination
thereof, Tenant shall promptly surrender the Premises in good and clean
condition, and remove any signs, fixtures, or equipment.
8.2 NOTICES. Whenever any notice, approval, consent, request or election is
given or made pursuant to this Lease it shall be in writing sent by certified
mail, return receipt requested or
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registered mail, or it shall be delivered personally. Notices and payments shall
be addressed to Landlord's address and Tenant's address or at such other address
as may have been specified by prior notice. Notices properly given by mail shall
be deemed sufficiently served four (4) days after the date of mailing thereof.
Notices given by personal delivery shall be deemed sufficiently served as of the
date of delivery thereof.
8.3 SUCCESSORS AND ASSIGNS. The obligations of this Lease shall run with
the land, and this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that only the
Landlord named herein shall be liable for obligations accruing before the
beginning of the Term, and thereafter each successive owner of the Premises
shall be liable only for obligations accruing during the period of its
ownership, said liability terminating upon termination of such ownership and
passing to the successor in ownership.
8.4 LIMITATION OF LANDLORD'S LIABILITY. The obligations of Landlord under
this lease shall be binding upon Landlord's trust estate, but not upon any
trustee or beneficiary of the trust individually.
8.5 NO WAIVER. The failure of Landlord or of Tenant to seek redress for
violation, or to insist upon the strict performance of any covenant or condition
of this Lease, shall not be deemed a waiver of such violation nor prevent a
subsequent act, which would have originally constituted a violation, from having
all the force and effect of an original violation. The receipt by Landlord of
monthly rent or other monies due hereunder with knowledge of the breach of any
covenant of this Lease shall not be deemed a waiver of such breach.
8.6 SEVERABILITY. If any term of this Lease, or the application thereof, to
any person or circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each term of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
8.7 OFFSET STATEMENTS. Tenant agrees from time to time within fifteen (15)
days of receipt of written request by Landlord, to execute, acknowledge and
deliver to Landlord a statement in writing certifying that (a) this Lease is
unmodified and in full force and effect, (b) Tenant has no defenses, offsets or
counterclaims against its obligations to pay the rent and other monies hereunder
and to perform its other covenants under this Lease, or (c) if there have been
any modifications that the Lease is in full force and effect as modified and
stating the modifications and, if there are any defenses, offsets, counterclaims
or defaults, setting them forth in reasonable detail, and (d) the dates to which
the rent has been paid and the amount of any prepaid rent. Any such statement
delivered pursuant to this Section 8.7 may be relied upon by any prospective
purchaser, or mortgagee or encumbrancer of the Building or Lot or any
prospective assignee of any mortgage or encumbrance upon the Building or Lot.
8.8 SUBORDINATION. This Lease shall be subject and subordinate to any first
mortgage now or
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hereafter on the Lot or Building or both and to each advance made or to be made
under any first mortgage and to all renewals, modifications, consolidations,
replacements, and extensions thereof, and all substitutions therefor. This
Section shall be self-operative and no further instrument of subordination shall
be required. In confirmation of such subordination, Tenant shall execute and
deliver promptly any certificate that Landlord or any first mortgagee may
request. In the event that any first mortgagee or its respective successor in
title shall succeed to the interest of Landlord, then, at the option of such
first mortgagee or successor, this Lease shall nevertheless continue in full
force and effect and Tenant shall and does hereby agree to attorn to such first
mortgagee or successor and to recognize such first mortgagee or successor as its
Landlord. Any such first mortgagee may subordinate its first mortgage or
encumbrances to this Lease, without Tenant's consent, by notice in writing to
Tenant, and thereupon this Lease shall be deemed prior in lien to such first
mortgage or encumbrance without regard to their respective dates of execution
and delivery, and such first mortgagee shall have the same rights with respect
to this Lease as though it had been executed and delivered prior to the
execution and delivery of the first mortgage and had been assigned to such first
mortgagee.
8.9 EXAMINATION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option to Lease, and
it is not effective as a lease or otherwise until execution and delivery by both
Landlord and Tenant.
8.10 LENDER'S REQUIREMENTS. Tenant hereby agrees to make any reasonable
revisions to this Lease which may be required in good faith by a bona fide
construction, interim or permanent lender in connection with the financing of
the Building.
8.11 EASEMENTS AND ACCESS THROUGH PROPERTY. The Landlord shall have the
right to grant easements in areas of the leased property for the installation of
utilities, provided that the use of such easement areas for such purposes does
not interfere with the operation of the Tenant's business. The Tenant shall not
be entitled to any compensation or abatement of rent if the use of such easement
areas does not interfere with the operation of the Tenant's business.
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IN WITNESS WHEREOF, the parties have hereunto executed this lease of the
day and year first above written.
WITNESS: LANDLORD:
EQUITY PROPERTY ASSOCIATES, I
/s/ Carol Garabedian BY: /s/ John W. Merchant
- ------------------------ -------------------------------
WITNESS: TENANT: HADCO CORPORATION
/s/ Timothy S. Mathews BY: /s/ Timothy P. Losik
- ------------------------ -------------------------------
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EXHIBIT C
RENEWAL OPTION
At the end of the initial term, the Tenant may elect to extend the lease for an
additional three years at the Annual Fixed Rental rate adjusted by the increase
of the Consumer Price Index dated November 1, 1995 and the Consumer Price Index
dated October 31, 2000.
At the end of the first three year option, the Tenant may elect to extend the
Lease for an additional three years at the Annual Fixed Rental rate effective
October 31, 2003 adjusted by the increase of the Consumer Price Index dated
November 1, 2000 and the Consumer Price Index dated October 31, 2003.
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EXHIBIT 10.4
Amendment to Lease
The Lease by and between Equity Property Associates I (Landlord) and HADCO
Corporation (Tenant) dated March 1, 1992 as amended May 1, 1995 is hereby
amended as follows:
I. Tenant is hereby exercising its rights per Exhibit E - Right of First
Refusal to lease the additional 21,105 square feet of space under the following
terms:
a) Effective April 1, 1996 Tenant will occupy 14,802 square feet of
lease area and will occupy the remaining 6,303 additional square
feet once the existing Tenant, Xircom, Inc. vacates said lease
area.
b) Effective April 1, 1996 the following Articles of the original
Lease are amended.
1. Tenant Floor Space will be 53,697 square feet (Article 1.4)
2. The Annual Fixed Rent will be $323,254.84 (Article 1.6)
3. The Included Operating Expense Share will be $29,385.47
(Article 1.6)
4. The Included Tax Expense Share will be $54,253.97 (Article
1.6)
c) Effective upon the written notice by Landlord of the availability
of the remaining 6,303 square feet the following Articles of the
original Lease will be amended.
1. Tenant Floor Space will be 60,000 square feet (Article 1.4)
2. The Annual Fixed Rent will be $361,200.00 (Article 1.6)
3. The Included Operating Expense Share will be $30,600.00
(Article 1.6)
4. The Included Tax Expense Share will be $60,600.00 (Article
1.6)
<PAGE> 2
The effective date of this Amendment will be April 1, 1996.
All other provisions of the Lease are hereby ratified and confirmed.
In Witness Whereof, the parties have executed this Amendment to Lease this
1st day of April, 1996.
WITNESS: LANDLORD: Equity Property Associates, I
Carol Garabedian John W. Merchant, General Partner
- ----------------------------- ---------------------------------------
WITNESS: TENANT: HADCO Corporation
Carol Walton Timothy P. Losik, V.P.
- ----------------------------- ---------------------------------------
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